20 highlights
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Among the rare joys of writing a weekly newsletter is the ability to pretend you’re an expert on everything under the sun. That way the last 2 years has been a gift that has kept on giving. Science of epidemiology, methods of lockdown, the efficacy of vaccines, how fiscal stimulus should be structured, what to do about China, the transitory nature of inflation or the long-term impact of working from home - there’s a wide swathe of subjects that I have claimed expertise on. The only thing missing was war. This week God, Putin heard me.
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There’s so much talk about higher-order morals in international relations that you can easily be taken in by it. Well, my view is that most of that stuff is garbage. The naked truth about international relations is grotesque. It needs the garb of pious intentions. And this becomes clear as daylight when you have a war. As much as it is a humanitarian crisis that saddens you, war is also a moment when all pretenses fall away. And you see the truth.
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So, what are the truths that emerge from the Russian invasion of Ukraine? The usual response to that question is about Putin, his ego and his frailties, his hegemonic ambitions and his desire for leaving behind a legacy that might appear dubious to us but important to him.
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In summary, Putin doesn’t like democracy in his neighbourhood, especially in countries with large Russian speaking populations. He fears any success there will have a risk of such ideas being transplanted and taking roots in Russia. So, he has to act.
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Firstly, there was a view gaining strength in the past decade that the interconnected nature of global trade and funds flow allows those who orchestrate them to wield tremendous power. An example of this was the way Iran was brought to the negotiating table by the US by freezing them out of SWIFT, a global financial messaging system that’s the spine that supports the money flow across the world. The term that’s often used to explain this ‘weaponized interdependence’.
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Weaponized interdependence (WI) is defined as a condition under which an actor can exploit its position in an embedded network to gain a bargaining advantage over others in a contained system
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Liberals claim that globalization has led to fragmentation and decentralized networks of power relations. This does not explain how states increasingly “weaponize interdependence” by leveraging global networks of informational and financial exchange for strategic advantage. The theoretical literature on network topography shows how standard models predict that many networks grow asymmetrically so that some nodes are far more connected than others.
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In particular, two mechanisms can be identified. First, states can employ the “panopticon effect” to gather strategically valuable information. Second, they can employ the “chokepoint effect” to deny network access to adversaries.
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As we have seen in the past few days, this all-seeing, all-knowing panopticon (like the SWIFT) hasn’t worked as a deterrent against Russia. The Biden administration sanction order sounded like we will see a complete freeze on SWIFT for the biggest Russian banks and energy companies. But tucked under a subclause in that order was an exemption for energy companies. Hah. I mean what are you left with on sanctions if you exempt the Russian energy sector. So, the question is why was this carved out? There is only one answer.
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All the networked interdependence by itself doesn’t create real, hard assets on the ground. It only facilitates their trade in a manner that reduces friction. Real world operates a step removed from this. Russia has cheap energy and the EU needs it. And the EU doesn’t love Ukraine more than the cheap, assured heating in their homes. That’s the reality.
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The other truth to appreciate is the hollowness of nuclear power as a deterrence to any potential escalation of conflict.
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Viewed from a perspective of deterrence, what was unwritten was the non-nuclear-weapon state would do good to ally with one or more nuclear-weapon states who would, in turn, help them in case they have to face off a nuclear state. I mean that’s the kind of thing Taiwan depends on. That the US will defend it in case China threatens to send over a few nuclear warheads their way. What’s the basis of this touching confidence in another nation? This is where things get nebulous. It is some kind of a commitment to values of friendship, liberty, human rights and, perhaps fresh air. Maybe this was true for a while in the post WW2 kind of polarised world.
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Those whom the Ukrainians trusted to come to their aid aren’t raring to get into their battle fatigues. There’s no urgency there while the Ukrainians huddle in their bomb shelters. It is an object lesson for the other smaller nations who are watching this.
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What’s happening in Ukraine is the crystallisation of the truths that were evident to all post 9/11 but difficult to prove. That truth is in front of us. You can talk forever about common interests and shared values. It means zilch.
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Whether Russia installs a puppet regime in Ukraine or not, the incoming sanctions of a united West are going to make it even more dependent on China. China for its own sake is hasn’t been overly appreciative of Russia’s warmongering, but the two states still remain close.
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India would come under significant pressure from both the US and Russia to show support for either side. Given its military overdependence on Russia (something we wrote about in the previous edition) on one hand and the overwhelming agreement with the west on countering China on the other, India’s choices have become more constrained
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Three years ago, the city government banned advertisement hoardings outright. The reasons: hoardings spoil the city’s aesthetics, cause visual pollution, and are a threat to drivers’ safety. After a number of contortions, this ban still stands.
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This week I came across an educational PolicyWTF courtesy that evergreen fount of knowledge: Bengaluru’s roads.
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And what does this ban do? First, it has pushed all advertisement hoardings just beyond the city government limits. Second, it has allowed illegal and more unsafe hoardings to come up.
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As for aesthetics and visual pollution? Seems like ‘isomorphic mimicry’ to me. With the GST taking away taxation powers of city governments, non-tax revenue through leasing land and advertisement space has become even more important.