The pandemic and the stimulus packages have preoccupied markets for most of this year but risks relating to the aims of the great powers are too important to ignore.
The growing tensions between China and the US are likely to characterise the Biden era as much as Trump. One of the few things Democrats and Republicans agree about is the need to confront China over technology, cyber threats, theft of intellectual property and alleged trade cheating.
Joe Biden will add a tougher line on human rights infringements than Donald Trump, at a time when China is becoming less cautious in its approach – with crackdowns on liberty in Hong Kong and continuing bad treatment of its Muslim minority.
All the time China is building its military strength, adding a large deep-water navy, improved weaponry and substantial air power. It has extended its reach in the South China Sea by enlarging and defending islands and atolls, and it has responded aggressively to NATO members and Japan when they exercise their rights of passage through international waters.
Now, well advanced with consolidating Hong Kong as just another city state within the Chinese system, Beijing eyes Taiwan and tests out its defences, which it had always regarded as properly part of China, despite the wishes of the islanders to the contrary.
Movements from Moscow
Markets also need to keep an eye open for what Russia is doing. This relatively small economy still supports a disproportionately large defence budget so that Russia can remain one of the big three military powers of the world. Armed with thousands of nuclear warheads, 900,000 military personnel, more than 1,500 fighter planes and large ground forces with tanks and other armoured vehicles, Russia intends to be taken seriously.
Russia wishes to see divided power beyond its borders, so it aims to drive wedges between the US and its European allies – and seeks to oppose EU policy where there is a unified foreign policy view. Russian leader Vladimir Putin seems to regret the breakup of the USSR, when satellites of the former Soviet state gained independence. He is trying to create a ring of smaller countries around Russia that owe their loyalty to him, as he backs some regimes and opposes governments too friendly to the West.
Mr Putin has pulled off a successful coup with the large gas contracts he has drawn up with Germany. The US sees this as a fundamental weakening of the NATO alliance, delivering Germany and parts of the EU into a difficult dependence on Russia at a time of tension between Russia and the West.
He intervened in Georgia in 2008 to detach South Ossetia from that country by supporting independence movements and using Russian forces. He detached Crimea from the Ukraine in 2014, holding a referendum which he claimed showed overwhelming support for Crimea joining Russia. His action was a direct response to a pro-EU Ukrainian government signing an Association Agreement with the EU, which is a strong first step towards full membership.
The Russian president saw Crimea as an integral part of Russia and did not wish to see it moving under some EU control. He has, so far, had to accept that the three Baltic republics that stand between Russia and better access to the Baltic are fully-paid-up members of NATO, who station a significant number of troops there to show they would defend the states against invasion.
Mr Putin supports the recently re-elected, long-standing President of Belarus, who is facing continuous protests from people who believe the election was rigged and wish to see a change of government. In Moldova, his preferred candidate for President lost the recent election. A narrowly pro-Russia parliament is now setting out to thwart the pro-EU president-elect. They have just voted through their budget and have removed control of some security from her. The recently-arranged ceasefire between Armenia and Azerbaijan may produce a peace which Russian forces can help protect. Russia is giving limited help to her ally Armenia and has to be watchful of Turkish ambitions there too.
View Full Article – published by Charles Stanley on 8th December 2020
#Russia and #China have held joint large-scale military exercises – and may often #veto together on the #UN Security Council. What does this alliance of #America’s enemies mean for #markets and #investing? Read our article to find out 👉 https://t.co/tQXrMpqe3t pic.twitter.com/d3toy8iKbv
— Charles Stanley Wealth Managers (@_CharlesStanley) December 15, 2020