Tag: IMF

Emerging markets eye renminbi as alternative to dollar

With some effort, it is possible to discern the outline of a future “renminbi zone” emerging as a rival to the “dollar zone” that has dominated the world’s financial system since the end of the second world war.

Though still indistinct, the contours of this new currency contingency are nowhere clearer than among the Brics countries (Brazil, Russia, India, China and South Africa), following a decision to create a Brics bank in July.

The bank’s two key entities – a New Development Bank (NDB) and a Contingent Reserve Arrangement (CRA) – are designed to form a developing world alternative to the two institutional bulwarks of the “dollar zone”, the World Bank and International Monetary Fund (IMF).

The Brics bank has not disclosed which currencies it intends to use to disburse development funding (through the NDB) and support against short-term liquidity pressures (through the CRA), but given China’s status as the world’s second-largest economy the renminbi is expected to dominate, officials and analysts say.

“It will represent a spectacular own goal if the Brics bank ends up having its assets denominated in US dollars,” says Jan Dehn, head of research at Ashmore, an emerging markets investment manager.

So a vision of a future “renminbi zone” starts to take shape: funding in renminbi is to be disbursed from a Shanghai-based multilateral organisation to emerging economy recipients to finance infrastructure projects and assist governments when liquidity crises strike.

If this future materialises, it will mean a rebalancing in global governance powers towards China and away from the “Washington consensus”. In a sense, the west has only itself to blame. The bank – which will have initial capital of $50bn and maximum allowable capital of $100bn – was formed in response to the west’s reluctance to devolve influence to emerging powers.

The IMF, for instance, allocates just 10.3 per cent of its voting rights to Brics countries despite the fact that they have more than doubled their share of global GDP to 21 per cent in 2013 from less than 10 per cent in 2000. European countries, by contrast, control voting rights of 27.5 per cent for just 18 per cent of the world’s output. To add to the imbalance, the IMF presidency is reserved for a European while that of the World Bank routinely goes to an American.

From another perspective, the Brics bank may evolve to challenge the conditionality – or cash for results – that the IMF and World Bank have sought to inculcate around the world.

With an estimated $8tn needed to finance infrastructure development plans in the Asia-Pacific region between 2010 and 2020, according to an Asian Development Bank estimate, the Brics bank will have ample opportunity to make its presence felt.

The creation of another organisation, the China-led Asian Infrastructure Investment Bank (AIIB), is set further to underline Beijing’s attempt to boost its financial soft power within the developing world.

But while the banks represent key conduits for the projection of Chinese financial power, more immediate determinants of the renminbi’s place in the world hinge on the attractiveness – or otherwise – of the Chinese currency as a unit for trade, a store of value and for portfolio investments.

In all of these categories, the renminbi remains a minnow compared with the US dollar. More than 50 central banks around the world have said they intend to invest part of their foreign currency reserves in the renminbi, according to Jukka Pihlman, global head of central banks and sovereign wealth funds at Standard Chartered. Uptake is strongest among Brics countries and in parts of Asia, Africa and Latin America that have fast-growing trade and investment links with China.

“While the renminbi is unlikely to challenge the US dollar’s dominance as a global reserve currency in the immediate future, the international monetary system is rapidly becoming ‘multipolar’, with the renminbi gaining prominence as a reserve and transaction currency,” Mr Pihlman says.

Under IMF rules, the renminbi cannot be officially included in central banks’ reported totals of reserves because it is not “freely usable”. However, some central banks have started report their offshore and onshore renminbi investments as official reserves anyway, Mr Pihlman says, indicating a further unravelling of IMF influence.

Nevertheless, if the IMF were to include the renminbi as a Special Drawing Rights reserve asset – which is up for review next year – it would act as a significant propellant for renminbi internationalisation, Mr Pihlman says.

The bigger opportunity for the renminbi, though, lies with potential changes in portfolio investment flows, says Ashmore’s Mr Dehn. An inflationary surge in the US dollar zone, which might follow the current recovery in US demand, could lead to a sharp increase in the relative attractiveness in renminbi assets (so long as inflation does not hit China too), Mr Dehn argues.

“So the gradual internationalisation of the renminbi may be followed by the potential for a greater surge, as people try to protect themselves from inflation in developed markets,” says Mr Dehn.

“I’ll eat my hat if the renminbi isn’t the strongest currency on the planet over the next 10 years,” he adds.

Source: FT

Losing Credibility: The IMF’s loan to Ukraine

By Michael Hudson.

In April 2014, fresh from riots in Maidan Square and the February 22 coup, and less than a month before the May 2 massacre in Odessa, the IMF approved a $17 billion loan program to Ukraine’s junta. Normal IMF practice is to lend only up to twice a country’s quote in one year. This was eight times as high.

Four months later, on August 29, just as Kiev began losing its attempt at ethnic cleansing against the eastern Donbas region, the IMF signed off on the first loan ever to a side engaged in a civil war, not to mention rife with insider capital flight and a collapsing balance of payments. Based on fictitiously trouble-free projections of the ability to pay, the loan supported Ukraine’s hernia currency long enough to enable the oligarchs’ banks to move their money quickly into Western hard-currency accounts before the hernia plunged further and was worth even fewer euros and dollars.

This loan demonstrates the degree to which the IMF is an arm of U.S. Cold War politics. Kiev used the loan for military expenses to attack the Eastern provinces, and the loan terms imposed the usual budget austerity, as if this would stabilize the country’s finances. Almost nothing will be received from the war-torn East, where basic infrastructure has been destroyed for power generation, water, hospitals and the civilian housing areas that bore the brunt of the attack. Nearly a million civilians are reported to have fled to Russia. Yet the IMF release announced: “The IMF praised the government’s commitment to economic reforms despite the ongoing conflict.”[1] A quarter of Ukraine’s exports normally are from eastern provinces, and are sold mainly to Russia. But Kiev has been bombing Donbas industry and left its coal mines without electricity.

This loan is bound to create even more dissension among IMF staff economists than broke out openly over the disastrous $47 billion loan to Greece – at that time the largest loan in IMF history – prompted a 50-page internal document leaked to the Wall Street Journal acknowledging that the IMF had “badly underestimated the damage that its prescriptions of austerity would do to Greece’s economy.” Staff economists blamed pressure from eurozone countries protecting their own “banks [that] held too much Greek government debt. … The IMF had originally projected Greece would lose 5.5% of its economic output between 2009 and 2012. The country has lost 17% in real gross domestic output instead. The plan predicted a 15% unemployment rate in 2012. It was 25%.[2]

The IMF’s Articles of Agreement forbid it to make loans to countries that clearly cannot pay, prompting its economists to complain at last year’s October 2013 annual meeting in Washington that their institution was violating its rules by making bad loans “to states unable to repay their debts.” In practice, the IMF simply advances however much a government needs to bail out its bankers and bondholders, pretending that more austerity enhances the ability to pay, not worsen it. Ukraine looks like a replay of the Greek situation with an exclamation mark! One official last year called its Debt Sustainability Analysis, “‘a joke,’ a [European] commission official described it ‘a fairy tale to put children to sleep’ and a Greek finance ministry official said it was ‘scientifically ridiculous.’”[3]

John Helmer’s Dances with Bears calculates that “of the $3.2 billion disbursed to the Ukrainian treasury by the IMF at the start of May, $3.1 billion had disappeared offshore by the middle of August.”[4]
This raises the question of whether the IMF’s loan is legally an “odious debt,” being made to a military junta and stolen by government insiders. The IMF acknowledged that the central bank was simply turning money over to the kleptocrats who run the country’s banks as part of their conglomerates (as well as funding the government’s military attack on the East, largely on behalf of the leading kleptocrats behind the Maidan coup). “The proportion of government securities and loans to banks increased from 28 percent of NBU total assets at end-2010 to 56 percent at end-April 2014.” The financial situation is getting so much worse that to stave off insolvency, Ukraine’s leading banks are reported to need another $5 billion over and above the IMF’s $17 billion commitment.

In preparation for October’s scheduled elections, the eastern provinces are in no condition to vote, and the junta has banned the Communist party as well as TV and media reporting that it does not like (mainly in the Russian language). The leading pro-war parties are polling very low even in the West (as of early September), prompting warnings of a coup by the Right Sector and allied neo-Nazi Ukrainian nationalists, headed by the oligarch Igor Kolomoyskyy, who fields his own private army.

A defeat in war frequently leads to regime change. The spectre of a coup is once again roaming the streets and squares of Kyiv. Surviving National Guard fighters are threatening to turn their weapons on Poroshenko. A third Maydan [Independence Square protest movement] is taking shape, which is to sweep aside the present regime. The instigators of this Maydan are militants from the punitive battalions created with Kolomoyskyy’s money. It is obvious that the oligarch is playing his game against Poroshenko. Subordinate to him Kolomoyskyy has quite a strong private army capable of carrying out a coup.[5]

IMF- and US-backed privatization plans for Ukraine

Ukraine’s main problem is that its debt is denominated in dollars and euros. There seems only one way for Ukraine to raise the foreign exchange to repay the IMF: by selling its natural resources, headed by gas rights and agricultural land. Here the shadowy figure of Kolomoyskyy resurfaces, with support from the United States. Recent Senate Bill 2277 “directs the U.S. Agency for International Development to guarantee loans for every phase of the development of oil and gas” in Ukraine, Moldova and Georgia.

Vice President Joe Biden’s son, R. Hunter Biden, recently was appointed to the board of Burisma, a Ukrainian oil and gas company registered in Cyprus, long a favorite for post-Soviet operators. The firm has enough influence over Kiev politics to make prospective gas-fracking lands a military objective. “Ukrainian troopers help installing shale gas production equipment near the east Ukrainian town of Slavyansk, which they bombed and shelled for the three preceding months, the Novorossiya news agency reports on its website citing local residents. Civilians protected by Ukrainian army are getting ready to install drilling rigs. More equipment is being brought in, they said, adding that the military are encircling the future extraction area.”[6]

One report notes the extent to which “pro-Russian” means opposing a gas grab:

The people of Slavyansk, which is located in the heart of the Yzovka shale gas field, staged numerous protest actions in the past against its development. They even wanted to call in a referendum on that subject. … Countries like the Czech Republic, the Netherlands and France have given up plans to develop shale gas deposits in their territories. Not only them but also all-important Germany, which two weeks ago announced it would halt shale-gas drilling for the next seven years over groundwater pollution concerns.[7]

U.S. and IMF backing seems intended to help reduce European dependence on Russian gas so as to squeeze its balance of payments. The idea is that lower gas revenues will squeeze Russia’s ability to maneuver in today’s New Cold War. But this strategy involves a potentially embarrassing U.S. alliance with Kolomoyskyy, reportedly the major owner of Burisma via his Privat Bank. He “was appointed by the coup regime to be governor of Dnipropetrovsk Oblast, a south-central province of Ukraine. Kolomoysky also has been associated with the financing of brutal paramilitary forces killing ethnic Russians in eastern Ukraine.”[8] The term “ethnic Russian” is a kakaism for local protest against fracking by kleptocrats privatizing the economy’s natural resource wealth.

It will be expensive to restore power and water facilities that have been destroyed by the Kiev forces in Donetsk, which faces a cold dark winter. Kiev has stopped paying pensions and other revenue to the Eastern Ukraine, all but guaranteeing its separatism. Even before the Maidan events the local population sought to prevent gas fracking, just as Germany and other European countries have opposed it.

Also opposed is the appropriation of land and other properties by Ukrainian kleptocrats and especially foreigners such as Monsanto, which has invested in genetically engineered grain projects in Ukraine, seeing the country as Europe’s Achilles Heel when it comes to resisting GMOs. A recent report by the Oakland Institute, Walking on the West Side: the World Bank and the IMF in the Ukraine Conflict, describes IMF-World Bank pressure to deregulate Ukrainian agricultural land use and promote its sale to U.S. and other foreign investors. The World Bank’s Investment Finance Corporation (IFC) has “advised the country to ‘delete provisions regarding mandatory certification of food in the listed laws of Ukraine and Government Decree,’” and “to avoid ‘unnecessary cost for businesses’” by regulations on pesticides, additives and so forth.[9]

Yet neither Russia nor many European countries accept genetically engineered foods. It would seem that the only way Ukraine can export GMO crops is if U.S. diplomats pressure Europe to drop its GMO labeling. This would drive yet another wedge between the United States and European NATO members, much as U.S. pressure to impose sanctions on Russia (“Let’s you and him fight”) has done.

U.S. stratagems to save Ukraine from having to pay its debts to Russia

The “inner contradiction” in the IMF loan is that Ukraine owes the entire amount to Russia for gas arrears and current needs as winter nears, and also for the euro loan by Russia’s sovereign wealth fund on strictly commercial terms with cross-defaults if Ukrainian debt rises above 60 percent of GDP. The U.S. Cold War response is to try to craft a legal argument to minimize payments to Russia out of IMF and NATO “reconstruction” lending. The Peterson Institute for International Economics has floated a proposal by former Treasury official Anna Gelpern to deprive Russia of legal means to enforce its claims on Ukraine. “A single measure can free up $3 billion for Ukraine,” she proposed. Britain’s Parliament might pass a law declaring the $3 billion bond negotiated by Russia’s sovereign wealth fund to be “foreign aid,” not a real commercial loan contract worthy of legal enforcement. “The United Kingdom can refuse to enforce English-law contracts for the money Russia lent,” thereby taking “away creditor remedies for default on this debt.”[10]

The problem with this ploy is that Russia’s sovereign wealth fund lent Ukraine euros with strict financial protection aimed at limiting the country’s overall debt to just 60 percent of its GDP. If debt rises above this level, Russia has the right to demand full immediate payment, triggering cross-default clauses in Ukraine’s foreign debt.

As recently as yearend 2013, Ukraine’s public debt amounted to just over 40 percent – a seemingly manageable $73 billion. But in view of the fact that Ukraine had only a B+ rating – below Russian sovereign fund normal limits of requiring at least an AA rating for bond investments – Russia acted in a prudent financial way by inserting protection clauses precisely to distinguish its investment from general purpose aid. Unlike foreign aid, Russia’s loan gives it “power to trigger a cascade of defaults under Ukraine’s other bonds and a large block of votes in any future bond restructuring. This is because all of the government’s bonds are linked among themselves. When one bond defaults, the rest can do the same.”

What the U.S. Government classifies as foreign aid also typically takes the form of loans to be repaid, and insists on matching funds in local currency, e.g. for Public Law 480 food exports. Congress insisted already during the Kennedy Administration that the U.S. balance of payments, and specifically its farm exports, must benefit from any such “aid.”[11]

Waging civil war is expensive, and Ukraine’s currency is rupturing. The black market exchange rate already is reported to have plunged by one-third. If recognized officially (once the kleptocrats have moved their money out at IMF-supported hernia rates), this would raise the country’s debt/GDP ratio to the 60 percent threshold making the debt to Russia payable immediately.

“Governments do not normally sue one another to collect their debts in national courts,” Prof. Gelpern points out. But if this should occur, the pari passu rule would prevent some debts from being annulled selectively. She therefore raises another possibility for how to prevent IMF and NATO credit from being paid to Russia for its bondholdings and gas arrears. Ukraine may claim that its debt to Russia is “odious.” This applies to situations where “an evil ruler signs contracts that burden future generations long after the ruler is deposed.” She adds that “Repudiating all debts incurred under Yanukovich would discourage lending to corrupt leaders.”

The double standard here is that instead of labeling Ukraine’s entire series of post-1991 kleptocratic governments odious, she singles out only Yanukovich, as if his predecessors and successors are not equally venal. But an even greater danger in trying to declare Ukraine’s debt “odious”: It may backfire on the United States, given its own support for military dictatorships and kleptocracies.

In contrast to IMF loans to support the kleptocrats’ banks and new Cold War asset grabs from the Eastern border provinces with Russia, Ukraine’s sale of bonds to Russia’s sovereign debt fund and its contracts signed for gas purchases were negotiated by a democratically elected government, at prices that subsidized domestic industry and also household consumption. Unlike the case with Greece, there was no removal of a national leader to prevent a public referendum from taking place over whether to approve the loan or not. If the Ukrainian debt is deemed odious, what of Eurozone loans to Ireland and Greece or U.S. loans to Argentina’s generals installed under Operation Condor? Gelpern acknowledges that Ukrainian refusal to pay the bonds by invoking the odious debt principle “is fraught with legal, political and market risks, all of which would play into Russia’s hands.” Indeed!

This leaves the most promising solution to hurt Russia to be the above-mentioned ploy for Britain’s Parliament to pass a sanctions law invalidating “the Yanukovich bonds.” Such a sanctions law would reduce Russia’s “ability to profit from selling the debt on the market” simply by denying Russia legal rights to grab Ukrainian assets. It also would destroy London as a leading global financial center.

Gelpern concludes her paper by suggesting a universal principle: that contracts “used to advance military and political objectives … should lose their claim to court enforcement.”

I love this suggestion!

It certainly would open a can of worms in view of the fact that “[t]he United Kingdom and the United States have both used military force in the past to collect debts and influence weaker countries. Is it legitimate for them to punish Russia for doing the same?” Are not the vast majority of inter-governmental debts either military or political in character?

On this logic, shouldn’t most inter-governmental debts be wiped out? Do not Gelpern’s arguments cited for not paying Russia serve even more to provide a legal basis for nullifying Ukraine’s debt to the IMF and subsequent NATO loans on terms that force it to forfeit its natural resource rights for gas and land to foreign investors?

Prof. Gelpern’s legal review is ostensibly seeking reasons to isolate Russia economically. It thus has the seemingly ironic effect of showing the legal and political difficulties in trying to achieve this. If Ukraine borrows from the IMF and/or EU, and then breaks up – with the East becoming independent – who will be obliged to pay? Certainly not the East, attacked by the military coup leaders.

So we are brought back to this month’s financial news in preparation for next month’s IMF annual meeting: Where then does the Ukrainian loan leave the IMF’s credibility?

Michael Hudson is President of The Institute for the Study of Long-Term Economic Trends (ISLET), a Wall Street Financial Analyst, Distinguished Research Professor of Economics at the University of Missouri, Kansas City and author of The Bubble and Beyond (2012), Super-Imperialism: The Economic Strategy of American Empire (1968 & 2003), Trade, Development and Foreign Debt (1992 & 2009) and of The Myth of Aid (1971).

Michael acts as an economic advisor to governments worldwide including Iceland, Latvia and China on finance and tax law.

Footnotes

[1] Reuters, “IMF approves loan tranche for Ukraine, warns of risks,” August 29, 2014.

http://www.reuters.com/article/2014/08/29/us-ukraine-crisis-imf-idUSKBN0GT23Z20140829

[2] Matina Stevis, “IMF Admits Mistakes on Greece Bailout,” Wall Street Journal, June 5, 2013.

[3] Matina Stevis, “IMF and Europe Part Ways Over Bailouts,” Wall Street Journal, October 12, 2013.

[4] John Helmer, “Ukraine Takes Another $1.39 Billion from International Monetary Fund–$3 Billion in IMF Cash Already Sent Offshore–Insiders Suspected in Heist,” Dances with Bears, September 3, 2014.

[5] Marina Perevozkina and Artur Avakov, Moskovskiy Komsomolets, September 4, 2014, from Johnson’s Russia List – unlisted, September 6, 2014 #14. They add that Putin has ordered Kolomoyskyy’s property in Crimea and Moscow to be sequestered.

[6] PEU report, July 27, 2014, “USAID to Help Young Biden: The Burisma File,” citing an Economic Policy Journal article. The report adds: “Further supporting the ‘natural gas motive’ is the fact that it was Vice President Joe Biden who demanded that President Yanukovych pull back his police on Feb. 21, a move that opened the way for the neo-Nazi militias and the U.S.-backed coup. Then, just three months later, Ukraine’s largest private gas firm, Burisma Holdings, appointed Biden’s son, Hunter Biden, to its board of directors.”

[7] Tyler Durden
 “Biden’s son a director in shale gas firm set to drill in East Ukraine,” Truthstream Media, July 27, 2014, Zero Hedge.

[8] Robert Parry, “The Whys Behind the Ukraine Crisis,” Consortiumnews.com, September 3, 2014.

[9] Walking on the West Side: the World Bank and the IMF in the Ukraine Conflict

[10] Anna Gelpern, “Debt Sanctions Can Help Ukraine and Fill a Gap in the International Financial System,” Peterson Institute for International Economics, Policy Brief PB14-20, August 2014.

[11] I provide a profuse documentation of U.S. self-interest in The Myth of Aid (Orbis Books 1970) and Super Imperialism (1972). Gelpern accuses Russia of seeking to keep Ukraine “on a short leash,” as if this is not what the IMF and indeed most financial investors do. US/NATO anti-Russian policy is filled with such double standards, and it is reflected in IMF support for Ukraine.

The Zionist-Anglo-Saxon caliphate vs BRICS

By Peter Koenig

Ever since the BRICS (Brazil, Russia, India, China and South Africa) expressed their unison through the formation of a joint Development Bank – Durban, South Africa on 27 March 2013 – the Zionist-Anglo-Saxon caliphate attempted to divide them. The BRICS constitute some 45% of the world population and close to 30% of global GDP. The BRICS idea is to issue a joint alternative currency, fully detached from the US dollar and its greed economy.

In the meantime a number of other countries would like to join the BRICS, including Argentina, Venezuela, Iran, Mongolia, Malaysia and others, which would result in about one third of the world’s economic output and half of the global inhabitants.

This gives the BRICS a profile of strength surpassing that of the United States and Europe together. China alone is not only already the world’s largest economy, China is also dominating the Asian market of some 4.2 billion people, 60% of the world populations and a combined GDP of about US$ 20 trillion, equivalent to about US$ 25 trillion, when comparing purchasing power with the dollar based US economy of about US$ 17 trillion. Asia registered an average growth rate of almost 8% over the past few years, compared to that of the western world, hovering around 1%.

There is no need for the BRICS to fear US interference – divide to rein – if they are able to solidify their union with solidarity – political and monetary solidarity, as well as common trade policies – and if they have the political will to decouple their economies from the dollar – which is key for the BRICS success.

Sir Obama – here also called the western caliphate – has multiple self-assumed capacities. He creates new caliphates at his service, like the ISIS, the Islamic State of Iraq and the Levant (Syria); then he bombs them making the world believe they are enemies, condones their beheading of western journalists and clandestinely funds their Middle East crusade for energy and world dominance, a crusade the ISIS are carrying out for the supreme caliphate in the White House.

Washington’s caliphate also has a small army of ‘martyr nations’ fighting (and suffering) for him, like the 28 members of the European Union, led (sic) by a like-minded group of Washington-submissive neoliberal Zionist- Christian puppets. They do what Washington says. Most of them are also pro-forma members of the White House caliphate-driven worldwide war machine, called NATO, and ape the war cries of (the) Fogh (of war) Rasmussen, who is Obama’s master puppet in Europe.

Of course, the caliphate is always ready with sanctions for those who don’t behave, especially sanctions which backfire on others. The latest sanctions on Russia follow a series of billion dollar propaganda of lies and outright falsehoods, demonizing Vladimir Putin and Russia. Interestingly the ‘sanctions’ imposed on Russia by Washington’s supreme warrior – and submissively carried out by his European minions, have been retaliated by Russia by blocking most of agro-trading with Europe, leaving European farmers with rotting vegetables and fruit – billion dollar losses, estimated at a multiple of the ‘sanctions’ costs to Russia.

Neoliberals are short-sighted. They are overwhelmed by greed, instant gratification, and a dream of Full Spectrum Dominance, meaning controlling the world’s resources, money and people. But their caliphate empire is doomed, since lies and deceptions work some of the time with some of the people, but not all the time with all of the people. In fact, the tide is shifting – which is the silver lining of the dark cloud shed by the monstrous, murderous western war machine. The larger of the European minions, Germany and France, and some of the newer ones, Poland, Hungary the Czech Republic, to name but a few, become doubting and hesitating on the way of sanctions. They start feeling the hurt.

The Zionist Anglo-Saxon caliphate needs conflicts and wars in order to survive. Its economy is based on producing weapons and on destruction. World peace would make it collapse.

To attain their objective, the western caliphate is using a thousands-of-year-old wisdom – dividing to rein. By a multi-billion dollar driven worldwide propaganda and lie campaign, Obama and his European bootlickers first confuse the people of nations and continents, distort their common sense, then they drive a wedge between them, between allies, neighbors, common cultures, families – turning friends into foes.

Remember, the dollar is fiat money, not worth the paper it’s printed on. It is produced at will and is called Quantitative Easing (QE), a conveniently confusing euphemism for creating debt held as monetary reserves by nations’ treasuries around the globe.

The same happens with funding of the eternal war machine. Printing money at will has become a pastime justifying wars, mass killings for conquering the world’s resources and people. It will last as long as the rest of the world permits it. It’s already a fading phenomenon. Ten to fifteen years ago close to 90% of the world’s reserves were denominated in US dollars. Today that figure has shrunk to about 60%.

Dividing to rein is precisely what the western caliphate intends to do with the BRICS. Starting with Brazil, Washington attempts through an ugly smear campaign to slander Brazil’s leader, Dilma Rousseff and to defame Brazil’s economy. The former is accused of corruption and nepotism and Brazil’s economy is admonished for runaway private debt that supposedly stands at 80% of GDP. However, the smear-campaigners do not explain that thanks to the increase in private debt Brazil’s GDP has grown by 30% in the last decade. They don’t explain either that Brazil’s foreign debt to GDP ratio stands at less than 57%, compared with that of the US of almost 101.5% and of Germany’s, 82%.

In short, Brazil is doing well. But the presstitute media propaganda masters have managed to lower President Rousseff’s popularity to the point where her re-election in the forthcoming ballot is questionable. Precisely what the Washington caliphate wants.

Imagine an economy-based real contest between the western caliphate and the BRICS. With a GDP of about 30% of the world’s economic output, covering almost 50% of the globe’s population, the BRICS have an average debt to GDP ratio of less than 45 % (2014 estimates) – Brazil (56.8%), Russia (13.4%) India (67.7%), China (22.4%), South Africa (46.1%) – compared to that of the US (101.5%) and of the Eurozone (92.6%).

It is clear that the BRICS have nothing to fear from the western caliphate – and its possible slew of sanctions. However – and this is key – the western Zionist-Anglo-Saxon empire controls the current western monetary system. The FED, Wall Street, the European Central Bank (ECB) and the IMF, an extension of the US Treasury and the FED, as well as the Bank for International Settlements (BIS), the central bank of central banks, the privately owned chief manipulator of gold and currencies – hold the western economies hostage. They finance the US/NATO war machine. The western Zionist-Anglo-Saxon controlled financial system has the same objective of Full Spectrum Dominance, as does the supreme caliphate and assassin-in-chief, Obama, who currently serves the western arms manufacturing and banking oligarchy.

It is therefore high time that the BRICS proceed to reality with their intended alternative currency, completely detached from the dollar and the Wall Street clearing system. The economic viability of such an alternative system stands about 2 to 3 times higher than that of the UD dollar.

An interim measure to stop the western bulldozer may be necessary. Russia and China and a number of other countries have already agreed to trade in their respective currencies and, in particular, to trade hydrocarbons in non-dollar denominated moneys, a measure that will considerably lower demand for the dollar, hence, further lower the dollars viability as a reserve currency. Russia and China are poised to issue a common currency, a basket of currencies that may be joined by other countries willing to detach themselves from the fangs of the western abusive monetary caliphate.

On 3 and 4 September, NATO, the military arm of the western caliphate met in Wales, UK – to discuss its raison d’être. By NATO’s own admission, this was the most important meeting since the collapse of the Soviet Union, attended by 60 heads of state, including the 28 NATO members. As expected the focus of the meeting was to demonize Russia, a key member of the BRICS, with lies and slanders that know hardly any competition in the world of deception. The final briefing report is so full of nonsense and unproven accusations – similar to those continuously aped by Fogh Rasmussen – that Russia doesn’t even need to counter them. The NATO declarations drown in their own lies and deceptions.

It is clear, after 65 years of existence and chaotic disasters all over the world, NATO needs a new identity, a new Cold War, or, better even, a new direct war with Russia – for ‘the security’ of Europe. Therefore, the caliphate Obama, in hopefully one of his last unabashed moves, is requesting that Europe ups its ante – that the European members contribute at least 2% of their GDP to NATO – and let the military industrial complex move more weapons into the European NATO bases. In other words, making Europe more vulnerable to Russian defense attacks, putting the peoples of Europe once again in the firing line. The European leaders (sic) seem to be oblivious to such dangers.

However, there is hope. As said by Pepe Escobar, “The real deal this September is not NATO. It’s the SCO’s summit. Expect the proverbial tectonic shifts of geopolitical plaques in the upcoming meeting of the Shanghai Cooperation Organization – a shift as far-reaching as when the Ottoman Empire failed at the gates of Vienna in 1683. On the initiative of Russia and China, at the SCO summit, India, Pakistan, Iran and Mongolia will be invited to become permanent members.”

The SCO summit could be the first step towards a new world order – not the notorious “One World Order” proclaimed by the empire of the Zionist-Anglo-Saxon caliphate – but a new direction of the world, away from an usurious, abusive financial and monetary system, away from Washington’s objective of Full Spectrum Dominance – towards a new world of sovereign states.

Peter Koenig is an economist and former World Bank staff. He worked extensively around the world in the fields of environment and water resources. He writes regularly for Global Research, ICH, the Voice of Russia, now Ria Novosti, and other internet sites. He is the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed – fiction based on facts and on 30 years of World Bank experience around the globe.

Warning: Washington and its NATO, EU vassals are insane

By Paul Craig Roberts.

Herbert E. Meyer, a nutcase who was a special assistant to the CIA director for a period during the Reagan administration, has penned an article calling for Russian President Putin’s assassination. If we have “ to get him out of the Kremlin feet-first with a bullet hole in the back of his head, that would be okay with us.”

As the crazed Meyer illiustrates, the insanity that Washington has released upon the world knows no restraint. Jose Manual Barroso, installed as Washington’s puppet as European Commission President, misrepresented his recent confidential telephone conversation with Russia’s President Putin by telling the media that Putin issued a threat: “If I want to, I can take Kiev in two weeks.”

Clearly, Putin did not issue a threat. A threat would be inconsistent with Putin’s entire unprovocative approach to the strategic threat that Washington and its NATO puppets have brought to Russia in Ukraine. Russia’s permanent representative to the EU, Vladimir Chizhov, said that if Barroso’s lie stands, Russia will make public the full recording of the conversation

Anyone familiar with the disparity between the Ukrainian and Russian militaries knows full well that it would take the Russian military 14 hours, not 14 days, to take all of Ukraine. Just remember what happened to the American and Israeli trained and equipped Georgian Army when Washington set its stupid Georgian puppets on South Ossetia. The American and Israeli trained and equipped Georgian army collapsed under Russian counterattack in 5 hours.

The lie that Washington’s puppet Barroso told was not worthy of a serious person. But where in Europe is there a serious person in power? Nowhere. The few serious people are all out of power. Consider the NATO Secretary General, Anders Rasmussen. He was a prime minister of Denmark who saw he could rise beyond Denmark by serving as Washington’s puppet. As prime minister he strongly supported Washington’s illegal invasion of Iraq, declaring that “we know that Saddam Hussein has weapons of mass destruction.” Of course, the fool didn’t know any such thing, and why would it matter if Iraq did have such weapons. Many countries have weapons of mass destruction.

According to the rule that anyone who serves Washington is elevated, the cipher Rasmussen was elevated.

The problem with elevating unprincipled fools is that they risk the world for their career. Rasmussen has now put the entirety of Eastern and Western Europe at risk of annihilation. Rasmussen has announced the creation of a blitzkrieg spearhead force capable of blitzkrieg attack on Russia. What Washington’s puppet calls “the Readiness Action Plan” is justified as a response to “Russia’s aggressive behavior in Ukraine.”

Rasmussen’s “lightening spearhead force” would be wiped out along with every European capital. What kind of idiot provokes a nuclear superpower in this way?

Rasmussen asserts “Russia’s aggressive behavior” but has no evidence of it. Russia has stood on the sidelines while Washington’s puppet government in Kiev has shelled and bombed civilian housing, hospitals, schools and issued a constant stream of lies against Russia. Russia denied the requests of the now independent eastern and southern provinces of Ukraine, former Russian territories, to be reunited with Russia. As readers know, I regard Putin’s decision as a mistake, but events might prove me wrong and that is OK with me. For now, the fact is that every act of aggressive behavior is the result of the US and EU support of the Kiev nazis. It is the Ukrainian nazi militias that are attacking civilians in the former Russian territories of eastern and southern Ukraine. A number of regular Ukrainian military units have defected to the independent republics.

Yes, nazis. Western Ukraine is the home of the Ukrainian SS division that fought for Hitler. Today the militias organized by the Right Sector and other right-wing political organizations wear the nazi insignia of the Ukrainian SS divisions. These are the people that Washington and the EU support. If the Ukrainian nazis could win against Russia, which they cannot, they would turn on the West, just as has the Washington-funded ISIS that Washington unleashed on Libya and Syria. Now ISIS is remaking the Middle East, and Washington appears helpless.

William Binney, a former high level official in the US National Security Agency, and colleagues from the CIA and military intelligence services have written to German chancellor Merkel advising her to beware of Obama’s lies at the upcoming NATO summit in Wales. The US intelligence officials advise Merkel to remember Iraq’s “weapons of mass destruction” and don’t again be deceived, this time into conflict with Russia.

The question is: who does Merkel represent? Washington or Germany? So far Merkel has represented Washington, not German business interests, not the German people, and not Germany’s interests as a country. Here is a protest in Dresden where a crowd prevents Merkel’s speech with shouts of “kriegstreiber” (warmonger), “liar, liar,” and “no war with Russia.”

My Ph.D. dissertation chairman, who became a high Pentagon official assigned to wind down the Vietnam war, in answer to my question about how Washington gets Europeans to always do what Washington wants replied: “Money, we give them money.” “Foreign aid?” I asked. “No, we give the European political leaders bagfuls of money. They are for sale, We bought them. They report to us.” Perhaps this explains Tony Blair’s $50 million fortune one year out of office.

The Western media, the largest brothel on earth, is desperate for war. The editorial board of the Washington Post, now a trophy newspaper in the hands of Amazon.com’s billionaire owner, ran an editorial on August 31 that projected all of Washington’s (and the Post’s) lies upon Putin.

Amazon.com’s owner might know how to market products on the Internet, but he is hopeless when it comes to running a newspaper. His editors at the Washington Post have made his trophy a worldwide laughing stock.

Here are the mindless accusations against Putin from the editors that the billionaire put in charge of his trophy newspaper:

Putin, bitterly resentful at the loss of power from the Soviet collapse, has “resurrected the tyranny of the Big Lie” in order to reconstitute the Russian Empire.

“Russian sponsored militias in Ukraine” are responsible for the “shoot-down of the Malaysian airliner in July.” The “Russian state-controlled media” lied and misrepresented to the Russian people the party responsible for downing the airliner.

“In the absence of independent and free reporting, few Russians realize that Russian soldiers and armaments are in action in eastern Ukraine, albeit (as in Crimea) in uniforms and vehicles stripped of their identifying insignia and license plates. With no free media, Russians are left to fend for themselves against a firestorm of falsehoods.”

“Mr. Putin’s Big Lie shows why it is important to support a free press where it still exists and outlets like Radio Free Europe that bring the truth to people who need it.”

As a former Wall Street Journal editor, I can say with complete confidence that such extraordinary propaganda posing as an editorial would have resulted in the immediate firing of all concerned. In my days on the Congressional staff, the Washington Post was regarded as a CIA asset. Today the Post has sunk far below this status.

I have seen much media propaganda in my day, but this Washington Post editorial takes the cake. The editorial shows that either the editorial writers are completely ignorant or they are completely corrupt and also assume that their readers are completely ignorant. If Russian military units were in action in eastern Ukraine, the situation would be precisely as Alexander Zakharchenko and Dmitry Orlov describe. Ukraine would no longer exist. Ukraine would again be part of Russia where it was for centuries prior to Washington taking advantage of the Soviet collapse to tear Ukraine away from Russia.

The question before us is: how long will Russia’s patience last with the West’s enormous lies and provocations? No matter how restrained Russia is, Russia is accused of the worst. Therefore, Russia might as well inflict the worst.

At what point will the Russian government decide that Washington’s mendacity, and that of its European puppets and corrupt Western media, render hopeless Russia’s efforts to resolve the situation with diplomacy and unprovocative behavior? As Russia is constantly accused falsely of invading Ukraine, when will the Russian government decide that as Western propaganda has established that Russia has invaded Ukraine and has imposed sanctions and new military bases on Russia’s borders because of the alleged invasion, Russia might as well go ahead and rid themselves of the problem Washington has brought to Russia and invade Ukraine?

There is nothing that NATO could do about it if Russia decides that Ukraine in Washington’s hands is too much of a strategic threat to Russia and reincorporates Ukraine again into Russia where it has resided for centuries. Any NATO force sent would start a war that NATO can’t win. The German population, remembering the consequences of war with Russia, would overthrow Washington’s puppet government. NATO and the EU would collapse as Germany departed the absurd construct that serves Washington’s interest at the expense of Europe.

Once this happens, the world will have peace. But not until.

For those who care to understand how the land of lies works, Washington’s puppet government in Kiev attributes the defeat of its military forces by the Donetsk Republic to the presence in the Donetsk army of Russian military units. This is the propaganda that has gone out to western Ukraine and to the presstitute western media, a collection of whores that echo the propaganda without any investigation whatsoever. However, Kiev has a different story for the IMF. Kiev cannot receive IMF money with which to pay off its Western creditors if Ukraine is at war. Therefore, Ukraine tells the IMF the opposite story: Russia has not attacked Ukraine.

The Western media remains uninterested in any facts. Just the lies. Only the lies.

The Washington Post, the New York Times, CNN, Fox “news,” Die Welt, the French press, the British press all plead: “please Washington give us more sensational lies that we can trumpet. Our circulation needs it. Who cares about war and the human race if only we can regain financial stability.”

Justin Raimondo warns that Washington is planting the seeds of World War III.


Dr. Paul Craig Roberts was Assistant Secretary of the Treasury for Economic Policy and associate editor of the Wall Street Journal. He was columnist for Business Week, Scripps Howard News Service, and Creators Syndicate. He has had many university appointments. His internet columns have attracted a worldwide following. Roberts’ latest books are The Failure of Laissez Faire Capitalism and Economic Dissolution of the West and How America Was Lost.

Police raid IMF chief Christine Lagarde’s flat

French police raid IMF chief Christine Lagarde’s flat in Bernard Tapie probe.

French authorities have searched the Paris flat of IMF chief Christine Lagarde as part of an investigation into her handling of a 2008 compensation payment to a businessman supporter of ex-president Nicolas Sarkozy, her lawyer said.

Police are investigating claims that Lagarde, when French Finance Minister under Nicolas Sarkozy, acted illegally in approving the €285m arbitration payout to Bernard Tapie.

Lagarde denies any wrongdoing.

“This search will help uncover the truth, which will contribute to exonerating my client from any criminal wrongdoing,” Lagarde’s lawyer, Yves Repiquet, told Reuters.

Ms. Lagarde confirmed the decision in a statement but said it was “without basis,” adding she would challenge it with a higher court. She said she was heading back to Washington Wednesday and would brief the IMF board about the latest development.

The investigation is part of a complex, drawn-out probe into the alleged misuse of state funds. The case stems from a decision in the 2008 to use arbitration to settle a dispute with business tycoon Bernard Tapie. The arbitration panel awarded €420 million to Mr. Tapie.

IMF issued a statement after Managing Director Christine Lagarde put under formal investigation for her role in an arbitration case during her time as French finance minister.

IMF spokesman Gerry Rice: “She is now on her way back to Washington and will, of course, brief the board as soon as possible. Until then, we have no further comment”

Source: WSJ/Bloomberg

New BRICS bank to challenge IMF

A new development bank launched by emerging economies will help all nations in distress to return to health, South African President Jacob Zuma said Monday.

The so-called Brics – Brazil, China, India, Russia and South Africa – announced last month that they were setting up a development bank and emergency reserve fund. This was seen as a major challenge to the Washington-based International Monetary Fund and World Bank, which some emerging powers see as biased towards Western policy positions.

Zuma, visiting Washington for a US-Africa summit, argued that the IMF has few success stories to show despite the often austere regimens it imposes on troubled economies in return for emergency loans.

For now, only the Brics nations will be able to draw from the $50-billion in the New Development Bank and $100-billion in the Contingent Reserve Arrangement. The IMF, set up with the World Bank during the Bretton Woods conference in 1944, has faced criticism for imposing onerous conditions and for not giving wider representation to developing nations on its controlling committees.

The Brics bank plan came after an agreement to give China and other emerging powers more voting power in the IMF got bogged down in the US Senate due to opposition by conservative Republicans.

Source: Sapa

BRICS to set up own IMF

bricsmapVery soon, the IMF will cease to be the world’s only organization capable of rendering international financial assistance. The BRICS countries are setting up alternative institutions, including a currency reserve pool and a development bank.

The BRICS countries (Brazil, Russia, India, China and South Africa) have made significant progress in setting up structures that would serve as an alternative to the International Monetary Fund and the World Bank, which are dominated by the U.S. and the EU. A currency reserve pool, as a replacement for the IMF, and a BRICS development bank, as a replacement for the World Bank, will begin operating as soon as in 2015, Russian Ambassador at Large Vadim Lukov has said.

Brazil has already drafted a charter for the BRICS Development Bank, while Russia is drawing up intergovernmental agreements on setting the bank up, he added.

In addition, the BRICS countries have already agreed on the amount of authorized capital for the new institutions: $100 billion each. “Talks are under way on the distribution of the initial capital of $50 billion between the partners and on the location for the headquarters of the bank. Each of the BRICS countries has expressed a considerable interest in having the headquarters on its territory,” Lukov said.

It is expected that contributions to the currency reserve pool will be as follows: China, $41 billion; Brazil, India, and Russia, $18 billion each; and South Africa, $5 billion. The amount of the contributions reflects the size of the countries’ economies.

Source: Vz.ru

Ukraine: The IMF’s Big Lie

Waiting for the IMF
Waiting for the IMF

Like government leaders everywhere, Russia’s Vladimir Putin often lies. But when he tells an uncomfortable truth, few people in the US or Europe bother to listen. Take what he said about Ukraine back in 2007, when Time magazine interviewed him as their “Person of the Year.”

The Russians subsidize Ukraine, Putin explained. They sell it natural gas and other energy resources at $3 billion to $5 billion a year below international market prices. At the same time, the US “somehow decided that part of the political elite in Ukraine is pro-American and part is pro-Russian, and they decided to support the ones they consider pro-American, the so-called orange coalition.”

Why, Putin asked, should Russia continue to subsidize Ukraine? “If you want to support someone, you pay for it. Nobody wants to pay.”

Putin had it right. In their proposed economic agreement with Ukrainian president Viktor Yanukovych, the Europeans offered very little money. In their negotiations with him during the Euromaidan protests, they and their allies in Washington continued to offer far less than the estimated $20 billion to $35 billion that the country needed.

In February, about a week before Yanukovych ran away, the Christian Science Monitor summed up the situation. Ukraine’s international currency reserves were falling at a vertiginous rate. The national currency, the hryvnia, had lost value, and the international credit rating agency Fitch had downgraded the country’s sovereign debt. How would Ukraine pay what it owed – primarily to Western banks and Russia’s Gasprom? How would it pay salaries, pensions, and social benefits?

The EU agreement looked to a major infusion of capital from the International Monetary Fund. But that would come only after the Ukrainians agreed to what IMF managing director Christiane Lagarde later called a “profound transformation,” especially of its fiscal policy, monetary policy, and policies on energy.

“Nobody is willing to give economic support, from the United States or from the IMF or from Europe, to an unreformed Ukraine,” US State Department’s Victoria Nuland said in Kiev on February 7.

The Westerners had good reason for being tight-fisted. They knew that the incredibly corrupt Yanukovych and the Ukrainian oligarchs would take the money and stay put. That is how the country’s oligarchic system works, with or without Yanukovych. Most of the new billionaires – including the leading candidate to become the new president, Petro Poroshenko – made their first big money by “privatizing” formerly state-owned enterprises.

“Ukraine’s oligarchs got rich during the privatization sales of former Soviet-owned industries and factories shortly after independence in 1991,” explained the Monitor. “The country’s main industries of mining, metals, chemical production, and energy distribution were snatched up by individuals, who then reaped millions in profits.”

The Monitor did not mention one significant fact. Privatization only came about the way it did with what one academic study called “the support and cajoling of Western donors.” Will foreign meddlers never learn?

Nor did the Western-backed rip-off stop with the original sin. Several analysts tell the same story, none more succinctly than the Monitor. “Many of the oligarchs’ businesses – particularly in the mining, heavy industry, and energy distribution industries – operate in dilapidated, Soviet-era facilities that are extremely energy-inefficient, and heavily dependent on government subsidies.”

In other words, when would-be reformers talk about Ukraine’s corruption, they mean the oligarchic system. Not necessarily personal corruption, but a pervasive systemic corruption.

“Corruption and politics have always had a close relationship in Ukraine,” explains the Monitor. “The oligarchs have benefitted for two decades from close relations with government officials, who have at times turned a blind eye to the activities in exchange for support. At other times, politicians have enabled their oligarch supporters to get richer through key government appointments and a lack of transparency in government contracts.”

Systemic corruption also gobbled up foreign assistance. Ukraine has gotten far more aid than any county in the former Soviet Union, energy specialist Emily Holland told Bloomberg Businessweek. And where has it gone? “Into the pockets of an incredibly corrupt political elite and oligarchs.”

The Russians, with their own oligarchic system, continued to subsidize Ukraine’s energy imports. They also agreed in December to buy $15 billion in Ukrainian Eurobonds, and actually laid out the first $3 billion.

“The economy of Ukraine was going into the wall and was heading for disaster,” the IMF’s Lagarde told PBS Newshour. “Without the support that they were getting from this lifeline that Russian had extended a few months ago, Ukraine was heading nowhere.”

Mounting violence from the protesters, continuing refusal of Brussels and Washington to come up with serious money, and increasing loss of support from the oligarchs convinced Yanukovych to jump ship. Putin responded by stopping the subsidies, which meant raising the price Ukraine had to pay for its energy imports.

Brussels and Washington were left holding the bag, as Putin had suggested they should. So, at warp speed, the IMF and Ukraine’s Western-backed interim government came to terms. The Ukrainians would agree to “profound transformation.” The IMF would give them something between $14 billion and $18 billion over time.

Having worked as a private banker, central banker, and Minister of Economy, Prime Minister Yatsenyuk knew from the start what lay ahead. “To be in this government is to commit political suicide,” he predicted even before the Russians moved into Crimea.

The biggest challenge, he told an investor’s conference in Kiev last week, will be to sell Ukrainians on the need for “painful economic reforms.” Unpegging the hryvnia from the dollar will likely cause a 3% drop in GDP, he explained. Cutting the public sector by 10% will put a lot of people out of work. Losing the Russian subsidy on energy and simultaneously cutting domestic fuel subsidies will greatly increase the cost of living, though the government would provide “some sort of subsidy” to the poorest five to eight million households.

Yats understood how this would breed discontent, especially in the east and south, where people lean more toward Russia. He knew Moscow was telling them that they would enjoy higher living standards in Russia, with higher wages and better pensions and without the austerity that the Kiev government was now offering. “They’re saying: if you go to Russia, you’ll be happy, smiling, and not living in a Western hell.”

That is Russian propaganda, no doubt. But the message rings true, doesn’t it?

Yats has a much bigger problem. He and his Western-backed interim government have gone to great lengths to give the oligarchs even greater power – far more than to the Svoboda Party or followers of Stepan Bandera in Yatsenyuk’s Fatherland Party. In one of their first acts in office, they appointed oligarchs like Ihor Kolomoisky and Serhiy Taruta as governors in Eastern Ukraine, and are already working closely with the country’s likely new president, Petro Poroshenko.

Many in the West welcome “the Chocolate King’s” presence, especially since he was the highest-profile oligarch to support the Euromaidan protest. Western “deciders” have looked kindly on him for years, as journalist Andriy Skumin wrote in March 2012, just after Yanukovych appointed Poroshenko Minister of Trade and Economic Development.

“European circles, blindly searching for any adequate Western-thinking individuals within Ukraine’s establishment, have a favorable opinion of Poroshenko as a person who is reliable, can be charged with introducing changes in Ukraine and ending the deadlock in EU–Ukraine relations” Skumin wrote. But “the preservation of the monopolistic oligarchy will not allow for any European integration or even domestic transformations using European patterns. The only thing that could be done is perhaps only an outward European appearance.”

“Profound transformation” requires killing the oligarchic system, which no one in the game – least of all Poroshenko – has come close to suggesting. This is the IMF’s big lie. Lagarde talks of changing Ukraine, but the people she has entrusted to make those changes are the precisely the ones whose power the country most needs to curtail.

To crib from Vladimir Putin, Poroshenko and his fellow oligarchs are neither pro-American, pro-European, nor pro-Russian. They are not even necessarily pro-Ukrainian, though a bit of patriotic fervor may help them shove austerity down the throats of their underlings. Ukrainian oligarchs, like American plutocrats, are simply pro-themselves.

A veteran of the Berkeley Free Speech Movement and the New Left monthly Ramparts, Steve Weissman lived for many years in London, working as a magazine writer and television producer. He now lives and works in France, where he is researching a new book, “Big Money and the Corporate State: How Global Banks, Corporations, and Speculators Rule and How to Nonviolently Break Their Hold.”

Source: Reader Supported News

Ukraine hikes gas by more than 50%

serfs
A great way to get people excited about their new debt serfdom

Ukraine is raising the price of gas for domestic consumers by more than 50 per cent from May 1 and will implement further rises under a fixed timetable until 2018, an official of state energy company Naftogaz said on Wednesday.

The step, which will be widely unpopular with ordinary Ukrainians who have grown used to subsidised gas prices from the Soviet era, were taken in response to demands by the International Monetary Fund.

The interim government of Arseny Yatseniuk is in the final stages of talks with the Fund to secure $15-20 billion in a new aid package.

Source: Reuters

‘Night of the Long Knives’ in Ukraine

deadrightsectorIt can best be described as killing your friends once they become a burden.

An effort is underway to clean up the image of the junta now in control of Ukraine. Although Right Sector (Pravy Sektor) played an instrumental role in the coup, its radical nationalism continues to be an embarrassment for the new regime put in place by the IMF, the EU and the United States.

“Night of the Long Knives” refers to a series of political murders conducted by Hitler and the Nazis after they assumed power. In addition to opponents of the regime, the Nazis assassinated a number of paramilitary brownshirts who earlier specialized in fighting against paramilitary units of political parties opposed to the Nazis and intimidating Slavic and Romani citizens, union members and Jews.

It is also a popular theme in South Africa, where state security agents regularly bait conservative whites to “rise up” against black crime and the ongoing genocide against white farmers, hoping to draw renewed international sympathy for “mistreated and oppressed blacks”.

However, the South African government did deploy thousands of troops inside the country and added tons of fluoride to the water supply before they finally announced the death of Nelson Mandela last year, fearing indeed that blacks would go on an open killing spree against all whites, not only white farmers.

That would obviously not have supported the narrative that Anglo-Americans have fabricated about South Africa: where kindly, forgiving blacks are oppressed by cruel, destructive whites.

Similary, the Western narrative about “freeing Ukraine” was beginning to suffer from a stark reality infusion.

The corporate media has tried to underplay the violent character of the Ukranian organization, but Dmytro Yarosh, the leader of Right Sector, made this virtually impossible when he allegedly made an appeal to Chechen terrorist leader Doku Umarov to assist the ultra-nationalist group in its crusade against Russia. In addition to courting al-Qaeda affiliated terrorists, Right Sector is rabidly pro-American.

Numerous incidents of violence and intimidation by Right Sector have gone unreported in the West. “In the days since the US-backed coup, according to citizens in Ukraine I am in contact with, after the new regime dissolved the National Police, members of the Right Sector took over police functions in Kiev. Groups of young men, mainly members of Right Sector, have been patrolling the streets armed with baseball bats and weapons,” writes F. William Engdahl. “In some documented instances according to these reports from ordinary Ukrainians, they come in groups to homes of people identified as ‘pro-Russian’ and force them out of their homes or take their possessions, as they term it ‘privatization’ actions. The population lives in a state of terror they liken to the Stalin-era terror.”

It appears an effort to “clean up” its image and make it more palatable to the oligrachs moving in on Ukraine is now underway. On Tuesday it was reported that Oleksandr Muzychko, aka Sashko Biliy, Right Sector’s second in command, was shot dead in a cafe in Rivne in western Ukraine.

According to the BBC, Ukraine’s Deputy Interior Minister Vladimir Yevdokimov said Muzychko was shot dead after opening fire on police and Sokol special forces during a raid at the cafe. They planned to arrest him and other ultra-nationalists for criminal activity. Ukrainian authorities described Muzychko as a gang leader.

Ukrainian MP Oles Doniy, however, provided a different account. He said Muzychko was abducted while traveling in western Ukraine and executed. His body was later found with hands bound and a fatal bullet wound to the heart. A photo posted on Twitter seems to confirm this second account.

Will Baroness Ashton of Upholland lead the nuclear charge?

Baroness Catherine Ashton
Catherine Ashton adjusting her GU crown

When Victoria Nuland rejected the EU solutions in Ukraine with her “Fuck the EU” comment, the EU went it alone. Germany’s Foreign Minister, Frank-Walter Steinmeier proposed that he and his French counterpart, Laurent Fabius, fly to Kiev and try to reach a resolution of the violence before escalation. Polish Foreign Minister, Radoslaw Sikorski was asked to join.

The talks in Kiev included the EU delegation, Yanukovich, the three opposition leaders and a Russian representative. The US was not invited.

Then suddenly snipers began shooting into the crowd in Maidan Square. Panic ensued and riot police retreated in chaos according to eyewitnesses. Vitali Klitschko withdrew from the deal. Yanukovich fled Kiev.

Now that the “opposition” has driven a duly-elected president into exile and dissolved the national riot police, Berkut, Washington has demanded that Ukraine submit to very onerous IMF conditionalities. As Paul Craig Roberts writes:

According to a report in Kommersant-Ukraine, the finance ministry of Washington’s stooges in Kiev who are pretending to be a government has prepared an economic austerity plan that will cut Ukrainian pensions from $160 to $80 so that Western bankers who lent money to Ukraine can be repaid at the expense of Ukraine’s poor.

The corrupt Western media describes loans as “aid.” However, the 11 billion euros that the EU is offering Kiev is not aid. It is a loan. Moreover, it comes with many strings, including Kiev’s acceptance of an IMF austerity plan.

The austerity plan will cut social services, funds for education, layoff government workers, devalue the currency, thus raising the prices of imports which include Russian gas, thus electricity, and open Ukrainian assets to takeover by Western corporations.

Ukraine’s agriculture lands will pass into the hands of American agribusiness.

The conflict between the US and the EU has thus been exposed.

Meanwhile Vladimir Putin has made it clear that Moscow does not need to “invade” Ukraine. The 1997 Ukraine-Russia partition treaty specifically allows Russian troops in Crimea. No shots were fired and Russian “sons” were welcomed with open arms.

The US should start worrying about the white supremacists they so ardently and openly support in Ukraine, but shun elsewhere. If the Nazi’s take over – which seem more and more likely – the UN’s R2P (responsibility to protect) will come into play. Samantha Power, the architect of R2P, should be proud of herself for crafting the ultimate solution many hawks in the US wish for.

The three war-mongering women who represent the West’s foreign policy apparatus, US Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland and EU official and onetime British Campaign for Nuclear Disarmament activist Catherine Ashton, and United States Ambassador to the United Nations Samatha Power, have been exposed. The first two by leaked phone calls, and the latter by her R2P plan.

Ashton, actually the grand and feudalistic Baroness Ashton of Upholland, also has an exaggerated view of her own accomplishments. She has scant knowlegde of what transpires in Europe, but flatters herself with the inflated title of High Representative for Foreign Affairs and Security Policy for the European Union.

Her title hasn’t lifted her dour expression and gloomy features yet, but it might be as a result of her closeness to the Great Unwashed, the GU.

The Baroness is married to former British journalist Peter Kellner, an executive of the British polling company YouGov. The pollster does political polling as well as the very dull infotainment media charts of Pop Idol and X-Factor, pandering to the GU. Only in Britain could a Labourite sink to such depths of grandeur.

In a phone call between herself and the Estonian foreign minister Urmas Paet, Ashton was told what had really happened in Kiev. The High Representative could no wait to throw cold water on the information that the “opposition” – actually a NATO force with looted Libyan weapons some say – was behind the shootings of protesters and policemen.

Ashton quickly defended the new members of the Ukrainian Rada, the parliament. The Estonian Foreign Ministry in the meantime has confirmed that the transcript is authentic.

Essentially, Ashton told the Estonian foreign minister that in the Machiavellian shaping of the fake opposition in the Rada, some “cannon fodder” had been required.

Ashton’s agenda complements that of Nuland whose January phone call with US ambassador to Ukraine Geoffrey Pyatt revealed that the Obama administration was hand picking and paying the future government of Ukraine even while Ashton, as well as Nuland’s co-ideologue Jeffrey Feltman, the United Nations Undersecretary General for Political Affairs, were feigning interest in a negotiated solution.

Nuland sounded certain that the US would achieve its political aims with the support of America’s bought-and-paid for UN team of Feltman and his boss, Secretary General Ban Ki-moon who was known to South Korean journalists as the “slippery eel” when he served as South Korean foreign minister.

The Calcutta-born Special UN envoy to Ukraine, Dutch diplomat Robert Serry, in which Nuland expressed great confidence must also not be forgotten in the coup plot.

Thanks to the intercept capabilities of loyal and proficient Ukrainian security agents, the world now understands the perfidy of chattering women who are helping lead Europe and, possibly, the rest of the world, into a massive conflagration, possibly a nuclear war.

Ukrainian president denies his resignation

peacedeal
Opposition ignoring the signed peace deal

Ukrainian President Viktor Yanukovich has called the latest developments in the country a coup d’etat, denying speculations of his resignation. He also accused international mediators of not fulfilling their obligations.

“I’m always threatened with ultimatums. I’m not going to leave the country,” Yanukovich said in an interview with local UBR TV channel. “I’m not going to resign. I’m a legitimately elected president.”

The interview with the embattled president was broadcast right after the opposition claimed it had received verbal assurances that Yanukovich was resigning.

But as parliament deputies said they were waiting for the written confirmation on his resignation, the president announced his plans to travel across the country’s southeast, which is “so far, less dangerous.”

“Everything that is happening today is, to a greater degree, vandalism and bandits and a coup d’etat,” Yanukovich said in a televised statement.

On Saturday, Ukrainian parliament (Verkhovna Rada) held a new emergency session, during which it passed a law on the return to the 2004 constitution without the president’s signature, saying that the president had removed himself from power.

It also appointed a new head of the Ministry of Interior and a new head speaker of the Rada. In addition, parliament ruled to free former Prime Minister Yulia Tymoshenko from prison and set early presidential elections for May 25.

But Yanukovich says the motions passed by parliament are illegitimate, and says he will not sign any of them.

“The decisions that they are now approving are illegal. I won’t sign anything,” he told UBR journalists in Kharkov. “This is not an opposition, these are bandits.”

The president said his car had been shot at while he was traveling to the airport to go to Kharkov.

“But I have no fear. I am overwhelmed by grief for our country. I feel responsibility,” he said.

“I’m doing everything to prevent the bloodshed of the people who are close to me,” Yanukovich stated, referring to his supportive deputies who he said are being threatened, beaten, and targeted by stone-throwing rioters.

He compared the situation in turbulent Ukraine – which is facing its worst political crisis in modern history – to the rise of the Nazis in the 1930s.

“We now see the same what was [happening] in 1930s, when the Nazis came to power. [They] forbade [political] parties…It’s the same now – [they] ban the party, stalk, beat people, burn down offices,” he said.

Yanukovich is determined to do whatever it takes to “stop the bloodshed” and protect Ukraine “from a split.” But the president admits: “I still don’t know how I am going to do it.”

The leader has stated that he expects international mediators to fulfill their commitments.

“What we are going to do depends on the reaction from the international community, how they are going to meet their responsibilities,” Yanukovich said. “The head of the Ministry of Foreign Affairs, still legitimate, reported yesterday he was speaking with Europeans, with Poland’s head of Ministry of Foreign Affairs, called the US. I hope to hold negotiations in the coming days.”

Yanukovich will call on EU mediators to stop “actions by radicals.”

“I was given guarantees of all the international mediators, with whom I worked. They gave security assurances. I’ll see how they will perform this role,” he said.

On Friday, Yanukovich and opposition leaders signed an EU-brokered agreement on ending the political crisis in the country. While it stipulated five major conditions, the agreement did not give the opposition the power to impose new laws or appointments without presidential approval, though they have attempted to do just that.

Thus the conditions of the deal are being clearly violated. However, the EU – which mediated the deal between the opposition and ruling government – remains quiet.

What the Ukrainian opposition IS NOT fulfilling:
1. Within 48 hours of the signing of this agreement, a special law will be adopted, signed and promulgated, which will restore the Constitution of 2004 including amendments passed until now. Signatories declare their intention to create a coalition and form a national unity government within 10 days thereafter.

2. Constitutional reform, balancing the powers of the President, the government and parliament, will start immediately and be completed in September 2014.

3. Presidential elections will be held as soon as the new Constitution is adopted but no later than December 2014. New electoral laws will be passed and a new Central Election Commission will be formed on the basis of proportionality and in accordance with the OSCE & Venice commission rules.

4. Investigation into recent acts of violence will be conducted under joint monitoring from the authorities, the opposition and the Council of Europe.

Lavrov to EU: Urge opposition to fulfill the deal

On Saturday, the foreign ministers of France, Poland, and Germany – the trio that most actively helped reach the deal between the rival sides in Kiev – admitted that opposition leaders have broken the agreement, according to the Russian Foreign Ministry.

The three EU ministers have spoken separately with Russian Foreign Minister Sergey Lavrov, who has voiced concerns over the Ukrainian opposition’s failure to fulfill the conditions of the agreement.

“The opposition not only has failed to fulfill a single of its obligations but is already presenting new demands all the time, following the lead of armed extremists and thugs whose actions pose direct threat to Ukraine’s sovereignty and constitutional order,” Lavrov told the ministers.

Russia’s FM has called on his counterparts to use their influence with the Ukrainian opposition to stop what he described as rampages by its supporters.

“It is time to stop misleading the international community and pretend that today’s Maidan represents the interests of the Ukrainian people,” Lavrov said.

But it seems that German Foreign Minister Steinmeier also has a separate agreement with British Foreign Secretary William Hague.

“Agreed with German Foreign Minister Steinmeier today to support new government in Ukraine and push for vital IMF financial package,” Hague stated on Twitter.

Sergey Lavrov also voiced his concerns in a talk with US Secretary of State John Kerry. The Russian FM told his counterpart that Kiev had been taken over by “illegal extremist groups,” adding that the situation in Ukraine has sharply escalated, the Russian Foreign Ministry said in a statement.

BRICS puncture credit bubbles risking deflationary shock

bartdrunkHalf the world economy is one accident away from a deflation trap. The International Monetary Fund says the probability may now be as high as 20pc.

It is a remarkable state of affairs that the G2 monetary superpowers – the US and China – should both be tightening into such a 20pc risk, though no doubt they have concluded that asset bubbles are becoming an even bigger danger.

“We need to be extremely vigilant,” said the IMF’s Christine Lagarde in Davos. “The deflation risk is what would occur if there was a shock to those economies now at low inflation rates, way below target. I don’t think anyone can dispute that in the eurozone, inflation is way below target.”

It is not hard to imagine what that shock might be. It is already before us as Turkey, India and South Africa all slam on the brakes, forced to defend their currencies as global liquidity drains away.

The World Bank warns in its latest report – Capital Flows and Risks in Developing Countries – that the withdrawal of stimulus by the US Federal Reserve could throw a “curve ball” at the international system.

Source: The Telegraph

IMF wants trade unions reined in, labour brokers rewarded

imfTrade unions need to be reined in. That is the advice given in an International Monetary Fund report on South Africa released on Tuesday .

The report strangely recommends the use of labour brokers. Labour broking has been called “human trafficking and a modern form of slavery” as it treats workers as profit-making commodities.

Brokers are generally viewed as parasites because they make labour more expensive in a country where unemployment is rife.

It urges the government to move more quickly in implementing its National Development Plan and massive infrastructure spending proposals. It also supported lower wage demands.

Noting that South Africa’s economic growth is lower than that of other emerging countries, and is too low to cut unemployment, the IMF suggests “a social bargain” that would pull together trade unions, business, government and labour brokers.

It urges “commitments to wage restraint” by trade unions. Increases of as much as 100% were demanded this year in the gold mining sector.

As the report was released, workers in the automotive components industry were past the three-week mark in their strike for higher wages. They are demanding an increase of more than 10% and have paralysed vehicle manufacturing.

Production at the world’s biggest platinum mining company, Anglo Platinum, has been disrupted. Members of the Association for Mineworkers and Construction Union have been on strike since Friday.

At South African Breweries, workers downed tools on Monday. The Food and Allied Workers’ Union is demanding a 9.5% increase.

The IMF report flags “escalating labour tensions” as “a key domestic risk”, the Times reported.

The IMF says that more jobs would be created if economic growth were stronger and the labour market “more flexible”.

“Unemployment remains stubbornly above 20%, or more than 30% when including those who have given up looking for a job. Youth unemployment is even higher at more than 50%,” says the report.

The IMF points to recent reforms in Mexico and suggests that South Africa should do something similar to loosen the hold of trade unions on the labour market. This hold, it said, has “produced an insider-outsider system that creates too few jobs and stifles growth”.

Compared to its peers, South Africa has been falling behind.

“Since 2009, South Africa’s growth has averaged 3% compared with 5% for emerging markets and 4% for commodity exporters,” says the report.

The IMF expects South Africa’s growth to slow to 2%.

It urges the government to “resist” a proposal to restrict the use of labour brokers , noting that temporary employment was responsible for a large share of employment growth in recent years.

Trade union federation Cosatu has been vocal in its campaign to get labour brokers banned.

The Treasury yesterday skirted around responding to calls for comprehensive reform of the labour market. It claimed that the issues raised by the IMF were already part of government policies and programmes.

“At its lekgotla in August, the cabinet agreed on a number of measures aimed at reigniting economic growth.

“These measures are in part informed by the recognition that the economy can no longer rely heavily on the global economy to reignite growth and create jobs for the millions of unemployed South Africans,” said the Treasury.

It said “actions are being taken to improve labour relations in key sectors”.

The IMF sees South Africa as more susceptible to shocks.

“In recent years, South Africa’s vulnerabilities [to adverse economic conditions] have increased considerably.”