Russia’s Ultimate Lethal Weapon
By Pepe Escobar
September 19, 2015 "Information
- Let’s start with some classic Russian
politics. Finance Minister Anton Siluanov is drawing up Russia's
economic strategy for 2016, including the government budget.
Siluanov – essentially a liberal, in favor of foreign investment
- will present his proposals to the Kremlin by the end of this
So far, nothing spectacular. But then, a few days
ago, Kommersant leaked that Russia's Security Council asked
presidential aide Sergei Glazyev to come up with a separate
economic strategy, to be presented to the council this week.
This is not exactly a novelty, as the Russian Security Council
in the past has asked small strategy groups for their economic
The Security Council is led
by Nikolai Patrushev, the former head of the Federal Security
Service. He and Siluanov are not exactly on the same wavelength.
And here’s where the plot thickens. Glazyev, a brilliant
economist, is a Russian nationalist – sanctioned personally by
Glazyev is arguably going no holds barred. He
is in favor of barring Russian companies from using foreign
currency (which makes sense); taxing the conversion of rubles to
foreign currencies (same); banning foreign loans to Russian
firms (depending if they are not in US dollars or euro); and –
the smoking gun - requiring Russian companies that have Western
loans to default.
Predictably, some sectors of US ‘Think Tankland’
went bonkers, stating with utmost certainty that “the Russian
energy sector would not be able to find much financing without
connections to the West.” Nonsense. Russian firms would easily
find financing from Chinese, Japanese or South Korean sources.
Whatever measure of attention Glazyev will get
inside the Kremlin, the whole episode already means that Moscow
harbors no illusions in the near future regarding the
exceptionalists (one just has to look at the presidential
candidates, from ‘El Trumpissimo’ to ‘The Hillarator’); as Russian
Deputy Foreign Minister Sergei Ryabkov recently put it, "[we]
should expect toughening of the sanctions pressure."
Once thing though is absolutely certain; Moscow won’t bend over
backwards to “pacify” Washington.
One might be tempted to see Glazyev drawing up
plans to return to some sort of Tsarist self-sufficiency while
cutting off ties with the West. Assuming some version of that would
be approved by the Kremlin, what’s certain is that it may turn into
a huge blow the EU might not recover from.
Imagine Russia defaulting on all its foreign debt
- over $700 billion – on which Western sanctions have raised extra,
punitive costs in terms of repayment.
The default would be payback for the twin Western
manipulation of oil prices and the ruble. The manipulation involved
unleashing on the oil market over five million barrels a day of
excess reserve production that were held back by a few usual
suspects, plus derivative manipulation at the NYMEX, crashing the
Then, the derivative manipulation of the ruble
crashed the currency. Almost all imports to Russia were virtually
blocked – as oil and natural gas exports remained constant. In the
long run though, this should create a significant balance of trade
surplus for Russia; a very positive factor for long-term growth of
Russia’s domestic industry.
Vladimir Yakunin, the former head of Russian
Railways, now out due to a reshuffle, recently told AP in no
uncertain terms how the aim of US sanctions was to cut off Russia
economically from Europe.
Sanctions, coupled with speculation on oil and the
ruble, pushed the Russian economy into recession in 2015. Yakunin,
like most of the economic/business elite, expect Russia’s economic
troubles to last at least until 2017.
Currently the only products that the West needs
from Russia are oil and natural gas. A possible Russian default on
its debt would have no effect on that demand in the short-term; and
most probably in the long-term as well, unless it would contribute
to a new financial crisis in the West, something that nearly
happened in 1998.
We all remember August 1998, when a Russian
default shook the entire Western financial system to the core. If a
Russian default is now the object of serious consideration by the
highest powers that be – and that includes, of course, the FSB, SVR,
GRU - then the specter of The Mother of All Financial Crisis in the
West is back. And for the EU, that would be fatal.
It’s your fault we can’t loot
Enter Iran. The lifting of sanctions on Iran –
arguably by early 2016 – ultimately has nothing to do with the
nuclear dossier. It’s a ‘Pipelineistan Great Game’, as in having
everything to do with oil and natural gas.
The US – and EU – wet dream remains to replace
Russia with Iran in terms of natural gas and oil imports to the EU.
Every serious analyst knows this might take at least a decade, and
over $200 billion in investment; not to mention Gazprom would fight
it with the formidable – commercial – weapons in its arsenal.
At the same time Western financial powers in the
New York-London axis did not anticipate that Moscow would not bow
down and accept their demands that Putin lay off Ukraine - so that
they could loot Ukraine’s mostly agricultural lands at will. They
obviously didn’t learn from history; Putin also did not back off
when he stopped them from looting Russia.
So the entire, sorrowful Kiev episode, as much as
an infinite NATO expansion gambit, was also an attempt to stop Putin
from preventing the Western looting of Ukraine.
What we had as a result was a tectonic
geopolitical shift; the reconfiguration of the entire world balance
of power as Russia and China deepened their strategic partnership -
based on a mutual external threat coming mostly from the US, with
the EU as accessories. Russian intelligence very well knows the
alliance now makes Russia and China invulnerable, whereas separately
they could easily fall victim to trademark Divide and Rule.
As for the counter-NATO angle, Russia has had
plenty of time to remilitarize, focusing on defensive and offensive
missiles; the key to the next major war, and not obsolete US
aircraft carriers. Russian defensive missiles such as the
state-of-the-art S-500 and the offensive Topol M - each with ten
MIRVs - can easily neutralize whatever the Pentagon may have in
After Russia, Western financial ‘Masters of the
Universe’ went after China for allying with Russia. The usual
financial suspects rigged the Chinese stock market in an attempt to
crash the economy, using Wall Street proxies manipulating cash
settlement mechanisms to first raise up the prices of the Chinese A
shares, creating a giant boom, and then reversing the cash
settlement rig to crash the market.
No wonder Beijing, very much aware of what was
happening massively intervened; is actively studying cash settlement
moves; and is carefully reviewing the records of major stock
operators in China.
Round up those central bank suspects
The Kremlin’s got to do something about the
Russian Central Bank.
The Russian Central Bank kept interest rates high,
forcing Russian oil and natural gas producers to finance their
operations from Western sources, and thereby plunging the Russian
economy into a debt trap.
These loans to Russia were part of the New
York-London financier axis control mechanism. Were Moscow to
“disobey” the West, the West would call in their loans after
crashing the ruble, making repayment almost impossible, as they did
This is the mechanism through which the West – and
its institutions, the IMF, World Bank, BIS, the whole gang – rule.
Beijing is moving either to complement or replace this set-up with
new and more democratic international institutions.
If the Russian Central Bank had operated under
sounder principles, it would have lent money at interest rates below
the West’s, and linked each loan to productive investment. A modus
operandi totally different from the US - where much of the central
bank credit goes to banks and financiers for their speculative
Michael Hudson, among others, has already made the
case that the entire Fed only serves the interest of its financial
rulers and does not give a damn about American industrial
infrastructure, which was progressively shifted to colonies and/or
vassals, as well as to China.
So the ‘Masters of the Universe’ thought hardcore
pressure on both Russia and then China would work. It did not. There
are reasons to be alarmed; the ‘Masters of the Universe’ will keep
raising the ante, higher and higher.
The scenario ahead spells out Russia further
moving east while simultaneously moving to extricate itself from
most of the West’s institutional architecture.
The merger of the China-driven New Silk Roads, a.k.a. One Belt, One
Road and the Russia-led Eurasian Economic Union, although slow and
full of pitfalls, is irreversible. It’s in their mutual interest to
invest and develop a pan-Eurasian emporium.
Iranian natural gas will go mostly to the Asian
part of Eurasia, and not the EU. And the Chinese economy will at
least triple over the next fifteen years as the US continues to
Whatever Putin and Obama discuss at their possible
meeting at the end of the month in New York, exceptionalist pressure
over the bear won’t abate. So it pays for the bear to keep a lethal
financial weapon in storage.
Pepe Escobar is the roving correspondent for
Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a
frequent contributor to websites and radio shows ranging from the US
to East Asia. Born in Brazil, he's been a foreign correspondent
since 1985, and has lived in London, Paris, Milan, Los Angeles,
Washington, Bangkok and Hong Kong.
© Autonomous Nonprofit Organization “TV-Novosti”, 2005–2015