What are the objectives of the global economic war against Russia? Will the West disconnect Russia from SWIFT? Will Europe and the USA impose more sanctions on Russia? What's happening to the oil prices? Will Syrian President Bashar Assad surrender? Pravda.Ru asked these and other questions in an interview with Ron Holland, author of many best-selling books
It has been a year since the US economic war against Russia began by the West. Which objectives have been set and have they been achieved?
I would suggest the objectives have been three fold but in fact I would date the sanctions war from Friday August 30, 2013. This was when President Putin offered a peaceful alternative at the last moment to stop the US military operation against Bashar al-Assad and Syria that was within hours of starting. Surprisingly the US called off the attack and this set in motion a series of events contrary to the goals of the US administration. I believe both Russia and China covertly played the Treasury debt card in order to protect their client states, Syria and Iran, from the impending US invasion.
I wrote in my September editorial at that time; Did Putin Quietly Play the Debt Card Over Syria that both Russia and China might have covertly played the Treasury debt card in order to protect their allies, Syria and Iran, from an impending US invasion.
Thus the planned Syrian invasion was to first secure the land route to build the Qatar-Turkey pipeline designed to end European dependence on Russian gas and pipelines. Second was to put US forces on the land border of Iran when they had secured Syria in order to ratchet up the pressure on Iran to give in to Washington demands. The third reason was to close any potential base options for the Russian Black Sea Fleet in the Mediterranean on the Syrian coast just prior to the move on Ukraine and Crimea both planned to vacate both the Russia fleet and bases as well as secure the oil and gas shipping pipelines and Black Sea transit. None of these objectives were attained.
Another major defeat was the Washington & London scheme to force Russia out of SWIFT, the Society of Worldwide Interbank Financial Telecommunications, as this entity is how banks globally transfer funds. But on Monday March 9, SWIFT didn't kick Russia out but rather offered Russia a seat on the board.
Now this wasn't because SWIFT was trying to be fair but because the Western controlled entity is now faced with competition from CIPS, the new China International Payment System which Russia plans to join. This will offer a new option allowing global banks to communicate and transfer funds that does not depend on fair treatment or a "hands off" attitude by US politicians.
So although Russia has escaped most of the sanctions and threats to date, the financial costs to Russia have been great for resisting the US, as low oil prices, hence currency war and a growing list of US sanctions have caused Russia to incur significant costs for resisting Washington domination and control.
Because of anti-Russian sanctions the EU lost €21 billion. Such data was given by the Spain's Minister of Foreign Affairs and Cooperation José Manuel García-Margallo y Marfil. When will Europe go the length of lifting sanctions that were imposed under the pressure of the US from your point of view? Or will they be strengthening sanctions?
Well there already appears to be a split between many of the EU nations and Germany and the foreign policy dictates of the United States. While the length and severity of the sanctions are somewhat dependent upon Russian actions regarding the Ukraine, they would certainly strengthen should Russia or the separatist New Russia forces advance further into the Ukraine along the lines. Still ultimately the lifting of sanctions will happen only when the political and economic costs to Europe exceed the pressure that is brought to bear by the United States. My recommendations further down in this interview would cause a quick lifting of sanctions because they threaten the profits of German and European banks to Russian "Swiss style" competition.
Some experts believe that the reason of economic crisis in Russia are not the Western sanctions, but decrease in oil price. What do you think?
While I think it is an organized action by the US and Saudi Arabia, it's success to date in dramatically lowering oil prices has been possible because of the global recession and worldwide drop in demand for oil. The price of oil would have pulled back in any case but the policy has made the downtrend worse and of a longer duration.
But understand this is a complicated situation not just aimed at Russia as this also dramatically cuts revenue for Iran another nation in opposition to US hegemony. Also Sunni Saudi Arabia rightly fears Shia Iran, as most of the Saudi oil resources are right across the Persian Gulf from Iran including the world's largest, the Ghawer field and most of the 15% Saudi Shite minority population lives in the area where the reserves are located. Remember the Shite/Sunni divide in Islam makes the Israel/Arab conflict pale in comparison and the Saudi Shites are treated quite badly so they and the Saudi oil reserves could become a fertile ground for Iranian actions.
Is it an organized act by the US and Saudi Arabia? If it is so, then Obama deliberately endangered the shale miracle in the US, didn't he?
Yes, as I answered in the question above it is an organized act by the US and Saudi Arabia but the leadership of Saudi Arabia jumped both at the chance to close the fracking and shale oil production competition in the United States as well as to put pressure on their arch enemy Iran.
Also much of the oil production industry votes and supports Republican candidates rather than the Democrats so Obama is not paying a huge political price. Finally although shale oil production is not profitable unless oil is near $100 a barrel, the public had already loaded up on these junk bonds and Wall Street had made their money so it was time to fleece the unsophisticated investors. Regardless of US shale oil production or losses, the opportunity to bring financial pressure against Iran and Russia was worth the cost to the Washington political leadership.
What is needed for the oil price starting to rise at last? Tyler Durden believes that it is Putin who should surrender Bashar al-Assad, who does not give permission for gas pipeline installation from Qatar to Europe. Do you agree?
It is too late to surrender Bashar al-Assad and allow the Qatar pipeline as Washington has bigger fish to fry, ie. Russia and Iran the last major energy suppliers outside of US domination and control. Two events have to happen before oil gets expensive again.
First, the price of oil will rise when the global recession has ended and the world economy picks up again. I believe the recession in China and the rest of the world is just starting and it is related to overhanging amount of government debt and bonds floating around the world. I really don't know how governments and the central banks get us out of the looming debt crisis without wholesale debt repudiation.
Second, Washington must decide that the disadvantages of artificially low oil prices hurt the US economy more than the intended victims Iran and Russia.
As for Germany and the EU, Hitler's violent goal of lebensraum for living spaces to farm, trade and grow food for the Reich at the expense of the Russian people has today been modernized to a longing for Russian natural resources ranging from timber, mining to oil and gas in order to benefit Europe and Washington. I believe their goal is economic rather than a military threat and this is just an expansion of an ongoing natural resource grab outside the Middle East as the long-term challenge for world supremacy between Washington & Wall Street VS China and the Asian tigers slowly develop.
The issuance of unredeemable government debt and bonds are the ultimate control mechanism by the Western interests utilized in order to keep politicians, national leaders and nations in line and march in lockstep to their economic programs. Russia under Putin is not over indebted like almost all other western nations thus allowing Putin to exercise leadership independent of European and Washington demands and this makes Russia in their eyes a threat to the continuation of the fake debt democracy system across the West.
The ultimate goal is to destabilize Russia by destroying the economy and limiting government revenue and growth by holding oil prices at historically low levels. To do this they must depose Putin, the national leader with the highest poll approval rating in the world and replace him with a compliant quisling type of leadership submissive to western interests as has been done in Ukraine. This goal could be achieved due to Russia's extreme over dependence on energy resource revenue.
In my view it wasn't the arms race, total failure of Russian communism to benefit the masses nor the inability to compete with the western market economies that overthrew the communist party leadership in the former Soviet Union and the rest of the Warsaw Pact countries. Rather it was the government debt burden of Moscow and it's other eastern European client states that eventually destroyed the Eastern Bloc as political leaders increasingly tried to improve their low standards of living and satisfy consumers through government borrowing from western banks.
This policy worked for the West and the Soviet style communism is thankfully no more but this is the same policy used today by Washington and in the European Union in order to control the destiny and leadership of what should be independent national governments. As you see with Greece, even in voting democracies where the citizens demand a change, there can be no change because all politicians are subservient to powerful foreign banking interests.
I would suggest that Washington is indeed acting rationally if their goal is to preserve their power base as well as the support of powerful banking and economic interests. The US Empire has indeed reached it's zenith of power and authority in the world and as America heads downhill as have all major empires in the past. Therefore it is crucial to buy time by attempting to conquer or control energy resources around the world hence why the US is involved across the Middle East and increasingly in the Ukraine and is surrounding Russia and Iran.
Their goal for Russia, now the ultimate ally of a resurgent China is economic vassalage, territorial dismemberment and the development of "spheres of influence" just like Great Britain did to India and the western countries including Russia did to a weakened China in the 19th century.
Will Putin go the length of it?
Well this is a tough question for a non-Russian to comment on. He is the best politician on the planet evidenced by his poll numbers and there is no question he is a patriot and wants the best for his country, the people and of course your powerful oligarchs.
I love the Washington propaganda always lambasting the evil Russian oligarchs because every country including the United States have their own powerful interests or oligarchs that seek to use government as a tool for their best interests. This is nothing new or sinister as government and politicians everywhere have always operated this way.
Yes, I believe Putin and Russia will survive this attack on Russian sovereignty and it's over emphasis on energy resource revenue which is a mistake made by Russia not by western interests. This economic war will end in stalemate because Russia cannot be subdued by invasion, history shows us that and the increasing alliance with China and other BRICS will help with better economic growth.
But I don't consider a standoff as a victory for Putin or Russia. It is just maintaining the status quo with Russia still at risk from western expansionism and the control of your natural resources. Russia is now engaged in an asymmetrical war with the American and European Union primarily over resources and the strategy and tactics really differ between the West and Russia. Washington failed in goading Russia into a military invasion of Ukraine as this could have drawn in other European nations thus further weakening the Russian economy but the economic, currency and financial warfare will continue hopefully short of military action.
To date Russia only reacts to western sanctions and economic warfare against your energy industry thus there is neither real pain for the west nor any reason for them not to ratchet up the sanctions against individuals, banking and other interests. They are logically attacking your weakest link, the energy and financial sectors and they certainly do not expect a major response from your side. Still dumping Treasury debt by Russia or China would probably be counter productive and both nations would be smart of liquidate US dollar debt in an organized regular fashion during this near term period of tremendous dollar strength. This is probably your last chance to unload US Treasury debt at a profit.
A defensive war strategy even in an economic war is not a recipe for victory but rather a guarantor of future wars or ultimate defeat. Putin and Russia can win this economic war quite easily if you think and act outside the box so to speak. The West is legitimately attacking your economy at its weakest link, your over dependence on the energy sector hence why low oil prices and the gas pipeline revolution in the Ukraine were smart moves by your energy adversaries.
Utilize your strengths and western weaknesses in your peaceful economic and financial responses to the challenges they have made to your country. I've spent my entire career in the financial industry and this is not rocket science on how to successfully counter western political moves against you.
The weakness of the Western banking and economic interests are massive government debt, the end of the dollar as the world reserve currency and nationalism within the EU. There is no way citizens or companies can escape the high taxes, massive debt service costs and the inability of citizens or companies within Europe to escape their high tax, regulatory environment that is killing the economy of Europe in order to defend the primarily German banking interests. Financial privacy and all wealth in Europe are at risk from future bail-ins where depositor's funds are used to pay for excessive bank lending losses. We've already seen it in Cyprus and soon it will happen in Greece and the PIGGS countries.
To win, you must have other powerful economic interests outside Russia who can benefit and profit from a sovereign independent Russia. The US has destroyed financial privacy and confidentially around the world and no nation can stand up to their powerful threats to other banking interests which means the private wealth of the entire West will eventually be at risk of bank bail-ins, confiscation of retirement funds and confiscatory tax rates when the bond crisis finally hit because there is no secure alternative to protecting honest earned wealth.
As I've written in earlier editorials, Russia can win the financial/energy/economic war only by finding new sources of revenue outside the energy sector and playing on its unique strengths. A low tax rate and friendly regulatory environment to attract European/American industry and money is a start. It appears Russia is now moving to offer economic citizenships and tax advantages in order to attract entrepreneurs as I wrote a couple of months ago and this will help.
For example, I'm a skier and where can you ski in the winter and enjoy a tropical climate the other 6 months outside of a couple of very expensive locations in Switzerland, Italy and France? You have skiing at Krasnaya Polyana less than an hour from Sochi on the Russian Riviera the site of the 2014 Olympics that could become another Hong Kong with the climate advantages and low taxes and secure banking opportunities. Plus you have a relatively empty Olympic village that could be remodeled into condos and flats for foreign entrepreneurs and investors.
Finally Russia must get aggressive in the economic war. You can win this economic contest in 24 months, if certain special zones in Russia simply are allowed to copy Swiss banking rules and regulations, as wealth will always flow to secure locations where taxes are low. You know what banking privacy and security did for Switzerland, it made a poor country with few natural resources the wealthiest nation in the world. You will have foreign banks and financial institutions lining up to open offices in Russia if you can guarantee financial privacy to a degree and wealth protection in total.
This will break the monopoly of West in financial and banking as well as their power to threaten you. The coming bond debacle guarantees this will work as I've written earlier every nation has wealthy interests and their own oligarchs so why not build support for Russia from wealthy foreigners as they transfer a portion of their wealth as taxable income at a very low rate to your nation. This will end the economic war.
Will there be set peace in Ukraine in the near future? Which role will the US have in it?
No the Ukraine is caught between competing sides in the East VS West conflict. Sadly it will likely end up like Libya, Iraq and Afghanistan as a battleground and non functioning state at least economically and maybe militarily caught between the US and EU verses Russia. Russia will protect the Russian speakers and likely will open a land route to the Crimea and maybe as far west as Odessa thus cutting off the Ukraine from the Black Sea. Still all Russia needs is a Ukraine non-aligned with the West or a member of NATO. The US will continue to promote instability in the Ukraine for the foreseeable future.
Ronald Holland is the author of several books as well as numerous special reports and hundreds of articles on finance, investments, history and politics. He speaks and moderates frequently at financial and free-market conferences and has developed Swiss oriented financial products in the US and Switzerland and his lived and worked in the US, Switzerland and Canada. He was head of a bank trust department, president of an investment firm licensed in 47 states and involved in resort real estate marketing and sales. He consults with a wide range of individuals, corporations and entities. Ron Holland can be reached at email@example.com
Russian nuclear-powered submarine Orel was left dead in the water off the coast of the Danish island of Sehero