And the stakes could not be any higher…
The United States and Europe kicked off a joint effort on Tuesday intended to curb Russia’s long-term ability to develop new oil resources, taking aim at the Kremlin’s premier source of wealth and power in retaliation for its intervention in Ukraine.
Russia is learning to live in a new harsh environment of U.S.-led economic sanctions and political confrontation with the United States. More than five months after the change of regime in Kiev, which ushered in a new era in Moscow’s foreign policy and its international relations, a rough outline of Russia’s new security strategy is emerging. It is designed for a long haul and will probably impact the global scene.
The central assumption in that strategy is that Russia is responding to U.S. policies that are meant to box it in and hold it down—and back. The Kremlin absolutely could not ignore the developments in Ukraine, a country of utmost importance to Russia. The armed uprising in Kiev brought to power a coalition of ultranationalists and pro-Western politicians: the worst possible combination Moscow could think of. President Putin saw this as a challenge both to Russia’s international position and to its internal order.
Taking up the challenge, however, meant a real and long-term conflict with the United States. Verbal opposition to U.S. global hegemony was not enough. Unlike the 2008 Georgia war, Ukraine was not an episode that could be safely localized and bracketed. Essentially, the current U.S.-Russian struggle is about a new international order.
For the foreseeable future, Ukraine will remain the main battleground of that struggle. Moscow’s tactics can change, but its core interests will not. The main goal is to bar Ukraine from NATO, and the U.S. military from Ukraine. Other goals include keeping the Russian cultural identity of Ukraine’s south and east, and keeping Crimea Russian. In the very long run, the status of Crimea will be the emblem of the outcome of the competition.
In broader terms, the competition is not so much for Ukraine as for Europe and its direction. Unlike at the start of the Cold War, with its pervasive and overriding fear of communism, the present situation in Ukraine and the wider U.S. conflict with Russia can be divisive. Western Europeans generally still see no threat from Russia; they also depend on Russian energy supplies and on the Russian market for their manufacturing exports.
Russia will seek to salvage as much of its economic relationship with the EU countries as possible, especially to retain some access to European technology and investment. It will also work hard to protect the market for its energy supplies to Europe. In this effort, Moscow will focus on Germany, Italy, France, Spain and a number of smaller countries—from Finland to Austria to Greece—with which Russia has built extensive trading relations.
Longer-term Russian calculations are linked with the steady emergence of Germany as a twenty-first century great power and Europe’s de facto leader. This process, over time, could give the EU the character of a genuine strategic player and make Europe’s relations with the United States more equitable. Even though Berlin’s and Moscow’s interests differ significantly, and a stronger Germany may not necessarily lead to an easy understanding with Russia, Russo-German relations are a rising priority for the Kremlin.
This calculus however, is for the distant future. For the present, Russia is seeking to compensate for the losses in its Western trade and its standing vis-a-vis Europe and the United States through a new outreach to Asia. China’s importance to Russia rises, as it is the one major economy impervious to U.S.-initiated sanctions. Concerned at the same time with potentially becoming too dependent on its giant neighbor, Russia will seek to engage others, such as Japan and South Korea, but, like in Europe’s case, those countries’ relations with Russia will be constrained by their alliances with the United States.
Given the fundamental nature of Russia’s conflict with the United States, Moscow is seeking to cement its connections with non-Western countries. The BRICS group, which brings together Brazil, Russia, India, China and South Africa, is a natural platform for that. The recent BRICS summit in Brazil made a first step toward creating common financial institutions. Russia receives some moral support from its partners and is working to improve relations with others in Latin America, Asia, the Middle East and Africa. However, to really strengthen its ties with the non-West, Russia will need to considerably expand economic relations with them: a tall order. India is a key priority here, followed by ASEAN.
Politically, Russia already posits itself as a go-to country for all those unhappy with U.S. global dominance.
These countries are watching Russia’s confrontation with the United States with keen interest, and are making conclusions for themselves.
In terms of military security, the principal threats to Russia, in Putin’s view, come from NATO military infrastructure coming closer to Russia (almost a done deal now); from the U.S. ballistic-missile defenses, which are seen as clearly directed at devaluing Russia’s nuclear deterrent; and from strategic nonnuclear systems that can attack Russian targets with high precision. This calls for redoubling Russia’s own military modernization effort, with an emphasis both on the nuclear forces which should remain a credible deterrent, and on the conventional forces which can be employed in various scenarios on the perimeter of Russian borders and abroad. The United States and NATO are back as likely adversaries.
The competition, skewed and asymmetrical as it may be, is likely to be hard and long. The sanctions will not make Putin back off. He also knows that if he were to step back, pressure on him will only increase. The Russian elite may have to undergo a major transformation, and a personnel turnover, as a result of growing isolation from the West, but the Russian people at large are more likely to grow more patriotic under outside pressure—especially if Putin leans harder on official corruption and bureaucratic arbitrariness. If the Kremlin, however, turns the country into a besieged fortress and introduces mass repression, it will definitely lose.
It is too early to speculate how the contest might end. The stakes are very high. Any serious concession by Putin will lead to him losing power in Russia, which will probably send the country into a major turmoil, and any serious concession by the United States—in terms of accommodating Russia—will mean a palpable reduction of U.S. global influence, with consequences to follow in Asia, the Middle East and elsewhere. Ironically, the challenge to the world’s currently predominant power does not come from the present runner-up, but from a former contender, long thought to be virtually defunct. China could not have hoped for such a helping hand.
In announcing coordinated sanctions, American and European leaders went beyond previous moves against banking and defense industries in an effort to curtail Russia’s access to Western technology as it seeks to tap new Arctic, deep sea and shale oil reserves. The goal was not to inhibit current oil production but to cloud Russia’s energy future.
The new strategy took direct aim at the economic foundation of Russia, which holds the largest combined oil and gas reserves in the world.
The carefully orchestrated actions on both sides of the Atlantic were intended to demonstrate solidarity in the face of what American and European officials say has been a stark escalation by Russia in the insurgency in eastern Ukraine. Until now, European leaders had resisted the broader sorts of actions they agreed to on Tuesday, and their decision to pursue them reflected increasing alarm that Russia was not only helping separatists in Ukraine but directly involving itself in the fighting.
Billionaire hedge fund manager Kyle Bass writes:
Trillions of dollars of debts will be restructured and millions of financially prudent savers will lose large percentages of their real purchasing power at exactly the wrong time in their lives. Again, the world will not end, but the social fabric of the profligate nations will be stretched and in some cases torn. Sadly, looking back through economic history, all too often war is the manifestation of simple economic entropy played to its logical conclusion. We believe that war is an inevitable consequence of the current global economic situation.
Paul Craig Roberts – former Assistant Secretary of the Treasury under President Reagan, former editor of the Wall Street Journal, listed by Who’s Who in America as one of the 1,000 most influential political thinkers in the world, PhD economist – wrote an article yesterday about the build up of hostilities between the U.S. and Russia titled, simply: “War Is Coming”. In the article, Roberts notes:
Economist and investment manager Marc Faber says that the American government will start new wars in response to the economic crisis:
Jim Rickards agrees:
Former Goldman Sachs technical analyst Charles Nenner – who has made some big accurate calls, and counts major hedge funds, banks, brokerage houses, and high net worth individuals as clients – saysthere will be “a major war”, which will drive the Dow to 5,000.As reported by Tyler Durden of Zero Hedge, the Russian response to the extra-legal ruling of a corrupt court in the Netherlands, which had no jurisdiction over the case on which it ruled, awarding $50 billion dollars from the Russian government to shareholders of Yukos, a corrupt entity that was looting Russia and evading taxes, is telling. Asked what Russia would do about the ruling, an advisor to President Putin replied, “There is a war coming in Europe.” Do you really think this ruling matters?”
Economist and investment manager Marc Faber says that the American government will start new wars in response to the economic crisis:
Economist and investment manager Marc Faber says that the American government will start new wars in response to the economic crisis:
Martin Armstrong – who has managed multi-billion dollar sovereign investment funds – wrote in August:
Our greatest problem is the bureaucracy wants a war. This will distract everyone from the NSA and justify what they have been doing. They need a distraction for the economic decline that is coming.
What’s causing the slide towards war? We discuss several causes below.
Initially, believe it or not, one cause is that many influential economists and talking heads hold thediscredited belief that war is good for the economy.
Jim Rickards agrees:
Currency wars lead to trade wars, which often lead to hot wars. In 2009, Rickards participated in the Pentagon’s first-ever “financial” war games. While expressing confidence in America’s ability to defeat any other nation-state in battle, Rickards says the U.S. could get dragged into “asymmetric warfare,” if currency wars lead to rising inflation and global economic uncertainty.
Given that China, Russia, India, Brazil and South Africa have just joined together to create a $100 billion bank based in China, and that more and more trades are being settled in Yuan or Rubles – instead of dollars – the currency war is hotting up.
What happened to [Libya's] Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a golddinar.
Gerald Celente – who has been making some accurate financial and geopolitical predictions for decades – says WW3 will start soon.
Hamas wants Hezbollah to join the now three-week-oldconflict with Israel, the deputy political bureau chief of the Palestinian Islamist organization reportedly said on Wednesday.
Moussa Abu Marzouk, who serves as Khaled Mashaal’s top deputy and who is currently based in Cairo, told the Russian news agency RIA Novosti on Wednesday that the organization hoped that the Lebanese Shi’ite group would engage Israel from the north.
“We hope the Lebanese front will open and together we will fight against this formation [Israel],” Abu Marzouk told RIA Novosti.
“There’s no arguing that Lebanese resistance could mean a lot,” Abu Marzouk said.
Last week, Hezbollah leader Hassan Nasrallah vowed to support "the resistance in Gaza in any way necessary" in its fight against the IDF.
Nasrallah made the statements in a phone call with Mashaal and the leader of Islamic Jihad Ramadan Salah.
The Times of Israel is liveblogging events as they unfold through Wednesday, the 23rd day of Operation Protective Edge. The day began with allegations of an Israeli shelling of a UN school in Gaza, with 15 people reported killed. Following another day of heavy Israeli strikes on Gaza, and Hamas rocket fire aimed at Tel Aviv and Jerusalem, among other towns and villages nationwide, Israel and Hamas were both reported to be considering ceasefire moves. But there were no formal confirmations that an end to the conflict was near. The Israeli security cabinet is set to meet Wednesday to discuss whether to expand the ground offensive or halt it, after some in the IDF say most of the Hamas cross-border tunnels have been found and are being demolished.
Fifty-three Israeli soldiers, two civilians and a foreign worker have been confirmed killed in three weeks of fighting, while Gazan health officials put the death toll there at over 1,200. Israel says hundreds of those are Hamas fighters. (Tuesday’s liveblog is here.)
IDF says it responded to mortar fire near UN school
After Israeli tank shells hit a crowded UN school Wednesday, killing 15 and wounding 90, the IDF says it fired after its soldiers were targeted by mortars operating from the vicinity of the school.
“In response, soldiers fired toward the origins of fire. And we’re still reviewing the incident,” the military says in a statement.
“I condemn in the strongest possible terms this serious violation of international law by Israeli forces,” says UNRWA commissioner-general Pierre Krahenbuhl in a written statement.
“We have moved beyond the realm of humanitarian action alone. We are in the realm of accountability. I call on the international community to take deliberate international political action to put an immediate end to the continuing carnage.”
Liberman calls Mideast conflict ‘clash of civilizations’
What is happening today in the Middle East is a “clash of civilizations between the free world and radical Islam,” Foreign Minister Avigdor Liberman says.
In a meeting with German parliamentarians in Jerusalem, he says that the current conflict in Gaza is just one embodiment of this phenomenon in a long series of clashes between the West and Islamism, as demonstrated by the situation in Libya, Iraq and elsewhere.
This clash of civilizations is “the world’s biggest challenge since World War II,” and that’s why Europe should be committed to supporting Israel, Liberman tells his German guests. “Beyond the moral aspects of the case, Israel is the first line on this front because it represents Western values, and that is why Islamic extremists are fighting us,” he says. Unfortunately, he adds, it seems that not everyone in Europe understand this.
As a PLO delegation including Hamas and Islamic Jihad members prepares to leave for Cairo to discuss a ceasefire with Israel, the Israeli cabinet evidently has still not decided whether it wants to topple Hamas or leave it in power, weakened, in the Gaza Strip, The Times of Israel has learned.
Prime Minister Benjamin Netanyahu is disinclined to go all the way with Hamas, but key ministers in his cabinet such as Economy Minister Naftali Bennett are urging him to redefine the goals of Protective Edge — from destroying the tunnels to destroying Hamas.
Through Operation Protective Edge, the IDF believes it has conveyed two important messages to the non-state actors fighting Israel. The first is that thanks to Israel’s missile defense technology — some of which is still being developed — rocket launches have proven ineffective as a weapon of war against Israel; few of the over 2,600 projectiles launched at Israel have landed in urban areas.
The second message is directed at Lebanon’s Hezbollah no less than at Hamas: the organizations’ doctrine of fighting Israel from within residential areas with impunity has been disproved. Following lengthy legal deliberations, the IDF has decided that all civilian structures from which military activity is launched are a legitimate target for attack.
Despite the rush of diplomats and analysts declaring that a ceasefire in the Gaza fighting is imminent, the war refuses to end. Wednesday, July 30, the commander of Hamas’ military wing, Mohammed Deif gave the conflict fresh impetus by injecting a religious dimension that cannot be ignored.
The conflict was sparked essentially by the June 12 abduction and murder of the Israeli teens Gilad She-ar, Naftali Fraenkel and Eyal Yifrach. Forty-nine days later the crisis is evolving into the longest and toughest of Israel’s wars, with the exception of its War of Independence.
As fierce as the fighting is on the battlefield, and as arduous the diplomatic wrangling, the emerging and largely overlooked jihadist element is the most troubling.
When UN Secretary General Ban Ki-moon visited Jerusalem on July 28, Netanyahu warned him about the troubling similarities between Deif’s Hamas and extremist Islamist groups like the Taliban, ISIS and Boko Haram.
Israel’s counter-terror offensive, Netanyahu explained, is part and parcel of the war on fundamentalist Islam. As self-appointed commander-in-chief, ensconced in his subterranean lair, Mohammed Deif couldn’t agree more.
And so the not-so-secret contacts between Washington, Cairo, Riyadh, Doha, Jerusalem and Ramallah are doomed to go nowhere, because they take place on one level, whereas a fanatical religious war is taking place on a completely separate one.
So long as the IDF does not breach Hamas’ main lines of defense to the east of Gaza City, and has not destroyed its underground command system and terror offshoots, Deif will cling to his belief that victory is his. And so long as that belief is not shaken, the war will go on.
Paul Singer has issued an unusual warning for investors, calling the threat of a widespread blackout from an electromagnetic surge the "most significant danger" in the world.
Called an "electromagnetic pulse" or EMP, the events can occur naturally from solar storms or artificially from a high-altitude explosion of nuclear weapons.
"While these pages are typically chock full of scary or depressing scenarios, there is one risk that is head-and-shoulders above all the rest in terms of the scope of potential damage adjusted for the likelihood of occurrence," Singer wrote to clients of his $24.8 billion Elliott Management on Monday in a standard investment update letter. "Even horrendous nuclear war, except in its most extreme form, can [be] a relatively localized issue, and the threat from asteroids can (possibly) be mitigated."
"(A natural EMP event) today would cause a massive disruption to the electric grid, possibly shutting it down entirely for months or longer, with unimaginable consequences," Singer wrote. "Only two years ago, the sun let loose with a Carrington-magnitude burst, but the position of the earth at the time prevented the burst from hitting it. The chances of additional events of such magnitude may be far greater than most people think."
Carrington refers to a solar storm in 1859 that caused telegraph systems to fail around the world.
Singer warned that a man-made EMP attack would be even worse.
"It would not cause any blast or radiation damage, but such an attack would have consequences even more catastrophic than a severe solar storm. It could not only bring down the grid, but also lay down a very intense, very fast pulse across the continent, damaging or destroying electronic switches, devices, computers and transformers across America," the letter said.
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