The World That Was

Adrian Olivier,

Sunday 12 March – Sunday 19 March

In the United States, former president Donald Trump has announced on his social media platform Truth Social that he expects to be arrested this coming Tuesday (March 21). A Fox News anchors told viewers on Frid1ay that the Manhattan District Attorney’s Office sought a meeting with law enforcement officials to discuss “logistics” ahead of a possible Trump indictment sometime next week. In response, Donald Trump called on his millions of supporters to protest and “take [their] nation back”. Trump’s lawyers said there had been no communication from law enforcement and that the post was based on media reports.

Tensions remain high in the Korean Peninsula. Freedom Shield joint U.S. and South Korean military drills are ongoing and will continue until Thursday. In response to these drills, North Korea has again fired a short-range ballistic missile on Sunday into the Sea of Japan. The missile, a Hwasong 17 with an estimated range of 15,000 km (9300 miles), flew 800km (500 miles) before hitting a target in the sea. The Hermit Kingdom’s state media has also announced that 800,000 North Korean students and workers have enlisted in the army to “defend the homeland and the war to destroy the enemy”. The volunteers vowed to “mercilessly wipe out the war fanatics who are making a last-ditch effort to erase our socialist fatherland”.

Turning to Ukraine, the war entered its 55^th week. Little has changed on the battlefield and the Russian offensive, such as it was, appears to have lost momentum. The only Russian gains have been in the area surrounding Bakhmut, though the city itself has not fallen. The General Staff of Ukraine’s Armed Forces said Russia carried out 19 air attacks and 26 rocket attacks against Bakhmut on Friday. The Pentagon has advised that Ukrainian forces withdraw from the city as supply issues continue to plague both sides on the battlefield. The Pentagon warns that Ukrainian ammunition firing rates are too high to maintain and stockpiles are running out. This high rate of fire could endanger Ukraine’s planned spring offensive. The Ukrainian Armed Forces are firing thousands of artillery shells a day to prevent the Russians from taking the city and are taking heavy casualties as the Russians can fire from three sides. This follows weeks and months of warnings that Western artillery supplies are running low and current production capacity is unable to meet Ukraine’s artillery demands. NATO allies are attempting a “last-ditch effort” to supply Ukraine with artillery ammunition.

Kiev’s troops are likely to have only one meaningful opportunity to go on the offensive this year to reclaim their lands seized by the Russians. This offensive will be complicated by persistent ammunition shortages. Ukraine has taken so many casualties in Bakhmut that commanders will be forced to choose between sending reinforcements to Bakhmut now or saving them for the spring offensive. In support of this, it emerged that a secret British task force is leading a program to find and purchase ammunition for Ukraine’s Soviet artillery systems from suppliers around the world. The European Union is pooling the resources of its member nations to purchase and manufacture one million shells for Ukraine while the United States aims to produce 90,000 artillery shells per month. These efforts are unlikely to bear fruit soon – estimates are that it will take at least 18 months – and perhaps two years – for the U.S. to reach these production levels.

Elsewhere, there has been no Russian progress. In the fighting around Vuhledar – also in the Donetsk region – the fighting has slowed. Russian attacks have decreased from a high of 100 a day to fewer than 30. Ukrainian commanders believe Russian forces are suffering significant ammunition shortages, and manpower and equipment losses.

An American MQ-9 Reaper drone was brought down near Crimea after a Russian Su-27 warplane performed fly-bys and dumped fuel on the drone. On a final approach the Russian warplane flew close enough to break one of the drone’s propellers, causing the plane to crash into the Black Sea. Russian divers were able to recover some parts of the drone, but the U.S. has dismissed fears that the Russians will discover anything useful in the wreckage. Russian Defence Minister Sergei Shoigu awarded the Su-27 pilots medals. The U.S. has since resumed surveillance drone flights over the Black Sea.

Russian president Vladimir Putin arrived in Crimea to mark the anniversary of the peninsula’s 2014 annexation from Ukraine. His visit was unannounced – he was expected to join the celebratory event by video link. On Friday the International Criminal Court issued an arrest warrant for the Russian President on allegations of war crimes committed by his troops in Ukraine, including the abduction of Ukrainian children. Moscow has called the court’s action “meaningless”. Russian Foreign Ministry spokeswoman Maria Zakharova said on her telegram that “The decisions of the International Criminal Court have no meaning for our country, including from a legal point of view…Russia is not a party to the Rome Statute of the International Criminal Court and bears no obligations under it.”

President Putin also made a surprise visit to the occupied city of Mariupol which was captured by Russian forces in May of 2022. Poland and Slovakia have announced that they will be delivering Mikoyan MiG-29 warplanes to Ukraine. The planes entered service with the Soviet Air Force in 1983 and were designed to counter the American F-15 Eagle and F-16 Fighting Falcon. Ukraine had several dozen MiG-29s it inherited in the 1991 collapse of the Soviet Union, but it’s unclear how many remain in service after more than a year of fighting.

In the wake of the Silicon Valley Bank collapse, troubled Swiss banking giant Credit Suisse has been hit with bank runs and potential collapse. Credit Suisse is one of around 30 banks worldwide deemed too big to fail because they are of such importance to the international banking system. The bank, founded in 1856 has been unprofitable over the course of the last decade and has racked up billions in legal losses. It reported a loss of 7.3bn Swiss francs (CHF) ($7.9bn; £6.5bn) in 2022 – its worst financial performance since the financial crisis of 2008 as well as warning that it could only expect profitability in 2024. The Financial Times reported that deposit outflows from the bank topped CHF10bn ($10.8bn) a day last week after fears about the bank’s financial health. The share price fell sharply after Credit Suisse reported “material weakness” in its financial reporting – falling 24% on Wednesday and initiating a general sell-off on European markets. In an effort to save the bank, the Swiss National Bank (SNB) provided Credit Suisse with a CHF50 billion line of credit which stabilised the share price.

Regulators have proposed that Credit Suisse’s largest banking rival in Switzerland, UBS, take control of Credit Suisse. They are reportedly trying to reach a deal before markets open on Monday morning. UBS has so far been unwilling to burden itself with Credit Suisse, with Bloomberg, Reuters and the WSJ all reporting that UBS is asking the Swiss government for a backstop to cover any future risks were it to buy Credit Suisse Group AG. Swiss regulators have said that a deal with UBS is the only solution to prevent the collapse of Credit Suisse. Should a deal not happen soon, there is a high chance of Credit Suisse’s remaining depositors will flee and the bank will collapse, spelling potentially dire consequences for the world banking system.

In the course of the last three years, while Credit Suisse shares have dropped 70 percent, UBS shares have gained 120%. UBS returned a profit of $7.6bn in 2022. Should a merger go through, it would create one of the largest financial institutions in the world. UBS currently has $1.1 trillion in total assets on its balance sheet and Credit Suisse has $575bn. The Swiss government held an emergency meeting on Saturday night but there has been no official statement on the outcome of the negotiations. Should the bank collapse, it will join the ranks of American banks Silicon Valley Bank and Signature Bank that collapsed since March 10. Trouble also hit U.S. markets as shares of First Republic bank dropped 33%, a day after it received an injection of funds from the country’s biggest banks.

In typical Parisian fashion, protestors against the government’s plans to raise the French retirement age have clashed with police. The unrest has been growing since the start of the year and has caused waves of strikes and the build-up of rubbish on the streets of Paris, as trash collectors refuse to go to work for a 12^th day. French police fired teargas at protestors chanting “Macron, resign”. 310 people were arrested overnight on Saturday – most in Paris. French president Macron and his government want to raise the retirement age from 62 to 64. Protests continue over the weekend and into the next week – at particular risk are the Baccalaureate high-school exams which are required for admission to university.

Turkish president Erdogan has announced he will ratify Finland’s bid to join the NATO alliance. Erdogan announced the decision on Friday after meeting with Finnish President Sauli Niinisto in Ankara. Turkey has so far withheld its approval for Sweden joining the alliance, citing Sweden’s support of those Turkey classifies as terrorists. Finland’s NATO application will now be voted on by the Turkish parliament – where Erdogan’s party is the majority. Ratification is expected before parliamentary elections are held on May 14.

Turkey and Egypt have held the first diplomatic talks in a decade, and have announced that they will continue talks about normalising relations. The two countries have had strained relations since 2013 when after Egypt’s then-army chief Abdel Fattah el-Sisi led the removal of Muslim Brotherhood’s Mohamed Morsi, an ally of Turkey.

The oil price dropped below $73 dollars, the lowest price since late 2021. West Texas Intermediate crude futures, the U.S. benchmark, fell as low as $65.17 per barrel on Friday, down 4.7% from Thursday’s levels. Brent crude, the international benchmark, fell as much as 4.4%, to $71.40 per barrel. Both products rebounded somewhat around midday, but were still trading down on the day. Brent is off by about 15% in just the past 10 days. President Joe Biden said last year that the U.S. government would consider purchases when oil was at or below $67-$72 per barrel, a level that would apply today.

In the week ahead:

The Federal Reserve’s next US monetary policy meeting is scheduled for 21-22 March. The Fed is expected to approve a 25 basis point interest rate hike

Chinese president Xi Jinping will visit Moscow in the coming week where he will meet with Russian president Vladimir Putin. This will be Xi’s first foreign trip since securing his third term as Chinese president last week.