Tuesday, 30 August 2022 — Moon of Alabama
Due to the stupidity of Europe’s political leadership the U.S. has managed to push it towards committing economic and social suicide.
On February 8 Michael Hudson, a research professor of Economics at University of Missouri, wrote about the then upcoming conflict in Ukraine which the U.S. was intentionally provoking.
The sanctions that U.S. diplomats are insisting that their allies impose against trade with Russia and China are aimed ostensibly at deterring a military buildup. But such a buildup cannot really be the main Russian and Chinese concern. They have much more to gain by offering mutual economic benefits to the West. So the underlying question is whether Europe will find its advantage in replacing U.S. exports with Russian and Chinese supplies and the associated mutual economic linkages.
What worries American diplomats is that Germany, other NATO nations and countries along the Belt and Road route understand the gains that can be made by opening up peaceful trade and investment. If there is no Russian or Chinese plan to invade or bomb them, what is the need for NATO? And if there is no inherently adversarial relationship, why do foreign countries need to sacrifice their own trade and financial interests by relying exclusively on U.S. exporters and investors?
Instead of a real military threat from Russia and China, the problem for American strategists is the absence of such a threat. …
The only way left for U.S. diplomats to block European purchases is to goad Russia into a military response and then claim that avenging this response outweighs any purely national economic interest. As hawkish Under-Secretary of State for Political Affairs, Victoria Nuland, explained in a State Department press briefing on January 27: “If Russia invades Ukraine one way or another Nord Stream 2 will not move forward.” The problem is to create a suitably offensive incident and depict Russia as the aggressor.
To provoke a war in Ukraine was easy as the movie production team ruling Ukraine was willing to sacrifice its people and country in a unwinnable war against Russia. The Ukrainian actor and president Vladimir Zelensky had already announced that the Ukraine would, by force, take back Crimea and the Donbas republics that were in the hand of a Russia aligned Ukrainian resistance.
On February 15 Professor John Mearsheimer gave a talk (vid) in which he documented how the U.S. had caused, and is responsible for, the whole Ukraine crisis.
Since last year about half of the Ukrainian army was positioned in the county’s southeast at the ceasefire line with the Donbas republics. On February 17 it opened preparatory artillery fire against the resistance positions. Over the next days the barrage steadily increased.
The observers of the Organization for Security and Co-operation (OSCE), positioned at the frontline, counted and documented each artillery strike and published daily summaries on its website. From 80 artillery impacts on February 16 the attacks increased each day to over 2,000 per day on February 22.
The OSCE observers also provided maps of where the grenades exploded (here of February 21):
The vast majority of impacts were on three areas east of the ceasefire line on resistance held positions. Anyone with a bit of military knowledge will recognize such intense artillery campaigns along distinct axes as the preparation action for an all out attack.
The leaders of the Donbas republics as well as of Russia had to react to this upcoming attack. On February 19 the Donetsk People’s Republic and the Luhansk People’s Republic asked the Russia government for help. Left alone they would have had no chance to resist against the Ukrainian army the U.S. and its allies, since 2015, had financed and built.
Up to this point Russia had insisted that the DPR and LNR were part of Ukraine but should receive some kind of autonomy as provided by the Minsk agreements. But it now had to take steps that would legalize Russian support for the Donbas. On February 21 Russia recognized the republics as independent states. The three parties signed cooperation agreements which included clauses for mutual military support:
Russia’s treaty with the Donetsk and Lugansk People’s Republics (DPR and LPR) stipulates granting the right to build military bases on their territory and provide mutual military assistance, Russian Deputy Foreign Minister Andrey Rudenko told a plenary session of the lower house of parliament on Tuesday.
“An important aspect: the treaty stipulates the intentions by the parties to interact in the field of foreign policy, the protection of sovereignty and territorial integrity and security provision, in particular, by way of rendering each other required assistance, including military aid, and granting the right to build, use and improve military infrastructure and military bases on their territory,” the high-ranking Russian diplomat pointed out.
With the agreements in place Russian military help against the Ukrainian attack became (at least arguably) legal under Article 51 (collective self-defense) of the UN Charter.
On February 22, no Russia soldier had yet stepped onto Ukrainian ground, the U.S. and its allies imposed extreme economic sanctions against Russia. President Biden acknowledged that the U.S. had long prepared for this.
Over the last few months, we have coordinated closely with our NATO Allies and partners in Europe and around the world to prepare that response.We’ve said all along and I’ve told Putin to his face a mon- — a month a- — more than a month ago that we would act together and the moment Russia moved against Ukraine.
Russia has now undeniably moved against Ukraine by declaring these independent states.
So, today, I’m announcing the first tranche of sanctions to impose costs on Russia in response to their actions yesterday. These have been closely coordinated with our Allies and partners, and we’ll continue to escalate sanctions if Russia escalates.
On February 24 Russian forces entered the Ukraine to preempt the coming attack on the Donbas republics. (The Russian plan A was to press on Kiev to agree to a fast settlement of the crisis. That failed in early April after Boris Johnson’s intervention in Kiev. Russia switched to plan B, the de-militarization of Ukraine.)
The German government announced that the Nord Stream II pipeline, which is technically ready to deliver Russian gas to Germany, would not be launched.
On February 27 the German chancellor Olaf Scholz gave a hysteric and moralizing speech in front of the Germany parliament. It accused Russia of breaking peace in Europe.
The Minsk agreement, under which the Ukraine had committed to federalize and give some autonomy to Donbas, was not mentioned once. Germany and France were both guarantee powers who in 2015 had cosigned the Minsk agreement but had, over seven long years, done little to press for its implementation.
Instead of working for a fast ceasefire and a renewal of economic relations with Russia Scholz committed Germany to economic suicide.
On February 28 Professor Hudson published another deep analysis of the crisis:
In a forward to the piece Yves Smith summarized:
Michael Hudson expands on his theme on how the conflict in Ukraine is the result of much bigger forces at work, and not necessarily the ones you have top of mind. He argues that preventing European countries, particularly Germany, from developing deeper economic ties with China and Russia is what’s really at stake.
Here, Hudson describes the hold key US interests have on foreign policy and how they see conflict as a way to hold off a possible fall in their status and power.
The Hudson piece is quite long and deep. I recommend to read it in full.
The U.S. idea is to isolate Europe from its Eurasian hinterland, to move Europe’s industries to the U.S. and to buy up the rest for cheap.
To take Nord Stream II out and to get European countries to boycott Russian energy the U.S. had promised that it would ‘help’ by selling its (quite expensive) Liquefied Natural Gas (LNG) to Europe. But when natural gas prices started to rise in Europe free market forces set in and they also started to increase in the United States. High energy prices threatened to damage Biden and to tank the Democrats in the midterm elections.
Then a mysterious accident happened:
An explosion at a liquefied natural gas terminal in Texas has left nearby residents rattled and is taking a substantial amount of the fuel off the market at a time when global demand is soaring.
Freeport LNG will be offline for at least three weeks, the company said Thursday, following a fire in its export facility.
Most of Freeport LNG’s exports were going to Europe, according to Rystad Energy. Europe may be able to offset the lost volume with increases from other facilities, said Emily McClain, vice president at Rystad. Europe gets about 45% of its LNG from the U.S., and the rest comes from Russia, Qatar and other sources, she said.
Three weeks was too short to lower U.S. natural gas prices. The U.S. regulator for such plants, the U.S. Pipeline and Hazardous Materials Safety Administration (PHMSA), stepped in and prolonged the restart process:
The second-biggest U.S. liquefied natural gas export facility hit by fire earlier this month will not be allowed to repair or restart operations until it addresses risks to public safety, a pipeline regulator said on Thursday.
U.S. natural gas futures tumbled 15% on Thursday due to the report and on a continued inventory build, contributing to a 33% price drop in June, the biggest monthly drop since 2018.
“The actual process (of reviews, repairs and approvals) will take longer than three months, and potentially take six to 12 months,” said Alex Munton, director of global gas and LNG at consultants Rapidan Energy Group.
There was also some news of sudden ‘problems’ at other LNG facilities.
It is not only natural gas but also petroleum products that the U.S. is withholding while Europe is in need:
The Biden administration is warning refiners that it may take “emergency measures” to address fuel exports as stockpiles of gasoline and diesel fuel remain near historically low levels in the Northeast.
In a long piece today Yves Smith is looking at the economic and political consequences for Europe. In a breach of Betteridge’s law</A she headlines:
We will be so bold as to posit that not only has the sanctions war against Russia backfired spectacularly, but the damage to the West, most of all Europe, is accelerating rapidly. And this is not the result of Russia taking active measures but the costs of the loss or reduction of key Russian resources compounding over time.
So due to the intensity of the energy shock, the economic timetable is moving faster than the military. Unless Europe engages in a major course correction, and we don’t see how this can happen, the European economic crisis looks set to become devastating before Ukraine is formally defeated.
As we’ll explain, this shock will be so severe if nothing is done (and as we’ll explain, it’s hard to see anything meaningful enough being done), that the result will be not a recession, but a depression in Europe.
In theory, the EU could try to make up to Russia. But the time for that has passed. It isn’t just that too many key European players like Ursula von der Leyen and Robert Habeck are too deeply invested in Russia-hatred to retreat. Even if there were blood in the street come December, they wouldn’t be turfed out quickly enough.
It is also that Europe has burned its bridges with Russia beyond just the sanctions. Putin has repeatedly offered the EU the option of using Nord Stream 2. Even with Russia now using half its capacity, it could still fully substitute for former Nord Stream 1 deliveries. Putin did warn that option would not stay open for all that long, that Russia would start using the rest of the volume.
So the outcome seems inevitable: many Europeans businesses will fail, leading to job losses, business loan defaults, loss of government revenues, foreclosures. And with governments thinking they’d maybe spent a bit too freely with Covid relief, their emergency energy fillups will be too little to make all that much difference.
At some point, the economic contraction will lead to a financial crisis. If the downdraft is rapid enough, it could be the result as much of (well warranted) loss of confidence as actual losses and defaults to date.
The U.S. has, out of purely egoistic reasons, dragged Europe, and especially Germany, into a trap that will lead to its economic and social destruction. Instead of recognizing the danger, and taking the necessary countermeasure, the European and the German ‘leaders’ committed themselves to help with the process.
The best thing for Europe and Germany would of course have been to avoid the crisis. That failed because of a lack of insight and effort. But now, as Europe is deep down in a hole, the politicians should at least stop digging. It is in Europe’s and especially Germany’s obvious interest to keep the crisis as short as possible.
But the lunatics who are ruling over Europe are still doing the opposite:
Germany will keep up its support for Kyiv “for as long as it takes”, Chancellor Olaf Scholz said on Monday, calling for an enlargement of the European Union to eventually include Ukraine, Moldova and Georgia.
Germany had undergone a “fundamental change of heart” in recent months on its military support for Ukraine, he said.
“We will keep up this support, reliably and, above all, for as long as it takes,” he told the packed university audience.
European Commission President Ursula von der Leyen echoed the “as long as it takes” promise to Kyiv in a speech in Slovenia, calling for “a new strategic thinking” to uphold European values.
As those ‘leaders’ seem to see it, affordable energy, warm homes, sufficient food, jobs and pensions of Europe citizens are not part of the ‘European values’ they intend to uphold.
The economic and financial breakdown of Europe will be much faster than the obviously necessary political change of its third rate leadership.
The only political sector that will not be damaged by all this, at least in France and Germany, is the far right. That in itself is also a danger.
Posted by b on August 29, 2022 at 17:38 UTC | Permalink