Three soldiers were killed in a clash with PKK militants in the southeastern Hakkari province’s Dağlıca district late Aug. 14, Turkish media reported. Six soldiers were wounded in the clash. A civilian, was killed in the southeastern province of Diyarbakır in clashes between police officers and PKK militants in the Bağlar district. Source Hurriyet Daily
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Kurdish militants launched attacks on military outposts in eastern Turkey overnight and seven of their fighters were killed in ensuing clashes with security forces. In the southeastern town of Silopi, near the borders with Iraq and Syria, PKK fighters opened fire with rifles and rocket-propelled grenades on a military base.
Coalition talks between the Justice and Development Party (AKP) and Republican People’s Party (CHP) ended in failure on Aug. 13, with the AKP leader admitting their counterpart had refused their proposal to form a short-term coalition government to bring Turkey to an early election. Source Hurriyet Daily
Oz and Kara, and a third ex-prosecutor, Mehmet Yuzgec, were accused of “forming an organization to commit crime” and “attempting to overthrow the government by use of force” in a plot allegedly masterminded by U.S.-based preacher Fethullah Gulen. According to Istanbul police, Oz and Kara left Turkey for Georgia early Monday. They later crossed into neighboring Armenia. Source Anadolu Agency
Turkey is in agreement with the U.S. to block the Democratic Union Party (PYD) from a Daesh-free “safe zone” in northern Syria, according to Turkish diplomatic sources. The PYD is a Syria-based affiliate of the Kurdistan Workers’ Party (PKK) which is considered a terrorist organization by Turkey, the U.S. and the EU. Source Anadolu Agency
The leaders of the de facto ruling and main opposition parties are set to meet Aug. 13 for a make-or-break meeting on a coalition, but President Recep Tayyip Erdoğan has expressed doubts about the possibilities, insisting that the country needs a strong political will to resolve its problems. Source Hurriyet Daily
Iranian Foreign Minister Javad Zarif postponed his planned visit Tuesday to Turkey where he was to hold talks on the Syrian conflict and other regional issues with his Turkish counterpart. Source The Wall Street Journal
What do Syria and Ukraine have in common? What do these two countries, separated from one another by thousands of miles, characterized by a different culture and religion, share? Oh yes, they share the same fate, albeit not played out concurrently.
Syria. We have all been notified of the collapse of the “Assad regime”. How did that come about? In a simple way. The Russian support for President Assad was withdrawn, leaving the rebellious forces free to act and that was it. The state of Syria fell like a house of cards.
Ukraine. We will soon be notified of the collapse of the “Zelensky government”. How will it come about? In a simple way. The American support for President Zelensky will be withdrawn, leaving the Russian forces free to act and that will be it. The state of Ukraine will fall like a house of cards.
Sure enough, the details differ. It is a bunch of states – Israel, Turkey, the United States – that were Syria’s enemies, it is one state – Russia – that is Ukraine’s enemy. The territories captured by Turkey and Israel in Syria may be held by the respective countries for good or temporarily; the territories captured by Russia in Ukraine are captured for good. Syria’s president has been and is going to be referred to as dictator by the Western media and politicians; Ukraine’s president, however, has been and is going to be called a heroic fighter for freedom and democracy by the same media.
There are also phenomena that are similar. Syria after Assad is going to remain a destabilized country, just like Libya, just like Iraq, just like Afghanistan. Ukraine after Zelensky, too, is going to be a destabilized country, though surely in a different way due to its different ethnic composition and its heritage. Syria has lost a huge number of its citizens, and so has Ukraine. Neither Syrians, nor Ukrainians are going to go back to their countries: especially those Syrians and those Ukrainians who have settled in Europe.
Assad’s fall has been heralded as the West’s victory, Russia’s defeat. Zelensky’s fall will be heralded as Russia’s victory and the West’s debacle. Except that it won’t. The Western media and politicians will continue their mantra of “Putin has lost this war.”
Why will Ukraine follow in Syria’s footsteps? Why has Syria preceded Ukraine? Because both states have been created artificially. Upon the disintegration of the Ottoman Empire after the First World War a few million Arabs inhabiting the Middle East have been made to become Syrians while other millions of Arabs have been made to become Jordanians or Lebanese. Upon the disintegration of the Russian Empire after the First World War a few million Russians have been made to become Ukrainians, while other few million have been made to become Belorussians. During their supposedly independent existence both Syria and Ukraine have been playthings at the hands of their neighbours and the world’s hegemons.
Ah, one more peculiar difference. Terrorist organizations fought against Assad, while other terrorist organizations fought for Zelensky. That is to say, whether those organizations are terrorist depends a lot on who labels them terrorist. Terrorists who fight for us are no terrorists, as the well-known diplomatic maxim says. Similarly, presidents who are with us are democratic leaders who manage democratic governments; presidents who are against us are – yes! yes! – dictators and their governments are regimes. Simple, is it not?
So long as Russians were capable of supporting Assad that long he could be the country’s president. The moment that support was withdrawn, he fled to Moscow. So long as Americans are capable of supporting Zelensky that long he will be the country’s president. The moment that support is withdrawn, he will flee to somewhere in the West. Or will be killed. No, he will be involved in an accident. He will be killed in that he will be involved in an accident. Or maybe there will be an attempt at poisoning him, which he will miraculously survive to eventually die under mysterious circumstances.
Two countries, two chessboards. The big players will eventually shake hands over those chessboards, establishing a new pecking order between them. For a time being, that is. The two chessboards will be left with but few playing pieces, with most of the others being destroyed or dispelled in the world. The two chessboards – Syria and Ukraine – are just two entities in a larger set of chessboards: Yugoslavia, Libya, Iraq, Afghanistan, you name it. The big players will find new chessboards to settle their accounts. New rogue states will appear, a new mantra of “this or that dictator must go” will be heard. It might be Iran, it might be Turkey; it might be Belarus, it might be Georgia. There are many chessboards around the globe with which the big players can settle their accounts.
Ukraine’s President Zelensky seems to be glad of the fall of President Bashar al-Assad. Has president Zelensky given it a thought? If he is clever enough, he ought to see in President Bashar al-Assad himself, he ought to see in President Bashar al-Assad’s fate his own fate. If he is clever enough and sufficiently judicious, he ought to be making arrangements for a quick plane flight from Kiev to Washington, or Paris, or London. With the whole family. It is not that President Zelensky needs to fear Russians: he needs to fear Ukrainians. He does not need to fear the dead – though, who knows? they may come to haunt him in his night dreams – but he needs to fear the living. Those with amputated limbs, those whose sons and brothers, husbands and fathers have fallen. President Zelensky needs to fear the millions of relatives of those who have lost their lives and their health in order that the West might spite Putin and Russia, in order that Ukraine might lose a quarter of its territory, in order that he might travel the world over away from, far away from, the hostilities on the ground.
An avalanche of events within a couple of days. [1] an attempt that resembled a Kiev-like coup d’état in Tbilisi, Georgia; [2] the results of the presidential election in Romania recognized as invalid; [3] Syria’s President Bashar al-Assad toppled. What’s coming next?
The unrest in Tbilisi, Georgia, has been compounded by Ukraine and the Baltic States, which imposed sanctions on Georgia! Yes, Ukraine, which is supposedly struggling hard for survival, and the three teeny-weeny Baltic States imposed sanction on Georgia, on the ruling Georgian Georgian Dream party, which won the parliamentary election. The Maidan in Tbilisi or the colour revolution – whichever name we assign to the event – is being played out just as it was played out in Belgrade or Kiev or Minsk or, or, or. The West’s Red Guards* – especially the youth – have taken to the streets, using all the tricks that have already been utilized in other places, at other times. European Union flags (the fingerprints of the powers behind) are waved, women approach the police troops with flowers, children participate, interviews are conducted on the spot during which people shed tears to show how oppressed they have been, posters are shown to the cameras with legend demanding the resignation of the current government and complaining about violence, lack of democracy, and lack of human rights. Everything is copied from other places, from other times.
The presidential election in Romania has been annulled by Romania’s supreme court – although a day earlier the same court announced the validity of the voting process and voting results – because voters might have been misled by misinformation about the candidates provided to them by… TikTok. No need to add that the results have been annulled for this simple reason that it was Calin Georgescu who won the majority of votes, and Calin Georgescu appears to be a Romanian Viktor Orbán, which is precisely something that the European Union cannot come to terms with. Brussels has enough trouble with the Hungarian Orbán, and Slovakia’s Robert Fico. The annulment and the resultant repeat of the election is something that the European Union is used to applying. This practice first began with referendums held in particular countries about their accession to the European Moloch. If a referendum revealed that the majority of the voters were against having their country joined to the EU, the referendum was repeated, until the desired result was obtained. Romanians must understand that they need to elect an EU-backed candidate or else they will prove that they do not know what democracy is all about and will be forced to elect again, and again, and again.
The intensification of the civil war in Syria has within the last two weeks gained momentum and eventually brought about the collapse of President Bashar al-Assad, habitually referred to by the Western media as a dictator. The president is rumoured to have fled to Russia. Damascus, Syria’s capital, has been taken over by Hay’at Tahrir al-Sham, which, depending on your political stance, may be categorized as a rebel, terrorist or opposition organization. The West has eventually hunted Bashar al-Assad down, a target that has been pursued for years. Israeli troops are also reported to have entered southern Syria. Was the collapse of the Bashar al-Assad government occasioned by the fact that its major supporter – Russia – has been engaged in Ukraine? Or maybe the United States has struck a secret deal with Russia according to which Moscow will give up on Syria, while Washington will give up on Ukraine?
Meanwhile the cooperation between Moscow and Minsk is tightening to the effect that the famed Oreshnik** missile launch-pads will be deployed to Belarus.
All of which suggests the following development of events:
[1] Syria is likely to become another Libya or another Iraq in that it is going to face a long period of disability marked by warring factions and a lack of a central government. The country might be occupied partly by Turkey, partly by Israel.
[2] Iran may be next on the kill list. That’s the last state in the Middle East that is regarded by Israel – and hence by the United States – as an enemy.
[3] The next Maidan will be attempted in Minsk, Belarus, because Alexandr Lukashenko, Belorussian president, is again a candidate in the presidential election that is scheduled for January 26, 2025. Minsk has already survived such a Maidan, so the Belorussian authorities will be well prepared to crush another one.
[4] Any possible elections in Hungary may be declared null and void if Viktor Orbán wins again, failing which the Hungarian prime minister may as well reckon with an assassination (see the Robert Fico case in Slovakia).
[5] The European Union is evidently turning into an aggressive and dictatorial political bloc that will tolerate no swerving from the course charted in Brussels. Disobedient governments will experience Maidans, or have their elections annulled, or face sanctions, or have their leaders assassinated. Taking into account that it is Germany that leads the European Union, one might say that a Fourth Reich is in the making.
[6] Belarus and Georgia, two countries that have historically been either part of Russia (Belarus), or united with Russia by means of a political union (Georgia), in the face of all the political pressure, economic sanctions and enormous interference from the West, might be pushed into Moscow’s embrace. The same conclusion might be drawn by the other Caucasian states as well as the states of Central Asia. They all might be pushed into Moscow’s embrace . The resultant union might be like that between Russia and Belarus. In other words the Russian Empire is about to be re-created (certainly not the Soviet Union, as this possible political structure is not going to indulge in communist ideas).
Who knows? It might be that in a few years’ time history will turn full circle with the re-birth of the Russian Empire. A rump Ukraine will probably become a buffer-zone state, as Moscow may not be willing to incorporate Ukraine’s westernmost regions inhabited by rabidly anti-Russian Ukrainians, and the West will not be strong enough to draw this westernmost part into its sphere of interests.
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*Red Guards – these were the shock troops, made up of predominantly of young people, who – as the Communist Party’s battering ram – carried out the Cultural Revolution in Maoist China, suppressing opposition from conservative and prudent sections of Chinese society.
**Oreshnik – that hypersonic missile that recently hit Yuzhmash, a military plant in Ukraine. Though it was not fitted with either a nuclear or any other explosive device, the damage it caused is comparable to that caused by an A-bomb.
When we think about the Crimean War of 1853-1856, we tend to think about fights that took place in the Crimean peninsula. The very name suggests it. It was the time when the Western powers – predominantly England and France, supported by Turkey and the Kingdom of Sardinia – made an attempt at weakening Russia. The hostilities, however, were not confined to the said peninsula. Russia’s enemies attempted landing troops, shelling ports and cities also along the Russian coastline of the Baltic and White Seas as well as in the Far East and the Caucasus.
Much the same happened when after the October Revolution of 1917 the Western powers tried to crush nascent Soviet Russia: they sent troops to intervene from the north (the Baltic Sea), from the south (the Black Sea) and in the Far East.
When today the West is waging a proxy war against Russia, it is, too, trying to engage Moscow in as many places as it is possible. Hence the Kremlin does not pay attention merely to Ukraine: it needs to be on guard in many other places simultaneously. Recently we have informed our readers about the riots in Georgia, where the Kiev-Maidan scenario is playing out a second time, and Georgia is being primed to become another Ukraine i.e. a state that will act aggressively towards Russia. so, willy-nilly, Moscow needs to divert some of Russia’s resources and troops to the Caucasus.
As if that were not enough, it is also in recent days that the long-term conflict in Syria has been reinvigorated, with the Turkish troops capturing Aleppo, and with the ISIS units making assaults here and there. Why in Syria? Because Syria’s President Bashar al-Assad has been supported by Russia (and Iran), because Russians have saved him from being toppled by the United States, because Russians are militarily present in Syria. Under such circumstances, the Kremlin needs to attend to Ukraine, to Georgia, and Syria simultaneously; Russia must also have reserves and remain on its guard as to where else a new conflict is likely to erupt.
True, the interests of particular nations in the region are opposed and of long historical standing. The Middle East – once a part of the Ottoman Empire – emerged as a mosaic of mainly Arab states at the end of World War One. The French and the British played major roles in creating “nations” and drawing or re-drawing state borders. The famed Sykes-Picot Agreement of 1916 was all about weakening Turkey and granting control of the Middle East to these two European powers. Yes, Russia was to participate in all this, but since Russia collapsed due to two revolutions and the ensuing civil war, it was the French and the British that remained in the region as dominant powers. Some of the national borders were drawn by means of a ruler (look at a map) with no regard for the ethnic or religious reality.
The Balfour Declaration of 1917 promising the establishment of a home for the Jewish people added yet another piece to the Middle East political puzzle. The tensions in the region were exacerbated by the ever growing influx of the Jewish people to Palestine after World War Two. The ethnic composition of the Middle East underwent an appreciable change. The Arab – Muslim – world stood up to the expansion of the State of Israel, with Israel being eventually backed by the United States, while some of the Arab nations relied on the support of the Soviet Union.
Of the two American allies – Saudi Arabia and Iran – the latter changed its course in 1979 and became hostile to Washington. Saudi Arabia – drawn into the American sphere of interests – has long participated in the notorious worldwide scheme of backing the dollar as the world currency of international exchange in that Saudi Arabia would sell oil exclusively for dollars and made the other OPEC countries do the same. Riyadh remained on hostile terms with Tehran for decades. It is only recently that Riyadh – also due to the political influence of Beijing – re-purposed its foreign policy and buried the war hatched with Tehran.
Today, Turkey is reviving its dreams of recreating the Ottoman Empire. Ankara is active in Syria, but also in Africa (especially in Libya), and is attempting to extend its political leverage to all Turkish peoples in Central Asia, some of which used to be Soviet republics, some of which live in the far east of the Russian Federation.
The Middle East, the Caucasus (Georgia, but also Armenia along with Azerbaijan) and Ukraine: three conflagrations in which Russia is involved, into which Russia is drawn. Three conflagrations that tap into Russia’s resources. The United States might be aiming at either extending Moscow’s activities and thus weakening Russia, or at toppling Bashar al-Assad (Assad must go! as Barack Obama and Hilary Clinton used to repeat), or at both.
These days there are street riots being held in Tbilisi, Georgia’s capital city. Why? Well, because the ruling Dream Party has announced a delay in joining Georgia to the European Union (does it not remind you of something?), and while Georgia’s president – Salome Zourabichvili – has opposed the ruling party and called on the citizens to protest. The protests are supported by the West – the United States and the European Union – which claims that the recent parliamentary election were fraudulent. Georgia, according to the West, ought to hold new elections till Georgians elect the pro-Western parties. Sorry, till Georgians restore democracy and human rights.
Who is Georgia’s President Salome Zourabichvili, the woman who encourages protests against Georgia’s government and parliamentary majority? For all practical purposes she is French: she was born in France, educated in France, held French citizenship and made a career in the French diplomatic corps, acting among others as French ambassador to… Georgia. Ah yes, she was born to Georgian parents, but that’s about everything that makes her Georgian. Also Zbigniew Brzeziński was born to Polish parents, yet he identified as an American. By the way, during her educational career Salome Zourabichvili attended Columbia University, where she studied under the tutelage of… yes, Zbigniew Brzeziński. That’s how much Georgian Salome Zourabichvili is. But back to the street riots.
It somehow happens so that whenever a nation elects parties, prime ministers, presidents or heads of state that are even slightly not pro-Western, such a nation immediately has a revolution on its hands and is immediately beset with accusations of running foul of democracy and violating human rights. At present, that’s the fate of Georgia. More to it. A nation that is sceptical towards the West is automatically accused of acting on Russia’s advice, Russia’s orders, for Russia’s money. At present, that’s precisely what the Georgian Dream Party is accused of. It’s all as simple as that.
Now, the street riots in Tbilisi are comparable to the street riots that took place in Kiev in 2013/2014. Precisely the same forces were at play in Ukraine’s capital as are now in Georgia’s capital. Young, impressionable people yell their demand to join Georgia to the European Union – because, as we all know, there is no salvation outside the European Union – while the police are trying to keep the rioters under control, which they fail, as did their counterparts in Kiev ten years earlier, because their orders are to handle the rioters with kid gloves (such were also the orders that the Ukrainian police took ten years earlier). Soon, if not already, the rioters will start jumping and chanting “Who’s not jumping is a Moskal*(=Russian)!” as their Ukrainian counterparts did in 2013/2014 in Kiev. Because – you did expect it, didn’t you? – the delay that their ruling party announced in joining Georgia to the European Union was dictated by – yes! yes! – Russia. How otherwise? Just as it was in 2013 in the case of Ukraine! Again this Russian serpent suggesting a poisonous apple this time to Georgians who are on the threshold of entering the Garden of Eden known as the European Union. And – who knows? – on the threshold of joining peaceful-loving, defensive NATO. The ongoing war in Ukraine and the hundreds of thousands of victims do not seem to make an impression on Georgian protesters. Evidently, they also want to sit in the trenches, to have their arms and legs torn away by bombs and grenades, to have their cities shelled, to have their cemeteries filled to overflowing with corpses of very young men, draped with Georgian national flags. No price is too high for preserving democracy and human rights, is it?
Before Salome Zourabichvili as president, Georgia had one Mikheil Saakashvili as its head of state. Do you remember him? An adventurer that very few could rival. He took power in Georgia by means of… street riots and one of the many colour revolutions, accusing the acting government of… fraudulent elections. The same script is enacted again and again around the globe, and nobody seems to take notice. As president, Mikheil Saakashvili applied a shock therapy to the nation, purging the police and the administration, raising the military budget, yet lowering social expenditure and what not. He soon ran foul of his nation and prior to the next presidential election, with no hope of being reelected, he fled the country amid accusations of having opposition activists tortured. He landed a job in… Ukraine, of all the places, becoming governor of the Odessa region. And you know what? He wholeheartedly supported the Kiev Maidan of 2013/2014!
It did not last long till Ukraine’s president Petro Poroshenko – surely out of gratitude for his services – deprived him of Ukrainian citizenship. To be the governor of the Odessa region Mikheil Saakashvili needed to acquire Ukrainian citizenship, just as Salome Zourabichvili needed to renounce her French citizenship prior to running for president in Georgia. Such a formality. How often and how easily the pawns at the hands of the managers of the world change their citizenship! How often they hold citizenship of two or three countries simultaneously! But then, that’s probably one of those sacrosanct “hyooman rytes”. Such individuals, those who are our and presidents, renounce or accept citizenship the way you and me change clothes from casual to professional to casual, as the circumstances dictate.
You won’t really be surprised if you learn that – I quote Wikipedia – Mikheil Saakashvili “received an LL.M. from Columbia Law School […] took classes at the School of International and Public Affairs and the George Washington University Law School [and] received a diploma from the [talk of the wolf!] International Institute of Human Rights in Strasbourg, France.” What a talented guy!
We have such talented men and women across Europe and across the world. They have necessarily been raised by the powers that be at Western universities or institutes, where they have been trained in – why – democracy and human rights!
It appears Georgia – just like any country – must have rulers with the Western blessing or else. Or else, Georgia will have unruly youth in Tbilisi’s centre chanting “Кто не скачет, тот москаль!” [He who is not jumping is a Moskal(=Russian)!]. This chanting and this jumping is repeated again and again and again in various cities across the world and… nobody seems to take notice of this pattern. Strange – or perhaps admirable – how the West manages to always have crowds of people in the streets of various capital cities at the West’s beckoning. In Moscow, in Tbilisi, in Kiev, in Minsk, in Warsaw, in Budapest, in Belgrade, in the Arabic states and about anywhere in the world.
The young men are protesting today to have their limbs cut off tomorrow. They are rioting today to have their dead bodies wrapped in Georgian national flags tomorrow. They are following the bidding of the managers of the world today to be slaughtered like lambs tomorrow. They could watch Ukraine and learn from Ukraine’s fate, but learn they will not. When push comes to shove, Salome Zourabichvili will travel the world over in search of support – the way Zelensky has been doing so for the past three years – to eventually find a sanctuary in her native France or elsewhere in the West. When push comes to shove, Georgian youth will desperately pay through the nose to illegally leave the country and thus avoid conscription. Only the lucky will be able to leave, though. The majority will be drafted and will pay the price the way their Ukrainian peers have been paying the price for the last three years. The Georgian youth could learn from the fate of Ukraine but learn they will not. Sadly. They think they fight for democracy and human rights. It never occurs to them that they are tools – disposable tools – replaceable pawns – biodegradable pieces on “The Grand Chessboard” of the Brzezińskis of this world.
*Moskal (москаль) (literally: inhabitant of Moscow and the region) is an ethnic slur for a Russian.
By a guest author.
Is it fundamentally not simple to see?
Prior to the dissolution of the Soviet Union the world was divided into two hostile blocs, and no one knew how that protracted conflict between West and East would resolve: would there be World War Three? Would the Cold War last forever? Would there be a string of proxy wars between the two political systems like that in Korea or that in Vietnam? Lo and behold, the Soviet Union, this terrible monster, this evil empire, laid down its arms, and
and while Russia – the Soviet Union’s successor – surrendered herself to the West, her President Boris Yeltsin famously said ‘God save America’ in Congress.
The astounded, mesmerised, astonished world heaved a deep sigh of relief and entertained high hopes about the peaceful future. The German rock band Scorpions encapsulated the atmosphere of that time in their winds of change song, which won enormous popularity across the Old Continent. Almost overnight events occurred that no one thought were possible. A miracle. Communism collapsed with not a single shot being fired. Annus mirabilis, indeed. That was day one. What happened on day two?
On day two all Central European countries flocked to NATO. They flocked to NATO to be protected from… well, from whom? There was no Soviet Union, there was no communist colossus, there was no hostile state in the east. European Russia had shrunk to the territorial size it had during the reign of Peter I three centuries earlier, its industry was in shatters, it had huge demographic problems, it was torn by factional feuds while the state property was appropriated by individuals, not infrequently of alien ethnicity, and its armed forces were weak and demoralised. So, what protection did the central European countries need? Still, they became NATO members.
As if that was not enough, on day two the CIA began supporting Chechen rebels and operating in the Caucasus, to name just a few areas, while NATO began deploying missiles to Poland and Romania with the ridiculous story that they were there to protect central Europe against… Iranian attacks! I rubbed my eyes and did not believe my ears when I heard that justification for the deployment of missiles as it was provided to us via the many media. Stupid, isn’t it? They should have come up with a better pretext, but there you have it.
Consider this historical event this way. A wild-west little settlement. The Russki posse on one side, the Yankee posse on the other. The gunslingers of both are holding their guns levelled at their opponents. The moment lasts all eternity until the Russki posse decides to give up. For whatever reason – psychological pressure, bad weather, the calculation of their chances of (not) prevailing in the shoot-out, whatever – the Russki posse lowers their hands, drops their guns, unbuckles their belts and throws them away. The Yankee posse emerges victorious. What do you think the Russki posse expects in return? Yes, you guessed it right. They expect a similar gesture. Right? But no. The Yankee posse not only does not lower their guns; no, they take over the members of the Russki posse (Poles, Czechs, Hungarians, Romanians etc.) and even take over Russki’s brother known as Ukraine and they begin to pit them all against the Russki. That’s what it all was about.
As far as I can search my memory, in between 1991 and 2022 I never heard or read in the media anything even slightly positive about Russia and things Russian. Anything to do with Russia was described as bad, ugly, repulsive, stupid, ridiculous, backward – you name it. Not one single positive piece of information about that country or its nation. Not one. I still remember the item of news just prior to the opening of the Winter Olympic Games in Sochi that the toilets in hotels for the athletes were constructed in such a way as to have two toilet bowls per cabin i.e. as to force people to – sorry for the word – defecate side by side without an intervening partition wall. And you know what? My compatriots believed in it. Eagerly.
My compatriots – just as the Western intellectuals – defended Khodorkovsky in his conflict with President Putin because Khodorkovsky was Putin’s enemy, and the enemy of our enemy is our friend. Never mind that a personage like Khodorkovsky in my own country would have been hated by the majority of people because they would have all figured out – and rightly so — that his enormous fortune was the result of theft, deceit, murder and all other kinds of crime. Still, anybody was regarded as saintly and a hero so long as he opposed Putin. Much the same story repeated itself with my compatriots wholeheartedly supporting Ukrainians, a nation otherwise commonly disliked in my country.
My countrymen – just like Western citizens – were all in favour of Navalny because he was – yes, you guessed it right – anti-Putin. They knew nothing about him: it was enough that he was anti-Putin to view him as a hero. No common sense applied. You remember how Putin tried to poison Navalny? It all bordered on the surreal and the absurd: the otherwise monstrous and effective KGB turned out to be unable to kill one dissident; Navalny’s wife demanded that her unconscious husband be transferred to Germany for treatment; the Russian government docilely agreed, knowing full well that German doctors would find the traces of poison in Navalny’s body; the traces of poison were found, of course!, but still Navalny came back to Russia after his recovery only to be killed a few months later in prison, this time successfully! My oh my, how foolish it all can be and still people accepted all this as pure truth!
Then came day three. The West began penetrating Ukraine and Belarus. The West began to turn those two Russian nations into anti-Russia. Just like that. It was like pitting Canada against the United States or setting New Zealand against Australia. It really is as absurd as that. The three states – Belarus, Ukraine and Russia – stem from one medieval Rus’, just like the United States, Canada, Australia and New Zealand are historical offshoots of the United Kingdom, and just as people in last mentioned countries generally speak English, so do people in Russia, Belarus and Ukraine generally speak Russian.
No, Ukrainians do not speak Ukrainian for the most part. There are a few millions of them in my country, I happened to work with some of them, and I have my ears wide open. And you know what? Maybe two, maybe three out of every hundred speak Ukrainian or something that is a mix between Ukrainian and Russian. Maybe two, maybe three out of every hundred! Yet, my government pretends not to notice this fact, and the newspapers or a television channel dedicated to the refugees from Ukraine as well as all the inscriptions and legend in shops, means of public transport and offices are printed in Ukrainian. Now to bring my point home: since almost all those Ukrainians speak Russian – Russian is their mother tongue – so what my government is doing is comparable to having a huge refugee population from Ireland and addressing all of them in the Irish language rather than English! That’s how downright foolish it all is, that’s how mendacious the powers that be are, that’s how the managers of the world create ‘reality’.
It’s not merely that Ukrainians speak Russian: Ukrainian children (just as Belorussian children) when they study at school about the beginning of the history of their nation, they learn about the same legends and the same first rules as Russian children do. Again, let me bring my point home: there is almost no such historical overlap between Polish and Czech history. Never mind, Leonid Kuchma, Ukraine’s second president, made a name for himself authoring a book entitled Ukraine is not Russia. The title says it all what the book is about. Now, if Ukraine were not Russia, no one in his right senses would speak about it not being Russia, let alone write a whole book to prove it! Do we have books like France is not Germany or vice versa? This title alone proves how much Ukraine is Russia.
Which is one of the reasons why so many Ukrainians (Russians) fled the country and did not want to defend it. If they were ‘Ukrainians-not-Russians’, they would have defended Not-Russia against Russia, but somehow they don’t want to. I see them in my city everywhere around. Young, sporty men. On the one hand it is morally reprehensible: their mates are dying in the trenches or losing limbs, while these sporty guys are in safety. On the other hand I understand them: they are not going to kill Russian brethren, they are not going to kill people speaking the same language, professing the same Orthodox Christian faith, writing in the same script, sharing the same legends, having close or distant relatives on either side of the border. Oleksandr Syrskyi, Ukraine’s commander-in-chief, an ethnic Russian, with both his parents and a brother living in Russia, is a glaring and telling illustration of the problem! For reasons known to himself he decided to fight against his own nation: millions of others decided otherwise.
Russians – like all those central and eastern European nations – have a huge inferiority complex towards the West. Go open Leo Tolstoy’s war and peace in the Russian original and you will see huge chunks of text written in French. Why? It’s not simply because sometimes the author presents the French characters speaking in their language; it is also and predominantly because Russian upper classes would speak French now and again, because Russians (and Poles, and Romanians, and, and, and) were enamoured of France and anything French; today they love English and anything having to do with the Anglosphere. Why am I saying this? I’m saying this to show that the West knowing about this inferiority complex could have controlled Russia ad infinitum if only the control were measured, moderate and mild; if only the West were not throwing its weight about as it has, as it is, as it invariably will. Sadly, the West threw its weight around and we are facing the sad result.
Hey, even a Navalny at the helm of the Russian state would have reacted to Ukraine being drawn into NATO in a way similar to what Putin did! How can you fail to see it? A putsch in Kiev, an attempted putsch in Minsk, the Baltic states as NATO members, missiles in Poland and Romania, constant political turmoil in the Caucasus – which Russian leader would remain passive? I didn’t want to repeat this banal comparison that many others keep using, but I feel compelled to do so: what would Washington do if Russia or China were about to draw Mexico and Canada to a military pact hostile to the United States? What would the Hill do if a Russian Nuland or a Chinese Pyatt were openly instigating putschists in Ottawa or Mexico City? We know what Washington would do. Why then are we so surprised at what Moscow has done? Quite apart from whether you like Putin or not, quite apart from whether you like Russia or not: apply just plain thinking like in a game of chess. Beijing must have applied such thinking, and must have been watching what had been happening to the Soviet Union and the Russian Federation, and they must have drawn the only right inference: surely, we might let go of Tibetans, Uyghurs and Mongols – why not? these are alien nations – but we can’t: the moment we let them go, they will flock to a NATO or an AUKUS, and become springboards for Western penetration and aggression. (Notice in passing the geopolitical similarity of the crescent made up of the Baltic States, Belarus and Ukraine west of Russia and that made up of Mongols, Uyghurs and Tibetans west of China.)
Notice also this hubris: Americans say that losing control over Taiwan, which is located thousands of miles across the Pacific away from the United States, threatens their national security; now Russians must not say that having Ukraine, which is located next door, controlled by Americans threatens their national security. Gee… how biased one needs to be to say that!?
When you listen to Western leaders you cannot get rid of the impression that they are obsessed with Putin. Putin, Putin, Putin is the word that they love to hate. I’m sure they have Putin-dolls which they punch with voodoo pins. I think they would readily bless Russia with the whole of Ukraine if only in return they could lay their hands on Putin to court-martial him, to humiliate him, and to hang him. Putin, Putin, Putin – a sickly obsession. The Western leaders simply indulge in the Orwellian two minutes of hate of Putin, who in their eyes is second only to Hitler. Before Putin there were a few others, with one especially imprinted on my memory: Serbia’s President Slobodan Milošević. He, too, was an incarnation of all evil, while Serbs – and only Serbs – were to blame for anything and everything. Saintly Albanians and Bosnians, not so saintly Croats, and those devils – Serbs! At that time I did not need to delve into the Balkan conflict very much to realise one thing: Milošević must have thrown a monkey wrench in the works of the powers that be. This glaring, enormous bias against little Serbia was enough to make me wonder.
So, how would the managers on the Potomac react to Mexico or Canada being drawn into a military bloc hostile to the United States? No Russian attentive to the world of politics and ideologies fails to notice that the West is hostile to Russia. What of the RAND think-tank publications, what of others – they make no bones about it: Ruthenia delenda est. These aims are declared openly with conferences taking par during which Russia’s territory is being divided into over twenty political entities with none – not a single one – of them bearing the name Russia. don’t Russians know about it? Of course they do! Such conferences are not kept secret, after all. so they react accordingly. “We are not interested in a world without Russia,” said the Russian president. “We are not interested in a world without Poland, France, Hungary, the United States…” would say any patriotic president, would he not? So what’s so strange about it? If they want to subjugate you, to enslave you, to annihilate you, you put up a fight.
Or maybe you throw a farewell party?
At the close of the BRICS summit, held this year, October 22-24, in Kazan, Russia, Russia’s President Vladimir Putin, as is his habit, took questions from journalists. One of them was asked by a BBC correspondent. The BBC journalist asked the Russian leader whether he did not see a discrepancy between what Russia aims at – which is its own and international security and stability and justice – and what Russia reaps as a result of its policies – which is having Ukrainian drones over its own territory or having Russian towns shelled by Ukrainian artillery. The same journalist also asked whether Vladimir Putin could confirm that the British secret services report that the Kremlin was behind social unrest in the United Kingdom. Putin’s reply was manifold and exhaustive:
① Yes, Russia was not shelled prior to 2022, but before that date Russia had experienced something much worse. Russia was ignored by the West, which attempted to assign to Russia a status of a semi-independent country, a mere provider of resources. Prior to 2022 Russia was doomed to become the West’s dependency. Obviously, under such circumstances the country could not hope to prosper, to develop, to even exist in the long run. The West did not respect Russia’s interests, Russia’s tradition, anything Russian.
② As for justice, continued Russia’s president, the West does all in its power to exploit the world under various pretexts. One of them was the time of the pandemic during which both the United States and the European Union printed billions of their respective currencies with which they bought up huge amounts of foodstuffs and caused worldwide inflation. By flooding the world’s markets with billions of additional dollars and euros, the West was in a position to consume much more than it produced, much more than the rest of the world. The other pretext is of course ecology. The West demands that energy produced on fossil fuels be reduced, which is done in the name of protecting the planet’s climate. That might be a noble purpose, but the point is that African and some Asian countries cannot afford to do away with fossil fuels. To do so, that is, to use modern technologies of energy production, they would need to get credit, which the West only offers with very high interest. For all practical purposes such an approach on the part of the West is turning former African colonies into modern-type colonies. Is that justice that the BBC journalist meant?
Was it just not to respect Russia’s demand that Ukraine not become a NATO member? Was it just on the part of the West to enter into agreements with Russia with the intention of breaking them? Was it just not only to turn Russia’s underbelly – Ukraine – into anti-Russia, but to even build military bases there? Was it just to carry out the coup d’etat in Ukraine? These are glaring acts of injustice and Russia wants to and will change them.
③ As for the claim of the British secret services that Russia allegedly sows discord in British society and is behind street unrest, President Putin said that the social upheaval observed in the West is a direct result of the policies of Western governments which deteriorated economic conditions in their countries due to sanctions and giving up on Russia’s cheap resources. What does Russia have to do with all this, asked the Russian leader.
Interesting points were raised. It may well be that Russians are instigating unrest in Western societies. Does that come as a surprise? One would be flabbergasted if Russia did not try to pay the West in kind. Indeed, the retaliation might be even more painful.
As for the inflation and robbing the globe of its produce and resources by printing money: well, that’s precisely why BRICS countries cooperate and are trying to create a parallel financial system. They have long been victims of financial machinations, and they have long realized the mechanism of being robbed by inflation brought about by foreign powers. If India’s or Brazil’s central banks issue much more money than warranted, the resultant inflation hits them directly, some other countries indirectly, and still some others not at all. If, however. The United States generates far more dollars than is reasonable, the resultant inflation hits the whole globe instantaneously and directly simply because the dollar is the global international currency. Thus, the United States solves its economic problems and burdens the rest of the world in the process. This is, by the way, the point that President Putin has raised many times during his speeches or interviews.
Freedom of speech is not what characterizes humanity, human societies. Only rarely does it surface, for a historically speaking short moment, and then disappears. Why? There’s always a ruling group that holds power, and in order to hold power as long as possible, this groups needs not only to have control over the finances and the law enforcement, but also of the collective mind. It is the mind where seeds of opposition can be sown and where they can sprout, it is the mind that sparks dissent and opposition, it is the mind that leads people to rise up against their rulers. That is the simple reason why genuine freedom of speech, freedom of expression is unthinkable. It is unthinkable because it is impossible, because it sooner or later undermines the authority. That is why freedom of speech must be controlled, channelled or otherwise influenced. The rare moments when freedom of speech resurfaces are those historical times of equilibrium between a descending and an ascending ruling grup.
In the modern world censorship has become a word evoking the worst possible connotations. Dictators resort to censorship, Communists used to apply censorship, but democracies are all about freedom of expression… except that they are not. What do democracies do to simultaneously have censorship and not have it? The solution is easy and as old as human history. Democracies abolish the word censorship without abolishing censorship itself, democracies invent new ways of censoring content without having to resort to the old primitive methods of physically gagging someone’s mouth are imprisoning someone for his words. Democracies invent terms like combating disinformation or misinformation, like protection of the populace against malicious or inciting false news and ideas. That’s it! Censorship in a democracy? God forbid! Yet, you will agree that lies need to be suppressed, will you not?
Humans instinctively want to know the truth and wish to be able to pass correct judgement. In order to know the truth and in order to be able to pass correct judgement, one needs information, one needs varied information coming from different, politically or ideologically opposed sources. Only then can truth be discovered, only then can correct judgement be passed. Hence the need for consulting various information sources. Audiatur et altera pars, as the Romans used to say: let also the other party have a fair hearing. An argument can only be accepted as binding if it has been confronted with opposing arguments and stood its ground, when the argument turned out to (more closely) correspond to reality, to truth. How otherwise can we justly and impartially decide about anything?
How about misinformation or disinformation? If misinformation or disinformation are allowed currency together with information, in the long run the last mentioned will win out. Truth always wins out. As someone said: you can’t deceive all people all the time. Conversely, if information is suppressed under whatever noble pretexts, if you are punished or intimidated or ridiculed for wanting to consult various sources of information, then you may rest assured that those who want to punish, intimidate or ridicule you have been feeding lies to you and are now afraid of you exposing their mendacity. That’s a litmus test available to all of us. You don’t need to be an expert on anything, you only need to be vigilant: if the powers that be don’t want you to look for other sources of information, it clearly means that they want to conceal something and are afraid of being confronted with the truth.
Quid est veritas? was famously asked by Pilate. Yes, what is truth? It may not be easy to discover truth, but one thing is certain: we will never discover it without consulting varied sources of information, without exposing our minds to varied, opposing arguments. At least that much is true. It may be that you do not wish to investigate into various phenomena, events and news: why, it takes a lot of time and effort, and we all have our lives to live, our work to perform, our families to take care of, our vocations to fulfil. Nothing wrong with that. That is why societies delegate few individuals – like journalists or historians – to do the job for the rest of us, to present us with the results of their research efforts. That’s the way it ought to be. The only task that we – the consumers of someone else’s investigative work – are set with is to familiarize ourselves with the investigations done by others with this however sound principle that we must consult opposing sources of information and argumentation. The moment we are denied it, we know that we are being lied to, we know that we are being separated from truth.
There are many, many people who are in favour of global peace. Many of them join organizations and take part in demonstrations in support of international peace. Yet, these are usually empty gestures. It is not enough to yell, Give peace a chance; what needs to be done is to encourage all of us to give the other party to a conflict a fair hearing. Peace disappears when only one argumentation is heard and, consequently followed. Peace disappears when one argumentation deemed as correct makes it impossible for us to understand our opponents. One argumentation turns us into reckless automatons who believe they know reality, who are certain that they know truth while they don’t. If you want to give peace a chance, encourage people to listen to and read what the other party to the conflict has to say; if you want to give peace a chance, declare war on those who suppress selected sources of information and argumentation. Once you learn the argumentation of the other party, your belligerent attitude will almost always be done away with, or at least significantly reduced. Contrarily, if you clam up in your own world of allegedly true ideas, you are going to end up in a vicious conflict of attrition so much so if the other party to the conflict does the same.
It takes intellectual courage to think. Yes, genuine thinking is an act of courage. It is an act of courage to admit a thought that my attitude to an event, my belief in an idea, my evaluation of reality are perhaps not quite correct, are perhaps wrong, or perhaps downright wrong? It is an act of huge courage to admit that perhaps my opponent is not quite wrong, that my opponent is maybe right, maybe… absolutely right. It is probably easier to go to physical war and fight in the trenches than to subdue your own ego and surrender your own cherished beliefs. It was not without a reason that Romans used to say, imperare sibi maximum est imperium, or, to rule yourself is the ultimate form of power. It is really much easier to command troops in the field, or to withstand hardships than to admit that what you hold as sacred truth is not true.
Gefira Financial Bulletin #86 is available now
Prior to being taken over by the Europeans, mainly the subjects of the British Crown, New Zealand was inhabited by Māori, a conglomerate of a number of tribes who had settled the two islands in the 14th century. Just as it was common in the Americas among Indians, the tribes waged wars for territory and resources and slaves and supremacy. The way of all flesh, everywhere and always on the planet Earth. Due to the primitive forms of weaponry, the hostilities were not very much devastating. When, however, white settlers began to trade muskets for the goods that the Māori could offer, those muskets became a game changer: the tribe with a larger number of muskets had a significant military edge and felt encouraged to wage war with other tribes, hoping for a swift and easy victory. Wars were also waged because of the past wrongs suffered at the hands of a neighbouring tribe. Vengeance was also a driving force. And yes, those tribes which were equipped with muskets gained the upper hand in the battlefield. The vanquished, however, would soon learn their lesson and purchase muskets from the Whites, thus tipping the scales in their favour. The mutually devastating wars lasted for almost half a century, roughly between 1806 (in 1805 Napoleon won the Battle of Austerlitz) and 1845 (in 1842 the first Opium War ended). Thousands of Māori men and women died in those hostilities, while whole tribes were decimated. The winning party would enslave the beaten tribe and work the slaves to death so as to have new produce to trade with the British settlers and buy more muskets and wage more wars. The beaten party, too, would do anything in its power to sell whatever they had to the Whites – including land – in order to acquire the firearms, resist the aggressors and – naturally – take revenge. A never ending story. While the Māori tribes would mutually annihilate themselves, the European settlers would enrich themselves and get rid of some of the indigenous population in the process. To put it differently, the Māori simply made room for the British colonizers while reducing their own numbers in the ceaseless feuds. Just one of the many historical examples of one party setting the other two or more parties off against each other and enriching itself in the process. One of the many historical examples of ethnically related nations, states, tribes letting themselves be used against their ethnic cousins by total biological and cultural strangers.
Nothing has changed since then. True, we do not encounter culturally backward tribes as we did in that time, but we do encounter nations and ethnicities whose development is not very much advanced and who let themselves be easily pitted against their ethnic cousins. Recently we could observe the same phenomena in the former Yugoslavia and in the former Soviet Union. Thus Croats were set off against Serbs, whereas Ukrainians – against Russians. Just as Māori received weaponry and other equipment from the West so are Ukrainians receiving it; just as Māori traded most they had for the weapons and equipment, so are Ukrainians selling their land and running up enormous debt; just as Māori were hellbent on killing other Māori to please the third party so is one Slavic nation hellbent on killing another Slavic nation to please a third party. The similarity is striking. The same might be said about Croats and Serbs, and, indeed, about tens and hundreds of conflicts worldwide. It turns out that there are nations with a huge inferiority complex that let themselves be politically and militarily exploited just like American Indians or new Zealand Māori tribes. There are nations – present-day Indians or Māori – that are willing to act as gladiators: they are willing to please the managers of the world by killing their neighbours and cousins so as to get a pat on the shoulder and so as to prolong their own life for a couple of months or years. There is no shortage of nations and ethnicities that are willing to buy muskets, to sell whatever they have, and to wage wars on their neighbours, simultaneously bending backwards to those who provide them with the muskets (Abrams, Challengers, F-16s, satellite intel) and collect from them their resources and grab their territory.
“The Germans long before …14 sought to destroy the unity of the Russian tribe forged in hard struggle. For this purpose they supported and boosted in the south of Russia a movement that set itself the goal of separation of its nine provinces from Russia, under the name of Ukraine. The aspiration to tear away from Russia the Little Russian branch of the Russian people has not been abandoned to this day. XY and his companions, the former protégés of the Germans, who began the dismemberment of Russia, continue to carry out their evil deed of creating an independent “Ukrainian state” and fighting against the revival of the United Russia (Единая Россия).”
Sounds familiar? This remark was made more than a hundred years ago by General Anton Denikin, one of the four most recognizable leaders of the anti-Bolshevik Russia during the civil war of 1917-1921. The other three were Alexander Kolchak, Nikolai Yudenich and Pyotr Wrangel. General Anton Denikin fought for a few years in the south of the former Russian Empire against the Red Army, but after some initial successes, he was forced to leave his fatherland. It was at that time that the West was very much interested in disrupting Russia. The two revolutions – the first one, often referred to as the bourgeois revolution, took place in February and the second one, the Bolshevik revolution, took place in October 1917 – were sparked off with the support and blessing of the Western powers. The British had a hand in dethroning the tsar in February 1917, the Germans substantially supported the Bolshevik party in October 1917: the leaders of the coup d’état that was to take place in October were transported in a sealed train from Switzerland across Imperial Germany to Sweden, from where they made their way to Petrograd (that’s how in 1914 the German-sounding Saint-Petersburg was renamed after Russia began the hostilities against Germany). Americans, too, chipped in. While Vladimir Lenin enjoyed German protection, travelling across Germany, Leon Trotsky, having spent a couple of years in New York with his family and two sons, was financed to cross the Atlantic and be on time in Petrograd to disrupt the Russian state. It was not only the financial and political support that helped the revolutionaries of all persuasions to bring about the collapse of the empire: national or ethnic resentment was also exploited, with the Germans advancing the idea of a Ukrainian nation as separate from Russians.
There were a number of Ukrainian leaders at that time, with Symon Petliura being one of the most recognizable. He was backed by the Germans, he was later backed by the reborn Polish state. The Polish troops together with some of his Ukrainian units advanced towards Kiev and even occupied it for a week or two in 1920. Quite a Maidan, was it not, even if short-lived? These are the events that General Anton Denikin referred to in the text at the opening of this article. The full date the part of which we intentionally deleted was 1914, while the letters XY stand for no less a person than Symon Petliura.
In 2014 we saw a kind of historical repeat. The Western powers made themselves felt in Ukraine, but especially in Kiev, and caused the legitimate president to flee the country. Also, a crawling civil war commenced in the Donbass, while Russia in response to all these events reclaimed the Crimean Peninsula, all of which led to the war that broke out eight years later. Today Anton Denikin might write something like this:
“The collective West long before 2014 sought to destroy the unity of the Russian tribe forged in hard struggle. For this purpose they supported and boosted in the Ukraine a movement that set itself the goal of antagonizing Ukrainians and Russians. The aspiration to tear away from Russia the Little Russian branch of the Russian people has not been abandoned to this day. Volodymyr Zelensky, Yulia Tymoshenko, Leonid Kravchuk, Petro Poroshenko, Vitalii Klichko (you name them) and their companions, the protégés of the West, who began the dismemberment of the Soviet Union, continue to carry out their evil deed of creating an independent “Ukrainian state” and fighting against the revival of the United Russia (Единая Россия).”
by the way, the phrase United Russia (Единая Россия) that Anton Denikin employed overlaps one to one with the name of the “Putin” party, which holds power in this largest post-Soviet republic.
This time, too, it is the United States, Germany and Great Britain along with Poland that are busy playing Ukrainians off against Russians. This time, too, they have found present-day Petliuras ready to serve them. Today, too, war is being waged, and today, like yesterday, it looks like Ukraine is on the losing end. So it goes. Will we be witnesses to yet another historical repeat in… 2114/2124?
During World War Two, after the Germans had attacked the Soviet Union, they approached General Denikin, who lived at that time in France, with a proposal of backing the Third Reich against the Bolsheviks. Anton Denikin was very much opposed to the Bolshevik rule in Russia, which is putting it mildly. Yet, he did not for a moment think it right to ally himself with the enemies of Russia, even Red Russia. Anton Denikin flatly refused and warned those Russians – and especially Ukrainians – who were willing to serve the Third Reich against the Bolsheviks. Anton Denikin tried to convince them that they were going to be miserable tools at the hands of the Germans, to be discarded the moment they were not needed.
It is said that the civil war in the Soviet Union did not end in 1922 – when Denikin, Wrangel and Yudenich were forced out of Russia, while Kolchak was taken prisoner and put against the wall – because the civil war in the form of resentment and a deep division running through Soviet society festered. It only ended when the Soviet Union was attacked by Germany. It was only then that the overwhelming majority of Soviet citizens of whatever political persuasion rallied around the Soviet leaders to defend Russia. Has not the same been happening since 2022 in Russia? Even those Russians who did not hold Vladimir Putin in high regard changed course and rallied around him. War and especially the resultant hardships were supposed to turn the people against the Kremlin: as it is, the opposite is true. Sure, there are some who have betrayed their country – there were some also during World War Two, like General Vlasov – but the majority have expressed their unwavering support for the leadership. Does anyone learn anything from the past? Does anyone study the past?
How did Germany fare between 1933 and 1940? The country was on the rise. It regained its full sovereignty after the humiliating Versailles Treaty, it had a strong economy and even stronger army; it had expanded territorially incorporating Austria and parts of Czechia; it had conquered Poland, Denmark, Norway, the Netherlands, Belgium, Luxembourg and France; it bent to its political will Slovakia, Hungary, Romania, Bulgaria, and Finland; Italy and Spain were its allies; with the Soviet Union it had an agreement that divided the spheres of influence. Germany was on top of the world. Only the United Kingdom challenged it, and this challenge was naturally weak and ineffective. The whole continent was under the German sceptre. What did the Germans do? Did they do their best to solidify their grip on the booty? Did they do their best to guard what they had gained? No. They decided to gamble, to swallow more than they could digest, to put at a risk everything that they had successfully won.
How did the West fare between 1991 and 2022? Just like Germany between 1933 and 1940. The West saw the collapse of the Soviet Union, the West’s rival of long standing; the West saw the enlargement of the sphere of its influence: all the central European former communist countries flocked to the West’s antechambers and begged to be let in. Most if not all of the former Soviet republics did the some. And to top it all, Russia, the direct heir to the Soviet heirloom, bowed and scraped before the West, and badly wanted to be regarded as a partner, a weaker, younger, smaller, but still a partner, a member of the Western club. The West’s companies took possession of the east European and post-Soviet markets; the West’s mass media and Western culture in general supplanted almost anything that was local and peculiar to post Soviet nations; the Western ideas and lifestyle were slavishly copied by Poles and Romanians, by Croats and Ukrainians, by Hungarians and Russians. For years, Russia’s president Putin kept referring to the Western countries as Russia’s partners. Russia wanted to become a NATO member and wanted to join the European project by creating a kind of commonwealth stretching from Lisbon, Portugal, to Vladivostok on the Pacific. All of Europe, Russia and Ukraine included, along with the post-Soviet Asian republics, prostrated themselves to the West, paid homage to the West’s rule, acknowledged the West’s dominance, bowed to Western hegemony. For all practical purposes the International Monetary Fund and other financial institutions, the White House and Brussels set up models of economies, societal organization and what not in the post-Soviet area. It came to pass that one Western author who still is regarded as a scholar wrote the famous sentence about the end of history! What did the West do with all this? Did the West do its best to solidify its grip on the booty? Did the West do its best to guard what it had gained? No. The West decided to gamble, to swallow more than it could digest, to put at a risk everything that it had successfully won.
History really rhymes! The Germans of 1941 – with almost all of Europe – and the Americans along with the European Union of 2022 decided to make a final killing: they both decided to challenge Russia. History really rhymes and history really shows that no one ever learns anything from the past. After a period of military and economic difficulties Soviet Russia ended the conflict by shelling Berlin; today’s Russia, after a period of caving in is perhaps not about to shell Washington or London (although who knows?) but it is about to deal an even more fatal blow: it is about to destroy the American dollar and to lay bare the ineffectiveness of the West’s military; today’s Russia is about to upend the world order that has been so meticulously built by the managers of the world, by the Club of Rome and the Trilateral Commission, by the G7 and the World Economic Forum, by all those Kissingers and Brzezinskis, Albrights and Obamas.
Rather than enjoy consuming almost the whole of the continent as it could prior to 1941, prior to the invasion of the Soviet Union, in 1945 Germany ended up territorially shrunk, politically divided, morally broken and economically destroyed. Similarly, rather than enjoy the fruits of the collapse of the Soviet Union and continue holding a grip on almost the whole post-Soviet area, the West is about to slowly recede and witness its own collapse in terms of economy, society, morals and military. A repeat of the Titanic’s catastrophe: rich conceited people going under, with their big sophisticated project being smashed and crushed by a simple, uncomplicated iceberg. They will soon fight for the seats in the few life-saving boats that are still at their disposal. Something very much similar must have preceded the famous sack of Rome by the barbarians. And mind you, the West already has its barbarians inside, flocking in – day in, day out. When their number exceeds the tipping point, the sack will take place. (We have had smaller sacks in Paris and London, in new York and Los Angeles, rehearsals before the in general and final sack). And you know what? The majority of the populace in the West will continue to live in total denial of reality, just as ancient Romans did, the same Romans who witnessed the sack of their capital city, and just as Germans persisted to believe in their final victory in the months of February and April 1945.
The Germans could have enjoyed their conquests for decades to come and so could the West: both screwed it up. Fools.
It was in the run-up to the Second World War. Czechoslovakia was about to fall apart. It was not only the Sudeten Germans that rebelled and wished to be joined to the Third Reich; it was also Slovaks, one of the two brotherly nations – the other were Czechs – that made up Czechoslovakia. The Slovak and the Czech languages are like two sides of the same coin, i.e. very close to each other. If you master one of the languages – either Czech or Slovak – you will have no difficulties understanding the other while reading or listening. There will even be a specific time drag during which you will not figure out whether you are reading or listening to Czech or Slovak. That’s how close those languages are. And yet, and despite this relatedness of blood and customs, of the DNA and culture, Slovaks, or to be precise, those who happened to be the nation’s leaders, were hell-bent on separating Slovakia from Czechia, cost it what it may. Yes, cost it what the may, because in the process they were willing to cooperate even with Konrad Heinlein’s Sudetendeutsche Partei against Prague, they were ready to look for help from Berlin or even to join Slovakia to Poland, a Slavic nation, whose language, however, is not as closely related to Slovak as Czech is. Let it sink in: Slovak elites preferred to ally themselves with powerful Germany in order to destroy Czechoslovakia and harm Czechia without having a second thought that maybe confronted with the Third Reich on their own they would not be long for this world.
The same was true of the then Polish elites. They, too, saw a chance in the fact that Czechoslovakia was coming apart at the seams with the separatist Sudeten Germans supported by the Third Reich on the one hand, and the separatist Slovaks on the other. Warsaw, too, wanted to have a stake in the unfolding events, grab a chunk of Czechia and, possibly, subordinate Slovakia. The Polish elites naively thought and expected to be viewed by Berlin as partners in carving this part of Europe. Before long they learnt it the hard way that not only were they not regarded as anything remotely to being partners: in a year’s time Poland was invaded by Germany and deleted from the political map within a couple of weeks. A disaster that the Polish elites brought upon themselves or rather upon the nation that they had led into the abyss, because the elites for the most part worked or wormed or bribed their way out of hell into one of the Western countries, with most of them never to return.
Fast forwards, Yugoslavia. Slovenians and Croats loathed Serbs so much that they were willing to associate themselves with Muslim Bosnians and Albanians while going to war against Belgrade; they were even willing to trade their political sovereignty with the Western powers for aid in making the life of Serbs miserable. NATO began bombing Serbia into the Stone Age and carving the former Yugoslavia into ever smaller parts, but never mind that! The most important thing that Croatian elites cared about was to do harm to Serbia. That was about anything that mattered. Just like Slovaks in the run-up to the Second World War they, too, preferred the protection of the European Reich. Were they afraid that from then on they would be confronted with a power incomparably stronger and more sinister than Serbia? Nay. Who would have cared?
How about Czechia and Poland who had joined NATO on the eve of the alliance’s strikes against Belgrade? Did it cross the mind of the elites of those nations that one of these days they, too, might be subjected to sanctions and bombings if only they dared not to walk in lockstep with their overlords? Nay.
A bit more forwards, Ukraine. In 1992 Ukraine emerged as an independent state with a territory that it had never ever had in its history, with over 50 million inhabitants, a well-developed industry, broad access to the Black Sea and large areas of some of the most fertile soil that the world can boast. Consider it for a moment: Ukraine had a huge territory not because it took it from Russia with the sword or at gunpoint. Ukraine had a huge territory because it so pleased the Bolsheviks to create a large Ukrainian republic, and because it later pleased the leader of the Soviet Union Nikita Khrushchev to add to it the Crimean Peninsula. The only thing that the responsible Ukrainian elites were tasked with was to preserve that precious possession. What did they do? They acted in ways that were far worse than what the elites of Slovakia and Croatia did. Why worse? Because Ukrainian elites did not need to fight for their independence from Moscow: it was served them on a platter. Slovaks needed to conspire with Berlin and Warsaw against Prague; Croats needed to conspire with Berlin, Washington and God knows who else against Belgrade. Ukrainian managers did not. That is, they were obviously backed by the West, but there was no fight when the Soviet Union disintegrated. Ukrainians took or received Ukraine as a huge chunk of the heirloom after the deceased Soviet Union, and… they did their best to waste it, to bleed it dry, to turn it into the West’s bridgehead against Moscow. What for?
Why did the Slovaks want so desperately to tear their nation awat from Czechs even at the price of allying themselves with Germans and Poles? Why did the Croats (and Slovenians) so badly want to deal a mortal blow to Serbia, again allying themselves with the West, among others with Germany, the same Germany that had invaded and destroyed Yugoslavia a few decades earlier, in 1941? Why did the Ukrainians need to ally themselves with the West to senselessly ruffle Moscow’s feathers? Why could they not be pleased with what they had at the outset, in the year 1991? An independent Ukraine of that large territorial size and so numerous population as it emerged in the 1990s was a godsend and there is no exaggeration to it! Sadly, Ukrainian elites have been ready to fight their Slavic brothers outside and within their borders asking for help not only Germans whose forefathers used to exterminate Ukrainians by the tens of thousands, but also Poles, with whom Ukraine has had a hard time throughout centuries! What for?
Why is it so easy for the powers that be to put neighboring and ethnically closely related nations – Slovaks and Czechs, Croats and Serbs, Ukrainians and Russians – at loggerheads? What have those nations ever gained or what will those nations ever gain by being at loggerheads with each other? The Slovak state that emerged from the ashes of Czechoslovakia was a puppet state controlled by Berlin. As a reward, it was Berlin – Slovakia’s protector – that forced Slovakia to cede chunks of its southern territories to Hungary! Poland, which supported Slovakia in the latter’s separatist policy, was soon – as mentioned above – attacked by Germany and the German army enjoyed the support of the Slovak troops! True, the contribution of the tiny Slovak units was negligible, but the symbolic meaning of the event is gargantuan! The Polish elites were so hell-bent on destroying Czechoslovakia and elevating Slovakia only to receive a nice thank-you from the latter in a few months’ time!
Today Poland supports Ukraine against Russia, the same Ukraine with which Poland shares a history of mutual massacres and wars, and today Poland has been invaded by Ukrainians with the Polish nation growing more and more impatient with their presence. The first signs of conflicts begin to emerge here and there, recently most notably over Ukrainian agricultural produce that has dumped the Polish market. Whose interests does the Polish commitment in Ukraine serve?
Croatia used to be independent from Serbia as early as in 1941, when Germany destroyed Yugoslavia. Croatia used to be independent for a couple of years in name only. Sure enough, it did the biddings of Berlin. Whose biddings is Zagreb doing at present? If, as Croats claim, it was so hard to by overwhelmed by Serbs, how much harder must it be to be overwhelmed by the big European conglomerate of states?
What good do all the mentioned Slavic nations expect from the fact of fighting each other and doing someone else’s bidding? Their elites either did not pay attention during their history classes or… or they are not acting in the interests of their nations intentionally.
Croatia (or Slovenia, for that matter) and Slovakia did not want to send their deputies to the respective parliaments in Belgrade and Prague where their deputies would have held in between a third and a half of all the seats, but they are more than willing to send their deputies to the European parliament where they hold a tiny, negligible, insignificant number of seats. Where’s the sense?
Unlike Belarus, which is allegedly ruled by a dictator, Ukraine has followed the path of democracy made by Washington D.C. and approved by Brussels E.U. Now, the population of Belarus has remained stable for the last thirty years with barely an appreciable change whereas that of Ukraine has been… halved. A loss that is larger than that suffered during the Second World War. Which country has faired better? How about other factors? How about economy, war and peace? In plain English, given the choice, would you like to live under President Lukashenko or President Zelensky and/or his predecessors? Would you like to live under President Putin or President Zelensky and/or his predecessors? An unpleasant thought, huh? An unfair comparison?
As of now, Ukraine has already been destroyed (partly even long before the ongoing war); Poland, whose leaders wanted to play big and carve Czechoslovakia in 1938, was mercilessly destroyed a mere year later (today’s Polish leaders, too, want to play big); Slovakia, which separated itself from Czechoslovakia, later took part in the German invasion of the Soviet Union (what for?), and consequently was destroyed and subjugated by the Red Army in a few years’ time; Croatia, having murdered Serbs in concentration camps, was subjugated by Tito’s communists at the war’s end. They all – Poland, Czechia, Slovakia, Croatia, and Ukraine – have been but playthings at the hands of the powers that be, flexing their muscles and making believe that they want to pursue the policies that they are compelled to pursue, policies like accepting the green agenda or accommodating Third World people or doing away with swaths of their economies or coming to grips with the new normal in morality. The elites of these countries of whatever political persuasion are sure to continue in the footsteps of their predecessors. Croats and Serbs, Slovaks and Czechs, Ukrainians and Russians, Poles and Russians are certainly going to be pitted one against the other also in the nearest and remote future. You just cannot help it. It runs in their DNA.
Argentina’s President Javier Milei, whom we praised in our article in February this year for his sober views and realpolitik, is showing his clout. Since he has been in office (exactly one year), applying radical measures, he has brought inflation in Argentina sharply down. At the beginning of his term of office, monthly inflation stood at 25.5 %, but it has now fallen to 3.5 %. This success is based on a comprehensive “shock program”, which included far-reaching cuts:
The FED or the ECB take years to get inflation under control, surrounded by crowds of employees, in their towers in Frankfurt (ECB) and Basel (BIS), in their bunkers in Fort Knox, cut off from reality, with the media serving them, convincing the public of the efficiency, caring and reasonableness of central bankers, leading us from one crisis to another. The ECB can do nothing about the deepening recession in Germany. An Argentinean who is going against the tide, a showman whom all the Western media despised a year ago and predicted his quick downfall, has succeeded. Against all odds. Though he is on the side of Ukraine and Israel in their conflicts, though he speaks out against the BRICS, Venezuela, Iran, Russia and China, nonetheless he argues against woke culture and all left-wing ideas for social transformation. Note that he was the first head of state Donald Trump met with (informally) after his election. While Trump is a protectionist who will try to control the US market with administrative measures, Milei is an opponent of liberalism and open markets. After 20 years of socialist government in Argentina, came a man who keeps his promises: he is putting an end to socialism and its failed ideas. First in the economy, then in all areas of life. One man, one word.
Donald Trump wants to increase tariffs on Chinese even by up to 60%, and Democrats will have no choice as to agree to at least some of protectionism planned by the Republicans, or else China will flood the market w its products to the detriment of American domestic industry. In recent years, Western companies and financiers have invested heavily in China only to withdraw from the country at present.
Source: bloomberg.com
In the second quarter of 2024, 15 billion dollars were withdrawn from China. At the same time, exports from the Middle Kingdom are on the rise as companies increase their inventories of Chinese parts, components, etc. so as not to be so affected by potential trade wars. Put simply, we buy what we can from China, but we no longer invest there. This strategy is being pursued by many countries. As a result, freight costs are also rising. Below you will find transport costs from main ports in China (Containerised Freight Index – green line). The situation is similar to that after the end of the pandemic, when inflation began to rage.
Source: tradingeconomics.com
Companies are filling their warehouses and politicians will have a tough nut to crack if inflation rises as a result of trade wars. Already, 59% of Americans believe their country is in recession, despite good economic data.
It is worth remembering that the development of the global economy has been due to free trade for several decades, with the focus on China. This process is now set to be halted and many Americans would even like to see it reversed. This will benefit many European or American companies, but unfortunately it will be at the expense of ordinary citizens, who will pay more for many products. This will fuel inflation and at the same time slow down the economy. Such a situation is known as stagflation. Stagflation is therefore a possible scenario as downside risks dominate the markets, including geopolitical tensions and trade fragmentation.
For public finances to be healthy, the economy must be sick
The fiscal conservatism of Germany and the Netherlands clearly limits the growth potential of both countries. The 45% of economists and think tanks active in the AIECE research network consider the current monetary policy in the eurozone to be too restrictive, while only 25% consider it to be correct. In particular, the respondents pointed to the governments of Germany and the Netherlands as those that are only insufficiently supporting their economies. The budget deficit of these two countries will amount to 1.6% of GDP this year for the former and 2% of GDP for the latter. By way of comparison, the figure for Italy is expected to be 4.4% and for France 5.3%. At the same time, many countries are struggling with much higher inflation than those between the Rhine and Oder, for example. It’s like between an anvil and a hammer: either you spend less money on stimulating businesses, leading to a slowdown in the economy and ultimately to recession in the country (Germany, Netherlands), or you increase public debt and the budget deficit through excessive spending, pumping money into the economy, which brings inflation with it (Italy, France).
In 2023, it paid off to pursue an expansionary fiscal policy that avoided a recession. In terms of GDP, higher government spending in Italy and France replaced falling demand, leading to positive growth rates. Countries that cooled their fiscal policy achieved lower growth rates and in some cases paid for this with a recession (see the Netherlands, where GDP fell by 0.3% year-on-year according to the latest figures). Denmark stands out from this pattern, as it achieved growth of almost 2% despite its restrictive fiscal policy. However, it is worth noting that economic growth was boosted by the huge success of Novo Nordisk, the manufacturer of weight loss drugs. Without the pharmaceutical industry, GDP would probably only have grown slightly.
At the same time, it should be noted that the higher inflation in countries with a more expansive fiscal policy is due to the fact that government spending has had to react to cost shocks. For example, countries that are more susceptible to supply shocks due to a higher share of food and energy in the basket of goods have taken more comprehensive and longer-lasting shielding measures for ordinary consumers. However, the reversal of these measures is slow, which is also slowing down the disinflation process.
A new threat to inflation is the escalation of wage demands in the major EU economies. Figures from the European Central Bank (ECB) indicate that growth in collectively agreed wages was stable at just under 3% in the fourth quarter. At the same time, these figures are published with a considerable time lag and show a rather outdated picture that ignores the ongoing negotiations between employers and employees. A completely different picture emerges from the internet search data, where questions about pay rises are reaching historic highs in almost all major EU economies. For example, Dutch internet users are now twice as likely to search for terms relating to pay rises than in 2016-2019, i.e. before the pandemic. In such an environment, rapid disinflation is highly unlikely.
Quelle: Google Trends | Gehaltserhöhung = salary increase, Lohnerhöhung = wage increase, Loonsverhoging = wage increase, Salarisverhoging = salary increase, Augmenter = Increase, Aumento = increase
To summarize, the impact of fiscal policy in 2023 has proven to be quite intuitive and textbook, although it is worth noting that the consequences of some fiscal tools will also show up over a longer period than just a few quarters (e.g. investment, education spending, etc.). Countries that pursued expansionary fiscal policies had to accept higher inflation but managed to avoid recession, while governments that focused on central bank support had to accept recession/weaker growth but achieved lower inflation rates at the end of the year.
The biggest surprise on the financial markets this year is that inflation is continuing. While investors had hoped not long ago for 4 interest rate cuts by the Fed this year, there are now only 3, and with a significant delay. This underpins the thesis we have often expressed that central banks do not fully understand the dynamics of the current inflation. The indicators suggest that parts of the economy, such as real estate and the automotive sector, are struggling with high interest rates, while other sectors, such as the defense industry, the semiconductor industry, the AI industry and the manufacture of anti-obesity drugs, are experiencing a boom. So, after the pandemic, due to new IT technologies and the war in Ukraine, a two-speed economy has emerged, where monetary policy is more difficult, as supporting the weak parts of the economy can go hand in hand with persistent inflation, which is more costly for companies.
Investors try to glean from the Fed’s statements the level of future interest rates (i.e. how much the money – the loans – will cost businesses in the future). It is often the case that the worse the situation in the economy is, the higher share prices rise as investors hope that in response to weak economic data, the Fed will cut interest rates to stimulate the economy. Just yesterday (July 3, 2024) we had an example of this: the ISM index for the service sector collapsed and – excluding the Covid-19 pandemic – fell to its lowest level in almost 15 years. And Wall Street hit record highs in response.
So investors believe this two-speed economy will continue to work. Meanwhile, fiscal spending in the US is unsustainable in the long term and current government bond yields are increasing government spending related to debt, taking away funds for citizen welfare and infrastructure. The US government has to deal with the risk of an economic slowdown or risk letting inflation run high for longer. So the scenario is: whether Democrats or Republicans win, they will have to increase spending (read: inflation), which will cause the Fed to perhaps raise interest rates even higher.
Investors need to understand that the real killer for stocks is recession, not inflation. Yes, I know that the examples, such as the behavior of the stock markets in Turkey or Argentina, clearly show that high inflation need not be a particular problem for equities in the long term. But one day the moment will come: even large companies will not be able to generate higher profits in the face of expensive loans, high taxes and wages. On that day, it will no longer be worth putting money into shares. Even in the USA.
A few centuries ago it was all visible. A peasant – a serf – was obliged to work, say, three days a week for his landlord, and he was obliged to give away a part of the agricultural produce from his household. The amount of work and the amount of the produce were all visible, palpable. If a landlord wanted to extend the time of work done by his serfs for his benefit or take away from the serfs more than was prescribed, the serfs would have rebelled because it was a matter of survival and the maintenance of the standard of living. A serf needed the three remaining days to work for the upkeep of his family; the serf needed to have the rest of the agricultural produce at his disposal for his family to survive. If a serf had been forced to work four rather than three days and give away more than usual from his produce, he would have had less for himself and his family. In other words, working as much as before, he and his family would have had less. The serf would have known who was to blame for this.
Today it is all for all practical purposes invisible. A government prints more and more money and causes inflation. The government does not need to raise taxes. The amount of the tax that is levied on workers may stay the same. Still, due to inflation, labourers or present-day serfs, although they work as much as before, can buy less and less. Of course, sooner or later the present-day serfs notice that they are worse off, but they notice it belatedly and – what’s worse – there is no one person, known to them by name, who is to blame. Yesterday’s serf could have rebelled against his landlord and oftentimes he did; today’s serf can rebel against… inflation, which means against nobody. Yesterday’s serf could have threaten his landlord with a pitchfork – and sometimes it happened. Today’s serf can cast his vote from time to time, to vote out of office some, and vote into office others and, as a result, receive more of the same in terms of economic policy. None of the politicians that currently hold power can stop inflation, even if he wants to. The purchasing power of the present-day serf is constantly diminished, and though the present-day serf is not referred to as serf but, rather, as a citizen with a batch of human rights, he can do nothing about being robbed of the fruits of his work.
Historical record shows that prices used to be stable over decades. Our day-to-day experience teaches us that generally in a longer perspective prices can only rise. If they level off, then but for a short time, while they never fall if viewed over a longer period.
The leftist West is getting a blow back!
– The elections to the European Parliament elevated parties that are maliciously referred to as far-right;
– the war in Ukraine is going badly for the collective West;
– in the United States Donald Trump, maliciously labelled as populist is about to win the presidential election;
– France and the United States are being pushed out of Africa;
– de-dollarization is in progress;
– Slovakia’s Prime Minister Robert Fico has survived the assassination (how the EU commissioners would have wished he had died!);
– Hungary’s Prime Minister Viktor Orbán is openly against the European Union’s policy of confrontation with Russia; and now – to top it all
– Turkey – has announced its willingness to join BRICS!
What a mess! Turkey, which boasts the second largest army in NATO, is about to seriously partner among others with… Russia, a country against which the same NATO is waging war!
The West is getting blow after blow after another blow. How ungrateful the world is! The collective West has been meaning to
– save the planet from the man-made climate change;
– extend the human rights by bringing to the forefront homosexuals and lesbians;
– eradicate racism by coercing races and nationalities to share the same ares, towns and villages, schools and factories,
and it turned out that the world has remained blind and deaf to all those advances… Goodness me!
All of which might suggest one serious suspicion: out of impotence and a thirst for vengeance the collective West might be thinking about retaliatory steps. What are these going to be? The leftist West needs to disrupt BRICS, to keep Russia at bay, to stop the march of the “far-right” through the institutions (a historical irony, indeed), to thwart Donald Trump from winning the elections, to preserve the dollar as the instrument of global exploitation and dominance, and so on, and so forth. What are they going to do? A wounded and hitherto domineering animal can be terribly dangerous.
The most important central bank in the world, the US Federal Reserve (FED), recently presented its financial report, which shows that it had a substantial loss of USD 114 billion last year. Why such a large loss for the FED? To explain this, one should first distinguish between two aspects of the central bank’s activities.
Firstly, the FED holds large quantities of US bonds, which in turn yield interest. Of course, in this case, this interest is income for the central bank. It is worth noting that since the FED began buying bonds on a large scale in 2008, interest rates have also risen considerably
Secondly, the Federal Reserve allows commercial banks and various types of funds to hold money in an account at the central bank. At the same time, it pays a certain amount of interest on these funds, which depends primarily on the level of interest rates.
Well, between 2022 and 2023, there was a series of interest rate hikes in the US. Eventually, a level of 5.5% was reached. This meant that the FED had to pay 5.5% interest to banks and funds (and there were a lot of them) that wanted to keep their money in a central bank account.
So on the one hand, the Fed still held a similar amount of bonds in 2023, for which it received interest rates close to the 2022 level (i.e. much lower than this 5.5%). On the other hand, it had to pay much higher interest rates to commercial banks or money market funds. This resulted in the loss.
You may ask: What happens when a central bank suffers a loss? From a purely financial point of view: Nothing significant happens. It is assumed that this loss will be covered by future profits. In the context of a central bank, it is difficult to talk about bankruptcy, especially as central banks can create gigantic amounts of money under the current system.
Gefira is critical of the monetary policy of central banks, but for completely different reasons. No one from the central bankers is commenting on the following questions:
1) Is it fair that the central bank only rescued and wants to rescue selected financial institutions simply because they operate on a large scale?
2) Is it normal for these institutions (especially banks) to hold their reserves at the central bank and safely receive a few percent interest in return?
3) What’s more – is it fair that unprofitable companies are kept alive by the central bank printing money, which in turn makes it more difficult for new companies to enter the market?
4) Is it good for the economy that unprofitable zombie companies are kept afloat in this way, which otherwise – in the real free economy – should have gone bankrupt long ago?
In December last year, we wrote about Javier Milei – the recently elected President of Argentina. Now, with his recent speech in Davos, he has turned the bottom into the top.
To understand what happened and what Milei got himself into, you first need to comprehend what exactly the World Economic Forum (WEF) is and who makes it up. The WEF is the world’s elite: the CEOs of the world’s richest companies (only companies with billions in revenue are invited to the Forum), leading bankers and technology specialists, politicians, representatives of major business organizations, lobbyists, selected intellectuals, journalists and activists of all kinds. The WEF meetings are therefore full of people who use their connections and influence to try to steer the world in a direction that benefits them and not necessarily the majority of people. It’s about power and money, not about a better life for ordinary citizens.
The aforementioned elite meet every year in Davos to present their proposals on how they want to intervene in our lives. They negotiate agreements among themselves and exert pressure on the world’s most influential politicians. In the meantime, of course, there is a lot of empty talk and boring debates about the world’s social and economic problems. The founder of the forum is Klaus The-Great-Reset Schwab, who became known as an advocate of collectivism. He is credited with the famous saying: You will have nothing and be happy.
This is where Milei comes into play. In a place where the ideas of feminism, birth control and increased government intervention in the economy are supported year after year, where the foundations for Agenda 2030 and its associated eco-terrorism were laid, Milei looks the globalists in the eye and dismantles their propaganda simply and vividly by exposing the lies of the globalists.
In many of his interviews and speeches, Milei refers to the so-called culture war. In his view, the causes of Argentina’s decline are cultural problems and moral decay. Among other things, this gives rise to the deep belief that the state is the guarantor for the satisfaction of citizens’ needs. At the same time, the Argentinian president points out that state intervention is counterproductive, as it should only contribute to the opposite when trying to solve a problem.
Here we summarize the most important theses of his speech in Davos:
1. Capitalism creates prosperity and is moral
Socialism leads to impoverishment and is based on violence. Wherever socialism has been introduced, it has brought more harm than good.
“The West is in danger because it has opened itself up to socialist ideas. It was capitalism that liberated humanity from mass poverty and created unimaginable prosperity. (…) In the countries where we should be defending the values of the free market, private property and other institutions of libertarianism, parts of the political and economic establishment – some because of flaws in their theoretical approach, others out of a desire for power – are undermining the foundations of libertarianism by opening the door to socialism and potentially condemning us to poverty, misery and stagnation. It should never be forgotten that socialism is always and everywhere an impoverishing phenomenon that has failed in all countries where it has been tried. It has failed economically as well as socially and culturally. It has also contributed to the deaths of more than 100 million people.”
So capitalism, rather than today’s Western neo-Marxism, is the way to abolish poverty.
2. Socialism is a repressive and unjust system:
“(…) Social justice is neither fair nor beneficial to society. Quite the opposite. It is an inherently unjust idea because it is based on force. It is unjust because the state is financed by taxes and taxes are levied by force. Or would any of you say that you pay taxes of your own free will? In other words, the state finances itself through coercion, and the higher the tax burden, the greater the coercion and the less the freedom. Advocates of social justice assume that the entire economy is a cake that can be shared. Yet, this cake did not fall from the sky. It is wealth created by what Israel Kirzner, for example, calls the process of market discovery. If there is no demand for the goods produced by a company, that company will fail if it does not adapt to the demands of the market. If it produces a good quality product at an attractive price, then it will be successful and produce more because the market is a process of discovery in which the capitalist finds the right direction in the course of his actions. If the state, however, punishes the capitalist for his success and blocks him in this discovery process (through excessive regulation, as in the EU – author’s note), it destroys his motivation, and the result is that he produces less and the pie shrinks, which damages society as a whole. By inhibiting these processes of discovery and making it difficult to adopt what has been discovered, collectivism inhibits the entrepreneur and prevents him from flourishing.”
3. The fight for women’s rights or nature conservation is just a pretext:
“When the socialists realized that the workers were not getting poorer under capitalism, but richer, they changed their strategy. Today, the class struggle between capitalists and workers has been replaced by alleged conflicts between men and women or between man and nature. It is claimed that to save the environment, population growth must be controlled; abortion is promoted”.
4. Public opinion is the result of decades of “brainwashing” in the direction desired by the elites:
“The neo-Marxists have changed public opinion in a long process of taking control of the media, the universities and even international organizations. As everyone here knows, the WEF is one of the latter. Socialist ideas must be fought frontally and vociferously.”
5. Socialists have more than one name:
“There are many varieties of socialism in the broadest sense. Socialists are not only those who call themselves socialists, but also social democrats, Christian democrats, communists, Keynesians, Nazis, nationalists and globalists. They all share a belief in regulation and the state”.
6. The real heroes are the entrepreneurs. The state, on the other hand, is only a threat to freedom:
“The real heroes of society are entrepreneurs. They are creators of wealth who can be proud of making profits by meeting the needs of others. They should not be allied with the state, not even through the WEF. The state is not the solution. The state is the problem. The state is a threat to freedom.”
Since Milei’s speech, the number of views of his video on the official WEF channel has exceeded half a million. Is that a lot? Just look at the other “great speakers” who have lagged far behind. The conversation with US Secretary of State Antony Blinken, for example, reached 56,000, the speech by EU Commission President Ursula von der Leyen 42,000, and the other speeches received even less attention. (As at the end of January 2024)
An interesting case is the speech by Spanish Prime Minister Pedro Sanchez, who, as the country’s extreme socialist leader – i.e. in complete opposition to Milei – made a staid appearance and barely reached 12,000 views. In his speech, he talks about everything and nothing. He mentions the current problems and challenges, but offers no solutions. The Spanish Prime Minister’s speech was preceded by congratulations on Spain’s strong economic growth, which the Prime Minister himself also boasted about. So let us quote here the conclusions of one of Spain’s leading independent economists, Daniel Lacalle, who summarizes it as follows: ‘The reality in which Spain finds itself today is different from the one presented by the Spanish government under Pedro Sanchez. The ruling socialists are using the same techniques that the Greek socialists resorted to at the end of the 1990s. Namely, they are increasing public spending and debt to hide the fact that investment and consumption in the country have stalled and exports are falling. Taxes are being increased because/although tax revenues have been falling in recent years. The choice between because and although in the last sentence reveals what you think about the right economic policy.
1% owns 50% of the world’s wealth and there are countries that want to change it. About geopolitical redistribution.
In 1974, the middle class had the highest share of world wealth. Today, it is at its lowest level in 100 years. Within the last 50 years, there has been a gigantic transfer of wealth from the working class to the class of society that owns assets. The latter, elitist stratum owns a disproportionate share of the wealth generated throughout the world and constantly increases it thanks to the central bankers who skillfully cause sometimes recession, sometimes revival of the economy through their interest rate policies and increase or decrease the money supply. These are the waves on which the great ones of the financial world surf and later eat caviar and drink champagne. You know it well that this elitist class is not sitting in Beijing, Jakarta, Rio or Moscow. It’s enough to name two cities and you already know who it’s really about: London and New York.
Erdoğan and the president of Brazil, leaders of ASEAN countries and comrade Xi – they all want to make their middle class bigger and stronger because they know it that the first industrial revolution, which lasted 150 (!) years, was possible only thanks to the creative and hard-working middle class. Therefore, they want to introduce their own monetary system, independent of Anglo-Saxon influences, which
(i) operates fairly,
(ii) is not dependent on a fiat currency like the dollar,
(iii) enables the middle class to accumulate wealth, and
(iv) does not serve to remove politically undesirables from the face of the earth through currency wars or military intervention. Suffice it to mention here how weak the Turkish lira is during Erdoğan’s tenure, or how Saddam Hussein fared because of the oil trade in euros, or Gaddafi because of the attempt to introduce the Pan-African currency, which was supposed to be based on gold.
The latter initiatives of countries seeking to free themselves from dollar domination – be it agreements between Russia and China, the BRICS initiative, agreements among ASEAN countries, and many others – all aim at creating some kind of common currency for these, as they are called in the West, “rapidly developing emerging economies.” This currency, however, should not be a fiat currency, such as the euro, but a currency based on tangible assets, thereby ensuring its purchasing power. It may be digital or classic – one thing is certain: its introduction will mean a huge war against the U.S. dollar. It will mean a war against the COMEX (USA) and LME (London) exchanges, where precious metal prices are now decided. And as we emphasized several times before in analyses in our bulletins: these prices have been suppressed and manipulated for decades by the so-called US bullion banks. So, the elitist class that owns the highest share of the world’s wealth may be in for a treat this September, when the BRICS group’s decisions are to be made. One possible scenario: the BRICS countries may, for example, buy countless futures contracts on precious metals and demand delivery of the physical commodity on the expiration date. Since it is common knowledge that COMEX and LME can physically back up perhaps only 20% of their transactions with physical reserves (the paper gold problem), there would be a collapse similar to the Nixon days.
So will the yuan or a whole new emerging market currency soon become a new world reserve currency? If you look at the chart below, you can see that nothing lasts forever and that the dollar’s days may be numbered.
Major reserve currencies since 1250
After the 2015 introduction of the common currency in Lithuania, much has changed. On the one hand, the euro positively influenced economic growth, as loans became cheaper, resulting in increasing exports and investments, on the other hand, the gap between rich and poor and between the level of living in the cities and in the countryside deepened. Until the beginning of the post-pandemic inflation, prices and salaries increased continuously in the Baltic country, but the latter mainly in the cities. Already between 2015-2019, prices increased by 10%, among others food by 6% and services by 22%. In the post-pandemic period, all Baltic countries are now among those with the highest inflation, with salaries, including those of the richer urbanites, unable to catch up with galloping food prices for a good two years. The ECB’s policy is not helping anyone. If one speaks to a Lithuanian or Latvian on this topic, one hears the following: I used to be able to often invite my girlfriend to the restaurant, now I can hardly afford it (a Latvian truck driver aged around 30). Prices have become European, salaries have not.
However, the argument with growth seems to be a bit misguided. Polish economy with its own currency is growing faster than that of Slovakia and Slovenia, which quickly adopted the euro. Since the introduction of the common currency in the PIGS countries, they systematically lose their growth rate compared to Germany. Contrary to the widespread complaints in the German media about Polish fiscal policy (and the hope that it would be “disciplined” after the introduction of the euro), public debt in Poland is keeping within limits – and this despite the policy of social transfers never seen before. In the euro zone, on the other hand, debt is exploding, despite various formal restrictions. This is true even for the countries that joined the euro without having a public debt problem. The debt has been created over time – precisely in this oh-so-fantastic union. This fact is illustrated in the following graph.
Source: Ameco
The culprit is the crazy idea that one monetary and fiscal policy should fit all countries like a universal recipe (one size fits all). One policy for 24 countries – that can’t work, like a 5 year plan for all Soviets, or one for the so very different regions of China. The same interest rate for the entire Eurozone cannot be effective. It leads to destabilizing and costly imbalances in individual member states, which subsequently spill over to the entire euro area, which cannot develop fast enough vis-à-vis the U.S. and China.
But what’s all the talk about? After all, it’s summer vacation and you want to relax. That’s when we recommend a vacation in Croatia – the latest to enjoy the benefits of the single currency. After the introduction of the euro this year, prices in the once cheap country rose to the level of Austria. The Austrian “Kronenzeitung” even compared the price level with Swiss health resorts. The Croatian newspaper “Slobodnaja Dalmacija” calculates that a kilo of cherries and figs now costs 8 euros – 10 percent more than a year ago. Wholesalers have to pay 5 euros for a kilo of pears, 3 euros for cucumbers and 5 euros for peaches. No wonder tourists are canceling their reservations in the country that depends on them the most in the whole EU (11% of GDP comes from them). Another local newspaper “Jutarnji list” points out the surprisingly high cost of daily rent of a deck chair. On the island of Hvar it costs €40, in Split €35 and in Dubrovnik €33. On Croatian social media, a video of an American tourist is very popular, where she aptly notes that the price of the service remained the same after the currency conversion from kuna to euro. The greed of (small) entrepreneurs is one downside of it all, the other is that the euro is actually always Teuro. So we wish you a nice vacation in Poland.
I can’t understand that. I would rather say: There should be a movement here and there under the prevailing circumstances, a kind of yellow vest against the bankers. But lo and behold, the anti-globalists protest against the “rulers” during the G7 summits, as if they don’t know who pulls the strings in G7. The bankers were, are and will be spared. Look at the history of the “Occupy Wall Street” movement, how it was mercilessly swept away by the rulers. You could say: like an oppositional movement in Russia, but in the middle of freedom-loving America. What does the dictatorship of the bankers look like at the moment? And what threats does it pose to us?
Mario Draghi. Remember his assurance that he would do everything to preserve the euro and its stability? Whatever the cost? This is what he said and did in fact, but at the expense of taxpayers. A more recent example: Jerome Powell, the head of the FED assured on June 21 of this year, in relation to the problems of cryptocurrencies in the U.S. market, made by rigorous actions of the FED and SEC against the platforms and banks dealing in this digital money, that he would do everything to preserve the dollar as the main reserve currency in the world. How much will this cost the American taxpayers? Hello, Mr. Powell! Have you lost touch with reality? The Saudis are renouncing U.S. guarantees and reconciling with Iran; China is trading with the yuan with its partners; The BRICS countries are banding together, looking to add new members, including perhaps France – who knows? And you, Mister Powell, together with your colleagues, want to introduce the digital dollar, called “FED-NOW”, sometime in July 2023 at any cost to show every country in the world who rules here? Pride always comes before a fall.
As always, the next crisis is carefully prepared. One day an article appears, for example in “Financial Times”, the other “qualitative” media follow the topic. Then comes the “crisis,” always like a bolt from the blue. What is the “Financial Times” writing now? That the Bundesbank is broke. And that’s true. But then they publish a counter-statement. After all, the “crisis” has to be baptized in the media at the right time. They have to wait until the bankers themselves (the owners of the leading media) will give a sign to the editors; Yes, you may write that now because all the rats have long since fled the sinking ship and the captain never existed.
Why would the Bundesbank need a bailout right now? Because it is, of course, too big to simply let it fall? Yes, of course. But the reason is too boring for the average citizen, so he ignores the facts, but as always only until the headlines sound the alarm or until the next “unexpected” tax increase comes along. It is about bonds, the world of the bankers, which hardly everyone understands and therefore fails as a small investor mostly because he invests against the current, by the way.
Super Mario, otherwise called “Cost what it may”, bought for years from the member banks of the ECB their government bonds so that they (especially his Italian home central bank) could service their debts. Thus, the over-indebted PISA countries did not become insolvent. But, wait, wasn’t that forbidden by the Maastricht Treaty? Yes, of course, but only if the bank in Frankfurt am Main had bought the debt directly from the states. The states, however, wisely sold their debts to the biggest bigwigs in the financial world, including the infamous funds like Black Rock. Thus, the ECB financed and continues to finance the private US money industry, which has done nothing to any EU citizen. These piles of the securities were hoarded in the bunker in Frankfurt and the great Italian banker had hoped that they would not lose value. But then inflation came, and his successor (remember: he himself did not) had to raise interest rates significantly. Since while prime rates were rising, fixed-income securities were losing value, it turned out that the bunker was full of toilet paper. Independent journalists (not those from the leading media) have calculated that the total loss of the EU monetary guardians could be as high as 500 billion euros. If the Bundesbank takes a stake in the ECB of about 10%, that’s already a small problem. But as a well-known German politician once said: Not all Germans believe in God, but they all believe in the Bundesbank. The euro will last forever. Maybe for 1000 years.
Gefira tracks the global players in Europe, the USA, Russia and China and anticipates the consequences of their policies
Gefira No. 9 is now available at a discount. 160 euros for 10 issues a year plus access to our archives.
Europe's geopolitical situation resembles that of 1913.
The enlargement of the European Union to the east, Germany's Ostpolitik, economic power and its reluctance to align its policy with France's and Italy's make the break-up of the Union unavoidable. While Germany is gaining a status of a financial superstar, German society is starting to disintegrate.
Nobody dares to ask, but the ECB board is bracing itself for the upcoming break-up of the euro. The Gefira team explains why France or Italy will leave the euro and we investigate how the ECB is preparing for the looming euro collapse.
