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Recent Days’ radio interviews (20min. ea) on latest developments in Ukraine and growing economic impacts (inflation, growth slowdown, financial markets, etc.) as well as long term consequences (supply chains, global economic institutions, role of US $, etc.)

March 2, 2020

https://drive.google.com/file/d/1HSENfQOGXimbG5dlwCPpnIypoUAgxkov/view

Feb. 25, 2020:

https://drive.google.com/file/d/1GR9momBZaSzpSF-BHUUkK_IqDqhXxYn7/view

Feb. 24, 2020:

https://drive.google.com/file/d/1srtHlEDgbZkgGuTH8yBoUVAh40tJFFwC/view

As a companion post to my recent article (Some Economic Consequences of Ukraine War), listen to my February 25, Alternative Visions Radio Show

TO Listen GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-ukraine-war%e2%80%94some-economic-consequences/

SHOW ANNOUNCEMENT

What might be the economic impact of the war in Ukraine—On Russia, Europe, and the US as well? Dr. Rasmus discusses the immediate short term economic effects of the past two days of the War. Further consideration and discussion follows on the more intermediate and long term likely impacts in inflation, output, stagflation, financial asset markets, currency exchange rates, and global goods and money flows (exports-imports). An analysis and prediction of the possible minimal effects of US and EU sanctions on Russia, including the suspension of the Russian-German Nordstream 2 natural gas pipeline. Why Biden’s sanctions are full of holes. Why the US has exempted the SWIFT international payments system from the sanctions and why the economic fallout of the war and sanctions will hit Europe harder. What are the implications for global real economic recovery from Covid now underway: will the War thwart and dampen that recovery? The show concludes with comments on some of the fundamental changes in the global economy that the Ukraine war may generate.

It may be premature somewhat to consider economic consequences of the Ukraine war with the Russian invasion still less than a week old. However, certain outlines of where things are going are nonetheless possible. With that caveat, the following represent some early considerations of the likely—in some cases already occurring—economic consequences of the war for Russia, European Union, and the USA.

Economic Consequences for Russia:

The immediate effect on the Russian economy in the initial days was a sharp fall in its stock and financial asset markets. Investors began cashing out and running for the sidelines to wait out subsequent developments. But not too much should be made of that. Financial asset price deflation is just paper value and doesn’t impact the Russian consumer or its general economy all that much.

A large collapse of financial markets is typically accompanied by a fall in the value of a country’s currency and Russia’s Ruble was no exception. It too fell. A currency collapse means a country must pay more for imports of goods. However, existing import contracts don’t change in price. Thus there’s a delay for new contracts to reflect a price hike only when the prior contracts have ended. So there’s a delay in the inflation effect caused by a fall in the country’s currency. That may not stop retailers from raising prices, however, in the interim in anticipation of the rise in import costs due to Russia’s currency fall. In short, some inflation is an immediate effect with more coming later.

To offset the inflation effect, Russia could impose some price controls to limit the impact on consumers in essential consumer goods. Similarly, the central bank can take steps to put a floor under the collapse of the currency. A government can even step in and purchase certain strategic stocks to mitigate a stock market contraction if it wants. Japan has been buying stocks for years to prop up its financial markets. It appears Russia’s central bank has taken steps to stabilize the Ruble. No actions as yet have occurred to control prices or prop up the stock markets, however.

More medium and longer term is what are the effects of increased sanctions by the USA and NATO EU countries on Russia’s economy?

Sanctions on Russian Goods Flows (Exports & Imports)

There are sanctions on goods and services flows, sanctions on individuals, and sanctions targeting banking and money capital investment flows, and on international payments
Traditionally US sanctions have focused on cutting off goods (products) flows into and from Russia. That is, imports from the rest of the world economy into Russia (inflow) as well as exports from Russia (outflows) from Russia to the rest of the world economy.

A reduction of imports into Russia would result in a reduced supply of the particular product in Russia and therefore a rise in its price—i.e. more inflation. A reduction of exports from Russia can mean a fall in production in Russia and therefore layoffs in those industries affected. The negative impact on production and employment, however, occurs only with a significant time lag. The impact on imports depends on how much of an inventory the country, Russia, has accumulated prior to the sanction. So sanctions impact on goods flows typically take weeks and months, as does in turn any consequent effect on either inflation and unemployment. In the meantime there are numerous ‘work arounds’ Russia could implement in order to ensure the flow of key goods via alternative channels of trade. Russia could continue to purchase or sell through a third country, most notably China perhaps.

In the longer run a reduction of Russian exports due to sanctions over time results in Russia earning less in foreign currencies (especially dollars). Cutting off Russian oil and gas sales would deny Russia its major source of earning foreign currency which is needed for trade for other goods and services. Cutting Russia off from obtaining dollars from oil-gas sales would be especially significant, since 85% of all global oil transactions are done in the global trading and reserve currency—i.e. the US dollar!

That cut off would seriously disrupt global oil supplies as well as crude oil prices. Russia is the second largest producer of oil in the world, generating more than 10 million barrels per day. (The USA is the first due to its fracking technology, producing 11m per day normally). Cutting off Russian oil sales reduces the global supply of crude by around 15%. A 15% reduction of supply results in massive roiling of oil markets and likely historic increases in the price of oil. Gasoline prices at the pump in the US could rise a $1 a gallon or more.

While the US is the largest producer of oil, it also purchases oil from other countries—notably Canada, Mexico, and even some from Russia. Why is that, if it’s the largest producer? Because US oil companies export a lot of refined US oil products to the rest of the world while it also imports crude. It is unknown what the impact of a 15% reduction in global oil supplies would have on US oil prices or oil prices globally. Major market restructuring and shifts would have to occur. It may not go smoothly. Disruptions could be chaotic. That is why the US and EU have been reluctant to target Russian oil and gas deliveries to Europe.

This brings up two areas also potentially affected by sanctions on Russia: the effect of the suspension of the Russia-German Nordstream 2 gas pipeline and the possible consequences of the US/NATO/EU decision to deny Russia access to the SWIFT international payments system. Let’s examine the possible effects of both, on Russia as well as rest of the world.

Nordstream 2 Natural Gas Pipeline

Much is made in the media about the Russia-Germany Nordstream 2 natural gas pipeline. To listen to US media, Biden has permanently shut off its gas flow. But how can one shut down what has not even been opened up yet? There is no gas flow via Nord2 yet. Moreover, Germany’s chancellor, Olaf Sholtz, has merely indicated Nord2 won’t be opened soon. It has been suspended. Not shut down. Meanwhile, Germany depends on more than 50% of its natural gas from Russia. That is not going to change soon, since it gets that 50% from 7 pipelines that flow through Ukraine to southeast Europe and from there to Germany.

Additional gas pipelines flow from Russia through Turkey into Europe. There is no talk by the USA or Europe about shutting down those pipelines. So Russia will continue to earn significant foreign currency from gas sales to Europe. In fact, it may earn even more gas revenue since gas prices are spiking and the volume sold will be at a higher price.

Sanctions are thus irrelevant so far as Nord2 is concerned, since they don’t exist. There’s only the ‘shutdown’ of the gas pipeline, Nord2, that doesn’t yet even provide gas.

A lot is said about the USA and other countries (Qatar, Azerbaijan, etc.) providing Germany and Europe natural gas in lieu of Nord2. But that’s irrelevant in the short run. Germany lacks port facilities to accept US liquid natural gas (LNGs). And it will take five years to build those facilities. In addition, it will take Qatar and other sources two years just to expand its production facilities in order to generate the extra gas to sell to Germany.

It should be noted as well that all of the current inflow of Russian natural gas to Europe comes from the existing seven gas pipelines flowing through Ukraine into East Europe and from there to Germany and the west. Several more pipelines flow through Turkey to Europe. It’s unclear if US sanctions are intended to cut this gas flow as well. Reportedly all of Europe gets 40% of its gas from these pipelines currently. To cut that off means a likely collapse of EU industries.

The US has been trying for years to get Europe to buy US natural gas in lieu of Russian. US gas is multiple times more expensive due to transport costs and the need to convert it into liquid form (LNG) and then back again to gas form when offloaded again at European ports. When the US introduced widespread fracking under Obama it raised the production of US natural gas (and oil) significantly. Exporting that oil and gas serves to prevent a supply glut in the USA that would reduce prices in the US. So getting Europe to buy US gas raises US energy corporations’ profits: it achieves more sales revenue from Europe and it gets to keep prices high in the US as well. It’s been difficult to convince the Germans up to now to buy much more expensive US gas. The war in Ukraine is the answer to this US dilemma. It may now get Europe to shift to US gas even though the cost is so much higher. (Some estimate five times as high).

SWIFT International Payments System

The international payments system refers to how countries and their businesses selling of goods and services are paid for. The payments for purchases and sales—i.e. the money flow—occurs through the network of connected global banks, of which the US banks are the biggest players since most of the payments are in the global trading currency, the US dollar.

SWIFT is the means by which the US banks and government can ‘look into’ global inter-bank transactions to identify which country or business might be violating US official sanctions. US big banks are at the center of SWIFT and can determine the violators on behalf of the US government. But SWIFT is headquartered in Belgium and the US would have to get the EU on board to deny Russian banks access to SWIFT to sell its oil or any export. Initially the EU—and especially Germany and Italy, was not at all amenable to doing that. So SWIFT has been initially exempted from Biden’s US announcement of recent sanctions. On the other hand, political forces in the US and especially in Ukraine and East Europe NATO began immediately to push hard to implement SWIFT sanctions on Russia. Biden and the US have been pushing hard to get the rest of the EU/NATO countries (especially Italy and Germany) on board.

The US has apparently succeeded in doing so. As this writer predicted at the outset of the Russian invasion, US/NATO would include denial of SWIFT to Russia as one of its sanctions. This is a qualitative new step—and a risky one— in the history of sanctions on Russia. It can backfire causing serious economic impact on US, EU and global oil markets and thus consequent sharp rise in oil related inflation globally and via oil prices into the economies in general price inflation. Already rising everywhere due to the structural impacts on supply chains by Covid and the recent recessions, inflation could accelerate even higher in Europe and US and ret of the global economy. That price acceleration might bring the tentative, weak recovery of the US, EU and global economy to a halt. Nonetheless, it appears that including denial of SWIFT to Russia with the goal of shutting down its oil and gas revenues is on the agenda and likely within days. The political war hawks pushing more confrontation with Russia in Ukraine have thus won the day so far as SWIFT is concerned. Russia’s responses to this move can be expected.

There are ways Russia could do an ‘end run’ around SWIFT. It could simply use the China Yuan currency in its transactions. Or it could join with China and others to establish a parallel international payments system bypassing SWIFT. That possibility was raised and piloted as far back as 2012 when the USA imposed sanctions on Iran’s sale of its oil.

There’s yet another ‘work around’ SWIFT possible: Russia could join China using digital currency. China is already well on its way to a digital currency, having already introduced it in China.
Whether SWIFT sanctions are introduced soon (likely) or not, it is clear that US control of the SWIFT system—through the US dollar and dominance of US banks globally—is a key instrument of US financial imperialism. It is as important as US control of other global economic institutions, like the IMF, World Bank, and the US dollar as global trading and reserve currency.

Many US Corporations Exempted from Russian Sanctions

Thus far Biden has not imposed sanctions directly on Russian oil and gas because its impact on global oil supplies and prices would be significant. (Denial of SWIFT would of course mean indirectly a major sanction). But at the behest of US and EU oil companies Biden specifically exempted oil and gas from sanctions. Initially SWIFT was excluded as well. But that’s not the entire list of exemptions. Biden in day 2 of the invasion announced Aluminum exports from Russia are exempt, after he met with US auto, Boeing, and canning industry CEOs who it seems are dependent on Russian raw aluminum imports to the US. At least 10% of raw aluminum comes to the US from Russia. Europe is even more dependent on Russian aluminum imports. So the corporate lobbyists have gotten themselves exempted from Russian sanctions as well. It can be expected other critical metal based commodities imports from Russia will lobby and quietly get exemptions from sanctions as well.

Russian Banking Sanctions

Biden initially announced sanctions on Russian banks, but left big holes in those initial sanctions exempting Russia’s two biggest banks, Sber bank and VTB bank. These two were central to the processing of SWIFT on the Russian side. Clearly, big US oil corporations did not want to roil the global markets. Pressure on Biden, however, rose to expand the sanctions. VTB was added to the list. Sberbank apparently still is not although that may have, or soon will, changed.

Banking sanctions not only mean interrupting the flow of payments revenue from sale of exports from Russia, whether oil and other resource commodities and productions. Banking sanctions are designed to prevent Russian banks and investors’ access to financial markets in the west.

Russian corporate and government bonds are often initiated for sale in the west, mostly it appears in London financial markets. Banking sanctions are designed to cut this off. Banking sanctions mean Russian companies’ ability to sell debt (bonds, etc.) in western markets may also be cut off. So may raising of investment capital in the west for Russian start up companies. Russian government debt (i.e. sovereign bonds) sales through foreign banks would be cut off as well, according to the new sanctions.

But Russia’s central bank could step in here and absorb (buy) both the corporate and government debt as a ‘buyer of last resort’ in the crisis—just as the US central bank, the Fed, and other central banks in the west due in emergency situations.

It’s reported that Russia in recent years accumulated up to $680 billion in an emergency cash hoard in anticipation of getting out from under US and western dependence on the US dollar and banking system. That cash hoard, in liquid currencies and gold, is available to offset western sanctions on its banking & financial system. It could also be used to subsidize Russian investor-Oligarchs’ interim losses from the US sanctions levied on individual wealthy businessmen. It should also be noted in turn, however, that US sanctions tactic cut both ways: Russia can in turn freeze foreign investors’ assets in Russian banks. And there’s a lot of western investors’ deposits held in Russia’s big five banks that serve Russia’s giant oil and gas producing industries.

Summing up Russian Sanctions

To sum up the recently announced Biden sanctions: they won’t likely prove very effective—except perhaps if the access to the SWIFT payments system is quickly implemented. Sanctions on Russian exports and imports do not have an immediate effect and there are third source ‘work arounds’ that western companies (and even governments) would be willing to ‘look the other way’ in order to ensure the supply of critical Russian commodities sales. The same applies to sanctions on the Russian banks and global money capital flows. There will be some disruptions longer term, but no major short term impact on Russia’s economy. Goods and money capital flows sanctions all have potential ‘work arounds’.

Financial experts and investors know this. That’s why, when US and EU financial markets initially fell by 800 points when Russia invaded the first day, the financial markets quickly bounced back quickly when Biden announced initial sanctions that same day. Global investors know the Biden sanctions are full of perforations. And if slipping out one or more of the holes is not possible, Russia has a big back door through which it can exchange money and goods with the rest of the world. It’s called China.

Russia will therefore experience in the short run significant volatility in its financial markets and its currency. It will experience inflation—as will all economies worldwide as supply disruptions of commodities (oil, gas, metals, even grains and other food) results in higher prices worldwide. It may even experience some initial production slow down, and thus unemployment, as goods markets and therefore demand are disrupted globally. But it won’t suffer a major economic crisis due to the war in Ukraine. And should that worst scenario occur, it has its cash hoard of reportedly more than $680 billion.

The major wild card in the US sanctions is the SWIFT system. If it is denied to Russia, it will have to create work arounds that will be somewhat more difficult—either using the China Yuan and other currencies or even joining China in significantly expanding the use of digitial currencies in foreign trade transactions.

European Economic Impact

Like Russia, the EU will experience significant financial market and currency volatility in the short run. Both declined sharply first day of the invasion and then recovered.

Europe is far more energy insufficient compared to the USA which is the world’s largest producer of oil and natural gas. The EU will therefore experience more significant price inflation driven by the chronic and steady rise in the global price of oil and gas. Global oil prices are projected to rise from around current $100/barrel levels for benchmark Brent (northsea) crude at the time of the invasion, rising to at least $120-25/barrel. As noted previously, natural gas prices will rise as well in the shorter run. And should in the longer run the EU have to purchase natural gas from the Mideast or USA in the form of LNG, prices will be much higher.

Europe’s economic recovery from Covid is also more tentative compared to the US economy’s. As its central bank plans to raise interest rates as inflation rises, it’s more likely those rate increases will dampen the recovery of the real economy more quickly than would a similar rate hike by the US central bank on the US economy. Wage increases have also been slower to recover in the EU compared to the US recently. Rising energy and commodity prices will discourage household consumption more and sooner in the case of the EU as well. Food prices may also rise as the EU obtains some agricultural goods from the Ukraine. In short, the inflation and greater EU real economy’s sensitivity to central bank interest rates will slow its economic recovery further. Added to the slowdown may be the new Covid Omicron2 variant that appears even more infectious than the earlier Omicron and currently is spreading rapidly in parts of the EU and will exacerbate the trends toward economic slowdown and recovery due to the war effect via inflation and interest rate policy.

Europe will also feel the effects relatively more of Russian reciprocal response to Russian banks’ asset freezes, Russian debt access, and export-import sanctions on Russia. Europe’s economy is integrated with Russia’s not just in energy, but in a long list of industrial and consumer products.

Yet another negative effect in the longer run is that the US will likely demand that the EU shoulder a still greater share of its total defense burden and expenditures. Diversion of tax revenues from social spending programs to defense will result in a net real disposable income decline for many European households. Like inflation, that too will impact consumer spending and slow economic recovery and growth.EU government debt and corporate debt will likely rise in the longer run due to slower growth and inflation.

In short, the EU stands to experience significant negative real affects to its economy as a result of the Ukraine war. In the shorter run more asset and currency volatility, but in the longer term higher chronic inflation, declines in real wage incomes, loss of markets in Russia, and consequent slower economic recovery and growth. Central bank monetary policy response stability are also not promising. Will the European Central Bank raise interest rates to try to slow inflation? When it’s economy is simultaneously experiencing war related developments that are already slowing its recovery and economy?

The USA Economic Impact

Like the EU the USA was already experiencing significant consumer price inflation before the war’s occurrence. In fact, higher chronic inflation than Europe. While the USA is more energy independent than the EU, it will nevertheless have to deal with still higher inflation due to the global energy shock in oil markets. Oil companies raise prices not because of legitimate supply or demand causes, but because as monopolies in their respective home economies they simply can. That has already been going on in the US economy before the Ukraine war. Recent US consumer inflation has been driven by oil prices. Nearly half of its latest 7.5% annual inflation rate has been oil price related.

US financial markets in the short run have also fallen sharply but recovered just as quickly—as in Europe and to a lesser extent in Russia. The US currency, the dollar, has been less volatile than the Euro and even less so than the Ruble. US financial markets may soon, however, experience a second major negative impact from its central bank, the Fed, rise in interest rates in March. That rate hike will likely be larger than any Europe may take. So the higher inflation, combined with higher rate hike, plus the Ukraine war may constitute a combination of negative economic events that cause a second more volatile fluctuation in US financial asset markets.

The combined rate hikes, inflation, and war perception—should the latter continue and deteriorate—will also slow the US economy recovery, as it will Europe’s.

A relatively greater effect on the US economy, compared to the EU’s, will be a further surge in US defense/war spending in the wake of the Ukraine war. With Pentagon spending this year already at $778 billion (and more than $1 trillion for all sources of US defense spending), tens of billions more in military spending can be expected as a result of the Ukraine war. That spending will surge in what remains of the current fiscal year, but continue thereafter as well in subsequent annual defense budgets for next and following years. That will exacerbate still further US deficits and national debt and, with higher interest rates, cause a higher cost of debt servicing that impacts later budget deficits as well. Rising deficits and debt—in the wake of already record deficits and debt due to Covid related policies, 2020-21, may lead to political pressures to cut social spending programs once again—i.e. austerity fiscal policies.

Chronic rising inflation, social program spending cuts, and rising central bank interest rates will together slow an already tentative economic recovery. If all these are severe in scope and magnitude, it may very well result in a double dip recession sometime late 2022 or early 2023.

In short, the US economy will feel the contributing negative effects of the Ukraine war in terms of inflation, disposable household incomes, and unstable central bank monetary policies. In some ways the effects of the war will be less than the effects felt in Europe; in other ways perhaps more severe.

Long Run Consequences for Global Capitalism

The global capitalist economy today is highly integrated: In the flow of real goods and services; in money capital flows between financial markets; in currency relative exchange rates; and in banking systems and interest rates—to name but the most obvious. The Ukraine war’s economic consequences will impact all the three economies—Russia’s, Europe’s and America’s. The impacts may be relatively different qualitatively and quantitatively. But actions taken against one have their inevitable economic reverberations on all.

Inflation due to escalating oil and commodity price inflation will negatively impact all. Central bank policy responses will be weaker across the board. Slower economic growth will result as goods and services flows are interrupted and global supply chain problems continue and perhaps even worsen. The war and US-EU economic and political policy responses will likely accelerate fundamental structural changes in relations between countries and global economic institutions.

It remains to be seen whether these economies, and the global capitalist economy itself, can absorb the stresses of the war and its fallout—so soon after the devastating impact of the Covid global crisis. Meanwhile, the other two systemic challenges will likely not disappear either: the worsening global health crisis of constantly mutating viruses and the deteriorating climate.

While nations continue to fight each other in wars hot and cold the War of Nature against Man—in the form of chronic diseases and global warming—will also continue. As nations fight the former, the latter will likely not be attended to. And if so, the scenario for mid-century will not be pleasant.

Dr. Jack Rasmus
February 26, 2022

Following events of this past week, just prior to and following the Russian invasion of Ukraine, my various commentaries on events on Twitter are as follows. Comments on in reverse chronology with most recent (2/24) first. (A more comprehensive analysis article will be posted on this blog this weekend)

Watch closely if US/NATO war hawks’ claim that “Putin’s endgame is not Ukraine but to restore all of E. Europe under Russia again” becomes official line of Biden/NATO. If so, then NATO war faction will escalate with massive men and material moved to NATO eastern border

A key question: at what point might US and NATO consider a cyberattack an ‘act of war’ and activate NATO article 5? Cyberattacks easiest of all ‘false flags’ to pull off and virtually impossible to locate its origins. War hawks in E. Europe or even US could do it

Here’s an important question: should US move to deny SWIFT int’l payments system access to Russia (against current wishes of EU), will Russia be able to bypass SWIFT by moving to sell its resources via digital currencies? (China already trialing its DC)

US Gen. Joulwan, former commander of NATO, on CNN calls for US air force enter Ukraine & protect Kyiv. Then says Putin’s real plan to reconquer all of former Warsaw Pact nations, now part of NATO (incl. Baltics, Poland, etc.) This view represents war wing US pol. forces

US media ideology machine shifting into high gear. 3 themes building in mainstream media: 1. Putin’s Covid isolation means he’s become unstable 2. Putin’s comments show his intention to go after E. Europe next 3. Biden says Putin has “sinister vision FOR THE WORLD”

As I predicted, Russian forces driving NE and NW up from Crimea + South from Kharkhiv + west from Donetsk/Lughansk in great encirclement. Also south from Belarus to encircle Kyiv. Still believe no ‘battle for Kyiv’ to occur; just to depose current Govt

The importance of SWIFT Int’l payments to the economic sanctions list is evident by Ukraine president Zelensky now begging Biden to implement SWIFT sanctions asap.

Biden’s latest sanctions announcements today still excludes SWIFT int’l payments system denial to Russia. Why? Will interfere with energy imports EU needs. Also, may accelerate Russia+China creating alternative payments system outside US dollar regime=weakens $

Fed mortgage rates falling today. Means investors betting Fed doesn’t raise rates as aggressively starting March due to Ukraine war which will mean much higher oil & commodities inflation that will slow US economic recovery now. Fed behind ‘eight ball’ as they say.

If Russia’s goal is depose Ukraine’s govt, it will likely have to chase them to Lviv after they leave Kyiv and set up shop near NATO border (for quick exit to NATO country to reorg as govt in exile in west). Meanwhile, Ukraine fascist elements will dig in Kyiv & fight

West political forces that want more direct conflict between NATO & Russia now saying Russia will attack land corridor from Belarus to Russian Kaliningrad region to cut off Baltics-i.e. Belarus is just Russia & thus need more NATO forces build up in Lithuania and Poland.

Following initial invasion, western markets not all that impressed with sanctions levied thus far. Will US/NATO impose harsher? Will it include sanctions via SWIFT int’l payments system located in Belgium? Last time SWIFT included in sanctions was Iran 2012. My bet: yes

One quick outcome of the conflict in Ukraine is that the US will now move to cut a deal fast with Iran. The biggest worry about Ukraine war: political forces in US & EU panic and may now propose fast track NATO membership to Ukraine. Not likely, but watch that one closely

Will massive US & west sanctions destabilize Russia’s economy? Not yet certain. What is certain: accelerating oil and commodity prices will now stifle US & EU econ recovery. Double dip recessions guaranteed if war lasts more than 2-4 weeks. Forget central bank rate hikes

Russia’s military strategy: encircle Ukraine’s main military forces concentrated in the east, in a pincer movement, from north (Kharkhiv), south (Crimea) and east (provinces). Force Ukraine military back to Kyiv. Encircle Kyiv and capture govt heads. How did we get here, you say? One word: NATO

The attack on Kyiv will be a military diversion; maybe Odessa too. Real objective: take and hold Donetsk, Lughansk, Kharkiv, Zaporiszhia and maybe Kherson provinces in east and south. Freeze Ukrainian forces in central & w. Ukraine in place with threat from Belarus.

It’s extremely unlikely Putin to try to ‘conquer’ and occupy all of Ukraine. That requires forces he doesn’t have. And costs too high. What he wants in hard commitment not to join NATO + maybe new Ukraine govt. US-NATO response: flood west Ukraine with arms and money.

The most likely scenario not a ‘battle for Kyiv’ city, but a Russian targeting Kharkhiv in northeast, Mariupol in southeast, and push further into E. provinces to encircle Ukraine forces & force them to retreat. Putin then halts further advances & waits on new negotiations

Will US/NATO send forces into Ukraine to confront Russians? No. US generals know their ‘Clausewitz’ whose Principles of warfare put US/NATO at disadvantage in direct confrontation. Besides, what US wants most is restore its control over NATO & end Nord2 gas. It gets that

If Americans think inflation is now bad, just wait if Russia invades and global oil, gas, and virtually all commodities prices spike to new levels. Inflation this summer will ravage the US economy, halt its recovery, and make the Fed think twice about 7 more rate hikes

If Russia invades will it drive quickly to Kyiv? I predict will move first along a front from Kharkiv to Mariupol & halt to see what US-Ukraine do. All this could have been avoided if US hadn’t signed agreement with Zelensky last Nov. ’21 to bring Ukraine into EU & NATO

The mainstream US media makes it sound like Germany’s chancellor, Sholtz, has cancelled Nord2 gas pipeline. No. He’s just not signing its final certification for now, needed to get the gas flowing. That’s not a very great ‘concession’ to US demands

Biden speech today warns Americans more inflation coming due to Ukraine crisis & accelerating oil and commodity prices. But he ignores the exempting global oil & commodity corps from sanctions responsible for the inflation & says nothing re. Europe exempting big Russian banks

Commodity prices of all kinds surging, not just oil. Aluminum, iron, food, etc. It will bleed into the US economy next several weeks. Watch April inflation to rise sharply, perhaps even March.

Putin makes clear the only real issue is Ukraine joining NATO. Says if Ukraine just says it won’t join NATO, then all confrontation is over. (But no chance of that since that’s the intent of Ukraine and US, to bring in NATO and surround Russia on several fronts)

It now appears banks will be exempt from Russian sanctions as well as oil & gas. EU announces Russia’s two biggest banks are exempt. Meanwhile, prices for all kinds of commodities (not just oil) are rising fast as global speculators step in and hoard supply contracts

Oil & Energy prices were 40% of last inflation report’s 7.5% CPI. That was when crude oil price was well below $100/bbl. Now it will be well above by next report and even more a contributor to inflation. (Oil corps have made sure there’ll be no US/NATO sanctions on oil

Watch for 500+ point drop in Dow and Nasdaq tuesday. More coming. Then Fed raises rates & more. Then March inflation numbers come in higher & still more. If Fed raises 7 times + Ukraine & inflation continue, classic inverted yield curve (predicts recession)

Putin today declared eastern provinces independent of Ukraine. Biden slaps sanctions on Oligarchs & limits on money & goods flows into/from 2 provinces. Outline of Biden plans. Watch demands now for more pre-emptive sanctions from US politicians. Escalations continuing.

Ukraine war bottom line: 1. Russia won’t allow NATO into Ukraine under any circumstances. 2. Ukraine’s Constitution declares it must join NATO. 3. East Europe NATO countries demand US, France, Germany extend NATO. All sides locked in. Situation appears increasingly like August 1914

NATO war hawks (including US Demo. party politicians) at Munich meeting project unanimous agreement NATO is destined for Ukraine no matter what Putin does. Yet, reports say German new Chancellor, Schultz, not on board & France’s Macron likely not also. What’s the truth?

Why is US now saying new sanctions against Russia won’t include blocking Russia from SWIFT intl payments system? Because too many countries depend on Russian oil. (SWIFT blocking needed for sanctions on Russian oil sales)-i.e.global oil corps to be exempt from sanctions

Dem politicians also now hyping “don’t forget Taiwan”. USA always at war somewhere. 16 wars since 1950. (8 wins, 5 losses, 3 draws). So let’s start #17, with largest country (Russia) & most populace (China)–after failing to win against 11th century peasant (Afghanistan)

Should Russia invade, global oil prices will soar well above $100/bbl, sending inflation to double digit levels (already 2/3 of US 7.5% due to oil prices). When oil surges > $100 almost always provokes a recession. (ex. 2008, 1990, 1980)

At NATO Munich meeting yesterday, NATO Secretary, Stoltenberg, and US VP Harris declare Russia’s actions now ensure NATO will allow Ukraine to join soon. Russia now backed into corner: attempt to prevent Ukraine in NATO now assured. US-NATO now daring Russia to invade

Biden today says Russia invades next week as provocations begin in east Ukraine. Will soon rise in number & weight. (But who’s doing the provocations is the question?) Should we believe Biden? Remember US false flags: ‘yellow cake’, WMDs, incubator babies, Tonkin Gulf…

Make no mistake, there are 3 sets negotiations going on re. Ukraine right now: US with Russia, Russia with W. Europe (esp. Germany, France) & W. Europe with US. Putin’s more interested in latter two than Russia-US. Europe has most to lose from invasion; USA much to gain

Dr. Jack Rasmus
2-25-22

Listen to my February 17, 2022 Alternative Visions Radio Show and my discussion of the US form of Imperialism, how it functions similarly as well as differently from other prior forms. How does current events in Ukraine fit in relation to USA’s prior 16 wars of the last 70 years?

To listen GO TO: https://alternativevisions.podbean.com/e/alternative-visions-america-s-wars-of-imperialism/

SHOW ANNOUNCEMENT:

As events intensify in the Ukraine and possible conflict looms between the US and Russia—using the proxy of Ukraine—the question rises which is exercising imperialist policies: Russia in Ukraine or US via NATO in Ukraine? Or both? What’s an empire and what’s an imperialist war? Dr. Rasmus defines Imperialism and its key historical examples in the last few centuries. Is capitalist Imperialism different from other pre-capitalist examples? How have different countries managed their empires, especially contrasting British in past compared to USA’s today? Why wars and colonies are only part of the practice of Empire and imperialism. Wars are about obtaining and maintaining empire. But the management of empire in between is different. How imperial countries—especially the USA today—maintain its empire and how is that different from prior empires (British, French, etc.). Rasmus explains how the emerging conflict in Ukraine species of Imperialism fits in the broader historical Genealogy of Imperialism.

The following is an excerpt of my recently posted blog entry, by the same title, with the long historical background commentary deleted for those not interested in the origins of the current crisis in Ukraine and march toward military conflict in that country. The essential argument is here posted: the 10 Reasons.

“Much of mainstream media continues to focus on why Russia is about to invade Ukraine. It refuses to consider the fact there are significant advantages for the US in provoking Russia to invade Ukraine. The US media, the Biden administration, and US war hawks in Congress say they are trying to discourage Putin and Russia from invading. But what they say and what they do are not the same thing. Ample evidence suggests the US and a good part of NATO want a confrontation, so long as it’s a proxy war fought between Russia and Ukraine on Ukrainian ground so that they can stand by, feed the conflagration with arms, and in the process achieve other US-NATO objectives. Just what might these other objectives of US/NATO be?

Here are at least 10 reasons why US political elites in both US parties, war hawks and military-industrial complex capitalists favor a Russian invasion of Ukraine:

1. Reunite NATO and strengthen US hegemony over it once again

In recent years—and especially since Trump—certain members in NATO have questioned whether the US is as reliable a partner to the alliance as it once was in decades past. Nations like France, and now Germany, have had growing doubts. Voices have risen within the EU that it should go its own way with its own defense and strategy. China has made major economic inroads to the EU NATO states. Europe and China are now either first or second biggest export/import traders with each other. Key Europe state leaders are very nervous about the US leading them into a conflict in Ukraine that could have very serious effects on their economy, at the very least, and at a time Europe’s economy continues to struggle to jump start a recovery from the past two years Covid precipitated recession. The US’s track record in the middle east is giving them pause as well: it achieved little, left the area in shambles, and the US then just pulled out to shift its focus on China. The European NATO allies, moreover, are also quite split among themselves. The East Europeans, the recent additions to NATO, follow the US lead in hope of more arms and troops. But big players like France and Germany are not so inclined to follow blindly. If a US provocation of conflict in Ukraine goes poorly, the risks—political and economic—for western Europe NATO states are high.

2. Get Germany to cancel the Nordstream2 Russian Gas Pipeline; get Europe to buy US gas instead; increase US natural gas exports to Europe and thereby create supply shortage in US to justify US domestic gas price hikes & US profits

Germany is particularly uncertain about following the US leading Europe into another middle east-like quagmire in Ukraine. Its new chancellor, Olaf Shultz, is especially nervous about the prospect. There is significant public opposition in Germany to becoming embroiled in Ukraine, even indirectly. And German capitalists themselves are split as well over the fate of the Nordstream2 natural gas pipeline from Russia. Germany desperately needs the supply. Russia’s gas is significantly less costly than would be purchasing natural gas from the US. For years now the US has been pressuring Germany to halt Norstream2 and buy liquefied natural gas from the US—at higher prices. Substituting US gas for Russian would also require Germany to build highly expensive new port facilities to import the US gas. US oil corporations want to sell the gas, to offload a US glut of natural gas supply. That would bring not only profits from more sales to Germany, but create shortages of supply in the US that would enable US corporations to raise prices in the US domestic market as well. The US gas corps—mostly owned by the big oil corporations—will enjoy a win-win profit. Then there’s the German and Europe uncertainty whether the US would even be able to supply the roughly 40% of natural gas Europe gets from Russia. Behind the scenes in the conflict in Ukraine is the looming gray presence of US oil companies who own and control most of US natural gas—who have had their hand in just about every American military adventure since the 1960s.

3. Create excuse to send still more troops & advanced weaponry to Baltics (Estonia, Latvia, Lithuania) & East Europe (Poland, Romania)

There are political forces in the US that want to arm Poland, Romania, and the Baltic countries to the hilt, including stationing nuclear weapons in their countries. Governments in the region are more than happy to bloc with these US war hawks. It means new massive funding from the US, more US arms and troops, and a boost to their economies (and to those politicians’ pockets as well no doubt).

4. Obtain more economic concessions from Ukraine for US business in exchange for more and better US/NATO arms

The US empire does not provide aide without demanding a cost. US investors and corporations have already, post-2014, penetrated deeply into the Ukraine economy. They have funded, acquired, and otherwise controlled a significant number of former all Ukrainian companies in key sectors of the economy. Biden’s son is not the only next generation representative of the US political elite (from both parties) to sit on Ukraine company boards of directors. As the US provides even more funds and weapons to Ukraine, it will exact a price in return. It will demand a still deeper further influence over the Ukraine economy and banking system. Ukrainian elites will more than welcome them, however, since the US form of economic empire integrates the colonial elites by sharing a big piece of the economic pie with them. It’s the Ukrainian workers and consumer that will have to pay the higher price in the end.

5. Grow US political support to go after Moldova to drive out Russian supporters & install US puppet regime over entire country

It is a certainty that should military conflict erupt in Ukraine, the US and its field intelligence services (CIA, State, etc.) will move on Moldova as well in some manner. Moldova is the small state located between southwest Ukraine and Romania. For years it has had an uneasy truce between Russian backed forces running half of the country and pro-western the other half. The US will attempt to change this and turn the country to full pro-western hegemony if NATO absorbs Ukraine, or perhaps even if military conflict erupts there.

6. Justify more US effort & funding to try to destabilize Belarus & Kazakhstan

It is naïve to think that US intelligence and related forces are not deeply involved in the recent public demonstrations and protests in both Belarus and Kazakhstan, the latter just weeks ago as tensions have risen in the Ukraine. At a minimum, the US is testing the extent of anti-Russian opposition in these countries, which are closely aligned economically and politically with Russia. Russia has helped these governments put down the demonstrations, some of which, as in Kazakhstan, were especially violent uprisings. Should the US ‘turn’ Ukraine fully toward NATO it is certain the US will intensify its efforts to further destabilize Belarus and Kazakhstan on Russia’s borders. They will be the next ‘Ukraine-like’ targets, following the template for Ukraine that began with 2014 and now culminating in 2022.

7. Provide major foreign policy distraction for Democrat party before November 2022 midterms

One cannot discount the potential advantages for the sitting president and party (Democrats) of a foreign policy issue such as Ukraine. It allows Biden and the party to ‘look tough’ in an election year, which always seems especially to add support for the party that ‘gets tough with Russia’—so long as it doesn’t lead to direct conflict with the US. Ukraine is a classic US proxy war possibility—the kind the US prefers to fight at a distance and on the ground of another country (Ukraine) using its own troops.

8. Get Congress to approve a further increase in US defense budget in addition to $778B

The US wars in the middle east are over. It will take time to build up new technological weaponry and forces to confront China in Asia. The US is behind in several key technological areas. The US deal to provide Australia with latest US nuclear subs is just one such example of how the US build up in the Pacific will not occur overnight. It will take time to build those subs in Australia. A proxy war in the Ukraine serves as a convenient interim excuse not to reduce defense spending as the US withdraws from the middle east but actually to raise it still more.

US defense spending is clearly out of control. Pentagon spending alone is now $778 billion, and continues to rise even after the US withdrawal from the middle east. However, total US defense spending is well over $1 trillion a year when other departments of government are included as well: Energy, State, AEC, Homeland Security, CIA, NSA, DARPA, etc.) The MIC never wastes time encouraging the US to get into another conflict once it ends one in order to prevent defense spending cuts post-war: Once the USSR imploded in the late-eighties/early nineties the military bete noir became Saddam Hussein. That fueled the 1991 first Gulf War and continued war spending thereafter and turned US attention to the middle east. The US intervention in Somalia in the 1990s and Balkans kept it going. The next convenient enemy was the ‘Terrorist Threat’ in wake of 9-11 attack in the US. That fueled defense and war spending still further over the next two decades, including wars in Iraq, Afghanistan, Libya, Syria and the current US proxy war in Yemen. Now that the US has withdrawn from the middle east direct wars, it needs a new enemy to keep the war spending going. It will take time to build up China as the target. In the interim, however, Ukraine and Russia will do nicely to keep Congress flowing dollars to the US military-industrial complex war machine.

9. Excuse to go after pro-Russian supporters: Venezuela, Nicaragua and Cuba again

A protracted conflict in Ukraine could eventually lead to a spread of the conflict to other ‘proxy’ nations. For Russia that means Venezuela, Cuba, and Nicaragua. Given a war in Ukraine, war hawks in the US will no doubt find justification to go after these countries with renewed destabilization efforts run by US intelligence units and even perhaps US special ops forces.

10.Test effectiveness of latest US weaponry against Russian forces & Russian weaponry effectiveness against US without having to directly confront Russia; get Russia to reveal state of its cyber capability

Proxy wars provide a good excuse to test new weaponry of the US in a third country battlefield. That means not only testing how well offensive US weapons perform against Russian defenses, but how well Russian weapons perform against US defenses. Weaknesses inevitably appear, permitting the correction and upgrading of the weaponry for potential future use elsewhere. But they are only discernible on a real battlefield. The US especially is interested in testing its cybersecurity weaponry while getting Russia to reveal the extent of much of its capability. Another area of interest to the US military is to test how well US anti-armor missiles perform and how well US/NATO missiles perform against Russian anti-missile systems (like its S-500).

Dr. Jack Rasmus

February 18, 2022

(Ukraine Latest Update + US GDP 1st Quarter 2022, US Inflation & Yield Curve as Recession Predictor)

https://drive.google.com/file/d/1cc1-KHyq_f5fLFPul7H5DsKBR1C3FgiH/view

(Price Gouging Inflation)

https://www.spreaker.com/user/8544886/by-any-means-1371-seg1a1-rasmus-spreaker

(1. Inflation & the Fed)
https://drive.google.com/file/d/1lHU6y1E_IfYSD6QSigHaG_pCvnuXTtZg/view

(2. Ukraine Crisis)
https://drive.google.com/file/d/1VdMjMtWwVymvgXGDmL2TyOFYpoQ8gpAm/view

In recent weeks both US and NATO have been stumbling toward confrontation with Russia over whether the Ukraine will be allowed membership in NATO. While there are various secondary issues on the negotiating table—deployment of US troops into Poland, Baltics and Romania and Russian natural gas delivery to Germany, among other issues—make no mistake: NATO membership is what the developing conflict is fundamentally about. As one of the main media vehicles of US imperialism, the New York Times, recently blared in its front page headline: “U.S. Won’t Bow to Russia Over Who Can Join NATO”. (February 3, 2022).

Background to Today’s Conflict

 

The pending conflict over Ukraine NATO membership has intensified recently, events have been leading to this at least since the January 2005 so-called Orange Revolution in Ukraine when emergent right wing forces rode a wave of popular protest over the previous November 2004 national elections. The origins of the current crisis go back even further, to the breakup of the former USSR in the early 1990s during which the US promised Russia that NATO would not be expanded to Eastern Europe, the Baltics, or the Caucasus.

In the November 2004 Ukraine election the pro-Russia candidate, Viktor Yanukovich won 39% of the vote; but the anti-Russia candidate, supported by growing fascist forces, also won 39%. Yanukovich’s support was heavily concentrated in east and south Ukraine, while Yushchenko’s in western Ukraine. As the vote was underway that November, and not yet concluded, Yushchenko called for mass street demonstrations. He then immediately declared himself president as mass protestors threatened to assault the Ukraine Parliament. In front of his massed supporters in Kyiv, the day after the election, Yushchenko unilaterally took the ‘oath of president’ in the Parliament in which only his supporters were present and which therefore lacked a quorum to legitimize the November vote results.  After he had himself sworn in, he then immediately called for continued mass strikes, protests and sit-ins to force the acceptance of his declared victory and questionable ‘oath’.

Yushckenko’s declaration was supported by the Central Electoral Commission which, it was later determined, withheld significant regional votes from being counted and ran a separate computer tally of the votes. In order to avoid growing political conflict in the streets, the Ukraine Supreme Court intervened in early December and voided the November election in which Yanukovich had won a narrow popular vote victory by less than 1%. The Court declared a run-off election for late December 2004. The same Central Election Commission tallied 52% vote for Yushchenko vs. 44% for Yanukovich in that run off, as several minor parties either abstained or threw their support to Yushchenko.

The next election in 2010 saw Yanukovich win back again in an election international observers declared was fair.  Rising right wing forces did not accept the 2010 results, however. In 2014 another uprising was staged, focused in the capital city of Kyiv. This time far more violent than in January 2005. This time, February 2014, fascist forces murdered more than 100 in the streets.

The insurrection of 2014 was clearly organized and funded by US imperialist interests. Manipulating forces behind the uprising was US undersecretary of State for Eastern Europe, Victoria Nuland. In a pubic speech in the Ukraine following the uprising of 2014, Nuland was quoted by the press bragging the US has spent $5 billion funding various grass roots movements behind the insurrection that toppled ‘fairly elected’ pro-Russia leader, Yanukovich.

At the core of those movements were largely self-declared fascist organizations that had grown and mobilized since 2005. Using classic fascist violence, including assassinations and widespread shootings of police and government officials in Kyiv (as well as subsequent multiple assassinations in Ukraine’s second important city, Odessa), the US-backed fascist forces—along with their political representatives—took control of the Ukraine government that February 2014.

In the wake of the insurrection and take over, Nuland was appointed by the new right wing Ukraine government as ‘economic Czar’ for Ukraine.  Nuland had formerly been an owner of a well known US Chicago financial firm before being appointed as under-secretary of State for the region, a position she held at the time of the February 2014 coup. After she became ‘economic Czar’, however, US investors began to pour into Ukraine—including relatives of well-known US politicians like Vice President Joe Biden. The quickly took up positions on various Ukrainian company boards of directors. US economic imperialism now penetrated deeply into the economic infrastructure of Ukraine.

Russia’s response to the insurrection of 2014 and the deposing of ‘fairly elected’ Yanukovich, was to provide support to the heavily pro-Russian eastern provinces. As it became clear in 2014 that outright declared fascist organization members took over key positions in the Parliament and government, Russia sent military forces to take back the strategic Crimea peninsula that housed Russia’s black sea naval forces. Crimea had always been part of Russia, but was ‘given’ to the Ukraine in the 1950s by the USSR in a government provincial reorganization.   In 2016 further conflict erupted in the eastern Ukraine provinces of Donetsk and Lugansk as Ukrainian fascist-led military forces attempted to take back the provinces but failed in the wake of Russian military support to the region.  The US and NATO then imposed sanctions on Russia in response which exist to this day, which Biden is threatening to intensify still further.

It’s important to note that while these events from 2004 to 2016 were occurring in the Ukraine, US war hawks pushed for, and achieved, expansion of NATO into East Europe—contrary to assurances made to Russia by the Clinton administration in the 1990s. The same year, 2004, as the first right wing uprising occurred in Ukraine, the US expanded NATO into seven East European countries and the three Baltic nations, Estonia, Latvia, Lithuania.  NATO forces were now located less than 400 miles from Moscow.

In 2008 US political factions in government, led by US Senator John McCain, Dick Cheney and others signaled and encouraged then Georgia President, Mikhail Saakashvili, to invade Russia’s South Ossetia province on Georgia’s northern border.  Georgia had been courting US and demanding NATO membership since at least 2003, when it sent significant troops to join the US invasion of Iraq. Georgian military forces invaded South Ossetia on August 7, 2008. Russia drove them back and entered Georgia itself a week later. It later withdrew and military conflict ended October 2008.

In 2009 and 2010 the US announced plans to deploy advanced missile systems of NATO into Poland and Romania, which were completed by 2016. The US also deployed ship-based advanced Tomahawk offensive missile systems on warships it sent into the Black Sea around the same time. Both the Romania land-based and US ship-based missiles were of the advanced ‘Aegis’ type, capable of rearming with nuclear warheads on very short notice.  If Russia intervened in the US election of 2016, it certainly had some justification given the US/NATO threat of forward basing of nuclear capable new missiles to Romania and Poland.

Russia responded angrily in 2017 and 2018 to the advanced US missile deployments of 2016, declaring they violated the Intermediate Nuclear Forces (INF) missile treaty signed with the US in 1987, in which both sides had agreed not to deploy nuclear-capable missiles in eastern Europe or on Russia’s western border.  In an unprecedented direct public response, Russia further declared it would destroy the missile systems in Romania if necessary. In reply, the US followed up with deployment of a Patriot anti-missile system in Romania.

In July 2019 the US formally withdrew from the 1987 intermediate missile treaty that Reagan and Gorbachev had negotiated. During the 2020 US election year and Covid health & economic crisis further escalations more or less froze in place.

It is in this context of events in Ukraine from 2004 to 2016—i.e. the coup staged in 2014, the deployment of US missile systems in Eastern Europe and in the black sea thereafter in 2016, and US withdrawal from the INF treaty in 2019—that the recent events of US-NATO expansion into Ukraine should be understood. History and context mean everything.  Explanations based just on immediate events are easily manipulated by mainstream media and political forces behind it.

US/NATO vs. Russia: Ukraine 2021-22

 

Once Biden was elected and Democrats were in power once again in 2021 political forces—in both Eastern Europe’s NATO allies and within the newly elected Zelensky government in the Ukraine—began pushing for more US advanced armaments and for Ukraine’s admission into NATO.  By late summer 2021, aware of the new pressure to allow Ukraine into NATO and the greater sympathy of the Democrats to sanction Russia compared to Trump (whom they, the Russians, had largely neutralized for reasons still unknown), Russia responded to the new NATO inclusion initiative.

Putin wrote an extended position paper in late summer 2021 that more or less drew a line in the sand so far as Ukraine inclusion in NATO was concerned. He noted in particular that the US and other NATO governments declared in 2008 that Ukraine “will become members of NATO” in the future, albeit without specifying exactly when, but that US/NATO has never withdrawn or repudiated that 2008 statement.

That fact, plus the advanced and potentially nuclear armed missile deployments in Poland, Romania, and on the Black Sea constituted a clear threat to Russia.  The US pulling out of Afghanistan and the middle east, while bolstering its sea-based nuclear submarine forces in Australia, was another signal that the US empire was clearly shifting its military resources and preparing for new conflicts. A NATO Ukraine could mean moving Romanian and Black Sea US missiles still further north into Ukraine right up to Russia’s border. With similar NATO forces in the Baltics on its border, Russia would be surrounded with NATO missiles just a few minutes from Moscow.

About the same time in 2021 uprisings erupted in Belarus and Kazakhstan. Russia might easily conclude these two events likely portend future 2014-Kyiv like insurrections in these border states. Another Ukraine 2014-like coup in Belarus or Kazakhstan would mean Russia would be even further encircled.  Russia intervened to assist their governments and put down the protests.  Future such insurrections in these states, however, are not out of the question.  And it is probable that Russia and Putin have interpreted these uprisings as US assisted—not unlike that of 2014 in Ukraine.

It is easy to see why Putin and Russia felt themselves increasingly encircled by NATO in East Europe and Baltics, given the likely US instigated and backed support for anti-Russian forces in Georgia, Belarus, Kazakhstan destabilizing its frontiers. A NATO Ukraine could destabilize Russia’s borders on a number of fronts. It would in effect strategically outflank Russia and close the ring on them.

NATO in Ukraine in 2022 would accomplish what Nazi Germany in 1942 could not. Social memories of the German Nazi invasion of Ukraine in 1941-42 run deep in Russia. It is often under-estimated by western political advisers—and especially by the so-called non-military ‘experts’ advisers to US presidents who have a long history of advocating US run headlong into military adventures abroad—most notably Vietnam, Iraq, Libya and Syria.  One might ask: “would Russia allow NATO and the US to enter and ‘take’ Ukraine—after it had lost 10 million of its citizens there to deny the same to the Nazis?” While this is not a mode of thought among US advisers, it is no doubt a central consideration within Russian circles—military and civilian.

It is true that Putin and Russia began a build up of military resources on its Ukrainian border. It’s also true the US is purposely hyping and exaggerating it.  Thus far the Russian military build up has been a ‘measured’ one. It is mostly military hardware that has been moved to forward bases with limited troops to support it. Most of the alleged 175,000 troops at the border, trumpeted almost daily by Biden and US mainstream media, are not in forward border positions. They are in some cases hundreds of kilometers within Russia at their regular bases.  A truer signal of intent to invade Ukraine will occur once support battalions move forward to the border—i.e. medical, ammunition, food and similar logistical troops and supplies. That doesn’t appear to have occurred as yet, however. Russia’s military movements so far have been designed apparently to get the attention of Biden and the US to bring them to the negotiating table. And in early January 2022 it worked.

Biden released what the US media is calling a ‘Transparency Mechanism’ offer.  In it the US offered to allow the Russians to verify if its missile systems in Poland and Romania were defensive or not. But in exchange, the US wanted Russia to reciprocate by allowing it access to Russian border missile sites—one of which would be the Russian facilities in the Kaliningrad, Russia region, a small area sandwiched between Lithuania and Poland on the Baltic sea coast. The US also offered in the ‘Mechanism’ that it would not permanently deploy offensive missiles in Ukraine—indicating it would only do so ‘temporarily’ (however that might be defined). The real kicker of the Mechanism offer, however, was Russian had to withdraw from eastern Ukraine and Crimea as part of any deal.  It was obviously a non-starter but it gave the US cover that it was putting a proposal on the table and negotiating.

But as Biden was making the above offer he simultaneously announced the US was sending another 5,000 US troops to eastern Europe, no doubt to placate Poland and the NATO Baltic states now demanding even more advanced NATO arms. Biden also reiterated his oft-repeated threat since December that if Russia invaded there would be new massive economic sanctions imposed on Russia by the US and its allies worldwide. He didn’t, and hasn’t yet, defined what exactly that might be the new massive sanctions, but clearly it suggests sanctions of a new nature not just more severe. (That could include, in this writer’s opinion, denying Russia to the US controlled SWIFT international payments system that would prevent Russia from selling its oil on global markets.) At the same time the US Congress has rushed to pass new emergency aid and military supplies to Ukraine and US ‘war hawks’ have been demanding US sanctions be placed on Russia even before it invades.  Somehow they think that is a deterrent, instead of a provocation.

Throughout January 2022 Biden and the US media kept pounding away the message that invasion is ‘imminent’.  This premature declaration, often repeated, has disrupted social stability within Ukraine itself, resulting in its president, Zelensky, to go so far as to publicly contradict Biden’s message. The US toned down its ‘imminent invasion’ theme for a couple days, to allow the British to release a document claiming to show Russian invasion plans (One wonders why it is that the Brits typically release such politically salacious but unverified ‘reports’—i.e. dossiers, false flags, etc. on behalf of their US big brother?).  In the interim the pressure continued to grow on Ukrainian politicians as near panic by Ukrainians themselves took root among the populace.

On February 1, Putin predictably rejected the ‘Transparency Mechanism’ proposal and publicly stated he believed the US and NATO were attempting to provoke Russia into a war in Ukraine.

In a clear appeal to western Europe NATO countries, Putin added he expected “dialogue to continue”.  That set off a flurry of announcements and visits by heads of state in the UK, France, Germany and Italy this past week. About to get sacked by his own party in the UK, Boris Johnson ran off to Kyiv for some photo ops.  France’s Macron announced had had telephone conversations with Putin and planned to meet him directly. So did Germany’s newly elected chancellor, Olaf Shultz, who scurried off to Washington to meet with Biden.

Putin meanwhile flew off to China to meet with President Xi during the opening of the winter Olympics. Both released a direct joint statement accusing the US of aggressive military moves in both the Pacific and Ukraine that would severely destabilize global peace and status quo.

At latest report, the media war in the west continues to intensify, with the Biden administration leaking a report that suggested Russia had plans to fake a ‘false flag’ operation as a prelude to invasion. In a like response, the Spanish newspaper, El Pais, in turn leaked some US/NATO plans in the works. Lately US media is hyping the number of likely dead from an invasion at around 60,000.

The preceding events and moves by both sides around the Ukraine today are reminiscent of how, in August 1914, both sides kept raising the stakes, in what appeared at first as small inconsequential moves but which then accelerated, grew increasingly threatening, until eventually resulting in military conflict and the 1st World War. Today in the Ukraine both sides circle each other, like boxers coming into the ring in the first round, testing and feinting, looking for weaknesses, sizing each other up, trying to determine what the other’s opening move might be.  Should one slip or fall by accident or the other unknowingly signal a blow is coming, it might very well precipitate a general exchange between both.

10 Reasons Why US Elites May Want Russia to Invade Ukraine

 

Much of mainstream media continues to focus on why Russia is about to invade Ukraine. It refuses to consider the fact there are significant advantages for the US in provoking Russia to invade Ukraine.  The US media, the Biden administration, and US war hawks in Congress say they are trying to discourage Putin and Russia from invading. But what they say and what they do are not the same thing. Ample evidence suggests the US and a good part of NATO want a confrontation, so long as it’s a proxy war fought between Russia and Ukraine on Ukrainian ground so that they can stand by, feed the conflagration with arms, and in the process achieve other US-NATO objectives. Just what might these other objectives of US/NATO be?

Here are at least 10 reasons why US political elites in both US parties, war hawks and military-industrial complex capitalists favor a Russian invasion of Ukraine:

  1. Reunite NATO and strengthen US hegemony over it once again

 

In recent years—and especially since Trump—certain members in NATO have questioned whether the US is as reliable a partner to the alliance as it once was in decades past.  Nations like France, and now Germany, have had growing doubts. Voices have risen within the EU that it should go its own way with its own defense and strategy.  China has made major economic inroads to the EU NATO states. Europe and China are now either first or second biggest export/import traders with each other.  Key Europe state leaders are very nervous about the US leading them into a conflict in Ukraine that could have very serious effects on their economy, at the very least, and at a time Europe’s economy continues to struggle to jump start a recovery from the past two years Covid precipitated recession.  The US’s track record in the middle east is giving them pause as well: it achieved little, left the area in shambles, and the US then just pulled out to shift its focus on China.  The European NATO allies, moreover, are also quite split among themselves. The East Europeans, the recent additions to NATO, follow the US lead in hope of more arms and troops. But big players like France and Germany are not so inclined to follow blindly.  If a US provocation of conflict in Ukraine goes poorly, the risks—political and economic—for western Europe NATO states are high.

  1. Get Germany to cancel the Nordstream2 Russian Gas Pipeline; get Europe to buy US gas instead; increase US natural gas exports to Europe and thereby create supply shortage in US to justify US domestic gas price hikes & US profits

 

Germany is particularly uncertain about following the US leading Europe into another middle east-like quagmire in Ukraine. Its new chancellor, Olaf Shultz, is especially nervous about the prospect. There is significant public opposition in Germany to becoming embroiled in Ukraine, even indirectly. And German capitalists themselves are split as well over the fate of the Nordstream2 natural gas pipeline from Russia. Germany desperately needs the supply. Russia’s gas is significantly less costly than would be purchasing natural gas from the US. For years now the US has been pressuring Germany to halt Norstream2 and buy liquefied natural gas from the US—at higher prices. Substituting US gas for Russian would also require Germany to build highly expensive new port facilities to import the US gas.  US oil corporations want to sell the gas, to offload a US glut of natural gas supply. That would bring not only profits from more sales to Germany, but create shortages of supply in the US that would enable US corporations to raise prices in the US domestic market as well. The US gas corps—mostly owned by the big oil corporations—will enjoy a win-win profit. Then there’s the German and Europe uncertainty whether the US would even be able to supply the roughly 40% of natural gas Europe gets from Russia. Behind the scenes in the conflict in Ukraine is the looming gray presence of US oil companies who own and control most of US natural gas—who have had their hand in just about every American military adventure since the 1960s.

  1. Create excuse to send still more troops & advanced weaponry to Baltics (Estonia, Latvia, Lithuania) & East Europe (Poland, Romania)

 

There are political forces in the US that want to arm Poland, Romania, and the Baltic countries to the hilt, including stationing nuclear weapons in their countries.  Governments in the region are more than happy to bloc with these US war hawks. It means new massive funding from the US, more US arms and troops, and a boost to their economies (and to those politicians’ pockets as well no doubt).

  1. Obtain more economic concessions from Ukraine for US business in exchange for more and better US/NATO arms

 

The US empire does not provide aide without demanding a cost. US investors and corporations have already, post-2014, penetrated deeply into the Ukraine economy. They have funded, acquired, and otherwise controlled a significant number of former all Ukrainian companies in key sectors of the economy.  Biden’s son is not the only next generation representative of the US political elite (from both parties) to sit on Ukraine company boards of directors.  As the US provides even more funds and weapons to Ukraine, it will exact a price in return. It will demand a still deeper further influence over the Ukraine economy and banking system.  Ukrainian elites will more than welcome them, however, since the US form of economic empire integrates the colonial elites by sharing a big piece of the economic pie with them. It’s the Ukrainian workers and consumer that will have to pay the higher price in the end.

  1. Grow US political support to go after Moldova to drive out Russian supporters & install US puppet regime over entire country

 

It is a certainty that should military conflict erupt in Ukraine, the US and its field intelligence services (CIA, State, etc.) will move on Moldova as well in some manner. Moldova is the small state located between southwest Ukraine and Romania. For years it has had an uneasy truce between Russian backed forces running half of the country and pro-western the other half. The US will attempt to change this and turn the country to full pro-western hegemony if NATO absorbs Ukraine, or perhaps even if military conflict erupts there.

  1. Justify more US effort & funding to try to destabilize Belarus & Kazakhstan

 

It is naïve to think that US intelligence and related forces are not deeply involved in the recent public demonstrations and protests in both Belarus and Kazakhstan, the latter just weeks ago as tensions have risen in the Ukraine.  At a minimum, the US is testing the extent of anti-Russian opposition in these countries, which are closely aligned economically and politically with Russia. Russia has helped these governments put down the demonstrations, some of which, as in Kazakhstan, were especially violent uprisings.  Should the US ‘turn’ Ukraine fully toward NATO it is certain the US will intensify its efforts to further destabilize Belarus and Kazakhstan on Russia’s borders. They will be the next ‘Ukraine-like’ targets, following the template for Ukraine that began with 2014 and now culminating in 2022.

  1. Provide major foreign policy distraction for the Democrat party before November 2022 midterms

 

One cannot discount the potential advantages for the sitting president and party (Democrats) of a foreign policy issue such as Ukraine. It allows Biden and the party to ‘look tough’ in an election year, which always seems especially to add support for the party that ‘gets tough with Russia’—so long as it doesn’t lead to direct conflict with the US. Ukraine is a classic US proxy war possibility—the kind the US prefers to fight at a distance and on the ground of another country (Ukraine) using its own troops.

  1. Get Congress to approve a further increase in US defense budget in addition to $778B

 

The US wars in the middle east are over.  It will take time to build up new technological weaponry and forces to confront China in Asia. The US is behind in several key technological areas. The US deal to provide Australia with latest US nuclear subs is just one such example of how the US build up in the Pacific will not occur overnight. It will take time to build those subs in Australia.  A proxy war in the Ukraine serves as a convenient interim excuse not to reduce defense spending as the US withdraws from the middle east but actually to raise it still more.

US defense spending is clearly out of control. Pentagon spending alone is now $778 billion, and continues to rise even after the US withdrawal from the middle east.  However, total US defense spending is well over $1 trillion a year when other departments of government are included as well: Energy, State, AEC, Homeland Security, CIA, NSA, DARPA, etc.) The MIC never wastes time encouraging the US to get into another conflict once it ends one in order to prevent defense spending cuts post-war: Once the USSR imploded in the late-eighties/early nineties the military bete noir became Saddam Hussein.  That fueled the 1991 first Gulf War and continued war spending thereafter and turned US attention to the middle east.  The US intervention in Somalia in the 1990s and Balkans kept it going. The next convenient enemy was the ‘Terrorist Threat’ in wake of 9-11 attack in the US. That fueled defense and war spending still further over the next two decades, including wars in Iraq, Afghanistan, Libya, Syria and the current US proxy war in Yemen.  Now that the US has withdrawn from the middle east direct wars, it needs a new enemy to keep the war spending going. It will take time to build up China as the target. In the interim, however, Ukraine and Russia will do nicely to keep Congress flowing dollars to the US military-industrial complex war machine.

  1. Excuse to go after pro-Russian supporters: Venezuela, Nicaragua and Cuba again

 

A protracted conflict in Ukraine could eventually lead to a spread of the conflict to other ‘proxy’ nations.  For Russia that means Venezuela, Cuba, and Nicaragua. Given a war in Ukraine, war hawks in the US will no doubt find justification to go after these countries with renewed destabilization efforts run by US intelligence units and even perhaps US special ops forces.

    10. Test effectiveness of latest US weaponry against Russian forces & Russian weaponry effectiveness   against US without having to directly confront Russia; get Russia to reveal state of its cyber capability

Proxy wars provide a good excuse to test new weaponry of the US in a third country battlefield. That means not only testing how well offensive US weapons perform against Russian defenses, but how well Russian weapons perform against US defenses.  Weaknesses inevitably appear, permitting the correction and upgrading of the weaponry for potential future use elsewhere. But they are only discernible on a real battlefield.  The US especially is interested in testing its cybersecurity weaponry while getting Russia to reveal the extent of much of its capability. Another area of interest to the US military is to test how well US anti-armor missiles perform and how well US/NATO missiles perform against Russian anti-missile systems (like its S-500).

Some Conclusions

 

All the above constitute advantages for the US should a direct conflict occur in the Ukraine against Russian forces.  Ukrainians will pay the human and economic price. The US and its corporations will benefit economically and strategically.  Europe will be caught in between, uncertain as to the economic effects of a conflict on it or the great political risks should the conflict not go well.

The behavior of US interests the last two months increasingly suggests it is the US that favors an open conflict in the Ukraine. For the US, it’s win-win situation. There is much to be gained strategically, politically at home, and economically: re-establishing its unchallenged hegemony over NATO; driving Russia out of Europe’s economy and making Europe even more dependent economically on US resource exports instead of Russia; deepening US influence and control over Ukraine’s economy and government; feeding US war hawks demands to destabilize other countries which, like Ukraine, also border Russia; resurrect spending and operations targeting Latin America friends of Russia;  create justifications in Congress to spend even more on US defense and war in the interim until the bigger, longer term buildup and military spending targeting China can come on line; and test in a real theater of operations the effectiveness of both US defensive and offensive weaponry against a sophisticated opponent like Russia—without having to provoke a direct conflict with Russian forces.

Time will reveal whether Russia and Putin also favor an open conflict in Ukraine—or whether the western media is exaggerating the Russian threat and beating the drums of ‘imminent invasion’ to serve the interests and various objectives of US and NATO.

Longer term, Russia may have no alternative but to invade should the US play its ‘final card’ and move to bring Ukraine into NATO.  The US says it has no such intention. But if so, why does it refuse to withdraw its declaration of a decade ago that Ukraine in NATO is the goal ‘at some point in the future’?  Is the future now?  Once the Ukraine joins NATO it is ‘game over’ for Russia strategically for decades to come. Similar developments like Ukraine eventually would occur in Belarus, Kazakhstan and likely Moldova. Calls and efforts to bring them too into NATO would similarly follow. Russia will have been outflanked. It will be thereafter now more easily intimidated.  Surrounded by NATO states everywhere, what likely would follow would be a US-NATO demand of a full scale nuclear disarmament by Russia.

This writer believes therefore that preventing NATO from entering Ukraine is a ‘red line’ for Putin and Russia.  If pushed into a corner with no retreat or way out, it is quite possible Russia may see no alternative to invading. That’s not on the immediate agenda. But that’s not to say it will never be.

Jack Rasmus

February 7, 2022

Dr. Jack Rasmus is author of ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020 and the forthcoming ‘The Viral Economy’ latter in 2022. He blogs at http://jackrasmus.com. His website is: http://kyklosproductions.com . He hosts the weekly radio show, Alternative Visions, on the Progressive Radio Network and tweets at @drjackrasmus on daily economic and political events.

The US & NATO appear to be stumbling toward a confrontation with Russia over US insistence that Ukraine be allowed into NATO (see NY Times headline today, February 4, 2022, p. 1). What’s the full story behind the drift toward confrontation? Is it simply that Russia wants to ‘take back’ Ukraine, as western media maintains? Or are the causes and various political forces behind the scenes more complicated? Is a Russian invasion ‘imminent’ as Biden says? Is Biden’s statement part of an attempt to provoke Russia? Who wants a proxy war between US/NATO and Russia in Ukraine? How may the US war hawks, oil corporations, and politicians benefit from a Russian invasion?

Listen to my discussion of the event, tracing its origins back to the 2014 US coup in the Ukraine, and even earlier to the collapse of the USSR in the early 1990s. And a list of at least 10 ways various factions of the US capitalist class and their politicians may actually benefit from a Russian invasion.

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-10-reasons-why-us-may-want-russia-to-invade-ukraine-1644006871/

SHOW ANNOUNCEMENT:

Dr. Rasmus reviews the historical background to the possible military confrontation in the Ukraine, going back to Gorbachev and the breakup of the USSR in the early 1990s; aggressive moves by the US to move NATO into East Europe after promising not to do so; then US efforts to push pro-Russian politicians out of Ukraine in 2006 and the US backed Georgian invasion of South Ossetia, Russia; followed by the US financed coup of 2014 and Russian responses in Crimea and eastern Ukraine and US unilateral withdrawal from the Intermediate Nuclear Weapons (INF) treaty with Russia in 2019 and moving of NATO missile systems into Poland and Romania. Rasmus chronologically describes events since Putin’s public article last summer indicating NATO in Ukraine was a ‘red line’, up to the current maneuvering going on between Biden and Putin since December 2021 and western European leaders’ shuttle diplomacy now underway. Why a Russian invasion is not ‘imminent’, as Biden claims, but is nonetheless still possible. A preview of Dr. Rasmus’ latest article, ’10 Reasons Why the US May Want Russia to Invade Ukraine’ is presented (see his blog, http://jackrasmus.com for the print version)