Sunday, April 13, 2014

The West and Russia: a tit for tat game, part II


 By Tatiana Yugay 




In this post, Tatiana Yugay, Professor at the Moscow State University of Economics, Russia gives us some background to the recent events relative to the crisis in Ukraine. Image © Collage: Voice of Russia


I wrote earlier on about the first level of sanctions against Russia imposed on individual businessmen. At present, “All Quiet on the Western Front” (Im Westen nichts Neues) but it seems to be a brief lull before the storm (note by UB: this sentence was written a few days ago and it seems to have been prophetic). The main geopolitical actors are staying in full alert anticipating further steps of each other. After a certain agitation caused by launching of the first sanctions tool kit, the West is watching Russia's reaction (a disappointing one) and making guesswork about Putin's next move. Now it is more or less clear that the West and the Ukraine have accepted Crimea’s integration with Russia. It seems that they are going to continue with sanctions only in case of a Russian invasion of mainland Ukraine, which is highly improbable.

Second sanctions' level: Trying hard to avoid the boomerang effect


The main reason behind the pause taken by the West is the understanding that after undertaking clearly political individual sanctions the law of consequences demands more comprehensive economic sanctions to be imposed on the most sensible sectors of the Russian economy. The conflict of mighty economic interests serves as a watershed between the U.S. and the EU, which separates them in the form of no less than the Atlantic Ocean.

As for the U.S., sanctioning is their favorite game. At present, the U.S. has been imposing at least 24 different sanction regimes on different countries from the Balkans to Zimbabwe. Moreover, last week Washington gave a strong warning to China not to escalate territorial tensions in the Asia-Pacific region if it doesn’t want to face American retaliation. In his statement, a US official used sanctions on Russia over Crimea’s accession as an example. However, politicians and analysts express strong doubts about sanctions' efficiency. Even a rather hawkish Paul Pillar writes in his post “More Sanctioning Madness”: “The sanctions habit has persisted because imposing sanctions is a primitive, easy way to “do something” about difficult problems on which there is an urge to do something. It is a gesture. Congress needs to decide whether gestures are more important than making progress in getting out of the current crisis”.

In fact, there are very limited trade relations between Russia and the USA and therefore economic sanctions can't cause much harm to the Russian economy. According to the Federal Customs Service, Russia's trade turnover with the U.S. in 2013 was less than $28 billion, or 3.8% of Russia's foreign trade. Russian exports to the US accounted for $11.2 billion while imports were $16.5 bn, so the balance is more favorable for the U.S. than for Russia
 
Last week, NATO and NASA created a rather comic duo by declaring demonstratively that they want to sanction Russia, too. The fact is that Russia has very limited relations with both organizations. NASA posted on its Twitter and Facebook accounts a statement announcing the suspension of cooperation with Russia. NASA’s status on Facebook stated: “Given Russia's ongoing violation of Ukraine's sovereignty and territorial integrity, NASA is suspending the majority of its ongoing engagements with the Russian Federation.” I was rather surprised by this bold declaration and even thought that NASA'a accounts had been hacked. Ironically, exactly at this same period NASA’s astronaut Steven Swanson has been staying at the International Space Station together with two Russian astronauts Aleksandr Skvortsov and Oleg Artemyev. It isn't very reasonable to turn a US citizen into a hostage of the Ukranian crisis. I tried to imagine possible ways out of this awkward situation. I could think of only two opportunities: Swanson could be deported from the station to extra vehicular activity (EVA) or, quite the contrary, would be granted Russian citizenship. Luckily for the US astronaut, his chiefs had specified a little bit later that they wouldn't suspend the ISS cooperation. As Deputy Prime Minister Dmitriy Rogozin wrote in his tweet, “NASA suspends cooperation with Roscosmos (Russian Federal Space Agency) with the exception of work on the ISS. Yet, apart from the ISS we didn't cooperate with NASA in any other way”. As a matter of fact, NASA's pompous declaration appeared to be much ado about nothing. George Abbey, former director of the Johnson Space Center, said in his interview to “Russia Today” that “the United States right now are totally dependent on our Russian partners. When we stopped flying the space shuttle, we did away with our access to take humans to space and we rely completely upon Russia. Russia does a very good job flying our crewmen up to the space station, so if that were to end, the US human flight program would not really be implemented in any fashion until 2017 or much later”. 
 
OK, what about NATO's demarche? Maybe it represents a real threat to Russia's national security? Actually, the only field where NATO and Russia have been fruitfully cooperating is Afghanistan. However, as I wrote in my previous post, NATO had already declared that it had unilaterally suspended all cooperation with Russia on drug trafficking. This display of political muscles takes place precisely at the time when NATO is preparing to conclude the withdrawal of the last 50 thousand troops from Afghanistan. The infamous retreat of NATO's forces will take place this summer and the Command of International Forces will be badly in need of Russia's assistance, namely, in providing transit services for troops withdrawal. At that, NATO hurried to precise that it didn't mean suspending the cooperation on Afghanistan.

On April 1st, the NATO issued a communiqué where it declared that it would restrict the access for Russian diplomats in its headquarters. A very good April Fool's joke, indeed! And what if Russia retaliates by forbidding access to the "northern corridor" for the transit of NATO's troops through its territory?! In this case, the international troops would be forced to march through Pakistan, which is much more dangerous because of the activity of the Pakistani Taliban in the country's northern provinces. Big groups of vehicles carrying military personnel and cargo could become an easy target for ambushes, terrorist and mine attacks. Thus, uncontested withdrawal of troops through Pakistan would be fraught with greater losses of manpower and military equipment.

Unlike their NASA's and NATO's colleagues, Russian officials seem to be maintaining a more mature position. Russia's Roscosmos space agency is not preparing to retaliate against NASA in connection with the latter's imposition of sanctions. Deputy head of Roskosmos Denis Lyskov said, "All the projects that have significance for Roscosmos are running in international format in the first place. NASA sanctions do not apply to them," he reiterated. The International Space Station is not a bilateral program, although the USA and Russia are among the key participants. "Suspending work within the framework of this program would result in serious consequences for everybody," Lyskov said.

Russian Foreign Ministry Lavrov regards NATO's decision to limit the access for Russian diplomats to its headquarters in Brussels as reflecting the persistent "Cold War" mentality among the alliance's officials. "We noted that information about the move was posted on the main page of NATO's official website. It looks like access by Russian diplomats to the NATO office is the North Atlantic alliance's number one problem," the Russian Foreign Ministry said in a statement.

In the best traditions of political farce, US senators Dan Coats and Mark Kirk sent a letter to FIFA requesting the international governing organization for soccer to strip Russia from its right to host the World Cup in 2018 and also ban it from this year's edition of the event which will be hosted by Brazil. FIFA Secretary General Jerome Valcke explained US lawmakers in his response letter that FIFA rules and regulations do not apply to a "entities outside the pyramidal structure of the game of football". He added that individual teams could not be banned from a competition because of actions by their parent states.

Deputy Foreign Minister Sergey Ryabkov, commenting on US, NATO's and NASA'sfeverish activity to threaten Russia with sanctions, gave them a very helpful recommendation. “What can we advise our American colleagues to do? Spend more time outdoors, do some yoga, have healthy food, probably, watch more comedy series on TV. That would be better than working yourselves and others up, knowing that the train has already departed and that no tantrums, crying and hysterics can help”.

Meanwhile, the American public gives little support to USA's engagement in Ukraine. According to a new Reason-Rupe poll, 58 percent of the 1,003 respondents said they do not want America to be involved in the crisis whatsoever–not economic sanctions, not military action. This may be indicative of weariness about adding a new chapter to America's legacy of international entanglements. Only eight percent of respondents considered sending military troops and assets to be the right course of action for America; and only thirty-one percent think the U.S. should continue imposing economic sanctions on Russia. "If Russia attempts to invade additional parts of Ukraine, would you favor or oppose [sending US troops to Ukraine]?" non-interventionist sentiments remained high. Sixty-two percent of people polled would still be opposed to sending military aid and weapons. Though, when asked a similar question about stricter sanctions, 61 percent said they would approve.

The discord in the European communal home

Obama's tour was dedicated to rally the international community in order to isolate Russia, but the European leaders are reluctant to punish themselves together with Russia. It isn't at all surprising since, unlike the U.S., the European Union has developed very strong economic ties with Russia. The EU trade turnover with Russia stands at almost $410 billion euros, or nearly 15 times more than the Russia-US trade turnover. According to the Eurostat, Russia is the EU's third most important trading partner, behind the USA and China and accounts for 7 percent of imports and 12 percent of exports of the EU. The introduction of sanctions may lead to a considerable financial losses for the EU while the region is slowly coming out from the Great Recession.

On the aftermath of the EU summit on March 20th and 21st, European Commission President Jose Manuel Barroso told that the European Union has not yet made a decision on possible practical trade and economic sanctions against Russia. He said the European Commission (EC) was considering all economic sectors, but had not reached an agreement on the specific economic measures against Russia; and the timeframe for the coordination of these measures had not been specified. Many European countries opposed trade war with Russia during the EU summit on March 20th and 21st. "Escalating the conflict around Ukraine would have catastrophic consequences both for the parties to the conflict and Europeans", Belgian Prime Minister Elio Di Rupo said.

There isn't even accord among the EU's main stakeholders. Angela Merkel, the Chancellor of Germany, made strong political statements, threatening Russia with "massive political and economic damage". At the same time Merkel also believes that the West “has not reached a stage that requires the imposition of economic sanctions” against Russia, as advocated by US President Barack Obama. “And I hope we will be able to avoid it,” she said. Germany is very much involved in economic relations with Russia with trade turnover about 76 billion euros in 2013. The imposition of sanctions has been strongly opposed by German businesses. More than 6,000 German firms and over 300,000 jobs are dependent on Russian partners with the overall investment volume of 20 billion euros. In addition, Germany heavily relies on Russian energy with around 35 percent of its natural gas imports coming from Russia.

The discord between the EU members is based on their unwillingless to hit Russia's sector of economy which is more connected with their own economy. Thus, Britain and France have exchanged unpleasantries over the fact that Paris was not strict enough in regard to Moscow as it had not refused to sale helicopter carriers to Russia. In its turn, London was unable to show the French an example and freeze multibillion assets of Russian businessmen.

A hint made by French FM Laurent Fabius that Paris may give up the contract for building Mistral-class amphibious assault ships for Russia as part of the western countries' economic sanctions against the Russia, caused a strong discontent in France. Apart from damaging 600 workers occupied in the manufacturing, the collapse of the deal can negatively affect the financial soundness of DCNS (Direction des Constructions Navales). According to Le Figaro, Moscow has already paid 1.2 billion euros to Paris, or more than a half of the contract sum. If breach of contract is also included in the economic sanctions package against Russia, France will have to pay the break fee. Russian Deputy Defense Minister Yury Borisov said, "Of course, Russia will defend its right to the end in accordance with the agreements concluded and will demand repayment of all damages we could sustain in the case that the Mistral contract is broken off".

The best kept secret about these Mistrals is in the fact that ahead of concluding the contract in 2011, there were hot debates in the Russian defense sphere about appropriateness of commissioning these vessels abroad whereas the national defense industry was quite capable to build aircraft carriers on its own. The Russian United Shipbuilding Corporation (USC) has already noticed that it would finish building the ships in case of cancellation of the contract, taking into account that the USC had already received the most part of the technical documentation on the "Mistral" from the French shipbuilder. French President Francois Hollande hurried to declare that France will continue implementing the contract on supplying the two Mistral vessels to Russia. France is complying with the conditions of the agreement signed, the parties are not at a stage of dissolving the contract and it is hoped that this will be avoid. This little story with happy end illustrates how the boomerang effect works.

Not only the big European economies express their concern but also the smaller ones. Latvia has so far voiced the biggest concern over sanctions against Russia, as the adverse effect would hit it the hardest compared to all the EU member states. The country could lose up to 10 percent of its GDP, as the action against Russia could have a big adverse effect, according to the country’s Prime Minister Laimdota Straujuma. Latvia also said that the EU should compensate any countries hurt by sanctions against Russia.

A boomerang never misses to hit back

The European leaders are seeking how to punish Russia and at the same time not to hit their own economies. In fact, Russia shouldn't work very hard in order to retaliate against its European counterparts. As a prominent US trader Jim Sinclair ironically said, slapping of sanctions on Russia is tantamount to shooting oneself in the foot. On a more serious tune, Euro MP Pino Arlacchi admitted, “The EU sanctions against Russia would cripple the European economy instead. The position of the European Union should be different from the US position. Europe should not insist on the extension of sanctions. These sanctions are unwise. In fact, they are directed against us".

The most vulnerable point in the EU-Russian relations is Europe's energy security. Russia is currently the world’s largest crude producer and ­second-largest gas producer. In 2012, the European Union’s bill for Russian oil and gas amounted to $156.5 billion, says the International Trade Centre’s Trade Map. European members of the Paris-based International Energy Agency imported 32% of their raw crude oil, fuels and gas-based industrial feedstocks from Russia that same year. According to the U.S. Energy Department in Washington, collectively, the EU, Turkey, Norway, Switzerland and the Balkan countries got 30% of the natural gas they burned from Russia last year. The EU as a whole accounts for about one-third of Russia’s exports, 40 percent of which pass through Ukraine.

The picture bellow clearly shows the dependence of individual EU countries on Russian gas, varying from zero in case of the UK and to 100% (Finland, Lituania, Latviya, Estonia). In the case of Italy, which depends for 90 percent on imports for its gas needs; 29% of the supplies come from Russia, which is the biggest.


I'm not a fan of The Economist's biased attitude towards Russia but as an economist I'm fond of maps, tables and charts etc. So I highly recommend to read an article with an eloquent title Reducing Europe’s dependence on Russian gas is possible—but it will take time, money and sustained political will. The author studies the case of high indebtedness of Ukraine to Russia's energy company Gazprom. “Ukraine already owes Gazprom $1.7 billion, according to Mr Miller. If Ukraine continues failing to pay its bills—and without outside help, it can't pay—Gazprom can cut it off. Such a dispute need not, in principle, have any effect on the gas that flows through Ukraine to other countries farther west. But if Gazprom reduces the flow of gas to reflect the fact that Ukraine no longer has a right to its 28bcm, and Ukraine takes some of that gas anyway, or if Gazprom shuts down the pipelines going through Ukraine completely, Europe’s supplies get hit. Europe gets 24% of its gas from Russia, and half of that—80bcm a year—passes through Ukraine”.

I'd like to admit that The Economist doesn't consider EU sanctions or Russia's retaliation but only a possibility of suspending gas supplies to Ukraine. The article examins different opportunities, such as gas sharing among the EU consumers, Norwegian exports, American shale gas, imports of LNG from the Middle East and even... Russian supplies via the Nord Stream. Finally, The Economist makes a rather ambivalent conclusion, “Though making a real dent in Europe’s reliance on Russian gas will take political will, money and the best part of a decade, merely moving in that direction will shift the balance of power, because it will signal a fundamental truth: in the end, the Kremlin needs its European customers at least as much as they need Russian imports”.

According to US-based financial research company Sanford C. Bernstein & Co, Europe will have to spend up to $215 billion through investments if it decides to stop buying Russian natural gas. The company considered "various scenarios of Europe refusing Russian gas supplies but none of them seem attractive" and arrived at conclusion that "the cure is worse than the illness".

Danny Vinik reasonably writes in “New Republic”, “the EU can impose its own sanctions against Russian individuals and entities. They will carry much more force than anything the U.S. does, because the EU does more than $400 billion of trade with Russia each year. This is a double-edged sword, though. For instance, if the EU prohibits Eurozone businesses from purchasing Russian natural gas and oil, it would significantly impact the Kremlin’s finances. But it would also leave the Eurozone nations without a vital energy supply, increasing the price of gas and oil and potentially leading to shortages. That's made countries like Germany hesitant to support sanctions".

An American cure from the Russian gas addiction

When I first heard an interview by Giulietto Chiesa, (http://youtu.be/GxeLAAyue_k) who said that all the Ukranian crisis was inspired by the U.S. in order to sell shale gas to Europe, I decided that the whole idea was a little bit exaggerated. Being a follower of Ugo Bardi's blog, I know that the American shale revolution is well over. You can imagine my surprise when Obama in his Hague speech declared the shale gas as a panacea from Europe's dependence on Russian gas. I asked Ugo to comment on this sensational statement. As I expected, he called the American idea to sell gas to Europe a mad one and advised me to read Gail Tverberg's articles. In her article “The Absurdity of US Natural Gas Exports”, Tverberg gives a comprehensive analysis explaining why America's gas crusade to Europe is ill-intentioned not only against Russia but Europe, as well.

Gail Tverberg writes, Another issue is that with shale gas, we are the high cost producer. There is a lot of natural gas production around the world, particularly in the Middle East, that is cheaper. If we add our high cost of shale gas to the high cost of shipping LNG long-distance across the Atlantic or Pacific, we will most definitely be the high cost producer. Other producers with lower costs (even local shale gas producers) can undercut our prices. So at best those shipping LNG overseas are likely to make mediocre profits. And there would seem to be great temptation to stir up trouble, to encourage Europe to buy our natural gas exports, rather than Russia’s. Of course, our ability to provide this natural gas is not entirely clear. It makes a good story, with lots of “ifs” involved: “If we can really extract this natural gas. If the price can really go up and stay up. If you can wait long enough.” The story makes the US look more rich and powerful than it really is. We can even pretend to offer help to Ukraine”.

Third sanctions' level: the credibility of the Iranian model

At the beginning of sanctions' hysteria, there was much talk about applicability of Iranian type of sanctions against Russia. The Iranian sanctions regime had three components. First, it included prohibitions on oil, tanker fleets, and the insurance industry, which grounded the Iranian oil trade to a halt and cost the country many billions of dollars in export revenue. Second, banking sanctions cut off Iran from the international banking system, making it virtually impossible for the country to engage in any form of international commerce. And third, Obama invoked the U.S. International Emergency Economic Powers Act (IEEPA), which allowed him to block Iranian assets subject to U.S. jurisdiction (such as those belonging to the Iranian Revolutionary Guard Corps and its various commercial and logistical affiliates) and made it illegal for U.S. citizens to do business with designated persons or companies.

The US hawks were citing US success which forced Iranian President Hassan Rouhani to start talks with the U.S. on the Iranian nuclear problem. The reality was quite different, not Rouhani but Obama himself called him on September 27, 2013, after the 68th UN General Assembly meeting on Syria where he failed to promote military intervention to Syria. In the best traditions of the US propaganda, his call to Rouhani was declared as a big strategic victory of the US sanctions' policy. However, more sober researchers question the efficiency of the Iranian model. Andrew Cockburn said, The Joint Plan of Action agreed to last fall between Iran and the so-called P5-plus-1 negotiating team — the five permanent members of the U.N. Security Council and Germany — stipulated that Iran would not continue to enrich uranium to levels above 5%, implicitly recognizing that Tehran can enrich uranium. All those years of throttling the Iranian economy, impeding even shipments of food and medicine, for this?”

Lee S. Wolosky in his article “How to Sanction Russia: And Why Obama's Current Strategy Won't Work” reluctantly admits, ”the sanctions against Russia would be missing two components that made the ones on Iran work: energy and banking. Energy accounts for 70 percent of Russia’s annual exports, so energy sanctions could, in principle, be a meaningful tool for rebuking Russia. But much of Russia’s oil and natural gas (unlike Iran’s) goes significantly to Europe, and Europeans have not been willing or eager to change that quickly. And without adequate preparation, such sanctions could cause a shock to world oil markets that could undermine the global economic recovery”. In his interview to Dimitri K. Simes at The National Interest, Sergey Glazyev, an adviser on Ukraine to President Putin estimated the possible consequences of Iranian type sanctions.

If we assume that they would adopt sanctions against Russia similar to those against Iran, according to our calculations, this would cost the EU 1 trillion euro. The sanctions would disproportionately affect the Baltic republics: for example, the potential losses for Estonia are estimated at the size of Estonia’s annual GDP; Latvia and Lithuania would incur losses the size of half of their annual respective GDPs; Germany would incur a loss of 200 billion euro”.

Among all crazy suggestions which has been overflooding these days the Western mass media, I really liked only one reasonable idea. Juan C. Zarate calls to “a broader effort that marginalizes illicit and suspect financial behavior — not just those activities tied to the invasion of Ukraine. This should be a conduct-based campaign that moves banks and companies to reconsider doing business and investing in Russia... Such a campaign would entail aggressive investigations of illicit financial activity of Russian interests globally — tied to concerns about money laundering, corruption, tax evasion and links to Russian organized crime”. Why do I appreciate this proposition? Mainly, because it coincides with Putin's struggle against offshores and corruption. If the international community would take part in this fight, then illegal businesses would really feel that they won't find refuge in safe havens under US and UK jurisdiction and return in Russia. Such kind of sanctions would turn into a real benefit for Russia.

At the time being, Europe resorts to toothless political bites which are intended to rise its own self-esteem but, instead, exposes it in a rather unflattering light. Recently, the Council of Europe (PACE) passed a resolution that puts all the blame for the Ukrainian crisis on Moscow and also deprived the Russian delegation of voting rights and the right to participate in the governing bodies of the Assembly til the end of the year.

Observers can notice that currently Russia has been restraining from backbites. Meantime, Russia has a broad scope of more efficient means of retaliation...




(To be continued)


14 comments:

  1. Link to part I in this post doesn't work

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  2. I think the description of the situation above (and of its context and background and related situations) is reasonably good though it's a bit all over the place. I also think the TIT FOR TAT GAME is a total waste of time though for the sake of justice and truth if for nothing else those who started it should lose it. Of course who actually will win it "in the end" and at what cost and with what outcomes, results and impacts is hard to predict. It's always easy enough to start something but it's not that easy to know how it will end. ("the best laid plans of mice and men and etc.)

    But I think that if the U.S. neocons and the U.S. government (and the various "complexes" it works with including Walls Street, the Fossil Fuels complex, the military industrial complex and a few others) and the EU LOST the game this would be the best outcome for all the "stakeholders" involved i.e. for:

    i) the Ukrainian people overall ii) for European progress towards a more (authentically) democratic EU that might return earlier rather than later to (at least some of) its founding principles and move away from rule by the banks, the big private interests / elites, and austerity for ordinary people; iii) the global geopolitical balance of power which as a result probably would shift somewhat to power being slightly more evenly distributed; iv) the peoples of Europe and the United States (probably the first and foremost winners) and v) the planet in terms of the probably more good than bad effect which the loss of this latest game would have on the race for what's left.

    Chris Hedges recently again repeated some of the by now fairly old arguments (though not many people seem to have understood them let alone taken them on board or started doing anything based upon them) regarding complexity:

    http://www.truthdig.com/report/item/the_myth_of_human_progress_and_the_collapse_of_complex_societies_video_2014

    Maybe how to deal with Limits to Growth and Complexity is THE BIG GAME and the game above is one of many Little Games? But perhaps the outcome of many little games may also affect the outcome of the big one. (which, at least thus far, humanity as a whole is clearly losing)



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    Replies
    1. Thank you very much, Max, for sharing your thoughts about Big and little games. I believe that the U.S. resorts to little games because it has already lost all big games.

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    2. Hello Tatiana and thank you very much too, for having read my comment and I am glad that you seem to have liked it. Overall I quite liked your piece.
      And since in it you also mention that you follow Ugo's blog fairly closely perhaps you also have already seen a recent post of mine (with the "amusing" title The Seven Powers of Planet Earth or "the seven powers that be") which was posted in mid-December 2013 on a more recent blog of Ugo’s which deals primarily with climate change communications called The Frog that Jumped out Blog. In any case here is the link to it in case you would like to read it.
      http://thefrogthatjumpedout.blogspot.com/2013/12/the-seven-powers-of-planet-earth.html
      I thought it might have been be a fairly interesting and useful post because it tried to pull together into a single place and in a single overarching conceptual framework the various different "complexes" (they could be 7 but they also could be 6 or 8 or some other number) which TOGETHER end up shaping the policies of Western governments, but -as I said at the beginning of that post- also the policies of Russia and China and other "non-western" (whatever that means) countries which have their own corresponding “complexes”.
      Regrettably it received very few comments and those that it did receive were mostly negative.
      As far as "the big game" of the international community (the authentic one, not the one usually banded about) coming to terms before it is too late (if it isn't already) with the various Limits to Growth - related (extremely serious) problems on both the inputs side and the outputs side (namely peak various resources on the one hand and climate change, environmental pollution, destruction and severe degradation and etc. on the other) my own view is that it is precisely because that same (disorganized and disunited) "international community" (or “non-community” of nations and of private sectors and civil societies) is so busy playing many “little games” and trying to win them on assorted national, regional or geopolitical “chessboards” that it cannot focus its attention adequately and collectively on the “big game” which it (and humanity) collectively are losing as globalized neoliberal capitalism continues to assault the planet and the “carrying capacities of its various sources and sinks” . The article by Chris Hedges which I had attached again talks broadly about this also in the context of the “complexity paradigm” which I think also could benefit from being developed further theoretically.
      On the “input side of things” many good people have written extensively about the resources squeeze. People like Gail Tverberg, Antonio Turiel and many others including Ugo himself. And on the climate change side there have been countless others not least of whom are Michael Mann, James Hansen and several other well known climate scientists. (not to even mention the 1000 or more international scientists who directly or indirectly contributed to the IPCC reports) Personally I think that much less has been written in terms of how to proceed practically regarding the major transition which needs to be organized and take place and in particular given the obstacles which “the seven complexes” (and both private and state capitalism) as a whole place on the process. The latest from the IPCC is that this September world leaders might discuss what to do a bit more seriously and that by the end of 2015 an international agreement will be reached (it should have been reached in Copenhagen but of course was not) to tackle these problems comprehensively and at scale. Personally I have little hope this will happen because the scale of the technical and institutional challenges are enormous but also because the seven complexes (everywhere) will undoubtedly remain hard at work to make sure business as usual continues.

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    3. Thank you Tatiana for reminding us that "isolating Russia", a current theme in British / American government language, is a bit of nonsense. Such is the way for stories framed essentially for domestic politics.

      As Max points out there is no escaping our joint predicament in the larger historical framework of industrial/energy inter-dependence. I share with Max the view that the currently accepted 'paths to prosperity' will not lead to 'the promised land'.

      President Putin continues to get a 'bad Press' in left-leaning British middle-class Guardian newspaper. NATO and EU apparent offers over several years to Ukraine of freedom from incompetent kleptocratic government and an eventual joining with a more prosperous EU-sphere, do not seem to be recognised here in the UK for the provocative disingenuous encouragement that, (dangerously), they have been.

      Ukraine is a still a very impoverished country compared with Russia itself, and even compared with Serbia / Macedonia / Bosnia-Herzegovina (still locked out of EU membership) and with Romania and Bulgaria inside EU. Ukraine with its much larger population is not in a happy position as a 'buffer' nation. The large disparity also between income levels inside Ukraine (higher income, except for Kiev, is in the East) makes for difficult choices. I understand Ukrainian industry still sells mostly to the Russian market - heaven help them if they become dependent on EU and IMF re-structuring and in direct competition with EU industry.

      Your comments on the accuracy of above points would be valued.

      Thanks to Ugo and yourself for keeping the dialogue ongoing.

      best
      Phil

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    4. Thank you very much, Max, for a link to your post. Right you are about 7 or more complexes ruling and robbibg the world. Of course, Russia and China have more or less the same structure. Though Russia is more biased to the Fossil and Fuels Complex. In my opinion, not the national complexes endanger the humanity but super-national ones, eg. global financial system dominated by several banks, international defense\offense alliance (NATO) etc.

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    5. Thank you, Phil, for sharing your position on the Ukraine. I think that the EU has become a hostage of the US vested interests of big complexes, in Max' terminology, mainly, gas companies and NATO. I think that the EU won't be happy to have a sort of Syria next door. Your analysis of situation is fairly correct, particularty, taking into account gigabytes of lies flooding the Western press,
      Yes, the Ukraine is very impoverished country because the U.S. has been destabilizing the country for more than two decades. The IMF loans with austerity in one pack will make Ukranians suffer even more. Russia has been its major economic partner since the industrial cooperation was inherited from the USSR. Moreover, Russia has been subsidizing the Ukranian economy with low gas prices and discounts etc. In fact, Russia has granted the Ukraine $35.4 billion. The question is: can Europe afford helping the Ukraine in such scale?

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    6. Tatiana
      I think Max has given us a powerful and integrated description of recent world industrial expansion and its "intellectual underpinning". I am glad he has re-posted his link. It seems apparent to me that most of the 'accepted' theories that this vast network uses, are simply wrong. That is 'wrong' in a very obvious 'common-sense' way. For example, I have been reading since 2007 commentaries on the set of financial and economic theories that the "7-Powers" network relies on. The theoretical base is 'wrong' and there has been no proper revision.

      In a similar and perhaps connectedway, the assumptions (theories?) that underpinned Western reaction to the failure of the USSR appear unrevised. Many participants appear to be following their 'Plan 1', formulated more than 20 years ago.

      My remarks about an 'incompetent kleptocracy' in Ukraine could equally be made about my own country and about leaders of large corporations and organisations in general, and this is illustrated by the dramatic increase in inequality of both income and wealth. The recent book "Capital in the 21stC" by Thomas Picketty sets out the undeniable facts. http://www.ft.com/cms/s/2/0c6e9302-c3e2-11e3-a8e0-00144feabdc0.html#axzz2z5PsDRos

      So where to go now? Civil conflict in Ukraine would be another disaster to add to the ongoing list, as the wrong-headed 7 monsters eventually bring down their own structures?

      I do not think there is a direct comparison with Europe in 1914, but one striking similarity it seems to me, is that nobody back then could imagine what the real result was going to be - the catastrophes from 1914 through to 1946 and beyond. I think we fail now to imagine what much of the World might be going to experience in the next 50 - 70 years.

      best wishes

      Phil

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    7. Thank you very much, Phil, for sharing your thoughts. Your comment is so profound that I needed some time to reply. I read the review on Piketty's book. It seems that this work will make a revolutionary impact on the economic theory. The progressive taxation was partly caused by existence of the socialist system and after its collapse nothing can resctrict the pursuit of profits.
      As for "kleptocracy in Ukraine" as well as in Russia, in my opinion, it's even worse than the patrimonial wealth. Oligarchs seek to rob their countries as soon as possible. Moreover, they continue to exsanguinate the economy, exploiting its natural resources, public infrastructure and manpower by means of offshore jurisdictions. In fact, they don't pay any taxes.

      I wish you happy Easter!

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  3. Thanks a lot for this update and analysis.

    Do you think there is a way to know (more or less) to what use the 5 billions dollars that Victoria "fu.ck the EU" Nuland mentions as having been already invested in Ukraine by the U.S. have been put ?
    At 7:42 below (December 2013) :
    https://www.youtube.com/watch?v=U2fYcHLouXY
    Is that official aid to the government from the US government ? Aid from "US foundations" to various NGOs or other groups ? Something else ?
    5 billions is quite a bit ...


    Also notice that at 6:10 she mentions "it is now time to finish the job", and she even mentions "religious communities" somewhere after 7:42.

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    1. Thank you, Yves, for your question. The notorious $5 bn weren't spent to aid the Ukranian economy. They were used for organizing the Maidan coup d'etat. The money came from the Department of State and sponsors such as Soros, e-bay auction and through NGO's and foundations which acted in the Ukraine. You can hear an inteview with Scott Rickard at http://rt.com/shows/sophieco/ukraine-revolution-usa-support-246/.
      A similar scheme was functioning in Russia until the Parliament adopted the Bill on non-commercial organizations which caused hysteria in the U.S. and the EU.

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  4. This is the most Russin biased blog outside of RT. You cannot be serious about trying to be taken serious.

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    Replies
    1. I'll be very grateful, if you write your well-grounded critical opinion but not an unfounded grumble.

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Who

Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014)