Margin Of Victory

Today I want to follow up and, hopefully, expand on some topics that have come up recently, including in yesterday’s post. The title is the title of Doug Macgregor’s latest book, Margin of Victory: Five Battles that Changed the Face of Modern War. I was alerted to this book by a brief interview with Macgregor here, in which the the topic of recruiting shortfalls and the general state of the US military is raised. Macgregor doesn’t hold back. He blasts the cultural wokeness that he believes has debilitated the American military, as well as the failure to learn from cheap victories over inferior militaries.

Probably not by coincidence, two of the five battles that Macgregor discusses in his book involve the Soviet Red Army—the Battles of Khalkhin Gol (against the Japanese in 1939), which exposed Japanese weaknesses and discouraged Japan from aiding Germany by invading the Soviet Far East, and the destruction of Germany’s Army Group Centre in Operation Bagration (1944). The hero of both battles for the Red Army—and indeed, for the entirety of the Great Patriotic War—was Georgiy Zhukov.

Macgregor argues that Zhukov applied lessons learned “on the plains of Nomonhan” against the Japanese to his victories against the Wehrmacht. I would actually argue against that view in some respects. Without in any way denigrating Zhukov’s accomplishments, I would argue that he was applying standard Russian military doctrine. I would also argue that one of Zhukov’s great strengths was that he had already taken to heart the lessons from the Red Army’s defeat in the Polish Soviet War. In any event, it’s clear that Macgregor is an admirer of the Russian way of war. Here are the key paragraphs for a review of Macgregor’s book. Note the praise for the Russian way and the criticism of the American way of war which, in Macgregor’s view, fails to “fully integrate all arms”:

The second battle that McGregor considers as the Battle of Shanghai in 1937, in this case Japanese armies succeeded in capturing Shanghai in the face of determined Chinese opposition. However, McGregor considers the weaknesses of Japanese tactics, which he says reflected a failure to fully integrate all arms, that is armour, artillery, air and infantry, into an effective fighting force. He says that one reason the Japanese generals failed to learn from their operations in Shanghai was the weakness of their opponents in the early stages of World War II. He adds that Japan’s modest military advantage did not last long, and in 1939 the Japanese were decisively defeated by Soviet Armed Forces on the plains of Nomonhan. Soviet army small arms, tanks, artillery and organisation were demonstrably superior to anything the Japanese could field.

The third battle McGregor discusses was the destruction of Germany’s Army Group Centre by the Soviets in 1944. It was this battle which opened the way for the Soviet advance into Eastern Europe. He argues that the Soviet advantage was established in the 1930s by decisions which increased Soviet military production capability, the size of the Soviet army was also increased and by early 1941 it was over 4 million, larger than the German Wehrmacht. The early failures of the Soviet armies in 1941 and 1942 were finally overcome with new tactics and a focus on the mass use of tanks. In 1944 Russian advantage in men and equipment was overwhelming, and the response of the Wehrmacht was seriously constrained by foolish orders originating with Hitler. McGregor says the partial transformation of the Wehrmacht that provided Germany with its margin of victory in 1939 and 1940 turned out be insufficient for an extended conflict with Stalin’s war mobilisation state. As the war with the Soviet Union continued McGregor says “Germany lost the profound age in military capability possessed at the outset.” By 1944-45 nearly 85% of the Wehrmacht’s supply and transport was horse-drawn. He adds that the key factor in the Soviet victory over Germany was to the fact that the Soviet Union had “organised its forces to achieve absolute unity of command.”

Here, too, I would take issue with Macgregor—or at least with the presentation of his views in the review. I would argue that the “early failures of the Soviet armies” were due in large part to Stalin’s firm belief that he had, through diplomacy, forestalled—for at least a couple of years—the German attack he knew was coming. This resulted in the Red Army being caught flatfooted. Nevertheless, while suffering catastrophic losses, the Red Army also inflicted heavier than anticipated losses on the Wehrmacht, leading to the defeat and retreat from Moscow. As for horse-drawn transport, the Wehrmacht relied heavily on horses throughout the war. One of the major disasters of the defeat before Moscow was the loss of vast numbers of horses in the winter conditions, leading to the loss of an enormous amount of military equipment. Most importantly, the principle of “absolute unity of command” was in place from the beginning of the war and was on full display once the Red Army was able to take the offensive.

Now, in this last paragraph that I’m pasting in, note that Macgregor stresses the importance of “culture and leadership”—factors that he cites as major American weaknesses both in his book and in the interview that I linked above.

The key part of the book is the author’s conclusion entitled “America’s Margin of Victory in the 21st-century.” He says, “If culture and leadership obstruct the process of adaptation and changing more the margin of victory is permanently lost.” This is the essence of his argument. It can be summed up as saying that where senior officers and civilian officials fail to learn the lessons of military failure and cling to outdated strategies and tactics with inefficient organisations, that defeat in war will become inevitable. McGregor says, of Desert Storm, that “without a coherent war fighting doctrine or integrated, unified command structure to guide the application of American military power, each service army, air force, navy, and Marine Corps fought its own war largely independently of the others.” He stresses the need for unity of command without which there will be no unity of effort, regardless of how powerful a nation state is. He claims that today there is no rational strategic framework in place to guide the development of American forces. McGregor says that in the 21st-century America needs the means to comprehensively plan and direct joint, integrated strike and manoeuvre operations.

This calls to mind Scott Ritter’s caution against the American military getting involved in a conventional war against a near peer—or superior—opponent. The US military, says Ritter, no longer trains for maneuver warfare, which would be the key in any conflict with a modern military such as the Russian one. We believe air power will win our wars, but we’ve never gone up against an air defense system remotely like the Russian air defense.

But all that is preliminary. The war we’re directly engaged in—beyond the proxy war in Ukraine—an economic war. And here, too, our policy makers have seriously miscalculated. With a major hat tip to Friend George, I want to turn to two articles by Alistair Crooke. These articles tie in very directly to the issues we discussed yesterday—especially the Saudi interest in joining BRICS.

The first article touches directly on the Saudis:

The wind blows eastwards, the Saudis know it

Accelerating inflation is everywhere — that’s obvious. Fiat currencies are sinking in real terms. And commodity-backed currencies that have implicit real value are being sought (i.e. the rouble).

Bear in mind as you read these excerpts that the Russians—both Putin and Lavrov—have been in intense contact with the Saudis since early March at the latest. The Russians, unlike the US, do diplomacy—not just threats and arm twisting. Note, too, Crooke’s central argument. The Zhou regime’s planned trip to the Middle East is not simply about trying to get more oil flowing. It’s critically about shoring up support for the dollar. Without an understanding of this issue, we’re totally in the dark about what’s really going on:

Biden is slated to visit Saudi Arabia sometime in July. ...

Naturally, the western mainstream assumes the Biden visit is all about sandbagging Saudi and OPEC into opening the spigot on oil supplies for the US, and a desperate Europe.

But Zhou himself has downplayed that:

“It happens to be a larger meeting taking place in Saudi Arabia. That’s the reason I’m going. And it has to do with national security for them – for Israelis”.  He continued, “I have a program, anyway. It has to do with much larger issues than having to do with the energy price”.

...

So what might be the ‘larger issues’ on Biden’s mind?  Not so much oil perhaps, but the US dollar.

Last week saw not just a 0.75% interest rate hike by the Fed, but unexpectedly, even the stolid, ultra-cautious Swiss hiked by 0.50%.

What has this to do with Biden’s trip? Quite a lot. The Swiss move was a big flashing amber light. Indeed, the SNB not only took their key rate closer to positive territory, but underlined that the Swiss Franc is “no longer highly valued”. Because of inflation. The latter implies that the Franc needs to be more highly valued to combat inflation; and that in turn suggests the SNB will be selling, not buying US stocks and other assets ...

Accelerating inflation is everywhere — that’s obvious. Fiat currencies are sinking in real terms. And commodity-backed currencies that have implicit real value are being sought (i.e. the rouble).

[The dollar] is ‘no longer so highly valued’ (when set against real assets in an inflationary context).  And if not highly valued, many, many – like the Swiss will be selling US assets – not buying them. So the Fed hikes rates.

This won’t kill US inflation. No chance. But it is probably enough to engender some global dollar demand ...

But … the US has $30 TRILLION debt – too – to service, but now at much higher interest rates.  It has to fund that debt servicing requirement by selling US Treasury Bills to the world. But who will buy Treasuries when in real terms they return a nearly negative 10%?

So Biden’s trip is to ask the Saudis to keep buying US Treasuries with their accrued profits arising from high oil prices. For, should the US lose the power of the dollar as global collateral – to commodities as collateral – then its [the American] economy and markets would soon follow.

Biden’s trip is the repeat of the 1974 Kissinger visit to the kingdom: That year, the oil crisis had hit home in the US. An embargo by OPEC’s Arab nations – payback for US military aid to the Israelis during the 1973 War — quadrupled oil prices. Inflation soared, the stock market crashed, and the US economy was in a tailspin.

The then goal was strikingly simple. Find a way to persuade a hostile kingdom to finance America’s widening deficit with its newfound petrodollar wealth.  President Nixon made clear there was simply no coming back empty-handed from the trip. Failure would not only jeopardize America’s financial health, but could also give the Soviet Union an opening to make further inroads into the Arab world.  Plus ça change…?

Times do change: Russia has made energy producers aware of the power of high commodity prices as the basis to future international trading, in lieu of a depreciating (real terms) fiat dollars.  Then, US Treasury Bills were seen to be inviolable: today they can be cast aside as ‘not money good’ upon a whim (i.e. confiscated Afghan government reserve holdings).  Then, US security guarantees seemed plausible; much less so today.  Then NATO was unchallenged; today no more.  Then the geo-political wind still filled the US sails; today those western sails hang flaccid by the masts. The wind blows eastwards. And the Saudis know it.

Will Biden succeed? Indeed, will the trip even take place?

Let’s consider things from the Saudi standpoint. Saudi Arabia is rich but vulnerable—the kingdom needs strong friends. Who is the strong horse in the world today? The US has been the Saudi protector but, as Crooke says, US security guarantees no longer seem as plausible as they once did. Iran has risen in the Middle East security picture. Iraq is no longer a bulwark against Iran—thanks to the US. Syria? Iran’s reach extends to the Mediterranean and Lebanon. Yemen is a threatening situation. Turkey is no longer a truly reliable NATO member—they play a largely independent role.

The big new factor is Russia. Under Putin Russia has shored up its standing with the Central Asia ‘Stans’, with Iran and Iraq. Russia has a significant military presence in Syria and the Mediterranean—as well as in the Black Sea and Caspian sea, aided by the extended reach of its hypersonic missiles. Turkey, a centuries old player in the Middle East, cooperates with Russia as often as not. Russia’s influence in the region could prove invaluable for the Saudis—especially because, unlike the US, Russia has proven to be a reliable partner. Is it any wonder that the Saudis are refusing to take phone calls from the policy makers behind Zhou? Is it any wonder that they welcome their new contacts with Putin and Lavrov?

All this could affect the US economy. But if so it will also, and more severely, affect the entire EU. This almost certainly reflects the increasingly apparent concern of the Euros to get this Ukraine thing over with ASAP.

Crooke’s second article is much longer. It is a warning of grave consequences to come, of the piper demanding payment. These excerpts will have to do—do yourself a favor and follow the link. Realize, however, the magnitude of the consequences being discussed, and that Zhou and his gang are insisting on doubling down, “as long as it takes”. OMG:

War Makes for Clarity

The train wreck has been expected for so long that we have become comfortable living under its shadow. ...

Now, however, we’re in a new era, in many ways. The West has entered upon a war with Russia and China. The West, however, did not do its homework first, and now is finding that the ‘war’ is cruelly revealing the structural rigidities and flaws integral to its own economic system, rather than mining the weaknesses of its rivals.

...

Hubris prevailed. It was magic: a ‘new economics’. ...

...

So, the serpents of inflation – at a time of structural economic checkmate – are loosened, as they always are in war. And as pressures mount, ‘things’ and people get thrown under a bus. ‘War’ makes for clarity: It becomes starkly clear what baggage must go overboard to save the vessel.

Saving the vessel, of course, is imperative. Thus, America has decided to look after ‘its own’. The Davos-Brussels plan to eventually to roll-up the over-indebted European commercial banks into a single, Brussels-controlled digital currency suddenly is seen – as if scales had fallen from the eyes – as potentially threatening to hole the hull below the waterline.

So, the U.S. Big Banks are thinking, let the ECB – and by extension the Euro Zone – ‘fall under the bus’. ...

...

What to do? With war comes inflation and a decline in those willing to fund the U.S. government’s borrowing requirement – as interest due on $30 trillion blows out. Interest rates therefore must rise (even if they do nothing to stem inflation) to keep ‘value’ in Treasuries. Thrown under the next bus too then is the U.S. consumer as inflation will soar.

Higher rates however, have not been enough to lure outside investors into treasury markets, with treasuries now facing the worst bond market collapse in half a century. This has led China to dump U.S. Treasuries to the lowest level in 12 years, and Japan, once a stalwart pillar of U.S. investment, is cutting their holdings as well.

The decline in U.S. treasuries along with the ongoing decline in the U.S. dollar as the world reserve currency leads to one thing: More inflation; more pain.

...

It’s the war, stupid ...

What is this likely to mean in terms of practical politics? Well, cost-of-living crises are already here, as is the beginning to the ensuing political ructions. ...

...

The Euro is but a derivative of the dollar (which itself is a derivative of the underlying collateral). ...

...

As of now, it seems the Euro-élites have not sensed the danger they are in. They entered ‘a war’, and already three major geo-political tectonic shifts are visible. ...

...

The risk coming from the cost-of-living crisis is easy to grasp. The risk from additional food shortages is almost beyond calculation. But what we observe from America, and the recent round of the French Assembly elections, is normal politics checkmated; social distrust; widening reservations toward the legitimacy of central authority; and increasing scepticism and doubts about ideologised SCIENCE.

...

Macgregor’s question is haunting: Does America still retain a margin for victory? Has it lost its internal culture war and thus even the capability for effective leadership that can come to grips with hard realities? Tough choices will need to be made, and it’s an open question whether our Establishment is up to the job at this point.