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‘Financial sanctions against
Russia could lead to a banking crisis in the West and even a
military war’, warned Harold James, a professor in history and
international affairs at Princeton University, renowned from his
studies “The Creation and Destruction of Value, The
Globalization Cycle and “Making the European Monetary System.
In this article for Project
Syndicate he stated that even a financial war could hurt the
West’s highly complex and interconnected financial system much
more than it would hurt Russia’s relatively isolated financial
market’. He referred to Lehman’s bankruptcy in 2008 that sparked
the U.S. financial crisis to see how banking integration creates
vulnerability. And Lehman is small compared with the German and
French banks that are heavily exposed to Russia. In the
meantime, the major financial players in the U.S. have already
been advised about the nasty consequences of further new
sanctions.
‘A Russian asset freeze could
be catastrophic for European and global markets. With that in
mind, Wladimir Putin believes the
West can’t possibly be serious about igniting a financial war’,
James writes. He also referred to Russia’s natural resources
(largest oil- and gas producer), Russia’s nuclear arsenal as
well as Russia’s capabilities in cyber war making it a very
serious opponent.
Also should kept in mind that
Putin considers the financial “neutron bomb”, which the U.S. has
developed since 2008, as a serious threat bringing almost any
nation to its knees without firing one shot. Or: ‘The United
States is centrally planning the entire global monetary system
to bring under its hegemony’. Under this regime, it becomes
feasible to ban Russian banks and other Russian state entities
with a combined debt of $714 billion on their balance sheets
from access to other markets. But this would be very unrealistic
and could have serious consequences.
Under Section 311 of the
Patriot Act each bank, in principle, can be earmarked as a
whitewash bank accused of money-laundering
and/or underwriting terrorist activities and declared ‘radio
active’. For any bank, such a stamp implies the end of
operations, even if such a bank has no activities in the U.S. In
this regard, the U.S. does not need any support from any country
and thus acting as a super sovereign. A contagious bank is left
alone as no other bank in the world opts to do business with
such a bank knowing that it will be declared contagious as well
by this regulation. It is no surprise that this very regulation
has already caused a new trend resulting in a retreat from the
dollar circuit. Various trade- and currency arrangements have
been closed already whilst a new BRIC’s IMF seems to be in the
making.
Once Russian banks are put on
the ‘black page’, a response from Putin may be anticipated one
way or the other. According to James, this could even lead to a
serious blow to Wall Street. Though Russia doesn’t possess the
power of its Soviet empire, this new situation is pushing Putin
to revitalize Russia’s ties with its former socialist republics
as well as with China.
Russia may not be as strong as
it was, at the same time it is not as weak as it seems. A
Russian asset freeze could have a devastating effect on European
as well as world markets. Even chancellor George Osborne must
have been let into the secrets of U.S. sanction plans. Reason
why he issued last week’s alert in Washington, warning City
bankers to prepare for a sanctions fall-out. But this also
counts for the banking in countries like Germany, France and
Austria with a huge exposure to Russia’s financial system.
James also noticed the risk of
an “asymmetric” riposte by the Kremlin as Russia’s cyber-warfare
experts are among the best. A cyber shutdown on U.S. utilities
(electricity, telephone, water systems) or the hacking of air
traffic and defence systems can cause a cascade of misery. It is
not a coincidence that U.S. defence secretary Leon Panetta
already warned of a cyber Pearl Harbor
in 2012. In a cyber war today, the U.S. would be the loosing
party according to James. He also referred to the fact that
sanctions are as old as time. So are salutary lessons. Pericles
tried to cow the city state of Megara
in 432 BC by cutting off trade access to markets of the Athenian
Empire. He set off the Peloponnesian Wars,
bringing Sparta’s well organised infantry crashing down
on Athens, leaving Greece’s economy in shatters at the mercy of
Persia.
One could wonder what Western
interference in Ukraine has brought about so far other than a
severe confrontation with Moscow. Keeping in mind that Ukraine
as Russia’s cradle will never join the EU neither NATO – as was
intended – without Russia’s consent. Further on, it is
undeniable that Wladimir Putin
understands how to play chess by suggesting during his last
tv happening that the current
problems can only be solved through a political compromise or,
in other words: there will be no peace without Russia. In the
meantime, he left the burden of Ukraine’s economic recovery in
the hands of the West. A starting sum of $17 billion was
mentioned already but will this be all and what happens in case
a civil war starts? For such reasons, wouldn’t a reflection on
the current situation be a more obvious option than sable
rattling, which will hurt us all?
It is amazing that those facts
have hardly caught the public opinion. According to Princeton’s
analyses the majority of the American public actually have
little influence over the policies the U.S. government adopts.
However, Americans do enjoy many features central to democratic
governance such as elections, freedom of speech and association.
But if policy making is dominated by
powerful business organizations and a small number of affluent
people, then America’s claims to being a democratic society are
seriously threatened. James concluded that the U.S. is an
oligarchy indicating that economic elites and organized groups
representing business interests have substantial independent
impacts on U.S. government policy. This group also finances the
presidential elections making the new president their prey.
One has to realize that the
results of such studies also catches
the Kremlin’s interest where the primus inter pares start
from the same premises. In this context, one could give Putin
the benefit of the doubt in that he finds himself in the case of
Ukraine much better supported by his subjects thanks to his last
tv
appearance.
It is for this reason that
Kremlin spokesman Dimitry
Peskov on Russia I
tv
(source: AFP) could openly declare that Russia had deployed
troops along its total border (including Ukraine) and that new
sanctions and/or NATO militairy
reinforcements were absolutely unacceptable. It looks like the
waiting is now for the first shot, in other words: the same old
song.
Talking about shooting, the
question is what will the result be other than Putin seeking
cover from his formed ‘allied’ republics and the support of
China once getting involved in a range of uncontrollable
consequences. In lieu of testing Russia’s weak spots after the
fall of the Sovjet Empire (which
feels like a humiliation), it would have been smarter had the
West offered a new Marshall Plan to Russia, which was refused by
Stalin after World War II. With the risk of a second rebuff,
the Russian population nonetheless would have been
enthousiastic about such a
proposition. See even now how Western brands and products are
the preferred.
However, since many signals
indicate a contradictory development, we as citizens of Europe
and America without any influence on the current developments
should by mo means allow that a provoked
escalation c.q.
confrontation with Russia would bring us in war with the
Russians, causing an economic backlash much worse since Lehman’s
fall. Therefore, on the brink of a (civil) war I - hopefully
supported by many - make an urgent call to our most important
policy makers to stop
playing with fire!
Robert
Broncel
April 24, 2014
CC. José Manuel
Barroso, President EU
CC. Anders
Fogh Rasmussen, Secretary General of
NATO
CC. Barrack Obama, President
United States
CC. Mark
Rutte, premier The Netherlands |
