The EU summit behind us and the NATO summit ahead, Western politicians have all hands full to do with their hypocritic theatre. Headlines say “More Sanctions: Europe Will Ban Purchase Of Russian Bonds; However Russian Gas Exports Remain Untouched”, “EU works to prepare new sanctions against Russia”, “Australia’s Abbot Announces New Sanctions Against Russia” or “Merkel: Russia’s ‘Aggressive’ Behavior Cannot Go Unanswered”.
Politicians seem to speak with one voice currently, even though experts say that sanctions are rather harmful than helpful and companies on the ground say that the real losers are not in Russia but in the West. I take a look at seven articles from today that are related to the new wave of sanctions rolling.
Zerohedge. Over the weekend, insolvent, debt-dependent Europe thought long and hard how to best punish Russia and moments ago reached yet another milestone in deep projective thought: as Reuters reports, Europeans could be barred from buying new Russian government bonds “under a package of extra sanctions over Moscow’s military role in Ukraine that European Union ambassadors were to start discussing on Monday, three EU sources said.” This will be in addition to the ban on the debt funding of most Russian corporations. So as Europe’s 7-day ultimatum for the Kremlin to “de-escalate” counts down, Putin has a choice: continue operating under a budget surplus and ignore Europe’s latest and most amusing hollow threat which is merely a projection of Europe’s biggest fears, or spend itself into oblivion as Europe has done over the past decade and become a vassal state of the Frankfurt central bank.. Somehow we doubt Putin will lose too much sleep over this latest “escalation”…
Some more details on today’s latest threat by Europe, which if nothing else has sent the ruble to a fresh record low against the dollar, leaving Europe green with envy at such currency debasement, and boosting Russian exports even more. I don’t know if that is the reason for articles of today (e.g. Goldman & Sachs) forecasting a 1:1 exchange rate for Dollar and Euro, which means that the Dollar is blown up. The Dollar! Despite all that fiat money business and uncontrolled Dollar printing.
German Chancellor Angela Merkel, who led the drive for a tougher EU response, said on Monday that Moscow’s behaviour in Ukraine must not go unanswered, even if sanctions hurt the German economy, heavily dependent on imported Russian gas, and not only that. Moscow News:
“I have said that (sanctions) can have an impact, also for German companies,” Merkel told a news conference in Berlin. “But I have to say there is also an impact when you are allowed to move borders in Europe and attack other countries with your troops,” she said. “Accepting Russia’s behaviour is not an option. And therefore it was necessary to prepare further sanctions.”
It remains to be seen just how much more loss-generating populism German companies are willing to take. After all, every now and then even Europe requires a reminder that it is corporations who pull the political strings. And if German corporations want Merkel gone, that just may be what they will get. For now however, all Europe gets is more “draconian” populism. What a welcome change of tune after all that austerity lamenting! Or is the same?
The leaders asked the executive European Commission to prepare further measures within a week, building on steps taken at the end of July, which targeted the energy, banking and defense sectors.
“I’m hearing that a ban on buying Russian government bonds could be in the next package,”
an EU official familiar with the preparations said. ITAR TASS: They will be imposed on the financial, arms, dual-use goods sectors and some technologies in the energy sector.
The European Commission has started preparing suggestions on new sanctions against Russia, which will be presented before September 7, Commission spokeswoman Pia Ahrenkilde Hansen told reporters Monday.
Work on the suggestions will be finished on terms set by the EU – within a week, she said, without disclosing the measures, saying only that they will have economic consequences which have to be assessed the political and economic point of view.
Previously, Finland’s Prime Minister Alexander Stubb told ITAR-TASS the new restrictions will be set in the framework of existing sanctions. They will be imposed on the financial, arms, dual-use goods sectors and some technologies in the energy sector, he said.
Russia’s Foreign Ministry replied that the country will take new countermeasures if the Union imposes new sanctions.
“It is regrettable that the Union follows the countries interested in increasing confrontation with Russia despite interests of its member-countries,” the ministry said in a statement. “But there is still hope that the EU can look at the situation above last century’s stereotypes and will organize constructive work on settling the Ukrainian crisis.
And in another ITAR TASS article:
Russia will take countermeasures in retaliatory to the West’s new sanctions, Federation Council (upper house) chairperson Valentina Matviyenko said on Monday.
“We have serious steps and countermeasures if the spiral of sanctions is widen,” she said, adding that Russia did not support such measures. However, she said if Western politicians forced Russia to take retaliatory measures “it will be a hell to pay”.
“The EU rhetoric changed” after Russia banned imports of beef, pork, poultry, fish, cheese, dairy products, fruit and vegetables from Australia, Canada, Norway, the US and the EU for one year on August 7.
To be sure, nothing was decided: it is, after all, Europe, and decisions is what well-catered parties in the future are for.
An EU diplomat said ambassadors of the 28 member states would hold an emergency meeting on Monday at 1300 GMT to start work on a “significant” package of further measures although no immediate decisions were expected. A further meeting is set for Wednesday.
The leaders said the Commission should include in the sanctions “every person and institution dealing with the separatist groups in the Donbass”, potentially leaving a very broad area that could be targeted.
I would suggest that the new EU thought crime legislation, which has been prepared for months to curb anti-Muslim sentiments throughout the EU, is extended to make all verbal and written support for Russia punishable. In the end, only that will help to keep people in line after they lost their jobs due to “inevitable measures” and politics “without alternative”.
And just to add to the European flavor, and humor, the key countries in central Europe have already opined against further Russian sanctions, thus further jamming the wedge discussed previously whereby Russia has succeeded in converting that all-important safehaven, Austria, to its side.
However several EU countries heavily dependent on Russian gas, including the Czech Republic, Slovakia and Austria, are opposed to new sanctions, which require unanimous agreement.
“I consider sanctions meaningless and counterproductive,” Slovak Prime Minister Robert Fico said on Sunday.
“Until we know what is the impact of the already imposed sanctions, it makes no sense to impose new ones,” Fico said. “I reserve a right to veto sanctions harming national interests of Slovakia.”
But back to the stupidity of Eurocrats, who instead of focusing on fixing their own imploding economies, are hell bent on making Russian life a living hell, in the process accelerating Europe’s mere “triple-dip” into an outright depression:
EU diplomats said the main thrust of new steps could be financial because that would hit the Russian government rather than citizens. It could be coordinated with the United States, whose measures were also focusing on the financial sector.
Two diplomats said they did not rule out a ban on the purchases of Russian sovereign bonds to make it more difficult for the Russian government to finance itself on markets. In July, the EU banned Russian state-owned banks from raising capital or from borrowing in EU markets.
And of course, since Putin knows he hold all the trump, or rather Gazprom, cards from day one, all Europe will achieve with further sanctions is even more retaliation:
Moscow has retaliated against sanctions by banning most agricultural imports from Europe and the United States. The risk of a ban on buying Russian sovereign bonds is that the Kremlin could hit back by dumping European government bonds, of which Russian state institutions have significant holdings.
Which bring us to the dumbest idea from last week: the UK’s push to exclude Russia from SWIFT… and in the process accelerate the demise of the dollar as the world’s reserve currency.
Asked about the idea that Russia could be cut off from the international money transfer system known as SWIFT, one diplomat said the idea had been floated several months ago, but that there was opposition to it among several EU countries.
“The problem is that while it would probably work well in the short-term, as in the case of Iran, in the long-term it would trigger the creation of an alternative system to SWIFT and the setting up of two alternative world transaction systems and nobody wants that,” the diplomat said.
Well certainly not the US government, who gets every single SWIFT transaction presented under the pretext of the “war on terror”.
But the punchline, and why once again anyone with half a brain knows it is all for show, is that as usual, Russia’s gas sector, which powers European industry and lights its cities, has been spared so far and will continue to be spared.
By now even 5 year olds realize that if Europe really wanted to hurt Russia, it would cut off the gas and oil imports.
Only one problem: it can’t, as that would be economic and political suicide for Europe, and for the “infinite” political capital behind its unraveling monetary union. Everything else is noise.
Noise are, of course, also Russian retaliatory steps against McDonalds fastfood restaurants in Russia. After the closing of some five or seven restaurants on health grounds, McDonald’s has fallen victim of Molotov cocktail attack in Russia. Pravda writes:
Employees of the restaurant managed to put down the fire before a fire brigade arrived. The police are looking for those, who committed the act of arson.
McDonald’s chain has been under close attention in Russia lately. Several restaurants of the chain were closed in different cities of Russia, including Moscow, over violations of sanitary conditions and poor quality food.
Meanwhile, State Duma deputy from Just Russia Andrei Krutov appealed to Prosecutor General Yuri Chaika with a proposal to check the activities of charity fund Ronald McDonald House. The principal activity of the fund, according to the deputy, is “other forms of monetary intermediation”. Charity is not indicated on the list of activities of Ronald McDonald House. The MP believes that one needs to understand where the collected money goes and how reliable financial statements from the fund are.
In addition, the organization, founded by foreign entities, is not registered in the Ministry of Justice as a foreign agent, Interfax says with reference to the Izvestia newspaper. The fund is registered at the place of mass registration.
Representatives of the fund rejected the deputy’s accusations. They noted that Ronald McDonald House “timely generates adequate reports and sends them to the General Directorate of the Ministry of Justice of Russia in Moscow. The press service also said that the fund was not referred to non-profit organizations that serve as a foreign agent, since the organization did not engage in political activities.
So, idiots are obviously not exclusive to the US and the EU. Is it really needed to remind that McDonald’s is a franchise system, which means the restaurants are owned by local investors, possibly together with foreigners. McDonald’s is delivering the raw materials and provides the marketing material.
Yesterday I saw a report about a German, who went 25 years ago as an apprentice to Russia and today owns the largest farm for milk production in Russia with some 20,000 cows and is an adviser to President Putin in the food ban issue. He reported that Russian farmers were already heavily under price pressure from abroad and that the import bans is working really nicely now to relieve the local producers from this pressure. He expects the whole crisis to be a tremendous development stimulus for Russian agriculture.
Worrying is however that the Wests bans or threatens to ban technology sales to Russia. Under this category would also fall the software needed to run modern farms of today and spare part for Western farming machinery. The Chinese, he says, have immediately picked up the opportunity and are sending armies of sales reps to invite farmers and producers to visit China to present them what they have to offer in this category. Verdict after the first visits: the Chinese products are not bad at all and have improved a lot from what they have been like some ten or twenty years ago.
Bottom line: the West, and especially the EU and Germany, are destroying all their gains they made in the Russian market. The winners will sit in China, the losers in the crisis-ridden countries of Western Europe.
Chinese automotive company Haima plans to enter the Russian market, following another Chinese automobile manufacturer Lifan, newspaper Kommersant reports.
“Chinese manufacturers, apparently, hope for special preferences or plan to fill niches, which can emerge after potential sanctions in the automotive sector,” said Oleg Dazkiv, head of the internet portal auto-dealer.ru. In his opinion, the moment for starting production is not quite right, as Russian automotive industry is currently experiencing a slowdown in sales.
According to Kommersant, Haima is going to invest 100$ Mln in the new project, which is expected to produce 10-30 thousand cars in a year. The project implementation is planned to take place in four steps – starting with SKD followed by gradual extension of localization levels.
For Haima, it will be a second attempt to start car manufacturing in Russia. In November 2010 a plant for Haima 3 production was opened in Cherkessk by Derways Automobile Company. However, due to Derways’ inability to pay for Haima’s knock-down kits and its low set-up quality, cooperation between the two companies was suspended.
Some analysts believe that the attempts of re-opening can be attributed to the deepening of Russia-China economic relations.
According to Forbes, Haima is currently producing 150 thousand cars a year, holding a 2% share in the Chinese automotive market.
What makes me so immensely angry with all of these politicians claiming that we have no alternative at all to destroying our own economy and jobs is the fact that the imagined reason for taking action are based on so many lies and falsehoods and in the end, for whom are we doing all this? Is Ukraine worth all that? Not at all! Is the American ambition of conquering Asia to ensure everlasting leadership worth it? Are you kidding???
Last aspect. A Ria Novosti video on Australian sanctions. Australia is moving quickly from being a cool country with nice and friendly people at the edge of the world to an important player in Washington’s plans to attack China and conquer the Pacific Rim. Japan is still a bit more important as the coming pitbull of Washington, but Australia will be the poodle that the UK used to be and keep Japan’s back free and provide logistical support. What do Australians do gain from all that apart from being used as cannon fodder once more as in WWII?
Check out the video: Australia’s Abbot Announces New Sanctions Against Russia