Fake Reporting on the Blown-up Pipelines and Russia’s “Annexation

Open Letter to the New York Times

September 30, 2022

Global Research,

By Peter Koenig

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Dear Editor of the once-upon-a-time Famous-for-truth New York Times,

With headlines like this, Sabotaged Pipelines and a Mystery: Who Did It? (Was It Russia?), even suggesting that Russia may have blown up their own pipeline, the NYT is killing its last vestige of credibility.

You know exactly this is a lie.

The only force that has a vital interest in doing so is the US / NATO conglomerate – to make sure, there is no way Germany could change their mind and go back on their decision to let their people freeze to death this winter, and to economically destroy Germany, THE economic force and leader of Europe.

You, and your analysts know that.

Unfortunately, there is no common people’s influence on our reporting. There are stronger forces that have bought into your mind-bending journalism.

Still, once a supporter of the NYT, I feel I want to tell you.

The Same with this reporting

Enormous U.S. Military Spending, EU Dragged into Abyss of War against Russia. Italy Out of the War!

Russian Proxies in Ukraine Push Moscow to Annex Occupied Regions

and

Vladimir Putin will sign agreements on Friday to take over four Ukrainian regions, the Kremlin said, after votes widely denounced as a sham

Here too, these are not “proxy” Russians who signed a sham petition to be annexed to Russia. You know it very well.

These are real Russians, living in the far Eastern part of Ukraine, the Donbas area mostly, who have been discriminated ever since the US instigated the Maidan coup on 22 February 2014 – when a neo-Nazi government was installed that let the Nazi Asov Battalions literally slaughter Ukraine’s own people in Donbas — at least 14,000 were reported killed – about half of them children – in the eight years since the “Victoria Nuland” (“Fuck Europe”) coup. See this.

We are talking about the same Asov Battalions, that helped Hitler during WWII fight against Russia.

Already in 2014 / 2015 the Donbas districts wanted to join Russia. President Putin did not allow it, because at that time he still believed in the “Minsk” Agreements, sponsored by France and Germany.

These agreements were principally meant to protect the Donbas people, as well as to demilitarize – de-Nazify – Ukraine, and to keep NATO out of Ukraine. None of the conditions of the Minsk Agreements (September 2014 and April 2015) were ever adhered to.

If truth-seeking geopolitical analysts around the globe know the real background, you, Editor-in-chief of the NYT, and your journalists, know the real story too. Still, you report lies and half-truths to further influence and promote people’s opinion against Russia.

The New York Times has become weaponized against Russia and China, by your mere reporting.

Don’t you think that this will eventually backfire?

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Peter Koenig is a geopolitical analyst and a former Senior Economist at the World Bank and the World Health Organization (WHO), where he worked for over 30 years around the world. He lectures at universities in the US, Europe and South America. He writes regularly for online journals and is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed; and  co-author of Cynthia McKinney’s book “When China Sneezes: From the Coronavirus Lockdown to the Global Politico-Economic Crisis” (Clarity Press – November 1, 2020)

Peter is a Research Associate of the Centre for Research on Globalization (CRG). He is also is a non-resident Senior Fellow of the Chongyang Institute of Renmin University, Beijing.

Featured image is from FAIR

The original source of this article is Global Research

Copyright © Peter Koenig, Global Research, 2022


Full text of Xi’s speech at SCO Samarkand summit

September 17, 2022

SAMARKAND, Uzbekistan, Sept. 16 (Xinhua) — Chinese President Xi Jinping delivered a speech at the 22nd meeting of the Council of Heads of State of the Shanghai Cooperation Organization (SCO) here on Friday.

The following is the full text of the speech:

Ride on the Trend of the Times and Enhance Solidarity and Cooperation to Embrace a Better Future
Statement by H.E. Xi Jinping
President of the People’s Republic of China
At the 22nd Meeting of the Council of Heads of State of The Shanghai Cooperation Organization
Samarkand, Sept. 16, 2022

(Emphasis added by me, Andrei)

Your Excellency President Shavkat Mirziyoyev,

Colleagues,

I am delighted to attend the meeting of the Council of Heads of State of the Shanghai Cooperation Organization (SCO). I would like to thank you, President Mirziyoyev, for your warm hospitality and thoughtful arrangements. I salute Uzbekistan for the great job it has done to promote SCO cooperation in various fields during its presidency over the past year.

Samarkand, renowned as the pearl on the Silk Road, witnessed the glory of the ancient Silk Road, a route that greatly boosted the flow of goods, spread of science and technology, interaction of ideas, and integration of diverse cultures on the Eurasian continent. Indeed, the ancient Silk Road has remained a historical source of inspiration for us SCO member states as we pursue peace and development.

This year marks the 20th anniversary of the SCO Charter and 15th anniversary of the Treaty on Long-Term Good-Neighborliness, Friendship and Cooperation Between the SCO Member States. Over the years, guided by these two founding documents, we have succeeded in exploring a new path for the development of international organizations, and there is much we can draw on from SCO’s rich practices.

— Political trust. Guided by the vision of forging enduring friendship and peace among the SCO member states, we respect each other’s core interests and choice of development path and support each other in achieving peace, stability, development and rejuvenation.

— Win-win cooperation. We accommodate each other’s interests, stay true to the principle of consultation and cooperation for shared benefits, enhance synergy between our respective development strategies, and keep to the path of win-win cooperation toward common prosperity.

— Equality between nations. We are committed to the principle of equality among all countries regardless of their size, consensus-based decision-making, and addressing issues through friendly consultations. We reject the practice of the strong bullying the weak or the big bullying the small.

— Openness and inclusiveness. We stand for harmonious coexistence and mutual learning between different countries, nations and cultures, dialogue between civilizations and seeking common ground while shelving differences. We are ready to establish partnership and develop win-win cooperation with other countries and international organizations that share our vision.

— Equity and justice. We are committed to the purposes and principles of the UN Charter; we tackle major international and regional issues on the basis of their merits, and oppose the pursuit of one’s own agenda at the expense of other countries’ legitimate rights and interests.

These five points fully embody the Shanghai Spirit, namely, mutual trust, mutual benefit, equality, consultation, respect for diversity of civilizations and pursuit of common development. It has been shown that this spirit is the source of strength for the development of the SCO. It is also the fundamental guide we must continue to follow in the years to come. We owe SCO’s remarkable success to the Shanghai Spirit. And we will continue to follow its guidance as we forge ahead.

Colleagues,

Human society, like the natural world, has both sunny and rainy days in its development. Our world today is undergoing accelerating changes unseen in a century, and it has entered a new phase of uncertainty and transformation. The once-in-a-century pandemic has continued unabated. Regional conflicts keep flaring up. The Cold War mentality and group politics are resurfacing, so are unilateralism and protectionism. Economic globalization has encountered headwinds. Deficit in peace, development, trust, and governance has grown. Human society has reached a crossroads and faces unprecedented challenges.

Under these new conditions, the SCO, as an important constructive force in international and regional affairs, should keep itself well-positioned in the face of changing international dynamics, ride on the trend of the times, strengthen solidarity and cooperation and build a closer SCO community with a shared future.

First, we need to enhance mutual support. We should strengthen high-level exchanges and strategic communication, deepen mutual understanding and political trust, and support each other in our efforts to uphold security and development interests. We should guard against attempts by external forces to instigate “color revolution,” jointly oppose interference in other countries’ internal affairs under any pretext, and hold our future firmly in our own hands.

Second, we need to expand security cooperation. A proverb in Uzbekistan goes to the effect that “With peace, a country enjoys prosperity, just as with rain, the land can flourish.” The Global Security Initiative put forward by China is to address the peace deficit and global security challenges. It calls on all countries to stay true to the vision of common, comprehensive, cooperative and sustainable security and build a balanced, effective and sustainable security architecture. We welcome all stakeholders to get involved in implementing this initiative.

We should continue to carry out joint anti-terrorism exercises, crack down hard on terrorism, separatism and extremism, drug trafficking as well as cyber and transnational organized crimes; and we should effectively meet the challenges in data security, biosecurity, outer space security and other non-traditional security domains. China is ready to train 2,000 law enforcement personnel for SCO member states in the next five years, and establish a China-SCO base for training counter-terrorism personnel, so as to enhance capacity-building for law enforcement of SCO member states.

We should ensure that the SCO-Afghanistan contact group and the mechanism of coordination and cooperation among Afghanistan’s neighbors continue to play their roles; and we should encourage Afghan authorities to establish a broadly-based and inclusive political structure and remove the ground that breeds terrorism.

Third, we need to deepen practical cooperation. To deliver a better life for people of all countries in the region is our shared goal. The Global Development Initiative launched by China aims to focus global attention on development, foster global development partnership, and achieve more robust, greener and more balanced global development. China is ready to work with all other stakeholders to pursue this initiative in our region to support the sustainable development of regional countries.

We need to implement the two statements on safeguarding international energy and food security to be adopted by this summit and better protect energy and food security. China will provide developing countries in need with emergency humanitarian assistance of grain and other supplies worth 1.5 billion RMB yuan.

We welcome the Comprehensive Plan for the Implementation of the SCO Treaty on Long-Term Good-Neighborliness, Friendship and Cooperation for 2023-2027 to be adopted at this summit. We should fully implement the cooperation documents in such areas as trade and investment, infrastructure building, protecting supply chains, scientific and technological innovation and artificial intelligence to be adopted within the framework of the summit. It is important to continue our efforts to achieve the complementarity of the Belt and Road Initiative with national development strategies and regional cooperation initiatives, expand sub-multilateral cooperation and sub-regional cooperation, and create more growth drivers in cooperation.

We need to ensure implementation of the roadmap for SCO member states to expand shares of local currency settlement, better develop the system for cross-border payment and settlement in local currencies, work for the establishment of an SCO development bank, and thus speed up regional economic integration. Next year, China will host an SCO ministers’ meeting on development cooperation and an industrial and supply chains forum, and will set up the China-SCO Big Data Cooperation Center to create new engines of common development. China stands ready to carry out space cooperation with all other parties and provide satellite data service to support them in agricultural development, connectivity and disaster mitigation and relief.

Fourth, we need to enhance people-to-people and cultural exchanges. Exchanges promote integration among civilizations, which, in turn, enables civilizations to advance. We should deepen cooperation in such areas as education, science and technology, culture, health, media, radio and television, ensure the continued success of signature programs such as the youth exchange camp, the women’s forum, the forum on people-to-people friendship and the forum on traditional medicine, and support the SCO Committee on Good-Neighborliness, Friendship and Cooperation and other non-official organizations in playing their due roles. China will build a China-SCO ice and snow sports demonstration zone and host the SCO forums on poverty reduction and sustainable development and on sister cities next year. In the next three years, China will carry out 2,000 free cataract operations for SCO member states and provide 5,000 human resources training opportunities for them.

Fifth, we need to uphold multilateralism. Obsession with forming a small circle can only push the world toward division and confrontation. We should remain firm in safeguarding the UN-centered international system and the international order based on international law, practice the common values of humanity and reject zero-sum game and bloc politics. We should expand SCO’s exchanges with other international and regional organizations such as the UN, so as to jointly uphold true multilateralism, improve global governance, and ensure that the international order is more just and equitable.

Colleagues,

The Eurasian continent is home to us all. Upholding its peace and development is the shared goal of countries both in our region and the world at large, and the SCO shoulders an important responsibility in meeting this goal. In recent years, an increasing number of countries have applied to join our SCO family. This fully demonstrates the power of SCO’s vision and the widely shared confidence in its future. By promoting the development and expansion of the SCO and giving full play to its positive impact, we will create strong momentum and new dynamism for ensuring durable peace and common prosperity of the Eurasian continent and the whole world. China supports advancing SCO expansion in an active yet prudent manner, and this includes going through the procedure to admit Iran as a member state, launching the procedure for Belarus’ accession, admitting Bahrain, the Maldives, the United Arab Emirates, Kuwait and Myanmar as dialogue partners, and granting the relevant applying countries the legal status due to them. We need to seize the opportunity to build consensus, deepen cooperation and jointly create a bright future for the Eurasian continent.

Here I wish to express China’s congratulations to India on assuming the next SCO presidency. We will, together with other member states, support India during its presidency.

Colleagues,

This year, facing a complex and challenging development environment both at home and abroad, China has stayed committed to the general principle of making advances while maintaining stable performance, and it has striven to ensure both effective COVID-19 containment, economic stability and development security. We have continued to respond to COVID-19 and promote economic and social development in a well-coordinated way. Thus, to the greatest extent possible, we have both safeguarded the life and health of the people and ensured overall economic and social development. The fundamentals of China’s economy, characterized by strong resilience, enormous potential, ample room for policy adjustment and long-term sustainability, will remain sound. This will greatly boost the stability and recovery of the world economy and provide more market opportunities for other countries.

Next month, the Communist Party of China will convene its 20th National Congress. It will be an important meeting to be held at a critical time as China embarks on a new journey toward its second centenary goal of building a modern socialist country in all respects. At this national congress, the Communist Party of China will fully review the major achievements made and valuable experience gained in China’s reform and development endeavors. It will also formulate programs of action and overarching policies to meet China’s new development goals on the journey ahead in the new era and the new expectations of the people. We will continue to follow the Chinese path to modernization to achieve the rejuvenation of the Chinese nation, and we will continue to promote the building of a community with a shared future for mankind. By doing so, we will create new opportunities for the world with new advances in China’s development and contribute our vision and strength to world peace and development and human progress.

Colleagues,

Long as the journey is, we will surely reach our destination when we stay the course. Let us act in the Shanghai Spirit, work for the steady development of the SCO, and jointly build our region into a peaceful, stable, prosperous and beautiful home!

Thank you

Source

A Eurasian jigsaw: BRI and INSTC interconnectivity will complete the puzzle

Shrugging off western obstacles, Eurasia’s ambitious connectivity projects helmed by China and Russia are now progressing deep into Asia’s Heartland

August 17 2022

Photo Credit: The Cradle

By Pepe Escobar

SAMARKAND – Interconnecting Inner Eurasia is an exercise in Taoist equilibrium: adding piece by piece, patiently, to a gigantic jigsaw puzzle. It takes time, skill, vision, and of course major breakthroughs.

A key piece was added to the puzzle recently in Uzbekistan, bolstering the links between the Belt and Road Initiative (BRI) and the International North South Transportation Corridor (INSTC).

The Mirzoyoyev government in Tashkent is deeply engaged in turbo-driving yet another Central Asian transportation corridor: a China-Kyrgyzstan-Uzbekistan-Afghanistan railway.

That was at the center of a meeting between the chairman of the board of Temir Yullari – the Uzbek national railways – and his counterparts in Kyrgyzstan and Afghanistan, as well as managers of the Chinese Wakhan Corridor logistics company.

In terms of the complex intersection of Xinjiang with Central and South Asia, this is as groundbreaking as it gets, as part of what I call the War of Economic Corridors.

The Uzbeks have pragmatically spun the new corridor as essential to cargo transport under low tariffs – but that goes way beyond mere trade calculations.

Imagine, in practice, cargo containers coming by train from Kashgar in Xinjiang to Osh in Kyrgyzstan and then to Hairatan in Afghanistan. Annual volume is planned to reach 60,000 containers in the first year alone.

That would be crucial to develop Afghanistan’s productive trade – away from the “aid” obsession of the US occupation. Afghan products will finally be able to be easily exported to Central Asian neighbors and also China, for instance to the bustling Kashgar market.

And that stabilizing factor would bolster the Taliban’s coffers, now that the leadership in Kabul is very much interested in buying Russian oil, gas and wheat under vastly attractive discounts.

How to get Afghanistan back in the game

There’s also the possibility of spinning off a road project from this railway that would cross the ultra-strategic Wakhan corridor – something that Beijing has already been contemplating for a few years.

The Wakhan is shared by northern Afghanistan and the Gorno-Badakhshan Autonomous Region of Tajikistan: a long, barren, spectacular geological strip, advancing all the way to Xinjiang.

By now it’s clear not only to Kabul, but also to members of the Shanghai Cooperation Organization (SCO), that the humiliated Americans will not restitute the billions of dollars ‘confiscated’ from the Afghan Central Bank’s reserves – something that would at least mitigate Afghanistan’s current, dire economic crisis and imminent mass famine.

So Plan B is to bolster the – for the moment devastated – Afghan supply and trade chains. Russia will be in charge of security for the whole Central-South Asian crossroads. China will provide the bulk of the financing. And that’s where the China-Kyrgyzstan-Uzbekistan-Afghanistan railway fits in.

China sees a road across the Wakhan – a very complicated proposition – as an extra BRI corridor, linking to the China-repaved Pamir highway in Tajikistan and China-rebuilt Kyrgyzstan roads.

The People’s Liberation Army (PLA) has already built an 80 km access road from the Chinese stretch of the Karakoram Highway – before it reaches the Pakistan border – to a mountain pass in the Wakhan, currently only available for cars and jeeps.

The next Chinese move would be to proceed further on down that road by 450 km, all the way to Fayzabad, the provincial capital of Afghan Badakhshan. That would constitute the roadside back-up corridor to the China-Central Asia-Afghanistan railway.

The key point is that the Chinese, as much as the Uzbeks, fully understand the extremely strategic location of Afghanistan: not only as a Central/South Asian crossroads, connecting to key ocean ports in Pakistan and Iran (Karachi, Gwadar, Chabahar) and to the Caspian Sea via Turkmenistan, but also helping landlocked Uzbekistan to connect to markets in South Asia.

That’s all part of the BRI corridor maze; and at the same time interlocks with the INSTC because of the key role of Iran (itself increasingly linked with Russia).

Tehran is already engaged in building a railway to Herat, in western Afghanistan (it already rebuilt the road). Then we will have Afghanistan inbuilt in both BRI (as part of the China-Pakistan Economic Corridor, CPEC) and the INSTC, giving momentum to yet another project: a Turkmenistan-Afghanistan-Tajikistan (TAT) railway, to be linked to Iran and thus the INSTC.

From the Karakoram to Pakafuz

The Karakoram highway – the northern part of which was rebuilt by the Chinese – may sooner or later get a railway sister. The Chinese have been thinking about it since 2014.

By 2016, a railway from the China-Pakistan border to Gilgit, in the northern areas and then further down to Peshawar, was enshrined as part of the China–Pakistan Economic Corridor (CPEC) blueprint. But then nothing happened: the railway is not included  in the 2017-2030 CPEC Long Term Plan.

That may eventually happen in the next decade: the engineering and logistics are an enormous challenge, as they were for the building of the Karakoram highway.

And then there’s the “follow the money” angle. The top two Chinese banks financing BRI – and thus CPEC – projects are the China Development Bank and the Export Import Bank. Even before Covid they were already toning down their loans. And with Covid, they now have to balance foreign projects with domestic loans for the Chinese economy.

The connectivity priority instead shifted to the Pakistan-Afghanistan-Uzbekistan (Pakafuz) railway.

The key stretch of Pakafuz links Peshawar (the capital of the tribal areas) to Kabul. When it’s finished, we’ll see Pakafuz directly interacting with the upcoming China-Central Asia-Afghanistan railway: a new BRI maze directly connected with the INSTC.

All of the above developments reveal their true complexity when we see they are simultaneously inserted into the interaction of BRI and the INSTC and the harmonization between BRI and the Eurasia Economic Union  (EAEU).

Essentially, in geopolitical and geoeconomic terms, the relation between BRI and EAEU projects allows Russia and China to cooperate across Eurasia while avoiding a race to reach a dominant position in the Heartland.

For instance, both Beijing and Moscow agree on the supreme need to stabilize Afghanistan and help it to run a sustainable economy.

In parallel, some important BRI members – like Uzbekistan – are not members of the EAEU, but that is compensated by their membership in the SCO. At the same time, the BRI-EAEU entente facilitates economic cooperation between EAEU members such as Kyrgyzstan and China.

Beijing de facto got full approval from Moscow to invest in Belarus, Kazakhstan, Kyrgyzstan and Armenia, all EAEU members. A future currency or basket of currencies bypassing the US dollar is being jointly discussed between the EAEU – led by Sergei Glazyev – and China.

China focuses on Central/West Asia

There’s no question that the proxy war in Ukraine between the US and Russia has been creating serious problems for BRI expansion. After all, the US war on Russia is also a war against BRI.

The top three BRI corridors from Xinjiang to Europe are the New Eurasian Land Bridge, the China-Central Asia-West Asia Economic Corridor, and the China-Russia-Mongolia Economic Corridor.

The New Eurasian Land Bridge uses the Trans-Siberian and a second link through Xinjiang-Kazakhstan (via the dry land port of Khorgos) and then Russia. The corridor via Mongolia is in fact two corridors: one from Beijing-Tianjin-Hebei to Inner Mongolia and then Russia; and the other from Dalian and Shenyang and then to Chita in Russia, near the Chinese border.

As it stands, the Chinese are not using Land Bridge and the Mongolian corridor as much as before, mainly because of western sanctions on Russia. The current BRI emphasis is via Central Asia and West Asia, with one branch then bisecting toward the Persian Gulf and on the Mediterranean.

And this is where we see another – highly complex – level of intersection quickly developing: how the increasing importance for China of Central Asia and West Asia mixes with the increasing importance of the INSTC for both Russia and Iran in their trade with India.

Call it the friendly vector of the War of Transportation Corridors.

The hardcore vector – real war – is already being deployed by the usual suspects. They are predictably bent on destabilizing and/or smashing any node of BRI/INSTC/EAEU/SCO Eurasia integration, by any means necessary: be it in Ukraine, Afghanistan, Balochistan, the Central Asian “stans” or Xinjiang.

As far as the major Eurasian actors are concerned, that’s bound to be an Anglo-American train to nowhere.

The views expressed in this article do not necessarily reflect those of The Cradle.

Going to Samarkand

July 31, 2022

By Pepe Escobar, posted with the author’s permission and widely cross-posted

The SCO and other pan-Eurasian organizations play a completely different – respectful, consensual – ball game. And that’s why they are catching the full attention of most of the Global South.

The meeting of the SCO Ministerial Council  in Tashkent this past Friday involved some very serious business. That was the key preparatory reunion previous to the SCO summit in mid-September in fabled Samarkand, where the SCO will release a much-awaited “Declaration of Samarkand”.

What happened in Tashkent was predictably unreported across the collective West and still not digested across great swathes of the East.

So once again it’s up to Russian Foreign Minister Sergei Lavrov to cut to the chase. The world’s foremost diplomat – amidst the tragic drama of the American-concocted Era of Non-Diplomacy, Threats and Sanctions – has singled out the two overlapping main themes propelling the SCO as one of the key organizations on the path towards Eurasia integration.

  1. Interconnectivity and “the creation of efficient transport corridors”. The War of Economic Corridors is one of the key features of the 21st
  2. Drawing “the roadmap for the gradual increase in the share of national currencies in mutual settlements.”

Yet it was in the Q@A session that Lavrov for all practical purposes detailed all the major trends in the current, incandescent state of international relations. These are the key takeaways.

How comfortable are you with the US dollar?

Africa: “We agreed that we will submit to the leaders for consideration proposals on specific actions to switch to settlements in national currencies. I think that everyone will now think about it. Africa already has a similar experience: common currencies in some sub-regional structures, which, nevertheless, by and large, are pegged to Western ones. From 2023, a continental free trade zone will start functioning on the African continent. A logical step would be to reinforce it with currency agreements.”

Belarus – and many others – eager to join the SCO: “There is a broad consensus on the Belarusian candidacy (…) I felt it today. There are a number of contenders for the status of observer, dialogue partner. Some Arab countries show such interest, as do Armenia, Azerbaijan and a number of Asian states.”

Grain diplomacy: “In regard to the issue of Russian grain, it was the American sanctions that did not allow the full implementation of the signed contracts due to the restrictions imposed: Russian ships are prohibited from entering a number of ports, there is a ban on foreign ships entering Russian ports to pick up export cargo, and insurance rates have gone up (…) Financial chains are also interrupted by illegitimate US and EU sanctions. In particular, Rosselkhozbank, through which all the main settlements for food exports pass, was one of the first to be included in the sanctions list. UN Secretary General A. Guterres has committed to removing these barriers to addressing the global food crisis. Let’s see.”

Taiwan: “We do not discuss this with our Chinese colleague. Russia’s position on having only one China remains unchanged. The United States periodically confirms the same line in words, but in practice their ‘deeds’ do not always coincide with words. We have no problem upholding the principle of Chinese sovereignty.”

Should the SCO abandon the US dollar? “Each SCO country must decide for itself how comfortable it feels to rely on the dollar, taking into account the absolute unreliability of this currency for possible abuses. The Americans have used this more than once in relation to a number of states.”

Why the SCO matters: “There are no leaders and followers in the SCO. There are no situations in the organization like in NATO, when the US and its closest allies impose one line or another on all other members of the alliance. In the Shanghai Cooperation Organization, the situation that we are currently seeing in the EU does not arise: sovereign countries are literally being ‘knocked out’, demanding that they either stop buying gas or reduce its consumption in violation of national plans and interests.”

Lavrov was also keen to stress how “other structures in the Eurasian space, for example, the EAEU and BRICS, are based and operate on the same principles” of the SCO. And he referred to the crucial cooperation with the 10 member-nations of ASEAN.

Thus he set the stage for the clincher: “All these processes, in interconnection, help to form the Greater Eurasian Partnership, which President Vladimir Putin has repeatedly spoken about. We see in them a benefit for the entire population of the Eurasian continent.”

Those Afghan and Arab lives

The real big story of the Raging Twenties  is how the special military operation (SMO) in Ukraine de facto kick-started “all these processes”, as Lavrov mentioned, simultaneously leading towards inexorable Eurasia integration.

Once again he had to recall two basic facts that continue to escape any serious analysis across the collective West:

Fact 1: “All our proposals for their removal [referring to NATO-expansion assets] on the basis of the principle of mutual respect for security interests were ignored by the US, the EU, and NATO.”

Fact 2: “When the Russian language was banned in Ukraine, and the Ukrainian government promoted neo-Nazi theories and practices, the West did not oppose, but, on the contrary, encouraged the actions of the Kyiv regime and admired Ukraine as a ‘stronghold of democracy.’ Western countries supplied the Kyiv regime with weapons and planned the construction of naval bases on Ukrainian territory. All these actions were openly aimed at containing the Russian Federation. We have been warning for 10 years that this is unacceptable.”

It’s also fitting that Lavrov would once again put Afghanistan, Iraq and Libya in context: “Let us recall the example of Afghanistan, when even wedding ceremonies were subjected to air strikes, or Iraq and Libya, where statehood was completely destroyed, and many human lives were sacrificed. When states that easily pursued such a policy are now making a fuss about Ukraine, I can conclude that the lives of Afghans and Arabs mean nothing to Western governments. It’s unfortunate. Double standards, these racist and colonial instincts must be eliminated.”

Putin, Lavrov, Patrushev, Madvedev have all been stressing lately the racist, neocolonial character of the NATOstan matrix. The SCO and other pan-Eurasian organizations play a completely different – respectful, consensual – ball game. And that’s why they are catching the full attention of most of the Global South. Next stop: Samarkand.

From Balkh to Konya: Discovering Rumi’s spiritual geopolitics

July 30 2022

By Pepe Escobar

Source

While Jalal al-Din Rumi is synonymous with Islamic mysticism, a deeper dig brings to light the West Asian political changes and upheaval that shaped his world and other-worldly view.

KONYA – Mystic poet, Sufi, theosophist, and thinker, Jalal al-Din Rumi remains one of the most beloved historical personalities in history, east and west. A wanderer in search of the light, he famously characterized himself thus: “I am nothing more than a humble lover of God.”

The era of Rumi’s father – Sultan Bahaeddin Veled (1152-1231) and son (1207-1273) – was an extraordinary socio-political rollercoaster. It’s absolutely impossible for us today to understand the ideas, allusions and parables that trespass Rumi’s magnum opus, the six-volume Masnevi , in 25,620 couplets, without delving into some serious time travel.

In the Masnevi , written in Persian – the prime literary language in West and Central Asia in those times – Rumi used poetry essentially as a tool for teaching divine secrets, explaining them via parables. The Rumi Project is to show Man the path to Divine Love, leading him from a low stage to the highest. Squeezed and subdued by the techno-feudalism juggernaut, we may now need to heed these lessons more than ever in history.

The Masnevi became hugely popular across Eurasia immediately after Rumi’s death in 1273 – from India, Pakistan and Afghanistan to Central Asia, Iran and Turkey. Then, slowly but surely, the man and the opus ended up reaching even the collective west (Goethe was mesmerized) and inspiring a wealth of learned commentaries, in Persian, Ottoman Turkish, Urdu and English.

“The master from Anatolia”

Let’s start our time travel in the 11th century, when some Turkish tribes, after crossing Transoxiana, began to settle in northern Persia. These new Turkish tribes – from the Ghaznavids to the Seljuks (actually the branch of a Turkoman tribe) – constituted fabulous dynasties that played a key role in the inter-mixing of Turkic and Persian culture (what the Chinese today, applying it to the New Silk Roads, call “people to people contacts”).

Islam spread very fast in Persia under the rule of the religiously tolerant Samanids. That was the foundation stone for Mahmud of Ghazna (998-1030) to form a great Turkish empire, from northeastern Persia to very remote parts of India. Mahmud made a great impression on Rumi.

While the Ghaznavids remained powerful in eastern Persia, the Seljuks established a powerful empire not only in parts of Iran but also in the remote lands of Anatolia (called Arz-I Rum). That’s the reason why Rumi is called Mavlana-yi Rum (“the master from Anatolia”).

Rumi as a kid lived in legendary Balkh (part of Khorasan in northern Afghanistan), capital of the Khwarazm empire. When he and his father were still there, the king was Ala al-Din, who came from a dynasty established by a Turkish slave.

After a series of incredibly messy kingdom clashes, Ala al-Din saw himself pitted in battle against the king of Samarkand, Osman Khan. That ended up in a massacre in 1212, in which Ala al-Din’s soldiers killed 10,000 people in Samarkand. The young Rumi was shocked.

Ala al-Din wanted to be no less than the absolute ruler of the Muslim world. He refused to obey the Caliph in Baghdad. He even started entertaining designs on China – where Genghis Khan had already conquered Pekin.

Ala al-Din sent an envoy to China who was very well treated by Genghis, who had an eye on – what else – good business between the two empires (the Silk Road bug, again). Genghis sent his ambassadors back, full of gifts. Ala al-Din received them in Transoxiana in 1218.

But then the governor of one of his provinces, a close relative, robbed and killed some of the Mongols. Genghis demanded punishment. The Sultan refused. Well, you don’t want to pick up a fight with Genghis Khan. He duly started a series of massacres in Persia, and inevitably the Khwarazm empire – along with its great cities, Samarkand, Bukhara, Balkh, Merv – collapsed. By then, Rumi and his father had already left.

Like Baghdad, each of these fabulous cities was a center of learning. Rumi’s Balkh had a mixed culture of Arabs, Sassanians, Turks, Buddhists and Christians. After Alexander The Great, Balkh became the hub of Greco-Bactria. Just before the coming of Islam, it was a Buddhist hub and a center of Zoroastrian teaching. All along, one of the great centers of the Ancient Silk Roads.

On the road with 300 camels

The hero of Rumi’s Masnevi, Ibrahim Adham, like the Buddha, had relinquished his throne for the love of God, setting the example for the Sufism that later came to flourish across these latitudes, known as the Khorasani school.

As Prof Dr Erkan Turkmen, who was born in Peshawar and today is a top scholar at Karatay University in Konya, and author, among others, of a lovely volume, ‘Roses from Rumi’s Rose Garden’ says, there are two top reliable sources for the extraordinary pilgrimage of Rumi’s father Bahaeddin and his family from Balkh to Konya, with books, food and house ware loaded on the back of 300 camels, accompanied by 40 religious people. The sources, inevitably, are father and son (Rumi’s account is written in verse).

The first major stop was Baghdad. At the entrance gates, the guards asked who they were. Rumi’s father said, “We are coming from God and shall go back to Him. We have come from the non-existent world and shall go there again.”

Caliph al-Nasir summoned his top scholar Suhreverdi, who immediately gave the green light to the newcomers. But Rumi’s father did not want to stay under the protection of the Caliph, who was noted for his cruelness. So after a few years he left for Mecca on a Hajj and then to Damascus – which was an extremely well organized city at the time of the Abbasids and the Seljuks, crammed with 660 mosques, more than 40 madrassas, 100 baths and plenty of famous scholars.

The final steps on the family journey were Erjinzan in Anatolia – already a center of trade and culture – and then Larende (now Karaman), 100km south of Konya. Today, Karaman is only a small Turkish province, but in those times extended as far as Antalya to the south. It housed a lot of Christian Turks, who wrote Turkish using the Greek alphabet.

That’s where Rumi got married. Afterwards, his father was invited by Sultan Ala al-Din Kayqubad I (1220-1237) to Konya, finally establishing himself and the family until his death in 1231.

The Seljuks in Anatolia erupted into history in the year 1075, when Alp Arslan defeated the Byzantines in the legendary battle of Manzikert. A century later, in 1107, Qilich Arslan defeated the Crusaders, and the Seljuk empire began to spread very fast. It took a few decades before Christians started to accept the inevitable: the presence of Turks in Anatolia. Later, they even started to intermix.

The golden era of the Seljuks was under Sultan Ala al-Din Kayqubad I (the one who invited Rumi’s family to Konya), who built citadels around Konya and Kayseri to protect them from the coming Mongol invasion, and spent his winters at the beautiful Mediterranean coast in Antalya.

In Konya, Rumi did not get into politics, and does not seem to have had close relations with the royal family. He was widely known either as Mevlana (our master) or Rumi (the Anatolian). In Turkey today he is simply known as Mevlana, and in the west as Rumi. In his lyrical poetry, he uses the pseudonym Khamush (Silent). Sultan Recep Tayyip Erdogan’s AKP – a highly materialistic enterprise wallowing in dodgy businesses – is not exactly fond of Rumi’s Sufism.

Under the Green Dome

As we’ve seen, Rumi spent most of his childhood on the road – so he never attended regular school. His early education was provided by his father and other scholars who followed the family to Karaman. Rumi also met many other famous scholars along the way, especially in Baghdad and Damascus, where he studied Islamic history, the Quran, and Arabic.

When Rumi was about to finish the 6th volume of the Masnevi, he fell ill, under constant fever. He passed away on 17 December, 1273. A fund of 130,000 dirhams was organized to build his tomb, which includes the world-famous Green Dome (Qubbat ul-Khazra), originally finished in 1274 and currently under renovation.

The tomb today is a museum (Konya holds astonishing relics especially in the Ethnography and Archeology museums). But for most pilgrims from all lands of Islam and beyond who come to pay their spiritual tributes, it is actually regarded as a lover’s shrine (Kaaba-yi Ushaq).

These lines, inscribed in his splendid wooden sarcophagus, may be a summary of all that Rumi attempted to teach during his lifetime:

“If wheat is grown on the clay of my grave, and if you bake bread of it, your intoxication will increase, the dough and the baker will go mad and the oven will also begin to recite verses out of madness. When you pay a visit to my tomb, it will seem to be dancing for God has created me out of the wine of love and I am still the same love even if death may crush me.”

A Sufi is by definition a lover of God. Islamic mysticism considers three stages of knowledge: the knowledge of certainty, the eye of certainty, and the truth of certainty.

In the first stage, one tries to find God by intellectual proof (failure is inevitable). In the second stage, one may be tuned in to divine secrets. In the third stage, one is able to see Reality and understand It spiritually. That’s a path not dissimilar to reaching enlightenment in Buddhism.

In addition to these three stages, there are paths to follow toward God. Choosing a path – Tarikat – is a very complicated business. It can be any Sufi order – such as Mavleviya, Kadriya, Nakshbandiya – under the guidance of a sheikh of that particular Tarikat.

In these absurdist times of grain diplomacy barely able to remedy the toxic effects of imperial sanctions, part of a proxy war of civilizations, a Rumi verse – “The celestial mill gives nothing if you have no wheat” – may open unexpected vistas.

Rumi is essentially saying that if one goes to a flour mill without wheat, what shall we gain? Nothing but the whiteness of one’s beard and hair (because of the flour). In the same vein: “If we have no good deeds to take with us to the other world, we will gain nothing but pain in the heart, while if we have developed our spiritual being, we will gain honor and Divine Love.”

Now try to explain that to a crusading collective west.

India-Russia-Iran: Eurasia’s new transportation powerhouses

No longer just an ‘alternative route’ on a drawing board, the International North South Transportation Corridor (INSTC) is paying dividends in a time of global crisis. And Moscow, Tehran and New Delhi are now leading players in the Eurasian competition for transportation routes.

July 19 2022

Photo Credit: The Cradle

By Matthew Ehret

Tectonic shifts continue to rage through the world system with nation-states quickly recognizing that the “great game” as it has been played since the establishment of the Bretton Woods monetary system in the wake of the second World War, is over.

But empires never disappear without a fight, and the Anglo-American one is no exception, overplaying its hand, threatening and bluffing its way, right to the end.

End of an order

It seems no matter how many sanctions the west imposes on Russia, the victims most affected are western civilians. Indeed, the severity of this political blunder is such that the nations of the trans-Atlantic are heading towards the greatest self-induced food and energy crisis in history.

While the representatives of the “liberal rules-based international order” continue on their trajectory to crush all nations that refuse to play by those rules, a much saner paradigm has come to light in recent months that promises to transform the global order entirely.

The multipolar solution

Here we see the alternative security-financial order which has arisen in the form of the Greater Eurasian Partnership. As recently as 30 June at the 10th St Petersburg International Legal Forum, Russian President Vladimir Putin described this emerging new multipolar order as:

“A multipolar system of international relations is now being formed. It is an irreversible process; it is happening before our eyes and is objective in nature. The position of Russia and many other countries is that this democratic, more just world order should be built on the basis of mutual respect and trust, and, of course, on the generally accepted principles of international law and the UN Charter.”

Since the inevitable cancellation of western trade with Russia after the Ukraine conflict erupted in February, Putin has increasingly made clear that the strategic re-orientation of Moscow’s economic ties from east to west had to make a dramatically new emphasis on north to south and north to east relations not only for Russia’s survival, but for the survival of all Eurasia.

Among the top strategic focuses of this re-orientation is the long overdue International North South Transportation Corridor (INSTC).

On this game-changing mega-project, Putin said last month during the plenary session of the 25th St Petersburg International Economic Forum:

“To help companies from other countries develop logistical and cooperation ties, we are working to improve transport corridors, increase the capacity of railways, trans-shipment capacity at ports in the Arctic, and in the eastern, southern and other parts of the country, including in the Azov-Black Sea and Caspian basins – they will become the most important section of the North-South Corridor, which will provide stable connectivity with the Middle East and Southern Asia. We expect freight traffic along this route to begin growing steadily in the near future.”

The INSTC’s Phoenix Moment

Until recently, the primary trade route for goods passing from India to Europe has been the maritime shipping corridor passing through the Bab El-Mandeb Strait linking the Gulf of Aden to the Red Sea, via the highly bottlenecked Suez Canal, through the Mediterranean and onward to Europe via ports and rail/road corridors.

Following this western-dominated route, average transit times take about 40 days to reach ports of Northern Europe or Russia. Geopolitical realities of the western technocratic obsession with global governance have made this NATO-controlled route more than a little unreliable.

Map of the International North South Transport Corridor (INSTC), linking Russia, Iran, India
The International North South Transport Corridor (INSTC)

Despite being far from complete, goods moving across the INSTC from India to Russia have already finished their journey 14 days sooner than their Suez-bound counterparts while also seeing a whopping 30 percent reduction in total shipping costs.

These figures are expected to fall further as the project progresses. Most importantly, the INSTC would also provide a new basis for international win-win cooperation much more in harmony with the spirit of geo-economics unveiled by China’s Belt and Road Initiative (BRI) in 2013.

Cooperation not competition

Originally agreed upon by Russia, Iran and India in September 2000, the INSTC only began moving in earnest in 2002 – albeit much more slowly than its architects had hoped.

This 7,200 km multimodal megaproject involves integrating several Eurasian nations directly or indirectly with rail, roads and shipping corridors into a united and tight-knit web of interdependency. Along each artery, opportunities to build energy projects, mining, and high tech special economic zones (SEZs) will abound giving each participating nation the economic power to lift their people out of poverty, increase their stability and their national power to chart their own destinies.

Beyond the founding three nations, the other 10 states who have signed onto this project over the years include Armenia, Georgia, Turkey, Azerbaijan, Kazakhstan, Belarus, Tajikistan, Kyrgyzstan, Oman, Syria and even Ukraine (although this last member may not remain on board for long). In recent months, India has officially invited Afghanistan and Uzbekistan to join too.

While western think tanks and geopolitical analysts attempt to frame the INSTC as an opponent to China’s BRI, the reality is that both systems are extremely synergistic on multiple levels.

Map of China's Belt and Road Initiative (BRI), The 'One Belt One Road' (OBOR)
China’s Belt and Road Initiative (BRI)

Unlike the west’s speculation-driven bubble economy, both the BRI and INSTC define economic value and self-interest around improving the productivity and living standards of the real economy. While short term thinking predominates in the myopic London-Wall Street paradigm, the BRI and INSTC investment strategies are driven by long-term thinking and mutual self-interest.

It is no small irony that such policies once animated the best traditions of the west before the rot of unipolar thinking took over and the west lost its moral compass.

An integrated alternative

The INSTC’s two major bookends are the productive zone of Mumbai in India’s Southeast region of Gujarat and the northern-most Arctic port of Lavna in Russia’s Kola Peninsula of Murmansk.

This is not only the first port constructed by Russia in decades, but when completed, will be one of the world’s largest commercial ports with an expected capacity to process 80 million tons of goods by 2030.

The Lavna Port is an integral part of Russia’s Arctic and Far East Development vision and is a central piece to Russia’s current Comprehensive Plan for Modernization and Expansion of Main Infrastructure and its Northern Sea Route which is expected to see a five-fold increase of Arctic freight traffic over the coming years. These projects are integrally linked to China’s Polar Silk Road.

Between these bookends, the INSTC moves freight from India into Iran’s Port of Bandar Abbas where it is loaded onto double-tracked rail to the Iranian city of Bafq and then to Tehran before coming to the Anzali Port on the southern Caspian Sea.

‘Be like water’

Because the INSTC is based on a flexible design concept capable of adapting to a changing geopolitical environment (very much like the BRI), there are a multitude of connecting lines that branch off the main North-South artery before goods make it to the Caspian Sea.

These include an eastern and western corridor branching off from the city of Bafq towards Turkey and thence Europe via the Bosporus and also eastward from Tehran to Turkmenistan, Uzbekistan, Kazakhstan and thereafter into Urumqi in China.

Railway is still relevant

From the Anzali Port in the north of Iran, goods may travel by the Caspian Sea towards Russia’s Astrakhan Port where it is then loaded onto trains and trucks for transport to Moscow, St Petersburg and Murmansk. Inversely goods may also travel over land to Azerbaijan where the 35 km Iran Rasht-Caspian railway is currently under construction with 11 km completed as of this writing.

Once completed, the line will connect the Port of Anzali with Azerbaijan’s Baku, offering goods a chance to either continue onwards to Russia or westward toward Europe. A Tehran-Baku rail route already exists.

Additionally, Azerbaijan and Iran are currently collaborating on a vast $2 billion rail line connecting the 175 km Qazvin-Rasht railway which began operations in 2019 with a strategic rail line connecting Iran’s Rasht port on the Caspian to the Bandar Abbas Complex in the south (to be completed in 2025). Iran’s Minister of Roads and Urban Development Rostam Ghasemi described this project in January 2022 saying:

“Iran’s goal is to connect to the Caucasus, Russia, and European countries. For this purpose, the construction of the Rasht-Astara railway is in the spotlight. During the Iranian president’s visit to Russia, discussions were conducted in this regard, and construction of the railway line is expected to begin soon with the allocation of needed funds.”

In recent months, India’s Prime Minister Narendra Modi has lobbied to incorporate the joint Iran-India built Chabahar Port into the INSTC which will likely occur since another 628 km rail line from the port to the Iranian city of Zahedan is currently under construction.

Once completed, goods will easily move onward to the city of Bafq. While some critics have suggested that the Chabahar Port is antagonistic to Pakistan’s Gwadar Port, Iranian officials have constantly referred to it as Chabahar’s twin sister.

Since 2014, a vast rail and transportation complex has grown around the co-signers of the Ashkabat Agreement (launched in 2011 and upgraded several times over the past decade). These rail networks include the 917.5 km Iran-Turkmenistan-Kazakhstan route launched in 2014, and Turkmenistan-Afghanistan-Tajikistan rail/energy project launched in 2016 which is currently seeing extensions that could easily go into Pakistan.

In December 2021, the 6540 km Islamabad to Istanbul rail line (via Iran) recommenced operations after a decade of inaction. This route cuts the conventional sea transit route time of 21 days by half. Discussions are already underway to extend the line from Pakistan into China’s Xinjiang Province linking the INSTC ever more closely into the BRI on yet another front.

Map of Islamabad to Istanbul rail line (via Iran)
Islamabad to Istanbul rail line (via Iran)

Finally, June 2022 saw the long-awaited unveiling of the 6108 km Kazakhstan-Iran-Turkey rail line which provides an alternative route to the under-developed Middle Corridor. Celebrating the inaugural 12 day voyage of cargo, Kazakhstan’s President Kasym-Jomart Tokayev stated: “Today, we welcomed the container train, which left Kazakhstan a week ago. Then it will go to Turkey. This is a significant event, given the difficult geopolitical conditions.”

Despite the fact that the INSTC is over 20 years old, global geopolitical dynamics, regime change wars, and ongoing economic warfare against Iran, Syria and other US target states did much to harm the sort of stable geopolitical climate needed to emit large scale credit requisite for long term projects like this to succeed.

Caspian Summit Security breakthroughs

As proof that necessity truly is the mother of invention, the systemic meltdown of the entire post-WW2 edifice has forced reality to take precedence over the smaller-minded concerns that kept the diverse nations of Sir Halford John Mackinder’s “World Island” from cooperating. Among these points of endless conflict and stagnation which has upset great economic potential over the course of three decades, the Caspian zone stands out.

It is in this oil and natural gas rich hub that the five Caspian littoral states (Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan) have found a power to break through on multi-level security, economic and diplomatic agreements throughout the June 29-30, 2022 Sixth Caspian Summit in Ashgabat, Turkmenistan.

This summit placed a high priority on the INSTC with the region becoming both a north-south and east-west transportation hub. Most importantly, the leaders of the five littoral states made their final communique center around the region’s security since it is obvious that divide-to-conquer tactics will be deployed using every tool in the asymmetrical warfare tool basket going forward.

Chief among the agreed-upon principles were indivisible security, mutual cooperation, military cooperation, respect for national sovereignty, and non-interference. Most importantly, the banning of foreign military from the land and waters of the Caspian states was firmly established.

While no final agreement was reached over the disputed ownership of resources within the base of the Caspian, the stage was set for harmonization of partner states’ security doctrines, a healthy environment was established for the second Caspian Economic Summit which will take place in Autumn of this year and which will hopefully resolve many of the disputes pertaining to Caspian resource ownership.

Although geopolitical storms continue to intensify, it is increasingly clear that only the multipolar ship of state has demonstrated the competence to navigate the hostile seas, while the sinking unipolar ship of fools has a ruptured hull held together by little more than chewing gum and heavy doses of delusion.

The views expressed in this article do not necessarily reflect those of The Cradle.I

Andrei Martyanov: SAS and BRICS

July 14, 2022

Please visit Andrei’s website: https://smoothiex12.blogspot.com/
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The Judgement of the Nations

July 12, 2022

Source

By Batiushka

A frequent topic among both contributors and commentators on this site is the discussion as to whether the Special Military Operation in the Ukraine will take a few months or a few years. It is a common question and there are different opinions. Let me say now that I am not qualified even to speculate on this, let alone have an opinion. I do not know the answer and I suspect that many highly-placed people in the military and among politicians do not know the answer either.

In any case why is an answer to this question so important? Originally, this was not a war, but a limited Operation, still involving a small proportion of the Russian Armed Forces. Had Russia wanted to occupy the Ukraine with massive military violence, in German, with a ‘Blitzkrieg’, in American, with ‘shock and awe’, with hundreds of thousands, perhaps millions, of victims, all could have been done in a couple of weeks. However, this is not Hollywood. That was not the aim.

The clear aim was to free the Russian part of the Ukraine and to demilitarise and denazify the rest, so it would no longer present a threat to the Russian World. Obviously, doing this meant not just winning the genodical war which the backers of the Kiev regime had begun in 2014, but also doing it, causing the smallest number of victims among the Russian and Allied military and Ukrainian civilians as possible, and at the same time doing the least amount of damage to civilian infrastructure as possible.

Pictures showing huge damage to civilian infrastructure, especially in Mariupol and Donetsk, show above all the enormous amount of damage done by NATO-backed Kiev regime bombardments over the last eight years. It was clear to Russian military and political planners that the Operation would take at least months, perhaps years, as the whole of the Kiev Armed Forces had been digging in here for eight years. Russia knew that in order to win a war, you have to win the peace afterwards.

It was no good doing like the Americans did in Vietnam, Iraq and Afghanistan, destroying infrastructure, making the people hate you and then, once you realise that you have lost, running away, leaving chaos and misery. The Russian authorities also knew that since NATO had already de facto declared war on Russia in 2014, the Operation to liberate the Ukraine through denazification and demilitarisation would further activate their war effort and provoke many more ‘sanctions’. Now that the Operation has become a NATO war against Russia, much as expected, it is all the more difficult to forecast the future.

Many missed the point. The Special Military Operation is not where it is at. The Ukraine is only the location, the battlefield, and the Kiev junta are only the actors on the stage, puppets. This is not primarily a battle of the military and their technologies, although they are very important, this is above all a battle of world views and ensuing realities. This battle is political and economic, spiritual and moral. Why else did the Johnson regime ban the Russian Orthodox Patriarch from visiting the UK?

Here we understand President Putin’s words of 7 July 2022 before Russian parliamentarians that Russia ‘has not even started anything in earnest in the Ukraine yet’, that the military operation in the Ukraine signifies ‘a cardinal break with the US world order, the beginning of the transition from the liberal globalism of US egocentricity to the reality of a multipolar world….the march of history is unstoppable and the attempts of the West to foist its New World Order on the world are doomed to failure’.

Whatever happens militarily in the Ukraine over the coming months, and much will happen, there are other stories, which are ultimately far more important. There was tiny Lithuania’s attempt to blockade the Russian Kaliningrad enclave, which has already failed. There was the toppling of the bankrupt UK’s Prime Minister, who wanted to wage a war without money, there was the assassination of the former Japanese Prime Minister by forces unknown, there was the occupation of the Presidential Palace in Colombo in Sri Lanka by a hungry crowd facing huge inflation and national bankruptcy.

Then there is the incipient collapse of the euro, already reaching parity with the dollar, as Europe grinds to a halt without Russian energy. There is the possible coming collapse of the dollar as the world dedollarises, under Russian impetus. There is mighty Germany’s attempt to survive without Russian oil and gas, which is already failing. There is much more that is being hidden from the populations of the Western world by worried elites – strikes, protests and the breakdown of social cohesion.

It is now July. In eight weeks’ time the weather cools. In sixteen weeks’ time winter begins. Wait until the panic begins and the palaces of leaders of the Western world also fall to hungry crowds facing huge inflation and national bankruptcy in European and North American Capitals. There may not be just a few deaths, as when the Washington Presidential Palace fell on 6 January 2021, but mass violence and fire. Wait until Chinese troops liberate Taiwan, as they will do at the right moment when the US is off guard, too busy with its own immense problems. Then shall begin the Judgement of the Nations.

Western Europe appears to go through a cycle of Judgement every 500 years or so. Round about the Year 500 (pedants mention the Year 476), Western Rome fell to the Barbarians, followed by great disruption and bloodshed. Round about the Year 1000 (pedants mention the Year 1054), there began Roman Catholicism, followed by its imperialist invasions, crusades and inquisitions. Round about 1500 (pedants mention 1517) there began Protestantism, followed by persecution of women (‘witches’) and ‘wars of religion’, both in Continental Europe and in Britain and Ireland under Cromwell. And now, round about the Year 2000 (will pedants mention the Year 2022?), there begins another Judgement.

For us, where we are, closely linked to the Ukraine, the war began already in early 2021. But that will be a story to tell another time.

من رمال الصحراء إلى القوقاز العين على الصين…

محمد صادق الحسيني

كلّ الأنباء التي تلفّ الكون في هذه الأيام تشير الى حقيقة واحدة باتت أوضح من الشمس…

الأميركيّ الذي كان يوماً القطب الأوحد في العالم والآمر الناهي وشرطي الجهات الأربع في الكون غدا مأزوماً ومهزوماً في كلّ جبهاته وميادينه، ولكن بخاصة على الجبهة الأوروآسيوية، حيث المستنقع الأوكراني او الحفرة التي حفرها بنفسه ظناً منه أنه قادر على تشتيت الاتحاد الصيني الروسي الاستراتيجي الجديد من جهة وجعل أوروبا تخضع له دون شروط!

لكن هذا الأميركي المتعجرف ولشدة عناده ومكابرته، وانغماسه في المستنقع الأوكراني لم يجد خلاصاً له على ما يبدو بعد كلّ جهوده التي ذهبت هباء لهزّ عرش بوتين إلا أن يفعل خديعة تحالف الناتو المزعوم بين أصحاب التيه وأصحاب ما بعد التيه في الرمال العربية المتحركة مغرياً إياهم بأنظمة دفاع جوي حديثة تقيهم خطر إيران المزعوم ويحقق لابنه «الإسرائيلي» المدلل لعبته المفضلة وحلمه بقيادة تحالف «شرق أوسطي» ليدمج وجوده المؤقت الزائل بكيانات مصنوعة من الشمع مثله…

فيما عقل واشنطن البراغماتي، لا يزال مشدوداً نحو التهديد الصيني وكيفية ضرب البيئة الحيوية للصين وطريقها وحزامها الواحد الممتدّ من شنغهاي مروراً بالجغرافيا الحيوية لروسيا ـ آسيا الوسطى والقوقاز، ومن ثم إيران، وصولاً إلى المياه الدافئة يعني بحر الشام وخليج فارس…

لذلك لا بدّ من النظر بريبة شديدة الى خططهم وحشدهم الحقيقي هناك ودور كلّ واحد من لاعبيهم الصغار في منطقتنا وهم البيادق المتحركة بأوامر الشيطان الأكبر…

وفي هذا السياق، يفيد مصدر ديبلوماسي إقليمي مطلع، تعليقاً على الحملة الدعائية لما يُسمّى «حلفاً دفاعياً عربياً إسرائيلياً»، بما يلي:

أولا ـ ان لا وجود لهذا التحالف إلا في عقلية المسؤولين «الإسرائيليين» الأمنيين والعسكريين وأسيادهم في الدولة العميقة الأميركية وليس إدارة بايدن، وهو طرح بعيد عن الاستراتيجية الأميركية العملية.

ثانيا ـ انّ الهدف الاستراتيجي الحالي للولايات المتحدة الأميركية (ادارة بايدن)، في «الشرق الأوسط» ودول أواسط آسيا، هو استكمال الحشد الاستراتيجي ضدّ الصين الشعبية وروسيا وإيران.

ثالثا ـ انّ ادوات واشنطن لتحقيق ذلك هي التالية:

ـ نظام أردوغان، الذي يقدّم التدريب العسكري والإمداد والتزويد، لكلّ العناصر التي تخدم الاستراتيجية الأميركية في المنطقة المشار إليها أعلاه.

والذي سبق أن درّب المجموعات الإرهابية المسلحة، التي عاثت خراباً واسعاً في جمهورية كازاخستان السوڤياتية السابقة، بداية العام الحالي. وهي التي أشرفت الاستخبارات العسكرية التركية على تنفيذ عمليات تسلل وإنزال جوي لها، من خلال طائرات نقل مستأجرة ولا تحمل شارات أيّ دولة، في مطار ألماآتا (العاصمة القديمة لكازاخستان) بعد أن سيطر المخرّبون المسلحون الإرهابيون على هذا المطار في اليوم الأول من الموجة الإرهابية التي ضربت البلاد.

ـ النظام السعودي، الذي يقوم بتمويل ثمانية عشر ألف منظمة غير حكومية، في جمهوريات آسيا الوسطى السوڤياتية السابقة، وهي قوات احتياط بيد الولايات المتحدة جاهزة للاستخدام، إما في ثورات ملوّنة أو في هزات مسلحة وتخريبية، عندما يصلها أمر العمليات من واشنطن.

ـ مشيخات قطر والإمارات، بالتعاون مع حركة طالبان، من خلال إدارة المطارات الأفغانية الرئيسية الثلاثة، حيث وقعت الإمارات العربية اتفاقية خاصة بذلك، مع حكومة طالبان، بتاريخ ٢٤/٥/٢٠٢٢، وهو الأمر الذي يعني سيطرة أميركية غير مباشرة، على تلك المطارات، وما لذلك من أهمية قصوى في نقل الأفراد والمعدات الى أفغانستان، خاصة في ضوء تمركز تركي قطري «تقني» في تلك المطارات، منذ بداية العام الحالي، وذلك بناءً على اتفاقيات موقعة مع حكومة طالبان.

ـ حركة طالبان نفسها، والتي تجري معها الولايات المتحدة محادثات متواصلة تتعلق بمجموعة طلبات أميركية للحركة وعلى رأسها السماح للمسلحين الإيرانيين، سواء من «مجاهدي خلق» الإرهابية المقيمة في ألبانيا، أو غيرهم، بالعمل من الأراضي الأفغانية مقابل رفع تدريجي للتجميد الأميركي المفروض على الأموال الأفغانية.

ـ فلول تنظيم داعش، الذين نقلت منهم القيادة المركزية الأميركية، من العراق وسورية، ما يزيد على ثلاثة آلاف مسلح تمّ نشرهم في محافظة:

*بدخشان/ شمال شرق أفغانستان/ بالقرب من الحدود الصينية والطاجيكية.

*محافظتا تخار وقندوز/ في شمال أفغانستان/ والمحاذيتان لحدود طاجيكستان.

وهنا لا بدّ أن نستذكر موجة التحركات التخريبية المنظمة التي تجتاح محافظة: كاركال باكستان الأوزبيكية، منذ عدة أيام، والتي حاول فيها المشاغبون الاستيلاء على الأسلحة من المباني الحكومية الرسمية.

رابعا ـ انّ الولايات المتحدة الأميركية هي من يقف وراء الحملة الدعائية، التي يروّج لها الإعلام «الإسرائيلي» وبعض الإعلام العربي، بما في ذلك للأسف الشديد بعض وسائل إعلامنا، حول التحالف المزعوم والمشار إليه اعلاه. وذلك لحرف الأنظار عن ساحة الفعل الحقيقي الأميركي، في جمهوريات آسيا الوسطى، بهدف السيطرة عليها واستخدامها كمنصات هجومية او رؤوس جسور استراتيجية، ضدّ جمهورية الصين الشعبية من جهة الشرق، وجمهورية روسيا الاتحادية من جهة الشمال، والجمهورية الإسلامية الإيرانية في الغرب، لزعزعة تحالف الشرق الصاعد هذا…

واحلوا قومهم دار البوار

بعدنا طيّبين قولوا الله…

Michael Hudson interviewed by Ben Norton (Multipolarista) Update with transcript

June 30, 2022

Economist Michael Hudson on inflation and Fed plan to cut wages: A depression is coming

Transcript:

BENJAMIN NORTON:

Hey, everyone, this is Ben Norton, and you are watching or listening to the Multipolarista podcast. I am always privileged to be joined by one of my favorite guests, Michael Hudson, one of the greatest economists living today.

We’re going to be talking about the inflation crisis. This is a crisis around the world, but especially in the United States, where inflation has been at over 8%. And it has caused a lot of political problems. It’s very likely going to cause the defeat, among other factors, of the Democrats in the mid-term elections in November.

And we’ve seen that the response of the US government and top economists in the United States is basically to blame inflation on wages, on low levels of unemployment and on working people.

We’ve seen that the chair of the Federal Reserve, Jerome Powell, has said that inflation is being caused by wages supposedly being too high. We’ve also seen that the top economist and former Clinton administration official Larry Summers has claimed that the solution to inflation is increasing unemployment, potentially up to 10%.

So today I’m joined by economist Michael Hudson, who has been calling out this kind of neoliberal snake oil economics for many years. And Professor Hudson has an article he just published that we’re going to talk about today. You can find this at his website, which is michael-hudson.com. It’s titled “The Fed’s Austerity Program to Reduce Wages.” and I’m going to let Professor Hudson summarize the main points of his article.

Professor Hudson, as always, it’s a pleasure having you. Can you respond to the decision by the Federal Reserve to increase interest rates by 0.75%? It doesn’t sound like a lot – it’s less than 1% – but this was the largest rate hike since 1994.

And now we’ve already seen reports that there’s going to be a depression. The Fed chair is blaming this on wages. Can you respond to the position of the Fed and the inflation crisis in the US right now.

MICHAEL HUDSON:

For the Fed, the only two things that it can do is, number one, raise the discount rate, the interest rate; and number two, spend $9 trillion buying stocks, and bonds, and real estate mortgages to increase real estate prices, and to increase the amount of wealth that the wealthiest 10% of the population has.

To the wealthiest 10%, especially the 1%, it’s not only inflation that’s a problem of wages; every problem that America has is the problem of the working class earning too much money. And if you’re an employer, that’s the problem: you want to increase your profits. And if you look at the short term, your profits go up the more that you can squeeze labor down. And the way to squeeze labor down is to increase what Marx called the reserve army of the unemployed.

You need unemployment in order to prevent labor from getting most of the value of what it produces, so that the employers can get the value, and pay that to the banks and the financial managers that have taken over corporate industry in the United States.

You mentioned that while the Fed blames the inflation it on labor, that’s not President Biden’s view; Biden keeps calling it the Putin inflation. And of course, what he really means is that the sanctions that America has placed on Russia have created a shortage of oil, gas, energy, and food exports.

So really we’re in the Biden inflation. And the Biden inflation that America is experiencing is the result basically of America’s military policy, its foreign policy, and above all, the Democratic Party’s support of the oil industry, which is the most powerful sector in the United States and which is guiding most of the sanctions against Russia; and the national security state that bases America’s power on its ability to export oil, or control the oil trade of all the countries, and to export agricultural products.

So what we’re in the middle of right now isn’t simply a domestic issue of wage earners wanting higher salaries – which they’re not particularly getting; certainly the minimum wage has not been increased – but you have to put this in the context of the whole cold war that’s going on.

The whole US and NATO confrontation of Russia has been a godsend, as you and I have spoken before, for the oil industry and the farm exporters.

And the result is that the US dollar is rising against the euro, against sterling, and against Global South currencies. Well, in principle a rising dollar should make the price of imports low. So something else is at work.

And what’s at work, of course, is the fact that the oil industry is a monopoly, that most of the prices that have been going up are basically the result of a monopolization, in the case of food, by the marketing firms, like Cargill and Archer Daniels Midland, that buy most of the crops from the farmers.

The irony is that while food prices, next to oil prices, are the major factor that is soaring, farmers are getting less and less for their crops. And yet farmers’ costs are going up – up for fertilizer, up for energy, up for other inputs – so that you’re having enormous profits for Archer Daniels Midland and the food monopolies, of the distributors, and enormous, enormous gains for the oil industry, and also of course for the military-industrial complex.

So if you look at what’s happening in the overall world economic system, you can see that this inflation is being engineered. And the beneficiaries of this inflation certainly have not been the wage earners, by any stretch of the imagination.

But the crisis that the Biden policy has created is being blamed on the wage earners instead of on the Biden administration’s foreign policy and the basically the US-NATO war to isolate Russia, China, India, Iran, and Eurasia generally.

BENJAMIN NORTON:

Professor Hudson, I want to talk about the increase in interest rates by the Fed. There has been a lot of attention to this, although, again, it’s 0.75%, which is not that big. But it’s of course going to have an outsize impact on the economy.

In your article, again, this is your column at michael-hudson.com, “The Fed’s Austerity Program to Reduce Wages,” you talk about the Fed’s “junk economics,” and you say that the idea behind raising interest rates by 0.75% is that:

raising interest rates will cure inflation by deterring borrowing to spend on the basic needs that make up the Consumer Price Index and its related GDP deflator. But banks do not finance much consumption, except for credit card debt, which is now less than student loans and automobile loans. Banks lend almost entirely to buy real estate, stocks and bonds, not goods and services.

So you argue that one of the effects of this is that it’s actually going to roll back homeownership in the United States. You note that the rate of homeownership has been falling since 2008.

So can you expand on those arguments? What will be the impact of the increase of the interest rates by the Fed?

MICHAEL HUDSON:

Well, in order to get an economics degree which is needed to work at the Fed or at the Council of Economic Advisors, you have to take economics courses in the universities, and all of the textbooks say just what you quoted me as saying they say.

The pretense is that banks actually play a productive role in society, by providing the money for factories to buy machinery, and build plants, and do research and development, and to hire labor; and that somehow the money that banks create is all lent out for industrial economy, and that that will enable companies to make more money that they’ll spend on labor; and of course, as they spend more money on labor, that supports to bid prices up as the reserve army of the unemployed is depleted.

But that’s all a fiction. The textbooks don’t want to say that banks don’t play a productive role like that at all. And the corporations don’t do what the textbooks say.

If you look at the Federal Reserve balance sheet and statistics that it publishes every month, you’ll see that 80% of bank loans in the United States are mortgage loans to commercial real estate and mostly for home real estate. And of course the home mortgage loans have been nothing, like under 1% for the last 14 years, since 2008.

Only the banks and the large borrowers, the financial sector, have been able to borrow at these low rates. Homeowners all along have had to pay very high rates, just under 4%, and now it’s going above 4%, heading to 5%.

Well, here is the situation that the Federal Reserve has created. Suppose that you’re a family right now going out to buy a home, and you find out that in order to borrow the money to buy the home – because if the average home in America costs $600,000 or $700,000, people haven’t saved that much; the only way you can buy a home is to take out a mortgage.

Well, you have a choice: you can either rent a home, or you can borrow the money to buy a home. And traditionally, for a century, the carrying charge for financing a home with the mortgage has been about the equivalent of paying a rent. The advantage is, of course, that you get to own the home when it’s over.

Well, now let’s look at what’s happening right now. All of a sudden, the carrying charge of mortgages have gone way, way up. The banks are making an enormous gap. They can borrow at just around 1%, and they lend out at 4.5%. They get a windfall gain of the markup they have in mortgages, lending to prospective homeowners.

And of course, the homeowners don’t have enough money to be able to pay the higher interest charged on the mortgages that they take out. So they are not able to buy as expensive a home as they wanted before.

But they’ve been a declining part of the population. At the time Obama took office, over 68% of Americans owned their own home. Obama started the great wave of evictions, of 10 million Americans who lived in homes, essentially to throw them out of their homes, especially the victims of the junk mortgages, especially the lower income and racial minorities who were redlined and had to become the main victims of the mortgages.

America’s homeownership rate is now under 61%. What has happened? You’ve had huge private capital firms come into the market thinking, wait a minute, we can now buy these properties and rent them out. And we can buy them for all cash, unlike homeowners, we’re multibillionaires, we Blackstone, BlackRock.

You have these multibillion-dollar funds, and they say, well, we can’t make much money buying bonds or buying stocks that yield what they do today, now that the Federal Reserve has ground down interest rates. What we can do is make money as landlords.

And so they’ve shifted, they’ve reversed the whole shift away from the 19th-century landlordism to an economy based on financialization, and the wealthy classes making money on finance, to go back to making money as landlords.

And so they are buying up these homes that American homeowners can’t afford to buy. Because when you raise the mortgage rate, that doesn’t affect a billionaire at all. Because the billionaire firm doesn’t have to borrow money to buy the home. They have the billion dollars of their own money, of pension fund money, of speculative money, of the money of the 1% and the 10% to spend.

So what you’re having by increasing the interest rates is squeezing homeowners out of the market and turning the American economy into a landlord-ridden rental economy, instead of a homeowners economy. That’s the effect.

And it’s a windfall for the private capital firms that are now seeing that are making money as landlords, the old fashioned way, it worked for 800 years under feudalism. It’s coming back in style.

BENJAMIN NORTON:

Professor Hudson, you point out in this article at your website that more than 50% of the value of U.S. real estate already is held by mortgage bankers. And of course, that percentage is increasing and increasing.

Now, you, Professor Hudson, have argued a point that I haven’t seen many other people make, although it’s an obvious, correct point, which is that there has actually been a lot of inflation in the United States in the past several years, but that inflation was in the FIRE sector: finance, insurance, and real estate.

We see that with the constant increase in real estate prices; they go up every single year; rent goes up every single year. The difference now is that there’s also a significant increase in the Consumer Price Index.

And there is an interesting study published by the Economic Policy Institute, which is, you know, a center-left think tank, affiliated with the labor movement; they’re not radicals, they’re progressives. And they did a very good study.

And they found – this was published this April – they found that corporate profits are responsible for around 54% of the increase of prices in the non-financial corporate sector, as opposed to unit labor costs only being responsible for around an 8% increase.

So they showed, scientifically, that over half of the increase of prices in the non-financial corporate sector, that is in the Consumer Price Index, over half of that inflation is because of corporate profits.

Of course, that’s not the way it’s discussed in mainstream media. That’s not the way the Fed is discussing it all. We see Larry Summers saying that we need to increase unemployment. Larry Summers, of course, was the treasury secretary for Bill Clinton.

He’s saying that the U.S. has to increase unemployment; the solution to inflation is increasing unemployment. Even though these studies show that over half of inflation in the Consumer Price Index is because of corporate profits.

I’m wondering if you can comment on why so many economists, including people as revered as Larry Summers, refuse to acknowledge that reality.

MICHAEL HUDSON:

Most economists need to get employment, and in order to be employed, you have to give a picture of the economy that reflects how well your employer helped society at large. You’re not allowed to say that your employer is acting in ways that are purely predatory. You’re not allowed to say that the employer does not earn an income.

You talked about corporate profits and the classical economists. If you were a free-market economist like Adam Smith, or David Ricardo, or John Stuart Mill – these are monopoly rents. So what you call corporate profits are way above normal corporate rates of return, normal profits. They’re economic rents from monopoly.

And that’s because about 10 or 15 years ago, the United States stopped imposing its anti-monopoly laws. It has essentially let monopolies concentrate markets, concentrate power, and charge whatever they want.

And so once you’ve dismantled the whole legal framework that was put in place from the 1890s, from the Sherman Antitrust Act, down through the early 20th century, the New Deal, once you dismantle all of this state control, saying – essentially what Larry Summers says is, we’re for a free market.

A “free market” is one in which companies can charge whatever they want to charge for things; a free market is one without government regulation; a free market is one without government; a free market is a weak enough government so that it cannot protect the wage earners; it cannot protect voters. A “democracy” is a country where the bulk of the population, the wage earners, have no ability to affect economic policy in their own interests.

A “free market” is one where, instead of the government being the planner, Wall Street is the planner, on behalf of the large industries that are basically being financialized.

So you’ve had a transformation of the concept of what a free market is, a dismantling of government regulation, a dismantling of anti-monopoly regulation, and essentially the class war is back in business.

That’s what the Biden administration is all about. And quite frankly, it’s what the Democratic Party is all about, even more than the Republican Party. The Republican Party can advocate pro-business policies and pro-financial policies, but the Democratic Party is in charge of dismantling the legacy of protection of the economy that had been put in place for a century.

BENJAMIN NORTON:

Yeah, and this is an article in Fortune that was originally based on an article in Bloomberg: “5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation.” That’s how simple it is, you know, just increase unemployment, and then inflation will magically go away!

Now, I also wanted to get your response, Professor Hudson, to these comments that you highlighted in a panel that was organized by the International Manifesto Group – a great organization, people can find it here, their channel here at YouTube. And they held a conference on inflation. And you were one of several speakers.

And you highlighted these comments that were made by the Fed chair, Jerome Powell. And this is according to the official transcript from The Wall Street Journal. So this is not from some lefty, socialist website. Here’s the official transcript of a May 4 press conference given by the Fed chief, Jerome Powell.

In this press conference, he said, discussing inflation, he said, in order to get inflation down, he’s talking about things that can be done “to get wages down, and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially.”

So this is another proposal. Larry Summers says 6% unemployment for five years, or 10% unemployment for one year. The Fed chair, Jerome Powell, says the solution is “to get wages down.” I’m wondering if you can respond to that as well.

MICHAEL HUDSON:

Well, the important thing to realize is that President Biden re-appointed Jerome Powell. President Biden is a Republican. The Democratic Party is basically the right wing of the Republican Party, the pro-financial, the pro-Wall Street wing of the Republican Party.

Why on earth, if the Democrats were different from the Republicans, why would would Biden re-appoint an anti-labor Republican, as head of the Federal Reserve, instead of someone that would actually try to spur employment?

Imagine, here’s a party that is trying to be elected on a program of, “Elect us, and we will create a depression and we will lower wages.” That is the Democrat Party slogan.

And it’s a winning slogan, because elections are won by campaign contributions. The slogan is, “We will lower wages by bringing you depression,” is a tsunami of contributions to the Democratic Party, by Wall Street, by the monopolists, by all the beneficiaries of this policy.

So that’s why the Supreme Court ruling against abortions the other day is a gift to the Democrats, because it distracts attention from their identity politics of breaking America into all sorts of identities, every identity you can think of, except being a wage earner.

The wage earners are called deplorables, basically. And that’s how the donor class thinks of them, as sort of unfortunate overhead. You need to employ them, but it really it’s unfortunate that they like to live as well as they do, because the better they live, the less money that you will end up with.

So I think that this issue of the inflation, and what really causes it, really should be what elections are all about. This should be the economic core of this November’s election campaign and the 2024 election campaign. And the Democrats are leading the fight to lower wages.

And you remember that when President Obama was elected, he promised to increase the minimum wage? As soon as he got in, he said the one thing we cannot do is raise the minimum wage. And he had also promised to back card check. He said, the one thing we must not do is increase labor unionization with card check, because if you unionize labor, they’re going to ask for better wages and better working conditions.

So you have the Democratic Party taking about as hard a right-wing position as sort of Chicago School monetarism, saying the solution to any any problem at all is just lower wages and somehow you’ll be more competitive, whereas the American economy is already rendered uncompetitive, not because wages are so high, but because, as you mentioned before, the FIRE sector, the finance, insurance, and real estate sector is so high.

Rents and home ownership, having a home is too expensive to be competitive with foreign labor. Having to pay 18% of GDP on medical care, privatized medical care, prices American labor out of the market. All of the debt service that America has paid is pricing America out of the market.

So the problem is not that wages are too high. The problem is that the overhead that labor has to pay in order to survive, for rent, for medical care, for student loans, for car loans, to have a car to drive to work, for gas to drive to work, to buy the monopoly prices that you need in order to survive – all of these are too high.

None of this even appears in economic textbooks that you need to get a good mark on, in order to get an economics degree, in order to be suitably pliable to be hired by the Federal Reserve, or the Council of Economic Advisers, or by corporations that use economists basically as public relations spokesmen. So that’s the mess we’re in.

BENJAMIN NORTON:

Professor Hudson, in your article at your website, michael-hudson.com, you have an important section about the quantitative easing policies. We were talking about how there has been inflation in the past decade, but then inflation was largely in the FIRE sector, pushing up, artificially inflating the prices of real estate and stocks.

You note that:

While home ownership rates plunged for the population at large, the Fed’s “Quantitative Easing” increased its subsidy of Wall Street’s financial securities from $1 trillion to $8.2 trillion – of which the largest gain has been in packaged home mortgages. This has kept housing prices from falling and becoming more affordable for home buyers.

And you, of course, note that “the Fed’s support of asset prices saved many insolvent banks – the very largest ones – from going under.”

I had you on to discuss, in late 2019, before the Covid pandemic hit, we know that the Fed had this emergency bailout where it gave trillions of dollars in emergency repo loans to the biggest banks to prevent them from from crashing, trying to save the economy.

I do want to talk about this as well, because sometimes this is used by right-wingers who portray Biden hilariously as a socialist. You were just talking about how the Democrats have a deeply neoliberal, right-wing economic program.

But of course, there is this rhetoric that we see from Republicans and conservatives claiming that Biden is a socialist. They claim that the reason there is inflation is because Biden is just printing money and giving money to people.

Of course, that’s not at all what’s happening. What has happened is that the Fed has printed trillions of dollars and given that to stockholders, to big corporations, and to banks.

And this is a point that I saw highlighted in that panel I mentioned, the conference on inflation that was organized by the International Manifesto Group. A colleague of yours, a brilliant political economist, Radhika Desai, she invited everyone to go to the Fed website and look at the Fed balance sheet.

And this is the Fed balance sheet from federalreserve.gov. This is the Board of Governors of the Federal Reserve System website. And it is pretty shocking to see this graph, which shows the total assets of the U.S. Federal Reserve.

US Federal Reserve assets balance sheet 2022

Back in 2008, the Federal Reserve had around $900 billion in assets. Now it’s at nearly $9 trillion in assets.

And we can see, after the financial crash, or during the financial crash, it increased to around $2 trillion. And then around 2014, it increased to around $4.5 trillion. And then especially in late 2019 and 2020, it skyrocketed from around $4 trillion up to $7 trillion. And since then, it has continued skyrocketing to $9 trillion in assets.

Where did all of that money go? And what was the impact on the economy, of course?

MICHAEL HUDSON:

Well, the impact on the economy has been to vastly increase the wealth of the wealthiest 1% of Americans who own most of the stocks and bonds.

Sheila Bair, the former head of the Federal Deposit Insurance Corporation, pointed out that a lot of this $8 trillion is spent to buy junk bonds.

Here’s the problem. The problem really began with President Obama. He inherited a system where you had the largest wave of commercial bank fraud in American history.

As my colleague Bill Black at the University of Missouri at Kansas City has pointed out, everybody knew that there was a bank fraud on. The newspapers referred to junk mortgages and “NINJA” borrowers: “no income, no jobs, no assets.”

So banks had written mortgages way above the actual value of homes, especially to racial and ethnic minorities, without any ability of the borrowers to actually pay.

And then these banks had packaged these mortgages, and sold them to hapless pension funds, and other institutional investors and to the European banks that are always very naive about how honest American banks are.

You had this whole accumulation of what the 19th century called fictitious capital. Mortgages for property that wasn’t worth anywhere near as much as the mortgage is for.

So if the mortgage was defaulted, if homeowners had jingle mail – in other words, you just mail the keys back to the bank and say, ok, take the house, I find I can buy a house now at half the price that Citibank or one of these other banks lent out.

Well, normally you’d have a crash of prices back to realistic levels, so that the value of mortgages actually reflected the value of property, or the value of junk bonds issued by a corporation reflected the actual earning power of the corporation to pay interest on the junk bonds.

So by the time Obama took over, the whole economy was largely fictitious capital. Well, Obama came in and he said, my campaign donors are on Wall Street. He called in the Wall Street bankers and he said, I’m the guy standing between you and the crowd with the pitchforks, the people who voted for me. But don’t worry, I’m on your side.

He said, I’m going to have the Federal Reserve create the largest amount of credit in human history. And it’s all going to go to you. It’s going to go to the 1% of the population. It’s not going to go into the economy. It’s not going to build infrastructure. It’s not going into wages. It’s not going to reduce the price of homes and make them more affordable to Americans.

It’s going to keep the price of these junk bonds so high that they don’t crash back to non-fictitious values. It’s going to keep the stock market so high that it’s not going to go down. It’s going to create the largest bond market boom in history.

The boom went from high interest rates to low interest rates, meaning a gigantic rise in the price of bonds that actually pay interest that are more than 0.1%.

So there was a huge bond market boom, a huge stock market, a tripling of stock market prices. And if you are a member of the group that owns 72% of American stocks, I think that’s 10% of the population, you have gotten much, much richer.

But if you’re a member of the 90% of the population, you have had to go further and further into debt just in order to survive, just in order to pay for medical care, student loans, and your daily living expenses out of your salary.

So if American wages were at a decent level, American families would not be pushed more and more into debt. The reason the personal debt has gone up in the United States is because families can’t get by on what they earn.

So obviously, if they can’t get by on what they earn, and they have to borrow to get by, they are not responsible for causing the inflation. They’re being squeezed.

And the job of economists, and of Democratic Party and Republican politicians, is to distract attention from the fact that they’re being squeezed and blame the victim, and saying, you’re doing it to yourself by just wanting more money, you’re actually creating the inflation that is squeezing you.

When actually it’s the banks, and the government’s non-enforcement of the monopoly policy, and the government support of Wall Street that is responsible for what is happening.

BENJAMIN NORTON:

Very, very well said.

Professor Hudson, I should have highlighted another part of this graph here. This is, again, this is at the Federal Reserve Board website. It’s even more revealing when you look at the selected assets of the Fed, and you see that all of these assets basically are securities, securities held outright by the Fed.

We see that around 2008, the Fed had less than $500 billion in securities. And you have this policy of quantitative easing. And since then, basically all of the increase has been in securities. Of the roughly $9 trillion in assets the Fed holds, about about $8.5 trillion is in securities.

US Federal Reserve assets securities balance sheet 2022

I’m wondering if you can compare this to central banks in other countries. We’ve seen, for instance, that the Western sanctions on Russia were aimed at trying to destroy the Russian economy.

President Biden claimed they were trying to make the ruble into rubble. In fact, the ruble is significantly stronger now than it was before the sanctions. To such a degree that the Russian government and Russian national bank are actually trying to decrease the value of the ruble, because they think it’s a little overvalued; it makes it a little harder to be competitive.

So how does this policy of the US Fed having $8.5 trillion worth of securities compare to the policies of other central banks?

You have experience working with the Chinese government as an advisor. Do other governments’ central banks have this policy?

And and that $8.5 trillion in securities, what are those securities? Even from the perspective of these neoliberal economics textbooks that you were talking about, that people are taught in universities, this seems to me to be totally insane. I don’t see how there is even an academic, neoliberal textbook explanation for this policy.

MICHAEL HUDSON:

Very few people realize the difference between a central bank and the national treasury. The national treasury is what used to perform all of the policies that central banks now do. The national treasury would be in charge of issuing money and spending it.

Central banks were broken off in America in 1913 from the Treasury in order to shift control of the money supply and credit away from Washington to New York. That was very explicit.

The original Federal Reserve didn’t even permit a Treasury official to be on the board of directors. So the job of a central bank is to represent the interest of the commercial banks.

And as we just pointed out, the interest of the commercial banks is to produce their product: debt. And they create their product against existing assets, mainly real estate, but also stocks and bonds.

So the job of the central bank here is to support the financial sector of the economy, and that sector that holds wealth in the form of stocks, bonds, and loans, and especially bank bonds that make their money off real estate credit.

Same thing in Europe, with Europe’s central bank. Europe is going into a real squeeze now, and has been going into a squeeze ever since you had the Greek crisis.

In Europe, because right-wing monetarist designed the euro, part of the eurozone rule is you cannot run a budget deficit, a national budget deficit of more than 3% of gross domestic product.

Well, that’s not very much. That means that you can’t have a real Keynesian policy in Europe to pull the economy out of depression. That means that if you’re a country like Italy right now, and you have a real financial squeeze there, a corporate squeeze, a labor squeeze, the government cannot essentially rescue either Italian industry or Italian labor.

However, the European central bank can, by the way that it creates credit, by central bank deposits, the European central bank can vastly increase the price of European stocks, bonds, and packaged mortgages. So the European central bank is very much like the commercial bank.

China is completely different, because, unlike the West, China treats money and credit as a public utility, not as a private monopoly.

And as a public utility, China’s central bank will say, what are we going to want to create money for? Well, we’re going to want to create money to build factories; we’re going to want to create money so that real estate developers can build cities, or sometimes overbuild cities. We can create money to actually spend in the economy for something tangible, for goods and services.

The Chinese central bank does not create money to increase stock market prices or bond prices. It doesn’t create money to support a financial class, because the Communist Party of China doesn’t want a financial class to exist; it wants an industrial class to exist; it wants an industrial labor force to exist, but not a rentier class.

So a central bank in a Western rentier economy basically seeks to create credit to inflate the cost of living for homebuyers and for anyone who uses credit or needs credit, and to enable corporations to be financialized, and to shift their management away from making profits by investing in plant and equipment and employing labor to produce more, to making money by financial engineering.

In the last 15 years, over 90% of corporate earnings in the United States have been spent on stock buybacks and on dividend payouts. Only 8% of corporate earnings have been spent on new investment, and plants, and equipment, and hiring.

And so of course you have had the economy deindustrialized. It’s this idea that you can make money financially without an industrial base, without a manufacturing base; you can make money without actually producing more or doing anything productive, simply by having a central bank increase the price of the stocks, and bonds, and the loans made by the wealthiest 10%.

And of course, ultimately, that doesn’t work, because at a certain point the whole thing collapses from within, and there’s no industrial base.

And of course, when that happens, America will find out, wait a minute, if we close down the economy, we’re still reliant on China and Asia to produce our manufacturers, and to provide us with raw materials, and to do everything that we need. We’re really not doing anything but acting as a world – well, people used to say parasite – as a world rentier, as getting something for nothing, as a kind of financial colonialism.

So America you could look at as a colonial power that is a colonial power not by military occupation, but simply by financial maneuvering, by the dollar standard.

And that’s what’s being unwound today as a result of Biden’s new cold war.

BENJAMIN NORTON:

Professor Hudson, you criticized the strategy of simply trying to increase the interest rates to bring down inflation, noting that it’s going to lead to a further decline in homeownership in the United States. It’s going to hurt working people. I think that’s a very valid criticism.

I’m curious, though, what your take is on the response of the Russian central bank to the Western sanctions. We saw that the chair of the Russian central bank, Elvira Nabiullina, she – actually this is someone who is not even necessarily really condemned a lot by Western economists; she is pretty well respected by even, you know, Western neoliberal economists.

And she did manage to deal with the sanctions very well. She imposed capital controls immediately. She closed the Russian stock market. And also, in a controversial move, she raised the interest rates from around 9% up to 20%, for a few months. And then after that, dropped the rates.

MICHAEL HUDSON:

A few days, not a few months. That was very short. And now she has moved the interest rates way down.

BENJAMIN NORTON:

Back to 9%.

MICHAEL HUDSON:

She was criticized for not moving them further down.

BENJAMIN NORTON:

Yeah, well go ahead. I’m just curious. So she immediately raised it to 20%, and then has dropped the interest rates since then. I’m curious what you think about that policy. Yeah, go ahead.

MICHAEL HUDSON:

There is very little that a central banker can do when the West has declared a war, basically, a war on a country that is completely isolated.

The response has come from President Putin and from Foreign Secretary Lavrov. And they pointed out, well, how is Russia going to going to trade and get what it needs. And this is what the recent meetings of the BRICS are all about.

Russia realizes that the world is now broken into two halves. America and NATO have separated the West. Basically you have a white people’s confederation against all the rest of the world.

And the West has said, we’re isolating ourselves from you totally. And we think you can’t get along without us.

Well, look at the humor of this. Russia, China, Iran, India, Indonesia, and other countries are saying, hah, you say we we can’t get along without you? Who is providing your manufacturers? Who is providing your raw materials? Who is providing your oil and gas? Who is providing your agriculture, and the helium, the titanium, the nickel?

So they realize that the world is breaking in two, and Eurasia, where most of the world’s population is concentrated, is going to go its own way.

The problem is, how do you really go your own way? You need a means of payment. You need to create a whole international system that is an alternative to the Western international system. You need your own International Monetary Fund to provide credit, so that the these Eurasian countries and their allies in the Global South can deal with each other.

You need a World Bank that, instead of lending money to promote U.S. policies and U.S. investments, will promote mutual gains and self-sufficiency among the countries.

So already, every day in the last few weeks, you have had meetings with the Russians about this, who said, ok, we’re going to create a mutual trading area, starting among the BRICS: Brazil, Russia, India, China, and South Africa.

And how are we going to pay? We can’t pay in dollars, because if we have money in a dollar bank, or a euro bank in Europe, they can just grab the money, like they grab Venezuela’s money. They can just say, we’re taking all your money because, essentially, we don’t want you to exist as an alternative to the finance capital world that we are creating.

So essentially, Russia, China, and these other countries are saying, ok, we’re going to create our own international bank. And how are we going to fund it? Well, every member of the bank will contribute, say, a billion dollars, or some amount of their own currency, and this will be our backing. We can also use gold as a means of settlement, as was long used among countries.

And this bank can create its own special drawing rights, its own bank order, is what Keynes called it. It can create its own credit.

Well, the problem is that, if you have Brazil, for instance, or Argentina, joining this group, or Ecuador, that sells almost all of its bananas to Russia, how is it going to get by?

Well, if there is a BRICS group or a Shanghai Cooperation Organization bank, obviously the Western governments are not going to accept this.

So Russia realizes that as a result of Biden’s Cold War Two, there is going to be a continued rise in energy prices. You think gasoline prices are not high now? They’re going up. You think food prices are not high now? They’re going up more.

And Europe is especially the case, because Europe now cannot buy Russian gas to make the fertilizer to make its own crops grow.

So you’re going to have a number of countries in the Global South, from Latin America to Africa, being squeezed and wanting to trade with the Eurasian group.

And the problem is Russia says, all right, we know that you can’t afford to pay. We’re glad to give you credit, but we don’t want to give you credit that you’re going to simply use the money you have to pay your dollar debts that are coming due.

Because one of the effects that I didn’t mention of the Federal Reserve raising interest rates is there is a huge flow of capital from Europe and England into the United States, so that if you’re a billionaire, where are you going to put your savings? You want the highest interest rates you want. And if the United States raises interest rates, the billionaires are going to move their money out of England, out of the euro, and the euro is going back down against the dollar. It’s almost down to a dollar a euro.

The British pound is heading downwards, towards one pound per dollar.

This increase in the dollar’s exchange rate is also rising against the currencies of Brazil, Argentina, the African countries, all the other countries.

So how are they going to pay this summer, and this fall, for their food, for their oil and gas, and for the higher cost of servicing their dollar debts?

Well, for Eurasia, they’re going to say, we want to help you buy our exports – Russia is now a major grain exporter, and obviously also an oil exporter – saying we want to supply you and give you the credit for this, but you’re really going to have to make a decision. Are you going to join the U.S.-NATO bloc, or are you going to join the Eurasian bloc?

Are you going to join the White People’s Club or the Eurasian Club? And it really comes down to that. And that’s what is fracturing the world in these two halves.

Europe is caught in the middle, and its economies are going to be torn apart. Employment is going to go down there. And I don’t see wages going up very much in Europe.

You’re going to have a political crisis in Europe. But also you’ll have an international diplomatic crisis over how are you going to restructure world trade, and investment, and debt.

There will be two different financial philosophies. And that’s what the new cold war is all about.

The philosophy of US-sponsored finance capitalism, of making money financially, without industrialization, and with trying to lower wages and reduce the labor force to a very highly indebted workforce living on the margin.

Or you’ll have the Eurasian philosophy of using the economic surplus to increase productivity, to build infrastructure, to create the kind of society that America seemed to be growing in the late 19th century but has now rejected.

So all of this is ultimately not simply a problem of interest rates and central bank policy; it really goes beyond central banks to what kind of a social and economic system are you going to have.

And the key to any social and economic system is how you treat money and credit. Is money and credit going to be a public utility, or will it be a private monopoly run for the financial interests and the 1%, instead of a public utility run for the 99%?

That’s what the new cold war is going to be all about. And that’s what international diplomacy week after week is trying to settle.

BENJAMIN NORTON:

Very, very well said. And I really agree about this increasing kind of bipolar order, where the US-led imperialist system is telling the world they have to pick a side. You know, as George W. Bush said, you’re either with us or you’re against us; you’re with us or you’re with the terrorists.

That’s what Biden is saying to the world. And we see the West has drawn this iron curtain around Russia. And now they’re threatening to do the same around China.

Now, of course, the difference is that China has the largest economy in the world, according to a PPP measurement. It’s even larger than the US economy. I don’t know how they can try to sanction the Chinese economy, considering China is the central factory of the world.

But this is related to a question I had for you, Professor Hudson, and this is from a super chat question from Manoj Payardha, and it’s about how Chinese banks say they’re not ready yet to develop an alternative to the SWIFT. He asked, how will the Third World pay Russia for resources?

And we’ve seen, maybe you can talk about the measures being implemented. India has this rupee-ruble system that they’ve created.

But I want to highlight an article that was published in Global Times. This is a major Chinese newspaper, and this is from April. And it quotes the former head of China’s central bank, who was speaking at a global finance forum in Beijing this April.

And basically he said, we need to prepare to replace Swift. He said the West’s adoption of a financial nuclear option of using SWIFT to sanction Russia is a wake up call for China’s financial development. And he said, “We must get prepared.”

So it seems that they’re not yet prepared. But this is something that you’ve been talking about for years. Or maybe you disagree and maybe you think they already are prepared with the SWIFT alternative?

MICHAEL HUDSON:

Well they’re already using an alternative system. If they weren’t using an alternative system – Russia is adopting part of the Chinese system for this – they wouldn’t be able to have banks communicate with each other.

So, yes, they already have a rudimentary system. They’re making it a better system that can also be immune from U.S. computer espionage and interference. So yes, of course there’s already a system.

But I want to pick up on what you said about Biden, how Biden characterizes things.

Biden characterizes the war of the West against Eurasia as between democracy and autocracy. By “democracy,” he means a free market run by Wall Street; he means an oligarchy.

But what does he mean by autocracy? What he means by autocracy, when he calls China an autocracy, an “autocracy” is a government strong enough to prevent an oligarchy from taking power, and taking control of the government for its own interests, and reducing the rest of the economy to debt peonage.

An “autocracy” is a country with public regulation against monopolies, instead of an oligarchic free market. An “autocracy” uses money and credit, essentially, to help economies grow. And when debts cannot be paid in China, if a factory or a real estate company cannot pay debts, China does not simply say, ok, you’re bankrupt, you’re going to have to be sold; anybody can buy you; the Americans can buy you.

Instead, the Chinese say, well, you can’t pay the debts; we don’t want to tear down your factory; we don’t want your factory to be turned and gentrified into luxury housing. We’re going to write down the debt.

And that’s what China has done again and again. And it’s done that with foreign countries that couldn’t pay the debt. When a debt that China has come due for China’s development of a port, or roads, or infrastructure, it says, well, we understand that you can pay; we will delay payment; we will have a moratorium on your payment. We’re not here to bankrupt you.

For the Americans, to the international funds, they’re saying, well, we are here to bankrupt you. And now if we lend you, we the IMF, lends you money to avoid a currency devaluation, the term is you’re going to have to privatize your infrastructure; you’re going to have to sell off your public utilities, your electric system, your roads, your land to private buyers, mainly from the United States.

So you have a “democracy” supporting bankruptcy, foreclosure, financialization, and privatization, and low wages by a permanent depression, a permanent depression to keep down wages.

Or you have “autocracy,” seeking to protect the interests of labor by supporting a living wage, to increase living standards as a precondition for increasing productivity, for building up infrastructure.

You have these two diametrically economic systems. And, again, that’s why there’s a cold war on right now.

BENJAMIN NORTON:

And there’s another super chat question here, Professor Hudson. You mentioned the International Monetary Fund, the IMF. We have talked about that many times. This is from Sam Owen. He asked, why do countries continue to accept bad IMF loans when they have such a poor track record? Is it just the US government meddling in the national politics? Are there cases of good IMF loans?

MICHAEL HUDSON:

Well, what is a country? When you say a country to most people, people think, ok, let’s talk about Brazil; let’s talk about all the people in Brazil; you have a picture in the mind of the Amazon; you have a big city with a lot of people in it.

But the country, in terms of the IMF, is a group of maybe the 15 wealthiest families in Brazil, that own most of the money, and they are quite happy to borrow from the IMF, because they say, right now there’s a chance that Lula may become president instead of the neo-fascist Bolsonaro. And if Lula comes in, then he is going to support labor policies, and he may stop us from tearing down the Amazon. So let’s move our money out of the country.

Well, normally this would push the exchange rate of the cruzeiro (real) down. So the IMF is going to make a loan to Brazil to support the cruzeiro (real), so that the wealthy 1% of Brazil can move their money into dollars, into euros, into foreign currency and offshore bank incentives, and load Brazil down with debt, so that then when there is an election, and if Lula is elected, the IMF is going to say, well, we don’t really like your policies, and if you pursue a pro-labor, socialist policy, then there’s going to be a capital flight. And we’re insisting that you pay all the money that you borrowed from the West right back now.

Well, that’s going to lead Lula either to sit there, follow the IMF direction, and let the IMF run the economy, instead of his own government, or just say, we’re not going to pay the foreign debt.

Well, until now, no country has been in a strong enough position not to pay the foreign debt. But for the first time, now that you have the Eurasian group – we’ll call it BRICS, but it’s really Eurasia, along with the Southern groups that are joining, the Global South – for the first time, they can say, we can’t afford to stay in the West anymore.

We cannot afford to submit the economy to the IMF demands for privatization. We cannot submit to the IMF rules that we have to fight against labor, that we have to pass laws banning labor unions, that we have to fight against laborers’ wage, like Western democracies insist on. We have to go with the Chinese “autocracy,” which we call socialism.

And of course, when America accuses China being an “autocracy,” autocracy is the American word for socialism. They don’t want to use that word. So we’re back in Orwellian double-think.

So the question is what, will the Global South countries do when they cannot afford to buy energy and food this summer, without an IMF loan? Are they going to say, ok, we can only survive by joining the break from the West and joining the Eurasian group?

That is what the big world fracture is all about.

And I described this global fracture already in 1978. I wrote a book, “Global Fracture,” explaining just exactly how all of this was going to happen.

And at that time, you had Indonesia, you had Sukarno taking the lead, the non-aligned nations, India, Indonesia, were trying to create an alternative to the financialized, American-centered world order. But none of these countries had a critical mass sufficient to go their own way.

Well, now that America has isolated Russia, China, India, Iran, Turkey, all these countries, now it has created a critical mass that is able to go its own way. And the question is, now you have like a gravitational pull, and will this Eurasian mass attract Latin America and Africa to its own group, away from the United States? And where is that going to leave the United States and Europe?

BENJAMIN NORTON:

And we saw one of the clearest examples yet of this bipolar division of the world between, you know, the West and the rest, as they say, with this ridiculous meeting that was just held of the G7.

Of course, the G7 are the white, Western countries. And then they’ll throw in U.S.-occupied Japan in there, to pretend they’re a little more diverse.

But we saw that the G7 just held a summit, and basically the entire summit was about how can we contain China? How can we expand the new cold war on Russia into a new cold war on China?

And here’s a report in BBC: “G7 summit: Leaders detail $600bn plan to rival China’s Belt and Road initiative.” Now, I got a chuckle out of this. The idea that the US government is going to build infrastructure in the Global South, I mean, it’s pretty laughable.

It’s also absurd considering that China’s Belt and Road Initiative, which involves over half of the countries on Earth, is estimated at many trillions of dollars in infrastructure projects. So the US and its allies think that they can challenge that with $600 billion in public-private partnerships.

I should stress, of course, what they announced is going to be a mixture of so-called public initiative and then contracts for private corporations.

So it’s yet another giveaway to the private sector, in the name of building infrastructure.

But I’m wondering if if you can comment on the G7 summit that just was held.

MICHAEL HUDSON:

Well, nothing really came out of it. They all said that they could not agree on any more sanctions against Russia, because they’re already hurting enough. India, in particular, stood up and said, look, there’s no way that we’re going to join the sanctions against Russia, because it’s one of our major trading partners. And by the way, we’re getting a huge benefit from importing Russian oil, and you’re getting a huge benefit by getting this oil from us at a markup.

So the G7 could not get any agreement on what to do. It is already at a stalemate. And this is only June. Imagine the stalemate it’s going to be in September.

Well, next week, President Biden is going to Saudi Arabia and saying, you know, we’re willing to kill maybe 10 million more of your enemies; we’re willing to help Wahhabi Sunni groups kill more of the Iranian Shiites, and sabotage Iraq and Syria. We’ll help you back al-Qaeda again, if you will lower your oil prices so that we can squeeze Russia more.

So that’s really the question that Saudi Arabia will have. America will send give it more cluster bombs to use against Yemen.  And the question is, is Saudi Arabia going to say, ok, we’re going to earn maybe $10 billion less a month, or however much they’re making, just to make you happy, and so that that you will kill more Shiites who support Iran?

Or are they going to realize that if they throw in their lot with the United States, all of a sudden they’ll be under attack from Iran, Russia, Syria, and they’ll be sitting ducks? So what are they going to do?

And I don’t see any way that Biden can actually succeed in getting Saudi Arabia to voluntarily earn less on its oil prices. Maybe Biden can say it’s only for a year, only for one or two years. But as other countries know, when America says only for a year or two, it really means forever. And if you don’t continue, then somehow they have a regime replacement, or a regime change and a color revolution.

So Biden keeps trying to get foreign countries to join the West against Eurasia, but there is Saudi Arabia sitting right in the middle of it.

And all that Europe can do is watch and wonder how it’s going to get by without without energy and without much food.

BENJAMIN NORTON:

Yeah, in fact, Venezuela’s President Maduro just confirmed that the Biden administration has sent another delegation basically begging Venezuela to try to work out some deal because, of course, the U.S. and the EU have boycotts of Russian energy.

So it’s really funny to me that, after years of demonizing Venezuela, portraying it as a dictatorship and all of this, the U.S. had to decide, well, the war in Venezuela is not as important as the war on Russia right now; so we’re going to temporarily pause our war on Venezuela to stick the knife deeper into Russia.

But on the on the subject of the the G7 meeting, this was the hilarious comment made by the European Commission President Ursula von der Leyen, in an article in Reuters titled “Europe Must Give Developing Nations Alternative to Chinese Funds.”

So echoing the same perspective that we hear from Biden, U.S. government officials constantly say that the US needs to challenge China in the Global South. So Europe pledged €300 billion – however, once again, important asterisk – “in private and public funds over five years to fund infrastructure in developing countries.”

So once again, we see another neoliberal private-public partnership. It’s going to be another public giveaway to private corporations.

And “she said that this is part of the G7’s drive to counter China’s multitrillion-dollar Belt and Road project.”

Now, this is really just tying everything together that we have been talking about today, Professor Hudson – in your article “The Fed’s Austerity Program to Reduce Wages,” you conclude the article noting that the depression that people in the United States are on the verge of facing because of these neoliberal policies – telling workers in the U.S. that they need to decrease their wages and be unemployed in order to stop inflation – you point out that:

Biden’s military and State Department officers warn that the fight against Russia is just the first step in their war against China’s non-neoliberal economy, and may last twenty years. That is a long depression. But as Madeline Albright would say, they think that the price is “worth it.”

And you talk about the new cold war against the socialist economy in China and the state-led economy in Russia.

So you predict not only a depression is coming. We have seen that in mainstream media outlets. Larry Summers said, you know, a depression could be coming for a few years. But you say, no, not only is a depression coming; it’s going to be a long depression. We could be seeing 20 years.

And basically the U.S. government and other Western leaders, as we see Ursula von der Leyen from the EU, they’re basically telling their populations, tighten your belts; we have decades of depression coming, because we have collectively decided, as Western leadership, that we are going to force the world through a long depression economically, or at least forced the West through a long economic depression, in order to try to halt the rise of China and Russia.

They’re basically telling their populations, suck it up, tighten your belts for decades, because in the end, the price is worth it in order to prevent the collapse of our empires.

MICHAEL HUDSON:

That’s right. When they’re talking about private-public initiatives, they’re talking about Pentagon capitalism. That means the government will give trillions of dollars to private firms and ask them to build infrastructure.

And if they build a port or a road in a Global South country, they will operate this at a profit, and it will be an enormously expensive infrastructure, because to make financial money off this infrastructure, you have to price it at the cost of production, which is Pentagon capitalism, hyper inflated prices; you have to pay management fees; you have to pay profits; you have to pay interest rates.

As opposed to the Chinese way of funding as equity. The Western mode of funding is all debt leverage. China takes as collateral for the infrastructure that it pays, an equity ownership in the port or whatever infrastructure in the Belt and Road that it’s building.

So you have the difference between equity ownership, debt-free ownership, where if it can afford to pay, fine; if it doesn’t make an income, there are no dividends to pay.

Or you have the debt leverage that is intended that the government cannot pay it, so that the government that will be the co-signer for the debt for all of this infrastructure will somehow be obliged to tax its whole population to pay the enormous super-profits, the enormous monopoly rents, the enormous debt charges of von der Leyen’s Margaret Thatcher plan.

Von der Leyen thinks that she can do to Europe and to America what Margaret Thatcher did to England. And if she does, then then America and Europe deserve it.

BENJAMIN NORTON:

And Professor Hudson, as we start wrapping up here, I know you have to go pretty soon, just a few short questions here at the end.

I’m wondering if what we’re also seeing is not only this fundamental crisis in the Western neoliberal, financialized economies, but it’s also this bubble that has burst, or at least this phase that is over.

At least this is my reading, I’m curious if you agree. In the 1990s, the peak of, you know, the so-called golden age of neoliberalism; we had Bill Clinton riding this wave, and it was the “end of history,” in Francis Fukuyama’s nonsense prediction and all that.

How much of that was not only based on this exorbitant privilege, as the French call it, of the dictatorship of the US dollar – we talked about that based on your book “Super Imperialism,” how the US was given this massive global free lunch economically because of dollar hegemony – but how much of it was not just that, but also the fact that in the 1990s and the first decade of the 2000s, the US and Western Europe had access to very cheap consumer goods from Asia and very cheap energy from Russia?

To me, it seems like those two factors are some of the most important reasons why this golden age of neoliberalism in the ’90s and early 2000s was even possible.

It was on the back of low-paid Asian workers, and based on this idea that Russia would permanently be, what Obama called it: a gas station.

Well, we’ve seen that, one, East Asian economies have lifted themselves up of poverty, especially China has ended extreme poverty and raised median wages significantly.

And now, of course, the West has sanctioned itself against buying Russian energy, massively increasing the cost of energy around the world.

So do you think that that bubble, or that brief moment of the end of history, the golden age of neoliberalism, that can never come back?

Because unless the West can succeed in overthrowing the Russian government and imposing a new puppet like Yeltsin, and overthrowing the Chinese government, it seems like that that the golden in the 1990s is never going to come back.

MICHAEL HUDSON:

Well, you’ve left out the key element of the golden age: that is military force, and the willingness to assassinate any foreign leader that does not want to go along with US policy.

BENJAMIN NORTON:

Of course.

MICHAEL HUDSON:

You’re neglecting what America did to [Salvador Allende]; you’re neglecting how America took over Brazil; America’s meddling and control, and in Europe, the wholesale bribery and manipulation of Europe’s political system, to put in charge of the [German] Green Party a pro-war leadership, an anti-environmental leadership, to put in charge of every socialist party of Europe right-wingers, neoliberals.

Every European socialist and labor party turned neoliberal largely by American maneuvering and meddling in their foreign policy.

So it’s that meddling that was intended to prevent any alternative economic philosophy from existing to rival neoliberalism.

So that when you talk about the end of history, what is the end of history? It means the end of change. It means stop; there will be no reform; there will be no change in the neoliberal system that we have locked in.

And of course, the only way that you can really end history is by what Biden is threatening: atomic war to blow up the world.

That is the neoliberal end of history. And it’s the only way that the neoliberals can really stop history. Apart from that, all they can try to do is to prevent any change that is adverse to locking in the neoliberal order.

So the “end of history” is a declaration of war against any country that wants to go its own way. Any country that wants to build up its own economy as a way that will keep the benefits of its economic growth in its own country, instead of letting it go to the global financial class centered in the United States and Britain.

So we’re talking about, neoliberalism was always a belligerent, implicitly military policy, and that’s exactly what you’re seeing in the proxy war of US and NATO in Ukraine today.

BENJAMIN NORTON:

Yeah, very well said. That’s the other key ingredient: overthrowing any government that is a challenge, that shows there is an alternative, to try to prove the maxim that “there is no alternative.”

MICHAEL HUDSON:

Yes.

BENJAMIN NORTON:

Here’s an interesting comment from Christopher Dobbie. He points out that in Australia, the average age for their first homeowner was 27 in 2001; now it’s 35, and increasing more and more by the year.

Now, in the last few minutes here, Professor Hudson, here’s another brief question that I got from someone over at patreon.com/multipolarista – people can go and support this show. One of my patrons asked this question: who who is hurt most by the Fed or other central banks raising interest rates? People, average consumers, or companies?

And obviously, you talked earlier about how the US Federal Reserve is different from other central banks, but it’s kind of an open question. Who is hurt more by raising interest rates?

MICHAEL HUDSON:

Well, companies are certainly hurt because it means that any possibility of getting productive credit is raised. But they’re also benefited, because if interest rates raised go up high enough, then it will not pay corporate raiders to borrow money to take over and raid companies and empty them out, like they did in the 1980s.

So everything cuts both ways. Raising the interest rates have given commercial banks an excuse to raise the interest charges on credit card loans and mortgage debts.

So raising interest rates, to the banks, have enabled them to actually increase their margin of monopoly profits on the credit that they extend.

And that certainly hurts people who are reliant on bank credit, either for mortgages or for consumer debt, or for any kind of loans that they want to take out.

Basically, raising interest rates hurts debtors and benefits creditors.

And benefiting creditors very rarely helps the economy at large, because the creditors are always really the 1%; the debtors are the 99%.

And if you think of economies, when you say, how does an economy benefit, you realize that, well, if the economy is 1% creditors and 99% debtors, you are dealing with a bifurcation there.

And you have to realize that the creditors usually occupy the government, and they claim we are the country. And the 99% are not very visible.

Democracy can only be afforded if they population’s voting has no effect at all on the government, that it’s only symbolic. You can vote exactly which oligarch you want to rule your country. Ever since Rome that was the case, and it’s the case today.

Is there really any difference between the Republicans and Democrats in terms of their policy? When you the same central bank bureaucracy, the same State Department blob, the same military-industrial complex, the same Wall Street control, what does democracy mean in a situation like that?

The only way that you can have what democracy aims at is to have a government strong enough to check the financial interests, to check the 1%, acting on behalf of the 99%. And that’s what socialism is.

BENJAMIN NORTON:

Very well said.

Here is another brief question from patreon.com/multipolarista – people can become a patron and help support the show over there.

This question, Professor Hudson, is about the proposal of an excess profits tax as an alternative to try to contain inflation. What do you think about the proposal of an excess profits tax?

MICHAEL HUDSON:

Well, only the little people make profits. If you’re a billionaire, you don’t want to make a profit; you want to essentially take all of your return in the form of capital gains. That’s where your money is.

And the way you avoid making a profit is you establish an offshore bank or creditor, and you pay out all of your profits in the form of interest, which an expense. You expense all of what used to be, what really is, income. And you show no profits at all.

I don’t think Amazon has ever made a profit. You have huge, the biggest corporations, with all the capital gains, have no profits. Tesla is a gigantic stock market presence, and it doesn’t make a profit.

So the key is capital gains, is financial gains, stock market gains, gains in real estate prices, unearned income. That’s what the free lunch is.

You want to prevent profits being paid out in the form of interest. So I would vastly increase profits, by saying you cannot deduct interest as a business expense. It’s not a business expense. It’s a predatory parasitic expense. So you’re going to have to declare all of this as profit, and pay interest on it.

Pricing your output from a foreign offshore banking center, so that you don’t seem to make any profit, like Apple does, pretending to make all its money in Ireland, you can’t do that anymore. You’re going to have to pay a real return.

So the accounting profession has made profits essentially tax free. So the pretense of making money by taxing profits avoids talking about capital gains and all of fictitiously low profits that are simply pretended not to be profit, like interest, depreciation, amortization, offshore earnings, management fees.

All of these should be counted as profits, and taxed as such as they were, I’d say back at the Eisenhower administration levels.

BENJAMIN NORTON:

And finally, the last question here, Professor Hudson, someone asked about the U.S. government pressuring countries in Africa not to buy Russian wheat. And the U.S. is, of course, claiming that this wheat is supposedly stolen from Ukraine.

This article, this headline at Newsweek, it summarizes pretty well: “U.S. Warns Starving African Nations to Not Buy Grain Stolen by Russia.” Again, that “stolen” is alleged by the U.S.

But you actually have a really good column about this over at your website, which again is michael-hudson.com: “Is US/NATO (with WEF help) pushing for a Global South famine?

I know this could be a long point of discussion; it could be the entire interview. And I know you have to go soon. But just concluding here, I’m wondering if you could comment.

The United Nations itself has warned that there could be a famine, especially in Global South nations.

What do you think the role of these neoliberal policies and Western sanctions are in fueling that potential crisis?

MICHAEL HUDSON:

Well, the wealthiest families in the world used to go every year, now they go every few years, to Davos, to Klaus Schwab’s Davos World Economic Forum. And they say, the world is overpopulated; we need about 2 billion human beings to starve, preferably in the next year or two.

So it’s as if the wealthy families have got together and say, how can we thin out the population that really we, the 1%, don’t need?

And in all of their policies, it is as if they’ve decided to follow the World Economic Forum and deliberately shrink the world population, especially in Africa and Latin America.

Remember, these are white people at the World Economic Forum, and that is their idea of how to retain equilibrium.

They’re always talking about “equilibrium,” and equilibrium is going to be for countries that cannot afford to grow their own food, because they have put their money into plantation crops and cotton to sell to the West, instead of feeding themselves – they’re just going to have to starve to contribute to world “equilibrium.”

BENJAMIN NORTON:

And while we’re on the subject of the World Economic Forum, I guess I should just briefly add – we’ve talked about this a little bit, but I just feel remiss not mentioning it – it’s interesting to see how right-wingers have seized on the World Economic Forum and begun criticizing it a lot.

Obviously, it’s worth criticizing. It’s a horrible neoliberal institution that represents the Western capitalist class. But we’ve even seen, you know, Glenn Beck, the right-winger, former Fox News host, he published a book about the Great Reset and the World Economic Forum.

I’m just wondering really quickly if you could respond to the idea that the World Economic Forum is like some “socialist” organization. Obviously, it’s the exact opposite.

But what do you say to these conservatives who have a right-wing critique of the World Economic Forum, and think it’s like secretly socialist, and Biden is a socialist.

MICHAEL HUDSON:

They look at any government or managerial power as socialist, not drawing the distinction between socialism and oligarchy.

The question is government power can be either right-wing or left-wing, and to say that any government power is socialist is just degrading the word.

However, as I mentioned before, almost all of the European “socialist” parties are neoliberal. Tony Blair was the head of something that called itself the British Labour Party. Gordon Brown was the head of the British Labour Party.

You can’t be more neoliberal and oligarchic than that. And that’s why Margaret Thatcher said her greatest success was creating Tony Blair.

You have the same thing in France; the French “socialists” are on the right-wing of the spectrum. The Greek “socialist” party, on the right-wing of the spectrum.

You have “socialist” parties around the world being neoliberalized.

So what does the word socialism mean? You want to go beyond labels into the essence.

And the question is, in whose interest is the government going to be run for? Will it be run for the 1% or the 99%?

And the right wing wants to say, well, the 1% can be socialist, because they’re taking over the government and that’s the big government, and we’re against it.

Well, the right-wing is taking over the government, but it’s not really what the world meant by socialism a century ago.

BENJAMIN NORTON:

Yeah, very well said. I just always laugh when I see these right-wing critiques of the World Economic Forum. I mean, the World Economic Forum is the embodiment of capitalism. It is the group of the elite capitalists who get together to talk about how they can exploit the working class and help monopolize the global economy on behalf of Western capital.

So with that said, there still are many questions, but I know you have to go, and we’re already at an hour and a half.

I do want to thank everyone who joined. We’re at 1200 viewers right now, so it has been a really good response.

Professor Hudson, you’re very popular. You should do your own YouTube channel. Maybe we can talk about that, because every time I have you on, it’s always an amazing response that I get. And hopefully we can do this again more in future.

Aside from people going to your website, michael-hudson.com, is there anything else that you want to plug before we conclude?

MICHAEL HUDSON:

Well, the book that I just wrote, “The Destiny of Civilization,” is all about what we’ve been talking about. It’s about the world’s split between neoliberalism and socialism. So that was just published and is available on Amazon. And I have two more books that are coming out very shortly.

BENJAMIN NORTON:

Yeah, for people who are interested, I did an interview with Professor Hudson here at Multipolarista a few weeks ago about his new book, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

And of course, anyone who wants to support this show, you can go to patreon.com/multipolarista. And as always, this will be available as a podcast, if you want to listen to the interview again. I’m certainly going to listen to this discussion again. You can find that anywhere there are podcasts.

Professor Hudson, it’s always a real pleasure. Thanks so much for joining me.

MICHAEL HUDSON:

I enjoyed the discussion.

BENJAMIN NORTON:

And like I said earlier at the beginning, for me, I truly think it’s always a privilege, because I do think you’re one of the greatest living economists. So I always feel very privileged to have the opportunity to pick your brain about all of these questions.

And I want to thank everyone who commented, who watched, and who listened. I will see you all next time.

Sergey Lavrov: Roundtable discussion SCO Treaties

June 30, 2022

Source

Foreign Minister Sergey Lavrov’s video address to the organisers of and participants in the roundtable discussion dedicated to the 20th anniversary of the SCO Charter and the 15th anniversary of the SCO Treaty on Long-Term Good-Neighbourliness, Friendship and Cooperation, June 29, 2022

Colleagues, friends,

I bid a most cordial and hearty welcome to the organisers of and participants in the roundtable discussion dedicated to two landmark events in the development of the Shanghai Cooperation Organisation. I am referring to the 20th anniversary of the SCO Charter and the 15th anniversary of the SCO Treaty on Long-Term Good-Neighbourliness, Friendship and Cooperation.

These fundamental documents establish aims and objectives, principles, rights and obligations, whereby the member states are guided in their joint efforts undertaken in the name of a safe and stable common future as well as the well-being and prosperity of their peoples. The values of mutual understanding and trust, equality and consensus, as well as the refusal to participate in hostile actions against each other or directed against third countries serve as a firm foundation for strengthening the spirit of mutual understanding and partnership inherent in the SCO.

Today, our Organisation is a dynamic international union of a new type, located in vast Eurasian expanses. It is distinguished by a creative philosophy and an ability to constantly generate creative energy in the name of achieving common goals. The SCO is by right perceived in the world as a recognised, authoritative, reliable and attractive partner, which is making a significant contribution to maintaining peace and stability, and ensuring sustainable development in Eurasia.

Russia’s foreign policy priorities include strengthening the SCO in a comprehensive way and promoting a meaningful dialogue and practical cooperation in the area of security, the economy, and humanitarian ties. We have consistently advocated greater coordination between the member states in international affairs and strengthening the impact of collaboration with observer states, dialogue partners, and interested multilateral organisations. It is important to continue the coordinated policy towards expanding the SCO, while carefully weighing each step, primarily from the point of view of whether it can really strengthen the Organisation.

Counteracting terrorism, drug trafficking and trans-border organised crime is a matter of particular importance on the SCO agenda.  Given the growing scale of interconnected challenges and threats, we continue the work to implement our leaders’ decisions on improving the mechanisms designed to counteract these risks, this in compliance with the relevant initiatives put forward by member states. Simultaneously, measures are being taken to expand the functional potential of the Regional Anti-Terrorist Structure.

A firm basis has been created for promoting economic interaction within the SCO. It is necessary to work hard to put the existing plans into practice and implement concrete measures intended to ensure food, transport and energy security, develop remote and rural territories, strengthen inter-regional ties, carry out digital transformation, and introduce high technologies and innovations.  It will be of use to approve, as expected, a roadmap on increasing the share of national currencies in mutual payments.

Yet another promising vector of joint work is setting up wide-ranging cooperative ties in the interests of creating the Greater Eurasian Partnership through the establishment of an open, mutually beneficial and equitable interaction with partners on our common continent, based on the norms of international law and a balance of national interests.

We are expanding humanitarian exchanges, including in education, science, culture, healthcare, the fight against epidemics, tourism, and human contacts, including contacts between young people.

A vast legal and contractual infrastructure, a huge human and resource potential, multilevel practical mechanisms and the accumulated rich experience of multifaceted cooperation remain a guarantee of the SCO’s further strengthening. Amid the continuing tectonic shifts in world politics and the economy, our Organisation can and must become one of the core elements of a new, more just and democratic polycentric world order based on the UN Charter, the principles of sovereign equality of all states, non-interference in internal affairs, and equal and indivisible security.

Russia has come up with an initiative to modernise the SCO and adapt it to the present-day geopolitical realities.  I am confident that the leaders of our countries will map out the priorities and measures to achieve the said goals at the upcoming September SCO Summit in Samarkand, which will be the culmination of Uzbekistan’s successful chairmanship.

In conclusion, I would like to wish you interesting and informative discussions and all the best.

Sanctions against Russia are leading Latin America to the abyss

June 27, 2022

Machine translated from:  http://www.opciones.cu/internacionales/2022-04-13/las-extorsiones-contra-rusia-golpean-a-latinoamerica

The war situation between Russia and Ukraine, together with the numerous extortions that the United States and its allies have imposed against Moscow, not only hit economically this nation but also Latin American countries.

One of the most affected is Ecuador because if in 2021, 20% of the bananas it exported were destined to Russia (about 85 million boxes) now it has nowhere to put them and they will spoil with the consequent monetary loss.

Last year Ecuador obtained 706 million dollars for banana exports to the Eurasian giant; 142 million dollars for shrimp; 99 million dollars for flowers; 28 million dollars for fish and 17 million dollars for coffee.

Paraguay had Russia as its second buyer of beef and in 2021 it sent 79 213 tons which represented an income of 314 million dollars and now with the disconnection of Moscow from the international banking system (swift) it does not know how to collect or send the product.

Something similar is happening with Brazil. In the previous period, Brazil sold soybean to Russia for 343 million dollars, 167 million for poultry meat, 133 million for coffee and 117 million for beef.

As for Mexico, it sent cars, computers, beer, tequila, among other products, and bought fertilizers. If it lacks this supply, agriculture will suffer losses and food will become more expensive.

This situation will lead to a worsening of the economic crisis in those nations, with the consequent wage cuts, layoffs of workers and price increases.

The enormous pressures exerted by the United States for Latin American nations to join the policy of Russophobia that it has imposed on the planet by controlling the main media, could aggravate these problems.

For example, an intergovernmental cooperation agreement between Russia and Argentina for the peaceful use of nuclear energy, particularly in the areas of basic and applied research, construction and operation of nuclear power plants and reactors, would be halted.

In addition, Moscow has expressed its interest in participating in a tender for the construction of a dry storage facility for spent nuclear fuel at the Atucha II nuclear power plant in the South American nation.

Washington uses all kinds of extortion to that end: political influence, economic promises and blackmail, as was the case during the recent vote at the UN General Assembly to suspend Russia from the UN Human Rights Council. After the vote, several delegates expressed that for various reasons they had been forced to vote that way.

Due to the impact of the Western “sanctions” war, the supply of fertilizers has been affected, which poses a threat to Latin American farmers, but is advantageous for the United States, which manufactures large quantities of fertilizer. Already, U.S. producers are looking to increase exports to countries in the region.

Fertilizer prices are currently at an all-time high and in the first quarter of 2022 they rose by 30%, which exceeds those reached in 2008 during the global financial crisis.

Due to the “sanctions”, shipments from Russia have been interrupted and this country is one of the main producers and exporters globally.

Moscow is the largest exporter of nitrogen fertilizers and the second largest exporter of potash and phosphorus fertilizers.

In 2021 the Eurasian giant shipped fertilizers worth $12.5 billion. Among its main buyers were Brazil and the European Union with 25% respectively, and the United States with 14%.

As is to be expected, if the fertilizers do not arrive, agricultural production in these countries will be greatly affected.

This complex scenario comes at a time when the Food and Agriculture Organization of the United Nations (UNFAO) reported that the food price index reached 159.3 points in March, an all-time high, while in February it had already beaten the record since the creation of the cost index in 1990.

The agency added that among the five categories that make up the index, four have never recorded such high prices: vegetable oils (248.6 points), cereals (170.1), dairy products (145.2) and meat (120.0).

Two of the categories increased prices in February due to the Russian-Ukrainian conflict: cereals by 17% and vegetable oils by 23%. These countries together export 30 % of the wheat and 20 % of the corn consumed in the world.

The present and future prospects for the Latin American economies are considered difficult because they will have to face the high costs of food products, without yet recovering from the enormous losses caused by the Covid-19 pandemic.

As a corollary, it can be stated that the string of extortions imposed by the United States, not only on Russia but also on more than 30 countries in the world, are leading several Latin American nations into an abyss.

The Musket and the Noodle Stall: A Strategic Comparison

June 23, 2022

Source

By Fred Reed

In big-chunk terms, in the world today we see a contest between the Chinese economy and the American military, between Chinese dynamism and American coercion. Sure, China has a military and the US has an economy. Yet the emphasis, and spirit are as described.

The United States gives priority to the military over civilian economy, with military spending increasing at the expense of internal infrastructure and social needs. By contrast, China focuses on infrastructure within and trade without. I wonder whether Americans are aware of the extent of this. And its likely consequences.

To read the Asian-based press—Asia Times, Nikkei Asia, the South China Morning Post, the Global Times, and various tech sites—is to see a constant stream of infrastructure projects in China and advancing trade outside. As perhaps many know China promotes the Belt and Road Initiative, a massive program to connect all of Eurasia, as well as Africa and Latin America in a huge trade zone connected by rail, highways, fiber optics, maritime links, and commercial treaties. If completed it will dwarf the United States.

China, a rising technological center, leads the world in civil engineering, manufacturing, Five G, trade, and clearly intends to maintain the lead. All power ultimately rests on economic power. Below a few news stories more or less randomly chosen from around the web. Can you think of American equivalents?

China Mandalay Rail Line

“New international railway route from Southwest China’s Chongqing Municipality to Mandalay, southern Myanmar, has officially started operation, with the first freight train departing from Chongqing on Monday, which will arrive in Mandalay about 20 days earlier than what it takes on traditional routes.”

The port will also further connectivity under the Belt and Road Initiative and increase Chinese influence in Myanmar. Key word: Trade

America leads in phenomenally expensive aircraft carriers with serious developmental problems and no particular purpose. Google “Ford class carriers.”

China’s high-speed rail network hit the 40,000-kilometer mark by the end of 2021, reaching out to 93 percent of domestic cities with a population of over 500,000, An Lusheng, deputy head of National Railway Administration, said on Friday. This comes as the country ramps up a push to build itself into a transportation power.”

Fast, pervasive transportation greatly facilitates almost everything. Beijing has said it will have 30,000 miles in a few years. key words: manufacturing, trade, connectivity.

The first China-Russia highway bridge, which stretches from Heihe, a border city in Northeast China’s Heilongjiang Province, to the Russian city of Blagoveshchensk spanning the Heilongjiang River, opened to traffic on Friday, Chinese state broadcaster CCTV reported. It will open a new international highway that will boost the connectivity between cities in China and Russia.“ A few days ago. Here we have more of China’s program to tie all of Eurasia into one interconnected web. Note that it says the “first” bridge. Key words: Trade, connectivity.

China plans new high-volume space-launch facility

“The new Ningbo spaceport, the nation’s fifth such facility, will give a crucial lift to Beijing’s new space programs as its rivalry with the United States reaches space. The spaceport is said to be tailor-made for Chinese commercial aerospace manufacturers and service providers to one day wrest business and foreign orders from US rivals.”

Typical China. Planning five years in advance. If this follows the country’s pattern, construction will begin and continue without interruption until completed. Keyword: Commercial.

America leads the world in overpriced fighter aircraft with a history of unending engineering problems. Google “F-35.”

Cargo carried via New Land-Sea Corridor in western China grows 38% in Jan-May”

“With the RCEP coming into effect, the corridor has played a bigger role in boosting trade between China and ASEAN. On April 8, four trains left Southwest China’s Sichuan Province, carrying aluminum products, agricultural equipment, industrial equipment, chemicals and food to Laos, Thailand, Vietnam and Indonesia

The RCEP, Regional Comprehensive Economic Partnership, is a vast commercial agreement among whose members are all of ASEAN, Japan, Australia, New Zealand, and China.”

Key word: Trade.

Multi-functional modular seabed trencher developed by a Chinese firm has recently completed 100 kilometers of pipelines construction in “Bangladesh’s first marine pipeline project, setting two world records in directional drilling and deep trenching.”

My knowledge of pipeline trenching would be zero even after three cups of coffee and a hearty breakfast. I note, though that it is in Bangladesh: More connection of China and everywhere else. It also sounds like good engineering. Key words: Trade, connectivity.

The CKU Railways will create significant trade opportunities for Kyrgyzstan and Uzbekistan while linking China directly to the Middle East via Rail, with spin off benefits throughout the region.”

China, Kyrgyzstan, and Uzbekistan will be tied more into the Central Asian ecosystem. Construction begins next year. Key words: Trade, connectivity.

America is unchallenged in funny-looking Batplane intercontinental nuclear bomber costing, says Aviation Week, $640 million a copy as America prepares to fill intense world demand for nuclear war. Google “B-21.”

The China-Laos Railway: Yunnan to Vientiane by Bullet Train

Written by Coco Yang Updated Feb. 11, 2022

On December 3rd 2021, the 1,035-km (643-mile) China-Laos Railway was fully opened making possible a bullet train journey of only 10 hours from Kunming to Vientiane, capital of Laos. Key word: Trade.

China-Europe freight train trips top 50,000, yearly growth of 55% from 2016 to 2021

“The value of goods transported by the cargo service skyrocketed to $74.9 billion in 2021, up from $8 billion dollars in 2016, and its share in total trade between China and Europe has increased from 1.5 to 8 percent, according to the release China State Railway Group sent to the Global Times.” America will probably try to block this traffic because it goes through Russia. Again, coercion over competition. Key word: Trade, connectivity.

Proposed US military budget: $857 billion. Keywords: Profits, stupidity.

China Hosts over Sixty Percent of World’s Five G Base Stations

“China had set up a total of nearly 1.43 million 5G base stations as of the end of 2021….”

And many more this year. As can be found by browsing tech sites, China leads in Five G patents, installed base, technology, and manufacturing capacity. Keywords: Trade, manufacturing.

Many millions of Americans can’t read, a hundred thousand a year die of opioid overdoses, the economy is a trainwreck, and despair grows, but the Pentagon has Space Command to give America “Total Spectrum Dominance,” which presumably will pay our mortgages.

China’s digital yuan extends usage into finance scenarios

“SHANGHAI, June 17 (Reuters) – China’s digital yuan can now be used to buy wealth management products, pay for insurance policies, and extend bank loans, as the central bank further expands e-CNY’s application beyond retail shopping, though still only in pilot schemes.”

China is the world’s leading major country in digital currency. Beijing is low-key about it but implications for global finance worry the US. Keywords: Money, connectivity.

US leads world in pricey, unnecessary but glamorous and profitable nuclear-missile submarines. Google “Columbia class submarines.”

China moves toward STEM leadership

Worth reading. “American” prowess in technology increasingly rests on East Asian and Indian scientists and engineers as the US destroys its schools to further inclusiveness. Keywords: Abject, stupidity.

Value of China-Vietnam Cross-border Freight Trains More Than Triples in Q1”

US holds world lead in ratio of money given to the Ukraine to number of citizens living on sidewalks.

China leader in supercomputers: “As of June 2021, 188 of the world’s 500 most powerful supercomputers were located in China, a figure which is a third more than that of its nearest competitor, the United States, which accounted for an additional 122 supercomputers. Together, the two nations account for around 60 percent of the world’s most powerful supercomputers.”

This needs to be read with caution. How the two stack up in aggregate computing power, whatever that means, I don’t know. The US just announced the first exascale computer at Oak Ridge. The Sunway Oceanlight from China is on many websites said to be exascale, but isn’t quite. The important point is that it is entirely of Chinese design from architecture to chips, using silicon of Chinese design and manufacture. It is remarkable that China can manage this in the face of American attempts to strangle the country technologically.

China Launches World’s Largest container Ship

A gorgeous monster. Check photo. China also has seven of the world’s largest cargo ports. Keyword: Trade

Trade deficit with China. Boring but worth a glance.

“During 2021, the United States exported $151,065,200,000 in products to China, but then imported $506,366,900,000 in products from China, resulting in $657,432,100,000 in total trade between the two countries–and a $355,301,700,000 deficit for the United States.” Keyword: Can you guess?

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Sitrep Operation Z: Cauldrons and Fatigue

June 22, 2022

by Saker Staff

Best again today, is Military Summary and worth listening to and watching.  He is ‘predicting’ a ‘riot’ in among the Ukie troops in the cauldron.  There is an update on Snake Island (Serpent Island).

What does become clear is that the map is going to turn very red in large areas very soon.

Yes there is a cauldron with estimated 1,500 to 2,000 Ukrainian forces.  This is where Military Summary expects the ‘military riot’.

The main take-away from the Russian MoD report is this:  “The enemy suffers considerable losses.”

Now we wait for

  • cessation of the shelling into the Donbass and
  • the results of all oil refineries in the Ukraine now non-functional and the results of
  • … this Kadyrov announcement: the imminent encirclement of Lisichansk and the subsequent cleansing of the city.

The Russian Defense Ministry also reported that as many as 500 Ukrainian troops from a single brigade were killed in the city of Nikolaev.

In the wider world, Ukraine War fatigue is setting in.  We still get reports that this country or another country will be sending wizzbang weapons, but if you read the fine print, it is usually dependent on arrival of US or other weapons in exchange.  Here is only one example:

Slovakia is trading with Germany on the terms of military assistance to Ukraine, writes Buisness Insider.According to the publication, Slovakia agrees to supply Kiev with 30 Soviet-made T-72 tanks, but in return requires 30 Leopard 2A4 tanks from Berlin.Germany does not like this formula, they are ready to supply only 15 tanks there — one Leopard for two T-72s.  As a result, all tanks remain in their places, deliveries are delayed, the newspaper notes.

While Ukraine War Fatigue is setting in in the western climes, the fear of cold and a powerless future is also setting in.  The disgust and fatigue with the Ukrainian refugees are now palpable.  What also is turning decidedly red, is some faces of the greens, because we hear that in various places in the EU, they are un-mothballing their old coal power plants.  It is of course not easy to recommission these plants, and one can only laugh because at least 70% of European thermal coal, is imported from Russia.

Our own Mr P, who knows about power plants and engineering wrote up a piece for us in the Cafe.  It is worth taking a look at: http://thesaker.is/moveable-feast-cafe-2022-06-18/#comment-1111759

A central idea is that the coal power plants can be taken out of mothballs, but what about the old skilled craftsmen?

Some overall themes that are appearing, are that Turkey may want to leave NATO (or should we say, subtext, Break NATO) and the EU cannot agree on anything, so, they want to change their ways so that they do not need 100% agreement or approval on anything from the member states.  What this should indicate to us, is that NATO may just be history in a while and the EU as well, in its current form.  Something else can be predicted to change its current form, and that is the United States.  In Texas they have this referendum to determine if it will secede from the US.  It won’t be the last state either.

We are in a tsunami of change, but there is one term that can be used and that is the old military term SNAFU everywhere.  This applies to Zelensky as well, as Zelensky fatigue has now really set in.   Zelensky addressed the African Union and only 4 out of 55 invited heads of state attended the virtual session.

2 Short Updates

The US Embassy in Moscow has a new address (https://t.me/donbassr/22283): 1 Donetsk People’s Republic Square.

Putin: The issue of creating an international reserve currency based on a basket of BRICS currencies is being worked out.  The Russian President also invited representatives of the BRICS countries to the economic forum in Vladivostok in September.

Beggaring Europe: switching cheap Russian gas for expensive American LNG

EU steps to significantly reduce Russian gas imports will see Europe newly dependent on much pricier US liquefied natural gas

June 15 2022

Photo Credit: The Cradle

By Daoud Baalbaki

Europe’s dependency on Russian natural gas has been a contentious issue for European Union (EU) policy makers for decades. Dozens of policies have been proposed over the years to diversify the continent’s gas supply, or to switch to green energy sources in order to minimize reliance on Russian gas.

There are only two ways to transport natural gas – via pipelines, or by liquifying the gas, transporting it as cargo, then re-gasifying it at the destination. Both processes require time and considerable infrastructure investment.

Pipelines: In 2021, Russian natural gas accounted for about 46 percent of the EU’s total natural gas imports with an amount of 155 bcm (billion cubic meters). Figure 1 shows that Russian pipelines provided about 41 percent (about 139 bcm) of these gas imports to the EU over the same period.

Norway is Europe’s second-biggest natural gas supplier, followed by pipelines from North Africa and Azerbaijan.

LNG: Imports of LNG constitute about 21 percent of total European natural gas imports.

Figure 2 shows the sources for the LNG shipments that were imported by the EU in 2021. It is important to note that the United States represents the main supplier for LNG to the EU, and is likely to be the main beneficiary if Russian gas pipelines cease operations. The US only commenced exports of LNG to the EU in 2016, but rapidly reached 22.3 bcm in 2021, representing 23 percent of all LNG exports from the US.

Europe’s dependency

Before the conflict in Ukraine, Russia was still a major supplier for LNG in Europe with about 20 percent of the total LNG imports (equivalent to 16 bcm). This means the EU imported a total of 155 bcm of natural gas from Russia annually – 139 bcm via pipelines and 16 via LNG. This accounts for almost half of all European natural gas imports.

This strategic failure in achieving independence from Russian natural gas was mainly due to lack of a coherent and unified strategy among EU members. As shown in Figure 3 the dependency on Russian natural gas varies from one European country to another.

Countries like the Czech Republic, Slovakia, Latvia, Estonia, Finland, and Hungary are fully dependent on Russian natural gas, while the countries that import the largest quantities like Germany, France, Italy Poland, and Greece are semi-dependent, and countries like Portugal are quasi-independent.

With intense pressure from Washington, this issue of over-reliance on Russian resources became further securitized following the conflict in Ukraine. Even after the west announced sanctions on Russian imports, the EU imported 39 billion euros worth of fossil fuel from Russia, until as recently as mid-May.

Reducing reliance on Russia

According to a Flash Eurobarometer survey for the European Commission (EC), 85 percent of Europeans believe that the EU should reduce its dependence on Russian gas and oil as soon as possible to support Ukraine. Meanwhile the EC, international agencies, and independent think tanks have proposed short term plans to decrease the EU’s dependence on Russian fossil fuels by the end of 2022.

The main three short term plans are the EC’s REPowerEU Plan under which two-thirds of Russian gas (101.5bcm/155bcm) could be replaced by next winter; the International Energy Agency’s (IEA) ten-point plan which proposes a one-third (50bcm / 155bcm) reduction of the Russian natural gas imports, finding alternative sources, and switching to renewable energy; and economic think tank Bruegel’s plan which says, in theory, the EU should be able “to replace Russian [gas] flows entirely,” even in the short term, by calculating Europe’s spare gas import capacity. Realistically, however, Bruegel calls for a reduction (86 bcm/155 bcm) by possibly switching electricity production to nuclear and coal, while applying energy saving policies.

What’s the plan?

Essentially, what these plans all have in common is a call for the EU to diversify its natural gas imports portfolio, switch to renewable energy, and apply policies for energy saving. Of the aforementioned plans, the REPowerEU strategy appears to be the most feasible.

The plan suggests cutting Russian natural gas imports to 101.5 bcm from 155 bcm in 2021 – in theory, by increasing non-Russian gas supply by 63.5 bcm, and reducing gas demand by 38 bcm.

To increase non-Russian gas supply by 63.5 bcm, the plan assumes the following can be achieved:

  1. Increase non-Russian LNG imports by 50 bcm
  2. Increase non-Russian pipeline imports by 10 bcm.
  3. Increase biomethane production by 3.5 bcm.

Complimentary to this, they also recommended reducing gas demand by 38 bcm. For this, they proposed 4 points:

  1. Energy savings to cut demand by 14 bcm
  2. Rooftop solar power to reduce gas demand by 2.5 bcm
  3. Heat pumps to reduce gas demand by 1.5 bcm
  4. Deploying wind and solar in the power sector to reduce gas demand by 20 bcm.

The first problem with the EC study is that it expects the demand for gas in Europe in 2022 to remain the same as in 2021. Studies shows that the continent may need around 20-25 bcm more than in the same period last year. So, the target gas requirement is actually 121.5 – 126.5 bcm – not just replacing the Russian imports of 101.5 bcm.

Increasing non-Russian LNG

By far the most important metric here is the EU’s current regasification capacity. As mentioned above, when imported as LNG, the liquified gas needs to be regasified by specialized plants in ports in order to be reinjected into pipelines. All combined, the EU countries had around 74 bcm spare regasification capacity last year.

The problem is that about half this spare capacity is concentrated in Spain and Portugal, which are linked to the rest of the EU with a pipeline of just 7.5 bcm/year capacity. Therefore, the EU has insufficient re-gasification plants to import an additional 50 bcm of LNG.

The proposed solution is to use the UK (now, officially outside the EU) – which has around 29 bcm spare regasification capacity – as a land bridge to import LNG and then reexport it to the EU via pipelines. In this scenario, the EU may succeed in importing an extra 50 bcm of LNG.

But even if Europe overcomes the regasification obstacle, is there enough LNG supply in the world to cover the demand?

Switching dependency from Russia to the US 

Due to many export plants struggling with technical and feed gas issues during the year, global LNG export capacity actually declined in 2021, despite the continued rise in capacity in the US. At the beginning of 2022, it was estimated that the LNG global export capacity will increase by some 43 bcm if all plants that had technical issues and shutdowns were to come back online.

In the second quarter of this year, the International Energy Agency’s gas market report estimated that the EU’s LNG imports may increase by a maximum of 25 bcm and that 65 percent of this quantity will be supplied by the US.

If this transpires, US LNG exports will increase by a whopping 19 percent, making it the global leader of LNG exports overnight. Meanwhile, Africa, Europe, Central and South America and Eurasia will have smaller contributions to global LNG supply growth in 2022, while the supply of the Asia Pacific and West Asian regions are expected to decline.

If we take Qatar as an example, despite its leading role in LNG markets and close relations with western states, Qatar is unable to supply Europe with extra large quantities in the short term because it suffers from a lack of spare LNG export capacity. Furthermore, over 70 percent of these exports are sold to Asian buyers via long term contracts. Europe would have to wait until 2024-25 to be able to count on Qatari LNG supplies.

This high-level demand for LNG projected by Europe will saturate the market and increase the competition for flexible LNG cargoes. In order to attract more LNG cargoes, spot prices in Europe should be $2-3/MMBtu higher than the Asian markets. This is leveling now at $35/MMbtu for the rest of 2022 which is more than five times their five-year average.

The bottom line is that it will be impossible for the EU to increase their LNG imports by the crucial 50 bcm milestone. Even if the EU overcomes the technical issues represented by the regasification capacities and the interconnections between the EU countries and Britain, the supply in the global LNG market simply cannot meet the demand.

Although Europe may receive an extra 25 bcm of LNG, it will come attached to a very high price tag, while prices in North America will be largely unaffected. The US is the big winner in this scenario, raking in exorbitant profits while establishing itself as the world’s biggest LNG exporter.

Where are the non-Russian gas pipelines?

Norway: As the main non-Russian gas supplier of natural gas to Europe via pipelines, Norway’s total capacity of supply is 94.3 bcm per year. Only 86.3 percent of this capacity was used in 2021, theoretically leaving 12.9 bcm of spare annual capacity.

However, in the first two quarters of 2022, the pipelines have been working close to effective full capacity, and this capacity is expected to be lower in the summer, as previous records indicate.

North Africa: The other source of pipeline natural gas to Europe is via three pipelines from North Africa: The Medgaz pipeline from Algeria to Spain, the Trans-Mediterranean Pipeline (also known as Transmed which carries Algerian gas from Tunisia to Italy), and the Green Stream pipeline, from Libya to Italy. A fourth pipeline, the Gas Pipeline Maghreb-Europe (GME), runs from Algeria to Spain via Morocco, but has not been used since 1 November 2021, following the breakdown of diplomatic relations between Algeria and Morocco that August.

The flow in Medgaz pipeline to Spain can increase by around 2 bcm, after increasing its capacity.  These extra quantities can cover a part of the quantities that have been delivered via GME in 2021. However, Algeria has also recently suspended trade ties with Spain over the latter’s decision to side with Morocco over the disputed Western Sahara territory, which has exacerbated tensions between Rabat and Algiers.

The Transmed pipeline to Italy has around 10 bcm spare capacity, but recent analysis shows that Algeria will not be able to offer additional gas quantities since reaching its production capacity and needing to address its own growing domestic demand.

Exports in Libya ranged around 5 bcm before 2020 but declined to 3.2bcm in 2021. A recovery can offer the extra 1-2 bcm, but ongoing political instability in Libya can offer no such guarantees.

As a result, North Africa is not foreseen to provide any extra-large quantities of gas to Europe in 2022.

Azerbaijan: In 2021, the EU started receiving natural gas from Azerbaijan via the Trans Adriatic Pipeline (TAP). The capacity of TAP is around 11 bcm, and flows in 2021 totaled 8.1 bcm, meaning there is extra capacity of around 2.5 bcm.

Overall, the EU plan is based on making a year-on-year increase of 2-3 bcm from Azerbaijan, 2-3 from Algeria, and 4-5 bcm from Norway. These appear to be achievable with regards to the pipelines’ spare capacities, but ambitious in terms of gas production quantities for the suppliers.

Trading dependencies

This European demand for non-Russian gas will mainly be covered by the United States which is the only player that stands to gain economically. It is therefore in Washington’s interests that Europe converts a big part of its gas imports from Russian pipelines into LNG. It is also why the US has remained determined for years to stop the Russia-to-Germany NordStream 2 pipeline from becoming operational – which it succeeded in doing in February, as tensions over Ukraine worsened.

As the US has its own independent pricing system, it is not affected by the international gas prices, which are expected to rise significantly in the European and Asian markets, bringing instant value to LNG production activities in the US.

The EU plan to cut two-thirds of its Russian gas imports and replace it elsewhere – by the end of 2022 – is very optimistic. Closer scrutiny shows it will come with a very high cost – around five times the price that Europe used to pay. Whichever plan the EU implements, Europe will have to acknowledge that it will be neither an energy independent or politically independent continent for the foreseeable future.

The views expressed in this article do not necessarily reflect those of The Cradle.

Will the Global South break free from dollarized debt?

In his latest book, economist Michael Hudson pits socialism against finance capitalism and tears apart the ‘dream civilization’ imposed by the 1 percent.

June 09, 2022

By Pepe Escobar

Let’s jump straight into the fray. Hudson begins with an analysis of the “take the money and run” ethos, complete with de-industrialization, as 90 percent of US corporate revenue is “used to share buybacks and dividend payouts to support company stock prices.”

Michael Hudson’s new book on the world’s urgent global economic re-set is sure to ruffle some Atlanticist feathers.Photo Credit: The Cradle

With The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism, Michael Hudson, one of the world’s leading independent economists, has given us arguably the ultimate handbook on where we’re at, who’s in charge, and whether we can bypass them.

That represents the apex of “Finance Capitalism’s” political strategy: to “capture the public sector and shift monetary and banking power” to Wall Street, the City of London and other western financial centers.

The whole Global South will easily recognize the imperial modus operandi: “The strategy of US military and financial imperialism is to install client oligarchies and dictatorships, and arm-twist allies to join the fight against designated adversaries by subsidizing not only the empire’s costs of war-making (“defense”) but even the imperial nation’s domestic spending programs.” This is the antithesis of the multipolar world advocated by Russia and China.

In short, our current Cold War 2.0 “is basically being waged by US-centered finance capitalism backing rentier oligarchies against nations seeking to build up more widespread self-reliance and domestic prosperity.”

Hudson presciently reminds us of Aristotle, who would say that it is in the interest of financiers to wield their power against society at large: “The financial class historically has been the major beneficiary of empires by acting as collection agents.”

So inevitably the major imperial leverage over the world, a true “strategy of underdevelopment,” had to be financial: instrumentalizing IMF pressure to “turn public infrastructure into privatized monopolies, and reversing 20th century pro-labor reforms” via those notorious ‘conditionalities’ for loans.

No wonder the Non-Aligned Movement (NAM), established in Belgrade in 1961 with 120 nations and 27 observers, became such a threat to US global strategy. The latter predictably fought back with a slew of ethnic wars and the earliest incarnations of color revolution – fabricating dictatorships on an industrial scale, from Suharto to Pinochet.

The culmination was a cataclysmic Houston get-together in December 19, 1990 “celebrating” the dissolution of the USSR, as Hudson reminds us how the IMF and the World Bank “laid out a blueprint for Russia’s leaders to impose austerity and give away its assets – it didn’t matter to whom – in a wave of ‘shock therapy’ to let the alleged magic of free enterprise create a neoliberal free-for-all.”

Lost in a Roman wilderness of debt

To a large extent, nostalgia for the rape-and-pillaging of 1990s-era Russia fuels what Hudson defines as the New Cold War, where Dollar Diplomacy must assert its control over every foreign economy. The New Cold War is not waged only against Russia and China, “but against any countries resisting privatization and financialization under US sponsorship.”

Hudson reminds us how China’s policy “followed almost the same path that American protectionism did from 1865 though 1914 – state subsidy for industry, heavy public-sector capital investment…and social spending on education and health care to upgrade the quality and productivity of labor. This was not called Marxism in the United States; it was simply the logical way to look at industrialization, as part of a broad economic and social system.”

But then, finance – or casino – capitalism gained steam, and left the US economy mainly with “agribusiness farm surpluses, and monopolies in information technology (largely developed as a by-product of military research), military hardware, and pharmaceutical patents (based on public seed-money to fund research) able to extract monopoly rent while making themselves largely tax-exempt by using offshore banking centers.”

That’s the current State of Empire: relying only “on its rentier class and Dollar Diplomacy,” with prosperity concentrated in the top one percent of establishment elites. The inevitable corollary is US diplomacy imposing illegal, unilateral sanctions on Russia, China and anyone else who defies its diktats.

The US economy is indeed a lame post-modern remake of the late Roman empire: “dependent on foreign tribute for its survival in today’s global rentier economy.” Enter the correlation between a dwindling free lunch and utter fear: “That is why the United States has surrounded Eurasia with 750 military bases.”

Delightfully, Hudson goes back to Lactantius, in the late 3rd century, describing the Roman empire on Divine Institutes, to stress the parallels with the American version:

“In order to enslave the many, the greedy began to appropriate and accumulate the necessities of life and keep them tightly closed up, so that they might keep these bounties for themselves. They did this not for humanity’s sake (which was not in them at all), but to rake up all things as products of their greed and avarice. In the name of justice they made unfair and unjust laws to sanction their thefts and avarice against the power of the multitude. In this way they availed as much by authority as by strength of arms or overt evil.”

Socialism or barbarism

Hudson succinctly frames the central issue facing the world today: whether “money and credit, land, natural resources and monopolies will be privatized and concentrated in the hands of a rentier oligarchy or used to promote general prosperity and growth. This is basically a conflict between finance capitalism vs. socialism as economic systems.”

To advance the struggle, Hudson proposes a counter-rentier program which should be the Global South’s ultimate Blueprint for responsible development: public ownership of natural monopolies; key basic infrastructure in public hands; national self-sufficiency – crucially, in money and credit creation; consumer and labor protection; capital controls – to prevent borrowing or denominating debts in foreign currency; taxes on unearned income such as economic rent; progressive taxation; a land tax (“will prevent land’s rising rental value from being pledged to banks for credit to bid up real estate prices”); use of the economic surplus for tangible capital investment; and national self-sufficiency in food.

As Hudson seems to have covered all the bases, at the end of the book I was left with only one overarching question. I asked him how he analyzed the current discussions between the Eurasia Economic Union (EAEU) and the Chinese – and between Russia and China, further on down the road – as being able to deliver an alternative financial/monetary system. Can they sell the alternative system to most of the planet, all while dodging imperial financial harassment?

Hudson was gracious enough to reply with what could be regarded as the summary of a whole book chapter: “To be successful, any reform has to be system-wide, not merely a single part. Today’s western economies have become financialized, leaving credit creation in private hands – to be used to make financial gains at the expense of the industrial economy… This aim has spread like leprosy throughout entire economies – their trade patterns (dependency on US agricultural and oil exports, and IT technology), labor relations (anti-unionism and austerity), land tenure (foreign-owned plantation agriculture instead of domestic self-reliance and self-sufficiency in food grains), and economic theory itself (treating finance as part of GDP, not as an overhead siphoning off income from labor and industry alike).”

Hudson cautions that “in order to break free of the dynamic of predatory finance-capitalism sponsored by the United States and its satellites, foreign countries need to be self-sufficient in food production, energy, technology and other basic needs. This requires an alternative to US ‘free trade’ and its even more nationalistic ‘fair trade’ (deeming any foreign competition to US-owned industry ‘unfair’). That requires an alternative to the IMF, World Bank and ITO (from which Russia has just withdrawn). And alas, an alternative also requires military coordination such as the SCO [the Shanghai Cooperation Organization] to defend against the militarization of US-centered finance capitalism.”

Hudson does see some sunlight ahead: “As to your question of whether Russia and China can ‘sell’ this vision of the future to the Global South and Eurasian countries, that should become much easier by the end of this summer. A major byproduct (not unintended) of the NATO war in Ukraine is to sharply raise energy and food prices (and shipping prices). This will throw the balance of payments of many Global South and other countries into sharp deficit, creating a crisis as their dollar-denominated debt to bondholders and banks falls due.”

The key challenge for most of the Global South is to avoid default:

“The US raise in interest rates has increased the dollar’s exchange rate not only against the euro and Japanese yen, but against the Global South and other countries. This means that much more of their income and export revenue must be paid to service their foreign debt – and they can avoid default only by going without food and oil. So what will they choose? The IMF may offer to create SDRs to enable them to pay – by running even further into dollarized debt, subject to IMF austerity plans and demands that they sell off even more of their natural resources, forests and water.”

So how to break free from dollarized debt? “They need a critical mass. That was not available in the 1970s when a New International Economic Order was first discussed. But today it is becoming a viable alternative, thanks to the power of China, the resources of Russia and those of allied countries such as Iran, India and other East Asian and Central Asian countries. So I suspect that a new world economic system is emerging. If it succeeds, the last century – since the end of World War I and the mess it left – will seem like a long detour of history, now returning to what seemed to be the basic social ideals of classical economics – a market free from rent-seeking landlords, monopolies and predatory finance.”

Hudson concludes by reiterating what the New Cold War is really all about:

“In short, it is a conflict between two different social systems, each with their own philosophy of how societies work. Will they be planned by neoliberal financial centers centered in New York, supported by Washington’s neo-cons, or will they be the kind of socialism that the late 19th century and early 20th century envisioned – a ‘market’ and, indeed, society free from rentiers? Will natural monopolies such as land and natural resources be socialized and used to finance domestic growth and housing, or left to financial interests to turn rent into interest payments eating into consumer and business income? And most of all, will governments create their own money and steer banking to promote domestic prosperity, or will they let private banks (whose financial interests are represented by central banks) take control away from national treasuries?”

The views expressed in this article do not necessarily reflect those of The Cradle.

The Eurasian Economic Union Steps Up

May 28, 2022

The Eurasian Economic Forum has shown once again that this high-speed – economic integration – train has already left the station.

By Pepe Escobar, posted with the author’s permission and widely cross-posted. 

The first Eurasian Economic Forum, in Bishkek, Kyrgyzstan, took place this week at a very sensitive geopolitical juncture, as Russian Foreign Minister Sergei Lavrov keeps stressing that, “the West has declared total war against us, against the entire Russian world. Nobody even hides this now.”

It’s always important to remember that before Maidan in 2014, Ukraine had the option to become a full member of the Eurasian Economic Union (EAEU), and even balance it with a loose association with the EU.

The EAEU comprises five full members – Russia, Kazakhstan, Kyrgyzstan, Belarus and Armenia – yet 14 nations sent delegations to the forum, including China, Vietnam and Latin American nations.

There was much rumbling that the proceedings would be jeopardized by the serial sanctions packages imposed on Russia by the collective West. There’s no question that some EAEU members – such as Kazakhstan – seem to be more worried about the effects of the sanctions than about fine-tuning business with Russia. Yet that’s not the point.

The crucial point is that by 2025 they have to harmonize their legislation concerning financial markets. And that’s directly connected to what the executive body of the EAEU, led by Sergey Glazyev, is working on, extensively: designing the lineaments of an alternative financial/economic system  to what the West would rather coin as Bretton Woods 3.

The Eurasian Economic Forum was established by the Supreme Eurasian Economic Council explicitly to further deepen economic cooperation between EAEU members. No wonder the official theme of the forum was Eurasian Economic Integration in the Era of Global Shifts: New Investment Opportunities, focusing on strategic development in the industrial, energy, transport, financial, and digital areas.

So Many Converging Strategies

President Putin’s speech to the plenary session was quite revealing. To really appreciate the scope of what’s implied, it’s important to remember that the Greater Eurasian Partnership concept was presented by Putin in 2016 at the St. Petersburg Economic Forum, focused on a “more extensive Eurasian partnership involving the Eurasian Economic Union” and including China, Pakistan, Iran and India.

Putin stressed how the drive for developing ties “within the framework of the Greater Eurasian Partnership” (…) “was not the political situation but global economic trends, because the centre of economic development is gradually – we are aware of this, and our businesspeople are aware of this – is gradually moving, continues to move into the Asia-Pacific Region.”

He added, “in the current international conditions when, unfortunately, traditional trade and economic links and supply chains are being disrupted”, the Greater Eurasian Partnership “is gaining a special meaning.”

Putin established a direct connection not only between the Greater Eurasian Partnership and EAEU members but also “BRICS members such as China and India”, “the Shanghai Cooperation Organization, ASEAN and other organizations.”

And that’s the core of the whole, ongoing, multi-layered process of Eurasia integration, with the China-led New Silk Roads intersecting with the Eurasia Economic Union, the SCO, BRICS+, and other converging strategies.

Lavrov this week said that Argentina and Saudi Arabia want to join BRICS, whose next summer in China is being meticulously prepared. Not only that: Lavrov mentioned how quite a few Arab nations want to join the SCO. He was careful to describe this process of converging alliances as “not antagonistic”.

Putin for his part was careful to define the Greater Eurasian Partnership as “a big civilizational project. The main idea is to create a common space for equitable cooperation for regional organizations”, changing “the political and economic architecture on the entire continent.”

Thus, the necessity to “draft a comprehensive strategy for developing large-scale Eurasian partnership”, including “a roadmap for industrialization”. That translates in practice as developing “engineering centers and research centers. This is inevitable for any country that wants to increase its economic, financial, and ultimately political sovereignty. It is inevitable.”

Yaroslav Lissovolik  at the Valdai Club is one of the top analysts tracking how this convergence may profit the whole Global South. He stresses that among the “variability and diversity in the platforms that may be launched by Global South economies, the most sizeable and comprehensive of which could include the aggregation of CELAC (Latin America), African Union (Africa)”, and the SCO in Eurasia.

And an even more diverse set of “regional blocs that targets deeper integration could feature a BRICS+ platform that comprises the South African Development Community (SADC), MERCOSUR, BIMSTEC”, the China-ASEAN free trade agreement, and the EAEU.

The Eurasian Economic Forum has shown once again that this high-speed – economic integration – train has already left the station. It’s quite enlightening to notice the sharp contrast with the endless doom and gloom afflicting a collective West prone to inflation, energy shortages, food shortages, fictional “narratives” and the defense of neo-Nazis under the banner of liberal “democracy”.

Balancing grenades: To contain China, the US will ignore Russia in India

May 26 2022

To keep India onside, the US will seek to focus on China with New Delhi, and underplay the latter’s close relations with Russia.Photo Credit: The Cradle

By Mobeen Jafar Mir

Divergent policies on Moscow will not get in the way of Indo-US efforts to counter Beijing’s regional influence.

Once referred to as ‘Enduring Global Partners in the 21st Century,’ the strategic alliance between India and the United States has entered a challenging phase since the February launch of Russia’s military operations in Ukraine.

As the only ‘major democracy’ to maintain a neutral position on the Ukraine conflict, New Delhi’s ties with Washington are being tested over disagreements on how to deal with Moscow.

The duo’s ‘Comprehensive Global Strategic Partnership’ is based purely on guaranteeing mutual national interests: securing international peace and security through regional cooperation in the Pacific, strengthening ‘shared democratic values,’ policing nuclear non-proliferation, and enhancing cooperation on economic and security priorities.

Today, although New Delhi and Washington are poles apart on Russia’s actions in Ukraine, one area where Indo-US relations remain in lockstep is the issue of containing China’s rising influence.

The Quad squad

This was illustrated in February during this year’s fourth Quadrilateral Security Dialogue (Quad) Foreign Ministers Meeting when India signalled its lack of enthusiasm for the Quad’s sharp criticism of Russia.

Initiated in 2007, the Quad is an informal alliance comprising the US, India, Australia and Japan, and was especially formed to collectively stand as a bulwark against Chinese ‘expansion’ in the region.

India, unlike its Quad allies, maintained silence on Ukraine, but continued its alignment with their positions against China’s growing role and ambitions in the Indo-Pacific.

The Leaders’ Meeting held in Tokyo this week comes amid growing concern over whether the US will take military action should China – theoretically emboldened by Russia – decide to invade Taiwan. Indian Prime Minister Narendra Modi has also held bilateral talks with US President Joe Biden, with greater emphasis on cooperation between their National Security Councils.

Mutual concerns over China

During February’s Quad meeting for foreign ministers, US Secretary of State Antony Blinken also hinted that while punishing Russia for its Ukraine policy was ‘front and center’ of the US’ immediate foreign policy priorities, the long-term challenge was working closely with regional allies to “out-compete” China. In this context, India is a pivotal US ally.

The US and India are thus likely to soft pedal Russia-related differences for the sake of consolidating a ‘maritime rules-based order’ in the Pacific, where the US and its regional allies seek to thwart Chinese influence.

In its effort to bolster India as a potential counterweight to China, the US has inserted itself directly into Indo-Pacific affairs, a political development that has irked the Chinese and Russian leadership alike.

Why did India resist US pressure to condemn Russia?

India’s refusal to sanction Russia over Ukraine is understandable within the context of their decades of close relations, cooperation and commerce. In recent years, Moscow and Delhi have together increased their global clout as members of the Shanghai Cooperation Organization (SCO) and BRICS, cooperative political platforms that have proactively advanced more multipolar agendas.

The fact is, while Washington may have pushed New Delhi to adopt a tough stance against Moscow, Russia is still India’s largest defence partner and the country’s weapons are heavily reliant on Russian spare parts for proper functioning.

Security interests for both countries have converged in neighbouring Afghanistan. After the chaotic US withdrawal from the war-torn country, India has also repositioned its priorities there.

After the Taliban’s accession to power in Kabul last summer, both India and Russia have further expanded their cooperation by establishing a ‘permanent bilateral channel for consultations’ on Afghan affairs.

Russia effectively aids India’s engagement with the Taliban-led government. Both countries have been actively engaging on Afghan terrorism and drug trafficking priorities, and bilateral intelligence cooperation between Moscow and New Delhi appears to also be expanding into Central Asia.

Despite the recent strengthening of Russian and Chinese strategic cooperation, competition continues to exist between the two states in Central Asia, the Arctic and the Russian Far East. A politically stable and economically powerful Russia is in Indian interests as it could potentially act as a counterbalance to rising Chinese power in these regions.

To this end, a maritime corridor between India and Russia has already been formalized. The corridor, upon functioning, can improve their mutual economic clout and allow the duo to potentially rival China in the South China Sea and Russian Far East.

A strong Russia is in India’s interests

Tanvi Madan, an Indian foreign policy expert at the Brookings Institution in Washington, DC, fears that Russia’s excessive reliance on China may damage Kremlin’s political and economic leverage and push it into China’s sphere of influence, thus costing New Delhi a viable mediator in the event Sino-Indian border tensions re-erupt. It is one of the reasons compelling India to oppose the US policy of weakening Russia through economic sanctions.

There are also widespread concerns in New Delhi that growing Chinese influence in Moscow may halt weapons supplies to India and make India vulnerable to any likely assault from Beijing in the future.

During a series of border skirmishes between Indian and Chinese armed forces, Washington issued mere boilerplate statements rather than playing a constructive role in diffusing the crisis. This, among other factors, has convinced Indian policy makers that the Kremlin can be a more reliable partner in resolving any future flare-ups with Beijing.

Indo-US cooperation on China

While the Biden administration remains unsure about whether or not to impose sanctions on India under CAATSA (Countering America’s Adversaries Through Sanctions Act) for purchasing Russian S-400 missiles, both states continue to deepen their strategic partnership on China.

Similarly, against all western expectations during April’s 2+2 Ministerial Dialogue between the US and India, the latter again declined to condemn Russian military operations in Ukraine. India continues to buy oil from Russia at competitive prices and resents the US for admonishing it over this.

Despite US statements on deteriorating human rights conditions in India, increasing disquietness about trade policy matters, and India’s repeat abstentions on US-sponsored resolutions against Russia, their mutual rivalry against China has kept the relationship engaged and afloat.

The Indo-US focus on China has played out in various spheres. During the US administration of Donald Trump, India was granted a sanctions waiver to continue purchasing oil from Iran – part of efforts to support India’s INSTC (International North South Transport Corridor) which New Delhi presents as a counter to China’s Belt and Road Initiative (BRI).

Bilateral trade and investment between the US and India also hit record levels last year.  In their collective quest to contain Chinese economic influence in its own region, both duo appear unanimous in criticizing the China-Pakistan Economic Corridor (CPEC), a political development perturbing policy makers in Islamabad.

Why is the Sino-Indian rivlary intensifying?

The Indian Ocean Region (IOR) has lately transformed into a major hotspot over the growing rivalry between Beijing and New Delhi, two of Asia’s biggest economic powerhouses. The region’s growing geostrategic importance – connecting energy-rich West Asia to energy-hungry East Asia – has compelled the two to vie for that dominance.

As both China and India are heavily reliant on hydrocarbons to shore up their economic engine, the IOR becomes pivotal for the uninterrupted flow of their seaborne trade and energy imports. The US naval presence in the region, however, has indisputably played a key role in the intensification of hostility between the two Asian giants.

The US considers the region crucial for its economic interests and security as any likely disruption to these seaborne lanes can have serious implications for US hegemony and the global economy at large.

The New Silk Road

In order to contain China’s rise, the US has inserted itself into the region by aggressively consolidating strategic, diplomatic, and military ties with regional allies – in it much-ballyhooed “Pivot to Asia.” Inevitably, this strategic move has heightened tensions between China and allies of the US, notably India.

Washington’s strategy is not necessarily working as seamlessly elsewhere. On Wednesday, the Japanese foreign ministry announced the results of a 2021 ASEAN survey that showed respondents selecting China as the G20’s most important future partner country. Japan slipped to second place for the first time since the survey launched in 2015, with the US coming in third.

To circumnavigate the threats posed to its sea lanes by the Indo-US presence in the IOR, China is diversifying its energy and trade routes. In this regard, the BRI has become an instrument of reducing strategic vulnerabilities through expansion of regional trade and infrastructural investments in areas falling outside the strategic choke point of the Strait of Malacca, a narrow sea area between the Indonesia island of Sumatra and the Malay Peninsula through which China imports more than 80 percent of its oil.

As the rivalry between China and India is not limited to the Himalayan region and has largely become maritime-focused, the expansion of China’s BRI in South and Central Asia is reducing China’s vulnerability to possible future Indian and US attacks in the East China Sea and the South China Sea to disrupt Chinese seaborne trade.

Another relevant component of the BRI, is the aforementioned CPEC, connecting China’s Xinjiang region to Pakistan’s Gwadar seaport. Through CPEC, China aims to solve its ‘Malacca Dilemma’ while simultaneously consolidating its economic and political ties with New Delhi’s nemesis, Islamabad.

A Passage to India…or Bharat

India fears that after the Chinese encirclement of its sea lanes through growing strategic presence in Pakistan, Myanmar (Burma), Sri Lanka, and Djibouti, the BRI can also pose threats to India’s land trade routes while simultaneously mitigating the impact on China from a combined Indo-US assault on its sea lanes.

The current ‘Hindu nationalist’ government of India, with its own ideologically expansionist designs, has also been responsible for exacerbating the crisis with China. New Delhi’s ties with its neighbours are largely dictated by the idea of Akhand Bharat, a term used by right-wing Hindu nationalists for a vision to restore a unified Indian subcontinent.

By referring to India as Vishwa Guru or ‘teacher to the world’, Modi has convinced his devotees that only he can restore the lost greatness of Hindustan. This expansionist mindset has pitted the country against its many neighbors, while Modi has used the narrative to consolidate his Hindu support base.

Who needs who?

In addition to Washington’s efforts at propping up India as an outsourcing-alternative to China for US companies, the growing Indian middle class are also perceived as a desired and lucrative destination for US exports.

The ‘limitless friendship’ between Russia and China is seen as a threat to US hegemony and may even require India as a bridge to reach out to Russia in the future. In fact, some strategists in Washington even suggest a ‘wedge’ strategy of engaging Russia to prevent it becoming overly dependent on China, and thus fostering a sense of rivalry between these two great-power rivals in their shared Eurasian space.

In this context, India’s partnership with Russia in key parts of Eurasia – such as Afghanistan and Central Asia – make it an ideal bridge to Moscow.

India and the US are likely to compartmentalize their priorities without coercing each other to veer too far from their respective interests. While unhappy about it, the US understands India’s sensitivities towards Russia and will pragmatically tone down its criticism of New Dehli’s positions.

The alternative would drive a wedge between the two allies and compromise their collective effort to contain China. If the US needs India to counter China, India surely needs both Russia and the US to keep China at bay.

The views expressed in this article do not necessarily reflect those of The Cradle.

Pepe Escobar : Interview with The Press Project

May 22, 2022

From a unipolar to a multipolar world.  This is my itvw with the wonderful folks at The Press Project in Greece.  In English, with Greek subtitles.

Michael Hudson: Interview with RT – Transcript

May 21, 2022

Source

Michael Hudson’s interview with RT – May 19 2022.

Peter Scott, RT anchor: Joining us now is Michael Hudson, economist and author of “Super-Imperialism” and the recently-published “Destiny of Civilization”. Welcome to the programme, Michael.

Michael Hudson: It’s good to be back.

PS: Let’s say all these European programmes like the REPOWER Programme come into effect, how do you expect the EU standing to be on the stage after that?

MH: Well, the EU standing will be squeezed economically. It was trying to be a powerhouse in the world economy but in the last month the euro has been declining steadily against the dollar and it’s on the way to one dollar per euro. That’s because it’s having to pay much foreign exchange for energy, for food, for weapons. It’s shrinking in terms of other economies.

PS: Where do you think the EU’s standing will be in relation to powerhouses such as China?

MH: Well, it’s obviously out of the game. Instead of putting its own interests first, it’s really putting the US interests first. It’s acting more like a satellite of the United States than trying to its own destiny. The whole plan of the EU 20 years ago was to get rich by investing in Russia, investing in China and a mutual exchange. And now it’s decided to stop that. The US has absorbed Europe. The war in Ukraine is a war by the US primarily to pull Europe into the US orbit, prevent European transactions with Russia or China. So Western Europe is being left out, while Russia, China and Eurasia are going with the rest of Asia. Europe is simply going to be left behind. It’s losing its export markets, it’s being squeezed and -as you just mentioned- it’s pushed up the retirement age because it’s spending its budget on replenishing American military arms instead of investing in industry as it had been doing since 1945.

PS: You did indeed write that Europe has ceased to be an independent state. You’ve almost mentioned that the United States wanted to sever EU trade ties with Russia and China. How exactly did you get to that conclusion and do you think that this alleged US plan is succeeding?

MH: Well, I simply read the speeches of President Biden and his team. They’ve said that China is America’s number one enemy. If you’re going to call a country your number one existential enemy, you’re not going to be increasing your trade and mutual dependency with it. And it’s already insisted that its allies sanction -meaning boycott- Russian sports not only of oil and agriculture but of titanium, helium and all of the other exports that Russia has been making.Europe jas been following US directions not to have contact with Russia and without contact with Russia it’s not going to have contact with China because China sees that Europe is going to do exactly what it’s been doing to Russia.

PS: Obviously as a result of this current situation, for many years now, Russia and China have been growing closer diplomatically and economically. How do you see a global shift in power evolving over the next 5, 10 years or so?

MH: The current war is dividing the world into two parts. There’s going to be a US dollar area of the US, Europe and its satellites. And there’ll be a multipolarity; there’ll be a group of Russia, China together and basically they will be making their proposal of a different way of organising the world economic affairs to Africa, Latin America and other Asian countries. And other Asian countries, Latin America and the global south will see that it can get a better deal with Russia and China than it can get with the United States.

PS: On the flip side of that coin, one could argue that the existing situation, world order, has only been cemented by this war. You see NATO more aligned than ever, you see Europe more aligned than ever. You see Finland and Sweden on the brink, perhaps, of joining NATO. What would your response to this be, Michael?

MH: This integration of Europe into the United States sphere is like the new Berlin Wall. It’s isolated the US from the whole rest of the world. So instead of a victory for the United States it’s self-isolated itself because US strategists have realised that they’re losing the economic war with China, Russia and the whole group of emerging nations. All they can try to do is hold on to Europe as their one source of income to exploit from Europe what it can no longer get from any other country.

PS: As well as being a war on the ground, this is obviously an economic war. You yourself have noted that Nord Stream 2 (the gas pipeline from Russia to Germany) was one of the first victims of this crisis. To what extent are we now seeing an international conflict for energy resources? We obviously have the EU now weaning itself off Russian energy, the US trying to fill that gap to a certain extent with LNG. Then we have Russia now selling oil to India and China.

MH: The important thing about Russian oil being sold to India is that they’re sold in roubles, they’re no longer in dollars. The entire oil trade is now de-dollarised. It will be in roubles, in Chinese Yuan and in other currencies. But the dollar will be left out. The whole idea of dollar diplomacy, of the dollar’s free ride and monetary imperialism has ended.Everyone thought it would take 10 years for Russia, China and other countries to break away. Yet the United States itself has broken away from the other countries by grabbing the foreign exchange reserves of Afghanistan, Venezuela and now Russia. Nobody is going to trust to transact oil, trade and invest in dollars anymore because the United States can simply grab whatever money they want from countries that don’t agree to turn over their economic surplus to American investors and American traders. The United States has isolated itself. It’s shot itself in the foot.

PS: Talking of currencies, Russia is currently the most sanctioned country in the world but the rouble has recovered to way before pre-war levels. To what extent do you think the sanctions imposed on Russia by western countries have negatively impacted the countries imposing them?

MH: It’s certainly been very positive for Russia. The first sanctions were imposed on Russian agriculture like cheese from Lithuania. So now Russia produces its own cheese. When you sanction a country, you force that country to be more self-reliant on its own productions. President Putin has already said that now he’s going to be investing in import substitution. If he can’t buy imports from the United States now he’ll set up factories in Russia to produce themselves. There’s no reason Russia cannot do this and be its own industrial power. It doesn’t need the West. But the West still needs Russia. You mentioned Europe doing without Russian oil, and instead getting US liquefied natural gas. But it doesn’t have the ports to import that natural gas. It will have to spend $5 billion to build ports. It will take many years for this. What are Germany and Europe going to do for the next few years? Are they going to let their pipes freeze in their houses? So that their pipes break and flood the houses? Will the factories slow down? Already German fertiliser companies have closed down because they can’t get gas and it’s going to be years before they can get gas. Without fertiliser how are the Germans going to make their agricultural yields sustainable? Well, they won’t be. So Europe is going to increase its food deficit. It’s going to increase its energy deficit. It’s basically committing suicide on behalf of the Americans. I don’t know how long the political system of Europe can go along with leaders who represent America instead of their own national interests.

PS: As inflation and consumer prices keep rising in the US – Joe Biden maintains that it’s all Russia’s fault. Does it look like American taxpayers are buying that story, though?

MH: The press is very one-sided here. I think a lot of people are buying the story because Russia has not been very good on public relations here. The reality is, for instance, that in Ukrainian food exports, Ukraine cannot export its grain because Ukraine itself has mined the Black Sea. If you have mines that are going to block up ships in the Black Sea, that means insurance companies aren’t going to be willing to insure ships carrying the grain. All of this is blamed on Russia but Russia didn’t put the mines there – Ukraine did. But right now there is such a race hatred of Russians, that Americans are indeed buying it all and Russians are being blamed for everything. Such a thing happened when WW1 broke out. I live in Forest Hills in NYC and German families here had to change their name -away from a German name- and pretend to be Swedish or something else. Families like Donald Trump’s family had to pretend to be Swedish not German. There was such an anti-German family. Then you had the Japanese being interned in camps in WW2.So American society is a hate-filled society and the American empire is really an empire of hatred and antagonism. The way they look at the world is ‘Us vs. Them’ and Russia is the new ‘Them’.

PS: The seizing of Russian economic assets – hundreds of billions of dollars – in the West has certainly become a controversial precedent. Moscow has called it theft. What sort of impact has this situation had on the US economy and the dollar itself, as a global reserve currency?

MH: No impact at all on the US economy as such. If Russia loses the $300 billion that was stolen, it will be a great victory for Russia. That’s because what America has said is that no country’s savings in the United States are safe. Any country that denominated its trade in US dollars, any country that invests in the United States, if you don’t have your government follow American dictates, then we can simply grab your money -like we grabbed Russia’s money, Afghanistan’s money, Venezuela’s money. So the act against Russia has been essentially the US destroying foreign faith in the US economy and the safety of the US government. For the last 75 years, the US dollar and US Treasury Bills, loaned to the US government, bonds, have been the safest investment in the world. Now they’re the most risk investment. So what this means is that the American economy has decoupled itself from the Asian economy, from the Latin American and African economies. The Americans have decoupled and yet America is not self-sufficient. It relies on foreign countries, especially China and other Asian countries, for its industrial exports and it relies on Russia for much of its helium, titanium, iridium, palladium… all of these exports which it’s not going to be getting anymore. So America has basically committed trade suicide and economic suicide. Russia seems to have lost the $300 billion but on the other hand it now gets to compensate itself with all of the foreign investments that are in Russia, that it’s picking up, and its position in the world affairs as a trustworthy economy has gone way, way up relative to the United States.

PS: Russia, China and India are among the countries which are now calling for a new, multi-polar world order – without a strong reliance on the US and its allies. Does that seem like a realistic scenario to you?

MH: Well, the crisis is going to come this summer. Now that you have oil and food prices and shipping rates go way up, you’re going to have Latin America, Africa and much of Asia have tremendous balance-of-payment deficit. These balance-of-trade deficits for oil, food and shipping are going to go hand-in-hand with huge foreign debts denominated in dollars for foreign bond holders and foreign banks. Something is going to give. What will probably give is massive debt defaults against American bondholders and against American banks.At this point, Russia, China and their allies can say, “We can create parallel institutions in the world. We can create our International Monetary Fund to give you credit. We can create our own World Bank to promote actual, positive developments and not dependency on the United States exporters. So the US policy has driven other countries into the Eurasian orbit of China, Russia, Iran will be joining, India will be along, Indonesia. All these countries now will have something that they never had before; they have their own critical mass. They can deal with each other and be self-sufficient. They don’t need the dollar anymore. That’s what makes today different from the 1970s when the third world countries and the non-aligned nations tried to create a new international economic order but couldn’t. They didn’t have enough scope in their economies. Now they have enough scope that they don’t need America. You’re going to find the rest of the world rushing away from the dollar area, leaving only Europe as part of the United States economy at great sacrifice of its own living standards.

PS: Which countries do you think are gaining the most from the ongoing political and economic turmoil?

MH: I don’t know if you can say win. I’d say Russia and China will be the big winners. Russia already is because the American sanctions against Russia have forced Russia to do something that it could have done half a century ago. It’s forced Russia to create its own consumer goods industry, its own industrial take off. Russia can now build its own plants, equipment and factories and hire its own labour to produce what it was buying from Europe before. So it won’t need Europe anymore. Europe has lost the Russian market. Without the Russian market, I don’t see where Europe can grow because the United States won’t let European goods into it. The United States is protectionist. Europe will be squeezed and ultimately it will end up moving into the Russian and Chinese orbits but it will take years of suffering before that occurs.

PS: There’s a lot of talk on Western unity but it’s clear that there’s an economic price for this. Will the pain see countries follow Hungary and Serbia and say, enough is enough, we’re done with this.

MH: Western unity is a one way unity. Western unity is the United States telling other countries, “Do what we tell you to.” If other countries don’t do what America tells it to, they’re treated like the enemy. Like Hungary has been treated as an enemy. There’s talk of how to punish Hungary. The Americans have no idea how to offer something to attract other countries to it. All the United States can do is, “We can bomb you if you don’t do what we say. We have nothing positive to offer you. We have no trade options to offer you. We have no investment to offer you that will not siphon off your income. All we can do is bomb you and threaten you and sanction you and try to hurt you.” That’s the only way the United States and now Europe can relate to the rest of the world. That’s a poisoned relating. It’s a way guaranteed to drive the rest of the world away.

PS: Looking to a time after the war. What do you think the relationship between the US and Russia, or the EU and Russia look like?

MH: Permanently hostile for 20 years until Europe collapses and until the United States goes into a long depression. There is no rapprochement. There will be no settlement because the United States industrial economy can only make military arms. The only thing the United States can offer other countries is bombers and military arms and weaponry. Not anything to raise the living standards. The situation in the United States will be one of increasing hostility towards the rest of the world. The great threat is that it will say, “Well, we’re just going to blow up the world.”The people who are in charge of US policy think that way, they’ve been thinking that way for 20 years. I’ve worked with these people before and they really are willing to blow up the world if they can’t turn the other world into dependencies. That’s a real danger for the rest of the world and it’s forcing it to withdraw from the US orbit. I think it was Henry Kissinger who said that, “To be an enemy of America can be dangerous, but. “To be an enemy of America can be dangerous, but to be a friend is fatal.” Well, the US friend who’s really in danger is Europe. The enemies are going to do OK because they’re at least friends with each other.

—o0o—

Also take a look at more information that Michael Hudson supplied to us.  It is not on the main page and can only be found via the All News Button.

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