Geopolitical Risk Theater: Russian Jets Buzzed Over a US Destroyer!

Will a global arms race, inspired by a cauldron of ideology based on economic military keynesianism and the rise of nationalism, financed by inflationism, lead to a detente or a world at war? 

Perhaps a clue to the answer may be seen from the other day's close encounter between US and Russian forces at the Baltic Sea.

Apparently, Russians wanted to test the defenses of the US navy. So Russians jets buzzed over a US destroyer, not once but several times in a "simulated attack" formation.

From the Business Insider/Reuters

Two Russian warplanes with no visible weaponry flew simulated attack passes near a U.S. guided missile destroyer in the Baltic Sea on Tuesday, a U.S. official said, describing it as one of the most aggressive interactions in recent memory.

The repeated flights by the Sukhoi SU-24 warplanes, which also flew near the ship a day earlier, were so close they created wake in the water, with 11 passes, the official said.

A Russian KA-27 Helix helicopter also made seven passes around the USS Donald Cook, taking pictures. The nearest Russian territory was about 70 nautical miles away in its enclave of Kaliningrad, which sits between Lithuania and Poland. "They tried to raise them (the Russian aircraft) on the radio but they did not answer," the official said, speaking on condition of anonymity, adding the U.S. ship was in international waters.

The incident came as NATO plans its biggest build-up in eastern Europe since the Cold War to counter what the alliance, and in particular the Baltic states and Poland, consider to be a more aggressive Russia.

The three Baltic states, which joined both NATO and the European Union in 2004, have asked NATO for a permanent presence of battalion-sized deployments of allied troops in each of their territories. A NATO battalion typically consists of 300 to 800 troops.

Moscow denies any intention to attack the Baltic states.

Videos of the incident seen from the links here and here.

Charts of the Day: Global Military Spending Soars!

Brinkmanship geopolitics has prompted a surge in global military spending

The Bloomberg reports:

Global military spending has begun rising in real terms for the first time since the U.S. began its withdrawal of troops from wars in Iraq and Afghanistan, according to the Stockholm International Peace Research Institute.

Defense budgets rose 1 percent to $1.68 trillion in 2015, making up about 2.3 percent of the world’s gross domestic product, Sipri said in a report Tuesday. While the U.S. spent the most at $596 billion, that was down 2.4 percent compared with 2014, while China’s outlay increased 7.4 percent to $215 billion.

Concern about a possible advance by Russia into North Atlantic Treaty Organization territory following the Crimea invasion and hostilities in east Ukraine led to a surge in spending in Eastern Europe, as Chinese ambitions in the South China Sea spurred arms purchases among Southeast Asian states.

Defense budgets have been under pressure since the financial crash, with some of the world’s biggest spenders, including the U.K., France and Germany, scaling back amid austerity programs. Following the November terror attacks in Paris and the expansion of campaigns against Islamic State, those countries plan “small increases” in 2016, Sam Perlo-Freeman, the report’s author, said.

Russia, where slumping oil receipts have weighed on the economy, fell to fourth position in the global rankings, with Saudi Arabia taking third spot. The Mideast country, also hurt by the lower price of crude, would have cut spending too had it not been for the $5.3 billion cost of its military campaign in Yemen.

Russia’s defense budget is set for a slight fall in nominal terms and an 8 percent real decline, Perlo-Freeman said, while Saudi Arabia plans a “large cut,” though with a significant budgetary reserve.

From the economic perspective: how will these spending surges be funded, given that the world economy has been materially slowing down? Will these translate to even more taxes? Or bigger government deficits financed by expansionary debt? Or financed by even more inflationism (ZIRP, NIRP and QEs)? Will the next QE be focused on subsidizing the defense industry? Who will bear the burden or economic-financial-social costs from the du jour military keynesianism? Will it not be the currency holding and tax paying citizenry? And who benefits from the transfer of resources from the currency holders and the tax paying public? Are they not the military industrial complex and the warfare state? Or is war really a racket?

From the geopolitical perspective: will such arms race serve as an effective detente? Or will such fan the flames of belligerency that increases the risk of a full scale world at war?

Geopolitical Risk Theater Links: Russia joins Arms Race?, ISIS gets Modern Weaponry, A Russia-US arms deal? and more…

1 Russia joins Space arms race? Object 2014-28E – Space junk or Russian satellite killer? Financial Times November 7, 2014

For the past few weeks, amateur astronomers and satellite-trackers in Russia and the west have followed the unusual manoeuvres of Object 2014-28E, watching it guide itself towards other Russian space objects. The pattern appeared to culminate last weekend in a rendezvous with the remains of the rocket stage that launched it.

The object had originally been classed as space debris, propelled into orbit as part of a Russian rocket launch in May to add three Rodnik communications satellites to an existing military constellation. The US military is now tracking it under the Norad designation 39765.

Its purpose is unknown, and could be civilian: a project to hoover up space junk, for example. Or a vehicle to repair or refuel existing satellites. But interest has been piqued because Russia did not declare its launch – and by the object’s peculiar, and very active, precision movements across the skies.

2 Cold war rhetoric deepens: Merkel of Germany Issues Rebuke to Russia, Setting Caution Aside New York Times November 17, 2014

Tit-for-tat expulsions of diplomats. Russian naval ships showing up as world leaders meet in Australia. Chancellor Ang ela Merkel of Germany telling Russia sternly to play by 21st-century rules — and President Vladimir V. Putin practically spitting fury over Western reaction to his annexation of Crimea.

As relations between Russia and the West increasingly resemble the bygone days of the Cold War, Ms. Merkel abandoned her traditionally cautious tone on Monday, castigating Russia for its actions in Ukraine, for intimidating sovereign states in Eastern Europe and for threatening to spread conflict more broadly across Europe.

3 Mounting risk of a nuclear standoff? The nuclear gun is back on the table Financial Times November 17, 2014

FT’s Gideon Rachman expresses his concerns: (bold mine)

Thirty years on and the nuclear peace is still holding. But I am becoming a little less secure in my belief that nukes will never be used.

There are three reasons for my anxiety. First, the spread of nuclear weapons to unstable countries such as Pakistan and North Korea. Second, the growing body of evidence about how close the world has come, at various times, to nuclear conflict. My third reason for worry is more immediate: a significant increase in threatening nuclear talk from Russia…

Mr Putin seems to adhere to what Richard Nixon called the “madman theory” of leadership. The former US president explained: “If the adversary feels that you are unpredictable, even rash, he will be deterred from pressing you too far. The odds that he will fold increase greatly.” President Putin may be right in calculating that, by putting the nuclear gun on the table, he can always out-madman Barack Obama, the coolly rational US president.

Nonetheless, even assuming that the Russian nuclear talk is a bluff, it is still dangerous – since to make the bluff intimidating, the Russians have to raise tensions and take risks. Last week, General Philip Breedlove, commander of Nato forces in Europe, said that Russia had “moved forces that are capable of being nuclear” into Crimea. As fighting in Ukraine continues, the danger of Russia and Nato misreading each other’s intentions increases.

I see the danger of brinkmanship geopolitics from one of an accident or a mis-encounter from the current provocative stunts by both parties. From here, one thing may lead to another.

4 Russia in Isolation? : Russia, Turkey Inch Toward Improved Relations usnews.com November 17, 2014

5 Emerging Markets flex their military muscles?: India-China military exercise begins in Pune Indian Express.com November 18, 2014

6 Selective perception? Shock over ISIS beheadings but silence over Saudi Arabia beheadings, Janine di Giovanni says oil prevents criticism CBA.ca November 12, 2014

7 Pawns get hurt while leaders bask in vanity: Paralyzed Iraq War Veteran Tomas Young Has Died – Here’s His Final Letter to George W. Bush and Dick Cheney LibertyBlitzkreig.com November 12, 2014

Tomas Young: 

The Iraq War is the largest strategic blunder in U.S. history. It obliterated the balance of power in the Middle East. It installed a corrupt and brutal pro-Iranian government in Baghdad, one cemented in power through the use of torture, death squads and terror. And it has left Iran as the dominant force in the region. On every level—moral, strategic, military and economic—Iraq was a failure. And it was you, Mr. Bush and Mr. Cheney, who started this war. It is you who should pay the consequences.

8 The European participants of ISIS; Briton and Frenchman Tentatively Identified in Islamic State Execution Video New York Times November 17, 2014

9 Using threats to get a better deal in the coming US-Iran nuclear negotiations? : Cleric: Iran Will Use ‘Suicide Operations to Send its Message to the World’ Freebeacon November 17, 2014

10 ISIS gains more sophisticated weaponry for every advance: As ISIS Continues To Gain Ground, Here's What The Militants Have In Their Arsenal Business Insider November 17, 2014

11 A Russia-US nuclear deal? Really? How about all the posturing from both sides? Theatrics for negotiation leverage?: U.S.-Russia Nuclear Cooperation Drawing to a Close Freebeacon November 17, 2014

Chart Porn: The US-Asia Arm Race

The conservative Heritage Foundation comes up with a deck of wonderful charts on Asia.

Writes the Zero Hedge,

Asia is a study in contrasts. It is home to economic freedom and political liberty; it is also home to political instability and tyranny. Some of Asia’s borders are unsettled and volatile. And military budgets and capabilities are expanding, sometimes faster than economic growth. The rise of China as a great power presents both sides of this equation. It is being watched carefully by all the countries of the region. It is the U.S. that is recognized as the catalyst in ensuring a prosperous peace over conflict. America is a Pacific power. That much is a matter of geography and history. But the facts – and America’s principles and interests – demand more than resignation to geography. They call for continued American leadership, commitment, and the predominant comprehensive power that has enabled Asia’s very welcomed, opportunity-laden rise."

Thus prefaces the Heritage Foundation its Asian 'Book of Charts', which summarizes most of the key economic, financial, trade, geopolitical, most importantly militaristic tensions both in Asia and, by dint of being the global marginal economic force, the world itself. And while we will present the complete deck shortly, of particular interest we find the summary in 7 easy charts how Asia is slowly but surely catching up on that accepted by conventional wisdom GloboCop - the United States.

We present it in its entirety below.

In my view, the current sensationalist brouhaha over territorial claims has been more of a political diversion (from domestic political and economic woes, e.g. in China and the US) and a complicit attempt by both US-China to promote the interests of the neo-conservative protected military industrial complex through an arms race and a resurgent build up of bases around the world in order to justify government expenditures on defense and inflationism.

[Perhaps the real reason is the encirclement and domestic infiltration strategy against Russia by the US, but indirectly implemented with China as the bogeyman or as the smoke screen].

Lastly these may have been part of the desperate attempts by welfare-warfare governments to curb civil liberties (through nationalism and financial repression) in face of growing forces of decentralization.

More great charts of Asia here.

Note: charts can mean different things or perspectives depending on the person’s interpretations and biases.