Month: February 2022

Federal Court Declares Diversity Initiative At Thomas Jefferson High School To Be Unconstitutional

Federal Court Declares Diversity Initiative At Thomas Jefferson High School To Be Unconstitutional

Authored by Jonathan Turley,

We recently discussed controversies on race criteria from college admissions cases pending before the Supreme Court to the threshold criteria used by President Joe Biden for his Supreme Court nominee. Now, a federal district court in Northern Virginia has handed down a major decision in Coalition for TJ v. Fairfax County School Board, ruling that a new admissions policy at the Thomas Jefferson High School for Science and Technology, in Fairfax, Virginia is unconstitutional.  Recently, the county decided to change the admissions system for the elite school to increase minority enrollment.  Judge Claude Hilton ruled that the county unconstitutionally engineered the reduction of Asian-American students to achieve greater racial diversity.

As a parent of Fairfax public school students. TJ was always the premier high school for the most gifted students in the county. Even if your kids did not get into TJ, there has been great pride for its ranking as one of the best high schools in the country. 

Many parents were opposed when the county announced that it would pursue greater diversity in admissions. We have been discussing a movement to eliminate gifted and talented programs in cities ranging from Boston to New York to San Francisco.

The Court details the push to diversify the top school after the death of George Floyd.

“In June emails, Corbett Sanders promised intentional action. In an email to Brabrand, Corbett Sanders wrote that ‘the Board and FCPS need to be explicit in how we are going to address the under-representation of Black and Hispanic students.’

At a June 18 Board meeting, Keys-Gamarra said that ‘in looking at what has happened to George Floyd, we now know that our shortcomings are far too great… so we must recognize the unacceptable numbers of such things as the unacceptable numbers of African Americans that have been accepted to T.J.‘”

As in the cases on the docket for the Supreme Court, Asian Americans alleged discrimination against them in these diversification programs. Judge Hilton wrote that “emails and text messages between Board members and high-ranking FCPS officials leave no material dispute that, at least in part, the purpose of the Board’s admissions overhaul was to change the racial makeup of TJ to the detriment of Asian-Americans….” He noted that, due to the new policy, “Asian American representation dropped from roughly 70 percent to around 50 percent of the class.”

As noted earlier, I believe that TJ should select students entirely based on scholastic achievement irrespective of their race or other criteria. While the country as a whole continues to fall behind other nations in math and science, TJ is one of the few exceptions — attracting brilliant students who are given highly advanced training. Math and science are fields given to objective testing and scoring. Students should be assured that they will be measured on their objective scores and rewarded for the hard work necessary to achieve admission.

What is interesting is how the diversification was achieved. The county limited the number of students admitted from any given middle school. That effectively limited the number of Asian-American students.

“FCPS staff then developed a proposal for a ‘Merit Lottery’ for TJ admissions, which they presented to the Board on September 15. The proposal stated that ‘TJ should reflect the diversity of FCPS, the community and Northern Virginia.’ The proposal discussed the use of ‘regional pathways’ that would cap the number of offers each region in FCPS (and the other participating jurisdictions) could receive. It included the results of Shughart’s modeling, which showed the projected racial effect of applying the lottery with regional pathways to three previous TJ classes. Each of the three classes would have admitted far fewer Asian-American students under the proposed lottery system.”

The summary judgment decision will now allow the county to appeal to the United States Court of Appeals for the Fourth Circuit.

Here is the opinion: Coalition-for-TJ-v.-Fairfax-County-School-Board-Decision

Tyler Durden
Mon, 02/28/2022 – 15:04

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The CDC’s Explanation for Its Reversal on School Mask Mandates Is Transparently Dishonest


Rochelle-Walensky-testifying-1-14-21-Newscom

New York Gov. Kathy Hochul yesterday announced that a statewide rule requiring students to wear masks in K–12 schools will be lifted this Wednesday. Hours later, New York Mayor Eric Adams said his city’s school mask mandate will end next Monday. California officials are expected to announce a similar change today.

Those moves come three weeks after several blue-state governors said they would stop requiring school districts to force masks on children. On Friday, the Centers for Disease Control and Prevention (CDC) belatedly ratified those decisions, saying it was changing its masking recommendations for schools and indoor businesses.

The CDC, as always, claims to be following the science and adapting to changing conditions. But given that CDC Director Rochelle Walensky was saying as recently as February 15 that the agency had no plans to change its recommendations for schools, it seems clear that the CDC is shifting with the same political winds that encouraged one Democratic governor after another to lift statewide mask mandates.

The fact that Walensky announced the changes before the CDC had even managed to revise its “Guidance for COVID-19 Prevention in K–12 Schools” suggests she was anxious to disguise the agency’s growing irrelevance. If the CDC had waited much longer, it would have become painfully clear that almost no one was paying attention to its advice anymore.

Under the new guidelines, the CDC recommends general masking only in counties with a “high” risk level, defined based on hospitalization rates and local hospital capacity as well as daily new cases. Under the new definition, about 30 percent of Americans live in “high-risk” counties. Previously, the vast majority did, since 95 percent of counties were classified as high-risk.

In another key change, the CDC says it will update its guidance for K–12 schools to align its masking recommendations for students with its masking recommendations for the general public. The CDC previously had insisted on “universal masking” in schools and day care centers, which applied to children as young as 2, regardless of local COVID-19 trends.

Neither the revised definition of risk nor the elimination of the double standard for schools vs. businesses is based on new evidence.

It has been clear since the beginning of this winter’s omicron wave that the variant, while highly contagious, is less virulent than earlier iterations of the coronavirus, which made case numbers less reliable than ever as an indicator of severe disease. It has been clear since the beginning of the pandemic two years ago that children rarely experience life-threatening COVID-19 symptoms, whether or not they are vaccinated.

It has been clear since COVID-19 vaccines were first approved in December 2020 that they dramatically reduce the risk of hospitalization and death for adults who might be exposed to children infected by the virus. It has always been true that adults can further protect themselves by wearing high-quality, well-fitting masks, regardless of whether the people around them are forced to cover their faces. And the CDC has never been able to present compelling evidence that school mask mandates have an important impact on virus transmission.

“When I look back at what was going on just a short time ago, I am so happy that we did have a mask requirement in place for schools at the time,” Hochul said. “That’s how we kept these numbers from getting even worse.” Since cases during the omicron surge followed the same basic pattern in nearly every state, regardless of its masking policies, Hochul’s conviction is more an article of faith than a statement of scientific fact.

As Reason‘s Robby Soave reported earlier this month, Walensky conceded during a closed-door congressional briefing on February 15 that the studies on which the CDC relied to justify school mask mandates “all have limitations…because we are not randomizing schools.” In truth, most of the studies did not even compare schools with mandates to schools without them. When they did include such a comparison, the failure to control for potentially important confounding variables such as vaccination rates and other COVID-19 safeguards made it impossible to draw firm conclusions about the effectiveness of mask mandates.

In public, however, Walensky pretended that the scientific case for “universal masking” in schools was beyond dispute. Last December, when she was asked about criticism of a deeply flawed Arizona study she had repeatedly cited to justify school mask mandates, she did not bother to defend its methodology. Instead, she dodged the question entirely, insisting that “study after study” has “demonstrated that our layered prevention strategies, including masks in schools, are able to keep our schools safely open.”

The crucial issue was not whether schools with “layered prevention strategies” could operate “safely” but whether mask mandates were necessary to achieve that outcome. As Walensky admitted in private, the research cited by the CDC did not resolve that question.

More generally, Walensky has consistently exaggerated the evidence in favor of general masking. Last fall, she asserted that wearing a mask “reduc[es] your chance of infection by more than 80 percent.” When I asked the CDC what evidence Walensky was relying on for that startling claim, it responded with boilerplate advice about masks and links to several CDC publications, none of which supported what Walensky had said. Notably, Walensky drew no distinction between different kinds of masks, implying that the amazing results she touted could be achieved with the commonly used cloth masks that the CDC later conceded “provide the least protection.”

This month the CDC claimed a study had shown that wearing a cloth mask “lowered the odds of testing positive” by 56 percent, while the risk reduction was 66 percent for surgical masks and 83 percent for N95 or KN95 respirators. But the result for cloth masks was not statistically significant, and the CDC’s causal conclusions regarding the other models were clearly not justified given the study’s glaring methodological weaknesses.

Especially in light of this history, the CDC’s explanation of its dramatic reversal on school mask mandates cannot be taken at face value. “We’ve been reviewing the data on COVID illness in children for two years of a pandemic,” CDC epidemiologist Greta Massetti told reporters on Friday. “And we have seen that although children can get infected and can get sick with COVID, they’re more likely to have asymptomatic or mild infections.”

Massetti was understating what the evidence shows. A year ago, based on data collected before vaccines were available to anyone, the CDC itself estimated that the COVID-19 infection fatality rate for people younger than 18 was 0.002 percent. “A (pre-vaccine!) analysis from Germany shows that if a child is infected with COVID—with or without preexisting conditions—there is an 8 in 100,000 chance of going to the intensive care unit,” University of California, San Francisco, epidemiologist Vinay Prasad notes. “According to the same study, the risk of death is 3 in 1 million, with no deaths reported in the over-5 age group. These risks are astonishingly low.”

More to the point, the CDC has known about these “astonishingly low” risks for a long time. If they were a sound reason to question the wisdom of school mask mandates, that was true when the CDC began recommending that policy more than a year ago, and it has been true every day since.

Immediately after noting that children face little risk from COVID-19, Massetti reverted to the misleading gloss favored by Walensky: “We know that when schools implement layered prevention strategies, that they can prevent…transmission of the virus that causes COVID 19.” We don’t actually know that, especially as it relates specifically to mask requirements. But assuming that it’s true, how is this claim relevant to the CDC’s new position that children need to wear masks only in the redefined “high-risk” counties? After losing the thread of her argument, Massetti reiterated that “schools can be safe places for children” because “children are relatively at lower risk from severe illness”—something the CDC has understood all along.

If the CDC is following the science, it is doing so at an awfully slow pace. Its explanation of this shift, like its rationales for previous reversals, is transparently dishonest. While Walensky may hope to salvage the CDC’s reputation by finally acquiescing to political decisions she stubbornly resisted until last Friday, it is probably too late for that.

The post The CDC's Explanation for Its Reversal on School Mask Mandates Is Transparently Dishonest appeared first on Reason.com.

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“They Actually Want Russia To Invade” – Beijing Slams Biden For Allegedly Provoking Putin

“They Actually Want Russia To Invade” – Beijing Slams Biden For Allegedly Provoking Putin

Amid mixed headlines in the western press that war in Ukraine is straining ties (as opposed to tightening them) between Russia and China, one thing has been constant: the CCP’s communications apparatus has continued to slam the US and NATO for doing ‘everything in their power’ to provoke Russia and President Vladimir Putin into invading Ukraine.

In a Twitter thread, Foreign Ministry spokeswoman Hua Chunying cited several US news reports which she claimed supported her contention that President Biden could have potentially averted the invasion by simply promising that Ukraine would never be admitted to NATO. NATO infamously promised Ukraine in 2008 that it would eventually become a member of the alliance after the country applied for membership in the early 2000s, but most western leaders fear that actually admitting it could potentially provoke Russia in an even more aggressive posture.

In support of this notion, she shared a couple of clips from Fox News, including one slip of the tongue from a State Department Spokesman who said “this is not the outcome we sought to prevent,” apparently a mistake,

And in another clip, Rep. Tulsi Gabbard tells Tucker Carlson that the Biden Administration actually wanted Russia to invade so they could impose “draconian” sanctions and boost defense spending.

Picking up where Gabbard left off, Hua continued to explain that should Ukraine become a member of NATO, that would put the US “directly on the doorstep of Russia”. This would surely “undermine their national security interest” (which is one reason why Ukraine hasn’t been invited to join the alliance years after applying for membership).

So, she concludes: “Why doesn’t President Biden and NATO leaders actually just say that and guarantee it? Why don’t they prevent this war from happening?”

It’s difficult to imagine another reason.

In the end, the military-industrial complex benefits, something that’s already becoming evident as the investment banks recommend defense stocks to their clients.

During an interview with Euronews on Saturday, European Commission President Ursula von der Leyen said she would like to see Ukraine join the EU, although many observers have claimed that Ukraine doesn’t meet the requirements for membership, and that this, too, would risk further provoking Russia.

Tyler Durden
Mon, 02/28/2022 – 14:45

via ZeroHedge News https://ift.tt/7ezJivL Tyler Durden

The CDC’s Explanation for Its Reversal on School Mask Mandates Is Transparently Dishonest


Rochelle-Walensky-testifying-1-14-21-Newscom

New York Gov. Kathy Hochul yesterday announced that a statewide rule requiring students to wear masks in K–12 schools will be lifted this Wednesday. Hours later, New York Mayor Eric Adams said his city’s school mask mandate will end next Monday. California officials are expected to announce a similar change today.

Those moves come three weeks after several blue-state governors said they would stop requiring school districts to force masks on children. On Friday, the Centers for Disease Control and Prevention (CDC) belatedly ratified those decisions, saying it was changing its masking recommendations for schools and indoor businesses.

The CDC, as always, claims to be following the science and adapting to changing conditions. But given that CDC Director Rochelle Walensky was saying as recently as February 15 that the agency had no plans to change its recommendations for schools, it seems clear that the CDC is shifting with the same political winds that encouraged one Democratic governor after another to lift statewide mask mandates.

The fact that Walensky announced the changes before the CDC had even managed to revise its “Guidance for COVID-19 Prevention in K–12 Schools” suggests she was anxious to disguise the agency’s growing irrelevance. If the CDC had waited much longer, it would have become painfully clear that almost no one was paying attention to its advice anymore.

Under the new guidelines, the CDC recommends general masking only in counties with a “high” risk level, defined based on hospitalization rates and local hospital capacity as well as daily new cases. Under the new definition, about 30 percent of Americans live in “high-risk” counties. Previously, the vast majority did, since 95 percent of counties were classified as high-risk.

In another key change, the CDC says it will update its guidance for K–12 schools to align its masking recommendations for students with its masking recommendations for the general public. The CDC previously had insisted on “universal masking” in schools and day care centers, which applied to children as young as 2, regardless of local COVID-19 trends.

Neither the revised definition of risk nor the elimination of the double standard for schools vs. businesses is based on new evidence.

It has been clear since the beginning of this winter’s omicron wave that the variant, while highly contagious, is less virulent than earlier iterations of the coronavirus, which made case numbers less reliable than ever as an indicator of severe disease. It has been clear since the beginning of the pandemic two years ago that children rarely experience life-threatening COVID-19 symptoms, whether or not they are vaccinated.

It has been clear since COVID-19 vaccines were first approved in December 2020 that they dramatically reduce the risk of hospitalization and death for adults who might be exposed to children infected by the virus. It has always been true that adults can further protect themselves by wearing high-quality, well-fitting masks, regardless of whether the people around them are forced to cover their faces. And the CDC has never been able to present compelling evidence that school mask mandates have an important impact on virus transmission.

“When I look back at what was going on just a short time ago, I am so happy that we did have a mask requirement in place for schools at the time,” Hochul said. “That’s how we kept these numbers from getting even worse.” Since cases during the omicron surge followed the same basic pattern in nearly every state, regardless of its masking policies, Hochul’s conviction is more an article of faith than a statement of scientific fact.

As Reason‘s Robby Soave reported earlier this month, Walensky conceded during a closed-door congressional briefing on February 15 that the studies on which the CDC relied to justify school mask mandates “all have limitations…because we are not randomizing schools.” In truth, most of the studies did not even compare schools with mandates to schools without them. When they did include such a comparison, the failure to control for potentially important confounding variables such as vaccination rates and other COVID-19 safeguards made it impossible to draw firm conclusions about the effectiveness of mask mandates.

In public, however, Walensky pretended that the scientific case for “universal masking” in schools was beyond dispute. Last December, when she was asked about criticism of a deeply flawed Arizona study she had repeatedly cited to justify school mask mandates, she did not bother to defend its methodology. Instead, she dodged the question entirely, insisting that “study after study” has “demonstrated that our layered prevention strategies, including masks in schools, are able to keep our schools safely open.”

The crucial issue was not whether schools with “layered prevention strategies” could operate “safely” but whether mask mandates were necessary to achieve that outcome. As Walensky admitted in private, the research cited by the CDC did not resolve that question.

More generally, Walensky has consistently exaggerated the evidence in favor of general masking. Last fall, she asserted that wearing a mask “reduc[es] your chance of infection by more than 80 percent.” When I asked the CDC what evidence Walensky was relying on for that startling claim, it responded with boilerplate advice about masks and links to several CDC publications, none of which supported what Walensky had said. Notably, Walensky drew no distinction between different kinds of masks, implying that the amazing results she touted could be achieved with the commonly used cloth masks that the CDC later conceded “provide the least protection.”

This month the CDC claimed a study had shown that wearing a cloth mask “lowered the odds of testing positive” by 56 percent, while the risk reduction was 66 percent for surgical masks and 83 percent for N95 or KN95 respirators. But the result for cloth masks was not statistically significant, and the CDC’s causal conclusions regarding the other models were clearly not justified given the study’s glaring methodological weaknesses.

Especially in light of this history, the CDC’s explanation of its dramatic reversal on school mask mandates cannot be taken at face value. “We’ve been reviewing the data on COVID illness in children for two years of a pandemic,” CDC epidemiologist Greta Massetti told reporters on Friday. “And we have seen that although children can get infected and can get sick with COVID, they’re more likely to have asymptomatic or mild infections.”

Massetti was understating what the evidence shows. A year ago, based on data collected before vaccines were available to anyone, the CDC itself estimated that the COVID-19 infection fatality rate for people younger than 18 was 0.002 percent. “A (pre-vaccine!) analysis from Germany shows that if a child is infected with COVID—with or without preexisting conditions—there is an 8 in 100,000 chance of going to the intensive care unit,” University of California, San Francisco, epidemiologist Vinay Prasad notes. “According to the same study, the risk of death is 3 in 1 million, with no deaths reported in the over-5 age group. These risks are astonishingly low.”

More to the point, the CDC has known about these “astonishingly low” risks for a long time. If they were a sound reason to question the wisdom of school mask mandates, that was true when the CDC began recommending that policy more than a year ago, and it has been true every day since.

Immediately after noting that children face little risk from COVID-19, Massetti reverted to the misleading gloss favored by Walensky: “We know that when schools implement layered prevention strategies, that they can prevent…transmission of the virus that causes COVID 19.” We don’t actually know that, especially as it relates specifically to mask requirements. But assuming that it’s true, how is this claim relevant to the CDC’s new position that children need to wear masks only in the redefined “high-risk” counties? After losing the thread of her argument, Massetti reiterated that “schools can be safe places for children” because “children are relatively at lower risk from severe illness”—something the CDC has understood all along.

If the CDC is following the science, it is doing so at an awfully slow pace. Its explanation of this shift, like its rationales for previous reversals, is transparently dishonest. While Walensky may hope to salvage the CDC’s reputation by finally acquiescing to political decisions she stubbornly resisted until last Friday, it is probably too late for that.

The post The CDC's Explanation for Its Reversal on School Mask Mandates Is Transparently Dishonest appeared first on Reason.com.

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Biden Says Sanctions Not “Immediate”, Lays Out Only Other Option Against Russia

Biden Says Sanctions Not “Immediate”, Lays Out Only Other Option Against Russia

Authored by Zachary Stieber via The Epoch Times,

President Joe Biden in an interview released over the weekend said sanctions don’t take effect immediately and alleged only one alternative exists in dealing with Russia after the country invaded Ukraine.

“You have two options. Start a third world war – go to war with Russia physically; or two, make sure that a country that acts so contrary to international law ends up paying a price for having done it,” Biden said, speaking with political commentator Brian Tyler Cohen before he traveled to Delaware.

“And there’s no sanction that is immediate. It’s not like you can sanction someone and say, ‘you no longer are going to be able to be the president of Russia.’ But I think these sanctions, I know these sanctions, are the broadest sanctions in history,” the Democrat president added.

The Biden administration has imposed a series of sanctions against Russian entities and persons in the wake of the Russian invasion of Ukraine, including sanctions on Russian President Vladimir Putin. The administration has also sent and is planning to send additional aid, including weapons, to Ukrainian fighters.

Biden has refused, at least so far, to send troops to directly assist Ukraine, arguing that doing so would trigger a conflict.

The moves have drawn criticism from some, including Sen. Tom Cotton (R-Ark.), who on Sunday asserted sanctions announced against banks in Russia “are riddled with loopholes.”

“I know that they say they sanctioned 80 percent of the banks in Russia—well, Vladimir Putin controls 100 percent of the banks in Russia. He can use the other 20 percent to continue to finance his war machine. It’s time to remove all Russian financial institutions from the international payment system. It’s time to impose sanctions on his oil and gas exports, which he uses as his primary means of financial support,” Cotton said on ABC’s “This Week.”

The senator also said the United States needs to rush weapons from a fresh round of funding Biden administration officials recently announced to Ukraine.

“It should have been done weeks ago. So, better late than never, but the Ukrainians have no time,” he said.

Early Monday, the administration imposed more sanctions against Russia’s central bank and several other Russian entities.

Also over the weekend, Putin ordered Russia’s nuclear forces on high alert, a move the United States declined to match while the NATO alliance, which America is a part of but Ukraine is not, emphasized it would not directly help Ukrainian forces.

“This is another escalatory and unnecessary step that threatens us all. We urge Russia to tone down its dangerous rhetoric regarding nuclear weapons,” Linda Thomas-Greenfield, the U.S. representative to the United Nations, said in New York.

Tyler Durden
Mon, 02/28/2022 – 14:25

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Ukraine Is Not Taiwan


biden

With Russian President Vladimir Putin sending troops into Ukraine, many journalists and analysts—even former President Donald Trump—have jumped to the conclusion that Taiwan is next. “Russia is in the headlines today, but China will be the spearhead of the authoritarian cause,” writes the Atlantic Council’s Michael Shuman.

But there is no direct link between Putin’s invasion of Ukraine and China’s taunting of Taiwan. 

Ukraine separated from the Soviet Union just 31 years ago. China and Taiwan have had separate governments for 73 years; they were united under the same regime for just four of the last 127 years. Taiwan is essentially united in wanting to be free of Beijing’s rule, while Ukraine has had to deal with unruly separatist regions loyal to Moscow. Taiwan is a flourishing liberal democracy, while Ukraine has yet to build a lasting democratic infrastructure.

Both countries are threatened by unpredictable nearby autocrats. But they are certainly not the same, and the U.S. hasn’t treated them as such. Kharis Templeman of the Hoover Institution notes that “security support for Ukraine is recent, limited, and subsumed under broader concerns about Russia’s challenge to the post-Cold War European security order”; in Taiwan, by contrast, “American interests run deep.” The U.S. is Taiwan’s primary security partner and source of military aid, training, and arms sales. This history of engagement dates back more than seven decades, and it reflects the fact that Washington sees much more at stake if Taiwan faces aggression.

Chinese President Xi Jinping believes the U.S. is a “fading superpower” that stands in the way of Chinese power. And China and Russia did recently establish an alliance (albeit a thin one). China came to Russia’s defense by supporting an end to NATO expansion, and Russia returned the favor by supporting China’s claim to Taiwan. China has also provided some relief to the Russian economy after the West reacted to the invasion with sanctions.

But China appears to have been surprised by Putin’s military action. Beijing’s response to the war has swayed between two stances it has been trying to hold simultaneously: generally opposing the invasion, and sympathizing with Moscow’s security concerns.

Officials from Taiwan have emphasized the differences between the two countries. “Trying to inappropriately link Ukraine’s situation with Taiwan’s is disturbing people’s morale,” Cabinet spokesperson Lo Ping-cheng said Monday. Beijing doesn’t want people comparing the situations either, though for different reasons: When Foreign Ministry spokesperson Hua Chunying declared last week that “Taiwan is not Ukraine,” she was arguing that “Taiwan has always been an inalienable part of China.”

But the most important difference right now is a military one. “The Ukraine crisis will not influence Chinese decisions on whether or not to launch a full-scale amphibious invasion because, given the force demands, China simply lacks the capacity to do so for the foreseeable future,” writes the Atlantic Council’s Harlan Ullman. Putin preceded his invasion by amassing hundreds of thousands of troops on the Ukrainian border. China currently shows no sign of surrounding Taiwan in a comparable manner.

And for all the fears that a restrained response to the Ukraine invasion will “embolden” China to take Taiwan, the U.S. has displayed no unwillingness here to its defend its allies and partners. Indeed, while it has wisely refused to send troops into Ukraine, Washington has been intimately involved with the global efforts to sanction Moscow for the war. In any case, as the Atlantic Council’s Emma Ashford points out, America’s “growing focus on China will limit what Washington can and should commit.” If the U.S. is bogged down in Ukraine, that hardly makes it more likely to stop China.  

There’s no reason as of now to believe that the U.S. will not maintain its long-held “strategic ambiguity” when it comes to Taiwan. Neither China nor Taiwan are drawing parallels between their situation and that between Russia and Ukraine; the United States shouldn’t either. 

The post Ukraine Is Not Taiwan appeared first on Reason.com.

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Ukraine Is Not Taiwan


biden

With Russian President Vladimir Putin sending troops into Ukraine, many journalists and analysts—even former President Donald Trump—have jumped to the conclusion that Taiwan is next. “Russia is in the headlines today, but China will be the spearhead of the authoritarian cause,” writes the Atlantic Council’s Michael Shuman.

But there is no direct link between Putin’s invasion of Ukraine and China’s taunting of Taiwan. 

Ukraine separated from the Soviet Union just 31 years ago. China and Taiwan have had separate governments for 73 years; they were united under the same regime for just four of the last 127 years. Taiwan is essentially united in wanting to be free of Beijing’s rule, while Ukraine has had to deal with unruly separatist regions loyal to Moscow. Taiwan is a flourishing liberal democracy, while Ukraine has yet to build a lasting democratic infrastructure.

Both countries are threatened by unpredictable nearby autocrats. But they are certainly not the same, and the U.S. hasn’t treated them as such. Kharis Templeman of the Hoover Institution notes that “security support for Ukraine is recent, limited, and subsumed under broader concerns about Russia’s challenge to the post-Cold War European security order”; in Taiwan, by contrast, “American interests run deep.” The U.S. is Taiwan’s primary security partner and source of military aid, training, and arms sales. This history of engagement dates back more than seven decades, and it reflects the fact that Washington sees much more at stake if Taiwan faces aggression.

Chinese President Xi Jinping believes the U.S. is a “fading superpower” that stands in the way of Chinese power. And China and Russia did recently establish an alliance (albeit a thin one). China came to Russia’s defense by supporting an end to NATO expansion, and Russia returned the favor by supporting China’s claim to Taiwan. China has also provided some relief to the Russian economy after the West reacted to the invasion with sanctions.

But China appears to have been surprised by Putin’s military action. Beijing’s response to the war has swayed between two stances it has been trying to hold simultaneously: generally opposing the invasion, and sympathizing with Moscow’s security concerns.

Officials from Taiwan have emphasized the differences between the two countries. “Trying to inappropriately link Ukraine’s situation with Taiwan’s is disturbing people’s morale,” Cabinet spokesperson Lo Ping-cheng said Monday. Beijing doesn’t want people comparing the situations either, though for different reasons: When Foreign Ministry spokesperson Hua Chunying declared last week that “Taiwan is not Ukraine,” she was arguing that “Taiwan has always been an inalienable part of China.”

But the most important difference right now is a military one. “The Ukraine crisis will not influence Chinese decisions on whether or not to launch a full-scale amphibious invasion because, given the force demands, China simply lacks the capacity to do so for the foreseeable future,” writes the Atlantic Council’s Harlan Ullman. Putin preceded his invasion by amassing hundreds of thousands of troops on the Ukrainian border. China currently shows no sign of surrounding Taiwan in a comparable manner.

And for all the fears that a restrained response to the Ukraine invasion will “embolden” China to take Taiwan, the U.S. has displayed no unwillingness here to its defend its allies and partners. Indeed, while it has wisely refused to send troops into Ukraine, Washington has been intimately involved with the global efforts to sanction Moscow for the war. In any case, as the Atlantic Council’s Emma Ashford points out, America’s “growing focus on China will limit what Washington can and should commit.” If the U.S. is bogged down in Ukraine, that hardly makes it more likely to stop China.  

There’s no reason as of now to believe that the U.S. will not maintain its long-held “strategic ambiguity” when it comes to Taiwan. Neither China nor Taiwan are drawing parallels between their situation and that between Russia and Ukraine; the United States shouldn’t either. 

The post Ukraine Is Not Taiwan appeared first on Reason.com.

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These Are The Global Banks With The Largest Exposures To Russian Sanctions

These Are The Global Banks With The Largest Exposures To Russian Sanctions

Following Zoltan Pozsar’s blueprint for how the US/UK/EU sanctions unveiled over the weekend could lead to problems in the “plumbing” of the global financial ecosystem, we have seen several cracks appear already.

Dollar liquidity is drying up – and thus getting more costly – especially against the Euro…

And while both US and European bank stocks were clubbed like a baby seal today, we note that US bounced back modestly while Europe’s financials couldn’t managed much (despite the overall indices rebounding from deep losses)…

So, the question is – which banks are most exposed to the ongoing (and escalating) threat of sanctions on Russia?

Specifically, among other more arcane details, the sanctions relate to:

(1) freeze of assets,

(2) capabilities of certain largest Russian banks to process transactions and

(3) proposed ban of certain payment avenues (SWIFT).

While the Russian banks have been in freefall recently (most especially the sanctioned ones)…

In their latest report, Goldman Sachs attempts to calculate the exposures that US and European banks face to these threats.

European banks exposure

In assessing exposure to Russia we use data from the latest EBA transparency exercise (June 2021); we acknowledge that certain banks have disclosed more recent figures and that the aggregate picture may have changed since June 2021 – but we use EBA data for the purpose of comparability. This data shows that (i) overall Russia exposure of European (EU/EEA) banks is small at €66bn – this is equivalent to 0.25% of banks aggregate exposure amount, (ii) concentrated among three banks (RBI, SG and UCG) and (iii) the impact on these groups is diluted owing to geographic diversification (Russian exposure is <5% of group loans for all banks apart for RBI at 9%). The direct exposure is therefore limited, in our view.

The EBA data shows that the banks with the largest exposure to Russia are (as at 06/21):

  • UniCredit: Total exposure of €13.7bn (of which €1.2bn is Government, €12.6bn is Retail & Corporate) equivalent to 1.6% of total exposure.

  • Société Générale: Total exposure of €14.3bn (of which €2.5bn is Government, €11.8bn is Retail & Corporate) equivalent to 1.7% of total.

  • Raiffeisen Bank International: Total exposure of €14.3bn (of which €2.4bn is Government, €11.9bn is Retail & Corporate) equivalent to 9.3% of total exposure.

EBA data only covers EU/EEA entities and omits country exposure outside the top-10 for each institution – the bank-by-bank exposure disclosed accounts for 67% of the total Russia exposure (c.€22bn outstanding). We therefore cross-check EBA data with the latest BIS country-level disclosure (Q3-2021). The BIS data outlines exposure to Russia at $25bn for both France & Italy, $15.5bn for Austria, $6.6bn for The Netherlands and $3bn for the UK.

We expect much of the focus of current geopolitical tensions for European banks to be on (1) outlook for yield curve progression, e.g. potentially flatter yield curve and slower/later lift off of the rate hiking cycle and (2) impact potentially higher energy prices have on consumer behavior.

US banks exposure to Russia

US bank exposure to Russia is limited with only Citigroup that has any material exposure, at $5.5bn, which equates to only 30bps of total global exposure for C. This breaks down as follows: $2.3bn in ICG loans, $0.7bn in GCB loans, $0.8bn of unfunded commitments, $1.6bn of investment securities, and $100mn of trading account assets (as of 3Q21).

While other large cap US banks do not size exposure to Russia, disclosures provide their top 20 country exposures, and Russia is not on the list for any of them. Based on these country exposures, we know 4Q21 exposure is <$4.9bn for JPM, <$3.5bn for BAC, <$2.6bn for MS, <$1bn for WFC.

We believe the market will be more focused on broader second order effects, such as: 1) the impact of sanctions on the Central Bank of Russia and Russian commercial banks; 2) disruptions to payments and the possibility of technical defaults of banks that cannot use the SWIFT network; and 3) central bank policy implications.

 

Tyler Durden
Mon, 02/28/2022 – 14:05

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Holy Roman Empire + 1000 Years

A conversation with my father Vladimir (who coincidentally shares the name of both the Russian and Ukrainian leaders) reminded me of the opening stanza of the Soviet National Anthem:

Союз нерушимый республик свободных
Сплотила навеки Великая Русь.
Да здравствует созданный волей народов
Единый, могучий Советский Союз!

An indestructible union of free republics,
Great Russia has joined forever.
Long live, created by the will of the peoples,
The united, mighty Soviet Union!

And that reminded me of the famous line that “the Holy Roman Empire was neither”; hard to think of a stanza that has a higher density of total falsehood, at least in its first three lines. (To be fair, the Soviet Union was indeed united and quite mighty for 70-odd years, though ultimately not mighty enough to endure beyond that.)

The post Holy Roman Empire + 1000 Years appeared first on Reason.com.

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Could Russia’s Invasion Of Ukraine Spark Another Arab Spring?

Could Russia’s Invasion Of Ukraine Spark Another Arab Spring?

Authored by Cyril Widdershoven via OilPrice.com,

  • Russia’s invasion of Ukraine has caused plenty of analysts to worry about the future of global financial and energy markets, but there is a major consequence being overlooked.

  • Russia and Ukraine are major exporters of food and agricultural products, and if these products are disrupted then there could be significant unrest in the MENA region.

  • The MENA region will also have to deal with the energy, security, and financial consequences of taking sides in what is sure to be a protracted conflict between Russia and the West.

The ongoing military Russian onslaught on Ukraine is reverberating across commodity markets. At present, Western media is mainly focusing on the direct effects of the military invasion and resultant sanctions on European and U.S. commodity markets. Crude oil prices are spiking while natural gas markets are in crisis mode. The importance of Russia in European energy markets has been highlighted in recent weeks, revealing the extent of European dependence on Russian oil and gas imports. Even U.S. energy markets have been hit by these developments. At the same time, Western politicians are calling on OPEC to prepare additional production to counter a possible blockade of Russian energy exports. This apparent belief that OPEC has the capability to save energy markets is one that may well be shaken in the near future. The Russia-Ukraine crisis will be a major destabilizing factor for the MENA region, threatening unrest in the streets of Cairo, Riyadh, and other places. The impact of the crisis on agricultural commodities and even tourism could also be significant.

Some analysts have already started assessing how the loss of Ukraine’s agricultural exports, especially corn, wheat, sunflower oil, and rapeseed oil will impact markets. This line of thinking now needs to be extended beyond Ukraine. A combination of higher energy prices, disrupted food supplies, and fewer tourists could be a poisonous mix for the stability of the main power centers of OPEC (Saudi Arabia, UAE, Libya, and even Iraq) and for pivotal regional powers such as Egypt, Israel, and even Turkey. The stability of all MENA countries is now being threatened, both directly and indirectly. 

While several countries in the region are attempting to stay neutral over Russia’s invasion of Ukraine, the economic realities of the invasion cannot be avoided. For leading OPEC producer Saudi Arabia, the prospect of a decline in Russian energy exports could be seen as a positive. Higher oil prices will not only support government revenues but would also strengthen the position of OPEC within oil markets. The same goes for Qatar, as Europe is desperate to replace Russian natural gas with Qatari LNG volumes. The same case could be made for both Algeria and Egypt. However, LNG exports to Europe are now facing logistical constraints, as most EU LNG regasification and storage plants are full to the brim. Increased demand from Europe for Saudi oil, on the other hand, could stretch Saudi Arabia’s oil capacity. Officially, Riyadh has shown no willingness to increase its production, and its production capacity remains a mystery.

Meanwhile, financial sanctions on Russia could have negative effects on MENA countries as MENA financial sectors have strong links with Russian actors. For some MENA countries, especially Israel and Turkey, the situation is particularly complicated. Russia’s total war against Ukraine has put Israel under pressure. While Tel Aviv is slowly moving towards the U.S.-EU standpoint, it is wary of the potential repercussions in Syria and Iran if it gets the wrong side of Russia. If Israel chooses to side with the US, military and economic repercussions from Moscow should be expected. As for Turkey, a NATO member, its main energy supplies are linked directly to Russia and its links to Central Asian/the Caucasus could be threatened. Ankara’s predicament will become particularly difficult if NATO members call upon it to block the Bosphorus for Russian navy transfers. NATO is looking at the East Med at present, where a strong Russian navy force has been gathering lately. 

While both energy markets and security concerns are valid, they pale in comparison to food and agricultural products for the MENA region. Russia and Ukraine are the world’s main wheat exporters, of which a vast volume goes to the MENA region, especially Egypt, Saudi Arabia, and others. Food supplies are needed to maintain stability for most Arab countries. The potential loss of wheat, corn, and even sunflower oil supplies to Egypt and others will directly impact local and regional stability. Without Russian-Ukrainian supplies, no other countries will be able to fill the gap. Egypt will be the main casualty in the coming weeks, as the country, holding 100+ million citizens, imported around 12.5 million tons of wheat in 2020-21, of which came 85% from Russia and Ukraine. Food shortages will push the Egyptian government into a corner, as was seen when Russia sanctioned the country before the Arab Spring. Other North African countries, such as Libya and Algeria, will follow suit. Ukraine is also the world’s 13th-largest producer of steel and the fifth-largest exporter of iron ore by volume. With production of 21.4 million metric tons of crude steel in 2021, 80% was exported.

Egypt, and potentially GCC countries such as UAE, could also be hit by the loss of tourism from Russia and Ukraine. Turkey is also worried about the loss of millions of Russians who would normally flock to its beaches. The overall impact of this invasion could be devastating for the region, especially after two years of COVID for the tourism industry. The loss of multibillions of US$ will be a hard hit to Egypt, Turkey, and Dubai. 

The picture painted above will soon be a reality for these countries. The poisonous mix of loss of income and food will threaten to destabilize major parts of the region. While developments in Ukraine pushed crude oil prices above $105 per barrel on Thursday, the potential of new unrest in the region and even a second Arab Spring would be even more worrying for markets. Goldman Sachs and JPMorgan could well be underestimating with their $125 per barrel assessments. The potential loss of Russian oil and gas combined with unrest across the MENA region would be disastrous for oil markets.

Tyler Durden
Mon, 02/28/2022 – 13:48

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