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Some Likely Longterm Effects Of The War In Ukraine
Arnaud Bertrand @RnaudBertrand – 4:44 UTC · Mar 26, 2022
What are the biggest game-changers of the Ukraine war so far?
I see three:
1) The freezing of Russia's central bank assets
2) China and India's rapprochement
3) The cementation of the EU's vassalage to the U.S.
Small 🧵
I agree with these but would add that it is also likely to lead to 4) the long term demise of NATO and 5) a shrinking role for the U.S. in the Middle East will also shrink as a consequence of the war.
1) The freezing of Russia's (and Iran's, Venezuela's, Afghanistan's) assets will have severe consequences for the U.S. dollar. The U.S. essentially defaulted by holding back Russian assets that it had the fiduciary duty to give back. China and everyone else will move its reserves to countries or into commodities that are not under U.S. control. See the Michael Hudson's interviews here and here:
[T]hat means that other countries all of a sudden see what they thought was their flight to security, what they thought was their most secure savings, their holdings in U.S. banks, US treasury bill, all of a sudden, is holding them hostage and is a high risk. Even the Financial Times of London has been writing about this, saying, how can the United States that was getting a free ride off the dollar standard for the last 50 years, ever since 1971, when foreign countries held dollars instead of gold and basically holding dollars means you buy U.S. Treasury bonds to finance the US budget deficit and the balance of payments deficit. How can the United States kill the goose that’s giving it the free ride? Well, the answer is that other countries can only move into gold and there’s an alternative to the dollar because that’s something that all the countries of the world have agreed upon is an asset, not a liability. If you hold any foreign currency, that currency is a liability of a foreign country, and if you hold gold, it’s a pure asset.
2) China's and India's rapprochement has been coming for some time. The border squabble over a few thousand square meters of mountain rocks in recent years never made much sense. The Ukraine crisis has shown that India and China have common interests. Some solution for the border will be worked out and full cooperation will return. This means the end for the Quad, the U.S. made anti-China coalition of Australia, India, Japan and the U.S. itself.
3) The cementation of the EU's vassalage to the U.S. will only be temporarily. European companies have their own interests and they will press their politicians into more realist positions:
It is a long haul for Europe to dispense with Russian gas. Serbian President Aleksandar Vucic said yesterday: “There are gas shortages, and that is why we need to talk to Russians. Europe will move towards reducing its dependence on the Russian gas, but can this happen in the coming years? This is very difficult.”
“Europe consumes 500 billion cubic meters of gas, while America and Qatar can offer 15 billion, up to the last molecule… That is why German and Austrian politicians told me: “We cannot just destroy ourselves. If we impose sanctions on Russia in the oil and gas domain, we will destroy ourselves. It’s like shooting yourself in the foot before rushing into a fight.” This is how certain rational people in the West see it today.”
4) As for NATO: As soon as Russia has finished its operation in the Ukraine it will become clear that it has absolutely no interest in attacking any NATO country. The coming period of high inflation will lead to shrinking defense budgets. A NATO that makes promises, like it did to Ukraine, but has neither will nor means to fulfill them has lost its way and serves no serious purpose. It will wither away.
5) In the Middle East the U.S. has proven to be an unreliably ally. The Saudis and others need someone else to protect their security:
The Russian intervention in the Ukraine took Gulf governments by surprise and caused a great deal of anxiety. Here were governments that have tried in recent years to balance their primary loyalty to the U.S. with a new attempt to improve relations with China and Russia.
While Putin intervened in Syria against the wishes of Gulf regimes, which were trying to unseat the Syrian ruler, Bashar al-Asad, the Gulf acknowledged the resolve and determination of the Russian government. Brutality in Russian or American intervention in Syria is of no concern to Gulf despots. They value first and foremost the willingness of the Putin administration to stand by his ally in Damascus in comparison to what they see as a lack of resolve on the part of the U.S. towards its clients in the Gulf.
The Gulf regimes feel Putin is more loyal than the U.S., and the mischievous behavior of UAE and Saudi Arabia in the last few weeks is an expression of their frustration with U.S. role in the region. (Riyadh, for instance, is in talks with China to trade some of its oil in yuan, which would deal a blow to the U.S. dollar that is used in 80 percent of world oil sales. Until now, the Saudis have exclusively used the dollar. And Emirati and Saudi leaders have refused to take Biden’s phone calls.)
China and Russia will likely cooperate to build some new security architecture in the Middle East.
As all the above plays out it may well turn out that the U.S. policy of overextending and unbalancing Russia did not work but has created a backlash that has severely damaged its own strategic position.
@Robert Lindsay | Mar 27 2022 6:22 utc | 237
“Yes but most of those hate crimes are verbal attacks. Whites do commit a lot of verbal attacks, technically hate crimes I guess, against Asians. But almost all of these assaults, including the very bad ones, are by Blacks. A few are by Hispanics. Only 10% are by Whites.”
Your source for this? As we have seen sources can be misinterpreted or drawn from non-comparable contexts. Are “the very bad ones” as in the killing of Shao Xiong (“Dennis”) motivated by robbery, a class issue, or racism specifically targeting people of Asian descent?
From the first of my links @190 (AAPI = Asian-American & Pacific Islander):
***
“Janelle Wong, a professor of American Studies at the University of Maryland, College Park examined nine sources and four different data states relating to anti-Asian hate crimes. She looked at data from Stop AAPI Hate, Pew Research and official law enforcement statistics.
“Wong’s analysis revealed that more than three-quarters of perpetrators of anti-Asian hate crimes and incidents, before and during the pandemic, were White.
“Unfortunately, news reports and social media often encourage the idea that most anti-Asian violence and discrimination is committed by people of color, NBC News reports.
“’This is really how crime is framed in the United States — it’s framed as the source is Black,’ Wong told NBC News.
“Wong says a misreading of a study from the American Journal of Criminal Justice, which examined anti-Asian hate crimes and incidents from 1994-2014, may have also contributed to misplaced blame. The study found that compared to anti-Black and anti-Latino hate crimes, a higher proportion of perpetrators of anti-Asian hate crimes were people of color.
“Ultimately, however, the study found that more than three-quarters of the perpetrators were White.
“The misconceptions perpetuate harmful racial stereotypes, specifically anti-Blackness, NBC News reports. Yet, Wong pointed out that despite the rise in anti-Asian hate crimes, Black people are the most targeted racial group.
“Wong added that the misconceptions can also hurt opportunities for racial solidarity. Most anti-Asian attackers are not people of color, however, research suggests that most people of color are concerned about the rise in anti-Asian hate.
“A poll conducted by the Associated Press-NORC Center for Public Affairs Research found that 85 percent of Black Americans and 82 percent of Hispanic Americans were at least somewhat concerned about the violence against Asians had increased during the pandemic. Only 74 percent of White Americans were at least somewhat concerned.
“Within those groups, 50 percent of Black Americans, 47 percent of Hispanic Americans and 41 percent of White Americans were extremely concerned.”
***
I do *not* want to attempt to speak for Black or Hispanic people in the US but the feeling I’ve gotten from listening to them is that if anyone is being targeted for reasons of race, they know all too well they may be next. It’s both solidarity *and* historical experience.
69% of US anti-Asian hate crimes occur in California and 75% of anti-Asian hate crimes are committed by whites, yet only 50% of the state’s population is white—unless there is a drastic statistical anomaly at work this means anti-Asian hate crimes are disproportionately committed by whites. This is a major reason I’d like to see the source for the figures you quote.
Personal aside: I live in Oakland, California. 140 languages are spoken within city limits, half of them Asian. My block is working class and nearly evenly white, Hispanic, Black and Asian. One block east is a predominantly Black neighborhood, one block west a mixed Chinese and Vietnamese neighborhood—I’d be on Ground Zero if what you’re implying is true. Never in 22 years have I seen an anti-Asian hate crime committed by anyone here, much less a Black person. What racial violence we see within Oakland city limits is almost always from white suburbanites or the Oakland Police Dept., which acts more as an occupying army than any kind of protective agency.
“Unfortunately, news reports and social media often encourage the idea that most anti-Asian violence and discrimination is committed by people of color…. the misconceptions can also hurt opportunities for racial solidarity.” This is exactly the aim of both the corporate media and of our racialized socialization here in the US, as noted by @malenkov | Mar 27 2022 2:17 utc | 192
All this said, my original point was to raise the danger of an extreme increase in anti-Asian violence due to a war waged by the US on China. It should be obvious that this danger will come from racist whites, as it did during the pandemic.
Posted by: Vintage Red | Mar 27 2022 7:55 utc | 255
@ Posted by: karlof1 | Mar 26 2022 17:55 utc | 16
I made the following comment on the Saker on the Hudson dialogue. Do I understand you have direct contact with Dr Hudson, Karlof1? I think you have mentioned asking him a question a couple of times, but on his site there is no “contact” link (other than through Patreon which is of no use to me). I’d be really interested in his view on my thesis:
Much of Dr Hudson’s interesting discussion is apparently based on the premise that for Russia selling hydrocarbons for Rubles to “Unfriendly Countries” [what a beautiful Lavrovian expression!] is a euphemism for cutting off sales to such countries altogether, but I see the real beauty in this response as an opportunity to totally rebalance the economic order from a dollar-biased economy – one which unfairly favours “dollar-friendlies” and unfairly assaults “dollar-unfriendlies” – to one which fairly favours “Friendly Countries” [read: the Global South] and fairly disfavours “Unfriendly Countries” – totally turning the tables on the Hegemon. Both the “dollar-friendlies” and the “Unfriendly Countries” I would see as overwhelmingly the extractative/rent-seeking/exploitative/parasitic countries, while both the “dollar-unfriendlies” and the “Friendly Countries” I would equate much more, on the whole, with real producers and holders of natural wealth. (Aside: historically it was always the East that was vastly wealthy and the West were paupers, until the West temporarily managed to distort the appearance of reality in their favour through unfair leverage).
I would love to hear Dr Hudson’s view on my thesis below, if I am lucky enough that he reads this [this is not my field, I announce in advance!].
After President Putin’s announcement on the sale of hydrocarbons in Rubles, the Ruble fully recovered its recently lost value since the announcement of sanctions. Unfriendly Countries need hydrocarbons, and therefore they need Rubles. With limited supply of Rubles, Rubles go up.
For Friendly Countries, however, the world is a different place. India, for example, as a Friendly Country can buy oil in Rupees. This gives India a major competitive edge over all Unfriendly Countries. Likewise other Friendly Countries can use their own currency or some other Friendly currency to purchase oil, and thereby gain a competitive advantage. This is going to very quickly be reflected in a massive shift and rebalancing of global inter-currency exchange rates along brand new fault lines to reflect these new financial conditions.
Where previously global exchange rates were grossly distorted by the unnatural favour given to “dollar-friendlies”, natural market forces will respond to the differing ease of access to scarce Rubles and complementarily differing need for scarce Rubles by heavily discounting “Unfriendly” currencies and favouring instead “Friendly” currencies.
How do “Unfriendly Countries” gain access to scarce Rubles to buy essential hydrocarbons [and wheat, fertilisers, titanium, neon, palladium etc]? Most “Friendly Countries” of the Global South have toxic debts denominated in dollars, Euros and Yen, which have to be serviced. Instead of servicing these debts in dollars, Euros and Yen, they can offer – as value-added service – the scarce Rubles to which they have privileged access – and because these Global South countries have leverage from their competitive Ruble-Advantage – and the “Unfriendly Countries” are desperately disadvantaged – they can demand a premium in the form of heavily discounted dollar-payments.
Russia and China recently announced that they will construct a new financial system based on production, commodity assets, synergy and win-win relations instead of the current one based on extraction, rent-seeking, exploitation, discrimination, and steal-lose relationships. Whilst the announcement came out of the blue, my assumption is that they have been working on the groundwork for this new financial system for many years already. The Russians and Chinese are Master Planners. If they already have the basic foundations at a sufficiently developed level that they can initiate crucial elements of the new system sufficiently quickly, that would facilitate and enhance the natural market processes I sketched above.
How will the new economic order interface with the old economic order? The West’s suicidal sanctions are rapidly dividing the world into two trade blocks: a resource-rich producer block with ready access to Rubles, cheap hydrocarbons and cheap fertilisers, and favouring win-win relations; and a self-bankrupted financialised block with difficult access to expensive hydrocarbons and fertilisers, and difficult access to scarce Rubles. It would make sense that the primary mechanism for the interface between the two systems would instrumentalise the servicing and elimination of toxic debt to the Global South (including the asset-stripping dollar extraction from the Global South through toxic “privatisation” of resources and infrastructure to dollar corporations). If the mechanism for making hydrocarbons, fertilisers and Rubles available to “Unfriendly Countries” is linked to the discounted servicing and elimination of toxic debt (and/or the pricing structures are linked), this would counterbalance the disbalance caused by the extreme desperation of the “Unfriendly Countries”.
The new World Order should be a natural World Order, not an unnatural World Order. Just as in the old World Order the rent-seeking Elites used unnatural and unjustly acquired leverage to force extraction of rent at the most exploitative rates from the most desperate communities (most of whom were desperate because they are so resource-rich and hence targetted), thereby creating unnatural and untenable levels of toxic debt; so then, in instantiating the link between the new and old financial systems, the central role of the servicing and elimination of toxic debt must be inseparable from the availability and pricing of hydrocarbons, fertilisers and Rubles.
As natural fall-out from the division into two trading blocks, the “Friendly Countries” and the “Unfriendly Countries”, global inter-currency exchange rates will settle along brand new fault-lines which reflect the differing access to and cost of hydrocarbons, fertilisers and Rubles. These exchange rates will heavily benefit “Friendly Countries” and disadvantage “Unfriendly Countries”. Thereby hydrocarbons which are very expensive to “Unfriendly Countries” will be intrinsically much cheaper to “Friendly Countries”, reducing their operating costs and the costs of living, and even further preferencing their local economies. Win-win all the way!
Perhaps Russia should even create separate “Friendly Rubles” and “Unfirendly Rubles” (the former being unavailable to “Unfriendly Countries” and disqualified as payment medium by “Unfriendly Countries” for resources, and convertible only through the mechanism of servicing or elimination of toxic debt).
For years there has been talk of a “Petroyuan” to replace the Petrodollar; the Russians are masters of strategy and surprise – the Petroruble has turned the global financial system upside down overnight, and turned the tables on Empire!
Posted by: BM | Mar 27 2022 11:16 utc | 286
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