Natylie Baldwin's Blog, page 171

Dmitry Simes Interviews Col. Douglas MacGregor About Ukraine War

Link here.

Gilbert Doctorow: ‘Partial mobilization’ and democracy

By Gilbert Doctorow, Blog, 10/11/22

Has ‘partial mobilization’ breathed full-blooded democracy into Russia’s parliamentary government structure and broader society?

It is normal to think of wartime as a period of tightened censorship and imposition of ever greater controls on society at large. Indeed, Western journalists have in the past half year focused attention on the closure of several notorious anti-Putin broadcasting companies and print media in Russia, including Rain (Dozhd’) and Novaya Gazeta. They have covered the flight of editors and staff abroad after they were labeled as ‘foreign agents’ and could expect invitations to appear before the courts.

However, in the days since the announcement by the Kremlin of ‘partial mobilization’ of the reserves, it is increasingly clear to any outside objective observer that a full blast of social activism is underway, and that the dikes of state controls on free speech are being swept away. A week ago, following reversals on the battlefield and loss of territory to the enemy that could not be ignored, members of the State Duma openly denounced the Ministry of Defense for dispensing ‘fairy tales’ about the progress of the campaign in Ukraine and demanded transparency in communications to the public. Speaker of the Duma Volodin, who is a leader of the ruling United Russia party, must have been in shock.

Meanwhile, we see on state television news reporting on the formation of private committees across the country to raise funds, procure goods and directly deliver to the new recruits clothing and other gear which the Army is not providing as it sends them off to the front. This is presented as representing a patriotic upsurge in Russian society, but on closer view it is a damning criticism of the incompetence of the powers-that-be for sending citizens off to war without the kit they need.

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In the United States, and to a lesser extent in Europe, the escalating confrontation between Russia and NATO in and over Ukraine is presented as a repetition of the actors and principles underlying the outbreak of World War II. Putin is the modern day Hitler and Western leaders must defend democratic institutions against authoritarian regimes which commit aggression against neighbors.

In Russia, the escalating confrontation is seen in different terms, as a repetition of World War I, when the leaders of the Great Powers ‘sleep walked’ into the greatest tragedy for civilization of all time by failing to see the abyss before them. If the Kremlin is not careful, the likeness of today’s developments on the home front to the situation at the start – and more importantly, at the end – of WWI may yet be proven. That war did not end well for the tsarist regime and to a very considerable extent it was brought down precisely by patriotic society.

Current Russian television footage of the send-off of the reservists in provincial cities, with busloads of recruits driving past cheering citizenry waving little flags and bouquets of flowers, bears an uncanny resemblance to vintage photos taken in Russia at the outset of The Great War. The patriotic organizations formed by local politicians to support the war effort in 1914 over time became hotbeds of open criticism of the army leadership and of the tsarist dynasty, leading to the February Revolution and forced abdication of Nicholas II. Kremlin elites have excellent memories and surely are concerned.

Why is there today such a public display of civic activism? What has happened to the passive Russian public? The one-word answer is mobilization. As Sergey Mikheev, a panelist in last night’s Vladimir Solovyov talk show explained, the mobilization has turned what was a technical operation manned by professional soldiers into a ‘people’s war’ and the people now want a say in how it is conducted.

That is a sea change in Russian domestic politics. But it was to be expected, and its emergence so quickly is precisely why the Kremlin postponed mobilization as long as it could.

A little less than a year ago, I published an essay about the passivity of the Russian citizen-taxpayer under the piquant heading “no representation without taxation,” standing on its head the call to arms that once motivated American Revolutionaries against their colonial masters in England – https://gilbertdoctorow.com/2021/11/03/no-representation-without-taxation/.

For a number of reasons, the lion’s share of the Russian state budget comes from export taxes on gas and oil, with a relatively low share coming from taxes on the average Russian citizen: income tax is set at a flat rate of 15% and property taxes on houses and apartments are close to nil, while the government assures welfare state benefits of free medical care and education to the broad population. But when the Russian citizen has a direct interest in the game, as is now the case with the mobilization of husbands and fathers, that passive citizenry can become very emotional, involved and vocal.

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Last night’s political talk show hosted by Vladimir Solovyov was outstanding for giving voice to precisely the thoughts you otherwise hear in people’s home as they talk in their kitchens with relatives and close friends. There were several noteworthy contributors to the discussion, but the most comprehensive contribution was made by Sergey Mikheev, whom I briefly cited above. He was given the microphone for ten minutes or more, was not interrupted by the host or fellow panelists, which is common practice on these talk shows, and he delivered a stirring programmatic speech which, if you take it apart, was severely critical not of the generals for unprofessional management of field operations but of the country’s political leadership, going straight back to Vladimir Putin, for deeply flawed concepts on how the war should be prosecuted.

The mobilization, per Mikheev, is merely an extension or escalation of the failed policies to date, namely the attempt to conduct an artillery and infantry war with successes measured in destruction of Ukrainian military assets, instead of conducting total war, with the emphasis placed on destruction of the entire Ukrainian power generation, logistics and other infrastructure so as to demoralize the Ukrainian population and deprive its army of the wherewithal to continue fighting.

Mikheev attributed to his opponents in the Kremlin the argument that what they are doing is more humane, that Russia has no intention of leaving the broad Ukrainian public without heat or electricity in winter, or of causing unnecessary civilian deaths in its missile strikes. He insisted that the more humane way would have been to inflict massive pain on Ukraine back in March and April, so as to bring the conflict to an early conclusion. Escalation by baby steps is only prolonging the war and raising the risk of nuclear Armageddon.

Mikheev said that the loss of territory during the recent Ukrainian counteroffensives has many citizens scratching their heads. Why is Russia not using the technological superiority of its weaponry to greatest advantage? Why is it instead only increasing the numbers of its front line fighters as if this were a 20th century rather than a 21st century war?

Doubts about how the war is being conducted are causing ordinary Russians to lose confidence in their leadership and to look for hidden traitors. People are asking whether the oligarchs are influencing how the war is being fought so as to protect their interests. There is no room for private interests in what has been described as an existential conflict, says Mikheev. How is it that the truck loaded with explosives was allowed onto the bridge despite what had been described as tightest security? People are thinking that someone was paid off to let this vehicle through without inspection. Such corrosive doubts can be cut short only by a change in the way the war in being conducted.

It is hard to imagine a more damning statement than what Sergey Mikheev was allowed to present live on air on the Solovyov show. All reports about secret messages of criticism to Putin from within the Kremlin ranks that our newspapers feature pale in significance by comparison.

Another noteworthy panelist in last night’s show was the general director of Mosfilm, Karen Shakhnazarov, who, like Mikheev, is a regular visitor to the program. Shakhnazarov had two points to convey, one minor, and strictly professional from his domain, the world of entertainment, and the other major, and likely more broadly representative of thinking among Russia’s ‘creative classes.’ The minor point was to call out the absence today of a comprehensive patriotic management of the war effort. With all due respect to the mastery of foreign film directors and production companies, how can it be, he asked, that our television stations, including the private station NTV, are showing Rambo films these days? Such adulatory films of American daring-do could and should be put on hold till after this war is over.

Shakhnazarov’s major point was that Russia erred in not taking up Elon Musk’s latest proposal for ending the war. This was a missed Public Relations opportunity of great potential value in the Information War. Yes, Russia does not accept certain points in the plan, in particular, regarding holding new referendums in the four newly annexed territories. But it would have served Russia very well to say ‘yes, the plan is worth considering, and we are ready to go the extra mile in pursuit of peace’ when Zelensky unreservedly rejected the Musk plan. Said Shakhnazarov, Musk has tens of millions of followers and they could have been won over to Russia’s cause had the Kremlin given a qualified yes to the plan.

Finally, I call attention to the remarks made by a retired military intelligence officer, hero of the Russian Federation, who gave highly relevant explanations to the alleged Russian targeting of purely civilian targets like children’s playgrounds and opera houses in its missile strikes on cities across Ukraine a day ago in revenge for the bombing of the Crimea bridge. As he noted, Ukrainian authorities have claimed that the Russians fired 72 missiles that day, of which 42 were supposedly knocked out by the Ukrainian air defenses. Meanwhile the Russian authorities have said nothing about possible losses of their missiles to Ukrainian defenses and only said that all of the targets on their list were destroyed.

Let us say, this general argued, that the Ukrainian figures were inflated and that they shot down not 42 but 21 of our missiles. That would take the loss rate into typical range given that Ukraine still has a powerful anti missile defense in Kiev and elsewhere, which has been strengthened in recent weeks by more advanced systems sent in from NATO countries. “Shot down” is a deceptive term: usually this means not total destruction but the break-up of the incoming missile into fragments which contain explosives and land wherever gravity brings them down. Accordingly it is entirely possible that fragments of such Russian missiles indeed landed in civilian, residential neighborhoods with associated loss of life. Though the general did not mention it, exactly the same scenario occurred in Donetsk and other cities in the rebel provinces when they came under attack from Ukrainian Tochka-M rockets early in this war. The rockets were intercepted by Russian air defenses, but the fragments landed in city streets and caused significant loss of life as well as damage to infrastructure.

Finally, this military intelligence expert had some interesting and possibly valuable words to say about the newly appointed head of military operations in Ukraine, General Sergei Surovikin, whom he met several times in the past and for whom he has great respect. Surovikin has been given this assignment after serving as chief of the Aerospace Forces, which was in itself an unusual career move for an officer whose basic education and experience was in charge of ground forces. In this appointment, we may well see better coordination and use of the two different branches of the military, which have been criticized in Western expert circles for precisely a lack of effectiveness. As regards the coincidence between the new assignment and the dramatic ratcheting up of Russian missile strikes on Ukrainian cities a day ago, the general insisted that from one day to the next a new appointee cannot master all aspects of the ongoing complex military operations, so that Surovikin cannot be the author of these strikes.

Having some experience as an historical researcher in Russian government archives from the tsarist period, I learned one lesson that bears on today: in government offices there are always competent and highly experienced officials who draft legislation or orders that sit idly in their desk drawers but which can become government policy in a matter of hours if events outside the bureaucracy force a change. I believe that is precisely what happened with respect to Russia’s massive attack on Ukraine of late.

With this, I rest my overriding point from the foregoing summary of the 10 October Solovyov show: Russian state television is essential reference material to anyone seeking to make sense of this war and to see where it may lead.

Big Serge: Politics by Other Means

By Big Serge, Substack, 10/5/22

With the sole possible exception of the great Sun Tzu and his “Art of War”, no military theorist has had such an enduring philosophical impact as the Prussian General Carl Philipp Gottfried von Clausewitz. A participant in the Napoleonic Wars, Clausewitz in his later years dedicated himself to the work that would become his iconic achievement – a dense tome titled simply “Vom Kriege” – On War. The book is a meditation on both military strategy and the socio-political phenomenon of war, which is heavily laced with philosophical rumination. Though On War has had an enduring and indelible impact on the study of military arts, the book itself is at times a rather difficult thing to read – a fact that stems from the great tragedy that Clausewitz was never actually able to finish it. He died in 1831 at the age of only 51 with his manuscript in an unedited disorder; and it fell upon his wife to attempt to organize and publish his papers.

Clausewitz, more than anything, is famous for his aphorisms – “Everything is very simple in war, but the simplest thing is difficult” – and his vocabulary of war, which includes terms such as “friction” and “culmination.” Among all his eminently quotable passages, however, one is perhaps the most famous: his claim that “War is a mere continuation of politics by other means.”

It is on this claim that I wish to fixate for the moment, but first, it may be worthwhile to read the entirety of Clausewitz’s passage on the subject:

“War is the mere continuation of politics by other means. We see, therefore, that War is not merely a political act, but also a real political instrument, a continuation of political commerce, a carrying out of the same by other means. All beyond this which is strictly peculiar to War relates merely to the peculiar nature of the means which it uses. That the tendencies and views of policy shall not be incompatible with these means, the Art of War in general and the Commander in each particular case may demand, and this claim is truly not a trifling one. But however powerfully this may react on political views in particular cases, still it must always be regarded as only a modification of them; for the political view is the object, War is the means, and the means must always include the object in our conception.”

On War, Volume 1, Chapter 1, Section 24

Once we cut through Clausewitz’s dense and verbose style, the claim here is relatively simple: war-making always exists in reference to some greater political goal, and it exists on the political spectrum. Politics lies at every point along the axis: war is begun in response to some political need, it is maintained and continued as an act of political will, and it ultimately hopes to achieve political aims. War cannot be separated from politics – indeed, it is the political aspect that makes it war. We may even go further and state that war in the absence of the political superstructure ceases to be war, and instead becomes raw, animalistic violence. It is the political dimension that makes war recognizably distinct from other forms of violence.

Let us contemplate Russia’s war-making in Ukraine in these terms.

Putin the Bureaucrat

It is often the case that the most consequential men in the world are poorly understood in their time – power enshrouds and distorts the great man. This was certainly the case of Stalin and Mao, and it is equally true of both Vladimir Putin and Xi Jinping. Putin in particular is viewed in the west as a Hitlerian demagogue who rules with extrajudicial terror and militarism. This could hardly be farther from the truth.

Almost every aspect of the western caricature of Putin is deeply misguided – though this recent profile by Sean McMeekin comes much closer than most. To begin with, Putin is not a demagogue – he is not a naturally charismatic man, and though he has over time greatly improved his skills as a retail politician, and he is capable of giving impactful speeches when needed, he is not someone who relishes the podium. Unlike Donald Trump, Barack Obama, or even – God forbid – Adolf Hitler, Putin is simply not a natural crowd pleaser. In Russia itself, his imagine is that of a fairly boring but level headed career political servant, rather than a charismatic populist. His enduring popularity in Russia is far more linked to his stabilization of the Russian economy and pension system than it is to pictures of him riding a horse shirtless.

Furthermore, Putin – contrary to the view that he wields unlimited extralegal authority – is rather a stickler for proceduralism. Russia’s government structure expressly empowers a very strong presidency (this was an absolute necessity in the wake of total state collapse in the early 1990’s), but within these parameters Putin is not viewed as a particularly exciting personality prone to radical or explosive decision making. Western critics may claim that there is no rule of law in Russia, but at the very least, Putin governs by law, with bureaucratic mechanisms and procedures forming the superstructure within which he acts.

This was made vividly apparent in recent days. With Ukraine advancing on multiple fronts, a fresh cycle of doom and triumph was set in motion: pro-Ukrainian figures exult in the apparent collapse of the Russian army, while many in the Russian camp bemoan leadership which they conclude must be criminally incompetent. With all of this underway on the military side, Putin has calmly ushered the annexation process through its legal mechanisms – first holding referendums, then signing treaties on entry in the Russian Federation with the four former Ukrainian oblasts, which were then sent to the State Duma for ratification, followed by the Federation Council, followed again by signature and verification by Putin. As Ukraine throws its summer accumulations into the fight, Putin appears to be mired in paperwork and procedure. The treaties were even reviewed by the Russian constitutional court, and deadlines were set to end the Ukrainian hryvnia as legal tender and replace it with the ruble.

This is a strange spectacle. Putin is plodding his way through the boring legalities of annexation, seemingly deaf to the chorus which is shouting at him that his war is on the verge of total failure. The implacable calm radiating – at least publicly – from the Kremlin seems at odds with events at the front.

So, what really is going on here? Is Putin truly so detached from events on the ground that he is unaware that his army is being defeated? Is he planning to use nuclear weapons in a fit of rage? Or could this be, as Clausewitz says, the mere continuation of politics by other means?

Expeditionary War

Of all the phantasmagorical claims that have been made about the Russo-Ukrainian War, few are as difficult to believe as the claim that Russia intended to conquer Ukraine with fewer than 200,000 men. Indeed, a central truth of the war that observers simply must come to grasps with is the fact that the Russian army has been badly outnumbered from day one, despite Russia having an enormous demographic advantage over Ukraine itself. On paper, Russia has committed an expeditionary force of less than 200,000 men, though of course that full amount has not been on the frontline in active combat lately.

The light force deployment is related to Russia’s rather unique service model, which has combined “contract soldiers” – the professional core of the army – with a reservist pool that is generated with an annual conscription wave. Russia consequentially has a two-tiered military model, with a world class professional ready force and a large pool of reserve cadres that can be dipped into, augmented with auxiliary forces like BARS (volunteers), Chechens, and LNR-DNR militia.

This two-tiered, mixed service model reflects, in some ways, the geostrategic schizophrenia that plagued post-Soviet Russia. Russia is an enormous country with potentially colossal, continent spanning security commitments, which inherited a Soviet legacy of mass. No country has ever demonstrated a capacity for wartime mobilization on a scale to match the USSR. The transition from a Soviet mobilization scheme to a smaller, leaner, professional ready force was part and parcel of Russia’s neoliberal austerity regime throughout much of the Putin years.

It is important to understand that military mobilization, as such, is also a form of political mobilization. The ready contract force required a fairly low level of political consensus and buy-in from the bulk of the Russian population. This Russian contract force can still accomplish a great deal, militarily speaking – it can destroy Ukrainian military installations, wreak havoc with artillery, bash its way into urban agglomerations in the Donbas, and destroy much of Ukraine’s indiginous war-making potential. It cannot, however, wage a multi-year continental war against an enemy which outnumbers it by at least four to one, and which is sustained with intelligence, command and control, and material which are beyond its immediate reach – especially if the rules of engagement prevent it from striking the enemy’s vital arteries.

More force deployment is needed. Russia must transcend the neoliberal austerity army. It has the material capacity to mobilize the needed forces – it has many millions in its reservist pool, enormous inventories of equipment, and indigenous production capacity undergirded by the natural resources and production potential of the Eurasian bloc that has closed ranks around it. But remember – military mobilization is also political mobilization.

The Soviet Union was able to mobilize tens of millions of young men to blunt, swamp, and eventually annihilate the German land army because it wielded two powerful political instruments. The first was the awesome and far reaching power of the Communist Party, with its ubiquitous organs. The second was the truth – German invaders had come with genocidal intent (Hitler at one point mused that Siberia could be turned into a Slav reservation for the survivors, which could be bombed periodically to remind them who was in charge).

Putin lacks a coercive organ as powerful as the Communist Party, which had both astonishing material power and a compelling ideology which promised to bring about an accelerated path to non-capitalist modernity. Indeed, no country today has a political apparatus like that splendid communist machine, save perhaps China and North Korea. So, in the absence of a direct lever to create political – and hence military – mobilization, Russia must find an alternative route to creating a political consensus to wage a higher form of war.

This has now been accomplished, courtesy of western Russophobia and Ukraine’s penchant for violence. A subtle, but profound transformation of the Russian socio-political body is underway.

Creating Consensus

Putin and those around him conceived of the Russo-Ukrainian War in existential terms from the very beginning. It is unlikely, however, that most Russians understood this. Instead, they likely viewed the war the same way Americans viewed the war in Iraq and Ukraine – as a justified military enterprise that was nevertheless merely a technocratic task for the professional military; hardly a matter of life and death for the nation. I highly doubt that any American ever believed that the fate of the nation hinged on the war in Afghanistan (Americans have not fought an existential war since 1865), and judging by the recruitment crisis plaguing the American military, it does not seem like anyone perceives a genuine foreign existential threat.

What has happened in the months since February 24 is rather remarkable. The existential war for the Russian nation has been incarnated and made real for Russian citizens. Sanctions and anti-Russian propaganda – demonizing the entire nation as “orcs” – has rallied even initially skeptical Russians behind the war, and Putin’s approval rating has soared. A core western assumption, that Russians would turn on the government, has reversed. Videos showing the torture of Russian POWs by frothing Ukrainians, of Ukrainian soldiers calling Russian mothers to mockingly tell them their sons are dead, of Russian children killed by shelling in Donetsk, have served to validate Putin’s implicit claim that Ukraine is a demon possessed state that must be exorcised with high explosives. Amidst all of this – helpfully, from the perspective of Alexander Dugin and his neophytes – American pseudo-intellectual “Blue Checks” have publicly drooled over the prospect of “decolonizing and demilitarizing” Russia, which plainly entails the dismemberment of the Russian state and the partitioning of its territory. The government of Ukraine (in now deleted tweets) publicly claimed that Russians are prone to barbarism because they are a mongrel race with Asiatic blood mixing.

Simultaneously, Putin has moved towards – and ultimately achieved – his project of formal annexation of Ukraine’s old eastern rim. This has also legally transformed the war into an existential struggle. Further Ukrainian advances in the east are now, in the eyes of the Russian state, an assault on sovereign Russian territory and an attempt to destroy the integrity of the Russian state. Recent polling shows that a supermajority of Russians support defending these new territories at any cost.

All domains now align. Putin and company conceived of this war from the beginning as an existential struggle for Russia, to eject an anti-Russian puppet state from its doorstep and defeat a hostile incursion into Russian civilizational space. Public opinion is now increasingly in agreement with this (surveys show that Russian distrust of NATO and “western values” have skyrocketed), and the legal framework post-annexation recognizes this as well. The ideological, political, and legal domains are now united in the view that Russia is fighting for its very existence in Ukraine. The unification of the technical, ideological, political, and legal dimensions was, just moments ago, described by the head of Russia’s communist party, Gennady Zyuganov:

“So, the President signed decrees on the admission of the DPR, LPR, Zaporozhye and Kherson regions into Russia. Bridges are burned . What was clear from the moral and statist points of view has now become a legal fact: on our land there is an enemy, he kills and maims the citizens of Russia. The country demands the most decisive action to protect compatriots. Time does not wait.”

A political consensus for higher mobilization and greater intensity has been achieved. Now all that remains is the implementation of this consensus in the material world of fist and boot, bullet and shell, blood and iron.

A Brief History of Military Force Generation

One of the peculiarities of European history is the truly shocking extent to which the Romans were far ahead of their time in the sphere of military mobilization. Rome conquered the world largely because it had a truly exceptional mobilization capacity, for centuries consistently generating high levels of mass military participation from the male population of Italy. Caesar brought more than 60,000 men to the Battle of Alesia when he conquered Gaul – a force generation that would not be matched for centuries in the post-Roman world.

After the fall of the Western Roman Empire, state capacity in Europe deteriorated rapidly. Royal authority in both France and Germany was curtailed as the aristocracy and urban authorities grew in power. Despite the stereotype of despotic monarchy, political power in the middle ages was highly fragmented, and taxation and mobilization were highly localized. The Roman capacity to mobilize large armies that were centrally controlled and financed was lost, and warfare became the domain of a narrow fighting class – the petty gentry, or knights.

Consequentially, medieval European armies were shockingly small. At pivotal English-French battles like Agincourt and Crecy, English armies numbered less than 10,000, and the French no more than 30,000. The world historical Battle of Hastings – which sealed the Normal conquest of Britain – pitted two armies of fewer than 10,000 men against each other. The Battle of Grunwald – in which a Polish-Lithuanian coalition defeated the Teutonic Knights – was one of the largest battles in Medieval Europe and still featured two armies that numbered at most 30,000.

European mobilization powers and state capacity were shockingly low in this era compared to other states around the world. Chinese armies routinely numbered in the low hundreds of thousands, and the Mongols, even with significantly lower bureaucratic sophistication, could field 80,000 men.

The situation began to shift radically as intensified military competition – in particular the savage 30 years’ war – forced European states to at last begin a shift back towards centralized state capacity. The model of military mobilization shifted at last from the servitor system – where a small, self-funded military class provided military service – to the fiscal military state, where armies were raised, funded, directed, and sustained through the fiscal-bureaucratic systems of centralized governments.

Through the early modern period, military service models acquired a unique admixture of conscription, professional service, and the servitor system. The aristocracy continued to provide military service in the emerging officer corps, while conscription and impressment were used to fill out the ranks. Notably, however, conscripts were inducted into very long terms of service. This reflected the political needs of monarchy in the age of absolutism. The army was not a forum for popular political participation in the regime – it was an instrument for the regime to defend itself from both foreign enemies and peasant jacqueries. Therefore, conscripts were not rotated back into society. It was necessary to turn the army into a distinct social class with some element of remoteness from the population at large – this was a professional military institution that served as an internal bulwark of the regime.

The rise of nationalistic regimes and mass politics allowed the scale of armies to increase much further. Governments in the late 19th century now had less to fear from their own populations than did the absolute monarchies of the past – this changed the nature of military service and at last returned Europe to the system that the Romans had in millennia past. Military service was now a form of mass political participation – this allowed for conscripts to be called up, trained, and rotated back into society – the reserve cadre system that characterized armies in both of the world wars.

In sum, the cycle of military mobilization systems in Europe is a mirror of the political system. Armies were very small during the era where there was little to no mass political participation with the regime. Rome fielded large armies because there was significant political buy-in and a cohesive identity in the form of Roman citizenship. This allowed Rome to generate high military participation, even in the Republican era where the Roman state was very small and bureaucratically sparse. Medieval Europe had fragmented political authority and an extremely low sense of cohesive political identity, and consequently its armies were shockingly small. Armies began to grow in size again as the sense of national identity and participation grew, and it is no coincidence that the largest war in history – the Nazi-Soviet War – was fought between two regimes that had totalizing ideologies that generated an extremely high level of political participation.

That brings us to today. In the 21st century, with its interconnectedness and crushing availability of both information and misinformation, the process of generating mass political – and hence military – participation is much more nuanced. No country wields a totalizing utopian vision, and it is inarguable that the sense of national cohesion is significantly lower now than it was one hundred years ago.

Putin, very simply, could not have conducted a large scale mobilization at the onset of the war. He possessed neither a coercive mechanism nor the manifest threat to generate mass political support. Few Russians would have believed that there was some existential threat lurking in the shadow – they needed to be shown, and the west has not disappointed. Likewise, few Russians would likely have supported the obliteration of Ukrainian infrastructure and urban utilities in the opening days of the war. But now, the only vocal criticism of Putin within Russia is on the side of further escalation. The problem with Putin, from the Russian perspective, is that he has not gone far enough. In other words – mass politics have already moved ahead of the government, making mobilization and escalation politically trivial. Above all, we must remember that Clausewitz’s maxim remains true. The military situation is merely a subset of the political situation, and military mobilization is also political mobilization – a manifestation of society’s political participation in the state.

Time and Space

Ukraine’s offensive phase continues on multiple fronts. They are pushing into northern Lugansk, and after weeks of banging their heads against a wall in Kherson, they have finally made territorial progress. Yet, just today, Putin said that it is necessary to conduct medical examinations of the children in the newly admitted oblasts and rebuild school playgrounds. What is going on? Is he totally detached from events at the front?

There are really only two ways to interpret what is happening. One is the western spin: the Russian army is defeated and depleted and is being driven from the field. Putin is deranged, his commanders are incompetent, and Russia’s only card left to play is to throw drunk, untrained conscripts into the meat grinder.

The other is the interpretation that I have advocated, that Russia is massing for a winter escalation and offensive, and is currently engaged in a calculated trade wherein they give up space in exchange for time and Ukrainian casualties. Russia continues to retreat where positions are either operationally compromised or faced with overwhelming Ukrainian numbers, but they are very careful to extract forces out of operational danger. In Lyman, where Ukraine threatened to encircle the garrison, Russia committed mobile reserves to unblock the village and secure the withdrawal of the garrison. Ukraine’s “encirclement” evaporated, and the Ukrainian interior ministry was bizarrely compelled to tweet (and then delete) video of destroyed civilian vehicles as “proof” that the Russian forces had been annihilated.

Russia will likely continue to pull back over the coming weeks, withdrawing units intact under their artillery and air umbrella, grinding down Ukrainian heavy equipment stocks and wearing away their manpower. Meanwhile, new equipment continues to congregate in Belgorod, Zaporizhia, and Crimea. My expectation remains the same: episodic Russian withdrawal until the front stabilizes roughly at the end of October, followed by an operational pause until the ground freezes, followed by escalation and a winter offensive by Russia once they have finished amassing sufficient units.

There is an eerie calm radiating from the Kremlin. Mobilization is underway – 200,000 men are currently undergoing refresher training at ranges around Russia. Trainloads of military equipment continue to flood across the Kerch bridge, but Ukraine’s offensive plods on with no Russian reinforcements to be seen at the front. The disconnect between the Kremlin’s stoicism and the deterioration of the front are striking. Perhaps Putin and the entire Russian general staff really are criminally incompetent – perhaps the Russian reserves really are nothing but a bunch of drunks. Perhaps there is no plan.

Or perhaps, Russia’s sons will answer the call of the motherland again, as they did in 1709, in 1812, and in 1941.

As the wolves once more prowl at the door, the old bear rises again to fight.

Kit Klarenberg: Documents Show Before Ukraine blew up Kerch Bridge, British spies plotted it

Map of Eurasia

By Kit Klarenberg, The Grayzone, 10/10/22

The secret British intelligence plot to blow up Crimea’s Kerch Bridge is revealed in internal documents and correspondence obtained exclusively by The Grayzone.

The Grayzone has obtained an April 2022 presentation drawn up for senior British intelligence officers hashing out an elaborate scheme to blow up Crimea’s Kerch Bridge with the involvement of specially trained Ukrainian soldiers. Almost six months after the plan was circulated, Kerch Bridge was attacked in an October 8th suicide bombing apparently overseen by Ukraine’s SBU intelligence services.

Detailed proposals for providing “audacious” support to Kiev’s “maritime raiding operations” were drafted at the request of Chris Donnelly, a senior British Army intelligence operative and veteran high ranking NATO advisor. The wide-ranging plan’s core component was “destruction of the bridge over the Kerch Strait.” 

Documents and correspondence plotting the operation were provided to The Grayzone by an anonymous source. 

The truck bombing of the Kerch Bridge differed operationally from the plot sketched therein. Yet, Britain’s evident interest in planning such an attack underscores the deep involvement of NATO powers in the Ukraine proxy war. At almost precisely the time that London reportedly sabotaged peace talks between Kiev and Moscow in April this year, British military intelligence operatives were drawing up blueprints to destroy a major Russian bridge crossed by thousands of civilians per day.

The roadmap was produced by Hugh Ward, a British military veteran. A number of strategies for helping Ukraine “pose a threat to Russian naval forces” in the Black Sea are outlined. The overriding objectives are stated as aiming to “degrade” Russia’s ability to blockade Kiev, “erode” Moscow’s “warfighting capability”,  and isolate Russian land and maritime forces in Crimea by “denying resupply by sea and overland via Kerch bridge.”

Read the complete blueprint: Support for Maritime Raiding Operations – Proposal

Continue reading article here.

Larry Elliott: Ukrainian economy will shrink at rate eight times that of Russia, World Bank forecasts

Photo by Karolina Grabowska on Pexels.com

By Larry Elliott, The Guardian, 10/4/22

Ukraine’s economy will shrink at a rate eight times that of Russia this year as a result of the war triggered by Moscow’s invasion in February, the World Bank has estimated.

In its latest report on Europe and central Asia, the Washington-based institution said the Ukrainian economy would contract by 35% in 2022, compared with a 4.5% fall in Russian GDP.

Earlier estimates had suggested the Kremlin faced a bigger economic hit this year, but the World Bank said the impact of sanctions had so far been less severe than forecast.

Kyiv has been making military advances in recent weeks, and since April the Ukrainian economy has shown signs of growth. Yet the Bank said recovery would be slow and the cost of repairing the damage inflicted by the war would be enormous. It put the cost at a minimum of $349bn (£303bn) – more than one-and-a-half times the country’s prewar gross domestic product.

Ukraine was already Europe’s poorest country even before the war began in February this year, but more than seven months of conflict meant a third of its population of 44 million had been displaced and 60% were living below the national poverty line.

“Russia’s invasion of Ukraine has triggered one of the biggest human displacement crises and exacted a heavy toll on human and economic life,” said Anna Bjerde, World Bank vice-president for the Europe and Central Asia region.

“Ukraine continues to need enormous financial support as the war needlessly rages on as well as for recovery and reconstruction projects that could be quickly initiated.”

Inflation had accelerated rapidly, reaching an annual rate of just under 24% in April, with high food price inflation hurting families, particularly the poor.

The repercussions of the war were expected to persist, with the economy scarred by the destruction of productive capacity, damage to arable land, and reduced labour supply. The risk of refugees not returning was becoming more and more likely, with the war now running into its eighth month and those fleeing the conflict increasingly settled in host countries.

By contrast, the World Bank said rocketing energy prices had helped cushion the blow to Russia from sanctions.

“The sanctions imposed on Russia following its war in Ukraine are having significant adverse economic impacts, albeit less severe in the short term than first expected”, it said.

“The initial shock was mitigated by the authorities’ strong fiscal response, capital controls, monetary tightening, swift action to stem financial sector risks, as well as high foreign exchange inflows driven by the surge in global commodity prices.”

The World Bank said the freezing of half Russia’s international reserves and weaker domestic oil and gas revenues had helped make the country more vulnerable to a fall in global energy prices.

“Moreover, the sanctions have led to a dramatic drop in total imports, restricting access to new technologies and equipment, and external financing, and thereby dampening medium to long-term growth prospects,” the report added.

Jeffrey Sachs: End Ukraine proxy war or face “armageddon”

Link here.

Max Blumenthal and Aaron Mate interview Jeffrey Sachs.

Melvin Goodman: United States and Russia: Dangerous Export of Democracy and Dictatorship

By Melvin Goodman, Counterpunch, 10/4/22

Earlier this month, the Department of State circulated to our embassies around the world its report on Russian efforts to sway elections and exert political influence in more than two dozen countries over the past ten years. According to the study, Russia has covertly given at least $300 million to political parties and politicians in order to “shape foreign political environments in Moscow’s favor.”

The State Department wants our embassies to share this information widely as part of the Biden administration’s Summit for Democracy and to ensure that governments are not complacent about the Russian threat. In calling attention to this study, the Washington Post editorialized that “democracies must stand guard.”

The policy and intelligence communities have substantial expertise in this area because the United States has been the global leader in election interference and regime change since the end of the Second World War. The strategic failures of the Central Intelligence Agency in this field are legendary. The classic case of CIA interference took place in Guatemala from 1952 to 1954, an operation codenamed PBSUCCESS. The congressional investigations of illegal CIA activities in the 1970s omitted the Guatemalan operation because it was such an embarrassment to the image of the United States and the Eisenhower administration.

President Dwight D. Eisenhower was also responsible for the strategic nightmare in Iran in 1953, when we paved the way for the accession of the Shah of Iran, and in the Congo, which led to the emergence of Joseph Mobutu, the worse tyrant in Africa’s history. In Iran, the CIA harassed religious figures, even bombed their homes, in order to turn them against the Mossadegh government. In the Congo, Eisenhower endorsed an assassination attempt against Patrice Lumumba in 1959 because of the latter’s socialist leanings.

As a result, dozens of U.S. embassies should think twice before informing their host governments of Russian influence operations because these governmental officials presumably have vivid memories of far worse U.S. and CIA covert operations that supported various criminal, dictatorial, or militarist organizations in their own countries. The White House endorsed CIA operations that tried to assassinate foreign leaders; sponsor guerrilla wars or insurgencies; or bankroll key members of political parties, such as the Christian Democratic Party in Italy or the Liberal Democratic Party in Japan. The list of targeted countries is a long one that includes Afghanistan, Albania, Angola, Bolivia, China, Cuba, the Dominican Republic, Georgia, Greece, Haiti, Hungary, Indonesia, Iraq, Laos, Malaysia, Nicaragua, North Korea, North Vietnam, Oman, Poland, Thailand, Tibet, Turkey, and Venezuela to name a few. We know little about the efforts of the United States to invest several billion dollars on influence operations in Ukraine and Georgia, including the promotion of anti-government riots, in the wake of the collapse of the Soviet Union

Much of the covert activity stemmed from a putative belief in the domino theory that posited that, if one country in region came under the influence of communism, then the surrounding countries would follow suit. Again, it was President Eisenhower, referring to communism in Indochina, who described the “falling domino” theory as a “beginning of a disintegration that would have the most profound influences.” In 1954, Eisenhower warned that “if Vietnam were lost, or if Laos and Vietnam were lost, the dominoes would fall.”

The military-industrial complex had enormous success using the simplistic domino theory to exaggerate the threat to U.S. interests. The Pentagon was the initial source of the threat exaggeration, regularly overestimating the military capabilities of the Soviet Union and now China. The U.S. General Accounting Office concluded in 1992 that the exaggeration of the Soviet threat was used to justify the modernization of U.S. strategic nuclear systems in the administrations of Carter, Reagan, and Bush. More recently, the importance of “counterinsurgency” and the tactics of “terror and extortion” have been similarly ridiculous battle cries. The mainstream media have largely echoed U.S. propaganda in this regard.

Political theorists and politicians are citing the combined Sino-Russian threat to justify another wasteful round of spending on strategic weaponry. The lead editorial in the New York Times on September 28 argued that the Biden administration is “endangering” the United States by not funding a military that can “adequately carry out our defense commitments, a dangerous posture for a great power.” In fact, the United States allocates more spending to defense than the rest of the world combined. The editorial argued that Congress was forced to increase the defense budget because the Biden administration has not issued a National Security Strategy, a boilerplate document that actually carries little weight in national security decision making. Congress typically asks for greater spending on defense than the White House or even the Pentagon deems sufficient because of a bipartisan agreement that views the defense budget as a jobs bill to bolster the economies of each and every state.

Democratic and Republican administrations have used false notions regarding a domino theory to justify various covert actions, including political assassination and regime change. The Truman administration used the domino theory to justify aid to Greece and Turkey. The chairman of the Senate Foreign Relations Committee, Arthur Vandenberg, told Truman that he would have to “scare the hell out of the American people” to get support for aiding Greece and Turkey.

Secretary of State Dean Acheson argued that “corruption of Greece would infect Iran and all [nations] to the east. Such corruption would also carry infection to Africa through Asia Minor and Egypt, and to Europe through Italy and France.” The domino theory was similarly used to justify U.S. involvement in Vietnam, although the North Vietnamese were conducting a nationalist revolution. American presidents regularly use Vandenberg’s scare tactics to bolster defense spending.

Most recently, the Pentagon used the domino theory to defend a continued military presence in Afghanistan, and to provide an obstacle to the efforts of the past three presidents to withdraw U.S. forces. Politicians and pundits are arguing that Russian success in Ukraine would enable the Kremlin to threaten Ukraine’s neighbors, even though it is obvious that Russian forces cannot even contend with the challenge of occupying Ukraine, let alone take on additional military challenges. Decades of political and military futility in Vietnam, Iraq, and Afghanistan have only worsened the atmosphere of fear and uncertainty in decision making circles that leads to the exaggeration of the threat and the misuse of military and clandestine capabilities.

The United States and Russia are powers with self-serving ambitions, but their covert actions have produced more failures than successes. Even so-called short-term “successes” such as the coup in Iran have become long-term failures or liabilities. Clandestine Soviet activities in East Europe in the Cold War have created an East European membership for the North Atlantic Treaty Organization that is passionately anti-Russian. U.S. covert action in Central America merely increased the violence in that region, bringing great embarrassment and substantial emigration to the United States.

“Whatsoever a man sowed, that shall he also reap.”

Melvin A. Goodman is a senior fellow at the Center for International Policy and a professor of government at Johns Hopkins University. A former CIA analyst, Goodman is the author of Failure of Intelligence: The Decline and Fall of the CIA and National Insecurity: The Cost of American Militarism. and A Whistleblower at the CIA.

Ben Aris: Kremlin preparing for a protracted conflict by putting Russian economy onto a war footing

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By Ben Aris, Intellinews, 9/30/22

The Kremlin is preparing for a protracted conflict and putting the Russian economy on a war footing. Details from the draft 2023-2025 budget show that spending on the Russian army this year will amount to almost RUB5 trillion ($86.2bn), up from the RUB3.5 trillion originally planned. In subsequent years spending will also exceed forecasts.

The extra spending is to cover the surge of troops being sent to Ukraine following Russian President Vladimir Putin’s partial mobilisation order on September 21.

According to some estimates, 300,000 draftees will cost the Russian federal budget RUB1.3 trillion per year. This is slightly less than the budget’s surplus in the first half of this year. The salary of a contract soldier sent to Ukraine is RUB250,000. One contractor will cost the Ministry of Defence RUB373,000 a month, if contractors and other expenses are taken into account, and 300,000 would be RUB112bn a month.

“Mobilisation spending will put a new burden on the federal budget, where this year, according to the Ministry of Finance, the deficit will be RUB1.7 trillion, and next year it will increase to RUB3 trillion (2% of GDP),” BCS GM said in a note.

Initially, RUB3.5 trillion was included in the 2022 budget, some details of which were released in the middle of September, under the “national defence” item, but that spending has now been dramatically increased.

At the same time, the Kremlin is increasing expenditures on the police, apparently fearing opposition protests, report independent journalists Farida Rustamova and Maxim Tovkaylo in a substack post on Putin’s escalation of the war.

According to expert calculations, Russia will spend at least RUB7.7 trillion on the war in Ukraine and the reconstruction of the annexed territories in 2022-2025.

​​War spending is likely to lift the breakeven oil price for the budget to $97 per barrel in 2022 vs $60 per barrel in 2021, says BCS GM.

“Oil and gas revenues have been the main support for the Russian economy in 1H22; however, since 2H22, the situation changed as sanctions pressure on Russian energy exports increased. Concurrently, the ruble strengthening also reduced the domestic currency value of oil and gas revenues. A combination of these forces together with higher budget spending increased the breakeven oil price for 2022 to $100 per barrel (last seen in 2014),” BCS GM said in a note.

In addition, the Ministry of Finance has ordered a 10% cut in expenditure across the board of non-protected items, excluding key payments like pensions.

The government surprised with an unexpected announcement in September that it was raising tariffs for households on energy, water and heat up to 9% early from December 1, instead of the scheduled mid-2023 increase within 4%. The move is especially sensitive for poorer Russians including pensioners.

And the business lobby protested loudly after the finance ministry increased the obligatory social payments as a way to raise taxes and revenues. Russia’s largest business lobby, RSPP, issued an unusually stark statement complaining about “surprising amendments to the system of social insurance payments which contradict earlier agreement [between large businesses and the state]”.

From 2023, the government plans to increase the base for calculating social insurance premiums. The single cap on fully contributory salaries will rise to RUB1.92mn. against the RUB1.57mn contribution planned before tough sanctions were imposed.

The maximum value of the base for calculating insurance premiums, which employers will begin to pay in a single payment from 2023, will be RUB1.917mn from January 1, 2023. This follows from the draft budget of the Social Fund, which RBC got acquainted with.

From 2023, Russia will merge the Pension Fund (PFR) and the Social Insurance Fund (FSS) into a single Social Fund. In addition to administrative changes, the merger involves a new model for paying insurance premiums: from 2023, all employers will pay both pension contributions and payments for social and medical insurance in the same amount (30% of the wage fund), but in the form of a single payment and based on the availability of a single base.

As long as the employee’s cumulative total salary within a year does not exceed the base, companies pay the full tariff (30%) from it, and if the amount of earnings is higher, the tariff is reduced to a preferential rate of 15.1%. Thus the higher the marginal value of the base, the longer the full insurance premiums for the employee are transferred.

Russia’s budget deficit will stand at 0.9% of the gross domestic product (GDP), or RUB1.313 trillion, in 2022, according to the draft budget for 2023-2025 seen by PRIME on September 23.

Russia’s budget deficit will amount to 2% of GDP or around RUB3 trillion in 2023, Prime Minister Mikhail Mishustin said on September 20 at a meeting of the government’s budget commission.

In a speech in early September, Putin said there would be no deficit this year.

Budget revenue will amount to RUB27.693 trillion, including RUB11.666 trillion of oil and gas and RUB16 trillion of non-oil and gas income, while spending will be RUB29 trillion, according to the new draft budget that will be sent to the Duma for approval before the end of this year.

In 2023, budget revenue is expected to be more than RUB26.1 trillion and spending to hit RUB29.056 trillion.

The finance ministry plans to borrow RUB1.747 trillion through OFZ government bonds in 2023, RUB1.938 trillion in 2024 and RUB2 trillion in 2025 – less than half of the annual borrowing plans of preceding years.

The finance ministry’s moves are designed to head off problems further down the road. Although Russia’s economy has been doing better than expected and its balance sheet looks strong, the structure of the government’s revenues contains some large weaknesses.

“While on the surface Russia’s fiscal accounts appear strong, with debt-to-GDP at about 17% and a fiscal deficit of 2% in 2022, they hide important vulnerabilities due to Russia’s reliance on oil and gas revenues. Energy extraction and export taxes account for more than 40% of total federal budget revenues. Without them, Russia’s federal budget would have been in persistently large deficits over the last decade,” Institute of International Finance (IIF) said in a note.

Russia has been enjoying very large inflows from oil and gas exports after the war pushed the prices of both commodities up to record levels.

Russia’s current account was still well in surplus in August. According to the preliminary estimate of the Russian central bank, the surplus was $16.5bn in August. The surplus was clearly smaller compared to the peak readings of recent months, but still at a historically high level. In January-August, a surplus of around $180bn was accumulated – more than double the previous record. This year, the surplus has also varied exceptionally widely from month to month.

“However, fiscal dynamics are even more critical for Russia’s ability to wage the war on Ukraine. Due to the high commodity prices and the seasonally low government spending, Russia ran a fiscal surplus of RUB1.3 trillion during 1H2022. However, a combination of the ruble strengthening, sharply lower gas exports, as well as somewhat higher expenditure pushed the federal budget into substantial deficits in July – August. While expenditures picked up markedly in July, the trend did not continue into August, so we will be closely watching the developments into the end of the year,” IIF said.

Even though Russia initially budgeted a fiscal surplus of 1.1% of GDP this year, IIF expects it to reach a deficit of about 2-3% in 2022. With Russia already cutting off the gas supply to Europe and oil prices stabilising, pressure on Russia’s fiscal accounts will continue to mount.

“For now, Russia can finance higher spending from the National Wealth Fund (NWF), currently at about 8% of GDP or $200bn, and domestic MinFin bond (OFZ) issuance,” says IIF. “However, up to 40% of the NWF appears to be already committed to anti-crisis measures, and close to $35bn allegedly frozen alongside the Bank of Russia reserves.” The finance ministry restarted OFZ issuance in September, which had been temporarily cancelled due to market volatility. The first auctions were heavily oversubscribed, given the limited investment opportunities for domestic banks flush with liquidity. Russia’s financial sector is dominated by public banks (accounting for more than two-thirds of total assets) with room to increase their holdings.

“The financial system has largely recovered from the March liquidity shock, and the structural liquidity surplus of the banking system vis-à-vis the Bank of Russia is back at RUB2.8 trillion ($47bn), which should allow banks to absorb significant additional issuance,” says IIF.

But the government is well aware that things will get tough soon. The medium-term budget for 2023 and beyond assumes a 25% reduction in oil and gas revenues by 2025 and a fall in oil prices to about $60 per barrel.

As a result of the sharp decrease in oil and gas revenues, the government is considering bringing back the fiscal rule that requires saving all oil and gas revenues above a certain Urals price cut-off point, reports IIF.

“We believe the authorities are overly optimistic expecting other revenues to fully compensate for the loss of oil and gas inflows, thus allowing government spending to stay flat in nominal terms. The government will need to find spending cuts of at least 10-15% during this period to keep the deficits in the 2-3% range,” says IIF. The finance ministry has already ordered 10% spending cuts, but it remains to be seen if they can be implemented.

In response to the combined oil price drop and sanctions shock in 2014, Russia implemented expenditure cuts on a par with most of the IMF crisis programmes.

Alexander Mercouris: Ukraine Sabotage Crimea Bridge, Russia Threatens Retaliation, Problems with Starlink, Biden Criticised for Armageddon Comment

Link here.

Moon of Alabama gives his analysis of the Crimea bridge attack here and also discusses the possible implications of the faltering Starlink system in Ukraine.

The most recent reporting from RT states that auto traffic is currently moving on the side of the Kerch bridge that is undamaged and rail service is expected to be back online this evening. Putin has ordered enhanced security in and around the bridge:

Russian President Vladimir Putin issued a new order on Saturday demanding the Russian Federal Security Service (FSB) enhance security of “the Kerch Strait transport corridor.” This comes after the Crimean Bridge was damaged in a truck explosion early on Saturday.

At least three people are believed to have died as a result of the truck explosion on the bridge. Additional ferry service is to be started to make up for the one side of the bridge that is closed to auto traffic due to damage. It is uncertain at this time how long it will take to repair.

Michael Hudson on The Euro Without Germany

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By Michael Hudson, Naked Capitalism, 9/30/22

Michael Hudson is a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is The Destiny of Civilization.

The reaction to the sabotage of three of the four Nord Stream 1 and 2 pipelines in four places on Monday, September 26, has focused on speculations about who did it and whether NATO will make a serious attempt to discover the answer. Yet instead of panic, there has been a great sigh of diplomatic relief, even calm. Disabling these pipelines ends the uncertainty and worries on the part of US/NATO diplomats that nearly reached a crisis proportion the previous week, when large demonstrations took place in Germany calling for the sanctions to end and to commission Nord Stream 2 to resolve energy shortage.

The German public was coming to understand what it meant that their steel companies, fertilizer companies, glass companies and toilet-paper companies were shutting down. These companies were forecasting that they would have to go out of business entirely – or shift operations to the United States – if Germany did not withdraw from the trade and currency sanctions against Russia and permit gas and oil imports to resume, and presumably to fall back from their astronomical eight to tenfold increase.

Yet State Department hawk Victoria Nuland already had stated in January that “one way or another Nord Stream 2 will not move forward” if Russia responded to NATO/Ukrainian accelerated military attacks on the Russian-speaking eastern oblasts. President Biden backed up U.S. insistence on February 7, promising that “there will be no longer a Nord Stream 2. We will bring an end to it. … I promise you, we will be able to do it.”

Most observers simply assumed that these statements reflected the obvious fact that German politicians were fully in the US/NATO pocket. They held fast in refusing to authorize Nord Stream 2, and Canada soon seized the Siemens dynamos needed to send gas through Nord Stream 1. That seemed to settle matters until German industry – and a rising number of voters – finally began to calculate just what blocking Russian gas would mean for Germany’s industrial firm. 

Germany’s willingness to self-impose an economic depression was wavering – although not its politicians or the EU bureaucracy. If German policymakers were to put German business interests and living standards first, NATO’s common sanctions and New Cold War front would be broken. Italy and France might follow suit. That nightmare of European diplomatic independence made it urgent to take the anti-Russian sanctions out of the hands of democratic politics and settle matters by sabotaging the two pipelines. Despite being an act of violence, it has restored calm to international diplomatic relations between U.S. and German politicians. 

There is no more uncertainty about whether or not Europe will break away from U.S. New Cold War aims by restoring mutual trade and investment with Russia. That option is now out. The threat of Europe beaking away from the US/NATO trade and financial sanctions against Russia has been solved, seemingly for the foreseeable future, as Russia has announced that as the gas pressure falls in three of the four pipelines, the infusion of salt water will irreversibly corrode the pipes. (Tagesspiegel, September 28.) 

Where do the euro and dollar go from here?

Looking at how this trade “solution” will reshape the relationship between the U.S. dollar and the euro, one can understand why the seemingly obvious consequences of Germany, Italy and other European economies severing trade ties with Russia have not been discussed openly. The “sanctions debate” has been solved by a German and indeed Europe-wide economic crash. To Europe, the next decade will be a disaster. There may be recriminations against the price paid for letting its trade diplomacy be dictated by NATO, but there is nothing that it can do about it. Nobody (yet) expects it to join the Shanghai Cooperation Organization. What is expected is for its living standards to plunge.

Germany’s industrial exports were the major factor supporting the euro’s exchange rate. The great attraction to Germany in moving from the deutsche mark to the euro would avoid its export surplus from pushing up the D-mark’s exchange rate to a point where German products would be priced out of world markets. Expanding the currency to include Greece, Italy, Portugal, Spain and other countries running balance-of-payments deficit would prevent the currency from soaring. And that would protect the competitiveness of German industry.

After its introduction in 1999 at $1.12, the euro did indeed sink to $0.85 by July 2001, but recovered and indeed rose to $1.58 in April 2008. It has been drifting down steadily since then, and since February of this year the sanctions have driven the euro’s exchange rate below parity with the dollar to $0.97 this week. The major factor has been rising prices for imported gas and oil, and products such as aluminum and fertilizer requiring heavy energy inputs for their production. And as the euro’s exchange rate declines against the dollar, the cost of carrying its US-dollar debt – the normal condition for affiliates of U.S. multinationals – will rise, squeezing their profits.

This is not the kind of depression that “automatic stabilizers” can work “the magic of the marketplace” to restore economic balance. Energy dependency is structural. And the eurozone’s own economic rules limit its budget deficits to just 3% of GDP. This prevents its national governments supporting the economic by deficit spending. Higher energy and food prices – and dollar-debt service – will leave much less income to be spent on goods and services. 

It seems curious that the U.S. stock market soared – 500 points for the Dow Jones Industrial Average on Wednesday. Maybe it was simply the Plunge Protection Team intervening to try and reassure the world that everything was going to be all right. But economic reality raised its ugly head on Thursday, and the stock market gave back its phantom gains.

It is true that the end of German industrial competition with United States is ended on trade account. But on capital account, depreciation of the euro will reduce the value of U.S. investments in Europe and the dollar-value of any profits that these investments may still earn as the European economy shrinks. So reported earnings by U.S. multinationals will fall.

As a final kicker, Pepe Escobar pointed out on September 28 that “Germany is contractually obligated to purchase at least 40 billion cubic meters of Russian gas a year until 2030. … Gazprom is legally entitled to get paid even without shipping gas. That’s the spirit of a long-term contract. … Berlin does not get all the gas it needs but still needs to pay.” It looks like a long court battle before money will change hands – but Germany’s ability to pay will be steadily weakening.

For that matter, the ability of many countries’ ability to pay already is reaching the breaking point.

The effect of U.S. sanctions and New Cold War outside of Europe

International raw materials are still priced mainly in dollars, so the dollar’s rising exchange rate will raise import prices proportionally for most countries. This exchange-rate problem is intensified by the US/NATO sanctions forcing up world prices for gas, oil and grain. Many European and Global South countries already have reached the limit of their ability to service their dollar-denominated debts, and are still coping with the Covid pandemic. They cannot afford to import the energy and food that they need to live if they have to pay their foreign debts. The world economy is now exceeding its debt limits, so something has to give.

On Tuesday, September 27 when news of the Nord Stream gas attacks became known, U.S. Secretary of State Antony Blinken shed crocodile tears and said that attacking Russian pipelines was “in no one’s interest.” But if that really were the case, no one would have attacked the gas lines.

I have no doubt that U.S. strategists have a game plan for how to proceed from here, and to do so that indeed is in what the neocons claim to be in the U.S. interest – that of maintaining a unipolar neoliberalized and financialized global economy for as long as they can. 

They have long had a plan for countries that are unable to their foreign debts. The IMF will lend them the money, conditional upon the debtor country raising the foreign exchange to repay the (increasingly expensive) dollar loans by privatizing what remains of their public domain, natural-resource patrimony and other assets, mainly to U.S. financial investors and their allies.

Will it work? Or will debtor countries band together and work out ways to restore the seemingly lost world of affordable oil and gas prices, fertilizer prices, grain and other food prices, and metals or raw materials supplied by Russia, China and their allied Eurasian neighbors? 

That is the next great worry for U.S. global strategists. It seems less easy to solve than was done by the sabotage of Nord Stream 1 and 2. But the solution seems to be the usual U.S. approach: something military in nature, new color revolutions. The aim is to gain the same power over Global South and Eurasian countries that American diplomacy wielded over Germany and other European countries via NATO.

Unless an institutional alternative is created to the IMF, World Bank, International Court, World Trade Organization and the numerous UN agencies now biased by U.S. diplomats and their proxies, the coming decades will see the U.S. economic strategy of financial and military dominance unfold as Washington has planned.

The problem is that its plans for how the Ukraine war and anti-Russian sanctions have worked out so far have been just the reverse of what was announced. That may give some hope for the world’s future. The opposition and even contempt by U.S. diplomats to other countries acting in their own economic interest and social values is so strong that they are unwilling to think through just how these countries might develop their own alternative to the U.S. world plan.

The question is thus how successfully these other countries may develop their alternative new economic order, and how they can protect themselves from the fate that Europe has just imposed upon itself for the next decade.