Month: February 2025

President Trump grapples with the Ukraine problem. It’s harder than he thought

I am finding it much easier to blog on Substack that here, and I’m starting to think that I should stop posting here at all, and subscribe my loyal email followers directly to Substack.

Anyway, I posted on Substack last week on the topic of Ukraine, and then went abroad for a few days – not posting it here. I returned yesterday and I’ve done an update. I’m posting both here.

Here’s the first, posted on 17 February

What can Trump achieve in Ukraine?

Don’t expect a lasting settlement

Gloom is spreading over European politicians as the nature of the USA’s Trump administration becomes more explicit. They are joining the legions of people shocked by that regime doing pretty much what they said they were going to do, and having to discard to the more optimistic gloss that they had been hoping for. Commentary is being overwhelmed by this sense of shock, which is not very helpful for people trying to understand what is happening. The forthcoming negotiation over the Ukraine war is about three things: a ceasefire, American military and financial support for Ukraine, and sanctions. The Trump regime simply doesn’t have the bandwidth to deal with more complicated problems, like a territorial settlement or a long-term security architecture.

First, let’s look at these three in turn. I have no doubt that Donald Trump sincerely wants the killing to stop. For all his violent talk he is actually quite squeamish about violence – and he craves the recognition that he would get from halting the actual exchange of fire. The only practical way of achieving this is an early ceasefire based on the current position of the two sides, pending some further form of negotiation – in which his regime will not really engage. Other members of the regime, such as the Vice President, JD Vance, are probably less bothered by this, however. And Russia does not want a ceasefire without getting more of what it wants to neutralise Ukraine and make it easier to attack at a future date. 

The biggest prize for the Trump regime is to stop financial and military aid to Ukraine. They have developed a narrative that this aid is creating hardship in America itself – and this seems to be accepted by the bulk of their supporters. They imagine that cutting all foreign aid (excepting Israel, of course), and waste within Federal bureaucracy, will transform the country’s budget deficit problem. Many senior people in the administration, including the President, almost certainly believe this. In fact it is only by tackling Social Security (i.e. state pensions) and health spending that a serious dent in the US finances will be made; that is off-limits. This is weakest part of the regime’s negotiating position. Russia thinks that it can win relatively easily if this support is withdrawn – after all the turning point in the war so far came when US aid was suspended at the end of 2023. However this does offer US leverage over Ukraine.

America’s negotiating position is much stronger when it comes to sanctions. Europe has a stronger incentive to lift these than America does – as that would allow European countries to diversify their sources of natural gas – and away from America. Because of this strength, the Trump regime is placing huge reliance on it. It is hard to know how important this is to the Russians.

The American hope is that the lifting of sanctions will be enough for Russia to agree to an immediate ceasefire, and that the prospect of loss of American aid will do the same for Ukraine. This might be combined with a limited swap of territory: with Ukraine withdrawing from the Kursk region, and Russia from the Kharkiv one. Some kind of negotiation process would then be put in place for a longer term settlement that will never in fact happen. America will block Ukraine’s access to NATO – but they will be unable to stop European countries from giving security guarantees. It is by no means impossible that the US will withdraw from NATO, meaning that it can’t veto Ukraine’s entry, but limiting the value of its worth. It is more likely that Mr Trump will seek to neutralise NATO by sitting fat, dumb and ugly inside its structure – much as the country does within the World Trade Organisation.

What if this plan doesn’t work? Russia calculates that America will stop its assistance anyway, and may not be so worried about the lifting of sanctions. And they might hope to talk Mr Trump into lifting them anyway. That may be too optimistic on Russia’s part. Mr Trump can sense when he’s being stitched up, and will walk away abruptly when he does. That is what happened in his attempt to negotiate a deal with North Korea – and this has many similarities. What happens then? My best guess is that US aid would continue, but would be renegotiated with Ukraine’s European supporters, and with Ukraine itself. The gloomier prospect is that he will walk away from the whole thing, blaming Ukraine and Europe, and ending the aid – which is the outcome Russia seeks.

This is putting the European powers in a tough position, as they at last recognise. If the war continues, they need to find an effective way of continuing to support Ukraine. This is, after all, the most cost-effective way to keep Russia at bay. If there is a ceasefire, then they need to reevaluate the Russian threat, in the knowledge that American support will be limited at best.

Much has been made of America giving away part of its negotiating position in advance. But there are many ways to negotiate and you shouldn’t listen to so-called experts on this. In negotiating terms The American government has put the ball in the Russian court. The Russians will be expected to move from their own hardline negotiating position in order to give proceedings a start – though they are unlikely to do this in public. An immediate ceasefire will be the critical point, though, and I doubt that they will concede this early. 

Donald Trump is not a great negotiator on the international scene – but he isn’t a dummy either. A ceasefire and frozen conflict is not the best outcome, but it would be an improvement on what is happening now. No better outcome is available for the time being. We must hope that Mr Trump has the patience to secure it.

And here’s the update, posted today, 23 February

How are the Ukraine negotiations going?

Not well, but there is hope

I posted last week on President Donald Trump’s negotiations to end the Ukraine war. I said that they would revolve around three things – a ceasefire, ending US aid to Ukraine, and lifting sanctions on Russia. There would be no long-term resolution of the dispute, which would be kicked into the long grass. How is it looking?

The Americans say that they are seeking a long-term resolution, rather than my rather short-term analysis. My prediction is that they will find this hard going. Russia is offering its own version of a long term resolution, but this will prove unacceptable to the Ukrainian government, even under extreme duress. Moving Russia from its solution will be just as hard.

The remarkable thing about events so far is that there seems to have been little negotiation at all. Mr Trump has spoken to the Russian and Ukrainian presidents; Russian and American officials have met in Saudi Arabia; the Americans have tried to strong-arm Ukraine in giving up mineral rights to the US in return for nothing – supposedly to recoup past American aid. Following the first of these Mr Trump has parroted Russian talking points, such as the war being Ukraine’s fault, and that President Volodymyr Zelensky’s mandate has expired, on top of his flat rejection of most ofUkraine’s war aims (starting with the reclamation of lost territory). After the talks in Saudi, American officials gushed about the business opportunities available in Russia for American businesses. But Marco Rubio, the Secretary of State, did not offer a date for a meeting between the Mr Trump and Vladimir Putin, the Russian president; he said this would be done once the Russians proved that they were serious. In other words the Russians hadn’t shown they were serious yet. I take this to mean that they haven’t offered a ceasefire. Mr Trump then backtracked on some of his remarks, and appeared to be showing the Ukrainians slightly more respect. 

The Russians are cock-a-hoop. Their plan is to get America to stop its aid and lift sanctions, without giving away a ceasefire, and then to force Ukraine into a humiliating defeat. Ukraine would be seriously hobbled if it lost access to the US Starlink system and to American Patriot missiles, if nothing else. They think things are going their way, because the Americans, and Mr Trump in particular, seem to be conceding all their negotiating points without a fight. This is surely too optimistic on their part.

What to make of the American attempt to bully Ukraine into conceding mineral rights? The curious thing about this is that it would give America a stake in a continuing Ukraine – especially since many of the minerals in question are in the Russian-occupied zone. Those rights would not be secure if Russia got its way in Ukraine – it would violate Russia’s sphere of influence. It is for this reason that Mr Zelensky may give ground on this. It would also be pretty useless without a ceasefire.

The Russians are not responding to Mr Trump’s negotiating tactics, which seem to a sort of tennis strategy – I make a concession and then it’s your turn. They are going to have to try putting real pressure on Russia for them to offer a ceasefire. I’m not sure that has dawned on Mr Trump yet. But it must have on some of his advisers – even if others (including the Vice President J D Vance perhaps) would happily cut Ukraine off and walk away.

What has become crystal clear, though, is that Mr Trump has no idea what the war is about. He seems to think that it was a stupid misunderstanding that got out of hand. He hasn’t grasped that for Russia the war is about incorporating Ukraine into its polity and suppressing Ukrainian nationalism – and for Ukrainians it is a desperate fight to stop this from happening. It is all much more serious that he appears to think. And it’s all much harder than he thought to stop it. 

I’m clinging to the hope that Mr Trump will realise that he is being stitched up by the Russians and start getting tough. And I’m sticking to my original prediction.

Is Rachel Reeves looking backwards or forwards?

Her growth ideas are a blast from the past

I have never really warmed to Rachel Reeves, Britain’s Chancellor of the Exchequer. She hid behind a wooden exterior without revealing anything beyond carefully-crafted PR messages. Still, she was eminently qualified for the job (more so than most of her predecessors) and she has helped transform Labour’s credibility, when her predecessor in the shadow role, Annaliese Dodds, was floundering. I also want to keep my inner misogynist in check: I bristle at a certain type of smartly-dressed, carefully presented, armour-plated, middle-class Labour female politician that has been prominent since New Labour days in the 1990s. I have been giving her the benefit of the doubt.

I forgave Ms Reeves when she announced the withdrawal of the pensioners’ winter fuel payment (or the means-testing of it, to be precise) leading to a blizzard of vituperation. I still think that it is a good policy, even though it is now clear that its political presentation was disastrous. And when she quickly settled many public sector pay disputes I thought this showed evidence of some welcome risk-taking in trying to fix longer-term problems against short-term financial pressures. Her first budget, though, was underwhelming. The only thing that was remotely bold about it was increasing the cost of lower paid employees through adjustments to employers’ National Insurance contributions, and raising the minimum wage. This seems to be a move against employers trying to solve problems with cheap labour. And the budget was sold with a patently dishonest narrative, that the government had discovered a black hole in the country’s finances. The black hole is real enough: but Labour had known its basic contours long before the election: these had been set out by pretty much every intelligent commentator, including, for example, the Institute for Fiscal Studies. Labour simply chose not to call it out. 

My reaction to the budget seems to be widely shared – it helped sustain a negative zeitgeist around the economy, which is discouraging investment. Lacklustre GDP statistics (which in reality are pretty meaningless as a performance indicator) supported the negative mood. Ms Reeves has then decided that she needed to lift the mood a bit, with a string of public appearances pushing the idea that the government will not compromise in its search for growth. The good news is that this extra exposure at last seems to be breaking down her woodenness and she has been more inclined to answer questions rather than just spout pre-prepared sound-bites. The bad news is that what she is communicating is pretty disappointing. 

Clearly Ms Reeves is anxious to get across the message that the government is really, really keen to encourage investment by reducing red tape. This is a popular theme right now, with the Trump administration trumpeting the message in America, and The Economist has a long article on the subject this week. I have a lot of sympathy. Most regulation is badly designed and implementation is usually even worse. Bureaucrats (in both private and public sector) lay on cautious over-interpretation, and then spend their time chasing innocent minor infractions and slowing down worthwhile projects, rather than tackling the harms that the regulations were designed to prevent. Sometimes this is a necessary evil, but surely we should aspire to do much better. Alas, all this is popular thing for government ministers to say, but there is a huge creditability gap, as they rarely deliver anything worthwhile. And that is especially true of Labour politicians. Their core supporters adore regulations (they are often the ones tasked with managing them) and any worthwhile deregulation hits stiff political resistance. Ms Reeves clearly knows this and realises that she needs to make an unpopular gesture to show that she means business. So she chose airport expansion, and expansion of London’s Heathrow airport in particular.

This has a great deal of symbolic value. Heathrow expansion has been a political football for as long as I can remember. Its advocates have always justified it in terms of “growth”, and there is a fierce NIMBY opposition. These can be presented as London elitists – but there are no obvious beneficiaries to the project outside the country’s richest region. Driving this through would be a signal achievement, showing that the government really does mean business.

There is a plausible economic case to be made for expanding Heathrow – The Economist makes an attempt this week, based on its value as a hub airport for Europe. Ms Reeves failed to make it on her media round. This included an extended interview with Justin Webb for the Today Podcast. In it she insisted that the potential impact on carbon emissions has been neutralised since it was last reviewed by the use of biofuels. Well there are ambitious targets for the greening of aviation fuel globally – but these lack credibility and look more like a smokescreen for the aviation industry. There is no way that Britain’s pressurised agricultural sector could produce these fuels itself. The Economist doesn’t even try to suggest this (though another article suggests that Brazil might turns itself to this fuel, if it can find sufficient investment); it just says that the use of electric ground vehicles (a lot of the pollution comes from the ground, apparently) and the diversion of flights from other other ports mean that the impact on carbon emissions is reduced. I don’t understand why Ms Reeves chose to make her central argument on such tricky ground.

I am personally unconvinced by the economic case for Heathrow expansion, even though it is no longer in my backyard (though Gatwick is, but that’s another story). I have a more quotidian worry. The new runway would cross London’s orbital M25 motorway, which would have to go through a tunnel underneath. The western M25 is a critical road artery (pretty much unavoidable if you want to travel to western parts of the country from here in East Sussex); it has already been badly disrupted by the rebuilding of its A3 junction. That work will barely be finished before it would again be disrupted by the construction of the tunnel. That will have its own impacts on economic activity. That’s small beer – but the prospect of re-launching the expansion programme for the managers of Heathrow remains a very daunting one – and notwithstanding government support for the next 4 years – they may not be willing to risk another failed project.

What is striking about Ms Reeve’s dash for growth, though, is how retro it looks – and not just Heathrow. The infrastructure projects are concentrated in the already prosperous South East (including two more airport expansions) and the government promises to play fast and loose with environmental objections. Gone is the idea of “Levelling up” or a “Northern Powerhouse”, to try and secure growth by helping less prosperous regions catch up. These ideas were admittedly Tory – but they helped keep the so-called Red Wall of seats in the North, Midlands and Wales in play. Labour won these seats back in their landslide, and it is striking that the government is leaving them out of its flagship programme, given that these same seats are subject to a surge of support for Reform UK. But it represents economic orthodoxy (the prevailing culture in the Treasury after all) – and thus the government’s seriousness about the whole thing.

That’s striking because the government is still pushing back against two other bits of orthodoxy. It won’t seriously engage with the EU about substantive trade integration for fear of reopening the Brexit wounds (this time in deference to that Red Wall). And it continues with its ambitious strengthening of workers’s rights; orthodox economics would suggest that this will discourage investment. Businesses are now hoping that they can pressure the government into watering these down. They may well make headway.

All this is rather depressing. Some of the ideas are perfectly sound, and it would be really encouraging if the government could push them through – the Oxford-Cambridge corridor (including rebuilding a railway line stupidly closed by Beeching in the 1960s, in accordance with the then economic orthodoxy), and a further lower Thames crossing. But a retreat into old-fashioned orthodoxy feels like the government is trying to revive a lost past, rather than providing a vision of a hopeful future.

Perhaps that’s unfair. The government is desperate to try and create a more hopeful zeitgeist. Attempts to try and paint a more hopeful and optimistic vision, around green energy for example, have fallen flat in its absence. One of the government’s ideas for regional development involves reorganising local government. also the government sets great store by the gutting of planning laws (and the local government reorganisation into bigger units may also have the aim helping drive through planning applications). These will take time to yield results. Ms Reeve’s budget will increase public spending over the next year, and this should rev things up a bit. Once the mood shifts to something better, it may be time to be a bit bolder.

Perhaps so, but my abiding impression is of a Chancellor who lacks a bold vision of a new, modern economy, and is unduly reliant on the conventional wisdom of her Treasury civil servants. I hope I am wrong.

First published on Substack