China Declares War On The United States (Gonzalo Lira)

February 22, 2023

Full document:

US Hegemony and Its Perils

2023-02-20 16:28

US Hegemony and Its Perils

February 2023

Contents

Introduction

I. Political Hegemony—Throwing Its Weight Around

II. Military Hegemony—Wanton Use of Force

III. Economic Hegemony—Looting and Exploitation

IV. Technological Hegemony—Monopoly and Suppression

V. Cultural Hegemony—Spreading False Narratives

Conclusion

Introduction

Since becoming the world’s most powerful country after the two world wars and the Cold War, the United States has acted more boldly to interfere in the internal affairs of other countries, pursue, maintain and abuse hegemony, advance subversion and infiltration, and willfully wage wars, bringing harm to the international community.

The United States has developed a hegemonic playbook to stage “color revolutions,” instigate regional disputes, and even directly launch wars under the guise of promoting democracy, freedom and human rights. Clinging to the Cold War mentality, the United States has ramped up bloc politics and stoked conflict and confrontation. It has overstretched the concept of national security, abused export controls and forced unilateral sanctions upon others. It has taken a selective approach to international law and rules, utilizing or discarding them as it sees fit, and has sought to impose rules that serve its own interests in the name of upholding a “rules-based international order.”

This report, by presenting the relevant facts, seeks to expose the U.S. abuse of hegemony in the political, military, economic, financial, technological and cultural fields, and to draw greater international attention to the perils of the U.S. practices to world peace and stability and the well-being of all peoples.

I. Political Hegemony — Throwing Its Weight Around

The United States has long been attempting to mold other countries and the world order with its own values and political system in the name of promoting democracy and human rights.

◆ Instances of U.S. interference in other countries’ internal affairs abound. In the name of “promoting democracy,” the United States practiced a “Neo-Monroe Doctrine” in Latin America, instigated “color revolutions” in Eurasia, and orchestrated the “Arab Spring” in West Asia and North Africa, bringing chaos and disaster to many countries.

In 1823, the United States announced the Monroe Doctrine. While touting an “America for the Americans,” what it truly wanted was an “America for the United States.”

Since then, the policies of successive U.S. governments toward Latin America and the Caribbean Region have been riddled with political interference, military intervention and regime subversion. From its 61-year hostility toward and blockade of Cuba to its overthrow of the Allende government of Chile, U.S. policy on this region has been built on one maxim-those who submit will prosper; those who resist shall perish.

The year 2003 marked the beginning of a succession of “color revolutions” — the “Rose Revolution” in Georgia, the “Orange Revolution” in Ukraine and the “Tulip Revolution” in Kyrgyzstan. The U.S. Department of State openly admitted playing a “central role” in these “regime changes.” The United States also interfered in the internal affairs of the Philippines, ousting President Ferdinand Marcos Sr. in 1986 and President Joseph Estrada in 2001 through the so-called “People Power Revolutions.”

In January 2023, former U.S. Secretary of State Mike Pompeo released his new book Never Give an Inch: Fighting for the America I Love. He revealed in it that the United States had plotted to intervene in Venezuela. The plan was to force the Maduro government to reach an agreement with the opposition, deprive Venezuela of its ability to sell oil and gold for foreign exchange, exert high pressure on its economy, and influence the 2018 presidential election.

◆ The U.S. exercises double standards on international rules. Placing its self-interest first, the United States has walked away from international treaties and organizations, and put its domestic law above international law. In April 2017, the Trump administration announced that it would cut off all U.S. funding to the United Nations Population Fund (UNFPA) with the excuse that the organization “supports, or participates in the management of a programme of coercive abortion or involuntary sterilization.” The United States quit UNESCO twice in 1984 and 2017. In 2017, it announced leaving the Paris Agreement on climate change. In 2018, it announced its exit from the UN Human Rights Council, citing the organization’s “bias” against Israel and failure to protect human rights effectively. In 2019, the United States announced its withdrawal from the Intermediate-Range Nuclear Forces Treaty to seek unfettered development of advanced weapons. In 2020, it announced pulling out of the Treaty on Open Skies.

The United States has also been a stumbling block to biological arms control by opposing negotiations on a verification protocol for the Biological Weapons Convention (BWC) and impeding international verification of countries’ activities relating to biological weapons. As the only country in possession of a chemical weapons stockpile, the United States has repeatedly delayed the destruction of chemical weapons and remained reluctant in fulfilling its obligations. It has become the biggest obstacle to realizing “a world free of chemical weapons.”

◆ The United States is piecing together small blocs through its alliance system. It has been forcing an “Indo-Pacific Strategy” onto the Asia-Pacific region, assembling exclusive clubs like the Five Eyes, the Quad and AUKUS, and forcing regional countries to take sides. Such practices are essentially meant to create division in the region, stoke confrontation and undermine peace.

◆ The U.S. arbitrarily passes judgment on democracy in other countries, and fabricates a false narrative of “democracy versus authoritarianism” to incite estrangement, division, rivalry and confrontation. In December 2021, the United States hosted the first “Summit for Democracy,” which drew criticism and opposition from many countries for making a mockery of the spirit of democracy and dividing the world. In March 2023, the United States will host another “Summit for Democracy,” which remains unwelcome and will again find no support.

II. Military Hegemony — Wanton Use of Force

The history of the United States is characterized by violence and expansion. Since it gained independence in 1776, the United States has constantly sought expansion by force: it slaughtered Indians, invaded Canada, waged a war against Mexico, instigated the American-Spanish War, and annexed Hawaii. After World War II, the wars either provoked or launched by the United States included the Korean War, the Vietnam War, the Gulf War, the Kosovo War, the War in Afghanistan, the Iraq War, the Libyan War and the Syrian War, abusing its military hegemony to pave the way for expansionist objectives. In recent years, the U.S. average annual military budget has exceeded 700 billion U.S. dollars, accounting for 40 percent of the world’s total, more than the 15 countries behind it combined. The United States has about 800 overseas military bases, with 173,000 troops deployed in 159 countries.

According to the book America Invades: How We’ve Invaded or been Militarily Involved with almost Every Country on Earth, the United States has fought or been militarily involved with almost all the 190-odd countries recognized by the United Nations with only three exceptions. The three countries were “spared” because the United States did not find them on the map.

◆ As former U.S. President Jimmy Carter put it, the United States is undoubtedly the most warlike nation in the history of the world. According to a Tufts University report, “Introducing the Military Intervention Project: A new Dataset on U.S. Military Interventions, 1776-2019,” the United States undertook nearly 400 military interventions globally between those years, 34 percent of which were in Latin America and the Caribbean, 23 percent in East Asia and the Pacific, 14 percent in the Middle East and North Africa, and 13 percent in Europe. Currently, its military intervention in the Middle East and North Africa and sub-Saharan Africa is on the rise.

Alex Lo, a South China Morning Post columnist, pointed out that the United States has rarely distinguished between diplomacy and war since its founding. It overthrew democratically elected governments in many developing countries in the 20th century and immediately replaced them with pro-American puppet regimes. Today, in Ukraine, Iraq, Afghanistan, Libya, Syria, Pakistan and Yemen, the United States is repeating its old tactics of waging proxy, low-intensity, and drone wars.

◆ U.S. military hegemony has caused humanitarian tragedies. Since 2001, the wars and military operations launched by the United States in the name of fighting terrorism have claimed over 900,000 lives with some 335,000 of them civilians, injured millions and displaced tens of millions. The 2003 Iraq War resulted in some 200,000 to 250,000 civilian deaths, including over 16,000 directly killed by the U.S. military, and left more than a million homeless.

The United States has created 37 million refugees around the world. Since 2012, the number of Syrian refugees alone has increased tenfold. Between 2016 and 2019, 33,584 civilian deaths were documented in the Syrian fightings, including 3,833 killed by U.S.-led coalition bombings, half of them women and children. The Public Broadcasting Service (PBS) reported on 9 November 2018 that the air strikes launched by U.S. forces on Raqqa alone killed 1,600 Syrian civilians.

The two-decades-long war in Afghanistan devastated the country. A total of 47,000 Afghan civilians and 66,000 to 69,000 Afghan soldiers and police officers unrelated to the September 11 attacks were killed in U.S. military operations, and more than 10 million people were displaced. The war in Afghanistan destroyed the foundation of economic development there and plunged the Afghan people into destitution. After the “Kabul debacle” in 2021, the United States announced that it would freeze some 9.5 billion dollars in assets belonging to the Afghan central bank, a move considered as “pure looting.”

In September 2022, Turkish Interior Minister Suleyman Soylu commented at a rally that the United States has waged a proxy war in Syria, turned Afghanistan into an opium field and heroin factory, thrown Pakistan into turmoil, and left Libya in incessant civil unrest. The United States does whatever it takes to rob and enslave the people of any country with underground resources.

The United States has also adopted appalling methods in war. During the Korean War, the Vietnam War, the Gulf War, the Kosovo War, the War in Afghanistan and the Iraq War, the United States used massive quantities of chemical and biological weapons as well as cluster bombs, fuel-air bombs, graphite bombs and depleted uranium bombs, causing enormous damage on civilian facilities, countless civilian casualties and lasting environmental pollution.

III. Economic Hegemony — Looting and Exploitation

After World War II, the United States led efforts to set up the Bretton Woods System, the International Monetary Fund and the World Bank, which, together with the Marshall Plan, formed the international monetary system centered around the U.S. dollar. In addition, the United States has also established institutional hegemony in the international economic and financial sector by manipulating the weighted voting systems, rules and arrangements of international organizations including “approval by 85 percent majority,” and its domestic trade laws and regulations. By taking advantage of the dollar’s status as the major international reserve currency, the United States is basically collecting “seigniorage” from around the world; and using its control over international organizations, it coerces other countries into serving America’s political and economic strategy.

◆ The United States exploits the world’s wealth with the help of “seigniorage.” It costs only about 17 cents to produce a 100 dollar bill, but other countries had to pony up 100 dollar of actual goods in order to obtain one. It was pointed out more than half a century ago, that the United States enjoyed exorbitant privilege and deficit without tears created by its dollar, and used the worthless paper note to plunder the resources and factories of other nations.

◆ The hegemony of U.S. dollar is the main source of instability and uncertainty in the world economy. During the COVID-19 pandemic, the United States abused its global financial hegemony and injected trillions of dollars into the global market, leaving other countries, especially emerging economies, to pay the price. In 2022, the Fed ended its ultra-easy monetary policy and turned to aggressive interest rate hike, causing turmoil in the international financial market and substantial depreciation of other currencies such as the Euro, many of which dropped to a 20-year low. As a result, a large number of developing countries were challenged by high inflation, currency depreciation and capital outflows. This was exactly what Nixon’s secretary of the treasury John Connally once remarked, with self-satisfaction yet sharp precision, that “the dollar is our currency, but it is your problem.”

◆ With its control over international economic and financial organizations, the United States imposes additional conditions to their assistance to other countries. In order to reduce obstacles to U.S. capital inflow and speculation, the recipient countries are required to advance financial liberalization and open up financial markets so that their economic policies would fall in line with America’s strategy. According to the Review of International Political Economy, along with the 1,550 debt relief programs extended by the IMF to its 131 member countries from 1985 to 2014, as many as 55,465 additional political conditions had been attached.

◆ The United States willfully suppresses its opponents with economic coercion. In the 1980s, to eliminate the economic threat posed by Japan, and to control and use the latter in service of America’s strategic goal of confronting the Soviet Union and dominating the world, the United States leveraged its hegemonic financial power against Japan, and concluded the Plaza Accord. As a result, Yen was pushed up, and Japan was pressed to open up its financial market and reform its financial system. The Plaza Accord dealt a heavy blow to the growth momentum of the Japanese economy, leaving Japan to what was later called “three lost decades.”

◆ America’s economic and financial hegemony has become a geopolitical weapon. Doubling down on unilateral sanctions and “long-arm jurisdiction,” the United States has enacted such domestic laws as the International Emergency Economic Powers Act, the Global Magnitsky Human Rights Accountability Act, and the Countering America’s Adversaries Through Sanctions Act, and introduced a series of executive orders to sanction specific countries, organizations or individuals. Statistics show that U.S. sanctions against foreign entities increased by 933 percent from 2000 to 2021. The Trump administration alone has imposed more than 3,900 sanctions, which means three sanctions per day. So far, the United States had or has imposed economic sanctions on nearly 40 countries across the world, including Cuba, China, Russia, the DPRK, Iran and Venezuela, affecting nearly half of the world’s population. “The United States of America” has turned itself into “the United States of Sanctions.” And “long-arm jurisdiction” has been reduced to nothing but a tool for the United States to use its means of state power to suppress economic competitors and interfere in normal international business. This is a serious departure from the principles of liberal market economy that the United States has long boasted.

IV. Technological Hegemony — Monopoly and Suppression

The United States seeks to deter other countries’ scientific, technological and economic development by wielding monopoly power, suppression measures and technology restrictions in high-tech fields.

◆ The United States monopolizes intellectual property in the name of protection. Taking advantage of the weak position of other countries, especially developing ones, on intellectual property rights and the institutional vacancy in relevant fields, the United States reaps excessive profits through monopoly. In 1994, the United States pushed forward the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), forcing the Americanized process and standards in intellectual property protection in an attempt to solidify its monopoly on technology.

In the 1980s, to contain the development of Japan’s semiconductor industry, the United States launched the “301” investigation, built bargaining power in bilateral negotiations through multilateral agreements, threatened to label Japan as conducting unfair trade, and imposed retaliatory tariffs, forcing Japan to sign the U.S.-Japan Semiconductor Agreement. As a result, Japanese semiconductor enterprises were almost completely driven out of global competition, and their market share dropped from 50 percent to 10 percent. Meanwhile, with the support of the U.S. government, a large number of U.S. semiconductor enterprises took the opportunity and grabbed larger market share.

◆ The United States politicizes, weaponizes technological issues and uses them as ideological tools. Overstretching the concept of national security, the United States mobilized state power to suppress and sanction Chinese company Huawei, restricted the entry of Huawei products into the U.S. market, cut off its supply of chips and operating systems, and coerced other countries to ban Huawei from undertaking local 5G network construction. It even talked Canada into unwarrantedly detaining Huawei’s CFO Meng Wanzhou for nearly three years.

The United States has fabricated a slew of excuses to clamp down on China’s high-tech enterprises with global competitiveness, and has put more than 1,000 Chinese enterprises on sanction lists. In addition, the United States has also imposed controls on biotechnology, artificial intelligence and other high-end technologies, reinforced export restrictions, tightened investment screening, suppressed Chinese social media apps such as TikTok and WeChat, and lobbied the Netherlands and Japan to restrict exports of chips and related equipment or technology to China.

The United States has also practiced double standards in its policy on China-related technological professionals. To sideline and suppress Chinese researchers, since June 2018, visa validity has been shortened for Chinese students majoring in certain high-tech-related disciplines, repeated cases have occurred where Chinese scholars and students going to the United States for exchange programs and study were unjustifiably denied and harassed, and large-scale investigation on Chinese scholars working in the United States was carried out.

◆ The United States solidifies its technological monopoly in the name of protecting democracy. By building small blocs on technology such as the “chips alliance” and “clean network,” the United States has put “democracy” and “human rights” labels on high-technology, and turned technological issues into political and ideological issues, so as to fabricate excuses for its technological blockade against other countries. In May 2019, the United States enlisted 32 countries to the Prague 5G Security Conference in the Czech Republic and issued the Prague Proposal in an attempt to exclude China’s 5G products. In April 2020, then U.S. Secretary of State Mike Pompeo announced the “5G clean path,” a plan designed to build technological alliance in the 5G field with partners bonded by their shared ideology on democracy and the need to protect “cyber security.” The measures, in essence, are the U.S. attempts to maintain its technological hegemony through technological alliances.

◆ The United States abuses its technological hegemony by carrying out cyber attacks and eavesdropping. The United States has long been notorious as an “empire of hackers,” blamed for its rampant acts of cyber theft around the world. It has all kinds of means to enforce pervasive cyber attacks and surveillance, including using analog base station signals to access mobile phones for data theft, manipulating mobile apps, infiltrating cloud servers, and stealing through undersea cables. The list goes on.

U.S. surveillance is indiscriminate. All can be targets of its surveillance, be they rivals or allies, even leaders of allied countries such as former German Chancellor Angela Merkel and several French Presidents. Cyber surveillance and attacks launched by the United States such as “Prism,” “Dirtbox,” “Irritant Horn” and “Telescreen Operation” are all proof that the United States is closely monitoring its allies and partners. Such eavesdropping on allies and partners has already caused worldwide outrage. Julian Assange, the founder of Wikileaks, a website that has exposed U.S. surveillance programs, said that “do not expect a global surveillance superpower to act with honor or respect. There is only one rule: there are no rules.”

V. Cultural Hegemony — Spreading False Narratives

The global expansion of American culture is an important part of its external strategy. The United States has often used cultural tools to strengthen and maintain its hegemony in the world.

◆ The United States embeds American values in its products such as movies. American values and lifestyle are a tied product to its movies and TV shows, publications, media content, and programs by the government-funded non-profit cultural institutions. It thus shapes a cultural and public opinion space in which American culture reigns and maintains cultural hegemony. In his article The Americanization of the World, John Yemma, an American scholar, exposed the real weapons in U.S. cultural expansion: the Hollywood, the image design factories on Madison Avenue and the production lines of Mattel Company and Coca-Cola.

There are various vehicles the United States uses to keep its cultural hegemony. American movies are the most used; they now occupy more than 70 percent of the world’s market share. The United States skilfully exploits its cultural diversity to appeal to various ethnicities. When Hollywood movies descend on the world, they scream the American values tied to them.

◆ American cultural hegemony not only shows itself in “direct intervention,” but also in “media infiltration” and as “a trumpet for the world.” U.S.-dominated Western media has a particularly important role in shaping global public opinion in favor of U.S. meddling in the internal affairs of other countries.

The U.S. government strictly censors all social media companies and demands their obedience. Twitter CEO Elon Musk admitted on 27 December 2022 that all social media platforms work with the U.S. government to censor content, reported Fox Business Network. Public opinion in the United States is subject to government intervention to restrict all unfavorable remarks. Google often makes pages disappear.

U.S. Department of Defense manipulates social media. In December 2022, The Intercept, an independent U.S. investigative website, revealed that in July 2017, U.S. Central Command official Nathaniel Kahler instructed Twitter’s public policy team to augment the presence of 52 Arabic-language accounts on a list he sent, six of which were to be given priority. One of the six was dedicated to justifying U.S. drone attacks in Yemen, such as by claiming that the attacks were precise and killed only terrorists, not civilians. Following Kahler’s directive, Twitter put those Arabic-language accounts on a “white list” to amplify certain messages.

◆The United States practices double standards on the freedom of the press. It brutally suppresses and silences media of other countries by various means. The United States and Europe bar mainstream Russian media such as Russia Today and the Sputnik from their countries. Platforms such as Twitter, Facebook and YouTube openly restrict official accounts of Russia. Netflix, Apple and Google have removed Russian channels and applications from their services and app stores. Unprecedented draconian censorship is imposed on Russia-related contents.

◆The United States abuses its cultural hegemony to instigate “peaceful evolution” in socialist countries. It sets up news media and cultural outfits targeting socialist countries. It pours staggering amounts of public funds into radio and TV networks to support their ideological infiltration, and these mouthpieces bombard socialist countries in dozens of languages with inflammatory propaganda day and night.

The United States uses misinformation as a spear to attack other countries, and has built an industrial chain around it: there are groups and individuals making up stories, and peddling them worldwide to mislead public opinion with the support of nearly limitless financial resources.

Conclusion

While a just cause wins its champion wide support, an unjust one condemns its pursuer to be an outcast. The hegemonic, domineering, and bullying practices of using strength to intimidate the weak, taking from others by force and subterfuge, and playing zero-sum games are exerting grave harm. The historical trends of peace, development, cooperation, and mutual benefit are unstoppable. The United States has been overriding truth with its power and trampling justice to serve self-interest. These unilateral, egoistic and regressive hegemonic practices have drawn growing, intense criticism and opposition from the international community.

Countries need to respect each other and treat each other as equals. Big countries should behave in a manner befitting their status and take the lead in pursuing a new model of state-to-state relations featuring dialogue and partnership, not confrontation or alliance. China opposes all forms of hegemonism and power politics, and rejects interference in other countries’ internal affairs. The United States must conduct serious soul-searching. It must critically examine what it has done, let go of its arrogance and prejudice, and quit its hegemonic, domineering and bullying practices.

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

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

January 19 2023

Photo Credit: The Cradle

By Pepe Escobar

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

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

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

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

A gold-backed digital currency

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

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

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

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

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

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

‘A fairer payment system’

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

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

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

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

Are you ready for the R5?

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

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

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

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

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

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

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

A new gold standard

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

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

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

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

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

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

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

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

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

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

All Global South eggs in one basket

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

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

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

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

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

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

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

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

The race to replace the dollar

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

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

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

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

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

How bright are EUropeans ?

November 05, 2022

Source

by Jorge Vilches

no contract

Several indications lead to the conclusion that EUropeans at large — exceptions aside — should not be very bright. Or at least not brighter than anyone else as they claim to be. The fact is that – despite their undeniably copious amounts of individual and collective achievements – they have not yet been able to articulate a peacefull co-existence strategy amongst themselves and with third parties. Having failed at that implies that EUropeans are not really that bright, how could they be ? True enough, EUrope´s macro-economic and consumer society development has been ´successful´… but still under a highly unstable political co-existence. IMNSHO the main reason for such disqualifying historical flaw is that – contrary to their own self-image frequently preached sanctimoniously onto others – in political EUrope a “deal” is never a deal. It´s rather an expression of possible temporary abidance always subject to their own interpretation and circumstances yet un-defined. Basically, there is no valid contract, social or political or otherwise in EUrope. Humpty Dumptyness at its best. And the EU governance experiment made things worse with all the key decisions imposed by un-elected officials very clearly in the case of Greece, Italy, Ireland, Portugal, Spain, Poland, and Hungary. The argument could possibly be made that other societies today also struggle along equivalent lines, but then again this would swiftly confirm that EUropeans cannot be considered to be brighter than others… as they bloody insist they are.

EUropean ´superiority´ (not)

Dr. Josep Borrell is the EU´s topmost senior diplomat as High Representative for Foreign Affairs and Security Policy.

Recently joined by another un-elected official namely the EU Commission President Ursula von den Leyen both now roughly insist that EUrope´s problems stem from its addictiveness to excellent and cheap Russian energy and resources, to China´s humongous export markets and high productivity dependency, and to the military ´security´ that the US today supposedly renders to them. So, accordingly their solution for EUrope would be to (a) get itself up in arms yet again and (b) to double-down on the ‘battle of narratives´ which should be interpreted to be just some more effective EU propaganda. So from this perspective rather than being bright EUropeans would just appear to be aggressive, manipulative, and conceited… and not superior to anyone else. So why be so proud about it all ?.

the EU thorny garden

Objectively searching into the EUropean political soul it´s easy to find EUrope´s self-EUthanization vis-á-vis its sheer lack of any ´affectio societatis´. This makes EUrope an un-viable business associate to and for anyone, even amongst themselves in view of the current widespread infighting. But JB´s ´brightness´ does not stop there, now proclaiming that “the world needs Europe” and that EUrope is a “garden” and the rest a mere ”jungle” ready to encroach upon it… So at this rate it would be wise to copernically acknowledge that EUrope is not any “global super-power” and that God Almighty has not appointed the un-elected European Commission as the rule-maker for the rest of the world to follow. Furthermore, the “international community”(sic) is not headquartered at Davos or Brussels and 85% of planet Earth does not even wake up in the West every morning. Making that clear would focus EU politics better than complaining about “too many abstentions” in the UN votes regarding this conflict which EU officials fail to understand and accept.

Ref #1 https://www.eeas.europa.eu/eeas/foreign-affairs-council-remarks-high-representative-josep-borrell-upon-arrival-1_en

Ref #2 http://www.euronews.com/my-europe/2022/10/19/josep-borrell-apologises-for-controversial-garden-vs-jungle-metaphor-but-stands-his-ground

Ref #3 https://news.cgtn.com/news/2022-10-12/Josep-Borrell-looks-backwards-on-China-Russia-and-U-S–1e3XRtUKOJy/index.html

Ref #4 https://www.eeas.europa.eu/eeas/european-diplomatic-academy-opening-remarks-high-representative-josep-borrell-inauguration_en

7 historical catastrophes 7

During the past one hundred years (approx.) aided or not by its supposed “superiority” collective Europe fostered 7 major historical vintage TM® failures, namely (1) enthusiastically fostered World War I – the Great War – “the war to end all wars” amongst themselves + (2) cradled and fully developed Nazism + (3) instigated and deployed World War II + (4) allowed for the firm establishment of ruinous “King Dollar” by calmly and willingly accepting the 1971 US unilateral default on the Bretton Woods Agreement thus perpetuating until today a highly detrimental “exhorbitant privilege” for a thus fiat US dollar + (5) established the currently ticking Euro currency time bomb + (6) fully accepted and even participated with impunity in many dozens of US military unsolicited interventions worldwide as the sole un-elected “world cop” thru its 800+ military bases in 80 countries (7) in 2022 unilaterally provoked an unnecessary and stupid self-harming divorce from Russia which has led the world closer than ever to a nuclear war. Readers may have different opinion regarding the individual interpretation of related events but still all of the above are categorically accepted historical facts. And a society that lies so much – onto itself and third parties — cannot be too bright, can it ?

Ref #5 http://www.theepochtimes.com/on-the-path-to-hyperinflation_4782143.html

Ref #6 http://www.zerohedge.com/markets/path-hyperinflation

no ´Greater Europe´

Forget any and all dreams about forging a Greater Europe from Lisbon to Vladivostok. Russia tried it, worked very hard at it, and invested tons in such century-milestone project, to no avail. Fact #1: Russia focused on Greater Europe for 30 years. Fact #2: Russia failed miserably in such endeavor. Under deep ´political hypnosis´ — for want of a better term — EUropean leaders supported by complicit constituents ended up deploying their self-harming strategy. For starters, no Referendum on the NATO-imposed, suicidal “let´s divorce Russia” initiative was ever proposed even though many dozens referenda have been held in the EU´s recent past. It´s simple: there is no valid contract in the EU

Russophia was also firmly established as a national cross-border regional sport of sorts spear-headed by complicit Western MSM and loudly outspoken and highly payed for EU officials. Of course, if challenged, Russians have the advantage of becoming quite stubborn when circumstances so require it, so they insisted in the Greater Europe project success and strictly followed the required EUropean Market & Financial Rules. But, yet again, there was no contract compliance. So led by the G-7 leadership, the collective West just plain took effective advantage of Russia in every way it possibly could provoke … and so the Minsk Accords were conveniently extended, postponed… and duly forgotten despite being squarely – and deceitfully — brokered by both Germany and France. The EU´s supposed Ostpolitik was betrayed with every trace of ´affectio societatis´ absent thus DE-stabilising the area and using third parties as pawns. Because, of course, EUropean flagrant unilateralism dictates that there is no room for anything close to having willingness and interest to engage and relate constructively with high-quality business partners beyond the EU´s – and NATO´s — full control. So Russia finally got fed up sick and tired of the West´s lack of “agreement capability” and will thus fully pivot to thriving Eurasia. Meanwhile Europe will immolate itself thru its NATO-induced suicide with shamefull colonialistic sins hovering its soul for the last 500 years until today. Is any of this “bright” ?

NATO´s ´hypnotic´ spell

British Gral. Hastings Ismay — the first Secretary General of NATO — defined that the purpose of the North Atlantic Treaty Organization was “to keep Russians out, Americans in, and Germans down” which has since become the common way to describe its dynamics and goals. Ismay also proposed that NATO “must grow until the whole free world gets under one umbrella.” So EUrope today and per its own fault, in more than one way and through not-publicized non-sanctum mechanisms, is actually ruled and governed directly by the US. Accordingly, the inclusion of Russia in the Greater Europe project was to be boycotted to death – most specially its association with Germany — and it certainly was. The European leadership thus offered and deployed highly pro-active support to provoke the Ukraine conflict, be it “militarily, financially or politically” thus confirming yet again its direct and unequivocal commitment and participation. During 8 years the Ukraine Armed Forces were trained by NATO to meet NATO combat standards while the Eastern Russian-speaking areas were systematically intimidated and bombed . NATO members proudly admitted to constantly supply the UAF with heavy modern weapons, military advisers and intel.

Ref #7 https://en.wikipedia.org/wiki/Hastings_Ismay,_1st_Baron_Ismay

Ref #8 https://www.azerbaycan24.com/en/eu-again-urged-to-open-wallet-for-kiev/

To weaken Germany and simultaneously strengthen the US required pitting Russia against Germany in a mutually destructive conflict so that the two countries could not re-establish normal relations for decades to come. The collapse of the EUropean economy would come about by denying cheap Russian energy to Germany. Thus, trillions of dollars of European resources would supposedly relocate to the US jointly with their best and brightest. According to the Rand Report, the main obstacle to Europe´s plundering on a scale which rivaled the Jewish looting of Russia in the 1990s was “the growing independence of Germany” which followed Britain’s exit from the European Union (Brexit) which gave “Germany greater independence and decreased the US influence upon European governments.”

the EU ´bright´ new oil & gas markets

No matter how diced or sliced, under the planned nat-gas EU ´capped-price´ purchase policy Western markets would be missing access to some 50% (approx.) of the 2021 effectively traded and consumed natural gas volumes. Besides, serious doubts remain on (a) the technical quality of such new possible “capped” price nat-gas (b) its delivery terms and conditions and (c) the reliability of such type of possible nat-gas suppliers. But at any rate when EUrope soon necessarily runs out of all possible nat-gas vendors willing to comply with its new capped-price policy — which would never fulfill its physical needs — then Russia and others will be able to charge whatever they want for the remaining nat-gas which EUrope will require in order to function ASWKI. Unless, of course, the deliberate ruinous EUropean plan were exactly THAT …which is an ever larger possibility. High quality nat-gas is high quality nat-gas, markets are markets, and business is business. An equivalent “absurd” sourcing conundrum would also be triggered by the soon-coming EU ban on Russian sea-borne oil with serious refinability problems (diesel !!!) vis-á-vis the different quality and quantity of the replacements yet to be found and the un-vetted reliability of the yet non-existent suppliers. Tom Kloza, Global Head of Energy Analysis says “Without new inventory, by the end of November the wolf will be at the door. And it will look like a big ugly wolf if it’s a cold winter” Ref #9 http://www.nakedcapitalism.com/2022/11/the-u-s-diesel-shortage-is-worsening.html

not-so-bright useful green idiots ?

The reference below describes the green parties in Europe “as being particularly easy to manipulate into running the errands of American imperialism. The prerequisite for Germany to fall into this trap is the dominant role of Green Parties and European ideologies. The German environmental movement is a highly dogmatic, if not fanatical, movement, which makes it quite easy to get them to ignore economic argument.”

Ref #10 https://fair.org/home/us-medias-intellectual-no-fly-zone-on-us-culpability-in-nord-stream-attack/

Ref #11 https://www.veteranstoday.com/2022/10/08/the-attack-on-the-pipeline-and-the-resurrection-of-the-morgenthau-plan-as-the-long-arm-of-jewish-vengeance/ Ref #12 https://nyadagbladet.se/utrikes/shocking-document-how-the-us-planned-the-war-and-energy-crisis-in-europe/

Eurasian pivot

On their part, the Russians — many still astonished by suicidal EUrope – seem to basically be thinking (approx.) …

“EUropeans, you didn´t have to love us or even be friends you know… but why hate us ? Always, systematically, by default. Why are you Russophobic ? We only wanted to continue being your vetted trade partners as repeatedly proven with flying colors for 30 years. So just what is wrong with you ? Why do you allow your leaders to lie to you, cheat and mislead you so much ? If you actually wished to scare us away consider it done, good job and good bye EUrope. Now, despite your fully un-necessary EUthanization of our relationship, we still welcome you to set up your investments as our business associates here in Russia. Just consider that your only gateway to the world´s next all-time winner anyway you dice it or slice it — namely Mackinder´s Eurasia — is by relocating to Russia with all our known advantages. Otherwise – per WEF logic — you will not have any worthwhile fuels or natural resources left ( just hyperinflation…and no markets ) and you will not be happy”. So the remaining bright Germans – and other bright minds still in EUrope — would finally understand that 85% of the world´s population is not Western let alone part of today´s non-sensical NATO, fully “brain dead” per French President Emmanuel Macron. And once that the NS1 & NS2 sabotage perpetrators are proven and known, EUropean public opinion – most specially Germans – will see things very differently from today understanding how they have been mis-led into an entirely un-justified Russophobia.

EUropean RE-location

Development requires cheap and excellent all-around energy and natural resources which Germany and others do not have and that Russia has plenty of. It also requires markets with which to trade. So the alternatives are (a) “NATO out” which does not seem feasible right now, meaning “to revolt en masse against the NATO-imposed trade/financial sanctions against Russia, and force Berlin to repair NS1 and commission Nord Stream 2”…or… (b) relocate to the US, meaning total vassalization of the EUropean industrial burgeoisie a-la Werner von Braun…or… (c) relocate to Russia and be part of Eurasia´s new bright future, jointly with China & BRICS & SCO & Global South. Of course, sooner or later some of (b) will surely take place but chances are that (c) — per the assumed Russian offering proposed — will at least be the German predominant choice. Obviously, this would probably mean the sudden demise of the EUro and, soon after, of the US dollar ASWKI. The smarter part of the remaining EUrope would also follow the relocation of bright Germans to Russia. Unexpectedly, along these lines events may pick up unusual speed and EUrope as we know it today would cease to exist. And this would be the final evidence proving that EUropeans at large are not as bright as they think they are. They would all act differently if they were, with no room for cannibalism.

the Overton window

Bright Europeans do exist, but in EUropean politics they are very few and far between. So most today focus on (1) ruining Russia per NATO mandate to supposedly uphold ´democracy everywhere´ even corrupt kleptocracies… and while they are at it…(2) also saving planet Earth. Still, a handfull are finally understanding that this is too high a price to pay as EUropeans would not be willing to accept the MAGNITUDE and DEPTH of the hardships soon to come in what up until today was a flourishing consumer society with an enviable standard of living. Hypothetically, what some few political leaders were waiting and jockeying for was an Overton window large enough to get their heads in, their bets made, and their feet wet. The Overton window defines what is politically possible per the existing public opinion at a given point in time. So it is a very convenient tool to apply in view of the EU Commissariat Master Plan.

Ref #13 https://thesaker.is/natos-green-masochistic-euthanasia/

Ref #14 https://thesaker.is/europe-hypnotized-into-war-economy/

Ref #15 https://oilprice.com/Energy/Energy-General/Europes-Energy-Crisis-Will-Not-Be-A-One-Winter-Story.html

the German oath

All members of the elected government of the German Federal Republic have necessarily taken an oath of office details of which are explicit below. That is the basis for the social and political contract between German leadership and their constituents. But apparently many / all have decided to conveniently dismiss such sworn obligations until the Overton window – Main Street´s hidden weapon — forces them to act accordingly, not before.

“ I swear that I will devote my energies to the well-being of the German people, increase their benefit, protect them from harm, uphold and defend the Basic Law and the laws of the Federation, perform my duties conscientiously and do justice to everyone. So help me God.” Not a single word is ever mentioned relating directly or indirectly to the EU, its governance impact, its interests and/or its goals.

the “most stupid” government in EUrope

Recently Sahra Wagenknecht has defined Germany’s government as the “most stupid” in EUrope for managing to embroil itself in a full-blown economic war with its top – and thus un-replaceable — energy supplier, namely Russia. Speaking at the Bundestag, the former co-chair of the party Die Linke (“The Left”) urged for an immediate end to the anti-Russian sanctions and also for the resignation of German Vice Chancellor and Minister of the Economy, the now infamous ´Herr Green´ Robert Habeck. While still describing the ongoing conflict in Ukraine as a “crime” Wagenknecht insisted that the anti-Russian sanctions are “fatal” for Germany itself. She told her fellow Bundestag leaders in-their-face that “The biggest problem is your grandiose idea of launching an unprecedented economic war against our most important energy supplier. The idea that we are punishing Putin by impoverishing millions of families in Germany and destroying our industry while Gazprom is making record profits – how stupid is that?” she wondered out loud. So, an important German at an important German venue publically told many other important Germans how stupid they were. Not me, she did. “The promise of NATO membership did not help any. Militarily, this war cannot be won”. Of course, this has meant that some Left Party members now demand the expulsion of Sahra Wagenknecht for good.

Ref #16 https://www.wsws.org/en/articles/2022/09/19/qunz-s19.html

Ref #17 https://www.rt.com/business/563382-high-energy-costs-eu-companies/

Ref #18 https://www.rt.com/business/563490-thousands-firms-italy-closure/

Ref #19 https://www.reuters.com/article/ukraine-crisis-eu-energy-smes-idAFL8N30E4WV

Ref #20 https://oilprice.com/Energy/Natural-Gas/Europe-Faces-An-Exodus-Of-Energy-Intensive-Industries.html

´the grandiose idea´ …

Firms in the metal and chemical industries, among others, are trying to relocate to the US, The Wall Street Journal reports: “High energy costs drive companies away from EU”. This means obvious consequences only fools would not foresee: DEpression & UN-employment. German producers warn of food shortages. Die Welt now reports that “There are significant supply gaps in the daily food supply for people in Germany. The situation is “more than serious” an open letter from the industry said. “Companies now fear that production lines will soon come to a standstill and that refrigerated logistics centers for food distribution will be closed. Some are even preparing for possible insolvency.”

Manufacturers of both frozen and fresh products say they cannot cope with soaring energy costs. “The food industry is currently experiencing the worst crisis since the end of the Second World War… It’s a minute to twelve. Act now – otherwise the refrigerators and freezers of the German population will soon be empty” the letter urges. Germany, along with the broader EU, is facing a sharp rise in energy prices and a record inflation surge amid the intensifying anti-Russian sanctions and a policy of abandoning all possible Russian fuels. The situation could also soon lead to energy rationing and shortages, also meaning NO energy, NO fuels at ANY price, period. And forget LNG from whomever or wherever. Too little, too late, too cumbersome, too risky, way dirtier, and way too expensive. Germany needs Russian pipelined nat-gas for many good reasons that they cannot ignore and will necessarily live by soon.

The frozen food industry is particularly susceptible to energy supply problems, due to its strong reliance on electricity for freezers. The EU risks a ‘Wild West’ scenario says IEA head Fatih Birol warning that member states could possibly abandon solidarity to secure their own gas supplies. Many dozens of thousands of small and medium-size businesses (SMEs) in Italy can’t cope with soaring energy bills, ´Corriere della Sera´ reports. Italy is badly dependant on Russian pipelined nat-gas, no substitutes are possible in practice. Supposed “stored” reserves cannot be extracted from sub-surface unless Russian pipelines are also flowing thus allowing to add-on such stored reserves to the main flow. By themselves, underground nat-gas reserves can hardly be produced on surface and still with lots of negative impact.

Ref #21 https://thesaker.is/germanys-failing-stored-nat-gas-lng-experiment/

Larger companies will also add to the un-employed. According to a recent survey, over 70% of Italians are having difficulty or are simply unable to pay their energy bills. SMEs represent 99% of all businesses in the 27-nation EU. SMEs employ around 100 million people, or two thirds of all employed and account for 53% of Europe’s GDP.

Nearly one in six people over 65 in Germany is at risk of poverty, meaning they have less than 60% of the median income at their disposal according to the Federal Statistical Office and published by the German media group Funke. Europe maybe could have articulated a far better and softer transition and slower pathway into “some” renewables under excellent quality and already available + pipeline delivered, cheap Russian nat-gas. But they chose otherwise and now Europe must pay the piper. And with only a fraction of the EU imploding generalized chaos will prevail.

True enough, Hungarian Prime Minister Viktor Orbán led the pack weeks ago by saying “the approach has clearly failed — sanctions have backfired — and our car now has 4 four flat tires”. Just as a reminder, vehicles carry only one spare tire (maybe two) but never four and more to come… Now, also Greek Prime Minister Kyriakos Mitsotaki proposes to lift sanctions on Russia by December at the latest. But the questions remains: beyond some optics, the audio and the visual… just where precisely is the ACTION ? Are these two Heads of State bright enough per the circumstances ? Or are they just better sounding than the overwhelming EUropean political mediocrity ? Oh, you say they aren´t allowed to do any more than that ? If that´s the established system then EUropeans were not very bright…

Ref #22 https://www.euractiv.com/section/global-europe/news/orban-urges-new-eu-strategy-on-ukraine-says-sanctions-have-failed/

Michael Kretschmer

“Germany needs Russian gas” – says Michael Kretschmer, Saxony’s Minister-President. Okay, that´s a good starting point to acknowledge don´t you think ? A valid diagnosis is necessarily behind any reasonable therapy and at least in this case – besides being bloody obvious – it´s still reconforting to see that a spanking new “common denominator” is being put together by some in Germany. Herr Kretschmer added that the current exorbitant prices for the fuel are “ruining Germany’s industry”. Okay, sorry to hear that. So that means that Russian energy matters lots, correct ?

“Russian gas supplies are critical for Germany, and will remain so in the foreseeable future”. In an interview with Germany’s Funke Mediengruppe Michael Kretschmer also added: “We are already witnessing that we can’t do without Russian gas.” Hmmm….. But then Kretschmer went on to say that now Berlin should try to make sure that it keeps receiving Russian gas after the armed conflict is over. But would that be soon, please tell us ? Because saying that implies ignoring that the end of the armed conflict will most probably not be decided in the battlefield and just come about by a NATO-EU surrender. Why so you may ask ? Well precisely because NATO & the EU leadership provoked and sustained Russian gas to be cut off, so that can be reverted only by them, not the other way around. So whatever happens militarily in the battlefield does not actually matter that much any more unless it were 101% decisive. But many months have elapsed and it does not seem to be anywhere close to that, does it ? So finally EU politicians on their own will have to end this unnecessary war that they started simply because the Overton window for European public opinion will not stand it and they will have to admit they were dead wrong and plain go home, if not to jail.

Ref #23 https://www.rt.com/news/563458-saxony-governor-germany-needs-russian-gas/

Clare Daly (Irish MEP)

Clare Daly is a Member of the European Parliament (MEP) and from the very beginning in March 2022 she has voted against its Resolutions on this matter basically considering them to be “a recipe for prolonging war with escalation”. She believes that “ignoring the role played by the US and NATO in destabilising the area for the past decade,using Ukraine as a pawn in its battles with Russia, only serves to prevent an understanding of the measures necessary to secure peace”. Per Clare Daly, the EP Resolutions “accelerate the provision of military equipment and weapons to Ukraine, strengthen NATO’s forward presence, increase defence spending…and strengthen the European pillar within NATO” while also ”opportunistically call for opening the European energy market to fracked American liquefied natural gas (LNG)…which is far more polluting and terribly far more expensive”. Clare Daly believes that ”there is no military solution to this crisis as the policy of flooding Ukraine with weapons will, at worst, lead to a permanent condition of conflict, as has happened in Afghanistan, Libya and Syria, at best, a greater loss of life and destruction in Ukraine”. Furthermore, Clare Daly believes that the EP Resolutions on this topic do not sufficiently “take into account the impact of the war on workers,their working conditions, and the recognition of the hardship that this entails”.

Ref #24 https://www.europarl.europa.eu/meps/en/197731/CLARE_DALY/other-activities/written-explanations

Ref #25 https://rmx.news/article/shock-eu-commission-president-threatens-italy-on-eve-of-election-says-brussels-has-tools-if-wrong-parties-win/ Ref #26 https://tomluongo.me/2022/09/23/as-democracy-dies-eu-its-sins-are-revealed/

Ref #27 https://oilprice.com/Latest-Energy-News/World-News/London-Banks-Prepare-For-Possible-Blackouts.html

Saint Greta of Thunberg

Days ago Greta Thunberg at the London’s Royal Festival Hall left on record that there is no going “back to normal” as it would mean returning to the Global North climate crisis “system” i.e. “colonialism, imperialism, oppression, genocide and racist, oppressive extractionism”. So only the overthrow of “the whole capitalistic system” will suffice, says Greta. No explanation was given — or even a mild attempt made — to describe how the required transition could possibly be made to get from our current evil point A to future greatly-improved point B. Apparently, there’s no GDP growth — especially of the capitalist sort — without increasing carbon emissions. Supposedly the only solution to this state of emergency is “for rich countries to immediately abandon economic expansion as a social goal.” Full interview credit to Nicholas Harris at Ref #28 https://unherd.com/thepost/greta-thunberg-throws-her-lot-in-with-the-anti-capitalist-left/

entitlements & cakeism vs. the chicken and the egg & DE-globalization economics: FIRE vs real STUFF

If really interested in reducing greenhouse gas emissions mankind worldwide would need to drastically change its way of life in many important ways already very firmly considered by the collective mind-set as genuinely valid entitlements So, politically speaking such proposal is a non-starter waaaay outside any current Overton window we may come up with. In turn, we also can´t have our own cake and eat it too. So which will it be ? On top of it, let´s add that “All service industries (– including FIRE finances –) remain completely dependent on the raw materials and manufactured goods sectors to function… So DE-globalization will increasingly favor those who produce and control the STUFF which underpins everything else…(of course necessarily) leading to devastating closures of (almost all ?) energy and/or resource-intensive industrial operations in Europe due to high energy prices that make their products uncompetitive.” Ref #29 https://oilprice.com/Energy/Energy-General/East-vs-West-Stuff-vs-Finance.html . Full credit to Kurt Cobb via OilPrice.com.

• Love Letter to Ireland! (and to ALL the Debt-Enslaved Nations of the World)
• NATO and the Kh-32 missile
• Pyrrhic victory or strategic defeat?
• NATO escalates (again) and achieves nothing (again)
• The New Cuban Missile Crisis That Isn’t

Exclusive: Russian geo-economics Tzar Sergey Glazyev introduces the new global financial system

The world’s new monetary system, underpinned by a digital currency, will be backed by a basket of new foreign currencies and natural resources. And it will liberate the Global South from both western debt and IMF-induced austerity.

April 14 2022

By Pepe Escobar

Sergey Glazyev is a man living right in the eye of our current geopolitical and geo-economic hurricane. One of the most influential economists in the world, a member of the Russian Academy of Sciences, and a former adviser to the Kremlin from 2012 to 2019, for the past three years he has helmed Moscow’s uber strategic portfolio as Minister in Charge of Integration and Macroeconomics of the Eurasia Economic Union (EAEU).

Leading Russian economist Sergey Glazyev says a complete overhaul of the western-dominated global monetary and financial system is under works. And the world’s rising powers are buying into it. Photo Credit: The Cradle

Glazyev’s recent intellectual production has been nothing short of transformative, epitomized by his essay Sanctions and Sovereignty and an extensive discussion of the new, emerging geo-economic paradigm in an interview to a Russian business magazine.

In another of his recent essays, Glazyev comments on how “I grew up in Zaporozhye, near which heavy fighting is now taking place in order to destroy the Ukrainian Nazis, who never existed in my small Motherland. I studied at a Ukrainian school and I know Ukrainian literature and language well, which from a scientific point of view is a dialect of Russian. I did not notice anything Russophobic in Ukrainian culture. In the 17 years of my life in Zaporozhye, I have never met a single Banderist.”

Glazyev was gracious to take some time from his packed schedule to provide detailed answers to a first series of questions in what we expect to become a running conversation, especially focused to the Global South. This is his first interview with a foreign publication since the start of Operation Z. Many thanks to Alexey Subottin for the Russian-English translation.

The Cradle: You are at the forefront of a game-changing geo-economic development: the design of a new monetary/financial system via an association between the EAEU and China, bypassing the US dollar, with a draft soon to be concluded. Could you possibly advance some of the features of this system – which is certainly not a Bretton Woods III – but seems to be a clear alternative to the Washington consensus and very close to the necessities of the Global South?

Glazyev: In a bout of Russophobic hysteria, the ruling elite of the United States played its last “trump ace” in the hybrid war against Russia. Having “frozen” Russian foreign exchange reserves in custody accounts of western central banks, financial regulators of the US, EU, and the UK undermined the status of the dollar, euro, and pound as global reserve currencies. This step sharply accelerated the ongoing dismantling of the dollar-based economic world order.

Over a decade ago, my colleagues at the Astana Economic Forum and I proposed to transition to a new global economic system based on a new synthetic trading currency based on an index of currencies of participating countries. Later, we proposed to expand the underlying currency basket by adding around twenty exchange-traded commodities. A monetary unit based on such an expanded basket was mathematically modeled and demonstrated a high degree of resilience and stability.

At around the same time, we proposed to create a wide international coalition of resistance in the hybrid war for global dominance that the financial and power elite of the US unleashed on the countries that remained outside of its control. My book The Last World War: the USA to Move and Lose, published in 2016, scientifically explained the nature of this coming war and argued for its inevitability – a conclusion based on objective laws of long-term economic development. Based on the same objective laws, the book argued the inevitability of the defeat of the old dominant power.

Currently, the US is fighting to maintain its dominance, but just as Britain previously, which provoked two world wars but was unable to keep its empire and its central position in the world due to the obsolescence of its colonial economic system, it is destined to fail. The British colonial economic system based on slave labor was overtaken by structurally more efficient economic systems of the US and the USSR. Both the US and the USSR were more efficient at managing human capital in vertically integrated systems, which split the world into their zones of influence. A transition to a new world economic order started after the disintegration of the USSR. This transition is now reaching its conclusion with the imminent disintegration of the dollar-based global economic system, which provided the foundation of the United States global dominance.

The new convergent economic system that emerged in the PRC (People’s Republic of China) and India is the next inevitable stage of development, combining the benefits of both centralized strategic planning and market economy, and of both state control of the monetary and physical infrastructure and entrepreneurship. The new economic system united various strata of their societies around the goal of increasing common wellbeing in a way that is substantially stronger than the Anglo-Saxon and European alternatives. This is the main reason why Washington will not be able to win the global hybrid war that it started. This is also the main reason why the current dollar-centric global financial system will be superseded by a new one, based on a consensus of the countries who join the new world economic order.

In the first phase of the transition, these countries fall back on using their national currencies and clearing mechanisms, backed by bilateral currency swaps. At this point, price formation is still mostly driven by prices at various exchanges, denominated in dollars. This phase is almost over: after Russia’s reserves in dollars, euro, pound, and yen were “frozen,” it is unlikely that any sovereign country will continue accumulating reserves in these currencies. Their immediate replacement is national currencies and gold.

The second stage of the transition will involve new pricing mechanisms that do not reference the dollar. Price formation in national currencies involves substantial overheads, however, it will still be more attractive than pricing in ‘un-anchored’ and treacherous currencies like dollars, pounds, euro, and yen. The only remaining global currency candidate – the yuan – won’t be taking their place due to its inconvertibility and the restricted external access to the Chinese capital markets. The use of gold as the price reference is constrained by the inconvenience of its use for payments.

The third and the final stage on the new economic order transition will involve a creation of a new digital payment currency founded through an international agreement based on principles of transparency, fairness, goodwill, and efficiency. I expect that the model of such a monetary unit that we developed will play its role at this stage. A currency like this can be issued by a pool of currency reserves of BRICS countries, which all interested countries will be able to join. The weight of each currency in the basket could be proportional to the GDP of each country (based on purchasing power parity, for example), its share in international trade, as well as the population and territory size of participating countries.

In addition, the basket could contain an index of prices of main exchange-traded commodities: gold and other precious metals, key industrial metals, hydrocarbons, grains, sugar, as well as water and other natural resources. To provide backing and to make the currency more resilient, relevant international resource reserves can be created in due course. This new currency would be used exclusively for cross-border payments and issued to the participating countries based on a pre-defined formula. Participating countries would instead use their national currencies for credit creation, in order to finance national investments and industry, as well as for sovereign wealth reserves. Capital account cross-border flows would remain governed by national currency regulations.

The Cradle: Michael Hudson specifically asks that if this new system enables nations in the Global South to suspend dollarized debt and is based on the ability to pay (in foreign exchange), can these loans be tied to either raw materials or, for China, tangible equity ownership in the capital infrastructure financed by foreign non-dollar credit?

Glazyev: Transition to the new world economic order will likely be accompanied by systematic refusal to honor obligations in dollars, euro, pound, and yen. In this respect, it will be no different from the example set by the countries issuing these currencies who thought it appropriate to steal foreign exchange reserves of Iraq, Iran, Venezuela, Afghanistan, and Russia to the tune of trillions of dollars. Since the US, Britain, EU, and Japan refused to honor their obligations and confiscated the wealth of other nations which was held in their currencies, why should other countries be obliged to pay them back and to service their loans?

In any case, participation in the new economic system will not be constrained by the obligations in the old one. Countries of the Global South can be full participants of the new system regardless of their accumulated debts in dollars, euro, pound, and yen. Even if they were to default on their obligations in those currencies, this would have no bearing on their credit rating in the new financial system. Nationalization of extraction industry, likewise, would not cause a disruption. Further, should these countries reserve a portion of their natural resources for the backing of the new economic system, their respective weight in the currency basket of the new monetary unit would increase accordingly, providing that nation with larger currency reserves and credit capacity. In addition, bilateral swap lines with trading partner countries would provide them with adequate financing for co-investments and trade financing.

The Cradle: In one of your latest essays, The Economics of the Russian Victory, you call for “an accelerated formation of a new technological paradigm and the formation of institutions of a new world economic order.” Among the recommendations, you specifically propose the creation of “a payment and settlement system in the national currencies of the EAEU member states” and the development and implementation of “an independent system of international settlements in the EAEU, SCO and BRICS, which could eliminate critical dependence of the US-controlled SWIFT system.” Is it possible to foresee a concerted joint drive by the EAEU and China to “sell” the new system to SCO members, other BRICS members, ASEAN members and nations in West Asia, Africa and Latin America? And will that result in a bipolar geo-economy – the West versus The Rest?

Glazyev: Indeed, this is the direction where we are headed. Disappointingly, monetary authorities of Russia are still a part of the Washington paradigm and play by the rules of the dollar-based system, even after Russian foreign exchange reserves were captured by the west. On the other hand, the recent sanctions prompted extensive soul searching among the rest of the non-dollar-block countries. western ‘agents of influence’ still control central banks of most countries, forcing them to apply suicidal policies prescribed by the IMF. However, such policies at this point are so obviously contrary to the national interests of these non-western countries that their authorities are growing justifiably concerned about financial security.

You correctly highlight potentially central roles of China and Russia in the genesis of the new world economic order. Unfortunately, current leadership of the CBR (Central Bank of Russia) remains trapped inside the intellectual cul-de-sac of the Washington paradigm and is unable to become a founding partner in the creation of a new global economic and financial framework. At the same time, the CBR already had to face the reality and create a national system for interbank messaging which is not dependent on SWIFT, and opened it up for foreign banks as well. Cross-currency swap lines have been already set up with key participating nations. Most transactions between member states of the EAEU are already denominated in national currencies and the share of their currencies in internal trade is growing at a rapid pace.

A similar transition is taking place in trade with China, Iran, and Turkey. India indicated that it is ready to switch to payments in national currencies as well. A lot of effort is put in developing clearing mechanisms for national currency payments. In parallel, there is an ongoing effort to develop a digital non-banking payment system, which would be linked to gold and other exchange-traded commodities – the ‘stablecoins.’

Recent US and European sanctions imposed on the banking channels have caused a rapid increase in these efforts. The group of countries working on the new financial system only needs to announce the completion of the framework and readiness of the new trade currency and the process of formation of the new world financial order will accelerate further from there. The best way to bring it about would be to announce it at the SCO or BRICS regular meetings. We are working on that.  

The Cradle: This has been an absolutely key issue in discussions by independent analysts across the west. Was the Russian Central Bank advising Russian gold producers to sell their gold in the London market to get a higher price than the Russian government or Central Bank would pay? Was there no anticipation whatsoever that the coming alternative to the US dollar will have to be based largely on gold? How would you characterize what happened? How much practical damage has this inflicted on the Russian economy short-term and mid-term?

Glazyev: The monetary policy of the CBR, implemented in line with the IMF recommendations, has been devastating for the Russian economy. Combined disasters of the “freezing” of circa $400 billion of foreign exchange reserves and over a trillion dollars siphoned from the economy by oligarchs into western offshore destinations, came with the backdrop of equally disastrous policies of the CBR, which included excessively high real rates combined with a managed float of the exchange rate. We estimate this caused under-investment of circa 20 trillion rubles and under-production of circa 50 trillion rubles in goods.

Following Washington’s recommendations, the CBR stopped buying gold over the last two years, effectively forcing domestic gold miners to export full volumes of production, which added up to 500 tons of gold. These days the mistake and the harm it caused are very much obvious. Presently, the CBR resumed gold purchases, and, hopefully, will continue with sound policies in the interest of the national economy instead of ‘targeting inflation’ for the benefit of international speculators, as had been the case during the last decade.

The Cradle: The Fed as well as the ECB were not consulted on the freeze of Russian foreign reserves. Word in New York and Frankfurt is that they would have opposed it were they to have been asked. Did you personally expect the freeze? And did the Russian leadership expect it?

Glazyev: My book, The Last World War, that I already mentioned, which was published as far back as 2015, argued that the likelihood of this happening eventually is very high. In this hybrid war, economic warfare and informational/cognitive warfare are key theaters of conflict. On both of these fronts, the US and NATO countries have overwhelming superiority and I did not have any doubt that they would take full advantage of this in due course.

I have been arguing for a long time for the replacement of dollars, euro, pounds, and yen in our foreign exchange reserves with gold, which is produced in abundance in Russia. Unfortunately, western agents of influence which occupy key roles at central banks of most countries, as well as rating agencies and key publications, were successful in silencing my ideas. To give you an example, I have no doubt that high-ranking officials at the Fed and the ECB were involved in developing anti-Russian financial sanctions. These sanctions have been consistently escalating and are being implemented almost instantly, despite the well-known difficulties with bureaucratic decision making in the EU.  

The Cradle: Elvira Nabiullina has been reconfirmed as the head of the Russian Central Bank. What would you do differently, compared to her previous actions? What is the main guiding principle involved in your different approaches?

Glazyev: The difference between our approaches is very simple. Her policies are an orthodox implementation of IMF recommendations and dogmas of the Washington paradigm, while my recommendations are based on the scientific method and empirical evidence accumulated over the last hundred years in leading countries.

The Cradle: The Russia-China strategic partnership seems to be increasingly ironclad – as Presidents Putin and Xi themselves constantly reaffirm. But there are rumbles against it not only in the west but also in some Russian policy circles. In this extremely delicate historical juncture, how reliable is China as an all-season ally to Russia?

Glazyev: The foundation of Russian-Chinese strategic partnership is common sense, common interests, and the experience of cooperation over hundreds of years. The US ruling elite started a global hybrid war aimed at defending its hegemonic position in the world, targeting China as the key economic competitor and Russia as the key counter-balancing force. Initially, the US geopolitical efforts were aiming to create a conflict between Russia and China. Agents of western influence were amplifying xenophobic ideas in our media and blocking any attempts to transition to payments in national currencies. On the Chinese side, agents of western influence were pushing the government to fall in line with the demands of the US interests.

However, sovereign interests of Russia and China logically led to their growing strategic partnership and cooperation, in order to address common threats emanating from Washington. The US tariff war with China and financial sanctions war with Russia validated these concerns and demonstrated the clear and present danger our two countries are facing. Common interests of survival and resistance are uniting China and Russia, and our two countries are largely symbiotic economically. They complement and increase competitive advantages of each other. These common interests will persist over the long run.

The Chinese government and the Chinese people remember very well the role of the Soviet Union in the liberation of their country from the Japanese occupation and in the post-war industrialization of China. Our two countries have a strong historical foundation for strategic partnership and we are destined to cooperate closely in our common interests. I hope that the strategic partnership of Russia and the PRC, which is enhanced by the coupling of the One Belt One Road with the Eurasian Economic Union, will become the foundation of President Vladimir Putin’s project of the Greater Eurasian Partnership and the nucleus of the new world economic order.

April 15, 2022

The world’s new monetary system, underpinned by a digital currency, will be backed by a basket of new foreign currencies and natural resources. And it will liberate the Global South from both western debt and IMF-induced austerity.

By Pepe Escobar, posted with the author’s permission and cross-posted at The Cradle. 

Leading Russian economist Sergey Glazyev says a complete overhaul of the western-dominated global monetary and financial system is under works. And the world’s rising powers are buying into it. Photo Credit: The Cradle

Sergey Glazyev is a man living right in the eye of our current geopolitical and geo-economic hurricane. One of the most influential economists in the world, a member of the Russian Academy of Sciences, and a former adviser to the Kremlin from 2012 to 2019, for the past three years he has helmed Moscow’s uber strategic portfolio as Minister in Charge of Integration and Macroeconomics of the Eurasia Economic Union (EAEU).

Glazyev’s recent intellectual production has been nothing short of transformative, epitomized by his essay Sanctions and Sovereignty and an extensive discussion of the new, emerging geo-economic paradigm in an interview to a Russian business magazine.

In another of his recent essays, Glazyev comments on how “I grew up in Zaporozhye, near which heavy fighting is now taking place in order to destroy the Ukrainian Nazis, who never existed in my small Motherland. I studied at a Ukrainian school and I know Ukrainian literature and language well, which from a scientific point of view is a dialect of Russian. I did not notice anything Russophobic in Ukrainian culture. In the 17 years of my life in Zaporozhye, I have never met a single Banderist.”

Glazyev was gracious to take some time from his packed schedule to provide detailed answers to a first series of questions in what we expect to become a running conversation, especially focused to the Global South. This is his first interview with a foreign publication since the start of Operation Z. Many thanks to Alexey Subottin for the Russian-English translation.

The Cradle: You are at the forefront of a game-changing geo-economic development: the design of a new monetary/financial system via an association between the EAEU and China, bypassing the US dollar, with a draft soon to be concluded. Could you possibly advance some of the features of this system – which is certainly not a Bretton Woods III – but seems to be a clear alternative to the Washington consensus and very close to the necessities of the Global South?

Glazyev: In a bout of Russophobic hysteria, the ruling elite of the United States played its last “trump ace” in the hybrid war against Russia. Having “frozen” Russian foreign exchange reserves in custody accounts of western central banks, financial regulators of the US, EU, and the UK undermined the status of the dollar, euro, and pound as global reserve currencies. This step sharply accelerated the ongoing dismantling of the dollar-based economic world order.

Over a decade ago, my colleagues at the Astana Economic Forum and I proposed to transition to a new global economic system based on a new synthetic trading currency based on an index of currencies of participating countries. Later, we proposed to expand the underlying currency basket by adding around twenty exchange-traded commodities. A monetary unit based on such an expanded basket was mathematically modeled and demonstrated a high degree of resilience and stability.

At around the same time, we proposed to create a wide international coalition of resistance in the hybrid war for global dominance that the financial and power elite of the US unleashed on the countries that remained outside of its control. My book The Last World War: the USA to Move and Lose, published in 2016, scientifically explained the nature of this coming war and argued for its inevitability – a conclusion based on objective laws of long-term economic development. Based on the same objective laws, the book argued the inevitability of the defeat of the old dominant power.

Currently, the US is fighting to maintain its dominance, but just as Britain previously, which provoked two world wars but was unable to keep its empire and its central position in the world due to the obsolescence of its colonial economic system, it is destined to fail. The British colonial economic system based on slave labor was overtaken by structurally more efficient economic systems of the US and the USSR. Both the US and the USSR were more efficient at managing human capital in vertically integrated systems, which split the world into their zones of influence. A transition to a new world economic order started after the disintegration of the USSR. This transition is now reaching its conclusion with the imminent disintegration of the dollar-based global economic system, which provided the foundation of the United States global dominance.

The new convergent economic system that emerged in the PRC (People’s Republic of China) and India is the next inevitable stage of development, combining the benefits of both centralized strategic planning and market economy, and of both state control of the monetary and physical infrastructure and entrepreneurship. The new economic system united various strata of their societies around the goal of increasing common wellbeing in a way that is substantially stronger than the Anglo-Saxon and European alternatives. This is the main reason why Washington will not be able to win the global hybrid war that it started. This is also the main reason why the current dollar-centric global financial system will be superseded by a new one, based on a consensus of the countries who join the new world economic order.

In the first phase of the transition, these countries fall back on using their national currencies and clearing mechanisms, backed by bilateral currency swaps. At this point, price formation is still mostly driven by prices at various exchanges, denominated in dollars. This phase is almost over: after Russia’s reserves in dollars, euro, pound, and yen were “frozen,” it is unlikely that any sovereign country will continue accumulating reserves in these currencies. Their immediate replacement is national currencies and gold.

The second stage of the transition will involve new pricing mechanisms that do not reference the dollar. Price formation in national currencies involves substantial overheads, however, it will still be more attractive than pricing in ‘un-anchored’ and treacherous currencies like dollars, pounds, euro, and yen. The only remaining global currency candidate – the yuan – won’t be taking their place due to its inconvertibility and the restricted external access to the Chinese capital markets. The use of gold as the price reference is constrained by the inconvenience of its use for payments.

The third and the final stage on the new economic order transition will involve a creation of a new digital payment currency founded through an international agreement based on principles of transparency, fairness, goodwill, and efficiency. I expect that the model of such a monetary unit that we developed will play its role at this stage. A currency like this can be issued by a pool of currency reserves of BRICS countries, which all interested countries will be able to join. The weight of each currency in the basket could be proportional to the GDP of each country (based on purchasing power parity, for example), its share in international trade, as well as the population and territory size of participating countries.

In addition, the basket could contain an index of prices of main exchange-traded commodities: gold and other precious metals, key industrial metals, hydrocarbons, grains, sugar, as well as water and other natural resources. To provide backing and to make the currency more resilient, relevant international resource reserves can be created in due course. This new currency would be used exclusively for cross-border payments and issued to the participating countries based on a pre-defined formula. Participating countries would instead use their national currencies for credit creation, in order to finance national investments and industry, as well as for sovereign wealth reserves. Capital account cross-border flows would remain governed by national currency regulations.

The Cradle: Michael Hudson specifically asks that if this new system enables nations in the Global South to suspend dollarized debt and is based on the ability to pay (in foreign exchange), can these loans be tied to either raw materials or, for China, tangible equity ownership in the capital infrastructure financed by foreign non-dollar credit?

Glazyev: Transition to the new world economic order will likely be accompanied by systematic refusal to honor obligations in dollars, euro, pound, and yen. In this respect, it will be no different from the example set by the countries issuing these currencies who thought it appropriate to steal foreign exchange reserves of Iraq, Iran, Venezuela, Afghanistan, and Russia to the tune of trillions of dollars. Since the US, Britain, EU, and Japan refused to honor their obligations and confiscated the wealth of other nations which was held in their currencies, why should other countries be obliged to pay them back and to service their loans?

In any case, participation in the new economic system will not be constrained by the obligations in the old one. Countries of the Global South can be full participants of the new system regardless of their accumulated debts in dollars, euro, pound, and yen. Even if they were to default on their obligations in those currencies, this would have no bearing on their credit rating in the new financial system. Nationalization of extraction industry, likewise, would not cause a disruption. Further, should these countries reserve a portion of their natural resources for the backing of the new economic system, their respective weight in the currency basket of the new monetary unit would increase accordingly, providing that nation with larger currency reserves and credit capacity. In addition, bilateral swap lines with trading partner countries would provide them with adequate financing for co-investments and trade financing.

The Cradle: In one of your latest essays, The Economics of the Russian Victory, you call for “an accelerated formation of a new technological paradigm and the formation of institutions of a new world economic order.” Among the recommendations, you specifically propose the creation of “a payment and settlement system in the national currencies of the EAEU member states” and the development and implementation of “an independent system of international settlements in the EAEU, SCO and BRICS, which could eliminate critical dependence of the US-controlled SWIFT system.” Is it possible to foresee a concerted joint drive by the EAEU and China to “sell” the new system to SCO members, other BRICS members, ASEAN members and nations in West Asia, Africa and Latin America? And will that result in a bipolar geo-economy – the West versus The Rest?

Glazyev: Indeed, this is the direction where we are headed. Disappointingly, monetary authorities of Russia are still a part of the Washington paradigm and play by the rules of the dollar-based system, even after Russian foreign exchange reserves were captured by the west. On the other hand, the recent sanctions prompted extensive soul searching among the rest of the non-dollar-block countries. western ‘agents of influence’ still control central banks of most countries, forcing them to apply suicidal policies prescribed by the IMF. However, such policies at this point are so obviously contrary to the national interests of these non-western countries that their authorities are growing justifiably concerned about financial security.

You correctly highlight potentially central roles of China and Russia in the genesis of the new world economic order. Unfortunately, current leadership of the CBR (Central Bank of Russia) remains trapped inside the intellectual cul-de-sac of the Washington paradigm and is unable to become a founding partner in the creation of a new global economic and financial framework. At the same time, the CBR already had to face the reality and create a national system for interbank messaging which is not dependent on SWIFT, and opened it up for foreign banks as well. Cross-currency swap lines have been already set up with key participating nations. Most transactions between member states of the EAEU are already denominated in national currencies and the share of their currencies in internal trade is growing at a rapid pace.

A similar transition is taking place in trade with China, Iran, and Turkey. India indicated that it is ready to switch to payments in national currencies as well. A lot of effort is put in developing clearing mechanisms for national currency payments. In parallel, there is an ongoing effort to develop a digital non-banking payment system, which would be linked to gold and other exchange-traded commodities – the ‘stablecoins.’

Recent US and European sanctions imposed on the banking channels have caused a rapid increase in these efforts. The group of countries working on the new financial system only needs to announce the completion of the framework and readiness of the new trade currency and the process of formation of the new world financial order will accelerate further from there. The best way to bring it about would be to announce it at the SCO or BRICS regular meetings. We are working on that.  

The Cradle: This has been an absolutely key issue in discussions by independent analysts across the west. Was the Russian Central Bank advising Russian gold producers to sell their gold in the London market to get a higher price than the Russian government or Central Bank would pay? Was there no anticipation whatsoever that the coming alternative to the US dollar will have to be based largely on gold? How would you characterize what happened? How much practical damage has this inflicted on the Russian economy short-term and mid-term?

Glazyev: The monetary policy of the CBR, implemented in line with the IMF recommendations, has been devastating for the Russian economy. Combined disasters of the “freezing” of circa $400 billion of foreign exchange reserves and over a trillion dollars siphoned from the economy by oligarchs into western offshore destinations, came with the backdrop of equally disastrous policies of the CBR, which included excessively high real rates combined with a managed float of the exchange rate. We estimate this caused under-investment of circa 20 trillion rubles and under-production of circa 50 trillion rubles in goods.

Following Washington’s recommendations, the CBR stopped buying gold over the last two years, effectively forcing domestic gold miners to export full volumes of production, which added up to 500 tons of gold. These days the mistake and the harm it caused are very much obvious. Presently, the CBR resumed gold purchases, and, hopefully, will continue with sound policies in the interest of the national economy instead of ‘targeting inflation’ for the benefit of international speculators, as had been the case during the last decade.

The Cradle: The Fed as well as the ECB were not consulted on the freeze of Russian foreign reserves. Word in New York and Frankfurt is that they would have opposed it were they to have been asked. Did you personally expect the freeze? And did the Russian leadership expect it?

Glazyev: My book, The Last World War, that I already mentioned, which was published as far back as 2015, argued that the likelihood of this happening eventually is very high. In this hybrid war, economic warfare and informational/cognitive warfare are key theaters of conflict. On both of these fronts, the US and NATO countries have overwhelming superiority and I did not have any doubt that they would take full advantage of this in due course.

I have been arguing for a long time for the replacement of dollars, euro, pounds, and yen in our foreign exchange reserves with gold, which is produced in abundance in Russia. Unfortunately, western agents of influence which occupy key roles at central banks of most countries, as well as rating agencies and key publications, were successful in silencing my ideas. To give you an example, I have no doubt that high-ranking officials at the Fed and the ECB were involved in developing anti-Russian financial sanctions. These sanctions have been consistently escalating and are being implemented almost instantly, despite the well-known difficulties with bureaucratic decision making in the EU.  

The Cradle: Elvira Nabiullina has been reconfirmed as the head of the Russian Central Bank. What would you do differently, compared to her previous actions? What is the main guiding principle involved in your different approaches?

Glazyev: The difference between our approaches is very simple. Her policies are an orthodox implementation of IMF recommendations and dogmas of the Washington paradigm, while my recommendations are based on the scientific method and empirical evidence accumulated over the last hundred years in leading countries.

The Cradle: The Russia-China strategic partnership seems to be increasingly ironclad – as Presidents Putin and Xi themselves constantly reaffirm. But there are rumbles against it not only in the west but also in some Russian policy circles. In this extremely delicate historical juncture, how reliable is China as an all-season ally to Russia?

Glazyev: The foundation of Russian-Chinese strategic partnership is common sense, common interests, and the experience of cooperation over hundreds of years. The US ruling elite started a global hybrid war aimed at defending its hegemonic position in the world, targeting China as the key economic competitor and Russia as the key counter-balancing force. Initially, the US geopolitical efforts were aiming to create a conflict between Russia and China. Agents of western influence were amplifying xenophobic ideas in our media and blocking any attempts to transition to payments in national currencies. On the Chinese side, agents of western influence were pushing the government to fall in line with the demands of the US interests.

However, sovereign interests of Russia and China logically led to their growing strategic partnership and cooperation, in order to address common threats emanating from Washington. The US tariff war with China and financial sanctions war with Russia validated these concerns and demonstrated the clear and present danger our two countries are facing. Common interests of survival and resistance are uniting China and Russia, and our two countries are largely symbiotic economically. They complement and increase competitive advantages of each other. These common interests will persist over the long run.

The Chinese government and the Chinese people remember very well the role of the Soviet Union in the liberation of their country from the Japanese occupation and in the post-war industrialization of China. Our two countries have a strong historical foundation for strategic partnership and we are destined to cooperate closely in our common interests. I hope that the strategic partnership of Russia and the PRC, which is enhanced by the coupling of the One Belt One Road with the Eurasian Economic Union, will become the foundation of President Vladimir Putin’s project of the Greater Eurasian Partnership and the nucleus of the new world economic order.

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

Bretton Woods III: the new Big Bang – “suicidal Europe saved by gold ?“

April 13, 2022

Source

by Jorge Vilches

The unstoppable momentum behind Russia´s new Bretton Woods III finances added to the lack of official gold data available worldwide last week prompted The Saker article “NATO´s internal gold war” to publically ask

(1) how hard would it be for most countries to repatriate their now much-needed gold — theoretically still safely vaulted in ´custody´ at the Bank of England — specially if many of them tried to do it at once as most probably would happen…?

(2) why isn´t the current price of gold anywhere near its genuine market value ? Is it due to silent daily central bank interventions that hinder true free-market price-discovery mechanisms? [Ref #1: http://thesaker.is/natos-internal-gold-war/ ]

Gold matters

The above is terribly important vis-á-vis the spanking-new payment system for Russia´s much-needed oil & gas and other essential produce now per Western “sanctions” only buyable either with rubles or gold. With rubles thru yet-not-so-clear–nor-yet-vetted banking procedures of unknown sustainability not been tried out even once yet — think revoking clawbacks…or ´artificial defaults´. While with gold it´d be thru old-fashioned sale of tangible bullion. Furthermore, in order to substantially increase its purchasing power, it would be highly meaningfull to be able to sell such gold – possibly with the buyer taking physical delivery — with a genuine market-reference price most probably very significantly above today´s sharply downward-manipulated quotes thru constant central bank interventions since time immemorial. Thus, we would avoid the coming chaos as the “blitzkrieg sanctions” imposed on Russia are not only not working but visibly having the opposite effect. Stubbornly opposing deeply immature EU wishfull thinking, the ruble today is even stronger than before the Ukraine armed conflict. The Anthony Quinn ´gold in Aqaba´ scene in “Lawrence of Arabia” brightly comes to mind [Ref #2: https://off-guardian.org/2022/04/08/despite-sanctions-the-ruble-is-stronger-than-before-the-war-why/%5D

The hungry 800-pound gorilla

So clearly Europe is not only shooting itself in the foot right now but rather both feet, plus knee-caps and elbows… and very soon in the temple (both sides) as exquisitely described by Pepe Escobar in “The Saker” per link below.

So this article would be Part II of “NATO´s internal gold war” … or, in other words, a tentative draft Plan to AVOID the terrorizing scenario now looming the Old World. This means that the political adults in the room must immediately stop the EU self-shooting spree and face off this hungry 800-pound gorilla with no good intentions in his purposefull mind.

Beware

Agreed, time is of the essence…and the schedule for this draft Plan to succeed may impress as too demanding and/or politically difficult. True enough, it requires careful massaging and political buy-in… and obviously LOTS of hard work, energy, good will and effort from every stakeholder involved. But please beware that this Plan has two huge advantages i.e. (1) having no visible competition and (2) counting with the automatic UK approval as the Brits will not survive without a relatively healthy EU to sell to. Yes, it´s TINA once again…but for a very different Big Bang

Skeptics

If you believe otherwise please just sit back and get the memo from Pepe Escobar re “Europe commits suicide”

[ Ref #3: http://thesaker.is/sit-back-and-watch-europe-commit-suicide/ + http://thesaker.is/the-total-war-to-cancel-russia/ ]

So this Plan could very well be the only chance for the Western world to literally avoid many millions of its people from starving or freezing to death amidst an economic devastation and scarcity of basic staples that no war has ever inflicted so widespread. There are no brilliant ideas to look forward to with a worsening outlook as we speak, with ever more serious infighting and unsolvable conflicts throughout Europe ´AWKI´ and very soon elsewhere too. Tourism is 25% of EU GDP but without A/C and typical food & essential fuel it´d be dead on arrival at the border.

Europeans, this is it

In a nutshell, right now our Western Graeco-Roman Judeo-Christian millenary culture needs to rise to the occasion. Dear “Europa”, as the cradle of Western civilization that you are supposed to be, please be advised that this is it. Otherwise, not just our culture but also our species could soon become functionally disabled. Or, in financial terms which technocrats enjoy so much, we can soon become a forever ´non-performing asset´ a.k.a. wasted garbage.

The Plan

Accordingly, this draft Plan attempts to AVOID the UK-EU Armageddon that “NATO´s internal gold war” would necessarily bring about. And also please be advised that our success would be the only way at hand to prove the Davos agenda wrong which actually was what brought us to the situation we are now facing in the first place.

The philosopy of The Plan

The basic philosophy behind this über urgent project is probably best represented by a photograph taken at Verdun in 1984 wherein French President Francois Mitterand and German Chancellor Helmut Kohl are firmly holding each other´s hand like two school children both looking straight at the camera for the whole world to see. These two most serious, intelligent and very powerfull elderly statesmen were silently screaming something instantly understood by everyone after French and Germans had killed, maimed and hatefully destroyed each other for decades. Say no more

The math of The Plan

Lacking public domain data, let´s accept a spitball yet trustworthy “back-of-the-envelope” guesstimate of 5000 tons of gold deposited by EU members for custody at the Bank of England. So, if such tonnage were now physically available at today´s ultra low central-bank-manipulated prices it would pay for all of Europe´s oil & gas imports for one full year …while if gold were priced at USD $ 5000 per ounce Troy it would pay for 2,5 years of Europe´s oil & gas needs… And if gold were priced at USD $ 50,000 per ounce (something quite possible if genuine price-discovery mechanisms were set free without central bank manipulation…) those 5000 metric tons of gold at current oil & gas prices (which could be lower due to deflationary pressures) would pay for 25 years of EU´s fuel needs, or more.[Ref #4 https://www.gata.org/node/21861 ] [ Ref #5 https://www.bullionstar.com/blogs/ronan-manly/central-bank-gold-at-the-bank-of-england/ ]

2022 goals of The Plan

Goal (A) is having all countries being able to gradually repatriate their gold bullion now theoretically in custody at the Bank of England if they so desire with a serious and foreseeable schedule in place to be unequivocally complied with.

Goal (B) being able to sell such gold bullion even with buyers taking physical delivery but always at a genuine market price most probably very much higher than today´s fully manipulated quotes thru central bank daily interventions.

Governance & Management of The Plan

1. Arbiter Czar

Immediate appointment of a high caliber Arbiter Czar — with proper staffing & facilities + open budget + funding both in London and Brussels – preferably of non-European or US origin, irrefutably knowledgeable and impartial to be duly followed by UK & EU leaders and institutions in the implementation of this Plan as per guidelines herein. Both the UK and EU Parliaments must immediately approve the political appointment of this Czar ( and substitute sub-Czar ) under these terms with unequivocal and unmitigated support behind his/her role.

2. Full legal open-ended amnesty

Full legal amnesty & indefinite end-of-story “forgiveness forever” to both UK and EU on this topic reconfirmed by ECJ + ECB + BoE + British Judiciary & BIS Basel III thru specific legal homologation by July 1 while setting this topic separate from pending Brexit negotiations with plenty of shared UK + EU blame all around.

3. UK & BoE gold bullion all-inclusive official public domain status Report

Full-disclosure UK & BoE transparent gold-holdings & historical evolution Report + Audits Stages #1 & #2

4. UK official public domain gold bullion transparent Repatriation Plan

Proposed fully-descriptive UK official gold bullion repatriation Plan with time-table & schedule per (3) above.

1. Gold at real free-market price

Definitive and conclusive end to Ponzi scheme derivatives & option futures and central bank interventions etc etc etc allowing gold price to freely reach its own price-discovery + elimination of VAT and other taxes etc

2. “Financial Equivalence” Protocol

“Financial Equivalence” Protocol approval under normal Brexit mechanisms already foreseen.

3. Political reconfirmation and legal homologation

EU Parliament + UK Parliament + BIS Basel III + ECB + BoE + ECJ + British Judiciary of points (2) + (4) & (5).

The all-losers “blame game” (… which badly requires amnesty…)

“ALL-losers”… ALL as in ´everyone´ so don´t even think of it … so just please hold your nose and stick to The Plan.

But to clear the air and thus never coming back to this aspect ever again, let´s leave on record that there was plenty of shameless blame BOTH sides of the English Channel, fog or no fog. Clearly, they were both non-compliant. The UK of course, but also EU members which faked to “trust” the UK while playing parallel games to reap huge benefits from

1. EU membership, economics & subsidies despite clear non-compliance with Maastricht inclusion criteria.
2. a full euro “free ride” with no questions asked despite the fact that EU financial strategy was unsustainable from get-go like a bunch of drunken sailors coming out of a pub very late at night leaning on each other.
3. so they all swept it under the rug, whistled the mess away, and “one hand washes the other” so to speak
4. both sides played hardball “for keeps” the only problem being that Russia has now taken their ball away…

Per reknown internationally published experts, everybody that mattered knew and knows — ECB and BIS included – that Western central banks deploy daily surrepticious derivatives & options interventions in the futures market to control commodity prices and protect government fiat currencies against the public’s recognition of their devaluation.

Thus, for decades the price of gold was artificially maintained at ULTRA low levels so nobody in the EU cared much…

Now Russia has changed all that with a BigBang commodities-based Bretton Woods III deal and suddenly gold bullion matters lots because it buys oil & gas and everything Russian that Europe badly needs, or else…. So there was

• NO due diligence nothing meaningful done by the EU or the UK, sheer negligence & carelessness.
• NO world-class fully independent full-scale & depth public domain audits from anyone nor UK nor EU.
• The ´Authorized Custodian´ incurred in guiltfull non-compliance of known tasks, duties & malfeasance
• With deceitfull impunity, BOTH sides always irresponsibly stonewalled every question, doubt or query.

Initial schedule of The Plan

To be expanded and modified on the fly under the leadership and directions of the all-powerfull Arbiter Czar in order to achieve Goal (A) + Goal (B) described before by November 30, 2022.

May 1

Meeting to be held in London between UK Prime Minister Boris Johnson and President Ursula von der Leyen of the European Commission and President Charles Michel of the European Council in order to

1. officially submit candidates for Arbiter Czar + substitute both to be agreed upon by mutual UK-EU consent.
2. discuss and agree on the general framework of the tentative draft plan outlined herein as possibly modified.
3. discuss and agree and formally approve the tentative procedures and schedule for execution + open budget

June 1

Both the UK and EU Parliaments must have already approved the political appointment of the Arbiter Czar + substitute under the terms of this outline thru an over-arching Law superseding and over-imposed above any other law, ruling, treaty or order. The above should also include proper staffing & facilities + open budget + funding both in London and Brussels plus objectives, goals and procedures to be followed per (A) + (B) + (C).

July 1

Approval of full legal amnesty law & indefinite end-of-story “forgiveness forever” concept for both UK and EU and everyone else on this topic, as approved simultaneously by ECJ + ECB + BoE + British Judiciary & BIS re Basel III with specific legal homologation from whomever else is needed while setting this matter completely separate from any possible pending Brexit negotiations.

Repeat

Granted The Plan is very tight and politically difficult. But there is no other plan for the EU-UK survival as we know them, unless with BoJo´s help we readily welcome the very angry pitchforks to come inside the Palace and warm up

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Jorge Vilches is proud to have been introduced many times as “ the quintessence of the independent columnist ”.

Former op-ed contributor for The Wall Street Journal – New York and other financial media, has studied this topic in depth for the past 20 years. WSJ-NY “The Americas” column, editor David Asman today Fox Business News anchor.

Sit back and watch Europe commit suicide

If the US goal is to crush Russia’s economy with sanctions and isolation, why is Europe in an economic free fall instead?

April 07, 2022

Washington’s competition with rising power Russia is so fierce, it is willing to sacrifice Europe.Photo Credit: The Cradle

By Pepe Escobar

The stunning spectacle of the EU committing slow motion hara-kiri is something for the ages. Like a cheap Kurosawa remake the movie is actually about the Empire of Lies-detonated demolition of the EU, complete with subsequent rerouting of some key Russian commodities exports to the US at the expense of the Europeans.

It helps to have a 5^th columnist actress strategically placed – in this case astonishingly incompetent European Commission head Ursula von der Lugen – with her vociferous announcement of a crushing new sanctions package: Russian ships banned from EU ports; road transportation companies from Russia and Belarus prohibited from entering the EU; no more coal imports (over 4.4 billion euros a year).

In practice, that translates into Washington shaking down its wealthiest western clients/puppets. Russia, of course, is too powerful to directly challenge militarily, and the US badly needs some of its key exports, especially minerals. So, the Americans will instead nudge the EU into imposing ever-increasing sanctions that will willfully collapse their national economies, while allowing the US to scoop everything up.

Cue to the coming catastrophic economic consequences felt by Europeans in their daily life (but not by the wealthiest five percent): inflation devouring salaries and savings; next winter energy bills packing a mean punch; products disappearing from supermarkets; holiday bookings almost frozen. France’s Le Petit Roi Emmanuel Macron – perhaps facing a nasty electoral surprise – has even announced: “food stamps like in WWII are possible.”

We have Germany facing the returning ghost of Weimar hyperinflation. BlackRock President Rob Kapito said, in Texas,“for the first time, this generation is going to go into a store and not be able to get what they want.” African farmers are unable to afford fertilizer at all this year, reducing agricultural production by an amount capable of feeding 100 million people.

Zoltan Poszar, former NY Fed and US Treasury guru, current Credit Suisse grand vizir, has been on a streak, stressing how commodity reserves – and, here, Russia is unrivaled – will be an essential feature of what he calls Bretton Woods III (although, what’s being designed by Russia, China, Iran and the Eurasia Economic Union is a post-Bretton Woods).

Poszar remarks that wars, historically, are won by those who have more food and energy supplies, in the past to power horses and soldiers; today to feed soldiers and fuel tanks and fighter jets. China, incidentally, has amassed large stocks of virtually everything.

Poszar notes how our current Bretton Woods II system has a deflationary impulse (globalization, open trade, just-in-time supply chains) while Bretton Woods 3 will provide an inflationary impulse (de-globalization, autarky, hoarding of raw materials) of supply chains and extra military spending to be able to protect what will remain of seaborne trade.

The implications are of course overwhelming. What’s implicit, ominously, is that this state of affairs may even lead to WWIII.

Rublegas or American LNG?

The Russian roundtable Valdai Club has conducted an essential expert discussion on what we at The Cradle have defined as  Rublegas – the real geoeconomic game-changer at the heart of the post-petrodollar era. Alexander Losev, a member of the Russian Council for Foreign and Defense Policy, offered the contours of the Big Picture. But it was up to Alexey Gromov, Chief Energy Director of the Institute of Energy and Finance, to come up with crucial nitty-gritty.

Russia, so far, was selling 155 billion cubic meters of gas to Europe each year. The EU rhetorically promises to get rid of it by 2027, and reduce supply by the end of 2022 by 100 billion cubic meters. Gromov asked “how,” and remarked, “any expert has no answer. Most of Russia’s natural gas is shipped over pipelines. This cannot simply be replaced by Liquified Natural Gas (LNG).”

The risible European answer has been “start saving,” as in “prepare to be worse off” and “reduce the temperature in households.” Gromov noted how, in Russia, “22 to 25 degrees in winter is the norm. Europe is promoting 16 degrees as ‘healthy’, and wearing sweaters at night.”

The EU won’t be able to get the gas it needs from Norway or Algeria (which is privileging domestic consumption). Azerbaijan would be able to provide at best 10 billion cubic meters a year, but “that will take 2 or 3 years” to happen.

Gromov stressed how “there’s no surplus in the market today for US and Qatar LNG,” and how prices for Asian customers are always higher. The bottom line is that “by the end of 2022, Europe won’t be able to significantly reduce” what it buys from Russia: “they might cut by 50 billion cubic meters, maximum.” And prices in the spot market will be higher – at least $1,300 per cubic meter.

An important development is that “Russia changed the logistical supply chains to Asia already.” That applies for gas and oil as well:  “You can impose sanctions if there’s a surplus in the market. Now there’s a shortage of at least 1.5 million barrels of oil a day. We’ll be sending our supplies to Asia – with a discount.” As it stands, Asia is already paying a premium, from 3 to 5 dollars more per barrel of oil.

On oil shipments, Gromov also commented on the key issue of insurance: “Insurance premiums are higher. Before Ukraine, it was all based on the Free on Board (FOB) system. Now buyers are saying ‘we don’t want to take the risk of taking your cargo to our ports.’ So they are applying the Cost, Insurance and Freight (CIF) system, where the seller has to insure and transport the cargo. That of course impacts revenues.”

An absolutely key issue for Russia is how to make the transition to China as its key gas customer. It’s all about the Power of Siberia 2, a new 2600-km pipeline originating in the Russian Bovanenkovo and Kharasavey gas fields in Yamal, in northwest Siberia – which will reach full capacity only in 2024. And, first, the interconnector through Mongolia must be built – “we need 3 years to build this pipeline” – so everything will be in place only around 2025.

On the Yamal pipeline, “most of the gas goes to Asia. If the Europeans don’t buy anymore we can redirect.” And then there’s the Arctic LNG 2 project – which is even larger than Yamal: “the first phase should be finished soon, it’s 80 percent ready.” An extra problem may be posed by the Russian “Unfriendlies” in Asia: Japan and South Korea. LNG infrastructure produced in Russia still depends on foreign technologies.

That’s what leads Gromov to note that, “the model of mobilization-based economy is not so good.” But that’s what Russia needs to deal with at least in the short to medium term.

The positives are that the new paradigm will allow “more cooperation within the BRICS (the emerging economies of Brazil, Russia, India, China and South Africa that have been meeting annually since 2009);” the expansion of the International North South Transportation Corridor (INSTC); and more interaction and integration with “Pakistan, India, Afghanistan and Iran.”

Only in terms of Iran and Russia, swaps in the Caspian Sea are already in the works, as Iran produces more than it needs, and is set to increase cooperation with Russia in the framework of their strengthened strategic partnership.

Hypersonic geoeconomics

It was up to Chinese energy expert Fu Chengyu to offer a concise explanation of why the EU drive of replacing Russian gas with American LNG is, well, a pipe dream. Essentially the US offer is “too limited and too costly.”

Fu Chengyu showed how a lengthy, tricky process depends on four contracts: between the gas developer and the LNG company; between the LNG company and the buyer company; between the LNG buyer and the cargo company (which builds vessels); and between the buyer and the end user.

“Each contract,” he pointed out, “takes a long time to finish. Without all these signed contracts, no party will invest – be it investment on infrastructure or gas field development.” So actual delivery of American LNG to Europe assumes all these interconnected resources are available – and moving like clockwork.

Fu Chengyu’s verdict is stark: this EU obsession on ditching Russian gas will provoke “an impact on global economic growth, and recession. They are pushing their own people – and the world. In the energy sector, we will all be harmed.”

It was quite enlightening to juxtapose the coming geoeconomic turbulence – the EU obsession in bypassing Russian gas and the onset of Rublegas – with the real reasons behind Operation Z in Ukraine, completely obscured by western media and analysts.

A US Deep State old pro, now retired, and quite familiar with the inner workings of the old OSS, the CIA precursor, all the way to the neocon dementia of today, provided some sobering insights:

“The whole Ukraine issue is over hypersonic missiles that can reach Moscow in less than four minutes. The US wants them there, in Poland, Romania, Baltic States, Sweden, Finland. This is in direct violation of the agreements in 1991 that NATO will not expand in Eastern Europe. The US does not have hypersonic missiles now but should – in a year or two. This is an existential threat to Russia. So they had to go into the Ukraine to stop this.  Next will be Poland and Romania where launchers have been built in Romania and are being built in Poland.”

From a completely different geopolitical perspective, what’s really telling is that his analysis happens to dovetail with Zoltan Poszar’s geoeconomics: “The US and NATO are totally belligerent. This presents a real danger to Russia. The idea that nuclear war is unthinkable is a myth. If you look at the firebombing of Tokyo against Hiroshima and Nagasaki, more people died in Tokyo than Hiroshima and Nagasaki. These cities were rebuilt. The radiation goes away and life can restart. The difference between firebombing and nuclear bombing is only efficiency. NATO provocations are so extreme, Russia had to place their nuclear missiles on standby alert. This is a gravely serious matter. But the US ignored it.”

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

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