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Global Tensions Dangerously Increasing

Saturday, April 8, 2017 7:10
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This post Global Tensions Dangerously Increasing appeared first on Daily Reckoning.

Even as President Trump hosted Chinese President Xi Jinping in Florida this week, the U.S. launched over 50 U.S. cruise missiles against the Syrian Shayrat air base. It is the same air base suspected of being the launch site of a chemical attack at Khan Shaykhun.

Shayrat Air base

Graphic by NightWatch, April 6, 2017

While this will not end the Syrian civil war, there will be myriad ramifications beyond the usual U.S. political finger-pointing. We should expect retaliation by Syrian President Assad. He could fire air defense missiles, launch an attack on U.S. personnel at Tabqa or other northern Syrian air bases or instigate an incident against the Israeli Golan Heights.

Another factor is the embarrassment of the Russian president. The U.S. attack demonstrates the limits of Russian power in Syria against a genuine great power. The Russians could not prevent the U.S. attack and could not protect Syria from it had they tried.

Iran also will be embarrassed by the attack, because it also could not defend its surrogate. It shows the Syrian armed forces could easily be destroyed if Western leaders so decide, regardless of Iranian goals.

Another reaction to consider will be China’s. By launching the attack during the visit of Chinese President Xi Jinping, the U.S. gives the impression that President Xi was informed and either posed no objection or was treated disrespectfully.

Whether he was informed or not, China will be concerned about the impact 50 cruise missiles could have on their South China Sea sandbar bases and on what the Trump administration just signaled to North Korea.

There is a long-standing connection between North Korea and Syria. North Koreans built the first Syrian Scud missile installations as well as the nuclear reactor in eastern Syria that the Israelis destroyed in 2007.

Chinese and North Korean leaders will understand that a U.S. attack on Syria sends a warning message to North Korea. North Korea will feel the need to display solidarity with the Syrian government, and the Chinese will be weighing their options.

Even as the missiles landed on Syria, we know the two presidents were discussing North Korea and trade because of the North Korean missile tests and tensions in the South China Sea.

But as these major headlines break, it is important to remember that countries are often less stable and powerful than they appear.

China is no exception. And China deserves some extra attention today.

The Chinese leadership is faced with the tectonic pressures of a potential financial collapse, an uneasy population and growing regional and international reaction to their military expansion into the South China Sea.

It is a mistake to refer to nations as unitary actors. It’s easy to think of China, for example, as a unitary actor and large external actor because it’s so big and very powerful. It terrifies its neighbors. It intimidates even its friends and allies.

But international crises are often the result of domestic actors who may view external conflict for their own political positioning against their domestic political rivals.

To my mind, China is actually weak in many ways, and brittle in a sense. I see China led by a political class desperately afraid to justify its rule, desperate to provide jobs and economic advancement for the population, which is a task that is virtually impossible.

Governments can lose their legitimacy and vanish overnight. That fear of losing domestic legitimacy is a major driver of any government’s decision making.

And China is faced with a constant need to demonstrate political legitimacy and a divided political leadership with different agendas.

China’s economy is not just about providing jobs, goods and services. It is about regime survival for a Chinese Communist Party that faces existential risk if it stumbles.

Given the systemic problems inherent in trying to run an economy in the absence of the accurate price signals only free markets provide (a problem for both Chinese socialism and the West’s corrupt crony markets), their challenges are worsening every day.

China’s historical pattern is to blow up in violent revolution and break into multiple warring states after they reach this apogee of expansion. The Chinese leadership is perfectly aware of it.

Such is their concern that they fear an order they give may or may not be obeyed.

What do I mean?

Many people aren’t aware of it, but some 3,500 military officers had to be relieved, reassigned, punished in some form or fashion because they refused to participate in what we think of as the Tiananmen Square Massacre back in 1989.

Think about that. It gives you a sense of the complexity of China’s internal society that we tend to overlook.

And that’s actually a factor of instability that makes war more likely not less likely, because it introduces unpredictability.

Within the Chinese Politburo is several contending elements jockeying for power. They can very easily view an external conflict as a tool either to gain power or retain power vis-à-vis their own domestic opponents.

It’s easy to miss sight of that when you focus on the external threat China presents. But the Chinese leadership is as equally terrified of its own domestic enemies and a disgruntled population, as they are concerned about the U.S.

That’s not unique to China. That kind of phenomenon happens all over the world.

It’s an interesting dynamic. And it is volatile, to say the least.

Jim and I are watching what China does in the South China sea with extraordinary interest. The artificial islands they’ve built are bristling with anti-ship and anti-aircraft weapons. They’ve installed runways.

From a military standpoint, they are extremely vulnerable to U.S. strike capabilities. But in peacetime, they’re enormously symbolic of China’s growing reach.

The region is becoming unstable, and it might not take much to start a shooting war.

It’s best to prepare now.


Kevin Massengill
for The Daily Reckoning

The post Global Tensions Dangerously Increasing appeared first on Daily Reckoning.

This story originally appeared in the Daily Reckoning . The Daily Reckoning, offers a uniquely refreshing, perspective on the global economy, investing, gold, stocks and today’s markets. Its been called “the most entertaining read of the day.


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