Euro Watch: A year into the war in Ukraine, is Russia planning for maximum escalation?

Money FM 89.3 Best of drive time. Money FM 89.3 it is drive Time with Elliot Danker, Timothy Goh and Chua Tian Tian. Time now to turn our attention to headlines coming out of the Euro region. Tim, in your travels, have you ever found yourself caught in the middle of some kind of a strike?

Always, always, always. In the country famous for strikes, of course, France.

Ah, okay.

Every single time I, I am affected by a taxi strike, an airport strike, things like that. Always 100%.

That happened to me when I was in Madrid and another time when I was in Italy. In fact, last year when I was in Italy, train strike, I got stuck in Como Island. Good gosh. But it's happening in the uk, the biggest strike to happen in a decade. Half a million workers walking out of jobs as the cost of living crisis continues.

Yeah, it is tough for all sides, for workers, for government, for everyone asking for more pay and all that. But we will get into that a little later on. And of course it is coming close to the first anniversary of the Russian conflict with Ukraine Special operations, whatever they're calling it. And amid this almost one year old war, Russia is now hinting that there could be a Russian offensive with warnings that it could begin as soon as the 24th of February.

All right, let's get into that with our guests this afternoon. David de Kremer, who is provost chair at the National University of Singapore Business School. Good afternoon, David, how are you?

Good afternoon, Elliot. It, I'm doing well, which we were.

Talking on better circumstances, but like Tim mentioned, a year of this Russia Ukraine conflict and he mentioned Russia might be planning a 24-2-22 offensive. Is this expected to be more intense as it's being speculated?

Well, it's about to have several reasons. One, the first anniversary of the initial invasion last year. And also there is another one, again symbolic, on 23rd February, the Russians have fathered Land Day and that celebrates the army. So these are symbolic reasons to already say, okay, we're going to be attacking, it's going to be intense. And why it's going to be intense is of course it's winter there right now in Singapore. We can hardly imagine the snow and the ice, but it's winter there now. And if the Russians are going to wait until winter is over, all the tanks that have been promised by Europe, the US will be there and this will be to the disadvantage of the Russian army as well. So yes, I do expect that the strike will be intense. Yes, that it will escalate actually for Symbolic reasons and practical ones.

David, it has been a humiliating time for the Russian president, of course, since this war started. Everybody thought he was going to prevail, but it hasn't happened so far. What's in his arsenal this time around that perhaps will give him the upper hand?

Well, obviously Putin, I don't think he looks at it like this that he's been humiliated. Obviously he has from the point of view of the rest of the world. So he definitely will try to make a point. Point. You may have heard as well that they are recruiting again, close to half a million so called volunteers. You also have the Wagner army who basically release criminals and in exchange they have to fight for six months. Most of them don't survive because they're just thrown in battle unprepared. So yes, I do think they're preparing on a big scale. There's also communication coming in that the Russians, they're one of the biggest delivery factories in the world, to say so of tanks, ammunition, that they're in overdrive right now. So I don't think he can afford any more losses because he has been losing. That doesn't mean he has lost the war.

But it feels like it's a bit of a stalemate. And when you consider that Ukraine's Prime Minister Volodymyr Zelensky saying that Ukraine European Union summit is set to take place in Kyiv, I believe tomorrow or sometime later tomorrow, what then would be on the agenda here? How do you move forward when there's a stalemate?

Well, I think there's several points on the agenda. The most important one that everyone is looking at is of course that Ukraine is pushing as well to become as quickly as possible a member of the eu because as you know, last year they gained EU candidacy at record speeds. I mean, this has never happened before. But it's going to take still years before they can become a member because EU regulations, laws are very strict in this. And as we've seen with Brexit, when they were negotiating with uk, the EU sticks to their rules. They're very rational in that point of view. So this is not going to change that quickly because the rules are they have to root out corruption, they have to make sure they don't have debts, that they have a sustainable economy. And Ukraine still has to work and putting considerable efforts to achieve that. So that's going to take years. So I think the summit is also a way of showing solidarity with Ukraine and that is probably for the eu, the main point.

So what are going to be the expected Outcomes, then the clock is ticking. But for which side?

Who will prevail for the summit? A lot of shaking hands and promises. And so far the west has been doing this in terms of delivery of the weapon arsenal. But it's not going to stop the war, nor is it going to stop the Russians, of course, and again, depending on what will come out of this summit, what will come out is the solidarity. The west will fight together with Ukraine. And of course, Putin will use this to say, like, you see, I was right, they are our enemy. We have to prevail. And this is something that's the kind of narrative he needs now as well, like I said, to get more and more volunteers because his army has been losing a lot of lives. I mean, it's a cruel war. I mean, it's an unnecessary war in my view. But unfortunately, it happened.

Yeah.

We're on the line this afternoon with David the Cremer, who is Provost Chair at National University of Singapore Business School. David, let's change gears and talk about the UK coming to a bit of a halt after being hit by the biggest day of strikes in a decade, as pay disputes escalate and it's a long time coming, cost of living and all that. Tell us a little bit about the situation and how things are developing as far as the government has gone.

Well, I think everything's blocked right now. That's the only thing I could almost say. And like you said, it is indeed something that in the UK doesn't happen too much in terms of the strikes taking place, because since 1980s, when Prime Minister Margaret Thatcher basically was busting the unions and pushed it through, that it's in the law that basically you can't have these strikes unless you get approval. This is a big thing now because people are fed up. That's basically the message. They're fed up with the fact that life quality has been going down so quickly. I mean, even people with jobs turn to food banks now in order to eat. In the education sector, which is the biggest one that's out on the streets today to say so, I think it's about 23%. I read somewhere in terms of real term pay cuts since 2010, I know in my own circle, many professors, they're concerned because salaries don't go up, I mean, not even in terms of inflation. So it is serious and people are fed up. They come out on the streets. So I'm going to go away very easily, let me put it this way.

But, David, what are the alternatives for the government, though? Because if you continue striking like this and slow down an already slow economy in the uk, it won't be good for anybody.

No, definitely not. I mean, the strike is always a signal that things are not going well. So. Indeed. And as you say, if you slow it down even more, what is going to happen? I mean, I think the ugly truth to say so is that the economy in the UK because of Brexit, don't forget Brexit is costing them 4 to 5% a year in GDP, which is huge.

They wanted that one too.

If you would ask most people now, the majority would not go for it anymore. That's already proven. But in addition, you have the worldwide inflation. Of course, that happens. So the inflation, UK inflation was about 10.5% annually in December. But if you look at, for example, supermarkets, where it's like food becomes so expensive, grocery price inflation was 16.7% in January 2022, which is like immense. Most people. And another thing most people never really knew, but the UK is, I mean, you know, they always talk about you have the elite and then the labor class. UK always had a large size of the labor class that was below the poverty border. And this is only increasing now. So people weren't really aware. But now this is surfaced completely. So I don't see what is going to happen because basically the UK doesn't have the money. Like you said, you can't keep handing out money. It's not like Singapore, who have their, basically their budget in order. It's not the case now. And they've been hit twice. Brexit, inflation, and then the political instability. I think the unions even said it today. The same people have been in place for 12 years. Yeah. Referring to the Conservative Party. So why should we believe what they say now? If anything will improve? Why should we believe these people?

Could you get a situation where, I mean, I know you referenced Singapore and it is true we've got our budgets in order as a country, but there are still a number of Singaporeans that complain that the cost of living is too high. Perhaps I'm better off in another country if I want a quieter life, maybe like, I don't know, Sarawak, for example, or Taiwan. Could you get a case in the UK where people want to exit the country just to survive and have a better life, you know, away from all of this, monetary issues.

Well, I don't have any official numbers, but friends that I have in the uk if they could. Yes. I mean, I think some of them definitely would leave. I do think in academia, for example, you do See, but usually these are non UK people who work in the uk. They're more easily leaving now as well. But what I think is, and this is one thing I very much like about the UK is there's still a sense of pride. Of course there's still, I mean, UK has a strong history. So I do think people are sincerely motivated to improve the conditions in their country. What is actually happening below the surface, the money's not there, but it's such a frustration with the political instability that has been taking place for so many years. But I think that frustration is also very much part of what we see today.

Yeah. Likelihood of the outlook for recession, according to a lot of analysts, being over the next two years. Looks like it's still there for sure.

Yes, yes. Look, they've lost credibility, okay? And what we see is that Prime Minister Rishi Sunak is saying we'll try whatever is possible. But the only thing that have been suggested, has been suggested is we will have further talks with the unions. But then at the same time, the unions are saying they're not looking at Rishi Sunak as a person, they're looking at him as a representative of a party that has been there for 12 years and that has disappointed them time and time after again. And also what is happening even more now, you have people who work in the public sector, you have people who work in the private sector. And if you look at pay increases, they don't run parallel in the public sector. I think pay increase in the last few years has been about average 2.7% in the private sector, 6.9%. So this government also has to deal with unfairness because that's how union workers see it. It's not being fair to all taxpayers. So this has to be solved as well. But this has been an issue that the country has been plagued with for decades, of course, and going to be.

Tough for the government to find money to give in to what the labor unions are asking. Thank you very much for joining us, David. David decramer is Provost Chair at the National University of Singapore Business School, joining us here on Drive Time. To listen to more great interviews, download our podcasts at Money FM893SG or download.

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