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It is now clear that today’s escalation of the New Cold War was planned over a year ago, with serious strategy associated with America’s plan to block Nord Stream 2 as part of its aim of blocking Western Europe (“NATO”) from seeking prosperity by mutual trade and investment with China and Russia.

As President Biden and U.S. national-security reports announced, China was seen as the major enemy. Despite China’s helpful role in enabling corporate America to drive down labor’s wage rates by de-industrializing the U.S. economy in favor of Chinese industrialization, China’s growth was recognized as posing the Ultimate Terror: prosperity through socialism.

 

By 

 

 

Socialist industrialization always has been perceived to be the great enemy of the rentier economy that has taken over most nations in the century since World War I ended, and especially since the 1980s. The result today is a clash of economic systems – socialist industrialization vs. neoliberal finance capitalism.

 

 

That makes the New Cold War against China an implicit opening act of what threatens to be a long-drawn-out World War III. The U.S. strategy is to pry away China’s most likely economic allies, especially Russia, Central Asia, South Asia and East Asia. The question was, where to start the carve-up and isolation.

Russia was seen as presenting the greatest opportunity to begin isolating, both from China and from the NATO Eurozone. A sequence of increasingly severe – and hopefully fatal – sanctions against Russia was drawn up to block NATO from trading with it. All that was needed to ignite the geopolitical earthquake was a casus belli.

That was arranged easily enough. The escalating New Cold War could have been launched in the Near East – over resistance to America’s grabbing of Iraqi oil fields, or against Iran and countries helping it survive economically, or in East Africa. Plans for coups, color revolutions and regime change have been drawn up for all these areas, and America’s African army has been built up especially fast over the past year or two. But Ukraine has been subjected to a U.S.-backed civil war for eight years, since the 2014 Maidan coup, and offered the chance for the greatest first victory in this confrontation against China, Russia and their allies.

So the Russian-speaking Donetsk and Luhansk regions were shelled with increasing intensity, and when Russia still refrained from responding, plans reportedly were drawn up for a great showdown to commence in late February – beginning with a blitzkrieg Western Ukrainian attack organized by U.S. advisors and armed by NATO.

Russia’s preemptive defense of the two Eastern Ukrainian provinces and its subsequent military destruction of the Ukrainian army, navy and air force over the past two months has been used as the excuse to start imposing the U.S.-designed sanctions program that we are seeing unfolding today. Western Europe has dutifully gone along whole-hog with what has become a “war of sanctions.” Instead of buying Russian gas, oil and food grains, it will buy these from the United States, along with sharply increased arms imports.

The prospective fall in the Euro/Dollar exchange rate

It therefore is appropriate to look at how this is likely to affect Western Europe’s balance of payments and hence the euro’s exchange rate against the dollar.

European trade and investment prior to the War to Impose Sanctions had promised a rising mutual prosperity between Germany, France and other NATO countries vis-à-vis Russia and China. Russia was providing abundant energy at a competitive price, and this energy was to make a quantum leap with Nord Stream 2. Europe was to earn the foreign exchange to pay for this rising import trade by a combination of exporting more industrial manufactures to Russia and capital investment in developing the Russian economy, e.g. by German auto companies and financial investment. This bilateral trade and investment is now stopped – and will remain stopped for many, many years, given NATO’s confiscation of Russia’s foreign reserves kept in euros and British sterling, and the European Russophobia being fanned by U.S. propaganda media.

In its place, NATO countries will purchase U.S. LNG – but they will need to spend billions of dollars building sufficient port capacity, which may take until perhaps 2024. (Good luck until then.) The energy shortage will sharply raise the world price of gas and oil. NATO countries also will step up their purchases of arms from the U.S. military-industrial complex. The near-panic buying will also raise the price for arms. And food prices also will rise as a result of the desperate grain shortfalls resulting from a cessation of imports from Russia and Ukraine on the one hand, and the shortage of ammonia fertilizer made from gas.

All three of these trade dynamics will strengthen the dollar vis-à-vis the euro. The question is, how will Europe balance its international payments with the United States? What does it have to export that the U.S. economy will accept as its own protectionist interests gain influence, now that global free trade is dying quickly?

The answer is, not much. So what will Europe do?

I could make a modest proposal. Now that Europe has pretty much ceased to be a politically independent state, it is beginning to look more like Panama and Liberia – “flag of convenience” offshore banking centers that are not real “states” because they don’t issue their own currency, but use the U.S. dollar. Since the eurozone has been created with monetary handcuffs limiting its ability to create money to spend into the economy beyond the limit of 3 percent of GDP, why not simply throw in the financial towel and adopt the U.S. dollar, like Ecuador, Somalia and the Turks and Caicos Islands? That would give foreign investors security against currency depreciation in their rising trade with Europe and its export financing.

 

For Europe, the alternative is that the dollar-cost of its foreign debt taken on to finance its widening trade deficit with the United States for oil, arms and food will explode. The cost in euros will be even greater as the currency falls against the dollar. Interest rates will rise, slowing investment and making Europe even more dependent on imports. The eurozone will turn into an economic dead zone.

For the United States, this is Dollar Hegemony on steroids – at least vis-à-vis Europe. The continent would become a somewhat larger version of Puerto Rico.

The dollar vis-à-vis Global South currencies

The full-blown version of the New Cold War triggered by the “Ukraine War” risks turning into the opening salvo of World War III, and is likely to last at least a decade, perhaps two, as the U.S. extends the fight between neoliberalism and socialism to encompass a worldwide conflict. Apart from the U.S. economic conquest of Europe, its strategists are seeking to lock in African, South American and Asian countries along similar lines to what has been planned for Europe.

The sharp rise in energy and food prices will hit food-deficit and oil-deficit economies hard – at the same time that their foreign dollar-denominated debts to bondholders and banks are falling due and the dollar’s exchange rate is rising against their own currency. Many African and Latin American countries – especially North Africa – face a choice between going hungry, cutting back their gasoline and electricity use, or borrowing the dollars to cover their dependency on U.S.-shaped trade.

There has been talk of IMF issues of new SDRs to finance the rising trade and payments deficits. But such credit always comes with strings attached. The IMF has its own policy of sanctioning countries that do not obey U.S. policy. The first U.S. demand will be that these countries boycott Russia, China and their emerging trade and currency self-help alliance. “Why should we give you SDRs or extend new dollar loans to you, if you are simply going to spend these in Russia, China and other countries that we have declared to be enemies,” the U.S. officials will ask.

At least, this is the plan. I would not be surprised to see some African country become the “next Ukraine,” with U.S. proxy troops (there are still plenty of Wahabi advocates and mercenaries) fighting against the armies and populations of countries seeking to feed themselves with grain from Russian farms, and power their economies with oil or gas from Russian wells – not to speak of participating in China’s Belt and Road Initiative that was, after all, the trigger to America’s launching of its new war for global neoliberal hegemony.

The world economy is being enflamed, and the United States has prepared for a military response and weaponization of its own oil and agricultural export trade, arms trade and demands for countries to choose which side of the New Iron Curtain they wish to join.

But what is in this for Europe? Greek labor unions already are demonstrating against the sanctions being imposed. And in Hungary, Prime Minister Viktor Orban has just won an election on what is basically an anti-EU and anti-U.S. worldview, starting with paying for Russian gas in roubles. How many other countries will break ranks – and how long will it take?

What is in this for the Global South countries being squeezed – not merely as “collateral damage” to the deep shortages and soaring prices for energy and food, but as the very objective of U.S. strategy as it inaugurates the great splitting of the world economy in two? India has already told U.S. diplomats that its economy is naturally connected with those of Russia and China. Pakistan finds the same calculus at work.

From the U.S. vantage point, all that needs to be answered is, “What’s in it for the local politicians and client oligarchies that we reward for delivering their countries?”

From its planning stages, U.S. diplomatic strategists viewed the looming World War III as a war of economic systems. What side will countries choose: their own economic interest and social cohesion, or submission to local political leaders installed by U.S. meddling like the $5 billion that Assistant Secretary of State Victoria Nuland bragged of having invested in Ukraine’s neo-Nazi parties eight years ago to initiate the fighting that has erupted into today’s war?

In the face of all this political meddling and media propaganda, how long will it take the rest of the world to realize that there’s a global war underway, with World War III on the horizon? The real problem is that by the time the world understands what is going on, the global fracture will already have enabled Russia, China and Eurasia to create a real non-neoliberal New World Order that does not need NATO countries and which has lost trust and hope for mutual economic gains with them. The military battlefield will be littered with economic corpses.

 

 

READ MORE:

https://www.unz.com/mhudson/the-dollar-devours-the-euro/

 

 

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coupons IOUs...

Siluanov pointed out that, even with the Ministry of Finance’s foreign currency accounts and the Central Bank’s foreign exchange reserves frozen, Russia kept using US dollars while conducting the transactions related to its debt obligations.

Russian Minister of Finance Anton Siluanov has announced that Russia, as a reliable borrower, has done all it could to fulfill its debt obligations.

During an interview with Russian newspaper “Izvestia”, Siluanov explained that Russia has been fulfilling its debt obligations in the currencies in which the borrowing was done, “first and foremost in US dollars”.

 

“And what have we encountered?” the minister inquired. “The Ministry of Finance’s foreign currency accounts were frozen, the Central Bank’s foreign exchange reserves were frozen,” he said.

 

The minister pointed out that, even in that situation, Russia kept using US dollars while conducting the transactions related to its debt obligations.

Earlier this week, the United States stopped Moscow from paying holders of Russia’s sovereign debt over $600 million from reserves held at US banks.

While the foreign currency reserves held by the Russian central bank at US financial institutions were frozen amid the sanctions imposed against Russia by the United States over the military operation Moscow launched in Ukraine in February, the US Treasury Department had been allowing the Russian government to use the frozen funds to make coupon payments on dollar-denominated sovereign debt on a case-by-case basis.

 

READ MORE:

https://sputniknews.com/20220410/russia-has-been-fulfilling-its-foreign-debt-obligations-finance-minister-says-1094652656.html

 

 

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too much of a good thing…….

From The Nation

 

 

What Will It Take to Shrink the Pentagon’s Budget?

 

We have now reached the point in our collective history where we face three certainties: death, taxes, and ever-soaring spending on weaponry and war.

 

By William Astore

 

EDITOR’S NOTE: This article originally appeared at TomDispatch.com. To stay on top of important articles like these, sign up to receive the latest updates from TomDispatch.com.

 

I have a question for you: What would it take in today’s world for America’s military spending to go down? Here’s one admittedly farfetched scenario: Vladimir Putin loses his grip on power and Russia retrenches militarily while reaching out to normalize relations with the West. At the same time, China prudently decides to spend less on its military, pursuing economic power while abandoning any pretense to a militarized superpower status. Assuming such an unlikely scenario, with a “new cold war” nipped in the bud and the United States as the world’s unchallenged global hegemon, Pentagon spending would surely shrink, right? 

Well, I wouldn’t count on it. Based on developments after the Soviet Union’s collapse three decades ago, here’s what I suspect would be far more likely to happen. The US military, aided by various strap-hanging think tanks, intelligence agencies, and weapons manufacturers, would simply shift into overdrive. As its spokespeople would explain to anyone who’d listen (especially in Congress), the disappearance of the Russian and Chinese threats would carry its own awesome dangers, leaving this country prospectively even less safe than before.

You’d hear things like: We’ve suddenly been plunged into a more complex multipolar world, significantly more chaotic now that our “near-peer” rivals are no longer challenging us, with even more asymmetrical threats to US military dominance. The key word, of course, would be “more”—linked, as I’m sure you’ve guessed, to omnipresent Pentagon demands for yet moremilitary spending. When it comes to weapons, budgets, and war, the military-industrial complex’s philosophy is captured by an arch comment of the legendary actress Mae West: “Too much of a good thing can be wonderful.”

 

Even without Russia and China as serious threats to American hegemony, you’d hear again about an “unbalanced” Kim Jong-un in North Korea and his deeply alarming ballistic missiles; you’d hear about Iran and its alleged urge to build nuclear weapons; and, if those two countries proved too little, perhaps the war on terror would be resuscitated. (Indeed, during the ongoing wall-to-wall coverage of Russia’s invasion of Ukraine, North Korea did test a ballistic missile, an event a distracted media greeted with a collective shrug.) My point is this: When you define the entire globe as your sphere of influence, as the US government does, there will always be threats somewhere. It matters little, in budgetary terms, whether it’s terror, most often linked to radical Islam, or the struggle over resources linked to climate change, which the Pentagon has long recognized as a danger, even if it still burns carbon as if there were no tomorrow. And don’t discount a whole new set of dangers in space and cyberspace, the latest realms of combat.

Of course, this country is always allegedly falling behind in some vital realm of weapons research. Right now, it’s hypersonic missiles, just as in the early days of the Cold War bomber and missile “gaps” were falsely said to be endangering our security. Again, when national security is defined as full-spectrum dominance and America must reign supreme in all areas, you can always come up with realms where we’re allegedly lagging and where there’s a critical need for billions more of your taxpayer dollars. Consider the ongoing “modernization” of our nuclear arsenal, at a projected cost approaching $2 trillion over the coming decades. As a jobs program, as well as an advertisement of naked power, it may yet rival the Egyptian pyramids. (Of course, the pyramids became wonders of the world rather than threatening to end it.)

NO PEACE DIVIDENDS FOR YOU

While a young captain in the Air Force, I lived through the fall of the Berlin Wall, the collapse of the Soviet Union, and a romping, stomping performance by our military in the first Gulf War against Iraq in 1991. It felt great! I was teaching history at the Air Force Academy when President George H.W. Bush talked of a “new world order.” On a planet with no Soviet Union and no Cold War, we even briefly heard talk of “peace dividends” to come that echoed the historical response of Americans after prevailing in past wars. In the aftermath of the Civil War, as well as World Wars I and II, rapid demobilization and a dramatic downsizing of the military establishment had occurred.

 

And indeed, there was initially at least some modest shrinkage of our military after the Soviet collapse, though nothing like what most experts had expected. Personnel cuts came first. As a young officer, I well remember the Voluntary Separation Incentive Payments (VSIP) and the Selective Early Retirement Board (SERB). VSIP offered money to entice officers like me to get out early, while SERB represented involuntary retirement for those judged to have overstayed their welcome. Then there was the dreaded RIF, or Reduction in Force, program, which involved involuntary separation without benefits.

 

Yet even as personnel were pruned from our military, the ambitions of the national security state only grew. As I wrote long ago, the United States didn’t just “contain” the Soviet empire during the Cold War; that empire also contained us. With its main enemy in tatters and facing virtually no restraint to its global ambitions, the military-industrial complex promptly began to search for new realms to dominate and new enemies to contain and defeat. Expansion, not shrinkage, soon became the byword, whether in Asia, Africa, or Europe, where, despite promises made to the last of the Soviet Union’s leaders, NATO’s growth took the lead.

So, let’s jump to 1998, just before the initial round of NATO expansion occurred. I’m a major in the Air Force now, on my second tour of teaching history to cadets and I’m attending a seminar on coalition warfare. Its concluding panel focused on the future of NATO and featured four generals who had served at the highest levels of that alliance. I was feverishly taking notes as one of them argued forcefully for NATO’s expansion despite Russian concerns. “Russia has nothing to fear,” he assured us and, far more important, could no longer prevent it. “If the Soviet Union was an anemic tiger, Russia is more like a circus tiger that may growl but won’t bite,” he concluded. Tell that to the people of Ukraine in 2022.

Retired Army Gen. Andrew Goodpaster had a different view. He suggested that the United States could have fostered a peaceful “overarching relationship” with Russia after 1991 but chose antagonism and expansion instead. For him, NATO’s growth was only likely to antagonize a post-Soviet Russia further. Air Force General John Shaud largely agreed, suggesting that the US should work to ensure that Russia didn’t become yet more isolated thanks to such a program of expansion.

In the end, three of those four retired generals urged varying degrees of caution. In an addendum to my notes, I scribbled this: “NATO expansion, from the perspective of many in the West, gathers the flock and unites them against an impending storm. From the Russian perspective, NATO expansion, beyond a certain point, is intolerable; it is the storm.” If three of four former senior NATO commanders and a young Air Force major could see that clearly almost 25 years ago, surely senior government officials of the day could, too.

 

READ MORE:

https://www.thenation.com/article/world/pentagon-budget-ukraine-nato/

 

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europe's fascism…..

The European Union Was Designed to Stifle Democracy
BY
DAVID JAMIESON

Perry Anderson’s critical analysis of the European Union is a devastating indictment of liberal complacency. The EU is undemocratic by design, and we will have to confront it in order to transform a Europe riddled with inequality and exploitation.

 

Today, the structures of European capitalism and the transatlantic alliance should be under scrutiny like never before. After more than a decade of intense economic and political crisis, Western European powers and their US sponsor are now facing off against Russia in a brutal proxy war in Ukraine.

Amid the maelstrom, European powers are rearming at an incredible rate. Germany, so long reticent to commit to its full military potential, has broken its long postwar militarist taboo and tripled its defense budget. At the Conference on the Future of Europe in April, leading politicians voted to deepen integration and launch a joint European armed force, indicating the trend toward even less democracy and even more militarism.

Developments are now underway that will shape the future of European and, indeed, world civilization. However, the appreciation of the European Union from much of the Left has been ambivalent, confused, and ultimately self-destructive.

This failure of reckoning has consequences. Many of those who advanced the most overwrought fantasies about the possibility of EU reform have expressed similar confusions (or rather allegiances) in the wake of Russia’s invasion of Ukraine, though now concerning another pillar of the Western order — NATO.

Today’s Legitimism

What are the intellectual roots of this stupefaction? Ever Closer Union? Europe in the West is the latest book of essays by Perry Anderson about Britain, Europe, and the United States. It seeks to examine the intellectual world of those sympathetic to the prevailing order. Although he completed the book before the February 2022 Russian invasion, the dangers of Euro-American overextension in Eastern Europe were already apparent to Anderson (giving the lie to the idea that the gruesome assault on Ukraine came from nowhere but Vladimir Putin’s black heart).

Ever Closer Union? is a devastating criticism of the ruling liberal hegemony in European society.

What emerges from Ever Closer Union? is a devastating criticism of the ruling liberal hegemony in European society: a chauvinistic worldview with an almost cultic belief in the rights of the powerful and a disdain for democracy. Socialists who want to understand the EU would do well to know the backdrop to this rapidly mutating behemoth.

In a Europe traumatized and exhausted by World War II and then divided by Cold War contestation, capitalism sought a new order. Anderson traces the rise of this order by scrutinizing The Passage to Europe (2009), a celebratory survey of the European Union’s development composed by Dutch historian, sometime EU political operative, and “liberal of the right” Luuk Van Middelaar.

Passage describes the project’s morphology from the six original founding states which drew together in the 1950s to the succession of treaties which created today’s EU in a way that reveals two characteristic phenomena. The first is the essentially closed and undemocratic nature of the union. Decisions in European institutions, as Anderson writes, are made “behind closed doors, in deliberations of which no minutes are kept, that issue in announcements to the world under the seal of consensus.”

This consensus, which governs institutions like the European Council, implies equality and prudence. In reality, it constitutes a united front of Europe’s rulers. Outside the closed loop of decision-making, the public is mere spectator. According to Anderson, “the quiet settling of affairs between elites in camera, above the heads of an inert populace below” troubles Van Middelaar not one bit.

In the tradition of European political thought, Anderson compares Van Middelaar not to Niccolò Machiavelli — who valued the republican ethos of citizenship — but rather to Friedrich Gentz, intellectual of European counterrevolution in the 1800s. Anderson considers the divergences and parallels between today’s EU and the Europe of the post-Napoleonic Restoration:

Composed not of aristocratic monarchies but of electoral democracies, it is in no danger of internecine fighting or revolution. Front lines in the war on terror are on other continents. The commonest arena for nationalism is the football field. Nevertheless, it is equally clear that tension, mostly submerged but sporadically visible, is widespread between the elites and the peoples of Europe, as it was in the days of the Restoration, requiring extra-territorial interventions to keep public order once again. No longer military expeditions of the kind sent to crush Spanish or Italian liberals, these now take economic form: dictates of Berlin, Paris or Frankfurt evicting unsuitable governments in Rome and Athens; commissaries of Brussels invigilating taxes, labour laws, pension systems of other lands for their conformity to neo-liberal principles, today’s legitimism.

Thunderbolts of Integration

The second and related characteristic that emerges from Van Middelaar’s work is what he calls the “coup.” At every great turn in its development, actions that had no license in European treaties and rules promoted the advance of European integration. This began with judicial rulings by the European Court of Justice in 1963 and 1964 that established the primacy of European over national law — “without any warrant in the Treaty of Rome,” as Anderson observes.

Van Middelaar takes special relish in describing a 1985 meeting in Milan of the European Council — which itself became the dominant body of the EU without sanction. Under the guidance of Italian premier Bettino Craxi, the union began to emerge from the European Economic Community through what he cheerfully brands “a coup disguised as a procedural decision.” This sleight of hand opened the way to the Maastricht Treaty of 1992.

For Van Middelaar, the term “coup” does not refer merely to a military seizure of power. It is, as Anderson writes, “an action taken suddenly, by stealth, catching its victims unawares, and confronting them with a fait accompli that cannot be reversed.” As such, it is “not a term associated with any form of democratic politics — just the opposite.” Yet Ever Closer Union? deftly traces an almost occult fascination with the coup in this sense that runs through modern European liberalism.

 

 

READ MORE:
https://jacobinmag.com/2022/05/eu-perry-anderson-ever-closer-union-book-review

 

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