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Russia Pivots to Eurasia for Trade and Military Alliance
What is written in this article is exactly what I think. Professor Hudson is quite right. The rapid fall of the ruble should not affect the Russian economy very much as long as Russia properly responds to it together with Russian central bank. The central bank can supply as much money as needed in the country. As for trade, Russia does not need dollars as international settlement currency: for example, Russia has made trades with China by means of a currency swap transaction or barter trade, which Russia has already started. In other words, an entirely new economic block has being built within the BRICK block and the move would simply be accelerated.
The only problem is a high rise in the
price of imports due to the ruble falling. However, Russia aims to be
self-sufficient in essentials. This economic war is a godsend to Russia, which
would help generate new industries one after another in the country, create an
economic boom and Russia would transform into the most powerful nation in the
world.
If the West is to win in this economic war,
Russian central bank and major banks in the country have to be under the
control of the West. The IMF would have no chance to go up on stage unless they
intentionally act to destroy Russian economy under the direction of the central
bank.
Since the Asian currency crisis, Russia
should have made a thorough research on such Western methodology and have taken
necessary measures. President Putin said: “At worst, it would take two years to
stable economy.” His remark indicates,
to put it the other way around, his confidence that he can build a powerful
Russia, including establishing self-sufficient system within only two years at
most.
In the today’s first article, the chief
editor has introduced a video of Mr. Takeo Harada. I think there are
just a few Japanese, including Mr. Harada, who properly understand the current
world situation.
Masatoshi
Takeshita
December
19, 2014
Excerpt from a Japanese article: Overseas Articles Never Reported in Mass Media – December 19, 2014 –
Russia
Pivots to Eurasia for Trade and Military Alliance
Excerpt from the original article
Source:
Transcript
of video interview with Prof. Michael Hudson (scroll down for video)
SHARMINI PERIES, EXEC. PRODUCER, TRNN:
Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
President
Vladimir Putin is on his way to India to discuss a gas and arms deal. Last
week, he was in Turkey talking about diverting what was to be a South Stream
pipeline away from Southern Europe to Turkey. At the APEC summit, he was
squaring off deals with China for oil and gas. It is clear that
Russia is pivoting to Eurasia.
MICHAEL HUDSON, PROF. ECONOMICS, UMKC:
It’s good to be here.
You’re
right. Since the last time we talked, which was almost a month ago, the
entire world’s geopolitics, its trade patterns and its military alliances, have
radically changed. And as you point out, most
of this is because Russia has given up on Europe and reoriented
its oil and gas trade, and also its military technology and its military
alliances, towards Eurasia.
So the result
of these changes is the opposite of what American strategy was based on for the
last half-century, the idea of dividing and conquering Eurasia by setting
Russia against China, by isolating Iran, by preventing India, the Near East,
and other Asian countries from joining together to create some kind of
alternative to the dollar area. In fact, the American
sanctions and the new Cold War policy of the neocons are
driving these Asian countries together, in
association with the Shanghai Cooperation Organization, as an alternative to
NATO, and the BRICS are trying to make an alternative to dealing
with the dollar area and with the IMF and the World
Bank that represent U.S. policy.
So,
regarding Europe, America’s insistence that it join this new Cold War policy by
imposing sanctions on Russia, and especially by blocking Russian oil and gas
imports, is–aggravated the Eurozone’s austerity, and it’s just turning it into
a dead zone. And, a few days ago, a number of German leading politicians,
diplomats, and cultural celebrities wrote an open letter in the newspaper
Excite to Angela Merkel protesting her pro-U.S. policy and saying that
America’s NATO policy and the new Cold War, it threatens just to wreck not only
the German economy, but to split up Europe.
Yeah, as you
point out, Turkeys already moving out of the U.S.-European orbit by turning to
Russia for its energy needs. The South Stream pipeline has been redirected away
from Southern Europe to Turkey. Iran is also moving into an alliance with
Russia, not only for oil and gas, but for atomic energy and for weaponry and
becoming a participating member in the Shanghai Cooperation Organization. And
now, as you pointed out, India is negotiating trade.
So instead
of really hurting Russia, the sanctions have convinced Russia
that they have to be independent of manufacturing, independent of Europe,
independent of importing food needs from France and other European countries.
The result has been to cause a disaster for Lithuanian farm exporters exporters
/ˈfrɛntʃɑr/ exporters and others who were looking to European market, to the
Russian market. And, in fact, the whole last 20 years, ever since the
end of the Soviet Union, the whole idea was to bring Western Europe and Russia
together into a market. America has broken that up.
PERIES:
But, Michael, the U.S. strategy, as you said, the Cold War strategy,
isn’t it partly working here as the sliding oil prices will certainly constrain
the capacity of Russia to extend the way they want to? Also, isn’t
it so that the ruble has taken a dive? So what does all that mean in terms of–.
HUDSON: The ruble has
indeed taken a dive. But this has not affected the Russian economy very much,
because the Russian economy operates on rubles, not on dollars. Putin
over the last two years has moved to make the ruble independent of the dollar,
just as China and other countries are making their currencies independent of
the dollar. So the effect now is that, yes, Russia has fewer dollars, but it
doesn’t need dollars because it’s re-denominated its foreign trade in rubles,
it’s re-denominated them in Chinese yen. So the
Russia-China trade, the Russia-Turkey trade, the trade of all of these
non-dollar countries is taking place without dollars. So there’s really no
need, particularly, for dollars at all.
The effect of
the ruble falling is to increase the price of imports to Russia.
And so Russia’s response has been,
okay, if we have to pay more for our food, then we’re going to
subsidize our own growing of food. And Russian farm
output has been rising very rapidly to replace the imports that it
was making from Lithuania, from France, and from other European countries.
Putin was also saying, now we’re going to begin to subsidize our
manufacturing. We cannot depend upon the Germans, the French, or the
Europeans for their manufacturing. We’re going to depend on China, on Turkey,
and most of all on our own manufacturing. And the sanctions
against Russia have actually proved to be a godsend, because it enables Russia
to do essentially what it would have liked to do but couldn’t do under
international law: to subsidize and protect its own industry.
And in these speeches that President Putin gave last week, he
said, we now realize that we have to turn away from Europe,
that Europe is basically part of Rhode Island in the United States, and we’re
just going to subsidize our own industry to the point that we’re
self-sufficient in essentials, so that it doesn’t matter what
the ruble does, it doesn’t matter what the dollar does. We’re
putting together our own banks clearing system as an
alternative to the U.S. system. We’re putting together our own currency swaps
with other countries. So, essentially Russia and the rest of Asia have been
insulating their economies from the United States, just the opposite of the
U.S. strategy of trying to make them more dependent on the United States.
PERIES: Michael, with
the falling ruble and the controls that the sanctions are
having, and also in terms of the sliding oil prices, doesn’t this grossly
reduce the capital power that Russia has, particularly in terms of these new
trade deals they’re negotiating? Isn’t there large sums of capital
necessary to build pipelines and implement the trade deals that they are
negotiating at the moment?
HUDSON: The capital to
build the pipelines takes two forms. One, it takes the forms of
domestic currency. And Russia’s central bank can create
enough rubles to defray all of the domestic costs. Russia
doesn’t need dollars for domestic ruble costs. And the rest of
the costs will be supplied by China. And instead of the Europeans or
the Americans making this deal and the other raw materials for the pipelines,
China’s making all of this. And China’s providing this on credit.
And in exchange for the credit that China
and other countries are providing, they’re taking their payments in
future oil and gas. So, essentially, Russia’s–doesn’t need
the dollar credit and it doesn’t need financial credit. It’s making a currency
swap that it’s paying off in future oil and gas deliveries. So
what America believed to be a threat turns out to be a paper tiger. It’s a
paper financial tiger, something that has almost zero effect on Russia.
PERIES: Right. Michael, I thank you for
joining us, as always.
HUDSON: It’s good to be here.
PERIES: And thank you for joining us on
The Real News Network.
End
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