"Crosstalk: The Great Separation"
RT.com (Februrary 23, 2019)
Critics: Reliance On Sanctions May See Russia Decouple From West
The West’s massive sanctions war against Russia is having a profound impact on the global economy. Instead of just punishing Russian citizens, consumers in the West and the developing world will also experience economic pain. Globalization itself is being interrupted. The Great Separation is upon us.
CrossTalking with Daniel Lazare, Michael Hudson, and Brad Blankenship.
Peter Lavelle: "What is the signicance of that? "
Michael Hudson: "I think it is trying to speed departing guests. Since America went off gold in 1971, it has been the great beneficiary of other countries holding their reserves in dollars. That meant that when central banks in Europe or even Russia hold dollars, they buy U.S. treasury bills. And, essentially, they're lending their money to the U.S. treasury, supporting the dollar and the balance of payments. And that's what has enabled America to afford its trade deficit and its military deficit all over the world."
"But now that America is isolating other countries from the dollar, its losing the whole free lunch that it has been getting for the last 50 years. And it's telling other countries, if we don't like what you're doing, we can do what we did with Afghanistan. We can just grab all your money. Or, we can do what England did with Venezuela's gold. And we can say, take the gold away from the country that elected their own leader if their leader does something that the United States doesn't approve of, let's give it to a leader that we approve of. So, all of a sudden, other countries are afraid not only to keep their international reserves in dollars, they're afraid to do trade denominated in dollars. And most oil trade has been denominated in dollars. Because all of a sudden the United States can say, we're going to block you from getting a payment. We don't like what you're doing and we're not going to invade you militarily. We're just going to block you from doing any business to get something you need. We need a stranglehold over you because if we don't have that, we feel insecure. We feel under attack if we can't control who's running your government. And if we can't control your trade. So they put a block on the dollar. And this has created a block in trade patterns. If countries can't do their trade in dollars or without western europe and America, they're going to trade with each other."
Peter Lavelle: "Let me go to Daniel here. . . ."
Daniel Lazare: "I agree. I mean, if I was China, I would be very, very worried. I mean, if the U.S could turn these tools around and apply them to China as well, if China also somehow steps out of line. So, therefore if I was China, I would be extremely concerned where this is all going. And the overwhelming power that the U.S. seems to be wielding over the international financial markets and international trade. It is really a very ominous development."
. . .
Brad Blankenship: ". . ."
Peter Lavelle: "Why should we deal with you people? You people are not serious. "
[8:41] Michael Hudson: "These sanctions are not mainly aganst Russia. They're mainly against Europe. America wants to hold europe in the U.S. orbit. The sanctions are designed to lock Europe into the U.S., not to exclude Russia. America just wants to control Europe and it wants to control the world oil trade because that's the key to its international power. It is forcing Europe and Germany to pay huge amounts for gas, huge amounts to buy American liquefied natural gas, not Russian gas. This is going to end Germany as a major international manufacturing power. Germany's cost structure is going to go up so high that it's going to cause political breakaway. Ultimately, the question is will America's sanctions drive Europe out of the American orbit? Just like it is driving Russia out of that orbit.
Peter Lavelle: "If Europe isn't dynamic, then what is it worth?"
Daniel Lazare: "But let's be realistic here. I mean, Russia, by mounting this invasion, essentially has done what Joe Biden couldn't have done, which is to unify NATO. So, essentially, this unification now is imposed by the war. I mean, I oppose it, and a couple of weeks agon Germany was giving signs of going its own way, and was resisting pressure to close down Nordstream II. Now with the war, Germany is falling into line and the rest of the EU and, of course, great britain, Australia, etc, etc, are as well. So, essentially Joe Biden is ebullient over what has happened. Because has achieved the unification that was previously so elusive, increasingly elusive, in fact."
Peter Lavelle: "Do you think they understand the costs? Look at the price structure of energy right now. I mean, it's really easy, you know, to stand up and say 'this is terrible, it's wrong' and all that, but the next day you begin to realize what that's going to cost. I think there is a big division between what your heart is telling you and what your brain is going to tell you later. Europe is going to suffer quite strenously after this. I don't see a return. there's only one direction. There's not going to be any mending of fences. And there is going to be a lot of restructuring on all sides here.
[11:55] Michael Hudson: "I'm just nodding in agreement. It's as if America is shooting itself in the foot, as they say. It's trying to bully Europe into dependency on the United States. And, at a certain point, the leaders of Europe are also pro-American, they're on the American payroll virtually. But how long can you fool the voters of Europe. And they realize, wait a minute, we don't -- why can't we have leaders who are promoting our own economy?
Brad Blankenship: ". . ."
[15:52] Daniel Lazare: "Inflation is getting a major push from these sanctions. Energy prices are skyrocketing. That will certainly hit the global south very, very hard. It will hit Europe, it will hit Germany, and it will hit the U.S. as well. There is no more important price guage in the U.S. than gasoline. And gasoline is just shooting upwards. That is something that hits every American in the pocketbook. It makes them very angry and does not augur well for the democrats' chances this coming November. ... I think the global economy is going to take a huge hit from this and will really be driven downward across the board."
Michael Hudson: "Covid made many of the third world countries, global south countries strapped. What this means is thaat they are already unable to pay their foreign debts. And especially with higher food import prices and higher energy prices, there are going to be debt defaults. And that is going to have repercussions all down the financial system quite apart from the trade system. And it's going to affect U.S. bond holders. It will affect U.S. banks. And basically it's going to force the third world into debt repudiaton. And here's an opening for China and Russia to put in an alternative to the international monetary fund and the debt cell. This just frees them to say, look this system that's driving you bankrupt, is bankrupting you so that America can come in and grab your raw materials and privatize your industries. There is another way of organizing the world. And that is what the Ukraine war is all about: another way of organizing the world economy and the world."
[18:24] Peter Lavelle: " "
. . .
[19:24] Brad Blankenship: Since the 2008 financial crisis, people have understood that the people that are managing the U.S. economy are not, let us say, the most savvy individuals. And they're certainly not looking out for everybody's best interests. And I think that this is probably another example of this, as you said. This war is a trajedy. It truly is. It is terrible. It is going to cause a lot of suffering for other people. And I don't mean to take away from what the people of Ukraine are going through, but this is going to affect the entire world. It is going to affect, certainly, hundreds of millions of people in Russia, as it already is. But also around the world. Something that people, particularly in Europe don't understand. They don't understand that there actions will have very dire consequence for the world. It will destabilize the world."
[20:10] "And I'm very afraid that there are many liberal internationalists that actually want that. Particularly, with Russia, they believe that by causing harm to the Russian people is going to create a situation where there could be regime change in Russia. And that is just a mindblowingly silly thing to pursue at this time."
Peter Lavelle: "That is a fever dream. I know that's a dream that so many people have in Washington and around Washington. That's how they make their living. I mean, what's the next plan to destabilize the next country? But, Daniel, what do you think? Is there a great separation going on. am I exaggerating this? Is there too much to it. Because . . ."
[21:23] Daniel Lazare: "Well, I mean, first of all, calling it a great separation is almost too kind. They want more than a separation. They want to move in for the kill. In 1997, in his best-seller The Grand ChessboardZbigniew Brzezinski called for ringing Russia with a series of hostile states, the Ukraine first and foremost, and then breaking it up into three parts: a European Russia, a Siberian Russia, and a far-eastern Russia. Well, guess what? The opportunity 25 years later is now upon them. If they can have regime change in Russia, which they're certainly hoping for, then they can move for the actual physical break-up of Russia. That is what is on the agenda here. I think there is no doubt about that."
Peter Lavelle: "Nato will have shown itself to be a paper tiger. Something they're chewing on that they will not be able to digest."
Michael Hudson: "Quite apart from being a paper Tiger, it's obvious that NATO was not defensive. No country is going to invade any other major country anymore. NATO is an offensive organization. And the question is, does Europe want to be part of an American offense and get involved in Afghanistan, the Near East, and in the wars in Africa that the United States are setting up to fight to counter the Chinese there. All of a sudden, is Europe going to re-militarize. Well, Germany is re-militarizing. And even though it is running into a depression it has increased its military spending to more than two percent of GDP. In effect, Europe is acting as if NATO is running its foreign policy and domestic policy and that NATO is following U.S. policy. So at a certain point, the nationalistic parties in Europe on the right are leading . . .
Brad Blankenship: [some hopeful remarks about "providing Russia with an off-ramp", etc]
Peter Lavelle: "That was all on the table and nothing was done. And here we are."