The West Has Lost Already (Gonzalo Lira)

January 28, 2023

ماذا بعد الحرب في أوكرانيا…؟

 السبت 21 كانون الثاني 2023

زياد حافظ

في هذه المحاولة الاستشرافية في مطلع 2023 قراءة وتساؤلات لمرحلة ما بعد الحرب في أوكرانيا. ننطلق في هذه القراءة من فرضية نناقشها في ما بعد أنّ روسيا ستحسم المعركة العسكرية في أوكرانيا ما قبل نهاية ربيع 2023. لكن هذا لا يعني انّ الصراع مع الحلف الأطلسي بشكل عام والولايات المتحدة بشكل خاص قد ينتهي. فالسؤال يصبح كيف سيتعامل الحلف الأطلسي وخاصة الولايات المتحدة مع الحقائق الميدانية التي تكون قد تحقّقت في الميدان؟

هناك عدة حالات ممكنة ولكن باحتمالات متباينة مبنية على قراءة في ذهنية القيادات الغربية والإمكانيات المتوفرة ضمن ميزان قوّة مختلّ لصالح روسيا بشكل عام وخاصة لصالح المحور العالمي الرافض للهيمنة الأميركية و/ أو الأطلسية. وما يُعقّد المشهد هو اعتبار الطرفين المتخاصمين أيّ روسيا والحلف الأطلسي أنّ الحرب في أوكرانيا حرب وجودية وبالتالي لا يمكن لأيّ طرف أن يتصوّر مخرجاً إلاّ النصر القاطع. وبما أنّ فرضية هذه القراءة تتبنّى حتمية النصر الروسي ما يبقى علينا هو تصوّر ما يمكن أن يقدِم عليه الأطلسي. وعندما نتكلّم عن الأطلسي نقصد بالدرجة الأولى الولايات المتحدة، ثم الاتحاد الأوروبي كمؤسسة، ثم الدول الأوروبية التي تماهت مع سياسات الولايات المتحدة وأخيراً بيروقراطية الحلف الأطلسي كمؤسسة قائمة بحدّ ذاتها. غير أنّ الحلقة الأساسية هي الولايات المتحدة لأنّ ما يمكن أن تقدم عليه سينجرّ بشكل أو بآخر على مؤسسة الحلف الأطلسي والاتحاد الأوروبي.

أما الحلقة الأضعف فهي الدول الأوروبية التي ستتعرّض إلى اضطرابات اجتماعية وسياسية بسبب التراجع الاقتصادي الناتج عن سياسة العقوبات المفروضة على روسيا وخاصة في قطاع الطاقة التي كانت تستوردها بشكل رخيص من روسيا دون أن تجد البديل الاقتصادي الذي يحرّرها من الاتكال على روسيا. والنتائج البنيوية على الاقتصاد الأوروبي هي تفكيك البنية الصناعية التي كانت ركيزة الطبقة الوسطى والاستقرار الاجتماعي. ليس هناك من آفاق إيجابية للاقتصاد الأوروبي في ظلّ ذلك التحوّل البنيوي خاصة مع صعود دول الجنوب الإجمالي وفي مقدّمته الصين والهند والبرازيل الذين سيتقاسمون الناتج الصناعي العالمي. دول أوروبا قد تكون دول متاحف التاريخ وللسياحة والترفيه وليس أكثر. فتصبح دولاً لا وزن لها في إدارة شؤون العالم. وهذا الهبوط لن يكون سهلاً بل ترافقه توترات اجتماعية وانتفاضات سياسية تعيد النظر في البنى السياسة والاقتصادية والاجتماعية لهذه الدول. وما سيساهم في ذلك الانحدار الكارثي هو الرداءة غير المسبوقة للقيادات السياسية سواء كانت في الحكم أو في المعارضة. المشهد البريطاني يتلاقى مع المشهد الألماني والمشهد الفرنسي، تلك الدول التي كانت تتصدّر المشهد الأوروبي. فأما دول الأطراف في أوروبا فقد تغرق أيضاً في حروب عرقية ودينية دون أن تكون لها ركيزة تستند إليها. فعلى سبيل المثال وليس الحصر اسبانيا تواجه حركة انفصالية في منطقة كتالونيا، وإيرلندا الشمالية قد تنفصل عن المملكة المتحدة لتلتحق بالجمهورية الإيرلندية، واسكتلندا قد تستقلّ عن المملكة المتحدة، وكورسيكا عن فرنسا، وبلجيكا تنقسم إلى قسم فرنسي وقسم فلمنكي. وما تبقّى من أوكرانيا خارج القبضة الروسية قد يذهب قسم منه إلى بولندا، والقسم الآخر إلى رومانيا ومولدوفيا. خارطة أوروبا مُعرّضة لتغيير جذري أسوة بما نتج في الحروب الأوروبية في القرون الماضية. كما هناك كلام عن انشطار إيطاليا بين جنوب فقير وشمال ثري. أما النعرات الطائفية في منطقة البلقان فمن السهل إشعالها مجدّداً مع سقوط الحكومات المركزية في حقبة الضيق الاقتصادي.
تصدّعات أوروبا

أما الاتحاد الأوروبي كمؤسسة فيشهد تصدّعات داخلية عززتها الإجراءات العبثية بحق روسيا وارتداداتها على الاقتصادات الأوروبية. فالزمرة الحاكمة في مؤسسة الاتحاد الأوروبي ملتزمة عقائدياً بمقرّرات دافوس لإعادة التعيين للاقتصادات القائمة نحو اقتصادات أكثر «لطفاً بالبيئة» على حدّ زعمهم. وهذا التوجه إلى مصادر طاقة نظيفة ومتجدّدة بشكل قسري وسريع سيؤدّي حتماً إلى تفكيك البنية الصناعية القائمة ما يوقع دول الاتحاد في حالة فقر وتراجع حضاري شبيه بالقرون الوسطى. فالطاقة هي مصدر الحضارة والعبث فيها له ارتدادات خطيرة على سكّان هذه الدول. لكن عدداً من حكومات دول الاتحاد يتململ من طغيان الزمرة المسيطرة على الاتحاد خاصة أنها لا تخضع لمساءلة ومحاسبة. وحكومة فيكتور اروبان المجرية تقود حملة التمرّد ضدّ الاتحاد قد تتبعها حكومة صربيا. من جهة أخرى أبدت بعض الدول الأوروبية كألمانيا وفرنسا امتعاضها من استغلال الولايات المتحدة للشحّ في قطاع الطاقة لفرض أسعار اضعاف ما كانت تدفعه لروسيا. ونعتت هذه الدول الولايات المتحدة بالتصرّف «غير الصديق» مع الحليف!

أما الدول الأوروبية فالتصدّعات التي أحدثتها الحرب الأوكرانية تتفاقم خاصة أنّ النموذج الاقتصادي النيوليبرالي المسيطر بعد سقوط الاتحاد السوفياتي وصل إلى طريق مسدود. كما أنّ النظام النيوليبرالي حوّل السلطة الفعلية للشركات الكبرى وخاصة بيوت المال التي لا تكترث لحال المواطنين. وهذه القوى المسيطرة على القرار السياسي والاقتصادي والثقافي في تلك الدول تستولد نخباً وقيادات من المستوى الرديء على صعيد العلم، والفهم، والأخلاق. وبالتالي ليس في الأفق المنظور إمكانية بروز قيادات أوروبية تضع مصلحة دولها فوق أيّ اعتبار وخاصة تلك الاعتبارات التي تريد إعادة الهندسة الاجتماعية وفقاً لمقرّرات منتدى دافوس. لذلك لا يمكن أن نتوقع خلال السنة الجديدة أيّ تغيير جذري في المشهد الأوروبي إلاّ ربما المزيد من التوترات والفوضى الأمنية والاقتصادية والاجتماعية ما يجعل أوروبا تفقد دوراً كانت تقوم به على الصعيد العالمي. فكيف يمكن وصف سلوك القيادات الأوروبية التي حوّلت أوروبا من ثاني كتلة اقتصادية في العالم، وربما في بعض الأحيان الأولى، إلى مجموعة دول مترهّلة. هذا انتحار جماعي أقدمت عليه قيادات حمقاء بكلّ معنى الكلمة.

تبقى الولايات المتحدة العنصر الأساسي في الحلف الأطلسي. والمشهد الأميركي معقّد حيث الخطاب السياسي السائد لدى المؤسسة الحاكمة وخاصة عند المحافظين الجدد الذين قبضوا على القرار السياسة الخارجية لا يسمح بأيّ تراجع أمام روسيا. لقد أصبحت الطبقة الحاكمة والمحافظون الجدد أسرى الخطاب السياسي حيث الانتصار على روسيا بات شرط ضرورة للبقاء. فلا يتصوّر المحافظون الجدد عالماً وروسيا موجودة على الأقلّ بشكلها الحالي. فلا بدّ من قلب النظام القائم في روسيا والإتيان بنخب سياسية تساهم في تقسيم روسيا إلى عدّة ولايات أو دول ضعيفة تحول دون إمكانية نهوض لدولة لها وزن على الصعيد الدولي. والمحافظون الجدد يحرصون على إجهاض أيّ محاولة للتفاهم مع روسيا تفادياً لحرب قد تخسرها حتماً الولايات المتحدة مهما كانت الكلفة عالية على روسيا. فعلى سبيل المثال وليس الحصر تسبّب المحافظون الجدود تسريب خبر لقاء بين مدير وكالة المخابرات المركزية وليم بيرنز ونظيره الروسي في أنقرة لإجهاض أيّ محاولة لمنع التصعيد في أوكرانيا الذي إذا ما استمرّ سيضع الجيش الروسي في مواجهة مباشرة مع الجيش الأميركي. وهذا الأمر لا يريده الطرفان سواء كان الرئيس الروسي بوتين أو الأميركي بايدن. لكن المحافظين الجدد لهم أجندة مختلفة ولا يكترثون لنتائج حتمية عن مواجهة عسكرية مباشرة بين الدولتين.

أجندة المحافظين الجدد!

السؤال المطروح هو هل يستطيع المحافظون الجدد تجاوز التحفّظات داخل الإدارة الأميركية التي لا تريد المواجهة المباشرة مع روسيا؟ ليس من السهل الإجابة خاصة أنّ المرحلة السابقة شهدت نصر المحافظين الجدد في توريط الولايات المتحدة في الصراع الذي كان بالإمكان تجنّبه مع روسيا. فهم من رفضوا التعامل مع العروض الروسية لحلّ الأزمة في أوكرانيا، وهم بالأساس من قام بالانقلاب على الحكومة المنتخبة شرعيا في أوكرانيا في 2014 وفي مقدمتهم فيكتوريا نيولند زوجة روبرت كاغان كبير المنظرين للمحافظين الجدد. وهم من استعمل اتفاقات منسك في 2015 للمراوغة لتمكين القوّات الأوكرانية لمواجهة روسيا. وهم من أجهضوا الاتفاق الذي تمّ الوصول إليه في أنقرة بين روسيا وحكومة زيلينسكي في نيسان/ ابريل 2022 بعد 3 أشهر من بدء العملية العسكرية الروسية في أوكرانيا. وهم من يدفعون إلى تفريغ ترسانات الدول التي كانت في كنف حلف وارسو وإرسال السلاح والذخائر لأوكرانيا. وهم من يدفعون البنتاغون لتفريع ترسانة الولايات المتحدة من الأسلحة المتطوّرة وإرسالها إلى أوكرانيا. النتيجة لكلّ ذلك هو تدمير كلّ السلاح المتوفر لأوكرانيا وقتل الجنود ودون تحقيق أيّ تقدّم على الأرض. فسجل المحافظين الجدد هو تراكم هائل من الفشل ولكن لا يوجد من يُسائل ويحاسب. ولذلك ستستمرّ إدارة بايدن في ارتكاب الحماقات تلو الحماقات دون تحقيق أي نتيجة لصالح الولايات المتحدة حتى يصبح تحطّم أوكرانيا أمراً واقعا لا يمكن الهروب منه.

المحافظون الجدد لهم أجندة من بند واحد وهي فرض هيمنة الولايات المتحدة على العالم وإنْ أدّى ذلك إلى تدمير الحلفاء وتهديد العالم بحرب نووية لن ينج منها أحد. فهم لا يكترثون لآثار سياساتهم طالما كانوا متمسكين بمفاصل صنع القرار في الولايات المتحدة سواء في الإدارة أو مراكز الأبحاث أو الجامعات أو الإعلام المرئي والمكتوب. وشبكة علاقات المحافظين الجدد لا تقتصر على الولايات المتحدة بل امتدّت إلى دوائر القرار في مكوّنات الحلف الأطلسي وإنْ كانت سياساتهم تدمّر تلك المكوّنات.

استطاع المحافظون الجدد أن يفرضوا سردية بين النخب الحاكمة في الولايات المتحدة والدول الأوروبية المتحالفة معها مفادها أنّ الصراع مع روسيا هو صراع بقاء بينما في الحقيقة هو صراع لتدمير روسيا والاستيلاء على ثرواتها الهائلة من المواد الخام، والطاقة، والمعادن الثمينة والنادرة. كما أنّ حجم روسيا الجغرافي يهدّد مصالح الولايات المتحدة فلا بدّ من تفكيك الدولة الاتحادية. وتعمّ مراكز الأبحاث في الولايات المتحدة عن خرائط محتملة لروسيا المفككة. وبالنسبة للولايات المتحدة فإنّ الهدف الحقيقي هو الحفاظ على هيمنتها وخاصة هيمنة الدولار الذي يواجه تحدّيات من اقتصادات ترفض تلك الهيمنة. والطابع الوجودي لهذا الصراع مبني على ثقافة الفكر الرأس المالي أن التوسّع هو الوسيلة الوحيدة للبقاء. وتاريخ الولايات المتحدة مبني على التوسّع الجغرافي، في البداية تجاه الغرب حتى الوصول إلى المحيط الهادي ومن ثمّ القفز إلى الجزر في ذلك المحيط وصولاً إلى الفليبين والشاطئ الشرقي للصين.

أما جنوباً، فكانت نظرية مونرو التي منعت الدول المستعمرة في القرن التاسع عشر من التواجد في أميركا اللاتينية وجعلها الحديقة الخلفية للولايات المتحدة. وتحفظ في أدراج الإدارات المتتالية خطط احتلال كندا إذا ما اقتضى الأمر! والآن تعمل الولايات المتحدة على التوسع في القطب الشمالي حيث توجد ثروات نفطية وغازية وشرقاً نحو القارة الآسيوية. وبالتالي لا بدّ من وضع اليد على روسيا.

المشروع الأميركي لوضع اليد على روسيا كان مكتوماً بعد سقوط حائط برلين. لكن سرعان ما تبدّدت الوعود المقطوعة للقيادات الروسية بعدم التوسّع شرقاً للحلف الأطلسي. وحجر الزاوية في مواجهة روسيا هو أوكرانيا وفقاً لنظرية زبغنيو بريجنسكي الذي اعتبر أوكرانيا ضرورة أساسية للقضاء على روسيا. المهمّ هنا أنّ التوسع الشرقي للحلف الأطلسي تجاه روسيا يشكّل خطراً وجودياً على روسيا لا يمكنها تجاهله خاصة إذا ما تمّ نشر الصواريخ البالستية النووية فيها كما يدعو إليه قادة النظام الانقلابي في أوكرانيا. حاولت القيادة الروسية إقناع الإدارات المتتالية بعدم التوسع شرقاً لكن العنجهية الأميركية لم تكترث للهواجس الروسية. لسنا هنا في إطار سرد تطوّر العلاقات الروسية الأطلسية/ الأميركية بل لنؤكّد أنّ صوغ الخطاب السياسي يدعو إلى المواجهة لدرء خطر وجودي يعني الوصول إلى الحرب لحلّ المشكلة. الحرب هنا لن تقتصر على الحرب بالوكالة كما هو الحال الآن في أوكرانيا أو ربما عبر بولندا في ما بعد بل في المواجهة المباشرة العسكرية مع روسيا.

ما يؤكّد عمق الأزمة بين النخب الأميركية مقال صدر يوم السبت في 7 كانون الثاني/ يناير 2023 في صحيفة «واشنطن بوست» والموقع من كوندوليزا رايس وزيرة الخارجية السابقة في ولاية بوش الابن وروبرت غيتس وزير الدفاع السابق في كلّ من ولايات بوش الابن وباراك أوباما. في المقال اعتراف واضح أنّ الوقت هو لصالح روسيا ولا بدّ من زيادة الجهود الأميركية (أيّ زيادة التمويل والإمداد لأنها مربحة للمجمّع العسكري الصناعي) وذلك لمنع النصر الروسي. فهذا الأمر سيكون له تداعيات كارثية بالنسبة للولايات المتحدة (خاصة للمجمّع العسكري الصناعي) وأنّ إمكانية تغيير تلك النتائج ستكون صعبة للغاية إنْ لم تكن مستحيلة. والهيمنة الأميركية على العالم أصبحت مطلباً «وجودياً» بالنسبة لتلك النخب التي لا تكترث لنتائج تلك الطموحات والتي لا تأخذ بعين الاعتبار التحوّلات التي حصلت في موازين القوّة. فمقال رايس وغيتس دعوة صريحة لاستمرار الحرب مهما كانت النتائج.

فما هي إمكانيات مواجهة مباشرة بين الحلف الأطلسي وروسيا، وبالأخصّ بين الولايات المتحدة وروسيا؟ حقيقة، إنّ المواجهة في أوكرانيا لها طابعان: الأول مع الحكومة الأوكرانية والثاني الذي تمّ إعلانه منذ بضعة أيام على لسان وزير الدفاع الاوكراني أنّ المواجهة هي بين روسيا والحلف الأطلسي. هدف العملية العسكرية الروسية في أوكرانيا هو تدمير الجيش الأوكراني وخلع النازيين من الحكم في أوكرانيا ومنع الحكومة من الالتحاق بالأطلسي. التطوّرات الميدانية أبرزت تدفق السلاح والذخيرة من مجمل دول الحلف الأطلسي دون أن يغيّر في ميزان القوّة في المعركة الذي كان ولا يزال لصالح روسيا. واليوم تعلن هذه الدول عن نفاذ سلاحها وذخيرتها لتزويد القوّات الأوكرانية بما كانت تملك من بقايا سلاح حلف وارسو. أما السلاح الغربي الذي يسيطر على معظم دول أوروبا الغربية فإنّ معرفة القوّات الأوكرانية بذلك السلاح ما زالت محدودة وتحتاج لوقت طويل للتتأقلم معها.

لكن هل تستطيع الولايات المتحدة الاستمرار بسياسة حرب رغم ضعف الجهوزية. ولا نقصد هنا الجهوزية العسكرية فحسب بل الجهوزية الاقتصادية. يشير الستير كروك وهو دبلوماسي سابق ومن أهمّ العقول السياسية المحلّلة للمشهد السياسي في آخر مقال له بتاريخ 13 كانون الثاني/ يناير 2023 على موقع «ستراتيجك كلتشار فوندشن» إلى أنّ الغرب يتجه تدريجياً لتحويل اقتصاداته لاقتصادات حرب وخاصة في ما يتعلّق بسلسلة التوريد في الإنتاج الصناعي. لكن في رأينا هذه عملية طويلة المدى خاصة بعد تفكيك البنية التحتية الصناعية في الولايات المتحدة والمملكة المتحدة وبالتالي القدرة على تحويل الطاقة الصناعية إلى طاقة إنتاجية حربية كما حصل في الحرب العالمية الثانية أمر مشكوك به في المدى المنظور. فاستبدال سلسلة التوريد التي اعتمدت خلال العقود الأربعة الماضية لتوطين مفاصل عديدة من القطاعات الصناعية في عالم الجنوب الإجمالي لا يمكن إنجازه بفترة قصيرة. فروسيا، ومعها الصين وسائر دول الجنوب الإجمالي لن يتركوا المجال لذلك التحويل.

لذلك نعتقد أنّ المعركة العسكرية الاستراتيجية بين روسيا وأوكرانيا قد حسمت في رأينا لصالح روسيا وأنّ ما تبقّى هو ترجمة الحسم الاستراتيجي إلى معالم مادية سواء في التقدّم الجغرافي أو في التغيير النظام السياسي في أوكرانيا وإنْ اقتضى الأمر دخول كييف لفرض نظام جديد. وقد يحصل ذلك خلال سنة 2023.

المواجهة مع الأطلسي طويلة

أما المواجهة مع الأطلسي فقد تطول خاصة أنّ الغرب يراهن على إطالة الحرب دون تدخّل مباشر للولايات المتحدة وسائر دول الحلف الأطلسي. ويعتمد المحافظون الجدد على سيطرتهم على الإعلام والسردية التي تقول بأنّ أوكرانيا «تنتصر» والقضية مسألة إمدادات فقط لا غير. لكن بدأت النخب الحاكمة تواجه معضلة تفسير انهيار خطوط الدفاع الأوكرانية وخاصة في منطقة سوليدار وباخوت. فهل ستتخذ الخطوة التالية بدخول جيوش الأطلسي بشكل مباشر في أوكرانيا؟

المزاج السياسي المعادي لروسيا في دول أوروبا غير مؤيّد للدخول في حرب مع روسيا. استطلاعات الرأي العام واضحة بهذا الشأن. فالمواطن الأوروبي بغضّ النظر عن رأيه في روسيا وحكّامها لا يريد ولا يتحمّل ثمن المواجهة. ولقد بدأت تظهر معالم «التعب» من أوكرانيا. ولكن المنحى الذي نشهده هو عدم اكتراث الحكومات الغربية للرأي العام الداخلي كما جاء على لسان وزيرة الخارجية الألمانية أنّ المانيا مستمرّة بدعم الجهود الحربية في أوكرانيا وأنها لا تكترث لآراء المواطنين وهذا بكلّ وضوح. لكن العديد من المؤشرات تفيد بأنّ الدول الأوروبية غير جاهزة وغير راغبة للدخول في حرب. أما الولايات المتحدة فهناك من يدفع إلى الدخول المباشر إلى أوكرانيا وإنْ كان الوجود العسكري الأميركي كـ «خبراء» و «مدرّبين» و «مستشارين» أصبح من المسلّمات. والمحافظون الجدد يدفعون إلى المواجهة المباشرة بعد استنفاذ الوكلاء علماً أنّ الجهوزية العسكرية الأميركية غير متوفّرة كما جاء على لسان رئيس هيئة الأركان المشتركة مارك ميلي في جلسة استجوابه في لجنة الدفاع في الكونغرس عند استلام مهامه. قال آنذاك في 2018 إنّ الجهوزية الأميركية لا تتجاوز 40 بالمائة وإنّ هدفه هو إيصال الجهوزية الأميركية إلى 60 بالمائة بحلول 2024.

وتأكيداً على ذلك يصدر معهد «أميركان هريتاج فونداشن» تقريراً سنوياً عن الجهوزية العسكرية الأميركية. وعلى مدى السنوات الخمس الماضية لم يتجاوز تقييم تلك الجهوزية مرحلة «الهامشية» أيّ لا تستطيع الحسم في أيّ مواجهة. وإذا أضفنا المحاكاة النظرية للمواجهة العسكرية مع أيّ من روسيا أو الصين أو إيران فكانت النتائج دائماً لصالح خصوم الولايات المتحدة. صحيح أنّ الولايات المتحدة تنفق أكثر من أيّ دولة في العالم لكن هذا الانفاق لا يعني تفوّقاً في الجودة كما تظهر التقارير حول فعّالية ركائز السلاح الجوّي أو البرّي الأميركي. وإذا أدخلنا في المعادلة السلاح المتفوّق الروسي خاصة في الصواريخ الفائقة لسرعة الصوت وغياب وسائل دفاع مضادة له فإنّ التفوّق التكتيكي والاستراتيجي للسلاح الروسي أصبح كاسراً.

وهناك خبراء عسكريون كـ اندري مرتيانوف يشكّكون بالقدرات البشرية لقيادة الأعمال العسكرية حيث خبرة القادة العسكريين الأميركيين في خوض حروب حقيقية ضدّ خصوم لديهم الحزم والعزم لا يُشجّع على إمكانية نصر عسكري. فتجربة الحرب الكورية والفيتنامية والعراقية والأفغانية تدلّ بوضوح إلى أنّ التفوّق الناري لا يعني بالضرورة النصر. لكن بعيداً عن هذه الاعتبارات ما نريد أن نقوله إنّ الولايات المتحدة غير جاهزة على الصعيد العسكري لخوض حرب طويلة مع دولة من طراز روسيا أو الصين على الأقلّ في المدى المنظور. لدى الولايات المتحدة قدرة نارية تدميرية هائلة تستطيع تدمير المعمورة آلاف المرّات ولكن ليس لديها كيف تترجمها في السياسة.

هناك عقول باردة خارج البنتاغون كدوغلاس مكغريغور او لاري جونسون أو فيليب جيرالدي أو راي مكغوفرن أو لاري ويلكرسون على سبيل المثال وليس الحصر تعي هذه الحقائق وتحاول ضبط إيقاع مسار السلطة السياسية. لكن المحافظين الجدد يتربّصون بها ويمنعون أن تصل تلك الآراء إلى مركز القرار. لذلك سيحتدم الصراع داخل الدولة العميقة بين من يؤيّد توجّهات المحافظين الجدد ومن يخشى من الوقوع في الهاوية. ولا نستبعد تكرار مشهد إنشاء لجنة بيكر ـ هاملتون جديدة التي كفّت يد المحافظين الجدد في إدارة بوش بعد الفشل في العراق. البديل عن كفّ يد المحافظين الجدد هو الحرب التي ستكون مدمّرة للولايات المتحدة وللعالم.

وهنا يكمن العامل الداخلي في الولايات المتحدة الذي قد يغيّر المعادلات بين الدولة العميقة والبيت الأبيض. مسلسل الفضائح التي تطال الرئيس الأميركي يتنامى ما يعني أنّ الدولة العميقة تريد التخلّص من إمكانية ترشّحه مجدّداً في 2024. فتعيين محقق خاص جمهوري الانتماء السياسي للكشف عن تفاصيل «الفضائح» يؤكّد أنّ المؤسسة الحاكمة بما فيها قيادة الحزب الديمقراطي تريد التخلّص من جوزيف بايدن والآتيان بـ كمالا هاريس في حال تنحّى بايدن عن منصبه، أو فتح الطريق لترشيح ميشال أوباما في 2024. في مطلق الأحوال فإنّ التطوّرات الداخلية قد تحوّل الأنظار عن الإخفاق في أوكرانيا ويتيح الفرصة لصوغ خطاب جديد يتجاهل الإخفاق في أوكرانيا. التغيير في السياسة التي تفرضه الوقائع يحتم تغيير في الأشخاص وهذا ما يمكن توقّعه في الأشهر المقبلة لمنع التدهور الذي الكارثي الذي يهدّد الجميع.

في الخلاصة نرى ما بعد الحرب في أوكرانيا الانتصار الكاسح لروسيا وتصدّع الاتحاد الأوروبي. كما سنرى تصاعد النقاش حول الدخول الأطلسي بشكل عام والولايات المتحدة بشكل خاص في حرب نووية محدودة بالنسبة للمحافظين الجدد. لكن في المقابل لا يستطيعون ضبط إيقاعها لأنّ روسيا لن تستجيب لرغبات المحافظين الجدد. فليس هناك من مواجهة نووية «محدودة»! لذلك لا نتوقع الوصول إلى تلك المرحلة بل ربما بداية تفكيك الحلف الأطلسي الذي فقد جدواه ومصداقيته. أما على صعيد الوضع الداخلي في الولايات المتحدة فتراكم الفشل في السياسة الخارجية سيظهر الحاجة للتغيير. من سيقود التغيير وكيف فهذا حديث ليوم آخر. الرهان هو على ما تبقّى من عقول باردة خاصة في أجواء التردّي لمستوى النخب السياسية في الغرب

*باحث وكاتب اقتصادي سياسي والأمين العام السابق للمؤتمر القومي العربي وعضو منتدى سيف القدس

Global South: Gold-backed currencies to replace the US dollar

The adoption of commodity-backed currencies by the Global South could upend the US dollar’s dominance and level the playing field in international trade.

January 19 2023

Photo Credit: The Cradle

By Pepe Escobar

Let’s start with three interconnected multipolar-driven facts.

First: One of the key take aways from the World Economic Forum annual shindig in Davos, Switzerland is when Saudi Finance Minister Mohammed al-Jadaan, on a panel on “Saudi Arabia’s Transformation,” made it clear that Riyadh “will consider trading in currencies other than the US dollar.”

So is the petroyuan finally at hand? Possibly, but Al-Jadaan wisely opted for careful hedging: “We enjoy a very strategic relationship with China and we enjoy that same strategic relationship with other nations including the US and we want to develop that with Europe and other countries.”

Second: The Central Banks of Iran and Russia are studying the adoption of a “stable coin” for foreign trade settlements, replacing the US dollar, the ruble and the rial. The crypto crowd is already up in arms, mulling the pros and cons of a gold-backed central bank digital currency (CBDC) for trade that will be in fact impervious to the weaponized US dollar.

A gold-backed digital currency

The really attractive issue here is that this gold-backed digital currency would be particularly effective in the Special Economic Zone (SEZ) of Astrakhan, in the Caspian Sea.

Astrakhan is the key Russian port participating in the International North South Transportation Corridor (INTSC), with Russia processing cargo travelling across Iran in merchant ships all the way to West Asia, Africa, the Indian Ocean and South Asia.

The success of the INSTC – progressively tied to a gold-backed CBDC – will largely hinge on whether scores of Asian, West Asian and African nations refuse to apply US-dictated sanctions on both Russia and Iran.

As it stands, exports are mostly energy and agricultural products; Iranian companies are the third largest importer of Russian grain. Next will be turbines, polymers, medical equipment, and car parts. Only the Russia-Iran section of the INSTC represents a $25 billion business.

And then there’s the crucial energy angle of INSTC – whose main players are the Russia-Iran-India triad.

India’s purchases of Russian crude have increased year-by-year by a whopping factor of 33. India is the world’s third largest importer of oil; in December, it received 1.2 million barrels from Russia, which for several months now is positioned ahead of Iraq and Saudi Arabia as Delhi’s top supplier.

‘A fairer payment system’

Third: South Africa holds this year’s rotating BRICS presidency. And this year will mark the start of BRICS+ expansion, with candidates ranging from Algeria, Iran and Argentina to Turkey, Saudi Arabia and the UAE.

South African Foreign Minister Naledi Pandor has just confirmed that the BRICS do want to find a way to bypass the US dollar and thus create “a fairer payment system not skewed toward wealthier countries.”

For years now, Yaroslav Lissovolik, head of the analytical department of Russian Sberbank’s corporate and investment business has been a proponent of closer BRICS integration and the adoption of a BRICS reserve currency.

Lissovolik reminds us that the first proposal “to create a new reserve currency based on a basket of currencies of BRICS countries was formulated by the Valdai Club back in 2018.”

Are you ready for the R5?

The original idea revolved around a currency basket similar to the Special Drawing Rights (SDR) model, composed of the national currencies of BRICS members – and then, further on down the road, other currencies of the expanded BRICS+ circle.

Lissovolik explains that choosing BRICS national currencies made sense because “these were among the most liquid currencies across emerging markets. The name for the new reserve currency — R5 or R5+ — was based on the first letters of the BRICS currencies all of which begin with the letter R (real, ruble, rupee, renminbi, rand).”

So BRICS already have a platform for their in-depth deliberations in 2023. As Lissovolik notes, “in the longer run, the R5 BRICS currency could start to perform the role of settlements/payments as well as the store of value/reserves for the central banks of emerging market economies.”

It is virtually certain that the Chinese yuan will be prominent right from the start, taking advantage of its “already advanced reserve status.”

Potential candidates that could become part of the R5+ currency basket include the Singapore dollar and the UAE’s dirham.

Quite diplomatically, Lissovolik maintains that, “the R5 project can thus become one of the most important contributions of emerging markets to building a more secure international financial system.”

The R5, or R5+ project does intersect with what is being designed at the Eurasia Economic Union (EAEU), led by the Macro-Economics Minister of the Eurasia Economic Commission, Sergey Glazyev.

A new gold standard

In Golden Ruble 3.0 , his most recent paper, Glazyev makes a direct reference to two by now notorious reports by Credit Suisse strategist Zoltan Pozsar, formerly of the IMF, US Department of Treasury, and New York Federal Reserve: War and Commodity Encumbrance (December 27) and War and Currency Statecraft (December 29).

Pozsar is a staunch supporter of a Bretton Woods III – an idea that has been getting enormous traction among the Fed-skeptical crowd.

What’s quite intriguing is that the American Pozsar now directly quotes Russia’s Glazyev, and vice-versa, implying a fascinating convergence of their ideas.

Let’s start with Glazyev’s emphasis on the importance of gold. He notes the current accumulation of multibillion-dollar cash balances on the accounts of Russian exporters in “soft” currencies in the banks of Russia’s main foreign economic partners: EAEU nations, China, India, Iran, Turkey, and the UAE.

He then proceeds to explain how gold can be a unique tool to fight western sanctions if prices of oil and gas, food and fertilizers, metals and solid minerals are recalculated:

“Fixing the price of oil in gold at the level of 2 barrels per 1g will give a second increase in the price of gold in dollars, calculated Credit Suisse strategist Zoltan Pozsar. This would be an adequate response to the ‘price ceilings’ introduced by the west – a kind of ‘floor,’ a solid foundation. And India and China can take the place of global commodity traders instead of Glencore or Trafigura.”

So here we see Glazyev and Pozsar converging. Quite a few major players in New York will be amazed.

Glazyev then lays down the road toward Gold Ruble 3.0. The first gold standard was lobbied by the Rothschilds in the 19th century, which “gave them the opportunity to subordinate continental Europe to the British financial system through gold loans.” Golden Ruble 1.0, writes Glazyev, “provided the process of capitalist accumulation.”

Golden Ruble 2.0, after Bretton Woods, “ensured a rapid economic recovery after the war.” But then the “reformer Khrushchev canceled the peg of the ruble to gold, carrying out monetary reform in 1961 with the actual devaluation of the ruble by 2.5 times, forming conditions for the subsequent transformation of the country [Russia] into a “raw material appendage of the Western financial system.”

What Glazyev proposes now is for Russia to boost gold mining to as much as 3 percent of GDP: the basis for fast growth of the entire commodity sector (30 percent of Russian GDP). With the country becoming a world leader in gold production, it gets “a strong ruble, a strong budget and a strong economy.”

All Global South eggs in one basket

Meanwhile, at the heart of the EAEU discussions, Glazyev seems to be designing a new currency not only based on gold, but partly based on the oil and natural gas reserves of participating countries.

Pozsar seems to consider this potentially inflationary: it could be if it results in some excesses, considering the new currency would be linked to such a large base.

Off the record, New York banking sources admit the US dollar would be “wiped out, since it is a valueless fiat currency, should Sergey Glazyev link the new currency to gold. The reason is that the Bretton Woods system no longer has a gold base and has no intrinsic value, like the FTX crypto currency. Sergey’s plan also linking the currency to oil and natural gas seems to be a winner.”

So in fact Glazyev may be creating the whole currency structure for what Pozsar called, half in jest, the “G7 of the East”: the current 5 BRICS plus the next 2 which will be the first new members of BRICS+.

Both Glazyev and Pozsar know better than anyone that when Bretton Woods was created the US possessed most of Central Bank gold and controlled half the world’s GDP. This was the basis for the US to take over the whole global financial system.

Now vast swathes of the non-western world are paying close attention to Glazyev and the drive towards a new non-US dollar currency, complete with a new gold standard which would in time totally replace the US dollar.

Pozsar completely understood how Glazyev is pursuing a formula featuring a basket of currencies (as Lissovolik suggested). As much as he understood the groundbreaking drive towards the petroyuan. He describes the industrial ramifications thus:

“Since as we have just said Russia, Iran, and Venezuela account for about 40 percent of the world’s proven oil reserves, and each of them are currently selling oil to China for renminbi at a steep discount, we find BASF’s decision to permanently downsize its operations at its main plant in Ludwigshafen and instead shift its chemical operations to China was motivated by the fact that China is securing energy at discounts, not markups like Europe.”

The race to replace the dollar

One key takeaway is that energy-intensive major industries are going to be moving to China. Beijing has become a big exporter of Russian liquified natural gas (LNG) to Europe, while India has become a big exporter of Russian oil and refined products such as diesel – also to Europe. Both China and India – BRICS members – buy below market price from fellow BRICS member Russia and resell to Europe with a hefty profit. Sanctions? What sanctions?

Meanwhile, the race to constitute the new currency basket for a new monetary unit is on. This long-distance dialogue between Glazyev and Pozsar will become even more fascinating, as Glazyev will be trying to find a solution to what Pozsar has stated: tapping of natural resources for the creation of the new currency could be inflationary if money supply is increased too quickly.

All that is happening as Ukraine – a huge chasm at a critical junction of the New Silk Road blocking off Europe from Russia/China – slowly but surely disappears into a black void. The Empire may have gobbled up Europe for now, but what really matters geoeconomically, is how the absolute majority of the Global South is deciding to commit to the Russia/China-led block.

Economic dominance of BRICS+ may be no more than 7 years away – whatever toxicities may be concocted by that large, dysfunctional nuclear rogue state on the other side of the Atlantic. But first, let’s get that new currency going.

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

‘Fragmented world’ sleepwalks into World War III

Wednesday, 18 January 2023 10:31 AM  [ Last Update: Wednesday, 18 January 2023 10:31 AM ]

By Pepe Escobar

The self-appointed Davos “elites” are afraid. So afraid. At this week’s World Economic Forum meetings, mastermind Klaus Schwab – displaying his trademark Bond villain act – carped over and over again about a categorical imperative: we need “Cooperation in a Fragmented World”.

While his diagnosis of “the most critical fragmentation” the world is now mired in is predictably somber, Herr Schwab maintains that “the spirit of Davos is positive” and in the end we may all live happily in a “green sustainable economy.”

What Davos has been good at this week is showering public opinion with new mantras. There’s “The New System” which, considering the abject failure of the much ballyhooed Great Reset, now looks like a matter of hastily updating the current – rattled – operating system.

Davos needs new hardware, new programming skills, even a new virus. Yet for the moment all that’s available is a “polycrisis”: or, in Davos speak, a “cluster of related global risks with compounding effects.”

In plain English: a perfect storm.

Insufferable bores from that Divide and Rule island in northern Europe have just found out that “geopolitics”, alas, never really entered the tawdry “end of history” tunnel: much to their amazement it’s now centered – again – across the Heartland, as it’s been for most of recorded history.

They complain about “threatening” geopolitics, which is code for Russia-China, with Iran attached.

But the icing on the Alpine cake is arrogance/stupidity actually giving away the game: the City of London and its vassals are  livid because the “world Davos made” is fast collapsing.

Davos did not “make” any world apart from its own simulacrum.

Davos never got anything right, because these “elites” were always busy eulogizing the Empire of Chaos and its lethal “adventures” across the Global South.

Davos not only failed to foresee all recent, major economic crises but most of all the current “perfect storm”, linked to the neoliberalism-spawned deindustrialization of the Collective West.

And, of course, Davos is clueless about the real Reset taking place towards multipolarity.

Self-described opinion leaders are busy “re-discovering” that Thomas Mann’s The Magic Mountain was set in Davos – “against the backdrop of a deadly disease and an impeding world war” – nearly a century ago.

Well, nowadays the “disease” – fully bioweaponized – is not exactly deadly per se. And the “impending World War” is in fact being actively encouraged by a cabal of US Straussian neo-cons and neoliberal-cons: an unelected, unaccountable, bipartisan Deep State not even subject to ideology. Centennary war criminal Henry Kissinger still does not get it.

A Davos panel on de-globalization was rife on non-sequiturs, but at least a dose of reality was provided by Hungarian Foreign Minister Peter Szijjarto.

As for China’s vice-premier Liu He, with his vast knowledge of finance, science and technology, at least he was very helpful to lay down Beijing’s five top guidelines for the foreseeable future – beyond the customary imperial Sinophobia.

China will focus on expanding domestic demand; keeping industrial and supply chains “smooth”; go for the “healthy development of the private sector”; deepen state enterprise reform; and aim for “attractive foreign investment.”

Russian resistance, American precipice

Emmanuel Todd was not at Davos. But it was the French anthropologist, historian, demographer and geopolitical analyst who ended up ruffling all the appropriate feathers across the collective West these past few days with a fascinating anthropological object: a reality-based interview.

Todd spoke to Le Figaro – the newspaper of choice of the French establishment and haute bourgeoisie. The interview was published last Friday on page 22, sandwiched between proverbial Russophobic screeds and with an extremely brief mention on the bottom of the front page. So people really had to work hard to find it.   

Todd joked that he has the – absurd – reputation of a “rebel destroy” in France, while in Japan he’s respected, featured in mainstream media, and his books are published with great success, including the latest (over 100,000 copies sold): “The Third World War Has Already Started”.

Significantly, this Japanese best seller does not exist in French, considering the whole Paris-based publishing industry toes the EU/NATO line on Ukraine.

The fact that Todd gets several things right is a minor miracle in the current, abysmally myopic European intellectual landscape (there are other analysts especially in Italy and Germany, but they carry much less weight than Todd).

So here’s Todd’s concise Greatest Hits.

– A new World War is on: By “switching from a limited territorial war to a global economic clash, between the collective West on one side and Russia linked to China on the other side, this became a World War”.

– The Kremlin, says Todd, made a mistake, calculating that a decomposed Ukraine society would collapse right away. Of course he does not get into detail on how Ukraine had been weaponized to the hilt by the NATO military alliance.

– Todd is spot on when he stresses how Germany and France had become minor partners at NATO and were not aware of what was being plotted in Ukraine militarily: “They did not know that the Americans, British and Poles could allow Ukraine to fight an extended  war. NATO’s fundamental axis now is Washington-London-Warsaw-Kiev.”

– Todd’s major give away is a killer: “The resistance of Russia’s economy is leading the imperial American system to the precipice. Nobody had foreseen that the Russian economy would hold facing NATO’s ‘economic power’”.

– Consequently, “monetary and financial American controls over the world may collapse, and with them the possibility for the US of financing for nothing their enormous trade deficit”.

– And that’s why “we are in an endless war, in a clash where the conclusion is the collapse of one or the other.”

– On China, Todd might sound like a more pugnacious version of Liu He at Davos: “That’s the fundamental dilemma of the American economy: it cannot face Chinese competition without importing qualified Chinese work force.”

– As for the Russian economy, “it does accept market rules, but with an important role for the state, and it keeps the flexibility of forming engineers that allow adaptations, industrial and military.”

– And that bring us, once again, to globalization, in a manner that Davos roundtables were incapable of understanding: “We have delocalized so much of our industrial activity that we don’t know whether our war production may be sustained”.

– On a more erudite interpretation of that “clash of civilizations” fallacy, Todd goes for soft power and comes up with a startling conclusion: “On 75 percent of the planet, the organization of parenthood  was patrilineal, and that’s why we may identify a strong understanding of the Russian position. For the collective non-West, Russia affirms a reassuring moral conservatism.”

– So what Moscow has been able to pull off is to “reposition itself as the archetype of a big power, not only “anti-colonialist” but also patrilineal and conservative in terms of traditional mores.”

Based on all of the above, Todd smashes the myth sold by EU/NATO “elites” – Davos included – that Russia is “isolated”, stressing how votes in the UN and the overall sentiment across the Global South characterizes the war, “described by mainstream media as a conflict over political values, in fact, on a deeper level, as a conflict of anthropological values.”      

Between light and darkness

Could it be that Russia – alongside the real Quad, as I defined them (with China, India and Iran) – are prevailing in the anthropological stakes?  

The real Quad has all it takes to blossom into a new cross-cultural focus of hope in a “fragmented world”.

Mix Confucian China (non-dualistic, no transcendental deity, but with the Tao flowing through everything) with Russia (Orthodox Christian, reverencing the divine Sophia); polytheistic India (wheel of rebirth, law of karma); and Shi’ite Iran (Islam preceded by Zoroastrianism, the eternal cosmic battle between Light and Darkness).

This unity in diversity is certainly more appealing, and uplifting, than the Forever War axis.

Will the world learn from it? Or, to quote Hegel – “what we learn from history is that nobody learns from history” – are we hopelessly doomed?

Pepe Escobar is a veteran journalist, author and independent geopolitical analyst focused on Eurasia.

(The views expressed in this article are the author’s own and do not necessarily reflect those of Press TV.)


Press TV’s website can also be accessed at the following alternate addresses:

www.presstv.ir

www.presstv.co.uk

US paralyzed by Islamic Republic of Iran’s strategic swing

Monday, 28 November 2022 6:18 PM  [ Last Update: Monday, 28 November 2022 6:21 PM ]

By Pepe Escobar

Iran’s parliament has just approved the accession of the Islamic Republic to the Shanghai Cooperation Organization (SCO), previously enshrined at the Samarkand summit last September, marking the culmination of a process that lasted no less than 15 years.  

Iran has already applied to become a member of the expanding BRICS+, which before 2025 will be inevitably configured as the alternative Global South G20 that really matters. 

Iran is already part of the Quad that really matters – alongside BRICS members Russia, China and India. Iran is deepening its strategic partnership with both China and Russia and increasing bilateral cooperation with India. 

Iran is a key Chinese partner in the New Silk Roads, or Belt and Road Initiative (BRI). It is set to clinch a free trade agreement with the Eurasia Economic Union (EAEU) and is a key node of the International North-South Transportation Corridor (INSTC), alongside Russia and India.     

All of the above configures the lightning-fast emergence of the Islamic Republic of Iran as a West Asia and Eurasia big power, with vast reach across the Global South. 

That has left the whole set of imperial “policies” towards Tehran lying in the dust.

So it’s no wonder that previously accumulated strands of Iranophobia – fed by the Empire over four decades — have recently metastasized into yet another color revolution offensive, fully supported and disseminated by Anglo-American media.

The playbook is always the same. Leader of the Islamic Revolution Ayatollah Seyyed Ali Khamenei actually came up with a concise definition. The problem is not bands of oblivious rioters and/or mercenaries:  “the main confrontation”, he said, is with “global hegemony.”

Ayatollah Khamenei was somewhat echoed by American intellectual and author Noam Chomsky, who has remarked how an array of US sanctions over four decades have severely harmed the Iranian economy and “caused enormous suffering.”

Using Kurds as expendable assets

The latest color revolution overdrive overlaps with the manipulation of Kurds in both Syria and Iraq. From the imperial perspective, the proxy war in Syria, which is far from over, not only works as an additional front in the fight against Russia but also allows the instrumentalization of highly dependent Kurds against both Iran and Turkey.   

Iran is currently being attacked according to a perverse variation of the scheme applied to Syria in 2011. A sort of “permanent protest” situation has been imposed across vast swathes of northwestern Iran.

What changed in mid-November is that armed gangs started to apply terrorist tactics in several towns close to the Iraqi border, and were even believed to be weaponized enough to take control of some of the towns.  

Tehran inevitably had to send IRGC troops to contain the situation and beef up border security. They engaged in operations similar to what has been done before in Dara’a, in the Syrian southwest.

This military intervention was effective. But in a few latitudes, terror gangs continue to attack government infrastructure and even civilian property. The key fact is that Tehran prefers not to repress these unruly demonstrations using deadly force.

The really critical issue is not the protests per se: it’s the transfer of weapons by the Kurds from Iraq to Iran to bolster the color revolution scenario.

Tehran has issued a de facto ultimatum to Baghdad: get your act together with the Kurds, and make them understand the red lines.    

As it stands, Iran is massively employing Fateh ballistic missiles and Shahed-131 and Shahed-136 kamikaze drones against selected Kurdish terrorist bases in northern Iraq.

It’s debatable whether that will be enough to control the situation. What is clear is that the “Kurdish card”, if not tamed, could be easily played by the usual suspects in other Iranian provinces, considering the solid financial, military and informational support offered by Iraqi Kurds to Iranian Kurds.   

Turkey is facing a relatively similar problem with the Syrian Kurds instrumentalized by the US.

In northern Syria, they are mostly armed gangs posing as “Kurds”. So it’s quite possible that these Kurdish armed gangs, essentially played by Washington as useful idiots, may end up being decimated, simultaneously, in the short to medium term, by both Ankara and Tehran.

If all fails, pray for regime change

A geopolitical game-changer which was unthinkable until recently may soon be on the cards: a high-level meeting between Turkish President Recep Erdogan and his Syrian counterpart Bashar al-Assad (remember the decade-long refrain “Assad must go”?) in Russia, with mediation by none other than Russian president Vladimir Putin.

What would it take for Kurds to understand no state – be it Iran, Syria or Turkey – will offer them land for their own nation? Parameters could eventually change in case Iraqis in Baghdad finally manage to expel the US.

Before we get there, the fact is Iran has already turned West Asian geopolitics upside down – via its smart cruise missiles, extremely effective kamikaze drones, electronic warfare and even state-of-the-art hypersonic missiles.

Empire “planners” never saw this coming: a Russia-Iran strategic partnership that not only makes total sense geo-economically, but is also a military force multiplier.

Moreover, that is inscribed in the looming Big Picture on which the expanded BRICS+ is focusing: Eurasia (and beyond) integration via multimodal economic corridors such as the INTSC, pipelines and high-speed rail.   

The Empire’s Plan A, on Iran, was a mere nuclear deal (JCPOA), devised by the Barack Obama administration as nothing but a crude containment scheme.

Trump actually blew it all up – and there’s nothing left: a JCPOA revival, which has been – in theory – attempted for months in Vienna, was always a non-starter because the Americans themselves don’t know anymore what they want from it. 

So what’s left as Plan B for the Straussian neocon/neoliberal psychos in charge of US foreign policy is to hurl all manner of fall guys – from Kurds to the toxic MEK – into the Iran cauldron and, amplified 24/7 by hysterical mainstream media, pray for regime change.

Well, that’s not going to happen. Tehran just needs to wait, exercise restraint, and observe how so much color revolution virtue signaling will eventually fizzle out.

Pepe Escobar is an independent geopolitical analyst and author, focused on Eurasia integration. His latest book is Raging Twenties.

(The views expressed in this article are author’s own and do not necessarily reflect those of Press TV.)


Press TV’s website can also be accessed at the following alternate addresses:

www.presstv.ir

www.presstv.co.uk

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Cruisin’ for a Bruisin’, or, Don’t Spit in the Well

November 27, 2022

Source

By Batiushka

The Ukrainian people will be liberated from their Neo-Nazi rulers, they deserve to live as friends and good neighbours and prosper alongside their Slav brothers’.

Sergei Lavrov, TASS, 26 November

Introduction

There is such a thing as retribution. This is what it says directly in the verse, ‘Vengeance is mine; I will repay, saith the Lord’ (Rom. 12: 19) and what lies behind the New Testament, ‘Do as you would be done by’. However, other cultures have other words for retribution, ‘karma’ for example in India. Then there is the proverb, similar in several languages, which in English appears as: ‘Sow the wind, reap the whirlwind’. (See Galatians 6: 7). Then there is another saying which is also pretty universal. The Maltese form says: ‘Don’t spit in the air’ – there is no need to quote the second half – you can imagine the spit falling back onto the spitter.

In Russian we have the same proverb, only that is to do with spitting in the well – since you might yourself need to drink the water. Others quote: ‘What goes around, comes around’. Australians and others speak about ‘the boomerang effect’ and Americans speak of ‘blowback’ and ‘payback’. The fact is that there is a universal spiritual law, the law of cause and effect, that when you do something good, there are always good consequences, and when you do something bad, there are always bad consequences. Sooner or later. Anyone who has lived a little can confirm it from experience. Basically, you simply cannot get away with it. And this is what is happening to the Western world today. It’s payback time.

The Perfect Storm

I mention consequences because the history books of the future will be asking the question: ‘Where did the perfect storm in the Western world in 2022 come from’? One thing for sure, it did not come out of the blue. Any number of dates will be put forward as the origin, as far back as 1492 and even further back, for instance, the First Crusade in 1096. From more recent dates we could suggest:

1917, when after nearly three years the US elite entered the first part of the Europeans’ twentieth-century Civil War, having forced Russia out of it through violent regime change. To this day these utterly corrupt Western propagandists justify this cunning strategy by declaring that the Tsar’s government was utterly corrupt (sic!) and going to collapse anyway (sic!) and all were well rid of it (sic!). Some people actually believe that propaganda. They should investigate it objectively, instead of naively swallowing the West’s self-justification for creating the conditions for its genocide.

1944, when US forces invaded and occupied Continental Europe, making it into the first US-occupied Eurasian peninsula, just as they later did with other Eurasian peninsulas, (South) Korea, and (South) Vietnam, in the latter of which they were defeated.

1991, when the USSR collapsed and was (briefly) colonised by the US, leaving chaos and poverty with Chicago-style gangsters everywhere and millions dying of despair and drinking themselves to death.

2014, when the US took over the Ukraine in a violent regime-change coup.

2021, when the US was humiliated in Afghanistan.

2022, when the US clearly began to lose against Russia’s war of liberation of the Ukraine, its equipment and its relations with Western Europe in ruins.

We will leave other dates and the details of the debate to the history books of the future. But the debate will be there, you’ll see. However, beyond the detail that we can leave to the disputes of the academics, the main question that future generations will be asking is: ‘However did the Western world think it could get away with it?’ Where did its delusion come from? These are the questions I will be trying to answer below.

Losing the War in the Ukraine

The US lost the war in the Ukraine the day it began. Russia had been preparing for it for eight years. Ever since, the US and its vassals have just been prolonging the agony by financing a Nazi regime, supplying it with arms, training its troops and sending it paid-for mercenaries. Pessimists see the agony now dragging on for years and years, whereas optimists think it will be much shorter, just a couple of months more. I would like to think the optimists are right, but I actually go along with a more pessimistic ‘another eighteen months’. I hope I am wrong. Every day is a day too long. The fact is the US elite will have to put a lot of effort into face-saving. They hate losing, even though they lost in Vietnam, Iraq, Afghanistan, Syria etc.

Backing down from the confrontations they began and chaos they caused is not something they like doing. But when the last US helicopters take off from the roofs of the US embassies in Kiev and Lvov, we shall see. Last Friday an electrician near Kiev said to my friends there: ‘This war is horrible. And it’s only going to get worse. There’s only one solution. We’ll line up all the politicians from the Rada (Parliament) and shoot them. Then peace will come immediately’. I am told from Kiev that there are more and more Ukrainians saying the same thing: there must be a popular revolt to stop it all. Get ready for it there and, at the rate things are going, get ready for the same thing in Western countries as well.

Losing the EU

In the longer term, however, there is the much more serious problem for the US of losing Europe. The national slogan of the Ukraine since 2014 has been: ‘The Ukraine is Europe’. This is of course nonsense. Geographically, the Ukraine, like the Russia where most Russians live, is obviously Europe. Indeed, most European territory is inside Russia. Of course, what the Kiev regime means is that the Ukraine belongs to Western Europe, the EU, only it does not say that. This is because it obviously does not belong there, apart from the small region of Galicia which is now in the far west of the present borders of the Ukraine, formerly Poland, formerly the Austro-Hungarian Empire. In 2014 the EU actually dismissed the Kiev fantasy, telling it that Ukrainian membership of the EU might be considered in 25 years’ from then.

The nonsense about ‘the Ukraine is Europe’ reminds me of a visit to Moldova five years ago. All official buildings flew the EU flag and that was in a country that is not part of the EU and never will be. In other words, ‘The Ukraine is Europe’ is a political daydream, a fantasy. Today, as a result of US incompetence and its lickspittle poodle UK enthusiastically blowing up the Nordstream pipeline, as though that were a present to Germany, we can see that although the Ukraine is not Europe, Europe is fast becoming the Ukraine. In other words, Europe is being corrupted by US political intrigues, being sucked into the same black hole as the Ukraine, without finance, heating, lighting and sewerage. In the words of that old Eastern European joke: ‘Which are the two most corrupt countries in the world? Lithuania is first and the Ukraine is second. But only because the Ukraine bribed Lithuania to take first place, so that it could be second’. Well, today the whole of Europe is being Ukrainianised. Well done, US/UK/EU elite!

Losing the World

Beyond Western Europe, the US elite is also losing the rest of the world. At one time, the US was No 1. Today it is China. At one time Europe was the most populated area in the world. Today over one third of the world’s population is in China and India. At one time the G7 was respected. Today it is a ghetto, representing only a small and increasingly irrelevant part of the world. At one time the G20 represented twenty countries which were pro-Western or at least Western-controlled. Today, definitely not. The G-20 is being taken over by BRICS +.

At one time the dollar was the world’s reserve currency. Today the world is being dedollarised, as countries sell dollars and US treasury bonds and trade in their own countries. After all, who wants to invest in a deindustrialised country which may illegally confiscate (= steal) your assets, gold reserves included, whose currency is not underpinned by gold, but only by printing presses, and whose national debt totals 31 trillion dollars, nearly all of which has been accumulated in the last forty years?

Conclusion

After 500 years of bullying the rest of the world, with the genocides of the native peoples of the Americas and Australia (100 million dead?), the manipulations of imperialism, colonialism, slavery, the Opium Wars, the salt hedge in India, the massacres in the Belgian Congo and in German South-West Africa, the bloodiest Western War in history which it called two World Wars (70 million dead), exporting Marxism outside Western Europe (millions dead), the carpet bombing of Korea, the French massacres in Algeria, the US genocide in Vietnam, uranium-tipped shells in Iraq and Yugoslavia, the pillaging of Eastern Europe and Russia under Western-appointed puppet governments, the war you started in the Ukraine and the mass of arms you are supplying Ukronazis with. However did you think you could get away with it? Where did your delusion come from? Because you came to believe in your own lies. You are delusional.

I do not fear the civil authorities in Western Europe and their death-threats. I fear only the traitors to Russia, who in fact are CIA assets. I fear today’s traitors, who want to make money from this war or have endless zoom meetings with their American masters and let people be massacred by the Gestapo Nazis from Kiev, trained by the CIA and MI6. True, there are fewer of those traitors than there were. Now I will tell you too: You will not get away with it. There are forces at work which are far greater than any of you. ‘The Ukrainian people will be liberated from their Neo-Nazi rulers’. Yes, they will be liberated, just as the German people were liberated from their Nazi rulers, but at such a price. I tremble for you traitors, because your end is coming too. For everything you have done, you will have to repay. Did you really think you could get away with it and that payback time would never come? You spat in the well? Now you will have to drink from it.

Russia, India, China, Iran: the Quad that really matters

Tuesday, 15 November 2022 3:55 PM 

By Pepe Escobar

Southeast Asia is right at the center of international relations for a whole week viz a viz three consecutive summits: Association of South East Asian Nations (ASEAN) summit in Phnom Penh, the Group of Twenty (G20) summit in Bali, and the Asia-Pacific Economic Cooperation (APEC) summit in Bangkok.  

Eighteen nations accounting for roughly half of the global economy represented at the first in-person ASEAN summit since the Covid-19 pandemic in Cambodia: the ASEAN 10, Japan, South Korea, China, India, US, Russia, Australia, and New Zealand. 

With characteristic Asian politeness, the summit chair, Cambodian Prime Minister Hun Sen (or “Colombian”, according to the so-called “leader of the free world”), said the plenary meeting was somewhat heated, but the atmosphere was not tense: “Leaders talked in a mature way, no one left.”

It was up to Russian Foreign Minister Sergey Lavrov to express what was really significant at the end of the summit.

While praising the “inclusive, open, equal structure of security and cooperation at ASEAN”, Lavrov stressed how Europe and NATO “want to militarize the region in order to contain Russia and China’s interests in the Indo-Pacific.”

A manifestation of this policy is how “AUKUS is openly aiming at confrontation in the South China Sea,” he said.

Lavrov also stressed how the West, via the NATO military alliance, is accepting ASEAN “only nominally” while promoting a completely “unclear” agenda. 

What’s clear though is how NATO “has moved towards Russian borders several times and now declared at the Madrid summit that they have taken global responsibility.”

This leads us to the clincher: “NATO is moving their line of defense to the South China Sea.” And, Lavrov added, Beijing holds the same assessment.

Here, concisely, is the open “secret” of our current geopolitical incandescence. Washington’s number one priority is the containment of China. That implies blocking the EU from getting closer to the key Eurasia drivers  – China, Russia, and Iran – engaged in building the world’s largest free trade/connectivity environment.

Adding to the decades-long hybrid war against Iran, the infinite weaponizing of the Ukrainian black hole fits into the initial stages of the battle.

For the Empire, Iran cannot profit from becoming a provider of cheap, quality energy to the EU. And in parallel, Russia must be cut off from the EU. The next step is to force the EU to cut itself off from China.

All that fits into the wildest, warped Straussian/neo-con wet dreams: to attack China, by emboldening Taiwan, first Russia must be weakened, via the instrumentalization (and destruction) of Ukraine.

And all along the scenario, Europe simply has no agency.     

Putin, Raeisi and the Erdogan track

Real life across key Eurasia nodes reveals a completely different picture. Take the relaxed get-together in Tehran between Russia’s top security official Nikolai Patrushev and his Iranian counterpart Ali Shamkhani last week.

They discussed not only security matters but also serious business – as in turbo-charged trade.

The National Iranian Oil Company (NIOC) will sign a $40 billion deal next month with Gazprom, bypassing US sanctions, and encompassing the development of two gas fields and six oilfields, swaps in natural gas and oil products, LNG projects, and the construction of gas pipelines.

Immediately after the Patrushev-Shamkhani meeting, President Putin called President Ebrahim Raeisi to keep up the “interaction in politics, trade and the economy, including transport and logistics,” according to the Kremlin.

Iranian president reportedly more than “welcomed” the “strengthening” of Moscow-Tehran ties.

Patrushev unequivocally supported Tehran over the latest color revolution adventure perpetrated under the framework of the Empire’s endless hybrid war.

Iran and the EAEU are negotiating a Free Trade Agreement (FTA) in parallel to the swap deals with Russian oil. Soon, SWIFT may be completely bypassed. The whole Global South is watching.

Simultaneous to Putin’s phone call, Turkiye’s Recep Tayyip Erdogan – conducting his own diplomatic overdrive, and just back from a summit of Turkic nations in Samarkand – stressed that the US and the collective West are attacking Russia “almost without limits”. 

Erdogan made it clear that Russia is a “powerful” state and commended its “great resistance”.

The response came exactly 24 hours later. Turkish intelligence cut to the chase, pointing out that the terrorist bombing in the perpetually busy Istiklal pedestrian street in Istanbul was designed in Kobane in northern Syria, which essentially responds to the US.

That constitutes a de-facto act of war and may unleash serious consequences, including a profound revision of Turkiye’s presence inside NATO.

Iran’s multi-track strategy

A Russia-Iran strategic alliance manifests itself practically as a historical inevitability. It recalls the time when the erstwhile USSR helped Iran militarily via North Korea, after an enforced US/Europe blockade.

Putin and Raeisi are taking it to the next level. Moscow and Tehran are developing a joint strategy to defeat the weaponization of sanctions by the collective West.

Iran, after all, has an absolutely stellar record of smashing variants of “maximum pressure” to bits. Also, it is now linked to a strategic nuclear umbrella offered by the “RICs” in BRICS (Russia, India, China).

So, Tehran may now plan to develop its massive economic potential within the framework of BRI, SCO, INSTC, the Eurasia Economic Union (EAEU), and the Russian-led Greater Eurasia Partnership.

Moscow’s game is pure sophistication: engaging in a high-level strategic oil alliance with Saudi Arabia while deepening its strategic partnership with Iran.

Immediately after Patrushev’s visit, Tehran announced the development of an indigenously built hypersonic ballistic missile, quite similar to the Russian KH-47 M2 Khinzal.

And the other significant news was connectivity-wise: the completion of part of a railway from strategic Chabahar Port to the border with Turkmenistan. That means imminent direct rail connectivity to the Central Asian, Russian and Chinese spheres. 

Add to it the predominant role of OPEC+, the development of BRICS+, and the pan-Eurasian drive to pricing trade, insurance, security, investments in the ruble, yuan, rial, etc.

There’s also the fact that Tehran could not care less about the endless collective West procrastination on the Joint Comprehensive Plan of Action (JCPOA), commonly known as Iran nuclear deal: what really matters now is the deepening relationship with the “RICs” in BRICS. 

Tehran refused to sign a tampered-with EU draft nuclear deal in Vienna. Brussels was enraged; no Iranian oil will “save” Europe, replacing Russian oil under a nonsensical cap to be imposed next month.

And Washington was enraged because it was betting on internal tensions to split OPEC.  

Considering all of the above, no wonder US ‘Think Tankland’ is behaving like a bunch of headless chickens.  

The queue to join BRICS

During the Shanghai Cooperation Organization (SCO) summit in Samarkand last September, it was already tacit to all players how the Empire is cannibalizing its closest allies.

And how, simultaneously, the shrinking NATO-sphere is turning inwards, with a focus on The Enemy Within, relentlessly corralling average citizens to march in lockstep behind total compliance with a two-pronged war – hybrid and otherwise – against imperial peer competitors Russia and China.

Now compare it with Chinese President Xi Jinping in Samarkand presenting China and Russia, together, as the top “responsible global powers” bent on securing the emergence of multipolarity.

Samarkand also reaffirmed the strategic political partnership between Russia and India (Indian Prime Minister Narendra Modi called it an unbreakable friendship).

That was corroborated by the meeting between Lavrov and his Indian counterpart Subrahmanyam Jaishankar last week in Moscow.

Lavrov praised the strategic partnership in every crucial area – politics, trade and economics, investment, and technology, as well as “closely coordinated actions” at the UN Security Council, BRICS, SCO and the G20.

On BRICS, crucially, Lavrov confirmed that “over a dozen countries” are lining up for membership, including Iran: “We expect the work on coordinating the criteria and principles that should underlie BRICS expansion to not take much time”.

But first, the five members need to analyze the ground-breaking repercussions of an expanded BRICS+. 

Once again: contrast. What is the EU’s “response” to these developments? Coming up with yet another sanctions package against Iran, targeting officials and entities “connected with security affairs” as well as companies, for their alleged “violence and repressions”.

“Diplomacy”, collective West-style, barely registers as bullying.

Back to the real economy – as in the gas front – the national interests of Russia, Iran and Turkiye are increasingly intertwined; and that is bound to influence developments in Syria, Iraq, and Libya, and will be a key factor to facilitate Erdogan’s re-election next year.

As it stands, Riyadh for all practical purposes has performed a stunning 180-degree maneuver against Washington via OPEC+. That may signify, even in a twisted way, the onset of a process of unification of Arab interests, guided by Moscow.

Stranger things have happened in modern history. Now appears to be the time for the Arab world to be finally ready to join the Quad that really matters: Russia, India, China, and Iran.

(The views expressed in this article are the author’s own and do not necessarily reflect those of Press TV.)


Press TV’s website can also be accessed at the following alternate addresses:

www.presstv.ir

www.presstv.co.uk

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What would a Russian defeat mean for the people of the West?

November 15, 2022

Regular readers of the blog know that I separate our poor and long-suffering planet into two basic parts: Zone A, aka the AngloZionist Empire, aka the World Hegemony aka the “Axis of Kindness” and what I call Zone B, or the Free World.  Very approximately, we need to separate the ruling elites and the people they rule over separately.  Here is, very roughly, what we get:

Zone AZone B
Ruling elitesHate Russia/PutinSome fear the Hegemony, but others don’t
Peoplemostly indifferent or hostilemostly support Russia/Putin

Next, I propose to make a simple though experiment.  Let’s assume that Russia loses the war against NATO.  We do *not* need to spell out how exactly such a defeat could/would happen, we simply assume that Russia is unable to achieve her goals of denazification and demilitarization of the Ukraine (and, really, all of NATO), that NATO forces are successful in defeating the Russian military machine (again, it does not matter how, with or without amazing Wunderwaffen) and that Russia very clearly loses.

We don’t even need to define what “defeat” would mean?  Maybe we can imagine that Russia gets keeps Crimea, but loses all her recently liberated regions from the former Ukraine, or maybe NATO manages to even occupy Crimea. I don’t see NATO tanks in downtown Moscow, but we can even imagine a purely psychological defeat in which both sides believe that Russia has lost and NATO won.

Again, details, no matter how improbable and far removed from reality, do not matter.  What matters is only this: once all the four groups above realize that NATO has defeated Russia, how would they react?

For the leaders of the Hegemony, this would be a dream come true.  In fact, the Neocons running the Hegemony will most likely decide that they need to “finish the job” which they did not finish in the 90s, and that Russia needs to be broken up into several parts.  This would be the West’s latest “final solution” for the “Russian problem”.

For the leaders of the Free World, a Russian defeat would signal that there are no alternatives to the Hegemony and that like it or not, the AngloZionists will rule the planet.  Like the Borg in Star Trek like to proclaim: “We are the Hegemony.  Resistance is futile.  You will be assimilated“.

For most people in the Free world, a Russian defeat would be a crushing disappointment for the simple reason that most people would see the AngloZionist plan for what it is: get Russia first, then take on and bring down China and then, eventually, Iran and any other nation daring to disobey the rulers of the Hegemony.

Clearly, this is not about the Ukraine, this is about the future of mankind as a whole.

But what about the people in Zone A who currently already live under the AngloZionist yoke?

[Quick reminder: I have decided, for various reasons, not to discuss internal US politics on the Saker blog and I will try hard to stick to this rule.  Still, I will state the obvious: we all now know the outcome of the latest elections in the USA and the adults in the room understand what happened, no need to list various truisms here.  If there is anybody reading this who would sincerely believe that some variation of the Neocon Uniparty in power will change things for the better or even slow down the inevitable collapse I would recommend that this person stop reading here.  Now for the rest of us:]

I think that the initial reaction of most people in Zone A will be a mix of relief (“Of course I knew that the West would win!“) and indifference (transgender issues are SO much more important!): their valiant “finest fighting force in the history of the world” kicked some rooskie commie ass which most definitely deserved some ass-kicking.  Some of the most sanguine defenders of the “western civilization” will even drop by our comments section and gloat “ha! ha! told you! your Putin and his clueless generals got their asses kicked by the most bestest US and NATO generals!“.  And for a while, they will feel really good.  Vindicated:  finally the dumbshit stupid Russians will pay the price for electing and supporting such a weak, indecisive, naive, corrupt, incompetent (and possibly even dying of cancer) leader!

And if only the Kremlin had had the wisdom to listen to its “western friends”!

But no, the Kremlin did not, and now there is going to be hell to pay.  Of course, if Russia’s “western friends” had been in charge, they would have executed a lightening fast blitzkrieg a long time ago, smashed Banderastan into smithereens (à la Fallujah if you wish) and quickly an decisively defeated NATO.  But those clueless idiots in the Kremlin did not listen, and so they deserve what is coming next.

Okay, fair enough.

But what about the regular people in Zone A?  The ones whose “side” supposedly “won”?

Once the initial bliss and celebrations are over, what will happen to them next?

Anybody want to take a guess?  If so, please post your thoughts in the comments section below.

My personal take is that after the defeat of Russia, the defeat of China (by whatever means) would be next.  Once that happens, all of the following will become decapitated and irrelevant: BRICS, SCO, CSTO.  The next country on the Hegemony’s kill list is Iran which, having lost the backing of both Russia and China will not be able to successfully challenge the Hegemony.  That, in turn will have major consequences for the entire Middle-East.  Wannabe Pasha Erdogan would be very quickly brought to heel.  Ditto for MBS.

The Israelis will feel like they “fixed the universe” well enough and that their Moshiach must be next 🙂

With Russia and China out of the way, Central Asia would be frankly easy picking for the Hegemony. In fact, all the Russian limitrophes would quickly be absorbed into the Hegemony.

The same goes for Pakistan and India, who would quickly lose most (or even all) of their sovereignty.  Afghanistan will be handed over to the (US-baked and run) ISIS.  Eventually, both Latin America and African will be fully recolonized (to the immense relief and joy of the local comprador class).

Now I submit that anybody with a modicum of information and intelligence will agree that the gang of woke freaks currently running the USA and almost every EU country out there doesn’t give a damn about the people they rule over: they see them only as means of production, in other words, as slaves who need to be given sufficient amounts of (bad) food and immense amounts of (truly demonic) “entertainment” to keep them nice, and happy and, above all, obedient and ignorant.  So here comes my question:

With Zone B gone, what hope for a better future, if any, could the slaves of the AngloZionist Hegemony keep in their hearts if our entire planet turns into Zone A?

The current repressive apparatus available to the US ruling class which includes 17 “intelligence” agencies,  the biggest military aggression budget on the planet, the highest number of prisoners kept in jails, the total informational control provided by Google, Amazon, Netflix, Facebook, Twitter, etc. etc. etc. militarized police forces and other agencies ready to deal with “internal terrorists” (sometimes defined as any MAGA person), and a school and college system designed to create obedient office plankton (white collar) and fast food employees (blue collar) with almost no awareness, nevermind any understanding, of the outside world.  EU states are not quite there (yet) but they are catching up fast.

This is not a system which will simply collapse by itself or, even less so, be overthrown by its “deplorables”.

I have mentioned this many times in the past: the US political system is neither viable nor reformable.

The EU political system is basically an extension of the US political system, just with a more strongly pronounced colonial mindset (“fuck the EU” right?).

So will the Hegemony turn our entire planet into a giant and “woke” Disney World run by Neocons?

Not as long as Russia, China, Iran and others are standing firm.  But if these “resisting nations” are crushed, then its show over for the people of Zone A whose slavery will not only last even much longer, but whose living conditions will further rapidly deteriorate

And once the “bread and games” thingie fails, you can bet that violent repression is next.

ANY regime which seriously aims at colonizing the entire planet (which the Hegemony undoubtedly does!) will ALWAYS keep its own population in slave-like conditions, materially, culturally and spiritually.

So, to paraphrase Malcolm Xthe only hope for the House Negros still remains the Field Negro.  Whether the House Negros themselves understand that or not is immaterial.

Let me rephrase this in an even more shocking way: the last and only hope for the people of the USA and the EU would be a total Russian victory against NATO.  A NATO defeat will bring down not only NATO itself, but also the EU and that, in turn, would force the US to (finally!) become a normal, civilized, country.

As for the EU, a NATO defeat would mean the end of one thousand years of imperialism.

I get it.  For a civilization built upon the assumption of racial superiority (whether officially proclaimed or not) the notion that the only possible salvation could come from “inferior Asiatic barbarians” is shocking and can only be considered as an extreme form of doubleplusbadcrimethink.  Such a thought is, quite literally, unthinkable for most.

Yet, as I mentioned above, what the House Negros understand or not is entirely irrelevant.  Not only do they have no agency, they want none (Poland anybody?).

Conclusion:

Russia won’t lose this war, most of us understand that.  But to those who don’t, I will offer one simple conclusion: a Russian defeat would be a disaster for Russia.  And China.  And the rest of the planet.  But it will also be a true calamity for the oppressed people of the West.  They, of all people, should be very careful what they wish for. And the next time they want to hallucinate and gloat about a “strategic Russian retreat/defeat” they should ask themselves a simple question: what might this mean for *me* and *my own* future?  Do I really have a reason to rejoice?

Maybe they simply got used to being slaves and the idea of *real* freedom and diversity simply terrifies them?

Andrei

Rewiring Eurasia: Mr. Patrushev goes to Tehran

The meeting this week between two Eurasian security bosses is a further step toward dusting away the west’s oversized Asian footprint.

November 10 2022

Photo Credit: The Cradle

By Pepe Escobar

Two guys are hanging out in a cozy room in Tehran with a tantalizing new map of the world in the background.

Nothing to see here? On the contrary. These two Eurasian security giants are no less than the – unusually relaxed – Russian Security Council Secretary Nikolai Patrushev and Ali Shamkhani, the Secretary of Iran’s Supreme National Security Council.

And why are they so relaxed? Because the future prospects revolving around the main theme of their conversation – the Russia-Iran strategic partnership – could not be more exciting.

This was a very serious business affair: an official visit, at the invitation of Shamkhani.

Patrushev was in Tehran on the exact same day that Russian Minister of Defense Sergey Shoigu – following a recommendation from General Sergey Surovikin, the overall commander of the Special Military Operation – ordered a Russian retreat from Kherson.

Patrushev knew it for days – so he had no problem to step on a plane to take care of business in Tehran. After all, the Kherson drama is part of the Patrushev negotiations with US National Security Advisor Jake Sullivan on Ukraine, which have been going on for weeks, with Saudi Arabia as eventual go-between.

Besides Ukraine, the two discussed “information security, as well as measures to counter interference in the internal affairs of both countries by western special services,” according to a report by Russia’s TASS news agency.

Both countries, as we know, are particular targets of western information warfare and sabotage, with Iran currently the focus of one of these no-holds-barred, foreign-backed, destabilization campaign.

Patrushev was officially received by Iranian President Ebrahim Raisi, who went straight to the point: “The cooperation of independent countries is the strongest response to the sanctions and destabilization policies of the US and its allies.”

Patrushev, for his part, assured Raisi that for the Russian Federation, strategic relations with Iran are essential for Russian national security.

So that goes way beyond Geranium-2 kamikaze drones – the Russian cousins of the Shahed-136 – wreaking havoc in the Ukrainian battlefield. Which, by the way, elicited a direct mention later on by Shamkhani: “Iran welcomes a peaceful settlement in Ukraine and is in favor of peace based on dialogue between Moscow and Kiev.”

Patrushev and Shamkhani of course discussed security issues and the proverbial “cooperation in the international arena.” But what may be more significant is that the Russian delegation included officials from several key economic agencies.

There were no leaks – but that suggests serious economic connectivity remains at the heart of the strategic partnership between the two top sanctioned nations in Eurasia.

Key in the discussions was the Iranian focus on fast expansion of bilateral trade in national currencies – ruble and rial. That happens to be at the center of the drive by both the Shanghai Cooperation Organization (SCO) and BRICS towards multipolarity. Iran is now a full SCO member – the only West Asian nation to be part of the Asian strategic behemoth – and will apply to become part of BRICS+.

Have swap, will travel

The Patrushev-Shamkhani get together happened ahead of the signing, next month, of a whopping $40 billion energy deal with Gazprom, as previously announced by Iranian Deputy Foreign Minister Mahdi Safari.

The National Iranian Oil Company (NIOC) has already clinched an initial $6.5 billion deal. All that revolves around the development of two gas deposits and six oilfields; swaps in natural gas and oil products; LNG projects; and building more gas pipelines.

Last month, Russian Deputy Prime Minister Aleksandr Novak announced a swap of 5 million tons of oil and 10 billion cubic meters of gas, to be finished by the end of 2022. And he confirmed that “the amount of Russian investment in Iran’s oil fields will increase.”

Barter of course is ideal for Moscow and Tehran to jointly bypass interminably problematic sanctions and payment settlement issues – linked to the western financial system. On top of it, Russia and Iran are able to invest in direct trade links via the Caspian Sea.

At the recent Conference on Interaction and Confidence Building Measures in Asia (CICA) summit in Astana, Kazakhstan, Raisi forcefully proposed that a successful “new Asia” must necessarily develop an endogenous model for independent states.

As an SCO member, and playing a very important role, alongside Russia and India, in the International North-South Transportation Corridor (INSTC), Raisi is positioning Iran in a key vector of multilateralism.

Since Tehran entered the SCO, cooperation with both Russia and China, predictably, is on overdrive. Patrushev’s visit is part of that process. Tehran is leaving behind decades of Iranophobia and every possible declination of American “maximum pressure” – from sanctions to attempts at color revolution – to dynamically connect across Eurasia.

BRI, SCO, INSTC

Iran is a key Belt and Road Initiative (BRI) partner for China’s grand infrastructure project to connect Eurasia via road, sea, and train. In parallel, the multimodal Russian-led INSTC is essential to promote trade between the Indian subcontinent and Central Asia – at the same time solidifying Russia’s presence in the South Caucasus and the Caspian Sea region.

Iran and India have committed to offer part of Chabahar port in Iran to Central Asian nations, complete with access to exclusive economic zones.

At the recent SCO summit in Samarkand, both Russia and China made it quite clear – especially for the collective west – that Iran is no longer going to be treated as a pariah state.

So it is no wonder Iran that is entering a new business era with all members of the SCO under the sign of an emerging financial order being designed mostly by Russia, China and India. As far as strategic partnerships go, the ties between Russia and India (President Narendra Modi called it an unbreakable friendship) is as strong as those between Russia and China. And when it comes to Russia, that’s what Iran is aiming at.

The Patrushev-Shamkhani strategic meeting will hurl western hysteria to unseen levels – as it completely smashes Iranophobia and Russophobia in one fell swoop. Iran as a close ally is an unparalleled strategic asset for Russia in the drive towards multipolarity.

Iran and the Eurasian Economic Union (EAEU) are already negotiating a Free Trade Agreement (FTA) in parallel to those swaps involving Russian oil. The west’s reliance on the SWIFT banking messaging system hardly makes any difference to Russia and Iran. The Global South is watching it closely, especially in Iran’s neighborhood where oil is commonly traded in US dollars.

It is starting to become clear to anyone in the west with an IQ above room temperature that the Joint Comprehensive Plan of Action (JCPOA, or Iran nuclear deal), in the end, does not matter anymore. Iran’s future is directly connected to the success of three of the BRICS: Russia, China and India. Iran itself may soon become a BRICS+ member.

There’s more: Iran is even becoming a role model for the Persian Gulf: witness the lengthy queue of regional states aspiring toward gaining SCO membership. The Trumpian “Abraham Accords?” What’s that? BRICS/SCO/BRI is the only way to go in West Asia today.

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

The Real Progressive interview of Michael Hudson (with transcript!)

November 08, 2022

RP Live with Michael Hudson: The Destiny of Civilization

Real Progressive webinar Sept 2022

Graphical user interface, text Description automatically generated

Intro

[00:00:06] Luke Parcher: All right. For those who might not know me, I’m Luke Parcher, I’m a student and activist. I volunteer with Real Progressives. I’m on our leadership team and I also do a show on Sundays covering politics and current events, and I do some interviews throughout the week and things which you guys can find on Real Progress in Action.

I want to quickly talk about Real Progressives. If you’re interested in learning more about us, you can go to realprogressives.org. We have articles, content, podcasts, all sorts of things. And if you’re interested in helping us out, we are a nonprofit. You can go to realprogressives.org/donate. I also want to plug our founder and CEO, Steve Grumbine’s shows. He does the Rogue Scholar on YouTube on Real Progress in Action. He also does the Macro N Cheese podcast, where you can find our guest today, Michael Hudson, as one of many fantastic guests on that podcast.

So without further ado, I’d like to introduce our guest today. Michael is an economist, a professor of economics at the University of Missouri, Kansas City. He’s also a researcher at the Levy Institute at Bard College. He’s a former Wall Street analyst, political consultant, and commentator and author. Michael, thank you so much for taking the time.

[00:01:06] Michael Hudson: Well, thanks for inviting me.

Question | Luke Parcher

[00:01:08] Luke Parcher: I wanted to kick things off for the first question. The title of your book is The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism.

Can you just explain how you came to such an all-encompassing title?

[00:01:20] Michael Hudson: Well, the world economy is now fracturing between two parts, the United States and Europe is the dollarized part. And this Western neoliberal unit is driving Eurasia and most of the Global South into a separate group. The conflict really is between finance capitalism in the United States and Europe against other countries – China, Russia, Iran, India – that are following the more traditional ethic and strategy of industrial capitalism.

The question is: how are countries going to be economically planned? Because every economy is planned by somebody. In the United States, the central planning has been taken out of the hands of government and put in Wall Street. In the City of London. A very rightwing philosophy. In other countries, there is a mixed economy – China and the rest of Eurasia – and their objective of planning and money creation and credit is to create industrial capital to create the means of production.

Obviously, also environmental cleanup now, not merely the means of production but an overall economic system, not simply to make fictitious capital, finance capital, without any reference to the industrial capital base, the earning of labor and industry together.

So there are two economic philosophies and I began the book by contrasting the dynamics of industrial capitalism with finance capitalism. And industrial capitalism in the United States, Germany, England, and every country where it took off, was to promote a public investment in basic infrastructure monopolies in transportation, communication, education, healthcare.

The idea is that if the government would provide these basic services and basic human rights at subsidized rates – or freely, as in the case of education and healthcare – then employers would not have to pay labor a high enough basic wage to make labor pay for healthcare – as in the United States where 18% of GDP is for healthcare – or to pay for education, the 1.7 trillion that goes for student debt in the United States, not mentioning the education that is not debt-financed.

Finance capitalism basically sought to break away all of the public infrastructure. Most financial fortunes and financial fortunes in history were made just in the way that Zola had described, by prying thefts from the public domain.

But the financial capitalism doesn’t say… You don’t have to steal it; you actually make it your policy, giving away the financial domain in the way that President Yeltsin gave away all of Russia’s natural resources, public utilities, electric companies, anything that yields an economic rent that can be just easy income without any investment. And you financialize it.

You’ve had, for the last – really since the 1980s, but even since World War 1 – this movement to prevent industrial economies from being low cost. But the objective of finance capitalism, contrary to what’s taught in the textbooks, is to make economies high cost, to raise the cost every year.

That actually is the explicit policy of the Federal Reserve in the United States. Turn over the central planning to the banking system to essentially inflate the price of housing, with government guaranteed mortgages, up to the point where buying a home is federally guaranteed up to absorbing 43% of the borrower’s income.

Well, you take that 43%, you take the wage withholding for social security and healthcare, you take the taxes; the domestic market shrinks and shrinks. And the finance capital strategy is exactly what it is in the United States today, in Europe. Shift all of the money away from the profits of industrial capital that are reinvested in making new means of production. To expand capital into a shrinking economy where the financial sector intrudes more and more into the economy of production and consumption and shrinks the economy.

The rest of the book all spells out how this transformation from industrial capitalism to finance capitalism occurred and how the fight between the United States and Russia, China, Iraq, Iran, and India – it’s really a conflict of economic systems. There’s no rivalry because they’re not trying to do the same thing. The objectives of the U.S. and Europe are completely different from the economic objectives of Eurasia. It’s a war of economic systems. And that’s why the United States is trying to prevent other countries from following the same path to industrial prosperity that made the United States, Germany and other countries originally rich.

So you have on the one hand a high productivity, high standard of living economy that used to be in the West and is now in Eurasia, as opposed to an economy of austerity planned by the IMF and central banks, as you’re finding in Europe.

Question | Virginia Cotts

[00:06:38] Luke Parcher: Fantastic. Thank you for that. First here we have Virginia Cotts, one of the people helping us backstage, has a question – if Virginia wants to come on screen and ask.

[00:06:47] Virginia Cotts: Michael, I’m not an economist. Can you explain debt deflation – but also how debt siphons money away from the real economy.

I once heard you say that the finance sector is the overhead of the real economy. I think these questions are related? If you could explain that.

[00:07:09] Michael Hudson: Well, the classic discussion of debt deflation was in Volume 3 of Capital, by Marx. And Marx said that debts tend to grow by compound interest.

He gave a citation of everybody from Martin Luther onwards about how any interest rate is a doubling time, it doubles in a given number of years. And it grows exponentially in an up-curve, like X equals Y squared. But the economy grows in the shape of an S-curve; it tapers off.

And one of the reasons that it tapers off in the business cycle is that as the cycle gains momentum, people go further and further into debt. And if you have to pay debt to a banker, if you have to pay student loans, if you have to pay credit card debt, if you have to pay mortgages on rising house prices, then the money you pay to the banker is not available to be spent on goods and services.

So as you have the debt ratio growing in every economy, that crowds out the ability to spend your income on goods and services. So right now many graduate students – you graduate from school, you have a student debt, and you have to live at home with your parents because you can’t get a mortgage to buy a house because the banks say, “Well, you’re already paying so much of your income for student debt that you don’t have any money left over to buy a mortgage, so you can’t buy a mortgage.”

Right now, you’re having the debt-ridden American economy being squeezed. More and more money is paid, not only for debt, but also for other overhead, like healthcare and various monopoly services that are not available to buy goods and services.

Debt deflation is when the growth of debt exceeds the rate of growth of the economy. And that’s true of every economy. The most sophisticated mathematical models that I’ve seen were the ones that were taught to every student in Babylon in 1750 BC.

We have the models that they were told. They say, how fast does a debt at the going rate of interest, at 20%, double? Well, it’s five years. How long does it take to redouble? Well, that’s 10 years. How long to quadruple? Well, that’s 15 years. You see how fast it is. They also would have students calculate the growth of a herd of sheep for instance, and it would all taper off. And when Assyriologists began to translate these cuneiform tablets, they thought, well, this must be an actual report of how the herd actually grew.

But then they found out that the Sumerians already in the third millennium had quadratic equations and very sophisticated mathematics. The mathematics that they used 5,000 years ago were far in advance of what the National Bureau of Economic Research uses.

The National Bureau here is officially in charge of explaining when there’s a recession, when there’s a boom, and explaining the business cycle. The basic theory was outlined and traced by Joseph Schumpeter. It’s a sign curve going up and down regularly, up and down. And the whole philosophy of the National Bureau is a right wing anti-government philosophy saying the economy has automatic stabilizers.

It can never get out of balance because the free market is always going to prevent any kind of chronic downturn. If you have a boom, well, prices will rise and that will cut into profits and that’ll slow investment. And that’ll means that wages will fall until it’s more profitable to begin employing labor again. And you’ll have a recovery, and things go on and on and on, like a sign curve, at a given frequency, forever and ever.

Well, what this deliberately leaves out of account, deliberately expurgates, is the fact that every recovery in the United States and every other Western economy since 1945, has occurred with a rising level of debt. And as debt grows each time, each recovery has been slower. And the reason it’s slower is because as the volume of debt rises, this leaves less and less income available to spend on goods and services. And so, the so-called recovery is weaker until finally it grinds to a halt.

Well, Ricardo anticipated something like that in 1817 in his Principles of Political Economy. He said: well, look at what’s going to happen to land rent. If we don’t prevent the landlords from being the planners of the economy, then the more and more population increases, the price of food will rise, the rents to the landlords will rise more and more until the entire economic surplus is paid for rent and there won’t be any opportunities available to industrial employers. And Marx said, well, this was the Armageddon of capitalism.

In Ricardo’s day, people didn’t borrow to buy housing. It was still hereditary landlords. If your ancestors conquered England and killed enough Englishmen to become aristocrats, you’d inherit it and you didn’t have to borrow. But now that real estate has been democratized in the United States, England and Europe, you have to go into debt in order to buy a house.

And the largest amount of debt in every economy is for real estate, which accounts for 80% of bank loans in the United States and England. Essentially, if you want to buy a house you go to a bank they’ll calculate — well, here’s the rental value of that house. The winner, if you’re trying to bid for a house or an apartment against somebody else, the winner is the buyer who promises to pay the most for the property by taking out a bank loan that absorbs most of the rent as interest. So today, the rent that Ricardo said was going to drive industrial capitalism to a halt, is turned into interest. So it’s the rise in interest that is the Armageddon of industrial capitalism driving the economy to a halt.

I chart most of these in my book Killing the Host, where I give a history of compound interest. But basically the Western economies are all subject to debt deflation today.

And that’s why they’re shrinking. And living standards here are not rising and the economy is not growing, in contrast to China, Russia, Iran, India, and the other countries that don’t have this kind of financial sector doing their planning.

Question | Luke Parcher

[00:13:47] Luke Parcher: I was hoping you could expand on a point you actually mentioned just before we went live, distinguishing between different kinds of debt and which kinds of debt are parasitic and need to be rid of and which ones do not. Can you just quickly distinguish between different types of debt?

[00:14:00] Michael Hudson: Well, in textbooks that students read, corporations will borrow from a bank and they will use this borrowing to build a factory, and to buy machinery, and to produce something.

And the profits will be paid – shared 50/50 or so – with the creditor. So a productive debt is debt which, actually, enables the creditor to repay the loan with the interest and still keep something for himself. Banks don’t lend money to build factories. The stock market does that. The money the banks lend is unproductive debt.

Unproductive debt is when the debt doesn’t enable you to earn more money to pay the creditor. In an unproductive debt, you have to earn the money elsewhere and take money that you may earn as wages or profits and pay the bank. And it’s your loss. It’s a zero sum game, not a positive sum game.

Now this distinction between productive and unproductive debt was built into Sumerian and Babylonian laws. Only unproductive debts were canceled under the Jubilee year the rulers announced. Their word was, andurarum and, the Hebrew, cognate was deror and that was the word used for the Jubilee year.

It meant the rural debts – that when there was a crop failure, and the borrower could not pay the advance of the land rent and the other means of production. Obviously, if the borrower couldn’t repay because there was a crop failure, or a drought, or a disease, or a flood, then the debts were wiped out because that debt did not enable anyone to repay.

And if you didn’t cancel the debt, then the poor cultivator would be forced into a debt bondage to the creditor. And if he did that, then his labor would belong to the creditor and he couldn’t serve in the army. He couldn’t go to work on building public infrastructure. The business debts were all left in place. Debt denominated in silver were left in place and not canceled. The debts denominated in grain were canceled.

Well, in the 12th and 13th century, crusades flooded Europe with money. The Christian Church saw that commerce was reviving. You needed credit. The church theorists said, okay, there’s a productive debt. You’ll make loans to a merchant to trade. He’ll have the money to repay you, that’s productive. But, a debt to a consumer who can’t, is usury. And so ancient languages had no words to distinguish interest from usury.

But the churchmen said, okay, usury is unproductive debt. Interest is a productive debt. Those two words, those were the original meanings of the distinction between interest and usury. That’s been eradicated today when everything is considered productive and part of the free market. And, if it makes the billionaire class rich, it’s productive. That’s basically the thing today.

And the only debts that are supposed to be canceled are debts that the financial sector owns. The banks don’t have to pay the billionaires. Only people with less than a billion dollars have to pay debt. The poorer you are, the more debt you have to pay. They’ve reversed the whole last thousand years of Christian morality as the church has become privatized and financialized.

Question | L Lewis

[00:17:21] Luke Parcher: Fantastic. We have a question here in the chat. This is from L Lewis. It says China has opted for industrialization and the U.S. corporate class clearly has not. Why is the U.S. so belligerent if it doesn’t even want an industrial system?

[00:17:35] Michael Hudson: Because it doesn’t want any other country to have an industrial system. Just like the West fought against communism threatening a new social system after the 1917 revolution, America’s terrified that if China can succeed by following the exact same policy that the United States got rich on in the late 19th century, then they might try to make America rich. And, oh my God, if they do that then there’s no more free lunch for the billionaires.

This is life and death for the billionaires. They make their money by exploiting the economy without producing. The Chinese billionaires make their money by producing and exploiting the economy. But they also produce a lot. And then they have to give up much of what they exploit. So the United States doesn’t want there to be any success in any country achieving prosperity in a way that doesn’t siphon off all of the income to the 1%.

Question | Andy Kennedy

[00:18:28] Luke Parcher: And we have a question here from Andy Kennedy.

[00:18:32] Andy Kennedy: Michael, I believe that you coined the phrase monetary hegemony. I believe it was in Super Imperialism, a book that you wrote a while back. But I think that’s something that a lot of people really have a hard time grasping what that even means. Can you talk a little bit about how the U.S. dollar hegemony has been a large part of why the U.S. became de-industrialized.

[00:19:01] Michael Hudson: Well, that is what my book, Super Imperialism, was all about, that I published in 1972. Dollar hegemony really began in 1972. Hegemony is a word that I can never really work into conversation very easily. It was actually Henry Liu that emphasized that term. He’s a friend of mine and we were colleagues for many years. The dollar hegemony means the United States can issue dollar bonds, IOUs, and it never has to repay them. If we run a balance of payments deficit in the United States, the dollars end up in the foreign central banks. Most of the U.S. balance of payments deficits since the Korean war have been for military spending.

While America is spending money on creating military bases all over the world, these countries will end up with the dollars that we spend to build the bases and buy off client oligarchies. And these dollars are turned over to the local central bank for domestic currency. And the central bank is going to say, “What do we do with the dollars?” Well, they will tend to hold the dollars in the form of buying a U.S. Treasury bond because central banks aren’t supposed to take risks.

So they will essentially buy the Treasury bonds and the United States has no intention of ever paying the Treasury bonds. How is it going to pay? It was paying in gold until 1971. So when the United States would spend money in Vietnam, the dollars that were spent in Southeast Asia, in Japan, in other countries, would be sent from Vietnam to their head office in Paris.

And General de Gaulle would say, “Well, here are these dollars. Now give us gold.” And the U.S. gold stock was going down and down and down. The American strategists worried that this was going to really hurt the country’s ability to dominate the world. So when they went off gold in 1971, everybody thought that this was going to end American financial leadership.

Instead, it was a great increase. It created dollar hegemony because there was nothing for foreign central banks to hold their reserves in except U.S. Treasury bills, Treasury bonds. In other words, Treasury IOUs. So the more money that America would spend abroad in a balance of payments deficit, this money would end up being recycled to the United States in the form of Treasury securities. And so it was actually the balance of payments deficit by military spending that helped finance the U.S. domestic budget deficit. Other countries really didn’t have an alternative. And so when the United States took the lead in creating the Eurozone, it made sure that the Eurozone would never make the Euro an alternative currency to the U.S. dollar because it limited the Eurozone’s ability to run a budget deficit to just 3% of GDP.

Well, what that means is that when Europe goes into a recession and needs to increase government spending like the United States does when it’s in a recession, or like the United States is doing today, running a budget deficit way in excess of 3% of the GDP, Europe is not. So there are not enough Euro bonds by the central bank to ever become a rival for the United States dollar.

Well, all of this is now being changed by Russia and China that they have discussed for the last few years. “In order to stop U.S. hegemony, we have to avoid financing our own military encirclement by lending to the U.S. Treasury that turns it over to the military industrial complex and Pentagon to build bases here.So we’re going to have an alternative to the U.S. dollar.”

Well, they were talking about it – Russia, China, other countries – really for five years. And amazingly enough, the end of dollar hegemony occurred last year when the United States itself said if any country pursues a policy that we don’t like, we can grab all of the dollar reserves that they hold in the United States.

We can grab all of the Treasury bonds they hold. We can just take them. All the bank deposits they have, we can grab. They grabbed that of Venezuela first. They grabbed that of Iran. They grabbed that of Afghanistan. And then they grabbed the $300 billion of Russia. So now the United States has told any country, if you do anything that we don’t like, if you do not let our companies buy control of your economy, or if you try to sue one of our oil companies that pollutes your land, we will grab all of your money and you’ll be isolated.

Well, this ends other countries’ ability to finance the American empire anymore. Other countries are terrified now. If they’re all saying “Let’s not denominate our trade in dollars. Let’s not use the dollars. Let’s use each other’s currencies. We will finance other governments’ treasuries.”

And these treasuries that they’re financing – between China, Russia, Iran, India, and their neighboring countries – are loans to help their treasuries build infrastructure and internal improvements to actually increase the economy growing. Well, the United States itself has brought this about by all the sanctions that it’s imposing. It’s an example of the self-defeating character of the U.S. strategists.

Fortunately, none of them understand how an economy actually works anymore than they understand how military strategy really works. So we’re having armchair amateurs essentially ending a whole system that was giving America a free lunch for the last 50 years.

Question | Jordan S

[00:24:54] Luke Parcher: So we have one here in the chat from Jordan Soreff. He asks, how do you see the interaction between major shareholders of large financial institutions and major shareholders of industrial enterprises? Do you see a lot of common ownership between these kinds of institutions? And if so, wouldn’t they collaborate in order to avoid starving industrial enterprises of access to credit and guarantee some basic form of growth, not only for financial institutions, but also for industrial enterprises.

[00:25:20] Michael Hudson: Not at all. They’re collaborating in destroying the industrial sector. They collaborate in turning industrial corporations into financial firms. and when you turn the management of a corporation away from the engineers and turn it over to the chief financial officer, the chief financial officer says, “Our job is not to increase our industrial production. Our job is to increase the stock’s price. And we can maximize the stock’s price by, instead of spending on research and development that’ll take years to pay off, we can spend our income on buying the shares.”

92% of the profits of the Fortune 500 are spent on share buybacks and dividend payouts, not on new investment. Once you financialize an industrial corporation, you’re trying to make money by financial engineering, not industrial engineering. And you do this by essentially using your income to buy up the share price. This is short term – and finance lives in the short term. The reason finance has no interest in building up industrial power is that that takes years and years to actually plan a factory, plan the production. You have to develop a whole marketing system.

How are we going to sell the product once we produce it? How are we going to distribute it? It takes a lot of planning. It’s beyond the ability of the financiers. You don’t need brains to be a financier. All you need is greed. And you really don’t need a business school. All you need is greed.

And greed is short term. I want it now. Greed is not long term planning. And so, you have a completely different mentality of a financial corporate leader, as opposed to an industrial leader. Someone like, let’s say, Henry Ford, or like the old type of industrial leaders that would try to increase the overall profits to expand production more and more. Today the objective is to shrink production more and more.

Question | Jonathan Kadmon

[00:27:18] Luke Parcher: And we have a question here from Jonathan.

[00:27:21] Jonathan Kadmon: There’s a concept you mentioned in the book that’s also very near and dear to my heart. The commodification of essential goods and services, and extortionist incentives that come when you…

[00:27:32] Michael Hudson: Is that the title of a book?

[00:27:33] Jonathan Kadmon: No, it’s definitely a theme you touch on a bunch of times in your book.

[00:27:37] Michael Hudson: Oh, okay.

[00:27:37] Jonathan Kadmon: And I was hoping you could talk a little bit about how the hostage situation created by commodifying things like housing, healthcare, food, transportation, fuel, things like that – that people need rather than want – is used to extract rents and siphon wealth out of the productive economy to service the wealth demand of the FIRE sector [Finance, Insurance, Real Estate]

[00:28:00] Michael Hudson: Well, the free trade ideology that backs monopolies says that all markets are a function of choice. But the way to control a market is not to give the consumers a choice. And when you say hostage, what that means is people don’t have a choice between whether to eat or to pay a bank.

If they have to buy food or if they have to buy medical care, they have to pay whatever the going price is. Anatole France said that the rich person was as free as the poor person to sleep under the bridge when he didn’t have a house. So the objective of rent seeking is to essentially create a situation where people have no alternative but to buy the service or the good that you’re producing.

If they have no alternative, then you can charge whatever you want. This is the case with most public infrastructure. If you want to mail a letter, you have to pay whatever the going postage is, or whatever parcel service costs. Well, this is why, for about a thousand years leading up to the late 20th century, all governments kept basic services in the public domain – the post office, education, healthcare. You don’t want to privatize them and leave them to the market because if you leave them to the market, then it really isn’t a matter of choice at all.

It’s a matter of letting a monopolist take something that everybody needs, no matter what the price, and charge as much as the market will bear. And that’s a rent-seeking monopoly. That basically is the philosophy that Margaret Thatcher, Ronald Reagan, and the free marketers developed since the 1980s, when you had a privatization of basic needs, especially in housing. And the most important utility that’s been privatized of course has been money and credit creation – the banking system. What has enabled China to avoid the financialization that’s occurred in the United States is because the Central Bank of China is run by the government, not by a financial oligarchy of bankers that get together to run the credit system for their own benefit. But if the government treats money as a public utility, everybody needs money, everybody needs credit, and the government will provide the credit as needed for the economy to grow.

And if the economy has a slowdown, or if a company runs into a financial problem, if you’re the government as a creditor, you can write down the debt. In the United States, if you’ve made loans to a company like General Electric and all of a sudden it can’t pay, the company either goes bankrupt or begins to sell off its assets piece by piece to other people and you have industry being turned into gentrified luxury housing.

So the same thing with healthcare. If you privatize healthcare, everybody needs to go to the hospital. Everybody needs doctor care. If you privatize it then in the United States, 18% of your GDP is going to go to healthcare. The objective is to make healthcare as inefficient and cheap as possible to maximize the profits of the health insurance companies. And the sicker you get, the more money they make.

Also, by the way, the sicker you get, the more GDP goes up. GDP goes up because you have to spend more money healing yourself. So, that’s, a growing part of the American GDP – along with rent and debt service and interest. Well, if you keep healthcare in the public sector, the public sector is going to try to actually keep people healthy instead of sick. And they’re trying to minimize the expense of getting sick so that you leave more money in the hands of households to spend on the real economy of production and consumption, not on giving money to the monopolies.

But in the United States the main utility beside money that’s been privatized is government. Under the Citizens United ruling, the government is now really up for sale and auctioned off to the highest campaign contributors. In the Democratic Party, for instance, every Democratic representative has to raise a given amount of money from campaign contributors to give to the Democrat National Committee.

So whoever can raise the most money gets to be the committee heads. Well, you’ll have the pharmaceuticals industry giving a lot of money to some representative they want to be head of the health committee. You’ll have the bankers giving money to whoever they want to be the head of the banking committee and so on. So, the function of government itself once it’s privatized is to make money for the donor class, which basically is the financial class and the monopoly class that finance creates. Banks have always been the mother of monopolies and the financial sector’s largest business market is in creating monopolies. So, you have basically the privatization of monopolies.

And the monopoly rent of these monopolies is used for paying interest to the banks that finance the corporate raiders, or whoever wants to take over and buy these monopoly privileges.

Question | Luke Parcher

[00:33:14] Luke Parcher: We have a question here from Paul Birtwell. Paul, go ahead.

[00:33:18] Paul B: Hi, Dr. Hudson. Could you briefly touch on the concept of economic rent and unearned income as well as how the establishment became established by conquering Europe, privatizing the commons all the way up through colonialism, and how they use all these little privileges through copyrights, patents, formula, and it’s not really through effort or innovation, but it’s through rake off.

I remember you in an interview, I’m paraphrasing, saying something like: For the crime of being conquered, the 99% and all of the descendants are obligated to take care of the 1% and all of their descendants into perpetuity.

But it would be great if you could touch on those historical elements because most folks think, “Hey, these folks that are really rich are smarter, they worked harder.” And as we know, it’s not based on effort or individual contribution but rather just milking society.

[00:34:16] Michael Hudson: Well, it’s very hard to answer that question very briefly in a question and answer. I’ve written two chapters of the Destiny of Civilization describing exactly what you’ve asked: economic rent. All classical economics – from Adam Smith through Ricardo, John Stuart Mill, Marx, Alfred Marshall – was all about value and price theory in order to segregate how much of the price is not reflected by a real cost of production. Economic rent is unnecessary income.

Economic rent is what you’re able to charge more than just the cost of producing goods and service with a profit. It’s “What is a free lunch?” And the free marketers say, “There’s no such thing as a free lunch.” That’s what Milton Friedman said. But a rentier economy is all about a free lunch. The concept of economic rent in the 19th century was aimed at landlords because they inherited the land. The land does not have a cost of production. And yet, if you have an ownership right to the land, a privilege of legal ownership of the land, you have a legal boundary and you can charge rent without any effort of your own.

John Stuart Mill said economic rent is what landlords make in their sleep. They don’t have to make a productive effort. Well, actually a theory of rent went way back to the churchmen in the 13th century describing what is a fair return to bankers. The economy needs credit, all economies work on credit, traders need credit. They need the money exchange from one currency to another. The value of banking services is the cost of living, the cost of doing business, the cost to have a certain lifestyle that’s becoming of a banker.

But everything that’s over and above normal living prosperity and costs is called usury. That’s not a valid cost. And so that was deemed illegal already in the 13th century. Well, Ricardo in the 19th century used the landlords as the main rent recipients of the hereditary landed aristocracy. Rent is what a landlord would get just for the ownership privilege of having a land. And so if you go out and buy a house today and the price of land goes up because the city will increase bus service or a transportation service. For instance, in New York City, a few years ago, they extended and built the Second Avenue subway that went uptown, along Second Avenue. Real estate prices all soared for real estate on Second Avenue. That was a free lunch.

The landlords didn’t do anything at all to increase the real estate rents that they were charging. Rents went way up. If you lived on Second Avenue or First Avenue, even Third Avenue, you had to pay much higher rent because you no longer had to walk half a mile to get to the Lexington subway that was very overcrowded. You could have the nice uncrowded, Second Avenue subway.

And yet, this rent increased not by the expenditure of any cost. It was rent without value. It was the price of housing without cost value. So rent is the unnecessary element of price over and above what it actually costs to produce something. And rentier income is the income that is unnecessary.

To actually pay a industrialist for building a factory… industrialists would be happy with making the normal rate of profit. But if you have a special technology monopoly like the drug companies, then you can make super-profits. So rents are super-profits, basically. That’s the difference. Anyway, that’s to your question.

Question | Roxanne D

[00:37:58] Luke Parcher: Right on. We have, a question here from Roxanne Devereaux. She says, if you’ve answered this, maybe just elaborate on your answer, but in a perfect world where government actually served the people, what would a debt jubilee look like and how could it reverberate through society?

Most examples I’m familiar with happened before the industrial revolution.

[00:38:14] Michael Hudson: Well, the best example is the German financial miracle of 1947, 1948, the allied monetary reform. All internal debts were canceled except for people’s bank accounts up to a given amount and except for the money that employers owed their employees.

And the reason is that most of the wealth, most of the bank deposits, most of the creditors’ claims, were by the Nazis. And the American occupation said, well, we don’t want the Nazis to get rich. So the good thing about canceling debts is you cancel the savings of bad guys. In 1947 it was the Nazis; today it’s the 1%.

If you cancel the debts that I’ve said should be canceled – the sort of bad debts that are not necessarily production – then you cancel all of this vast accumulation of savings by the 1%. For instance, if you cancel student debts, that would free income for spending on democracy.

If you cancel all the debts that US banks owe to the offshore banking centers in the Caribbean, Panama, Liberia. All of this is flight capital. This is criminal capital. Cancel out all the debt of criminal capital and fraud. When Greece was running into its financial crisis seven years ago, Greece owed 50 billion euros of debt that it was trying to write down.

And the IMF produced a list called the Lagarde List that had deposits of Greek crooks and tax evaders in Switzerland were $50 billion. That 50 billion could have been wiped out. One of the first debt cancellations that went wrong was in Sparta in the third century, BC, under Agis and Cleomenes. When they canceled the debts, the people who wanted to cancel the debts were people who’d bought land on credit and they wanted their debt.

They wanted to own the land free and clear and cancel the mortgages. So some debts you don’t want to write down. If you were to write down mortgage debts, Donald Trump and real estate speculators would be the richest people in the country. So you don’t want to write down their debts.

Their debts will remain on the books. But if they were written down, well, first of all then, their debts are the banking systems assets. So Citibank would be even more insolvent than it is already and the banks would go under. They would be taken over by the public sector because if you have the mortgage debt wiped out, there’s still economic rent. Because people are willing to pay more money for a well-situated property that would, uh, in place of the banks getting the rental value as mortgage debt, the government would get the same rental value in the form of a land tax. That was what classical economics was all about. That was Adam Smith. That was John Stuart Mill. That was the whole reform movement of the late 19th century. So you want to cancel the bad debts, but you don’t want to make debtors who are just speculators rich in the process.

You want to make sure that you only cancel the bad debts and you don’t create a new rentier class. The idea is to look at the economy as a system and see what should the government receive as economic rent. And it can decide what is it going to receive for healthcare. The government… if the government took over the healthcare industry, it probably would not charge the prices that healthcare charges today. It would charge less. Same thing for housing. If housing were run like England ran its council housing before Margaret Thatcher, it would be very low. In Germany, Germany pays only 10% of its average family income for rent, not 30 or 40% as in the case of the United States.

That’s what used to make Germany, until last month, so competitive an economy. So, you’d restructure the economy so that it would only have debts that were socially necessary to keep the economy operating. Debts will begin to grow all over again.

Debts will always begin to grow over and over again. If you don’t ban interest, you permit debts to grow, but when they get so problematic that they threaten economic growth, then you have to write them down to a level where they will no longer prevent economic growth from occurring as they’re doing today.

Question | Doug G

[00:42:45] Luke Parcher: So we have one from Doug Greer here. He says many people seem to confuse the lessons of MMT with the super imperialism of the US dollar being the reserve currency of the world. Is the ability to create dollars to finance domestic needs of the US, like healthcare and infrastructure, dependent on the US dollar being the reserve currency?

Can you clarify?

[00:43:05] Michael Hudson: They’re completely separate. Any country can use its credit creation, either by the central bank or by commercial banks, to create credit. It doesn’t have to be linked to the balance of payments, except that if a country’s running a balance of payments deficit its currency will fall, unless it can balance the payments somehow.

So they are different questions.

Question | Fabiano D

[00:43:30] Luke Parcher: We have one from Fabiano D. Being that politicians, therefore government, are in the pockets of the rentier class, how do you think we could get rid of such rentier influence in order to implement socially oriented policies?

[00:43:43] Michael Hudson: That has never happened without a revolution. That’s the problem. How do you get rid of them? Well, I don’t see any way for the United States to get rid of them. It took a revolution in China. It took a revolution in Russia. That’s the problem right there.

You did have the beginning of a peaceful revolution in England in the 19th century and, leading to a constitutional crisis in 1909 and 1910, when the House of Commons actually passed the land tax and the House of Lords, being the landed aristocracy, canceled it. That caused a crisis.

And the upshot was the House of Lords was never, again, going to be able to negate a revenue act passed by the House of Commons. So that was actually a peaceful resolution of a constitutional crisis. Then World War I came and changed everything. But today I don’t see that kind of a peaceful resolution occurring in the United States.

They’re not going to repeal the Citizens United act, and, from what it looks like to me, the economy is going to get more and more highly squeezed and more polarized between the 1% and the 99%. I would say it’s a class war except finance isn’t really a class because everybody is a creditor as well as a debtor in some sense or another. So it’s really a financial dynamic against the rest of the economy. One of the points that Marx made in Volume 3 of Capital was that finance grows by purely mathematical laws of its own, having no relation to the growth of the economy. It’s an autonomous economic system.

And I think that autonomous economic system is independent of the government here and yet, unless you have a study of economics as an economic system – understanding what’s causing the polarization and the poverty in the United States – you’re not going to be able to have a reform movement to change the system.

The role of economics departments is to dumb down the understanding of the economy. You’re not going to have any kind of a peaceful reform movement here.

Question | Cristina

[00:45:47] Luke Parcher: We have a question here from Cristina who asks, what are the steps we can take to fix the housing crisis? Kind of a broad question, but if you have any policy prescriptions there, that would be great.

[00:45:57] Michael Hudson: There’s very little that individuals can do. The 19th century dealt with this question increasingly. And their solution was if you have a calculation of the land rent, as opposed to what it costs to build a building – we all know that if you build a building the contractor and the builder or developer have to make a profit, but if the government will tax the land rent, then it will not be available to the banks to charge as interest.

So, if you tax the land rent, then the land rent is not going to be capitalized into a bank loan, and housing prices will be kept down to the actual cost of construction plus normal profits. And as housing becomes more desirable, or as the economy becomes more profitable, or as cities build more Second Avenue subways and the rental value goes up, the taxes will go up. That will prevent this increased rent from taking a financial form and will simply be the source of a government revenue. It requires a tax system to tax away the economic rent, so that housing does not reflect the speculation and the economic rent that is caused by the privatization that’s been occurring. Especially since 2008.

Question | Tim

[00:47:11] Luke Parcher: So this one is from Tim. Tim says one argument against de-dollarization is the liquidity and stability of the US dollar. For example, oil is based in dollars and many OPEC countries have their currencies pegged to the dollar, such that they benefit from a strong dollar. At this age, the transition into trade in local currency pairs against these advantages of dollar as reserve currency.

[00:47:32] Michael Hudson: Well, that’s exactly what this last weekend’s Shanghai cooperation meetings were all about. Any country that holds its central bank reserves in dollars has a stake and in wanting to lose the money. China has the largest dollar holdings of any government and its currency has gone down and down and down.

China’s willing to take a loss on this by moving out of the dollars. The solution is, as both President Xi and President Putin pointed out, we’re going to move out of the dollar so we don’t have a stake in the dollar. It can go up or down. It is not going to bother us. They’re not buying or selling to us anymore.

Anyway, they’re sanctioning us. So let’s go with what president Biden wants. He says, you go your way, we’ll go our way. Fine. Let’s go our own ways and use each other’s currency, and that way, it won’t matter. So, it won’t matter to them. If moving out of the dollar means that there’s less demand for the dollars and it goes down, what they’re gaining is freedom.

So, this is the price of their economic liberty from dollar diplomacy.

[00:48:34] Luke Parcher: We have another question here from Virginia Cotts.

Question | Virginia Cotts

[00:48:36] Virginia Cotts: Michael, I feel like we have… some people have a lot of nostalgia for the post World War II social democracies of Europe. I can’t remember if it was in your book or in an interview you described Thatcher’s process of privatizing in England. Could you talk about that? Because I didn’t know a lot of that.

[00:49:00] Michael Hudson: Well, Margaret Thatcher said that her greatest contribution was Tony Blair. And Tony Blair was an opportunist who got enough support from the United States to move the British Labour party to the right of the Conservative Party and do what Margaret Thatcher never could have done. By even privatizing the railroads, by being more viciously anti-labor, the social democratic parties in every country have been so pushed by what the CIA called “the mighty Wurlitzer of public opinion” – meaning bribes to the politicians – that they’ve financed the campaigns of neoliberals to pretend to be pro-labor, to pretend to be socialist, while actually they’re the far right wing of the political spectrum. I won’t call them fascist. But let’s just say there’s nothing the fascists would not like in the social democratic parties. So, here you have the most right wing parties in Europe are the social democratic parties. Way to the right.

I guess the most right wing neofascist party is, of course, the Greens in Germany that are the pro-war party. And anti-labor. But basically, there is no longer a real labor party representing the interests of labor. They’ve all been co-opted by demagogues. The social democratic parties in a way have been like the peace parties.

The first thing that every peace party does when there’s a war is they’re at the head of the pro-war patriotism parade. That was what Trotsky noted about World War One. The peace parties jumped on the bandwagon in Germany, Austria, England, America. Social democratic parties have done the same thing when there’s a neoliberal right wing corporatist financialization. They’ve all been persuaded to do it.

The equivalent was like what the Clintons did to the United States since the 1990s. In the United States, the Democratic Party is the far right wing party now. And I guess when I answered the question about what can Americans do to help the housing crisis… You cannot solve the housing crisis until you end the Democratic Party. You cannot solve the labor problem without ending the Democratic Party. Because that is the party of Wall Street. That is the party of the 1%. Its function is to make sure that there cannot be any left wing opposition to block the Republican Party’s program.

What Bill Clinton did, the Republicans never could have done. Backing Alan Greenspan and the right wingers in getting rid of the acts preventing banks from owning insurance companies and brokerage houses. Getting rid of the Glass Steagall Act. And no Republican could have done anything as viciously anti-black and anti-Hispanic as President Obama, whose policies are basically identical with those of the Ku Klux Klan.

Obama’s role was essentially to reverse the attempt by blacks and hispanics to become homeowners. His objective was to replace black home ownership and hispanic home ownership with ownership by private capital companies. His role in 2009 was to bail out the banks – the fraudulent banks that had written the junk mortgages – and to keep the junk mortgages on the hook to evict almost 10 million American families. And not fine the banks, not throw a single crooked banker in jail. This ended the hopes of the low income Americans – and especially the minorities – to have housing.

If you say, what can we do about housing? Well, if you’re black or Hispanic, you must avoid the Democratic Party like the plague. And you must come to terms with the fact that it was Obama that was the most anti-black president of the 20th century, except of course for Woodrow Wilson. The damage that he’s done has not been widely recognized here.

And, he has put in place a Democratic Party leadership that is so anti-labor, so white racist. and so pro-Wall Street that I don’t think it is reformable.

Question | Luke Parcher

[00:53:18] Luke Parcher: And just to build on what you were just talking about there, Michael, I’m kind of stunned by the extent to which people buy into the partisan false dichotomy in this country and seem to think there are all these massive differences between the parties.

And that obviously is an issue-by-issue thing, but I’m curious where you think that buy-in comes from and how we might be able to cut into it. The fear mongering about Trump is I think overstating the differences between Trump and Biden on these issues. Can you talk a little bit about that?

[00:53:43] Michael Hudson: Yes. The Republican Party’s role is to say to Wall Street, “Yes, please.” And the Democratic Party’s policy is to say “Yes, thank you.” But that’s basically it. You’ll notice, like in Ohio, the Democratic National Committee is backing a right-winger who is going to play the role of West Virginia Senator Manchin or Arizona’s Sinema. The Democrats want to make sure that it has enough Republicans running as Democrats, that if there’s ever a danger of promoting a bill that is good for the working class or the racial minorities or ethnic minorities, that you’ll have the Republicans running as Democrat to cancel it, to play the role.

There’ll always be many senators right behind Manchin and Sinema in the wings to prevent the Democrats from doing anything that does not serve the short-term immediate interests of their Wall Street bankers… Backers.

Question | Bruce W

[00:54:39] Luke Parcher: Rotating villain is a very real concept for sure. We have a question here from Bruce Wall who asks, which of the public banking and monetary reform movements do you support, if any? I have in mind Public Banking Institute, American Monetary Institute, the Alliance of Just Money, Christine Desan’s Just Money. What about figures like Robert Hockett?

[00:54:58] Michael Hudson: Well, I’m on the board of directors of the Public Banking Institute. Steve Zarlenga was a good friend of mine.

I was at all of his early conferences. So they both have very good ideas. And… I’m blocking out the name. Who’s the head of the public banking?

[00:55:15] Virginia Cotts: That’s not Ellen Brown, is it?

[00:55:17] Michael Hudson: Yeah. Ellen Brown. Ellen would be all in favor of many of the things I’ve talked about, but she doesn’t think that a debt cancellation is politically feasible right now. And of course, she’s right. So she’s said that, well, public banks can provide the model for what could be. The result of what happens if Obama would have let Citibank go bankrupt.

The Republican head of the FDIC [Federal Deposit Insurance Corporation] urged that Citibank, being run by crooks… but, Obama put an even bigger crook in charge. Geithner, who was working for his banker Robert Rubin, basically did not let Citibank go bankrupt because that would’ve wiped out the stockholders.

And as Sheila Bair, the head of FDIC, said, well, it was all about the bond holders. And Sheila said, if Citigroup would’ve gone under, then that meant the government would’ve had the biggest bank in the country, and it could actually run a commercial bank along making good loans instead of making loans to corporate raiders. Instead of making crooked mortgage loans and fake loans, it could actually make loans to help the economy grow. Well, she’s quite right. That would’ve been a good idea.

So she’s concentrated.on public banks for what they can do. And she said, at least by having a public bank, you’ll keep the deposits of the public sector – the government, the state agencies, and hopefully the local city agencies – in the public domain, out of the hands of, the commercial bankers and Wall Street, so that you can use the money for a good purpose.

So, I’m all in favor of what she’s doing. Steve Zarlenga at American monetary Institute was for the hundred percent reserve plan that was proposed in the 1930s. And that is, commercial banks would actually be reduced to the status of savings banks.

A hundred percent reserves. Could not create credit. They could only make loans from deposits. Of course, if they had a productive loan made, the government, the Treasury, would act as the depositor – simply increase the deposits in the bank to enable them to make productive loans.

And that also, in principle, is a very good idea. That’s why I supported that. And of course that was the program that was introduced by Dennis Kusinich in his presidential run. I was Kusinich’s economic advisor. So those are the two groups that I’m most familiar with and the most in favor of.

Question | Rasha 

[00:57:41] Luke Parcher: We have a question here from Rasha. What role does defining money play in shaping the economy? How do you define money? Is it a record of value transferred between economic actors or is it a commodity? If you agree that money is a record of value transferred between two or more economic actors, isn’t it possible to create money on demand by any two or more economic actors in a decentralized manner, as opposed to central private banks providing there is a scientific formula by which value of goods and services is assigned.

[00:58:10] Michael Hudson: Oh, my God. I can’t even begin to answer that. The jargon is so misleading. Money has nothing to do with value. Money is debt. That’s the opposite of value. It’s a transfer of debt among people, it’s not a transfer of value. You’re using a very right wing, quite frankly, a fascist economic terminology, maybe without meaning to. But it’s not value, it’s debt created out of thin air. It’s credit.

When you go into a bank and you take out a loan the bank doesn’t say let me see how much money I have on deposit to lend you. They will just write you a loan. They’ll create a bank deposit and in exchange you’ll give them an IOU. It’s debt, loans, that create deposits, not the other way around. Anyone who talks about money and value, you want to stop talking to them immediately. Because you know that it’s just going to be patter talk for propaganda.

Question | Tom

[00:59:03] Luke Parcher: So we have one here from Tom. Tom asks: all prices of all things for sale are not rising. Therefore, the term inflation is not what we are experiencing. For example, the market is working. Money is moving from those without oil to those with oil.

Why does no trained economist understand and label this a normal market redistribution period or some term listed in textbooks for reference? And why is the concept called inflation, which scares unknowing economists and today’s consumers who needlessly suffer from money famine, so poorly taught and so poorly understood?

[00:59:33] Michael Hudson: The question is so bizarre, I cannot answer it. It’s just how do you, how do you answer a swamp and straighten out what they’re saying to give them an answer? It’s a swamp. I can’t answer that.

[00:59:42] Luke Parcher: I suppose in general, what would you prescribe the price increases that we’ve seen today to?

[00:59:47] Michael Hudson: Very largely monopoly positions. The reason oil prices are going up is not because there’s an oil shortage. It’s because the oil companies find an excuse to use the newspaper reports that there will be an oil shortage at some point to raise the prices right now. Adam Tooze wrote a good article a few days ago, comparing the inflation in Europe to the inflation in the United States. In Europe, the price inflation is almost exclusively for energy and for oil and gas derivatives. In the United States, the inflation is much broader – it’s over the whole course.

Again, you want to look at the economy as a system. You don’t want to reduce everything to one-dimensional “here’s the price level”. You want to look at the multi-layered economy. What are the cost prices? What are the economic rents? What are the monopoly prices? What’s the tax system? You have to look at the economy as a system, not in a one-dimensional way. So, I can’t untangle all of the jumble any clearer than that.

Question | Paul B

[01:00:55] Luke Parcher: We have one here from Paul Birtwell again. Could Dr. Hudson touch on and acknowledge the validity of MMT? What do you think is the importance of MMT and how does it apply to this discussion?

[01:01:04] Michael Hudson: Well, I was on the faculty of the UMKC, which is MMT center for many years. I’m all in favor of MMT. The point of MMT is that just as banks create endogenous credit on their own computers, the government can create credit. The government doesn’t have to borrow money from the 1% or from bond holders in order to spend it; the government can simply print it as it did under the greenbacks.

The government can create its own credit. And there’s nothing wrong with running a budget deficit because a budget deficit does not have to be paid by taxpayers paying taxes. A government deficit can be funded by simply creating the money on your own computer – not by taxes. That’s the point that Stephanie Kelton has been making again and again in what she writes.

And that really is the essence of MMT. But of course the leading exponent of MMT was Donald.Trump, when he said deficits don’t matter, we can just create whatever we want. And I think, Vice President Cheney also said we can spend whatever we want. It doesn’t matter. George Bush said, you know, it’s all really fictitious anyway; we can do it.

The difference between Donald Trump and the Republicans and the MMTers is, we want the government to run deficits to actually spend into the economy. We do not want deficits to be run for $9 trillion to subsidize quantitative easing for the 1% to promote real estate prices and stock and bond prices.

We want them to actually employ workers and to promote full employment. So the difference is that the MMTers are basically in favor of tangible economic growth, not creating money bad MMT of Cheney and Donald Trump style.

Question | Luke Parcher

[01:02:51] Luke Parcher: Can you talk a little bit about how the IMF [International Monetary Fund] and financialization have contributed to what’s going on right now in Ukraine? I know that’s a little bit broad, but if you could tie in what we’ve been talking about here to the situation in Ukraine.

[01:03:02] Michael Hudson: The IMF’s job is to make sure that the economy is impoverished and that all the money that it gives is to support the currency – to enable the kleptocrats, Kolomoyskyi and others, to take the Ukrainian currency they have and transfer it into dollars and pound sterling at a high exchange rate.

So they will lend Ukraine the dollars – essentially to support the hryvnia, however you pronounce its currency – and enable the kleptocrats to make money and then pull the rug out from under them if any alternatives to the Nazis take power. They want.to make sure that, once the kleptocrats have emptied out the economy, they can let the economy collapse.

They’re of course backing the new labor law president Zelensky has pushed, abolishing labor unions, abolishing the rights of labor to negotiate, and making basically the most fascist labor law in any country’s history. So the role of the IMF is to support client oligarchy, to get their money out of a country before there is a possibility of a leftwing government coming in, and then to deny all credit and organize a currency raid on the leftwing government, to say, “You see, socialism doesn’t work”.

The IMF is one of the institutions that is the arm of American hegemony, preventing economic growth occurring outside of the United States. Essentially the IMF is a… it’s a small office in the basement of the Pentagon, run by the neocons, to make sure that other countries cannot have any policy that would not let American firms come in and buy their raw materials and their natural resources and their monopolies.

So, think of the IMF as a tool of the military, but much more right wing than any general would dare to be.

[01:04:55] Luke Parcher: Thank you so much, Michael. We really appreciate you taking the time today.

I also, once again, want to remind people to please go to realprogressives.org to learn more about us, or find our podcasts and articles, including again, Michael, as a guest on Macro N Cheese. With that, we will go ahead and call it a discussion here. Virginia, did you have anything you wanted to add?

[01:05:12] Virginia Cotts: Yes. I wanted to ask Michael where people can find his work.

[01:05:17] Michael Hudson: Well, Amazon, I guess, is the easiest place to go. It’s all available there.

On my website, michael-hudson.com. And you can go to that and join me on Patreon. I do have a Patreon group, and if you’re a contributor at a given level, then you get to talk to me directly every few months.

[01:05:36] Virginia Cotts: Well, we can all use support. Real Progressives also has a Patreon. So, support us all, please.

I just want to say, Michael, you wrote an article with the greatest title I’ve ever seen, which was something like the US Defeats Germany for the Third Time in a Century. I just thought that was such a perfect title. I think you wrote it right when the Ukraine war was beginning.

[01:06:02] Michael Hudson: Right. It was apparent what was going to happen at the very beginning. And I’m amazed that nobody else was writing about that. I’m not very good on military analysis. I can follow what Andrei Raevsky at the Saker says, and Moon of Alabama, and Andrei Martyanov. The one thing I can tell about military operations is the balance of payments aspects and how it all is spelled out.

[01:06:24] Virginia Cotts: Well… and you talked about how the three main sectors benefited.

[01:06:30] Michael Hudson: Yes. Oil is the key to American diplomacy. And I guess if we’re talking about American hegemony, it comes from America’s control of the oil trade. That was one of the reasons that America wanted to isolate first Venezuela, and then Russia, because if the only source of oil are companies controlled by the American oil majors, then…

Every economy needs energy to grow. And in every economy since the beginning of the industrial revolution, there’s a connection between the growth of GDP and energy use per capita. So I talk about the monopoly rent and the victim economy. If you can control oil then you can control, basically, the world economy.

That has been a key to the American policy. The Americans realized that if Europe cannot buy Russian oil anymore, or Venezuelan oil, then it’ll have to spend 10 times as much buying American liquified natural gas. This means the sanctions against Russia have ended German industrial supremacy. It has ended the German steel industry. It has ended German heavy industry.

They’re now going to be dependent thoroughly on the United States. And the euro is going to become a weakening satellite currency of the US dollar as a result of killing off the German economic and industrial leadership of the European economy, along with that of Italy and France.

[01:07:53] Virginia Cotts: Oh, thank you. I hope we didn’t abuse your generosity with your time.

[01:07:59] Michael Hudson: No. I assume if I said anything controversial, you’ll just take it out.

[01:08:03] Virginia Cotts: Oh, no, we like it. We will actually clip it and plaster it all over the internet.

[01:08:12] Luke Parcher: Oh… [laughs]

[01:08:13] Virginia Cotts: Michael Hudson isn’t controversial, is he?

[01:08:18] Luke Parcher: Well, you certainly don’t mince words, and we very much appreciate that about you. Michael, thanks again for giving us so much time today. And I want to give a brief shout out to Jonathan Kadmon, Andy Kennedy, and Virginia Cotts, who’ve been helping behind the scenes today to make this happen.

Thanks to all involved. Great.

[01:08:31] Michael Hudson: Thanks for having me. I liked the discussion.

Everybody wants to hop on the BRICS Express

Eurasia is about to get a whole lot larger as countries line up to join the Chinese and Russian-led BRICS and SCO, to the detriment of the west

October 27 2022

By Pepe Escobar

Photo Credit: The Cradle

Let’s start with what is in fact a tale of Global South trade between two members of the Shanghai Cooperation Organization (SCO). At its heart is the already notorious Shahed-136 drone – or Geranium-2, in its Russian denomination: the AK-47 of postmodern aerial warfare.

The US, in yet another trademark hysteria fit rife with irony, accused Tehran of weaponizing the Russian Armed Forces. For both Tehran and Moscow, the superstar, value-for-money, and terribly efficient drone let loose in the Ukrainian battlefield is a state secret: its deployment prompted a flurry of denials from both sides. Whether these are made in Iran drones, or the design was bought and manufacturing takes place in Russia (the realistic option), is immaterial.

The record shows that the US weaponizes Ukraine to the hilt against Russia. The Empire is a de facto war combatant via an array of “consultants,” advisers, trainers, mercenaries, heavy weapons, munitions, satellite intel, and electronic warfare. And yet imperial functionaries swear they are not part of the war. They are, once again, lying.

Welcome to yet another graphic instance of the “rules-based international order” at work. The Hegemon always decides which rules apply, and when. Anyone opposing it is an enemy of “freedom,” “democracy,” or whatever platitude du jour, and should be – what else – punished by arbitrary sanctions.

In the case of sanctioned-to-oblivion Iran, for decades now, the result has been predictably another round of sanctions. That’s irrelevant. What matters is that, according to Iran’s Islamic Revolutionary Guard Corps (IRGC), no less than 22 nations – and counting – are joining the queue because they also want to get into the Shahed groove.

Even Leader of the Islamic Revolution, Ayatollah Ali Khamenei, gleefully joined the fray, commenting on how the Shahed-136 is no photoshop.

The race towards BRICS+

What the new sanctions package against Iran really “accomplished” is to deliver an additional blow to the increasingly problematic signing of the revived nuclear deal in Vienna. More Iranian oil on the market would actually relieve Washington’s predicament after the recent epic snub by OPEC+.

A categorical imperative though remains. Iranophobia – just like Russophobia – always prevails for the Straussians/neo-con war advocates in charge of US foreign policy and their European vassals.

So here we have yet another hostile escalation in both Iran-US and Iran-EU relations, as the unelected junta in Brussels also sanctioned manufacturer Shahed Aviation Industries and three Iranian generals.

Now compare this with the fate of the Turkish Bayraktar TB2 drone – which unlike the “flowers in the sky” (Russia’s Geraniums) has performed miserably in the battlefield.

Kiev tried to convince the Turks to use a Motor Sich weapons factory in Ukraine or come up with a new company in Transcarpathia/Lviv to build Bayraktars. Motor Sich’s oligarch President Vyacheslav Boguslayev, aged 84, has been charged with treason because of his links to Russia, and may be exchanged for Ukrainian prisoners of war.

In the end, the deal fizzled out because of Ankara’s exceptional enthusiasm in working to establish a new gas hub in Turkey – a personal suggestion from Russian President Vladimir Putin to his Turkish counterpart Recep Tayyip Erdogan.

And that bring us to the advancing interconnection between BRICS and the 9-member SCO – to which this Russia-Iran instance of military trade is inextricably linked.

The SCO, led by China and Russia, is a pan-Eurasian institution originally focused on counter-terrorism but now increasingly geared towards geoeconomic – and geopolitical – cooperation. BRICS, led by the triad of Russia, India, and China overlaps with the SCO agenda geoeconomically and geopoliticallly, expanding it to Africa, Latin America and beyond: that’s the concept of BRICS+, analyzed in detail in a recent Valdai Club report, and fully embraced by the Russia-China strategic partnership.

The report weighs the pros and cons of three scenarios involving possible, upcoming BRICS+ candidates:

First, nations that were invited by Beijing to be part of the 2017 BRICS summit (Egypt, Kenya, Mexico, Thailand, Tajikistan).

Second, nations that were part of the BRICS foreign ministers’ meeting in May this year (Argentina, Egypt, Indonesia, Kazakhstan, Nigeria, UAE, Saudi Arabia, Senegal, Thailand).

Third, key G20 economies (Argentina, Indonesia, Mexico, Saudi Arabia, Turkiye).

And then there’s Iran, which has already already shown interest in joining BRICS.

South African President Cyril Ramaphosa has recently confirmed that “several countries” are absolutely dying to join BRICS. Among them, a crucial West Asia player: Saudi Arabia.

What makes it even more astonishing is that only three years ago, under former US President Donald Trump’s administration, Crown Prince Muhammad bin Salman (MbS) – the kingdom’s de fact ruler – was dead set on joining a sort of Arab NATO as a privileged imperial ally.

Diplomatic sources confirm that the day after the US pulled out of Afghanistan, MbS’s envoys started seriously negotiating with both Moscow and Beijing.

Assuming BRICS approves Riyadh’s candidacy in 2023 by the necessary consensus, one can barely imagine its earth-shattering consequences for the petrodollar. At the same time, it is important not to underestimate the capacity of US foreign policy controllers to wreak havoc.

The only reason Washington tolerates Riyadh’s regime is the petrodollar. The Saudis cannot be allowed to pursue an independent, truly sovereign foreign policy. If that happens, the geopolitical realignment will concern not only Saudi Arabia but the entire Persian Gulf.

Yet that’s increasingly likely after OPEC+ de facto chose the BRICS/SCO path led by Russia-China – in what can be interpreted as a “soft” preamble for the end of the petrodollar.

The Riyadh-Tehran-Ankara triad

Iran made known its interest to join BRICS even before Saudi Arabia. According to Persian Gulf diplomatic sources, they are already engaged in a somewhat secret channel via Iraq trying to get their act together. Turkey will soon follow – certainly on BRICS and possibly the SCO, where Ankara currently carries the status of extremely interested observer.

Now imagine this triad – Riyadh, Tehran, Ankara – closely joined with Russia, India, China (the actual core of the BRICS), and eventually in the SCO, where Iran is as yet the only West Asian nation to be inducted as a full member.

The strategic blow to the Empire will go off the charts. The discussions leading to BRICS+ are focusing on the challenging path towards a commodity-backed global currency capable of bypassing US dollar primacy.

Several interconnected steps point towards increasing symbiosis between BRICS+ and SCO. The latter’s members states have already agreed on a road map for gradually increasing trade in national currencies in mutual settlements.

The State Bank of India – the nation’s top lender – is opening special rupee accounts for Russia-related trade.

Russian natural gas to Turkey will be paid 25 percent in rubles and Turkish lira, complete with a 25 percent discount Erdogan personally asked of Putin.

Russian bank VTB has launched money transfers to China in yuan, bypassing SWIFT, while Sberbank has started lending out money in yuan. Russian energy behemoth Gazprom agreed with China that gas supply payments should shift to rubles and yuan, split evenly.

Iran and Russia are unifying their banking systems for trade in rubles/rial.

Egypt’s Central Bank is moving to establish an index for the pound – through a group of currencies plus gold – to move the national currency away from the US dollar.

And then there’s the TurkStream saga.

That gas hub gift

Ankara for years has been trying to position itself as a privileged East-West gas hub. After the sabotage of the Nord Streams, Putin has handed it on a plate by offering Turkey the possibility to increase Russian gas supplies to the EU via such a hub. The Turkish Energy Ministry stated that Ankara and Moscow have already reached an agreement in principle.

This will mean in practice Turkey controlling the gas flow to Europe not only from Russia but also Azerbaijan and a great deal of West Asia, perhaps even including Iran, as well as Libya in northeast Africa. LNG terminals in Egypt, Greece and Turkiye itself may complete the network.

Russian gas travels via the TurkStream and Blue Stream pipelines. The total capacity of Russian pipelines is 39 billion cubic meters a year.

Photo Credit: The Cradle
Map of Russian gas route via Turkey

TurkStream was initially projected as a four-strand pipeline, with a nominal capacity of 63 million cubic meters a year. As it stands, only two strands – with a total capacity of 31,5 billion cubic meters – have been built.

So an extension in theory is more than feasible – with all the equipment made in Russia. The problem, once again, is laying the pipes. The necessary vessels belong to the Swiss Allseas Group – and Switzerland is part of the sanctions craze. In the Baltic Sea, Russian vessels were used to finish building Nord Stream 2. But for a TurkStream extension, they would need to operate much deeper in the ocean.

TurkStream would not be able to completely replace Nord Stream; it carries much smaller volumes. The upside for Russia is not being canceled from the EU market. Evidently Gazprom would only tackle the substantial investment on an extension if there are ironclad guarantees about its security. And there’s the additional drawback that the extension would also carry gas from Russia’s competitors.

Whatever happens, the fact remains that the US-UK combo still exerts a lot of influence in Turkey – and BP, Exxon Mobil, and Shell, for instance, are actors in virtually every oil extraction project across West Asia. So they would certainly interfere on the way the Turkish gas hub functions, as well on determining the gas price. Moscow has to weigh all these variables before committing to such a project.

NATO, of course, will be livid. But never underestimate hedging bet specialist Sultan Erdogan. His love story with both the BRICS and the SCO is just beginning.

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

Why India is arming Armenia against Azerbaijan

Trade routes and national security interests in the South Caucasus are central to New Delhi’s decision to arm Armenia

October 15 2022

Photo Credit: The Cradle

By Yeghia Tashjian

After the 2020 Nagorno-Karabakh war and the shift in the South Caucasus balance of power toward Turkey, India has expressed concern that its vision to connect Europe and Russia to its Indian ports through the International North-South Transport Corridor (INSTC) could be jeopardized.

From New Delhi’s perspective, the increase of Turkish influence in the region is particularly troublesome given its arch-enemy Pakistan’s excellent ties with Ankara, and Islamabad’s support of Baku during the Nagarno-Karabakh war.

It was within this context that India joined Iran to send harsh diplomatic messages to Azerbaijan during the conflict. On several occasions, New Delhi called on Baku to pull back its forces from Armenia “immediately” and refrain from further provocation.

These concerns became all the more pressing when following its victory in the war, Azerbaijan launched an incursion on Armenia’s sovereign territory in May 2021 – and again in September 2022 – by attacking Armenian bordering villages killing more than 200 soldiers and civilians.

When Baku launched the September attack, Arindam Bagchi, the spokesperson of India’s Ministry of External Affairs, weighed in, urging “peace and stability in the South Caucasus region” as vital from a “regional security perspective.”

Similarly, on 15 September, after Azerbaijan’s attack on Armenia, India’s representative to the UNSC meeting called on the “aggressor to immediately cease hostilities.”

India fills the Russian vacuum

The reason behind India’s unease over continued instability in the region is largely over fears that it may threaten the security of the INSTC, where both India and Iran are encouraging Armenia to play an important role connecting the Persian Gulf to the Black Sea.

Concerned that the budding Turkish-Azerbaijani-Pakistani axis would endanger its grand connectivity project and become more assertive in other regions such as Kashmir, India stepped in to fill the void left by Russia’s Ukraine-distraction to secure its regional geopolitical and geo-economic interests by striking an arms trade with Yerevan.

While Armenia had shown interest in Indian military hardware prior to the 2020 Nagarno-Karabakh war, it was only in that year that Yerevan stepped up to sign a $40 million arms deal with New Delhi for the supply of four SWATHI weapons detection radars.

The radar system has been designed to the specifications of the Indian Army: to track incoming artillery shells, mortars, and rockets and provide pinpoint locations of enemy launchers and positions.

Since June 2022, rumors had swirled that Armenia was quietly negotiating the purchase of Indian drones, anti-drone air defense systems, and rocket launchers. The speculation was confirmed in late September when Indian media reported that New Delhi will be exporting missiles, rockets, ammunition, anti-tank missiles (ATGM), and the indigenous Pinaka multi-barrel rocket launcher (MBRL) system to Armenia.

These weapons alone are not sufficient to boost Armenia’s defense capabilities: both the Pinaka MBRL system and the ATGM are unable to combat the Turkish or Israeli-made drones in Baku’s arsenal, as Armenia lacks proper air defense mechanisms.

Indian military experts and former generals argue that the Pinaka alone is not sufficient as Armenia needs “BrahMos” and “Akash” missiles to “break the opponents’ teeth.”

“In war, hammers aren’t the right way ahead to kill flies. One must carry out a threat assessment, after which the correct weapons can be chosen. A ‘transparent’ battlefield allows wise choices to be made. An Indian assessment team could identify the real battlefield problems and then suggest what India could provide at a reasonable cost.”

Defense against drones

This argument correctly assesses the outcome of the 2020 war in which Turkish Bayraktar drones decimated entire Armenian tank columns and rocket launchers, as Yerevan lacked an air defense system to hinder the drone attacks.

These experts argue that Armenia should therefore seek to purchase India’s indigenous “Akash” missile system, a surface-to-air system has been proven to successfully intercept drones and aircraft, which would enhance Armenia’s immunity against future drone operations.

Nevertheless, such improvements would still not be enough to significantly alter the regional balance of power.

Furthermore, Israel, a country heavily invested in Indian defense capabilities, may also have a say in some of these arms exports. Tel Aviv’s close relationship with Azerbaijan to counter Iran in the South Caucasus may ultimately prevent or restrict the sale of heavy weapons to Armenia.

What’s behind the arms deal?

After the 2020 war, Armenia became politically and economically isolated in the region. Yerevan’s failure to seize the opportunity presented by China’s Belt and Road Initiative (BRI) – largely due to poor infrastructure – left out a major Asian power that could have invested heavily, both politically and economically, in the country. 

Instead, in India, Yerevan has found a means to diversify its economic and political ties – a prudent move, as India views Beijing’s BRI initiative as a rival project to its INSTC.

On another front, Beijing is also advancing its Middle Corridor (also known as the Trans-Caspian International Transport Route, or TITR), connecting mainland China with Central Asia via Kazakhstan, and then onto Azerbaijan, Georgia, and Turkey, before heading to Europe. This corridor is also crucial for Europe as it bypasses Russia.

The importance of this corridor became significant as Azerbaijan and Turkey began pressuring Armenia to give up its southern border with Iran and establish the strategic Zangezur Corridor where Azerbaijan would be directly linked to Turkey.

This alarmed both Iran and India, who realized that their mutual geo-economic interests would be threatened along their north-south trade routes.

For this reason, Tehran and New Delhi began to actively urge Yerevan’s participation in the INSTC and the Iranian-backed Black Sea – Persian Gulf Transport Corridor initiatives. Among the benefits of joining the INSTC, Armenia will have transport access to the Iranian Chabahar Port, the Persian Gulf, and Indian markets.

Beyond business

Geopolitical considerations also factor into India’s growing presence in the region. Pranab Dhal Samanra opined in India’s Economic Times that New Delhi cannot ignore the dangerous adventures of the “three Brothers” (Azerbaijan, Turkey, and Pakistan) in Armenia and elsewhere.

The author argues that Turkey and Azerbaijan have always supported Pakistan against India over the issue of Kashmir, and in return, Pakistan has fully-backed Azerbaijan in its war with Armenia over Nagorno-Karabakh.

According to Samanra, if this axis is cemented in the South Caucasus it will move southwards and the “three brothers” will act jointly in other theaters – including ‘Pakistan-occupied Kashmir’ – given their “existing political understanding on the subject.”

India is also concerned that Pakistan may bring China into this axis, which will undermine India’s national security. Hence, it is in “India’s interest that Armenia puts up a stand and not be trampled upon because of a power vacuum (in South Caucasus) caused by Russia’s preoccupation in Ukraine.”

Countering Baku or proxy against Pakistan?

Both India and Armenia stand to benefit from these arms deals. If the Indian weapons prove effective in battle, it could boost India’s prestige in the global defense industry and increase interest by other states to procure arms from New Delhi.

Moreover, by arming Armenia, India can use the country as a deterrent force against the emerging Turkish-Azerbaijani-Pakistani axis. Aside from Afghanistan, Armenia will be the first near-abroad counterweight against Islamabad’s activities deemed to pose a threat to India’s security interests.

By strengthening its current ties with New Delhi, Armenia can become a strategically significant partner for India, where the latter can establish commercial and defense hubs for joint Armenian-Iranian-Indian goods to be exported to Russia and Europe.

Armenia, firmly embedded within Russia’s sphere of influence, will serve as an additional advantage for India, as this flourishing partnership would further boost India’s north-south economic corridor in the South Caucasus.

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

EU Pushes For More Sanctions Which Will Come Back To Bite It

October 5, 2022

On February 22, two days before Russian troops entered the Ukraine, the U.S. and the EU put reams of sanctions onto Russia. They also confiscated some $300 billion of Russia’s reserves that were invested in the ‘west’. The sanctions had been negotiated between the EU and the U.S. and prepared for over several months.

The idea was to bankrupt Russia within a few weeks. The deluded people behind those sanctions had no idea how big and sanctions proved Russia’s economy really is. The sanctions failed to influence Russia in any way but their consequences led to a shortfall of energy in Europe and increased the already high inflation rates. Inflation in Russia is sinking and its general economic numbers are good. The now higher energy prices generate sufficient additional income to completely finance its war efforts.

A sane actor would conclude that the sanctions were a mistake and that lifting them would help Europe more than it would help Russia. But no, the U.S. and European pseudo elites are no longer able to act in a sane manner. They are instead doubling down with the most crazy sanction scheme one has ever heard of:

[T]he European Union pushed ahead on Wednesday with an ambitious but untested plan to limit Russia’s oil revenue.

If the global price of oil remains high, it would complicate the European Union’s effort to impose a price cap on Russian oil that was expected to gain final approval on Thursday, after E.U. negotiators reached an agreement on the measure as part of a fresh package of sanctions against Moscow.

Under the plan, a committee including representatives of the European Union, the Group of 7 nations and others that agree to the price cap would meet regularly to decide on the price at which Russian oil should be sold, and that it would change based on the market price.

Several diplomats involved in the E.U. talks said that Greece, Malta and Cyprus — maritime nations that would be most affected by the price cap — received assurances that their business interests would be preserved, the diplomats said.

The countries had been holding up what would be the eighth sanctions package the European Union has adopted since the Russian invasion of Ukraine because of worries that a price cap on Russian oil exported outside the bloc would affect their shipping, insurance and other industries, the diplomats said.

With oil prices at a high, Russia is raking in billions of dollars in revenue, even as it sells smaller quantities. The cap — part of a broad plan pushed by the Biden administration that the G7 agreed to last month — is intended to set the price of Russian oil lower than where it is today, but still above cost. The U.S. Treasury calculates that the cap would deprive the Kremlin of tens of billions of dollars annually.

How do you make a big producer of a rare commodity sell those goods below the general market price? Unless you have a very strong buyers cartel that can also that product from elsewhere you can not do this successfully. It is an economic impossibility.

To make the measure effective, and cut Russian revenue, the United States, Europe and their allies would need to convince India and China, which buy substantial quantities of Russian oil, to purchase it only at the agreed upon price. Experts say that even with willing partners, the cap could be hard to implement.

Russia has declared that it will not sell any oil to any party that supports the G7 price fixing regime. That is why neither China nor India nor any other country besides the EU and U.S. will agree to adhere to it.

The whole idea is crazy and way too complicate to achieve anything:

Under the new rules, companies involved in the shipping of Russian oil — including shipowners, insurers and underwriters — would be on the hook for ensuring that the oil they are helping to transport is being sold at or below the price cap. If they are caught helping Russia sell at a higher price, they could face lawsuits in their home countries for violating sanctions.

Russian crude will come under an embargo in most of the European Union on Dec. 5, and petroleum products will follow in February. The price cap on shipments to non-E.U. countries has been championed by U.S. Treasury Secretary Janet Yellen as a necessary complement to the European oil embargo.

Under the E.U. deal, Greece, Malta and Cyprus will be permitted to continue shipping Russian oil. Had they not agreed to place their companies at the forefront of applying the price cap, they would have been forbidden from shipping or insuring Russian oil cargo outside the European Union, a huge hit for major industries.

More than half of the tankers now shipping Russia’s oil are Greek-owned. And the financial services that underpin that trade — including insurance, reinsurance and letters of credit — are overwhelmingly based in the European Union and Britain.

This is of course an open invitation to other countries to enter the oil shipping and related financial services businesses at the cost of European companies.

China and India will both it to increase their market shares in those fields. Their ships will transport Russian oil to whoever wants to buy it for the market price minus the always negotiable Russian rebate. Greek ships will sit idle or will be sold off while Indian and Chinese and other Asian tankers will be very, very busy. China’s big insurance companies will happily join that new global services business.

That European bureaucrats agreed to his stupid U.S. idea, which will foremost hurt European businesses, is another sign that Brussels has given up on having any agency.

Today OPEC+ countries, the seller cartel for oil, reacted to the crazy sanctions idea and the upcoming global depression by agreeing to decrease their daily output by 2 million barrels. This was not done out of Saudi solidarity with Russia. Saudi Arabia needs oil at above $80/bl to finance its budget.

Brent Crude, which had fallen to $83/bl on September 26, has since risen to $93/bl.

The global demand for oil is around 100 million barrels per day. Should the demand stay up the 2% reduction in OPEC+ production will have significant price effects and $100 per barrel will be in easy reach.

But OPEC+ is committed to stable prices, not to significant price increases. During the OPEC+ session today the Saudi Prince Abdulazis showed this table:
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Since the beginning of the year the prices for all forms of carbon based energy except crude oil have increased considerably. Abdulazis argued that the chart shows that OPEC+ is managing oil prices responsibly. The EU is certainly not doing similar.

The Biden administration has meanwhile nearly halved the content of the U.S Strategic Petroleum Reserve. This to keep U.S. pump prices down and the Democrats in power.
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Neither is a responsible step to take.

Posted by b on October 5, 2022 at 16:48 UTC | Permalink

Asia’s future takes shape in Vladivostok, the Russian Pacific

September 08, 2022

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

Sixty-eight countries gathered on Russia’s far eastern coast to listen to Moscow’s economic and political vision for the Asia-Pacific

The Eastern Economic Forum (EEF) in Vladivostok is one of the indispensable annual milestones for keeping up not only with the complex development process of the Russian Far East but major plays for Eurasia integration.

Mirroring an immensely turbulent 2022, the current theme in Vladivostok is ‘On the Path to a Multipolar World.’ Russian President Vladimir Putin himself, in a short message to business and government participants from 68 nations, set the stage:

“The obsolete unipolar model is being replaced by a new world order based on the fundamental principles of justice and equality, as well as the recognition of the right of each state and people to their own sovereign path of development. Powerful political and economic centers are taking shape right here in the Asia-Pacific region, acting as a driving force in this irreversible process.”

In his speech to the EEF plenary session, Ukraine was barely mentioned. Putin’s response when asked about it: “Is this country part of Asia-Pacific?”

The speech was largely structured as a serious message to the collective west, as well as to what top analyst Sergey Karaganov calls the “global majority.” Among several takeaways, these may be the most relevant:

  • Russia as a sovereign state will defend its interests.
  • Western sanctions ‘fever’ is threatening the world – and economic crises are not going away after the pandemic.
  • The entire system of international relations has changed. There is an attempt to maintain world order by changing the rules.
  • Sanctions on Russia are closing down businesses in Europe. Russia is coping with economic and tech aggression from the west.
  • Inflation is breaking records in developed countries. Russia is looking at around 12 percent.
  • Russia has played its part in grain exports leaving Ukraine, but most shipments went to EU nations and not developing countries.
  • The “welfare of the ‘Golden Billion’ is being ignored.”
  • The west is in no position to dictate energy prices to Russia.
  • Ruble and yuan will be used for gas payments.
  • The role of Asia-Pacific has significantly increased.

In a nutshell: Asia is the new epicenter of technological progress and productivity.

No more an ‘object of colonization’ 

Taking place only two weeks before another essential annual gathering – the Shanghai Cooperation Organization (SCO) summit in Samarkand – it is no wonder some of the top discussions at the EEF revolve around the increasing economic interpolation between the SCO and the Association of Southeast Asian Nations (ASEAN).

This theme is as crucial as the development of the Russian Arctic: at 41 percent of total territory, that’s the largest resource base in the federation, spread out over nine regions, and encompassing the largest Special Economic Zone (SEZ) on the planet, linked to the free port of Vladivostok. The Arctic is being developed via several strategically important projects processing mineral, energy, water and biological natural resources.

So it’s perfectly fitting that Austria’s former foreign minister Karin Kneissel, self-described as “a passionate historian,” quipped about her fascination at how Russia and its Asian partners are tackling the development of the Northern Sea Route: “One of my favorite expressions is that airlines and pipelines are moving east. And I keep saying this for twenty years.”

Amidst a wealth of roundtables exploring everything from the power of territory, supply chains and global education to “the three whales” (science, nature, human), arguably the top discussion this Tuesday at the forum was centered on the role of the SCO.

Apart from the current full members – Russia, China, India, Pakistan, four Central Asians (Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan), plus the recent accession of Iran – no less than 11 further nations want to join, from observer Afghanistan to dialogue partner Turkey.

Grigory Logvinov, the SCO’s deputy secretary general, stressed how the economic, political and scientific potential of players comprising “the center of gravity” for Asia – over a quarter of the world’s GDP, 50 percent of the world’s population – has not been fully harvested yet.

Kirill Barsky, from the Moscow State Institute of International Relations, explained how the SCO is actually the model of multipolarity, according to its charter, compared to the backdrop of “destructive processes” launched by the west.

And that leads to the economic agenda in the Eurasian integration progress, with the Russian-led Eurasia Economic Union (EAEU) configured as the SCO’s most important partner.

Barsky identifies the SCO as “the core Eurasian structure, forming the agenda of Greater Eurasia within a network of partnership organizations.” That’s where the importance of the cooperation with ASEAN comes in.

Barsky could not but evoke Mackinder, Spykman and Brzezinski – who regarded Eurasia “as an object to be acted upon the wishes of western states, confined within the continent, away from the ocean shores, so the western world could dominate in a global confrontation of land and sea. The SCO as it developed can triumph over these negative concepts.”

And here we hit a notion widely shared from Tehran to Vladivostok:

Eurasia no longer as “an object of colonization by ‘civilized Europe’ but again an agent of global policy.”

‘India wants a 21st Asian century’

Sun Zuangnzhi from the Chinese Academy of Social Sciences (CASS) elaborated on China’s interest in the SCO. He focused on achievements: In the 21 years since its founding, a mechanism to establish security between China, Russia and Central Asian states evolved into “multi-tiered, multi-sector cooperation mechanisms.”

Instead of “turning into a political instrument,” the SCO should capitalize on its role of dialogue forum for states with a difficult history of conflicts – “interactions are sometimes difficult” – and focus on economic cooperation “on health, energy, food security, reduction of poverty.”

Rashid Alimov, a former SCO secretary general, now a professor at the Taihe Institute, stressed the “high expectations” from Central Asian nations, the core of the organization. The original idea remains – based on the indivisibility of security on a trans-regional level in Eurasia.

Well, we all know how the US and NATO reacted when Russia late last year proposed a serious dialogue on “indivisibility of security.”

As Central Asia does not have an outlet to the sea, it is inevitable, as Alimov stressed, that Uzbekistan’s foreign policy privileges involvement in accelerated intra-SCO trade. Russia and China may be the leading investors, and now “Iran also plays an important role. Over 1,200 Iranian companies are working in Central Asia.”

Connectivity, once again, must increase: “The World Bank rates Central Asia as one of the least connected economies in the world.”

Sergey Storchak of Russian bank VEB explained the workings of the “SCO interbank consortium.” Partners have used “a credit line from the Bank of China” and want to sign a deal with Uzbekistan. The SCO interbank consortium will be led by the Indians on a rotation basis – and they want to step up its game. At the upcoming summit in Samarkand, Storchak expects a road map for the transition towards the use of national currencies in regional trade.

Kumar Rajan from the School of International Studies of the Jawaharlal Nehru University articulated the Indian position. He went straight to the point: “India wants a 21st Asian century. Close cooperation between India and China is necessary. They can make the Asian century happen.”

Rajan remarked how India does not see the SCO as an alliance, but committed to the development and political stability of Eurasia.

He made the crucial point about connectivity revolving around India “working with Russia and Central Asia with the INSTC” – the International North South Transportation Corridor, and one of its key hubs, the Chabahar port in Iran: “India does not have direct physical connectivity with Central Asia. The INSTC has the participation of an Iranian shipping line with 300 vessels, connecting to Mumbai. President Putin, in the [recent] Caspian meeting, referred directly to the INSTC.”

Crucially, India not only supports the Russian concept of Greater Eurasia Partnership but is engaged in setting up a free trade agreement with the EAEU: Prime Minister Narendra Modi, incidentally, came to the Vladivostok forum last year.

In all of the above nuanced interventions, some themes are constant. After the Afghanistan disaster and the end of the US occupation there, the stabilizing role of the SCO cannot be overstated enough. An ambitious road map for cooperation is a must – probably to be approved at the Samarkand summit. All players will be gradually changing to trade in bilateral currencies. And creation of transit corridors is leading to the progressive integration of national transit systems.

Let there be light

A key roundtable on the ‘Gateway to a Multipolar World’ expanded on the SCO role, outlining how most Asian nations are “friendly” or “benevolently neutral” when it comes to Russia after the start of the Special Military Operation (SMO) in Ukraine.

So the possibilities for expanding cooperation across Eurasia remain practically unlimited. Complementarity of economies is the main factor. That would lead, among other developments, to the Russian Far East, as a multipolar hub, turning into “Russia’s gateway to Asia” by the 2030s.

Wang Wen from the Chongyang Institute for Financial Studies stressed the need for Russia to rediscover China – finding “mutual trust in the middle level and elites level”. At the same time, there’s a sort of global rush to join BRICS, from Saudi Arabia and Iran to Afghanistan and Argentina:

“That means a new civilization model for emerging economies like China and Argentina because they want to rise up peacefully (…) I think we are in the new civilization age.”

B. K. Sharma from the United Service Institution of India got back to Spykman pigeonholing the nation as a rimland state. Not anymore: India now has multiple strategies, from connecting to Central Asia to the ‘Act East’ policy. Overall, it’s an outreach to Eurasia, as India “is not competitive and needs to diversify to get better access to Eurasia, with logistical help from Russia.“

Sharma stresses how India takes SCO, BRICS and RICs very seriously while seeing Russia playing “an important role in the Indian Ocean.” He nuances the Indo-Pacific outlook: India does not want Quad as a military alliance, privileging instead “interdependence and complementarity between India, Russia and China.”

All of these discussions interconnect with the two overarching themes in several Vladivostok roundtables: energy and the development of the Arctic’s natural resources.

Pavel Sorokin, Russian First Deputy Minister of Energy, dismissed the notion of a storm or typhoon in the energy markets: “It’s a far cry from a natural process. It’s a man-made situation.” The Russian economy, in contrast, is seen by most analysts as slowly but surely designing its Arctic/Asian cooperation future – including, for instance, the creation of a sophisticated trans-shipment infrastructure for Liquified Natural Gas (LNG).

Energy Minister Nikolay Shulginov made sure that Russia will actually increase its gas production, considering the rise of LNG deliveries and the construction of Power of Siberia-2 to China: “We will not merely scale up the pipeline capacity but we will also expand LNG production: it has mobility and excellent purchases on the global market.”

On the Northern Sea Route, the emphasis is on building a powerful, modern icebreaker fleet – including nuclear. Gadzhimagomed Guseynov, First Deputy Minister for the Development of the Far East and the Arctic, is adamant: “What Russia has to do is to make the Northern Sea Route a sustainable and important transit route.”

There is a long-term plan up to 2035 to create infrastructure for safe shipping navigation, following an ‘Arctic best practices’ of learning step by step. NOVATEK, according to its deputy chairman Evgeniy Ambrosov, has been conducting no less than a revolution in terms of Arctic navigation and shipbuilding in the last few years.

Kniessel, the former Austrian minister, recalled that she always missed the larger geopolitical picture in her discussions when she was active in European politics (she now lives in Lebanon): “I wrote about the passing of the torch from Atlanticism to the Pacific. Airlines, pipelines and waterways are moving East. The Far East is actually Pacific Russia.”

Whatever Atlanticists may think of it, the last word for the moment might belong to Vitaly Markelov, from the board of directors of Gazprom: Russia is ready for winter. There will be warmth and light everywhere.”

Ten years of Chinese Research and Development: 2005-2015, the decisive decade to the top

September 05, 2022

Source

by Jean-Pierre Voiret

After the beginning of the millenium, China started investing huge amounts of money in scientific research and development. With millions of engineers and scientist working to develop the country and its science and technology this effort will, in the long term, bring about a tremendous quantum jump in science and technology for the whole planet.

Acronyms:

Atimes Asia Times online, Hong Kong
BjRev Beijing Review online, Beijing
CASS Chinese Academy of Social Sciences, Beijing
EinNews Ein News online, Washington DC
GT Global Times online, Beijing
Hirn Wolfgang Hirn: Angriff aus Asien. Fischer, 2007, Germany
NZZ Neue Zürcher Zeitung, Zürich
Sieren Frank Sieren: Der Chinaschock. Econ, Berlin, 2008.
Spieg Der Spiegel, Hamburg
StZ Stuttgarter Zeitung, Stuttgart
VDI VDI Nachrichten, Düsseldorf
WiWo Wirtschaftswoche, Düsseldorf
Xinhua China’s State News Agency, online edition, Beijing

With seven-league-boots in R+D

General Trend: „The Chinese scientists walk with seven-league boots to the top positions in the field of Research and Development (R+D)“ wrote the German Wirtschaftswoche (‘Economic week’) as early as 2005 in a “China” special issue. And China’s expenditures on R+D reached a record high of 869 billion Yüan (US$ 140 billion) in 2011, up 23% year on year and accounting for 1.84% of GDP (1.76% in 2010). In the same year, fiscal spending on science & technology development rose by 19.2% to reach 490 billion Yüan or 4.5% of the State’s total expenditures (GT, 2012.10.26). In 2012, China’s R+D spending overtook the mark of one trillion Yüan (US$ 162.3 billion) after a growth of 17.9% year on year, now representing 1.97% of GDP. This situation is based on a healthy development of education: “The 6th [national population] census shows us that the average education level for Chinese citizens has been greatly raised, and its speed [of development] exceeds the population growth, [a fact] which had never been seen in human history before” said Hu Angang at a CASS-Qinghua seminar in May, 2011. Five years after the Wirtschaftswoche statement, B. Bartsch wrote in the Stuttgarter Zeitung: „In many fields, the Chinese are already reaching their target of technological independence“ (StZ, 2010.9.17). The State’s role is very important: private companies spend only 3.5% of China’s total R+D expenditures, whereas State companies spend 34% of them. The rest is spent by research institutions like the Chinese Academy of Sciences, which owns 90 different research institutes. The framework for the State’s activity is the Outline national programme for the medium and long-term development of science and technology 2006-2020 with 16 key areas. This plan is supported by the Indigenous Innovation National Campaign of 2006. According to the UN, China was investing in 2007 the third highest sum in R+D after the USA and the EU, before Japan. It should however be noted in this comparison that the USA spend an over-the-average high percentage of their R+D money in largely unproductive military R+D. This may be one of the reasons why OECD’s Economic Research saw the situation differently: According to their estimate, China had already spent in 2006 over 136 billion Yuan more for R+D than any other countries with exception of the USA (Sieren, Chinaschock, p. 393). If one takes into account the excessive (and economically unhealthy) US spending in weaponry R+D, this means that the Middle Kingdom is already the N° 1 in the field of civil research and development. As a matter of fact, China’s R+D spending grows currently at the rate of around 20% yearly, so that even if the OECD’s estimate was overrated, China will soon overtake all other countries anyway. Here are the R+D spending data for the leading countries in 2019 according to Wikipedia Germany:

USA: 612.7 billion US$ = 3.1 % of GDP.

China: 514.8 billion US$ = 2.2% of GDP.

Japan: 172.6 billion US$ = 3.2% of GDP.

India: 158.7 billion US$ = 1.3% of GDP.

Germany: 131.9 billion US$ = 3.2 % of GDP.

Investments: According to the Beijing Review, China boosted her R+D investments from 1.34% of GDP in 2005 to 1.84% of GDP in 2011, 1.97% of GDP in 2012, and plans to reach 2.2% of GDP until 2015 and 2.5% of GDP by 2020 (BjRev., 2012.12.24). ”China’s Gross Domestic expenditure on R+D (GERD) tripled between 2000 and 2006“ (Atimes, March, 2010). Companies investing in research enjoy important tax rebates. Alone in the year 2006, China had been pumping around US $ 37 billion in R+D (Xinhua, January, 2007) and, among others, huge sums in the building of laboratories and research institutes in the universities of the country. By 2012, this sum had grown, as we said, to the amount of US$ 162 billion. This growth has not been checked by the economic crisis. For instance the building of the World’s biggest earthquake simulation laboratory was started in July, 2009 at the Shanghai Tongji University[1]. In the same month, the first National Aerodynamic Laboratory for Advanced Space Technology was opened in Sichuan, where China already has several wind tunnels and aircraft development corporations. In the 12th five-year plan of China (2011-2015), the aircraft industry’s growth plays an important part. The building of a research and development centre for the country’s large capacity aircraft programme began in 2009. Bejing Review informed on the 1st of Feb., 2010, that AVIC Commercial Aircraft Engine Co. has started the building of an R+D centre for the development of engines for the future Chinese large cabin aircrafts. The yearly Chinese air show, during which China presented its new middle range passenger aircraft ARJ21 for 70 to 110 passengers in Sept., 2009, is to day by far the most important air show in Asia. The State owned Commercial Aircraft Corp. (ComAC), which manufactures the ARJ21 with the help of different international contractors (GE for the engines, Rockwell-Collins for the electronic equipment), delivers the aircrafts since 2011. The company already had 208 orders in 2010, 25 of which came from GE Commercial Aviation Services. ComAC also prepares the production lines for the manufacturing of the future large cabin aircraft for 190 passengers C919, which flew at the 2012 air show. The maiden flight took place in 2010, mass production is planned to start in 2014. Hundred and two C919 were already ordered by the end of 2010. Airbus A320 airplanes are currently assembled in series in Tianjin, where Airbus built a copy of her Hamburg assembly line for US$ 1.2 billion[2]. Eleven A320 were produced there in 2009, 26 in 2010 and 36 in 2011.

Universities, institutes of technology, patents: The number of officially approved universities and institutes of technology grew by 70% to over 1700 between 1998 and 2004. In the same period, the number of students exploded from 3.6 to 14.2 million (2004) and reached over 20 million by the end of 2007 (Wiwo, China special issue, 2007). The private industry also invests huge sums in R+D. For instance, telecom giant Huawei (Shenzhen) invests 10% of its income into its R+D in the frame of a very long term company policy planning. In 2007, almost 50% of the 70’000 Huawei employees were busy with R+D activities. No wonder this company is granted the highest number of patents each year (for instance 2734 patents in 2012, as against 2727 patents for Chinese competitor ZTE (Xinhua, 2013.02.22). By the End of 2007, the company had already applied for a total of 26,880 patents (ATimes, 2008.8.16). By the way: at the end of 2012, Huawei had 140,000 employees world wide (NZZ, 2012.11.27). In a more general way, one should note that since 2002, the number of Chinese and South-Korean patent applications at the European Patent Office EPA grew by 34% yearly on the average (StZ, N° 138/2007). In 2008, the number of Chinese patent applications at EPA kept growing at the rate of almost 30% in spite of the economic crisis (StZ., 2009.4.2). In Germany, Chinese companies applied for 160 patents in 2000, but for 12,700 patents in 2010 and for 16,000 in 2011 (StZ, 2012.1.21). The growth rate in patent applications by Chinese from 2009 to 2010 in Munich was 54% year on year (StZ, 2011.5.2). In Beijing itself, China has organised a state of the art patent office along newest Western patterns. The number of patent applications from all provinces of the country is growing at high speed. In spite of the young age of the new patent and copyright law (enacted 1984), the number of patent applications has grown by more than 20% per annum in the five years from 2002 on, to reach a total of 4 million applications for the 2002-2007 period. “More than 900,000 new patent applications are awaited for 2008” wrote the China daily on the 30th of October, 2008, whereas a NZZ graphic of July 26th, 2011, indicates roughly 800,000 applications for 2010[3] (this means that the yearly number of patent applications of the USA could be overtaken by China in a few years from now); on these applications, around 200,000 invention patents are granted in China each year (for instance 217,105 in 2012 according to Xinhua, 2013.2.22). The third revision of the 1984 patent law was put in force on the 1st of October, 2009. The new rules now meet the requirements of the corresponding international agreements (TRIPS) and thus comply with most international standards. Just as these developments take place, Thomas L. Friedman tells us in his book “The World is flat“ (NY, 2005) that the number of American patents and of American scientific publications regularly decreases since a number of years. The US Patent Office itself is stuck in a lasting crisis (VDI, 2007.2.16). Who knows in the USA to day that the 19th century reformer Kang Youwei considered the USA as the most innovative country on Earth in his memorandum of 1895 to the young emperor of China: “The positive interaction between inventiveness and education”, he wrote, “is most evident in the USA, where thousands of new patents for industrial inventions are applied for each year.” Tempi passati! By the Way, China’s largest technology imports no longer come from the United States, but from Europe (39.3%); Japan takes the second place (23.8%) whereas the USA are now just third (19.2%). The successes of the efficient Chinese R+D policy are showing quickly: At the beginning of 2007, China’s first self manufactured high speed train was put into service on the Shanghai-Hangzhou line. At Christmas 2009, the Wuhan-Guangzhou high speed line was also opened to high speed service, reputedly with a routine average speed of 320 km/hour. “The World’s first high-speed railway in areas with extremely low temperatures, the Harbin-Dalian railway, started operations in Northeast China on Dec. 1st, 2012” (BjRev., 2013.1.21). As soon as 2009, Premier Putin declared on the 12th October meeting in Beijing that Russia would now buy its high speed trains from China – no longer from Europe: “They are as fast or even faster, and cheaper” (GT, 12.10.09). China is also technologically independent – and even leading on automation – in the underground train technology. In 2007, China also put a bus with hydrogen drive on trial. It is also since 2007 that the Middle Kingdom owns an independent caesium time-measuring system (integral atomic clock). In 2010, the World also heard for the first time that China had the World’s fastest Supercomputer – a computer of the Tianhe 1A Type.

Technology parks: In China, the preparation of the scientific and technological future is advanced by a formidable group of remarkably well planned high technology parks; W. Hirn writes for instance about the Zhongguangcun technology park: „On the level of equipment and support, you cannot find anything comparable in Germany. The Martinsried technology park outside of Munich, which is often labelled the German “Silicon Valley” of biotech industries, looks rather like a miniature edition of a Chinese technology park. Here [near Beijing], a huge science landscape was built with State assistance around the Beida and Qinghua mother universities. On about 100 square kilometres, more than 400,000 researchers are working in more than 200 research institutes and in some fifty new universities. Between them, you’ll find many high-tech enterprises and start-ups. Lenovo, China’s most famous IT company, originated for instance in Zhongguancun.” (Hirn, p. 176). Zhonguancun was the first technology park of this type. In the meantime, each Chinese big city owns an institution and/or an R+D conglomerate of this sort. GT wrote that at the end of 2012, China had more than 100 high-tech zones. The first four best ones were Beijing’s Zhongguangcun, Shanghai’s Zhangjiang, Shenzhen’s SHTZ and Chengdu’s HTIZ (GT, 2012.12.21). And this is just Mainland China. If you take „global China“ under your microscope, then you must add Taiwan’s (for instance the famous Hsinchu Technology Park) and Singapore’s technology parks (like the incredible Biopolis) to the coming Chinese R+D empire. And because R+D is much cheaper in China (and in Asia in general) than in the USA or Europe (in 2007, you could employ five Chinese engineers and ten Indian ones for the cost of one US engineer), more and more Western multinational companies outsource their research centres to China. One can thus understand why The President’s Council of Advisors on Science & Technology wrote the following words in its report to the US government: „China’s rise to the status of a high-tech area is definitely one of our biggest worries” (quoted in Hirn, p. 55).

Conquering space

Space and geo-sciences: China’s successes in space and in the geo-scientific research are equally impressive: successful launch of three ocean surveying satellites (the third one launched in 2010), successful implementation of the China-Brazil satellite-based Earth sensing programme[4] (CBERS, China-Brazil Earth Research Satellite: N°1 Satellite: 1999; N° 2 sat.: 2003; N° 3 sat.: 2007; N° 4 sat.: 2011), successful launch of Shenzhou 5 into space in 2003 with astronaut Yang Liwei on board, successful launch of Shenzhou 6 in 2005, then of Shenzhou 7 (with extra vehicular activity) in 2008. China launched the unmanned Space module Tiangong 1 („Heavenly Palace 1“) of its prototype space lab in 2011. With 8.5 tons of weight, it will eventually be transformed into a manned space laboratory after experimental dockings of three Shenzhou spacecrafts: Shenzhou N° 8, 9 and 10. The automatic docking of Shenzhou 8 and the manned docking of Shenzhou 9 took place in 2011 and 2012 respectively. On June 18th, 2012, Shenzhou 9 completed its manual docking with Tiangong 1 with 3 astronauts on board, one of them a female. On board, they executed different experiments during ten days. Shenzhou 10 was successfully launched in mid-June, 2013. This time, the crew remained 15 days on board Tiangong 1. The permanent manning of the Chinese space lab took place in 2021. Taking part to the ISS work by Chinese astronauts, a Chinese wish supported by the EU and Russia, is refused by the USA under the pretext of „dual use danger” (use of scientific findings for military aims).

Lunar programme: Successful launch of the Chang’e-1 moon orbiter in the fall of 2007, successful launch of the 2nd Chang’e satellite on the 1st of October, 2010, to take photos of the moon and especially of Sinus Iridium, the future landing zone of Chang’e-3. Chang’e-2 photos of the moon and moon maps have been published on Feb. 6, 2012 (China sent Chang’e-3 and a lunar rover to the moon in 2013. Chang’e-3’s mission was to achieve a soft landing and rove the surface. Chang’e-4 rose in 2017 and returned to Earth with lunar soil and stone samples); after photographing the moon surface in low orbit in early 2011, Chang’e-2 was sent in outer space to orbit the 2nd Lagrange point L2; Chang’e-2 entered L2’s orbit in August, 2011, so that China’s SASTIND was the World’s third agency after ESA and NASA to put a spacecraft into orbit around L2. China was also successful with its Compass navigation system programme (programme duration: 2008-2011) with the launch of 2nd generation Beidou navigation Satellites on April the 15th, 2009, then January the 16th, 2010. Second generation Beidous contain an in-built atomic clock. The Beidou system also implements two-way text messaging, a function which GPS and Glonass cannot ensure; it is particularly useful in remote areas where mobile phone services are unavailable (BjRev, 2011.5.23). In October, 2012, the 16th Beidou satellite was added to the navigation system, making it ready for Asia-Pacific service, which started in the 1st half of 2013. Now Chinese mobile phones get Beidou access (BjRev, 2013.5.23). Total satellite number was 35 in 2020, providing world-wide service.

Remote sensing and more: China was also successful with the launch of the first Chinese Mars probe in the second half of 2009, and the launch of the seventh remote sensing satellite Yaogan VII from the new Jiuquan launch centre (uses: “Land resources survey, crop yield estimate, disaster reduction & prevention, etc.“); then came Yaogan VIII and Yaogan IX (2010.3.5). China also uses these satellites for the digital cartography of the whole of China – a project that was completed in the year 2015. China’s first space telescope was launched into space in 2012. China was not quite so successful with her communication satellites and had different problems at the beginning of the programme: After the loss of Sinosat-2 in 2006, the Nigerian communication satellite Nigcomsat-1, which was financed and supplied by China, also got blind in November, 2008, after only 18 months of service[5]. In all events, Beijing decided in July, 2008, to raise its aerospace research and production capacity by 100%. In the meantime, China manufactured a replacement satellite for Nigeria. It also launched successfully a communication satellite for Venezuela and one for Bolivia. The launch of a satellite for Laos also took place (2010). In the field of its own communication satellites, China launched its communication satellite Zhongxin 11 in May, 2013, to ensure commercial communication in the Asia-Pacific region. On the level of launchers, China successfully tested in July, 2012, its 120 ton-thrust liquid oxygen/Kerosene engine for its new generation of carrier rockets, the Long March-5 (BjRev., 2013.1.21). In the southern island of Hainan, as close to the equator as possible, the Chinese started in September, 2009, the building of their fourth space flights guiding centre with start ramps and flight control station. The Chinese Plan for the development of space industry of the eleventh 5-years plan and the Three stage plan for manned space research anticipate the following activities among other things: Until 2020, as we said, a space station exclusively manned by Chinese astronauts, then between 2025 and 2030 a manned landing on the moon, and until 2040 a manned station on Mars. “More than 5,000 Chinese firms and organisations are now involved in the applications and services of satellite navigation, and the industry generated more than 50 billion Yüan of output value in 2010 according to the report published by the Social Sciences Academic Press” (GT, 2012.1.24). With 22 successful launches, “the number of China’s space launches in 2011 surpassed that of the US, which sent only 18 satellites into orbit” (Pang Zhao in GT, 2012.1.20). What a contrast to the USA where the Spaces shuttles went into retirement in 2011, so that for many years, the USA will not have any own means of sending astronauts into space. Another fact is interesting: As soon as 2010, China succeeded in completing its nation-wide network of three satellites-monitoring ground stations: The stations in Miyun and Kashkar were already operational in 2009, the station in Sanya was then ready at the beginning of 2010. This net allows a China-wide 100% reception of satellite data. In April, 2013, China launched successfully her first high-definition earth observation satellite Gaofen-1. And in May, 2013, China conducted her first space science active experiment to obtain in-situ measurements of the vertical distribution of space environments.

“From pole to pole”

Antarctic and Arctic research: The Chinese Antarctic and Arctic research is also an astonishing success story. With the World’s largest non-nuclear research icebreaker, Xue long (Snow dragon), China has embarked on four Arctic research expeditions in recent years. The Chinese scientists are even more active in the Antarctic: There, they have since 2003 a big base station at their disposal. This base has been entirely modernised in 2009. They also have two smaller stations, the Kunlun-Station on Dome A, the highest Antarctic summit at 4093 m above sea level, and the Zhongshan Station in the Grove Mountains. They operate a sensor station on Dome A. China will build two more Antarctic research stations by 2015. In 2012, China has organised twenty eight Antarctic research expeditions since 2003, the most recent one (28th) ended in April, 2012 after 163 days voyage. In July, 2009, the Chinese also began the building of a new and stronger telescope network at the South Pole. The CAA (China Arctic and Antarctic Administration, under the State Oceanic Administration) launched 5 new Antarctic expeditions from 2011 to 2015.

Exploration: In the course of the last decade, China also organised several high-level geo-scientific explorations/expeditions in the Amazon basin (2004), in the Himalayas (2007) and in Ethiopia (Great Rift Valley, 2008). In Tibet, which seemed to be particularly hit by global warming (the permafrost layer was said to be thawing), China built up a network of 48 soil observatories and 4 radar stations in order to be able to record permanently the data measured around the clock. Tibet is also a centre for cosmic ray research under the Institute of High Energy Physics. In the field of astrophysics, the Chinese government opened officially on June 4th, 2009, its new Large Sky Area Multi-Object Fibre Spectroscopic Telescope (LAMOST) in Xinglong, Hebei Province: „The largest of its kind in the World, it will scan 10 million celestial spectra in the coming five years, one of the World’s most ambitious astronomical endeavours to record key data betraying how the universe was formed“. In Tibet, China built in collaboration with Germany a conventional optical observatory near Lhasa. On Oct. 28th, 2012, China unveiled Asia’s biggest radio telescope in Shanghai; it is used to track & collect data from satellites and space probes.

Underwater activities: For underwater exploration (for instance oceanographic, archaeological, geological, oil, etc.), China built a submersible – the Jiaolong – designed for exploring to 7,000 meters’ depth. In early 2010, the Jiaolong planted a Chinese flag in a South China Sea canyon at 3,759 meters below sea level, then reached 5188 meters in July, 2011. A dive to 7062 meters took place in June, 2012 (BjRev., 2013.1.21). A new Deep-sea base with wharves, deep-sea equipment maintenance workshops, large scale experimental pools and training facilities for oceanauts is being built (commissioned end of 2014); it also provides ground support for the Jialong and for other large scale deep-sea equipment. In early 2013, a Chinese research vessel started an undersea resources survey of the Pacific Ocean. We would also like to mention a border area of Chinese research because it shows how fast the country’s scientists are able to reach top level: Until 1987, nothing had ever happened in China in the field of underwater archaeology. The Underwater Archaeological Research Office, a branch of the National History Museum, was founded in 1987. In 1990, the first research dives took place with foreign colleagues. In 1991-1997, the Chinese archaeologists carry out alone several underwater excavations on five Ming dynasty (1368-1644) ships sunk outside the Coast of Liaoning-Province. In 2007, a Song dynasty (960-1279) ship, Nanhai I, is entirely salvaged out of the South China Sea and then preserved, showing that the Chinese now have a perfect command of the preservation technologies. In Mai, 2009, the Baiheliang underwater Museum is opened in Chongqing with all the underwater exhibits salvaged during the Three Gorges dam construction. Other highlight: In 2010, the ocean going ship Nan’ao I of the Ming Dynasty, is entirely salvaged with tons of Ming Chinaware.

Oil and gas exploration: Deputy director Zhong Ziran of the National Geological Survey told reporters in January, 2011, that his agency’s annual spending for oil and gas exploration will rise tenfold, to 500 million Yuan (US$ 60 million): “Sixty percent of this amount will support offshore projects”, he added. Until now, China’s offshore drilling has been limited to relatively shallow waters near its coasts, employing “jack-up rigs” that are planted on the sea bed. Now, CNOOC announced plans to deploy its first floating drilling platform: The $ 30 billion behemoth, Marine Oil 981, is designed to drill 800 deep water wells. They will produce $ 50 billion worth of oil annually by 2020. In the meantime, a similar floating rig was also built for PetroChina (Atimes, 2011.7.15).

Priorities: Within the framework of its World Crisis management package, the Chinese Cabinet decided in mid-May 2009 to finance with a sum of Yuan 62.8 billion (US$ 9.2 billion) 11 national research programmes which were planned to ensure breakthroughs in different fields. The promoted areas are CNC machining, civil aircraft development, („China to rival Boeing/Airbus with C 919 big plane”, titled EinNews of Washington on the 2009.10.13), pressurized water, high temperature and gas cooled nuclear reactors, broadband mobile communication, high-end central data treatment and software[6], development of big oil and gas fields, water purifying and water treatment technology, trans-genetic products and new medicines & Aids/Viral hepatitis therapies. The corresponding intellectual property (patents, etc.) will not belong to the State, but will be the property of the promoted universities, institutes and companies. In the field of water technology, the ministry of agriculture reported in April, 2013 the development of a new water-saving capillary-based irrigation method saving 50% water as compared to drip irrigation technology. In the field of water treatment, Boying Co. in Xiamen developed a new ‘Nanometer Catalyst Electrolysis’ (NCE) process with extremely promising applications. In a more general way, Xiamen is the centre of Chinese marine economy development; the administration is building there the South Marine Research Centre, which will house high-calibre researchers in oceanography. “China’s marine economy totalled 4.55 trillion Yüan ($ 722 billion) in 2011. The country’s marine output will reach 10% of the country’s GDP by 2015,” said Liu Cigui, Minister of the State Oceanic Administration (BjRev., 2012.12.17). In an interview on the 2009.12.27, Prime Minister Wen Jiabao told a Xinhua reporter of the following general targets for the national research package:

„Our efforts must be focussed on the development of the Internet, of the green economy, of the low carbon economy, of the environment protection technology and of bio medicine“. In the field of Internet, fast broadband internet will access 18,000 more rural villages and 5,000 more schools in just one year (2013). These aims have all been reached. In the field of bio medicine, “The Ministry of Science & Technology announced on Jan. 11th, 2012, that it has approved a hepatitis-E vaccine developed by Xiamen University and Xiamen Innovax Biothech Co.

Robotics: China is still comparatively weak in robotics, owning only 21 robots for every 10,000 workers, compared with an average of 55/10,000 for the World and a peak of 339/10,000 for Japan. But China is pulling up very quickly because of its one child policy-induced growing labour scarcity and of the correspondingly rising wages: according to the International Federation of Robotics, the growth of industrial robotics in China in the past few years has been exceeding 40% to 50% a year, an unprecedented level of growth (Atimes, 2013.3.5).

From particle physics to Atomic energy and related fields

Particle physics: In the field of particle physics, Chinese research takes place under the responsibility of the IHEP (Institute of High Energy Physics), Beijing. IHEP’s main research centres are the Electron positron collider in Beijing, the Daya Bay neutrino research centre with the new Spallation neutron source in Shandong province and the Cosmic ray research centre in Tibet. R+D until 2020 focuses on the accelerator-driven sub-critical system (ADS) and the Beijing light source (BLS). IHEP is also heavily involved in space projects (see http://english.ihep.cas.cn/au/). In 2012, IHEP scored a great success at Daya Bay where physicists solved some problems of the so-called neutrino oscillation in their cave lab. At the same time, we hear that the US DoE (Department of Energy) must scrap a new neutrino experiment by Fermilab because of insufficient funding: “The long baseline neutrino experiment of Fermilab is not affordable” said W. Brinkman, director of DoE’s Office of Science.

Nuclear energy: In the field of nuclear energy, the Atomic Energy Administration selected and assessed 14 reactor locations in the framework of the middle and long term National nuclear energy development plan (2005-2020). In 2010, China already exploited 13 nuclear reactor blocks in four nuclear power stations with a total production capacity of 10.8 GW, which is not quite 2% of the total electrical energy production (coal power stations produced 75% of the total energy production; their share then sank to 60% within ten years). Ten locations with a power capacity of 70 to 90 GW have been built with Chinese 2nd and 3rd generation technology between 2010 and 2020 (by comparison, India plans a nuclear power production capacity of 20 to 25 GW by 2020). Near Weihai, Shandong Prov., China was also building since the summer of 2011 her first 4th generation reactor inspired by the German “Kugelhaufen” (ball-heap) technology high temperature reactor, but also based on own developments. It produced 210 MW of electricity by 2015. If this reactor works satisfactorily, 18 more modules will be built for a production of 3.8 GW of electricity. In 2012, China also announced the commissioning of its first experimental fast neutron reactor, permitting to increase the utilisation rate of uranium to 60% (GT, 2012.10.31). In the meantime, China also started tackling the final storage problem in Beishan (Gansu Prov.), where miles of tunnels are being drilled into compact granite rock. Final storage in this location should start around 2050 (Sieren 2011, p. 71-2). China’s own uranium ore reserves should be sufficient until 2020. “Later, we shall rely on the market and on specific co-operation agreements with other countries” said Zhao Chengkun of the Chinese Nuclear Energy Association. Chinese State companies own shares of several uranium mines in central Asia and Africa. By comparison: In the USA, almost 45 reactors are currently missing according to specialists (EinNews, 2009.8.4).

Power transportation: For power transportation, China learnt the High Voltage DC (HVDC) power transport technology (for the so called HGÜ “power highways”) from Siemens, Germany, and now owns the World’s most up to date “intelligent” current transport grid. SGCC, the State-owned power distribution company operating 88% of the Chinese power grid, which is upgrading China’s grid with HVDC technology and IT management to accommodate varying renewable inputs, expressed in 2012 the wish to join the EU’s Desertec project. However, this project was given up by Europe for reasons of insecurity in North Africa. It is in Shanghai that Siemens, the World leader for sea-located wind parks, opened one of its 3 central offices for wind energy (the other two locations are Hamburg, Germany, and Orlando/Fa., USA). Finally, Asiatimes online published on the 26th of August, 2010, spectacular news: „A team of fifteen Chinese researchers from the Beijing Qinghua University and from the Hefei National Laboratory for Physical Sciences, a government-directed research centre, published in May [2010] a research paper announcing a successful demonstration of “quantum teleportation” (liangzi yinxing chuan) over 16 kilometres of free space. This should give China a clear advantage on the USA in the field of cryptography and in the field of security between communication networks. Employing quantum teleportation over a satellite network allows for complete secure communications without optical fibre infrastructure, even in sensitive and remote areas. In the meantime, the Chinese have mastered a 100 kilometers teleportation (StZ, 2012.8.10). Last but not least, China obtained the project management for the US$ 1.5 billion glass fibre optic cable network agreed upon at the 2013 Vladivostok BRICS Summit. This network, which will link the five BRICS countries with 21 African countries, will make the BRICS bloc independent of the Western world’s spying greed.

Successes

To close this study, let us note some important Chinese successes in science and technology mentioned in different Global Times issues.

Chinese IHEP physicists have confirmed and measured in the presence of foreign physicists a 3rd type of neutrino oscillation in their cave laboratory near the Daya Bay reactor in Guangzhou Province (GT, 2012.3.9). China has completed the construction of a powerful test bench for train braking systems setting a World record by allowing a maximal test-speed of 530 km/h (GT 2012.3.11). Two more weather stations have been added to the network of monitoring stations on the Qinghai-Tibet plateau. End total will be 23 monitoring stations (GT, 2012.3.16). The Chinese ocean research ship Dayang yihao (Ocean One) set sail on a new global research voyage (GT, 2012.4.18). The first megawatt-level tower-type solar thermal power station in Asia was built in NW-Beijing. It uses a 1.5 MW steam turbo generator and generates 1.95 million Kwh of electricity annually in stable condition (GT, 2012.11.14). An amendment to the Chinese copyright law will enhance punitive measures against IPR piracy (GT, 2012.12.21). Within the framework of the National Research package announced in 2009 by Prime minister Wen Jiabao (see higher up), the IME (Institute of Micro-Electronics) of the CAS announced that they made a break through in shrinking integrated circuits (ICs), producing a field effect transistor (FET) with a gate length of only 22 nanometers. 22 nanometers IC technology will afford huge savings for China in importing foreign technology and will boost China-made IC products’ competitiveness (Xin hua). On Sept. 11, 2012, “the Chinese Sunway ‘Blue Light’ Supercomputer, built with domestically produced microprocessors and capable of one thousand trillion operations per sec. passed the examination of the experts panel of the Ministry of Science & Technology (BjRev, 2013.1.21). As soon as Feb., 2012, Prof. Pan Jianwei had demonstrated experimentally a topological correction with a 8-photon cluster state, thus securing a breakthrough in quantum information processing research (BjRev., 2013.1.21). In March, 2013, China’s strongest biogenetic Institute, BGI of Shenzhen, founded by Wang Jian, acquired its strongest American competitor for US$ 118 Million (Spiegel, N° 19, 2013). By the way: early in 2013, China reported the successful unlocking of the key genetic code of wheat.

Further Developments and records in Chinese R&D since 2015

(according to Global times, August 2022)

China’ ZK-1 solid propellent rocket made successful maiden flight from Jiuquan Satellite Launch Centre, sending six satellite into pre-set orbits.

Shenzhou-14 crew receives 1st lab module Wentian at China Space Station, verifying country’s ability to assemble ultra-large spacecraft in orbit.

A new record for horizontal drilling technology under complex geological conditions was set by a Chinese hydropower company on Wednesday, with the termination depth reaching as deep as 775 meters below the ground under complex geological conditions.

China begins construction on world’s most far-reaching radar system to boost defence against near-Earth asteroid impact as well as sensing capability for the Earth-Moon system.

Chinese scientist make significant breakthrough in hyperfine wind observation with coherent Doppler effect wind-Lidar.

China unfolds deorbiting sail for in-orbit spacecraft, thus deploying a deorbiting sail system for the first time in the world. Deorbiting sails slow-down unused space objects or debris to bring them back on earth in a planned way within a much shorter time than usual.

Chinese scientists find high-pressure minerals in Chang’e-5 samples for the first time.

China’s world-largest radio telescope detects first persistently active repeating fast radio burst from 3b light-years away.

China’s Shenzhou-14 crewed spaceship successfully docks with the Tianhe space station core module.

BRICS countries establish joint commission on space cooperation.

Let us end with two interesting notices by the Beijing Review of August, 2022:

Protection of intellectual property: China’s progresses in this field are now widely recognized. In this respect, China jumps from the 22nd to the 12th place in the newest corresponding world ranking.

The opinion of most young Chinese on the West has changed in the course of the last ten years. The West’s reputation has been sinking and the respect for China’s own successes has been growing.

Jean-pierre Voiret, 1936, first received an engineer’s degree, and four years later a doctorate in metallurgy at the Federal Institute of Technology in Zurich. Nine years later, he started studying sinology at the University of Zurich. He has lectured on history of Chinese science at the Federal Institute of technology in Lausanne, and on general Chinese history at the University of Zurich.

  1. After the terrible Earthquake of May, 2008, researchers of the Chinese Laboratory for the Study of Continental Plates Dynamics immediately started series of drillings along the Sichuan faults in order to assess the stress of the geological strata afflicted by the quake. These systematic measurement campaigns went on during more than one year. 
  2. The Chinese middle class flies more and more, so that air transports will more than double within the next 15 years. China’s airlines transported 230 million passengers in 2009 (by comparison: Number of transported passengers in India, 2010: 56 million). In 2015, China will operate 220 airports. Boeing and Airbus already fear the competition of China’s future huge civil aircraft assembly lines. Others than Airbus are also already working in China: Embraer produces her ERJ145 130-seater in Harbin, Bombardier produces the fuselage of her Q400 130-seater in Shenyang. AVIC produces electricity supply systems for aircrafts together with Hamilton-Sundstrand in Xian and manufactures avionics together with General Electric. 
  3. Concerning patents: the NZZ speaks of 800,000 and WiWo of 314,000 patent applications in China for 2011! Did WiWo mean granted patents? Then it seems too many! At least, all agree on the huge rates of growth… 
  4. An impressive success of the CBERS & Yaogan VII earth sensing programs was the discovery, at the end of 2009, of a huge iron ore deposit in the central Chinese province of Hebei (Reserves: About 10 billion tons iron ore). 
  5. The competitors also have problems: for instance Boeing with its 702-series satellites, or Russia with KAZSAT-1. 
  6. 1. On December 25th, 2009, BjReview reported that China’s new first petaflop-Supercomputer Tianhe (Milky Way) opened „a full world of new potentials“. This computer is able to carry out one Quadrillion Operations per second. 2. The first Chinese high temperature research reactor was demonstrated to foreigners in Huyu near Beijing in the fall of 2004: Deliberate stopping of the reactor’s cooling induced no melting down of the reactor’s core. 

Imran Khan’s arrest will derail Pakistan’s democracy

When the nation’s most popular leader in living memory is also the state’s public enemy number one, what will become of Pakistan?

August 23 2022

Photo Credit: The Cradle

By Ejaz Akram

Prominent defense analyst and former Pakistani military officer Haider Mehdi has vociferously claimed that Army Chief General Qamar Javed Bajwa colluded with US authorities to topple the Imran Khan government on 9 April.

While much of the Pakistani masses and social media seem to think the same, the state’s mainstream media outlets have largely stayed mum on the biggest political scandal the country has witnessed in years.

Many who criticized the role of Pakistan’s military in the alleged coup – even without naming the collaborating officers specifically – have already fled the country. Some have been arrested, while others are facing legal charges.

One of the more notable and emotionally-charged cases has been that of Dr. Shahbaz Gill, a Pakistani-American academic and a close member of Imran Khan’s media team. Gill was charged with sedition against the state for making the argument on ARY News Network (a mainstream channel which was immediately shut down afterward) that military officers should not obey unlawful commands from their superiors.

Various senior military officers have already explained that Gill’s remarks are no serious offense because all military officers are already under oath to not obey unlawful commands by their superiors.

Gill was apprehended by authorities on 9 August and reportedly remained in federal government custody until his deteriorating medical condition forced his jailers to move him to a state hospital.

Khan said that he had been fooled by the very same state medical facility back in 2019 when courts were persuaded to allow former PM Nawaz Sharif to travel to the UK for urgent medical treatment, from which he never returned. Khan insisted on checking on Gill’s status himself, but was denied entry to the hospital.

According to the leadership of Khan’s Pakistan Tehreek-e-Insaf (PTI) party, Gill was apprehended without an arrest warrant, tortured, and sexually assaulted.

Under Pakistan’s Code of Criminal Procedure (CrCP), the maximum period of detention is 14 days – which for Gill would be today, 23 August – except for “terrorism specific cases,” in which custody can be extended for up to 90 days.

“The disparity in the period of detention under the CrPC and the ATA [Anti-Terrorism Act] is one of the many contributory factors of the high number of superfluous cases in the anti-terrorism courts of Pakistan, since the ATA gives more time to the police to complete investigation while detaining the accused,” writes the Research Society of International Law in its report on Pakistan.

Is Imran Khan next?

Which brings us to news of the arrest warrant on “terrorism” charges issued against Imran Khan himself.

The highly controversial charge against Khan, under section 7 of Pakistan’s Anti-Terrorism Act, followed Saturday’s mass rally in support of Gill. During his speech, Khan vowed to bring lawsuits against police and judicial authorities for their roles in Gill’s alleged torture: “We will not spare you … We will sue you,” he threatened.

The accusation appear frivolous to the extreme, especially when the prosecuting government’s cabinet is overwhelmingly composed of well-known indicted criminals and repeat offenders on charges that range from corruption to murder.

But government officials defended the “terrorism” charges against Khan, saying he “spread terror amongst the police and the judiciary” and hindered their work.

Pakistan’s ATA has come under fire by domestic lawyers as well as overseas organizations. It’s definitions are too broad, its powers too aggressive, its authorities too dangerous.

Pakistan’s abuse of terror laws

The Office of the UN High Commissioner for Human Rights (OHCHR) says one of the “fundamental flaws” of the ATA “is the vague and overly broad definition of ‘terrorism’ under its provisions. This allows offenses bearing no nexus to militancy and proscribed terrorist networks to be tried.”

Up to 80 percent of those convicted of terrorism-related offenses under this act in Pakistan were accused of things that had nothing to do with “terrorism.”

Furthermore, the OHCHR cites observations from Pakistani lawyers that “political and economic influence serves as a primary determinant for whether an offense is tried under the ATA or under the ordinary criminal justice system.”

The report quotes lawyer Imran Asmat Chaudhry, a senior Advocate of the High Courts, saying:

“I have personally taken around 11 cases, which were sent to ATCs for trial. [The] motive behind all cases was personal enmity, political rivalry, or any other malignant intentions of the police themselves – even though the crime had no nexus to the ATA.”

The UN human rights group concludes: “The [ATA’s] broad definition under the law has often allowed it to be used as a tool of political victimization by ruling parties against opponents.”

Silencing media

Following the news of Khan’s arrest warrant, several Pakistani television channels were shut down and prominent journalist Jameel Farooqi was arrested and moved to an undisclosed location. According to analysts, such level of Praetorian politics and McCarthyism is unprecedented in Pakistan.

Pakistani social media activists have reported deployment of troops on high alert in major cities of Pakistan. The state has imposed a ban on Khan’s appearance on mainstream television networks, and Islamabad Police has announced that it will be no longer provide security services for Khan in the capital.

Sami Ibrahim, another prominent journalist from BOL TV that was struck off the air, says the next 48 hours will be crucial because actions for or against Khan’s arrest may take place. He believes some key decisions are likely to be made shortly, possibly including further restrictions, crackdowns, and persecution of social media platforms inside Pakistan.

In a potentially dangerous stand-off between state authorities and regular Pakistani citizens, most are wondering if the government has enough power to arrest the most popular leader in Pakistan’s recent history.

Khan’s PTI political party currently runs multiple governments in different Pakistani provinces. In stark contrast, the ruling party in the federal government – widely seen as a foreign installed government – is limited to the capital and is suffering from a major crisis in legitimacy, despite aggressive efforts to control the narrative.

Cracks form at the top

The current Pakistani government is in an impossible situation. It cannot call for early elections to help establish a public mandate of support, because all indications suggest an overwhelming win for Khan. And yet the very act of governing is a challenge without this mandate, especially given the ongoing public derision expressed in massive street protests and across social media.

In addition, the government of PM Shahbaz Sharif has its own internal divisions; these cracks are slowly becoming visible – and widening.

On 21 August, the PTI beat their opposing 13-party alliance with a decisive margin in Karachi’s by-election. Imran Khan has essentially already gone to the polls and won, because these massive election margins are taking place on the opposition’s own home ground.

Many of the ruling alliance members are fleeing provinces, where the PTI has formed provincial governments, in order to avoid potential legal charges. Some federal ministers have already escaped overseas.

According to prominent Pakistani analyst Nasir Ahmad: “General Bajwa and his senior generals have no idea how deeply the people of Pakistan, and indeed their own command, loathe them. The more insecure the generals feel, the more they dig their heels, and the closer they dig in their heels, and the closer they take their country, which they are oath-bound to defend, to its ultimate fall.”

Others, however, worry that if the state succeeds in arresting – or even assassinating Imran Khan – then nobody of similar stature and popularity will remain to lead Pakistan to safe shores. Mass movements require competent and legitimate leadership that can appropriately channel nations toward a politically constructive end, or else these numbers may just collapse upon themselves.

Since the alleged US-sponsored ousting of Imran Khan on 9 April, there hasn’t been a dull moment in Pakistani politics. It is as though the country grew a new head overnight:

Nobody could have imagined that the nation’s usually impartial military elite could be turned against the Pakistani masses and become the focus of widespread disdain. Nobody thought the military’s top brass would cozy up to New Delhi, all while when India amasses invasion-level troop build-ups in occupied Kashmir.

Interior Minister Rana Sanaullah stated on 22 August that Afghanistan is an ‘enemy country,’ signaling renewed Pakistani sycophancy in Washington’s latest war against the Taliban. Such decisions go diametrically against the will, interests, and decisions of the people of Pakistan.

A showdown between the majority – versus an increasingly unpopular and emboldened Pakistani elite – is inevitable in the near future.

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

Six months into Ukraine’s collapse, the world has changed forever

The inevitable transfer of power away from the west is leading to a surge in state-sponsored terrorism, but this will do little to reverse the trend

August 24 2022

By Pepe Escobar

Six months after the start of the Special Military Operation (SMO) by Russia in Ukraine, the geopolitical tectonic plates of the 21st century have been dislocated at astonishing speed and depth – with immense historical repercussions already at hand.

To paraphrase T.S. Eliot, this is the way the (new) world begins, not with a whimper but a bang.

The cold-blooded assassination of Darya Dugina – terrorism at the gates of Moscow – may have fatefully coincided with the six-month intersection point, but will do nothing to change the dynamics of the current, work-in-progress, historical shift.

Russia’s Federal Security Service (FSB) appeared to have cracked the case in a little over 24 hours, designating the perpetrator as a neo-Nazi Azov operative instrumentalized by the Security Service of Ukraine (SBU) – itself a mere tool of the CIA/MI6 combo that de facto rules Kiev.

The Azov operative is just a patsy. The FSB will never reveal in public the intel it has amassed on those that issued the orders, and how they will be dealt with.

One Ilya Ponomaryov, an anti-Kremlin minor character granted Ukrainian citizenship, boasted he was in contact with the outfit that prepared the hit on the Dugin family. No one took him seriously.

What is manifestly serious, however, is how oligarchy-connected organized crime factions in Russia would have a motive to eliminate Alexander Dugin, the Christian Orthodox nationalist philosopher who, according to them, may have influenced the Kremlin’s pivot to Asia (he didn’t).

These organized crime factions blamed Dugin for a concerted Kremlin offensive against the disproportional power of Jewish oligarchs in Russia. So these actors would have both the motive and the local know-how to mount such a coup.

If that’s the case, it potentially spells out a Mossad-linked operation – especially given the serious schism in Moscow’s recent relations with Tel Aviv. What’s certain is that the FSB will keep their cards very close to their chest – and retribution will be swift, precise and invisible.

The straw that broke the camel’s back

Instead of delivering a serious blow to Russia’s psyche that could impact the dynamics of its operations in Ukraine, the assassination of Darya Dugina only exposed the perpetrators as tawdry killers who have exhausted their options.

An IED cannot kill a philosopher – or his daughter. In an essential essay, Dugin himself explained how the real war – Russia against the US-led collective west – is a war of ideas. An existential war.

Dugin correctly defines the US as a “thalassocracy,” heir to “Britannia rules the waves.” Yet now the geopolitical tectonic plates are spelling out a new order: The Return of the Heartland.

Russian President Vladimir Putin himself first spelled it out at the Munich Security Conference in 2007. China’s Xi Jinping put it into action by launching the New Silk Roads in 2013. The Empire struck back with Maidan in 2014. Russia counter-attacked by coming to the aid of Syria in 2015.

The Empire doubled down on Ukraine, with NATO weaponizing it non-stop for eight years. At the end of 2021, Moscow invited Washington for a serious dialogue on “indivisibility of security” in Europe. That was dismissed with a non-response response.

Moscow took no time to assess that a dangerous US-led trifecta was instead in the works: an imminent Kiev blitzkrieg against Donbass; Ukraine flirting with acquiring nuclear weapons; and the work of US bioweapon labs. That was the straw that broke the camel’s back.

A consistent analysis of Putin’s public interventions these past few months reveals that the Kremlin – as well as Security Council Yoda Nikolai Patrushev – fully realize how the politico/media talking heads and shock troops of the collective west are directed by the rulers of Finance Capitalism.

As a direct consequence, they also realize how western public opinion is absolutely clueless, Plato cave-style, totally captive to the ruling financial class, who cannot tolerate any alternative narrative.

So Putin, Patrushev, and their peers will never presume that a senile teleprompter reader in the White House or a cokehead comedian in Kiev “rule” anything.

As the US rules global pop culture, it is fitting to borrow from what Walter White/Heisenberg, an average American channeling his inner bad, states in Breaking Bad: “I’m in the Empire business.” And the Empire business is to exercise raw power, maintained with ruthlessness, by all means necessary.

Russia broke that spell. But Moscow’s strategy is way more sophisticated than leveling Kiev with hypersonic weapons, something that could have been done at any moment, starting six months ago.

Instead, what Moscow is doing is talking to virtually the entire Global South, bilaterally or to groups of actors, explaining how the world-system is changing right before our eyes, with the key actors of the future configured as the Belt and Road Initiative (BRI), Shanghai Cooperation Organization (SCO), Eurasian Economic Union (EAEU), BRICS+, the Greater Eurasia Partnership.

And what we see is vast swathes of the Global South – or 85 percent of the world’s population – slowly but surely becoming ready to engage in expelling the finance capitalists from their national horizons, and ultimately taking them down: a long, tortuous battle that will imply multiple setbacks.

The facts on the ground

On the ground in soon-to-be rump Ukraine, Khinzal hypersonic weapons launched from Tu-22M3 bombers or Mig-31 interceptors  will continue to be employed.

Piles of HIMARS will continue to be captured. TOS 1A Heavy Flamethrowers will keep sending invitations to the gates of hell. Crimean Air Defense will continue to intercept all sorts of small drones with IEDs attached. Terrorism by local SBU cells will eventually be smashed.

Using essentially a phenomenal artillery barrage – cheap and mass-produced – Russia will annex Donbass, very valuable in terms of land, natural resources and industrial power. And then on to Nikolaev, Odessa, and Kharkov.

Geoeconomically, Russia can afford to sell its oil with fat discounts to any Global South customer, not to mention strategic partners China and India. Cost of extraction reaches a maximum of $15 per barrel, with a national budget based on $40-45 for a barrel of Urals, whose market value today is almost double that.

A new Russian benchmark is imminent, as well as oil in rubles following the wildly successful gas for rubles scheme.

The assassination of Darya Dugina provoked endless speculation about the Kremlin and the Ministry of Defense finally breaking their discipline. That’s not going to happen. Russian advances along the enormous 1,800-mile battle front are relentless, highly systematic, and deeply invested in a Greater Strategic Picture.

A key vector is whether Russia stands a chance of winning the information war with the west. That will never happen inside NATO’s realm – even as success after success is unfolding across the Global South.

As Glenn Diesen has masterfully demonstrated in his latest book, Russophobia, the collective west is viscerally impervious to admitting any social, cultural, historical merits by Russia.

They have already catapulted themselves into the irrationality stratosphere: the grinding down and de facto demilitarization of the imperial proxy army in Ukraine is driving the Empire’s handlers and its vassals literally nuts.

But the Global South should never lose sight of the ‘Empire business.’ That industry excels in producing chaos and plunder, always supported by extortion, bribery of local elites, and assassinations on the cheap. Every trick in the Divide and Rule book should be expected at any moment. Never underestimate a bitter, wounded, deeply humiliated, declining Empire.

Fasten your seat belts for more of this tense dynamic for the remainder of the decade.

But before that, all along the watchtower, get ready for the arrival of General Winter, whose riders are fast approaching. When the winds begin to howl, Europe will be freezing in the dead of dark nights, lit up occasionally by its finance capitalists puffing on fat cigars.

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

Geopolitical tectonic plates shifting, six months on

August 24, 2022

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

Six months after the start of the Special Military Operation (SMO) by Russia in Ukraine, the geopolitical tectonic plates of the 21st century have been dislocated at astonishing speed and depth – with immense historical repercussions already at hand. To paraphrase T.S. Eliot, this is the way the (new) world begins, not with a whimper but a bang.

The vile assassination of Darya Dugina – de facto terrorism at the gates of Moscow – may have fatefully coincided with the six-month intersection point, but that won’t change the dynamics of the current, work-in-progress historical drive.

The FSB may have cracked the case in a little over 24 hours, designating the perpetrator as a neo-Nazi Azov operative instrumentalized by the SBU, itself a mere tool of the CIA/MI6 combo de facto ruling Kiev.

The Azov operative is just a patsy. The FSB will never reveal in public the intel it has amassed on those that issued the orders – and how they will be dealt with.

One Ilya Ponomaryov, an anti-Kremlin minor character granted Ukrainian citizenship, boasted he was in contact with the outfit that prepared the hit on the Dugin family. No one took him seriously.

What’s manifestly serious is how oligarchy-connected organized crime factions in Russia would have a motive to eliminate Dugin as a Christian Orthodox nationalist philosopher who, according to them, may have influenced the Kremlin’s pivot to Asia (he didn’t).

But most of all, these organized crime factions blamed Dugin for a concerted Kremlin offensive against the disproportional power of Jewish oligarchs in Russia. So these actors would have the motive and the local base/intel to mount such a coup.

If that’s the case that spells out a Mossad operation – in many aspects a more solid proposition than CIA/MI6. What’s certain is that the FSB will keep their cards very close to their chest – and retribution will be swift, precise and invisible.

The straw that broke the camel’s back

Instead of delivering a serious blow to Russia in relation to the dynamics of the SMO, the assassination of Darya Dugina only exposed the perpetrators as tawdry operatives of a Moronic Murder Inc.

An IED cannot kill a philosopher – or his daughter. In an essential essay Dugin himself explained how the real war – Russia against the collective West led by the United States – is a war of ideas. And an existential war.

Dugin – correctly – defines the US as a “thalassocracy”, heir to “Britannia rules the waves”; yet now the geopolitical tectonic plates are spelling out a new order: The Return of the Heartland.

Putin himself first spelled it out at the Munich Security Conference in 2007. Xi Jinping started to make it happen when he launched the New Silk Roads in 2013. The Empire struck back with Maidan in 2014. Russia counter-attacked coming to the aid of Syria in 2015.

The Empire doubled down on Ukraine, with NATO weaponizing it non-stop for eight years. At the end of 2021, Moscow invited Washington for a serious dialogue on “indivisibility of security” in Europe. That was dismissed with a non-response response.

Moscow took no time to confirm a trifecta was in the works: an imminent Kiev blitzkrieg against Donbass; Ukraine flirting with acquiring nuclear weapons; and the work of US bioweapon labs. That was the straw that broke the New Silk Road camel’s back.

A consistent analysis of Putin’s public interventions these past few months reveals that the Kremlin – as well as Security Council Yoda Nikolai Patrushev – fully realize how the politico/media goons and shock troops of the collective West are dictated by the rulers of what Michael Hudson defines as the FIRE system (financialization, insurance, real estate), a de facto banking Mafia.

As a direct consequence, they also realize how collective West public opinion is absolutely clueless, Plato cave-style, of their total captivity by the FIRE rulers, who cannot possibly tolerate any alternative narrative.

So Putin, Patrushev, Medvedev will never presume that a senile teleprompter reader in the White House or a cokehead comedian in Kiev “rule” anything. The sinister Great Reset impersonator of a Bond villain, Klaus “Davos” Schwab, and his psychotic historian sidekick Yuval Harari at least spell out their “program”: global depopulation, with those that remain drugged to oblivion.

As the US rules global pop culture, it’s fitting to borrow from what Walter White/Heisenberg, an average American channeling his inner Scarface, states in Breaking Bad: “I’m in the Empire business”. And the Empire business is to exercise raw power – then maintained with ruthlessness by all means necessary.

Russia broke the spell. But Moscow’s strategy is way more sophisticated than leveling Kiev with hypersonic business cards, something that could have been done at any moment starting six months ago, in a flash.

What Moscow is doing is talking to virtually the whole Global South, bilaterally or to groups of actors, explaining how the world-system is changing right before our eyes, with the key actors of the future configured as BRI, SCO, EAEU, BRICS+, the Greater Eurasia Partnership.

And what we see is vast swathes of the Global South – or 85% of the world’s population – slowly but surely becoming ready to engage in expelling the FIRE Mafia from their national horizons, and ultimately taking them down: a long, tortuous battle that will imply multiple setbacks.

The facts on the ground

On the ground in soon-to-be rump Ukraine, Khinzal hypersonic business cards – launched from Tu-22M3 bombers or Mig-31 interceptors – will continue to be distributed.

Piles of HIMARS will continue to be captured. TOS 1A Heavy Flamethrowers will keep sending invitations to the Gates of Hell. Crimean Air Defense will continue to intercept all sorts of small drones with IEDs attached: terrorism by local SBU cells, which will be eventually smashed.

Using essentially a phenomenal artillery barrage – cheap and mass-produced – Russia will annex the full, very valuable Donbass, in terms of land, natural resources and industrial power. And then on to Nikolaev, Odessa, and Kharkov.

Geoeconomically, Russia can afford to sell its oil with fat discounts to any Global South customer, not to mention strategic partners China and India. Cost of extraction reaches a maximum of $15 per barrel, with a national budget based on $40-45 for a barrel of Urals.

A new Russian benchmark is imminent, as well as oil in rubles following the wildly successful gas for rubles.

The assassination of Darya Dugina provoked endless speculation on the Kremlin and the Ministry of Defense finally breaking their discipline. That’s not going to happen. The advances along the enormous 1,800-mile front are relentless, highly systematic and inserted in a Greater Strategic Picture.

A key vector is whether Russia stands a chance of winning the information war with the collective West. That will never happen inside NATOstan – even as success after success is ramping up across the Global South.

As Glenn Diesen has masterfully demonstrated, in detail, in his latest book, Russophobia , the collective West is viscerally, almost genetically impervious to admitting any social, cultural, historical merits by Russia.

And that will extrapolate to the irrationality stratosphere, as the grinding down and de facto demilitarization of the imperial proxy army in Ukraine is driving the Empire’s handlers and its vassals literally nuts.

The Global South though should never lose sight of the “Empire business”. The Empire of Lies excels in producing chaos and plunder, always supported by extortion, bribery of comprador elites, assassinations, and all that supervised by the humongous FIRE financial might. Every trick in the Divide and Rule book – and especially outside of the book – should be expected, at any moment. Never underestimate a bitter, wounded, deeply humiliated Declining Empire.

So fasten your seat belts: that will be the tense dynamic all the way to the 2030s. But before that, all along the watchtower, get ready for the arrival of General Winter, as his riders are fast approaching, the wind will begin to howl, and Europe will be freezing in the dead of a dark night as the FIRE Mafia puff their cigars.

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.

American Diplomacy as a Tragic Drama

July 29, 2022

By Michael Hudson and posted with the author’s permission

As in a Greek tragedy whose protagonist brings about precisely the fate that he has sought to avoid, the US/NATO confrontation with Russia in Ukraine is achieving just the opposite of America’s aim of preventing China, Russia and their allies from acting independently of U.S. control over their trade and investment policy. Naming China as America’s main long-term adversary, the Biden Administration’s plan was to split Russia away from China and then cripple China’s own military and economic viability. But the effect of American diplomacy has been to drive Russia and China together, joining with Iran, India and other allies. For the first time since the Bandung Conference of Non-Aligned Nations in 1955, a critical mass is able to be mutually self-sufficient to start the process of achieving independence from Dollar Diplomacy.

Confronted with China’s industrial prosperity based on self-financed public investment in socialized markets, U.S. officials acknowledge that resolving this fight will take a number of decades to play out. Arming a proxy Ukrainian regime is merely an opening move in turning Cold War 2 (and potentially/or indeed World War III) into a fight to divide the world into allies and enemies with regard to whether governments or the financial sector will plan the world economy and society.

What is euphemized as U.S.-style democracy is a financial oligarchy privatizing basic infrastructure, health and education. The alternative is what President Biden calls autocracy, a hostile label for governments strong enough to block a global rent-seeking oligarchy from taking control. China is deemed autocratic for providing basic needs at subsidized prices instead of charging whatever the market can bear. Making its mixed economy lower-cost is called “market manipulation,” as if that is a bad thing that was not done by the United States, Germany and every other industrial nation during their economic takeoff in the 19th and early 20th century.

Clausewitz popularized the axiom that war is an extension of national interests – mainly economic. The United States views its economic interest to lie in seeking to spread its neoliberal ideology globally. The evangelistic aim is to financialize and privatize economies by shifting planning away from national governments to a cosmopolitan financial sector. There would be little need for politics in such a world. Economic planning would shift from political capitals to financial centers, from Washington to Wall Street, with satellites in the City of London, the Paris Bourse, Frankfurt and Tokyo. Board meetings for the new oligarchy would be held at Davos’s World Economic Forum. Hitherto public infrastructure services would be privatized and priced high enough to include profits (and indeed, monopoly rents), debt financing and management fees rather than being publicly subsidized. Debt service and rent would become the major overhead costs for families, industry and governments.

The U.S. drive to retain its unipolar power to impose “America First” financial, trade and military policies on the world involves an inherent hostility toward all countries seeking to follow their own national interests. Having less and less to offer in the form of mutual economic gains, U.S. policy makes threats of sanctions and covert meddling in foreign politics. The U.S. dream envisions a Chinese version of Boris Yeltsin replacing the nation’s Communist Party leadership and selling off its public domain to the highest bidder – presumably after a monetary crisis wipes out domestic purchasing power much as occurred in post-Soviet Russia, leaving the international financial community as buyers.

Russia and President Putin cannot be forgiven for having fought back against the Harvard Boys’ “reforms.” That is why U.S. officials planned how to create Russian economic disruption to (they hope) orchestrate a “color revolution” to recapture Russia for the world’s neoliberal camp. That is the character of the “democracy” and “free markets” being juxtaposed to the “autocracy” of state-subsidized growth. As Russian Foreign minister Sergey Lavrov explained in a press conference on July 20, 2022 regarding Ukraine’s violent coup in 2014, U.S. and other Western officials define military coups as democratic if they are sponsored by the United States in the hope of promoting neoliberal policies.

Do you remember how events developed after the coup? The putschists spat in the face of Germany, France and Poland that were the guarantors of the agreement with Viktor Yanukovych. It was trampled underfoot the next morning. These European countries didn’t make a peep – they reconciled themselves to this. A couple of years ago I asked the Germans and French what they thought about the coup. What was it all about if they didn’t demand that the putschists fulfil the agreements? They replied: “This is the cost of the democratic process.” I am not kidding. Amazing – these were adults holding the post of foreign ministers.[1]

This Doublethink vocabulary reflects how far mainstream ideology has evolved from Rosa Luxemburg’s description a century ago of the civilizational choice being posed: barbarism or socialism.

The contradictory U.S. and European interests and burdens of the war in Ukraine

To return to Clausewitz’s view of war as an extension of national policy, U.S. national interests are diverging sharply from those of its NATO satellites. America’s military-industrial complex, oil and agriculture sectors are benefiting, while European industrial interests are suffering. That is especially the case in Germany and Italy as a result of their governments blocking North Stream 2 gas imports and other Russian raw materials.

The interruption of world energy, food and minerals supply chains and the resulting price inflation (providing an umbrella for monopoly rents by non-Russian suppliers) has imposed enormous economic strains on U.S. allies in Europe and the Global South. Yet the U.S. economy is benefiting from this, or at least specific sectors of the U.S. economy are benefiting. As Sergey Lavrov, pointed out in his above-cited press conference: “The European economy is impacted more than anything else. The stats show that 40 percent of the damage caused by sanctions is borne by the EU whereas the damage to the United States is less than 1 percent.” The dollar’s exchange rate has soared against the euro, which has plunged to parity with the dollar and looks set to fall further down toward the $0.80 that it was a generation ago. U.S. dominance over Europe is further strengthened by the trade sanctions against Russian oil and gas. The U.S. is an LNG exporter, U.S. companies control the world oil trade, and U.S. firms are the world’s major grain marketers and exporters now that Russia is excluded from many foreign markets.

A revival of European military spending – for offense, not defense

U.S. arms-makers are looking forward to making profits off arms sales to Western Europe, which has almost literally disarmed itself by sending its tanks and howitzers, ammunition and missiles to Ukraine. U.S. politicians support a bellicose foreign policy to promote arms factories that employ labor in their voting districts. And the neocons who dominate the State Department and CIA see the war as a means of asserting American dominance over the world economy, starting with its own NATO partners.

The problem with this view is that although America’s military-industrial, oil and agricultural monopolies are benefitting, the rest of the U.S. economy is being squeezed by the inflationary pressures resulting from boycotting Russian gas, grain and other raw-materials exports, and the enormous rise in the military budget will be used as an excuse to cut back social spending programs. That also is a problem for Eurozone members. They have promised NATO to raise their military spending to the stipulated 2 percent of their GDP, and the Americans are urging much higher levels to upgrade to the most recent array of weaponry. All but forgotten is the Peace Dividend that was promised in 1991 when the Soviet Union dissolved the Warsaw Pact alliance, expecting that NATO likewise would have little reason to exist.

Russia has no discernable economic interest in mounting a new occupation of Central Europe. That would offer no gain to Russia, as its leaders realized when they dissolved the old Soviet Union. In fact, no industrial country in today’s world can afford to field an infantry to occupy an enemy. All that NATO can do is bomb from a distance. It can destroy, but not occupy. The United States found that out in Serbia, Iraq, Libya, Syria and Afghanistan. And just as the assassination Archduke Ferdinand in Sarajevo (now Bosnia-Herzegovina) triggered World War I in 1914, NATO’s bombing of adjoining Serbia may be viewed as throwing down the gauntlet to turn Cold War 2 into a veritable World War III. That marked the point at which NATO became an offensive alliance, not a defensive one.

How does this reflect European interests? Why should Europe re-arm, if the only effect is to make it a target of retaliation in the event of further attacks on Russia? What does Europe have to gain in becoming a larger customer for America’s military-industrial complex? Diverting spending to rebuild an offensive army – that can never be used without triggering an atomic response that would wipe out Europe – will limit the social spending needed to cope with today’s Covid problems and economic recession.

The only lasting leverage a nation can offer in today’s world is trade and technology transfer. Europe has more of this to offer than the United States. Yet the only opposition to renewed military spending is coming from right-wing parties and the German Linke party. Europe’s Social Democratic, Socialist and Labour parties share American neoliberal ideology.

Sanctions against Russian gas makes coal “the fuel of the future”

The carbon footprint of bombing, arms manufacturing and military bases is strikingly absent from today’s discussion about global warming and the need to cut back on carbon emissions. The German party that calls itself Green is leading the campaign for sanctions against importing Russian oil and gas, which electric utilities are replacing with Polish coal and even German lignite. Coal is becoming the “fuel of the future.” Its price also is soaring in the United States, benefitting American coal companies.

In contrast to the Paris Club agreements to reduce carbon emissions, the United States has neither the political capability nor the intention to join the conservation effort. The Supreme Court recently ruled that the Executive Branch has no authority to issue nation-wide energy rules; only individual states can do that, unless Congress passes a national law to cut back on fossil fuels.

That seems unlikely in view of the fact that becoming head of a Democratic Senate and Congressional committee requires being a leader in raising campaign contributions for the party. Joe Manchin, a coal-company billionaire, leads all senators in campaign support from the oil and coal industries, enabling him to win his party’s auction for the Senate Energy and Natural Resources committee chairmanship and block any seriously restrictive environmental legislation.

Next to oil, agriculture is a major contributor to the U.S. balance of payments. Blocking Russian grain and fertilizer shipping threatens to create a Global South food crisis as well as a European crisis as gas is unavailable to make domestic fertilizer. Russia is the world’s largest exporter of grain and also of fertilizer, and its exports of these products have been exempted from NATO sanctions. But Russian shipping was blocked by Ukraine placing mines in the sea lanes through the Black Sea to close off access to Odessa’s harbor, hoping that the world would blame the world’s imminent grain and energy crisis on Russia instead of the US/NATO trade sanctions imposed on Russia.[2] At his July 20, 2022 press conference Sergey Lavrov showed the hypocrisy of the public relations attempt to distort matters:

For many months, they told us that Russia was to blame for the food crisis because the sanctions don’t cover food and fertiliser. Therefore, Russia doesn’t need to find ways to avoid the sanctions and so it should trade because nobody stands in its way. It took us a lot of time to explain to them that, although food and fertiliser are not subject to sanctions, the first and second packages of Western restrictions affected freight costs, insurance premiums, permissions for Russian ships carrying these goods to dock at foreign ports and those for foreign ships taking on the same consignments at Russian harbours. They are openly lying to us that this is not true, and that it is up to Russia alone. This is foul play.

Black Sea grain transport has begun to resume, but NATO countries have blocked payments to Russia in dollars, euros or currencies of other countries in the U.S. orbit. Food-deficit countries that cannot afford to pay distress-level food prices face drastic shortages, which will be exacerbated when they are compelled to pay their foreign debts denominated in the appreciating U.S. dollar. The looming fuel and food crisis promises to drive a new wave of immigrants to Europe seeking survival. Europe already has been flooded with refugees from NATO’s bombing and backing of jihadist attacks on Libya and Near Eastern oil-producing countries. This year’s proxy war in Ukraine and imposition of anti-Russian sanctions is a perfect illustration of Henry Kissinger’s quip: “It may be dangerous to be America’s enemy, but to be America’s friend is fatal.”

Blowback from the US/NATO miscalculations

America’s international diplomacy aims to dictate financial, trade and military policies that will lock other countries into dollar debt and trade dependency by preventing them from developing alternatives. If this fails, America seeks to isolate the recalcitrants from the U.S.-centered Western sphere.

America’s foreign diplomacy no longer is based on offering mutual gain. Such could be claimed in the aftermath of World War II when the United States was in a position to offer loans, foreign-aid and military protection against occupation – as well as manufactures to rebuild war-torn economies – to governments in exchange for their accepting trade and monetary policies favorable to American exporters and investors. But today there is only the belligerent diplomacy of threatening to hurt nations whose socialist governments reject America’s neoliberal drive to privatize and sell off their natural resources and public infrastructure.

The first aim is to prevent Russia and China from helping each other. This is the old imperial divide-and-conquer strategy. Minimizing Russia’s ability to support China would pave the way for the United States and NATO Europe to impose new trade sanctions on China, and to send jihadists to its western Xinjiang Uighur region. The aim is to bleed Russia’s armaments inventory, kill enough of its soldiers, and create enough Russian shortages and suffering to not only weaken its ability to help China, but to spur its population to support a regime change, an American-sponsored “color revolution.” The dream is to promote a Yeltsin-like leader friendly to the neoliberal “therapy” that dismantled Russia’s economy in the 1990s.

Amazing as it may seem, U.S. strategists did not anticipate the obvious response by countries finding themselves together in the crosshairs of US/NATO military and economic threats. On July 19, 2022, the presidents of Russia and Iran met to announce their cooperation in the face of the sanctions war against them. That followed Russia’s earlier meeting with India’s Prime Minister Modi. In what has been characterized as “shooting itself in its own foot,” U.S. diplomacy is driving Russia, China, India and Iran together, and indeed to reach out to Argentina and other countries to join the BRICS-plus bank to protect themselves.

The U.S. itself is ending the Dollar Standard of international finance

The Trump Administration took a major step to drive countries out of the dollar orbit in November 2018, by confiscating nearly $2 billion of Venezuela’s official gold stock held in London. The Bank of England put these reserves at the disposal of Juan Guaidó, the marginal right-wing politician selected by the United States to replace Venezuela’s elected president as head of state. This was defined as being democratic, because the regime change promised to introduce the neoliberal “free market” that is deemed to be the essence of America’s definition of democracy for today’s world.

This gold theft actually was not the first such confiscation. On November 14, 1979, the Carter Administration paralyzed Iran’s bank deposits in New York after the Shah was overthrown. This act blocked Iran from paying its scheduled foreign debt service, forcing it into default. That was viewed as an exceptional one-time action as far as all other financial markets were concerned. But now that the United States is the self-proclaimed “exceptional nation,” such confiscations are becoming a new norm in U.S. diplomacy. Nobody yet knows what happened to Libya’s gold reserves that Muammar Gadafi had intended to be used to back an African alternative to the dollar. And Afghanistan’s gold and other reserves were simply taken by Washington as payment for the cost of “freeing” that country from Russian control by backing the Taliban. But when the Biden Administration and its NATO allies made a much larger asset grab of some $300 billion of Russia’s foreign bank reserves and currency holdings in March 2022, it made official a radical new epoch in Dollar Diplomacy. Any nation that follows policies not deemed to be in the interests of the U.S. Government runs the risk of U.S. authorities confiscating its holdings of foreign reserves in U.S. banks or securities.

This was a red flag leading countries to fear denominating their trade, savings and foreign debt in dollars, and to avoid using dollar or euro bank deposits and securities as a means of payment. By prompting other countries to think about how to free themselves from the U.S.-centered world trade and monetary system that was established in 1945 with the IMF, World Bank and subsequently the World Trade Organization, the U.S. confiscations have accelerated the end of the U.S. Treasury-bill standard that has governed world finance since the United States went off gold in 1971.[3]

Since dollar convertibility into gold ended in August 1971, dollarization of the world’s trade and investment has created a need for other countries to hold most of their new international monetary reserves in U.S. Treasury securities and bank deposits. As already noted, that enables the United States to seize foreign bank deposits and bonds denominated in U.S. dollars.

Most important, the United States can create and spend dollar IOUs into the world economy at will, without limit. It doesn’t have to earn international spending power by running a trade surplus, as other countries have to do. The U.S. Treasury can simply print dollars electronically to finance its foreign military spending and purchases of foreign resources and companies. And being the “exceptional country,” it doesn’t have to pay these debts – which are recognized as being far too large to be paid. Foreign dollar holdings are free U.S. credit to the Unites States, not requiring repayment any more than the paper dollars in our wallets are expected to be paid off (by retiring them from circulation). What seems to be so self-destructive about America’s economic sanctions and confiscations of Russian and other foreign reserves is that they are accelerating the demise of this free ride.

Blowback resulting from US/NATO isolating their economic and monetary systems

It is hard to see how driving countries out of the U.S. economic orbit serves long-term U.S. national interests. Dividing the world into two monetary blocs will limit Dollar Diplomacy to its NATO allies and satellites.

The blowback now unfolding in the wake of U.S. diplomacy begins with its anti-Russia policy. Imposing trade and monetary sanctions was expected to block Russian consumers and businesses from buying the US/NATO imports to which they had become accustomed. Confiscating Russia’s foreign currency reserves was supposed to crash the ruble, “turning it into rubble,” as President Biden promised. Imposing sanctions against importing Russian oil and gas to Europe was supposed to deprive Russia of export earnings, causing the ruble to collapse and raising import prices (and hence, living costs) for the Russian public. Instead, blocking Russian exports has created a worldwide price inflation for oil and gas, sharply increasing Russian export earnings. It exported less gas but earned more – and with dollars and euros blocked, Russia demanded payment for its exports in rubles. Its exchange rate soared instead of collapsing, enabling Russia to reduce its interest rates.

Goading Russia to send its soldiers to eastern Ukraine to defend Russian speakers under attack in Luhansk and Donetsk, along with the expected impact of the ensuing Western sanctions, was supposed to make Russian voters press for regime change. But as almost always happens when a country or ethnicity is attacked, Russians were appalled at the Ukrainian hatred of Russian-language speakers and Russian culture, and at the Russophobia of the West. The effect of Western countries banning music by Russian composers and Russian novels from libraries – capped by England banning Russian tennis players from the Wimbledon tournament – was to make Russians feel under attack simply for being Russian. They rallied around President Putin.

NATO’s trade sanctions have catalyzed helped Russian agriculture and industry to become more self-sufficient by obliging Russia to invest in import substitution. One well-publicized farming success was to develop its own cheese production to replace that of Lithuania and other European suppliers. Its automotive and other industrial production is being forced to shift away from German and other European brands to its own and Chinese producers. The result is a loss of markets for Western exporters.

In the field of financial services, NATO’s exclusion of Russia from the SWIFT bank-clearing system failed to create the anticipated payments chaos. The threat had been so loudly for so long that Russia and China had plenty of time to develop their own payments system. This provided them with one of the preconditions for their plans to split their economies away from those of the US/NATO West.

As matters have turned out, the trade and monetary sanctions against Russia are imposing the heaviest costs on Western Europe, and are likely to spread to the Global South, driving them to think about whether their economic interests lie in joining U.S. confrontational Dollar Diplomacy. The disruption is being felt most seriously in Germany, causing many companies to close down as a result of gas and other raw-materials shortages. Germany’s refusal to authorize the North Stream 2 pipeline has pushed its energy crisis to a head. This has raised the question of how long Germany’s political parties can remain subordinate to NATO’s Cold War policies at the cost of German industry and households facing sharp rises in heating and electricity costs.

The longer it takes to restore trade with Russia, the more European economies will suffer, along with the citizenry at large, and the further the euro’s exchange rate will fall, spurring inflation throughout its member countries. European NATO countries are losing not only their export markets but their investment opportunities to gain from the much more rapid growth of Eurasian countries whose government planning and resistance to financialization has proved much more productive than the US/NATO neoliberal model.

It is difficult to see how any diplomatic strategy can do more than play for time. That involves living in the short run, not the long run. Time seems to be on the side of Russia, China and the trade and investment alliances that they are negotiating to replace the neoliberal Western economic order.

America’s ultimate problem is its neoliberal post-industrial economy

The failure and blowbacks of U.S. diplomacy are the result of problems that go beyond diplomacy itself. The underlying problem is the West’s commitment to neoliberalism, financialization and privatization. Instead of government subsidy of basic living costs needed by labor, all social life is being made part of “the market” – a uniquely Thatcherite deregulated “Chicago Boys” market in which industry, agriculture, housing and financing are deregulated and increasingly predatory, while heavily subsidizing the valuation of financial and rent-seeking assets – mainly the wealth of the richest One Percent. Income is obtained increasingly by financial and monopoly rent-seeking, and fortunes are made by debt-leveraged “capital” gains for stocks, bonds and real estate.

U.S. industrial companies have aimed more at “creating wealth” by increasing the price of their stocks by using over 90 percent of their profits for stock buybacks and dividend payouts instead of investing in new production facilities and hiring more labor. The result of slower capital investment is to dismantle and financially cannibalize corporate industry in order to produce financial gains. And to the extent that companies do employ labor and set up new production, it is done abroad where labor is cheaper.

Most Asian labor can afford to work for lower wages because it has much lower housing costs and does not have to pay education debt. Health care is a public right, not a financialized market transaction, and pensions are not paid for in advance by wage-earners and employers but are public. The aim in China in particular is to prevent the rentier Finance, Insurance and Real Estate (FIRE) sector from becoming a burdensome overhead whose economic interests differ from those of a socialist government.

China treats money and banking as a public utility, to be created, spent and lent for purposes that help increase productivity and living standards (and increasingly to preserve the environment). It rejects the U.S.-sponsored neoliberal model imposed by the IMF, World Bank and World Trade Organization.

The global economic fracturing goes far beyond NATO’s conflict with Russia in Ukraine. By the time the Biden administration took office at the start of 2021, Russia and China already had been discussing the need to de-dollarize their foreign trade and investment, using their own currencies.[4] That involves the quantum leap of organizing a new payments-clearing institution. Planning had not progressed beyond broad outlines of how such a system would work, but the U.S. confiscation of Russia’s foreign reserves made such planning urgent, starting with a BRICS-plus bank. A Eurasian alternative to the IMF will remove its ability to impose neoliberal austerity “conditionalities” to force countries to lower payments to labor and give priority to paying their foreign creditors above feeding themselves and developing their own economies. Instead of new international credit being extended mainly to pay dollar debts, it will be part of a process of new mutual investment in basic infrastructure designed to accelerate economic growth and living standards. Other institutions are being designed as China, Russia, Iran, India and their prospective allies represent a large enough critical mass to “go it alone,” based on their own mineral wealth and manufacturing power.

The basic U.S. policy has been to threaten to destabilize countries and perhaps bomb them until they agree to adopt neoliberal policies and privatize their public domain. But taking on Russia, China and Iran is a much higher order of magnitude. NATO has disarmed itself of the ability to wage conventional warfare by handing over its supply of weaponry – admittedly largely outdated – to be devoured in Ukraine. In any case, no democracy in today’s world can impose a military draft to wage a conventional land warfare against a significant/major adversary. The protests against the Vietnam War in the late 1960s ended the U.S. military draft, and the only way to really conquer a country is to occupy it in land warfare. This logic also implies that Russia is no more in a position to invade Western Europe than NATO countries are to send conscripts to fight Russia.

That leaves Western democracies with the ability to fight only one kind of war: atomic war – or at least, bombing at a distance, as was done in Afghanistan and the Near East, without requiring Western manpower. This is not diplomacy at all. It is merely acting the role of wrecker. But that is the only tactic that remains available to the United States and NATO Europe. It is strikingly like the dynamic of Greek tragedy, where power leads to hubris that is injurious to others and therefore ultimately anti-social – and self-destructive in the end.

How then can the United States maintain its world dominance? It has deindustrialized and run up foreign official debt far beyond any foreseeable way to be paid. Meanwhile, its banks and bondholders are demanding that the Global South and other countries pay foreign dollar bondholders in the face of their own trade crisis resulting from the soaring energy and food prices caused by America’s anti-Russian and anti-China belligerence. This double standard is a basic internal contradiction that goes to the core of today’s neoliberal Western worldview.

I have described the possible scenarios to resolve this conflict in my recent book The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism. It has now also been issued in e-book form by Counterpunch Books.

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  1. “Foreign Minister Sergey Lavrov’s interview with RT television, Sputnik agency and Rossiya Segodnya International Information Agency, Moscow, July 20, 2022,” Russian Foreign Affairs Ministry, July 20, 2022. https://mid.ru/en/foreign_policy/news/1822901/. From Johnson’s Russia List, July 21, 2022, #5. 
  2. International Maritime Organization, “Maritime Security and Safety in the Black Sea and Sea of Azov,” https://www.imo.org/en/MediaCentre/HotTopics/Pages/MaritimeSecurityandSafetyintheBlackSeaandSeaofAzov.aspx. See Yves Smith, Some Implications of the UN’s Ukraine Grain and Russia Fertilizer/Food Agreements,” Naked Capitalism, July 25, 2022, and Lavrov’s July 24 speech to the Arab League. 
  3. My Super ImperialismThe Economic Strategy of American Empire (3rd ed., 2021) describes how the Treasury-bill standard has provided America with a free ride and enabled it to run balance-of-payments deficits without constraint, including the costs of its overseas military spending. 
  4. Radhika Desai and Michael Hudson (2021), “Beyond Dollar Creditocracy: A Geopolitical Economy,” Valdai Club Paper No. 116. Moscow: Valdai Club, 7 July, reprinted in Real World Economic Review (97), https://rwer.wordpress.com/2021/09/23. 
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