Saturday Commentary and Review #155

Salvini's Next Move, BlackRock to Fractionalize the World, Armenia vs. Azerbaijan Is Far From Over, The Tyranny of the Algorithm, Another Cosmic Riddle Solved

Every weekend (almost) I share five articles/essays/reports with you. I select these over the course of the week because they are either insightful, informative, interesting, important, or a combination of the above.

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In my daily scan of media, I stumbled across this piece in POLITICO Europe:

The headline and subheader took me a few seconds to digest. My first reaction was “Wow! What a GRAND VISION for our collective future! Aspiration for greatness!”

It’s no secret that the European Union is a bureaucrat’s dream where the most petty people can find work trying to dictate how the most trivial bits of life should be lived by its citizens. This is the Tyranny of the Busybody, the complete opposite of a vision for a grand future. These bureaucrats have successfully convinced themselves that they are saving the world via their plans and actions. Meanwhile, Europeans continue to grow increasingly frustrated by these consistent intrusions in our lives, intrusions that we know aren’t going to make the world a better place, but that do “justify” the vast bureaucracy that we pay for.

To be fair, what else can the EU do anyway now that it has effectively ceded its foreign policy to the USA? It has also indicated that it will obey US dictates on who it can and can’t do business with in the future as well. All that’s left for EU policymakers to do is to try and arrange and re-arrange what happens internally, hence the focus on dictating the minutiae of our lives.

It doesn’t have to be this way, and some people are trying to change it from within despite the significant obstacles put in their way. One of these people is Matteo Salvini, head of Italy’s Lega party. Salvini was riding high only a few years ago, but then came COVID-19 and a strategy that he pursued that backfired horribly. The party’s base of support is in the north of Italy, so much so that it had a secessionist faction within it, seeking independence for “Padania”. Salvini managed to broaden the party’s appeal nationally, largely on two issues: 1. migration and 2. anti-establishmentarianism.

Lega made one very, very important tactical error; it decided to participate in the “national unity coalition” during COVID-19 in order to have a say in how COVID funds would be disbursed. This caused the populist support for Lega to collapse, as it moved over to FdI (Brothers of Italy), led by the country’s current Premier, Georgia Meloni. This wrong step does not take away from the fact that Salvini actually attempted to reform Italy, unlike Meloni who was ruled as a centrist liberal, and is now feted in western media as a ‘voice of reason’.

This year sees elections for the EU Parliament, and all signs show that the big winner will be parties of the right, hard right, and those that are considered populist. A big victory will allow these currents to begin to try and snatch as much power within the Brussels machine as possible, albeit very slowly at first due to how it is currently constructed. Gone are the days when populist and right wing parties are anti-EU, realizing that only through alliances with similar parties on the continent can they actually lay the groundwork for reform at home. Matteo Salvini sees this as the only possible path:

Matteo Salvini hosted a meeting of the continent’s sovereigntist parties, the Identity and Democracy (ID) group, under the slogan “Free Europe! Jobs. Security. Common Sense.” The meeting brought together 12 of their leaders, who head the political parties in their respective countries that oppose the project of the ‘superstate’ that obliterates the distinctiveness of European identities. Representatives of 27 nations with very different character but much in common have agreed in the Tuscan capital to search for joint policies that restore the independence and national sovereignty of their countries, the democratic freedoms of citizens, and local economies.

During the meeting, whose participants intend to change the European Union’s dirigiste, interventionist, and anti-national orientation, Matteo Salvini said, “Today I have listened to friends from different countries with different cultures. The Identity and Democracy Group is the union of the different. I believe that today is an historic day because today the renaissance of Europe can see the light of day, which will be based on work and rights. Europeans will have to choose [between], on the one hand, freedom and, on the other, fear; on the one hand, rights and work, on the other hand, extremism.”

Ultimately, the political parties represented at the meeting all believe that current EU directives are failing. Despite their lofty goals, they curb economic development and national industry, limit energy resources, weaken security, make a mockery of borders, and attack European cultures and traditions. The ID group therefore opposes much that has hitherto been synonymous with the EU, and because of this, it faces the challenge of breaking the cordon sanitaire imposed on it.

These parties run counter to the liberal assumptions of the Brussels clique, which is why they have faced a cordon sanitaire time after time after time.

Matteo Salvini’s solution is to bring the successful Italian political model of unity to the European Union: “For the first time, the united and determined centre Right can win and liberate Brussels from those who occupy it for their own interests. The centre Right in Europe can only make the revolution if it is united. … Just as we are taking Italy by the hand to return it to growth, it would be a fatal mistake to split the centre Right in Europe.” The message was undoubtedly aimed at those like Antonio Tajani—deputy prime minister and leader of Forza Italia, with which the Lega forms part of the government together with Fratelli d’Italia—who has recently declared that “Salvini is an ally and can be an ally in Europe, but we will never make an alliance with Alternative for Germany and Mrs. Le Pen.”

Salvini is aware that Marine Le Pen, the indefatigable leader of Rassemblement National—a friend and historical ally of the Lega—today plays a key role in this alternative political project. Her political weight in France, and therefore in the EU, is indisputable. This is what the ID initiative is counting on. As Salvini said, “Between Macron and Le Pen, I choose her for life. We are the alternative to the socialists,” and added, “Make no mistake! Those who choose the Lega in the European elections choose the alternative to the Left, to the socialists, and to the communists.”

Marine Le Pen is topping the polls to be France’s next president.

There is no doubt that advocates of sovereignty are advancing across Europe. Salvini reminded the press of the electoral success of his allies, dispelling accusations of extremism. Referring to the member parties of ID, he said that today they are: “the first party in France, Holland, Austria, Belgium; the second party in Germany; and an Italian governmental party. … The data tell us that today we are the fourth political force in the European Parliament. The goal is to be the third and to be decisive. … May the victory in the Netherlands be the beginning of victory throughout Europe, and there is no better time and place to affirm this than Florence, the cradle of the Renaissance, the city of the rebirth of Europe.” Spirits are high; they are optimistic, and they have every reason to be.

Countries where ruling parties have done everything to try and stop right wing populists have seen those same populists rise in support. Countries where the ruling parties have co-opted parts of the right wing populist platform have seen support for those populist parties stay at an “acceptable” level.

The ruling establishment in the USA fears Donald Trump, which is why they are pulling out all the stops to deny him the Presidency. In Europe, the Brussels clique fear not just Salvini’s success and the success of his pan-European coalition, but of other parties who are similar to them but not of their grouping.

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As of June 30, 2023, BlackRock Inc., the world’s largest asset manager, manages assets worth $9.42 Trillion USD in total.

That’s a number that is difficult to digest, and these are very, very serious people who have an incredible amount of leverage and power over people, organizations, institutions, and countries. What they say and do matters, and it matters quite a lot, whether we like it or not. BlackRock is a behemoth, one thrust forth by the political-economic system that our countries and leaders have constructed over the years.

Last month, BlackRock officially entered the Bitcoin market when the SEC approved BlackRock’s iShares Bitcoin Trust (IBIT). My knowledge on this sector is subpar, so I am not going to comment too much on this subject, especially because so many of you readers are very well-versed on this subject (so please do contribute your thoughts in the comments). Bitcoin Magazine has a lengthy exploration of what BlackRock’s entry into the market means, so it’s worth taking a look at:

Not one to mince words, Fink articulated a clear framework for his company's approach to Bitcoin, and furthermore for BlackRock's intention to replicate similar ETF products for other assets. “If we can 'ETF' a Bitcoin, imagine what we can do with all financial instruments.” Fink continued, speaking about Bitcoin itself, stating “I don’t believe it’s ever going to be a currency. I believe it’s an asset class.”

Check this out:

Fink even went so far as to turn the abbreviated noun “ETF," an exchange-traded fund, into a verb, gloating about transmuting the Bitcoin protocol into just another speculative commodity – all the efforts of miners and nodes across the world to decentralize trust in issuance and settlement reduced to a paper offering by their iShares division.

Asset tokenization attempts:

Many FinTech companies, such as Lightning Labs and Blockstream, have spent millions in capital developing methods for utilizing Bitcoin as a way to issue tokenized assets, such as stablecoins like Tether's USDT, in order to transact dollar-denominated tokens via Lightning channels or federated sidechains. While the institutional adoption dreamed of by early Bitcoin adopters has certainly come to fruition, the actualization and methods of these institutions is clear: bitcoin must remain an asset, and all effort on scaling it as a currency should be directed towards the dollar. Fink himself in the same Bloomberg interview stated “We believe ETFs are a technology no different than Bitcoin was a technology for asset storage.” Bitcoin Spot ETF products encourage many practices far outside the norm of the typical Bitcoin user within the near decade and a half of its existence; e.g. trusting a custodian with your keys, limiting exchange to US business days and hours, and aggregating individual exposure into a collective paper claim managed and surveilled by highly-regulated brokers.

The future will be tokenized:

However, in keeping with Fink’s promise that everything will be tokenized, the efforts to tokenize nature have already gone far beyond carbon. For instance, The Latin America-focused branch of the multilateral development banking system, the Inter-American Development Bank, helped create, along with the Rockefeller Foundation, the Intrinsic Exchange Group (IEG), which is the entity behind Natural Asset Corporations (NACs). Per the IEG, NACs pioneer “a new asset class based on natural assets and the mechanism to convert them to financial capital.” These natural assets, the group states, “include biological systems that provide clean air, water, food, medicines, a stable climate, human health and societal potential.” NACs, once they lay claim to the natural asset they identify, launch an IPO and become the issuers of shares in that natural asset which are then sold to institutional and individual investors, corporations, sovereign wealth funds, etc., thereby fractionalizing the natural asset the NAC was created to capture.

And BlackRock plans on being a leader in the ‘tokenization of everything’:

During a January 17, 2024 panel at the World Economic Forum conference in Davos, Jeremy Allaire, CEO of the USDC stablecoin issuer and BlackRock affiliate Circle, made note of Fink's comments on tokenization from a few days prior on Bloomberg. “It suggests confidence that tokenization is going to be coming on in a significant way. That we’re going to see some of the very biggest asset issuers in the world issuing tokenized versions of those assets this year. That’s significant.”

The universal ledger:

Fink, in his recent statements on the coming tokenization “revolution” also emphasized how this dramatic shift would be enabled by everything that will be tokenized, as well as those interacting with the tokenized economy, having a unique identifier and having every transaction tracked “on one general ledger.” He stated specifically that:

“We believe the next step going forward will be the tokenization of all assets and that means every stock and every bond will have its own, basically, CUSIP [i.e. the system used to identify most financial products in North America]. It will be on one general ledger. Every investor, you and I, will have our own number, our own identification. We can rid ourselves of all issues around illicit activities around bonds and stocks and digital by having tokenization…. We would have instantaneous settlement. Think of all the costs of settling bonds and stocks, but if you had a tokenization, everything would be immediate because it is just a line item. We believe this is a technology transformation for financial assets. [emphasis added]”

Fink’s statements are an apparent head-nod to the UN’s sustainable development goals (SDGs, sometimes referred to as Agenda 2030), which BlackRock has long supported, both in terms of public support and in terms of pressuring companies it influences to implement SDG policy goals and tracking their progress towards their implementation.

Wew.

Click here to read the rest.

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For roughly three decades, Armenia managed to control the Nagorno-Karabakh (Artsakh) region that was officially part of the neighbouring country of Azerbaijan, but that was also 80% Armenian in population at the time of the USSR’s collapse. Armenia, a tiny, landlocked country with a recent history of being on the wrong end of a genocide, had managed to pull off a miracle.

The Azeris spent those three decades using their oil wealth to purchase a new army and diplomatic support for its efforts to take back Nagorno-Karabakh. Deftly spending money in both Washington DC and in Moscow, the Azeris managed to create a situation where they could not lose diplomatically, meaning that the battlefield was where the result would be found. In two short wars, the Azeris managed to defeat Armenian forces, with the second war lasting little more than one whole day, as local Armenians had already been sold out by their cousins in Yerevan.

Azerbaijan would simply point to a map of the world and declare that Nagorno-Karabakh “was and is” a recognized part of their territory, giving them the right under international law to “take it back’ in order to restore their rule over the whole of the country. That is a very, very tough position to counter, especially for a country as small, weak, and diplomatically isolated as Armenia is. The Armenians, sensing the danger that was approaching, attempted to make nice with the West instead of relying on the Russians as they had done so historically. This strategy failed.

The collapse of Artsakh and the flight of the ancient Christian population there was a victory for the Azeris and for Islam as well. Enjoying this taste of victory, the Azeris’ appetite has grown for more. Their eyes have now turned towards Nakhchivan, the Azeri enclave stuck between Armenia and Iran. The Azeris (and the Turks) want to create a corridor between Azerbaijan Proper and the enclave via road and railway lines through the Zangezur Corridor that separates Armenia from Iran. This proposed corridor would require the agreement of the Armenians and Iranians, as it does not sit on Azeri soil. The Azeris are threatening war in order to carve out this corridor, but unlike the last two wars, they do not have the full backing of the West this time:

The Armenia-Azerbaijan peace process continues to struggle due to the latter’s insistence on a “corridor” through Armenia and the former’s stance that the West act as mediator in the talks.

While Azerbaijan wants to start direct negotiations with Armenia, the latter insists on holding them with the involvement of Western governments – something Azerbiajani President Ilham Aliyev no longer has any interest in. Aliyev recently refused to meet his Armenian counterpart, Nikol Pashinyan, in Granada and Brussels, citing perceived bias against Azerbaijan in the trio format.

Paris is the major issue for Baku, which claims that the process was “hijacked by France.”Azerbaijani officials especially resent France’s sending of weapons to Armenia, which makes it impossible for Paris to be an honest peace broker.

Germany is also reportedly dangling a bunch of money to entice Yerevan to take anti-Russia steps, such as purging the government and armed forces of anyone harboring friendly views towards Moscow. Berlin, already struggling financially, might want to rethink its offer as the tab might get run up quickly considering there might be quite a few Russia-friendly individuals in government considering the two countries’ long history.

“Unfortunately, in Europe there have also been those who have always fueled revanchism and Armenian nationalism,” Deputy Foreign Minister of Italy Edmondo Cirielli admitted recently in an interview with the Italian publication Formiche.

France, which is the home to the largest Armenian diaspora community in Europe, is playing that role at the moment, according to Azerbaijan.

“France is the country that arms Armenia, gives them support, trains their soldiers, and prepares them for another war,” Aliyev told local media in January 2024. If outside parties must be involved, Baku proposes a broader “3+3” framework, involving Russia, Iran, Türkiye, Azerbaijan, Armenia, and Georgia.

A complex part of the world often sees sides change overnight.

The main roadblock:

Aside from Armenia insisting on EU involvement, the main roadblock to any deal between Baku and Yerevan remains the Zangezur Corridor – a transportation connection between Azerbaijan and its Nakhchivan exclave wedged between Armenia, Turkiye, and Iran.

On January 10, Aliyev stated that, if this corridor remains closed, Azerbaijan refuses to open its border with Armenia anywhere else.

The nine-point ceasefire agreement signed under Russian mediation that ended the 2020 war included a  stipulation that Armenia is responsible for ensuring the security of transport links between the western regions of Azerbaijan and the Nakhichevan Autonomous Republic, facilitating the unhindered movement of citizens, vehicles and cargo in both directions. Azerbaijan and Turkiye have latched onto that point, insisting they have the right to set up transportation links through southern Armenia.

Baku wants travel of people and cargo between Azerbaijan and Nakhchivan to be free of inspection and customs and expects Yerevan to agree to the deployment of Russian border guards along the corridor.

The West would like to finally yank Armenia out of Moscow’s orbit, which is why some western states are taking a tougher line with Baku this time around. But at the same time, they cannot afford to alienate the Azeris and their oil wealth and transit lines either.

A recap:

Against the backdrop of the Ukrainian war and the new Cold War, mediating countries began to compete for the status of the main moderator of the Armenia-Azerbaijan negotiations.

Yerevan began to favor the West, and talks mostly moved to Western platforms. It was during those meetings that Armenia agreed to officially recognize Nagorno-Karabakh as part of Azerbaijan.

Once Armenia did so (and PM Pashinyan declared so publicly), the die was cast. The region was (and is) recognized as Azerbaijani territory by the international community but was overwhelmingly populated by ethnic Armenians. Roughly 100,000 of them fled to Armenia after Azerbaijan blockaded the region for months and then moved militarily to assert control in September – an operation that resulted in hundreds of deaths.

Despite moving the negotiation process under the guidance of the West and publicly recognizing Nagorno-Karabakh as Azerbaijani territory, the Pashinyan government has sought to lay all the blame for its loss at the feet of Russia. And Pashinyan now largely refuses to participate in summits with Russia.

Baku, despite assuming control of Nagorno-Karabakh under the guidance of the western process, now wishes to disinvite the West from the process. Why is that?

A range of likely possibilities include some combination of the following:

• The heavy handed involvement of the French who began increasing military support for Armenia last year.

• Baku was being asked to make concessions in other areas, almost certainly having to do with Russia. Azerbaijani officials decided this was not in their interest and/or Moscow applied pressure. (Baku and Moscow share strong ties. In just the energy sector, Russian companies’ large investments in the Azerbaijani oil and gas sector make it one of the bigger beneficiaries of Brussels’ efforts to increase energy imports from Azerbaijan in order to replace Russian supplies. Azerbaijan is also importing more Russian gas itself in order to meet its obligations to Europe.)

• The West was using the process as a way to move Armenia squarely into the Western camp, an outcome that no country in the Caucasus wants.

• It makes zero sense for the West to play such an integral role because its solutions might not take into account (or could actively go against) the interests of other countries with major stakes in the outcome, mainly Iran and Russia.

It would seem that Azerbaijan is refusing to play its role in the West’s attempt to direct the play. For example, when the new US ambassador to Azerbaijan, Mark Libby, was hastily dispatched to the country in December, one of his first actions was to visit the Alley of Martyrs dedicated to those killed by the Soviet Army during Black January 1990. Azerbaijanis weren’t falling for it.

And now the West has reverted to hardball tactics.

France is already upping its military support for Armenia, sending 50 Arquus Bastion armored personnel carriers, Thales-made GM 200 radars, and Mistral 3 air defense systems. There are also discussions to send CAESAR self-propelled howitzers.

The US State Department signaled that it will pause the delivery of all military support to Azerbaijan. USAID, however, is becoming more active in the region, and media campaigns are revving up against the government in Baku. Azerbaijan just ended its engagement with the Parliamentary Assembly of the Council of Europe after it began criticizing Azerbaijan’s domestic affairs and made allegations of ethnic cleansing in Nagorno-Karabakh. Last month, the US put Azerbaijan on its watchlist on religious freedom.

These efforts are likely to prove fruitless as Aliyev has the full support of Türkiye, as well as Russia, and simply doesn’t need the West to get more out of the current situation. And the US, by butting into the process, has helped Azerbaijan and Iran put aside their differences in an effort to keep the Americans out.

Meanwhile:

While Armenia ups its military spending, getting weapons from France and India, Azerbaijan also remains in preparation mode. Aliyev recently said the following:

“The process of building our army will continue. Armenia should know that no matter how many weapons it buys, no matter how it is supported, any source of threat to us will be immediately destroyed. I am not hiding this, so that tomorrow no one will say that something unexpected has happened.”

The Azeris want to call the West’s bluff and take advantage of their present military superiority over the Armenians. Will they have the balls to do so?

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From cafes to work spaces, everything everywhere now tends to look the same. Kyle Chayka blames this ‘global ubiquity’ on the internet and the algorithms that power it:

I often typed “hipster coffee shop” into the search bar as a shorthand because Yelp’s search algorithm always knew exactly what I meant by the phrase. It was the kind of cafe that someone like me – a western, twentysomething (at the time), internet-brained millennial acutely conscious of their own taste – would want to go to. Inevitably, I could quickly identify a cafe among the search results that had the requisite qualities: plentiful daylight through large storefront windows; industrial-size wood tables for accessible seating; a bright interior with walls painted white or covered in subway tiles; and wifi available for writing or procrastinating. Of course, the actual coffee mattered, too, and at these cafes you could be assured of getting a cappuccino made from fashionably light-roast espresso, your choice of milk variety and elaborate latte art. The most committed among the cafes would offer a flat white (a cappuccino variant that originated in Australia and New Zealand) and avocado toast, a simple dish, also with Australian origins, that over the 2010s became synonymous with millennial consumer preferences. (Infamous headlines blamed millennials’ predilection for expensive avocado toast for their inability to buy real estate in gentrifying cities.)

These cafes had all adopted similar aesthetics and offered similar menus, but they hadn’t been forced to do so by a corporate parent, the way a chain like Starbucks replicated itself. Instead, despite their vast geographical separation and total independence from each other, the cafes had all drifted toward the same end point. The sheer expanse of sameness was too shocking and new to be boring.

Of course, there have been examples of such cultural globalisation going back as far as recorded civilisation. But the 21st-century generic cafes were remarkable in the specificity of their matching details, as well as the sense that each had emerged organically from its location. They were proud local efforts that were often described as “authentic”, an adjective that I was also guilty of overusing. When travelling, I always wanted to find somewhere “authentic” to have a drink or eat a meal.

If these places were all so similar, though, what were they authentic to, exactly? What I concluded was that they were all authentically connected to the new network of digital geography, wired together in real time by social networks. They were authentic to the internet, particularly the 2010s internet of algorithmic feeds.

I assume that everyone here who has done a bit of traveling has also experienced this growing ‘sameness’ everywhere.

Algorithms:

My theory was that all the physical places interconnected by apps had a way of resembling one another. In the case of the cafes, the growth of Instagram gave international cafe owners and baristas a way to follow one another in real time and gradually, via algorithmic recommendations, begin consuming the same kinds of content. One cafe owner’s personal taste would drift toward what the rest of them liked, too, eventually coalescing. On the customer side, Yelp, Foursquare and Google Maps drove people like me – who could also follow the popular coffee aesthetics on Instagram – toward cafes that conformed with what they wanted to see by putting them at the top of searches or highlighting them on a map.

To court the large demographic of customers moulded by the internet, more cafes adopted the aesthetics that already dominated on the platforms. Adapting to the norm wasn’t just following trends but making a business decision, one that the consumers rewarded. When a cafe was visually pleasing enough, customers felt encouraged to post it on their own Instagram in turn as a lifestyle brag, which provided free social media advertising and attracted new customers. Thus the cycle of aesthetic optimisation and homogenisation continued.

Click here to read the rest.

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We end this weekend’s SCR with a look at how the James Webb Space Telescope has “solved another cosmic mystery”:

The powerful James Webb Space Telescope has solved another cosmic mystery.

Astronomers can see a type of light emitted billions of years ago from some of the earliest galaxies, yet many scientists don't think this light should be visible. That's because, at a crucial time in the universe's history — a time called "reionization" when the first stars began to glow — space was absolutely packed with gas spawned by the Big Bang (the pivotal explosion that created our universe).

Such thick gas should shroud this light from the first stars and galaxies. But it doesn't. We can see light emitted from early hydrogen atoms (the smallest atom, and one of the first elements ever formed).

"One of the most puzzling issues that previous observations presented was the detection of light from hydrogen atoms in the very early Universe, which should have been entirely blocked by the pristine neutral gas that was formed after the Big-Bang," Callum Witten, an astronomer at the University of Cambridge who led the new Webb research on this mystery, said in a statement. "Many hypotheses have previously been suggested to explain the great escape of this 'inexplicable' emission."

But the Webb telescope, built with a huge mirror to detect extremely faint light and resolve extremely distant objects, has provided a compelling answer.

Click here to read the rest.

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