The horizon is not so far as we can see, but as far as we can imagine

Month: February 2022 Page 1 of 4

Ukraine: The Ethical Dimension & Sanction Decision Making

Ok. Deep breath.

Is what is happening in Ukraine worse than what happened in Iraq?

Why was the US not hit with crippling sanctions, like is being done to Russia?

Think this stuff through on your own, and if you get it, your belief that anything happening is being driven by ethical considerations will go away, and you’ll be able to think clearly.

Now, let’s talk sanctions. They’re more severe than initial indications, and Russian reserves have been blocked, as was done to Venezuela and Afghanistan (this, plus sanctions, is what is starving Afghans to death this winter, by the way).

Now, put yourself in Putin’s shoes. Assume the sanctions really are severe enough to collapse Russia and kill millions and, not incidentally, remove you from power at which point you, your family, and everyone close to you, will be killed. (That’s what is most likely if Putin loses power.)

You are a nuclear superpower with a Great Power military. What do you do? Do you just sit there? Or do you try and use that military to force the return of your reserves and some reduction in the worst sanctions?

(I don’t think the sanctions are quite that severe, but I could be wrong; I’m still thinking it through. However, many commenters — and even politicians — are clear that this is what they want: To collapse Russia under sanctions. But Russia is not Venezuela, or Iran, or Afghanistan.)

Put yourself in Putin’s shoes, and remember, he’s been known to raze entire cities.


What the West and Russia Want in Ukraine & the “Good” Result for Ukraine

There’s a lot of nonsense going around, including talk of Russia losing the war because, less than five days into the war, they haven’t conquered Ukraine.

The German blitz of Poland took five weeks. The conquest of France took six weeks — and people were astonished. Ukraine is the largest country in Europe except for Russia itself.

The sources I respect say that Russia is taking losses, but the war is not in question, and they are advancing about as fast as the US did into Iraq. Russia will win the war, though they may take more damage than they expected (but as we have no idea what they expected, who knows?). Ukraine is a modern equipped army; it isn’t Iraq with obsolete equipment, or Libya, or Afghanistan.

The question is not whether Russia wins the war, it is who wins the peace.

What the US and Europe want is to turn Ukraine into a guerilla quagmire, like Afghanistan in the 80s, or like Iraq and Afghanistan were for the US.

What Russia wants is to turn Ukraine into a guaranteed neutral state and withdraw its troops out of the country, minus Donbas and Luhansk.

The good result for the Ukraine, which most Westerners don’t seem to get, is what the Russians want. Austria was neutral in the Cold War, and that was not horrid. A multi-year guerilla campaign will devastate Ukraine in ways that will take generations from which to recover, because if the Russians have to fight an insurgency, they will be utterly brutal, as they were in Chechnya (successfully).

Moralist yapping about “the right to choose” is off the board. The only good result for Ukraine and Ukrainians is a negotiated settlement. The West egged them on and left them to swing, as the smart people said they would.

This video, predicting this situation in 2015, is pretty much required watching.

As for the economic consequences for Russia due to sanctions, it depends on what they are. If they are stopped from selling oil, natural gas, and wheat to the West, that will hurt. Sanctions less severe than that will be painful, but not crippling.

The problem here is China. For the last six years or so, the US has declared that China is an enemy. They used sanctions to cripple the most important tech company in China, Huawei, and have slapped sanctions and tariffs on China.

Chinese leadership sees a confrontation with the US as inevitable. They had hoped to keep good relations with Europe, but European countries have bowed to US pressure to shut out Huawei based on jingoistic claims that “they’ll spy on you,” which is hilarious. “Instead of us being able to see all your info, the Chinese will!”

China needs Russia’s resources: oil, wheat, and minerals. They know that they can be cut off from most other sources, but because of geography, and because Russia needs China, Russia is a safe supplier. In turn, China can let Russia into their SWIFT equivalent, finance them, and sell that almost every manufactured good they need, with a few exceptions (primarily semiconductor based, but China’s working on that).

Further, to let Russia fall would mean that China would be encircled. The CCP isn’t that stupid.

Basically, the West wants to use sanctions to “choke out” Russia, but China believes the West will then want to use sanctions to choke them out. If they let Russia go down, they’re next (they’re next either way, really, but they can have a major ally or not).

What the US has succeeded in doing is making Europe choose to turn their back not just on Russia, but, inevitably, on China as well.

This is a strong cold war coalition (Cold War is our future, as I have been saying for about four years now), but notice that it is not as strong as the previous cold war, because China is now the primary manufacturing power and the most populous nation, not the US.

Most of Africa, the Middle East, and South America is staying out of this. Even India refused to vote against Russia in the Security Council. Three of the four gulf states refused to vote against Russia, and, in the UN general assembly, the West is struggling to get 50 percent to vote against Russia.

In the West, we have a huge propaganda bubble going on — “Russia is the worst ever, blah, blah, blah.” What they have done is certainly a crime, but no one outside the bubble can take American and European whinging seriously; they remember Iraq, and Libya, and know that the US still occupies Syrian oil fields, while US ally Saudi Arabia bombs the hell out of Yemen, and Israel has annexed land from neighbouring states (supposedly Russia’s great crime).

Russia has done something bad, but this is not about morality. It is about power. Only the US and its allies are supposed to be able to do what Russia is doing, and people outside the Western bubble recognize this hypocrisy.

The Chinese Embassy in Russia tweeted this:

Indians I follow are noting that Russia has been a firm friend to India since independence, and that the US and Europe have not been.

So the question here is whether or not Russia gets drawn into a guerilla quagmire. If it doesn’t, the question then becomes: How hard will the sanctions hit? In the medium to long term, this leads down the road to two separate economic and political regions and a new cold war, as I have been stating for years.

Despite the hysteria, nothing here is surprising. Russia asked for Ukraine as neutral and security guarantees, and didn’t get them. So they invaded, exactly as I wrote (in advance) was likely. Measheimer predicted this in 2015 (video above), and George Kennan, the architect of the Cold War containment policy, noted that NATO expansion would lead to this back in the 90s.

Russia is not Iraq. It is not Iran. It is not Venezuela. It is not Libya. It cannot be treated as minor state who can be choked out by the West at the West’s whim, especially not when the US has been stupid enough to tell China it is also an enemy.

Even in realpolitik terms, telling both Russia and China they are your enemy, at the same time, is breathtakingly stupid.

If you want the best for Ukraine, hope they negotiate soon. The longer they wait, the weaker their negotiating position. The best case for Ukraine is now (as it was three months ago) an Austrian-style neutrality agreement. There will be overflights and inspections, but that’s just how it’s going to be.

The world, outside the West and some of its closest allies, is not in hysteria about this. They recognize it’s aggressive war, but they do not see that what Russia has done is worse than American and European behavior over the last 20 years. Indeed, at least so far, and unless the US gets its wish for a guerilla quagmire, this is not nearly as bad as Iraq.

So relax and take a deep breath. This is bad, and there is a tiny chance of a miscalculation that will kill us all in nuclear armageddon. But, mostly, this is just geopolitics playing out as anyone with sense knew it would. The US has split Europe from Russia — and soon China and Russia will be strong allies, and a new cold war will occur, though how soon this will be crystal clear to everyone is, well, unclear.


Week-end Wrap – Political Economy – February 27, 2022

by Tony Wikrent

Ukraine — Russia

“Shipping braces for impact as Russia-Ukraine crisis intensifies”

[Freight Waves, via Naked Capitalism Water Cooler 2-24-2022]

“Military action could curtail ship movements in the Black Sea, a key transit point for dry bulk exports. In fact, Russian military exercises have already done so. VesselsValue analyzed ship-movement data and found that Russian naval maneuvers ‘visibly impacted traffic.; Russian and Ukrainian waters of the Black Sea and Sea of Azov were designated ‘listed areas’ by the insurance industry’s War Risk Council on Feb. 15, meaning higher war risk insurance premiums. According to BRS [brokerage], the Black Sea area was the world’s second-largest grain-exporting region in 2021, with 111.2 million tons of cargo; Russia and Ukraine accounted for 30% of global wheat exports, and Ukraine accounted for 16% of global corn exports. Ukrainian corn could be first in the line of fire. BRS noted that by the end of January, Ukraine had already exported 71% of wheat predicted for the current marketing period but just 32% of its predicted corn exports. Agribulk exports face risks on land as well, not just at sea. ‘An attack or land grab by Russia could sharply reduce grain production as farmers flee the conflict, agricultural infrastructure and equipment are damaged, and the region’s economy is paralyzed,’ said BRS. “A substantial part of Ukraine’s most productive agricultural land is in the east and therefore vulnerable to any potential Russian attack.’ According to Braemar ACM Shipbroking, this landside risk could affect the coming wheat marketing season. ‘The main grain-producing regions are notably located along the Russian border,’ said Braemar, which pointed out that the military threat coincides with the beginning of the spring wheat planting period.”

Putin Looks to Win Both the War & the Peace

Ian Welsh, February 25, 2022

The sanctions which are about to hit Russia are serious, but if they don’t include wheat, aluminum, energy, or maritime shipping or hit oligarchs by kicking them out of London and other European capitals, they aren’t really going to matter.

Putin has made fools of the Western elite class again. Yes, the intelligence was right, but it didn’t matter. He’s figured exactly out what the West will and won’t do. He calculated right, they calculated wrong….

Let’s be clear, China will never let the West choke out Russia because China knows that the US (and increasingly the EU) considers China the real enemy — once Russia is taken out, China’s next. If Russia goes down, China no longer has a secure back, or a secure source of oil, minerals, or food. With Russia, China has a good chance of winning the oncoming Cold War. Without it, China loses that war.

War in Ukraine: How we got here — and what may come next 

[Grid, via The Big Picture 2-25]

Grid is Matthew Yglesias’​​​​​​​ new platform.

The History of Economic Sanctions as a Tool of War

[Yale University Press Blog , via Naked Capitalism 2-25-2022]

Biden’s Ukraine Plans Face Wall Street Roadblock

David Sirota and Julia Rock [The Daily Poster, February 24, 2022]

…Biden faces a significant obstacle: corporate lobbyists’ success in shrouding the American finance industry in secrecy, which makes it far easier for Russian oligarchs and their business empires to evade economic sanctions.

The situation spotlights how America’s money-drenched political process can create national security challenges. In effect, Wall Street’s overwhelming power to shape U.S. regulatory policy — fueled by massive campaign contributions and an army of lobbyists — may defang some of the White House’s most potent economic weapons against an international adversary.

More than two decades ago, federal investigators warned Congress of potentially illicit streams of cash flowing from Russia into the opaque American financial system — and leaks of the so-called Panama Papers and Pandora Papers over the past few years suggest those flows have only increased, as have oligarchs’ attempts to evade sanctions.

Strategic Political Economy

The Mystery of the Declining U.S. Birth Rate

[EconoFact, via The Big Picture 2-21-2022]

The U.S. birth rate has fallen by 20% since 2007. This decline cannot be explained by demographic, economic, or policy changes.

Open Thread

Use the comments to discuss topic unrelated to the Ukrainian/Russian war.

(I’m afraid that for a while posts will probably be mainly or entirely about this war because it matters and also illustrates a lot of very important things.)

Putin Looks to Win Both the War & the Peace

So, saw this yesterday:

“Biden said he’s seeking to shield Americans from higher energy costs by exempting energy payments from sanctions…The sanctions didn’t appear targeted at Russian energy, aluminum, and wheat industries…”

Former Bush official McNally called it: “I expect stringent sanctions, but nothing on energy — bankers, ships, and oligarchs. They don’t want to add upward pressure on oil prices — they are absolutely terrified.”

Putin will win the war. He will leave Ukraine, except in the newly recognized republics. Whatever regime is in control of the rest of the Ukraine will now understand the consequences of even thinking of joining NATO. The West egged Ukraine on and then did nothing while Russia invaded it.

The sanctions which are about to hit Russia are serious, but if they don’t include wheat, aluminum, energy, or maritime shipping or hit oligarchs by kicking them out of London and other European capitals, they aren’t really going to matter.

Putin has made fools of the Western elite class again. Yes, the intelligence was right, but it didn’t matter. He’s figured exactly out what the West will and won’t do. He calculated right, they calculated wrong.

Because people are all worked up, I will state, again: This is not a moral judgment. Putin, like every recent US President, is a war criminal who should be hung. But he’s competent, and Western elites are fools.

Putin calculated correctly because, indeed, if Russian oil is cut off from the West, the economic consequences will be huge. He can withstand the loss of customers better than the customers can withstand the loss of oil and natural gas.

I don’t really get it. (I mean, I do; they’re idiots.) If they weren’t going to actually hit Russia with real sanctions & they believed Russia would invade, they should have actually negotiated to avoid the invasion. What here is better than saying “Okay, Ukraine won’t join NATO”?

However, I think there’s still a slight chance Putin has miscalculated. Congress may pass a ban — even if Biden doesn’t want it. But, it looks to me like Putin is fine with his BATNA; he thinks an oil cutoff will hurt the West more than it hurts Russia.

(A BATNA is your best alternative to a negotiated agreement. Putin wanted things from the West, they wouldn’t give those things to him, and his BATNA was “Okay, I’ll invade, you’ll hit me with sanctions, and I can live with those sanctions.)

At the end of the day, neglecting to negotiate over whether Ukraine will ever join NATO or is a neutral country will result in Ukraine never joining NATO and a lot of people dying. (I know some people think he would have invaded anyway, but we’ll never know. We didn’t negotiate.)

Negotiation is not based on the notion that “None of the things you want are a starter. We will talk, but nothing you want will happen.” That was the Western stance. Well then, Putin had a BATNA he was willing to use. What was the West’s?

No matter how much I take the sheer incompetence of Western elites into account, I can never keep up. They are always more stupid, more foolish, and more greedy than I can imagine.

Anyway, Putin will win his war. He will probably win his peace; the sanctions are not going to be so large he can’t handle them. Indeed, the way that the West has ratcheted up sanctions over the years has been a favor to him. Do remember that Russia has said that if they are cut out out from SWIFT, they will consider it an act of war, and then ask yourself, “Is Putin bluffing?” Then ask yourself how the assumption that Putin is bluffing and calling his bluffs has worked out for people over the years.

Putin will not let the West choke him out like they did Iran and Venezuela. And it doesn’t look like the West is even going to try.

Meanwhile, China has been crystal clear that they are not going to cut Russia off. China’s foreign ministry statement:

When the US drove five waves of NATO expansion eastward all the way to Russia’s doorstep and deployed advanced offensive strategicweapons in breach of its assurances to Russia, did it ever think about the consequences of pushing a big country to the wall?… Did the US respect the sovereignty and territorial integrity of the Federal Republic of Yugoslavia when US-led NATO bombed Belgrade?

Did the US respect the sovereignty and territorial integrity of Iraq when it launched military strikes on Baghdad on unwarranted charges? Did the US respect the sovereignty and territorial integrity of Afghanistan when US drones wantonly killed innocent people in Kabul and other places? Did the US respect the sovereignty and territorial integrity of other countries when it instigated color revolutions and meddled in their internal affairs all around the world?

It is hoped that the US takes these questions seriously and abandons double standards.


Let’s be clear, China will never let the West choke out Russia because China knows that the US (and increasingly the EU) considers China the real enemy — once Russia is taken out, China’s next. If Russia goes down, China no longer has a secure back, or a secure source of oil, minerals, or food. With Russia, China has a good chance of winning the oncoming Cold War. Without it, China loses that war.

The West appears unwilling to put in real sanctions because they would hurt the West more than they would hurt Russia. (Note that England’s economy would collapse if they really froze out oligarchs, starting with the London real-estate market. I bet half the richest people in Britain would be bankrupt in six months. Even the central bank might not be able to save them by printing money because, without Russians propping up the City, the pound would collapse.)

We’ll see how this plays out. But I think Putin comes out of this with a win. That’s not a moral judgment, it’s a pragmatic one.


Calm and Perspective About Ukraine

Obviously, the war in Ukraine is bad. Innocents will suffer, people who needn’t have been will die and be crippled, and hurt.

However, I’m seeing a great deal of hysteria or near-hysteria over this, and it mostly isn’t justified. It is unlikely that more people will die in this situation than died due to Iraq — or Libya. Some years back, the Congo had a war in which six million people died, and most Westerners don’t even know it happened. Right now, people are starving to death in Afghanistan and Yemen, and Yemen is constantly being bombed. Etc.

So, on humanitarian grounds, this is no worse than many other wars, and while we don’t know the final butcher bill (and can’t guess very well yet, as we don’t know exactly what Putin intends to do), it’s unlikely to be as many deaths as in the Congo or as resulted from Iraq (as all ISIS deaths must be counted in the tally, etc.).

What makes Ukraine different, emotionally, to Westerners, is that they are white Europeans.

The next question is geopolitical. Ukraine feels more important because it seems like the end of a particular political order. It is not that Russia is recognizing new states and carving up an old state; Israel took the Golan Heights, and Kosovo was created by NATO military intervention and would not exist without it. For that matter, Russia has run this playbook before, in Ossetia (Georgia) and Crimea.

So this is not NEW. It is not something completely verboten or anything, as many claim.

It feels new because Russia defied the US, the EU, and NATO, invading a European state, and did so in the face of huge sanction threats.

But, in geopolitical terms, all that is happening is that Russia is saying, “We are a ‘Great Power’ and we will take the same rights as the US has taken to invade and annex.”

This is not a greater war crime than Iraq, or Libya, or the Israeli invasion and occupation of Lebanon. What it is, is the moment at which the West realizes that the US is no longer the sole “Great Power.”

There is, of course, a small but very real risk here because Russia is a great power, with a real military, and a lot of nuclear weapons. I have seen a fair number of people calling for NATO to intervene militarily, and I don’t think Americans understand what they’re calling for. Since the Civil War, the US hasn’t had a war with an enemy that could hurt them in the continental US. If Russia gets bombed, the continental US will get hit as well. Russia is not Iraq, Korea, Vietnam, Afghanistan, or Libya. It has a real military and can strike back, even without using nukes.

The rage, the impotent rage and fear, is, I think, because of this. At last, the US has come up against an enemy it can’t just shove around. That hasn’t been the case since the USSR collapsed.

Fortunately, saner heads — including Biden — recognize this, which is why they’re reaching for further sanctions and not intending to bomb, bomb, bomb.

I will point out that I wrote that Russia would go to war if it wasn’t given a guarantee that Ukraine would not join NATO. Put aside, “But they should be able to do whatever they want,” and look at the situation pragmatically. Drop the emotions.

What is the end result of not signing a piece of paper saying Ukraine will not join NATO?

Ukraine won’t join NATO. Even after the war (assuming they aren’t occupied), they won’t because Russia has made it clear that if they even gesture in that direction, they’ll be invaded again. So the end result is dead people, recognition of breakaway regions, and Ukraine not joining NATO anyway.

Russia will be sanctioned, but it is ready for that. They have stated that if they are cut off from SWIFT, they will consider that a declaration of war. They don’t intend to be slowly choked out like Venezuela, Iran, and Iraq in the 90s. Nor will China allow them to be choked out, because if Russia’s choked out, China knows they’re next. The consensus in DC that China must be humbled and forced into a subservient position in the “rules-based international order” is absolutely iron-clad and bipartisan.

So, for a few years now, I’ve been writing about the next cold war. This is the start of it. It doesn’t include China yet, but they won’t cooperate with sanctions on Russia, so it may not be long before it does. I also have an entire section called “The Age of War and Revolution,” and a discussion of this is the start of it — along with the “The Twilight of Revolution,” a sub-category. Neoliberalism no longer rules Russia, in large part because of the sanctions. In time, it won’t rule China either, and in some ways it never has (they are neoliberal for export purposes, but not internally, and their internal market is huge).

The foolish “End of History” nonsense is now obviously dead. It was always the most stupid intellectual movement of the past 50 years, and only poltroons ever believed it.

History is back.

But in the meantime, while war is awful and always will be (and for the record I’m happy to see war crimes tribunals for Putin so long as the last five US presidents are also in the dock, and I’d even volunteer as the executioner), this isn’t likely to be as bad a war as many other recent ones. So except for the remote possibility of nuclear war, there’s no need to be more upset than you were about Iraq or the six million dead Congolese.

Take deep breaths and carry on. Nothing that is happening is unexpected in the broad strokes.


Putin Is Running the Georgian and Kosovo Playbook in Ukraine

As I noted last week, the playbook for Russia in Ukraine is based on what happened with Kosovo.

Putin recognized the breakaway regions, moved troops in, and is now attacking and bombing Ukraine — just as both Serbia and Georgie were attacked. I didn’t expect the general invasion, but I should have, especially since I wrote:

It’s ironic revenge for Kosovo and Serbia. Say there are atrocities/genocide, recognize a break-away, bomb and use troops to enforce your will.

I will be surprised (and wrong) if there is a general occupation of Ukraine, but it is possible because of the NordStream cancellation. What will most likely happen is the Ukrainian military will be defeated in the field, as were the Georgian and Serbian militaries, to make the point that they can’t resist, they have to let Russia do what it wants, and, as Putin himself has said, to demilitarize it. (“We destroyed your military, and you will not build one up or let foreign troops in, or we will do it again.”)

If Putin does occupy Ukraine, it will be because he considers it (like Taiwan) nothing more than a breakaway province, considers Western sanctions inevitable (he said so in his most recent speech), and figures, “Fuck it, might as well take the pain now as later.”

It was wise of NATO nations to remove diplomats, as that means it won’t matter if there’s an “accidental” embassy bombing, which is what happened to the Chinese embassy during the Serbian war.

With the announcement that NordStream will not happen, Russia has very little reason to play by Western rules (we can do it, you can’t), and they won’t.

Welcome to the world I have been predicting for a few years. Russia will be increasingly cut off, China is next on the list (they will not cooperate with US and European sanctions on Russia), and the world will split into two economic areas at cold war, though it won’t be immediate unless things spiral completely out of control.

Europe will be hurt badly by this, as they need far more from China and Russia than they do from the US, as this excellent article by Michael Hudson points out.

Welcome to interesting times.

Update: If NATO responds militarily, there is a good chance the war goes nuclear. And if it does, China will use the opportunity to reconquer Taiwan.

Update 2: What George Kennan, the architect of USSR containment, said back in the 90s.



Why Are UK Sanctions on Ruissia So Small?

So, before the Russian recognition of the two breakaway Republics and their sending troops, PM Johnson was talking big about sanctions, but in the end, they were fairly minor.

The irony is that Britain could really hurt Russia, because a lot of Russian money is stored there, invested in real-estate, and many important Russians have homes in Britain, especially in London.

Various people have noticed this, for example:

But thing to understand about the UK is that it has almost nothing left that the world wants. It offers:

1) The City for money laundering and access to world financial markets.

2) London itself, still a world class city.

3) UK law, for disputes — people trust UK law more than they trust their own law (or US law, the other common third-party option).

The UK doesn’t have a significant manufacturing sector any more. It has a few high-tech companies, but is not a leader in tech. It has some North Sea oil (being depleted), and it has some very pretty real-estate and that’s, well, that’s it.

Britain mishandled the post-war period and did not upgrade its manufacturing sector. Then Thatcher decided, quite deliberately, to liquidate it and concentrate on financial services and real-estate. That’s what both Labour and Conservative governments have done for the last 43 years.

There’s basically nothing left now but the “City” and real-estate games which are based on air. Without more money coming in from outside and from financial games, there’s no reason to be in London or Britain — except that London’s already a great world city with a big financial center. But there’s nothing else; no real industry, no high tech, and the great universities are being systematically defunded along with everything else.

So Britain can’t impose real sanctions because Britain’s one real product is, “Bring your money and yourself here and your money and your self will be safe and you’ll even make more money.” That’s now the central column of the entire economy; nothing else can replace it.

“Your money is safe here unless you do something nasty we don’t like,” isn’t safety. It means political whims can destroy rich people’s lives, and that’s the exact opposite of what they’re paying for when they take their money to the City and Britain. They can get that elsewhere; if they want to be “safe except for sanctions” then hell, go to the US, Canada, or Germany.

Or, if they want to be “safe from sanctions but our rulers can fuck you up any time they want on a whim and will,” then there’s Abu Dhabi.

London, the City, and Britain offer safety to all but the very very worst rich people in the world. Without that, what is left of Britain collapses. Maybe even past middle-income status (where they’re already headed).

There was a last “out” offered. His name was Jeremy Corbyn. UK Elites colluded and lied (at a rate of about 80 percent) to make sure he wouldn’t take power, because he would have redistributed some money away from them.

So now the course of the UK’s decline is set, and if the comfortable classes want a chance of living out their lives comfortably while the rest of society decays around them, the foreign, corrupt cash must flow.


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