That same old American institution called the United States Agency for International Development (USAID) who supports regime change and wars across the world has a board member who wrote an opinion piece for The Hill, a liberal online news organization on the relevance of the rules-based order and how much the world needs it. Harley Lippman, a board member for USAID wrote about how the rules-based order (New World Order) will continue despite the challenges of a multipolar world and the peace dividends it has brought to the table thus far. Lippman’s claims about where the rules-based order stands in this new world of geopolitics is propaganda at its best, so you might already know where this article is going since the liberal media is absolutely pro-establishment and pro-war.
Lippman wrote an opinion piece called ‘The rules-based order will endure, despite ‘shifting sands’ based on Russia and China’s achievements that includes establishing a diplomatic solution between Iran and Saudi Arabia and bringing back Syria into the fold with the rest of the Middle East which is a big deal, but to Lippman, it “rings hollow”, its insincere:
Russia and China recently have attempted to act as chief mediators on the international stage. Russia reportedly facilitated meetings between Saudi Arabia and Syria to restore ties and reopen their respective consular services, and China played peacemaker between Saudi Arabia and Iran. More recently, Saudi Arabia’s Cabinet approved a decision to join the Shanghai Cooperation Organization (SCO) as a dialogue partner. The SCO was created to counter U.S. economic hegemony and includes longtime adversaries and partners of our country. These recent developments have been described by some as evidence of the decline of the U.S.-led rules-based order.
Despite the clamoring of pundits to bemoan America’s decline, Moscow and Beijing’s attempts at diplomatic relevance ring hollow as the U.S. shores up the post-World War II international order by reinvigorating existing strategic alliances that underpin various security architectures
Lippman says that the US-led rules-based order is in decline but at the same time, it is working on replenishing its old alliances as a counterweight to Russia and China even though they were able to forge a peaceful solution among nations who were at odds against each other at one time or another. However, Russia and China are trying to establish real peaceful solutions among nations and that should be welcomed by the international community. Lippman says that “the U.S. values its alliance with Japan and South Korea in the Asia-Pacific to serve as a counterweight to an increasingly belligerent China.” A belligerent China? How many military bases does the US have around the world? In fact, how many of these bases surround China? China’s peace initiatives should be welcomed at all costs. Bringing peace is a good thing while the US and its Western allies (and Israel) has brought endless wars and chaos on almost every continent on the planet, in fact the US war machine has killed more than 20 million people since World War II. In other words, when Lippman says that the US “values” its alliance with Japan and South Korea, he is talking about the continuation of selling them military hardware and keeping the same US bases in place to counter China’s growing influence in the region so that the US war machine can keep antagonizing China in the South Pacific sea at all costs even if it means starting a war.
Lippman also takes aim at Russia, “Correspondingly, America’s role in NATO is pivotal to the West’s efforts to face off an aggressive Russia that threatens the security of Europe and the Balkans.” Seriously? Wasn’t Ukraine’s continuous bombardment of the Eastern Donbass region for more than 8 years killing at least 8,000 Ukrainian people who spoke Russian an aggressive action that was and still is supported by the US-NATO alliance?
The US has used its alliances to counter Russia and China as part of the old rules-based order strategy of divide and conquer in Asia and Eastern Europe. In other words, he wants Washington to keep the same policies of funding and arming one-side against another to advance the US war machine and continue the rules-based order to establish their Great Reset agenda.
Concerning the Middle East, Russia and China also have a wide range of interests with Iran, therefore that arrangement angers the US political establishment and their bosses who are based in Israel, and that’s the other problem for Lippman:
In contrast to America’s values-based approach to allies and partners, engagement with Russia and China offers only a transactional and interest-based relationship that rests on economic ties both countries share equally with such aggressors as Iran and Iran’s proxies
Russia and China’s strategic partnership with Iran, Syria and now Saudi Arabia bypasses US interests in the region so for most of the people in the Middle East, it’s a new development that is welcomed in a region that has only experienced regime change and endless wars that the US and its closest ally, Israel sponsored and at times participated in since the end of World War II:
Riyadh’s decision to restore diplomatic relations with Tehran via China is an attempt to reduce regional tensions with an aggressive neighbor committed to militant Islam and regional hegemony. In the near term, Tehran will likely seek to avoid actions that threaten this new relationship. However, absent an Iranian decision to radically redefine its foreign policy and abolish the Revolutionary Guards, this rapprochement is likely to collapse in the wake of fresh Iranian violence
First, let me start by saying that Iran is not looking to expand into a hegemonic footprint in the Middle East, it is Israel who is looking to expand its territorial ambitions by hoping to destroy all its Arab neighbors’ piece by piece and carry-out Oded Yinon’s plan or what is known as the “Greater Israel” project. Rabbi Fischmann, a member of the Jewish Agency for Palestine testified to the U.N. Special Committee of Enquiry on July 9th, 1947, said that “the Promised Land extends from the River of Egypt up to the Euphrates, it includes parts of Syria and Lebanon.” But Iran is the aggressor? The rules-based order will continue if the U.S. Central Command (CENTCOM) focuses on its security commitments according to Lippman:
America’s security commitment to the region must be paramount. U.S. Central Command (CENTCOM) remains the foundation of the region’s security architecture that protects trade and energy arteries critical to global economic stability. The Biden administration should ensure that CENTCOM remains well-resourced and focused on building regional partnerships. Furthermore, economic ties must be strengthened. American firms view the region with enthusiasm. The Biden administration must be more vocal in its support for trade and expedite approvals for technology sharing on 5G and 6G communications, green energy, and space. Furthermore, increased cabinet-level visits to the region would demonstrate the U.S.’s commitment to the region. While this will not offset the inevitable commercial relationships between the Gulf States and China, it will assert America’s ability to compete in this strategic region
Using the Sunni-Shiite argument is propaganda to further instigate that there is a sectarian divide in the Arab world for thousands of years’, and the threat of a nuclear-armed Iran and because of that, the US security structure under CENTCOM will remain in place since the US and Saudi Arabia has a long-standing relationship. China’s peace deal between Iran and Saudi Arabia is what he calls “cosmetic”, and that China has no place for its peace initiative in the Middle East:
Despite the region’s “shifting sands” of ever-changing relationships, the Sunni-Shiite tensions are over a thousand years old and Iran’s advancement toward nuclear status has every U.S. partner in the Middle East on alert. The traditional security architecture underpinned by U.S.-Saudi strategic ties will remain intact. As a result, future Chinese transactional neutrality is likely to be cosmetic, devoid of any significant strategic substance.
The U.S. and its allies can best sustain the rules-based order established after WWII through robust engagement with allies and partners in which we show that we understand and support their core economic and security interests in the same way that we expect they will do the same for American interests
Tell that to the families of the 20 million people that US and its NATO allies killed since the end of World War II. The old rules-based order has collapsed in the face of a new multipolar world, as for Harley Lippman’s vision for the US and its globalist cabal to continue its hegemonic agenda in this new world of ours, is just wishful thinking.
A nightmare scenario of U.S. geopolitical strategists is coming true: foreign independence from U.S.-centered financial and diplomatic control. China and Russia are investing in neighboring economies on terms that cement Eurasian integration on the basis of financing in their own currencies and favoring their own exports. They also have created the Shanghai Cooperation Organization (SCO) as an alternative military alliance to NATO.[1] And the Asian Infrastructure Investment Bank (AIIB) threatens to replace the IMF and World Bank tandem in which the United States holds unique veto power.
More than just a disparity of voting rights in the IMF and World Bank is at stake. At issue is a philosophy of development. U.S. and other foreign investment in infrastructure (or buyouts and takeovers on credit) adds interest rates and other financial charges to the cost structure, while charging prices as high as the market can bear (think of Carlos Slim’s telephone monopoly in Mexico, or the high costs of America’s health care system), and making their profits and monopoly rents tax-exempt by paying them out as interest.
By contrast, government-owned infrastructure provides basic services at low cost, on a subsidized basis, or freely. That is what has made the United States, Germany and other industrial lead nations so competitive over the past few centuries. But this positive role of government is no longer possible under World Bank/IMF policy. The U.S. promotion of neoliberalism and austerity is a major reason propelling China, Russia and other nations out of the U.S. diplomatic and banking orbit.
On December 3, 2015, Prime Minister Putin proposed that Russia “and other Eurasian Economic Union countries should kick-off consultations with members of the SCO and the Association of Southeast Asian Nations (ASEAN) on a possible economic partnership.”[2] Russia also is seeking to build pipelines to Europe through friendly secular countries instead of Sunni jihadist U.S.-backed countries locked into America’s increasingly confrontational orbit.
Russian finance minister Anton Siluanov points out that when Russia’s 2013 loan to Ukraine was made, at the request of Ukraine’s elected government, Ukraine’s “international reserves were barely enough to cover three months’ imports, and no other creditor was prepared to lend on terms acceptable to Kiev. Yet Russia provided $3 billion of much-needed funding at a 5 per cent interest rate, when Ukraine’s bonds were yielding nearly 12 per cent.”[3]
What especially annoys U.S. financial strategists is that this loan by Russia’s National Wealth Fund was protected by IMF lending practice, which at that time ensured collectability by withholding credit from countries in default of foreign official debts, or at least not bargaining in good faith to pay. To cap matters, the bonds are registered under London’s creditor-oriented rules and courts.
Most worrisome to U.S. strategists is that China and Russia are denominating their trade and investment in their own currencies instead of dollars. After U.S. officials threatened to derange Russia’s banking linkages by cutting it off from the SWIFT interbank clearing system, China accelerated its creation of the alternative China International Payments System (CIPS), and its own credit card system to protect Eurasian economies from the threats made by U.S. unilateralists.
Russia and China are simply doing what the United States has long done: using trade and credit linkages to cement their diplomacy. This tectonic geopolitical shift is a Copernican threat to New Cold War ideology: Instead of the world economy revolving around the United States (the Ptolemaic idea of America as “the indispensible nation”), it may revolve around Eurasia. As long as global financial control remains grounded in Washington at the offices of the IMF and World Bank, such a shift in the center of gravity will be fought with all the power of an American Century (and would-be American Millennium) inquisition.
Any inquisition needs a court system and enforcement vehicles. So does resistance to such a system. That is what today’s global financial, legal and trade maneuvering is all about. And that is why today’s world system is in the process of breaking apart. Differences in economic philosophy call for different institutions.
To U.S. neocons the specter of AIIB government-to-government investment creates fear of nations minting their own money and holding each other’s debt in their international reserves instead of borrowing dollars, paying interest in dollars and subordinating their financial planning to the U.S. Treasury and IMF. Foreign governments would have less need to finance their budget deficits by selling off key infrastructure. And instead of dismantling public spending, a broad Eurasian economic union would do what the United States itself practices, and seek self-sufficiency in banking and monetary policy.
Imagine the following scenario five years from now. China will have spent half a decade building high-speed railroads, ports, power systems and other construction for Asian and African countries, enabling them to grow and export more. These exports will be coming online to repay the infrastructure loans. Also, suppose that Russia has been supplying the oil and gas energy for these projects on credit.
To avert this prospect, suppose an American diplomat makes the following proposal to the leaders of countries in debt to China, Russia and the AIIB: “Now that you’ve got your increased production in place, why repay? We’ll make you rich if you stiff our adversaries and turn back to the West. We and our European allies will support your assigning your nations’ public infrastructure to yourselves and your supporters at insider prices, and then give these assets market value by selling shares in New York and London. Then, you can keep the money and spend it in the West.”
How can China or Russia collect in such a situation? They can sue. But what court in the West will accept their jurisdiction?
That is the kind of scenario U.S. State Department and Treasury officials have been discussing for more than a year. Implementing it became more pressing in light of Ukraine’s $3 billion debt to Russia falling due by December 20, 2015. Ukraine’s U.S.-backed regime has announced its intention to default. To support their position, the IMF has just changed its rules to remove a critical lever on which Russia and other governments have long relied to ensure payment of their loans.
The IMF’s role as enforcer of inter-government debts
When it comes to enforcing nations to pay inter-government debts, the IMF is able to withhold not only its own credit but also that of governments and global bank consortia participating when debtor countries need “stabilization” loans (the neoliberal euphemism for imposing austerity and destabilizing debtor economies, as in Greece this year). Countries that do not privatize their infrastructure and sell it to Western buyers are threatened with sanctions, backed by U.S.-sponsored “regime change” and “democracy promotion” Maidan-style. The Fund’s creditor leverage has been that if a nation is in financial arrears to any government, it cannot qualify for an IMF loan – and hence, for packages involving other governments. That is how the dollarized global financial system has worked for half a century. But until now, the beneficiaries have been U.S. and NATO lenders, not been China or Russia.
The focus on a mixed public/private economy sets the AIIB at odds with the Trans-Pacific Partnership’s aim of relinquishing government planning power to the financial and corporate sector, and the neoliberal aim of blocking governments from creating their own money and implementing their own financial, economic and environmental regulation. Chief Nomura economist Richard Koo, explained the logic of viewing the AIIB as a threat to the U.S.-controlled IMF: “If the IMF’s rival is heavily under China’s influence, countries receiving its support will rebuild their economies under what is effectively Chinese guidance, increasing the likelihood they will fall directly or indirectly under that country’s influence.”[4]
This was the setting on December 8, when Chief IMF Spokesman Gerry Rice announced: “The IMF’s Executive Board met today and agreed to change the current policy on non-toleration of arrears to official creditors.” Russian Finance Minister Anton Siluanov accused the IMF decision of being “hasty and biased.”[5] But it had been discussed all year long, calculating a range of scenarios for a sea change in international law. Anders Aslund, senior fellow at the NATO-oriented Atlantic Council, points out:
The IMF staff started contemplating a rule change in the spring of 2013 because nontraditional creditors, such as China, had started providing developing countries with large loans. One issue was that these loans were issued on conditions out of line with IMF practice. China wasn’t a member of the Paris Club, where loan restructuring is usually discussed, so it was time to update the rules.
The IMF intended to adopt a new policy in the spring of 2016, but the dispute over Russia’s $3 billion loan to Ukraine has accelerated an otherwise slow decision-making process.[6]
The target was not only Russia and its ability to collect on its sovereign loan to Ukraine, but China even more, in its prospective role as creditor to African countries and prospective AIIB borrowers, planning for a New Silk Road to integrate a Eurasian economy independent of U.S. financial and trade control. The Wall Street Journal concurred that the main motive for changing the rules was the threat that China would provide an alternative to IMF lending and its demands for crushing austerity. “IMF-watchers said the fund was originally thinking of ensuring China wouldn’t be able to foil IMF lending to member countries seeking bailouts as Beijing ramped up loans to developing economies around the world.”[7] So U.S. officials walked into the IMF headquarters in Washington with the legal equivalent of suicide vests. Their aim was a last-ditch attempt to block trade and financial agreements organized outside of U.S. control and that of the IMF and World Bank.
The plan is simple enough. Trade follows finance, and the creditor usually calls the tune. That is how the United States has used the Dollar Standard to steer Third World trade and investment since World War II along lines benefiting the U.S. economy. The cement of trade credit and bank lending is the ability of creditors to collect on the international debts being negotiated. That is why the United States and other creditor nations have used the IMF as an intermediary to act as “honest broker” for loan consortia. (“Honest broker” means being subject to U.S. veto power.) To enforce its financial leverage, the IMF has long followed the rule that it will not sponsor any loan agreement or refinancing for governments that are in default of debts owed to other governments. However, as the afore-mentioned Aslund explains, the IMF could easily
change its practice of not lending into [countries in official] arrears … because it is not incorporated into the IMF Articles of Agreement, that is, the IMF statutes. The IMF Executive Board can decide to change this policy with a simple board majority. The IMF has lent to Afghanistan, Georgia, and Iraq in the midst of war, and Russia has no veto right, holding only 2.39 percent of the votes in the IMF. When the IMF has lent to Georgia and Ukraine, the other members of its Executive Board have overruled Russia.[8]
After the rules change, Aslund later noted, “the IMF can continue to give Ukraine loans regardless of what Ukraine does about its credit from Russia, which falls due on December 20.[9]
The IMF rule that no country can borrow if it is in default to a foreign government was created in the post-1945 world. Since then, the U.S. Government, Treasury and/or U.S. bank consortia have been party to nearly every major loan agreement. But inasmuch as Ukraine’s official debt to Russia’s National Wealth Fund was not to the U.S. Government, the IMF announced its rules change simply as a “clarification.” What its rule really meant was that it would not provide credit to countries in arrears to the U.S. government, not that of Russia or China.
It remains up to the IMF board – and in the end, its managing director – whether or not to deem a country creditworthy. The U.S. representative can block any foreign leaders not beholden to the United States. Mikhail Delyagin, Director of the Institute of Globalization Problems, explained the double standard at work: “The Fund will give Kiev a new loan tranche on one condition: that Ukraine should not pay Russia a dollar under its $3 billion debt. … they will oblige Ukraine to pay only to western creditors for political reasons.”[10]
The post-2010 loan packages to Greece are a case in point. The IMF staff saw that Greece could not possibly pay the sums needed to bail out French, German and other foreign banks and bondholders. Many Board members agreed, and have gone public with their whistle blowing. Their protests didn’t matter. President Barack Obama and Treasury Secretary Tim Geithner pointed out that U.S. banks had written credit default swaps betting that Greece could pay, and would lose money if there were a debt writedown). Dominique Strauss-Kahn backed the hard line US- European Central Bank position. So did Christine Lagarde in 2015, overriding staff protests.[11]
Regarding Ukraine, IMF executive board member Otaviano Canuto, representing Brazil, noted that the logic that “conditions on IMF lending to a country that fell behind on payments [was to] make sure it kept negotiating in good faith to reach agreement with creditors.”[12] Dropping this condition, he said, would open the door for other countries to insist on a similar waiver and avoid making serious and sincere efforts to reach payment agreement with creditor governments.
A more binding IMF rule is Article I of its 1944-45 founding charter, prohibiting the Fund from lending to a member state engaged in civil war or at war with another member state, or for military purposes in general. But when IMF head Lagarde made the last loan to Ukraine, in spring 2015, she merely expressed a vapid token hope there might be peace. Withholding IMF credit could have been a lever to force peace and adherence to the Minsk agreements, but U.S. diplomatic pressure led that opportunity to be rejected. President Porochenko immediately announced that he would step up the civil war with the Russian-speaking population in the eastern Donbass region.
The most important IMF condition being violated is that continued warfare with the East prevents a realistic prospect of Ukraine paying back new loans. The Donbas is where most Ukrainian exports were made, mainly to Russia. That market is being lost by the junta’s belligerence toward Russia. This should have blocked Ukraine from receiving IMF aid. Aslund himself points to the internal contradiction at work: Ukraine has achieved budget balance because the inflation and steep currency depreciation has drastically eroded its pension costs. But the resulting decline in the purchasing power of pension benefits has led to growing opposition to Ukraine’s post-Maidan junta. So how can the IMF’s austerity budget be followed without a political backlash? “Leading representatives from President Petro Poroshenko’s Bloc are insisting on massive tax cuts, but no more expenditure cuts; that would cause a vast budget deficit that the IMF assesses at 9-10 percent of GDP, that could not possibly be financed.”[13]
By welcoming and financing Ukraine instead of treating as an outcast, the IMF thus is breaking four of its rules:
Not to lend to a country that has no visible means to pay back the loan. This breaks the “No More Argentinas” rule, adopted after the IMF’s disastrous 2001 loan.
Not to lend to a country that repudiates its debt to official creditors. This goes against the IMF’s role as enforcer for the global creditor cartel.
Not to lend to a borrower at war – and indeed, to one that is destroying its export capacity and hence its balance-of-payments ability to pay back the loan.
Finally, not to lend to a country that is not likely to carry out the IMF’s austerity “conditionalities,” at least without crushing democratic opposition in a totalitarian manner.
The upshot – and new basic guideline for IMF lending – is to split the world into pro-U.S. economies going neoliberal, and economies maintaining public investment in infrastructure n and what used to be viewed as progressive capitalism. Russia and China may lend as much as they want to other governments, but there is no global vehicle to help secure their ability to be paid back under international law. Having refused to roll back its own (and ECB) claims on Greece, the IMF is willing to see countries not on the list approved by U.S. neocons repudiate their official debts to Russia or China. Changing its rules to clear the path for making loans to Ukraine is rightly seen as an escalation of America’s New Cold War against Russia and China.
Timing is everything in such ploys. Georgetown University Law professor and Treasury consultant Anna Gelpern warned that before the “IMF staff and executive board [had] enough time to change the policy on arrears to official creditors,” Russia might use “its notorious debt/GDP clause to accelerate the bonds at any time before December, or simply gum up the process of reforming the IMF’s arrears policy.”[14] According to this clause, if Ukraine’s foreign debt rose above 60 percent of GDP, Russia’s government would have the right to demand immediate payment. But President Putin, no doubt anticipating the bitter fight to come over its attempts to collect on its loan, refrained from exercising this option. He is playing the long game, bending over backward to behave in a way that cannot be criticized as “odious.”
A more immediate reason deterring the United States from pressing earlier to change IMF rules was the need to use the old set of rules against Greece before changing them for Ukraine. A waiver for Ukraine would have provided a precedent for Greece to ask for a similar waiver on paying the “troika” – the European Central Bank (ECB), EU commission and the IMF itself – for the post-2010 loans that have pushed it into a worse depression than the 1930s. Only after Greece capitulated to eurozone austerity was the path clear for U.S. officials to change the IMF rules to isolate Russia. But their victory has come at the cost of changing the IMF’s rules and those of the global financial system irreversibly. Other countries henceforth may reject conditionalities, as Ukraine has done, as well as asking for write-downs on foreign official debts.
That was the great fear of neoliberal U.S. and Eurozone strategists last summer, after all. The reason for smashing Greece’s economy was to deter Podemos in Spain and similar movements in Italy and Portugal from pursuing national prosperity instead of eurozone austerity. “Imagine the Greek government had insisted that EU institutions accept the same haircut as the country’s private creditors,” Russian finance minister Anton Siluanov asked. “The reaction in European capitals would have been frosty. Yet this is the position now taken by Kiev with respect to Ukraine’s $3 billion eurobond held by Russia.”[15]
The consequences of America’s tactics to make a financial hit on Russia while its balance of payments is down (as a result of collapsing oil and gas prices) go far beyond just the IMF. These tactics are driving other countries to defend their own economies in the legal and political spheres, in ways that are breaking apart the post-1945 global order.
Countering Russia’s ability to collect in Britain’s law courts
Over the past year the U.S. Treasury and State Departments have discussed ploys to block Russia from collecting by suing in the London Court of International Arbitration, under whose rules Russia’s bonds issued to Ukraine are registered. Reviewing the excuses Ukraine might use to avoid paying Russia, Prof. Gelpern noted that it might declare the debt “odious,” made under duress or corruptly. In a paper for the Peterson Institute of International Economics (the banking lobby in Washington) she suggested that Britain should deny Russia the use of its courts as a means of reinforcing the financial, energy and trade sanctions passed after Crimea voted to join Russia as protection against the ethnic cleansing from the Right Sector, Azov Battalion and other paramilitary groups descending on the region.[16]
A kindred ploy might be for Ukraine to countersue Russia for reparations for “invading” it and taking Crimea. Such a claim would seem to have little chance of success (without showing the court to be an arm of NATO politics), but it might delay Russia’ ability to collect by tying the loan up in a long nuisance lawsuit. But the British court would lose credibility if it permits frivolous legal claims (called barratry in English) such as President Poroshenko and Prime Minister Yatsenyuk have threatened.
To claim that Ukraine’s debt to Russia was “odious” or otherwise illegitimate, “President Petro Poroshenko said the money was intended to ensure Yanukovych’s loyalty to Moscow, and called the payment a ‘bribe,’ according to an interview with Bloomberg in June this year.”[17] The legal and moral problem with such arguments is that they would apply equally to IMF and U.S. loans. They would open the floodgates for other countries to repudiate debts taken on by dictatorships supported by IMF and U.S. lenders.
As Foreign Minister Sergei Lavrov noted, the IMF’s change of rules, “designed to suit Ukraine only, could plant a time bomb under all other IMF programs.” The new rules showed the extent to which the IMF is subordinate to U.S. aggressive New Cold Warriors: “since Ukraine is politically important – and it is only important because it is opposed to Russia – the IMF is ready to do for Ukraine everything it has not done for anyone else.”[18]
In a similar vein, Andrei Klimov, deputy chairman of the Committee for International Affairs at the Federation Council (the upper house of Russia’s parliament) accused the United States of playing “the role of the main violin in the IMF while the role of the second violin is played by the European Union, [the] two basic sponsors of the Maidan – the … coup d’état in Ukraine in 2014.”[19]
Putin’s counter-strategy and the blowback on U.S.-European relations
Having anticipated that Ukraine would seek excuses to not pay Russia, President Putin refrained from exercising Russia’s right to demand immediate payment when Ukraine’s foreign debt rose above 60 percent of GDP. In November he even offered to defer any payment at all this year, stretching payments out to “$1 billion next year, $1 billion in 2017, and $1 billion in 2018,” if “the United States government, the European Union, or one of the big international financial institutions” guaranteed payment.[20] Based on their assurances “that Ukraine’s solvency will grow,” he added, they should be willing to put their money where their mouth was. If they did not provide guarantees, Putin pointed out, “this means that they do not believe in the Ukrainian economy’s future.”
Implicit was that if the West continued encouraging Ukraine to fight against the East, its government would not be in a position to pay. The Minsk agreement was expiring and Ukraine was receiving new arms support from the United States, Canada and other NATO members to intensify hostilities against Donbas and Crimea.
But the IMF, European Union and United States refused to back up the Fund’s optimistic forecast of Ukraine’s ability to pay in the face of its continued civil war against the East. Foreign Minister Lavrov concluded that, “By having refused to guarantee Ukraine’s debt as part of Russia’s proposal to restructure it, the United States effectively admitted the absence of prospects of restoring its solvency.”[21]
In an exasperated tone, Prime Minister Dmitry Medvedev said on Russian television: “I have a feeling that they won’t give us the money back because they are crooks … and our Western partners not only refuse to help, but they also make it difficult for us.” Accusing that “the international financial system is unjustly structured,” he nonetheless promised to “go to court. We’ll push for default on the loan and we’ll push for default on all Ukrainian debts,” based on the fact that the loan
was a request from the Ukrainian Government to the Russian Government. If two governments reach an agreement this is obviously a sovereign loan…. Surprisingly, however, international financial organisations started saying that this is not exactly a sovereign loan. This is utter bull. Evidently, it’s just an absolutely brazen, cynical lie. … This seriously erodes trust in IMF decisions. I believe that now there will be a lot of pleas from different borrower states to the IMF to grant them the same terms as Ukraine. How will the IMF possibly refuse them?[22]
And there the matter stands. On December 16, 2015, the IMF’s Executive Board ruled that “the bond should be treated as official debt, rather than a commercial bond.”[23] Forbes quipped: “Russia apparently is not always blowing smoke. Sometimes they’re actually telling it like it is.”[24]
Reflecting the degree of hatred fanned by U.S. diplomacy, U.S.-backed Ukrainian Finance Minister Natalie A. Jaresko expressed an arrogant confidence that the IMF would back the Ukrainian cabinet’s announcement on Friday, December 18, of its intention to default on the debt to Russia falling due two days later. “If we were to repay this bond in full, it would mean we failed to meet the terms of the I.M.F. and the obligations we made under our restructuring.”[25]
Adding his own bluster, Prime Minister Arseny Yatsenyuk announced his intention to tie up Russia’s claim for payment by filing a multibillion-dollar counter claim “over Russia’s occupation of Crimea and intervention in east Ukraine.” To cap matters, he added that “several hundred million dollars of debt owed by two state enterprises to Russian banks would also not be paid.”[26] This makes trade between Ukraine and Russia impossible to continue. Evidently Ukraine’s authorities had received assurance from IMF and U.S. officials that no real “good faith” bargaining would be required to gain ongoing support. Ukraine’s Parliament did not even find it necessary to enact the new tax code and budget conditionalities that the IMF loan had demanded.
The world is now at war financially, and all that seems to matter is whether, as U.S. Defense Secretary Donald Rumsfeld had put matters, “you are for us or against us.” As President Putin remarked at the 70th session of the UN General Assembly regarding America’s support of Al Qaeda, Al Nusra and other allegedly “moderate” ISIS allies in Syria: “I cannot help asking those who have caused this situation: Do you realize now what you have done? … I am afraid the question will hang in the air, because policies based on self-confidence and belief in one’s exceptionality and impunity have never been abandoned.”[27]
The blowback
America’s unilateralist geopolitics are tearing up the world’s economic linkages that were put in place in the heady days after World War II, when Europe and other countries were so disillusioned that they believed the United States was acting out of idealism rather than national self-interest. Today the question is how long Western Europe will be willing to forego its trade and investment interests by accepting U.S.-sponsored sanctions against Russia, Iran and other economies. Germany, Italy and France already are feeling the strains.
The oil and pipeline war designed to bypass Russian energy exports is flooding Europe with refugees, as well as spreading terrorism. Although the leading issue in America’s Republican presidential debate on December 15, 2015, was safety from Islamic jihadists, no candidate thought to explain the source of this terrorism in America’s alliance with Wahabist Saudi Arabia and Qatar, and hence with Al Qaeda and ISIS/Daish as a means of destabilizing secular regimes in Libya, Iraq, Syria, and earlier in Afghanistan. Going back to the original sin of CIA hubris – overthrowing the secular Iranian Prime Minister leader Mohammad Mosaddegh in 1953 – U.S. foreign policy has been based on the assumption that secular regimes tend to be nationalist and resist privatization and neoliberal austerity.
Based on this assumption, U.S. Cold Warriors have aligned themselves against democratic regimes seeking to promote their own prosperity and resist neoliberalism in favor of maintaining their own traditional mixed public/private economies. That is the back-story of the U.S. fight to control the rest of the world. Tearing apart the IMF’s rules is only the most recent chapter. Arena by arena, the core values of what used to be American and European social democratic ideology are being uprooted by the tactics being used to hurt Russia, China and their prospective Eurasian allies.
The Enlightenment’s ideals were of secular democracy and the rule of international law applied equally to all nations, classical free market theory (of markets free from unearned income and rent extraction by special interests), and public investment in infrastructure to hold down the cost of living and doing business. These are all now to be sacrificed to a militant U.S. unilateralism. Putting their “indispensable nation” above the rule of law and parity of national interests (the 1648 Westphalia treaty, not to mention the Geneva Convention and Nuremburg laws), U.S. neocons proclaim that America’s destiny is to prevent foreign secular democracy from acting in ways other than in submission to U.S. diplomacy. Behind this lie the special U.S. financial and corporate interests that control American foreign policy.
This is not how the Enlightenment was supposed to turn out. Industrial capitalism a century ago was expected to evolve into an economy of abundance worldwide. Instead, we have American Pentagon capitalism, with financial bubbles deteriorating into a polarized rentier economy and a resurgence of old-fashioned imperialism. If and when a break comes, it will not be marginal but a seismic geopolitical shift.
The Dollar Bloc’s Financial Curtain
By treating Ukraine’s repudiation of its official debt to Russia’s National Wealth Fund as the new norm, the IMF has blessed its default. President Putin and foreign minister Lavrov have said that they will sue in British courts. The open question is whether any court exist in the West not under the thumb of U.S. veto?
America’s New Cold War maneuvering has shown that the two Bretton Woods institutions are unreformable. It is easier to create new institutions such as the AIIB than to retrofit the IMF and World Bank, NATO and behind it, the dollar standard – all burdened with the legacy of their vested interests.
U.S. geostrategists evidently thought that excluding Russia, China and other Eurasian countries from the U.S.-based financial and trade system would isolate them in a similar economic box to Cuba, Iran and other sanctioned adversaries. The idea was to force countries to choose between being impoverished by such exclusion, or acquiescing in U.S. neoliberal drives to financialize their economies under U.S. control.
What is lacking here is the idea of critical mass. The United States may arm-twist Europe to impose trade and financial sanctions on Russia, and may use the IMF and World Bank to exclude countries not under U.S. hegemony from participating in dollarized global trade and finance. But this diplomatic action is producing an equal and opposite reaction. That is the Newtonian law of geopolitics. It is propelling other countries to survive by avoiding demands to impose austerity on their government budgets and labor, by creating their own international financial organization as an alternative to the IMF, and by juxtaposing their own “aid” lending to that of the U.S.-centered World Bank.
This blowback requires an international court to handle disputes free from U.S. arm-twisting. The Eurasian Economic Union accordingly has created its own court to adjudicate disputes. This may provide an alternative to Judge Griesa’s New York federal kangaroo court ruling in favor of vulture funds derailing Argentina’s debt settlements and excluding that country from world financial markets.
The more nakedly self-serving U.S. policy is – from backing radical fundamentalist outgrowths of Al Qaeda throughout the Near East to right-wing nationalists in Ukraine and the Baltics – then the greater the pressure will grow for the Shanghai Cooperation Organization, AIIB and related institutions to break free of the post-1945 Bretton Woods system run by the U.S. State, Defense and Treasury Departments and their NATO superstructure of coercive military bases. As Paul Craig Roberts recently summarized the dynamic, we are back with George Orwell’s 1984 global fracture between Oceania (the United States, Britain and its northern European NATO allies as the sea and air power) vs. Eurasia as the consolidated land power.
Footnotes:
[1] The SCO was created in 2001 in Shanghai by the leaders of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan. India and Pakistan are scheduled to join, along with Iran, Afghanistan and Belarus as observers, and other east and Central Asian countries as “dialogue partners.”
[2] “Putin Seeks Alliance to Rival TPP,” RT.com (December 04 2015). The Eurasian Economic Union was created in 2014 by Russia, Belarus and Kazakhstan, soon joined by Kyrgyzstan and Armenia. ASEAN was formed in 1967, originally by Indonesia, Malaysia the Philippines, Singapore and Thailand. It subsequently has been expanded. China and the AIIB are reaching out to replace World Bank. The U.S. refused to join the AIIB, opposing it from the outset.
[8] Anders Åslund, “Ukraine Must Not Pay Russia Back,” Atlantic Council, November 2, 2015 (from Johnson’s Russia List, November 3, 2015, #50).
[9] Anders Aslund, “The IMF Outfoxes Putin,” op. cit.
[10] Quoted in Tamara Zamyantina, “IMF’s dilemma: to help or not to help Ukraine, if Kiev defaults,” TASS, translated on Johnson’s Russia List, December 9, 2015, #9.
[11] I provide a narrative of the Greek disaster in Killing the Host (2015).
[15] Anton Siluanov, “Russia wants fair rules on sovereign debt,” Financial Times, op. cit.. He added: “Russia’s financing was not made for commercial gain. Just as America and Britain regularly do, it provided assistance to a country whose policies it supported. The US is now supporting the current Ukrainian government through its USAID guarantee programme.”
“Lavrov: U.S. admits lack of prospects of restoring Ukrainian solvency,” November 7, 2015, translated on Johnson’s Russia List, December 7, 2015, #38.[21]
[24] Kenneth Rapoza, “IMF Says Russia Right About Ukraine $3 Billion Loan,” Forbes.com, December 16, 2015. The article added: “the Russian government confirmed to Euroclear, at the request of the Ukrainian authorities at the time, that the Eurobond was fully owned by the Russian government.”
The dual summits that took place in Russia’s Ufa beginning 9 July were anything but routine. In fact it may be seen by future historians as a signal event that marked the definitive decline of the global hegemony of European civilization including North America. This is no small event in human history. It’s the most significant shift in relative global economic relations since the Fourth Crusade in 1204 when the Republic of Venice emerged as a world power following their brutal, disgraceful capture and sacking of Constantinople, marking the demise of the Byzantine Empire.
First a look at what transpired. Russia was host to two overlapping summits of emerging alternative organizations, the annual meeting of the BRICS nations as well as the annual meeting of the Shanghai Cooperation Organization. The larger significance has been all but entirely blacked out by western mainstream media such as the New York Times.
First we look at the results from the BRICS meeting where Brazil, Russia, India, China and South Africa are the five member states. The BRICS formally put their New Development Bank (NDB) into operation. It has world headquarters in Shanghai, China’s banking and financial center with a branch in South Africa to serve the African region.
It is explicitly operating as an alternative to the post-1945 domination of the IMF and World Bank, the heart of Washington’s Dollar System. It has member contributions of $50 billion for infrastructure projects mainly, but not exclusively, in the BRICS states. As well it has created a $100 billion financial defense fund, a so-called Contingent Reserves Arrangement, in event of speculative attacks such as were launched by Washington with the Soros Quantum Fund in 1997 to destroy the independent Asian Tiger economies.
The NDB bank is in business one year after the last BRICS summit agreed to its creation, and the meeting announced that first approved infrastructure projects will begin at the beginning of 2016. That’s an impressive testament to the mutual will to create an alternative to the IMF and World Bank, both of the latter controlled by Washington where they are headquartered. Notably BRICS agreed for the first time to institute formal cooperation with the leaders of the Eurasian Economic Union of Russia, Belarus, Kazakhstan, Armenia and Kyrgyzstan.
As well they agreed to meet the leaders of the Shanghai Cooperation Organization (SCO)–Russia, China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan.
SCO adds major security dimension
For its part, the nations of the SCO–Shanghai Cooperation Organization–in addition to formally admitting both India and Pakistan, agreed to increase its role combating terrorism in the region. The SCO was established in 2001 originally to settle border conflicts between China, Russia, Uzbekistan, Kyrgyzstan and Kazakhstan in the years after the dissolution of the Soviet Union. It is now undergoing an organic metamorphosis into something quite different and, in combination with China’s One Belt, One Road New Economic Silk Road high-speed rail network crisscrossing Russia and all Eurasia, potentially the kernel of an economic region whose growth over the next century and more can pale anything the debt-bloated OECD economies of the west are capable of.
This year the SCO members admitted Pakistan and India as full members, a move that undercuts some seventy years of Anglo-American geopolitics on the Indian Subcontinent by bringing the two bitter enemies into a forum dedicated to resolving border conflicts diplomatically. The Ufa BRICS declaration also stressed the importance of reaffirming the UN Charter and condemned unilateral military intervention, a clear reference to guess who?
That enlargement to include India and Pakistan into the Eurasian SCO has huge implications for China’s New Economic Silk Road high-speed rail infrastructure network across all Eurasia as well as potential gas and oil pipeline routes in the region. Significantly, for an Obama Administration that wants to pit Iran against Russia and China with the signing of the latest nuclear Geneva 6-power deal, Iranian President Hassan Rouhani attended the BRICS/SCO summits and held private talks with Russian President Vladimir Putin. Tehran will likely join the Shanghai Cooperation Organization after the embargo is withdrawn, perhaps as early as 2016, something that will give the SCO a major presence in the Middle East geographically.
With the planned lifting now of US economic sanctions on Iran, this could mean a huge economic deepening of the Eurasian economic space from Shanghai to St. Petersburg to Teheran and beyond, the nightmare scenario of US geopolitical actors like Zbigniew Brzezinski or Henry Kissinger.
Notably, the BRICS final declaration also pledged greater cooperation on combating terrorism and dealing with security problems of member states. This overlaps the Russia-initiated Collective Security Treaty Organization (CSTO), created in 1992 after the collapse of the Soviet Union to provide some semblance of security from rampant CIA monkey business using veterans of the CIA’s Afghani Mujahideen to “stir up” (to use Brzezinski’s term for it) the peoples of former Soviet states with large Muslim populations across Central Asia, especially Azerbaijan and the Caucasus.
Today, the CSTO is emerging as a far more serious organization and a means by which Russia can legitimately provide direct security expertise to weaker states inside the Eurasian Economic Union such as Kyrgyzstan or Armenia, both of whom have been targets of new US-sponsored Color Revolutions to spread chaos across the emerging Eurasian economic space.
What is notable about the joint BRICS-SCO-Eurasian Economic Union summit hosted by Russia’s Putin in Ufa, a city of some one million at the foot of the Ural mountain range near to Kazakhstan, is not only the degree of harmonizing that is taking place among the three vast organizations. It is also the fact that Russia uniquely is a member of all three, facilitating the harmonization of the three in terms of strategic goals. Moreover the member states have everything and everyone necessary to be fully independent of the dollar world and the dying EU with its misbegotten Euro sham.
As The Saker pointed out in a recent perceptive piece, “the full list of BRICS/SCO members will now look like this: Brazil , China , India , Kazakhstan , Kyrgyzstan , Pakistan , Russia , South Africa , Tajikistan and Uzbekistan. The BRICS/SCO will thus include 2 Permanent UN Security Council, 4 countries with nuclear weapons (only 3 NATO countries have nukes!), it’s members account for a full third of the world’s land area: they produce 16 trillion dollars in GDP and have a population of 3 billion people or half of the global world population.”
A new architecture of Eurasia is being formed, something which, were they of a mind to, the nations of the EU, above all Germany, France, Italy, could hugely benefit from cooperating with. Yet, what is the response of Washington and her “vassals” in European NATO, to use the term of Brzezinski?
The NATO Washington response
The response of Washington and NATO to all this is a bleak, pathetic contrast to put it mildly.
The new Obama nominee to become US Joint Chiefs of Staff chairman, Marine Corps General Joseph Dunford, declared Russia to be America’s greatest threat in his Congressional testimony some days ago. Conveniently forgetting all about the “existential threat” from ISIS, an organization US and Israeli intelligence brought into being to spread their chaos, Dunford declared, “If you want to talk about a nation that could pose an existential threat to the United States, I’d have to point to Russia.” The alarming thing is there was scarcely a peep of protest aside from blog remarks by retired Congressman Ron Paul and a few others. The tom-toms of bellicosity are pounding louder along the Potomac these days.
The war rage in Washington goes deeper than just one general. The Pentagon just released its Military Strategy of the United States, 2015. There the focus has clearly shifted away from “non-state actors” such as ISIS as being the greatest threat to the US and refocuses on “state actors” that are “challenging international norms.” The Pentagon strategy document goes on to name Russia, China, Iran, North Korea as the greatest threats. What they do not admit is the “threat” is to the continued sole Superpower hegemony of a United States that insists its will is the only valid one as self-appointed guardian of “democracy” and “human rights,” their New World Order as George Bush senior termed it in 1991.
On the economic front, what is emerging across the vast expanse of Eurasia is the greatest infrastructure investment in real physical infrastructure, which in turn will create new markets where today the remote regions of Siberia or Mongolia remain virtually untouched. By contrast, Obama’s Washington, a once-hegemon that has lost its soul, can only offer the US-dominated secret free trade pact, Trans-Pacific Partnership (TPP), for Asian states absent China, as a way to contain china economically, and the Trans-Atlantic Trade and Investment Partnership (TTIP) that offers the same geopolitical dead end for the economies of the EU. Both trade proposals are a desperate attempt by Washington strategists and their corporate backers in agribusiness such as Monsanto or the pharmaceutical industry to dominate world trade and finance.
Just as an individual can lose themselves through a trauma, so it’s possible for entire nations, even nations as large and apparently mighty as the United States of America, to lose its soul. Once a nation loses its soul, it loses its ability to do good, to be good. That tragically describes America today. The process has been a slow-motion rot from within, much as the Roman Empire in the Third and Fourth centuries AD. The rot has proceeded over decades.
There were many seminal events we as a people let pass without acting. One such over the past century or more was the US Congress’ surrender of the Constitutional responsibility to control the issue of money, handing it over to a private cabal of Wall Street bankers who named it the Federal Reserve. Another was the perfidy of our turning on our wartime allies in Russia and making them the “new Hitler,” so that Nelson Rockefeller’s national security state, complete with a CIA, could be built to justify the devaluation of the essence of the US Constitution. Another was the decision, well, perhaps you can fill in the blanks there are so many, each seemingly minor, but as a cumulative totality toxic to genuine respect for human life and individual freedom. Then, following the events of September 11,2001 we as a nation, crippled by our fear, stood by silently as the Bill of Rights went into the paper shredder of George W. Bush with the misnamed Patriots Act and other police state laws.
Once a people as once-wonderful as the American people lose all that that made them good, it takes a conscious decision and determination to regain that goodness. The first essential step is to become conscious of what is bad in us as a people today. David Rockefeller or George H.W. Bush or Bill Gates or Hillary Clinton or Jeb Bush did not do this. We did, and they merely took the use out of our action. There we must begin if we wish to take ourselves seriously again as a nation and as a people. Seeing ourselves as “victims” regardless of what or whoever is a dead end, literally.
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.
The several hundred Republicans who have thrown their hats into the ring for the 2016 presidential race and the war hawks in Congress (mainly but hardly only Republicans) have already been in full howl about the Vienna nuclear deal with Iran. Jeb Bush took about two seconds to label it “appeasement,” instantly summoning up the image of British Prime Minister Neville Chamberlain giving in to Hitler before World War II; former Arkansas Governor Mike Huckabee spared no metaphor in labeling the agreement “a deal that empowers an evil Iranian regime to carry out its threat to ‘wipe Israel off the map’ and bring ‘death to America’”; Senator Lindsey Graham called it a “possible death sentence for Israel”; this year’s leading billionaire candidate, Donald Trump, summed up his opinion of the deal in one you’re-fired-style word, “ridiculous”; Senator John McCain described Secretary of State John Kerry, who negotiated the deal, as “delusional”; and Senator… I mean, Israeli Prime Minister Benjamin Netanyahu mockingly turned Chamberlain’s infamous “peace in our time” into “peace at any price,” dismissed the deal as a catastrophe filled with “absurdities,” and then appeared on every American media venue imaginable to denounce it. And that’s just to start down the usual list of suspects. Even Senator Rand Paul swore he would vote against the agreement (though his father called it “to the benefit of world peace”), while Wisconsin Governor Scott Walker was typical of Republican presidential candidates in swearing that he would personally scuttle the deal on his first day in the Oval Office.
This, in short, is the mad version of international policy that makes Washington a claustrophobic echo chamber. After all, the choice isn’t actually between Iran having no nuclear “breakout” capacity or regaining that capacity 15 years from now (as the present deal seems to offer); the choice is between an agreement for 15 verifiably non-weaponized years and a guarantee of nothing whatsoever. And if you’ve just checked off that nothing-whatsoever column, the alternative is to somehow crush the Iranians, to force them into submission. It is, in other words, some version of war. Two questions on that: How successful has war in the Greater Middle East been as an American policy weapon these last 13 years? And what makes anyone think that, when even Dick Cheney and crew couldn’t bring themselves to pull the trigger on Iran, Jeb B. or any of the other candidates will be likely to do so in an ISIS-enriched world in 2017?
When you’ve satisfied yourself on those two questions, consider the seldom-discussed larger context within which twenty-first-century nuclear politics has taken place. In these last years, the Pakistanis, the Indians, the Russians, and the Americans, to name just four nuclear powers, have either been expanding or “modernizing” their nuclear stockpiles in significant ways. And god knows what the Israelis were doing with their super-secret, never officially acknowledged, but potentially civilization-busting atomic arsenal of 80 or more weapons, while the North Koreans were turning themselves into a nuclear mini-power. Nonetheless, the focus of nuclear attention and the question of “disarmament” has remained almost exclusively on a country that had no such weapons, has officially disavowed them, and at this point, at least, doesn’t even have a weapons program. And note that no one who is anyone in Washington considers any of this the least bit strange.
In this context, that irrepressible TomDispatch regular Pepe Escobar offers another kind of lens-widening exercise when it comes to the Iranian deal. He focuses on a subject that Washington has yet to fully absorb: changing relations in Eurasia. Few here have noticed, but while the Vienna deal was being negotiated, Russia and China, countries the Pentagon has just officially labeled as “threats,” have been moving mountains (quite literally in some cases) to integrate ever larger parts of that crucial land mass, that “world island,” into a vast economic zone that, if all goes as they wish, will be beyond Washington’s power and control. This is a remarkable development that, despite the coming two months of sound and fury about Iran, won’t be at the top of any news report, which is why you need a website like TomDispatch to keep up with the times. Tom
The Eurasian Big Bang How China and Russia Are Running Rings Around Washington
By Pepe Escobar
Let’s start with the geopolitical Big Bang you know nothing about, the one that occurred just two weeks ago. Here are its results: from now on, any possible future attack on Iran threatened by the Pentagon (in conjunction with NATO) would essentially be an assault on the planning of an interlocking set of organizations — the BRICS nations (Brazil, Russia, India, China, and South Africa), the SCO (Shanghai Cooperation Organization), the EEU (Eurasian Economic Union), the AIIB (the new Chinese-founded Asian Infrastructure Investment Bank), and the NDB (the BRICS’ New Development Bank) — whose acronyms you’re unlikely to recognize either. Still, they represent an emerging new order in Eurasia.
Tehran, Beijing, Moscow, Islamabad, and New Delhi have been actively establishing interlocking security guarantees. They have been simultaneously calling the Atlanticist bluff when it comes to the endless drumbeat of attention given to the flimsy meme of Iran’s “nuclear weapons program.” And a few days before the Vienna nuclear negotiations finally culminated in an agreement, all of this came together at a twin BRICS/SCO summit in Ufa, Russia — a place you’ve undoubtedly never heard of and a meeting that got next to no attention in the U.S. And yet sooner or later, these developments will ensure that the War Party in Washington and assorted neocons (as well as neoliberalcons) already breathing hard over the Iran deal will sweat bullets as their narratives about how the world works crumble.
The Eurasian Silk Road
With the Vienna deal, whose interminable build-up I had the dubious pleasure of following closely, Iranian Foreign Minister Javad Zarif and his diplomatic team have pulled the near-impossible out of an extremely crumpled magician’s hat: an agreement that might actually end sanctions against their country from an asymmetric, largely manufactured conflict.
Think of that meeting in Ufa, the capital of Russia’s Bashkortostan, as a preamble to the long-delayed agreement in Vienna. It caught the new dynamics of the Eurasian continent and signaled the future geopolitical Big Bangness of it all. At Ufa, from July 8th to 10th, the 7th BRICS summit and the 15th Shanghai Cooperation Organization summit overlapped just as a possible Vienna deal was devouring one deadline after another.
Consider it a diplomatic masterstroke of Vladmir Putin’s Russia to have merged those two summits with an informal meeting of the Eurasian Economic Union (EEU). Call it a soft power declaration of war against Washington’s imperial logic, one that would highlight the breadth and depth of an evolving Sino-Russian strategic partnership. Putting all those heads of state attending each of the meetings under one roof, Moscow offered a vision of an emerging, coordinated geopolitical structure anchored in Eurasian integration. Thus, the importance of Iran: no matter what happens post-Vienna, Iran will be a vital hub/node/crossroads in Eurasia for this new structure.
If you read the declaration that came out of the BRICS summit, one detail should strike you: the austerity-ridden European Union (EU) is barely mentioned. And that’s not an oversight. From the point of view of the leaders of key BRICS nations, they are offering a new approach to Eurasia, the very opposite of the language of sanctions.
Here are just a few examples of the dizzying activity that took place at Ufa, all of it ignored by the American mainstream media. In their meetings, President Putin, China’s President Xi Jinping, and Indian Prime Minister Narendra Modi worked in a practical way to advance what is essentially a Chinese vision of a future Eurasia knit together by a series of interlocking “new Silk Roads.” Modi approved more Chinese investment in his country, while Xi and Modi together pledged to work to solve the joint border issues that have dogged their countries and, in at least one case, led to war.
The NDB, the BRICS’ response to the World Bank, was officially launched with $50 billion in start-up capital. Focused on funding major infrastructure projects in the BRICS nations, it is capable of accumulating as much as $400 billion in capital, according to its president, Kundapur Vaman Kamath. Later, it plans to focus on funding such ventures in other developing nations across the Global South — all in their own currencies, which means bypassing the U.S. dollar. Given its membership, the NDB’s money will clearly be closely linked to the new Silk Roads. As Brazilian Development Bank President Luciano Coutinhostressed, in the near future it may also assist European non-EU member states like Serbia and Macedonia. Think of this as the NDB’s attempt to break a Brussels monopoly on Greater Europe. Kamath even advanced the possibility of someday aidingin the reconstruction of Syria.
You won’t be surprised to learn that both the new Asian Infrastructure Investment Bank and the NDB are headquartered in China and will work to complement each other’s efforts. At the same time, Russia’s foreign investment arm, the Direct Investment Fund (RDIF), signed a memorandum of understanding with funds from other BRICS countries and so launched an informal investment consortium in which China’s Silk Road Fund and India’s Infrastructure Development Finance Company will be key partners.
Full Spectrum Transportation Dominance
On the ground level, this should be thought of as part of the New Great Game in Eurasia. Its flip side is the Trans-Pacific Partnership in the Pacific and the Atlantic version of the same, the Transatlantic Trade and Investment Partnership, both of which Washington is trying to advance to maintain U.S. global economic dominance. The question these conflicting plans raise is how to integrate trade and commerce across that vast region. From the Chinese and Russian perspectives, Eurasia is to be integrated via a complex network of superhighways, high-speed rail lines, ports, airports, pipelines, and fiber optic cables. By land, sea, and air, the resulting New Silk Roads are meant to create an economic version of the Pentagon’s doctrine of “Full Spectrum Dominance” — a vision that already has Chinese corporate executives crisscrossing Eurasia sealing infrastructure deals.
For Beijing — back to a 7% growth rate in the second quarter of 2015 despite a recent near-panic on the country’s stock markets — it makes perfect economic sense: as labor costs rise, production will be relocated from the country’s Eastern seaboard to its cheaper Western reaches, while the natural outlets for the production of just about everything will be those parallel and interlocking “belts” of the new Silk Roads.
Meanwhile, Russia is pushing to modernize and diversify its energy-exploitation-dependent economy. Among other things, its leaders hope that the mix of those developing Silk Roads and the tying together of the Eurasian Economic Union — Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan — will translate into myriad transportation and construction projects for which the country’s industrial and engineering know-how will prove crucial.
As the EEU has begun establishing free trade zones with India, Iran, Vietnam, Egypt, and Latin America’s Mercosur bloc (Argentina, Brazil, Paraguay, Uruguay, and Venezuela), the initial stages of this integration process already reach beyond Eurasia. Meanwhile, the SCO, which began as little more than a security forum, is expanding and moving into the field of economic cooperation. Its countries, especially four Central Asian “stans” (Kazakhstan, Kyrgyzstan, Uzbekistan, and Tajikistan) will rely ever more on the Chinese-driven Asia Infrastructure Investment Bank (AIIB) and the NDB. At Ufa, India and Pakistan finalized an upgrading process in which they have moved from observers to members of the SCO. This makes it an alternative G8.
In the meantime, when it comes to embattled Afghanistan, the BRICS nations and the SCO have now called upon “the armed opposition to disarm, accept the Constitution of Afghanistan, and cut ties with Al-Qaeda, ISIS, and other terrorist organizations.” Translation: within the framework of Afghan national unity, the organization would accept the Taliban as part of a future government. Their hopes, with the integration of the region in mind, would be for a future stable Afghanistan able to absorb more Chinese, Russian, Indian, and Iranian investment, and the construction — finally! — of a long-planned, $10 billion, 1,420-kilometer-long Turkmenistan-Afghanistan-Pakistan-India (TAPI) gas pipeline that would benefit those energy-hungry new SCO members, Pakistan and India. (They would each receive 42% of the gas, the remaining 16% going to Afghanistan.)
Central Asia is, at the moment, geographic ground zero for the convergence of the economic urges of China, Russia, and India. It was no happenstance that, on his way to Ufa, Prime Minister Modi stopped off in Central Asia. Like the Chinese leadership in Beijing, Moscow looks forward (as a recent document puts it) to the “interpenetration and integration of the EEU and the Silk Road Economic Belt” into a “Greater Eurasia” and a “steady, developing, safe common neighborhood” for both Russia and China.
And don’t forget Iran. In early 2016, once economic sanctions are fully lifted, it is expected to join the SCO, turning it into a G9. As its foreign minister, Javad Zarif, made clear recently to Russia’s Channel 1 television, Tehran considers the two countries strategic partners. “Russia,” he said, “has been the most important participant in Iran’s nuclear program and it will continue under the current agreement to be Iran’s major nuclear partner.” The same will, he added, be true when it comes to “oil and gas cooperation,” given the shared interest of those two energy-rich nations in “maintaining stability in global market prices.”
Got Corridor, Will Travel
Across Eurasia, BRICS nations are moving on integration projects. A developing Bangladesh-China-India-Myanmar economic corridor is a typical example. It is now being reconfigured as a multilane highway between India and China. Meanwhile, Iran and Russia are developing a transportation corridor from the Persian Gulf and the Gulf of Oman to the Caspian Sea and the Volga River. Azerbaijan will be connected to the Caspian part of this corridor, while India is planning to use Iran’s southern ports to improve its access to Russia and Central Asia. Now, add in a maritime corridor that will stretch from the Indian city of Mumbai to the Iranian port of Bandar Abbas and then on to the southern Russian city of Astrakhan. And this just scratches the surface of the planning underway.
Years ago, Vladimir Putin suggested that there could be a “Greater Europe” stretching from Lisbon, Portugal, on the Atlantic to the Russian city of Vladivostok on the Pacific. The EU, under Washington’s thumb, ignored him. Then the Chinese started dreaming about and planning new Silk Roads that would, in reverse Marco Polo fashion, extend from Shanghai to Venice (and then on to Berlin).
Thanks to a set of cross-pollinating political institutions, investment funds, development banks, financial systems, and infrastructure projects that, to date, remain largely under Washington’s radar, a free-trade Eurasian heartland is being born. It will someday link China and Russia to Europe, Southwest Asia, and even Africa. It promises to be an astounding development. Keep your eyes, if you can, on the accumulating facts on the ground, even if they are rarely covered in the American media. They represent the New Great — emphasis on that word — Game in Eurasia.
Location, Location, Location
Tehran is now deeply invested in strengthening its connections to this new Eurasia and the man to watch on this score is Ali Akbar Velayati. He is the head of Iran’s Center for Strategic Research and senior foreign policy adviser to Supreme Leader Ayatollah Khamenei. Velayati stresses that security in Asia, the Middle East, North Africa, Central Asia, and the Caucasus hinges on the further enhancement of a Beijing-Moscow-Tehran triple entente.
As he knows, geo-strategically Iran is all about location, location, location. That country offers the best access to open seas in the region apart from Russia and is the only obvious east-west/north-south crossroads for trade from the Central Asian “stans.” Little wonder then that Iran will soon be an SCO member, even as its “partnership” with Russia is certain to evolve. Its energy resources are already crucial to and considered a matter of national security for China and, in the thinking of that country’s leadership, Iran also fulfills a key role as a hub in those Silk Roads they are planning.
That growing web of literal roads, rail lines, and energy pipelines, asTomDispatch has previously reported, represents Beijing’s response to the Obama administration’s announced “pivot to Asia” and the U.S. Navy’s urge to meddle in the South China Sea. Beijing is choosing to project power via a vast set of infrastructure projects, especially high-speed rail lines that will reach from its eastern seaboard deep into Eurasia. In this fashion, the Chinese-built railway from Urumqi in Xinjiang Province to Almaty in Kazakhstan will undoubtedly someday be extended to Iran and traverse that country on its way to the Persian Gulf.
A New World for Pentagon Planners
At the St. Petersburg International Economic Forum last month, Vladimir Putin told PBS’s Charlie Rose that Moscow and Beijing had always wanted a genuine partnership with the United States, but were spurned by Washington. Hats off, then, to the “leadership” of the Obama administration. Somehow, it has managed to bring together two former geopolitical rivals, while solidifying their pan-Eurasian grand strategy.
Even the recent deal with Iran in Vienna is unlikely — especially given the war hawks in Congress — to truly end Washington’s 36-year-long Great Wall of Mistrust with Iran. Instead, the odds are that Iran, freed from sanctions, will indeed be absorbed into the Sino-Russian project to integrate Eurasia, which leads us to the spectacle of Washington’s warriors, unable to act effectively, yet screaming like banshees.
NATO’s supreme commander Dr. Strangelove, sorry, American General Philip Breedlove, insists that the West must create a rapid-reaction force — online — to counteract Russia’s “false narratives.” Secretary of Defense Ashton Carter claims to be seriously considering unilaterally redeploying nuclear-capable missiles in Europe. The nominee to head the Joint Chiefs of Staff, Marine Commandant Joseph Dunford, recently directly labeled Russia America’s true “existential threat”; Air Force General Paul Selva, nominated to be the new vice chairman of the Joint Chiefs, seconded that assessment, using the same phrase and putting Russia, China and Iran, in that order, as more threatening than the Islamic State (ISIS). In the meantime, Republican presidential candidates and a bevy of congressional war hawks simply shout and fume when it comes to both the Iranian deal and the Russians.
In response to the Ukrainian situation and the “threat” of a resurgent Russia (behind which stands a resurgent China), a Washington-centric militarization of Europe is proceeding apace. NATO is now reportedly obsessed with what’s being called “strategy rethink” — as in drawing up detailed futuristic war scenarios on European soil. As economist Michael Hudson has pointed out, even financial politics are becoming militarized and linked to NATO’s new Cold War 2.0.
In its latest National Military Strategy, the Pentagon suggests that the risk of an American war with another nation (as opposed to terror outfits), while low, is “growing” and identifies four nations as “threats”: North Korea, a case apart, and predictably the three nations that form the new Eurasian core: Russia, China, and Iran. They are depicted in the document as “revisionist states,” openly defying what the Pentagon identifies as “international security and stability”; that is, the distinctly un-level playing field created by globalized, exclusionary, turbo-charged casino capitalism and Washington’s brand of militarism.
The Pentagon, of course, does not do diplomacy. Seemingly unaware of the Vienna negotiations, it continued to accuse Iran of pursuing nuclear weapons. And that “military option” against Iran is never off the table.
So consider it the Mother of All Blockbusters to watch how the Pentagon and the war hawks in Congress will react to the post-Vienna and — though it was barely noticed in Washington — the post-Ufa environment, especially under a new White House tenant in 2017.
It will be a spectacle. Count on it. Will the next version of Washington try to make it up to “lost” Russia or send in the troops? Will it contain China or the “caliphate” of ISIS? Will it work with Iran to fight ISIS or spurn it? Will it truly pivot to Asia for good and ditch the Middle East or vice-versa? Or might it try to contain Russia, China, and Iran simultaneously or find some way to play them against each other?
In the end, whatever Washington may do, it will certainly reflect a fear of the increasing strategic depth Russia and China are developing economically, a reality now becoming visible across Eurasia. At Ufa, Putin told Xi on the record: “Combining efforts, no doubt we [Russia and China] will overcome all the problems before us.”
Read “efforts” as new Silk Roads, that Eurasian Economic Union, the growing BRICS block, the expanding Shanghai Cooperation Organization, those China-based banks, and all the rest of what adds up to the beginning of a new integration of significant parts of the Eurasian land mass. As for Washington, fly like an eagle? Try instead: scream like a banshee.
Pepe Escobar is the roving correspondent for Asia Times, an analyst for RTand Sputnik, and a TomDispatch regular. His latest book is Empire of Chaos. Follow him on Facebook by clicking here.
Shortly, the «gruesome twosome» of U.S.-Russian relations, Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland and NATO Supreme Commander General Philip Breedlove, will be joined by a third neo-Cold Warrior, Marine Corps General Joseph Dunford, the prospective Chairman of the Joint Chiefs of Staff, to become the «terrible troika» of American officials clamoring for a military showdown with Moscow.
During his confirmation hearings before the Senate Armed Services Committee, Dunford said he viewed Russia as the greatest threat to America. But not just any «threat». In language that could have been pulled out of a U.S. newspaper from the 1960s, Dunford testified, «If you want to talk about a nation that could pose an existential threat to the United States, I’d have to point to Russia», adding, «and if you look at their behavior, it’s nothing short of alarming».
While Dunford’s Cold War rhetoric warmed the cockles of the hearts of leading Senate committee war hawks such as John McCain, McCain’s eyelash-batting pal Lindsey Graham – a 2016 presidential candidate – and Texas Joseph McCarthy lookalike Ted Cruz, it was not well-received at the White House or the State Department. White House Press Secretary John Earnest distanced President Obama from Dunford’s views, stating at a press conference that Dunford was expressing «his own view and [it] doesn’t necessarily reflect the . . . consensus analysis of the president’s national security team».
State Department spokesman Mark Toner, in commenting on Dunford’s remarks, was more emphatic when stating that Secretary of State John Kerry rejected the general’s comments, «The secretary doesn’t agree with the assessment that Russia is an existential threat to the United States, nor China, quite frankly». Toner was referring to Dunford’s testimony that China was second only to Russia in posing a significant threat to the United States.
However, it was Kerry who promoted Nuland, who is married to arch-neoconservative and Project for the New American Century (PNAC) architect Robert Kagan, to the position that placed her in charge of U.S.-Russian relations. Previously, Nuland served as Secretary of State Hillary Clinton’s press spokeswoman. And if Mrs. Clinton’s penchant for «standing by her women» is any indication, a Hillary Clinton presidency could see Nuland, who once worked for Vice President Dick Cheney, promoted to a higher-level position, including Secretary of State or National Security Adviser. Obama and Kerry can distance themselves from Dunford’s alarming comments all they want, however, it is they who have permitted individuals like Nuland, Breedlove, Dunford, and the saber-rattling Defense Secretary Ashton Carter to become major policy officials within the Obama administration.
Dunford and Breedlove appear to have been pulled from central casting for a remake of the 1960s Stanley Kubrick noire comedy film, «Dr. Strangelove». Dunford, who bears the problematic nickname «Fighting Joe» and has been described as a «fervent Catholic», sounds like the blusterous General Buck Turgidson, who, after a wayward B-52 continues on to Russia, against orders, to drop its nuclear payload on a missile base, tells a bewildered president, «It is necessary now to make a choice, to choose between two admittedly regrettable, but nevertheless ‘distinguishable,’ postwar environments: one where you got twenty million people killed, and the other where you got a hundred and fifty million people killed». Breedlove, on the other hand, is just as much an ideologue as is the fictional General Jack Ripper, who in «Dr. Strangelove» tells his British liaison officer, «Today, war is too important to be left to politicians. They have neither the time, the training, nor the inclination for strategic thought».
Dunford, Breedlove, Nuland, and Carter could very well push the United States and Russia to the brink of a hot war. Breedlove championed the creation of NATO’s Very High Readiness Joint Task Force, or VHRJTF as it is known to the acronym- and abbreviation-addicts of the Pentagon. VHRJTF brings ground forces from nine NATO nations to Russia’s borders. The new rapid-response unit took part in the first «live fire» exercise in Poland, code-named NOBLE JUMP, since the end of the Cold War. VHRJTF also consists of U.S.-supplied drones. The possibility that an unmanned drone could bring about a replay of the 1960 U-2 incident, in which a manned American spy plane was shot down over Russia, this time with a drone straying into Russian airspace from one of the Baltic countries, cannot be ruled out.
Obama and Kerry were quick to distance themselves from «Fighting Joe» Dunford’s saber rattling before the Senate committee. However, if they wanted to truly reset relations with Russia, Kerry could fire Nuland, Obama could pull Dunford’s nomination, and both could ask NATO to request a new Supreme Commander. However, as President Dwight Eisenhower warned in his 1961 Farewell Address about the menace of the «military-industrial complex», Obama and Kerry are powerless to get rid of those who were placed in power by what has now become a «military-intelligence-contractor» complex.
What is even more troubling is that Breedlove, Dunford, Nuland, and Carter appear prepared to not only take on Russia and China in a new Cold War, but are willing to confront the new «anti-NATO», the Shanghai Cooperation Organization (SCO), which just wrapped up its summit in Ufa, the capital of the Russian Federation’s autonomous republic of Bashkortostan. If the «gruesome twosome» of Nuland and Breedlove, soon to become the «terrible troika» after Dunford is confirmed by the Senate, have their way, NATO and the United States will not only be willing to face off militarily against SCO members China and Russia but also the new members of Pakistan and India, in addition to charter members Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan.
Russia has savaged the West’s attempts to isolate it and China has broken America’s attempt to establish a military containment «cordon sanitaire» around China by welcoming Belarus as a new observer nation of SCO, joining Afghanistan, Mongolia, and Iran as prospective full members of the alliance. Cambodia, Nepal, Armenia, and Azerbaijan joined the organization as dialogue partners, supplementing existing partners Sri Lanka and Turkey. Egypt, Bangladesh, and Syria are also prospective members of the organization that is a counter to the ever-expanding NATO. SCO’s geopolitical security mission, coupled with the emerging economic power of the BRICS alliance of Brazil, Russia, India, China, and South Africa, equates to a majority of the world’s population rejecting America’s military and economic dominance and NATO’s and the Pentagon’s menacing swagger. It is as if Dunford, Breedlove, and Nuland have never heard of SCO, BRICS, or the Eurasian Economic Union.
It is amazing that Dunford and Breedlove can issue challenges to their perceived enemies when Carter has announced a 40,000 troop strength cut for the U.S. Army. Instead, Carter plans to supplement NATO forces in Europe with more Bradley Fighting Vehicles and tanks that would be manned by a smaller number of U.S. troops. Like the Roman Empire, the United States has over-extended itself around the world.
It is not Russia nor China that maintain troops in 150 countries around the world. That dubious distinction falls on the United States. Fighting Joe Dunford and General Breedlove can talk all they want about the Russian and Chinese «threat». But for the rest of the world, which sees SCO and BRICS as welcome foils to the plans for further NATO expansion, it is America and its policy of fostering «color revolutions» and displaying military shows of force that represent the true threats to global stability.
After the Crash 