Alastair Crooke — Behind Korea, Iran & Russia Tensions: The Lurking Financial War

While out of paradigm with MMT, the conventional thinking underlying the scenario that Crooke depicts reflects a widespread view that is shared by most political leaders who are responsible for shaping the world through their decisions. This thinking lies at the basis not only of global finance but also geopolitics and geostrategy. So, it is important to understand it because it is shaping emerging events of great consequence. Financial warfare can easily turn into military warfare, and there are a number of hotspots already as we enter 2018 — North Korea, the South China Sea, Taiwan, Ukraine, Syria, Iran, Yemen, etc. The fuse is burning.

Strategic Culture Foundation
Behind Korea, Iran & Russia Tensions: The Lurking Financial War
Alastair Crooke | Former British diplomat, founder and director of the Beirut-based Conflicts Forum.

US Sanctions Push Russia Closer to Abandoning the Dollar — Deputy FM Sergei Ryabkov

It will be interesting to see what comes of this. Many are predicting a return to gold, but I am betting on digital.

Whatever the result, there is little doubt he is right about this:

Ryabkov: I think we can, and I think also every single step that people—on the Hill [US Congress] in particular—take to make our lives more difficult brings us closer to the moment when we will develop all sorts of alternatives to the US financial system, to the dollar reserve currency system, the dollar-based reserve currency system, to all sorts of areas where the whole world and not just Russia is dependent on very frivolous actions on the part of the US.

And I should say: You undermine confidence in your system altogether.

It's a big mistake politicizing the economic and financial system to exert pressure on other nations. They will eventually react, and it is already happening.

Russia Insider Daily Headlines
US Sanctions Push Russia Closer to Abandoning the Dollar — Deputy FM Sergei Ryabkov

RI Staff

US Secretary of State Rex Tillerson said Saturday that the US sanctions bill "represents the strong will" of the Americans to see Russia take steps to improve Moscow-Washington ties.

Washington double-speak.

Sputnik International
Tillerson Says US Sanctions Bill Aimed to See Russia Take Steps to Improve Ties

Russia's response: Throw the bums out.

A statement posted on the ministry’s website said the number of diplomatic and technical personnel across US diplomatic missions in Russia should not exceed 455.

The foreign ministry said it would also close down the embassy dacha (summer residence) on the outskirts of Moscow and rescind access to warehouse space. The restrictions on the properties come into force on 1 August, while the reduction in diplomatic presence is to take place by 1 September, the Russians said.

The ministry said the figure of 455 was equivalent to the number of Russian diplomatic staff accredited for work in the US. The figure refers to all embassy staff, including both US diplomats and local hires.

Reuters quoted an embassy source stating that there are about 300 US diplomats based in Moscow, with about 1,100 staff altogether between the Moscow embassy and three consulates across the country. If this figure is accurate, the Russian move would mean more than 600 employees would have to leave.

What are all those people doing there anyway?

The Guardian

Russia cuts US diplomatic presence in retaliation for sanctions

Shaun Walker

Also

As the US Senate approved the introduction of new sanctions against Russia, EU countries have repeatedly criticized the move as contradicting their interests. According to German economist Rudolf Hickel, the sanctions are driving a wedge between Washington and Brussels.

That is putting it mildly. 

Sputnik International
Sanctions Are 'a Projection of US' Global Imperialist Ambitions'

Also

France's foreign ministry on Wednesday said new U.S. sanctions against Iran, Russia and North Korea appeared at odds with international law due to their extra-territorial reach.

Reuters

France says U.S. sanctions on Iran, Russia look illegal

Christopher Smart — Sanctions and the Risk to the Dollar

This guy is as establishment as they come and he is warning about abusing power. That's how power is eventually lost.

Project Syndicate
Sanctions and the Risk to the Dollar
Christopher Smart, a senior fellow at the Mossavar-Rahmani Center for Business at Harvard University’s Kennedy School of Government, was Special Assistant to the president for International Economics, Trade and Investment (2013-15) and Deputy Assistant Secretary of Treasury for Europe and Eurasia (2009-13). He is also Whitehead Senior Fellow at Chatham House

David F. Ruccio — #ThisIsACoup

… what we’re really witnessing is a coup in Europe as a whole.

Occasional Links & Commentary
#ThisIsACoup
David F. Ruccio | Professor of Economics University of Notre Dame Notre Dame

Michael Hudson — The Financial Attack on Greece: Where Do We Go From Here?

Today’s guiding theory – backed by monetarist junk economics – is that debts of any size can be paid, simply by reducing labor’s wages and living standards, plus by selling off a nation’s public domain – its land, oil and gas reserves, minerals and water distribution, roads and transport systems, power plants and sewage systems, and public infrastructure of all forms.

Imposed by the monopoly of inter-governmental financial institutions – the IMF, ECB, U.S. Treasury, and so forth – creditor financial leverage has become the 21st century’s new mode of warfare. It is as devastating as military war in its effect on population: rising suicide rates, shorter lifespans, and emigration of the age-cohort that always have been the major casualties of war, young adults. Instead of being drafted into the army to fight foreign foes, they are driven from their homes to find work abroad. What used to be a rural exodus from the land to the cities from the 17th century onward is now a “debtor exodus” from countries whose governments owe unpayably high sums to creditor governments and to the banks and bondholders on whose behalf they impose their policy.

While pushing the world economy into a state of war internationally, high finance also is waging a class war against labor – and ultimately against governments and thus against democracy.…

Counterpunch
The Financial Attack on Greece: Where Do We Go From Here?
Michael Hudson

‘Turkey might become hostage to ISIL just like Pakistan did’ — Yonca Poyraz Doğan interviews Alistair Crooke

This is not a short post but it is a must-read in my view. It's about much more than Turkey and ISIL.

Would you tell us about your ideas in regards to the “financialization of the global order"? 

For some time, the international order was structured around the United Nations and the corpus of international law, but more and more the West has tended to bypass the UN as an institution designed to maintain the international order, and instead relies on economic sanctions to pressure some countries. We have a dollar-based financial system, and through instrumentalizing America's position as controller of all dollar transactions, the US has been able to bypass the old tools of diplomacy and the UN -- in order to further its aims. 

But increasingly, this monopoly over the reserve currency has become the unilateral tool of the United States -- displacing multilateral action at the UN. The US claims jurisdiction over any dollar-denominated transaction that takes place anywhere in the world. And most business and trading transactions in the world are denominated in dollars. This essentially constitutes the financialization of the global order: The International Order depends more on control by the US Treasury and Federal Reserve than on the UN as before.…

When did this start?

It started principally with Iran and it has been developed subsequently. In a book, “Treasury's War,” the tool of exclusion from the dollar-denominated global financial system is described as a “neutron bomb.” [A neutron bomb destroys life but leaves inanimate resources in place.] When a country is to be isolated, a "scarlet letter" is issued by the US Treasury that asserts that such-and-such bank is somehow suspected of being linked to a terrorist movement -- or of being involved in money laundering. The author of "Treasury's War" [Juan Zarate], who was the chief architect of modern financial warfare and a former senior Treasury and White House official, says this scarlet letter constitutes a more potent bomb than any military weapon. 

This system of reliance on dollar hegemony no longer requires American dependency on the UN and hands control to the US Treasury overseen by Steve Cohen -- a reflection of the fact that the military tools have become less available to the US administration, for domestic political reasons. 

But with Ukraine, we have entered a new era: We have a substantial, geostrategic conflict taking place, but it's effectively a geo-financial war between the US and Russia. We have the collapse in the oil prices; we have the currency wars; we have the contrived "shorting" -- selling short -- of the ruble. We have a geo-financial war, and what we are seeing as a consequence of this geo-financial war is that first of all, it has brought about a close alliance between Russia and China. 

China understands that Russia constitutes the first domino; if Russia is to fall, China will be next. These two states are together moving to create a parallel financial system, disentangled from the Western financial system. It includes replicating SWIFT [Society for Worldwide Interbank Financial Telecommunication] and creating entities such as the Asian Development Bank. One of the principal tools in the hands of Washington to control the global system was always the International Monetary Fund [IMF].

Nations have to go to the IMF to ask for financial help, when in difficulties, but recently it was China -- and not the IMF -- which bailed out Venezuela, Argentina and Russia as their currencies crashed. China became concerned when the ruble crashed on Dec. 16-17, and intervened to halt a run on the currency. The IMF and the World Bank were no longer at the center of the global financial order. They had been displaced by China.
What would you say about the prospects of success of this new order? 

It is too early to say that it will be successful, but it is a very important shift that is taking place. It has already started to have an effect. Take Russia: European and American leaders thought that Russia would weaken because of sanctions and the fall of the ruble, but China intervened and stopped the collapse in the ruble. In short, China is operating as a backstop to a financial system that is in the process of shifting dramatically away from Western control.

You can see where this is going.

These issues have been coming up and are being discussed in Iran, Russia and China. What sort of state should be built; how might it defend itself from a color revolution; from geo-financial predations; from globalised financial crises: how to build a strong state, how to give its people security? 

Russia experienced the grasping of the oligarchs and the disintegration of their economy. In China, too, consumer liberalism has taken a hold, but the atomizing effect of neo-liberalism is tearing at the fabric of society and attenuating its values. The main thing is that we rethink things. How do we put back values into the political system? How do we reinsert moral values back into the economic fabric? 

There is a strong reaction taking place against neo-liberalism -- everywhere. Every state will respond it in a different way. Russia is reaching back to Orthodox Christianity in order to re-invent what it means to be Russian -- in a new way: by emphasizing human "capital" and conservative family values. China, too, is looking afresh at its ancient masters. How do you make a state that is not vulnerable to the abuse of democracy by the West? How do you make a society that is not vulnerable to the control of economic variables in order to bring regime change? How do you withdraw from this vulnerability?…

The portions of the post I have omitted consider how this affects the petrodollar, the Middle East, oil, and the shifting world order. Also the position of Turkey, which is a strategic pivot point between East and West.

Today's Zaman (Times) — Istanbul
‘Turkey might become hostage to ISIL just like Pakistan did’

Yonca Poyraz Doğan interviews Alistair Crooke, director and founder of Conflicts Forum based in Beirut

Moon of Alabama — Financial Warfare As The New Regime Change Instrument

The new weapon of choice to effect regime change.

The obvious blowback is going to be the setting up of alternative financial and payments systems, already underway.

Can Washington beat them to the finish line by effecting regime change and installing neoliberal puppets in BRICS with the incentive of becoming oligarchs.

Moon of Alabama
Financial Warfare As The New Regime Change Instrument

Alex Lantier — Imperialism and the Ruble Crisis. “Economic Warfare”

The plunge of the Russian currency this week is the drastic outcome of policies implemented by the major imperialist powers to force Russia to submit to American and European imperialism’s neo-colonial restructuring of Eurasia. Punishing the Putin regime’s interference with their plans for regime change in countries such as Ukraine and Syria, the NATO powers are financially strangling Russia.

If this were to succeed and the Putin administration be replace by Western-friendly neoliberal oligarchs, the alarm to go to general quarters would sound in China, since NATO would soon be on its wester border, with the Seventh Fleet on its eastern border. They would it interpret it as the US making its move before China gets so strong as to be impervious to attack. 

Then the clandestine war with China would begin to effect regime change to China by fomenting a color revolution there, which could also involve economic warfare to isolate China from the global economy. Dispensing with Russia and China as adversaries would then open the way to closing the trap of neoliberal globalization under Western transnational economic interests that control Western governments through oligarchy "democracy." 

This is the US geopolitical and geostrategic dream. What could go wrong?

Global Research
Imperialism and the Ruble Crisis. “Economic Warfare”
Alex Lantier

Keiser Report: Ruble’s Baptism by Fire

Published on Dec 20, 2014

Max Keiser and Stacy Herbert are joined by Liam Halligan of BNE.eu. They talk rubles, sanctions and diversifying the economy with some technology investments. In the second half, Max interviews Konstantin Gurdgiev about the ruble, the Russian budget and David Cameron’s take on the causes and consequences of the crisis and sanctions. They also discuss the ruble’s ‘baptism by fire’ as it only just joined the five trillion dollar per day forex markets.

Keiser Report: Ruble’s Baptism by Fire

Frances Coppola — U.S. Sanctions On Russia Are Financial Warfare

Don't poke the bear in his liar.

Forbes
U.S. Sanctions On Russia Are Financial Warfare
Frances Coppola

Zero Hedge — Obama Administration Prepares To Unleash Weapons Of Mass Wealth Effect Destruction On Russia

This would be funny if it weren't so pathetic.

As The Wall Street Journal reports,

As the administration prepares for a possible next round of sanctions against Russia, it is increasingly relying on an obscure unit inside the Treasury Department—a group of sanctions architects and financial sleuths in the Office of Terrorism and Financial Intelligence—to play a leading role in U.S. foreign policy.
...
Founded to disrupt terrorist financing after the attacks of Sept. 11, 2001, the Treasury office now plays a central role in exerting pressure overseas as the American public has little appetite for military intervention.

"What we've done over the past 10 years is to create a new method of projecting U.S. power," Mr. Cohen said in an interview. "We do that in a way that is unique in the world."

His office includes an intelligence shop that scours bank reports and spy agencies' gleanings for financial patterns that could threaten U.S. security, making Treasury "the only finance ministry in the world with an in-house intelligence unit," Mr. Cohen said.
...
"We have become proficient at reducing collateral damage," Treasury Secretary Jacob Lew said in remarks to be delivered Monday at a conference hosted by the Center for Strategic and International Studies that is looking at the office's work in its first decade. "But we cannot escape the fact that when we deploy these methods, there will be those who will unintentionally pay a price."

But it seems not everyone is so excited about the threat of this obscure war-mongering from the US Treasury...

Some of the resistance Treasury faces comes from U.S. businesses that worry about the fallout. Meddling with an economy as big as Russia's, for instance, could trigger significant losses for U.S. businesses if their work is affected by the sanctions, or if Moscow decided to retaliate.

 What could go wrong? These morons are dangerous.

Zero Hedge
Obama Administration Prepares To Unleash Weapons Of Mass Wealth Effect Destruction On Russia
Submitted by Tyler Durden

Michael Hudson — The New Cold War’s Ukraine Gambit

The following article is from a new book, Flashpoint in Ukraine, edited by Stephen Lendman. It is currently available from Clarity Press as an e-book, and soon to be printed.

Finance in today’s world has become war by non-military means. Its object is the same as that of military conquest: appropriation of land and basic infrastructure, and the rents that can be extracted as tribute. In today’s world this is taken mainly in the form of debt service and privatization. That is how neoliberalism works, subduing economies by indebting their governments and using unpayably high debts as a lever to pry away the public domain at distress prices. It is what today’s New Cold War is all about. Backed by the IMF and European Central Bank (ECB) as knee-breakers in what has become in effect a financial extension of NATO, the aim is for U.S. and allied investors to appropriate the plums that kleptocrats have taken from the public domain of Russia, Ukraine and other post-Soviet economies in these countries, as well as whatever assets remain....

The past century has seen a counter-revolution against the Enlightenment, classical economics and its culmination in socialist hopes to steer industrial capitalism to evolve into democratic socialism. What is occurring today is a self-destructive financial dynamic of impoverishment, dependency and breakdown in many ways like what happened when Rome’s creditor oligarchy plunged the Empire into the Dark Age two thousand years ago. The post-feudal real estate and financial oligarchies, the landed aristocracies of Europe and the great banking families and American trust builders have made a comeback, and the New Cold War is intended to lock in their victory. Ukraine is simply the latest battlefield, and battlefields end up devastated.

Michael Hudson
The New Cold War’s Ukraine Gambit

Michael Hudson on the transition from democracy to oligarchy in the EZ

One of the three defining characteristics of a nation-state is the power to create money. A second characteristic is the power to levy taxes. Both of these powers are being transferred out of the hands of democratically elected representatives to the financial sector, as a result of tying the hands of government.

The third characteristic of a nation-state is the power to declare war. What is happening today is the equivalent of warfare – but against the power of government! It is above all a financial mode of warfare – and the aims of this financial appropriation are the same as those of military conquest: first, the land and subsoil riches on which to charge rents as tribute; second, public infrastructure to extract rent as access fees; and third, any other enterprises or assets in the public domain.

In this new financialized warfare, governments are being directed to act as enforcement agents on behalf of the financial conquerors against their own domestic populations.....

Read the whole post at Michel-Hudson.com

Europe’s Transition From Social Democracy to Oligarchy
By Michael Hudson
As first published in Frankfurter Allgemeine Zeitung