In the enemy camp. What the future holds for Russia

The New Voice of Ukraine – Opinion

In the enemy camp. What the future holds for Russia

The New Voice of Ukraine – January 15, 2024

Putin claims that Russians are living better
Putin claims that Russians are living better

Russia will become North Korea, and Putin will become Kim Jong-un

Regarding Russia and its near future, we must realize that the margin of economic and institutional stability of Russian statehood will remain strong. However, Russia will still undergo profound changes and transformations.

The political system in Russia will be in a state of latent turbulence. The ruling Kremlin elite will do its best to preserve the image of the collective Putin in the public mind. However, the Kremlin’s towers will be swaying in different directions as all participants prepare for the transition of power in post-Putin Russia. A step-by-step plan has been created on how and who to act.

In the Russian Federation, people’s trust in each other is low by world standards, which indicates tension in society, mass fears, and mutual alienation at the social level.

A similar situation will be observed in the regions, particularly in the national republics and autonomous districts. Centrifugal processes will accelerate, provoking a reaction from the central government. A striking example of a “watchdog” over certain national fringes is the head of Chechnya, Ramzan Kadyrov. This will provoke even greater confrontation.

The Kremlin’s towers will be swaying in different directions

These processes will be deepened and accelerated by the country’s difficult social and economic situation, which has wholly switched to war. Inflation, an increase in the discount rate, higher prices for food, fuel, housing, and utilities, significant import restrictions, and rising lending rates will also increase tensions. The social gap between large metropolitan areas and the regions will rapidly deepen. Forced mobilization and border closures will increase the shortage of skilled labor. At the same time, it is impossible not to note the steps the Russian Federation took to stabilize the financial and economic system, which resulted in a budget deficit of 0.7% of GDP.

Putting the economy on a war footing, coupled with the West’s toughened sanctions policy against exports to Russia, will undoubtedly lead to a deepening shortage of certain consumer goods, from imported cars and spare parts to gaskets and toothpaste. Gray imports, which the Russians use in their military-industrial complex, cannot cover the needs of a country of 110 million people for essential hygiene products or household appliances. This situation will undoubtedly strengthen China, which is already actively pursuing economic expansion in Russia. An example is the assembly of JAC cars under the Moskvich brand at the former Renaut plant. The well-known Russian Lada Kalina will suffer a similar fate of complete “Chineseization.”

The state of affairs in the Russian armed forces will also affect public sentiment. “Meat assaults” will remain a key tactic of Russian generals. This will affect the moral and psychological state of the personnel, and the growth of the death conveyor will further drive Russian society into alcoholic apathy. The return of demobilized soldiers from the front will lead to massive criminalization of the Russian hinterland, including yesterday’s convicts. Problems with army logistics will remain. Russian soldiers will continue to be massively underfunded and underprovisioned and will go into battle with outdated weapons.

Old and new special operations

Russia will not abandon the KGB’s usual practice of creating “sources of instability” in different parts of Europe and the world. The main areas of such work are the Balkans (Kosovo, Bosnia and Herzegovina), Kazakhstan (northern regions of the country), Armenia, Moldova, the Baltic States, Niger, and Sudan. In the Baltics, the Russians will only “shake” the socio-political situation through their agents, playing the old card of “protecting the rights of Russian speakers.” They will provoke a direct armed conflict in Kosovo, using historical differences between Serbia and the former autonomous province of the Socialist Federal Republic of Yugoslavia. In Kazakhstan, a scenario using proxy armed groups such as the “Donbas militia” of 2014 is possible. The main goal of such sabotage activities is to divert attention from Ukraine and create global chaos and the illusion that complete peace cannot be established without the participation of the Kremlin and Russia.

Putin’s Death and the Transition of Power

2024 is the year of the Russian presidential election. However, even Putin’s death or re-election for another term will not fundamentally change the strategic situation for Ukraine. But there are nuances.

Putin’s obvious re-election will show that the Kremlin’s policy remains unchanged. That is, the military and political leadership will continue to try to implement a strategy to restore the Russian Empire within the borders of the former Soviet Union.

At the same time, the order of the International Court of Justice in The Hague significantly restricts Putin’s international communications. It marginalizes not only him personally but the entire country. Consequently, Russia’s official representation in the international arena will primarily be purely formal. It will only be fully effective in some African and Asian countries. As a result, this factor will undoubtedly push Russia to the margins of the global political landscape, turning it into a third-world country. This status has already become a significant problem for Russian elites and those Russian citizens who are used to considering themselves “people of the world.” And now they will live in a new “North Korea” with a new “Kim Jong-un.”

A Ukrainian floating drone that is devastating Russia’s Black Sea fleet can now fire missiles

Business Insider

A Ukrainian floating drone that is devastating Russia’s Black Sea fleet can now fire missiles

Tom Porter – January 15, 2024

Ukraine sends 'army of drones' to fight Russian troopsScroll back up to restore default view.

  • Ukraine has used sea drones to attack Russia’s Black Sea fleet.
  • It’s now able to fit them with missiles enabling them to fire at ships, it says.
  • Ukraine has had to improvise to offset Russia’s naval superiority.

Ukraine claims it has fitted the floating drones it is using to devastate Russia’s Black Sea fleet with missile launchers, making them even more deadly.

Ukraine’s intelligence service, the SBU, in early January released grainy video footage which it claimed showed its “Sea Baby” drones firing missiles at Russian vessels.

According to the Ukrainska Pravda, Russian ships had left a port near Sevastopol in occupied Crimea to sink the drones after an attack — but instead of seeking to outpace them, the drones turned back and fired missiles at the Russian vessels.

It’s unclear exactly when the incident took place, or what kind of rockets were used.

The SBU confirmed the authenticity of the video to Business Insider.

It’s not the only enhancement Ukraine has made to the devices, the report said, with the drones now fitted with up to 850 kilograms of explosives, flamethrowers, $300,000 worth of communications equipment, and material designed to evade radars.

Throughout its two-year-long battle to repel the Russian invasion, Ukraine has had to resort to improvisation and ingenuity to offset Russia’s military and manpower advantages.

One of its most striking successes in 2023 has been inflicting a series of devastating attacks on Russia’s Black Sea fleet, despite its navy being a fraction of the size of Russia’s.

The sea drones, or unmanned surface vehicles (USVs), it’s developed have been vital to the success of the attacks, with the remote-controlled devices used to surveil Russian naval bases and launch attacks on ships by being fitted with explosives.

The drones “have provided Ukraine’s nearly non-existent navy with an asymmetric capability to challenge Russia’s larger and more capable Black Sea Fleet,” Nicholas Johnson, a naval warfare expert with the RAND Corporation, told Business Insider.

“Ukraine’s employment of these small explosive vessels has imposed Russian losses and shown operational impacts on their ability to wage war.”

The drones are built using components that are readily available, are much cheaper than missiles, and don’t need a crew to operate them, notes security expert Wes O’Donnell.

They were invented by Ukrainian security services and used in an attack on the Kerch Strait bridge last July which seriously damaged it.

The drones were used for the first time ever in a naval attack in October 2022, when Ukraine attacked Russian naval vessels docked in Sevastopol, and according to the BBC have been used in around 13 attacks since.

Their capacity to strike Russia’s fleet in its own naval bases has challenged Russia’s dominance of the Black Sea, forcing it to move ships away from Sevastopol to evade attacks, said Johnson.

Vasyl Maliuk, who leads the SBU, told CNN last year that the drones are built without private sector involvement in a secret underground base and are continually being modified and improved on.

Johnson said that fitting the vessels with rocket launchers massively increased the type of targets they could attack.

“This modification would also allow USVs to hold a wider range of assets at risk, potentially including targets ashore, small boats, or even employing surface-to-air missiles to target aircraft,” he said. “By utilizing joint salvos of missiles from USVs in addition to aircraft and ground launchers, Ukraine could leverage multiple axis of attack further complicating Russia’s air defense picture.”

However, they come with some drawbacks. Interruptions to the camera feed can make them difficult to control, and they can go off course, with a drone found washed up ashore near Sevastopol in September 2022 and seized by Russia, reports say.

Johnson told BI that the vessels are vulnerable to air or boat attacks, and their signals can be scrambled by electronic-warfare units, meaning they can be cut off from their controllers.

And recent adaptations, such as fitting them with expensive missiles, mean they are no longer just a relatively cheap way of launching mass attacks on Russian ships, but would have to be used more carefully, he said.

Russia receiving military-linked goods from Finnish companies

Kyiv Independent

Media: Russia receiving military-linked goods from Finnish companies

Dinara Khalilova – January 15, 2024

Over 20 Finnish companies managed or owned by Russians have been exporting high technology and other goods that can be used in the military industry to Russia, according to an investigation by Finland’s public broadcaster YLE Published on January 15th.

The investigation revealed that at least nine customers of the Finnish companies have direct links to the Russian military sector and intelligence agencies such as Russia’s Federal Security Service (FSB).

These are small logistics firms operating mostly in southeastern Finland, near major logistics hubs, YLE wrote. At least four of them are already subjects of criminal investigations.

A Russian-linked company operating in Lappeenranta has sent to Russia “numerous packages” with sensors, diesel engines, fuel pumps, and transmission equipment, which experts have classified as critical supplies in warfare, according to the investigation.

According to Russian public procurement data, two of the firm’s clients have ties to the FSB, with one of the clients posting a letter on their website thanking the FSB for good cooperation.

Read also: Most of 2,500 foreign components Ukraine found in Russian weapons come from US (GRAPHS)

Similar components were reportedly found in destroyed Russian weapons and vehicles in Ukraine, but not all of them were subjected to Western sanctions, which has made it easier to export them to Russia.

Other products exported to Russia by the Finnish companies include equipment for military research, product development, and intelligence activities, as well as engine parts and electronics, the media outlet wrote.

It is not clear, though, whether the Russian military has specifically used the goods exported from the Finnish companies covered in the investigation.

According to YLE, some goods were exported from Finland to Russia through Uzbekistan, which Russia has reportedly used to evade Western sanctions.

Following the outbreak of the full-scale war against Ukraine, Western countries imposed extensive sanctions against Russia, banning imports of electronics and other goods critical for the production of high-tech weapons like missiles or drones.

In spite of these restrictions, Moscow continues to acquire dual-use goods via third-party countries like Uzbekistan, Kazakhstan, Turkey, or China.

Pritzker: Confiscation of Russian assets needs collective action

The Kyiv Independent

Pritzker: Confiscation of Russian assets needs collective action

Martin Fornusek – January 15, 2024

The decision to confiscate frozen Russian assets must be taken on a collective level and is unlikely to happen quickly, U.S. Special Representative for Economic Recovery in Ukraine Penny Pritzker said during the World Economic Forum on Jan. 15, Ukrinform reported.

Western countries have frozen over $300 billion in the Russian central bank’s sovereign assets since the start of the full-scale invasion of Ukraine.

Last week, Bloomberg reported that the White House backs legislation that would allow the confiscation of Russia’s funds. Washington reportedly seeks to coordinate such a step with Group of the Seven (G7) members.

“I think there’s enormous hope that the Russian sovereign assets could become an easy source of financing,” Pritzker said at the sidelines of the Davos summit, according to the Radio France Internationale (RFI).

“The whole thing is very complicated. And the first thing you know is a ton of lawyers need to get involved.”

Around two-thirds of the assets are held in European accounts, while only up to $5 billion are frozen at U.S. institutions.

Involved countries have been so far hesitant to outright seize the assets over numerous legal and fiscal pitfalls.

Instead, the EU has been discussing ways of providing Ukraine with a windfall tax on profits generated by the frozen assets. In October, Belgium announced it would create a $1.8 billion fund for Ukraine, financed by the tax revenue from interest on frozen Russian assets.

The World Bank assessed early in 2023 that the total cost of Ukraine’s reconstruction would amount to $411 billion. Ukrainian Foreign Minister Dmytro Kuleba commented earlier this week that the full amount of Russian assets could cover over 80% of recovery costs.

The U.S., with the support of the U.K., Japan, and Canada, are reportedly preparing viable options for confiscating the assets, which should be discussed during a G7 meeting in February.

Read also: Opinion: Seizing Russia’s frozen assets is the right move

Why the World Is Betting Against American Democracy

Politico

Why the World Is Betting Against American Democracy

Nahal Toosi – January 15, 2024

Liesa Johannssen/AP

When I asked the European ambassador to talk to me about America’s deepening partisan divide, I expected a polite brushoff at best. Foreign diplomats are usually loath to discuss domestic U.S. politics.

Instead, the ambassador unloaded for an hour, warning that America’s poisonous politics are hurting its security, its economy, its friends and its standing as a pillar of democracy and global stability.

The U.S. is a “fat buffalo trying to take a nap” as hungry wolves approach, the envoy mused. “I can hear those Champagne bottle corks popping in Moscow — like it’s Christmas every fucking day.”

As voters cast ballots in the Iowa caucuses Monday, many in the United States see this year’s presidential election as a test of American democracy. But, in a series of conversations with a dozen current and former diplomats, I sensed that to many of our friends abroad, the U.S. is already failing that test.

The diplomats are aghast that so many U.S. leaders let their zeal for partisan politics prevent the basic functions of government. It’s a major topic of conversations at their private dinners and gatherings. Many of those I talked to were granted anonymity to be as candid with me as they are with each other.

For example, one former Arab ambassador who was posted in the U.S. during both Republican and Democratic administrations told me American politics have become so unhealthy that he’d turn down a chance to return.

“I don’t know if in the coming years people will be looking at the United States as a model for democracy,” a second Arab diplomat warned.


Many of these conversations wouldn’t have happened a few months ago. There are rules, traditions and pragmatic concerns that discourage foreign diplomats from commenting on the internal politics of another country, even as they closely watch events such as the Iowa caucuses. (One rare exception: some spoke out on America’s astonishing 2016 election.)

But the contours of this year’s presidential campaign, a Congress that can barely choose a House speaker or keep the government open, and, perhaps above all, the U.S. debate on military aid for Ukraine have led some diplomats to drop their inhibitions. And while they were often hesitant to name one party as the bigger culprit, many of the examples they pointed to involved Republican members of Congress.

As they vented their frustrations, I felt as if I was hearing from a group of people wishing they could stage an intervention for a friend hitting rock bottom. Their concerns don’t stem from mere altruism; they’re worried because America’s state of being affects their countries, too.

“When the United States’ voice is not as strong, is not as balanced, is not as fair as it should be, then a problem is created for the world,” said Ronald Sanders, Antigua and Barbuda’s longtime ambassador in Washington.

Donald Trump’s name came up in my conversations, but not as often as you’d think.

Yes, I was told, a Trump win in 2024 would accelerate America’s polarization — but a Trump loss is unlikely to significantly slow or reverse the structural forces leading many of its politicians to treat compromise as a sin. The likelihood of a closely split House and Senate following the 2024 vote adds to the worries.

The diplomats focused much of their alarm on the U.S. debate over military aid to Ukraine — I was taken aback by how even some whose nations had little connection to Russia’s war raised the topic.

In particular, they criticized the decision to connect the issue of Ukrainian aid and Israeli aid to U.S. border security. Not only did the move tangle a foreign policy issue with a largely domestic one, but border security and immigration also are topics about which the partisan fever runs unusually high, making it harder to get a deal. Immigration issues in particular are a problem many U.S. lawmakers have little incentive to actually solve because it robs them of a rallying cry on the campaign trail.

So now, “Ukraine might not get aid, Israel might not get aid, because of pure polarization politics,” said Francisco Santos Calderón, a former Colombian ambassador to the United States.

Diplomats from many European countries are especially unhappy.

They remember how, when Russia launched its full-scale invasion of Ukraine, many Republicans downplayed concerns about the far-right fringe in their party that questioned what was then solid, bipartisan support. Now, as the debate over the aid unfolds, it seems the far-right is calling the shots.

There’s a growing sense among foreign diplomats that moral or national security arguments — about defending a country unjustly invaded, deterring Russia, preventing a bigger war in Europe and safeguarding democracy — don’t work on the American far-right.

Instead, some are stressing to U.S. lawmakers that funds for Ukraine are largely spent inside the United States, creating jobs and helping rebuild America’s defense industrial base (while having the side benefit of degrading the military of a major U.S. foe).

“If this doesn’t make sense to the politicians, then what will?” the European ambassador asked.

A former Eastern European ambassador to D.C. worried about how some GOP war critics cast the Ukraine crisis as President Joe Biden’s war when “in reality, the consideration should be to the national interests of the United States.”

Foreign diplomats also are watching in alarm as polarizing abortion politics have delayed the promotions of U.S. military officers and threaten to damage PEPFAR, an anti-AIDS program that has saved millions of lives in Africa. That there are questions about America’s commitment to NATO dumbfounds the diplomats I talked to. Then, there are the lengthy delays in Senate confirmations of U.S. ambassadors and other officials — a trend exacerbated by lawmakers from both parties.

“There was always a certain courtesy that the other party gave to let the president appoint a Cabinet. What if these courtesies don’t hold as they don’t seem to hold now?” a former Asian ambassador said. “It is very concerning.”

When Republicans and Democrats strike deals, they love to say it shows the system works. But simply having a fractious, lengthy and seemingly unnecessary debate about a topic of global security can damage the perception of the U.S. as a reliable partner.

“It is right that countries debate their foreign policy stances, but if all foreign policy issues become domestic political theater, it becomes increasingly challenging for America to effectively play its global role on issues that need long-term commitment and U.S. political capital — such as climate change, Chinese authoritarianism, peace in the Middle East and containing Russian gangsterism,” a third European diplomat warned.

The current and former diplomats said their countries are more reluctant to sign deals with Washington because of the partisan divide. There’s worry that a new administration will abandon past agreements purely to appease rowdy electoral bases and not for legitimate national security reasons. The fate of the Iran nuclear deal was one example some mentioned.

“Foreign relations is very much based on trust, and when you know that the person that is in front of you may not be there or might be followed by somebody that feels exactly the opposite way, what is your incentive to do long-term deals?” a former Latin American diplomat asked.

Still, there’s no ambassadorial movement to band together and draw up a petition or a letter urging greater U.S. unity or focus.

The diplomats’ countries don’t always have the same interests. Some have plenty of polarizing politics themselves. In other words, there will be no intervention.

Some of the diplomats stressed they admire America — some attended college here. They acknowledged they don’t have some magical solution to the forces deepening its political polarization, from gerrymandered congressional districts to a fractured media landscape.

They know the U.S. has had polarized moments in the past, from the mid-1800s to the Vietnam War, that affected its foreign policy.

But they’re worried today’s U.S. political divisions could have lasting impact on an increasingly interconnected world.

“The world does not have time for the U.S. to rebound back,” the former Asian ambassador said. “We’ve gone from a unipolar world that we’re familiar with from the 1990s into a multipolar world, but the key pole is still the United States. And if that key pole is not playing the role that we want the U.S. to do, you’ll see alternative forces coming up.”

Russia’s diplomats, meanwhile, are among those delighting in the U.S. chaos (and fanning it). The Eastern European ambassador said the Russians had long warned their counterparts not to trust or rely on Washington.

And now what do they say? “We told you so.”

So the world’s envoys are reconsidering how their governments can deal with this America for many years and presidents to come.

Some predicted that a Republican win in November would mean their countries would have to become more transactional in their relationship with the United States instead of counting on it as a partner who’ll be there no matter what. Embassies already are beefing up their contacts among Republicans in case they win back the White House.

“Most countries will be in defensive positions, because the asymmetry of power between them and the United States is such that there’s little proactively or offensively that you can do to impact that,” said Arturo Sarukhan, a former Mexican ambassador to the United States.

When I asked diplomats what advice they’d offer America’s politicians if they were free to do so, several said the same thing: Find a way to overcome your divisions, at least when it comes to issues that reverberate beyond U.S. borders.

“Please create a consensus and a long-term foreign policy,” said Santos, the former Colombian ambassador. “When you have consensus, you don’t let the internal issues create an international foreign policy crisis.”

Davos: Global crises set to dominate gathering of business leaders

BBC News

Davos: Global crises set to dominate gathering of business leaders

Faisal Islam – Economics editor – January 15, 2024

A woman takes a picture in front of a screen displaying AI-generated artwork
A woman takes a picture in front of a screen displaying AI-generated artwork

Just a week ago, the expectation about the latest gathering of the World Economic Forum in Davos, Switzerland, was of a line being drawn under three years of pandemic, lockdown and Ukraine war energy shocks.

Inflation is falling, and 2024 was set to be the year that central banks start cutting interest rates, including here in the UK. In three years of different rolling, merging global crises, the world economy has been in the shadow of massive geopolitical shifts.

The events of the past few days shows that the “polycrisis” is far from over.

Perhaps the most telling development has been the ability of the Houthis to use relatively cheap drones and armaments to cause havoc with world trade. Air strikes on the Houthis in Yemen were carried out explicitly to keep the currents of trade and economic recovery flowing through the straits leading to the Suez Canal.

But oil prices jumped on Friday because the risk of a wider confrontation in the region has also gone up. In three months the crisis in Gaza has led to RAF jets attacking targets in Aden. What will be happening three months from now?

As it happens, this sort of fundamental diplomatic challenge is made for the World Economic Forum. Launched in 1971, and held every year in the Alpine ski resort of Davos, the conference puts together the world’s top business people and politicians, as well as key players from charity and academia.

Where else would the Israeli president, Saudi foreign minister and Qatari prime minister be present in the same space at the same time, alongside French President Emmanuel Macron, UK Foreign Secretary David Cameron, US Secretary of State Antony Blinken and Chinese Premier Li Qiang?

Expectations are low surrounding the grim situation in the Middle East, but this is the sort of place where constructive and unexpected conversations can take place discreetly.

There had been a whiff of decay about Davos since the pandemic. G7 leader appearances were getting rarer. Rishi Sunak hasn’t been and isn’t going this week. In a huge year for elections across the globe the US delegation this year is particularly thin. Republicans in particular view the event with some suspicion.

The Republican Party’s Ron DeSantis, a potential presidential candidate, last year called Davos a “threat to freedom” run by China. The Florida governor said any policies emerging from the forum were “dead on arrival” in his state. The view in Davos is that he thought that such rhetoric would play well in the presidential primaries which also start this week.

Ukraine’s President Volodymyr Zelensky is attending, and will be mindful of “Ukraine fatigue” reaching Washington DC and becoming prevalent in developing countries.

Police at Davos
Security is always tight at the Davos gathering

For the UK, some in the business community appear ready to go beyond a curious interest in the Labour Party in this election year.

Chancellor Jeremy Hunt and shadow chancellor Rachel Reeves will be competing for the attention of UK business leaders and international investors.

If business investors are worried about Labour’s economic plans, for example for extra investment spending, the World Economic Forum is exactly where it may, or may not surface. I recall then-opposition leader David Cameron’s parade of meetings with world leaders, just before he became prime minister in 2010.

There has been a backlash against some of the corporate do-gooding typical of the event, especially the recent focus by investors on companies’ environmental and social policies.

Put brutally, the world of the past two years has seen massive returns for hydrocarbon extractors, carbon emitters and arms companies.

The optimism will come from a hope that disturbed geopolitics can somehow settle without a further energy shock.

Artificial intelligence will be everywhere, with the ChatGPT-creating Open AI boss Sam Altman being paraded to the world’s business and political leaders by Microsoft, which is now vying with Apple to be the world’s biggest company.

So at the start of a delicate year of disorder and uncertainty in global politics and diplomacy, and question marks about economic recovery from years of such crisis, it is difficult to imagine a better moment for a gathering like the World Economic Forum this week.

The task is to travel towards the light at the end of the tunnel. It will not be easy.

Davos Elite Size Up the Global Risks of Another Trump Presidency

Bloomberg

Bloomberg

Davos Elite Size Up the Global Risks of Another Trump Presidency

Francine Lacqua – January 15, 2024

(Bloomberg) — Donald Trump is thousands of miles away from the Alpine Swiss town of Davos but talk of his possible return to the White House is on everyone’s lips even before the annual shindig of the global elite has kicked off.

On Monday, in the subzero temperatures of Iowa, he’s set to cement his status as the Republican frontrunner in the first GOP contest of the 2024 election. His crushing lead over rivals appears unsurmountable and polls show Trump and US President Joe Biden facing off and in a dead heat.

Last seen mingling with the Davos crowd in 2020, when he made a dramatic entrance by landing with a squadron of helicopters, Trump is the last US leader to have shown up at the World Economic Forum but has remained a popular topic of conversation for attendees ranging from CEOs, financiers and policymakers.

“You know, we’ve been there before, we survived it, so we’ll see what it means,” BlackRock Inc. Vice Chairman Philipp Hildebrand said in a Bloomberg Television interview. “Certainly from a European perspective, from a kind of globalist, Atlanticist perspective, it’s of course a great concern.”

The former Swiss National Bank president shared the assessment of European Central Bank President Christine Lagarde, who last week said in plain language unusual for a central banker that another term of Trump would clearly be a threat.

Former US Vice President Al Gore, of course, is no stranger to political shocks having come within a whisker of becoming president himself almost a quarter of a century ago. These days he’s better known for being a climate warrior but he shared some caveats about assuming Trump is an inevitability even as the Republican candidate.

“I don’t think that it’s a foregone conclusion,” he told Bloomberg Television in Davos. “I’ve been through the process, I’ve run four national campaigns over the years and seen it from that perspective. I’ve seen a lot of surprises over the years. Something tells me this may be a year of significant surprises. I hope it’s the case because I don’t want to see him re-nominated and re-elected.”

He even issued a warning about not overplaying the importance of the Iowa vote.

“I’m not sure they’re as significant as some believe, he said. “There have been so many examples – last time in 2016 Ted Cruz won the Iowa caucus, and then it mattered not a whit. We’ve seen others win the Iowa caucus on the Republican side and then disappear.”

–With assistance from Laura Millan and Zoe Schneeweiss.

Ukraine says it shot down 2 Russian command and control aircraft in a significant blow to Moscow

Associated Press

Ukraine says it shot down 2 Russian command and control aircraft in a significant blow to Moscow

Illia Novikov – January 15, 2024

FILE - A Russian Beriev A-50 airborne early warning and control plain flies over Red Square during a rehearsal for the Victory Day military parade in Moscow, Russia, on May 7, 2019. Ukraine’s military chief is claiming that the Ukrainian air force has shot down a Russian Beriev A-50 early warning and control plane and an IL-22 command center aircraft. (AP Photo/Alexander Zemlianichenko, Pool, File)
A Russian Beriev A-50 airborne early warning and control plain flies over Red Square during a rehearsal for the Victory Day military parade in Moscow, Russia, on May 7, 2019. Ukraine’s military chief is claiming that the Ukrainian air force has shot down a Russian Beriev A-50 early warning and control plane and an IL-22 command center aircraft. (AP Photo/Alexander Zemlianichenko, Pool, File)
Ukrainian President Volodymyr Zelenskyy, center, arrives at Zurich's Kloten airport, Switzerland, Monday, Jan. 15, 2024. Zelenskyy is in Switzerland to attend the World Economic Forum in Davos starting Tuesday. (Alessandro della Valle/Keystone via AP)
Ukrainian President Volodymyr Zelenskyy, center, arrives at Zurich’s Kloten airport, Switzerland, Monday, Jan. 15, 2024. Zelenskyy is in Switzerland to attend the World Economic Forum in Davos starting Tuesday. (Alessandro della Valle/Keystone via AP)
FILE - A Ukrainian APC fires towards Russian positions near Avdiivka, in the Donetsk region, Ukraine, Friday, April 28, 2023. The United Nations is appealing for $4.2 billion to help people in Ukraine and displaced outside the country this year. It said Monday, Jan. 15, 2024 that people on the front lines have “exhausted their meager resources” and many refugees also are vulnerable. (AP Photo/Libkos, File)
A Ukrainian APC fires towards Russian positions near Avdiivka, in the Donetsk region, Ukraine, Friday, April 28, 2023. The United Nations is appealing for $4.2 billion to help people in Ukraine and displaced outside the country this year. It said Monday, Jan. 15, 2024 that people on the front lines have “exhausted their meager resources” and many refugees also are vulnerable. (AP Photo/Libkos, File)
Ukrainian President Volodymyr Zelenskyy, left, is accompanied by Switzerland's Foreign Minister Federal Councillor Ignazio Cassis, after his arrival at Zurich's Kloten airport, Switzerland, Monday, Jan. 15, 2024. Zelenskyy is in Switzerland to attend the World Economic Forum in Davos starting Tuesday. (Alessandro della Valle/Keystone via AP)
Ukrainian President Volodymyr Zelenskyy, left, is accompanied by Switzerland’s Foreign Minister Federal Councillor Ignazio Cassis, after his arrival at Zurich’s Kloten airport, Switzerland, Monday, Jan. 15, 2024. Zelenskyy is in Switzerland to attend the World Economic Forum in Davos starting Tuesday. (Alessandro della Valle/Keystone via AP)

KYIV, Ukraine (AP) — The Ukrainian air force shot down a Russian early warning and control plane that can spot targets up to 650 kilometers (400 miles) away and a key command center aircraft that relays information to troops on the ground in a significant blow for the Kremlin’s forces, Ukraine’s military chief said Monday.

The planes are fundamental tools in helping orchestrate Russian battlefield movements in Ukraine. Shooting them down, if confirmed, would be a landmark feat for Ukraine in the almost two-year war, as fighting along the front line is largely bogged down in trench and artillery warfare.

Russia has largely ensured its air dominance during the war, as Ukraine fights with its fleet of Soviet-era warplanes against Moscow’s more more modern aircraft.

Gen. Valeriy Zaluzhnyi, the commander-in-chief of the Ukrainian armed forces, didn’t say how the two aircraft — a Beriev A-50 and an Il-22 — were brought down, but Ukraine has received sophisticated air defense systems from its Western allies.

Zaluzhnyi also did not say where the interceptions occurred, though he attached a video to his social media post with an airplane tracker showing two targets disappearing above the Azov Sea, which lies between Ukraine and Russia, north of the Crimea Peninsula and the Black Sea.

There was no immediate official comment from Moscow. Russian war bloggers said both planes had come under friendly fire, though they presented no evidence of that. They claimed the Il-22 was damaged but made a successful landing.

The A-50, which is topped with a large radar, typically carries a crew of 15. The Russian air force reportedly has been operating a fleet of nine such aircraft.

February 2023 drone attack at an airfield in Belarus damaged a parked A-50, but Russian and Belarusian officials described the damage as minor.

The Il-22 is an airborne command post. It oversees military operations and sends radio signals to troops on the front line. The Russian air force reportedly has a dozen such planes.

Ukraine is eager to impress its Western supporters with its ability in deploying the advanced weapons it has received.

Ukrainian President Volodymyr Zelenskyy was due to meet Swiss President Viola Amherd in Bern later Monday before attending the World Economic Forum in Davos on Tuesday.

Ukrainian officials are striving to keep world attention on the war amid concerns that the conflict is slipping down the list of global priorities.

The United Nations appealed Monday for $4.2 billion to help people in Ukraine and displaced outside the country this year.

Martin Griffiths, the U.N.’s humanitarian chief, acknowledged that “the competition for funding is getting greater” because of crises elsewhere, including the Israel-Hamas war in Gaza.

Russia, meanwhile, was looking to deepen its ties with North Korea, whose foreign minister began a three-day visit to Moscow on Monday.

The Kremlin is eager to replenish its weapons stockpiles. It has in recent times turned to Iran and North Korea for supplies.

Pyongyang has likely supplied several types of missiles to Russia to support its war in Ukraine, along with its widely reported shipments of ammunition and shells, the U.S. and its allies have alleged.

Russian and Iranian defense and foreign ministers spoke by phone Monday to discuss bilateral military and military technical cooperation and regional security issues, according to official statements. They noted that the two countries are preparing to sign a landmark cooperation treaty.

Ukraine is also determined to build up its stocks for a protracted conflict and is “dramatically expanding” its domestic manufacturing capacity for military items, a U.S. think tank said.

Ukraine is well-positioned to succeed in its plans to make up for any shortfall in Western-supplied weaponry, the Institute for the Study of War said.

“Ukraine is heavily industrialized, with a highly educated and technically sophisticated population,” the think tank said late Sunday. “It had a massive arms industry during the Soviet period and continued to be a significant arms exporter after independence.”

$88 trillion in debt and a wave of elections. World leaders are hamstrung

CNN

$88 trillion in debt and a wave of elections. World leaders are hamstrung

Analysis by Hanna Ziady, CNN – January 14, 2024

Nathan Howard/Bloomberg/Getty Images

World leaders are flocking to Davos this week to pontificate on the planet’s most pressing problems.

Two major wars, a shipping crisiscyber attacks on state institutions and yet more alarming evidence of the climate emergency mean there’s no shortage of talking points.

But turning ideas into action when governments owe an unprecedented $88.1 trillion — equivalent almost to the world’s annual economic output — will be hard.

Public debt exploded during the pandemic and new borrowing this year is likely to break records in several big economies, leaving governments less able to respond to shocks such as financial meltdowns, pandemics or wars.

Even in the absence of a new crisis, soaring debt servicing costs will constrain efforts to tackle climate change and care for aging populations. Public services in many countries are already strained after successive budget cuts.

More worryingly still, as debt burdens grow, governments could find themselves unable to borrow more to service existing obligations and fund basic services adequately.

A government unable to finance its debt “would be forced to implement abrupt and painful” spending cuts or tax hikes, said Michael Saunders, a former member of the Bank of England’s monetary policy committee.

“And such a government may lack the fiscal space to respond to future adverse shocks, preventing fiscal support when it is most needed,” he told CNN.

Saunders, now a senior economic adviser at consultancy Oxford Economics, doesn’t think rich economies are approaching what is roughly equivalent to a personal credit limit and points to sustained investor appetite for government debt. But that’s not to say the limit won’t be tested “10, 20, 30 years from now.”

Testing the limit

The United Kingdom — the world’s sixth-biggest economy — offers a cautionary tale of how badly things can go wrong when investors reject a government’s plan to borrow.

In September 2022, the pound and UK government bonds, or gilts, sold off sharply, partly in response to plans by former Prime Minister Liz Truss to issue more debt in order to pay for tax cuts. Mortgage rates and other borrowing costs soared as investors demanded much higher premiums for owning UK debt.

The Bank of England was ultimately forced to intervene and pledge to buy gilts on “whatever scale is necessary.”

“Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability,” Dave Ramsden, a senior official at the central bank, said at the time. “This would lead to … a reduction of the flow of credit to the real economy.”

While central banks can provide temporary emergency support, they cannot finance government deficits in lieu of bond investors.

Just ask crisis-stricken Argentina, where for years the central bank printed pesos to help the country’s spendthrift government continue paying interest on its debt and avoid default. That tactic caused the value of the currency to plummet and prices to rocket. Annual inflation exceeded 211% last month, the highest level in three decades.

A risky year of elections

Government budgets will face renewed scrutiny this year from investors on high alert for politicians tempted to make promises in a bid to win over voters.

Half the world’s population is going to the polls. That swathe of elections means little incentive for belt-tightening among incumbent administrations, while also raising the prospect that incoming leaders will seek to make their mark with new tax and spending plans.

Already, debt is shaping up to be a key issue in this year’s US elections, which will culminate in the presidential election in November. Record levels of public borrowing have become a major point of contention between Republicans and Democrats, aggravating standoffs over the national budget that periodically threaten to starve federal agencies of funds and prevent them from operating.

Mounting debt and political brinksmanship have already taken their toll on America’s credit rating, which typically affects borrowing costs for the government, businesses and households.

Fitch cut its rating on US sovereign debt to AA+ from the top AAA grade last August, citing political polarization as a factor in its decision. Meanwhile, in November, Moody’s warned that it could also remove the United States’ last remaining perfect rating from the big three ratings agencies.

“One of the key elements sustaining a country’s credibility on its ability to repay (debt) is political consensus,” said Raghuram Rajan, a former governor of the Reserve Bank of India.

“It’s not unimaginable that if democracy takes a downturn in the United States, if there is a sense that there will be a political calamity,” the value of US sovereign bonds would fall, he added. And that would increase the government’s borrowing costs.

AI to the rescue?

Even if the worst scenarios are avoided, the increased cost of servicing debt after a recent rapid rise in official interest rates is siphoning ever greater amounts of money away from vital public services — and making it harder to address the climate crisis.

According to reports in UK media, Britain’s main opposition Labour Party has scaled back some of its enormous green spending plans because of concerns about adding to country’s debt burden.

In the current financial year, which ends on April 5, the UK government is expected to spend more on debt interest (£94 billion, or $120 billion) than on either education or defense, according to the Office for Budget Responsibility, a fiscal watchdog.

In the United States, interest costs on a common measure soared to $659 billion in fiscal year 2023, which ended on September 30, according to the Treasury Department. That’s up 39% from the previous year and nearly double what it was in fiscal year 2020.

In 2023 the government spent more to service its debt than it did on each of housing, transport and higher education, according to the Committee for a Responsible Federal Budget, a non-profit.

The surge in advanced economies’ debt that those hefty interest payments partly illustrate coincides with slowing economic growth and a rise in the number of the elderly relative to working-age people. Against that backdrop, it’s unclear how the world will dig itself out of its debt hole.

“What could rescue us relatively painlessly is if we have huge productivity improvements without job losses,” Rajan, now a professor of finance at the University of Chicago Booth School of Business, told CNN, suggesting that artificial intelligence could hold the key.

Indeed, many experts think an AI-powered productivity boom could transform the global economy’s fortunes.

Let’s hope that over the next few days in Switzerland they tell us how.

Anna Cooban contributed reporting.

Western companies have exited Russia in droves. New companies with owners from China and former Soviet republics are stepping in.

Business Insider

Western companies have exited Russia in droves. New companies with owners from China and former Soviet republics are stepping in.

Huileng Tan – January 12, 2024

Russia is buying back weapons it sold to other countries as its arsenal runs lowScroll back up to restore default view.

  • Nearly 10,000 companies with foreign involvement exited Russia in 2022 and the first 10 months of 2023.
  • But the number of firms in Russia with co-owners from China and former Soviet republics has increased sharply.
  • Russia is targeting new markets in the east following sweeping Western sanctions over the invasion.

Western companies have been leaving Russia in droves since Moscow invaded Ukraine nearly two years ago — but new companies from alternative markets are stepping in to take their place.

In total, 9,600 companies with foreign affiliation left Russia in 2022 and the first 10 months of 2023, Vedomosti business daily reported on Thursday, citing a review of official data from the SPARK-Interfax professional information service.

However, the number of new companies in Russia with cofounders from former Soviet republics and China has soared in those two years, per Vedomosti.

Companies with cofounders from former Soviet republics including Belarus, Kyrgyzstan, and Kazakhstan accounted for 59% of all new companies that established operations in Russia last year, per Vedomosti. Companies with cofounders from Turkey and India accounted for 3% and 2% of new firm registrations in that time frame, respectively.

Companies with cofounders from China accounted for 25% — or 1,500 — of new companies in Russia over the first 10 months of 2023.

But it doesn’t appear as if the new entrants are fully making up for the number of those that have left.

In all, 116,400 legal entities with foreign involvement were registered in Russia as of late 2023 — down by more than one-third from a peak of 185,000 foreign-affiliated entities recorded in 2017, according to Vedomosti.

Mikhail Nikolayev, the head of Russian ratings agency ACRA, told the Russian media outlet that while Western sanctions hit the number of foreign-affiliated companies in Russia, the realignment of Russia’s trade and supply chains eastward helped boost new company registrations from alternative markets, according to a Moscow Times translation.

Meanwhile, Russian businesses overseas have also been moving their assets home amid the pressures of Western sanctions and a push by President Vladimir Putin’s regime.

Despite tensions between Russia and the West over the war in Ukraine, about 3% of companies registered in Russia last year were from countries the Kremlin deems “unfriendly” — which means they have imposed sanctions on Russia over the invasion of Ukraine, according to the SPARK-Interfax’s analysis. This still marks a huge decrease from 14% of new companies registered in 2021.

The review from SPARK-Interfax comes nearly two years after Russia’s invasion of Ukraine triggered early pledges from a swathe of international companies to exit the market.

But, Russia has been making it increasingly difficult for foreign companies to exit.

It has introduced a series of steep hurdles to the process, such as demanding companies pay donations to the state and sell their assets at a steep discount before they can exit the country.

Companies operating in strategically important sectors — such as energy and resources — also need Putin’s sign-off before any asset sale.

All in all, what that has amounted to is a large number of unfulfilled promises by Western countries.

Just about 350 international companies have completed their exits from Russia, a tracker from the Kyiv School of Economics shows. Another 1,606 international firms are continuing operations as usual, while 1,741 foreign firms are in various stages of pausing their investments or operation in Russia.