Incidentally, the above map illustrates another reason why the hold on Afghanistan was so important to the empire.
Iran’s partnership with Russia and China will ultimately tip the military balance of power, so it was perhaps no coincidence that Iran’s President
Ebrahim Raisi’s visit to Moscow was scheduled for Wednesday, 19 January 2022 – only days after the failed talks between Russia and the US in Geneva. In announcing the meeting, Russian Foreign Minister
Sergei Lavrov said it was a “very important” meeting and
added that, “
Undoubtedly, among international issues, the ones such as the Joint Comprehensive Plan of Action and the security of the Persian Gulf will be discussed in the meeting of the Presidents of Iran and Russia.”
At the opening of his meeting with President Putin, Mr. Raisi said that the relationship between the two nations “should be permanent and strategic.” In his address to the Russian Duma, he said that, “The strategy of domination has now failed, the United States is in its weakest position, and the power of independent nations is experiencing historic growth.” President Raisi’s visit to Moscow was followed two days later by military exercises of Russian, Iranian and Chinese navies in the Sea of Oman, not far from the strategically pivotal Straits of Hormuz. The three powers’ show of force was an unmistakable hint that there’s a new sheriff in town and that the days of unchallenged US/NATO dominance over the region are over.
Thus, the “military technical” measures Russia promised if the US and NATO did not agree to her draft treaties will likely be made in support of forces that are already fighting to drive the western powers out of the region. Iran is obviously the prime candidate for such support and during his visit in Moscow President Raisi did not fail underscore Iran’s credibility and commitment to this objective in stating, “We have been resisting the Americans for 40 years.” Together with its proxy forces in Iraq, Iran will make it increasingly difficult and costly for the US to secure its control of the region.
Russia will not need to confront the US militarily at all – the US forces will simply be worn down and eventually pushed out in a similar way as they were pushed out from Afghanistan. For the Western nations which are already facing a worsening energy crisis, this could indeed jeopardize their security. But it could also have severe adverse effects on their economies and capital markets. Paradoxically however, for that same reason the western powers will not advertise that their control is slipping away; they will likely take their blows in silence and keep a brave face for as long as possible to keep the markets convinced that their revenue streams from the Middle East will remain secure forever.
I first published what I laid out here in my daily TrendCompass newsletter on 14th January, titled “Only a hunch: will it be the Persian Gulf?” I can confess, this really is only a hunch, based on my own reading of the situation. However, as events have played out over the last two weeks, I am increasingly confident that my hunch was correct. At the same time however, I couldn’t begin to guess
how exactly the events might play out. For one thing, the uncertainty is probably part of the equation: Russia’s current gambit is very radical departure from the status quo and it should be to her advantage to keep her adversaries guessing and distracted in the wrong places. Indeed, it is possible that nothing obvious will happen over the coming weeks. All the same, we should not underestimate changes that are already taking place. As they compound, they will precipitate a collapse of the global order that has become entrenched for more than two centuries now.
How the coming changes will manifest in the West
Russia will probably not invade Ukraine and Russian bombs won’t start raining down on European cities. We’re living in the age of assymetric warfare and it is quite likely that nothing obvious will be captured by TV cameras. But the pain will set in and it will be real. I believe that the changes will be felt most strongly in our capital and commodities markets. Over time, we’ll see a very substantial rise in interest rates which will ultimately push stock prices into a real bear market. Unlike the limited and short-lived corrections we’ve experienced over the last four decades, a real bear market could be drastic and last a very long time. It is what happened in the US after the 1920s bubble and in Japan after the 1980s bubble.
In both cases we saw stock prices decline by over 80%. The US stock market took nearly three decades to fully recover while the Nikkei never recovered, after fully 32 years since the 1989 peak.
We are also likely to see a continued acceleration of inflation in most if not all of the G7 nations, as well as a gradual worsening of the energy crisis which could drag on for years. This could push the energy prices far beyond today’s levels. Even without factoring the conflict with Russia and based on the accelerating depletion of conventional oil reserves, the UK Ministry of Defence predicted in 2012 that the price of Crude Oil would rise to $500/bbl by 2040. Similar trends could materialize in other commodities including metals and agricultural produce, fueling a sustained commodity super-cycle that many analysts have been predicting in the recent years.