{"id":206598,"date":"2022-03-07T13:13:24","date_gmt":"2022-03-07T13:13:24","guid":{"rendered":"https:\/\/www.transcend.org\/tms\/?p=206598"},"modified":"2022-03-07T13:13:24","modified_gmt":"2022-03-07T13:13:24","slug":"follow-the-money-us-sanctions-will-russia-be-able-to-bypass-western-economic-warfare","status":"publish","type":"post","link":"https:\/\/www.transcend.org\/tms\/2022\/03\/follow-the-money-us-sanctions-will-russia-be-able-to-bypass-western-economic-warfare\/","title":{"rendered":"Follow the Money: US Sanctions–Will Russia Be Able to Bypass Western Economic Warfare?"},"content":{"rendered":"
\n

The US and EU are over-reaching on Russian sanctions. The end result could be the de-dollarization of the global economy and massive commodity shortages worldwide.<\/em><\/p>\n<\/blockquote>\n

\"\"<\/a>

From The Cradle<\/p><\/div>\n

1 Mar 2022 – <\/em>So a congregation of NATO\u2019s top brass ensconced in their echo chambers target the Russian Central Bank with sanctions and expect what? Cookies?<\/p>\n

What they got instead was Russia\u2019s deterrence forces bumped up to \u201ca special regime of duty\u201d \u2013 which means the Northern and Pacific fleets, the Long-Range Aviation Command, strategic bombers and the entire Russian nuclear apparatus on maximum alert.<\/p>\n

One Pentagon general very quickly did the basic math on that, and mere minutes later, a Ukrainian delegation was dispatched to conduct negotiations with Russia in an undisclosed location in Gomel, Belarus.<\/p>\n

Meanwhile, in the vassal realms, the German government was busy \u201csetting limits to warmongers like Putin\u201d \u2013 quite a rich undertaking considering that Berlin never set any such limits for western warmongers who bombed Yugoslavia, invaded Iraq, or destroyed Libya in complete violation of international law.<\/p>\n

While openly proclaiming their desire to \u201cstop the development of Russian industry,\u201d damage its economy, and \u201cruin Russia\u201d \u2013 echoing American edicts on Iraq, Iran, Syria, Libya, Cuba, Venezuela and others in the Global South \u2013 the Germans could not possibly recognize a new categorical imperative.<\/p>\n

They were finally liberated from their WWII culpability complex by none other than Russian President Vladimir Putin. Germany is finally free to support and weaponize neo-Nazis out in the open all over again \u2013 now of the Ukrainian Azov battalion variety.<\/p>\n

To get the hang of how these NATO sanctions will \u201cruin Russia,\u201d I asked for the succinct analysis of one of the most competent economic minds on the planet, Michael Hudson, author, among others, of a revised edition of the must-read Super-Imperialism: The Economic Strategy of American Empire<\/a>.<\/p>\n

Hudson remarked how he is \u201csimply numbed over the near-atomic escalation of the US.\u201d On the confiscation of Russian foreign reserves and cut-off from SWIFT, the main point is \u201cit will take some time for Russia to put in a new system, with China. The result will end dollarization for good, as countries threatened with \u2018democracy\u2019 or displaying diplomatic independence will be afraid to use US banks.\u201d<\/p>\n

This, Hudson says, leads us to \u201cthe great question: whether Europe and the Dollar Bloc can buy Russian raw materials \u2013 cobalt, palladium, etc, and whether China will join Russia in a minerals boycott.\u201d<\/p>\n

Hudson is adamant that \u201cRussia\u2019s Central Bank, of course, has foreign bank assets in order to intervene in exchange markets to defend its currency from fluctuations. The ruble has plunged. There will be new exchange rates. Yet it\u2019s up to Russia to decide whether to sell its wheat to West Asia, that needs it; or to stop selling gas to Europe via Ukraine, now that the US can grab it.\u201d<\/p>\n

About the possible introduction of a new Russia-China payment system bypassing SWIFT, and combining the Russian SPFS (System for Transfer of Financial Messages) with the Chinese CIPS (Cross-Border Interbank Payment System), Hudson has no doubts \u201cthe Russian-China system will be implemented. The Global South will seek to join and at the same time keep SWIFT \u2013 moving their reserves into the new system.\u201d<\/p>\n

I\u2019m going to de-dollarize myself<\/strong><\/p>\n

So the US itself, in another massive strategic blunder, will speed up de-dollarization. As the managing director of Bocom International Hong Hao told the Global Times<\/em>, with energy trade between Europe and Russia de-dollarized, \u201cthat will be the beginning of the disintegration of dollar hegemony.\u201d<\/p>\n

It\u2019s a refrain the US administration was quietly hearing last week from some of its own largest multinational banks, including notables like JPMorgan and Citigroup.<\/p>\n

A Bloomberg<\/a> article sums up their collective fears:<\/p>\n

\u201cBooting Russia from the critical global system \u2013 which handles 42 million messages a day and serves as a lifeline to some of the world\u2019s biggest financial institutions \u2013 could backfire, sending inflation higher, pushing Russia closer to China, and shielding financial transactions from scrutiny by the west. It might also encourage the development of a SWIFT alternative that could eventually damage the supremacy of the US dollar.\u201d<\/p><\/blockquote>\n

Those with IQs over 50 in the European Union (EU) must have understood that Russia simply could not be totally excluded from SWIFT, but maybe only a few of its banks: after all, European traders depend on Russian energy.<\/p>\n

From Moscow\u2019s point of view, that\u2019s a minor issue. A number of Russian banks are already connected to China\u2019s CIPS system. For instance, if someone wants to buy Russian oil and gas with CIPS, payment must be in the Chinese yuan currency. CIPS is independent of SWIFT.<\/p>\n

Additionally, Moscow already linked its SPFS payment system not only to China but also to India and member nations of the Eurasia Economic Union (EAEU). SPFS already links to approximately 400 banks.<\/p>\n

With more Russian companies using SPFS and CIPS, even before they merge, and other maneuvers to bypass SWIFT, such as barter trade \u2013 largely used by sanctioned Iran \u2013 and agent banks, Russia could make up for at least 50 percent in trade losses.<\/p>\n

The key fact is that the flight from the US-dominated western financial system is now irreversible across Eurasia \u2013 and that will proceed in tandem with the internationalization of the yuan.<\/p>\n

Russia has its own bag of tricks<\/strong><\/p>\n

Meanwhile, we\u2019re not even talking yet about Russian retaliation for these sanctions. Former President Dmitry Medvedev already gave a hint: everything, from exiting all nuclear arms deals with the US to freezing the assets of western companies in Russia, is on the table.<\/p>\n

So what does the \u201cEmpire of Lies\u201d want? (Putin terminology, on Monday\u2019s meeting in Moscow to discuss the response to sanctions.)<\/p>\n

In an essay published this morning, deliciously titled America Defeats Germany for the Third Time in a Century: the MIC, OGAM and FIRE conquer NATO<\/em>, Michael Hudson makes a series of crucial points, starting with how \u201cNATO has become Europe\u2019s foreign policy-making body, even to the point of dominating domestic economic interests.\u201d<\/p>\n

He outlines the three oligarchies in control of US foreign policy:<\/p>\n

First is the military-industrial complex, which Ray McGovern memorably coined as MICIMATT (military industrial Congressional intelligence media academia think tank).<\/p>\n

Hudson defines their economy base as \u201cmonopoly rent, obtained above all from its arms sales to NATO, to West Asian oil exporters and to other countries with a balance-of-payments surplus.\u201d<\/p>\n

Second is the oil and gas sector, joined by mining (OGAM). Their aim is \u201cto maximize the price of energy and raw materials so as to maximize natural resource rent. Monopolizing the Dollar Area\u2019s oil market and isolating it from Russian oil and gas has been a major US priority for over a year now, as the Nord Stream 2 pipeline from Russia to Germany threatened to link the western European and Russian economies together.\u201d<\/p>\n

Third is the \u201csymbiotic\u201d Finance, Insurance and Real Estate (FIRE) sector, which Hudson defines as \u201cthe counterpart to Europe\u2019s old post-feudal landed aristocracy living by land rents.\u201d<\/p>\n

As he describes these three rentier sectors that completely dominate post-industrial finance capitalism at the heart of the western system, Hudson notes how \u201cWall Street always has been closely merged with the oil and gas industry (namely, the Citigroup and Chase Manhattan banking conglomerates).\u201d<\/p>\n

Hudson shows how \u201cthe most pressing US strategic aim of NATO confrontation with Russia is soaring oil and gas prices. In addition to creating profits and stock market gains for US companies, higher energy prices will take much of the steam out of the German economy.\u201d<\/p>\n

He warns how food prices will rise \u201cheaded by wheat.\u201d (Russia and Ukraine account for 25 percent of world wheat exports.) From a Global South perspective, that\u2019s a disaster: \u201cThis will squeeze many West Asian and Global South food-deficient countries, worsening their balance of payments and threatening foreign debt defaults.\u201d<\/p>\n

As for blocking Russian raw materials exports, \u201cthis threatens to cause breaks in supply chains for key materials, including cobalt, palladium, nickel, aluminum.\u201d<\/p>\n

And that leads us, once again, to the heart of the matter: \u201cThe long-term dream of the US new Cold Warriors is to break up Russia, or at least to restore its managerial kleptocracy seeking to cash in their privatizations in western stock markets.\u201d<\/p>\n

That\u2019s not going to happen. Hudson clearly sees how \u201cthe most enormous unintended consequence of US foreign policy has been to drive Russia and China together, along with Iran, Central Asia and countries along the Belt and Road initiative.\u201d<\/p>\n

Let\u2019s confiscate some technology<\/strong><\/p>\n

Now compare all of the above with the perspective of a central European business tycoon with vast interests, east and west, and who treasures his discretion.<\/p>\n

In an email exchange, the business tycoon posed serious questions about the Russian Central Bank support for its national currency, the ruble, \u201cwhich according to US planning is being destroyed by the west through sanctions and currency wolf packs who are exposing themselves by selling rubles short. There is really almost no amount of money that can beat the dollar manipulators against the ruble. A 20 percent interest rate will kill the Russian economy unnecessarily.\u201d<\/p>\n

The businessman argues that the chief effect of the rate hike \u201cwould be to support imports that should not be imported. The fall of the ruble is thus favorable to Russia in terms of self-sufficiency. As import prices rise, these goods should start to be produced domestically. I would just let the ruble fall to find its own level which will for a while be lower than natural forces would permit as the US will be driving it lower through sanctions and short selling manipulation in this form of economic war against Russia.\u201d<\/p>\n

But that seems to tell only part of the story. Arguably, the lethal weapon in Russia\u2019s arsenal of responses has been identified by the head of the Center for Economic Research of the Institute of Globalization and Social Movements (IGSO), Vasily Koltashov: the key is to confiscate technology \u2013 as in Russia ceasing to recognize US rights to patents.<\/p>\n

In what he qualifies as \u201cliberating American intellectual property,\u201d Koltashov calls for passing a Russian law on \u201cfriendly and unfriendly states. If a country turns out to be on the unfriendly list, then we can start copying its technologies in pharmaceuticals, industry, manufacturing, electronics, medicine. It can be anything \u2013 from simple details to chemical compositions.\u201d This would require amendments to the Russian constitution.<\/p>\n

Koltashov maintains that \u201cone of the foundations of success of American industry was copying of foreign patents for inventions.\u201d Now, Russia could use \u201cChina\u2019s extensive know-how with its latest technological production processes for copying western products: the release of American intellectual property will cause damage to the United States to the amount of $10 trillion<\/em>, only in the first stage. It will be a disaster for them.\u201d<\/p>\n

As it stands, the strategic stupidity of the EU beggars belief. China is ready to grab all Russian natural resources \u2013 with Europe left as a pitiful hostage of the oceans and of wild speculators. It looks like a total EU-Russia split is ahead \u2013 with little trade left and zero diplomacy.<\/p>\n

Now listen to the sound of champagne popping all across the MICIMATT.<\/p>\n

_______________________________________________<\/em><\/p>\n

\"\"<\/a>Pepe Escobar, born in Brazil, is a correspondent and editor-at-large at <\/em>Asia Times and<\/em> columnist for<\/em> Consortium News and<\/em> Strategic Culture in Moscow. Since the mid-1980s he\u2019s lived and worked as a foreign correspondent in London, Paris, Milan, Los Angeles, Singapore, and Bangkok. He has extensively covered Pakistan, Afghanistan and Central Asia to China, Iran, Iraq and the wider Middle East. He is the author of <\/em>Globalistan<\/a> (2007),<\/em> Red Zone Blues<\/a> (2007), <\/em>Obama Does Globalistan<\/a> (2009), <\/em>Empire of Chaos<\/a> (2014) and <\/em>2030<\/a> (2015), all by Nimble Books. Pepe was contributing editor to <\/em>The Empire and The Crescent and<\/em> Tutto in Vendita in Italy and is also associated with the Paris-based European Academy of Geopolitics. When not on the road he lives between Paris and Bangkok. <\/em><\/p>\n

Go to Original \u2013 thecradle.co<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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