In an exclusive interview for Al Mayadeen, the Cuban President talks about Cuba’s stance on the war in Ukraine, and his country’s relationship with Russia, China, and other countries.
Cuban President Miguel Diaz-Canel
During the second part of Al Mayadeen Media Network Chairman Ghassan Ben Jeddou’s interview with Cuban President Miguel Diaz-Canel, the president discusses Cuba’s assessment of current alliances, in addition to its position on the war in Ukraine.
The Cuban president discussed the solid relationship that consolidates his country with Russia, China, and Iran, as well as his country’s relationship with Latin American leaders, and what he aspires for in the Arab region. He also expressed his admiration for Syrian President Bashar al-Assad, and his desire to visit Damascus this year.
The world that Cuba aspires to
During his interview with Al Mayadeen, Diaz-Canel said that “the assessment of alliances in today’s world must be on the current context, and on an analysis of the current situation,” noting that this is related to what happened in the world, as the world is going through a multidimensional crisis.
He stresses that the situation has also been exacerbated by the Covid-19 pandemic, which has plunged the world into a state of uncertainty.
Diaz-Canel added, “Instead of enforcing the language of cooperation and respect for one another, the world has resorted to imposing new sanctions and resolving conflicts using the language of war.” “This is not the world we want and I think it is not the world that the majority of people on Earth want.”
“Today,” the Cuban president said, “we need a world capable of globalizing solidarity, peace, and friendship, a world that has a system of relations that defends pluralism,” noting that “this world is being built in accordance with common values based on peace, solidarity, friendship, and pluralism, which are capable of preserving, first and foremost, the human race.”
He added that this issue was former Cuban President Fidel Castro’s concern from an early age, and it was mentioned in many of his messages to the world on various international occasions, and that Cuba aims to resolve conflicts through dialogue, and for the world to become more democratic.
The Cuban president asserted to Al Mayadeen the need to change the “current global economic system, because it is based on exploitation and inequality, serves the rich at the expense of the majority of the world’s poor, and does not offer developing countries any alternatives, as it is subject to the interests of military-industrial complexes and great Western powers.”
If “we are able to achieve alliances that contribute to achieving pluralism, understanding, respect for others, and the struggle for peace… these alliances will then be valid and supportive.”
In the same context, he refers to the Bolivarian Alliance for the Peoples of America (ALBA), the alternative adopted by Latin America to confront the ALCA Free Trade Agreement, which represents an imperialist project.
One of the most important reasons for the success of these alliances is, according to Diaz-Canel, that they are based on cooperation, solidarity, and sincere stances, and not on concepts that prioritize money and the economy.
The president stressed that the Cuban revolution is based on sharing what it has with others, and that this is what the future of the world should be like.
Blame for Russia-Ukraine war lies with Washington
Regarding Cuba’s position on the Russian-Ukrainian war, Diaz-Canel stressed that this conflict has serious consequences for the world, not just the parties involved.
The president accused Washington of using its power of influence through the media to spread Russophobia and disinformation on the origin of the conflict, labeling Russia as a culprit while concealing the real reasons behind the war.
He stressed that “the culprit in this conflict is the United States itself, which resorts to wars to solve its problems and overcome its crises,” adding that “Washington puts the interests of the military-industrial complex at the forefront, as it needs the war to sell weapons and to solve the internal problems it suffers from.”
The Cuban president indicated that the US has always sought to encircle Russia by promoting NATO expansionism on its borders, which he says Russia is aware of. The countries that are accomplices in the war will lose the most, he added, as they began to suffer from food shortages and an energy crisis, while those directly involved in the conflict are losing human lives.
The biggest beneficiary of the war, he said, is the US administration, and there need to be initiatives at the international level that facilitate the process of dialogue between the concerned parties to put an end to the war.
Diaz-Canel reiterated his country’s disapproval of the continued use of the language of war and the imposition of sanctions against Russia instead of dialogue, as these measures do not solve crises, but rather exacerbate the state of war. He added that the way Western nations are dealing with the crisis may drag the world into a possible world war.
He further wondered how Europe, which was the theater of two previous world wars, and the theater for Fascism and Nazism, is incapable of extracting the necessary lessons from history to play an effective role in avoiding a third world war.
Speaking about Cuban-Chinese relations, the president stressed that his country and China enjoy historical and friendly relations, based on common principles that bring the two countries together.
He added that his country shares convictions with China regarding a structured socialist path in both countries that takes into account the specificities of each; both countries also share strong relations at the levels of their governments, peoples, and parties (the Communist Party of China and the Communist Party of Cuba).
Diaz-Canel praised the Chinese model of socialism and reform, and its establishment of a firm economic base, which transformed it into one of the world’s great powers. He added that China adopted a distinguished position in terms of cooperation and solidarity, as is the case in Cuba, referring in this context to the initiatives and proposals presented by Chinese President Xi Jinping to achieve more harmony on the global level.
The Cuban president said that during his visit to China at the end of last year, he felt assured by the clear Chinese desire to support Cuba out of its crisis. He pointed out that during the visit, decisions were taken regarding the development of bilateral relations.
He said that China is one of Cuba’s main economic partners and that it is directly involved with Cuban energy, transportation, and telecommunication projects, referring also to the wide exchange between the two countries in terms of education, culture, science, technologies, and innovation, calling China “a friend of Cuba.”
Cuba’s relationship with Russia
Regarding Cuban-Russian relations, Diaz-Canel affirmed the high level of political, economic, and commercial relations between Moscow and Havana.
He added that Russia is present in the most strategic sectors that were developed within the national plan for economic and social development in Cuba until 2030: the energy sector, transportation and communications, cybersecurity, the mineral sector, the industrial sector, and in food production.
Diaz-Canel discussed how Russia sent a plane to assist his country during the Covid-19 pandemic and placed it at the disposal of Havana to transport oxygen cylinders imported from various places in Latin America and the Caribbean. He added that while Cuba was in a crisis, Russia donated factories to help it produce oxygen, and many concentrators, as did China.
The Cuban president touched on his recent visit to Russia, pointing out that he saw that Russian President Vladimir Putin understood Cuba’s problems, and Moscow’s political and governmental will to help alleviate the problems his country suffers from. He added that since that visit, Cuba has constantly been updated with regard to the agreements with Moscow, especially concerning energy and food.
He stressed that China and Russia are friendly states, and that Chinese President Xi Jinping and Russian President Vladimir Putin have demonstrated the will to embody a true friendship with Cuba.
During the interview with Al Mayadeen, the Cuban president did not hide his admiration for his Russian counterpart, pointing out that Putin’s speeches are rich in historical references. He added that Putin is constantly referring to lessons from history in order to reaffirm what is happening today, and what needs to be done in the future.
He added that “I don’t think it was Putin who caused the conflict with Ukraine, they were about to impose a siege on the Russian Federation,” pointing out that the Russian president is defending Russia’s interests and security.
“Dialogue with the Russian president is not impossible, but rather possible, provided that it is linked to a sincere will and without the imposition of preconditions.”
Cuba’s relationship with Iran
Speaking about Cuban-Iranian relations, the Cuban president described Iran as Cuba’s sister nation. He said that the foundations of the relationship between the two countries are based on history and mutual respect, as well as the great resistance that the two people waged in the face of imperial blockades and sanctions.
According to the Cuban president, “the Cuban and Iranian people share an understanding of resistance, courage, heroism, dignity, and defiance to the plans of imperialist power.”
He also expressed his appreciation for the Iranian leader, Sayyed Ali Khamenei, as a politician and as the leader of the Iranian Revolution, admiring his “tremendous capability for logical thinking and analysis,” also describing him as a wise leader.
The Cuban president indicated that the two countries are working on joint projects that serve the economic development of both, especially in the fields of energy and food. He pointed out that Iranian President Ebrahim Raisi might visit his country, while also expressing his desire to visit Tehran this year.
Diaz-Canel stressed to Al Mayadeen that this year will witness a deepening of relations between the two countries, and the adoption of projects that are of mutual benefit. He specified both nations share mutual projects that include scientific research, technology, and energy.
The Cuban president expressed his admiration for Iran’s culture, civilization, and resistance against aggression, and said that the technological development that Iran has achieved despite the embargo and sanctions is very important, and multifaceted, pointing out that being familiar with Iran’s development can benefit Havana.
Diaz-Canel pointed out that the late Venezuelan President Hugo Chavez sowed hope in Venezuela, shining throughout Latin America, and that Venezuela has always been an important country and played a key role in Latin America, especially during Chavez’s leadership of the Bolivarian Revolution.
He added that many values have come together in Chavez, as he was Bolivarian in thought par excellence, was well versed in the history of Latin America and the Caribbean, and was an exceptional defender of Simon Bolivar’s thought and of the pioneers of liberation in Latin America.
The Cuban president noted that “Chavez was able, as an exemplary leader, to understand the concerns and aspirations of the Venezuelan people,” adding that the friendship between former Cuban President Fidel Castro and Chavez, “was like a father-son relationship.”
In this context, he referred to the achievements made by the two countries during the Chavez and Fidel eras, especially with regard to the ALBA.
He added that when Chavez was head of the Bolivarian Revolution, he was preparing cadres who were distinguished by their true commitment to the revolution’s path, to the Venezuelan people, and their loyalty to the revolution, referring in this context to Venezuelan President Nicolas Maduro.
The Cuban president described Maduro as a brother to Cuba, and admired how he defended the Bolivarian Revolution against all destabilization attempts planned by the US government. He pointed out that “Maduro, with his efforts and persistence, was able to achieve civil-military unity, preserve the Bolivarian Revolution, and move it forward on the path of victory.”
Cuba and Colombia
Speaking about Colombia, the Cuban president said that there is now a government in Colombia that prioritizes dialogue with Venezuela, adding that Nicolas Maduro and Gustavo Petro have agreed on a whole set of measures that also aim to ensure peace in one of Latin America’s most important regions.
Cuba and Brazil
The Cuban president also described his Brazilian counterpart, Lula da Silva, as an exceptional leader, pointing to his prominent role in extracting Brazil from its economic crisis, which turned it into a reference for what can be achieved in the policy of social justice, adding that “Lula doesn’t suit US interests, so the administration worked to discredit him by fabricating legal cases against him.”
He added that Lula did not surrender and did not accept any conditions to be imposed on him, despite his imprisonment and the pressure exerted on him to subdue him. He complimented the Brazilian president, stressing that his new projects help develop programs and investments in the country.
Cuba and Nicaragua
The Cuban president also expressed his admiration for the Sandinista revolution in Nicaragua, noting that it was a success the United States could not bear, and against which it launched a fierce campaign of destabilization, backed by a fierce media campaign to discredit Nicaragua.
“Therefore, I believe that whenever we want to assess the situation in Nicaragua, we must start from where we proceed in our analysis of what the Sandinista revolution contributed to in the areas of economic and social development for the Nicaraguan people, and what the Sandinista revolution means in terms of building a state with national security, and remove everything related to imperialist distortion and tampering.”
Cuba’s relationship with the Arab world
Regarding the island’s relationship with the Arab world, Diaz-Canel affirmed that Havana has good relations with Arab countries based on respect and mutual understanding of the historical and cultural specifics of each country.
He pointed out that there was space for cooperation, for the defense of common struggles, and coordination of efforts in international forums, adding that Cuba has always felt the solidarity and support of the Arab communities.
Diaz-Canel stressed that there is room to deepen the already strong ties on the economic and commercial level, as the historical foundations laid out for these relations are strong and Cuba looks to strengthen this relationship with the Arab world.
The Cuban president expressed his admiration for Syria’s courage, steadfastness, and self-confidence in the face of an aggressive campaign aimed at destroying it, noting that Syria, after many years of the unjust war against it, remained a strong and united nation.
In this context, he praised the role of Syrian President Bashar al-Assad, “The Syrian president has shown sincerity to his people and has remained at the forefront without giving up… I have always seen a great deal of steadfastness and composure in him.”
Before concluding the interview with Al Mayadeen, the Cuban President renewed his support for Syria, saying that Havana will remain with the Syrian people, and condemned the ongoing Israeli aggression against it, as well as the sanctions imposed on the Syrian people.
The Cuban president expressed his desire to visit Damascus this year and admired the nation’s steadfastness and the solidity and dignity of the Syrian people.
Close to 9 million people in Syria have been affected by the 7.8 magnitude earthquake, 65 seconds in duration on February 6, that Turkish President Erdogan has compared with the power released by atomic bombs. The hardest hit areas are Latakia, Aleppo, and Idlib.
The UN estimates that more than 4.2 million people have been affected in Aleppo province with 400,000 homeless, and 5,000 buildings declared unlivable. Aleppo has more than 1,600 dead and 10,000 injured.
The province of Idlib is a total population estimated at 3 million, but because there is no government or authority there, we can only guess how many have been affected.
UAE Aid plane landing in Aleppo International Airport
The UN says 5.5 million Syrians are without a home after the earthquake, with more than 7,400 buildings having been destroyed completely, or partially in Syria.
In Latakia, there are 820 dead, 142,000 homeless, and over 2,000 injured, with 102 buildings completely collapsed, and others condemned.
A total of 58 trucks have crossed from Turkey to north-west Syria through the Bab al Hawa crossing point over the past five days, carrying aid such as food, tents, and medicines. Those trucks are solely supplying Idlib, under the occupation of the armed group, Hayat Tahrir al-Sham. Eleven trucks have gone through the newly opened border crossing of Bab al Salam today, carrying non-food items such as blankets, and mattresses.
Iraqi AAid plan landing in Damascus international Airport
Location matters in this quake
The map will show that Aleppo, Syria is just south of Gaziantep, Turkey which was the epicenter. Aleppo was heavily damaged in the earthquake, adding more misery to a city that was under the occupation of Al Qaeda terrorists in the eastern section until being liberated in December 2016.
Looking at a map, you see that Latakia is a 2 ½ hour drive west of Aleppo on the M4 highway. It seems like a long distance, but the power of the 7.8 magnitude brought the epicenter and Latakia together because they share the same fault line, which Aleppo does not.
Tunisian Aid plane landing in Aleppo International Airport
UN: no roadblocks to aid, no politics
Rula Amin, UN Refugee Agency Senior Communications Advisor, urged cooperation among nations to help Turkey and Syria. She said there should be no roadblocks to assistance for people in need. Referring to the UN and western aid coming almost exclusively to Idlib, and by-passing those in need in Latakia and Aleppo, she urged all to put politics aside, and focus on getting aid to those in need regardless of whether they are in the US-EU supported area in Idlib, or whether they live in Aleppo and Latakia under the Syrian administration from Damascus. Amin is no stranger to Syria. In March 2011, Amin was one of the very first international journalists in Deraa, covering what she had claimed was a ‘popular uprising’, and even interviewed the cleric who was the key player of the Obama-designed US-NATO attack on Syria for ‘regime change
.’ She did not go as far as to demand the lifting of all US-EU sanctions on Syria to send aid, but her meaning was clear. The sanctions prevent aid from arriving in Damascus. On February 9 the US Department of the Treasury issued General License 23, which allows for a humanitarian waiver of supplies to government-controlled areas in Syria, but must be received by an NGO and not the Syrian government. The 180-day waiver is far too short, as the need is enormous, and will people will need years to grapple with the damages. Rebuilding homes and businesses may take a decade or more. Also, most governments abroad would be sending official aid to Syria through a government-to-government mechanism, and using an NGO is a tedious stipulation designed to discourage aid from being sent.
Jordanian Aid plane landing in Damascus international Airport
Italy sent two planeloads of aid to Beirut, Lebanon to be transported to Syria by land. This demonstrates the extreme fear that western allies of the US have of the sanctions. By sending the aid to Lebanon, which is not sanctioned, Italy feels more comfortable that the US Treasury will not issue massive penalties against them.
Who refused aid to Damascus?
The US, the EU, and all US allies such as Canada have sent nothing to Syria for the earthquake-ravaged zones of Latakia and Aleppo. According to America, the European Union, the United Kingdom, and the allies of the US, there is no place called Syria. There is only a small, rural agricultural province called Idlib. Syria is 10,000 years old, and Damascus and Aleppo both tie as the undisputed oldest inhabited cities on earth. But the great minds in Washington, DC. only acknowledge the tiny area called Idlib. The terrorist-controlled Idlib is suffering, and has innocent unarmed civilians in need of help; however, Latakia, and Aleppo are far bigger and have sustained more deaths, injuries, and structural damages than Idlib. The US and the west have used politics to judge who gets helped, and who is forgotten. The Syrian people will never forget this. The US and EU sanctions have made life unbearable in Syria before the earthquake of the century, and now when politics should be set aside for humanitarian needs, the US doggedly holds on to their dogmatic ideology to make sure the Syrian people know the full disdain of the American government. The Foreign Minister of the United Arab Emirates visited Damascus and met with President Assad after the quake, in an act of defiance of US-dictated policy.
Algerian aid plane in Aleppo International Airport
Where is Government controlled Syria?
The US-NATO attack on Syria beginning in March 2011 has resulted in three separate administrations in Syria. The biggest territory, about 75%, is the central government in Damascus. Aleppo and Latakia are the two hardest hit by the earthquake which is under the Damascus administration.
The second administration is the province of Idlib, which is an olive-growing region between Latakia and Aleppo. There is no government there. The 3 million persons there live under the occupation of an armed terrorist group, Hayat Tahrir al-Sham, formerly called Jibhat al-Nusra, the Syrian branch of Al Qaeda. The terrorists embedded themselves there in 2012, and until now are safe from attack because the US, EU, and UN all lobby for their protection, and aid. The US supports the Al Qaeda terrorists because they represent the US interests in Syria to be decided upon in a final political settlement in Syria under the auspices of the UN.
The third administration is the Kurdish self-proclaimed region of the northeast, where the US military is occupying the Syrian oil wells, and allowing the Kurds to sell the stolen oil in Iraq to cover their expenses. This area was not affected by the earthquake. This administration exists separate from Damascus only because of the US military illegal occupation
Where is Idlib?
Many of the residents of Idlib most affected by the earthquake have had to sleep outside among the olive groves, in freezing temperatures. The UN acknowledged the international response to Idlib has been a failure.
Raed al-Saleh, head of the White Helmets, an award-winning video troupe headquartered in Washington, DC. has denounced the UN as incompetent in their response to the needs in Idlib. The White Helmets work solely in Idlib and have international donors. Al-Saleh was angry after UN Secretary-General Antonio Guterres said Syrian President Assad had agreed to allow UN aid deliveries to the area through two border crossings from Turkey for three months. The White Helmets and the terrorists do not recognize the Syrian government. Damascus had tried to send aid to Idlib, but the terrorists turned it back saying, “We don’t want help from the enemy.” Previously the UN trucks of aid to Idlib were also stalled after the terrorists demanded a $1,000 fee for each of the 10 trucks.
Why are the borders controlled?
The Syrian government has controlled the border crossings of Syria for security reasons. Serena Shim, an American journalist from Detroit, witnessed and reported seeing a UN food truck carrying Al Qaeda terrorists, and their weapons, from Turkey into Syria near Idlib. She was murdered in Turkey just days after publishing her report.
The terrorists in Idlib are contained in a small area and have weapons including missiles which have frequently been directed at Latakia, and Kessab, a small Christian Armenia village just north of Latakia. The Syrian government wants to keep the weapons from flowing into Idlib while allowing UN, and other humanitarian aid to flow into the 3 million civilians who are held there as human shields.
Steven Sahiounie is a two-time award-winning journalist
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These ‘third-world’ nationalist forces were identified by the UK as an extension of the ‘Soviet threat’, as well as an occurrence of Cold War dynamics that needed to be reverted.
In this June 18, 1956 file photo, Egyptian leader Gamal Abdel Nasser waves as he moves through Port Said, Egypt, during a ceremony in which Egypt formally took over control of the Suez Canal from Britain (AP Photo, File)
A recent report published by Declassified UK details a somewhat exhaustive timeline of the UK’s involvement in plotting coups across the world, both overt and covert, and in most cases conducted with the collaboration of the CIA to depose or assassinate democratically elected leaders.
The report counts a total of 47 coups put into action in 27 different countries since 1945, but the numbers could her higher.
The point in doing so is obvious: as a former colonial empire, the UK is structurally and historically pre-disposed to impede all signs of democratic and socioeconomic developments across the Global South.
After WWII, the Soviet Union supported the massive wave of anti-colonial wars to gain national independance.
These ‘third-world’ nationalist forces were identified by the UK as an extension of the Soviet threat, as well as an occurrence of Cold War dynamics that needed to be reverted.
Some of the most prominent coups orchestrated against leaders include the overthrow of democratically elected Prime Minister Mohammad Mosaddegh in Iran in 1953.
They also include the assassination of the former Prime Minister of the Democratic Republic of the Congo Patrice Lumumba who was killed in the most tragic way one could possibly think of.
But the UK did not always succeed in effecting a regime change, as it did in Iran, Egypt, Indonesia, and so many African countries.
For instance, in the 1950s, the British regime tried to draw two consecutive uprisings against the government in Syria – the first in 1956 and the second in 1957 – which were both unsuccessful.
Another covert operation that foiled was one conducted in 1957 against Indonesia’s Sukarno, the leader of the Indonesian struggle for independence from the Dutch colonialists who propelled Indonesia out of morbid poverty.
Sukarno was ousted a decade later in what appeared to “one of the 20th century’s worst bloodbaths” with the purge of communists and socialists by the Indonesian military under Suharto – an event which was later revealed to have been backed by the UK in 1965-1966.
Other countries which have been targeted during the 1950s and 1960s include Brazil, British Guiana, Egypt, and several countries in the Gulf region.
One leader took about four decades for the UK to take down, namely Muammar Gaddafi, who nationalized British oil operators as soon as he seized power in 1969.
After several failed attempts to kill the strongman leader, the UK finally managed to rid of him in 2011 with the assistance of NATO.
Other leaders that were targeted for assassination include Yugoslav leader Slobodan Milosevic in 1992, Ugandan President Milton Obote in 1969, and his successor Idi Amin in the late 1970s.
The list also includes countries of the former Soviet Union, namely Estonia, Latvia and Lithuania.
It further includes Italy because the Communist Party “looked as if it might win or influence the next government,” the report states.
The most recent coup attempts include failed attempts to depose Syrian President Bashar el-Assad during the Arab Spring, as well as several attempts to depose leaders in Latin American countries, namely lithium-rich Bolivia and oil-rich Venezuela.
Venezuela recently joined the ranks of failed coups after Juan Guaido was ousted and his government dissolved.
The report is relevant to the modern context because the West has recently tried to push for regime change in Iran and Peru.
In the case of Peru, former President Pedro Castillo had charges fabricated against him to justify his impeachment and imprisonment.
All-in-all, the UK’s habitus of conducting coups across the Global South is always motivated by strategic interests. These include a wide range of interests but almost always concern the privatization of oil resources.
In the case where no oil is involved, the UK intervenes to simply ward off the presence of progressive ideologies that strengthen the people against the will of the West.
Hopes are that the agreement will end the political crisis that has engulfed the nation since the 2018 presidential election.
Venezuelan President Nicolás Maduro
The leftist government of Venezuela and the opposition resumed talks on Saturday and inked what they referred to as a “social protection deal,” as per reports by AFP.
Venezuela’s government and opposition restarted negotiations on Saturday in Mexico and signed a rare deal to work together on a humanitarian spending plan and setting the stage for the US to ease restrictions on Chevron Corp. to operate in the country.
The accord held in Mexico represents “hope for all of Latin America,” Mexican Foreign Minister Marcelo Ebrard said.
Representatives of the Venezuelan government and the opposition signed the humanitarian agreement in an attempt to get access to some of the country’s frozen funds abroad and use them to reinforce the public health system and the electrical grid, among other purposes.
"Por vía de este acuerdo estamos rescatando más de 3 mil millones de dólares que fueron robados", así lo dijo el Jefe de la Delegación de Venezuela @jorgerpsuvpic.twitter.com/BVWY4dfywx
The parties also agreed to request support from the United Nations with the implementation of the program in the country, which includes the “establishment of a single trust fund for the protection of the Venezuelan people,” according to the agreement. Compliance will be monitored by various representatives of the agreement.
Se reanudó el diálogo sobre Venezuela y se firmó Segundo Acuerdo entre gobierno y oposiciones de ese país hermano. Es un triunfo de la política y mérito a reconocer de los participantes. México es su casa. Felicitaciones !! Buenas noticias para el pueblo venezolano. pic.twitter.com/lstOJHLhLB
In return, the United States is allegedly gradually lifting the oil sanctions it had put in place against Venezuela, declaring it will permit Chevron to resume small-scale oil extraction operations there.
The US Treasury said the accord is “a humanitarian agreement focused on education, health, food security, flood response, and electricity programs that will benefit the Venezuelan people.”
It marked a breakthrough after 15 months of stalemate between the government and the opposition in Venezuela.
International efforts to resolve the Venezuelan crisis have gained strength since the war in Ukraine and the quest of the west in search of energy supplies elsewhere.
US issues expanded license to allow Chevron to import Venezuelan petroleum
After the Venezuelan government and the opposition said they would resume political talks, the United States on Saturday issued an expanded license allowing Chevron Corp CVX.N to import petroleum or petroleum products produced by its ventures in Venezuela, of course eyeing its own interests after President Putin shut the taps of oil and gas.
“This action reflects longstanding US policy to provide targeted sanctions relief based on concrete steps that alleviate the suffering of the Venezuelan people and support the restoration of democracy,” the US Treasury Department claimed in a statement.
A Chevron spokesperson said the company was reviewing the license terms.
The US Treasury granted Chevron a general license that permits the energy giant based in California to conduct transactions that support oil production in Venezuela and its export to the US.
Sale to, exportation to, or importation into the US of petroleum produced by the Chevron JVs will be allowed as long as it is first sold to Chevron, as per the Treasury statement.
Joint ventures will also be permitted to purchase and import products related to petroleum products into Venezuela, such as diluents, condensates, petroleum, or natural gas.
Among other restrictions, the license does not permit transactions if the oil is exported outside of the US, payments of taxes or royalties to the Venezuelan government, or “dealings with organizations with ties to Russia.”
Call of Duty: Modern Warfare II has been available for less than three weeks, but it is already making waves. Breaking records, within ten days, the first-person military shooter video game earned more than $1 billion in revenue. Yet it has also been shrouded in controversy, not least because missions include assassinating an Iranian general clearly based on Qassem Soleimani, a statesman and military leader slain by the Trump administration in 2020, and a level where players must shoot “drug traffickers” attempting to cross the U.S./Mexico border.
The Call of Duty franchise is an entertainment juggernaut, having sold close to half a billion games since it was launched in 2003. Its publisher, Activision Blizzard, is a giant in the industry, behind titles games as the Guitar Hero, Warcraft, Starcraft, Tony Hawk’s Pro Skater, Crash Bandicoot and Candy Crush Saga series.
Yet a closer inspection of Activision Blizzard’s key staff and their connections to state power, as well as details gleaned from documents obtained under the Freedom of Information Act, reveal that Call of Duty is not a neutral first-person shooter, but a carefully constructed piece of military propaganda, designed to advance the interests of the U.S. national security state.
In the first five minutes the new Call of Duty has you pilot the missile that kills Soleimani lol
— sad because the female faceapp of me isnt fuckable (@websiteidi0t) October 20, 2022
MILITARY-ENTERTAINMENT COMPLEX
It has long been a matter of public record that American spies have targeted and penetrated Activision Blizzard games. Documents released by Edward Snowden revealed that the NSA, CIA, FBI and Department of Defense infiltrated the vast online realms such as World of Warcraft, creating make-believe characters to monitor potential illegal activity and recruit informers. Indeed, at one point, there were so many U.S. spies in one video game that they had to create a “deconfliction” group as they were wasting time unwittingly surveilling each other. Virtual games, the NSA wrote, were an “opportunity” and a “target-rich communication network”.
However, documents obtained legally under the Freedom of Information Act by journalist and researcher Tom Secker and shared with MintPress News show that the connections between the national security state and the video game industry go far beyond this, and into active collaboration.
In September 2018, for example, the United States Air Force flew a group of entertainment executives – including Call of Duty/Activision Blizzard producer Coco Francini – to their headquarters at Hurlburt Field, Florida. The explicit reason for doing so, they wrote, was to “showcase” their hardware and to make the entertainment industry more “credible advocates” for the U.S. war machine.
“We’ve got a bunch of people working on future blockbusters (think Marvel, Call of Duty, etc.) stoked about this trip!” wrote one Air Force officer. Another email notes that the point of the visit was to provide “heavy-hitter” producers with “AFSOC [Air Force Special Operations Command] immersion focused on Special Tactics Airmen and air-to-ground capabilities.”
“This is a great opportunity to educate this community and make them more credible advocates for us in the production of any future movies/television productions on the Air Force and our Special Tactics community,” wrote the AFSOC community relations chief.
Francini and others were shown CV-22 helicopters and AC-130 planes in action, both of which feature heavily in Call of Duty games.
Yet Call of Duty collaboration with the military goes back much further. The documents show that the United States Marine Corps (USMC) was involved in the production of Call of Duty: Modern Warfare 3 and Call of Duty 5. The games’ producers approached the USMC at the 2010 E3 entertainment convention in Los Angeles, requesting access to hovercrafts (vehicles which later appeared in the game). Call of Duty 5 executives also asked for use of a hovercraft, a tank and a C-130 aircraft.
This collaboration continued in 2012 with the release of Modern Warfare 4, where producers requested access to all manner of air and ground vehicles.
Secker told MintPress that, by collaborating with the gaming industry, the military ensures a positive portrayal that can help it reach recruitment targets, stating that,
For certain demographics of gamers it’s a recruitment portal, some first-person shooters have embedded adverts within the games themselves…Even without this sort of explicit recruitment effort, games like Call of Duty make warfare seem fun, exciting, an escape from the drudgery of their normal lives.”
Secker’s documentary, “Theaters of War: How the Pentagon and CIA Took Hollywood” was released earlier this year.
. The military clearly held considerable influence over the direction of Call of Duty games. In 2010, its producers approached the Department of Defense (DoD) for help on a game set in 2075. However, the DoD liaison “expressed concern that [the] scenario being considered involves future war with China.” As a result, Activision Blizzard began “looking at other possible conflicts to design the game around.” In the end, due in part to military objections, the game was permanently abandoned.
FROM WAR ON TERROR TO FIRST-PERSON SHOOTERS
Not only does Activision Blizzard work with the U.S. military to shape its products, but its leadership board is also full of former high state officials. Chief amongst these is Frances Townsend, Activision Blizzard’s senior counsel, and, until September, its chief compliance officer and executive vice president for corporate affairs.
Prior to joining Activision Blizzard, Townsend spent her life working her way up the rungs of the national security state. Previously serving as head of intelligence for the Coast Guard and as Secretary of State Condoleezza Rice’s counterterrorism deputy, in 2004, President Bush appointed her to his Intelligence Advisory Board.
As the White House’s most senior advisor on terrorism and homeland security, Townsend worked closely with Bush and Rice, and became one of the faces of the administration’s War on Terror. One of her principal achievements was to whip the American public into a constant state of fear about the supposed threat of more Al-Qaeda attacks (which never came).
Before she joined Activision Blizzard, Frances Townsend worked in Homeland Security and Counterterrorism for the Bush White House. Ron Edmonds | AP
As part of her job, Townsend helped popularize the term “enhanced interrogation techniques” – a Bush-era euphemism for torturing detainees. Worse still, Lt. Col. Steven L. Jordan, the officer in charge of the notorious Abu Ghraib prison, alleged that Townsend put pressure on him to ramp up the torture program, reminding him “many, many times” that he needed to improve the intelligence output from the Iraqi jail.
Townsend has denied these allegations. She also later condemned the “handcuff[ing]” and “humiliation” surrounding Abu Ghraib. She was not referring to the prisoners, however. In an interview with CNN, she lamented that “these career professionals” – CIA torturers – had been subject to “humiliation and opprobrium” after details of their actions were made public, meaning that future administrations would be “handcuffed” by the fear of bad publicity, while the intelligence community would become more “risk-averse”.
During the Trump administration, Townsend was hotly tipped to become the Director of National Intelligence or the Secretary of Homeland Security. President Trump also approached her for the role of director of the FBI. Instead, however, Townsend took a seemingly incongruous career detour to become an executive at a video games company.
ENTER THE WAR PLANNERS
In addition to this role, Townsend is a director of the NATO offshoot, the Atlantic Council, a director at the Council on Foreign Relations, and a trustee of the hawkish think tank, the Center for Strategic and International Studies, a group MintPress News has previouslycovered in detail.
Funded by weapons companies, NATO and the U.S. government, the Atlantic Council serves as the military alliance’s brain trust, devising strategies on how best to manage the world. Also on its board of directors are high statespersons like Henry Kissinger and Conzoleezza Rice, virtually every retired U.S. general of note, and no fewer than seven former directors of the CIA. As such, the Atlantic Council represents the collective opinion of the national security state.
Two more key Call of Duty staff also work for the Atlantic Council. Chance Glasco, a co-founder of Infinity Ward developers who oversaw the game franchise’s rapid rise, is the council’s nonresident senior fellow, advising top generals and political leaders on the latest developments in tech.
Game designer and producer Dave Anthony, crucial to Call of Duty’s success, is also an Atlantic Council employee, joining the group in 2014. There, he advises them on what the future of warfare will look like, and devises strategies for NATO to fight in upcoming conflicts.
Anthony has made no secret that he collaborated with the U.S. national security state while making the Call of Duty franchise. “My greatest honor was to consult with Lieut. Col. Oliver North on the story of Black Ops 2,” he stated publicly, adding, There are so many small details we could never have known about if it wasn’t for his involvement.”
Oliver North is a high government official gained worldwide infamy after being convicted for his role in the Iran-Contra Affair, whereby his team secretly sold weapons to the government of Iran, using the money to arm and train fascist death squads in Central America – groups who attempted to overthrow the government of Nicaragua and carried out waves of massacres and ethnic cleansing in the process.
REPUBLICANS FOR HIRE
Another eyebrow-raising hire is Activision Blizzard’s chief administration officer, Brian Bulatao. A former Army captain and consultant for McKinsey & Company, until 2018, he was chief operating officer for the CIA, placing him third in command of the agency. When CIA Director Mike Pompeo moved over to the State Department, becoming Trump’s Secretary of State, Bulatao went with him, and was appointed Under Secretary of State for Management.
There, by some accounts, he served as Pompeo’s personal “attack dog,” with former colleagues describing him as a “bully” who brought a “cloud of intimidation” over the workplace, repeatedly pressing them to ignore potential illegalities happening at the department. Thus, it is unclear if Bulatao is the man to improve Activision Blizzard’s notoriously “toxic” workplace environment that caused dozens of employees to walk out en masse last summer.
After the Trump administration’s electoral defeat, Bulatao went straight from the State Department into the highest echelons of Activision Blizzard, despite no experience in the entertainment industry.
Trump stands with then-CIA Chief Operations Officer Brian Bulatao at CIA Headquarters, May 21, 2018, in Langley, Va. Evan Vucci | AP
The third senior Republican official Activision Blizzard has recruited to its upper ranks is Grant Dixton. Between 2003 and 2006, Dixton served as associate counsel to President Bush, advising him on many of his administration’s most controversial legal activities (such as torture and the rapid expansion of the surveillance state). A lawyer by trade, he later went on to work for weapons manufacturer Boeing, rising to become its senior vice president, general counsel and corporate secretary. In June 2021, he left Boeing to join Activision Blizzard as its chief legal officer.
Other Activision Blizzard executives with backgrounds in national security include senior vice president and chief information security officer Brett Wahlin, who was a U.S. Army counterintelligence agent, and chief of staff, Angela Alvarez, who, until 2016, was an Army chemical operations specialist.
That the same government that was infiltrating games 10-15 years ago now has so many former officials controlling the very game companies raises serious questions around privacy and state control over media, and mirrors the national security state penetration of social media that has occurred over the same timeframe.
WAR GAMES
These deep connections to the U.S. national security state can perhaps help partly explain why, for years, many have complained about the blatant pro-U.S. propaganda apparent throughout the games.
The latest installment, Call of Duty: Modern Warfare II, is no exception. In the game’s first mission, players must carry out a drone strike against a character named
The latest installment, Call of Duty: Modern Warfare II, is no exception. In the game’s first mission, players must carry out a drone strike against a character named General Ghorbrani. The mission is obviously a recreation of the Trump administration’s illegal 2020 drone strike against Iranian General Qassem Soleimani – the in game general even bears a striking resemblance to Soleimani.
The latest Call of Duty game has players assassinate a General Ghorbrani, a nebulous reference to Iranian General Qassem Solemani, pictured right
Call of Duty: Modern Warfare II ludicrously presents the general as under Russia’s thumb and claims that Ghorbrani is “supplying terrorists” with aid. In reality, Soleimani was the key force in defeating ISIS terror across the Middle East – actions for which even Westernmedia declared him a “hero”. U.S.-run polls found that Soleimani was perhaps the most popular leader in the Middle East, with over 80% of Iranians holding a positive opinion of him.
Straight after the assassination, Pompeo’s State Department floated the falsehood that the reason they killed Soleimani was that he was on the verge of carrying out a terror attack against Americans. In reality, Soleimani was in Baghdad, Iraq, for peace talks with Saudi Arabia.
These negotiations could have led to peace between the two nations, something that the U.S. government is dead against. Then-Iraqi Prime Minister Adil Abdul-Mahdi revealed that he had personally asked President Trump for permission to invite Soleimani. Trump agreed, then used the opportunity to carry out the killing.
Therefore,, just as Activision Blizzard is recruiting top State Department officials to its upper ranks, its games are celebrating the same State Department’s most controversial assassinations.
This is far from the first time Call of Duty has instructed impressionable young gamers to kill foreign leaders, however. In Call of Duty Black Ops (2010), players must complete a mission to murder Cuban leader Fidel Castro. If they manage to shoot him in the head, they are rewarded with an extra gory slow motion scene and obtain a bronze “Death to Dictators” trophy. Thus, players are forced to carry out digitally what Washington failed to do on over 600 occasions.
A mission from “Call of Duty: Black Ops” has players assassinate a hostage-taking Fidel Castro
Likewise, Call of Duty: Ghosts is set in Venezuela, where players fight against General Almagro, a socialist military leader clearly modelled on former president Hugo Chavez. Like Chavez, Almagro wears a red beret and uses Venezuela’s oil wealth to forge an alliance of independent Latin American nations against the U.S. Washington attempted to overthrow Chavez and his successor, Nicolás Maduro, multiple times. During the sixth mission of the game, players must shoot and kill Almagro from close range.
The anti-Russian propaganda is also turned up to 11 in Call of Duty: Modern Warfare (2019). One mission recreates the infamous Highway of Death incident. During the First Iraq War, U.S.-led forces trapped fleeing Iraqi troops on Highway 80. What followed was what then-Joint Chiefs of Staff Chairman Colin Powell described as “wanton killing” and “slaughter for slaughter’s sake” as U.S. troops and their allies pummeled the Iraqi convoy for hours, killing hundreds and destroying thousands of vehicles. U.S. forces also reportedly shot hundreds of Iraqi civilians and surrendered soldiers in their care.
Call of Duty: Modern Warfare recreates this scene for dramatic effect. However, in their version, it is not the U.S.-led forces doing the killing, but Russia, thereby whitewashing a war crime by pinning the blame on official enemies.
A mission in “Call of Duty: Modern Warfare” has players recreate the infamous highway of death
“Call of Duty, in particular, has been flagged up for recreating real events as game missions and manipulating them for geopolitical purposes,” Secker told MintPress, referring to the Highway of Death, adding,
In a culture where most people’s exposure to games (and films, TV shows and so on) is far greater than their knowledge of historical and current events, these manipulations help frame the gamers’ emotional, intellectual and political reactions. This helps them turn into more general advocates for militarism, even if they don’t sign up in any formal way.”
Secker’s latest book, “Superheroes, Movies and the State: How the U.S. Government Shapes Cinematic Universes,” was published earlier this year.
GAME OVER
In today’s digitized era, the worlds of war and video games increasingly resemble one another. Many have commented on the similarities between piloting drones in real life and in games such as Call of Duty 4: Modern Warfare. Prince Harry, who was a helicopter gunner in Afghanistan, described his “joy” at firing missiles at enemies. “I’m one of those people who loves playing PlayStation and Xbox, so with my thumbs I like to think I’m probably quite useful,” he said. “If there’s people trying to do bad stuff to our guys, then we’ll take them out of the game,” he added, explicitly comparing the two activities. U.S. forces even control drones with Xbox controllers, blurring the lines between war games and war games even further.
The military has also directly produced video games as promotional and recruitment tools. One is a U.S. Air Force game called Airman Challenge. Featuring 16 missions to complete, interspersed with facts and recruitment information about how to become a drone operator yourself. In its latest attempts to market active service to young people, players move through missions escorting U.S. vehicles through countries like Iraq and Afghanistan, serving up death from above to all those designated “insurgents” by the game.
Players earn medals and achievements for most effectively destroying moving targets. All the while, there is a prominent “apply now” button on screen if players feel like enlisting and conducting real drone strikes on the Middle East.
U.S. Armed Forces use the popularity of video games to recruit heavily among young people, sponsoring gaming tournaments, fielding their own U.S. Army Esports team, and directly trying to recruit teens on streaming sites such as Twitch. The Amazon-owned platform eventually had to clamp down on the practice after the military used fake prize giveaways that lured impressionable young viewers onto recruitment websites.
Video games are a massive business and a huge center of soft power and ideology. The medium makes for particularly persuasive propaganda because children and adolescents consume them, often for weeks or months on end, and because they are light entertainment. Because of this, users do not have their guards up like if they were listening to a politician speaking. Their power is often overlooked by scholars and journalists because of the supposed frivolity of the medium. But it is the very notion that these are unimportant sources of fun that makes their message all the more potent.
The Call of Duty franchise is particularly egregious, not only in its messaging, but because who the messengers are. Increasingly, the games appear to be little more than American propaganda masquerading as fun first-person shooters. For gamers, the point is to enjoy its fast-paced entertainment. But for those involved in their production, the goal is not just making money; it is about serving the imperial war machine.
Established under the presidency of late leader Hugo Chavez, teleSUR celebrates its 17th anniversary, at which Al Mayadeen CEO sent a letter of congratulations.
Al Mayadeen Media Network Ghassan Ben Jeddou, standing next to the President of teleSUR, Patricia Villegas.
On the occasion of the 17th anniversary of the launching of the Global South media outlet teleSUR, Al MayadeenMedia Network CEO, Mr. Ghassan Ben Jeddou, sent a heartening letter to the Venezuela-based television network, praising the steadfastness of the outlet’s vision and work against imperialist media.
TeleSURwas founded in 2005 – funded primarily by the Venezuelan government, as well as other neighboring countries in the region. It was launched under the presidency of revolutionary leader Hugo Chávez, who passed away in 2013.
TeleSUR, like many alternative media outlets, challenges misleading neoliberal narratives that continue to demonize the struggles of the peoples of the Global South, push forward imperialist and exploitative narratives, and circulate war-mongering propaganda.
In his letter to the media outlet, Mr. Ghassan Ben Jeddou wrote:
“The establishment of teleSUR was a strategic media event. It is not only an informative channel, in spite of its significant media role and success in Latin America and the world, but it was also indeed a bright and visionary decision from the internationalist leader, Hugo Chávez.
Today, on the anniversary of its establishment, we cannot but recall with much appreciation the channel’s journalistic professionalism, political commitment, strategic decisions, and humanitarian example.
We extend our warm greetings to all the brave, creative, and resilient media workers in this steadfast outlet. Despite the numerous pressures that have been exerted against teleSUR, it is, however, still devoted to its values, and a reference for all the free peoples of the world.
This is a tribute to the teleSUR administration on its success in cementing its position as one of the most important media outlets Worldwide.”
Moreover, Mr. Ben Jeddou extended his warm greetings to the President of teleSUR, Mrs. Patricia Villegas, remarking that “Patricia is not only a great president of a great channel, but she is also a media icon in the Global South and international community.
With Patricia and teleSUR, we have established an influential, high-end, candid, professional, intellectual media partnership… We, at Al Mayadeen Media Network, will proceed in this cooperative partnership in full depth, strength, and a long-term vision.”
#Venezuela | On Sunday, July 24, Ghassan Ben Jeddou, Chairman of the Board of Directors of the Al Mayadeen news network, sent a message of congratulations to the entire team of the multinational teleSur on the occasion of its 17th anniversary. https://t.co/Jn7grhenN4pic.twitter.com/BbyZfWCeo4
“The Al Mayadeen family yields heartful felicitations to all their friends and colleagues on the 17th anniversary of the establishment of teleSUR.
From the bottom of my heart, I extend to my colleagues at teleSUR, and to the dear captain of the ship Patricia, the most sincere congratulations. I do so with the conviction that this leading channel, whose headquarters are rooted in beautiful Caracas – the capital of victorious Venezuela over conspiracies, sanctions, blockades, and slander under the presidency of the unfaltering Venezuelan President Nicolas Maduro, resembles steadfast Venezuela, its great people, its vigorous leadership, and its iconic President.
Thus, teleSUR is destined to succeed, innovate, shine, and triumph.”
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Venezuelan President Nicolas Maduro says the country has received an “advanced” oil tanker from Iran as part of a bilateral contract amid increasing cooperation between Tehran and Caracas in various fields.
“We have just received a ship with the most advanced engineering and technology in the world,” Maduro said according to Venezuelan state TV. He said that the ship was manufactured by Iran upon Venezuela’s order.
The oil tanker “now comes to serve as a cargo ship for our revolutionary PDVSA,” he added.
This is the third Iran-made oil tanker delivered to Venezuela. The South American country received the second tanker on June 11, 2022.
The second tanker was of Aframax type with a deadweight between 80,000 and 120,000 metric tons [mt] which can carry 113,000 mt or 750,000 barrels of oil. The 250-meter-long vessel is equipped with a 21,000-horsepower engine and three diesel generators that are capable of producing 900 kilowatts of electricity.
Maduro said in June that the fourth tanker will also join the Venezuelan state-owned oil and natural gas company [PDVSA] in 2024, marking the conclusion of a 2006-signed contract on four oil tankers between the two states.
The tankers are produced by Iran Marine Industrial Company [Sadra] located along the Persian Gulf coast in Bushehr province.
The delivery comes as both Iran and Venezuela are under severe economic sanctions imposed by the United States. Tehran and Caracas have expanded cooperation in recent years, especially in the field of energy, to neutralize Washington’s unilateral measures.
The Venezuelan president made an official visit to Iran in June, inking a 20-year partnership agreement aimed at improving bilateral cooperation in various fields such as technology, agriculture, oil and gas, petrochemicals, tourism as well as culture.
The ceremony to deliver the second oil tanker was held during this visit with presidents of the two nations in attendance.
Addressing the event, Iranian President Ebrahim Raisi hailed Venezuela as a “friendly and brotherly” country, adding, “In a situation where the enemies of Iran and Venezuela are trying to impede the progress of the free nations of Iran and Venezuela by imposing severe restrictions and sanctions, the delivery of the 113,000-ton tanker built by Iranian engineers and shipbuilding industries to Venezuela is an example of Iran’s high capacity and capability in exporting technical and engineering services to the world and proving the efficiency of the policy of the resistance economy.”
For his part, Maduro hailed the cooperation with Iran, saying, “The production of the tanker for the Venezuelan state oil company was Commander Chavez’s plan to strengthen our country’s oil industry, to make it self-sufficient in the face of all foreign aggression.”
“The construction of this modern and strong ship shows the high capability of the extraordinary and admirable industry of the Islamic Republic of Iran,” he said, adding, “Iran is one of the emerging powers of the 21st century and the construction of this ship is one of the practical and clear signs of this emerging power.”
Argentinian Judge Federico Vilena has ordered that only 12 of the 19 seized Venezuelan plane crew members can leave the country while the other seven have been ordered to remain there.
An Emtrasur Cargo Boeing 747
Washington asked Argentina, on Tuesday, to seize a Venezuelan cargo plane that has been parked since June on its soil and is linked to the US sanctions against Iran. The plane had 19 crew members at a Buenos Aires airport since it arrived on June 8 carrying a shipment of auto parts.
The Boeing 747 was sold to Emtrasur, a subsidiary of the Venezuelan company Conviasa, by an Iranian company, Mahan Air, in October 2021. The two countries have signed a 20-year cooperation plan as a way to overcome the sanctions imposed against them by the US.
Both the previous Iranian owner of the Boeing 747 as well as the Venezuelan owner of the plane have been sanctioned by the US for different reasons. The US Department of Justice used this pretext to justify its request from Argentina to confiscate the plane.
According to AFP, Argentinian Judge Federico Vilena has ordered that only 12 of the 19 crew members plane crew can leave, but seven others, including four Iranian and three Venezuelan citizens, were ordered to stay. One of the Iranians that are ordered to remain in Buenas Aires is Gholam-Reza Qasemi, which the US alleges is an ex-IRGC member.
“As alleged in the seizure warrant, in or around October 2021, Mahan Air violated the Temporary Denial Order and US export control laws when it transferred custody and control of the Boeing aircraft to EMTRASUR without US Government authorization,” the Justice Department claimed in a statement.
Furthermore, Assistant Attorney General Matthew Olsen said in a statement “The Department of Justice will not tolerate transactions that violate our sanctions and export laws.”
The crew was kept on board and Iranian diplomats were prevented from visiting the ship until Iran’s ambassador to Athens was allowed to check on the crew. This was only after Iran retaliated against the theft of its cargo, by the seizure of two Greek tankers in the Gulf.
Hey, everyone, this is Ben Norton, and you are watching or listening to the Multipolarista podcast. I am always privileged to be joined by one of my favorite guests, Michael Hudson, one of the greatest economists living today.
We’re going to be talking about the inflation crisis. This is a crisis around the world, but especially in the United States, where inflation has been at over 8%. And it has caused a lot of political problems. It’s very likely going to cause the defeat, among other factors, of the Democrats in the mid-term elections in November.
And we’ve seen that the response of the US government and top economists in the United States is basically to blame inflation on wages, on low levels of unemployment and on working people.
We’ve seen that the chair of the Federal Reserve, Jerome Powell, has said that inflation is being caused by wages supposedly being too high. We’ve also seen that the top economist and former Clinton administration official Larry Summers has claimed that the solution to inflation is increasing unemployment, potentially up to 10%.
So today I’m joined by economist Michael Hudson, who has been calling out this kind of neoliberal snake oil economics for many years. And Professor Hudson has an article he just published that we’re going to talk about today. You can find this at his website, which is michael-hudson.com. It’s titled “The Fed’s Austerity Program to Reduce Wages.” and I’m going to let Professor Hudson summarize the main points of his article.
Professor Hudson, as always, it’s a pleasure having you. Can you respond to the decision by the Federal Reserve to increase interest rates by 0.75%? It doesn’t sound like a lot – it’s less than 1% – but this was the largest rate hike since 1994.
And now we’ve already seen reports that there’s going to be a depression. The Fed chair is blaming this on wages. Can you respond to the position of the Fed and the inflation crisis in the US right now.
MICHAEL HUDSON:
For the Fed, the only two things that it can do is, number one, raise the discount rate, the interest rate; and number two, spend $9 trillion buying stocks, and bonds, and real estate mortgages to increase real estate prices, and to increase the amount of wealth that the wealthiest 10% of the population has.
To the wealthiest 10%, especially the 1%, it’s not only inflation that’s a problem of wages; every problem that America has is the problem of the working class earning too much money. And if you’re an employer, that’s the problem: you want to increase your profits. And if you look at the short term, your profits go up the more that you can squeeze labor down. And the way to squeeze labor down is to increase what Marx called the reserve army of the unemployed.
You need unemployment in order to prevent labor from getting most of the value of what it produces, so that the employers can get the value, and pay that to the banks and the financial managers that have taken over corporate industry in the United States.
You mentioned that while the Fed blames the inflation it on labor, that’s not President Biden’s view; Biden keeps calling it the Putin inflation. And of course, what he really means is that the sanctions that America has placed on Russia have created a shortage of oil, gas, energy, and food exports.
So really we’re in the Biden inflation. And the Biden inflation that America is experiencing is the result basically of America’s military policy, its foreign policy, and above all, the Democratic Party’s support of the oil industry, which is the most powerful sector in the United States and which is guiding most of the sanctions against Russia; and the national security state that bases America’s power on its ability to export oil, or control the oil trade of all the countries, and to export agricultural products.
So what we’re in the middle of right now isn’t simply a domestic issue of wage earners wanting higher salaries – which they’re not particularly getting; certainly the minimum wage has not been increased – but you have to put this in the context of the whole cold war that’s going on.
The whole US and NATO confrontation of Russia has been a godsend, as you and I have spoken before, for the oil industry and the farm exporters.
And the result is that the US dollar is rising against the euro, against sterling, and against Global South currencies. Well, in principle a rising dollar should make the price of imports low. So something else is at work.
And what’s at work, of course, is the fact that the oil industry is a monopoly, that most of the prices that have been going up are basically the result of a monopolization, in the case of food, by the marketing firms, like Cargill and Archer Daniels Midland, that buy most of the crops from the farmers.
The irony is that while food prices, next to oil prices, are the major factor that is soaring, farmers are getting less and less for their crops. And yet farmers’ costs are going up – up for fertilizer, up for energy, up for other inputs – so that you’re having enormous profits for Archer Daniels Midland and the food monopolies, of the distributors, and enormous, enormous gains for the oil industry, and also of course for the military-industrial complex.
So if you look at what’s happening in the overall world economic system, you can see that this inflation is being engineered. And the beneficiaries of this inflation certainly have not been the wage earners, by any stretch of the imagination.
But the crisis that the Biden policy has created is being blamed on the wage earners instead of on the Biden administration’s foreign policy and the basically the US-NATO war to isolate Russia, China, India, Iran, and Eurasia generally.
BENJAMIN NORTON:
Professor Hudson, I want to talk about the increase in interest rates by the Fed. There has been a lot of attention to this, although, again, it’s 0.75%, which is not that big. But it’s of course going to have an outsize impact on the economy.
raising interest rates will cure inflation by deterring borrowing to spend on the basic needs that make up the Consumer Price Index and its related GDP deflator. But banks do not finance much consumption, except for credit card debt, which is now less than student loans and automobile loans. Banks lend almost entirely to buy real estate, stocks and bonds, not goods and services.
So you argue that one of the effects of this is that it’s actually going to roll back homeownership in the United States. You note that the rate of homeownership has been falling since 2008.
So can you expand on those arguments? What will be the impact of the increase of the interest rates by the Fed?
MICHAEL HUDSON:
Well, in order to get an economics degree which is needed to work at the Fed or at the Council of Economic Advisors, you have to take economics courses in the universities, and all of the textbooks say just what you quoted me as saying they say.
The pretense is that banks actually play a productive role in society, by providing the money for factories to buy machinery, and build plants, and do research and development, and to hire labor; and that somehow the money that banks create is all lent out for industrial economy, and that that will enable companies to make more money that they’ll spend on labor; and of course, as they spend more money on labor, that supports to bid prices up as the reserve army of the unemployed is depleted.
But that’s all a fiction. The textbooks don’t want to say that banks don’t play a productive role like that at all. And the corporations don’t do what the textbooks say.
If you look at the Federal Reserve balance sheet and statistics that it publishes every month, you’ll see that 80% of bank loans in the United States are mortgage loans to commercial real estate and mostly for home real estate. And of course the home mortgage loans have been nothing, like under 1% for the last 14 years, since 2008.
Only the banks and the large borrowers, the financial sector, have been able to borrow at these low rates. Homeowners all along have had to pay very high rates, just under 4%, and now it’s going above 4%, heading to 5%.
Well, here is the situation that the Federal Reserve has created. Suppose that you’re a family right now going out to buy a home, and you find out that in order to borrow the money to buy the home – because if the average home in America costs $600,000 or $700,000, people haven’t saved that much; the only way you can buy a home is to take out a mortgage.
Well, you have a choice: you can either rent a home, or you can borrow the money to buy a home. And traditionally, for a century, the carrying charge for financing a home with the mortgage has been about the equivalent of paying a rent. The advantage is, of course, that you get to own the home when it’s over.
Well, now let’s look at what’s happening right now. All of a sudden, the carrying charge of mortgages have gone way, way up. The banks are making an enormous gap. They can borrow at just around 1%, and they lend out at 4.5%. They get a windfall gain of the markup they have in mortgages, lending to prospective homeowners.
And of course, the homeowners don’t have enough money to be able to pay the higher interest charged on the mortgages that they take out. So they are not able to buy as expensive a home as they wanted before.
But they’ve been a declining part of the population. At the time Obama took office, over 68% of Americans owned their own home. Obama started the great wave of evictions, of 10 million Americans who lived in homes, essentially to throw them out of their homes, especially the victims of the junk mortgages, especially the lower income and racial minorities who were redlined and had to become the main victims of the mortgages.
America’s homeownership rate is now under 61%. What has happened? You’ve had huge private capital firms come into the market thinking, wait a minute, we can now buy these properties and rent them out. And we can buy them for all cash, unlike homeowners, we’re multibillionaires, we Blackstone, BlackRock.
You have these multibillion-dollar funds, and they say, well, we can’t make much money buying bonds or buying stocks that yield what they do today, now that the Federal Reserve has ground down interest rates. What we can do is make money as landlords.
And so they’ve shifted, they’ve reversed the whole shift away from the 19th-century landlordism to an economy based on financialization, and the wealthy classes making money on finance, to go back to making money as landlords.
And so they are buying up these homes that American homeowners can’t afford to buy. Because when you raise the mortgage rate, that doesn’t affect a billionaire at all. Because the billionaire firm doesn’t have to borrow money to buy the home. They have the billion dollars of their own money, of pension fund money, of speculative money, of the money of the 1% and the 10% to spend.
So what you’re having by increasing the interest rates is squeezing homeowners out of the market and turning the American economy into a landlord-ridden rental economy, instead of a homeowners economy. That’s the effect.
And it’s a windfall for the private capital firms that are now seeing that are making money as landlords, the old fashioned way, it worked for 800 years under feudalism. It’s coming back in style.
BENJAMIN NORTON:
Professor Hudson, you point out in this article at your website that more than 50% of the value of U.S. real estate already is held by mortgage bankers. And of course, that percentage is increasing and increasing.
Now, you, Professor Hudson, have argued a point that I haven’t seen many other people make, although it’s an obvious, correct point, which is that there has actually been a lot of inflation in the United States in the past several years, but that inflation was in the FIRE sector: finance, insurance, and real estate.
We see that with the constant increase in real estate prices; they go up every single year; rent goes up every single year. The difference now is that there’s also a significant increase in the Consumer Price Index.
And there is an interesting study published by the Economic Policy Institute, which is, you know, a center-left think tank, affiliated with the labor movement; they’re not radicals, they’re progressives. And they did a very good study.
And they found – this was published this April – they found that corporate profits are responsible for around 54% of the increase of prices in the non-financial corporate sector, as opposed to unit labor costs only being responsible for around an 8% increase.
So they showed, scientifically, that over half of the increase of prices in the non-financial corporate sector, that is in the Consumer Price Index, over half of that inflation is because of corporate profits.
Of course, that’s not the way it’s discussed in mainstream media. That’s not the way the Fed is discussing it all. We see Larry Summers saying that we need to increase unemployment. Larry Summers, of course, was the treasury secretary for Bill Clinton.
He’s saying that the U.S. has to increase unemployment; the solution to inflation is increasing unemployment. Even though these studies show that over half of inflation in the Consumer Price Index is because of corporate profits.
I’m wondering if you can comment on why so many economists, including people as revered as Larry Summers, refuse to acknowledge that reality.
MICHAEL HUDSON:
Most economists need to get employment, and in order to be employed, you have to give a picture of the economy that reflects how well your employer helped society at large. You’re not allowed to say that your employer is acting in ways that are purely predatory. You’re not allowed to say that the employer does not earn an income.
You talked about corporate profits and the classical economists. If you were a free-market economist like Adam Smith, or David Ricardo, or John Stuart Mill – these are monopoly rents. So what you call corporate profits are way above normal corporate rates of return, normal profits. They’re economic rents from monopoly.
And that’s because about 10 or 15 years ago, the United States stopped imposing its anti-monopoly laws. It has essentially let monopolies concentrate markets, concentrate power, and charge whatever they want.
And so once you’ve dismantled the whole legal framework that was put in place from the 1890s, from the Sherman Antitrust Act, down through the early 20th century, the New Deal, once you dismantle all of this state control, saying – essentially what Larry Summers says is, we’re for a free market.
A “free market” is one in which companies can charge whatever they want to charge for things; a free market is one without government regulation; a free market is one without government; a free market is a weak enough government so that it cannot protect the wage earners; it cannot protect voters. A “democracy” is a country where the bulk of the population, the wage earners, have no ability to affect economic policy in their own interests.
A “free market” is one where, instead of the government being the planner, Wall Street is the planner, on behalf of the large industries that are basically being financialized.
So you’ve had a transformation of the concept of what a free market is, a dismantling of government regulation, a dismantling of anti-monopoly regulation, and essentially the class war is back in business.
That’s what the Biden administration is all about. And quite frankly, it’s what the Democratic Party is all about, even more than the Republican Party. The Republican Party can advocate pro-business policies and pro-financial policies, but the Democratic Party is in charge of dismantling the legacy of protection of the economy that had been put in place for a century.
Now, I also wanted to get your response, Professor Hudson, to these comments that you highlighted in a panel that was organized by the International Manifesto Group – a great organization, people can find it here, their channel here at YouTube. And they held a conference on inflation. And you were one of several speakers.
And you highlighted these comments that were made by the Fed chair, Jerome Powell. And this is according to the official transcript from The Wall Street Journal. So this is not from some lefty, socialist website. Here’s the official transcript of a May 4 press conference given by the Fed chief, Jerome Powell.
In this press conference, he said, discussing inflation, he said, in order to get inflation down, he’s talking about things that can be done “to get wages down, and then get inflation down without having to slow the economy and have a recession and have unemployment rise materially.”
So this is another proposal. Larry Summers says 6% unemployment for five years, or 10% unemployment for one year. The Fed chair, Jerome Powell, says the solution is “to get wages down.” I’m wondering if you can respond to that as well.
MICHAEL HUDSON:
Well, the important thing to realize is that President Biden re-appointed Jerome Powell. President Biden is a Republican. The Democratic Party is basically the right wing of the Republican Party, the pro-financial, the pro-Wall Street wing of the Republican Party.
Why on earth, if the Democrats were different from the Republicans, why would would Biden re-appoint an anti-labor Republican, as head of the Federal Reserve, instead of someone that would actually try to spur employment?
Imagine, here’s a party that is trying to be elected on a program of, “Elect us, and we will create a depression and we will lower wages.” That is the Democrat Party slogan.
And it’s a winning slogan, because elections are won by campaign contributions. The slogan is, “We will lower wages by bringing you depression,” is a tsunami of contributions to the Democratic Party, by Wall Street, by the monopolists, by all the beneficiaries of this policy.
So that’s why the Supreme Court ruling against abortions the other day is a gift to the Democrats, because it distracts attention from their identity politics of breaking America into all sorts of identities, every identity you can think of, except being a wage earner.
The wage earners are called deplorables, basically. And that’s how the donor class thinks of them, as sort of unfortunate overhead. You need to employ them, but it really it’s unfortunate that they like to live as well as they do, because the better they live, the less money that you will end up with.
So I think that this issue of the inflation, and what really causes it, really should be what elections are all about. This should be the economic core of this November’s election campaign and the 2024 election campaign. And the Democrats are leading the fight to lower wages.
And you remember that when President Obama was elected, he promised to increase the minimum wage? As soon as he got in, he said the one thing we cannot do is raise the minimum wage. And he had also promised to back card check. He said, the one thing we must not do is increase labor unionization with card check, because if you unionize labor, they’re going to ask for better wages and better working conditions.
So you have the Democratic Party taking about as hard a right-wing position as sort of Chicago School monetarism, saying the solution to any any problem at all is just lower wages and somehow you’ll be more competitive, whereas the American economy is already rendered uncompetitive, not because wages are so high, but because, as you mentioned before, the FIRE sector, the finance, insurance, and real estate sector is so high.
Rents and home ownership, having a home is too expensive to be competitive with foreign labor. Having to pay 18% of GDP on medical care, privatized medical care, prices American labor out of the market. All of the debt service that America has paid is pricing America out of the market.
So the problem is not that wages are too high. The problem is that the overhead that labor has to pay in order to survive, for rent, for medical care, for student loans, for car loans, to have a car to drive to work, for gas to drive to work, to buy the monopoly prices that you need in order to survive – all of these are too high.
None of this even appears in economic textbooks that you need to get a good mark on, in order to get an economics degree, in order to be suitably pliable to be hired by the Federal Reserve, or the Council of Economic Advisers, or by corporations that use economists basically as public relations spokesmen. So that’s the mess we’re in.
BENJAMIN NORTON:
Professor Hudson, in your article at your website, michael-hudson.com, you have an important section about the quantitative easing policies. We were talking about how there has been inflation in the past decade, but then inflation was largely in the FIRE sector, pushing up, artificially inflating the prices of real estate and stocks.
You note that:
While home ownership rates plunged for the population at large, the Fed’s “Quantitative Easing” increased its subsidy of Wall Street’s financial securities from $1 trillion to $8.2 trillion – of which the largest gain has been in packaged home mortgages. This has kept housing prices from falling and becoming more affordable for home buyers.
And you, of course, note that “the Fed’s support of asset prices saved many insolvent banks – the very largest ones – from going under.”
I had you on to discuss, in late 2019, before the Covid pandemic hit, we know that the Fed had this emergency bailout where it gave trillions of dollars in emergency repo loans to the biggest banks to prevent them from from crashing, trying to save the economy.
I do want to talk about this as well, because sometimes this is used by right-wingers who portray Biden hilariously as a socialist. You were just talking about how the Democrats have a deeply neoliberal, right-wing economic program.
But of course, there is this rhetoric that we see from Republicans and conservatives claiming that Biden is a socialist. They claim that the reason there is inflation is because Biden is just printing money and giving money to people.
Of course, that’s not at all what’s happening. What has happened is that the Fed has printed trillions of dollars and given that to stockholders, to big corporations, and to banks.
And this is a point that I saw highlighted in that panel I mentioned, the conference on inflation that was organized by the International Manifesto Group. A colleague of yours, a brilliant political economist, Radhika Desai, she invited everyone to go to the Fed website and look at the Fed balance sheet.
And this is the Fed balance sheet from federalreserve.gov. This is the Board of Governors of the Federal Reserve System website. And it is pretty shocking to see this graph, which shows the total assets of the U.S. Federal Reserve.
Back in 2008, the Federal Reserve had around $900 billion in assets. Now it’s at nearly $9 trillion in assets.
And we can see, after the financial crash, or during the financial crash, it increased to around $2 trillion. And then around 2014, it increased to around $4.5 trillion. And then especially in late 2019 and 2020, it skyrocketed from around $4 trillion up to $7 trillion. And since then, it has continued skyrocketing to $9 trillion in assets.
Where did all of that money go? And what was the impact on the economy, of course?
MICHAEL HUDSON:
Well, the impact on the economy has been to vastly increase the wealth of the wealthiest 1% of Americans who own most of the stocks and bonds.
Sheila Bair, the former head of the Federal Deposit Insurance Corporation, pointed out that a lot of this $8 trillion is spent to buy junk bonds.
Here’s the problem. The problem really began with President Obama. He inherited a system where you had the largest wave of commercial bank fraud in American history.
As my colleague Bill Black at the University of Missouri at Kansas City has pointed out, everybody knew that there was a bank fraud on. The newspapers referred to junk mortgages and “NINJA” borrowers: “no income, no jobs, no assets.”
So banks had written mortgages way above the actual value of homes, especially to racial and ethnic minorities, without any ability of the borrowers to actually pay.
And then these banks had packaged these mortgages, and sold them to hapless pension funds, and other institutional investors and to the European banks that are always very naive about how honest American banks are.
You had this whole accumulation of what the 19th century called fictitious capital. Mortgages for property that wasn’t worth anywhere near as much as the mortgage is for.
So if the mortgage was defaulted, if homeowners had jingle mail – in other words, you just mail the keys back to the bank and say, ok, take the house, I find I can buy a house now at half the price that Citibank or one of these other banks lent out.
Well, normally you’d have a crash of prices back to realistic levels, so that the value of mortgages actually reflected the value of property, or the value of junk bonds issued by a corporation reflected the actual earning power of the corporation to pay interest on the junk bonds.
So by the time Obama took over, the whole economy was largely fictitious capital. Well, Obama came in and he said, my campaign donors are on Wall Street. He called in the Wall Street bankers and he said, I’m the guy standing between you and the crowd with the pitchforks, the people who voted for me. But don’t worry, I’m on your side.
He said, I’m going to have the Federal Reserve create the largest amount of credit in human history. And it’s all going to go to you. It’s going to go to the 1% of the population. It’s not going to go into the economy. It’s not going to build infrastructure. It’s not going into wages. It’s not going to reduce the price of homes and make them more affordable to Americans.
It’s going to keep the price of these junk bonds so high that they don’t crash back to non-fictitious values. It’s going to keep the stock market so high that it’s not going to go down. It’s going to create the largest bond market boom in history.
The boom went from high interest rates to low interest rates, meaning a gigantic rise in the price of bonds that actually pay interest that are more than 0.1%.
So there was a huge bond market boom, a huge stock market, a tripling of stock market prices. And if you are a member of the group that owns 72% of American stocks, I think that’s 10% of the population, you have gotten much, much richer.
But if you’re a member of the 90% of the population, you have had to go further and further into debt just in order to survive, just in order to pay for medical care, student loans, and your daily living expenses out of your salary.
So if American wages were at a decent level, American families would not be pushed more and more into debt. The reason the personal debt has gone up in the United States is because families can’t get by on what they earn.
So obviously, if they can’t get by on what they earn, and they have to borrow to get by, they are not responsible for causing the inflation. They’re being squeezed.
And the job of economists, and of Democratic Party and Republican politicians, is to distract attention from the fact that they’re being squeezed and blame the victim, and saying, you’re doing it to yourself by just wanting more money, you’re actually creating the inflation that is squeezing you.
When actually it’s the banks, and the government’s non-enforcement of the monopoly policy, and the government support of Wall Street that is responsible for what is happening.
BENJAMIN NORTON:
Very, very well said.
Professor Hudson, I should have highlighted another part of this graph here. This is, again, this is at the Federal Reserve Board website. It’s even more revealing when you look at the selected assets of the Fed, and you see that all of these assets basically are securities, securities held outright by the Fed.
We see that around 2008, the Fed had less than $500 billion in securities. And you have this policy of quantitative easing. And since then, basically all of the increase has been in securities. Of the roughly $9 trillion in assets the Fed holds, about about $8.5 trillion is in securities.
I’m wondering if you can compare this to central banks in other countries. We’ve seen, for instance, that the Western sanctions on Russia were aimed at trying to destroy the Russian economy.
President Biden claimed they were trying to make the ruble into rubble. In fact, the ruble is significantly stronger now than it was before the sanctions. To such a degree that the Russian government and Russian national bank are actually trying to decrease the value of the ruble, because they think it’s a little overvalued; it makes it a little harder to be competitive.
So how does this policy of the US Fed having $8.5 trillion worth of securities compare to the policies of other central banks?
You have experience working with the Chinese government as an advisor. Do other governments’ central banks have this policy?
And and that $8.5 trillion in securities, what are those securities? Even from the perspective of these neoliberal economics textbooks that you were talking about, that people are taught in universities, this seems to me to be totally insane. I don’t see how there is even an academic, neoliberal textbook explanation for this policy.
MICHAEL HUDSON:
Very few people realize the difference between a central bank and the national treasury. The national treasury is what used to perform all of the policies that central banks now do. The national treasury would be in charge of issuing money and spending it.
Central banks were broken off in America in 1913 from the Treasury in order to shift control of the money supply and credit away from Washington to New York. That was very explicit.
The original Federal Reserve didn’t even permit a Treasury official to be on the board of directors. So the job of a central bank is to represent the interest of the commercial banks.
And as we just pointed out, the interest of the commercial banks is to produce their product: debt. And they create their product against existing assets, mainly real estate, but also stocks and bonds.
So the job of the central bank here is to support the financial sector of the economy, and that sector that holds wealth in the form of stocks, bonds, and loans, and especially bank bonds that make their money off real estate credit.
Same thing in Europe, with Europe’s central bank. Europe is going into a real squeeze now, and has been going into a squeeze ever since you had the Greek crisis.
In Europe, because right-wing monetarist designed the euro, part of the eurozone rule is you cannot run a budget deficit, a national budget deficit of more than 3% of gross domestic product.
Well, that’s not very much. That means that you can’t have a real Keynesian policy in Europe to pull the economy out of depression. That means that if you’re a country like Italy right now, and you have a real financial squeeze there, a corporate squeeze, a labor squeeze, the government cannot essentially rescue either Italian industry or Italian labor.
However, the European central bank can, by the way that it creates credit, by central bank deposits, the European central bank can vastly increase the price of European stocks, bonds, and packaged mortgages. So the European central bank is very much like the commercial bank.
China is completely different, because, unlike the West, China treats money and credit as a public utility, not as a private monopoly.
And as a public utility, China’s central bank will say, what are we going to want to create money for? Well, we’re going to want to create money to build factories; we’re going to want to create money so that real estate developers can build cities, or sometimes overbuild cities. We can create money to actually spend in the economy for something tangible, for goods and services.
The Chinese central bank does not create money to increase stock market prices or bond prices. It doesn’t create money to support a financial class, because the Communist Party of China doesn’t want a financial class to exist; it wants an industrial class to exist; it wants an industrial labor force to exist, but not a rentier class.
So a central bank in a Western rentier economy basically seeks to create credit to inflate the cost of living for homebuyers and for anyone who uses credit or needs credit, and to enable corporations to be financialized, and to shift their management away from making profits by investing in plant and equipment and employing labor to produce more, to making money by financial engineering.
In the last 15 years, over 90% of corporate earnings in the United States have been spent on stock buybacks and on dividend payouts. Only 8% of corporate earnings have been spent on new investment, and plants, and equipment, and hiring.
And so of course you have had the economy deindustrialized. It’s this idea that you can make money financially without an industrial base, without a manufacturing base; you can make money without actually producing more or doing anything productive, simply by having a central bank increase the price of the stocks, and bonds, and the loans made by the wealthiest 10%.
And of course, ultimately, that doesn’t work, because at a certain point the whole thing collapses from within, and there’s no industrial base.
And of course, when that happens, America will find out, wait a minute, if we close down the economy, we’re still reliant on China and Asia to produce our manufacturers, and to provide us with raw materials, and to do everything that we need. We’re really not doing anything but acting as a world – well, people used to say parasite – as a world rentier, as getting something for nothing, as a kind of financial colonialism.
So America you could look at as a colonial power that is a colonial power not by military occupation, but simply by financial maneuvering, by the dollar standard.
And that’s what’s being unwound today as a result of Biden’s new cold war.
BENJAMIN NORTON:
Professor Hudson, you criticized the strategy of simply trying to increase the interest rates to bring down inflation, noting that it’s going to lead to a further decline in homeownership in the United States. It’s going to hurt working people. I think that’s a very valid criticism.
I’m curious, though, what your take is on the response of the Russian central bank to the Western sanctions. We saw that the chair of the Russian central bank, Elvira Nabiullina, she – actually this is someone who is not even necessarily really condemned a lot by Western economists; she is pretty well respected by even, you know, Western neoliberal economists.
And she did manage to deal with the sanctions very well. She imposed capital controls immediately. She closed the Russian stock market. And also, in a controversial move, she raised the interest rates from around 9% up to 20%, for a few months. And then after that, dropped the rates.
MICHAEL HUDSON:
A few days, not a few months. That was very short. And now she has moved the interest rates way down.
BENJAMIN NORTON:
Back to 9%.
MICHAEL HUDSON:
She was criticized for not moving them further down.
BENJAMIN NORTON:
Yeah, well go ahead. I’m just curious. So she immediately raised it to 20%, and then has dropped the interest rates since then. I’m curious what you think about that policy. Yeah, go ahead.
MICHAEL HUDSON:
There is very little that a central banker can do when the West has declared a war, basically, a war on a country that is completely isolated.
The response has come from President Putin and from Foreign Secretary Lavrov. And they pointed out, well, how is Russia going to going to trade and get what it needs. And this is what the recent meetings of the BRICS are all about.
Russia realizes that the world is now broken into two halves. America and NATO have separated the West. Basically you have a white people’s confederation against all the rest of the world.
And the West has said, we’re isolating ourselves from you totally. And we think you can’t get along without us.
Well, look at the humor of this. Russia, China, Iran, India, Indonesia, and other countries are saying, hah, you say we we can’t get along without you? Who is providing your manufacturers? Who is providing your raw materials? Who is providing your oil and gas? Who is providing your agriculture, and the helium, the titanium, the nickel?
So they realize that the world is breaking in two, and Eurasia, where most of the world’s population is concentrated, is going to go its own way.
The problem is, how do you really go your own way? You need a means of payment. You need to create a whole international system that is an alternative to the Western international system. You need your own International Monetary Fund to provide credit, so that the these Eurasian countries and their allies in the Global South can deal with each other.
You need a World Bank that, instead of lending money to promote U.S. policies and U.S. investments, will promote mutual gains and self-sufficiency among the countries.
So already, every day in the last few weeks, you have had meetings with the Russians about this, who said, ok, we’re going to create a mutual trading area, starting among the BRICS: Brazil, Russia, India, China, and South Africa.
And how are we going to pay? We can’t pay in dollars, because if we have money in a dollar bank, or a euro bank in Europe, they can just grab the money, like they grab Venezuela’s money. They can just say, we’re taking all your money because, essentially, we don’t want you to exist as an alternative to the finance capital world that we are creating.
So essentially, Russia, China, and these other countries are saying, ok, we’re going to create our own international bank. And how are we going to fund it? Well, every member of the bank will contribute, say, a billion dollars, or some amount of their own currency, and this will be our backing. We can also use gold as a means of settlement, as was long used among countries.
And this bank can create its own special drawing rights, its own bank order, is what Keynes called it. It can create its own credit.
Well, the problem is that, if you have Brazil, for instance, or Argentina, joining this group, or Ecuador, that sells almost all of its bananas to Russia, how is it going to get by?
Well, if there is a BRICS group or a Shanghai Cooperation Organization bank, obviously the Western governments are not going to accept this.
So Russia realizes that as a result of Biden’s Cold War Two, there is going to be a continued rise in energy prices. You think gasoline prices are not high now? They’re going up. You think food prices are not high now? They’re going up more.
And Europe is especially the case, because Europe now cannot buy Russian gas to make the fertilizer to make its own crops grow.
So you’re going to have a number of countries in the Global South, from Latin America to Africa, being squeezed and wanting to trade with the Eurasian group.
And the problem is Russia says, all right, we know that you can’t afford to pay. We’re glad to give you credit, but we don’t want to give you credit that you’re going to simply use the money you have to pay your dollar debts that are coming due.
Because one of the effects that I didn’t mention of the Federal Reserve raising interest rates is there is a huge flow of capital from Europe and England into the United States, so that if you’re a billionaire, where are you going to put your savings? You want the highest interest rates you want. And if the United States raises interest rates, the billionaires are going to move their money out of England, out of the euro, and the euro is going back down against the dollar. It’s almost down to a dollar a euro.
The British pound is heading downwards, towards one pound per dollar.
This increase in the dollar’s exchange rate is also rising against the currencies of Brazil, Argentina, the African countries, all the other countries.
So how are they going to pay this summer, and this fall, for their food, for their oil and gas, and for the higher cost of servicing their dollar debts?
Well, for Eurasia, they’re going to say, we want to help you buy our exports – Russia is now a major grain exporter, and obviously also an oil exporter – saying we want to supply you and give you the credit for this, but you’re really going to have to make a decision. Are you going to join the U.S.-NATO bloc, or are you going to join the Eurasian bloc?
Are you going to join the White People’s Club or the Eurasian Club? And it really comes down to that. And that’s what is fracturing the world in these two halves.
Europe is caught in the middle, and its economies are going to be torn apart. Employment is going to go down there. And I don’t see wages going up very much in Europe.
You’re going to have a political crisis in Europe. But also you’ll have an international diplomatic crisis over how are you going to restructure world trade, and investment, and debt.
There will be two different financial philosophies. And that’s what the new cold war is all about.
The philosophy of US-sponsored finance capitalism, of making money financially, without industrialization, and with trying to lower wages and reduce the labor force to a very highly indebted workforce living on the margin.
Or you’ll have the Eurasian philosophy of using the economic surplus to increase productivity, to build infrastructure, to create the kind of society that America seemed to be growing in the late 19th century but has now rejected.
So all of this is ultimately not simply a problem of interest rates and central bank policy; it really goes beyond central banks to what kind of a social and economic system are you going to have.
And the key to any social and economic system is how you treat money and credit. Is money and credit going to be a public utility, or will it be a private monopoly run for the financial interests and the 1%, instead of a public utility run for the 99%?
That’s what the new cold war is going to be all about. And that’s what international diplomacy week after week is trying to settle.
BENJAMIN NORTON:
Very, very well said. And I really agree about this increasing kind of bipolar order, where the US-led imperialist system is telling the world they have to pick a side. You know, as George W. Bush said, you’re either with us or you’re against us; you’re with us or you’re with the terrorists.
That’s what Biden is saying to the world. And we see the West has drawn this iron curtain around Russia. And now they’re threatening to do the same around China.
Now, of course, the difference is that China has the largest economy in the world, according to a PPP measurement. It’s even larger than the US economy. I don’t know how they can try to sanction the Chinese economy, considering China is the central factory of the world.
But this is related to a question I had for you, Professor Hudson, and this is from a super chat question from Manoj Payardha, and it’s about how Chinese banks say they’re not ready yet to develop an alternative to the SWIFT. He asked, how will the Third World pay Russia for resources?
And we’ve seen, maybe you can talk about the measures being implemented. India has this rupee-ruble system that they’ve created.
But I want to highlight an article that was published in Global Times. This is a major Chinese newspaper, and this is from April. And it quotes the former head of China’s central bank, who was speaking at a global finance forum in Beijing this April.
And basically he said, we need to prepare to replace Swift. He said the West’s adoption of a financial nuclear option of using SWIFT to sanction Russia is a wake up call for China’s financial development. And he said, “We must get prepared.”
So it seems that they’re not yet prepared. But this is something that you’ve been talking about for years. Or maybe you disagree and maybe you think they already are prepared with the SWIFT alternative?
MICHAEL HUDSON:
Well they’re already using an alternative system. If they weren’t using an alternative system – Russia is adopting part of the Chinese system for this – they wouldn’t be able to have banks communicate with each other.
So, yes, they already have a rudimentary system. They’re making it a better system that can also be immune from U.S. computer espionage and interference. So yes, of course there’s already a system.
But I want to pick up on what you said about Biden, how Biden characterizes things.
Biden characterizes the war of the West against Eurasia as between democracy and autocracy. By “democracy,” he means a free market run by Wall Street; he means an oligarchy.
But what does he mean by autocracy? What he means by autocracy, when he calls China an autocracy, an “autocracy” is a government strong enough to prevent an oligarchy from taking power, and taking control of the government for its own interests, and reducing the rest of the economy to debt peonage.
An “autocracy” is a country with public regulation against monopolies, instead of an oligarchic free market. An “autocracy” uses money and credit, essentially, to help economies grow. And when debts cannot be paid in China, if a factory or a real estate company cannot pay debts, China does not simply say, ok, you’re bankrupt, you’re going to have to be sold; anybody can buy you; the Americans can buy you.
Instead, the Chinese say, well, you can’t pay the debts; we don’t want to tear down your factory; we don’t want your factory to be turned and gentrified into luxury housing. We’re going to write down the debt.
And that’s what China has done again and again. And it’s done that with foreign countries that couldn’t pay the debt. When a debt that China has come due for China’s development of a port, or roads, or infrastructure, it says, well, we understand that you can pay; we will delay payment; we will have a moratorium on your payment. We’re not here to bankrupt you.
For the Americans, to the international funds, they’re saying, well, we are here to bankrupt you. And now if we lend you, we the IMF, lends you money to avoid a currency devaluation, the term is you’re going to have to privatize your infrastructure; you’re going to have to sell off your public utilities, your electric system, your roads, your land to private buyers, mainly from the United States.
So you have a “democracy” supporting bankruptcy, foreclosure, financialization, and privatization, and low wages by a permanent depression, a permanent depression to keep down wages.
Or you have “autocracy,” seeking to protect the interests of labor by supporting a living wage, to increase living standards as a precondition for increasing productivity, for building up infrastructure.
You have these two diametrically economic systems. And, again, that’s why there’s a cold war on right now.
BENJAMIN NORTON:
And there’s another super chat question here, Professor Hudson. You mentioned the International Monetary Fund, the IMF. We have talked about that many times. This is from Sam Owen. He asked, why do countries continue to accept bad IMF loans when they have such a poor track record? Is it just the US government meddling in the national politics? Are there cases of good IMF loans?
MICHAEL HUDSON:
Well, what is a country? When you say a country to most people, people think, ok, let’s talk about Brazil; let’s talk about all the people in Brazil; you have a picture in the mind of the Amazon; you have a big city with a lot of people in it.
But the country, in terms of the IMF, is a group of maybe the 15 wealthiest families in Brazil, that own most of the money, and they are quite happy to borrow from the IMF, because they say, right now there’s a chance that Lula may become president instead of the neo-fascist Bolsonaro. And if Lula comes in, then he is going to support labor policies, and he may stop us from tearing down the Amazon. So let’s move our money out of the country.
Well, normally this would push the exchange rate of the cruzeiro (real) down. So the IMF is going to make a loan to Brazil to support the cruzeiro (real), so that the wealthy 1% of Brazil can move their money into dollars, into euros, into foreign currency and offshore bank incentives, and load Brazil down with debt, so that then when there is an election, and if Lula is elected, the IMF is going to say, well, we don’t really like your policies, and if you pursue a pro-labor, socialist policy, then there’s going to be a capital flight. And we’re insisting that you pay all the money that you borrowed from the West right back now.
Well, that’s going to lead Lula either to sit there, follow the IMF direction, and let the IMF run the economy, instead of his own government, or just say, we’re not going to pay the foreign debt.
Well, until now, no country has been in a strong enough position not to pay the foreign debt. But for the first time, now that you have the Eurasian group – we’ll call it BRICS, but it’s really Eurasia, along with the Southern groups that are joining, the Global South – for the first time, they can say, we can’t afford to stay in the West anymore.
We cannot afford to submit the economy to the IMF demands for privatization. We cannot submit to the IMF rules that we have to fight against labor, that we have to pass laws banning labor unions, that we have to fight against laborers’ wage, like Western democracies insist on. We have to go with the Chinese “autocracy,” which we call socialism.
And of course, when America accuses China being an “autocracy,” autocracy is the American word for socialism. They don’t want to use that word. So we’re back in Orwellian double-think.
So the question is what, will the Global South countries do when they cannot afford to buy energy and food this summer, without an IMF loan? Are they going to say, ok, we can only survive by joining the break from the West and joining the Eurasian group?
That is what the big world fracture is all about.
And I described this global fracture already in 1978. I wrote a book, “Global Fracture,” explaining just exactly how all of this was going to happen.
And at that time, you had Indonesia, you had Sukarno taking the lead, the non-aligned nations, India, Indonesia, were trying to create an alternative to the financialized, American-centered world order. But none of these countries had a critical mass sufficient to go their own way.
Well, now that America has isolated Russia, China, India, Iran, Turkey, all these countries, now it has created a critical mass that is able to go its own way. And the question is, now you have like a gravitational pull, and will this Eurasian mass attract Latin America and Africa to its own group, away from the United States? And where is that going to leave the United States and Europe?
BENJAMIN NORTON:
And we saw one of the clearest examples yet of this bipolar division of the world between, you know, the West and the rest, as they say, with this ridiculous meeting that was just held of the G7.
Of course, the G7 are the white, Western countries. And then they’ll throw in U.S.-occupied Japan in there, to pretend they’re a little more diverse.
But we saw that the G7 just held a summit, and basically the entire summit was about how can we contain China? How can we expand the new cold war on Russia into a new cold war on China?
It’s also absurd considering that China’s Belt and Road Initiative, which involves over half of the countries on Earth, is estimated at many trillions of dollars in infrastructure projects. So the US and its allies think that they can challenge that with $600 billion in public-private partnerships.
I should stress, of course, what they announced is going to be a mixture of so-called public initiative and then contracts for private corporations.
So it’s yet another giveaway to the private sector, in the name of building infrastructure.
But I’m wondering if if you can comment on the G7 summit that just was held.
MICHAEL HUDSON:
Well, nothing really came out of it. They all said that they could not agree on any more sanctions against Russia, because they’re already hurting enough. India, in particular, stood up and said, look, there’s no way that we’re going to join the sanctions against Russia, because it’s one of our major trading partners. And by the way, we’re getting a huge benefit from importing Russian oil, and you’re getting a huge benefit by getting this oil from us at a markup.
So the G7 could not get any agreement on what to do. It is already at a stalemate. And this is only June. Imagine the stalemate it’s going to be in September.
Well, next week, President Biden is going to Saudi Arabia and saying, you know, we’re willing to kill maybe 10 million more of your enemies; we’re willing to help Wahhabi Sunni groups kill more of the Iranian Shiites, and sabotage Iraq and Syria. We’ll help you back al-Qaeda again, if you will lower your oil prices so that we can squeeze Russia more.
So that’s really the question that Saudi Arabia will have. America will send give it more cluster bombs to use against Yemen. And the question is, is Saudi Arabia going to say, ok, we’re going to earn maybe $10 billion less a month, or however much they’re making, just to make you happy, and so that that you will kill more Shiites who support Iran?
Or are they going to realize that if they throw in their lot with the United States, all of a sudden they’ll be under attack from Iran, Russia, Syria, and they’ll be sitting ducks? So what are they going to do?
And I don’t see any way that Biden can actually succeed in getting Saudi Arabia to voluntarily earn less on its oil prices. Maybe Biden can say it’s only for a year, only for one or two years. But as other countries know, when America says only for a year or two, it really means forever. And if you don’t continue, then somehow they have a regime replacement, or a regime change and a color revolution.
So Biden keeps trying to get foreign countries to join the West against Eurasia, but there is Saudi Arabia sitting right in the middle of it.
And all that Europe can do is watch and wonder how it’s going to get by without without energy and without much food.
BENJAMIN NORTON:
Yeah, in fact, Venezuela’s President Maduro just confirmed that the Biden administration has sent another delegation basically begging Venezuela to try to work out some deal because, of course, the U.S. and the EU have boycotts of Russian energy.
So it’s really funny to me that, after years of demonizing Venezuela, portraying it as a dictatorship and all of this, the U.S. had to decide, well, the war in Venezuela is not as important as the war on Russia right now; so we’re going to temporarily pause our war on Venezuela to stick the knife deeper into Russia.
So echoing the same perspective that we hear from Biden, U.S. government officials constantly say that the US needs to challenge China in the Global South. So Europe pledged €300 billion – however, once again, important asterisk – “in private and public funds over five years to fund infrastructure in developing countries.”
So once again, we see another neoliberal private-public partnership. It’s going to be another public giveaway to private corporations.
And “she said that this is part of the G7’s drive to counter China’s multitrillion-dollar Belt and Road project.”
Now, this is really just tying everything together that we have been talking about today, Professor Hudson – in your article “The Fed’s Austerity Program to Reduce Wages,” you conclude the article noting that the depression that people in the United States are on the verge of facing because of these neoliberal policies – telling workers in the U.S. that they need to decrease their wages and be unemployed in order to stop inflation – you point out that:
Biden’s military and State Department officers warn that the fight against Russia is just the first step in their war against China’s non-neoliberal economy, and may last twenty years. That is a long depression. But as Madeline Albright would say, they think that the price is “worth it.”
And you talk about the new cold war against the socialist economy in China and the state-led economy in Russia.
So you predict not only a depression is coming. We have seen that in mainstream media outlets. Larry Summers said, you know, a depression could be coming for a few years. But you say, no, not only is a depression coming; it’s going to be a long depression. We could be seeing 20 years.
And basically the U.S. government and other Western leaders, as we see Ursula von der Leyen from the EU, they’re basically telling their populations, tighten your belts; we have decades of depression coming, because we have collectively decided, as Western leadership, that we are going to force the world through a long depression economically, or at least forced the West through a long economic depression, in order to try to halt the rise of China and Russia.
They’re basically telling their populations, suck it up, tighten your belts for decades, because in the end, the price is worth it in order to prevent the collapse of our empires.
MICHAEL HUDSON:
That’s right. When they’re talking about private-public initiatives, they’re talking about Pentagon capitalism. That means the government will give trillions of dollars to private firms and ask them to build infrastructure.
And if they build a port or a road in a Global South country, they will operate this at a profit, and it will be an enormously expensive infrastructure, because to make financial money off this infrastructure, you have to price it at the cost of production, which is Pentagon capitalism, hyper inflated prices; you have to pay management fees; you have to pay profits; you have to pay interest rates.
As opposed to the Chinese way of funding as equity. The Western mode of funding is all debt leverage. China takes as collateral for the infrastructure that it pays, an equity ownership in the port or whatever infrastructure in the Belt and Road that it’s building.
So you have the difference between equity ownership, debt-free ownership, where if it can afford to pay, fine; if it doesn’t make an income, there are no dividends to pay.
Or you have the debt leverage that is intended that the government cannot pay it, so that the government that will be the co-signer for the debt for all of this infrastructure will somehow be obliged to tax its whole population to pay the enormous super-profits, the enormous monopoly rents, the enormous debt charges of von der Leyen’s Margaret Thatcher plan.
Von der Leyen thinks that she can do to Europe and to America what Margaret Thatcher did to England. And if she does, then then America and Europe deserve it.
BENJAMIN NORTON:
And Professor Hudson, as we start wrapping up here, I know you have to go pretty soon, just a few short questions here at the end.
I’m wondering if what we’re also seeing is not only this fundamental crisis in the Western neoliberal, financialized economies, but it’s also this bubble that has burst, or at least this phase that is over.
At least this is my reading, I’m curious if you agree. In the 1990s, the peak of, you know, the so-called golden age of neoliberalism; we had Bill Clinton riding this wave, and it was the “end of history,” in Francis Fukuyama’s nonsense prediction and all that.
How much of that was not only based on this exorbitant privilege, as the French call it, of the dictatorship of the US dollar – we talked about that based on your book “Super Imperialism,” how the US was given this massive global free lunch economically because of dollar hegemony – but how much of it was not just that, but also the fact that in the 1990s and the first decade of the 2000s, the US and Western Europe had access to very cheap consumer goods from Asia and very cheap energy from Russia?
To me, it seems like those two factors are some of the most important reasons why this golden age of neoliberalism in the ’90s and early 2000s was even possible.
It was on the back of low-paid Asian workers, and based on this idea that Russia would permanently be, what Obama called it: a gas station.
Well, we’ve seen that, one, East Asian economies have lifted themselves up of poverty, especially China has ended extreme poverty and raised median wages significantly.
And now, of course, the West has sanctioned itself against buying Russian energy, massively increasing the cost of energy around the world.
So do you think that that bubble, or that brief moment of the end of history, the golden age of neoliberalism, that can never come back?
Because unless the West can succeed in overthrowing the Russian government and imposing a new puppet like Yeltsin, and overthrowing the Chinese government, it seems like that that the golden in the 1990s is never going to come back.
MICHAEL HUDSON:
Well, you’ve left out the key element of the golden age: that is military force, and the willingness to assassinate any foreign leader that does not want to go along with US policy.
BENJAMIN NORTON:
Of course.
MICHAEL HUDSON:
You’re neglecting what America did to [Salvador Allende]; you’re neglecting how America took over Brazil; America’s meddling and control, and in Europe, the wholesale bribery and manipulation of Europe’s political system, to put in charge of the [German] Green Party a pro-war leadership, an anti-environmental leadership, to put in charge of every socialist party of Europe right-wingers, neoliberals.
Every European socialist and labor party turned neoliberal largely by American maneuvering and meddling in their foreign policy.
So it’s that meddling that was intended to prevent any alternative economic philosophy from existing to rival neoliberalism.
So that when you talk about the end of history, what is the end of history? It means the end of change. It means stop; there will be no reform; there will be no change in the neoliberal system that we have locked in.
And of course, the only way that you can really end history is by what Biden is threatening: atomic war to blow up the world.
That is the neoliberal end of history. And it’s the only way that the neoliberals can really stop history. Apart from that, all they can try to do is to prevent any change that is adverse to locking in the neoliberal order.
So the “end of history” is a declaration of war against any country that wants to go its own way. Any country that wants to build up its own economy as a way that will keep the benefits of its economic growth in its own country, instead of letting it go to the global financial class centered in the United States and Britain.
So we’re talking about, neoliberalism was always a belligerent, implicitly military policy, and that’s exactly what you’re seeing in the proxy war of US and NATO in Ukraine today.
BENJAMIN NORTON:
Yeah, very well said. That’s the other key ingredient: overthrowing any government that is a challenge, that shows there is an alternative, to try to prove the maxim that “there is no alternative.”
MICHAEL HUDSON:
Yes.
BENJAMIN NORTON:
Here’s an interesting comment from Christopher Dobbie. He points out that in Australia, the average age for their first homeowner was 27 in 2001; now it’s 35, and increasing more and more by the year.
Now, in the last few minutes here, Professor Hudson, here’s another brief question that I got from someone over at patreon.com/multipolarista – people can go and support this show. One of my patrons asked this question: who who is hurt most by the Fed or other central banks raising interest rates? People, average consumers, or companies?
And obviously, you talked earlier about how the US Federal Reserve is different from other central banks, but it’s kind of an open question. Who is hurt more by raising interest rates?
MICHAEL HUDSON:
Well, companies are certainly hurt because it means that any possibility of getting productive credit is raised. But they’re also benefited, because if interest rates raised go up high enough, then it will not pay corporate raiders to borrow money to take over and raid companies and empty them out, like they did in the 1980s.
So everything cuts both ways. Raising the interest rates have given commercial banks an excuse to raise the interest charges on credit card loans and mortgage debts.
So raising interest rates, to the banks, have enabled them to actually increase their margin of monopoly profits on the credit that they extend.
And that certainly hurts people who are reliant on bank credit, either for mortgages or for consumer debt, or for any kind of loans that they want to take out.
Basically, raising interest rates hurts debtors and benefits creditors.
And benefiting creditors very rarely helps the economy at large, because the creditors are always really the 1%; the debtors are the 99%.
And if you think of economies, when you say, how does an economy benefit, you realize that, well, if the economy is 1% creditors and 99% debtors, you are dealing with a bifurcation there.
And you have to realize that the creditors usually occupy the government, and they claim we are the country. And the 99% are not very visible.
Democracy can only be afforded if they population’s voting has no effect at all on the government, that it’s only symbolic. You can vote exactly which oligarch you want to rule your country. Ever since Rome that was the case, and it’s the case today.
Is there really any difference between the Republicans and Democrats in terms of their policy? When you the same central bank bureaucracy, the same State Department blob, the same military-industrial complex, the same Wall Street control, what does democracy mean in a situation like that?
The only way that you can have what democracy aims at is to have a government strong enough to check the financial interests, to check the 1%, acting on behalf of the 99%. And that’s what socialism is.
BENJAMIN NORTON:
Very well said.
Here is another brief question from patreon.com/multipolarista – people can become a patron and help support the show over there.
This question, Professor Hudson, is about the proposal of an excess profits tax as an alternative to try to contain inflation. What do you think about the proposal of an excess profits tax?
MICHAEL HUDSON:
Well, only the little people make profits. If you’re a billionaire, you don’t want to make a profit; you want to essentially take all of your return in the form of capital gains. That’s where your money is.
And the way you avoid making a profit is you establish an offshore bank or creditor, and you pay out all of your profits in the form of interest, which an expense. You expense all of what used to be, what really is, income. And you show no profits at all.
I don’t think Amazon has ever made a profit. You have huge, the biggest corporations, with all the capital gains, have no profits. Tesla is a gigantic stock market presence, and it doesn’t make a profit.
So the key is capital gains, is financial gains, stock market gains, gains in real estate prices, unearned income. That’s what the free lunch is.
You want to prevent profits being paid out in the form of interest. So I would vastly increase profits, by saying you cannot deduct interest as a business expense. It’s not a business expense. It’s a predatory parasitic expense. So you’re going to have to declare all of this as profit, and pay interest on it.
Pricing your output from a foreign offshore banking center, so that you don’t seem to make any profit, like Apple does, pretending to make all its money in Ireland, you can’t do that anymore. You’re going to have to pay a real return.
So the accounting profession has made profits essentially tax free. So the pretense of making money by taxing profits avoids talking about capital gains and all of fictitiously low profits that are simply pretended not to be profit, like interest, depreciation, amortization, offshore earnings, management fees.
All of these should be counted as profits, and taxed as such as they were, I’d say back at the Eisenhower administration levels.
BENJAMIN NORTON:
And finally, the last question here, Professor Hudson, someone asked about the U.S. government pressuring countries in Africa not to buy Russian wheat. And the U.S. is, of course, claiming that this wheat is supposedly stolen from Ukraine.
I know this could be a long point of discussion; it could be the entire interview. And I know you have to go soon. But just concluding here, I’m wondering if you could comment.
The United Nations itself has warned that there could be a famine, especially in Global South nations.
What do you think the role of these neoliberal policies and Western sanctions are in fueling that potential crisis?
MICHAEL HUDSON:
Well, the wealthiest families in the world used to go every year, now they go every few years, to Davos, to Klaus Schwab’s Davos World Economic Forum. And they say, the world is overpopulated; we need about 2 billion human beings to starve, preferably in the next year or two.
So it’s as if the wealthy families have got together and say, how can we thin out the population that really we, the 1%, don’t need?
And in all of their policies, it is as if they’ve decided to follow the World Economic Forum and deliberately shrink the world population, especially in Africa and Latin America.
Remember, these are white people at the World Economic Forum, and that is their idea of how to retain equilibrium.
They’re always talking about “equilibrium,” and equilibrium is going to be for countries that cannot afford to grow their own food, because they have put their money into plantation crops and cotton to sell to the West, instead of feeding themselves – they’re just going to have to starve to contribute to world “equilibrium.”
BENJAMIN NORTON:
And while we’re on the subject of the World Economic Forum, I guess I should just briefly add – we’ve talked about this a little bit, but I just feel remiss not mentioning it – it’s interesting to see how right-wingers have seized on the World Economic Forum and begun criticizing it a lot.
Obviously, it’s worth criticizing. It’s a horrible neoliberal institution that represents the Western capitalist class. But we’ve even seen, you know, Glenn Beck, the right-winger, former Fox News host, he published a book about the Great Reset and the World Economic Forum.
I’m just wondering really quickly if you could respond to the idea that the World Economic Forum is like some “socialist” organization. Obviously, it’s the exact opposite.
But what do you say to these conservatives who have a right-wing critique of the World Economic Forum, and think it’s like secretly socialist, and Biden is a socialist.
MICHAEL HUDSON:
They look at any government or managerial power as socialist, not drawing the distinction between socialism and oligarchy.
The question is government power can be either right-wing or left-wing, and to say that any government power is socialist is just degrading the word.
However, as I mentioned before, almost all of the European “socialist” parties are neoliberal. Tony Blair was the head of something that called itself the British Labour Party. Gordon Brown was the head of the British Labour Party.
You can’t be more neoliberal and oligarchic than that. And that’s why Margaret Thatcher said her greatest success was creating Tony Blair.
You have the same thing in France; the French “socialists” are on the right-wing of the spectrum. The Greek “socialist” party, on the right-wing of the spectrum.
You have “socialist” parties around the world being neoliberalized.
So what does the word socialism mean? You want to go beyond labels into the essence.
And the question is, in whose interest is the government going to be run for? Will it be run for the 1% or the 99%?
And the right wing wants to say, well, the 1% can be socialist, because they’re taking over the government and that’s the big government, and we’re against it.
Well, the right-wing is taking over the government, but it’s not really what the world meant by socialism a century ago.
BENJAMIN NORTON:
Yeah, very well said. I just always laugh when I see these right-wing critiques of the World Economic Forum. I mean, the World Economic Forum is the embodiment of capitalism. It is the group of the elite capitalists who get together to talk about how they can exploit the working class and help monopolize the global economy on behalf of Western capital.
So with that said, there still are many questions, but I know you have to go, and we’re already at an hour and a half.
I do want to thank everyone who joined. We’re at 1200 viewers right now, so it has been a really good response.
Professor Hudson, you’re very popular. You should do your own YouTube channel. Maybe we can talk about that, because every time I have you on, it’s always an amazing response that I get. And hopefully we can do this again more in future.
Aside from people going to your website, michael-hudson.com, is there anything else that you want to plug before we conclude?
MICHAEL HUDSON:
Well, the book that I just wrote, “The Destiny of Civilization,” is all about what we’ve been talking about. It’s about the world’s split between neoliberalism and socialism. So that was just published and is available on Amazon. And I have two more books that are coming out very shortly.
BENJAMIN NORTON:
Yeah, for people who are interested, I did an interview with Professor Hudson here at Multipolarista a few weeks ago about his new book, The Destiny of Civilization: Finance Capitalism, Industrial Capitalism or Socialism.”
And of course, anyone who wants to support this show, you can go to patreon.com/multipolarista. And as always, this will be available as a podcast, if you want to listen to the interview again. I’m certainly going to listen to this discussion again. You can find that anywhere there are podcasts.
Professor Hudson, it’s always a real pleasure. Thanks so much for joining me.
MICHAEL HUDSON:
I enjoyed the discussion.
BENJAMIN NORTON:
And like I said earlier at the beginning, for me, I truly think it’s always a privilege, because I do think you’re one of the greatest living economists. So I always feel very privileged to have the opportunity to pick your brain about all of these questions.
And I want to thank everyone who commented, who watched, and who listened. I will see you all next time.
Gustavo Petro becomes Colombia’s first leftist president after receiving 50.47% of the votes in the second round of the country’s presidential election.
Colombia’s new President Gustavo Petro and his Vice President Francia Marquez (Archive)
Gustavo Petro was elected the first ever left-wing president of Colombia on Sunday, after beating millionaire businessman Rodolfo Hernandez in a tense and unpredictable runoff election.
With all votes counted, Petro – the 62-year-old former mayor of Bogota – won with 50.4% compared to Hernandez’s 47.3%.
“As of today, Colombia is changing, a real change that guides us to one of our aims: the politics of love … of understanding and dialogue,” Petro said.
Hoy es dia de fiesta para el pueblo. Que festeje la primera victoria popular. Que tantos sufrimientos se amortiguen en la alegria que hoy inunda el corazon de la Patria.
Esta victoria para Dios y para el Pueblo y su historia. Hoy es el dia de las calles y las plazas.
Hernandez, 77, accepted the result, in which he came up short by 700,000 votes, in a Facebook live broadcast.
“I hope that Mr. Gustavo Petro knows how to run the country and is faithful to his discourse against corruption,” he said.
Speaking to supporters at his party headquarters in Bogota, Petro stressed that “this is not a change to deepen sectarianism in Colombia. The change consists precisely of leaving hatred behind, leaving sectarianism behind.”
“We want a Colombia that through its diversity is one Colombia,” he added.
Colombia’s first black woman vice president
In the same context, Francia Marquez, 40, will become Colombia’s first black woman Vice President.
“The great challenge that all of us Colombians have is reconciliation,” said Marquez, adding that “the time has come to build peace, a peace that implies social justice.”
Leftist leaders congratulate Petro
Leftist leaders in the Latin American region were quick to congratulate Petro.
“Gustavo Petro’s victory is historic. Colombia’s conservatives have always been tenacious and tough,” tweeted Mexico’s President Andres Manuel Lopez Obrador.
El triunfo de Gustavo Petro es histórico.
Los conservadores de Colombia siempre han sido tenaces y duros. El escritor José María Vargas Vila relataba que los dictadores de su país "mojaban en agua bendita su puñal antes de matar". 1/3
Hernandez, 77, accepted the result, in which he came up short by 700,000 votes, in a Facebook live broadcast.
“I hope that Mr. Gustavo Petro knows how to run the country and is faithful to his discourse against corruption,” he said.
Speaking to supporters at his party headquarters in Bogota, Petro stressed that “this is not a change to deepen sectarianism in Colombia. The change consists precisely of leaving hatred behind, leaving sectarianism behind.”
“We want a Colombia that through its diversity is one Colombia,” he added.
Colombia’s first black woman vice president
In the same context, Francia Marquez, 40, will become Colombia’s first black woman Vice President.
“The great challenge that all of us Colombians have is reconciliation,” said Marquez, adding that “the time has come to build peace, a peace that implies social justice.”
Leftist leaders congratulate Petro
Leftist leaders in the Latin American region were quick to congratulate Petro.
“Gustavo Petro’s victory is historic. Colombia’s conservatives have always been tenacious and tough,” tweeted Mexico’s President Andres Manuel Lopez Obrador.
El triunfo de Gustavo Petro es histórico.
Los conservadores de Colombia siempre han sido tenaces y duros. El escritor José María Vargas Vila relataba que los dictadores de su país "mojaban en agua bendita su puñal antes de matar". 1/3
Chile’s President Gabriel Boric said, “Joy for Latin America! We will work together for the unity of our continent in the challenges of a world-changing rapidly.”
Similarly, Venezuela’s President Nicolas Maduro considered that “the will of the Colombian people has been heard, it went out to defend the path to democracy and peace.”
Felicito a Gustavo Petro y a Francia Márquez, por la histórica victoria en las elecciones Presidenciales en Colombia. Se escuchó la voluntad del pueblo colombiano, que salió a defender el camino de la democracia y la Paz. Nuevos tiempos se avizoran para este hermano país. pic.twitter.com/FxodCn9Uqx
Meanwhile, US Secretary of State Antony Blinken congratulated “the people of Colombia for making their voices heard in a free and fair presidential election.”
Tough challenge for the new President
The electoral observer mission said one of Petro’s election monitors and a soldier were killed, both in the south.
Petro will have to deal with a country reeling economically from the coronavirus pandemic, a spike in drug-trafficking-related violence, and deep-rooted anger at the political establishment that spilled over into mass anti-government protests in April 2021.
Almost 40% of the country lives in poverty, while 11% are unemployed.
It is noteworthy that the new Colombian President was born on April 19, 1960, and is a well-known politician, economist, and activist who, in his youth, joined the April 19 Movement – a militant faction that participated in the internal armed conflict between 1974-1990.
On May 16, the Biden administration announced new measures to “increase support for the Cuban people.” They included easing travel restrictions and helping Cuban-Americans support and connect with their families. They mark a step forward but a baby step, given that most U.S. sanctions on Cuba remain in place. Also in place is a ridiculous Biden administration policy of trying to isolate Cuba, as well as Nicaragua and Venezuela, from the rest of the hemisphere by excluding them from the upcoming Summit of the Americas that will take place in June in Los Angeles.
This is the first time since its inaugural gathering in 1994 that the event, which is held every three years, will take place on U.S. soil. But rather than bringing the Western Hemisphere together, the Biden administration seems intent on pulling it apart by threatening to exclude three nations that are certainly part of the Americas.
For months, the Biden administration has been hinting that these governments would be excluded. So far, they have not been invited to any of the preparatory meetings and the Summit itself is now less than a month away. While former White House press secretary Jen Psaki and State Department spokesman Ned Price have repeated that “no decisions” have been made, Assistant Secretary of State Brian Nichols said in an interview on Colombian TV that countries that “do not respect democracy are not going to receive invitations.”
Biden’s plan to pick and choose which countries can attend the Summit has set off regional fireworks. Unlike in the past, when the U.S. had an easier time imposing its will on Latin America, nowadays there is a fierce sense of independence, especially with a resurgence of progressive governments. Another factor is China. While the U.S. still has a major economic presence, China has surpassed the U.S. as the number one trading partner, giving Latin American countries more freedom to defy the United States or at least stake out a middle ground between the two superpowers.
The hemispheric reaction to the exclusion of three regional states is a reflection of that independence, even among small Caribbean nations. In fact, the first words of defiance came from members of the 15-nation Caribbean Community, or Caricom, which threatened to boycott the Summit. Then came regional heavyweight, Mexican President Manuel López Obrador, who stunned and delighted people around the continent when he announced that, if all countries were not invited, he would not attend. The presidents of Bolivia and Honduras soon followed with similar statements.
The Biden administration has put itself in a bind. Either it backs down and issues the invitations, tossing red meat to right-wing U.S. politicians like Senator Marco Rubio for being “soft on communism,” or it stands firm and risks sinking the Summit and U.S. influence in the region.
Biden’s failure at regional diplomacy is all the more inexplicable given the lesson he should have learned as vice president when Barack Obama faced a similar dilemma.
That was 2015, when, after two decades of excluding Cuba from these Summits, the countries of the region put down their collective feet and demanded that Cuba be invited. Obama had to decide whether to skip the meeting and lose influence in Latin America, or go and contend with the domestic fallout. He decided to go.
Cristobal Marquez, owner of “Cristobal’s,” the restaurant where Michelle and Barak Obama had lunch during their visit to Cuba in 2016, shows the book made by White House photographer Pete Souza, in Havana, Cuba. Ramon Espinosa | AP
I remember that Summit vividly because I was among the bevy of journalists jostling to get a front seat when President Barack Obama would be forced to greet Cuba’s President Raúl Castro, who came into power after his brother Fidel Castro stepped down. The momentous handshake, the first contact between leaders of the two countries in decades, was the high point of the summit.
Obama was not only obligated to shake Castro’s hand, he also had to listen to a long history lesson. Raúl Castro’s speech was a no-holds-barred recounting of past U.S. attacks on Cuba—including the 1901 Platt Amendment that made Cuba a virtual U.S. protectorate, U.S. support for Cuban dictator Fulgencio Batista in the 1950s, the disastrous 1961 Bay of Pigs invasion and the scandalous U.S. prison in Guantanamo. But Castro was also gracious to President Obama, saying he was not to blame for this legacy and calling him an “honest man” of humble origins.
The meeting marked a new era between the U.S. and Cuba, as the two nations began to normalize relations. It was a win-win, with more trade, more cultural exchanges, more resources for the Cuban people, and fewer Cubans migrating to the United States. The handshake led to an actual visit by Obama to Havana, a trip so memorable that it still brings big smiles to the faces of Cubans on the island.
Then came Donald Trump, who skipped the next Summit of the Americas and imposed draconian new sanctions that left the Cuban economy in tatters, especially once COVID hit and dried up the tourist industry.
Until recently, Biden has been following Trump’s slash-and-burn policies that have led to tremendous shortages and a new migration crisis, instead of reverting to Obama’s win-win policy of engagement. The May 16 measures to expand flights to Cuba and resume family reunifications are helpful, but not enough to mark a real change in policy—especially if Biden insists on making the Summit a “limited-invite only.”
Biden needs to move quickly. He should invite all the nations of the Americas to the Summit. He should shake the hands of every head of state and, more importantly, engage in serious discussions on burning hemispheric issues such as the brutal economic recession caused by the pandemic, climate change that is affecting food supplies, and the terrifying gun violence–all of which are fueling the migration crisis. Otherwise, Biden’s #RoadtotheSummit, which is the Summit’s Twitter handle, will only lead to a dead end.
Feature photo | President Joe Biden and first lady Jill Biden wave to reporters before boarding Air Force One at Andrews Air Force Base, Md., May 17, 2022. Gemunu Amarasinghe | AP
Medea Benjamin is the co-founder of the peace group CODEPINK. She is the author of ten books, including three books on Cuba—No Free Lunch: Food and Revolution in Cuba, The Greening of the Revolution, and Talking About Revolution. She is a member of the Steering Committee of ACERE (Alliance for Cuba Engagement and Respect).
The views expressed in this article are the author’s own and do not necessarily reflect MintPress News editorial policy.
Rublegas is the commodity currency du jour and it isn’t nearly as complicated as NATO pretends. If Europe wants gas, all it needs to do is send its Euros to a Russian account inside Russia.
Saddam, Gaddafi, Iran, Venezuela – they all tried but couldn’t do it. But Russia is on a different level altogether.
The beauty of the game-changing, gas-for-rubles, geoeconomic jujitsu applied by Moscow is its stark simplicity.
Russian President Vladimir Putin’s presidential decree on new payment terms for energy products, predictably, was misunderstood by the collective west. The Russian government is not exactly demanding straightforward payment for gas in rubles. What Moscow wants is to be paid at Gazprombank in Russia, in its currency of choice, and not at a Gazprom account in any banking institution in western capitals.
That’s the essence of less-is-more sophistication. Gazprombank will sell the foreign currency – dollars or euros – deposited by their customers on the Moscow Stock Exchange and credit it to different accounts in rubles within Gazprombank.
What this means in practice is that foreign currency should be sent directly to Russia, and not accumulated in a foreign bank – where it can easily be held hostage, or frozen, for that matter.
All these transactions from now on should be transferred to a Russian jurisdiction – thus eliminating the risk of payments being interrupted or outright blocked.
It’s no wonder the subservient European Union (EU) apparatus – actively engaged in destroying their own national economies on behalf of Washington’s interests – is intellectually unequipped to understand the complex matter of exchanging euros into rubles.
Gazprom made things easier this Friday, sending official notifications to its counterparts in the west and Japan.
Putin himself was forced to explain in writing to German Chancellor Olaf Scholz how it all works.
Once again, very simple: Customers open an account with Gazprombank in Russia. Payments are made in foreign currency – dollars or euros – converted into rubles according to the current exchange rate, and transferred to different Gazprom accounts.
Thus it is 100 percent guaranteed that Gazprom will be paid.
That’s in stark contrast to what the United States was forcing the Europeans to do: pay for Russian gas in Gazprom accounts in Europe, which would then be instantly frozen. These accounts would only be unblocked with the end of Operation Z, Russia’s military ops in Ukraine.
Yet the Americans want the war to go on indefinitely, to “bog down” Moscow as if this was Afghanistan in the 1980s, and have strictly forbidden the Ukrainian Comedian in front of a green screen somewhere – certainly not Kiev – to accept any ceasefire or peace deal.
So Gazprom accounts in Europe would continue to be frozen.
As Scholz was still trying to understand the obvious, his economic minions went berserk, floating the idea of nationalizing Gazprom’s subsidiaries – Gazprom Germania and Wingas – in case Russia decides to halt the gas flow.
This is ridiculous. It’s as if Berlin functionaries believe that Gazprom subsidiaries produce natural gas in centrally heated offices across Germany.
The new rubles-for-gas mechanism does not in any way violate existing contracts. Yet, as Putin warned, existing contracts may indeed be stopped: “If such [ruble] payments are not made, we will consider this to be the buyers’ failure to perform commitments with all ensuing implications.”
Kremlin spokesman Dmitri Peskov was adamant that the mechanism will not be reversed under the current, dire circumstances. Still that does not mean that the gas flow would be instantly cut off. Payment in rubles will be expected from ‘The Unfriendlies’ – a list of hostile states that includes mostly the US, Canada, Japan and the EU – in the second half of April and early May.
For the overwhelming majority of the Global South, the overarching Big Picture is crystal clear: an Atlanticist oligarchy is refusing to buy the Russian gas essential to the wellbeing of the population of Europe, while fully engaged in the weaponization of toxic inflation rates against the same population.
Beyond Rublegas
This gas-for-rubles mechanism – call it Rublegas – is just the first concrete building block in the construction of an alternative financial/monetary system, in tandem with many other mechanisms: ruble-rupee trade; the Saudi petroyuan; the Iran-Russia SWIFT- bypassing mechanism; and the most important of all, the China-Eurasia Economic Union (EAEU) design of a comprehensive financial/monetary system, with the first draft to be presented in the next few days.
After the predictable initial stages of denial, the EU – actually, Germany – must face reality. The EU depends on steady supplies of Russian gas (40 percent) and oil (25 percent). The sanction hysteria has already engineered certified blowback.
Natural gas accounts for 50 percent of the needs of Germany’s chemical and pharmaceutical industries. There’s no feasible replacement, be it from Algeria, Norway, Qatar or Turkmenistan. Germany is the EU’s industrial powerhouse. Only Russian gas is capable of keeping the German – and European – industrial base humming and at very affordable prices in case of long-term contracts.
Disrupt this set up and you have horrifying turbulence across the EU and beyond.
The inimitable Andrei Martyanov has summed it up this way: “Only two things define the world: the actual physical economy, and military power, which is its first derivative. Everything else are derivatives but you cannot live on derivatives.”
The American turbo-capitalist casino believes its own derivative “narrative” – which has nothing to do with the real economy. The EU will eventually be forced by reality to move from denial to acceptance. Meanwhile, the Global South will be fast adapting to the new paradigm: the Davos Great Reset has been shattered by the Russian Reset.
The views expressed in this article do not necessarily reflect those of The Cradle.
Following Putin’s announcement about selling gas for Rubles only to hostile nations, I decided to reach out to Michael Hudson and ask him (my level, primitive) questions. Here is our full email exchange:
Andrei: Russia has declared that she will only sell gas to “hostile countries” for Rubles. Which means that to non-hostile countries she will continue to sell in Dollars/Euros. Can these hostile countries still purchase gas from Russia but via third countries?
Michael Hudson: There seem to be two ways for hostile countries to buy Russian gas. One seems to be to use Russian banks that are not banned from SWIFT. The other way would indeed seem to be to go through what looks to develop as a formal or informal third-country bank or exchange. India and China would seem to be the best positioned for this role. U.S. diplomats will be pressing India to impose its own sanctions on Russia, and there is a strong pro-U.S. constituency there. But even Modi sees the obvious superior benefits of benefiting from India’s geopolitical position with Russia and China’s Belt and Road Initiative relative to whatever the U.S. has to
Back in the 1960s the West dealt with the Soviet Union using barter deals. Arranging this barter became a big banking business. Barter is the typical “final stage” of the deterioration of a credit economy into a money economy that breaks down. Over the medium term, a new international financial organization needs to be created as an alternative to the dollarized IMF to handle such intra-bloc transactions in today’s new multipolarizing world.
Andrei: These hostile nations would pay extra for that service, but they would not have to get Rubles. Is that even possible?
Michael Hudson: Presumably Russia would not absorb the added bank costs of avoiding U.S. sanctions. It would simply add them on to the price, after setting the price at which it hopes to end up with – preferably at the original “old” ruble/euro or ruble/dollar exchange rate, not the post-attack depreciated rate.
Andrei: Question: Do you believe that the EU will agree to pay Roubles or will they take the total loss of 40% of their energy?
Michael Hudson: They will pay – or be voted out of office. If they WERE to cut their energy imports from Russia, the distress-price of gas would soar and there would be drastic shortages disrupting the economy. Energy is productivity and GDP. For Russia, of course, this is an opportunity to make the break now instead of later – and leave NATO to take the blame for the interruption of supply. So if I were Russia, I would not be in a hurry to help solve the foreign-payment problem. The same goes for non-oil raw materials, from neon to palladium to titanium, nickel and aluminum.
Andrei: So far, this applies only to natural gas. Do you believe that Russia will extend this to petroleum, wheat and fertilizers and, if yes, what will the effect from this be for the world economy?
Michael Hudson: All Russian exports are affected by these currency controls, because all bank transfers are sanctioned in the way discussed above. Russia has no use for dollars or euros, because these can be grabbed. It needs to have complete control over whatever monetary assets it receives, now that past norms of international law and financial policy no longer apply.
Andrei: Russia has A LOT of natural resources and a lot of technologies/commodities. If she is successful in her efforts to become paid in Rubles, could it be that the Ruble, which would then be a natural resources/ commodities backed currency, could become a major “refuge” currency.
Michael Hudson: I’m not sure what a “refuge” currency is, but the ruble will become a self-standing currency. If its balance of trade and payment improves, the problem may be to keep it from rising. If that happens, the question will be whether a rising ruble would oblige buyers of Russian exports to pay more in their own currency. A new multilateral financial system is in the process of being structured as we’re having this discussion. Will there be speculation? Forward selling? Short squeezes and Soros-type raids? Who will be the participants and under what rules …?
Andrei: How hard a hit would this Russian decision potentially have on the dollar? And MBS negotiating with the PRC for oil sales in Renminbi. Do you think that China and Russia will bring down the Petrodollar and will we see a commodities-backed Ruble and a commodities-backed Yuan replacing the Dollar?
Michael Hudson: The petrodollar will remain between the United States and its allies. But alongside it, there will be the Saudi-yuan and India-yuan arrangements for trade in oil, minerals, industrial products and probably international investment. Trade in these products will be able to occur in a number of currencies, probably on a number of exchanges. It is not clear whether some formal or informal arbitrage may develop between these areas. That is part of what is to be designed. To oversee and regulate the resulting financial and trade arrangements, an alternative to the IMF is needed. The U.S. will not join any organization in which it does not have veto power, so we will see a division of the world into different trading and monetary areas. The result is not so much a conflict as two quite different operating philosophies as the non-U.S. world develops its alternative to financialized neoliberalism.
Andrei: The US has basically stolen Russian gold and foreign currency. The Russians claim that the US has shot itself in the foot and that this will ruin the reputation of the dollar, do you agree with that?
Michael Hudson: Absolutely: Iran after the Shah was overthrown, Afghanistan’s foreign reserves earlier this year, Venezuela’s gold held in the Bank of England, and now Russia. Even timid Germany has asked that airplanes begin flying its gold held in the New York Fed back to Germany!
Andrei: do you think that Russia will retaliate against the US/UK/EU and nationalize/seize their assets in Russia or even in countries friendly to Russia (China?)?
Michael Hudson: Russia is very careful to do everything according to international law – which, of course, has a wide variety of precedents and excuses, and whose courts tend to be dominated by U.S. judges backing U.S. versions of what is legal under whatever it announces to be the “rules-based order of the day” instead of the “rule of law” along UN lines. To the extent that NATO investors abandon their assets in Russia, these may be sold – perhaps at a distress discount – to buyers who promise to maintain the business. Russia might impose severe fines for abandonment, as when landlords abandon buildings causing local expenditures on cleanup costs. Abandonment causes a “public nuisance.”
This would be a cause for immediate confiscation of current taxes, rent payments and salaries or payments for current supplies (including electricity and fuel) are not paid. Think what would happen if the gas bill were not paid and pipes froze and flooded a property. There is an entire world of penalties that could be applied.
International law provides for some recovery of assets wrongly confiscated – as the U.S. confiscations of Russian-owned reserves and personal property would seem to be. At this point Russia really has nothing to lose. It looks like there is not going to be much Russian-European cross investment for quite some time. Russia finally has given up on its hopes to “turn West” after 1991. It was a dream that turned into a nightmare, and President Putin and Lavrov have expressed their disgust with Europe acting in so uncivilized a matter. So for Russia – and increasingly other countries – NATO Europe and North America are the new barbarians at the gate. Russia is turning
That of course is precisely the aim of U.S. policy – to lock Europe into its own dollarized neoliberal order, blocking any mutual prosperity achieved by trade and investment with Russia or, behind it, with China. It looks like today’s sanctions are permanent for the next few years. So of course Russia needs to keep formerly NATO-owned enterprises operating. Let the NATO investors recover compensation from what the United States has grabbed. (Hint: the U.S. may simply begin to grab China’s or Latin American or near Eastern reserves to pay NATO investors who have lost in Russia. That is the model of using Afghan money to pay victims of Saudi Arabia’s 9/11 attack two decades ago.)
Andrei: finally, what question, if any, did I forget to ask and what would you reply to it?
Michael Hudson: Your questions are about specific problems and solutions. But the overall resolution needs to be system-wide, not patchwork. These specific problems cannot really be solved without a far-reaching institutional restructuring of the international financial system, world trade, a world court, and a UN without US veto power. And such an institutional reformation requires an economic doctrine to provide its basic principles. A New International Economic Order will be constructed on non-neoliberal principles – along the lines of what used to be called socialism, when that was what people expected industrial capitalism to be evolving into.
Andrei: thank you so much for your time and expertise!!
Colombia’s Leftist candidate Gustavo Petro, the front-runner for Colombia’s May Presidential elections, has secured the nomination of the left-wing coalition
Colombian presidential candidate Gustavo Petro
The front-runner for Colombia’s presidential election has secured his nomination by the left-wing Historic Pact coalition, putting the country on a track that may mark a historic first.
Gustavo Petro, a former guerrilla in the M-19 rebel group, may become Colombia’s first leftist president.
Petro won more than 80% in the Historic Pact primary, while his main contenders for the presidency, right-winger Federico Gutierrez and Centrist Sergio Fajardo, won 54% and just under 33% of the votes of their respective groupings.
As Colombia’s Congress is split among a number of parties, presidents are forced to build big-tent coalitions if they want to pass legislation.
In the last elections in 2018, Petro lost to incumbent President Ivan Duque, in the second round.
The Left’s first president?
Colombia has always been ruled by the political right, yet polls show that Petro stands a real chance of winning.
Bogota’s distrust of the left is associated with its experience with FARC (Revolutionary Armed Forces of Colombia), which the US removed from its list of foreign terrorist groups a few months ago, and other rebel groups that fought the government in a six-decade-long civil conflict.
Since Petro’s first run for president in 2010, two controversies took place that won him additional fans and enemies:
The first is his relationship with Venezuelan President Hugo Chavez, and his successor Nicolas Maduro. Petro was captivated by Venezuela’s ideals, but later distanced himself from Chavez. However, when Petro attended his funeral in 2013, he wondered aloud “Why did I distance myself from him?”
The second is his time as mayor of Bogota, when he challenged the establishment during his administration and was bent on standing up against the ruling class, despite many issues and lawsuits, through which he made a number of enemies.
Everybody and his goat are talking about the Ukraine. Why not me? You might ask, But Fred, what do you know about it? To which I would respond, Look, this is journalism. You don’t need to know anything, just wing it, preferably using words you can spell. Admittedly this is more of a limitation than it used to be. Anyway, here goes:
Why did Russia invade the Ukraine? Contrary to American media, the invasion was not unprovoked. Since the collapse of the Soviet Union in 1991, America has been pushing NATO, which is a US sepoy operation, ever closer to Russian borders in what, to anyone who took fifth-grade geography, is an obvious program of military encirclement. Of the five countries other than Russia littoral to the Black Sea, three, Turkey, Romania, and Bulgaria, are now in NATO. America has been moving toward bringing in the Ukraine and Georgia. After Georgia would have come Azerbaijan, putting American forces on the Caspian with access to Iran and Kazakhstan. This is calculated aggression over the long term, obvious to the—what? Ten percent? Fifteen percent?—of Americans who know what the Caucasus is.
Putin has said, over and over, that Russia could not allow hostile military forces on its border any more than the US would allow Chinese military bases in Mexico and China or missile forces in Cuba. Washington kept pushing. Russia said, no more. In short, America brought on the war.
Among people who follow such things, there are two ways of looking at the invasion. First, that Washington thought Putin was bluffing, and he wasn’t. Second, that America intentionally forced Russia to choose between allowing NATO into the Ukraine, a major success for Washington’s world empire; or fighting, also a success for Washington as it would cause the results it has caused.
From the latter understanding, America pulled off, at least at first glance, an astonishing geopolitical victory over Russia. Nordstream II blocked, crippling sanctions placed on Russia, many of its banks kicked out of SWIFT, economic integration of Europe and Asia slowed or reversed, Germany to spend 113 billion on rearming (largely meaning buying American costume-jewelry weaponry), Europe forced to buy expensive American LNG, and Europe made dependent on America for energy. All this in a few days without loss of a single American soldier. This presumably at least in part engineered by Virginia Newland who, though she looks like a fireplug with leprosy, seems effectively Machiavellian.
Next victim, China. Divide and conquer. Or at least that’s the theory. At the same time reinstate the JCPOA and use economic baubles to try to pry Iran away from Beijing.
Here we need some context. Everything Washington does internationally aims at maintaining America’s largely military near-hegemony over the world. This involves several elements:
First, military dominance. This includes the many hundreds of bases around the world, naval supremacy, and the huge military expenditure. Thy latter will be maintained at any cost to domestic needs, and apparently it is going to be increased.
Second, control of the world’s supply of energy. Washington is trying to starve Venezuela, with its vast reserves of petroleum, into submission. Submission means letting American-dominated oil majors exploit the country’s oil. Washington is doing the same with Iran and its enormous reserves. It has troops in Kuwait and Saudi Arabia, has confiscated Syria’s oil lands, crushed Libya, and so on. Keeping the European vassals from buying more Russian gas through Nordstream II is part of this energy control and an important part.
Third, and crucial, keep Eurasia—note the “EU”—from coalescing into a vast continent-spanning trade zone, which is exactly what China contemplates in its BRI, Belt and Road initiative. This is too much subject for a few paragraphs, but some thoughts: China is a manufacturing juggernaut in explosive growth. Economic power is the basis of all power. China has the advantage of inner lines of communication: it can build rail, fiber optics, highway,s and pipelines in Asia, where America has little access. China has money because it has a for-profit economy, and America doesn’t. The pull of China’s gigantic market and manufactures was beginning to loosen America’s control of Europe. Eurasian integration had to be stopped.
Fourth, the dollar. Washington controls the dollar, the IMF, SWIFT, and in general the international financial system. It uses this control brutally as a weapon to impose sanctions, crippling the economies of such countries as Venezuela, Iran, Cuba, North Korea, and now Russia. Seeing this intimidates other countries. Washington may have gone too often to this well. Having made England, its chief bootlicker, confiscate Venezuela’s gold reserves, and now freezing Russia’s reserves, Washington has served notice that no country is secure from this treatment. Here I speculate freely, but this may prove America’s worst mistake since 1619 as it may greatly accelerate the search for other payment systems—CIPS from China, SPFS from Russia, and the upcoming digital yuan. Washington, methinks, is betting the farm.
So much for the world. Meanwhile, America seems to be sinking into irreversible decadence that muss eventually—I would say soon—affect its international position. As the world’s economic and, laggingly, technological center of gravity moves east to Asia, an internally collapsing America will be less able to maintain the empire. Consider:
Washington’s printing of money, equivalent to the debasing of the coinage characteristic of failing societies, has resulted in high inflation and a potentially catastrophic national debt. This will cause political perturbation as voters seek to find which of the two essentially identical parties will not behave like the other one. Unrest will grow. Trust abroad in the dollar will decrease.
America suffers from a massive and growing trade deficit, largely with China, about which nothing can be done, certainly not soon, because America no longer makes things it needs. Manufacturing cannot be brought back, excep perhaps in niche markets like semiconductors, because the US no longer has the necessary engineers and trained work force, and American labor costs more than Chinese, so reshoring would increase inflation. The importation of cheap Chinese products keeps inflation down,.
The heavy flow of national wealth into Wall Street and the military in addition to offshoring has led to real poverty in Appalachia, the Rust Belt, and the rural Deep South. This has produced some 100,000 opioid deaths annually in despairing populations. Simultaneously large and growing homeless aggregations appear in LA, Seattle, San Francisco, Austin, St. Louis, on and on, estimated at 60,000 in LA and 50,000 in New York, making the subways dangerous. Bush world conditions presumably do not make for political stability, as neither does the governmental inattention to them.
Crime is out of control, not a sign of a healthy polity. Some 700 homicides annually in Chicago, 300 in Baltimore, and similar numbers elsewhere are now routine, almost all of the killers and killed being black. To countries like Japan and South Korea this must seem barbaric. The situation is not First World.
America’s racial problem is grave. The southern border is open, the southwestern states either majority Latino or soon to be. This is not as bad as it could be as the races seem to get along, but it imposes heavy economic and other costs. At the same time across the country cities have huge black ghettos with appalling semiliteracy, no prospects for the young, all of this apparently irremediable. Racial attacks on whites and Asians grow in number and so, almost everywhere, do racial killings, mostly by blacks. Governments at all levels fear blacks who they know will burn cities if provoked, which leads tax bases to flee from cities, making things worse.
This adds to potentially explosive resentment. There is a substantial White Nationalist movement, that wants no non-whites in America (a bit late for this), Republican Chambers of Commerce, that want more illegal Latinos for the cheap labor but won’t say so, and the high-tech sector, which wants more East Asian and Indian immigrants on which America, with a failing educational system, increasingly depends.
Overall, government is weak, unable to prevent crime, riots, and looting. Washington does not control, but is controlled, being a storefront operation for special interests. Elections do not change policy but only the division of the spoils. Presidents perform their three essential duties, protecting Wall Street, Israel, and the military budget, but not much else.
Schooling is being dumbed down in stark contrast with China. Excellence everywhere is discouraged in the name of equity. Native white talent dwindles in the elite schools, from high-end high schools through CalTech, as Asian majorities predominate. Measures of talent, such as SATs and Medcats, are dropped or downplayed. English grammar and arithmetic are dropped as racist. None of this seems likely to improve America’s future competitiveness.
Finally, the media are controlled. This allows Washington freedom of action abroad as enough of the public will believe anything they are told by television (The Russians are coming, the Chinese are coming, the Iranians are coming, the Guatemalans….) Internally censorship may keep the lid on, for now anyway, by keeping enough of the population from knowing what is going on. By preventing discussion of problems, or their mention, it assures that nothing will be done. I suspect this is having the effect of winding a spring.
Where is all of this leading?
Biden is playing as if this were 1960 and the US enjoyed rock solid military and economic superiority and the population were firmly behind him. This is the world he remembers, being an aging cold warrior. He seems to believe that he consequently can do what he pleases with no repercussions for America. This may be true, or true enough. Perhaps he believes that Russia will collapse in domestic rebellion or simply surrender to the US. It is not how I would bet.
But—and this is sheer speculation—it is not clear what would happen if Russia cut off gas and petroleum and wheat and such things as neon gas from Europe. The West is accustomed to bombing remote countries, not to going without. Would Russia collapse under privation before Europe decided it wanted to trade with Moscow after all?
If Biden and the hawks decide to play hardball with China, they may realize that America is an economic dependency of Beijing. If—again, very hypothetically—China cut off all trade with America, the US economy would die instantly. Almost everything on American shelves is made in China. An American public already very unhappy would explode, which it is on the point of doing for various reasons. Reflect on the Floyd riots. China would be hurt, but it has other markets and a nationalistic population more united than the American.
Them’s my thoughts, probably worth what you pay for them.
Washington’s ‘replacement strategy’ for sanctioned Russian oil and gas imports appears to be to cozy up to its oil-producing arch-enemies Iran and Venezuela. Photo Credit: The Cradle
The official Russian blacklist of hostile sanctioning nations includes the US, the EU, Canada and, in Asia, Japan, South Korea, Taiwan, and Singapore (the only one from Southeast Asia). Notice how that ‘international community’ keeps shrinking.
The Global South should be aware that no nations from West Asia, Latin America and Africa have joined Washington’s sanctions bandwagon.
Moscow has not even announced its own package of counter-sanctions. Yet an official decree “On Temporary Order of Obligations to Certain Foreign Creditors,” which allows Russian companies to settle their debts in rubles, provides a hint of what’s to come.
Russian counter-measures all revolve around this new presidential decree, signed last Saturday, which economist Yevgeny Yushchuk defines as a “nuclear retaliatory landmine.” .
It works like this: to pay for loans obtained from a sanctioning country exceeding 10 million rubles a month, a Russian company does not have to make a transfer. They ask for a Russian bank to open a correspondent account in rubles under the creditor’s name. Then the company transfers rubles to this account at the current exchange rate, and it’s all perfectly legal.
Payments in foreign currency only go through the Central Bank on a case-by-case basis. They must receive special permission from the Government Commission for the Control of Foreign Investment.
What this mean in practice is that the bulk of the $478 billion or so in Russian foreign debt may “disappear” from the balance sheets of western banks. The equivalent in rubles will be deposited somewhere, in Russian banks, but western banks, as things stand, can’t access it.
It is debatable whether this straightforward strategy was the product of those non-sovereignist brains gathered at the Russian Central Bank. More likely, there has been input from influential economist Sergei Glazyev, also a top former advisor to Russian President Vladimir Putin on regional integration: here is a revised edition, in English, of his groundbreaking essay Sanctions and Sovereignty, which I have previously summarized.
Meanwhile, Sberbank confirmed it will issue Russia’s Mir debit/credit cards co-badged with China’s UnionPay. Alfa-Bank – the largest private bank in Russia – will also issue UnionPay credit and debit cards. Although only introduced five years ago, 40 percent of Russians already have a Mir card for domestic use. Now they will also be able to use it internationally, via UnionPay’s enormous network. And without Visa and Mastercard, commissions on all transactions will remain in the Russia-China sphere. De-dollarization in effect.
Mr. Maduro, gimme some oil
The Iran sanctions negotiations in Vienna may be reaching the last stage – as acknowledged even by Chinese diplomat Wang Qun. But it was Russian Foreign Minister Sergei Lavrov who introduced a new, crucial variable into Vienna’s final discussions.
Lavrov made his eleventh-hour demand quite explicit: “We have asked for a written guarantee…that the current [Russian sanctions] process triggered by the United States does not in any way damage our right to free and full trade, economic and investment cooperation and military-technical cooperation with the Islamic Republic.”
As per the Joint Comprehensive Plan of Action (JCPOA) agreement of 2015, Russia receives enriched uranium from Iran and exchanges it for yellowcake, and in parallel, is reconverting Iran’s Fordow nuclear plant into a research center. Without Iranian enriched uranium exports there’s simply no JCPOA deal. It boggles the mind that US Secretary of State Blinken does not seem to understand that.
Everyone in Vienna, sidelines included, knows that for all actors to sign on the JCPOA revival, no nation must be individually targeted in terms of trading with Iran. Tehran also knows it.
So what’s happening now is an elaborate game of Persian mirrors, coordinated between Russian and Iranian diplomacy. Moscow’s Ambassador to Tehran, Levan Jagaryan, attributed the fierce reaction to Lavrov in some Iranian quarters to a “misunderstanding.” This will all be played out in the shade.
An extra element is that according to a Persian Gulf intel source with privileged Iranian access, Tehran may be selling as many as three million barrels of oil a day already, “so if they do sign a deal it will not affect supply at all, only they will be paid more.”
The US administration of President Joe Biden is now absolutely desperate: today it banned all imports of oil and gas from Russia, which happens to be the second-largest exporter of oil to the US, behind Canada and ahead of Mexico. The US’ big Russian-energy ‘replacement strategy’ is to beg for oil from Iran and Venezuela.
So, the White House sent a delegation to talk to Venezuelan President Nicolás Maduro, led by Juan Gonzalez, the White House’s top Latin America adviser. The US offer is to “alleviate” sanctions on Caracas in exchange for oil.
The United States government has spent years – if not decades – burning all bridges with Venezuela and Iran. The USG destroyed Iraq and Libya, and isolated Venezuela and Iran, in its attempt to take over global oil markets – just to end up miserably trying to buy out both and escape from being crushed by the economic forces it has unleashed. That proves, once again, that imperial ‘policy makers’ are utterly clueless.
Caracas will request the elimination of all sanctions on Venezuela and the return of all its confiscated gold. And it seems like none of this was cleared with ‘President’ Juan Guaido, who since 2019, was the only Venezuelan leader “recognized” by Washington.
Social cohesion torn apart
Oil and gas markets, meanwhile, are in total panic. No western trader wants to buy Russian gas; and that has nothing to do with Russia’s state-owned energy behemoth Gazprom, which continues to duly supply customers that signed contracts with fixed tariffs, from $100 to $300 (others are paying over $3,000 in the spot market).
European banks are less and less willing to grant loans for energy trade with Russia because of the sanctions hysteria. A strong hint that the Russia-to-Germany gas pipeline Nord Stream 2 may be literally six feet under is that importer Wintershall-Dea wrote off its share of the financing, de facto assuming that the pipeline will not be launched.
Everyone with a brain in Germany knows that two extra Liquefied natural gas (LNG) terminals – still to be constructed – will not be enough for Berlin’s needs. There is simply not enough LNG to supply them. Europe will have to fight with Asia over who can pay more. Asia wins.
Europe imports roughly 400 billion cubic meters of gas a year, with Russia responsible for 200 billion of this. There’s no way Europe can find $200 billion anywhere else to replace Russia – be it in Algeria, Qatar or Turkmenistan. Not to mention its lack of necessary LNG terminals.
So obviously the top beneficiary of all the mess will be the US – which will be able to impose not only their terminals and control systems, but also profit from loans to the EU, sales of equipment, and full access to the whole EU energy infrastructure. All LNG installations, pipelines and warehouses will be connected to a sole network with a single control room: an American business dream.
Europe will be left with reduced gas production for its – dwindling – industry; job losses; decreasing quality of life standards; increased pressure over the social security system; and, last but not least, the necessity to apply for extra American loans. Some nations will go back to coal for heating. The Green Parade will be livid.
What about Russia? As a hypothesis, even if all its energy exports were curtailed – and they won’t be, their top clients are in Asia – Russia would not have to use its foreign reserves.
The Russophobic all-out attack on Russian exports also targets palladium metals – vital for electronics, from laptops to aircraft systems. Prices are skyrocketing. Russia controls 50% of the global market. Then there are noble gases – neon, helium, argon, xenon – essential for production of microchips. Titanium has risen by a quarter, and both Boeing – by a third – and Airbus – by two thirds – rely on titanium from Russia.
Oil, food, fertilizers, strategic metals, neon gas for semiconductors: all burning at the stake, at the feet of Witch Russia.
Some Westerners who still treasure Bismarckian realpolitik have started wondering whether shielding energy (in the case of Europe) and selected commodity flows from sanctions may have everything to do with protecting an immense racket: the commodity derivatives system.
After all, if that implodes, because of a shortage of commodities, the whole western financial system blows up. Now that’s a real system failure.
The key issue for the Global South to digest is that the “west” is not committing suicide. What we have here, essentially, is the United States willfully destroying German industry and the European economy – bizarrely, with their connivance.
To destroy the European economy means not allowing extra market space for China, and blocking the inevitable extra trade which will be a direct consequence of closer exchanges between the EU and the Regional Comprehensive Economic Partnership (RCEP), the world’s biggest trade deal.
The end result will be the US eating European savings for lunch while China expands its middle class to over 500 million people. Russia will do just fine, as Glazyev outlines: sovereign – and self-sufficient.
American economist Michael Hudson has concisely sketched the lineaments of imperial self-implosion. Yet way more dramatic, as a strategic disaster, is how the deaf, dumb and blind parade toward deep recession and near-hyperinflation will rip what’s left of the west’s social cohesion apart. Mission Accomplished.
(Republished from The Cradle by permission of author or representative)
From the huge reserve it accumulated over the years to alternative currency transfer methods, Russia has many tools to counter the ‘barrage’ of Western sanctions, but will they be effective?
Russia has seen this moment coming for years, hence its US$630 billion central bank reserve of which only 16 percent is held in US dollars
The addition of Russia to the ranks of Iran, Venezuela, Yemen and others enduring “maximum pressure” campaigns will only further the creation of financial and economic mechanisms that bypass the US dollar and the global architecture that supports it.
From the opening salvo of a full-scale war between Russia and Ukraine last week, it was inevitable that we would reach this point. Under American pressure, the European Union has agreed to expel the central bank of Russia from the SWIFT messaging system, the so-called “plumbing of the global financial system”. The measure, along with massive export restrictions from western states, is specifically designed to cripple the Russian economy, preventing it from paying for its imports and more crucially, receiving payment for its exports.
Moscow now joins just a handful of states worldwide to be subjected to such totalizing economic warfare. The most prominent example is the Islamic Republic of Iran, which has endured massive sanctions since its inception in 1979, escalating to the point of economic siege in 2012 and again in 2018. Venezuela, under the leadership of Hugo Chavez and now Nicholas Maduro has gone from being one of the largest oil exporters to the United States to the victim of a siege that has led to a massive refugee crisis throughout South America and outright theft of its national gold reserves by the Bank of London.
Far more effective attempts at economic strangulation are currently being carried out against Yemen, where the Ansar Allah movement had the temerity to overthrow a western and GCC-backed president. That country’s death count is rapidly approaching 400,000 of whom the overwhelming majority are civilian victims of famine and disease resulting from a total land, sea, and air blockade of the country enforced by the GCC states as well as the western powers directing them from afar.
Afghanistan’s near 40 million population is also being viciously punished for NATO’s defeat at the hands of its Taliban rulers. Nearly the entire population lives in absolute poverty and is unable to survive because the American government froze the central bank’s assets and has seen fit to release only half of the approximately US$8 billion. The other half Washington has seen fit to keep for itself, to compensate the families of 9/11 victims, whose losses the Afghan people have manifestly nothing to do with. In the case of the latter two countries, almost no other country has even recognized them as legitimate states entitled to sovereign equality and membership of the United Nations.
Now, these nations are joined by the largest state on earth and one of its most critical suppliers of raw materials, from feed grains to strategic metals and fertilizers.
The initial impacts of the sanctions regime are likely to be socially devastating on Russia but like the countries in whose company it now finds itself, it will quickly find a way to circumvent these economic hurdles and find new markets for its goods. It could also conceivably become far more self-sufficient in higher-end value-added goods, as it will now be forced to substitute imports of western technology.
Russia has seen this moment coming for years, hence its US$630 billion central bank reserve of which only 16 percent is held in US dollars. What is likely to make up a growing proportion of that reserve will be the Chinese yuan. Beijing has dropped all limits to its importation of Russian wheat, signaling that the PRC may be willing to provide Russia a guaranteed market for most, if not all of the commodities it will now be unable to sell freely on the global market. Chinese non-compliance with the US and EU-mandated sanctions may augur a more terminal split with the west.
Should China opt for a final economic decoupling from its decades-long partners, the East Asian giant would likely choose to serve as a guaranteed market for similarly besieged states, Iran, Yemen, Afghanistan, and Venezuela. Its likely means of doing so have been intimated in just the last few days. The Cross-Border International Payments System (CIPS) is Beijing’s In-house version of the western SWIFT system, albeit in its infancy and far less wide-reaching. What it would do is significantly expand the use of the yuan as a means of payment-settling, particularly for energy imports. Given its insatiable demand for energy, the Chinese economy, waning pandemics-permitting, could finally propel the widespread adoption of a non-western global currency. Bilateral trade between Russia and China, now well over US$100 billion annually has already been largely “de-dollarized” with the US currency being used to settle less than 23 percent of payments between the two nations.
A parallel financial-plumbing system built to service a growing list of states could significantly internationalize and speed up this trend.
Russia could instead expand the use of its own domestic payment system, the System For Transfer of Financial Messages (SPFS), created in 2014, to facilitate international transfers. This would be especially effective in the former states of the Soviet Union, in the Caucasus and Central Asia. Several or all of these isolated states might construct their own indigenous payment systems that could be mutually compatible. As direct fuel shipments and technical assistance from Iran to Venezuela over recent years have demonstrated, the weaponization of the US dollar and the international financial system is serving more to unite disparate nations in sanction-proofing their economies than in toppling their political systems.
Planners in Washington are almost certainly aware of this and while the bountiful natural resources of the Russians are now lost to them, it may just be the cost of having Europe now entirely beholden to the US for its economic survival, as well as the South American, Middle Eastern and East Asian former Russian markets the west has secured for itself.
While the west’s expanded economic market share will keep the dollar, euro, and the pound afloat in the immediate post-COVID world, this will only delay the inevitable. NATO belligerence has now set in motion the forces that will eventually produce a successor to the current world-reserve currency, and the very existence of a parallel financial universe will show that other worlds than that ruled by the euro or the dollar, are possible.
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 US diplomat George Kennan, an astute observer of Soviet Russia under Stalin, offered his observations later in life on the question of NATO expansion. The tragedy of our times is that those views are being ignored.
Winston Churchill once famously quipped that the “Americans will always do the right thing, but only after all other possibilities are exhausted.” That bit of dry British humor cuts to the heart of the current crisis in Ukraine, which is loaded with enough geopolitical dynamite to bring down a sizable chunk of the neighborhood. Yet, had the West taken the advice of one of its leading statesmen with regards to reckless military expansion toward Russia, the world would be a more peaceful and predictable place today.
George Kennan is perhaps best known as the US diplomat and historian who composed on February 22, 1946 the ‘Long Telegram’, a 5,400-word cable dispatched from the US embassy in Moscow to Washington that advised on the peaceful “containment” of the Soviet Union. That stroke of analytical brilliance, which Henry Kissinger hailed as “the diplomatic doctrine of his era,” provided the intellectual groundwork for grappling with the Soviet Union under Joseph Stalin as ultimately enshrined in the ‘Truman Doctrine’.
Inside the fetid corridors of power, however, where the more hawkish Dean Acheson had replaced the ailing George Marshall in 1949 as secretary of state, Kennan and his more temperate views on how to deal with capitalism’s arch rival had already passed its expiration date. Such is the fickleness of fate, where the arrival of a single new actor on the global stage can alter the course of history’s river forever. Thus, having lost his influence with the Truman administration, Kennan eventually began teaching at the Institute for Advanced Study, where he remained until his death in 2005. Just because George Kennan was no longer with the State Department, however, didn’t mean that he stopped ruffling the feathers of predators.
In 1997, with Washington elves hard at work on a NATO membership drive for Central Europe, particularly those countries that once formed the core of the Soviet-era Warsaw Pact, Kennan pulled the alarm. Writing in the pages of the New York Times, he warned that ongoing NATO expansion toward Russia “would be the most fateful error of American policy in the entire post-cold-war era.”
Particularly perplexing to the former diplomat was that the US and its allies were expanding the military bloc at a time when Russia, then experiencing the severe birth pains of capitalism atop the smoldering ruins of communism, posed no threat to anyone aside from itself.
“It is … unfortunate that Russia should be confronted with such a challenge at a time when its executive power is in a state of high uncertainty and near-paralysis,” Kennan wrote.
He went on to express his frustration that, despite all of the “hopeful possibilities engendered by the end of the cold war,” relations between East and West are becoming predicated on the question of “who would be allied with whom” in some “improbable future military conflict.”
In other words, had Western dream weavers just let things work themselves out naturally, Russia and the West would have found the will and the way to live side-by-side in relative harmony. One example of such mutual cooperation is evident by the Nord Stream 2 pipeline, a bilateral project between Moscow and Berlin that hinges on trust and goodwill above all. Who needs to travel around the world for war booty when capitalism offers more than enough opportunities for elitist pillage right at home? Yet the United States, having snorted from the mirror of power for so long, will never be satisfied with the spectacle of Russians and Europeans playing nice together.
As for the Russians, Kennan continued, they would be forced to accept NATO’s program of expansionism as a “military fait accompli,” thereby finding it imperative to search elsewhere for “guarantees of a secure and hopeful future for themselves.”
Needless to say, Kennan’s warnings fell on deaf ears. On March 12, 1999, then US Secretary of State Madeleine Albright, an acolyte of geopolitical guru and ultimate Russophobe Zbigniew Brzezinski, formally welcomed the former Warsaw Pact countries of Poland, Hungary, and the Czech Republic into the NATO fold. Since 1949, NATO has grown from its original 12 members to thirty, two of which share a border with Russia in the Baltic States of Estonian and Latvia, which has been the site of massive NATO military exercises in the past.
So while it is impossible to say how things would be different between Russia and the West had the US heeded Kennan’s sage advice, it’s a good bet the world wouldn’t be perched on the precipice of a regional war over Ukraine, which has become a center of a standoff between Moscow and NATO.
Russia certainly does not feel more secure as NATO hardware moves inexorably toward its border. Vladimir Putin let these sentiments be known 15 years ago during the Munich Security Conference when he told the assembled attendees: “I think it is obvious that NATO expansion does not have any relation with the modernization of the Alliance itself or with ensuring security in Europe. On the contrary, it represents a serious provocation that reduces the level of mutual trust. And we have the right to ask: against whom is this expansion intended?”
Today, with Kiev actively pursuing NATO membership for Ukraine, and the West stubbornly refusing to acknowledge Moscow’s declared ‘red lines’, outlined in two draft treaties sent to Washington and NATO in December, the situation looks grim. What the West must understand, however, is that Russia is no longer the special needs country it was just 20 years ago. It has the ability – diplomatic or otherwise – to address the perceived threats on its territory. There has even been talk of Russia, taking its cue from NATO’s reckless expansion in Europe, building military alliances in South America and the Caribbean.
Last month, Foreign Minister Sergey Lavrov reported that President Putin had spoken with the leaders of Cuba, Venezuela, and Nicaragua, for the purpose of stepping up collaboration in a range of areas, including military matters.
With each passing day it is becoming more apparent that had Kennan’s more realistic vision of regional cooperation been accepted, the world would not find itself at such a dangerous crossroads today. Fortunately, there is still time to reconsider the advice of America’s brilliant diplomat if it is peace that Washington truly desires.
The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.
As soon as Moscow received an American response to its security demands in Ukraine, it answered indirectly by announcing greater military integration between it and three South American countries, Nicaragua, Venezuela and Cuba.
Washington’s response, on January 26, to Russia’s demands of withdrawing NATO forces from Eastern Europe and ending talks about a possible Kyiv membership in the US-led alliance, was noncommittal.
For its part, the US spoke of ‘a diplomatic path’, which will address Russian demands through ‘confidence-building measures’. For Russia, such elusive language is clearly a non-starter.
On that same day, Russian Foreign Minister Sergey Lavrov announced, in front of the Duma, Russia’s parliament, that his country “has agreed with the leaders of Cuba, Venezuela, and Nicaragua to develop partnerships in a range of areas, including stepping up military collaboration,” Russia Today reported.
The timing of this agreement was hardly coincidental, of course. The country’s Deputy Foreign Minister Sergey Ryabkov did not hesitate to link the move to the brewing Russia- NATO conflict. Russia’s strategy in South America could potentially be “involving the Russian Navy,” if the US continues to ‘provoke’ Russia. According to Ryabkov, this is Russia’s version of the “American style (of having) several options for its foreign and military policy”.
Now that the Russians are not hiding the motives behind their military engagement in South America, going as far as considering the option of sending troops to the region, Washington is being forced to seriously consider the new variable.
Though US National Security Advisor Jake Sullivan denied that Russian military presence in South America was considered in recent security talks between both countries, he described the agreement between Russia and the three South American countries as unacceptable, vowing that the US would react “decisively” to such a scenario.
The truth is, that scenario has already played out in the past. When, in January 2019, the US increased its pressure on Venezuela’s President Nicolás Maduro to concede power to the US-backed Juan Guaido, a coup seemed imminent. Chaos in the streets of Caracas, and other Venezuelan cities, mass electric outages, lack of basic food and supplies, all seemed part of an orchestrated attempt at subduing Venezuela, which has for years championed a political discourse that is based on independent and well-integrated South American countries.
For weeks, Washington continued to tighten the pressure valves imposing hundreds of sanction orders against Venezuelan entities, state-run companies and individuals. This led to Caracas’ decision to sever diplomatic ties with Washington. Ultimately, Moscow stepped in, sending in March 2019 two military planes full of troops and equipment to prevent any possible attempt at overthrowing Maduro. In the following months, Russian companies poured in to help Venezuela out of its devastating crisis, instigating another US-Russia conflict, where Washington resorted to its favorite weapon, sanctions, this time against Russian oil companies.
The reason that Russia is keen on maintaining a geostrategic presence in South America is due to the fact that a stronger Russian role in that region is coveted by several countries who are desperate to loosen Washington’s grip on their economies and political institutions.
Countries like Cuba, for example, have very little trust in the US. After having some of the decades-long sanctions lifted on Havana during the Obama administration in 2016, new sanctions were imposed during the Trump administration in 2021. That lack of trust in Washington’s political mood swings makes Cuba the perfect ally for Russia. The same logic applies to other South American countries.
It is still too early to speak with certainty about the future of Russia’s military presence in South America. What is clear, though, is the fact that Russia will continue to build on its geostrategic presence in South America, which is also strengthened by the greater economic integration between China and most South American countries. Thanks to the dual US political and economic war on Moscow and Beijing, both countries have fortified their alliance like never before.
What options does this new reality leave Washington with? Not many, especially as Washington has, for years, failed to defeat Maduro in Venezuela or to sway Cuba and others to join the pro-American camp.
Much of the outcome, however, is also dependent on whether Moscow sees itself as part of a protracted geostrategic game in South America. So far, there is little evidence to suggest that Moscow is using South America as a temporary card to be exchanged, when the time comes, for US and NATO concessions in Eastern Europe. Russia is clearly digging its heels, readying itself for the long haul.
For now, Moscow’s message to Washington is that Russia has plenty of options and that it is capable of responding to US pressure with equal or greater pressure. Indeed, if Ukraine is Russia’s redline, then South America – which has fallen under US influence since the Monroe Doctrine of 1823 – is the US’s own hemispheric redline.
As the plot thickens in Eastern Europe, Russia’s move in South America promises to add a new component that would make a win-lose scenario in favor of the US and NATO nearly impossible. An alternative outcome is for the US-led alliance to recognize the momentous changes on the world’s geopolitical map, and to simply learn to live with it.
– Ramzy Baroud is a journalist and the Editor of The Palestine Chronicle. He is the author of six books. His latest book, co-edited with Ilan Pappé, is “Our Vision for Liberation: Engaged Palestinian Leaders and Intellectuals Speak out”. Dr. Baroud is a Non-resident Senior Research Fellow at the Center for Islam and Global Affairs (CIGA). His website iswww.ramzybaroud.net
Of course, this selection is very one-sided, there are many more headlines every bit as bad the ones yesterday, so let’s not make too much of this.
Also, please remember that in 08.08.08 Saakashvili made a speech promising peace to South Ossetia just HOURS before the Georgian forces attacked!
But what this does show, is that there is a “narrative chaos“.
Actually, this is just the tip of a much bigger iceberg. The fact is that Russia’s ultimatum has created chaos in the so-called “united West” pitting some part of the deep state elites against others. That, by itself, is already a very good outcome.
Another good outcome is the laughable idea to send a few thousands US troops to “defend Europe” within five days. Why is is laughable:
a few thousand troops make no difference
bringing them to the EU is not enough, you then have to prepare them and deploy them for combat; that would take much longer.
If a Ukie attack is limited to the LDNR, it will take about 24 hours to stop it. It would take Russia less than a week to destroy the Ukie military. By the time the first US jarheads land in Germany or Poland, it will all be over.
Finally, what does adding several thousands solider from a military which has never fought in defense of its homeland and never won a war since WWII do to “deter Russia” anyway?
Next, I strictly personal opinion about Russian forces in Cuba/Nicarague/Venezuela/etc.
As Andrei Martyanov recently commented, western military moves are all about PR. Russian military moves are all about war. From a PR prospective, deploying Russian missiles in Cuba or Venezuela might look like a good idea, but from a military point of view?
Does anybody remember that the USSR had several brigades defending the Soviet missiles in Cuba? Why, because Cuba is as close to the USA as Estonia is to Russia, and that means that deploying forces right across the US border puts that force at a huge risk of US preemptive attack.
Next, while Cuba is the most stable of them all, it is a fact that thanks to decades of subversion, attacks, sabotage, coup attempts and the like, countries like Nicaragua or Venezuela are inherently unstable (again, by no fault of their own). Placing weapons like, say, the Iskander complexes there would not only expose them to attack, but even possibly to capture. Some will say that Russia can send forces there to defend them. In theory – yes. But in practice?
Such a deployment would be both risky and very very expensive. Also, what if the US decides not to invade Cuba/Venezuela/Nicaragua but to blockade it. Does the Russian military have the means to breach a blockade many thousands of miles away from Russia? Nope, she does not. Neither her Navy nor her Aerospace forces have the means to engage in a struggle for naval/air superiority against the USA in the Caribbean.
It would be much safer, quicker and cheaper to use her submarines and long range aviation to threaten both US coasts, the one in the Atlantic and the one in the Pacific with cruise and ballistic missiles, including hypersonic ones. I won’t even mention the Poseidon underwater drones which could completely wipe out both US coasts.
Interestingly, the RAND corporation is posting articles which strongly suggest that the US and the West are deluding themselves about how war between Banderastan and Russia would look. Check these out:
Okay, RAND is RAND, so they will never challenge the official narrative about Russia as the evil aggressor, but this shows, yet again, that there is some very serious disagreements inside the US ruling elites.
I will conclude today with 4 photos under the heading “one image is worth 1000 words”:
This is the Russian minister of defense:
These are Russian soliders
This is the Ukie minister of defense:
This is, according the The Times, the soldiers civilians which will deter/defeat the Russians
UPROOTED PALESTINIANS: SALAM ALQUDS ALAYKUM 