A black swan is slang for an unexpected event with large consequences. 2020 has brought us two so far: the COVID-19 pandemic and the collapse of oil prices. Each will have potent consequences for the Imperium Americanum. And there is a nest of black cygnets maturing.
A new infectious disease was noticed in China at the end of last year, identified as a coronavirus in January and a pandemic was declared in March. Since then economic and social life has come to a stop in the West as governments have been convinced to declare shutdowns. Restrictions became widespread in March and April and are still in effect; while some jurisdictions lessen them, others talk about more months. It is not the purpose of this essay to wonder whether these measures were justified or effective, only to state that they happened and that the world economy will have been enfeebled for two to three months or even longer. A big black swan indeed.
The fuller effects won’t be known for some time but one result is certainly that the West’s repudiation for efficiency has taken a huge – perhaps fatal – hit. Only six months earlier, a survey confidently stated that the West – led by the USA and Britain – would do best in dealing with a pandemic. Not so: “We Are Living in a Failed State: The coronavirus didn’t break America. It revealed what was already broken“; “The Death of American Competence“; “The coronavirus is the worst intelligence failure in U.S. history“; “U.S.’s global reputation hits rock-bottom over Trump’s coronavirus response“; ““The world has loved, hated and envied the U.S. Now, for the first time, we pity it”; “Coronavirus: EU could fail over outbreak, warns Italy’s Giuseppe Conte“; “The EU has bungled its response to coronavirus and it might never fully recover“. China can’t hold back its laughter “Chinese state media calls U.S. a ‘primitive society,’ says ‘democracy is dying’ amid coronavirus“. Many of the American pieces, reflecting the abyssal divide in U.S. politics, write as through it were all Trump’s fault. But it wasn’t Trump who didn’t replace PPE stocks used up eleven years ago. Whatever failures are his, the failure is not his alone. And neither are the West’s other deficiencies his doing. No one seems to have stocks of PPE – the easier and most obvious first step against the threat.
Washington deflects its failure by blaming China. But here too it’s lost its competence: here’s U.S. Secretary of State Pompeo asserting at the same time that it’s manmade and that it isn’t:
POMPEO: Look, the best experts so far seem to think it was manmade. I have no reason to disbelieve that at this point.
RADDATZ: Your — your Office of the DNI says the consensus, the scientific consensus was not manmade or genetically modified.
POMPEO: That’s right. I — I — I agree with that. Yes. I’ve — I’ve seen their analysis. I’ve seen the summary that you saw that was released publicly. I have no reason to doubt that that is accurate at this point.
To say nothing of Fauci’s money in the Wuhan lab. China may not even be the point of origin: France has just discovered a case from December and there may be a U.S. case from November. The breathlessly reported Five-Eyes assessment blaming China is fast collapsing: “mostly based on news reports and contained no material from intelligence gathering” says one of the Eyes. Washington may lash its minions into a coffle, but the rest of the world will scorn it as a pitiful attempt to distract. There will be increased rejection of the West’s assumption of competence and veracity. And, in the West itself, more will doubt the words of “experts” (especially those from Imperial College and its professors), “authorities and “trusted media sources”.
Most of the West is still shut down but China is opening. Observers know that China is becoming the world’s top economy – the World Bank had already given it that title in PPP terms in 2013 – and COVID-19 is sure to accelerate the process by giving it a head start out of the economic slowdown. With cheap energy too.
“Soft power” is a useful term that describes the appeal of a given culture to others. For many years this was a potent arrow in the America quiver – I often think of the character played by Gregory Peck in Roman Holiday as the exemplar: open, honest, honourable and modern, but content to be an example and never to take advantage of her. Propaganda, to be sure, but effective propaganda. COVID-19 shows something else: in the simplest terms China has given assistance to many countries and the “U.S. accused of ‘modern piracy’ after diversion of masks meant for Europe“. Piffle like “The United States and President Trump are leading the global effort to combat this pandemic” or “America remains the world’s leading light of humanitarian goodness” just make it more obvious. From the EU we get word salads: reaffirms/recognises/supports/recalls. And only three months ago the “West is winning“. It has be-clowned itself.
Of the downstream effects of the COVID-19 black swan, we can see at least three: great and possibly fatal damage to the assumption of American and Western competence; a widening of the economic gap with China; a further change in the world soft power balance. The “blame China” diversion (not forgetting the rest of the current Enemy Package – Russia and Iran) is childish and will earn disgust. None of these changes is to the benefit of the Imperium Americanum.
In March Riyadh, on behalf of OPEC, proposed to Moscow that they reduce oil production in order to keep prices up. Moscow refused and Riyadh started pumping. COVID-19 shutdowns collapsed demand. A month later West Texas Intermediate futures went negative and the price of a barrel of oil passed below $20.
Generally it is estimated that the U.S. shale oil industry (about 60% of U.S. production) needs prices of about $60 to be profitable, Saudi Arabia, despite very low pumping costs, squanders so much that it needs about $80; Russia on the other hand is profitable at $45 and has half a trillion dollars in its FOREX kitty. So, if Riyadh started a price war it is not in a strong position; Moscow, on the other hand, some say, can survive $25 a barrel for ten years. As China’s industry comes back on line, it is starting to buy oil but most of it from Russia.
The end result of this price competition in a demand crash is unknown but it is unlikely that the U.S. shale industry will do well out of it. And, because so much of Washington’s behaviour is based on the confidence that it is oil-independent, the U.S. will not come out of this stronger.
So two black swans are likely to leave the Imperium Americanum weaker and less influential. And, it should be said, more contemned. But there is more.
And some black cygnets
Some may remember the excitement of TV commentators about cruise missiles in the Gulf War of 1990. And a weapon that could be launched a thousand kilometres away and hit a particular floor of the building aimed at was pretty amazing. That was the first large-scale public combat use of very long-range precision weapons and for many years cruise missiles were a signature feature of U.S. attacks and practically a monopoly. Until 2015 when Russia struck targets in Syria from otherwise insignificant small craft in the Caspian Sea. So flabbergasted was Washington by this that its first reaction was to pooh-pooh the accuracy. But they were real; many Kalibres have been launched from different platforms including submerged submarines. So, there were now two demonstrated members of the club that could, in real conditions, precisely hit a target a long distance away. In its response to the killing of Soleimani, Iran showed that it too was a member of the club. While it seems some of its missiles did go astray, most hit exactly what they were aimed at. (The U.S. military’s opponents also took note – again – of the fact that it does not have effective air defences). And the usual reaction from Washington: downplaying at first; later we heard of the hundred-plus brain injuries. Quite an achievement for a country that has been under sanctions for decades. And Iran just joined another small club: countries that can launch a satellite on their own (again the U.S. contemptuous dismissal: “tumbling webcam in space“).
The Trump Administration is very hostile towards Iran but no more so than most U.S. Administrations since the departure of the Shah – himself put back into power by a U.S.-UK coup. Probably the hottest moment of this undeclared war was in 1988, but there have been many other crises and we just had another threat from Washington. Tehran knows its on Washington’s hit list and has been preparing for decades. Missiles will be one of its principal defences. Washington would do well to reflect on Iran’s – surprising to it – membership in these two elite clubs before it makes any more threats. Little cygnets become big swans.
Another black cygnet is the Iraq parliament’s demand that U.S. forces leave the country. Washington is consolidating its troops but they will be besieged prisoners if the country rises against them. Which sooner or later it will when the new Prime Minister forms his government. Two consequences of the neocon-dominated “New American Century” in the Middle East have been the growth of Iran’s influence and the demonstration that the U.S. military is not the omnipotent force it thought it was. When the effort to get it out starts, Washington will have three choices: hunker down and hope it goes away, enormously reinforce its troops for a completely new war, withdraw à la Vietnam. This cygnet is growing.
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A pandemic, oil price collapse, a target country showing it has more capability than assumed, threatened expulsion from Iraq. The surprises have exposed long-time weaknesses.
It’s always the unexpected things that test things to destruction.