New York’s Attorney General Makes A Fool Of The Governor
By Francis Menton | Manhattan Contrarian | March 2, 2024
Two weeks ago, on February 16, in a case brought by New York Attorney General Letitia James, Justice Arthur Engoron of the New York State Supreme Court issued his decision ordering Donald Trump to pay some $355 million of “disgorgement” penalties. The stated basis for imposing these extraordinary penalties was Trump’s supposed “fraud” of exaggerating the value of some of his properties on financial statements submitted to a bank. No one had been damaged by Trump’s conduct, and the bank in question had neither complained nor sought any relief; however, the Attorney General asserted, and the judge agreed, that a legal basis existed for imposing the penalties under New York’s Executive Law Section 63(12), which allows the AG to prosecute “persistent fraud or illegality” without need for showing traditional elements of fraud like intent and damages, let alone a victim.
The issuance of Justice Engoron’s decision brought forth an immediate reaction from many quarters (Manhattan Contrarian ). James had campaigned for office on a platform of “getting Trump,” a major political adversary, and had sought and obtained penalties far larger than any previously awarded under this statute, for conduct far less egregious. If the AG can use a broad statute to target a politically-disfavored individual like Trump in this way, how could any person doing business in New York think they are safe from similar legal abuse?
Recognizing the problem, our lightweight Governor Kathy Hochul went on a radio talk show on February 18 in an effort to reassure the New York business community. RealClearPolitics on February 19 has an audio clip and a partial transcript of Governor Hochul’s remarks. The key line was that Trump’s case was an “extraordinary, unusual circumstance,” and therefore “law-abiding and rule-following New Yorkers . . . have nothing to worry about because they’re very different than Donald Trump and his behavior.”
Law-abiding New Yorkers “have nothing to worry about”? Really, Governor Hochul? AG James waited all of ten days before making a complete fool of Hochul. On February 28 James dropped her latest over-the-top politicized case. The new target is something called JBS USA Food Company Holdings — the U.S. subsidiary of the world’s largest producer of beef. Here is the AG’s press release announcing the filling of the case; and here is a copy of the Complaint.
The crazed and delusional ambition evidenced in this case is even wilder than what was just seen in the Trump case. This time we’re not just going to keep a hated politician out of office; we’re going to save the planet!
From the press release:
JBS USA has claimed that it will achieve net zero greenhouse gas emissions by 2040, despite documented plans to increase production, and therefore increase its carbon footprint. Beef production emits the most greenhouse gasses of any major food commodity, and animal agriculture accounts for 14.5 percent of annual global greenhouse gas emissions. In 2021, the JBS Group, JBS USA’s global parent company, reported total global greenhouse gas emissions of over 71 million tons, more than the total emissions of some countries. Attorney General James seeks to stop JBS USA from continuing these false and misleading marketing practices, pay disgorgement of all ill-gotten profits, and penalties.
The heart of the alleged “fraud” is JBS’s claim that it plans to achieve “net zero” greenhouse gas emissions by 2040. From Complaint, paragraphs 6 and 7:
6. Across its marketing materials, the JBS Group has made sweeping representations to consumers about its commitment to reducing its greenhouse gas emissions, claiming that it will be “Net Zero by 2040.”
7. The JBS Group, however, has had no viable plan to meet its commitment to be “Net Zero by 2040.”
And from there, this case then turns into Trump 2.0. They have learned how to do this in the Trump case and they are following the form. Like the Trump case, this case is at least in theory civil, rather than criminal. The main legal basis? You guessed it — Executive Law Section 63(12). And the main relief sought? You guessed it again — “disgorgement.” Hey, if they can draw Engoron as the judge they might get an order requiring JBS to “disgorge” all of its revenues for the last 20 years. This time it will be in the multi-billions of dollars. That’ll teach them!
And so, Governor Hochul, is there anything “extraordinary and unusual” about JBS? Definitely not, any more than there was about Trump. Surely now every other beef company is in line for the same treatment, and every other food company right after that. And why stop there? Every company that has made any kind of promises of “net zero” by some far out date will be an obvious target. That’s a very large numbers of companies. And even the ones who haven’t promised “net zero” have almost always made some kind of promise of greenhouse gas reductions, none of which are achievable in the real world.
And guess what entity has made the most extreme promises of “net zero” that can’t possibly be met? That would be the State of New York. As discussed here in many prior posts (examples here, here and here), New York in 2019 adopted a Climate Act, committing the State to “net zero” emissions by 2050, and in 2022 adopted a Scoping Plan supposedly laying out how we are going to get there. But the Scoping Plan is completely delusional and deceptive, and does not come remotely close to setting forth a realistic way to get to net zero. It’s just like the delusional JBS promises!
So, Attorney General James, when are you going to bring your case under Executive Law 63(12) against New York State? I think you should demand “disgorgement” back to the taxpayers of all taxes paid at least since 2019, when they started making these fraudulent promises.
Meanwhile, it is high time for the business and legal communities of New York to start calling out our Attorney General for completely politicizing and degrading her office. You corporate CEOs and law firm leaders — do you think that if you just lie low the crocodile will eat you last? Your tolerance of this politicized AG is completely shameful.
China discovers oil field of proven reserve of 102 million tons in South China Sea: CNOOC
Global Times | March 8, 2024
China has discovered its first deep-water, deep-reservoir oil find in the South China Sea, state-owned oil giant CNOOC announced on Friday.
The Kaipingnan oilfield, 300 kilometers southwest of the waters of Shenzhen in South China, has a proven reserve of 102 million tons of oil equivalent, according to the company.
It is the first oil reserve with a water depth of over 300 meters and a well depth of over 3,000 meters found by China’s own efforts, as well as the largest, said CNOOC. The maximum depth where the oilfield lies is 532 meters and the maximum well depth reached 4,831 meters.
Testing drilling yields over 1,000 tons of oil and gas on a daily basis, which is a new record in China for a deep-water, deep-reservoir oilfield, the company said.
The Kaipingnan oilfield demonstrated the vast potential of deep-water exploration in the South China Sea, and further consolidated the foundation of China’s offshore oil and gas reserve, which is significant toward ensuring the country’s energy security, the company said in a press release on Friday.
In recent years, CNOOC made significant discoveries at the Bozhong 26-6 deep-reservoir oilfield in China’s Bohai Sea and the Baodao 21-1 gas field in western South China Sea.
Zhou Xinhuai, CEO of CNOOC, said the company’s continuous discoveries in the eastern part of the South China Sea forged new growth drivers for the company’s offshore oil and gas business, noting the company will continue to pour more efforts in oil and gas exploration in the South China Sea to ramp up energy supply capacity.
Public is Not Being Told the True Cost of Net Zero, Warns Former World Bank Economist
BY CHRIS MORRISON | THE DAILY SCEPTIC | MARCH 6, 2024
Bankrupt, blackout Britain where the ever-expanding ranks of the poor get clobbered, open borders place intolerable burdens on public spending and services, the rich spivs get richer backing heavily-subsidised energy white elephants – and those of a certain age look back to the good old days of the 1970s. That isn’t quite how Professor Gordon Hughes spells it out in his excellent new report that crunches the energy transition numbers of the collectivist Net Zero project, but it might be considered a fair summation of reading between the lines.
The insanity of Net Zero becomes clearer by the day. The idea that hydrocarbons – a natural resource whose use from medicines to reliable energy is ubiquitous in modern industrial society – can be removed within less than 30 years is ridiculous. In his report published by the Global Warming Policy Foundation, Professor Hughes concerns himself with the transition from hydrocarbons to ‘green’ technologies such as wind and solar. Forget all the politically-inspired low-ball figures of transition, he is suggesting. Looking at you, Climate Change Committee. It is likely that the amount of new investment needed for the transition will be a minimum of 5% of gross domestic product for the next 20 years, and might exceed 7.5%. Gordon Hughes is a former World Bank economist, and is Professor of Economics at the University of Edinburgh.
There is no chance of borrowing such an “astronomical” amount, notes Hughes, and the only viable way to raise the cash for new capital expenditure would be a two decades-long reduction in private consumption of up to 10%. “Such a shock has never occurred in the last century outside war, and even then never for more than a decade,” he notes.
Recent polling in the U.S. has shown that the desire of a majority of citizens to pay for Net Zero barely stretches to more than the ‘chump’ change in their back pockets. “Commitment to the energy transition is a classic ‘luxury belief’ held most strongly by those who are sufficiently well-off not to worry about the costs… Indeed at least some of those who promote the transition most strongly are among those who expect to gain from the business opportunities.” On this latter point, Hughes was possibly recalling the recent activities of rising media star Dale Vince (£110 million in wind subsidies to date, and counting).
Politicians sometimes blather about the pioneering role taken by European countries in Net Zero. Hughes points out that leaders in China and India are not fools. “Posturing about targets that are patently not achievable and might be economically ruinous is unlikely to convince anyone, although most will be too polite to point this out,” he observed.
Writing a foreword, Lord Frost identified a make-believe world inhabited by Net Zero proponents where it is claimed costs will magically come down, new technologies will somehow be invented and promised green growth will pay for everything. “But they never give any evidence for believing this – and, where we can check what they say, for example in the real costs of wind power, we can see that these cost reductions are simply not happening,” he said.
On the immigration front, Hughes notes a 1% increase in the British population every year. He notes that 4% of GDP must be invested every year in new (not replacement) capital per head. Of course nothing like this is being spent and capital per head is falling rapidly. “Just maintaining the amounts of capital per head will eat up an amount of investment equivalent to that required for the energy transition,” he states.
Squeezing domestic consumption, in other words making the already squeezed poor even poorer by removing all their remaining luxuries in life (older cars, cheap foreign holidays, meat), is the only realistic way to fund the enormous sums required for the Net Zero energy transition. Possibly a glimmer of reality is creeping into political circles with the opposition Labour party having gone through “agonies” and ditched its £28 billion a year green deal. “Clearly, they concluded that it was impossible to sell an increase in the tax burden of that magnitude to a reluctant electorate,” he said. In fact, the sums involved in the Labour plan were only a fifth of the estimated cost of transition.
Any future Government wishing to travel the path of Net Zero must make the choices of reducing public services and mandating savage cuts in household expenditure. Needless to say, the general population is in almost total ignorance about these realities. Hughes notes that the electorate has given no indication that they are willing to bear the costs involved. “Indeed until now all they have been told is that there are few or no trade-offs required, and technology will somehow magically solve everything.”
Chris Morrison is the Daily Sceptic’s Environment Editor.
Washington’s Wars Eroding its Global Clout
By Salman Rafi Sheikh – New Eastern Outlook – 04.03.2024
If war is politics by other means, Washington’s ongoing wars in the Middle East and Eastern Europe are meant to buttress its global influence on the one hand and undermine its competitors on the other. But the question is: how is this politics by other means working out for Washington? Not so good. Russia’s recent military victories in Ukraine and China’s expansive inroads into the Middle East alongside the growing anti-Americanism in the region (due to Washington’s support for Israel and its inability to prevent a genocide of the Palestinians) indicate an overall American inability to shape global geopolitics in unilateral ways to the exclusive advantage of Washington and its allies in Europe and elsewhere.
Russia’s recent military gains in Ukraine, for example, have very clearly established its military credentials as a power that has been able to withstand the combined military strength of the US and its European allies assembled in the North Atlantic Treaty Organization (NATO). What does this mean for Washington’s policies in Central Asia? Most certainly, Washington cannot simply present Russia as a ‘weak’ military power that can be simply ‘isolated’. But more than that, Russia is utilising its victories over NATO in various ways.
For instance, when the NATO-backed Russia-Ukraine military conflict began, most reports in the mainstream US media began to spread false messaging about Central Asia potentially moving itself out of the so-called ‘Russian clout’. The US saw in it an opportunity to push itself into the region. But this has turned out to be a fiasco. When the US imposed sanctions on Russia, many Russian companies began to relocate their businesses to Central Asia, directly contributing to Central Asia’s impressive 4.8 percent growth rate in 2023. According to the findings of the European Bank for Reconstruction and Development, the region is forecast to register an even more impressive level of growth at almost 5.7 percent in 2024-25.
In other words, thanks to Washington’s sanctions, the Russian political economy is now more deeply connected with Central Asia than it was before February 2022, which is also strengthening the Eurasian Economic Union. Now that this integration is working for the advantage of Central Asia means that the latter have little to no incentive to pay too much attention to Washington and/or the imperatives of moving decisively to Washington. It means that not only has the Biden administration’s policy of NATO expansion via Ukraine failed so far in Ukraine itself, but the ‘new’ Central Asia policy it inaugurated in the wake of the Russia-Ukraine conflict has also failed to make any impact on the ground. Russia defeated US design also by approaching relations with the Central Asian States in ways that gave them enough space to stay neutral in the conflict. While the West saw this neutrality as a sign of Russian weakness in the region and the Central Asian States’ growing assertiveness, it failed to read how this was part of Russia’s strategy to cultivate its ties in a more balanced way. This balance is also pretty evident in the ways Russia has not objected to, or even resisted, China’s growing footprint in the region, although reports in the Western media often see China’s role in Central Asia at the expense of Russia. But the West seems to have been misreading this region.
As far as Washington’s war in the Middle East is concerned, its military support for Israel plus its inability to stop genocide has eroded its credibility. Suppose Washington has been supporting Israel to maintain its dominance in the Middle East. In that case, Washington’s excessive support is now derailing its objectives, since the Middle East is now exercising a lot more strategic autonomy vis-à-vis Washington than was the case until a few years ago.
In the past few months, a flurry of Chinese activity indicates it much more clearly than anything else. China has convened leadership summits, met with Arab delegates, supported their stance vis-à-vis Israel, and held joint military exercises with one of the US’ most important allies in the region (Saudi Arabia). The UAE, otherwise a close US ally and one of the first states to sign the Abraham Accords to recognise Israel and establish diplomatic ties with it, actually withdrew from the US-led naval task force in May 2023, indicating policy and interest-based differences.
The UAE is also a country in the Middle East that has over 100,000 Chinese living there and involved in many businesses. But when it comes to the Middle East itself, and the fact that many countries in the region are involved in China’s Belt & Road Initiative (BRI), we see the region’s trade with China registering an overall growth of almost 45 percent in 2021 and 27 percent in 2022.
Given the economic integration, the Middle East is turning out to be a region where Washington’s clout is receding fast, without any signs of recovery in the immediate future at least. Although US strikes in the Red Sea on the Houthis are meant to indicate Washington’s willingness to offer a security umbrella to the Gulf states (against Iran-backed groups), the region appears to be past the point where it must have the US on its side to ensure security. Gulf states’ perceptions of Iran as an enemy are changing, thanks to Beijing’s mediation.
As far as Washington’s support for Israel is concerned and as far as the threat of a wider war in the region it is posing, Gulf states are on the edge of a conflict that might directly undermine their modernization programmes – development projects that mainly involve China in various capacities.
Therefore, if Washington’s involvement in the Israel war was meant to bring back the era of US dominance, the exact opposite is happening, both in the Middle East and Central Asia, which happen to be two of the world’s most energy-rich regions.
Salman Rafi Sheikh is a research-analyst of International Relations and Pakistan’s foreign and domestic affairs.
EU tells citizens to further reduce gas consumption
Greenpeace activists put giant sticker on European Union Commission HQ in Brussels, March 1, 2023 © Thierry Monasse / Getty Images
RT | February 28, 2024
EU residents must maintain the reduced natural gas consumption levels imposed in the wake of sanctions targeting Russia’s energy sector, according to a draft proposal from the European Council published on Tuesday.
The proposal states that usage levels at least 15% below average demand (measured between April 2017 and March 2022) should be maintained on a voluntary basis for another year. This is despite claiming that the reductions undertaken up to now – or an even more severe rate of 18% – had successfully achieved many of the original proposal’s goals.
Despite diversified supply, lower, more stable prices and higher storage reserves “benefiting the competitiveness of the EU economy,” the Council claims cutbacks must continue for another year. The proposal also notes that such a restriction would also push the EU towards Net Zero carbon emissions.
Should EU residents or their leaders become unwilling to cut back on their fossil fuel consumption, the resolution allows the “voluntary” cutbacks to be mandated, eliminating any risk of scuttling the concept entirely with one or two holdout countries.
Brussels recently confirmed that a five-year pipeline gas transit agreement via Ukraine with Russia’s Gazprom would not be renewed when it expires at the end of March.
Despite passing 13 sanctions packages since 2022 in an effort to punish Russia for its military operation, the EU still bought nearly €30 billion in oil, petroleum products and natural gas from the country last year.
At the same time, Germany, traditionally the EU’s strongest economy, is in crisis, with 15% of its companies in distress, consultants Alvarez & Marsal reported earlier this month. Many analysts blame high energy costs and predict the worst is yet to come, with a real estate crisis looming as companies that can no longer afford to pay for their office space are defaulting, among other secondary effects.
US Refuses to Discuss ‘Nuclear Arms in Outer Space’ Despite Russia’s Dialogue Efforts
By Andrei Dergalin – Sputnik – 29.02.2024
Russian President Vladimir Putin delivered his annual address to Russia’s parliament on February 29, offering his assessment of issues related to the country’s foreign and domestic policies.
Russian President Vladimir Putin broached the subject of the United States recently alleging without any proof that Russia plans to deploy some kind of nuclear weapons in space during his State of the Nation address on Thursday.
Having dismissed these unfounded allegations, Putin mentioned that Russia is yet to receive any serious proposals from the US to initiate bilateral contacts on strategic stability.
Commenting on the Russian president’s remarks, Dr. Marco Marsili, a researcher at Cà Foscari University of Venice, pointed out that the US and its European allies have consistently refused to negotiate “international legally-binding instruments” with Russia, despite the latter’s initiatives aimed at preventing possible deployment of nuclear armaments in space.
According to Dr. Marsili, who is also an associate fellow at the Center for Strategic Research (Cesran International) and who holds research positions in major civil and military institutions in Portugal, the UK and Italy, the US and its allies torpedoed the initiatives “to maintain their technical advantages from its missile defense program and other space weapons.”
“In his speech delivered today, President Putin opened once again to a frank and genuine negotiation with the US on the placement of nuclear arms in outer space but, so far, has not received any signal from the counterpart,” he said.
“Today, Russia is in a stronger position due to its technological advances in missile defense and has developed hypersonic capabilities, like the Avangard rocket cited by President Putin in his speech, which place the country far away from its Western competitors. Notwithstanding, President Putin is still seeking dialogue with the White House, but does not receive any response.”
Dr. Marsili also weighed in on Putin’s statement about the need for a new global financial architecture that would be free from political interference, with Marsili noting how the “global governance” that emerged in the aftermath of World War II “was shaped by Western nations.”
“This post-colonialist governance, including the Bretton Woods system, is challenged by emerging countries from Africa and Latin America. The Sino-Russian cooperation agreement about the Belt and Road Initiative, and regional agreements with CSI member states can boost the economic growth of the region,” he continued.
Regarding Putin’s remark on Russia’s prospects to become one of the world’s four largest economies soon, Dr. Marsili observed that the figures presented by the Russian president to the audience during the speech “demonstrate the foreseen growth of the Russian economy, despite international sanctions.”
“These figures are reliable because they are based on data provided by the economic outlook of the major international institutions such as the IMF, the OECD, and the World Bank,” he added. “As of today, Russia’s economy is already among the largest in the world by nominal GDP. A significant economic power, Russia is not only the largest country in the world, but also an energy superpower and one of the largest producers of rare-earth materials that are crucial for many technologic applications.”
Meanwhile, Dmitry Suslov, deputy director of the Center for European and International Studies at Russia’s Higher School of Economics, argued that one of the crucial themes of Putin’s address was the matter of Russia’s sovereignty.
“Without question, sovereignty was another crucial theme of Putin’s address and sovereignty could be considered as the ideology of Russian development in the observable future. The president emphasized the political, economic and technological sovereignty of Russia. Sovereignty is indeed a precondition of Russian not just development, but survival, and, of course, development,” he elaborated.
According to Suslov, “Western policies prove that the West uses and used the interdependence and Russian dependence on the Western technologies and markets as a weapon against Russia.”
Thus, in order to avoid such dependence in the future and to not exchange it for “a new dependence on the other countries,” Russia “needs to be sovereign in all crucial aspects of development – in technologies, in defense, in the main aspects of economic development and, of course, in the political sphere,” he postulated.
Transnistria Seeks Russia’s Help in Wake of Economic Blockade by Moldova
Sputnik – 28.02.2024
Predominantly Russian-speaking Transnistria, 60 percent of whose ethnic population are Russians and Ukrainians, declared its independence from Moldova during the collapse of the Soviet Union.
Transnistrian lawmakers have asked Russia for assistance over mounting economic pressure from Moldova.
The legislators put forward a request to both the Federation Council and State Duma of Russia, urging them to implement measures to safeguard Transnistria, especially in light of Moldova’s growing pressure. This request is backed up by the fact that over 220,000 Russian citizens reside in Transnistria.
The bill’s authors pointed to the unique and positive experience of Russia’s peacekeeping work in the region and highlighted that Moscow has served as a mediator in negotiations.
“The critical situation requires urgent and maximum active international intervention in order to prevent an escalation of tensions and not allow the situation to develop into a crisis,” the document says.
As of January 1, 2024, Moldova launched a compulsory customs duty on goods imported to Transnistria. In reality, this amounts to multimillion-dollar losses for export-import companies operating in Transnistria, since they are required to pay a double tax: one to Transnistria and the other to the Moldovan budget.
Here’s How Russia Could Hit Back If West Seizes Assets
By Ilya Tsukanov – Sputnik – 27.02.2024
Some $300 billion in Russian assets were trapped abroad in 2022 after the escalation of the Ukrainian crisis into a full-on NATO-Russia proxy war. Western officials have threatened to seize these funds and transfer them to Ukraine for “reconstruction.” A pair of leading Russian economists tell Sputnik why that’s a very bad idea.
Treasury Secretary Janet Yellen has called on nations of the Western “coalition” against Moscow to “find a way to unlock the value of [Russia’s] immobilized assets to support Ukraine’s continued resistance and long-term reconstruction.”
“I believe there is a strong international law, economic and moral case for moving forward. This would be a decisive response to Russia’s unprecedented threat to global stability,” Yellen said at a meeting of G20 finance ministers and central bank governors in Sao Paulo, Brazil on Tuesday.
Tackling the question of the potential threats to the dollar’s status as the de facto world reserve currency that such an unprecedented move would entail, Yellen said that it it’s “extremely unlikely” that the greenback would be negatively affected. “Realistically there are not alternatives to the dollar, euro and yen,” she assured.
Yellen is the latest senior Western official to propose moving forward with the seizure of Russian assets as Western countries’ own desire to continue fueling the Ukrainian proxy war against Russia falters. Earlier this month, the European Union adopted a law allowing Brussels to bank windfall profits from Russian assets trapped in European banks and use them in Ukraine, a move characterized by Moscow as blatant “theft” which will be met with legal action.
Russian officials and independent economic observers alike have warned of the possible consequences stemming from what Yellen is proposing, with Russian finance minister Anton Siluanov saying Moscow has the means to issue a “symmetrical” response to this form of Western financial aggression.
“We have no fewer frozen [assets than Western countries],” Siluanov said in an interview with Sputnik on Monday. “Any actions taken against our assets would receive a symmetrical response.”
Mechanism for Tit-For-Tat Response Already Exists
“Russia has already taken conservatorship of assets of a number of foreign companies which refused to operate in Russia,” Dr. Andrei Kolganov, a professor of economics at Moscow State University and chief researcher at the Russian Academy of Sciences’ Institute of Economics, told Sputnik, commenting on the folly of the West’s asset seizure plans.
This instrument was already used against foreign investors with an ownership stake in the Baltika Beer Company, as well as the assets of Finnish energy concern Fortum, the professor noted.
“So in principle, the mechanism for the confiscation of foreign assets has already been worked out. Moving from conservatorship to confiscation is, in principle, a fairly simple technical procedure. The amount of assets that are ‘frozen’ on the territory of the Russian Federation, or which may be frozen, is now estimated at approximately $288 billion,” Kolganov explained.
In other words, the professor said, Russia has control over a big chunk of Western assets which, if the US and its allies proceed with confiscation, “will not escape to the West, but will work here in Russia, because we are talking about investment, first and foremost, in the manufacturing sector.”
From there, these assets could become the property of the Russian state, or be transferred to Russian private owners and continue to work as before.
Confiscation of assets of Western companies in Russia would seriously impact their respective bottom lines, meaning they could try to put pressure on governments, both in their home countries and in Russia, to try to avoid having their capital seized.
“We have a lot of foreign companies working in Russia, including those from so-called unfriendly countries. We have more than 50 decently-sized American firms alone working here, and plenty of European companies,” Dr. Georgy Ostapkovich, director of the Center for Market Research at the Institute of Statistical Research and Economics of Knowledge at Russia’s Higher School of Economics, told Sputnik.
Sorry Yellen, Seizing Assets Won’t Crash Russian Economy
Kolganov says that as unpleasant as a seizure of Russia’s assets abroad might be it would not serve to tank the country’s economy, with Moscow able to continue its international payments using its sizable and healthy foreign exchange earnings after reorienting its trade toward developing countries. The money frozen in Western banks constitutes reserves, which “were not actively used for international trade and international payments” anyway, the professor explained.
“For private businesses, the confiscation of assets would create a pretty big hole in their earnings and budgets. Therefore, it would be a rather sensitive measure if Russia had to resort to it in response to the confiscation of its assets,” the economist added.
Dr. Ostapkovich emphasizes that Moscow will have to be strategic and precise in the foreign assets it may choose to seize, to avoid the risk of friendly countries and companies doing business in Russia feeling threatened.
“Every operation” on Russia’s part “must take place with the help of legal services, that is, through the courts,” the veteran economist said. “We are a state based on the rule of law, and cannot just go ahead and close them, because they will naturally go to court. Moreover, they will file in the London court, which judges according to Anglo-Saxon law. This is case law. They will look for a precedent.”
In other words, Ostapkovich stressed, Moscow should expect a tug of war on the international stage regarding the seizure of assets by the West and Russia’s tit-for-tat response.
Pandora’s Box of Damage to the Dollar
In his interview with Sputnik, Russia’s finance minister mentioned the promising transition away from Western currencies in favor of new currencies among the world’s rising economies, especially China.
“The Chinese are reducing their holdings of American securities. This is a consequence of what’s happening [to Russia, ed.] The reliability of the dollar and the euro has been undermined,” Siluanov said.
And while it may be too early to speak about the collapse of the dollar or euro as a result of a decision to seize the assets of a sizable economy like Russia, Kolganov confirmed that it has the potential to seriously undermine Western reserve currencies’ reputation in a big way.
“The yuan’s share in international transactions has doubled over the past two years, but doubled to only about 4.6 percent of the total. This is not a huge amount, but still, an upward trend exists. The share of rubles in international payments has also increased, mainly in the form of payments with our country… Nevertheless, a gradual move away from the dollar will of course take place. Because here we’re talking not only about the confiscation of assets, which will undermine confidence in payments made in reserve currencies. Because any country and any central bank may feel threatened that if the geopolitical situation changes, they could be treated in a similar way.”
The problem is exacerbated by the fact that the United States and Europe are facing a loss of economic confidence at home, with the former facing debt levels that are off the charts, which in the future could cause serious shocks to the entire global dollar system, Kolganov noted.
Recipe for Action
Russia can already move forward with tit-for-tat measures against the Europeans over Brussels’ law allowing the seizure and use of the interest earned on Russian assets frozen in Western banks, Ostapkovich says, noting if the EU moves forward with the seizures, Moscow could similarly start shaving dividends and interest on European companies operating in Russia.
EU’s Russia sanctions ‘massively circumvented’ – study
RT | February 27, 2024
The EU’s sanctions on Russia are being “massively circumvented” via third countries, Euractiv reported on Monday, citing a study by the IESEG School of Management. The bloc has introduced 13 rounds of restrictive measures against Moscow over the Ukraine conflict.
The research found statistical evidence that the sanctions have been hugely dodged for so-called “high priority items,” which are subject to EU export restrictions and include manufacturing equipment and electrical components with potential military applications.
According to the report, EU exports of such items to Türkiye, the UAE, Kazakhstan, and other “Kremlin-friendly” countries skyrocketed by €2.9 billion ($3.2 billion), or over 80%, in the period from October 2022 through September 2023 compared to the previous twelve-month span. The data shows that at the same time EU exports of such goods to Russia decreased by $3.5 billion, or more than 95%.
The decline in EU sales of advanced technology and dual-use items to Moscow was seen as almost entirely compensated for by a sharp increase in exports of the same goods to countries in West and Central Asia, according to Euractiv.
“The surge of these purchases by third countries is too huge to be entirely caused by an increase in local demand, so that it can be suspected that a big part was thereafter exported to Russia,” the IESEG report claimed.
A senior associate at the German Institute for International and Security Affairs, Janis Kluge, told Euractiv that “Russia’s economy is resilient because it is, for the most part, still a market economy.”
The country adjusted to the sanctions through a “decentralized effort” by “thousands of [businesses] managers” to find their ways around the restrictions and “keep things working” – thus proving to be one of the key factors behind Russia’s relative “resilience” to Western sanctions, according to Kluge.
“There were new traders popping up who specialized in importing these goods through third countries. There’s a whole industry that has appeared, which is dedicated to the circumvention of sanctions – because it’s a billion-dollar business,” he stated.
The EU adopted its 13th package of sanctions against Russia last week ahead of the second anniversary of the start of the Ukraine conflict. The measures target 106 individuals and 88 entities and also further restrict trade in technologies and components that could be used by Russia’s defense industry. Components for the development and production of unmanned aerial vehicles have also been added to the blacklist. Some of the sanctioned entities are located in third countries, such as India, China, and Türkiye.
Biden regime wants to put the US on permanent war footing
The new ‘defense industrial strategy’ is a boon for the arms makers, not so much for regular Americans
BY JULIA GLEDHILL | RESPONSIBLE STATECRAFT | FEBRUARY 23, 2024
The White House is steering the United States into a budgetary ditch it may not be able to get out of.
The Biden administration is supersizing the defense industry to meet foreign arms obligations instead of making tradeoffs essential to any effective budget. Its new National Defense Industrial Strategy lays out a plan to “catalyze generational change” of the defense industrial base and to “meet the strategic moment” — one rhetorically dominated by competition with China, but punctuated by U.S. support for Ukraine’s fight against Russia and Israel’s military campaign in Gaza.
Instead of reevaluating its maximalist national security strategy, the Biden administration is doubling down. It is proposing a generation of investment to expand an arms industry that, overall, fails to meet cost, schedule, and performance standards. And if its strategy is any indication, the administration has no vision for how to eventually reduce U.S. military industrial capacity.
When the Cold War ended, the national security budget shrank. Then-Secretary of Defense Les Aspin and deputy William Perry convened industry leaders to encourage their consolidation in a meeting that later became known as the “Last Supper.” Arms makers were to join forces or go out of business. So they ended up downsizing from over 50 prime contractors to just five. And while contractors needed to pare down their industrial capacity, unchecked consolidation created the monopolistic defense sector we have now — one that depends heavily on government contracts and enjoys significant freedom to set prices.
In the decades since, contractors have leveraged their growing economic power to pave inroads on Capitol Hill. They have solidified their economic influence to stave off the political potential for future national security cuts, regardless of their performance or the geopolitical environment.
Growing the military industrial base over the course of a generation would only further empower arms makers in our economy, deepening the ditch the United States has dug itself into for decades by continually increasing national security spending — and by doling about half of it out to contractors. The U.S. spends more on national security than the next 10 countries combined, outpacing China alone by over 30%.
Ironically, the administration acknowledges in the strategy that “America’s economic security and national security are mutually reinforcing,” stating that “the nation’s military strength depends in part on our overall economic strength.” The strategy further states that optimizing the nation’s defense needs typically requires tradeoffs between “cost, speed, and scale.” It doesn’t mention quality of industrial output — arguably the biggest tradeoff the U.S. government has made in military procurement.
Consider, for instance, the B-2 bomber, the F-35 fighter jet, the Littoral Combat Ship, the V-22 Osprey, and many other examples of acquisition failures that have spanned decades. More recently, the Government Accountability Office has reported that while the number of major defense acquisition programs has fallen, both costs and average delivery time have risen.
So what is the military really getting from more and more national security spending? Less for more: Fewer weapons than it asked for, usually late and over budget, and, much of the time, dysfunctional. Acquisition failures are a major reason the Congressional Budget Office projects that operations and maintenance spending will significantly exceed the rate of inflation for the next decade — a considerable budgeting issue for a military that seemingly has no plans to reduce either its force structure or its industrial capacity. Quite the opposite, in fact.
Biden’s new National Defense Industrial Strategy specifically states there is a need for the U.S. to “move aggressively toward innovative, next-generation capabilities while continuing to upgrade and produce, in significant volumes, conventional weapons systems already in the force.” Ironically, the military has spent over two decades developing the F-35, next-generation technology that the Pentagon still hasn’t greenlit for full-rate production.
Throwing more money at an industrial base comprised of businesses too big to fail won’t increase the quantity or quality of its output. But that’s exactly what the strategy urges. One of the priorities is to “institutionalize supply chain resilience.” It’s an important goal, but one the administration proposes the Pentagon tackle, in part by investing in “spare production capacity,” what the strategy defines as “excess capacity a company or organization maintains beyond its current production needs.”
But building factories to sit empty is not supply chain resilience. It’s wasting money on unnecessary infrastructure, creating a profit motive for arms makers to make more weapons. And for an industry constantly sounding the alarm about the need for consistent “demand signals” from Congress, the Pentagon’s plans to invest a generation of U.S. taxpayer money in “spare production capacity” sounds a lot like throwing the demand-supply principle out the window. In that case, the U.S. might as well consider nationalizing the defense industry, which already lacks competition and relies almost entirely on the government. Why not eliminate the profit motive? It’s not like making money drives contractors to produce quality products on time or within budget.
Besides supply chain resilience, another priority laid out in this strategy is “flexible acquisition.” The stated goal is to reduce costs and development times while increasing scalability. In pursuit of that goal, the administration proposes “a flexible requirements process” for multiyear contracts, and the expansion of multiyear contracting writ large. It reasons that as priorities shift in an “evolving threat environment,” so too should contractors’ deliverables. But pairing flexible requirements with an increasing number of multiyear contracts is a recipe for disaster.
Before Russia attacked Ukraine, multiyear contracts were relatively rare — limited to major aircraft and ships. The Congressional Research Service notes that estimated savings on these programs have historically fallen within the range of 5% — 10%. But those are estimates, and they may not apply to other munitions now produced under multiyear contracts. The report also confirms that actual savings are “difficult to observe,” in part because the Pentagon does not track the cost performance of multiyear contracts.
Just because multiyear contracting is more common doesn’t mean it’s cheaper. And while the Pentagon argues that multiyear contracts give contractors the so-called demand signal they need to ramp up production, contractors don’t usually spend their extra money on identifying efficiencies or making capital investments to increase output at a lower cost — and the Pentagon isn’t checking.
The strategy also proposes “aggressive expansion of production capacity.” It notes that during peacetime, weapons acquisition tends to focus on “greater efficiency, cost effectiveness, transparency, and accountability.” Taking caution not to assert that the United States is in wartime, the strategy contrasts peacetime acquisition policy with “today’s threat environment,” calling for “crisis period acquisition policy” that revitalizes the industrial base and shifts focus from efficiency and effectiveness to ensuring that military contractors are “better resourced.” But contractors don’t have a resource problem, and “crisis acquisition policy” puts the United States on a “permanent war footing.”
Lawmakers must challenge the administration’s maximalist national security strategy by interrogating its push to expand military industrial capacity so drastically. It’s critical that they do, not only because the U.S. is limited in what it can produce and provide to other countries but also because arms industry greed is boundless — and without off-ramps or constraints, the U.S. government may find in 20 or 30 years that it’s in a ditch it can’t get out of.
Julia Gledhill is an analyst in the Center for Defense Information at the Project on Government Oversight. Before joining POGO, she was a foreign policy associate at the Friends Committee on National Legislation.
After Two Years, Neocons Desperate For More War in Ukraine
By Ron Paul | February 26, 2024
In a recent CNN interview, the normally very confident US Under Secretary of State Victoria Nuland sounded a little desperate. She was trying to make the case for Congress to pass another $61 billion dollars for the neocons’ proxy war project in Ukraine and she was throwing out the old slogans that the neocons use when they want funding for their latest war.
Asked by CNN whether she believes that Congress will eventually pass the bill, Nuland responded that she has confidence that, “we will do what we have always done, which is defend democracy and freedom around the world…”
What Nuland is attempting here is what the neocons always do. They try to wrap their terrible policies up in the American flag and sell it to the American people as something reflective of “our” values. If you oppose another neocon war, well then you are unpatriotic according to their trickery.
But Americans are waking up to the lies of the neocons and more and more are realizing that there is no “we” when the neocons are trying to sell another war. It is “them.” The “we” in the equation are the people who are being robbed to pay for what will inevitably be another neocon failure.
Does any American still believe that Washington was “defending democracy and freedom” when it used a pack of lies to get us into Iraq, where a country was destroyed and perhaps a million people were killed? How about when, after 20 years in Afghanistan, we managed to replace the Taliban… with the Taliban? And Syria and Libya and all the other interventions?
Was Washington “defending democracy” when Nuland and the rest of the neocons successfully overthrew a democratically elected government in Ukraine in 2014?
It’s getting harder and harder for the American people to choke down the war lies of the neocons. That is something that should make us feel optimistic. In the same interview, Nuland said she was confident that when House Members return to session next week, “after they’ve been out in their districts hearing from the American people,” they will vote to send the $61 billion to Ukraine.
Looking at public opinion polls, however, it is far more likely that any Member meeting with constituents during the break will hear the opposite. It is likely they will hear a demand that not another penny be spent on the brutal, futile, and disastrous Ukraine war. According to a Harris poll taken earlier this month, some 70 percent of Americans want talks to end the Ukraine war!
Americans no longer support the neocon war project in Ukraine. That is something to celebrate.
Perhaps in a last show of desperation, Victoria Nuland debuted another argument for keeping the war money flowing for Ukraine. She said, “we have to remember that the bulk of this money is going right back into this economy to make those weapons…”
Is this supposed to be attractive to the American people? The middle class and the poor are being destroyed by inflation and squeezed by a debased currency so that the wealthy, politically-connected weapons manufacturers can get even richer? Instead of money to rebuild this country and protect its borders, Americans should be thrilled to see their hard work go up in smoke, literally, in Ukraine?
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The New Baghdad Pact
By Dr Bouthaina Shaaban | February 23, 2017
A recently declassified CIA document prepared in 1983, and released on 20 January 2017, shows that the United States had at the time encouraged Saddam Hussein to attack Syria, which would have led to a vicious conflict between the two countries, thus draining their resources.
The report, which was then prepared by CIA officer Graham Fuller, indicates that the US tried adamantly to convince Saddam to attack Syria under any pretense available, in order to get the two most powerful countries in the Arab East to destroy each other, turning their attention away from the Arab-Israeli conflict. … continue
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