As David Miliband presents in his New York Times article reviewed below, we have entered the Age of Impunity – an era where autocrats exercise power without accountability. Whether it be through war, human rights abuse, unaccountable governance, economic exploitation, or environmental degradation, we are seeing the abuse of power across the globe. The global balance of power is shifting due to a series of crises driven by such impunity. To fight the cultures and systems of impunity formed by immoral actors, an even stronger counterculture of accountability must be established. This week, we dive into this Age of Impunity, and the primary actors that have led us to this point: Russia and China. In addition, we take a look at why bonds may be investors’ current safe haven.

The Age of Impunity

Our Age of Impunity

David Miliband, The New York Times

“Atlas of Impunity” documents rise of unaccountable pow in new and comprehensive global index

David Miliband, Eurasia Group

David Miliband, the former foreign secretary of the UK, and The Chicago Council on Global Affairs, with analytical support from Eurasia Group, have published the “Atlas of Impunity,” a new global index that scores 197 countries and territories across five areas of ‘impunity’: abuse of human rights, unaccountable governance, conflict and violence, economic exploitation, and environmental degradation. This year, Afghanistan, Syria, and Yemen top the list for abuse, while Denmark, Sweden, and Finland are at the opposite end. The architects of the index define impunity as the exercise of power without checks and balances, practically the abuse of power. They call to attention the alarming increase in actions taken with no accountability – from Russia’s illegal invasion of Ukraine to oil companies insidiously downplaying the harm of climate change. Impunity – the concept that laws and norms are for suckers – is a sinister evil that thrives unseen. The authors hope the Atlas will reveal impunity and spark a debate on how best to meet it with accountability. Miliband remarks, “As Ukrainians fight to defeat impunity on the battlefield, there is a wider job for the rest of us.”

Stubborn Inflation is Pointing Investors to Bonds

Investors Are Bracing for Surge in Market Volatility

Eric Wallerstein, The Wall Street Journal

Welcome to the 5% World, Where Yield Chases You

Jason Zweig, The Wall Street Journal

The Cboe Volatility Index (VIX), a benchmark for investors’ concerns about market volatility, rose to its highest level since the beginning of 2023. Investors’ fears are being driven by hotter-than-expected inflation, which would mean the Federal Reserve would continue its contractionary policy of raising interest rates. Factors such as the strength of the US economy, the resilience of the European economy, and the reopening of China have reignited worry about inflation. Some analysts even wonder if the Fed will have to deliberately induce a recession to combat rising prices. This sharp downturn in mood comes right after an over-exuberant beginning to February, where indexes recorded bullishness reaching their highest level since 2021.

Rising bond yields threaten stocks, helping cashlike products appear more attractive to investors. In fact, some analysts believe government and high-quality bonds are the place to be. During the long years of near-zero interest rates, junk bonds have been propagated by a market desperate for anything yielding higher than 1%. Those are no longer a necessary hedge – if one is worried about increased market turmoil, one simply needs to look toward high-quality bonds.

The Year That Redrew the Energy Map

Clara Ferreira Marques & David Fickling, Bloomberg

Read the full article here

Russia’s invasion of Ukraine and its subsequent impact on the global energy market is hastening the market’s transformation in a way not seen since the 1973 oil shock. Therein lies the risk to the prosperity of the Russian state. Russian weaponization of its hydrocarbons in response to European sanctions has triggered the European Union to drastically increase support for its green energy transition, with renewable output increasing by 9% a year. The Inflation Reduction Act in the US and the EU’s RepowerEU will further catalyze such shifts. For Russia, the impact of sanctions and the loss of the European market has reduced oil and gas revenue by as much as 46% from last year and the impact is being felt, as Russia’s January budget deficit is close to half of the amount projected for the year. Nonetheless, Russia has proven more resilient than initially expected, in large measure due to its reorientation towards hydrocarbon-hungry emerging economies in India and China, who have been happy to gobble up cheap Russian fuel. The developing world, which has generally not signed on to Western sanctions, represents 2/3 of greenhouse emissions, affording Russia a continued market for the foreseeable future. Still, the pitfalls for the country are real and time will tell whether Russia’s emerging markets bet will pay off in the long run.

Geopolitical Shifts Amidst the War in Ukraine

War in Ukraine Has Changed Europe Forever

Roger Cohen, The New York Times

Ukraine Is the West’s War Now

Yaroslav Trofimov, The Wall Street Journal



China Sticks Close to Russia as It Makes Cautious Diplomatic Push

Austin Ramzy, The Wall Street Journal

Russia’s invasion of Ukraine has resulted in the reshaping of the geopolitical landscape for the West in general, Europe in particular, and China as well. To start, the war in Ukraine has become the West’s war. While no uniformed NATO, American, or European soldiers are fighting and dying on the battlefield, the Western allies have sent as much as $120 billion in military aid to the Ukrainians, in addition to financial aid. A failure to achieve strategic defeat for Russia would therefore be construed as a strategic defeat for NATO and the West, which has invested more and more advanced weapon systems into Ukraine, such as Patriot Missile Systems and Leopard 2 tanks. The disbursal of aid in this way displays a shifting attitude amongst European states regarding militarization. Where countries like Germany and Finland had sought to maintain positive relations with Russia up to the war, both countries now seek to increase deterrence against it, with the Germans moving to increase military spending and the Finnish voting to enter into NATO. As the landscape in Europe changes, the EU will have to grapple with: how to reinforce its militaries; how to navigate tensions between frontline states intent on Russian defeat and others like France and Germany that prefer compromise; and how to manage American elections next year that will feed anxieties over whether Washington will stay the course.

Meanwhile, Russia’s and China’s strategic cooperation continues to deepen as the war drags on. To date, China has offered no criticism of Russia’s invasion of Ukraine, with its recently released position paper on the Ukrainian conflict calling for peace and reflecting Russian priorities, such as not strengthening military blocs or imposing unilateral sanctions. As China continues to support Russia in the face of Western sanctions through oil and gas importation and chip sales, the possibility to ratchet up support through military aid shipments remains distinct, with the US accusing China of considering military aid sales to Russia. China has denied the claim and has accused the US of stoking violence via its own weapons sales. The possibility of a Cold War-style proxy conflict between the US-led West and the Chinese, then, lends itself towards a sharpening security environment with the very blocs China seeks to avert becoming more likely by the day.