Subscriber Commentary & Review Thread (#15)
Enlightened Sheikhs; CBDCs DGAF; Fascists cross the Channel!; CIA Col. makes pact with anti-communist jungle shaman, and other tales
Apologies are in order for not doing one of these subscriber threads in some time. I’ve been working on a long essay that I had intended to quickly wrap up before returning to the regular monthly schedule on these. But writing that has proven much more complicated and challenging than anticipated, gobbling up months more time than expected. (It will be worth it though, I promise!) So I decided it was time to take a break from it, peruse the internet, and write up one of these babies to offer you all some suggested reading and commentary on recent happenings and such. For sanity’s sake I’m going to have to aim to arbitrarily limit this to just items from approximately the last month or so, however.
A few announcements and notes to start though:
First, FYI Matt Crawford and I agreed to open up the popular discussion we had from behind the paywall, so free subscribers can now read that if you missed it:
Second, in case you missed the email about it, I also did an interview last month that appeared on the
Substack. I’ve since realized that, because I cross-posted that, the post doesn’t appear anywhere in my archives. But here it is again if interested:
Finally, an entrepreneurial friend has started a media company offering a daily email news briefing on global politics intended to compete with the likes of Axios (ugh), and it has begun to take off at https://www.upward.news/. Politically it’s right-leaning in coverage, but diligently objective with facts. I find it well-written, interesting, and helpful as a round-up, so I thought I’d give them a quick recommendation here. This is not a paid endorsement (advertisers, please stop trying to get me to do these); I just like it and the people running it.
Ok, on to the results of doing my own internet research…
1. Is the Persian Gulf the Future for Liberalism?
Featuring: Rory Jones and Stephen Kalin, “Persian Gulf States Boom With Billionaires, Beyoncé and Bling” (WSJ); Armin Rosen, “Birth of a Nation” (Tablet); Michael Anton, "The Road to Dubai” (CRB)
I’ve recently read several good pieces on the Gulf States that have, collectively, proven very thought-provoking. The Gulf States – or more specifically the UAE and Saudi Arabia – are undergoing exceptionally rapid change. The outcome could rebalance the world’s geopolitics. But, even more significantly, I think this could also potentially reshape the future of global liberalism and shift the world’s dominant norms of ideology and governance. I’ll try to explain.
First, as the WSJ notes, the Gulf States are experiencing a major economic boom:
Saudi Arabia, the region’s biggest economy, recorded the fastest GDP growth in the world last year among major economies, according to the International Monetary Fund, and 2023 is expected to be another lucrative year for the world’s biggest oil exporter. The U.A.E. was just behind it at 7.6% and Qatar grew at 4.8%, its fastest rate in nearly a decade.
While high oil prices help, this is fundamentally because the Gulf States are now becoming a genuine magnet for the global elite and their capital:
Once considered a desert hardship posting that drew talent mainly from the surrounding region, the oil-rich Gulf is becoming a magnet for global wealth, attracting European bankers, American hedge-fund managers and Israeli tech founders to countries with zero income taxes and a swelling food, sports and arts scene.
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“Tech people, all of them moved to Dubai. Crypto, moved to Dubai. Fashion, moved to Dubai,” said Adel Mardini, the chief executive of Jetex, a global private-aviation company based in the city. “Celebrity, Instagrammable, all of them.”
The U.A.E. had the world’s biggest jump in high-net-worth individuals last year—those with more than $1 million—up 4,000 to more than 92,600, according to Henley & Partners, an advisory firm on using investments to secure citizenship.
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With money, talent and arts funds flowing to and from the Arabian Peninsula, Saudi Crown Prince Mohammed bin Salman and U.A.E. President Sheikh Mohamed bin Zayed Al Nahyan are turning the Gulf into an independent power center.
This trend has been boosted by many rich Russians fleeing there. But it’s by no means just them. Saudi Arabia is now the third-most-popular destination in the world for international migrants overall. Notably, the attraction of the place is based on a deliberate campaign of liberalization, both economic and social:
The U.A.E. and Saudi Arabia are looking for ways to keep the boom going even after oil prices come down. They are liberalizing their economies with looser immigration policies and laws less beholden to Islamic strictures, attracting more tourists and foreign workers from around the world—although significant restrictions remain.
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The boom has created some momentum for social liberalization. The U.A.E., where 90% of the population is foreign, has cut taxes on alcohol, permitted unmarried couples to live together and issued new visas encouraging people to stay for longer. The country has decriminalized carrying products with marijuana into the country and indicated its next moves would be allowing casinos. Saudi Arabia is expected to soon break a ban on alcohol.
Liberalism does tend to be a highly profitable process. In an essay for Tablet, Armin Rosen has done an excellent deep dive into how this “harsh enlightenment” of top-down liberalization is transforming Saudi Arabia (part of a whole collection of pieces on the country, all of which are worth reading; Katherine Dee’s is especially interesting).[1]
Since 2016, the palace, under the leadership of 37-year-old Crown Prince Mohammed bin Salman, widely referred to as MBS, has embarked on a bold program of social and economic reform. As Syria and Libya burned, ISIS consolidated control of northern Iraq, and the Egyptian military crushed the country’s brief spell of elected Muslim Brotherhood rule, Saudi women saw the rapid disappearance of such mainstays of national policy as the driving ban, compulsory hijab, male guardianship laws, and employment prohibitions. A nationwide ban on cinemas was lifted in 2018. The once-ubiquitous religious police still technically exist, but they are almost never seen in public anymore and have lost all of their formal powers.
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MBS’s reforms, whose effects are plainly visible in every area of Saudi life, amount to a wholesale rewriting of the kingdom’s social contract. The days of the palace using endless supplies of oil money and religious conservatism to drug Saudis into a mutually reinforcing culture of indolence and obedience are over. In its place, the population is now meant to derive its sense of direction and meaning from a rebooted idea of Saudiness, while its wealth will now come from exciting new economic sectors.
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Riyadh is the epicenter of the reform era’s goal of reorienting the Saudi economy around technology, services, and internal consumption. As a result, the young people moving back from Dubai or newly returned from Harvard actually have places to go and things to do now—hookah lounges, which offended the sensibilities of the religious conservatives who ran Riyadh for decades, were finally legalized in 2019. There is remarkably good arrabbiata and risotto on offer for $30 a plate, along with English speakers in their mid 20s to eat it with.
The theocracy has disappered. This is all a huge change for a people who were, until now, considered among the most religious and socially conservative on earth. Where it will all end up is uncertain. As Rosen writes:
MBS is gambling that the fruits of openness and modernity can be reaped on Saudi terms, and that prosperity, stability, and a recharged, secularized sense of national purpose won’t shatter existing norms or generate dangerous civic appetites. The reforms have created a rising class of ambitious executives, entrepreneurs, and artists, and for now almost everyone seems to accept the idea of a national horizon defined by the wisdom and vision of a single family, and perhaps even a single man. His program has created an atmosphere muggy with floating potential, as the palace carries out an uncertain experiment on tens of millions of people. MBS’s subjects could be the engine and the beneficiaries of the only successful 21st-century governance project in any populous Middle Eastern state—or they could mark the disastrous limits of utopia declared from on high.
But:
The population has thus far accepted MBS’s changes with astounding equanimity—a possible result of having been trained for decades in obedience. There have been no tax riots or bread riots. There was no visible rearguard action by the old order, or at least none that inflamed or incited any divisions within society at large. Saudis went to work as shopkeepers and Uber drivers with little apparent complaint—not that public complaining is socially tolerated or even all that legal in Saudi Arabia—with some treating participation in the new economy as a kind of patriotic duty.
Here we come to an important point: these countries are rapidly liberalizing but are not, and show no signs of becoming, democracies. They are very stable authoritarian regimes that don’t accept challenges to their political decisions and structures, and which are (much like China has done) very rapidly adapting digital technologies into their systems of control:
“We have a very reasonable government here,” Alshethre [a defense industry executive] explained. The ultimate proof of the government’s “reasonableness,” in Alshethre’s telling, was that it had sensed an incipient popular urge for a different kind of life: The reforms are working, he said, because “people are willing to change.” As evidence, he showed me a government smartphone app called Tawakalna, which aggregates every imaginable official document and service. Tawakalna lists your passport information, traffic violations, and vehicular paperwork; the ownership of a car can be transferred through the app, as can power of attorney and commercial registrations. It has copies of your birth certificate and your real estate deeds, your health information, your international travel record, and a digital kiblah for locating the direction of Mecca during prayer. This is a level of government power over the individual that few democratic citizens would tolerate, merged with a logic and seamlessness that few democratic governments seem capable of delivering these days. But the most important thing about Tawakalna is that it proved Saudis could rapidly accept a digitally based and state-controlled civic existence. “The government could launch an app and assure that 80% of the population would use it,” Alshethre claimed.
Note here something very important: the outlines of a social contract that pairs liberal economic and social life together with safety, security, and order, in exchange for strict centralized government control. This may also sound quite like the Chinese model – or the vision of our lovely US and European elites for that matter (more on that in a second). But there are also important differences from both systems. Which brings us to what I think are the most fascinating passages from Rosen’s essay (emphasis mine):
Citizens in a democracy, including the elected leadership, must resign themselves to the wondrous and horrible reality that public space is basically unmanageable, and that the state probably can’t forcibly eliminate things one might think are unspeakably evil, like gun ownership or abortion or the fentanyl trade. The Saudi government takes the opposite approach: The state exerts a tight grip over the public realm while respecting its subjects’ traditional sovereignty over the home. Private spaces are still considered sacrosanct—the police don’t go hunting for alcohol or sexual deviancy beyond locked doors, and unless you’re a jihadist, there is no Mukhabarat that seeks to penetrate the inner spaces of your true self. “There are consequences for expression here,” as one Riyadh intellectual put it, “but not for thought. You can think whatever you want.”
The system’s essential clarity explains why the Saudi leadership is so convinced that the population will continue to trust in its guidance and vision even as society becomes freer and more exposed to the outside world. There is mass deception at work in most autocracies, which retain the ceremonies of democratic procedure and other performances of civic openness in order to hide which section of the regime or the security services actually holds power—or to create the constant sense of terror that comes with living in a place where the rules are strategically obscured. There are no comparable lies at play in Saudi Arabia, according to Alyahya. “Mohammed bin Salman doesn’t pretend to be a Jeffersonian democrat, and nobody pretends to have voted for him,” he explained.
Challenge the king and your head will literally role, but otherwise there are far fewer of the mandatory lies of “political correctness” here. In other words the emerging Gulf State model is a liberal system that is authoritarian but not totalitarian (that is, the state is not interested in intruding into and micromanaging absolutely every aspect of private life or trying to manipulate thought and collective reality by enforcing wholesale vocal conformity to an ideology or other shifting edifice of lies). You can’t oppose the government, but otherwise you can pretty much do what you want. Arguably, as Rosen has tried to explain here, the model’s unapologetic hierarchy may actually be what protects it from edging into totalitarianism.
Speaking of which, young Saudi’s drop some interesting comments on their experience in America:
“There’s so much more drama in American social circles than in Saudi social circles,” one lunch companion, a recent Ivy graduate now working in the newly sprouted forest of sky-high squiggles and cantilevers that forms Riyadh’s King Fahad Financial District, recalled of his time back in America. Dressed in the usual white robe, he blamed it all on American dating culture. We were joined by a woman in discrete Western-style dress and no hijab, who was also back from a fancy education stateside and working for an investment bank in Riyadh. “In America,” she said, “you have to watch what you say... we have to give them tolerance, but there was no tolerance back to us.” Everyone in America, she said, “is super sensitive.” The young man agreed: Educated Americans were in fact so sensitive that they didn’t have the ability to debate anything except by indirection. “In American society you can never say something is bad: You say that it’s bad for children. In Saudi you’d appeal to religion, not to children’s welfare.” In another city we might have been drinking a white wine made for dry and sunny afternoons. At this restaurant our best option was a mysteriously ash-clouded lemonade infused with charcoal. I pointed out that New York City banned activated charcoal as an ingredient in foods and beverages in 2018.
This then is why I find all this so thought-provoking: should it take root and continue to prosper, the Gulf States’ authoritarian take on globalist liberalism (the kind that attracts hedge fund managers, Instagram influencers, and WEF Young Leaders with an appreciation for good arrabbiata) will present a model that is actually rather different from what’s currently on offer from either the West or China. First of all, a bit like communist China, America and Europe are – let’s be honest – increasingly totalitarian societies, in which it is no longer enough even to refrain from speaking out against Big Sister; no, you must love and affirm Big Sister, and all her values and beliefs, and all her progressive works, and you must say so constantly and at high volume or be instantly suspected as a dangerous, hateful, reactionary threat not only to the regime but to all humanity.
But, unlike China, many Western “liberal-democratic” societies are despite this totalizing obsession also increasingly dysfunctional, dangerous, and awash with anarchic madness. No one is satisfied with this state of affairs. The globalist liberal presses for ever more centralized and supranational government power and tighter control over wrong-thinkers – erm, I mean “disinformation” – in order to crush the nationalist-populist opposition – erm, “threats to democracy” – whom they think are to blame for destabilizing the profitable liberal-progressive project. The conservative nationalist, having had quite enough of the top-down ideological crusades and the lawless chaos that has proliferated in their wake, is in revolt against globalist liberalism and dreams of a Hungarian-style “illiberal democracy” that could return power to the people of sovereign nation-states and allow for a restoration of public order and moral stability.
Now let’s say along comes a Sheikh who offers them both a compromise: all the material perks/degeneracy of global techno-liberal-capitalism, but the worst of it is kept pretty quiet, you don’t have to wave the Progress Pride Flag, and the streets aren’t covered in feces and crazy people. You just have to ditch the democracy and yield the government vast powers of digital surveillance and control – but it will be competent and subtle with its power and generally leave you alone if you don’t cross it. Instead of illiberal democracy or run-away liberal-progressive nightmare you can have a relatively stable liberal authoritarianism. How many on right and left alike would take this deal? At this point, I suspect a lot of people.
In fact, if I were a conspiracy theorist, I might suspect that this was precisely the point of all the chaos of our times: destabilized societies are liable to come to clamor for orderly rule by a firm hand. But if this were the gambit of Western elites, it might prove impossible to cash in on at home. Rather, as Michael Anton writes in his own worthwhile exploration into the UAE, already the “uncomfortable truth is that the United States and most of the West are in certain ways becoming more, not less, like the United Arab Emirates: more ‘diverse,’ more authoritarian, more reliant on surveillance and censorship.” But, “we’re doing so without the latter’s real advantages: competent government, fair treatment, order and predictability, rising living standards, freedom to work and (mostly) live as one chooses.”
This is because the causes of Western liberalism’s civilizational breakdown run much deeper than bad policy and incompetent or even malevolent elites. Rather, as many, including myself, have by now concluded, over a couple of centuries Western liberalism essentially cannibalized the prior substructure of Christian values, moral assumptions, and social norms that it inherited and unknowingly relied on to function; now that those foundations have been sufficiently destroyed, it has no solid ground to stand on and is collapsing into the weird transitional stew of dysfunctional post-modern totalitarianism we now enjoy.
In contrast, could a Muslim society with strong traditionalist roots only recently exposed to the all-consuming fire of liberal-modernity be better positioned than former-Christendom to Make Liberalism Work Again? Frankly, I don’t know. Maybe liberalism could only ever really run on an operating system of specifically Christian foundations. But if it can function on an alternative moral foundation then presumably there would be a lot more religious tradition, family structure, and unconscious community standards for the termite of liberalism to chew up, digest, and spit out before the society’s load-bearing structures are someday inevitably hollowed out enough to collapse. It will probably be at least a few decades before Saudi’s are transing their kids, anyway.
In that case, might the Gulf and its still youthful population – 40% of Saudi Arabians are under the age of 25 – then become, against all expectations, the new functional 21st century stronghold of globalist liberalism as the West continues to degenerate and the escalating US-China cold war inhibits direct exchange between China and a large bloc of the developed world? And might the future then end up not being post-liberal as some expect, merely post-democratic? I have no answers. But, as I said, this has all provided much to think about!
2. Update: CBDCs DGAF
Featuring: our friends the world’s central banks
Speaking of digital authoritarianism, it’s now been more than a year since I wrote “Just Say No to CBDCs.” So have central banks listened carefully to public concerns about central bank digital currencies (CBDCs), and their unprecedented potential to enable totalitarian state surveillance and control over every aspect of everyday life, and backed off? Surprise!: no. Turns out CBDCs aren’t going to take “no” for an answer. Via UnHerd:
A central bank digital currency (CBDC) in the UK is “likely to be needed,” the Bank of England’s Deputy Governor for financial stability has claimed. During a Treasury select committee hearing this week, Sir Jon Cunliffe was asked to rank the likelihood of a digital pound coming to the UK on a scale of one to 10. The Deputy Governor answered that it was “more than five” before later saying that his “private” view was 7 “and maybe higher”.
“The difficulty is if we just wait until it’s 9 out of 10, then we are five years away at least,” he said. “This would be a very serious thing that would be resilient, fraud-proof and secure. If we just wait until we say ‘okay, now we think it’s needed’, we will be five years behind.” Cunliffe added that the Bank of England currently does not have the technical skills to create a CBDC, but he “hoped” to develop them in the next phase.
When probed about why the UK needed a digital pound, the Deputy Governor asserted that it was the wrong question to ask: “If you do a static thing like ‘what is it that I can’t do now that I know I want to do – what hole in the current landscape would it fill?’ I don’t think you get to an answer for having a CBDC now,” he replied. Instead, the CBDC offered a “new frontier” in payments that would be comparable to when the iPhone first launched.
Got that? They don’t have to explain a need for a CBDC you peasants! Wow you all are so weird and uppity. Why can’t you just take the new iPhone and stfu? Oh by the way:
Britons would be limited to 20,000 digital pounds ($24,000) each if the country goes ahead with a digital currency, Bank of England Deputy Governor Jon Cunliffe said on Tuesday.
Britain's government said on Monday that it and the BoE were pressing on with work on a possible digital pound that was likely to enter circulation in the second half of this decade and be held in a "wallet" provided by banks, although no final decision has been made.
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A limit of 10,000 pounds would mean that three quarters of people could receive their pay in digital pounds as well as holding pre-existing balances in the same account, while a 20,000 pound limit would allow almost everyone to use digital pounds for day-to-day transactions, Cunliffe said.
This would provide everyone a nice “little wallet full of internet cash to buy things on Amazon,” adds Cunliffe. Like that iPhone! You’ll always have Amazon guys, geez, don’t worry.
Central banks across the world are studying digital currencies, with the European Union due to publish a draft law in May setting out a legal framework for a potential digital euro.
Well, it’s the end of May and I haven’t seen that draft law come out yet, but I’m sure the EU will at least listen to the European Parliament and say “no, you know what, we don’t need this CBDC, let’s not do it,” and that will be that.
Meanwhile, though, the US Federal Reserve will “launch its long-awaited instant payment service FedNow in July”:
The instant payment network will settle payments in seconds, with the capability to support consumer-to-consumer, consumer-to-merchant, merchant-to-merchant, and bank-to-bank transactions.
"The launch reflects an important milestone in the journey to help financial institutions serve customer needs for instant payments to better support nearly every aspect of our economy."
According to the Fed, a mix of banks of all sizes, including the largest processors and the U.S. Treasury, are on board. The central bank is continuing to speak with financial institutions and service providers to test the program ahead of its implementation.
"With the launch drawing near, we urge financial institutions and their industry partners to move full steam ahead with preparations to join the FedNow Service," said Ken Montgomery, first vice president of the Federal Reserve Bank of Boston and FedNow program executive.
Full steam ahead! It turns out the Fed is actually really into engine and train metaphors by the way…
Technically FedNow is not a CBDC, just a technical measure for the Fed to steam ahead with taking over and centralizing the digital payments marketplace in the interim. So don’t be concerned:
Fed Governor Michelle Bowman said last year that FedNow, which will enable consumers and businesses to send payments instantly, could offer some of the same benefits as a central bank digital currency.
And in case you were worried about them missing out, the International NGO Borg has no intention of being left off the CBDC train: a Universal Monetary Unit (UMU), a digital currency created by the Digital Currency Monetary Authority (DCMA), whatever that is, was also launched at the International Monetary Fund (IMF)’s spring meeting in April:
Bryan Swann, the Former Deputy Chief Data Officer for the U.S. Treasury, has been serving as an informal advisor to the DCMA, conducted a deeper dive in how Unicoin works and advises "The Universal Monetary Unit architecture is a componentized framework that allows every central bank to configure its own AML, KYC, sanctions, and other compliance rules. The protocol enforces the appropriate origination and destination rules at the time of payment. This is a game changer in how cross-border payments can be more streamlined and cost-efficient."
Nice, nothing says “the public interest” like “sanctions and other compliance rules.”
Choo choo!