Betrayal (Andrei Martyanov)

September 11, 2022

Please visit Andrei’s website: https://smoothiex12.blogspot.com/
and support him here: https://www.patreon.com/bePatron?u=60459185

While I have a very different take on 9/11, Martyanov, again, is spot on.  Highly recommended!

Nord Stream I Disruption: Europe’s Panicking After Poland Finally Got What It Wanted

Sep 3, 2022

By Andrew Korybko

Source

The absolute last thing that Poland wants right now is for everyone to remember how actively its leadership lobbied for exactly this outcome that’s since brought so much hardship to hundreds of millions of people, which is why it’s so important right now for activists to prioritize raising awareness of this “politically inconvenient” fact.

The entire US-led Western Mainstream Media (MSM) went wild on Friday after Gazprom announced the indefinite suspension of supplies through Nord Stream I due to technical malfunctions that were only just discovered. The Golden Billion’s perception managers speculated that Russia was weaponizing the export of gas to Europe as punishment for the bloc complying with the US’ counterproductive sanctions demands. The prevailing theory is that President Putin wants to exacerbate the EU’s impending energy crisis ahead of the coming winter in an attempt to pressure its leaders to coerce Kiev into concessions.

Whatever one’s views may be about that interpretation of events, there’s no denying that Europe’s in an unprecedented state of panic, especially considering the very likely possibility of large-scale socio-political unrest the longer that its systemic economic crisis lasts. To remind everyone, this crisis was brought about by the combination of complying with the US’ sanctions and Nord Stream I’s unexpected indefinite disruption. Likewise, there’s also no denying the following “politically incorrect” fact that’s being desperately suppressed by the MSM because it raises too many questions at this sensitive time.

Few folks remember it, but Polish Prime Minister Morawiecki demanded in late May ahead of the World Economic Forum in Davos that Germany unilaterally shut down Nord Stream I by the end of the year. Prior to that, he proposed including that pipeline in the Golden Billion’s sanctions package right after the latest US-provoked phase of the Ukrainian Conflict began over half a year ago. It’s now known just how disastrous the disruption of Russian exports through that route has been for European stability, which wasn’t unexpected but should make observers wonder why Poland wanted this predictable outcome.

From the get-go, this aspiring Central & Eastern European (CEE) hegemon has pushed for the most radical anti-Russian policies possible, with its leadership even going as far as boasting that they set the global standard for Russophobia. Part of the reason is due to the “negative nationalism” that’s regrettably come to influence the formation of Polish nationalism in recent years wherein Poles obsess over what supposedly differentiates themselves from Russians instead of embracing “positive nationalism” which refers to pride in what one is without comparing themselves to others.

The other reason is much more strategic and related to the desire to sabotage leading European countries’ efforts to maximize their strategic autonomy. In particular, Poland fears that a strong Germany will impose its envisioned continental hegemony onto all others, beginning with its eastern neighbor. Its leadership therefore decided to pursue a dual policy of presenting itself as the US’ leading anti-Russian force in Europe so as to become that declining unipolar hegemony’s top partner on the continent in parallel with trying to trick Germany into committing economic suicide.

The first-mentioned was achieved through its rabidly Russophobic policies while the second was advanced by consistently pushing for Berlin to unilaterally shut down Nord Stream I on the false basis of “solidarity with its fellow democracies”, the manipulative rhetoric of which the Polish Ambassador to India just referenced while trying to pressure Delhi into condemning and sanctioning Moscow. Even though shutting down that pipeline would damage Poland’s own interests, Warsaw wagered that its people won’t protest all that much since they’re so indoctrinated with “negative nationalism”.

That aspiring hegemon’s grand strategic interests with respect to undercutting Germany’s rise as a global power through the aforementioned means are regarded as much more important than its short-term ones connected with the disruption of the continent’s Russian energy supplies. What Poland has plotted all along is to mislead Germany into promulgating counterproductive policies that would irreversibly weaken its strategic autonomy vis a vis the US and thus enable Washington to restore its declining unipolar hegemony over Berlin and the bloc that it unofficially leads more broadly.

The purpose behind doing so is for the US to privilege Poland over Germany as its top European vassal as a reward for Warsaw perfectly marching in lockstep with Washington’s anti-Russian demands and tricking Berlin into irreversibly weakening its strategic autonomy to the point where America could successfully reassert its hegemonic control over the continent. The euro has dropped to its lowest rate against the dollar in two decades as a result of the joint US-Polish Hybrid War on Germany, which means that it’s unlikely that this aspiring global power can ever economically compete with the US again.

This outcome would have happened even sooner had Germany gone along with Poland’s ill-intended plan to sanction Nord Stream I half a year ago prior to announcing in late May like Morawiecki demanded at the time that it’ll unilaterally stop importing gas from this pipeline by the end of the year. The whole point behind pursuing these destabilizing objectives was for Poland to get Germany to weaken itself and the EU by none other than its own hand so as to ensure the successful reassertion of US hegemony over the continent in order to forever avert a rapprochement with Russia.

For as distant as that second scenario might have seemed up until recently, it was still possible in theory for a strategically autonomous Germany to eventually repair its relations with Russia after some time so long as the economic foundation of the bloc’s de facto leader remained comparatively stable and it was thus able to retain some degree of independence from the declining American hegemony. That’s precisely why Poland wanted Germany to get rid of Nord Stream I in order for its Hybrid War target to sabotage its own objective national interests.

Regardless of whatever one thinks about Nord Stream I’s latest disruption and whether it’s truly related to technical malfunctions or whatever else, this development dooms Germany to vassalhood status vis a vis the US in full accordance with the grand strategic outcome that Poland’s been pursuing for the past half-year already as was earlier explained. The unprecedented socio-economic hardships that the unexpectedly exacerbated energy crisis is bound to inflict on hundreds of millions of people in the EU makes this latest event extremely unpopular though, which risks making its Polish mastermind look bad.

Even though Poland ultimately wasn’t responsible for the outcome that it’s pursued for so long after it ended up officially occurring due to technical malfunctions and not Germany’s own hand, Warsaw still doesn’t want to be associated with the immense hardships that this development has inflicted on the European people. It intended for Berlin to be blamed for this, which would have destroyed its target’s soft power once and for all, but now the MSM’s perception managers can conveniently blame Moscow while simultaneously trying to make everyone forget that Warsaw’s wanted this all along.

The absolute last thing that Poland wants right now is for everyone to remember how actively its leadership lobbied for exactly this outcome that’s since brought so much hardship to hundreds of millions of people, which is why it’s so important right now for activists to prioritize raising awareness of this “politically inconvenient” fact. Europeans deserve to know that this is all part of the joint US-Polish Hybrid War on Germany for the earlier explained grand strategic aims even though the climax thus far was due to technical malfunctions and not Berlin being tricked into shutting down the pipeline.

Geopolitical tectonic plates shifting, six months on

August 24, 2022

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

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

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

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

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

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

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

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

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

The straw that broke the camel’s back

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

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

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

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

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

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

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

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

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

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

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

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

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

The facts on the ground

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

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

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

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

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

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

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

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

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

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

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

A Tale of Two Cities

August 13, 2022

Source

By Batiushka

(With Apologies to Charles Dickens)

Moscow and Washington

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair.

The opening words of ‘A Tale of Two Cities’

It is the best of times. That which some in Moscow and in the Orthodox Christian world in general have been awaiting for a thousand years is coming to pass. Just as it has been prophesied again and again down the centuries: the West and its ruthless Imperialism are collapsing in the face of the resistance of the long-suffering and long-exploited Rest. This struggle is being led by Russia. What a time to be alive. We did not think we would live to see it. After the disaster of the Western and Russophobic ideology of Parliamentary Democracy, which was imposed by Great Britain and others on the old Russian Empire in February 1917, and then, as a prime example to the West of blowback, those incompetents passed power into the hands of the equally Western and Russophobic ideology of Marxism, which began genociding its subject peoples in October 1917.

It is the worst of times. Nobody likes this Washington-imposed war. People are dying, people are being mutilated both in their bodies and in their souls, people are being exploited and manipulated. Still worse is our pain for the Western peoples, on whom their wealthy elites are about to threaten with death by hunger and death by freezing, with all the civil strife that is hanging over them like black Doomsday.

It is the age of wisdom. Some in Moscow and elsewhere know that this is an existential war not just for the Russian Federation, but for the whole world. Either we will have a One World Dictatorship imposed on us by the Western elites, or else we will have Freedom and Peace, Justice and Prosperity.

It is the age of foolishness. The gerontocracy in Washington has imposed a choice. From 330 million Americans, all they could find as candidates to be US President, him who has charge of the nuclear button, is two very elderly men, an ill-reputed, viagra-charged businessman-clown and an ill-reputed double-dealer of dubious personal morality, clearly suffering from the onset of dementia.

It is the epoch of belief. There are those in Moscow and elsewhere who believe that the values of traditional faiths can vanquish the great Satan and his depravity.

It is the epoch of incredulity. There are those in Washington and elsewhere who are unwilling or unable to believe that the Western world is utterly corrupted and are so deluded that they are convinced of their own lies.

It is the season of Light. At last in Moscow and elsewhere the possibility of freedom and new life for the peoples of the once-enslaved world dawns.

It is the season of Darkness. The CIA-controlled Western media, fed from the judases in Washington, is striving to spread the darkness of its tentacular lies all over the world.

It is the spring of hope. On 24 February 2022 (new style), 105 years to the day after it was enslaved by the West (old style), Moscow proclaimed the springtime of liberation for the Ukraine, physical liberation for Russian-speakers, and spiritual liberation of the whole country from the twin yoke of Militarism and Nazism.

It is the winter of despair. Only a few weeks away from the first cold nights, nobody in Washington or in the Western European world with a mind that still works is looking forward to this winter. Hunger and cold, bankruptcy and unemployment, with ensuing mass civil disobedience, beckon to the Western peoples. Can you hear the demons laughing? They are laughing at you, the naïve, gullible, hoodwinked, zombified Western masses, gaslit by your narcissistic, egomaniac elite.

Hope

I see a beautiful city and a brilliant people rising from this abyss, and, in their struggles to be truly free, in their triumphs and defeats, through long years to come, I see the evil of this time and of the previous time of which this is the natural birth, gradually making expiation for itself and wearing out. It is a far, far better thing that I do, than I have ever done…

From the closing paragraph of ‘A Tale of Two Cities’

If we can win against the Mordor of the Collective West and its weapons of destruction, sanction and propagandisation, all three of which the Allies are wearing down in the Ukraine, then nothing from the above prophecy is beyond us.

There are those who can see the struggles to be truly free, triumphs and defeats, through long years to come. There are those who can see the evil of this time of 2022, and of the previous time, the thousand years which preceded it, of which the present is only the logical result. There are those who can see that here at last is the chance for the Western elites to make amends for their millennial crimes towards the rest of the world, first of all to their own peoples, then to the peoples of Eastern Europe and Russia, of the Middle East, and North Africa, of Central and South America, of North America, of Central and Southern Africa, of Asia and Oceania. This repentance, in mind and heart and deed, would indeed be a far, far better thing that the Western world could do than anything it has ever done before.

12 August 2022

Foreign Minister Sergey Lavrov : Member countries of the African Union

July 29, 2022

Editorial Comment: Mr Lavrov’s visits to Arab states, the Arab League, and African states can only be described as a stunning victory and a complete triumph for diplomacy. A short overview is included in the second part of this Operation Z situation report: http://thesaker.is/sitrep-operation-z-collapses-and-progress/
All of the various transcripts can be read at the MFA site: https://www.mid.ru/en/
Short comments and summaries can be found on the MFA Telegram Channel: https://t.me/MFARussia



Foreign Minister Sergey Lavrov’s statement and answers to the questions during a meeting with permanent representatives of the member countries of the African Union and the diplomatic corps, Addis Ababa, July 27, 2022

Your Excellencies,

Ladies and gentlemen,

Representatives of the media,

Thank you very much for coming here at our invitation. I believed that being in Addis Ababa, it is absolutely important to meet with the African Union members, like I did during all my previous visits. We could not do this at the headquarters for, as far as I understand, scheduling reasons. And I’m glad that you’ve accepted our invitation to come here to the Russian Embassy to discuss issues which are on the top of international agenda.

Many of our Western colleagues try to send the message that the key, if not the only, problem in international relations is the situation around Ukraine. I tend to disagree with such an assertion and during my visit here and  in my previous encounters with my foreign colleagues, I sense a broad understanding that the issue is much more complex and complicated.

What we witness now, especially as the West launches an unprecedented campaign of sanctions, accusations, threats, vis-à-vis Russia and anybody who dares to support Russia or even not to condemn Russia. This campaign indicates that we are living through a very important historical period, a period where we will all be deciding what kind of universe we are going to have and to leave for our children and grandchildren. The universe which is based on the United Nations Charter, which says that the United Nations is founded on the principle of sovereign equality of states, or we will have the world where the right of force, the right of the strongest dominates.

Actually, what it is all about can be described on the following example. Is it our choice to have the world where we have the so-called collective West, totally subordinated to the United States and feeling free, feeling that it has the right to decide when and how to promote its own interests without following the international law, without any respect to the sovereign equality of states?

When our American colleagues felt in the past that there was a threat to their interests, tens of thousands kilometers from the American coast, be it Yugoslavia in 1999, be it Iraq in 2003, be it Libya in 2011, and many other occasions, without any hesitation, without explaining anything to anybody, very often on false pretexts, they just started military operations levelling cities, killing hundreds of thousands of civilians, like it happened in Iraq in the city of Mosul which was literally levelled. The same happened to Raqqa in Syria, where dozens and hundreds of corpses have been lying for weeks unattended and I don’t recall the progressive civilized community raising any big noise about that situation.

When the Russian Federation, not just overnight, but for the last ten long years has been drawing the attention of the United States and its allies to the unacceptable policy which they have been promoting on Ukraine, building Ukraine as a stronghold to contain Russia, pumping more and more modern arms in Ukraine, planning to build naval and military bases in that country and encouraging in all possible ways Russophobic policies of its leaders; when in 2014 we categorically protested to the West that in spite of its guarantees, the opposition in Ukraine staged a bloody coup and when they came to power, the first thing they did was to demand to cancel the status of the Russian language which has been the historical language of Ukraine from the very beginning. They also demanded the Russians to get out of Crimea. They sent armed groups to storm the Parliament of Crimea and then the eastern part of Ukraine protested against the coup.

The putchists called them separatists, terrorists and started a full-fledged military operation against them. And the West as I’ve said, which had guaranteed only a few days before that – guaranteed a peace deal between the former president and the opposition, the deal which provided for creation of a government of national unity and early elections, – this deal was disrupted overnight and the opposition bragged that they created the government of the winners.

See the difference: the government of national unity and the government of the winners. This was an invitation for the civil war because the opposition called part of its own citizens “losers” while the opposition became “winners”.

So when this all started we managed, together with some other countries, to stop it in February 2015 – Minsk Agreements were signed – keeping Ukraine one-piece.

The eastern territories of Ukraine that originally after the coup declared independence were persuaded not to insist on independence and to agree to stay inside Ukraine by these Minsk Agreements, provided they are given a special status. First of all, the right to use the Russian language.

This was endorsed by the Security Council and this was systemically and totally ignored and sabotaged by the Kiev regime with the encouragement of the West.

There was no direct dialogue between Kiev and those territories in spite of the fact that this was directly demanded from the Ukrainian regime by the Security Council.

And few weeks ago the former President of Ukraine P.Poroshenko who signed the Minsk Agreements, proudly stated to the media that “When I was signing it, I never intended to implement it. We just needed more time to get more weapons from the West in order to enable us to resolve the problem of Ukrainian East by the use of force.” Very honestly.

But this is totally neglected by the West. So we have been knocking on the door of our Western colleagues at least since 2013, telling them that this is absolutely a red line when you create a direct threat to the Russian Federation just on our borders. When you create a Russophobic state, which during all these years, managed to pass series of laws, prohibiting – physically, literally, – the use of Russian language in education, in culture, in media, and even in day-to-day life.

And at the same time, legislation was passed to legalize neo-Nazi theories and practices. Neo-Nazi battalions with swastikas and insignias of Waffen-SS, have been mushrooming in Ukraine and becoming the cornerstone of the Ukrainian Army.

It’s a very radicalized country. They glorify the collaborators of Hitler condemned by the Nuremberg Tribunal and all this is being done with silent encouragement by the United States and the European Union. And the process which I’ve described was accompanied by the Western attempts, not attempts – policy – to pull Ukraine into NATO.

Dozens of military exercises of NATO with Ukraine were held on Ukrainian territory with an obvious anti-Russian dimension. The efforts of Russia during all these years – it was not just, you know, we say today that this is a threat and excuse us, but we need to remove this threat. It has been happening for at least ten years.

When we’ve told our Western colleagues, “Guys, why are you pulling Ukraine to NATO? You know that this is a hostile organization vis-a-vis Russia, they were telling us, ‘Don’t worry, it will not be detrimental to your security.’”

Russia, as any other self-respectful country has the right to determine itself what is good for its security and what is not. In that case, NATO members led by the United States, opted to decide for us what is good for the Russian Federation.

We reminded them that many years ago in 2010, they all signed up a declaration saying that the Organization of Security and Cooperation in Europe will be based on the principle of equal and indivisible security, which means that any country can choose alliances, but no country has the right in choosing alliances to increase its security at the expense of the security of other countries. And that no single organization in Europe can pretend to dominate the security space.

NATO is doing exactly this. And NATO, of course, is strengthening the security of its own at the expense of the security of the Russian Federation, because the borders of NATO have been moved just to the borders of Russia.

So we told them, “Guys, political commitments to which your presidents and prime ministers put the signatures don’t work. Let’s make this principle that the security is indivisible and must be equal for all, let’s make it legally binding.”

And we suggested to them respective treaties several times. First, back in 2009 and the last attempt was in December of 2021. And they told us, “Look gentlemen, first there would be no legally binding security guarantees except for NATO members. And second, as regards Ukraine, the relations between NATO and Ukraine are none of your business.” And that was the end of it.

And parallel with this absolute rejection of constructive efforts we have been undertaking for many, many years, parallel to this the Ukrainians, in violation of the Minsk Agreements, started to accumulate huge military force on the line of contact with the eastern part of the country where the two republics have been under siege, basically. They intensified radically the shelling and bombing of those territories.

When we understood that there would be no agreement on security guarantees in Europe which would be equal, when we understood that there would be no implementation of the Minsk Agreements because the Ukrainian leadership publicly renounced this, and when we understood that the only way to save the people in the east of Ukraine was to recognize these two republics, we did so.

We signed the Treaty on Mutual Assistance with them and at their request, we are now exercising a special military operation aimed at saving lives of the citizens of the Donbass and removing any possibility for Ukrainian territory to be used to threaten the security of the Russian Federation.

I am sure that you have been following the events. I know that the Western media presents the situation in a totally distorted manner. If only to mention the so-called food crisis, as if nothing was of concern before February this year.

If you read the reports of the World Food Programme and the Food and Agriculture Organization, you will refresh your memory and establish the fact that the problems in the world food market started at the beginning of the COVID-19 pandemic, when in an attempt to fight this virus and the pandemic consequences the US, the EU and Japan have made an emission for eight trillion dollars’ worth without any economic substantiation, and they use this empty money to buy food and all other goods which they believe would be necessary in case pandemic takes long and there will be closure of countries.

Then there were, of course, increases, long ago, of the price of fertilizers because of the reckless policy of the Western countries on the so-called Green Transition, because the energy supplies, the classical energy resources were more or less discriminated and all this has brought the price of fertilizers high, which of course affected the price of food, and so on and so forth. And then there were not very conducive climate conditions for a couple of years.

And yes, the situation in Ukraine did affect, additionally, negatively affected food markets. But not because of the Russian special operation, rather due to the absolutely inadequate reaction of the West, which announced sanctions, undermining the availability of the food on the markets.

When we explain this to them, they say, “Food and fertilizers are not covered by sanctions”. Yes, but you know, half-truth is worse than a lie. And the truth is that the list of sanctions does not contain an item saying “food”, but what it does contain is prohibition for the Russian ships to call to the ports in the Mediterranean, prohibition for the foreign ships to call on the Russian ports, to pick up food and other cargo, prohibition to insure the Russian ships, because of which insurance prices quadrupled overnight. And of course, prohibition for the main Russian bank, Russian Agricultural Bank, which has always served the payments for Russian food exports – it was listed in the European Union sanctions.

So the latest attempt by our Turkish friends and the Secretary General of the United Nations resulted in a deal between Russia and the United Nations, whereby Secretary General Guterres committed himself to press the Western countries to lift those restrictions, which I just quoted. We’ll see whether he can succeed.

And the same deal as you know, provided for Ukraine an obligation to demine its coastal line for the ships which have been locked there, I think 70 ships from 16 countries since February, to allow them out of the Ukrainian territorial waters, after which Turkish and Russian fleet will ensure their safe travel to the straits and then to the Mediterranean.

So those were the agreements, which could have been announced long, long ago, if not for the Western stubbornness in insisting that they are always right, and all those who don’t agree with them, of course, are always wrong.

A similar situation is taking place with the energy markets. Many years ago, before February this year, the West started discriminating Russian energy projects. First, the project called Nord Stream 1 was limited by 50% of its capacity for no good reason at all. Europe deprived itself of 50% of Russian cheap, accessible gas.

Then Nord Stream 2 was blocked by absolutely illegal action when the legal committee of the European Union ruled that the Nord Stream 2 gas pipeline was built and financed and invested, fully aligned with the existing European norms.

But after that, the European Commission changed the rules retrospectively and applied the new rules to the investment which took place legally several years ago.

So Nord Stream 2 is also not available. Poland, several months ago, stopped taking gas from a direct pipeline from Russia. Ukraine stopped one of the two transit lines through its territory from Russia. And there was some hassle with that turbine which went for maintenance to Canada, then Canada didn’t want to bring it back.

I listed five or six factors which immediately negatively affected gas supplies to Europe volume-wise. And, of course, the less you buy from Russia through a pipeline, which is a price established for long-term, the more expensive prices on the spot.

It reached yesterday, I think, $2,200 for a thousand cubic meters. So the attempts to blame us for everything which goes wrong is an attempt with not very clean purposes and intentions.

What is my point? My point is that it’s a period of history where we will have to choose either to go down the current, which the West tries to move, saying that the world must be run not by international law, but by the rules.

They coined an expression “rules-based world order”. And if you analyze the behavior of our Western colleagues in the international arena, you will understand that these rules differ from case to case. There is no single criteria. There is no single principle, except one. If I want something, you have to obey. If you don’t obey, you would be punished.

This is the picture for the future offered to us by the rules-based world order promoted by the West. Basically, this is the unipolar world where the United States, which subordinated to its own will everybody else in the European Union and allies in Asia… This is the offer. Not even an offer, it is an ultimatum actually.

The alternative to this, and I’m sure that the overwhelming majority of the world countries do not want to live as if the colonial times came back, that the vast majority of the states want to be independent, want to rely on their own tradition, to rely on their own history, to rely on their old friends, don’t want to betray their old friends.

And this is basically evident from the fact that except two or three developing countries, no one else in Africa, Asia or Latin America joined the illegal American and European sanctions.

And back to the United Nations Charter. I believe, when we speak about more just, more democratic world order, we don’t need to invent anything. Once again, I quote the Charter which says that the United Nations is based on the principle of sovereign equality of states.

And to recognize that each state is independent, each state has the right to determine how it wants to live, what kind of economic, social, political system it wants to choose on the basis of the will of its people. And I have no slightest doubt that any normal state wants to be like this. Nobody wants to have enemies. This is also an absolute truth. Neither Russia nor any other country present in this hall – I have no doubt.

But if countries, like we witness now the behavior of the West, if they do want to have enemies, as they publicly declared in their doctrines, in the decisions of the latest NATO summit in Madrid – they do want enemies, they appoint enemies, they appoint the order in which they handle these enemies. Now Russia is the first, China is earmarked as the existential challenge for the long term. And all this manifests in renewed thinking about how the world economy and the world system operates.

If the US and the European Union – under the demand of the US – decided to freeze the Russian reserves – and now they seriously start a legal process to prepare the basis to confiscate the Russian money – who knows… If they become irritated by somebody else tomorrow or the day after, they might do the same.

In other words, the reliance on dollar as the instrument supporting the world economy is not very promising, frankly speaking. And it is not by incident that more and more countries are shifting to using alternative currencies, shifting to use national currencies more and more, and this process will be gaining momentum.

This is not to say that we are suggesting some kind of revolution against the dollar, against the United States – this is to state the obvious: the West created a system which was based on certain principles – free market, fair competition, sanctity of private property, presumption of innocence, and something else. All these principles have been thrown down the drain when they needed to do what they believe is to punish Russia.

And I don’t have the slightest doubt that, if need be, they will not hesitate to do the same in relation to any other country which would irritate them one way or another.

I mentioned China as the next target. It’s a very interesting example of how the Americans consider fair competition in practice. Actually, China developed into the number one world economy – everybody recognizes this – and China did so, China achieved those results, working and acting on the basis of the rules established by the West. The IMF, the World Bank, the World Trade Organization, the rules to settle disputes, competition and the stuff. China accepted those rules in developing its own economy and China defeated the West, economically and trade-wise, investment-wise, on its own turf, on the basis of the rules invented by the West.

And what happened next? Already a couple of years ago, the Secretary of Treasury of the United States and some other officials started saying, “We need to reform the Bretton Woods Institutions, we need to reform the WTO and we need to organize this reform between the US and Europe not to allow anybody else to participate in developing new rules.”

Guys, it is absolutely obvious, how they want this world to be operated. And I believe, as long as it is not too late, we would be ready to talk to our Western friends when they come back to their senses about how they think they should live together with all of us in the future. But this conversation can only be made on full equality, with full respect to the legitimate interests of all of us.

If I took too long of your time, I apologize. And I understand there might be a couple of questions, right?

Question: Your Excellency, Sergey Lavrov, Minister of Foreign Affairs of the Russian Federation,

On behalf of the people of South Sudan, the Government and on my own behalf, I wish to take this opportunity to express my personal gratitude to the Embassy of the Russian Federation in Ethiopia for inviting me and my delegation here.

We are grateful that our two countries, the Russian Federation and the Republic of South Sudan enjoy cordial bilateral relations, dating back to the day of our declaration of independence, where the Russian people and their Government were among those who recognized our statehood on July 9, 2011. Since then Your Excellency, the people and the governments of two countries have stood with the people and the Government of South Sudan in many ways.

The people of South Sudan wish to express their gratitude for your immense support in the UNSC, the Human Rights Council in Geneva and other activities where you supported us. First of all, as you explained, Your Excellency, you outlined your view on sanctions. Now we know what’s really going on.

On the current political situation in my country I would like to inform Your Excellency the Minister that the signed revitalized peace agreement of 2018 is holding despite the challenges that you have mentioned. These include numerous sanctions by Western countries and their allies, and an arms embargo. Other factors of concern are natural disasters, such as heavy rains…

Sergey Lavrov: I apologize, can you pass on this text? Because it would be useful and more polite to the others. Ok? Please, pass it. Thank you!

Just one remark. We are against those sanctions which are intended to punish people. And don’t forget that the initiators of these sanctions against you are exactly the same countries who wanted to create South Sudan out of Sudan.

Question: Thank you very much for giving a very detailed and covering all important aspects in your briefing. A short question: How the hegemony of dollar can be controlled by international community because right now the countries like Pakistan and many developing countries are suffering from huge debt that continues to grow. The problem is getting worse. I would like you to clarify the situation.

Sergey Lavrov: I am not an expert in monetary affairs. What I said was it’s an obvious feeling by many countries that the dollar is not reliable, because the capricious behavior could be aimed at anyone in the future.

I know that you can feel this on yourself, if you compare the situation of 20-30 years ago and now. So, it’s life. It’s life. And nobody wants to go to war because of the dollar and I believe this is crazy.  But people want to have some insurance as regards the reliability of their economic and trade relations with their partners. And there are examples, including the use of national currencies, including barter, including clearing mechanisms. Some might say this is going back to the past instruments of conducting trade. But there would be digital currencies, I don’t have the slightest doubt, which are already being developed in China, for example, in Venezuela, in Iran.

We are thinking about this as well. It’s the beginning of a process. Now we have accumulated the elements of the problem and we know that it must be addressed.

Question: With an approach of winter during which gas importations increase. How does Russia going to export its gas and circumvent the sanctions imposed? 15 African countries import more than 50% of their grain from Russia. The situation also affected the exports from African countries to Russia. How does Russia intend to manage trade relations with Africa?

Sergey Lavrov: I think I addressed both issues in my remarks. I hope you listened to me. Antonio Guterres personally promised to make sure that the US and EU remove any obstacles to the export of Russian grain. If you add your noble voice to his efforts, I think it would be useful.

And on gas prices – I also explained how Europe systemically, during the last almost ten years, was creating barriers on the way of bringing to European countries cheap and accessible Russian gas.

I listed five or six specific decisions which were cutting more and more of Russian exports, vacating the room in Europe for much more expensive LNG from the United States, just like, you know, the US insists that Europe sends all its weapons to Ukraine, vacating the arms market in Europe for the import of American weapons. It’s “nothing personal, it’s business.”

As regards your country (Algeria), the Europeans are now thinking of alternative sources of supply. They have suffocated themselves with their own hands the pipeline routes from Russia. Now they are  looking for alternatives. And I know that the Mediterranean, including Algeria, is one of those sources.

They would be asking you to help, and it’s up to your companies to decide, it’s up to your government to decide.

In our case, according to our experiences that when we had long-term contracts with Europe, these long-term contracts protected our interests. But, a few years ago, Europe started cutting long-term contracts saying, “Let’s shift to the spot market”. And the spot market does not guarantee that you will have a long-term investment justified.

So, what we see now is not a scientific, not a responsible approach to the energy markets – it’s a hectic search for something which can save you this winter, with the green agenda shelved for the time being.

The coal is coming back, polluting the atmosphere – it’s a mess, if you take a look at the energy and environment policy that Europe is promoting. I am sorry to say this. We are not getting any happiness or joy from what Europe is experiencing, but they have been doing this to themselves for quite some time already.

Ladies and gentlemen, I have to apologize because the minister – my colleague from Ethiopia – is   waiting for me for the next event. Once again I want to thank you whole-heartedly for accepting our invitation. I hope it was not a waste of time. I tried to be as frank as I can, and we would be ready to promote dialogue with the African Union.

Unfortunately, we could not meet at the headquarters. And we would be ready for a dialogue on all these and any other issues of interest and of importance with you bilaterally. With all of you we have good relations and channels of communication.

I wish you all the best and keep healthy. Thank you very much.

Veteran Russian General in Syria Leading Combat Group in Ukraine

 ARABI SOURI 

Veteran Russian Lieutenant-General Rustam Muradov who served in Syria is leading the Russian Army’s ‘East Grouping’ operating in Ukraine, a Russian Ministry of Defense revealed the name on Monday in a press statement.

The Russian MoD’s statement commenting on the visit of Russia’s Minister of Defense Sergei Shoigu to the area of operation of the ‘East Grouping’ mentioned the name of General Muradov when briefing his group’s operations to the minister.

Military commentators picked up the name of Lieutenant-General Rustam Muradov a veteran of the Russian army who served in Syria in the capacity of military consultant overseeing the military operations in Deir Ezzor in 2017 for which Russian President Vladimir Putin awarded him the title and star “Hero of Russia”.

Russian Minister of Defense Sergei Shoigu in the Donbas
Russian Minister of Defense Sergei Shoigu in the Donbas, Ukraine

RT, the Russian media outlet banned in the ‘free world’ added in a report more details about the Lieutenant-General of the Russian army:

  • Born in Daghestan in 1973.
  • In 2016, appointed as the Russia Representative in the Monitoring and Coordination Center for Ceasefire and Demarcation Line Stability in Donbas.
    -Since 2018, he has held the position of Deputy Commander of the Southern Military District Forces.
    -In February 2020, Muradov was promoted to the rank of Lieutenant-General, before he was assigned on November 11 to command the Russian peacekeeping forces in the Karabakh region, and remained its commander until September 2021.

The appearance of Lt-General Muradov in the news came to the dismay of the ‘inclusive diversified’ regime of Joe Biden with Biden’s security advisor lashing out at the Russian army veteran for combating ISIS (ISIL) in Syria accusing him of committing war crimes, the irony of a US official accusing those who combat terrorism of war crimes is an insult to the intelligence of the taxpayers paying the salaries of those US officials.

This same former senior policy advisor to Hillary Clinton’s failed election campaign Jake Sullivan who for his failure in Clinton’s campaign, he was rewarded with the post of National Security Advisor of the United States, he’s attributed by many political analysts for inventing the ‘Trump Collusion with Russia’ hoax leading to calls for the impeachment of the former US president and pushing Trump to take hard measures against Russia due to his inability in handling the pressure and as an attempt to show he’s strong on the party he’s accused of colluding with, the events leading to the current situation of open hostility and most probably the war in Europe and the suffering of the European people in a war that was not necessary but pushed for by Russophobes, the likes of Sullivan.

Lieutenant-General Rustam Muradov has also earned his spot on the sanctions list of the European Union after the beginning of the Russian special military operation in Ukraine to protect the people of the Donbas. The degenerated and fractured from within EU which is now speeding toward catastrophe by its own doing.

https://syrianews.cc/top-syrian-and-russian-army-commanders-in-syria-attend-saa-special-forces-drill/embed/#?secret=uIGjaslUBl#?secret=MoHhgTnUZa


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Douglas MacGregor: Washington wants this to continue

July 02, 2022

Douglas MacGregor

Sanctions against Russia are leading Latin America to the abyss

June 27, 2022

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Sitrep Operation Z: Open Thread

June 26, 2022

Source

by the Saker Staff

Wow, too much information out there in addition to the world happenings.  Today and tomorrow we have the G7 in Germany and NATO on June 29-30 in Madrid.  Various threats will surface from these two meetings as well as childish foot-stomping and brave statements on steriods.  Mr Lavrov’s short statement has relevance: ‘We have few illusions that EU’s Russophobic policies will change’ – FM Lavrov

We leave you with one image

And on the battlefront, the news is coming in so fast that it is almost impossible to keep track of.  Of main importance on the front line and from the Russian MoD report:

  • On June 25, the cities of Severodonetsk and Borovskoye, the settlements of Voronovo and Sirotino passed under control of the Lugansk People’s Republic. The localities liberated from the Kiev regime are inhabited by about 108,000 people. Total area of the liberated territory is about 145 square kilometres.
  • Success of the Russian army and the units of people militia of the Donetsk and Lugansk people’s republics considerably diminish moral and psychological condition of the Ukrainian army personnel.
  • In 30th Mechanised Brigade deployed near Artyomovsk, there are mass cases of alcohol abuse, drug use and unauthorised abandonment of combat positions.

If you take a look at that MoD Report it is becoming so clear that the attrition rate now is counted in brigades.

Attacks have resulted in neutralising 65th, 66th mechanised brigades and 46th Airmobile Brigade from AFU strategic reserves that were finishing their preparation at those training grounds.

Take a look at Larry Johnson’s latest: “Some die hard neo-cons continue to manifest their ignorance of military affairs by pointing to Russia’s slow progress in taking Severodonetsk as evidence of Russia’s incompetent, weak army. What they fail to understand is that Russia was trying to avoid killing the civilians still inside Severodonetsk, who were being used as human shields by the Ukrainians. Putin and the Russian commanders are placing a higher value on saving civilians rather than unleashing their full military might in order to show the world what they can really do. This is a remarkably mature military strategy.”  https://sonar21.com/even-the-uks-sky-news-is-reporting-on-the-ukrainian-debacle-in-the-donbas/

  • Also of note is the strikes on Kiev from the Caspian Sea & from the airspace of Belarus. The Russian Federation used Tu-95 and Tu-160 strategic bombers. They launched X-101 missiles, which can fly up to 5500 km. At the same time, Russian warships fired up to 50 missiles at targets all over Ukraine — targeting Ukrop bases, manufacturing sites of air to air missiles in Kiev disguised as “residential buildings” & other military targets

We leave this for you as an open thread for reporting updates.

Map:  The Readovka Map is up to date.  If you go to this page and click on the map itself, there is a bigger and better quality version.

Mixed Bag June 22

June 22, 2022

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“قلعة روسيا”.. إلى متى ستستمر المواجهة مع الغرب؟

 الإثنين 20 حزيران 2022

سيرغي كاراغانوف

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.

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President Putin: St Petersburg International Economic Forum Plenary session

June 18, 2022

Ed Note:  This transcript is not fully complete but we post it because of the renewed DDoS attacks on Russian infrastructure.  When it is complete, we will do an update.   (Mr Putin was on top form with an excellent, even exhaustive and detailed economic tour de force for Russia, and then of course for the sane world, or our Zone B).

Pepe Escobar created a very high-level summary:

THE NEW ERA

Top Ten Breakdown – as announced by Putin

  • 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 its sovereignty. Reinforcement of political and economic sovereignty is an absolute priority.
  • The current crisis shows the EU is not ready to play the role of an independent, sovereign actor. It’s just an 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 Africa and the Middle East.
  • Russia will invest in internal economic development and reorientation of trade towards nations independent of the US.
  • The future world order, currently in progress, will be formed by strong sovereign states.
  • The ship has sailed. There’s no turning back.

A further summary from RT rounds it out:  https://www.rt.com/russia/557346-putin-spief-speech-takeaways/


http://en.kremlin.ru/events/president/news/68669

President of the Republic of Kazakhstan Kassym-Jomart Tokayev also took part in the session. President of the People’s Republic of China Xi Jinping and President of the Arab Republic of Egypt Abdel Fattah el-Sisi addressed the session via videoconference.

The theme this year is New Opportunities in a New World.

* * *

Plenary session moderator Margarita Simonyan: Good afternoon, or almost evening.

As you may know, we had a minor technical issue. Thankfully, it has been dealt with quickly. We are grateful to those who resolved this.

We are also grateful to the audience.

We are grateful to our leader, President Vladimir Putin, for traditionally fitting this forum into his schedule so that he can tell us about economic prospects and other plans.

We are grateful to President Kassym-Jomart Tokayev for attending our forum. We know that it is not an easy thing to do. Thank you for supporting our forum and our country. We really appreciate this.

We will have a lot of questions today. You may not like some of them, and I may not be happy to ask some of them. We would be much happier to speak only about good things, but this is impossible today.

Mr President, I would like to ask you to take the stand and to tell us what lies in store for us all. Thank you.

President of Russia Vladimir Putin: Thank you very much. President Tokayev, friends and colleagues,

I welcome all participants and guests of the 25th St Petersburg International Economic Forum.

It is taking place at a difficult time for the international community when the economy, markets and the very principles of the global economic system have taken a blow. Many trade, industrial and logistics chains, which were dislocated by the pandemic, have been subjected to new tests. Moreover, such fundamental business notions as business reputation, the inviolability of property and trust in global currencies have been seriously damaged. Regrettably, they have been undermined by our Western partners, who have done this deliberately, for the sake of their ambitions and in order to preserve obsolete geopolitical illusions.

Today, our – when I say “our,” I mean the Russian leadership – our own view of the global economic situation. I would like to speak in greater depth about the actions Russia is taking in these conditions and how it plans to develop in these dynamically changing circumstances.

When I spoke at the Davos Forum a year and a half ago, I also stressed that … the era of a unipolar world order has come to an end. I want to start with this, as there is no way around it. This era has ended despite all the attempts to maintain and preserve it at all costs. Change is a natural process of history, as it is difficult to reconcile the diversity of civilisations and the richness of cultures on the planet with political, economic or other stereotypes – these do not work here, they are imposed by one centre in a rough and no-compromise manner.

The flaw is in the concept itself, as the concept says there is one, albeit strong, power with a limited circle of close allies, or, as they say, countries with granted access, and all business practices and international relations, when it is convenient, are interpreted solely in the interests of this power. They essentially work in one direction in a zero-sum game. A world built on a doctrine of this kind is definitely unstable.

After declaring victory in the Cold War, the United States proclaimed itself to be God’s messenger on Earth, …without any obligations and only interests which were declared sacred. They seem to ignore the fact that in the past decades, new powerful and increasingly assertive centres have been formed. Each of them develops its own political system and public institutions according to its own model of economic growth and, naturally, has the right to protect them and to secure national sovereignty.

These are objective processes and genuinely revolutionary tectonic shifts in geopolitics, the global economy and technology, in the entire system of international relations, where the role of dynamic and potentially strong countries and regions is substantially growing. It is no longer possible to ignore their interests.

To reiterate, these changes are fundamental, groundbreaking and rigorous. It would be a mistake to assume that at a time of turbulent change, one can simply sit it out or wait it out until everything gets back on track and becomes what it was before. It will not.

However, the ruling elite of some Western states seem to be harbouring this kind of illusions. They refuse to notice obvious things, stubbornly clinging to the shadows of the past. For example, they seem to believe that the dominance of the West in global politics and the economy is an unchanging, eternal value. Nothing lasts forever.

Our colleagues are not just denying reality. More than that; they are trying to reverse the course of history. They seem to think in terms of the past century. They are still influenced by their own misconceptions about countries outside the so-called “golden billion”: they consider everything a backwater, or their backyard. They still treat them like colonies, and the people living there, like second-class people, because they consider themselves exceptional. If they are exceptional, that means everyone else is second rate.

Thereby, the irrepressible urge to punish, to economically crush anyone who does not fit with the mainstream, does not want to blindly obey. Moreover, they crudely and shamelessly impose their ethics, their views on culture and ideas about history, sometimes questioning the sovereignty and integrity of states, and threatening their very existence. Suffice it to recall what happened in Yugoslavia, Syria, Libya and Iraq.

If some “rebel” state cannot be suppressed or pacified, they try to isolate that state, or “cancel” it, to use their modern term. Everything goes, even sports, the Olympics, bans on culture and art masterpieces just because their creators come from the “wrong” country.

This is the nature of the current round of Russophobia in the West, and the insane sanctions against Russia. They are crazy and, I would say, thoughtless.They are unprecedented in the number of them or the pace the West churns them out at.

The idea was clear as day – they expected to suddenly and violently crush the Russian economy, to hit Russia’s industry, finance, and people’s living standards by destroying business chains, forcibly recalling Western companies from the Russian market, and freezing Russian assets.

This did not work. Obviously, it did not work out; it did not happen. Russian entrepreneurs and authorities have acted in a collected and professional manner, and Russians have shown solidarity and responsibility.

Step by step, we will normalise the economic situation. We have stabilised the financial markets, the banking system and the trade network. Now we are busy saturating the economy with liquidity and working capital to maintain the stable operation of enterprises and companies, employment and jobs.

The dire forecasts for the prospects of the Russian economy, which were made in early spring, have not materialised. It is clear why this propaganda campaign was fuelled and all the predictions of the dollar at 200 rubles and the collapse of our economy were made. This was and remains an instrument in an information struggle and a factor of psychological influence on Russian society and domestic business circles.

Incidentally, some of our analysts gave in to this external pressure and based their forecasts on the inevitable collapse of the Russian economy and a critical weakening of the national currency – the ruble.

Real life has belied these predictions. However, I would like to emphasise that to continue being successful, we must be explicitly honest and realistic in assessing the situation, be independent in reaching conclusions, and of course, have a can-do spirit, which is very important. We are strong people and can deal with any challenge. Like our predecessors, we can resolve any task. The entire thousand-year history of our country bears this out.

Within just three months of the massive package of sanctions, we have suppressed inflation rate spikes. As you know, after peaking at 17.8 percent, inflation now stands at 16.7 percent and continues dropping. This economic dynamic is being stabilised, and state finances are now sustainable. I will compare this to other regions further on. Yes, even this figure is too much for us – 16.7 percent is high inflation. We must and will work on this and, I am sure, we will achieve a positive result.

After the first five months of this year, the federal budget has a surplus of 1.5 trillion rubles and the consolidated budget – a surplus of 3.3 trillion rubles. In May alone, the federal budget surplus reached almost half a trillion rubles, surpassing the figure for May 2021 more than four times over.

Today, our job us to create conditions for building up production and increasing supply in the domestic market, as well as restoring demand and bank financing in the economy commensurately with the growth in supply.

I mentioned that we have taken measures to reestablish the floating assets of companies. In most sectors, businesses have received the right to suspend insurance premiums for the second quarter of the year. Industrial companies have even more opportunities – they will be able to delay them through the third quarter as well. In effect, this is like getting an interest-free loan from the state.

In the future, companies will not have to pay delayed insurance premiums in a single payment. They will be able to pay them in equal installments over 12 months, starting in June next year.

Next. As of May the subsidised mortgage rate has been reduced. It is now 9 percent, while the programme has been extended till the end of the year. As I have mentioned, the programme is aimed at helping Russians improve their housing situation, while supporting the home building industry and related industries that employ millions of people.

Following a spike this spring, interest rates have been gradually coming down, as the Central Bank lowers the key rate. I believe that that this allows the subsidised mortgage rate to be further cut to 7 percent.

What is important here? The programme will last until the end of the year without change. It means that our fellow Russians seeking to improve their living conditions should take advantage of the subsidy before the end of the year.

The lending cap will not change either, at 12 million roubles for Moscow and St Petersburg and 6 million for the rest of Russia.

I should add that we must make long-term loans for businesses more accessible. The focus must shift from budget subsidies for businesses to bank lending as a means to spur business activity.

We need to support this. We will allocate 120 billion rubles from the National Wealth Fund to build up the capacity of the VEB Project Financing Factory. This will provide for additional lending to much-needed initiatives and projects worth around half a trillion roubles.

Colleagues,

Once again, the economic blitzkrieg against Russia was doomed to fail from the beginning. Sanctions as a weapon have proved in recent years to be a double-edged sword damaging their advocates and architects just a much, if not more.

I am not talking about the repercussions we see clearly today. We know that European leaders informally, so to say, furtively, discuss the very concerning possibility of sanctions being levelled not at Russia, but at any undesirable nation, and ultimately anyone including the EU and European companies.

So far this is not the case, but European politicians have already dealt their economies a serious blow all by themselves. We see social and economic problems worsening in Europe, and in the US as well, food, electricity and fuel prices rising, with quality of life in Europe falling and companies losing their market edge.

According to experts, the EU’s direct, calculable losses from the sanctions fever could exceed $400 billion this year. This is the price of the decisions that are far removed from reality and contradict common sense.

These outlays fall directly on the shoulders of people and companies in the EU. The inflation rate in some Eurozone countries has exceeded 20 percent. I mentioned inflation in Russia, but the Eurozone countries are not conducting special military operations, yet the inflation rate in some of them has reached 20 percent. Inflation in the United States is also unacceptable, the highest in the past 40 years.

Of course, inflation in Russia is also in the double digits so far. However, we have adjusted social benefits and pensions to inflation, and increased the minimum and subsistence wages, thereby protecting the most vulnerable groups of the population. At the same time, high interest rates have helped people keep their savings in the Russian banking system.

Businesspeople know, of course, that a high key rate clearly slows economic development. But it is a boon for the people in most cases. They have reinvested a substantial amount of money in banks due to higher interest rates.

This is our main difference from the EU countries, where rising inflation is directly reducing the real incomes of the people and eating up their savings, and the current manifestations of the crisis are affecting, above all, low-income groups.

The growing outlays of European companies and the loss of the Russian market will have lasting negative effects. The obvious result of this will be the loss of global competitiveness and a system-wide decline in the European economies’ pace of growth for years to come.

Taken together, this will aggravate the deep-seated problems of European societies. Yes, we have many problems as well, yet I have to speak about Europe now because they are pointing the finger at us although they have enough of their own problems. I mentioned this at Davos. A direct result of the European politicians’ actions and events this year will be the further growth of inequality in these countries, which will, in turn, split their societies still more, and the point at issue is not only the well-being but also the value orientation of various groups in these societies.

Indeed, these differences are being suppressed and swept under the rug. Frankly, the democratic procedures and elections in Europe and the forces that come to power look like a front, because almost identical political parties come and go, while deep down things remain the same. The real interests of people and national businesses are being pushed further and further to the periphery.

Such a disconnect from reality and the demands of society will inevitably lead to a surge in populism and extremist and radical movements, major socioeconomic changes, degradation and a change of elites in the short term. As you can see, traditional parties lose all the time. New entities are coming to the surface, but they have little chance for survival if they are not much different from the existing ones.

The attempts to keep up appearances and the talk about allegedly acceptable costs in the name of pseudo-unity cannot hide the main thing: the European Union has lost its political sovereignty, and its bureaucratic elites are dancing to someone else’s tune, doing everything they are told from on high and hurting their own people, economies, and businesses.

There are other critically important matters here. The worsening of the global economic situation is not a recent development. I will now go over things that I believe are extremely important. What is happening now does not stem from what happened during recent months, of course not. Moreover, it is not the result of the special military operation carried out by Russia in Donbass. Saying so is an unconcealed, deliberate distortion of the facts.

Surging inflation in product and commodity markets had become a fact of life long before the events of this year. The world has been driven into this situation, little by little, by many years of irresponsible macroeconomic policies pursued by the G7 countries, including uncontrolled emission and accumulation of unsecured debt. These processes intensified with the onset of the coronavirus pandemic in 2020, when supply and demand for goods and services drastically fell on a global scale.

This begs the question: what does our military operation in Donbass have to do with this? Nothing whatsoever.

Because they could not or would not devise any other recipes, the governments of the leading Western economies simply accelerated their money-printing machines. Such a simple way to make up for unprecedented budget deficits.

I have already cited this figure: over the past two years, the money supply in the United States has grown by more than 38 percent. Previously, a similar rise took decades, but now it grew by 38 percent or 5.9 trillion dollars in two years. By comparison, only a few countries have a bigger gross domestic product.

The EU’s money supply has also increased dramatically over this period. It grew by about 20 percent, or 2.5 trillion euros.

Lately, I have been hearing more and more about the so-called – please excuse me, I really would not like to do this here, even mention my own name in this regard, but I cannot help it – we all hear about the so-called ‘Putin inflation’ in the West. When I see this, I wonder who they expect would buy this nonsense – people who cannot read or write, maybe. Anyone literate enough to read would understand what is actually happening.

Russia, our actions to liberate Donbass have absolutely nothing to do with this. The rising prices, accelerating inflation, shortages of food and fuel, petrol, and problems in the energy sector are the result of system-wide errors the current US administration and European bureaucracy have made in their economic policies. That is where the reasons are, and only there.

I will mention our operation, too: yes, it could have contributed to the trend, but the root cause is precisely this – their erroneous economic policies. In fact, the operation we launched in Donbass is a lifeline they are grabbing at to be able to blame their own miscalculations on others, in this case, on Russia. But everyone who has at least completed primary school would understand the true reasons for today’s situation.

So, they printed more money, and then what? Where did all that money go? It was obviously used to pay for goods and services outside Western countries – this is where the newly-printed money flowed. They literally began to clean out, to wipe out global markets. Naturally, no one thought about the interests of other states, including the poorest ones. They were left with scraps, as they say, and even that at exorbitant prices.

While at the end of 2019, imports of goods to the United States amounted to about 250 billion dollars a month, by now, it has grown to 350 billion. It is noteworthy that the growth was 40 percent – exactly in proportion to the unsecured money supply printed in recent years. They printed and distributed money, and used it to wipe out goods from third countries’ markets.

This is what I would like to add. For a long time, the United States was a big food supplier in the world market. It was proud, and with good reason, of its achievements, its agriculture and farming traditions. By the way, this is an example for many of us, too. But today, America’s role has changed drastically. It has turned from a net exporter of food into a net importer. Loosely speaking, it is printing money and pulling commodity flows its way, buying food products all over the world.

The European Union is building up imports even faster. Obviously, such a sharp increase in demand that is not covered by the supply of goods has triggered a wave of shortages and global inflation. This is where this global inflation originates. In the past couple of years, practically everything – raw materials, consumer goods and particularly food products – has become more expensive all over the world.

Yes, of course, these countries, including the United States continue importing goods, but the balance between exports and imports has been reversed. I believe imports exceed exports by some 17 billion. This is the whole problem.

According to the UN, in February 2022, the food price index was 50 percent higher than in May 2020, while the composite raw materials index has doubled over this period.

Under the cloud of inflation, many developing nations are asking a good question: why exchange goods for dollars and euros that are losing value right before our eyes? The conclusion suggests itself: the economy of mythical entities is inevitably being replaced by the economy of real values and assets.

According to the IMF, global currency reserves are at $7.1 trillion and 2.5 trillion euros now. These reserves are devalued at an annual rate of about 8 percent. Moreover, they can be confiscated or stolen any time if the United States dislikes something in the policy of the states involved. I think this has become a very real threat for many countries that keep their gold and foreign exchange reserves in these currencies.

According to analyst estimates, and this is an objective analysis, a conversion of global reserves will begin just because there is no room for them with such shortages. They will be converted from weakening currencies into real resources like food, energy commodities and other raw materials. Other countries will be doing this, of course. Obviously, this process will further fuel global dollar inflation.

As for Europe, their failed energy policy, blindly staking everything on renewables and spot supplies of natural gas, which have caused energy price increases since the third quarter of last year – again, long before the operation in Donbass – have also exacerbated price hikes. We have absolutely nothing to do with this. It was due to their own actions that prices have gone through the roof, and now they are once again looking for somebody to blame.

Not only did the West’s miscalculations affect the net cost of goods and services but they also resulted in decreased fertiliser production, mainly nitrogen fertilisers made from natural gas. Overall, global fertiliser prices have jumped by over 70 percent from mid-2021 through February 2022.

Unfortunately, there are currently no conditions that can overcome these pricing trends. On the contrary, aggravated by obstacles to the operation of Russian and Belarusian fertiliser producers and disrupted supply logistics, this situation is approaching a deadlock.

It is not difficult to foresee coming developments. A shortage of fertiliser means a lower harvest and a higher risk of an undersupplied global food market. Prices will go even higher, which could lead to hunger in the poorest countries. And it will be fully on the conscience of the US administration and the European bureaucracy.

I want to emphasise once again: this problem did not arise today or in the past three or four months. And certainly, it is not Russia’s fault as some demagogues try to declare, shifting the responsibility for the current state of affairs in the world economy to our country.

Maybe it would even be nice to hear that we are so powerful and omnipotent that we can blow up inflation in the West, in the United States and Europe, or that we can do things to throw everything into disorder. Maybe it would be nice to feel this power, if only there were truth in it. This situation has been brewing for years, spurred by the short-sighted actions of those who are used to solving their problems at somebody else’s expense and who have relied and still rely on the mechanism of financial emission to outbid and draw trade flows, thus escalating deficits and provoking humanitarian disasters in certain regions of the world. I will add that this is essentially the same predatory colonial policy as in the past, but of course in a new iteration, a more subtle and sophisticated edition. You might not even recognise it at first.

The current priority of the international community is to increase food deliveries to the global market, notably, to satisfy the requirements of the countries that need food most of all.

While ensuring its domestic food security and supplying the domestic market, Russia is also able to scale up its food and fertiliser exports. For example, our grain exports in the next season can be increased to 50 million tonnes.

As a priority, we will supply the countries that need food most of all, where the number of starving people could increase, first of all, African countries and the Middle East.

At the same time, there will be problems there, and not through our fault either. Yes, on paper Russian grain, food and fertilisers… Incidentally, the Americans have adopted sanctions on our fertilisers, and the Europeans followed suit. Later, the Americans lifted them because they saw what this could lead to.

But the Europeans have not backed off. Their bureaucracy is as slow as a flour mill in the 18th century. In other words, everyone knows that they have done a stupid thing, but they find it difficult to retrace their steps for bureaucratic reasons.

As I have said, Russia is ready to contribute to balancing global markets of agricultural products, and we see that our UN colleagues, who are aware of the scale of the global food problem, are ready for dialogue. We could talk about creating normal logistical, financial and transport conditions for increasing Russian food and fertiliser exports.

As for Ukrainian food supplies to global markets – I have to mention this because of numerous speculations – we are not hindering them. They can do it. We did not mine the Black Sea ports of Ukraine. They can clear the mines and resume food exports. We will ensure the safe navigation of civilian vessels. No problem.

But what are we talking about? According to the US Department of Agriculture, the matter concerns 6 million tonnes of wheat (we estimate it at 5 million tonnes) and 7 million tonnes of maize. This is it, altogether. Since global production of wheat stands at 800 million tonnes, 5 million tonnes make little difference for the global market, as you can see.

Anyway, Ukrainian grain can be exported, and not only via Black Sea ports. Another route is via Belarus, which is, incidentally, the cheapest way. Or via Poland or Romania, whichever you prefer. In fact, there are five or six export routes.

The problem is not with us, the problem is with the adequacy of the people in control in Kiev. They can decide what to do, and, at least in this particular case, they should not take their lead from their foreign bosses, their masters across the ocean.

But there is also the risk that grain will be used as payment for arms deliveries. This would be regrettable.

Friends,

Once again, the world is going through an era of drastic change. International institutions are breaking down and faltering. Security guarantees are being devalued. The West has made a point of refusing to honour its earlier commitments. It has simply been impossible to reach any new agreements with them.

Given these circumstances and against the backdrop of mounting risks and threats, Russia was forced to go ahead with the special military operation. It was a difficult but necessary decision, and we were forced to make it.

This was the decision of a sovereign country, which has еру unconditional right to uphold its security, which is based on the UN Charter. This decision was aimed at protecting our people and the residents of the people’s republics of Donbass who for eight long years were subjected to genocide by the Kiev regime and the neo-Nazis who enjoyed the full protection of the West.

The West not only sought to implement an “anti-Russia” scenario, but also engaged in the active military development of Ukrainian territory, flooding Ukraine with weapons and military advisers. And it continues to do so now. Frankly, no one is paying any attention to the economy or well-being of the people living there, they just do not care about it at all, but they have never spared money to create a NATO foothold in the east that is directed against Russia and to cultivate aggression, hatred and Russophobia.

Today, our soldiers and officers, as well as the Donbass militia, are fighting to protect their people. They are fighting for Russia’s future as a large, free and secure multiethnic country that makes its own decisions, determines its own future, relies on its history, culture and traditions, and rejects any and all outside attempts to impose pseudo-values steeped in dehumanisation and moral degradation.

No doubt, our special military operation goals will be fulfilled. The key to this is the courage and heroism of our soldiers, consolidated Russian society, whose support gives strength and confidence to the Russian Army and Navy and a deep understanding of the truth and historical justice of our cause which is to build and strengthen Russia as a strong sovereign power.

My point is that sovereignty cannot be segmented or fragmented in the 21st century. The components of sovereignty are equally important, and they reinvigorate and complement each other.

So, what matters to us is not only the defence of our political sovereignty and national identity, but also strengthening everything that determines our country’s economic, financial, professional and technological independence.

The very structure of Western sanctions rested on the false premise that economically Russia is not sovereign and is critically vulnerable. They got so carried away spreading the myth of Russia’s backwardness and its weak positions in the global economy and trade that apparently, they started believing it themselves.

While planning their economic blitzkrieg, they did not notice, simply ignored the real facts of how much our country had changed in the past few years.

These changes are the result of our planned efforts to create a sustainable macroeconomic structure, ensure food security, implement import substitution programmes and create our own payment system, to name a few.

Of course, sanction restrictions created many challenges for the country. Some companies continue having problems with spare parts. Our companies have lost access to many technological solutions. Logistics are in disarray.

But, on the other hand, all this opens up new opportunities for us – we often talk about this but it really is so. All this is an impetus to build an economy with full rather than partial technological, production, human and scientific potential and sovereignty.

Naturally, it is impossible to resolve such a comprehensive challenge instantly. It is necessary to continue working systematically with an eye to the future. This is exactly what Russia is doing by implementing its long-term plans for the development of branches of the economy and strengthening the social sphere. The current trials are merely resulting in adjustments and modifications of the plans without changing their strategic orientation.

Today, I would like to talk about the key principles on which our country, our economy will develop.

The first principle is openness. Genuinely sovereign states are always interested in equal partnership and in contributing to global development. On the contrary, weak and dependent countries are usually looking for enemies, fuelling xenophobia or losing the last remnants of their identity and independence, blindly following in the wake of their suzerain.

Russia will never follow the road of self-isolation and autarky although our so-called Western friends are literally dreaming about this. Moreover, we are expanding cooperation with all those who are interested in it, who want to work with us, and will continue to do so. … They make up the overwhelming majority of people on Earth.

I will not list all these countries now. It is common knowledge.

I will say nothing new when I remind you that everyone who wants to continue working or is working with Russia is subjected to blatant pressure from the United States and Europe; it goes as far as direct threats. However, this kind of blackmail means little when it comes to countries headed by true leaders who know the difference between their own national interests, the interests of their people – and someone else’s.

Russia will build up economic cooperation with these states and promote joint projects. At the same time, we will certainly continue to cooperate with Western companies that have remained in the Russian market despite the unprecedented arm-twisting – such companies exist, too.

We believe the development of a convenient and independent payment infrastructure in national currencies is a solid and predictable basis for deepening international cooperation. To help companies from other countries develop logistical and cooperation ties, we are working to improve transport corridors, increase the capacity of railways, transshipment 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.

But foreign trade is not our only priority. Russia intends to increase scientific, technological, cultural, humanitarian and sports cooperation based on equality and mutual respect between partners. At the same time, our country will strive for responsible leadership in all these areas.

The second principle of our long-term development is a reliance on entrepreneurial freedom. Every private initiative aimed at benefiting Russia should receive maximum support and space for implementation.

The pandemic and the more recent events have confirmed how important flexibility and freedom are in the economy. Russian private businesses – in tough conditions, amid attempts to restrain our development by any means – have proved they can compete in global markets. Private businesses should also be credited for Russia’s adaptation to rapidly changing external conditions. Russia needs to ensure the dynamic development of the economy – naturally, relying on private business.

We will continue to reduce administrative hurdles. For example, in 2016–2018, we imposed a moratorium on routine audits of small businesses. Subsequently, it was extended through 2022. In 2020, this moratorium was extended to cover mid-sized companies. Also, the number of unscheduled audits decreased approximately fourfold.

We did not stop at that, and last March, we cancelled routine audits for all entrepreneurs, regardless of the size of their businesses, provided their activities do not put people or the environment at high risk. As a result, the number of routine audits has declined sixfold compared to last year.

Why am I giving so many details? The point is that after the moratorium on audits was imposed, the number of violations by entrepreneurs – this was the result – has not increased, but rather it has gone down. This testifies to the maturity and responsibility of Russian businesses. Of course, they should be offered motivation rather than being forced to observe regulations and requirements.

So, there is every reason to take another radical step forward, that is, to abandon, for good and on a permanent basis, the majority of audits for all Russian businesses, except on risky or potentially dangerous activities. Everyone has long since understood that there was no need to check on everyone without exception. A risk-oriented approach should be at work. I ask the Government to develop the specific parameters of such a reform in the next few months.

There is another very sensitive topic for business, which has also become important today for our national security and economic resilience. To reduce and bring to a minimum all sorts of abuse and loopholes to exert pressure on entrepreneurs, we are consistently removing loose regulations from criminal law that are applied to economic crimes.

Last March, a law was signed, under which tax-related criminal cases against entrepreneurs shall only be brought before a court by the tax service – there is no other way. Soon a draft law will be passed on reducing the statute of limitations for tax-related crimes and on rejecting lawsuits to initiate criminal proceedings after tax arrears have been paid off.

Working comprehensively, although prudently, we need to decriminalise a wide range of economic offenses, for instance, those that punish businesses without a licence or accreditation. This is a controversial practice today because our Western partners illegitimately refuse to provide such licenses.

Our own agencies must not single-handedly make our businesses criminally liable for actually doing nothing wrong. The problem is this, and small businesses understand it very well – if a licence has expired, and Western partners refuse to extend it, what are businesses to do, wrap up operations? By no means, let them work. State oversight should continue, but there should be no undue interference in business.

It also makes sense to think about raising the threshold of criminal liability for unpaid customs duties and other such taxes. Additionally, we have not for a long time reconsidered the parameters of the terms ‘large’ and ‘very large’ economic loss for the purposes of economic offences despite inflation accruing 50 percent since 2016. The law now fails to reflect the current realities and needs to be corrected.

We need to reconsider the conditions for detaining entrepreneurs and for extending preliminary investigations. It is no secret that these practices have long been used inappropriately.

Businesses have been forced to cease operations or go bankrupt even before the investigation is over. The reputation of the owners and of the brand name suffers as a result, not to mention the direct financial loss, loss of market share and jobs.

I want to ask law enforcement to put an end to these practices. I also ask the Government and the Supreme Court to draft appropriate legislation before October 1 of this year.

In addition, at the Security Council, a special instruction was given to look into criminal cases being opened without later proceeding to court. The number of such cases has grown in recent years. We know the reasons. A case is often opened without sufficient grounds or to put pressure on individuals. We will discuss this in autumn to take legislative action and change the way our law enforcement agencies work.

It goes without saying that regional governments play a major role in creating a modern business environment. As is customary during the St Petersburg Forum, I highlight the regions that have made significant progress in the National Investment Climate Rankings compiled by the Agency for Strategic Initiatives.

There have been changes in the top three. Moscow and Tatarstan have remained at the top and were joined by the Moscow Region which, in a span of one year, went from eighth place to the top three. The leaders of the rankings also include the Tula, Nizhny Novgorod, Tyumen, Novgorod, and Sakhalin regions, St Petersburg and Bashkortostan.

Separately, I would like to highlight the regions that have made the greatest strides such as the Kurgan Region, which moved up 36 spots; the Perm Territory and the Altai Territory, up 26 spots; Ingushetia, up 24 spots; and the Ivanovo Region which moved up 17 spots.

I want to thank and congratulate our colleagues in the regions for their good work.

The federal government and regional and municipal governments should focus on supporting individual business initiatives in small towns and remote rural communities. We are aware of such stories of success. That includes developing popular software and marketing locally produced organic food and environmentally friendly products nationwide using domestic websites.

It is important to create new opportunities, to introduce modern retail formats, including e-commerce platforms, as I mentioned above, and to cut the logistics, transportation and other costs, including by using upgraded Russian Post offices.

It is also important to help small business employees, self-employed individuals and start-up entrepreneurs acquire additional skills and competencies. Please include corresponding measures tailored specifically to small towns and rural and remote areas as a separate line in the national project for promoting small and medium-sized businesses.

Today I would like to address our officials, owners of large companies, our business leaders and executives.

Colleagues, friends,

Real, stable success and a sense of dignity and self-respect only come when you link your future and the future of your children with your Fatherland. We have maintained ties with many people for a long time, and I am aware of the sentiments of many of the heads and owners of our companies. You have told me many times that business is much more than just making a profit, and I fully agree. It is about changing life around you, contributing to the development of your home cities, regions and the country as a whole, which is extremely important for self-fulfilment. There is nothing like serving the people and society. This is the meaning of your life and work.

Recent events have reaffirmed what I have always said: it is much better at home. Those who refused to hear that clear message have lost hundreds of millions, if not billions of dollars in the West, in what looked like a safe haven for their assets.

I would like to once again say the following to our colleagues, those who are both in this audience and those who are not here: please, do not fall into the same trap again. Our country has huge potential, and there are more than enough tasks that need your contribution. Invest here, in the creation of new enterprises and jobs, in the development of the tourism infrastructure, support schools, universities, healthcare and the social sphere, culture and sport. I know that many of you are doing this. I know this, but I wanted to say it again.

This is how the Bakhrushin, Morozov, Shchukin, Ryabushinsky, Akchurin, Galeyev, Apanayev, Matsiyev, Mamontov, Tretyakov, Arsanov, Dadashev and Gadzhiyev families understood their noble mission. Many Russian, Tatar, Buryat, Chechen, Daghestani, Yakutian, Ossetian, Jewish, Armenian and other merchant and entrepreneurial families did not deprive their heirs of their due share, and at the same time they etched their names in the history of our country.

Incidentally, I would like to note once again that it remains to be seen what is more important for potential heirs: money and property or their forefathers’ good name and service to the country. The latter is something that cannot be squandered or, pardon my language, wasted on drink.

A good name is something that will always belong to your descendants, to future generations. It will always be part of their lives, going from one generation to another, helping them and making them stronger than the money or property they might inherit can make them.

Colleagues,

A responsible and well-balanced macroeconomic policy is the third guiding principle of our long-term development. In fact, this policy has largely enabled us to withstand the unprecedented pressure brought on by sanctions. Let me reiterate that this is an essential policy in the long term, not just for responding to the current challenges. We will not follow in the footsteps of our Western colleagues by replicating their bitter experience setting off an inflation spiral and disrupting their finances.

Our goal is to ensure robust economic growth for years to come, reducing the inflation burden on our people and businesses and achieving the mid- and long-term target inflation rate of four percent. Inflation was one of the first things I mentioned during my remarks, so let me tell you this: we remain committed to this target of a four-percent inflation rate.

I have already instructed the Government to draft proposals regarding the new budget guidelines. They must ensure that our budget policy is predictable and enables us to make the best use of the external economic conditions. Why do we need all this? To put economic growth on a more stable footing, while also delivering on our infrastructure and technological objectives, which provide a foundation for improving the wellbeing of our people.

True, some international reserve currencies have set themselves on a suicidal path lately, which is an obvious fact. In any case, they clearly have suicidal intentions. Of course, using them to ‘sterilise’ our money supply does not make any sense. Still, the principle of planning one’s spending based on how much you earn remains relevant. This is how it works, and we understand this.

Social justice is the fourth principle underpinning our development. There must be a powerful social dimension when it comes to promoting economic growth and business initiatives. This development model must reduce inequality instead of deepening it, unlike what is happening in other countries. To be honest, we have not been at the forefront when it comes to delivering on these objectives. We have yet to resolve many issues and problems in this regard.

Reducing poverty and inequality is all about creating demand for Russian-made products across the country, bridging the gap between regions in terms of their capabilities, and creating new jobs where they are needed the most. These are the core economic development drivers.

Let me emphasise that generating positive momentum in terms of household income growth and poverty reduction are the main performance indicators for government agencies and the state in general. We need to achieve tangible results in this sphere already this year, despite all the objective challenges we face. I have already assigned this task to the Government.

Again, we provide targeted support to the most vulnerable groups – pensioners, families with children, and people in difficult life situations.

Pensions are indexed annually at a rate higher than inflation. This year, they have been raised twice, including by another 10 percent on June 1.

The minimum wage was also increased by 10 percent at the same time, and so was the subsistence minimum – a reference figure used to calculate many social benefits and payments – accordingly, these benefits should also grow, increasing the incomes of about 15 million people.

In recent years, we have built a holistic system to support low-income families with children. Women are entitled to state support from the early stages of pregnancy and until the child reaches the age of 17.

People’s living standards and prosperity are the most important demographic factors; the current situation is quite challenging due to several negative demographic waves that have recently overlapped. In April, less than a hundred thousand children were born in Russia, almost 13 percent less than in April 2020.

I ask the Government to continue to keep the development of additional support measures for families with children under review. They must be far-reaching and commensurate with the magnitude of the extraordinary demographic challenge we are facing.

Russia’s future is ensured by families with two, three and more children. Therefore, we need to do more than provide direct financial support – we need to target and direct the healthcare system, education, and all areas that determine the quality of people’s lives towards the needs of families with children.

This problem is addressed, among other approaches, by the national social initiatives, which regional teams and the Agency for Strategic Initiatives are implementing together. This autumn, we will assess the results of their work, review and rank the Russian regions by quality of life in order to apply the best experiences and practices as widely as possible throughout the country.

Prioritising the development of infrastructure is the fifth principle underlying Russia’s economic policy.

We have scaled up direct budget spending on expanding transport corridors. An ambitious plan for building and repairing the federal and regional motorway core network will be launched next year. At least 85 percent of the roads are to be brought up to code within the next five years.

Infrastructure budget lending is a new tool that is being widely used. The loans are issued for 15 years at a 3 percent APR. As I mentioned before, they are much more popular than we originally thought. The regions have multiple well-thought-out and promising projects that should be launched at the earliest convenience. We will look into how we can use this support measure. We debated this issue last night. What I am saying is that it is a reliable tool.

Upgrading housing and utilities services is a separate matter with a backlog of issues. The industry is chronically underinvested to the tune of 4.5 trillion rubles. Over 40 percent of networks need to be replaced, which accounts for their low efficiency and big losses. About 3 percent of the networks become unusable every year, but no more than 2 percent get replaced, which makes the problem even worse every single year.

I propose consolidating resources and launching a comprehensive programme for upgrading housing and utilities, and synchronizing it with other infrastructure development and housing overhaul plans. The goal is to turn the situation around and to gradually reduce the number of dated networks, just like we are doing by relocating people from structurally unsafe buildings or fixing roads. We will discuss in detail housing and utilities and the construction complex with the governors at a State Council Presidium meeting next week.

On a separate note, I propose increasing resources to fund projects to create a comfortable urban environment in small towns and historical settlements. This programme is working well for us. I propose allocating another 10 billion rubles annually for these purposes in 2023–2024.

We will allocate additional funds for renovating urban areas in the Far Eastern Federal District. I want the Government to allocate dedicated funds to this end as part of the programmes for infrastructure budget lending and housing and utilities upgrading, as well as other development programmes.

Promoting comprehensive improvements and development for rural areas is a top priority for us. People who live there are feeding the country. We now see that they are also feeding a major part of the world, so they must live in comfort and dignity. In this connection, I am asking the Government to allocate additional funding for the corresponding programme. Export duties on agricultural produce can serve as a source of funding here. This is a permanent source of revenue. Of course, there can be fluctuations, but at least this ensures a constant flow of revenue.

On a separate note, I suggest that we expand the programmes for upgrading and modernising rural cultural centres, as well as regional theatres and museums by allocating six billion rubles for each of these projects in 2023 and 2024.

What I have just said about cultural institutions is something that people are really looking forward to, something they really care about. Let me give you a recent example: during the presentation of the Hero of Labour medals, one of the winners, Vladimir Mikhailov from Yakutia, asked me directly for help with building a cultural centre in his native village. This was during the part of the ceremony where we meet behind closed doors. We will definitely do this. The fact that people are raising this issue at all levels shows that they are really eager to see these projects implemented.

At this point, I would like to make a sidenote on a topic that is especially relevant now, since we are in early summer, when Russians usually take their summer vacations.

Every year, more and more tourists want to visit the most beautiful corners of our country: national parks, wildlife sanctuaries and nature reserves. According to available estimates, this year this tourist flow is expected to exceed 12 million people. It is essential that all government bodies, businesses and tourists are well aware of what they can and cannot do in these territories, where they can build tourism infrastructure, and where such activity is strictly prohibited because it endangers unique and fragile ecosystems.

The draft law governing tourism in special protected territories and regulating this activity in a civilised manner is already in the State Duma.

In this context, I would like to draw your attention to the fact that we must figure out in advance all the relevant estimates and ensure that the decisions are well-balanced. We need to be serious about this.

I would like to place special emphasis on the need to preserve Lake Baikal. In particular, there is a comprehensive development project for the city of Baikalsk, which must become a model of sustainable, eco-sensitive municipal governance.

This is not just about getting rid of the accumulated negative environmental impacts from the Baikalsk Pulp and Paper Mill, but about setting a higher standard of living for the city and transforming it into a signature destination for environmental tourism in Russia. We need to rely on the most cutting-edge technologies and clean energy when carrying out this project.

Overall, we will be developing clean technology to achieve the goals we set in the environmental modernisation of production facilities, and to reduce hazardous emissions, especially in large industrial centres. We will also continue working on closed-loop economy projects, green projects and climate preservation. I spoke about these issues in detail at this forum last year.

Consequently, the sixth cross-cutting development principle that consolidates our work is, in my opinion, achieving genuine technological sovereignty, creating an integral system of economic development that does not depend on foreign institutions when it comes to critically important components. We need to develop all areas of life on a qualitatively new technological level without being simply users of other countries’ solutions. We must have technological keys to developing next-generation goods and services.

In the past years, we have focused a lot of attention on import substitution, succeeding in a range of industries, including agriculture, pharmaceuticals, medical equipment, defence production and several others.

But I should stress that there is a lot of discussion in our society about import substitution. And it is not a cure-all nor a comprehensive solution. If we only imitate others when trying to replace foreign goods with copies, even if very high-quality ones, we may end up constantly playing catch-up while we should be one step ahead and create our own competitive technologies, goods and services that can become new global standards.

If you remember, Sergei Korolyov did not just copy or locally upgrade captured rocket technology. He focused on the future and proposed a unique plan to develop the R-7 rocket. He paved the path to space for humankind and in fact set a standard for the entire world, for decades ahead.

Proactively – this is how founders of many Soviet research programmes worked at the time. And today, building on that groundwork, our designers continue to make progress and show their worth. It is thanks to them that Russia has supersonic weapons that do not exist in any other country. Rosatom remains the leader in nuclear technology, developing our fleet of nuclear-powered icebreakers. Many Russian AI and Big Data solutions are the best in the world.

To reiterate, technological development is a cross-cutting area that will define the current decade and the entire 21st century. We will review in depth our approaches to building a groundbreaking technology-based economy – a techno economy – at the upcoming Strategic Development Council meeting. There is so much we can discuss. Most importantly, many managerial decisions must be made in the sphere of engineering education and transferring research to the real economy, and the provision of financial resources for fast-growing high-tech companies. We will also discuss the development of cross-cutting technologies and progress of digital transformation projects in individual industries.

To be clear, of course it is impossible to make every product out there, and there is no need for that. However, we need to possess critical technologies in order to be able to move swiftly should we need to start our own production of any product. This is what we did when we quickly started making coronavirus vaccines, and most recently launched the production of many other products and services.

For example, after dishonest KamAZ partners left the Russian market, their place was taken by domestic companies, which are supplying parts for traditional models and even advanced mainline, transport and heavy-duty vehicles.

The Mir card payment system has successfully replaced Visa and MasterCard on the domestic market. It is expanding its geography and gradually gaining international recognition.

The St Petersburg Tractor Plant is another case in point. Its former foreign partner stopped selling engines and providing warranty maintenance. Engine builders from Yaroslavl and Tutayev came to the rescue and started supplying their engines. As a result, the output of agricultural equipment at the St Petersburg Tractor Plant hit a record high in March-April. It did not decrease, but hit an all-time high.

I am sure there will be more positive practices and success stories.

To reiterate, Russia possesses the professional, scientific and technological potential to develop products that enjoy high demand, including household appliances and construction equipment, as well as industrial and service equipment.

Today’s task is to scale up the capacities and promptly get the necessary lines up and running. One of the key issues is comfortable work conditions for the businesses as well as the availability of prepared production sites.

I ask the Government to submit key parameters of the new operating guidelines for industrial clusters by the autumn. What is critical here?

First – financing. The projects launched in these clusters must have a long-term credit resource for up to ten years at an annual interest rate below seven percent in rubles. We have discussed all these issues with our economic agencies as well. Everyone agreed, so we will proceed.

Second – taxation. The clusters must have a low level of relatively permanent taxes including insurance contributions.

Third – supporting production at the early, kick-off stage, forming a package of orders including subsidising the purchases of ready products by such enterprises. This is not an easy issue but I think subsidies may be required. They are needed to ensure the market. We just have to work it out.

Fourth – simplified administration including minimal or no inspections as well as convenient customs monitoring that is not burdensome.

Fifth, and probably the most important – we need to set up mechanisms of guaranteed long-term demand for the new innovative products that are about to enter the market. I remind the Government that such preferential terms and respective industrial clusters must be launched as early as January 1, 2023.

On a related note, I want to say that both new and already operating points of industrial growth must attract small businesses and engage them in their orbit. It is crucial for entrepreneurs, for small entities to see the horizon and grasp their prospects.

Therefore, I ask the Government together with the SME Corporation [Federal Corporation for the Development of Small and Medium Enterprises] and our biggest companies to launch an instrument for long-term contracts between companies with state participation and SMEs. This will ensure demand for the products of such enterprises for years ahead whereas suppliers can confidently undertake commitments to launch a new manufacturing facility or expand an existing one to meet that order.

Let me add that we have substantially shortened the timeframe for building industrial sites and eliminated all the unnecessary burdensome procedures. Still, there is much more we can do here. We have things to work on, and places to go from here. For example, building an industrial facility from the ground up takes anywhere from eighteen months to three years, while the persistently high interest rates make it harder to buy suitable land plots.

Given this, I suggest launching industrial mortgages as a new tool for empowering Russian businesses to quickly start making all the products we need. What I mean are preferential long-term loans at a five-percent interest rate. Companies planning to buy new manufacturing space will be entitled to these loans. I am asking the Government to work out all the details with the Russian banking sector so that the industrial mortgage programme becomes fully operational soon.

Friends,

Changes in the global economy, finances and international relations are unfolding at an ever-growing pace and scale. There is an increasingly pronounced trend in favour of a multipolar growth model in lieu of globalisation. Of course, building and shaping a new world order is no easy task. We will have to confront many challenges, risks, and factors that we can hardly predict or anticipate today.

Still, it is obvious that it is up to the strong sovereign states, those that do not follow a trajectory imposed by others, to set the rules governing the new world order. Only powerful and sovereign states can have their say in this emerging world order. Otherwise, they are doomed to become or remain colonies devoid of any rights.

We need to move forward and change in keeping with the times, while demonstrating our national will and resolve. Russia enters this nascent era as a powerful sovereign nation. We will definitely use the new immense opportunities that are opening up for us in this day and age in order to become even stronger.

Thank you for your attention.

Margarita Simonyan: Thank you, Mr President.

I would very much like to say that after such exhaustive remarks and such an exhaustive analysis, we have nothing left to talk about, because you have answered all the questions. Still, some questions remain, and we will certainly ask them.

And now I would like to ask President Tokayev to come over here and share with us his perspective on the processes taking place in his country, in our country, and in relations between our countries and in the world.

Thank you.

President of Kazakhstan Kassym-Jomart Tokayev: President Putin,

forum participants,

I congratulate everyone on a significant event – the 25th St Petersburg International Economic Forum. I thank President Putin for the invitation and for the warm and cordial welcome in the cultural capital of Russia.

Over the past quarter of a century, the St Petersburg Forum has deservedly gained respect as a prestigious expert platform and occupies a worthy place among other world discussion platforms.

Today, we are meeting in rather extraordinary circumstances – I am referring to the elevated political and economic turbulence. The global upheavals caused by the pandemic and the rising geopolitical tensions have led to a new reality. Globalisation has given way to an era of regionalisation, with all its inherent advantages and disadvantages. Be that as it may, the process of reformatting traditional economic models and trade routes is accelerating.

The world is changing rapidly – unfortunately, in most cases it is not for the better. Inflation in many countries is breaking ten-year records, global economic growth is slowing down, and competition for investment and resources is intensifying.

There are constraining factors for economic growth such as climate change, growing migration flows, and faster technological change. We certainly pay attention to these processes.

Speaking about the new reality, it is important to bear in mind the rapidly changing structure of the international order – even the seemingly stable East-West, North-South vectors of interaction are shifting. It is important for the countries in our region not only to find the right answers to all these challenges, but also to try to make the most of them. Therefore, we have to consistently reach our full potential for cooperation within the Eurasian Economic Union. The project to link Eurasian integration with China’s One Belt, One Road initiative is relevant here.

As you know, Kazakhstan is now implementing large-scale political and economic reforms. Their goal is to reset public administration and build a fair, new Kazakhstan. We are working to ensure that there is a correlation between economic growth and rising living standards for our people. We want to achieve sustainable development of trade and economic ties, open new production lines, support the growth of human capital, and make investments.

As part of our large-scale effort to modernise the country, we are drafting new rules of the game in the economy without glaring monopolies and rampant corruption. Our priority is to support businesses and improve the business climate with a view to providing the utmost protection for the rights of investors, and promoting stability and predictability. We will continue meeting all of our commitments to our traditional partners. Kazakhstan will continue building an inclusive, fair society without social inequality.

I believe that to ensure sustainable development of all countries of the region, it is necessary to determine new horizons of cooperation and create new growth points in our economies. Along with this, we must always remember the very important task of ensuring international and regional security.

In this context, I would like to draw your attention to the following points.

The first task, as I have already mentioned, is to strengthen the capacity of the Eurasian Economic Union. This task remains relevant for us. The aggregate size of the economies of its members exceeds $2 trillion. This is an enormous market with free movement of goods, capital, services and workforce. At any rate, this is what it should be.

Despite the pandemic and geopolitical upheavals, cooperation in the EAEU continues to grow stronger. Last year, its trade reached a record $73 billion, which is a third higher than last year.

Russia has been and remains Kazakhstan’s key economic partner in the EAEU. Last year, our trade went up by almost a third to exceed $24 billion. These are record figures for us. The dynamics remains positive this year as well. Our trade increased by over 12 percent in the first quarter of 2022.

I believe that, considering the new reality, it would be appropriate and useful to develop an innovative trade strategy within the Eurasian Economic Union. Instead of imposing counter-sanctions, which, frankly, are unlikely to be productive, a more proactive and flexible trade policy should be pursued covering the Asian and the Middle Eastern markets. Kazakhstan could be instrumental in its role of a buffer market.

Overall, the ultimate success of Eurasian integration largely, if not massively, depends on our effective common trade strategy. Kazakhstan and Russia can break new ground in industrial cooperation.

We have a special plan, a programme for industrial cooperation in the new circumstances. Investors from Russia will be provided with industrial sites complete with infrastructure, and a favourable investment climate will be created for them. As a matter of fact, this is already being done.

The full unlocking of our countries’ agricultural potential is particularly important in these circumstances. According to the FAO [the Food and Agriculture Organisation of the United Nations], Russia and Kazakhstan are global leaders in terms of available agricultural land. This fact is of particular importance in light of declining global food security. According to the UN, the number of malnourished people will go from 270 million to 323 million this year.

Providing people with high-quality and safe food remains a priority and a factor in maintaining internal stability.

To create a reliable food system, it is important to implement innovative solutions and advanced technologies, as well as to cut food losses.

Approaches to ensuring food security should be developed at the national level and within regional associations, including the EAEU with account taken of the interests of all state participants. Achieving declared goals in this extremely important area is unlikely without coordinated work.

In other words, fighting skyrocketing inflation and food shortages is our common challenge, which will remain a priority in the foreseeable future, because it directly concerns the well-being of our people. Our countries’ potential makes it possible to consistently and fully supply our markets with the necessary foods, as the President of Russia convincingly demonstrated today.

Secondly, I believe that it is essential that we continue expanding trade and economic cooperation with third countries. Kazakhstan is proactively involved in integration processes, and has always stood for mutually beneficial cooperation with other international organisations.

As far as I know, there has been much interest on the sidelines of the St Petersburg International Economic Forum in Russia’s initiative to build a Greater Eurasian Partnership. This concept consists of offering regional organisations a platform for creating a common space of equal cooperation. It is for this reason that Kazakhstan continues to have a positive outlook on the effort to build the Greater Eurasian Partnership.

This year, Kazakhstan chairs the Commonwealth of Independent States. Over the years, this structure has built up a positive track record despite all the geopolitical challenges, which proves that multilateral dialogue tools are effective.

I believe that the CIS is perfectly suited for serving as a foundation for this megaproject. I am referring to Greater Eurasia, or the Greater Eurasian Partnership. It can encompass the SCO, ASEAN, and the Eurasian Economic Union as its integral elements.

Over the next decade, China, India, as well as countries in the Middle East, South and Southeast Asia, which have traditionally been friendly to us, can become major investors in the economies of our region.

China has already emerged as Kazakhstan’s main economic and foreign trade partner. This country invested in our economy more than $22 billion over the past 15 years. For this reason, strengthening our multilateral cooperation with China is a very important goal for our country.

Of course, the economy matters today just as much as political considerations. I believe that we have to promote business-to-business ties and build new transport and logistics corridors. Today, we treat these matters as our top priorities when meeting with people from Russia and other interested nations.

There is a lot of potential for combining our efforts to develop a pool of breakthrough innovation and technology projects, as well as uninterrupted transportation and logistics chains. At the end of the day, this will create new economic growth opportunities for our countries.

Thirdly, Kazakhstan maintains its unwavering commitment to international efforts to combat climate change. We will be consistent in our efforts to promote green investment and carry out corresponding projects. Environmental problems are global in nature, affecting almost all countries without exception, including Kazakhstan.

Last year, our farmers had serious problems due to a draught that was triggered by low rainfall and low water level in rivers. The cross-border Ural River is in critical condition. We call it Zhayyq on our territory.

I believe we should tackle such problems together when faced with such long-term challenges to the sustainable development of our states. I think we should give serious thought to the prospects of introducing the principles of closed-loop or circular economy. We are working to reduce the GDP’s energy-output ratio, expand the renewable energy sector and reduce transit losses in this area.

The similarity of our economies, industrial infrastructure ties between our two countries and geography as such are prompting us to pool efforts in this strategically important area as well. I hope that together we will manage to draft effective approaches and specific measures for tangible progress in this field.

Fourthly. High quality human resources and constructive inter-cultural dialogue are a reliable source of economic growth. As part of the UN-proclaimed International Decade for the Rapprochement of Cultures, we will continue our policy of preserving the cultural diversity of our country and promoting international dialogue between civilisations.

In September our capital will host yet another congress of world and traditional religions. We welcome the participation of religious figures from Russia in this forum. Practically all of them confirmed their participation.

Kazakhstan is actively reformatting the system of its higher education with the participation of leading foreign universities, including Russian ones. The deepening of international academic ties has special significance for promoting the traditions of bilateral cooperation.

I am convinced that the successful implementation of a number of joint educational and cultural initiatives will allow us to make a tangible contribution to the steady economic advance of our country.

Participants of the forum,

Kazakhstan proceeds from its firm conviction that Eurasia is our common home and that all countries on our continent should closely cooperate in the community. We are confident that the building of a peaceful, stable and economically strong Eurasia will become a major factor of sustainable development and inclusive growth on a global scale.

I am convinced that this prestigious discussion venue that unites top class experts has great potential in searching for constructive ideas aimed at normalising the international situation and recovering the positive dynamics of the world economy.

Thank you for your attention.

Margarita Simonyan: Thank you very much, President Tokayev.

Eurasia is indeed our common home. We all want this home to be safe and prosperous through God’s help and our mutual efforts.

And now we will turn to Africa. We have a video address from President of Egypt Abdel Fattah el-Sisi. Can we have it on the screens, please? Thank you.

President of Egypt Abdel Fattah el-Sisi: In the Name of Allah, the Most Beneficent, the Most Merciful,

President of the Russian Federation Vladimir Putin,

Ladies and gentlemen,

At the outset, allow me to extend to His Excellency, President Vladimir Putin, my sincere congratulations on the silver jubilee of the St Petersburg International Economic Forum. Since 1997, when it has been held for the first time, the forum has become a leading platform for the business community and a remarkable economic event that seeks to discuss the key economic issues facing emerging markets and the world.

Ladies and gentlemen,

The Arab Republic of Egypt, as a guest country, will be part of this year’s session of the forum, which marks the 25th anniversary of its launch, thus confirming the distinguished level that Egyptian-Russian economic relations have reached over the recent years.

This year’s forum is being held amid unprecedented political and economic challenges of a strategic nature. We hope that the outcomes of the forum will contribute to finding effective solutions to these challenges in a way that mitigates the impact of the global economic crisis and its negative repercussions on many countries in the world, especially the economies of emerging countries, takes the concerns and interests of all parties into account, and achieves the security and tranquility of peoples.

This would be achieved through long-term political understandings that open the way for the growth of the global economy, especially in the wake of the severe coronavirus pandemic, which has cost our societies many victims and considerable money and resources, thus making us keen to avoid any slowdown in the global economy.

Ladies and gentlemen,

Let me use this opportunity to reiterate that the Arab Republic of Egypt values its firm, historic friendship relations with the Russian Federation, and values the tangible progress the two countries’ relations have been witnessing over the past years in a multitude of vital sectors, for the two countries’ economies and the prosperity of the two peoples.

The Arab Republic of Egypt and the Russian Federation have been engaged over the past years in the implementation of mega and ambitious projects that serve our countries and respond to the aspirations of our peoples to realise more economic progress.

The most prominent of these are: the project for the establishment of the Dabaa nuclear power plant, which comes within the context of the Egyptian State’s strategy to expand national projects for the use of new and renewable sources of energy.

Another project is the establishment of the Russian Industrial Zone in the Economic Zone of the Suez Canal, which is meant to become an important platform for industry in Africa.

This is in addition to cooperation between the two countries to upgrade the Egyptian railway network and other joint ventures that realise the benefit of the two peoples.

Ladies and gentlemen,

You must be aware that the exceptional events that have been taking place in the Arab Republic of Egypt over the past decade had their immense impact on the overall economic situation in the country. The Egyptian people stood up to surmount this crisis by supporting a clear vision, based on investing in the Egyptian citizen and developing his capabilities.

Therefore, Egypt Vision 2030 was launched to reflect the state’s long-term strategic plan to achieve the principles and goals of sustainable development, with its economic, social and environmental dimensions.

Based on this vision, the Government of Egypt has modernised its legislative structure to enable Egypt to attract more foreign investment. This qualified Egypt to become the top destination for attracting foreign investments in Africa and one of the few countries in the world capable of achieving a growth rate of up to 3.3 percent in 2021, despite the negative challenges posed by the spread of COVID-19 and their impact on the global economy. We expect the Egyptian economy to grow by 5.5% during the current fiscal year. The country’s non-petroleum exports also increased during 2021 to reach $32 billion.

Egypt has also succeeded, within the framework of its strategy to increase its capabilities, to implement mega agricultural projects that are aimed at increasing agricultural land by almost 2 million feddans.

This is in addition to the mega projects Egypt is implementing in the fields of transport, by expanding thousands of kilometers of roads and upgrading Egypt’s transport system by introducing new projects. Those include the high-speed rail that will constitute a means to link the Red Sea and the Mediterranean Sea, thus boosting and facilitating international trade.

Adding to this are the mega industrial projects and the numerous projects in the field of clean energy production, which have been established in Egypt at a rapid pace over the past period.

Despite the previously-mentioned national efforts, Egypt’s actions and efforts to achieve progress were hit recently by economic crises caused by the COVID-19 pandemic. The world was partially recovering from its effects and repercussions, when it was hit again by a great economic crisis that cast a shadow over growth rates and negatively affected states’ budgets, reflecting on the rise of fuel prices and the decline in the value of the national currencies in the face of hard currencies. This is in addition to the disruption in supply chains, the emergence of the food crisis, as well as the irregular movement of civil aviation. This sector is connected with vital fields of the Egyptian economy, primarily tourism and insurance.

Addressing this crisis, which has an international character, requires international efforts and collaboration among all parties in order to get matters back to their normal state, particularly the movement of maritime traffic and the regularity of supply chains, particularly foodstuff, such as grain and vegetable oil.

This also requires working toward restoring calm and stability at the international level, in order to mitigate the impact of this economic crisis on the peoples, who seek peace and development.

I also call on all companies participating in this forum and others to take advantage of this huge opportunity that is provided by investing in Egypt in all fields.

I would not miss, before concluding my speech, thanking the people of Saint Petersburg, this brave city throughout history, which at the same time represents an icon for culture and openness on the outside world.

Finally, I would like, once again, to thank His Excellency, President Vladimir Putin, for his kind invitation for Egypt to participate in this forum as a guest of this round, wishing the forum and the participants all success and blessings and wishing our friendly countries more constructive cooperation, prosperity and progress. We pray God Almighty to spread peace and stability across the world and to spare our peoples the scourge of war and its economic and social impact by giving priority to the language of dialogue, understanding and co-existence.

Thank you.

Margarita Simonyan: We are grateful to the President of Egypt. I think that the people of the host city should be especially pleased to hear his warm words about St Petersburg.

We have just a little time left before the discussion begins. They say anticipation increases desire.

We will now listen to an address by President of the People’s Republic of China Xi Jinping.

President of the People’s Republic of China Xi Jinping (retranslated): President Putin, ladies and gentlemen, friends,

I am delighted to have this opportunity to address the plenary session of the 25th St Petersburg International Economic Forum, which I attended in person three years ago.

In February this year, President Putin visited China and attended the opening ceremony of the Winter Olympic Games in Beijing. We had a detailed exchange of views, following which we reached a vital agreement on expanding our comprehensive practical cooperation and implementing the concept of global governance based on joint consultations, joint participation and joint use.

Cooperation between China and Russia is currently ascending in all spheres. Our bilateral trade reached $65.8 billion over the first five months of this year. We can expect to attain new records by year-end. This is evidence of the high resilience and ingenious potential of Chinese-Russian cooperation.

The world is entering a new period of turbulence and transformation amid the ongoing radical changes and the coronavirus pandemic. There is an obvious trend of anti-globalism, a growing divide between the South and the North, and a weakening of cooperation drivers in the area of development, which could plunge the erratically reviving global economy into a deep recession and create unprecedented challenges to the implementation of the UN 2030 Agenda for Sustainable Development.

According to ancient Chinese words of wisdom, a clever man sees a seed of crisis in every opportunity and an opportunity in every crisis. Danger and opportunity always go together. By overcoming danger, you get opportunity. Strength lies in confidence. The more there are difficulties, the more important it is to remain confident.

During last year’s session of the UN General Assembly, I proposed a Global Development Initiative, which was positively received and supported by a number of international organisations, including the UN, and about a hundred countries.

Today, at a time when the international community is ever more interested in achieving more equitable, sustainable and secure development, we should seize opportunities, meet challenges head-on, and work on the implementation of the Global Development Initiative to build a shared future of peace and prosperity.

First, we need to create conditions for development. It is important that we follow true multilateralism, respect and support all countries’ pursuit of development paths suited to their national conditions, build an open world economy, and increase the representation and voice of emerging markets and developing countries in global economic governance with a view to making global development more balanced, coordinated and inclusive.

Second, we need to strengthen development partnerships. It is important that we enhance North-South and South-South cooperation, pool cooperation resources, platforms and networks of development partnerships, and scale up development assistance in order to forge greater synergy for development and close the development gap.

Third, we need to advance economic globalization. It is important that we enhance the coordination of development policies and international rules and standards, reject attempts at separation, supply disruption, unilateral sanctions and maximum pressure, remove trade barriers, keep global industrial and supply chains stable, tackle the worsening food and energy crises, and revive the world economy.

Fourth, we need to pursue innovation-driven development. It is important that we unlock the potential of innovation-driven growth, improve the rules and institutional environment for innovation, break down barriers to the flow of innovation factors, deepen exchanges and cooperation on innovation, facilitate deeper integration of science and technology into the economy, and make sure the fruits of innovation are shared by all.

Ladies and gentlemen, friends,

The fundamentals of the Chinese economy are its strong resilience, enormous potential and long-term sustainability, which remain unchanged. We have full confidence in China’s economic development. China will continue to promote high-quality development, promote openness with firm resolve, and pursue high-quality Belt and Road cooperation.

China stands ready to work with Russia and all other countries to explore development prospects, share growth opportunities, and make new contributions to deepening global development cooperation and building a community with a shared future for mankind.

Thank you.

Margarita Simonyan: Thank you, Mr President.

Coming to learn Chinese wisdom and some of Chinese sagacity is always a good thing, especially now that Chinese wisdom might come in useful for the entire world.

Mr President, I would like to show you something that I have brought with me especially. It is juice, and it used to be so nicely coloured. It does not matter what sort of juice it is; you cannot even see the brand here, although it is a popular one. And now – do you see? A small picture and the rest is white. Why is that? And this is happening on a massive scale.

Because we ran out of paint. The producer of paint for such packaging has left Russia, and the producer of the packaging also announced that they are leaving. I bought this two weeks ago, and soon this will disappear. As a result, we will have to pour it into bottles or three-litre glass jars, like it was in my childhood, unless we discover that we do not produce bottles either.

There are conflicting opinions on this. You have touched upon this issue today. Some of the participants – a considerable part, maybe even the majority – came here by Sapsan trains. Some say “We will swap Sapsans for Chinese trains, they are even better,” since Siemens has gone. Others say “We will learn to make them ourselves.” Let me remind you that we launched our own high-speed trains in 1984, I think they were called ER200. I was four years old, did not go to school yet, but we already had high-speed trains – but we do not have them any longer. It is sad, isn’t it?

And there are also people who say that no, we cannot replace all that, we can use Sapsan trains for another couple of years and then we will just give up high-speed railways, which means we will step back from what we got used to. And it is like this with everything: telephones, computers, everything we got used to. This is a very sad, I would even say heartbreaking plan.

Maybe there is a different plan?

Vladimir Putin: Whenever any decisions are taken, the key issues must be to singled out. What is key for us? Being independent, sovereign and ensuring future-oriented development both now and for the future generations? Or having packaging today?

Unless we have sovereignty, we will soon have to buy everything and will only produce oil, gas, hemp fibre, saddles and sell rough logs abroad.

It is inevitable. I have already said so in my speech: only sovereign countries can expect to have a sovereign future. That does not mean, however, that we need to plunge back into a situation of 30, 40 or 50 years ago.

Regarding packaging. I do not think it is such a complicated thing that either our partners from other countries can replace, who will be pleased to occupy this market sooner or later, or we will be able to make ourselves.

Margarita Simonyan: You do not see it, but President Tokayev is nodding his head: they will probably be able to replace it.

Kassym-Jomart Tokayev: Absolutely, this is not a problem.

Vladimir Putin: Of course, we will able to replace it.

The question is about a totally different matter. We keep talking about import substitution. In my speech here I also said – and I will just add a couple of words so as not to take too much time while answering only one question.

The issue is not about import substitution, the issue is to establish our own capabilities based on progress in education, science and new promising schools of engineering. We will always be given packaging materials and other simple things, event telephones and smartphones. What we have never been given and never will be is critically important technologies. We have never been given them before even though we had problem-free relations with our Western partners in the previous decades. This is the problem.

And when we begin to stand up for our rights, we are immediately slapped with some sanctions and restrictions; this is what the problem is all about. Therefore, we must commit ourselves to that and have the capacity to reproduce critically important technologies on the basis of what I mentioned. And with that base we will always be able to manufacture the goods you mentioned: packaging materials, telephones and smartphones. If we realise that and keep focusing on solving fundamental issues, we will resolve everything else without a problem.

Let me reiterate: others are already coming to that place – those who produce the packaging materials, those who produce the paints. We are also starting to produce paints and other consumer goods as well as goods employed in industry in a broader sense. We can make anything – I have absolutely no doubt about that.

Obviously, some things will be lost, other things will be made on a new basis, much more advanced – the way it happened earlier. Therefore, when we talk about import substitution, we will substitute something while other things will have to be done on a totally new promising basis of our own making.

Margarita Simonyan: Thank you. President Tokayev, would you like to add anything?

Kassym-Jomart Tokayev: I think everything is clear here, and judging by President Putin’s extremely interesting speech, we can understand that he is thinking in the categories of historical perspective, so to say.

Margarita Simonyan: As always.

Kassym-Jomart Tokayev: And juice packaging has no place here.

Indeed, it is a small problem, nature abhors a vacuum: others will come who will be producing juice packaging that is just as good, and local producers will appear.

The issue is about something else. In particular, I said in my speech about the importance of Eurasian cooperation, about the importance of uniting efforts to resolve unexpected problems. I think we will arrive at the result we are seeking on this road.

To be continued.

Economic Rent and Exploitation: Michael Hudson, Shepheard Walwyn

June 18, 2022

Michael Hudson, Shepheard Walwyn recording May 23, 2022
Part one:  https://www.youtube.com/watch?v=XDo7HykYN9k

Part two here:  https://www.youtube.com/watch?v=I-xWgLertkg

Jonathan Brown
Michael, welcome to the podcast.

Michael Hudson
It’s good to be here. I’m looking forward to it.

Jonathan Brown
Michael, I think you have one the most extraordinary upbringings and journeys into economics. And I just wanted to give our listeners just some sense of how you got from being the godson of Leon Trotsky all the way to what I consider to be probably the most important economist in the world today.

Michael Hudson 00:23
There’s no direct causality there that could have been anticipated. I never studied economics in college, because I went to school at the University of Chicago. We know that there were some students at the university who were at that business school. They were such strange people that we never even thought of going near them, because there was something otherworldly about them, something abstract.

My degree was in German language and history of culture, because the head of the History of Culture Department was Matthijs Jolles, a German professor and translator of von Clausewitz, On War. And in at the time, my intention was to become a musician. And I had to learn German in order to read the works of Heinrich Schenker. In music theory, my teachers were German. And for the History of Culture, most of the books that I was reading were, were all in German. And the German professors were also heads of the Comparative Literature Department and other departments. That meant that I could take all the courses cafeteria style at the university that I wanted.

I had to go to work when I graduated. I went to work for a while for direct mail advertising for the American Technical Society, a publisher a block away from the university, and then went to work for Free Press that was headed by Jerry Kaplan, a Trotskyist follower of Max Shachtman. And he wanted to send me to New York to help set up Free Press there.

Soon after I came to New York, Trotsky’s widow died. And Max Shachtman was the executor of her estate. He thought I should go into publishing by myself. And I had already had the copyrights for George Lukacs, the Hungarian Marxist and I thought tried to get funding for a publishing company with Trotsky’s works and other works. I’ve been writing a history of music and art theory. And needless to say, I didn’t get any funding because nobody was at all interested in publishing the works of Trotsky. I even tried to get Dwight Eisenhower the write the introduction to his military papers, wouldn’t work.

I was urged to meet Terence McCarthy, the father of a girlfriend of one of my schoolmates, Gavin MacFadyen. He was the first English-language translator of the first history of economic thought that was written: Karl Marx’s Theories of Surplus Value (Mehrwert), reviewing the value theory of classical economics. Terence said that he would help guide me in economic thinking if I’d get a PhD in economics and go to work on Wall Street to see how the world works. But I had to read all of the bibliography in Marx’s Theories of Surplus Value. So I had to begin buying the books, and ended up working as a sideline with one of the reprinters, Augustus Kelly, who was reprinting many of the classical economists. He was a socialist. There were other dealers in New York: Samuel Ambaras, Sydney Millman. I began buying all of the 19th-century classical economic books that I could, sinse that was the only way that I could get copies.

I took graduate classes in the evening while working at a bank for three years, the Savings Banks Trust Company. It was a commercial bank, but was acting as a central bank for the savings banks that in America finance mortgages. All their savings are reinvested in mortgages. So for three years my job was to track the real estate market, the mortgage market, interest rates, the funding of mortgages, the growth of assets by the savings banks, all growing at compound interest. All the growth in savings in the New York savings banks in the early 1960s was simply the accrual of dividends. So you’d have a step function at dividend time every quarter, going up exponentially. There was hardly any new savings inflow. It’s as if you’ve just left a given amount of savings in 1945, and let the amount rise exponentially. All this increase in savings was recycled into the real estate market.

The New York banks wanted to extend their market so they couldn’t just keep bidding up New York housing prices. They won the right to lend out of state, especially the Florida. So my job was basically seeing that real estate prices were whatever a bank would lend. At that time, banks would not lend you a mortgage if the debt service exceeded 25% of your income. And you had to put up usually 30% of the purchase price as a down payment, but possibly 10%. So housing was affordable. You could buy a really nice house for you know, $20 or $30,000. Now, it costs $400,000 to buy just a one room apartment in a condominium.

I bought a house for $1 down – it was $45,000 total. I took out a mortgage from Chase for half the price, and the other half was a purchase-money mortgage. So it was easy. Anybody coul get a house in New York at that time. Housing was readily affordable.

After I finished my PhD courses, I changed jobs. My real interest at the time was international finance and the balance of payments. So I went to work at Chase Manhattan as their balance of payments economist. This was at a time when the balance of payments and even balance-sheet analysis was not taught in schools. It was very specialised. I realised that what I was taught, especially in monetary theory, had nothing at all to do with what I was learning in practice.

In monetary theory, for instance, that was the era of Milton Friedman in the 60s and 70s. He thought that when you create more money, it increases consumer prices. Well, I thought that obviously was not how things worked. When banks create money, they don’t lend for people for spending. About 80% of bank loans in America, as in England, are mortgage loans. They lend against property already in place. They also lend for corporate mergers and acquisitions, and by the 1980s for corporate takeovers.

The effect of this lending is to increase asset prices, not consumer prices. You could say that money creation actually lowers consumer prices, because 80% is to increase housing prices. Banks seek to increase their loan market by lending more and more against every kind of real estate, whether it’s residential or commercial property. They keep increasing the proportion of debt to overall real estate price. So by 2008 you could buy property with no money down at all, and take 100% mortgage, sometimes even 102 or 103% so that you would have enough money to pay the closing fees. The government did not limit the amount of money that a bank could lend against income. The proportion of income devoted to mortgage service that was federally guaranteed increased to 43%. Well, that’s a lot more than 25%. That’s 18% of personal income more in 2008 than in the 1960s – simply to pay mortgage interest in order to get a house. So I realised that this was deflationary. The more money you have to spend on mortgage interest to buy a house as land and real estate is financialized, the less you have left to spend on goods and services. This was one of the big problems that was slowing the economy down.

Well, it was obvious to me that rent was being paid out as interest. Rent is for paying interest. If I talked with various developers about buying buildings, they said, “Well, we try to buy our buildings without any money at all. The banks will lend us the money to buy a building, and they calculate how much is your rental income going to be? That rental income will carry how much of a bank loan at a given interest charge, and lend the money to buy it.” That is how real estate rent was financialized.

Democratization of real estate on credit means turns rental income into interest, not taxes
This meant that the role that had been played in the 19th century by landlords is now played by banks. In the 19th century, the problem was absentee landlords, the heirs of the warlords who conquered England or other European countries in the Middle Ages. You had hereditary rent. Well, now our rent has been democratised. But it’s been democratised on credit, because obviously, the only way that a wage earner can afford to buy is is on credit. For an investor you can buy whole buildings on credit.

Finance has transformed real estate into a financial vehicle. So that that’s what rent is for paying interest means. There’s a symbiotic sector, Finance, Insurance and Real Estate – the FIRE sector. It’s the key to today’s financialised economy. Most real estate tax in America is at the local level, because after the income tax was introduced, commercial real estate was made tax exempt by the pretence that buildings depreciate in value, as if they don’t in fact rise in price. The pretence is that they wear out, even though landlords normally pay about 10% of the rental income for repairs and upgrades to keep the building from wearing out.

Today in New York, and I’m sure in London too, the older a building is, the better it’s built. Real-estate developers have crapified building codes so that the newer the building, the more shoddily it’s built. They call shoddy buildings “luxury” real estate, meaning is built with really not very thick walls. I think the junkiest building in New York is Trump Tower, which is sort of the model of shadiness which they call luxury. It’s very high-priced.

The academic economics curriculum finds unproductive credit to embarrassing to acknowledge
While I saw the importance of finance and real estate, none of that was discussed in the university’s economics courses at all. The pretense is that money is created by banks lending to investors who build factories and employ labour to produce more. All credit is assumed to be productive, and taken on to finance productive investment in the form of tangible capital formation. Well, that that was the hope in the 19th century, and actually was the reality in Germany and in Central Europe, where you had banking becoming industrialised. But after World War I, you had a snap back to the Anglo-Dutch-American kind of banking, which was really just the Merchant banking. It was bank lending against assets already in place.

Classical economics as a reform program to free economies from economic rent and rentier income

I realised that the statistics that I worked on showed the opposite of what I was taught. I had to go through the motions of the PhD orals. and avoided conflict by writing my dissertation on the history of economic thought, because anything that I would have written about the modern economy would have driven the professors nutty. Needless to say, none of the academic professors I had ever actually worked in the real world. It was all very theoretical. So that basically how I came to realise that the 19th century fight for 100 years – we can call it the long 19th century, from the French Revolution, up to World War I, and from the French Physiocrats, to Adam Smith, Ricardo and Malthus, John Stuart Mill, Marx, Simon Patton and Thorstein Veblen – was the value and price theory of classical economics to quantify economic rent as unearned income.

The purpose of value and price theory was to define the excess of market price over actual cost value. The difference was economic rent. The essence of classical economics was a reform campaign – that of industrial capitalism. It was a radical campaign, because the basic cost-cutting dynamic of industrial capitalism was radical. It realised that in order to make Britain, France or Germany, or any country competitive with others, you had to get rid of the landlord class and its demands for economic rent. You also had to get rid of monopolies and their economic rent. You had to get rid of all payments of income that were not necessary for production to take place. The aim was to bring prices in line with the actual cost value of production, to free economies from this rake-off to unproductive investment, unproductive labour and economic rent – land rent, monopoly rent and financial interest charges. Those were the three basic categories of rent on which classical political economy focused.

To translate classical rent theory into practice, you needed a political reform, You had to get rid of the landlord class’s political power to block reform. It wasn’t enough simply to say that economic rent was not a necessary cost of production, not part of real value. The landlord class would simply say, “Well, what are you going to do about it?”

The proponents of industrial capitalism saw that the constitution of England, France and America required giving governments the power to pass laws to free economies from economic rent. in order to do that, they needed democratic reform of the political system. In England they needed to empower the House of Commons over the House of Lords. That effort led to a constitutional crisis in 1909 and 1910, when the House of Commons, Parliament, passed a land tax. That was rejected, as I’m sure you know, by the House of Lords. The crisis was resolved by saying the Lords could never again reject a Revenue Act passed by the House of Commons. That political reform was part and parcel with classi9cal economic theory defining rent as an unnecessary cost of production.

But where did this leave the interests of labor – the majority of the population? As a broad social reform, classical economics began to falter by 1848. You had revolutions in almost every European country. These revolutions were not fully democratic in the sense of they weren’t really for wage labour, which was the bulk of society. They were bourgeois revolutions, including land reform. They were all for getting rid of the landed aristocracy and the special privileges that the aristocracy held. But they were not very interested in helping consumers, and labour’s working conditions, shortening the workweek, shortening the workday and promoting safety. There was nothing really about public health, or public social infrastructure spending. So things began to falter by 1848.

But they still made progress through the balance of the 19th century. By the time World War I broke out in 1914, it looked like the world was moving towards socialism. Almost everybody in the 19th century, across the political spectrum, whatever you were advocating was called socialism.

Socialism and strong government as the program of post-rentier industrial capitalism
At the broadest level, socialism meant collecting economic rent and getting rid of the landlords and the aristocracy, either by taxing away rent or nationalizing land and natural monopolies, in hope that that by itself would create a viable industrial economy. you had libertarian socialism, Marxist socialism, anarchist socialism, industrial socialism and Christian socialism. Almost every reformer wanted that as a label. The question is, what kind of socialism were are you going to have?

That was what the aftermath of World War I was fought about. The fight was largely shaped by the Russian Revolution, which unfortunately went tragically wrong under Stalin and gave socialism and communism a bad name. But it still had a good name in England after World War II. And also in America in the 1930s, as a result of Franklin Roosevelt’s New Deal that saved capitalism by investing in public infrastructure.

I can give you an example of where pro-capitalist theory was in the 1890s. In the United States. The industrial interests in America faced a problem once the Civil War ended in 1865. They wanted to create an industrial society – ideally, a fair society with rising living standards. How do you do that without training people to administer such an economy? You need to train people in a university. You have to teach them how economies worked. But the main universities in America were religious colleges, founded to train the clergy. Yale, Harvard, Princeton and most taught British free-trade theory, which trivialized economic theory.

So the business interests and the government saw the need to teach reality-based economics. They saw that there was little hope in trying to reform the existing universities. Their economics departments – called moral philosophy – were unreformable. So it was necessary to create new universities. All through America, each state was given a land grant to enable it to create a new university and teach reality economics. They also would teach economic history and how the world actually works. Most of all, they would teach protectionist trade theory and how to create a society and economy that is more efficient than other economies?

Well, the first business school in America was the Wharton School at the University of Pennsylvania. Its first economics professor was Simon Patton, a protectionist. And he explained that if you’re going to make industrial products at prices that outcompete those of England, you need public infrastructure spending. You need as much of the cost of living as possible to not to be paid by the employers to factor into the price of their products, but to be paid by the government.

Patten cited public roads and canals to lower the cost of doing business. He also noted that every time you build a road or railroad, you’re going to raise the land value along these routes – and lower land prices for areas replaced by the now-more-accessible producers. You can simply self-finance the cost of these by taxing the rent.

You also need public education, and that should be free so that you don’t have like today, to earn enough money to pay an enormous student debt – and receive a high salary to afford to pay that. If the government would provide free education, you wouldn’t have to pay workers enough to pay this student debt, so they wouldn’t need such high wages simply to break even.
Today 18% of America’s national income is from medical insurance. If you have a public health system and socialized medicine, as England had after World War II and as Bernie Sanders advocates today, then you wouldn’t have to pay workers a high enough salary to afford this enormous medical expense. England realised this already in the 1870s and ‘80s, when Benjamin Disraeli campaigned as a conservative for health.

So the movement towards public infrastructure towards government spending was led by the industrialists. It was they themselves who wanted strong government. The common denominator of politics from Adam Smith through all of the 19th century was to free economies from the unnecessary economic rent, to free them from unearned income, from the free lunch. To do that, you have to have a government strong enough to take on the vested interests – first the landlord class in the House of Lords, and then the financial class behind it.

Jonathan Brown 26:00
Well, just to clarify that, Michael, I think what you’re, what you’re saying is, I know in some of your writing you talk about the view of government or the public sector was it was a fourth means of production. So you got land, labour, capital and the public sector.

Michael Hudson 26:16
That was the term that Simon Patten used. Government infrastructure is a fourth means of production. But what makes it different from profits and wages is that if you’re a wage earner, you want to make as high a wage as possible. If you’re a capitalist, you want to make as high a profit as possible. But the job of public investment is not to make an income, not to do what was done under Thatcher and Tony Blair, not to treat public utilities, education and health as profit making opportunities. Instead, Patten said, you should measure their productivity by how much they lower the cost of doing business and the cost of living for the economy at large.

Jonathan Brown 27:03
And what that allows a country to do, so if you’re good at it, is to get together and ask how to educate our people, lower the cost of transportation so we’ve got we’ve got a mobile workforce, all those things. We can then start to compete against other nations who are ahead of us, who may have more expensive means of production, and we can maintain that advantage. We’re not stuck in a lower level of the economy where we’re basically working for someone else. We’re able to develop ourselves as a nation. And I guess the benefit of us doing it collectively is that we can minimise the cost, then use a natural monopoly power in government hands to provide efficient services across the board. Is that right?

Michael Hudson 27:46
Yes, but they went further. Protectionists in America said the way to minimise costs – and it may seem an oxymoron to you – the way you minimise costs is to have high-wage labour. You raise the wages of labour, or more specifically, you want to raise the living standards, because highly paid labour, highly educated labour, well fed labour, well rested labour is more productive than pauper labour. So they said explicitly, America’s going to be a high wage economy. We’re not like Europe. Our higher wages are going to provide high enough living standards to provide high labour productivity. And our higher labour productivity, shorter working day, better working conditions, healthy working conditions, public health, well educated labor will undersell that of countries that don’t have an active public sector.

Jonathan Brown 28:45
and Henry Ford being the poster boy for that approach, of doubling his employees’ salaries and so on.

Michael Hudson 28:53
Yes.

Jonathan Brown 28:54
Amazing.

<h4>The fight against classical economics and its concept of rent as unearned income</h4>
Michael Hudson 28:55
Needless to say, the fight for the kind of democracy that will free economies from economic rent was not easy. By the late 1880s, and especially the 1890s, you had the rentiers fighting back. In America the fight was led by John Bates Clark. There was a movement, which today is called neoliberalism, to deny the entire thrust of classical economics. Clarke said that there is no such thing is unearned income. That meant that economic rent does not exist. Whatever a businessman makes, he is said to earn. Whatever a landlord makes, he earns – so there was no unearned income.

This came to a head around 1890 the Journal of Ethics. Clark wrote the first essay, and it was refuted by Simon Patton. There was a fight against the concept of economic rent by academic economics, especially in New York City at Columbia University, where Clark ended up, This is really the dividing line: You recognise that much of the economy is unearned income and you want to get rid of it. To do that, you have to pass laws that will tax away the unearned income, or better yet, you put land and other natural resources and natural monopolies in the public domain where the public sector directly sets prices. That was what Teddy Roosevelt did with his trust busting.

Jonathan Brown 31:13
Michael, I just want to say reading your work is something of a revelation. I’ve got a degree in economics for what it’s worth. And I would say the only valuable thing that I found from a getting a degree in economics is that I know, resolutely when an economist is talking bullshit. How do you know that? It’s when his lips move.

Michael Hudson 31:32
If it’s an economist, they’re talking bullshit – let me make it easy, right!

Jonathan Brown 31:36
And then the thing is, that reading your work, for example, going back to Thorstein Veblen, his work, which only made it into the mainstream when I was getting a degree in the 90s, was conspicuous consumption. It had nothing to do with absentee landlords or, and the profound importance of that, and then I’m looking in J is for Junk Economics, and you talk about the free lunch, and how Milton Friedman said that there’s no such thing as a free lunch.

When you look at your work, you prove that actually there is, and that he’s having it! And you say, “Most business ventures seek such free lunches not entailing actual work or real production costs, and to deter public regulation or higher taxation of rent-seeking recipients of free lunches. They have embraced Milton Friedman’s claim that there’s no such thing as a free lunch”.

And you talk about: “Even more aggressively rent extractors accused governments of taxing their income to subsidise freeloaders, pinning the label of free lunches on public welfare recipients, job programs, beneficiaries of higher minimum wage, when the actual antidote to free lunches is to make governments strong enough to tax economic rent, and keep the potential rent extracting opportunities and natural monopolies in the public domain.”

Michael Hudson 32:51
Veblen was indeed was the last great classical economist. He coined the term neoclassical economics. I think that’s an unfortunate term. When I went to school in my 20s, I thought neoclassical meant ‘Oh, it’s a new version of classical economics’. It’s not that at all. What Veblen meant was there used to be the old classical economics of Adam Smith, John Stuart Mill and Marx, all about economic rent and exploitation. “Neo” means there’s a new body of completely different, post-classical economics aiming to make classical economics obsolete. That is the new mainstream economics of today, trying to make itself “classical.” So Veblen he should have used the terms post-classical or anti-classical economics.

Jonathan Brown 33:44
Or even pseudo classical?

Michael Hudson 33:49
It’s antithetical, because the root of classical value and price theory was to isolate and define economic rents statistically. To deny economic rent is to deny the whole point of classical value and price theory. That is where economics became untracked.

Unfortunately, it became untracked largely by Henry George, who rejected classical economics and very quickly followed J.B. Clark and accepted his mushy value and price theory. Removing all elements the cost of production from value theory, analysing prices simply in terms of consumer demand and what people want, and not analysing what determines land and other asset prices, loses focus.

George became very popular as a journalist. He wrote wonderful journalism to expose the railroads in California as landlords, and he wrote a wonderful book on the Irish land question. But when he tried to talk about the whole economy, he didn’t want any competition. He said, in effect, “Economics begins and ends with me. Forget everything, Adam Smith and classical economics.” He’s sort of an early Margaret Thatcher. There’s no such thing as society or the economy. Only “tax the landlords.”

Jonathan Brown 35:35
What are you doing? You’re destroying my view of Henry George! He’s an early Margaret Thatcher? How, how could that possibly be?

Michael Hudson 35:47
Well, in two ways. The first way is that in the 19th century, in order to tax the land rent, you had to take on the most powerful vested interests of all: the real estate interests and the financial interests. But Henry George was a libertarian. He was for small government. He broke with the socialists, because he warned that socialism had a potential for authoritarianism. Well, we know that he was right in that warning, because we saw what happened in Stalinist Russia. But obviously, what you want is a government that is strong and democratic, and with enough authority to tax and regulate the vested interests. (That term is Veblen’s, by the way.) That was the ideal in America, but it needed a strong enough government so that Teddy Roosevelt could come in and be able to bust the trusts.

The government was strong enough in 1913-14 to impose an American income tax that fell just on 1% of the population, almost entirely on economic rent, on land rent, mineral rent on monopoly rent of the big corporations. If you’re a libertarian, your government is too small to take on these vested interests. And you’ll never win. You’ll end up like the Social Democrats or like today’s Labour Party under Mr. Starmer, not able to be very efficient. So that was George’s first problem.

The second problem was when he said that all you have to do is tax the land and everything else will take care of itself. Well, as you know, he was nominated as a celebrity candidate by the socialist and labour groups in New York City in 1876 to run for mayor. They gave him their programme – safe housing, workers housing, safe working conditions, food laws that protect people from poison, like you don’t want to use chromium for cake frosting to make it yellow.
Well, George threw out the whole labour programme and said that there’s only one thing that mattered: If you tax the land rent, the cakes will take care of themselves, worker safety conditions will take care of themselves. You don’t need socialism; just tax land rent.

Well, the word “panacea” came into popular use in the English language at that time, because George didn’t see the economy as a whole. That was a tragedy. He was great as a journalist describing rent and the machinations of the railroads. But once he tried to talk about the economy, without really describing how it worked as a system, saying there really isn’t any economic system, it’s just about land rent. That separated him from the other reformers.

By the 1890s you had many of reformers in America, who had been inspired by George’s journalism in the 70s and early 80s, including attacks on the oil monopoly and the Rockefellers. They asked what happened to George? Well, he became a sectarian. He formed his own party and said, we’re only going to talk about land rent. This diverted attention away from how the overall economy works. And if you don’t understand how the economy is all about providing a free lunch in one way or another, not only to landlords but to the financial sector primarily, then you’re really not going to address the interests of most of the population.

So his sectarian party shrank. Still, in the first decade of the 20th century you had followers of Henry George and socialists going around the country debating each other. They had great debates, they spelled out the whole problem. I wanted to reprint all these debates somewhere, what both the socialists and the Georgists said: “One thing we can agree on is that society is going to get go either your way or our way. We’re talking about how is the future of the political system and the economic relations and taxes that follow from this system. How are they going to evolve?”

The socialists focused on labour’s working conditions, because these were getting worse and worse. In America the fight for labour unionisation got quite violent, and corrupt. The abuse of consumers, the growth of monopolies, all these were growing problems. The socialists focused on these problems – and decided to leave the discussion of rent to followers of George. I think that was very unfortunate, because George had pried the discussion of economic rent away from the classical value theory and its political dimension, which was socialist.

I find little interest in today’s socialist movement or the socialist movement 50 years ago about land rent. They are more concerned about international issues, about war, about almost everything except land rent. And today I find the greatest interest in rent theory as a guide to a tax system in the context of an overall economic system to be in China. So that’s really where the debate over how to keep the price of housing down by keeping the financial sector from trying to capitalise the land rent into a bank loan.

That’s a big fight in China today. It should have been also in Russia. Fred Harrison, in the early 1990s, brought a group of people including me over to Russia. We made two trips to the Duma and did everything we could to explain that Russia could have a great advantage to rebuild its industry into a productive economy. The first thing that it should have done was to keep housing prices down. It could have given everybody their houses, free and clear, without any debt. Of course, some places would be more valuable than others, but Russia would have had the lowest-priced economy in the world. In America, the rent can take up to 43% of a home buyer’s income.

Well, there was pushback from the Russians. They had no rent in a socialist economy. Ted Gwartney, an American real estate appraiser, walked down the streets of St. Petersburg with the local mayor, I think on a fall or winter days. He pointed out that one side of the street was very sunny. The other street was in the shade. That’s how the sun is in the northern latitudes in the winter. Most people were walking on the sunny side of the street. That means that if you’re going to have a store, whether it’s a bakery, a food store or a restaurant, the store on the sunny side of the street is going to be able to attract more customers. Their site has more economic rent than the dark side of the street. Same thing with buildings near a subway. They will be worth more than sites far away from transportation.

The mayor said understood the point, and asked how to actually make a land value tax so to collect this rent? Ted explained that St. Petersburg’s layout was much like that of Boston, where a land map was easy to make. It showed that there was a peak centre of values near the subway, with rents tapering off further away. He suggested to apply Boston as a scale model to St. Petersburg. Just plug in a few prices, and you have a land-valuation map.

Russia could have been a low-cost economy. It could have kept the oil and gas, Yukos, GazProm, nickel and platinum resources all in the public domain to finance investment in re-industrialization, to become independent of the West. But as we all know, Ted and the people that Fred Harrison bought were completely overwhelmed by the billions of dollars that U.S. diplomats spent on promoting kleptocracy and shock therapy in Russia. Its officials and insiders worked for themselves, not Russia.

And it wasn’t only Russia that missed opportunities. I brought Ted Gwartney and his mathematical model-maker to Latvia, where I was Economic Research Director of the Riga Graduate School of Law. I was asked by the leading political party of Latvia, the Centre Party – basically the party of Russian speakers, with 1/3 of the population and votes – to draw up a model for how Latvia could restructure its post-Soviet economy and industry. Ted met with the tax authorities and housing authorities and explained how to use land rent as the tax base. They were amazed and said, “This is great. We can hire a separate appraiser for every single building. This will create a lot of employment”. No he said. He had been the appraiser for Greenwich, Connecticut, the state’s wealthiest city. He said, “We can do a whole city in about one week.” They couldn’t believe this in Latvia.

Around the time of his visit there was a meeting in Boston of the Eastern Economics Association. It was largely created by John Kenneth Galbraith to go off the economic mainstream. I think the Schalkenbach Foundation had a session on political critics of Henry George, so there were a lot of Georgists. Other people who came to the Eastern Economic Association meeting were socialists, including Alan Freeman who was the assistant to Ken Livingston, the Mayor of London.

When everybody was having lunch after the economic meetings, I brought Alan over to sit down with Ted Gwartney. Ted explained what he did, and Alan said, “Oh, I’ve never heard of this! I’ve got to come and meet you some more.’ So he came to New York and we went up to visit Ted in Connecticut. He explained how to make a land value map. Alan said, “You should win the Nobel Prize for this! This is amazing! There’s nothing like this in England.”

Ted explained that there are about 20,000 appraisers in America that do what he did. There are abundant statistics. Every city has a map of land and building appraisals: here’s the value of the building, here’s the value of the land. So smoothing out a land value map is pretty easy to do. Alan could hardly believe it.

Well, I went back to London shortly and met with Alan. It turned out that political pressures in England, especially from the Labour Party, led London to hire Weatheralls, a real estate company, do appraisals. So we never got to do our version of a real estate appraisal of London to calculate land rent.

But this is what all of the theories of the Physiocrats, Adam Smith, Ricardo, John Stuart Mill, Marx, Veblen, Alfred Marshall, all of them were focusing on. Yet this idea is so alien that from London to St. Petersburg, they don’t have any idea of how the simple concept can be done. The economics profession is in denial. It’s followed the idea that there’s no such thing as unearned income, everybody gets what they make.

The National Income and Product Accounts treat rent as a product, not a subtrahend
A byproduct of this value-free doctrine is how countries calculate their national income and product accounts. And if you look at the GDP accounts for the United States (and I’ve published a number of articles on my website and in major economic journals), rent is counted as part of GDP.

This is easiest to see in real estate and finance. The Bureau of Labor Statistics sends its employees around to ask homeowners what the rental income of their home would be if they had to rent it. If you were a landlord and rented yourself how much rent would that be? This appears in the NIPA statistics as “homeowners imputed rent.” That’s 8% of GDP. But it is not really income, because it is not actually paid. Nobody gets it. But value-free designers of GDP want to describe all of the income that landlords make as contributing to GDP. They say that landlords provide a productive service, they provide housing to people who need it, and they provide commercial properties to businesses that need it. Well, that’s not exactly how John Stuart Mill put it. He said that rent is what landlords make ‘in their sleep’. So how can you rationalize how productive landlords are?

Another element of American GDP is financial services. I called up the Commerce Department where they make the NIPA statistics and asked what happens when credit card companies increase their interest charges. And where do penalty charges for late payments appear? Credit card companies in America make billions of dollars in interest a year and even more billions in fees, late fees and penalties. Most of the income that credit card companies make are actually on these fees and penalties. So where does that appear in that GDP? I was told, in “financial services.’ So the “service” of calculating how far the debtors must pay for falling behind in their payments. They typical charge 29%. That’s all counted as a contribution to GDP. But in reality it is a subtrahend, leaving less to spend on real “product.”

This raises the question of just what income and product actually mean. Well, this brings us back to what classical economics is all about. The “product” should be measured by what its actual necessary cost of production is. But there’s a lot of income over and above this necessary cost of production. Namely, economic rent, that’s unearned income. But the income and product accounts don’t say how much is “earned” and how much is “unearned” land rent, monopoly rent, natural resource rent, interest and financial charges.

A classical economic accounting format would show how much of the prices for what our society produces is actually necessary, and how much is a subtrahend. Classical economists treat the land rent that you pay, interest charges and monopoly prices as a rake-off. So not all of your income is income equals “product,” because only a portion of that income represents a real product.

In America, the head of Goldman Sachs a few years ago said Goldman Sachs partners – a financial management firm – make more money than almost anyone else in America, because they’re the most productive. If you make a lot of money, by definition, you make it by being productive. That’s the false identity.

Jonathan Brown 55:25
That’s really the John Bates Clark idea that if you make the money, you’ve earned it. And it’s not just because you control the gate. You’re the gatekeeper, to stop people and make them pay the toll. You’re the troll under the bridge, taking people’s money as they cross, which is essentially what financial economics is about.

Michael Hudson 55:48
Right. I have spoken with a number of political advisors, many of whom were followers of Henry George. They’ve described to me how political all of this definition of the economy is. A number of friends of mine have been trying to show how much of what the United Nations calculates as income and product is actually economic rent. Steve Keen, Dirk Bezemer and Jacob Assa are in this group. There are a number of others who do it. We publish in places like the Review of Keynesian Economics, Journal of Economic Issues and other not-mainstream journals. A lot of this was taught where I was a professor for decades, at the University of Missouri in Kansas City.

Our graduates had problems getting jobs, because in order to get an appointment at a university, you have to publish articles in prestige journals. The University of Chicago, the Milton Friedman boys, the Chicago Boys control the editorial boards of all these prestige magazines, just like they control the Nobel Economics Prize Committee. The prize basically is given to Chicago Boys every year for not explaining how the economy works.

A precondition for what you call an economist, especially a Nobel Prize winning economist, is not to understand how the economy works. Because if you understand that, you’re going to threaten the vested interests that are getting the free lunch. You have to say there’s no such thing as a free lunch, everybody earns whatever they can get. Robbers and criminals like that idea. “Yeah, we stole it fair and square!”

Crime pays, and rent seeking also pays.

You can get much more money quicker by extractive means – by rent extraction – than you can by investing in plant and equipment and developing products and marketing them and making a profit over time, and spending on research and development. That’s why in today’s United States, 92% of corporate revenue, called earnings, (although not all of it is earned – that’s a euphemism) is spent on stock buybacks and dividend payouts, not on new capital investment.

So the way that the economy works today is no longer industrial capitalism; it is finance capitalism. Instead of Industrial Engineering, making society produce more with all of the environmental protection cost included, you have financial engineering, making wealth by increasing stock-market prices. Wealth is not achieved by earning it. You don’t save up your earnings and get wealthy. I think half of Americans are unable to raise $400 In an emergency. They have no savings at all.

For most people it’s very hard to save up money, especially if they have student debt, credit-card debt, medical debt and mortgage debt. After paying this, there’s really no income left to be saved. So you have the 1% of society, the rentier portion that had to pay income tax back in 1914, getting huge amounts of income and the rest of the society getting less and less. The result is economic polarisation. The dynamics of society are financial and basically rely on rent seeking that has been financialized.

I’ll give you another example of the GDP. One of the problems that makes GDP statistics meaningless is depreciation, the idea that buildings depreciate. When Ronald Reagan came in, the real estate interests and their banks basically took over the government. Henry George and the Libertarians oppose central planning by elected democratic governments, and that leaves central planning to Wall Street’s financial interests. Every economy is planned, and if you don’t have a government strong enough to do the planning, then the planning is done by the financial sector and the real estate sector, and they were given free rein under Ronald Reagan.

Under Reagan’s 1981 tax “reform” you could pretend that if you buy a big commercial building, you can write off 1/7 of the entire costs every single year as tax deductible income. At the end of seven years, you change your ownership from one name to another name, and you start all over again. The same building can be re depreciated again and again and again.

Donald Trump wrote in his autobiography, he loves depreciation, because he said thanks to the pretence of depreciation, his buildings are all going up in value, but he gets to pretend they’re falling, and deduct all of that fictitious over-depreciation from his taxable income. It’s actually economic rent. But if you look at the national income statistics, you can’t find economic rent in them at all. I was able to piece it together by adding up what goes into economic rent: Real estate taxes are part of economic rent, and also interest payments, because interest is paid out of economic rent. But fictitious depreciation tax loopholes also should be there.

But nowhere in the national income statistics is a report of how much income real estate owners actually claim as depreciation. They haven’t done that because if they showed this, people would think, ‘Wait a minute, this is a giveaway. This is utterly unrealistic.” So they only put in a figure for how much they [think] buildings are actually depreciating over a period of decades. So you have a fictitious national income accounting format that makes it impossible to calculate what land rent is – and that was the major focus of classical economics.

How are you going to get a statistical system that actually reflects this? Well, one associate of mine, Jacob Assa, has written a few books on this criticising economic rent. He worked in the United Nations here in New York until quite recently. But as I said, our graduates can’t publish in the University of Chicago economic journals whose party line is that ‘there’s no such thing as economic rent’, just like there’s no such thing as society is beyond “the market.”

I wanted to publish statistics on this and in 1994 the Henry George School in New York asked me to calculate what rent was and the land value. I found out that the value of land, the market price of land in the United States was twice what the government reported.

The government pretends that real estate prices rise mainly because buildings keep growing in value, even though they’re supposed to depreciate. They pretend that buildings grow in value by taking the original cost of the building, and multiplying it by the Construction Price Index. Whatever is left is reported as land value. Well, in 1994 the Federal Reserve reported that the land value of all of the commercially owned real estate in the United States was negative $4 billion. This is crazy.

The statistics are drawn up by a methodology that the real estate interests lobbied for. When I calculated this, the Georgists in America got furious. They said that I was showing that land value and rents were much higher than they thought. They worried that this might lead people to want to tax real estate. Lowell Harriss of Schalkenbach explained that Georgists today represent mainly real estate developers, and that their major audience was local mayors, whose biggest campaign funders are the real estate interest.

These Georgists called themselves “two raters,” wanting to keep overall real estate taxes unchanged (“revenue-neutral”) but shift the tax from commercial landlords onto homeowners by taxing land, not buildings – e.g., electric utilities, office buildings and other capital-intensive structures.

By representing the developers, Georgists proposed to save society by having the developers build up those slums, build up those vacant lots. Like George, they said that there was no need to worry about ecology or any problem except cutting property taxes for large real estate owners. You don’t need to worry about workers conditions or anything else. Let’s just give an economic incentive (i.e., a tax cut) to help contractors build up those vacant lots.

I was told if I published a new explanation of my statistics showing that most rent was paid out as interest, I could never have any relations with Schalkenbach and the Henry George school again. So I published them in a Harper’s Magazine cover story and have lived happily ever after.

Jonathan Brown 1:06:13
And was that “The New Road to Serfdom”?

Michael Hudson 1:06:22
Yes. I chose that title because the purpose of industrial capitalism was to free economies from the legacy of feudalism. And the legacy of feudalism was the landlord-warrior class collecting hereditary rent and the predatory banks that were not making loans for industry. None of the industrialists got their money to invest in banks. The inventors of the steam engine couldn’t get loans except by mortgaging their houses. Banks don’t lend money to create capital, only for the right to foreclose on it.

Jonathan Brown 1:07:02
This is all included in your in your latest book that just came out, The Destiny of Civilization: Finance Capitalism, Industrial capitalism, or Socialism, which I gather was a series of lectures to a Chinese University. Is that correct?

Michael Hudson 1:07:16
Yes. There were 160,000 viewers for the first lecture, and there’s a huge interest in this in China, because they realise that higher housing prices make them poorer and more highly indebted, not richer. What is pushing up housing prices in China is the amount of credit that banks will lend against the property.

A land tax would keep housing prices down, because the rent could not be available, to be capitalized into a bank loan. As China gets more productive and more prosperous, people obviously are going to be able to afford housing, which is how most people define their status. If a site gets more valuable because of public investment in transportation, or schools or parks nearby, that’s going to make it more valuable. But if you tax this rental income, then you’re going to keep the housing price down.

I think Fred Harrison and Don Riley wrote a book Taken for a Ride where they show that the money that London spent on extending the Jubilee Line increased real estate prices by twice as much as the line cost. London could have simply collected the land’s increase in rental value that this public investment created and made it self-financing.

Instead it was a giveaway.

They ended up taxing labour and business, and the effect was to increase Britain’s cost of living and hence the cost of production, which is why Britain is de-industrialising. It’s been de-industrialising because despite the attempts through 1909 and 1911, to free itself from landlordism, the bankers have taken the place of the landlords. They are the class today that the landlords were in the 19th century. So we’re back on the revival of what really was feudalism – a rake-off by a hereditary privileged class.

America’s monetary imperialism coming to an end with de-dollarization
Jonathan Brown 1:09:47

I’m wondering where we go next. I want to get into the conversations that you started with the 1972 first edition of Super Imperialism. I know we had a third edition fairly recently, with your prescience of the predictions in analyzing the situation for America, and how the balance of payments deficit was a result of U.S. expenditure by the military. Getting into the current manifestation of the de-dollarization challenge that seems to be accelerating through the Ukraine and Russia crisis, I wonder what background we need to give the listeners just to tell them about how that system works.

Michael Hudson 1:10:39
One of the things that most people don’t understand is money, largely because of the academic discussion confusing matters. Until 1971, countries running a balance of payments deficit would have to settle it either in gold or by selling off their industry to investors in the payments-surplus countries. Well, beginning with the war in Korea in 1950-1951, the U.S. balance of payments moved into deficit. The entire U.S. balance of payments deficit from the Korean War to the 1970s was a result of its foreign military spending.

By the time the Vietnam war was ending, the Americans had to sell its gold every month. Vietnam had been a French colony, so the banks there were French. As America spent more dollars in Southeast Asia, these dollars were sent from local French bank branches to their head offices in Paris. The Paris bank would turn over these dollars to the central bank for francs, and the central bank, under General de Gaulle, would cash in these dollars for gold.

Germany was doing the same thing, using its export proceeds that were paid in dollars to buy gold. So America’s gold stock was steadily going down, until finally it had to withdraw from the London Gold pool and stop making the dollar gold convertible. Back in 1950 when the Korean War began, the American Treasury had 75% of the world’s monetary gold. It had used this monetary power to control diplomacy in other countries. The basis of America’s political power was its gold stock.

Once they left the gold-exchange standard there was hand wringing. How was the United States going to dominate the world if it didn’t have gold anymore, if the military spending abroad had made it run out of gold? My Super Imperialism pointed out that henceforth when foreign central banks got more dollars, what were they going to use them for? Well, there’s only one thing that central banks at that time did: That was to buy government securities. So the central banks of France, Germany and other payment-surplus countries had little option except to buy U.S. Treasury bills and bonds. Some of these were special non-marketable bonds that they couldn’t sell, but they were stores of value.

So the money that America was spending abroad was simply recycled to the United States. It didn’t mean that America had to devalue the dollar through running a balance-of-payments deficit, like today’s Global South countries do, or do as England had to do with its’ stop-go policies, always raising interest rates to borrow when its deficits threatened to force the pound sterling to depreciate.

Jonathan Brown 1:13:57
Michael, this insight was that was that when you were working at Chase Manhattan, and you were advising the State Department on what to do with the fact that they were having these balance of payments problem, because of military spending?

Michael Hudson 1:14:07
My job at Chase was to analyse basically the balance of payments of Third World countries and then of the oil industry. I had to develop an accounting format to find how much does the oil industry actually makes in the rest of the world. I had to calculate natural-resource rent, and how large it was. I did that from 1964 till October 1967. Then I had to quit to finish my dissertation to get the PhD. And then I developed the system of balance-of-payments analysis that actually was the way it had been calculated before GDP analysis.

I went to work for Arthur Andersen and spent a year calculating the whole U.S. balance of payments. That’s where I found that it was all military in character, and I began to write in popular magazines like Ramparts, warning that America’s foreign wars were forcing it to run out of gold. That was the price that America was paying for its military spending abroad.

I realised as soon as it went off gold in 1971 that America now had a cost-free means of military spending. Suppose you were to go to the grocery store and just pay in IOUs. You could just keep spending If you could convince the owner, the grocer to use the IOU to pay the farmers and the dairy people for their products. What if everybody else used these IOUs as money? You would continue to get your groceries for free.

That’s how the United States economy works under the dollar standard, at least until the present. This is what led China, Russia, Iran and other countries to say that they don’t want to keep giving America a free ride. These dollarized IOUs are being used to surround them of military bases, to overthrow them and to threaten to bomb them if we don’t do what American diplomats tell them to do.

That led already a few years ago to pressure to de-dollarize the world economy and make it multipolar, not simply an extension of the U.S. military, U.S. investors, mining and oil companies. The post-dollar aim was for other countries to keep their economic surplus among themselves to promote their own economic growth, instead of imposing IMF dictated austerity programmes to impose austerity so that they can pay foreign dollarized bondholders.

Just about everybody thought that it would take many years for China, Russia, Iran, India, Indonesia and other countries to get their act together and create an alternative. But this year the Biden administration itself destroyed America’s free ride for the dollar. First the United States grabbed Venezuela’s foreign exchange, then Biden grabbed all of the foreign exchange of Afghanistan, just confiscated it. And then a month ago he confiscated $300 billion of Russia’s foreign exchange reserves. He said, in effect, that we are the leading democracy in the world, and global democracy means that America’s military gets to appoint foreign presidents.

And so we don’t like the person you’ve voted in as president for Venezuela. We’re going to hire this little nitwit that we bought out, Juan Guaido, and appoint him president. To force you to accept this, we’re going to take away all of your gold reserves held in the Bank of England, and we’re going to give it to Mr. Guaido as our nominee for the bastion of democracy, to do what a democratic regime is supposed to do: hiring terrorist groups to kill all land reformers and labour leaders, to finance a neo-Nazi takeover like we did in Chile under Pinochet, and just like we’ve done in democratic Ukraine with our funding of neo-Nazis to fight against the Russians there.

This confiscation of foreign reserves and foreign money held in U.S. banks shocked the rest of the world. Nobody had believed that countries would actually grab other countries’ financial savings. If you go back to the wars in the 19th century, the Crimean War and others, countries would continue to pay their foreign debts.

All this was ended by President Biden rejecting the international rule of law. He said that “We have a ‘rules-based’ order, in which we can make up the rules. Number one, we are exempt from the rules. Only you have to follow them. Number two, the rules or whatever we say.” China, Russia and India would have taken years by themselves to denominate their trade in their own currencies. Biden’s money grab has impelled them to create a new economic order independently of the United States and Europe, whose euro and sterling are satellite currencies of the United States.

Jonathan Brown 1:19:54
So Michael, this is a crazy situation that we’ve got. Even If you have deposits in a bank, the deposits don’t really belong to you, but they used to be respected.

Michael Hudson 1:20:07
Well they belong to you, but they can be stolen.

Jonathan Brown 1:20:09
Yeah, but then they don’t belong to me, do they? They’re kind of mine, but not. Likewise, if I annoy the wrong person, I could have my car impounded, because I’ve just annoyed the local politician, which is essentially what’s happened to a Russian oligarch. Now, whether or not the oligarch deserved that $500 million yacht, obviously, they didn’t, but it was technically theirs. So what Americans are doing is showing that if you piss them off, they will take all your resources, which has happened in other countries, right? We’ve stolen it.

The British did that, right? We appropriated resources and stole resources from other nations. If you want the best example of that, you can just go into the very beautiful British Museum and see all the artefacts that we’ve appropriated, one of which was a Rosetta Stone, which I know you write about.

So we’ve got this situation now that the Americans have declared the most profound economic war on Russia, threatening China that we can do the same. China’s got trillions of U.S. dollars. And one of the things that I don’t quite understand, looking at your philosophy and Super Imperialism, was in demonstrating that the Americans can have a free lunch by getting people to buy U.S. Treasury bonds. How is it that the U.S. dollar has gone up against all currencies pretty much other than the rouble since declaring war in Ukraine?

Michael Hudson 1:21:43
Europe has committed economic suicide, United States offered its leaders a lot of money in their offshore accounts, and made sure that their kids got free education in the United States. But in return, they would have to represent the United States, not Germany, France or other countries. The Americans have been meddling in European politics for years. European politicians do not represent their own countries. They represent the American State Department and American diplomacy. And they were told to lock their countries into the U.S. economy.
For instance, European businesses had a hope that Americans really hated. The Europeans hoped that after 1991, now that communism was over, they could invest in Russia to make money. They could sell exports to Russia and make mutual gains from each other. But the Americans wanted to make all the money off Russia for themselves, mainly by using the kleptocrats they backed to sell the natural resources that they grabbed to U.S. investors. The Harvard Boys wanted to make sure that rent-yielding natural resources were given the kleptocrats – who could only make their money in hard currency by selling shares abroad in the assets they grabbed, keeping their payments in England or the United States.

So they’ve asked Europe not to buy Russian gas, but to spend seven times as much buying American liquefied natural gas, and spend $5 billion to build the ports to accept this gas – while going without gas for about three or four years…let their pipes freeze… stop making fertiliser… Don’t feed your land, we’ll take it on the chin for America. Your standard of living is going to have to drop by 20%, but it’s all for American democracy. And the European heads said that’s fine.

America said that you Europeans are bothering them by trying to stop global warming. That’s a direct attack on a major arm of U.S. diplomacy, the oil industry. American companies control almost all the world’s oil trade. It’s the highest rent-yielding sector in the world. And it’s income-tax free. It’s politically powerful, and as long as America can control the oil trade, it can talk to Latin American countries or African countries and say if they elect a leader that U.S. officials don’t like, it can impose sanctions and stop exporting oil to them to freeze them out. They won’t get fertilizer, so the U.S. can starve you out. It can put a sanction on their food trade. 

Agriculture is Americans biggest trade surplus.

Jonathan Brown 1:25:14
That’s what they’re doing with the conflict in Ukraine to Russia, and also China as well. Are there other major sources of grain, wheat and rice?

Michael Hudson 1:25:26
Yes. But President Biden has blamed Putin for creating a world food shortage and threatening to cause a famine, because Ukraine can’t export its grain. Ukraine, at American direction, has put mines all over the Black Sea. So the Black Sea’s ports have mines around them. If a ship hits them, it’ll blow a hole in the hull and will sink.
As a result, if you’re a shipping company and want to transport grain, you have to get insurance, because if you don’t have insurance, then you’re in danger of going bust if your ship goes under. But no insurance company will insure it until the Ukrainians remove the mines that they put. You need minesweepers for that. Needless to say, Russia doesn’t want American minesweepers in, because they may very well attack as there’s a war on.

So you have the United States blocking Ukrainian grain exports, which was a huge export. You’ve had the American dollar area, the NATO countries, refusing to import food from Russia, which is the world’s largest agricultural exporter. This is creating a crisis for Global South countries, for Latin America and Africa.

Meanwhile, global warming is causing droughts that are reducing the harvest. The Green Party in Germany has a pro-war policy that is making global warming rise faster. By supporting military warfare against Russia, and U.S. military adventurism in general, they are becoming major lobbyists for the air polluters. The largest air polluter is the American military. The Green Party in Germany advocates fighting Russia more, providing it with more arms, and thus supporting the military that is now the largest new contributor to global warming. In effect, this means that Europe is willing to say, ‘Okay, we are willing to have the sea levels rise another 10 feet, as long as we can help America dominate Russia’.

Europe even is letting America keep the Trump tariffs on its exports, in place, so it can’t export more for America. It looks like Europe will have to de-industrialize, maybe we’ll go back to the 19th century and become a country of farmers. That basically is the situation that its subservience is imposing.

Jonathan Brown 1:28:49
I’d like to come back to the just what China and Russia can do, given their reserves. They understand they’ve got… they’ve got lots of reserves of gold, and also large grain stores, China having the most as I understand it, but can you help me understand why all these nations around the world have U.S. dollar reserves in some form or other, most of it in bonds? Why is the dollar still increasing at this moment in time?

Michael Hudson 1:29:28
Because the Euro was going down. The Japanese Yen is going down. The Yen is the worst performing currency, because they’ve held their interest rates very low. Their aim is for banks to make money by borrowing low at low rates and lending to foreign countries at a higher rate. Europe is also keeping its interest rates low. The American Federal Reserve is raising the interest rate, and that is money from low interest rate countries. Capital from Europe and Japan is flowing to America.

Currency values are primarily set by relative interest rates and capital flows. They’re not set by the cost of production for imports and exports. They are not caused by trade, unless there’s a radical breakdown of trade. All these zigzags that you see are short-term capital movements. America tells other countries to keep their interest rates low, so that money will flow from their banks and financial to the United States to buy American securities that yield higher returns. As long as the Euro is a satellite currency to the dollar, it’s going to continue to go down. So the both the euro and the British Sterling are now moving towards $1 per pound and $1 per euro.

Jonathan Brown 1:28:49
That’s a short-term measure. The long-term measure is that countries have to start selling the bonds that they’ve got in U.S. currency. So long term, it has to come down. Is that right?

Michael Hudson 1:29:28
Yes. They’re going to hold each other’s currencies. Especially now that Russia is denominating its exports, in roubles instead of dollars. The American banks have lost the trade financing of the world oil trade, certainly Russian oil and agricultural trade. Instead of holding dollars, countries will hold rouble reserves to stabilise their currencies via the rouble, China is holding rouble reserves, and Russia is holding Chinese yuan reserves.

The balance will be held more in gold and some kind of assets without a liability attached to them. I think the logical direction in which this is moving is that the non-dollar countries will create their own version of the International Monetary Fund, their own World Bank, their own trade organization. So there will be one set of trade and financial and development organisations and military organisations in the U.S. and Europe, in NATO, that is, in the white countries, and another set of relations and the non-white countries that are actually developing while America and Europe shrink.

Jonathan Brown 1:33:06
So what’s your idea of how much gold China actually holds, because there’s the published numbers [which] are really extraordinarily small aren’t they for an economy that’s so big.

Michael Hudson 1:33:18
I don’t know. Governments can hold gold not only through their own treasury, but through some subordinate agency. I no longer go into the financial statistics like I used to, because it takes a whole year to do a balance sheet that is comprehensive. All I know is that they saw how America simply grabbed Russia’s dollar holdings, and they don’t want the same thing done to them. President Biden has said China is America’s number one long-term enemy, and he wants to destroy the Russian economy first and then attack China after prying them apart.

Obviously, China is reading the newspapers and wants to avoid that fate.

Jonathan Brown 1:34:16
The other thing that I find utterly remarkable, for example, is that Biden in his speech said that he wants to get rid of Putin. I think if it was a U.S. Defence Secretary or Secretary of State saying that he wants to arm Taiwan……. If I ran China and I said I want to arm Mexico, or if anyone in South America wants any weapons then my doors open to you, I would expect the Americans to be very upset with that because I’m breaching the Monroe Doctrine. Can you help me understand, having been in the corridors of power, whether Chase Manhattan or the contacts you’ve got, how can …. how can politicians be so delusional to think they can say stuff like that without having a negative consequence?

Michael Hudson 1:35:18
Well you know who’s really upset by that? The Taiwanese! They say, Oh, they want to make Taiwan into another Ukraine, to fight to the last Taiwanese, just like the Ukrainians have been used. They see two choices before them. If they do arm and get weapons that can hit China, then China is likely to bomb them. On the other hand, I’ve met Taiwanese officials for 40 years, and many have said that their long-term hope is to be reintegrated. They want to be investors in China, but they want to merger under terms where they can be sort of like Hong Kong, able to have a merger that will make them prosperous too.

So Taiwan’s choice is between following the Americans and becoming the Ukraine of the Pacific, or joining with China. Given the fact that China is growing and America is shrinking, what are they going to choose? Well, I would imagine that you will see a strong, peaceful integrationist movement with China. But China remembers that Chiang Kai Shek massacred the communists in 1927.

Jonathan Brown 1:36:47
So what are we looking at then, who is in charge, President Biden or other people?

Michael Hudson 1:36:56
President Biden is a front man. They’re all the front men for the faceless people in the State Department, the neocons who are controlling things. Biden has always been right-wing, just a corrupt party politician. He does what he’s paid to do. He’s unimaginative. He’s brought in some real Russia haters – people who have a visceral hatred of Russia because of their family background under the tsars or under Stalin. Blinken said that his family was Jewish and lost under the tsars, and maybe under Stalin. He wants to kill Russians because he’s so angry at what they did to his ancestors. That is the neocon mentality in a nutshell. It’s a crazy mentality.

The Federal Reserve and the Treasury officials say they were not consulted in the political moves that Biden and Blinken and the neocons are making. There is the kind of single-minded tunnel vision at work. They really are Russia haters and China haters. There is a lot of racism you’re seeing in New York, where it’s very dangerous for Asian women to take a subway. Almost every week, the lead news item is yet another Asian woman attacked or pushed in front of a subway. There’s a there’s a new race hatred in America. And they are treating Russians as the Ukrainians do, as if Slavic speaking people are a separate race.

Jonathan Brown 1:38:49
Extraordinary. So Super Imperialism came out, as I understand it, and was used by the State Department to figure out how to continue running their economics …

Michael Hudson 1:39:04
At first U.S. officials thought that going off gold was going to be a disaster. Herman Khan told me, “You’ve shown that we’ve run rings around the British Empire.” He hired me for the Hudson Institute, which is a national security institute, and brought me to the State Department for meetings and to Army War colleges and Air Force war colleges to talk about it. I guess I shouldn’t be surprised that the main people who wanted to learn how imperialism works were the imperialists themselves. I had thought that the anti-imperialists were going to be my main audience, but the imperialists really needed to know what was new.

Jonathan Brown 1:39:50
They took your book, Super Imperialism and they read it as a love letter, right.

Michael Hudson 1:39:56
Not a love letter. They saw it as a “how to do it” book. I was a technician.

Jonathan Brown 1:40:04
Right. And working for Herman Kahn, he’s a powerful guy that people don’t talk about so much anymore, but he was, he was extraordinarily influential at the time, right?

Michael Hudson 1:40:14
Yes, he had a great sense of humour. He was a great speaker. He was absolutely brilliant. He wrote a book on thermonuclear war, saying that even if there were to be a war, somebody would be left to survive. That made him one of the models for Dr. Strangelove in the movies. I would sit and hear Herman talk about military strategy, and was awed by how he thought it all through. He was a brilliant military tactician. He would bring me and sit down with generals, and they would explain things. I don’t have a good military sense, or any military training at all. He wrote that, personally, he wanted to be right under the first hydrogen bomb. He didn’t want to live in the post-nuclear world. But there would be some survivors somewhere. That made him notorious. He was so reviled for even having brought up discussion of the topic that needed to be discussed, that he wanted to have ideas that people liked. And that was the corporate environment study. That was what I was pretty much in charge of. I was the economist, he was the military. We had the same salary there.

We would go around the world disagreeing with each other. It would be like a show. He’d talk about the world being a cup half full. I talked about the cup being half-empty, as he put it. I talked about the debt overhead, and how debt was growing and would ultimately stifle the economy. He talked about how productivity would be sufficient to pay debt, although productivity doesn’t necessarily give you the money to pay the debt. Productivity does not grows exponentially, but tapers off. As debt grows, any rate of interest is a doubling time. And it doubles quicker than the economy can double.

Jonathan Brown 1:42:24
And this is really coming back to one of your initial questions from Terrence McCarthy, which was to focus on productivity, wasn’t it?

Michael Hudson 1:42:33
Yes. And the idea was focusing on productivity, you realise that it all comes down to labour ultimately. How do you make labour more productive? How do you make industry more productive? You get rid of what is unproductive – and the unproductive overhead is rent. So how much corporate spending is just plain overhead? How much is unnecessary for corporate industry to take place? That line of questioning brings you back into the classical economics.
Marx is really the last great classical economist who pushed it all to its logical end. His contribution was to explain that just as the landlord exploits by taking rent, the industrial capitalist exploits labour by charging more for the products of labour than it costs to hire labour to produce.

However, unlike the rentier, unlike the landlord, the capitalist uses this economic surplus value to expand production, to build yet more factories, to employ yet more labour. This is an expanding society, whereas the rent paid to landlords is a kind of exploitation that is pure overhead and shrinks industrial capitalism. That’s why Marx said that the political aim of industrial capitalism was to free society from the landlords, predatory bankers and monopolists. That’s why the Communist Manifesto‘s program begins with collecting rent for the public sector. You can tax the land as a transition to socialising it. That was the Communist Manifesto’s classical economics.

Jonathan Brown 1:44:26
You have these views, and yet you were still a valued member of the team at the Hudson Institute.

Michael Hudson 1:44:33
Yes, because I was explaining how the world worked. Herman and I disagreed so much, we were genuine friends. I liked him, and we couldn’t believe that the other would actually believe something so different. But we said okay, if the arguments that we’re having is the “big argument,” it’s going to determine where the economy is going. Either he’s right or I’m right.
This is like the debates between Henry George’s followers and the socialists in the early 1900s. It was going to be one world or another.

What is the key to analysing the economy? Is it to focus on rent and finance, or on technological potential? My point is that technological potential can be smothered by so much overhead paid to the rentier class via the FIRE sector – finance, insurance and real estate – that there’s no money left to invest, no income left for wage earners to spend on buying the goods and services that they produce.

Jonathan Brown 1:45:48
And yet the technology sector in my opinion is actually the new monopolist. Instead of having a competition, in that sense they’re the new landowners. So Google is a spectrum landowner. If I want to host these videos, then I’ve got to negotiate or accept the terms of the landowner YouTube. I’m posting them there, but I won’t be making any money on it. Because I’m one of the serfs on YouTube.

Michael Hudson 1:46:16
This is the problem that China is dealing with in its own way. What do you do when Jack Ma and other IT specialists end up as billionaires? Well, China did not have an anti-monopoly group. It let 100 flowers bloom and let billionaires develop, but would then have them transfer their money to the government in one way or another. They haven’t done this in the way that Western economies do, by an anti-monopoly tax, but by a political consensus way.

In countries like Russia, I’m trying to get them to formalise this into formally calculating the magnitude of economic trends. You want innovation to take place, you want people to make the fortune, but at a certain point they can’t somehow make so big a fortune that it ends up crashing the economy.

Jonathan Brown 1:47:37
But looking at your writing from the Byzantine times and the ancient Near East, is the importance of the leader of that particular economy or society to make sure that no one got so rich that they could overthrow the leader? Which is really what you’ve got with someone like Zuckerberg, the power that he was able to wield in the election, whether you agree with him or not, was extraordinary. And likewise, if you look at the fight that’s currently going on with Elon Musk and Twitter, is to recognise that actually we want, we want our people to own these resources that we pretend are private, but actually have tremendous social power.

Michael Hudson 1:48:24
Yes, they financialized politics in America, by the Supreme Court’s Citizens United ruling. Anyone can contribute as much as they want, if you’re a corporation. The rentier interests give to pro-rentier politicians to act as their puppets. The money goes for advertising airtime on television and the media to overwhelm all the people who normally would want to minimise the rentier class. So essentially, you’ve financialized politics in America much more than has occurred in Europe. But in Europe, it’s the right wingers who basically control the press, commercial television and media. So if the media are controlled by the right wing with their own agenda, they frame the economic issues from the vantage point of the rentier class instead of from the vantage point of how an economy actually develops and grows wealthier in a fair manner.

Jonathan Brown 1:49:48
I know we need to need to wrap up. Just thinking about the scenarios for Russia and China currently. Everybody who is part of the original white economies of Europe, realises that if they don’t side with America, they get overthrown. But also right now they have a short-term challenge that the Americans are going to let them starve because they’re stopping wheat exports coming through the European ports. But then you’ve also got Russia with resources, you’ve got China with grain resources.

So there is a potential that when people start to starve, and you look at the challenges in Sri Lanka, with politicians being murdered and people running out of food, there’s a chance for China to step in and say, we can send you grain exports. And by lucky coincidence, because of the all the lock downs that China’s got right now, a lot of the world’s boats and ships are currently waiting outside ports in China.

Michael Hudson 1:50:54
[Missing part here] Computer chips are part of the problem. And that’s probably going to make them friendlier with Taiwan. Taiwan has the computer chips.

Jonathan Brown 1:51:03
And by your assessment, because Taiwan do not want to be another Ukraine, American actions are likely to accelerate the reintegration.

Michael Hudson 1:51:12
There’s a bell shaped curve, I haven’t met with the Taiwanese in quite a few years so I don’t know, up to date what the dynamic is. But just by logic, you can see the international environment in which they’re operating. You wonder how they are going to calculate the plusses and minuses of the U.S. versus China? What economy do they want to attach themselves to so that they can get richer fastest?

Jonathan Brown 1:51:46
And also stay safe and not get involved in unnecessary wars. When you look at the tragedy in Ukraine, all these people dying when you’ve got such a strong opponent in Russia, how can you go to war with them for any period of time?

Michael Hudson 1:52:07
Well, that’s what the world is divided into. The U.S. and European society is built on war. It’s the only foreign policy they have, because they don’t have an economic power anymore. They’ve de-industrialised and the rest of the world that is trying to industrialise and trying to feed itself. China, Russia, India, the Global South are the anti-war part of the world. So the world is dividing into two parts: a rentier part supporting finance capitalism [that] is trying to impose it on other countries, to financialize China and Russia to make them put a Margaret Thatcher or Boris Yeltsin in charge of China. While they try to put their own candidates in charge, a la General Pinochet, the rest of the world is trying to defend itself against this terrorism.

So the Western world that calls itself democracy is the terrorist military world. The nations that it calls authoritarian are any authority strong enough to control and tax the financial interests – that is, any government strong enough to regulate finance and real estate. Such an economy is by definition authoritarian as opposed to a democracy, where Wall Street and the financial centres are the democratically elected central planners. So what’s at issue is who’s going to plan society: the financial sector, or the people as in China and other countries.

Jonathan Brown 1:53:41
I think that says it. From a Western lens it’s a different type of democracy.

Michael Hudson 1:53:48
Yes. But democracy really means an economy run to benefit the great bulk of the population, who happen to be wage earners? Or is it going to be for the 1%? Is the economy run for on behalf of the 99% and the 1%? Well, the 99% need a strong government to run it in their own interests and cope with the counter-revolutionary policies, the neo-feudal rentier policies of the 1%.

Jonathan Brown 1:54:22
Okay, so knowing China, then your take on its zero-COVID policy that the authorities are implementing in some parts of the country?

Michael Hudson 1:54:32
The more I read about long COVID here, the worse it seems. I’m 83 years old, so my wife and I have not gone to a restaurant since 2020. We haven’t even gone to our friends’ houses for dinner. We’re isolating ourselves. China has isolated itself at great cost, but it saved the population not only from having COVID itself, but from having long COVID. There are now a million Americans with long COVID. They also say that long COVID lowers your, your IQ by 10%.

It’s almost as dangerous is inheriting a trust fund when it comes to impairing your IQ. It’s debilitating.

My webmaster in Australia and his family have COVID. So I’m very sympathetic with what China’s doing, even though it means that I can’t go there, because I’d have to be isolated in a hotel room for two weeks just to give a few days’ meeting – and then be isolated again when I come back. So China is making a huge effort not to sicken its population with COVID. And now of course, since the Russians have began to publish all their findings of the US bio-warfare labs in Ukraine that were designed to spread a COVID like diseases by migrating birds and bats and manmade aircraft over Russia.

Now, they’ve reopened the question ‘was COVID a US bio-warfare from the very beginning’? And the Chinese are looking at it and saying ‘was it engineered’? If the Americans are trying to engineer COVID to affect mainly Slavic population and their DNA signatures, could they have been doing the same thing against Asians? So all of this is suddenly opened up. The World Health Organisation has refused to divulge any of the USA biowarfare efforts, and the U.S. has stonewalled all efforts to find out about the bio-warfare. This is isolating America and Europe.

If American Europe is left with its current foreign policy, biowarfare and atomic bombs, NATO will be shunned by the civilised world. As Rosa Luxemburg said a century ago, the choice is between socialism or barbarism. NATO, Europe and America represent the new barbarism. The alternative is socialism. That is how the world seemed to be developing in Europe and America until World War I untracked everything. The rest of the world now has a chance to get back on track. I don’t know what’s going to happen in the West.

Jonathan Brown 1:57:47
Michael, as always, you always get more into your stuff than I expected. Are there any things that you’d like to say to our listeners, before we finish up,

Michael Hudson 1:57:56
I’ve probably said too much. And I hope you can edit out anything that’s embarrassing.

Jonathan Brown 1:58:01
I may get thrown off YouTube for publishing some of your comments. So you may have to go back and review a few of them. But as always, Michael, thanks so much your time what we’ll do is we’ll send a link to everybody for the website and also for the new book, as well which I think and those series of lectures when I was researching for this conversation were the single best economic lectures I’ve ever listened to – truly extraordinary levels of insight and real economics rather than theoretical or textbook stuff. So as always from ShepherdWalwyn, thanks so much for your time and for your contribution.

Michael Hudson 1:58:41
Well, if you transcribe it all in will be worth it. \

Jonathan Brown 1:58:45
That’s, that’s our promise 100%. So thanks very much.

Michael Hudson 2:00:05
Thanks a lot.

Andrei Martyanov: Adam Smith With Harpoons

June 17, 2022

Please visit Andrei’s website: https://smoothiex12.blogspot.com/
and support him here: https://www.patreon.com/bePatron?u=60459185

Traitors and Patriots

June 10, 2022

Source

By Batiushka

The prolific Russian nationalist author of 91 books, Oleg Platonov (born 1950), relates in his work on the fall of the Soviet Union how in the 1980s, on the eve of the country’s collapse, Westerners, whom The Saker rightly calls ‘Euro-Atlanticists’, betrayed the USSR. These ‘Euro-Atlanticists’ were the ‘Communists’ who in the 1990s overnight became super Capitalists, bought shares for almost nothing in valuable, about-to-be privatised national companies and so became ‘oligarchs’. Their shameful acts, in fact thefts of national property by those with insider knowledge, created an underclass of homeless. They reveal how these money-launderers sold out their own country and people and souls, often then going to live in Tel Aviv, New York, London, Nice, Marbella, Nicosia etc.

The Traitors were opposed by the Patriots, some of whom worked in the national intelligence services, where some of the best brains met. One of these Patriots, the future President Putin, was then a lowly colonel in Dresden in East Germany, working in the Soviet intelligence services (not a head of it, like so many US Presidents, heads of the CIA). When the Berlin Wall fell in November 1989, his office sought answers from Moscow as to what to do. And there was no answer. ‘Moscow is silent’. I believe the story is related in many places, among them in ‘The Putin Interviews’ by Oliver Stone. It was that paralysis and silence of the Centre in Moscow that was among the most decisive events in the future President’s life. He realised that Moscow was betraying the Soviet Union, that it had been taken over by the Traitors, the ‘Nomenklatura’. They believed in nothing, except in their own disgraceful gain. They were anti-Patriots.

Since coming to power in 2000, V. V. Putin has very slowly and very cautiously, but incrementally, been remedying the situation. It is his life’s work – to reverse treachery. In 19th century Russian history people like him were known as ‘Slavophiles’ and they were opposed by ‘Westerners’. These are very vague and rather crude terms, for there are many types of Slavophiles, from primitive and bigoted nationalists to genuine Patriots, who are well-educated realists and seek only the well-being of their people. Similarly, the term ‘Westerners’ can describe outright Traitors and murderers, like Litvinenko and Skripal, but also those who realise that if Russia is to defend itself against the West, it must fight obscurantism and make use of, and then improve on, Western technology. President Putin would probably not identify with either of these historical tags, but rather perhaps with aspects of both of them.

History

The Slavophile and Westerner tendencies go back far beyond the invention of the terms in the 19th century. Western influence, but not domination, is already there in the late 15th century, in the Italian-built Moscow Kremlin and in the Italian manufacture of cannon under Ivan III, the Great (died 1505). This was positive. However, during the reign of Ivan IV (died 1584), called ‘the Threatening’ in Russian, which is deliberately mistranslated into English as ‘The Terrible’, Prince Andrei Kurbsky became the first Russian political émigré. Today we would call him an oligarch, or a Traitor, for in his correspondence he clearly betrays his Homeland, fleeing to the enemy in Lithuania. He was the first of the Traitors, a stereotypical ‘Westerner’.

In the second half of the 17th century the protest against State-imposed ritual religious changes led to the nationalistic Old Ritualist reaction, popular among merchants and ‘boyars’, in the 19th century called ‘aristocrats’, today called ‘oligarchs’. They were ‘ultra-Slavophiles’, some would say obscurantist nationalists. Then, conversely, came the Westerner Tsar Peter I, called ‘the Great’ (died 1725) who imposed by force Western technology and a Western way of life wholesale, even cutting off beards. This 18th century later saw the reign of the enserfer Catherine II, called ‘the Great’ (died 1796), who in reality was the German Princess Sophie von Anhalt-Zerbst-Dornburg, who did not stop persecuting Russian traditions. Westerners and Slavophiles, Traitors and Patriots.

In the 19th and 20th centuries three Romanov Tsars were assassinated by Westerners. The first of these was Paul I in 1801, with close British support because Paul wanted to free India from the yoke of British imperialism. In 1825 a revolt of Westerner aristocrats led to the Decembrist plot straight after the mysterious disappearance of Tsar Alexander I, Paul I’s son. In 1881 Alexander II, the Liberator from the enserfment of the people by the aristocrats, was assassinated by a Westerner terrorist. In 1918 his grandson, Nicholas II, hated by the aristocrats for providing virtually free education and health care and giving away land to the people, was also assassinated, again with close Western support. After the British-orchestrated coup d’etat of 1917 (absurdly called a ‘Revolution’), Westerner upper and middle classes had taken over over, but they were ousted a few months later by Westerner Bolsheviks. The vast majority of these were not Russian, and indeed their idol Karl Marx was not Russian either. Thus, they felt free to genocide the Slav population of the USSR.

Make Russia Great Again

Since the failure of the 1917-imposed Communist experiment of the USSR after three generations, the West has finally had to face a new reality. This was one which the Russophobic Brzezinski had feared so much that in the 1990s he urged the destruction and dismemberment of Russia and her Church. As Samuel Huntingdon put it so well: ‘As the Russians stopped behaving like Marxists and began behaving like Russians, the gap between Russia and the West broadened. The conflict between liberal democracy and Marxist-Leninism was between ideologies which, despite their major differences, were both modern and secular…A Western democrat could carry on a debate with a Soviet Marxist. It would be impossible for him to do that with a Russian Orthodox nationalist’ (1). In other words, the Brzezinskis of this world feared that the Patriots would return to power after rejecting Western secular ideologies, as they mostly did temporarily between 1941 and 1945 in the ‘Great Patriotic War’.

This is also what happened in 2000, when V. V. Putin came to power. Since then he has been very patient, putting up with all sorts of insults and humiliations from the Western world, from one US President after another. Many of the opposite extreme criticised him in those years, those whom The Saker rightly calls ‘sixth columnists’. Similarly, many also criticised Dmitry Medvedev as a ‘Westerner’. Perhaps he was a Westerner then, but now the chips are down and the Collective West has shown its Nazi hand, there is no mistaking whom he supports. And maybe he never was a Westerner anyway. Maybe he was emollient at the time, simply because Russia was so weak and he had to court popularity in the West. We cannot say, but whatever his past, his present is clear.

Now that Russia is strong, President Putin, with his Prime Minister Dmitry Medvedev and all the Russia that counts behind him, is in no mood for weakling Westerners and their compromises. The Special Operation is all or nothing, and the West is losing fast. All has been carefully prepared. For over twenty years the Russian Federation has been gathering allies in a coalition all over the world, wisely using its international diplomatic skills. There will never be a repeat of Yeltsin’s betrayal of Serbia again. There will never be a repeat of the betrayal of Libya again. Technologically and economically, Russia has become independent. And militarily Russia has become stronger than the combined NATO West. The Patriots are in power and the cack-handed West and its sanctions are making Russia great again.

The Great Cleansing

The Great Cleansing has been under way since 24 February 2022. Many internal traitors in Russia soon fled – one of the first was the notorious economist and privatiser Anatoly Chubais. Millions of other traitors also soon fled from the Ukraine westwards, much to Russian satisfaction. Russia will not welcome so many of them back. Only those who left from mistaken or brainwashed panic, or because they did not want to be enlisted in the suicidal Kiev Army, will return. Let the others stay in Poland and elsewhere, living off Western ideological stupidity and humanist naivety. Other internal traitors who infiltrated positions of responsibility over the last 30 years have also been removed in Russia, as they have been found out. We know some of their names. There are still a few left to clear out. The Great Cleansing is here. Dewesternisation is being delivered.

The Special Operation has revealed who is who. The Traitors have been revealed. As also the Patriots. Those who only in fair weather supported have disappeared. Those who in foul weather still support have been revealed. The multilateral world, led by Russia, China, India and Iran, is taking shape; the unilateral world is over, as Russian sanctions bite. Forget the US vassal and client-state called ‘Ukraine’ – it is over; instead, there will be a smallish Russian Protectorate centred around Kiev. Never again will traitors in Kiev threaten Russians with NATO, nuclear weapons, bioweapons or ban the Russian language and culture, forbidding ‘War and Peace’, but allowing ‘Mein Kampf’. Never again will Kiev promote the Western Nazi ideology of ‘Cancel Russia’. It is over. This is the Great Cleansing.

But let it be said that, just as in Russia, so in the West too there are Traitors and Patriots, the elite and those among the people who have retained some integrity. They have always been there, suppressed and repressed, but still alive. The English historian Robert Bartlett put it very well in his study of Western Europe in the period from 950 to 1350, devoting a whole chapter to ‘The Europeanisation of Europe’. This relates how the West was ‘Westernised’ from the 11th century on (2). In other words, if even after all this time the underclass of Patriots, people of integrity, were to come to power in Europe as a result of the present catastrophic situation there, as decided by the elite, and replace the treacherous Establishment traitors, then the West too could begin a process of Dewesternisation. This would be the even Greater Cleansing.

9 June 2022

Notes:

1. The Clash of Civilizations and the Remaking of World Order, Chapter 6, Torn Countries, Samuel Phillips Huntingdon, 1997

2. The Making of Europe, Conquest, Colonisation and Cultural Change 950-1350, Chapter 11, Robert Bartlett, 1993

For Europe, from Russia, with love

June 07, 2022

by Jorge Vilches https://thesaker.is/for-europe-from-russia-with-love/

The EU catch-22 conundrum involves many incongruous and conflicting issues each one of which must be solved first before solving any of the others in a context of constant change and dozens of mutually exclusive moving parts.

Simply put, the European situation is ultra-complex, far from enviable, and getting ever worse by the hour. Possibly a Rubik´s cube may represent the problem, but two of them would do it better. Still, you can easily google the solution for Rubik´s cube, but you cannot do that for the European conundrum. And as impossible as it may seem, I tried my best to convince the EU leadership to reverse their foolish decisions. Now, the big news is ( just as unbelievable…) that the Western collective brainos in charge are changing the MSM tune proposing that “a deal must now be made” as if orchestrated by top D.C. communication experts. And it probably is, why not ? Furthermore, most emphatically the living Henry Kissinger persona has boldly proposed the idea to the Davos crowd in.their.face.

fool me once

But HK is not alone and there must be some strategically huge thinking going on. Now even “The Guardian” tries to pivot realizing that “The perverse effects of sanctions means rising fuel and food costs for the rest of the world”. No kidding. ”Sooner or later, a deal must be made “. Congrats for such brilliant idea. And others also join the choir.

pax Russiana

The problem with “a deal must be made” is it contradicts history, and Valdai Director Timofei Bordachev for one.   There cannot be any “deal” in the Ukraine conflict simply because Russia wins and it´s way too late to negotiate anything after plenty of destruction and bloodshed and with no Ukranian or European intention of ever complying with Minsk 2. So Western credibility has reached negative values in the Russian collective mindset. What should take place though is a unilateral withdrawal and full capitulation of Western military support coupled with Ukraine´s unconditional surrender with voluntary regime change and even with a ´pax Russiana´ way beyond Minsk 2. Think US public opinion re Japan 1945 and the Pearl Harbor specter roaming in their minds, nothing less.

the EU conundrum

In an age were securing energy sourcing and ensuring strategic semiconductors is essential, Europe has dug for itself an ugly Catch-22 ditch that will directly hinder the livelihood of 800 million Europeans. Most dangerously, by picking a needless confrontation with Russia and banning the purchase of its oil, Europe has now unilaterally set itself up for an unmanageable outcome with assured negative consequences. This includes severe financial instability derived from

(1) disqualifying higher prices of seaborne risked, batched, necessarily variable and troublesome non-Russian crude oil feedstocks which will turn European products, services, and labor costs utterly expensive and non-competitive.

(2) unnecessarily sacrificing the energy security enjoyed during decades through cheap and reliable Russian Urals blend for yet unknown non-Russian vendors which in the best of cases will never ever match Russia, already a fully vetted, solid, experienced, close-by provider of unlimited quantities of very specific and high quality, door-to-door oils.

(3) spending a monumentally large amount of euros that Europe does not have nor should print while simultaneously risking project non-performance through the necessarily partialized, probably interrupted, postponed or aborted, and well-known trouble full reconversion investments now required for refineries, chemical processing plants, and every logistics infrastructure throughout European industry and trade. And all of this supposedly in 6 months time when 6 years would not be enough, meaning that non-compliance will be rampant by January 2023. Worse yet, having many half-finished, half-baked, half-tested facilities will mean the European energy & fuel matrix will stand flat-footed neither reconverted to yet unknown non-Russian oils nor processing the traditional and fully proven Urals blend (!!!)

 The real ultimate EU problem is ´negotiating´ from a position of extreme weakness it has dug itself into and should have always avoided. But at the same time, Europe cannot be anywhere independent from Russia. So the above will affect current and future European production of fuels to fertilizers and everything in between, from kerosene to diesel to gasoline affecting cars, trucks, buses, plastics, pesticides, agricultural, mining and industrial machinery, foodstuffs, water quality and availability, pharmaceuticals, ships, inks, airplanes, polymers, medical and industrial gases, sealing rings & membranes, power transmission, transformer and lube oils, etc., etc., etc., etc., etc., etc., etc., etc., etc., etc.

Attempting to execute the above under the described terms – and others not mentioned but technically even far more demanding – would be outright engineering and economics madness. But simultaneously attempting many impossible projects as now required throughout Europe within an ultra-narrow 6-month time-frame and everybody at the same time is sheer nonsensical stupidity, doomed to fail. Why do it then ? Because it´s mandated by the prevailing post-Brexit-US-Anglo-Saxon Russophobia that now hypnotized European leadership foolishly and irreversibly endorses.

Davos failed

Henry Kissinger knows it, but do they?.  Naturally, the EU leadership has made mistakes all along the 21st century, both technical and political, as fallible humans cannot avoid it. But the captains of the European ship this time around are going a long step further by unbelievably forcing its sailors to run around the deck like a bunch of beheaded chickens with no sense of purpose in rapidly approaching shallow waters in what seems to be a deliberate suicidal attempt. This has never happened before in recent history as the European success we all know was always based on superb and cheap Russian energy. The plan and policies were led by former German Chancellor Gerhard Schröder who thought it out bottom-up, top-down, sideways, from left to right, from right to left, crossways, you name it. Until finally in the late 1990s reached the conclusion and convinced the European family of nations that Franz should marry Natasha. And so they remained happily married with many healthy and ambitious children until 2022 whereby the post-Brexit US Anglo-Saxon axis achieved the unthinkable by turning Europe against Russia yet again for the third time in a century as Prof. Michael Hudson has correctly observed. Meanwhile, absurdly enough, Poland is now proposing yet additional sanctions against Russia as if they did any good

wrong policy

Mike Whitney at The Unz Review reported how Henry Kissinger nailed it at Davos when claiming that “The EU policy is wrong… and must be changed immediately…or the damage to the US and its allies will be severe and permanent. Negotiations need to begin in the next two months”. So the Davos crowd heard it directly from a very famous horse´s mouth – the still most powerful former Establishment’s Voice – as he splashed ice-cold water at their staring eyes for concocting the current EU suicidal policy. Kissinger told the Davos messenger boys to their faces “you got it wrong” guys so report to your bosses that hurting US allies and US interests must stop immediately, right now. Of course, let´s recall that the real Davos puppeteers never bother to show up anywhere public in their “rules-based order” narrative, let alone at Davos proper. Furthermore, Whitney explained in no uncertain terms that “the basic strategy to weaken and isolate Russia by severing Russia’s economic ties with Europe and goading them into a long and costly quagmire in Ukraine” just pushes Russia and China to their mutual warm embrace. Thus, the West is making both the US No.1 and No.2 top rivals even stronger (unbeatable maybe ?) against US strategic interests. So “ the world’s manufacturing powerhouse (China) and the world’s second biggest producer of hydrocarbons (Russia) just got a helluva a lot better (together) because of Washington’s counterproductive war in Ukraine.” And forgot to add that Russia would also be the world´s topmost nuclear power with flight-ready hypersonic vector delivery capabilities. So already very much with us are supply line disruptions, food and energy shortages, with high inflation rearing its ugly head and worldwide unstoppable deglobalization. But more is coming with massive migrations and unemployment that will necessarily follow as Ukraine calls Germany´s policy “a disgrace”

energy insecurity

Obvious to any clear-thinking and reasonably informed mind, Western energy security is not secure anymore thanks to the EU policy vis-á-vis Ukraine thus placing Western livelihoods and wellbeing at stake. So Russia now has been forced to pull a 180 on the West while successfully focusing on China, India, and the remaining 85% of the world´s population, not NATO´s 15%. Meanwhile, European mismanagement stupidly ensures no possible rewinding for such a trend while Russia can freeze and starve Europe to death anytime it wants as humans are only a few meals away from survival. By the way, Russia has just limited the export of noble gases, a key ingredient in the manufacture of semiconductor chips. So, for example, no neon means no chips which would prolong a worldwide semiconductor supply crisis already wreaking havoc for a wide swath of EU industries. Or just a bit less of Russian natural gas means deep problems for Switzerland which would have to cover its electricity import needs from its other neighbors Germany, Austria, and Italy. Yet, the power export availability of those countries would heavily depend on the available fossil fuels, mostly Russian natural gas to be paid, of course, in nothing else but Rubles.

rubber meets road

The world oil market is finite one and the same. What you buyeth, someone else selleth. If the declared intended goal is to deprive Russia of oil revenue, that would mean that all exportable Russian oils — or a very important fraction thereof – would stay in Russia wherever (even subsurface) but not sold to anyone. That would necessarily mean that approximately 35% of the world´s currently imported oil would have non-Russian vendors. Now there´s no mystery here, so who would that be? Iran and Venezuela would not for different but still well-known technical reasons. So would it be Oman? Let alone whether Oman would have the right quality base blend oil, but still how much constant quality oil can Oman export to the EU? Would Norway suddenly supply all Europe?

(1) So, every refinery in Europe would not possibly be modified and tuned up for, say, a blend based on Oman spot crude. So which ones would and which ones would not? On what basis? Would there be EU infighting for vendors?

(2) such modifications and tuneups would be done all at the same time and with a tremendously strict deadline.

(3) is there enough deliverable surplus Oman or Norwegian blend base oil (or equivalent) to substitute for all current EU consumption of Russian Urals? What percentage then? 10% ? 20 % ? what about the remaining 80%?

(4) What about the added complication of seaborne batch delivery and still missing inland logistics infrastructure?

(5) Thousands of yet unknown people are needed to execute all of these projects 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. Many oldies will be called back from retirement. New managers and all sorts of office & field personnel from logistics to IT contractors, welders, etc. will not even be hired by the end of 2022

humpty dumpty

The EU Russian oil ban means that the UK and others in the continent will find that they now suddenly have spanking new fully unexpected competitors – Germany and Poland and many others too – per European countries bidding for what used to be THEIR vendors, their oils, including “Norway´s or Oman´s” which, of course, have finite supply capacity and will end up exporting a bit more to their traditional European countries and that´d be IT. Same for Middle East producers that besides negative geopolitics are not stupid enough to increase production in this senseless and most probably not sustainable temporary vaccuum of sorts now created by the EU. That leaves the random boutique hit-and-miss “beach front bazaar” oil suppliers, so lots of good luck with that. True enough, the UK and others in Europe have imported non-Russian oils before but in far smaller quantities and still perfectly matched & mated to only a few processing plants and refineries which would now be hundreds all throughout Europe.

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no diesel no glory

At least 50% of cars and almost 100% of trucks in Europe are diesel-powered. So, most European refineries are currently finely tuned to distill humongous tonnage from the “diesel special” Russian Urals blend in theory no longer available unless cheating prevails, of course. Venezuelan and Iran oils are way too heavy for diesel fuel production.

In turn, sweet Middle East oils are clearly not bidding for whatever reasons, even geopolitics. That eliminates the only three possible large enough providers of constant quality oils. So then the trick would be to find crude oil blends from “somewhere” that would be most similar to Russian Urals with a Nelson Complexity Index refinability of 9.8. Of course, this always assuming that European refineries will be rapidly fined-tuned to process such crude blends without problems, something which should be seriously doubted. The fact remains that refineries in the EU still are currently set up to distill diesel from a well-known Russian crude, and switching them over to a different blend would normally take many months if a single refinery were to be modified. Reconverting all refineries and processing plants in Europe simultaneously is an unheard-of experiment with most probable terribly adverse results.

Matching the Urals oil grade in theory is technically “possible” (sorta) by blending oils from different sources, BUT maintaining the blend specs and volumetric physical flow requirements to meet refinery capacity/specs is very difficult.

So, now not having available Russian Urals blend, exactly which “diesel special” crude oil blends — from where? — will European refineries process in order to distill massive amounts of high-quality diesel needed by the European transportation market? Not from Venezuela, and not from the Middle East. Maybe a little bit from Nigeria? Same as the Urals, the final supposedly constant high-quality homogenous non-Russian oil blend has got to have light-intermediate API gravity and low sulfur content. So what percentage of Russian Urals would any of these new blends replace? Anywhere near 100%? If not, how would Europeans manage with the enormous missing difference? The refineability of these non-Russian oil blends is risky and thus requires careful constant testing of all-around refinery modifications adapting internal processes to new yet unknown oil blends required to remain constant for at least 30 years, preferably 50 years. Of course, switching these European refineries over to different and varying types of non-Russian crude blends will take an enormous effort and time. But they better produce tons and tons of diesel. And it is not only a “refinery modification problem”. It´s rather a “refinery modification problem vis-á-vis a given feedstock blend, with guaranteed FIXED & CONSTANT composition, for decades, always unchanging with continuous reliable delivery despite the batch-only nature of seaborne sourcing.

quantity

Russian Urals oil is unlimited, smooth, on-demand, door-to-door, either by pipeline or from nearby Russian ports.

For unknown new oils, chances are that there is not enough volume available, not even in Africa.

The problem is also finding non-Russian oil suppliers with possible future “incremental” export volumes beyond current production for two main reasons: one would be potential growth in EU demand and the second is that no vendor will leave traditional customers abandoned high & dry just because the EU has now launched itself to an impossible project. Furthermore, these possible future European contracts might all turn out to be short-term ephemeral unsustainable ´purchases of convenience´ with no future. If Europe were not receiving timely, large enough, and well-delivered quantities it´d mean degraded European livelihoods and a failing economy, with shut down plants and refineries affecting everything. Price would also go way up, of course. The problem is that increasing source oil-field production is a fantasy stifled by the realities of labor shortages, increased drilling costs due to inflation, and temporary or permanent lack of raw materials caused by supply chain disruptions. There is little chance that worldwide production without Russia´s EU-specific blends will ever be able to match EU demands. Meanwhile, Russia is finding new Asian markets real fast as India in 2022 has increased its purchase of Russian seaborne oil by 25 times, that is 2500%…

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weaker West

So, by banning Russia, its primary and already well-established crude oil import source which satisfied all its energy requirements, Europe will now have to laboriously find it elsewhere with far less supply bidded. So the West will be paying higher prices – possibly much higher – while China, India, and others will be taking advantage of solid, constant, on-demand supplies and discount prices from Russia. Some suicidal EU strategy no?

So, from 2023 Europe will pay very dearly for its energy, thus having much higher non-competitive costs all around. This will affect the internal cost of living and most probably will ruin its export-based business model. “The current energy crisis could be one of the worst and longest in history and European countries could be hit particularly hard”, said the head of the International Energy Agency, Fatih Birol, in a public statement. But it could be even worse.

no game in town

Europe may find itself not only paying much higher prices for the energy it requires. It may end up not even finding it at any price, period. At least not the right type at the precise time that any just-in-time economy requires thus leading to massive unemployment and massive migrations. So you either have it as you should or you actually have nothing at all. The current “just-in-time” world would obviously not function without proper and constant “just-in-time” deliveries of the right type of oil blends.

Europe has just drastically reduced the supply side of its economic equation by not allowing itself to access Russia, the world’s largest oil exporter, the world’s largest natural gas exporter, and a major supplier of coal. This means a self-inflicted severe limitation simply because not oil blends are the same (!!!) And Russia´s Urals oil may not have substitutes anywhere in the world large enough and compliant enough to satisfy European current and future needs.

Actually it´s not a “refinery problem” it´s a joint “refinery + oil blend problem”. Because the refinery is matched and mated for a given (and constant !) oil blend. Refineries do not refine just any oil. It is not plug & play, nowhere near that. So it´s a “specific refinery – specific oil blend” coupling that marries happily ever after for many years to come.

The refinery is always dependent on the input grade of the crude while following the output market requirements.

Right now the EU doesn´t even know what oil blends it will find in enough quantity, quality, and type for whichever of the hundreds of refineries and processing plants involved. That will not be known until both the right oils are secured in the required amounts and terms of delivery while whichever refinery adjusts to it, something not always possible. The much-needed end result has got to be a CONTINOUS supply of a highly SPECIFIC & UNIFORM quality oil blend in ENORMOUS quantities with the right delivery format. No occasional dating but rather a faithful MARRIAGE.

So a given plant or refinery for all practical purposes would pretty much FOREVER be fed with one and the same CONSTANT oil blend of the right formulation and specs. Repeat: it is not “plug & play”. Russia is the T-Rex supplier of a European troglodyte crude oil consumer. The problem is that Europe has just set itself up short of the QUANTITY of the right constant QUALITY of the oil blends it requires from a trustworthy and proven supplier.

Achilles heel

Finding non-Russian substitutes for Russian Urals blend will be hard enough to find and expensive enough to pay for. Constant uninterrupted physical delivery of such will be a whole new challenge which may end being the weakest link, same as yet unthought of human resources as partially explained hereinbefore.

So the process involves lots of previous lab testing trying to find the right reservoirs ( which exactly ? ) with the right type of blend base oil, with the right time window for oil-field production, the right seaborne delivery plus internal logistics and loading port capabilities, availability of the right vessel freight fleet yet unknown plus today non-existent capabilities at unloading ports, and the right land logistics for delivery per end-user requirements. This requires lots of coordination of thousands of the right people, lots of time, lots of the right policies and expertise in place, and tons of money. Russia has always complied with all of that — and even more — at cheap prices. Where will Europe find that in 6 months?

In a nutshell, the world wasn´t anywhere nearly prepared for an EU ban on Russian oil… or other Russian fuels…

market blues

Approximately 50% of the world´s total oil imports are from Japan + South Korea + Australia + New Zealand + Canada + US + Europe. Supposedly, none of these will now be buying any oil from Russia, so they will buy non-Russian oil competing among themselves. In the case of Europe, it´s 36% of their oil imports that they now have to substitute. Obviously a huge amount and not just of any oil. So which oil-exporting countries will now replace the missing Russian oil for these “unfriendlies” to buy? For example, will they have the right quality and enough quantity to substitute Russia´s previous oil export volumes to Europe and other places? In order to substitute for Russian oil, these oil-exporting countries will have to either (a) suddenly increase their production (?) and how would they do that exactly (??) or (b) disregard their traditional clients by suddenly cutting them off high and dry to sell to Europe.

In that case, where would their traditional clients find an exporter to buy the right quality oil from? It´s a single planet Earth market no? So, by now not having Russian Urals blend available because of the EU ban, exactly which crude oil blends — from where? — will European refineries adequately process enough in order to distill MASSIVE amounts of high-quality diesel fuel needed by European cars and trucks market and still render other required distillates…?

refineries nightmare

The fuel supply crisis will continue increasing sharply worldwide as the 2022 summer demand season kicks in while refineries everywhere keep running at an unsustainable rate. Still, refineries will not undergo major revamping & upgrades such as European refineries would now require because of new non-Russian crude oil feedstocks. Only very limited budgets would be approved for refinery modifications in the EU as the normal investment payback is 40 to 50 years, while, in the near future, fossil fuel consumption will supposedly be plummeting sharply. No incentives nor any subsidies will be awarded in any way shape or form. This year, China is expected to overtake the United States as the world’s largest oil refining country meaning it will import ever-larger amounts of crude oil, including Russia´s, so prices will go up accordingly despite any discounts. Meanwhile, the US continues to normally import Russian heavy oil on its own while telling Europe not to. There has been no announcement of any US Russian oil import reduction let alone an outright ban. I guess this piece of information makes it clear who is really running this show.

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ports

Each and every European port will require modifications adapting to new handling, unloading, storage, and additional delivery requirements of non-Russian oil from whichever tanker fleet is found, yet unknown, if any. This means designing and building new dedicated facilities per specific consumer and tanker needs (supposedly fixed and unchanging) in order to match the processing foreseen and executed until today with necessarily different non-Russian oils. An EU Russian seaborne oil ban will shrink the number of vendors and the volume of oil offered to Europe very significantly thus ruining the supply side of the EU oil price equation. The much lower the supply, the MUCH higher the price. With Russian seaborne oil banned, the potential European supply is much smaller both in number of vendors and/or of the volume available for bidding. An unnecessary procurement mess and a very harmful self-inflicted policy. No feasibility studies have been made as there has not been enough time to do any in 3 months.

Ever larger migrations will be one of the prominent indicators of Europe in the very near future while Ukraine officials exchange insults with Hungarian government officers.

Why “cancel” Russians?

May 30, 2022

Source

By Batko Milacic

There is a persistent belief in both Europe and the United States that the “Western” economies are the most developed around, just as the “Western” culture and democracy, with its culture of abolition and total tolerance, is the only correct and advanced system. Russia, which is a bridge connecting Europe with Asia since Tsar Peter, has apparently chosen the European path. With all its exotic image and totalitarian regimes that oppressed the Russian people, deep down, the latter considered themselves Europeans. Their jokes and humor are easily understood in both North America and in Europe, and the Russians’ values in life are in many ways similar to European ones. And still, they were not accepted into the European family.

During the 18th and 19th centuries Russia accepted and completely assimilated tens of thousands of Polish, Dutch, German settlers, but was never recognized in Europe as one of their own. It turned out that picturing Russia as a wild Cossack riding a bear, a ruthless Asian “enemy” at Europe’s border was more desirable that integration with Russia. The notion of the “Russian threat” has been exploited since the 18th century by politicians, from Louis XV to Barack Obama. After all, nothing brings small European countries closer together than the image of a common enemy. The Russians sincerely did not understand why they were not accepted into the European family. After the collapse of the Soviet Union, Moscow even asked to join NATO. The only thing that politicians in Moscow asked their Western partners for was not to offend the Russian-speaking residents of the Baltic countries and Ukraine, who, in the wake of the Soviet collapse, had became second-class people there. Let us be honest, however. Russia was purposefully being nurtured as an enemy.

The Russophobic policy of the Baltic republics led to a break with Russia and forced Moscow to urgently start building, due to logistical security concerns, new ports in the Baltic. Two color revolutions in Ukraine, orchestrated by Western “democracies” brought local nationalists to power and eventually sparking a conflict in Donbass, where 95 percent of people were not native speakers of the “state” Ukrainian language.

Even then, the Russians tried to demonstrate their friendliness to Europe. In the spring of 2021, when Italy’s medical system was paralyzed by the Covid-19 pandemic, the Russians sent there several planes with doctors and medicines, along with a team of military personnel from the chemical defense forces, who helped the Italians disinfect quarantine zones in hospitals. Following the November 2015 terrorist attacks in France, the Russian military, which had previously suffered from radical Islamists itself, wrote on the missiles, which they used against terrorist groups in Syria “For Paris.” Russia’s opposition-minded intellectuals sincerely believed that Russian liberals would be dear guests in Europe. It seems that until February 2022, pro-government circles in Russia sincerely believed that the West could force Kiev to start implementing the Minsk agreements on Donbass.

Everything changed on February 24 this year. Seriously worried by the threat posed by the strengthening of NATO and a 140,000-strong Ukrainian army deployed along the demarcation line near Donetsk, Moscow launched a special operation and, a series of initial failures, the Russian troops are confidently grinding Ukrainian troops while Europe remained sympathetically silent. It is already clear that not a single kilometer of already seized Ukrainian territory will return under Kiev’s control. From an economic standpoint, the West’s retaliatory measures looked very surprising. A number of countries have completely stopped buying Russian gas, urgently renting floating terminals to receive expensive liquefied gas from the United States and Qatar. Most of the European countries, including Italy, whose people were saved by Russian doctors, started to supply weapons to Ukraine. And this despite the fact that nothing will stop the raging bear. European weapons will only prolong the war and kill an additional tens of thousands Russians and Ukrainians, including civilians.

What is most important, however, is the demonization of Russians. Hundreds of Russian liberals who opposed the war rushed to the West only to realize that no one expected them in Europe. After all, there is no such thing as “good Russians.” At best, if they repent for all their crimes against Europe, including the defeat of Napoleon and the storming of Berlin in 1945, maybe they will let them distribute food to Ukrainian refugees.

As a result, some of those who fled to Europe faced with violence and insults and eventually returned to Russia. Some went to Belgrade, where people like Russians, and to Istanbul, where people are equally neutral towards Russians and Ukrainians… provided that they have money, of course. In the meantime, a whole nation actually fell victim to the “cancellation” procedure. People seemed to have forgotten that one of the main causes of the war was the forced assimilation of Russians in Ukraine. Now, the Kremlin propagandists don’t even have to invent anything. All they need is just to translate Western articles about the “passport of a good Russian,” about “collective responsibility of Russians,” the confiscation of Russian businesses and private property in Europe and publish them with links to the European media outlets they come from. Besides, the confiscation of Russian assets in the West is something that Russia sees as nothing but outright theft. There have also been cases of numerous refusals to operate on sick Russian children in the West, the money for which had been raised by charitable foundations! For Russians, who love children so much, this looks atrocious.

As a result, we have a paradoxical situation. Despite certain setbacks of the opening phase of the war, more Russians began to support the special operation. Those who wrote “No to war” on social networks in February changed their rhetoric a month later and began to gloat over the lack of gas and coal in Europe. But neither the Russians nor the Europeans have realized so far the scale of the colossal revolution which is taking place in the minds of people, and in geopolitics. The Russians in the EU and the US got “cancelled” and, what is even worse, resigned to this.

Back in March, the Russians took over the grain elevators in Kherson and Berdyansk and, with a high degree of probability, before the start of the harvest, they will seize all of southern Ukraine, which, along with Russia’s Kuban and Altai regions, is one of the world’s largest granaries. Huge flows of Russian fertilizers, grain and hydrocarbons are slowly but surely turning to Asia. Which market is better? Europe’s economy, which has been stagnating for years, with a population of just about 400 million, or 3.5 billion people in Southeast Asia who need bread, heat, electricity, Russian weapons and machine tools? By year’s end, the Russians will finally expand their supply flows, fill their budget with money, get rid of their fear of an expensive ruble and will be able to spend trillions to rebuild the newly annexed territories. Actually, there is already an example of this – Crimea, where a 17-kilometer bridge was built in eight years, along with excellent highways, and where housing and business construction is booming. The global workshop – China will take over the Russian consumer goods market, displacing the remnants of European brands along with Russian manufacturers that are becoming popular amid the upsurge of patriotic feelings.

And somewhere beyond the Dnieper or in the Carpathians, from the Black Sea to the Arctic Ocean, an iron curtain, or rather a steel curtain, will fall. Instead of Spain and Italy, wealthy Russians will travel to Sri Lanka and Thailand, paying there using Chinese and domestic payment systems. Instead of Ukraine, European countries will buy grain from Arab and Chinese middlemen. The high incomes and consumer power of Europeans will change nothing here. There are 400 million of us, plus more than 3 billion people in Southeast Asia. Well, the union of two bears – a brown Siberian and a hardworking panda – will completely change the world’s entire security structure.

When, a year or two later, the whole of Europe, suffering from inflation, lack of food and hydrocarbons, falling economy and military overspending, will wonder “who is to blame?” how many people in Europe will have the guts to tell themselves: “we shouldn’t have cancelled the Russians…”?

Why “Cancel” Russians?

28 MAY 2022

By Slavisha Batko Milacic

Source

When, a year or two later, the whole of Europe, suffering from inflation, lack of food and hydrocarbons, falling economy and military overspending, will wonder “who is to blame?”, how many people in Europe will have the guts to tell themselves: “we shouldn’t have cancelled the Russians…”?

There is a persistent belief in both Europe and the United States that the “Western” economies are the most developed around, just as the “Western” culture and democracy, with its culture of abolition and total tolerance, is the only correct and advanced system. Russia, which is a bridge connecting Europe with Asia since Tsar Peter, has apparently chosen the European path. With all its exotic image and totalitarian regimes that oppressed the Russian people, deep down, the latter considered themselves Europeans. Their jokes and humor are easily understood in both North America and in Europe, and the Russians’ values in life are in many ways similar to European ones. And still, they were not accepted into the European family.

During the 18th and 19th centuries Russia accepted and completely assimilated tens of thousands of Polish, Dutch, German settlers, but was never recognized in Europe as one of their own. It turned out that picturing Russia as a wild Cossack riding a bear, a ruthless Asian “enemy” at Europe’s border was more desirable that integration with Russia. The notion of the  “Russian threat” has been exploited since the 18th century by politicians, from Louis XV to Barack Obama. After all, nothing brings small European countries closer together than the image of a common enemy. The Russians sincerely did not understand why they were not accepted into the  European family. After the collapse of the Soviet Union, Moscow even asked to join NATO. The only thing that politicians in Moscow asked their Western partners for was not to offend the Russian-speaking residents of the Baltic countries and Ukraine, who, in the wake of the Soviet collapse, had became second-class people there. Let us be honest, however. Russia was purposefully being nurtured as an enemy.

The Russophobic policy of the Baltic republics led to a break with Russia and forced Moscow to urgently start building, due to logistical security concerns, new ports in the Baltic. Two color revolutions in Ukraine, orchestrated by Western “democracies” brought local nationalists to power and eventually sparking a conflict in Donbass, where 95 percent of people were not native speakers of the “state” Ukrainian language.

Even then, the Russians tried to demonstrate their friendliness to Europe. In the spring of 2021, when Italy’s medical system was paralyzed by the Covid-19 pandemic, the Russians sent there several planes with doctors and medicines, along with a team of military personnel from the chemical defense forces, who helped the Italians disinfect quarantine zones in hospitals. Following the November 2015 terrorist attacks in France, the Russian military, which had previously suffered from radical Islamists itself, wrote on the missiles, which they used against terrorist groups in Syria “For Paris.” Russia’s opposition-minded intellectuals sincerely believed that Russian liberals would be dear guests in Europe. It seems that until February 2022, pro-government circles in Russia sincerely believed that the West could force Kiev to start implementing the Minsk agreements on Donbass.

Everything changed on February 24 this year. Seriously worried by the threat posed by the strengthening of NATO and a 140,000-strong Ukrainian army deployed along the demarcation line near Donetsk, Moscow launched a special operation and, a series of initial failures, the Russian troops are confidently grinding Ukrainian troops while Europe remained sympathetically silent. It is already clear that not a single kilometer of already seized Ukrainian territory will return under Kiev’s control. From an economic standpoint, the West’s retaliatory measures looked very surprising. A number of countries have completely stopped buying Russian gas, urgently renting floating terminals to receive expensive liquefied gas from the United States and Qatar. Most of the European countries, including Italy, whose people were saved by Russian doctors, started to supply weapons to Ukraine. And this despite the fact that nothing will stop the raging bear. European weapons will only prolong the war and kill an additional tens of thousands Russians and Ukrainians, including civilians.

What is most important, however, is the demonization of Russians. Hundreds of Russian liberals who opposed the war rushed to the West only to realize that no one expected them in Europe. After all, there is no such thing as “good Russians.” At best, if they repent for all their crimes against Europe, including the defeat of Napoleon and the storming of Berlin in 1945, maybe they will let them distribute food to Ukrainian refugees.

As a result, some of those who fled to Europe faced with violence and insults and eventually returned to Russia. Some went to Belgrade, where people like Russians, and to Istanbul, where people are equally neutral towards Russians and Ukrainians… provided that they have money, of course. In the meantime, a whole nation actually fell victim to the “cancellation” procedure. People seemed to have forgotten that one of the main causes of the war was the forced assimilation of Russians in Ukraine. Now, the Kremlin propagandists don’t even have to invent anything. All they need is just to translate Western articles about the “passport of a good Russian,” about “collective responsibility of Russians,” the confiscation of Russian businesses and private property in Europe and publish them with links to the European media outlets they come from. Besides, the confiscation of Russian assets in the West is something that Russia sees as nothing but outright theft. There have also been cases of numerous refusals to operate on sick Russian children in the West, the money for which had been raised by charitable foundations! For Russians, who love children so much, this looks atrocious.

As a result, we have a paradoxical situation. Despite certain setbacks of the opening phase of the war, more Russians began to support the special operation. Those who wrote “No to war” on social networks in February changed their rhetoric a month later and began to gloat over the lack of gas and coal in Europe. But neither the Russians nor the Europeans have realized so far the scale of the colossal revolution which is taking place in the minds of people, and in geopolitics. The Russians in the EU and the US got “cancelled” and, what is even worse, resigned to this.

Back in March, the Russians took over the grain elevators in Kherson and Berdyansk and, with a high degree of probability, before the start of the harvest, they will seize all of southern Ukraine, which, along with Russia’s Kuban and Altai regions, is one of the world’s largest granaries. Huge flows of Russian fertilizers, grain and hydrocarbons are slowly but surely turning to Asia. Which market is better? Europe’s economy, which has been stagnating for years, with a population of just about 400 million, or 3.5 billion people in Southeast Asia who need bread, heat, electricity, Russian weapons and machine tools? By year’s end, the Russians will finally expand their supply flows, fill their budget with money, get rid of their fear of an expensive ruble and will be able to spend trillions to rebuild the newly annexed territories. Actually, there is already an example of this – Crimea, where a 17-kilometer bridge was built in eight years, along with excellent highways, and where housing and business construction is booming. The global workshop – China will take over the Russian consumer goods market, displacing the remnants of European brands along with Russian manufacturers that are becoming popular amid the upsurge of patriotic feelings.

And somewhere beyond the Dnieper or in the Carpathians, from the Black Sea to the Arctic Ocean, an iron curtain, or rather a steel curtain, will fall.  Instead of Spain and Italy, wealthy Russians will travel to Sri Lanka and Thailand, paying there using Chinese and domestic payment systems. Instead of Ukraine, European countries will buy grain from Arab and Chinese middlemen. The high incomes and consumer power of Europeans will change nothing here. There are 400 million of us, plus more than 3 billion people in Southeast Asia. Well, the union of two bears – a brown Siberian and a hardworking panda – will completely change the world’s entire security structure.

When, a year or two later, the whole of Europe, suffering from inflation, lack of food and hydrocarbons, falling economy and military overspending, will wonder “who is to blame?”, how many people in Europe will have the guts to tell themselves: “we shouldn’t have cancelled the Russians…”?

 “Vatican Hatred” and Russophobia

May 25, 2022

By Prof. Slobodan Antonic, Department of Sociology, University of Belgrade (Translated for the Saker Blog)

“Vatican hatred” is not a quote from a publication on the Croatian genocide against Serbs between 1941−1945. It is a phrase used by the three-time Pulitzer Prize winner Thornton Wilder in his novel “The Bridge of San Luis Rey,” to describe a hatred that is strong, deep, persistent, and cruel.

Of course, not everyone in the Vatican hates, nor are all haters Catholics. However, nations belonging to the cultural domain of Eastern Christianity are sometimes genuinely amazed by the depth and intensity of hatred emanating from influential Western ideologues, some powerful institutions, and numerous “voluntary executors” of various extermination projects. Formally they also are European and Christian, but they belong to a slightly different tradition and culture.

Serbs got a taste of it several times in the 20th century. They face it even today. An example is writer and Nobel Prize winner Herta Miller, Romanian-German novelist, who said publicly what most Germans think about Serbs when she endorsed the 1999 NATO bombing of Yugoslavia. And Germany, at least while Serbia’s current president was prime minister, was said to be our main Western friend. What are our enemies like then?

Serbs, at least when it comes to Eastern Europe, are not the only target of Western hatred. There are, of course, also the Russians. As one American woman of Serbian origin correctly remarked while watching TV over there, “the enemies of the Western world have been stable and unchanged for 30 years: Serbia and Russia. Terrible Orthodox Serbs who, in terror, slaughtered a huge number of peaceful democratic Muslims and no less terrible Russian communists who destroyed democracy and freedom in Chechnya.”

Entire scholarly monographs on the West’s hatred of Russia have been written, and three of them have been translated in our country: “Russophobia: Two Paths to the Same Abyss” (translated in 1993) by Igor Šafarević; “Russophobia” (translated by 2016) by Giulietto Chiesa; and “Russia and the West – a Thousand Years of War: Russophobia from Charlemagne to the Ukrainian Crisis” (translated in 2017) by Guy Methane.

The word “Russophobia” is in the title of all three books. That word can be misleading. Phobias are irrational and unjustified fears, like being scared of a mouse when it jumps on a table (musophobia), even though it is a creature that will not eat us or bite our leg. However, in the case of Russia, it is not a matter of phobia, but of deep and constant hatred – a good example was recently given by James Jatras:

“Moscow could return Crimea to Ukraine, escort Kiev troops to Donbas on a red carpet, and hang Bashar Assad on a flagpole in Damascus. Sanctions imposed by Washington on Moscow would remain, and even gradually intensify. See how long it took us to get rid of the Jackson-Venik law (a law that limited trade relations with the USSR, passed in 1974 and repealed only in 2012). The Russophobic impulse that controls American policy does not come from what the Russians do, but from who they are: Russia delenda est!”

Now, in Serbia, we have a newly-published book that talks about Russia hatred in our country. It is “Russophobia among Serbs 1878−2017″, by Dejan Mirović. Where did the Serbs get this from, given that the Russians helped us get rid of the Turks and rebuild a state, that because of us in 1914 they went to war with Austria-Hungary (and Germany), that in 1944 they helped us get rid of German Nazism, and that today they defend our claim to Kosovo, sometimes better than official Belgrade?

The first source of Russophobia in Serbia, in the last two centuries, is certainly the trickling down of anti-Russianism from the West. Serbia is perceived in the West as a small, Balkan Russia”, a traditional Russian stronghold in the Balkans. That is why all anti-Russian strategic projects allocate significant funds to suppress Russia’s popularity in Serbia, primarily through open anti-Russian propaganda.

Another source of anti-Russianism is the ideology of the local elite, which wants to “modernize” Serbia, but by Westernizing it. That elite, which existed in the 19th and 20th centuries, just as it exists today, wants Serbia to take over not only Western technology but also Western institutions, Western culture, and even the Western frame of mind (“Protestant spirit”). Since the model that Serbia should strive for can only be Western countries – France or Britain in the 19th century, and the EU today – Russia must be portrayed in the worst light, as it could not be a model for anything – not even in art, culture, or religion.

The third source of anti-Russianism in our country, during the last two centuries, were different political interests and different particular interests of the ruling elites of Serbia (Yugoslavia) and Russia (USSR). For example, in the 19th century, Russia wanted to take Constantinople. That is why the Bulgarians who inhabit the eastern Balkans – which could be considered the gates of Istanbul – were more important to her than the Serbs, who were geographically further away, in the west. The Russians, therefore, preferred Bulgarians at the time, supporting a Greater Bulgaria rather than a Greater Serbia. Thus, they endangered Serbian interests not only in Macedonia, but also in south-eastern Serbia. This was the real background of a certain coldness that developed in the policy of Serbian kings Milan and Aleksandar Obrenović towards Russia (a policy given a personal stamp in the “secret convention” concluded between Serbian Prince Milan and Austro-Hungary).

Another example of divergent interests is certainly the Titoist period, 1948−1989. Tito and his associates, after 1948, in fear for the survival of their regime, cruelly persecuted not only Sovietophiles but also Russophiles. A 20-year-old student, Vera Cenic, was tortured for two years (1950-1951) in the Goli Otok concentration camp only because she frequented the Soviet Cultural Center to watch Russian films, loved Russian literature and kept a diary in which she expressed her intimate reservations toward the official policy of keeping a distance from Russia.

Radivoj Berbakov was sentenced in 1980 to two and a half years in prison, which he served in the Sremska Mitrovica prison, for “enemy propaganda.” That consisted, among other things, of being “biased in favor of Russian art and literature, in the sense of exaggerating the merits ​​of art and literature in the USSR,” which fits in with his statement that he “loves Russians and that no one can forbid him to love them.”

Of course, the Titoist nomenklature knew that a political upheaval in Yugoslavia would lead to Titoists losing not only power but also their personal freedom. That is why, at that time, as Mirović shows us in his book, a significant part of the public in Serbia was being soaked not only with anti-Soviet but also outright anti-Russian propaganda and ideology.

When it comes to today’s anti-Russianism in Serbia, its basic source is a combination of the first and second factors. As a result, contemporary anti-Russian manifestations here range from the unconscious absorption of Western ideological and propaganda clichés, to unabashed Russian hatred articulated by pro-Atlanticist, self-hating Serbs.

As an example, a truly dark, threatening and dangerous “Vatican hatred,” of the kind that Thornton Wilder was alluding to, erupts regularly in the texts of some of the columnists of the Western-financed Belgrade daily “Danas”. There, we can read that “Tsarist Russia dragged Serbia into the First World War”, and also that “Russians” took part in the 2003 assassination of the then prime minister Zoran Djindjic, on the spurious premise that “the assassination of the Prime Minister was the first step in returning Serbia to the Soviet orbit.”

In Serbia, according to this view, there is a “quisling attitude towards Russia”, that is, in our country there is a “Russian network” with “extremist groups under the obvious control of Serbian and Russian security services”. The line propounded by these circles is that “Putin’s Russia is robbing us of the remnants of European sovereignty and identity, economic potential and common sense”, warning that an “evolution from Serbian chauvinism to quisling Putinism” is taking place in Serbia.

Their buzzwords are that “Putin’s regime recognizes men as oligarchs and men, and women as either whores or grandmothers”, that “the boss in Moscow is pressuring Serbia to deviate from the democratic international order”, and that for Serbia “EU integration is a priority”.

There is also in Serbia “anti-Russian incitement propaganda,” with preposterous allegations that “half of the ministers seem to have been smuggled in from the Donetsk Republic”. The alleged concept of “Greater Serbia” was initially the object of their disdain. Now they have come up with the idea that Serbia is “in danger of becoming a Russian province”. Serbs are being told that reliance on Russia “destroys our democratic institutions and introduces us to dirty sources of financial capital,” ultimately leading Serbs to “pathological Sovietophilia”, and also enabling “treacherous conduct on the part of government organs, and even circles within the Serbian Orthodox Church”.

Of course, no other privatization project in Serbia but that of NIS has been denounced as questionable for those ideologues. The only problem they see in the area of privatization is the sale of the formerly state-owned petroleum enterprise, NIS, to Russian interests. And there is also the alleged “Putin spy center”, a Russian Emergency Situations outpost located in the city of Nis, accused of “nurturing criminal traditions and destroying fragile democracies in the region.”

The Russophobic lobby maintains that in Serbia “since 2004, the media under the supervision of each government have been preparing public opinion not only for new conflicts with neighbors, but also for World War III, which we will fight on the side of Russia, China, North Korea, Cuba and Venezuela”. The author of this particular diatribe goes on to wonder “how Vučić can possibly position Serbia in the victorious camp in the emerging international conflict.”

Russia and China are, according to this lobby, “factors of world disorder” because, as they absurdly argue, “the annual total of victims of state-party terror in Russia and China is almost equal to the victims of Mauthausen”. Hence, if Belgrade – which according to them is a “stinking sh##hole” opts to side with Russia, “Serbia will remain as the Balkan GDR”.

Don´t you feel a terrible, deep hatred in these words, not only towards Russia but also towards Serbia – just because Serbia is also Slavic, nationalistic, Orthodox and strives to march to its own drummer?

That hatred is unleased primarily in order to turn Serbs into someone else: Western “Protestants” and “citizens”, more precisely a consumerist crowd that lives in a territory, not a country, and which tomorrow can be replaced by some other, more “modern” and “politically correct” population.

Eruptions of such hatred are necessary in order to mould the “Serbian-European”, whose brain is crushed and the terrible “little Russian” within him is torn out. There is no doubt that this is the ultimate goal of Atlanticist policy in the Balkans. But that cannot happen without enthronement in the Serbian society of the equivalent of “Vatican hatred” – deep, systematic and cruel.

It is important to be able to recognize that hatred. It is contrary not only to our essential interests, but also to our civilizational identity that makes us special as a people and as a culture. The general public rejects it intuitively. But in the context of the announced “international conflict” – which will allegedly finally “separate the wheat from the chaff” – it serves as an early announcement of totalitarian repression against each and every one of us who loves his country and thinks for himself.

So each of us must take the risk of falling victim to “Vatican hatred”. Even you who are reading this text, dear reader.

NATO vs Russia: what happens next

In Davos and beyond, NATO’s upbeat narrative plays like a broken record, while on the ground, Russia is stacking up wins that could sink the Atlantic order.

By Pepe Escobar

May 24 2022

Three months after the start of Russia’s Operation Z in Ukraine, the battle of The West (12 percent) against The Rest (88 percent) keeps metastasizing. Yet the narrative – oddly – remains the same.

Photo Credit: The Cradle

On Monday, from Davos, World Economic Forum Executive Chairman Klaus Schwab introduced Ukrainian comedian-cum-President Volodymyr Zelensky, on the latest leg of his weapons-solicitation-tour, with a glowing tribute. Herr Schwab stressed that an actor impersonating a president defending neo-Nazis is supported by “all of Europe and the international order.”

He means, of course, everyone except the 88 percent of the planet that subscribes to the Rule of Law – instead of the faux construct the west calls a ‘rules-based international order.’

Back in the real world, Russia, slowly but surely has been rewriting the Art of Hybrid War. Yet within the carnival of NATO psyops, aggressive cognitive infiltration, and stunning media sycophancy, much is being made of the new $40 billion US ‘aid’ package to Ukraine, deemed capable of becoming a game-changer in the war.

This ‘game-changing’ narrative comes courtesy of the same people who burned though trillions of dollars to secure Afghanistan and Iraq. And we saw how that went down.

Ukraine is the Holy Grail of international corruption. That $40 billion can be a game-changer for only two classes of people: First, the US military-industrial complex, and second, a bunch of Ukrainian oligarchs and neo-connish NGOs, that will corner the black market for weapons and humanitarian aid, and then launder the profits in the Cayman Islands.

A quick breakdown of the $40 billion reveals $8.7 billion will go to replenish the US weapons stockpile (thus not going to Ukraine at all); $3.9 billion for USEUCOM (the ‘office’ that dictates military tactics to Kiev); $5 billion for a fuzzy, unspecified “global food supply chain”; $6 billion for actual weapons and “training” to Ukraine; $9 billion in “economic assistance” (which will disappear into selected pockets); and $0.9 billion for refugees.

US risk agencies have downgraded Kiev to the dumpster of non-reimbursing-loan entities, so large American investment funds are ditching Ukraine, leaving the European Union (EU) and its member-states as the country’s only option.

Few of those countries, apart from Russophobic entities such as Poland, can justify to their own populations sending huge sums of direct aid to a failed state. So it will fall to the Brussels-based EU machine to do just enough to maintain Ukraine in an economic coma – independent from any input from member-states and institutions.

These EU ‘loans’ – mostly in the form of weapons shipments – can always be reimbursed by Kiev’s wheat exports. This is already happening on a small scale via the port of Constanta in Romania, where Ukrainian wheat arrives in barges over the Danube and is loaded into dozens of cargo ships everyday. Or, via convoys of trucks rolling with the weapons-for-wheat racket. However, Ukrainian wheat will keep feeding the wealthy west, not impoverished Ukrainians.

Moreover, expect NATO this summer to come up with another monster psyop to defend its divine (not legal) right to enter the Black Sea with warships to escort Ukrainian vessels transporting wheat. Pro-NATO media will spin it as the west being ‘saved’ from the global food crisis – which happens to be directly caused by serial, hysterical packages of western sanctions.

Poland goes for soft annexation

NATO is indeed massively ramping up its ‘support’ to Ukraine via the western border with Poland. That’s in synch with Washington’s two overarching targets: First, a ‘long war,’ insurgency-style, just like Afghanistan in the 1980s, with jihadis replaced by mercenaries and neo-Nazis.  Second, the sanctions instrumentalized to “weaken” Russia, militarily and economically.

Other targets remain unchanged, but are subordinate to the Top Two: make sure that the Democrats are re-elected in the mid-terms (that’s not going to happen); irrigate the industrial-military complex with funds that are recycled back as kickbacks (already happening); and keep the hegemony of the US dollar by all means (tricky: the multipolar world is getting its act together).

A key target being met with astonishing ease is the destruction of the German – and consequently the EU’s – economy, with a great deal of the surviving companies to be eventually sold off to American interests.

Take, for instance, BMW board member Milan Nedeljkovic telling Reuters that “our industry accounts for about 37 percent of natural gas consumption in Germany” which will sink without Russian gas supplies.

Washington’s plan is to keep the new ‘long war’ going at a not-too-incandescent level – think Syria during the 2010s – fueled by rows of mercenaries, and featuring periodic NATO escalations by anyone from Poland and the Baltic midgets to Germany.

Last week, that pitiful Eurocrat posing as High Representative of the EU for Foreign Affairs and Security Policy, Josep Borrell, gave away the game when previewing the upcoming meeting of the EU Foreign Affairs Council.

Borrell admitted that “the conflict will be long” and “the priority of the EU member states” in Ukraine “consists in the supply of heavy weapons.”

Then Polish President Andrzej Duda met with Zelensky in Kiev. The slew of agreements the two signed indicate that Warsaw intends to profit handsomely from the war to enhance its politico-military, economic, and cultural influence in western Ukraine. Polish nationals will be allowed to be elected to Ukrainian government bodies and even aim to become constitutional judges.

In practice, that means Kiev is all but transferring management of the Ukrainian failed state to Poland. Warsaw won’t even have to send troops. Call it a soft annexation.

The steamroller on the move

As it stands, the situation on the battlefield can be examined in this map. Intercepted communications from the Ukrainian command reveal their aim to build a layered defense from Poltava through Dnepropetrovsk, Zaporozhia, Krivoy Rog, and Nikolaev – which happens to be a shield for the already fortified Odessa. None of that guarantees success against the incoming Russian onslaught.

It’s always important to remember that Operation Z started on February 24 with around 150,000 or so fighters – and definitely not Russia’s elite forces. And yet they liberated Mariupol and destroyed the elite neo-Nazi Azov batallion in a matter of only fifty days, cleaning up a city of 400,000 people with minimal casualties.

While fighting a real war on the ground – not those indiscriminate US bombings from the air – in a huge country against a large army, facing multiple technical, financial and logistical challenges, the Russians also managed to liberate Kherson, Zaporizhia and virtually the whole area of the ‘baby twins,’ the popular republics of Donetsk and Luhansk.

Russia’s ground forces commander, General Aleksandr Dvornikov, has turbo-charged missile, artillery and air strikes to a pace five times faster than during the first phase of Operation Z, while the Ukrainians, overall, are low or very low on fuel, ammo for artillery, trained specialists, drones, and radars.

What American armchair and TV generals simply cannot comprehend is that in Russia’s view of this war – which military expert Andrei Martyanov defines as a “combined arms and police operation” – the two top targets are the destruction of all military assets of the enemy while preserving the life of its own soldiers.

So while losing tanks is not a big deal for Moscow, losing lives is. And that accounts for those massive Russian bombings; each military target must be conclusively destroyed. Precision strikes are crucial.

There is a raging debate among Russian military experts on why the Ministry of Defense does not go for a fast strategic victory. They could have reduced Ukraine to rubble – American style – in no time. That’s not going to happen. The Russians prefer to advance slowly and surely, in a sort of steamroller pattern. They only advance after sappers have fully surveilled the terrain; after all there are mines everywhere.

The overall pattern is unmistakable, whatever the NATO spin barrage. Ukrainian losses are becoming exponential – as many as 1,500 killed or wounded each day, everyday. If there are 50,000 Ukrainians in the several Donbass cauldrons, they will be gone by the end of June.

Ukraine must have lost as many as 20,000 soldiers in and around Mariupol alone. That’s a massive military defeat, largely surpassing Debaltsevo in 2015 and previously Ilovaisk in 2014. The losses near Izyum may be even higher than in Mariupol. And now come the losses in the Severodonetsk corner.

We’re talking here about the best Ukrainian forces. It doesn’t even matter that only 70 percent of Western weapons sent by NATO ever make it to the battlefield: the major problem is that the best soldiers are going…going…gone, and won’t be replaced. Azov neo-Nazis, the 24th Brigade, the 36th Brigade, various Air Assault brigades – they all suffered losses of 60+ percent or have been completely demolished.

So the key question, as several Russian military experts have stressed, is not when Kiev will ‘lose’ as a point of no return; it is how many soldiers Moscow is prepared to lose to get to this point.

The entire Ukrainian defense is based on artillery. So the key battles ahead involve long-range artillery. There will be problems, because the US is about to deliver M270 MLRS systems with precision-guided ammunition, capable of hitting targets at a distance of up to 70 kilometers or more.

Russia, though, has a counterpunch: the Hermes Small Operational-Tactical Complex, using high precision munitions, possibility of laser guidance, and a range of more than 100 kilometers. And they can work in conjunction with the already mass-produced Pantsir air defense systems.

The sinking ship

Ukraine, within its current borders, is already a thing of the past. Georgy Muradov, permanent representative of Crimea to the President of Russia and Deputy Prime Minister of the Crimean government, is adamant: “Ukraine in the form in which it was, I think, will no longer remain. This is already the former Ukraine.”

The Sea of ​​Azov has now become a “sea of ​​joint use” by Russia and the Donetsk People’s Republic (DPR), as confirmed by Muradov.

Mariupol will be restored. Russia has had plenty of experience in this business in both Grozny and Crimea. The Russia-Crimea land corridor is on. Four hospitals among five in Mariupol have already reopened and public transportation is back, as well as three gas stations.

The imminent loss of Severodonetsk and Lysichansk will ring serious alarm bells in Washington and Brussels, because that will represent the beginning of the end of the current regime in Kiev. And that, for all practical purposes – and beyond all the lofty rhetoric of “the west stands with you” – means heavy players won’t be exactly encouraged to bet on a sinking ship.

On the sanctions front, Moscow knows exactly what to expect, as detailed by Minister of Economic Development Maxim Reshetnikov: “Russia proceeds from the fact that sanctions against it are a rather long-term trend, and from the fact that the pivot to Asia, the acceleration of reorientation to eastern markets, to Asian markets is a strategic direction for Russia. We will make every effort to integrate into value chains precisely together with Asian countries, together with Arab countries, together with South America.”

On efforts to “intimidate Russia,” players would be wise to listen to the hypersonic sound of 50 Sarmat state-of-the-art missiles ready for combat this autumn, as explained by Roscosmos head Dmitry Rogozin.

This week’s meetings in Davos brings to light another alignment forming in the world’s overarching unipolar vs. multipolar battle. Russia, the baby twins, Chechnya and allies such as Belarus are now pitted against ‘Davos leaders’ – in other words, the combined western elite, with a few exceptions like Hungary’s Prime Minister Viktor Orban.

Zelensky will be fine. He’s protected by British and American special forces. The family is reportedly living in an $8 million mansion in Israel. He owns a $34 million villa in Miami Beach, and another in Tuscany. Average Ukrainians were lied to, robbed, and in many cases, murdered, by the Kiev gang he presides over – oligarchs, security service (SBU) fanatics, neo-Nazis. And those Ukrainians that remain (10 million have already fled) will continue to be treated as expendable.

Meanwhile, Russian President Vladimir “the new Hitler” Putin is in absolutely no hurry to end this larger than life drama that is ruining and rotting the already decaying west to its core. Why should he? He tried everything, since 2007, on the “why can’t we get along” front. Putin was totally rejected. So now it’s time to sit back, relax, and watch the Decline of the West.

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

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