Interests Aim To Flummox Russia
Craig Roberts and Michael Hudson
February 14, 2017 "Information
by Robert Berke in oilprice.com,
which describes itself as “The No. 1 Source for
Oil & Energy News,” illustrates how interest
groups control outcomes by how they shape policy
article reveals how the US intends to maintain
and extend its hegemony by breaking up the
alliance between Russia, Iran, and China, and by
oil privatizations that result in countries
losing control over their sovereignty to private
oil companies that work closely with the US
government. As Trump has neutered his presidency
by gratuitously accepting Gen. Flynn’s
resignation as National Security Advisor, this
scheme is likely to be Trump’s approach to
“better relations” with Russia.
reports that Henry Kissinger has sold President
Trump on a scheme to use the removal of Russian
sanctions to pry President Putin away from the
Russian alliance with Iran and China. Should
Putin fall for such a scheme, it would be a
fatal strategic blunder from which Russia could
not recover. Yet, Putin will be pressured to
make this blunder.
pressure on Putin comes from the Atlanticist
Integrationists who have a material stake in
their connections to the West and who want
Russia to be integrated into the Western world.
Another pressure comes from the affront that
sanctions represent to Russians. Removing this
insult has become important to Russians even
though the sanctions do Russia no material harm.
agree with President Putin that the sanctions
are in fact a benefit to Russia as they have
moved Russia in self-sufficient directions and
toward developing relationships with China and
Asia. Moreover, the West with its hegemonic
impulses uses economic relationships for control
purposes. Trade with China and Asia does not
pose the same threat to Russian independence.
says that part of the deal being offered to
Putin is “increased access to the huge European
energy market, restored western financial
credit, access to Western technology, and a seat
at the global decision-making table, all of
which Russia badly needs and wants.” Sweetening
the honey trap is official recognization of
“Crimea as part of Russia.”
might want all of this, but it is nonsense that
Russia needs any of it.
is part of Russia, as it has been for 300 years,
and no one can do anything about it. What would
it mean if Mexico did not recognize that Texas
and California were part of the US? Nothing.
has scant alternatives to Russian energy.
does not need Western technology. Indeed, its
military technology is superior to that in the
Russia most certainly does not need Western
loans. Indeed, it would be an act of insanity to
It is a
self-serving Western myth that Russia needs
foreign loans. This myth is enshrined in
neoliberal economics, which is a device for
Western exploitation and control of other
countries. Russia’s most dangerous threat is the
country’s neoliberal economists.
Russian central bank has convinced the Russian
government that it would be inflationary to
finance Russian development projects with the
issuance of central bank credit. Foreign loans
are essential, claims the central bank.
needs to teach the Russian central bank basic
economics before Russia is turned into another
Western vassal. Here is the lesson: When central
bank credit is used to finance development
projects, the supply of rubles increases but so
does output from the projects. Thus, goods and
services rise with the supply of rubles. When
Russia borrows foreign currencies from abroad,
the money supply also increases, but so does the
foreign debt. Russia does not spend the foreign
currencies on the project but puts them into its
foreign exchange reserves. The central bank
issues the same amount of rubles to pay the
project’s bills as it would in the absence of
the foreign loan. All the foreign loan does is
to present Russia with an interest payment to a
capital is not important to countries such as
Russia and China. Both countries are perfectly
capable of financing their own development.
Indeed, China is the world’s largest creditor
nation. Foreign loans are only important to
countries that lack the internal resources for
development and have to purchase the business
know-how, techlology, and resources abroad with
foreign currencies that their exports are
insufficient to bring in.
not the case with Russia, which has large
endowments of resources and a trade surplus.
China’s development was given a boost by US
corporations that moved their production for the
US market offshore in order to pocket the
difference in labor and regulatory costs.
Neoliberals argue that Russia needs
privatization in order to cover its budget
deficit. Russia’s government debt is only 17
percent of Russian GDP. According to official
measures, US federal debt is 104 percent of GDP,
6.1 times higher than in Russia. If US federal
debt is measured in real corrected terms, US
federal debt is 185 percent of US GDP.
Clearly, if the massive debt of the US
government is not a problem, the tiny debt of
Russia is not a problem.
article is part of the effort to scam Russia by
convincing the Russian government that its
prosperity depends on unfavorable deals with the
West. As Russia’s neoliberal economists believe
this, the scam has a chance of success.
delusion affecting the Russian government is the
belief that privatization brings in capital.
This delusion caused the Russian government to
turn over 20 percent of its oil company to
foreign ownership. The only thing Russia
achieved by this strategic blunder was to
deliver 20 percent of its oil profits into
foreign hands. For a one-time payment, Russia
gave away 20 percent of its oil profits in
repeat outselves, the greatest threat that
Russia faces is not sanctions but the
incompetence of its neoliberal economists who
have been throughly brainwashed to serve US
Paul Craig Roberts was Assistant
Secretary of the Treasury for Economic Policy
and associate editor of the Wall Street Journal.
He was columnist for Business Week, Scripps
Howard News Service, and Creators Syndicate. He
has had many university appointments. His
internet columns have attracted a worldwide
following. Roberts' latest books are
Failure of Laissez Faire Capitalism and Economic
Dissolution of the West,
America Was Lost,
Neoconservative Threat to World Order.
Michael Hudson is research professor of
economics at University of Missouri, Kansas City
and a research associate at the Levy Economics
Institute of Bard College.
views expressed in this article are solely those
of the author and do not necessarily reflect the
opinions of Information Clearing House.
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