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Interpreting Putin’s Decision | The Diplomat

Interpreting Putin’s Decision | The Diplomat.

Interpreting Putin’s Decision
Image Credit: Wikimedia Commons

Interpreting Putin’s Decision

From Western weakness to its Eurasian Union project, a look at the factors that drove the annexation of Crimea.

By Wei Zongyou
March 23, 2014

People around the world were astounded by Vladimir Putin’s rapid decision to annex Crimea in response to the latter’s referendum to secede from Ukraine and join Russia, which Kiev and the West view as illegal. The decision also drew worldwide criticism and vehement condemnation by the West and Ukraine, and triggered a second wave of economic sanctions from the United States, and soon afterwards Europe. Relations between Russia and the West are at their chilliest since the end of the Cold War.

So why has Putin risked Russia’s economic welfare and political space to swallow Crimea, push Ukraine out, and alienate the entire Western world? Is Putin “in another world” as German Chancellor Angela Merkel claimed he is? In my opinion, there are at least two considerations behind Putin’s decision.

The first is the realist, geo-political consideration. In Putin’s world, since the collapse of the former Soviet Union, Russia has lost nearly one fourth of its geography, one half of its population, and more than half of its GDP. Among the “lost” territories are those that are strategically important or militarily advanced, such as Ukraine and the Baltic states. With the eastward expansion of NATO, and the integration of former Soviet satellite states and republics in Eastern Europe and the Baltics into Europe, the traditional buffer zone between Russia and the West is increasingly squeezed and Russia’s space for strategic maneuvering becomes smaller with each year. When Russia craved for entry into the West, this might not have been particularly worrisome or embarrassing for Moscow. But since Russian leaders decided long ago that joining the West was neither particularly helpful to Russia’s political standing nor particularly attractive in terms of economic gains, it has begun to view the expansion of the West at its own strategic expense as both ill-intentioned and threatening.

Ukraine holds a unique position in Russia’s geo-strategic consideration. First, it is crucial territory in the passage of Russia’s oil exports to Europe. Each year more than one third of the oil Russia ships to Europe travels via the Ukraine pipeline. Second, Crimea gives Russia’s Black Sea Fleet access to the Black Sea. If the pro-West Kiev government were to have decided to end its lease to the Russian naval base in Crimea, Russia would have lost its strategic gateway to the Black Sea and the Mediterranean Sea. Third, Ukraine is deemed the most crucial member of Russia’s Eurasia Union project, an economic and strategic plan to closely connect Russia, Belarus, Ukraine, and Central Asia. If all goes according to plan, this union will integrate these former Soviet republics and now independent countries economically, politically, and diplomatically with Russia, and go some way to restoring the glory of the Soviet empire at its peak. The “coup d’état” in Kiev and the political orientation of the new government put all these things in jeopardy, if Russia remains disinterested and passive.

The second consideration is more psychological in nature. Following the end of Cold War, embracing the West was the first priority of Russian foreign policy. But to Moscow’s dismay, it found that the West still harbored strong reservations and considerable distrust. Years spent courting and wooing provided little of what Russia craved most: equal membership in the West and economic prosperity. Though Russia became part of the exclusive G8, it never enjoyed the full status and say of the other seven members, always remaining an “other.” Economically, the shock remedy proposed by the West and faithfully implemented by Boris Yeltsin didn’t bring the expected economic benefit. Instead, it took Russia’s economy into freefall, leaving the average Russian worse off than before. Russia’s look West ended in humiliation and disaster.

It was Putin who saved Russia from its miserable condition. He readjusted both Russia’s domestic and foreign policies, and distanced the country from the West, instead seeking opportunities to resurrect past Soviet glories. As the Russian economy improved, the West found that its time was passing. The 2008 economic crisis hit the U.S. and Europe hard and they found themselves more reliant on the emerging powers, Russia included. It is Britain, France, and even Germany who are now busy appealing to Russian oil barons to buy more and invest more. The balance of power between Russia and the West has shifted. The small war in Georgia in the summer of 2008 only strengthened this trend and the response from the West impressed Russia greatly: Europe is rotten and the U.S. has become too weak to lead. Then came the Arab Spring and the Syria crisis. In the former case, the U.S. “led from behind,” and in the latter it was Russia that decided the course of the Syria civil war.

Russians, and especially Putin learned a hard lesson from the post-Cold War romance with the West: For all the talk of democracy and freedom, the fact remains that the strong dictate to the weak.

With Europe rotten and United States weakened, a resurgent and confident Russia will definitely not let a geo-strategically important former Soviet republic fall entirely into the West’s camp. By annexing Crimea, Putin not only secured Russia’s naval base and its strategic gateway to the Black Sea, he also sent a powerful message to Ukraine and the West: Ignore Russia’s legitimate strategic concerns at your own peril.

Wei Zongyou, is Professor and Vice Dean of the Institute of International and Diplomatic Affairs, Shanghai International Studies University, Shanghai, China. His main research interests cover Sino-U.S. Relations, american foreign policy, humanitarian intervention and R2P

Interpreting Putin’s Decision | The Diplomat

Interpreting Putin’s Decision | The Diplomat.

Interpreting Putin’s Decision
Image Credit: Wikimedia Commons

Interpreting Putin’s Decision

From Western weakness to its Eurasian Union project, a look at the factors that drove the annexation of Crimea.

By Wei Zongyou
March 23, 2014

People around the world were astounded by Vladimir Putin’s rapid decision to annex Crimea in response to the latter’s referendum to secede from Ukraine and join Russia, which Kiev and the West view as illegal. The decision also drew worldwide criticism and vehement condemnation by the West and Ukraine, and triggered a second wave of economic sanctions from the United States, and soon afterwards Europe. Relations between Russia and the West are at their chilliest since the end of the Cold War.

So why has Putin risked Russia’s economic welfare and political space to swallow Crimea, push Ukraine out, and alienate the entire Western world? Is Putin “in another world” as German Chancellor Angela Merkel claimed he is? In my opinion, there are at least two considerations behind Putin’s decision.

The first is the realist, geo-political consideration. In Putin’s world, since the collapse of the former Soviet Union, Russia has lost nearly one fourth of its geography, one half of its population, and more than half of its GDP. Among the “lost” territories are those that are strategically important or militarily advanced, such as Ukraine and the Baltic states. With the eastward expansion of NATO, and the integration of former Soviet satellite states and republics in Eastern Europe and the Baltics into Europe, the traditional buffer zone between Russia and the West is increasingly squeezed and Russia’s space for strategic maneuvering becomes smaller with each year. When Russia craved for entry into the West, this might not have been particularly worrisome or embarrassing for Moscow. But since Russian leaders decided long ago that joining the West was neither particularly helpful to Russia’s political standing nor particularly attractive in terms of economic gains, it has begun to view the expansion of the West at its own strategic expense as both ill-intentioned and threatening.

Ukraine holds a unique position in Russia’s geo-strategic consideration. First, it is crucial territory in the passage of Russia’s oil exports to Europe. Each year more than one third of the oil Russia ships to Europe travels via the Ukraine pipeline. Second, Crimea gives Russia’s Black Sea Fleet access to the Black Sea. If the pro-West Kiev government were to have decided to end its lease to the Russian naval base in Crimea, Russia would have lost its strategic gateway to the Black Sea and the Mediterranean Sea. Third, Ukraine is deemed the most crucial member of Russia’s Eurasia Union project, an economic and strategic plan to closely connect Russia, Belarus, Ukraine, and Central Asia. If all goes according to plan, this union will integrate these former Soviet republics and now independent countries economically, politically, and diplomatically with Russia, and go some way to restoring the glory of the Soviet empire at its peak. The “coup d’état” in Kiev and the political orientation of the new government put all these things in jeopardy, if Russia remains disinterested and passive.

The second consideration is more psychological in nature. Following the end of Cold War, embracing the West was the first priority of Russian foreign policy. But to Moscow’s dismay, it found that the West still harbored strong reservations and considerable distrust. Years spent courting and wooing provided little of what Russia craved most: equal membership in the West and economic prosperity. Though Russia became part of the exclusive G8, it never enjoyed the full status and say of the other seven members, always remaining an “other.” Economically, the shock remedy proposed by the West and faithfully implemented by Boris Yeltsin didn’t bring the expected economic benefit. Instead, it took Russia’s economy into freefall, leaving the average Russian worse off than before. Russia’s look West ended in humiliation and disaster.

It was Putin who saved Russia from its miserable condition. He readjusted both Russia’s domestic and foreign policies, and distanced the country from the West, instead seeking opportunities to resurrect past Soviet glories. As the Russian economy improved, the West found that its time was passing. The 2008 economic crisis hit the U.S. and Europe hard and they found themselves more reliant on the emerging powers, Russia included. It is Britain, France, and even Germany who are now busy appealing to Russian oil barons to buy more and invest more. The balance of power between Russia and the West has shifted. The small war in Georgia in the summer of 2008 only strengthened this trend and the response from the West impressed Russia greatly: Europe is rotten and the U.S. has become too weak to lead. Then came the Arab Spring and the Syria crisis. In the former case, the U.S. “led from behind,” and in the latter it was Russia that decided the course of the Syria civil war.

Russians, and especially Putin learned a hard lesson from the post-Cold War romance with the West: For all the talk of democracy and freedom, the fact remains that the strong dictate to the weak.

With Europe rotten and United States weakened, a resurgent and confident Russia will definitely not let a geo-strategically important former Soviet republic fall entirely into the West’s camp. By annexing Crimea, Putin not only secured Russia’s naval base and its strategic gateway to the Black Sea, he also sent a powerful message to Ukraine and the West: Ignore Russia’s legitimate strategic concerns at your own peril.

Wei Zongyou, is Professor and Vice Dean of the Institute of International and Diplomatic Affairs, Shanghai International Studies University, Shanghai, China. His main research interests cover Sino-U.S. Relations, american foreign policy, humanitarian intervention and R2P

Two Steps Forward, One Step Back — Paul Craig Roberts – PaulCraigRoberts.org

Two Steps Forward, One Step Back — Paul Craig Roberts – PaulCraigRoberts.org.

Two Steps Forward, One Step Back

Paul Craig Roberts

Washington’s plan to seize Ukraine and to evict Russia from its Black Sea naval base has come amiss. But as Lenin said, “two steps forward, one step back.”

Do you remember all the tough talk coming from John Kerry, the White House Fool, Hilary Clinton, and the lickspittle Merkel about the harsh sanctions that would “badly damage” the Russian economy unless Russia prevented the referendum vote in Crimea? Well, it was all bullshit, more hot air from the White House sock puppet and the lickspittle German chancellor who is a disgrace to the German nation. As the Russians kept telling John Kerry, sanctions on Russia would destroy Europe and do little damage to Russia.

I wish the Russians had kept this to themselves. I was looking forward to the Washington morons destroying NATO by closing down the European economy.

Of course, after pretending that they were macho tough guys, something that Washington’s presstitute media could hype as sanctions had to be imposed, so Washington came up with sanctions, not on Russia, but on eleven individuals: the deposed Ukrainian president, an advisor to the deposed president, 2 Crimean officials, and 7 Russians.

The choice of the officials is an utter mystery. The seven Russians are a Putin aid, a Putin adviser, four members of the Russian parliament (Duma) and a deputy prime minister. What any of these people had to do with the referendum in Crimea, no one knows.

Moreover, the sanctions only apply to foreign bank accounts that these 11 individuals might have outside Russia. Most likely, that means only the deposed Ukrainian president, if we are to believe all the propaganda about him. Other reports say that the sanctions are only for the next six months.

If the Washington and EU criminals steal any money from these persons, the Russian central bank can replenish their stolen accounts.

The people who decided that Crimea would disassociate from Ukraine and return to Russia were the people themselves. Under the wording of Obama’s stupid sanctions, his sanctions should apply to the Crimean people who voted to disassociate from the US stooge government in Kiev.

Additionally, Obama’s sanctions apply to himself and to his regime and to its NATO puppets as it was the West that overthrew the elected government of Ukraine, not Russia or Crimea. The Americans, of course, never apply law to themselves.

In other words, the sanctions are totally meaningless. Yet, the White House Fool declared: “If Russia continues to interfere in Ukraine, we stand ready to impose further sanctions.”

Obama’s hypocrisy makes a person want to puke. It is the White House Fool who is interfering in Ukraine. It was Washington that financed and organized the overthrow of the elected Ukraine government, using well organized and well armed neo-nazis to intimidate the unarmed police and ruling party, thus clearing the way for Washington to set up an unelected government of its well-paid stooges.

What the incompetent White House Fool overlooked is that southern and eastern Ukraine are Russian, not Ukrainian, so the fool’s coup has caused Crimea to depart and is causing widespread protests in eastern Ukraine against Washington’s stooge unelected government in Kiev. Washington’s stooge Kiev government has appointed unelected Ukrainian multibillionaire oligarchs, who have their own private security forces, as mayors of the Russian cities to put down the protests. If the oligarchs use violence against the Russian people, the likely result will be that the Russian Army will take control of eastern Ukraine, which in every essential way is Russian.

If eastern Ukraine returns to Russia, Washington will be left with the ultra-nationalists of western Ukraine, people who fought for Hitler during World War 2. The EU doesn’t want ultra-nationalists as the EU is busy stamping out nationalism and the sovereignty of European countries. Nevertheless, Washington will have gained a strategic advantage over Moscow, as Washington can place anti-ballistic missile and other military bases on western Ukraine’s border with Russia, thus completing Washington’s encirclement of Russia with hostile military and missile bases.

Russia will neutralize the US bases by targeting them with Iskander missiles, which cannot be intercepted by ABMs.

All that the White House Fool will have achieved is to further make clear to Russia, and to China, that Washington has both on its target list, because both are in the way of Washington’s world hegemony.

One can only wonder why Putin doesn’t preempt the coming US military attack on Russia by destroying NATO economically without firing a shot. All Putin needs to do is to cut Europe off from energy. It would take Washington three years to create the capability to deliver US natural gas, achieved by fracking’s destruction of US water supplies, to Europe. By that time NATO governments would likely have been overthrown by mass unemployment and economic suffering. Putin could also seize all foreign assets in Russia and rapidly complete the arrangements with China, India, Brazil, and South Africa to abandon the use of the US dollar in international settlements.

The US dollar as world reserve currency is the source of American imperialism. The five countries that comprise the BRICS have half of the world’s population. They can conduct their economic affairs without the dollar.

The world needs to understand that the neoconservative US government is the Third Reich on steroids. It is a malevolent force with no sense of justice or respect for truth, law, or human life. Just ask the residents of Iraq, Afghanistan, Libya, Syria, Palestine, Pakistan, Yemen, Somalia, Lebanon, Honduras, Venezuela, Cuba, Iran. Even the deluded western Ukrainians will soon catch on.

Obama himself declared that the US is “the exceptional nation.” This is the neoconservatives version of Hitler’s declaration that the German nation was exceptional and, therefore, above all others. The only difference between Washington and National Socialist Germany is that Washington has a far more powerful police state and nuclear weapons.

The hubris and arrogance that arises from Washington’s belief that it is the government of the “indispensable and exceptional nation” means Washington has no respect for any other country, nor for law whether its own or international. Washington can invade countries without cause, a war crime. Washington can kidnap and torture people, a crime under US and International law. Washington can ignore the self-determination of peoples, such as Crimeans. Who are mere Crimeans to vote on their own future without Washington’s consent, without Washington determining the outcome? Washington declares the Crimean people’s self-determination “illegitimate and illegal,” and refuses to recognize self-determination, while pretending to be the home of “freedom and democracy.”

No government in human history can come close to the hypocrisy and malevolence of Washington. Armed with nuclear weapons and a military doctrine of pre-emptive nuclear first strike, Washington alone stands as the threat to life on earth.

Angela Merkel Furious At Nuland’s “Fuck The EU” Comments | Zero Hedge

Angela Merkel Furious At Nuland’s “Fuck The EU” Comments | Zero Hedge.

A few short months after Putin cornered the US state department into a disastrous foreign relations dead end with the false flag Syrian escalation which achieved none of the predetermined nat-gas-to-Europe pipeline ambitions, instead alieanting the US from both staunch allies Saudi Arabia and Israel, the Russian president has just managed to inflict yet more pain on US foreign policy this time by infuriating (even more) a core US ally in Europe – Angela Merkel. Just two days after the phone recording of Victoria Nuland emerged in which she not only made it explicitly clear it was the US who was the puppetmaster behind the Ukranian opposition with the traditional CIA tractics as was expected all along, but also explained just how the US freels toward the EU with the now infamous “Fuck the EU” comment, Angela Merkel called the obscene remark “absolutely unacceptable.”

And then, Nuland not knowing when to stop, proceeded to insert foot in mouth just a little deeper: “”I am not going to comment on private diplomatic conversations. But it was pretty impressive tradecraft. The audio was extremely clear,” she told reporters during a visit to Kiev.”

At least she indirectly complemented Putin on being smart enough to not only intercept what appears to have been an unencrypted phone call, but to release it at just the right time as the entire world’s attention turns to Russia and by extension, the Ukraine.

Because in retrospect Putin does deserve praise: having won the Ukraine over Europe’s cries of horror, he has also managed, in the past year, to alienate the US from Israel, Saudi Arabia and now, Germany. And all this without saying a single word, let along firing a shot.

So now that we know the apriori winner, the loser has no choice but to engage major damage control, which is borderline delusional. From Reuters:

[Nuland] said she did not foresee damage to relations with opposition leaders, saying they “know exactly where we stand in respect of a non-violent solution to the problem.”

 

Of relations with Russia, she said Washington and Moscow had “very deep, very broad and complex” discussions on a range of international issues including Iran and “frank and comradely discussions” on Ukraine.

 

U.S. officials did not deny the authenticity of the recording and said Nuland apologized to EU colleagues for the comment.

 

Angela Merkel, already furious with Washington for several months over reports that U.S. officials bugged her own phone, found Nuland’s remarks “totally unacceptable”, a spokeswoman for the German chancellor said.

Yet, it’s one thing to delude oneself that the US is still the undisputed world’s superpower, it is far worse to express the kind of hubris that Nuland did, when she communicated and discussedconfidential US geopolitical strategy on an unencrypted phone line – traditionally a fireable offense, if not worse.

In Washington, U.S. officials said Nuland and Pyatt apparently used unencrypted cellphones, which are easy to monitor. The officials said smart phones issued to State Department officials had data encryption but not voice encryption.

 

In Nuland’s call, apparently recorded about 12 days ago when Ukrainian opposition leaders were considering an offer from Yanukovich to join his cabinet, she suggested that one of three leading figures might accept a post but two others should stay out. In the end, all three rejected the offer.

The biggest loser here, however, continues to be the Ukraine, whose people are facing a cold winter without assurances they will have Russian nat gas, and a government that is a chess piece in an ongoing power play between Europe and Russia, now that the CIA has taken a back seat. Incidentally, Russia made it quite clear that it demands Ukraine’s full allegiance and as Russian finance minister Anton Siluanov told reporters overnight, Russia  would withold its second loan payment to the troubled nation unless the Ukraine, which owes a “not insignificant” sum for natgas, makes the payment.

In other words, just like Greece has become a money “tolling” intermediary for the ECB and German banks, in which Europe pretends to bail out the crushed country when in reality it is just funding debt payments to its own banks, so the Ukraine has now become an intermediary, in which loan payments from Russia go to pay… Russia’s Gazprom. And in the process Russia pulls the Ukraine from the European sphere of influence and back into that of the New Normal USSR.

Game, set, match Putin. Again.

But wait, there’s more. Because Putin, unsatisfied with simple making a mockery of the US State Department, decided to rub it in some more. The Hill reports:

Rising animosity between the former Cold War powers was on full display Friday when Russia chose a former figure skater who tweeted out a racially charged picture of President Obama for the symbolic lighting of the Olympic cauldron.

 

Russian President Vladimir Putin hoped hosting the first Games since the 1980 Moscow Olympics, which the U.S. boycotted, would showcase a “new Russia” emerging from the ashes of the Soviet Union as he enters his 15th year in power.

 

Instead the U.S. and its western allies have consistently painted the picture of a corrupt autocracy.

 

The media’s focus on the persecution of gays in Russia, terrorism and Russia’s lackluster infrastructure – many hotels don’t have potable water even though the Games are estimated to have cost more than $50 billion, the most ever – have further infuriated the Kremlin.

 

“I understand how the press here works. They need hot issues in order to be read, to have high circulation,” Sergey Kislyak, Putin’s envoy to Washington, told The Washington Diplomat last month.

That’s ok – as long as the US population can keep itself distracted from the sheer implosion of US standing internationally by looking at tweeted images of decrepit toilets and busted Sochi plumbing from a self-indulgent US press corps, and continue feeling good about itself, then all is well. After all, that’s just what Putin wants.

Kiev protesters expand street barricades – Europe – Al Jazeera English

Kiev protesters expand street barricades – Europe – Al Jazeera English.

Ukrainian protesters have erected more street barricades and occupied a government ministry building, fuelling tension after the failure of crisis talks with the president, Viktor Yanukovich.In response to opposition calls, about 1,000 demonstrators moved away from Kiev’s Independence Square in the early hours of Friday and began to erect new barricades closer to the presidential headquarters.

Masked protesters, some carrying riot police shields seized as trophies, stood guard as others piled up sandbags packed with frozen snow to form new ramparts across the road leading down into the square.

After leaving a second round of talks with Yanukovich empty handed late on Thursday, opposition leader Vitaly Klitschko voiced fears the impasse could now lead to further bloodshed.

After speaking first to protesters manning the barricades, Klitschko then went to Independence Square where he declared: “Hours of conversation were spent about nothing. There is no sense sitting at a negotiating table with someone who has already decided to deceive you.”

Klitschko had earlier brokered a truce in the violence between protesters and police, and the ceasefire appears to be holding so far.

A group of protesters took control of the main agricultural ministry building in the centre. “We need the place for our people to warm up,” a local protest leader was quoted as saying by Interfax news agency.

Meanwhile, protesters near Dynamo Kiev football stadium, the new flashpoint in the city, cranked up their action, setting tyres ablaze again and sending a pall of black smoke over the area.

There were no signs that protesters were heeding an appeal from general prosecutor Viktor Pshonka who said early on Friday that those so far arrested would be treated leniently by the courts if protest action was halted.

At least three protesters have been killed so far after clashes between protesters and riot police.

East-West tensions

Hundreds of thousands have taken to the streets in the capital after Yanukovich backed away from signing a free trade deal with the EU, which many people saw as the key to a European future, in favour of financial aid from Ukraine’s old Soviet master Russia.

But the movement has since widened into broader protests against perceived misrule and corruption in the Yanukovich leadership.

Protesters have been enraged too by sweeping anti-protest legislation that was rammed through parliament last week by Yanukovich loyalists in the assembly.

Earlier on Thursday, Yanukovich had suggested he might be prepared to make concessions to the opposition when he called for a special session of parliament next week to consider the opposition demands and find a way out of the crisis. But this did not impress opposition leaders.

Underlining the level of mistrust between the government and opposition, the prime minister Mykola Azarov on Thursday accused protesters of trying to stage a coup and dismissed the possibility of an early presidential election.

Greece begins EU presidency by saying austerity policies are intolerable | World news | The Guardian

Greece begins EU presidency by saying austerity policies are intolerable | World news | The Guardian.

Greek EU Presidency

The start of Greece’s six-month European Union presidency reinforced the isolation of German chancellor Angela Merkel. Photograph: Alkis Konstantinidis/EPA

Greece kicked off six months in charge of the European Union on Wednesday declaring that the imposition of austerity, spending cuts and fiscal policy by Berlin and Brussels could no longer be tolerated.

Coinciding with a growing backlash across the EU against the austerity policies mainly scripted in Berlin, the start of Greece’s EU presidency reinforced the isolation of German chancellor Angela Merkel, who has dominated the policy response to the EU crisis for the past four years.

Following four years at the sharpest end of Europe‘s debt and currency crisis and €250bn in bailout funds, the Greek government declared enough was enough.

“Greece does not want to have any more fiscal conditionality,” the finance minister, Yannis Stournaras, said on Wednesday. “It is out of the question because it is already too tough.”

The cry of exhaustion from a country that went broke, sank into years of slump and mass unemployment, slashed labour costs, and saw incomes collapse by more than a third is finding an echo not only across southern Europe but in the prosperous north, too, as leaders fear for their career prospects.

They have had enough of austerity, leaving Merkel, the main architect of spending cuts as the cure to Europe’s malaise, isolated as seldom before in what is becoming less of a financial crisis and more of a political battle for Europe’s future direction.

“The acute phase of the financial crisis is now over,” the US financier, George Soros, said last week. “Future crises will be political in origin.” He foresaw a bleak period of Japanese-style stagnation worsened by constant bickering between EU national leaders.

“What was meant to be a voluntary association of equal states has now been transformed by the euro crisis into a relationship between creditor and debtor countries that is neither voluntary nor equal. Indeed, the euro could destroy the EU altogether.”

The political frictions are visible, with leaders using vivid language to try to sway one another and win the argument. Merkel recently likened the situation to that of 1914, complaining of complacency and speaking of sleepwalking European leaders who led the continent into the first world war. She also evoked parallels with growing up under communism in East Germany, a rare public reference to her childhood experiences.

Describing the mood among most EU national leaders, a senior policymaker in Brussels said: “The worst of the crisis is over. So the pressure to take tough measures is off. We’ve had enough of discipline, enough of sanctions, we’re sufficiently unpopular already. The worst is over, so let’s stop now.”

Merkel, whose steering of the euro crisis propelled her to soaring popularity at home and a third term, has become increasingly resented among elites in other EU capitals, underlining the differences between Germany and the rest.

“The problem in Europe is that there is a government headed by one person,” a west European ambassador said in reference to Merkel. “That’s the issue and how to deal with it. All decisions are taken by one leader. This is what is happening now.”

If that has been a big part of the narrative for the past few years, however, the story went into reverse just before Christmas in the first week of Merkel’s new term. She went to a Brussels EU summit determined to push a new policy of compelling structural reforms on the economies of the eurozone. But she found herself supported by not one single other national leader, opposed not only by her foes, but also her friends such as the Dutch, Austrians and Finns.

“It was really a strange discussion,” said the policymaker, “difficult from the start, full of prejudice, ideology and fear.” Merkel was said to be disappointed. That much is clear from her private remarks to fellow leaders at the summit. A transcript of the exchange, obtained by Le Monde, highlighted her frustration.

She said: “Sooner or later the currency will explode without the necessary cohesion. If everyone behaves as they could under communism, then we are lost.”

Merkel’s plan was to empower the European commission in Brussels to police structural reforms in eurozone countries and to sweeten the pain of the changes by partially subsidising them. She denied that she was dictating anything, but said it was better to spend €3bn on the changes now than €10bn later.

She was supported by three European presidents, José Manuel Barroso of the commission, Herman Van Rompuy chairing the summit and Mario Draghi at the European Central Bank. None of the trio have to face the voter. All the other elected leaders were against and the plan was shelved.

One prime minister warned that the years of austerity had given rise to increasing populism. In Athens on Wednesday, the deputy Greek prime minister, Evangelos Venizelos, spoke of the growing appeal of neo-Nazis, racists and xenophobes. “In most of the EU we see a new wave of euro-scepticism.”

Soros went so far as to blame the German chancellor for this. “Angela Merkel’s policies are giving rise to extremist movements in the rest of Europe.”

The strength of the new anti-European movements on the far right and the hard left will be tested in the elections for the European parliament in May when they are expected to make gains at the expense of the centre and possibly win the poll outright in countries such as Britain, France, the Netherlands and Greece.

Fear of the impact of more extreme politics helps to explain the current aversion in most of Europe to the crisis solutions scripted in Berlin.

Bond Tab for Biggest Economies Seen at $7.43 Trillion in ’14 – Bloomberg

Bond Tab for Biggest Economies Seen at $7.43 Trillion in ’14 – Bloomberg.

The world’s biggest economies will need to refinance $7.43 trillion of sovereign debt in 2014 as bond yields begin to climb from record lows, threatening to raise borrowing costs while nations struggle to bring down elevated budget deficits.

The amount of bills, notes and bonds coming due for the Group of Seven nations plus Brazil, Russia, India and China is little changed from 2013 after dropping from $7.6 trillion in 2012, according to data compiled by Bloomberg. At $3.1 trillion, representing a 6 percent increase, the U.S. faces the largest tab. Russia, Japan and Germany will see refinancing needs drop, while those of Italy, France, Britain, China and India increase.

While budget deficits in developed nations have fallen to 4.1 percent of their economies from a peak of 7.8 percent in 2009, they remain about double the average in the decade before the credit crisis began. The cost for governments to borrow may rise further after average yields last year rose the most since 2006, as the global economy shows signs of improving and the Federal Reserve pares its unprecedented bond buying.

“Refinancing needs remain elevated in many developed nations, particularly the U.S.,” Luca Jellinek, the London-based head of European rates strategy at Credit Agricole SA, said in a Dec. 30 telephone interview. “The key here is demand rather than supply. If demand drops as growth picks up, and we expect it will, that could put pressure on borrowing costs.”

Photographer: Brent Lewin/Bloomberg

A man is silhouetted against the sun as he walks his bicycle down a flight of stairs in…Read More

Debt as a proportion of the economies of the 34 members of the Organization for Economic Cooperation and Development will rise to 72.6 percent this year from 70.9 percent last year and 39 percent in 2007, according to the group’s forecasts.

Deficit Spending

The amount of government debt obligations contained in a benchmark Bank of America Merrill Lynch index has more than doubled to $25.8 trillion since the end of 2007 as countries from the U.S. to Japan financed increased spending to counter the worst economic crisis since the Great Depression.

After interest-rate cuts around the world and the Fed’s bond purchases pushed down average yields on government notes to an all-time low of 1.29 percent in May, borrowing costs have since jumped, according to the Bank of America Merrill Lynch Global Broad Market Sovereign Plus Index.

Yields climbed to 1.84 percent by the end of December, making the 0.41 percentage point increase in 2013 the biggest in seven years, the data show. That represents an extra $4.1 billion in annual interest on every $1 trillion borrowed.

Bond buyers are demanding more compensation as the Fed plans to scale back its own monthly debt purchases in January to $75 billion from $85 billion and the U.S.-led recovery prompts investors to seek assets with higher returns such as equities.

Risk Premium

Government debt lost an average 0.36 percent worldwide last year, the first decline since 1999.

Based on 41 economists surveyed by Bloomberg on Dec. 19, the Fed will reduce its buying by $10 billion in each of the next seven meetings before ending its stimulus in December.

The U.S., the world’s largest economy, will expand 2.6 percent this year after 1.7 percent growth in 2013 and accelerate 3 percent in 2015, which would be the fastest in a decade, according to economists surveyed by Bloomberg. With Europe and Japan also forecast to grow, the three economies will all expand for the first time since 2010.

“With the Fed pulling back on bond purchases and growth picking up, bond investors will demand higher yields to justify investment,” Mohit Kumar, a money manager at GLG Partners, a hedge-fund unit of Man Group Plc, said by telephone from London. “We need to price in higher risk premium in an environment where rates and market volatility are likely to increase.”

Debtor Nations

Even as faster growth helps increase tax revenue, higher refinancing costs may squeeze governments that are still contending with fiscal deficits. Spending will outstrip revenue in the world’s largest economies by 3.3 percent of their gross domestic product this year, versus an average of 1.75 percent in the 10 years through 2007, data compiled by Bloomberg show.

In the U.S., the world’s largest debtor nation with $11.8 trillion of marketable debt obligations, the amount due this year will increase by about $187 billion, data compiled by Bloomberg show. France, faced with an economy that has barely grown in two years, will see the amount of debt securities due this year rise by 15 percent to $410 billion.

China will lead emerging-market economies with the amount of maturing bonds increasing by 12 percent to $143 billion.

Japan will have $2.38 trillion of bonds and bills to refinance this year, 9 percent less than in 2013, while the amount of German debt maturing this year will decrease by about 5.3 percent to $268 billion.

Public Debt

Including interest payments, the amount of debt that needs to be refinanced by the G-7 countries plus the BRIC nations this year increases by about $712 billion to $8.1 trillion, according to data compiled by Bloomberg.

“There has been a shift of a significant amount of debt” into the public sector during the crisis, saidNicholas Gartside, London-based international chief investment officer for fixed-income at J.P. Morgan Asset Management, which oversees $1.5 trillion. “Despite some improvement on the debt front, there is still a lot of deleveraging to go. The process is still ongoing and will continue for many years.”

Forecasters are overestimating the likelihood government debt costs will increase because the global economic recovery remains fragile and disinflation is starting to emerge, according toSteven Major, head of global fixed-income research at HSBC Holdings Plc, Europe’s largest bank.

The world economy will to expand 2.83 percent this year, according to forecasts compiled by Bloomberg, slower than the average 3.43 percent during the five-year span between the end of the dot-com bust in 2002 and the start of the credit crisis.

Consumer Prices

Slowing inflation also preserves the purchasing power of fixed-rate interest payments, which may support demand for bonds. Consumer prices in the U.S. will rise less than 2 percent in 2014 for a second straight year, which has only happened one other time in the last half century, data compiled by Bloomberg and the Bureau of Labor Statistics show.

In the 18 nations that share the euro, the inflation rate will be 1.2 percent, the lowest in five years.

“Growth may have picked up but it’s still pretty weak compared to previous cycles,” Major said in a telephone interview on Dec. 31. “Inflation is falling in many developed countries. Central banks should be worried about disinflation rather than inflation. It’s hard for me to imagine that bond yields will rise much against this backdrop.”

Some nations are starting to rein in spending, which may help contain borrowing costs. Government bond sales in the euro area, excluding issuance used to refinance maturing debt, will decline to 215 billion euros ($293 billion), the least since 2009, Morgan Stanley predicted.

Bond Sales

Germany said in December that it plans to curb bond and bill sales this year by 17 percent to 205 billion euros as tax revenue rises and Chancellor Angela Merkel seeks to end net new borrowing by 2015. In the U.S., the budget deficit will drop to to 3.4 percent of the economy this year, versus 10 percent five years ago, economist forecasts compiled by Bloomberg show.

Demand at U.S. government debt auctions remained stronger than before the financial crisis as investors bid for 2.87 times the amount sold last year, the fourth-highest ratio on record and surpassed only in the the prior three years.

Buying of Japanese debt was underpinned by the Bank of Japan’s commitment to buy 7 trillion yen ($71 billion) a month of bonds, a pace that would equal more than 50 percent of the 155 trillion yen in notes that Japan plans to sell this year.

Yield Forecasts

“Investors should not and will not be concerned about the supply picture,” said Major, who predicts that yields on the benchmark U.S. 10-year note will decrease to 2.1 percent by year-end from 2.99 percent last week.

His estimate conflicts with the majority of forecasters in a Bloomberg survey who say U.S. borrowing costs will increase. They anticipate yields on the 10-year notes, which rose 1.27 percentage points last year to 3.03 percent, the highest since 2011, will climb to 3.38 percent on average. No one in the survey projected yields falling below 2.5 percent. The yield was at 2.98 percent as of 9:56 a.m. London time.

Borrowing costs in all the G-7 nations are all poised to increase in 2014, based on the estimates. Yields on German bunds will increase to 2.28 percent by year-end, while those for similar-maturity U.K. gilts will end the year at 3.36 percent. That would be the highest for both nations since 2011.

Among the BRIC nations, only bond yields in India and China are poised to drop, the data show.

With global growth picking up, investors such as Standard Life Investments predict government bonds will underperform this year and are holding a greater proportion of equities than their benchmarks used to measure performance.

“We are not enthusiastic about government bonds,” Frances Hudson, a strategist at Standard Life in Edinburgh, which oversees $294 billion, said in an telephone interview on Jan. 2. “It’s reasonable to expect bond yields to rise from record lows as recovery gains momentum.”

Following is a table of projected bond and bill redemptions and interest payments in dollars for 2014 for the Group of Seven countries, Brazil, China, India and Russia using data compiled by Bloomberg as of Dec. 30:

To contact the reporter on this story: Anchalee Worrachate in London ataworrachate@bloomberg.net

Edward Snowden Releases “A Manifesto For The Truth” | Zero Hedge

Edward Snowden Releases “A Manifesto For The Truth” | Zero Hedge. (source)

While Edward Snowden may be reviled at the top echelons of Western developed nations and is wanted in his native US on espionage charges for peeling back the curtain on how the gargantuan government machine truly works when it is not only engaged in chronic spying on anyone abroad, but worse, on its own people, the reality is that his whistleblowing revelations have done more to shift the narrative to the topic of dwindling individual liberties abused pervasively in the US and elsewhere, than anything else in recent years. And alongside that, have led to the first reform momentum of a system that is deeply broken. Which also happens to be the topic of a five-paragraph opinion piece he released today in German weekly Der Spiegel titled “A Manifesto For The Truth” in which he writes that his revelations have been useful and society will benefit from them and that he was therefore justified in revealing the methods and targets of the US secret service.

In the Op-Ed we read that “Instead of causing damage, the usefulness of the new public knowledge for society is now clear because reforms to politics, supervision and laws are being suggested.”

RT adds“Spying as a global problem requires global solutions, he said, stressing that “criminal surveillance programs” by secret services threaten open societies, individual privacy and freedom of opinion.

“Citizens have to fight against the suppression of information about affairs of essential importance for the public,” Snowden said in his five-paragraph manifesto. Hence, “those who speak the truth are not committing a crime.”
Even with the existence of mass surveillance, spying should not define politics, Snowden said.

We have a moral duty to ensure that our laws and values limit surveillance programs and protect human rights,” he wrote.

The type of persecution campaigns that governments started after being exposed, and threats of prosecution against journalists, who blew the whistle, were “a mistake” and did not “serve the public interest,” Snowden concluded.

But “at that time the public was not in a position to judge the usefulness of these revelations. People trusted that their governments would make the right decisions,” he said.

Needless to say, all of the above points are spot on, which is why one hopes that Snowden does not intend on returning to the US to defend himself with only truth and justice to lean on, because the US Judicial system is just as broken, if not more, as every other aspect of a tentacular government, intent on growing to even more epic proportions and silencing anyone and everyone who stands in its way.

 

China Slams “Peeping Tom” America: “The Trust Fiasco Of America The Eavesdropper” | Zero Hedge

China Slams “Peeping Tom” America: “The Trust Fiasco Of America The Eavesdropper” | Zero Hedge. (source)

Three weeks ago, during the US government shutdown fiasco, and when there was legitimate concern if the US would begin prioritizing debt payments upon running out of cash, China’s official and most widely read press agency, Xinhua, slammed the US in “U.S. fiscal failure warrants a de-Americanized world” in which it called for a new world order, and an end to the reserve currency. Now, it is time for the follow up, with China kicking “America the eavesdropper” precisely when it is down.

From Xinhua:

The trust fiasco of America the Eavesdropper


The latest outburst of outcries and outrage across the world has laid bare that almighty America has at least one other anomalous addiction besides borrowing —  bugging.

The U.S. debt drama features a polarized and paralyzed Washington at the helm of the world’s largest economy. As nerve-racking as it is, such irresponsible behavior is a recurrent headache economic policymakers worldwide can bear with.

Yet the sole superpower’s spying saga is spicy on a heart-attack scale. It is particularly hurtful to those supposed to trust America the most — its allies.

The recent cascade of eye-popping disclosures depicts a hyperactive Uncle Sam prying into others’ secrets and even eavesdropping on dozens of heads of state.

It has been revealed that the U.S. National Security Agency (NSA) monitored the phone conservations of at least 35 world leaders in 2006. And that is just a tip of the iceberg of the spook organization’s sprawling spying scheme.

Leaked documents show that the NSA has not only gained front-door access to countless Google and Yahoo user accounts through a court-approved process, but secretly broken into the main communications links connecting the two Internet giants’ respective data centers around the world to siphon information at will.

What is counterintuitive in the NSA forage is its nonsensical approach: relentless and indiscriminate like a vacuum cleaner. It just bugs everybody, even its closest allies in Europe.

In the most shocking revelation so far, Uncle Sam turned Madame Europa, German Chancellor Angela Merkel, into, as Deutsche Presse-Agentur puts it, “a dupe whose mobile phone conversations were for more than a decade a source of information for U.S. authorities.”

Merkel and her peers in the U.S. alliance have every reason to feel insulted and betrayed. At the very least, they deserve the kind of respect and trust that underpins the practice that air travelers do not have to fly naked.

The motivation behind America’s extensive eavesdropping is unclear. The explanations the White House has been forced to offer are far from explanatory, and the diorthosis President Barack Obama has promised seems all but skin-deep.

The half-heartedness stands in stark contrast with the pushfulness with which America accuses China of cyber-espionage, and the evasiveness marks a stunning retreat from the straightforwardness with which Washington reproves Beijing for alleged monetary manipulation.

The apparent application of a double standard only reinforces the image of a Janus-faced America. In the sunlight, it preaches; in the dark, it pries. On the offensive, it orates; on the defensive, it equivocates.

The wayward practice has now backfired, and the damage is increasing. Just as the borrowing addiction is shedding America’s economic credibility, the bugging obsession is draining its political and security trustworthiness — only with potentially more destructive consequences.

Trust is the first and foremost casualty. Common sense dictates that trust is a two-way street: One has to trust in order to be trusted. It is particularly true in friendships and alliances. America obviously failed to follow the simple rule.

If Washington did not knit the worldwide wiretapping web just because it could, then its pillage for information unveils an Uncle Sam too deeply entrenched in suspicion and isolation to treat anyone as a real friend.

Ironically enough, the bugging undermines the very thing it is supposed to protect — national security. As America pins its security on alliances, the tapping tale would sour its relationship with allies — and thus erode its security bedrock — more than any terrorist would be capable of.

The harm could go far beyond. For example, mutual trust is vital to China and America’s endeavor to build a new type of major-country relations. Washington’s lack of trust and hemorrhage of trustworthiness would only make the effort more difficult.

Needless to say, trust entails trade-offs, and the quid pro quos are not riskless. But the United States should be wise enough to know that to trust nobody is no less dangerous than to trust anybody.

As indicated in the still simmering spying scandal, the potential cost of excessive bugging could be way higher. Uncle Sam needs to remember what happened to the tailor in the Lady Godiva story — Peeping Tom was struck blind.

 

White House To Stop Spying on Allies, Dianne Feinstein Promises | Zero Hedge

White House To Stop Spying on Allies, Dianne Feinstein Promises | Zero Hedge. (source)

Continuing to play Obama like a fiddle, the Snowden revelations have done more to change US foreign policy in a few short months, than all laws passed since the advent of the Patriot Act. In the latest example of just this, moments ago, USA Today first and the WSJ and others subsequently, reported that according to Dianne Feinstein, chair of the Senate Intelligence Committee and an NSA supporter, the National Security Agency has stopped gathering intelligence on allied political leaders, a practice that has drawn global criticism. “The White House has informed me that collection on our allies will not continue, which I support,” according to Feinstein. It was not immediately clear if this is an implicit admission that the White House actually did know about the NSA’s spying on foreign leaders over the past decade, and lied about being unaware. Recall that Obama denied just this last night, but at this point the pit of lies is so deep, few actually care or are keeping track.

Ironically, in an attempt to redirect once again, Feinstein “criticized President Obama over reports he only recently learned about the monitoring that included German Chancellor Angela Merkel. “It is my understanding that President Obama was not aware Chancellor Merkel’s communications were being collected since 2002,” she said. “That is a big problem.” Don’t worry Dianne, he knew everything, but an autocrat-in-waiting has to lie do what an autocrat-in-waiting has to lie do.

From USA Today:

As a growing chorus of nations protest U.S. surveillance policies, Obama’s spokesman said Monday that an ongoing review will address the concerns of allies.

The review of NSA programs is designed to insure that intelligence gathering protects “both the security of our citizens and our allies and the privacy concerns shared by Americans and citizens around the world,” said White House press secretary Jay Carney.

Administration officials refused to comment on a report indicating that Obama learned only this year about a program that monitored the communications of foreign leaders — a situation that wouldn’t be particularly unusual, said an intelligence expert.

Paul Pillar, a former senior intelligence officer, said most presidents don’t know about “the targeting decisions” made by their intelligence agencies.

It would be a horrible drain on the president’s time and attention,” Pillar said.

So instead the president can focus all his time and energy on creating 40-ing websites and taking over the public healthcare system?

As reported earlier, Spain was the latest country to be exposed as having been the target of the NSA’s extensive espionage (at a massive cost to US taxpayers), resulting in just the latest ambassadorial summoning. Which of course was merely more theater, set in motion merely to appease the locals.

Pillar said it’s not the tactics themselves that create international friction as much as the fact that they have now been publicized.

“Not only do allies spy on each other all the time, allies know about it all the time,” Pillar said.

Normally, he said, nations that discover surveillance from other countries would tighten their security procedures and not make “a public stink” about it.

But the news coverage – inspired by the Snowden revelations and fueled by outrage from their domestic constituents – forces leaders to confront the United States.

The issue is particularly sensitive in Germany, where memories of the nation’s Cold War divisions remain fresh. That includes domestic spying by police forces in Communist-run East Germany – the native region of Chancellor Merkel, an outspoken critic of NSA tactics.

“Their history is speaking very loudly to them,” said Heather Conley, senior fellow and director of the Europe Program with the Center for Strategic and International Studies.

Conley and Pillar said intelligence agencies do gather information on each other, on items ranging from positions on trade negotiations to the political troubles of the targeted government.

The difference these days? “It’s a public discussion,” Conley said.

Precisely. Because the public has had enough of governments scheming behind their backs, always to the detriment of common people. And the person to thank for all of this is none other than Edward Snowden, who instead of being praised as a hero in his home country, has been forced into exile into the country that once upon a time was the “evil empire.” How the times have changed in the despotic New Normal.

As for Feinstein’s promise that the US will stop spying either on foreign leaders, or domestically, that is about as good as any other promise made by an insolvent empire in full decline.

 

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