Will the Economic Sanctions on Russia Backfire?

Ukraine - Russia Conflict : The SWIFT divide

Biden and the European allies are putting on a brave face and claiming their really socking it to Russia, but this celebration is likely to be shortlived. The recent actions by Biden are likely to set in motion disruptions in the international financial system that could end America’s status as the World’s reserve currency. Let’s start with the SWIFT sanctions.

SWIFT is the acronym for Society for Worldwide Interbank Financial Telecommunication. SWIFT is basically a message system for banks that allows them to communicate key financial information required to pay invoices or wire money from one entity to another. So the big brave West cut off some Russian banks access to SWIFT. That means people wanting to buy Russian exports will not be able to pay for them in dollars. EXCEPT, the SWIFT sanctions were not imposed on those Russian banks that receive payments from the United States and Europe for oil. Got that? It is a sham sanction.

But SWIFT is not the only game in town. There are alternatives:

  • CIPS – sponsored by China, for trade-related deals in the Chinese currency with Chinese clearing banks[57]
  • SFMS – sponsored by India
  • SPFS – sponsored by Russia, mostly composed of Russian banks

CIPS in particular represents a direct threat to SWIFT dominance. A recent discussion at MarketPlace between David Brancaccio and Jennifer Pak is illuminating:

David Brancaccio: So, an alternative for Russia could be China’s cross-border interbank payment system, acronym CIPS. How’s it work?

Jennifer Pak: China’s CIPS connects participants inside China and out to do trade or investment and then settle those transactions using Chinese yuan.

Brancaccio: Well, How’s it different from the SWIFT global payment system based in Belgium?

Pak: Right. So let’s say I sell you shoes. Normally, you’d reach for PayPal to settle it in U.S. dollars, right? But instead, you could use CIPS and pay me in Chinese yuan. And it actually relies heavily on SWIFT’s financial messaging services. So you can think of CIPS as being enhanced by SWIFT rather than working against it.

Brancaccio: But in the Chinese currency, that’s key. What kinds of institutions currently use the CIPS system?

Pak: Well, CIPS says they have roughly 1,100 financial institutions from 100 countries, but they’re mostly from China, and also ones from Russia.

Many analysts believe CIPS is still a pipe dream. I do not. I think the West has underestimated the seriousness of this threat. Consider this fact–of the top ten banks in the world, the top four are all based in China (the following data is from January 2021).

Industrial and Commercial Bank Of China Ltd. (IDCBY)

  • Revenue (TTM): $123.6B
  • Net Income (TTM): $45.3B
  • Market Cap: $231.8B
  • 1-Year Trailing Total Return: -6.9%
  • Exchange: OTC

The largest bank in the world in terms of total assets under management (AUM) is the Industrial and Commercial Bank Of China Ltd. This institution provides credit cards and loans, financing for businesses, and money management services for companies and high net worth individuals. Though this is a commercial bank, it is state-owned.

China Construction Bank Corp. (CICHY)

  • Revenue (TTM): $102.2B
  • Net Income (TTM): $38.7B
  • Market Cap: $196.6B
  • 1-Year Trailing Total Return: -3.7%
  • Exchange: OTC

The second Chinese bank on our 10 biggest list is China Construction Bank Corp. It provides corporate banking services such as e-banking, credit lines, and commercial loans. China Construction Bank also provides personal banking through a separate segment, offering personal loans, deposits, wealth management, and credit cards.

Agricultural Bank of China Ltd. (ACGBY)

  • Revenue (TTM): $89.7B
  • Net Income (TTM): $30.9B
  • Market Cap: $131.5B
  • 1-Year Trailing Total Return: -14.1%
  • Exchange: OTC

Agricultural Bank of China is state-owned institution that provides not only personal and corporate banking services, but it also offers a special suite of products for agricultural customers such as small farming operations and larger agricultural wholesale companies.

Bank Of China Ltd. (BACHF)

  • Revenue (TTM): $79.4B
  • Net Income (TTM): $27.2B
  • Market Cap: $109.1B
  • 1-Year Trailing Total Return: -12.7%
  • Exchange: OTC

Bank Of China focuses primarily on commercial banking activities such as deposits and withdrawals, and foreign exchange. The bank also is even licensed to issue banknotes in Hong Kong and Macau.

These banks are likely to forge a closer relationship with Russia than already exists. Russia may not be a huge market but it provides some critical commodities. The United States is buying 20% of its oil from Russia. Europe is purchasing an even larger chunk.

Then there is refined nickel. Russia is not the largest producer of nickel in the world (that honor lies with Indonesia) but it is the largest producer of refined nickel. This is a critical component in stainless steel and batteries. In addition, Russia and Belarus are major producers of potash–an essential commodity needed to produce fertilizer. A reduction in potash exports means less fertilizer for American farmers come September.

According to Tyler Durden at Zerohedge, an enormous spike in the price of oil looms on the near horizon:

This self-imposed embargo which has effectively halted a majority of Russian oil shipments, threatens to drive up energy prices globally by removing a gusher of oil from a market that was tight even before the Russian invasion of Ukraine. Meanwhile, Russia, waging war and in need of revenue with its financial system in turmoil, is taking extreme steps to convince companies to buy its most precious commodity. . . .

“The market is starting to fail,” a trader at a major commodities trading house told the WSJ, which is a problem because with Russia exporting roughly 5 mmb/d, the oil market – already extremely tight – could find itself in a historic supply shortage in just a few days, and will need massive demand destruction, read much, much higher oil prices, to stabilize as Goldman wrote over the weekend. . . .

As a result of these sanctions, and fears that a full-blown embargo on Russian oil output will soon follow, energy buyers have balked at the prospect of using the existing “loophole” worried that in just a few days they may be stuck with billions in Russian oil they can’t sell. As a result the entire Russian oil supply chain is collapsing.

Which is not to say there are no buyers left: as prices for Russian crude tanked last week, companies in India vacuumed up around seven million barrels of Urals oil, but even there companies are taking steps to limit sanctions risk according to the WSJ.

I do not anticipate that Russia will collapse in a heap and wail about the unfair bullying of the West. They are likely to use cutouts and work arounds but will start shedding dollars and acquire more Chinese Yuans. It appears that Vladimir Putin was anticipating the possiblity of sanctions in light of the agreements he signed with China in early February. These agreements had to be in place before he could contemplate launching the invasion of Ukraine:

Russia forged new long-term supply deals with China as the Kremlin aims to strengthen ties with the Asian nation amid souring relations with the West.

Energy giants Gazprom PJSC and Rosneft PJSC signed agreements with the world’s largest energy consumer as President Vladimir Putin met his Chinese counterpart Xi Jinping in Beijing ahead of the Winter Olympics.

Gazprom signed its second long-term gas deal with China National Petroleum Corp. Under the agreement, the producer will deliver 10 billion cubic meters per year over 25 years via a new pipeline from Russia’s Far East.

Rosneft reached an agreement to deliver 100 million tons of crude oil to CNPC via Kazakhstan within 10 years, following the expiration of a similar contract next year. The volumes will be used as feedstock for refineries in China’s north-west, Rosneft said in a statement.

Biden’s policy towards Russia has succeeded in solidifying ties between Russia and China that puts the United States at a clear disadvantage. The shaking in the financial markets is just beginning. This is likely to produce the worst of both worlds–global stagflation and inflation. American consumers are likely to pay a terrible price.

 

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61 Responses to Will the Economic Sanctions on Russia Backfire?

  1. Fred says:

    “The United States is buying 20% of its oil from Russia”

    This is due to the Biden administration’s economic policies. Those are meant to break the middle-class and make them even more reliant on the government than the two years of wealth concentrating Covid policies have. Did anyone notice the complete change in the narrative and utter lack of accountability of all the “experts”, regulators, and politicians?

    • Christian J. Chuba says:

      “The United States is buying 20% of its [imported] oil from Russia”
      https://www.eia.gov/dnav/pet/PET_MOVE_IMPCUS_A2_NUS_EPC0_IM0_MBBLPD_M.htm
      and even that number is a bit high. I think calling out that it is referring to oil imports is important, not trying to pester you Larry, the stuff I hear on the business networks is atrociously inaccurate.
      ————–
      Bigger point. I’m 100% for getting back the 1M bpd of oil production that we lost under Biden but the claims being made about it are excessive.
      Yes, it could replace the oil we import from Russia and most other places except for Canada. We import 4M bpd from Canada. Even under Trump we were not energy independent. If you listened carefully to the experts who knew their field they called it ‘North American’ is energy independence. That got morphed into U.S. energy independence and the rest is history.

      The really lovely thing is the Saudi Arabia is in the driver’s seat. Since we are attacking Venezuelan, Iranian, and now Russian oil production they are now untouchable. Had we expended 1/10 the energy against the KSA as we are doing now against Russia the starvation of Yemen would end in a week but that was yesterday.

      • ISL says:

        CC,
        I recently read that to make diesel, you need a heavy oil, such as from Venezuela or Russia – (Kazhakstan/Azerbaijian/etc.). If true, diesel prices will rapidly outpace gasoline and the already threadbare US supply chain will lead to more bare shelves. It also would explain why the US is buying Russian oil.

      • Fred says:

        You must not have noticed the 30% percent increase in gas prices that began months ago, right after Biden gutted all Trump’s energy policies. Carefully listening to experts etc, got us to where we are. Maybe they have a quite different agenda than one that actually serves Americans.

  2. Pollyella says:

    THANKS, Larry: I value most of the views-&-debates here, but have haunted the site even more often, hoping to hear your wisdom now.
    & You’re pointing out what we’ve feared: the damned Dems (I used to be one of them, eek) have suicidally blundered by rejecting Russia’s past offer of friendship; staging the always-clear Russia-Hoax; refusing to assure Russia of the once-known fact: Ukraine can never join NATO; goading it to protect itself by “attacking” Ukraine; & pushing it into the happy arms of China.
    The cost: loss of the US Dollar as the world’s reserve currency & what was left of our middle-class well-being.

    • Lysias says:

      On Feb. 19, at the Munich Security Conference, Zelenko said in a speech that the Budapest Declaration should be renounced, and Ukraine allowed to have nuclear weapons again. Kamala Harris attended that conference and met with Zelenko.

      Is it any wonder that, less than a week later, Russia invaded Ukraine and occupied Chernobyl?

      • Lysias says:

        Sorry, I meant Zelensky.

        • Bill Roche says:

          So Zelinski has been responsible for all of this? If those Ukrainians had not hoped for real independence there would have been no need for Russia to destroy their land, children, economy, and enslave them. Have you heard of the Stockholm Syndrome. Had I been Zelinsky a couple of weeks ago I would have accepted reality, announced preference for a Finland/Austria like “solution”, and accepted the loss of the Donbass; if that would keep Ukraine peaceful and “independent”. But that has never been the issue “b/h the curtain”. The real issue is the restoration of the empire of the Czars, Mother Russia Redux, and that will involve the rest of European slavs. Zelinski is simply the first duck in the row. If I had the money I’d buy a chalet in the N.E. Kingdom of Vt. and stock it with grub, wood, good books, wine, and a lot of propane. Things could get very dicey if we’re not careful. Cheers.

          • jim ticehurst says:

            Bill….

            I am With You Likeminded..On All Points
            and for Stock ups..I Buy Cup O Noodles
            All Your Need Is Hot Water.. Hot /Nutritious
            Easy To Fix And Store..Long Shelf Lift…. RE; Your Main point..Zelinski,,status..

            Agree On Those Points Too,,Reminds me
            of The Cartoon On The Editorial page Of My Paper This morning

            It Shows The Grim Reaper..Looming..With His
            Hand On LENINS Shoulder..Lenin is Holding Out A Puppet….That Puppet (Dummy)..is
            Holding Out STALIN..That Puppet Stalin ..
            PUTIN..

          • TTG says:

            jim ticehurst,

            I saw that same editorial cartoon in my local paper this morning. It reminded me of the Matryoshka dolls that came out in Gorby’s days. One of my sources told me about them and said Gorby was not thrilled with them. He said Gorby tried to ban them. He gave me one anyways. My first one was Lenin-Stalin-Krushchev-Brezhnev-Gorbachev. Years later I got one with Yeltsin from a Russian street vendor operating from the trumk of his car near Brandenburg Gate. I’m sure there are Putin ones now. The dolls are said to symbolize the continuity of family. Makes sense to me given the historical continuity of Russia extending before and after Lenin.

      • TTG says:

        Lysias,

        Either you’re lacking in reading comprehension skills or, more likely, you’re relying on well worn talking points from the Putin apologists. Here are the words translated from Zelenskiy’s Munich Security conference speech.

        “Otherwise – who’s next? Will NATO countries have to defend each other? I want to believe that the North Atlantic Treaty and Article 5 will be more effective than the Budapest Memorandum.
Ukraine has received security guarantees for abandoning the world’s third nuclear capability. We don’t have that weapon. We also have no security. We also do not have part of the territory of our state that is larger in area than Switzerland, the Netherlands or Belgium. And most importantly – we don’t have millions of our citizens. We don’t have all this.
Therefore, we have something. The right to demand a shift from a policy of appeasement to ensuring security and peace guarantees.”

        Nowhere does he say he wants Ukraine to have nuclear weapons. It’s just not there. The only one threatening the world in recent days with launching nuclear weapons is Putin. Even Kim Jong -un pales in comparison.

  3. jim ticehurst says:

    Good kace to Say..Re. Economic sanctions,,Banking..I keep thinking
    That ALL Bidens Connections..Commerce..Banking ability..What ever
    Means Both Set Up;;Trade..Through The Ports Of Ukraine..When available..

    Russias Main Man Will Be Xi,, and Trade Partner..
    I heard on TeeVee Earlier..That Putin had sent His Family To a Bunker..and
    and WithDrawn;;All his Far East Troops..To Ukraine..

    A Highly Unusal Move
    JT

    • jim ticehurst says:

      Back To Bill Roach:
      Watched STOU..
      Just Now..John Kirby Giving Presser..I Have many Observations.
      .JT

  4. jim ticehurst says:

    Correction Its UTIN…Not Biden

  5. Stefan says:

    Iranians are bypassing sanctions by trading oil with the Chinese Kunlun bank that is not connected to the dollar trade (hence cannot be sanctioned by the US). Kunlun bank then transacts with the big banks in China, and there is no way to stop this short from disconnecting the whole Chinese financial system from the West.

    In my opinion, Russia will most probably do something similar. And use SPFS for trade with Europe – some large German banks are already connected.

  6. Babeltuap says:

    Stopping imported Russian oil is a joke. Unfortunately we can’t explain why it is a joke because the public is beyond feeble minded and truly believes this will hurt Russia…meh.

    https://www.afpm.org/sites/default/files/issue_resources/U.S.%20Imports%20of%20Oil%20%26%20Petroleum%20from%20Russia.pdf

    Besides the gulf it’s also going to the west coast and Hawaii to the tune of roughly 70M a day. Good luck replacing that with an administration that doubles down on not being energy independent. End of the day none of the sanctions or banking systems will hurt Russia. Putin kinda thought about this a long long time ago unlike my feeble minded citizens.

    • English Outsider says:

      On fuel supply, if one takes the worst case and assumes no oil or natural gas from Russia then the US is OK. Short term disruption because of the wrong sort of refineries and supply chains for the new dispensation, price increases, but long term, how can a country that produces as much as it needs get into real trouble on energy supplies?

      A layman’s take, that, and assumes that American industry is fleet of foot enough to adapt quickly and with minimum disruption as it does so. But it’s arguable anyway.

      It’s not arguable with Europe. Take this commercial/financial war to the maximum and Europe’s dead in the water.

      Hence, one assumes the last minute attempts by Scholz and Macron to get Minsk 2 implemented, and Macron’s plea for a new European “security architecture”.

      On the limp-wristed side, those attempts by the Euros to pour oil on troubled waters. I doubt the Euros thought it would go this far. We shall pay a heavy price in Europe, if it goes to the maximum, for insisting on the Ukrainian’s right to continue shelling across the line of control.

      • Bill Roche says:

        But my friend, shelling across the line of control was never the real issue. Great Russia, from the Oder Niesse to Kamchatka is.

        • Muralidhar Rao says:

          Sir Minsk 2 was agreed in 2015 by Ukraine and the Break away Republics. The agreement lays out chronological steps that needed to be taken. If after 7 years the French and German leaders still negotiating with Putin about its implementation to which he is not a signatory. Can you kindly explain the logic? How long are those Republics supposed to wait? Just reminds me of Palestenians waiting for the last 30 years. And slow echroachment of their lands with no end in sight. Is it what those breakaway Republics supposed to emulate the Palestenians? Just wondering

        • English Outsider says:

          Bill, agree entirely it’s as well to be on one’s guard. It’s not paranoid to be on one’s guard. But not like this.

          Not by pushing some brutalised wreck of a country, for that’s what the Ukraine’s been for decades, into a conflict it can’t win. Knowing that if we did push it into a conflict we’d cut and run and leave it to face the music solo.

          Not by looking the other way when for year after year civilians are shelled at random. That’s not what the West should be about. That’s not what a viable defence policy should be about.

          We do not have clean hands in the Ukraine. We’ve used it and haven’t been too bothered how. Time that stopped.

  7. Lowmire says:

    Inflation will rage if we lose our ability to export it.

  8. Poul says:

    Michael Pettis, Finance Professor, Peking University, is not all that convinced CIPS will be able to replace SWIFT because both Russia and China run current account surpluses. Russia can of couse dump it’s dollar risk on China if they agree. But China can’t get out of SWIFT.

    https://twitter.com/michaelxpettis/status/1498294635395153923

    quote:
    “2/8
    As I see it, what complicates their abilities to choose is that countries that rely on large persistent trade surpluses to resolve domestic demand imbalances must by definition acquire foreign assets in exchange for these surpluses.”
    &
    “3/8
    If they do not want to risk acquiring these assets in the US or in the “West” (i.e. in Europe, Canada, Australia, etc.) then they only have four serious options.”

    CIPS also have a short term challenge of capacity.

    https://twitter.com/michaelxpettis/status/1498938196700577796

    • ISL says:

      Pure psyops. – SWIFT is simply a messaging service – its not a global bank where funds are temporarily deposited and then cleared.

      One has to only check wikipedia

      https://en.wikipedia.org/wiki/SWIFT_message_types

      He also makes no sense – its not as if the dollar has been in balance in recent decades and somehow the messaging system still works! Glad to see an academic who knows where his bread is buttered.

      • Poul says:

        He makes very good sense. And as an economist with experience from the IMF he has a very good grasp of debt, savings and the effects on foreign trade.

        Just read through his articles and you come away much better informed on the topics he cover.

        https://carnegieendowment.org/chinafinancialmarkets

        His point is that the US Dollar has reached it’s position because of the current account deficit. The US is exporting Dollars – not goods or services but Dollars.

        You can only replace the Dollar with the Renminbi if China runs a current account deficit with CIPS members.

        Take an example if Russia accepts Egyptian Pounds as payment instead of Dollars then Russia can only use the EP in Egypt. If they try to buy German goods they would have to sell EP for Euros. And voila you’re back in Western controlled currency which is not an option. You can only make a deal with a German company willing to take EP as payment. How likely is that?

  9. Sean says:

    I’ve been surprised by how supportive India has been of Russia during this crisis. China meanwhile is proceeding nonchalantly, I think that is a better word to use than cautiously. Of course there will be big disruptions in the short term, for a few months until Russia irons out a whole new finance supply chain for handling natural resource exports. The big question in my mind is if Russia will stop oil and gas shipments to the West. This will definitely have a big effect on Europe and a non-trivial effect on the USA, but Russia will lose nearly 50% of its export revenue in the process. Another route they can take which is face-saving is a nationalization of western oil and gas investments in Russia, which run into the hundreds of billions of dollars.

    If Russia doesn’t cut off oil and gas to the West, after 6 months or a year, they will be looking at nearly identical export revenues, coupled with much reduced net capital flight, a lot more money sloshing around in the economy, and whole sectors of the local economy which will open up to local entrepreneurs to fill. Smartphone OS, app stores, Apple Pay and Google pay clones, Netflix clone, widespread use of their existing YouTube clone, fedex and ups alternatives. Russia is a big country and they will probably end up doing interesting stuff by themselves, which over time they can take to China and the developing world and even to the West when things calm down.

    A piece of news today that surprised me is that Mexico has decided to not sanction Russia. This is a big slap in the face of their dominant trading partner the USA, and would have been pretty cost free for Mexico because it has hardly any economic ties to Russia. In fact I have noticed that very very few developing countries have sanctioned Russia, which suggests to me that sentiment in that part of the world (6/7ths by population) is much different than in the West. People there notice Western hypocrisy (after invading and indiscriminately bombing Iraq and attacking many other countries), and appreciate Russia as a counter to the West. The larger countries like India also understand that what is happening to Russia can happen to them down the line.

    • Seamus Padraig says:

      Russia would never cut off the oil exports to Europe. Washington, rather, wants Europe to cut off oil IMPORTS from Russia. The effect, I’m sure, would be far more devastating on Europe than on Russia, since a ready consumer market for all that oil exists in Asia.

    • Eol says:

      Well this is the type of opinion being broadcast by news channel associated with India’s ruling party:

      https://youtu.be/BOkn3l7mddc

      So, that in a nutshell explains Indias tacit support (aside from a long history of non-alingment). In reality, if you account for the middle east (surpsingly including UEA, and Saudia Arabia), India and China (Asia accept for Japan and Singapore) as part of the “international community” .. Russia is mostly being condemned by the west. The view from other places is a lot more nuanced and critical of the role the west has played on this crisis

      • Sean says:

        It’s being widely reported in India that Indian students in Ukraine are at a minimum being treated badly as revenge for lack of Indian government support for Ukraine (not being allowed to board trains, being turned back at the border), to actively being used as human shields in Kharkiv, a big university city.

        Predictably this has gotten virtually zero press in the West, but you can be sure Indians are noticing and won’t forget so soon.

        • JohninMK says:

          The Indians enlisted the help of the Russians who opened a safe corridor for the 700 or so Indians in Kharkiv to try to exit on, if the Ukrainians let them, before tonight’s attacks.

          This is not just a problem for Indians in Ukraine, a powerful part of Ukrainian society, the Right Sector, are racist and are not averse to using anyone of colour as human shields.

  10. John Anderson says:

    Pepe Escobar covers the history and projects the future of these alternatives here:
    https://www.youtube.com/watch?v=T8syVHWRv_k

  11. tedrichard says:

    of course ””politicizing”” swift will in less time than you might suppose render swift regional and then irrelevant. in fact any time you politicize money as washington is doing and has done with the dollar over the past 10 years the inevitable result is for users to seek alternatives knowing its issuer is unreliable and can not be trusted.

    that sums up the west in a nutshell. when the west does not get what it wants it uses its banks, it currency and the messaging system for both to punish those refusing to submit.

    only a fool who is being attacked would not bypass the nonsense and find like minded other nations to work with.

    the simple fact that the west chooses to use ultimately toothless ways to punish russia is testament to the fact it has no ”’real” (aka: force) options to compel obedience. it is in fact russia with all the real options should they choose to tit for tat as a means.

    1. oil and gas…..they could demand the west pay for those purchases in roubles thereby in one stroke compelling the west in fact support russia currency they are now attacking in the forex markets……….they could also demand physical gold which would be catastrophic for the west and upend the world financial system causing cascading defaults and force majeure

    2. russia could halt titanium exports to the west thereby severely damaging if not destroying airbus and boeing to name only 2

    3. halt fertilizer exports and watch europe especially walk the road toward famine or at least serious unrelenting food shortage

    there are many more options russia can employ against the hapless badly and idiotically ruled west. in this game of chicken most in the west are to ignorant or outright stupid to grasp it is russia not the west which holds the big stick.

    russia has yet to play any card which will present a profound shock to the hollywood western political system rooted in slogans and fantasies rather than real politik. sooner rather than russia will demonstrate definitively who is bluffing and who is not.
    ukraine are the bread sticks before the meal is served.

    • JohninMK says:

      Ted, an interesting potential move in your Point 1 is the European gas market which is now primarily spot market based. That is for Russia to give advance warning that they will be stopping supplying that market. Instead if European countries with to continue buying Russian gas they will have to do it by reverting to the old scheme of 15 year contracts that they used up to around 8 years ago. This will give Russia a secure revenue stream, which the valued more that up and down spot based revenue. Mind you they are taking eye watering profits currently.

      The smart guys in Hungary spotted last summer what could happen in the gas market and reverted back to contract last October and are currently paying around 10% of today’s spot making some of their products e.g. fertiliser, astonishingly competitive in the EU single market.

      Apparently Europe now has effectively nothing in their storage systems so will need as more gas from Russia than they have ever taken over the next few months to refill on top of normal usage.

      It is good to see the Ukrainian pipeline system being currently used at over its contracted minimum in the middle of fighting and Russia still paying Ukraine as per contract for transit fees. Commerce must go on!

  12. LondonBob says:

    https://www.theice.com/products/910/UK-Natural-Gas-Futures/data?marketId=5253318

    At the level factories start halting production. Whole load of commodities going parabolic.

  13. Datil D says:

    The sanctions only serve as a warning to others to make alternate arrangements to SWIFT before its used as a political weapon against them. Sanctions will reduce global economic output but won’t work as intended (Iraq, Iran, Crimea) they may hurt the innocents but not the governments. Tulsi Gabbard on Zelensky. The US keeps increasing support preventing Zelensky from declaring neutrality and ceasefire.
    https://vaticancatholic.com/tulsi-gabbards-info-on-ukraines-president-that-most-people-have-never-heard-about-must-see-video/

  14. Socal Rhino says:

    SWIFT is a messaging system used to instruct payment or receipt of payment. That is separate from the systems that actually move cash. “SWIFT” is being used as shorthand for the dollar centric financial system including access to the Fed Wire.

    I believe Pettis’s point was that China can’t leave the dollar system while it remains a trading partner with countries within the dollar system. That seems obviously true. But I haven’t seen any arguments for why China couldn’t employ a second system for non-dollar trade.

  15. David Habakkuk says:

    Larry,

    Having being tied up answering questions about the background to Putin’s actions from an old schoolfriend, I did not have time to produce a considered contribution to the discussion on your previous post, to which some history I know a certain amount about seemed relevant.

    It seems sensible to post an ‘updated version’, taking into account more recent events, of what I might have posted then, now.

    People seriously interested in understanding what has been happening in Ukraine could I think usefully consult a site dedicated to the original founder of what is now Donetsk, and indeed the whole Donbass, at http://www.johnhugheswales.com/ .

    As it explains:

    ‘In 1869, John James Hughes, an engineer from the South Wales industrial town of Merthyr Tydfil, travelled to Imperial Russia. There, on the wide empty plains (the steppes) he set up an ironworks which developed into a huge industrial complex. Around the works grew up a town: Hughesovka.’

    It would be renamed Stalino, in 1924, and Donetsk, in 1961.

    Twenty years after John Hughes first became involved, when the plant he created was being run by sons of his, one of them brought out a girl from Merthyr, Annie Gwen Jones, who had been one of the early beneficiaries of the opening of the college at Aberystwyth to women in 1884, to tutor his daughters.

    Some time after her return to Wales – around the turn of the century – she would write an account of her time in ‘Hughesovska’ which is now available on the internet, under the title ‘Life on the Steppes of Russia, 1889 to 1892.’

    (See https://www.garethjones.org/margaret_siriol_colley/annie%20gwen/life-steppes.htm .)

    It contains fascinating impressions of many things. Of particular interest, in relation to current events, may be the following paragraph:

    ‘I should have said that Hughesoffka the place in which we lived was situated in the Government of Ekaterinislav about 80 to 100 versts north of the sea of Azof about six hours journey from the Taganrog Port and from Marcople. It bordered also on Don Cossack country. The Russian Government in honour of the late John Hughes named Hughesoffka, the father of the gentleman in whose house I lived and whose granddaughters I taught. When he went out to Russia first at the invitation of the Russian Government (for whom he had already made some patent iron plates for the Russian Navy) he searched the Steppes for a suitable place wherein to start an Ironworks. The Steppes as far as is known is especially rich in minerals. At last he fixed on a spot that is now called Hughesoffka with a population of 25-30,000 but then was inhabited only by shepherd and dog. The ironworks is called the New Russian Company. All this was due to the Indomitable pluck and perseverance of John Hughes, a Welshman born near Ynysgan, Merthyr Tydfil. In Hughesoffka we were a small band of Welsh and English in the midst of a mixed population of Russians, Poles, Jews, Tartars, French and Germans. The Russians of course predominating. An Armenian doctor saved my life when I developed typhoid Fever.

    So, she observed ‘a mixed population of Russians, Poles, Jews, Tartars, French and Germans.’

    Where the Ukrainians? And why is there not a single reference in her whole account to anyone speaking Ukrainian, the language which the government in Kiev appears determined to prevent the descendants of the workers she described from speaking? Why were the peasants and peasants’ children she observed at church services all Orthodox – as much so as Putin, one might say?

    Another part of the way industrialisation worked here, alike in Wales and what is now Ukraine, may be relevant in making sense of what was happening.

    What the ‘small band of Welsh and English’ to whom Annie Gwen Jones refers had spent the previous twenty years doing was simply a more complicated version of what had they had done to others, and had been done to many of their own forbears at home: turning country boys into industrial workers.

    And, although working in the mines, and the iron and then steelworks, had hardships and dangers enough, it was sufficiently more attractive than the alternatives to ‘draw in’ people from quite remote areas. (An example is the father of Nikita Khrushchev.)

    As to why there were no Ukrainians, an obvious possible answer is that the area where what became modern Ukrainian was chiefly spoken was Galicia, which was in the Habsburg Empire: what is now called Lviv was then called Lemberg.

    From an account of the city in an ‘International Encylopaedia of the First World War’:

    ‘Around 1900 Lemberg had about 160,000 inhabitants. 49.4 percent were Polish, 26.5 percent were Jews and 19.9 percent were Ruthenians/Ukrainians. The Polish élites had considerable political power within the local government and were in possession of much of Galicia’s land. The emergence of Ukrainian nationalism led to the foundation of a national party in 1899 which aimed at national unity and independence. Therefore, on the eve of World War I, the situation in Lemberg was characterized by growing nationalism and antisemitism and a conflict between Poles and Ukrainians on the verge of escalation.’

    Over the years since 2014, I have often thought that among the ‘militias’ in the Donbass there must be descendants of the workers whom the Welshmen who went out with John Hughes trained. And I have found myself hoping they gave a good account of themselves.

    And indeed, I think they have. As I write, they have been one ‘pincer’ in the ‘cauldron’ which has been closing around Mariupol, which must I think have been the place which Annie Gwen Jones called ‘Marcopole.’

    Inside, it appears, are the ‘Azov Regiment’ – whose symbol includes allusions to both the Wolfsangel’ and the ‘Black Sun’: the symbol set in the floor of the ‘Obergruppenführersaal’ in Wewelsburg Castle.

    From a description on a site called ‘War History Online’:

    ‘There were twelve pedestals in the castle vault, and twelve spokes in the Black Sun, a symbol in the floor that represented the twelve SS “‘knights.”

    ‘Himmler believed that after the final victory of the German people Wewelsburg would be the spiritual center of the world. The SS would become the priests of the new world. Before campaigns, the leading SS commanders were called to the castle to prepare them spiritually.;

    (See https://www.warhistoryonline.com/world-war-ii/wewelsburg-castle-the-nazi-temple-of-doom.html?chrome=1 .)

    When Annie Gwen Jones returned to England, she married a fellow student from Aberystwyth, Edgar Jones. The port town of Barry was in some ways a bit like ‘Hughesovka.’ Its creation, in 1884, was again out of nothing, because it was a location which ‘made sense’ in terms of the development of the coal, iron and steel industries.

    And, like the town which John Hughes founded, it was something of a ‘magnet’ for people from the countryside looking for opportunities. A ‘County School’ was founded in 1896, and in 1899, Edgar was appointed as its headmaster. An early pupil, Evan Guest Habakkuk, later became ‘Education Officer’ for South Glamorgan, and so a close collaborator, in the attempt to provide Welsh boys with the best possible education.

    An unsurprising consequence was that quite a few of the pupils from the school – like the son of Edgar and Annie Gwen Jones, Gareth Jones, who did the only serious ‘on the ground’ reporting on what is now called the ‘Holodomor’, and John Hrothgar Habakkuk, went on scholarships to Oxford and Cambridge. (In Russia, they would have called my father ‘Hrothgar Guestovich.’

    An equally unsurprising consequence was that many of these ended up meeting and marrying English girls.

    As a result, as a descendant of a rather wide range of people who worked with coal, iron and steel, in South Wales, I tend to identify more with my mother’s family, from south and west of the River Severn, than with my father’s.

    However, when I see the kind of ‘ethnonationalists’ who destroyed the ‘multiculturalism’, such as it was, of places like Lemberg, who in the end killed almost all the Jews, and got rid of the Poles, trying to ‘complete their successes’ in the Donbass, as they have been for years now, my Welsh and English sides come together. (As to the Jewish influences on the thinking of me and my friends – not a Nuland-style Nazi-sympathiser among them.)

    That ‘rich white trash’ like Boris Johnson are happy to collaborate with people who flaunt the ‘Wolfsangel’ and ‘Black Sun’ symbols is not particularly surprising, to someone of my background.

    There are others, alike in my country and yours, whose desire to see what is happening as a simple ‘liberation struggle’, with those groups who look to Russia treated with contempt, has surprised me.

    All I can do, is to shrug my shoulders, hope for a return to sanity, and wonder whether ‘Occam’s Razor’ suggests that the apparently crazy archeological expeditions Himmler sponsored did lead to the recovery of a ’palantir’, and that somehow it came into the hands of Deng Ziaoping.

    The fact that precisely the people who have now ‘woken up from their slumber’ about a potential challenge from China seem determined to push Russia into the arms of that country, and to make a definitive end to the ‘Petrine’ period of that country’s history, quite clearly, indicates a degree of insanity which is not susceptible of ‘rationalistic’ explanations.

    • Leith says:

      David H –

      I agree 100% that the Welsh diaspora in the Donbas will give a good account of themselves. My dear Aunt Gwynne would agree also. But they would do well on both sides, for how can you be sure they are all fighting for the DPR. Some may well be fighting for Ukraine. But I doubt they were one of the pincers closing in on Mariupol. They are busy in a breakthrough of Ukrainian lines to the city of Volnovakha, and fighting off a Ukrainian attempt to breakthrough their lines further north near Horlivka.

      The pincers attacking Mariupol are Russian Federation troops from Taganrog who moved through the DPR, and Russian Naval Infantry moving in from the west. The city has mostly been taken and the remaining sliver will fall soon, maybe even as we speak. No water, no electricity, no heat. I wonder how the ethnic Greek population is doing there?

      • JohninMK says:

        Leith, two comments, the first is that Mariupol is nowhere near taken and will be a serious fight to the death by the Right Sector, mainly Azov but also Aidair, thugs. Sadly many will die but Russia is determined to exterminate them for what they did in 2014/15 and since so will probably use extreme force. We should say prayers for the locals, they are going to need them.

        The second is that the pincer, whilst containing Russian troops was heavily manned by Donetsk locals fighting their way south. I have seen the podcast video in English that tracked their progress. It will be the Russian Army proper that hits Mariupol itself.

        • Leith says:

          John in MK –

          There is only a narrow strip (maybe a few km wide by one km N to S) of Ukrainian resistance remaining on the coast and in the port. Most of that is south of the M-14. The rest of Mariupol is either flattened or occupied by Russian troops. I’m sure those troops have some locals from the DNR with them. But the great majority of DNR troops are fighting about 40 to 50 km north of Mariupol near Volnovakha, where they broke through the Ukrainian lines. They may move south fighting on the way, or may be doing that already. But the situation in Mariupol is already in hand by Russian troops except for that enclave. The Russians may let the DNR militias do the extreme force to wipe out the remnants.

          I’m no fan of either the Azov or the Aidar thugs. If any survive, they should face War Crime trials in the ICC. Is Aidar in Mariupol? I thought they were much further north in Luhansk at Sievierodonetsk, which is currently under attack by LNR troops. They will probably be enveloped soon by RF troops that are driving west just 40 or 50 km north of them. Or there were other conflicting reports that they were just over the line from the city of Donetsk, if so, they are probably heavily involved right now near Horlivka.

          Some units on the DNR side should also face up to their war crimes in the Hague. Including the Sloviansk Brigade (mass murder); the neo-Nazi RNU volunteer units (kidnapping and torture) they also sport a swastika lokalike in their logo like the Azovs; and Sevich’s Serb Chetnik volunteers (again kidnapping plus beatings and looting) some of them were also responsible for massacres in the former Yugoslavia, and in WW2 the Chetniks often collaborated with the Nazis in Serbia like Bandera did in Galicia and Poland.

      • David Habakkuk says:

        Leith,

        On an earlier thread, you wrote, in response to my quoting the description by Sergey Shoigu of how he was sent back to his mother’s relatives in Luhansk to be baptised at the age of five:

        ‘As for Shoigu, I have a good deal of respect for the man. But per Wikipedia his mother was born in Oryol Oblast in Russia, not from Luhansk as you imply.’

        If you read the whole of that ‘Wikipedia’ entry, you will find the following paragraph:

        ‘Mother – Alexandra Yakovlevna Shoigu (née Kudryavtseva) (1924–2011). Born in the village of Yakovlev in the Oryol Oblast. From there, shortly before the war, her family moved to Kadievka (now Stakhanov) in the Luhansk Oblast, Ukraine.’

        (See https://en.wikipedia.org/wiki/Sergei_Shoigu .)

        So, having claimed to have ‘a good deal of respect’ for Shoigu, you insinuated that both I, and also he, were attempting to deceive you about his links to Ukraine.

        Tell me: Were you simply too lazy to read the full entry in ‘Wikipedia’, or did you read it, and still feel that the fact that Shoigu’s mother moved to Luhansk when she was a girl provided good grounds to ‘imply’ that I, and more important he, were engaged in deliberate deception, rather than pointing out the full facts?

        • Leith says:

          David H –

          Alexandra Yakovlevna Shoigu (née Kudryavtseva)

          Looking up her maiden name, Kudryavtseva and the male version Kudryavtsev, I find no examples of any Ukrainians. There are many from Moscow Leningrad, Tula, Orenberg, Yaroslavl, and other Russian cities. And of course, the village of Yakovlev in a Russian Oblast where Alexandra Yakovlevna was born.

          Do you claim that there is a branch of the Kudryavtsev family in Luhansk? Or originated from there? I try to have an open mind and will listen to any proof or evidence.

          • Leith says:

            David H –

            Perhaps Alexandra’s mother, Shoigu’s maternal grandmother, was Ukrainian? Or great grandmother or great grandfather? And that is why the family moved to Luhansk when she was a girl

            Maybe so.

  16. LondonBob says:

    Real fear of a cascade of defaults in the EU, energy crisis already here. The ideologues ignored the advice of the experts. Peace deal incoming…

    To think they could have just implemented the Minsk Agreements and this would all have been avoided.

  17. Leith says:

    What will happen to Poland’s dream for the city of Lodz to be a major node on China’s New Eurasian Land Bridge? It has to go through Russia and Belarus. Will Putin allow it now that Poland is pouring arms and equipment to Ukraine, and allowing other NATO countries to move their military aid via a Polish corridor?

    Any Belt & Road experts here?

    Speaking of China, will Taiwan start buying up Bayraktars from Turkey? Maybe the new TB3 naval version?

    • JohninMK says:

      Ten years or so ago there was going to be major Chinese Belt and Road investment in a deep water port on Crimea (the best place on the north Black Sea coast due to much shallow water) which would feed into the railway network in Ukraine up into Europe. That was pulled when Crimea lost access to the railway and I think the investment went into Greece instead.

      When peace returns and Ukraine and Russia work together again (ever the optimist) this project could return.

  18. TTG says:

    Leith,

    Last I heard, one of the Belt and Road routes was to go over the Black Sea to ports at Odesa and nearby and then into Europe through Ukraine and Poland. China was actively building port facilities near Odesa. That might be part of the reason for China’s lukewarm support of Russia.

    • JohninMK says:

      TTG, as I wrote above, wasn’t it Crimea for the port?

      • TTG says:

        JohninMK,

        A Chinese construction company began dredging out the port facilities in Yuzhny just east of Odesa as far back as 2017 as a node in trans-Caspian route of the Belt and Road. This was to be a prime rail route to Europe.

  19. JohninMK says:

    Larry,

    On top of oil and gas there is another major critical Russian export, wheat. Together with Ukraine they export more than 50% of World supply. The middle east and Egypt in particular is dependent on it. Add to that Ukraine’s rapeseed oil exports and a lot of food disruption on the way. Fortunately commercial food traffic is outside sanctions and is still rolling through the Black Sea to Russia at least.

    Then there is neon, a byproduct of steel production, where again Ukraine and Russia produce 60% of supply, which is critical for semi conductor manufacturing.

    Meanwhile, a side effect of the fighting is that VW have started cutting production due to the lack of cable harnesses that are made in Ukraine.

  20. Ed Lindgren says:

    I wonder if Putin (and Xe) are playing a long game?

    Putin certainly went into this fully aware of the colossal economic slap-down that Russia would have to absorb once his forces crossed the line of departure. He was threatened with most of this in the run-up to the actual invasion.

    Might it be possible that the Putin/Xe axis have as a long term objective setting in motion the beginning of the end of dollar-domination of the global financial system? Larry Johnson touches on much of this as an unintended consequence of the flurry of Western sanctions on Russia.

    But perhaps that is a longer term strategic objective of the actual invasion. Blocking access to SWIFT will result in Russia and China moving ahead with alacrity on alternatives, many of which might be attractive to a number of large developing countries (India perhaps).

    And the loss of the dollar as the global reserve currency will create massive problems for the U.S., with its buy now, pay later form of government.

    I am no economist, so this might all be off-base. But I am confident that there will be significant blow-back from Russia sanctions that will cause a good deal of economic pain for citizens in those Western countries playing the sanctions game.

  21. Leith says:

    TTG & John in MK –

    Thanks. Somewhere I had read that Poland’s president was schmoozing Xi so that the Polish city of Lodz could be a node on a Chinese rail link from Jiangsu thru Kazakhstan to Russia. All land based. Can’t find it now though.

  22. David Habakkuk says:

    Larry,

    Having being tied up answering questions about the background to Putin’s actions from an old schoolfriend, I did not have time to produce a considered contribution to the discussion on your previous post, to which some history I know a certain amount about seemed relevant.

    It seems sensible to post an ‘updated version’, taking into account more recent events, of what I might have posted then, now.

    People seriously interested in understanding what has been happening in Ukraine could I think usefully consult a site dedicated to the original founder of what is now Donetsk, and indeed the whole Donbass, at http://www.johnhugheswales.com/ .

    As it explains:

    ‘In 1869, John James Hughes, an engineer from the South Wales industrial town of Merthyr Tydfil, travelled to Imperial Russia. There, on the wide empty plains (the steppes) he set up an ironworks which developed into a huge industrial complex. Around the works grew up a town: Hughesovka.’

    It would be renamed Stalino, in 1924, and Donetsk, in 1961.

    Twenty years after John Hughes first became involved, when the plant he created was being run by sons of his, one of them brought out a girl from Merthyr, Annie Gwen Jones, who had been one of the early beneficiaries of the opening of the college at Aberystwyth to women in 1884, to tutor his daughters.

    Some time after her return to Wales – around the turn of the century – she would write an account of her time in ‘Hughesovska’ which is now available on the internet, under the title ‘Life on the Steppes of Russia, 1889 to 1892.’

    (See https://www.garethjones.org/margaret_siriol_colley/annie%20gwen/life-steppes.htm .)

    It contains fascinating impressions of many things. Of particular interest, in relation to current events, may be the following paragraph:

    ‘I should have said that Hughesoffka the place in which we lived was situated in the Government of Ekaterinislav about 80 to 100 versts north of the sea of Azof about six hours journey from the Taganrog Port and from Marcople. It bordered also on Don Cossack country. The Russian Government in honour of the late John Hughes named Hughesoffka, the father of the gentleman in whose house I lived and whose granddaughters I taught. When he went out to Russia first at the invitation of the Russian Government (for whom he had already made some patent iron plates for the Russian Navy) he searched the Steppes for a suitable place wherein to start an Ironworks. The Steppes as far as is known is especially rich in minerals. At last he fixed on a spot that is now called Hughesoffka with a population of 25-30,000 but then was inhabited only by shepherd and dog. The ironworks is called the New Russian Company. All this was due to the Indomitable pluck and perseverance of John Hughes, a Welshman born near Ynysgan, Merthyr Tydfil. In Hughesoffka we were a small band of Welsh and English in the midst of a mixed population of Russians, Poles, Jews, Tartars, French and Germans. The Russians of course predominating. An Armenian doctor saved my life when I developed typhoid Fever.

    So, she observed ‘a mixed population of Russians, Poles, Jews, Tartars, French and Germans.’

    Where the Ukrainians? And why is there not a single reference in her whole account to anyone speaking Ukrainian, the language which the government in Kiev appears determined to prevent the descendants of the workers she described from speaking? Why were the peasants and peasants’ children she observed at church services all Orthodox – as much so as Putin, one might say?

    Another part of the way industrialisation worked here, alike in Wales and what is now Ukraine, may be relevant in making sense of what was happening.

    What the ‘small band of Welsh and English’ to whom Annie Gwen Jones refers had spent the previous twenty years doing was simply a more complicated version of what had they had done to others, and had been done to many of their own forbears at home: turning country boys into industrial workers.

    And, although working in the mines, and the iron and then steelworks, had hardships and dangers enough, it was sufficiently more attractive than the alternatives to ‘draw in’ people from quite remote areas. (An example is the father of Nikita Khrushchev.)

    As to why there were no Ukrainians, an obvious possible answer is that the area where what became modern Ukrainian was chiefly spoken was Galicia, which was in the Habsburg Empire: what is now called Lviv was then called Lemberg.

    From an account of the city in an ‘International Encylopaedia of the First World War’:

    ‘Around 1900 Lemberg had about 160,000 inhabitants. 49.4 percent were Polish, 26.5 percent were Jews and 19.9 percent were Ruthenians/Ukrainians. The Polish élites had considerable political power within the local government and were in possession of much of Galicia’s land. The emergence of Ukrainian nationalism led to the foundation of a national party in 1899 which aimed at national unity and independence. Therefore, on the eve of World War I, the situation in Lemberg was characterized by growing nationalism and antisemitism and a conflict between Poles and Ukrainians on the verge of escalation.’

    Over the years since 2014, I have often thought that among the ‘militias’ in the Donbass there must be descendants of the workers whom the Welshmen who went out with John Hughes trained. And I have found myself hoping they gave a good account of themselves.

    And indeed, I think they have. As I write, they have been one ‘pincer’ in the ‘cauldron’ which has been closing around Mariupol, which must I think have been the place which Annie Gwen Jones called ‘Marcopole.’

    Inside, it appears, are the ‘Azov Regiment’ – whose symbol includes allusions to both the Wolfsangel’ and the ‘Black Sun’: the symbol set in the floor of the ‘Obergruppenführersaal’ in Wewelsburg Castle.

    From a description on a site called ‘War History Online’:

    ‘There were twelve pedestals in the castle vault, and twelve spokes in the Black Sun, a symbol in the floor that represented the twelve SS “‘knights.”

    ‘Himmler believed that after the final victory of the German people Wewelsburg would be the spiritual center of the world. The SS would become the priests of the new world. Before campaigns, the leading SS commanders were called to the castle to prepare them spiritually.;

    (See https://www.warhistoryonline.com/world-war-ii/wewelsburg-castle-the-nazi-temple-of-doom.html?chrome=1 .)

    When Annie Gwen Jones returned to England, she married a fellow student from Aberystwyth, Edgar Jones. The port town of Barry was in some ways a bit like ‘Hughesovka.’ Its creation, in 1884, was again out of nothing, because it was a location which ‘made sense’ in terms of the development of the coal, iron and steel industries.

    And, like the town which John Hughes founded, it was something of a ‘magnet’ for people from the countryside looking for opportunities. A ‘County School’ was founded in 1896, and in 1899, Edgar was appointed as its headmaster. An early pupil, Evan Guest Habakkuk, later became ‘Education Officer’ for South Glamorgan, and so a close collaborator, in the attempt to provide Welsh boys with the best possible education.

    An unsurprising consequence was that quite a few of the pupils from the school – like the son of Edgar and Annie Gwen Jones, Gareth Jones, who did the only serious ‘on the ground’ reporting on what is now called the ‘Holodomor’, and John Hrothgar Habakkuk, went on scholarships to Oxford and Cambridge. (In Russia, they would have called my father ‘Hrothgar Guestovich.’

    An equally unsurprising consequence was that many of these ended up meeting and marrying English girls.

    As a result, as a descendant of a rather wide range of people who worked with coal, iron and steel, in South Wales, I tend to identify more with my mother’s family, from south and west of the River Severn, than with my father’s.

    However, when I see the kind of ‘ethnonationalists’ who destroyed the ‘multiculturalism’, such as it was, of places like Lemberg, who in the end killed almost all the Jews, and got rid of the Poles, trying to ‘complete their successes’ in the Donbass, as they have been for years now, my Welsh and English sides come together. (As to the Jewish influences on the thinking of me and my friends – not a Nuland-style Nazi-sympathiser among them.)

    That ‘rich white trash’ like Boris Johnson are happy to collaborate with people who flaunt the ‘Wolfsangel’ and ‘Black Sun’ symbols is not particularly surprising, to someone of my background.

    There are others, alike in my country and yours, whose desire to see what is happening as a simple ‘liberation struggle’, with those groups who look to Russia treated with contempt, has surprised me.

    All I can do, is to shrug my shoulders, hope for a return to sanity, and wonder whether ‘Occam’s Razor’ suggests that the apparently crazy archeological expeditions Himmler sponsored did lead to the recovery of a ’palantir’, and that somehow it came into the hands of Deng Ziaoping.

    The fact that precisely the people who have no ‘woken up from their slumber’ about a potential challenge from China seem determined to push Russia into the arms of that country, and to make a definitive end to the ‘Petrine’ period of that country’s history, quite clearly, indicates a degree of inanity which is not susceptible of ‘rationalistic’ explanations.

    • English Outsider says:

      I just lapped up that story of Welsh enterprise in Donetsk, and your connection with it. Is there anywhere the Welsh didn’t go in the nineteenth century? I have a Welsh friend who went to check out the Patagonian Welsh. Unfortunately he got robbed in Buenos Aires by some ingenious characters “helping” him with his luggage, so the recordings of Welsh folk songs he took over were lost. Also all credit cards and cash and documents so the fraternal visit fell a bit flat.

      In Little Dorrit, my favourite apart from Bleak House and it’s such a shame no one reads Dickens these days – including the Outsider infants, utter savages, who can’t get on with him at all – the partner of the main character, who for plot reasons needs to be got out of the way for a while, is sent off to Russia on some vast engineering project the nature of which is not specified.

      I’m not sure Dickens knew enough about engineering of any sort to risk going into detail in the novel, but that account of the Welshman in Donetsk gives one an idea of what exactly these nineteenth century Titans were doing in very foreign parts. Doing it as matter of factly as if it were quite in the day’s work to get an entire industry going wherever one pleased. Thanks for that account. I really liked it.

      Now look here. This Russia business. 2/21/22 the world changed for ever for us Europeans. You knew that at the time. I knew it. And we’re still getting to grips with the dimensions of this changed and fraught new world. We’d better. Europe has become rather smaller and meaner than it was. I think England, too, and I don’t like it.

      Jorrocks tells us of his hunting “The image of war, without its guilt, and only half its danger. I confess that I’m a martyr to it—a perfect wictim—no one knows wot I suffer from my ardour.” That’s us. We are gripped with vicarious ardour and gaze fascinated at a war we know little about and could do little about if we did.

      Kamala Harris tells us as much of the story as we need to know. “Ukraine is a country in Europe. It exists next to another country called Russia. Russia is a bigger country. Russia is a powerful country. Russia decided to invade a smaller country called Ukraine.”

      And with that comprehensive explanation under our belts we can revel in the drama while knowing none of us or ours need be anywhere near the action. The image of war without its guilt and in this case nothing at all of its danger. Unless mushroom clouds start sprouting or someone turns the gas off.

      And Johnson, the familiar old Houdini Johnson, the dodgy but lovable rogue, is transformed into the stern Churchillian figure of his, or his speechwriter’s, dreams.

      Same in Germany. The phone’s been red hot and almost all I know there have taken their line from Scholz. Germany can finally cast away its antique guilt and stride confidently into its new purposeful future. One hundred billion on the military and freedom and democracy is safe in our hands. Goodbye Auschwitz. Welcome Bismarck.

      Almost all. One or two who think as I do and wonder what the hell we’re doing backing up Banderites, men who’d many of them be in prison over here if they even spoke of what they do in real life over there. One or two, but not many; and those few of us keeping our heads down. This is no time to reveal oneself as quisling by running counter to the big story.

      Is it like that in London, over your way? Must we keep our heads down until all wake up and realise the politicians have conned us yet again?

  23. A. Pols says:

    If, by “backfire”, you mean will it result in severe economic dislocation for us and Europe, I would say absolutely. We were already heading into a shitstorm of inflation and steep, non inflation related, rises in commodities pricing, and all the moves against Russia will exacerbate those trends.
    I try to listen to commentators from both sides of the domestic political divide, mainly to keep calibrated about the nuttiness to be found across the spectrum. I listen to Hugh Hewitt in the morning drive to work and consider him quite the blatherskite, but amusing in an awful way when it comes to foreign affairs. Lately he’s been pounding away on the idea of immediately cutting off imports of Russian oil which I believe represent ~~11% of our use. He says we should be glad to make the sacrifice, all the while ignoring the fact that pricing is determined at the margins and we can’t just flip a switch and ramp up domestic production to make up the shortfall. People are outdoing one another with suggestions to take all manner of actions which are kinda “cut off your nose to spite your face” ideas. Pulling Russian vodka off the shelves of liquor stores resembles the “freedom fries” nuttiness. hey, y’all we already bought the vodka; might as well drink it.

  24. Sam says:

    NO BUYERS: Russian flagship Urals crude plunges to a fresh record large discount of **minus $22.7-a-barrel** to benchmark Dated Brent. Even at such a huge discount, oil trader Trafigura found no bidders

    https://twitter.com/javierblas/status/1499443979183607809?s=21

    This is unusual. No bid is a sign of both counterparty risk and lack of liquidity.

  25. Sam says:

    CHART OF THE DAY: Russia is a major coal exporter. With buyers shunning its commodities, the rest of the market is on fire. As a result, the Asian benchmark price (high quality Newcastle coal) has nearly doubled to a fresh all-time high

    https://twitter.com/javierblas/status/1499270597548949507?s=21

    European natural gas benchmark TTF surges to €199.99 per MWh, a new all-time high. In crude oil terms, natural gas is trading at what’s ~$360 per barrel of oil equivalent!!!

    https://twitter.com/javierblas/status/1499305444451487749?s=21

    Unintended consequences. More inflation…

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