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22 December 2014

THE VIEW FROM OLYMPUS: THE S WEAPON


Just as Germany had its V weapons, the V-1 and V-2, so Washington now has its S weapon. If another country does something we don’t like, Washington hits it with economic sanctions.

As Iran’s economy shows, sanctions can do a country quite a bit of damage. The burden falls mainly on the middle class; just as in Washington, the elites know how to protect themselves. From Washington’s perspective, sanctions are an ideal weapon, in that they seem to cost us little or nothing.

In fact, they may end up costing us a great deal. All around the world, a state’s legitimacy now depends in no small part on ensuring a growing economy. A state that cannot do that may fail. Because Washington has no understanding of Fourth Generation war, it thinks the result will be merely a new government, one that will bend to Washington’s (and Globalism’s) will. In reality, in a 4GW world, the consequence may be another failed state and the effective conquest of another region by non-state elements.

More, whenever a state thinks it has discovered a new weapon to which there is no reply, its opponents surprise it by coming up with one or several. Other countries are growing tired of Washington dictating to them and threatening sanctions if they do not obey. At least two are not little countries Washington can easily step on. I refer to China and, especially, Russia.

Following its now-usual pattern when Russia recovered the Crimea and moved to protect ethnic Russians in eastern Ukraine from a hostile government in Kiev, the U.S. put economic sanctions on Russia. Reluctantly, the EU went along, partly because its elites share the Globalist ideology and partly because it is afraid to act independently of Washington. Russia hit back with sanctions of its own, which did no harm to the U.S. but did brake an already slow-moving EU economy.

Washington continues to threaten Russia with further sanctions. But if I read the tea leaves correctly, Russia is preparing some counter-moves that could inflict serious pain on both the EU and the U.S.

Russia currently owes foreign institutions about $800 billion in debt. The fall in the price of oil, engineered by the Saudis to put the frackers out of business, has undermined Russia’s earnings of foreign exchange. Russia has a large foreign currency reserve, but not large enough to cover the $800 billion. Washington is smirking, saying to Moscow, “OK, let’s see you get out of this one.”

Moscow has what I see as an obvious answer. Normally, it would roll the debt over. Sanctions now prevent that, because any EU financial institution that lends to Russia will be prosecuted by Washington. So why does not Moscow merely announce that it is suspending payment to institutions in any country that is participating in sanctions? It would still pay whatever is due to institutions in countries not taking part in the sanctions, so that while it would be in technical default, it would not be in what I would call policy default. It could pay; it was merely, in some cases, choosing not to as a matter of policy, a policy of replying to the S weapon.

As an old saying goes, if you owe your banker $100,000, you have a problem. If you owe him $100 million, he has a problem. The EU’s share of that $800 billion is large enough that Moscow would immediately hand Europe a new and massive banking crisis.

Washington won’t much care, because it regards Europe with the contempt satellites usually receive. But both Russia and China recently bought large amounts of gold to add to their already considerable reserves.

This points to a possibility that would hurt Washington: a joint Russian-Chinese move to put some international trade back on a gold basis. That would bypass sanctions because it could bypass banks. Iran has already done this to some extent, but Iran is not big enough to make much difference. Russia and China are.

The lesson here is one war has long taught: every move has countermoves. There ain’t no such thing as a free MRE. One-way war, war where only one side gets hurt (unless it is over quickly), turns into two-way war. That was the real lesson of 9/11, although Washington has refused to learn it. The S weapon, used often enough and casually enough, will elicit replies that will hurt us. Russia and China, especially if they act together, can give Washington and the EU both a good birchin

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