March 24 2022 Edition
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Sadly we have seen no progress at all in getting a resolution of the Russo / Ukraine war. It is just truly awful. What role China is playing in all this continues to be obscure.
Otherwise in the US it is partisan politics as usual with 7 House Republicans even opposing helping Ukraine.
The UK seems to be leading the efforts on Ukraine in Europe as the rest seem to recognise they have been asleep at the wheel on the Russian threat.
In OZ we have seen a change government in South Australia while we approach a Budget and election pretty soon.
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Major Issues.
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Inflation threatens global bear market for shares
Tom Richardson Markets reporter and commentator
Mar 13, 2022 – 4.57pm
Equity investors face another white-knuckle week punctuated by the US Federal Reserve’s first post-pandemic interest rate hike, war in Europe, and fears that soaring fuel prices will demolish the global economic recovery.
Despite the risks, Australian equity futures point to a 0.3 per cent gain on Monday as investors eye energy and commodities businesses likely to ride price inflation that reached a 40-year high of 7.9 per cent in the US in February.
Market consensus forecasts are for the US Federal Reserve to deliver a 25 basis point cash rate rise on Wednesday in an initial effort to contain inflation, after Russia’s invasion of Ukraine lengthened the odds on a 50 basis point lift.
“I suspect the Fed will buy themselves some time to see how the Ukraine situation unfolds,” said Andrew Mitchell, a portfolio manager at Ophir Asset Management.
“This meeting is one of the quarterly ones where they update their projections or ‘dot plots’ and we’ll probably see that [forecast] double to six 0.25 per cent rate hikes this year, up from just three expected last December.
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Foreign students back to pre-pandemic numbers
Julie Hare Education editor
Mar 13, 2022 – 2.07pm
International student numbers at universities and vocational education have bounced back to above pre-pandemic levels, with the number of students commencing studies higher than in 2019.
However, that is at odds with the English-language and school sectors, which have both been decimated and show no signs that students are responding in any significant numbers to the reopening of borders.
In January, federal education data shows that 3670 new students had enrolled in higher education courses, 100 more than the same period in 2019. For vocational education, the number was 22,783, or 2500 more than in 2019. However, overall numbers have plummeted as students graduating or leaving have outnumbered new enrolments.
For schools and English-language courses, the numbers are dismal. In January 2019, there were 50,469 overseas students enrolled in English language courses and 19,630 in schools. By 2022, those numbers had collapsed to 8187 and 8337.
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‘Bonds won’t exist in 10 years’: Vimal Gor quits Pendal, joins crypto
Jessica Sier Journalist
Mar 14, 2022 – 5.00am
Fixed income manager Vimal Gor has quit his post at Pendal Group to join crypto advisory firm Trovio and reckons government bonds will vanish within a decade and be replaced by fundraising through central bank digital currencies.
Mr Gor, who was Pendal’s head of bond, income and defensive strategies, will bring his five-person team across to Trovio, where he will head up its digital asset funds.
He said he had become bored working in traditional debt and currency markets and saw a future where digital currencies issued by central banks would let governments tap pools of liquidity in “decentralised finance” to raise debt.
“I’ve been sitting talking about the dollar/yen for 30 years and, believe me, it’s very boring,” Mr Gor said.
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https://thenewdaily.com.au/finance/finance-news/2022/03/14/alan-kohler-morrison-budget-pressure/
6:00am, Mar 14, 2022 Updated: 9:04pm, Mar 13
Alan Kohler: Oh Lord make us fiscally chaste, but not yet, says Morrison
The Prime Minister’s speech to the Australian Financial Review’s business summit last week was a classic of having it both ways, of saying one thing and then immediately saying the opposite.
He declared that he’s “never been caught up in the hoopla” of President Biden’s “Build Back Better” set of ideas and policies which, he said, try to “replace our market-based, business-led growth economic system, with a government-centred reimagination of global capitalism”.
Then, straight-faced, he listed all the things his government is doing to build Australia back better, and it was quite a lot – most of the speech, in fact.
It was a case of Hayek then Hobbes, Ronald Reagan then Lyndon Johnson, and the central question for the 2022 election is whether Scott Morrison can pull off this feat of sophistry.
That is, can he and Treasurer Josh Frydenberg continue to spout conservative small government theology while presiding over the biggest government in living memory, getting bigger.
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Solid SMSF strategies in volatile markets
How to turn your thinking around on share price falls and realign your portfolio with your long-term goals.
Tim Mackay Contributor
Mar 14, 2022 – 5.00am
With markets reeling from the Russia-Ukraine conflict, energy costs and inflationary fears, what should self-managed superannuation fund investors do?
To put current market volatility in perspective, the S&P/ASX 200 fell more than 1.5 per cent on only eight trading days in 2021 at an average fall of 2 per cent. In the first two months of 2022, it has already done this on five trading days at an average fall of 2.5 per cent.
Volatility is back in a big way. Between August 2021 and January 2022, the ASX 200 fell 10 per cent – a “correction”.
Psychologically this can be jarring. At the same time your emotions are urging you to do something, the finance industry simply repeats the mantra “do nothing, don’t look”, whatever the circumstances.
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Scientists find ancestor of the vampire squid: it isn’t Goldman Sachs
Lindsey Bever
Mar 14, 2022 – 9.47am
Palaeontologists have identified the earliest known ancestor of the octopus and vampire squid – and named the newly discovered species after US President Joe Biden.
Perhaps surprisingly, they did not name the creature after Goldman Sachs, the US investment bank famously described as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money” by Matt Taibbi in Rolling Stone magazine.
The more than 300-million-year-old fossilised Syllipsimopodi bideni, a vampyropod, was unearthed from the Bear Gulch Limestone in Montana and donated in 1988 to the Royal Ontario Museum in Canada. There, it sat relatively unstudied until paleontologists from the American Museum of Natural History slid it under a microscope.
They noticed that the fossil resembled an octopus and vampire squid, but with 10 arms instead of eight, two rows of tiny suckers and what appears to be an ink sac – the organ that produces the ink that octopuses and squid spray in self-defence when escaping from predators. The findings were published last Tuesday in the journal Nature Communications.
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Inflation-linked bonds: what they are, and why investors are turning to them
By James Gerrard
5:07PM March 11, 2022
It is a perilous time to be a bond investor with negative returns when inflation is factored in. And it is not only the frugal rates of interest that is the source of the problem, we now have rising oil prices and supply constraints leading to a sharp spike in inflation, technically known as cost-push inflation.
Around the world, investors have reacted by moving large sums of money away from traditional bond investments to “inflation-linked bonds” to counteract the current and future anticipated inflationary impacts on their bond portfolios.
We have already seen inflation hit the US economy with the January CPI number coming in at an annualised rate of 7.5 per cent, a 40-year high.
Economists warn that President Joe Biden’s recent announcement to ban Russian oil imports is likely to push inflation above 10 per cent in the coming months. Indeed, US Federal Reserve chairman Jerome Powell has retired the use of the word “transitory” when he speaks about inflation.
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Government bonds will survive crypto era, but look different
Cecile Lefort Markets reporter
Mar 14, 2022 – 1.40pm
Risk-free government bonds will be forced to modernise, but they will not be extinct in 10 years’ time, argue fixed-income experts responding to bond veteran Vimal Gor’s claim that sovereign debt will vanish within a decade and be replaced by fundraising via central bank digital currencies.
Technology will play a bigger role in the bond market, just like synthetic products expanded from less than 10 per cent of the market two decades or so ago to more than half of today’s bond trading volume.
Fixed-income managers acknowledged that intermediaries, such as banks, could eventually be replaced by platforms that will efficiently transfer bond securities from the government borrower to the end investor.
“It’s probably a sound argument. The current technology is old,” agreed one bond market player. “But it is not clear to me that the government bond market is inefficient.”
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Bonds are the ballast in an investment portfolio
A well-diversified portfolio may not deliver the best returns, but it will never be the worst either.
Jean Bauler Contributor
Mar 15, 2022 – 5.00am
The role of bonds – in particular, investment-grade bonds – in a well-diversified investment portfolio has rarely been more important. However, a quick search of the term “bonds” on various social media platforms often turns up comments from investors lamenting the performance drag of bonds on their otherwise well-performing portfolios.
These comments are often rooted in the misplaced perception that bonds, like equities, are growth assets that should deliver the same performance outcomes in a portfolio. But just like how we recognise that purchasing fuel and insurance for our cars serves different purposes, we should also acknowledge that equities and bonds play different roles in an investment portfolio.
Investment-grade bonds are the ballast in a portfolio when equity prices head downward. Although past performance is never a guarantee of future results, history has shown that bonds are the much-needed shock absorber for the times when equity prices fall.
When share prices worldwide sank an average of about 34 per cent during the 2008 global financial crisis, the market for investment-grade bonds returned more than 8 per cent.
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https://www.afr.com/technology/pm-s-chip-supply-plan-a-mammoth-task-20220311-p5a3ru
PM’s chip supply plan ‘a mammoth task’
John Davidson Columnist
Mar 15, 2022 – 5.00am
A plan mooted by Prime Minister Scott Morrison to gain national or allied-nation control over semiconductor supply is going to be a “mammoth” undertaking if it is even possible at all, electronics manufacturing experts have warned.
And even if companies such as Intel succeed in restoring supply capacity to the US, there are still too many Chinese and Taiwanese suppliers involved in lower tiers of the supply chain to hope to replace them all, experts say.
Last week Mr Morrison listed semiconductors as one of seven industries over which Australia needs to gain national sovereignty, working with “like-minded” countries such as the US and Japan to mitigate against the supply chain problems that have plagued industry for two years.
“The overlay of an uneven global recovery from the pandemic, unprovoked military aggression in Europe, an energy and commodity price shock, and continued geostrategic risks in our own region creates a highly complex and risky external environment,” Mr Morrison told The Australian Financial Review Business Summit.
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Australian workers are at least $800 worse off as cost of living outstrips wage growth
NCA NewsWire
March 15, 2022
The average Australian was more than $800 worse off last year than they were in 2020, as the soaring cost of living outstrips wage growth, according to the Australian Council of Trade Union.
President Michele O’Neil will tell the Australia Institute on Tuesday that Australian workers are suffering from the steepest cut in real terms in more than 20 years.
In her speech, two weeks before Treasurer Josh Frydenberg hands down his budget, Ms O’Neil will say that a worker with an average income of $68,000 last year had their wages fall by at least $832 in real terms due to accelerating inflation.
According to the Australian Bureau of Statistics, consumer prices rose 3.5 per cent in 2021 while wages grew just 2.3 per cent.
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Blame-shifting and stunts won’t win Morrison an election
Award-winning political commentator and author
March 17, 2022 — 5.00am
When Scott Morrison came under frenzied, sustained assault last week over his handling of the flood emergency, there was one person who did not come out swinging. Anthony Albanese.
The Opposition Leader’s response was – by conventional political standards – restrained. He encouraged people to heed the warnings, while urging governments to provide whatever support people needed wherever it was needed.
He stopped being his own attack dog.
While he was lauding the achievements of women on International Women’s Day – then promising in speeches on the economy and foreign policy to be part Bob Hawke, part John Howard and part Kevin Rudd – the person spearheading Labor’s assault on the Prime Minister’s handling of the crisis, and landing direct hits, was his disaster and emergency management spokesman, Queensland Senator Murray Watt.
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Mean girls and boys’ clubs plague all the parties
Once more in politics, we have serious allegations being levied by friends of a dead woman. This time, however, it concerns Labor.
Phillip Coorey Political editor
Mar 17, 2022 – 8.00pm
One of the many to offer condolences over last week’s tragic and sudden death of Victorian Labor Senator Kimberley Kitching was the Dalai Lama.
In a letter to Kitching’s husband Andrew Landeryou, the spiritual leader of the Tibetan people expressed his sadness at the death of “our good friend”.
“Senator Kitching was a steadfast supporter and a friend of the Tibetan people,” he said.
“As you know, I had the opportunity to meet her when she visited Dharamsala in 2017 with a delegation of parliamentarians.”
There are not many MPs, let alone obscure backbenchers, who would receive such a shout-out from one so distinguished, especially someone who had spent such a short time in Parliament.
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Kitching’s death casts shadow over Albanese’s pitch to be PM
The Labor leader has to shut down a brutal insight into how his party works just as he emerges into the forefront of the election campaign. He must hope the narrative does not stick.
Laura Tingle Columnist
Mar 18, 2022 – 5.23pm
Kimberley Kitching, a 52-year old first-term Labor senator from Victoria, died by the side of a suburban Melbourne road just over a week ago, after suffering a heart attack. She will be farewelled at St Patrick’s Cathedral in Melbourne on Monday.
For her family and friends, there is obviously grief.
But Kitching was not just a woman who died suddenly and too young. She was a politician and, for that matter, a fierce warrior for her cause, and deeply embroiled throughout her life in the often murky machinations of Victorian Labor politics.
The combination meant that within 24 hours of her death, the charge was effectively being made that the Labor Party had killed her: that stress over her unsettled preselection had at the very least contributed to her heart attack.
At a meeting of the party’s Right faction the day before her death, Kitching was told by two of those present that they declined to support her renomination for the Senate. According to some sources, Kitching was told this was a decision for the leader. That is, Anthony Albanese.
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As the world pivots, it’s time for Australia to confront the unthinkable
Political and international editor
March 19, 2022 — 5.00am
Three years ago, it was unthinkable that China would impose trade boycotts on Australia. Three years ago, it was unthinkable that Australia would be organising to get nuclear-powered submarines.
Three years ago, it was unthinkable that the Australian Prime Minister would threaten to impose trade boycotts on China. Yet, this week, this unthinkable also became reality. Scott Morrison said it would be “an abomination” if Beijing were to send military aid to Moscow for its invasion of Ukraine.
“We will move in lockstep with our partners and allies” in imposing any sanctions on China, as the US has threatened to do, Morrison said without qualification.
This is remarkable. China still dominates Australia’s trade in goods and services. Even after Xi Jinping imposed bans on more than $20 billion worth of Australian products, annual two-way trade is valued at a quarter of a trillion dollars.
That’s 30 per cent of the total national trade, more than the next five countries’ shares combined. Any Australian sanctions against China need not be economic. But economic pain is Xi’s favourite form of coercion. He still has ample scope to inflict more on Australia should he choose.
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Latest Biden, Xi exchange reveals risk of full-blown global conflict
March 19, 2022
The potential for Russia’s invasion of Ukraine to spark a full-blown global confrontation should be obvious following Joe Biden’s latest phone call with Chinese President Xi Jinping.
The US president warned China of repercussions if it helped Russia in a “material way”, providing some wriggle room should it think twice about setting the US on a collision with China over an issue that’s of relatively marginal to US national security.
Reading between the lines, Mr Biden received cold comfort from the Chinese leader in their call on Friday (Saturday AEDT), their second since November, who refused to rule out helping Russia, let alone condemn Vladimir Putin’s aggression.
That shouldn’t be a surprise, if the lengthy joint statement of Putin and Xi signed in Beijing at the start of the Olympics, promising a “friendship with no limits”, meant anything.
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https://www.afr.com/policy/economy/peter-malinauskas-set-to-become-sa-premier-20220319-p5a64x
Labor wins power in SA with big swing
Simon Evans Senior Reporter
Updated Mar 19, 2022 – 10.43pm, first published at 7.53pm
Labor Leader Peter Malinauskas has stormed to victory in the South Australian election with a big swing of 5.6 per cent, with voters turfing Liberal Premier Steven Marshall out after just one term of government.
The 41-year-old Mr Malinauskas focused firmly on the future as he addressed the Labor Party faithful at the Adelaide Oval at about 9.45pm on Saturday night, and will become the 47th Premier of the state.
Labor leader Peter Malinauskas claims victory in the South Australian election.
He said it was “not lost on me the significance of the privilege and the size of the responsibility that you invested in me and my team”.
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COVID 19 Information
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How much more transmissible is Omicron’s BA.2 sub-variant?
By Mary Ward and Lucy Carroll
March 15, 2022 — 5.00am
The sub-variant of COVID-19 tipped to become dominant in Australia by the end of the month may be up to seven times more transmissible than the original form of the virus, experts say, although the country’s pandemic prognosis is more positive than it was in January.
Coronavirus cases have increased in recent weeks, with the reproduction number – the average number of people a case infects – pushing above one in NSW and Victoria as Omicron’s BA.2 sub-variant spreads.
School-aged children and teenagers have driven the recent rise in cases, and NSW Health Minister Brad Hazzard has flagged cases could double by April. The state recorded 8911 new cases on Monday.
Associate Professor James Wood, an applied mathematician in the University of NSW’s School of Public Health, estimated the BA.2 sub-variant is about 25 to 30 per cent more transmissible than its predecessor, BA.1.
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Climate Change.
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Five years on, Snowy 2.0 emerges as a $10 billion white elephant
By Ted Woodley
March 15, 2022 — 5.00am
Five years ago on Tuesday, then prime minister Malcolm Turnbull announced, with great fanfare, the Snowy 2.0 pumped hydro project: “The Turnbull Government will start work on an electricity game-changer ... This plan will increase the generation of the Snowy Hydro scheme by 50 per cent, adding 2000 megawatts of renewable energy to the National Electricity Market (NEM).”
Senate Estimates papers confirm the announcement was cobbled together in less than two weeks after the concept was floated by Snowy Hydro.
The nation-building vision was for a big battery to be added to the Snowy Mountains Hydro-Electric Scheme. It was to be completed in four years (that is, by last year) at a cost of $2 billion without any taxpayer subsidy, bring down electricity prices, generate renewable energy and incur minimal environmental impact on Kosciuszko National Park.
Inspiring stuff. But not one of these grand claims has turned out to be true. Worse, Australian taxpayers and NSW electricity consumers will be up for billions of dollars in subsidies and increased electricity costs, all while Kosciuszko is trashed. Let’s have a quick recap.
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Energy costs blowback to hit the West hard
11:00PM March 15, 2022
The Ukraine war is going to rewrite the rules of the global economy, and Western consumers – enthusiastic backers of the campaign to isolate and cripple Vladimir Putin’s Russia – will pay a high and chaotic price for the cause of freedom.
How this war ends defies prediction. But the longer it lasts the more the norms of the globalisation age will be subjugated to geopolitics as the US and Europe commit to unprecedented tools of financial warfare and the declared intention to terminate their dependence on Russian energy.
There are three immediate consequences – global commodity prices are taking off, guaranteeing consumer and business agitation from higher gas, petrol, energy, food, fertiliser and mineral prices; global inflation will be accentuated, with linked pressure on central banks to bring further forward interest rate increases; and global recovery from the pandemic will be checked, living standards will suffer and national incomes will face pressures certain to spill into Western politics.
The crisis Putin has triggered is now global. This war, contrary to misleading initial speculation about a khaki campaign, may become an election negative for the Morrison government.
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https://thenewdaily.com.au/finance/2022/03/17/petrol-excise-carbon-tax-alan-kohler/
6:00am, Mar 17, 2022 Updated: 8:05pm, Mar 16
Alan Kohler: Don’t touch the petrol excise. It’s Australia’s carbon tax
Petrol excise is Australia’s de facto carbon tax; if it’s cut or removed that would confirm that the Morrison government is not serious about dealing with climate change.
It’s already one of the lowest gasoline taxes in the world, so it would make far more sense to remove taxes on electric vehicles. But not enough voters own them yet.
Petrol excise has been a political toy for the Coalition for 44 years.
It was imposed by the Fraser government in 1978, after winning the 1977 election. This was also two years after the Australian Academy of Science first reported that human activities were contributing to global warming, not that the petrol excise had anything to do with that.
Then Treasurer John Howard said Australians were enjoying artificially low prices for Australian crude oil after the oil shock of 1973, so he slipped in a petrol tax at 3.5 cents a litre, taking the price to an artificially higher 21 cents.
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Royal Commissions And The Like.
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No entries in this section.
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National Budget Issues.
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https://www.afr.com/business-summit/the-task-of-economic-reform-has-no-finish-line-20220314-p5a4fk
The task of economic reform has no finish line
The need for reform is ongoing and requires commitment, purpose and the resolve to persist, even in the face of determined opposition.
Josh Frydenberg Treasurer
Updated Mar 14, 2022 – 12.53pm, first published at 12.12pm
It is a great honour to speak to you as we celebrate The Australian Financial Review’s outstanding contribution to public policy and debate over the past 70 years.
There are many special guests in the room, but in particular I would like to acknowledge former prime ministers John Howard, Paul Keating, Malcolm Turnbull and former treasurers Peter Costello and Wayne Swan. It is good to see all those exclusives you have given The Fin over the years rewarded at last, with a free meal!
To Reserve Bank governor Phil Lowe, ACCC chair Rod Sims, ASIC chair Joe Longo, APRA chair Wayne Byres and Treasury Secretary Steven Kennedy – I am also pleased to see you here, but in your case, I am hoping the invitation is not the result of any exclusives! I also want to acknowledge my chief political opponent, Joe Aston. Also here is Jim Chalmers.
As we recognise the significant role played by The Australian Financial Review, we also pay tribute to a long list of outstanding editors and journalists who made it possible. Among them Jack Horsfall, Max Newton, Max Walsh, Paddy McGuinness, Alan Kohler, Greg Hywood, Colleen Ryan, and today, Michael Stutchbury. They and their columnists, including Chanticleer, Pierpont, and the Modest Member have created Australia’s must-read financial publication.
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Words from past a timely reminder on the journey to full employment
As Australia charts its way back to the lowest jobless rate in almost half a century, it would be wise to keep The Australian Financial Review’s counsel from 1963 in mind.
Philip Lowe Reserve Bank governor
Mar 14, 2022 – 5.00am
At the start of last year, the Reserve Bank’s central forecast was that the unemployment rate would now be at 6 per cent. Yet over recent months, the unemployment rate has been 4.2 per cent and underemployment has fallen to the lowest rate in more than a decade.
We expect this improvement in the labour market to continue. There was, however, a setback in January, with total hours worked in Australia declining by nearly 9 per cent, as many people isolated due to omicron and others took holidays that had been put off last year.
Looking forward, the high level of job vacancies and the information from our business liaison program both suggest there will be strong growth in hours worked and in the number of jobs over the months ahead.
Our central forecast is that the unemployment rate will fall to below 4 per cent this year and remain there next year. The last time the unemployment rate was that low was almost half a century ago.
If we reach this milestone, it would be a significant achievement.
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Costs hit ‘tipping point’ amid inflation expectations, petrol spike
Ronald Mizen Economics correspondent
Mar 15, 2022 – 2.13pm
Facing squeezed margins due to soaring input costs, businesses are at a tipping point and shoppers will increasingly bear the brunt of inflation through higher shelf prices, the Australian Retailers Association says.
The warning to households was echoed by the Reserve Bank of Australia, which said construction, manufacturing and retail were facing the biggest price pressures due to upstream costs, including freight and petrol.
The national weekly average petrol price increased from $1.83 to a record $1.97 last week, according to the Institute of Petroleum, while ANZ’s consumer inflation expectations hit the highest level in almost a decade.
“Households are certainly noticing the effect of higher prices on their finances, with overall confidence dropping 4.3 per cent,” ANZ head of Australian economics David Plank said.
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Inflation is here. The RBA fears we could talk prices up even further
By Shane Wright
March 15, 2022 — 4.42pm
Not only does the Reserve Bank have to worry about real inflation – now it’s concerned Australian consumers and businesses could talk themselves into cost-of-living problems.
Central banks like the RBA have their own term for the way people can convince themselves that inflation is rampant. It’s called inflation psychology, and Reserve Bank governor Philip Lowe is convinced it could be brewing here in Australia.
Dr Lowe has been governor of the RBA – whose main job is to hold inflation between 2 and 3 per cent – since 2016.
Over that period he has given numerous speeches and prepared remarks about the economy, the jobs market, the future of money and even about the link between trust and prosperity.
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https://www.afr.com/policy/economy/jobless-rate-drops-to-14-year-low-20220317-p5a5fs
Jobless rate drops to 14-year low, pressure on rate hikes
Ronald Mizen Economics correspondent
Mar 17, 2022 – 11.42am
Unemployment dropped to 4 per cent in February after 77,400 people found jobs, while hours worked rebounded dramatically after plummeting during January’s omicron induced shadow lockdown.
The jobless rate came in slightly better than market expectations of 4.1 per cent and is at its lowest level in 14 years. The rate is forecast to continue falling to a 48-year low rate below 4 per cent later this year.
“This is the lowest unemployment rate since February 2008 and August 2008, and we would need to go back to the mid-1970s to find a similar level of unemployment,” KPMG chief economist Brendan Rynne said.
The robust post-pandemic employment market will add further pressure on the Reserve Bank of Australia to increase the record low 0.1 per cent cash rate. The RBA had been forecasting the jobless rate to hit 4 per cent in June.
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Health Issues.
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Health funds sceptical on Health Minister Greg Hunt’s $900m prosthesis savings
March 17, 2022
Private health insurers say the federal government excluded them from negotiations of its much anticipated reform package on the pricing of replacement hips, knees and other artificial body parts.
The government says families are set to save up to $50 a year on their private health insurance premiums after it struck a deal with medical device companies that aims to slash the cost of prostheses by more than $900m a year.
Private hospitals have welcomed the reforms, saying Health Minister Greg Hunt has “achieved a pretty good compromise” that will deliver “significant cuts to prostheses pricing and therefore significant savings”.
But health funds are sceptical the agreement, which was brokered on the eve of an election without their input, will deliver the savings claimed. Under previous cuts to the prostheses list in 2017, health funds say they only received 10 per cent of the promised $250m savings.
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International Issues.
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Russian invasion is rabid identity politics by other means
Because the war in Ukraine is primarily about restoring the status of Russia as great power, any retreat or compromise would be a shock.
David Brooks
Mar 13, 2022 – 2.13pm
Carl von Clausewitz famously asserted that war is the continuation of politics by other means. The Russian invasion of Ukraine is the continuation of identity politics by other means.
I don’t know about you, but I’ve found the writings of conventional international relations experts to be not very helpful in understanding what this whole crisis is about. But I’ve found the writing of experts in social psychology to be enormously helpful.
That’s because Vladimir Putin is not a conventional great-power politician. He’s fundamentally an identity entrepreneur. His singular achievement has been to help Russians to recover from a psychic trauma – the aftermath of the Soviet Union – and to give them a collective identity so they can feel that they matter, that their life has dignity.
The war in Ukraine is not primarily about land; it’s primarily about status. Putin invaded so Russians could feel that they are a great nation once again, and so Putin himself could feel that he’s a world-historical figure along the lines of Peter the Great.
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https://www.washingtonpost.com/world/2022/03/13/russia-ukraine-war-news-live-updates/
Russia asks China for military equipment, U.S. officials say
By David L. Stern, Ellen Francis, Gerry Shih, Isabelle Khurshudyan, Paulina Firozi, Hannah Knowles, Ellen Nakashima and Karen DeYoung
Yesterday at 12:32 a.m. EST|Updated today at 5:20 p.m. EDT
Russia has turned to China for military equipment and aid in the weeks since it began its invasion of Ukraine, U.S. officials familiar with the matter told The Washington Post.
The officials, who spoke on the condition of anonymity because of the sensitivity of the subject, did not describe what kind of weaponry had been requested, or whether they know how China responded.
White House national security adviser Jake Sullivan told CNN that the administration was “communicating directly, privately to Beijing, that there will absolutely be consequences” for any Chinese efforts to assist Russia in evading sanctions.”
Meanwhile, at least 35 people were killed and 134 injured early Sunday when a barrage of Russian missiles slammed into a military facility in western Ukraine about 15 miles from the border with Poland, a NATO member. The Yavoriv military range near Lviv, also known as the International Peacekeeping and Security Center, has for years been used for exercises by NATO troops and Ukrainians, with Americans on-site as recently as February. Members of the Florida Army National Guard trained there with Ukrainian forces as recently as February, during the buildup to the Russian invasion.
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Grain damage: war in Ukraine will cripple global food markets
By The Economist
5:33PM March 13, 2022
In October 1914 the Ottoman Empire, having just joined the first world war, blockaded the Dardanelles Strait, the only route for Russian wheat to travel to Britain and France. The world had entered the conflict with wheat stocks 12 per cent above the five-year average, but losing over 20 per cent of the global traded supply of the crop overnight set food markets ablaze. Having risen by a fifth since June 1914, wheat prices in Chicago, the international benchmark, leapt by another 45 per cent over the following quarter.
Today Russia and Ukraine, respectively the largest and fifth-largest wheat exporters, together account for 29 per cent of international annual sales. And after several poor harvests, frantic buying during the pandemic and supply-chain issues since, global stocks are 31 per cent below the five-year average.
Efforts to export more of Australia’s bumper winter-wheat crop have clogged the supply chains between its farms and ports.
But this time it is the threat of embargoes from the West that has lit a bonfire — and the flames are higher than even during the Great War. Wheat prices, which were already 49 per cent above their 2017-21 average in mid-February, have risen by another 30 per cent since the invasion of Ukraine started on February 24. Uncertainty is sky-high: indicators of price volatility compiled by IFPRI, a think-tank, are flashing bright red.
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Russia asked China for military, economic aid for war: US officials
Edward Wong and Julian E. Barnes
Updated Mar 14, 2022 – 9.16am, first published at 8.27am
Washington | Russia asked China to give it military equipment and support for the war in Ukraine after Russian President Vladimir Putin began a full-scale invasion last month, according to US officials.
Russia has also asked China for additional economic assistance, to help counteract the battering its economy has taken from broad sanctions imposed by the United States and European and Asian nations, according to an official.
US officials, determined to keep secret their means of collecting the intelligence on Russia’s requests, declined to describe further the kind of military equipment Moscow is seeking. The officials also declined to discuss any reaction by China to the requests.
Chinese President Xi Jinping has strengthened a partnership with Mr Putin and has stood by him as Russia has stepped up its military campaign, destroying cities in Ukraine and killing hundreds or thousands of civilians.
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https://www.afr.com/markets/commodities/ukraine-war-fuels-fears-of-a-new-food-crisis-20220314-p5a4fe
Ukraine war fuels fears of a new food crisis
Peter Timmer
Mar 14, 2022 – 11.50am
Russia’s invasion of Ukraine raises the spectre of another world food crisis.
Ukraine, devastated by the war, is known as the breadbasket of Europe for its exports of wheat, corn, sunflower and other commodity staples. But it’s too soon to know the full impact on Ukraine’s grain supplies and infrastructure from the Russian onslaught, or on the prospects for a reasonably normal winter wheat harvest, and then spring planting.
But what is clear is that the world food economy is on the verge of another crisis, perhaps as disruptive as the one in 2007-08. Asia suffered badly then, mostly because of panicked behaviour in the region’s rice markets. Important lessons were learned, and avoiding those mistakes will be critical to keeping the region’s food economies reasonably stable this time. How Asia’s developing countries fare as food supplies tighten is of special interest to Australia.
World grain markets are seeking direction. Africa is already suffering from losing access to Ukraine’s wheat. Maize and barley exports to China have been disrupted. An already tight oilseeds market is now threatened by the loss of Ukrainian sunflower seed oil. India has asked Indonesia to ease its restrictions on palm oil exports.
Wheat prices on futures markets rose ahead of Russia’s invasion, and prices were already high because of supply chain disruptions caused by COVID-19. But there has been no sustained spike since the war started on February 24. Prices are high and volatile, with wheat futures prices trading both up and down the daily limits.
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https://www.afr.com/world/asia/china-business-hubs-in-partial-lockdown-20220314-p5a4f3
China business hubs in partial lockdown
Michael Smith North Asia correspondent
Mar 14, 2022 – 12.18pm
Tokyo | China has imposed partial lockdowns in the major commercial hubs of Shanghai and Shenzhen as it grapples with a surge in COVID-19 cases to the highest level since the start of the pandemic in Wuhan two years ago.
The Chinese government said it would double down on its zero-case strategy as it struggles to stamp out COVID-19 outbreaks around the country. Economists warned, however, that Beijing’s latest crackdown would likely shut down ports, airports and factories, and further disrupt global supply chains.
In Shenzhen, a major technology hub and home to companies such as telecoms giant Huawei, public transport was shut down on Monday as most big businesses and industrial parks were locked down. The government has launched a citywide testing program.
Further north in Shanghai, China’s main financial hub and home to thousands of Australian expatriates, residents were advised on the weekend not to leave the city. Long-distance buses to other cities were suspended and schools have been closed, with classes moving online.
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Russia’s problems in Ukraine are a management failure
The war has shown that highly centralised and secretive organisations struggle to execute complex projects.
Aaron Patrick Senior correspondent
Mar 14, 2022 – 2.09pm
At 7.38pm on March 7, a Federal Security Service intelligence officer in the Russian city of Tula got a call from the mobile phone of a colleague assigned to the 41st Russian Army.
The army’s chief of staff, Vitaly Gerasimov, had been killed at a command post near Kharkiv in Ukraine, the officer said. On a recording of the call, which was made on an open line because a secure system wasn’t working, the FSB officer who hears the news pauses, then swears.
“How’s it going there?” he asks.
“Yea. Not so hot,” the Russian officer in Ukraine replies.
Gerasimov’s death – he is the third Russian general the Ukrainians claim to have killed – and the intercept of the FSB call are examples of what looks like a structural problem within the Russian government and military.
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The polonium pill setting up Russia for a slow death
Richard Holden Economics professor
Mar 14, 2022 – 3.24pm
The US and British bans on Russian oil imports, announced Wednesday, is the most recent in a long line of economic measures that are putting the hurt on Putin’s Russia.
In what can only be described as a remarkable show of international solidarity, the US, Europe and their allies have co-ordinated to kick many Russian banks off the SWIFT network and frozen much of Russia’s central bank currency reserves.
Russia’s payments system has been crippled after Visa, Mastercard, Apple Pay, and Google Pay suspended services. Global companies from Oracle and Apple to Starbucks and McDonald’s have stopped doing business in Russia. The US and its allies have closed their airspace to Russian flights. And sweeping sanctions have limited Russia’s ability to earn export dollars.
These measures have already caused significant pain for Russians – from ordinary folk whose standard of living has been smashed, to oligarchs forced into fire sales of super yachts and sports teams. That is, if their yachts have not been seized outright.
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https://www.afr.com/companies/financial-services/us-recession-anxieties-are-mounting-20220313-p5a46u
US recession anxieties are mounting
The world’s largest market is struggling with high inflation, rising long-term interest rates and the impact of Russia’s invasion of Ukraine.
Karen Maley Columnist
Mar 14, 2022 – 4.23pm
A growing number of economists are warning the United States is lurching towards a possible recession this year, after the world’s largest market has been hit by the double whammy of a steep rise in long-term interest rates and a spike in the oil price.
The yield on benchmark US 10-year bonds has climbed to 2.05 per cent, a steep rise from 1.63 per cent at the beginning of the year. Meanwhile, the US oil benchmark – West Texas Intermediate (WTI) – has jumped to $US106.79 a barrel, up from $US65.39 a year ago.
Economists have been racing to cut their earlier, more optimistic, forecasts for US economic growth this year, which were predicated on a rebound in economic activity as the omicron wave of the pandemic waned.
But that was before Russia’s invasion of Ukraine drove commodity prices higher, at a time when the US is already grappling with elevated inflation. The US consumer price index rose at a 7.9 per cent annual rate in February, a fresh four-decade high.
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Putin’s ‘request’ increases cost of war for Beijing
By Eryk Bagshaw
Updated March 14, 2022 — 4.57pmfirst published at 3.48pm
Singapore: China has spent years preparing for the possibility that it might one day be cut off from large parts of the global economy.
It now has its own payment systems, a blossoming technology sector, advanced manufacturing capability, and is diversifying its fossil fuel sources away from the West towards its own mines and economic partners in Africa and South America. On Monday, it announced it would produce more domestic coal this year than its entire imports combined.
The trend towards self-reliance is clear and prudent for a superpower facing a rapidly deteriorating international environment and with its own plans to take over Taiwan in the coming decades. President Xi Jinping’s “internal circulation” model will in theory allow China’s economy to continue functioning on the strength of its domestic market and the 1.4 billion who populate it.
But it is not ready yet. Chinese consumers are not wealthy enough to support it, businesses rely heavily on critical imported technology such as semi-conductors and Chinese banks remain intertwined in global financial markets. Unfortunately for Xi, Vladimir Putin’s war on Ukraine has just accelerated the calculations being made in Beijing by a decade.
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https://www.afr.com/world/asia/xi-jinping-faces-a-fateful-decision-on-ukraine-20220315-p5a4o1
Xi Jinping faces a fateful decision on Ukraine
If China grants military aid to Russia, that decision could spell the end for the globalised economic system that has fuelled China’s extraordinary rise over the past 40 years.
Gideon Rachman Columnist
Updated Mar 15, 2022 – 7.33am, first published at 7.25am
Just before Russia invaded Ukraine, Vladimir Putin met Xi Jinping in Beijing. Shortly afterwards, the two countries announced a “no limits” partnership.
Whether there are truly no limits to the China-Russia partnership may become clear in the coming days, following reports that Moscow has asked Beijing for military aid. If Xi grants that request, China would in effect be entering a proxy war with the US and NATO nations that are backing Ukraine.
That decision could spell the end for the globalised economic system that has fuelled China’s extraordinary rise over the past 40 years.
Russia and China share a deep hostility to America’s global power. But they have approached their rivalry with the US in very different ways. China can afford to play a “long game”, relying on its economic might to change the global balance of power.
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https://www.afr.com/world/europe/russia-china-deny-us-claims-of-military-assistance-20220315-p5a4n8
US warns China on support for Russia’s war in Ukraine
Hans van Leeuwen and Matthew Cranston
Updated Mar 15, 2022 – 1.18pm, first published at 4.46am
London/Washington | The US has warned China that its relationship with Russia had become a global concern, and that “it won’t stand by” if Beijing aids in any way President Vladimir Putin’s war in Ukraine.
According to an official White House briefing, national security adviser Jake Sullivan on Monday (Tuesday AEDT) told his counterpart Yang Jiechi that the US had “deep concerns about China’s alignment with Russia at this time” and “was direct about those concerns and the potential implications and consequences of certain actions”.
The comments followed a seven-hour in-person meeting in Rome described by the White House official as “intense”.
Moscow and Beijing had earlier rejected US claims that Russia has asked China for military equipment to bolster its invasion of Ukraine, as the White House warned of “consequences” for any Chinese support.
China’s foreign ministry dismissed the claims as “fake news” and the Kremlin said Russia had enough capability to win the war on its own.
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https://www.afr.com/world/europe/putin-s-war-is-based-on-lies-and-hate-20220313-p5a497
‘Putin’s war is based on lies and hate,’ says dissident
Myroslav Marynovych, who spent seven years in a Soviet gulag for detailing abuses and opposing communism, says the West should get over its “wishful thinking” about mediating peace with Vladimir Putin.
Misha Zelinsky Special correspondent
Mar 15, 2022 – 12.17pm
Lviv | The man once dubbed “the most dangerous state criminal” in the Soviet Union is a bookish professor with a moustache and a flat cap.
In the 1970s, Myroslav Marynovych spent seven years in a Soviet gulag for detailing abuses within the Soviet Union and for opposing communism.
When I met him recently in a large square in the western Ukrainian city of Lviv, he told me that with truth the first casualty of war, spreading lies was part of Putin’s playbook. But Marynovych, now senior professor at Lviv’s Catholic University, says truth is the very weapon that will destroy Putin.
“Lies were the basis of the Soviet regime. I knew it couldn’t prevail. Putin cannot win in the long term. In the end, truth wins,” Marynovych says.
“Along with lies, Putin’s regime is also built on hatred. There is a wave of hate against Ukraine. Hate, hate and more hate.”
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Why Russia’s achieved none of its strategic aims in Ukraine
The fundamental problem is that the Kremlin just does not understand how decentralised and bottom-up Ukrainian society has become.
Alex Sundakov
Mar 15, 2022 – 12.06pm
It is looking less and less likely that Russia can achieve any of its strategic objectives through conventional military means. The insights from the Ukrainian and Russian observers – which ring very true given my own experience with both countries – suggest that Russian failure can be explained by the following.
Intelligence: At the start of the war, there was concern that Ukraine was permeated by Russian intelligence operatives and that there were many pro-Russian elements within Ukraine who could undermine defence. In fact, it appears to be almost the other way around. There is evidence that elements within the Russian intelligence services support Ukraine.
The evidence includes: (i) that on the first morning of the war, when Russians sought to achieve a shock and awe effect of destroying key Ukrainian military installations and command and control centres, all sensitive equipment and troops were removed from the areas under attack; there were very few initial Ukrainian casualties and the command and control remained intact; (ii) Ukraine appears to have had remarkably good intelligence about the locations and plans of the elite Russian forces, to the point where a very high proportion of Russian casualties continued to be among the elite troops; (iii) Ukrainian home guards have been very effective at detaining Russian sabotage and assassination teams.
Kleptocracy: We all knew that theft of public property was a Russian national pastime. However, many Western military analysts assumed that kleptocracy would only have a limited effect on the Russian military. It now appears that much of the modernisation of the Russian army was a sham – a Potemkin show for the leader while siphoning off vast amounts from public procurement.
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https://www.afr.com/world/europe/russia-s-war-will-remake-the-world-20220316-p5a4zh
Russia’s war will remake the world
The combination of conflict, supply shocks and high inflation is inevitably destabilising, as is an accelerating reversal of globalisation. Even nuclear war is, alas, conceivable.
Martin Wolf Columnist
Mar 16, 2022 – 6.37am
A new world is being born. The hope for peaceful relations is fading. Instead, we have Russia’s war on Ukraine, threats of nuclear Armageddon, a mobilised West, an alliance of autocracies, unprecedented economic sanctions and a huge energy and food shock.
No one knows what will happen. But we do know this looks to be a disaster.
It is natural to seek someone to blame. For many, the culprit is NATO’s expansion into central and eastern Europe. A leading voice is John Mearsheimer, the distinguished “realist” scholar, who blames the US decision to open up the possibility of NATO membership to Ukraine in 2008. I agree and disagree.
The mistake was the ambiguity. The offer should only have been made when Ukraine would join as a full member. But I supported the expansion of NATO into the former Russian satellites because good fences make good neighbours. Russia knows that if it invades a NATO member, there will be war. That was not the case with Ukraine. This is why this assault seemed an easy option for the despot in the Kremlin.
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China’s economy will never dominate the West: Lowy Institute
Ronald Mizen Economics correspondent
Mar 15, 2022 – 10.30pm
China will become the world’s largest economy, but its miracle growth will slow dramatically in coming years, and it will never establish a meaningful lead over the United States, according to Lowy Institute economists.
China’s decades-long boom has bolstered Australia’s growth, particularly with strong demand for commodities such as iron ore, but gross domestic product forecasts from Beijing in the double digits are well in the past.
In a new paper titled Revising down the rise of China, Lowy economists predict China’s GDP growth will slow from about 6 per cent before the COVID-19 crisis to 3 per cent by 2030, and 2 per cent by 2050.
“A slower-growing Chinese economy than otherwise is going to be negative for the rest of the global economy and for the Australian economy,” Lowy lead economist and report co-author Roland Rajah said.
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Russia is spiralling towards a $210b default nightmare
Sydney Maki, Eliza Ronalds-Hannon and Selcuk Gokoluk
Mar 15, 2022 – 6.14pm
Russia’s economy is fraying, its currency has collapsed, and its debt is junk. Next up is a potential default that could cost investors billions and shut the country out of most funding markets.
Warning lights are flashing as the government kickstarts the process of paying $117 million ($163 million) in interest on dollar bonds on Wednesday, a key moment for debt holders who’ve already seen the value of their investments plunge since Russia invaded Ukraine last month.
The government says that all debt will be serviced, though it will happen in roubles as long as sanctions — imposed because of the war — don’t allow dollar settlements. Failure to pay, or paying in local currency instead of dollars, would start the clock ticking on a potential wave of defaults on about $US150 billion in foreign currency debt owed by both the government and Russian companies including Gazprom, Lukoil and Sberbank.
Default on debt
Such an event will revive memories of previous crises, including Russia in 1998, when it defaulted on some rouble-denominated debt, and Argentina three years later.
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How Putin might be removed from power and who could take over
With the Kremlin’s war in Ukraine not going exactly to plan, people are thinking more sharply about Russia after Vladimir Putin and how that may be brought about.
Mark Galeotti
Mar 16, 2022 – 8.00am
Vladimir Putin is in for the fight of his life. His ill-conceived war in Ukraine has left his army mired abroad and an economy reeling under sanctions. No wonder people are thinking more sharply not only about Russia after Putin, but also how that may be brought about.
There are those in Russia wondering if mortality will do the job. Might his strange terror of infection be a sign he is suffering from an auto-immune disease? A trembling hand may indicate Parkinson’s. The puffiness of his face could be a sign of steroid treatment.
But it is hard to see him standing down voluntarily. Putin is clearly obsessed with his place in history – he would only go out on a high, something that seems unlikely in the near future.
In theory, Putin could be removed through the constitution: impeachment based on serious crimes. Yet, that requires a two-thirds vote in both chambers of parliament, and the consent of the Constitutional and Supreme Courts – and they have all been packed with loyalists.
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Three ways the Ukraine war could crash the global finance system
By Matthew Lynn
March 16, 2022 — 9.33am
The deployment of chemical weapons. Perhaps even a tactical nuclear strike, or full-scale assault on one of the country’s nuclear plants.
There are still lots of ways the war in Ukraine could get much worse than it already is. They are all terrifying enough. And yet, there is another threat as well, and one that has not even started to be added into the potential reckoning: a financial crash.
In truth, the markets have never witnessed stress at these levels, nor price moves this violent, without cracks starting to appear somewhere. The eurozone may soon start to splinter, with Cyprus’s oligarch-dependent economy heading into big trouble, and potentially Malta as well.
Energy intensive manufacturers may soon start closing down as their costs become unsustainable; and we could soon be back in a full-scale sovereign debt crisis as developing economies have to choose between buying oil and wheat and paying back their creditors.
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If Putin uses chemical weapons, America’s hesitant hand may be forced
Military leader and strategist
March 15, 2022 — 3.30pm
In November 1989, as a very new and inexperienced lieutenant in the Australian Army, I attended a training course at the Sydney-based School of Military Engineering to learn about nuclear, biological, chemical defence. It was a sobering experience, noting that even in the closing stages of the Cold War, the Soviet Union still maintained a massive stockpile of chemical, biological and nuclear weapons. I learnt a lot on that course. Principally, I learnt that I never wanted to operate in such a horrifically contaminated, lethal environment.
The spectre of chemical or biological warfare has been raised by the Russian invasion of Ukraine. Beginning in December last year, the Russian government has been shaping the information environment to provide a foundation for Russian use of chemical weapons. On December 21, at a Ministry of Defence collegium with Russian President Vladimir Putin, Russian Defence Minister Sergei Shoigu accused the United States of planning a chemical attack in Donbas. Later in the same month, Russian media quoted a former Ukrainian Security Service (SBU) officer who apparently stated that Ukrainian armed forces will use chemical weapons to attack schools, hospitals, and mass gatherings in eastern Ukraine.
This Russian disinformation has continued up to the last few days. On March 9, Russian permanent representative to the Organisation for the Prevention of Chemical Weapons (OPCW) Alexander Shulgin claimed Russia would provide documents as evidence of Russian fears of an alleged Ukrainian chemical escalation. Even their Chinese partners have joined this chorus of disinformation with Chinese Foreign Ministry Spokesperson Zhao Lijian claiming that Russia had found labs that the United States uses to conduct bio-military plans.
The Russian military has a long history of developing and even using chemical and biological weapons. Many nations had chemical or biological weapon programs during the Cold War. But nothing came anywhere near the size and scope of the Soviet program. The Soviets ran a massive chemical and biological warfare program that involved dozens of facilities across the nation, and the involvement of multiple government ministries (besides the Ministry of Defence). Russian defector (and participant in this program) Ken Alibek’s book on this topic is chilling reading.
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‘A new era’: Ukraine war to transform US influence around the globe
By Michael Crowley and Edward Wong
March 13, 2022 — 6.32pm
Washington: The war in Ukraine has prompted the biggest rethinking of US foreign policy since the September 11, 2001 attacks, infusing the United States with a new sense of mission and changing its strategic calculus with allies and adversaries alike.
The Russian invasion has bonded America to Europe more tightly than at any time since the Cold War and deepened US ties with Asian allies, while forcing a reassessment of rivals like China, Iran and Venezuela.
And it has re-energised Washington’s leadership role in the democratic world just months after the chaotic US withdrawal from Afghanistan ended 20 years of conflict on a dismal note.
But the new focus on Russia will come with hard choices and internal contradictions, similar to ones that defined US diplomacy during the Cold War, when America sometimes overlooked human rights abuses and propped up dictators in the name of the struggle against communism.
“It feels like we’re definitively in a new era,” said Benjamin J. Rhodes, a former deputy national security adviser in the Obama White House. “The post-9/11 war on terror period of American hubris, and decline, is now behind us. And we’re not sure what’s next.”
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Australia backs US warning of ‘consequences’ for China if it sends arms to Russia
By Eryk Bagshaw
Updated March 15, 2022 — 7.14pmfirst published at 4.01pm
Singapore: Vladimir Putin’s war on Ukraine threatens to draw Australia into economic sanctions on China after the United States briefed allies that Beijing was willing to supply arms to Russia.
The supply of military equipment would trigger “serious consequences”, the White House said on Tuesday after a tense seven-hour meeting between US and Chinese representatives in Rome ratcheted up tensions between the two superpowers.
Australian Finance Minister Simon Birmingham said that Australia would follow Washington and its international partners “in lockstep” in response to “any and all” reactions that support Russia’s assault on Ukraine.
Sanctions on China could escalate the war in Ukraine to a global economic fight. China’s economy is six times larger than Russia’s and is the world’s largest manufacturer and consumer market.
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America more divided than at any time since civil war
11:00PM March 15, 2022
US President Joe Biden came to office more than a year ago promising to “build back better”, declaring America was back and returning to its role as the leader of the democratic world. How’s that working out? And not just for the US but for Australia?
On Wednesday the US Studies Centre will release its annual State of the United States report, providing assessments based on survey research, trade and investment data, historical comparisons and consultations across our networks spanning the US political and policy establishment, but with a particular focus on implications for Australian interests.
Like the Biden administration, the US sits at a delicate moment. Covid continues to ravage the US with a per capita death toll more than four times seen elsewhere across the G20. Inflation and crime are back at the top of the US domestic political agenda, issues not experienced at such levels since the 1970s. Biden’s approval rating languishes at Trump-like levels, the bulk of his legislative agenda is stalled and Republicans are all but assured of taking the House of Representatives in midterm elections in November.
Still, the Biden administration has enjoyed success. More than 200 million Americans have been vaccinated against Covid-19. Record numbers of new jobs and economic growth followed the passage of a $US1.9 trillion ($2.65 trillion) Covid recovery package and Democrats legislated a $US1.2 trillion bipartisan infrastructure bill. A 40 per cent reduction in child poverty is one of the legacies of the Covid relief measures. Biden took the US back into international climate change forums but has been, and will be, unable to secure legislation to help meet emissions targets. And critically for Australian interests, under Biden we saw the announcement of the AUKUS security pact and an expansion and deepening of the Quadrilateral Security Dialogue’s remit.
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China warned of isolation after Russian plea for aid
4:48PM March 15, 2022
Chinese government advisers have warned support for Russia could leave China dangerously isolated, following reports that Beijing expressed willingness to supply Moscow with military equipment for its war on Ukraine.
The United States told allies that China had signalled its openness to providing military assistance after Russia requested equipment, including surface-to-air missiles, intelligence-related equipment and logistics vehicles, the Financial Times reported.
President Joe Biden’s top security adviser, Jake Sullivan, on Monday warned his Chinese counterpart Yang Jiechi that Beijing would face penalties if it supplied Russia with munitions or helped it evade sanctions.
Mr Sullivan told Mr Yang – Xi Jinping’s top foreign policy adviser – that Washington had “deep concerns” about “alignment” between Russia and China, during an intense, seven-hour meeting in Rome.
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The Fed’s other inflation-fighting medicine might be harder to swallow
The Fed’s official interest rate is given all the attention, but shrinking its balance sheet will also drive up borrowing costs to households and business.
Matthew Cranston United States correspondent
Mar 17, 2022 – 9.27am
Washington| After three years of easy money and, more recently, breakaway inflation, the Federal Reserve has known for a while that Americans needed to take some medicine.
On Wednesday (Thursday AEDT), fearing a violent reaction from financial markets, the world’s most powerful central bank administered just a minimum dose.
Share markets surged, and bond yields - after having initially spiked - eased when the Fed announced its first increase in the Fed funds rate - of 0.25 percentage point - in three years.
The market reaction, of relief rather than panic, suggests that the Fed did go easy, and could have gone harder.
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https://www.afr.com/policy/foreign-affairs/china-s-big-stake-in-the-ukraine-fight-20220315-p5a4xc
China’s big stake in the Ukraine fight
China wants to adjust the global order to its liking, not bring it crashing down. How does it curb its reckless ally?
Colin Heseltine
Mar 16, 2022 – 1.09pm
China is in a bind. Locked into a friendship with Russia declared by both countries only last month as having no limits, already this has been challenged.
China’s failure to vote with Russia on two UN resolutions condemning the latter’s invasion of Ukraine – it abstained along with 34 other countries – clearly set a limit to the friendship.
At the same time China has not criticised Russia for invading a sovereign independent member of the United Nations, placing the blame on the United States for not respecting Russia’s security needs and promoting the eastern expansion of NATO.
Foreign Minister Wang Yi said on March 8 at the National People’s Congress meeting in Beijing that the two countries were each other’s most important close neighbours and strategic partners, and that the friendship between the peoples was “rock solid”.
Russian and Chinese co-operation, he said, contributed to peace and stability in the world.
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As China quietly joins sanctions against Russia, Xi might be too rational to risk arming Putin
By Tianlei Huang and Nicholas R. Lardy
March 16, 2022 — 1.04pm
The protracted war in Ukraine has plainly caught China off guard and led to some confusion and mixed reports about the extent to which President Xi Jinping’s regime supports Moscow’s offensive.
China continues to withhold explicit criticism of the Russian invasion and may still be working to formulate a coherent response. But beyond the rhetoric out of Beijing, the evidence suggests China is not acting to undermine the economic and financial sanctions on Russia and indeed has moved to support the drive to isolate Russia economically.
We believe this is the result of a cost-benefit calculation by Xi, who appears to be far more rational than Russia’s President, Vladimir Putin.
Consider the following. From the outset of Russia’s invasion of Ukraine, two major Chinese state-controlled banks have reportedly refused to provide US dollar-denominated letters of credit to finance imports from Russia. The Asian Infrastructure Investment Bank, in which China is the largest shareholder, announced a suspension of any new lending to Russia. The New Development Bank (the so-called BRICS Bank), which is headquartered in Shanghai, made a similar announcement.
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‘It is tempting to report that Zelensky will prevail over Putin. But I can’t’
March 16, 2022 — 3.51pm
Kramatorsk: Ukraine’s heroics in fighting off a Russian invasion have captured our attention but what many fail to grasp is that the nation will lose this war unless something changes.
None of this is to say that Russian President Vladimir Putin will win. The Russian economy is in ruins and what many thought would be a three-day operation to conquer the capital, Kyiv, is now a war entering its fourth week. Putin’s military misadventure is likely to rival Russia’s invasion of Afghanistan and America’s forays in the Middle East and Vietnam in terms of disastrous interventions.
But we must be more clear-eyed about what lies ahead for the Ukrainians, otherwise their gallant fight will come to nothing.
Having spent more than two weeks in Ukraine covering the invasion, I’m here to tell you that Russia is getting over its initial logistical problems and is starting to methodically put in place a proper plan to encircle Ukraine’s biggest cities. In the absence of some kind of intervention, miraculous diplomatic breakthrough or outright capitulation by Putin, Russian soldiers will eventually overwhelm the Ukrainians.
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Time for West to take off the gloves
11:00PM March 16, 2022
In his vainglorious march to conquest, Russian President Vladimir Putin has decided to bomb Ukraine back to the Stone Age. He is deliberately and criminally targeting civilians with vacuum, cluster and phosphorus munitions to break Ukrainian morale in flagrant violation of international humanitarian law.
Chemical and biological weapons may be next. They are weapons of mass destruction.
Putin’s war of liberation is turning into a war of obliteration. It must be stopped to save lives, maintain Ukraine’s sovereignty, uphold democracy, and prevent eastern Europe and the Baltic States from disappearing behind another iron curtain.
This is a moral and geopolitical imperative. And the West has the means to do it. NATO must declare and enforce a humanitarian no-fly zone over western Ukraine; ramp up the supply of arms to the embattled Ukrainian forces; embargo all Russian oil and gas; and prevent any further movement of goods into Russia across the Belarus border.
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https://www.afr.com/policy/foreign-affairs/this-is-how-world-war-iii-begins-20220316-p5a55w
This is how World War III begins
The West has spent most of the past 22 years placating Putin through a long cycle of resets and wrist slaps. The devastation of Ukraine is the fruit of this appeasement.
Bret Stephens
Updated Mar 17, 2022 – 1.32pm, first published at 12.37pm
The usual date given for the start of World War II is September 1, 1939, when Hitler invaded Poland after the signing of the Molotov-Ribbentrop Pact. However, it was just one in a series of events that, at the time, could have seemed disconnected.
Among them: Japan’s invasion of Manchuria in 1931; Italy’s invasion of Abyssinia in 1935; the remilitarisation of the Rhineland in 1936 and the Spanish Civil War, which started the same year; Anschluss with Austria and the Sudeten crisis of 1938; The Soviet invasion of Poland weeks after the German one, and Germany’s western invasions the following year; Operation Barbarossa and Pearl Harbour in 1941.
The point is, World War II did not so much begin as it gathered, in the same way that water rises until it breaches a dam. We, too, have been living through years of rising waters, although it took Russia’s invasion of Ukraine for much of the world to notice.
Before the invasion, we had the Russian invasions of Georgia, Crimea and eastern Ukraine; the Russian carpet bombing of Aleppo, Syria; the use of exotic radioactive and chemical agents against Russian dissidents on British soil; Russian interference in US elections and massive hacks of our computer networks; the murder of Boris Nemtsov and the blatant poisoning and imprisonment of Alexei Navalny
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How Russia’s revamped military fumbled the invasion of Ukraine
By Thomas Grove And Stephen Fidler
Dow Jones
March 18, 2022
For over a decade, Russia spent hundreds of billions of dollars restructuring its military into a smaller, better equipped and more-professional force that could face off against the West.
Three weeks into Russia’s invasion of Ukraine, its first big test, the armed forces have floundered. Western intelligence estimated last week that 5,000 to 6,000 Russian troops had been killed, some of them poorly trained conscripts.
The dead included four Russian generals -- one-fifth of the number estimated to be in Ukraine -- along with other senior commanders, according to a Western official and Ukrainian military reports. The generals were close to the front lines, some Western officials said, a sign that lower ranks in forward units were likely unable to make decisions or fearful of advancing.
Russian troops turned to using open telephone and analog radios following the failure of encrypted communications systems, the Ukrainian Defense Ministry has said, making them vulnerable to intercept or jamming. Russian officers were likely targeted after their positions were exposed by their use of open communications, Western military analysts said.
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https://www.afr.com/policy/foreign-affairs/china-s-elites-gag-on-vlad-the-toxic-20220317-p5a5gh
China’s elites gag on ‘Vlad the Toxic’
China’s top people see a successful country standing tall in the world. Now their leader is tarring it all by association with the wrecker and war criminal in Moscow.
Geoff Raby Columnist
Mar 18, 2022 – 11.34am
In politics a catchy phrase can be used to devastating effect, such as John Howard’s assertion that his Labor opponent, Kim Beazley, “had no ticker”. With this, the Liberals could focus on Labor’s perceived weakness on national security and border protection. It may well have cost Beazley the 2001 election.
In international relations, such glib catchphrases can frame serious policy choices, divide countries and lead to countervailing reactions. In 2002, president George W. Bush’s “Axis of Evil” linking North Korea, Iran and Iraq led to the creation by Iran of the “Axis of Resistance” – and concern among key US allies not to be seen standing too close to Washington.
With the outrageous Russian invasion of Ukraine, our Prime Minister’s speech-writers have come up with “Arc of Autocracy”, linking Russia and China in an alliance of autocratic states that stand opposed to democracies. Without nuance or subtlety, it presupposes a neat alignment of interests, divides the world order into two hostile groups, and implies undifferentiated policy responses towards the autocracies.
It is worth recalling that after the Sino-Soviet split in 1961, it took a decade for Western governments to look beyond the “communism” tag to understand that China and the Soviet Union had indeed fallen out.
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https://www.afr.com/world/north-america/how-us-power-came-out-from-the-shadows-20220315-p5a4o0
How US power came out from the shadows
The support of Ukraine has reminded the world that the United States is a military and financial superpower capable of standing up against dictators.
Matthew Cranston United States correspondent
Updated Mar 18, 2022 – 2.17pm, first published at 1.27pm
Washington| On February 23, when Ukraine forces used a cache of American Javelin missiles to send hellfire into a row of invading Russian tanks, they caught, first-hand, a glimpse of the extraordinary military might of the United States.
Less than 24 hours later, Russia got a taste of a different type of US weaponry. It was a sentence from US President Joe Biden that spelled it out. “We’ve cut off the Russian government from Western finance.”
The words sent an economic missile into Russia’s MOEX sharemarket index, causing a $US189 billion ($256 billion) haemorrhaging of shareholder wealth in a single day – the fifth-worst in the history of any global index – and sending the rouble plunging to the value of an American penny.
The damage has been extraordinary, especially considering not a single US soldier’s boot has stepped into Ukraine. This week, Biden announced another $US800 million of assistance to Ukraine, including hundreds of anti-air systems and thousands of anti-tank weapons.
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‘Raising concerns’: US warns China on support for Russia in Ukraine war
By Aamer Madhani
Updated March 15, 2022 — 9.29amfirst published at 5.07am
Talking points
· US adviser Jake Sullivan and senior Chinese foreign policy adviser Yang Jiechi met in Rome to discuss China’s support for Russia in the Ukrainian invasion.
· The US side “very clearly” raised its concerns about China’s possible support for Russia.
· A convoy of 160 civilian cars left the encircled port city of Mariupol along a designated humanitarian route. Russia later blocked aid from entering.
· Two people were killed when the Russians struck an airplane factory in Kyiv, sparking a large fire.
· A pregnant woman photographed being carried from a bombed maternity hospital in Mariupol last week has died along with her baby.
Washington: Face to face, President Joe Biden’s national security adviser warned a top Chinese official on Tuesday AEDT about China’s support for Russia in the Ukrainian invasion, even as the Kremlin denied reports it had requested Chinese military equipment to use in the war.
US adviser Jake Sullivan and senior Chinese foreign policy adviser Yang Jiechi met in Rome, with the Biden administration increasingly concerned that China is using the Ukraine war to advance Beijing’s long-term interest in its competition with the United States.
Sullivan was seeking clarity on Beijing’s posture and was warning the Chinese anew that assistance for Russia — including helping it avert sanctions imposed by the US and Western allies — would be costly for them.
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Moscow claims hypersonic missile use, Kyiv asks Beijing to condemn 'barbarism'
AFP
March 20, 2022
Ukraine called on China on Saturday to join the West in condemning "Russian barbarism", as Moscow claimed it had struck a Ukrainian arms depot with hypersonic missiles in what would be the first use in combat of the next-generation weapons.
That attack, not far from the Romanian border in the west, came as Russia said its troops had broken through Ukrainian defences to enter the besieged southern port city of Mariupol, a scene of mounting desperation.
The plea for China to condemn the invasion came from a top Zelensky advisor, Mikhailo Podolyak.
While Western countries have shown unity in the face of an invasion whose brutality has been clearly documented on social media, China has so far refused to condemn it.
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Reconfigure trade globalisation after the Ukraine war but keep it alive
The Economist
2:17PM March 19, 2022
The invasion of Ukraine is the third big blow to globalisation in a decade. First came President Donald Trump’s trade wars. Next was a pandemic in which cross-border flows of capital, goods and people almost stopped. Now armed conflict in Europe’s breadbasket, besieged Black Sea ports and sanctions on Russia have triggered a supply shock that is ripping through the world economy.
Wheat prices have risen by 40 per cent, Europeans may face gas shortages later this year, and there is a squeeze on nickel, used in batteries, including for electric cars. Around the world many firms and consumers are grappling with supply chains that have proved too fragile to depend on — yet again.
If you look beyond the chaos, Vladimir Putin’s warmongering also raises a question about globalisation that is uncomfortable for free-traders. Is it prudent for open societies to conduct normal economic relations with autocratic ones, such as Russia and China, that abuse human rights, endanger security and grow more threatening the richer they get?
In principle, the answer is simple: democracies should seek to maximise trade without compromising national security. In practice, that is a hard line to draw. Russia’s war shows that a surgical redesign of supply chains is needed to prevent autocratic countries from bullying liberal ones. What the world does not need is a dangerous lurch towards self-sufficiency.
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I look forward to comments on all this!
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David.
