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The Saker Blog now in Oceania

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The Saker Blog now in Serbian

you can now also visit the Serbian Vineyardsaker Blog by clicking on this link:

Wednesday, November 26, 2014

CrossTalk: Whitewashing fascism

The future of the Nazi Ukraine in 90 seconds

Check the sad and, frankly, pathetic footage recently taken at the Ukrainain-Polish border: these poor people are trying to storm the Polish checkpoint every day to try to sell or barter something, or to find a job.  This has been happening every day.  The saddest thing about that is that this is only a timid beginning for a phenomenon which will inexorably grow.  The poor Ukies can sing "Ще не вмерла України" ("The Ukraine has not died yet", the Ukrainian national anthem, itself a bad copy of the Polish one) but it sure looks to me like the Ukraine is dying.

The Saker

Russian commander warns US could control whole Gulf of Mexico

How is that for a ridiculous headline?  You like it?

Well, it is just a little variation of a BBC headline today:

Nato commander warns Russia could control whole Black Sea

Here is an except from this article:
Russia's top military commander, Gen Valerii Gerasimov, has warned that US "militarisation" of the annexed Florida Peninsula could be used to exert control over the whole Gulf of Mexico.
Well, the real excerpt was just slightly different:
Nato's top military commander, Gen Philip Breedlove, has warned that Russian "militarisation" of the annexed Crimea Peninsula could be used to exert control over the whole Black Sea
So is there a difference? Of course not. Except one: American exceptionalism, of course.  Come to think of it, there is another difference: the US and NATO just tried to take control of Crimea via the Maidan color revolution whereas Russia did not try to take control of Florida.  That, of course, also begs the following question: if the US and NATO suspect that Russia might use the Crimea Peninsula to control the whole of the Black Sea, then would it be most unreasonable to ask what exactly the US and NATO were hoping to achieve had they succeeded in taking over Crimea?

This is, of course, absolutely ridiculous and yet another example of the mind-blowing hypocrisy western corporate media.  It goes like this: US in Gulf of Mexico - good.  US in Black Sea - also good.  Russia in Black Sea - bad.  Russia in Gulf of Mexico - unthinkable.

And the worst here is not the imperial hubris and arrogance of the USA, it is the willing subservience of the Europeans to Uncle Sam.  They all know it, but they pretend not to notice.

Still, does Gen Breedlove have a point?  Oh yes, he sure does.  Crimea will, indeed, give Russia total control of the Black Sea and even beyond.  Russia will station at the very least one missile cruiser, several ultra-modern diesel attack submarines (ideal for brown and green water operations), supersonic medium range bombers armed with cruise missiles, coastal artillery and cruise missile batteries, fast attack craft, anti-submarine rotary and fixed-wing aircraft, etc.  You can think of Crimea as a unsinkable mega-carrier.  Kind of like Florida.

The Saker

25-26.11.2014 Ukrainian crisis news. Donetsk, Lugansk, Latest news of Ukraine, Novorossia

Supporting the Rouble And Other Energy Exporter's Currencies

by George Oprisko

Earler, you specifically mentioned that currencies of many energy exporters, eg: Venezuela, Iran, Malaysia, Indonesia, Russia, and Ecuador have dropped sharply against the US Dollar.

This essay explores the reasons behind the observed sellof(s), and debunks the myth that each currency stands on it's own, and is a unique case, instead asserting that concerted action by one party is responsible.

The party I believe to be responsible for the declines observed in the above currencies, and that of Argentina, is the US Treasury. The venue for attack on these currencies, is NYMEX in NYC and it's sister exchange in London, the world's largest, which has increased its share of global turnover in traditional transactions from 34.6% in April 2007 to 36.7% in April 2010. London's dominance in the market, determines a currency's quoted price, which is usually the London market price. This even affects operations of the International Monetary Fund which uses noon London Market Prices to calculate the value of its special drawing rights.

Note that virtually all currency trading occurs on these two exchanges, and that currencies are traded like commodities, with only 0.1% margin required. Furthermore, both exchanges are located on territories hostile to the BRICs, SCO, and CSTO.

Needed is a mechanism which shifts trading in the Rouble to Moscow, and only Moscow, likewise trading in the Yuan must be shifted to Shanghai/HongKong, the Iranian Rial to Kish Island, the Argentine Peso to Buenos Aires, the South African Rand to Johannesburg, the Ecuadorian Sucre to Quito, the Venezuelan Bolivar to Caracas, and the Brazilian Peso to Rio.

Needed is a mechanism which eliminates naked short selling, while permitting trade in physical goods.

Since virtually all the currencies studied here are FIAT currencies, not backed by specie, I assert that the principles espoused in Modern Monetary Theory(MMT) apply. The key principles of MMT with respect to FIAT currencies are the following:

a) FIAT currencies have value because the sovereign demands payment of fees and taxes in them

b) FIAT currencies have value because the sovereign demands acceptance of them for settlement of debts, public and private

c) FIAT currencies have value because the sovereign has a monopoly on their issuance

To maximize the value and utility of a FIAT currency, the sovereign must maximize the volume of goods and services purchasable in it's currency, and must jealously guard against issuance of it's currency by others.

In the case of the Rouble, maximization of goods and services purchasable by it, involves demanding payment in it for all goods and services produced in, imported into, or exported from Russia. This specifically means

a) requiring payment in Roubles for Russian energy exports,

b) demanding that importers of goods to Russia accept Roubles as payment,

c) eliminating the ability of Banks to “create” Roubles through accounting entries when loans are made, via imposition of full reserve banking covering all banks(including foreign banks) operating within the Rouble Zone.

Additionally, Russia must re-industrialize, and must grow it's agricultural sector to fully meet domestic demand for manufactures and food. This will require redefining Russia's W

TO obligations.

To protect it's foreign reserves, and exchange rate, Russia must eliminate naked short selling of the Rouble, and must maximize international demand for the Rouble. Demanding payment in Roubles for Russian exports of energy, and materials is essential for the latter, and conversion of the electronic Rouble from a commodity into a security, via BitCoin Technology (BCT) is essential for the former.

BCT as mentioned here is the algorithm which creates BitCoins. A BitCoin is a data packet, nothing more. Yes, much of the data is encrypted, to provide authenticity, but in essence, a BitCoin, has an issue date, issuer, Denomination, serial number, and transaction history. This is similar to a paper Rouble note, which uses special paper, special inks, unique engraving, holograms, to create a paper emblazoned with the denomination, serial number, date of issue, issuer, using the former to guarantee authenticity.

This essay advocates conversion of all electronic Roubles into ElectronicRoubles, which we define here as Data Packets containing the following fields:

1. Denomination
2. Serial Number
3. Issue Date
4. Issuer
5. Encrypted Transaction History
6. Security Code, which is an encrypted hash of the foregoing fields

To prevent counterfeiting, all ERs are recorded in the RCB database, including the owner of record.

To prevent naked short selling, only the Owner of Record, or an authorized exchange may sell ERRs. Furthermore, authorized exchanges must post a bond with the RCB, amounting to 1oz of .999 fine gold per 100,000 Roubles in authorized open interest, subject to forfeit at 1oz of gold for every 100,000 Counterfeit/Stolen Roubles traded. This mechanism links the Rouble to gold, but does not make the Rouble exchangible for gold, and it specifically eliminates the ability of UK/US money center banks to fund naked sales of the Rouble, via the mechanism of the RCB challenging any or all sales, for the purpose of enforcing it's monopoly on issuance.

How would this work in practice?

Consider the following example:

The Russian Government pays Sukhoi 100,000,000 Roubles for Fighter Aircraft. Traditionally, this is done by crediting Sukhoi's account at it's bank, which we assume to be SberBank. Using ER(s), The Defense Ministry pays Sukoi with 100 Electronic Rouble Notes, each worth 1 Million Roubles. Sukhoi deposits the notes at it's bank, SberBank. Upon making the deposit, SberBank notifies the RCB of the transfer from Sukhoi to itself of the notes, and the RCB confirms the authenticity of the transfer with Sukhoi. The RCB recalculates the Security Code using it's 512 bit Private Key for these notes, and ReIssues the Notes to SberBank.

Sometime later, Sukhoi pays it's employees and suppliers 50 million Roubles, via transfers from it's account at SberBank to other accounts at SberBank and other banks. Of this amount 25 million Roubles is owed AlfaBank. SberBank transfers 25 of it's million Rouble ERs to AlfaBank. AlfaBank notifies the RCB of the purchase, and the RCB verifies the transaction, adding it to the transaction history of each note, recalculating the Security code using it's private key, and re-issuing the 25 notes to AlfaBank.

Later, Diamler of Germany, a customer of AlfaBank chooses to transfer 10 million Roubles to it's German Bank to pay for items imported into Russia. AlfaBank notifies the Russian Ex-Im Bank of the international transfer to DeutchBank, DeutschBank confirms receipt of the 10 million Rouble notes, The Russian ExIm Bank notfies the RCB, which adds the transaction to the history, recalculates the Security Code, and reissues the notes, which are recorded on the ExIm Banks Transaction Log as held outside Russian Territory.

Still later NYMEX receives an order to sell 10 million Rouble ER(s) from DeutschBank. NYMEX sends the serial numbers to the Russian ExIm Bank, which verifies ownership, and authenticity. If the owner is selling and the notes are authentic, the Russian ExIm Bank so notifies NYMEX. If not, the notes are listed as stolen or counterfeit, as appropriate. Should NYMEX choose to conduct Sales of Rouble Notes without verifying their authenticity, RCB can seize the collateral NYMEX put up to become authorized to trade Roubles, according to the volume of unauthorized trades conducted.

Via this mechanism, embezzlement of Roubles is eliminated, and illegal movements of Roubles abroad are also eliminated, and the RCB ExIm Bank knows the exact volume of Roubles held abroad, the daily/annual demand for Roubles by foreign firms who trade goods and services with Russia, and the identity of those firms. Furthermore, this mechanism makes impossible naked short sales of the Rouble, because all Roubles offered for sale, must be authenticated by the RCB – ExIm Bank, who reserves the right to buy them. This specifically means that Futures Contracts in the Rouble must specify the notes offered for sale, and the notes in question must be authenticated before the contract position is opened, because the RCB can at any time challenge the contract, demanding forfeiture of collateral, should the contract be for non-existent/conterfeit/stolen notes. This will essentially eliminate Futures Trading of Roubles.

Major political faceplant for French Resistance leader Alain Soral

Dear friends,

Just a few days after I posted a report about the French Resistance to the Empire, a really sad news came out of France: Alain Soral, the leader of the movement "Equality and Reconciliation" (E&R) was involved in a disgusting and, frankly, pathetic scandal mixing race, ideology and sex.  The story just broke in the French media, the parties disagree on a number of things and Soral is threatening to sue, but between the reports published by the Zionist press in France (JssNews; Elfassiscoopblog) and what was published by the official E&R site, there are a few more or less established facts: for a while Alain Soral had a, quote, "virtual affair", unquote, with an African model called Binti.  This "virtual affair" involved sending each other nude "selife" photos.  Then things went south, they began insulting each other by text messages. Soral's insults included racial ones.  Now, the photos and the insults have become public.  Frankly, I don't feel any inclinations to describe or analyze this psycho-sexual sewer, but those of you interested in the ugly details just need to click on the links above.

Soral is now threatening several lawsuits and he promises to release a video where he explains it all.  Maybe.  But unless he tells us that the photos and text messages are all fake, there is nothing he can tell me which would make me change the conclusion to which I have already come: Soral has serious sexual problems.

This is hardly surprising, to be honest.  Soral has always said that he was a "dragueur" which in modern politically-correct French refers to somebody who likes to pick up girls.  In plain English this simply means that Soral was sexually promiscuous.  The poor man even wrote a book about that.  Apparently Soral married a lady named "Maylis Bourdenx" (or "Maylis Bonnet") in 1996.  Whatever may be the case, married or nor, Soral is yet another example of the fact that the West is, truly, the most sexually dysfunctional society on the planet and that western hetero-sex is every bit as dysfunctional as its homo-sex.

The number of people involved in some kind of sexual scandals simply blows my mind.  From Anthony Weiner to Bill Clinton to the innumerable Latin priests in involved in high profile sex scandals, it seems that this phenomenon is just an integral part of our daily lives.  Because it is, of course.

First, let's get one basic myth out of the way.  Sexual promiscuity is not a sign of success" but a sign of frustration.  Why do I say so?  Simple!  Think about it yourself: would you change cars or houses or jobs or places of residence if you were happy where you are?  Of course not.  Folks who constantly have different sexual partners are just seeking to attain a satisfaction which inevitably eludes them.  If they had a truly sexually satisfying partner - why would they ever bother looking for more?!

This is why sexual promiscuity is to sex what alcoholism is to wine: not an enjoyment of, or appreciation for, but an addiction which, as any other addiction, is fueled by internal emptiness.  Roger Water perfectly described this feeling in his song "Empty Spaces":

What shall we use to fill the empty spaces
Where waves of hunger roar?
Shall we set out across this sea of faces
In search of more and more applause?
Shall we buy a new guitar?
Shall we drive a more powerful car?
Shall we work straight through the night?
Shall we get into fights,
Leave the lights on,
Drop bombs,
Do tours of the East,
Contract diseases,
Bury bones,
Break up homes,
Send flowers by phone,
Take to drink,
Go to shrinks,
Give up meat,
Rarely sleep,
Keep people as pets,
Train dogs,
Raise rats,
Fill the attic with cash,
Bury treasure,
Store up leisure,
But never relax at all
With our backs to the Wall?

Here is a fantastic live version of this song by Roger Waters and Bryan Adams (at his very best):

These "empty spaces"did not come out of nowhere.  They are the direct result of a lifestyle which completely ignores the basic needs of our body, mind and soul.  This is true for the food we eat, the air we breath, the exercise we don't get, the human feelings we don't get to show, the human relations we don't get to experience and, of course, from a completely mistaken notion of what "good and satisfying sex" truly is.  There is so much ego, and pseudo-science, invested in this that I suspect that the true consequences of our sexual inanity will be the last we will look at.  We will stop polluting our planet long before we stop polluting our bodies, minds and souls (and God knows I don't think we will stop polluting our planet anytime soon).

To be honest, I feel sorry for Soral. I know that he had a terrible childhood and that his youth was spent with the most degenerate social groups possible.  And I cannot blame him for his "empty spaces" and his desire to fill them with something, even if this something is as pathetic and sterile as a "virtual relationship" via phone and text messages.  But where Soral is a total idiot is that he should have know that this kind of "lifestyle" would blow up in his face.  Did he really think that he could send picture of him nude to a young and poor African immigrant before they would end up in hands ready to pay top dollar for it?  The scary thing is that Soral is very far from being stupid, and that tells you how compulsive and totally out of control his sexual frustrations are.

He reminds me of Scott Ritter, another clearly very intelligent man, who also was caught in acts of such an extreme stupidity as to appear completely impossible.  And yet that solid and highly principled Marine specialized in, of all things, intelligence (!) was caught exposing his genitals via webcam to a police officer impersonating a 15 year old child.  Again, besides being a clear sign of sexual frustration and pathology, how utterly stupid is that?

The very first rule for anybody involved in any public affairs nowadays is to live a squeaky clean live, especially in sex related matters.  The second rule should be, and if you really cannot engage in "normal" (i.e. socially approved) sex, then don't do that anywhere near any electronic device.  Soral and Ritter both knew that.  And yet they did it.  Does that really tell us anything about them?  Are we better?  Stronger?  Smarter?  Healthier?

I don't think so.

Soral and Ritter are not "perverts" - that explanation is just too easy and really it explains nothing.  I submit a very different explanation: like all of us, Soral and Ritter have a specific human nature which is highly susceptible to its social environment and when that environment fosters dysfunction most humans will end up displaying pathological and compulsive behavior.  Being an Orthodox Christian, I also believe that our current human nature is a "fallen" one, and that our real/original human nature was lost as a result of Adam's sin and that, in turn, tells me that asceticism and resulting self-control are not "luxuries for monastics", but a vital necessity for every single human being.  But even if we set asides religious arguments, I think that there is absolutely overwhelming evidence of the fact that most, the vast majority really, of people in the West are sexually frustrated and miserable.  Our "modern" and "progressive" society has completely failed to yield its promise of sexual satisfaction.  Oh sure, it does serve us cheap and readily available "fast sex" just as it serves us "fast food", but just as fast food is garbage for our bodies, fast sex is garbage to our bodies, minds and souls.

Look at Soral's body: the guy is 56 years old, yet he is "healthy as an ox" as the Russian expression goes, clearly in a fantastic shape.  But psychologically decades of "fast sex" have made him "psychologically morbidly obese".  If anything, the Soral fiasco proves, yet again, that in a health-obsessed society we ignore the needs of our mind and soul only at great peril to ourselves.

What will happen next?

In theory the sexual problems of Alain Soral say nothing about his views or about the Resistance to Empire he embodies today.  That is in theory.  In reality, this is a massive political faceplant which Soral's enemies will use and exploit to the maximum.  After all, for them it is much more fun to focus on Soral's sexual problems than to focus on his ideas.  Sure, his hardcore supporters will probably forgive him for letting his frustration endanger the future of the Resistance to Empire in France, and it's not like Francois Hollande or Nicholas Sarkozy are any less sexually dysfunctional. 

The one issue which nobody will look into is why is it that men who apparently have it all are clearly so out of whack sexually?  Feminists will tell us that men think with their genitals and not their brains, progressives will condemn a repressive moral order, conservatives will deplore the lack of "Christian morals" and nobody will ever dare ask whether a satisfying and fulfilling sexual life is possible and, if yes, in what circumstances?

In conclusion, and just for the record, I want to say this.  I have been accused by some of being "anti-gay" for my clearly stated belief that homosexuality is a personality disorder, a psycho-sexual pathology.  I hope that the above will convince everybody that I make no inherent difference between modern homo-sex and hetero-sex: to me their are all equally pathological and contrary to our human nature.  When I look in the world I live I conclude that the Church is correct in saying that there is only one form of sex which is "right": sex in the context of a heterosexual marriage of adults.  This form of sex does not guarantee sexual satisfaction, but at least it makes it possible.  Sexual promiscuity - whether hetero or homo - makes it impossible not because some bishops decided that, but because they correctly identified the needs and characteristics of our human nature.

By the way, in Greek the word "sin" (ἁμαρτία) means "missing the target" or a "failure to reach the goal".  Sin is not pissing off some morally rigid god sitting on a cloud who spends his time monitoring our sexual lives.  "Sin" is simply not realizing our true nature and our true potential. Sin is inducing misery in ourselves, whether we realize it or not.  Sin is ignoring our nature and mistreating ourselves.

Oh, and one more thing: I hear the voices saying "this blog should be about the Ukraine or politics - not Christian fundamentalist propaganda!!".  Well, for one thing, it's my blog and I do with it whatever the hell I please.  Second, there is a direct connection here.  Russian society is in many ways at least as sexually dysfunctional as the western one.  It has promiscuity, prostitution, marital violence, pornography, mass abortions and even homosexuality.  But there comes the huge difference: in Russia most of the political and intellectual elites deplore that and openly advocate a return to a very different social order.  In the West the political and intellectual elites not only do not denounce these phenomena, they declare them as fully normal.  True, in the USA there is a seizable "Christian" minority which opposes the social consequences of the western "slouching to Gomorrah" but it is deeply reactionary and never looks at the true causes of what it denounces.   So while Russia is post-Communist, she is not, like the West, post-Christian and while the Russian people have yet to decide what their culture should stand for, they at least have decided that the Western model does not inspire them any more.  So if today Russia draws the line at "gay pride" parades in Moscow, this is only a beginning, an obvious point of consensus.  But unless the Empire is successful in its goal of "regime change in Russia", this timid first step will be followed by many more.
I did not write all of the above to convince anybody that Russia is right.  After all, I personally don't accept the notion of universal values and to each his/her own and "live and let live" also applies to societies.  If the folks in the West are happy, fine - let them enjoy themselves and who cares that to me the look miserable and frustrated?  My main goal is to bring to your attention the very deep social, cultural, religious and civilizational tensions between the post-Christian capitalist West and post-Communist Russia and to illustrate why the West has so little appeal to Russians.  What you make of my diagnosis is up to you.

Kind regards,

The Saker

PS: for those of you interested by a truly traditional Russian Orthodox view of the the West, please read the transcript of Alexander Solzhenitsyn's 1983 Templeton Address, one of the most important, and therefore most ignored, speeches he ever made.

Tuesday, November 25, 2014

SitRep Transcarpathia, Transnistria and Gagauzia 17 Nov - 23 Nov (NEW FORMAT!)

SitRep Transcarpathia, Transnistria and Gagauzia 17 Nov - 23 Nov

A perambulation around the periphery of Ukraine, looking at local and regional viewpoints. The media coverage varies from relatively neutral to rabidly nationalist.

Note: some urls in the links are prefixed with '' . This form provides the reader with a Yandex translated version of the source. The original article can be reached by removing this prefix.

Kharkov has experienced numerous unexplained explosions may reflect actions by partisans. A recent status map shows the extent of purported partisan activity throughout Donbass. The connection from Kharkov to the border is interesting. Is there another voentorg in action?

Estonia - the national airline has lost 6.4 million euro as a result of the Ukraine crisis. The route Tallinin - Kiev has been severely disrupted.

Latvia seems to be feeling left out. It has claimed a Russian submarine passed about 27 miles from its territorial waters. This is seriously pathetic.

Galicia - low level discontent was exhibited at a recent football match. One of the teams, Shakhtar Donetsk, refused to wear T-shirts commemorating ATO forces.

Poland reportedly buying 40 AGM-158B JASSM cruise missiles from the US for around $250 million, with 50 % discount. These missiles have a range of 960 km, and an accuracy of around three meters. Even if you buy into the Polish missile defence is aimed at Iran and North Korea scam, these missiles certainly are not defensive and could reach Moscow.

Slovakia will continue to supply Ukraine with gas via reverse flow through the Vojny-Uzhgorod pipeline. This pipeline can supply about 30 million cubic metres gas per day from the Slovakian energy company Eustream. Slovakia claims to be able to maintain this despite a 50% decline in gas supplied to Slovakia from Russia. The head of the Ukraine gas company NaftoGaz claims this way Ukraine can completely avoid Russia as a gas supplier. He seems to be relying on ignorance of readers as to where Slovakia obtains its gas. The Ukraine gas company will defer any decision to buy further gas from Russia until 1 December

Czech Republic - Milos Zeman, the Head of State has stated that it is pointless to support Ukraine in the midst of a civil war. He also is a critic of EU sanctions against Russia, stating that he is not the only one leader with concerns. The leaders of Slovakia, Hungary, and Austria hold similar views. Sanctions are a loss-loss policy. He has invited the leaders of the four major WWII western powers to a ceremony commemorating the liberation of AUschwitz. Predictably some poodles have whined at the mention of Putin, but Zeman points out the camp was liberated by the Red Army. Equally predictably, there have been sign of a colour-coordinated response suggesting the US are hinting at regime change. Look out for red cards in the Czech Republic.

Transcarpathian military forces continue the dance of shuttling to and from the front in the east. In the last week, 27 volunteers have returned, with permission from Kiev, for two weeks leave. A further 36 officers from the Uzhgorod battalion of the National Guard have returned from two months duty at block posts in the Debaltsevo area. Small numbers of casualties are reported. Three were reported killed and two severely wounded in action around Debaltsevo. Initially these were described as members of the local 128th Mountain Infantry Brigade, but the identification was corrected to the 79th Brigade. A few days later, two troops from the 128th were reported killed after serving four months duty near Debaltsevo. One ATO soldier and nine were wounded in action at Donetsk airport.

The Transcarpathian press recently included a very surprising item - an interview with a man from the Lugansk region who had moved west with his family. The surprising thing was the fairly accurate representation of the situation, not jingoistic like all previous interviews with refugees. He notes that locals shun him when he mentions where he is from and asks why are Ukrainians killing Ukrainians.

This was counteracted to some extent by the appearance of an odious piece of propaganda. A Canadian outfit, Nordic Filmworks, has produced a slick propaganda piece linked to a StandWithUkr hash-tag. This seems to reflect an Israeli hasbara theme StandWithUs.

Prisoner exchanges recently resulted in the release of 17 Ukrainian prisoners of war. Transcarpathian police officers returned from the front claim to have arrested 100 separatists, 50 of whom were exchanged for prisoners. The charges justifying arrest are not specified, so maybe it was a quota in order to have someone to exchange.

Biden The US Vice President made a visit to Ukraine this week. Little was reported about the subject matter, The two key questions covered in the meeting were energy (Biden's son has a financial interest in shale oil/gas resources in the Donbass) and security. One report claims "the United States promised assistance in all areas" and "there are a lot of arrangements, which should not be mentioned at a press conference". Does this refer to the supply of weapons to the Ukraine forces? We will not see. Given the Novorossian forces ability in depriving Ukrainians of their weapon systems, maybe shiny new US equipment will show up on their side.

The Transcarpathia economy fares slightly better than the overall Ukraine position, but it is dire. Inflation is running at 19% for the year to date and is predicted to reach 25% by the end of the year. Salaries have risen by about 5.8%, to an average of 2660 UAH (~$178) per month. Wage arrears have reduced b 4.5 million UAH to 3.9 million UAH, one of the lowest rates in the country.Kiev, perhaps the wealthiest part of the country, has a budget deficit of 2 billion UAH, with only 25 million UAH on hand as a result of a government strategy to keep Kiev 'on short rations'.

The exchange rate
position is worsening. There is evidence of manipulation of the exchange rate during the run up to the election election. Shortly after the coup, suspicious activity involving armed masked men, unmarked vehicles, forty large crates and an unmarked aircraft led to speculation that Ukraine's gold, or at least a significant part of it, had been secreted out of the country. One possibility is that the residual gold was sold to stabilise the rate of the Hryvnia in order to give an appearance of stability. The NBU however, claims the gold was sold to optimise the structure of international reserves. The exchange rate control was removed after the election and the rate increased dramatically from the nominal 13 UAH / USD to nearly 16 UAH / USD. The head of the Ukraine National Bank (NBU) notes that the UAH has devalued by ~100% since the beginning of the year and by ~50% since July. The NBU now claims to be operating a floating exchange rate. One other possibility for the manipulation is the influence of George Soros. The head of the NBU has admitted that Soros visited Ukraine two weeks ago and that Ukraine relies on financial support from him. There is also evidence of US financial support via the CIA front USAID.

The banking sector
is in a very poor state in spite of this support. The overall banking system of Ukraine made a loss of 13.5 billion UAH for the period January to October 2014, compared to a $2.1 billion UAH profit in the same period the previous year. About one third of bank loans are 'non performing' i.e. they borrower is not making payments. The weak currency also makes it very difficult to pay debt owed in foreign currency. Initially the NBU said it was not going to close banks in spite of speculation in Transcarpathian media. A few days later, it refinanced the state-owned Oschadbank with 11 billion UAH and towards the end of the week, it declared that two public joint stock companies, 'VAB Bank' and 'CityCommerce Bank' were insolvent after shareholders failed to recapitalise the bank to new capital levels imposed to comply with IMF requirements.

Zakarpatgas, the local Transcarpathian gas supply company, is planning to spend 10.8 million UAH on infrastructure renovation, aimed at reducing gas losses in the distribution system and more accurate metering of gas used by customers.

The Ukraine nuclear power industry depends on Russia for its supply of nuclear fuel for its operational reactors. The contract runs until the end of 2015.

Hungary is under increasing pressure from the US regarding its perceived pro-Russian stance. Orban claims that the government is not pro-Russian, rather it is concerned about the protection of the interests and sovereignty of Hungary, including the Hungarian diaspora in neighbouring countries. In this light, Hungary still supports South Stream as a means of bypassing problems associated with Ukraine and gas supplies through it. It looks like the US is exploiting diverse internal sources of discontent to cover a standard colour-coordinated regime change warm-up. I guess the US hopes the mere threat would be sufficient to make the Hungarians see the error of their ways and put US interests first.

Serbia is not et a member of the EU, but it has been told to impose EU sanctions against Russia by the European Commissioner Johannes Hahn. This is effectively an ultimatum - obey or you do not join. Given the relatively close trading ties and historical association with Russia, the Serbian goverment has stated it will not impose such sanctions. It rightly fears the adverse effects of reverse sanctions. It also has an interest in the success of South Stream and funding for the reconstruction of Serbian railways. It seems likely that Serbia may also face the usual colour-coordinated threat of regime change if it choses to put its own interests before those of the US and EU.

Colour-coordinated regime change - so we have Russia as the big target, then China, but first the Czech Republic, Hungary and Serbia are in the sights of the US. If the German business people have their way, Merkel would change course so Germany would also join the list. I wonder how many simultaneous regime change actions the US can run. Will the totally manipulated US / global USD-backed financial system collapse first as a result of massive internal inconsistencies?

Romania has a new President Klaus Johannis who won a narrow victory over his rival the current Prime Minister Victor Ponta. Johannis is the mayor of Sibiu and the leader of the right wing Christian Liberal Alliance. He seems to have won by default in a protest vote against "wickedness, corruption, betrayal, lies, arrogance" of the system. The US State representative stated that "democracy is alive and well" in Romania and they are prepared to work with Johannes.

Moldova faces an election on 30 November. The results of a poll released on 18 November indicate PCRM (Communist) would get 19.4%, PLDM (Liberal Democrat) 15.1%, PDM (Democratic) 12.4%, PSRM (Socialist) 11.6%, Patria 8.1% and PL (Liberal) 7.1%. The Popular Movement Antimafia would gain 2.5% and the Peoples Party 2.1%. The pollsters surveyed 1591 people aged 18-72 from all localities except Transnistria in the period 1 - 10 November. The accuracy of the result is claimed to be within 2.6%. Other surveys indicate closure of the gap between PCRM and PLDM. Given the PLDM is more pro-EU/pro-US than the PCRM, it seems likely that the result will favour them, and consequent alignment of Moldova with the EU over the RF. Another youth group, the Alliance of Students, has stated it will stage protests if the PCRM win or are included in any governmental alliance. This is a clear indication that some democratic outcomes are not allowed and marks out their role as an EU/US tool.

The Moldovan economy continues to face problems. It's external debt has increased by $11.1 million to $1.3 billion over the course of 2014. Part of this increase arises from the attempt of the Moldovan national bank to stabilise the exchange rate of the national currency (the lei). The exchange rate has increased from 13 lei to the dollar at the start of the year to about 15 lei now. Moldova faces similar problems to Ukraine, facing increasing debt in foreign currency and a weakening exchange rate. Russian sanctions are also important, and the consequent reduced trade with Russia has had the effect of making Romania the dominant trading partner of Moldova. It claims it intends to repay part of the outstanding debt to Gazprom in the near future. It is also considering alternative sources of gas, Romania or Austria via reverse flow. The Democrat Party has come out in favour of the sale of agricultural land to foreigners, an essential part of the EU project. This will allow foreign companies to acquire land cheaply and introduce industrial agriculture, with profit exiting Moldova. This will greatly disadvantage any local farming units.

Gagauzia faces more problems should the PLDM win the election. A representative of the party has publicly stated that the PLDM will not recognise the autonomy of Gagauzia and may be preparing to remove the special status enshrined in law.

Transnistria also faces potential problems after the Moldovan elections. The PMR representative on the jCC 5+2 status negotiations team has expressed the view that Moldovan combatants may storm Transnistria, given the recent provocations against the PMR leader at Chisinau airport and the group of Moldovan soldiers travelling in plain clothes in PMR. Moldova continues to block progress at the JCC meetings originally intended to deliver a peaceful solution to the status of Transnistria. Moldova appears to have a position of no compromise which is consistent with US/EU support. Ukraine is continuing with the construction of a ditch along the border with Transnistria.

Reunification of Moldova and Romania would present further problems for Transnistria and more so, Gagauzia. The original impetus for autonomy or separation was the possibility of reunification of what became Moldova with Romania.

Crimea has a higher profile in the news following the election. As part of his electioneering, Dmitry Yarosh stated that Crimean Tatars would start to cause trouble. This has manifested in frequent appearances of Mustafa Dzhemilev, a Ukrainian representative of, and advisor to Poroshenko on, the Tatar people in the press. He makes unsupported claims that Crimean Tatars are living in a climate of fear. Human Rights Watch have produced a report about these allegations, but their position is compromised having used an image of a women crying in the presence of militia after the Odessa mas murder event claiming the women was being threatened by Russian police. They silently withdrew the petition once their misrepresentation was made public. Interestingly, Soros mentioned earlier also has his finger in the pie in Crimea. He seems to support or influence a Tatar NGO amongst others.

This concludes this short tour. I think it clearly indicates the degree of interaction and the expanding scale of problems enhanced by the coup in Ukraine. There is clear potential for further destabilisation of recalcitrant (in US eyes) countries further to the west with the consequent fallout. The EU politicians have done themselves proud in their obeisance to the Anglo-Zionist project. The remarkably diplomatic Russian Foreign Minister Lavrov has stated the Russia will not shoot itself in the foot by ceasing to trade with Europe, but the former relationship is finished and "business as usual" is no longer possible.

Absolutely crucial statement by Foreign Minister Lavrov (*MUST READ*!)

Note: Finally the Russian Ministry of Foreign Affairs found the time, energy and personnel to translate this most important statement. They even posted it (thanks to Jonathan Jarvis for the pointer!). And if you detect irritation on my part you are correct - I am frustrated with how incompetent Russians are in anything relating to public information. Anyway,

I have bolded out what I consider to be the most important statements made by Lavrov that day.  I would just like to add the following:

1)  Lavrov is considered very much a "moderate" and his language has always been strictly diplomatic.  So when you read Lavrov, just imagine what folks in other Russian ministries are thinking.

2) Lavrov makes no secret of his view of the USA and of his plans for the future of our planet.  When you read his words, try to imagine what a US Neocon feels and thinks and you will immediately see why the US elites both hate and fear Russia.

3) Finally, Lavrov openly admits that Russia and China have forged an long-term strategic alliance (proving all the nay-sayers who predicted that China would backtstab Russian wrong).  This is, I would argue, the single most important strategic development in the past decade.

4)  Finally, notice the clear contempt which Lavrov has for a pseudo-Christian "West" which dares not speak in defense of persecuted Christians, denies its own roots, and does not even respect its own traditions.

Friends, what we are witnessing before our eyes is not some petty statement about the Ukraine or sanctions, it is the admission by Lavrov of a fundamental "clash of civilizations", but not between some wholly imaginary "Christian West" and Islam, but between Christian Russia and the post-Christian West.

Russia did not want this conflict.  Russia did everything in her power to prevent it.  But the West left Russia no choice and Russia now openly declares her willingness to fight and prevail.

The Saker

Remarks by Foreign Minister Sergey Lavrov at the XXII Assembly of the Council on Foreign and Defence Policy, Moscow, 22 November 2014

I’m happy to be at this annual Assembly of the Council on Foreign and Defence Policy (Russian abbreviation SVOP). It is always a great pleasure for me to meet people and feel the intellectual potential, which enables the Council, its leaders and representatives to respond to global developments and analyse them. Their analysis is always free from any hysteria, and its members offer well-grounded and solid arguments, taking a step back, since those caught in the midst of events can hardly adopt an unbiased perspective. We are inevitably influenced by the developments, which makes your observations, analysis, discourse and suggestions even more valuable to us.

As far as I know, this year’s Assembly will focus on prospects for accelerating domestic growth in Russia. There is no doubt that concerted efforts by our society as a whole to bring about comprehensive economic, social and spiritual development are a prerequisite for making Russia’s future sustainable. That said, by virtue of my professional duties, I have to focus on foreign policy issues, which are still relevant for the Assembly’s agenda, since in this interconnected, globalised world, isolating internal development from the outside world is impossible.
Russia’s President Vladimir Putin provided a detailed analysis of the international developments at the Valdai Club meeting in Sochi, as well as in his interviews during his trip to Asia. For this reason, I won’t offer any conceptual observations, as everything has already been said. Nevertheless, I would like to share with you some considerations based on our day-to-day foreign policy efforts. It is not my intention to deliver a comprehensive or clear outlook, since at this stage all forecasts are provisional, no matter who makes them. Moreover, diplomats seek to influence developments as they unfold, not contemplate them.

Naturally, I will start with Ukraine. Long before the country was plunged into the crisis, there was a feeling in the air that Russia’s relations with the EU and with the West were about to reach their moment of truth. It was clear that we could no longer continue to put issues in our relations on the back burner and that a choice had to be made between a genuine partnership or, as the saying goes, “breaking pots.” It goes without saying that Russia opted for the former alternative, while unfortunately our Western partners settled for the latter, whether consciously or not. In fact, they went all out in Ukraine and supported extremists, thereby giving up their own principles of democratic regime change. What came out of it was an attempt to play chicken with Russia, to see who blinks first. As bullies say, they wanted to Russia to “chicken out” (I can’t find a better word for it), to force us to swallow the humiliation of Russians and native speakers of Russian in Ukraine.

Honourable Leslie Gelb, whom you know all too well, wrote that Ukraine’s Association Agreement with the EU had nothing to do with inviting Ukraine to join the EU and was aimed in the short term at preventing it from joining the Customs Union. This is what an impartial and unbiased person said. When they deliberately decided to go down the path of escalation in Ukraine, they forgot many things, and had a clear understanding of how such moves would be viewed in Russia. They forgot the advice of, say, Otto von Bismarck, who had said that disparaging the millions-strong great Russian people would be the biggest political mistake.

President Vladimir Putin said the other day that no one in history has yet managed to subjugate Russia to its influence. This is not an assessment, but a statement of fact. Yet such an attempt has been made to quench the thirst for expanding the geopolitical space under Western control, out of a mercantile fear to lose the spoils of what they across the Atlantic had persuaded themselves was the victory in the Cold War.

The plus of today’s situation is that everything has clicked into its place and the calculus behind the West’s actions has been revealed despite its professed readiness to build a security community, a common European home. To quote (singer/song-writer) Bulat Okudzhava, “The past is getting clearer and clearer.” The clarity is becoming more tangible. Today our task is not only to sort out the past (although that must be done), but most importantly, to think about the future.

Talks about Russia’s isolation do not merit serious discussion. I need hardly dwell on this before this audience. Of course, one can damage our economy, and damage is being done, but only by doing harm to those who are taking corresponding measures and, equally important, destroying the system of international economic relations, the principles on which it is based. Formerly, when sanctions were applied (I worked at the Russian mission to the UN at the time) our Western partners, when discussing the DPRK, Iran or other states, said that it was necessary to formulate the restrictions in such a way as to keep within humanitarian limits and not to cause damage to the social sphere and the economy, and to selectively target only the elite. Today everything is the other way around: Western leaders are publicly declaring that the sanctions should destroy the economy and trigger popular protests. So, as regards the conceptual approach to the use of coercive measures the West unequivocally demonstrates that it does not merely seek to change Russian policy (which in itself is illusory), but it seeks to change the regime -- and practically nobody denies this.

President Vladimir Putin, speaking with journalists recently, said that today’s Western leaders have a limited planning horizon. Indeed, it is dangerous when decisions on key problems of the development of the world and humankind as a whole are taken on the basis of short electoral cycles: in the United States the cycle is two years and each time one has to think of or do something to win votes. This is the negative side of the democratic process, but we cannot afford to ignore it. We cannot accept the logic when we are told to resign, relax and take it as a given that everyone has to suffer because there are elections in the United States every two years. This is just not right. We will not resign ourselves to this because the stakes are too high in the fight against terror, the threats of the proliferation of weapons of mass destruction and many bloody conflicts whose negative impact goes far beyond the framework of the corresponding states and regions. The wish to do something to gain unilateral advantages or to endear oneself to the electorate ahead of another election leads to chaos and confusion in international relations.

We hear the daily repeated mantra that Washington is aware of its own exclusiveness and its duty to bear this burden, to lead the rest of the world. Rudyard Kipling spoke about “the white man’s burden.” I hope that this is not what drives Americans. The world today is not white or black, but multi-coloured and heterogeneous. Leadership in this world can be assured not by persuading oneself of one’ exclusiveness and God-given duty to be responsible for everyone, but only by the ability and craft in forming a consensus. If the US partners committed their power to this goal, this would be priceless, and Russia would be actively helping them.

However, so far, US administrative resources still work only in the NATO framework, and then with substantial reservations, and its writ does not reach beyond the North Atlantic Alliance. One proof of this is the results of US attempts to make the world community follow its line in connection with the anti-Russian sanctions and principles. I have spoken about it more than once and we have ample proof of the fact that American ambassadors and envoys across the world seek meetings at the highest level to argue that the corresponding countries are obliged to punish Russia together with them or else face the consequences. This is done with regard to all countries, including our closest allies (this speaks volumes about the kind of analysts Washington has). An overwhelming majority of the states with which we have a continuing dialogue without any restrictions and isolation, as you see, value Russia’s independent role in the international arena. Not because they like it when somebody challenges the Americans, but because they realise that the world order will not be stable if nobody is allowed to speak his mind (although privately the overwhelming majority do express their opinion, but they do not want to do so publicly for fear of Washington’s reprisals).

Many reasonable analysts understand that there is a widening gap between the global ambitions of the US Administration and the country’s real potential. The world is changing and, as has always happened in history, at some point somebody’s influence and power reach their peak and then somebody begins to develop still faster and more effectively. One should study history and proceed from realities. The seven developing economies headed by BRICS already have a bigger GDP than the Western G7. One should proceed from the facts of life, and not from a misconceived sense of one’s own grandeur.

It has become fashionable to argue that Russia is waging a kind of “hybrid war” in Crimea and in Ukraine. It is an interesting term, but I would apply it above all to the United States and its war strategy – it is truly a hybrid war aimed not so much at defeating the enemy militarily as at changing the regimes in the states that pursue a policy Washington does not like. It is using financial and economic pressure, information attacks, using others on the perimeter of a corresponding state as proxies and of course information and ideological pressure through externally financed non-governmental organisations. Is it not a hybrid process and not what we call war? It would be interesting to discuss the concept of the hybrid war to see who is waging it and is it only about “little green men.”

Apparently the toolkit of our US partners, who have become adept at using it, is much larger.

In attempting to establish their pre-eminence at a time when new economic, financial and political power centres are emerging, the Americans provoke counteraction in keeping with Newton’s third law and contribute to the emergence of structures, mechanisms, and movements that seek alternatives to the American recipes for solving the pressing problems. I am not referring to anti-Americanism, still less about forming coalitions spearheaded against the United States, but only about the natural wish of a growing number of countries to secure their vital interests and do it the way they think right, and not what they are told “from across the pond.” Nobody is going to play anti-US games just to spite the United States. We face attempts and facts of extra-territorial use of US legislation, the kidnapping of our citizens in spite of existing treaties with Washington whereby these issues are to be resolved through law enforcement and judicial bodies.

According to its doctrine of national security, the United States has the right to use force anywhere, anytime without necessarily asking the UN Security Council for approval. A coalition against the Islamic State was formed unbeknownst to the Security Council. I asked Secretary of State John Kerry why have not they gone to the UN Security Council for this.

He told me that if they did, they would have to somehow designate the status of Syria’s President Bashar al-Assad. Of course, they had to because Syria is a sovereign state and still a member of the UN (no one excluded it from UN membership). The secretary of state said it was wrong because the United States is combating terrorism and the al-Assad regime is the most important factor that galvanises terrorists from around the world and acts as a magnet attracting them to this region in an attempt to overthrow the Syrian regime.

I believe this is perverse logic. If we are talking about precedents (the United States adheres to case law), it is worth remembering the chemical disarmament in Syria when the Assad regime was a completely legitimate partner of the United States, Russia, the OPCW and others. The Americans maintain talks with the Taliban as well. Whenever the United States has an opportunity to benefit from something, it acts quite pragmatically. I’m not sure why the ideologically-driven position took the upper hand this time and the United States chose to believe that Assad cannot be a partner. Perhaps, this is not so much an operation against the Islamic State as paving the way for toppling al-Assad under the guise of a counter-terrorist operation.

Francis Fukuyama recently wrote the book, Political Order and Political Decay, in which he argues that the efficiency of public administration in the United States is declining and the traditions of democratic governance are gradually being replaced with feudal fiefdom ruling methods. This is part of the discussion about someone who lives in a glass house and throws stones.

All of this is happening amid the mounting challenges and problems of the modern world. We are seeing a continued "tug of war" in Ukraine. Trouble is brewing on the south border of the EU. I don’t think the Middle Eastern and North African problems will go away all by themselves. The EU has formed a new commission. New foreign actors have emerged, who will face a serious fight for where to send their basic resources: either for the continuation of reckless schemes in Ukraine, Moldova, etc., within the Eastern Partnership (as advocated by an aggressive minority in the EU), or they will listen to the Southern European countries and focus on what’s happening on the other side of the Mediterranean.

This is a major issue for the EU.

So far, those who are not guided by real problems, but rather by a desire to quickly grab things from freshly turned up ground. It is deplorable. Exporting revolutions – be they democratic, communist or others – never brings any good.

State, public and civilisational structures are actually disintegrating in the MENA region. The destructive energy released in the process can scorch states that are located far beyond this region. Terrorists (including the Islamic State) are claiming a national status. Moreover, they are already beginning to create quasi-governmental bodies there that engage in the administrative work.

On this backdrop, minorities, including Christians, are banished. In Europe, these issues are deemed not politically correct. They are ashamed when we invite them to do something about it together at the OSCE. They wonder why would we focus specifically on Christians? How is that special? The OSCE has held a series of events dedicated to keeping memories about the Holocaust and its victims alive. A few years ago, the OSCE started holding events against Islamophobia. We will be offering an analysis of the processes leading to Christianophobia.

On 4-5 December, OSCE ministerial meetings will be held in Basel, where we will present this proposal. The majority of EU member states elude this topic, because they are ashamed to talk about it. Just as they were ashamed to include in what was then the EU constitution drafted by Valery Giscard d'Estaing a phrase that Europe has Christian roots.

If you don’t remember or respect your own roots and traditions, how would you respect the traditions and values of other people? This is straightforward logic. Comparing what’s happening now in the Middle East to a period of religious wars in Europe, Israeli political scientist Avineri said that the current turmoil is unlikely to end with what the West means when it says “democratic reforms.”

The Arab-Israeli conflict is dead in the water. It's hard to play on several boards at a time. The Americans are trying to accomplish this, but it doesn’t work for them. In 2013, they took nine months to sort out the Israeli-Palestinian conflict. I will not go into the reasons, they are known, but they failed at this as well. Now, they asked for more time to try to achieve some progress before the end of 2014, so that the Palestinians wouldn’t go to the UN and sign the Statute of the International Criminal Court, etc. Suddenly, it transpired that negotiations on Iran are underway. The US State Department dumped Palestine to focus on Iran.

US Secretary of State John Kerry and I agreed to talk on this subject some time soon. It’s important to understand that you can’t keep the problem of the Palestinian state deeply frozen forever. Failure to resolve it for nearly 70 years has been a major argument of those who recruit extremists in their ranks, “there’s no justice: it was promised to create two states; the Jewish one was created, but they will never create an Arab state.” Used on a hungry Arab street, these arguments sound quite plausible, and they start calling for a fight for justice using other methods.

Russian President Vladimir Putin said at the Valdai Club meeting in Sochi that we need a new version of interdependence. This was a very topical statement. The leading powers must return to the negotiating table and agree on a new framework that takes into account the basic legitimate interests of all the key parties (I can’t tell you what it should be called, but it should be based on the UN Charter), to agree on reasonable self-imposed restrictions and collective risk management in a system of international relations underpinned by democratic values. Our Western partners promote respect for the rule of law, democracy and minority opinion within countries, while failing to stand up for the same values in international affairs. This leaves Russia as a pioneer in promoting democracy, justice and rule of international law. A new world order can only be polycentric and should reflect the diversity of cultures and civilisations in today’s world.

You are aware of Russia’s commitment to ensuring indivisibility of security in international affairs and holding it in international law. I won’t elaborate on this.

I would like to support the point the SVOP has been making that Russia won’t succeed in becoming a major, successful and confident power of the 21st century without developing its eastern regions. Sergei Karaganov was among the first to conceptualise this idea, and I fully agree. Taking Russia’s relations with the Asia Pacific countries to a new level is an absolute priority. Russia worked along these lines at the Beijing APEC meeting and the G20 forum. We will continue moving in this direction in the new environment created by the upcoming launch of the Eurasian Economic Union (EAEU) on 1 January 2015.

We have been treated as “subhumans.” For over a decade, Russia has been trying to establish partnership ties with NATO through CSTO. These efforts were not just about putting NATO and CSTO “in the same league.” As a matter of fact, CSTO is focused on catching drug dealers and illegal migrants around the Afghan border, and the North-Atlantic Treaty Organisation is the backbone of the international security forces, which, among other things, were tasked with fighting the terrorist threat and eliminating its financing schemes, which involve drug trafficking. We tried everything: we pleaded and then demanded real-time contact, so that once NATO detects a caravan transporting drugs and is unable to stop it, it alerts us across the border, so that this caravan could be intercepted by CSTO forces. They simply refused to talk to us. In private conversations, our NATO well-wishers (and I actually mean this in the positive way) told us that the alliance can’t view CSTO as an equal partner for ideological reasons. Until recently, we saw the same condescending and arrogant attitude with respect to the Eurasian economic integration. And that despite the fact that countries intending to join the EAEU have much more in common in terms of their economies, history and culture than many EU members. This union is not about creating barriers with anyone. We always stress how open this union is expected to be. I strongly believe that it will make a significant contribution to building a bridge between Europe and Asia Pacific.

I can’t fail to mention Russia’s comprehensive partnership with China. Important bilateral decisions have been taken, paving the way to an energy alliance between Russia and China. But there’s more to it. We can now even talk about the emerging technology alliance between the two countries. Russia’s tandem with Beijing is a crucial factor for ensuring international stability and at least some balance in international affairs, as well as ensuring the rule of international law. We will make full use of our relations with India and Vietnam, Russia’s strategic partners, as well as the ASEAN countries. We are also open to expanding cooperation with Japan, if our Japanese neighbours can look at their national interests and stop looking back at some overseas powers.

There is no doubt that the European Union is our largest collective partner. No one intends to “shoot himself in the foot” by renouncing cooperation with Europe, although it is now clear that business as usual is no longer an option. This is what our European partners are telling us, but neither do we want to operate the old way. They believed that Russia owed them something, while we want to be on an equal footing. For this reason, things will never be the same again. That said, I’m confident that we will be able to overcome this period, lessons will be learned and a new foundation for our relations will emerge.

The idea of creating a single economic and humanitarian space from Lisbon to Vladivostok can now be heard here and there and is gaining traction. Germany’s Foreign Minister, Frank-Walter Steinmeier, has said publicly (while we have been saying it for a long time) that the EU and the EAEU should engage in dialogue. The statement President Vladimir Putin made in Brussels in January 2014, when he proposed the first step by launching negotiations on a free-trade zone between the EU and the Customs Union with an eye on 2020, is no longer viewed as something exotic. All of this has already become part of diplomacy and real politics. Although this is so far only a matter of discussion, I strongly believe that we will one day achieve what is called “the integration of integrations.” This is one of the key topics we want to promote within the OSCE at the Ministerial Council in Basel. Russia is about to assume BRICS and SCO presidency. The two organisations will hold their summits in Ufa. These are very promising organisations for the new age. They are not blocks (especially BRICS), but groups where members share the same interests, representing countries from all continents that share common approaches regarding the future of the global economy, finance and politics.

The Scotsman who took a shrapnel wound for Russia

Yup, I managed to get two mistakes into one title yesterday:  Graham Phillips is not English, but Scottish, and his would was caused not by a bullet, but by shrapnel.  The good news is that he is doing well, here he is making a short statement from the hospital.  And, yes, for those who might wonder, he is speaking in Russian, not English, even if his Russians does sound very, very English :-)  And since he basically says that he is okay and needs some rest, there is no transcript needed in this case.


The Saker

The Englishman who took a bullet for Russia

I have been aware of the numerous reports by Graham Phillips from Novorussia and I knew that he had been kidnapped by Ukrainian goons not once, but twice.  What always touched me in his reports was the visible fondness of the Novorussians for Graham, and in this video below you will see them calling him "Gremchik".

Not even Graham (terrible!) British accent could be an obstacle for the respect and affection the Novorussians showed him (and in this video, they are clearly upset and distressed at the fact that he got hurt).  I know that Graham did not truly "take a bullet for Russia", but that he probably took it for the cause of honest journalism and I would say for the Truth.  But I am also quite sure that for the Novorussians it was "our Gremchik" who took a bullet for "us".

In my opinion President Putin should bestow the medal "for bravery" to Graham just as he did to that other fantastic reporter, Anastasia Popopva, for her truly heroic reporting from Syria.

Check out the video of how Phillips was wounded below.

He took a shrapnel wound to his lower back and his life is not in danger.

I wish him a prompt recovery and I hope that his work will finally get the recognition it deserves.  And even if his courage and integrity are never recognized in the West, his example proves one more time that there is this "other West" which is not hostile to Russia at all and which is principled and honorable.

The Saker

Monday, November 24, 2014

Today meatspace won. See you tomorrow

Dear friends,

Today has been a really bad day in meatspace for me.
I need to bounce back and a night of sleep.
I will get back to you all tomorrow.

I have authorized all comments today (as I don't feel like reading them), including even one from a Ukie propagandist who wrote them with the hated CAPS on, but whatever - who cares?

I will try to get things rolling tomorrow.

Sorry about that, 

The Saker

Q&A with the Saker by Controinformazione in Italy

Dear friends,

I was recently contacted by Anacronista from the website Controinformazione in Italy and we agreed to do a short Q&A which was published today here in Italian. I am posting the original English text of our exchange below.


The Saker

Anacronista: Today the contrast between Russian and US foreign policies is striking: on one side moderation, common sense, respect for sovereign states; on the other side coups d'etat, threats, sanctions and lies. Is the contrasting behaviour of the two powers due to incidental political calculations or to a different underlying view of life?

The Saker: The first thing to point out is that Lavrov and Putin are extremely well educated men who come from elite institutions: Lavrov from the Ministry of Foreign Affairs and Putin from the former external intelligence directorate of the KGB. They are far better educated that modern US diplomats. In the past the US also had distinguished diplomats like James Baker, but now they are either total idiots (like Psaki) or arrogant liars (like Powers). The second this is that the USA truly does not have a "diplomacy". After all, US "diplomacy" is just a combination of demands, promises, threats and bombings which do not require any real diplomatic skills. Third, Russia has greatly suffered from the costs of empire, both under the Czars and under the Soviet rule. As a result, Russia does not want to be an empire, or a super power, or a world policeman or a hegemon. All Russia wants is to be a *normal* but, and this is important, a *truly sovereign* country. In order to achieve that Russia has a few basic fundamental rules she really believes in:

  1. Turn your enemies into neutrals, your neutrals into partners, your partners into friends and your friends into allies. The US can only conceptualize two categories: vassals and enemies.
  2. Security is always and necessarily collective. If your neighbor does not feel safe, then you also are not safe. The US only feels secure then it can threaten everybody, as a result of which, everybody feels threatened.
  3. International law really matters to the Russians. Why? Because they want a multi-polar world and that, in turn, mandates that the "rules of the game" (international law) be upheld. The US wants a unipolar world which, therefore, has no need for international law.
  4. For Russia, the use of military forces is the last resort and a failure of diplomacy. For the US the use of force is an integral part of what it calls "diplomacy"
What we are dealing with here is a deep civilizational conflict. These are two fundamentally incompatible views of the world, two mutually exclusive civilizational models which cannot coexist, much less so collaborate.

Anacronista: What are the substantial differences, if any, between Western capitalism and Russian capitalism? Is Russia run by "markets"?

The Saker: No, Russia has a deeply dysfunctional economy. First, Russian interest rates as so high as to completely inhibit most credit for the creation of small to medium size companies. In fact, interest rates in Russia are higher than the profitability of entire sectors of the economy. Second, a huge amount of Russian money leaves Russia every year into offshore accounts and is then returned to Russia in form of "foreign investments". Combine that with the fact that most Russian corporations are incorporated outside Russia (in the UK typically) and you will immediately conclude that the entire economic/financial system in Russia is designed to prevent Russia from diversifying the Russian economy and get off the "energy needle". Russia is also poorly regulated, has a very erratic taxation system, very limited government investments and corrupt courts (hence the use of arbitrage). The Russian market has clear signs of being an oligopoly and this is a major inhibitor to the real potential of the Russian society. Some economist say that the Russian economy is barely turning at 2/3-1/2 of its true potential.

On a very different level I would also note that true capitalism has never been part of the Russian culture. Russian culture is far more collective and Russian people are not inspired by worldviews which offer little besides hopes of self-enrichment and the monetization of everything. Russian culture has always been social and social justice is an ideal which still is strong in Russia today while unbridled greed is frowned upon.

Anacronista: In Western states, money creation and management are in the hands of private banks such as the FED and the ECB. How does it work in Russia?

The Saker: Russia also have a Fed-like Central Bank which can only print Rubles in amounts corresponding to the purchase of dollars. This is a crazy idea. Officially, the Central Bank has a mission to keep the Ruble stable, but in reality all it appears to care about in inhibiting inflation which is a very bad idea, especially in times of recession and sanctions like today.

Anacronista: Does Russia plan to extend industrialization and modern infrastructure to all its territory?

The Saker: In theory yes. There are plans to re-industrialize and re-develop Siberia, the Russian Far East, Crimea and other regions. Again, in theory there is an import-substitution program being worked upon to begin developing indigenously that which was imported in the past. Major investment programs have been announced to modernize the infrastructure, especially the roads, airports, railways, etc. On paper these programs look terrific, but as long as the Russian Central Bank continues to choke down the Russian economy and the Medvedev Government continues to sabotage Presidential decisions I am not very optimistic.

Anacronista: What is Russian view on immigration and integration: how does Russia manage the many ethnicities that make up the immense Federation and the new arrivals from abroad?

The Saker
: There are many tensions around this issue and lot's of disagreements. Historically, Russia has always been a multi-ethnic state thanks to which 180 different ethnic groups have survived in Russia (compare that with the USA!). Even the so-called "Russians" (roughly 80% of the people) are almost always with very mixed ethnic roots. To be "Russian" is not an ethnic/racial thing. Even Orthodoxy tends to categorize people by their worldview and values and not their biological roots. There are, however, real cultural and religious differences which create tensions: poorly educated and heavily criminalized minorities from the now independent ex-Soviet republics and Wahabi Islam which is very closely connected to terrorism. In response to these two problems, the Kremlin introduced three main policies: support for local economies in depressed regions, support for local law-enforcement and support for traditional Islam (which in the former Soviet Union is never Wahabi). There are also problems with Chinese immigrants but these are mainly local and not nearly as severe as those with immigrants from the South (Caucasus, Central Asia).

Anacronista: Drugs, family crisis, social disintegration: to what an extent is Russia affected by the evils that trouble the West, and how is it planning to heal them?

The Saker:
Russia also has all the problems you list, including drugs, dysfunctional families and social disintegration. The main difference in with the West is that these were at their worst in the horrible 1990s when, as the local joke says, every boy wanted to be a criminal and every girl wanted to be a prostitute (not literally true, of course, but partially true nonetheless). Since Putin came to power these problems have begun a slow but steady process of improvement whereas in the West things are still getting worse with every passing day. The main factor is that the Russian society which in the 1990s wanted to emulate the West has now grown disillusioned and even disgusted with the West and as a result of the the entire western civilizational model is being rejected. A lot of Russians are returning to their historical, civilizational and religious roots (Orthodox Christianity and Islam) while others are looking towards an original "Russian" social/civilizational model. While there is definitely still a class of people who want to be like Europeans, the Ukrainian slogan "the Ukraine is Europe" would have zero traction in Russia. If anything, the western hostility and hypocrisy towards Russia has convinced the vast majority of Russians that the West hold no promise for Russia. I estimate that the pro-western population in Russia is at no more than 5% of the total.

Anacronista: Classics are more and more neglected in Western education, thus alienating the youth from their heritage and traditions. What is the relationship between the past, the present and the future in Russia?

The Saker
: Very interesting but also very painful question. The Russian past has been very tragic, especially in the 20th century. But even before that. There are still Russians who - like Alexander Solzhenitsyn - say that the deep roots of the Russian Revolution can be found in the 18th century reforms of Peter I. I tend to agree with that. The Russian civilization has been more or less oppressed for no less than 300 years. Yet, Russian cannot simply reject 300 years of her history, take a time machine and return to the Russia of Alexei Mikhailovich. But neither can Russia simply endorse everything which was done in the past 3 centuries. There is a small movement of National-Bolsheviks who basically say that every Czar was good, and Lenin was good, and Stalin was good, and more or less everything Russian is great. But that is nonsense and this ideology has no future. And yet, Russians are also deeply attached to their roots and believe that somebody with no past has no present and no even real future. So the quest is on for a criteria, a worldview, a unifying ideology which would allow Russians to separate the good from the bad and, hopefully, keep the good. I think that nobody in Russia wants yet another revolution or a "Russian Maidan". So rather then revolution, evolution is the order of the day. But Russia needs an evolution towards higher ideals then just greed, profit, wealth and comfort. So far, no real solution has been found to that problem. If you carefully read the program statements of Putin, he does offer a consensus vision which roughly 80% of Russians support: respect for tradition, respect for individual freedom, social solidarity, national sovereignty, respect for the family and the social collective, a quest for social and economic justice and a general endorsement for traditional religions (Orthodoxy, Islam, Judaism, Buddhism). That is, of course, only a beginning, but I personally find it a reasonable and healthy one.