Japanese firms have no plans to abandon Russian energy project
RT | March 14, 2022
Japanese trading houses, Mitsui and Mitsubishi, are reportedly not considering quitting Russia’s Sakhalin-2 project, that is focused on producing and shipping liquified natural gas (LNG), 60% of which is destined for the Japanese market.
The Japanese trading giants, which hold a total stake of 22,5% in Sakhalin-2, will remain partners to the project, as “prompt exit is risky” and “will be in favor of China,” Nikkei newspaper reports, citing documents submitted by the companies to the Ministry of Economy, Trade and Industry of Japan earlier this month.
The project has been one of the main sources of natural gas supply to Japan with nearly 100% of Japanese LNG imports coming from Sakhalin-2, according to media reports.
Located on the Russian island of Sakhalin in the Pacific Ocean, north of Japan, the project reportedly produces nearly 11.5 million tons of LNG annually which is mainly exported to major markets in Asia.
The project, launched in 2009, includes the offshore Piltun-Astokhskoye oil field and Lunskoye natural gas field in the Okhotsk Sea, and associated infrastructure on Sakhalin Island itself.
Sakhalin-2 is managed and operated by the Sakhalin Energy Investment Company. The majority stake in the enterprise belongs to Russia’s energy giant Gazprom. Shell, the world’s largest LNG trader, holds 27,5% minus one share, Mitsui’s share totals 12,5%, while Mitsubishi Corporation owns 10%.
On February 28, UK-based Shell announced plans to pull out its stake in the Sakhalin-2 liquefied natural gas facility, its 50% stake in the Salym Petroleum Development and the Gydan energy venture following sanctions placed on Moscow over the ongoing military operation in Ukraine.
India Should Quit Quad Now!
BY M. K. BHADRAKUMAR | INDIAN PUNCHLINE | MARCH 14, 2022
Hedging between superpowers — United States, Russia and China — was never the smart thing to do. India should have known that the contradictions are simply irreconcilable.
This is a moment of truth, therefore, as the US unsheathes the sword to bleed and dismember Russia, and gives an ultimatum to China to stay out of it.
The gravity of the situation is sinking in, finally. That is the message coming out of the Cabinet Committee on Security meeting convened by PM Modi on Sunday “to review India’s security preparedness, and the prevailing global scenario in the context of the ongoing conflict in Ukraine,” where he was briefed “on latest developments and different aspects of India’s security preparedness in the border areas as well as in the maritime and air domain.”
The US National Security Advisor Jake Sullivan’s meeting with China’s top diplomat and Politburo member Yang Jiechi in Rome later today promises to be a defining moment in world politics.
Yesterday, Sullivan explicitly threatened China in an interview with CNN. He said: “We are communicating directly, privately to Beijing, that there will absolutely be consequences for large-scale sanctions evasion efforts or support to Russia to backfill them. We will not allow that to go forward and allow there to be a lifeline to Russia from these economic sanctions from any country, anywhere in the world.”
The warning to China is that it should conform to the US sanctions against Russia and desist from providing support (“lifeline”) to Russia in any form.
The cutting edge of Sullivan’s statement is that it also applies to India. The implications are very, very severe. Simply put, Washington’s demand is also that India should abandon its relationship with Russia.
That means principally, that India should freeze the defence relationship. Considering that something like 60-70% of weaponry for our armed forces is of Russian origin, this will render a crippling blow to India’s defence preparedness.
Essentially, this is going to be baptism by fire for the Indian leadership. It stands to reason that the Americans have already conveyed their charter of demands to the government, and PM’s hurried move to convene the CCS ensued.
Last week, the Russian minister of energy had a call with his Indian counterpart where he not only offered oil at concessional rates but also invited Indian companies to step up investments in Russian oil and gas fields on a preferential basis. At a time when the oil price crossed $130 a barrel and the spot market price for gas is approaching $4000 per thousand cubic meters, the Russian offer came as a gift from God.
But the fact that the government downplayed it shows a state of paranoia — symptomatic of the same pusillanimity that characterised the UPA mindset, prompting the rollback of ties with Iran.
The Americans have experienced that our elite are largely men of straw. Given the scale of corruption, there are all kinds of interest groups in our country. Besides, the comprador elements within our elite are stakeholders in the American agenda. That is a tragic fact of life.
However, the difference today is that the looming American threat would have vital bearing on India’s defence capabilities, and national security. For a government that proclaims the nationalist credo, the choice ought to be clear.
The Modi government should refuse to comply with the American legislations regarding Russia. Period. In all likelihood, Americans are bluffing. Or, if there is going to be a price to pay, the leadership should take the nation into confidence and explain the long-term imperative of safeguarding the country’s core interests at whatever cost. Indians are a patriotic people.
To my understanding, in the world of today, American hegemony is unsustainable. The US bullies those who are susceptible to bullying and blackmails those ruling elites who are vulnerable to blackmail, individually or collectively. Hopefully, our ruling elite do not fall into such a pitiable category.
Freedom struggle was so much more arduous. The predicament today is also about the country’s independence. The nation will rally under an inspiring leader.
Things have come to such a sorry pass today largely due to the flawed foreign policies through the past two decades or so when the American lobbyists began expounding that India’s interests are best served in an alliance with the US.
‘Non-Alignment’ and ‘strategic autonomy’ became archaic concepts. Thus, circa 2000 or so, India ‘crossed the Rubicon’, to borrow the title of an infamous book of those times, to be with our ‘natural allies’. Where has it brought the country today after 21 years?
The self-styled foreign policy gurus in the media and the strategic immunity proved horribly wrong in their assessment of international politics. Beyond the Rubicon, what we saw and experienced was a bleached landscape of parched earth and birds of prey, so different from the El Dorado that we were promised by the carpetbaggers.
Indian foreign policy needs a strategic course correction. India should distance itself completely from the self-centred US polices whose aim is the preservation of its global hegemony. The first step in that direction should be to quit Quad.
Make no mistake, a US-China showdown is in the making sooner than one might have expected it, and it will be calamitous for India to get sucked into it. The visit by Japanese prime minister Kishida to India this weekend causes disquiet.
By the colour of our skin, our religion, our culture, our geography, our political economy, we will never be accepted by the West as ‘one of us’. Do not be mesmerised by promises of equal partnerships. Look at the US’ track record — selfish, cynical and ruthless in the pursuit of its interests.
History didn’t end with the eclipse of the Cold War. Fundamentally, what the Western powers are planning is a form of neo-colonialism borne out of the desperate need to arrest the decline of their economies through a massive transfer of wealth from the rest of the world inhabited by 88 percent of mankind — Asia, in particular. To that end, the West has unceremoniously buried ‘globalisation’ and turned its back on multilateralism.
Quintessentially, what is unfolding is no different from 19th century colonial era. Therefore, India should work together with like-minded countries that are stakeholders in the preservation of their sovereignty, hard-won independence and most important, their cherished freedom to choose their paths of development insulated from interference in internal affairs or attempts at ‘regime change’.
A peaceful external environment is an imperative need and the foreign policy should prioritise that objective. It means a revamp of India’s policies toward China and Pakistan. We are stuck in a groove cut decades ago largely for propaganda purposes, unable to disown our self-serving narratives. Fortunately, there are incipient signs of rethink lately. Do not let Washington queer the pitch of India’s crucial relationships with China or Pakistan.
A nation has no future if it is incapable of introspection. Mistakes have been made but it is false pride and hubris not to make amends. Indians are a forgiving people. And as for the present government at least, it only inherited the false narratives.
‘US will scrap Iran deal before agreeing with Russia on sanctions’
RT | March 13, 2022
The US will not negotiate the easing of any Ukraine-related sanctions on Russia to ensure that Moscow can trade with Tehran under a new iteration of the Iran nuclear deal, a US official told the Wall Street Journal on Sunday. Despite a deal being reportedly close at hand, the official said that Washington would pursue an alternate agreement before granting Russia any exemptions.
“I don’t see the scope for going beyond what is within the confines of the JCPOA,” the official said, referring to the 2015 Joint Comprehensive Plan of Action, which guaranteed Iran limited sanctions relief in exchange for a halt to its nuclear program. “I think it’s pretty safe to say that there is no room for making exemptions beyond those.”
Russian Foreign Minister Sergey Lavrov has demanded written assurances that sanctions imposed on Russia since the start of its military offensive in Ukraine won’t impact any trade between Russia and Iran under a successor deal to the JCPOA, which is currently being negotiated.
Despite US Secretary of State Tony Blinken describing the Ukraine-related sanctions as “irrelevant” to the deal last week, the Iranians are apparently siding with Russia. Iranian Foreign Ministry spokesman Saeed Khatibzadeh stated last week that “Iran’s peaceful nuclear cooperation should not be affected or restricted by any sanctions, including Iran’s peaceful nuclear cooperation with Russia.”
According to the Wall Street Journal, Russian negotiators are likely to specify their precise demands in writing in the coming days, and the Americans will “know within a week whether or not Russia is prepared to back down,” the US official added.
Should Russia remain firm on its demands, the US would be open to negotiating a “replica of the JCPOA” without Russian involvement, the official said, noting that “we…at this point wouldn’t rule anything out.”
However, it is far from clear whether the other parties to the 2015 deal would agree to a new accord without Russia. The original agreement was signed by Iran and the US, UK, Russia, France, Germany, China and the EU. While the Wall Street Journal claimed that European diplomats are exploring “options for pursuing a deal without Russia,” China is a major nuclear power and generally a diplomatic ally of Russia, and may balk at any deal that excludes Moscow.
Negotiators have been attempting to hammer out a replacement for the JCPOA for nearly a year, meeting regularly in Austria’s capital Vienna for negotiations. The French Foreign Ministry said last week that the parties are “very close to a deal,” but admitted that disagreements between the US and Russia could scupper any potential accord. The anonymous US official echoed these concerns on Sunday, describing Russia’s demands as “the most serious stumbling block and obstacle to reaching a deal.”
Putin’s War
BY GILAD ATZMON | MARCH 13, 2022
Putin is not a military general. He is a modernist leader, a trained spymaster and strategist who understands that war is a continuation of politics by other means (Clausewitz). Accordingly, if we want to grasp Putin’s motives we should refrain from trying to assess Russia’s military campaign in terms of ‘strict military objectives.’ We should instead look at the military campaign as a political instrument that is set to mobilize a global and regional geopolitical shift and on a mammoth scale.
It is clear that Putin’s army is doing its best to avoid civilian casualties. It uses siege tactics as opposed to the barbarian American ‘Shock and Awe’ doctrine. Furthermore, the Russian military works hard not to dismantle the Ukrainian military. Instead it encircles cities and is cutting out the Ukrainian army in the East and South of the country. The Russian military has dismantled Ukraine’s ability to regroup, let alone counter attack. Western military analysts have agreed that clear evidence of the Ukrainian army’s growing disability is that Ukraine’s army didn’t manage to seriously damage the 60 km Russian convoy on its way to Kyiv despite the fact that the convoy stood still for more than 10 days. In the last 24 hours, Russia has made it clear to the West that any Western military supply to Ukraine will be treated as a legitimate military target. In other words, the elite Ukrainian army in the East is now a defunct military force; it can defend the cities, it can mount guerrilla attacks on stretched Russian military logistics but it cannot regroup into a fighting force that can alter the battleground.
Putin’s army, as military experts agree, enjoys massive firepower. It is hardly a secret that Russia’s artillery is a deadly force and there is no force that can match it anywhere in the world. The military rationale for this is plain. The USSR never trusted the quality and the loyalty of its foot soldiers. While it counted on the soldiers’ mass impact, their sheer numbers, it also invented the means, the technology, the tactics and the doctrine to win the battle from afar in preparation for the masses to move in. It was Red artillery that knocked down the 3rd Reich Army. Similarly, flattening enemy cities is something the USSR and modern Russia are famous for. Russia enjoys this power, but it has refrained, so far, from deploying this ability in Ukraine. Russia has displayed this capability rather than deploying it. According to military analysts, Russia hasn’t even begun to utilize its superior air power other than assuring its total air superiority over Ukraine.
The Russian army’s tactic has been to mount pressure on cities’ outskirts, demonstrating Russian military might and then opening corridors for humanitarian convoys. And this is the trick. Russia is creating a flood of refugees to the west. Due to the Ukrainian government ban on men 18-60 leaving the country, we are talking about women and children. So far there are about 2.5 million Ukrainian refugees but this number could increase dramatically. And the question follows: will Germany be happy to accept another million refugees that aren’t a working force? What about France and Britain, the USA, Canada, all those countries that pushed Zalensky and Ukraine into a war but were quick to leave the Ukrainian people to their fate?
Sooner or later, Putin believes, Europe will accept his entire list of demands and will lift the list of sanctions, and may even compensate him for his losses on oil sales all in a desperate attempt to stop the tsunami of Ukrainian refugees. By the time the guns cool down, many Ukrainians may actually prefer to stay in Germany, France, Britain and Poland. This will lead, at least in Putin’s mind, to a demographic shift in the ethnic balance in favor of the Russian ethnic groups in Ukraine. Within the context of such a shift, Putin will be able to dominate the situation in his neighbour state by political and even democratic means.
Putin’s plan is not new. It already succeeded in Syria.
When the West realised that Syria was on foot to Europe, it was very quick to allow Putin to win the battle for Assad at the expense of America’s hegemony in the Middle East. Putin now deploys basically the same tactics. He may be cruel or even barbarian but stupid or irrational he isn’t.
The main question is how is it possible that our Western political and media elite are clueless about Putin and Russia’s moves? How is it possible that not one Western military analyst can connect the dots and see through the fog of this horrid war? The reason is obvious: no gifted people see a potential career in military or public service these days. Gifted people prefer the corporate world, banks, high tech, data and media giants. The result is that Western generals and intelligence experts are not very gifted. The situation of our Western political class is even more depressing. Not only are our politicians those who weren’t gifted enough to join the corporate route, they are also uniquely unethical. They are there to fulfil the most sinister plans of their globalist masters and they do it all at our expense.
I have little doubt that an experienced politician like Angela Merkel wouldn’t have let the Ukraine situation escalate into a global disaster. She, like Putin, was properly trained for her job, understanding the deep distinction between strategy and tactics. She, like Putin, was trained to think five steps ahead. As far as I can tell there is no one in the West who understands Putin, who can read his mind. Instead they attribute to the Russian leader psychotic characteristics in a desperate attempt to hide the depth of the hopeless and tragic situation the West inflicted on itself and on Ukraine in particular.
Meanwhile Putin is taking the most spectacular measures to protect his life and his regime. We in the west find it ‘laughable,’ but Putin knows very well that the only way the West can deal with its own incapacity is to eliminate him and his regime one way or another.
Iran and SCO sign protocol to start accession process for Tehran
Press TV – March 12, 2022
Iran and the Shanghai Cooperation Organization (SCO) have started a formal process for Tehran’s accession to the major economic bloc.
A Saturday report by Iran’s IRIB News said that a document had been signed a day earlier in the Uzbek capital of Tashkent between representatives of the eight-member SCO and Iran to allow the organization to consider Iran’s accession bid.
Uzbekistan’s Foreign Ministry said in a statement that the signing of the protocol would practically allow the implementation of decision by SCO heads of state in Tajikistan last year to provide membership to Iran.
The next step in the process will be for Iran to sign a memorandum of commitment at an SCO summit in Uzbekistan’s Samarkand in September 2022, said the statement, adding that SCO heads of states will then decide to include Iran in the bloc.
Iran was an observer member of the SCO before applying to join the bloc that includes Russia, China, India, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan and Uzbekistan.
Experts says Iran’s accession to the SCO will be a major boost to the bloc’s influence in the region mainly because Iran’s massive transportation network can facilitate regional and international trade.
Iran is also expected to benefit economically from membership in the bloc. The Iranian customs office (IRICA) said on Saturday that Iranian exports to SCO members had increased by 41% year on year in the 11 months to late February to reach nearly $18.3 billion.
IRICA figures showed that Iran had imported $14.4 billion worth of goods from the SCO countries between March 2021 and February 2022, an increase of 31% against the previous similar period.
Georgia and NATO announce joint exercises
RT | March 12, 2022
Joint NATO-Georgia IT-based exercises will be conducted from March 20 to 25, the Georgian ministry of defense announced on Saturday.
The exercises, which have been planned since 2020, will take place in the Georgia-NATO Joint Training and Evaluation Center (JTEC) with representatives of 23 NATO member states set to take part.
“The exercises will help increase interoperability between the military of Georgia and NATO member and partner countries,” the Defense Ministry said in a statement.
It specified that the goal of the upcoming exercises would be to develop the skills necessary for planning operations by using computer simulations, as well as to share knowledge and experience.
The exercises would be the third of their type held since 2016 and are a part of the Substantial NATO-Georgia Package, which was approved at the 2014 Wales Summit.
In 2008, in the Bucharest Summit Declaration the alliance announced that NATO welcomed “Ukraine’s and Georgia’s Euro-Atlantic aspirations for membership in NATO.” The summit participants agreed that eventually these countries would “become members of NATO.”
This decision was condemned by Moscow which consistently opposed NATO’s expansion to Russia’s borders.
The possibility of Ukraine becoming a member of the bloc has been one of the reasons for Russia’s ongoing military offensive, despite numerous assurances from NATO that neither Ukraine’s and Georgia’s memberships are currently on its agenda.
Moscow rejects Washington’s chemical-weapons claim
RT | March 12, 2022
Russia’s ambassador to Washington accused the Americans on Saturday of trying to “demonize” Moscow, rejecting a US State Department allegation that his country may deploy chemical weapons in Ukraine.
“The US official, as always, did not bother to provide any evidence. This is another attempt to demonize our country,” Anatoly Antonov said, adding that such claims were “not worth a penny.”
Citing a paper from Russia’s Ministry of Foreign Affairs, the official then suggested that Ukrainian “radical groups” – allegedly “[trained] under the control of the representatives of American special services” – could have themselves “prepared several potential scenarios of the use of toxic chemicals in order to carry out various types of provocations.”
“Our country, unlike the United States, eliminated all available stocks of chemical warfare agents in 2017. This fact has been documented by the OPCW. It is pointless to argue with this fact,” Antonov concluded, in reference to the fact that US chemical warfare stockpiles have yet to be completely decommissioned.
The Russian government has claimed that Ukrainian groups backed by the US could be preparing a false-flag chemical attack in order to “accuse Russia of the use of chemical weapons against the civil population and violating its obligations.” The US and Ukraine have denied such claims.
State Department spokesperson Ned Price suggested on Wednesday that Russia could use chemical weapons in Ukraine.
“Russia has a track record of accusing the West of the very crimes that Russia itself is perpetrating,” he said, calling Moscow’s warnings “an obvious ploy.”
White House Press Secretary Jen Psaki claimed this week that Russia could “use chemical or biological weapons in Ukraine” or “create a false-flag operation” with such weapons. Psaki added that the world should “be on the lookout.”
Psaki dismissed Moscow’s suggestions that the US and Ukraine could conduct a similar false-flag attack, calling them “false claims” and “conspiracy theories.”
The press secretary argued that Moscow’s claims were an “obvious ploy” to justify further military action in Ukraine.
Russia’s Foreign Ministry claimed on March 6 that Russian forces had discovered evidence of Ukraine erasing traces of an alleged US-backed military biological program in the country. Washington has claimed it is working to prevent Russian forces from capturing biological research material.
US Officials Meet Maduro, Fail to Drive Wedge Between Venezuela and Russia
By José Luis Granados Ceja | Venezuelanalysis | March 7, 2022
Mexico City, Mexico – A high-level United States (US) government delegation that visited Venezuela on Saturday failed to produce an agreement with the government of Nicolás Maduro.
News of the delegation was first broken by the New York Times, which described the trip as the highest-level visit by US officials in years. Outlets subsequently reported that no agreement was reached. Caracas had not publicly commented on the meeting at the time of writing.
According to Reuters, the US team was led by White House Latin America adviser Juan González and made “maximalist” demands concerning electoral guarantees. Citing three people familiar with the matter, Reuters reported that the US was seeking new presidential elections, a larger participation of foreign private capital in Venezuela’s oil industry and a public condemnation of Russia’s incursion into Ukraine. The Biden administration representatives reportedly offered Venezuela a temporary return to the SWIFT financial transaction system.
Venezuelan President Nicolás Maduro and Vice President Delcy Rodríguez, who directly participated in the meeting, instead demanded broader sanctions relief and the return of foreign assets such as oil subsidiary CITGO. US officials reportedly brought up the cases of US citizens jailed in Venezuela, including six oil executives imprisoned for corruption and two former Green Berets who took part in a failed coup effort.
The meeting in Caracas was the latest US effort to isolate Russian President Vladimir Putin from his allies in the region. US officials told the Times that Washington views Russia’s Latin American allies as a potential “security threat” should the tensions continue to escalate in light of the ongoing conflict in Ukraine, which has ratcheted up conflict between the US and Russia.
Venezuela broke off diplomatic relations with the US in 2019 after the latter recognized opposition figure Juan Guaidó as “interim president.” The US and its allies refused to recognize the results of the 2018 election that saw Maduro reelected to a six-year term. Washington then proceeded to engage in and support a series of unsuccessful coup plots, ultimately failing to oust Maduro from power.
US strategy toward Venezuela has more recently been focused on isolating Maduro, imposing crippling sanctions on the country’s energy sector and seizing, together with its allies, the country’s assets abroad. In public statements, the Biden administration has expressed its unwillingness to seriously negotiate with Caracas absent new elections.
Nonetheless, due to the failure of the US to successfully install Guaidó as an authority with any real power inside Venezuela, Caracas and Washington have maintained back-channel communications despite the lack of formal diplomatic relations. Guaidó, despite being recognized by the US as the country’s president, was only informed of the high-level delegation the morning of the meeting.
Venezuelan geopolitical analyst Sergio Rodríguez Gelfenstein told Venezuelanalysis that the leak of the news of the visit of senior US officials was motivated by an effort to drive a wedge between Caracas and Moscow and leave the impression that there was a “chill” in relations between the two countries.
Rodríguez maintained that Washington and Caracas would nonetheless leave the door open to dialogue.
“I believe that there will be continued attempts at rapprochement, especially because the Mexican [dialogue between the Venezuelan government and the opposition] was exhausted,” he said. “The Mexico talks were totally absurd since the opposition was being directed from within the United States, any step they took had to be consulted with Washington. In that sense it is much more feasible for the United States to negotiate directly with Venezuela.”
President Maduro has repeatedly expressed a willingness to negotiate an end to US-led sanctions on the country. The lack of a deal stemming from the visit by the senior-level delegation suggests Venezuela did not find it to be a workable proposal. Reuters reported that US officials agreed to a follow-up meeting.
It would take a considerable reversal of US policy toward the Caribbean nation to get the country to walk away from its Russian ally. Relations between the two countries have only grown in light of US efforts to isolate Caracas. Russian assistance has played an important role in Venezuela’s efforts to attend to the economic crisis in the country, providing support and expertise to the country’s key industries as well as steady investment in Venezuela’s energy sector.
Venezuela likewise recently strengthened its ties with Russia following a visit by Russian Deputy Prime Minister Yuri Borisov in February.
Caracas has called for a “peaceful resolution” to the ongoing crisis in Ukraine but has stopped short of condemning the Russian military operation. Venezuela did not vote in the United Nations (UN) General Assembly’s resolution concerning the Russian offensive in Ukraine. The country’s voting rights have been suspended as a result of unpaid UN membership dues due the impact of sanctions.
In light of coercive measures applied on Russia by the US and the European Union, Maduro has insisted that Venezuela will maintain its commercial relations with the Eurasian nation.
The Venezuelan leader also spoke directly by phone with Putin last week, with the Russian Ministry of Foreign Affairs reporting that the Venezuelan president expressed his “firm support” for Russia and condemned destabilization efforts by the US and NATO. Maduro has publicly called NATO’s handling of the Minsk Agreements a “mockery” and argued that their “derailment” constituted a violation of international law.
The Russian ambassador in Caracas Sergey Melik was invited to greet the opening 5th Congress of the ruling United Socialist Party of Venezuela, held this Saturday, and was met with strong applause from the delegates.
Edited by Ricardo Vaz in Caracas.
Russia adjusts to “sanctions from hell”
BY M. K. BHADRAKUMAR | INDIAN PUNCHLINE | MARCH 11, 2022
The Russian President Vladimir Putin’s remarks at his meeting with government ministers on Thursday constituted his first comments on the West’s “sanctions from hell.” They were focused almost entirely on “a set of measures to minimise the consequences of sanctions on the Russian economy and the people of our country.”
Putin’s number one priority is to hold himself accountable to his people. Unlike his American counterpart, Joe Biden, Putin feels no need of grandstanding, given his high approval rating above 70%.
The paradox is, while the western countries who imposed the sanctions are going through paroxysms of angst, gnawing worries and anxiety syndromes, the “victim”, Russia, seems nonchalant and is calmly adjusting to the “new normal.” The contrast couldn’t be sharper.
Without doubt, the Kremlin prepared thoroughly for the western sanctions. Prime Minister Mikhail Mishustin told Putin that a “special headquarters” has swung into action to coordinate the activities of all departments, including at the regional level. He said, “Steps to protect the most vulnerable areas are being worked through sector by sector.” The “core goals” are:
- “protecting the domestic market”;
- ensuring uninterrupted functioning of enterprises by eliminating disruptions in logistics and production chains;
- helping the people and businesses to quickly adapt to the changing circumstances; and,
- maintaining employment.
Over 20 major legislations are in the pipeline, which include specific proposals for stabilising financial markets, support industries, especially for the private sector, as well as for the “return of capital.”
One draft law aims to prevent shutdown of factories by foreign owners through “external management.” There is a vague hint of nationalisation, if push comes to shove. Interestingly, most western owners are announcing “temporary suspension of operations” while paying salaries to employees.
The IT sector, construction industry, transport companies and travel and tourism sector will receive special attention — as also agriculture, which is not only about jobs but also food security. There is an overall relaxation of regulatory measures, debt repayment schedules, bureaucratic procedure, etc.
Mishustin noted: “Maximum freedom of economic activity in the country, minimal regulation and control and, of course, support for the labour market will remain the basis for our economic response. The Government will expand import substitution and help domestic producers replace foreign products in supply chains.”
The highlight of yesterday’s event was the presentation by Finance Minister Anton Siluanov on measures to stabilise the domestic financial market, underscoring how accurately the Kremlin anticipated the West’s agenda to isolate Russia.
Siluanov said, “the Western countries have basically launched a financial and economic war” combining a default on their financial liabilities to Russia with a freeze on Russia’s gold and currency reserves. “They are doing all they can to stop foreign trade and the export,” he added, “trying to create a shortage of imported everyday essentials… (and) compel successful businesses with foreign capital to shut down.”
In these circumstances, the government’s “priority is to stabilise the situation in the financial system and ensure uninterrupted operations.” Siluanov explained that the measures taken in this direction include “precautions to control the outflow of capital abroad” and a special procedure for servicing external debt, including national debt, whereby Russia will pay off its external liabilities in rubles and “carry out the conversion by de-freezing our gold and currency reserves.”
Other measures include mandatory surrender of foreign exchange proceeds by companies, higher ruble interest rates, suspension of taxes on individual interest income for two years, suspended VAT on the purchase of gold and “a large project on capital amnesty.”
The central bank will fully guarantee the liquidity and uninterrupted operations of financial institutions. Siluanov claimed, “These measures have already produced results. The situation on the outflow of deposits is being stabilised and the amount of cash withdrawals has been reduced to almost zero… balance of payments is also improving. Current account receipts are balancing out capital flow.”
To be sure, the big increase in oil and gas revenue will offset any decline in revenue in other sectors, thereby reduce borrowing and public debt, and will provide funds for priority spending.
Most important, Siluanov stressed that the government regards the social commitments as the “top budget priority.” He said, “We will ensure the payment of pensions, benefits, salaries and other payments in a timely manner and in full. Medicines are provided as planned as well, including for children with complex diseases..
“In May, low-income families with children will start receiving new payments. We will earmark additional spending for these purposes in the budget system. The Government has begun to implement anti-crisis measures. Our top priority is to maintain employment and jobs, and to support people who need help under the current circumstances.”
All in all, the prognosis here rubbishes the western predictions of “apocalypse now”. The EU’s rejection of Washington’s proposal for sanctions on Russia’s oil exports virtually ensures that there isn’t going to be any income deficit in Moscow. In 2021, the Kremlin balanced its budget with an oil price expectation of $45 per barrel. The prices currently exceed $130 per barrel!
This conservative fiscal approach by the government largely insulates the economy from the effects of Western economic sanctions. Ironically, the pressure is going to be on European leaders who are concerned about major energy supply disruptions from Russia and have to keep their economies supplied with fuel, while also punishing Russia!
On the contrary, if Putin responds with gas cutoffs, that could spike energy prices further, drive inflation, and undermine Europe’s economic recovery. Simply put, Russia is much larger than the contiguous United States, and has an educated population and far more natural wealth than the West’s Russophobes might expect!
Take Russia’s exclusion from SWIFT. The fact of the matter is that while seven Russian banks were removed from SWIFT, those targeted did not include Sberbank or Gazprombank, two of Russia’s largest banks by assets. Why? Primarily due to Europe’s continued reliance on Russia for energy!
The point is, Russia is intricately connected to the global economy, holds large quantities of critical resources, and has been strategically preparing since 2014 to weather the long-term impacts of sanctions and a removal from SWIFT.
Furthermore, it needs to be understood that while several Russian banks are now cut off from SWIFT, they can still execute international transactions with other banks — except that they must use slower and less-secure methods of interbank communication, such as the outdated telex telegram network or phone calls and email.
By the way, Russia has also developed its own internal financial transaction messaging system, the System for Transfer of Financial Messages that could at a pinch serve as a functional alternative to SWIFT.
Equally, the western sanctions against Russia are bound to cause ripple effects across global markets, including supply chain disruptions and higher prices on energy and agricultural goods. Apart from being a key exporter of oil and gas, Russia is the world’s largest producer of palladium and the second-largest producer of platinum—key commodities used in semiconductor manufacturing—and a major exporter of other critical minerals, mining commodities, and agricultural goods.
Clearly, Russia has no dearth of willing trade partners across Asia, Africa, and the Middle East, as it comes under compulsion to rely primarily on non-Western-aligned nations for trade markets for the foreseeable future.
This has larger implications. Western sanctions could potentially accelerate a global economic divide between the West and Russian-aligned economies that are open to break away from the current US-dominated financial system, thereby accelerating a broad global economic reorientation.
Surely, sanctions will isolate Russia from the US and EU markets, but its large reserve of natural resources and strong ties to China decrease the likelihood that it will become economically isolated.
On the contrary, if Western sanctions persist, economic relations with Russia could help accelerate the growth of a non-Western bloc in the global economy, which would have deleterious impact on the status of the American dollar as the world currency.
Quite obviously, there are already incipient signs that thoughtful minds in Europe, especially France and Germany, feel troubled and are conscious of the need to rebuild bridges with Russia. How they pan out remains to be seen.
The likelihood is that once the dust settles down in Ukraine and Russia has had its way as regards its security guarantees, a process of rapprochement will commence between the major European countries and Russia sooner rather than later.
In fact, at yesterday’s meeting, Putin expressed confidence that he expects a volte face by the US too, just as the Biden administration has done vis-a-vis Venezuela and Iran recently. Putin also signalled that Russia may not resort to tit-for-tat sanctions against Europe, especially in regard of energy exports.


