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Benton D Struckcheon

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Member since: Fri Jan 18, 2013, 09:06 PM
Number of posts: 2,347

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Maddow on Sanctioning Russia, and the BBC on Russia wanting to sabotage the US economy in 2008

Prologue: The Budapest Memorandum
This was agreed on Dec 5, 1994. Think about what this did: it took the nuclear arsenal under Ukraine's control at that time, and turned them over to Russia. There had to be a pretty high level of trust in Russia's assurances about Ukraine in this memorandum for this deal to go through.
Somewhere between the signing of this deal in 1994 and 2008, Russia went from an attitude of cooperation towards the U.S. to one of belligerence, as seen in the following hair-raising incident:

1. Russia tries a bear raid on Wall Street - BBC News:

There is a cynicism in the relationship between Russia and the US, being played out in the Crimean crisis...The depth of mistrust between the two was highlighted in the interview given by Hank Paulson, the former US treasury secretary, for my recent BBC Two documentary, How China Fooled The World...this is where we enter the territory of a geopolitical thriller. Mr Paulson:
"Here I'm not going to name the senior person, but I was meeting with someone… This person told me that the Chinese had received a message from the Russians which was, 'Hey let's join together and sell Fannie and Freddie securities on the market.'
...Paulson says this guerrilla skirmish in markets by the Russians and Chinese didn't happen.
But this kind of intelligence from China on Russian desire and willingness to embarrass the US in a financial sense may help to explain - in a small way - why President Obama shows little desire to understand Crimea as seen by Mr Putin.
And maybe if the US is being a bit more robust than the EU in wanting to impose economic and financial sanctions on Russia, that may not all be about America's much lesser dependence (negligible dependence) on Russian gas and oil.


This is exactly the opposite behavior to the cooperative spirit of the Budapest Memorandum: it amounts to economic warfare. This story isn't well-known; the BBC says that segment of the interview never made it into their documentary, so the story was never publicly aired. But the intention brought forth here, of deliberately dumping securities at a time of crisis into the market so as to cost the US large sums of money, is striking for the level of hostility to the US it betrays.
Remember that Russia, right up until this Crimea crisis, had been brought into the G-7, which was then turned into the G-8. This was a strictly political move, as Russia simply doesn't rate as a member of this group. The OECD still keeps track only of the G-7, and then after that of the G-20*; for purposes of actual strictly economic thinking, in other words, Russia doesn't make the cut as being a developed economy on the same level as the others. But the symbolic purpose of bringing it in was obviously to make the point that post-Soviet Russia was now a part of the normal functioning of the world, not apart from it.
Despite these efforts, the above makes it pretty obvious Russia was actively hostile to the US in a way that most people probably aren't really aware of. They were willing to make the already disastrous crisis in 2008 far worse, with the express purpose of costing the US as much as they could. This point needs emphasis: they were let into the G-7 in 2007. Just one year later, they were actively proposing a huge act of economic sabotage against the US.
This also of course emphasizes the fact that Russia isn't the important one to watch internationally; China is. But China didn't do what Russia wanted for precisely that reason.They have a far larger stake in keeping things going, a stake that Russia doesn't have, but thinks it can get by means of shortcuts like costing the US large sums of money when it's in crisis. It's a remarkably immature attitude.
IMO, you can get at Putin's inflated ego by instead inviting China in as a replacement for Russia in a newly configured G-8. I don't know if China would go along with this, but it certainly makes more sense than the grouping as currently configured.

2. Maddow: Obama signs executive order giving himself power to sanction any Russian entity. This was on tonight's show. He did this before the one issued today, which actually names persons subject to sanctions.
I found a nice little write-up on the order, and it appears to be as she described it. It's unusual enough to be remarked on thusly:

In a departure from most instances where the U.S. has authorized new sanctions regimes, the new Executive Order does not name any individuals or organizations subject to the new sanctions. Rather, the new Ukraine-related sanctions were issued more along the lines of a warning that the U.S. would target specific persons who undermine democratic processes and institutions in Ukraine; threaten its peace, security, stability, sovereignty, and territorial integrity; and/or misappropriate assets from Ukraine. The Order authorizes blocking the assets of such persons, making the individuals ineligible for visas, and blocking of donations by, to, or for the benefit of such persons.


In other words, in this order Obama is reserving the right to himself to name more people in the future, and any organizations associated with those people. He's being heavily criticized by the right, as usual, for being too lenient, but it would appear that that leniency is highly conditional.
As Maddow also pointed out, Exxon/Mobil signed a big deal with Rosneft, the state-owned company that looted Khodorkovsky's Yukoil when Putin had him arrested and imprisoned after he attempted to oppose him 10 years ago, to explore in the Arctic in a huge deal that was signed in front of Putin. If the President really wants to get to Putin, sanctioning Rosneft and preventing this deal from continuing would do it. I doubt he'd go that far, but then again, given what happened in 2008, which Obama has to know about, well, it's a lot more likely than I would have thought before reading that story.

Final thought: this interesting story from Bloomberg: Russia sounds alarm on economy. I think some thought should be given to the idea that Putin pulled this Crimea thing out of his ass to distract the Russian populace from looming troubles in the economy, and to give himself something to point to as the cause of what apparently was a slowdown that was already going to happen.

And, final-final: Russia eyes Crimea's oil and gas. It really was all about oil and gas, looks like, but for Putin. By taking Crimea he also took a huge portion of Ukraine's potential gas reserves away. IMO, that was his real motivation. Distracting the populace from the worsening economy via a manufactured crisis was just a nice bonus.
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* Description of the latest issue of the OECD National Accounts, for the third quarter of 2013 (great bedtime reading):

The OECD’s Quarterly National Accounts contains a selection of the accounts most widely used by economic analysts: GDP by expenditure and by industry, gross fixed capital formation by asset, gross fixed capital formation by institutional sector, and components of disposable income are all shown at both current and constant prices. Saving and Net lending and GDP by income at current prices are also provided as well as population and employment data (national concept) and employment by industry (domestic concept).

The data cover 34 OECD countries, and totals are provided for the following groups: OECD, OECD-Europe, European Union, Euro area, G7 and G20. Data are based on the System of National Accounts 1993 (1993 SNA) for all countries except Australia, Canada, Israel and United States (2008 SNA).
Posted by Benton D Struckcheon | Tue Mar 18, 2014, 12:21 AM (10 replies)
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