Convenient “Tanker Attacks” as US Seeks War with Iran

June 13, 2019 (Tony Cartalucci – NEO)

…it would be far more preferable if the United States could cite an Iranian provocation as justification for the airstrikes before launching them. Clearly, the more outrageous, the more deadly, and the more unprovoked the Iranian action, the better off the United States would be. Of course, it would be very difficult for the United States to goad Iran into such a provocation without the rest of the world recognizing this game, which would then undermine it. 

– Brookings Institution, “Which Path to Persia?” 2009 

For the second time since the United States unilaterally withdrew from the so-called Iran Nuclear Deal, Western reports of “suspected attacks” on oil tankers near the Stait of Hormuz have attempted to implicate Iran.

The London Guardian in an article titled, “Two oil tankers struck in suspected attacks in Gulf of Oman,” would claim:

Two oil tankers have been hit in suspected attacks in the Gulf of Oman and the crews evacuated, a month after a similar incident in which four tankers in the region were struck.

The article also claimed:

Gulf tensions have been close to boiling point for weeks as the US puts “maximum economic pressure” on Tehran in an attempt to force it to reopen talks about the 2015 nuclear deal, which the US pulled out of last year. 

Iran has repeatedly said it has no knowledge of the incidents and did not instruct any surrogate forces to attack Gulf shipping, or Saudi oil installations.

The Guardian would admit that “investigations” into the previous alleged attacks in May carried out by the UAE found “sophisticated mines” were used, but fell short of implicating Iran as a culprit.

The article would note US National Security Advisor John Bolton would – without evidence – claim that Iran “was almost certainly involved.”

All Too Convenient 

This news of “attacked” oil tankers near the Stait of Hormuz blamed by the US on Iran – comes all too conveniently on the heels of additional steps taken by Washington to pressure Iran’s economy and further undermine the Iranian government.

The US just recently ended waivers for nations buying Iranian oil. Nations including Japan, South Korea, Turkey, China, and India will now face US sanctions if they continue importing Iranian oil.

Coincidentally, one of ships “attacked” this week was carrying “Japan-related cargo,” the Guardian would report.

Also convenient was the US’ recent designation of Iran’s Islamic Revolutionary Guard Corps (IRGC) just ahead of this series of provocations attributed to Iran.

AP in a May 2019 article titled, “President Trump Warns Iran Over ‘Sabotaged’ Oil Tankers in Gulf,” would claim:

Four oil tankers anchored in the Mideast were damaged by what Gulf officials described as sabotage, though satellite images obtained by The Associated Press on Tuesday showed no major visible damage to the vessels.

Two ships allegedly were Saudi, one Emirati, and one Norwegian. The article also claimed:

A U.S. official in Washington, without offering any evidence, told the AP that an American military team’s initial assessment indicated Iran or Iranian allies used explosives to blow holes in the ships.

And that:

The U.S. already had warned ships that “Iran or its proxies” could be targeting maritime traffic in the region. America is deploying an aircraft carrier and B-52 bombers to the Persian Gulf to counter alleged, still-unspecified threats from Tehran. 

This more recent incident will likely be further exploited by the US to continue building up its military forces in the region, applying pressure on Iran, and moving the entire globe closer toward war with Iran.

The US has already arrayed its forces across the Middle East to aid in ongoing proxy wars against Iran and its allies as well as prepare for conventional war with Tehran itself.

All of this amounts to a renewed push toward a more direct conflict between the United States and Iran after years of proxy war in Syria Washington-backed forces have decisively lost.

It is also a continuation of long-standing US foreign policy regarding Iran put into motion over a decade ago and carried out by each respective presidency since.

Washington’s Long-Standing Plans 

Continued sanctions and the elimination of waivers are part of Washington’s unilateral withdrawal from the Joint Comprehensive Plan of Action (JCPOA) or the “Iran Nuclear Deal.” The deal was signed in 2015 with the US withdrawing in 2018.

While the decision is portrayed as political differences between former US President Barack Obama and current US President Donald Trump – in reality – the plan’s proposal, signing, and then withdrawal from by the US was planned in detail as early as 2009 as a means of justifying long sought-after war with Iran.

In their 2009 paper, “Which Path to Persia?: Options for a New American Strategy Toward Iran” (PDF), the corporate-financier funded Brookings Institution would first admit the complications of US-led military aggression against Iran (emphasis added):

...any military operation against Iran will likely be very unpopular around the world and require the proper international context—both to ensure the logistical support the operation would require and to minimize the blowback from it. 

The paper then lays out how the US could appear to the world as a peacemaker and depict Iran’s betrayal of a “very good deal” as the pretext for an otherwise reluctant US military response (emphasis added):

The best way to minimize international opprobrium and maximize support (however, grudging or covert) is to strike only when there is a widespread conviction that the Iranians were given but then rejected a superb offerone so good that only a regime determined to acquire nuclear weapons and acquire them for the wrong reasons would turn it down. Under those circumstances, the United States (or Israel) could portray its operations as taken in sorrow, not anger, and at least some in the international community would conclude that the Iranians “brought it on themselves” by refusing a very good deal.

And from 2009 onward, this is precisely what the United States set out to achieve.

First with President Obama’s signing of the 2015 Iran Nuclear Deal, up to and including President Trump’s attempts to backtrack from it based on fabricated claims Iran failed to honor the agreement.

The 2009 policy paper also discussed “goading” Iran into war, claiming (emphasis added):

With provocation, the international diplomatic and domestic political requirements of an invasion [of Iran] would be mitigated, and the more outrageous the Iranian provocation (and the less that the United States is seen to be goading Iran), the more these challenges would be diminished. In the absence of a sufficiently horrific provocation, meeting these requirements would be daunting.

Unmentioned directly, but also an obvious method for achieving Washington’s goal of provoking war with Iran would be the US simply staging an “Iranian provocation” itself.

As the US had done in Vietnam following the Gulf of Tonkin incident, or US fabrications regardings “weapons of mass destruction” Washington claimed Iraq held in its possession, the US has a clear track record of not just simply provoking provocations, but staging them itself.

The Brookings paper even admits to the unlikelihood of Iran falling into Washington’s trap, lamenting (emphasis added):

…it is certainly the case that if Washington sought such a provocation, it could take actions that might make it more likely that Tehran would do so (although being too obvious about this could nullify the provocation). However, since it would be up to Iran to make the provocative move, which Iran has been wary of doing most times in the past, the United States would never know for sure when it would get the requisite Iranian provocation. In fact, it might never come at all.

The alleged sabotaging of oil tankers off the shore of the UAE in May and now additional “attacks” this month could be the beginning of a series of staged provocations aimed at leveraging the recent listing of the IRGC as a “terrorist organization” coupled with increased economic pressure as a result of US sanctions re-initiated after the US’ own withdrawal from the Iran Deal.

Synergies Toward War 

The US has already attempted to leverage allegations in May of “Iranian sabotage” to further build its case against Iran. Washington hopes that either war – or at least the impending threat of war – coupled with crippling economic sanctions, and continued support of political and armed sedition within Iran itself will create the synergies required for dividing and destroying Iran’s political order.

In a wider regional context, the US has seen political losses particularly in Iraq where Iranian influence has been on the rise. Militarily, US-backed proxy forces have been defeated in Syria with Iran and Russia both establishing permanent and significant footholds there.

Despite the setbacks, the success of Washington’s designs against Tehran still depends mainly on America’s ability to offer political and economic incentives coupled with equally effective threats to friend and foe alike – in order to isolate Iran.

How likely this is to succeed remains questionable – decades of US sanctions, covert and overt aggression, as well as proxy wars have left Iran resilient and with more influence across the region now than ever. Still, Washington’s capacity for sowing regional destruction or dividing and destroying Iran should not be underestimated.

The intentional creation of – then withdrawal from the Iran Deal, the US’ persistent military presence in the Middle East, and sanctions aimed at Iran all indicate that US policymakers remain dedicated isolating and undermining Iran. It will continue to do so until its geopolitical goals are met, or until a new international order creates conditions in the Middle East and throughout the global economy making US regime change against Iran impossible.

Tony Cartalucci, Bangkok-based geopolitical researcher and writer, especially for the online magazine New Eastern Outlook”.

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US Not Seeking Military Confrontation with Iran, Only Waging Psywar: Senior MP

 May 12, 2019

Trump

A senior member of the Iranian Parliament says the United States does not seek a military confrontation with Iran and is only waging a “psychological war” against the Islamic Republic.

Head of the Iranian Parliament’s Committee on National Security and Foreign Policy Heshmatollah Falahatpisheh made the remarks after a closed-door meeting of lawmakers with the new chief commander of the Islamic Revolution Guards Corps, Major General Hossein Salami, on Sunday.

“Analysis of the behavior of Americans shows that they do not seek a military confrontation with Iran and are only waging a psychological war against the Islamic Republic,” the Iranian lawmaker said, adding that the US government is trying to combine its psychological war against Iran with sanctions and other forms of economic pressure.

Referring to heightened presence of American forces in the Middle East, particularly in the Persian Gulf, Falahatpisheh noted that Iran is capable of hitting its targets from a distance of 2,000 kilometers in line with its defensive policy, while American warships will be at a maximum distance of 500 kilometers away from Iran and they know that in no other war, their defeat will not be so evident.

The United States is ratcheting up economic and military pressure on Iran, with US President Donald Trump on Thursday urging Tehran to talk to him.

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Hezbollah will Eventually Prevail over US Sanctions: Official

Source

April 28, 2019

Deputy Chief of Hezbollah Executive Council Sheikh Ali Daamoush

A high-ranking Hezbollah official says the United States has slapped economic sanctions against the Lebanese resistance movement due to its bitter defeats from the group, stressing that Hezbollah will finally emerge victorious over the punitive measures.

Speaking at a ceremony in the southern Lebanese city of Nabatieh, Vice President of the Executive Council of Hezbollah Sheikh Ali Damoush said Hezbollah will confront the US-led sanctions, and its enemies will definitely fail to achieve their goals.

“Hezbollah, which owes national and moral duties to defend and protect Lebanon against the aggression of the Zionist regime (of Israel), is also responsible for safeguarding the rights and interests of the Lebanese nation and helping prevent economic collapse in the country,” Damoush said.

He added, “The Lebanese resistance movement is targeted by financial sanctions, because it continues to thwart US-Israeli plots in the (Middle East) region. The US, Zionists and their allies have failed in military confrontations with Hezbollah, have fallen short in their psychological war to tarnish the group’s image, and gained not much from designating the Lebanese group a terrorist group.”

Damoush said the strategy of imposing sanctions will not succeed in the face of the strategy of stability and patience, and strong will of Lebanese resistance fighters and Lebanese people, who have managed to thwart enemies’ plots over the past decades.

“Lebanon will not be the arena in which the (the United States of) America can achieve its political objectives. Lebanon has been and will remain to be the place for victories of Hezbollah, and decline in the American role in the region,” the senior Hezbollah official said.

Source: Press TV

What the Press Hides From You About Venezuela

A Case of News Suppression

Introduction

This news-report is being submitted to all U.S. and allied news-media, and is being published by all honest ones, in order to inform you of crucial facts that the others — the dishonest ones, who hide such crucial facts — are hiding about Venezuela. These are facts that have received coverage only in one single British newspaper: the Independent, which published a summary account of them on January 26th. That newspaper’s account will be excerpted here at the end, but first will be highlights from its topic, the official report to the U.N. General Assembly in August of last year, which has been covered-up ever since. This is why that report’s author has now gone to the Independent, desperate to get the story out, finally, to the public:

The Covered Up Document

On 3 August 2018, the U.N.’s General Assembly received the report from the U.N. Independent Expert on the Promotion of a Democratic and Equitable International Order, concerning his mission to Venezuela and Ecuador. His recent travel through both countries focused on “how best to enhance the enjoyment of all human rights by the populations of both countries.

” He “noted the eradication of illiteracy, free education from primary school to university, and programmes to reduce extreme poverty, provide housing to the homeless and vulnerable, phase out privilege and discrimination, and extend medical care to everyone.”

He noted

“that the Bolivarian Republic of Venezuela, and Ecuador, both devote around 70 per cent of their national budgets to social services.”

However, (and here, key paragraphs from the report are now quoted):

22. Observers have identified errors committed by the Chávez and Maduro Governments, noting that there are too many ideologues and too few technocrats in public administration, resulting in government policies that lack coherence and professional management and discourage domestic investment, already crippled by inefficiency and corruption, which extend to government officials, transnational corporations and entrepreneurs. Critics warn about the undue influence of the military on government and on the running of enterprises like Petróleos de Venezuela. The lack of regular, publicly available data on nutrition, epidemiology and inflation are said to complicate efforts to provide humanitarian support.

23. Meanwhile, the Attorney General, Tarek Saab, has launched a vigorous anticorruption campaign, investigating the links between Venezuelan enterprises and tax havens, contracting scams, and deals by public officials with Odebrecht. It is estimated that corruption in the oil industry has cost the Government US$ 4.8 billion. The Attorney General’s Office informed the Independent Expert of pending investigations for embezzlement and extortion against 79 officials of Petróleos de Venezuela, including 22 senior managers. The Office also pointed to the arrest of two high-level oil executives, accused of money-laundering in Andorra. The Ministry of Justice estimates corruption losses at some US$ 15 billion. Other stakeholders, in contrast, assert that anti-corruption programmes are selective and have not sufficiently targeted State institutions, including the military.

29. Over the past sixty years, non-conventional economic wars have been waged against Cuba, Chile, Nicaragua, the Syrian Arab Republic and the Bolivarian Republic of Venezuela in order to make their economies fail, facilitate regime change and impose a neo-liberal socioeconomic model. In order to discredit selected governments, failures in the field of human rights are maximized so as to make violent overthrow more palatable. Human rights are being “weaponized” against rivals. Yet, human rights are the heritage of every human being and should never be instrumentalized as weapons of demonization.

30. The principles of non-intervention and non-interference in the internal affairs of sovereign States belong to customary international law and have been reaffirmed in General Assembly resolutions, notably [a list is supplied].

31. In its judgment of 27 June 1986 concerning Nicaragua v. United States, the International Court of Justice quoted from [U.N.] resolution 2625 (XXV): “no State shall organize, assist, foment, finance, incite or tolerate subversive, terrorist or armed activities directed towards the violent overthrow of the regime of another State, or interfere in civil strife in another State”.

36. The effects of sanctions imposed by Presidents Obama and Trump and unilateral measures by Canada and the European Union have directly and indirectly aggravated the shortages in medicines such as insulin and anti-retroviral drugs. To the extent that economic sanctions have caused delays in distribution and thus contributed to many deaths, sanctions contravene the human rights obligations of the countries imposing them. Moreover, sanctions can amount to crimes against humanity under Article 7 of the Rome Statute of the International Criminal Court. An investigation by that Court would be appropriate, but the geopolitical submissiveness of the Court may prevent this.

37. Modern-day economic sanctions and blockades are comparable with medieval sieges of towns with the intention of forcing them to surrender. Twenty-first century sanctions attempt to bring not just a town, but sovereign countries to their knees. A difference, perhaps, is that twenty-first century sanctions are accompanied by the manipulation of public opinion through “fake news”, aggressive public relations and a pseudo-human rights rhetoric so as to give the impression that a human rights “end” justifies the criminal means.

39. Economic asphyxiation policies are comparable to those already practised in Chile, the Democratic People’s Republic of Korea, Nicaragua and the Syrian Arab Republic. In January 2018, Middle East correspondent of The Financial Times and The Independent, Patrick Cockburn, wrote on the sanctions affecting Syria:

There is usually a pretence that foodstuffs and medical equipment are being allowed through freely and no mention is made of the financial and other regulatory obstacles making it impossible to deliver them. An example of this is the draconian sanctions imposed on Syria by the US and EU which were meant to target President Bashar al-Assad and help remove him from power. They have wholly failed to do this, but a UN internal report leaked in 2016 shows all too convincingly the effect of the embargo in stopping the delivery of aid by international aid agencies. They cannot import the aid despite waivers because banks and commercial companies dare not risk being penalised for having anything to do with Syria. The report quotes a European doctor working in Syria as saying that “the indirect effect of sanctions … makes the import of the medical instruments and other medical supplies immensely difficult, near impossible”.

In short: economic sanctions kill.

41. Bearing in mind that Venezuelan society is polarized, what is most needed is dialogue between the Government and the opposition, and it would be a noble task on the part of the Secretary-General of the United Nations to offer his good offices for such a dialogue. Yet, opposition leaders Antonio Ledezma and Julio Borges, during a trip through Europe to denounce the Government of the Bolivarian Republic of Venezuela, called for further sanctions as well as a military “humanitarian intervention”.

44. Although the situation in the Bolivarian Republic of Venezuela has not yet reached the humanitarian crisis threshold, there is hunger, malnutrition, anxiety, anguish and emigration. What is crucial is to study the causes of the crisis, including neglected factors of sanctions, sabotage, hoarding, black market activities, induced inflation and contraband in food and medicines. 

45. The “crisis” in the Bolivarian Republic of Venezuela is an economic crisis, which cannot be compared with the humanitarian crises in Gaza, Yemen, Libya, the Syrian Arab Republic, Iraq, Haiti, Mali, the Central African Republic, South Sudan, Somalia, or Myanmar, among others. It is significant that when, in 2017, the Bolivarian Republic of Venezuela requested medical aid from the Global Fund to Fight AIDS, Tuberculosis and Malaria, the plea was rejected, because it ”is still a high-income country … and as such is not eligible”.

46. It is pertinent to recall the situation in the years prior to the election of Hugo Chávez. 118 Corruption was ubiquitous and in 1993, President Carlos Pérez was removed because of embezzlement. The Chávez election in 1998 reflected despair with the corruption and neo-liberal policies of the 1980s and 1990s, and rejection of the gulf between the super-rich and the abject poor.

47. Participatory democracy in the Bolivarian Republic of Venezuela, called “protagónica”, is anchored in the Constitution of 1999 and relies on frequent elections and referendums. During the mission, the Independent Expert exchanged views with the Electoral Commission and learned that in the 19 years since Chávez, 25 elections and referendums had been conducted, 4 of them observed by the Carter Center. The Independent Expert met with the representative of the Carter Center in the Bolivarian Republic of Venezuela, who recalled Carter’s positive assessment of the electoral system. They also discussed the constitutional objections raised by the opposition to the referendum held on 30 July 2017, resulting in the creation of a Constitutional Assembly. Over 8 million Venezuelans voted in the referendum, which was accompanied by international observers, including from the Council of Electoral Specialists of Latin America. 

48. An atmosphere of intimidation accompanied the mission, attempting to pressure the Independent Expert into a predetermined matrix. He received letters from NGOs asking him not to proceed because he was not the “relevant” rapporteur, and almost dictating what should be in the report. Weeks before his arrival, some called the mission a “fake investigation”. Social media insults bordered on “hate speech” and “incitement”. Mobbing before, during and after the mission bore a resemblance to the experience of two American journalists who visited the country in July 2017. Utilizing platforms such as Facebook and Twitter, critics questioned the Independent Expert’s integrity and accused him of bias, demonstrating a culture of intransigence and refusal to accept the duty of an independent expert to be neutral, objective, dispassionate and to apply his expertise free of external pressures.

67. The Independent Expert recommends that the General Assembly: (g) Invoke article 96 of the Charter of the United Nations and refer the following questions to the International Court of Justice: Can unilateral coercive measures be compatible with international law? Can unilateral coercive measures amount to crimes against humanity when a large number of persons perish because of scarcity of food and medicines? What reparations are due to the victims of sanctions? Do sanctions and currency manipulations constitute geopolitical crimes? (h) Adopt a resolution along the lines of the resolutions on the United States embargo against Cuba, declaring the sanctions against the Bolivarian Republic of Venezuela contrary to international law and human rights law.

70. The Independent Expert recommends that the International Criminal Court investigate the problem of unilateral coercive measures that cause death from malnutrition, lack of medicines and medical equipment.

72. The Independent Expert recommends that, until the International Court of Justice and the International Criminal Court address the lethal outcomes of economic wars and sanctions regimes, the Permanent Peoples Tribunal, the Russell Tribunal and the Kuala Lumpur War Crimes Commission undertake the task so as to facilitate future judicial pronouncements.

On January 26th, Britain’s Independent headlined “Venezuela crisis: Former UN rapporteur says US sanctions are killing citizens“, and Michael Selby-Green reported that:

The first UN rapporteur to visit Venezuela for 21 years has told The Independent the US sanctions on the country are illegal and could amount to “crimes against humanity” under international law.

Former special rapporteur Alfred de Zayas, who finished his term at the UN in March, has criticized the US for engaging in “economic warfare” against Venezuela which he said is hurting the economy and killing Venezuelans.

The comments come amid worsening tensions in the country after the US and UK have backed Juan Guaido, who appointed himself “interim president” of Venezuela as hundreds of thousands marched to support him.

The US Treasury has not responded to a request for comment on Mr de Zayas’s allegations of the effects of the sanctions programme.

US sanctions prohibit dealing in currencies issued by the Venezuelan government. They also target individuals, and stop US-based companies or people from buying and selling new debt issued by PDVSA or the government.

The US has previously defended its sanctions on Venezuela, with a senior US official saying in 2018: “The fact is that the greatest sanction on Venezuelan oil and oil production is called Nicolas Maduro, and PDVSA’s inefficiencies,” referring to the state-run oil body, Petroleos de Venezuela, SA.

Mr De Zayas’s findings are based on his late-2017 mission to the country and interviews with 12 Venezuelan government minsters, opposition politicians, 35 NGOs working in the country, academics, church officials, activists, chambers of commerce and regional UN agencies.

The US imposed new sanctions against Venezuela on 9 March 2015, when President Barack Obama issued executive order 13692, declaring the country a threat to national security.

The sanctions have since intensified under Donald Trump, who has also threatened military invasion and discussed a coup.

Despite being the first UN official to visit and report from Venezuela in 21 years, Mr de Zayas said his research into the causes of the country’s economic crisis has so far largely been ignored by the UN and the media, and caused little debate within the Human Rights Council.

He believes his report has been ignored because it goes against the popular narrative that Venezuela needs regime change.

The then UN high commissioner, Zeid Raad Al Hussein1, reportedly refused to meet Mr de Zayas after the visit, and the Venezuela desk of the UN Human Rights Council also declined to help with his work after his return despite being obliged to do so, Mr de Zayas claimed.

Ivan Briscoe, Latin America and Caribbean programme director for Crisis Group, an international NGO, told The Independent that Venezuela is a polarising subject. … Briscoe is critical of Mr de Zayas’s report because it highlights US economic warfare but in his view neglects to mention the impact of a difficult business environment in the country. … Briscoe acknowledged rising tensions and the likely presence of US personnel operating covertly in the country.

Eugenia Russian, president of FUNDALATIN, one of the oldest human rights NGOs in Venezuela, founded in 1978 before the Chavez and Maduro governments and with special consultative status at the UN, spoke to The Independent on the significance of the sanctions.

“In contact with the popular communities, we consider that one of the fundamental causes of the economic crisis in the country is the effect that the unilateral coercive sanctions that are applied in the economy, especially by the government of the United States,” Ms Russian said.

She said there may also be causes from internal errors, but said probably few countries in the world have suffered an “economic siege” like the one Venezuelans are living under.

In his report, Mr de Zayas expressed concern that those calling the situation a “humanitarian crisis” are trying to justify regime change and that human rights are being “weaponised” to discredit the government and make violent overthrow more “palatable”….

Venezuela has the largest oil reserves in the world and an abundance of other natural resources including gold, bauxite and coltan. But under the Maduro government they’re not easily accessible to US and transnational corporations.

US oil companies had large investments in Venezuela in the early 20th century but were locked out after Venezuelans voted to nationalise the industry in 1973.

Other than readers of that single newspaper, where has the public been able to find these facts? If the public can have these facts hidden from them, then how much trust should the public reasonably have in the government, and in the news-media?

• Here is the garbage that a reader comes to, who is trying to find online Mr. de Zayas’s report on this matter:  As intended, the document remains effectively hidden to the present day. Perhaps the U.N. needs to be replaced and located in Venezuela, Iran, or some other country that’s targeted for take-over by the people who effectively own the United States Government and control the U.N.’s bureaucracy. The hiding of this document was done not only by the press but by the U.N. itself.

• On January 23rd, Germany’s Die Zeit headlined “Christoph Flügge: ‘I am deeply disturbed’: The U.N. International Criminal Court Judge Christoph Flügge Accuses Western Nations of Threatening the Independence of the Judges“. Flügge especially cited U.S. President Trump’s agent, John Bolton. That same day, the Democratic Party and Labour Party organ, Britain’s Guardian, bannered “International criminal court: UN court judge quits The Hague citing political interference“. This news-report said that, “A senior judge has resigned from one of the UN’s international courts in The Hague citing ‘shocking’ political interference from the White House and Turkey.” The judge especially criticised Bolton: “The American security adviser held his speech at a time when The Hague was planning preliminary investigations into American soldiers who had been accused of torturing people in Afghanistan. The American threats against international judges clearly show the new political climate. It is shocking. I had never heard such a threat.” Flügge said that the judges on the court had been “stunned” that “the US would roll out such heavy artillery”. Flügge told the Guardian: “It is consistent with the new American line: ‘We are No 1 and we stand above the law’.”

• On February 6th, a former UK Ambassador to Syria vented at an alt-news site, 21st Century Wire (since he couldn’t get any of the major-media sites to publish it), “A Guide to Decoding the Doublespeak on Syria“, and he brazenly exposed there the Doublespeak-Newspeak that the U.S. Government and press (what he called America’s “frothing neocons and their liberal interventionist fellow travellers”) apply in order to report the ‘news’ about Syria. So: how can the public, in a country such as the U.S., democratically control the Government, if the government and its press are lying to them, like that, all the time, and so routinely?

Venezuela: Let’s Cut to the Chase

Venezuela: Let’s Cut to the Chase

PEPE ESCOBAR | 01.02.2019 | FEATURED STORY

Venezuela: Let’s Cut to the Chase

Cold War 2.0 has hit South America with a bang – pitting the US and expected minions against the four key pillars of in-progress Eurasia integration: Russia, China, Iran and Turkey.

It’s the oil, stupid. But there’s way more than meets the (oily) eye.

Caracas has committed the ultimate cardinal sin in the eyes of Exceptionalistan; oil trading bypassing the US dollar or US-controlled exchanges.

Remember Iraq. Remember Libya. Yet Iran is also doing it. Turkey is doing it. Russia is – partially – on the way. And China will eventually trade all its energy in petroyuan.

With Venezuela adopting the petro crypto-currency and the sovereign bolivar, already last year the Trump administration had sanctioned Caracas off the international financial system.

No wonder Caracas is supported by China, Russia and Iran. They are the real hardcore troika – not psycho-killer John Bolton’s cartoonish “troika of tyranny” – fighting against the Trump administration’s energy dominance strategy, which consists essentially in aiming at the total lock down of oil trading in petrodollars, forever.

Venezuela is a key cog in the machine. Psycho killer Bolton admitted it on the record; “It will make a big difference to the United States economically if we could have American oil companies invest in and produce the oil capabilities in Venezuela.” It’s not a matter of just letting ExxonMobil take over Venezuela’s massive oil reserves – the largest on the planet. The key is to monopolize their exploitation in US dollars, benefitting a few Big Oil billionaires.

Once again, the curse of natural resources is in play. Venezuela must not be allowed to profit from its wealth on its own terms; thus, Exceptionalistan has ruled that the Venezuelan state must be shattered.

In the end, this is all about economic war. Cue to the US Treasury Department imposing new sanctions on PDVSA that amount to a de facto oil embargo against Venezuela.

Economic war redux

By now it’s firmly established what happened in Caracas was not a color revolution but an old-school US-promoted regime change coup using local comprador elites, installing as “interim president” an unknown quantity, Juan Guaido, with his Obama choirboy looks masking extreme right-wing credentials.

Everyone remembers “Assad must go”. The first stage in the Syrian color revolution was the instigation of civil war, followed by a war by proxy via multinational jihadi mercenaries. As Thierry Meyssan has noted, the role of the Arab League then is performed by the OAS now. And the role of Friends of Syria – now lying in the dustbin of history – is now performed by the Lima group, the club of Washington’s vassals. Instead of al-Nusra “moderate rebels”, we may have Colombian – or assorted Emirati-trained – “moderate rebel” mercenaries.

Contrary to Western corporate media fake news, the latest elections in Venezuela were absolutely legitimate. There was no way to tamper with the made in Taiwan electronic voting machines. The ruling Socialist Party got 70 percent of the votes; the opposition, with many parties boycotting it, got 30 percent. A serious delegation of the Latin American Council of Electoral Experts (CEELA) was adamant; the election reflected “peacefully and without problems, the will of Venezuelan citizens”.

The American embargo may be vicious. In parallel, Maduro’s government may have been supremely incompetent in not diversifying the economy and investing in food self-sufficiency. Major food importers, speculating like there’s no tomorrow, are making a killing. Still, reliable sources in Caracas tell that the barrios – the popular neighborhoods – remain largely peaceful.

In a country where a full tank of gas still costs less than a can of Coke, there’s no question the chronic shortages of food and medicines in local clinics have forced at least two million people to leave Venezuela. But the key enforcing factor is the US embargo.

The UN rapporteur to Venezuela, expert on international law, and former secretary of the UN Human Rights Council, Alfred de Zayas, goes straight to the point; much more than engaging in the proverbial demonization of Maduro, Washington is waging “economic war” against a whole nation.

It’s enlightening to see how the “Venezuelan people” see the charade. In a poll conducted by Hinterlaces even before the Trump administration coup/regime change wet dream, 86% of Venezuelans said they were against any sort of US intervention, military or not,

And 81% of Venezuelans said they were against US sanctions. So much for “benign” foreign interference on behalf of “democracy” and “human rights”.

The Russia-China factor

Analyses by informed observers such as Eva Golinger and most of all, the Mision Verdad collective are extremely helpful. What’s certain, in true Empire of Chaos mode, is that the American playbook, beyond the embargo and sabotage, is to foment civil war.

Dodgy “armed groups” have been active in the Caracas barrios, acting in the dead of night and amplifying “social unrest” on social media. Still, Guaido holds absolutely no power inside the country. His only chance of success is if he manages to install a parallel government – cashing in on the oil revenue and having Washington arrest government members on trumped-up charges.

Irrespective of neocon wet dreams, adults at the Pentagon should know that an invasion of Venezuela may indeed metastasize into a tropical Vietnam quagmire. The Brazilian strongman in waiting, vice-president and retired general Hamilton Mourao, already said there will be no military intervention.

Psycho killer Bolton’s by now infamous notepad stunt about “5,000 troops to Colombia”, is a joke; these would have no chance against the arguably 15,000 Cubans who are in charge of security for the Maduro government; Cubans have demonstrated historically they are not in the business of handing over power.

It all comes back to what China and Russia may do. China is Venezuela’s largest creditor. Maduro was received by Xi Jinping last year in Beijing, getting an extra $5 billion in loans and signing at least 20 bilateral agreements.

President Putin offered his full support to Maduro over the phone, diplomatically stressing that “destructive interference from abroad blatantly violates basic norms of international law.”

By January 2016, oil was as low as $35 a barrel; a disaster to Venezuela’s coffers. Maduro then decided to transfer 49.9% of the state ownership in PDVSA’s US subsidiary, Citgo, to Russian Rosneft for a mere $1.5 billion loan. This had to send a wave of red lights across the Beltway; those “evil” Russians were now part owners of Venezuela’s prime asset.

Late last year, still in need of more funds, Maduro opened gold mining in Venezuela to Russian mining companies. And there’s more; nickel, diamonds, iron ore, aluminum, bauxite, all coveted by Russia, China – and the US. As for $1.3 billion of Venezuela’s own gold, forget about repatriating it from the Bank of England.

And then, last December, came the straw that broke the Deep State’s back; the friendship flight of two Russian nuclear-capable Tu-160 bombers. How dare they? In our own backyard?

The Trump administration’s energy masterplan may be indeed to annex Venezuela to a parallel “North American-South American Petroleum Exporting Countries” (NASAPEC) cartel, capable of rivaling the OPEC+ love story between Russia and the House of Saud.

But even if that came to fruition, and adding a possible, joint US-Qatar LNG alliance, there’s no guarantee that would be enough to assure petrodollar – and petrogas – preeminence in the long run.

Eurasia energy integration will mostly bypass the petrodollar; this is at the very heart of both the BRICS and SCO strategy. From Nord Stream 2 to Turk Stream, Russia is locking down a long-term energy partnership with Europe. And petroyuan dominance is just a matter of time. Moscow knows it. Tehran knows it. Ankara knows it. Riyadh knows it.

So what about plan B, neocons? Ready for your tropical Vietnam?

محاولة أميركية لاستفراد روسيا وتطويع أوروبا ومهادنة الصين

 

ديسمبر 7, 2018

د. وفيق إبراهيم

الدولة الأميركية العميقة لا تزال تعمل بإتقان على الرغم من هلوسات الرئيس الأميركي دونالد ترامب الذي يعبّر عن حاجات بلاده بأسلوب رجال البورصة الذين لا يلمُّون بالأساليب الدبلوماسية ولا تثير اهتمامهم.

هذه الدولة تعرف من هم منافسو إمبراطوريتها وأين توجد مكامن الخلل فتعمل على معالجتها بالاساليب الترمبية.

يبدو أنها اكتشفت حاجة الامبراطورية الى آليات جديدة لمنافسة وتطويع القوى الأخرى، الامر الذي يتطلب وقتاً وهدنة مع منافسيها فقسمتهم الى ثلاث فئات:

أخطار استراتيجية عالمية تتجسّد في روسيا التي تعاود اجتياح الشرق الأوسط بالتدريج انطلاقاً من الميدان السوري وأهميتها كامنة في قوة عسكرية ضاربة لديها الأنواع التقليدية والنووية وأسلحة الفضاء بشكل يوازي معادلات القوة الأميركية ويزيدها في بعض الأحيان، ولديها أفقٌ مفتوح على أميركا الجنوبية وآسيا وبخلفية تحالف عميق مع الصين. للملاحظة فإن مساحة روسيا تزيد مرتين عن المساحة الأميركية وثلاث مرات ونصف المرة عن الصين. ويختزن باطنها اقل بقليل من نصف ثروات الأرض، لكنها لم تبدأ باستغلالها لخلل في العلاقات بين التقدم الصناعي البطيء ومخزون الثروات وذلك منذ الاتحاد السوفياتي.

لجهة أوروبا وخصوصاً ألمانيا وفرنسا فبلدانها سقطت في السلة الأميركية سياسياً واقتصادياً وعسكرياً منذ انتصار الولايات المتحدة في الحرب العالمية الثانية في 1945. هذا لا يعني أنها أصبحت كالدول العربية، فلا تزال دولاً صناعية وعلمية وقوية عسكرياً ولديها مداها العالمي خلف أميركا والصين واليابان، ألمانيا مثلاً استطاعت في العقد الأخير التسلق الى المرتبة العالمية الثالثة اقتصادياً ولولا الاتفاق العسكري الذي قبلت بموجبه أن لا تتسلح منذ خسارتها الحرب العالمية الثانية في 1945 لصنعت أسلحة قد تتفوّق بها على روسيا وأميركا معاً. تكفي الاشارة الى أن هناك قواعد عسكرية أميركية ترابط فيها منذ هزيمتها في الحرب العالمية الثانية 1945.

وبذلك تمكن الأميركيون من استتباع أوروبا لنفوذهم بشكل كامل مؤسسين معها بنى عسكرية وسياسية مشتركة الحلف الاطلسي- على قاعدة العداء للاتحاد السوفياتي ولاحقاً لوريثته أوروبا الشرقية المتاخمة لموسكو.

لكن أوروبا اليوم تصطدم بمعوقات ترامبية أميركية تمنعها من الحصول على مواقع متقدمة، لكنها تعتبر أن من حقها وراثة الفراغات الناتجة عن التراجع الأميركي. لكن الصراخ الترامبي المتقاطع مع حركات تأديب تواصل ضبط أوروبا في الأسر الأميركي ولا تمنع حصول تلاسن بين ترامب ورئيس فرنسا ومستشارة المانيا بشكل حاد.

إن ترامب يعتبر أن على أوروبا دعم بلاده في وجه روسيا والصين من دون أي تأفف او تذمر لانه يحميها حسب مزاعمه، مضخماً ظاهرة الخوف من روسيا «البلد المرعب» متماثلاً بذلك مع اسلافه الذين كانوا يثيرون خوف القارة العجوز من الاتحاد السوفياتي ذي القدرات التسليحية الضخمة والعقيدة الشيوعية المناهضة لمفهوم «العالم الحر الغربي» وكانوا يثيرون ايضاً رعب العرب في الخليج والشرق الاوسط من «الإلحاد والكفر» من الشيوعية الروسية.

هناك اذاً صراع أميركي روسي مكشوف ومتصاعد الى جانب محاولات أميركية لتطويع أوروبا.

ماذا عن الصين: تمكنت بكين من اختراق الاسواق العالمية بسلع رخيصة منافسة واستفادت من إقرار نظام العولمة لاقتحام الاسواق الأميركية بطرح سلع أقبل عليها المستهلك الأميركي الشمالي والجنوبي من أبناء الطبقتين الوسطى والفقيرة فيما عجزت السلع الأميركية من اختراق أسواق الصين بسبب عجز طبقاتها عن التماهي مع أسعارها العالية قياساً لمرتباتهم الضعيفة.

إن راتب العامل الأميركي ذي الحد الأدنى للأجور يعادل عشرة اضعاف العامل الصيني وربما أكثر.

فحدث خلل هائل في العلاقات الصينية الأميركية لمصلحة بكين وهذا ما أزعج ترامب وامبراطوريته؟

اعتبر أن روسيا قوة عسكرية وليست اقتصادية، وهذا لن يؤدي مهما ساءت العلاقات معها الى اندلاع حروب بينهما لأنها مخيفة وقد تفجر الكرة الأرضية نفسها. لذلك رأت امبراطورية ترامب ضرورة إرباك روسيا في أوروبا الشرقية وشرقي سورية وإعادتها الى «حرب تسلح جديدة» قد تؤدي الى اجهاض مشاريعها التوسعية أي تماماً كما حدث للسلف السوفياتي الذي انخرط في حرب تسلّح في مرحلة الرئيس الأميركي السابق ريغان ادت الى سقوطه اقتصادياً وبالتالي سياسياً.

للإشارة فإن الاتحاد السوفياتي كان بمفرده يجابه الأميركيين والأوروبيين وأحلافهم في اليابان والخليج وأميركا الجنوبية. هذه القوى التي نظمها الأميركيون للاستفادة منها آنذاك في حروب الفضاء والتسلح.

هذا ما دفع البيت الابيض الى اتهام روسيا بالعودة الى إنتاج صواريخ نووية متوسطة المدى وقصيرة واختراق المعاهدة الموقعة بين البلدين بهذا الصدد منذ 1987.

إن المتضرر الاكبر من تدمير هذه المعاهدة هم الأوروبيون الذين هاجموا الأميركيين المصرّين على الانسحاب من المعاهدة، لأنهم يعرفون انهم الأكثر تضرراً من إلغائها، لأنهم اقرب الى الاراضي الروسية لكن واشنطن لا تأبه لصراخهم وكانت تريد من حركتها تفجير إشكالات روسية أوروبية تعاود فرض الطاعة على أوروبا لإمبراطوريتها الاقتصادية السياسية بأسلوب التخويف من روسيا.

ضمن هذا الإطار يلجأ الأميركيون الى كل الوسائل المتاحة لهم لضبط الطموح الأوروبي فيستعملون الموالاة فيها محرّضين في الوقت نفسه المعارضات مثيرين ذعرها من روسيا حيناً والصين حيناً آخر.

والهدف واضح وهو الإبقاء عليها في الحضن الأميركي.

ماذا عن الصين؟ لا تشكل خطراً عسكرياً بالنسبة إليهم، لكنها تجسد رعباً اقتصادياً. يقول المتخصّصون ان بكين قد تتجاوز الناتج الأميركي بعد أقل من عقد فقط وأهميتها انها لا تخلط سلعها بطموحات سياسية. لذلك تبدو الصين سلعة اقتصادية يختبئ خلفها صاحبها الذي يرسم ابتسامة دائمة لا تفارق مُحياه. وهذا ما يسمح للسلعة الصينية باختراق أفريقيا وآسيا والشرق الاوسط والاسواق الأميركية والأوروبية لأنها تُدغدغ إمكانات ذوي الدخل المتوسط والمنخفض.

هذا ما دفع امبراطورية ترامب الى البحث عن طرق جديدة لمهادنة الصين فوجدها في إطلاق تهديدات وحصار وعقوبات فمفاوضات على طريقة السماسرة وطلب منها بوضوح مسألتين عاجلة وآجلة: الأولى تتعلق بخفض الضرائب على البضائع الأميركية لتصحيح الميزان التجاري بين البلدين الخاسر أميركياً فوافقت بكين، لكنها لا تزال تتردّد في تلبية الطلبات الأميركية الحقيقية وهي ضرورة بناء الصين لمعامل السلع التي تبيعها في الأسواق الأميركية داخل أراضي الولايات المتحدة وذلك لتأمين وظائف لملايين الأميركيين العاطلين عن العمل فيها.

يبدو هذا العرض مغرياً لكن التدقيق فيه يكشف انه مجرد فخ… فبناء معامل صينية في أميركا يعني استعمال أدوات وعمال أميركيين تزيد من اسعارهم عن الأسعار الصينية الرخيصة بعشرات المرات، كما ان توظيف عمالة أميركية فيها يعني التسبب برفع اسعار السلع الصينية حتى توازي اسعار السلع الأميركية وربما أكثر فتسقط قيمتها التنافسية.

وهذا يعني أن الهدنة الصينية الأميركية هي خداع متبادل بين طرفين يعتمدان على شراء الوقت لاستيلاد ظروف أفضل لبناء علاقات متوازنة.

فهل تنجح سياسات إنقاذ الامبراطورية الأميركية؟

يبدو أن العالم يتجه بسرعة نحو عالم متعدد الاقطاب لن تتمكن «هلوسات» ترامب من إجهاضه لان الصين مستمرة في الهيمنة الاقتصادية على العالم، وروسيا تواصل توسيع دورها العالمي، أما أوروبا فإن عصر تحررها من الكابوس الأميركي لم يعد بعيداً فهل رأى أحدكم عربياً في هذه المعادلات؟

Related

Russian Economic Resilience

November 24, 2018

by Gary Littlejohn for The Saker Blog

Introduction

Western political commentaries about the condition of the Russian economy are becoming increasingly illusory, as additional economic sanctions are imposed for a series of increasingly implausible reasons, the most recent ones including those being for alleged Russian complicity in chemical weapons attacks in Syria, those supposedly for the alleged attack on Sergei and Yulia Skripal, and some more regarding Crimea. It might seem self-evident that such measures are pretty futile, given the obvious effect that earlier sanctions have had in galvanising the Russian government into action to mitigate the effects of almost any conceivable future sanctions, but that very failure might be precisely the motive for the West’s renewed sanctions. Existing sanctions have been of limited effectiveness, and Russia is now self-evidently capable of defending itself against virtually any conventional military attack. Even the US recognizes that it would face considerable difficulty in a war against Russia.

For that reason, other sanctions apparently need to be employed to probe the economy for possible other weaknesses, or at least to slow down the development of serious Russian competition in new sectors, such as civil aviation. An additional motive is probably to weaken Russia militarily prior to starting a conflict, despite the assessments above. What Professor Stephen Cohen describes as the ‘war party’ seems to harbour an insatiable hatred for Russia, and despite the problems encountered in the recent exercises such as Trident Juncture 2018, preparations seem to be taking place for a conventional conflict with Russia.

The sanctions currently in place are summarised here:

In any case, despite the evidence coming from international financial institutions and credit rating agencies that the Russian economy is growing in 2018, there are still claims from inside and outside Russia that this will not last and that Russia should somehow change course to avoid future or incipient difficulties. The most notable recent internal claim that Russia must concede defeat from Western sanctions comes from the economist Kudrin, while a well-known French economist Picketty has published a report misleadingly indicating that Russia continues to suffer from much greater wealth inequality than other industrial countries.

I remain of the view that Russia will remain resilient in the face of sanctions, but that it may well have difficulty in reaching its goal of 5 per cent growth per annum by 2024, partly for internal reasons, and partly because the world economy is facing a major near-term crisis that would have a serious impact on Russia, through no fault of its own. As an indication of the causes of what I believe is the coming global financial crisis, it is worth recalling that global debt is now 60 per cent higher than it was at the time of the last financial crisis of 2008, and that no major reforms of the Western-dominated global financial institutional structure have taken place. Moreover, the same kind of banking behaviour is becoming increasingly evident, with complex financial packages known as derivatives being based once again on dubious loans that are likely to be unpaid, or at least not repaid in full. These are so-called ‘non-performing’ loans. These clouds on the economic horizon have become darker owing to President Trump’s policy of trade wars with countries that he considers to be engaging in unfair competition with the USA. In addition, while Western economists have for some years predicted the slowing down of Chinese economic growth, and have been wrong, there is now reason to believe that the Chinese economy really is slowing down, while still growing.

If this apparent slow-down continues, it will have a negative effect on the rest of the world economy, as the second link above shows already. In addition, there is increasing evidence of poor economic performance in the EU:

Since a great deal of Russian trade is with China and the Eurozone currency area, such developments beyond Russian control could have a greater impact on Russian economic performance than sanctions. In addition, the boost to the Russian economy in 2018 from high oil prices looks vulnerable or at least unlikely to continue at the present level:

It is true that the oil price has recovered a little in the hours following the above report, but the need to cut production shows that continuing high oil prices cannot be taken for granted, and Russia has not yet decided to cut its own oil production. This has resulted in a further decline in the oil price.

Yet there is no denying that in 2018 the Russian economy has continued to grow, and this is now widely recognised by various Western credit rating agencies and international financial institutions.

The Emerging Consensus on Russian Economic Performance

The IMF has unequivocally reported that the Russian economy has grown in 2018, although it claims that some institutional factors will impede future growth. Its growth estimate for 2018 is 1.7 per cent and for 2019 it is 1.8 per cent. This implies that Russia will have difficulty in reaching its aim of 5 per cent growth per annum by 2024, as laid down in President Putin’s Address to the Nation on March 1st 2018. Nevertheless, the idea that Western sanctions are crushing the Russian economy, as some US Senators have implied, seems fanciful. This is the case even if one does not criticise the IMF for ignoring the possible changes that have already taken place in various sectors, such as agriculture, finance, civil aviation, car manufacture and big data. And indeed the official Russian figure on growth for the second quarter [Q2] of 2018 indicates that the economy is 1.8 per cent larger than it was in Q2 for 2017, so we may end up with an overall growth figure for 2018 that is slightly higher than the IMF estimate.

The main credit agencies have also publicly signed up to the narrative of continuing growth. For example, Moodys has also forecast growth along lines similar to those of the IMF. My own view is that such forecasts are unduly pessimistic, but only if one assumes that the world economy remains stable over the next few years. Thus it has been argued that the Russian financial sector has been somewhat underdeveloped, and yet the official figures from the Russian government statistical agency Rosstat show that in 2018 finance has been the fastest growing sector. In sharp contrast to the UK, where the financialisation of the economy has grown like a monster and now greatly influences economic priorities at the expense of productive investment and sound long-term growth, in Russia the finance sector until recently has been lacking in capacity to cope properly with the needs of the economic restructuring that has been taking place. One of the main reasons for this recent positive change has been the closure of around 100 banks with too high a proportion of non-performing loans, which has probably reduced the room for corruption and for capital flight, instead facilitating the focus of capital on the more productive sectors of the economy.

Nevertheless, sanctions did initially produce a recession in 2014, and it took two years to recover from that and restart growth. The loss of income over those two years has been estimated at about 6 per cent of GDP compared to the result of a steady growth rate during those two years.

It seems pretty clear that the outflow of capital from Russia which has been going on for over 25 years has been facilitated by the City of London, which has enabled the creation of anonymous companies (the names of whose directors are not publicly disclosed) that can readily be used to move funds to offshore tax havens. For example the recently discovered scandal whereby a branch of Danske Bank located in Estonia evaded oversight and acted as a conduit for the outflow of about $180 billion from CIS countries over a ten-year period has brought to light the fact that London-based anonymous companies were the main vehicle for hiding this outflow of funds. Closing such gaps by greater supervision of the activities of Russian banks should help stop this drain on the Russian economy. Yet there is still ongoing outflow of capital from Russia, which remains a potential cause for concern, and the Russian Central Bank expects sanctions to continue until at least 2021.

Unfortunately, the reduction in the outflow of funds from 2014 to 2017 has not yet led to a reverse flow of funds back into Russia to any great extent, because the Russian policy of “de-offshoreization” has had a limited impact so far, according to a recent report by Bloomberg. In addition, Russian millionaires continue to keep about 70 per cent of their assets abroad.

The ongoing (if now more limited) damage from sanctions would be more readily recuperated if so much capital was not still leaving Russia.

Yet it is important to stress that not all capital leaving Russia constitutes capital flight. As the link above says:

“According to the Central Bank, there are two main factors that make the outflow of capital grow. First off, Russian banks pay their foreign debts. Secondly, other sectors of economy invest in foreign assets. Earlier, the Central Bank reported the net outflow of $31.9 billion in January-September of 2018. Thus, as much as $10.3 billion were withdrawn from Russia in October.

It is worthy of note that Russia managed to improve its trade balance: its surplus amounted to $154.6 billion vs. $90.5 billion a year earlier. In addition, foreign exchange reserves (gold reserves) of the Central Bank of the Russian Federation have grown by $35.7 billion. The National Welfare Fund played a significant role in the trend: the reserves of the fund were growing owing to oil and gas super-profits (with the price of oil over $40 per barrel). According to the Central Bank, the outflow of capital from Russia for 2018 may reach $66 billion. This will be the largest indicator since 2014 ($152 billion), when the West imposed its first sanctions on Russia.”

In contrast to the outflow of capital, which as the Central Bank indicates can be beneficial, Russia has become more successful at attracting foreign direct investment [FDI] especially in the energy sector, despite sanctions. The most notable example of this is the flagship Yamal Liquefied Natural Gas [LNG] project in the Arctic. This was built with Russian, Chinese and French funding. In recent days, Saudi Arabia has expressed an interest in the follow-up project at Yamal, known as Arctic 2, as it tries to diversify its economy ahead of the decline in its own oil resources.

Arctic 2 will be even larger than the original project. One unexpected result of Yamal has been that Russian LNG has even occasionally found American customers.

In addition, Russia is using the present demand for oil to try to pressure some customers to use Euros rather than US dollars to buy their oil.

And whatever the fluctuations in the price of oil and gas, Russia is still using pipelines to secure greater stability in energy sales. The Nord Stream 2 pipeline has now reached the German shore and the Pride of Siberia pipeline in the Far East is also close to completion, but less publicity has been given to the fact that the Turk Stream pipeline has also now reached Turkish landfall.

Overall, the strong performance in the energy sector in generating available investment funds for other sectors, and the strengthening of the financial sector coupled with a growth of FDI should enable Russia to invest more effectively in future.

Other indicators of Russian economic performance

One Western economic appraisal recording some aspects of Russian economic performance is that of the World Economic Forum [WEF]. This indicates that Russia has improved on its competiveness index ranking, going up two places to 43rd out of 140 countries that are listed.

“…Russia’s standing was buoyed in the WEF rating this year by stable macroeconomics, a large market size, information and communications technology adoption and human capital…”

The factors that were thought to count against it were:

“Meanwhile, low transparency, innovation, limited interaction and diversity were listed as factors that hurt the Russian economy, along with weak institutions, workforce skills, lower social capital and a vulnerable financial system.”

These latter claims suggest that, to some extent at least, old prejudices are still in play. Contrary to these claims, Russia has a very low debt-to-GDP ratio, two sovereign wealth funds that have benefitted this year from the high price of oil, and a restructured and growing financial sector. Workforce skills are probably increasing with the inward migration of ethnic Russians from Ukraine, and it is clear that the reform of local government is ongoing. The IMF ‘ease of doing business’ index shows that transparency is increasing, contrary to the impression given by the WEF. Furthermore, both innovation and the diversification of the economy are clearly growing in agriculture, civil aviation, civilian space activity, car manufacture, and possibly in the future in the use of big data, as indicated in Putin’s speech of 1st March. The effects of measures to deal with many of these issues can be found on the Rosstat website:

Concentrating on innovation, and taking agriculture first, the Q2 figures self-evidently do not include the very recent results of the Russian harvest this year. This has once again (for the third year) exceeded earlier estimates, and the diversification within agriculture is clear, as well as the adoption of modern machinery where possible.

This video is less than 5 minutes long. The figures shown from 1 minute to 1 minute 30 seconds are worth noting. They show how much four agricultural sectors produced in relation to total Russian demand for these products. Even in meat production, Russia has produced 93 per cent of its own needs. For grain, it produced 170 per cent of its own needs. In sugar, the estimate was that 80 per cent of needs would be produced within Russia, whereas the actual output was 105 per cent, and in vegetable oil, the expected 80 per cent of demand being met internally turned out to be 153 per cent. The result is that Russia supplied more than half of the world’s wheat exports this year.

Russia is rapidly turning into an exporter in areas other than grain, and this growing export potential (with its geopolitical implications) has meant that a series of foreign ministers, as well as the World Health Organization, attended this exhibition. This rapidly changing agricultural performance is bound to increase overall economic growth in the coming years. One surprising new export crop is soya:

This might only be 3.9 million tonnes in a Chinese soya market of 95 million tonnes, but it will doubtless grow in future.

Note that the YouTube video above includes a statement that a possible reduction in VAT from 20 per cent to 10 per cent is envisaged for next year, which would reduce any upward pressure on prices, and there may be more funding for the existing policy of promoting certain agricultural regions. This raises the issue of how the performance of such special regions will be evaluated. For example, will the Ministry of Economic Development be involved and will there be specific measures such as the use of social accounting matrices to ‘capture’ the specific economic development in such regions? The ongoing growth in food production not only tends to reduce inflation and help the balance of payments, but also stimulates demand for agricultural machinery and relevant services. The planned increase in rural road construction should also foster growth in this sector.

Turning to another sector, the new American sanctions being imposed on Russian civil aviation are rightly seen as simply an attempt to contain Russian competition in this area, but as Ruslan Ostashko has argued, it will be technically easy to develop Russian alternatives to U.S. civil aviation electronics, given the capabilities shown in military avionics. Although the performance in flight tests of the MC-21 (a future competitor to the Boeing 737Max) is probably the precipitating cause of such sanctions, these sanctions cannot affect the use of composite materials in this civil aircraft, because no other plane has such technology and the components and materials were developed exclusively in Russia. So there is no way to prevent such a development programme by using sanctions. Similarly, on the wide body passenger jet being developed the new engines can readily be developed in Russia without relying on foreign expertise.

In car and bus production, the new Kamaz autonomous [driverless] bus was on display at the recent motor show in Moscow. No Western manufacturer has yet brought a similar vehicle to market. Doubtless the lessons learned in developing the Aurum luxury range of automobiles will soon cascade on to other car production.

With regard to big data, the use of distributed ledger recording of transactions is already well advanced in Russia, and not only in the area of cryptocurrencies. Apart from the fact that three of the largest five such companies are located in Russia, Russia has other potentially helpful ‘factor endowments’ in the area of big data. Firstly, there is the expertise in electronics that permitted Russia to develop its own microchip extremely rapidly. Doubtless the performance in this area will continue to improve. Secondly, there is the expertise in all aspects of computing which was evident to me 25 years ago when I visited the Computer Centre of the Russian Academy of Sciences [RAS], and the formerly secret nuclear city of Obninsk. For example, at the RAS I was shown a fully functional graphical user interface as good as MS Windows, but capable of running on an Intel 286 chip, whereas MS Windows (which had only just appeared in the West) required a 386 chip as a minimum. At the time, Russia lacked the financial capacity to market such a graphical user interface. In addition, a private company engaged in trade with China was using the programming language APL to construct its own database, without needing a proprietary commercial package. This would have enabled it to exceed the capacity limits of Western commercial database programmes available in those days, and the same would have been true of spreadsheets. In Obninsk, APL was also being used in nuclear safety, neural networking and statistical analysis quite separately from the macroeconomic modelling that was being done at the RAS. Thirdly, Russia could easily locate data warehouses near natural gas sources, thereby avoiding the transmission costs of the energy to run them, and (given the average cold temperatures in Russia) would incur lower costs in cooling such buildings. Electrical resistance of semiconductors generates heat, and this makes cooling of server buildings an issue for big data in some countries. Cryptocurrencies and other distributed ledger applications are pretty energy-intensive.

No need to surrender

In the light of such economic potential, it should be surprising that the well-known economist Kudrin is suggesting that Russia needs to make concessions to the West to ease the impact of sanctions.

Alexei Kudrin is Head of the Accounts Chamber and a former finance minister, so prima facie one would expect him to talk sense. Yet he considers that sanctions are the main threat to the President’s goals, as expressed in the Address to the Nation of 1st March. It should by now be clear that it would take far greater changes in the world economy, such as another financial crash, to throw the objectives for 2024 into serious jeopardy. There are positive elements in the balance of payments (oil, agriculture and arms, with civil aviation likely to be a growing sector) that will enable the Russian government to fund most of the objectives now set for 2014, in my view. The sovereign funds are increasing at the moment, and while this form of saving is a precautionary counter-measure to probable further sanctions, the fact that Russia is pretty much self-sufficient in raw materials, and has a growing skills base (with ethnic Russians coming from both Ukraine and Kazakhstan) should mean that additional sanctions will have a limited effect. There is also the likely prospect of military innovations cascading into the civilian economy, as used to happen in the USA, and this is particularly relevant for civil aviation and big data.

There is the additional problem that the West is stagnating economically and technologically, and has evident difficulty in developing new technologies, including in space. Where the West (and Far East) has had a technological lead with smart phones, the global market is showing clear signs of saturation. The same is true of social media, where stocks are declining quite steeply at the moment, and where Russia or China have rival products already in place. It is likely that the West has little to offer Russia if sanctions are lifted, given the changes that have already taken place in Russia. Sanctions are mainly about financial power and that is already ebbing away in the West. Russia on the other hand will continue to strengthen gradually owing to the growing strength and sophistication of Russian financial institutions, the policies of currency swaps to facilitate non-dollar trade, alternatives to SWIFT developed in both Russia and China, and perhaps in future more “de-offshoreization”.

The ‘failure of nerve’ shown by Kudrin indicates the pernicious effect of Western neoliberal ideology, and raises once again the issue of its influence on aspects of Russian economic policy-making. This can be seen in the case of the pension reform earlier this year, for which Kudrin had lobbied over a period of some years. Having looked again at the research report that was published in Russia just before the law was changed on the age at which people become eligible for a state pension, I am even more convinced that it was premature to introduce this legislation. The report looked at the interaction between demographic and economic changes in present-day Russia covering five aspects, and argued that to raise the age of pension eligibility would adversely affect the economy, and slow down economic growth. While this would not be the case in many industrial societies most of which have a very different demographic profile, Russia is unusual and it would have been preferable to delay the introduction of such a measure, in order to avoid the negative impact just at a time when economic growth was picking up.

There was an analogous case with South Africa at the end of Apartheid in 1994, where the political settlement that was reached included enormous pension payments to South African civil servants. An econometric and demographic analysis there showed that it would have been possible to have a ‘pension holiday’ for a few years in order to devote those funds to kick-starting the economy – a high priority at the time. It was shown that this would not really have adversely affected those pension payments, but strong vested interests prevented this temporary diversion of pension payments from taking place.

The Saker has commented on Putin’s adroit response to the political backlash that took place in mid-2018 when the new pension law was introduced during the football World Cup. The subsequent changes to the legislation may have mitigated some of the adverse effects, but the outcome will not be as good as if the legislation had been postponed for a few years to facilitate the desired acceleration of the economic growth rate.

Why Russian growth may not be constrained by the factors highlighted by the Washington Consensus.

Russia is simply running a mixed economy, with most of it privately owned and parts of it in public ownership. This was considered perfectly normal in Western Europe from 1945 until the late 1970s, and even now forms quite a large segment of economic activity in countries such as France. The advantages of such public sector activity include reaping the benefits of ‘natural monopolies’ such as railways or utilities where competition is likely to be restricted under normal market conditions. These benefits then potentially include additional state revenues, long-term time horizons for investment planning and at times greater democratic control. In the UK the fact that foreign state-owned companies now own companies that were originally privatised is an indicator of how the ‘logic’ of natural monopolies can sometimes prevail even in competitive market conditions. It is much easier to develop a realistic long-term national economic strategy if those natural monopolies are under government control.

In general, more equal societies grow more quickly, contrary to the mythology of the neoliberal Washington Consensus. It is increasingly clear that the increased inequality of income and wealth generated by the neoliberal policies of that last 38 years has acted as a drag on growth and has contributed to the economic instability that resulted in the financial crash of 2008. Russia is widely considered to be a very unequal society, but this view ignores the impact of measures to reduce such inequalities of income and wealth, especially poverty reduction measures that have had a significant impact. This now includes minimum wage legislation that appears to have been influenced by the research of Professor James K. Galbraith at the University of Austin, Texas.

The view that wealth inequality in Russia is huge has recently been given a boost from a book by the well-known French economist Thomas Piketty. However, that book has been subject to very serious critique by the Swedish economist Jon Hellevig:

Hellevig argues that under its present leadership, Russia has been moving towards a more equal society, a trend that seems to be continuing despite the glaring inequality of income and wealth. Hellevig’s point is that these glaring inequalities are not dire in terms of international comparisons.

“After identifying the deficiencies, we have adjusted the main findings announced by the Piketty scholars to reflect the actual data. Corrected data shows that instead of earning 45-50% of national income as claimed by the our Piketty scholars, the top 10% of Russians earned less than 30% of the income. Correspondingly, our corrected data shows that instead of owning more than 70% of the national wealth, the wealth of the top 10 percent of the population was 39% of private wealth and 32% of total national wealth.”

This refutation by Hellevig, which shows that the glaring inequalities are not dire in terms of international comparisons, indicates how Russian society has changed since the 1990s. The so-called ‘oligarchs’ have less weight in the economy and almost certainly less political power. It seems that the member of the Duma who stated that there are no oligarchs any more may well have been correctly pointing to the changed political landscape, even if that was probably an overstatement. The wealthy no longer seem to dominate the political agenda completely, in contrast to the 1990s. Insofar as they do have an impact on policy, it seems to be through the ongoing influence of neoliberal ideologists such as Kudrin and others in certain parts of the government.

Returning to the potentially strategic importance of the state in economic performance, the historical evidence indicates that since the 18th century state-sponsored growth has been vital for stimulating economic growth, especially for industrialisation. The famous five Asian tigers are clear examples of this during the last 40 years or so, but in fact all economies have relied initially on state-sponsored growth in the early phases of industrialisation. Even the UK relied on the dominance of the Royal Navy to support its dominant trade position and ensure that the colonies, especially India, supplied the economic surplus necessary to finance the industrial revolution. Historically, it is only the leading global economy (the UK, then the USA, then China) that advocates free trade, after it has achieved its dominance.

Russia fulfils both criteria for long-term growth, namely, it is not too unequal and has a state-sponsored growth strategy. It also has the most fundamental feature for long-term growth, namely population growth, and is now the only technologically advanced society to have this positive demographic profile. That is a result both of growing optimism about the future and of more stable families. Among ethnic Russians and some minorities this is almost certainly a result of the restored influence of Christianity.

Conclusion

While Russia may well struggle against growing global economic ‘headwinds’ to achieve its aim of 5 per cent growth per annum by 2024, it quite clearly has the resilience to cope with the current sanctions in place and to help shield other economies from sanctions by using currency swaps, occasional barter agreements, the use of an alternative international payments system to SWIFT and other measures. By contrast, the EU seems unable to help shield Iran against US sanctions because it does not possess an alternative to SWIFT and SWIFT itself has already caved in to US financial threats and refused to process payments going to Iran. In addition, the EU can find no member state willing to host any financial institution designed to facilitate trade between the EU and Iran in fulfilment of the nuclear deal that the US has recently withdrawn from. Apart from Russia, only China has the financial muscle and its own alternative to SWIFT to help Iran to withstand the US sanctions.

The fact that Russia is innovating in agriculture, energy production, civilian space activity, civil aviation, automobiles and intends to do so in big data (partly for greater transparency and responsiveness in government administration) shows that its prospects for economic growth remain good.

http://thesaker.is/russian-economic-resilience/

 

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