Post-review of Kissinger’s speech in Davos 2022

The main theme for four-day Davos Summit 2022 was “History at a Turning Point” indicating more than just a rhetorical talking point. Now the political tectonics are really moving to some new position and the whole world order is fundamentally changing.

Davos Summit 2022

May 23, 2022, former US secretary of state Henry Kissinger, 98, told the World Economic Forum held in Davos, Switzerland that Ukraine must begin negotiations “before it creates upheavals and tensions that will not be easily overcome”. He said Ukraine should accept giving up part of its territory to reach a peace deal with Russia and end the now three-month-long war immediately. Failing to restart negotiations with Russia and continuing to antagonize Moscow could have disastrous consequences for Europe’s stability in the long term.

Kissinger also said that the West should stop trying to inflict a crushing defeat on Russia and Ukraine should give up territory. “Ideally, the dividing line should be a return to the status quo ante. Pursuing the war beyond that point would not be about the freedom of Ukraine but a new war against Russia itself,” he told the conference on Monday. Kissinger said also it would be “fatal” for the West to get swept up in the “mood of the moment” and forget Russia’s position of power within Europe. He said that Ukraine should give Russia territory within the next two months and accept terms that fail to meet their current war aims.

Kissinger explained that Russia has been an “essential part of Europe” for over four centuries, noting that European leaders must “not lose sight of the longer-term relationship” or otherwise risk putting Russia in a permanent alliance with China. He also said: ‘I hope the Ukrainians will match the heroism they have shown with wisdom.’ 

The Ukrainian President Volodymyr Zelensky’s speech came at the start of Davos talks. He told delegates that their summit will become pointless, if Putin is allowed to win the war because he is “not interested in our thoughts” and “brute force… does not talk, it kills”. Russia was not at the Davos meeting this year after organizers banned Moscow from sending a delegation.

The key message of Kissinger can be summarized “Kissinger tells Ukraine it should give Russia territory to try to find a peace deal”, which provoked wide public criticism. Some informative videos here , here and here .

Analysis of Kissinger’s speech

Why did Kissinger’s speech provoke such a furor? Kissinger did not criticize the way the war in Ukraine is being conducted. What Kissinger criticized was the policy itself, that’s what triggered the firestorm. The US policy regarding Ukraine that President Biden is currently pursuing, is hurting both US interests and US allies’ interests.

The US basic strategy of this case is to “weaken” and “isolate” Russia by severing Russia’s economic ties with Europe and spurring them into a long and costly quagmire in Ukraine. That sounds a reasonable plan but according to Kissinger is totally wrong. Why?

Because US National Security Strategy identifies China as America’s number one rival and therefore, any policy that makes China stronger, runs counter to US strategic interests and the US proxy-war in Ukraine is making China stronger.

The reason is that it forces Russia to strengthen relations with China and this makes China a lot stronger. Russia’s pivot to Asia is reaching an irreversible turning point in this summer. The closer relations between the biggest economic and manufacturing power China with largest population base and geographically largest nation Russia with richest natural resources will form the most powerful player on the international scene.

As relations between those two countries improve, the pace of US imperial decline is going to accelerate as the non-dollar zone expands and bilateral trade gradually replaces the current US-dominated global trade system.

You can see this happening already. The war in Ukraine has triggered shocking distortions in global trade, major disruptions in critical supply lines, unprecedented food and energy shortages and the greatest redivision of the world since the breakup of the Soviet Union. Washington’s decision to stake its future and the future of the American people on a senseless geopolitical gambit (Ukraine war) could turn out to be the greatest strategic catastrophe in US history.

Kissinger grasps the gravity of the situation but he was not just critical of the policy, he also offered an ominous warning that has been almost-entirely ignored by the media.

Here’s what he said: “Negotiations need to begin in the next two months before it creates upheavals and tensions that will not be easily overcome. Ideally, the dividing line should be a return to the status quo ante. Pursuing the war beyond that point would not be about the freedom of Ukraine but a new war against Russia itself”. His key arguments are:

• The US policy is wrong
• The US policy must be changed immediately or the damage to the US and its allies will be severe and permanent. (“Negotiations need to begin in the next two months”)

Pandora’s Box will be opened

This may sound too challenging but Kissinger seems to be very serious on this. When looking at the massive changes the world has already experienced since the conflict began (disruptions in supply lines, food and energy shortages & price hikes, setbacks of globalization etc.), pretty big changes have already taken place but they are probably just the tip of the iceberg. The real pain is still ahead of us, next autumn will open “Pandora’s Box”.

The characteristics of the coming winter seem to be ominous, when home heating bills go through the roof, industries across Europe succumb to the higher energy costs, unemployment soars to Great Depression levels and rolling blackouts become a regular feature of life in the west. That’s what the future holds for Europe and America, if the policy isn’t reversed and a negotiated settlement quickly reached, according to Kissinger.

Russia’s concentration and focus are now directed towards East. Putin has already stated that Russia will never again put itself in a position, where it is economically dependent on Europe. Those days are over. Instead, he is redirecting critical energy flows to China, India and beyond. Europe is no longer a priority customer, in fact, they have emerged as a threat to Russia’s survival, which means, Russia will continue to reorient its production eastward.

The impacts of this Russian re-orientation to Europe will be dramatic, both in short, medium and long term. Europe is going to pay much more for its energy, fertilizers and food than any other region in the world. That is the choice Europe has made and that is the outcome Europe will have to live with. It may be worth to remind that in 2021, Russia provided 40% of all the natural gas and over 25% of the oil consumed in the EU.

Oil grades are not changeable, at least not in the short term

The EU Commission made the decision to quit Russian oil, crude oil and others, and seek other alternative sources of fossil fuels. They approved its sanctions package No. 6 imposing a ban on Russian seaborne oil imports. EU Commission seems to have no slightest idea of certain chemical and physical facts of different crude oil grades. By banning Russian oil within next few months and assuming to replace it by supplies from Nigeria, Iran, Saudi Arabia, Qatar or any other locations, is a massive mistake. Europe is walking headlong into the biggest energy crisis in its history and it can only blame itself.

European refinery industry is used to features and characteristics of Russian oil grades, is fully adjusted to quality of Urals blend that is delivered in vast quantities via the Druzhba pipeline to German refineries and has been engineered to meet particular processing requirements.

Different oil from different providers would throw a massive re-calibration wrench in the whole refinery process. According to the recent expert report, the required restructuring and modification process is so massive that it will take six (6) years to accomplish the whole re-orientation project and will cost tens of billion euros.

In the meantime, Germany’s and Europe’s economic growth– which is closely aligned with energy consumption– will dip dramatically, businesses will be shuttered, unemployment will spike and the EU’s most powerful and productive country will be brought to its knees.Maybe someone in the German government should have thought about these things before they decided to boycott Russia oil?

Every European refinery and chemical process plant affected, will now immediately require modification of internal processes adapted to new unknown non-Russian seaborne oils. Unbelievably, Christmas 2022 will be an eyewitness for all of the above. Scheduled non-compliance could lead to outward chaos by continuous damage beyond repair of machinery, processes, sensitive devices and installations that EU plants currently have in place. No equivalent madness has ever been planned or implemented anywhere, like this one now in Europe.

Europe’s coming crisis

“The current energy crisis could be one of the worst and longest in history and European countries could be hit particularly hard, the head of the International Energy Agency, Fatih Birol, said recently. In an interview with German magazine Der Spiegel, Birol said that the fallout from the events in Ukraine is likely to make the current energy crisis worse than the crises of the 1970s. Back then it was all about oil. Now we have an oil crisis, a gas crisis and an electricity crisis at the same time,” Birol told the publication.

As part of its Ukraine-related sanctions, the EU introduced restrictions on Russian fossil fuels and has pledged to gradually phase them out. Birol warned that countries in Europe that are more dependent on Russian gas are facing a “difficult winter,” as “gas may well have to be rationed,” including in Germany. His comments came as Russia’s state gas supplier Gazprom cut off supplies to some energy firms in Germany, Denmark, the Netherlands and other countries, after their failure to pay for the fuel in rubles as per new requirements.

The European crisis, accelerating from autumn 2022 on, will cover not only economy or energy but food, agriculture and finally the whole societal stability. “Das tolle Jahr Europa” is coming.

European choice

So-called “War of Attrition”, as the current phase of war in Ukraine has been described, is stacked up in Russia’s favour and Kissinger knows it.

Kissinger was right, when accusing Europe and the US of the failed Ukraine strategy. If they do not convene for negotiations in the next two months, as Kissinger advices, then the break with Russia will be final and irreversible, at which point, Russia’s voluminous energy resources, mineral wealth and agricultural products will be forever routed eastward to other nations. And that is going to inflict terrible suffering on both the United States and its allies in Europe.

“Freezing to death in the dark is preferrable to insisting that Ukraine remain neutral”. If that is the “principal” that Europe is defending, it’s a bad choice.