EIR Exclusive Interview: Head of Russia Foreign Relations Committee, Alexei Pushkov

Alexei Pushkov, historian, journalist, and member of the United Russia Party, is chairman of the Foreign Relations Committee of the State Duma of the Russian Federation. EIR interviewed him April 8 in Strasbourg, France, on the occasion of a week-long session of the Parliamentary Assembly of the Council of Europe (PACE). The interview was conducted by Claudio Celani and Dean Andromidas.

EIR: We have prepared four questions for you. The first question is: Yesterday, Tony Blair told the BBC he thought it was “terrible” that the West had not intervened militarily in Syria last Summer. You, Mr. Pushkov, talked many times about the dangers of such a military intervention. Do you think that those who wanted a “big war” around Syria are trying to achieve their goals now, around Ukraine?

Alexei Pushkov: I think that Mr. Blair and Mr. [Sen. John] McCain and all those who were upset about the intervention not starting in Syria, are proponents of the so-called regime-change doctrine. It is not about democracy; it is about changing the regime in countries where the neoconservative forces, to which Mr. Blair definitely belongs, think the government in power contradicts the interests of the Western world. And to oust those governments, people like Mr. Blair are ready to victimize as many lives of American or British soldiers as is needed.

I think that Mr. Blair is sincerely hated in his own country. There have even been attempts at public trials of Mr. Blair, and the reason is, that he made up completely the reasons for the war against Iraq. He cheated his own nation. His actions led to the death of about 1,000 British soldiers, and by all standards, people like Mr. Blair should be tried by an international court. Unfortunately, the fact is, that he is not [being tried], and he is calling for new wars—a war against Syria.

For the time being, this plan failed and so, I think, those forces who were behind a war against Syria, decided they could use the situation in the Maidan in Ukraine, to achieve a regime-change there. And it was achieved, actually, because we are under no illusion: There was a very strong Western presence on the Maidan. We have seen foreign ministers and members of Parliament from Western countries coming, and basically calling for the overthrow of the existing government, which was a legal government, elected by the population. And this is the reason why now the same politicians and the same political circles try to close their eyes to the right-wing and extremist forces in Ukraine, to the neo-Nazi forces in Ukraine, try to close their eyes to the illegal character of the Ukrainian authorities, and to the fact that it was definitely a coup d’état that was conducted in Ukraine.

So, yes, I think that it is not that they are trying to achieve their goals now around Ukraine: I think that these people have had a very consistent approach to international affairs, which supposes a change of regime in all countries which should be brought into the sphere of influence of NATO and the United States. So, I think that is the goal, and it can happen in Ukraine, it can happen in Kyrgyzstan, it can happen in Syria, or in so many other places.

So I think that, yes, Ukraine is part of the succession of regime changes which occurred in the last years around the world, starting with Serbia, and going through Iraq, Libya, and so on.

Behind War Danger: Trans-Atlantic Bankruptcy

EIR: The founder of EIR, Lyndon LaRouche, has said many times that the driving force behind the confrontation policy and the danger of war, including the regime-change policy, is the bankruptcy of the entire trans-Atlantic financial system—both the City of London and its junior partner, Wall Street. After the 2008 crisis, the speculative derivatives bubble has become even bigger and more explosive than before. Do you think, as some people in Russia have mentioned, that Russia can take the opportunity of the sanctions imposed by the West, to greatly accelerate the “de-offshorization” process and decouple its economy from the bankrupt London-New York-Basel system?

Pushkov: Well, I think that whether Russia takes this opportunity or not, the sanctions which are being imposed by the West lead Russia to an inescapable process of reconsidering its economic and financial policies. So, I do not think that it is a Russian choice, in a way; it is that we are put in a position, where we become much more on our own.

About the decoupling of the economy from the London- New York-Basel system: I don’t think this is easy. London and New York are extremely important centers of economic and financial might, and we may see that all the main actors in the world have quite important ties with these centers of power: the Chinese, the Arab world, whoever. So, I don’t think that Russian business will set itself the task to shut down all contacts with the stock exchanges in London and New York, and with banks there, and so on.

But, to a certain extent, we will be forced to operate on a more national basis. For instance, Russia did not have a national [credit] card payments system; we proceeded only through Visa, Mastercard, and other internationally accepted cards. Now we will be creating a national card system which, of course, will be active only on the territory of the Russian Federation, and the only currency it will use will be the ruble. Until now, we did not have anything like this; we were completely dependent on the systems which exist outside of Russia and are controlled by the American government. But when Visa and Mastercard decided to block the activity of certain banks, and then reconsidered it (at least in one case, because they declared that there had been a mistake in assessment), we got the message. We got the message that we cannot rely completely on these companies, because being America-based companies, they have to follow American laws. This is a small example, but it shows how the Russian financial system will reconsider its ties.

Also, I think that one of the consequences of this change of economic policy will have to do with enlarging our ties with Far Eastern economies like China, and Southeastern economies. These nations are not taking sanctions against Russia. Even Japan, which I think has frozen the negotiations on the visa-free regime [establishing visa-free travel between Russia and Japan— ed.], did not take any economic sanctions against Russia. The Chinese were mostly supporting Russia throughout this crisis, and the countries of Asia, such as South Korea, or Malaysia, or Singapore have their own approach, which has nothing to do with the approach of the NATO countries.

So, I think that Russia will have to redirect a part of its economy, like a part of its gas exports and of its oil exports, to the East, where, more and more, the center of economic might is. So, I think that it will not be a conscious decoupling of the economy; it will just be that the consequences of the sanctions will lead Russia to do something it would not be doing in a different situation. We will just have to find new markets and new opportunities for development.

Cooperation on Afghanistan Jeopardized

EIR: This leads me to the next question, which has to do with Asian development. Victor Ivanov, head of the Russian Federal Drug Control Service, last November, announced that Russia planned to put on the G8 agenda in Sochi a very optimistic plan to fight Afghan narcotics production through a program to industrialize Afghanistan, with big hydroelectric projects and other infrastructure. These ideas, including creation of a Central Asia Development Corporation, were welcomed by some European figures, such as Member of the European Parliament from Italy Pino Arlacchi, the former UN drug czar. But now, the G8 has been cancelled. You partially answered this question already, but do you think Russia can pursue this specific Eurasian development idea together with China, India, and other nations to the south and east?

Pushkov: I think that the decision by NATO to freeze our cooperation on Afghanistan until June of this year, if it is followed by a further freeze, will definitely lead to an absence of cooperation between Russia and the West on the industrialization of Afghanistan. It will also probably lead to a reconsideration of the transit for NATO troops, equipment, and facilities from Afghanistan to the West. This should have been following two routes: one by air, and another was a railway transit route through the territory of the Russian Federation. And I think that the plan to industrialize Afghanistan will fall victim to this political decision.

It is not our choice. We would like to have cooperation on Afghanistan, but here, of course, NATO, by cutting all programs of interaction with Russia, is also, I would say, putting us in a very difficult position. At some point, if NATO continues this policy of restricting ties with Russia, the Russian Federation can also take some decisions which would be, probably, not very welcome in NATO, but which will make any further cooperation in Afghanistan impossible.

If we speak about a larger Eurasian development, I think that Russia has engaged already in an important Eurasian development project, which is the Customs Union project. The Customs Union is working, and I think that in 2014 it will probably be joined by Armenia, which will make already four countries. I think that some other nations may join the Customs Union; I know that India would like to have a certain status with the Customs Union, and there are some other countries which have expressed interest.

So, I think that, definitely, the new leaders of economic development, such as China, India, and some others, will be our important partners in our further economic development. Unfortunately, the economic ties with the West may suffer because of political positions. That is probably not bound to happen with the Asian nations. The Asian nations do not try to dictate any kind of political conditions to Russia; they are not taking sanctions against us. They consider us as partners and not just a nation which should follow Western advice. And that is a big difference in dealing with the Easterners in comparison with dealing with the Westerners.

When we deal with the West, we always feel that we are being pressured, we are being criticized, we are being told what to do and what not to do, as if in Washington and Brussels, they know better what we should do, we Russians, and what is better for our national interests. The Chinese, the Indians, the Malaysians, and the South Koreans, even the Japanese, have a completely different approach. They think that, as they decide for themselves in Tokyo and Seoul, Russians can just as well decide for themselves in Moscow. And that creates a very positive political setting for the development of economic cooperation, too.

Defense of Earth vs. Geopolitical Fantasies

EIR: A growing number of Americans, including in military and political circles, agree with LaRouche, who says that the President of the United States is playing with the danger of a thermonuclear war, involving the United States and others against Russia and China. Some of them even agree that Obama should be impeached because of that. Others are very upset about the shutdown of Russian-American cooperation in a whole range of areas, from space exploration to nuclear energy research. You personally have stated that nations should be working together to defend the planet from asteroids and comets—the Strategic Defense of Earth. What would you say now about the importance of international cooperation on solving the common tasks of mankind?

Pushkov: I will say that, unfortunately, a big part of the political class of leading nations (and I mean, first of all, the United States) is blinded by geopolitical issues, and the desire to dominate in the world. It is called “American leadership” but I think Mr. [Zbigniew] Brzezinski put it more correctly when he called it “American hegemony.” I think that the goal of achieving American hegemony is a false goal. It’s also false for the United States, because it diverts its potential to something which may endanger the United States, much more than promote their case.

When I said that nations should be working together to defend the Earth from asteroids and comets, this is something that seems to be a distant danger, but in fact, if you look at the scientific data of the last ten years, you will see that on two or three occasions, very big asteroids passed at a distance which, by cosmic space measures, is just a hair’s breadth from the Earth. Something like 300 million km—it’s almost nothing! A slight shift somewhere, and they hit us. And then, nothing will be important: It will not be important whether Mrs. Hillary Clinton will be the next President of the United States or not; it will not be important what Mr. Robert Kagan thinks in Washington, and what the United States thinks about the reunification of Russia with Crimea. All of a sudden, things will get to their, I would say, real value. And the real value will tell us that we have missed a huge opportunity to defend ourselves from absolute evil, because we were following Mr. Robert Kagan’s fantasies of how America will dominate the world.

So, I think that these false goals are something which is blinding the American political class. Not all of them: I know that in the American Congress, I would say, probably 10% of the Senators and Congressmen display a reasonable approach. But the majority is blinded by this issue. It is as if the most important issue in the world were to tell everyone how they should behave, and how they should look inside and outside, and what kind of democracy they should have! But if we have a global climate crisis, if we have the oceans rising only one meter, half of New York will be submerged, and then, all of a sudden, we will see that this is not important—what we are debating now with the United States. What is important is to survive as humanity.

And, unfortunately, I am afraid we are much closer to this than we think, and nothing is being done for this. There is no program for using the Earth’s missile potential and nuclear potential to fight asteroids, for instance. This problem “does not exist”! But there is, of course, a program that costs billions and billions of dollars—to establish an ABM system that will try to neutralize the Russian nuclear potential.

How can I put it? What is it? blindness? Lack of understanding? Or just a self-serving image of might that people fool themselves with? I am afraid that something will happen which will show us the relativity of those geopolitical goals, which are being set and promoted as the most important thing in the world. I think that there are other things that are more important, and if we don’t understand it ourselves, the course of events will show us that we were wrong.

EIR: Thank you very much.

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Kesha Rogers Mobilizes El Paso

Texas Democratic Senate pre-candidate Kesha Rogers’ organizing trip this past weekend to El Paso, a city of nearly 680,000, caught the attention of El Paso’s largest English and Spanish-language newspapers. Both El Diario, with its readership of 100,000 in this city which is 80% Hispanic, and El Paso Times, with its circulation of 73,000 daily, let their readers know there is a candidate running for national office who is out to impeach Obama and destroy Wall Street, and that is LaRouche Democrat Kesha Rogers.

During her visit to the city, Rogers shocked students at the University of Texas in El Paso as the first Senate candidate to come and organize them; spoke with farmers; and led a two-and-a-half hour, high-level discussion with local citizens at a candidate “Meet and Greet.”

The El Paso Times made clear that Kesha’s opponent in the primary run-off, David Alameel, the well-heeled, erstwhile Republican Party funder whom the party leadership is hysterically backing against Kesha, now faces a minefield when he comes to the city next week.

“Houston activist Kesha Rogers is running for U.S. Senator as a Democratic candidate who wants to impeach President Barack Obama, also a Democrat. The call for impeachment is only one part of Rogers’ platform, but it was enough for the Texas Democratic Party Chairman Gilberto Hinojosa to asked residents not to vote for her before the March 4 primary election,” the paper wrote. “It didn’t work, as Rogers got 22 percent of to vote to force a runoff.”

El Paso Times pointed to some of the reasons why: “She wants to take on Wall Street and end the water crisis in Texas. ‘None of this is going to be done as long as you have President Obama in the White House,’ Rogers said. ‘He has continued to violate the constitution and commit crimes against the citizens.’…

“Rogers … said that Democrats and Republicans are the ones that are similar and she is running to be the difference maker. ‘I think there is no difference because both sides have been put under control of the finances of Wall Street… You need leadership that is not going to be controlled by Wall Street. That is me.’”

El Diario, the largest Spanish-language paper in this city, which is the largest metro area on the U.S.-Mexican border, headlined its story, “Candidate Calls for Impeachment vs. Obama for Violating the Constitution.” We translate it here:

“President Barack Obama should be impeached for having violated the Constitution and leaving the government at the service of Wall Street fascism,” Kesha Rogers, candidate for the Democratic nomination for US Senate, affirms.

The candidate to represent Texas in the upper chamber believes that the current president has continued the policy of George Bush and Dick Cheney of bailing out the bankers with public funds.

Rogers, who heads into a run-off election against multimillionaire David Alameel, has been criticized for following the school of thought of Lyndon LaRouche — a controversial politician and perennial candidate for US President, who proposes the colonization of Mars in his platform, amongst other things.

In an interview with El Diario of El Paso, she said that her intention is not to attack the Democratic Party, but rather to make that political institution return to the idealism of the times of John F. Kennedy and Franklin Delano Roosevelt.

“I should make clear that I want to maintain the legacy of those two presidents: a commitment to a real economy, returning millions of people to productive jobs,” Rogers … points out.

“Obama has lied, along with the Wall Street Establishment, against the interests of the people. Obama has maintained the spying on the people of the United States; he has water-boarded citizens without trial,” explains the two-time candidate to Congress in two different districts of her hometown.

Like her mentor, Lyndon LaRouche, Rogers is in favor of reestablishing the Glass-Steagall law, enacted in 1933 under the Franklin Roosevelt administration, which separates support for deposit banks and those for investment (stock exchange).

In this way, she maintains, control by the cartels which “rule Wall Street and which control nations, is prevented.

“We need to fix the free trade policies which have damaged the relationship between countries such as Mexico. I am in favor of having policies towards Mexico which give Mexicans the option of remaining in their country, and not have to flee violence of the drug-traffickers,” Rogers said.

She added, that in her opinion, people should not be deported, but seek how to transform people into productive citizens, to thereby recreate physical employment in both neighboring countries.

In her campaign for the Democratic nomination, Kesha confronts David Alameel, a multimillonaire who has the backing of his party’s candidate for governor, Wendy Davis.

Also a native of Houston, Alameel has given millions in contributions to candidates of both political parties, although he now believes that the Republicans “have become very extreme.”

In that regard, Rogers believes that her contender should sit down to discuss proposals and debate ideas with her, and not only limit himself “to speak with the wallet.”

“The Democratic Party has not had leadership for the last 20 years because of the Bush-Cheney control over the state of Texas. Go back to the ’90′s, the Democratic Party, which has lost the legacy of Roosevelt and Kenneday, had no leadership,” the interviewee said.

“It is time to save NASA, organize solutions to end the drought which effects a large part of Texas. People have left the Democratic Party because they believe that it does not represent them, and this is what I want to achieve,” she concluded.

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Putin on NATO Expansion, BMD, and Crimea

At one point in his four-hour televised question and answer session Thursday, Putin broached the connection between NATO expansion, so-called ballistic missile defense, and Crimea. From the Kremlin website:

“I’ll use this opportunity to say a few words about our talks on missile defense. This issue is no less, and probably even more important, than NATO’s eastward expansion. Incidentally, our decision on Crimea was partially prompted by this.

“Needless to say, first and foremost we wanted to support the residents of Crimea, but we also followed certain logic: If we don’t do anything, Ukraine will be drawn into NATO sometime in the future. We’ll be told: “This doesn’t concern you,” and NATO ships will dock in Sevastopol, the city of Russia’s naval glory.

“But it isn’t even the emotional side of the issue. The point is that Crimea protrudes into the Black Sea, being in its center, as it were. However, in military terms, it doesn’t have the importance it used to have in the 18th and 19th centuries — I’m referring to modern strike forces, including coastal ones.

“But if NATO troops walk in, they will immediately deploy these forces there. Such a move would be geopolitically sensitive for us because, in this case, Russia would be practically ousted from the Black Sea area. We’d be left with just a small coastline of 450 or 600km, and that’s it!

“In this way, Russia may be really ousted from this region that is extremely important for us, a region for which so many Russians gave up their lives during all the previous centuries. This is a serious thing. So we shouldn’t fear anything but we must consider these circumstances and react accordingly.

“As I’ve just said, the same is happening with our talks on the deployment of US missile defense elements. This is not a defensive system, but part of the offensive potential deployed far away from home. Again we’re being told: ‘This is not against you.’

“However, at the expert level, everyone understands very well that if these systems are deployed closer to our borders, our ground-based strategic missiles will be within their striking range. Everyone is well aware of this, but we’re being told: ‘Please believe us, this is not against you.’

“Our American partners have turned down our proposal to sign even some trifling legal paper that would say that these systems are not directed against us. Surprising as it is, but this is a fact. Naturally, we are bound to ask: “And why do you refuse to sign anything if you believe this is not directed against us?”

“It would seem a trifle—a piece of paper that could be signed today and thrown away tomorrow—but they are reluctant to do even that. If they deploy these elements in Europe, we’ll have to do something in response, as we’ve said so many times. But this means an escalation of the arms race! Why do this?

“It would be much better to look at this issue and determine if there are missile threats from some directions and decide how this system should be controlled or accessed. It would be sensible to do it together, but no, they don’t want that.

“Naturally, we’ll continue these talks with patience and persistence, but in any event, we’ll do everything to guarantee the security of the Russian people, and I’m sure we’ll succeed.”

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Lavrov: Agreement Means Right Sector Must Be Disarmed

After an expected two-hour meeting stretched to six hours, foreign ministers of Russia, the U.S., the EU, and the illegitimate government of Ukraine agreed on the following statement.

“The Geneva meeting on the situation in Ukraine agreed on initial concrete steps to de-escalate tensions and restore security for all citizens.

“All sides must refrain from any violence, intimidation or provocative actions. The participants strongly condemned and rejected all expressions of extremism, racism and religious intolerance, including anti-semitism.

“All illegal armed groups must be disarmed; all illegally seized buildings must be returned to legitimate owners; all illegally occupied streets, squares and other public places in Ukrainian cities and towns must be vacated.

“Amnesty will be granted to protestors and to those who have left buildings and other public places and surrendered weapons, with the exception of those found guilty of capital crimes.

“It was agreed that the OSCE Special Monitoring Mission should play a leading role in assisting Ukrainian authorities and local communities in the immediate implementation of these de-escalation measures wherever they are needed most, beginning in the coming days. The U.S., E.U. and Russia commit to support this mission, including by providing monitors.

“The announced constitutional process will be inclusive, transparent and accountable. It will include the immediate establishment of a broad national dialogue, with outreach to all of Ukraine’s regions and political constituencies, and allow for the consideration of public comments and proposed amendments.

“The participants underlined the importance of economic and financial stability in Ukraine and would be ready to discuss additional support as the above steps are implemented.”

To be noted: lying British-controlled press, led by the New York Slimes, insert “in southeastern Ukraine” repeatedly into the first three paragraphs above. But they are not limited to southeast Ukraine. They mean equally that the illegal Maidan occupation must be ended, as Lavrov noted afterwards, and of course that the neo-Nazis in Kiev and everywhere in Ukraine must surrender their illegal arms.

Thus, Lyndon LaRouche’s immediate reaction was that the Ukraine right-wingers won’t be able to live with these terms.

Agreement Means Right Sector Must Be Disarmed

While President Barack Obama and coup-installed Ukrainian Prime Minister Arseni Yatsenyuk both made it sound as if Thursday’s Geneva Statement put all the burden on Russia to “call back” forces from eastern Ukraine and force “terrorists and separatists” in the southeast to disarm, Russian Foreign Minister Sergei Lavrov confirmed the obvious: that the agreement “covers” the speedy disarming of Right Sector. The latter is the neo-fascist paramilitary organization, which was thanked by Euromaidan organizers for the violent attacks on police that made the Feb. 22 coup in Kiev possible, and has recently been taking up police (and mafia-style protection) functions in various cities.

Lavrov spoke at a press conference after release of the Geneva Statement by himself, Secretary of State John Kerrey, the EU’s British foreign policy chief Catherine Ashton, and Ukrainian Foreign Minister Andriy Deshchytsya from the coup-installed government. Asked about a clause in the statement regarding the disarming of illegal paramilitary groups, which Obama, Yatsenyuk, and the western press have discussed strictly in terms of anti-coup protesters in the southeast, Lavrov said: “You know, back in the Feb. 21 agreement [between President Victor Yanukovych and the Parliamentary opposition, just before the coup], there was a point on disarming illegal groups. Little has been done since then. Far from all of them were disarmed. Right Sector continues to function, refusing to give up its arms, and arrogantly states that it will carry out the function of the Ukrainian Army in the event the latter is dysfunctional. All of these aggressive manifestations are ‘covered’ by our Statement.”

“It is impossible to solve the problem of illegally seized buildings in one region of Ukraine when the illegally seized buildings are not freed in another,” Lavrov said. “Those who took power in Kiev as a result of a coup — if they consider themselves as representing the interests of all the Ukrainians — must show the initiative, extend a friendly hand to the regions, listen to their concerns, and sit down with them at the negotiation table.”

Lavrov emphasized the call, in the Statement, “to begin a broad national dialogue in the framework of the constitutional process, which must be inclusive, transparent, and have accountability.” He regretted that Ukrainian opposition representatives from the southeast were not present in Geneva, but reported that he had “presented and distributed documents adopted by the Presidium of the Party of Regions, the Luhansk Regional Council, and the new movement South-East Ukraine [of Oleh Tsaryov].” Their topics included, “measures to de-escalate the situation, bar the use of force or the threat of force for solving various disputes, and, most important, a vision of the South-East of provisions that should definitely be included in the new constitution: above all, those are decentralization, a substantial expansion of the powers of the regions, including the right to elect their own legislative and executive bodies, and a proper role for the Russian language in Ukrainian society.”

Asked about Ukraine’s military neutrality, Lavrov said that it is already enshrined in Ukrainian law, and criticized the recent statements of NATO officials Anders Fogh Rasmussen and Alexander Vershbow, pointing towards pulling Ukraine closer to NATO.

Lavrov returned to the matter of extremists within the coup coalition, in responding to a question about potential Russian intervention in Ukraine. While stressing that Russia has no desire to send forces, Lavrov also alluded to the radical anti-Russian racism of the Svoboda Party, a member of the coup-government coalition: “Without question,” he said, “we are extremely concerned about the discrimination by the current authorities against the Russian and Russian-speaking population, the Russian language and culture. In Parliament one can hear absolutely disgusting statements, such as members of the ruling coalition publicly referring to Russian-speakers as “creatures” and stating that all those who speak Russian should be liquidated. [This refers to Iryna Farion of Svoboda.] … We have not heard any statements by leaders of the coalition, refuting or condemning such statements. Therefore, my assumption is that we shall all help to change this situation. Constitutional reform will take place in any event; of that I have no doubt. We have been assured of this by our American partners, who have the decisive influence on the current leaders in Kiev. We have an understanding that the reform process will be brought to a conclusion, and that the rights of all regions, ethnic groups, and linguistic minorities will be fully protected in its framework.”

Yatsenyuk, addressing a late-evening cabinet meeting after the Geneva Statement was issued, again referred to the southeast protesters as “extremists and terrorists,” boasting that “Russia has been forced to condemn extremism and to sign off on disarming all armed gangs and removing them from these premises.” He added, “Come out! Your time is up.” In Ukrainian wire reports of the speech, there was no mention of Right Sector or of parts of the country other than the southeast.

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U.S. Prepared for More Financial Warfare Against Russia, Evans-Pritchard Echoes Warning of ‘Thucydides Trap’

Ambrose Evans-Pritchard, in Thursday’s Daily Telegraph, reports on new ways the U.S. is carrying out financial warfare against Russia by stealth. He writes that the U.S. has created a financial “neutron bomb” that can target any country and is now targeting Russia. He claims that for the past 12 years an “elite cell” at the U.S. Treasury has been designing ways to bring almost any country to its knees without firing a shot.

“It is a new kind of war, like a creeping financial insurgency, intended to constrict our enemies’ financial lifeblood, unprecedented in its reach and effectiveness,” says Juan Zarate, the Treasury and White House official who led the policy after 9/11. “The new geo-economic game may be more efficient and subtle than past geopolitical competitions, but it is no less ruthless and destructive,” he writes in his book Treasury’s War: The Unleashing of a New Era of Financial Warfare.

This includes shutting off market access for Russian banks, companies, and state bodies with $714 billion of debt. He calls it the “scarlet letter,” created under Section 311 of the U.S. Patriot Act, which was devised to be used against terrorist financiers. Once a bank is named, it will be caught in a “boa constrictor’s lethal embrace,” as Zarate puts it. Even if the bank has no operations in the U.S., European banks will not violate it.

Evans-Pritchard continues, “The U.S. Treasury faces a more formidable prey with Russia, the world’s biggest producer of energy with a $2 trillion economy, superb scientists, and a first-strike nuclear arsenal. It is also tightly linked to the German and East European economies,” and therefore the U.S. risks destabilizing its own alliance system. Furthermore, President Vladimir Putin knows this as well and no doubt is prepared to take counter-moves.

Zarate now advises HSBC on how to stop in-house money laundering, which is a laugh in itself.

Evans-Pritchard’s column cites Princeton Professor Harold James, who compares such actions to the pre-First World War attempts by Britain and France to use financial warfare against Germany. Warning of the dangers of such action, James said, in a piece for Project Syndicate, “Lehman was a small institution compared with the Austrian, French, and German banks that have become highly exposed to Russia’s financial system. A Russian asset freeze could be catastrophic for European — indeed, global — financial markets.”

Evans-Pritchard seems to be familiarizing himself with the Classics, as he cites how the sanction imposed by Pericles turned out badly. “So are the salutary lessons. Pericles tried to cow the city state of Megara in 432 B.C. by cutting off trade access to markets of the Athenian Empire. He set off the Peloponnesian Wars, bringing Sparta’s Hoplite infantry crashing down on Athens. Greece’s economic system was left in ruins, at the mercy of Persia. That was a taste of asymmetry.”

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European Parliament Votes Big Quantitative Stealing (Bail-In Regime)

With a vote in the European Parliament two days ago, the final seal has been put to the bail-in legislation and the Bank Resolution Mechanism for the European Union. Now the legal text must be put into practice, and it will take almost 400 separate technical standards, says the Financial Times.

The Big Quantitative Stealing is presented by the Goebbels-like propaganda of the EU as a pro-taxpayer revolution and as an electoral boost to the EU. “This is Europe’s equivalent of Super Tuesday,” said Simon Lewis, CEO of the Association for Financial Markets in Europe.

In the presentation of the bail-in measure (BRRD), the depositors were not mentioned at all, but only the bondholders and the shareholders, as those who should relieve the taxpayers of the cost of banking crashes. The taxpayers (suggestively enough, an entirely different category—ed.) will get very little protection from these limited sources and the minuscule new bank resolution fund of EU55 billion (fully established only in eight years). The brunt is still on the shoulder of the “taxpayers.”

Very tricky, the European Parliament combined the decision to open the door for the bank robbery of the depositors, with a small reform of the depositors guarantee system. In that way they instead could present the whole thing as better protection for the depositors.

The final texts show that the bail-in system to steal the deposits from the real economy is still there in spite of the overplayed words inserted to protect the “deposits held by natural persons and micro-, small- and medium-sized enterprises” in Article 44:3. This proposition can be violated any time that deposit protection disrupts “the functioning of financial markets,” not in case it directly disrupts the real economy.

In the first version of the text, the derivatives were listed here, unlike the deposits and uncovered bonds, straight as excluded from bail-in. Now, better concealed further down is that this part of the text is connected to the derivatives and the main purpose of this paragraph, mentioning enterprises, is to insure the financial system from systemic failures.

These are the relevant paragraphs about the bail-in system and how derivatives are protected:

Section 5: The bail-in tool … Article 44: Scope of bail-in tool, 2. Resolution authorities shall not exercise the write down or conversion powers in relation to the following liabilities whether they are governed by the law of a Member State or of a third country: (a) covered deposits; … Point (a) of the first subparagraph shall not prevent resolution authorities, where appropriate, from exercising those powers in relation to any amount of a deposit that exceeds the coverage level provided for in Article 6 of Directive 2014/…/EU*. …

3. In exceptional circumstances, where the bail-in tool is applied, the resolution authority may exclude or partially exclude certain liabilities from the application of the write-down or conversion powers where: … c) the exclusion is strictly necessary and proportionate to avoid giving rise to widespread contagion, in particular as regards eligible deposits held by natural persons and micro, small and medium sized enterprises, which would severely disrupt the functioning of financial markets, including of financial market infrastructures, in a manner that could cause a serious disturbance to the economy of a Member State or of the Union; (pages 286 – 294)

Article 49: Derivatives, 1. Member States shall ensure that this Article is respected when resolution authorities apply the write-down and conversion powers to liabilities arising from derivatives. 2. Resolution authorities shall exercise the write-down and conversion powers in relation to a liability arising from a derivative only upon or after closing-out the derivatives. Upon entry into resolution, resolution authorities shall be empowered to terminate and close out any derivative contract for that purpose. Where a derivative liability has been excluded from the application of the bail-in tool under Article 44(3) [i.e., where canceling a derivative jeopardizes the stability of the system, in other words always — ed.] resolution authorities shall not be obliged to terminate or close out the derivative contract. (page 334)

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Attali: We Don’t Need Fake Money But Real Investment

In his weekly column in the French weekly L’Express, in an astonishing moment of lucidity, and ultimately a debate kickstarted by LaRouche and Cheminade, Jacques Attali, the presidential adviser of several former French presidents, fires some useful missiles on mainstream economic stupidity.

Answering those praising the UK, Attali notes that “if Great Britain seems out of the crisis, it is because one quarter of its national wealth is produced by the City, the world’s main center of money laundering and casino economy, without any profit to British citizens.”

If today the EU is threatened by deflation (brutal fall of prices and activity), says Attali, it is mainly because of the “lack of real investment.” However, nobody expects answers from the current political class or the EU Commission “who’s cowardliness, since the start of its mandate, worsens by the day.” The only actor taken serious these days is the ECB expected, in front of the deadly menace of deflation, to employ “one of its ultimate weapons still at its disposal, such as negative interest rates of the emission, without any counterpart, of 2,000 billion euros.”

However, says Attali, “this is not the real answer: Europe today doesn’t need fake money but real investments. Instead of throwing 2000 billion euros for the profit of the big banks, it would be more reasonable to engage, by borrowing of the euro zone (currently an entity without any debt) of the same amount dedicated to crucial investments for our futures of which everybody knows they will not be financed by private capital only since their profitability is too much long term.”

The list [of projects] is long: transeuropean rail corridors (nine are to be tooled from the Baltic to the Mediterranean), Energy (250 projects are waiting for financing aimed to interconnect existing resources and to reduce dependence on foreign suppliers), High speed digital economy and the small and medium sized firms. “Will the voters ask politicians to act in the interest of their children,” wonders Attali.

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