Cold War

Pfäffikon SZ, Switzerland – The British go back to the polls, and the Turks have chosen, but the outcome raises a lot of questions. The Dutch are trying to put together a complicated cabinet, and the French are on the eve of a crucial choice for Europe; not to mention North Korea and the chaos in the Middle East. According to many, a new Cold War presents itself.

Insight
Newly-known US President Donald Trump is accelerating into new insights as he is in control of the so-called single remaining superpower. The relationship with Russia, for example, seems to have fallen below the zero, which provides the old-fashioned ‘Cold War thinking’ with new fuel. The Cold War is deeply rooted in many. After the fall of the Soviet Union, the power of one nation – the United States – has never been so great. Very slowly, relative power is shifting to China, Russia and, to a lesser extent, India. Europe is still American minded, but the earlier cohesion appears to weaken. The Brexit certainly does not contribute to the European-American axis.

Superpower
In her role as a supernation, America has played a dramatic role in the Middle East. The United States could not impose its will on relatively small nations and piled up blunder as it turned out. In this sense, the US has hardly been able to benefit from her so-called hegemony. For this reason, alone, it is better to get more balance between China, Russia, the EU and the US. I mentioned earlier that American policy plays into the hands the axis of China-Russia. Now, years later, Russia has found a good (trade) partner in China on many fronts. Joint exercises of their armed forces underline this image.

New Phase
The Cold War created –more or less– balance, where all players knew they should not go too far. Today, the situation is different. China, Russia, and India are advancing as capitalist bolsters at a rapid pace, even though it is not explained this way. These countries do not want to invade their neighbors but defend their economic goals.

The world seems to be in a phase of reshaping power and economic gain and the ‘Cold War thinking’ seems to win land. The ‘obsolete’ NATO is obviously pleased with its role as a supplier of tanks and aircraft carriers. It is remarkable that the main role players in the ideology are hardly different from each other because they have grown increasingly towards each other over time. The stirring of old Cold War feelings would, therefore, be a stupid move. To the investor to focus only on the investments and to stay far away from politics. It is up to political leaders to manage this extremely complex situation. Let’s hope they have this wisdom.

It remains for me to wish you a good weekend.


Jan Dwarshuis is CIO at Thirteen Asset Management AG. Dwarshuis writes his columns in a personal capacity. Professionally, he holds positions in major European, American and Russian stock funds. The information in his columns is not intended as professional investment advice or a recommendation to make certain investments. At the time of writing, he has no position in above mentioned shares and has no intention of doing so in the next 72 hours.