The unreported economic crisis in Europe

Reality is that which, when you stop believing in it, doesn’t go away.  

==Philip K. Dick

Europe appears to be on the verge of economic collapse because of blowback from the sanctions war against Russia.

The European economic boom, it turns out, was based on availability of cheap oil and gas from Russia.

The UK and the European Union has deliberately cut themselves off, thinking it will punish Russia.  But the Russians are doing okay while Europeans face a winter with shortages of electricity and fuel.  Many are stocking up on firewood and coal.

Whole industries have shut down or relocated to Asia or North America.

Alex Christoforou and Alexander Mercouris, in the video above, say the latest word from oil company executives is that the Europeans might just possibly have enough oil and gas in storage to get by this winter, depending on just how cold the winter is and depending on who you believe.

This is because the European countries bought all the cheap Russian oil and gas they could before the supply shut down.  But next spring, the cupboard (or rather the oil tank) will be bare.  So an even worse crisis will occur in the winter of 2023-2014.

Saudi Arabia, Iran and the United Arab Emirates decline to increase their own output to help the Europeans out.  They and the Russians benefit greatly from the sanctions induced increase in oil prices.

The Europeans are willing to buy second-hand Russian oil and gas from China, India, Turkey and other countries, at prices they refuse to pay Russia directly.  The problem with this is that the importers of Russian oil and gas will only sell that which is surplus to their own needs, and at a very high price.

The U.S. plan is supply Europe with liquified natural gas from North America.  But the infrastructure needed to carry out this plan doesn’t exist, and won’t for at least several years.  Liquifying natural gas, and storing and shipping it, is not easy and not cheap.

In a new video this morning, Christoforou and Mercouris talk about how the economic situation in the UK is so bad that Rishi Sunak, the new British prime minister, has no choice but to raise taxes, cut public services and cut aid to Ukraine.

The goal of sanctions policy is to weaken Russia so as to help Ukraine.  But sanctions policy is weakening Europe, not Russia.  How does this make sense?

Diana Johnstone on the decline of Europe

CIRCLE IN THE DARKNESS: Memoir of a World-Watcher by Diana Johnstone (2020)

Diana Johnstone is an American journalist, a year or two older than me, who has spent most of her adult life reporting from Europe.

This memoir is a rich account of the past half-century of European history.  Its over-arching themes are the erosion of the sovereignty of European nations and of the European left as fighters for peace and defenders of working people.  Another is reality is rarely what the official sources say it is.

It also touches on her personal struggles and family life.  She decided at an early stage in her career to choose freedom to write as she saw things over middle-class security.

I won’t try to summarize her work, which touches on many important events, but I’ll mention a few highlights.

∞∞∞

>> Johnstone was not a supporter of the European Union.  It had been promoted as a way for European nations to unite and make Europe an independent power, setting standards for human rights, social welfare and the environment, which other nations would have to respect in order to engage with Europe or belong to it.

Maybe it was that way in the beginning, at least to a certain extent.  But she pointed out that the proposed European Constitution of 2005, if you read the fine print of its more than 500 pages., committed its signers to supporting neoliberal economics and the NATO alliance.

It the principal objective of the Union was “a highly competitive market economy,” with business competition “undistorted” by state policy.  Public services “of general economic interest” had to be open to competition, including international competition.

The Constitution specified a “common security and defense policy” in which”commitments and cooperation in this area shall be consistent with commitments under the North Atlantic Treaty Organization.”  It also stressed the need to defend against “terrorist attacks.”

It was put to a public vote in France and the Netherlands and rejected both times.  It was revised in the form of the 2008 Lisbon Treaty, which was accepted by all the member governments except Ireland.  The Irish put it up to a referendum, which was rejected in 2008.

After some minor concessions, the Irish were called on to vote again, and on Dec. 1, 2009, the new treaty became law.  The principle is: Keep voting until you get it right.

I doubt if many of those who voted “yes” understood they were locking themselves into economic austerity and undeclared wars.

> Johnstone didn’t know what to make of the 1968 student uprising in Paris.  It was inspired by privileged students’ desire to overthrow restraints on personal behavior (“it is forbidden to forbid”) and not by any program for improving the welfare of society.

The passing scene: Links & comments 9/13/2022

Asia’s Future takes shape in Vladivostok, the Russian Pacific by Pepe Escobar for The Cradle.  (Hat tip to Bill Harvey)

Putin in Vladivostok

Pepe Escobar, reporting last week on the Russia-hosted Eastern Economic Forum in Vladivostok, says the world’s center of economic gravity is shifting to Asia, with China as leader and Russia and India as its main partners.

 I have my doubts that the Chinese-led new order will be as utopian as Escobar predicts, but the Chinese magnetic pole is a more powerful attractor than the U.S. pole.

The Shanghai Cooperation Organization, led by China, now includes China, Russia, the Central Asian republics, India, Pakistan and Iran, while 11 more nations, including Turkey, seeking to join.  

The reason is not hard to see.  China promises benefits to its economic partners; the NATO alliance demands sacrifices.  As the old saying goes, you can catch more flies with honey than you can with vinegar.

The Specter of Germany Is Rising by Diana Johnstone for Consortium News.  (Hat tip to Bill Harvey)

Scholz meets Zelensky

German Chancellor Olaf Scholz advocates an expanded, militarized European Union with Germany as the dominant force.  

It would include all of Eastern Europe and the Balkans, plus Ukraine, Moldova and Georgia.  It would have a common foreign policy, consisting of a permanent Cold War against Russia, and make decisions by majority vote, not by consensus as now.

Germany dominates the smaller Eastern European countries economically.  The further east the European Union goes, the greater the influence of Germany, the less the influence of France and the stronger the possibility of a war policy being adopted over French objections.

Viktor Orban’s message to Europe

Viktor Orban

Viktor Orban, the prime minister of Hungary, refuses to join in the proxy war and economic war against Russia.  He gave his reasons why in a speech last summer, which I’ve excerpted, because it sums up the situation so well.  

He is a contentious character, for reasons explained in the linked articles.  But I don’t see anything in this speech excerpt that isn’t true.

Western strategy in this war is based on four pillars.  It is a sensible strategy on paper, and perhaps even has numbers to back it up.  

The first was that Ukraine cannot win a war against Russia on its own, but it can do so with training from the Anglo-Saxons and with NATO weapons.  That was the first claim.

The second strategic claim was that sanctions would weaken Russia and destabilise the leadership in Moscow.

The third strategic element was that – although they would also affect us – we would be able to deal with the economic consequences of the sanctions, so that they would be hurt more and we would be hurt less.

And the fourth strategic consideration was that the world would line up behind us, because we were in the right.

As a result of this excellent strategy, however, today the situation is that we are sitting in a car with four flat tires.  

It is absolutely clear that the war cannot be won like this.  The Ukrainians will never win a war against Russia with American training and weapons.  This is simply because the Russian army has asymmetric superiority.

The second fact that we must face up to is that the sanctions are not destabilising Moscow.

The third is that Europe is in trouble: economic trouble, but also political trouble, with governments falling like dominoes.  Just since the outbreak of the war, the British, the Italian, the Bulgarian and the Estonian governments have fallen.  And autumn is still ahead of us.  The big price rise came in June, when energy prices doubled.  The effects of this on people’s lives, which are creating discontent, are only just beginning to arrive, and we have already lost four governments.

And finally, the world is not only not with us, it is demonstrably not with us.  Historically the Americans have had the ability to pick out what they identify as an evil empire and to call on the world to stand on the right side of history – a phrase which bothers us a little, as this is what the Communists always said.  This ability that the Americans used to have of getting everyone on the right side of the world and of history, and then the world obeying them, is something which has now disappeared.

Europe faces self-imposed economic crash

Thousands in Prague protest energy crisis and NATO alliance

I’ve written about why I think Russia is likely to win its ground war in Ukraine and its sanctions war worldwide, and what I think the results of Russian victory might be.  This post is about one aspect of that war—how the sanctions war has brought about an economic crisis in Europe.

Six months ago, Europe’s leaders boasted they’d bring Russia to its knees through economic sanctions. Today their countries fact economic disaster because of blowback from those sanctions.

Many Germans are hunting through forests for firewood for the winter, because of the looming scarcity of oil and natural gas.  One report says there is a one-year waiting list for purchasers of wood stoves. Coal also is in great demand and short supply.

In Spain, the government is imposed rules forbidding air conditioning to be set below 80 degrees Fahrenheit. In the Netherlands, a campaign called Flip the Switch asks Dutch people to limit showers to five minutes and do without air conditioning and clothes dryers.

One expert says six in 10 British factories are in danger of closing as a result of higher energy bills. The average British household is expected to see its annual average energy bill rise to $4,180, a rise of $1,765, according to CNN Business.

Forward contracts for electricity in France and Germany are 10 times what they were this time last year.

It’s hard to see how Europe can escape a energy crisis and an economic recession this winter.  The initial reaction of Europe’s leaders has been to double down.  Germany’s foreign minister said Germany will never desert Ukraine, no matter what.

The European Union is reportedly planning to seek sweeping powers over businesses in member states that would basically allow Brussels to tell these companies what to produce, how much of it, and whom to sell it to in times of a crisis.

A public opinion poll indicates a majority of Germans would like to negotiate a peace.  Unfortunately a compromise peace is no longer being offered.  The Russians now say their terms are unconditional surrender.

Tens of thousands joined to protest against the sanctions war in Prague.  I think it is the first of many such protests.  They may lead to sweeping changes across Europe; they may lead to existing governments and the. EU itself invoking emergency powers to stay in power.

I sympathize with the European peoples who’ve been caught up in the global struggle of the USA vs. the Russian-Chinese alliance.  Europeans have a lot to lose and little to gain by joining in.

Globalist Germany and nationalist France?

German Chancellor Olaf Scoltz and French President Emmanuel Macron

Diana Johnstone, a long-time independent reporter of European politics, wrote an interesting article about the differences between Germany and France in economic, environmental and military police.

Germany is confident and expansive.  France is defensive and fearful of national decline.  Or so she says.

Germany is committed to green energy, feminism, globalization and an anti-Russian “rules-based international order.”  France is committed to nuclear energy and a nationalistic industrial policy, and is reluctant to join in a new Cold War against Russia.

Franco-German unity has been the key to European unity since the founding of the European Coal and Steel Community, the forerunner of the European Union, in 1952.   If they can’t stay unified, the EU may not have much of a future.

Germany’s new government is, as she puts it, a “traffic light” coalition.  Red represents the Social Democrats, yellow (or gold) represents the pro-business Free Democrats and green represents the Green Party.

A new Ministry of Economic and Climate will be in charge of reducing CO2 emissions.  Every governmental measure will have to pass a climate check.  

Germany today is heavily dependent on coal as a result of phasing out nuclear energy, and it has delayed certification of the new gas pipeline from Russia.  Itt has a goal of generating 80 percent of Germany’s electricity from renewable energy, mainly wind farms, by 2030, sooner than before.

One of the new government’s priorities is to develop an electric car industry for the export market, both inside and outside the EU.  Germany’s expectation is that all EU countries will be open to importing the new electric cars without favoring their own industry.   The European Commission is considering rules that would require all cars sold in Europe after 2035 to be carbon neutral.

France’s Emmanuel Macron, meanwhile, is being pulled to the right, Johnstone wrote.  There is a fear that France is losing its national character and also its position in the world.  France is not going to shut down its network of nuclear-powered electric power plants any time soon.

The French government wants to build up French manufacturing industry.  This might bring it into conflict with EU rules and regulations, which bans government policies to favor domestic industry, except in the military sphere.

There has a strong right-wing, anti-immigrant movement in France, led by Marine Le Pen.  But now there’s an even more extreme movement, led by a journalist named Eric Zemmour.  His party is called the Reconquest Party; the idea is to reconquer France for the French.

The new German government wants strong ties with the United States, which, according to Johnstone, means dropping objections to storing nuclear weapons on German soil.  France hasn’t openly opposed NATO, but is less enthusiastic about the alliance than Germany is.

Macron has floated the idea of an independent European military force, independent of the United States, but hasn’t gotten anywhere with the Germans and other NATO allies.  Johnstone said he wouldn’t like Ukraine in NATO, because it would expand German influence and its farm exports would compete with French farmers.

The passing scene: Links 12/1/2021

The Next European War by John Michael Greer for Ecosophia.  Peace in Europe is not permanent..

The War Nerd: The Tigray-Ethiopia War.  War is hell.

When All the Media Narratives Collapse by Andrew Sullivan for The Weekly Dish.  Big news organizations have forfeited trust.

Ten Million a Year: David Wallace-Wells on polluted air for the London Review of Books.

How Delaware Sold the Greatest, Most Insidious Financial Security Tool the World Has Ever Known by Casey Michel for CrimeReads.

Hayao Miyazaki Prepares to Cast One Last Spell by Ligaya Mishan for the New York Times.  Some good news to end with.

Trade war tactics and strategy

Reuters reported that the European Union is considering applying 25 percent tariffs on American motorcycles, bourbon and blue jeans, if President Trump imposes new tariffs on steel and aluminum imports.

Motorcycles, bourbon and blue jeans?  Kevin Drum of Mother Jones explained the significance.

Hmmm.  Harley-Davidsons are made in—what?  Wisconsin, right?  In Menomonee Falls, actually, about 50 miles from Janesville, where Paul Ryan lives.  The Jim Beam bourbon distillery is in Clermont, Kentucky, about 20 miles from Mitch McConnell’s house in Louisville.  Levi’s is headquartered in San Francisco, about two miles from Nancy Pelosi’s house.

I think that’s a pretty funny example of trade war tactics.

Mike Whitney on U.S. anti-Russian policy

Will Washington Risk WW3 to Block an Emerging Russia-EU Superstate? by Mike Whitney for Counterpunch.

Map via Wikimedia

Will Brexit be the scapegoat for UK’s problems?

I can’t judge all the consequences to Britain of the vote to exit the European Union, but there are a few things I am sure of.

• The United Kingdom had many serious economic problems before Brexit—financialization, the hollowing out of manufacturing, the decline of the British pound, unnecessary government austerity.
• Politicians and journalists will use Brexit as the scapegoat and explanation of these problems, and an excuse for not doing anything about them.
• If the UK joins the Transatlantic Trade and Investment Partnership, the Trade In Services Agreement or other corporate-sponsored trade agreements, it will lose whatever national sovereignty it gained by exiting the European Union.

LINKS

Why They Left by Costos Lapavitsas for Jacobin magazine.

‘I want to stop something exploitative, divisive and dishonest’—conversation with a Leaver by Oliver Humpage for Medium.

Britain is not a rainy, fascist island — here’s my plan for ProgExit by Paul Mason for The Guardian.

Brexit: the revolt of the losers

The dominant neoliberal economy sorts people into winners and losers.  Brexit is a revolt of the losers.

The winners are the credentialed professionals, the cosmopolitan, the affluent.  The losers are the uncredentialed, the provincial, the working class.

Losers are revolting across the Western world, from the USA to Poland, and their revolt mostly takes the form of nationalism.

The reason the revolt takes the form of nationalism is that the world’s most important international institutions—the World Bank, the International Monetary Fund, and the European Central Bank—are under the control of a global financial elite that does not represent their interests.

I don’t fully understand the decision-making process in the European Union, but looking at its web site, my impression is that public debate is not a part of it.

The only vehicles for exercising democratic control, at the present moment in history, is through democratic national governments.  I am in favor of international cooperation, and I don’t know how I would have voted on Brexit if I had been British, but I certainly can understand Britons who don’t want to be at the mercy of foreign bureaucrats and the London governmental, banking and intellectual elite.

Democratic nationalism is the only form that democracy can take until there is a radical restructuring of international institutions.  Without a strong progressive democratic movement, the only alternative to neo-liberal globalization is right-wing anti-democratic populism as represented by Donald Trump, the United Kingdom Independence Party, Marine le Pen’s National Front in France, Greece’s Golden Dawn and others.

Why did Germany abandon the good path?

A decade ago, looking at the state of the union the Bush administration, it seems to me that it was the European Union, and Germany in particular, had replaced the USA as the last, best hope of earth.  As recently as five years ago, I posted an article on Germany as an Economic Role Model.

Germany had seemingly created an economy based not on cutting costs, but on creating value, investing in people and worker participation in decision-making.  The Germans had learned how how to hold their own in international trade and still enjoy high wages, generous social benefits and excellent public services, without sacrificing civil liberties.

Or so I thought at the time.  But the Greek debt crisis shows Germany as much in the grip of a financial oligarchy as the USA was.

The German leaders have embraced the idea, very familiar to us Americans, that the purpose of an economic system is not cooperation for mutual benefit, but to reward winners and punish losers.

The best way to help Greece’s creditors is to promote Greece’s economic recovery, so at least a portion of the debt can be repaid.  The austerity measures being imposed by the European Central Bank, European Commission and International Monetary Fund are driving Greece deeper into economic depression.  They are being imposed as a punishment and a deterrent.

The German leaders also have made the mistake of allowing central banks, rather than the public, to determine economic policy.   The problem with this is that bankers have different priorities than the public.

Broadly speaking, bankers want zero inflation and debts to be repaid in full.  All other things being equal, these are desirable goals, but not at the cost of rising unemployment, falling wages and non-functioning government services.

Unfortunately the European Central Bank is in charge of European monetary policy, and the public has nothing to say about its policies.   It is governed by a committee consisting of 19 national central banks and a six-member executive board appointed by the European Council.   I looked up “accountability” on the bank’s web site, and found that this consists of regularly issuing reports.

The best way to enforce accountability for the Greek debt crisis would be to investigate the Greek public officials and their banker advisers who created it, and determined whether they should be charged with malfeasance.  Instead the banks have been bailed out, and the public officials escape blame—much the same as in the 2008 financial crisis in the United States.

As Greece goes, so go other debtor nations

The Greek debt burden is more than the people of Greece can ever repay.

But evidently the creditor nations will not accept this until Greece is bled dry.

Their “austerity” plan is for higher taxes, lower wages and higher prices and the sale of Greek national assets at bargain prices.

Greece is being treated like a nation defeated in war, and, like a defeated nation, it will never prosper until it can free itself from the power of its conquerors.

A trust fund created by Greece’s creditors will sell off 50 billion Euros worth of Greek national assets, with half the money to be used to pay Greece’s debt and half to recapitalize Greek banks.   Greeks will not have a voice in what is sold or at what price.

Heather Stewart of The Guardian recently listed 23 nations that, like Greece, are in an external debt crisis, and 14 at high risk of an external debt crisis.

The 23 nations also in external debt crisis are Armenia, Belize, Costa Rica, Croatia, Cyprus, the Dominican Republic, El Salvador, The Gambia, Grenada, Ireland, Jamaica, Lebanon, Macedonia, Marshall Islands, Montenegro, Portugal, Spain, Sri Lanka, St. Vincent and the Grenadines, Sudan, Tunisia, Ukraine and Zimbabwe.

The 14 high risk nations are Bhutan, Cape Verde, Dominica, Ethiopia, Ghana, Laos, Mauritania, Mongolia, Mozambique, Samoa, Sao Tome e Principe, Senegal, Tanzania and Uganda.

My guess is that Ukraine is the next country in line to lose its national sovereignty to creditors; this is likely as soon as the government no longer needs financing to crush the rebellion in Donetsk and Lugansk.

We Americans should remember that the United States is a debtor nation like Greece, not a creditor nation like Germany, Japan or China.  What happens to Greece today and to Ukraine tomorrow could happen to the USA someday, too, when our debts are in yuan or some other currency instead of dollars.

LINKS

Beyond Greece, the world is filled with debt crises by Heather Stewart for The Observer.

Global Debt Can’t Be Paid by Briton Ryle for WealthDaily.

There are more TPPs in the pipeline

The Trans-Pacific Partnership is just the beginning.

POLITICO reported that four more trade agreements are now being negotiated.

Following Congress’ hard-fought approval of “fast-track” trade authority last week, U.S. Trade Representative Michael Froman vowed not only to complete the 12-nation Trans-Pacific Partnership but an even bigger pact with the European Union and three other major trade deals — all in the 18 months remaining in President Barack Obama’s term.

It could add up to the biggest trade blitz in history, transforming the rules under which the world does business.

“We’ve got a lot of pots on the stove,” Froman told POLITICO while watching senators cast their final votes to send the legislation to the president. “We want to get TPP done and through Congress. We want to get TTIP negotiated. We’re going to finish ITA. I’m hoping to finish EGA and TISA.”

Those would be, in order: the Transatlantic Trade and Investment Partnership agreement with the European Union, an even bigger pact than the TPP in terms of economic size; the World Trade Organization’s Information Technology Agreement, which covers about 97 percent of world IT trade; the Environmental Goods Agreement, accounting for 86 percent international commerce in green goods; and the 24-party Trade in International Services Agreement, which involves three-quarters of the United States’ gross domestic product and two-thirds of the world’s services, such as banking and communications.

via POLITICO.

I’d heard of the Transatlantic Trade and Investment Partnership (TTIP) and the Trade in Services Agreement (TISA), but not the Information Technology Agreement or the Environmental Goods Agreement until now.

Squeezing Greece won’t help German people

The Greek debt crisis is not a conflict between Germany and Greece.   It is the European Union acting as a debt collection agency for central bankers.

German working people get no benefit from the demand that the government of Greece impoverish the people of Greece so as to pay interest to the European Central Bank and the International Monetary Fund.

They in fact will suffer in the long run, because the more wages and living conditions are driven down in other countries, the harder it will be to maintain them in Germany.

Some five years ago, I wrote a post about how Germany was a good role model for the USA, because its leaders were committed to industrial productivity and a high-wage economy.   Unfortunately, the German leaders instead have taken the USA as a role model, and followed our downward path of financialization.

I believe that people who borrow money have a moral obligation to pay it back—if they can.  I believe that there are other moral obligations that take precedence, such as the welfare of those who depend on you.  That’s why the United States and other nations substituted bankruptcy laws for debtors’ prisons.

The Greek debt problem would have solved itself if Greece had its own currency instead of the Euro.  As Greece’s balance of trade worsened, its currency would be devalued and its products and services (including the tourist industry) would become cheaper in terms of dollars and euros.

The great fear of the “troika”–the ECB, IMP and the leaders of the European Union–is that Greece will stop using the euro, and that some of the other 17 countries that use the euro will follow suit.  That might be a problem for bond-holders.  I don’t see it as a problem for ordinary people in Germany, the USA or any other country.

LINKS 

It’s the class conflict, stupid! by David Ruccio on occasional links and commentary.

Europe: Shaking the Temple by Conn Hallinan for Dispatches from the Edge.  (Hat tip to Bill Harvey)

From Minsk to Brussels, it’s all about Germany by Pepe Escobar for RT Op-Edge.

 

Europe’s alternative to Putin’s oil and gas

Map: Global Research

Dependence of key European nations on imports of Russian oil and gas puts the European Union in weak position in relation to Vladimir Putin.

One way to get out of that position of weakness is to end the sanctions against Iran, and import Iranian oil and gas.  In the longer run, Europe would benefit from a new gas pipeline from Iran to Europe.

The European Union has no conflict of interests with Iran.  It is following the lead of the United States.  As far as that goes, the United States has no conflict of interests with Iran.  We Americans are merely nursing old resentments and following the lead of Israel and Saudi Arabia.

§§§

Breaking Europe’s Putin addiction by Amir Handjani for Al Jazeera.

‘Drill, tovarich, drill’: Putin’s economic dilemma

Vladimir Putin’s Russia is a great military power with a backward economy.

Without a strong manufacturing base, Russia’s economy depends sale of oil and natural gas, which are non-renewable.   This means that, unless Russia changes direction, it is fated to become a resource colony of China or the European Union.

Economic sanctions promoted by the USA could be an opportunity for Russia to develop its domestic industries and its internal market, much as the infant USA did when it was cut off from trade with Europe prior to and during the War of 1812.  But according to this article by Mikhail Matveev for Inter-Press Service, Russia is going in the opposite direction.

The recent call from Russian Prime Minister Dmitry Medvedev for “tightening belts” has convinced even optimists that something is deeply wrong with the Russian economy.

No doubt the planned tax increases introduction of a sales tax and increases in VAT [1] and income tax will inflict severe damage on most businesses and their employees, if last year’s example of what happened when taxes were raised for individual entrepreneurs is anything to go by – 650,000 of them were forced to close their businesses.

Nevertheless, it looks like some lucky people are not only going to escape the “belt-tightening” but are also about to receive some dream tax vacations and the lucky few are not farmers, nor are they in technological, educational, scientific or professional fields – it is the Russian and international oil giants involved in oil and gas projects in the Arctic and in Eastern Siberia that stand to gain.

“In October [2013], Vladimir Putin signed a bill under which oil extraction at sea deposits will be exempt from severance tax.  Moreover, VAT will not need to be paid for the sales, transportation and utilization of the oil extracted from the sea shelf,” noted Russian newspaper Rossiiskie Nedra.

[snip]

In fact, the line of thinking adopted by Russian officials responsible for tax policy is very simple. Faced with the predicament of an economy dependent on oil and gas half of the state budget comes from oil and gas revenue, while two-thirds of exports come from the fossil fuel industry, they decided to act as usual – by stimulating more drilling and charging the rest of the economy with the additional tax burden.

Matveev wrote that Russia, like other countries, suffers the bad effects of global climate change caused by fossil fuel emissions.  The Russian economy is at risk, he wrote, if the USA or European Union ever achieve their announced goals for shifting to renewable energy sources.   I don’t think the latter is as likely as Matveev seems to think.

The fact that economic sanctions cause serious problems to Russia does not mean that they are a good idea.  Weaker nations than Russia have survived U.S.-led economic sanctions, and the economic war with Russia hurts European Union countries as much or more than Russia.

EU pact makes Ukraine a colony

When Poland and the Baltic states joined the European Union, the EU invested in the infrastructure of these countries to bring them closer to the economic level of other European countries.

Economist Michael Hudson said, in an interview with the Real News Network, that the exact opposite is happening with Ukraine’s association agreement with the EU.

Ukraine will not be a member of the EU, will not get any EU investment and will not get any relief from its financial obligations to the International Monetary Fund and European banks, but will open itself up to have foreign investors buy up its assets at bargain prices.

Supposedly the 28 countries of Europe will be opened up as an export market, but, as Hudson asked, what does Ukraine have to export that European countries want?  Formerly Ukraine’s chief exports were military equipment made in Soviet-era factories for Russia.   Now that market is cut off and Russia will build its own armaments factories.

Hudson said the Ukrainians to benefit from the agreement will be that nation’s ruling kleptocrats.

The trouble with internationalism

I would like to see a world at peace, and I would like to see international institutions capable of settling disputes and addressing global problems such as climate change and nuclear arms.   Unfortunately these are not the kinds of international institutions that we the people are being asked to support.

The most powerful global organizations, with the possible exception of the Roman Catholic church, are international banks and corporations.  International institutions such as the World Trade Organization, the International Monetary Fund and the European Central Bank enforce rules that serve the interests of banks and corporations.

The proposed Trans Pacific Partnership Agreement and similar proposals would give the world’s corporate and financial elite new tools for enforcing their agendas.  While there is urgent need for international agreement and institutions to deal with climate change, TPP-type agreements actually would give corporations the right to appeal national laws and local rules aimed at limiting greenhouse gasses.

What makes the banks and corporations powerful is that money can go anywhere while most people are stuck where they are. Migrant money is treated with deference.  Migrant Mexicans in the United States, migrant Uzbeks and Kazakhs in Russia, and migrant Filipinos in the Persian are treated like dirt.

The European Union’s current austerity program is an example.  The well-being of Europe’s people is being sacrificed to ensure that Europe’s banks never suffer losses.   I’d guess this is the main reason for the success of Europe’s nationalist right-wing parties in the recent elections to the European Parliament.