Why the West is to blame for the crisis in Ukraine: the full story
Chris Nineham reviews Frontline Ukraine: Crisis in the Borderlands by Professor Richard Sakwa
WE ALL KNOW about of the fog of war, but the current coverage and commentary on the crisis in Ukraine arguably takes wartime disinformation to new levels.
Richard Sakwa’s new book is a rare and precious exception. It is clear and measured and carefully researched and it shows that the story we are told in the west about events inside Ukraine is deeply flawed.
More generally, it exposes the idea that Russia is the aggressor and the West the protector of Ukraine’s democratic will as a travesty of the truth. In short, Sakwa’s analysis is diametrically opposed to what passes for an explanation of the Ukraine crisis in the mainstream.
One of the book’s great strengths is that it sees the crisis as a product of two connected processes, one domestic, one geopolitical.
Far from being a straightforward expression of popular will, Sakwa details how the government that emerged from the Maidan protests in February 2014 represented the victory of a minority hardline anti-Russian Ukrainian nationalism.
But this minority could come to dominate, he argues, because of the context provided by an aggressive, US-led, Western foreign policy designed to assert Western control over Eastern Europe and, at least in its more hawkish versions, de-stabilise Russia.
The push to the east
Nato and the EU have been pushing steadily eastwards ever since the end of the Cold War, despite verbal assurances from a series of Western leaders that this would not happen.
Twelve countries have joined Nato in the region since 1991. Georgia and Ukraine were promised membership at the Nato Summit in Bucharest in 2008, despite repeated warnings from the Russian government that taking Nato to the Russian border would cause a security crisis of the first order. It was only the intercession of Germany and France that forced the US to put these plans on hold.
The push to the east continued in the form, amongst others, of a plan to get Ukraine to sign up to an ‘Association Agreement’ with the EU. It was this agreement, due to be signed in November 2013, which sparked the crisis. To grasp its significance it is important to understand just how closely tied Nato and the EU have become, especially since the Lisbon Treaty signed by EU members in 2007.
Article 4 in the proposed Association Agreement committed the signatories to ‘gradual convergence on foreign and security matters with the aim of Ukraine’s ever deeper involvement in the European Security area’ (p.76). As Sakwa puts it, “it is pure hypocrisy to argue that the EU is little more than an extended trading bloc: after Lisbon, it was institutionally a core part of the Atlantic security community, and had thus become geopolitical”. (p.255)
All parties involved must have known that this document, if signed, would have caused existential anxiety in Moscow. Defenders of the West’s drive to the east justify it as the reflection of the will of the people concerned.
This is disingenuous. As Western leaders themselves have publicly admitted, a campaign to buy Ukrainain hearts and minds has been running for decades. In 2013, US Assistant Secretary of State for European and Eurasian affairs, Victoria Nuland, publicly boasted of the fact that the US had invested $5 billion in ‘democracy promotion’ since 1991, a huge sum by USAID’s standards (p.86). It has since been revealed that the EU too spent 496 million on front groups in Ukraine between 2004 and 2013 (p.90).
And there was nothing democratic about the process. Discussions about the Association Agreement in fact took place behind the backs of the Ukrainian people and the text of the agreement was not available in Ukraine till the last moment (p.74). It actually contained very little in the way of assistance to Ukraine’s economy, and its centrepiece was a radical liberalisation of EU-Ukraine trade, a direct threat to the traditional economic relations between Ukraine and Russia.
In the end, for a mixture of reasons, President Yanokovich didn’t sign up to the deal. But the pressure to sign helped to polarise the debate in Ukraine. The meaning of the agreement was an open secret in Washington. In the words of Carl Gershman from the National Endowment for Democracy, while Ukraine was ‘the biggest prize’, there was, beyond that, an opportunity to put Putin ‘on the losing end not just in the near abroad but within Russia itself’. (p.75)
Internal impact
This concerted Western strategy to surround and weaken Russia had a profound impact on the internal politics of Ukraine. Sakwa explains well the complex history that links Ukraine and Russia, a history that can’t be reduced to simple formulas of colonial dependency. The long, indigenous tradition of seeing Ukraine as part of greater Russian union has resulted in Russian being the dominant language in most of the country despite ethnic Russians being a relatively small minority. (p.8)
For all the mixed motivations behind the Maidan protests, it was a hardline anti-Russian strand that came to dominate, first in the protests themselves and subsequently in the regime that emerged out of the forced removal of the Yanukovich government.
Western policy in general gave ballast to a hardline nationalist tradition in the country that saw Russia – and the Russian minorities within the country – as the enemies of Ukrainian nationalism.
This tradition centred on the historic figure of Stepan Bandera who collaborated with the German Nazis in atrocities against Jews, Poles and Russians in Ukraine during WW2. His followers formed SS divisions which were responsible for the deaths of up to half a million people. (pp16-17). A giant poster of Bandera hung by the side of the stage in the Maidan, and many leaders of the regime that came out of the Maidan saw him as part of their tradition.
The West was minutely involved in this process. The State Department’s Victoria Nuland visited Ukraine three times in the first few weeks of the Maidan protests (p.86). The famous February leaked phone call between her and the US ambassador in Ukraine in which Nuland said ‘fuck the EU’, showed the extent to which the US was pulling the strings and in which direction.
In the call Nuland judges that the relatively moderate nationalist Vitaly Klitschko, who had the backing of Germany and the EU, should be kept out of office and that Arseniey Yatsenhuk – ‘Yats’ she calls him – a man who turned out to be a hardline chauvinist, should be the key player. Yatsenyuk indeed became the acting Prime Minister in the new government.
The result, in Sakwa’s words, was that, ‘what had begun as a movement in support of ‘European values’ now became a struggle to assert a monist representation of Ukrainian nationhood. The amorphous liberal rhetoric gave way to a much harsher agenda of integrated nationhood, and the euphoria promoted a rash of ill-considered policies’ (p.94).
As President Yanukovich was impeached and the new government was installed, armed insurgents strutted around the debating chamber. Yatsenyuk’s government was a mixture of recycled oligarchs and hard-line nationalists and fascists. It contained only two ministers from the entire south and east of the country, the areas with closest ties to Russia.
Five cabinet positions out of 21 were taken by the far right Svoboda Party, despite the fact they had only received 8% of the seats in Parliament. The minister of justice and the deputy Prime Minister came from the Russophobic Svobada party and its founder, a man with a long record of ultra nationalist activism, Andriy Parubiy, became head of the NSDC security agency.
Provocations
One of the new government’s first acts was to vote to rescind a law guaranteeing the right to instate a second official language where there were significant minorities. Although the change in the law was blocked, the vote was correctly interpreted as an attack on Russian minorities across the country.
It was followed by the outlawing of the Ukrainian Communist Party and the establishment of a ‘special service’ to root out fifth columnists in the armed forces (p.137). A wave of physical assaults on Russians duly followed.
In Odessa, pro-Russian activists were driven from an encampment into a trade union building which was then torched, killing a minimum of 48, many hundreds according to locals. The massacre was hailed by one of the Maidan leaders, Dmytro Yarosh, as ‘another bright day in our national history’ (p.98).
This series of events made a civil war virtually inevitable. Uprisings in the east of the country were motivated by political resentments, opposition to neoliberal policies and other economic grievances against Kiev, but most of all by a sense of the need for self defence. Unlike the largely middle-class movement in Kiev, the anti-Maidan movement in the Donbass region was ‘lower-class, anti-oligarchic (and Russian nationalist)’ (p.149). It was not mainly separatist. A poll by the Pew Research Center in May 2014 found that 70 per cent of eastern Ukrainians wanted to keep the country intact, including 58 per cent of Russian speakers (p.149).
The view from the East
Sakwa carefully analyses Russia’s behaviour during the crisis. His conclusions are a frontal challenge to the West’s narrative that the crisis in the Ukraine was precipitated by Russian aggression. As he shows, this is the opposite of the truth.
After the collapse of the Soviet Union, successive governments embraced a Western orientation, even making tentative moves to join Nato. In contrast to the stereotype that has been so carefully constructed, in his first term, Putin, and his successor Medvedev, sought engagement and accommodation with the West and tried to establish structured relationships with Nato and the EU. This approach faltered according to Sakwa, because of repeated rebuffs from the West:
“Continued conflicts in the post-Soviet space, the inability to establish genuine relations with the EU and disappointment following Russia’s positive demarche in its attempt to reboot relations with the US after 9/11 all combined to sour Putin’s new realist project” p.31
Over the last decade and a half, the Russian foreign policy establishment has become more and more alarmed by the unilateralism of US foreign policy, particularly over the invasion of Iraq and the attack on Libya. The non-negotiated push eastwards by Nato and the EU could of course only be perceived as hostile.
Even in these circumstances, however, for Sakwa, Putin’s central concern was to maintain the status quo in Ukraine, and try and ensure a friendly or at least neutral buffer state based on a stable settlement within the multi-ethnic Ukrainian state.
The forced, Western-backed removal of the Yanukovich government created an immediate crisis for the Russian government. Putin reacted by running a popular poll and an armed operation to secure the secession of the Crimean region to the USSR. Given the level of hostility and the mobilisations against Russian minorities, this can have surprised no-one. The Crimea was part of Russia until 1954, and it contains Sevastopol, Russia’s only major warm-water naval base. The idea that the Russian ruling class was going to stand aside and allow this area to be taken by a pro-Nato and anti-Russian government was obvious fantasy.
But if Putin’s long-term plan had been to invade, partition or even to destabilise the rest of Ukraine, he would have taken the opportunity presented by the virtual collapse of the Ukrainian government in February last year and the anti-Kiev uprisings in the east of the country which developed as a result.
His response was in fact was very different. Sakwa argues that despite the hoopla in the Western media, with the exception of the special case in Crimea, there is little evidence of significant military intervention by Russia in the months after the crisis of February, at least until August.
Putin supported the rebels to try and gain some leverage, but when it came to military assistance the rebels in the east were denouncing Putin for not delivering it. In Sakwa’s words, “Russia used proxies in the Donbas to achieve its goals within Ukraine, but this was not an attempted ‘land-grab’ or even a challenge to the international system” (p.182).
On 24 June in fact, the Russian Federation Council revoked a ruling which had previously allowed Russian military involvement in Ukraine ‘in order to normalise and regulate the situation in the eastern regions of Ukraine’ in the run up to tripartite talks involving the new Prime Minister Poroshenko (p.162). But Poroshenko had been the continuity candidate. On taking office, he had issued a statement calling for ‘a united, single Ukraine’ and characterising insurgents in the south-east as ‘terrorists’ (p.161).
Sakwa, along with most other sane commentators, is far from idealising the authoritarian and sometimes aggressive Russian regime. He criticises its human rights record and its institutions of governance. If anything his instincts are with a reformed integrationist ‘wider European project’, which, given the behaviour of the actually-existing Western institutions, seems a bit of a forlorn hope.
But what Sakwa’s book does so well is to ask us to go beyond rhetoric and generalities and examine the actual dynamics of the particular situation in its national and international dimensions.
Most importantly, he argues, we can’t begin to understand the Ukrainian catastrophe unless we completely reject the dominant, not to say consensual, Western account of what is happening. This is a crisis created by the West, but by threatening Russia’s core interests, it contains the possibility of a catastrophic confrontation; ‘the US has sought to create a regime in its own image, while Russia has sought to prevent the creation of one hostile to its perceived interests’ he argues (p.255).
We in the West have a responsibility to do everything possible to force our leaders back from the brink.
See also:
Richard Sakwa: History returns with a vengeance in Ukraine
Jonathan Steele: Who is really responsible for the crisis in Ukraine boiling over?
Crimeans Keep Saying No to Ukraine
By Robert Parry | Consortium News | March 22, 2015
A central piece of the West’s false narrative on the Ukraine crisis has been that Russian President Vladimir Putin “invaded” Crimea and then staged a “sham” referendum purporting to show 96 percent support for leaving Ukraine and rejoining Russia. More recently, Assistant Secretary of State Victoria Nuland claimed that Putin has subjected Crimea to a “reign of terror.”
Both elements have been part of the “group think” that dominates U.S. political and media circles, but this propagandistic storyline simply isn’t true, especially the part about the Crimeans being subjugated by Russia.
Consistently, over the past year, polls conducted by major Western firms have revealed that the people of Crimea by overwhelming numbers prefer being part of Russia over Ukraine, an embarrassing reality that Forbes business magazine has now acknowledged.
An article by Kenneth Rapoza, a Forbes specialist on developing markets, cited these polls as showing that the Crimeans do not want the United States and the European Union to force them back into an unhappy marriage with Ukraine. “The Crimeans are happy right where they are” with Russia, Rapoza wrote.
“One year after the annexation of the Ukrainian peninsula in the Black Sea, poll after poll shows that the locals there — be they Ukrainians, ethnic Russians or Tartars are all in agreement: life with Russia is better than life with Ukraine,” he wrote, adding that “the bulk of humanity living on the Black Sea peninsula believe the referendum to secede from Ukraine was legit.”
Rapoza noted that a June 2014 Gallup poll, which was sponsored by the U.S. government’s Broadcasting Board of Governors, found that 82.8 percent of Crimeans said the March 16 referendum on secession reflected the views of the Crimean people. In the poll, when asked if joining Russia would improve their lives, 73.9 percent said yes and only 5.5 percent said no.
A February 2015 poll by German polling firm GfK found similar results. When Crimeans were asked “do you endorse Russia’s annexation of Crimea,” 93 percent gave a positive response, with 82 percent saying, “yes, definitely.” Only 2 percent said no, with the remainder unsure or not answering.
In other words, the West’s insistence that Russia must return Crimea to Ukraine would mean violating the age-old U.S. principle of a people’s right of self-determination. It would force the largely ethnic Russian population of Crimea to submit to a Ukrainian government that many Crimeans view as illegitimate, the result of a violent U.S.-backed coup on Feb. 22, 2014, that ousted elected President Viktor Yanukovych.
The coup touched off a brutal civil war in which the right-wing regime in Kiev dispatched neo-Nazi and other extremist militias to spearhead a fierce “anti-terrorism operation” against resistance from the ethnic Russian population in the east, which – like Crimea – had supported Yanukovych. More than 6,000 Ukrainians, most of them ethnic Russians, have been killed in the fighting.
Despite this reality, the mainstream U.S. news media has misreported the crisis and distorted the facts to conform to U.S. State Department propaganda. Thus, many Americans believe the false narrative about Russian troops crushing the popular will of the Crimean people, much as the U.S. public was misled about the Iraq situation in 2002-03 by many of the same news outlets.
Or, as Forbes’ Rapoza put it: “At some point, the West will have to recognize Crimea’s right to self rule. Unless we are all to believe that the locals polled by Gallup and GfK were done so with FSB bogey men standing by with guns in their hands.” (The FSB is a Russian intelligence agency.)
The GfK survey also found that Crimeans considered the Ukrainian media, which has been wildly anti-Russian, unreliable. Only 1 percent said the Ukrainian media “provides entirely truthful information” and only 4 percent said it was “more often truthful than deceitful.”
So, the people at the frontline of this conflict, where Assistant Secretary Nuland, detected a “reign of terror,” say they are not only satisfied with being restored to Russia, which controlled Crimea since the 1700s, but don’t trust the distorted version of events that they see on Ukrainian TV.
Practical Reasons
Some of the reasons for the Crimean attitudes are simply pragmatic. Russian pensions were three times larger than what the Ukrainian government paid – and now the Ukrainian pensions are being slashed further in compliance with austerity demands from the International Monetary Fund.
This month, Nuland boasted about those pension cuts in praising the Kiev regime’s steps toward becoming a “free-market state.” She also hailed “reforms” that will force Ukrainians to work harder and into old age and that slashed gas subsidies which had helped the poor pay their heating bills.
Last year, the New York Times and other U.S. news outlets also tossed around the word “invasion” quite promiscuously in discussing Crimea. But you may recall that you saw no images of Russian tanks crashing into the Crimean peninsula or an amphibious landing or paratroops descending from the skies. The reason was simple: Russian troops were already in Crimea.
The Russians had a lease agreement with Ukraine permitting up to 25,000 military personnel in Crimea to protect the Russian naval base at Sevastopol. About 16,000 Russian troops were on the ground when the Feb. 22, 2014 putsch occurred in Kiev – and after a crisis meeting at the Kremlin, they were dispatched to prevent the coup regime from imposing its control on Crimea’s people.
That Russian intervention set the stage for the March 16 referendum in which the voters of Crimea turned out in large numbers and voted overwhelmingly for secession from Ukraine and reintegration with Russia, a move that the Russian parliament and President Putin then approved.
Yet, as another part of its false reporting, the New York Times claimed that Putin denied that Russian troops had operated inside Crimea – when, in fact, he was quite open about it. For instance, on March 4, 2014, almost two weeks before the referendum, Putin discussed at a Moscow press conference the role of Russian troops in preventing the violence from spreading from Kiev to Crimea. Putin said:
“You should note that, thank God, not a single gunshot has been fired there. … Thus the tension in Crimea that was linked to the possibility of using our Armed Forces simply died down and there was no need to use them. The only thing we had to do, and we did it, was to enhance the defense of our military facilities because they were constantly receiving threats and we were aware of the armed nationalists moving in. We did this, it was the right thing to do and very timely.”
Two days after the referendum, which recorded the 96 percent vote in favor of seceding from Ukraine and rejoining Russia, Putin returned to the issue of Russian involvement in Crimea. In a formal speech to the Russian Federation, Putin justified Crimea’s desire to escape the grasp of the coup regime in Kiev, saying:
“Those who opposed the [Feb. 22] coup were immediately threatened with repression. Naturally, the first in line here was Crimea, the Russian-speaking Crimea. In view of this, the residents of Crimea and Sevastopol turned to Russia for help in defending their rights and lives, in preventing the events that were unfolding and are still underway in Kiev, Donetsk, Kharkov and other Ukrainian cities.
“Naturally, we could not leave this plea unheeded; we could not abandon Crimea and its residents in distress. This would have been betrayal on our part.”
But to make it appear that Putin was denying a military intervention, the Times and other U.S. news outlets truncated Putin’s statement when he said, “Russia’s Armed Forces never entered Crimea.” The Western press stopped there, ignoring what he said next: “they were there already in line with an international agreement.”
Putin’s point was that Russian troops based in Crimea took actions that diffused a possibly violent situation and gave the people of Crimea a chance to express their wishes through the ballot. But that version of events didn’t fit with the desired narrative pushed by the U.S. State Department and the New York Times. So the problem was solved by misrepresenting what Putin said.
But the larger issue now is whether the Obama administration and the European Union will insist on forcing the Crimean people – against their will – to rejoin Ukraine, a country that is rapidly sliding into the status of a failed state and a remarkably cruel one at that.
~
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com).
The charade of Europe’s annual ‘threats’
By Jonathon Cook | The Blog from Nazareth | March 20, 2015
There is something deeply mendacious and cowardly about this ritual leaking by European diplomats of their annual report on Jerusalem. This year they’ve chosen to deposit the “confidential” report in the hands of the Guardian.
Obviously, the Europeans – and Americans – want this information about how angry they are with Israel disseminated as widely as possible in the wake of Netanyahu’s election win. “We’re mad and we’re not going to take it any more!” they shout – yet again, as they have done over the past four or five years.
As ever, the report is being described as “hard-hitting”; as ever, it threatens penalties against Israel; and as ever, it signifies nothing.
This is paltry theatre designed to persuade us – people with consciences – that our representatives care and that they are planning – at some point – to do something. But what it really indicates is that that something is going to amount to nothing more than empty threats. These are the same threats they have been making for more than a decade. And even were Europe actually to carry them out, they would have almost no impact on Israel.
Here’s what these “threats” consist of:
Known Jewish terrorists may face “restrictions” on entering Europe. (One would have hoped such “restrictions” were already in place.)
Europe may give its consumers more information about whether they are being misled into buying products from illegal settlements. (Such products should not even be available in Europe.)
And efforts will be made to “raise awareness” among European companies that it could be bad for business to be associated with the settlements. (And yet, according to free-market ideology, market forces ought to be enough to dissuade most companies from such associations – after all, they are supposed to want to maximise profits.)
In short, this list of potential “sanctions” is complete hot air. It’s zilch. And anyone claiming otherwise, including the Guardian, is simply conspiring in this diplomatic charade.
Quantitative Easing for Whom?
Why the European Central Bank’s Trillion Euro Plan will Only Help Keep the Banks Afloat
By MICHAEL HUDSON and SHARMINI PERIES | CounterPunch | March 13, 2015
SHARMINI PERIES: In an effort to relieve some pressure on the struggling European economies, Mario Draghi, president of the European Central Bank, announced a 1 trillion euro quantitative easing package on Monday. Quantitative easing is an unconventional form of monetary policy where a central bank creates new money electronically to buy financial assets like government bonds. And this process aims to directly increase private-sector spending in the economy and return inflation to target.
Well, what does that mean and what might be wrong with it is our next topic with Michael Hudson. Michael Hudson is a distinguished research professor of economics at the University of Missouri-Kansas City. His two newest books are The Bubble and Beyond and Finance Capitalism and Its Discontents. His upcoming book is titled Killing the Host: How Financial Parasites and Debt Bondage Destroy the Global Economy.
Michael, the Fed and some economists will argue that this is what got the U.S. out of its 2008 financial crisis. In fact, they put several QE measures into place. So what’s wrong with quantitative easing?
MICHAEL HUDSON: Well, the cover story is that it’s supposed to help employment. The pretense is an old model that used to be taught in textbooks a hundred years ago: that banks lend money to companies to invest and build equipment and hire people.
But that’s not what banks do. Banks lend money mainly to transfer ownership of real estate. They also lend money to corporate raiders. They lend money to buy assets. But they don’t lend money for companies to invest in equipment and hire more workers. Just the opposite. When they lend money to corporate raiders to take over companies, the new buyers outsource labor, downsize the work force, and try to squeeze out more work. They also try to grab the pensions.
The Fed was pretty open in what quantitative easing is supposed to do since 2008. It’s supposed to lower the interest rates, which raises bond prices and inflates the stock market. Since 2008 they’ve had the largest monetary inflation history – $4 trillion of quantitative easing by the Fed. But it’s gone via the banks into the stock and bond market.
What has this done for the economy as a whole? For starters, it’s obviously helped stock and bond holders get richer. And who are they? They’re the 1 percent and the 10 percent.
People are wringing their hands and saying, why isn’t the economy getting richer? Why is it that since 2008, economic inequality and the distribution of wealth have worsened instead of gotten closer together? Well, it’s largely because of quantitative easing. It’s because quantitative easing has increased the value of the stocks and the bonds that are held mainly by the 1 percent or the 10 percent hold. This hasn’t helped the economy because the Fed is really concerned with its constituency, which are the banks.
Quantitative easing hasn’t helped one class of investors in particular: pension funds. It’s done just the opposite. Pension funds made the assumption a few years ago that in order to break even with the rate of contributions that corporations, states and municipalities are paying, they have to make eight percent or eight and a half percent a year as a rate of return. But quantitative easing lowers the interest rate.
Today’s lower interest rates have made pension funds desperate. The risk-free rate of return is less than 1 percent on short-term Treasury bills. If you buy longer-term treasuries you can make 2 percent, but then if the interest rates ever go up, you’re going to take a loss as the bond price declines. So pension funds have said, “We’re desperate; what are we going to do?”
They’ve turned their money over to Wall Street money managers and hedge funds. The hedge funds take a huge rake off of fees to begin with. But even worse, when hedge funds and the big banks – Goldman Sachs, Citibank – see a pension fund manager coming through the door, they think, “How can I take what’s in his pocket and put it in mine?” So they rip them off. That is why there are so many big lawsuits against Wall Street for mismanaging pension fund money.
To summarize, the effect of the quantitative easing has been to make pension funds desperate, and to support real estate prices, as if higher costs to obtain housing will help recovery. It doesn’t help recovery, because to the extent that quantitative easing supports a re-inflation of housing prices, new homeowners have to pay even more of their income to the banks as mortgage interest. That means they have less money to pay for goods and services, so markets for goods and services continue to shrink.
What the quantitative easing has not been used for is what was promised in 2008. Before President Obama won the election and took office, Congress said that the TARP bailout and TALF were supposed to go for debt reduction. Some was to write down mortgages, so that people could afford to stay in their homes rather than the millions of home owners that have been foreclosed on and thrown out. But even before Obama came into office, Hank Paulson, the Secretary of the Treasury, told Democrats in Congress, yes, we’re willing to write down debts. But as Barney Frank explained in exasperation, Obama said no, he’s not going to do that. Obama ended up supporting the banks. So almost none of the TARP bailout money has been used for debt write-downs.
The same phenomenon is happening in Europe.
PERIES: So, Michael, what’s wrong with what the ECB has announced in terms of a trillion euros worth of quantitative easing for Europe?
HUDSON: They head of the European Central Bank, Mario Draghi, has said that he’ll do whatever it takes to keep banks afloat. He doesn’t say that he’ll do whatever it takes to help economic recovery, or to help labor more. The ECB’s job is to help banks make more money.
Draghi was vice chairman of Goldman Sachs during 2002 to 2005. His view is that of Wall Street. It’s not a vantage point helping labor or helping economies grow. So it’s not surprising that the trillion euros of new money that the eurozone’s central bank is creating hasn’t gone to help Greece, for instance, survive. It hasn’t gone to help Greece, Spain, Italy, or Portugal get out of depression by fueling government spending. It’s simply been given away to the banks to buy bonds and stocks, including buying American stocks and bonds.
Behind this policy is the trickle-down theory that if you can make the financial sector richer, if you can make the one percent and the 10 percent richer, it’s all going to trickle down. This is the view of Paul Krugman, and it’s the view of the advisers that Obama has had. But instead of trickling down, the stock and bond price gains by the 1% and 10% drive a wedge in the economy, by increasing the value of stocks and bonds and real estate and wealth against labor. So quantitative easing is largely behind the fact that the distribution of wealth has become worse rather than better since 2008.
PERIES: One of the things that has happened in Europe that you wrote to me actually in an email was the disappearing central banks’ role in stimulating economies. Why is this an issue?
HUDSON: Central banks originally were designed to monetize government deficits. Governments are supposed to spend money into the economy, because that helps economies grow. But in Europe the Lisbon agreements say governments can’t run a deficit more than 3 percent of national income.
Furthermore, the role of the European Central Bank is not to give a penny to governments. They say that if you give a penny to government, you’ll have hyperinflation like you had in Weimar. So the central bank can only give money to banks – to invest in stocks and bonds. But the ECB won’t buy fresh bonds to finance new government spending. The result of this policy of not funding government deficits is that if the economy is to grow, it has to be entirely dependent on commercial banks for credit.
We had this situation in the United States in the last few years of the Clinton administration when the United States actually ran a budget surplus instead of a deficit. Now, how do you think the United States could grow when there’s a budget surplus sucking money out of the economy?
The answer is that commercial banks and bondholders have to supply the money. But the banks only supplied money in the form of junk mortgages and other forms of an economic bubble, such as takeover loans and a stock market bubble.
The interest of banks is not to help economies grow; it’s to extract interest from the economy. The financial sector uses part of its rising wealth to lobby for privatization sell-offs. The problem with this is that when you privatize a public utility, you give away a monopoly – and if you deregulate the economy, you let the monopoly set up tollbooths over the economy, for toll roads, communications or whatever is being privatized.
The ECB is telling Greece to privatize to raise the money to pay its bondholders, the ECB and IMF. So you have quantitative easing going hand-in-hand with the insistence on privatization. The result is debt deflation as the economy is forced to depend more and more on banks for the money to grow, instead of on government spending into the economy. You’re having the governments not being able to spend on infrastructure, letting it fall apart, as is happening with bridges and tunnels in the United States.
The next step is for the government to say, “I’m sorry, the central bank doesn’t have enough money to help us build new infrastructure. So we’ve got to sell it off to private investors who do have the money.” The next thing you know, you have the economy ending up looking like Chicago. That city sold off its sidewalks and its parking meters to Goldman Sachs and to other Wall Street firms. All of a sudden the prices of parking, driving, and living in Chicago went way, way up instead of lowering the costs as privatization promised.
You have the same phenomenon here that England suffered under Margaret Thatcher: costs for hitherto public services go up. Transportation costs go way up. Road costs go up. Communications, internet costs, telephone costs, everything that is privatized goes way up. Financialization leads to a rent-extractive, almost neo-feudal economy.
In that sense, quantitative easing and the refusal of central banks to fund governments (except to pay bondholders and bail out commercial banks) is a new kind of class war. It’s not the old kind of class war, which was between employers and their workforce over what wages will be. It’s by the financial sector trying to take over the economy, and especially to take over the public sector, to take over the public domain, to take over public utilities and whatever assets a government has. If governments cannot borrow from central banks, they have to begin selling off property.
PERIES: Michael, this is exactly what’s happening in Greece right now. The SYRIZA government is somewhat forced to continue privatization as a part of the agreement of the loans that they have been given by European banks. What could they do in this situation?
HUDSON: This is really a scandal, because most privatizations are corrupt insider dealings. The SYRIZA Party came in and said, wait a minute, the privatizations that have been done are by governmental officials to their own cronies at a giveaway price. How can we balance the budget if we’re giving away the public utilities instead of getting a fair price for them?
The European Central Bank said, no, you have to give away privatization to cronies at pennies on the dollar just like Russia did under Yeltsin, just like the United States did with the railroad giveaways of the 19th century.
Remember, the American privatization to the railroad barons and their financial backers created essentially the ruling class of the 20th century. It created the American stock market. The same thing is happening in Greece. It’s being told to continue the former politicians’ drive to endow a new oligarchy, a new kind of a feudal monopoly lord, by these privatization giveaways. The ECB says that if you don’t do that, we’re going to bankrupt the banking system.
Yanis Varoufakis went back to the party congress in Parliament and asked whether they would approve this. The left wing in Greece has said, no, we won’t approve the giveaways.
The pretense is that privatization is to make money, but the European Central Bank is saying, no, you can’t make money; you have to give it away to our cronies. It’s all one happy financial family. This is escalating financial warfare.
I can assure you that neither Varoufakis nor SYRIZA has any interest in this kind of privatization giveaway. It’s trying to figure out some way of perhaps prosecuting the cronies for bribery, for internal connections, or figuring out some way of legally stopping the rotten policies that they’re told to follow by the European Central Bank – which isn’t giving a single euro to help Greece get over the economic depression that debt deflation has brought on. The euros are only given to the financial sector, basically to help declare war on the Greek government, the Spanish government, the Italian government.
This financial warfare is trying to achieve the same thing that military warfare did in the past. It’s aim is to grab the land, to grab control of the public infrastructure, to grab control of governments themselves. But it’s doing it financially rather than militarily.
PERIES: Right. The SYRIZA Party last week did agree to the conditions of privatization, that they would not roll back on the existing agreements that had been made by previous government. They agreed to not roll back on ones that are underway, and that they’re actually not even averse to privatization as a statement by Yanis Varoufakis. What does all this mean for Greece?
HUDSON: The financial gun was put to their head. If they wouldn’t have said that, there would have been a total breakdown, and the European Central Bank would have tried to bankrupt the Greek banks. So he didn’t have much of a choice. Everything that Varoufakis has written, and all that the political leader of SYRIZA has said, has been exactly the opposite. But they had to give lip service to what they were told to do, and any agreement that’s made has to be ratified by Parliament. So, what they’ve said is, okay, we’re going to play good cop, bad cop. We’ll be the good cops with you, and let Parliament and our left wing be the bad cops and say that we’re not going to stand for this.
European Commission chief wants to create EU army
Press TV – March 8, 2015
President of the European Commission (EC) Jean-Claude Juncker has called for the creation of a European Union army, amid tension with Russia over the crisis in Ukraine.
“Such an army would help us to build a common foreign and security policy, as well as jointly assume the responsibilities of Europe in the world,” said Juncker in an interview with German weekly Welt am Sonntag published on Sunday.
Juncker added that the formation of a European armed forces would signal to Moscow the political and economic union is “serious about upholding the values of the European Union.”
“A common European army would show the world that there will by no means be war once more amongst EU nations,” said Juncker.
According to the EC chief, an EU army could be used to “react credibly” to dangers facing one of the 28-member states or any of the bloc’s neighboring countries.
The German weekly reported that Juncker has backing in the German legislature, including chairman of Germany’s foreign affairs committee Norbert Rottgen, who said it is time to put such a proposal in action.
“The Europeans spend enormous sums of money for the military combined, much more than Russia,” said Rottgen, adding, “But our military capabilities remain an insufficient security policy as long as we maintain small national armies, which make and buy many parts of the same thing on a smaller scale.”
Former EU foreign policy chief Javier Solana is set to present the findings of a report titled, More Union in European Defense. The report calls for a new European protection method, which would have “a political and military ability to autonomously conduct intervention operations beyond the EU’s borders.” The report also calls for the establishment of a military EU headquarters in the bloc’s de facto capital, Brussels.
According to the report, a common security policy would bring savings to the bloc’s member states, which altogether spends €190 billion annually to maintain 28 national armies, consisting of roughly 1.5 million service personnel.
The proposals to extend EU’s military capabilities come amid tensions between European countries and the US over the Ukrainian crisis. The Western governments accuse Russia of destabilizing Ukraine, an allegation which Moscow has repeatedly denied.
Meanwhile, NATO plans to expand its military presence in Eastern Europe amid the crisis in Ukraine and has held numerous war games over the past year. In 2014, NATO forces held some 200 military exercises, with the alliance’s General Secretary Jens Stoltenberg having promised that such drills would continue.
Moscow has repeatedly condemned NATO’s exercises and military buildup toward its borders.
Defending Ukraine From Russian Imperialism?
By Jason Hirthler | CounterPunch | February 20, 2015
In Bertrand Russell’s A History of Western Philosophy, the philosopher delivered his summarization of the writings of Catholic theologian Thomas Aquinas thusly, “Before he begins to philosophize, he already knows the truth; it is declared in the Catholic faith. If he can find apparently rational arguments for some parts of the faith, so much the better; if he cannot, he need only fall back on revelation. The finding of arguments for a conclusion given in advance is not philosophy, but special pleading.”
American foreign policy is determined in much the same fashion. Valuable objects are desired. Noble justifications are manufactured. Trusting populations are deceived. War is made. Empires do their special pleading on a global scale. For instance, the U.S. and its allies know precisely how they want to portray the Ukrainian conflict to their deluded Western populations. They need only apply the false flags and fashion the nefarious motives—like so many brush strokes—to the canvas of geopolitics.
Both the government and their corporate media vassals know their conclusions in advance. They are simple: Russia is the aggressor; America is the defender of freedom; and NATO is a gallant security force that must counter Moscow’s bellicosity. As the chief pleader in the construction of this fable, the Obama administration has compiled a litany of lies about the conflict that it disseminates almost daily to its press flacks.
One lie is that Putin has a feverishly expansionist foreign policy. No evidence exists for this claim, repeated ad nauseum in the West. The annexation of Crimea hardly seems like an example of such a policy. Crimeans voted overwhelmingly to secede from Ukraine. Russia was quite content with its long-term agreements with Kiev over the stationing of its Black Sea fleet at Sevastopol. It was the Kiev putsch that forced its hand.
There are plenty of signals that Putin has sent a stream of conscripts across the border to battle alongside the besieged “rebel separatists” in the East of Ukraine. But is this a crime of imperialism, sending soldiers to defend communities of ethnic peers under attack? Seems a difficult argument to make.
Moreover, Moscow has long stated that it wouldn’t permit NATO bases on its border—a purely defensive stance. The West knows this, but that is precisely its plan. It also surely knew that by capsizing Kiev and installing a few Westernized technocrats, it would provoke Russia into taking Crimea rather than sacrifice its Black Sea outpost. This cynical baiting permitted Washington to frame its aggression as self-defense, and Moscow’s self-defense as aggression. For context, consider how the U.S. might react if China suddenly toppled Mexico City using local drug lords with the aim of stationing hypersonic glide missiles in Tijuana. For once, Washington’s contempt for diplomacy would be justified.
Another lie is that we know Russia was behind the downing of MH17. Obama repeated this outlandish claim in the pulpit of the United Nations, no less. No proof exists, but plenty of circumstantial evidence seriously undermines the charge—missing air traffic controller (ATC) transcripts, the absence of satellite evidence of Buk anti-aircraft missile launchers in rebel territory, shelling traces on cockpit material, and Ukrainian ATC worker tweets pointing the finger at Kiev, and so on. Yet within hours of the crash, Barack Obama had told the world that Russian-backed separatists were responsible, and that Moscow must be punished. Nobody owns the narrative better than the USA.
A third lie is that the toppling of Viktor Yanukovych was a democratic uprising. Interesting how these always seem to occur wherever America has “strategic interests” in peril. Only then does the fever for representative government seize upon the minds of the rabble. Setting fantasy aside, the most reasonable conclusion, judging not least by admissions from Victoria Nuland and Obama himself, is that the U.S. engineered a coup using fascist thugs in the vanguard, and false flag shootings to drive Yanukovych into hurried exile. Odd how it all occurred when Yanukovych, after prevaricating for a time, discarded his association agreement with the EU for a better Russian offer. (Note likewise how Syria erupted in violence immediately following Bashar al-Assad’s decision to reject a Western-backed Qatari pipeline deal in favor of an Iranian one. In both cases, the inciting incidents were examples of an imperial province defying the diktats of Rome.)
A fourth lie is that Western sanctions against Russia are merited, since they are based on Russian aggression. However, a State Department run by his rhetorical eminence, Secretary of State John Kerry, would never phrase it so bluntly. Instead, we were informed that Russia was being chastened for “violating the sovereignty and territorial integrity of Ukraine,” and because it had worked to, “undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and contribute to the misappropriation of its assets.” One can just imagine the media flacks in speechless submission as this decree was sonorously recited from on high. None of this puffery removes the fact that the coup was a contemptuous move to bring NATO to the edges of Russia.
Bootlickers Anonymous
My, how the media lemmings fall in line with the official rhetoric. Dutiful to a fault, Western corporate media have performed their servile tasks with aplomb this month. A Thursday Times edition earlier in the month led with the headline, “U.S. and Europe working to end Ukraine fighting.” Saturday morning’s edition led with “U.S. faults Russia as combat spikes in East Ukraine.” A lead in the Economist put it rather more bluntly, “Putin’s war on the West.” Beneath the headline was a Photoshopped image of the Russian President, looking resolute, hand extended with puppet strings dangling from each digit. The op-ed pages of the Washington Post teemed with vitriol, continuing efforts to portray Obama as a latter-day Neville Chamberlain, arch appeaser of transparent tyrants. The “alarmingly passive” White House should be more concerned about how “to keep Vladimir Putin in line.”
This isn’t nuanced propaganda. It isn’t hedging or garden variety bias. It’s flat-out mendacity. Surely these publications have, as none of the rest of us does, the resources to know that the United States, trailed by its milquetoast EU lackeys, is trying to provoke a conflict between nuclear powers in eastern Ukraine. It either wants Russia to quit backing eastern rebels and permit NATO to establish bases on its border, or allow itself to be drawn into a resource-sapping proxy war. The end goal of the former is to divide Moscow from Europe. The goal of the latter is to vastly diminish the federation’s capacity to support its Shiite and Alawite allies in the Middle East, all of who stand in the way of Washington’s feverish dream of regional hegemony. Neither option holds much hope for residents of Donetsk, Luhansk and the surrounding oblasts, or provinces.
Yet the Times leads the Western world in disseminating, in every Starbuck’s in America, the folderol that our high-minded, hand-wringing, and munificent leaders are pursuing peace. This despite the unquenchable imperial ambitions of Russian President Vladimir Putin, who will not cease his provocations until he has resurrected the former glory of the Soviet Union, circa the Stalin era. How soon before the term “Hun” starts circulating? We’ve already got warmongering Senators releasing fake photos and cantankerously arguing that Obama is weak in the face of a world-historical threat.
Howitzers for Peace
Despite hysterical claims that Obama is a dove and tremulous fears that Putin will roll unopposed across the European mainland, the U.S. Congress approved new sanctions on Russia just before Christmas. The Orwellian, “Ukraine Freedom and Support Act” was intended to make sure that Vladimir Putin, “pays for his assault on freedom and security in Europe,” according to co-author of the bill, Senator Larry Corker, the Republican who will soon chair the Senate Foreign Relations Committee.
But what are sanctions without a little lethal aid thrown in? The bill also provided $350 million in such aid to Kiev. That means “anti-tank and anti-armor weapons, crew weapons and ammunition, counter-artillery radars to identify and target artillery batteries, fire control, range finder, and optical and guidance and control equipment, tactical troop-operated surveillance drones, and secure command and communications equipment.”
Now President Obama, tired of the pretense of diplomacy, is said to be weighing a recommendation from the always-helpful Brookings Institute to speed some $3 billion more in military aid to Kiev, including missiles, drones and armored Humvees. Look at this stern-faced collection of the pale and pious, spines erect as they advocate more slaughter in East Ukraine, where the U.N. has condemn both sides of the conflict—Western-backed Ukrainian government and the Russian-supported Novorossiya Army in the East—of indiscriminate shelling, which no doubt accounts for the hundreds of civilian deaths in just the last few weeks. A million have already fled to Russia as shelling from their own nation’s army has destroyed power and medical infrastructure, one of the first steps toward the impoverishment of a region. Couple that physical distress with the economic stress being implemented through Kiev’s agreement with the European Union.
The U.S. has also promised energy aid to Kiev to counter—as the media generally puts it—Russian threats to cut gas supplies. It is rarely noted that Kiev has refused to pay or even schedule payments on its $2 billion past-due invoice on previous deliveries. This is no doubt a Western prescription or precondition of assistance.
Note the staggering disparities here. Kiev owes Russia $2 billion in back payments. Vice President Joe Biden promises $50 million in energy relief, none of which will make it to Moscow. Then the president weighs in with $350 million in military aid and contemplates a staggering $3 billion more. He also offers a piddling $7 million for humanitarian purposes alongside some 46 million in the same bill for border security and the like.
That’s some $3.35 billion to further destroy a fractured Ukrainian society and $57 million to help repair it. Forgive me for being obtuse, but how is this peacemaking? Yet Secretary of State Kerry, Senator John McCain and others in Congress have continuously cast the conflict in defensive terms, producing all manner of fabrication to support the conceit. In the next sound byte, NATO’s Secretary-General Jens Stoltenberg says the alliance wants to double its Response Force to some 30,000 troops. France’s Hollande has called for Ukrainian entry into NATO.
Peace Before the Thaw?
Amid all this belligerent posturing, cameras crisply flashed when Angela Merkel and Francoise Hollande, Vladimir Putin and Petro Poroshenko concluded a second Minsk ceasefire agreement last week, implemented Sunday. It was perhaps a last ditch effort by a temporizing EU to prevent a vicious proxy war, or possibly more insincere diplomatic posturing to provide cover for Western aggression. In any event, Washington was notably absent, but surely it loomed large over the meetings. The core points of the accord include a withdrawal of heavy weapons behind the nominal buffer zone; amnesty for prisoners; withdrawal of foreign militias and disarming of illegal groups; decentralization of areas controlled by Novorossiya Armed Forces, supposedly in the form of constitutional reform; but also Ukrainian control of the Russian border by year’s end. Despite the agreement, the battle for city of Debaltseve continued, with the rebels—or “terrorists” in Kiev parlance—finally emerging victorious yesterday and driving the Ukrainian Army into retreat.
Betting on peace isn’t a smart call in this circumstance. Already radical voices have flared up in Kiev and also in rebel circles declaring their contempt for the agreement. None of the contracting parties in Minsk seem to have control over these groups. Poroshenko himself said he agreed to the first Minsk agreement to let his troops regroup, and he has evidently refused the stipulation of constitutional reform this time around. Nor has Washington shown any serious interest in implementing a peace plan. In fact, the financial outlay by the White House suggests this is no token conflict, but part of a larger imperial strategy that many pundits claim doesn’t exist.
But it does. Look at Carter administration National Security Advisor Zbigniew Brzezinski’s strategic master plan, laid out in his book The Grand Chessboard, among others. Then see how that plan found its apostles in the neoconservative movement, re-articulated in Paul Wolfowitz’s 1992 Defense Planning Guidance for the Clinton administration, and later in the Bush administration’s madcap blueprint for reshaping the Middle East. As ever, the objective is full-spectrum dominance, an arcadia or nightmare, depending on which side of the imperial fence you find yourself.
Jason Hirthler can be reached at jasonhirthler@gmail.com.
NATO invents Russian threats in the Baltic
By Oliver Tickel | The Ecologist | February 19, 2015
Russian President Vladimir Putin will “launch a campaign of undercover attacks to destabilise the Baltic states on Nato’s eastern flank”, the Telegraph reports today – along with all other mainstream news media.
How do we know this? Because the UK’s Defence Secretary Michael Fallon has said so. Lithuania, Estonia and Latvia watch out – the Russian peril is fast coming your way.
“There are lots of worries”, Fallon told the newspaper. “I’m worried about Putin. There’s no effective control of the border, I’m worried about his pressure on the Baltics, the way he is testing NATO, the submarines and aircraft … They are modernising their conventional forces, they are modernising their nuclear forces and they are testing NATO, so we need to respond.”
Covert attack by Russia on the Baltic states is “a very real and present danger”, Fallon insisted. Now where did we hear that before? Ah yes. On 16th December 1998 President Bill Clinton said that that Iraqi President Saddam Hussein presented “a clear and present danger” to the stability of the Persian Gulf and the safety of people everywhere.
We all know where that led: the Iraq war followed a few years later. We also know that the claim was a monstrous untruth: Saddam had no chemical, biological or nuclear weapons. So why should we believe Fallon now? Where is his evidence? He has none. When you already know the truth, who needs evidence?
Fallon – and NATO – should keep their eyes on the ball
But while Fallon’s attention is focused on the imaginary threat to the Baltic states, there is another country that really could be ‘at risk’ – and not because of cyber-attack, invasion by ‘green men’ or a campaign of destabilisation emanating from the Kremlin.
No, the EU, the European Central Bank, the IMF and European finance ministers have already been doing all the destabilisation that’s needed – forcing Greece into a deep programme of austerity that has seen the economy shrink by 25% over five years, the closure of vital public services, mass unemployment and the forced sell-off of public assets.
And now the Greeks – and their newly elected Syriza government – have had enough. This week the Greek prime minister Alexis Tsipras flatly refused to renew the €240 billion ‘bailout’ package, which comes with all the austerity strings, and he today advanced proposals for a ‘six-month assistance package’ free of harsh conditions to give Greece time to renegotiate its debt.
The standoff continues, and will be decided tomorrow by EU finance ministers. It’s not looking good: Germany has already stated that the Greek proposal “does not meet the conditions”. But if the finance minsters don’t agree, then what?
You guessed it: Tsipras will turn to Russia. Earlier this month Tsipras and Putin agreed on a range of bilateral ties, including the construction of a pipeline that would carry Russian natural gas from the Turkish border across Greece to the other countries of southern Europe.
This follows the re-routing of the ‘South Stream’ pipeline, which had been due to cross Bulgaria but was effectively blocked by the EU’s retrospective application of energy market rules, under heavy pressure from the USA. Last November and December Putin negotiated the pipeline’s realignment across Turkey with Turkish President Erdogan – right up to the Greek border.
Following the agreement between Putin and Tsipras, which came complete with an invitation to Moscow on Victory over the Nazis day, 9th May, the pipeline link to the major countries of southern Europe is now complete, at least on paper. And once it’s built, Greece will effectively control – and profit from – that gas supply, and take a strategic position in Europe’s energy landscape.
But Greece is a NATO member!
Greece’s increasingly warm relationship with Russia is already causing concern among other EU and NATO countries. German Defense Minister Ursula von Der Leyen has said that Greece was “putting at risk its position in the NATO alliance with its approach to Russia.”
This provoked a fierce retort from Greek Defense Minister Panos Kammenos who branded the attack as “unacceptable and extortionate” – noting that “Greece was always on the side of the Allies when they pushed back German occupation troops.”
“Statements that replace the EU and NATO’s institutional bodies are unacceptable as blackmailing”, he added. “They undermine the European institutions except if Germany’s aim is to dissolve the European Union and the NATO.”
So if Tsipras’s refinancing proposal is refused tomorrow will Greece quit NATO and the EU, to join the Eurasian Union? Not if Mr Putin gets his way: Greece is worth much more to Russia as an ally within the EU and NATO than outside – where it can veto more trade sanctions against Russia, block the TTIP and CETA trade deals with the USA and Canada, and oppose NATO’s increasing belligerence from within.
But we could see Greece simply renouncing its manifestly unpayable and unjust €320 billion national debt, and quitting the Eurozone straitjacket – while receiving an emergency liquidity package from Russia to support the launch of the New Drachma.
In fact, we could see a re-run of important elements of the Ukraine play of December 2013, when Russia offered a support package under which it would buy $15 billion in bonds from Ukraine, supporting its collapsing currency, and supply it with deeply discounted gas – £268 per cubic metre rather than the maarket price of $400.
A $15 billion purchase of New Drachma denominated Greek bonds would be a superb launch for Greece’s new currency, and would firmly cement Greece’s long term alliance with Russia, providing it with a valuable long term bridgehead into both the EU and NATO.
This move would also give inspiration and confidence to progressive political movements across Europe that take inspiration from Syriza’s fight for economic justice – in Spain, Portugal, Ireland, Italy, the UK and beyond – and bear the powerful message: there is an alternative.
And while NATO, the EU, the USA and their loyal servants, among them the UK’s Michael Fallon, deliberately whip up a fictitious threat in the Baltic, ignoring the real danger they face to the south, the masterly Mr Putin would once again make fools of them all.
IMF aid package pushes Ukraine gas prices up 280%
RT | February 18, 2015
Ukraine has agreed to increase the cost of gas to consumer by 280 percent, and 66 percent for heating, as part of the IMF terms for getting extra financial aid, says Valery Gontareva the head of the National Bank of Ukraine.
“From now on, in accordance with our joint program with the IMF, the tariffs will see rather a sharp increase of 280 percent for gas and about 66 percent for heat,” said Gontareva Wednesday during the 11th Dragon Capital investment conference in Kiev. She added that as a result inflation will be 25-26 percent by the end of 2015.
The tariff rises are part of the amendments to the 2015 budget the government has had to introduce in order to receive an $8.5 billion loan from the IMF by the end of the year.
The changes will also see Ukraine’s budget deficit growing to 4.1 percent of GDP and forecasts a 5.5 percent decline in the Ukrainian economy.
Prime Minister Arseny Yatsenyuk had warned of future price rises for gas and heating, and stressed the IMF saved Ukraine from default, and now it’s time to make moves which should eventually result in Ukraine’s complete independence from Russian gas.
The tariff increase was among the subjects Ukraine and the IMF touched upon during negotiations in January. Deputy Chairman of the Ukraine parliament’s budget committee Viktor Krivenko said the IMF had requested a sevenfold increase in prices.
The head of IMF Christine Lagarde said on February 12 that the preliminary agreement reached between Kiev and Western creditors envisages increasing the aid package to $40 billion over the next four years.
The program will help Ukraine receive an additional $25 billion in financial aid, of which $17.5 billion will be provided to stabilize the financial situation in the country.
The latest IMF program will replace the $17 billion package agreed in April 2014. Ukraine has already received $4.5 billion under that agreement, thus the total IMF loans to Ukraine since the beginning of the crisis amount to $22 billion.
Read more: IMF announces new $17.5bn bailout package for Ukraine
Russian draft resolution on Ukraine passed by UN Security Council
RT | February 17, 2015
The United Nations Security Council has voted unanimously to approve a Russia-drafted resolution to support the Minsk agreements, reached by the leaders of France, Germany, Russia and Ukraine last week.
The resolution was submitted to the UNSC by Russia on February 13, a day after the Minsk deal was agreed on. It is aimed at endorsing and executing the Minsk agreements. The document also expresses concern over the continuing violence in eastern Ukraine, and stresses the importance of resolving the conflict peacefully.
“After the unprecedented diplomatic efforts last week, Ukraine has a chance to turn a dramatic page in its history,” said Russia’s UN envoy Vitaly Churkin, who expressed “gratitude” towards the other parties for endorsing the document.
Moscow would aid “in full” the realization of the agreement, he added.
The resolution calls for a “total ceasefire” and a “political solution” that respects the “sovereignty, independence and territorial integrity of Ukraine”.
The plan, hammered out during 16-hour negotiations on February 12, stipulates the comprehensive ceasefire, the withdrawal of heavy weapons from the frontline, an all-for-all prisoner exchange, and passage for humanitarian aid convoys.
In the medium turn, the Minsk peace plan calls for the withdrawal of any “foreign troops” and “mercenaries” from the conflict zone, general amnesty for the rebels and the OSCE using its drone fleet and monitors on the ground to ensure the implementation of agreements. It also provides for handing back of the border controls of the Ukrainian government, and lifting of the economic blockade that Kiev imposed on the eastern regions.
Eventually, the treaty proposes new elections in eastern Ukraine and a decentralization that would grant more power to the rebel regions.
Read more: The Minsk ceasefire deal, point by point
European Court confirms Polish complicity in CIA rendition and torture
Reprieve | February 17, 2015
The European Court of Human Rights (ECHR) has today confirmed its judgement that Poland actively assisted the CIA’s European “black site” programme, which saw detainees held and tortured in secret prisons across the Continent.
In July 2014, the ECHR had ruled that Poland “facilitated” the torture, secret detention and unlawful transfer of Abu Zubaydah, who is now held in Guantanamo Bay.
Mr Zubaydah was flown from a secret site in Thailand to another CIA prison in Stare Kiejkuty in northern Poland, where he was detained and tortured during 2002 and 2003. The Senate Select Committee on Intelligence (SSCI) detailed in its recent report how Mr Zubaydah was subjected to torture numerous times by the CIA, before the Agency concluded that he was not a member of al Qaeda at all.
Today’s ruling by the ECHR confirms its 2014 judgement and rejects a request by Poland to refer it to its Grand Chamber for potential reconsideration.
The 2014 judgment described the evidence that Mr Zubaydah was detained in Poland as “coherent, clear and categorical,” and ruled that it was “inconceivable” that Poland was unaware of his mistreatment. It concluded that “Poland, for all practical purposes, facilitated the whole process, created the conditions for it to happen and made no attempt to prevent it from occurring.”
Kat Craig, legal director at human rights charity Reprieve, said: “The Court’s decision today is a crucial step forward for justice and accountability over the European role in the US torture programme. Poland’s attempts to avoid responsibility were rightly refused – it’s now time for the Polish authorities to admit their complicity in renditions, take their investigations seriously, and come clean about how they allowed these abuses on Polish soil.”
Ukraine Denouement
By Michael Hudson | CounterPunch | February 16, 2015
The fate of Ukraine is now shifting from the military battlefield back to the arena that counts most: that of international finance. Kiev is broke, having depleted its foreign reserves on waging war that has destroyed its industrial export and coal mining capacity in the Donbass (especially vis-à-vis Russia, which normally has bought 38 percent of Ukraine’s exports). Deeply in debt (with €3 billion falling due on December 20 to Russia), Ukraine faces insolvency if the IMF and Europe do not release new loans next month to pay for new imports as well as Russian and foreign bondholders.
Finance Minister Natalia Yaresko announced on Friday that she hopes to see the money begin to flow in by early March.[1] But Ukraine must meet conditions that seem almost impossible: It must implement an honest budget and start reforming its corrupt oligarchs (who dominate in the Rada and control the bureaucracy), implement more austerity, abolish its environmental protection, and make its industry “attractive” to foreign investors to buy Ukraine’s land, natural resources, monopolies and other assets, presumably at distress prices in view of the country’s recent devastation.
Looming over the IMF loan is the military situation. On January 28, Christine Lagarde said that the IMF would not release more money as long as Ukraine remains at war. Cessation of fighting was to begin Sunday morning. But Right Sector leader Dmytro Yarosh announced that his private army and that of the Azov Battalion will ignore the Minsk agreement and fight against Russian-speakers. He remains a major force within the Rada.
How much of Ukraine’s budget will be spent on arms? Germany and France made it clear that they oppose further U.S. military adventurism in Ukraine, and also oppose NATO membership. But will Germany follow through on its threat to impose sanctions on Kiev in order to stop a renewal of the fighting? For the United States bringing Ukraine into NATO would be the coup de grace blocking creation of a Eurasian powerhouse integrating the Russian, German and other continental European economies.
The Obama administration is upping the ante and going for broke, hoping that Europe has no alternative but to keep acquiescing. But the strategy is threatening to backfire. Instead of making Russia “lose Europe,” the United States may have overplayed its hand so badly that one can now think about the opposite prospect. The Ukraine adventure could turn out to be the first step in the United States losing Europe. It may end up splitting European economic interests away from NATO, if Russia can convince the world that the epoch of armed occupation of industrial nations is a thing of the past and hence no real military threat exists – except for Europe being caught in the middle of Cold War 2.0.
For the U.S. geopolitical strategy to succeed, it would be necessary for Europe, Ukraine and Russia to act against their own potential economic self-interest. How long can they be expected to acquiesce in this sacrifice? At what point will economic interests lead to a reconsideration of old geo-military alliances and personal political loyalties?
This is becoming urgent because this is the first time the EU has been faced with such war on its own borders (if we except Yugoslavia). Where is the advantage for Europe supporting one of the world’s most corrupt oligarchies north of the Equator?
America’s Ukrainian adventure by Hillary’s appointee Victoria Nuland (kept on and applauded by John Kerry), as well as by NATO, is forcing Europe to commit itself to the United States or pursue an independent line. George Soros (whose aggressive voice is emerging as the Democratic Party’s version of Sheldon Adelson) recently urged (in the newly neocon New York Review of Books) that the West give Ukraine $50 billion to re-arm, and to think of this as a down payment on military containment of Russia. The aim is the old Brzezinski strategy: to foreclose Russian economic integration with Europe. The assumption is that economic alliances are at least potentially military, so that any power center raises the threat of economic and hence political independence.
The Financial Times quickly jumped on board for Soros’s $50 billion subsidy.[2] When President Obama promised that U.S. military aid would be only for “defensive arms,” Kiev clarified that it intended to defend Ukraine all the way to Siberia to create a “sanitary cordon.”
First Confrontation: Will the IMF Loan Agreement try to stiff Russia?
The IMF has been drawn into U.S. confrontation with Russia in its role as coordinating Kiev foreign debt refinancing. It has stated that private-sector creditors must take a haircut, given that Kiev can’t pay the money its oligarchs have either stolen or spent on war. But what of the €3 billion that Russia’s sovereign wealth fund loaned Ukraine, under London rules that prevent such haircuts? Russia has complained that Ukraine’s budget makes no provision for payment. Will the IMF accept this budget as qualifying for a bailout, treating Russia as an odious creditor? If so, what kind of legal precedent would this set for sovereign debt negotiations in years to come?
International debt settlement rules were thrown into a turmoil last year when U.S. Judge Griesa gave a highly idiosyncratic interpretation of the pari passu clause with regard to Argentina’s sovereign debts. The clause states that all creditors must be treated equally. According to Griesa (uniquely), this means that if any creditor or vulture fund refuses to participate in a debt write-down, no such agreement can be reached and the sovereign government cannot pay any bondholders anywhere in the world, regardless of what foreign jurisdiction the bonds were issued under.
This bizarre interpretation of the “equal treatment” principle has never been strictly applied. Inter-governmental debts owed to the IMF, ECB and other international agencies have not been written down in keeping with private-sector debts. Russia’s loan was carefully framed in keeping with London rules. But U.S. diplomats have been openly – indeed, noisily and publicly – discussing how to “stiff” Russia. They even have thought about claiming that Russia’s Ukraine loans (to help it pay for gas to operate its factories and heat its homes) are an odious debt, or a form of foreign aid, or subject to anti-Russian sanctions. The aim is to make Russia “less equal,” transforming the concept of pari passu as it applies to sovereign debt.
Just as hedge funds jumped into the fray to complicate Argentina’s debt settlement, so speculators are trying to make a killing off Ukraine’s financial corpse, seeing this gray area opened up. The Financial Times reports that one American investor, Michael Hasenstab, has $7 billion of Ukraine debts, along with Templeton Global Bond Fund.[3] New speculators may be buying Ukrainian debt at half its face value, hoping to collect in full if Russia is paid in full – or at least settle for a few points’ quick run-up.
The U.S.-sponsored confusion may tie up Russia’s financial claims in court for years, just as has been the case with Argentina’s debt. At stake is the IMF’s role as debt coordinator: Will it insist that Russia take the same haircut that it’s imposing on private hedge funds?
This financial conflict is becoming a new mode of warfare. Lending terms are falling subject to New Cold War geopolitics. This battlefield has been opened up by U.S. refusal in recent decades to endorse the creation of any international body empowered to judge the debt-paying capacity of countries. This makes every sovereign debt crisis a grab bag that the U.S. Treasury can step in to dominate. It endorses keeping countries in the U.S. diplomatic orbit afloat (although on a short leash), but not countries that maintain an independence from U.S. policies (e.g., Argentina and BRICS members).
Looking forward, this position threatens to fracture global finance into a U.S. currency sphere and a BRICS sphere. The U.S. has opposed creation of any international venue to adjudicate the debt-paying capacity of debtor nations. Other countries are pressing for such a venue in order to save their economies from the present anarchy. U.S. diplomats see anarchy as offering an opportunity to bring U.S. diplomacy to bear to reward friends and punish non-friends and “independents.” The resulting financial anarchy is becoming untenable in the wake of Argentina, Greece, Ireland, Spain, Portugal, Italy and other sovereign debtors whose obligations are unpayably high.
The IMF’s One-Two Punch leading to privatization sell-offs to rent extractors
IMF loans are made mainly to enable governments to pay foreign bondholders and bankers, not spend on social programs or domestic economic recovery. Sovereign debtors must agree to IMF “conditionalities” in order to get enough credit to enable bondholders to take their money and run, avoiding haircuts and leaving “taxpayers” to bear the cost of capital flight and corruption.
The first conditionality is the guiding principle of neoliberal economics: that foreign debts can be paid by squeezing out a domestic budget surplus. The myth is that austerity programs and cuts in public spending will enable governments to pay foreign-currency debts – as if there is no “transfer problem.”
The reality is that austerity causes deeper economic shrinkage and widens the budget deficit. And no matter how much domestic revenue the government squeezes out of the economy, it can pay foreign debts only in two ways: by exporting more, or by selling its public domain to foreign investors. The latter option leads to privatizing public infrastructure, replacing subsidized basic services with rent-extraction and future capital flight. So the IMF’s “solution” to the debt problem has the effect of making it worse – requiring yet further privatization sell-offs.
This is why the IMF has been wrong in its economic forecasts for Ukraine year after year, just as its prescriptions have devastated Ireland and Greece, and Third World economies from the 1970s onward. Its destructive financial policy must be seen as deliberate, not an innocent forecasting error. But the penalty for following this junk economics must be paid by the indebted victim.
In the wake of austerity, the IMF throws its Number Two punch. The debtor economy must pay by selling off whatever assets the government can find that foreign investors want. For Ukraine, investors want its rich farmland. Monsanto has been leasing its land and would like to buy. But Ukraine has a law against alienating its farmland and agricultural land to foreigners. The IMF no doubt will insist on repeal of this law, along with Ukraine’s dismantling of public regulations against foreign investment.
International finance as war
The Ukraine-IMF debt negotiation shows why finance has become the preferred mode of geopolitical warfare. Its objectives are the same as war: appropriation of land, raw materials (Ukraine’s gas rights in the Black Sea) and infrastructure (for rent-extracting opportunities) as well as the purchase of banks.
The IMF has begun to look like an office situated in the Pentagon, renting a branch office on Wall Street from Democratic Party headquarters, with the rent paid by Soros. His funds are drawing up a list of assets that he and his colleagues would like to buy from Ukrainian oligarchs and the government they control. The buyout payments for partnership with the oligarchs will not stay in Ukraine, but will be moved quickly to London, Switzerland and New York. The Ukrainian economy will lose the national patrimony with which it emerged from the Soviet Union in 1991, still deeply in debt (mainly to its own oligarchs operating out of offshore banking centers).
Where does this leave European relations with the United States and NATO?
The two futures
A generation ago the logical future for Ukraine and other post-Soviet states promised to be an integration into the German and other West European economies. This seemingly natural complementarity would see the West modernize Russian and other post-Soviet industry and agriculture (and construction as well) to create a self-sufficient and prosperous Eurasian regional power. Foreign Minister Lavrov recently voiced Russia’s hope at the Munich Security Conference for a common Eurasian Union with the European Union extending from Lisbon to Vladivostok. German and other European policy looked Eastward to invest its savings in the post-Soviet states.
This hope was anathema to U.S. neocons, who retain British Victorian geopolitics opposing the creation of any economic power center in Eurasia. That was Britain’s nightmare prior to World War I, and led it to pursue a diplomacy aimed at dividing and conquering continental Europe to prevent any dominant power or axis from emerging.
America started its Ukrainian strategy with the idea of splitting Russia off from Europe, and above all from Germany. The U.S. playbook is simple: Any economic power is potentially military; and any military power may enable other countries to pursue their own interests rather than subordinating their policy to U.S. political, economic and financial aims. Therefore, U.S. geostrategists view any foreign economic power as a potential military threat, to be countered before it can gain steam.
We can now see why the EU/IMF austerity plan that Yanukovich rejected made it clear why the United States sponsored last February’s coup in Kiev. The austerity that was called for, the removal of consumer subsidies and dismantling of public services would have led to an anti-West reaction turning Ukraine strongly back toward Russia. The Maidan coup sought to prevent this by making a war scar separating Western Ukraine from the East, leaving the country seemingly no choice but to turn West and lose its infrastructure to the privatizers and neo-rentiers.
But the U.S. plan may lead Europe to seek an economic bridge to Russia and the BRICS, away from the U.S. orbit. That is the diplomatic risk when a great power forces other nations to choose one side or the other.
The silence from Hillary
Having appointed Valery Nuland as a holdover from the Cheney administration, Secretary of State Hillary Clinton joined the hawks by likening Putin to Hitler. Meanwhile, Soros’s $10 million on donations to the Democratic Party makes him one of its largest donors. The party thus seems set to throw down the gauntlet with Europe over the shape of future geopolitical diplomacy, pressing for a New Cold War.
Hillary’s silence suggests that she knows how unpopular her neocon policy is with voters – but how popular it is with her donors. The question is, will the Republicans agree to not avoid discussing this during the 2016 presidential campaign? If so, what alternative will voters have next year?
This prospect should send shivers down Europe’s back. There are reports that Putin told Merkel and Holland in Minsk last week that Western Europe has two choices. On the one hand, it and Russia can create a prosperous economic zone based on Russia’s raw materials and European technology. Or, Europe can back NATO’s expansion and draw Russia into war that will wipe it out.
German officials have discussed bringing sanctions against Ukraine, not Russia, if it renews the ethnic warfare in its evident attempt to draw Russia in. Could Obama’s neocon strategy backfire, and lose Europe? Will future American historians talk of who lost Europe rather than who lost Russia?
Michael Hudson’s book summarizing his economic theories, “The Bubble and Beyond,” is now available in a new edition with two bonus chapters on Amazon. His latest book is Finance Capitalism and Its Discontents. He is a contributor to Hopeless: Barack Obama and the Politics of Illusion, published by AK Press. He can be reached via mh@michael-hudson.com
Notes.
[1] Fin min hopes Ukraine will get new IMF aid in early March – Interfax, http://research.tdwaterhouse.ca/research/public/Markets/NewsArticle/1664-L5N0VN2DO-1
5:40AM ET on Friday Feb 13, 2015 by Thomson Reuters
[2] “The west needs to rescue the Ukrainian economy,” Financial Times editorial, February 12, 2015.
[3] Elaine Moore, “Contrarian US investor with $7bn of debt stands to lose most if Kiev imposes haircut,” Financial Times, February 12, 2015.
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$1.5bn up in smoke: US THAAD missile stockpile dries up defending Israel against Iran
By Ivan Kesic | Press TV | July 2, 2025
According to American media, defense news outlets, and independent analysts, the 12-day Israeli military aggression against Iran significantly depleted the US stockpile of THAAD (Terminal High Altitude Area Defense) interceptor missiles.
Citing official sources, American magazine Newsweek reported on Friday that the US transferred a substantial portion of its advanced missile defense capabilities to support the Israeli regime, an effort with questionable results and a critical impact on US strategic reserves.
THAAD, developed by Lockheed Martin arms manufacturing company, is a key component of Israel’s multi-layered air defense architecture. It is designed to intercept medium-range ballistic missiles, including those launched from Iran and Yemen.
The US-made system is capable of targeting short-, medium-, and intermediate-range ballistic missiles during their terminal phase, whether inside or outside Earth’s atmosphere.
THAAD uses a “hit-to-kill” method, relying on kinetic energy rather than explosive warheads to destroy incoming threats, intercepting at altitudes of up to 150 km and ranges between 150-200 km.
Operated exclusively by American personnel, the US military maintains eight THAAD batteries with an estimated 350–400 interceptors in total. The eighth battery was activated during the June 20 Israeli aggression against Iran and is capable of intercepting hypersonic missiles. … continue
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