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The Great Reset Didn’t Work: The Case of EVs

By Jeffrey A. Tucker | Brownstone Institute | February 15, 2024

We are living through one of history’s longest and most excruciating versions of “We told you so.” When in March 2020, the world’s government decided to “shut down” the world’s economies and throttle any and all social activity, and deny kids schooling plus cancel worship services and holidays, there was no end to the warnings of the terrible collateral damage, even if most of them were censored.

Every bit of the warnings proved true. You see it in every story in the news. It’s behind every headline. It’s in countless family tragedies. It’s in the loss of trust. It’s in the upheaval in industry and demographics. The fingerprints of lockdowns are deeply embedded in every aspect of our lives, in ways obvious and not so much.

Actually, the results have been even worse than critics predicted, simply because the chaos lasted such a long time. There are seemingly endless iterations of this theme. Learning losses, infrastructure breakages, rampant criminality, vast debt, inflation, lost work ethic, a growing commercial real estate bust, real income losses, political extremism, labor shortages, substance addiction, and more much besides, all trace to the fateful decision.

The headlines on seemingly unrelated matters go back to the same, in circuitous ways. A good example is the news of the electric vehicle bust. The confusion, disorientation, malinvestment, overproduction, and retrenchment – along with the crazed ambition to force convert a country and world away from oil and gas toward wind and solar – all trace to those fateful days.

According to the Wall Street Journal, “As recently as a year ago, automakers were struggling to meet the hot demand for electric vehicles. In a span of months, though, the dynamic flipped, leaving them hitting the brakes on what for many had been an all-out push toward an electric transformation.”

Reading the story, it’s clear that the reporter is downplaying the sheer scale of the boom-bust.

That’s not to say that Tesla itself is going bust, only that it has a defined market segment. The technology of EVs simply cannot and will not become the major way Americans drive. It might have seemed otherwise for a moment in time but that was due to factors that traced exactly to pent up demand caused by lockdowns and huge errors in supply management due to bad signaling.

Looking back, the lockdowns hit in the spring of 2020 and supply chains were entirely frozen by force. This might have been a major problem for car manufacturers that had long relied on just-in-time inventory strategies. However, at the very time, the demand for travel collapsed. Commutes came to an end, and vacations too. At that same time, pre-arranged government subsidies and mandates for EVs flooded the industry, all of which were later ramped up by the Biden administration.

As demand picked up, retailers sold their old inventory of cars and looked to manufacturers for more but the chips needed to complete the cars were not available. Many cars were put on hold and lots emptied out. This continued through the following year as used car prices soared and stock was otherwise depleted.

By the time matters became desperate in the fall of 2021, manufacturers discerned a heightened demand for EVs and began to retool their factories for more. There was even a time when cars were being shipped without power steering, just to meet the demand.

It might have seemed for a time like the crazed period we just lived through was birthing a completely different way of life. A kind of irrationality, born of shock and awe, swept industry and culture. The EV was central to it.

This demand seemed to pan out in 2022 as Americans grabbed whatever cars were available, perhaps willing to give the new doohickies a shot. So on it went as more carmakers threw more resources at production, benefitting from massive subsidies and staying in compliance with new mandates for reducing their carbon footprint.

There was no particular reason to think anything would go wrong. But then the next year began to reveal uncomfortable truths. Cold weather dramatically cuts the range of the EVs. Charging stations are not as readily available on longer trips, charging takes longer than one expects, and having to plan such matters adds time. In addition, the repair bills can be extremely high if you can find someone to do it.

Tesla as a manufacturer had planned out all such contingencies but other carmakers less so. Very quickly the EVs gained a bad reputation on a number of different fronts.

“Last summer, dealers began warning of unsold electric vehicles clogging their lots. Ford, General Motors, Volkswagen and others shifted from frenetic spending on EVs to delaying or downsizing some projects,” writes the Journal. “Dealers who had been begging automakers to ship more EVs faster are now turning them down.”

In short, “the massive miscalculation has left the industry in a bind, facing a potential glut of EVs and half-empty factories while still having to meet stricter environmental regulations globally.”

Today, lots are selling the cars at a loss just to avoid the costs of keeping them around.

Truly, this has been one spectacular boom-bust in a single industry. There seems to be no real end to the bust either. These days it appears that everyone has given up on any chance of actually converting the mass of American cars to become EVs. All recent trends are headed in the other direction.

Meanwhile, the EV is deeply loved by many as 1) a second car, 2) for well-to-do suburban commuters, 3) who own homes, 4) can charge overnight, and 5) have a gas car as a backup for cold weather and out-of-town trips. That is to say, the market is becoming exactly what it should be – a street-worthy golf cart with very fancy features – and not some paradigmatic case for the “great reset.” That’s simply not happening, despite all the subsidies and tax breaks.

“A confluence of factors had led many auto executives to see the potential for a dramatic societal shift to electric cars,” writes the Journal, including “government regulations, corporate climate goals, the rise of Chinese EV makers, and Tesla’s stock valuation, which, at roughly $600 billion, still towers over the legacy car companies. But the push overlooked an important constituency: the consumer.”

Indeed, the American economy, much to the chagrin of many, still primarily relies on consumers to make choices in their best interest. When that doesn’t happen, no amount of subsidies can make up the difference.

This story is impossible to understand without reference to the crazed illusions caused by lockdowns. Those are what provided the respite of time to allow automakers to retool. Then they boosted demand artificially for transportation after a long period in which inventory had been depleted.

Then the whole ridiculous ethos of the “great reset” convinced idiotic corporate executives that nothing would ever be the same. Maybe we would get 15-minute cities powered by sunbeams and breezes after all, along with a social-credit system that would allow the authorities to decommission our ability to drive in an instant.

It turns out that the entire bit, including the fake prosperity of the lockdown economy, made possible by money printing and grotesque levels of government spending, was unsustainable. Even sophisticated car companies bought into the nonsense. Now they are paying a very heavy price. The new market depended on a panic of buying that turned out to be temporary.

In short, the illusions of these horrible policies have come crashing down. It was born of liberty-wrecking policies under the cover of virus control. Every special interest seized the day, including a new generation of industrialists seeking to displace the old ones by force.

More and more, it’s obvious what a disaster this was. And yet no one has apologized. Hardly anyone has admitted error. The big shots who wrecked the world are still in power.

The rest of us are left holding the bag, and paying very high repair bills for cars that are non-optimal for driving from one town to another and back again in the cold weather that was supposed to be gone by now had the “climate change” prophets been correct. They turn out to be as correct as those who promised us that we would no longer need “fossil fuels” and that the magic inoculation would protect everyone from a killer virus.

What astonishing illusions were born of this nutty and destructive period. At some point, not even corporate CEOs will be tricked by the experts.

Jeffrey Tucker is Founder, Author, and President at Brownstone Institute.

February 16, 2024 Posted by | Civil Liberties, Economics, Malthusian Ideology, Phony Scarcity | , , | Leave a comment

Moody’s Downgrades Israel, Warns That Weaker US Backing for Israel, War with Hezbollah Would Trigger Crash

By John Helmer – Dances with Bears – February 11, 2024

Twice already the warning of the obvious has been posted in the money markets — Israel cannot survive a long war with the Arabs and Iran.

In this long war, the gods do not favour the Chosen People, it was reported on October 27, three weeks after the Hamas offensive began. The decline in Israel’s export earnings from tourism and diamonds; the loss of imported supplies for manufacturing and consumption from the Houthi blockade of the Red Sea; and increasing risk to both imports and exports at the Mediterranean ports within range of Hamas and Hezbollah strikes were identified at that time.

The international ratings agencies, Moody’s, Fitch and Standard and Poors, postponed announcing the obvious for as long as they could.

In attrition war, on the economic front just like the Gaza and other fire fronts, the Axis of Resistance wins by maintaining its offensive capacities and operations for longer than the US and US-backed Israeli forces can defend. Like troops, tanks, and artillery pieces, the operational goal is to grind the enemy slowly but surely into retreat, then capitulation. Last week, Moody’s had already decided in-house to downgrade Israel; for several days senior management fended off a ferocious attack from Israeli officials and their supporters in the US trying to compel postponement of the downgrade and the analytical report substantiating it.

On February 6, in a review of the shekel, bond, credit default swaps (CDS), budget deficit, and other indicators, the conclusion was there could be no stopping the money markets from moving against Israel. Negative ratings from the agencies raise the cost of servicing Israel’s state and corporate bonds, and put pressure on the state budget. A ratings downgrade is a signal to the markets to go negative against the issuer – this usually comes after the smart money has changed its mind and direction. In Israel’s case, however, there has been an exceptional delay between negative outlook and downgrade. The last Fitch report on Israel was dated October 17; Moody’s followed on October 19; Standard & Poors (S&P) on October 24.

That Israeli and US tactics had forced postponement of new reports from the troika was obvious. A fresh warning was published on this website: as real estate and other tax collections collapse, Israel will have to make a large cash call on the US. This is going to come in the near future, just as the government in Kiev has been forced into calling on Congress as the Ukraine war is being lost. The longer both wars are protracted, the more obviously the loss of confidence expresses itself in Washington.

Moody’s has now caught up. According to the Israeli press, this is the first credit and currency downgrade in their country’s history.

In a report dated last Friday but not issued until Saturday, the Jewish sabbath, the agency officially reduced Israel’s rating from A1 to A2, and added pointers of further downgrading to come. The Anglo-American press immediately reacted against Moody’s. “Israel hits back”, the Financial Times headlined. The newspaper added: “[Prime Minister Benjamin] Netanyahu, in a rare statement over the Jewish Sabbath, said: ‘The rating downgrade is not connected to the economy, it is entirely due to the fact that we are in a war. The rating will go back up the moment we win the war — and we will win the war.’” In the Associated Press report, “Israel’s finance minister blasts Moody’s downgrade”. Rupert Murdoch’s platform Fox claimed: “Israel has a strong, open economy despite Moody’s downgrade”. “Israel’s creditworthiness remains high,” according to the New York Times, “but the rating agency noted that the outlook for the country was negative… A rating of A2 is still a high rating.”

The press release version of Moody’s report is republished verbatim so that its meaning can be understood without the propaganda.

Three points have been missed in the Anglo-American counterattack and Israeli government’s bluster. The first is the warning that Israel will soon have to request enormous cash backing from the US, and if there is any sign of weakening on that in Washington, the collapse of the Israeli economy and its capacity to continue its war is inevitable. The Moody’s report camouflaged the point this way: “The related issuances benefit from an irrevocable, on-demand guarantee provided by the Government of the United States of America (Aaa negative) with the government acting through USAID. The notes benefit explicitly from ‘the full faith and credit of the US’ and as per prospectus, USAID is obligated to pay within three business days if the guarantee is called upon.”

The second point strikes at announcements from Israel Defence Forces (IDF) generals and Netanyahu of their plan to expand their operations on the northern front – the Litani River ultimatum they called it in December. According to Moody’s report, “downside risks remain at the A2 rating level. In particular, the risk of an escalation involving Hezbollah in the North of Israel remains, which would have a potentially much more negative impact on the economy than currently assumed under Moody’s baseline scenario. Government finances would also be under more intense pressure in such a scenario.”

The third point is the most explosive. After cutting Israel’s rating to A2, Moody’s warned that further and deeper downgrades may follow, but that there is presently no way the ratings agency can predict what will happen next. “The ongoing military conflict with Hamas, its aftermath and wider consequences materially raise political risk for Israel as well as weaken its executive and legislative institutions and its fiscal strength, for the foreseeable future.”

In flagging those last four words – “for the foreseeable future” — Moody’s has told the markets that the strategic initiative in this war has now passed to the Axis of Resistance. Of course, the Arabs and Iranians already know. … Full article 

February 14, 2024 Posted by | Economics, Ethnic Cleansing, Racism, Zionism | , , , , | Leave a comment

Beijing reacts to claim EU will target Chinese firms with Russia sanctions

RT | February 14, 2024

Beijing rejects “illegal sanctions” and will defend the interests of its companies, the Chinese Foreign Ministry has said following a report that the EU could blacklist some of the country’s firms for allegedly helping Russia to evade the bloc’s restrictions.

The EU is planning to place restrictions on three Chinese businesses and one Indian company as part of its 13th round of sanctions on Russia over its conflict with Ukraine, the Financial Times reported on Monday.

Brussels believes the firms in question are helping Moscow to circumvent existing restrictions, especially through the supply of electronic components that can be repurposed for use in drones and other weapons systems. If the plan is approved by member states, it will see the EU sanction companies from mainland China and India – two of the bloc’s key trading partners – for the first time.

”We are aware of the relevant reports,” the Chinese Foreign Ministry said in a statement on Tuesday. “China firmly opposes illegal sanctions or ‘long-arm jurisdiction’ against China on the grounds of cooperation between China and Russia.”

Chinese and Russian companies “carry out normal exchanges and cooperation and do not target third parties, nor should they be interfered with or influenced by third parties,” the ministry said.

Beijing “will take necessary measures to resolutely safeguard the legitimate rights and interests of Chinese enterprises.”

According to media reports, the EU was already considering sanctioning Chinese firms over their links with Russia last year, but refrained from doing so after Beijing assured Brussels that it was not supporting Moscow’s military effort in Ukraine.

Indian newspaper the Economic Times claimed on Wednesday that the government in New Delhi was also studying reports that an Indian firm could face sanctions over its dealings with Russia.

The Indian authorities may ask senior EU officials to clarify the situation during their meetings as part of the Raisina Dialogue forum on geopolitics and economy, which will take place in New Delhi next week, according to the outlet.

The paper’s source said it was “curious” that the report had emerged ahead of the high-profile event in the Indian capital.

Since the outbreak of the conflict between Russia and Ukraine in February 2022, both China and India have consistently called for a peaceful resolution of the crisis. Beijing and New Delhi have resisted Western pressure to join sanctions on Moscow, and instead have boosted economic cooperation with Russia, becoming the main destinations for Russian oil.

Chinese customs data shows that trade turnover between the two countries has grown by 26.6% percent in the past year, reaching a record $240 billion. The sales volume between Russia and India in the first ten months of 2023 stood at almost $55 billion, according to the Russian ambassador in New Delhi – an increase of 41% compared to 2022.

February 14, 2024 Posted by | Economics, Russophobia | , , | Leave a comment

Scrapping Russian gas deal would cause prices to ‘explode’ – Austrian MP

RT | February 13, 2024

Austria’s plans to end a long-term contract for Russian gas would cause energy prices to “explode” and would fuel inflation in the country, Axel Kassegger, a member of the Freedom Party of Austria, has warned.

On Monday, Austrian Energy Minister Leonore Gewessler urged for radical steps to be taken to cut the country’s reliance on Russian gas, including breaking the long-term deal that state-owned energy company OMV has with Russia’s Gazprom until 2040.

In December, the share of Russian gas in Austria’s total gas imports surged to a new record of 98%, up from 76% the previous month, according to Gewessler.

“The market and the energy companies that are part of it are not fulfilling their responsibility to reduce the dependency on Russian gas sufficiently,” the minister said. “We must prepare to exit OMV’s long-term contracts,” she added.

Kassegger, a member of the Austrian National Council, took aim at Gewessler’s plans on Monday, urging members of other political parties who have “retained any trace of economic policy common sense” to “ring all the bells” at the announcement and say a “clear no” to the idea “immediately.”

He warned that a decision to rescind the contract with Russia would result in a several-fold increase in gas prices, send inflation skyrocketing, and deprive Austrian businesses of competitive advantages.

“In her green-ideological drive, Minister Gewessler has apparently set herself the goal of causing energy prices to explode even further in the final phase of her term in office and thus driving our economy and industry completely into a wall,” he said.

Austria’s imports of Russian gas reached pre-Ukraine conflict levels last year, as the country imported almost double the amount of gas its economy needed. Stable Russian gas supplies and increased shipments allowed Vienna to become a net energy exporter for the first time in twenty years.

Kassegger said that “an end to these gas supply contracts would therefore be the next political knee-jerk that this unfortunate black-green federal government takes” in order to comply with EU sanctions, which only harm the Austrian population and economy without causing any change in Russia’s behavior.

He called for an end to the “demonization” of fossil fuels in a “hysterical” climate policy from the “ideological ivory tower,” saying that Austria needs an energy policy that pursues only the interests of its own citizens and businesses.

February 13, 2024 Posted by | Economics, Malthusian Ideology, Phony Scarcity | | Leave a comment

Ford Lost $4.7B On EVs Last Year, Or About $64,731 For Every EV It Sold

By Robert Bryce | February 7, 2024

How bad is the EV business? Yesterday afternoon, Ford Motor Company reported that the operating loss it incurred on its EV business in 2023 exceeded its total profit for the year.

That shocking fact comes directly from the company’s earnings report, which carried the headline, “Ford+ Delivers Solid 2023…” The Dearborn-based auto giant had an operating loss (also known as EBIT, or earnings before interest and taxes) of $4.7 billion on its EV business last year. Meanwhile, the company reported net income (profit) of just $4.3 billion, on revenue of $176 billion. The company also reported operating income, or what it called “adjusted EBIT,” of $10.4 billion.

Calculating the company’s per-EV operating loss requires only a bit of simple division. The company sold 72,608 EVs last year and had an EBIT loss of $4.7 billion in its “Model e” segment. Thus, the auto giant lost a knee-buckling $64,731 for each EV it sold in 2023. To put that $64,731 per-vehicle loss in perspective, a top-of-the-line Mustang Mach-E listed on the website of a large Ford dealership here in Austin (see below) is selling for $66,615.

The company said the $4.7 billion loss reflected “an extremely competitive pricing environment, along with strategic investments in the development of clean-sheet, next-generation EVs.” The $4.7 billion loss is far higher than the $3 billion loss Ford projected back in March. Further, it’s more than double the $2.2 billion loss it recorded in the EV segment in 2022. Thus, in the last two years alone, the company has lost nearly $7 billion on its foray into fully electric automobiles. Recall that, as I reported here last July, the company has plans to spend $50 billion on EVs.

Given the company’s 2023 results, it’s clear that Ford’s headlong plunge into the EV market has been an unmitigated disaster and that the company would be far more profitable had it ignored the EV fad. Of course, the company tried to put a positive spin on its EV results, noting that EV sales rose by 18% last year. But those sales must be put into context. In 2023, Ford sold 750,789 F-Series trucks. Thus, the auto giant sold more than 10 times as many conventionally powered trucks as EVs (72,608).

Warnings about the company’s failing EV business have been coming for months. In December, the automaker announced it was slashing production of its F-150 Lightning in half, from 3,200 trucks per week to 1,600 per week, as part of an effort “to match Lightning production to customer demand.” On January 19, the company said it was cutting production of Lightning even further because, as Reuters reported, “demand for EVs has been lower than expected.”

What should be particularly worrisome for investors — and for the company’s CEO, Jim Farley — is that Ford’s EV losses aren’t falling, they are rising. Indeed, those losses doubled between the first quarter and fourth quarter of 2023. Ford’s first-quarter EV operating loss was $722 million. In the second quarter, it was $1.1 billion. In the third quarter, it was $1.3 billion, and in the fourth quarter, Ford’s EV operating loss hit $1.57 billion.

Ford’s losses are only part of the ongoing train wreck in the EV market. Last October, General Motors said it would delay the opening of a $4 billion electric truck factory in Michigan for a year. That same month, Reuters reported that  Honda and General Motors “were ending a $5 billion plan to develop lower-cost EVs together just a year after announcing the effort.” The article continued, noting that GM “would focus near-term EV efforts on meeting demand rather than hitting specific volume targets.”

In November, nearly 3,900 automobile dealers across the country sent a letter to President Biden telling him that EV demand is “not keeping up with the large influx of BEVs arriving at our dealerships prompted by the current regulations. BEVs are stacking up on our lots.” They continued, saying EVs are “not selling nearly as fast as they are arriving at our dealerships.”

As I explained in the written testimony I submitted to the Senate Energy and Natural Resources Committee last month, EVs have always been a niche-market product, not a mass-market one. And that niche market is dominated by wealthy, white, male, liberal voters who live in a handful of heavily Democratic cities and counties.

I wrote:

Further, that niche market is primarily defined by class and ideology. Some 57% of EV owners earn more than $100,000 annually, 75% are male, and 87% are white. Last March, Gallup reported, “a substantial majority of Republicans, 71%, say they would not consider owning an electric vehicle.”

Last October, researchers at the University of California, Berkeley, released a remarkable study that found “counties with affluent left-leaning cities” like Cambridge, San Francisco, and Seattle “play a disproportionately large role in driving the entire national increase in EV adoption.” The researchers found that over the past decade, about half of all the EVs sold in the U.S. were sold in the most heavily Democratic counties in the country. The summary of the study deserves quoting at length:

“The prospect for EVs as a climate change solution hinges on their widespread adoption across the political spectrum. In this paper, we use detailed county-level data on new vehicle registrations from 2012-2022 to measure the degree to which EV adoption is concentrated in the most left-leaning U.S. counties. The results point to a strong and enduring correlation between political ideology and U.S. EV adoption. During our time period about half of all EVs went to the 10% most Democratic counties, and about one-third went to the top 5%. There is relatively little evidence that this correlation has decreased over time, and even some specifications that point to increasing correlation. The results suggest that it may be harder than previously believed to reach high levels of U.S. EV adoption.” (Emphasis added.)

Perhaps the most remarkable thing about the staggering losses at Ford and the other automakers is that the carmakers didn’t understand the limited appeal of EVs. Their lack of knowledge of the history of EVs, the concentrated nature of the market, and the limited number of motorists interested in buying EVs should go down as one of the biggest blunders in modern automobile history. Again, as I noted in my written testimony:

Ford and the other big automakers have been spending billions of dollars to cater to the whims of a tiny segment of the overall car market — a segment heavily concentrated in a handful of liberal counties. That’s a lousy business strategy. But it is an even worse strategy for federal policymakers who must be responsive to the transportation needs of every American, not just those who live in liberal cities and large, wealthy states.

In October, the chairman of Toyota Motor Corporation, Akio Toyoda, gloated about his company’s success with hybrids and the friction other automakers face in the EV business. Toyoda said automakers are “finally seeing reality” about all-electric cars. Unfortunately for Ford and its shareholders, finally seeing reality comes with multi-billion-dollar losses.

A final note: Ford’s EV sales in January fell by 11% compared to the same period last year. There’s more carnage ahead for FoMoCo.

February 11, 2024 Posted by | Economics | | Leave a comment

‘Vassal’ Scholz Gov’t Ignoring Nord Stream Terrorism Despite ‘Colossal Damage’ Done to Germany

By Ilya Tsukanov – Sputnik – 09.02.2024

Tucker Carlson asked President Putin who he thought blew up the Nord Stream pipeline network and why, with the Russian leader offering a response which included an assessment of the competence of the current German government. Sputnik reached out to a lawmaker from Germany’s fastest growing opposition party for his take on Putin’s comments.

“Who blew up Nord Stream?” Carlson asked Putin at the midpoint of his two-hour-long interview. “You, for sure,” Putin jokingly replied. “I was busy that day. I did not blow up Nord Stream,” Carlson assured. “You personally may have an alibi, but the CIA has no such alibi,” Putin answered.

“You know, I won’t go into details, but people always say in such cases: ‘look for someone who is interested’. But in this case we should not only look for someone who is interested, but also for someone who has the capabilities. Because there may be many people interested, but not all of them are capable of going to the bottom of the Baltic Sea and carrying out this explosion,” Putin continued. “It is clear to the whole world what happened, and even American analysts talk about it directly,” Putin said, citing evidence laid out publicly about Washington’s responsibility for the Nord Stream attack.

Vladimir Putin, in an interview with Carlson, explained who blew up the Nord Stream pipeline.

“Who blew up Nord Stream?” the reporter asked.

“You for sure,” the president replied.

“I was busy that day. I did not blow up Nord Stream. Thank you though,” Carlson said.

Asked why Germany, the main economic loser from the attack, has remained silent on the terrorist incident despite essentially being targeted by its own NATO ally, Putin said he believes “today’s German leadership is guided by the interests of the collective West rather than its [own] national interests.”

“After all, it is not only about Nord Stream-1, which was blown up, and Nord Stream-2, which was damaged, but one pipe remains safe and sound, and gas can be supplied to Europe through it, but Germany does not open it,” Putin said, pointing to the energy crisis currently rocking the country, and suggesting the nation is being led by “highly incompetent people.”

Over 15 months after the Nord Stream incident, German authorities have yet to release the findings of an official investigation.

Eugen Schmidt, a Bundestag lawmaker from the opposition Alternative for Germany (German acronym AfD) Party who has made several parliamentary inquiries on the matter, told Sputnik that the lack of interest in finding the culprits of the attack is a sign of not only incompetence, but vassal status.

“Even the fact that the investigation has been classified as ‘secret’, i.e. the public is isolated as much as possible from it, despite the colossal harm done to both the German economy and the country’s prestige in general,” is concerning, Schmidt said.

Instead, the lawmaker noted, Germans have been treated to regular doses of misinformation in media reports citing intelligence officials that the Nord Stream attack was “supposedly done by some group of Ukrainian swashbucklers,” despite comments by Germany’s own investigators that only a small handful of nations have the capability to target pipelines 80 meters underwater in the Baltic Sea.

“The goal, apparently, is to divert public opinion from the real masterminds, the real perpetrators, and of course, the beneficiaries. It’s quite obvious that the beneficiary of such an act is first and foremost the United States. And technically, they could do it. That is, they are one of the few countries that could pull off something like this,” Schmidt stressed.

The politician recalled how President Biden warned publicly in February 2022, with Chancellor Scholz standing beside him, that the US would “bring an end” to Nord Stream if the Ukrainian crisis escalated.

“That is, there is a huge number of factors, plus Seymour Hersh’s investigation, all suggesting that the United States both planned and carried out this terrorist attack,” Schmidt said.

In the middle of it all, Germany’s government has not only demonstrated its “absolute incompetence,” but has “shown that they are absolutely dependent on the United States, that they are not able to pursue any sovereign policy. They’ve shown their status as a vassal. That’s why they’re hiding the results of the investigation,” the lawmaker believes.

Germany’s ruling elites are almost entirely dependent on America, Schmidt stressed. “They are actual American agents of influence here in Germany. They do not pursue their own sovereign policy. They pursue US policy in Germany. In other words, they’re not seeking to make Germany independent or to pursue policies in the interests of Germany itself. They’re absolutely dependent on the US. Therefore, the country’s entire policy does not meet its own national interests.”

The authorities’ incompetence is perfectly highlighted by its reaction to possibly the worst economic crisis in Germany’s postwar history, according to the lawmaker. “They’ve recruited ideologically-motivated people who have no idea how the economy works or how to correctly implement the country’s policies, especially in economic terms, how to protect the country’s interests so that the economy works effectively.”

Instead, Schmidt lamented, the government is filled with officials whose top priorities include the climate agenda, or accepting even more immigrants into the country. “No one is busy with the work for which they are there. They are simply carrying out their own ideological projects.”

The consequences include an economy “bursting at the seams, with businesses closing and moving abroad,” and Germany being treated like “some kind of foreign policy dwarf” on the world stage, the lawmaker said. “Energy prices are breaking records. We’re paying crazy amounts of money for American liquefied natural gas at the same time that we’re imposing sanctions on [Russian] pipeline gas.”

There are still “sound political forces” in Germany, Schmidt stressed, including AfD, and these are gaining more and more public support, resulting in media smear campaigns and accusations of “Nazism,” “right-wing populism,” and of being in bed with the Kremlin, which the lawmaker has personally experienced.

“Every imaginable propaganda cliché is being used to discredit our party using all possible means. Because [the authorities] are confused and afraid of losing their warm places,” engaging in witch hunts against the opposition instead of actually earning the public’s trust, up to and including calls to ban the AfD outright.

“This is a completely ridiculous and impossible situation that harms democracy in the country,” Schmidt said, adding that unfortunately for the government, the attacks on the opposition are reflected in public opinion polling, where the ruling coalition has set records to become possibly the most unpopular government in German history.

Fresh polling by the Erfurt-based Institute for New Social Answers, one of Germany’s leading social research institutions, found the Traffic Light coalition government, which includes Chancellor Scholz’s Social Democrats, the Greens and the Free Democratic Party, collectively polling at just 32 percent support. The same poll found that the mainstream socially conservative opposition Christian Democratic Union has 30 percent support, with the AfD sitting at 20.5 percent (5.5 percent more than Scholz’s Social Democrats), and former Left Party lawmaker Sarah Wagenknecht’s new party at 7.5 support (three percent more than the Free Democrats).

Germans are set to go to the polls sometime between late August and late October of 2025, unless the Bundestag is dissolved earlier and snap elections are called.

February 9, 2024 Posted by | Economics, Malthusian Ideology, Phony Scarcity, War Crimes | , , | Leave a comment

Biden vs Trump has profound implications for the world order

By Glenn Diesen | RT | February 8, 2024

The world is watching the US presidential election closely as it will have significant implications for global governance. President Joe Biden and former leader Donald Trump have very different views on how the world order should be governed and how the US should respond to its relative decline.

Biden wants to restore unipolarity with ideological economic and military blocs, strengthening the loyalty of allies and marginalizing adversaries. Trump has a more pragmatic approach. He believes the alliance system is too costly and limits diplomatic room for maneuver.

Since World War II, the US has enjoyed a privileged position in the key institutions of global governance. The Bretton Woods format and NATO ensured its economic and military dominance within the West. After the collapse of the Soviet Union, the Americans sought to extend their liberal hegemony around the globe.

They developed a security strategy based on global superiority and an expanded NATO. Washington assumed that its dominance would mitigate international anarchy and great power rivalry, and that liberal trade agreements would strengthen the US’ position at the top of global value chains. The replacement of international law with a ‘rules-based international order’ – in effect, sovereign inequality – was supposed to promote American hegemony and enhance the role of liberal democratic values.

However, unipolarity has proven to be a temporary phenomenon because it depends on the absence of rivals and values are devalued as instruments of power politics. The US has predictably exhausted its resources and the legitimacy of its hegemony, and competing powers have collectively counterbalanced Washington’s hegemonic ambitions by diversifying economic relations, staging retaliatory military operations, and developing new regional institutions of global governance.

The Cold War was a unique period in history because the West’s communist adversaries were largely disconnected from international markets, and military confrontation strengthened alliance solidarity to the extent that it mitigated economic rivalry between the capitalist allies. After the Cold War, however, the former communist powers, China and Russia, gained experience in managing economic processes, and submission to the US-led economic path lost its value for them.

The system of alliances has also begun to decline. The US previously was willing to subsidize European security in exchange for political influence. But Washington shifted its strategic focus to Asia, demanding that its European allies show geo-economic loyalty and not develop independent economic relations with rivals China and Russia. Meanwhile, the Europeans sought to use collective bargaining mechanisms through the European Union to establish autonomy and an equal partnership with the United States.

It is now clear that the unipolar moment has come to an end. The US military, exhausted by failed wars against weak opponents, is preparing for a conflict against Russia and China and a regional war in the Middle East.

The ‘rules-based international order’ is openly rejected by other major powers. US economic coercion to prevent the emergence of new centers of power only encourages separation from US technology, industry, transport corridors, banks, payment systems, and the dollar.

The US economy is struggling with unsustainable debt and inflation, while socio-economic decline is fueling political polarization and instability. Against this backdrop, Americans could elect a new president who will seek fresh solutions for global governance.

Biden’s global governance: Ideology and bloc politics

Biden wants to restore US global dominance by reviving the Cold War system of alliances that divided the world into dependent allies and weakened adversaries. It pits Europe against Russia, Arab states against Iran, India against China, and so on. Inclusive international institutions of global governance are being weakened and replaced by confrontational economic and military blocs.

Biden’s bloc politics is legitimized by simplistic heuristics. The complexity of the world is reduced to an ideological struggle between liberal democracies and authoritarian states. Ideological rhetoric means demanding geo-economic loyalty from the ‘free world’ while promoting overly aggressive and undiplomatic language. Thus, Vladimir Putin and Xi Jinping are smeared as ‘dictators’.

Multilateralism is welcome to the extent that it reinforces US leadership. Biden is less hostile to the UN and the EU than his predecessor, and under his administration, the US has rejoined the World Health Organization and the Paris climate agreement. But Biden has not revisited the Iran nuclear deal or reduced economic pressure on China to change its supply chains. The institutions that could constrain the US – the International Criminal Court (ICC) and the International Court of Justice (ICJ) – are not favored by either Biden or Trump.

The deteriorating socio-economic and political situation in the US will also affect Biden’s approach to global governance. Biden will remain reluctant to enter into new ambitious trade agreements as the losers of globalization and neo-liberal economics within the US move into the camp of the populist opposition. Nor will he favor free trade agreements in areas where China has a technological and industrial advantage, and his attempts to cut European states off from Russian energy and Chinese technology will further fragment the world into competing economic blocs.

Western Europe will continue to weaken and become more dependent on the US, to the point where it will have to give up any claim to ‘strategic autonomy’ and ‘European sovereignty’.

Biden has also shown a willingness to disrupt allied country’s industries through initiatives such as the US Inflation Reduction Act.

Trump’s global governance: ‘America First’ and great power pragmatism

Trump seeks to restore American greatness by reducing the costs of alliance systems and hegemony. He sees alliances against strategic rivals as undesirable if they involve a transfer of relative economic power to allies. Trump believes that NATO is an “obsolete” relic of the Cold War because Western Europeans should contribute more to their own security. In his view, the US should perhaps reduce its presence in the Middle East and allies should pay America for their security in some way. Economic agreements such as the North American Free Trade Agreement and the Trans-Pacific Partnership would have promoted US leadership, but under Trump, they have been abandoned because of the transfer of economic benefits to allies. Trump does not reject US imperialism, but wants to make it sustainable by ensuring a higher return on investment.

Less tied to the alliance system and unencumbered by ideological dogma, Trump can take a more pragmatic approach to other great powers. Trump is able to make political deals with adversaries, use friendly and diplomatic language when talking to Putin and Xi, and even perhaps make a diplomatic visit to North Korea. While Biden’s division of the world into liberal democracies and authoritarian states makes Russia an adversary, Trump’s view of the world as nationalists/patriots versus cosmopolitans/globalists makes Russia a potential ally. This ideological view complements the pragmatic consideration of not pushing Russia into the arms of China, the main rival of the US.

Global governance will be utilitarian in this case, and the main goal of the US will be to regain a competitive advantage over China. Trump is fundamentally inclined to blame China excessively for America’s economic problems. Economic pressure on China is intended to restore US technological/industrial dominance and protect domestic jobs. Economic nationalist ideas reflect the ideas of the 19th-century American system, where economic policy is based on fair trade rather than free trade. Trump appears to view the entire post-Cold War security system in Europe as a costly attempt to subsidize Western Europe’s declining importance. These same Europeans have antagonized Russia and pushed it into the arms of China. Trump’s unclear stance on NATO has even prompted Congress to pass a bill prohibiting presidents from unilaterally deciding whether to withdraw the US from NATO.

While Trump is in favor of improving relations with Russia, his presidency would be unlikely to achieve this goal.

The US can be seen as an irrational actor to the extent that it allows domestic political battles to influence its foreign policy. In 2016, Hillary Clinton’s campaign staff fabricated the Steele dossier and Russiagate to portray Trump as a Kremlin agent. In the 2020 election, Biden’s campaign staff attempted to portray the Hunter Biden laptop scandal as a Russian disinformation campaign and accused Russia of paying bribes to kill US troops in Afghanistan. These false accusations were designed to distract the public and make Trump look weak on Russia. All of this ultimately soured relations with Russia and even contributed to the current conflict in Ukraine.

Both Biden and Trump seek to reverse the relative decline of the US in the world, but the difference in their approaches will have a profound impact on global governance. While Biden seeks to restore US greatness through systems of ideological alliances that will fragment global governance into regional blocs, Trump will seek to withdraw from the institutions of global governance because they drain US resources and impede pragmatic policies.

Glenn Diesen is a Professor at the University of South-Eastern Norway and an editor at the Russia in Global Affairs journal.

February 8, 2024 Posted by | Economics, Militarism | , , , , , | Leave a comment

Green Energies Shattering German Economy… Industrial Production Falls 7th Consecutive Month

By P Gosselin | No Tricks Zone | February 7, 2024

-1.6%!

That’s how much Germany’s industrial production fell in December, 2023. It’s the seventh-straight month of decline as the country’s energy woes mount.

One reason is reported by the Wall Street Journal today: ”Germany’s Industrial Production Falls For Seventh-Straight Month” in December 2023, far worse than expected.

To underscore the seriousness, 2023’s industrial production result is a whopping 10% below pre-pandemic levels.

One of the major drivers behind the demise is arguably the country’s disastrous energy policy, which has entailed shutting down cheap and steady conventional sources such as nuclear and natural gas and increasingly relying on unstable wind and solar energy. Energy prices have soared over the past years, thus driving inflation.

Things aren’t expected to improve much any time soon as the country is currently being plagued by strikes by train drivers, airport and airline personnel, who are fighting for higher wages that have been eroded away by high inflation. Energy supplies remain unstable and are expected to stay high.

Farmers are angry and have been demonstrating for weeks, often blocking transportation routes.

If there’s any light at the end of the tunnel, it’s a very faint one and the tunnel may be very long.

Currently many companies are announcing plans to move operations to business- friendlier locations.

February 8, 2024 Posted by | Economics, Malthusian Ideology, Phony Scarcity | | Leave a comment

Fears growing in Germany – NATO may not survive Trump’s re-election

By Ahmed Adel | February 7, 2024

There is growing concern among the German leadership that NATO will not survive if Republican front-runner Donald Trump is re-elected as US president and that Russia will set its eyes closer to Berlin after Ukraine, writes The New York Times. This alarmist fake news comes as German Chancellor Olaf Scholz is using “fiscal policy trickery” to ensure that his government can continue supporting Ukraine despite budgetary restrictions and the rise of the Russia-friendly Alternative for Germany (AfD).

In a speech to his supporters in Las Vegas in January, Trump said: “We’re spending – we’re paying for NATO, and we don’t get so much out of it,” adding that “if we ever needed their help, let’s say we were attacked, I don’t believe they’d be there [to help].”

The former US leader has repeatedly accused NATO allies of failing to meet budgetary requirements and even proclaimed in 2017 that the military bloc was “obsolete.”

Trump remains in the lead for the nomination as Republican presidential candidate in the November elections, especially after several candidates dropped out of the race. The article notes that senior German officials fear there are significant doubts about whether NATO could survive a second Trump term.

“Their immediate concern is growing pessimism about the United States continuing to fund Ukraine’s struggle,” writes the NYT, referring to a months-long impasse in the US Congress over the latest $60 billion package proposed for Kiev by President Joe Biden. Republicans made the approval of more military aid to Ukraine contingent on the administration’s agreement to tighten controls at the US-Mexico border to stem the flow of illegal immigrants.

More alarming from the article is the fake news peddled by German officials who say that it is impossible to return to previous relations with Russian President Vladimir Putin and that they are afraid of the consequences of Russia’s win. Unnamed German officials stated to the newspaper that if American funding dries up and Russia prevails, its next target will be closer to Berlin, something which obviously will not occur as Moscow has repeatedly stated it has no interest in conflict with NATO.

The ruling German government has an all-time low approval rating, mostly related to economic issues, with many of these stemming from the reckless sanctions imposed on Russia. Nonetheless, Scholz said during a press conference on January 24 that he expects Kiev and Berlin to agree on security guarantees “soon.”

According to the Frankfurter Allgemeine Zeitung, sources in Berlin said the agreement between Ukraine and Germany “should be signed on February 16 during the Munich Security Conference.”

Since the launch of the Russian military operation, Germany has supported Ukraine with weapons and equipment deliveries and is the second largest donor of military aid after the US.

Berlin has thrown away billions of euros to Ukraine, creating much outrage and why it took the German parliament until February 2 to approve this year’s ruling coalition’s budget. The approval ended a spending crisis that shook Scholz’s government after Germany’s constitutional court ensured a €60 billion hole in the country’s finances in November, forcing the ruling coalition to cut spending. This triggered infighting among the ruling Social Democrats (SPD), Free Democrats (FDP) and Greens.

Notably, though, Germany’s 2024 budget includes a fallback clause that allows a potential debt brake suspension for 2024 — should the war escalate or the US reduce their support for Ukraine, something likely if Trump is elected in November, which could prompt Germany to increase its support.

“If the situation worsens as a result of Russia’s war against Ukraine, for example, because the situation on the front deteriorates or because other supporters reduce their aid to Ukraine or because the threat to Germany and Europe increases further, we will have to respond to this,” Scholz told reporters back in December.

Friedrich Merz, leader of the Christian Democrats, exposed Scholz’s reasoning in parliament for suspending the debt brake over Ukraine aid as “fiscal policy trickery,” pointing out that it would allow the government to use the war to justify more spending in other areas. “The trick is obvious.”

Germany’s economy contracted in the final quarter of 2023, narrowly avoiding a recession spurred on by low global demand, high inflation, and energy costs. Yet, under these difficult economic conditions, which are hurting everyday Germans, Scholz is using “trickery” and alarmist fake news to justify his unhinged anti-Russia policies and support for Ukraine.

Scholz has sent €27.8 billion to Ukraine thus far, and all at a time when Germans are struggling, explaining why the AfD is now the most popular political party in the country. Although NATO will likely survive a Trump presidency perfectly fine, the purpose of Scholz’s fake news agenda is to create an alarm to try and justify his reckless policies. However, as the rise of the AfD attests, the Germans see his trickery.

Ahmed Adel is a Cairo-based geopolitics and political economy researcher.

February 7, 2024 Posted by | Economics, Russophobia | , , | Leave a comment

Germany’s energy crisis deepens further due to Biden’s halt of U.S. LNG projects

Germany has dug itself into an energy hole

By P Gosselin | No Tricks Zone | February 4, 2024

Due to the environmental and climate hysteria over the past decades, Germany has steadily moved to shut down its vast  fleet of nuclear reactors, coal power plants, and even natural gas supplies (a major supply line from Russia got blown up).

Moreover, Germany is moving to ban fossil fuel heating systems for homes, and mandating electric cars by 2035.

Now in an energy crunch

Since the supply of natural gas from Russia got cut off, it became necessary to find an alternative source quickly – from USA in the form of imported LNG. The German government approved the construction an LNG terminal at the north German coast in record time. This would help secure Germany’s energy supply. Surely the USA could be viewed as a reliable partner.

That was the plan – until President Joe Biden unexpectedly put a stop to further LNG projects. Now, Germany suddenly risks finding itself in energy isolation. It’s panic time in Berlin.

“Devastating energy crisis”

“Germany is facing a devastating energy crisis that seriously threatens its security of supply,” reports Germany’s Blackout News. “Biden’s decision now has far-reaching consequences that could pose serious problems for German energy policy.”

Also see. berliner-zeitung : 26.01.24

The USA is the world’s largest exporter of LNG, but because of climate protection, Biden bowed to pressure from climate radicals and stopped plans to build new export terminals. This development has sent shockwaves through energy-starved Germany.

According to US government officials, four U.S. terminal projects are directly affected by Biden’s decision.

Berlin has backed itself into a corner with its years of misguided green energy policy. Now the chickens are coming home to roost.

February 4, 2024 Posted by | Economics, Malthusian Ideology, Phony Scarcity | , | Leave a comment

EU Leaders Squander Another €50 Billion on Propping up Kiev Regime… and Self-Destruction

Strategic Culture Foundation | February 2, 2024

Finally, the European Union’s threats, blackmail, and arm-twisting have paid off to push through a giant €50 billion aid package to the hopelessly corrupt Kiev regime. This is while European farmers revolt against the EU leadership over higher energy costs and cheap imports from Ukraine that are putting them out of business and wiping out their livelihoods.

The EU leaders are committing the entire bloc of 500 million people to political suicide. The reckless cavalier attitude is something to behold. Bring on the pitchforks, Merci!

The 27 leaders of the European Union met in an emergency summit this week not to deal with the bloc’s mounting internal political, economic, and social problems but rather to lavish mountains of more aid on non-member Ukraine.

When the leaders held their last summit in December, it was a spectacle of back-biting and sordid wrangling. At that gathering, Hungary’s Prime Minister Viktor Orban vetoed the allocation of more funds to the Ukrainian regime amid bitter recrimination and bickering. This time around, however, Hungary caved in to the intense pressure to agree on the package.

Days before the summit in Brussels this week, it was reported by the Financial Times that the European Council had drawn up plans to sabotage the Hungarian economy if Budapest persisted in not signing up for the massive aid plan. That speaks volumes about the perverse mindset at the apex of the EU bureaucracy. It demonstrates the undemocratic character of the bloc despite pretentious claims to the contrary.

Brussels had already frozen up to €10 billion in central funding for Hungary and there were reported threats to remove Budapest’s voting rights in the bloc’s decision-making which would have been a blatant violation of the EU’s declared principle of unanimity.

The allocation of €50 billion to a non-member state is astounding. Even more bewildering is that the latest largesse is only a fraction of the total aid that the EU leadership has pumped into Ukraine since the proxy war against Russia erupted in February 2022. Over the past two years, the European Union has given the Kiev regime an estimated €100 billion.

The United States and other Western allies have also plied Ukraine with another €100 billion. About half of this goes on weapons, while the other half pays for state financing.

As we have noted here previously, the cumulative funding by the West to Ukraine has far exceeded the historic Marshall Fund that the U.S. allocated to all of Europe for reconstruction following World War Two (about €170 billion in today’s money).

There is simply no precedent or justifiable rationale for this mobilization of financial support for Ukraine. This has all been done as a fait accompli by an elite class with no democratic mandate. No referenda have been conducted to consult the public about the inordinate expenditure. Indeed, polls indicate that the European public – like the American public – is opposed to their governments supporting Ukraine.

The Biden administration is vying with growing resistance in Congress to send Ukraine an additional $60 billion.

To boot, the Kiev regime under the puppet president Vladimir Zelensky is a byword for rampant corruption and repression. It is admitted by Pentagon sources that something like $400 million of military spending has been siphoned off by the Kiev junta. The real figure is plausibly even greater.

The grotesque allocation of financial resources to Ukraine has nothing to do with supporting democracy or defending the country from alleged Russian aggression.

EU leaders like German Chancellor Olaf Scholz and European Commission President Ursula von der Leyen keep repeating a mantra about defending Ukraine because, they say, if it is defeated then all of Europe is in danger of Russian invasion. This is the most preposterous scaremongering by politicians who are ideologically blinded by Russophobia and slaves to propagating Western hegemony.

The latest €50 billion injection to a war-addicted Ukrainian regime is openly said to be for sustaining its government and paying for salaries and services. In other words, Ukraine is a failed state, and yet European citizens, workers, and farmers – who themselves are subsisting in hard economic times – are expected to bankroll a corrupt cabal.

Furthermore, the hardship that tens of millions of European citizens are enduring is a direct result of their political leaders and the Brussels bureaucratic elite pandering to the United States’ agenda of hostility towards Russia.

That U.S.-led aggression, which can be traced back to the CIA-instigated coup in Kiev in 2014 to bring a NeoNazi regime to power, has sabotaged Europe’s economy. European leaders have treasonously served Washington’s geopolitical interests and not those of ordinary Europeans. The insane imposition of sanctions on Russia has led to huge hikes in energy prices which has decimated European businesses and the living standards of consumers, workers, and farmers.

The higher costs of production are a major factor in the surging protests across Europe by farmers. Another factor is the EU’s undemocratic import of cheaper agricultural produce from Ukraine as a sop to the Kiev regime. Those imports have undermined farmers all across Europe, in Germany, France, Italy, the Netherlands, Poland, Romania, Hungary, and the Baltic countries.

The scandalous abuse of European funds to prop up a corrupt fascist regime that violently suppresses political opponents, media, and the Orthodox Church, and glorifies Nazi collaborators, has one fundamental purpose – to prolong a proxy war against Russia. That war’s objective is for eventual strategic subjugation.

The Western regimes are so bankrupt and impotent in the face of their broken capitalist economies that they are seeking to exploit Russia’s vast natural wealth. This is the continuation of the Lebensraum policy of Nazi Germany by Western imperialists.

Ukraine has lost the proxy war against Russia. It is a shameful, criminal debacle. Up to 500,000 Ukrainian soldiers have been killed over the past two years by superior Russian forces. The vile Kiev regime, of course, wants to keep the war racket going for its insatiable grifting. Washington and its European vassals in high office want to keep the war going out of elitist imperial ambition, an ambition that is ultimately futile in the new emerging multipolar global order.

While European leaders were ensconced in the European Council in Brussels, the parliament was blockaded by angry farmers from all over Europe. Protesters were calling out politicians by name. The contempt is palpable. Paris and other capitals across Europe are being besieged by motorway chokepoints. National economies are on the brink as a result.

One might even perceive that European farmers in France, Germany, Belgium, and elsewhere, are implementing tactics similar to the Yemenis in the Red Sea. Squeeze the chokepoints and watch the empire writhe.

You couldn’t make this farce up. European elitist regimes are waging war in Europe against nuclear-powered Russia by wasting the public’s money to lavish a Neo-Nazi mafia in Kiev and by doing so making the lives of European citizens even harder. The upshot is political and economic suicide for the European Union.

The EU is holding parliamentary elections in June amid the dramatic rise of anti-EU or Eurosceptic parties. Two years of senseless war in Ukraine is fomenting popular disgust with the elite class. The anger out there may not even be contained by voting in elections. The fury seems to be beyond making little Xs in a box. A collapse is coming and heads are going to roll.

February 3, 2024 Posted by | Civil Liberties, Economics, Militarism, Russophobia | , | Leave a comment

Good Money After Bad: Where Will EU Funds for Ukraine Come From?

By Ekaterina Blinova – Sputnik – 02.02.2024

European Union (EU) member states have agreed on a €50 billion ($54 billion) support package for Ukraine over four years, overcoming Hungary’s resistance. But where will the EU get that money?

The EU could commandeer interest paid on frozen Russian assets to fund Ukraine during its war with Moscow.

Europe’s economy is facing stagnation, with zero economic growth for October-to-December period reported by EU statistics agency Eurostat.

The Eurozone inflation rate has yet to fall below the target two percent threshold, with consumer prices still remaining high.

Against that backdrop EU member states are cutting subsidies, reducing energy consumption and diminishing industrial production. Protests by farmers have rocked the continent since early January.

Nonetheless, Brussels has found €50 billion ($54 billion) to support the embattled Kiev regime for four more years. But where will this money come from?

According to the European Council, the bloc has set up the so-called Ukraine Facility for the period 2024-2027 to “contribute to the recovery, reconstruction and modernization of the country, foster social cohesion and progressive integration into the Union, with a view to possible future Union membership.”

To that end the EC has allocated €50 billion, of which:

€33 billion ($35.9 billion) comes “in the form of loans guaranteed by extending until 2027 the existing EU budget guarantee, over and above the ceilings, for financial assistance to Ukraine available until the end of 2027,” the document sets out.

€17 billion ($18.5 billion) comes “in the form of non-repayable support, under a new thematic instrument the Ukraine Reserve, set up over and above the ceilings of the MFF 2021-27.” The EC document specifies that revenues “could be generated under the relevant Union legal acts, concerning the use of extraordinary revenues held by private entities stemming directly from the immobilized Central Bank of Russia assets.”

On February 1, CNN claimed that the EU had taken a step towards seizing billions of dollars in interest payments generated by Russian assets frozen in European accounts. Media reported that roughly €200 billion ($218 billion) remain in the EU, mainly in Euroclear, a Belgium-based financial services company.

The media outlet highlighted that the EU approved the €50 billion Ukraine package as it “came closer to finalizing a plan” of using the profits from the Russian Central Bank’s sequestred assets — indicating that it has yet to gain access to the funds. Euroclear revealed on Thursday that the frozen Russian assets had yielded €5.2 billion ($5.6 billion) in interest on income assets since 2022.

On Monday, EU member states “agreed in principle” that profits from the Russian assets will be set aside and not be paid out as dividends to shareholders until the bloc’s members decide to set up a “financial contribution to the [EU] budget that shall be raised on these net profits to support Ukraine”, according to a draft document quoted by Euroactive.

The document claimed that the levy will be “consistent with applicable contractual obligations, and in accordance with [EU] and international law.” After that the EC would transfer the money to the EU’s accounts and then to Ukraine, the media noted, specifying that the proposal targets future profits and would not be applied retrospectively. It is believed that Russia’s frozen assets in the EU could generate an estimated €15-17 billion over four years, which would be transferred to Ukraine, according to the press.

Speaking to Sputnik last October, Jacques Sapir, director of studies at the School for Advanced Studies in the Social Sciences (EHESS) in Paris, argued that any attempt by the EU to grab Russia’s frozen assets or revenues from them could turn into a legal nightmare for the EU leadership and particular member states where the money is being stored.

“As a matter of fact, if assets belong to the Russian state legally, you will have to prove that this state is a ‘failing state,’ something impossible,” Sapir told Sputnik on October 29, 2023. “If assets belong to private persons, you need a legal conviction against these persons. If you can’t do both and that you take away revenues to divert them to a third party (Ukraine) this is no less than a theft. Then you will be liable to legal action. But, what is even more important, you will probably discourage all foreign investors from investing in the EU.”

Brussels Wants European Farmers to Tighten Belts

While allocating tens of billions of euros for Ukraine, Brussels has yet to solve its farming crisis caused by inflation, a spike in production costs, economic slowdown, politically-motivated decoupling from Russia’s energy market, an influx of cheap agricultural goods from Ukraine and the bloc’s aggressive climate policies.

Farmers’ protests have been gaining pace since early January, engulfing France, Belgium, Germany, Italy, Poland, Romania and the Netherlands.

Commenting on the provision of €50 billion to Kiev, French member of the European Parliament Thierry Mariani warned that the package could cost France at least €8 billion ($8.7 billion) in taxpayers’ money since Paris contributes 16 percent of the EU budget.

“Another €50 billion for Ukraine (17 in donations plus 33 in loans… which will never be repaid). Do the French realize that they will have to pay €8 billion since we contribute 16 percent of the EU spending? Eight billion that our farmers would dream of,” Mariani posted on X on Thursday.

By January 31, the number of farmers protesting across France against the Macron government’s agricultural policies had reached 10,000, French Interior Minister Gerald Darmanin admitted. French farmers are protesting against unfair competition from cheaper imports, draconian environmental rules and the government’s push to bring down food inflation by artificially suppressing prices.

In a bid to calm the protests, the French government has proposed €150 million in tax and social support — small change compared to the multi-billion aid for Ukraine paid for by Paris.

Will EU Money be Spent Appropriately or Wasted in Ukraine?

Aid to Ukraine would be provided under certain conditions, the European Council said.

“A precondition for the support for Ukraine under the Facility shall be that Ukraine continues to uphold and respect effective democratic mechanisms, including a multi-party parliamentary system, and the rule of law, and to guarantee respect for human rights, including the rights of persons belonging to minorities. In implementing the Facility, the Commission and Ukraine shall take all the appropriate measures to protect the financial interests of the Union, in particular regarding the prevention, detection and correction of fraud, corruption, conflicts of interests and irregularities,” the document read.

Those rules have already been broken by Ukrainian President Volodymyr Zelensky, who has refused to hold general elections this year under the pretext of the ongoing conflict, despite top US and EU officials repeatedly urging Kiev to go ahead with the vote.

Washington and its European allies have grown concerned by Ukraine’s endemic corruption, as Pulitzer Prize-winning investigative journalist Seymour Hersh remarked in his latest op-ed on Substack. Washington and Western Europe want Zelensky to carry out financial reforms.

“According to the knowledgeable American official, the first step of the new concept is a long-standing issue: financial reform,” Hersh wrote. “Zelensky must be told: ‘You’ve got to get rid of corruption before we do anything more.’ The second step is something that does not exist today in Ukraine: a serious audit of all government funding. The official said Zelensky should consider the billions he needs ‘as our money, as an investment with all of the rules’ for its disbursement ‘to be laid out and followed’.”

The investigative journalist recalled that last year CIA Director William Burns secretly travelled to Kiev to warn the Ukrainian president that Washington was aware of his and his entourage’s corruption. Hersh noted that Burns reportedly also told Joe Biden that Zelensky’s subordinates were outraged by their leader personally taking too large a cut of the US aid.

In order to get Ukraine’s spending under control, “the Council will play a key role in the governance of the Ukraine Facility,” according to the EC press release.

“In this sense, a Council Implementing Decision shall be adopted by a qualified majority for the adoption and amendments of the Ukraine Plan and for the approval and the suspension of payments based on the relevant assessments and proposals by the Commission. On the basis of the Commission annual report on the implementation of the Ukraine Facility, the European Council will hold a debate each year on the implementation of the Facility with a view to providing guidance. If needed, in two years the European Council will invite the Commission to make a proposal for review in the context of the new Multiannual Financial Framework (MFF).”

Time will tell whether the EU’s funds allocated for Ukraine at a time of economic stagnation and looming crisis would be used by the Kiev regime properly — or whether it will result in yet another economic and military failure.

February 2, 2024 Posted by | Economics | , , | Leave a comment

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