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How US sanctions against Russia promoting bilateral trade and finance

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How US sanctions against Russia promoting bilateral trade and finance

Sanctions are forcing large volumes of trade and finance out of the ambit of traditional networks, weakening western control over such flows.

Tue Sep 23, 2014 2:19PM GMT

Western sanctions are having an unintended effect. They are accelerating the birth of a parallel ecosystem where countries not allied to the West are able to operate without the constant threat of sanctions. Free of western control, this alternative platform is gaining traction at a surprisingly fast pace.

It is worth mentioning at the start that western companies have a huge exposure in the Russian market. In contrast, Russia is primarily an exporter of commodities such as oil, gas, metals and minerals which are in great demand – especially in Asia’s ravenous markets. Bottom line: while western consumer and capital goods can be replaced by Asian manufacturers, Russian commodities are the lifeblood of economies in both Asia and Europe.

SWIFT move

The move towards a non-western world is happening most rapidly in the area of finance. This is hardly surprising because financial flows are easier to reroute – and replace – than say, a shipment of coal or an oil tanker.

Among the dozens of sanctions directed against Russia, the most extreme one was proposed by the UK, which pressed European Union leaders to block Russian access to the SWIFT banking transaction system. The Belgium-based SWIFT, which stands for the Society for Worldwide Interbank Financial Telecommunication, is the financial world’s very arteries.

Restricting Russian usage of SWIFT would no doubt disrupt financial and commercial activities in the country, but according to Richard Reid of the University of Dundee in Scotland it may carry a longer-term downside. “Large chunks of Russian international payments flows would move to much less well monitored and measured financial channels and thus be beyond sanctions at any future point,” he told Bloomberg News.

Although German Chancellor Angela Merkel swiftly rejected the British proposal as too extreme, the damage has been done. It is now abundantly clear to Moscow that the US-UK evil twins are not content with symbolic sanctions but are really out to destroy its economy. Anticipating this blow to its financial jugular, Russia had in July drawn up a law that would create a local equivalent of SWIFT.

The sanctions have also highlighted the synergy between Russia and China. Vesti Finance says sanctions aimed at restricting Russian access to finance will have almost no sense, since Russian companies will find the necessary money in China. And the Chinese are keen to increase the impact of the renminbi and turn it into the world’s reserve currency.

De-dollarization

The move to a parallel payment system is happening in tandem with the ditching of the US dollar on which the entire US economy – and hegemony – pivots. The dollar’s status as the reserve currency is due to it being the only currency accepted de-dollarization in the petroleum market, which is why it’s also known as the petrodollar.

That’s about to change as Russia and other emerging powers are planning to drop the petrodollar and end the dollar’s reserve status. But because the dollar’s dominance is so overwhelming in the petroleum trade, it would require someone really big to take it down.

That heavy hitter is Gazprom. Kommersant reports the Russian oil company has started shipping oil from the Arctic and the tankers will arrive in European ports this month, with payment to be received in rubles. Gazprom will also deliver oil via the Eastern Siberia-Pacific Ocean pipeline (ESPO), accepting payment in Chinese renminbi.

Finance portal Zero Hedge says, “Russia is actively pushing on with plans to put the US dollar in the rearview mirror and replace it with a dollar-free system – or a de-dollarized world.”

Citing the Voice of Russia, Zero Hedge says the country’s Ministry of Finance is ready to greenlight a plan to radically increase the role of the ruble in export operations while reducing the share of dollar-denominated transactions.

As Zero Hedge says, “The further the west antagonises Russia, and the more economic sanctions it lobs at it, the more Russia will be forced away from a US dollar-denominated trading system and into one which faces China and India.”

Worth mentioning is that the Siberia-sized $400 billion gas contract with China – which Moscow and Beijing had haggled over for a decade – finally got inked in May 2014, after westerns sanctions kicked in.

Military: That sinking feeling

It is a pointer to the paucity of strategic thinking in France and Germany that they are so easily swayed by the US-UK combine to welch on military contracts already inked with Russia. The built-in penalties aside, the breach of contract is guaranteed to alarm other buyers.

If Germany and France are planning to drive away their weapons customers, then they are doing a pretty good job of it. But look at it this way: perhaps that’s precisely what the US and UK have been planning all along – to attract disillusioned buyers.

As part of its military modernization, Russia had hired Germany’s Rheinmetall to build a modern military training facility. But under pressure from the US, Germany cancelled the $134 million contract. Strategy Page says Russia may turn to China to get the training centre built as China has obtained – or rather purloined – the technology and built its own.

“The growing list of sanctions against Russia has hit the Russian arms industry particularly hard because new Russian weapons depend on Western suppliers for some of the high tech components needed,” says Strategy Page. “China is taking advantage of this by pointing out it has become a major producer of high-end electronic and mechanical components, and can probably replace Western suppliers now unavailable because of the sanctions. While Russia does not buy a lot of foreign weapons it does buy a lot of high-tech components (especially electronic ones) from the West. A lot of these items are dual use items that China and other East Asian countries also manufacture. China backs Russian (moves in Ukraine) and is hostile to sanctions (which it has been under for several decades). Beijing believes it can replace enough western suppliers to Russia to create about $1 billion a year in additional business for Chinese firms.”

Similarly, India is watching – with a mix of amusement and dismay – France kowtow to the US and letting its $1.6 billion Mistral deal with Russia sink. France has been a reliable supplier of quality combat systems and has never welched on a deal with India. However, that was in the past when France had opted out of NATO. With Paris now syncing its foreign policy with the warlords in Washington, India’s military should be cagey about ‘Made in France’ technology.

Loss-loss for the West

As the US and EU fumble around in the dark, there is considerable activity in countries allied to Russia. As well as market-led movements (food exporters from Asia rushing in to fill Russian supermarket shelves) there are strategic moves afoot. For instance, the US and EU have a monopoly on wide body aircraft and also dominate the middle categories. The sanctions are just the push required to expedite aviation joint ventures, particularly between Russia and China in wide body aircraft and Russia and India in mid-size airliners.

The concept of a “World Without the West” was first articulated by American academics Steven Weber, Naazneen Barma and Ely Ratner. “By preferentially deepening their own ties among themselves, and in so doing loosening relatively the ties that bind them to the international system centered in the West, rising powers are building an alternative system of international politics whose endpoint is neither conflict nor assimilation with the West,” they say.

So in effect, by not playing by the rules and systems set by the West they are creating an alternative arrangement in which they neither enter into conflict situations with the West nor enter into subservient alliances (like those offered to South Korea and Japan).

Years from now, westerners will ruefully look back at the sanctions as the tipping point that ushered in a world without the West.

AN/AGB

http://www.presstv.ir/detail/2014/09/23/379745/us-sanctions-on-russia-dedollarization/

Written by Mika

23. septembra 2014. at 14:11

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Ukraine and neo-Nazis

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Ukraine and neo-Nazis

Ever since serious protest broke out in Ukraine in February the Western mainstream media, particularly in the United States, has seriously downplayed the fact that the usual suspects – the US/European Union/NATO triumvirate – have been on the same side as the neo-Nazis. In the US it’s been virtually unmentionable. I’m sure that a poll taken in the United States on this issue would reveal near universal ignorance of the numerous neo-Nazi actions, including publicly calling for death to “Russians, Communists and Jews”. But in the past week the dirty little secret has somehow poked its head out from behind the curtain a bit.

On September 9 NBCnews.com reported that “German TV shows Nazi symbols on helmets of Ukraine soldiers”. The German station showed pictures of a soldier wearing a combat helmet with the “SS runes” of Hitler’s infamous black-uniformed elite corps. (Runes are the letters of an alphabet used by ancient Germanic peoples.) A second soldier was shown with a swastika on his helmet.

On the 13th, the Washington Post showed a photo of the sleeping quarter of a member of the Azov Battalion, one of the Ukrainian paramilitary units fighting the pro-Russian separatists. On the wall above the bed is a large swastika. Not to worry, the Post quoted the platoon leader stating that the soldiers embrace symbols and espouse extremist notions as part of some kind of “romantic” idea.

Yet, it is Russian president Vladimir Putin who is compared to Adolf Hitler by everyone from Prince Charles to Princess Hillary because of the incorporation of Crimea as part of Russia. On this question Putin has stated:

The Crimean authorities have relied on the well-known Kosovo precedent, a precedent our Western partners created themselves, with their own hands, so to speak. In a situation absolutely similar to the Crimean one, they deemed Kosovo’s secession from Serbia to be legitimate, arguing everywhere that no permission from the country’s central authorities was required for the unilateral declaration of independence. The UN’s international court, based on Paragraph 2 of Article 1 of the UN Charter, agreed with that, and in its decision of 22 July 2010 noted the following, and I quote verbatim: No general prohibition may be inferred from the practice of the Security Council with regard to unilateral declarations of independence.

Putin as Hitler is dwarfed by the stories of Putin as invader (Vlad the Impaler?). For months the Western media has been beating the drums about Russia having (actually) invaded Ukraine. I recommend reading: “How Can You Tell Whether Russia has Invaded Ukraine?” by Dmitry Orlov

And keep in mind the NATO encirclement of Russia. Imagine Russia setting up military bases in Canada and Mexico, from the Atlantic to the Pacific. Remember what a Soviet base in Cuba led to

http://williamblum.org/aer/read/132

Written by Mika

16. septembra 2014. at 14:25

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Germans ‘Fed Up With NATO Lies and US Wars,’ Says Former Defense Secretary

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Germans ‘Fed Up With NATO Lies and US Wars,’ Says Former Defense Secretary
RT News (Russia) – Video

https://www.youtube.com/watch?v=54Y28LR3tyk

Willy Wimmer, former State Secretary of Germany’s Minister of Defence, comments on the fighting in Ukraine, and the likely response in his country and Europe. The German people, he says, are "fed up with Nato lies and they are fed up with wars organized by the United States." This sentiment is shared by people across the continent, he adds. Runtime: 5:16 mins.

Written by Mika

14. septembra 2014. at 20:16

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Since 9-11 America’s Insane Foreign Policy Has Killed a Million and Created ISIS

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Published on Alternet (http://www.alternet.org)

Home > Since 9-11 America’s Insane Foreign Policy — Continued Under Obama — Has Killed a Million and Created ISIS

Written by Mika

12. septembra 2014. at 11:57

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NATO deploys wishful thinking against Putin’s tanks

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http://ww2.nationalpost.com/m/wp/blog.html?b=fullcomment.nationalpost.com/2014/09/02/kelly-mcparland-nato-deploys-wishful-thinking-against-putins-tanks

Kelly McParland: NATO deploys wishful thinking against Putin’s tanks

Kelly McParland: NATO deploys wishful thinking against Putin’s tanks

The case for believing Russian President Vladimir Putin won’t risk a wider war while perusing his campaign in Ukraine is the assumption that no sane leader could be so reckless, foolhardy or mindless of history.

The Soviet Union lost 20 million dead in the Second World War, split evenly between military and civilian casualties. That followed nine million killed or wounded in the First World War. Thirty million people lost in two wars over three decades – that should be enough to convince even the most irresponsible of leaders that risking yet another European conflagration isn’t something to be joked about.

Yet Mr. Putin seems immune to such sensibilities. Visiting a youth camp near Moscow, Mr. Putin played the part he loves best, the macho strongman who likes to doff his shirt and show off his pecs.

“Russia is far from being involved in any large-scale conflicts,” he said. “We don’t want that and don’t plan on it. But naturally, we should always be ready to repel any aggression towards Russia.

“Russia’s partners… should understand it’s best not to mess with us … Thank God, I think no one is thinking of unleashing a large-scale conflict with Russia. I want to remind you that Russia is one of the leading nuclear powers.”

Mr. Putin knew his words would be recorded and broadcast to the powers that are trying to halt his “incursion” – as Washington insists on terming it – into Ukraine. They’re the words of a madman, except, of course, we know Mr. Putin isn’t mad. He may be calculating, ruthless, vain, boastful and imprudent, but he’s not mad. That may be what’s most worrying about his Ukraine escapade. None of the people who unleashed the horrors of those two previous wars were mad either. Just reckless, foolhardy, and mindless of history.

While The West assures itself the Russian leader can’t be serious in his demands for Ukraine to submit to his dictates, Mr. Putin gives every sign of meaning what he says. He has yet to lose a challenge to western powers. He sent Russian tanks to the Georgian provinces of South Ossetia and Abkhazia, and got away with it. He seized Crimea and got away with it. He allied himself with Syria’s President Bashar al Assad in challenging the U.S. and got away with it. And so far he’s managed to shrug of warnings against meddling in Ukraine, and is getting away with it. He treats efforts at diplomacy with contempt, pretending the Russian troops in Ukraine are “on vacation”, and just happened to take their tanks with them. None of the shaken fists and dire threats issued at his previous adventures has been followed up with action; why should he expect this one to be any different?

Ukrainians and Ukraine supporters demonstrate in front of the White House in Washington. AP Photo/Pablo Martinez Monsivais

Re: Russia Blusters, NATO Cowers, editorial, Sept. 3.

Accusing Russia of attacking Ukraine, NATO Secretary-General Anders Fogh Rasmussen said that, “This is the first time since the end of the Second World War that one European country has tried to grab another’s territory by force.” Maybe the Secretary-General has a case of amnesia, because, if memory serves, NATO countries themselves did just this just 15 years ago, when they attacked Serbia and grabbed the Serbian territory of Kosovo by force.

In the same speech, Mr. Rasmussen also said, “We strongly condemn Russia’s repeated violations of international law. This begs the question: Was he referring to the same international law that NATO countries violated when they attacked Serbia in 1999?
Stanko Vuleta, president, The Ottawa Serbian Heritage Society, Ottawa.

Written by Mika

6. septembra 2014. at 22:53

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Putin, Poroshenko Largely Agree on Ukraine Cease-Fire Steps

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Putin, Poroshenko Largely Agree on Ukraine Cease-Fire Steps

By Ilya Arkhipov, Daryna Krasnolutska and Angela Greiling KeaneSep 3, 2014

Russian President Vladimir Putin and his Ukrainian counterpart Petro Poroshenko agreed on steps toward a cease-fire in Ukraine’s easternmost regions, where a bloody conflict has raged for more than five months.

Putin backs the idea of an immediate truce, his spokesman Dmitry Peskov said today in Ulan Bator, Mongolia. A conversation between the two leaders resulted in an agreement on a “cease-fire regime” and they reached a mutual understanding on the steps toward peace, Poroshenko said on his website.

A lasting cease-fire would be the biggest breakthrough yet in the conflict that the United Nations estimates has cost at least 2,600 lives. Ukraine, the U.S. and Europe accuse Putin of backing pro-Russian rebels with troops and equipment. Russia, which faces further sanctions as early as this week over the unrest, has repeatedly denied involvement. Even amid talk of a truce, the fighting in eastern Ukraine intensified, with government forces bracing to defend the port city of Mariupol.

“The biggest risk to both a potential cease-fire and a possible larger political agreement would be that they might not be followed through,” Otilia Dhand, an analyst at Teneo Intelligence in London, said by e-mail. “The lack of clear chains of command on both sides and the likely popular backlash in Kiev mean that any kind of agreement could easily fail even before it is supposed to come into effect.”

Stocks, Ruble

Standoff in Ukraine

European stocks rose and the ruble rebounded, while U.S. Treasuries and the dollar declined. The Russian currency strengthened the most since April against the dollar, while the Micex stock index jumped 2.9 percent in Moscow, its biggest gain in three months. The Ukrainian Equities Index climbed 3.3 percent and Ukraine’s 2017 Eurobond rose for the first time in 11 days, pushing the yield 91 basis points lower to 12.637 percent.

While conciliatory statements from Russia haven’t always led to de-escalation in the past and previous cease-fires failed to hold, this is Poroshenko’s most definitive statement yet on progress in finding a solution to the conflict.

U.S. President Barack Obama, in Estonia today to reassure eastern European NATO members of their security before heading to the alliance summit in the U.K., expressed skepticism over the announcement.

Interpreting Putin

“We haven’t seen a lot of follow-up on so-called announced cease-fires,” Obama told reporters in the Estonian capital, Tallinn. If Russia “is serious about a political settlement, that is something we are hopeful for. I’ll leave it up to others to interpret Mr. Putin’s psychology on this.”

The European Commission, the European Union’s executive, will propose new sanctions that should be built on the current ones this afternoon, spokeswoman Pia Ahrenkilde-Hansen told reporters in Brussels today.

There were no other details about the conversation between Putin and Poroshenko. Pro-Russian rebels said Poroshenko didn’t agree to a cease-fire with them, RIA Novosti reported.

Peskov also denied Poroshenko’s earlier assertion that the leaders agreed on a permanent cease-fire, saying Russia can’t reach such an accord as it’s not part of the conflict. The Ukrainian president’s office deleted the word “constant” from its statement.

Meanwhile, fighting intensified in eastern Ukraine, with government troops killing 200 rebels in the past 24 hours, military spokesman Andriy Lysenko told reported in Kiev today. Insurgents were stealing coal and destroying gas pipelines in actions that Ukrainian authorities said were aimed at curbing energy flows to the EU.

Ukraine was preparing to defend Mariupol from rebel attack from land and sea and has sent more troops and equipment there, Defense Minister Valeriy Geletey said today on Facebook.

To contact the reporters on this story: Ilya Arkhipov in Ulaanbaatar, Mongolia at iarkhipov; Daryna Krasnolutska in Kiev at dkrasnolutsk; Angela Greiling Keane in Tallinn, Estonia at agreilingkea

To contact the editors responsible for this story: Balazs Penz at bpenz; James M. Gomez at jagomez Andrea Dudik, Andrew Langley

®2014 BLOOMBERG L.P. ALL RIGHTS RESERVED. http://www.bloomberg.com/news/print/2014-09-02/russia-says-u-s-europe-incite-party-of-war-in-ukraine.html

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Written by Mika

3. septembra 2014. at 11:22

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