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.”
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 IndigenousInnovation 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 Oil981, 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.
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. ↑
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. ↑
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… ↑
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). ↑
The competitors also have problems: for instance Boeing with its 702-series satellites, or Russia with KAZSAT-1. ↑
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. ↑
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 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.
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.
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.
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.
“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. ↑
My Super Imperialism: The 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. ↑
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. ↑
On the Future of Europe: A Proposition from 1 January 2023
Note: after three months away (mostly) from the blog, it is a real pleasure for me to come back. Simply put – I missed you and I missed writing analyses. Thus I am truly delighted to be back and I want to once again thank all those who patiently waited for me to recharge my batteries. Your support means the world to me! Thank you for everything! Andrei
***
Five months ago, on February 24th, Russia began what she called a “special military operation” (SMO). In very simple terms, this is what Russia has achieved so far: Ukraine has lost about 20% of its territory, about 3 thousand towns and villages, half of the gross national product, and a third of coal production. It completely lost access to the Sea of Azov, and traffic through the Black Sea ports froze due to fighting and mining of waterways. The number of refugees has reached 7 million (source).
But these factoids don’t even begin to tell the full story. There would be many ways that this story could be told, but to begin I want to list a few elements of the official western narrative which have now faceplanted and nobody sane would take seriously. I will present a few them in no specific order (and I will ignore the most idiotic ones, including that Putin is dying of cancer or very sick (check here for 50 headlines about this!) – he is not, to the great chagrin of the CIA – or that Shoigu wants to overthrow him).
“Russia is losing the war, was defeated by the Ukronazis near Kiev, she is running out of ammunition and supplies and is about to collapse”.
First, if you look at the size of the Russian force which took the Antonov airport near Kiev (one airborne regiment) and the size of the force which moved by land towards that airport, you can easily convince yourself that this force was not intended to attack or invade Kiev. This force did exactly what it was intended to do, it forces the Ukronazis to move forces to protect Kiev and, thereby, it pinned them down just long enough to establish air superiority, attack and cut off the forces near and in the Donbass, destroy the Ukrainian C4I and almost the entire Ukrainian air force. This took just a few days and once that mission was completed, these forces withdrew as they had literally nothing to gain by staying in place. If anything it is the Ukrainian side which is running out of weapons, supplies and soldiers (more about that later). The Russians have all the firepower they need for many years ahead.
“Russia had to change her plans and tactics because of the heavy losses suffered by the Russian military early in the operation”
Actually, there is a grain of truth here, but not the correct explanation. As I have mentioned several times, the special military operation is “special” because it is an operation which is not a regular combined arms operation. The Russians began the SMO with fewer soldiers than the opposing side, and they privileged maneuver and long range strikes over the taking and holding of towns and cities. Most crucially, the Russians very deliberately tried all they could to minimize Ukrainian casualties and to preserve the Ukrainian civilian infrastructure (unlike the “democratic” countries out there who first destroy power plants, bridges, water stations, etc. to inflict the maximum of “shock and awe” on the civilian population!). The Russians could have easily turned, say, Kiev into Baghdad or Belgrade under US/NATO bombs, but they deliberately chose to save as many lives and civilian infrastructure as possible, even at the cost of lives of Russian soldiers).
[Sidebar: a prefect example is the small town of Avdeevka, near Donetsk, which is heavily fortified and from which the Ukronazis shell not only Donetsk, but also other towns such as Makeevka killing people and destroying the civilian infrastructure every day. The Russians could use their TOS-1A “Solntsepyok”, airborne FAE, FAB-3000 bombs, heavy mortars and plenty of other weapons to simply turn all of Avdeevka into a lifeless desert. But here is the problem: Avdeevka is full of civilians, including relatives of LDNR combatants. Furthermore, if Russia used such weapons, it would only feed the Anglo-Zionist propaganda to create a “victastar” city à la Sarajevo or even accuse the Russians of a Srebrenica-like “genocide”. The precedent of Bucha is something which limits the Russians in two major ways: first, it makes it almost impossible to retreat, now that we know that the Ukronazis will massacre all the “collaborators” in the area left by Russian forces and, second, it means that any major strike, no matter how militarily justified, will be turned into a “massacre” just like in Bosnia, Kosovo or Syria.
What apparently did take the Russians by surprise is the willingness of the Ukrainian forces in some towns to attack the Russian columns even though the local authorities seemed to have indicated to the Russians that, like in, say, Kherson, their city would not resist. Simply put, they chose the Mariupol model rather than the Kherson model. This choice was mainly dictated by the very powerful Nazi death squads who would at best arrest anybody negotiating with Russia and, at worst, simply shoot them on the spot. The Russians found plenty of bodies of executed Ukrainian soldiers.
But this does not tell the full story either.
The truth is that by the laws of warfare the Ukraine lost the war in less than a week.
What is my evidence for such an apparently outlandish and over-the-top statement? Simple: since the beginning of the SMO, the Ukrainians failed to execute a single operational level attack or counter-attack. At most they were able to execute small, tactical level attacks, the vast majority of which almost instantly failed, a few were defeated in a few days, and, crucially, not a single one gave the Ukrainian side the operational initiative. Not once.
So what happened?
If Kiev had any agency and if the Ukrainian leadership cared about their country and people, they would have immediately sued for peace. But Kiev never had any agency and the buffoons in power do not give a damn about the Ukrainian people.
Instead, it was the US that told the Ukrainians to never surrender or pull back, even if that meant huge losses in both manpower and firepower. The West, which despises and hates the Ukrainians almost as much as it hates the Russians were delighted to see the hated Ukrainians and the hated Russians killing each other (well, mostly Russians doing the killing). Furthermore, being military incompetent, the leaders of the West apparently believed that supplying weapons, money, instructors, and special forces to the Ukrainians could, if not turn the tide, slow down Russia enough to create fear, uncertainty, and doubts in the Russian public opinion. That plan also spectacularly failed, Putin is as popular as ever, the 5th column and the 6th columns in Russia are in despair (many emigrate) and the SMO has the full support of the Russian nation.
As for the much talked about “Russian plans”, which nobody has seen, they are not like the plan for a building. They are not fixed, but highly flexible and reactive and, in fact, they are constantly adjusted and refined in response to the developments on the ground. So while the Russians did have hopes that much/most of the eastern Ukraine would follow the “Kherson model” they were quick to adapt to the reality that the US and its Nazi agents in the Ukrainian military would force the eastern Ukraine to follow the “Mariupol model”. So yes, operational plans are like water in a stream, depending on the obstacles encountered, they can go left or they can go right to bypass that obstacle, but in either case, they are going down towards the ocean. The fact that armchair strategists declared that Russia “changed plans” simply proves that they don’t understand how operational planning works.
[Sidebar: most people in the West think of military operations as something similar to US football: there are “lines/fronts” which are defended and most forces are facing each other along these lines. This is not so. Modern warfare is much more similar to European soccer, where each player is “attached” to an opposing player and these players constantly maneuver and regularly engage each other. For example, modern warfare does not really have a “front” and a “rear” as we can see from the Russian strikes deep inside the western Ukraine. Finally, modern warfare deeply relies on coordinated actions. That is to say that even if side A has, say, five subunits (say companies) you cannot add them up and count them as a regiment or brigade because they lack the ability for coordinated operations (nevermind joint or combined ones). Think of your hand, it has five fingers, but these five fingers only become a powerful fist if the five fingers act in unison and become one fist. So when somebody write about, say, 60’000 Ukrainian soldiers in the eastern Ukraine, this describes a X number of platoons, companies, regiments or even “brigades” (I put quotation marks because these are not real brigades with a full table of organization and equipment), these subunits are not capable of coordinating their actions like the Russian military does. There is a lot of talk about “network centric warfare” which is nothing but combined arms operations on steroids, where the level of integration includes a full fusion of all C4ISR data into one common real time picture of the battlefield and a full coordination of all military forces/means. By the way, only Russia has fully developed such a capability (though the US has also made some serious progress in this field)].
Now let’s address two smaller but nonetheless crucial lies told by some about Russia:
“There are no Atlantic Integrationists or Eurasian Sovereignists in Russia”
If anything, this war has resulted in a major shakeup of the Russian society where some folks suddenly showed their true feelings. Examples range from Russian journalists standing with an anti-war sign behind a newscaster to those Russians abroad who either agreed to condemn Putin and the SMO or accepted to participate in various events under a neutral or foreign flag, to Dmitri Medvedev now changing his tune 180 degrees and rebranding himself as an ultra-patriot. I listed those examples because they are known in the West, but inside Russia, there are many more such examples, including amongst business executives and elected officials. Finally, even Putin himself mentioned the existence of such internal enemies of Russia. The fact that Russia has now expanded the definition of “treason” means that pro-US agents in Russia now face a major risk for their activities. Some 5th columnists have already been sentenced to jail. As for the 6th columnists, they still hate Putin with a passion and are still chanting their “all is lost” mantra, but (almost) nobody takes them seriously anymore.
The irony is that the US wanted to create a crisis to overthrow Putin but, instead, this crisis gave him yet another boost in popularity, in spite of some very real problems (automotive sector, civilian airliners, etc.).
Next,
“Putin is an Israeli stooge, he works hand in glove with the Israelis”
In reality, it is pretty obvious that the most vociferous Russophobes in the West are overwhelmingly Jews, both inside and outside Israel. Usually, the invoked excuse is that there were anti-Jewish pogroms in Russia. Yet, in reality, all those pogroms happened in what is today the Ukraine, and yet it is pretty clear that Zionist and Jewish organizations are overwhelmingly siding with Kiev (in spite of the regime in power being undeniably Nazi), and only very few individuals side with Russia (but they exist and should never be overlooked). As for the Kremlin, it is getting fed up with the Israeli arrogance in Syria (even if the Israeli airstrikes are ineffective and make no difference for the reality on the ground) and the Russians are now demanding that the Israelis cease their attacks on Syria. The Israelis cannot stop, for internal political and even psychotherapeutic reasons, but one of two things are likely to happen: the Israeli attacks will become even more useless and symbolic, or Russia will shoot down an Israeli aircraft.
But enough about Israel here, this is only a small part of the Anglo-Zionist Empire run by the USA. Now let’s turn to the West’s actions over the past 5 months.
So what about the US/NATO/EU in all this?
First, I want to make it clear that I strongly believe that the Anglo-Zionist Empire died on January 8th, 2020 when it allowed Iran to bomb CENTCOM bases without even a single bullet being fired back. That day the Empire showed the world that it did not even have what it takes to attack Iran. As for the USA, they died on January 6th, 2021.
However, remember my example above contrasting 5 fingers with a fist? While the Empire as we knew it and the USA as we knew it did die, that does not mean that its composing parts all vanished in thin air. Countries and Empires have momentum, just like the Titanic, when they have been mortally wounded. Simply put, the final process of sinking takes time. The Russian Empire died in February of 1917, yet the civil war lasted until 1923 (and I would even argue until WWII).
Second, there are two totally different planes in which the West (well, really the USA) decided to fight Russia:
First, it declared total proxy war on Russia, but only total short of a direct war military confrontation with Russia
Second, a total #cancelRussia in the PR/propaganda virtual reality. These infantile actions (latest example here) show how frustrated and powerless the West really is.
For years now I have stated many, many times that Russia and the Empire were locked into an existential war from which only one side would walk away. I usually added that this total war was about 80% informational, 15% economic and only 5% kinetic. I hesitate to provide numbers here, but I would say that after a very strong success in the first 2-3 months of the SMO, the informational war initially won by the West is now fizzling out. The economic war massively grew, as did the kinetic one (albeit still by proxy). I am very reluctant to provide numbers here, but very tentatively I would score the current war as maybe 10% informational, 50% economic and maybe 40% kinetic. Again, please don’t focus on these very tentative figures, the key thing is this: as per President “Biden”, the goal of the USA is to inflict a strategic failure on Russia. The same stuff was also spoken by the EU, UK politicians and pretty much everybody in the West.
As for the demented Poles, one of their former Presidents and Nobel Prize winner declared that he wants to reduce the population of Russia down to 50 million. Then there are the Brits, who still want to be “Great” or, at least, relevant, and who speak about “leading the free world” against Russia with such stellar allies as Poland, the 3B statelets and Banderastan.
And yet, let’s look at the outcomes on three levels:
Military: the best proxy the USA had in history (the Ukrainian armed forces) is being slowly and inexorably destroyed by about only 8-10 percent of the Russian armed forces.
Economic: while some sectors in Russia did suffer from the so-called “sanctions” (they are not sanctions, but acts of war and crude robbery, only the UNSC can impose legal sanctions), all in all, Russia did great, and seems to be set on a path for economic success due to the fact that a) most countries have refused to obey Washington’s demands and b) the Russian economy is powerful and real, not virtual like the western economies. It will take a couple of years for Russia to adapt, but now that this process has begun, it is unstoppable.
Propaganda: here the image is pretty clear: on one hand we have the USA and its colonies, then a few countries with comprador elites that are hated by most people, and countries that openly defy Washington. This is best expressed by this map from the Chinese foreign ministry:
One key characteristic of the countries shown in red on the bottom (realistic) map is that all these countries have two crucial factors in common: a) they (mostly) lack real resources (since their civilizations were always built on imperialism, colonialism and plain robbery) b) they hate Russia so much that they are willing to take measures which hurt themselves much more than they hurt Russia. This type of hate-saturated insanity reminds me of an old Soviet joke: “in a small village, a local discovers a bottle and when he opens it, a genie comes out and says: since you have liberated me, I will grant you one wish, the only condition is that your next door neighbor will get double of what you will. Then the man thought for a while and replied: please poke one of my eyes out!”. This is the current mental state of western “leaders”…
That is the core “philosophy” of the USA: fight Russia to the last Ukrainian, prolong the war as long as possible, get as much of the civilian infrastructure of the Ukraine destroyed, subvert the status of the dollar, crash the world economy, let the EU crash and burn economically, socially, and politically, shove the Woke agenda down everyone’s throats, even if that makes them gag and throw up and, last but not least, totally and comprehensively stick your head in the sand and deny reality in all its aspects.
Yes, the West is so soaked in rabid hatred and fear of Russia that it prefers to commit collective suicide rather than accept any type of coexistence with a sovereign Russia.
Hitler’s comparatively vague/ambiguous/oblique slogan of “Drang nach Osten” has now been replaced by a much more candid and unambiguous #cancelRussia slogan. Same idea, just much more “in your face”.
Truth be told, most of the so-called “West” is really run by these three groups, in order of influence:
The US Neocons
The Anglo imperialists
The EU comprador ruling elites
This reminds me very much of an album by Roger Waters called “Animals” in which he separates our modern societies into three archetypes: dogs, pigs and sheep. Needless to say, the dogs and pigs will run the sheep, but as soon as a (Russian) bear shows up, they are powerless against him.
This small image tells the true story about the Ruble “turning into rubble” as “Biden” promised.
This is what we see now and which will probably continue well into 2023. The fact that the economic warfare waged against Russia or the promise of Wunderwaffen has totally failed will never be admitted by these deeply psychopathic and terminally delusional people. And if they cannot double down ad infinitum in their actions, they sure will continue to double down in their rhetoric, just as the orchestra continued to play while the “unsinkable” Titanic was sinking.
Still, at least some of the regular folks in the West are smelling the roses, hence the dismal rating of ALL the western political leaders. The hostility of many US Americans even results in polls that suggest that many of them would want to secede from the other states, in this case Trump voters. Considering that Trump voters are, as a rule, far more patriotic than Woke-soaked US “liberals”, this is very telling. But also ironic: the USA wants to break up Russia and ends up breaking up itself. Karma?
Not only. Let’s look at the map which shows which countries did and did not impose “sanctions” on Russia:
Notice that pretty much the entire green zone is composed of countries that the West has invaded, robbed, devastated, enslaved, subverted, forcibly converted, bombed, economically “sanctioned” with blockades and blackmail (by means so-called “secondary sanctions” which is a euphemism for blackmail and extortion) and, more recently, upon which the full satanic insanity of Wokeness has been imposed (hence the US embassies flying “homopride” flags). The population of these green countries, which I call “Zone B”, knows the true score and they mostly hate and despise the West. And that places all their comprador ruling elites in a very tricky situation: their US masters want them to declare total war on Russia while their population is mostly sympathetic to Russia. In the past, this would have been a no-brainer, Uncle Shmuel with his CIA-run death squads, aircraft carriers and seemingly infinite money printing capability was much more vital to these comprador elites than their own population. But now that death squads have been largely replaced with woked-out fairies which are only good at shooting unarmed civilians, now that US aircraft carriers don’t really frighten even countries like Iran, the DPRK or Venezuela and now that the entire Western-built international economic and financial system is collapsing, these comprador elites have to become much, much more careful lest they end up like the US stooges in Bolivia: out of power and in jail. Even Colombia seems to be slowly slipping away, as does Brazil. And I won’t even mention the absolute lack of utility of the likes of Guaido, Tikhanovskaia or the “friends of Syria” gang (Maduro, Lukashenko and Assad or all doing great, thank you!).
The writing is on the wall, and only those who deliberately shut their eyes fail to see it.
This leaves us with the issue of the US Neocons.
What about the western ruling classes, what impact, if any, did the SMO have on them?
First, let’s define our categories. In the EU we don’t really have any real “ruling class”, we only have frontmen (sorry! I meant “frontpersons” of course), puppets, pretend-rulers with no agency whatsoever (Olaf Scholz and Josep Borrell are perfect examples) . There is no European “defense policy” or any other meaningful evidence of agency on any level. The EU is dead, clueless and totally in the control of the US Neocons.
Second, in the USA, Neocons rule supreme, having total control of both major parties in the US. And while the GOP base is very different from the Dem’s base, their leaders are mostly interchangeable. So I will consider them as one.
Their mindset and worldview are pretty clear: they are messianic supremacists and sincerely consider themselves racially superior to the rest of mankind. The fusion of Anglo imperialism and Jewish supremacism has yielded the monster we now know as “Neocons”. These folks excel in the art of accumulating power, by hook or by crook. They like to claim that they have superior intelligence, but in reality, what separates these people is not brainpower, but two key aspects of their worldview: a) tribalism and b) drive. Simply put, most other people do not have this tribal “us against them” mindset, and only a subsection of regular people are truly driven to power and influence. Hence, while being a numerically small minority, the US Neocons are in full control of the USA.
Their psychological profile is narcissistic at best, and fully psychopathic in most cases. That also gives them an advantage, especially when dealing with weak, ignorant and easily influenceable people. But when they meet a determined pushback, be it by Russia, Iran, the DPRK or even Hezbollah, they quickly become clueless and helpless. Check the expression of Blinken on the photo above – that is the face of a coward and a loser. He might have become a decent tailor, instead, he was asked to run the foreign policy of the (now former) superpower. No wonder all he ever produced was disasters and abject failures!
Initially, feeling buoyant from their total control over Eltsin and the Russian liberals, the US Neocons celebrated victory. Then something went very wrong and suddenly they were faced with a radically different kind of leader, one with the massive support of the Russian people. Remember here that Putin was an intelligence officer specializing in the West, thus a man who had a very good understanding of his enemies. Furthermore, Putin was patient enough to realize that in the early years of the confrontation with the West, Russia was in no condition to openly defy the West, let alone fight it militarily. This is why he stopped the LDNR forces from moving any further westwards in 2014-2015 even though the Ukrainian military was in disarray. While he knew that during the time the Ukrainians were in a panic and disorganized, he also knew that Russia could not take on the consolidated West. So between 2014 and 2018 Russia made a gigantic effort to develop the kind of capabilities needed to be able to take on all of NATO and win. By the time of the Russian ultimatum to the West last Fall, Russia was finally ready.
Notice that the Russian ultimatum was not an ultimatum to Kiev as much as it was a direct challenge to the US and NATO. The Neocons, drunk on their bravado and sense of racial superiority, basically told Russia to screw herself and doubled down in their rhetoric. And when Russia moved in, they truly freaked out, hence their suicidal policies towards Russia ever since. These folks mistakenly assumed that while Russia might (maybe!) prevail over the Ukrainian forces, they were confident that Putin would not dare openly defy the consolidated West. And when Putin did just that, they went into full panic mode, hence the nonsense we hear from the western capitals on a daily basis.
But it got even worse. Far from being deterred by western promises of fire and brimstone, the Russian then proceeded to methodically destroy the Ukrainian armed forces. In spite of the Ukrainian military being the best proxy force in US history, in spite of BILLIONS given to the Nazi regime each month, in spite of all sorts of super-dooper Wunderwaffen deliveries, in spite of economic warfare, Russia is now pounding the Ukie+western forces in the Ukraine day after day after day and while the US is ordering the Ukrainians to fight to the end and never withdraw, the many waves of Volkssturm reinforcements have had no impact on Russian warfighting capabilities. The US also ordered its vassal states in eastern Europe to send their large supplies of Soviet era weapons to the Ukraine (over 300 tanks just from Poland!), and Ukrainian-branded Mi-24s, Su-25s and MiG-29s still are seen in the Ukrainian skies almost daily in spite of the fact that almost the entire Ukrainian air force was destroyed in the first 3 days of the war. Helicopters are easy to hide, “Ukrainian” aircraft take off from bases in Poland and Romania, and yet they don’t seem to make a difference: for most of them, it is a one-way mission and they know it. But it is good PR, even if it costs lives (at least that is what Uncle Shmuel thinks). But now that the already low credibility of the legacy corporate media is in freefall, even such PR “victories” yield very little traction:
It is outright comical to hear western countries (Germany, Italy and even the USA) whining about their weapons stores getting depleted while all these truly huge deliveries have not made any difference at all on the ground since the beginning of combat operations.
[Sidebar: does Russia have air superiority over the Ukraine? Yes, absolutely. A few helicopters or fixed wing aircraft on one way missions make no difference here. In fact, a much bigger threat to the Russian Aerospace Forces are the Ukrainian air defenses which, while old, have often been modernized and have the full support of US C4ISR (Command, Control, Communication, Cyber, Intelligence, Surveillance and Reconnaissance) including surveillance drone, AWACS, satellites, SIGNIT, etc. etc. etc. and yet the Russians have adapted: the close air support aircraft fly low, while their SEAD (suppression of enemy air defenses) fly high with long range anti-radiation missiles on the ready. A quick reminder, while the USAF/USN has often achieved air supremacy over countries without a modern air force or any modern air defenses, it failed to knock out the Serbian air defenses during the Anglo-Zionist wars against the Serbian nation. In fact, the USAF/USN *never* operated in an environment as dangerous as the one currently created over the Ukraine, but the comparatively much smaller Russian Aerospace Force did achieve and maintain air superiority over this huge country. As for air supremacy (as oppose to superiority), it is only achievable against a very poorly armed adversary: air superiority is the best one can hope to achieve, even theoretically, over any country with serious air defenses]
And yet, the (comparatively small, but more modern) Russian aerospace forces have achieved and maintained air superiority throughout the past 5 months of combat operations. This is an extremely alarming sign for the US and NATO forces. Just imagine what the full might of the Russian armed forces would do to NATO if it was unleashed!
But it gets even worse (for the Empire, that is): there are all the signs and even clear messages that Putin is not “bluffing” at all and that Russia has full escalation dominance over the West. but it is now becoming quite evident that the Kremlin will not stop under any circumstances short of a total victory, and if that means nuclear war, so be it. And the Russian people are overwhelmingly supportive of this stance.
Why?
Because the Russian people have now FINALLY seen the true face of the West, they now understand that this is nothing else but a continuation of WWII and that the very existence and sovereignty of the Russian people are at stake. Again, Putin said it clearly: “if someone makes a decision to destroy Russia, we have every right to fight back. Yes, it would be a global disaster for humanity and for the world, but being a Russian citizen and head of Russia, I want to ask a question, “What’s the point of the world without Russia?“. If these were just empty words, like what Biden reads (with difficulty) from his teleprompter, that would be one thing, but these words need to be remembered in the context of the deployment of Avangards, Poseidons, S-500 and all the other weapons and tactics developed by Russia while the Neocons, drunk with arrogance, slept at the wheel.
So no, while Putin rarely makes threats, he never bluffs.
Bottom line is this: anybody who sincerely believes that Russia will not wipe out the entire West if she is seriously threatened is terminally delusional, knows nothing about history, and does not understand the Russian mindset. They would do so at their own peril.
If there is one message I want to convey to anybody willing to listen it is this: Putin is not bluffing, the West cannot win, and the only variable here is what price the West is willing to pay for its defeat.
By the way, the Chinese are also getting mighty fed up with the crazies in DC, just check out their latest statements.
Will somebody actually take action against the Neocons? I doubt it. If anything, the entire Trump debacle has proven beyond any reasonable doubt that US anti-Neocons are either fakes, or that they have the willpower of a case of jello (that also goes for Tulsi Gabbard, by the way). Will the Neocons realize that if they persist in doubling down, they will personally and physically die? Maybe. At the end of the day, the US can afford to have a comprehensively destroyed Ukraine and a not less comprehensively destroyed EU. Now that the UK has left the EU, the Anglos couldn’t care less, and triggering wars in Europe is a time-honored British tradition anyway.
The real blowback from the Neocons’ arrogance and ignorance is that far from dealing with Russia first and with China as an end goal, they have greatly contributed to a major strengthening of the Russian, Chinese and Indian alliance.
The Neocons could decide to let Europe burn, while they remain in control of the USA which, unlike the EU, has plenty of natural resources and will remain, if not a world hegemon, then at least a powerful nation. In that case, their plan is simple: to continue to push for a maximum confrontation and war in Europe, but short of involving the USA in a nuclear exchange with Russia. The Brits on their island might have similar plans, just on a smaller scale and with the vital need to fully rely on the support of the USA. In the “best” of cases (for them), the UK would be in charge of managing the chaos in Europe on behalf of the USA.
I don’t think that the Neocons give a damn about Israel and the Israeli people either, by the way. Nor do the Anglo ruling “elites” give a damn about the people of the USA or the UK. If there is one lesson we must take from the horror of 9/11 is that these people won’t hesitate to murder thousands of “their own” because, in reality, for all the patriotic or Zionist flag-waving, they only care about themselves and their power.
NATO is a joke, and sooner or later, Russia will denazify all of the EU, either politically and economically, or, if no other option is left, militarily. First, the Ukraine, then the 3B+P crazies will have to be denazified. Next will be the turn of the EU/NATO beginning with Germany. By then, the US will have suffered a massive economic, social and cultural disaster which will probably reformat the current US polity. Where will the Neocons go next? I don’t know and, frankly, I don’t care. The Neocons are only dangerous just like a parasite that invades the brain of a much larger host. Once the host is down, the parasite might as well leave ditch it and find a new host. By itself, this parasite is weak and universally disliked.
Well, at least so far, the leaders of the USA are still in full “double down forever” mode, along with their volunteer slaves in eastern Europe. Their plan for Russia is best visualized with this map: (source)
During WWII the Russian people quickly understood that Hitler was no “liberator”, no more than Napoleon before him, and that he only used that kind of language to try to achieve victory. Then, during the Cold War, it was easy to believe that the enemy of the West was Communism and its idea of universal liberation from the capitalist yoke. Surely, if Russia got rid of the CPSU the West would embrace such a free Russia?
Nope, the exact opposite happened: in spite the “all you can eat” “freedoms” of bluejeans, fast foods, crime and pornography, Russia was plundered and came very very close to totally breaking up (only the 2nd Chechen war with Putin as the Commander in Chief prevented that from happening). Instead of the promised “democratic heaven” Russia got deeply immersed in the worst kind of capitalist hell imaginable.
Furthermore, the combination of a rather inept Soviet propaganda machine and a much more effective western propaganda gave many Russians the illusion that the West was a group of free and prosperous nations only wanting the best for Russia. The Western-run nightmare of the 90s opened the eyes of some, but not all. As did the apocalypse in the so-called “independent Ukraine”. But the kind of open, direct and absolute hatred for Russia, Putin and everything Russian we all see know has convinced the vast majority of Russians that what the West erally wants is a “final solution” to the “Russian problem” not unlike what the Papist regime of Pavelic during WWII wanted for the Serbs: kill ⅓, expel another ⅓ and “convert” the remaining ⅓.
Some things never change, especially not in the West. The Muslim are all spot on when they speak of the “modern Crusaders”!
So far, Russia has only been observing with some amazement, and even amusement, how the EU was committing economic, political and social suicide without even trying to improve its fate. For the people of Europe, there is only one thing more important than their imperialistic and racist mindset: their wallets. And that wallet has been hurting pretty badly since the self-defeating “sanctions” against Russia were implemented. In Russia that attitude is referred to as a “kid freezing his own ears to piss off his granny”: infantile, self-defeating and simply stupid. That being said: how many regimes (by that I mean political systems, as opposed to governments which are specific people; for example, if Truss replaces Johnson in the UK, this will be a government change, but not a regime change) are threatened by popular discontent in the EU?
The sad reality is that none. Oh sure, they are immensely unpopular, just like “Biden” is in the USA, but changing the puppet figureheads will do nothing to change the regimes in power (basically US-controlled colonial occupation regimes).
It is therefore likely that Russia will have to turn up the pain dial quite a few notches up before the sheep in the EU or the US come to their senses. Primarily, I think of economic measures, but if the crazies from the 3B+PU do something really stupid Russia will not hesitate to use military power if/when needed. The bottom line is this: Russia needs to denazify all of the European continent, and the more countries are told to join NATO, the more candidates for denazification Russia will have.
It is impossible to predict the future, there are simply too many variables at this point, but I would offer the following tentative suggested steps towards escalation:
Russia could gradually either refuse to sell her resources to Europe, not only gas and oil, of course, but everything else which Russia has been selling to the EU in the past for very good prices and which was a key to the wealth of the EU nations. So that would be a full-scale economic counter-attack from Russia against the EU. As an initial step, Russia could also demand to only be paid in Rubles for any and all exports to the EU.
Russia is already killing scores of Polish, British and other mercenaries (excuse me, “advisors” and “volunteers”) in the Ukraine, but most of these are low-level grunts. Russia could decide to target higher ranks involved in the war against Russia, including targets in Kiev and elsewhere. So far Russia has unleashed only a tiny fraction of her real firepower, but if the US/NATO weapon deliveries and deployment of mercenaries increase, Russia will have little choice but to further turn up the pain dial. And if the Poles, or the Baltic statelets go “full crazy” strikes against targets in these countries will become inevitable (Putin has already warned against that when he mentioned striking the “decision making centers”).
Finally, if Russia decides that enough is enough, the first targets of a Russian military response to the US/NATO proxy war would be to attack the US/NATO C4ISR capabilities, including AWACS/JSTARS aircraft, SIGINT centers and satellites.
Right now, these US/NATO aircraft are only flying along the Ukrainian airspace and remain based outside the Ukraine. But if, say, the US/NATO does actively participate in a strike against Crimea or the Crimean Bridge, then all bets will be off and S-400s and various standoff weapons will do the talking.
Imagine for a second that Russia shoots down a US AWACS/JSTARS, what will be the West’s reaction? And I don’t mean expressions of outrage and hatred, they are already at max and really have no effect on Russians. Would the US/NATO try to shoot down a Russian aircraft? And what would the Russian response to that be?
The truth is that the US/NATO simply don’t have the means to wage a land war against Russia. They literally lack everything needed to do that. Oh sure, they have many (mostly old and subsonic) cruise missiles which they could fire at Russia, but here again, this would pose a dilemma for the West: if the strikes are unsuccessful (as they were in Syria), what to do next? And if these strikes are successful, what would the Russians do next? Use their own conventional strategic deterrence capabilities to strike at targets all over Europe and possibly even the USA? And then what?
[Sidebar: airpower and cruise missiles are vastly overrated in the US propaganda. One of my teachers in college was a retired USAF Colonel who worked for the YF-23 program and who taught us a very good course in force planning. One day he said in class “what good does it do to you if you bomb all your targets, shoot down enemy aircraft if by the time you get back your officer’s club is filled with enemy soldiers?!” He was joking, of course, but what he knew is that only “boots on the ground” can win a war. And “boots on the ground” is exactly what neither the US, nor NATO (nor Israel or the KSA by the way) can deploy, especially against a military which has the biggest experience of land warfare on the planet, and by a huge margin!]
The truth is that the choice for the Neocons is binary: either accept defeat in Europe and keep the USA as their prize and host, or die in a major nuclear confrontation that will wipe out millions (which they don’t care about at all), including the Neocons themselves (which they care a lot about).
Try to reason with or convince messianic, narcissistic and delusional racist maniacs is a dangerous and mostly futile task. This is why Russia is turning the pain dial up very very slowly. Right now, most of the efforts of the Kremlin are not even directed at the West, but at forging the core of the future multilateral world, the BRICS countries and BRICS candidates (possibly including Iran, Argentina, Egypt, Turkey, Saudi Arabia, Afghanistan, Mexico, Lebanon and Indonesia in the near future). Russia is also expanding her ties to Africa and Latin America. Last, but not least, Russia, China and India are constantly expanding their ties and even collaboration, especially with China.
In this respect, I would strongly recommend to the Neocons and their puppet regimes to carefully consider the implications of Putin’s words that “We haven’t really started yet anything in earnest yet” (мы ещё всерьёз и не начинали). That is not a threat, but a statement of fact. Whether the West will continue to pretend that Russia is about to collapse, or that Putin is bluffing, will determine what will happen next.
Right now, and exactly as I predicted would happen, Russia has basically totally given up on any form of dialog with the West, since the West has basically severed all its diplomatic ties with Russia. Put differently, Russia is now acting unilaterally without giving the moaning and threats from the West any consideration whatsoever. In fact, the stark reality is that Russia has no need, or use, for the West, especially a West trying to commit collective suicide by a million cuts. Right now, the West is mostly dialing up the pain dial on itself, with little or no Russian assistance. But that does not mean that Russia won’t proactively turn up that dial if/when needed. And if the sheep in the West prefer athletic events or chess tournaments without Russian participation, by all means, let them do it and, in the process, make these events meaningless. The same goes for all the #cancelRussia insanity out there, including the destruction of statues and monuments or sanctioning of Russian musicians. The putatively proud and freedom-loving East Europeans seem to especially relish their “glorious victories” against old Soviet statues and monuments. I say – let them, it just shown their impotence and utter irrelevance. If they have no respect for themselves, why should anybody else?
As the saying goes, “go woke, go broke”. A fitting epitaph on the West’s gravestone.
As for Russia, her real future lies in the South, East and North. She has no need or use for the West. Almost one thousand years of western imperialism are coming to a shameful and self-inflicted death, one way or another. As I have written many times, that system was neither viable nor reformable. It will either die of its own internal contradictions, or Russia and China will have to cull it. They most definitely has the means to, but won’t act directly unless provoked.
But that, should it happen, is still further down the road. For the time being, we are entering a long phase (many months probably) of gradual pain dial increase. Russia will continue to grind down the NATO forces in the Ukraine and let the economic realities sink into the awareness of the European sheep.
As many observe in Russia: “now russophobia will come at a steep price”.
I couldn’t agree more.
Andrei
PS: the above was kind of a “bird’s eye view” trying to cover the key developments during the five past months. From now on, I will write shorter, but more frequent, analyses of specific issues. In this context, if you have questions or want me to address a specific topic in my future analyses, please let me know in the comments section below. Thank you!
Question: Mr President, some would think the world has forgotten about Syria amid the numerous issues on the international agenda. But we have seen today that this is not so.
We would like to hear your views on the situation on the ground in Syria. A great deal has been said today about points of contact, but there are many differences as well. Have you discussed or coordinated any fundamentally new solutions today? I am referring primarily to these differences.
President of Russia Vladimir Putin: What I would like to begin with is not the differences but the fundamental issues that allow us to work and continue our efforts in the trilateral format. All of us believe that it I necessary to guarantee the territorial integrity of the Syrian Arab Republic and to eliminate all sorts of terrorists, which I will not enumerate here. This is the fundamental and the most important thing, as we have pointed out again in our joint statement. I believe that this is very important.
Yes, there are certain differences, which is obvious, but all of us support the constitutional process. Thanks to our efforts, we have brought together various conflicting parties at one negotiating platform, including the opposition and the official authorities of the Syrian Arab Republic, experts and representatives of public organisations, as well as the UN. I believe this is extremely important. This is the first point.
The second. Humanitarian aid is being provided to Syria, for which there is particularly great demand today, because the sanctions imposed on Syria and the Syrian people have produced a deplorable result: nearly 90 percent of people in Syria are living below the poverty line. The situation in Syria is extremely serious.
Of course, it would be unfair to give priority attention to certain groups, to politicise humanitarian aid.
Third. There are different approaches to organising humanitarian aid. We have always believed that it should be organised in full compliance with international humanitarian law. This means that all humanitarian aid must be provided through the official Syrian authorities, through Damascus. However, we have agreed to extend the existing procedure for six months, including for deliveries to the Idlib zone, so as to have more time for coordinating our positions.
There is some disagreement about what is happening in Northern Syria. Incidentally, we also have some common ground here: all of us believe that US troops should leave this area. This is the first point. And they should stop looting the Syrian state, the Syrian people, taking their oil illegally. But there is disagreement about how to organise and stabilise the situation in that region. As you know, Russian-Turkish observation convoys are working there together.
However, in our view, in order to ensure a long-term, stable situation there it is necessary to transfer the entire territory under the control of the official authorities in Damascus, under the control of the Armed Forces of the Syrian Arab Republic, and then it will be possible to hold a dialogue with those who are responsible – in this case the official Syrian authorities. I believe it would greatly stabilise the situation there.
But in general, it is work in progress. As I have said many times and would like to stress once again, the work of this tripartite group – Russia, Turkiye and Iran – this joint effort to search for compromises and find these compromises has led to the fact that over 90% of Syria is now under official government control and, as we say in such cases, we have broken the back of international terrorism there. This is a great result of this joint work.
Question: Mr President, you had three one-on-one meetings today, first with Mr Raisi, then with Mr Khamenei, and then with Mr Erdogan, and there were no news conferences after these meetings. All we know is the topic you were discussing, the official part.
In particular, you said that you discussed the grain issue with your Turkish counterpart, the issue of supplying Russian and Ukrainian grain to international markets. Could you tell us some more about that, please?
Vladimir Putin: There are no secrets here; in fact, almost everything is known. There are some subtleties; maybe I do not always have time to follow what is happening in the information field. I will tell you how I see it.
First, what was the highlight of the three meetings? At each meeting, there were issues that could be considered central to a particular bilateral meeting.
For example, as I said at the news conference, in my press statement, the main theme at the meeting with the Spiritual Leader of Iran was strategic issues, including developments in the region. This is natural, as it is the sphere of his activity. It was very important for me to hear his opinion, his assessment. I have to say that we have very similar views with Iran on many aspects. So, it was very important and very useful.
As for my meeting with President Raisi, we discussed primarily economic matters. I would like to note that Russian-Iranian trade has grown by 40 percent over the past six months. This is a very good indicator.
There are promising spheres for our cooperation, and there is a great variety of them, like infrastructure development. You may know that a deputy prime minister of the Russian Government chairs a group that is responsible for developing relations in the South Caucasus, including infrastructure projects in the South Caucasus, that is, in Azerbaijan, Armenia and Russia. A great deal can be achieved in this sphere in cooperation with Iran.
As you know, the first pilot train is travelling along the North-South Railway line. It is a short route to ports in the south of Iran, which further leads to the Persian Gulf and India.
There is a practical project: the Rasht-Astara railway is a short 146-kilometre line across Iran. Azerbaijan is interested in its construction. I recently met with President Aliyev during the Caspian Summit, and we discussed this matter. Iran is interested in this as well, as our Iranian partners have told us just now. Russia is interested in this, because it will connect Russia’s northern region, St Petersburg, directly to the Persian Gulf. It is a very interesting and promising project. The task now is to build this line, which is only 146 kilometres. Russia is ready to do this.
We need to coordinate the conditions of this construction project. We have discussed its general outlines with our Iranian partners and friends, and we have coordinated it with Azerbaijan. I hope we will get down to business now. And then, it will be an interesting job for us. It actually amounts to exporting the services of Russian Railways (RZD). This is one of the relevant examples.
There are other spheres. There are security issues relevant to Iran’s nuclear programme. It was very important for us to understand the sentiments of the Iranian party regarding this work. It also involves Russia, which is contributing to the joint efforts aimed at relaunching interaction between Iran and the IAEA. I will not speak about this now, but Russia is playing a considerable role in this.
The grain issue. It is what we discussed with the President of Turkiye. I have already said that the Republic of Turkiye and personally President Erdogan have done a great deal to facilitate the agreement on Ukrainian grain exports. But initially we suggested that it should be adopted as a package, that is, we would facilitate the Ukrainian grain exports provided all the restrictions on the potential exports of Russian grain are lifted. This is what we initially agreed upon with international organisations. They pledged to formulate this as a package solution. Nobody has so far raised any objections, including our American partners. We will see what comes of it in the near future.
As you know, the Americans have actually lifted restrictions, for example, on the delivery of Russian fertilisers to the global market. I hope this will also happen with regard to the export of Russian grain if they really want to improve the situation on the global food markets. As I have said, we are ready to do this right now. We can export 30 million tonnes of grain, and our export potential based on this year’s harvest will be 50 million tonnes.
Question: Mr President, a serious energy crisis is developing in Europe, which is discussing the possibility of Gazprom cutting off gas deliveries. The company has allegedly issued an official notification to one of its German clients, citing force majeure circumstances.
Are there grounds for accusing Russia of causing this energy crisis? Will Gazprom continue to honour its obligations
Vladimir Putin: First of all, Gazprom has always honoured, and will continue to honour its commitments.
There are no grounds at all for the attempts by our partners to shift or try to shift the blame for their own mistakes on Russia and Gazprom.
What is the situation with energy deliveries? In 2020, in the first half of 2020, gas cost 100 euros per 1,000 cubic metres in Europe. The price rose to 250 euros in the first half of 2021. Today it is 1,700 euros per 1,000 cubic metres of gas.
What is happening? I have spoken about this on numerous occasions, and I do not know if we should go into detail regarding the energy policies of European countries, which underrate the importance of traditional sources of energy and have put money on non-traditional energy sources. They are big experts on non-traditional relations, and they have also decided to make a bid for non-traditional energy sources like the sun and wind.
Last winter was long, there wasno wind, and that did it. Investment in the fixed assets of traditional energy producers has decreased because of previous political decisions: banks do not finance them, insurance companies do not insure them, local governments do not allocate land plots for new projects, and pipeline and other forms of transportation are not developing. This is a result of many years, probably a decade of this policy. This is the root cause of price hikes rather than any actions by Russia or Gazprom.
What is going on today? Until recently, we supplied gas to Europe without Turkiye: we supplied around 30 billion cubic metres a year to Turkiye, and 170 billion to Europe, 55 billion via Nord Stream 1, and, if memory serves me, 33 billion were supplied via Yamal-Europe, via the two strings that run through Ukraine. About 12 billion were delivered to Europe through Turkiye via TurkStream.
Ukraine suddenly announced that it was going to close one of the two routes on its territory. Allegedly because the gas pumping station is not under its control but on the territory of the Lugansk People’s Republic. But it found itself under the control of the Lugansk People’s Republic several months before, and they closed it just recently without any grounds. Everything was functioning normally there, no one interfered. In my opinion, they closed it simply for political reasons.
What happened next? Poland imposed sanctions on Yamal-Europe, which supplied 33 billion cubic metres of gas. They used to take 34, I think, 33–34 million cubic metres a day from us. They shut it down completely. But then we saw that they turned on the Yamal-Europe pipeline in reverse mode, and they started taking about 32 million a day from Germany. Where is the gas from Germany coming from? It is our Russian gas. Why from Germany? Because it turned out to be cheaper for the Poles. They used to get it from us at a very high price, closer to the market price, whereas Germany gets it from us 3–4 times cheaper than the market price under long-term contracts.
It is profitable for German companies to sell it to the Poles at a small premium. It is profitable for the Poles to buy it because it is cheaper than to buy it directly from us. But the volume of gas in the European market has decreased, and the total market price has gone up. Who has won? All Europeans only lost. This is the second point: Yamal-Europe.
So, first one of the routes in Ukraine was shut down, then Yamal-Europe was shut down, now Nord Stream 1, which is one of the main routes – we pump 55 billion cubic metres a year through it. There are five Siemens gas compressor stations working there, and one is on standby. One compressor had to be sent out for repairs. A repaired compressor was supposed to come from Canada, from the Siemens plant in Canada, to replace it. But it ended up under sanctions in Canada. So, one pumping station, just one piece of equipment was out of order because of scheduled maintenance work and it has not been returned from Canada.
Now we are being told that the unit will be delivered from Canada soon, but Gazprom does not have any official documents yet. We must certainly obtain them, because this is our property, it is the property of Gazprom. Gazprom should receive not only the hardware, not only the gas pumping unit, but also the accompanying documents, both legal and technical documentation. We must be able to see what Gazprom is taking – the turbine’s current condition as well as its legal status, whether it is under sanctions or not, what we can do with it, or maybe they are taking it back tomorrow. But that is not all.
The problem is that at the end of July, on July 26, I think – we can ask Gazprom – another turbine should be sent for routine maintenance, for repairs. And where will we get a replacement from? We do not know.
One more turbine is actually out of order because of some crumbling of its internal liner. Siemens has confirmed this. That leaves two operational units, which are pumping 60 million per day. So, if one more is delivered, fine, we will have two in operation. But if it is not, only one will be left, and it will pump only 30 million cubic meters per day. You can count how much time it will take to pump the rest. How is this Gazprom’s responsibility? What does Gazprom even have to do with this? They have cut off one route, then another, and sanctioned this gas pumping equipment. Gazprom is ready to pump as much gas as necessary. But they have shut everything down.
And they have fallen into the same trap with the import of oil and petroleum products. We hear all sorts of crazy ideas about capping the volume of Russian oil imports or the price of Russian oil. This is going to lead to the same situation as with gas. The result (I am surprised to hear people with university degrees saying this) will be the same – rising prices. Oil prices will spiral.
As for gas, there is another route we are ready to open, which is Nord Stream 2. It is ready to be launched, but they are not launching it. There are problems here as well, I discussed them with the Chancellor about six or maybe eight weeks ago. I raised this issue; I said that Gazprom had reserved the capacity, and that this capacity needed to be used, and it cannot be suspended in mid-air indefinitely.
The answer was that there were other issues on the agenda, more important things, so it is difficult for them to deal with this right now. But I had to warn them that then we would have to redirect half of the volume intended for Nord Stream for domestic consumption and processing. I raised this issue at the request of Gazprom, and Gazprom has actually already done it. Therefore, even if we launch Nord Stream 2 tomorrow, it will not pump 55 billion cubic meters, but exactly half that amount. And given that we are already halfway through this year, it would be just a quarter. Such is the supply situation.
But – I said this at the beginning of my answer to your question and I want to end with this – Gazprom has always fulfilled and will always fulfil all of its obligations, as long as, of course, anyone needs it. First, they themselves close everything, and then they look for someone to blame – it would be comical if it were not so sad.
Question: You spoke with Mr Erdogan today. He has repeatedly stated his readiness to arrange talks between you and Vladimir Zelensky. Has this issue surfaced today? Are you ready to meet with the President of Ukraine?
Vladimir Putin: President Erdogan is making a lot of efforts to create the necessary conditions for normalising the situation. It was during our talks in Istanbul that we actually reached an agreement, and it only remained to initial it. But, as you know, after that, when our troops, in order to create the right conditions, withdrew from central Ukraine, from Kiev, the Kiev authorities backed off on those agreements. These were agreements that had actually been achieved. So, you see that the final result depends, of course, not on intermediaries, but on the parties’ commitment to fulfil the agreements reached. And we can see today that the Kiev authorities have no interest in that.
As for Turkiye’s efforts, as well as other countries’ proposals – Saudi Arabia has offered its mediation services, and the United Arab Emirates, and they do have such capabilities – we are grateful to all our friends who are interested in resolving this crisis for providing their opportunities. Even their willingness to make some contribution to this noble cause is worth a lot. We are deeply grateful for that.
No longer just an ‘alternative route’ on a drawing board, the International North South Transportation Corridor (INSTC) is paying dividends in a time of global crisis. And Moscow, Tehran and New Delhi are now leading players in the Eurasian competition for transportation routes.
Tectonic shifts continue to rage through the world system with nation-states quickly recognizing that the “great game” as it has been played since the establishment of the Bretton Woods monetary system in the wake of the second World War, is over.
But empires never disappear without a fight, and the Anglo-American one is no exception, overplaying its hand, threatening and bluffing its way, right to the end.
End of an order
It seems no matter how many sanctions the west imposes on Russia, the victims most affected are western civilians. Indeed, the severity of this political blunder is such that the nations of the trans-Atlantic are heading towards the greatest self-induced food and energy crisis in history.
While the representatives of the “liberal rules-based international order” continue on their trajectory to crush all nations that refuse to play by those rules, a much saner paradigm has come to light in recent months that promises to transform the global order entirely.
The multipolar solution
Here we see the alternative security-financial order which has arisen in the form of the Greater Eurasian Partnership. As recently as 30 June at the 10th St Petersburg International Legal Forum, Russian President Vladimir Putin described this emerging new multipolar order as:
“A multipolar system of international relations is now being formed. It is an irreversible process; it is happening before our eyes and is objective in nature. The position of Russia and many other countries is that this democratic, more just world order should be built on the basis of mutual respect and trust, and, of course, on the generally accepted principles of international law and the UN Charter.”
Since the inevitable cancellation of western trade with Russia after the Ukraine conflict erupted in February, Putin has increasingly made clear that the strategic re-orientation of Moscow’s economic ties from east to west had to make a dramatically new emphasis on north to south and north to east relations not only for Russia’s survival, but for the survival of all Eurasia.
Among the top strategic focuses of this re-orientation is the long overdue International North South Transportation Corridor (INSTC).
On this game-changing mega-project, Putin said last month during the plenary session of the 25th St Petersburg International Economic Forum:
“To help companies from other countries develop logistical and cooperation ties, we are working to improve transport corridors, increase the capacity of railways, trans-shipment capacity at ports in the Arctic, and in the eastern, southern and other parts of the country, including in the Azov-Black Sea and Caspian basins – they will become the most important section of the North-South Corridor, which will provide stable connectivity with the Middle East and Southern Asia. We expect freight traffic along this route to begin growing steadily in the near future.”
The INSTC’s Phoenix Moment
Until recently, the primary trade route for goods passing from India to Europe has been the maritime shipping corridor passing through the Bab El-Mandeb Strait linking the Gulf of Aden to the Red Sea, via the highly bottlenecked Suez Canal, through the Mediterranean and onward to Europe via ports and rail/road corridors.
Following this western-dominated route, average transit times take about 40 days to reach ports of Northern Europe or Russia. Geopolitical realities of the western technocratic obsession with global governance have made this NATO-controlled route more than a little unreliable.
The International North South Transport Corridor (INSTC)
Despite being far from complete, goods moving across the INSTC from India to Russia have already finished their journey 14 days sooner than their Suez-bound counterparts while also seeing a whopping 30 percent reduction in total shipping costs.
These figures are expected to fall further as the project progresses. Most importantly, the INSTC would also provide a new basis for international win-win cooperation much more in harmony with the spirit of geo-economics unveiled by China’s Belt and Road Initiative (BRI) in 2013.
Cooperation not competition
Originally agreed upon by Russia, Iran and India in September 2000, the INSTC only began moving in earnest in 2002 – albeit much more slowly than its architects had hoped.
This 7,200 km multimodal megaproject involves integrating several Eurasian nations directly or indirectly with rail, roads and shipping corridors into a united and tight-knit web of interdependency. Along each artery, opportunities to build energy projects, mining, and high tech special economic zones (SEZs) will abound giving each participating nation the economic power to lift their people out of poverty, increase their stability and their national power to chart their own destinies.
Beyond the founding three nations, the other 10 states who have signed onto this project over the years include Armenia, Georgia, Turkey, Azerbaijan, Kazakhstan, Belarus, Tajikistan, Kyrgyzstan, Oman, Syria and even Ukraine (although this last member may not remain on board for long). In recent months, India has officially invited Afghanistan and Uzbekistan to join too.
While western think tanks and geopolitical analysts attempt to frame the INSTC as an opponent to China’s BRI, the reality is that both systems are extremely synergistic on multiple levels.
China’s Belt and Road Initiative (BRI)
Unlike the west’s speculation-driven bubble economy, both the BRI and INSTC define economic value and self-interest around improving the productivity and living standards of the real economy. While short term thinking predominates in the myopic London-Wall Street paradigm, the BRI and INSTC investment strategies are driven by long-term thinking and mutual self-interest.
It is no small irony that such policies once animated the best traditions of the west before the rot of unipolar thinking took over and the west lost its moral compass.
An integrated alternative
The INSTC’s two major bookends are the productive zone of Mumbai in India’s Southeast region of Gujarat and the northern-most Arctic port of Lavna in Russia’s Kola Peninsula of Murmansk.
This is not only the first port constructed by Russia in decades, but when completed, will be one of the world’s largest commercial ports with an expected capacity to process 80 million tons of goods by 2030.
Between these bookends, the INSTC moves freight from India into Iran’s Port of Bandar Abbas where it is loaded onto double-tracked rail to the Iranian city of Bafq and then to Tehran before coming to the Anzali Port on the southern Caspian Sea.
‘Be like water’
Because the INSTC is based on a flexible design concept capable of adapting to a changing geopolitical environment (very much like the BRI), there are a multitude of connecting lines that branch off the main North-South artery before goods make it to the Caspian Sea.
These include an eastern and western corridor branching off from the city of Bafq towards Turkey and thence Europe via the Bosporus and also eastward from Tehran to Turkmenistan, Uzbekistan, Kazakhstan and thereafter into Urumqi in China.
Railway is still relevant
From the Anzali Port in the north of Iran, goods may travel by the Caspian Sea towards Russia’s Astrakhan Port where it is then loaded onto trains and trucks for transport to Moscow, St Petersburg and Murmansk. Inversely goods may also travel over land to Azerbaijan where the 35 km Iran Rasht-Caspian railway is currently under construction with 11 km completed as of this writing.
Once completed, the line will connect the Port of Anzali with Azerbaijan’s Baku, offering goods a chance to either continue onwards to Russia or westward toward Europe. A Tehran-Baku rail route already exists.
Additionally, Azerbaijan and Iran are currently collaborating on a vast $2 billion rail line connecting the 175 km Qazvin-Rasht railway which began operations in 2019 with a strategic rail line connecting Iran’s Rasht port on the Caspian to the Bandar Abbas Complex in the south (to be completed in 2025). Iran’s Minister of Roads and Urban Development Rostam Ghasemi described this project in January 2022 saying:
“Iran’s goal is to connect to the Caucasus, Russia, and European countries. For this purpose, the construction of the Rasht-Astara railway is in the spotlight. During the Iranian president’s visit to Russia, discussions were conducted in this regard, and construction of the railway line is expected to begin soon with the allocation of needed funds.”
In recent months, India’s Prime Minister Narendra Modi has lobbied to incorporate the joint Iran-India built Chabahar Port into the INSTC which will likely occur since another 628 km rail line from the port to the Iranian city of Zahedan is currently under construction.
Once completed, goods will easily move onward to the city of Bafq. While some critics have suggested that the Chabahar Port is antagonistic to Pakistan’s Gwadar Port, Iranian officials have constantly referred to it as Chabahar’s twin sister.
Since 2014, a vast rail and transportation complex has grown around the co-signers of the Ashkabat Agreement (launched in 2011 and upgraded several times over the past decade). These rail networks include the 917.5 km Iran-Turkmenistan-Kazakhstan route launched in 2014, and Turkmenistan-Afghanistan-Tajikistan rail/energy project launched in 2016 which is currently seeing extensions that could easily go into Pakistan.
In December 2021, the 6540 km Islamabad to Istanbul rail line (via Iran) recommenced operations after a decade of inaction. This route cuts the conventional sea transit route time of 21 days by half. Discussions are already underway to extend the line from Pakistan into China’s Xinjiang Province linking the INSTC ever more closely into the BRI on yet another front.
Islamabad to Istanbul rail line (via Iran)
Finally, June 2022 saw the long-awaited unveiling of the 6108 km Kazakhstan-Iran-Turkey rail line which provides an alternative route to the under-developed Middle Corridor. Celebrating the inaugural 12 day voyage of cargo, Kazakhstan’s President Kasym-Jomart Tokayev stated: “Today, we welcomed the container train, which left Kazakhstan a week ago. Then it will go to Turkey. This is a significant event, given the difficult geopolitical conditions.”
Despite the fact that the INSTC is over 20 years old, global geopolitical dynamics, regime change wars, and ongoing economic warfare against Iran, Syria and other US target states did much to harm the sort of stable geopolitical climate needed to emit large scale credit requisite for long term projects like this to succeed.
Caspian Summit Security breakthroughs
As proof that necessity truly is the mother of invention, the systemic meltdown of the entire post-WW2 edifice has forced reality to take precedence over the smaller-minded concerns that kept the diverse nations of Sir Halford John Mackinder’s “World Island” from cooperating. Among these points of endless conflict and stagnation which has upset great economic potential over the course of three decades, the Caspian zone stands out.
It is in this oil and natural gas rich hub that the five Caspian littoral states (Russia, Iran, Azerbaijan, Kazakhstan and Turkmenistan) have found a power to break through on multi-level security, economic and diplomatic agreements throughout the June 29-30, 2022 Sixth Caspian Summit in Ashgabat, Turkmenistan.
This summit placed a high priority on the INSTC with the region becoming both a north-south and east-west transportation hub. Most importantly, the leaders of the five littoral states made their final communique center around the region’s security since it is obvious that divide-to-conquer tactics will be deployed using every tool in the asymmetrical warfare tool basket going forward.
Chief among the agreed-upon principles were indivisible security, mutual cooperation, military cooperation, respect for national sovereignty, and non-interference. Most importantly, the banning of foreign military from the land and waters of the Caspian states was firmly established.
While no final agreement was reached over the disputed ownership of resources within the base of the Caspian, the stage was set for harmonization of partner states’ security doctrines, a healthy environment was established for the second Caspian Economic Summit which will take place in Autumn of this year and which will hopefully resolve many of the disputes pertaining to Caspian resource ownership.
Although geopolitical storms continue to intensify, it is increasingly clear that only the multipolar ship of state has demonstrated the competence to navigate the hostile seas, while the sinking unipolar ship of fools has a ruptured hull held together by little more than chewing gum and heavy doses of delusion.
The views expressed in this article do not necessarily reflect those of The Cradle.I
Against the odds and powerful rivals pitted against him, former PM Khan’s win in Punjab elections is a victory for democracy and Pakistan’s sovereignty
It is an unsavoury proposition always, be it in India or Pakistan, when political power is usurped by fly-by-night operators who engineer defections from a ruling party, and an established government gets overthrown despite its mandate to govern.
In India — so far, at least — such shenanigans leading to regime change at the federal or state level have not been manipulated by foreign powers — except, perhaps, in the ouster of the first communist government in the southern state of Kerala, way back in 1959.
In South Asian politics, Nepal, Afghanistan, Sri Lanka and Maldives have been chronic cases where foreign interference in their domestic politics has become endemic. But they are either small countries or weak states, vulnerable to external pressure.
A coup by other means
It was the first time that the curse of foreign interference appeared in a big South Asian country such as Pakistan when the US openly sought the removal of then-Prime Minister Imran Khan, and a regime change indeed ensued within a short period of time.
To what extent the political forces that constituted the successor regime in Islamabad drew encouragement from Washington to usurp power, we do not know, and may never. But given the political elite’s past record of rentier mentality, such a thing cannot be ruled out.
Although those elites in India and Pakistan have strong similarities, the Pakistani (civilian) elite has long held a tradition of looking over their shoulder for US approval.
Imran Khan himself insists that this was precisely what happened, and therefore, he has called his protest movement a “jihad.” Indeed, the abrupt warming up of the US-Pakistan relationship, which was in a state of disrepair under Khan, no sooner than he was ousted, also signified the Biden administration’s delight and sense of relief over the regime change in Pakistan.
As for Secretary of State Antony Blinken, who had no time for Pakistan previously, the sudden upbeat tone of his personal diplomacy toward the new ruling elite in Islamabad, which is also drawn from powerful political dynasties that are intimately known to the US establishment, distinctly conveyed the impression that on his cold war chessboard, he could now count on a new pawn to be pitted against China (and Russia.)
Khan not ‘out’
However, such euphoria was short-lived. Contrary to the estimations, including in India, that Imran Khan’s political career was over, events have shown that he is still very much Pakistan’s current history, and, if anything, it is the usurpers in Islamabad who are relics from the past.
To be sure, Khan’s “jihad” has taken the form of a tsunami that today threatens to drown the usurpers. The manner in which he has stormed the heartland of Punjab in Sunday’s by-elections must be sending alarm bells ringing in the corridors of power, not only in Lahore but also in Islamabad.
A landslide victory
The mammoth crowds that follow Imran Khan everywhere are indeed turning into votes. Without doubt, it is after a very long time that a truly charismatic politician has appeared on the Pakistani political landscape.
Khan has stunned his detractors and political opponents by taking control of the crucial Punjab provincial assembly. His party won 15 of 20 seats up for grab in by-elections, trouncing arch-rival Pakistan Muslim League-N (which incidentally heads the federal government in Islamabad also since April after Imran Khan’s ouster) on its home ground.
The result is not only a major blow for current Prime Minister Shehbaz Sharif but is also widely regarded as a foretaste of what could happen in a general election. Imran Khan has been demanding an early general election which is otherwise due in October 2023.
The powers that be
The conventional wisdom that the Pakistani military establishment would feel challenged by such a spectre has been proven wrong this time around (which also augurs well for the country’s political future.) Fundamentally, the axiom that a Pakistani civilian politician who developed differences with the military leadership would be a fallen angel ever condemned to oblivion has also withered away.
In fact, the swiftness of Imran Khan’s return to centre stage is awesome, as if he never quit the centre stage and the usurpers were mere interlopers.
Imran Khan has rewritten Pakistan’s political history by knocking at the doors of political power so soon after his ouster by an unholy alliance of time servers with foreign patronage.
If the election results from Punjab have conveyed one single thing, it is that the people of that country have understood what democratic empowerment is and are determined to voice their opinion.
And that opinion is, unmistakably, that the regime change in Lahore following the ouster of Imran Khan’s party from power was a repugnant episode, and must be undone. The strong likelihood is that it also becomes a signpost for those in power in Islamabad.
Given Pakistan’s grave economic challenges, political stability is an imperative need, and the last thing the country deserves is to be burdened with a national government which lacks legitimacy. When a country is faced with such a predicament, the only way out is to hold fresh elections that can hopefully bring to power a new, stable government with the mandate to rule.
Of course, mandate only gives legitimacy to rule and does not necessarily guarantee good governance — Bangladesh is, perhaps, a solitary exception in the South Asian region — but that is something that we can learn to live with as a fact of life in our part of the world.
Understanding Khan’s ‘jihad’
Imran Khan’s “jihad” is not a call for anarchy. Nor is he stirring up a “colour revolution”. He is, on the contrary, a factor of stability for Pakistan — strictly abiding by the rule of law and constitutional order. He is only demanding a new government with a mandate to rule, a cause that he has consistently espoused since signs of a US-sponsored political coup against him began to crystallize.
The real danger is that if there is a disconnect between the rulers and the ruled, it not only weakens the incumbent government and affects decision-making, especially when difficult decisions need to be taken, but also that political drift could spawn anarchical conditions. And that is an eventuality Pakistan can ill afford in the prevailing circumstances.
It is possible that Khan may be returned to power in fresh elections. It is equally possible that his party may once again fall short of a majority and has to build a coalition, or, alternatively, reconcile with the role of an opposition. But the present logjam needs to be broken, nonetheless. And that is only possible through new elections.
Political instability in Pakistan will be detrimental to the country’s long term interests at the present juncture in global affairs, where it has a serious role to play as a major regional power.
Pakistan has a lot going for it in the emergent world order characterized by multipolarity. It is up to the Pakistani political elite not to goof up, in their mad scramble for power. That makes fresh elections in the shortest possible time a dire necessity.
The views expressed in this article do not necessarily reflect those of The Cradle.
The War of Economic Corridors is now proceeding full speed ahead, with the game-changing first cargo flow of goods from Russia to India via the International North South Transportation Corridor (INSTC) already in effect.
Very few, both in the east and west, are aware of how this actually has long been in the making: the Russia-Iran-India agreement for implementing a shorter and cheaper Eurasian trade route via the Caspian Sea (compared to the Suez Canal), was first signed in 2000, in the pre-9/11 era.
The INSTC in full operational mode signals a powerful hallmark of Eurasian integration – alongside the Belt and Road Initiative (BRI), the Shanghai Cooperation Organization (SCO), the Eurasian Economic Union (EAEU), and last but not least, what I described as “Pipelineistan” two decades ago.
Caspian is key
Let’s have a first look on how these vectors are interacting.
The genesis of the current acceleration lies in Russian President Vladimir Putin’s recent visit to Ashgabat, Turkmenistan’s capital, for the 6th Caspian Summit. This event not only brought the evolving Russia-Iran strategic partnership to a deeper level, but crucially, all five Caspian Sea littoral states agreed that no NATO warships or bases will be allowed on site.
That essentially configures the Caspian as a virtual Russian lake, and in a minor sense, Iranian – without compromising the interests of the three “stans,” Azerbaijan, Kazakhstan and Turkmenistan. For all practical purposes, Moscow has tightened its grip on Central Asia a notch.
As the Caspian Sea is connected to the Black Sea by canals off the Volga built by the former USSR, Moscow can always count on a reserve navy of small vessels – invariably equipped with powerful missiles – that may be transferred to the Black Sea in no time if necessary.
Stronger trade and financial links with Iran now proceed in tandem with binding the three “stans” to the Russian matrix. Gas-rich republic Turkmenistan for its part has been historically idiosyncratic – apart from committing most of its exports to China.
Under an arguably more pragmatic young new leader, President Serdar Berdimuhamedow, Ashgabat may eventually opt to become a member of the SCO and/or the EAEU.
Caspian littoral state Azerbaijan on the other hand presents a complex case: an oil and gas producer eyed by the European Union (EU) to become an alternative energy supplier to Russia – although this is not happening anytime soon.
The West Asia connection
Iran’s foreign policy under President Ebrahim Raisi is clearly on a Eurasian and Global South trajectory. Tehran will be formally incorporated into the SCO as a full member in the upcoming summit in Samarkand in September, while its formal application to join the BRICS has been filed.
Purnima Anand, head of the BRICS International Forum, has stated that Turkey, Saudi Arabia and Egypt are also very much keen on joining BRICS. Should that happen, by 2024 we could be on our way to a powerful West Asia, North Africa hub firmly installed inside one of the key institutions of the multipolar world.
As Putin heads to Tehran next week for trilateral Russia, Iran, Turkey talks, ostensibly about Syria, Turkish President Recep Tayyip Erdogan is bound to bring up the subject of BRICS.
Tehran is operating on two parallel vectors. In the event the Joint Comprehensive Plan of Action (JCPOA) is revived – a quite dim possibility as it stands, considering the latest shenanigans in Vienna and Doha – that would represent a tactical victory. Yet moving towards Eurasia is on a whole new strategic level.
In the INSTC framework, Iran will make maximum good use of the geostrategically crucial port of Bandar Abbas – straddling the Persian Gulf and the Gulf of Oman, at the crossroads of Asia, Africa and the Indian subcontinent.
Yet as much as it may be portrayed as a major diplomatic victory, it’s clear that Tehran will not be able to make full use of BRICS membership if western – especially US – sanctions are not totally lifted.
Pipelines and the “stans”
A compelling argument can be made that Russia and China might eventually fill the western technology void in the Iranian development process. But there’s a lot more that platforms such as the INSTC, the EAEU and even BRICS can accomplish.
Across “Pipelineistan,” the War of Economic Corridors gets even more complex. Western propaganda simply cannot admit that Azerbaijan, Algeria, Libya, Russia’s allies at OPEC, and even Kazakhstan are not exactly keen on increasing their oil production to help Europe.
Kazakhstan is a tricky case: it is the largest oil producer in Central Asia and set to be a major natural gas supplier, right after Russia and Turkmenistan. More than 250 oil and gas fields are operated in Kazakhstan by 104 companies, including western energy giants such as Chevron, Total, ExxonMobil and Royal Dutch Shell.
While exports of oil, natural gas and petroleum products comprise 57 percent of Kazakhstan’s exports, natural gas is responsible for 85 percent of Turkmenistan’s budget (with 80 percent of exports committed to China). Interestingly, Galkynysh is the second largest gas field on the planet.
Compared to the other “stans,” Azerbaijan is a relatively minor producer (despite oil accounting for 86 percent of its total exports) and basically a transit nation. Baku’s super-wealth aspirations center on the Southern Gas Corridor, which includes no less than three pipelines: Baku-Tblisi-Erzurum (BTE); the Turkish-driven Trans-Anatolian Natural Gas Pipeline (TANAP); and the Trans-Adriatic (TAP).
The problem with this acronym festival – BTE, TANAP, TAP – is that they all need massive foreign investment to increase capacity, which the EU sorely lacks because every single euro is committed by unelected Brussels Eurocrats to “support” the black hole that is Ukraine. The same financial woes apply to a possible Trans-Caspian Pipeline which would further link to both TANAP and TAP.
In the War of Economic Corridors – the “Pipelineistan” chapter – a crucial aspect is that most Kazakh oil exports to the EU go through Russia, via the Caspian Pipeline Consortium (CPC). As an alternative, the Europeans are mulling on a still fuzzy Trans-Caspian International Transport Route, also known as the Middle Corridor (Kazakhstan-Turkmenistan-Azerbaijan-Georgia-Turkey). They actively discussed it in Brussels last month.
The bottom line is that Russia remains in full control of the Eurasia pipeline chessboard (and we’re not even talking about the Gazprom-operated pipelines Power of Siberia 1 and 2 leading to China).
Gazprom executives know all too well that a fast increase of energy exports to the EU is out of the question. They also factor the Tehran Convention – that helps prevent and control pollution and maintain the environmental integrity of the Caspian Sea, signed by all five littoral members.
Breaking BRI in Russia
China, for its part, is confident that one of its prime strategic nightmares may eventually disappear. The notorious “escape from Malacca” is bound to materialize, in cooperation with Russia, via the Northern Sea Route, which will shorten the trade and connectivity corridor from East Asia to Northern Europe from 11,200 nautical miles to only 6,500 nautical miles. Call it the polar twin of the INSTC.
This also explains why Russia has been busy building a vast array of state-of-the-art icebreakers.
So here we have an interconnection of New Silk Roads (the INSTC proceeds in parallel with BRI and the EAEU), Pipelineistan, and the Northern Sea Route on the way to turn western trade domination completely upside down.
Of course, the Chinese have had it planned for quite a while. The first White Paper on China’s Arctic policy, in January 2018, already showed how Beijing is aiming, “jointly with other states” (that means Russia), to implement sea trade routes in the Arctic within the framework of the Polar Silk Road.
And like clockwork, Putin subsequently confirmed that the Northern Sea Route should interact and complement the Chinese Maritime Silk Road.
Russia-China Economic cooperation is evolving on so many complex, convergent levels that just to keep track of it all is a dizzying experience.
A more detailed analysis will reveal some of the finer points, for instance how BRI and SCO interact, and how BRI projects will have to adapt to the heady consequences of Moscow’s Operation Z in Ukraine, with more emphasis being placed on developing Central and West Asian corridors.
It’s always crucial to consider that one of Washington’s key strategic objectives in the relentless hybrid war against Russia was always to break BRI corridors that crisscross Russian territory.
As it stands, it’s important to realize that dozens of BRI projects in industry and investment and cross-border inter-regional cooperation will end up consolidating the Russian concept of the Greater Eurasia Partnership – which essentially revolves around establishing multilateral cooperation with a vast range of nations belonging to organizations such as the EAEU, the SCO, BRICS and ASEAN.
Welcome to the new Eurasian mantra: Make Economic Corridors, Not War.
The views expressed in this article do not necessarily reflect those of The Cradle.
Hey, everyone, this is Ben Norton, and you are watching or listening to the Multipolarista podcast. I am always privileged to be joined by one of my favorite guests, Michael Hudson, one of the greatest economists living today.
We’re going to be talking about the inflation crisis. This is a crisis around the world, but especially in the United States, where inflation has been at over 8%. And it has caused a lot of political problems. It’s very likely going to cause the defeat, among other factors, of the Democrats in the mid-term elections in November.
And we’ve seen that the response of the US government and top economists in the United States is basically to blame inflation on wages, on low levels of unemployment and on working people.
We’ve seen that the chair of the Federal Reserve, Jerome Powell, has said that inflation is being caused by wages supposedly being too high. We’ve also seen that the top economist and former Clinton administration official Larry Summers has claimed that the solution to inflation is increasing unemployment, potentially up to 10%.
So today I’m joined by economist Michael Hudson, who has been calling out this kind of neoliberal snake oil economics for many years. And Professor Hudson has an article he just published that we’re going to talk about today. You can find this at his website, which is michael-hudson.com. It’s titled “The Fed’s Austerity Program to Reduce Wages.” and I’m going to let Professor Hudson summarize the main points of his article.
Professor Hudson, as always, it’s a pleasure having you. Can you respond to the decision by the Federal Reserve to increase interest rates by 0.75%? It doesn’t sound like a lot – it’s less than 1% – but this was the largest rate hike since 1994.
And now we’ve already seen reports that there’s going to be a depression. The Fed chair is blaming this on wages. Can you respond to the position of the Fed and the inflation crisis in the US right now.
MICHAEL HUDSON:
For the Fed, the only two things that it can do is, number one, raise the discount rate, the interest rate; and number two, spend $9 trillion buying stocks, and bonds, and real estate mortgages to increase real estate prices, and to increase the amount of wealth that the wealthiest 10% of the population has.
To the wealthiest 10%, especially the 1%, it’s not only inflation that’s a problem of wages; every problem that America has is the problem of the working class earning too much money. And if you’re an employer, that’s the problem: you want to increase your profits. And if you look at the short term, your profits go up the more that you can squeeze labor down. And the way to squeeze labor down is to increase what Marx called the reserve army of the unemployed.
You need unemployment in order to prevent labor from getting most of the value of what it produces, so that the employers can get the value, and pay that to the banks and the financial managers that have taken over corporate industry in the United States.
You mentioned that while the Fed blames the inflation it on labor, that’s not President Biden’s view; Biden keeps calling it the Putin inflation. And of course, what he really means is that the sanctions that America has placed on Russia have created a shortage of oil, gas, energy, and food exports.
So really we’re in the Biden inflation. And the Biden inflation that America is experiencing is the result basically of America’s military policy, its foreign policy, and above all, the Democratic Party’s support of the oil industry, which is the most powerful sector in the United States and which is guiding most of the sanctions against Russia; and the national security state that bases America’s power on its ability to export oil, or control the oil trade of all the countries, and to export agricultural products.
So what we’re in the middle of right now isn’t simply a domestic issue of wage earners wanting higher salaries – which they’re not particularly getting; certainly the minimum wage has not been increased – but you have to put this in the context of the whole cold war that’s going on.
The whole US and NATO confrontation of Russia has been a godsend, as you and I have spoken before, for the oil industry and the farm exporters.
And the result is that the US dollar is rising against the euro, against sterling, and against Global South currencies. Well, in principle a rising dollar should make the price of imports low. So something else is at work.
And what’s at work, of course, is the fact that the oil industry is a monopoly, that most of the prices that have been going up are basically the result of a monopolization, in the case of food, by the marketing firms, like Cargill and Archer Daniels Midland, that buy most of the crops from the farmers.
The irony is that while food prices, next to oil prices, are the major factor that is soaring, farmers are getting less and less for their crops. And yet farmers’ costs are going up – up for fertilizer, up for energy, up for other inputs – so that you’re having enormous profits for Archer Daniels Midland and the food monopolies, of the distributors, and enormous, enormous gains for the oil industry, and also of course for the military-industrial complex.
So if you look at what’s happening in the overall world economic system, you can see that this inflation is being engineered. And the beneficiaries of this inflation certainly have not been the wage earners, by any stretch of the imagination.
But the crisis that the Biden policy has created is being blamed on the wage earners instead of on the Biden administration’s foreign policy and the basically the US-NATO war to isolate Russia, China, India, Iran, and Eurasia generally.
BENJAMIN NORTON:
Professor Hudson, I want to talk about the increase in interest rates by the Fed. There has been a lot of attention to this, although, again, it’s 0.75%, which is not that big. But it’s of course going to have an outsize impact on the economy.
raising interest rates will cure inflation by deterring borrowing to spend on the basic needs that make up the Consumer Price Index and its related GDP deflator. But banks do not finance much consumption, except for credit card debt, which is now less than student loans and automobile loans. Banks lend almost entirely to buy real estate, stocks and bonds, not goods and services.
So you argue that one of the effects of this is that it’s actually going to roll back homeownership in the United States. You note that the rate of homeownership has been falling since 2008.
So can you expand on those arguments? What will be the impact of the increase of the interest rates by the Fed?
MICHAEL HUDSON:
Well, in order to get an economics degree which is needed to work at the Fed or at the Council of Economic Advisors, you have to take economics courses in the universities, and all of the textbooks say just what you quoted me as saying they say.
The pretense is that banks actually play a productive role in society, by providing the money for factories to buy machinery, and build plants, and do research and development, and to hire labor; and that somehow the money that banks create is all lent out for industrial economy, and that that will enable companies to make more money that they’ll spend on labor; and of course, as they spend more money on labor, that supports to bid prices up as the reserve army of the unemployed is depleted.
But that’s all a fiction. The textbooks don’t want to say that banks don’t play a productive role like that at all. And the corporations don’t do what the textbooks say.
If you look at the Federal Reserve balance sheet and statistics that it publishes every month, you’ll see that 80% of bank loans in the United States are mortgage loans to commercial real estate and mostly for home real estate. And of course the home mortgage loans have been nothing, like under 1% for the last 14 years, since 2008.
Only the banks and the large borrowers, the financial sector, have been able to borrow at these low rates. Homeowners all along have had to pay very high rates, just under 4%, and now it’s going above 4%, heading to 5%.
Well, here is the situation that the Federal Reserve has created. Suppose that you’re a family right now going out to buy a home, and you find out that in order to borrow the money to buy the home – because if the average home in America costs $600,000 or $700,000, people haven’t saved that much; the only way you can buy a home is to take out a mortgage.
Well, you have a choice: you can either rent a home, or you can borrow the money to buy a home. And traditionally, for a century, the carrying charge for financing a home with the mortgage has been about the equivalent of paying a rent. The advantage is, of course, that you get to own the home when it’s over.
Well, now let’s look at what’s happening right now. All of a sudden, the carrying charge of mortgages have gone way, way up. The banks are making an enormous gap. They can borrow at just around 1%, and they lend out at 4.5%. They get a windfall gain of the markup they have in mortgages, lending to prospective homeowners.
And of course, the homeowners don’t have enough money to be able to pay the higher interest charged on the mortgages that they take out. So they are not able to buy as expensive a home as they wanted before.
But they’ve been a declining part of the population. At the time Obama took office, over 68% of Americans owned their own home. Obama started the great wave of evictions, of 10 million Americans who lived in homes, essentially to throw them out of their homes, especially the victims of the junk mortgages, especially the lower income and racial minorities who were redlined and had to become the main victims of the mortgages.
America’s homeownership rate is now under 61%. What has happened? You’ve had huge private capital firms come into the market thinking, wait a minute, we can now buy these properties and rent them out. And we can buy them for all cash, unlike homeowners, we’re multibillionaires, we Blackstone, BlackRock.
You have these multibillion-dollar funds, and they say, well, we can’t make much money buying bonds or buying stocks that yield what they do today, now that the Federal Reserve has ground down interest rates. What we can do is make money as landlords.
And so they’ve shifted, they’ve reversed the whole shift away from the 19th-century landlordism to an economy based on financialization, and the wealthy classes making money on finance, to go back to making money as landlords.
And so they are buying up these homes that American homeowners can’t afford to buy. Because when you raise the mortgage rate, that doesn’t affect a billionaire at all. Because the billionaire firm doesn’t have to borrow money to buy the home. They have the billion dollars of their own money, of pension fund money, of speculative money, of the money of the 1% and the 10% to spend.
So what you’re having by increasing the interest rates is squeezing homeowners out of the market and turning the American economy into a landlord-ridden rental economy, instead of a homeowners economy. That’s the effect.
And it’s a windfall for the private capital firms that are now seeing that are making money as landlords, the old fashioned way, it worked for 800 years under feudalism. It’s coming back in style.
BENJAMIN NORTON:
Professor Hudson, you point out in this article at your website that more than 50% of the value of U.S. real estate already is held by mortgage bankers. And of course, that percentage is increasing and increasing.
Now, you, Professor Hudson, have argued a point that I haven’t seen many other people make, although it’s an obvious, correct point, which is that there has actually been a lot of inflation in the United States in the past several years, but that inflation was in the FIRE sector: finance, insurance, and real estate.
We see that with the constant increase in real estate prices; they go up every single year; rent goes up every single year. The difference now is that there’s also a significant increase in the Consumer Price Index.
And there is an interesting study published by the Economic Policy Institute, which is, you know, a center-left think tank, affiliated with the labor movement; they’re not radicals, they’re progressives. And they did a very good study.
And they found – this was published this April – they found that corporate profits are responsible for around 54% of the increase of prices in the non-financial corporate sector, as opposed to unit labor costs only being responsible for around an 8% increase.
So they showed, scientifically, that over half of the increase of prices in the non-financial corporate sector, that is in the Consumer Price Index, over half of that inflation is because of corporate profits.
Of course, that’s not the way it’s discussed in mainstream media. That’s not the way the Fed is discussing it all. We see Larry Summers saying that we need to increase unemployment. Larry Summers, of course, was the treasury secretary for Bill Clinton.
He’s saying that the U.S. has to increase unemployment; the solution to inflation is increasing unemployment. Even though these studies show that over half of inflation in the Consumer Price Index is because of corporate profits.
I’m wondering if you can comment on why so many economists, including people as revered as Larry Summers, refuse to acknowledge that reality.
MICHAEL HUDSON:
Most economists need to get employment, and in order to be employed, you have to give a picture of the economy that reflects how well your employer helped society at large. You’re not allowed to say that your employer is acting in ways that are purely predatory. You’re not allowed to say that the employer does not earn an income.
You talked about corporate profits and the classical economists. If you were a free-market economist like Adam Smith, or David Ricardo, or John Stuart Mill – these are monopoly rents. So what you call corporate profits are way above normal corporate rates of return, normal profits. They’re economic rents from monopoly.
And that’s because about 10 or 15 years ago, the United States stopped imposing its anti-monopoly laws. It has essentially let monopolies concentrate markets, concentrate power, and charge whatever they want.
And so once you’ve dismantled the whole legal framework that was put in place from the 1890s, from the Sherman Antitrust Act, down through the early 20th century, the New Deal, once you dismantle all of this state control, saying – essentially what Larry Summers says is, we’re for a free market.
A “free market” is one in which companies can charge whatever they want to charge for things; a free market is one without government regulation; a free market is one without government; a free market is a weak enough government so that it cannot protect the wage earners; it cannot protect voters. A “democracy” is a country where the bulk of the population, the wage earners, have no ability to affect economic policy in their own interests.
A “free market” is one where, instead of the government being the planner, Wall Street is the planner, on behalf of the large industries that are basically being financialized.
So you’ve had a transformation of the concept of what a free market is, a dismantling of government regulation, a dismantling of anti-monopoly regulation, and essentially the class war is back in business.
That’s what the Biden administration is all about. And quite frankly, it’s what the Democratic Party is all about, even more than the Republican Party. The Republican Party can advocate pro-business policies and pro-financial policies, but the Democratic Party is in charge of dismantling the legacy of protection of the economy that had been put in place for a century.
Now, I also wanted to get your response, Professor Hudson, to these comments that you highlighted in a panel that was organized by the International Manifesto Group – a great organization, people can find it here, their channel here at YouTube. And they held a conference on inflation. And you were one of several speakers.
And you highlighted these comments that were made by the Fed chair, Jerome Powell. And this is according to the official transcript from The Wall Street Journal. So this is not from some lefty, socialist website. Here’s the official transcript of a May 4 press conference given by the Fed chief, Jerome Powell.
In this press conference, he said, discussing inflation, he said, in order to get inflation down, he’s talking about things that can be done “to get wages down, and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially.”
So this is another proposal. Larry Summers says 6% unemployment for five years, or 10% unemployment for one year. The Fed chair, Jerome Powell, says the solution is “to get wages down.” I’m wondering if you can respond to that as well.
MICHAEL HUDSON:
Well, the important thing to realize is that President Biden re-appointed Jerome Powell. President Biden is a Republican. The Democratic Party is basically the right wing of the Republican Party, the pro-financial, the pro-Wall Street wing of the Republican Party.
Why on earth, if the Democrats were different from the Republicans, why would would Biden re-appoint an anti-labor Republican, as head of the Federal Reserve, instead of someone that would actually try to spur employment?
Imagine, here’s a party that is trying to be elected on a program of, “Elect us, and we will create a depression and we will lower wages.” That is the Democrat Party slogan.
And it’s a winning slogan, because elections are won by campaign contributions. The slogan is, “We will lower wages by bringing you depression,” is a tsunami of contributions to the Democratic Party, by Wall Street, by the monopolists, by all the beneficiaries of this policy.
So that’s why the Supreme Court ruling against abortions the other day is a gift to the Democrats, because it distracts attention from their identity politics of breaking America into all sorts of identities, every identity you can think of, except being a wage earner.
The wage earners are called deplorables, basically. And that’s how the donor class thinks of them, as sort of unfortunate overhead. You need to employ them, but it really it’s unfortunate that they like to live as well as they do, because the better they live, the less money that you will end up with.
So I think that this issue of the inflation, and what really causes it, really should be what elections are all about. This should be the economic core of this November’s election campaign and the 2024 election campaign. And the Democrats are leading the fight to lower wages.
And you remember that when President Obama was elected, he promised to increase the minimum wage? As soon as he got in, he said the one thing we cannot do is raise the minimum wage. And he had also promised to back card check. He said, the one thing we must not do is increase labor unionization with card check, because if you unionize labor, they’re going to ask for better wages and better working conditions.
So you have the Democratic Party taking about as hard a right-wing position as sort of Chicago School monetarism, saying the solution to any any problem at all is just lower wages and somehow you’ll be more competitive, whereas the American economy is already rendered uncompetitive, not because wages are so high, but because, as you mentioned before, the FIRE sector, the finance, insurance, and real estate sector is so high.
Rents and home ownership, having a home is too expensive to be competitive with foreign labor. Having to pay 18% of GDP on medical care, privatized medical care, prices American labor out of the market. All of the debt service that America has paid is pricing America out of the market.
So the problem is not that wages are too high. The problem is that the overhead that labor has to pay in order to survive, for rent, for medical care, for student loans, for car loans, to have a car to drive to work, for gas to drive to work, to buy the monopoly prices that you need in order to survive – all of these are too high.
None of this even appears in economic textbooks that you need to get a good mark on, in order to get an economics degree, in order to be suitably pliable to be hired by the Federal Reserve, or the Council of Economic Advisers, or by corporations that use economists basically as public relations spokesmen. So that’s the mess we’re in.
BENJAMIN NORTON:
Professor Hudson, in your article at your website, michael-hudson.com, you have an important section about the quantitative easing policies. We were talking about how there has been inflation in the past decade, but then inflation was largely in the FIRE sector, pushing up, artificially inflating the prices of real estate and stocks.
You note that:
While home ownership rates plunged for the population at large, the Fed’s “Quantitative Easing” increased its subsidy of Wall Street’s financial securities from $1 trillion to $8.2 trillion – of which the largest gain has been in packaged home mortgages. This has kept housing prices from falling and becoming more affordable for home buyers.
And you, of course, note that “the Fed’s support of asset prices saved many insolvent banks – the very largest ones – from going under.”
I had you on to discuss, in late 2019, before the Covid pandemic hit, we know that the Fed had this emergency bailout where it gave trillions of dollars in emergency repo loans to the biggest banks to prevent them from from crashing, trying to save the economy.
I do want to talk about this as well, because sometimes this is used by right-wingers who portray Biden hilariously as a socialist. You were just talking about how the Democrats have a deeply neoliberal, right-wing economic program.
But of course, there is this rhetoric that we see from Republicans and conservatives claiming that Biden is a socialist. They claim that the reason there is inflation is because Biden is just printing money and giving money to people.
Of course, that’s not at all what’s happening. What has happened is that the Fed has printed trillions of dollars and given that to stockholders, to big corporations, and to banks.
And this is a point that I saw highlighted in that panel I mentioned, the conference on inflation that was organized by the International Manifesto Group. A colleague of yours, a brilliant political economist, Radhika Desai, she invited everyone to go to the Fed website and look at the Fed balance sheet.
And this is the Fed balance sheet from federalreserve.gov. This is the Board of Governors of the Federal Reserve System website. And it is pretty shocking to see this graph, which shows the total assets of the U.S. Federal Reserve.
Back in 2008, the Federal Reserve had around $900 billion in assets. Now it’s at nearly $9 trillion in assets.
And we can see, after the financial crash, or during the financial crash, it increased to around $2 trillion. And then around 2014, it increased to around $4.5 trillion. And then especially in late 2019 and 2020, it skyrocketed from around $4 trillion up to $7 trillion. And since then, it has continued skyrocketing to $9 trillion in assets.
Where did all of that money go? And what was the impact on the economy, of course?
MICHAEL HUDSON:
Well, the impact on the economy has been to vastly increase the wealth of the wealthiest 1% of Americans who own most of the stocks and bonds.
Sheila Bair, the former head of the Federal Deposit Insurance Corporation, pointed out that a lot of this $8 trillion is spent to buy junk bonds.
Here’s the problem. The problem really began with President Obama. He inherited a system where you had the largest wave of commercial bank fraud in American history.
As my colleague Bill Black at the University of Missouri at Kansas City has pointed out, everybody knew that there was a bank fraud on. The newspapers referred to junk mortgages and “NINJA” borrowers: “no income, no jobs, no assets.”
So banks had written mortgages way above the actual value of homes, especially to racial and ethnic minorities, without any ability of the borrowers to actually pay.
And then these banks had packaged these mortgages, and sold them to hapless pension funds, and other institutional investors and to the European banks that are always very naive about how honest American banks are.
You had this whole accumulation of what the 19th century called fictitious capital. Mortgages for property that wasn’t worth anywhere near as much as the mortgage is for.
So if the mortgage was defaulted, if homeowners had jingle mail – in other words, you just mail the keys back to the bank and say, ok, take the house, I find I can buy a house now at half the price that Citibank or one of these other banks lent out.
Well, normally you’d have a crash of prices back to realistic levels, so that the value of mortgages actually reflected the value of property, or the value of junk bonds issued by a corporation reflected the actual earning power of the corporation to pay interest on the junk bonds.
So by the time Obama took over, the whole economy was largely fictitious capital. Well, Obama came in and he said, my campaign donors are on Wall Street. He called in the Wall Street bankers and he said, I’m the guy standing between you and the crowd with the pitchforks, the people who voted for me. But don’t worry, I’m on your side.
He said, I’m going to have the Federal Reserve create the largest amount of credit in human history. And it’s all going to go to you. It’s going to go to the 1% of the population. It’s not going to go into the economy. It’s not going to build infrastructure. It’s not going into wages. It’s not going to reduce the price of homes and make them more affordable to Americans.
It’s going to keep the price of these junk bonds so high that they don’t crash back to non-fictitious values. It’s going to keep the stock market so high that it’s not going to go down. It’s going to create the largest bond market boom in history.
The boom went from high interest rates to low interest rates, meaning a gigantic rise in the price of bonds that actually pay interest that are more than 0.1%.
So there was a huge bond market boom, a huge stock market, a tripling of stock market prices. And if you are a member of the group that owns 72% of American stocks, I think that’s 10% of the population, you have gotten much, much richer.
But if you’re a member of the 90% of the population, you have had to go further and further into debt just in order to survive, just in order to pay for medical care, student loans, and your daily living expenses out of your salary.
So if American wages were at a decent level, American families would not be pushed more and more into debt. The reason the personal debt has gone up in the United States is because families can’t get by on what they earn.
So obviously, if they can’t get by on what they earn, and they have to borrow to get by, they are not responsible for causing the inflation. They’re being squeezed.
And the job of economists, and of Democratic Party and Republican politicians, is to distract attention from the fact that they’re being squeezed and blame the victim, and saying, you’re doing it to yourself by just wanting more money, you’re actually creating the inflation that is squeezing you.
When actually it’s the banks, and the government’s non-enforcement of the monopoly policy, and the government support of Wall Street that is responsible for what is happening.
BENJAMIN NORTON:
Very, very well said.
Professor Hudson, I should have highlighted another part of this graph here. This is, again, this is at the Federal Reserve Board website. It’s even more revealing when you look at the selected assets of the Fed, and you see that all of these assets basically are securities, securities held outright by the Fed.
We see that around 2008, the Fed had less than $500 billion in securities. And you have this policy of quantitative easing. And since then, basically all of the increase has been in securities. Of the roughly $9 trillion in assets the Fed holds, about about $8.5 trillion is in securities.
I’m wondering if you can compare this to central banks in other countries. We’ve seen, for instance, that the Western sanctions on Russia were aimed at trying to destroy the Russian economy.
President Biden claimed they were trying to make the ruble into rubble. In fact, the ruble is significantly stronger now than it was before the sanctions. To such a degree that the Russian government and Russian national bank are actually trying to decrease the value of the ruble, because they think it’s a little overvalued; it makes it a little harder to be competitive.
So how does this policy of the US Fed having $8.5 trillion worth of securities compare to the policies of other central banks?
You have experience working with the Chinese government as an advisor. Do other governments’ central banks have this policy?
And and that $8.5 trillion in securities, what are those securities? Even from the perspective of these neoliberal economics textbooks that you were talking about, that people are taught in universities, this seems to me to be totally insane. I don’t see how there is even an academic, neoliberal textbook explanation for this policy.
MICHAEL HUDSON:
Very few people realize the difference between a central bank and the national treasury. The national treasury is what used to perform all of the policies that central banks now do. The national treasury would be in charge of issuing money and spending it.
Central banks were broken off in America in 1913 from the Treasury in order to shift control of the money supply and credit away from Washington to New York. That was very explicit.
The original Federal Reserve didn’t even permit a Treasury official to be on the board of directors. So the job of a central bank is to represent the interest of the commercial banks.
And as we just pointed out, the interest of the commercial banks is to produce their product: debt. And they create their product against existing assets, mainly real estate, but also stocks and bonds.
So the job of the central bank here is to support the financial sector of the economy, and that sector that holds wealth in the form of stocks, bonds, and loans, and especially bank bonds that make their money off real estate credit.
Same thing in Europe, with Europe’s central bank. Europe is going into a real squeeze now, and has been going into a squeeze ever since you had the Greek crisis.
In Europe, because right-wing monetarist designed the euro, part of the eurozone rule is you cannot run a budget deficit, a national budget deficit of more than 3% of gross domestic product.
Well, that’s not very much. That means that you can’t have a real Keynesian policy in Europe to pull the economy out of depression. That means that if you’re a country like Italy right now, and you have a real financial squeeze there, a corporate squeeze, a labor squeeze, the government cannot essentially rescue either Italian industry or Italian labor.
However, the European central bank can, by the way that it creates credit, by central bank deposits, the European central bank can vastly increase the price of European stocks, bonds, and packaged mortgages. So the European central bank is very much like the commercial bank.
China is completely different, because, unlike the West, China treats money and credit as a public utility, not as a private monopoly.
And as a public utility, China’s central bank will say, what are we going to want to create money for? Well, we’re going to want to create money to build factories; we’re going to want to create money so that real estate developers can build cities, or sometimes overbuild cities. We can create money to actually spend in the economy for something tangible, for goods and services.
The Chinese central bank does not create money to increase stock market prices or bond prices. It doesn’t create money to support a financial class, because the Communist Party of China doesn’t want a financial class to exist; it wants an industrial class to exist; it wants an industrial labor force to exist, but not a rentier class.
So a central bank in a Western rentier economy basically seeks to create credit to inflate the cost of living for homebuyers and for anyone who uses credit or needs credit, and to enable corporations to be financialized, and to shift their management away from making profits by investing in plant and equipment and employing labor to produce more, to making money by financial engineering.
In the last 15 years, over 90% of corporate earnings in the United States have been spent on stock buybacks and on dividend payouts. Only 8% of corporate earnings have been spent on new investment, and plants, and equipment, and hiring.
And so of course you have had the economy deindustrialized. It’s this idea that you can make money financially without an industrial base, without a manufacturing base; you can make money without actually producing more or doing anything productive, simply by having a central bank increase the price of the stocks, and bonds, and the loans made by the wealthiest 10%.
And of course, ultimately, that doesn’t work, because at a certain point the whole thing collapses from within, and there’s no industrial base.
And of course, when that happens, America will find out, wait a minute, if we close down the economy, we’re still reliant on China and Asia to produce our manufacturers, and to provide us with raw materials, and to do everything that we need. We’re really not doing anything but acting as a world – well, people used to say parasite – as a world rentier, as getting something for nothing, as a kind of financial colonialism.
So America you could look at as a colonial power that is a colonial power not by military occupation, but simply by financial maneuvering, by the dollar standard.
And that’s what’s being unwound today as a result of Biden’s new cold war.
BENJAMIN NORTON:
Professor Hudson, you criticized the strategy of simply trying to increase the interest rates to bring down inflation, noting that it’s going to lead to a further decline in homeownership in the United States. It’s going to hurt working people. I think that’s a very valid criticism.
I’m curious, though, what your take is on the response of the Russian central bank to the Western sanctions. We saw that the chair of the Russian central bank, Elvira Nabiullina, she – actually this is someone who is not even necessarily really condemned a lot by Western economists; she is pretty well respected by even, you know, Western neoliberal economists.
And she did manage to deal with the sanctions very well. She imposed capital controls immediately. She closed the Russian stock market. And also, in a controversial move, she raised the interest rates from around 9% up to 20%, for a few months. And then after that, dropped the rates.
MICHAEL HUDSON:
A few days, not a few months. That was very short. And now she has moved the interest rates way down.
BENJAMIN NORTON:
Back to 9%.
MICHAEL HUDSON:
She was criticized for not moving them further down.
BENJAMIN NORTON:
Yeah, well go ahead. I’m just curious. So she immediately raised it to 20%, and then has dropped the interest rates since then. I’m curious what you think about that policy. Yeah, go ahead.
MICHAEL HUDSON:
There is very little that a central banker can do when the West has declared a war, basically, a war on a country that is completely isolated.
The response has come from President Putin and from Foreign Secretary Lavrov. And they pointed out, well, how is Russia going to going to trade and get what it needs. And this is what the recent meetings of the BRICS are all about.
Russia realizes that the world is now broken into two halves. America and NATO have separated the West. Basically you have a white people’s confederation against all the rest of the world.
And the West has said, we’re isolating ourselves from you totally. And we think you can’t get along without us.
Well, look at the humor of this. Russia, China, Iran, India, Indonesia, and other countries are saying, hah, you say we we can’t get along without you? Who is providing your manufacturers? Who is providing your raw materials? Who is providing your oil and gas? Who is providing your agriculture, and the helium, the titanium, the nickel?
So they realize that the world is breaking in two, and Eurasia, where most of the world’s population is concentrated, is going to go its own way.
The problem is, how do you really go your own way? You need a means of payment. You need to create a whole international system that is an alternative to the Western international system. You need your own International Monetary Fund to provide credit, so that the these Eurasian countries and their allies in the Global South can deal with each other.
You need a World Bank that, instead of lending money to promote U.S. policies and U.S. investments, will promote mutual gains and self-sufficiency among the countries.
So already, every day in the last few weeks, you have had meetings with the Russians about this, who said, ok, we’re going to create a mutual trading area, starting among the BRICS: Brazil, Russia, India, China, and South Africa.
And how are we going to pay? We can’t pay in dollars, because if we have money in a dollar bank, or a euro bank in Europe, they can just grab the money, like they grab Venezuela’s money. They can just say, we’re taking all your money because, essentially, we don’t want you to exist as an alternative to the finance capital world that we are creating.
So essentially, Russia, China, and these other countries are saying, ok, we’re going to create our own international bank. And how are we going to fund it? Well, every member of the bank will contribute, say, a billion dollars, or some amount of their own currency, and this will be our backing. We can also use gold as a means of settlement, as was long used among countries.
And this bank can create its own special drawing rights, its own bank order, is what Keynes called it. It can create its own credit.
Well, the problem is that, if you have Brazil, for instance, or Argentina, joining this group, or Ecuador, that sells almost all of its bananas to Russia, how is it going to get by?
Well, if there is a BRICS group or a Shanghai Cooperation Organization bank, obviously the Western governments are not going to accept this.
So Russia realizes that as a result of Biden’s Cold War Two, there is going to be a continued rise in energy prices. You think gasoline prices are not high now? They’re going up. You think food prices are not high now? They’re going up more.
And Europe is especially the case, because Europe now cannot buy Russian gas to make the fertilizer to make its own crops grow.
So you’re going to have a number of countries in the Global South, from Latin America to Africa, being squeezed and wanting to trade with the Eurasian group.
And the problem is Russia says, all right, we know that you can’t afford to pay. We’re glad to give you credit, but we don’t want to give you credit that you’re going to simply use the money you have to pay your dollar debts that are coming due.
Because one of the effects that I didn’t mention of the Federal Reserve raising interest rates is there is a huge flow of capital from Europe and England into the United States, so that if you’re a billionaire, where are you going to put your savings? You want the highest interest rates you want. And if the United States raises interest rates, the billionaires are going to move their money out of England, out of the euro, and the euro is going back down against the dollar. It’s almost down to a dollar a euro.
The British pound is heading downwards, towards one pound per dollar.
This increase in the dollar’s exchange rate is also rising against the currencies of Brazil, Argentina, the African countries, all the other countries.
So how are they going to pay this summer, and this fall, for their food, for their oil and gas, and for the higher cost of servicing their dollar debts?
Well, for Eurasia, they’re going to say, we want to help you buy our exports – Russia is now a major grain exporter, and obviously also an oil exporter – saying we want to supply you and give you the credit for this, but you’re really going to have to make a decision. Are you going to join the U.S.-NATO bloc, or are you going to join the Eurasian bloc?
Are you going to join the White People’s Club or the Eurasian Club? And it really comes down to that. And that’s what is fracturing the world in these two halves.
Europe is caught in the middle, and its economies are going to be torn apart. Employment is going to go down there. And I don’t see wages going up very much in Europe.
You’re going to have a political crisis in Europe. But also you’ll have an international diplomatic crisis over how are you going to restructure world trade, and investment, and debt.
There will be two different financial philosophies. And that’s what the new cold war is all about.
The philosophy of US-sponsored finance capitalism, of making money financially, without industrialization, and with trying to lower wages and reduce the labor force to a very highly indebted workforce living on the margin.
Or you’ll have the Eurasian philosophy of using the economic surplus to increase productivity, to build infrastructure, to create the kind of society that America seemed to be growing in the late 19th century but has now rejected.
So all of this is ultimately not simply a problem of interest rates and central bank policy; it really goes beyond central banks to what kind of a social and economic system are you going to have.
And the key to any social and economic system is how you treat money and credit. Is money and credit going to be a public utility, or will it be a private monopoly run for the financial interests and the 1%, instead of a public utility run for the 99%?
That’s what the new cold war is going to be all about. And that’s what international diplomacy week after week is trying to settle.
BENJAMIN NORTON:
Very, very well said. And I really agree about this increasing kind of bipolar order, where the US-led imperialist system is telling the world they have to pick a side. You know, as George W. Bush said, you’re either with us or you’re against us; you’re with us or you’re with the terrorists.
That’s what Biden is saying to the world. And we see the West has drawn this iron curtain around Russia. And now they’re threatening to do the same around China.
Now, of course, the difference is that China has the largest economy in the world, according to a PPP measurement. It’s even larger than the US economy. I don’t know how they can try to sanction the Chinese economy, considering China is the central factory of the world.
But this is related to a question I had for you, Professor Hudson, and this is from a super chat question from Manoj Payardha, and it’s about how Chinese banks say they’re not ready yet to develop an alternative to the SWIFT. He asked, how will the Third World pay Russia for resources?
And we’ve seen, maybe you can talk about the measures being implemented. India has this rupee-ruble system that they’ve created.
But I want to highlight an article that was published in Global Times. This is a major Chinese newspaper, and this is from April. And it quotes the former head of China’s central bank, who was speaking at a global finance forum in Beijing this April.
And basically he said, we need to prepare to replace Swift. He said the West’s adoption of a financial nuclear option of using SWIFT to sanction Russia is a wake up call for China’s financial development. And he said, “We must get prepared.”
So it seems that they’re not yet prepared. But this is something that you’ve been talking about for years. Or maybe you disagree and maybe you think they already are prepared with the SWIFT alternative?
MICHAEL HUDSON:
Well they’re already using an alternative system. If they weren’t using an alternative system – Russia is adopting part of the Chinese system for this – they wouldn’t be able to have banks communicate with each other.
So, yes, they already have a rudimentary system. They’re making it a better system that can also be immune from U.S. computer espionage and interference. So yes, of course there’s already a system.
But I want to pick up on what you said about Biden, how Biden characterizes things.
Biden characterizes the war of the West against Eurasia as between democracy and autocracy. By “democracy,” he means a free market run by Wall Street; he means an oligarchy.
But what does he mean by autocracy? What he means by autocracy, when he calls China an autocracy, an “autocracy” is a government strong enough to prevent an oligarchy from taking power, and taking control of the government for its own interests, and reducing the rest of the economy to debt peonage.
An “autocracy” is a country with public regulation against monopolies, instead of an oligarchic free market. An “autocracy” uses money and credit, essentially, to help economies grow. And when debts cannot be paid in China, if a factory or a real estate company cannot pay debts, China does not simply say, ok, you’re bankrupt, you’re going to have to be sold; anybody can buy you; the Americans can buy you.
Instead, the Chinese say, well, you can’t pay the debts; we don’t want to tear down your factory; we don’t want your factory to be turned and gentrified into luxury housing. We’re going to write down the debt.
And that’s what China has done again and again. And it’s done that with foreign countries that couldn’t pay the debt. When a debt that China has come due for China’s development of a port, or roads, or infrastructure, it says, well, we understand that you can pay; we will delay payment; we will have a moratorium on your payment. We’re not here to bankrupt you.
For the Americans, to the international funds, they’re saying, well, we are here to bankrupt you. And now if we lend you, we the IMF, lends you money to avoid a currency devaluation, the term is you’re going to have to privatize your infrastructure; you’re going to have to sell off your public utilities, your electric system, your roads, your land to private buyers, mainly from the United States.
So you have a “democracy” supporting bankruptcy, foreclosure, financialization, and privatization, and low wages by a permanent depression, a permanent depression to keep down wages.
Or you have “autocracy,” seeking to protect the interests of labor by supporting a living wage, to increase living standards as a precondition for increasing productivity, for building up infrastructure.
You have these two diametrically economic systems. And, again, that’s why there’s a cold war on right now.
BENJAMIN NORTON:
And there’s another super chat question here, Professor Hudson. You mentioned the International Monetary Fund, the IMF. We have talked about that many times. This is from Sam Owen. He asked, why do countries continue to accept bad IMF loans when they have such a poor track record? Is it just the US government meddling in the national politics? Are there cases of good IMF loans?
MICHAEL HUDSON:
Well, what is a country? When you say a country to most people, people think, ok, let’s talk about Brazil; let’s talk about all the people in Brazil; you have a picture in the mind of the Amazon; you have a big city with a lot of people in it.
But the country, in terms of the IMF, is a group of maybe the 15 wealthiest families in Brazil, that own most of the money, and they are quite happy to borrow from the IMF, because they say, right now there’s a chance that Lula may become president instead of the neo-fascist Bolsonaro. And if Lula comes in, then he is going to support labor policies, and he may stop us from tearing down the Amazon. So let’s move our money out of the country.
Well, normally this would push the exchange rate of the cruzeiro (real) down. So the IMF is going to make a loan to Brazil to support the cruzeiro (real), so that the wealthy 1% of Brazil can move their money into dollars, into euros, into foreign currency and offshore bank incentives, and load Brazil down with debt, so that then when there is an election, and if Lula is elected, the IMF is going to say, well, we don’t really like your policies, and if you pursue a pro-labor, socialist policy, then there’s going to be a capital flight. And we’re insisting that you pay all the money that you borrowed from the West right back now.
Well, that’s going to lead Lula either to sit there, follow the IMF direction, and let the IMF run the economy, instead of his own government, or just say, we’re not going to pay the foreign debt.
Well, until now, no country has been in a strong enough position not to pay the foreign debt. But for the first time, now that you have the Eurasian group – we’ll call it BRICS, but it’s really Eurasia, along with the Southern groups that are joining, the Global South – for the first time, they can say, we can’t afford to stay in the West anymore.
We cannot afford to submit the economy to the IMF demands for privatization. We cannot submit to the IMF rules that we have to fight against labor, that we have to pass laws banning labor unions, that we have to fight against laborers’ wage, like Western democracies insist on. We have to go with the Chinese “autocracy,” which we call socialism.
And of course, when America accuses China being an “autocracy,” autocracy is the American word for socialism. They don’t want to use that word. So we’re back in Orwellian double-think.
So the question is what, will the Global South countries do when they cannot afford to buy energy and food this summer, without an IMF loan? Are they going to say, ok, we can only survive by joining the break from the West and joining the Eurasian group?
That is what the big world fracture is all about.
And I described this global fracture already in 1978. I wrote a book, “Global Fracture,” explaining just exactly how all of this was going to happen.
And at that time, you had Indonesia, you had Sukarno taking the lead, the non-aligned nations, India, Indonesia, were trying to create an alternative to the financialized, American-centered world order. But none of these countries had a critical mass sufficient to go their own way.
Well, now that America has isolated Russia, China, India, Iran, Turkey, all these countries, now it has created a critical mass that is able to go its own way. And the question is, now you have like a gravitational pull, and will this Eurasian mass attract Latin America and Africa to its own group, away from the United States? And where is that going to leave the United States and Europe?
BENJAMIN NORTON:
And we saw one of the clearest examples yet of this bipolar division of the world between, you know, the West and the rest, as they say, with this ridiculous meeting that was just held of the G7.
Of course, the G7 are the white, Western countries. And then they’ll throw in U.S.-occupied Japan in there, to pretend they’re a little more diverse.
But we saw that the G7 just held a summit, and basically the entire summit was about how can we contain China? How can we expand the new cold war on Russia into a new cold war on China?
It’s also absurd considering that China’s Belt and Road Initiative, which involves over half of the countries on Earth, is estimated at many trillions of dollars in infrastructure projects. So the US and its allies think that they can challenge that with $600 billion in public-private partnerships.
I should stress, of course, what they announced is going to be a mixture of so-called public initiative and then contracts for private corporations.
So it’s yet another giveaway to the private sector, in the name of building infrastructure.
But I’m wondering if if you can comment on the G7 summit that just was held.
MICHAEL HUDSON:
Well, nothing really came out of it. They all said that they could not agree on any more sanctions against Russia, because they’re already hurting enough. India, in particular, stood up and said, look, there’s no way that we’re going to join the sanctions against Russia, because it’s one of our major trading partners. And by the way, we’re getting a huge benefit from importing Russian oil, and you’re getting a huge benefit by getting this oil from us at a markup.
So the G7 could not get any agreement on what to do. It is already at a stalemate. And this is only June. Imagine the stalemate it’s going to be in September.
Well, next week, President Biden is going to Saudi Arabia and saying, you know, we’re willing to kill maybe 10 million more of your enemies; we’re willing to help Wahhabi Sunni groups kill more of the Iranian Shiites, and sabotage Iraq and Syria. We’ll help you back al-Qaeda again, if you will lower your oil prices so that we can squeeze Russia more.
So that’s really the question that Saudi Arabia will have. America will send give it more cluster bombs to use against Yemen. And the question is, is Saudi Arabia going to say, ok, we’re going to earn maybe $10 billion less a month, or however much they’re making, just to make you happy, and so that that you will kill more Shiites who support Iran?
Or are they going to realize that if they throw in their lot with the United States, all of a sudden they’ll be under attack from Iran, Russia, Syria, and they’ll be sitting ducks? So what are they going to do?
And I don’t see any way that Biden can actually succeed in getting Saudi Arabia to voluntarily earn less on its oil prices. Maybe Biden can say it’s only for a year, only for one or two years. But as other countries know, when America says only for a year or two, it really means forever. And if you don’t continue, then somehow they have a regime replacement, or a regime change and a color revolution.
So Biden keeps trying to get foreign countries to join the West against Eurasia, but there is Saudi Arabia sitting right in the middle of it.
And all that Europe can do is watch and wonder how it’s going to get by without without energy and without much food.
BENJAMIN NORTON:
Yeah, in fact, Venezuela’s President Maduro just confirmed that the Biden administration has sent another delegation basically begging Venezuela to try to work out some deal because, of course, the U.S. and the EU have boycotts of Russian energy.
So it’s really funny to me that, after years of demonizing Venezuela, portraying it as a dictatorship and all of this, the U.S. had to decide, well, the war in Venezuela is not as important as the war on Russia right now; so we’re going to temporarily pause our war on Venezuela to stick the knife deeper into Russia.
So echoing the same perspective that we hear from Biden, U.S. government officials constantly say that the US needs to challenge China in the Global South. So Europe pledged €300 billion – however, once again, important asterisk – “in private and public funds over five years to fund infrastructure in developing countries.”
So once again, we see another neoliberal private-public partnership. It’s going to be another public giveaway to private corporations.
And “she said that this is part of the G7’s drive to counter China’s multitrillion-dollar Belt and Road project.”
Now, this is really just tying everything together that we have been talking about today, Professor Hudson – in your article “The Fed’s Austerity Program to Reduce Wages,” you conclude the article noting that the depression that people in the United States are on the verge of facing because of these neoliberal policies – telling workers in the U.S. that they need to decrease their wages and be unemployed in order to stop inflation – you point out that:
Biden’s military and State Department officers warn that the fight against Russia is just the first step in their war against China’s non-neoliberal economy, and may last twenty years. That is a long depression. But as Madeline Albright would say, they think that the price is “worth it.”
And you talk about the new cold war against the socialist economy in China and the state-led economy in Russia.
So you predict not only a depression is coming. We have seen that in mainstream media outlets. Larry Summers said, you know, a depression could be coming for a few years. But you say, no, not only is a depression coming; it’s going to be a long depression. We could be seeing 20 years.
And basically the U.S. government and other Western leaders, as we see Ursula von der Leyen from the EU, they’re basically telling their populations, tighten your belts; we have decades of depression coming, because we have collectively decided, as Western leadership, that we are going to force the world through a long depression economically, or at least forced the West through a long economic depression, in order to try to halt the rise of China and Russia.
They’re basically telling their populations, suck it up, tighten your belts for decades, because in the end, the price is worth it in order to prevent the collapse of our empires.
MICHAEL HUDSON:
That’s right. When they’re talking about private-public initiatives, they’re talking about Pentagon capitalism. That means the government will give trillions of dollars to private firms and ask them to build infrastructure.
And if they build a port or a road in a Global South country, they will operate this at a profit, and it will be an enormously expensive infrastructure, because to make financial money off this infrastructure, you have to price it at the cost of production, which is Pentagon capitalism, hyper inflated prices; you have to pay management fees; you have to pay profits; you have to pay interest rates.
As opposed to the Chinese way of funding as equity. The Western mode of funding is all debt leverage. China takes as collateral for the infrastructure that it pays, an equity ownership in the port or whatever infrastructure in the Belt and Road that it’s building.
So you have the difference between equity ownership, debt-free ownership, where if it can afford to pay, fine; if it doesn’t make an income, there are no dividends to pay.
Or you have the debt leverage that is intended that the government cannot pay it, so that the government that will be the co-signer for the debt for all of this infrastructure will somehow be obliged to tax its whole population to pay the enormous super-profits, the enormous monopoly rents, the enormous debt charges of von der Leyen’s Margaret Thatcher plan.
Von der Leyen thinks that she can do to Europe and to America what Margaret Thatcher did to England. And if she does, then then America and Europe deserve it.
BENJAMIN NORTON:
And Professor Hudson, as we start wrapping up here, I know you have to go pretty soon, just a few short questions here at the end.
I’m wondering if what we’re also seeing is not only this fundamental crisis in the Western neoliberal, financialized economies, but it’s also this bubble that has burst, or at least this phase that is over.
At least this is my reading, I’m curious if you agree. In the 1990s, the peak of, you know, the so-called golden age of neoliberalism; we had Bill Clinton riding this wave, and it was the “end of history,” in Francis Fukuyama’s nonsense prediction and all that.
How much of that was not only based on this exorbitant privilege, as the French call it, of the dictatorship of the US dollar – we talked about that based on your book “Super Imperialism,” how the US was given this massive global free lunch economically because of dollar hegemony – but how much of it was not just that, but also the fact that in the 1990s and the first decade of the 2000s, the US and Western Europe had access to very cheap consumer goods from Asia and very cheap energy from Russia?
To me, it seems like those two factors are some of the most important reasons why this golden age of neoliberalism in the ’90s and early 2000s was even possible.
It was on the back of low-paid Asian workers, and based on this idea that Russia would permanently be, what Obama called it: a gas station.
Well, we’ve seen that, one, East Asian economies have lifted themselves up of poverty, especially China has ended extreme poverty and raised median wages significantly.
And now, of course, the West has sanctioned itself against buying Russian energy, massively increasing the cost of energy around the world.
So do you think that that bubble, or that brief moment of the end of history, the golden age of neoliberalism, that can never come back?
Because unless the West can succeed in overthrowing the Russian government and imposing a new puppet like Yeltsin, and overthrowing the Chinese government, it seems like that that the golden in the 1990s is never going to come back.
MICHAEL HUDSON:
Well, you’ve left out the key element of the golden age: that is military force, and the willingness to assassinate any foreign leader that does not want to go along with US policy.
BENJAMIN NORTON:
Of course.
MICHAEL HUDSON:
You’re neglecting what America did to [Salvador Allende]; you’re neglecting how America took over Brazil; America’s meddling and control, and in Europe, the wholesale bribery and manipulation of Europe’s political system, to put in charge of the [German] Green Party a pro-war leadership, an anti-environmental leadership, to put in charge of every socialist party of Europe right-wingers, neoliberals.
Every European socialist and labor party turned neoliberal largely by American maneuvering and meddling in their foreign policy.
So it’s that meddling that was intended to prevent any alternative economic philosophy from existing to rival neoliberalism.
So that when you talk about the end of history, what is the end of history? It means the end of change. It means stop; there will be no reform; there will be no change in the neoliberal system that we have locked in.
And of course, the only way that you can really end history is by what Biden is threatening: atomic war to blow up the world.
That is the neoliberal end of history. And it’s the only way that the neoliberals can really stop history. Apart from that, all they can try to do is to prevent any change that is adverse to locking in the neoliberal order.
So the “end of history” is a declaration of war against any country that wants to go its own way. Any country that wants to build up its own economy as a way that will keep the benefits of its economic growth in its own country, instead of letting it go to the global financial class centered in the United States and Britain.
So we’re talking about, neoliberalism was always a belligerent, implicitly military policy, and that’s exactly what you’re seeing in the proxy war of US and NATO in Ukraine today.
BENJAMIN NORTON:
Yeah, very well said. That’s the other key ingredient: overthrowing any government that is a challenge, that shows there is an alternative, to try to prove the maxim that “there is no alternative.”
MICHAEL HUDSON:
Yes.
BENJAMIN NORTON:
Here’s an interesting comment from Christopher Dobbie. He points out that in Australia, the average age for their first homeowner was 27 in 2001; now it’s 35, and increasing more and more by the year.
Now, in the last few minutes here, Professor Hudson, here’s another brief question that I got from someone over at patreon.com/multipolarista – people can go and support this show. One of my patrons asked this question: who who is hurt most by the Fed or other central banks raising interest rates? People, average consumers, or companies?
And obviously, you talked earlier about how the US Federal Reserve is different from other central banks, but it’s kind of an open question. Who is hurt more by raising interest rates?
MICHAEL HUDSON:
Well, companies are certainly hurt because it means that any possibility of getting productive credit is raised. But they’re also benefited, because if interest rates raised go up high enough, then it will not pay corporate raiders to borrow money to take over and raid companies and empty them out, like they did in the 1980s.
So everything cuts both ways. Raising the interest rates have given commercial banks an excuse to raise the interest charges on credit card loans and mortgage debts.
So raising interest rates, to the banks, have enabled them to actually increase their margin of monopoly profits on the credit that they extend.
And that certainly hurts people who are reliant on bank credit, either for mortgages or for consumer debt, or for any kind of loans that they want to take out.
Basically, raising interest rates hurts debtors and benefits creditors.
And benefiting creditors very rarely helps the economy at large, because the creditors are always really the 1%; the debtors are the 99%.
And if you think of economies, when you say, how does an economy benefit, you realize that, well, if the economy is 1% creditors and 99% debtors, you are dealing with a bifurcation there.
And you have to realize that the creditors usually occupy the government, and they claim we are the country. And the 99% are not very visible.
Democracy can only be afforded if they population’s voting has no effect at all on the government, that it’s only symbolic. You can vote exactly which oligarch you want to rule your country. Ever since Rome that was the case, and it’s the case today.
Is there really any difference between the Republicans and Democrats in terms of their policy? When you the same central bank bureaucracy, the same State Department blob, the same military-industrial complex, the same Wall Street control, what does democracy mean in a situation like that?
The only way that you can have what democracy aims at is to have a government strong enough to check the financial interests, to check the 1%, acting on behalf of the 99%. And that’s what socialism is.
BENJAMIN NORTON:
Very well said.
Here is another brief question from patreon.com/multipolarista – people can become a patron and help support the show over there.
This question, Professor Hudson, is about the proposal of an excess profits tax as an alternative to try to contain inflation. What do you think about the proposal of an excess profits tax?
MICHAEL HUDSON:
Well, only the little people make profits. If you’re a billionaire, you don’t want to make a profit; you want to essentially take all of your return in the form of capital gains. That’s where your money is.
And the way you avoid making a profit is you establish an offshore bank or creditor, and you pay out all of your profits in the form of interest, which an expense. You expense all of what used to be, what really is, income. And you show no profits at all.
I don’t think Amazon has ever made a profit. You have huge, the biggest corporations, with all the capital gains, have no profits. Tesla is a gigantic stock market presence, and it doesn’t make a profit.
So the key is capital gains, is financial gains, stock market gains, gains in real estate prices, unearned income. That’s what the free lunch is.
You want to prevent profits being paid out in the form of interest. So I would vastly increase profits, by saying you cannot deduct interest as a business expense. It’s not a business expense. It’s a predatory parasitic expense. So you’re going to have to declare all of this as profit, and pay interest on it.
Pricing your output from a foreign offshore banking center, so that you don’t seem to make any profit, like Apple does, pretending to make all its money in Ireland, you can’t do that anymore. You’re going to have to pay a real return.
So the accounting profession has made profits essentially tax free. So the pretense of making money by taxing profits avoids talking about capital gains and all of fictitiously low profits that are simply pretended not to be profit, like interest, depreciation, amortization, offshore earnings, management fees.
All of these should be counted as profits, and taxed as such as they were, I’d say back at the Eisenhower administration levels.
BENJAMIN NORTON:
And finally, the last question here, Professor Hudson, someone asked about the U.S. government pressuring countries in Africa not to buy Russian wheat. And the U.S. is, of course, claiming that this wheat is supposedly stolen from Ukraine.
I know this could be a long point of discussion; it could be the entire interview. And I know you have to go soon. But just concluding here, I’m wondering if you could comment.
The United Nations itself has warned that there could be a famine, especially in Global South nations.
What do you think the role of these neoliberal policies and Western sanctions are in fueling that potential crisis?
MICHAEL HUDSON:
Well, the wealthiest families in the world used to go every year, now they go every few years, to Davos, to Klaus Schwab’s Davos World Economic Forum. And they say, the world is overpopulated; we need about 2 billion human beings to starve, preferably in the next year or two.
So it’s as if the wealthy families have got together and say, how can we thin out the population that really we, the 1%, don’t need?
And in all of their policies, it is as if they’ve decided to follow the World Economic Forum and deliberately shrink the world population, especially in Africa and Latin America.
Remember, these are white people at the World Economic Forum, and that is their idea of how to retain equilibrium.
They’re always talking about “equilibrium,” and equilibrium is going to be for countries that cannot afford to grow their own food, because they have put their money into plantation crops and cotton to sell to the West, instead of feeding themselves – they’re just going to have to starve to contribute to world “equilibrium.”
BENJAMIN NORTON:
And while we’re on the subject of the World Economic Forum, I guess I should just briefly add – we’ve talked about this a little bit, but I just feel remiss not mentioning it – it’s interesting to see how right-wingers have seized on the World Economic Forum and begun criticizing it a lot.
Obviously, it’s worth criticizing. It’s a horrible neoliberal institution that represents the Western capitalist class. But we’ve even seen, you know, Glenn Beck, the right-winger, former Fox News host, he published a book about the Great Reset and the World Economic Forum.
I’m just wondering really quickly if you could respond to the idea that the World Economic Forum is like some “socialist” organization. Obviously, it’s the exact opposite.
But what do you say to these conservatives who have a right-wing critique of the World Economic Forum, and think it’s like secretly socialist, and Biden is a socialist.
MICHAEL HUDSON:
They look at any government or managerial power as socialist, not drawing the distinction between socialism and oligarchy.
The question is government power can be either right-wing or left-wing, and to say that any government power is socialist is just degrading the word.
However, as I mentioned before, almost all of the European “socialist” parties are neoliberal. Tony Blair was the head of something that called itself the British Labour Party. Gordon Brown was the head of the British Labour Party.
You can’t be more neoliberal and oligarchic than that. And that’s why Margaret Thatcher said her greatest success was creating Tony Blair.
You have the same thing in France; the French “socialists” are on the right-wing of the spectrum. The Greek “socialist” party, on the right-wing of the spectrum.
You have “socialist” parties around the world being neoliberalized.
So what does the word socialism mean? You want to go beyond labels into the essence.
And the question is, in whose interest is the government going to be run for? Will it be run for the 1% or the 99%?
And the right wing wants to say, well, the 1% can be socialist, because they’re taking over the government and that’s the big government, and we’re against it.
Well, the right-wing is taking over the government, but it’s not really what the world meant by socialism a century ago.
BENJAMIN NORTON:
Yeah, very well said. I just always laugh when I see these right-wing critiques of the World Economic Forum. I mean, the World Economic Forum is the embodiment of capitalism. It is the group of the elite capitalists who get together to talk about how they can exploit the working class and help monopolize the global economy on behalf of Western capital.
So with that said, there still are many questions, but I know you have to go, and we’re already at an hour and a half.
I do want to thank everyone who joined. We’re at 1200 viewers right now, so it has been a really good response.
Professor Hudson, you’re very popular. You should do your own YouTube channel. Maybe we can talk about that, because every time I have you on, it’s always an amazing response that I get. And hopefully we can do this again more in future.
Aside from people going to your website, michael-hudson.com, is there anything else that you want to plug before we conclude?
MICHAEL HUDSON:
Well, the book that I just wrote, “The Destiny of Civilization,” is all about what we’ve been talking about. It’s about the world’s split between neoliberalism and socialism. So that was just published and is available on Amazon. And I have two more books that are coming out very shortly.
BENJAMIN NORTON:
Yeah, for people who are interested, I did an interview with Professor Hudson here at Multipolarista a few weeks ago about his new book, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”
And of course, anyone who wants to support this show, you can go to patreon.com/multipolarista. And as always, this will be available as a podcast, if you want to listen to the interview again. I’m certainly going to listen to this discussion again. You can find that anywhere there are podcasts.
Professor Hudson, it’s always a real pleasure. Thanks so much for joining me.
MICHAEL HUDSON:
I enjoyed the discussion.
BENJAMIN NORTON:
And like I said earlier at the beginning, for me, I truly think it’s always a privilege, because I do think you’re one of the greatest living economists. So I always feel very privileged to have the opportunity to pick your brain about all of these questions.
And I want to thank everyone who commented, who watched, and who listened. I will see you all next time.
A Chinese Foreign Ministry official stated that BRICS countries agree to accept new countries into the bloc.
BRICS members agree on including new states.
The BRICS (Brazil, Russia, India, China, and South Africa) countries agree that the bloc needs new members while retaining its original character, according to Li Kexin, Director-General of the Chinese Foreign Ministry’s Department of International Economic Affairs.
China wishes to keep the BRICS format open to new members’ participation. Despite the fact that there are no set dates for the expansion, all BRICS countries agree on this, according to Li Kexin.
“I believe there is a shared understanding that we need to enlarge, get ‘new faces,'” he said at a press conference dedicated to the results of the 14th BRICS summit in Beijing. The diplomat emphasized that the goal of the BRICS expansion is not to create a new bloc.
According to the director-general, BRICS leaders are working to reach an agreement on potential future members. “There are several countries currently ‘at the door,’ for example, Indonesia, Turkey, Saudi Arabia, Egypt, Argentina,” he said.
As stated in the Beijing Declaration of the XIV BRICS Summit, BRICS leaders support the continuation of discussions on the expansion process, particularly through the Sherpas’ channel.
Two days ago, Iranian President Ebrahim Raisi expressed Iran’s readiness to use its potential to help BRICS to reach its goals.
BRICS, a group of countries consisting of emerging economies – Brazil, Russia, India, China, and South Africa – has been functioning on a working mechanism that runs against the tide of the economic and political isolation of Russia which is created by NATO.
At a virtual summit of the BRICS Business Forum, Raisi delivered a speech in which he spoke of Iran’s willingness to use its unique energy reserves, wealth, manpower, and transportation networks to help BRICS achieve its goals.
He started off by congratulating Xi Jinping, China’s president, on holding the summit and inviting Iran to the dialogue, then went on to address a few points in the conference, which went under the title “Participating in Global Development in the New Era”.
Earlier in May, Chinese Foreign Minister Wang Yi stated that China would initiate the process of BRICS expansion. He stated that it will demonstrate BRICS openness and inclusiveness, meet the expectations of developing countries, increase their representation and voice in global governance, and contribute more to global peace and development.
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German Economy Minister Robert Habeck is now getting very cold feet because the strategy of madly firehosing the excellent oil & gas sourcing that Europe had with Russia until recently to his personal dismay is now fully defeating both the EU´s purpose and Germany´s needs. Ref #1 https://www.rt.com/business/557729-gas-shortage-industry-halt-germany/
Still, Robert Habeck is realizing that — no matter how thirsty — nobody can ever drink water from a firehose, not even Germans, let alone Europeans. And don´t you dare to try it. If you did, chances are you´d end up with dark-purple lips and ice-cold water pressing deeply inside your sinus cavities, probably knocked-down, blood-shot eyes popping and hurting beyond belief, and possible random injuries elsewhere. Police forces worldwide know all about this so they invented the water-cannon to rapidly disperse confronting defiant crowds. Of course, you could not ever drink from a firehose water jet, but the impact could have you hospitalized. A bit late, Habeck now foresees all of this, and beyond. And it clearly does not end well, not for Germany, nor for Europe either, and winter is coming. Unless Herr Habeck were a member not of the German Green Party but rather of the European War Party, a truly losing proposition.
Firehoses many times are also difficult to hold steady even by brutish strong hands and arms of young, well-trained, heavy-booted firemen. Obviously enough, thirst can only be satisfied by drinking one sip at a time no matter how thirsty you might be, most preferably from a cup or glass. And, of course, tremendous thirst cannot be quenched with tremendous amounts of water dispensed from a high pressure firehose jet. Unfortunately, the “firehose” analogies #1 + #2 presented herein are exactly what Robert Habeck is doing per the EU-approved ban on Russian oil by December 2022. Meanwhile, as explained below, China and India instead take full advantage of the nicely discounted price by “sipping” down Russian crude oil gradually and – per the analogy — from an imaginary glass, not a firehose water jet.
Apparently, both of these “firehose strategies” #1 and #2 do not show up on the radar screen of neither European engineers, nor supposed chemical ´experts´, or trade associations, scientific societies, think tanks and/or labor unions. Quite on the contrary, they and many others have remained solemnly silent just watching how a few unelected and improvised groupie politicians that know jack about technical requirements gain political traction and MSM coverage for their foolish ´firehose approach´ as if it were doable and convenient for the best interests of Europeans. But by banning Russia they´ll never quench the EU´s enormous thirst for crude oil, processed and refined products thereof, and natural gas. Rather they will bring the European energy sourcing matrix down on its knees, something which has finally dawned in the mind of Herr Habeck and that by now is most probably already shared by the average European.
firehose #1 per oil
This most self-destructive nonsensical idea consists in simultaneously running throughout the key upstream refinery and petrochemical sector many dozens (if not hundreds) of still undefined and truly challenging parallel reconversion projects of different sorts – all tightly-packed within the same timeframe — requiring currently non-existing resources of different types ( HR + IT hard/soft/firmware + not-yet-designed equipment plus installation and commissioning thereof, etc. etc. etc., etc., etc. ) throughout the European continent and all of them with an identical 6-month deadline for execution and delivery. This most expensive idea starts by banning imported, perfect-from-every-sense-except-politics Russian oil at half the price and without any pay-back cost as nothing other than already existing resources are required. Only a bunch of fools would thus negatively affect the livelihoods of 800 million of their own people that will necessarily suffer the irreversible consequences of this mis-management of their self-made crisis. By December 2022 in 6 short months all that Europeans will have is freezing cold and a horrible, un-rewindable blowback in their hands.
The current course of action officially approved by the EU necessarily calls for the 2022 execution of hundreds of projects related to the Russian oil ban which would supposedly allow for non-Russian oil imports refinement and processing in Europe. Imagine this “firehose” approach trying to adapt all refineries, processing plants, ports, docks, pipelines, logistics infrastructure, etc., etc. to a new mix of yet unknown oils to replace the Russian Urals blend which would therefore require yet unknown modifications and corresponding fine tuning. This impossible re-vamping and retrofitting of absolutely everything will consume humongous amounts of euros, human resources, expertise, trials & errors, risk and lots of hard work and lots and lots of time. The Schwedt refinery alone will require 11 major projects at the very least per Ref.#21 below. All in all, we are talking hundreds of billions of euros that Europe does not have — and should not print — with 40-50 years payback long after (supposedly) fossil fuels have been phased out of the EU and no bank willing to finance the madness. So far nothing has been announced, no feasibility studies, no bid forms issued or trans-European call for bids, no joint-ventures, no engineering firms, plans or specs, no guidelines, no oil vendors, bidding documents, no schedules, no consultants or commissions, no bid opening and contract award dates: plain nothing.
China & India
Readers frequently ask how is it that China and India are readily importing and successfully processing Russian oils while European refineries would supposedly have tremendous trouble processing other “good” oils (ha!). Some readers go far beyond and assure other fellow posters without batting an eyelash that necessarily, of course, if China and India can successfully process and refine Russian oils well obviously enough Europe can readily and easily do the same with yet unknown oil blends from yet unknown vendors blah blah yadda yadda. Well, the short answer is a flat “NO”, the slightly longer answer is “you better know what you are saying and doing” and the longest answer I dare to publish is that “history will not be kind to anyone directly or indirectly involved in what you are saying or proposing”. The more elaborate answer includes that China and India since years ago have already carefully designed, tested, vetted, certified, and commissioned the required modifications for processing Russian Urals blend. But neither China nor India has been stupid and ignorant enough to adopt the European nonsensical and ruinous ´nuclear option´ of the firehose flood-everything-out strategy. First they went slow on solid footing, and then only later speeded-up with their experience on firm ground and with the advantage of the constant Russian Urals that Europe doesn´t have any more
3 differences 3
There are 3 main differences between China & India and the European firehose approach (more on that later). The No. 1 difference is that China & India had plenty of time to slowly study and carefully modify only a limited handful of refineries. So both had many years for the specific modification of only very few refineries later to be easily carbon-copied per the always constant Russian Urals blend feedstock. So China & India fine tuned their processes always responding to a single homogenous constant excellent Russian Urals blend, while Europe does not yet even have the faintest idea of what in glorious cold-freezing hell it has to fine-tune to… or even if it will ever find any blend to fine-tune for … so that its refineries render humongous amounts only of diesel fuel, not anything else, which matters a lot. Difference No. 3 is that Europe will not find a single oil mix to substitute for Russia´s Urals blend feedstock and will end up having to import several variable yet unknown mixes sourced from yet unknown vendors, if any. Very messy.
What both China and India did years ago is to import small amounts of Russia´s Urals blend and comfortably tuned up a small handfull of refineries to process it at a “small scale” like drinking from a glass of water one sip at a time. Now that Russia is offering its Urals blend at a great discount very close to 30%, both China and India are ramping up their purchases while also further enlarging their refining capacity so as to process ever growing amounts of excellent, now super-cheap, abundant, homogenous Russian Urals blend. Anyone, such as Europe, attempting instead a “firehose” strategy with unknown blends will fail miserably as explained to death and in depth in the 21 references linked below. In view of the above, China & India and others too will most probably build brand new refineries ad hoc from scratch only to process Russian Urals blend feedstocks just like Europe was doing a short while ago before going bananas. And once that pipelines from Russia to Asia are concluded in 3 years time the Western world will play second fiddle.
One way to begin to understand the problem is agreeing and accepting that European Commission President Ursula von der Leyden made a historical bad joke, by saying “ The EU will make sure to phase out Russian oil in an orderly fashion to allow us and our partners to secure alternative supply routes minimizing the impact on global markets”. Nope, you can´t do that in 6 months Ursula, if ever. So if you accept that´d be absolutely impossible then you are on the right track to understand the rest. Otherwise you´d be just playing games running around in circles. Hint: it´d be like trying to change the engine oil while cruising at 150 km/hr on a German autobahn. Of course, you can stop the car and change the oil, but in this case it would mean shutting down Europe for months. You cannot do that, can you ?
By any standards, there are definitely not enough adequate oil blends around to come close to satisfying European refinery requirements comparable to homogenous continuous over-abundant constant Russian high-quality Urals which the EU now has decided to ban. And also please accept once and for all that a specific oil blend is not just “any oil blend” to be plugged & played anywhere anytime. Oil blends are not fungible. A very specific refinery or processing plant tune-up needs to be specifically matched with an always constant high-quality homogenous oil blend in large enough quantities and for a given desired output such as diesel fuel, or whatever. No “open architecture” is possible here, that´s just for IT nerds, not for refineries. And definetly there are no vendors all lined up happily willing and able to sell you their oil blend in unlimited quantities already fully adapted to whatever plant you may have ´as-is´ for whichever desired production output you may need delivered just-in-time on-demand and only when you need it. No. that´s not the case or anywhere close. Europe now may have Angola oil (maybe) for what it might be worth, but it needs 30 additional Angolas nowhere to be found under current circumstances. Suez is a tremendous choke-point.
In a nutshell, EU politicians have officially approved a forcefull mandate whereby all of Europe will have to execute in 6 short months what India and China would not dare doing in less than 10 (ten) years. That is 20 times more time. When the rubber meets the road, Europeans will realize that their political class are just a bunch of ignorant fools.
Furthermore, China & India had the enormous advantage of having to fine-tune and modify their plants for a single well-known, constant, homogenous, reliable, fully vetted Russian Urals blend… while Europe does (a) not have anywhere near that possibility and (b) does not even know what blends it will be able to find in large enough quantities and (c) it is now realizing that it will not ever be a single oil mix. So, eventually and if lucky enough (for how long ?) Europe will have to fine-tune its refineries and processing plants quite differently (not carbon copied as China & India) depending on what Europe happens to source and procure with the minimum corresponding performance and delivery guarantees. And in view of possible discontinuous supply of the right quality feedstocks, European refineries may very well find themselves back in square one and having to re-do everything all over. Refining and chemical processing are a key upstream sector, highly capital-intensive, thick skin required yet delicate & tricky, and also a very ugly business.
non-fungible oils
Refineries are very closely matched and mated with subtle calibration to a very specific and foreseeable feedstock. Changing such feedstock requires lots of time, effort, money, dedicated facilities, experimentation, mistakes, trial & error, specific expertise, and risk. Substituting the constant quality and humongous quantity of Russian oils in only 6 months has never been conceived yet alone attempted. Now Europe needs a substitute feedstock it can´t yet know which could it possibly be, if any. This will require cross-border negotiations and coordination,funding, major cross-industry interferences, new costs and surprises from yet unknown trade and other business partners, new procedures, etc. And 95% completion is not enough, only 100% is satisfactory. Everybody and his sister would now in Europe be modifying the same things at the same time with the same resources and the same deadline. Exactly who will refine & process crude oil in the meantime ? No fuels in Europe until European refineries refine something no ?
Adapting any EU refinery to new types of oils requires detailed laboratory knowledge of the new blend with constant composition and formal guarantees for its continuous delivery for decades, convoluted & lengthy contracts and procurement processes, extremely detailed engineering plans, manufacturing of parts, shipping, installation, testing, commissioning, optimization, permitting etc. etc. etc. The EU today has highly sensitive plants finely tuned and used to Russian high quality oil during decades. One single ‘bad fuel’ refinery batch would produce never ending down/time cascading impact, damages, repairs, claims, accidents with possible injuries, non-compliance and altered delivery schedules, liabilities everywhere. It´s the joint “oil feedstock – refinery – desired output” sequence to be resolved.
All EU refineries will need modification and tune-up of new feedstock lines and infrastructure, atmospheric distillation facilities, vacuum distillation systems, cat-crack units, visbreaking facilities, alkylation units, catalytic reformers, isomerisation units, ethyl tertiary butyl ether (ETBE) facilities, etc. Plus probably new storage facilities + handling equipment to substitute the Druzhba pipeline now shut-down by December 2022. Plus all sorts of sensors, software & firmware modifications or possible purchases of new stuff which will require personnel and third party vendors all over.
firehose #2 per gas
As if all of the above were not enough, Herr Habeck is now getting Europe ready for a firehose #2 project. Namely the DE-conversion from natural gas and the RE-conversion into dirty coal proposed by a member of the Green Party !!!!
You can´t make this stuff up, trust me that imagination cannot compete with European reality. So, the back-to-coal ´solution´ proposed is (a) very dirty against Europe´s Green Plan plus other climate pledges and regulations (b) ultra expensive (c) a major upheaval throughout Europe which would not make it for this coming winter soon knocking on the European doors, and probably not even for next winter 2024 at least throughout all of Europe… or even in 2025.
This completely separate – yet overlapping – set of major madhouse back-to-coal projects also imply enormous risk and major modifications and tight schedules all around, bids, bidders, contract oversight, etc. etc.etc for which nobody is prepared for nor regulators, nor vendors, nor consultants or engineering firms, nor end users, nor households or the industry at large. So this DE-conversion from natural gas and subsequent RE-conversion into coal simultaneous with the “firehose strategy #1” for Russian oil substitution means enormous additional time and ultra-high costs, technical limitations, interrupted services and production, upheaval everywhere, labor union conflicts, discomfort, civil works, electromechanical contracts, specialized labor, expertise, etc. etc. – nobody would be able to walk down the street for groceries or catching the subway — while all of this is done simultaneously throughout Europe ? This is not fiction…
In sum, Herr Habeck and EU politicians have unnecessarily set Europe up for hundreds of overlapping, cross-borders, gargantuan projects impossible to fulfill simultaneously, with absurd sequencing and scheduling coordination, plus peremptory timing limitations and deadlines, with countless synchronized engineering specialties and very risky, highly demanding logistics, plus overwhelming legal, political, and environmental aspects. For decades European refineries have streamlined supplies and specifically matched their processing capabilities for the Russian Urals blend in order to produce a very specific set of final products amongst which diesel fuel is paramount. So now European refineries and processing plants cannot just suddenly switch to whatever oil blends are found elsewhere without the complete set of features that the Urals blend has..Accordingly, this glorious mis-management has the whole EU economy at risk
Europe could also suffer the pain of potentially non-performing rushed and poorly designed modifications made to ports and logistics infrastructures, or while retrofitting and revamping its refineries and chemical processing plants. Furthermore, Europe will spend a fortune it cannot afford while running the certain, serious risk of a failed troublefull reconversion ending up with many half-finished facilities that will not be anywhere ready on time, or ever. And as 95% compliance is not enough to produce a single drop of a processed product (diesel or whatever) this means that under current circumstances and 2022 established deadlines until Europe has 100% adequately modified and successfully retrofitted everything up and running for feedstocks it does not yet have or know about… Europe really has nothing. Additionally, the human resource challenge related to all of the above is insurmountable and probably un-compliable.
Hungary has publically exposed the problem: “the EU has ‘no solution’ to fix damage from Russian oil ban”. Mass migrations very soon are in the cards, including large cities of Western Europe. Herr Habeck already knows this. Skeptics are rapidly hiding because these energy supply problems have become obvious throughout Europe already.
And you just can´t have 35% of the plants processing and/or running with “good” Russian oil still fed by the Druzbha pipeline till December while the remaining 65% run on “bad” unknown non-Russian seaborne oil. You can´t do that.
European “firehose” = hundreds of studies urgently needed yesterday, NONE possibly yet done, not yet announced.
China + India = those required were done years ago, many more are currently in progress
feasibility studies
European “firehose” = hundreds of studies urgently needed yesterday, NONE done, nor announced, nor scheduled
China + India = many approved, up and running, yet more are currently in progress
start date
European “firehose” = June 2022
China + India = many years ago, exact date unknown, preparations since ever, plenty of time for everything.
authority
European “firehose” = the EU system has overlapping bureaucratic jurisdictions whereby decisions are made by 27 unanimous votes while limiting or even opposing decisions are later taken by individual member countries.
China + India = everything under the command of a single country authority in charge.
deadline
European “firehose” = 6 months (!!!!!) imminently foolish
China + India = open, gradual, through years, plenty of time left, meanwhile lots of work in progress
affected domain
European “firehose” = 100s of projects, ports, docks, refineries, processing plants, pipelines, logistics, infrastructure
China + India = already done years ago for today´s needs, meaning 0 (zero) affected domain
relative project size
European “firehose” = enormously large, diverse, incommensurate, complex, cross-border, zero management skills.
China + India = carbon-copy expansion of vetted modifications with work in progress for far larger shipments
reservoirs
European “firehose” = unknown, experimental mix from occasional “beach-front bazaar” variable vendors.
China + India = Russian Urals blend, enormous, reliable geologically & physico-chemically stable reservoirs
oil quality
European “firehose” = fully unknown, wishy-washy-iffy, does not even exist, experimental, does not allow any planning of anything yet. A lower-rate or not constant & homogenous oil quality means poor performance and operational risks with possible serious breakdown troubles beyond repair plus possible injuries plus down-time will necessarily require plant process modifications and other engineering & logistics nightmares already described in many references below.
China + India = Russian Urals blend, decades-proven, fully vetted, constant, well-known 100% reliable, high quality homogenous blend, low sulfur, light- intermediate API gravity. Easy to process and/or refine. All-around compliance, special mixture of heavy sour oil from the Ural and Volga region mixed with light API oil of Western Siberia per 9.8 Nelson Complexity index with medium 31.7 API gravity sour with about 1.35% sulfur content.
Matching the Russian Urals oil grade is theoretically ´possible´ by blending high-quality oils from different sources if available from reliable vendors in large enough quantities. BUT maintaining the blend specs and volumetric flow requirements to meet refinery capacity/specs is very difficult. Beware: the Urals blend allows for a very constant Nelson Complexity Index of 9.8 to guarantee refined excellence for a range of products including petrol (gasoline) diesel, aviation turbine fuel, LPG, extra light heating oil, heavy fuel oil, bitumen, benzene, toluene, xylene, and sulfur.
oil quantity
European “firehose” = fully unknown, weakest point no matter what its variable “quality” may get to be. It´d also have to be an “incremental” volume beyond current production because of (a) potential growth in European demand and (b) because no vendor will ever leave traditional customers abandoned high & dry just because the EU has now gone bonkers. Furthermore, these contracts could might all turn out being short-term ephemeral un-sustainable ´purchases of convenience´ without continuity to be dropped the instant the EU´s “ban Russia´s oil” stops dead in its tracks for plenty of good reasons. Not enough quantity means degraded European livelihoods and failing economy, with shut down plants and refineries affecting transportation, heating, hospitals & schools, military, government, business, etc.
In order to substitute Russian oils, other oil-exporting vendor countries will have to either (a) suddenly increase their production (?) and how would they do that exactly (??) … or (b) disregard their traditional clients … and suddenly cut them off high and dry to go out to sell to Europe. In that case, where would their traditional clients find an exporter to buy the right quality oil from? The world oil market is one and the same and Russia inputs at least 15% of such.
China + India = Russian Urals blend, on-demand continuous non-stop unlimited delivery, allows planning everything.
HR Human Resources
European “firehose” = probably the weakest link of all with tons of people missing with yet-to-be-defined job descriptions, yet to be interviewed, hired, trained, teams put together, deployed, etc. etc. Current operational and maintenance + staff & field personnel would probably demand being switched to other jobs… or will drag their feet… or would simply resign thus necessarily compounding the problem to unchartered depths. New, young, inexperienced hands do not help under these circumstances. New managers and all sorts of office & field personnel from logistics to IT contractors, welders, etc. will not even be hired by December 2022
China + India = 100% contracted and working normally with operational personnel, field hands, staff & management
PROCUREMENT
bidding process
European “firehose” = not started yet, no bid forms issued nor trans-European call for bids, no joint-ventures, no engineering firms, plans or specs, or guidelines, no bidding documents, no tentative schedules, no consultants, no commissions or committees, no bid opening and contract award dates. No nothing.
China + India = normal operational checks, buyer-seller relationship well established, future procurement wide open.
contracts
European “firehose” = supposedly by June 2022 impossible to comply with. Real date unknown, possibly by 2023
China + India = already awarded and entered into, currently under execution, with buyer / seller satisfaction
investments
European “firehose” = needs to invest hundreds of billions of euros that Europe does not have and should not print
China + India = already done years ago, now up and running, could expand by carbon copying.
financing
European “firehose” = unfathomable mystery, 40-50 years payback long after fossil fuels are phased out of the EU.
Many dozens of billions of euros need to be financed for these projects. Banks agree ? Refineries and pipelines have a 40-50 year service life. Nobody in their right mind is going to finance with multi-decade payback when per EU regulations the investment will be dead in 10 years.
China + India = not required yet, comes out of national budget already approved. Only needed for new projects.
sourcing
European “firehose” = fully unknown, does not even exist, experimental, does not allow any planning of anything yet.
China + India = excellent Russian Urals blend, decades-proven, fully vetted, constant, well-known 100% reliable.
vendor certification
European “firehose” = vendor(s) do not exist, probably a variable group of partial variable mix vendors with a “beach-front bazaar” structure, uncoordinated and even enemies of each other.
China + India = already done, decades-proven, fully vetted, constant, well-known 100% reliable, no risk,
tanker certification
European “firehose” = do not yet exist, if ever found available as needed both in type and size.
China + India = done, up and running.
oil certification
European “firehose” = does not yet exist
China + India = done, up and running
lab tests
European “firehose” = no vendors, no oil feedstocks, no lab tests of anything
China + India = done years ago per current requirements,regular checks into the future
homologation
European “firehose” = cannot yet exist
China + India = done
compliance
European “firehose” = unknown, all compliance pending, approval takes years with plenty of EU bureaucratic requirements starting with ISO 9001 (manufacturing) + ISO 14000 (environmental) + ISO 15000 (laboratory analysis quality) approval of which starts only after full design and complete specifications are satisfactorily concluded and internally approved for submission to EU regulators. EU´s Green Plan spirit and wording must be complied with, same as other EU Common Policies, climate pledges, and regulations in force. Environmental impact assessments have to be completed with specific procedures, submitted, and approved. Labor union issues also pending
China + India = already 100% compliant, up and running.
price
European “firehose” = unknown, definitely FAR more expensive, with pay-back amortization of the many huge investments / modifications / reforms made plus terrific freight, logistics, and final delivery costs disrupting the European and the world economy with inflation beyond imagination.
China + India = At least 30-35% cheaper than market price and without any pay-back amortization of the many huge investments / modifications / reforms required by the European “firehose”.
guarantees
European “firehose” = no project just wishful thinking, no sourcing, no vendor, does not yet apply
China + India = traditional Urals with 50-year guarantee of homogenous blend ( +/- ) 15% volume
LOGISTICS
docks
European “firehose” = NO vendor(s) yet, many needed with large deliveries, no docks yet, some will be problematic
China + India = small deliveries. No dock improvements required yet. Pre-feasibility studies underway for enlargement
handling equipment
European “firehose” = NO vendor(s) yet, many needed with large deliveries, no handling equipment anywhere yet.
China + India = small deliveries. No handling equipment modifications yet. Pre-feasibility studies underway.
loading & unloading
European “firehose” = NO vendor(s) yet, many needed with large deliveries, no loading experience anywhere yet.
China + India = small deliveries. No modifications required yet. Pre-feasibility studies underway for larger volumes.
ports
European “firehose” = NO vendor(s) yet, many needed with large deliveries, no ports yet, some will be problematic
China + India = small deliveries. No port modifications required yet. Pre-feasibility studies underway.
pipelines
European “firehose” = No new ones foreseen only seaborne delivery . Still, the all-important Schwedt refinery in Germany does need revamping of the Rostock to Schwedt 60-year-old Soviet-era 200 km. pipeline. Full upgrade and retro-fitting required. Not started yet nor plans announced. Partially buried heavy structure built with obsolete materials and technology commissioned in 1963 many times patched-up and most probably unable to be “pig”- inspected properly or meaningfully, let alone be upgraded as needed. Lots of skeletons hanging inside many closets after several decades, now to be opened. Other inter-European transfer pipelines may also need repair and upgrade.
China + India = pre-feasibility & feasibility studies concluded, major pipelines being designed or under construction.
seaborne delivery
European “firehose” = no tankers yet contracted, possible shipping lanes issues, piracy, weather, lack of tankers, vessel size limitations, warfare, labor conflicts both on board and/or on the docks /berths, draft issues, not enough water depth for Suezmax oil tanker channels and ports. Suez is also a tremendous choke-point limitation not allowing for much needed VLCCs or Very Large Crude Carriers – tankers with 2-million-barrel capacity, only allows Aframax.
China + India = already under way, sea lanes well-known, no operational problems.
END USERS
refineability
European “firehose” = fully unknown, risky, requires carefull constant testing of all-around refinery modifications adapting internal processes to new blends required to remain constant for at least 40 preferably 50 years. No data possible yet and lots of work to be done. Refinement process unknown re final distillates quantities and qualities.
China & India = efficient, reliable with excellent guaranteed performance for decades per Nelson Complexity Index of 9.8 allowing to refine with excellence a range of products including petrol (gasoline) diesel, aviation turbine fuel, LPG, extra light heating oil, heavy fuel oil, bitumen, benzene, toluene, xylene and sulfur, mostly sold to Europe and the US.
refineries
European “firehose” = modifications have not yet been bidded, nor announcements made.
China & India = modification finished years ago, up and running
The leaders of Brazil, Russia, India, China, and South Africa held their 14th annual summit on Thursday virtually. This year, the summit was chaired by China.
BRICS members vowed to widen the Shanghai-based New Development Bank (NDB) on Thursday, following the successful admission of Bangladesh, Egypt, the United Arab Emirates (UAE) and Uruguay in September 2021.
“We look forward to further membership expansion in a gradual and balanced manner in terms of geographic representation and comprising of both developed and developing countries, to enhance the NDB’s international influence as well as the representation and voice of Emerging Market and Developing Countries (EMDCs) in global governance,” the 75-point joint declaration released after the summit read.
BRICS has supported the NDB’s goals of attaining the highest possible credit rating and institutional development. The BRICS member nations have also stressed that they have a similar approach to the global economic governance, and their mutual cooperation can make a valuable contribution to the post-Covid economic recovery.
Geopolitical Concerns
Leaders also discussed the ongoing crisis in Eastern Europe, recalling their national positions at different global forums, including the United Nations’ Security Council and General Assembly.
“We support talks between Russia and Ukraine. We have also discussed our concerns over the humanitarian situation in and around Ukraine,” the joint declaration said.
Amid border tensions between India and China, the leaders committed to “respect the sovereignty and territorial integrity of all States,” stressing the peaceful resolution of differences and disputes through dialogue and consultation.
The BRICS countries – which represent 24 percent of the global GDP and 16 percent of worldwide trade – further reiterated the need to resolve the Iranian nuclear issue through peaceful and diplomatic means as per international law. They stressed the importance of preserving the Joint Comprehensive Plan of Action, a deal reached between Iran and the five permanent members of the UN Security Council in 2015. The stand-off between Iran and western nations continues following the US’ withdrawal from the JCPOA in May 2018.
The future world order, already in progress, will be formed by strong sovereign states. The ship has sailed. There’s no turning back.
By Pepe Escobar, posted with the author’s permission and widely cross-posted
Let’s cut to the chase and roll in the Putin Top Ten of the New Era, announced by the Russian President live at the St. Petersburg forum for both the Global North and South.
The era of the unipolar world is over.
The rupture with the West is irreversible and definitive. No pressure from the West will change it.
Russia has renewed with its sovereignty. Reinforcement of political and economic sovereignty is an absolute priority.
The EU has completely lost its political sovereignty. The current crisis shows the EU is not ready to play the role of an independent, sovereign actor. It’s just en ensemble of American vassals deprived of any politico-military sovereignty.
Sovereignty cannot be partial. Either you’re a sovereign or a colony.
Hunger in the poorest nations will be on the conscience of the West and euro-democracy.
Russia will supply grains to the poorer nations in Africa and the Middle East.
Russia will invest in internal economic development and reorientation of trade towards nations independent of the U.S.
The future world order, already in progress, will be formed by strong sovereign states.
The ship has sailed. There’s no turning back.
How does it feel, for the collective West, to be caught in such a crossfire hurricane? Well, it gets more devastating when we add to the new roadmap the latest on the energy front.
Rosneft CEO Igor Sechin, in St. Petersburg, stressed that the global economic crisis is gaining momentum not because of sanctions, but exacerbated by them; Europe “commits energy suicide” by sanctioning Russia; sanctions against Russia have done away with the much lauded “green transition”, as that is no longer needed to manipulate markets; and Russia, with its vast energy potential, “is the Noah’s Ark of the world economy.”
For his part Gazprom CEO Alexey Miller could not be more scathing on the sharp decline in the gas flow to the EU due to Siemens’ refusal and/or incapacity to repair the Nord Stream 1 pumping engine: “Well, of course, Gazprom was forced to reduce the volume of gas supplies to Europe by 20%+. But you know, prices have increased not by 20%+, but by several times! Therefore, I’m sorry if I say that we don’t feel offended by anyone, we are not particularly concerned by this situation.”
If this pain dial overdrive was not enough to hurl the collective West – or NATOstan – into Terminal Hysteria, then Putin’s sharp comment on possibly allowing Mr. Sarmat to present his business card to “decision-making centers in Kiev”, those that are ordering the current shelling and killing of civilians in Donetsk, definitely did the trick:
“As for the red lines, let me keep them to myself, because this will mean quite tough actions on the decision-making centers. But this is an area that shouldn’t be disclosed to people outside the military-political leadership of the country. Those who deserve appropriate actions on our part should draw a conclusion for themselves – what they may face if they cross the line.”
Baby please, stop breaking down
Alastair Crooke has masterfully outlined how the collective West’s zugzwang leaves it lumbering around, dazed and confused. Now let’s examine the state of play on the opposite side of the chessboard, focusing on the BRICS summit this Thursday in Beijing.
As much as the Belt and Road Initiative (BRI), the Shanghai Cooperation Organization (SCO), the Eurasia Economic Union (EAEU) and ASEAN, now it’s time for a reinvigorated BRICS to step up its game. In conjunction, these are the key organizations/instruments that will be carving the pathways towards the post-unipolar era.
Both China and India (which between them were the largest economies in the world for centuries before the brief Western colonial interregnum) are already close and getting closer to “the Noah’s Ark of the world economy”.
The G20 – hostages of the Michael Hudson-defined FIRE scam that is the core of the financialized neoliberal casino – is slowly fading away, while a potential new G8 ramps up: and that is directly connected to BRICS expansion, one of the key themes of this week’s summit. An expanded BRICS with a parallel G8 configuration is bound to easily overtake the Western-centric one in importance as well as GDP by purchasing power parity (PPP).
BRICS in 2021 already added Bangladesh, Egypt, the UAE and Uruguay to its New Development Bank (NDB). In May, at Foreign Ministry-level debates, Argentina, Egypt, Indonesia, Kazakhstan, Nigeria, the UAE, Saudi Arabia, Senegal and Thailand were added to the 5 BRICS members. Leaders of some of these nations will be connected to the Beijing summit.
BRICS plays a completely different game from the G20. They aim for the grassroots, and it’s all about slowly “building trust” – a very Chinese concept. They are creating an independent Credit Rating Agency – away from the Anglo-American racket – and deepening a Currency Reserves Arrangement. The NDB – including its regional offices in India and South Africa – has been involved in hundreds of projects. Time will tell: one day the NDB will make the World Bank superfluous.
Comparisons between BRICS and the Quad, a U.S. concoction, are silly. Quad is just another crude mechanism to contain China. Yet there’s no question India treads on tightrope walker territory, as it’s a member of both BRICS and Quad, and made a vastly misguided decision to walk out of the Regional Comprehensive Economic Partnership (RCEP) – the largest free trade deal on the planet – opting instead to adhere to the American pie-in-the-sky Indo-Pacific Economic Framework (IPEF).
Yet India, long term, skillfully guided by Russia, is being steered to find essential common ground with China in several key issues.
BRICS, especially in its expanded BRICS+ version, is bound to increase cooperation on building truly stable supply chains, and a settlement mechanism for resources and raw material trade, which inevitably has to be based in local currencies. Then the path will be open for the Holy Grail: a BRICS payment system as a credible alternative to the weaponized U.S. dollar and SWIFT.
Meanwhile, a torrent of bilateral investments from both China and India in the manufacturing and services sector around their neighbors is bound to lift up smaller players in both Southeast Asia and South Asia: think Cambodia and Bangladesh as important cogs in a vast supply wheel.
Yaroslav Lissovolik had already proposed a BEAMS concept as the core of this BRICS integration drive, uniting “the key regional integration initiatives of BRICS economies such as BIMSTEC, EAEU, the ASEAN-China free trade agreement, Mercosur and SADC/SACU.”
It’s only (BRICS) rock’n roll
Now Beijing seems eager to promote “an inclusive format for dialogue spanning all the main regions of the Global South via aggregating the regional integration platforms in Eurasia, Africa and Latin America. Going forward this format may be further expanded to include other regional integration blocks from Eurasia, such as the GCC, EAEU and others.”
Lissovolik notes how the ideal path from now on should be “the greater inclusivity of BRICS via the BRICS+ framework that allows smaller economies that are the regional partners of BRICS to have a say in the new global governance framework.”
Before he addressed the St. Petersburg forum on video, President Xi called Putin personally to say, among other things, that he’s got China’s back on all “sovereignty and security” themes. They also, inevitably, discussed the relevance of BRICS as a key platform towards the multipolar world.
Meanwhile, the collective West plunges deeper into the maelstrom. A massive national demonstration of trade unions this past Monday paralyzed Brussels – the capital of the EU and NATO – as 80,000 people expressed their anger at the rising and rising cost of living; called for elites to “spend money on salaries, not on weapons”; and yelled in unison “Stop NATO.”
It’s zugzwang all over again. The EU’s “direct losses”, as Putin stressed, provoked by the sanctions hysteria, “could exceed $400 billion a year”. Russia’s energy earnings have hit record levels. The ruble is at a 7-year high against the euro.
It’s a blast that arguably the most powerful cultural artifact of the entire Cold War – and Western supremacy – era, the perennial Rolling Stones, is currently on tour across a “caught in a crossfire hurricane” EU. On every show they play, for the first time live, one of their early classics: ‘Out of Time’.
Sounds much like a requiem. So let’s all sing, “Baby baby baby / you’re out of time”, as one Vladimir “it’s a gas, gas, gas” Putin and his sidekick Dmitry “Under My Thumb” Medvedev seem to be the guys really getting their rocks off. It’s only (BRICS) rock’n roll, but we like it.
Russian President Vladimir Putin said on Wednesday that banks from BRICS nations can freely connect to the System for Transfer of Financial Messages (SPFS), Russia’s alternative to SWIFT.
While addressing a BRICS business forum, Putin said that together with its BRICS partners – Brazil, India, China and South Africa – Russia is developing reliable alternatives for international payments.
“The Russian system for transmitting financial messages is open to connecting banks from the five countries,” he said, adding: “The geography of the use of the Russian payment system Mir is expanding.”
The Russian president also noted that work is underway to create an international reserve currency based on a basket of BRICS currencies.
مواقف الغرب القائمة على التفوّق العسكري، ظلت ثابتة نحو 500 عام، ومثّلت أساس رفاهيته، ما سمح له بنهب العالم بأسره بشكل مباشر أو خفي.
مع نموّ الهستيريا المعادية لروسيا والصين، كان الغرب يتوطّد فعلاً
عشيّة الاحتفال بيوم روسيا، كثرت الأحاديث حول الأشياء التي يمكن لروسيا أن تفتخر بها، وما الذي نجحت فيه، وماذا الذي يعبّر عن هذا النجاح؟ هل هو توسّع رقعتها الجغرافية، أم اعتماد بعض الصواريخ ذات السرعة الفائقة والقدرة التدميرية الهائلة، أم الحدّ من الفقر مثلاً؟ ما الذي نفخر به حقاً؟
أودّ أن أقترح أن نكون فخورين بأننا نجَونا مرة أخرى. نجَونا من الاضطرابات التي فُرضت علينا جزئياً من الخارج، وقد بدأنا نولد من جديد. لقد أصبحنا أقوى، وعدنا إلى صفوف القوى العظمى. وروسيا لا يسعها إلا أن تكون من بين القوى العظمى، فمن دون ذلك لا تستطيع ببساطة أن تشعر بأنها دولة، لأن ذلك هو طبيعة تاريخها.
على مدار الخمسة عشر عاماً الماضية، ومع نموّ الهستيريا المعادية لروسيا والصين، كان الغرب يتوطّد فعلاً. لكنه يفعل ذلك على وجه التحديد لأنه يدرك أن مواقفه تتداعى. هذه المواقف، القائمة على التفوّق العسكري، ظلت ثابتة نحو 500 عام، ومثّلت أساس رفاهيته، ما سمح له بنهب العالم بأسره – بشكل مباشر أو خفي.
أما اليوم، فلم يعد هناك تفوق عسكري، كما أن الواقع كشف أن القيم السائدة في الغرب هي مناهضة لأوروبا نفسها ومعادية للإنسان، ويرفضها معظم الناس في العالم – كالمثلية، والنسوية المتطرفة، وإنكار الأسرة والتاريخ والوطن.
وفي الغرب، وإن لم يقتصر الأمر عليه، يوجد الكثير من المشاكل الآخذة في الازدياد، ولكن سوى الضجيج الدائر حولها، لم يتم في الواقع حلها، كالتلوث والمشاكل البيئية (جميع الخبراء يؤكدون منذ سنوات عديدة أن تغيّر المناخ، وتقلّص الأراضي الصالحة للزراعة، وضحالة الأنهار في المناطق الزراعية، ستؤدي إلى المجاعة – لكن لم يتم فعل شيء). وهذا إضافة إلى إفقار الطبقة الوسطى، وتنامي التفاوت الطبقي بشكل صارخ (هذا الأخير ينطبق أيضاً على بلدنا).
إن النخب القديمة التي نشأت على الازدهار النسبي، خلال العقود الأربعة الماضية، لا تريد التغيير ولا تستطيع ذلك. لقد بدأت الأرض تنهار تحت أقدامهم، وهذا أحد أسباب المواجهة اليوم: إنهم بحاجة إلى عدو يمكنهم تحويل انتباههم إليه، ولبعض الوقت، لتجنّب المسؤولية عن الفشل.
إلى جانب ذلك، قد يبدو غريباً بالنسبة إلى البعض أن روسيا يمكن أن تعتبر نفسها، إلى جانب الصين – وجزئياً الهند- جزيرة استقرار في عالم يتساقط، بينما بدأ الغرب والعديد من المناطق الأخرى بالانهيار.
فعلًا، إن العالم من حولنا ينهار، وقريباً سيكون هناك مئات الملايين من الجياع والمهاجرين والعديد من النزاعات الجديدة، ومن الأفضل لنا أن نعيش لبعض الوقت في “قلعة روسيا”، المحميّة بشكل موثوق، والتي تعتني بنفسها بالدرجة الأولى، ولكن في الوقت نفسه، منفتحة على التعاون مع أولئك المستعدين لذلك. ينبغي، بأي حال من الأحوال، أن لا نعزل أنفسنا عن العالم فكرياً أو علمياً، وإلا فإننا سنتوقف عن فهمه، كما كانت عليه الحال في العهد السوفياتي.
نحن بحاجة إلى إقامة علاقات مع جميع الدول المستعدة للتعاون معنا، كأفريقيا والعالم العربي، وتقريباً كل آسيا وأميركا اللاتينية.
أما بخصوص الموقف الصيني، فأنا متأكد تماماً من أن بكين ستساعدنا. بطبيعة الحال، هم يحاولون عدم تقويض موقف شركاتهم، التي لا تزال تعتمد بشكل وثيق على الأسواق والتقنيات الغربية. ومن نواحٍ كثيرة، يُنفَّذ هجوم الغرب على روسيا لشطبها كحليف استراتيجي محتمل للصين. وإذا تعثرت روسيا، فإن الموقف الصيني سيضعف بشكل كبير، وهم يفهمون هذا جيداً.
ومن المهم أيضاً التخلّي عن الصور النمطية التي أسرَتنا لعقود. لقد أكلنا العصيدة الفكرية التي طُبخت في الغرب، والتي أصبحت فاسدة منذ زمن طويل، لكننا ما زلنا نمضغها. وهذا ما يحدث في العلوم الاجتماعية والاقتصادية والسياسية والعلاقات الدولية.
لنأخذ هنا على سبيل المثال فكرة التكافؤ العسكري السيّئة السمعة. هذا غباء! لقد أعاق 300 من المقاتلين الاسبارطيين الجيش الفارسي المؤلف من 100 ألف مقاتل في تيرموبيلاي. كما حطم نابليون على الدوام (باستثناء حملته المؤسفة ضد روسيا) الجيوش الأوروبية، التي كان لها تفوّق عددي عليه.
أما نحن فاستوعبنا مفهوم التكافؤ في الحقبة السوفياتية، وقمنا ببناء كمية مجنونة من الصواريخ والدبابات والأسلحة الأخرى – كان لدى الاتحاد السوفياتي دبابات أكثر من بقية العالم! وما زال البعض متمسكاً بهذه الفكرة.
وعلى الرغم من ذلك، لماذا نحتاج إلى الكثير من الصواريخ مثل الأميركيين؟ فإذا افترضنا أن لديهم 5 آلاف صاروخ، ولدينا ألف فقط، وهو أمر مضمون لتحقيق أهدافهم، فإن التهديد حتى باستخدامهم المحدود لها سيبدو مقنعاً ويمنع العدوان والصراع العالمي. لكن قد يكون لدينا المزيد من الأسلحة الأخرى. الشيء الرئيسي هو عدم التورط في سباق تسلح، ولا سيما أن تبنّي مفهوم التوازن العسكري، والحدّ من التسلح أدّى إلى تضخيمهما إلى حدّ كبير.
إن عودة روسيا إلى الوقوف على قدميها، بعد أن تحولت من دون إرادتها إلى بطلة العالم في العقوبات الاقتصادية، ستعتمد على مدى سرعة انتقالها إلى طريق التعبئة في مجال التنمية. حتى الآن هذا يحدث ببطء شديد. أنا لا أتحدّث عن “شيوعية الحرب”. فبالطبع، يجب أن يظل الاقتصاد مختلطاً، مع الملكية الخاصة المتطورة. لكن الصناعات الرئيسية يجب أن تتعامل معها الدولة بشكل مباشر.
نقله إلى العربية: فهيم الصوراني
المؤلف: سيرغي كاراغانوف – المشرف الأكاديمي لكلية الاقتصاد العالمي والشؤون الدولية في الجامعة الوطنية للبحوث.
At St. Petersburg on Friday, backers of multipolarity pushed forward integration of their networksPhoto Credit: The Cradle
The St. Petersburg International Economic Forum has been configured for years now as absolutely essential to understand the evolving dynamics and the trials and tribulations of Eurasia integration.
St. Petersburg in 2022 is even more crucial as it directly connects to three simultaneous developments I had previously outlined, in no particular order:
First, the coming of the “new G8” – four BRICS nations (Brazil, Russia, India, China), plus Iran, Indonesia, Turkey and Mexico, whose GDP per purchasing parity power (PPP) already dwarfs the old, western-dominated G8.
Second, the Chinese “Three Rings” strategy of developing geoeconomic relations with its neighbors and partners.
Third, the development of BRICS+, or extended BRICS, including some members of the “new G8,” to be discussed at the upcoming summit in China.
There was hardly any doubt President Putin would be the star of St. Petersburg 2022, delivering a sharp, detailed speech to the plenary session.
Among the highlights, Putin smashed the illusions of the so-called ‘golden billion’ who live in the industrialized west (only 12 percent of the global population) and the “irresponsible macroeconomic policies of the G7 countries.”
The Russian president noted how “EU losses due to sanctions against Russia” could exceed $400 billion per year, and that Europe’s high energy prices – something that actually started “in the third quarter of last year” – are due to “blindly believing in renewable sources.”
He also duly dismissed the west’s ‘Putin price hike’ propaganda, saying the food and energy crisis is linked to misguided western economic policies, i.e., “Russian grain and fertilizers are being sanctioned” to the detriment of the west.
In a nutshell: the west misjudged Russia’s sovereignty when sanctioning it, and now is paying a very heavy price.
Chinese President Xi Jinping, addressing the forum by video, sent a message to the whole Global South. He evoked “true multilateralism,” insisting that emerging markets must have “a say in global economic management,” and called for “improved North-South and South-South dialogue.”
It was up to Kazakh President Tokayev, the ruler of a deeply strategic partner of both Russia and China, to deliver the punch line in person: Eurasia integration should progress hand in hand with China’s Belt and Road Initiative (BRI). Here it is, full circle.
Building a long-term strategy “in weeks”
St. Petersburg offered several engrossing discussions on key themes and sub-themes of Eurasia integration, such as business within the scope of the Shanghai Cooperation Organization (SCO); aspects of the Russia-China strategic partnership; what’s ahead for the BRICS; and prospects for the Russian financial sector.
One of the most important discussions was focused on the increasing interaction between the Eurasia Economic Union (EAEU) and ASEAN, a key example of what the Chinese would define as ‘South-South cooperation.’
And that connected to the still long and winding road leading to deeper integration of the EAEU itself.
This implies steps towards more self-sufficient economic development for members; establishing the priorities for import substitution; harnessing all the transport and logistical potential; developing trans-Eurasian corporations; and imprinting the EAEU ‘brand’ in a new system of global economic relations.
Russian Deputy Prime Minister Alexey Overchuk was particularly sharp on the pressing matters at hand: implementing a full free trade customs and economic union – plus a unified payment system – with simplified direct settlements using the Mir payment card to reach new markets in Southeast Asia, Africa and the Persian Gulf.
In a new era defined by Russian business circles as “the game with no rules” – debunking the US-coined “rules-based international order” – another relevant discussion, featuring key Putin adviser Maxim Oreshkin, focused on what should be the priorities for big business and the financial sector in connection to the state’s economic and foreign policy.
The consensus is that the current ‘rules’ have been written by the west. Russia could only connect to existing mechanisms, underpinned by international law and institutions. But then the west tried to “squeeze us out” and even “to cancel Russia.” So it’s time to “replace the no-rules rules.” That’s a key theme underlying the concept of ‘sovereignty’ developed by Putin in his plenary address.
In another important discussion chaired by the CEO of western-sanctioned Sberbank Herman Gref, there was much hand-wringing about the fact that the Russian “evolutionary leap forward towards 2030” should have happened sooner. Now a “long-term strategy has to be built in weeks,” with supply chains breaking down all across the spectrum.
A question was posed to the audience – the crème de la crème of Russia’s business community: what would you recommend, increased trade with the east, or redirecting the structure of the Russian economy? A whopping 72 percent voted for the latter.
So now we come to the crunch, as all these themes interact when we look at what happened only a few days before St. Petersburg.
The Russia-Iran-India corridor
A key node of the International North South Transportation Corridor (INTSC) is now in play, linking northwest Russia to the Persian Gulf via the Caspian Sea and Iran. The transportation time between St. Petersburg and Indian ports is 25 days.
This logistical corridor with multimodal transportation carries an enormous geopolitical significance for two BRICs members and a prospective member of the “new G8” because it opens a key alternative route to the usual cargo trail from Asia to Europe via the Suez canal.
The International North South Transportation Corridor (INSTC)
The INSTC corridor is a classic South-South integration project: a 7,200-km-long multimodal network of ship, rail, and road routes interlinking India, Afghanistan, Central Asia, Iran, Azerbaijan and Russia all the way to Finland in the Baltic Sea.
Technically, picture a set of containers going overland from St. Petersburg to Astrakhan. Then the cargo sails via the Caspian to the Iranian port of Bandar Anzeli. Then it’s transported overland to the port of Bandar Abbas. And then overseas to Nava Sheva, the largest seaport in India. The key operator is Islamic Republic of Iran Shipping Lines (the IRISL group), which has branches in both Russia and India.
And that brings us to what wars from now will be fought about: transportation corridors – and not territorial conquest.
Beijing’s fast-paced BRI is seen as an existential threat to the ‘rules-based international order.’ It develops along six overland corridors across Eurasia, plus the Maritime Silk Road from the South China Sea, and the Indian Ocean, all the way to Europe.
One of the key targets of NATO’s proxy war in Ukraine is to interrupt BRI corridors across Russia. The Empire will go all out to interrupt not only BRI but also INSTC nodes. Afghanistan under US occupation was prevented from become a node for either BRI or INSTC.
With full access to the Sea of Azov – now a “Russian lake” – and arguably the whole Black Sea coastline further on down the road, Moscow will hugely increase its sea trading prospects (Putin: “The Black Sea was historically Russian territory”).
For the past two decades, energy corridors have been heavily politicized and are at the center of unforgiving global pipeline competitions – from BTC and South Stream to Nord Stream 1 and 2, and the never-ending soap operas, the Turkmenistan-Afghanistan-Pakistan-India (TAPI) and Iran-Pakistan-India (IPI) gas pipelines.
Then there’s the Northern Sea Route alongside the Russian coastline all the way to the Barents Sea. China and India are very much focused on the Northern Sea Route, not by accident also discussed in detail in St. Petersburg.
The contrast between the St. Petersburg debates on a possible re-wiring of our world – and the Three Stooges Taking a Train to Nowhere to tell a mediocre Ukrainian comedian to calm down and negotiate his surrender (as confirmed by German intelligence) – could not be starker.
Almost imperceptibly – just as it re-incorporated Crimea and entered the Syrian theater – Russia as a military-energy superpower now shows it is potentially capable of driving a great deal of the industrialized west back into the Stone Age. The western elites are just helpless. If only they could ride a corridor on the Eurasian high-speed train, they might learn something.
The views expressed in this article do not necessarily reflect those of The Cradle.
UPROOTED PALESTINIANS: SALAM ALQUDS ALAYKUM 