Special Geopolitical Macro Update: Possible US Election surprise, Moral decline, US-Russia escalation & Syria-Iraq war

By Christian Takushi, Switzerland – 4 November 2016

Dear reader

The 3-4 weeks leading to the US Elections are as expected a tense “radio silence”, with many decision makers in waiting mode. Nevertheless, some developments deserve our attention. Their timing and inter-connection call for close monitoring. Interestingly, some of these developments fit the pattern of controlled escalation/de-escalation strategies of our post-WW2 history.

Update from today, 4 November 2016:

Where could US Elections’ surprise come from?  Events in Turkey and Britain

My latest US Elections Update was made on October 27th, right before the FBI de facto reopened the criminal investigation of Mrs. Clinton.

Since then the lead of Clinton has imploded from 6 to 1.9 points – in just one week. More importantly key battleground states are now a perfect tie. I think mainstream media has shed little light on a possibly decisive factor on Tuesday Nov 8th: The behavior of the 70 million disenfranchised American citizens that have lost hope in the political system, not voted in years and therefore not registered to vote. Analysts have tossed these forgotten people aside and the polls don’t cover them. But interestingly in 15 states they can still register even on Election Day. These states comprise the battlegrounds of IowaOhioNew Hampshire, Colorado and Wisconsin. They are either “tie” or “edge”.

Source: UnitedStatesHistoryLSA

Source: UnitedStatesHistoryLSA

On Election Day channels like CNN, CBS and ABC News normally say the American People have decided and chosen their new president. But in reality what they say is a stretch, because more than have of Americans don’t vote.

What could be a headache for Clinton is that some of these states are part of or adjacent to the U.S. Rust Belt, regions where millions of Americans have been hit hard by the exodus of manufacturing firms to China, Mexico etc to benefit from the Free Trade Deals that Obama and Clinton once championed. Since well educated higher earning Americans tend to vote Democrat, all the above means that many of those that could deliver a surprise on Tuesday are Americans that are struggling financially and that live in the North East of the United States. Normally they don’t vote, but this year I wouldn’t be so sure. This forgotten people could become a factor, because in the 11 days leading to the elections revelations about a candidate are coming to the light that point to corruption and two separate FBI criminal investigations.

My overall political-geopolitical analysis points to three major conclusions and a big soft factor for the vote this coming Tuesday:

  1. A big upset is likely: the mobilization of disenfranchised skeptical Americans that want to prevent a US Party to stay in power for more than two terms would benefit Mr. Trump. I have calculated that some 20% of Americans have not been sampled by analysts and pollsters – simply because they are not expected to vote. A surprise could come from this camp.
  2. So much is at stake in 2016 that I expect the establishment in politics, media, business and security circles will use all means at their disposition to secure a 3rd DNC term. In this legal-technical-logistical game the GOP is at a significant disadvantage.
  3. Under normal circumstances the formidable Clinton machinery should secure a Clinton victory. The DNC candidate was more disciplined than her GOP contender and also made fewer mistakes during the electoral process. Her biggest problem is the potential criminal evidence of past breaches, but with top pro-DNC people at the helm of the Justice Department, the worse should be avoided.

Last but not least, there is a big soft factor consensus is overlooking: Religion. It pertains to a group of voters that make up to 28% of the electorate map. Evangelical Christians and Jews were initially seriously opposed to Trump, but lately many are switching to him. Interestingly African Americans were an early part of this phenomenon, before White evangelical and protestant leaders embraced Trump. A late shift in such a large conservative group of voters could decide these tight elections. What is behind this late shift? Hard to say, but according to my research a growing number of Christian bible teachers and Jewish rabbis are seeing signs pointing to Mr. Trump as the agent of change needed to shake up a flawed system. On the one hand, he is being compared with Cyrus, King of Persia, who as a gentile was used by God to perform God’s work of redemption for His people. On the other hand, scholars have found the name of Trump coded in the bible. Interestingly in this new Jewish year 777 (5’777) that means a lot to Jews for political, security and religious reasons, Trump would have his first day in office when he is 70 years, 7 months and 7 days old. Allow me to be critical, we can’t rule out those revelations refer to Donald Trump Junior, who has said may run for president when his children are older. Another pushback to this shift is that it is taking place rather late in the race and the group is not homogenous. We may say this is not a hard fact, but issues that speak to people’s faiths could sway voters in this unusual election year. We are dealing here with an unusual late convergence of factors. As usual, no one single factor can turn around a complex system’s outcome.

Something you should not overlook ..

  • 70 million eligible voters have not registered to vote
  • A late shift among evangelical and Jewish voters towards Mr. Trump is taking place (28% of electorate)
  • Over 15% of registered voters have already voted

I recommend that you keep this Battleground Map of Real Clear Politics by your side as you watch and digest the results on Tuesday night. I think it is very helpful.


Source: RealClearPolitics

Source: RealClearPolitics

The perceived bias of the Justice Department (DOJ) in favor of the DNC candidate, and the presumed DOJ efforts to influence the FBI investigations (allowing the key destruction of evidence, granting immunity to crucial aides etc) may be highlighting the struggle of the establishment as opposition to the Policy Mix of the past 41 years broadens. The trust damage suffered by the Justice Department may never heal in our time and weigh on America. But it is not along. Overall the executive, legislative and justice branches of government may face yet more distrust by the masses.

Many Democrat leaders are not euphoric these days: On the one hand they want their party to win a 3rd term, on the other, they are worried by the visibly eroded separation of powers in the USA. Both main US parties, the GOP and DNC are deeply flawed and increasingly detached from normal Americans. The political landscape of America needs a renewal, and that process has somehow begun. Mr. Sanders and Mr. Trump were the catalysts to kick start that process. But although America looks disturbingly polarized and on the edge of violence, I refuse to join the doomsayers. The USA could see a renewed political landscape by 2025. Coinciding with a new economic expansion just as China and Europe face the worse part of their demographic and security challenges. Furthermore, a Clinton win next week could open the door for a scenario where Marco Rubio or one of Mr. Trump’s sons could be running for president in the future.

Deepening Moral Crisis: EU-Canada Deal, Democracy under siege in Turkey and Britain?  The West loses credibility

There is a lot of talk about crisis. I’d like to emphasize that we are hearing this word so often, it might not be possible to discern relevant from less relevant. Just as the word “war” is being heard so often, many people think they are now acquainted with war. But what we are experiencing in Iraq, Syria or Ukraine is not the kind of real large-scale wars that lie ahead of humanity. I say this with certainty. 

The most important crisis we are experiencing, is the unfolding Moral Crisis of the West, followed by the imploding trust of citizens in their political leaders and institutions. That crisis of Morality and Trust supersedes and enables all other crises. Allow me to remind us that the Center of Christianity is fast shifting away from the West towards Asia, Africa and Latin America. 

And yet, I believe the key word in our times is not the CRISIS, but rather CHANGE. For Change is upon us. Much points to imminent change. Nevertheless, an upset in the elections in the USA and France over the coming weeks and months could give the world a Time-Out. I recall that there is a possibility that the results of the US Congress Elections may not be settled until January 2017. A shocker or upset in the USA and France could allow the West to have a re-set and pause to rethink the policy course for 4 to 7 years. It could delay the current agenda in place (globalization, standardization, power concentration in politics and business, Middle East reshuffle etc.) and the wars it is leading to.

Many intellectuals say ultra-liberal Free Trade is the part of our global agenda, which will guarantee peace. But I humbly believe that they are mistaken. As an economist I appreciate and support Trade, Capitalism, Free Markets and Competition, but the current Policy Mix is not promoting those things anymore, it is actually altering or destroying them. It has replaced competition with gigantic oligopolies and allows them to influence if not dictate legislation. Ultra-liberal Trade in conjunction with bilateral agreements has led to a weakening of the Local Supply Chain and to an explosion in trade volumes. Much of which creates significant external costs that are neither paid nor accounted for. Apart from the economic, social and health costs, the environment has been greatly impacted. Gigantic amounts of cheap merchandise are transported from one continent to the other – the low cost of the merchandise does not cover the damage (cost) to the seas nor the affected workers along their families. The U.N. covers up this scandalous trade system allowing ships to sail with flags of nations that have little respect for labor laws, the rule of law and the environment.  

From a global and long term perspective a Trade Deal between the EU and Canada (CETA) does not promote fair and sustainable trade, it rather creates new barriers to every other nation. Bilateral Trade Agreements are counterproductive for equal treatment, trust, peace and fairness. They add mainly to the profits of already gigantic oligopolies and produce new frictions. A Free Trade deal between a developing country and the USA should not be a zero tariffs system. Such a deal invites abuse and benefits some, but mostly the multinational enterprises. It also takes any incentives away for these developing nations to open up to democracy and to build a social security system. As we see in China, since it became a WTO member with massive trade volumes, Beijing has become more autocratic and more repressive. Why should Beijing make steps to respect human rights and intellectual property once it has our factories, our business and our Treasury Bills? 

Many independent Macro Economists recommend for nations to trade with one another on the basic rules of the WTO, avoiding bilateral agreements. Nations become slaves to those bilateral agreements and they become ever more complex. Switzerland has made this bitter experience with the EU. Post BREXIT, I personally recommend Britain to trade with the EU and other nations on simple & transparent WTO rules. 

Democracy and Freedom of Speech

Yesterday two events coincided that many may miss to connect. They took place in Britain and Turkey. The two events are different in nature, but they touch the same nerve that is mobilizing citizens all over the world. In both instances the Freedom of Speech and the stated Will of the People were frustrated. In London the BREXIT referendum was put (back) in the hands of parliament, which may water it down before it approves it, in Ankara opposition leaders were arrested. It is understandable that a British High Court sees the procedural need to submit the process to the parliament. But for citizens around the globe this latest event only solidifies their perception that democracy has been hijacked by established parties and Big Firms. The decision of a popular referendum to lead Britain out of the EU cannot go ahead unless the parliament (those politicians elected by the people) approve it. Those in Britain that wanted to stop the popular BREXIT decision celebrated the High Court intervention. But they may have only further galvanized British citizens against their political establishment. Ironically it may help those undecided voters in the USA that are wondering if they also should “Take their Country Back”.  

What many people are reading in this is “if you want us to pass it, you better water it down”. Even Swiss citizens have realized that their Direct Democracy only exists when Bern’s political establishment approves of it. The popular decision via referendum to limit immigration from the EU will not be implemented by the Swiss Government. Swiss political leaders except for the People’s Party never liked the referendum nor its result; thus, they never intended to implement it. As an economist I am glad about the cautious management by the government for it protects the current business relations, but we should not underestimate the signal we are sending to citizens and nations around the globe. Western leaders and UN leaders have big plans for the world since the mid 1970’s that include integration and power concentration. But Direct Democracy and the Freedom of Speech seem to be in their way. One thing is obvious, worsening crises, crime and terror are allowing governments to exercise unprecedented executive powers. 

screen-shot-2016-11-04-at-18-05-38The world over, people are observing how NATO and the EU are dealing with Turkey. Many observers say that Human rights and Freedom of Speech have been severely curtailed by Ankara, but neither NATO nor the EU has disassociated itself from Turkey. Turkey is still a key partner of these Western institutions. The USA and EU have not imposed any sanctions. There are public statements, but nothing that would send a clear message. The bottom line for the rest of the world is this: Western leaders talk a lot about democracy, but there are massive discrepancies between their words and their actions. The fact that European leaders oppose that their citizens vote on the future of the EU matches their support for autocratic regimes. The question many are asking outside of the West is: Why do NATO fighter jets bomb the regimes in Libya and Syria, and not the regimes in Iran, Saudi Arabia or Turkey?  

The failed Regime Changes enforced by the West, the way Western leaders are trying to frustrate the will of their citizens and the double standard the West applies to other nations is terribly hurting the image of the West. The message is out that Western leaders have used democracy as a pretext to advance their interests in the Middle East, and their concept of democracy has little to do with the Will of the People, but rather the system established parties have arranged. 

This is changing the perception of the West in many capitals of Asia, Africa and Latin America. As a result, silent support or understanding for the position of Russia, China and Syria is growing. The loss of credibility by the West is opening options and opportunities to China and Russia that they could only dream of until 3 years ago. 

Political leaders across many nations have embraced an ultra-liberal globalisation agenda that aims at unprecedented power concentration. Something that has not been sanctioned by their citizens. What is in the way? National borders, Freedom of Speech, rights to own guns, national armies and the capitalistic atomistic free competition. My analysis points clearly to the development of Super States as a necessary intermediate stage. Let us keep this in the back of our minds as we go through the coming weeks and months. 

At a time when we should come together in discussing multiple issues openly and with respect, people are laughed at or mocked before they are allowed to say something. I saw yesterday how a renowned news anchor at CNN made fun of and laughed at a US professor she was interviewing. She was assailing and to some extent mocking the professor, because his political research comprising the last 100 years suggests Mr. Trump will win next week’s elections. For someone that is neither Democrat nor Republican and that wants to hear different opinions, it was a worrying scene. Political leaders and mainstream media are increasingly showing intolerance for conservative values, religious faith and national identity/culture. Those who care about them are deemed backwards, extreme or intolerant. This week’s events in London and Turkey are showing that the geopolitical agendas of the EU and Ankara may not be that far apart. Maybe only the execution is different. Without the shield and protection of the West (NATO and EU), Ankara could have never gone this far. De facto the West has enabled and empowered Ankara. As I have voiced before, Turkey will take part in at least one of the coming wars in the Middle East, dragging NATO into it. At the minimum it will expose Western Europe to warring parties with nuclear weapons. Teheran, Ryad and Islamabad may be able to force conditions on Europe. 

Update from Thursday 27 October 2016:

Obama Administration to advance military fronts ahead of November 8th 2016 – escalation is an option

Abstract: Thanks to our monitoring, we have noted that several options have been initiated to heighten activity in the U.S. Foreign Policy, Military and Homeland Security realms. The Administration’s preparation for several scenarios concerning Homeland Security and State of Emergency seem to be focusing on a foreign threat and possibly a natural threat (three U.S. regions). A cyber attack has been deemed likely. It is nevertheless possible that the flurry of activity could be prophylactic, also preempting a potential social unrest following the November 8th Elections. While we can’t be sure all those measures are connected, we infer Washington is preparing for specific scenarios pre and post U.S. General Elections that go beyond what we’ve seen in past elections.

My current assessment is this: if the Clinton Campaign is confident of winning the elections, Foreign Policy options will not be activated, de-escalation will be aimed for. If the lead narrows critically, we may see multiple escalations, both overseas and the Homeland. Possibly triggered from within and without. This doesn’t mean that the Obama administration will deflect into Foreign Policy; it is also likely foreign powers will use the presumed vulnerability and uncertainty of the USA to maximize the effect of any disruption. 

Source: Norwegian Navy, Russian Flagship Aircraft Carrier Kuznetsov headed for the English Chanel

Source: Norwegian Navy, Russian Flagship Aircraft Carrier Kuznetsov headed for the English Chanel

As I write to you the Russian Northern Fleet is on course past the British Channel and Gibraltar into the Mediterranean Sea with NATO warships alternating between “intercepting” and “close shadowing” the 8-strong fleet spearheaded by Russia’s flagship aircraft carrier. The critical city of Mosul controlling the Tigris is nearing its fall to a US-led coalition and Moscow is concerned the armies involved in that offensive could use their high morale and on-the-field coordination to launch a three-pronged attack on the Syrian Army. That would force Russia to accept an unfavorable partition of Syria. After having lost old allies Iraq, Ukraine, Lybia and de facto Iran to the West, it would now have to concede the East of Syria to a NATO-controlled corridor and the North of Syria to NATO-ally Turkey. Moscow knows well that the so-called Humanitarian Corridors would get a “no-fly shield” to allow – as an option against Moscow – for the rapid construction of a pipeline that could transport Iranian Gas/Oil to Europe via Turkey. That “option” has Moscow worried: Russia would lose its tight grip on Europe as a “captive customer”.

Our analysis shows that the Russian Fleet may not need to engage in battle; the mere show of force has already helped to give a morale boost to the war-weary soldiers of the Syrian Army and other allies. It has also sent a message to the USA, Britain and Turkey: “how much are you willing to risk? Russia can raise the stakes if the West wants to single-handedly reshape the map of the Middle East”. Western generals are extremely confident to the point of mocking the capabilities of the Russian Task Force. Such condescending superiority is troublesome. 

The convergence of military and economic interests is shifting against Russia and the Arab-Sunni states
Source: original chart by the C.I.A.; Further development, N/S edits & analytical comments by Christian Takushi MA UZH. Obama-pushed Northern Alliance with core members: Turkey-Syria-Iraq-Iran at risk if Trump wins US elections.

Source: original chart by the C.I.A.; Further development, N/S edits & analytical comments by Christian Takushi MA UZH.
Obama-pushed Northern Alliance with core members: Turkey-Syria-Iraq-Iran at risk if Trump wins US elections.

As you may know, my independent analysis has pointed a few years ago to the high likelihood that the EU is seeking to have Iranian Gas as a geostrategic alternative for Russian Gas. To that aim parts of Iraq and Syria need to be occupied, so that in case of need a pipeline can be laid from Iran to Turkey-Romania. Once North-Eastern Iraq and North-Eastern Syria are under NATO control, the USA and NATO don’t even have to build the pipeline. The mere control of the ground corridor from Iran through North Eastern Iraq and North-Eastern Syria will weaken Russia’s geopolitical influence over Europe: “we can quickly build the pipeline to mass-transport Iranian Gas to the EU”. That is the global geopolitical background to what we will witness in the coming weeks. The control of those territories will advance the de facto partition of Syria and survival of a Kurdish autonomous para-state. It is likely that humanitarian reasons and justice for the Kurdish cause will be used to grant the Kurds also autonomy in North-Eastern Syria. That would maximize security and defensibility of any future pipeline option from Iran to Europe that can pass through NATO-Kurdish controlled Iraq-Syria. That would allow Iran to accelerate the development of vast gas and oil reserves. It would help the reconstruction of its once powerful and advanced economy. Nonetheless, Sunni-Arab states are deeply worried about the empowerment of Iran by the current US and European administrations.

Arab leaders are convinced Iran is using the new hard currency to procure high-grade uranium and ready-to-deploy nuclear payloads. Saudi Arabia, Egypt and the Emirate states believe Iran has outsmarted Washington to pursue a two-pronged strategy to destroy the Sunni Arab archrivals in a first war and then Israel, to finally subdue the West. We have warned that the US-Iran deal is worryingly flawed and that it has forced Arab states to seek nuclear weapons of their own to pre-empt an Iranian attack.

Russia and Arab states feel increasingly humiliated, vulnerable and provoked. And that is not a good thing for world peace. It will lead them to try to take pre-emptive action. All we are gathering confirms our assessment of the US-Iran Deal and its aftermath: The Middle East is on track to at least two wars with the limited use of nuclear weapons among other means. A first war is likely to settle the supremacy within the Moslem world: there can’t be two caliphates nor two end-time prophets. Iran is likely to overcome its Sunni-Arab rivals; after that old enemies will join forces to take on Israel. And it is increasingly likely that Turkey may play a key role in both wars and potentially drag NATO into that conflict. 

Perception in the West and rest of the world drift apart

Our Western media is mainly reporting the plight of the civilian population under a so-called Russia’s aggression and portraying NATO as liberators. While that is true to some extent, it is also one-sided. Western allies have perpetrated many atrocities and many observers see the West’s policy of Forced Regime Change as a key driver for the catastrophes in both Iraq and Syria. 

Few Western journalists dare to ask why NATO does not equally attack the probably most repressive regimes in the region: Iran and Saudi Arabia. In New Delhi and Beijing they have a ready answer: Saudi Arabia and Iran are the old and new partners of the West. In many emerging nations Russia is not being perceived as pacifist, but neither is it perceived as the aggressor that Western media is projecting. In her struggle with the West, Russia is not totally isolated as our media portrays it. That has implications for the geopolitical struggle ahead of us. 

I conclude that the West’s condescending linear-logical worldview may one day backfire. We hear our own media narrative and are convinced the others are evil. Fact is, most of those disagreeing with our Western media narrative are simply rather quiet. Even in the USA and within military circles. Top brass U.S. military officials that strongly disagreed with the US President were reportedly removed from their post. Dissenting military leaders, ironically, were severely punished for careless or incorrect handling of Classified Information

President Obama and President Putin may be part of the elevated Global Geopolitical Risk

The West is underestimating the possibility of miscalculation or misjudgement by the current US administration and the Kremlin. Worryingly, key Western nations are in the simultaneous process of changing leadership. We have a lack of leadership and some key leaders that have been too long in power. A third presidential term for the DNC would only increase that risk. Why? After 7 years in power, the two closest circles of advisers surrounding the U.S. President are not necessarily bold and diverse in opinion. Ideally a US and Russian president should have diversity and dissenting opinions in their closest circles. They are essential, especially in times of crisis. None of our current world leaders seem to appreciate or tolerate many dissenting opinions or much ambiguity in their inner circle. Not necessarily because the presidents want it so, currently that is the “Zeitgeist” in leadership and management. The press sees that as inconsistency or weakness. The only leader in the West that seems to have the qualities of a strong leader is Mrs. Theresa May. Thus, I expect Britain to assume a more visible role of leadership in the coming few years, until new leaders have been able to consolidate their power in the USA, Germany, France etc.

screen-shot-2016-10-19-at-15-09-37Our independent analysis sees in fact a higher likelihood of miscalculations and of large-scale conflagration under a Clinton administration than under a Trump administration. That has to do with overconfidence and having a team that is too sworn in on you, purged and perfected too many times over 20-30 years. The same smooth machinery that sends you to power, is likely to be your demise in a complex world in crisis.

In contrast, I see a rather disparate team of advisers around Mr. Trump, but one with outspoken people. With just one year in politics, he doesn’t have a sworn in team of advisers with a standardized set of opinions. This may not be ideal for marketing his image, but it is better for the complex security scenario we face. When Mr. Pence disagrees with Mr. Trump on multiple issues, political analysts see this as a “negative”, but I see this as a very good thing for a time as this. Contrary to US political analysts, I’m a bit concerned Mr. Kaine barely differs in opinion from Mrs. Clinton. Should a major conflagration loom, I’d prefer to see the vice president telling the president that he is wrong or that he is missing this or that point. 

Both Russia and the USA are led by presidents that have spent a long time in power, purging dissenting minds and surrounding themselves with sworn-in likeminded advisors. That is one of the biggest and most underestimated Risk Factors in the current escalation of tensions between West and East. During the Cold War’s Cuba Crisis, which brought the world to the edge of the nuclear abyss, one thing helped humanity. Both, Kennedy and Khrushchev struggled with their close advisers, wanting outside confirmations. That ended up being a healthy thing. Tired of being told what the US or Soviet leader’s intention is, they ended up demanding a direct telephone line with the “enemy”. Kennedy was told the Russians wanted WW3, but Kennedy paid attention to a Russian submarine’s captain that preferred to sink and die with all his crew (they were dangerously under fire by US warships), rather than defending himself and unleashing its torpedoes on the American warships that intercepted it before Cuba. Something didn’t add up. And Khrushchev went through something similar. Many heated and fiery debates took place during those 13 long days. Current world leaders surround themselves with likeminded people. The media demands one view and one opinion only; regulators demand banks should have only one strategy and one answer to highly complex scenarios. And it reflects the “Zeitgeist” at TV channels, businesses, banks and even universities.    

China, the rising Asian power with Nuclear First Strike capability since less than a year has also moved into a more autocratic mode with frequent purges of dissident minds. That does not bode well for world peace. Russia and America are indeed very different economies and nation states, but at their very helms their respective presidents and leadership teams are more similar than the Western media has led us to believe.

We can see the tragic consequences of this lack capacity to deal with diversity, dissent and ambiguity in Europe. Our control-seeking European leaders have surrounded themselves with able career politicians and able administrators, but they utterly lacked strategic foresight over future developments, risks and threats. Not only in monetary, defense and security, also in energy matters. Despite being exceedingly dependent on Russian energy, the EU dared to expand territorially quite aggressively into the Buffer Zone (Eastern Europe) between Russia and NATO. That in my opinion allowed the nationalist hardliners in the Kremlin to rise to and consolidate power. The EU expansion deprived the democratic forces within Russia of any political future: Having lost more than 13 million of their own in WW2, Russians felt increasingly encircled by NATO and wondered if the pro-Western intellectuals were Western sympathizers. Sadly, the violent regime change in Ukraine only confirmed their fears. The EU went on to provoke Russia without preparing an alternative source of energy. Many EU leaders should be called EU managers. 

The USA and Russia seem interested in an escalation, fortunately a controlled one 

Our analysis shows that both, NATO and Russia are quietly building up a scenario in which a crisis could be sparked – with both sides wanting to advance their geopolitical interests through it. The potential scenarios are multiple, and a serious crisis is only one of the options. More importantly, both sides are behaving in a way that would allow them to de-escalate if their political goal is achieved. That makes the military outcome secondary – yes, neither Obama nor Putin are prioritizing territorial expansion at this stage as Russian or Western media are propagating. Thus, contrary to consensus, we ascertain, that political leaders and not unruly generals are driving this controlled confrontation. Things can change of course.

The current frictions and military moves fit so far the pattern of controlled escalation/de-escalation that was often used by the USA and Russia after the Korean War, where the USA, Russia and China later wished they could have spared the soldiers and civilians involved such a traumatic experience. We can say at this juncture: Russia and NATO are approaching and cautiously provoking each other confident they can control the political outcome. Russia is sending the message it won’t let NATO singlehandedly reshape the political landscape along the strategic Tigris River; Mosul is key for that.

Let’s look closer at the “timing” of this development.

We have multiple indications that Moscow sees as most likely scenario, that Obama wants US-led forces and tanks marching into Mosul in the eve of the US Elections; with CNN, ABC and CBS News broadcasting LIVE the liberation of the population. Also that Obama wants to carry that political momentum and troop morale into the Syrian Battle Theatre. Mosul secures control over the Tigris River and control over the Tigris and Euphrates rivers will decide this war. A Mosul victory will allow the Turkish military to solidify their positions in Eastern Syria and the Iraqi Army to control Mosul; it limits aspirations of Kurdish forces to join with Syrian combatants under Turkish occupation. It helps Washington win favor with Turkey and Iraq, at the expense of Kurdish aspirations. Nevertheless Kurdish men and women won’t go empty-handed, they will get the media attention. But if all goes well they won’t be allowed to enter and control the center of Mosul. Once the Tigris banks are in firm US-Turkish-Iraqi-Kurdish control, they can launch the next offensive into the vast Syrian desert, in order to control the Euphrates River banks.

The following map shows the latest stage of our own independent research and analysis of convergence of trends at aggregate levels as well as intel gathering. Mosul would seal the campaign for the Tigris. The Euphrates needs to be also secured to make any future pipeline defensible. The “prospect” of a pipeline is a geopolitical-economic weapon aimed at Russia and Saudi Arabia. 

Many Western experts are saying Russia is unnecessarily escalating the East-West tensions by sending its strategic Northern Fleet into an already “boiling” Middle East, risking possibly a major conflagration or WW3 (we deem this far-fetched). Our analysis is less dramatic: The Russian Fleet is accomplishing already the goal of warning NATO and boosting the morale of the Syrian Army soldiers and other Russian allies on the ground. Additionally it increases Moscow’s military options, though I currently see a 60% chance of Moscow pulling out the fleet or keeping it in safe distance. Morale is absolutely key in the desert. There it matters more than material and troops. Only strategy may top it.


Western military experts know about the essence of logistics in the desert. But those who have fought alongside or against Arab regular troops in the “mercy-less” desert tell that the morale of the troops often decides over victory or defeat, life or death. Few in the West appreciate this. That was well exemplified at several fronts in the Independence War of 1948, when 7 major Arab countries, including British-trained soldiers, decided to wipe out the re-born state of Israel. In May that year some 300 poorly armed men and women (Jewish settlers) defended their settlements with such bravery, they held back the main body of the invading Egyptian Armies. The sacrifice and courage of those settlers demoralized the thousands of Egyptian troops and no amount of tank & air support or British intelligence could help them. Five days later the main invasion from the South was collapsing. Moscow is rightly concerned about the USA taking the victory in Mosul right into Syria. Moscow’s problem is that many Syrian soldiers are battle-fatigued. Their morale is reasonably high thanks to the frequent presence of Russian intel officers at the battlefront. I’m convinced, Russia is effectively using Israeli tactics to keep their soldiers from being captured by Islamist groups.

I ascertain that President Obama delayed the assault on Mosul to let the liberation coincide with US Elections, at the margin helping Clinton. 

The first signs of this came when at the beginning of last winter, the offensive of the US coalition came to a standstill and lethal bombardments on crucial ISIS assets in the Iraqi-Syrian Battle Theatre became less frequent. Former Islamic allies were dismissed and the role of the Kurds changed. The defection of so called moderate Islamic fighters to Al Nusra and ISIS was long known, but timing was odd, because ISIS was on the retreat on multiple fronts and France had joined the war effort with great resolution. Military experts were told the collateral damage follow-up of the accidental bombing of a humanitarian hospital led to the change of strategy.  

Even if the victory effect will not match the “raising of the flag” during the battle for Iwo Jima (end of WW2), the emotional impact should not be underestimated. Timing matters: When General Patton’s Tank Army rolled towards Paris, he was told to slow down. De Gaulle’s army entered Paris first.  

But Obama is not alone; Putin did also soften his support for Syria in recent months. Iraq and Syria had fallen prey to their location in the geographic and religious maps, and now to US & Russian politics.

Both Russia and the USA deflecting into Foreign Policy tensions for domestic and regional interests 

When faced with a foreign enemy, the electorate in most countries rallies behind their commander-in-chief. And at the moment Presidents Obama and Putin are aiming to rally domestic political support for their respective causes. It is clear to me though, that the Obama administration initiated the so-called “Controlled Engagement” of Russia. Working actively to destabilize or bring down the regimes in countries that are allied with Russia: Ukraine and Syria.  Through “Forced Regime Change” Obama was sure to engage Russia and force it to intervene. As predicted, Russia reacted. As we have said before, we believe Washington outsmarted Moscow. If we are right, Western media has been spreading a biased narrative. At this stage of my analysis, I am convinced that since 2013, Moscow is in a desperate attempt to control the damage and gain the initiative. The response in Syria and Latin America were geostrategically so far successful, but overall Moscow has displayed a pretty predictable reaction. Military escalations would help Russia convince his Eurasian Customs neighbors to join Russia’s Federation. The same escalations would help the USA convince the Pacific Alliance nations of Latin America to join NAFTA in an American hemispheric economy.  

Europe underestimating threats from Iran, Turkey, Saudi Arabia and Russia

Apart from political calculations, I am convinced that most NATO leaders are overestimating the unconditionality and the extent of US support for the EU. NATO leaders are also underestimating Russia’s capabilities. There is a worrisome history of high-ranking Western military leaders underestimating Russia’s capabilities throughout the Cold War. And that condescending attitude towards Moscow is well alive these days in the circles of advisers around President Obama. The revelation that the US Nuclear Response Time is 4 minutes lays bare that the USA can effectively protect herself, but probably not Europe considering some tactical scenarios. Europe hasn’t done its homework at strategic and tactical level security. It looks utterly vulnerable in several respects and depending on US deployment of multiple missile shields. The missile defence stations planned in Poland and Romania will be critical as they could protect Western Europe against a missile attack from Russia, Iran and possibly Saudi Arabia. But that is only one type of threat and those nations may not wait until the stations are fully operational. A surprise short range/mid range missile attack on Europe in the near future may not be neutralized in time. The USA may well retaliate against the presumed aggressors – provided the source can be clearly identified, but Paris, Berlin and Rome may have been hit or wiped out already. 

Looking beyond US Elections: US Nuclear deterrence, Britain ahead of Europe 

What the US Elections and EU politics are revealing to potential enemies of the West is troublesome. A divided and morally decaying foe is an attractive target.

One day the extent of Clinton’s Email-Gate may well dwarf the Watergate scandal. But why are the scandals and moral decay of the West important for its security? It has to do in part with advancements in Cyber and EMP warfare capabilities, the modernization of Russian and Chinese ballistic assets, and possibly the disclosure by Mrs. Clinton of the US Nuclear Response Time. A strange coincidence that will be picked up by conspiracy theorists. I don’t use conspiracy theories. It goes against one of my methodologies: All nations pursue their national interests with all the means at their disposal. Thus, I don’t divide them into good and evil nations or groups in the analysis. 

EMP and cyber weapons do not kill people directly, but they can put out or compromise the chain of command and authority in a state (order and binding of resources); laying the ground for the main attack. Experts focus on their ability to destroy or disable communications and electrical networks, crippling an economy. But even a crippled nation where civil morality and respect still exist can stand. Japan showed this in 2011 when struck by a triple catastrophe. The more divided a nation and the more eroded its moral fiber, the more effective and lethal an EMP or cyber attack becomes. Such a combined attack can unleash lawlessness and looting within hours, forcing the government to declare the state of emergency or martial law. The army has to be unleashed upon its own citizens. The biggest problem is yet to come: An EMP or cyber attack cannot be traced to its real source without a doubt in a few minutes (country A can launch the attack from an unawares country B). Thus, a nuclear or massive response in a matter of minutes against a disguised enemy is difficult. During the following 48 hours the country can descend into chaos at a massive loss of life coming from the loss of power and lawlessness. Once debilitated, such a Western nation would be a much easier prey to concerted nuclear attack or invasion. This is only one of the many scenarios, where nuclear weapons could have limited use. The Mutual Assured Destruction (MAD) so many people still rely on today to explain the dismantling of their strategic armed forces is no longer accurate. 

It worries me more that enemies of the West and those seeking hegemony are adjusting or changing their strategies as they monitor the USA and EU in recent months. Those bent on hegemony and destroying the West are realizing the deterioration of Moral Authority in the USA is far more advanced than they thought. Mr. Trump is willing to zig-zag course even on National Security within one week, and Mrs. Clinton is willing to give away the exact Response Time the USA needs to launch Nuclear Ballistic Missiles, i.e. a Counter Attack. All that just to win a debate issue. That was a well-guarded secret in the US Ballistic Program since the 1950’s. The uproar in the Pentagon last week was huge. The talk was often of a few minutes, most likely 4 minutes. But there was ambiguity about it. That ambiguity is critical for maximum deterrence of any US enemies. Strategists and analysts of other nuclear powers had argued if the USA lets people believe it is 4, the real number would be most likely between two and three minutes. To have affirmation it is indeed 4 minutes could be a game changer. DNC people said, it is not so bad, after all it was the time many had presumed anyway. But I clearly disagree, and top Pentagon officials would have not reacted the way they did if it wouldn’t matter. I can only imagine what U.S. Strategic Command is doing now.

In case the USA faces a surprise Nuclear First Strike (please, don’t think of Russia only, China can launch one such surprise strike against the USA since 2015), a fast Response Time can decide over the survival of the USA as a state or superpower since we might be dealing with stealth submarines launching at close range. Getting missiles off the ground is not enough, they have to have accelerated on route to their targets. The 4 minutes given away by Clinton say something to foreign powers about the technological missile capabilities and procedures of the USA. Remember that unlike the USA, Russia and China have invested a lot of efforts and money in the past decade to modernize their Ballistic Nuclear Missiles, possibly shortening their Response Times. According to some reports US Ballistic Systems might still be operating with floppy disks. Political leaders gave it no money, because they thought the world will see peace and the new threats could be dealt with conventional forces. Despite the rise of new and unstable nuclear powers, Western leaders have completely relied on these two beliefs: a) the infallibility of Mutual Assured Destruction, and b) growing trade will deter anyone from going to war. It is clear that Western leaders don’t understand Oriental ways of thinking.  

The point I want to make is that this debate slip of a US presidential candidate in the current global context could mean 

  1. Those wanting to launch a surprise attack on the West have one crucial ambiguity less.
  2. It could further lead some Middle Eastern leaders to assume that presently the USA cannot effectively shield Europe from a nuclear surprise attack via short/mid range missiles. 

The idea of having a powerful nuclear arsenal and keeping your enemy in the dark about key parameters like your Response Time, is so that you’d never have to use it. It is to deter anyone that would dare to launch a Nuclear First Strike at you. That is why the first joint act of the British Government and Parliament after the BREXIT vote was to ratify the complete renewal of Britain’s Continuous At-Sea Nuclear Deterrence (CASD), starting the construction of new strategic submarines armed with nuclear missiles. With at least one or two of them always at an undisclosed Location with an undisclosed Response Time. When the EU decided to treat Britain like (say..) Switzerland, threatening tough consequences on the British if they dared to leave the union, the EU practically lost its Nuclear Shield and most effective military-geopolitical power. As I wrote post BREXIT, the EU has become a geopolitical dwarf for at least 7-10 years. A long time in National Security terms. Many believe the EU doesn’t need Britain, because it has NATO. Wishful thinking: a) a growing number of military leaders in the USA oppose NATO in its current form; and b) the USA cannot currently effectively shield the EU from a Nuclear First Strike. Paris and Berlin may be lost, before the USA strikes back in retaliation. The EU is geostrategically and militarily an exceedingly vulnerable super-state that has never seriously prepared for that kind of eventuality. EU leaders have instead dismantled all Strategic Armed Forces, leaving only operational brigade-size units. The rest exists mostly only on paper.  

Let us be clear, I don’t see any imminent nuclear exchange risk, but that risk is rising steadily since the US-Iran deal was signed. I see the Middle East on course for at least two large-scale wars. Iran and Saudi Arabia need probably two more years to ready their nuclear missile arsenals. Having said that Pakistan has ready mid-range missiles armed with nuclear warheads that could be shipped within months.

Another front has been readied for possible escalation: North Korea

The USA, Japan and South Korea are silently shifting their Defense Strategy vs. North Korea to “possible confrontation”. A senior US official reportedly said recently that any further diplomatic efforts on North Korea are useless. That kind of language has often preceded a tougher military attitude. The dialogue with North Korea has been indeed hopeless for some 8 years, but why does Washington say this 2 weeks before such crucial elections in the USA? China has joined Russia in complaining that the deployment of the new generation U.S. Missile Shield in South Korea will destabilise the Balance of Power in Asia. Since President Obama refused to delay the deployment, China’s relations with the USA have changed and cooled. And immediately after China showed its new policy bias, Asian neighbours made moves that I interpret as distancing themselves from Washington and showing some understanding for Beijing. Manila and Kuala Lumpur are not the only nations that despite ongoing tensions in the South China Sea are taking a more differentiated Foreign Policy stance towards the West. 

Christian Takushi MA UZH, Macro Economist & Strategist, released to the public on 5 November 2016 after adaptation.

General Disclaimer: Global Macro and Geopolitical Analysis are highly complex and subject to sudden changes. No analytical method is without certain disadvantages. We may change our 3-pronged outlook within less than 3-6 hours following an event or data release. Global macro analysis can be extremely time-sensitive and the first 24 hours after an event are critical for the response of a government, corporation, pension or portfolio. Only qualified investors should make use of macro reports and treat them as an additional independent perspective. Every investor should weigh different perspectives as well as “opportunities & risks” before making any investment decision. Not all our reports, research and intelligence is published here. What we release here is delayed and adapted. The research & views we post here for public access are aimed at fostering research exchange (to improve our assessment) and helping decision makers adapt their long term & strategic planning to changing realities, not for short term decisions. If you are not a qualified or professional investor, you should get professional advice before taking any investment decisions.

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