Geopolitical tectonic plates shifting, six months on

August 24, 2022

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

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

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

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

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

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

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

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

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

The straw that broke the camel’s back

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

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

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

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

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

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

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

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

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

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

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

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

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

The facts on the ground

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

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

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

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

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

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

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

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

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

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

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

The BRICS+ show themselves as an alternative to the current international financial system, but still with caution

June 25, 2022

By Guilherme Wilbert

Since the beginning of Operation Z in Ukraine, unfortunately interpreted as an invasion or an occupation of Ukrainian territory by the Russians, realpolitik has accelerated integration among economic blocs of emerging countries, with several speeches by BRICS regional leaders speaking openly about the weight of emerging economies in global economic development.

Source

The last BRICS meeting on 06/23, with open criticism of western sanctions by China and Russia, showed well what the emerging economies are discussing at the moment: how to escape dollarized debt? Or better yet: how to implement an alternative system to the one established at Bretton Woods?

Vladimir Putin, the Russian president who overnight became “persona non grata” in Europe, is already talking openly about a possible basket of BRICS own currencies as an alternative to strengthen the national economies, with the most advanced countries, for example Russia itself or China, working openly with an economy of real production based on resource ballast for their national currencies, in the Russian case the Gaso-Ruble becomes a character, in the Chinese case, the PetroYuan emerges as an alternative to strengthen the Chinese currency.

Caution is walking hand in hand with haste for the emerging countries

While emerging countries are trying to gain international prominence through economic blocs that can prove to be alternative to the current international financial system, the members of these blocs, especially China, despite acting as a kind of leadership in this global turn towards de-dollarization, do not show imperialistic intentions as seen in the U.S. within their geopolitical blocks. For example, NATO, where it is clearly an aggressive military alliance led by the US to impose its policies and state interests. On the other side, this is not seen within the BRICS or Mercosur for example with a military alliance led by China or with groupings supported by the Chinese establishment for color revolutions in non-aligned countries.

Therefore the caution: BRICS cannot emerge as an alternative to do the same things in the same ways committing the same Western mistakes, in fact the opposite, if negotiating with Westerners you would be willing one day to have to deal with Uncle Sam carrying out a lawfare in its territory to overthrow a legitimate government, with China the concern is much more diplomatic regarding Taiwan for example, with criticism much more focused on humanitarian aspects by some analysts.

Brazilian diplomacy has shown concern with the political intentions of the BRICS, wanting the strategic partnership to continue in a win-win system and not to mix geopolitical meanings in order to face the old system, but this is due to the fact that Brazil is still strongly influenced by Washington, despite its recent independent foreign policy.
We are witnessing a paradigm shift in all senses with this Russian police operation in Ukraine, which revealed the face of the irresponsible weak western leaders that have hurt the global economy by causing 1. sanctions to have the reverse effect to the desired one (of breaking the Russian economy) and 2. sanctions to have the opposite effect to the desired one (of breaking the Russian economy). Many countries that carry out military offensives on their neighbors (like Saudi Arabia in Yemen) even though supported by international law and ratifying humanitarian conventions on the battlefield saw that Westerners, unfortunately, can still simply loot the wealth of some countries they consider non-aligned like Russia, Iran, Venezuela… And given this the emerging countries logically seek an alternative, with the difference being that for Westerners to do what was accomplished in Libya when Gaddafi attempted the same, they will now have to deal with a bear sitting on just over 5,000 nuclear warheads. The conversation is now essentially different.


Guilherme Wilbert is a Bachelor’s Law with interests in geopolitics and international law.

References: https://investogist.com/president-putin-says-that-brics-are-developing-global-reserve-currency/
https://noticias.uol.com.br/colunas/jamil-chade/2022/06/23/brasil-ve-com-preocupacao-ambicao-da-china-para-expandir-brics.html

It’s education, stupid!

June 02, 2022

Source

By Fẹmi Akọmọlafẹ

Maybe it is time the Collective West does something about its educational system.

Watching the performances of Russians and Western officials, one immediately notices that the much-touted and ultra-expensive “education “ provided in the West today is actually not up to par.

The Russian actions in Ukraine revealed a West where leaders remain emotional juveniles who continue to REACT jerkily to Russia’s deft moves. That’s when they are not busy projecting their own values and behavior onto the Russians.

Not only have the Russians vastly outplayed the West militarily, economically, and geopolitically, the actions/reactions of the West have boomeranged mightily to Russia’s advantage. The hyperinflation ravaging the West is just one example.

The exposure of the impotence of the much-touted NATO is also glaring for all to see; the Russians have made a mincemeat of what was touted as the best army in Europe, trained and equipped to NATO’s standards.

It is like every move by the Americans and their vassals in the EU was calculated to benefit the Russians.

This happened because they were ill-taught, and irrational resulting in pure emotional lash outs.

There’s simply no logic behind them.

A good example is how Western sanctions resulted in Russia earning jumbo income from selling less of its oil and gas.

Thank you very much!.

In addition to always being on top of their game, Russian officials always come across as well-educated, well-informed, well-mannered, sophisticated, cultured, and respectful. Western officials, on the other hand, attack the world as haughty, naughty, ill-mannered, ill-educated, uncultured, provincial, and narcissistic imbeciles.

They lack the elementary decorum necessary to engage peers in respectful manners. Ok, superciliousness, fueled by racist arrogance, might partly explain why they behave so, but we cannot discount the possibilities that they simply lack the education, the culture, and the home training required for civilized behavior, especially in encounters with other cultures.

The question needs to be asked how the Collective West ended up with the current gaggle of clowns holding positions of responsibility?

Examples abound aplenty: Just take a look at Sergey Lavrov and compare him with that dwarfish oaf, Anthony Blinken. Please, how did the once great US get to appoint that trashy lightweight idiot supposed to engage with a towering Diplomat of Mr Lavrov’s caliber?  Can’t a kindhearted one whisper in his ears how utterly ridiculous he appears and sounds when he issues stupid threats?

And how do we compare the seriously martial Sergei Shoigu with that Raytheon’s Uncle Tom arms merchant, Lloyd Austin?

And we then have the magnificent, confident, articulate, urbane and sophisticated woman Mr Lavrov appointed to speak for his Foreign Ministry. Please, do not take my word for it, just point out a Western official, male or female (forget the other stupid pronouns concocted by Western woke narcissists pumped up with hedonism), who can match Maria Zakharova in confident eloquence?

It didn’t use to be like this. The West was once great. I should know; I studied there.

Even as a student I noticed that there’s something terribly wrong with the type of education western institutions dish out to students starting in the late 1980s. It is quite noticeable, even to an undergraduate like myself, that there is a TOTAL disconnection between what is being taught at the universities and what transpires in REAL LIFE.

Take what is called Economics as an example. A degree, Bachelor of Science (B.Sc), is awarded to students who successfully complete the four-year program.

Any honest person will know that there’s absolutely nothing scientific in the potpourri of jargon western economists continue to string together to dazzle the gullible.

Meaningless figures and data are churned out to bamboozle people into believing that producing “services” is somehow superior to having mineral resources and a strong manufacturing base. The magicians, who masquerade as economists in the West, successfully cast spells that made people accept fancifully-printed papers, that are backed by nothing, in lieu of gold, diamond, cocoa, coal, titanium, and other real products.

These types of deliberate falsehoods and concoctions explain why Western economies are based on illusions and delusions as the Great V Putin exposed in recent encounters with the Collective West.

Arrogant and totally ignorant Westerners had no idea what the Russians had in stock for them when they started their stupid sanctions which they believed would destroy the Russian economy.

A little knowledge of history, geography, geopolitics, and geoeconomics should have informed the West that a country (the largest in the world) that is not only self-sufficient in food production, but produces almost all the metals required by all of the major industries and, in addition, is the world’s leading energy (oil and gas) producer, is not one to trifle or pick a fight with.

Most especially, not by a bunch of self-worshipping, resource-less, parasitical inconsequential nonentities like the EU states, who suffer from excessive self-regard.

There is little doubt the arrogance of the Collective West is fueled by ignorance which is a result of the poor quality of the education produced by the ideological institutions the West call universities, which have been transformed from places of rigorous learning into ones that produce only selfish, self-centered, narcissistic, hedonistic ideologues who are incapable of any thought beyond the ME!

Education reflects the mental attitude of the people. A society that recognizes neither wrong nor right, truth or falsehood cannot produce upright people who are capable of subjecting their thoughts and actions to deep reflections and applying the necessary breaks to curb their animalistic impulses.

Right from infancy, Westerners are brought up to regard everything as relative and to mix up rhetoric with actions.

Children in nurseries are told tales about the cow jumping over the moon. They are later introduced to the fable of a Santa Claus who deliver gifts through the chimney (let’s not mention the gross racism inherent in the Dutch version of that silly ‘tradition’). From here the westerner is told only tales about how his superior race brought the light of civilization to the rest of the world. Never mind the fact that half of the human drama passed before a European appeared on the scene. And never mind the documented fact that Europeans extinguished the light of civilization wherever they went. Let’s not even consider the absurdity of vandals and rapacious conquerors claiming to be civilizers! What civilization did Europe bring to the Americas? What superior knowledge, apart from that of guns, did the British bring to the Benin Kingdom?

A system of education that teaches everything about personal freedom but remains silent on responsibilities, basic values, and respect for elders and institutions cannot but produce self-seeking, self-affirming narcissistic individuals who will regard any suggestion or notion of rights of others as personal assaults.

A system of education that mistakes cheating and lying for cleverness can not but produce the type of Ambassador Michael McFaul who laughs,  when confronted with the lies the West told over Ukraine’s NATO membership and exclaimed: “That is the real world. Welcome to the real world.” https://nationalfile.com/thats-the-real-world-michael-mcfaul-laughs-off-lies-over-ukraine-nato-membership/

Basically, McFaul told us that the west exists in a real world where the telling of lies is the normal thing! Per his profile, McFaul is a professor in one of the top universities in the US. What type of minds will a man like McFaul produce?

Societies reflect the people that live in them. Western societies produced rugged individualistic-minded people who, in turn, find it difficult to cope with an international arena where the game is to give and take. Despite the fact that they proclaim their superiority over the rest of us, Western societies are incapable of operating on a level playing field. They cannot compete unless the cards are stacked in their favor. If they deny it, they simply should abandon their sense of entitlement and join the rest of humanity in playing by the rules agreed upon by the comity of nations.

Just take a good look at the current crop of Western leaders. The senile mannequin Biden has been a professional politician like for forever and a half. Macron is an investment banker, essentially one who conjures money from thin air, or what are derivatives, futures, etc?

The one in Germany, Scholz, is a lawyer. We all know that lawyers are born liars who make money by manipulating facts and telling barefaced lies. A great pity that we did not listen to Shakespeare and kill all the lawyers!

That lying, cheating, racist, boorish, unscrupulous, drunken addict like Boris Johnson became the leader of a former Great Britain shall forever remain one of the greatest mysteries of our time. It shall also go down as one of the worst things the British did to themselves.

Please, don’t get me wrong, I shed no tears for the inhabitants of that Island of iniquities.

Sadly, for them, the Collective West used to have very solid leaders. No matter how much one disagrees with them or hated their ideology, one cannot but respect Ronald Reagan, Helmut Kohl, Margaret Thatcher, Francois Mitterrand, and George Bush sr.

These men and women were true statesmen, prepared to defend their national interests while recognizing the need not to negate the interests of their peer actors in the global geopolitical arena.

Both Reagan and Thatcher were extreme ideologues, but they still both recognized that they cannot wish the USSR (Russia) away without destabilizing the global security architecture. They acted accordingly.

Alas, today, there’s not a single leader in the West with either the intellectual depth or the cultural sophistication to handle complex geopolitical issues.

Examples:

  • At his first meeting with Chinese officials, the arrogant but amateurish US Secretary of State was promptly shot down by a Chinese official who told him point-blank: “The United States does not have the qualification to say that it wants to speak to China from a position of strength.”
  • In their encounter,  Russia’s FM Lavrov publicly humiliated the queen that poses as the UK’s FM, Truss, by exposing her shallowness and ignorance of basic geography.

With leaders such as these, it is little wonder that the west continues to self-destruct with the speed that few people thought possible.

First, western officials’ lack of simple courtesy, manners, and etiquette is quite stunning.

In many cultures, bullies are considered uncultured philistines and are promptly dispensed with. Even at the height of their war with Iraq we witnessed how US Secretary James Addison Baker continued to extend diplomatic and personal courtesies to his Iraqi counterpart, Tarik Aziz.

Puffed up with insane arrogance, the West rushed to impose thousands of sanctions on Russia. The belief was that the sanctions would cripple Russia and make it forgo the pursuits of its national interests.

So many things are terribly wrong with this assumption and it can only be the product of utterly stupid brains. Just a few: How could anyone in their right mind think that the Russians would have failed to consider ALL possibilities before they decided to confront the west in an existential struggle?

Forget about the Ukraine, Russian officials told whoever would listen that the Ukraine is just a sideshow; upending western domination is the ultimate goal. The Russians simply had enough of bullying and they planned to put an end to it.

Russians are world champions in both mathematics and chess playing, one must be utterly daft to even think that a Judoka like V Putin will go into battle without adequate preparations and preparedness.

Three months later, not only did Russia shrug off all the touted “sanctions from hell,’ but its economy is back on track, steady income are streaming into its treasury, and its currency, the Ruble, has emerged as the best currency in the world!

Instead of the Ruble turning into rubble as the dimwit Biden promised, Russians today worry more about the strength of their currency.

So, how did the West get it so spectacularly wrong?

It’s education, stupid.

While other societies stepped up on the teachings of mathematics and science, the West focused its attention on WOKISM.

The teaching of new pronouns became more important to a people that have become over-obsessed with their genitalias. Not even children were spared in the degenerate obsession to sexualize everything.

The west abandoned the teaching of history. So, people grew up not knowing anything about their past. Years of obscenely grotesque overconsumption produced inert citizens who became too decadent for their own good.

The consequences of these long years of easy living (off the back of foreign resources) are people who deluded themselves that their easy living was made possible by some immutable law of nature.

Westerners forgot that the institutions and the unfair international economic setups which guarantee them to live like exceptionalists were created by crafty, highly-educated, and far-seeing men and women who managed to collar the best advantages for the West.

Example: We saw how spectacularly the Euro has nosedived since V Putin asked Europeans to pay for his gas in his currency.

Not only have the ill-thought sanctions boomeranged badly on the sanctioneers, but the west has also ended up financing Russia’s military campaign in the Ukraine.

More sanctions from hell, please!


Fẹmi Akọmọlafẹ is a writer and a published author. He is a member of the Ghana Association of Writers.

His latest book, “Africa: a Continent on Bended Knees” is available on:
Amazon: https://www.amazon.com/Africa-Continent-Bended-Femi-Akomolafe-ebook/dp/B08FGZNJ5T
On Ghana Association of Writers Website: https://www.gaw.org.gh/product/africa-a-continent-on-bended-knees/

Pepe Escobar : Interview with The Press Project

May 22, 2022

From a unipolar to a multipolar world.  This is my itvw with the wonderful folks at The Press Project in Greece.  In English, with Greek subtitles.

After the NATO War is Over

May 17, 2022

Source

By Batiushka

Make no mistake about it: The tragic war that is currently taking place on Ukrainian battlefields is not between the Russian Federation and the Ukraine, but between the Russian Federation and the US-controlled NATO. The latter, also called ‘the collective West’, promotes an aggressive ideology of organised violence, a politically- economically- and militarily-enforced doctrine euphemistically known as ‘Globalism’. This means hegemony by the Western world, which arrogantly calls itself ‘the international community’, over the whole planet. NATO is losing that war, which uses NATO-trained Ukrainians as its proxy cannon fodder, in three spheres, political, economic and military.

Firstly, politically, the West has finally understood that it cannot execute regime change in Moscow. Its pipedream of replacing the highly popular President Putin with is CIA stooge Navalny is not going to happen. As for the West’s puppet-president in Kiev, he is only a creature of Washington and its oligarchs. A professional actor, he is unable to speak for himself, but is a spokesman for the NATO which he loves.

Secondly, economically, the West faces serious resistance to the 6,000 sanctions it has imposed on Russia and Russians. Those sanctions have backfired. In the West, we can testify to this every time we buy fuel or food. The combination of high inflation (10% +) and even higher energy prices, caused almost solely by these illegal anti-Russian sanctions, are threatening the collapse of Western economies, much more than threatening Russia or China. As a result of this reverse effect of sanctions against Russia, the rouble is at a three-year high, standing at about 64 to the US dollar and rising, though immediately after the sanctions it had briefly gone down to 150 to the dollar.

After strenuously denying that they would do it, already most countries in Europe (at least 17 for now), including Germany and Italy, have agreed to open accounts with Gazprombank, as Russia advised them to do and to pay for oil and gas in roubles. And this number is growing by the week. The problems will be even greater with food shortages, as the world food chain is highly integrated and the agricultural production of Russia and the Ukraine (now controlled by Russia) is at least 40% of the world’s grain production.  Just days ago it was announced that Russia expects record grain production this year (130 million tonnes). Russia may yet demand payment in roubles for all this as well.

The sanctions against Russia have divided Europe and are threatening to divide NATO. President Erdogan of Turkey, a NATO member, has announced that he would veto the entry to NATO of Finland and Sweden into NATO. At the same time, Russia has announced that it will cut off Finland’s natural gas supply. Swedish leaders are re-thinking their entry to NATO.

Thirdly, militarily, it is clear that the Ukraine, with huge numbers of desertions and surrenders, has no chance of winning the war against Russia. Most of its military equipment has already been wiped out and newly-delivered and often antiquated Western equipment will make little difference, even if it is not destroyed by Russian missiles as soon as it reaches the Ukraine. The conflict could now be over within weeks, rather than months. The US ‘Defense Secretary’ (= Minister for Offense), Lloyd Austin, has desperately called the Russian Defence Minister Sergey Shoigu to beg for a ceasefire. Would you agree to a ceasefire when in less than three months and with only 10% of your military forces you have already occupied an area greater than England inside the Ukraine, an area that produces 75% of Ukrainian GDP?

The panic of financial disaster in the West has begun to set in. As a result, the French President Macron has told President Zelensky (that is, told Washington) to give up part of Ukraine’s sovereignty and at last start serious negotiations with Russia. Macron is also trying to free French mercenaries from Azovstal in Mariupol, but the problem is much bigger than this, as the whole of Europe is facing economic meltdown. And the Italian Prime Minister, Mario Draghi, has asked President Biden to contact President Putin and ‘give peace a chance’. Note that Mario Draghi is a former president of the European Central Bank and a Goldman Sachs puppet – just as Macron is a Rothschild puppet.

There have always been empires and invasions throughout history. However, they have always been local and not been justified as the only possible global ideology, a ‘New World Order’, to be imposed by violence all over the planet. After the NATO war is over, lost by ‘the collective West’, NATO Centralism, the ideology of a ‘Unipolar World’, controlled from Washington, must end. However, Centralism must also come to an end everywhere else, like that under Soviet-period Moscow (1).

However, Nationalism must also come to an end. Here we should remember that the very word ‘Nazism’ comes from the German words for ‘National Socialism’. (Nationalism entails hatred for others, whereas Patriotism means the ability not only to love your own country, but also love the countries of others, not hate their countries). And the Ukraine has a history of Nazism, stretching back over eighty years. Moreover, today’s leading Kiev soldiery are Nazi nationalists and represent the tribalism so typical of Western Europe, responsible in the twentieth century for two huge wars which it spread worldwide. The Nazi Ukrainian cries of ‘Glory to the Ukraine’ and their slogan of ‘Ukraine above Everything’ are slogans of Nazism.

Let us move to a world that is multipolar and multicentric, which has unity in diversity and diversity in unity. If we do not move towards this, we will probably be lost. For a multipolar, multicivilisational and multicultural world, the world of seven billion human beings already, is the only civilized world, the only true international community.

Note:

1. Here anti-Semites will tell you that the Centralism of Soviet-period Moscow was founded by the Bolsheviks, of whom over 80% were Jews. Firstly, it should be pointed out that they were atheist Jews, internationalists like Bronstein/Trotsky, who supported the ‘Third International’. In other words, they were political Zionists (not religious Zionists, indeed, they were anti-religious). And let us recall that a huge number of Jews were and are anti-Zionists and a huge number of Zionists were and are not at all Jews. This is why the Saker rightly uses the term ‘Anglo-Zionism’ for these unipolar centralisers.

Why Russia´s oil ban is impossible

May 15, 2022

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by Jorge Vilches

How can you be so sure Jorge ? Please allow me 10 minutes to make my case with this focused, easy to follow, all-inclusive, and fully vetted explanation. Then I humbly and cordially challenge any individual or institution to prove me wrong. If history is any guide, banning Russian oil would turn EU members into failed states. Furthermore it would FUBAR world market dynamics by altering Russia´s current stabilizing role thus triggering moving parts into motion.

6 key criteria

Beware: the reliable provision of Russian oil to the EU is essential because of its quality, quantities, price, service and delivery enlargement that Europe needs to constantly grow. Banning Russian oil means finding many different oils – from many new unproven vendors – that would have to render the same homogenized profile of delivery, quality, quantity, price, service and enlargeability that Russia reliably provides today. Nothing less, of course. Think about it.

Otherwise we cannot have the Europe we now know and the future Europe we need. All 6 factors are required. Not enough quantity adequately delivered means degraded European lives and failing economy, with shut down plants and refineries affecting transportation, heating, hospitals & schools, highly limited military, unemployment, etc., etc.

A different or lower oil quality means poor performance and operational risks with serious breakdown troubles and injuries plus down-time probably beyond repair. Not low enough price — Russian fuels are good & cheap — means disrupting the EU and the world with inflation beyond imagination. And as Procurement Depts. know well, an utmost reliable vendor service is paramount also to allow for mutual growth. Russia is a vetted, close-by, one-stop, well “oiled” 6-criteria compliant vendor. Instead, the EU´s losing proposition is a far away beach-front bazaar with seaborne delivery only, shipped by a fleet too small for purpose. A single non-compliant vendor is simply unacceptable, period.

Furthermore, Russia´s oil sales to Europe provide a stabilizing critical mass to compensate for world market variations

3 impossible missions 3

The huge problem is that there are 3 and only 3 ways out of this terribly EU mis-managed fuel sourcing hellish-crazy messy mess. For all 3 options in order to comply with the 6 oil criteria briefly explained before (more on that later) the EU would be required to import variable quantities from several different yet unknown vendors having

(1) fully compliant export-ready oil grades to be produced beyond and incremental to current production (#)

and/or…

(2) fully compliant oil grades found deep underground somewhere yet unknown per definition 0% available today

or…

(3) modify every single piece of machinery in the EU to fuel them with different non-compliant non-Russian oils…

and with no possible “toggle switch” to convert from one type of oil to another… We´d have a forcefull life-long linkage between one vendor and his supposedly constant oil deliveries, which would be different from other vendors and their supposedly constant deliveries made to other EU consumers. NO interchangeability here.

(#) It´d have to be “incremental” export volumes beyond current production for two reasons: one would be potential growth in EU demand and the second reason is that no vendor will leave traditional customers abandoned high & dry just because the EU has now gone bananas. Furthermore, these contracts could might all turn out being short-term ephemeral un-sustainable ´purchases of convenience´ without continuity to be dropped the instant the EU´s “ban Russia´s oil” stops dead in its tracks for plenty of good reasons and thus discarding this nonsensical idea altogether.

Be it as it may, all 3 options require to find, negotiate, contract, plan for, test, schedule and get delivery of fully compliant Russian-oil substitutes. Per definition Option (2) does not exist today – if ever — and can only be considered for 2030 planning purposes or beyond in view of the firm 2022 EU deadline premise. Option (1) requires to import varying qualities, quantities, and prices of oils currently in production somewhere, if any are found, which as explained later due to current circumstances and overlapping requirements turns out to be 99% doubtful. Option (3) requires to modify, retrofit and adapt each and every European refinery, chemical & processing plant, machinery, engines, etc. etc. — everything powered by fuels really — for individual, specific not-interchangeable non-Russian oil substitutes which would all be slightly different at the very least and expensive. As shall be duly shown Option (3) is impossible.

“ We will make sure to phase out Russian oil in an orderly fashion in a way that allows us and our partners to secure alternative supply routes and minimises the impact on global markets” – said Ursula von der Leyen, President of the European Commission. Quick response, no that will NOT happen Ursula. Neither markets nor Russia nor EU Green Standards nor prices nor regulators will let you do any of that. It will necessarily be very chaotic although most Europeans may not yet know it. Renewables and fancy footwork such as hydrogen or dirty coal & fuel oil will make things worse. Bankruptcies and unemployment would follow. Specifics are presented later herein. Let me explain.

Ref #1 https://oilprice.com/Energy/Energy-General/Why-Renewables-Cant-Solve-Europes-Energy-Crisis.html

Ref #2 https://worldcrunch.com/business-finance/europe-russian-gas/floating-lng-terminals

Ref #3 https://worldcrunch.com/business-finance/europe-russian-gas/particle-4

timing, volumes & judo

Now comes what would normally be described as a multiple-ring circus with the animals and clowns running lose.

Technically speaking, all three options should be dismissed altogether, particularly under current most unfavorable circumstances. Also beware that Europe needs to avoid a self-inflicted Armageddon depression. The reason is an EU ban on Russian oil means per Option (1) to engage in a years-long import development project with non-vetted vendors (from Africa ?) covering absolutely 100% of all the EU current and future oil consumption. So the EU should necessarily replace ALL the Russian oil Europe could possibly ever consume, NOT just a part. Because Russia now has other priorities and will no longer cooperate with and adapt to EU needs and timing in any way. So forget about gradual Russian oil substitution. It´d be the opposite Ursula. For example, and just to entertain the idea, even if eventually achieving constant delivery of 75% fully-compliant non-Russian oil per Option (1) – impossible — it´d still mean digging a 25% deep hole into Europe´s economy, which Russia will not help to solve by supplying the missing 25% oil. The Druzhba pipeline supplies land-locked refineries in Poland, Germany, Hungary, Slovakia and Czechia, so no need to shut down all of Europe. Just triggering a strong negative impact on a couple of countries would be enough A brief cut-off on Germany´s Schwedt refinery or Slovakia´s Slovnaft would be unbelievably catastrophic by shutting down continuous year-round processes which cannot be re-started and would mean irreparable harm. So the EU would need to substitute forever with whatever ALL of the almost infinite and excellent quick & safe delivery Russian oils. Europe just makes naïve and rigid moves ignoring Russia´s clever dynamic capabilities. Judo comes to mind. Ask Finland how does the Russian gut punch feel while now being cut off from both Russian nat-gas and electric power.

Ref #4 https://www.rt.com/business/555414-russia-gas-supplies-finland/

Ref #5 https://www.wionews.com/world/russia-to-suspend-finland-electricity-supply-from-weekend-over-payment-issues-478731

the solar system (… and beyond)

And if EU politicians don´t know or don´t care they´ll still very soon participate front and center in a fast & furious crash course on basic high school chemistry that will turn their faces pale, I promise. Hungary has publically exposed the problem: “the EU has ‘no solution’ to fix damage from Russian oil ban”. Also promised, history will not be kind with the EU leadership both for absent fuels and everyday consumer staples with “prices out of the solar system”. The EU relies on cheap and efficient Russian energy for many things such as transportation, heating, and electricity. The drop in supplies will lead to blackouts, shutdowns in industries and unemployment pushing inflation to unmanageable levels Ref #6 https://www.rt.com/news/555297-hungary-eu-no-solution/ .

Ref #7 https://oilprice.com/Energy/Energy-General/Record-High-Diesel-Prices-Will-Ripple-Across-The-Economy.html

Ref #8 https://www.zerohedge.com/markets/record-airfares-and-soaring-food-prices-whats-behind-todays-surprise-cpi-beat

Ref #9 https://www.rt.com/business/555295-ukraine-block-russian-gas-explainer/

OIL - Santos Holding

renewables do not help

Renewables have other known serious problems but also require humongous loads of Russian nat-gas, oil, coal, minerals and commodities. Wind turbines require thousands of tons of nickel and rare earths. Any such large structures are moved and erected with Russian fuel-powered equipment. Solar energy requires silver beyond belief. When renewables in large quantities are added to the electrical grid, costs go up – not down — as they have to be backstopped by thermal plants that today run on Russian fuels. “The more renewables you add, the more natural gas you need”. Ref #10 https://www.zerohedge.com/geopolitical/lighting-gas-under-european-feet-how-politicians-journalists-get-energy-so-wrong

delivery + quality + quantity + price + service + reliability

The 3 options above are impossible to deploy for many reasons besides timing. For example, even if ever found, these 3 options need to be contracted, planned for, tested, scheduled, and delivered under very strict conditions that Russian sources already comply with regularly and reliably. Europeans are necessarily very much used to proven, vetted, Russian vendors and will not be acceptable to find it otherwise. It´d hurt Europe badly and possibly leading to outward chaos by continuous damage beyond repair of machinery, processes, sensitive devices and installations that EU plants currently have in place. With Russian sourcing, European production runs swift and smooth humming in all 8 cylinders… but not so with possible others… even if physical deliveries were adequately met. Also it´s easy to imagine vendors having something that Europe would buy, that still under current circumstances would not even wish to entertain the idea of offering anything to Europe let alone helping it out in any way shape or form. Think India and China, the world´s factory countries in many ways. And of course Russia would not help out Europe in any of the above 3 impossible missions. Russia will naturally – and probably very effectively — hinder any European effort or solution to replace Russian exports. The risky low tides and strong headwinds are fully against Europe, not Russia.

petro-logistics 101

So then why do I say ´impossible´ ? The short answer is that “petro-logistics” make it physically impossible to ban Russian oil from Europe no matter how it´s diced or sliced as explained hereinafter in layman´s language. The name of this game means that “plug & play” of ensured adequate substitutes for Russian oil grades – options (1) and (2) respectively — are and will always remain clearly absent in quantities anywhere near large enough to make any difference for European needs. Chemical composition and physical parameters matter lots. Options (1) & (2) are out.

Option (1) – In the very best of cases, only useless, tiny small, and sporadical deliveries — if any, actually — would ideally be found, let alone effectively contracted on a necessarily predictable basis. I´d call them minor deliveries of substitutes not comparable to Russian oil. At any rate, the above would be operationally un-manageable as no plant can run if receiving supplies on a highly variable and ocassional basis of now-you-have-it (maybe) now-you-don´t (sorry) with feeds of dubious quality and composition. The EU today has highly sensitive plants finely tuned and used to Russian high quality oil during decades. So no plant runs without continuous, foreseeably constant feed of the right quality product (read chemical and physical properties) in large enough quantities which most probably will grow in time as demand increases. Otherwise no processing works as expected, or I´d rather say nothing works, period. This is shared by anybody with minimum plant hands-on or managerial experience, even millennials. So these facts all by themselves pretty much blow out options (1) and (2) out of the water. I confess that many times I disbelieve having to present such basic explanations. And no high sulphur content allowed as hydrotreating has reached its limits long ago

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

Franz marries Natasha

Early this century, former German Chancellor Gerhard Schröder´s philosophy and policies led to a very clear and conclusive European strategy vis-á-vis energy sourcing. Very simply put in everyday terms, fuel-wise Europe married fuel-rich Russia and soon had plenty of babies that have now grown-up and crave for Russian food. Now enter the violent situation re Ukraine thru NATO´s provocation according to Pope Francis, and with an idle North Stream 2 fully wasted and just sitting pretty. So the whole European successful exporter industrial base was conceived, designed, built, and operated under the ´Russian fuels´ premise. That is why every EU government has failed to find the architectonics — let alone build — a realistic energy strategy that does not depend exclusively on Russia´s capability as an EXTRAordinary and reliable commodities exporter, most specially fuels. So Franz married gorgeous Natasha and raised a family. But now, per Anglo-Saxon ill-intentioned directives, Franz forces a divorce. The problem is that their children still demand Natasha´s Russian food. Ref #11 https://www.politico.eu/article/pope-francis-nato-cause-ukraine-invasion-russia/

helpfull SKovacs

The comments section of my latest article gained greatly from the input offered by SKovacs an excellent and friendly poster who shared his first hand 30-year knowledge in the oil & gas business with us all.

Please see link referenced below. So I´ll just summarize and/or quote what this most experienced poster had to say

  1. many EU refineries have been built to process certain types of oils found in Russia. The very design & build of these refineries (and petrochemical plants) was based on certain specific oil types within narrow variation in blend/quality and steady supply — variation normally of less than 15% vol/day — guaranteed for over 30 years (most commonly 50+ years). Obviously enough, the continuous supply of quality feeds is critical to the operation of a refinery or any chemical plant.
  2. adapting an EU refinery to new types of oils is not an easy task. Every adaptation of a chemical plant or refinery or ore processing plant requires first a detailed laboratory knowledge of the new blend, and formal guarantees for its continuous delivery for decades, convoluted & lengthy contracts and procurement processes, extremely detailed engineering plans, manufacturing of parts, shipping, installation, testing, commissioning, optimization, permitting etc. etc. etc. before it can be declared “done”. Any element of this incomplete list, if missing, renders the whole affair a failure both technically and economically…
  3. the above assumes guaranteed efficient and continuous shipping and receiving network(s) are always in place and fully operational (!) Such work involves thousands of people, complex processes and of course many billions of euros, regulatory permitting process, inherent lawsuits etc., i.e. A LOT OF TIME – years !
  4. Europe deprived of oil/gas/metallurgical coal from Russia — and also iron ore — is unlikely to build much. Never mind the finer components that require other alloy metals which are also provided by Russia…

Ref #12 https://thesaker.is/europes-mad-ban-on-russian-oil/

matched & mated

As already described, chemical plants and refineries are very closely matched and subtly calibrated to very specific and foreseeable supply feedstocks which are also very difficult to substitute. Changing anything requires lots of time, effort, money, dedicated facilities, experimentation, specific expertise, risk, and most important fixed, unchanging feeds always complying with specs. This means that Russia today supplies Europe with exclusive unreplaceable oil & gas grades of very specific chemical content (even coal grades) that would be impossible to get from third parties fast enough and cheap enough. So it´s a very delicate and tight matching already achieved between European facilities and reliable and vetted Russian fuels and other inputs that cannot be altered or replaced, let alone all at the same time (!!) or else… So another factor is the “sudden death” moment, no possible easy-does-it slow and smooth transition phasing out the Russian stuff one at a time and gradually phasing in our new whatever stuff… It´d be like trying to change a tyre as you keep driving without ever stopping the car okay ? Ref #13 https://www.ifo.de/en/node/69417

what for ?

And this banning of Russian oil idea defeats the supposed purpose as Russia would end up earning much more by exporting far less. And the higher the price of oil, the higher the inflationary pressure worldwide destroying the income of regular people. Go figure…By the way, it´s a single oil world market Ref #14 https://www.bbc.com/news/business-60656673

And of course, Russia wouldn´t dare to retaliate against its oil ban with delivery reductions of, say, gas or uranium, would they?

logistics

Banning Russian oil also means altering the traditional direction of logistic flows which is costly and risky. New shipping freighters are unprepared for unknown delivery schedules and product specs. Ports and oceans are different, same with shipping lanes, climates, seasonal availabilities of hydrocarbons and shipping vessels types and sizes which means lots of negotiation, coordination, funding, expertise, risk, new fixed and variable costs and surprises from yet unknown trade and business partners, new procedures, brokers, insurance companies, etc. Also expected continuity, LNG & LPG terminal bottlenecks, processing, availability, cost, weather restrictions when most needed.

Russia´s oil & gas pipe delivery to the EU is safe, clean, and cheap. Russian sea freighted oil comes for nearby ports.

EU acquatics + age & Whatsapp

Altering the Russian energy sourcing strategy now leaves Europe gasping for air with its nose dangerously close to the waterline. By design, chemically speaking Russian feeds are a European absolute sine-qua-non. It is technically unfeasible and unsustainable for Europe not to count on Russian oil & gas. Politics – or war for that matter — can´t change that. If this Russian oil ban is ever implemented, European operational and maintenance staff & field personnel would probably demand being switched to other jobs… or will drag their feet… or would simply resign thus necessarily compounding the problem to unchartered depths. New, young, inexperienced hands do not help under these experimental circumstances, trust me. With or without Whatsapp, having baldy and/or grey-haired guys around is a greatly-appreciated feature/asset, never a bug. Many would be called back from retirement, read my lips.

now some petrophysics

So option (1) applies to all non-Russian oils currently under production but not necessarily offered for sale. Option (2) refers to future oil theoretically down in subsurface in yet untapped reservoirs of hyper-low possible existence in ultra-low production volumes. If you are in the business agreed it´s pure nonsense to go into the details of such an experiment. But apparently the topic now needs to be politically addressed and explained, so bear with me and so be it. To make a long story short, petro-physically speaking these Russian oil grades actually cannot exist elsewhere for very clear and well-known limiting geological parameters. So not only these oil grades can´t be sourced somewhere else but it´d also be a monumental royal waste of time and money to look for such down in subsurfaces yet unknown,

to no avail. Nobody in the business will invest time, money, expertise and valuable people in such failed idea. No way.

pain but no gain

But be it as it may with options (1) and (2) no complying Russian oil & gas grades are available anywhere outside of Russia, neither today nor in the future, let alone in quantity and quality and required vendor reliability to make any difference. And it would certainly focus the European attention properly if everyone please gets used to this idea, the faster the better, Ursula included. So the supposed ´Russian oil ban´ is impossible simply because Russian oil grades do not have and will not have any complying substitutes for the foreseeable future anywhere above or below ground. Such tremendous conclusion leaves one and only one hellaceous alternative open to be discussed in detail below – namely Option (3) — as from the “Mohammed and the Mountain” paragraph thereafter. But so as to avoid running around in circles proposing impossible chimeras, Europeans at large and most specially EU politicians should not forget that today or in the future Russian oil grades are un-replaceable for European consumption. What´s left is technically dreadful and socio-politically most dangerous as we shall soon read about below as Option (3)

LNG / LPG ?

Lots of suggested overly optimistic “solutions” were posited regarding LNG / LPG. Not so. The comments section of my latest article covered this very thoroughly. Please see link below. Most especially we should all thank SKovacs once again for sharing a lot of his 30-year first-hand knowledge in the industry with us all. So I´ll just summarize and/or quote what this most experienced poster has reported regarding LNG / LPG.

  1. There are not enough vessels — oil tankers nor lNG tankers — to replace existing pipelines. At least, a few dozen more are needed. How long and what does it take to build these? Who would build them? By when?
  2. European countries are extremely bureaucratic, so say ~20 years to have 1 LNG terminal ready where this is possible and if not vetoed by the local council. Meanwhile, a pipeline must be connected from the terminal to the existing grid… with further complications at every level. What capacity should these terminals have vis-á-vis the related new pipelines? Nobody can know that today [and thus adding even more load to timing demands]
  3. Transit times on the tankers change and existing EU southern pipelines are probably at full capacity already.
  4. Tankers are far more costly to operate as liquefied gas has to be kept liquefied re power-hungry refrigeration.
  5. Tankers have a more costly service life than other bulk tankers, if only for the regulation/inspection requirements. So therefore they are a higher risk with higher cost per cubic meter of gas transported vs. cheap, reliable, safe, environmentally friendlier pipelines.
  6. the EU needs several LNG terminals to receive and process liquefied nat-gas. The sites have to be carefully chosen, their expensive environmental impact assessments completed (which can take 5 to 15 years) with engineering design that can also take years with limited room for direct carbon copy of other designs, plus ground preparation construction would take 1-2 years + manufacturing of plant and modules (usually in Korea and China, would they now agree ? ) which need contracts, capacity, materials, etc, lots of time and shipping.
  7. By the time all is said and done ~15+ years went by per first-hand knowledge…
  8. All LNG terminals are owned/built/operated by consortiums of gigantic multinational companies, not governments. They cost 10’s of billions to design and build, which need to be borrowed from banks.
  9. The borrower must prove that it has a solid plan with guarantees in place to repay the loan with interest.
  10. The owner/operator of the terminal has all sorts of other very important liabilities.

Ref #15 https://thesaker.is/europes-mad-ban-on-russian-oil/

Russia delivers its oil & gas to some key EU locations through low-cost, safe, efficient, door-to-door clean pipelines.

Hungary has proposed to exempt all of Russia´s pipeline delivered oil from current or future EU sanctions or embargo.

Ref #16 https://oilprice.com/Latest-Energy-News/World-News/More-Oil-From-US-Strategic-Petroleum-Reserve-Heads-To-Europe.html

then nuclear maybe?

Germany had 15 nuclear plants in operation. But no more. The last 3 operating nuclear plants in Germany were scheduled to be decommissioned permanently in 2022. Part of the “Green Agenda” in the EU is to eliminate nuclear plants. France does not approve this, but is having technical trouble with its nuclear plants. France has said it will shut down 50% of its nuclear plants for critical maintenance this year at the worst possible timing imaginable. No uranium as usually imported from Russia is the final monkey wrench shoved merciless inside the guts of the European engine.

Ref #17 https://www.bbc.com/news/business-61298791

no time & no volume…

Question: but what if such Russian oil grades substitutes were prospected for and luckily found in the future ? That´s Option (2) which would first require lots of time we don´t have, plus tons of money, and a major serious ´life or death´ European-led major fossils fuels project in order to adequately and successfully explore such hypothetical reservoirs nobody has heard of today and with zero guarantees in a most risky and extraordinarily expensive business The EU Green Plan environmental agenda would not allow for that either. Plus those hypothetical reservoirs would also need to be geologically studied and mapped, with many thousands of sample cores lab tested before wild-catted or factory drilled and fracked (if allowed) to industrially produce and deliver thru today´s non-existent infrastructure in yet unknown reservoirs most surely in the middle of nowhere in politically and environmentally unstable environments.

And as happens 95% of the time, even if luck strikes big in Europe´s favor, such oil grades would only be found in very small rapidly depleting volumes (boom & bust oil towns) not anywhere close to solving the Russian massive oil availability problem Europe now faces per its own misdoings. Of course, also needed would be tons of infrastructure which doesn´t exist today, including many special heavy-duty traffic-intensive roads, thousands of housing quarters, plenty of power generation and power distribution lines and equipment, readily available water in enormously large quantities, environmental and political approval (with “not in my back yard” mentality working against you) regulator´s intervention, reasonable year-round climate, etc. etc. etc. No need to go on, is there ? Oh…

… and no money

Normally, if successful, the above takes 10 to 15 years or more (!) and even if ever found such oil grades would be prohibitively expensive as in UN-payable. Europe simply does not have or earn that kind of money which the ECB cannot print either. We are talking many trillions of euros in an already 990% overloaded financial system ready to break its own back with a single added straw. Christine Madeleine Odette Lagarde – President of the European Central Bank — would not authorize such nonsense, sanctions or no sanctions. She knows better than that.

physical chemistry & engineering

So Russian oil grades do not have available substitutes both in the needed quality and quantities, neither currently under production nor subsurface for future exploitation. Accordingly, the only other possible solution is exactly the other way around ( Option 3 ) which does exist as a most unprobable possibility and is enormously difficult and time + resource consuming to execute. Actually, under current circumstances, this “other” alternative is absolutely impossible to put into practice simultaneously and throughout Europe with the same fixed deadline. When you “phase out” all of the current Russian oil as the EU´s leading politician Ursula von der Leyen emphatically repeats… well, to put it kindly Ursula… you better simultaneously “phase-in” the corresponding operationally-adequate replacement for such. Or else you would be perpetrating the Mother of all Suicides of the Europe we know. Such phase-out / phase-in tango is very difficult to dance about with, let alone without absolutely any help from Russia. So, as if they had not learned anything during the past two centuries, Europeans are happily playing Russian roulette with their own gun.

Mohammed and the mountain

Refineries and chemical plants cannot be fed anywhere near the way you feed your dog, period. This means that if the Mountain won’t go to Mohammed, then Mohammed must come to the Mountain, namely all of these highly technical European chemical plants, refineries and machinery have to be either (a) newly built from scratch or (b) completely re-vamped and retrofitted thru an enormous effort that will consume humongous amounts of euros, human resources, expertise, trials & errors, risk and lots of hard work and lots and lots of TIME we do not have. Enter Option (3)

mission impossible #3

Below please find a very brief descriptive summary of the basic requirements involved for such Option (3) EU-wide project. Actually there are many more, so this listing just pretends to give readers an idea of the category and caliber of the major endeavor Europe would be facing, namely mission impossible Option (3).

All refineries, chemical plants, etc.,etc. etc. in very broad terms need to undergo all of what is explained below which has been detailed only for the sake of completeness and the corresponding credibility. But actually any minimally experienced person that only knows some basic chemistry and process engineering concepts would understand that it should be absolutely unnecessary to continue describing the head-on technical/practical crash that the whole of Europe would be facing if adopting the only remaining game in town, namely Option (3) or better yet Chaos (3)

Chinese fire drill

In sum, in order for installed plants & processing capabilities to remain as they are intact & untouched, per options (1) and (2) Europe would need to effectively find, negotiate, contract, plan for, test, schedule and receive year-round rain or shine come hell or highwater adequate Russian oil grade substitutes in the right quantities, qualities, vendor reliability and prices. That is out of the question as it just doesn´t exist and will not exist either for reasons explained.

The only card left is to modify all current European chemical plants and refineries etc by adapting them to whatever feeds of whatever quality and variations are effectively found, contracted and delivered by non-Russian vendors willing and able to sell to Europe under current circumstances. Oh, by the way, this would have to be done throughout Europe and all at the same time. A Chinese fire drill would be considered a well-organized event in comparison.

Option (3) : modify, adapt, retrofit European refineries, chemical plants, equipment etc for non-Russian substitutes of unknown origin with yet undefined all-around characteristics nor vendor track record. These oils would all be slightly different (not interchangeable) and definitely more expensive. No “toggle-switch” for alternate feed of different oils.

Option (3) requires executing the above modifications to every single European plant and piece of equipment at the very same time and with the same deadline. Of course, this is impossible to do simultaneously. And it´d still be monstrous to do it gradually, but if the decision were ever made it would require Russia´s accommodation so as to allow for a gradually growing part of EU industry modified and fueled by new non-Russian sources while the rest still awaits modification thus still requiring Russian oil grades which Russia would not supply in the way that Europe would need to keep importing. The human resources and expertise required are nonexistent even if every single retired engineer and technician went back to work very hard. IMPOSSIBLE in many ways, just simply IMPOSSIBLE

  • Overall agreement on European energy sourcing philosophy (years)
  • Role of nuclear energy & LPG / LNG & renewables (years)
  • European Green Plan implementation status and goals (open, probably never)
  • Oil & gas & coal substitutes and suppliers approval to replace Russian imports (years)
  • Schedule, plans, consultant vetting + industry input & feedback for new feeds (years)
  • Site selection candidates for each country with adequate location for new plants (many months)
  • Pre-feasibility studies + regulator´s Report approval (more years)
  • Feasibility studies + regulator´s approval and involvement (yet more years)
  • Detailed engineering + plans + specs + drawings, etc.etc ( several years )
  • Contractor bidding process re civil works, electromechanical contracts, etc. etc. etc. (years)
  • Bid evaluation process, bid homologation and Contractor selection (months)
  • Final design, construction, manufacturing of parts, shipping and installation (years)
  • Trials, testing, commissioning, optimization, permitting (many months)
  • New oil & gas feed contractor pre-selection (many months)
  • Contractor bidding process etc. etc. etc. (many months)
  • Bid evaluation process, bid homologation and Contractor selection (months)
  • Trials and Testing (many months)

All of the above is explained in the simplest possible language for an enormously broad & technical topic but that still affects everybody´s own daily lives. The time periods estimates required mostly do not overlap, they are sequential.

Ref #18 https://www.rt.com/news/555258-uk-energy-heating-cost/

Ref #19 http://theeconomiccollapseblog.com/18-signs-that-food-shortages-will-get-a-lot-worse-as-we-head-into-the-second-half-of-2022

Not mentioned, one way out is to rewind back to Feb. 1 for the EU to keep buying Russian oils directly from Russia. Another way out is to keep buying the same Russian oil but from third parties at a far higher price, per “triangulation”.

Meanwhile, hungry bellies may focus stray minds. Ref # 20 https://www.rt.com/news/555490-baerbock-hunger-russia-war-strategy/

In the meantime, Bloomberg says – not exactly an enemy of the EU is it ? – that the Russian Ruble today is the best performing currency in the whole world Ref #21 https://www.rt.com/business/555354-ruble-named-worlds-best-performing-currency/.

The US wants to keep its status as a superpower at any cost

May 14, 2022

Source

By Zamir Awan

The US is desperate to sustain its hegemony and supremacy. It is taking extreme measures and can go to any extent to keep its hegemony and supremacy. Its Petrodollars policy has been playing a significant role, but, facing challenges recently and the US is getting nervous and crazy.

The petrodollar is any U.S. dollar paid to oil-exporting countries in exchange for oil. The dollar is the preeminent global currency. As a result, most international transactions, including oil, are priced in dollars. Oil-exporting nations receive dollars for their exports, not their own currency.

In addition, most oil-exporting nations own their oil industries. That makes their national income depends on the dollar’s value. If it falls, so does their government’s revenue. As a result, most of these oil exporters also peg their currencies to the dollar. That way, if the dollar’s value falls, so does the price of all their domestic goods and services. That helps these countries avoid wide swings in inflation or deflation.

The petrodollar system is tied to the history of the gold standard. After World War II, the United States held most of the world’s supply of gold. It agreed to redeem any U.S. dollar for its value in gold if the other countries pegged their currencies to the dollar. Other countries signed this deal at the 1944 Bretton Woods conference. It established the U.S. dollar as the world’s reserve currency.

On February 14, 1945, President Franklin D. Roosevelt initiated the alliance with Saudi Arabia.1 He met with Saudi King Abd al-Aziz. The United States built an airfield at Dhahran in return for military and business training. This alliance was so critical that it survived subsequent years of differences of opinion over the Arab-Israeli conflict.

The 1945 agreement between the United States and Saudi Arabia cemented the relationship between the dollar and oil. The petrodollar was born. In 1971, U.S. stagflation prompted runs on the dollar. Many countries asked to redeem their U.S. dollars for gold. To protect the remaining U.S. gold reserves, President Richard Nixon removed the dollar from the gold standard. As a result, the value of the dollar plummeted. That helped the U.S. economy as its export values also decreased, making them more competitive. A falling dollar hurt oil-exporting countries because contracts were priced in U.S. dollars. Their oil revenue dropped along with the dollar. The cost of imports, denominated in other currencies, increased.

In 1973, Nixon asked Congress for military aid to Israel in the Yom Kippur War. The newly-formed Organization of the Petroleum Exporting Countries halted oil exports to the United States and other Israeli allies. The OPEC oil embargo quadrupled the price of oil in six months. Prices remained high even after the embargo ended. In 1979, the United States and Saudi Arabia negotiated the United States-Saudi Arabian Joint Commission on Economic Cooperation. They agreed to use U.S. dollars for oil contracts. The U.S. dollars would be recycled back to America through contracts with U.S. companies. These companies improve Saudi infrastructure through technology transfer.

The United States uses the power of petrodollars to enforce its foreign policy. But many countries don’t fight back. They are afraid it would mean the collapse of the petrodollar system.

However, there was strong thinking against the Petrodollar concept and few Arab leaders declared to trade oil; in local currencies or any other currency, de-linking from dollars. The leading role was played by President Sadden Hussain, Col. Qaddafi of Libya, and the Syrian President. The US has punished them and changed the regimes in such countries.

China called for a replacement of the U.S. dollar as a global currency. Although, it is one of the largest foreign holders of the dollar. China influences the U.S. dollar by pegging its currency, the yuan, to it. China has signed a currency swap agreement with more than twenty countries and already trading with them in Yuan or local currencies. China is importing oil and gas from a few Arab nations in Yuan.

Russia has demanded to settle Gas bills in Rubles and a few European countries are already agreed to pay in Rubles. EU has also no objections if any member state pays in Rubles instead of Dollars. Russia is trading with few other nations in Rubles or local currencies instead of Dollars.

Russia has slashed the value of the dollar and the euro by 30% in a jiffy by linking the Russian Ruble to the value of gold and declaring to supply oil only against the Russian Ruble. Russia’s move means that now the entire world, especially Western Europe and Japan will buy the Russian Ruble by selling dollars in huge quantities, as the Russian Ruble has become the world’s most stable currency overnight after being linked to gold.

America, which does not mass-produce anything other than weapons and ammunition, is caught in a terrible economic crisis. In the event of a shrinking dollar, the US cannot cover its 306 billion budget deficit. This will cause severe unemployment and adversely affect the social safety net. This is the economic atom bomb that Joe Biden was aware of when he was talking about the removal of Putin in Poland.

Putin orders European countries to make payments of Gas and Oil in terms of Rubble and open the account in Russian banks. It will weaken the American sanctions on Russia. Although Russia has not retaliated against the American sanctions so aggressively, introduced its policies to counter the sanctions successfully.

The rapid decline of the US has made its leadership nervous and crazy. They are taking all possible measures to sustain their hegemony and supremacy. Even, though the Ukraine war is only a phenomenon, the objective is to maintain status-co. unfortunately, the US is not interested in global peace, stability, or saving human lives. The only priority is to maintain its hegemony and supremacy. To achieve this goal, the US can sacrifice Ukraine, Europe, or any heavy price. The US policy in the Ukraine war is to add fuel to fire, there is no will to stop the war, ceasefire, or save human lives. They are providing weapons, and arming civilians to lead toward a prolonged civil war, to bleed Russian and keep many countries over-engaged and let the US maintain its monopoly and the upper hand.

Russia was reluctant to attack Ukraine and has been observing restrains for quite along. Showing its genuine security concerns and alarming the US with serious consequences, but, the US kept its policy to encircle Russia.

The haphazard joining of NATO by Finland and the defense agreement with the UK is also equally a genuine threat to Russia. Russia and Finland share a long common border. Joining NATO, means, the deployment of NATO forces along the Russian border, which is a direct threat. Joining NATO by other Scandinavian nations is also a serious and matter of deep concern for Russia.

It seems the US has only one priority which is to sustain its position in the geopolitics, it ignores the genuine concerns of other nations. We are scared of the future of geopolitics and afraid the days to come may be harsh for humankind.

In history, many nations rose to the status of superpowers and ruled the world for a certain period of time, then, meltdown and passed the status of superpower to other rising nations. Like Roman Empire, Ottoman Empire, Greek Empire, British, and French empires, etc. But, The US is not willing to accept the natural cycle of superpowers and can go to any extent to keep its status of superpower forever, which is not rational nor natural, it might cause irrecoverable loss to humankind. Unfortunate!


Author: Prof. Engr. Zamir Ahmed Awan, Sinologist (ex-Diplomat), Editor, Analyst, Non-Resident Fellow of CCG (Center for China and Globalization). (E-mail: awanzamir@yahoo.com).

أرقام مرعبة لواشنطن حول تدفق المليارات النفطية و الغازية على الخزانة الروسية

(Updated with transcript) Ben Norton aka Multipolarista interviews Michael Hudson: Destiny of Civilization

May 12, 2022

Source

The decline of the US dollar, the three ‘systems’, the sanctions war on Russia, on the eve of the publication of Prof. Hudson’s new book:  The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

UPDATE:  This wonderful transcript is now available just underneath the video

Transcript

BENJAMIN NORTON: Hey, everyone. I’m Ben Norton, and this is the Multipolarista podcast. And I have the great pleasure of being joined today by one of my favorite guests, one of I think the most important economists in the world today. I’m speaking with Professor Michael Hudson.

If you’ve seen any of the interviews I’ve done with Professor Hudson over the past few years, you probably know that he’s a brilliant analyst. He always has, I think, the best analysis to understand what’s going on economically and also politically, geopolitically, in the world today.

And right now is, I think, a very important moment to have Professor Hudson on today. We’re going to talk about the economic war on Russia and the process of economic decoupling between Russia and China and the West, which is something that Professor Hudson has talked about for many years. And that really has accelerated with the Western sanctions on Russia over Ukraine.

We’re also going to talk about the decline in U.S. dollar hegemony. A recent report from the International Monetary Fund, which is dominated by the U.S., acknowledged that the use of the dollar in foreign bank reserves is gradually declining.

Now, it’s not going to disappear overnight. But even the IMF is acknowledging that dollar hegemony is eroding. And, of course, the IMF acknowledged that the Western sanctions on Russia are going to further erode the hegemony of the U.S. dollar.

We now see Russia doing business with China in the Chinese yuan. Russia is also doing business with India with the Indian rupee. And of course Russia has been telling Europe that if it wants to buy Russian energy, it has to do so with Russian rubles.

So there’s so much to talk about today, Professor Hudson, but I want to begin in the first half of this interview today talking about a new book that you’re just about to publish.

Today is Monday, May 9th. You said on Wednesday, May 11th, the book comes out. And it’s called “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”

And everything that I just prefaced this interview with, discussing the economic war in Russia and sanctions and decoupling, this is all deeply related to what you talk about in this book. And I had the pleasure of getting an early copy and reading through it. It’s a really important book, I think.

And you talk about this fundamental divide internationally – and this is a divide that actually goes back historically as well – between these three models for different economic systems you discuss: finance capitalism, industrial capitalism, and socialism.

And your argument is that the U.S. empire has been a force for imposing neoliberalism, which is a particular form of finance capitalism, which is nonproductive, in which finance capital destroys productive industries in pursuit of rent-seeking, and what you call the rentier class.

So instead of producing, as the classical bourgeois economists had said capitalism would be a productive system instead, finance capitalism is fundamentally a system of destruction and debt.

And your argument is that this is deeply rooted in U.S. foreign policy. This is the U.S. foreign policy strategy for expanding its economic power, is imposing this finance capitalist model on the world.

So can you expand further on your argument about the fight between finance capitalism, industrial capitalism, and socialism, and why you decided to publish this book now?

MICHAEL HUDSON: Well the book came out of a series of 10 lectures that I did for my Chinese audience. I’ve been a professor at Peking University for a number of years in economics, and have professorships at other universities, Wuhan and Hong Kong.

And I have a fairly large audience of about 65,000 people per lecture there. And I was asked to give my general overview, sort of a history of economic development in the West, for the Chinese.

And in order to understand today’s finance capitalism, you have to understand what industrial capitalism was, as it was described in the 19th century.

And it’s often forgotten, or played down, that industrial capitalism was revolutionary. What it was trying to do – from the physiocrats in France in the late 18th century to Adam Smith, John Stuart Mill, Marx, and the whole late-19th century flowering of socialism – the ideal of classical value theory and rent theory, was to say what is the actual value, the cost value of producing goods and services?

And what is earned by the capitalist, when he employs labor to make a profit, and what is unearned? And what is unearned was the landlord class. That was the hereditary warrior class that conquered all of the European kingdoms in the Middle Ages.

And the attempt by England’s industrialists was saying, look, we cannot become the workshop of the world; we cannot undersell foreign countries if we have a landlord class ripping off all of the money in land rent.

And if we have predatory banking, or the wealthy people just lend really for buying property, or making distressed loans or predatory loans that have nothing to do with financing actual capital formation.

Well, what made this capitalism revolutionary was the British industrialists and advocates of industry, even the bankers in Ricardo’s time, said, well, in order to overthrow the landlord class, which controls the House of Lords and all of the upper chambers of government in Europe, we have to have democratic reform.

If we have democratic reform and give voting to the people, they’re going to vote against the landlord class, and then we can have an efficient economy where our prices of our exports and our goods and services reflect the actual cost of production, not the rake off for the rentiers class, not the rake off of what landlords take, not the rake off of what predatory bankers take.

And the whole long 19th century leading up to World War One was this revolutionary value theory that depicted land rent and monopoly rent and financial returns as being unearned income and wanting to strip it away.

And all of this seemed to be moving toward socialism. The industrialists were all in favor of government public utilities, of government enterprise, because they said, if the government doesn’t provide health care, then individuals are going to have to pay it, and it’ll cost a lot of money, like it does in the United States.

And so you had the conservative prime minister of England, Benjamin Disraeli, saying, health, all is health, we’ve got to provide public health for the people.

And it was the conservative Bismarck in Germany that said, we’ve got to provide pensions. If labor has to save up for the pensions, then it’s not going to have enough money to buy the goods and services that we Germans are producing. We have got to make pensions public.

So all of this move towards socialism was not only in favor of increasing living standards, which soared in the 19th century, but also in freeing the economy from the rentier class, from the landlords, from the bankers.

And for the classical economists, a free market was a market free from landlords, free from bankers, free from monopolists.

Well, needless to say, the rentiers fought back. And by after World War Two, we’ve seen a continual anti-classical theory replacing the classical idea of free markets with a value of free theory, saying, well, everybody earns whatever they they have. All wealth is earned, not unearned. And if Goldman Sachs partners are paid more than anyone else, that’s because they’re so productive.

So you had a move rejecting classical economics, a junk economics, and a kind of artificial economics that doesn’t really talk about how finance capitalism has worked.

And as it turns out, the business plan of finance capitalism was so predatory that it was anti-industrial.

That’s why President Clinton in the United States moved to invite China into the International Labor Organization, saying, well, we can fight wage rises in America by a race to the bottom. We can we can hire Asians to do work, and that will cause unemployment here. And that’s wonderful for the industrialists. It will basically cut wages and keep American wages down.

Well, that basically is the strategy of finance capitalism, and the aim of finance capitalism is not to invest in factories, and plant equipment, and research and development, but to live in the short term, but to make money by financial engineering, not industrial engineering.

And it becomes predatory, and so you have the whole ideological attack on public enterprise. You have Frederick Hayek’s “The Road to Serfdom,” where you say, if government provides public healthcare, that’s “the road to serfdom,” where actually it’s finance capitalism that is the road to debt peonage and serfdom.

And you have now a whole disparagement of government. And all of this is a counter-revolution to the revolutionary impetus of industrial capitalism in its early stages.

And it’s true that corporations now are just as right-wing as the the banks and the hedge funds. But that’s because corporate industry has been taken over by the financial sector, and the heads of almost every industrial corporation are rewarded the how high they can push the stock price, to exercise the stock options they’re paid in.

And you increase the stock price not by investing more, not by hiring more labor or increasing productivity or increasing sales, but simply by using whatever income you have to buy back your stocks. And by buying back your stocks, this forces up their price.

And, most of all, by giving political contributions in this country to the Democrats and Republicans alike, who appoint Federal Reserve heads that have spent $7-9 trillion buying up stocks and bonds to increase the price of buying a retirement income, to increase Wall Street prices, to increase housing prices, and make America even less competitive industrially.

So finance capitalism is what has essentially de-industrialized the United States and turned the Midwest into a Rust Belt.

Well, the alternative, obviously, are the societies that have not followed this neoliberal finance capitalist plan. And the most successful economy, obviously, has been China, which is why it has been spending so much time there.

And China has done exactly what 19th-century United States, Germany, England, and France did. It has kept basic utilities, basic needs, housing, and above all, finance and banking, in the public domain, as public utilities.

Instead of having an independent financial sector operating on its own self-interest, the Bank of China creates the money. And the Bank of China lends money by deciding, where do we need to have investment in real estate to provide housing for the population at as low a price as we can make it? How do we build up the industry? How do we provide an educational system with training? How do we provide health?

And the fact is that the central planning in an efficient socialist style, not the Stalinist planning that everybody refers to of Russia, but a mixed economy as you have in China, which is truly a mixed economy, with guidance, like the French planification.

Well, that is obviously the way in which you survive and you avoid the kind of overloading the economy with debt service, with high rents, with high payments to the health-care monopoly in the United States, by avoiding all of this payment to a rentier class that has what the classical economists call unearned income, predatory income.

And instead of unseating them, we’ve put them in charge, and made the banks and Wall Street, and the city of London, and the Paris Bourse, the central planners.

So we do have central planning much more centralized than anything that was dreamed by the socialists. But the planning, the centralized planning is done by the financial sector.

And financial planning is short-termism; it’s short-term planning; it’s take your money and run. And that’s what is stripping and impoverishing the global economy today.

BENJAMIN NORTON: Absolutely. And, in your book, you write about the important distinction between the classical economic idea of a so-called free market, and how, you argue that, neoliberals turn that idea on its head.

So this is what you write in your book. And this is, again, Michael Hudson’s new book, “The Destiny of Civilization,” which is out this week. You write:

“The neoliberal ideology inverts the classical idea of a free market from one that is free from economic rent to one that is free for the rentier classes” – that is the rent-extracting classes – “to extract rent and gain dominance.”

So they they completely flip the idea of what it means to have a free market.

And then you note that, “in contrast to classical political economy, this neoliberal ideology promotes tax favoritism for rentiers, privatization, financialization, and deregulation.” And you discuss all of that.

That is, of course, what we could call the Washington consensus.

And then you argue that “U.S. foreign policy seeks to extend this neoliberal rentier program throughout the world.”

And you have a very interesting section of your book where you discuss this concept as “free-trade imperialism.”

So can you talk about what your idea of “free-trade imperialism” is and how it relates to U.S. foreign policy?

MICHAEL HUDSON: Well, the Nobel Prize is given basically for junk economics. And probably the worst junk economist of the century was Paul Samuelson.

He made the absurd claim that he proved mathematically that, if you have free trade then, and don’t have tariffs, and don’t have any government protection, then everyone will become more equal. At least the proportions between labor and capital will be more equal. Well, the reality is just the opposite.

And the term “free-trade imperialism” was actually created by a British historian of trade theory who pointed out that, wait a minute, when England went for free trade, the idea was, if we have free trade, we can stifle other countries from being able to industrialize, because if we have free trade, then we can tell America, we will open our doors to your markets – meaning the markets of the slave South, that Britain supported – and in exchange, you will open your markets to our industrial goods.

And America followed that until the Civil War, which was fought not only over slavery, but by the Republican Party after 1853 that said very explicitly, if we’re going to win the election – the Whigs never could win – if we, the new party, are going to win the election and industrialize America, we’ve got to integrate ourselves with the anti-slavery issue, with emancipation, but for us, the economic war of America is a war of, either we’re going to have protective tariffs in the North, or we’re going to end up as a non-industrial, raw materials-producing society, as the South wants.

And that was the debate from 1815, when the Napoleonic wars ended and world trade began again, until really the Civil War.

And America became strong in the way that Germany became strong too, by having protective tariffs, in order to have prices large enough to nurture what was called infant industry, to nurture American manufacturing.

And I wrote a long book about this, published some years ago based on my PhD dissertation, “America’s Protectionist Takeoff.”

Well, the English tried to fight against other countries protecting their economy, saying that if you just have free trade, you’ll get rich. Whereas the reality is, if we have free trade, you’ll get poor, if you’re not already able to have industrial and labor productivity and agricultural productivity on par with the most advanced countries.

Free trade was an attempt to prevent other countries from investing government money and building up their agriculture, and building up their industry, and building up their productivity, and creating a school system, to raise wages, to make wages more productive.

And the American protectionists said, well, we’re going to have a high-wage economy because high-wage labor undersells pauper labor. And skilled, well-fed, well-rested American labor can produce much more than the pauper labor of other countries that have free trade.

Well, what the leading American protectionist economist, Erasmus Peshine Smith, went to Japan and helped industrial help Japan break away from British free trade, helped Japan industrialize.

And other American economists, other foreign economists, all picked up the ideas of the American protectionist, like Friedrich List went to Germany promoting protectionism.

And Peshine Smith’s book, “The Manual of Political Economy,” was translated into all the foreign languages – Japanese, Italian, French, German.

And you had Europe realizing that free trade polarizes economies. Well, it was this that after World War One, and especially World War Two, when you had orthodox economics turning into basically propaganda.

That’s where you and Samuelson and others try to convince other countries, governments are bad, leave everything to the wealthy people, to the finance people, trickle-down economies, it’s all going to trickle down, don’t worry, just give more money to the rich, and don’t have any government interference with markets.

Whereas America had got rich by interfering with markets, to shape them in the years leading up to World War One.

But after World War One, America had already achieved its industrial dominance. And it was after World War One that America said, ok, now our protective tariffs have enabled us to outproduce all the other countries, and our protectionist agriculture especially – the most protected sector in America, has always been agriculture, since the 1930s.

Basically it said, well, now we can outproduce other countries, we can undersell them, now we can tell them to go for free trade.

And after World War Two, the Americans created the World Bank for economic impoverishment, and the International Monetary Austerity Fund.

And the World Bank’s leading objective was to prevent other countries from investing in their own food production.

The guiding line of the World Bank was, we’ve got to provide infrastructure for building up plantation agriculture in Latin America, and Africa, and other countries, so that they will grow tropical export crops, but they cannot be permitted to grow grain or wheat to feed themselves; they must be dependent on the United States.

And so the function of free trade, the World Bank, and the International Monetary Fund has been to finance dependency, backed up by the American support of dictatorships throughout Latin America who agree to have client oligarchies supporting pro-American trade patterns and avoiding any kind of self-reliance, so that the United States can do what it has recently done to Russia and other countries, impose sanctions – say, well, now that you depended on us for your grain, we can now impose sanctions, and you can’t feed yourself if you don’t follow the policies we want.

That was the policy that America tried to use against China after Mao’s revolution. And fortunately for China, Canada broke that monopoly, and said, well, we’re going to sell grain to China. And China was always very friendly to Canada in those earlier decades.

So basically, free trade means no government, no socialism. It means central planning essentially by Wall Street – countries should let American firms come in, buy control of their raw materials, resources, control of their oil and gas, and mineral rights, and forests and plantations, and basically let other countries send their whole economic surplus to the United States, where it will be duly financialized to buy out other countries’ raw materials and rent yielding resources.

BENJAMIN NORTON: Yeah, and in your book, you have a very funny passage that I think really encapsulates this ideology that you’re talking about here.

You referred to Charles Wilson, who was the secretary of defense under Eisenhower in the U.S., and he was also the former CEO of General Motors.

And he famously said, “What’s good for General Motors is good for the country.” And that idea has morphed into the idea that, “What’s good for Wall Street is good for America.”

And then you note that “this merged with evangelistic U.S. foreign policy that says ‘What’s good for America is good for the world.’ And therefore the logical syllogism is clear: ‘What’s good for Wall Street is good for the world.’”

And you describe this, you link it to the new cold war, this idea that what’s good for the U.S. is good for the world and what’s good for Wall Street is good for the U.S., therefore, what’s good for Wall Street is good for the world.

You argue, “We must recognize how finance capitalism has gained power over industrial economies, above all in the United States, from which it seeks to project itself globally, led by the financialized U.S. economy. Today’s new Cold War is a fight to impose rentier-based finance capitalism on the entire world.”

And this is such an important analysis. Because among those very few people of us who talk about this idea of the new cold war and how dangerous it is, there are very few people who frame it in economic terms.

Usually we frame it in political terms, right, the geopolitical interests between the US and the EU on one side, and China and Russia on the other.

And going back to Brzezinski and The Grand Chessboard, his 1997 book, where he talks about the importance of preventing near strategic competitors from emerging in Eurasia. That’s of course a geopolitical discussion and economics is part of it, but it’s often not at the forefront.

But your analysis I think is even more important, and more accurate, because your argument is not only is it geopolitical, but the geopolitical struggle is rooted in economics. And this is an economic struggle between systems.

So talk talk more about the new cold war and how you see it.

MICHAEL HUDSON: Well, as we’re seeing now, the world is dividing into two parts. We can see that in the fight against Russia, which is also a fight against China, and against India, as you noted. And it seems Indonesia and other countries as well.

The United States is pushing a world that can be controlled by American investors. The ideal of the American neoliberal plan is to do to other countries what it did to Russia after 1991: take all of your public domain, your oil companies, your nickel mines, your electric utilities, give them all to the wealthy oligarchy, that can only make money once it’s taken control of these companies, by selling the stocks to the West.

The West will buy out oil, just like Mikhail Khodorkovsky tried to sell Yukos oil to Standard Oil in the West. And we’ve got to put an oligarchy that will sell all of the national domain, all of the patrimony and natural resources, and all the companies, to American investors on the cheap.

The Russian stock market led all the stock markets in the world from 1994 up to about 1998. This was a huge rip off. The United States wants to be able to do that to the rest of the world.

And it was furious when Russia said, we’ve lost more population as a result of neoliberalism than we did in all of World War Two fighting against Nazism. We’ve got to stop.

And Russia began to say, we’ve got to use Russia’s population, and industry, and natural resources for Russia’s benefit, not for the United States’ benefit.

Well, the United States was absolutely furious with this. And the fury has erupted in the NATO war against Russia in the last few months, and what’s ongoing now.

And the United States says, U.S. State Department officials have said, what we want to do is carve up Russia into maybe four different countries: Siberia, western Russia, southern Russia or Central Asia, maybe northern Russia.

And once we’ve done that, we cut Russia off from China, then we go into China. We finance, we send ISIS and al-Qaeda into the Uyghur areas, the Muslim areas, and we start a color revolution there. And then we break up China, into a northern part, a southern part, a central part.

And once we break them up, we can more or less control them. And we can then come in, buy up their resources, and take over their industry, their labor, and their government, and get richer to obtain from China, Russia, India, Indonesia, and Iran the wealth that we’re no longer producing in the United States, now that we de-industrialized.

So the world is dividing into two parts. And it’s not simply the United States and its European satellites on the one hand versus the non-white population on the other hand; it’s finance capitalism versus the rest of the world, which is protecting itself by socialism, which in many ways fulfills what was the ideal of industrial capitalism during the 19th century, when industrial capitalism was actually progressive.

And it was progressive. That’s part of the whole theme of my book. It was revolutionary. It tried to free economies from the legacy of feudalism, from the legacy of hereditary landlords.

And now the financial class is no longer the landlord class, but the landlord class pays most of its rent to the financial class in the form of mortgage interest, as it borrows money to buy property and housing and commercial sites on credit.

And you have the kind of financialization that has increased housing prices in the United States to over 40% of income, that is officially guaranteed for mortgages. That has priced American labor out of the market.

Privatized health care, 18% of GDP, that is pricing America out of the world market. Debt, auto debt, student debt, which in other countries education is free; that’s pricing America out of the market.

So you have a basically un-competitive economy that’s committing financial suicide, following the same dynamic that destroyed the Roman empire, where a predatory oligarchy took over and maintained power by an assassination policy of its critics, just very similar to what America has been doing in Latin America and other countries.

So you’re having history repeat itself with this same kind of world split. And this split couldn’t have occurred back in the 1970s, with the Bandung Conference in Indonesia. There were other attempts by the Non-Aligned nations to break free of American imperialism, but they didn’t have a critical mass.

So right now, for the first time, you have a critical mass. And you have the ability of China, Iran, Russia, India, other countries together to be self-sufficient. They don’t need relations with the United States.

They can handle their own; they can create their own monetary system outside of the International Monetary Fund, which is basically an arm of the Defense Department. They can give loans to build up the infrastructure of countries outside of the World Bank, which is basically an arm of the Defense Department, the deep state.

So you have the American economy – essentially a merger between the military-industrial complex and the Wall Street FIRE sector, finance, insurance, and real estate – really cannot develop any more than the Roman Empire could develop, by trying to obtain militarily what it could not produce at home anymore.

Well, China and other countries, now that they have their industrial base, the raw materials, the food, the ability to feed themselves, the agriculture, and the technology, they can go their own way.

And so we’re seeing in the last few months the beginning of a war that is going to go on for, I think, 20 years, maybe 30 or 40 years. The world is splitting away.

And it won’t be a pretty sight, because the United States and its European satellites are trying to fight to prevent an inevitable break away they cannot prevent, any more than Europe’s landlord class could prevent industrial capitalism from developing in the 19th century.

BENJAMIN NORTON: Yeah, and this is a good segue to what I wanted to ask you about, Professor Hudson, which is the economic war on Russia.

And I should say, of course, that today is May 9th. Today is Victory Day in Russia, celebrating the Soviet Union’s victory over Nazi Germany in World War Two. Not the US and British victory over Nazi Germany, the Soviet victory, in which 27 million Soviets died.

And actually I should say that, here on YouTube, in the comment section, there are some Russians who are your fans, Professor Hudson, saying they’re thanking you for your cogent analysis of Russia.

But on the subject of Russia, Professor Hudson, we now have seen that since Russia’s military intervention in Ukraine on February 24th, we saw really what could be referred to as financial shock-and-awe. That’s a term that’s been used.

Just as when the U.S. invaded Iraq, it waged a military shock-and-awe campaign on Iraq. Well, now it is waging economic or financial shock-and-awe on Russia.

And Russia has been referred to as the most heavily sanctioned country in history. Which I think is probably accurate, although maybe the DPRK, maybe North Korea, is more sanctioned. But I mean we’re talking about levels of sanctions not seen against a country of this size ever.

And you can also refer to it as the contemporary equivalent of medieval siege warfare against Russia.

Joe Biden, in a speech in Poland, made it clear what Washington’s goal is: it’s regime change. The U.S. wants to overthrow the Russian government, as it did in the Soviet Union in 1991, and clearly install a a pliant alcoholic neoliberal puppet like Boris Yeltsin.

So can you talk about, from an economic perspective, what do you see as the effects of this economic war on Russia?

And specifically in terms of the concept of decoupling, which you have talked about for years, and you have said that the Western sanctions on Russia and China were accelerating that process of decoupling. And this was before the financial shock-and-awe we’ve seen.

So you talked about a move away from this neoliberal globalization where everything is interconnected, or at least capital is interconnected globally, to the creation of a kind of, what you could say is kind of an economic iron curtain.

But how do you see that also in terms of integrating the Eurasian economies more deeply?

And also what is the effect on the European economies, which my impression is that Europe is going to become what you call an economic dead zone, more and more reliant on the U.S., whereas Russia, China, and Iran, and even potentially India, Pakistan, Bangladesh, Indonesia – we’re seeing much more economic integration of Asia, which is, of course, where the majority of humanity lives.

MICHAEL HUDSON: Well you have used the words shock-and-awe, picking it up from the U.S. statements of shock-and-awe. There hasn’t been any shock-and-awe; there’s been a self-defeating piffle, and laughter.

That’s not all. There was an attempt to grab $300 billion of Russia’s foreign reserves, saying, well, any country that leaves their reserves in American banks or in the American Monetary Fund to stabilize their currency, we can grab if we don’t like their policy.

So the idea was, now Russia is going to go broke. It can’t afford to buy anything without U.S. dollars. And the people are going to get so angry, they’re going to vote against Putin. And then we can pour in our money to twerps like Navalny and other right-wingers who have promised to be the new Yeltsins.

Well, it didn’t work that way. They did grab the $300 billion of Russia’s reserves. Russia immediately said, ok, we have our own money. We now, fortunately, have enough oil and gas that we don’t have to sell to Europe and Germany. If they want to freeze in the dark and let their pipes burst when the weather gets cold, that’s their problem. We’ll sell to India, and China, and other countries.

And there was, for a few days, the ruble plunged, by saying, uh oh, what is Russia going to do? So all the foreign exchange traders thought, you can trust Biden to have a really brilliant policies.

I think Paul Krugman, the Nobel Prize winner, said Biden is the greatest American president since Roosevelt, or since Truman, that he was so smart. Well, that’s why Krugman got the Nobel Prize, for making statements like that.

So immediately Russia said, well, obviously we can’t get paid in dollars anymore, or in euros, because, you’ll just grab them, so you’ll have to buy oil and gas in rubles. We’re going to price it in our own currency. Just like China had talked about pricing its exports in yuan.

And so what has happened is that immediately the ruble not only recovered, but is now selling at a higher rate than it was before the American sanctions. So there was no shock at all. The Americans felt shock.

The Americans are shocked. The Americans are awed. The Russians are laughing and everything is going their way.

So it’s almost as if – I would not accuse Biden of being on the pay of Russia, and I would not say that the leaders of Congress are the Russian agents, but if they were Russian agents, if they were paid by Russia, they could not have done a better job of helping Russia catalyzing its protectionism that it wouldn’t do itself.

The fact is that President Putin and many of the people around him still were neoliberals. I mean, they began as neoliberals, in the ’90s.

They began by hoping that they could make an arrangement with Germany and Europe, that Europe would develop their industry and make Russia as efficient an economy as Germany or the United States. Well, obviously that hasn’t happened.

All the same, they didn’t think of imposing protective tariffs as the United States did. They didn’t protect their agriculture. They bought grain, and cheese, and other agricultural products from the Baltics, and from other countries.

Well, now that, once the Americans put on the sanctions, beginning already under the Trump administration, all of a sudden Russia had to produce its own food.

And it did. It made the investment. It is now the largest agricultural exporter in the world, not a food-deficit country. It’s not importing any more cheese from Lithuania and the Baltics. It has its own cheese segment.

And the sanctions are forcing Russia to do exactly what the United States, Germany, and other protectionist countries did in the 19th century, developing their own industry by isolating it from low-priced foreign imports that would be priced so low that the Russians otherwise could not afford to make the investment in factories, plants, equipment, research, and development.

So what the United States has done is actually catalyze Russia moving together.

And also, for three or four years, I have been talking with Russians, and with the Chinese, and other countries about the need to de-dollarize. If you want to develop your own economy, you have to develop your economy in your own interest with public spending and planning, independent from the United States.

Well, now everybody thought that, well, in a few years it may take a decade for China, Russia, Iran, all these countries to break away from the U.S. But America said, we’re going to help you, we’re going to speed up the breakaway process. We’re going to isolate you. So you’ve got to band together against us.

So that’s exactly what it has done. You can just imagine how the Russians are crying all the way to the bank about this.

And how China is watching what the Americans are doing to Russia, and listening to President Biden saying, you know, Russia is not our real enemy, our real enemy of China. And when we’re finished with Russia, then we’re going to go against China and do the same thing to it.

Well you can imagine what this is leading the Chinese government to try to plan to be sufficiently independent from the United States, so that similar type sanctions will not hurt it.

And President Xi in the last few weeks has said we’ve got to make China as independent as possible. We’ve got to make our own computer chips. We’ve got to not depend on the United States for anything, except maybe Walt Disney movies. That’s basically about it.

So it’s as if – you know, I had mentioned earlier that finance lives in the short term. American policy, being financial policy, lives in the short term. And it’s looking at if it can make a quick, a quick victory, and forget about what’s going to happen next.

I’m told that, years ago, already from the war with Iran, and then Iraq and Syria, in the State Department, if there were Arab specialists who spoke Arabic, they were all fired. Because they said, well, if you can speak Arabic, you must’ve learned Arabic because you’re sympathetic with them. You’re fired. We won’t have anyone who can read Arabic here.

Well, now in the last decade or so, they fired all the Russia specialists from the the State Department and CIA, saying, well, if you can read Russian, why would you want to learn Russian? You must like something in Russia. You wanted to learn it. You’re fired.

So they have people who have no idea of what’s happening in Russia, no idea what’s happening in these other countries. And they’re blinded by their ideology.

And if anyone would say, wait a minute now, public planning and making education a public utility is actually making them more competitive, well, that’s against the ideology. That’s not the corporate type.

And they’re taught, well, we really can’t trust people, maybe they’re tending toward socialism, and they’re out the door.

So you’re having American policy pretty much run by the blind, and the Europeans are simply taking orders, and money in little white envelopes from the United States, to just show their loyalty, and basically are willing to spend three to seven times as much for their energy, for their liquefied natural gas and oil, by buying from the United States, than they are by a long-term contract with Russia.

Europe is willing to spend now $5 trillion on putting together ports that can handle shipping tankers for liquefied natural gas instead of relying on the Russian pipeline, the Nord Stream Two, that’s already there.

So Europe is making an enormous sacrifice. If it doesn’t have Russian gas, and it refuses to pay rubles, it says, if you don’t give us our gas and oil for free, you’re attacking us, because we’ve been getting all of your oil and gas for free, because all the dollars, all the money we pay, you’ve recycled to the United States in your foreign reserves. Thank heavens, the U.S. can grab it all. If you don’t continue to give it to us for free, then you’re attacking us.

To the United States, other countries protecting their economy, other countries trying to raise their living standards, and especially other countries undertaking land reform, are viewed as enemies of the United States, because they’re an enemy of the neoliberal American financial system.

And the idea of the unipolar world where the United States gets all of the profits, and rents, and interests of the world economy, just as ancient Rome stripped its provinces by getting all of their wealth and income for themselves, not producing it at home, while impoverishing their own domestic population. It’s just an exact parallel.

So Europe is willing to say, well, ok, if we don’t have a Russian gas, well, that means that our chemical companies cannot buy the gas to make the fertilizer to make our crops grow, and our agricultural productivity is going to fall by about 50%.

We’re also going to spend a lot more money on America’s military, NATO arms to support NATO. So higher food, higher military spending, higher energy costs.

This ends Europe as an industrial rival to Asia, and Eurasia, I should say, because now the Chinese Belt and Road Initiative and other spending investment, capital investment, throughout Western Asia is creating a new productive plant that is not only self-sufficient, but is leaving the United States and Europe without any industrial competitive power. They’ve priced themselves out of the world market. They’re no longer competitive.

So the world is developing. And I’m sure the only way that the NATO countries can fight against it is militarily, by threatening to bomb. But they can’t fight economically. They can’t fight financially. They tried by disconnecting Russia from the SWIFT system. It put it in its own system very quickly.

It really is left without a strategy, except that it’s done a wonderful job of controlling the public relations dimension of this war, making it appear as if somehow other countries are the aggressors, in not letting America exploit them, and making it appear as if Russia is the aggressor in Ukraine, instead of NATO prodding and prodding Russia to say, we’re going to capture your port at Crimea, and we’re going to attack the Russian-speakers if you don’t fight back, and we’re going to keep bombing them year after year, from 2014 on, we’re going to keep bombing them until you protect them.

So all of this is treated as if America is purely defending itself. Well, this is what the Nazis said in World War Two. Hitler and Goebbels said, we can always mobilize a population to support our war by saying it’s a war to defend ourselves.

And that’s how the United States in Europe are doing it. Not only are they pulling a strategy out of Goebbels’ Nazi book, but a few weeks ago, Germany went to the museums, the military museums, where they had the old Panzer tanks from World War Two, and they sent the Panzer tanks, the Nazi tanks from World War II, to Ukraine, saying this is symbolic, now we can fight Russia with the same German Nazi tanks run by the neo-Nazi groups, that Zelensky is supporting, the same Nazi fight against Russia. We can reenact World War Two with the same tanks, even symbolically, to show that this is a fight of Naziism, and neoliberalism, against Eurasia.

BENJAMIN NORTON: We’ve also seen Germany not only re-militarizing, but also boosting its relations with Japan. There are some terrifying echoes of of World War Two.

But you mentioned something that I want to analyze a little bit more, which is the strength of the Russian ruble. I talked about the concept of financial shock-and-awe that was waged on Russia. And President Biden said, “the Russian ruble has become rubble,” he joked. He said the Russian ruble has become rubble.

Well, that’s actually not at all what happened. This is the value of the dollar to Russian rubles, right now [showing a graph]. Russian rubles are at 69 to the dollar. A few days ago, it was at 64, or 65 to the dollar, which is actually better than it was even before the Russian war in Ukraine, which began in February 24th.

And it did spike, and there was a peak here, at which it was devalued to 139 to the dollar, about half the value it has now. But in the months leading up to the Russian military intervention, in November and December, it was around 75 to the dollar.

So the ruble has actually strengthened despite these sanctions. And here’s a report from Reuters from five days ago, that was May 4th: the “Rouble leaps to over 2-year high vs dollar, euro as EU ups sanctions.” So the ruble is doing quite well.

And you talked about the Russian mechanism to force Europe to buy energy exports from Russia in the Russian ruble. And this graphic here, for people watching, it’s in Russian, but really it just shows this mechanism in which a European firm that wants to buy gas from Russia’s state owned gas giant Gazprom, it has to send the money in euros to the Gazprombank, which is the obviously the bank that works with Gazprom, and then it puts it in a special account in euros, and then that is sold in the Moscow exchange for Russian rubles.

And then those rubles are put in another special account, called a K account, that belongs to that European firm. It has two accounts, two special accounts with Gazprombank, one in euros, one in rubles. And then this special ruble account sends that money to Gazprom. And then once the money reaches Gazprom, that’s when Russia considers that the payment officially went through.

So this is the mechanism by which Russia is getting paid in rubles. And much of Europe claimed at first that they would not do so, but eventually they gave in. So that’s an incredible development.

And related to that, what I wanted to ask you about, is I think another reason that the Russian ruble has strengthened and stabilized is not only because Russia continues to maintain constant exports of energy to Europe and other parts of the world.

You can talk about the central bank policies. But one of the policies is that the Russian central bank has basically put the ruble on gold, which I think is a very interesting and historic development.

And we saw that from the beginning of April until the end of June, the Bank of Russia says that it’s going to buy gold at a fixed price of 5000 rubles per gram of gold. And then the question is whether or not in July, when this policy ends, if it’s going to continue, and if the ruble will basically become fixed, it become pegged to gold like the U.S. dollar was up until 1971.

So you don’t think it will be? So talk about this policy. Do you think that that the gold standard is going to come back? Or apparently you don’t think so.

MICHAEL HUDSON: No, Russia is not going on on the gold standard. What it is doing is investing, its foreign exchange in the only way that is not grabbable. It’s investing it in gold; it’s putting gold in its reserves.

It is not setting its exchange rate according to the price of gold, but it is buying gold with what it has been getting.

I want to go back to your talk about rubble. You talked about, “from ruble to rubble,” what President Biden said.

There have been a lot of pictures of rubble in the news for the last few days. For instance, there are talks of, here’s a Ukrainian picture, and look at this picture of a Russian tank, we shot it down, it’s rubble. Turns out it’s a Ukrainian tank, that they just say it was the Russian tank we shot down.

So basically, they’re taking their own destruction, and they’re saying that, while they’re being destroyed, they’re saying, no, this is a picture of Russia being destroyed, Russian assets, not Ukrainian assets being destroyed.

Well, the similar thing is with the Russian ruble. America says, look, we’ve isolated the the ruble. Well, what has happened? If you isolate the ruble and you say we’re not going to export anything more to Russia, so it’s not going to be able to spend any of its rubles on buying American or European products.

Well, meanwhile, Russia can continue to earn rubles from Germany and Europe, and it can continue to earn foreign exchange from other countries that it’s selling its agriculture to at rising prices, its oil and gas at rising prices, too. So obviously, the balance of payments is going way up.

And they believe that what is in store is a new monetary system that is an alternative to the dollar IMF system.

And in this system other countries will hold their reserves in each other’s currencies. In other words, Russia will hold Indian rupees and Chinese yuan. China will hold rupees and Russian rubles.

There will be the equivalent of what Keynes thought of as something like artificial special drawing rights that the banks will be able to create to help fund governments to undertake capital investment.

But for settlements settling balance of payments deficits among countries, once they don’t have enough foreign exchange to make a swap, they will use gold as the means of settlement, because gold is a pure asset. It’s not a liability.

Any foreign currency basically is held in a foreign country that has the power to do what America did to Russia and just grab it all, and say, we’re just wiping it all out.

It’s as if you have a bank account, and the bank says, we’ve just emptied out your account to give it to one of our friends, and you don’t have it anymore. You can’t do that if gold is held in your own country.

Venezuela made the problem of keeping its gold in England, trusting England, saying that, even if there is war, they’ll never interrupt gold and finance. And England just grabbed Venezuela’s gold.

So, obviously, countries are not going to leave their gold in other countries. Even little Germany has asked America to begin sending back the gold that it has in the Federal Reserve Bank of America because it’s worried that what if it ever buys Russian gas again? America will grab all of Germany’s gold, grab all the German money, and it’ll be like World War One all over again.

So this act that America did of grabbing Russian money, Afghanistan’s foreign reserves it grabbed, this is telling all the other countries, pull all your money out of dollars. What are they going to put it in? There’s not that much they can put it in that it is absolutely safe.

So gold is a flight to safety today, because it’s one of the things that all of the world realizes as having an international value for settling balance of payments deficits, that is independent of world politics.

So that’s the explanation. Russia is not going on gold. It’s going on an independent standard from the United States with gold as an element of its foreign reserve, just as it’s holding Chinese yuan and Indian rupees.

It’s not going on the rupee standard. It’s not going on the yuan standard. And it’s not going on the gold standard. But these are elements of its foreign reserves.

BENJAMIN NORTON: I have a question for you. It’s kind of a more technical question that I’ve always wondered. And I’ve tried to do research on this, because there’s not much information.

So we know that that the U.S. and European Union have frozen over $300 billion from Russia’s central bank foreign exchange reserves. And of course they did this after doing the same to Iran, to Venezuela, to Afghanistan, which is now threatening a famine in Afghanistan that could kill more people than died in the 20-year NATO-U.S. military occupation of Afghanistan, which is another topic that really needs to get more coverage.

And I should add, by the way, that the US and the EU, they’ve frozen nearly half of Russia’s central bank’s foreign exchange reserves, and are now saying they’re not going to give it back. So they stole it. I mean, they stole half of its reserves.

My question is, what is the mechanism by which they effectively freeze and steal those reserves?

Because my understanding is that there is of course a physical element of those reserves, which you’re talking about, which is gold. But not all of the $640 billion in Russia’s central bank reserves is physical currency, right? A lot of it is just computerized? It’s number in computers and bank accounts.

So when when the U.S. and the EU steal this money from central banks like in Russia or Afghanistan – obviously in the case of Venezuela, as you mentioned, they physically stole the gold. But if it’s not gold, is it physical cash stored in Moscow, like physical dollars and euros? Or it’s mostly just numbers in a computer, which is why they can steal it?

MICHAEL HUDSON: Every country needs to manage its exchange rates, and there’s always like an up-and-down and a zigzag in the flow of payments for imports and exports, investment, capital movements, debt service, all of that.

So countries want to stabilize their exchange rate. How do they do that? Well, most of the big exchange markets are in New York and in London.

So countries would leave their money in correspondent banks. Like when Iran, at the time under the shah, kept that foreign reserve in the Chase Manhattan Bank. So when Iran, after the revolution and Khomeini came in, and Iran wanted to pay interest on the foreign debt that the shah had run up, they told Chase, please, here’s our bondholders, please pay them.

Well Chase was told by the Treasury, don’t pay them, just take the money and hold it. So Chase said, we put a freeze on your account. And so Iran defaulted, and then Chase and the State Department said, oh, Iran defaulted, it missed the payment. Now, all the money that it’s due for foreign debt has to be paid all at once. And Chase paid all of the bondholders off. No more money in the account. It was all emptied out.

Suppose you had an account in Chase Manhattan. And they said, ok, now you’ve done something really bad, you put Michael Hudson on the show. We’re going to grab your account. We’re going to give it to Mr. Guaidó, because he needs the money in Venezuela because the people still are not voting for him. So all of a sudden, you won’t have money in your account. It’ll go to Mr. Guaidó’s account.

Well, that’s what happened with Russia. They took the money. They grabbed the money from Russia’s account. And they said, half the money we’re going to give to, I think, to the 9/11 people, because we all know that it was Russia that bombed the World Trade Center on 9/11.

And we’re going to give it to all sorts of other people who suffered all over the world. It’s all Russia’s fault.

BENJAMIN NORTON: But Professor Hudson, when you say that they seized Russia’s assets, you mean the assets held by the Russian central bank in foreign bank accounts?

MICHAEL HUDSON: Yes, yes.

BENJAMIN NORTON: And these are not physical assets, these are numbers in a computer, right?

MICHAEL HUDSON: In Venezuela’s case, Venezuela had used some of its oil company earnings to buy oil stations and refining companies and the United States actually grabbed the ownership of the gas stations and the refineries and distribution system that Venezuela had in America.

BENJAMIN NORTON: It’s called Citgo.

MICHAEL HUDSON: Citgo, yeah. Russia doesn’t really have any capital investments in the United States. It did have bank accounts, and that was all that the United States could grab.

BENJAMIN NORTON: So when you say that, when Russia, at least for now, the central bank is allowing convertibility of rubles at a set rate into gold, that’s a temporary policy to make sure that they have a physical asset that their central bank can hold on to, because if they have dollars or euros in their reserves, my understanding is that’s not physical cash, it’s actually just numbers in a computer, so they don’t have it physically in their bank reserves, so it’s easy to steal that money.

Obviously, if they had billions of dollars worth of cash, of paper cash, it would be much harder to steal it, but if it’s just on a bank account, if it’s numbers in a computer, then they can just freeze it.

So I think this is also a reflection of a point that you’ve also made about the financialization of the economy, is it’s also just a lot of this capital is not even physical capital.

MICHAEL HUDSON: Yes. Savings take the form – one person’s savings is another person’s debt. So these are Russia’s deposits in American banks that it used to buy or sell rubles, or to buy goods from America, or to receive payments in, if Russia exports something such as oil. Americans buyers of Russian oil would put the money into the Russian bank account.

They never dreamed that this would be grabbed. But now Russia says, ok, you’ve grabbed our money, now that means that we get to grab all of your assets in Russia. This is great! All of your stock holdings in nickel, and Yukos, and all these other companies, ok, you’ve got the money, we have the assets, look at us as just buying the assets on the cheap.

And the Western investors in Russia have all been selling their Russian assets to show that they’re good American citizens in NATO, and the Russians are buying up these European and American assets on the cheap, largely by borrowing money from the banks, that get the money from the central bank, now that they’re so wealthy, and all of the foreign exchange reserves is a result of the American shock-and-awe statement, that’s sort of shock-and-awe in reverse.

So Russia is coming through just fine. And you can imagine how the American strategists are gnashing the teeth. They don’t understand how Russia was able to avoid being bankrupted by this.

They really are not economists. They’re not really financiers. They’re foreign-policy strategists. They’re ideologues that are not very well educated in how to think about the future and how to recognize the fact that the world can actually change from what it is today into something else. And sometimes that change is not in America’s interests. That is sort of not a permitted thought over here.

So essentially, Americans and Europe are operating in the blind, and Russia and China, and Iran, and India, are all looking at how are we going to restructure the world so that we come out of it more prosperous than we were before, not more impoverished. That’s really what the world is dividing into.

BENJAMIN NORTON: Professor Hudson, I don’t know if this is directly related, but it’s it’s something that’s always been a very curious question in my mind.

Germany, back in 2016 and 2017, it moved, physically moved, its central bank’s gold reserves, which had been stored in New York, London, and Paris, and it physically moved those reserves, those gold reserves, to Frankfurt.

Now this was before the U.S. and Britain stole Venezuela’s gold reserves and other reserves. But do you know anything about what motivated Germany’s central bank to move the physical location of its gold reserves into Germany itself?

MICHAEL HUDSON: I don’t think it’s all moved yet. It’s still going on. Gold is very heavy, as heavy has lead, basically. And America said, well, we can only do a little bit, trickle by trickle. So America has been returning the gold very slowly.

So I think Germany, with all of its history of hyper inflation, I think just realizes that, now that gold is not used to settle balance of payments deficits anymore – the gold that Germany had in America was all of the exports that it made to the United States during the Vietnam War. This is Vietnam War gold.

You remember that President de Gaulle would every month cash in, the dollars that America spent in Vietnam would all be spent from Vietnam to Paris, the dollars would end up there, the central bank of Paris would essentially buy gold on the London exchange and keep the gold either in New York or in London.

Well, Germany, because America defeated Germany, and it wasn’t going to keep its gold in Russia, that defeated it even more, it said, well, ok, we’re cashing in our surplus dollars for gold, but we’re going to hold the gold in America.

But now it says, well, America is never going to settle its balance of payments deficits and its foreign debt in gold again, because it doesn’t have any balance of payments surplus, any ability to do that.

It’s going to spend its export surplus and its investment surplus on war. So it’s never going to be able to pay. That’s obvious. Let’s get the gold back.

That was the calculation that every country was making already a decade ago. They realized that America can never repay its foreign debt, unlike other countries.

When other countries can’t pay their foreign debt, they have to go to the International Monetary Fund, that tells them, well, we’ll make you a loan, but you have to sell off your natural resource reserves to the Americans, or we won’t lend you the money.

Well, basically, that’s not going to happen anymore. They realized that America is just going to say, haha, we’re just not going to pay.

Well, now other countries are saying, wait a minute, if America’s never going to repay its foreign debt, why do the Global South countries have to pay their debt to the IMF and the World Bank, all this dollar debt to dollar bondholders?

If America won’t pay, we don’t have to pay. Let’s have a clean slate. Let’s start from the beginning. And we’re only going to have debt and credit relations with friendly countries, not countries that want to go to war with us like America did in Afghanistan, Syria, Iraq, Iran, and now Russia.

So that’s basically what’s happening.

BENJAMIN NORTON: Great. And just to wrap up here, I have another question. And I know your time is limited, so I really appreciate you being here.

I have a quick question about the decline in U.S. dollar hegemony. We were talking about the strength of the ruble, the economic war on Russia; we talked about the bilateral trade that’s growing between Russia and China using the Chinese yuan, between Russia and India using the Indian rupee. And Iran also is talking about doing business with a basket of currencies.

I want to point to a report that was recently published by economists who work with the IMF. And I published an article about this over at Multipolarista.com, “IMF admits US dollar hegemony declining due to rise of Chinese yuan and sanctions on Russia.”

And there is this report that was published by the IMF, by these economists, and I cite you, Professor Hudson, in this report. It’s a working paper from the IMF, published in March, titled “The Stealth Erosion of Dollar Dominance.”

And here’s a graph, for people watching, here’s a graph from the report. And it shows not a large, but a noticeable and consistent decline in the use of the holding of the U.S. dollar in the foreign exchange reserves of central banks around the world. So this is around the world.

And it has declined in the past years from about 70% of central bank exchange reserves to about 60%. So a 10% decline. That’s not massive, but it’s steady and I think it’s going to accelerate.

And at the same time they’ve also found an increase in the use of what they call “non-traditional currencies” in the foreign exchange reserves of central banks around the world.

And here you can see this graph. I mean it looks like a significant influence because if you look at the y-axis it’s only from 90 to 100. But there is a significant increase in the use of other currencies in foreign exchange reserves, aside from the U.S. dollar, the euro, the Japanese yen, and the British pound. And the currency that is increasingly popular is the Chinese yuan.

So that’s one half of my question. The other half is about this interesting report that was published in the Financial Times, and it’s titled “Russia Sanctions Threaten to Erode Dominance of Dollar, says IMF.”

And the FT interviewed the IMF’s first deputy managing director, Gita Gopinath, who acknowledged that the sanctions imposed on Russia over its military intervention in Ukraine could lead to what she says “fragmentation at a smaller level.”

And she did say that the dollar is eroding influence, but “would remain the major global currency.”

So, that’s a two part question. I’m wondering if you could talk about the decline in U.S. dollar hegemony and how the sanctions will potentially erode that. And then the other half of the question is, can you comment on the declining use of dollars in foreign exchange reserves?

MICHAEL HUDSON: Well, this is what my book “Super Imperialism” was all about. When I first published it in 1972, I could see how the whole thing was unfolding for the next 50 years. And we just published last year a third edition of it, bringing it up to date.

Dollar hegemony means America’s entire balance of payments deficit in the ’50s, ’60s, and ’70s was military. So the dollars that were being pumped into the world economy were the result of military spending.

But the dollars would end up in foreign central banks, especially from Asia to France, Germany, others. What were they going to do with it? Well after 1971 they could not buy gold anymore, so all they could do was buy U.S. Treasury securities. IOUs.

And so they re-lent to the Treasury all the money that America was spending militarily. And the more money America spent in waging its cold war militarily against the world, the more money central banks would lend to the U.S. government to finance the U.S. deficit that was spent largely on the military-industrial complex and foreign military operations.

So dollar hegemony was a free lunch financing America’s almost 800 military bases across the world, to fight against communism, defined as any country that doesn’t let American industry and finance buy control of its raw materials, agriculture, resources.

And this has now come to an end. Right now America has grabbed Afghanistan’s, and Russia’s gold. All of a sudden it’s obvious that, this summer, there’s going to be an enormous squeeze on Third World countries, on the Global South.

Their energy prices are going to go way up, and that’s going to hurt them just like the oil shock of 1974 and 1975 did.

They’re going to have to pay higher food costs, because of food prices are going to go way up now that the Ukraine war is erupting.

And a lot of their foreign debt, dollarized debt service, is coming due. And they’re facing a choice: if they pay the foreign debt, they can’t afford to buy the oil and energy that they need to run their factories and heat their homes. They can’t afford to buy the food to feed their people. Whose interests are they going to put first?

Well of course their leaders are going to put America’s interests first, and their own interests second, because their leaders, if they’re a client oligarchy, are put in power by the U.S. military, as sort of miniature Pinochets, throughout Latin America and other countries.

So suppose other countries decide, well, we’re going to feed ourselves and we’re not going to wreck our economy just to pay foreign bondholders. We’re a sovereign country. We’re going to put our national interests first.

Well, then the United States can say, aha, we’re going to grab all of your foreign assets in the United States.

Well, other countries can say, oh, they’re going to do to us just what they did to Afghanistan and Russia. Let’s move our money out of the United States quickly. If we don’t have dollars, well, it’s true, we can’t pay our dollar bondholders, but at least we can, in international markets, we can buy the food and the energy we need.

And so the tensions, the disruption of world prices, and inflation, and trade that is a result of the NATO attack on Russia, now threatens to drive all of the southern hemisphere countries into an alliance with Russia, China, India, and all the rest.

So America basically is creating a new Berlin Wall, but the wall is isolating itself from other countries, and driving other countries all together into what I hope will be a happy, self-sufficient, non-U.S. globalized economy.

BENJAMIN NORTON: Well, I want to thank you, Professor Michael Hudson. It’s always a real pleasure having you. I know you’re very busy, so thank you for giving us so much of your time.

I’ll say that the comment section here on YouTube has been very vibrant, with some interesting conversation. And what’s nice is there are people from all over the world, from the U.S., Latin America, Europe, and from Russia. So it’s good to see a mix of people.

And for anyone who wants to listen to this, you can check out the podcast version if you look up Multipolarista on Spotify, and iTunes, and all the other podcast platforms.

And I’ll just say, while I wrap up here, that today we were talking about, at the beginning of this discussion, a new book that Michael Hudson is publishing this week. It is called “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism.”

It’s a very good book. I had the privilege of getting a review copy early. So definitely check out that book.

You can also find all of Professor Hudson’s writings at michael-hudson.com.

Thanks, Professor Hudson.

MICHAEL HUDSON: It’s really good to be here. It was a good discussion.

For the weekend: May 9th, The Real Story Behind D-Day (and current rumors)

May 06, 2022

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Dollar Plunges against Russian Ruble to Lowest Level in 2 Years!

May 4, 2022

By Staff, Agencies

The exchange rate of the dollar and the euro fell against the Russian ruble on Wednesday, and the US currency was trading below the level of 69 rubles for the first time since June 2020, while the euro was trading below the level of 73 rubles.

At the beginning of trading, the dollar exchange rate fell to the level of 68.63 rubles, for the first time since June 2020, while the euro exchange rate fell to the level of 72 rubles.

In terms of stock trading, the Moscow Stock Exchange index denominated in rubles [Mexis] decreased by 0.02 percent to 2444.67 points, while the index of the stock exchange denominated in rubles [RTS] rose by 0.87 percent to 1091 points.

New pure-bred ´Schrödinger-seizable´ euros

May 02, 2022

Source

by Jorge Vilches

The EU had already promoted and achieved all-around chaos regarding very simple yet absolutely essential trading terms urgently to be agreed with the Russian Federation. As if that were not enough, now adding fuel to the fire EU member countries continue to dangerously play their traditional fiddles while declaring that “ some contracts are holier than others, didn´t you know ? ” This daring criterion also means getting back to square one with an ever larger and riskier conflict while everybody´s patience is running thin. If Europe does not reverse course within a very limited time frame it will needlessly smash itself head-on against a very harsh reality. Once triggered, the subsequent uncontrolled demolition cannot rewind no matter how many desperate “emergency meetings” EU officials call for.

Ref # 1 https://www.aljazeera.com/economy/2022/4/27/eu-warns-companies-not-to-buy-russian-gas-in-rubles

Ref # 2 https://www.euronews.com/my-europe/2022/04/28/eu-countries-paying-for-russian-gas-in-roubles-may-face-legal-action-warns-dombrovskis

ground-breaking EU criterion

The EU has now come up with a ground-breaking legal criterion that international jurisprudence should rapidly adhere to and possibly improve. Thus it could include it in Treaties and other important legislation and, in view of its apparent virtues, even apply it ex-post-facto such as in this case. By the way, with this new international flat-Earth public policy, the EU would be the only party entitled to unilaterally uphold some contracts and not others per its own wishes and convenience as if it were a God-given right. Not anybody else, no way. So Europe, supposedly the cradle of Western civilization, is now trying hard to earn “The Joker” award disregarding the livelihood of at least 800 million human beings plus serious negative impact upon the rest of the world. Granted, history will not be kind with EU leaders.

800 million Europeans

Obviously, in view of the above, the interruption of Russian imports – including very specific, exclusive, and unreplaceable grades of Russian natural gas, oil, and coal – is now definetly in the cards for some or all European countries. This will necessarily impact beyond belief a still clueless population which continues to play the role of vassal puppets to Anglo-Saxon malignant dictates without actually following how they are being had.

Ref #3 https://www.news18.com/news/explainers/explained-what-would-paying-for-natural-gas-in-rubles-instead-of-dollars-euros-mean-4921046.html

C:\Users\Jorge Vilches\Desktop\index.jpg

Fool me once, shame on you,…

Four weeks ago, in view of the massive seizure of its legitimate funds, Russia was left with the only option of requiring Rubles as payment for its exports as such currency is exclusively under Russia´s purview and thus cannot be freezed and/or seized by any stakeholder, EU included. And negotiations were making very definite progress along such lines up until the past week. A month ago, the only real problem was for EU countries to find Rubles other than by selling their “theoretical” gold bullion vaulted in the UK and the US which many claim is either non-existent or highly encumbered with many dozens of claimees standing in line. So the alternative viable solution wisely found up until last week was to convert euros into Rubles at Russia´s Gazprombank as it had not been sanctioned – at least not yet – as possibly the EU had foreseen its role for the proposed solution at hand. So Vladimir Putin, President of Russia, took the trouble to personally explain the exact simple two-step payment procedure by phone conversation with German Chancellor Olaf Scholz. By the way, the procedure is so simple and so straight-forward that even tie-wearing boomers can understand it.

back to square 1

But now European governments and energy companies are proudly rejecting the idea of paying in Rubles on the basis that gas import contracts clearly specify that the allowed currencies to be used for payment are only euros or dollars, not Rubles. Accordingly, they argue that one side of the deal – in this case the Russian Federation – cannot change such contractual obligation by its own decision (!). The EU now says “This is an absolutely clear circumvention of the EU sanctions.” “Opening a Ruble account at Gazprombank in and by itself may breach the EU sanctions…”

Ref # 4 https://www.aljazeera.com/news/2022/4/28/europe-struggles-for-clarity-on-russias-roubles-for-gas-demand

a deal is a deal…

“No way to now require Rubles, it´s contractual, see ?” It does not matter that Russia´s fully contractual foreign currency accounts in euros & dollars were seized by the EU to the tune of $ 300+ billion dollars. No, that contract is to be discussed another day. This is ´different´ you see, and thus “The Czech Republic will not give in to Russia. Other countries that accept paying in Rubles are making a mistake. It is a violation of sanctions. It is legally dangerous.” Danish energy group Orsted also won´t pay for Russian gas with Rubles. “We refuse to accept unilateral demands (!!) from Russia and Gazprom”. Ref # 5 https://www.rt.com/business/554743-eu-nations-reject-gas-terms/

…but some contracts are holier than others (no ?)

So, as Europe badly needs natural gas, the corresponding Russian supply contracts need to be complied with, as specified, with euros or dollars – but not with Rubles. While the Minsk Agreements, duly brokered and endorsed by the same European counterparts, do not have to be complied with, what for ? Neither should Europe comply with the most elementary property rights and contractual banking rules regarding Russian funds in euros and dollars illegally seized by the EU. The Western world has unilaterally declared that contractual property rights are no longer valid so now bank accounts anywhere – or other assets — are freezable, seizable and forefeiturable. Weaponizing Swift access and use is also contractually unacceptable, yet Western powers decide upon it freely dismissing the illegality.

the Schrödinger euros – “The Saker”

Last week, “The Saker” published what turned out to be a highly visible article entitled the Schrödinger euros which explained the situation simply and clearly up until that date, exposing how deceitful the EU payment-in-euros proposal was. So much so that Russia could only offer the euros-converted-to-Rubles payment alternative to avoid confiscation yet again. Many of the comments therein were highly pertinent and definitely knowledgeable, particularly JD´s most valuable input. One valid conclusion arrived at such commentariat debate was that thru the euro-converted-to-Rubles payment mechanism, into the future Russia would still run the very serious risk of a possible seizure, freezing, arresting and/or confiscation of remnant euros — not yet converted into Rubles — already paid to and duly received by the Russian side. This would include euros or dollars not converted into Rubles — or other currencies — and still held by Russia or third parties (China, India, or whoever) as a result of Russian payments or investments. Thus, remnant unconverted euros or dollars, per their Schrödinger-seizable nature, would eventually be a “hot potato” liability in whoever hands they were held, Russian or otherwise. Beware of these ´Schrödinger-seizable´ euros…

Ref # 6 https://thesaker.is/the-schrodinger-euros/ Depending upon circumstances and the specific point in time that such possible risk could become real, the sums of euros – or dollars — involved could be humongous and even exceeding the $300+ billion of Russian funds currently frozen & seized. Let´s recall that these transferred euros would not be physical and, therefore, practically untraceable bills. Instead, these are very distinct digital liabilities of European banks which can be nullified at will through revocation or claw-back anytime in the future either applied on Russian holders and/or third parties at whichever domain or legal monetary jurisdiction these euros may lie at…

Other unconverted currencies received by Russia in payment for its exports – such as US dollars – from whoever else in the world also run the same possible seizability, something which would also be applicable to other countries…

In sum, the EU´s financial criteria have been transformed into a random and unpredictable quantum mechanics casino

  • The EU badly needs to keep importing Russian produce for years to come.
  • Russia is willing to sell such produce if they get effectively paid, no charity possible.
  • Russia doesn´t accept euros or dollars as they would be just as seizable as the now frozen legitimate Russian funds that have been rendered unusable per unilateral sanction applied by the EU.
  • Russia proposed to be paid by conversion of the euros received into effective Rubles under the purview of the Russian Central Bank. Once the Rubles are duly credited the delivery of Russian produce could proceed, not before. This means that the contractual obligation is only satisfied when the euro-conversion transaction into Rubles is concluded at Gazprombank.
  • The EU now objects to that and says that actually the EU payment should be considered as duly fulfilled the instant that euros are transferred and not a millisecond later. This means that Russia would be obliged to comply with the contracts whatever or whenever happens with the conversion into Rubles of the euros received.

pure-bred pedigreed ´Schrödinger-seizable´ euros

So now the EU would accept to pay for Russian imports only with pure-bred pedigreed ´Schrödinger-seizable´ euros not bastardized into Russian Rubles as such are “not contractual” and thus against the “rules-based EU”. Meaning that per the EU the payment contractual obligation would be fulfilled the instant that such pure-bred euros are transferred to Gazprombank without the need to consider any aspect of the subsequent bastardizing conversion into Rubles. The EU only cares about and acknowledges pure-bred pedigreed ´Schrödinger-seizable´ euros. Thus Russia would be obliged to deliver the goods the instant it receives such “contractual” euros at Gazprombank.

Per Al Jazeera, EU spokesman Mr. Eric Mamer stated the official EU commission position: “ If the contract stipulates that payments should be made in euros or in dollars, then the company’s obligation ends once it has made such payment in euros or dollars,” Mamer said. “If the payment takes place in Rubles, then we are no longer talking about the agreed contract terms and we are circumventing the sanctions. What we cannot accept is that companies are obliged to open a second account and that between the first and second account the euros are under full control of Russian authorities and the Russian Central Bank who says that the payment would only be complete when it is finally converted into Rubles. This is an absolutely clear circumvention of the sanctions. Opening a Ruble account at Gazprombank in and by itself may breach the EU sanctions… “

Ref# 7 https://www.aljazeera.com/news/2022/4/28/europe-struggles-for-clarity-on-russias-roubles-for-gas-demand

So, before making any payments, EU buyers would have to get from their Russian counterparts a full agreement in writing specifying that the payment contractual obligation would be fully completed and satisfied as described above. The subsequent conversion of such euros — or dollars — into Rubles after the euro transfer has been duly credited is something under the entire responsibility and risk of the Russian authorities. Such a written statement would have to be duly approved and signed beforehand by pertinent officials from the EU and the Russian Federation. This means that, according to the EU, the instant that such Schrödinger euros or dollars were deposited – and therefore subject to seizure per the many sanctions already approved and effectively applied to Russia, or even possible future sanctions to be thought of against Russia or others – the contract has been fulfilled and Russia is obliged to deliver the goods.

… fool me twice, shame on me

So, in view of current and possible future EU sanctions, attitude and seizures, as the President of Russia Vladimir Putin clearly explained to the German Chancellor Olaf Scholz, to put it nicely the Russians beg to differ. Accordingly,

Step (1) is the transfer of euros to a Gazprombank account.

Step (2) is the conversion of such euros into Rubles per Gazprombank´s operational criteria including timing, rate conversion factors, and fees.

And only after such step (2) of euro conversion into Rubles is duly and satisfactorily concluded would the transaction be considered as completed and fulfilled.

Ref # 8 https://www.zerohedge.com/energy/trump-was-right-putins-gas-strategy-gives-germany-only-bad-worse-choices

brace for impact

After Russia´s funds were seized, the way to pay for Russian produce remains unchanged from day 1:

  1. payment in Rubles thru the euro conversion mechanism proposed by Russia per the above mechanics.
  2. payment in Rubles thru the sale of gold bullion in the terms that Russia has offered from day one.

“ So the EU better be prepared to continue paying (many) billions of euros each week to Russia, supporting the Ruble and subsidizing its military in the process. It’s not just a short-term problem, either. If Germany manages over time (many years ?) to find adequate replacements for Russian natural gas, oil and coal, it will be at (tremendously) much higher prices. The era of cheap-Russian natural gas fueling the German economy is over. German energy-intensive companies, like its chemical giants, could not compete in the global market. Germany will face painful choices about the future of its industrial economy”. So without very specific and unreplaceable exclusive Russian grades of natural gas and oil and coal the huge German industrial giants run the very serious risk of shutting down continuous year-round processes which would mean irreparable harm + negative impact on the German economy and the rest of the world. Ref # 9 https://www.zerohedge.com/energy/trump-was-right-putins-gas-strategy-gives-germany-only-bad-worse-choices

The European conventional military dependence on Russian fuels is beyond overwhelming, close to checkmate.

The gold card

Regarding option (B) payment in Rubles thru the sale of gold bullion, I recommend two most pertinent “The Saker” recent articles, namely

Ref # 10 http://thesaker.is/bretton-woods-iii-the-new-big-bang-suicidal-europe-saved-by-gold/?

Ref # 11 http://thesaker.is/natos-internal-gold-war/

RE-published ]

Schrödinger gas for Schrödinger euros ?

As stated before, last week “The Saker” published what turned out to be a highly visible article namely the Schrödinger euros which explained the situation simply and clearly up until that date, including the “Schrödinger” details exposing how deceitful the EU payment in euros proposal was. Ref # 3 https://thesaker.is/the-schrodinger-euros/

As has happened on other occasions, the above “The Saker” article was also RE-published in different specialized blogs such as Zero Hedge wherein commentariati posted comments and analysis of their own. In this occasion, “not-me—it-was-the-dog” posted an interestingly creative comment which paraphrases highly pertinent aspects with refined sarcasm, namely

“… In exchange for so-called Schrödinger Euros, now Vladimir Putin ´the merciless´ has decreed the creation of Schrödinger NatGas, whereby GazPorn would thus “print” cubic meters of natgas with a keyboard 100% for free and then transfer such gas over to the European purchaser’s storage tanks in the EU albeit now under “frozen” status.

So Russia never gets to use such euros – which actually never see the light of day – and accordingly are not inflationary in any and every sense of the term as nobody else can use them either, and Europe never gets to burn such gas – which actually never sees the light of pilot – and accordingly does not contribute to global warming!

Thus, by not entering into any economy at all in no way, shape, or form the EU and Russia can exchange lots of nothing for free, and Greta will squirm with delight. Easy see ?

Michael Hudson, Katie Halper and Aaron Maté

April 30, 2022

Michael starts at 23:40 and the transcript will be added to this thread when available.

Pepe Escobar and Danny Haiphong; Russia, China, and the Post-Dollar World

April 28, 2022

Andrei Martyanov: Q and A session off the cuff

April 26, 2022

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

حرب عالميّة للفوز بالنقاط.. والضربة القاضية صينيّة

الثلاثاء 19 نيسان 2022

 ناصر قنديل

مع اقتراب الحرب في أوكرانيا من نهاية شهرها الثاني، وتقاطع التقارير والمواقف والتقديرات عند كونها ستسمرّ طويلاً، وكونها لن تضع أوزارها خلال أسابيع، وظهور حركة الجيوش والأسلحة في مساحات الاشتباك بما لا يمكن تفسيره بمقتضيات الحرب الأوكرانيّة وحدها، بل بصفتها مناورات استراتيجيّة في سياق حرب الشرق والغرب، حيث تختبر الإرادات والأسلحة والأسلحة المضادة والحروب الإلكترونية والمالية، وشيئاً فشيئاً بدأ يتضح ان الجيش والحكم والسلاح وخطط القتال في أوكرانيا لا تتحرك بحسابات أوكرانية، بل بصفتها خط المواجهة الأول لنخبة الجيوش الغربية وأسلحتها وخططها، وتحت سقوفها السياسية، وان الحركة الروسية العسكرية ونوعية السلاح الروسي المستخدم والسقوف السياسية المتحركة، لا تنطلق من متطلبات المعركة في النطاق الجغرافي لأوكرانيا بقدر ما تمثل استجابة لمتطلبات مواجهة أشمل وأوسع، يقف فيها الغرب الأميركي والأوروبي فيها قبالة الحسابات الروسية حيث يتم التخاطب باستعراض أنواع الصواريخ والقدرات العسكرية لبلورة موازين قوى على أرض الواقع وليس على الورق، تنتج وحدها قواعد الاشتباك وحدود قدرات الردع، وفّرت لها شروط الاشتباك حول أوكرانيا الفرصة المثالية للطرفين المتقابلين لخوض الشكل الوحيد الممكن للحرب غير النووية.

أوكرانيا التي تقلّ عن مساحة دول المشرق العربي، سورية والعراق ولبنان والأردن وفلسطين، ويقلّ عدد سكانها عن مجموع سكان المشرق قليلاً، وتقع على الحدود الروسية بتاريخ وجغرافيا على درجة عالية من التشابك والتداخل، وتشكل الامتداد الأهم للغرب في قلب روسيا، ونافذة روسيا وأوروبا على البحر الأسود، وتمثل الجمع المشترك لتاريخ حروب البلقان والقرم معاً، التي كانت أساس حروب عالمية سابقة، هي اليوم مساحة الحرب العالميّة التي نعيش يومياتها، والتي يسعى الغرب من خلالها لإعادة تشكيل روسيا، وتسعى روسيا من خلالها لإعادة تشكيل أوروبا. والحرب تبدو مستمرة حتى يتحقق أحد الهدفين، او يتحقق الإنهاك والتسليم المتبادل بالحاجة لتنظيم قواعد الاشتباك وربط النزاع على قاعدة التوازن السلبي، ما يعني نصف انتصار لروسيا ونصف هزيمة للغرب. بينما نجاح الغرب بنقل الأزمة الى الداخل الروسي، من البوابة الاقتصادية أو العسكرية، وصولاً لبدء مسار التغيير في التوازنات السياسية الداخلية سيعني انتصاراً للغرب، فيما نجاح روسيا بالصمود ونقل التداعيات الناجمة عن العقوبات على الداخل الأوروبي إلى مرحلة الغليان، وبدء التحول الى عنصر فاعل في تشكيل مشهد أوروبي سياسي وشعبي جديد، سيعني انتصاراً روسياً في رسم معادلة دوليّة تكون لها فيها يد طولى.

  حتى الآن في المسرح العسكري نجحت روسيا بتفادي استدراجها لحرب استنزاف ونجح الغرب بتظهير قدرته على تمويل وتجهيز مسرح صالح لمثل هذه الحرب، وعنوانها كييف، ونجحت روسيا بدرجة كبيرة بجعل الحرب تدور تحت عنوان السيطرة على خطوط الإمداد براً وبحراً وجواً، ولذلك يسعى الغرب لتوسيع هوامش حركته نحو الداخل الأوكراني ملوحاً بتوسيع المدى الجغرافي نحو بولندا والسويد وفنلندا، أملاً بتراجع روسي أمام حركة الإمداد العسكري نحو الداخل الأوكراني. وبرز اختبار التدخل المباشر عن بُعد باستهداف الطراد موسكوفا بصواريخ أميركية، فجاء إغراق غامض للمدمرة الأميركية يو اس اس سوليفانز داخل بحيرة في ولاية أوهايو، ليظهر حرباً سريّة للأسلحة النوعية التي لم يتم اختبارها من قبل، ويرسم قواعد الردع والاشتباك في آن واحد.

يبدو المسرح الاقتصادي والمالي عنواناً للميدان الأشد حيوية وأهمية في الحرب العالمية، فهي حرب تدور بين سعي أميركي لتهميش روسيا كمورد عالمي لا غنى عنه في موارد الطاقة، خصوصاً بالنسبة لأوروبا، مقابل سعي روسي للتلويح بتهميش الدولار كعملة عالمية أولى حاكمة في الأسواق العالمية، وفيما يبدو أن السقفين صعبا المنال ودونهما متطلبات تفوق قدرة الفريقين الراهنة، نجحت موسكو حتى الآن باحتواء الصدمة القاتلة لحزمة العقوبات الغربية القاسية، وانتقلت الى تحويل التحدّي الى فرصة بجعل معركة توريد الطاقة الى أوروبا قضية سيادية أوروبية تتصل بمصير النمو والتضخم والرفاه، ووضع عنوان الدفع بالروبل كرأس جسر لسقف المعركة المتصل بموقع الدولار كعملة محورية حصرية عالمياً.

توقعات الربح بالضربة القاضية بمعنى النصر الحاسم لأي من الفريقين، يبدو بالنسبة للغرب مستحيلاً، وبالنسبة لروسيا متوقفاً على حدود الجاهزية الصينية للانتقال من الاصطفاف الدفاعي مع روسيا إلى المبادرة الهجومية، وفي حال بقاء الصين في التموضع الدفاعي في الحلف مع روسيا، ستكون فرص الربح بالنقاط لمحور روسيا الصين، أعلى من حظوظ الفوز بها من المحور الأوروبي الأميركي.

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

April 13, 2022

Source

by Jorge Vilches

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

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

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

Gold matters

The above is terribly important vis-á-vis the spanking-new payment system for Russia´s much-needed oil & gas and other essential produce now per Western “sanctions” only buyable either with rubles or gold. With rubles thru yet-not-so-clearnor-yet-vetted banking procedures of unknown sustainability not been tried out even once yet — think revoking clawbacks…or ´artificial defaults´. While with gold it´d be thru old-fashioned sale of tangible bullion. Furthermore, in order to substantially increase its purchasing power, it would be highly meaningfull to be able to sell such gold – possibly with the buyer taking physical delivery — with a genuine market-reference price most probably very significantly above today´s sharply downward-manipulated quotes thru constant central bank interventions since time immemorial. Thus, we would avoid the coming chaos as the “blitzkrieg sanctions” imposed on Russia are not only not working but visibly having the opposite effect. Stubbornly opposing deeply immature EU wishfull thinking, the ruble today is even stronger than before the Ukraine armed conflict. The Anthony Quinn ´gold in Aqaba´ scene in “Lawrence of Arabia” brightly comes to mind [Ref #2: https://off-guardian.org/2022/04/08/despite-sanctions-the-ruble-is-stronger-than-before-the-war-why/%5D

The hungry 800-pound gorilla

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

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

Beware

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

Skeptics

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

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

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

Europeans, this is it

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

The Plan

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

The philosopy of The Plan

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

The math of The Plan

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

2022 goals of The Plan

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

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

Governance & Management of The Plan

1. Arbiter Czar

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

2. Full legal open-ended amnesty

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

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

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

4. UK official public domain gold bullion transparent Repatriation Plan

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

1. Gold at real free-market price

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

2. “Financial Equivalence” Protocol

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

3. Political reconfirmation and legal homologation

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

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

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

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

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

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

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

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

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

Initial schedule of The Plan

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

May 1

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

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

June 1

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

July 1

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

Repeat

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

teaser image

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

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

Interview: London Paul from the Sirius Report – Move to Multipolarity

April 12, 2022

Source

Amarynth interviewed London Paul

London Paul from the Sirius Report has a story to tell. This is the story of the history of multipolarity and the global move to a new multipolar structure in our world with the old single polarity hegemon now collapsing.

He graciously agreed to this 5-question written interview to bring Saker readers up to date and we are grateful for his time.

Paul will probably not be a new voice for some of our readers, but for others, you can read his background here: https://www.thesiriusreport.com/about/

His work was some of the first that was scrubbed from the internet and for years, he was laughed out of the house, as what he was observing was just too different to be true. To avoid the continual internet scrubbing games, he set up a monthly subscription podcast, where he discusses current affairs in relation to economics.  Yet today, we are in this process and we can visibly see the progress and effects of this massive move to a multipolar world.

At the Saker Blog, we’ve focused on the Russian military action in the Ukraine. We understand that this is a fight not against the Ukrainians but against the US-led NATO military alliance, and the single power center, west.  The Ukraine is but a proxy. In the bigger picture, this move toward multipolarity is one of the reasons if not the major part, for this military action.

With that short overview, we move straight into the questions.

Question:  Paul, give us the background. How did you arrive at your understanding? What drew you to this specific study and what makes you excited about it, even today? Where do we stand as a world community? What do we stand to gain by changing the complete underpinnings of our world to a fairer system, where each country has a voice?

Response:  I was originally an academic who studied Physics at degree and PhD level. I then moved into the financial services sector, so that’s when my interest and understanding in economics and finance started in earnest. It was around the time of 9-11 that I developed a serious interest in geopolitics.

In the immediate aftermath of the 2008 Global financial crisis, which I predicted in 2006, it was immediately apparent that the West had not implemented any policies which would resolve the causes of that crisis. They merely decided to bailout the financial system and then implemented QE and ZIRP which should only ever have been implemented on a very short term basis. I wrote to Western governments at the time advising them not to implement these policies for more than a few short months because the consequence of long term implementation is unsustainable asset bubbles, failing economies addicted to – and propped up by – cheap credit, and a completely unsustainable financial system. Developments made by China, Russia and other nations, which we will come to in the next question, were the first genuine suggestion that those nations saw the need for an alternative to what had become the utter failure of unipolarity by the 2008 GFC.

It was around a decade ago that I came to know the architects of what is now known as the multipolar world. They understood back in the 1990s that US hegemony and the US Dollar were in terminal decline. They advised the Chinese and Russians that they needed to develop a multipolar world, the resurrection of the Old Silk Road, to seek win-win cooperation with other nations and to develop sound monetary policies and currencies backed by real wealth, such as gold and commodities. From discussions with these architects I began to study China, Russia and the wider Global South in great detail as we began to see the embryonic development and implementation of the multipolar world.

Given these are fundamentally game changing developments in the so-called global order, my interest remains as strong today as it was a decade ago. We are now seeing a world that operates in two distinct spheres: a rapidly developing and ascendent multipolar world and a unipolar world in terminal decline. When these two worlds collide as the latter seeks to retain its relevance, we then see the risk of serious conflicts developing such as what we are now witnessing in the Ukraine.

Whilst the developing multipolar world is a decades-long project in the making, its adoption and the benefits that will be accrued are multifold, in that it seeks to develop nations domestically, bilaterally and in multilateral formats. It strives to promote true globalisation, not the highly abusive Western adoption of this theory. By promoting win-win cooperation and the development of vertical poles across the entire world, it will provide prosperity and security for everyone.

Many will argue that this is a nonsensical pipedream but it is already becoming a reality. Challenges will remain, not least in the ideological bias that exists between nations and in deep-seated historical grievances. However, all journeys have to start with the first step and that is what we are already beginning to see across the Global South. The sum of our parts can be infinitely greater than the individual components and that is something we, as responsible custodians of this planet, should be striving to achieve. It is for these reasons that my understanding of this paradigm shift remains as strong today as it was a decade ago.

Question:  Is it only China and Russia that designed the concept of multipolarity for us, or were there more involved historically?

Response:  Whilst I think it would be fair to say that China and Russia were the trail blazers for multipolarity, we should not forget the role that has been played by many other nations in the last decade which is equally as important and significant.

Firstly, there was the announcement of the BRIC alliance, which became the BRICS alliance, namely Brazil, Russia, India, China and South Africa in 2009, in the immediate aftermath of the GFC of 2009. We also saw the foundation of the SCO or Shanghai Cooperation Organisation in 2001, which included Kazakhstan, China, Kyrgyzstan, Russia Tajikistan, and Uzbekistan. Full membership was granted to India and Pakistan in 2017. There are also four observer states: Afghanistan, Belarus, Iran (soon to become a full member), Mongolia and 6 dialogue partners.

We also saw the creation of the EAEU in 2014 which now includes Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. In 2016, there was the formation of the AIIB or the Asian Infrastructure Investment Bank, which is a multilateral development bank focusing on developments in Asia. The bank currently has 105 members, including 16 prospective members.

We have also seen the modification of long-term institutions such as the ASEAN alliance or the Association of Southeast Asian Nations which was founded in 1967 and is a political and economic union of 10 member states in Southeast Asia, which promotes intergovernmental cooperation in the realms of economic, political, and security integration between its members and in a wider context throughout Asia.

One development which has been years in the making was the adoption of the RCEP or the Regional Comprehensive Economic Partnership in early 2022, which is a free-trade agreement. It includes Australia, Brunei, Cambodia, China, Indonesia, Japan, Laos, Malaysia, Myanmar, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam.

These are just a few examples of developments in multilateral formats. There have also been many developments in bilateral and trilateral formats which are all pieces of the development of this multipolar world.

Question:  What do you envisage as we move further into this world configuration in terms of trade?  What could be the everyday currencies? As we are a Russian-oriented site, there is much concern about the Russian Central Bank. Will we end up with Central Banks? Has Russia’s move to set a price standard for gold ended in a gold backed Ruble, or a commodity based currency? Explain to us what it means in broader terms for the ordinary person?  Why should we be interested?

Response:  Global trade, finance and ecoomies will literally go through a revolution. The BRI (Belt and Road Initiative) has laid the foundation for a global trade system but it is fluid and subject to change. There is no doubt that banks and the global financial system are going to undergo radical changes, including their investment arms. There will be a radical overhaul of the function of governments and financial institutions to include central banks. We expect to see the adoption of sophisticated barter systems which will facilitate trade whereby the respective counter parties will set transaction prices as they see fit, free from government interference.

Blockchain and other technologies will totally change the way business is conducted. The multipolar world will seek to facilitate trade and allow trading partners to generate and keep their wealth. There will be a radical overhaul of how basic needs are managed to include healthcare, education, food and energy security. The domination of unsustainable cartels and cooperations will come to an end and we will see an explosion of creativity in terms of industry, medicine, science and the arts. Ultimately, it requires a complete overhaul of all existing Western institutions which have ruthlessly abused their responsibility for self-interests.

We will see, in a very broad sense, the marrying of true capitalism and socialism into workable models for nations and alliances. The ongoing challenge to US unipolarity will continue via the Global South and, in essence, the Eurasian Trade Zone. Existing Western institutions will continue to unravel and the insidious practices that have underpinned the world since WW2 will continue to be exposed.

In terms of future currencies, we are going to see the adoption of new payment mechanisms outside the purview of the USD / UST complex. This will include nations trading in local currencies, adopting future cryptocurrencies or digital currencies in multilateral formats such as the EAEU and the ASEAN nations. The backbone of future trade will be in currencies which are backed by real wealth, to include gold, perhaps silver and a basket of commodities. There will be no single world reserve currency in the future. China has always made it clear that it doesn’t seek to make the yuan a world reserve currency but merely to internationalise its currency. Russia also has that possibility via its vast commodity resource base, for the future global adoption of the ruble in terms of trade, particularly with the Global South but also the West and not just in terms of demanding ruble for gas as we are currently seeing.

The 5000 ruble per gram price fix was merely meant to stabilise internal markets and miners. It has now been removed because that stability has been achieved. Unfortunately, in the West, that announcement was interpreted as meaning that Russia had backed the ruble with gold and it was wrongly conflated with a far bigger story which we have discussed for years about the future role of the ruble in international trade.

For Russia, the stability and global adoption of the ruble in terms of trading commodities will be beneficial to the Russian economy, its financial stability and enable it to access markets free from the potential interference of the US via the weaponization of the dollar. It will also permit Russia to continue to implement further domestic changes, not least including the development of the Russian Far East and its integration into the BRI. A stable ruble and the benefits that will accrue will also see greater international investment in Russia in the future.

Question:  People talk about food scarcity and prices are rising everywhere.  So, is this purely sanctions blowback, or the result of years of fiscal mismanagement?  And then how is an ordinary person to hedge.  Where are we going to see major country defaults on their debts?

Response:  We have spoken about food and energy insecurity for a number of years. The sanctions blowback has merely exacerbated a long-term problem caused by utterly failed policy decisions. Firstly, nations should have long since been aware of the flaws of a global ‘just-in-time-system’, in that if one aspect of that mechanism fails it can have damaging consequences.

We have seen during the pandemic how global supply chains were impacted in very serious and sudden ways. The just-in-time-system was the primary cause of this. Whilst we are not advocates of protectionism, because we see that as being equally flawed, nations need to understand that they need to become more self-sufficient where possible, in terms of food and energy security. There also needs to be a radical overhaul of this just-in-time-system because the pandemic highlighted eloquently why it is quite simply unfit for purpose.

This also highlights the need for nations to adopt a new approach via multipolarity which seeks to find mechanisms to address the future disruption of supply chains, how nations can begin to address some of those concerns domestically, particularly in terms of food production and via their energy needs. There also needs to be an understanding that this Western ideological zero-sum game mentality is contributing to global food and energy instability because of its very weaponization by Washington and its vassal states.

In terms of energy security, the desire to push ahead with the utterly flawed green revolution has also led to unnecessary imbalances in the energy mix, putting even Western nations at serious risk of future energy and food insecurity including rationing and perhaps even the complete absence of basic sustenance food items. There needs to be a radical global overhaul of how we address energy needs and how we can address this via a mix of traditional fossil fuels, nuclear reactors to include a global drive for commercial fusion development, hydroelectricity and the adoption of viable renewable energy sources because currently the renewable sector is appallingly myopic and fails to address obvious issues such as the cost in terms of energy, resources, commodities and the environmental impact to implement e.g. solar and wind farms. In very basic terms the cost-benefit ratio of seeking to implement such technologies has not been adequately addressed.

In terms of how people can manage the current risks of food and energy insecurities, that depends on their individual circumstances. If possible, they should look to stockpile non-perishable foods, grow their own fresh vegetables, utilize alternative off-the-grid energy sources for cooking, heating and lighting. However, this is often not possible due to financial and domestic constraints. What is clear is that we are expressing a global crisis in terms of food and energy security and currently we don’t sense that Western nations are taking this seriously enough. The consequences are potentially catastrophic and not just in terms of the global South. The West is now highly vulnerable to similar shocks and we are simply unprepared, not least in dealing with the societal impact this could and will cause.

Question:  What is the question that you would have liked people to ask you, initially, in the early days, when your message was not taken seriously. And of course, if you can answer that question as well.

Response:  Ironically, this is a question within a question. I was asked back in 2014 what I regarded as my fundamental observation for the next decade. My response was that we should all pay attention to what China and Russia do domestically, bilaterally and internationally. This was greeted with utter disbelief, ridicule and anger. Instead of reacting in such a manner, the next question should have been why I gave such a radical response and what was my reasoning, instead of being summarily dismissed.

If I had been asked why I believed this to be the case I would have explained why the GFC in 2008 was the signal that US hegemony, the US dollar and unipolarity were in rapid and terminal decline. Why – as I stated at the time of the Kiev maidan in 2014 – this was the final nail in the coffin lid of the US hegemony and the USD and Russia would play the long game to see this reach its inevitable conclusion. Why I stated that the major energy deal between China and Russia for the Power of Siberia, signed in 2014, was a major catalyst for the acceleration of the multipolar world and de-dollarisation. Why post GFC 2008, the US burnt its bridges with China by printing trillions of dollars instead of asking China to buy their debt. Why the rollout of the multipolar world was baked in the cake in 2014 and the US weaponization of the dollar would continue to erode global trust in the US and the USD leading to the collapse of unipolarity.

My reasoning was based on an unfolding reality which Westerners have continually, for the last 8 years, failed to see, often because of their arrogance and ignorance. Even now, many still regard the US as the hegemonic power it was in the 1990s and China and Russia as they were in the 1980s economically, societally and military. They also tend to see China and Russia through the eyes of the West, which is a very myopic perspective and makes the assumption that neither nation is capable of offering a better alternative to unipolarity. A failure to grasp these fundamental issues will continue to see Westerners fail to understand the unfolding paradigm shift and therefore to continue to dismiss it as being an irrelevance.


Thank you Paul! for your time and your complete responses.  But, I feel we’ve hardly touched the subject and this is most probably the one issue we will be talking about far into the future.

We open to the Saker commentariat and if you have a question for Paul, please put that in the comments.  We will choose another five questions and do another interview in written form.  It is now your turn, dear reader.


The ‘All or Nothing’ Wars

April 11 2022

Source: Al Mayadeen

Alastair Crooke 

The radical stance the West is taking against Russia is risking bringing down the whole economic system with which it has imposed its dominion over the planet.

The ‘All or Nothing’ Wars

These ‘wars’ are becoming viewed in the West as existential — ie. ‘all or nothing’ events — and their scope is widening.  Why wars in plural?  Well, the Ukraine military clash is coming to its climax; the war over Russia’s radical shifts in the global monetary order is sending western states into a speechless whirl; Europe stands at the brink of economic abyss; and the Russia-China ‘war’ to re-engineer the global ‘rules’ is coming to a head too (albeit travelling on a slightly slower train).

The West’s PSYOPS war however, truly stands in a class of its own. The wall of toxicity swelling, rising and crashing down onto the shores of Russia represents a sea-storm, such as we never before have seen.  Its’ intent plainly is to blacken President Putin beyond ‘evil’, to make of him such a twisted satanic demon, that any sane Russian oligarch will rush to replace him with a more compliant, Yeltsin-like figure.

Only it isn’t working.  The western officials behind the PSYOPS ‘curtain’ do not know when to stop. They pull levers harder and twiddle the dials ever higher until the outpouring of visceral hatred directed at everything Russian has created the opposite effect: not only is Putin more popular, it has launched a fierce backlash in Russia against the West in toto. 

The net effect then has been precisely to drive the Ukraine issue into an existential Manichaean nightmare. Headlines are written in the Anglo-world that ‘the war is all or nothing’:  If Putin is not defeated (in the sense of utterly vanquished in battle), the West simply cannot survive.

The problem of the West driving things to such a light or darkness ‘all or nothing’ climax, is that it also risks being ‘nothing’.  For clearly, there can be allowed no talking with ‘evil’ demonic forces: No political dialogue therefore.  All or nothing.

Then, derived from the casting of this confrontation in such binary good/evil terms is the obvious corollary that the rest of the world must be subjected to a Grand Inquisitorial mechanism to uncover, and then force, heretics to recant any lapse in their support for Ukraine versus Russia, or face the stake.  Inquisitors are spreading around the globe: Euro-recalcitrants are first (the Orbàns); Pakistan, India, Turkey, Gulf States, etc., etc. follow. 

Only again, it isn’t working.  The non-West scents in the air a weakening empire that is faltering; flailing-about, like Hercules descending armed with his sword into Hades (the underworld) to fetch out the three-headed dog Cerberus, one of whose heads spreads human fear about what lays waiting for us, around the next corner.  (Fear indeed is rising.)

And this is what is driving that fear behind ‘all or nothing’: The radical shift presaged by Russia’s insistence on receiving payment in roubles (for now, only in respect of gas supplies), and by an already resurgent rouble, now linked to gold and commodities.

By playing both sides of the equation: i.e. linking the rouble to gold, and then linking energy payments to the rouble, the Bank of Russia and the Kremlin are fundamentally altering the entire working assumptions of the global trade system (i.e. by replacing evanescent dollar trading, by solid commodity-backed, currency trading), whilst at the same time triggering a shift to the role of gold back as a bulwark underpinning the monetary system. 

If a majority in the international trading system begins accepting roubles for commodity supply, this could propel what Wall Street guru, Zoltan Pozsar, foresees being the death of the petro-dollar and the rise of Bretton Woods III (i.e. a new world monetary order).

The World is watching intently.  They can see the landscape shifting.  When the collective West seized all the foreign exchange reserves of the Central Bank of Russia, the latter decreed that Russian sovereign reserve holdings in Euros, dollars, and US Treasuries were no longer ‘money good’.  They were valueless as ‘money’ with which to pay debts to foreign creditors.  

The message was plain enough: If even a prominent G20 state can have its reserves cancelled at a flick of the switch, then for those who still hold ‘reserves’ in New York, take them elsewhere (whilst the going is good)! For tomorrow’s trading currencies will be commodity-backed, and not in constant dollars.

Of course, of those watching another aspect (market oil prices) most closely will be China (with its huge gold reserves), and the large crude producers who will perceive that Russia’s actions – if they stick – could lead to Russia not only wresting gold price determination away from LBMA and COMEX (bullion exchanges) but who knows, in combination with other producers, a wresting of oil price determination away from US commodity exchanges too?

In a very real sense, the West senses existential danger. We are not talking just de-dollarisation, but something more fundamental. The western financial system consists of an inverted pyramid of highly-leveraged paper money ‘instruments’ (many known as derivatives), resting on the tiniest bottom, apex-base of the inverted pyramid.  This is termed ‘inside money’.  

It is of magnitudes greater than its collateral undergirdings at its base — sometimes called ‘outside money’. Outside money represents something real: oil, gas, energy, food, metals, etcetera. Collateral that is real.

Take the outside money away from the base of the upturned pyramid … and (potentially), crash.

Well, this is what is happening. Putin is whisking Russian gas away from under the pyramid by insisting that the entire payment process, and collateral value, stays within the rouble sphere. And, if many other states follow suit, and extend it to more commodities … Crash.

The irony is that the West brought this on themselves. Putin didn’t do it. They did it. They did it when the Russo-phobic Washington ‘hawks’ stupidly picked a fight with the one country – Russiam – that has the commodities needed to run the world, and to trigger the shift to a different monetary system — an alternative system, anchored in something other than fiat money, backed by nothing but the Federal Reserve’s ability to print dollars ad infinitum. 

And then they destroyed the ‘full faith and promise’ of the US Treasury to commit to contractual payment – by stealing the Russian reserves. 

The opinions mentioned in this article do not necessarily reflect the opinion of Al mayadeen, but rather express the opinion of its writer exclusively.

The Dollar Devours the Euro

April 08, 2022

By Michael Hudson and posted with the author’s permission

It is now clear that today’s escalation of the New Cold War was planned over a year ago, with serious strategy associated with America’s plan to block Nord Stream 2 as part of its aim of blocking Western Europe (“NATO”) from seeking prosperity by mutual trade and investment with China and Russia.

As President Biden and U.S. national-security reports announced, China was seen as the major enemy. Despite China’s helpful role in enabling corporate America to drive down labor’s wage rates by de-industrializing the U.S. economy in favor of Chinese industrialization, China’s growth was recognized as posing the Ultimate Terror: prosperity through socialism. Socialist industrialization always has been perceived to be the great enemy of the rentier economy that has taken over most nations in the century since World War I ended, and especially since the 1980s. The result today is a clash of economic systems – socialist industrialization vs. neoliberal finance capitalism.

That makes the New Cold War against China an implicit opening act of what threatens to be a long-drawn-out World War III. The U.S. strategy is to pry away China’s most likely economic allies, especially Russia, Central Asia, South Asia and East Asia. The question was, where to start the carve-up and isolation.

Russia was seen as presenting the greatest opportunity to begin isolating, both from China and from the NATO Eurozone. A sequence of increasingly severe – and hopefully fatal – sanctions against Russia was drawn up to block NATO from trading with it. All that was needed to ignite the geopolitical earthquake was a casus belli.

That was arranged easily enough. The escalating New Cold War could have been launched in the Near East – over resistance to America’s grabbing of Iraqi oil fields, or against Iran and countries helping it survive economically, or in East Africa. Plans for coups, color revolutions and regime change have been drawn up for all these areas, and America’s African army has been built up especially fast over the past year or two. But Ukraine has been subjected to a U.S.-backed civil war for eight years, since the 2014 Maidan coup, and offered the chance for the greatest first victory in this confrontation against China, Russia and their allies.

So the Russian-speaking Donetsk and Luhansk regions were shelled with increasing intensity, and when Russia still refrained from responding, plans reportedly were drawn up for a great showdown to commence in late February – beginning with a blitzkrieg Western Ukrainian attack organized by U.S. advisors and armed by NATO.

Russia’s preemptive defense of the two Eastern Ukrainian provinces and its subsequent military destruction of the Ukrainian army, navy and air force over the past two months has been used as the excuse to start imposing the U.S.-designed sanctions program that we are seeing unfolding today. Western Europe has dutifully gone along whole-hog. Instead of buying Russian gas, oil and food grains, it will buy these from the United States, along with sharply increased arms imports.

The prospective fall in the Euro/Dollar exchange rate

It therefore is appropriate to look at how this is likely to affect Western Europe’s balance of payments and hence the euro’s exchange rate against the dollar.

European trade and investment prior to the War to Impose Sanctions had promised a rising mutual prosperity between Germany, France and other NATO countries vis-à-vis Russia and China. Russia was providing abundant energy at a competitive price, and this energy was to make a quantum leap with Nord Stream 2. Europe was to earn the foreign exchange to pay for this rising import trade by a combination of exporting more industrial manufactures to Russia and capital investment in developing the Russian economy, e.g. by German auto companies and financial investment. This bilateral trade and investment is now stopped – and will remain stopped for many, many years, given NATO’s confiscation of Russia’s foreign reserves kept in euros and British sterling, and the European Russophobia being fanned by U.S. propaganda media.

In its place, NATO countries will purchase U.S. LNG – but they will need to spend billions of dollars building sufficient port capacity, which may take until perhaps 2024. (Good luck until then.) The energy shortage will sharply raise the world price of gas and oil. NATO countries also will step up their purchases of arms from the U.S. military-industrial complex. The near-panic buying will also raise the price for arms. And food prices also will rise as a result of the desperate grain shortfalls resulting from a cessation of imports from Russia and Ukraine on the one hand, and the shortage of ammonia fertilizer made from gas.

All three of these trade dynamics will strengthen the dollar vis-à-vis the euro. The question is, how will Europe balance its international payments with the United States? What does it have to export that the U.S. economy will accept as its own protectionist interests gain influence, now that global free trade is dying quickly?

The answer is, not much. So what will Europe do?

I could make a modest proposal. Now that Europe has pretty much ceased to be a politically independent state, it is beginning to look more like Panama and Liberia – “flag of convenience” offshore banking centers that are not real “states” because they don’t issue their own currency, but use the U.S. dollar. Since the eurozone has been created with monetary handcuffs limiting its ability to create money to spend into the economy beyond the limit of 3 percent of GDP, why not simply throw in the financial towel and adopt the U.S. dollar, like Ecuador, Somalia and the Turks and Caicos Islands? That would give foreign investors security against currency depreciation in their rising trade with Europe and its export financing.

For Europe, the alternative is that the dollar-cost of its foreign debt taken on to finance its widening trade deficit with the United States for oil, arms and food will explode. The cost in euros will be even greater as the currency falls against the dollar. Interest rates will rise, slowing investment and making Europe even more dependent on imports. The eurozone will turn into an economic dead zone.

For the United States, this is Dollar Hegemony on steroids – at least vis-à-vis Europe. The continent would become a somewhat larger version of Puerto Rico.

The dollar vis-à-vis Global South currencies

The full-blown version of the New Cold War triggered by the “Ukraine War” risks turning into the opening salvo of World War III, and is likely to last at least a decade, perhaps two, as the U.S. extends the fight between neoliberalism and socialism to encompass a worldwide conflict. Apart from the U.S. economic conquest of Europe, its strategists are seeking to lock in African, South American and Asian countries along similar lines to what has been planned for Europe.

The sharp rise in energy and food prices will hit food-deficit and oil-deficit economies hard – at the same time that their foreign dollar-denominated debts to bondholders and banks are falling due and the dollar’s exchange rate is rising against their own currency. Many African and Latin American countries – especially North Africa – face a choice between going hungry, cutting back their gasoline and electricity use, or borrowing the dollars to cover their dependency on U.S.-shaped trade.

There has been talk of IMF issues of new SDRs to finance the rising trade and payments deficits. But such credit always comes with strings attached. The IMF has its own policy of sanctioning countries that do not obey U.S. policy. The first U.S. demand will be that these countries boycott Russia, China and their emerging trade and currency self-help alliance. “Why should we give you SDRs or extend new dollar loans to you, if you are simply going to spend these in Russia, China and other countries that we have declared to be enemies,” the U.S. officials will ask.

At least, this is the plan. I would not be surprised to see some African country become the “next Ukraine,” with U.S. proxy troops (there are still plenty of Wahabi advocates and mercenaries) fighting against the armies and populations of countries seeking to feed themselves with grain from Russian farms, and power their economies with oil or gas from Russian wells – not to speak of participating in China’s Belt and Road Initiative that was, after all, the trigger to America’s launching of its new war for global neoliberal hegemony.

The world economy is being enflamed, and the United States has prepared for a military response and weaponization of its own oil and agricultural export trade, arms trade and demands for countries to choose which side of the New Iron Curtain they wish to join.

But what is in this for Europe? Greek labor unions already are demonstrating against the sanctions being imposed. And in Hungary, Prime Minister Viktor Orban has just won an election on what is basically an anti-EU and anti-U.S. worldview, starting with paying for Russian gas in roubles. How many other countries will break ranks – and how long will it take?

What is in this for the Global South countries being squeezed – not merely as “collateral damage” to the deep shortages and soaring prices for energy and food, but as the very objective of U.S. strategy as it inaugurates the great splitting of the world economy in two? India has already told U.S. diplomats that its economy is naturally connected with those of Russia and China. Pakistan finds the same calculus at work.

From the U.S. vantage point, all that needs to be answered is, “What’s in it for the local politicians and client oligarchies that we reward for delivering their countries?”

From its planning stages, U.S. diplomatic strategists viewed the looming World War III as a war of economic systems. What side will countries choose: their own economic interest and social cohesion, or submission to local political leaders installed by U.S. meddling like the $5 billion that Assistant Secretary of State Victoria Nuland bragged of having invested in Ukraine’s neo-Nazi parties eight years ago to initiate the fighting that has erupted into today’s war?

In the face of all this political meddling and media propaganda, how long will it take the rest of the world to realize that there’s a global war underway, with World War III on the horizon? The real problem is that by the time the world understands what is going on, the global fracture will already have enabled Russia, China and Eurasia to create a real non-neoliberal New World Order that does not need NATO countries and which has lost trust and hope for mutual economic gains with them. The military battlefield will be littered with economic corpses.

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