Merlin Weekly Macro: Europe’s middle powers fight for relevance

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It is time for these columns to revisit geopolitics. It is obvious that in the last decade the geostrategic tectonic plates have been shifting. The results have been releases of energy that are most evident down the primary faultline, which extends from the Baltic in the north to the Indian Ocean in the south. The wars in Ukraine and the Middle East are simultaneously coincidental and conflated, separate but overlapping. The conundrum is how to stop both conflicts in a way that restores peace and stability to populations’ everyday existence when the chief protagonists are all still seeking strategic advantage and leadership in their own national interests.

Trumpian doctrine still running

The political backdrop in the United States is changing following the mid-term elections. When the new Congress replaces the incumbent in January, an emboldened and empowered Democrat majority legislature will be determined to exert its democratic mandate and legitimacy over a naturally autocratic President. Congress has considerable authority over domestic policy, but the reality is that, except for declaring war, it has far less influence, let alone power, over foreign policy. It is not quite the case that exercised principally through the Secretary of State the President rules supreme over foreign policy, but he/she certainly has the upper hand dictating US posture around the world.

Today that posture is embodied in President Trump’s National Security Strategy of the United States, published exactly a year ago. An in-depth critique of that document by Jupiter Merlin Investment Director Alastair Irvine (also author of this column) is available here. 

A wide-ranging statement of strategic intent (“America First” and “MAGA” in action), most pertinent is Trump’s vision of spheres of influence. His ambition is US dominance of the western hemisphere: as you look at the globe, everything west of the Greenwich Meridian round to the International Date Line lies in the US back yard, over which the Trumpian intent is to exert control. Europe needs to look after itself and the perceived Russian threat (he does not see it as that) is Europe’s problem to deal with.

China is Trump’s challenge: he has great respect for the country and its leader; he understands China’s own considerable and growing sphere of influence and its own strategic intent to be the single dominant society globally by mid-century. Recognising the threat to the US superpower hegemon, he is equally determined to contain China’s ambitions and to forge America’s own position as the “most dominant civilisation the world has ever seen”. Reduced to its simplest and most obvious essential, there cannot be two powers which dominate the world separately and simultaneously; in this colossal struggle for global supremacy, who wins, who loses and how much collateral damage is inflicted on everyone else in the process should be the major preoccupation of the rest of us.

Conflict resolution

With Trump having engaged in an inconclusive conflict with Iran, America’s problem is how to bring it to a satisfactory end that a) achieves America’s aim of preventing Iran becoming a nuclear-armed state and which cannot hold the global economy to ransom by exercising terror across the Gulf and the Red Sea, and b) that does not allow the Iranians’ military David to present itself as the winner against what should have been the American Goliath. How this ends happily is far from clear but an empowered, emboldened and legitimised Iranian Revolutionary regime already exporting terror against the West, Israel and Iran’s Sunni neighbours, will only be an even bigger menace to global security than it already is.

As to resolving the Russian-Ukrainian conflict, yet another in a series of sporadic negotiations is currently under way, this time in Abu Dhabi, between representatives from Moscow, Kyiv and Washington. At the time of writing, the Ukrainian delegation expresses qualified optimism, the Russians remain immovable.

The big carve-up

More important for the long-term is the mooted “Big Three” get-together on 18/19 November in Shenzhen. A side-meeting at the Asia Pacific Economic Cooperation in China, Trump, Putin and Xi Jinping are intending to discuss geostrategy and denuclearisation. It is being billed as the “New Yalta”. Why so?

From August 1941 even before America had joined the war, when Winston Churchill and Franklin D Roosevelt first met at Placentia Bay in Canada and agreed the Atlantic Charter which sowed the seeds for the post-War United Nations, a series of trilateral strategic conferences followed between the US, Great Britain and Russia about war strategy. In 1944 and 1945, including at Yalta in the Crimea in February 1945, the focus shifted towards the post-War architecture, especially in Europe and specifically Germany and Austria being placed under the control of the four winning allied powers (including France). Uppermost in Churchill’s mind was containing and preventing the spread of Russian Bolshevism across continental Europe. Stalin was ahead of him in every sense.

Historically important to understand because of its direct relevance to today, is what happened in Western Europe in the early autumn of 1944. 12 weeks of hard fighting in Normandy following D-Day on June 6^th saw the Allies finally break out of their confined lodgement at the end of August. Having secured Brittany and the north Biscay ports, US forces spearheaded by General Patton changed their axis of attack and raced southeast, heading towards Nancy, Metz and the Saar. In the north, General Montgomery’s British and Canadian armies rapidly crossed Picardy into Flanders and Belgium, capturing Brussels in the first week in September. Without a major deep-water port, and requiring 26,000 tons of food, fuel and ammunition every day to keep moving and fighting, the extended lines of communication were a major constraint to keeping the German forces in the west off balance and in retreat (the furthest extent of Patton’s forces in early September was 300 miles away from the Bay of the Seine beaches across which all the allied supplies were still being unloaded). Arbitrated through the Supreme Allied Commander General Eisenhower, after acrimonious debate it was resolved that a single-point thrust to Berlin through Holland, enveloping the industrial Ruhr and across the north German plain, should be made. This was in preference to a similar attack by Patton towards Frankfurt or to a broad-front advance extending south to Switzerland. It was the subsequent failure of Operation Market Garden (popularly but inaccurately, “the Battle of Arnhem”, immortalised in the film “A Bridge Too Far”) the biggest airborne assault in history, to secure a permanent bridgehead over the Rhine, which saw the Allies stalled on the wrong side of this formidable river obstacle for another six months.

Had Market Garden succeeded, there would have been a realistic prospect of the war being won by Christmas 1944. However, it was the Germans’ ability to hold US, British and Commonwealth forces west of the Rhine, and also in northern Italy (despite Rome being captured early in June 1944), both until well into 1945, which caused the future map of Europe to be redefined. Under Stalin the Russians continued their relentless progress westwards and south, “liberating” a plethora of countries across Eastern Europe and down into the Balkans. With possession being 9/10ths of the law, at Yalta there was a sense of inevitability of an irreversible train of events culminating in Churchill’s memorable acknowledgement in March 1946 that, "From Stettin in the Baltic, to Trieste in the Adriatic, an iron curtain has descended across the continent”. As he said, Europe was divided into two separate spheres. After the fall of the Soviet Union in 1990/91 and the period of Glasnost and Perestroika, it is the restoration of that Russian sphere of influence which is front and foremost in today’s strategic perspective seen through the eyes of President Putin.

The Putin perspective

Putin’s strategic aim is simple: the emasculation of NATO. It was spelled out on 17 December 2021 in his fantasy “Agreement on measures to ensure the security of the Russian Federation and Member States of the North Atlantic Treaty Organisation”. Article 4 spells out that all parties that were members of NATO prior to 27 May 1997 would be prohibited from deploying military forces and weaponry on the territory of any of the other states of Europe that became NATO members subsequent to that date (for example, Estonia would be prohibited from hosting a British Army battle group or RAF combat aircraft). Article 6 precludes any further expansion of NATO, specifically including Ukraine. Article 7 says no NATO member shall conduct military activity on the territory of Ukraine as well as the other states in Eastern Europe, in the South Caucasus and in Central Asia (it would preclude NATO Coalition of the Willing members participating as peace keeping forces in Ukraine).

That is Putin’s starting point in negotiations: beyond each country’s domestic forces, a militarily sterile buffer zone comprising all the old Soviet Bloc countries which have subsequently joined NATO: Poland, Hungary, the Czech Republic, Bulgaria, the Baltic States, Romania, Slovakia, Slovenia, Albania, Croatia, Montenegro, N Macedonia. Unsurprisingly it was never agreed by NATO. Post-invasion events say we must now add the former neutral states of Sweden and Finland.

It is impossible to disaggregate a peace solution in Ukraine from the wider discussion about European security. The former includes the reconciliation of territorial claims and future control of the oblasts comprising south-east Ukraine, enforced Ukrainian neutrality, security guarantees, reparations and the cost of re-building. Confusing the issue is whether it remains Trump’s intention to secure US access to Ukrainian rare-earth minerals and elements as part of a peace settlement.

Note that in the planned Big Three talks in China about the wider European security architecture, the UK and the EU are excluded. That is not to say their future will be determined without them but as far as this US administration, Russia and China are concerned, Europe is to be discussed over and not discussed with. Such is the fate of reduced Middle Powers struggling to find security and relevance in a world that is moving on without them. It is a challenge to which they must rise unanimously simply to avoid their destiny to be having advantage taken of them or, worse, being trampled upon. It is in this context that the 2027 French and 2029 German elections are important. Populist parties in both countries are in the ascendancy: if they have common traits, it is their broad sympathy with Russia, their antipathy towards NATO, their Euroscepticism and their contempt for Ukraine.

Disturbing Trumpian tendencies

Worrying in all of this is the attitude of the Americans. Trump either ignores, does not understand or more likely does not care about the US obligations to Ukraine enshrined in the 1994 Budapest Memorandum assuring the sovereignty and security of Ukraine. Trump has partisan relationships: his friendliness towards Putin oozes appeasement; his volatile relationship with President Zelensky says that the Ukrainian president is unreasonable and a block to progress towards a solution. US Envoy and estate agent Steve Witkoff recently lauded Putin as a great humanitarian; Putin has indictments of war crimes and crimes against humanity against him from the International Criminal Court. His co-envoy Jared Kushner, Trump’s son-in-law, declared this week that he firmly believes the Russians want peace. Why? Because they told him so. He is a dupe. He needs to watch the excellent BBC2 series, “Putin and the West” in which leaders ranging from David Cameron, Boris Johnson and Francois Hollande, to senior members of the Obama and Merkel administrations, all confessed that they were skilfully manipulated and hoodwinked by Putin; their common refrain, “he lied to me!”. Putin was a KGB colonel whose job description was deceit and dissembling in the national interest. It is in his DNA. Who knew? Not these people, and seemingly not Trump’s envoys.

Markets are keen to see the back of conflict and a restoration of normality. But most assuredly, in terms of global risk, bad deals are much worse than quick ones. The problem does not go away; it merely comes back later and much bigger. Be careful what you wish for. 

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