De profundis ad astra

The significance of an interceptor missile launched from an American warship

China and Russia will feel that America has just undermined their nuclear deterrents


THE INTERCONTINENTAL BALLISTIC missile (ICBM) took off from Kwajalein Atoll in the middle of the Pacific Ocean on November 17th. American satellites spotted its bright plume at once. 

They alerted Schriever Air Force Base in Colorado which in turn informed the USS John Finn, an Arleigh Burke-class destroyer poised north-east of Hawaii. 

A hatch on the deck flipped open and spewed out a torrent of flames as an SM-3 Block IIA interceptor shot up and out. High above the Earth, it collided with the descending ICBM.

It was the first time an interceptor fired from a warship had shot down a (mock) ICBM in space. “Politically this test is a big deal,” says James Acton of the Carnegie Endowment for International Peace, a think-tank. Russia and China have always complained that American missile defences undermine their own deterrents. America has always batted away those concerns. 

When the SM-3 was developed, America first said it would protect aircraft-carriers, and later that it would shield Europe from Iranian medium-range missiles. In fact, only a software tweak was needed to make it work against longer-range ones. Now that the system has been demonstrated against an ICBM, both Russia and China will claim vindication.

America already has a missile shield for its homeland, comprising 44 ground-based interceptors (GBIs) in Alaska and California. These were previously the only ones to have shot down an ICBM. Yet these are staggeringly expensive, relatively few in number and unreliable in tests. 

The ship-based system, known as Aegis Ballistic Missile Defense (BMD), has several advantages. It can be rolled out more quickly, moved where needed and allows America to field many more interceptors.

Currently, 44 destroyers and cruisers are equipped with Aegis BMD. Each has 90-plus launch tubes, so several thousand interceptors could theoretically be put to sea (in practice, the tubes also carry other weapons, like Tomahawk cruise missiles). The navy plans to fit Aegis to 65 ships, 11 of which would be allocated for the protection of the continental United States. 

Just three to four ships deployed off America’s coast could cover its whole landmass, notes George Lewis, a missile-defence expert who recently retired from Cornell University. The idea is that if GBIs failed to take out a missile, Aegis could mop it up at a lower altitude—though SM-3 IIAs can still reach three times higher than the International Space Station.

In practice, notes Mr Acton, intercepting an incoming ICBM would still be forbiddingly difficult. They would travel a longer distance and therefore arrive at greater speed than in the test, armed with counter-measures to trick the interceptor and potentially in sufficient numbers to overwhelm defences. 

“SM-3 IIAs can’t fundamentally undermine China’s or Russia’s nuclear deterrents, or even frankly North Korea’s,” he says. But that is not how those countries are likely to see the matter.

Russia has long held that arms-control talks ought to include not just offensive systems, like bombers and missiles, but also defensive ones which might neuter them. It has been especially irked by land-based Aegis systems built in Romania and Poland. 

The new test “is likely to have a crushing effect on prospects for new nuclear arms control agreements”, says Laura Grego of the Union of Concerned Scientists, an advocacy organisation.

“It will also provide motivation (or justification) for Russia and China to diversify and grow their nuclear weapons arsenals,” she adds—the logic being that more missiles will be needed to saturate stiffer defences. China is especially jittery as it has relatively few land-based ICBMs.

Ms Grego notes that because the SM-3 interceptor can also take out satellites—something America demonstrated in 2008—deploying more of them will have an impact on space security, too. But with the Iranian and North Korean nuclear programmes simmering, the incoming Biden administration is not about to abandon a flexible seaborne means of shielding its European and Asian allies. 

Learning The Wrong Lesson From World War II Debt

BY JOHN RUBINO 


As Washington borrows and spends to keep the pandemic lockdown from turning into a Greater Depression, federal government debt is approaching the same percentage of GDP as during WW II. 

This is a nice journalistic hook, especially because the story – as told by the typical reporter – has a happy ending: Yes, we borrowed a lot of money to win the war, but then we boomed in the 1950s and paid off the debt, no harm no foul. 

So don’t worry, with the right interest rate and trade policies, we’ll manage our current debts just as easily.



Here’s an excerpt from a recent NY Times article observing that even people who normally worry about government debt have concluded that massive deficits are now okay:


A surge in government borrowing in the face of the pandemic recession has put the United States in a position it has not seen since World War II: In order to pay off its national debt this year, the country would need to spend an amount nearly as large as its entire annual economy.

And still, economists and many fiscal hawks are urging lawmakers to borrow even more to fuel the nation’s economic recovery.

“We should think and worry about the deficit an awful lot, and we should proceed to make it larger,” said Maya MacGuineas, the president of the Committee for a Responsible Federal Budget in Washington, which has for years pushed lawmakers to take steps to reduce deficits and debt.

The turnabout on deficit fears caps several years of declining concern over Washington spending more than it takes in, particularly among Republicans. Lawmakers voted along party lines in 2017 to pass a $1.5 trillion tax cut that President Trump and Republican leaders insisted would pay for itself but has instead added to the deficit. 

The budget deficit surpassed $1 trillion in 2019 — before the coronavirus pandemic hit — a jump of 17 percent from 2018 as tax cuts and spending increases continued to force heavy government borrowing.

The deficit — the difference between what the United States spends and what it earns through taxes and other revenue — is expected to reach $3.3 trillion for fiscal year 2020, the budget office said on Wednesday. That is more than triple the level it reached in the 2019 fiscal year.


In other words, we had already decided that debt didn’t matter before the pandemic hit, which makes it easy to rationalize war-time levels of emergency spending. 

Hence the many articles noting that we’re now back to WWII government debt levels, and it’s no big deal.

This, alas, is an epic apples-to-oranges delusion. Pre-war, it was hard for individuals and businesses to borrow money (even if they wanted to, which many didn’t), so “the national debt” consisted mostly of outstanding government bonds.

But in the ensuing seven decades, government policy has shifted from borrowing when necessary and then quickly extinguishing that debt, to borrowing continuously while encouraging everyone else to borrow even more. 

So the correct metric when thinking about our societal obligations is total debt – that is, government debt plus business loans, mortgages, credit cards, car loans, student loans, etc.

The resulting picture is very different:



And even the above chart understates the problem because it excludes the unfunded liabilities of government entitlement programs and pension plans, which dwarf the official total debt. 

So assuming too much debt is a potential problem – which it is always and everywhere — we can’t use the post-war economy as a rationale for relaxing. 

Just the opposite.

The Event that Triggered US Maritime Supremacy

Thoughts in and around geopolitics.

By: George Friedman


On Nov. 11, 1940, the British Royal Navy set the stage for the United States becoming the dominant naval power in the world. It certainly did not intend to; the British wanted to retain that title for themselves. The consequences of an action are frequently hard to anticipate and even to recognize before the fact.

Taranto was an Italian naval base located in the heel of the Italian boot. It was a logical location for a navy whose mission was to dominate the Mediterranean. The Italian navy was not a trivial force, and Taranto was a key installation. 

The Italians based a substantial number of battleships at Taranto but were cautious in allowing them to sortie. They were caught between war and peace, and had removed their torpedo nets designed to block torpedoes on Nov. 11. There were six battleships, nine cruisers and 28 destroyers at anchor.

The British saw the Italian fleet as their only challenger in the Mediterranean, which was essential to Britain’s path to the empire. The Royal Navy was ordered to destroy the Italian navy. It could not enter Taranto Harbor with battleships, so it contrived a new strategy. 

The attack was based on an aircraft carrier, the HMS Illustrious, carrying about 20 swordfish biplanes, some with torpedoes and some with bombs. The British planned a night attack to surprise the Italians. 

The Italians had sound sensing equipment that detected the plane’s engines, but the system for alerting the command was ineffective. The British sank three battleships, two cruisers and two destroyers, a substantial amount for about 20 biplanes.

The British attack at Taranto did not plant the idea of Pearl Harbor in Adm. Isoroku Yamamoto’s mind, but it did confirm that it could be done. Taranto, like Pearl Harbor, was relatively shallow, and the argument against attacking it was that torpedoes would bottom instead of hitting their target. 

This successful attack showed that by reconfiguring torpedoes, an air attack in a shallow harbor could work. At the time, the Japanese contemplated war with the U.S. but were not committed to it. U.S. embargos of oil and scrap metal, and interdiction of the flow of oil from the Netherlands East Indies – after the Japanese invasion of Indochina – convinced the Japanese that war with the United States was necessary. 

They knew of the American plan that foresaw the Japanese conquest of the Philippines, after which the fleet at Pearl Harbor would sortie and insert themselves between the Philippines and Japan, forcing the Japanese fleet into a surface battle the U.S. would win. Understanding this, the Japanese knew that the center of gravity of American forces was at Pearl Harbor. With a much larger fleet than the British had, and much more advanced monoplanes, they repeated Taranto on a larger scale.

Two things followed from this. First, the U.S. mobilized naval construction workers to build a massive fleet around the aircraft carrier. Second, Hitler, for obscure reasons, declared war on the United States. The U.S. had aided the British by lending them destroyers to fight German U-boats. 

In return, the British had to lease the U.S. almost all of their bases near the Western Hemisphere – hence Lend-Lease. This essentially broke the back of the Royal Navy in the Atlantic, and the U.S. shipyards, producing transport and warships, dominated the Atlantic in World War II and afterward as well. Britain was no longer a global naval power.

In the Pacific, the limited carriers under Adm. Raymond Spruance engaged the Japanese fleet at Midway and shattered it. The outcome of the Pacific War was a foregone conclusion – although much blood had to be shed – and the U.S emerged from the war in unchallenged command of the Atlantic and Pacific. 

It was invulnerable to attack save by nuclear missile, and occupied the only continent on which there could be no significant wars waged. That, the massive industrial plant built during World War II, and the little damage that was done to it, made the U.S. enormously powerful.

Yamamoto had to fight for a preemptive strike on Pearl Harbor against dubious admirals, generals and politicians. Without the evidence provided by the British at Taranto, the Japanese would likely have declined what would have been seen as a completely untried risk. Its failure would have been disastrous to Japan, and the U.S. Navy would have still executed its Pacific war plan. 

Pearl Harbor was the critical alternative to a surface battle in the Western Pacific, which, if the Japanese lost, would cost them everything. In the end, they lost everything to American shipyards and the extraordinary good fortune and brilliance of Spruance, but they had not calculated the U.S. penetrating Japanese codes, knowing their next battle plan and being defeated by an inferior force. Taranto had induced the Japanese to strike Pearl Harbor, a move that led to national catastrophe and American Pacific preeminence.

The ability to recognize the emergence of a new, decisive naval vessel – the aircraft carrier – and to understand how it might be used was instrumental to the war. The Americans, like the Italians, detected the approach of Japanese planes but failed to order aircraft aloft. But unlike Italy, the U.S. had the ability to rebuild its fleet, now based on aircraft carriers.

The British driving the Italians out of the Mediterranean was useful but not decisive. 

The Japanese shattering the American fleet at Pearl Harbor was decisive because it activated the American industrial base to a frenzy. Hitler’s declaration of war eliminated the political barriers to the U.S. entering the European war. 

None of this would have happened if the Japanese were not certain that the attack on Pearl Harbor would likely succeed, and that would not have happened had the British not led the way at Taranto. 

A war was likely under any case, but absent the stunning effect of Pearl Harbor on American society, it might (emphasize might) not have led to total war.

Taranto and Pearl Harbor led to the reasonable belief that an enemy might strike at any time, and that the U.S. and others must be on continual standby alert. It fundamentally transformed the American understanding of the dangers that are present in the world. 

History wasn’t changed on Nov. 11, 1940, but the coming of a new era was announced.

Populism After Trump

While more than 72 million Americans cast their votes for Donald Trump, over five million more chose Joe Biden – a 3.4 percentage-point difference. The implication is clear: right-wing populism is not dead, but it can be defeated.

Philippe Legrain


LONDON – Before he was US president, Donald Trump built a reality-television persona on the catchphrase, “You’re fired.” 

Now, the American people have fired him. And Trump’s defeat has also dealt a devastating blow to nationalist populists in Europe and elsewhere. Might it prove lethal?

The swamps that breed populist nationalism have not been drained. Too many people remain frustrated over their perceived (or anticipated) loss of economic and social status, and feel disregarded or maligned by establishment politicians. 

Wage stagnation, deindustrialization, and economic injustice continue to be serious challenges. Many are convinced that immigration and cultural change pose a threat to their safety and way of life. The COVID-19 crisis has compounded these anxieties.

The persistence of these fears and frustrations was reflected in the US election results. Though President-elect Joe Biden won over five million more votes than Trump – a 3.4 percentage-point lead – more than 72 million Americans still cast their votes for the outgoing president.

Nonetheless, Biden has demonstrated that populism can be defeated – and not just with more populism. Far from employing populists’ tactics, endorsing their worldviews, or pandering to their prejudices, Biden built a broad electoral coalition around a promise of positive change, sober moderation, and competent governance. 

This holds a crucial lesson for center-left and center-right political parties in Europe, which have at times succumbed to the populist temptation – such as by echoing their socially conservative, anti-immigrant views – to try to win votes.

Trump’s loss also amounts to a warning for other far-right populists, such as Brazilian President Jair Bolsonaro and Hungarian Prime Minister Viktor Orbán. Earlier this year, Orbán proclaimed, “We used to think that Europe was our future; today we know that we are the future of Europe.” 

But with Trump’s defeat, his words ring hollow. Even if these leaders remain popular for now – in Bolsonaro’s case, thanks to generous COVID-19 handouts to citizens – the rise or persistence of far-right populism is hardly inexorable.

Beyond shattering this self-serving narrative of inevitability, Trump’s loss discredits his deeply flawed policies, thereby reducing their attractiveness to others. Over the past four years, Trump has pursued an approach that unabashedly purports to put “America first,” trampling on trade treaties and misusing sanctions to try to give US businesses and workers an edge.

In this context, it seemed almost naive for others, including European governments, to pursue multilateral, cooperative open-market solutions. As mainstream politicians leaned toward protectionism, the extreme economic nationalism espoused by the likes of France’s National Rally (formerly the National Front) – whose leaders favor putting “France and French people first” – seemed increasingly reasonable. 

Moreover, as I explain in my new book, Them and Us: How Immigrants and Locals Can Thrive Together, Trump’s xenophobic rhetoric and encouragement of nativist sentiment opened the way for harsh immigration policies at home and abroad.

Of course, some European governments needed no encouragement to demonize Muslims, erect barbed-wire border fences, or detain asylum-seekers in squalid camps; indeed, they began doing so before Trump was elected, notably during the 2015-16 refugee crisis. 

But the Trump administration’s actions – including separating children from their parents and detaining them in awful conditions, deporting asylum seekers without due process, banning immigrants from Muslim-majority countries, and building a wall on the US border with Mexico – gave Europe’s anti-immigrant forces a major boost.

For example, Matteo Salvini, the leader of Italy’s far-right League party and the country’s interior minister in 2018-19, reveled in his status as “Italy’s Trump,” as he blocked boats carrying rescued migrants from docking in Italian ports. 

When the Trump administration refused in 2018 to agree to the non-binding Global Compact for Safe, Orderly, and Regular Migration, nine EU governments – as well as other countries, such as Australia – followed suit.

Biden will set a very different example, which is likely to strengthen internationalists and weaken nationalists in Europe. To be sure, the president-elect – like Democrats more broadly – is not pushing for unfettered free trade and immigration. 

But he does recognize the foreign-policy benefits of trade cooperation with America’s European allies, and he has pledged to reverse some of the Trump administration’s most controversial immigration policies within days of taking office, as well as to reshape America’s immigration system over the longer term. 

Biden will also scrap Trump’s approach to climate change, beginning by rejoining the Paris climate agreement on the first day of his presidency.

With Trump gone, populist politicians will not only enjoy less domestic legitimacy; governments will face a higher international price for nationalist stances. Trump was a powerful ally for Europe’s nationalist governments, especially in Hungary and Poland. 

When Poland’s ruling Law and Justice party picked fights with Germany and challenged EU policies on asylum, judicial independence, and much else, it felt confident that, even if its European partners turned on it, Trump would protect it from the likes of Vladimir Putin’s revanchist Russia. 

With Biden in the White House, the Polish government will feel more pressure to be constructive.

The same goes for British Prime Minister Boris Johnson. Trump championed Brexit as an expression of sovereignty and encouraged Johnson to take a tough line with the European Union, dangling the prospect of a bilateral trade deal as a prize.

Biden is no fan of Brexit – or, one might guess, of Johnson, whose racist slight about President Barack Obama’s “part-Kenyan” ancestry during the referendum campaign Biden is unlikely to have forgotten. Moreover, Biden, who has often discussed his Irish ancestry, has made clear that he will not accept any threat to peace in Northern Ireland. 

With time running out to negotiate a post-Brexit trade agreement, Johnson is now under far greater pressure to compromise.

So, populist nationalism is not dead. But it can be defeated – and Trump’s fall is likely to make that easier. Are Europeans up to the task?


Philippe Legrain, a former economic adviser to the president of the European Commission, is Visiting Senior Fellow at the London School of Economics’ European Institute and the author of Them and Us: How Immigrants and Locals Can Thrive Together. 

Killing coal

Time to make coal history

Coal is at the toxic heart of the fossil fuel economy



Around the world the mood is shifting. Xi Jinping has adopted a target to cut China’s net carbon emissions to zero by 2060. Under Joe Biden, America will rejoin the Paris agreement, which it adopted five years ago. In the financial markets clean-energy firms are all the rage. 

This month Tesla will join the S&P 500 share index—as one of its largest members.

Remarkably, in a realm where words are cheap, there has been action, too. In America and Europe the consumption of coal, the largest source of greenhouse gases, has fallen by 34% since 2009. The International Energy Agency, an intergovernmental body, reckons that global use will never surpass its pre-covid peak.

Yet coal still accounts for around 27% of the raw energy used to power everything from cars to electric grids. Unlike natural gas and oil, it is concentrated carbon, and thus it accounts for a staggering 39% of annual emissions of CO² from fossil fuels. If global emissions are to fall far enough, fast enough, the task now is to double down on the West’s success and repeat it in Asia. It will not be easy.

Coal came of age in the Industrial Revolution. In the rich world its use in furnaces and boilers peaked in the 1930s and faded as cleaner fuels became available. Consumption in the West has recently collapsed. 

In Britain the last coal-fired power plants could close as soon as 2022. Peabody Energy, a big American coal miner, has warned that it may go bankrupt for the second time in five years.

Although carbon prices accelerated the shift in Europe, the Trump administration has favoured America’s coal industry with deregulation and political support—and still it has declined. One reason is competition from cheap natural gas produced in America by fracking. 

Tax credits and subsidies have prompted renewables to scale up, which has in turn helped drive down their costs. Solar farms and onshore wind are now the cheapest source of new electricity for at least two-thirds of the world’s population, says Bloombergnef, a data group. 

As coal faces cleaner rivals and the prospect of more regulation, banks and investors are turning away, raising coal’s cost of capital.

This is a victory, but only a partial one. In the past decade, as Europe has turned against coal, consumption in Asia has grown by a quarter. The continent now accounts for 77% of all coal use. China alone burns more than two-thirds of that, followed by India. Coal dominates in some medium-sized, fast-growing economies, including Indonesia and Vietnam.

If the aim is to limit global temperature rises to 2°C above pre-industrial levels, it is no good waiting for Asia’s appetite for coal to fade. New plants are still being built. Many completed ones are not yet fully utilised and still have decades of life in them. 

Nor is it enough to expect a solution from “clean coal” technologies, which aim to capture and store emissions as they are released. They may help deal with pollution from industrial uses, such as steelmaking, but they are too expensive for power generation.

Hence Asia needs new policies to kick its coal habit, and soon. The goal should be to stop new coal-fired power plants being built and to retire existing ones. Some countries have taken a first step, by imposing new targets and bans. 

The Philippines has declared a moratorium on new plants; Japan and Bangladesh are slowing construction, too. China’s new five-year-plan, which will be published next year, may limit coal use. It should set its cap at current levels, so that the decline can start immediately.

If targets are to be credible, Asian countries must tackle deeper problems. The strategy that worked in Europe and America will get them only so far, because the mining firms, power stations, equipment-makers and the banks that finance them are often state-controlled. Market forces and carbon taxes, which use price signals to change incentives, are therefore less effective. And coal politics is treacherous. 

The coal economy forms a nexus of employment, debt, tax revenues and exports. China has used its Belt and Road Initiative to sell both mining machinery and power plants. Across the region, local governments depend on coal for revenues. Many will defend it ferociously.

One step in fighting regional lobbies is to redesign power systems so that renewables can compete fairly and incentives work. Most renewables provide only intermittent power, because the weather is changeable. National smart grids can mitigate this by connecting different regions. 

Too many of Asia’s electricity systems muffle market signals because they are locked into legacy long-term supply contracts with coal firms, and because they are riddled with opaque subsidies and price caps. Removing these so that markets and taxes work better will let renewable power undercut coal.

The other step is to compensate losers. The lesson from destitute mining towns in south Wales and West Virginia is that job losses store up political tensions. Coal India, the national mining colossus, has 270,000 workers. 

From Shanxi province in China to Jharkhand in India, local governments will need fiscal transfers to help rebalance their economies. Banks may need to be recapitalised: China’s state lenders may have up to $1trn at stake.

Europe and America have shown that King Coal can be dethroned, but they cannot be bystanders as Asia works to complete the revolution. Coal powered the West’s development. In 2019 coal consumption per person in India was less than half that in America. 

It is in Asia’s long-term interests to topple coal, but the short-term political and economic costs are large enough that action may be too slow. If politicians in Europe and America are serious about fighting global warming, they must work harder to depress coal elsewhere. That includes honouring prior promises to help developing countries deal with climate change.

Ultimately, though, the responsibility will lie with Asia itself. And the good news is that it is overwhelmingly in Asia’s interest to do so. Its people, infrastructure and agriculture are dangerously exposed to the droughts, flooding, storms and rising sea levels caused by climate change. 

A growing middle class yearns for their governments to clean up Asia’s choking metropolises. And renewable energy offers a path to cheaper power, generated at home, as well as a source of industrial employment and innovation. Coal’s days are numbered. The sooner it is consigned to museums and history books, the better.