The Great NATO miscalculation ...
Putin underestimated Zelensky. He seriously underestimated how the leaders of the "Free World" and NATO would react.
Perhaps it was an easy mistake to make. Putin had enjoyed four years of laissez-faire with Trump. The U.S. President had demonstrated his disdain for democracy and the admiration of President Putin. A President in power twenty years had a certain appeal, especially with the bonus of a little crony corruption on the side.
Trump had also demonstrated indifference to the NATO Alliance. He berated close allies with long over due debts to Uncle Sam. More votes were on offer at home from an aggressive stance with China. Trump was struggling with the Thucydides trap. The rise of Sparta ensured war with Athens was inevitable. So too it was said, the rise of China would lead to inevitable war in the South China Sea.
Joe Biden appeared to offer even less of a threat. Walk tall and carry a big stick. Biden struggled to walk tall carrying a walking stick. In Germany, the retirement of Angela Merkel would create a leadership vacuum. The Germans were hooked on Russian Gas. Nord Stream two would guarantee a permanent fix. The European Union had been dealt a serious blow with the abdication of Britain from the economic alliance. Putin would have been unimpressed by Defence Secretary Williamson's, now Sir Gavin Williamson's remarks that "Russia should go away and shut up".
The Tanks Rolled over the Border
The Tanks Rolled over the Border and into the abyss. Zelensky held firm. The Ukrainian people defiant. The invasion stalled. The Russians upgraded the levels of civilian attacks and large scale destruction. It is like watching a 1930's news clip. The annexation of a sovereign state, millions of refugees feeling across Europe, a dictator unchallenged at home, the West prepares for war, the threat of nuclear detonation returns.
Sanctions imposed on Russia and the Oligarchs. Russian central bank assets frozen. Putin achieved what Trump could not. The Germans vowed to increase spending to meet the NATO commitment. Georgia and Moldova apply for EU membership. Sweden and Finland may join the alliance.
Higher inflation and lower growth in prospect. Oil trades at $120 dollars his morning. Commodity prices are soaring. Russian stock markets are collapsing. The Russian economy will be badly damaged in the process.
In our next update, we will try to pull together the forecasts for growth and inflation in the year ahead. Meanwhile the tragedy in Ukraine continues ... we are deeply shocked and saddened as the terrible events unfold ...
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