A Rough Estimate catch up

 

John Martin and Francis Kett look back at the most important events of 2020, covering the end of the Syrian Civil War, the rising role of Africa in western foreign policy, China’s financial pull-back from the world stage, and the year to come:

COVID-19

 

John Martin: “Well maybe the obvious one to start off with is COVID-19. I mean there's still ambiguity about when the virus actually started but we all heard about it in January, and then it became a global thing in early March. I'm pretty sure everyone's sick to death of hearing about it but it is something that has since affected everything else going on like the situation with China. The US is obviously massively affected by it. And you had the oil price shock earlier in the year and that's affected a lot of things especially in the Middle East. Then we've got a lot of pro-democracy protests happening around the world. They all seem to be at least partially related to COVID. Before that — it seems like a lifetime ago — the year started with the assassination in Iran and the impeachment of Trump, which all seems to be from another reality. But I think if we're talking about 2020 it's important to look back and see what was there before. I think COVID has been a catalyst that's made a lot of things happen faster.”

The poisoning of Alexei Navalny

Francis Kett: “Completely. A lot of what happened in 2020 was in a way a sped-up version of 2019 and 18. Take for example the Navalny poisoning. In the UK and we had a similar case in 2018 with the attempted murders of Sergey and Yulia Skripal, the cases this time just went slightly more under the radar  because of everything else which is going on. In April, you had the attempted poisoning of the mayor of Prague, Zdenek Hrib, and a few other Czech politicians, allegedly for trying to take down a statue of Marshal Konev, who is seen by the Russians as a hero who fought against the Nazis. The interesting thing about the first poisoning was that they tried to disguise it as though it was Covid-19, mimicking the symptoms back in early April, when not as much was known about the virus. Compared with the UK poisoning, it seemed a lot less targeted and much more reactionary. They see Prague as symbolically breaking its ties with Russia. And then they start to poison the mayor in response, and then the same thing happens with the opposition leader who is campaigning to root out corruption, putting Putin at his lowest approval ratings in the polls since he took office. After the poisoning of Navalny, Putin has a call Macron, where he tells Macron that Navalny actually poisoned himself to make Russia look bad. Macron explodes that and hangs up on him. It basically sours relations with Putin across the whole of Europe. It goes over to every heads of state in Europe, and of course, Merkel. It’s jeopardising a gas pipeline between Russia and Europe which the US are involved with trying to set up to help alleviate pressure on the Russians and keep them in the fold, called Nord Stream II. The end result could be a more isolated and aggressive Russia which continues to be hostile toward Europe.”

John Martin: “I think the big theme of probably the last five years is what’s perceived as the global shift towards a more authoritarian world order. It's not just the economic rise of China and, to a lesser extent, Russia, but it's more the fact that China, Russia and Iran have all started acting out more on the world stage, and that's coincided with America intervening less in world affairs. Obviously that’s coincided with what's seen in the West as the rise of populism over the last five years and it pretty much was 2015 where there was this big turn of events where everything seemed to change. I think the biggest misconception that's out there in terms of COVID is that China dealt with it relatively well and that in the US it's been a big mess. That's not true at all. I think the big story of COVID is that yes, it was bad in the US but it was probably more devastating in China. Obviously I write a lot about China but I think it's just that they've managed to cover it up so well. And yes, they backed off lock downs after the first four or five months but China’s economy is driven by exports and because there's so much less demand there's also very little room for economic growth. And so I think the big story of COVID is that it's really weakened, or destabilised, all the big powers like Russia, China and the US, even Turkey and India. And it's only really the small countries that actually dealt with it well. So Taiwan, Korea, Japan, and the Scandinavian countries. They're really the only ones that are the models for dealing with COVID, and you can point to a few others but that’s mostly it. That will be seen historically as the takeaway message that it's the small developed countries that were able to withstand the virus as they had the administrative capacity for it, and the bigger countries didn't.

Francis Kett: “Yes, an interesting point I was going ask you about was what you think of China's alleged recovery. I know we're seeing a lot of photos and events going on. Yes they had a big dip a massive GDP drop but now it seems that they are back in action and the economy is running again. What do you think about that?”

John Martin: “I mean definitely in places like Wuhan, and other areas in the early outbreak areas things are mostly back to normal. I have friends who are there and they can go about their lives just fine. But there are still lockdowns going on. There was a massive lockdown in Xinjiang for about a month that I think was only just lifted. And there's still many lockdowns in other cities, the media just doesn’t report on it or isn’t aware of it. So there's that aspect of it where the virus is by no means over in China. And then the other aspect is the death rates. In my view, they were far higher than probably any other country, certainly in terms of absolute numbers. And then there’s the alleged economic growth, these 6% figures that the government's coming out with, I think are total nonsense and no one should have any faith in them. I'm not gonna say it's like 1% but two or three is probably closer to the truth.”

 

Ant Group’s IPO

Francis Kett: “We were talking about this not long ago actually in terms of China's economic trajectory. One of the things I would point to as one of the most important events of the year, and you might disagree, is the attempted launch of Ant Group, which of course a Jack Ma’ owned company, grouped with Alibaba. You're probably better placed to go through that background.”

John Martin: “Yeah, I mean I'm not as connected as you to the goings on of the financial world, as I didn't really see the significance of it until later. But Jack Ma, if anyone doesn't know he's the head of Taobao and Alibaba so it’s like Amazon and Visa pay rolled into one. He was the richest man in Asia for a long time and he was this kind of flagship figure of this new generation of entrepreneurial Chinese. In 2018, Alibaba became by some measures the biggest company in China with more financial assets than any national bank so to have a private company that huge was unprecedented in China it had never happened before.”

Francis Kett: “From what I understand, the CCP has a bunch of loops and rings that you need to kind of jump through as a Chinese company, I understand, to classify yourself as a bank. Most of this involves showing some kind of allegiance to the CCP and obeying their regulations and not interacting with foreign investors too much. Alibaba is classified as a tech company and so was basically able to avoid that regulation, sneaking into being a bank by offering loans and credit products and insurance. That pushed the government into announcing the E-yuan, as a means of counterbalancing Alibab’s financial dominance in China. I think that's really what scared them about it because it is essentially a bank which, if it had launched with its IPO valuation, would have had a higher valuation than any individual CCP-run Chinese banks, most of it coming from foreign investment. Remember that the big four Chinese banks are the biggest banks in the world, bigger than any in the US, which a bit of misnomer because the biggest financial institutions now are the asset managers, not the banks. Jack Ma gave a speech calling out China’s financial sector as self-serving, right at the time when his privately-backed company was about to financially outpace any CCP-backed institution. That does seem to be the point where they drew a line in the sand and said, this is how far a private company can go in China.”

John Martin: “I think it might have been that speech because I do remember that at the last minute the government seemed to be trying to stop the IPO from being launched. And then Jack Ma was sort of made to appear on Chinese TV apologising to the police for embarrassing the nation. And there was this video made of him discussing it in an office with a painting of a cloud in the shape of a horse behind him because that’s his name in Chinese.”

Francis Kett: “What is the joke, sorry?

John Martin: “His name in Chinese means “horse cloud”. So in the background of the video this painting appeared of a cloud in the shape of a horse and there was speculation that some CCP agent had made that appear there as a way to just demean and mock him. It sounds a bit strange but it’s the kind of thing they do.

Francis Kett: “Hmm, that's interesting.”

John Martin: “And it is a continuation but it’s also quite a big event just like Jack Ma stepping down in 2018. Because this is happening at a time when the government is unveiling all these global projects like the new internet infrastructure called the Hongyun projects where they're trying to basically rival Elon Musk's Starlink network. They're trying to make this banking infrastructure at the same time. In 2018, they created these massive data centres all over the country and it's tied into the 5G thing so it all goes back to the CCP’s attempt to try to give itself global leader status in things like AI and internet technology. Jack Ma I think just got in the way of these projects and that’s why he was pushed to the sidelines.”

Francis Kett: “In a way, it’s not dissimilar to what was happening with Facebook trying to launch its own digital currency called the Libra, which they announced last year. The original project to launch a currency which would be backed by a basket of other currencies, but Congress got involved and made it so they are only allowed to link it to the US dollar, not other currencies. They are afraid that it would eventually threaten the US dollar’s financial dominance in the global markets.”

John Martin: “That would be the same problem they've been having with the real US dollar which is that it can become undervalued because of buying other currencies. Which was the whole reason for the trade war in the first place. “

Francis Kett: “Exactly. If you think about how successful China's investments have really been in other countries, we’ve talked about the Belt and Road initiative, do you think after coronavirus there might be a speeding up in those kind of debt diplomacy activities, whether its buying ports in Sri Lanka and Poland, or do you think they will pull back from those kind of grandiose projects?”

John Martin: “I think they'll pull back. I don't want to make a certain prediction but they’ve just been very unsuccessful to be honest. I mean, the Belt and Road for example declared nearly $100 billion in non-performing assets is in essentially a loss of $100 billion. That's like the GDP of many countries in Asia. So you can argue there’s some long term strategic advantage to them. But in terms of the investment they don't get their money back. So I think because the economy is not really recovering that much it's going to be very hard for more investments to happen. Many things will continue because of Xi Jinping’s plans but I think the reality is that there won’t be enough money. And we’ve seen a shift from Xi Jinping towards Li Keqiang who has pushed a message of focus more on the domestic economy. And I think the average person in China identifies a lot more with that than they do with these global strategies.”

 

Belarusian protests

 

Francis Kett: “China was pulling some strings in Eastern Europe this year. They funded a lot of infrastructure in Belarus, and obviously they've been having huge protests this year over Parliamentary issues, which the Russians have also been funding. Geographically Belarus has always been one of the countries, which was closely tied to the Soviet Union. There's a really interesting anecdote about when Yeltsin was a power in Russia and the president the current president of Belarus, Alexander Lukashenko, tried to annex all of Russia. Yeltsin was the first elected president of Russia and becomes quickly embroiled in a bunch of corruption scandals, which leads him to bringing in Putin as a head of the FSB, and eventually placing him as an interim president. But before he does that, he is basically looking for a propaganda victory, and one of the things he tries to do is to make Belarus part of Russia. And so Lukashenko surprisingly agrees to this. The reason was because he'd actually gone through a lot of backdoor channels to meet with all the other politicians who opposed Yeltsin and get them to support him so that he could run and replace him in the next election, since he would then be a Russian citizen, which would allow him to annex all of Russia into Belarus.”

John Martin: “He sounds like an ambitious guy.”

Francis Kett: “He certainly is. Talking about the rest of Eastern Europe, but Poland was the country where the head of Huawei arrested back in 2019. And then Serbia and Romania also said to the Chinese Premiers that they don't want anything to do with them if they're going to negotiate in bad faith, essentially. And as you said, for spending the equivalent of the GDP of small nations, they don’t have too much to show for it. If their goal was to destabilise politics within the EU they've certainly done that – Hungary basically uses China's financial offers as leverage to negotiate better terms with the EU – but in terms of actually getting influence over those countries, there’s little evidence of it. Most Eastern European countries have cut ties. They’re loyal to Chinese money, but beyond that, they don't have much sympathy with the CCP or any their political goals.”

John Martin: “Yeah, I agree. I think the real story is that Chinese economy is so massive that they have these investment projects everywhere. So it looks like this master plan to take over the world. But the reality is that in most of these areas they don’t get much for their money. The most interesting thing is that if you look at the countries that have somewhat aligned with China they map very closely onto the countries that were aligned with the Soviet Union during the first cold war. Serbia is a big example in Europe but also Nicaragua, Venezuela, and even Ethiopia and Angola which are formerly communist countries in Africa. So what’s happened over the last ten years is that there’s been this backlash against globalisation. And the result is that many countries don’t see this trade with China as the advantage that they used to, they know it comes with strings attached and makes them vulnerable to sanctions and infiltration because we have examples like Australia. So I think we’ll see more of this global decoupling.”

Francis Kett: “I find it interesting that people are already using the term “second Cold War”. It’s accurate, I think, except the roles are switched. China is the main adversary instead of Russia, is the narrative. The story seems to be that Russia is still playing a role, and that it's still broadly the Western Allies versus the former Soviet countries. But in reality I think it's really very different. Russia really can’t be called communist anymore, even though China can. There also seems to be less chance of aggressive confrontation or proxy wars like Vietnam in this Second Cold War, so far anyway.”

John Martin: “Yeah that's the good news, though it seemed to come close with India and Taiwan. That seemed to be something that was very, very risky even just a few months ago but has since died down.”

 

Middle-East peace deals

 

Francis Kett: “I mean there is some good news, yes. One of the things which has really gone unnoticed in 2020 is the fact that the Syrian Civil Wars has basically concluded, although there is some fighting in the North. People are going on holiday to Damascus, and ISIS has largely been driven out of the region. Al Assad is still very much in control, which isn't the ideal situation, but it looks like peace is holding for now. There have also been a lot of peace deals all over the region.”

John Martin: “But it’s not just the peace deals with Israel, at the same time we've had at least a partial end to conflicts in Yemen, and a potential deal with the Taliban in Afghanistan. So I would say it seems like what's been pretty much the story of our lifetimes — the endless wars in the Middle East — may be finally coming to an end.”

Francis Kett: “We don't want to speak too soon. If Syria is about to conclude, it will have been a ten year civil war, which really put things into perspective. Even with the peace deals, I don't think proxy conflicts in the Middle East are over, I think it's just about to shift slightly to North Africa. The conflict in Libya is not concluding anytime soon. Basically, the Russians and the French are opposing an EU elected government, backed by the US and a coalition of allies including Turkey. Both Russia and Turkey are sending private militias to fight each other in the middle of it. We’ve just had a coup in Mali, and Algeria is breaking ties with the French. Nigeria is also one to keep an eye on, because its economy is mostly funded by oil exports, and we talked about the plunge of oil prices in March. That’s why I think the focus of civil wars and proxy wars may shift to Africa, which China is also heavily involved with. So that might be interesting.”

 

The conflict in Ethiopia

 

John Martin: “Again I think COVID was a huge factor in the conflict in Ethiopia, although the conflict there mostly seems to be over. It seems to now be a bunch of guerrilla fighters in the mountains but they seem to have avoided a civil war by acting quickly. The fighters are Tigray and they were the ethnic group that have been in power since the 90s. In 2019, the guy who won the Nobel Peace Prize last year Abiy Ahmed essentially ended their rule and came to power in a coalition. But the Tigray People’s Liberation Front whose members include Tedros Adhanom current leader of the WHO decided to retaliate by killing and attacking local supporters of the government.

Francis Kett: “The interesting thing about that was is that Ethiopia essentially has written in its constitution that none of the factions or provinces of Ethiopia are under the rule of the central government. Really the conflict was the death throes of the last Tigray dictatorship. The sitting president is from both Oromo and Amhara heritage, the other largest minorities in Ethiopia, and was seen as a peace broker and a compromise between different factions. But the Tigray were never fully opposed, they left layers of control over the government which have slowly been peeled back. This was their last attempt to try and take back what they had lost. So I think it could actually be a turning point for Ethiopia where bubbling sectarianism is able to simmer back down and maybe stay away for good.”

John Martin: “I just want to point out quickly that obviously we’ve been talking about the negative trends in Africa but I think it's important to realise that over the last five years there's been a lot of positive trends. Even though there are many dictators still there they tend to basically be forced out every five to six years. You had the overthrowal of Al Bashir in Sudan, you had Mugabe in Zimbabwe a couple of years before. Also, in Angola, the president there was thrown out. Same thing happened in Senegal aided by the African Union. And so overall the trend in Africa is pretty positive, I would say.

 

Chilean constitution rewritten

 

Francis Kett: “Sudan has just gotten off the terrorism list, which will open it up to foreign investment. But Sudan has really gone from a country which looked like it was about to be on par with the Congo, to a country which might end up being one of the success stories of Africa if it continues on same trajectory.”

John Martin: “Yeah the other interesting global trend is the outbreak of protests around the world that happened this year but also happened a lot in 2019. Again it seems like a lifetime ago but last year there were global protests, Hong Kong was the biggest one but you had huge ones all over Latin America that forced out Morales in Bolivia and several in Europe. So this year seems to be kind of a continuation of some of that with Iran, Thailand, Belarus, Kazakhstan, and Kyrgyzstan. They appear on the surface to be mostly anti-corruption protests, and in some cases they are openly pro democratic, definitely in Belarus in Thailand. But in most countries they tend to just be against corrupt leadership which seems to be the trend.

Francis Kett: “In Bulgaria as well there was huge anti-corruption protests, they were on their 200th day of protest when I was there this year. The Chilean protests last year were the fourth biggest protests in the world. They succeeded in rewriting the Constitution, and I mean remains to be seen how it's going to affect the economy and everything else, but one of the things it might possibly will do is shake up the oligarchic families which dominate politics. For the last decade it has been a back and forth between Sebastián Piñera and Michelle Bachelet for the past 10 years or so. I think overall there are a lot of positive trends in South America. Bolivia as well has also stopped itself from huge civil conflict, but also managed to make big progress on corruption. There are some happy stories, looking at what 2019 and 2020 as a whole.”

John Martin: “On the whole I think it's a good thing because we do live in a time where there appears to be an authoritarian resurgence and a decline of democracy. I've written about why I think that is. The truth is a lot of developing countries have governments that sort of resemble oligarchies. They're not really democratic and they’re not really dictatorships they’re more like corrupt aristocracies. So that's why you get these protests. Although there haven't been many real democratic transitions, it didn't happen in Thailand and it didn't happen in Belarus, those have pretty much been suppressed. But they do limit the ability of governments to seriously abuse their power.

 

The 2020 United States Presidential Election

 

Francis Kett: “Yeah, definitely. We haven't really talked about the US elections yet. It's a bit like Covid in the sense there's been so much written and said, but it’s hard to ignore.”

John Martin: “Yeah Covid seems to have created all kinds of issues with the ballot counting and there’s apparently no real way to actually verify the process. And that’s the current source of contention. But for now it does seem like Biden will probably be president with Kamala Harris playing a large role. But it’s really an open question about what will happen then because over the next few days we’ve seen mounting threats from the Republican states. Basically most won’t recognise the authority of a Democrat president unless there's a full investigation into the vote counts. So it almost seems like there will be a partition of the country along these lines where the two parties effectively govern their own territories and don’t recognise the authority of the other. A kind of legal civil war.”

Francis Kett: “It's really fascinating, looking back at the impeachment. I think it ended up as similar to the first impeachment of Andrew Johnson, who became president after Lincoln was assassinated. What’s interesting is that he was a Democrat, whereas Lincoln was obviously a Republican, but such were the times that they ran on a joint ticket. He’s impeached over a technicality, led into a trap by the opposition party who use it as a political cudgel, resulting in him eventually losing the next election. I think it will be interesting to see how much of a role Kamala plays, because Biden has already hinted that if there was a disagreement between him and Kamala that he is likely to step down. It’s not clear how much of a gaff it was, but he even seemed he could ‘contract a disease’ if the disagreement was unresolvable, which apparently is something he also discussed with Obama.”

John Martin: “Yeah and he never comes out afterwards and clarifies about what he meant to say. The reporters just ignore it and everyone’s supposed to pretend nothing happened like this bizarre Truman show facade.”

 

The Hunter Biden scandal

 

Francis Kett: “One of the things that I've noticed was about the Hunter Biden scandal, because that essentially came out a few weeks before the election. There was essentially a consensus across most Democrat-allied media in the US that they weren't going to cover it until the election was over. Glenn Greenwald, for anyone doesn't know, is the journalist responsible for the Snowden leaks, which led to the rolling back of the Patriot Act, where the NSA was found to be spying on 1000s of Americans. Snowden talks about how they had a shout-out system if a subject you were watching on their webcam started undressing in his autobiography. Glenn Greenwald arranged those leaks and is responsible for getting them out, along with a few others. After that, he started his own publication called the Intercept. During the election, he tries to publish an article on Joe Biden’s activities as Vice President, paying visits to Ukraine to essentially pressure the Ukrainian government to fire investigators looking into of his son's company, which you might think is at least worth talking about. He then has to step down from his own publication, which refused to publish the article. So the interesting thing for me was to see if the rest of the media were going to continue with the memory holding of the scandal, or if it would just take a break during the election. The latter seems to be what's happened because it's now back in the news. The coverage seems to be so selective that it can essentially be switched on and off by politically sensitive periods because of the personal goals of editors and publications which lean in a certain political direction.”

John Martin: “Yeah in the last few days most of the media came out and basically said “yeah, we covered up the Hunter Biden scandal. It was a real thing that happened but we covered it up because we wanted to win and remove Trump.” So the attitude is sort of like, well, what are you gonna do about it? I think this is one of the biggest issues because how is anyone who's not rooting for Joe Biden supposed to trust anything the media says? So there's really no shared language between the two sides, and I’m not someone who buys into the whole “End of the American Empire” type reading of history, but it does feel as though it is one of these pivotal moments like in Roman history when the Empire was divided between different emperors. It feels like a real crisis point.

Francis Kett:  “I think they decided to change how they would handle their coverage because of 2016. They covered the WikiLeaks emails which showed, among other things, that Hillary Clinton had been given questions ahead of CNN interview and also that the DNC was working to prevent Bernie from getting the nomination. It’s hard not to conclude that those email contributed to Trump getting elected. I think they thought it was their responsibility to make sure that Trump didn't win, and that if that meant that they wouldn't cover certain issues, then they were willing to do just that.”

John Martin: “The other side of it though is the conformity of the media and their collaboration with social media conglomerates. Now YouTube's banning any videos that talk about voter fraud and most tech companies are completely onboard with political censorship. I've never bought the idea that the coverage of Hillary's emails lost her the election. I think people already knew that she was corrupt. But the difference is that in 2016 there was very little internet censorship about politics. So it was easy for anyone to find negative coverage about Hillary, and that was popular in internet subculture. Whereas in 2020 negative videos about Biden were actively censored by Facebook, Youtube and Google. It was happening throughout the year and I think that's in a sense the more worrying trend.”

Francis Kett: “It does make you wish that Trump could have done more to break up big tech while he was president. Maybe he still will in the few weeks he's got left. There is an encouraging law which just got passed where Facebook might have WhatsApp and Instagram sold off, effectively breaking them up. Those tech giants are also going to be heavily regulated in the UK post-Brexit, from the look of things. It's unclear if the Biden government will actually roll some of them back. My gut feeling is that they actually won't. I think a lot of people on the Democrat side are worried about it too, perhaps not to the same extent.”

John Martin: “It seems like they’re trying to return to the policies of the Obama administration to be honest.”

 

The rise of government debt

 

Francis Kett: “Looking at 2021, I think at one point, there'll be a bailout of at least one southern European country. Maybe Italy, but possibly Spain as well. It depends on the extent to which they're able to push through emergency financing. The “frugal four”, meaning Denmark, Austria, the Netherlands and Sweden are against paying for the rest of Europe. The institutions will continue to flounder. At the moment, they are trying to impose sanctions on Belarus, but they can't because Cyprus is blocking it. You wonder how Cyprus is involved. The answer is they’re not involved at all, they just block it because they want the EU to impose sanctions on Turkey, but they can’t put sanctions on Turkey because they have the threat of flooding Europe with migrants like they did in 2015. So because of the veto system the EU continues to be fairly crippled on the world stage and that is only going to get worse unless it reforms, which, if Brexit is anything to go by, is unlikely.”

John Martin: “I have a feeling that the end of COVID might actually set some things in motion that right now are being prevented from happening because COVID is still ongoing. I think there's a potential for a huge conflict between the US and China that the end of COVID might just see the beginning of. But apart from that my other prediction is that you'll see a kind of polarisation where democratic countries become economically and politically aligned against authoritarian countries which will also become more aligned.”