By J Mulraj
JUNE 22-28, 2024

By Joe Biden (Move Over, Dale)

Before 2021 USA had friends and allies like Saudi Arabia, Germany and other EU countries. It had energy security, because of fracking shale oil, which gave it geopolitical clout. Its currency was globally accepted and it was able to borrow internationally to fund its wasteful ways (mostly wars). It’s two principal enemies, China and Russia, were not close to each other.

Then Biden became President!

In the 3 1/2 years since, Biden has managed, in his addlepated, bumbling way, to overturn all these advantages.

He has managed to lose a fifty-year friendship with the Kingdom of  Saudi Arabia (KSA). A deal had been struck by USA, represented by Secretary of State Henry Kissinger, with King Fahd, the then ruler of KSA. Under it, KSA agreed to provide crude oil to USA, so protecting US economic interests, in return for modern weaponry, so protecting KSA’s geostrategic ones. Furthermore, the oil sale was denominated in US dollars, giving birth to the ‘petrodollar’. Petrodollar is a stock of US $s kept by other countries, outside its borders, and thus not adding inflationary pressure inside America.

All these advantages were lost, after a thoughtless insult to KSA by Biden, who called it a ‘pariah’ state, after the brutal assassination of a Saudi journalist living in America. The public shaming might have provided Biden with an ephemeral  moment of satisfaction, but, given US history of assassinating world leaders, is diplomatically unsavoury.

The loose comment triggered the decline in a 50-year relationship, and KSA has refused to extend the old petrodollar agreement. Biden’s intemperate outburst has lost USA a close friend and ally. KSA has now commenced selling its oil in currencies other than the USD, including in Chinese renminbi. The reduced demand for the greenback will, over time, impact its universal acceptance as an international currency. Worse still, it will reduce the allure of US Treasury Bills as a place for other countries to park their savings. With a debt of $34 trillion, USA needs this support to issue fresh bonds so as to be able to to repay old ones.

Biden is in danger of losing Germany as a friend, after encouraging it to cut its dependence on Russian oil and gas for its energy needs. He went to the extent of illegally blowing up the Nordstream pipeline, as per New York Times celebrity contributor Seymour Hersh. This, to sever Germany’s umbilical energy chord to Russian gas. Biden’s professed concern for the environment was discarded for geostrategic interests and millions of tonnes of methane, more harmful than carbon dioxide, was released because of the pipeline explosion. Without cheap, and environmentally friendly, Russian gas, the German economy is in recession, and its industry, now uncompetitive, is either shutting down or relocating.

Germany, too, may ’unfriend’ America. Other EU countries, also suffering the consequences of the Ukraine war, one that should never have been encouraged by the collective west, might, if the leadership changes, become less eager to blindly follow USA.

Biden’s folly in goading Russia into the war had a further, much worse, disastrous consequence. It made its two major enemies, China and Russia, economically interdependent and brought them closer. The US sanctioned Russian energy. In its search for new buyers to replace lost European ones, Russia turned to other countries, notably neighboring China. China was ecstatic. Russian delivery of energy was over land, at shorter distances, rather than over sea from the Middle East, vulnerable to the choke point of the Malacca Straits.

Dale Carnegie, best selling author of the book ‘How to Win Friends and Influence People’ may need to move over after Biden has twisted it to ‘How to Lose Friends and Confluence Enemies’.

Had Franz Kafka imagined such geopolitical foolishness his book wouldn’t have been printed. But Biden has managed to do it.

With such poor decisions, and fumbles visible to the public, it may not be a surprise if Biden is replaced as a candidate for the Presidential elections by the Dems, as is now rumored.

That would be relevant for stock markets in several ways. If the price of crude oil comes down thanks to a change in US stance towards fracking, for example, the Federal Reserve would be more willing to cut interest rates. High price of gas prevents inflation from falling to the Fed’s desired target. Any change in US stance towards funding a lost war in Ukraine, one that should never have been encouraged by it in the first place, would help America better control its spiraling debt and, maybe, stanch the move towards de-dollarization. Trump has promised to negotiate the end of the Ukraine within days, if elected. The next step would be to wean away Russia from China, perhaps by ensuring resumption of oil/gas purchases by EU from Russia. Russia is upset by Chinese reluctance to fully fund the Power of Siberia 2 pipeline project and it seeks to also reduce over dependence on China as a buyer. All of these would be positive for stock markets.

Last week the BSE Sensex closed at 79032 , up 1723 points.

The inclusion of 28 Government of India bonds in JP Morgan’s Emerging Markets Index is expected to lead to around $30 b inflow in sovereign bonds by foreign investors in the next ten months. On the flip side, India’s neglect of its primary, and higher education (witness the leak of NEET exam paper), is pathetic. As author Daniel Prelipcean says ‘you don’t require atomic bombs to destroy any nation. It only requires lowering the quality of education. Then, patients die at the hands of such doctors, buildings collapse at the hands of such engineers, humanity dies at the hands of such religious scholars and justice is lost at the hands of such judges.’

The India story, which has positive facets, is diluted because of neglect of its education system, the obnoxious slowness and apathy of its judicial system, and the pervading corruption that has proven immune to eradication.

In his third term, PM Modi will have to Focus more on these issues and not on the nauseating acceptance of accommodative politics. Running a coalition Government, his task won’t be easy.

The first US presidential debate between Biden and Trump didn’t reveal the former as capable enough to lead the country for another term. One hopes that the next leader will be more like Dale Carnegie, capable of making friends and influencing people. God help us otherwise.


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