Exclusive: Official Washington’s “group think” on the Ukraine crisis now has a totalitarian feel to it as “everyone who matters” joins in the ritualistic stoning of Russian President Putin and takes joy in Russia’s economic pain, with liberal economist Paul Krugman the latest to hoist a rock, reports Robert Parry.
By Robert Parry
When America’s opinion-making herd gets running, it’s hard for anyone to get in the way regardless of how erroneous or unfair the reason for the stampede. It’s much easier and career-wise safer to join the pack, which is what New York Times columnist Paul Krugman has done regarding Russia, Ukraine and Vladimir Putin.
In the latest example of the New York Times’ endless Putin-bashing, Krugman begins his Friday column with what you might call a “negative endorsement” of the Russian president by claiming that ex-New York Mayor Rudy Giuliani has “an embarrassing crush on the swaggering statesman.”
But Krugman misleads his readers. Giuliani wasn’t really praising Putin when he said “that is what you call a leader” in commenting on Putin’s decisiveness. Some liberal defenders of President Barack Obama simply cherry-picked the quote to counter Giuliani’s attempt to disparage Obama by comparing Obama’s chronic indecisiveness to Putin’s forcefulness.
In the fuller context, Giuliani was not expressing a fondness for Putin at all. Indeed, he disparaged the Russian leader as “a bully” and urged a tough-guy response to Putin over Ukraine. “Instead of him pushing us around, we push him around,” Giuliani said in the Fox News interview. “That’s the only thing a bully understands.”
So, why did Krugman begin his Putin-bashing column by misrepresenting what Giuliani was saying? It may have been a form of “negative endorsement.” Since many American liberals hate Giuliani, Giuliani’s praise is supposed to translate into liberal hatred for Putin.
But “negative endorsements” are inherently unfair. Just because Josef Stalin might have liked Franklin Roosevelt and because we may hate Stalin, that doesn’t mean we should hate Roosevelt, too. The use of “negative endorsement” is akin to guilt by association. And, in this case, Krugman was playing fast and loose with the facts as well
Krugman also opts for some of the most hyperbolic language that has been used in the U.S. mainstream media to distort events in Ukraine. For instance, Krugman claims that “Mr. Putin invaded Ukraine without debate or deliberation.” But that really isn’t true either.
The Ukraine crisis is far more complicated and nuanced than that, as Krugman must know. If he doesn’t, he should consult with fellow Princeton professor Stephen F. Cohen, who has bravely challenged the prevailing “group think” on both Ukraine and Russia.
Cohen, one of America’s premier Russia experts, has even warned that “American media coverage of Vladimir Putin has so demonized him that the result may be to endanger U.S. national security.
“[M]ainstream press reporting, editorials and op-ed articles have increasingly portrayed Putin as a czar-like ‘autocrat,’ or alternatively a ‘KGB thug,’ who imposed a ‘rollback of democratic reforms’ under way in Russia when he succeeded Boris Yeltsin as president in 2000. He installed instead a ‘venal regime’ that has permitted ‘corruptionism,’ encouraged the assassination of a ‘growing number’ of journalists and carried out the ‘killing of political opponents.’ Not infrequently, Putin is compared to Saddam Hussein and even Stalin.”
Yet, Cohen said, “there is no evidence that any of these allegations against him are true, or at least entirely true. Most seem to have originated with Putin’s personal enemies, particularly Yeltsin-era oligarchs who found themselves in foreign exile as a result of his policies or, in the case of Mikhail Khodorkovsky, in prison. Nonetheless, U.S. media, with little investigation of their own, have woven the allegations into a near-consensus narrative of ‘Putin’s Russia.’” [For details from Cohen’s article, click here.]
Indeed, much of what Krugman finds so offensive about Putin’s Russia actually stemmed from the Yeltsin era following the collapse of the Soviet Union in 1991 when the so-called Harvard Boys flew to Moscow to apply free-market “shock therapy” which translated into a small number of well-connected thieves plundering Russia’s industry and resources, making themselves billionaires while leaving average Russians near starvation.
When Putin succeeded Boris Yeltsin in 2000, Putin challenged some of the oligarchs and pushed others out of the political arena, while also moderating some of the extreme policies and thus making life somewhat better for the average Russian, thus explaining Putin’s broad popularity. Putin could be fairly criticized for not going further, but economist Krugman must surely know this history regarding how the Russian “kleptocracy” got started.
Yet, Krugman slides into the now common demonization of Putin. “Mr. Putin never had the resources to back his swagger,” Krugman smugly writes.
“It’s quite a comedown for Mr. Putin. And his swaggering strongman act helped set the stage for the disaster. A more open, accountable regime, one that wouldn’t have impressed Mr. Giuliani so much, would have been less corrupt, would probably have run up less debt, and would have been better placed to ride out falling oil prices. Macho posturing, it turns out, makes for bad economies.”
In other words, Krugman buys into the “group think” that blames Putin’s “macho posturing” over Ukraine for the current financial crisis in Russia, which has resulted from falling oil prices as well as the U.S.-led sanctions punishing Russia for its alleged “aggression” in Ukraine.
That puts Krugman in the same camp as the neocons who have pushed the bogus narrative that the megalomaniacal Putin is trying to reconstitute the Russian Empire. The actual facts, however, disprove that narrative. [See Consortiumnews.com’s “The Crazy US ‘Group Think’ on Russia.”]
Putin himself has a much better understanding of recent Russian history and what Official Washington’s goals are regarding him and Russia as he explained in an end-of-year news conference on Thursday.
Asked if the economic pain was the price for accepting Crimea back into Russia, Putin responded: “No. This is not the price we have to pay for Crimea. This is actually the price we have to pay for our natural aspiration to preserve ourselves as a nation, as a civilization, as a state.
“I gave an example of our most recognizable symbol. It is a bear protecting his taiga. [M]aybe it would be best if our bear just sat still. Maybe he should stop chasing pigs and boars around the taiga but start picking berries and eating honey. Maybe then he will be left alone.
“But no, he won’t be! Because someone will always try to chain him up. As soon as he’s chained they will tear out his teeth and claws. In this analogy, I am referring to the power of nuclear deterrence. As soon as God forbid it happens and they no longer need the bear, the taiga will be taken over. And then, when all the teeth and claws are torn out, the bear will be of no use at all. Perhaps they’ll stuff it and that’s all.
“So, it is not about Crimea but about us protecting our independence, our sovereignty and our right to exist. That is what we should all realize.”
The Neo-Nazi Reality
There is another unpleasant reality about Ukraine that Krugman ignores — its neo-Nazi element — apparently not wanting to be out of step with his New York Times colleagues who have studiously looked the other way. Again, Krugman could learn something from his fellow Princeton professor Cohen, who has recounted the grim facts about neo-Nazism in Ukraine, facts that would put Putin’s supposed “invasion” in defense of Ukraine’s ethnic Russians in a different light.
In an article for The Nation magazine, Cohen wrote: “Independent Western scholars have documented the fascist origins, contemporary ideology and declarative symbols of Svoboda and its fellow-traveling Right Sector. Both movements glorify Ukraine’s murderous Nazi collaborators in World War II as inspirational ancestors. Both, to quote Svoboda’s leader Oleh Tyahnybok, call for an ethnically pure nation purged of the ‘Moscow-Jewish mafia’ and ‘other scum,’ including homosexuals, feminists and political leftists.
“And both hailed the Odessa massacre [on May 2 when ethnic Russian protesters were trapped in the Trade Union building and burned alive]. According to the website of Right Sector leader Dmytro Yarosh, it was ‘another bright day in our national history.’ A Svoboda parliamentary deputy added, ‘Bravo, Odessa. Let the Devils burn in hell.’
“If more evidence is needed, in December 2012, the European Parliament decried Svoboda’s ‘racist, anti-Semitic and xenophobic views [that] go against the EU’s fundamental values and principles.’ In 2013, the World Jewish Congress denounced Svoboda as ‘neo-Nazi.’ Still worse, observers agree that Right Sector is even more extremist.
“In December 2012, a Svoboda parliamentary leader anathematized the Ukrainian-born American actress Mila Kunis as ‘a dirty kike.’ Since 2013, pro-Kiev mobs and militias have routinely denigrated ethnic Russians as insects (‘Colorado beetles,’ whose colors resemble a sacred Russia ornament). More recently, the US-picked prime minister, Arseniy Yatsenyuk, referred to resisters in the Southeast as ‘subhumans.’ His defense minister proposed putting them in ‘filtration camps,’ pending deportation, and raising fears of ethnic cleansing.
“Yulia Tymoshenko, a former prime minister, titular head of Yatsenyuk’s party and runner-up in the May presidential election, was overheard wishing she could ‘exterminate them all [Ukrainian Russians] with atomic weapons.’ ‘Sterilization’ is among the less apocalyptic official musings on the pursuit of a purified Ukraine.”
By leaving out this troubling context, it’s much easier to mislead Americans about what is actually happening in Ukraine. Instead of understanding Russia’s interest in protecting ethnic Russians in eastern Ukraine from these brutal neo-Nazis, the crisis can simply be presented as Putin’s “aggression” or as Krugman says how “Mr. Putin invaded Ukraine.” [For an earlier case of Krugman’s distortions on Ukraine, click here.]
More fitting Krugman’s expertise about the dangers of free-market extremism, he might do better looking at the consequences of those strategies on both Russia and Ukraine, where corrupt oligarchs also took power and have now moved to the center of Ukraine’s U.S.-backed regime.
And, if Krugman wants some current example of cronyism, he might look at the curious case of Natalie Jaresko, a former U.S. diplomat who parlayed $150 million in U.S. AID funds designed to help Ukraine develop an investment-based economy into a personal fortune and now into the post of Ukraine’s new Finance Minister.
According to corporate records, the U.S. government-funded investment project for Ukraine involved substantial insider dealings by Jaresko, including $1 million-plus fees to a management company that she also controlled. Meanwhile, the $150 million stake provided by the U.S. taxpayers appears to have dwindled to less than $100 million. [See Consortiumnews.com’s “Ukraine’s Made-in-the-USA Finance Minister.”]
But critical reporting about the U.S.-backed Ukrainian regime would violate Official Washington’s narrative that prefers the Kiev authorities to be dressed in white hats while Vladimir Putin wears the black hat.
Investigative reporter Robert Parry broke many of the Iran-Contra stories for The Associated Press and Newsweek in the 1980s. You can buy his latest book, America’s Stolen Narrative, either in print here or as an e-book (from Amazon and barnesandnoble.com). For a limited time, you also can order Robert Parry’s trilogy on the Bush Family and its connections to various right-wing operatives for only $34. The trilogy includes America’s Stolen Narrative. For details on this offer, click here.
It’s my reading of recent events that the current Russian ‘crises’ is a ‘made-in-the-USA’ act of economic warfare against Russia (vulnerable for the reasons Krugman lays out) fomented to not only promote ‘regime change’ in Moscow, but to, as Putin says “… tear out his [Russia’s] teeth and claws.” thus leaving her defenseless against a new neoliberal gang rape of Mother Russia as occurred in ’91 when she was flat on her back & defenseless. While pundits are debating about whether the Saudi oil glut & subsequent price plummet was to crush the U.S. fracking industry, create chaos in Iran’s economy, or to attack Venezuela (all three are likely so, as ‘bonuses’), I believe it’s a U.S.-Saudi collaboration to destroy Russia’s economy and government since I cannot believe that our government would allow something as central to our ‘energy independence’ & economic growth as the shale oil industry to be destroyed without a word of protest – has anyone heard Obama begging the Saudis to let up? Thus, I conclude that the U.S. & Saudi Arabia are complicit in this trifecta (oil price drop, U.S. sanctions, E.U. sanctions) and that all parties are willing to accept the damages to their own economies (the E.U. especially) in expectation of the greater rewards of a Russia open to neoliberal exploitation and the removal of a major global competitor. It is my expectation that the Saudis would never have attacked the U.S. shale-oil industry absent a specific ‘go-ahead’ from the USG, likely directly from President Obama.
Regarding homos’ rights in Russia. I really wonder what’s with all the rambling about those, since if anything, those have been expanded during Putin’s reign. Previously it was both the advertisement and being gay that counted as illegal, now it’s only the former – one can be of any sexual orientation as long as one doesn’t go on about oneself being superior to all others based on that (which is exactly the issue with all the “gay and proud” crowd).
As such, the whole arguement on gay rights in Russia is quite moot.
I’m with you all the way, Mr. Parry but if you could address the support Putin or the Russian government gives to the organized and brutal suppression of homosexuals that I have seen in videos posted at Democratic Underground it would do much to allay my concerns. According to the compelling videos Russian “nazis” unopposed by police are doing some terrible things. You seem to avoid this issue and if you would tell me how that really is then the picture would be clearer. Not that gay bashing doesn’t happen in other countries all over the world but by balancing what is true re anti-gay actions in Russia along with how Russia is getting maltreated by the US then it might allay the resistance you are getting from some quarters.
Paul Krugman is a member of the Group of 30.
Other names of Trustees that will be familiar: Paul Volcker, Larry Summers, Jean-Claude Trichet, Mario Draghi, Timothy Geithner and… Jacob Frenkel – Chairman of the Board AND Chairman of JPMorgan Chase International, Chase, the bank that was founded as Chase National Bank by John D. Rockefeller jr, father of David Rockefeller. More about Group of 30 Chairman and JPMorgan Chase International Chairman Jacob Frenkel:
Good morning, mr. Rockefeller.
Just to add, the Group of 30 was funded by the Rockefeller Foundation:
If you read the reader comments on Huffington Post (who bashes Putin quite regularly) you will hear nothing put bad remarks being made against Putin. Huffington readers dislike Putin due to Russia’s stance on gay rights. I am all for the rights of gays, and other minorities, but we’re talking about on a higher level WWIII! Yet, Huffington along with the rest of the American media trash Putin every single time, and for what?
The new left talking points being use goes something like; FOX loves Putin because back when Crimea voted to join Russia, well that was because Obama was playing checkers while Putin was playing chess…something like that. Back then FOX did critize Obama like that. Racheal Maddow the other night really went overboard with this spin, to the point of just becoming utterly stupid with her rant.
Americans are not getting the right news. Instead, the U.S. is being lied to everyday by it’s media. To prove my point, just ask the average American if they know who Victoria Nuland is.
Point of fact: Crimea did not vote to join Russia, at least not in any internationally recognized election. Russia invaded a sovereign nation’s territory using a new approach now called a â€œhybrid war.â€ This type of engagement is waged by commandos without insignia, armored columns slipping across the international border at night, volleys of misleading propaganda, floods of disinformation and sneaky invasions like the one into Crimea. In this hybrid war, a civilian airliner was shot down by surface-to-air missiles, but the triggerman or supplier of the missile was never identified; artillery shells are fired but no one can say from where; Russian military material and equipment appears suddenly in the villages and fields of eastern Ukraine. While people are being killed, as in any war, and while Ukraine has mustered its forces admirably to push back, this hybrid war features an aggressor whose moves are shrouded in Âdeception.
Point of fact: All the “color revolution” regime change efforts, from the Arab Spring to the Syrian “civil war” to the coup d’Ã©tat staged by neo-Nazi forces in Kiev in February 2014, are “hybrid warfare” projects.
The Russian Federation and the population in Donbas understand this all too well.
Thanks, Lew Rockwell, for your thorough recitation of US “hybrid warfare” propaganda.
Got any Photoshopped “Russian invasion” images or faked video to show us, too?
The remark was directed to Lew Rakowsky, in point of fact.
What is interesting is the tone of the propaganda. There are two main threads:
(1) Russia, especially Putin is evil, evil, evil.
(2) Russia is weak economically and militarily.
#2 was epitimised by Obama’s speech where he called Russia a dying country.
#1 by him putting Russia as the biggest threat to the world after Ebola…and before ISIS.
But this mindset is particularly dangerous because the logic of this is “face down Russia” because it is “evil” and it will backdown/collapse (and hopefully execute Putin).
The two threads reinforce each other into making ever greater strategic risks and mistakes.
The third thread is overblowing the US (and NATO) military. Look the US would struggle to put 2 battle groups together right now. Itâ€™s training/readiness/maintenance are at historic lows (that is across the Army, USN and USAF) .
Take this incredible example: Just last month the USAF announced that (to save money needed for the F-35 project) it is stopping training F-16 pilots for air-air combat, except against low level threats (third world Mig-15s and all that). So in one fell swoop the most numerous US fighter has been taken out of any potential air-air combat with Russiaâ€¦..
The reality is Russia would slaughter any conventional NATO forces in very short order. Look at the incredible, crushing victory by Novarussian forces against vastly larger and better equipped (and they had an airforce), probably directly US controlled, Kiev forces as an example of what would happen to NATO against Russiaâ€™s military.
But everyone of the decision makers are completely blind to this, their own ‘reality bubble’ (and echo chamber) is so complete that it is impossible for any fact to get through or any rational decisions to emerge.
Military suppliers PR puffery is taken as ‘truth’ in that area, I am sure that heaps of them truly believe their AMD systems will actually work…because the suppliers’ PR hacks have told them so.
Military and economic power comparisons are notoriously politicized. Notably, whenever the Pentagon is sidling up to the trough (and when are they not?), the US is perilously “weak” and its “enemies” are both “evil, evil, evil” and “strong, strong, strong”.
Oh this is all insanely dangerous, but as I have argued before, inevitable. Krugman has just admitted he has drank the ‘kool aid’, but so has just about everyone over there.
The problem with it escalating into a NATO/Russia military conflict is that the Russians would slaughter NATO, who would then go tactical nuclear very, very quickly. Russia would respond …and their wouldn’t be much left of Eastern Europe and a heck of a lot of Germany after that.
On a pure tactical nuclear exchange Russia has all the advantages. It can deliver by mobile short range missiles, long range cruise missiles (by air and land) and by aircraft, while NATO depends on aircraft. Russia has arguably the best air defence system in the world and quite possibly the best anti missile defence systems too. NATO will basically be limited to dropping nukes on its own territory.
Provided NATO doesnâ€™t try a lob a tactical nuke at Moscow, then it might just stay at that level. If it does then we go for a full on strategic exchange.
If it doesnâ€™t then Russia comes out fairly ok (albeit with a big loss to its military). Eastern Europe is a total disaster and probably a fair proportion of Germany too. Far western Europe is probably okâ€¦.unless Russia hits those tactical nuclear storage areasâ€¦.in which case much of those will be a right mess too (sorry ex-Holland).
Now Russia has the majority of its strategic missiles on mobile launchers, which means no one knows where they are (and of course they use lots of decoys). Their readiness levels are far better now (after all those recent exercises) The western AMD systems would be lucky to shoot down 10% of Russian launched missiles, probably far less.
That means the end of the US and Europe (inc the UK) totally.
The US will launch everything, air sea and land. Their will be a lot of failures because their readiness levels are so poor. But they will destroy Russia and China (no way are they going to let China survive to take over from the rubble, so they will launch at China as well),
Now everyone will launch at that point. China will take out Japan (similar logic as the US), Israel probably will, Indian/Pakistan possibly.
Say 500M-1B die in the explosions and the next few days afterwards. Another 1B to die in the aftermath over the next few months, because of smashed infrastructure (power, water, etc), logistic/supply chains and the taking out of US/Russian/EU/etc agriculture.
Then nuclear winter setting in and other 2-5B (at least) over the next 2-3 years. Crashing birth rates and vastly increased mortality (especially infant mortality as drugs, etc disappear) then another 3-4B over the following few years. Going to be a much smaller populationâ€¦..
Funnily enough, though all you hear about are the US AMD system and their potential for a â€˜first strikeâ€™, The odds of a successful one are actually steadily moving in Russiaâ€™s favour. Their launchers are newer, their anti-missile defence gets ever stronger (S-400 is a very effective AMD system when reconfigured, let alone the coming S-500). Their cruise missiles have far longer range, etc. The only thing the US has to counter that is their submarine force.
* Note what happened a few months ago when Kiev launched conventional ballistic missiles at Novrussia…the Russians shot all 3 or 4 of them down.
** In the stand off between the USN and the Russian Navy over Syria (what you think the US backed down because of diplomacy…are you stupid?) there are unconfirmed reports of Russians successfully jamming test fired US cruise missiles.
There’s more to come. The Combat Rail Guided-Missile Complexes. One of the most frightful weapon of USSR is coming back more modernized! And this is not the end, because all of these NATO/Washington (the same thing, actually) assholes can’t stop.
Excellent analysis. I have never seen the US and UK press in such total lockstep on any issue in the past twenty years. It’s too uniform to be an accident. The toxic brew claims that Russia invaded the eastern regions of Ukraine (which is absurd). This constitutes “aggression.” As someone said, we can have different beliefs but not different facts. The fact is that Russia has been on the defensive from the start of this crisis. Additionally, the only successful diplomacy has been Russian led. There is no reason to believe the servile, intellectually dishonest press on much of anything anymore.
The question you have to ask about Krugman is, “What did he ever get right?” Better yet, has he ever been right about anything? Where was he when any of the “bubbles” broke? Where were his prognostications before the financial collapse? Who took his advice and saved themselves?
Sometimes, when wading through the cesspool of official dogma, it is helpful to look at real numbers. Pundit propaganda is infused with subjective platitudes, meaningless superlatives and deflective emphasis. Disclaimers are always artfully injected, reassuring the audience that “indicators suggest” or “trends favor” or analysts speculate”. Obviously, the objective is to avoid quantification of anything that resembles the dismal reality they’re trying to evade.
In this case, let’s look at the numbers. The United States has $17.6 Trillion in debt, which amounts to 73.6% of GDP. That amounts to a per capita debt of $36,600 per person. Russia obviously has a much smaller economy with a debt of only $308 Billion. But that amounts to only 12.2% of its GDP, and a $2,200 debt per capita. Russia’s debt amounts to less than one percent of world public debt. For the United States, that figure is a whopping 31.3%.
Soâ€¦exactly which economy in the world today is teetering on the brink of collapse? At the current rate of U.S. debt accumulation, Putin could start a big fire on the Tundra and burn a billion rubles a day. At that rate, it would take him 2,794 years to catch up to the U.S. national debt.
But don’t you know that the Fed can just stamp a $17t coin and pay off that debt?
As the worldâ€™s attention turns to events in eastern Europe, rising tensions between the worldâ€™s nuclear superpowers is once again raising the specter of the cold war.
The Obama administration has simply reaffirmed and even extended the existing US nuclear policy allowing for a first-strike, offensive nuclear war against its enemies.
And just as in the cold war, this conflict, too, brings with it the prospect of nuclear warfare.
Nuclear Warfare in the “New Cold War”
In its 2010 Nuclear Posture Review, the US government admitted that it reserves the right to wage a first-strike offensive nuclear war, although it hoped to work toward the goal of one day setting policies to restrict nuclear deployment to defensive situations. The Obama administrationâ€™s 2013 Nuclear Employment Strategy document only reaffirms this:
â€œThe 2010 Nuclear Posture Review established the Administrationâ€™s goal to set conditions that would allow the United States to safely adopt a policy of making deterrence of nuclear attack the sole purpose of U.S. nuclear weapons. Although we cannot adopt such a policy today, the new guidance re-iterates the intention to work towards that goal over time.â€
Increasing the risk is the development and deployment in recent years of a greater number of so-called â€œtactical nuclear weapons,â€ supposedly designed for battlefield use to focus a nuclear attack on a pinpoint target.
The Doctrine for Joint Nuclear Operations (DJNO) outlines the procedures governing the use of nuclear weapons and the nature of the relationship between nuclear and conventional war operations. It states that “use of nuclear weapons within a [war] theater requires that nuclear and conventional plans be integrated to the greatest extent possible”.
The implications of this “integration” are far-reaching because once the decision is taken by the Commander in Chief, namely the President of the United States, to launch a joint conventional-nuclear military operation, there is a risk that tactical nuclear weapons could be used without requesting subsequent presidential approval. In this regard, execution procedures under the jurisdiction of the theater commanders pertaining to nuclear weapons are described as “flexible and allow for changes in the situation”.
While presidential approval is formally required to launch a nuclear war, combat commanders would be in charge of Theater Nuclear Operations (TNO), with a mandate not only to implement but also to formulate command decisions pertaining to nuclear weapons.
We are no longer dealing with “the risk” associated with “an accidental or inadvertent nuclear launch” as outlined by former Secretary of Defense Robert S. McNamara , but with a military decision-making process which provides military commanders, from the Commander in Chief down to the geographical commanders with discretionary powers to use tactical nuclear weapons.
Moreover, because these “smaller” tactical nuclear weapons have been “reclassified” by the Pentagon as “safe for the surrounding civilian population”, thereby “minimizing the risk of collateral damage”, there are no overriding built-in restrictions which prevent their use.
Once a decision to launch a military operation is taken, theater commanders have a degree of latitude. What this signifies in practice is once the presidential decision is taken, USSTRATCOM in liaison with theater commanders can decide on the targeting and type of weaponry to be used. Stockpiled tactical nuclear weapons are now considered to be an integral part of the battlefield arsenal. In other words, nukes have become “part of the tool box”, used in conventional war theaters.
Krugman neglects to mention that Russia is under economic assault by the West. What are Russia’s options?
What Putin is not telling us
By Pepe Escobar
The perfect storm evolves in two fronts; an overt economic war â€“ as in siege by sanctions – and a concerted, covert, shadow attack to the heart of the Russian economy. Washingtonâ€™s endgame is clear: impoverish and defang the adversary and force him to meekly bow to the â€˜Empire of Chaosâ€™sâ€™ whims. And bragging about it all the way to â€œvictory.â€
The problem is Moscow happens to have impeccably deciphered the game â€“ even before Putin, at the Valdai Club in October, pinned down the Obama doctrine as â€œour Western partnersâ€ working as practitioners of the â€œtheory of controlled chaos.â€
So Putin neatly understood this weekâ€™s monster controlled chaos attack. The Empire has massive money power; a great deal of influence over the worldâ€™s GDP at $85 trillion, and the banking power behind that. So nothing easier than using that power through the private banking systems that actually controls central banks to create a run on the ruble. Think about the â€˜Empire of Chaosâ€™ dreaming of driving the ruble down by 99% or so â€“ thus wrecking the Russian economy. What better way to impose imperial discipline on Russia?
The â€œnuclearâ€ option
Russia sells oil in US dollars to the West. Lukoil, for instance, would have a deposit in US dollars in an American bank for the oil they sell. If Lukoil has to pay wages in rubles in Russia, then they will have to sell the US dollar deposits and buy in Russia a ruble deposit for their bank account. This in effect supports the ruble. The question is whether Lukoil, Rosneft and Gazprom are hoarding US dollars overseas – and holding back. The answer is no. And the same applies to other Russian businesses.
Russia is not â€œlosing their savingsâ€, as Western corporate media gloats. Russia can always require foreign companies to relocate to Russia. Apple, for instance, may open a manufacturing plant in Russia. The recent Russia-China deals include the Chinese building factories in Russia. With a depreciated ruble, Russia is able to force manufacturing that might have been located in the EU to be located in Russia; otherwise these companies lose the market. Putin somewhat admitted that Russia should have been demanding this much earlier. The â€“ positive â€“ process is now inevitable.
And then thereâ€™s a â€œnuclearâ€ option â€“ which Putin didnâ€™t even have to mention. If Russia decides to impose capital controls and/or imposes a â€œholidayâ€ on repayment of larger debt tranches coming due in early 2015, the European financial system will be bombed â€“ Shock and Awe-style; after all, much of the Russian bank and corporate funding was underwritten in Europe.
Exposure to Russia per se is not the issue; what matters is the linkage to European banks. As an American investment banker told me, Lehman Brothers, for instance, brought down Europe just as much as New York City – based on inter-linkages. And yet Lehman was based in New York. Itâ€™s the domino effect that counts.
Were Russia to deploy this â€œnuclearâ€ financial option, the Western financial system would not be able to absorb a shock of default. And that would demonstrate â€“ once and for all – that Wall Street speculators have built a â€˜House of Cardsâ€™ so fragile and corrupt that the first real storm turns it to dust.
Krugman’s posturing the NYT qualifies as war propaganda.
Belgian journalist and author Michel Collon has outlined how mass media and governments apply the â€œFive Principles of War Propagandaâ€:
1. Obscure economic interests.
2. Invert the victim and the aggressor.
3. Hide history.
5. Monopolize the news.
An “extreme version of crony capitalism, indeed, a kleptocracy in which loyalists get to skim off vast sums for their personal use” — thus spake the pot to the kettle.
Paul Krugman seems completely clueless about everything. He doesn’t know what’s been happening in Ukraine in the past year, or in Russia in the past twenty five years. He doesn’t seem to know much about economics which is supposed to be his area of expertise.
Russia has hundreds of billions of dollars in foreign-exchange reserves that it has wisely built up over the years with oil and gas revenues, and its debt to GDP ratio is a small fraction of that of many western countries.
Still, Krugman says “The standard response of a country in Russiaâ€™s situation is an International Monetary Fund program that includes emergency loans and forbearance from creditors in return for reform.” The only reason he gives for this in his article appears to be that Russian businesses have large foreign debts, even though the Russian government has no liability for these.
Sure, the Russian economy is facing a tough time with western sanctions and the fall in oil prices and the value of the ruble, but Russia has the resources to deal with this.
He also blames Putin for helping the oligarchs to loot Russia’s assets, but the opposite is the case. That western-backed phenomen has been reversed in Russia for more than a decade, unlike in Ukraine where oligarchs are just as powerful in the new pro-western government as they ever were.
Thank you. I read Krugman’s article and suffered cognitive dissonance myself. What the hell was he rambling about? Putin invaded Ukraine? Krugman should stick to supply and demand curves. I know it’s boring sometimes but at least he won’t make an ass of himself.
This article by Parry is a good beginning, but does not go far enough in decrying the awful recent Krugmanian performance. Very disappointed in Krugman. Krugman is being really stupid because he is throwing his own credibility under the bus. Not only as a political commentator but as an economist. His decision or need or whatever to follow the pack has blinded him to what is really going on. He is going to turn out to be wrong. I used to respect Krugman tremendously and read his columns with a sense of relief at the clarity. No more. It is not just the facts that are wrong but the whole tone that is off, a low tone of cheap shots, adolescent-level ad hominem snark. Paul, what happened?! Are you perchance secretly envious of Putin’s testosterone emanations? Paul, you have just dealt yourself a very serious blow and time will show that your complex has blinded you to the reality of what is going on in DC, Kiev, Moscow, St. Petersburg, Beijing, and elsewhere.
Naomi Klein has fully researched and artfully explained in her book, “The Shock Doctrine” about the IMF-initiated oligarch looting of Russia in the 90’s with Yeltsin in charge. She also explains the devastating economic impacts of the IMF “structural reforms” initiated by banksters, billionaires, and military ‘shock troops’ directly affiliated with the IMF – precisely those who are initiating the Ukrainian ‘situation’ as we speak – to countless numbers of countries the ‘Washington Consensus’ has targeted over the past 40 years or so.
Maybe ‘fellow liberal’ Paul Krugman should seek some economics education from her very well documented and plainly understood economic analysis book. (In fact, with Klein’s expertise on what the well-researched book documents happened economically and militarily in Pinochet’s Chile in the 70’s/80’s, she should come out of ‘speaking-about-shock-doctrine-retirement’ and assist the ‘professional Left,’ like Krugman, with some timely and accurate education on the matter?)
Yes that Krugman thinking was a real disappointment when I read it online last night.
Surprised Krugman insisted that Russia was most certainly and definitely arming rebels in eastern Ukraine and actually even sending Russian troops to fight there.