The E.U.’s Hungary Overreaching on Sovereignty: International Trade

Sovereignty is not a word to be casually used, especially if in overreaching. In both the E.U. and U.S., state governments have overreached at the expense of the delegated competencies or enumerated powers of the respective Unions of states. The Nullification Crisis in the U.S. and de facto unilateral refusal of the E.U. state of Hungary to observe E.U. law both demonstrate how the overreaching by state governments can compromise a federal system.[1] In the E.U. the refusal to do away with the principle of unanimity in the European Council and the Council of the E.U. enable and even invite such overreaches at the expense of the E.U. itself, and its distinctly federal officials. Even a state government’s pursuit of it’s state’s economic interests does not justify holding the E.U. hostage. The case of supporting Ukraine in the midst of the invasion by Russia is a case in point.

In part because of Hungary’s veto of the accession of Ukraine into the Union, as intimated by Ukrainian President Zelensky on August 24, 2025, Ukrainian attacks on the Druzhba oil pipeline blocked oil imports into the E.U. states of Hungary and Slovakia. “Ukraine attacked oil facilities on Russian territory with drones and rockets.”[2] This violation of Russia’s sovereignty was predicated on Russia’s long-standing invasion of Ukraine’s sovereignty. Accordingly, the main motive for the bombings of the oil facilities in Russia can be said to have been to weaken Russia’s military by reducing the revenue to the Russian state from oil exports. To be sure, Ukraine’s president himself “suggested that the attacks on the pipeline might be connected to Hungary’s veto on Ukraine’s EU accession.”[3] On the anniversary of Ukraine having broken off from the Soviet Union, Zelensky said, “We always supported the friendship between Ukraine and Hungary. And now the existence of the friendship depends on what Hungary’s position is.”[4]

The overt threat to continued imports of Russian oil was received loud and clear in Budapest, the Hungarian state capital. The state’s foreign minister, Péter Szijártó “said his government firmly rejected what he described as the Ukrainian President’s intimidation and considered those bombings on the Russian pipelines as an attack on Hungary’s sovereignty.”[5] On social media, the foreign minister puts sovereignty in terms of “territorial integrity, and, furthermore, claims that an “attack on energy security is an attack on sovereignty.”[6] I beg to differ.

Sovereignty as understood territorially and applied to the E.U. state of Hungary does not include Ukrainian bombings within the territory of Russia because the latter is not Hungarian territory. Furthermore, energy security is not sovereignty, especially when such security depends on international trade. The severing of such a contract by the inability of a counterparty to deliver product does not violate sovereignty. In fact, as pointed out by Andriy Sybiha, Ukraine’s foreign minister, the E.U. state of Hungary could have diversified and become independent of Russian oil “like the rest of Europe.”[7] Indeed, the ability to do so would have been an exercise of the governmental sovereignty retained by the Hungarian government in the E.U., and the latter may have used its portion of sovereignty to assist the state, given the consensus at the E.U. level against Russia’s invasion of Ukraine, which began in 2014 with Crimea.

The problem of the Hungarian overreach on what sovereignty means and entitles helps to explain why Viktor Orbán, the governor of Hungary, had been serially violating E.U. law and regulations even after the Commission began withholding money for the state. Orbán’s refusal to recognize that some governmental sovereignty, in the form of competencies—full and shared—had been delegated to the E.U.’s federal governmental institutions in 1993 coupled with an overreaching construal (or distortion) of what territorial sovereignty means and entitles, explains why Hungary has stymied so much at the federal level, given the power that states wield there through the European Council and the Council of the European Union. Therefore, it is ironic that Tamás Deutsch, a representative in the European Parliament representing a district that is within the state of Hungary, “said the pipeline bombings represent a military attack against an EU member state, and that the EU should not conduct [accession] talks with Ukraine as a result.”[8] So Hungary is a member-state after all, when being one is convenient.

Playing by convenience at the state level without concern for the viability of the federal level is precisely what could unravel the European Union. The irony is that without the E.U., Hungary would not have an empire-scale union at hand to push back against Russia, should Putin decide to invade Hungary after all. That would be a violation of Hungary’s sovereignty. So resisting the urge of convenience or state-rights ideology to exploit state power at the federal level could actually strengthen Hungary’s sovereignty even if international trade deals do not all go Hungary’s way. Unfortunately, the principle of unanimity at the E.U. level ultimately undermines rather than strengthens the remaining governmental sovereignty of the states if the veto power is exploited for expediency rather than to protect vital, long-term state interests against federal encroachment on the governmental sovereignty reserved by the states.

---

1. In 1832-1833, the government of South Carolina held that the U.S. tariffs of 1828 and 1832 were null and void within the state. “The resolution of the Nullification Crisis in favor of the federal government helped to undermine the nullification doctrine,” which holds that states have the right “to nullify federal acts within their boundaries.” Britannica.com (accessed August 25, 2025). I submit that the European Court of Justice could do worse than declare the same with regard to state laws, including the refusal of a governor or state legislature to implement federal directives, that are in violation of E.U. law and regulations. Monetary sanctions by the European Commission have not been a sufficient deterrent. If either de facto or de jure nullification becomes the norm, then it would only be a matter of time before the Union dissolves and the states could once again take up arms against each other.
2. Sandor Zsiros, “Hungary and Slovakia in Spat with Ukraine over Bombed Druzhba Oil Pipeline,” Euronews.com, August 25, 2025, italics added.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.

Underneath the Rhetoric: Israel’s Hatred of Palestinians

Official public statements by a government’s officials obviously trade on rhetoric—manipulation by wording being a part of statecraft—but when the rhetoric is so self-serving and divorced from facts on the ground (i.e., empirically), wording can be indicative of the underlying mentality, which is real. I submit that the statements of Israel’s prime minister Netanyahu and Israeli foreign-ministry spokesman Oren Marmorstein in May, 2025 amid the Israeli military offensive in Gaza reveal the surprising extent that hatred can warp human perception and cognition without the warping itself being grasped by the very people in its grip.

Facing pressure from the E.U. and, to a lesser extent, the U.S. in May, 2025, the Israeli government made a decision that the media described as lifting of the two-month-old Israeli ban on humanitarian food and medicine entering Gaza as over a million residents there were facing starvation and a lack of medical care. The so-called lifting of the blockade in actuality consisted in allowing in less than ten trucks on the first day, and between twenty and forty on the second day, with none being able to distribute through distribution centers. As a result, the food—a mere trifle spread over 1.2 million souls—did not reach any hungry mouths. Incredibly, Netanyahu admitted publicly that he was intent to allow in just enough food and medicine that would relieve the Israeli government of the pressure from its allies. Whereas during the ceasefire earlier in 2025 when Israel was allowing 600 trucks into Gaza per day, the “lifting” of the blockade would only permit a maximum of 100 trucks. In essence, the crime against humanity of exterminating a people was ongoing, given how far short 100 trucks’ worth of food (and the trucks also contained boxes of medicine and medical supplies) is in being able to feed 1.2 million people. Meanwhile, the Israeli military was upping its bombing in Gaza, with 100 residents killed on one day and 48 on the next day after the “lifting” of the blockade. In effect, the Israeli government’s cabinet was increasing the demand for medical supplies and medicine while intentionally minimizing the number of humanitarian trucks that could enter Gaza and making it very difficult for the trucks that did get in to unload at distribution centers such that the food and medicine could reach the actual residents of Gaza. Netanyahu’s stated goal of riding Gaza of Palestinians continued unfettered.

It is in that context that the E.U. took the decision to review the “wide-ranging trade and cooperation pact” with Israel “over its intensified offensive in Gaza.”[1] The E.U.’s foreign minister, Kaja Kallas, stated on May 20, 2025 that the E.U. “would examine if Israel has violated its human rights obligations under Article 2 of the EU-Israel Association Agreement, which defines the trading and diplomatic relations” bilaterally.[2] That the Israeli military had already killed over 50,000 residents of Gaza over more than a year begs the question of what took the E.U. so long even just to review the agreement. The constitutional, or basic law, provision for unanimity on foreign policy in the European Council and the Council of the E.U. and that the E.U. state of Hungary had been serially exploiting its veto-power on the federal level is the obvious explanation.

Less well-known, however, is the sheer gradualism in the machinery of any government, federal or unitary, in reacting beyond words in ways that a strong enough to make a real difference “on the ground.” Aggressor regimes around the world benefit from the refusal of legislatures to off-set the inherent gradualism of government by enacting a fast-track option. Both in reacting quicker to Russia’s invasion of Ukraine and Israel’s bombing of Gaza, the E.U. could arguably have made a difference, whereas entrenchment is much more difficult to counter after a year.

Ongoing entrenchment has the benefit to the aggressor of being able to set the contours of debate concerning the militarization of an occupation or an outright invasion and extermination of a people. For example, in responding to the E.U.’s decision just to review the agreement, Marmorstein of the Israeli government wrote on social media that the “war was forced upon Israel by Hamas, and Hamas is the one responsible for its continuation. Ignoring these realities and criticising Israel only hardens Hamas position and encourages Hamas to stick to its guns.”[3] There a number of problems with this reply.

Firstly, whether or not Israel rejects the decision of the E.U. to review the trade and diplomatic agreement, the decision is solely for the E.U. concerning its own review, so this is not something for the counterparty to accept or reject. Secondly, not even Hamas—not to mention the 1.2 million residents of Gaza—forced Israel to kill over 50,000 and decimate entire neighborhoods. Nor did any counterparty force Israel to block humanitarian aid from entering Gaza as people on a mass scale were starving. Behind the rhetoric is a warping of social reality in being incorrect in terms of being forced to make decisions, as if at gunpoint. Thirdly, the extremely disproportionate number of guns and bombs that Israel had over Gaza undercuts the claim that Hamas was “sticking to its guns,” and that this forced Israel to disproportionately bomb and kill in Gaza, especially during its offensive in May, 2025. Fourthly, the claim that Israel was militarily on the defensive is so contrary to the facts that, beyond the rhetorical use of the claim, it points to a rather severe cognitive and perceptual warping. I submit that hatred is the underlying culprit behind the cognitive and perceptional displacement.

Shortly after Hamas’s unjustified attack and kidnapping on October 7, 2023, the president of Israel said publicly that every resident of Gaza was culpable. Such over-reach of accusation, even considering that Hamas had democratic legitimacy in Gaza, bespeaks hatred, and is consistent with the UN’s finding of reason to believe that Israel was guilty of the crime of trying to exterminate a people, which is easier to prove than genocide. Furthermore, Netanyahu’s admission that he would allow only a minimum of humanitarian food-aid into Gaza in May, 2025 and only to satisfy the U.S. and E.U. points to an underlying hatred like smoke suggests the presence of fire. 

Also indicative of hatred in the Israeli government, Yair Golan, a former deputy chief of staff of the Israeli army, said at the time that the Israeli government was “rejecting” the E.U.’s decision to review the trade and diplomatic agreement: “A sane country does not wage war against civilians, does not kill babies as a pastime, and does not engage in mass population displacement.”[4] This revealing glimpse both of the intent of Israel’s cabinet and what atrocities had been going on in Gaza strongly implies that hatred was a, or even the motivator, for what else other than sadistic pleasure could explain killing babies as a pastime. Furthermore, the statement belies the claim that Israel was being forced by its adversary to hit, and hit hard in Gaza. The refusal to take responsibility for one’s own decisions and even blame a counterparty as if it had made the decisions or forced them is suggestive of a sordid character and even delusion. It is probably that Israeli government’s officials have continued to be so angry and demeaning of a people deemed in effect (and ironically!) as sub-human that the policy of extermination has continued unabated even by the so-called lifting of the blockade of humanitarian aid that might keep the population from continuing to shrink as intended and desired by the Israeli officials. 

It is no wonder that the ICC has issued arrests warrants; it is more astonishing that the world has allowed the Israeli officials to continue to commit war crimes and a crime against humanity with only slight pressure to let some humanitarian aid into Gaza. While certainly not as culpable, the E.U.’s delay in even reviewing its agreement with Israel is astonishing. Is there a threshold of atrocity beyond which a coalition of countries would take immediate action against an aggressor-state? Given the impunity of not only Israel, but also Russia in Ukraine, it seems unlikely that there is such trigger even when a squalid, hateful, and over-reactive aggressor-character is on the loose as if it were in Hobbes' state of nature. 

---

1. Euronews, “Israel ‘Completely Rejects’ EU Decision to Review Trade and Cooperation Deal,” Euronews.com, May 21, 2025.
2. Ibid.
3. Ibid.
4. Astha Rajvanshi, “Ex-Israeli General Hits Out at Government for ‘Killing Babies as a Pastime’ in Gaza,” Nbcnews.com, May 20, 2025.

Tariffs as a Negotiating Tactic: Undercut by Wall Street Expediency

With all the economic and political turmoil from the anticipated American tariffs, it may be tempting, especially for financially-oriented CEOs and billionaires looking at quarterly reports, to call the whole thing off even though doing so would deflate the American attempt to renegotiate trade bilaterally with other countries. The concerns of the wealthy, whether corporations or individuals, have their place, but arguably should not be allowed to "lead the proverbial dog from behind, lest the dog run in circles and get nowhere." Moreover, the notion that any goal that is difficult and takes some time to materialize can or even should be vetoed by momentary passions at the outset is problematic and short-sighted. That U.S. President Trump's announcement of bilateral tariffs quickly brought fifty countries to the negotiating table is significant as a good sign for the United States, as long as that country's powerful business plutocracy (i.e., private concentrations of wealth that seek to govern) can be kept from vetoing the emergent trade policy, which at least in part is oriented to trade negotiation and ultimately to the notion that fair trade is conducive to increased free trade. 

As of 3:10 pm (CET) on April 7, 2025, the Euro STOXX 50 was down 5.27 percent, and the STOXX 600 lost 5.15 percent of its value. “The bloodbath is in full swing, and that’s exactly what you see when you look at the European markets. There is no safe haven; equity markets have entered a complete free-fall with no clear bottom in sight,” according to Zaye Capital Markets.[1] Meanwhile, the Dow Jones opened down 3.2 percent.[2] “The sheer volatility was enough to spook CEOs on that rainy Monday in New York. The Dow “briefly erased a morning loss of 1,700 points, shot up more than 800 points, then went back to a loss of 629 points.”[3] The S&P 500 “likewise made sudden up-and-down lurching movements”.[4]

U.S. President Trump had “announced a 20% across-the-board tariff on imports from the European Union, set to take effect on 9 April,” with steel, aluminum and cars being subject to a separate 25% rate; over all, over €380 billion in E.U.-made products could be affected.[5]

In that uneasy context, I contend that two markers are worthy of attention, only one of which is arguably productive.  E.U. President von der Leyen proposed to her counterpart, U.S. President Trump, that both unions cut their respective tariffs to zero; essentially, there would be a free-trade agreement on industrial goods. Just such an overture is in line with President’s intent that other countries get rid of their unfair trading practices, which, the president believed, had aggravated the U.S. trade deficits for decades. In this regard, President von der Leyen’s proposal can be viewed as an overture, which could lead to a counter-proposal that not only tariffs, but also non-tariff barriers of the E.U. be removed (or that the E.U. compensate the U.S. for those annually).

Adam Smith’s ideal of competitive free-trade rather than mercantilism presupposes trade that is free even of non-tariff barriers so comparative advantage can be a major factor in international trade. To be sure, national-security concerns are arguably legitimate constraints on Smith’s ideal of competitive advantage. Being dependent on China for computer chips would be risky for both the E.U. and U.S. because China could hold either or both unions hostage as Taiwan is invaded by China with impunity.

So von der Leyen’s response was in “the right direction,” if free and fair trade was among Trump’s goals in unilaterally imposing tariffs—that is to say, to the extent that the announcement of tariffs was geared to triggering real negotiations.

That the billionaire hedge fund manager, Bill Ackman, a supporter of President Trump, just one day earlier, had “urged the president to pause his sweeping new tariffs, warning they could economically devastate America if implemented, as planned,” can be likened to a driver unilaterally letting some air out of his own car’s tires just before a race.[vi] Ackman may have been rich, but his intelligence was lacking in his assumption that the tariffs would be permanent even though fifty governments were already willing to negotiate on trade with the American government. Also, his understanding of negotiation could have used a spare tire.

It is one thing for a republic to be an open society, and quite another for a dog to be led by its own tail, meaning for the U.S. Government to be led by greedy and short-sighted finance managers and CEOs of even major corporations. The enlightened self-interest of whom would be focused on the wealth that could be obtained from fewer trading obstacles in other countries, for the money that an American-based (and owned) company can possibly be made on exports from the U.S. is hardly nugatory. The capture of legislative and regulatory bodies by private companies and billionaires is a danger not only to democracy itself, but also to a country’s pursuit of its long-term strategic interests globally. A dog that is led by its hungry tail doesn’t get very far, and an argument can be made that such a dog doesn’t deserve to get very far, for weakness within a polity is hardly laudatory. Put another way, that elected offices in a republic have terms of years rather than, say, just a few months, is an important impediment to short-term passions in society seeking to get their way in policy. Sometimes long-term goals require momentary sacrifice even if the measures are erroneously assumed to be permanent rather than negotiating tactics.

---

1. Angela Barnes, “European Markets Dive as Global Tariff Fears Shake Investor Confidence,” Euronews.com, April 7, 2025.
2. Ibid.
3. The Associated Press, “Stocks Are Making Wild Swings as Markets Assess the Damage from Trump’s Trade War,” Apnews.com, April 7, 2025.
4. Ibid.
5. Jorge Liboreiro, “Von der Leyen Offers Trump ‘Zero-For-Zero’ Tariffs Deal on All Industrial Goods,” Euronews.com, April 7, 2025.
6. Lee Moran, “Billionaire Trump Backer Warns America of ‘Self-Induced Economic Nuclear Winter.” The Huffington Post, April 7, 2025.

Russian Electricity Hits a Financial Curtain

On February 8, 2025, the E.U. states of Estonia, Latvia, and Lithuania turned off all electricity-grid connections to Russian and Belarussian supplies of electricity, thus reducing revenues for the belligerent country and its ally. Electricity would thenceforth merge with the Continental European and Nordic grids through links with the E.U. states of Finland, Sweden, and Poland. Europe was taking care of its own, for a price of course, while Russia was increasing trade with China and other countries to make up the difference from decreasing trade with Europe. In short, it can be concluded that unilaterally invading a country has economic consequences that diminish and reconfigure international business.

At the time, European media played up the “geopolitical and symbolic significance” of the “severing of electricity ties.”[1] To these, economic significance could be added. No longer could officials in Russia’s government count on the stable revenue to help finance the military incursion into Ukraine. The economic interdependence between Russia and the E.U. was decreasing. Moreover, the philosophy of international business, which maintains that increasing commercial ties, including trade and foreign direct-investment, reduces the probability of war because such conflict would come with a financial cost. In fact, decreasing economic interdependence can itself make war more probable as there is less to lose financially from going to war.

Moreover, taking the E.U. and Russia as empire-scale countries that in themselves can be viewed as regions in the world, a financial curtain replacing the Iron Curtain of the Cold War could be said to be the “big picture” of which cutting off supplies of Russian electricity is just a part. In the age of nuclear weapons, a financial divide between the E.U. and Russia (and Belarus) could give rise to dangers of much greater magnitude than even Russia’s threats to use tactical nuclear weapons in Ukraine. Even though the view that if enough international business is established between two or more countries, war can finally be obviated has been shown to be faulty, eliminating trade and foreign direct-investment makes it easier politically for countries to go to war over other matters.

In short, the severing of business relationships can be viewed on the macro economic-geopolitical level on which the severing of ongoing business contracts can itself be viewed as a political weapon and, together with other severings, as part of larger economic wedge between even regions of the world. At that scale, as the world wars of the twentieth century demonstrate and perhaps pre-figure, war can be of a magnitude that the weapons unleased are nothing short of horrendous. Drawing an economic line roughly between Europe and Asia can have very significant geopolitical and military implications. Perhaps it is owing to human nature that we are more prone to drawing such lines in which economic relations are severed than to reinforcing economic interdependencies in spite of the fact that they do not obviate war. It takes some time for a spider to weave its web, especially if the spider happens to be named Charlotte, but only a moment for such a web to be destroyed.

---

1. Daniel Bellamy, “Baltic States Cut Russian Electricity Ties, Ending Decades of Reliance,” Euronews.com, February 8, 2025.

On the Potential of International Business to Render War Obsolete: The Case of Russian Gas

In a graduate-level course on international business, a professor sketched out the political-economic philosophy of international business, whose mantra is that if two or more countries have enough trade and foreign direct-investment, those countries would be less likely to go to war. In short, economic interdependence, thanks to international business, can render war obsolete and thus greatly enhance the human condition. Decades after I had taken that course, a business professor at the same university wrote extensively on the role that business can play in facilitating peace. Unfortunately, that economically-sourced theory of international relations downplays or ignores that the reasons or rationales for going to war and the decisions taken by a government for military-strategic reasons during a war can trump the (especially immediate) economic benefits from international business, whether in terms of imports, exports, or foreign direct-investment by foreign firms at home or by domestic firms abroad. This can occur even though revenue from taxes or state-owned enterprises having to do with trade and foreign-direct investment can help a government in fighting a war. The case of Ukraine cutting off Russian natural gas from traveling through Ukraine in pipes to the E.U. as of January 1, 2025 is illustrative of vulnerability in the theory of international business as a way to world peace.

In not allowing the 2019 transit deal between the Kremlin-owned gas company, Gazprom, and Ukraine’s Naftogaz to be renewed for 2025 and beyond, the Ukrainian government faced “the loss of some $800 million a year in transit fees from Russia, while Gazprom [stood to] lose close to $5 billion in gas sales.”[1] At the time, Russian forces were making further incursions in eastern Ukraine, so the Ukrainian military could have used the military hardware that $800 million could have bought, especially with isolationism soon to gain a foothold in the White House. Furthermore, that Gazprom had “recorded a $6.9 billion loss, its first in more than 20 years, due to diminished sales to Europe,”[2] suggests that Putin’s decision to invade Ukraine, largely for a noneconomic, imperial reason, had come with some economic costs. Put another way, Putin’s regime could have used the $5 billion in gas sales to the E.U. to help finance the invasion. International business was clearly not foremost two either government in the war. Rather than the pipeline reducing the chances of war when it broke out in 2023, the international commerce would become a casualty of war. Although international business benefits states, to reduce state interests in political realism to economics misses a lot and thus can lead to bad predictions regarding war and peace.

As for the E.U., at first glance it would seem that Europe would be less supportive of Ukraine in its war, including financially and in terms of sending military hardware because the Ukrainian government had just cut off Russian gas from reaching the E.U. in the middle of winter. Fortunately, the E.U. had anticipated the geopolitical strategic move by seeking out other sources of natural gas, such as the U.S., so the Russian gas through Ukraine only “represented about 5% of the European Union’s total gas imports, according to Brussels-based think tank Bruegel.”[3] A spokeswoman for the European Commission said at the time, “The European gas infrastructure is flexible enough to provide gas of non-Russian origin to (central and eastern Europe) via alternative routes . . . since 2022.”[4] Taking into account the continuing pipeline through Turkey, the E.U. had reduced “Russia’s share of its pipeline gas imports down from over 40% in 2021 to about 8% in 2023, according to the European Council.”[5] I submit that even if the E.U. had not prepared for the rather obvious decision of Ukraine’s government not to renew the transit deal with Russia in the midst of the Russian invasion, non-economic, geopolitical interests would have continued to fuel the E.U.’s desire to support Ukraine militarily, for fear of Russian inroads in eastern and even central Europe can easily be understood to trump even the economic benefits from international trade and foreign direct-investment with Russia.

In short, states are foremost political entities; not that they and the people who run them are not motivated by the economic benefits arising from international trade and foreign direct-investment, and these can admittedly make a difference on close calls on whether to go to war, but geopolitical considerations are primary. War and the effects thereof go beyond economics and business. A town being occupied, whether in Ukraine or Gaza, has existential implications for the people therein that extend beyond how trade is being impacted. In fact, as Israel has demonstrated toward Gaza, economic resources can be weaponized such as by withholding food and other humanitarian relief so as to kill off a population. Such a goal is not economic in nature, and international business is not sufficient to override such ideological goals, or even hatred itself. The limits to peace through economic interdependence stem from precisely this point: hatred goes beyond economics, so the latter can only go so far in constraining the former. The problem, in other words, is not that international trade and business haven’t been extended sufficiently to insure world peace, but that hatred can override economic self-interest.  

---

1. Kosta Gak, Alex Stambaugh, and Anna Cooban, “Ukraine Ends Supply of Russian Gas to Europe,” CNN.com, January 1, 2025.
2. Ibid.
3. Ibid.
4. Ibid.
5. Ibid.

India on Russia’s Invasion of Ukraine: On the Flawed Hegemony of Political Realism

India took an equivocal position on Russia’s invasion. This is surprising at first glance because India has been so concerned to protect its sovereign territory from baleful encroachments from China. What explains India looking the other way as Russia unilaterally invaded a sovereign state? I contend that the explanation supports the assertion that the world could no longer afford its system based on national sovereignty if political realism is in the driver’s seat at the national level.

According to Sumit Ganguly of Indiana University, one of my alma maters, the USSR was a vital partner of India during the Cold War. The Soviet Union was willing to sell weapons to India for cheap in order to keep China from expanding. For spare parts, India still has to go to Russia and is thus dependent on that country and the good will of its government. No country could ween itself away from a provider of military hardware quickly.

Furthermore, Ganguly noted in a talk in 2024 that India had a history of buying oil from Russia, and this continued during Russia’s invasion in spite of the Western embargos of Russian oil. The U.S. is in part to blame because it would sanction India were it to buy oil from Iran or Venezuela. At the time of the Russian War, India was still a poor country even as its high tech industry was expanding. Russian oil was relatively cheap. Also, India could point to the American hypocrisy in having relations with some sordid, autocratic regimes. This can explain why the government of India was well-aware during Russia’s war in Ukraine that by buying Russian oil and selling it to the EU and US, India was undermining the embargoes. Saudi Arabia was doing likewise, and yet the Biden administration held that both countries were allies of the United States. Everyone was looking primarily or even solely at their own interests.

Ganguly has also pointed out that in Indian culture, there is an obsession for multipolarity: there should be several global powers rather than just one biggie. Therefore, there is a willingness to work with Russia, which could serve as a check on hegemonic American power. This is not to say that Indian culture had any affinity whatsoever, Ganguly insists, with internal Russian politics. Nevertheless, India has had China as its principal long-term threat, and India’s government has recognized for a long time that Russia could act as a check on China.

All of this goes to say, political realism was alive and well as the world adjusted to Russia’s aggressive invasion of Ukraine. In realism, each government orients its foreign (and industrial) policy tightly to the national interest rather than also to cooperate with other governments in the interests of a global order in which international law can be more effectively enforced. The international system is just the aggregate of the self-interests of governments; aggregated parts make up the whole. With human rights suffering from a want of international enforcement in Ukraine as well as in Gaza, the want of international attention in a system of sovereign countries on tightening that system to enhance the enforcement of international law suggests that political realism has become insufficient. Climate change and the risk of nuclear war, which Russia has threatened in the context of Ukraine, only add to the argument that the world could no longer afford an international order that rests on national sovereignty to which political realism is the dominant operating system in governments.

Energy and Global Population

There is a temptation, especially since the global average temperature reached the 1.5C increase threshold in 2023 much faster than anticipated, to focus narrowly on the progress in renewable energy sources without placing it in perspective relative to the total amount of energy being used globally, the annual increases in energy demand, and the root cause, the explosive growth in human population since the early 20^th century. The strategic geo-political international interests of countries impacted and should thus be considered as well.  

According to Nick Butler, a former advisor at BP, a European oil company, the global use of energy increased 4-fold by 2024 since 1965. The increased use of energy commercially has led to increased trade as supply has become global. The world has thus become even more interdependent, which means that yet another basis for political instability has sprung up. Interruptions in supply led to a political push in the U.S. for energy independence. Even though as of 2024 every country still depended on the global trade in energy, the U.S. was trending towards energy independence and could eventually even be in a position of being able to export energy supplies without importing any. It’s debatable, however, whether exporting energy increases a country’s power. It had not worked for OPEC in managing prices, although the oil shocks in 1974 and 1979 gave the impression that OPEC could have considerable leverage over the U.S. As it turned out, substitution and the development of new supplies undercut OPEC’s higher prices. In contrast, Butler contends, building up sources of energy is a source of wealth, though political instability can also result as fights can break out over the new wealth.[1]

Besides being at odds with efforts to reduce carbon emissions if the stock is exported to be consumed, maximizing stocks of oil, natural gas, and coal as a source of a country’s wealth be wrongheaded. It may suffer from the same fallacy that is in mercantilism. Under that economic policy, a country minimizes imports and maximizes exports in order to accumulate as much silver and gold as possible. According to Adam Smith, “The exportation of gold and silver in trade might frequently be advantageous to the country.”[2] Historically, “the exportation of gold and silver in order to purchase foreign goods, did not always diminish the quantity of those metals in the [British] kingdom. That, to the contrary, [the exportation] might frequently increase that quantity.”[3] This still assumes that increasing the stocks represents an increase in a country’s wealth. Before critiquing that assumption, let’s look at the argument wherein exporting gold and silver to pay for imports actually winds up increasing the domestic supply of those metals to a net-increase.”

How could trading away some of those precious metals that were used as money increase a country’s wealth? If a country has gold and silver in surplus, part of it could be exchanged “for something else, which may satisfy a part of [the domestic] wants, and increase [the people’s] enjoyments” at home.[4] The benefits from the exports of the metals to pay for imports of goods extend back to domestic manufacturers being able to produce more output, given the increased demand, and thus increase the division of labor—Smith’s big thing!—and thereby produce goods more efficiently.  According to Smith, “By means of [the increased demand], the narrowness of the home market does not hinder the division of labour in any particular branch of art or manufacture from being carried to the highest perfection.”[5] The increased division of labor enhances efficiency of production, which in turn makes the pricing of exports more competitive, and thus demand increases. As exports to satisfy the increased foreign demand for the goods rise, the gold and silver that are used abroad to pay for the goods come into the home country and thus increase its supply of the two metals.

As for the need to increase the holdings of gold and silver as much as possible, the assumption that this enhances a country’s ability to fight a war is something else that Smith contests in his text. Regarding the need for stocks of silver and gold from which to be able to send abroad some in order to pay for the home army while it is fighting abroad, “(t)he commodities most proper for being transported to distant countries, in order to purchase there, either the pay and provisions of an army, or some part of the money of the mercantile republick (sic) to be employed in purchasing them, seem to be the finer and more improved manufactures.”[6] These, rather than sending silver and gold, have the benefit of increasing the demand of manufactures. “The enormous expense of the late war,” Smith contends, “must have been chiefly defrayed, not by the exportation of gold and silver, but by that of British commodities of some kind or other.”[7] So the need to accumulate silver and gold by minimize the imports of manufactured goods while maximizing exports—the key tenet of mercantilism—is, according to Smith, less beneficial than free-trade. Moreover, he holds that the market mechanism is much better than government fiat in allocating goods, services, and even metals used as money and wealth.

Similarly, perhaps exporting other commodities than coal, liquified natural gas, and oil might benefit the U.S. more by enhancing the efficiency of domestic producers of other goods (and services), especially if economies of scale exist, and increasing employment since more workers would be required and each could be more efficient and thus valuable to the companies. Additionally, carbon emissions would not be as high were the U.S. to sit on, rather than export, its stockpiles of “dirty” energy sources.

Admittedly, the pressure from unmet energy demand in other countries that are not energy-independent would tempt the U.S. Government and American companies to respectively allow and make more exports of coal, liquified natural gas, and oil because such sales would be lucrative. Behind this pressure is the relationship between a steeply growing global population and the ongoing prevalence of the “dirty” energy sources in meeting the increasing demand from an exponentially growing population. Indeed, because of shale, the US had become the largest exporter of natural gas in the world by 2024.

As of February, the world had 4 billion more people than in 1970. That translates into a 10,000 increase per hour, which in turn means 200 million new customers for commercial energy supplies every year.[8] Along with the increased global population, oil consumption increased by 150% since 1970. Because renewables were still focused on electricity, which was only one fourth of energy demand globally in 2023, the “dirty” sources were still supplying most of the increased demand.[9] Put another way, the increased supply of renewables was not even keeping up with the annual increases in demand for energy. In spite of the carbon-emission targets, oil and gas still accounted for 80% of global energy in early 2024.[10]

Most of the increase in energy demand and all the increase in carbon emissions during the previous 20 years was in Asia Pacific (esp. China).  By 2024, China was importing a lot of energy supplies—even markedly changing the patterns of global trade away from the U.S. being the dominant import market—and accounted for about a third of total global emissions.[11] Crude oil imports doubled from 2013 and 2023.[12]

Unfortunately, forecasts did not include a dramatic reduction in oil and coal use. In China, 300 million poor people in China were projected in 2024 to move into the middle class by 2050. This means more energy use, and thus more oil and gas. Nuclear energy was being developed there, but coal was still a major source of employment in 2023, and fit the Party’s goal of shifting wealth inland. Also, wanting to be the world’s leading industrial power is not in the direction of decreasing the commercial demand for energy.[13]

It is important to include the impact on international relations. As of the start of 2024, China was dependent on imports from Russia and the Middle East. As the U.S. strategic oil-imports interest in policing the Middle East diminishes as the U.S. gets closer to energy independence, the increased interest of China in exercising control in that region meant that a new conflict-zone might open up between the two empires. 

With the world going from over 8 billion people in late 2023 to a projected nearly 10 billion in 1045, we can anticipate more demand for energy, and with it, more international (and domestic) instability. With plenty of oil still in the ground and decreased demand due to substitutes such as electric cars and nuclear energy, the world won’t run out of oil.[14] This is bad news for our species as the planet continues to warm. Even as the press highlights the increase in renewable energy sources, the default is much, much larger and thus diminishing the share of “dirty” sources will not come as quickly as we might think. In short, we are in quite a mess as a species both because it isn’t easy to reduce our sluggish reliance on sluggish oil and invisible gas, and our global population grew so fast and so much in the 20^th century and has continued to increase in the first two decades of the next century that, as biological organisms needing external sources of energy, the energy demand of our species is likely to keep on increasing even if we become more efficient. The expediential increase in population can be so large that its baleful effects outweigh any gain from increased efficiency. Again, the baseline is so massive that changes from greater efficiency merely mitigate the increased harm done. 

Similarly, the large amount of energy consumption from “dirty” sources relative to the increased supply from renewables renders any shift very gradual. The Titanic could not turn fast enough to avoid the iceberg in 1912 because the rudder was too small for the mass, and thus momentum, of the ship. We would like to turn away from “dirty” sources of energy, but our rudder pales in comparison to the magnitude (and proportion) of those sources. We need a bigger rudder, or we too may flounder. The global economy does not “turn on a dime.”

---

1. Nick Butler, Lecture on Energy and Security, Yale University, February 15, 2024.
2. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, 4^th edn., R. H. Campbell, A. S. Skinner, and W. B. Todd, ed.s (Oxford, UK: Clarendon Press, 1776/1976), sec 9, p. 433.
3. Ibid., sec 7, p. 431.
4. Ibid., sec 31, p. 446.
5. Ibid., sec 31, pp. 446-47.
6. Ibid., sec 29, p. 444.
7.  Ibid., sec 27, p. 443.
8. Nick Butler, Lecture on Energy and Security, Yale University, February 15, 2024.
9.  Ibid.
10. Ibid.
11. Ibid.
12. Ibid.
13. Ibid.
14. Ibid.

China or USA: Which Will Rule Trade?

The Association of Southeast Asian Nations (ASEAN) announced at its meeting in November 2012 that it would host negotiations among its members on “a sweeping trade pact that,” according to the New York Times, “would include China.” The trade agreement would include not only the ten countries that are in the association, but also six other countries that have free-trade agreements with the association. In addition to China, those countries include Australia, India, Japan, New Zealand and South Korea. Half of the world’s population would be included in the pact. Notably absent is the United States. This is no accident, as the Obama administration’s own proposal for an eleven-nation Trans-Pacific Partnership excludes China. In other words, the contending proposals may be more about a “control battle” between two contending empires—the United States and China—than anything else. Moreover, which proposal succeeds could say something about whether China succeeds the United States as the hegemonic super-power of the twenty-first century.

Barack Obama and Wen Jiabao: A contest of wills at the East Asia Summit in 2012.   Jason Reed/Reuters

That the immediate issue was that of China’s inclusion or exclusion can be gleamed from Barak Obama’s statement during one of the presidential debates in 2012. “We’re organizing trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards.” The inclusion of basic can be read as a slight against China. However, that protecting state-run enterprises as done by China would continue to be allowed under ASEAN’s Regional Comprehensive Economic Partnership suggests that what the U.S. takes to be settled in terms of what constitutes the basics of international trade may not have been so settled after all. China could point to U.S. companies being able to deduct expenses on their income tax forms as a form of government aid to the home team. Since at least the mercantilist era in the seventeenth century, governments have carried out industrial policies designed to profit domestic companies and increase tax revenue. Laissez-faire-based trade may not be realistic, considering the myriad ways in which governments interact with business. Regulation itself, in being of a strategic to some firms more than others, could have a differential impact on domestic and foreign firms. It is unrealistic to assume that governments would stop regulating just so the trade is “fair” as well as “free.”

As the twenty-first century was coming into its own, two major economic powers in the world were contending not only for economic dominance, but political hegemony as well. Would it be another American century, or would power follow economic growth over to Asia? The “control battle” itself ostensibly about ordering trade alliances could be an indication that power was about to shift on a massive scale in terms of which economic power would become the definitive superpower.

Source:

Jane Perlez, “Asian Nations Plan Trade Bloc That, Unlike U.S.’s, Invites China,” The New York Times, November 21, 2012.