Jon Kofas interview of Noam Chomsky regarding energy sector's influence on public policy

 

 

https://www.bilibili.com/s/video/BV18S4y1x7j5

LINKS ON A CHAIN: Five Days in October

NEW NOVEL 

"Honorable Mention" at London Book Festival - 2023        

 

 

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A third generation Norwegian, Freddie with a gambling addiction and nostalgic for the sixties counterculture, inherits the low-budget motel on the city's outskirts. As Freddie struggles with his own problems after leaving the motel maid pregnant, he is caught up in the lives of transients; a white supremacist, a black ex-con, a former mental patient and an unstable Vietnam veteran, among others. 

Against the background of the moral majority movement of the 1980s, Freddie faces not only a moral dilemma, but an existential one.

 The unraveling of his own life, and the lives of motel guests, force him to reexamines his own middle class values in a society that equates immorality with the marginalized souls like those staying at the Strassen Inn. 

 https://www.amazon.com/dp/1387815067/ref=sr_1_11?qid=1657255475&refinements=p_27%3AJon+Kofas&s=books&sr=1-11

 

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SCENARIOS OF RUSSIAN WAR OUTCOME

When the US became involved in both world wars in the 20^th century, all sides knew the outcome would be in favor of US allies. However, they had no idea of the length nor could they guess that the terms of the Paris Peace Treaty of 1919 would be the first long-term cause of WWII, any more than anyone could predict that WWII would end with the US dropping nuclear bombs on Hiroshima and Nagasaki.

Similarly, the Russian war outcome is impossible to predict with any degree of accuracy. Yet, the US has based its proxy-war strategy through military and economic aid, combined with sanctions on a neoconservative scenario of the 1980s. This is because Biden, a Cold War/militarist liberal, has always supported the military-industrial complex and the neoconservative strategy of the 1980s. Surrounded by a Clinton-Obama hawkish foreign policy team, with individuals who unfortunately operate under assumptions that the US can repeat the Reagan-era strategy with the same degree of success in Russia, Biden’s mindset has not moved out of the 1980s neoconservative mold.  

In the Russian war against Ukraine, the US goal is based on the neoconservative strategy of the Reagan administration which raised defense spending astronomically to the degree that Moscow responded, despite crippling its already weak civilian economy. Debilitating Russia economically by forcing it to spend itself into oblivion for its defense sector, thereby winning the war of attrition, worked for Reagan who raised the US public debt to the highest level since WWII, as though the US had an FDR-style war economy.

At the time, Biden was senator who went along with the neoconservatives of the 1980s, just as he went along with Reagan’s vast defense budget increase as part of the strategy which in fact seemed, at least on the surface, to pay off because Mikhail Gorbachev dismantled the ungovernable USSR collapsing from within owing to structural impediments ranging from falsified economic output statistics to a parasitic bureaucracy. Scholars who have studied postwar Soviet history know very well that internal structural causes, combined with the rapidly rising cost of defense, precipitated the collapse of USSR.

Scenarios for the end of the Russian War:

1.      Russia suffers a military defeat. If we are to believe the Pentagon, Russia has already lost and cannot possibly prevail militarily. If we are to accept the State Department version, Russia cannot win militarily because its “war aims” cannot be realized, although the war aims have been a moving target. How realistic is this scenario, considering that the Pentagon map of Russian-controlled Ukrainian territory stretches from Odessa up to Kherson, Mariupol, Donetsk, Luhansk, Kharkiv and all along the border northwest to Chernobyl; in essence a solid strategic buffer zone that reminds any student of Soviet studies the sort of thing Stalin would do in pursuit of securing a minimal base of operations, if for no other reason, than negotiating leverage. Deliberately oblivious to this reality in part for public relations reasons but also because the US wants a protracted war, and the fact that about 6 million of 44 million Ukrainians are displaced and many cities severely destroyed, the US government insists that Russia is “losing”. Unless losing has some “alternative fact” meaning other than what is in the dictionary, it defies logic to see how Russia is “losing’ and Ukraine is “winning”.

2.      Russia scores a resounding victory with the end of the Zelenskyy regime and Moscow placing its own puppet regime in Kyiv. This is as unrealistic as the first scenario because geography determines Russia’s foreign policy, as it does Mexico-US relations, India-China, etc. Russia values the strategic balance of power and does not want a Ukraine as a military and economic Western puppet, but it also values economic integration with the West. Here too the US has an early Cold War goal which is completely contradictory to the neoliberal model of globalization, namely, the creation of East-West economic blocs with an eye on China, not Russia, as the ultimate Western enemy to undermine. “Giving war a chance”, the Biden neo-conservatives have no other card to play against China, but to force Russia into a war, even if Moscow prevails, thereby making it easier to consolidate those blocs and derive the meager short-term benefits of strengthening the US defense and energy sectors, along with derivative industries.

3.      A Yalta-style conference (February 1945) where Moscow and the West agree on portioning Ukraine, with provisions for all sorts of Russian limitations regarding future military operations similar to Ukraine, in return for Western guarantees to place geographic limits on NATO expansion so that Russia does not feel the pressure of Cold War containment. Putin and Biden are Cold War militarists who understand this sort of thinking, but it is unlikely to take place, unless Western Europe feels the pain of a declining economy and reverses position to demand a quick settlement. The fact that sanctions cut both ways, deeply and sharply, is hardly anything to celebrate any more for the Europeans than for the Americans, dragging down the rest of the world over a war of imperialism in Ukraine. Macron has both Marine Le Pen and especially Jean-Luc Melenchon after a deal with the Greens, breathing down his neck with the legislative elections of June 2022. Energy is killing the EU economy and it is no secret that the US is charging far higher prices than the Russians.

4.      War of attrition scenario as the Biden neo-cons envision would be another way that this could end, although attrition cuts both ways and it would send not just the Russian economy into oblivion, but Ukraine would become another Yemen. Furthermore, the US neo-con position also clashes with the MF, World Bank, Credit Suisse and Goldman Sachs warning of a sharp drop in the dollar, lingering stagflation, sharply higher US and EU public debt, and lower living standards for the entire world. If that is not sufficiently scary to business elites and trade unions alike, China would emerge even stronger because of its unique global integration model free of a sanction’s regime.

5.      Sharp US-NATO escalation, with hundreds of billions poured into the conflict to the degree that it becomes even more obvious than it is currently that Ukraine is but a pretext for a Russia vs, US-led NATO war. The inevitable conclusion is nuclear winter for the planet. While Putin has been talking about it from a position of weakness/deterrence, and the US has been talking nuclear war down but acting as though it is on the table, the Europeans are very anxious because nuclear war takes them right back to Reagan Defense Secretary Cap Weinberger who had no problem of a “limited nuclear war”, as long as it were confined on European/Eurasian soil. Europe holds a great deal of leverage and the question is when and it if will exercise it.

6.      Afghanistan-style insurgency of the 1980s combined with internal pressure on the Kremlin from oligarchs and the masses to end the conflict would be dream come true for the US. However, this is as unlikely as a nuclear war. Neo-con US strategists are salivating over such a scenario but once again realism will sink in when action on the ground does not support the mental constructs. True, in some respects this is already taking place sporadically in cocoons of resistance, but it is hardly a deterrent for the Kremlin’s goals. Contrary to Western wishful thinking, Putin has built an elite and populist-based consensus, enjoying greater popularity than Biden enjoys either among the public or business elites watching their stock portfolios drop sharply in the first four months of 2022.

The scenarios described above may never come to pass, unless some combination of those versions ends the war. A more important question is how will any war-ending scenario shape the post-war peace, as was the case with the dreadful Paris Peace Treaty of 1919 which led right back to another war. Putin is not Tsar Peter the Great, but his is ambitious and wants a place in history by somehow strengthening Russia which was weakened under Yeltsin in the 1990s.

Putin and many in the Kremlin have been watching China’s global ascendancy as the world’s undisputed economic superpower and the relative economic decline of the US. Putin and the Kremlin want to position Russia in a competitive role beyond just exporting energy, minerals and raw materials as though it is a Third World country. Securing a balance of power was a priority against the unapologetic Western advances, but this has meant militarism and alienation of countries surrounding Russia; a calculated risk that Putin was willing to take to affirm Russia’s Great Power status.  

The US saw the opportunity to exploit Putin’s imperialist ambition by “giving war a chance”, considering that “empire as a way of life”, as William Appleman Williams argued is part of the political culture and ideological framework. The problem, however, is that in 2022 the US is in a comparable position as Russia in the 1980s, namely a military superpower, playing an increasingly diminishing role in the world economy. Hence, the US is falling back on its remarkable ability to destabilize and slowdown the advances of its rivals, even if this means self-inflicted wounds to its own declining economic status. Regardless of which scenario plays out, short of the nuclear, there are no winners in this conflict, contrary to what the oligarch-led Putin regime assumes or the neo-con Wall Street-led group of delusional enthusiasts living in the neo-con Reagan world of the 1980s.   

 

The Dollar and Delusional Assumptions about Sanctions

 Sanctions are a form of warfare, and few would deny that we have moved into a new era of economic warfare with sanctions, led by the US, have become the norm, rather than the exception. This was the conclusion recently of the pro-Western World Economic Forum. If there is general agreement that sanctions are a form of warfare, and not selectively, but regardless of who imposes them and for whatever reason, the next question is the cost-benefit ratio on the country or countries imposing them.

Clearly, the desired goal is to use economic sanction as leverage, although there is an appreciation of their impact on the general population, rather the elite of the targeted nation. From the Cuban Revolution, to the Iranian Revolution, and to Russia’s invasion of Ukraine, history has shown that sanction do not yield the desired goal. When imposed on countries like China, economic sanctions have shown to cause far greater damage to those imposing them than on the targeted country. Assuming that heads of state are well aware of this reality, why go the route of economic sanctions, only to suffer the detrimental consequences?  

The combination of ideology, power status, the mythology/pathology of “greatness”, even when time has diluted such “greatness”, revenge at any cost, desperation owing to lack of alternative paths, and, of course, delusional thinking of which it is always in abundance on the part of the political and business elite, merely because they embrace the fallacy of the eternal sameness against the harsh reality of constant change combined with the other reality of the unpredictability on the part of the sanctioned party. Just as Russian is not what it was in 1949 when it successfully tested the first atomic bomb, and simultaneously Mao’s revolution succeeded in China, neither is the US the same as the world’s hegemonic superpower with the dollar as the world’s preeminent currency.

When Biden announced the massive US-led sanctions against Russia, US and European officials as well as Western analysts were predicting the complete collapse of the Russian currency now linked to gold; the quick bankruptcy of the Russian state agencies owing to defaults, followed by an economic depression and presumably the Kremlin’s decision to leave Ukraine in humiliation. At the same time, US-Western analysts expected an international rush to buy dollars, thereby strengthening the US reserve currency.

The above scenario was around the end of February when the euro-dollar exchange rate just $1.13-1.14 to one euro. On 28 April the dollar-euro rate stands at $1.05, representing a significant drop against a currency itself in trouble because of the Russian sanctions. More significant, a number of private financial institutions as well as the IMF which monitors currencies globally, have concluded that the dollar is headed for continued decline. Saudi Arabia among other countries have already announced that they are transitioning out of the dollar as the most reliable reserve currency. The US-NATO sanctions regime which is in essence a reaffirmation of economic bloc trading in the absence of their ability to compete with China, regardless of what has taken place with Russia, demonstrates that the West is undermining the Western neoliberal model from within, using the Russian war as a pretext in a desperate attempt to retain core status in the world economy.  

The US-NATO plan to weaken Russia militarily, thereby sending a message to China about Taiwan, rather than to pursue a diplomatic solution will hasten and deepen global economic recession, and by default strengthen China despite its own supply chain problems because of an austere COVID-19 lock down policy. Rhetoric aside, the Russian currency has stabilized. GAZPROM has already compelled a number of European countries and companies to pay in rubles for natural gas. And the idea that a war of attrition will only hurt Russia has proved delusional so far, and we are still early in a conflict that the US wants to be drawn out.

The idea that a military solution will favor the US-NATO bloc and result in the demise of Russia is another leap into the murky realm of delusional thinking, considering that autocratic Putin is more determined and far more capable of doing damage to Europe than NATO can inflict on Russia, unless the West has resolve to put an end to the continent. This is not to suggest that the Kremlin's delusions are less imperialistic, less militaristic and more ethical than those of the US-NATO coalition. If China never existed, and if more than two dozen countries of the 195 in the world were taking part in US-led sanctions, US-NATO sanctions would not be as delusional, though they would still not be nearly as effective as policy makers assume.

BIDEN, RUSSIAN WAR, AND STAGFLATION ECONOMICS

When Trump left office, he had a personal low public opinion poll of 34% amid the January 6th quasi-coup attempt, whereas Biden in a middle of an enemy that most Americans love to hate, and have done for more than century, has approval rating 1% lower than Trump when the latter left office in January 2020. The question is why do only one-third of the voters polled approve of a president trying to blame Russia and/or China for all calamities befalling the US?

1.      Stagflation – A recession cycle was as inevitable as the Federal Reserve was due to raise interest rates to slow down speculative financialization on Wall Street. Biden exacerbated the problem by arrogantly assuming that "punishing" Russia with sanctions that would have minimal impact on the world economy with which the US is intertwined. Trump tried tariff wars with China and the net economic loser was the US; a lesson one would assume that Biden's advisors would have learned and provided a bit of realistic analysis to the White House dreaming of a return to the Cold War of the 1950s.

Instead, they have been willing to sacrifice the US and world economy to "punish" Russia, as though it were ever a possibility that Putin would actually change his mind and abandon his war aims in Ukraine. Calling the high cost of living the "Putin inflation" is about as "cute" as Trump calling COVID-19 "the China virus" and indicative of why Beijing criticizes the US leadership for conducting policy from a realistic perspective.

2. Another reason for Biden’s low polling numbers is that the Progressive wing of the Democratic Party and rank and file feel betrayed. Biden had promised a pro-labor agenda. Instead, he has continued some of the Trump economic policies both in fiscal measures as well as corporate subsidies, favoring Wall Street and the richest 1%. Despite the Progressive Caucus’ urging to push the Build Back Better program, to do something about college student debt, and support labor unions and higher federal minimum wage, he and the mainstream Democrats engage in patronizing rhetoric, but have done nothing to deliver on policy.    

3. Biden has placed militarism above environmentalism and the environmentalists have taken notice that he has abandon the promise of a green economy. Nationalism works up to a certain point when people’s material needs are satisfied. Biden has used nationalism to justify not seeking a diplomatic solution, while benefiting the defense sector industries, but above all, the fossil fuel which he had promised that he would not be supporting. On the contrary, he has given the industry the green light and provided corporate subsidies, all in a desperate effort to create an Atlantic bloc economy that would minimize the role of Russia and China. This has meant tossing out all campaign promises about green energy.

4. While remaining true to symbolic gestures like choosing the first black woman for the Supreme Court, he has done absolutely nothing to lift living standards among minorities, as he promised when he insisted that a massive infrastructure program would create high paying jobs. The cost of living was climbing higher before Russia’s invasion of Ukraine, and reached new heights thereafter. People are judging Biden based on their living standards, not his policy intended to replace Russian natural gas and oil market in Europe with US exports.

5. Focusing on a war in a distant land where Americans feel a general sense of empathy does work for a brief period, very brief when the realities of paying bills are confronting working families. Biden has failed to deliver for working families, as he had promised in 2020 and this is the main reason only one-third of those polled support him. Every few days, people find out that there are hundreds of millions of their tax dollars going to military aid in Ukraine whose chances of winning the conflict were always ZERO and are unlikely to improve. They also discover that Biden has proposed the highest defense budget in US history. Meanwhile, the country’s debt is reaching new highs, as a percent of GDP, while the IMF is warning that US GDP growth will be in the low 1% in 2022 and the dollar’s future is looking very grim.

In March 2022, the IMF issued a warning about the global demise of the dollar owing to US-NATO-led global sanctions on Russia’s the world's largest producer of commodities. A few days later Goldman-Sachs followed the IMF with a more dire warning about the dollar's future as a reserve currency, arguing that it will be somewhat analogous to the British pound, given that the US has chosen to place military-based geopolitics above economic considerations, or rather risk using military means as economic leverage.

 This week, CREDIT SUISSE issued an even more pessimistic scenario than either the IMF or Goldman-Sachs, arguing that bloc-trading geopolitics in essence disengages a segment of the world economy, forcing countries at odds with US policy to go their own way and drop the dollar as a reserve currency. Right now, there is really no problem, other than inflation and stagnation, cyclical in nature with a good possibility for a recession exacerbated by the Russian invasion of Ukraine and US-NATO sanctions regime, and combined with the adamant US refusal for a diplomatic solution based on accommodating Russia's security concerns.

 After the Russian war, the recession will remain and after the recession, the dollar will continue the long slide to oblivion, exactly as the IMF, Goldman-Sachs and CREDIT-SUISSE have warned. This was not inevitable, but rather a decision by Washington to rely on "military Keynesian" policy, as it has since the Truman presidency, to the detriment of the civilian economy under the neoliberal model that has already debilitated the middle class and working class.

 China has been watching NATO and the US weakened economically by their own sanctions, while they are and taking down the world economy. Prolonging the conflict provides nothing but destruction for Ukraine, a weaker global economy, which inadvertently benefits China, and nuclear-powered Russia becomes more distant from the West. Following a path contrary of the US, on 14 April, China asked banks to keep less cash on reserve and make more credit available. This was in anticipation of a global economic contraction and a means of stimulating internal demand to substitute for the anticipated drop in exports. Undermining that policy, US Treasury Janet Yellen called on China to stop undermining US-led sanctions against Russia, while hinting that the US wants to avoid a split with China. In reality, the US and EU have been pursuing bloc trading and the so-called split that Yellen mentioned is manifested in the East-West approach to the war in Ukraine.