Since we’re ‘checking in’ on various disasters this week, let’s turn to Russia.
From ABC News:
‘Russia has choked off the supplies of cheap natural gas that the continent depended on for years to run factories, generate electricity and heat homes. That has pushed European governments into a desperate scramble for new supplies and for ways to blunt the impact as economic growth slows and household utility bills rise.
‘The crisis deepened when Russia’s state-owned exporter Gazprom said the main pipeline carrying gas to Germany would stay closed, blaming an oil leak and claiming the problems could not be fixed because of sanctions barring many dealings with Russia.’
It’s been seven months since the first wad was shot in the Russo-Ukrainian war.
And the news from the front still comes almost directly from the Ukrainian press releases. Here’s International Business Times with ‘news’ that could have been written six months ago:
- ‘Russian soldiers are losing morale after realizing they may not win the war, says a Ukrainian official
- ‘Russians are also reportedly struggling with resupplying troops with missiles
- ‘Ukrainian authorities say soldiers with Russia’s 127th Regiment refused to participate in the war
- ‘Morale is steadily decreasing among Russian soldiers as Ukraine continues to pound occupied regions in the south in its counteroffensive operations, a Ukrainian official said Monday.’
Maybe the reporter should have asked a Russian official? But they never do. The reporting is entirely one-sided, always flattering the Ukrainian cause.
And what the Ukrainians failed to mention is that their latest counteroffensive is almost certain to fail…and that the Russians are winning the war.
Here, we have no dog in that fight. But we try to connect the dots. And almost everything is connected.
Arch-villain, Vladimir Putin gave us a hint:
‘The economy of imaginary wealth is being replaced by the economy of real and hard assets.’
Replaced? We doubt it. But repriced? Almost certainly.
Ukraine’s serious generals counselled against the Kherson campaign. They saw it as a trap. Russian planes control the air. It would be very hard for Ukrainian forces to sustain a drive into Russian-held territory against attack from Russia’s air force and long-range artillery.
But word on the street is that the Zelensky Government needed to show its European and American enablers that it was still capable of delivering victory. So the attack went forward.
‘Never interrupt when the enemy is making a mistake’, Napoleon had said. The Russians appear to be letting the enemy advance…so it can be cut off and destroyed at their leisure.
Of course, we get our news from the media — just like everyone else. But we’ve learned that if you really want to know what is going on, you have to look a little deeper. Like panning for gold, you have to swirl the news around, separating out the implausible gravel, and hoping to spot a few nuggets.
We only bother because the war bears heavily on the price of energy…which leans on other prices…and ultimately plays a major role in what is likely to be the biggest, most costly mistake ever made by an educated elite…which we will come to later.
Reviewing the record of the last seven months, the first thing that washes out is the Western media’s creation myth: ‘The war is solely the result of Moscow’s brutal invasion; the Ukraine is as innocent as Heidi’.
Not for nothing are the southwestern steppes, bordering Russia, known as ‘The Ukraine’; it means ‘border area’ in Russian. Its present borders are of recent vintage, dictated by three Soviet Union leaders — Lenin, Stalin, and Khrushchev. And its most easterly provinces are inhabited in the majority by Russian speakers who apparently would prefer to be a part of the Russian Federation rather than a government dominated by Ukrainians. The Kiev Government, after an ethnic and political cleansing led by the US in 2014, has been trying to bring them to heel ever since.
Once ‘The Ukraine’ feds were firmly in thrall to NATO and US, they built up the largest army in Europe, with 500,000 soldiers, more than France and England put together. This was a direct challenge to Russia’s version of the Monroe Doctrine and made Mr Putin very uncomfortable. A huge, hostile army, armed with NATO missiles, grew like a cancer on his southern flank. He must have felt that it was time to get out the knife.
And then, the cannons opened, and the Western press closed ranks to protect the Ukraine. Zelensky is an actor. (Among his most notable performances, he once pretended to play the piano with his penis.) He is far more media-savvy than Putin. And the Western media — little more than the propaganda arm of the elite — went to work misinforming the public. Every report told us how the Russians were losing the war.
It was all so familiar. As in Afghanistan, Vietnam, and even the Second World War, reports to the public — and to the US president — were always the same. ‘We’, whoever we were, were winning, and more money and weapons would bring a final and complete victory. In almost every case, the updates were lies. And whatever help the US provided to Ukraine was mostly stolen or wasted. The Grayzone:
‘“The weapons are stolen, the humanitarian aid is stolen, and we have no idea where the billions sent to this country have gone,” a Ukrainian complained.’
As in all of the US’s post-Second World War military adventures, the deeper the US went, the more disastrous the results. And already, the war on the steppes is looking more and more like a Sicilian feud, with caskets needed for all the participants.
While the military and financial aid mostly went into corrupt pockets, the sanctions proved either ineffective…or they backfired. From The Economist:
‘The trouble is that the knockout blow has not materialised. Russia’s GDP will shrink by 6% in 2022, reckons the IMF, much less than the 15% drop many expected in March, or the slump in Venezuela. Energy sales will generate a current-account surplus of $265bn this year, the world’s second-largest after China. After a crunch, Russia’s financial system has stabilised and the country is finding new suppliers for some imports, including China.’
More and more countries are realising that if they want to be safe from US mischief, they need to get out from under the dollar-based international money system. They are looking for alternatives and finding them. Almayadeen.net — ‘Russia moves from SWIFT to more secure mechanisms: Official’:
‘“The unreasonable blocking of all Russian customers by the largest international card payment systems has increased the priority of expanding the geography of using Mir cards. We are actively working on it,” he said.
‘“Negotiations with Azerbaijan, Bahrain, Egypt, India, China, Cuba, Myanmar, Nigeria, Thailand, and other countries are at different stages,” the top Russian diplomat said.
‘He recalled that the Russian payment system is now available in Abkhazia, Armenia, Belarus, Vietnam, Kazakhstan, Kyrgyzstan, Tajikistan, Turkey, Uzbekistan, South Korea, and South Ossetia.’
Where does this lead? The Financial Times takes a guess:
‘Since the 15th century, the last five global empires have issued the world’s reserve currency — the one most often used by other countries — for 94 years on average. The dollar has held reserve status for more than 100 years, so its reign is already older than most.
‘South-east Asia’s largest economies are increasingly settling payments to one another directly, avoiding the dollar. Malaysia and Singapore are among the countries making similar arrangements with China, which is also extending offers of renminbi support to nations in financial distress. Central banks from Asia to the Middle East are setting up bilateral currency swap lines, also with the intention of reducing dependence on the dollar…So don’t be fooled by the strong dollar. The post-dollar world is coming.’
A post-dollar world? Where does that leave the country, whose wealth is based on issuing more and more dollars?
Darned if we know. But we’ll try to figure it out before tomorrow.
For The Daily Reckoning Australia