Russia, China mock divide and rule

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BLOOD & OIL

By Pepe Escobar

 

ROME and BEIJING — The Roman Empire did it. The British Empire copied it in style. The Empire of Chaos has always done it. They all do it. Divide et impera. Divide and rule — or divide and conquer. It’s nasty, brutish and effective. Not forever though, like diamonds, because empires do crumble.

A room with a view to the Pantheon may be a celebration of Venus — but also a glimpse on the works of Mars. I had been in Rome essentially for a symposium — Global WARning — organized by a very committed, talented group led by a former member of European Parliament, Giulietto Chiesa. Three days later, as the run on the rouble was unleashed, Chiesa was arrested and expelled from Estonia as persona non grata, yet another graphic illustration of the anti-Russia hysteria gripping the Baltic nations and the Orwellian grip NATO has on Europe’s weak links.[1] Dissent is simply not allowed.

At the symposium, held in a divinely frescoed former 15th century Dominican refectory now part of the Italian parliament’s library, Sergey Glazyev, on the phone from Moscow, gave a stark reading of Cold War 2.0. There’s no real “government” in Kiev; the US ambassador is in charge. An anti-Russia doctrine has been hatched in Washington to foment war in Europe — and European politicians are its collaborators. Washington wants a war in Europe because it is losing the competition with China.

Glazyev addressed the sanctions dementia: Russia is trying simultaneously to reorganize the politics of the International Monetary Fund, fight capital flight and minimize the effect of banks closing credit lines for many businessmen. Yet the end result of sanctions, he says, is that Europe will be the ultimate losers economically; bureaucracy in Europe has lost economic focus as American geopoliticians have taken over.

Only three days before the run on the rouble, I asked Rosneft’s Mikhail Leontyev (Press-Secretary — Director of the Information and Advertisement Department) about the growing rumors of the Russian government getting ready to apply currency controls. At the time, no one knew an attack on the rouble would be so swift, and conceived as a checkmate to destroy the Russian economy. After sublime espressos at the Tazza d’Oro, right by the Pantheon, Leontyev told me that currency controls were indeed a possibility. But not yet.

What he did emphasize was this was outright financial war, helped by a fifth column in the Russian establishment. The only equal component in this asymmetrical war was nuclear forces. And yet Russia would not surrender. Leontyev characterized Europe not as an historical subject but as an object: “The European project is an American project.” And “democracy” had become fiction.

The run on the rouble came and went like a devastating economic hurricane. Yet you don’t threat a checkmate against a skilled chess player unless your firepower is stronger than Jupiter’s lightning bolt. Moscow survived. Gazprom heeded the request of President Vladimir Putin and will sell its US dollar reserves on the domestic market. German Foreign Minister Frank-Walter Steinmeier went on the record against the EU further “turning the screw” as in more counter-productive sanctions against Moscow. And at his annual press conference, Putin emphasized how Russia would weather the storm. Yet I was especially intrigued by what he did not say.[2]

As Mars took over, in a frenetic acceleration of history, I retreated to my Pantheon room trying to channel Seneca; from euthymia — interior serenity – to that state of imperturbability the Stoics defined as aponia. Still, it’s hard to cultivate euthymia when Cold War 2.0 rages.

Show me your imperturbable missile

Russia could always deploy an economic “nuclear” option, declaring a moratorium on its foreign debt. Then, if Western banks seized Russian assets, Moscow could seize every Western investment in Russia. In any event, the Pentagon and NATO’s aim of a shooting war in the European theater would not happen; unless Washington was foolish enough to start it.

Still, that remains a serious possibility, with the Empire of Chaos accusing Russia of violating the Intermediate-Range Nuclear Forces Treaty (INF) even as it prepares to force Europe in 2015 to accept the deployment of US nuclear cruise missiles.

Russia could outmaneuver Western financial markets by cutting them off from its wealth of oil and natural gas. The markets would inevitably collapse — uncontrolled chaos for the Empire of Chaos (or “controlled chaos,” in Putin’s own words). Imagine the crumbling of the quadrillion-plus of derivatives. It would take years for the “West” to replace Russian oil and natural gas, but the EU’s economy would be instantly devastated.

Just this lightning-bolt Western attack on the rouble — and oil prices — using the crushing power of Wall Street firms had already shaken European banks exposed to Russia to the core; their credit default swaps soared. Imagine those banks collapsing in a Lehman Brothers-style house of cards if Russia decided to default — thus unleashing a chain reaction. Think about a non-nuclear MAD (Mutually Assured Destruction) — in fact warless. Still, Russia is self-sufficient in all kinds of energy, mineral wealth and agriculture. Europe isn’t. This could become the lethal result of war by sanctions.

Essentially, the Empire of Chaos is bluffing, using Europe as pawns. The Empire of Chaos is as lousy at chess as it is at history. What it excels in is in upping the ante to force Russia to back down. Russia won’t back down.

Darkness dawns at the break of chaos

Paraphrasing Bob Dylan in When I Paint My Masterpiece, I left Rome and landed in Beijing. Today’s Marco Polos travel Air China; in 10 years, they will be zooming up in reverse, taking high-speed rail from Shanghai to Berlin.[3]

From a room in imperial Rome to a room in a peaceful hutong — a lateral reminiscence of imperial China. In Rome, the barbarians swarm inside the gates, softly pillaging the crumbs of such a rich heritage, and that includes the local Mafia. In Beijing, the barbarians are kept under strict surveillance; of course there’s a Panopticon element to it, essential to assure internal social peace. The leadership of the Chinese Communist Party (CCP) — ever since the earth-shattering reforms by the Little Helmsman Deng Xiaoping — is perfectly conscious that its Mandate of Heaven is directly conditioned by the perfect fine-tuning of nationalism and what we could term “neoliberalism with Chinese characteristics.”

In a different vein of the “soft beds of the East” seducing Marcus Aurelius, the silky splendors of chic Beijing offer a glimpse of an extremely self-assured emerging power. After all, Europe is nothing but a catalogue of multiple sclerosis and Japan is under its sixth recession in 20 years.

To top it off, in 2014 President Xi Jinping has deployed unprecedented diplomatic/geostrategic frenzy — ultimately tied to the long-term project of slowly but surely keeping on erasing US supremacy in Asia and rearranging the global chessboard. What Xi said in Shanghai in May encapsulates the project; “It’s time for Asians to manage the affairs of Asia.” At the APEC meeting in November, he doubled down, promoting an “Asia-Pacific dream.”

Meanwhile, frenzy is the norm. Apart from the two monster, US$725 billion gas deals — Power of Siberia and Altai pipeline — and a recent New Silk Road-related offensive in Eastern Europe,[4] virtually no one in the West remembers that in September Chinese Prime Minister Li Keiqiang signed no fewer than 38 trade deals with the Russians, including a swap deal and a fiscal deal, which imply total economic interplay.

A case can be made that the geopolitical shift towards Russia-China integration is arguably the greatest strategic maneuver of the last 100 years. Xi’s ultimate master plan is unambiguous: a Russia-China-Germany trade/commerce alliance. German business/industry wants it badly, although German politicians still haven’t got the message. Xi — and Putin — are building a new economic reality on the Eurasian ground, crammed with crucial political, economic and strategic ramifications.

Of course, this will be an extremely rocky road. It has not leaked to Western corporate media yet, but independent-minded academics in Europe (yes, they do exist, almost like a secret society) are increasingly alarmed there is no alternative model to the chaotic, entropic hardcore neoliberalism/casino capitalism racket promoted by the Masters of the Universe.

Even if Eurasian integration prevails in the long run, and Wall Street becomes a sort of local stock exchange, the Chinese and the emerging multipolar world still seem to be locked into the existing neoliberal model.

And yet, as much as Lao Tzu, already an octogenarian, gave the young Confucius an intellectual slap on the face, the “West” could do with a wake-up call. Divide et impera? It’s not working. And it’s bound to fail miserably.

As it stands, what we do know is that 2015 will be a hair-raising year in myriad aspects. Because from Europe to Asia, from the ruins of the Roman empire to the re-emerging Middle Kingdom, we all still remain under the sign of a fearful, dangerous, rampantly irrational Empire of Chaos.

What Putin is not telling us?

Russian President Vladimir Putin

Russian President Vladimir Putin – Reprinted from RT

 
 

By Pepe Escobar

 
 

Russian President Vladimir Putin holds his annual press conference, addressing the economy, ruble and impact of sanctions from the U.S. and Europe.

 
 

Even facing what under any circumstances is a perfect storm; President Putin delivered an extremely measured performance at his annual press conference and Q&A marathon.

The perfect storm evolves in two fronts; an overt economic war — as in siege by sanctions — and a concerted, covert, shadow attack to the heart of the Russian economy. Washington’s endgame is clear: impoverish and defang the adversary and force him to meekly bow to the “Empire of Chaos’ s” whims. And bragging about it all the way to “victory.”

The problem is Moscow happens to have impeccably deciphered the game — even before Putin, at the Valdai Club in October, pinned down the Obama doctrine as “our Western partners” working as practitioners of the “theory of controlled chaos.”

So Putin neatly understood this week’s monster-controlled chaos attack. The Empire has massive money power; a great deal of influence over the world’s GDP at $85 trillion, and the banking power behind that. So nothing easier than using that power through the private banking systems that actually controls central banks to create a run on the ruble. Think about the “Empire of Chaos” dreaming of driving the ruble down by 99% or so — thus wrecking the Russian economy. What better way to impose imperial discipline on Russia?

The “nuclear” optionRussia sells oil in US dollars to the West. Lukoil, for instance, would have a deposit in US dollars in an American bank for the oil they sell. If Lukoil has to pay wages in rubles in Russia, then they will have to sell the US dollar deposits and buy in Russia a ruble deposit for their bank account. This in effect supports the ruble. The question is whether Lukoil, Rosneft and Gazprom are hoarding US dollars overseas — and holding back. The answer is no. And the same applies to other Russian businesses.

Russia is not “losing their savings,” as Western corporate media gloats. Russia can always require foreign companies to relocate to Russia. Apple, for instance, may open a manufacturing plant in Russia. The recent Russia-China deals include the Chinese building factories in Russia. With a depreciated ruble, Russia is able to force manufacturing that might have been located in the EU to be located in Russia; otherwise these companies lose the market. Putin somewhat admitted that Russia should have been demanding this much earlier. The — positive — process is now inevitable.

And then there’s a “nuclear” option — which Putin didn’t even have to mention. If Russia decides to impose capital controls and/or imposes a “holiday” on repayment of larger debt tranches coming due in early 2015, the European financial system will be bombed — Shock and Awe-style; after all, much of the Russian bank and corporate funding was underwritten in Europe.

Exposure to Russia per se is not the issue; what matters is the linkage to European banks. As an American investment banker told me, Lehman Brothers, for instance, brought down Europe just as much as New York City – based on inter-linkages. And yet Lehman was based in New York. It’s the domino effect that counts.

Were Russia to deploy this “nuclear” financial option, the Western financial system would not be able to absorb a shock of default. And that would demonstrate — once and for all – that Wall Street speculators have built a “House of Cards” so fragile and corrupt that the first real storm turns it to dust.

It’s just a shot away

And what if Russia defaults — creating a holy mess out of the country’s $600 billion debt? This scenario reads as the Masters of the Universe telling Janet Yellen and Mario Draghi to create credits in the banking systems to prevent “undue damage” — as in 2008.

But then Russia decides to cut off natural gas and oil from the West (while keeping the flow to the East). Russian intel may wreak non-stop havoc in pumping stations from the Maghreb to the Middle East. Russia may block all the oil and natural gas pumped in the Central Asian “stans.” The result: the greatest financial collapse in history. And the end of the “Empire of Chaos’ s” exceptionalist panacea.

Of course this is a doomsday scenario. But don’t provoke the bear, because the bear could pull that off in a flash.

Putin was so cool, calm, collected — and eager to delve into details — at his press conference because he knows Moscow is able to move in total autonomy. This is — of course — an asymmetrical war — against a crumbling, dangerous empire. What those intellectual midgets swarming the lame duck Obama administration are thinking? That they can sell American — and world — public opinion the notion Washington (European poodles, actually) will brave nuclear war, in the European theater, in the name of failed state Ukraine?

This is a chess game. The raid on the ruble was supposed to be a checkmate. It’s not. Not when deployed by amateur scrabble players. And don’t forget the Russia-China strategic partnership. The storm may be abating, but the match continues.

Pepe Escobar is the roving correspondent for Asia Times. His regular column, “The Roving Eye,” is widely read. He is an analyst for the online news channel Real News, the roving correspondent for Asia Times/Hong Kong, an analyst for RT and (more…)

Do the Trans-Siberian shuffle -By Pepe Escobar

ASIA TIMES ONLINE

THE ROVING EYE
Do the Trans-Siberian shuffle
By Pepe Escobar

Published October 18, 2014

A specter haunts the elites of the Empire of Chaos; the new Russia-China strategic partnership. It’s manifesting itself in myriad ways – energy deals, investment deals, a closer political alliance inside the G-20, the BRICS and the Shanghai Cooperation Organization, a concerted effort to progressively bypass the petrodollar. I have described this long process as essential to the birth of the Eurasian century.

From a Washington/Wall Street point of view, it was so much easier in those long gone, unipolar, “end of history” days. China was still tiptoeing on the banks of the river of capital accumulation, and Russia was down if not out.

So allow me a flashback to the early 1990s. I had been on the road in Asia for months, from all points Southeast Asia to India, Nepal, the Himalayas and the eastern Chinese seaboard. Then I finally hit Beijing – waiting in the bitter winter of early 1992 to take the Trans-Siberian to Moscow. I was barely aware of the collapse of the Soviet Union – not exactly a news item in the Himalayas. I was also fortunate enough to be in southern China just a few days after Deng Xiaoping made his famous tour – whose key consequence was to catapult the dragon to dizzying development heights. A look back to those heady times may have the merit of illuminating our present.

All aboard the night train
It’s 8:32 pm in Beijing Railway Station, and the Trans-Manchurian Train 19 to Moscow is about to depart. It’s minus 9 degrees Celsius. A bunch of Romanian crazies are trying to load more than 20 huge, vaguely green bundles stuffed with Made-in-China gear into one of the carriages. The Russian comptroller spouts out a “Nyet”. Romanian chicks immerse in Transylvanic hysteria. Then a stash of George Washingtons changes hands at the final whistle, just in time for PLA soldiers and lady sweepers sporting the ubiquitous red armband with the words “Serve The People” to impassibly observe the happy ending.

A cacophony of Russians, Poles, Romanians, Czechs and Mongols has deployed dozens of bags, bundles and sacks to totally overload the train corridors. 300 kg of shoes. 500 kg of jackets. 200 kg of T-shirts. Thousands of beauty cream pots that will be all the rage from Bucharest to Cracow. A “bed” on the train is a concavity over one of the bundles. That will be story for six days, across over 9,000 snowy kilometers in the former USSR, now Russia, from East to West.

At the comptroller’s compartment, more bags – whose content will be sold in the streets of Moscow. With so many George Washingtons in sight, the success of her bazaar is guaranteed – what with multiple stops on the way and an unregulated “free” market in every platform. The whole of Eastern Europe is loaded with stuff and dying to make a quick buck.

In the Chinese stretch of the journey, nothing happens, unlike the 1930s, when Japan occupied Manchuria, installed puppet Pu Yi on the throne and was ready to take over Asia. The Terminator action starts in Zabaikalsk, at the Russian-China border – after we cross a huge Arc of Triumph in cement, complete with Leninist motto and not-yet-destroyed hammer and sickle. Customs – on both sides – is absolutely deserted.

The train changes configuration to adapt to the new tracks. Yet all sights are set on the new dining car; exit Chinese, which only offered a miserable pork with soya sauce; enter Russian, crammed with goulash, soup, salami, frozen fish, black caviar, champagne from Crimea, coffee, eggs, even cheese – everything on the black market paid with US dollars.

With the border behind us, it’s go-go bazaar time. Everyone freaks out, because we instantly move from Beijing time to Moscow time. Sunrise is at 1 in the morning. The black market is running at $1 = 110 roubles, the rouble in free fall as we cut through the sublime snowy infinite desert of the Siberian tundra, where each spectacular sunrise under a slight Arctic fog is an epiphany celebrated with more Crimea champagne.

Occasionally we spot reindeers or even huskies. The taiga – coveted by Japan, Korea and the US – is enveloped in snow. Beyond lay the ghosts of the 20 million corpses in Stalin’s gulags, the hunters of the rare Amu tiger (fewer than 200 left) and the sinister Norilsk complex; 2 million tons a year of sulphuric acid and other heavy metals dumped in the atmosphere – the reason for that Arctic fog.

The train stops stretch for 15 and even 20 minutes, reaching a nadir in Novosibirsk and Perm, which previously housed a notorious gulag. At every stop, hordes of Russians in Genghis Khan mode attack the train with little plastic bags. The best deal in the Trans-Siberian is anoraks and leather jackets. Jao, from Beijing, sells 50 in three days, at up to US$50 each; she paid $20 each in the Beijing hutongs. The Russians buy everything in sight and sell roubles – now plunging to 160 to the US dollar – as well as vodka, beer, salami, champagne and local $1 Pepsi bottles.

The whole of Eastern Europe has taken over Train 19. Post-Ceausescu Romanians are the most exuberant – from former boxers to hookers to a seedy gangster in a tracksuit boasting about his two hours with a Russian doll for $10 (the going rate is $20). There’s an Albanian contingent, young Polish students, shirtless Mongol nomads feverishly counting their profits, babushkas bored to death and even a loquacious Chinese dandy.

The Russian carriages, once elegant, are a mess: foul air, dense cigarette smoke, drenched in sweat, toilets crammed with sacks, and “Kapitan”, the only waiter, trying to make a quick buck selling Soviet paraphernalia. I find it the ideal setting to devour almost 1,000 pages of Norman Mailer’s Harlot’s Ghost, a history of the CIA.

Blame it on glasnost
Train 19 is not only a bazaar but also a multinational Agora. Young Russians elaborate how the almost genius perversity of the Soviet system led it to boost to the limit all the problems of modern industrial societies – offering nearly none of its benefits. Eastern Europeans volunteer that it was not the Cold War that finished off “real socialism”; it was the invasion of the capitalist economy combined with the inefficiency and “stupidity” (copyright by a Polish undergraduate) of the socialist economy.

Russians say that glasnost finished off authority and perestroika finished off the economy – and there was nothing to replace either. End result: physics graduates selling caviar tins in a moving train for survival. Everyone praises Gorbachev but essentially condemn him to a short historical footnote. In the train, I heard arguments that would be reproduced years later in countless US academic studies.

All the Trans-Siberian navigators exhibit a solidarity not to be found at the United Nations; they exchange currencies, swap addresses, lend money and the indispensable calculators, help to load and unload the loot, accept bundles in their compartment, offer their places for half an hour for those who only have the corridor to sleep, and crack jokes about the small Bank of China yuan bills. They are all ardent defenders of this unheard of form of direct democracy that is synonym with the end of the Cold War.

Amid the casino lurks the most improbable character: Lulu, a diminutive Bangladeshi, always attached to a Samsonite, dabbling in Allah-only-knows mysterious activities, passport filled with dodgy visas, Saudi Arabian included. Chinese and Russians treat him like an allergic Pekingese. Train chow is predictably unbearable for this strict Muslim, who wakes us all up everyday at 5 am with his prayers – Rashid Muhammad spends six days literally on bread and water.

Skolka? That’s the Trans-Manchurian bazaar motto, a preview of Moscow. Pink Floyd launched the legendary Dark Side of the Moon at the height of the Brejnev era; Moscow suburbs look like the ghostly, dark side of the moon. Stalin’s lunatic legacy is alleviated only by a solitary kiosk selling flowers, fruit or sweet Georgia brandy.

We arrive as zombies – and only a few hours late – at Yaroslavlsky Vakzal, one of nine Moscow train stations, where a deluge of Volga taxis fight for the precious Chinese cargo. Those moving on to Eastern Europe without a reservation are doomed: seats for Warsaw and Berlin are only available in 40 days.

In Shenzhen, Guangzhou, Shanghai and Beijing, I had witnessed the spectacular success of post-Tiananmen Chinese “market socialism”, where the economy was the locomotive and politics was dispatched to the bottom end of the train. Nothing more astonishing than the contrast with Moscow, where politics was the locomotive.

I’m housed by Dmitri, an odontology student, three metro stops from the Kremlin, paying $6 a day, a small fortune; he and his girlfriend precariously subdivide the two-bedroom, one-bathroom apartment with a whole family, dog included, besides the occasional Western visitors, who sleep in the master bedroom. This is considered an upper middle-class lifestyle.

At the beautiful metro stations, it’s the return of the Trans-Siberian bazaar; on sale are political or porno samizdats, second-hand clothes, bottles of every possible liquid. Only when I reach Red Square doI see the light; at the Himalayas and China, my time-zone was still on Gorbachev. What’s now at the top of the Kremlin is a Russian flag – as well as in the center of Dzerzhinsky square, in front of the KGB. As a perfect idiot, I aim for the statue of Felix Dzerzhinsky, the former head of the Soviet secret police, only to be warned by a student that it had been torn down weeks ago. Gorbachev is now a vodka brand. And I can’t get inside the KGB building.

The whole city is converted into a giant Turkish bazaar. After Boris Yeltsin liberated the sidewalks, everyone wants to exercise this privatizatsiya thing. Until 1990, nobody knew what a checkbook or a credit card was, and $1 was equivalent to 1 rouble. There are absolutely astonishing street markets on Prospekt Marka and Gorki street, everyone silently in line exhibiting their wares; a broken doll, a solitary shoe, dusty champagne bottles, perfume, instant coffee, sardine tins, an empty beer bottle.

The streets are filled with all the stuff brought by the Trans-Siberian navigators, but the supermarkets are empty. There’s very little milk or meat, but lots of canned fish and interminable lines to buy nothing – with potential consumers resigned to play chess.

The biggest hit in town is the new McDonald’s on Pushkin square – one of the busiest in the world, selling full meals for 50 cents by cashiers sporting an Eva Herzigova smile. In front of the MacD, a paper Gorbie poses for tourists, and a crowd sells caviar tins for $5 and champagne for $3. At the GUM department store, there is not much except a few Sony and Honda showrooms and a new Dior window.

The recent past does not let go; it’s impossible to call Europe. It’s impossible to send a fax from the Post Office. It’s impossible to make a train reservation. It’s impossible to make a plane reservation – at least on the Aeroflot shop in Lubyanka; only at the cavernous Intourist Hotel.

At the lugubrious ground floor of the Mockba Hotel, deaf and dumb characters straight out of an Ionesco play crowd the corridors while a beer black-market does brisk business in front of the hotel bar. A glass of champagne goes for 50 cents. At the hall of the legendary Metropol – the 1899 Grand Dame favored by Trotsky – a dry martini is a steep $7,70. The Metropol is the new Wall Street; Danes, Italians, Americans and Chinese discuss all deals this side of a Brave New World downing Heinekens at $5 a pop.

On Armed Forces Day, a Sunday, there’s a communist demonstration, repressed with tact, boasting large numbers of old ladies carrying flowers and flags. For their part, Moscow punks with anarchist flags protest against the Armed Forces. A pre-historic Volga takes me to Sheremetyevo as if I was running from a 1950s Cold War B-movie set. The Volga gurgles, stops, cools off, runs, gurgles, stops again, cools off; a metaphor of the new Russia, and I almost miss Aeroflot SU 576 back to Paris.

Nothing will ever be the (unipolar) same
Those were the days. That McDonald’s – symbol of unipolar, “end of history”, Pax Americana – has been recently shut down. It’s harder and harder for the Empire of Chaos to rule the world alone while McDonald’s serves burgers. Across Pushkin square, the fashionable Cafe Pouchkine now serves the best of Russian haute cuisine.

And still, both Russia and China are seen as pariahs by the unipolar, imperial elite. It’s as if we were still frozen in those early1990s days. Russia and China may have changed almost beyond recognition – but for the Empire of Chaos the priorities are to tear Russia apart, starting with Ukraine, and “pivot to Asia” via an anti-China military/economic axis in the Western Pacific.

Meanwhile, the Trans-Siberian will soon be linked with the Chinese-driven New Silk Roads. And then one day in the early 2020s this will all be a high-speed rail network, linking Eurasia in a flash. And nothing will ever be the (unipolar) same. Except for the back-to-Russia Crimean champagne.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

 

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