Geopolitics and Markets Review – 22nd May 2023

Sections:

1) Bakhmut Falls, Washington F-16s

2) Debt Ceiling – Biden Cancels Trip To Pacific

3) Influence In The Pacific – U.S. and Micronesia. Papua New Guinea Close

4) Sam Altman Testifies In Senate – His Biggest AI Fear

5) Ledger Recover

6) AI Boom – Restart of FAANG Bubble or A Different Beast?

7) Argentina To Raise Interest Rate To 97%

8) China Bans Micron

9) Extension of Black Sea Grain Deal

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Bakhmut Falls, Washington F-16s

Russia’s Wagner Group head Prigozhin has claimed Ukraine has no military presence left in Bakhmut. Zelenskyy also claimed that “Bakhmut is only in our hearts”, which implies the city is about to fall or already has.

The conflict dubbed as The Battle of Bakhmut officially started on August 1st last year. But the city had been shelled since May 2022. In October 2022, Wagner became involved in the battle. Prigozhin also stated on Telegram that Wagner will start withdrawing from Bakhmut on 25th May and the entirety of the group will leave by 1st June.

The importance of the Battle of Bakhmut has been debated by anyone and everyone. I think the most important thing to consider is that whoever claims they control it, what do they really control? The city is a shell of its former self. The symbolic value of a victory in Bakhmut became the most important aspect of the battle for both sides. A symbolic victory at the cost of creating a wasteland in Eastern Ukraine. Doesn’t strike me as a liberation.

The question that arises now is what next? If Russia is pushing west, where does the next battle occur that turns a town or city into a wasteland? The Ukrainian counter-offensive has been discussed for months. So much so that is it really happening anymore? Especially after the loss in the Battle of Bakhmut. Where would a counter-offensive aim to push for?

The answer to many of these questions appears to be the USA agreeing to send F-16s to Ukraine by fall and that they won’t stop other nations from doing the same. If the Ukrainians are currently faltering, the introduction of F-16s could provide them with greater capabilities to launch counter-offensives. The decisions were told by Biden to his G7 allies at the meeting in Japan.

Photo by Stephen Leonardi on Unsplash

This decision was described by national security adviser Jake Sullivan as “a logical next phase in the war”. What happens when either side is left with no choice but unreturnable escalation? I don’t see how the trend of further escalation ends in any other way than disaster and destruction. Especially with Russian nuclear weapons in the back of everybody’s minds.

This morning, we have seen conflict arise and missiles launched from the Russian border region of Belgorod. Also, some sources claimed Putin sent elite guards to the Ukrainian border yesterday. The next stage of the war in Ukraine is underway.

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Debt Ceiling – Biden Cancels Trip To Pacific

What usually happens in debt ceiling talks is the party that isn’t in power aims to hold the leading party hostage and gain some concessions. In this scenario, the Republicans are holding Biden and the Democrats hostage. And nobody wants to be the President in power when the US defaults on its debt in an entirely avoidable situation. Even a technical default.