Putin’s speech at the Eastern Economic Forum

September 07, 2022

President of Russia Vladimir Putin: Friends, Mr Min Aung Hlaing, Mr Pashinyan, Mr Oyun-Erdene, Mr Li Zhanshu, ladies and gentlemen,

I am delighted to greet all participants and guests of the Eastern Economic Forum. Russia and Vladivostok are again hosting a forum of business leaders, experts, politicians, public figures and members of government from dozens of countries across the world.

As per tradition, the programme of the Eastern Economic Forum includes discussions on the projects and initiatives that are extremely important for the development of the regions in Russia’s Far East and for strengthening Russia’s cooperation and production ties with Asia Pacific countries, both our old, traditional partners and countries that are only developing dialogue with Russia in a broad range of areas and business projects.

Of course, this meeting in Vladivostok is a good opportunity to once again review the situation in the global economy and to exchange views on its main trends and risks.

Last year, the Eastern Economic Forum was held after a long pause caused by the coronavirus pandemic. At that time, the majority of experts agreed that global business activity was beginning to recover and that it would normalise soon after the lifting of the coronavirus restrictions, However, the pandemic has given way to new challenges, global ones that are threatening the world as a whole. I am referring to the Western sanctions frenzy and the open and aggressive attempts to force the Western mode of behaviour on other countries, to extinguish their sovereignty and to bend them to its will. In fact, there is nothing unusual in that: this policy has been pursued by the “collective West” for decades.

The waning dominance of the United States in the global economy and politics, as well as the stubborn unwillingness or even inability of the Western elites to see, let alone recognise objective facts, acted as a catalyst for these processes.

I have already mentioned that the entire system of international relations has recently undergone irreversible, or should I say, tectonic, shifts. Emerging states and regions around the world, primarily, of course, in the Asia-Pacific region, now play a substantially bigger role. Asia-Pacific countries emerged as new centres of economic and technological growth, attracting human resources, capital and manufacturing.

Despite all that, the Western countries are seeking to preserve yesterday’s world order that benefits them and force everyone to live according to the infamous “rules”, which they concocted themselves. They are also the ones who regularly violate these rules, changing them to suit their agenda depending on how things are going at any given moment. At the same time, other countries have not been forthcoming when it comes to subjecting themselves to this dictate and arbitrary rule, forcing the Western elites, to put it bluntly, to lose grip and take short-sighted, irrational decisions on global security, politics, as well as economics. All these decisions run counter to the interests of countries and their people, including, by the way, the people in those Western countries. The gap separating the Western elites from their own citizens is widening.

Europe is about to throw its achievements in building up its manufacturing capability, the quality of life of its people and socioeconomic stability into the sanctions furnace, depleting its potential, as directed by Washington for the sake of the infamous Euro-Atlantic unity. In fact, this amounts to sacrifices in the name of preserving the dominance of the United States in global affairs.

Back in spring, many foreign corporations rushed to announce their withdrawal from Russia, believing that our country will suffer more than others. Today, we see one manufacturing site after another shutting down in Europe itself. One of the key reasons, of course, lies in the severed business ties with Russia.

The competitive ability of European companies is in decline, for the EU officials themselves are essentially cutting them off from affordable commodities and energy, as well as trade markets. It will come as no surprise if eventually the niches currently occupied by European businesses, both on the continent and on the global market in general, will be taken over by their American patrons who know no boundaries or hesitation when it comes to pursuing their interests and achieving their goals.

More than that, in an attempt to obstruct the course of history, Western countries have undermined the pillars of the global economic system, built over centuries. It is in front of our eyes that the dollar, euro and pound sterling have lost trust as currencies suitable for performing transactions, storing reserves and denominating assets. We are taking steps to shed this dependence on unreliable and compromised foreign currencies. By the way, even allies of the United States are gradually reducing their dollar assets, as we can see from statistics. Step by step, the volume of transactions and savings in dollars is diminishing.

I want to note here that yesterday, Gazprom and its Chinese partners decided to switch to 50/50 transactions in rubles and yuan with respect to gas payments.

I want to add that with their short-sighted actions, Western officials have triggered a global inflation. In many developed economies, the inflation rate has reached a record-high level that had not been seen in many years.

Everybody is aware of this but I will reiterate: as of late July, inflation in the United States reached 8.5 percent. Russia has just over 14 percent (I will speak about this further) but it is declining, unlike in Western economies. The inflation there is on the rise, and in our country it is declining. I believe that as of the end of the year, we will have around 12 percent and, as many of our experts think, in the first quarter or by the second quarter of 2023, we will most likely reach the target inflation rate. Some say it will be 5–6 percent. Others say it will go down to 4 percent. We will see. In any case, the trend is positive. Meanwhile, what is happening with our neighbours? The inflation in Germany has reached 7.9 percent, in Belgium 9.9 percent, in the Netherlands 12 percent, Latvia 20.8 percent, Lithuania 21.1 percent and Estonia 25.2 percent. And it is still on the rise.

Rising prices in the global markets can be a real tragedy for most of the poorest countries, which are facing shortages of food, energy, and other vital goods. I will cite a few figures that underline the danger: while in 2019, according to the UN, 135 million people in the world were facing acute food insecurity, their number has soared by 2.5 times to 345 million by now – this is just horrible. Moreover, the poorest states have completely lost access to the most essential foods as developed countries are buying up the entire supply, causing a sharp increase in prices.

Let me give you an example. Most of the ships – you all know very well how high passions have been running, how much has been said about the need to facilitate the export of Ukrainian grain at all costs, to support the poorest countries. And we certainly had no other choice but to respond, despite all the complicated developments taking place around Ukraine. We did everything to ensure that Ukrainian grain was exported, and we certainly assumed – I met with the leaders of the African Union, with the leaders of African states and I promised them that we would make every effort to uphold their interests and would facilitate the export of Ukrainian grain.

Russia did it together with Turkiye. We did it. And I would like to report the result to you, colleagues: if we exclude Turkiye as an intermediary, all the grain exported from Ukraine, almost in its entirety, went to the European Union, not to the developing and poorest countries. Only two ships delivered grain under the UN World Food Programme – the very programme that is supposed to help countries that need help the most – only two ships out of 87 – I emphasise – transported 60,000 tonnes out of 2 million tonnes of food. That’s just 3 percent, and it went to the developing countries.

What I am saying is, many European countries today continue to act as colonisers, exactly as they have been doing in previous decades and centuries. Developing countries have simply been cheated yet again and continue to be cheated.

It is obvious that with this approach, the scale of food problems in the world will only increase. Unfortunately, to our great regret, this could lead to an unprecedented humanitarian disaster, and perhaps, exporters need to think about limiting their exports of grain and other food to this destination. I will certainly consult with President of Turkiye, Mr Erdogan, because together with him we were the ones who developed a mechanism for the export of Ukrainian grain, primarily, I repeat, to help the poorest countries. But what happened in practice?

I would like to stress once again that this situation has been caused by the reckless steps taken by the United States, the UK and the European Union, which are obsessed with illusory political ideas. As for the wellbeing of their own citizens, let alone people outside the so-called golden billion, they have been pushing it to the backburner. This will inevitably lead Western countries into a deadlock, an economic and social crisis, and will have unpredictable consequences for the whole world.

Colleagues,

Russia is coping well with the economic, financial and technological aggression of the West. I am talking about a real aggression; there is no other word for it. Russia’s currency and financial market has stabilised, inflation is going down, as I have already mentioned, and the unemployment rate is at an all-time historical low of less than 4 percent. The assessments and forecasts of our economic performance, including by businesspeople, are more optimistic now than in early spring.

I would like to say that our economic situation has stabilised overall, but we also see a number of problems in some sectors, regions and individual enterprises, especially those that relied on supplies from Europe or supplied their products there.

It is important to continue working with businesses to take prompt decisions and launch effective targeted support mechanisms. I would like to ask the Government Commission to Increase the Sustainability of the Russian Economy under the Sanctions to keep track of the situation. It is true that we are doing this almost on a daily basis. Nevertheless, despite the evidence of stabilisation I have mentioned, we are also aware of the risks and so we must keep an eye on them.

Russia is a sovereign state. We will always protect our national interests while pursuing an independent policy, and we also appreciate this quality among our partners, who have demonstrated their reliability and responsible attitude in the course of our trade, investment and other types of cooperation over many years. I am referring, as you are aware, to our colleagues from the Asia Pacific countries.

An absolute majority of Asia Pacific countries reject the destructive logic of sanctions. Their business relations are focused on mutual advantage, cooperation and the joint use of our economic capabilities to the benefit of our countries’ citizens. This adds up to a huge competitive advantage of the regional countries and a guarantee of their dynamic long-term development, which has been growing faster than the world’s average for a long time.

You are aware of this, but I would like to remind everyone that over the past 10 years Asian countries’ GDP has been increasing by approximately 5 percent every year, while the figure is 3 percent in the world, 2 percent in the US and 1.2 percent in the EU. But it is even more important that this trend persists. What will this ultimately lead to? As a result, the share of Asian economies in global GDP will grow from 37.1 percent in 2015 to 45 percent in 2027, and I am sure that this trend will persist.

It is important for Russia that the economy of the Russian Far East grows together with Asia Pacific economies, that this region provide modern living conditions, boost people’s incomes and well-being, and that it create high-quality jobs and cost-effective production facilities.

We have already tested unique national tax, administrative and customs privileges in the Far East. They help implement landmark projects, even by global standards, in such fields as natural gas conversion and the shipbuilding sector, bioengineering technologies and clean energy.

In the past seven years, industrial production volumes in the Far East have increased by about 25 percent. This exceeds nationwide levels by one third. I want to stress this: growth rates of industrial production in the Far East greatly exceed similar nationwide growth rates.

We will continue to promote the priority development of the Far Eastern regions by using new advanced state support measures and by creating the best and highly competitive business environment. For example, we intend to continue adjusting the mechanism of priority development areas for modern and joint projects with other countries, to create the best possible business climate for attracting the most advanced technologies to Russia and for manufacturing high value-added goods in the Far East.

Events of this year confirm the special significance of such a factor as accessible and affordable raw materials without which it is impossible to organise any production process or to set up co-production chains. Russia is just about the only country that is completely self-sufficient in terms of natural resources, and the Far East plays a substantial role here. This region is a highly important supplier of crude oil and natural gas, coal, metals, timber and marine biological resources to the domestic market and our foreign partners.

We are staking on the prudent and rational development of Russia’s natural riches under the most stringent environmental standards. First of all, we will refine all extracted raw materials domestically as much as possible. We will also use these raw materials to strengthen the sovereignty of this country, to ensure industrial security, to raise incomes and to develop the regions.

We have already protected the resource extraction industry from unfriendly actions. From now on, only companies with Russian jurisdiction have the right to develop natural resources in Russia.

The Ministry of Natural Resources and Environment together with the Ministry of Industry and Trade and leading business associations has determined the national economy’s demand for strategic raw materials. This information will become the foundation of the revised Strategy for the Development of Russia’s Mineral Resources Base with an extended planning horizon up to 2050.

At the same time, special focus should be placed on geological exploration and processing of rare raw materials (such as titanium, manganese, lithium, and niobium), which are used in metallurgy, medical and chemical industries, microelectronics, aircraft manufacturing and other industries, as well as in new energy storage and transmission technologies.

I would like to separately ask the Government to have a look at the bioresources harvesting sphere, where we have a mechanism of investment quotas. Here, it is important to achieve balanced growth and full utilisation of production capacities, as well as to ensure the harmonious development of the regions’ infrastructure.

I would like to stress that the funds the state receives from the utilisation of water bioresources must above all be allocated for developing the infrastructure of rural areas, employment support, and increasing incomes of local residents. I ask the Government to take specific measures on this. We have discussed this many times.

Next, over the past years Russia has implemented big plans for the development of transport infrastructure, railways and roads, seaports and pipelines. These timely decisions have made it possible for businesses to quickly rebuild logistics in today’s conditions, and redirect cargo flows to those countries that are ready and willing to trade with Russia and prefer civilised and predictable business relations.

It is noteworthy that despite the attempts of external pressure, the total cargo of Russian seaports has only slightly decreased over the seven months of this year; it has remained at the same level as a year earlier, which is about 482 million tonnes of cargo. Last year there were 483 million, so the figure is practically the same.

At the same time, Far Eastern ports are seeing a real logistics boom. The volume of cargo transhipment and container handling is such that specialists are working 24/7 to handle the workload. In a word, no matter how much someone might like to isolate Russia, it is impossible to do it, as we have always said so. It is enough just to look at the map.

We will use natural competitive advantages to build up our further transport capabilities, expand the road and railway network, build new access roads to sea terminals and expand their capacity.

I mentioned earlier that our focus is on building the eastward infrastructure and developing the North-South international corridor and ports of the Azov-Black Sea basin which we will keep working on. They will open up more opportunities for Russian companies to enter the markets of Iran, India, the Middle East and Africa and, of course, for reciprocal deliveries from these countries.

The total volume of freight and cargo transportation along these routes and arteries will be able to grow by about 60 percent by 2030. We are absolutely realistic about our predictions, and this is how it will be. To achieve these numbers, the Government has drafted specific “roadmaps” in the three areas I outlined earlier, which will enable us to make this work consistent, consolidate and coordinate our efforts in terms of deadlines and capacity to break up the bottlenecks and upgrade border checkpoints and related infrastructure.

In addition to our plans to expand transport corridors, it is important to put in place new rolling stock and railway traction vehicles, to provide Russian shipyards with orders for modern high-quality tankers, dry cargo ships and container vessels, including ice-class ships, for the further expansion of the Northern Sea Route as a potent transport corridor of national and global importance with, I want to stress this, year-round navigation. The state-of-the-art icebreakers that we are designing and building make it possible for us to do this already now.

This year, a container vessel made its first run between Murmansk and Kamchatka along the Northern Sea Route to reaffirm the reliability and safety of shipping operations in the Arctic zone.

Notably, the point is not just about authorising the passage of ships in the Arctic or simply connecting two destinations. What we need to do is make sure that ships are properly serviced and cargo is properly handled at each port along the route, and the traffic schedule is sustainable, predictable and reliable. Then, every Northern Sea Route waypoint and region will benefit from the logistics corridor. That is what we should be striving for.

The Government has approved a development plan for the Northern Sea Route until 2035 with plans to allocate 1.8 trillion rubles from various sources to implement it. As forecasted, the cargo traffic along this corridor will go from the current 35 million tonnes per year to the targeted 220 million tonnes per year.

The availability of freight vehicles is certainly a key factor in the transportation of goods to and from the Russian Far East. This means we need to offer economically justified and competitive freight rates. I am asking the Government to study all these issues carefully.

Aviation is a special issue for the Far East. Here, the availability of flights from the European part of Russia to the Far East is not the only issue, but connectivity between the Far Eastern regions themselves also matters – air services should cover as many destinations, cities and regions of the Far East as possible.

That is why we have established a single Far Eastern airline. It offers almost 390 destinations, some of them subsidised by the state. In the next three years, this airline’s traffic should increase, and the number of destinations will exceed 530. And as we could see after those flights were opened, these destinations are in great demand.

To implement these plans, we need to expand the company’s fleet, to make sure it has modern aircraft, including small aircraft. A decision has been made in this regard, and I ask the Government to strictly implement it.

I would like to note that in general, Russian air carriers will soon be thoroughly re-equipped. Our airlines, including Aeroflot, have placed the largest order package in modern history, for about 500 Russian-made mainline aircraft. By the way, as far as I know, the United Aircraft Corporation and Aeroflot have signed a respective agreement on the sidelines of this Eastern Economic Forum, and the figures in there are quite impressive – over a trillion, I think.

This high demand should become a powerful incentive for aircraft factories and design bureaux, for many related industries, including electronics and aircraft components, and, of course, for the schools training professional personnel including engineers and skilled blue-collar workers in the aviation industry.

I would like to add that a decision has been made on another sensitive issue for the Far East. I am referring to the development of air medical services and increasing the availability of medical care for people living in remote areas. Starting next year, we will more than double federal funding for these purposes, which means that the number of flights will also increase, and there will be faster and better provision of healthcare in the region.

Friends, colleagues,

All our decisions involving the economy and social sphere, all the mechanisms that we are implementing in the Far East have the same important purpose – to make this region a truly attractive place for living, studying, working, for starting families, to ensure that more children are born.

Several important initiatives in this regard have been included in the package of measures that the Government is now considering. One of them is to create an up-to-date environment for living, to improve the local cities and towns.

Let me remind you that at the last forum, we set a task to develop master plans for the development of the largest Far Eastern cities. These include all administrative centres of the regions, and cities with a population of over 50,000 people, as well as Tynda and Severobaikalsk, the key stations on the Baikal-Amur Mainline railway.

We had in mind an integrated approach to the development of communities, where plans for the modernisation of infrastructure, social facilities, and creation of public spaces and so on would be combined competently and conveniently, and economic and industrial projects would rely on thoroughly calculated business models.

In all cities, the initial task was to make strategic development plans. Master plans are already being actively developed on the basis of those strategic plans in 17 cities and metropolitan areas. One of them has to do with the development of the Petropavlovsk-Kamchatsky urban area, and the day before yesterday, we discussed this issue with our colleagues on the spot. Once again, I ask the Government to provide maximum assistance in implementing this and other master plans in order to have them unconditionally implemented.

Here, among other things, it is important to use tools such as the Far Eastern concession, the government’s infrastructure loans and infrastructure bonds. It is necessary to determine target limits for the Far East in these programmes. The funds should be used for urban development and improvement, and of course, for infrastructure, including the upgrade of existing networks and connections to utilities.

I would like to add that at the recent St Petersburg Economic Forum, I instructed the Government to allocate an additional 10 billion rubles annually for improvement projects in Russian cities. I think it would be right to channel half of this financing, that is, 5 billion a year, towards upgrading Far Eastern cities and towns with populations below 250,000.

Separate resources should also be allocated under all our main infrastructure development programmes for projects to modernise Far Eastern cities. I have already given such an instruction, and I ask you to ensure its implementation as quickly as possible. Target limits should be stipulated in the federal budget for the next three years.

Something else I would like to stress – we need to increase the volume of housing construction in the Far East, while also widely applying the most advanced ‘green’ and energy-efficient construction technologies.

This year, the Far Eastern Quarters programme was launched. Under this programme, developers will be able to take advantage of priority development areas, including tax and infrastructure benefits, which will reduce the cost of flats and the price of finished housing. This will increase the availability of housing for people. The plan is to build about 2.5 million square metres of housing by 2030 using this cost-reduction mechanism. I ask the regional authorities and the Ministry for the Development of the Russian Far East to hold the first tenders by the end of the year, to select developers and start designing and developing the residential buildings.

Next, the Far Eastern residents are entitled to special, preferential mortgage terms. As many as 48,000 families have already purchased new housing using mortgages with a rate of 2 percent. This year, we have expanded the Far Eastern mortgage programme so that doctors and teachers, regardless of their age, can apply for it along with young Far Easterners.

Let me remind you that the programme is planned until 2024. But given the demand and efficacy – and this programme is working effectively – I propose extending it until at least 2030. I hope that the Far Eastern residents will also appreciate this.

(Applause.)

A separate decision concerns the support of young professionals who come to the Far East or graduate from local educational institutions, get a job and consider local accommodation. As many as 10,000 rental apartments will be built for them. The rental rate will be significantly below the market level due to subsidies from the regional and federal budgets. The Government has already envisaged such a measure. I ask you to work out all the details in order to start building rental housing for young professionals without delay. And I would like to specifically point out that the location of this housing should be included in the development master plans for Far Eastern cities, which means all the necessary infrastructure should be available – in short, such accommodation should be convenient and enjoy demand.

I would like to note that the Far Eastern regions, like many other regions of the Russian Federation, are experiencing a shortage of workers today. We will also take several important steps to intensify personnel training in key competencies. Over 900 modern workshops will be opened in Far Eastern colleges by 2030, and in the near future, until the end of 2025, we will launch 29 production and educational clusters. In addition, businesses will receive compensation for employing young workers.

Another important area is improving the quality of higher education in the Russian Far East. The goal is to attract qualified instructors, upgrade facilities and equipment in higher education institutions, and provide grants to stimulate academic research and prospective developments in the crucial areas of the technological agenda.

There are network programmes for Far Eastern universities that connect education institutions in the region with the country’s leading universities such as St Petersburg State Marine Technical University, Moscow Aviation Institute and others. We will undoubtedly support this area of cooperation.

Finally, branches of the Russian Institute of Theatre Arts (GITIS), the National State Gerasimov Institute of Cinematography (VGIK) and the Boris Shchukin Theatre Institute will open in 2025 in the Russian Far East to train cultural and art workers. I would like to ask the Government to provide all necessary assistance.

I would like to note that the Far Eastern regions offer their own professional development initiatives. For example, the Agency for Strategic Initiatives in the Sakhalin Region supports a pilot project called Earning Money Together. Participants in the project will be able to undergo free additional training, receive career guidance and get help with starting a business. Based on the outcome of these pilot projects we will think about scaling up.

I also want to mention a training programme for a new generation of managers in the Far East. The programme focuses on cultivating a local pool of talent, and on integrating study programmes and internships in public offices and development institutions. This programme is already running and I suggest that the heads of all regions in the Far Eastern Federal District get involved.

Colleagues, I want to conclude my remarks by stressing once again that the modern global economy and the entire system of international relations is going through challenges. However, I believe that the logic of cooperation, aligning the potentials and mutual benefits that our countries and our friends in the region adhere to, will prevail no matter what. By reasonably taking advantage of the competitive sides and strengths of the Asia-Pacific countries, by creating constructive partnerships we will open new colossal opportunities for our peoples. We are ready to work together for the sake of a successful future. And we are grateful to our partners for participating in this work.

Thank you.

Hold Your Breath. Europe Is at the Tipping Point, As the Abyss is Closer Than We Think

July 28, 2022

Source

By Martin Jay

It’s Italy which will fire the starter’s gun on a turnaround on the EU’s policy on Russia and the Ukraine war.

It might well be Italy which marks the starting point of a demise of sorts of the EU, as the coalition government collapses. Mario Draghi, who might be remembering interest rate hikes like the ECB’s this week, which only happened previously when he was the boss overseeing the eurozone crisis, is out.

By resigning his post as PM, he must be that he sees the writing on the wall and that we are heading towards another eurozone crisis.

Right now, the euro has already slumped to parity with the dollar and Eurozone inflation averages about 8.6 per cent (although it’s now 10 per cent in Spain, 12 per cent in Greece and a thundering 20 per cent in Estonia). Have a heart for Croatia which is planning on joining the eurozone soon.

But it’s Italy which will fire the starter’s gun on a turnaround on the EU’s policy on Russia and the Ukraine war. In September a snap election is almost certain to put in power as a coalition two of Italy’s far-right groups, whose leaders both have an admiration for Putin.

Once this happens, others in the EU will see how ludicrous it is to continue the so-called punishment of Putin, which in reality destroys economies and ruins lives across the EU 27-member bloc. Other EU countries will see that Italy’s desperate situation of having debt at 150 % of its GDP and double-digit inflation can only be rescued by a radical political change. Elites in other EU countries will be scared that populist uprisings which throw out incumbent mainstream parties are heading their way once they see the Italian economy go from boiling to a gentle simmer. And once the Italian coalition is in place, dialogue — something which we haven’t seen yet from the EU — will begin with Putin.

Putin is laughing all the way to the bank in Ukraine with this present crisis that Europe has created for itself. There is no urgency on his side to really do anything. The EU is lowering itself into an acid bath all by itself and all he needs to do is watch it like watching a comedy on TV.

The Italian change in politics will be a huge blow to the EU as well, which is really spiralling out of control. Who could have imagined that a political has-been like Ursula von der Leyen would be quite as useless as she has turned out to be. By definition — and tradition — European Commission presidents are supposed to be pretty inept and servile to their masters France and Germany. But few could have guessed how Ursula would have messed up so badly on Brexit, Covid, Russia and soon the eurozone itself.

The EU is only as strong as the three giants of Europe — Germany, France and Italy — which it is supposed to protect. Yet for the first time in 30 years, Germany has a trade deficit and it talking about energy rationing with many factories in the country expected to close down or run on half production soon.

All the pressure will be in the ECB as another eurozone crisis looms when Italy is forced to pay back higher rates to its debtors due to the ECB slowing down printing of new currency. This is extremely dangerous for Italy and could bring about a total collapse of its economy like Greece. The difference is that Italy is a founding EU country and it is too big to collapse, which means that France and Germany will have to keep it on a life support machine. It is hard to imagine this scenario without a change of heart from Macron and Scholz with regards to the war in Ukraine and the EU’s view in general towards Putin. Germany has just recently started to show signs of wanting to take a different tact on Putin. Recently, it was revealed that an aid package of 9 bn euros, destined for Ukraine, was held up by Berlin, coupled with the Germans failing to resupply countries supporting Ukraine with tanks which it earlier promised. These are not ‘cracks’ appearing. These signs are more prolific than this and we are more likely to see squabbles soon between Scholz and von der Leyen in Brussels, with Macron intervening to look for a new dialogue with Putin.

The once golden relationship between the U.S. and the EU is also grinding to a halt. The EU will soon be more divided than ever about the war in Ukraine and Biden’s almost certain self-destruction at the midterms in November will see to a great reduction in the U.S. role of supplying arms to Zelensky. There will be a blame game which will be crafted carefully for weeks in the media beforehand which points to endemic corruption in the Ukrainian elite and the illegal sales of much of the U.S. hardware to Syrian jihadists. This has already started in fact, but has not yet shifted into top gear, which should be expected over the summer period before the Italian elections. The West needs to get out of the war in Ukraine and it needs a gilt-edged reason for the U-turn. Zelensky, as ever, will provide them with the perfect excuses, as he never fails in his primary role of useful idiot — that is of course if he survives assassination attempts from his own cabal who want a larger slice of the cake. The Left’s preposterous notion of fighting a full-on war in Ukraine with NATO forces will be nipped at the bud by fascists in Italy who believe in the power of feeding people and giving them public services rather than the folly of geopolitical chest-beating and the foibles which accompany such nonsense. Who would have thought that the descendants of Mussolini would direct the EU away from the abyss which it is hell bent on throwing itself over?

ماذا يريد جو بايدن من الشرق الأوسط؟

تموز 15 2022

حسن لافي 

يتمثّل الهدف الأميركي للزيارة في إعادة صياغة خارطة موازين القوى لدول المحور الأميركي في المنطقة.

يمكن قراءة زيارة الرئيس الأميركي جو بايدن للشرق الأوسط من خلال عدة مستويات تمثل بكليتها الأهداف الرئيسية لتلك الزيارة. على المستوى الاستراتيجي، تأتي زيارته في خضم صراع الولايات المتحدة الأميركية الشرس والمعلن مع كلٍّ من الصين وروسيا على معركة تشكيل المنظومة الدولية وصياغتها بعد انتهاء عصر القطب الأميركي الواحد الذي شارف على الانتهاء.

تسعى أميركا لقطع الطريق أمام الصين وروسيا، للحؤول دون نسجهما علاقات مع حلفاء أميركا في الشرق الأوسط.

لذلك، تسعى الولايات المتحدة الأميركية لاستعادة سيطرتها على موارد الطاقة في الشرق الأوسط بعدما أجبرتها الحرب الأوكرانية الروسية على البحث عن مصادر تمويل للطاقة لحلفائها الأوروبيين، ما أعاد للنفط الخليجي وغاز البحر المتوسط أهميته، إضافة إلى العمل على زيادة إنتاج النفط الخليجي مع خفض أسعاره، من أجل خلق استقرار في سوق الطاقة، حتى لا يتأثر الاقتصاد الأميركي الذي يعاني حالة غير مسبوقة من التضخم المالي.

على المستوى الجيو-استراتيجي، تسعى أميركا لقطع الطريق أمام الصين، ومن ثم روسيا، للحؤول دون نسجهما علاقات مع حلفاء أميركا في الشرق الأوسط، وخصوصاً دول الخليج، الذين شعروا بالخوف من تراجع اهتمام أميركا في الشرق الأوسط بعد انسحابها من العراق وأفغانستان وذهابها للتفاوض مع الإيرانيين على اتفاق نووي جديد، ما أنتج حالة من الانفتاح على كلٍّ من الصين وروسيا، ولو على سبيل تحسين شروط تحالفهم مع الأميركيين، وليس تغيير اتجاهاتهم التحالفية، ناهيك بأن تداعيات الأزمة الأوكرانية باتت تهدد الهيمنة الأميركية على المنظومة الدولية كدولة عظمى.

وبالتالي، رجعت أميركا إلى سياسة الأحلاف التي انتهجتها في ستينيات القرن الماضي، واستمرت طوال فترة الحرب الباردة. لذلك، تعيد ترميم علاقتها مع حلفائها، وخصوصاً السعودية، تحت شعار “المصالح الأميركية فوق المبادئ الإنسانية”.

يتمثّل الهدف الأميركي للزيارة على مستوى إقليم الشرق الأوسط بإعادة صياغة خارطة موازين القوى لدول المحور الأميركي في المنطقة، لتكون “إسرائيل” هي مركز الثقل الأساس الذي يثق الأميركي بأنه قادر على تنفيذ متطلبات مصلحته بأقل الأثمان، وبإخلاص كبير، لكون ذلك يتطابق مع مصلحتها كدولة وظيفية احتلالية يرتبط وجودها بالرعاية الأميركية؛ قائدة المشروع الغربي في العالم.

والأهم أنّ الدول الأخرى الحليفة للولايات المتحدة الأميركية، سواء العربية أو الإسلامية، لا تثق أميركا بها وبقدرتها على أداء ذلك الدور، ناهيك بالإشكاليات الداخلية التي يعانيها قادة تلك الدول على المستوى الداخلي.

لذلك، كل ما يحدث في المنطقة من إنشاء تحالفات عسكرية واقتصادية وسياسية تحت الرعاية الأميركية هدفه ضمان أمن “إسرائيل” والحفاظ على قوتها كدولة مركزية في الشرق الأوسط، ما دفع الولايات المتحدة الأميركية مجدداً إلى إعادة اكتشاف أهمية وجود “إسرائيل” ككيان استعماري متقدّم في خدمة مشروعها كدولة عظمى في العالم، في ظل منافسة كلٍّ من الصين وروسيا، وفي منطقة لم تنتهِ مصالحها الاقتصادية فيها بعد.

ينبع خطورة إطلاق بايدن – لابيد “إعلان القدس” من كونه وثيقة أعادت الولايات المتحدة الأميركية مجدداً فيها تأكيداتها والتزاماتها السابقة على مدار أكثر من 70 عاماً تجاه “إسرائيل والشعب اليهودي” في ورقة واحدة لا تتضمن الجديد، ولكنها بمنزلة تأكيد من جو بايدن، الرئيس الديمقراطي، على “صفقة القرن” التي طرحها الرئيس السابق دونالد ترامب الجمهوري، ما يعيد التزام الحزبين الأميركيين تجاه “إسرائيل”، بعدما عصفت الكثير من الرياح السيئة بالعلاقة بينهم منذ عهد الرئيس الأميركي السابق باراك أوباما، وليس انتهاء بأزمة رفض التيار اليساري في الحزب الديمقراطي الأميركي التصويت على تضمين الموازنة العامة في الكونغرس بند تمويل إعادة مخزون صواريخ القبة الحديدية الإسرائيلية.

من الواضح أن “إسرائيل”، للأسف الشديد، استطاعت أن تستفيد جيداً من التطورات والتغيرات في الساحة الدولية، والتي هددت الهيمنة الأميركية، في إعادة تسويق نفسها بحلة جديدة للمشروع الغربي الاستعماري، ولكن هذه المرة كـ”دولة اليهود”، وبدعم دول التطبيع العربي غير المسبوق وغير المتوقع، حتى من الأميركيين أنفسهم، بل أدت “إسرائيل” دور الوسيط بين دول الخليج، وخصوصاً السعودية، وإدارة جو بايدن، وبالتالي برهنت للأميركيين قدرتها على قيادة حلف الناتو الصهيو-تطبيعي الجديد.

أوضحت الزيارة أنَّ بايدن لم يغير موقفه تجاه إيران، فما زال يفرق بين المشروع النووي الإيراني من جهة، والمشروع العسكري لمحور المقاومة بقيادة إيران من جهة أخرى. 

في المشروع النووي، أكد بايدن التزامه الحل الدبلوماسي من خلال اتفاق جديد مع إيران. وبالنسبة إلى التهديد العسكري، منح بايدن “إسرائيل” الكثير من الأدوات العسكرية والسياسية والاقتصادية لمواجهته، مثل منظومة الاعتراض بالليزر الجديدة ومنظومة الدفاع الجوي الإقليمي المشترك، لكن تبقى رؤية بايدن متعارضة مع الموقف الإسرائيلي الذي يرى في التهديد الإيراني رزمة واحدة متكاملة.

لذلك، تضغط “إسرائيل” تجاه وضع الحل العسكري تجاه المشروع النووي الإيراني على طاولة خيارات إدارة بايدن، رغم التزام الأخير عدم السماح لإيران بالحصول على القنبلة النووية. وفي هذا السياق، تحاول “إسرائيل” انتهاج سياسة التدرج الاستراتيجي في سبيل تغيير موقف إدارة بايدن من دون الوصول إلى صدام معه، رغم أن الوقت لا يسعفها كثيراً بحسب تقديراتها الاستخبارية.

أظهرت أجندة الزيارة أنَّ القضية الفلسطينية بالنسبة إلى جو بايدن مجرد هوامش، ويكفي إبداء قناعته الشخصية بحل الدولتين، لكن من دون أي خطوة حقيقية تجاه هذا الحل، بل إنّ الذريعة الأميركية حاضرة بعدم وجود حكومة مستقرة في “إسرائيل”.

ويخشى بايدن أن يستغلّ بنيامين نتنياهو أي ضغط أميركي على حكومة يائير لابيد قبل الانتخابات للعودة إلى الحكم، الأمر الذي سيجعل تأجيل تنفيذ أي خطوة أميركية لمصلحة الفلسطينيين إلى ما بعد الانتخابات الإسرائيلية وتأليف حكومة مستقرة في “إسرائيل” أمراً مبرراً لدى السلطة الفلسطينية.

إن الآراء المذكورة في هذه المقالة لا تعبّر بالضرورة عن رأي الميادين وإنما تعبّر عن رأي صاحبها حصراً

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The Judgement of the Nations

July 12, 2022

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By Batiushka

A frequent topic among both contributors and commentators on this site is the discussion as to whether the Special Military Operation in the Ukraine will take a few months or a few years. It is a common question and there are different opinions. Let me say now that I am not qualified even to speculate on this, let alone have an opinion. I do not know the answer and I suspect that many highly-placed people in the military and among politicians do not know the answer either.

In any case why is an answer to this question so important? Originally, this was not a war, but a limited Operation, still involving a small proportion of the Russian Armed Forces. Had Russia wanted to occupy the Ukraine with massive military violence, in German, with a ‘Blitzkrieg’, in American, with ‘shock and awe’, with hundreds of thousands, perhaps millions, of victims, all could have been done in a couple of weeks. However, this is not Hollywood. That was not the aim.

The clear aim was to free the Russian part of the Ukraine and to demilitarise and denazify the rest, so it would no longer present a threat to the Russian World. Obviously, doing this meant not just winning the genodical war which the backers of the Kiev regime had begun in 2014, but also doing it, causing the smallest number of victims among the Russian and Allied military and Ukrainian civilians as possible, and at the same time doing the least amount of damage to civilian infrastructure as possible.

Pictures showing huge damage to civilian infrastructure, especially in Mariupol and Donetsk, show above all the enormous amount of damage done by NATO-backed Kiev regime bombardments over the last eight years. It was clear to Russian military and political planners that the Operation would take at least months, perhaps years, as the whole of the Kiev Armed Forces had been digging in here for eight years. Russia knew that in order to win a war, you have to win the peace afterwards.

It was no good doing like the Americans did in Vietnam, Iraq and Afghanistan, destroying infrastructure, making the people hate you and then, once you realise that you have lost, running away, leaving chaos and misery. The Russian authorities also knew that since NATO had already de facto declared war on Russia in 2014, the Operation to liberate the Ukraine through denazification and demilitarisation would further activate their war effort and provoke many more ‘sanctions’. Now that the Operation has become a NATO war against Russia, much as expected, it is all the more difficult to forecast the future.

Many missed the point. The Special Military Operation is not where it is at. The Ukraine is only the location, the battlefield, and the Kiev junta are only the actors on the stage, puppets. This is not primarily a battle of the military and their technologies, although they are very important, this is above all a battle of world views and ensuing realities. This battle is political and economic, spiritual and moral. Why else did the Johnson regime ban the Russian Orthodox Patriarch from visiting the UK?

Here we understand President Putin’s words of 7 July 2022 before Russian parliamentarians that Russia ‘has not even started anything in earnest in the Ukraine yet’, that the military operation in the Ukraine signifies ‘a cardinal break with the US world order, the beginning of the transition from the liberal globalism of US egocentricity to the reality of a multipolar world….the march of history is unstoppable and the attempts of the West to foist its New World Order on the world are doomed to failure’.

Whatever happens militarily in the Ukraine over the coming months, and much will happen, there are other stories, which are ultimately far more important. There was tiny Lithuania’s attempt to blockade the Russian Kaliningrad enclave, which has already failed. There was the toppling of the bankrupt UK’s Prime Minister, who wanted to wage a war without money, there was the assassination of the former Japanese Prime Minister by forces unknown, there was the occupation of the Presidential Palace in Colombo in Sri Lanka by a hungry crowd facing huge inflation and national bankruptcy.

Then there is the incipient collapse of the euro, already reaching parity with the dollar, as Europe grinds to a halt without Russian energy. There is the possible coming collapse of the dollar as the world dedollarises, under Russian impetus. There is mighty Germany’s attempt to survive without Russian oil and gas, which is already failing. There is much more that is being hidden from the populations of the Western world by worried elites – strikes, protests and the breakdown of social cohesion.

It is now July. In eight weeks’ time the weather cools. In sixteen weeks’ time winter begins. Wait until the panic begins and the palaces of leaders of the Western world also fall to hungry crowds facing huge inflation and national bankruptcy in European and North American Capitals. There may not be just a few deaths, as when the Washington Presidential Palace fell on 6 January 2021, but mass violence and fire. Wait until Chinese troops liberate Taiwan, as they will do at the right moment when the US is off guard, too busy with its own immense problems. Then shall begin the Judgement of the Nations.

Western Europe appears to go through a cycle of Judgement every 500 years or so. Round about the Year 500 (pedants mention the Year 476), Western Rome fell to the Barbarians, followed by great disruption and bloodshed. Round about the Year 1000 (pedants mention the Year 1054), there began Roman Catholicism, followed by its imperialist invasions, crusades and inquisitions. Round about 1500 (pedants mention 1517) there began Protestantism, followed by persecution of women (‘witches’) and ‘wars of religion’, both in Continental Europe and in Britain and Ireland under Cromwell. And now, round about the Year 2000 (will pedants mention the Year 2022?), there begins another Judgement.

For us, where we are, closely linked to the Ukraine, the war began already in early 2021. But that will be a story to tell another time.

The disintegration of Western society – visible to the naked eye

July 02, 2022

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by Guilherme Wilbert

While we notice the closest integration among emerging countries, we notice a certain disparity among the richest, first-world countries, because they may not seem like it, but they also have internal problems that cannot always be fought. And the most recent of these is inflation, with an unprecedented rise in prices.

The middle class, the main target of the Great Reset enthusiasts, is beginning to feel prices rising more and more, even though they don’t fully agree with the war at the moment, which is impressive if you consider that public opinion is of little concern to the leaders who are driving the economic-military and diplomatic disaster in Europe.  The most practical example of this is recent with the Nordics joining NATO without any referendum or popular poll within the countries’ society. And the argument to be used I can already imagine: “But democracy is representative, William! If the people vote for politician x, it’s because they agree with his platform.” Yes. But that is half right. Not entirely.

Democracy, especially representative democracy, has a serious flaw, precisely in terms of representation.  Politicians who are not faithfully committed to the objectives of the nation, of the homeland, but, unfortunately, are rather vain, cause a distortion in the etymological sense of the term “representative democracy”, because who would it represent? Not the people!  And one of the causes of the wrong votes that the people usually give (considering totally clean elections) is due to the fact that it is not invested in the political conscience of these societies, usually due to a lack of interest from part of society, but also due to the lack of incentives from the State in this matter. But this is a very complex subject that I can deal with in another article.

To try to continue the reasoning of the Western disintegration and distortion of the democratic sense, I can give a practical example of Brazil, because it is closer to home. The juristocracy ended up taking over the country after Operation Lava Jato, which was nothing more than an American collusion with the Brazilian opposition to depose the Dilma Rousseff government (which does not cancel out Dilma’s mistakes, who was a terrible supposed economist and basically destroyed the country, becoming easy prey as she fell into popular disgrace). But what is this juristocracy? Simply the country’s Supreme Court overruling any take on government that the Federal Executive Branch has. And that’s just about anyone anyway.

A more emblematic case was when Jair Bolsonaro, head of the Brazilian Executive Government, tried to cheapen and cut taxes, in which he was barred by the country’s Federal Supreme Court with pious claims that did not see the welfare of the Brazilian people, but the opposite.  What is this if not a distortion of the sense of democracy with a judiciary ruling without popular vote in place of the actual president of the country? And this is seen in many parts of the globe. Jacob Zuma was arrested by order of the country’s Supreme Court as a reminder.

No wonder that what is now called lawfare has become a real weapon against legitimately elected governments.

And these phenomena happening in Brazil as in the example, or in the US, which exports this kind of practice in several parts of the world (not forgetting Pakistan which ousted Imran Khan with a motion of no confidence fomented by the US) with several groups such as Black Lives Matter, where they are nothing more than spearheads of social agitators and bankers, end up eroding the civilizational core of the country, leading to barbarism, lack of control and evil. And then you extend the reasoning now to all the countries that apply democracy as a system of government and are influenced directly or indirectly by the Northern Empire.

It is simply the total disintegration of Western society because it is not yet realized by the leaders today that the current system of government is not working, and this is causing social distortions that could be easily countered in other ways. I am not making room for dictatorships if that is what you are used to thinking, but I cannot imagine a platform of nation and homeland being put together in only 4 years. Things take much longer to happen than the terms of democracies.

We could have held on, but the thirst for war always speaks louder

It is curious to think that things could have been different, such as if Russia became a member of NATO, which would have shut up some of the mouths in Brussels and London thirsting for war, or even what I have already mentioned in an article: a document linked to international law based on multilateral coordination between the UN and other entities recognizing that Ukraine would not join NATO, respecting the Russian right to the territorial security of the Federation. If we take recent Russian history, we would understand their concerns.

In the late 1990s, Chechnya for example tried to secede from Russia as soon as the Soviet disintegration happened and Putin ascended to power, which led him to his first challenge: to reintegrate Chechnya into Russian territory. But how? Well, unfortunately, it took Chechnya going back to the stone age for that. But it has also been proven that the US used spearheads and international terrorists in some wars in the Caucasus, including in Chechnya itself, thus fostering a disintegration of Russian territory.

Putin himself has already spoken several times on this subject in speeches because he himself as director of the FSB (still KGB, just changed the name, everybody knows) had access to the documents coming from double agents which would prove that the West was using terrorists to disintegrate Russia. But it failed.

This point alone would explain the Russian fear of NATOstan as a neighbor, the most emblematic case being Ukraine, which is their gateway to Europe, basically the breadbasket of the continent. But it’s not as if the Russians didn’t give in as well, the Baltics bordering Russia are already part of NATO, and could be used as agents provocateurs against Moscow in various ways. But it was not enough. It is never enough for those who thirst for war.  And they cooked up the crisis to such a point where we got where we are today.

The US as a country supposedly allied with Ukraine (which was doing nothing more than sponsoring bio-labs for developing biological weapons in the country and laundering money through the Burisma company, which hired Hunter Biden) if they really didn’t want war, the first step to be taken was to put at least 50,000 troops in and around Kiev. They could do this, and it would cost very little compared to the financial effort currently seen. Or better: let the diplomatic arguments win and the binding anti-Ukraine document in NATO come out! It would be the most beautiful diplomatic move between countries ever seen. But things are not that sweet.

With this, they got the war, they are losing territory, part of popular opinion no longer supports them, and practically in numbers, they govern for less than 1 billion people (considering the current population of the G7). They have accelerated an integration among emerging economies, that would normally take a few years to happen. Who would have thought that not everybody likes war? That the concern of some countries is against hunger and unemployment, for example?

The integration is already happening, the train has left the station, and they will try to do what we are doing because mistakes don’t last forever. One hour you learn, even if through pain, even if it costs some genocides, even if it costs some bombed cities, even if it costs some generations, we always learn. It is not difficult to understand that you do not apply the same tactics that have already been tried when they have already been proven wrong.

Using the refrain from The Wanted:

“We’ve only just begun, hypnotized by drums
Until forever comes
You’ll find us chasing the sun
They said this day wouldn’t come, we refused to run”

The emergents have just begun and will be there chasing the sun showing that those who said the day wouldn’t come. It has come.


Guilherme Wilbert is a Brazilian law graduate interested in geopolitics and international law.

أميركا تحزم أمرها: نحو عسكرة العالم

الجمعة 1 تموز 2022

 سعيد محمد

أهمّ القرارات الصادرة عن القمة كان زيادة تعداد القوّة الضاربة للحلف في أوروبا من 40 ألف جندي إلى 300 ألف (أ ف ب)

لندن انتهت قمّة «حلف شمال الأطلسي» (الناتو) المنعقدة في مدريد، مع انتصاف نهار أمس، وغادر رؤساء دول وحكومات الغرب إلى بلدانهم، وفي جُعبهم خطط لمزيد من الإنفاق الحربي والتجنيد والتصعيد، فيما تُواجه اقتصاداتهم أزمات تضخّم وركود لم يشهد مثلَها العالم منذ الحرب العالمية الثانية. وبدت الولايات المتحدة، في خلال إعلان مخرجات القمّة، وكأنها ألقت على نفسها رداء العسكرة، وعزمت على أخذ العالم برمّته نحو الحرب، وذلك بعدما بثّت الروح في جسد «الناتو»، وفرضت تضخيم عديده في شرقيّ أوروبا إلى ضِعف حجم الجيش الروسي، وأعادت توجيه بوصلته نحو عدوّ مباشر آنيّ (روسيا)، وتحدّ استراتيجي (الصين)، إضافة إلى تجديد الالتزام بـ«مكافحة الإرهاب» في العالم العربي والساحل

وافق رؤساء دول وحكومات «حلف شمال الأطلسي»، في قمّتهم الطارئة التي عُقدت في العاصمة الإسبانية مدريد، على صياغة جديدة لفلسفة الحلف، تُحدّد استراتيجياته ومهامه الأساسية للعقد المقبل. وفي تحوُّل كبير عن وثيقة الاستراتيجية السابقة (قمّة لشبونة 2010) التي كانت اعتبرت روسيا شريكاً محتملاً، فإن موجز الوثيقة التي تمّ التوافق عليها في مدريد يقول إن روسيا تظلّ «التهديد الأكثر أهمية ومباشرة لأمن الدول الأعضاء وللسلام والاستقرار»، كما يضع الصين، لأوّل مرّة، في خانة «التحدّي الرئيس لأمن الحلفاء ومصالحهم وقيمهم». واعتَبر المجتمعون أن بيئة الأمن الأوروبي تغيّرت كليّاً نتيجة «العدوان» الروسي على أوكرانيا، و«انتهاك المعايير والمبادئ» التي ساهمت في ضمان استقرار تلك البيئة لعقود، ولم يستبعدوا «احتمال شنّ هجوم روسيّ في أيّ وقت ضدّ سيادة الحلفاء وسلامة أراضيهم»، مستشهدين بجهود موسكو لتحديث قوّتها النووية، ورفضها الامتثال للالتزامات الدولية للحدّ من التسلح، وما وصفوه بمحاولاتها «زعزعة استقرار الدول المجاورة على الجناحَين الشرقي والجنوبي للناتو».

كما تعهّدوا بـ«العمل معاً في التصدّي للتحدّيات المنهجية التي تفرضها الصين على الأمن الأوروبي – الأطلسي جرّاء طموحاتها المعلَنة وسياساتها القمعية التي تهدّد مصالح الغرب، ومحاولاتها الحثيثة للسيطرة على التقنيات والصناعات الرئيسة، مع تجاهل القواعد واللوائح الدولية». ومع ذلك، لم ينصّ الاتفاق على وصف الصين بالعدو، بل أكد أن الحلف لا يزال منفتحاً على إمكانية بناء علاقات بنّاءة معها، ربّما في حالة تخلّيها عن شراكتها الاستراتيجيّة مع روسيا، والتي عدّها المجتمعون «طليعة التصدّي الاستبدادي» لقواعد النظام الدولي. وفي الواقع، فإن الشراكة الصينية – الروسية تبدو أخطر تهديد لهيمنة الغرب منذ انهيار الاتحاد السوفياتي، وانتهاء الحرب الباردة، إذ نجحت روسيا في عقدَين من حُكم الرئيس فلاديمير بوتين في استعادة حيويتها، فيما تقدّمت الصين بشكل مطّرد لتُنافس الولايات المتحدة اليوم على مكانة أكبر اقتصادات العالم، وهما اليوم تتعاونان في غير مجال، في ما من شأنه التمهيد لنشوء بيئة بديلة لا تخضع لرغبات نُخبة واشنطن، وقادرة على استيعاب شعوب أخرى في الجنوب.

ستتعيّن على ستولتنبرغ متابعةُ الحلفاء للحصول على تعهّدات منهم بالمساهمة بقوات إضافية ومعدّات وتمويل


وبالعودة إلى الوثيقة الصادرة عن القمّة، فإن «الإرهاب لا يزال يشكّل تهديداً مستمرّاً غير متكافئ لأمن الدول الأعضاء» (الثلاثين)، فضلاً عن تغيّرات المناخ، والتكنولوجيات الحديثة المخلّة بالاستقرار، وانتشار الأسلحة. كما شدّد المجتمعون على حق الردّ المسلّح على الهجمات الهجينة (السايبرية وعبر الفضاء) التي قد تستهدف دول الحلف، وعلى دور الأخير في الردع والدفاع ومنع الأزمات وإدارتها، كما التعاون الأمني (الاستخباراتي)، والذي يقتضي استدامة عملياته. وتضمّنت الوثيقة عدّة إشارات إلى شمال أفريقيا والشرق الأوسط ومنطقة الساحل، بحجّة أن أيّ «صراع أو عدم استقرار» في هذه المناطق يمكن أن «يؤثّر بشكل مباشر على أمننا»، وهو ما سيثير ارتياح أعضاء «الناتو» في جنوبي أوروبا، ولا سيما إسبانيا وإيطاليا واليونان التي طالما طالبت بدعمها لمواجهة تدفّق اللاجئين من الجنوب. كذلك، أشار الموجز إلى أن المناطق المذكورة تُواجه «تحدّيات أمنية وديموغرافية واقتصادية وسياسية عميقة ومترابطة ومرشّحة للتفاقم»، مضيفاً أن «هذه الديناميكيات توفّر أرضاً خصبة لانتشار الجماعات المسلحة، بما في ذلك المنظّمات الإرهابية، وتشرّع الأبواب لتدخّلات تزعزع الاستقرار من قِبَل المنافسين الاستراتيجيين» – في إشارة إلى الصين وروسيا -.
إلى جانب ذلك، قرّرت القمّة دعوة فنلندا والسويد، رسمياً، للانضمام إلى «الناتو»، علماً أن التحاقهما به سيعزّز تواجده في بيئة بحر البلطيق، ويسهّل «الدفاع» عن لاتفيا وليتوانيا وإستونيا القابعة تحت هاجس «الغزو» الروسي. لكن أهمّ القرارات الصادرة عن المجتمعين في مدريد، كان زيادة تعداد القوّة الضاربة للحلف في أوروبا من 40 ألف جندي حالياً، إلى 300 ألف، وفق مقترح الأمين العام لـ«الناتو»، ينس ستولتنبرغ. على أن هذا القرار يظلّ مجرّد إطار عمل، فيما ستتعيّن على ستولتنبرغ متابعة الحلفاء للحصول على تعهّدات منهم بالمساهمة بقوات إضافية ومعدّات وتمويل. وقالت ألمانيا إنها ستخصّص 15 ألف جندي لهذه الغاية، وتعهّدت كندا برفع تواجدها الأوروبي من نحو 1375 جندياً حالياً إلى مستوى لواء. لكنّ الاندفاعة الأكبر أتت من الرئيس الأميركي، جو بايدن، الذي أعلن أن بلاده ستُعزّز تواجدها في كلّ أوروبا، وستُخصّص أسلحة ومعدّات متطوّرة لدعم حضور «الناتو» بحراً وبرّاً وجوّاً في مواجهة روسيا. وتشمل الخطط الأميركية المعلَنة مقرّاً دائماً في بولندا، و5000 جندي إضافي في رومانيا، وسربَين من طائرات «إف-35» في المملكة المتّحدة، ومعدّات دفاع جوي متقدّم في إيطاليا وألمانيا، ومدمّرتَين بحريتَين في إسبانيا. وتمتلك الولايات المتحدة وجوداً عسكرياً دائماً في 13 بلداً أوروبياً، ويصل تعداد جنودها في مختلف القطاعات عبر القارّة إلى 70 ألفاً الآن، فيما يمكن أن يبلغ بعد القمّة 100 ألف، وفق تقديرات الخبراء.

من جهتها، أعربت إسبانيا عن راحتها لحصولها على ضمانات من «الناتو» لحماية سبتة ومليلة، وهما مدينتان عربيتان تحتلّهما في شمال أفريقيا. ونُقل عن رئيس هيئة الأركان الإسبانية، تيودورو لوبيز كالديرون، قوله إن التزام الحلف بالدفاع عن «السلامة الإقليمية» للدول الأعضاء يشمل أيضاً ممتلكات إسبانيا في القارة الأفريقية. بريطانياً، أعلن بوريس جونسون، رئيس الوزراء، عن دعم مسلّح إضافي بقيمة مليار جنيه إسترليني لأوكرانيا، وهو ما من شأنه أن يرفع مجموع ما قدّمته لندن لكييف منذ شباط الماضي، إلى 2.3 مليار جنيه إسترليني (2.8 مليار دولار أميركي)، الأمر الذي يجعلها أكبر مموّلي النظام الأوكراني بعد الولايات المتحدة. وتعهّد جونسون، الذي يواجه ضغوطاً داخلية شديدة للاستقالة، بزيادة حجم الإنفاق العسكري لبلاده داخل «الناتو»، إلى 2.5% من مجموع الناتج القومي، أي بزيادة 20% عن الحد الأدنى. لكنّ سخاء الرئيس من جيوب البريطانيين لن يكون من دون عواقب محلّية على الأقل، حيث يشتكي وزير الدفاع من عدم توفّر الاعتمادات الكافية للجيش البريطاني، فيما تملأ الصحفَ التي سيقرأها أثناء رحلة العودة إلى لندن تصريحات محبطة من أندرو بيلي، محافظ بنك إنكلترا (المركزي)، الذي قال في مؤتمر في البرتغال إن المملكة المتحدة – من الناحية الاقتصادية – في أسوأ وضع ممكن -، وتعاني من أزمة طاقة أكثر من بقيّة أوروبا، وقد تعيش حالة تضخّم أعلى لفترة أطول.
وحضرت اليابان – مُمثَّلة برئيس وزرائها فوميو كيشيدا – القمّة، وذلك لأوّل مرّة في تاريخ الحلف الذي تأسّس قبل 73 عاماً. وشارك كيشيدا زعماء الحلف مخاوفهم من صعود الصين، وقلقهم على مستقبل تايوان، لكنّ مراقبين أعربوا عن خشيتهم من أن الأميركيين سيعيدون عسكرة اليابان، كما شرعوا بالفعل في عسكرة ألمانيا، مع كلّ ما يحمله هذا من كوابيس فاشيات القرن العشرين. وحضرت القمّةَ أيضاً مجموعة ممّن تسمّيهم واشنطن شركاء «الناتو»، ومن هؤلاء رؤساء دول وحكومات أستراليا، وأوكرانيا (عن بعد)، وجورجيا، وكوريا (الجنوبية)، فضلاً عن رئيس المجلس الأوروبي ورئيس المفوّضية الأوروبية والسويد وفنلندا. وتَمثّل الأردن وموريتانيا من خلال وزيرَي خارجيّتهما، في حين سُجّل حضور وزير الدفاع في البوسنة والهرسك.

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Michael Hudson interviewed by Ben Norton (Multipolarista) Update with transcript

June 30, 2022

Economist Michael Hudson on inflation and Fed plan to cut wages: A depression is coming

Transcript:

BENJAMIN NORTON:

Hey, everyone, this is Ben Norton, and you are watching or listening to the Multipolarista podcast. I am always privileged to be joined by one of my favorite guests, Michael Hudson, one of the greatest economists living today.

We’re going to be talking about the inflation crisis. This is a crisis around the world, but especially in the United States, where inflation has been at over 8%. And it has caused a lot of political problems. It’s very likely going to cause the defeat, among other factors, of the Democrats in the mid-term elections in November.

And we’ve seen that the response of the US government and top economists in the United States is basically to blame inflation on wages, on low levels of unemployment and on working people.

We’ve seen that the chair of the Federal Reserve, Jerome Powell, has said that inflation is being caused by wages supposedly being too high. We’ve also seen that the top economist and former Clinton administration official Larry Summers has claimed that the solution to inflation is increasing unemployment, potentially up to 10%.

So today I’m joined by economist Michael Hudson, who has been calling out this kind of neoliberal snake oil economics for many years. And Professor Hudson has an article he just published that we’re going to talk about today. You can find this at his website, which is michael-hudson.com. It’s titled “The Fed’s Austerity Program to Reduce Wages.” and I’m going to let Professor Hudson summarize the main points of his article.

Professor Hudson, as always, it’s a pleasure having you. Can you respond to the decision by the Federal Reserve to increase interest rates by 0.75%? It doesn’t sound like a lot – it’s less than 1% – but this was the largest rate hike since 1994.

And now we’ve already seen reports that there’s going to be a depression. The Fed chair is blaming this on wages. Can you respond to the position of the Fed and the inflation crisis in the US right now.

MICHAEL HUDSON:

For the Fed, the only two things that it can do is, number one, raise the discount rate, the interest rate; and number two, spend $9 trillion buying stocks, and bonds, and real estate mortgages to increase real estate prices, and to increase the amount of wealth that the wealthiest 10% of the population has.

To the wealthiest 10%, especially the 1%, it’s not only inflation that’s a problem of wages; every problem that America has is the problem of the working class earning too much money. And if you’re an employer, that’s the problem: you want to increase your profits. And if you look at the short term, your profits go up the more that you can squeeze labor down. And the way to squeeze labor down is to increase what Marx called the reserve army of the unemployed.

You need unemployment in order to prevent labor from getting most of the value of what it produces, so that the employers can get the value, and pay that to the banks and the financial managers that have taken over corporate industry in the United States.

You mentioned that while the Fed blames the inflation it on labor, that’s not President Biden’s view; Biden keeps calling it the Putin inflation. And of course, what he really means is that the sanctions that America has placed on Russia have created a shortage of oil, gas, energy, and food exports.

So really we’re in the Biden inflation. And the Biden inflation that America is experiencing is the result basically of America’s military policy, its foreign policy, and above all, the Democratic Party’s support of the oil industry, which is the most powerful sector in the United States and which is guiding most of the sanctions against Russia; and the national security state that bases America’s power on its ability to export oil, or control the oil trade of all the countries, and to export agricultural products.

So what we’re in the middle of right now isn’t simply a domestic issue of wage earners wanting higher salaries – which they’re not particularly getting; certainly the minimum wage has not been increased – but you have to put this in the context of the whole cold war that’s going on.

The whole US and NATO confrontation of Russia has been a godsend, as you and I have spoken before, for the oil industry and the farm exporters.

And the result is that the US dollar is rising against the euro, against sterling, and against Global South currencies. Well, in principle a rising dollar should make the price of imports low. So something else is at work.

And what’s at work, of course, is the fact that the oil industry is a monopoly, that most of the prices that have been going up are basically the result of a monopolization, in the case of food, by the marketing firms, like Cargill and Archer Daniels Midland, that buy most of the crops from the farmers.

The irony is that while food prices, next to oil prices, are the major factor that is soaring, farmers are getting less and less for their crops. And yet farmers’ costs are going up – up for fertilizer, up for energy, up for other inputs – so that you’re having enormous profits for Archer Daniels Midland and the food monopolies, of the distributors, and enormous, enormous gains for the oil industry, and also of course for the military-industrial complex.

So if you look at what’s happening in the overall world economic system, you can see that this inflation is being engineered. And the beneficiaries of this inflation certainly have not been the wage earners, by any stretch of the imagination.

But the crisis that the Biden policy has created is being blamed on the wage earners instead of on the Biden administration’s foreign policy and the basically the US-NATO war to isolate Russia, China, India, Iran, and Eurasia generally.

BENJAMIN NORTON:

Professor Hudson, I want to talk about the increase in interest rates by the Fed. There has been a lot of attention to this, although, again, it’s 0.75%, which is not that big. But it’s of course going to have an outsize impact on the economy.

In your article, again, this is your column at michael-hudson.com, “The Fed’s Austerity Program to Reduce Wages,” you talk about the Fed’s “junk economics,” and you say that the idea behind raising interest rates by 0.75% is that:

raising interest rates will cure inflation by deterring borrowing to spend on the basic needs that make up the Consumer Price Index and its related GDP deflator. But banks do not finance much consumption, except for credit card debt, which is now less than student loans and automobile loans. Banks lend almost entirely to buy real estate, stocks and bonds, not goods and services.

So you argue that one of the effects of this is that it’s actually going to roll back homeownership in the United States. You note that the rate of homeownership has been falling since 2008.

So can you expand on those arguments? What will be the impact of the increase of the interest rates by the Fed?

MICHAEL HUDSON:

Well, in order to get an economics degree which is needed to work at the Fed or at the Council of Economic Advisors, you have to take economics courses in the universities, and all of the textbooks say just what you quoted me as saying they say.

The pretense is that banks actually play a productive role in society, by providing the money for factories to buy machinery, and build plants, and do research and development, and to hire labor; and that somehow the money that banks create is all lent out for industrial economy, and that that will enable companies to make more money that they’ll spend on labor; and of course, as they spend more money on labor, that supports to bid prices up as the reserve army of the unemployed is depleted.

But that’s all a fiction. The textbooks don’t want to say that banks don’t play a productive role like that at all. And the corporations don’t do what the textbooks say.

If you look at the Federal Reserve balance sheet and statistics that it publishes every month, you’ll see that 80% of bank loans in the United States are mortgage loans to commercial real estate and mostly for home real estate. And of course the home mortgage loans have been nothing, like under 1% for the last 14 years, since 2008.

Only the banks and the large borrowers, the financial sector, have been able to borrow at these low rates. Homeowners all along have had to pay very high rates, just under 4%, and now it’s going above 4%, heading to 5%.

Well, here is the situation that the Federal Reserve has created. Suppose that you’re a family right now going out to buy a home, and you find out that in order to borrow the money to buy the home – because if the average home in America costs $600,000 or $700,000, people haven’t saved that much; the only way you can buy a home is to take out a mortgage.

Well, you have a choice: you can either rent a home, or you can borrow the money to buy a home. And traditionally, for a century, the carrying charge for financing a home with the mortgage has been about the equivalent of paying a rent. The advantage is, of course, that you get to own the home when it’s over.

Well, now let’s look at what’s happening right now. All of a sudden, the carrying charge of mortgages have gone way, way up. The banks are making an enormous gap. They can borrow at just around 1%, and they lend out at 4.5%. They get a windfall gain of the markup they have in mortgages, lending to prospective homeowners.

And of course, the homeowners don’t have enough money to be able to pay the higher interest charged on the mortgages that they take out. So they are not able to buy as expensive a home as they wanted before.

But they’ve been a declining part of the population. At the time Obama took office, over 68% of Americans owned their own home. Obama started the great wave of evictions, of 10 million Americans who lived in homes, essentially to throw them out of their homes, especially the victims of the junk mortgages, especially the lower income and racial minorities who were redlined and had to become the main victims of the mortgages.

America’s homeownership rate is now under 61%. What has happened? You’ve had huge private capital firms come into the market thinking, wait a minute, we can now buy these properties and rent them out. And we can buy them for all cash, unlike homeowners, we’re multibillionaires, we Blackstone, BlackRock.

You have these multibillion-dollar funds, and they say, well, we can’t make much money buying bonds or buying stocks that yield what they do today, now that the Federal Reserve has ground down interest rates. What we can do is make money as landlords.

And so they’ve shifted, they’ve reversed the whole shift away from the 19th-century landlordism to an economy based on financialization, and the wealthy classes making money on finance, to go back to making money as landlords.

And so they are buying up these homes that American homeowners can’t afford to buy. Because when you raise the mortgage rate, that doesn’t affect a billionaire at all. Because the billionaire firm doesn’t have to borrow money to buy the home. They have the billion dollars of their own money, of pension fund money, of speculative money, of the money of the 1% and the 10% to spend.

So what you’re having by increasing the interest rates is squeezing homeowners out of the market and turning the American economy into a landlord-ridden rental economy, instead of a homeowners economy. That’s the effect.

And it’s a windfall for the private capital firms that are now seeing that are making money as landlords, the old fashioned way, it worked for 800 years under feudalism. It’s coming back in style.

BENJAMIN NORTON:

Professor Hudson, you point out in this article at your website that more than 50% of the value of U.S. real estate already is held by mortgage bankers. And of course, that percentage is increasing and increasing.

Now, you, Professor Hudson, have argued a point that I haven’t seen many other people make, although it’s an obvious, correct point, which is that there has actually been a lot of inflation in the United States in the past several years, but that inflation was in the FIRE sector: finance, insurance, and real estate.

We see that with the constant increase in real estate prices; they go up every single year; rent goes up every single year. The difference now is that there’s also a significant increase in the Consumer Price Index.

And there is an interesting study published by the Economic Policy Institute, which is, you know, a center-left think tank, affiliated with the labor movement; they’re not radicals, they’re progressives. And they did a very good study.

And they found – this was published this April – they found that corporate profits are responsible for around 54% of the increase of prices in the non-financial corporate sector, as opposed to unit labor costs only being responsible for around an 8% increase.

So they showed, scientifically, that over half of the increase of prices in the non-financial corporate sector, that is in the Consumer Price Index, over half of that inflation is because of corporate profits.

Of course, that’s not the way it’s discussed in mainstream media. That’s not the way the Fed is discussing it all. We see Larry Summers saying that we need to increase unemployment. Larry Summers, of course, was the treasury secretary for Bill Clinton.

He’s saying that the U.S. has to increase unemployment; the solution to inflation is increasing unemployment. Even though these studies show that over half of inflation in the Consumer Price Index is because of corporate profits.

I’m wondering if you can comment on why so many economists, including people as revered as Larry Summers, refuse to acknowledge that reality.

MICHAEL HUDSON:

Most economists need to get employment, and in order to be employed, you have to give a picture of the economy that reflects how well your employer helped society at large. You’re not allowed to say that your employer is acting in ways that are purely predatory. You’re not allowed to say that the employer does not earn an income.

You talked about corporate profits and the classical economists. If you were a free-market economist like Adam Smith, or David Ricardo, or John Stuart Mill – these are monopoly rents. So what you call corporate profits are way above normal corporate rates of return, normal profits. They’re economic rents from monopoly.

And that’s because about 10 or 15 years ago, the United States stopped imposing its anti-monopoly laws. It has essentially let monopolies concentrate markets, concentrate power, and charge whatever they want.

And so once you’ve dismantled the whole legal framework that was put in place from the 1890s, from the Sherman Antitrust Act, down through the early 20th century, the New Deal, once you dismantle all of this state control, saying – essentially what Larry Summers says is, we’re for a free market.

A “free market” is one in which companies can charge whatever they want to charge for things; a free market is one without government regulation; a free market is one without government; a free market is a weak enough government so that it cannot protect the wage earners; it cannot protect voters. A “democracy” is a country where the bulk of the population, the wage earners, have no ability to affect economic policy in their own interests.

A “free market” is one where, instead of the government being the planner, Wall Street is the planner, on behalf of the large industries that are basically being financialized.

So you’ve had a transformation of the concept of what a free market is, a dismantling of government regulation, a dismantling of anti-monopoly regulation, and essentially the class war is back in business.

That’s what the Biden administration is all about. And quite frankly, it’s what the Democratic Party is all about, even more than the Republican Party. The Republican Party can advocate pro-business policies and pro-financial policies, but the Democratic Party is in charge of dismantling the legacy of protection of the economy that had been put in place for a century.

BENJAMIN NORTON:

Yeah, and this is an article in Fortune that was originally based on an article in Bloomberg: “5 years at 6% unemployment or 1 year at 10%: That’s what Larry Summers says we’ll need to defeat inflation.” That’s how simple it is, you know, just increase unemployment, and then inflation will magically go away!

Now, I also wanted to get your response, Professor Hudson, to these comments that you highlighted in a panel that was organized by the International Manifesto Group – a great organization, people can find it here, their channel here at YouTube. And they held a conference on inflation. And you were one of several speakers.

And you highlighted these comments that were made by the Fed chair, Jerome Powell. And this is according to the official transcript from The Wall Street Journal. So this is not from some lefty, socialist website. Here’s the official transcript of a May 4 press conference given by the Fed chief, Jerome Powell.

In this press conference, he said, discussing inflation, he said, in order to get inflation down, he’s talking about things that can be done “to get wages down, and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially.”

So this is another proposal. Larry Summers says 6% unemployment for five years, or 10% unemployment for one year. The Fed chair, Jerome Powell, says the solution is “to get wages down.” I’m wondering if you can respond to that as well.

MICHAEL HUDSON:

Well, the important thing to realize is that President Biden re-appointed Jerome Powell. President Biden is a Republican. The Democratic Party is basically the right wing of the Republican Party, the pro-financial, the pro-Wall Street wing of the Republican Party.

Why on earth, if the Democrats were different from the Republicans, why would would Biden re-appoint an anti-labor Republican, as head of the Federal Reserve, instead of someone that would actually try to spur employment?

Imagine, here’s a party that is trying to be elected on a program of, “Elect us, and we will create a depression and we will lower wages.” That is the Democrat Party slogan.

And it’s a winning slogan, because elections are won by campaign contributions. The slogan is, “We will lower wages by bringing you depression,” is a tsunami of contributions to the Democratic Party, by Wall Street, by the monopolists, by all the beneficiaries of this policy.

So that’s why the Supreme Court ruling against abortions the other day is a gift to the Democrats, because it distracts attention from their identity politics of breaking America into all sorts of identities, every identity you can think of, except being a wage earner.

The wage earners are called deplorables, basically. And that’s how the donor class thinks of them, as sort of unfortunate overhead. You need to employ them, but it really it’s unfortunate that they like to live as well as they do, because the better they live, the less money that you will end up with.

So I think that this issue of the inflation, and what really causes it, really should be what elections are all about. This should be the economic core of this November’s election campaign and the 2024 election campaign. And the Democrats are leading the fight to lower wages.

And you remember that when President Obama was elected, he promised to increase the minimum wage? As soon as he got in, he said the one thing we cannot do is raise the minimum wage. And he had also promised to back card check. He said, the one thing we must not do is increase labor unionization with card check, because if you unionize labor, they’re going to ask for better wages and better working conditions.

So you have the Democratic Party taking about as hard a right-wing position as sort of Chicago School monetarism, saying the solution to any any problem at all is just lower wages and somehow you’ll be more competitive, whereas the American economy is already rendered uncompetitive, not because wages are so high, but because, as you mentioned before, the FIRE sector, the finance, insurance, and real estate sector is so high.

Rents and home ownership, having a home is too expensive to be competitive with foreign labor. Having to pay 18% of GDP on medical care, privatized medical care, prices American labor out of the market. All of the debt service that America has paid is pricing America out of the market.

So the problem is not that wages are too high. The problem is that the overhead that labor has to pay in order to survive, for rent, for medical care, for student loans, for car loans, to have a car to drive to work, for gas to drive to work, to buy the monopoly prices that you need in order to survive – all of these are too high.

None of this even appears in economic textbooks that you need to get a good mark on, in order to get an economics degree, in order to be suitably pliable to be hired by the Federal Reserve, or the Council of Economic Advisers, or by corporations that use economists basically as public relations spokesmen. So that’s the mess we’re in.

BENJAMIN NORTON:

Professor Hudson, in your article at your website, michael-hudson.com, you have an important section about the quantitative easing policies. We were talking about how there has been inflation in the past decade, but then inflation was largely in the FIRE sector, pushing up, artificially inflating the prices of real estate and stocks.

You note that:

While home ownership rates plunged for the population at large, the Fed’s “Quantitative Easing” increased its subsidy of Wall Street’s financial securities from $1 trillion to $8.2 trillion – of which the largest gain has been in packaged home mortgages. This has kept housing prices from falling and becoming more affordable for home buyers.

And you, of course, note that “the Fed’s support of asset prices saved many insolvent banks – the very largest ones – from going under.”

I had you on to discuss, in late 2019, before the Covid pandemic hit, we know that the Fed had this emergency bailout where it gave trillions of dollars in emergency repo loans to the biggest banks to prevent them from from crashing, trying to save the economy.

I do want to talk about this as well, because sometimes this is used by right-wingers who portray Biden hilariously as a socialist. You were just talking about how the Democrats have a deeply neoliberal, right-wing economic program.

But of course, there is this rhetoric that we see from Republicans and conservatives claiming that Biden is a socialist. They claim that the reason there is inflation is because Biden is just printing money and giving money to people.

Of course, that’s not at all what’s happening. What has happened is that the Fed has printed trillions of dollars and given that to stockholders, to big corporations, and to banks.

And this is a point that I saw highlighted in that panel I mentioned, the conference on inflation that was organized by the International Manifesto Group. A colleague of yours, a brilliant political economist, Radhika Desai, she invited everyone to go to the Fed website and look at the Fed balance sheet.

And this is the Fed balance sheet from federalreserve.gov. This is the Board of Governors of the Federal Reserve System website. And it is pretty shocking to see this graph, which shows the total assets of the U.S. Federal Reserve.

US Federal Reserve assets balance sheet 2022

Back in 2008, the Federal Reserve had around $900 billion in assets. Now it’s at nearly $9 trillion in assets.

And we can see, after the financial crash, or during the financial crash, it increased to around $2 trillion. And then around 2014, it increased to around $4.5 trillion. And then especially in late 2019 and 2020, it skyrocketed from around $4 trillion up to $7 trillion. And since then, it has continued skyrocketing to $9 trillion in assets.

Where did all of that money go? And what was the impact on the economy, of course?

MICHAEL HUDSON:

Well, the impact on the economy has been to vastly increase the wealth of the wealthiest 1% of Americans who own most of the stocks and bonds.

Sheila Bair, the former head of the Federal Deposit Insurance Corporation, pointed out that a lot of this $8 trillion is spent to buy junk bonds.

Here’s the problem. The problem really began with President Obama. He inherited a system where you had the largest wave of commercial bank fraud in American history.

As my colleague Bill Black at the University of Missouri at Kansas City has pointed out, everybody knew that there was a bank fraud on. The newspapers referred to junk mortgages and “NINJA” borrowers: “no income, no jobs, no assets.”

So banks had written mortgages way above the actual value of homes, especially to racial and ethnic minorities, without any ability of the borrowers to actually pay.

And then these banks had packaged these mortgages, and sold them to hapless pension funds, and other institutional investors and to the European banks that are always very naive about how honest American banks are.

You had this whole accumulation of what the 19th century called fictitious capital. Mortgages for property that wasn’t worth anywhere near as much as the mortgage is for.

So if the mortgage was defaulted, if homeowners had jingle mail – in other words, you just mail the keys back to the bank and say, ok, take the house, I find I can buy a house now at half the price that Citibank or one of these other banks lent out.

Well, normally you’d have a crash of prices back to realistic levels, so that the value of mortgages actually reflected the value of property, or the value of junk bonds issued by a corporation reflected the actual earning power of the corporation to pay interest on the junk bonds.

So by the time Obama took over, the whole economy was largely fictitious capital. Well, Obama came in and he said, my campaign donors are on Wall Street. He called in the Wall Street bankers and he said, I’m the guy standing between you and the crowd with the pitchforks, the people who voted for me. But don’t worry, I’m on your side.

He said, I’m going to have the Federal Reserve create the largest amount of credit in human history. And it’s all going to go to you. It’s going to go to the 1% of the population. It’s not going to go into the economy. It’s not going to build infrastructure. It’s not going into wages. It’s not going to reduce the price of homes and make them more affordable to Americans.

It’s going to keep the price of these junk bonds so high that they don’t crash back to non-fictitious values. It’s going to keep the stock market so high that it’s not going to go down. It’s going to create the largest bond market boom in history.

The boom went from high interest rates to low interest rates, meaning a gigantic rise in the price of bonds that actually pay interest that are more than 0.1%.

So there was a huge bond market boom, a huge stock market, a tripling of stock market prices. And if you are a member of the group that owns 72% of American stocks, I think that’s 10% of the population, you have gotten much, much richer.

But if you’re a member of the 90% of the population, you have had to go further and further into debt just in order to survive, just in order to pay for medical care, student loans, and your daily living expenses out of your salary.

So if American wages were at a decent level, American families would not be pushed more and more into debt. The reason the personal debt has gone up in the United States is because families can’t get by on what they earn.

So obviously, if they can’t get by on what they earn, and they have to borrow to get by, they are not responsible for causing the inflation. They’re being squeezed.

And the job of economists, and of Democratic Party and Republican politicians, is to distract attention from the fact that they’re being squeezed and blame the victim, and saying, you’re doing it to yourself by just wanting more money, you’re actually creating the inflation that is squeezing you.

When actually it’s the banks, and the government’s non-enforcement of the monopoly policy, and the government support of Wall Street that is responsible for what is happening.

BENJAMIN NORTON:

Very, very well said.

Professor Hudson, I should have highlighted another part of this graph here. This is, again, this is at the Federal Reserve Board website. It’s even more revealing when you look at the selected assets of the Fed, and you see that all of these assets basically are securities, securities held outright by the Fed.

We see that around 2008, the Fed had less than $500 billion in securities. And you have this policy of quantitative easing. And since then, basically all of the increase has been in securities. Of the roughly $9 trillion in assets the Fed holds, about about $8.5 trillion is in securities.

US Federal Reserve assets securities balance sheet 2022

I’m wondering if you can compare this to central banks in other countries. We’ve seen, for instance, that the Western sanctions on Russia were aimed at trying to destroy the Russian economy.

President Biden claimed they were trying to make the ruble into rubble. In fact, the ruble is significantly stronger now than it was before the sanctions. To such a degree that the Russian government and Russian national bank are actually trying to decrease the value of the ruble, because they think it’s a little overvalued; it makes it a little harder to be competitive.

So how does this policy of the US Fed having $8.5 trillion worth of securities compare to the policies of other central banks?

You have experience working with the Chinese government as an advisor. Do other governments’ central banks have this policy?

And and that $8.5 trillion in securities, what are those securities? Even from the perspective of these neoliberal economics textbooks that you were talking about, that people are taught in universities, this seems to me to be totally insane. I don’t see how there is even an academic, neoliberal textbook explanation for this policy.

MICHAEL HUDSON:

Very few people realize the difference between a central bank and the national treasury. The national treasury is what used to perform all of the policies that central banks now do. The national treasury would be in charge of issuing money and spending it.

Central banks were broken off in America in 1913 from the Treasury in order to shift control of the money supply and credit away from Washington to New York. That was very explicit.

The original Federal Reserve didn’t even permit a Treasury official to be on the board of directors. So the job of a central bank is to represent the interest of the commercial banks.

And as we just pointed out, the interest of the commercial banks is to produce their product: debt. And they create their product against existing assets, mainly real estate, but also stocks and bonds.

So the job of the central bank here is to support the financial sector of the economy, and that sector that holds wealth in the form of stocks, bonds, and loans, and especially bank bonds that make their money off real estate credit.

Same thing in Europe, with Europe’s central bank. Europe is going into a real squeeze now, and has been going into a squeeze ever since you had the Greek crisis.

In Europe, because right-wing monetarist designed the euro, part of the eurozone rule is you cannot run a budget deficit, a national budget deficit of more than 3% of gross domestic product.

Well, that’s not very much. That means that you can’t have a real Keynesian policy in Europe to pull the economy out of depression. That means that if you’re a country like Italy right now, and you have a real financial squeeze there, a corporate squeeze, a labor squeeze, the government cannot essentially rescue either Italian industry or Italian labor.

However, the European central bank can, by the way that it creates credit, by central bank deposits, the European central bank can vastly increase the price of European stocks, bonds, and packaged mortgages. So the European central bank is very much like the commercial bank.

China is completely different, because, unlike the West, China treats money and credit as a public utility, not as a private monopoly.

And as a public utility, China’s central bank will say, what are we going to want to create money for? Well, we’re going to want to create money to build factories; we’re going to want to create money so that real estate developers can build cities, or sometimes overbuild cities. We can create money to actually spend in the economy for something tangible, for goods and services.

The Chinese central bank does not create money to increase stock market prices or bond prices. It doesn’t create money to support a financial class, because the Communist Party of China doesn’t want a financial class to exist; it wants an industrial class to exist; it wants an industrial labor force to exist, but not a rentier class.

So a central bank in a Western rentier economy basically seeks to create credit to inflate the cost of living for homebuyers and for anyone who uses credit or needs credit, and to enable corporations to be financialized, and to shift their management away from making profits by investing in plant and equipment and employing labor to produce more, to making money by financial engineering.

In the last 15 years, over 90% of corporate earnings in the United States have been spent on stock buybacks and on dividend payouts. Only 8% of corporate earnings have been spent on new investment, and plants, and equipment, and hiring.

And so of course you have had the economy deindustrialized. It’s this idea that you can make money financially without an industrial base, without a manufacturing base; you can make money without actually producing more or doing anything productive, simply by having a central bank increase the price of the stocks, and bonds, and the loans made by the wealthiest 10%.

And of course, ultimately, that doesn’t work, because at a certain point the whole thing collapses from within, and there’s no industrial base.

And of course, when that happens, America will find out, wait a minute, if we close down the economy, we’re still reliant on China and Asia to produce our manufacturers, and to provide us with raw materials, and to do everything that we need. We’re really not doing anything but acting as a world – well, people used to say parasite – as a world rentier, as getting something for nothing, as a kind of financial colonialism.

So America you could look at as a colonial power that is a colonial power not by military occupation, but simply by financial maneuvering, by the dollar standard.

And that’s what’s being unwound today as a result of Biden’s new cold war.

BENJAMIN NORTON:

Professor Hudson, you criticized the strategy of simply trying to increase the interest rates to bring down inflation, noting that it’s going to lead to a further decline in homeownership in the United States. It’s going to hurt working people. I think that’s a very valid criticism.

I’m curious, though, what your take is on the response of the Russian central bank to the Western sanctions. We saw that the chair of the Russian central bank, Elvira Nabiullina, she – actually this is someone who is not even necessarily really condemned a lot by Western economists; she is pretty well respected by even, you know, Western neoliberal economists.

And she did manage to deal with the sanctions very well. She imposed capital controls immediately. She closed the Russian stock market. And also, in a controversial move, she raised the interest rates from around 9% up to 20%, for a few months. And then after that, dropped the rates.

MICHAEL HUDSON:

A few days, not a few months. That was very short. And now she has moved the interest rates way down.

BENJAMIN NORTON:

Back to 9%.

MICHAEL HUDSON:

She was criticized for not moving them further down.

BENJAMIN NORTON:

Yeah, well go ahead. I’m just curious. So she immediately raised it to 20%, and then has dropped the interest rates since then. I’m curious what you think about that policy. Yeah, go ahead.

MICHAEL HUDSON:

There is very little that a central banker can do when the West has declared a war, basically, a war on a country that is completely isolated.

The response has come from President Putin and from Foreign Secretary Lavrov. And they pointed out, well, how is Russia going to going to trade and get what it needs. And this is what the recent meetings of the BRICS are all about.

Russia realizes that the world is now broken into two halves. America and NATO have separated the West. Basically you have a white people’s confederation against all the rest of the world.

And the West has said, we’re isolating ourselves from you totally. And we think you can’t get along without us.

Well, look at the humor of this. Russia, China, Iran, India, Indonesia, and other countries are saying, hah, you say we we can’t get along without you? Who is providing your manufacturers? Who is providing your raw materials? Who is providing your oil and gas? Who is providing your agriculture, and the helium, the titanium, the nickel?

So they realize that the world is breaking in two, and Eurasia, where most of the world’s population is concentrated, is going to go its own way.

The problem is, how do you really go your own way? You need a means of payment. You need to create a whole international system that is an alternative to the Western international system. You need your own International Monetary Fund to provide credit, so that the these Eurasian countries and their allies in the Global South can deal with each other.

You need a World Bank that, instead of lending money to promote U.S. policies and U.S. investments, will promote mutual gains and self-sufficiency among the countries.

So already, every day in the last few weeks, you have had meetings with the Russians about this, who said, ok, we’re going to create a mutual trading area, starting among the BRICS: Brazil, Russia, India, China, and South Africa.

And how are we going to pay? We can’t pay in dollars, because if we have money in a dollar bank, or a euro bank in Europe, they can just grab the money, like they grab Venezuela’s money. They can just say, we’re taking all your money because, essentially, we don’t want you to exist as an alternative to the finance capital world that we are creating.

So essentially, Russia, China, and these other countries are saying, ok, we’re going to create our own international bank. And how are we going to fund it? Well, every member of the bank will contribute, say, a billion dollars, or some amount of their own currency, and this will be our backing. We can also use gold as a means of settlement, as was long used among countries.

And this bank can create its own special drawing rights, its own bank order, is what Keynes called it. It can create its own credit.

Well, the problem is that, if you have Brazil, for instance, or Argentina, joining this group, or Ecuador, that sells almost all of its bananas to Russia, how is it going to get by?

Well, if there is a BRICS group or a Shanghai Cooperation Organization bank, obviously the Western governments are not going to accept this.

So Russia realizes that as a result of Biden’s Cold War Two, there is going to be a continued rise in energy prices. You think gasoline prices are not high now? They’re going up. You think food prices are not high now? They’re going up more.

And Europe is especially the case, because Europe now cannot buy Russian gas to make the fertilizer to make its own crops grow.

So you’re going to have a number of countries in the Global South, from Latin America to Africa, being squeezed and wanting to trade with the Eurasian group.

And the problem is Russia says, all right, we know that you can’t afford to pay. We’re glad to give you credit, but we don’t want to give you credit that you’re going to simply use the money you have to pay your dollar debts that are coming due.

Because one of the effects that I didn’t mention of the Federal Reserve raising interest rates is there is a huge flow of capital from Europe and England into the United States, so that if you’re a billionaire, where are you going to put your savings? You want the highest interest rates you want. And if the United States raises interest rates, the billionaires are going to move their money out of England, out of the euro, and the euro is going back down against the dollar. It’s almost down to a dollar a euro.

The British pound is heading downwards, towards one pound per dollar.

This increase in the dollar’s exchange rate is also rising against the currencies of Brazil, Argentina, the African countries, all the other countries.

So how are they going to pay this summer, and this fall, for their food, for their oil and gas, and for the higher cost of servicing their dollar debts?

Well, for Eurasia, they’re going to say, we want to help you buy our exports – Russia is now a major grain exporter, and obviously also an oil exporter – saying we want to supply you and give you the credit for this, but you’re really going to have to make a decision. Are you going to join the U.S.-NATO bloc, or are you going to join the Eurasian bloc?

Are you going to join the White People’s Club or the Eurasian Club? And it really comes down to that. And that’s what is fracturing the world in these two halves.

Europe is caught in the middle, and its economies are going to be torn apart. Employment is going to go down there. And I don’t see wages going up very much in Europe.

You’re going to have a political crisis in Europe. But also you’ll have an international diplomatic crisis over how are you going to restructure world trade, and investment, and debt.

There will be two different financial philosophies. And that’s what the new cold war is all about.

The philosophy of US-sponsored finance capitalism, of making money financially, without industrialization, and with trying to lower wages and reduce the labor force to a very highly indebted workforce living on the margin.

Or you’ll have the Eurasian philosophy of using the economic surplus to increase productivity, to build infrastructure, to create the kind of society that America seemed to be growing in the late 19th century but has now rejected.

So all of this is ultimately not simply a problem of interest rates and central bank policy; it really goes beyond central banks to what kind of a social and economic system are you going to have.

And the key to any social and economic system is how you treat money and credit. Is money and credit going to be a public utility, or will it be a private monopoly run for the financial interests and the 1%, instead of a public utility run for the 99%?

That’s what the new cold war is going to be all about. And that’s what international diplomacy week after week is trying to settle.

BENJAMIN NORTON:

Very, very well said. And I really agree about this increasing kind of bipolar order, where the US-led imperialist system is telling the world they have to pick a side. You know, as George W. Bush said, you’re either with us or you’re against us; you’re with us or you’re with the terrorists.

That’s what Biden is saying to the world. And we see the West has drawn this iron curtain around Russia. And now they’re threatening to do the same around China.

Now, of course, the difference is that China has the largest economy in the world, according to a PPP measurement. It’s even larger than the US economy. I don’t know how they can try to sanction the Chinese economy, considering China is the central factory of the world.

But this is related to a question I had for you, Professor Hudson, and this is from a super chat question from Manoj Payardha, and it’s about how Chinese banks say they’re not ready yet to develop an alternative to the SWIFT. He asked, how will the Third World pay Russia for resources?

And we’ve seen, maybe you can talk about the measures being implemented. India has this rupee-ruble system that they’ve created.

But I want to highlight an article that was published in Global Times. This is a major Chinese newspaper, and this is from April. And it quotes the former head of China’s central bank, who was speaking at a global finance forum in Beijing this April.

And basically he said, we need to prepare to replace Swift. He said the West’s adoption of a financial nuclear option of using SWIFT to sanction Russia is a wake up call for China’s financial development. And he said, “We must get prepared.”

So it seems that they’re not yet prepared. But this is something that you’ve been talking about for years. Or maybe you disagree and maybe you think they already are prepared with the SWIFT alternative?

MICHAEL HUDSON:

Well they’re already using an alternative system. If they weren’t using an alternative system – Russia is adopting part of the Chinese system for this – they wouldn’t be able to have banks communicate with each other.

So, yes, they already have a rudimentary system. They’re making it a better system that can also be immune from U.S. computer espionage and interference. So yes, of course there’s already a system.

But I want to pick up on what you said about Biden, how Biden characterizes things.

Biden characterizes the war of the West against Eurasia as between democracy and autocracy. By “democracy,” he means a free market run by Wall Street; he means an oligarchy.

But what does he mean by autocracy? What he means by autocracy, when he calls China an autocracy, an “autocracy” is a government strong enough to prevent an oligarchy from taking power, and taking control of the government for its own interests, and reducing the rest of the economy to debt peonage.

An “autocracy” is a country with public regulation against monopolies, instead of an oligarchic free market. An “autocracy” uses money and credit, essentially, to help economies grow. And when debts cannot be paid in China, if a factory or a real estate company cannot pay debts, China does not simply say, ok, you’re bankrupt, you’re going to have to be sold; anybody can buy you; the Americans can buy you.

Instead, the Chinese say, well, you can’t pay the debts; we don’t want to tear down your factory; we don’t want your factory to be turned and gentrified into luxury housing. We’re going to write down the debt.

And that’s what China has done again and again. And it’s done that with foreign countries that couldn’t pay the debt. When a debt that China has come due for China’s development of a port, or roads, or infrastructure, it says, well, we understand that you can pay; we will delay payment; we will have a moratorium on your payment. We’re not here to bankrupt you.

For the Americans, to the international funds, they’re saying, well, we are here to bankrupt you. And now if we lend you, we the IMF, lends you money to avoid a currency devaluation, the term is you’re going to have to privatize your infrastructure; you’re going to have to sell off your public utilities, your electric system, your roads, your land to private buyers, mainly from the United States.

So you have a “democracy” supporting bankruptcy, foreclosure, financialization, and privatization, and low wages by a permanent depression, a permanent depression to keep down wages.

Or you have “autocracy,” seeking to protect the interests of labor by supporting a living wage, to increase living standards as a precondition for increasing productivity, for building up infrastructure.

You have these two diametrically economic systems. And, again, that’s why there’s a cold war on right now.

BENJAMIN NORTON:

And there’s another super chat question here, Professor Hudson. You mentioned the International Monetary Fund, the IMF. We have talked about that many times. This is from Sam Owen. He asked, why do countries continue to accept bad IMF loans when they have such a poor track record? Is it just the US government meddling in the national politics? Are there cases of good IMF loans?

MICHAEL HUDSON:

Well, what is a country? When you say a country to most people, people think, ok, let’s talk about Brazil; let’s talk about all the people in Brazil; you have a picture in the mind of the Amazon; you have a big city with a lot of people in it.

But the country, in terms of the IMF, is a group of maybe the 15 wealthiest families in Brazil, that own most of the money, and they are quite happy to borrow from the IMF, because they say, right now there’s a chance that Lula may become president instead of the neo-fascist Bolsonaro. And if Lula comes in, then he is going to support labor policies, and he may stop us from tearing down the Amazon. So let’s move our money out of the country.

Well, normally this would push the exchange rate of the cruzeiro (real) down. So the IMF is going to make a loan to Brazil to support the cruzeiro (real), so that the wealthy 1% of Brazil can move their money into dollars, into euros, into foreign currency and offshore bank incentives, and load Brazil down with debt, so that then when there is an election, and if Lula is elected, the IMF is going to say, well, we don’t really like your policies, and if you pursue a pro-labor, socialist policy, then there’s going to be a capital flight. And we’re insisting that you pay all the money that you borrowed from the West right back now.

Well, that’s going to lead Lula either to sit there, follow the IMF direction, and let the IMF run the economy, instead of his own government, or just say, we’re not going to pay the foreign debt.

Well, until now, no country has been in a strong enough position not to pay the foreign debt. But for the first time, now that you have the Eurasian group – we’ll call it BRICS, but it’s really Eurasia, along with the Southern groups that are joining, the Global South – for the first time, they can say, we can’t afford to stay in the West anymore.

We cannot afford to submit the economy to the IMF demands for privatization. We cannot submit to the IMF rules that we have to fight against labor, that we have to pass laws banning labor unions, that we have to fight against laborers’ wage, like Western democracies insist on. We have to go with the Chinese “autocracy,” which we call socialism.

And of course, when America accuses China being an “autocracy,” autocracy is the American word for socialism. They don’t want to use that word. So we’re back in Orwellian double-think.

So the question is what, will the Global South countries do when they cannot afford to buy energy and food this summer, without an IMF loan? Are they going to say, ok, we can only survive by joining the break from the West and joining the Eurasian group?

That is what the big world fracture is all about.

And I described this global fracture already in 1978. I wrote a book, “Global Fracture,” explaining just exactly how all of this was going to happen.

And at that time, you had Indonesia, you had Sukarno taking the lead, the non-aligned nations, India, Indonesia, were trying to create an alternative to the financialized, American-centered world order. But none of these countries had a critical mass sufficient to go their own way.

Well, now that America has isolated Russia, China, India, Iran, Turkey, all these countries, now it has created a critical mass that is able to go its own way. And the question is, now you have like a gravitational pull, and will this Eurasian mass attract Latin America and Africa to its own group, away from the United States? And where is that going to leave the United States and Europe?

BENJAMIN NORTON:

And we saw one of the clearest examples yet of this bipolar division of the world between, you know, the West and the rest, as they say, with this ridiculous meeting that was just held of the G7.

Of course, the G7 are the white, Western countries. And then they’ll throw in U.S.-occupied Japan in there, to pretend they’re a little more diverse.

But we saw that the G7 just held a summit, and basically the entire summit was about how can we contain China? How can we expand the new cold war on Russia into a new cold war on China?

And here’s a report in BBC: “G7 summit: Leaders detail $600bn plan to rival China’s Belt and Road initiative.” Now, I got a chuckle out of this. The idea that the US government is going to build infrastructure in the Global South, I mean, it’s pretty laughable.

It’s also absurd considering that China’s Belt and Road Initiative, which involves over half of the countries on Earth, is estimated at many trillions of dollars in infrastructure projects. So the US and its allies think that they can challenge that with $600 billion in public-private partnerships.

I should stress, of course, what they announced is going to be a mixture of so-called public initiative and then contracts for private corporations.

So it’s yet another giveaway to the private sector, in the name of building infrastructure.

But I’m wondering if if you can comment on the G7 summit that just was held.

MICHAEL HUDSON:

Well, nothing really came out of it. They all said that they could not agree on any more sanctions against Russia, because they’re already hurting enough. India, in particular, stood up and said, look, there’s no way that we’re going to join the sanctions against Russia, because it’s one of our major trading partners. And by the way, we’re getting a huge benefit from importing Russian oil, and you’re getting a huge benefit by getting this oil from us at a markup.

So the G7 could not get any agreement on what to do. It is already at a stalemate. And this is only June. Imagine the stalemate it’s going to be in September.

Well, next week, President Biden is going to Saudi Arabia and saying, you know, we’re willing to kill maybe 10 million more of your enemies; we’re willing to help Wahhabi Sunni groups kill more of the Iranian Shiites, and sabotage Iraq and Syria. We’ll help you back al-Qaeda again, if you will lower your oil prices so that we can squeeze Russia more.

So that’s really the question that Saudi Arabia will have. America will send give it more cluster bombs to use against Yemen.  And the question is, is Saudi Arabia going to say, ok, we’re going to earn maybe $10 billion less a month, or however much they’re making, just to make you happy, and so that that you will kill more Shiites who support Iran?

Or are they going to realize that if they throw in their lot with the United States, all of a sudden they’ll be under attack from Iran, Russia, Syria, and they’ll be sitting ducks? So what are they going to do?

And I don’t see any way that Biden can actually succeed in getting Saudi Arabia to voluntarily earn less on its oil prices. Maybe Biden can say it’s only for a year, only for one or two years. But as other countries know, when America says only for a year or two, it really means forever. And if you don’t continue, then somehow they have a regime replacement, or a regime change and a color revolution.

So Biden keeps trying to get foreign countries to join the West against Eurasia, but there is Saudi Arabia sitting right in the middle of it.

And all that Europe can do is watch and wonder how it’s going to get by without without energy and without much food.

BENJAMIN NORTON:

Yeah, in fact, Venezuela’s President Maduro just confirmed that the Biden administration has sent another delegation basically begging Venezuela to try to work out some deal because, of course, the U.S. and the EU have boycotts of Russian energy.

So it’s really funny to me that, after years of demonizing Venezuela, portraying it as a dictatorship and all of this, the U.S. had to decide, well, the war in Venezuela is not as important as the war on Russia right now; so we’re going to temporarily pause our war on Venezuela to stick the knife deeper into Russia.

But on the on the subject of the the G7 meeting, this was the hilarious comment made by the European Commission President Ursula von der Leyen, in an article in Reuters titled “Europe Must Give Developing Nations Alternative to Chinese Funds.”

So echoing the same perspective that we hear from Biden, U.S. government officials constantly say that the US needs to challenge China in the Global South. So Europe pledged €300 billion – however, once again, important asterisk – “in private and public funds over five years to fund infrastructure in developing countries.”

So once again, we see another neoliberal private-public partnership. It’s going to be another public giveaway to private corporations.

And “she said that this is part of the G7’s drive to counter China’s multitrillion-dollar Belt and Road project.”

Now, this is really just tying everything together that we have been talking about today, Professor Hudson – in your article “The Fed’s Austerity Program to Reduce Wages,” you conclude the article noting that the depression that people in the United States are on the verge of facing because of these neoliberal policies – telling workers in the U.S. that they need to decrease their wages and be unemployed in order to stop inflation – you point out that:

Biden’s military and State Department officers warn that the fight against Russia is just the first step in their war against China’s non-neoliberal economy, and may last twenty years. That is a long depression. But as Madeline Albright would say, they think that the price is “worth it.”

And you talk about the new cold war against the socialist economy in China and the state-led economy in Russia.

So you predict not only a depression is coming. We have seen that in mainstream media outlets. Larry Summers said, you know, a depression could be coming for a few years. But you say, no, not only is a depression coming; it’s going to be a long depression. We could be seeing 20 years.

And basically the U.S. government and other Western leaders, as we see Ursula von der Leyen from the EU, they’re basically telling their populations, tighten your belts; we have decades of depression coming, because we have collectively decided, as Western leadership, that we are going to force the world through a long depression economically, or at least forced the West through a long economic depression, in order to try to halt the rise of China and Russia.

They’re basically telling their populations, suck it up, tighten your belts for decades, because in the end, the price is worth it in order to prevent the collapse of our empires.

MICHAEL HUDSON:

That’s right. When they’re talking about private-public initiatives, they’re talking about Pentagon capitalism. That means the government will give trillions of dollars to private firms and ask them to build infrastructure.

And if they build a port or a road in a Global South country, they will operate this at a profit, and it will be an enormously expensive infrastructure, because to make financial money off this infrastructure, you have to price it at the cost of production, which is Pentagon capitalism, hyper inflated prices; you have to pay management fees; you have to pay profits; you have to pay interest rates.

As opposed to the Chinese way of funding as equity. The Western mode of funding is all debt leverage. China takes as collateral for the infrastructure that it pays, an equity ownership in the port or whatever infrastructure in the Belt and Road that it’s building.

So you have the difference between equity ownership, debt-free ownership, where if it can afford to pay, fine; if it doesn’t make an income, there are no dividends to pay.

Or you have the debt leverage that is intended that the government cannot pay it, so that the government that will be the co-signer for the debt for all of this infrastructure will somehow be obliged to tax its whole population to pay the enormous super-profits, the enormous monopoly rents, the enormous debt charges of von der Leyen’s Margaret Thatcher plan.

Von der Leyen thinks that she can do to Europe and to America what Margaret Thatcher did to England. And if she does, then then America and Europe deserve it.

BENJAMIN NORTON:

And Professor Hudson, as we start wrapping up here, I know you have to go pretty soon, just a few short questions here at the end.

I’m wondering if what we’re also seeing is not only this fundamental crisis in the Western neoliberal, financialized economies, but it’s also this bubble that has burst, or at least this phase that is over.

At least this is my reading, I’m curious if you agree. In the 1990s, the peak of, you know, the so-called golden age of neoliberalism; we had Bill Clinton riding this wave, and it was the “end of history,” in Francis Fukuyama’s nonsense prediction and all that.

How much of that was not only based on this exorbitant privilege, as the French call it, of the dictatorship of the US dollar – we talked about that based on your book “Super Imperialism,” how the US was given this massive global free lunch economically because of dollar hegemony – but how much of it was not just that, but also the fact that in the 1990s and the first decade of the 2000s, the US and Western Europe had access to very cheap consumer goods from Asia and very cheap energy from Russia?

To me, it seems like those two factors are some of the most important reasons why this golden age of neoliberalism in the ’90s and early 2000s was even possible.

It was on the back of low-paid Asian workers, and based on this idea that Russia would permanently be, what Obama called it: a gas station.

Well, we’ve seen that, one, East Asian economies have lifted themselves up of poverty, especially China has ended extreme poverty and raised median wages significantly.

And now, of course, the West has sanctioned itself against buying Russian energy, massively increasing the cost of energy around the world.

So do you think that that bubble, or that brief moment of the end of history, the golden age of neoliberalism, that can never come back?

Because unless the West can succeed in overthrowing the Russian government and imposing a new puppet like Yeltsin, and overthrowing the Chinese government, it seems like that that the golden in the 1990s is never going to come back.

MICHAEL HUDSON:

Well, you’ve left out the key element of the golden age: that is military force, and the willingness to assassinate any foreign leader that does not want to go along with US policy.

BENJAMIN NORTON:

Of course.

MICHAEL HUDSON:

You’re neglecting what America did to [Salvador Allende]; you’re neglecting how America took over Brazil; America’s meddling and control, and in Europe, the wholesale bribery and manipulation of Europe’s political system, to put in charge of the [German] Green Party a pro-war leadership, an anti-environmental leadership, to put in charge of every socialist party of Europe right-wingers, neoliberals.

Every European socialist and labor party turned neoliberal largely by American maneuvering and meddling in their foreign policy.

So it’s that meddling that was intended to prevent any alternative economic philosophy from existing to rival neoliberalism.

So that when you talk about the end of history, what is the end of history? It means the end of change. It means stop; there will be no reform; there will be no change in the neoliberal system that we have locked in.

And of course, the only way that you can really end history is by what Biden is threatening: atomic war to blow up the world.

That is the neoliberal end of history. And it’s the only way that the neoliberals can really stop history. Apart from that, all they can try to do is to prevent any change that is adverse to locking in the neoliberal order.

So the “end of history” is a declaration of war against any country that wants to go its own way. Any country that wants to build up its own economy as a way that will keep the benefits of its economic growth in its own country, instead of letting it go to the global financial class centered in the United States and Britain.

So we’re talking about, neoliberalism was always a belligerent, implicitly military policy, and that’s exactly what you’re seeing in the proxy war of US and NATO in Ukraine today.

BENJAMIN NORTON:

Yeah, very well said. That’s the other key ingredient: overthrowing any government that is a challenge, that shows there is an alternative, to try to prove the maxim that “there is no alternative.”

MICHAEL HUDSON:

Yes.

BENJAMIN NORTON:

Here’s an interesting comment from Christopher Dobbie. He points out that in Australia, the average age for their first homeowner was 27 in 2001; now it’s 35, and increasing more and more by the year.

Now, in the last few minutes here, Professor Hudson, here’s another brief question that I got from someone over at patreon.com/multipolarista – people can go and support this show. One of my patrons asked this question: who who is hurt most by the Fed or other central banks raising interest rates? People, average consumers, or companies?

And obviously, you talked earlier about how the US Federal Reserve is different from other central banks, but it’s kind of an open question. Who is hurt more by raising interest rates?

MICHAEL HUDSON:

Well, companies are certainly hurt because it means that any possibility of getting productive credit is raised. But they’re also benefited, because if interest rates raised go up high enough, then it will not pay corporate raiders to borrow money to take over and raid companies and empty them out, like they did in the 1980s.

So everything cuts both ways. Raising the interest rates have given commercial banks an excuse to raise the interest charges on credit card loans and mortgage debts.

So raising interest rates, to the banks, have enabled them to actually increase their margin of monopoly profits on the credit that they extend.

And that certainly hurts people who are reliant on bank credit, either for mortgages or for consumer debt, or for any kind of loans that they want to take out.

Basically, raising interest rates hurts debtors and benefits creditors.

And benefiting creditors very rarely helps the economy at large, because the creditors are always really the 1%; the debtors are the 99%.

And if you think of economies, when you say, how does an economy benefit, you realize that, well, if the economy is 1% creditors and 99% debtors, you are dealing with a bifurcation there.

And you have to realize that the creditors usually occupy the government, and they claim we are the country. And the 99% are not very visible.

Democracy can only be afforded if they population’s voting has no effect at all on the government, that it’s only symbolic. You can vote exactly which oligarch you want to rule your country. Ever since Rome that was the case, and it’s the case today.

Is there really any difference between the Republicans and Democrats in terms of their policy? When you the same central bank bureaucracy, the same State Department blob, the same military-industrial complex, the same Wall Street control, what does democracy mean in a situation like that?

The only way that you can have what democracy aims at is to have a government strong enough to check the financial interests, to check the 1%, acting on behalf of the 99%. And that’s what socialism is.

BENJAMIN NORTON:

Very well said.

Here is another brief question from patreon.com/multipolarista – people can become a patron and help support the show over there.

This question, Professor Hudson, is about the proposal of an excess profits tax as an alternative to try to contain inflation. What do you think about the proposal of an excess profits tax?

MICHAEL HUDSON:

Well, only the little people make profits. If you’re a billionaire, you don’t want to make a profit; you want to essentially take all of your return in the form of capital gains. That’s where your money is.

And the way you avoid making a profit is you establish an offshore bank or creditor, and you pay out all of your profits in the form of interest, which an expense. You expense all of what used to be, what really is, income. And you show no profits at all.

I don’t think Amazon has ever made a profit. You have huge, the biggest corporations, with all the capital gains, have no profits. Tesla is a gigantic stock market presence, and it doesn’t make a profit.

So the key is capital gains, is financial gains, stock market gains, gains in real estate prices, unearned income. That’s what the free lunch is.

You want to prevent profits being paid out in the form of interest. So I would vastly increase profits, by saying you cannot deduct interest as a business expense. It’s not a business expense. It’s a predatory parasitic expense. So you’re going to have to declare all of this as profit, and pay interest on it.

Pricing your output from a foreign offshore banking center, so that you don’t seem to make any profit, like Apple does, pretending to make all its money in Ireland, you can’t do that anymore. You’re going to have to pay a real return.

So the accounting profession has made profits essentially tax free. So the pretense of making money by taxing profits avoids talking about capital gains and all of fictitiously low profits that are simply pretended not to be profit, like interest, depreciation, amortization, offshore earnings, management fees.

All of these should be counted as profits, and taxed as such as they were, I’d say back at the Eisenhower administration levels.

BENJAMIN NORTON:

And finally, the last question here, Professor Hudson, someone asked about the U.S. government pressuring countries in Africa not to buy Russian wheat. And the U.S. is, of course, claiming that this wheat is supposedly stolen from Ukraine.

This article, this headline at Newsweek, it summarizes pretty well: “U.S. Warns Starving African Nations to Not Buy Grain Stolen by Russia.” Again, that “stolen” is alleged by the U.S.

But you actually have a really good column about this over at your website, which again is michael-hudson.com: “Is US/NATO (with WEF help) pushing for a Global South famine?

I know this could be a long point of discussion; it could be the entire interview. And I know you have to go soon. But just concluding here, I’m wondering if you could comment.

The United Nations itself has warned that there could be a famine, especially in Global South nations.

What do you think the role of these neoliberal policies and Western sanctions are in fueling that potential crisis?

MICHAEL HUDSON:

Well, the wealthiest families in the world used to go every year, now they go every few years, to Davos, to Klaus Schwab’s Davos World Economic Forum. And they say, the world is overpopulated; we need about 2 billion human beings to starve, preferably in the next year or two.

So it’s as if the wealthy families have got together and say, how can we thin out the population that really we, the 1%, don’t need?

And in all of their policies, it is as if they’ve decided to follow the World Economic Forum and deliberately shrink the world population, especially in Africa and Latin America.

Remember, these are white people at the World Economic Forum, and that is their idea of how to retain equilibrium.

They’re always talking about “equilibrium,” and equilibrium is going to be for countries that cannot afford to grow their own food, because they have put their money into plantation crops and cotton to sell to the West, instead of feeding themselves – they’re just going to have to starve to contribute to world “equilibrium.”

BENJAMIN NORTON:

And while we’re on the subject of the World Economic Forum, I guess I should just briefly add – we’ve talked about this a little bit, but I just feel remiss not mentioning it – it’s interesting to see how right-wingers have seized on the World Economic Forum and begun criticizing it a lot.

Obviously, it’s worth criticizing. It’s a horrible neoliberal institution that represents the Western capitalist class. But we’ve even seen, you know, Glenn Beck, the right-winger, former Fox News host, he published a book about the Great Reset and the World Economic Forum.

I’m just wondering really quickly if you could respond to the idea that the World Economic Forum is like some “socialist” organization. Obviously, it’s the exact opposite.

But what do you say to these conservatives who have a right-wing critique of the World Economic Forum, and think it’s like secretly socialist, and Biden is a socialist.

MICHAEL HUDSON:

They look at any government or managerial power as socialist, not drawing the distinction between socialism and oligarchy.

The question is government power can be either right-wing or left-wing, and to say that any government power is socialist is just degrading the word.

However, as I mentioned before, almost all of the European “socialist” parties are neoliberal. Tony Blair was the head of something that called itself the British Labour Party. Gordon Brown was the head of the British Labour Party.

You can’t be more neoliberal and oligarchic than that. And that’s why Margaret Thatcher said her greatest success was creating Tony Blair.

You have the same thing in France; the French “socialists” are on the right-wing of the spectrum. The Greek “socialist” party, on the right-wing of the spectrum.

You have “socialist” parties around the world being neoliberalized.

So what does the word socialism mean? You want to go beyond labels into the essence.

And the question is, in whose interest is the government going to be run for? Will it be run for the 1% or the 99%?

And the right wing wants to say, well, the 1% can be socialist, because they’re taking over the government and that’s the big government, and we’re against it.

Well, the right-wing is taking over the government, but it’s not really what the world meant by socialism a century ago.

BENJAMIN NORTON:

Yeah, very well said. I just always laugh when I see these right-wing critiques of the World Economic Forum. I mean, the World Economic Forum is the embodiment of capitalism. It is the group of the elite capitalists who get together to talk about how they can exploit the working class and help monopolize the global economy on behalf of Western capital.

So with that said, there still are many questions, but I know you have to go, and we’re already at an hour and a half.

I do want to thank everyone who joined. We’re at 1200 viewers right now, so it has been a really good response.

Professor Hudson, you’re very popular. You should do your own YouTube channel. Maybe we can talk about that, because every time I have you on, it’s always an amazing response that I get. And hopefully we can do this again more in future.

Aside from people going to your website, michael-hudson.com, is there anything else that you want to plug before we conclude?

MICHAEL HUDSON:

Well, the book that I just wrote, “The Destiny of Civilization,” is all about what we’ve been talking about. It’s about the world’s split between neoliberalism and socialism. So that was just published and is available on Amazon. And I have two more books that are coming out very shortly.

BENJAMIN NORTON:

Yeah, for people who are interested, I did an interview with Professor Hudson here at Multipolarista a few weeks ago about his new book, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

And of course, anyone who wants to support this show, you can go to patreon.com/multipolarista. And as always, this will be available as a podcast, if you want to listen to the interview again. I’m certainly going to listen to this discussion again. You can find that anywhere there are podcasts.

Professor Hudson, it’s always a real pleasure. Thanks so much for joining me.

MICHAEL HUDSON:

I enjoyed the discussion.

BENJAMIN NORTON:

And like I said earlier at the beginning, for me, I truly think it’s always a privilege, because I do think you’re one of the greatest living economists. So I always feel very privileged to have the opportunity to pick your brain about all of these questions.

And I want to thank everyone who commented, who watched, and who listened. I will see you all next time.

Sweden and Finland joining NATO precedes an inevitable financial collapse of the current international system

June 29, 2022

Source

Sweden and Finland joining NATO besides being a provocative act towards Russia, precedes an inevitable financial collapse of the current international system

By Guilherme Wilbert

The Nordic entry into NATO, in the middle of a war, is clearly an act that does not help the peace negotiations that could be underway, but acts as the opposite, putting more wood on the fire for “military-technical” measures (to paraphrase Shoigu, Russian Defense Minister who uses the term when talking about responding to Western provocations).

With the entry of Finland and Sweden barred initially by Turkey, it shows that even a NATO member cares about enemies of its national interests. In Turkey’s case with the PKK, which is a Kurdish political organization seen as terrorist by Ankara and some countries, yet they were (until then) operating freely throughout the Nordic countries with active members of the official Kurdistan party holding protests in public squares in Helsinki and Stockholm.
Just for level of knowledge, Kurdistan is a region that would be home to the Kurdish ethnic group, taking part of Turkish territory up to the North of Iran, which explains Erdogan’s concern with a possible disintegration of Turkish territory if the Kurds were to gain prominence on the battlefields (which in real data would be very difficult since the Turkish army is the strongest in NATO for example).

But this provocation, which will surely be responded to by Moscow, proves the warmongers’ concern with continuing disputes and wars around the world, using Ukraine, which is the most recent case at the moment, as a kind of proxy to weaken Russia, serving only as a spearhead of the American objective, since Zelensky himself and his cabinet acknowledge that they will never join NATO and possibly not even the European Union, if you consider and draw a parallel with the case of Turkey itself, which has been waiting since 1999 for a resolution whether to join the bloc or not.

So, the entrance of the Nordics into NATO does not help Ukraine at all and can even make the situation worse with military-technical measures applied by the Russian Armed Forces perhaps in the decision centers in Brussels or in the Baltics, which would lead us to a nuclear catastrophe since the mentioned countries (Belgium and the Baltics for example) are NATO members and could invoke article 5 of mutual aid in case of “aggression” (See that aggression here is interpreted by Westerners (in an exercise of deduction) as only after the military-technical measure, ignoring what provoked the decision to do so).

Coupled with the desperation to provoke more wars, Western leaders get lost in the real global objective: economic integration and the fight against hunger

While great concern is seen with NATO, with diplomats having used the term “Global NATO” a few times, some primary and more basic goals of the organization’s member nations are put aside to add more gasoline to the fire.

The recent cases of inflation in Western Europe or even in the US precede a global financial collapse that has several causes, with some analysts citing the sanctions on Russia but personally I would go further and cite all of the last 10 years of at least NOTHING-backed dollar printouts that were used to give a supposed liquidity to the economy after the 2008 crash that was a scare felt around the world.

Economics, unlike some sciences, is not as if it can receive arguments and opinions, the theories are very clear and explanatory: by printing too much of your currency, you devalue it. But surely American economists know this and they also know that the coming collapse would affect the entire Globe because unfortunately after World War II, American hegemony was also monetary, with countries to this day using the dollar as an international reserve. In other words, in addition to the overprinting and national devaluation of the currency on American territory, it also devalues in the coffers of the countries that use it as a reserve and this will cause a cascading effect that will further force realpolitik into play and cause more haste in the emerging countries to get rid of the coming bomb.

Unfortunately war-hungry Western leaders are blind to what is coming and is already happening in some parts of the world, either because of irresponsible sanctions or the natural course of the very sequence of American economic mistakes. Because it is very different to sanction Russia compared to sanctioning Iran for example. And this does not mean that Iran deserves to be sanctioned in any way, because I believe that every country should have the right to its nuclear program, at least for peaceful purposes, and this cannot be used as a pretext for sanctions that crush already small economies, such as the example of Iran.

In the case of Russia the conversation is different for numerous reasons, be they military at the nuclear level or at the economic level, because Russia is part of a global production chain which acts as an active player on the macroeconomic stage. For example, the raw material called antimony, which is used in the global defense industry for military equipment of various kinds, is rightly found in excess in Russia and parts of Asia. This is to cite a simple example of an element that is not on the average citizen’s table, for example. In addition to the many important productions that Russia is responsible for.

So, given recent events and the inference for the disastrous future, the international scenario for the Global South forces them towards long term solutions of American de-dollarization and decolonization in the various ways, either by American NGOs that operate in several countries or by the very US culture exporting technologies that function as small fiefdoms of thought, the case of Facebook for example. But the latter is a little more difficult to achieve because it involves a collective societal thought that would require a national unity for the development of regional cultures.

Having said that, a peace agreement between Ukraine and Russia with the Ukrainian loss of the territories that comprise New Russia needs to happen and sanctions against any country need to be lifted for the sake of multipolarity.

The world cannot be guided by one diplomatic corps and one government only because the international scenario is not a movie of one actor, but of several, with several potentials to be developed in different parts of the Globe.


Guilherme Wilbert is a Brazilian Bachelor of Law interested in geopolitics and international law.

‘Rationality is Not Permitted’: Chomsky on Russia, Ukraine and the Price of Media Censorship

June 23, 2022

By Ramzy Baroud

One of the reasons that Russian media has been completely blocked in the West, along with the unprecedented control and censorship over the Ukraine war narrative, is the fact that western governments simply do not want their public to know that the world is vastly changing.

Ignorance might be bliss, arguably in some situations, but not in this case. Here, ignorance can be catastrophic as western audiences are denied access to information about a critical situation that is affecting them in profound ways and will most certainly impact the world’s geopolitics for generations to come.

The growing inflation, an imminent global recession, a festering refugee crisis, a deepening food shortage crisis and much more are the kinds of challenges that require open and transparent discussions regarding the situation in Ukraine, the NATO-Russia rivalry and the responsibility of the West in the ongoing war.

To discuss these issues, along with the missing context of the Russia-Ukraine war, we spoke with Professor Noam Chomsky, believed to be the greatest living intellectual of our time.

Chomsky told us that it “should be clear that the (Russian) invasion of Ukraine has no (moral) justification.” He compared it to the US invasion of Iraq, seeing it as an example of “supreme international crime.” With this moral question settled, Chomsky believes that the main ‘background’ of this war, a factor that is missing in mainstream media coverage, is “NATO expansion”.

“This is not just my opinion,” said Chomsky, “it is the opinion of every high-level US official in the diplomatic services who has any familiarity with Russia and Eastern Europe. This goes back to George Kennan and, in the 1990s, Reagan’s ambassador Jack Matlock, including the current director of the CIA; in fact, just everybody who knows anything has been warning Washington that it is reckless and provocative to ignore Russia’s very clear and explicit red lines. That goes way before (Vladimir) Putin, it has nothing to do with him; (Mikhail) Gorbachev, all said the same thing. Ukraine and Georgia cannot join NATO, this is the geostrategic heartland of Russia.”

Though various US administrations acknowledged and, to some extent, respected the Russian red lines, the Bill Clinton Administration did not. According to Chomsky, “George H. W. Bush … made an explicit promise to Gorbachev that NATO would not expand beyond East Germany, perfectly explicit. You can look up the documents. It’s very clear. Bush lived up to it. But when Clinton came along, he started violating it. And he gave reasons. He explained that he had to do it for domestic political reasons. He had to get the Polish vote, the ethnic vote. So, he would let the so-called Visegrad countries into NATO. Russia accepted it, didn’t like it but accepted it.”

“The second George Bush,” Chomsky argued, “just threw the door wide open. In fact, even invited Ukraine to join over, despite the objections of everyone in the top diplomatic service, apart from his own little clique, Cheney, Rumsfeld (among others). But France and Germany vetoed it.”

However, that was hardly the end of the discussion. Ukraine’s NATO membership remained on the agenda because of intense pressures from Washington.

“Starting in 2014, after the Maidan uprising, the United States began openly, not secretly, moving to integrate Ukraine into the NATO military command, sending heavy armaments and joining military exercises, military training and it was not a secret. They boasted about it,” Chomsky said.

What is interesting is that current Ukrainian President Volodymyr Zelensky “was elected on a peace platform, to implement what was called Minsk Two, some kind of autonomy for the eastern region. He tried to implement it. He was warned by right-wing militias that if he persisted, they’d kill him. Well, he didn’t get any support from the United States. If the United States had supported him, he could have continued, we might have avoided all of this. The United States was committed to the integration of Ukraine within NATO.”

The Joe Biden Administration carried on with the policy of NATO expansion. “Just before the invasion,” said Chomsky, “Biden … produced a joint statement … calling for expanding these efforts of integration. That’s part of what was called an ‘enhanced program’ leading to the mission of NATO. In November, it was moved forward to a charter, signed by the Secretary of State.”

Soon after the war, “the United States Department acknowledged that they had not taken Russian security concerns into consideration in any discussions with Russia. The question of NATO, they would not discuss. Well, all of that is provocation. Not a justification but a provocation and it’s quite interesting that in American discourse, it is almost obligatory to refer to the invasion as the ‘unprovoked invasion of Ukraine’. Look it up on Google, you will find hundreds of thousands of hits.”

Chomsky continued, “Of course, it was provoked. Otherwise, they wouldn’t refer to it all the time as an unprovoked invasion. By now, censorship in the United States has reached such a level beyond anything in my lifetime. Such a level that you are not permitted to read the Russian position. Literally. Americans are not allowed to know what the Russians are saying. Except, selected things. So, if Putin makes a speech to Russians with all kinds of outlandish claims about Peter the Great and so on, then, you see it on the front pages. If the Russians make an offer for a negotiation, you can’t find it. That’s suppressed. You’re not allowed to know what they are saying. I have never seen a level of censorship like this.”

Regarding his views of the possible future scenarios, Chomsky said that “the war will end, either through diplomacy or not. That’s just logic. Well, if diplomacy has a meaning, it means both sides can tolerate it. They don’t like it, but they can tolerate it. They don’t get anything they want, they get something. That’s diplomacy. If you reject diplomacy, you are saying: ‘Let the war go on with all of its horrors, with all the destruction of Ukraine, and let’s let it go on until we get what we want.’”

By ‘we’, Chomsky was referring to Washington, which simply wants to “harm Russia so severely that it will never be able to undertake actions like this again. Well, what does that mean? It’s impossible to achieve. So, it means, let’s continue the war until Ukraine is devastated. That’s US policy.”

Most of this is not obvious to western audiences simply because rational voices are “not allowed to talk” and because “rationality is not permitted. This is a level of hysteria that I have never seen, even during the Second World War, which I am old enough to remember very well.”

While an alternative understanding of the devastating war in Ukraine is disallowed, the West continues to offer no serious answers or achievable goals, leaving Ukraine devastated and the root causes of the problem in place. “That’s US policy”, indeed.

(The interview with Noam Chomsky was conducted jointly with Italian journalist, Romana Rubeo)

– Ramzy Baroud is a journalist and the Editor of The Palestine Chronicle. He is the author of six books. His latest book, co-edited with Ilan Pappé, is “Our Vision for Liberation: Engaged Palestinian Leaders and Intellectuals Speak out”. Dr. Baroud is a Non-resident Senior Research Fellow at the Center for Islam and Global Affairs (CIGA). His website is www.ramzybaroud.net

Forbes Warns of ‘Disaster’, Says Biden Policy to ‘Make People Poor’

June 21, 2022

Forbes Media CEO Steve Forbes has warned that President Joe Biden’s policy to raise the interest rates in order to solve the inflation problem will “make people poor”.

In an interview with conservative news outlet Newsmax, Forbes stressed that raising interest rates will have severe effects on American consumers.

“Let’s be blunt about it. When they talk about a soft landing or trying to slow the economy down, that means making people poor,” he said.

Rather than “punishing the American economy” with higher interest rates, the Federal Reserve should focus its efforts on stabilizing the value of the dollar, he added.

Many economists have voiced concern about a possible recession after the Fed last week announced its highest interest rate increase in 28 years.

Forbes stressed that the interest rate hikes will particularly hurt consumers when “mortgage rates are readjusted later this year” and heating prices rise in the winter.

“A big, bad thing is happening. And when heating oil prices come in this winter, when you’re paying twice as much as you were before and you have to heat your home, that’s going to be a disaster,” he said, adding that “whatever they want to call it, it’s not good.”

The US is grappling with rising prices and soaring inflation, with its population under severe pressure like many of the European countries.

Biden’s administration placed an embargo on Russian oil earlier this year, shortly after Russian President Vladimir Putin declared a military campaign against Ukraine on February 24. It prompted the gas and energy prices to hike all over the country. The move has also sent the prices of grain, cooking oil, fertilizers and food skyrocketing.

Source: Agencies (edited by Al-Manar English Website)

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When the Lies Come Home

June 19, 2022

After lying for months, the media are preparing the public for Ukraine’s military collapse.

Douglas MacGregor at The American Conservative

Diogenes, one of the ancient world’s illustrious philosophers, believed that lies were the currency of politics, and those lies were the ones he sought to expose and debase. To make his point, Diogenes occasionally carried a lit lantern through the streets of Athens in the daylight. If asked why, Diogenes would say he was searching for an honest man.

Finding an honest man today in Washington, D.C., is equally challenging. Diogenes would need a Xenon Searchlight in each hand.

Still, there are brief moments of clarity inside the Washington establishment. Having lied prolifically for months to the American public about the origins and conduct of the war in Ukraine, the media are now preparing the American, British, and other Western publics for Ukraine’s military collapse. It is long overdue.

The Western media did everything in its power to give the Ukrainian defense the appearance of far greater strength than it really possessed. Careful observers noted that the same video clips of Russian tanks under attack were shown repeatedly. Local counterattacks were reported as though they were operational maneuvers.

Russian errors were exaggerated out of all proportion to their significance. Russian losses and the true extent of Ukraine’s own losses were distorted, fabricated, or simply ignored. But conditions on the battlefield changed little over time. Once Ukrainian forces immobilized themselves in static defensive positions inside urban areas and  the central Donbas, the Ukrainian position was hopeless. But this development was portrayed as failure by the Russians to gain “their objectives.”

Ground-combat forces that immobilize soldiers in prepared defenses will be identified, targeted, and destroyed from a distance. When persistent overhead intelligence, surveillance, and reconnaissance assets, whether manned or unmanned, are linked to precision guided-strike weapons or modern artillery systems informed by accurate targeting data, “holding ground” is fatal to any ground force. This is all the more true in Ukraine, because it was apparent from the first action that Moscow focused on the destruction of Ukrainian forces, not on the occupation of cities or the capture of Ukrainian territory west of the Dnieper River.

The result has been the piecemeal annihilation of Ukrainian forces. Only the episodic infusion of U.S. and allied weapons kept Kiev’s battered legions in the field; legions that are now dying in great numbers thanks to Washington’s proxy war.

Kiev’s war with Moscow is lost. Ukrainian forces are being bled white. Trained replacements do not exist in sufficient numbers to influence the battle, and the situation grows more desperate by the hour. No amount of U.S. and allied military aid or assistance short of direct military intervention by U.S. and NATO ground forces can change this harsh reality.

The problem today is not ceding territory and population to Moscow in Eastern Ukraine that Moscow already controls. The future of the Kherson and Zaporozhye regions along with the Donbas is decided. Moscow is also likely to secure Kharkov and Odessa, two cities that are historically Russian and Russian-speaking, as well as the territory that adjoins them. These operations will extend the conflict through the summer. The problem now is how to stop the fighting.

Whether the fighting stops in the early fall will depend on two key factors. The first involves the leadership in Kiev. Will the Zelensky government consent to the Biden program for perpetual conflict with Russia?

If the Biden administration has its way, Kiev will continue to operate as a base for the buildup of new forces poised to threaten Moscow. In practice, this means Kiev must commit national suicide by exposing the Ukrainian heartland west of the Dnieper River to massive, devastating strikes by Russia’s long-range missile and rocket forces.

Of course, these developments are not inevitable. Berlin, Paris, Rome, Budapest, Bucharest, Sofia, Vilnius, Riga, Tallin, and, yes, even Warsaw, do not have to blindly follow Washington’s lead. Europeans, like most Americans, are already peering into the abyss of an all-encompassing economic downturn that Biden’s policies are creating at home. Unlike Americans who must cope with the consequences of Biden’s ill-conceived policies, European governments can opt out of Biden’s perpetual-war plan for Ukraine.

The second factor involves Washington itself. Having poured more than $60 billion or a little more than $18 billion a month in direct or indirect transfers into a Ukrainian state that is now crumbling, the important question is, what happens to millions of Ukrainians in the rest of the country that did not flee? And where will the funds come from to rebuild Ukraine’s shattered society in a developing global economic emergency?

When inflation costs the average American household an extra $460 per month to buy the same goods and services this year as they did last year, it is quite possible that Ukraine could sink quietly beneath the waves like the Titanic without evoking much concern in the American electorate. Experienced politicians know that the American span of attention to matters beyond America’s borders is so short that an admission of defeat in Ukraine would probably have little or no immediate consequences.

However, the effects of repeated strategic failures in Afghanistan, Iraq, Libya, and Syria are cumulative. In the 1980s, General Motors wanted to dictate the kind of automobiles Americans would buy, but American consumers had different ideas. That’s why G.M., which dominated the U.S. market for 77 years, lost its top spot to Toyota. Washington cannot dictate all outcomes, nor can Washington escape accountability for its profligate spending and having ruined American prosperity.

In November, Americans will go to the polls. The election itself will do more than test the integrity of the American electoral process. The election is also likely to ensure that Biden is remembered for his intransigence; his refusal to change course, like Herbert Hoover in 1932. Democrats will recall that their predecessors in the Democratic Party effectively ran against Hoover for more than a half century. Republicans may end up running against Joe Biden for the next 50 years.


Douglas Macgregor, Col. (ret.) is a senior fellow with The American Conservative, the former advisor to the Secretary of Defense in the Trump administration, a decorated combat veteran, and the author of five books.

President Putin: St Petersburg International Economic Forum Plenary session

June 18, 2022

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

Pepe Escobar created a very high-level summary:

THE NEW ERA

Top Ten Breakdown – as announced by Putin

  • The era of the unipolar world is over.
  • The rupture with the West is irreversible and definitive. No pressure from the West will change it.
  • Russia has renewed its sovereignty. Reinforcement of political and economic sovereignty is an absolute priority.
  • The current crisis shows the EU is not ready to play the role of an independent, sovereign actor. It’s just an ensemble of American vassals deprived of any politico-military sovereignty.
  • Sovereignty cannot be partial. Either you’re a sovereign or a colony.
  • Hunger in the poorest nations will be on the conscience of the West and Euro-democracy.
  • Russia will supply grains to Africa and the Middle East.
  • Russia will invest in internal economic development and reorientation of trade towards nations independent of the US.
  • The future world order, currently in progress, will be formed by strong sovereign states.
  • The ship has sailed. There’s no turning back.

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


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

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

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

* * *

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

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

We are also grateful to the audience.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Colleagues,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Friends,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We believe the development of a convenient and independent payment infrastructure in national currencies is a solid and predictable basis for deepening international cooperation. To help companies from other countries develop logistical and cooperation ties, we are working to improve transport corridors, increase the capacity of railways, transshipment capacity at ports in the Arctic, and in the eastern, southern and other parts of the country, including in the Azov-Black Sea and Caspian basins – they will become the most important section of the North-South Corridor, which will provide stable connectivity with the Middle East and Southern Asia. We expect freight traffic along this route to begin growing steadily in the near future.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Colleagues, friends,

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

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

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

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

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

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

Colleagues,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Friends,

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

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

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

Thank you for your attention.

Margarita Simonyan: Thank you, Mr President.

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

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

Thank you.

President of Kazakhstan Kassym-Jomart Tokayev: President Putin,

forum participants,

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Participants of the forum,

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

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

Thank you for your attention.

Margarita Simonyan: Thank you very much, President Tokayev.

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

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

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

President of the Russian Federation Vladimir Putin,

Ladies and gentlemen,

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

Ladies and gentlemen,

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

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

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

Ladies and gentlemen,

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

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

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

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

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

Ladies and gentlemen,

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

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

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

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

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

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

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

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

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

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

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

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

Thank you.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Ladies and gentlemen, friends,

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

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

Thank you.

Margarita Simonyan: Thank you, Mr President.

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

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

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

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

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

Maybe there is a different plan?

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Margarita Simonyan: As always.

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

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

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

To be continued.

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