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Page added on June 18, 2014
Putin Advisor Proposes “Anti-Dollar Alliance”
It has been a while since both Ukraine, and the ongoing Russian response to western sanctions (which set off the great Eurasian axis in motion, pushing China and Russia close together, and accelerating the “Holy Grail” gas deal between the two countries) have made headlines. It is still not clear just why the western media dropped Ukraine coverage like a hot potato, especially since the civil war in Ukraine’s Donbas continues to rage and claim dozens of casualties on both sides. Perhaps the audience has simply gotten tired of hearing about mixed chess/checkers game between Putin vs Obama, and instead has reverted to reading the propaganda surrounding just as deadly events in the third war of Iraq in as many decades.
However, “out of sight” may be just what Russia’s political elite wants. In fact, as VoR’s Valentin Mândr??escu reports, while the great US spin and distraction machine is focused elsewhere, Russia is already preparing for the next steps. Which brings us to Putin advisor Sergey Glazyev, the same person who in early March was the first to suggest Russia dump US bonds and abandon the dollar in retaliation to US sanctions, a strategy which worked because even as the Kremlin has retained control over Crimea, western sanctions have magically halted (and not only that, but as the Russian central bank just reported, the country’s 2014 current account surplus may be as high as $35 billion, up from $33 billion in 2013, and a far cry from some fabricated “$200+ billion” in Russian capital outflows which Mario Draghi was warning about recently). Glazyev was also the person instrumental in pushing the Kremlin to approach China and force the nat gas deal with Beijing which took place not necessarily at the most beneficial terms for Russia.
It is this same Glazyev who published an article in Russian Argumenty Nedeli, in which he outlined a plan for “undermining the economic strength of the US” in order to force Washington to stop the civil war in Ukraine. Glazyev believes that the only way of making the US give up its plans on starting a new cold war is to crash the dollar system.
As summarized by VoR, in his article, published by Argumenty Nedeli, Putin’s economic aide and the mastermind behind the Eurasian Economic Union, argues that Washington is trying to provoke a Russian military intervention in Ukraine, using the junta in Kiev as bait. If fulfilled, the plan will give Washington a number of important benefits. Firstly, it will allow the US to introduce new sanctions against Russia, writing off Moscow’s portfolio of US Treasury bills. More important is that a new wave of sanctions will create a situation in which Russian companies won’t be able to service their debts to European banks.
According to Glazyev, the so-called “third phase” of sanctions against Russia will be a tremendous cost for the European Union. The total estimated losses will be higher than 1 trillion euros. Such losses will severely hurt the European economy, making the US the sole “safe haven” in the world. Harsh sanctions against Russia will also displace Gazprom from the European energy market, leaving it wide open for the much more expensive LNG from the US.
Co-opting European countries in a new arms race and military operations against Russia will increase American political influence in Europe and will help the US force the European Union to accept the American version of the Transatlantic Trade and Investment Partnership, a trade agreement that will basically transform the EU into a big economic colony of the US. Glazyev believes that igniting a new war in Europe will only bring benefits for America and only problems for the European Union. Washington has repeatedly used global and regional wars for the benefit of the American economy and now the White House is trying to use the civil war in Ukraine as a pretext to repeat the old trick.
Glazyev’s set of countermeasures specifically targets the core strength of the US war machine, i.e. the Fed’s printing press. Putin’s advisor proposes the creation of a “broad anti-dollar alliance” of countries willing and able to drop the dollar from their international trade. Members of the alliance would also refrain from keeping the currency reserves in dollar-denominated instruments. Glazyev advocates treating positions in dollar-denominated instruments like holdings of junk securities and believes that regulators should require full collateralization of such holdings. An anti-dollar coalition would be the first step for the creation of an anti-war coalition that can help stop the US’ aggression.
Unsurprisingly, Sergey Glazyev believes that the main role in the creation of such a political coalition is to be played by the European business community because America’s attempts to ignite a war in Europe and a cold war against Russia are threatening the interests of big European business. Judging by the recent efforts to stop the sanctions against Russia, made by the German, French, Italian and Austrian business leaders, Putin’s aide is right in his assessment. Somewhat surprisingly for Washington, the war for Ukraine may soon become the war for Europe’s independence from the US and a war against the dollar.
28 Comments on "Putin Advisor Proposes “Anti-Dollar Alliance”"
bobinget on Wed, 18th Jun 2014 1:40 pm
………………….Zero Hedge Strikes Again…………………..
Exactly what makes Zero think Putin is so popular in Europe he could ever pull off such a hat trick?
Anyway, everyone has lost interest in Ukraine, that is if they ever cared. Most folks didn’t thing there was still fighting in Syria till Iraq went down the tubes.
Putin needs to be in there helping Iran if he ever expects to diminish US and Saudi influence.
J-Gav on Wed, 18th Jun 2014 2:07 pm
Bob – You’re right when you say Putin does not enjoy great popularity in Western Europe – Germany will likely be the test-case there. That is in part due to the demonizing Western media blitz against anything Russian and in part due to the failings and shortcomings of Russia itself (I mean social and economic more than (geo)- political).
By the way, not everyone has lost interest in Ukraine. That so-called ‘nation’ will be back in the news in short order, once people realize that ISIS is not going to take possession of the Iraqi ‘nation.’ There, it is in most players’ interest to keep a (weak) central govt in place, whilst allowing the rest of it to be carved up into competing (weak) factions who can be bought out with a few million $.
Back to Ukraine – If nothing positive appears on the horizon in the coming months, next winter will be looking rather cold and bleak for a lot of Europeans.
Davey on Wed, 18th Jun 2014 2:43 pm
If there is no money in Putin’s advisors plan I see little interest other than back slapping and cheerleading. A serious change to the dollars status will take the cooperation of multiple nations and significant mechanical changes not possible in these times of turmoil and simmering trade wars.
J-Gav on Wed, 18th Jun 2014 4:49 pm
Davey – What you say is true – and the nations are getting more ‘multiple’ every year …
After the “what we say goes, no matter what any of you think” attitude of the Bush years, now continued with a friendlier face and less linguistically challenged Chief Operator in Obama, what did they expect? Of course other countries will do what they can to skirt the arrogant exceptionalism that the U.S. flaunts at every opportunity.
Granted, ALL of the countries involved in this end-run have serious issues of their own, but I don’t see them pulling back, which means the dollar is on the way out, one way or another. If the U.S. is unable to strike a more balanced international pose, that could get very messy. If there is anybody left in the administration with a modicum of diplomatic acumen, on the other hand, the worst (WWIII) could still be avoided.
Newfie on Wed, 18th Jun 2014 5:30 pm
“It is still not clear just why the western media dropped Ukraine coverage like a hot potato…”
Kim Kardashian’s wedding of course. The dumb-ed down masses can’t follow what’s going on in some country they can’t even find on a map.
Davey on Wed, 18th Jun 2014 5:31 pm
Gav, that would be great unfortunately I see no other country or counties that meet those high standards. Thus we are stuck with what we have until the collapse. Then who knows
alokin on Wed, 18th Jun 2014 5:58 pm
Bob the general public in Germany does not like Putin. He worked for the secret service after all. I think that there are still old wounds on how the Russians behaved after WWII, so the Russians are still feared.
But German industry does depend on Russia and I don’t think that they will let Merkel obey to Obama’s orders.
Juan Pueblo on Wed, 18th Jun 2014 6:04 pm
The US$ has been losing its relevance for over a decade and represents an increasingly smaller part of international trade and reserve currency use.
I have seen first hand how this was experienced in Latin America. Twenty years ago the rich down there had most of their foreign reserves in dollars. Then the € appeared. Then it grew. Then the USA started treating tourists as potential terrorists and alienated many rich tourists who no longer stop over in Miami or New York on their way to Europe every year. After that they realized their dollars weren’t that useful any more and they started using them less for business, too. This process is ongoing worldwide and irreversible. As trading becomes more regional and less global, multiple regional currencies for trade is the natural way to go.
Juan Pueblo on Wed, 18th Jun 2014 6:06 pm
That said the dollar remains the number one global currency today!
Davey on Wed, 18th Jun 2014 6:46 pm
Juan, paradoxically the best thing that can happen to the US at this point is forced deglobization through the rejection of the dollar. It will force us back to depending on the local. With that said any rejection of the dollar will eventually hit diminishing returns of effectiveness. The US economy is too large for the global economy to decouple from.
Feemer on Wed, 18th Jun 2014 7:22 pm
Alokin, Merkel does not obey Obama’s orders. She runs the EU, and is being practical. Europe needs Russian gas and oil, but Merkel has (and kudos to her) seized on the crisis and called for a European energy union, further tying the European states together as well as advancing renewable energy which could ease the strain off of the gas and oil from Russia. Merkel also has the best relationship with Putin out of all other leaders. She could be the key to diplomatically solving the Ukraine crisis (though I don not believe it will be solved diplomatically)
Feemer on Wed, 18th Jun 2014 7:24 pm
All in all though, the Ukraine crisis is more significant and more relevant than Iraq. It’s already to late for the US, it’s wasted to much money and time in the ME and will be stuck there. The outcome of the Ukrainian crisis on the other hand will impact Europe and Eurasia for a VERY long time and will have a lot of ramifications.
Makati1 on Wed, 18th Jun 2014 8:17 pm
Big business will trump any plans of the US for Europe, I think. That said, the dollar is on the way out. The list grows daily of countries switching to their own or other currencies for trade.
As the value of the dollar becomes apparent (toilet paper at best) the rest of the world will quickly follow China and Russia in the switch. When China decides to back their currency with gold, it will be all over for the USD. The Chinese now have somewhere north of 10,000 tons of the stuff and adding a thousand plus tons per year, while the US gold has not been seen for decades and every demand for an audit has been denied. My personal thought is that Fort Knox is empty. So are all the other ‘gold’ vaults in the US. Why does it take 7 years for Germany to get it’s gold back if there is not a shortage in the US vaults? After all the German gold should just be laying there collecting dust, shouldn’t it? Hahahaha … not in America, the land of the scam.
Davy, Hermann, MO on Wed, 18th Jun 2014 8:50 pm
Back at it makster with your bashing, speculations, and half-truths. Where is it reported China has 10,000 tons of gold? Mak in your fantasy world. As for trusting a Chinese currency wow that is really a stretch. Have you been reading about what is going on in China now with the collateral scandals? Can you imagine the games they would be playing with a reserve currency? Geeze, talk about con artist the Chinese are ahead of the game there. It is not a part of their culture to be honest and above board in business and everyone that has dealt with the Chinese know this. I am sure there is plenty of gold in Fort Knox Mak. Go ahead Mak, put your head in the sand but you should realize Asia is a Bad place to invest your future. Asia is going down following China’s nose dive.
clueless on Wed, 18th Jun 2014 9:46 pm
America has 0 gold to back it’s collapsed/bankrupt economy up. How on earth could an idiot nation, which just rely on the industry of WAR, ever do that?
CONCOCTION OF MORE WARS/WW3?
The more idiot americans who are commenting here are delusional.
LOL
clueless on Wed, 18th Jun 2014 9:47 pm
America has 0 gold to back it’s collapsed/bankrupt economy up. How on earth could an idiot nation, which just rely on the industry of WAR, ever do that?
CONCOCTION OF MORE WARS/WW3?
The more idiot americans who are commenting here are delusional.
BWAHAHAHAHAHA!!!!!
DMyers on Wed, 18th Jun 2014 9:48 pm
The Short Knox Caper really is something significant. We’re holding a certain sum of gold for Germany. Germany exercises its right to a quantity on demand.
“How much was that exactly you wanted? OK, no problemo. But look, with the sea of gold we have down in Short Knox, it’s hard to find those exact bars that you gave us back then. That might take up to ….whatyathink, Charlie?…I’d say seven years. You didn’t need it like tomorrow, did you? We’ve got it, don’t worry about that. We have some old technology at work down there in the gold vault. Just give us a little time…”
How about some old time metaphors to describe this, such as ‘the emperor wears no clothes’ or ‘caught with his pants down?’ We don’t have the gold. We don’t have integrity.
There seems to be a general sense that the US is too important to fall to such a petty Russian ploy. The US maintains its global popularity, which is, and always has been, its insulation against global mutiny. But that is surely a factor that is turning a different way. How many women and children must one nation slaughter, with no real justifying purpose, before the whole world turns against it?
Davy, Hermann, MO on Wed, 18th Jun 2014 9:50 pm
So Clue whats the point?
alokin on Wed, 18th Jun 2014 10:22 pm
For my taste, Feemer Merkel does play far to nice with Obama. But I think too that she won’t risk German jobs and unheated houses.
What do you think about Schroeder, he’s an a%%h*&e, but he’s Putin’s best friend.
Davy, I know that China is in a pretty bad shape, but KGB-Putin is a sly fox. Would he make big deals with China if they were that short of money? Or are his moves pure gambling?
Davy, Hermann, MO on Thu, 19th Jun 2014 4:52 am
Alokin, “Puut” is among the slyest of foxes being ex KBG and reported to be the richest man in the world. I may criticize China but it is my effort at balancing Maks attempt to vilify American (west) and glorify China (East). Mak is absurd with his half-truths, speculations, and unfair criticism. With that understood China in reality is on par with the rest of the west financially. China is in horrible shape with its environment, population overshoot, and food security to name a few with the west in much better shape by comparison. Financially China and the west are in the same Ponzi debt creation game. China is extremely dependent on growth because of their social fabric needs the west by comparison is already declining. Chinese growth has been the worst kind coming on way too quick. It has created a destroyed environment, ghost cities, industry overcapacity, and a housing bubble. Chinese growth is entropic and wasteful. China has destroyed the west’s “happy days” but fairly. China has every right to develop even if it is bringing on the “end of the world as we know it”. With regards to Russia and China being neighbors it is smart to make bilateral trade deals just as the US and Canada are big trading partners. Russia has resources and China has a manufacturing export economy. China needs gas and it is next door to Russia so a smart fit. Russia has allot of Asian gas and needs markets for it. This is a good fit. Another issue is for how long does this partnership have to get this vast expensive gas network built before BAU crashes? That is debatable. The Chinese currency is a dangerous currency to have considering what is going on in China with a debt unwind but where else is Russia going to go. Europe is a mature market. Gas is not easy like oil to thrown in a tanker and ship off to market. We know here the hurdles of exporting gas.
Juan Pueblo on Thu, 19th Jun 2014 8:03 am
I believe that almost every country in the Americas, except Haiti, will be better off than almost any country in Asia and Europe, except Russia, after BAU collapses. I am simplistic in my analysis and only consider productive land, water, energy, natural resources, and population levels.
I love China and have Chinese friends, but, as has been said above, it is deeply out of balance because it grew too much too fast causing an awful lot of environmental damage in the process.
We are all doomed! 😉
Juan Pueblo on Thu, 19th Jun 2014 8:47 am
Davey, we will decouple as you well know, it is only a matter of when and how. I agree with you that the sooner the better, but I am afraid it might take much longer than we wish, at great cost.
Davey on Thu, 19th Jun 2014 9:09 am
Juan, as worried as I am about a collapse beginning, I am increasingly feeling we need a 911 impacting crisis to shake all levels into change. I am not saying a 911 attack but maybe a fuel shortage or crop failure. Anything that will eliminate the attitudes and lifestyles that have no future in a decent. With each passing month pressure is building but there is no way to know the particulars. We have to start our global system decouple while our economy is whole. If economic collapse occurs first much will be lost.
clueless on Thu, 19th Jun 2014 12:02 pm
Davey, how can someone as delusional as you would understand something as sarcastic as my comment. We can’t meet halfway…you’re…delusional…got it?…i don’t think so. lol
Davy, Hermann, MO on Thu, 19th Jun 2014 1:30 pm
Fair enough clue. I have been called worse. Clue you are a clinical something. When the right psych condition comes along in my readings I will let you know. Around here we would just call you an ass and a loon. A missed opportunity for a condom.
Northwest Resident on Thu, 19th Jun 2014 1:43 pm
clueless — I’ve read a few million Davy posts, and never did I get the impression that he is “delusional”. Are you just name-calling, or is there something specific on one or more posts that Davy wrote that leads you believe that he is delusional? If so, please point it out to me because I missed it. Thanks in advance for your reasonable response.
Makati1 on Fri, 20th Jun 2014 4:05 am
Countries currently trading without using USDs:
China
Russia
UK
India
Brazil
New Zealand
Australia
Iran
Japan
Venezuela
South Africa
And soon to come: Saudi Arabia and then it is ‘game over’.
Davy, Hermann, MO on Fri, 20th Jun 2014 6:39 am
Mak, you talk like a 1st year econ major. Your above post is a laugh. If you are going to post make it legible and coherent. Mak, give us some figures. Game over when KSA dumps the dollar? Mak, are you drinking? The dollar is here to stay until the global financial collapse comes. Nearly every one of the countries listed above is a basket case in one form or another. Get a grip Mak. The global system is not going to decouple from the US without a collapse. The system is brittle and unable to change. The global geopolitical situation is not stable enough to allow the kind of cooperation and grand agreements to transition away form the dollar. A process the US would have to participate in and many participants would have to make significant economic changes. There is something going on globally now called diminishing returns. If applied to the financial system as an indicator it tells us that the problem situation with the dollar as a world currency is a predicament that cannot be solved without collapsed. It is the case that more countries are turning to bilateral trade and this will continue but the complex interconnected global system cannot function at the high intensity it does today without the trade and exchange through a common currency. Bilateral trade is not an alternative at this level and intensity. The global system must have growth and must have this level of intensity or it will quickly fall apart in entropic decay. I want the dollar to be dumped. It is my feeling the sooner the US is forced to decouple from the global system the sooner the US will take steps to make it by its own means. If we are going to get allot poorer let us get with the project. It will happen and soon anyway. A slower fall is better than a large sudden fall in conjunction with a complete collapse of the entire global system. Yet, this is my wishful thinking because the global system cannot dump the dollar and decouple from the largest economy in a cooperative managed way. It is theoretically possible but not practically possible in the current global situation of disequilibrium in geopolitics and global finance.