Wednesday, December 17, 2014

The story of the ruble: Is Russia turned into a late Weimar Republic? Counterrevolution from above? Maidan? Or "nothing to see here"?

While Medvedev is issuing weak proclamations about the ruble crisis, Putin's appointee to the Central Bank says that this is a good opportunity for "adaptation" and "to face new reality" (without bothering to say what she means by "new reality"), and leading Russian managers and bankers are calling the (their own) attack on the ruble perfectly "rational," the fact is that, while the West is behind it, Russian (quasi)state funds have been leading the charge. That is to say neither the sanctions nor the oil price nor economic fundamentals can or do explain the speed and steepness of the fall of the ruble. This means that the explanation needs to be sought in the agency, in well organized plan and activity, which go beyond mere speculation.

Some in Russia already call what is happening "the West's economic or currency blitzkrieg."

Here are few basic factors that have to be stressed:
1. Russia under Putin's leadership has not implemented any significant internal economic defensive countermeasures in the face of the West's unleashed hybrid war.
2. Responses to Western sanctions have also been very limited, piecemeal, and largely unreciprocated. The lack to response was, moreover, presented by the Russian leaders as a sign of the Russian government's virtue, maturity, partnership and good behavior.
3. Thus, for most part, it has been "business as usual" for the Russian government in the face of existential threat and crisis.
4. Medvedev is a perfect "liberal"--a product of the "privatized Soviet apparatus"--who understands politics as business or as business is understood by a Russian liberal.
5. In fact, the Russian government has been planning to unleash and pursue more liberal, anti-social policies and more privatizations.
6. When it comes to Surkov who was tasked by Putin with matters pertaining to Ukraine and about whom Strelkov complained so much, it has to be said that far from being, a bad, nasty boyar who went rogue, Vladislav Surkov is Putin or, to be more precise, Putin's hand and Putin's extension. In some way, Surkov has a greater liberal arts education. But the fact that Surkov is mainly a PR mastermind or one dealing with what is called in Russia "political technologies," says a lot about how the Kremlin approached and handled Ukraine and the conflict there.

Russian leaders are now assuring the public that the current crisis of the ruble is really nothing new or special, that such fluctuations have been here before. Partially, this is correct, in other sense, it is also very dishonest and misleading. For the crisis of the ruble is part of the intensified regime change effort launched by the US and NATO. If Strelkov once said that "by taking Crimea Putin started a revolution from above," the attack on the ruble launched both from without and from within (and perhaps primarily from within) does seem like a beginning of a Russian Maidan and/or of a counterrevolution from above.

Instead of helping to fix the situation, Putin's promise of absolute amnesty for stolen wealth and theft, which Russian mafias and oligarchs took abroad, made in his December 4 speech helped to pave the way to the crisis. Not only such a "policy" can be read as an untimely voiced sign of desperation (and how bad things were), but it also signals abandonment of principles and a morally grounded position, much like is Lavrov's declaration that Crimea ought to be seen now as a unique, special exception. Exception from the rules and principles. When one runs out of principles and reasons or from them, one starts asking for the privilege to be granted a special exception, a special treatment: Please, forgive us, we want to follow and obey your rules! For we don't have our own principles anyway!

In this connection, Dugin declared that stopping the stunning offensive at the beginning of September in Donbass for the sake of the Minsk Deal was a "tragic mistake."

So, if I put my cherished Socratic bias aside and look at the crisis of the ruble as a political economist, who once I thought I was, I would say that these seem to be key factors behind it:
1. Significant limiting of access of Russia and Russian business to the Empire's fiat money or new lines of credit and financing.
2. The fact that the Russian financial system is not really a system, but clearly a colonial part of the Empire's financial system and neither Putin or Medvedev did anything to change it.
3. If in the 1980s and the 1990s, the Soviet and Russian elites threw their loyalties with the West and became "partners" (in their mind), many today's Russian oligarchs and managers are not that much different; they are doing what the West wanted them to do.
4. Much of the attack on the ruble is from within--by Russia's state corporations and monopolies.
5. I would also suspect a large and accelerated capital flight from Russia--compliment of the Russian oligarchs and Western intelligence services.
6. Some might also possibly suggest that the melting of the ruble might be also a sign of a "deal" over Donbass, which Lavrov's latest statements suggest together with the stated result of the sudden meeting of Putin with Hollande, the Penguin, at Vnukovo" in the form of "unambiguous commitment to territorial integrity of Ukraine." And that would mean--judging from the statements and demands of the US, EU, and Kiev--also reparations. And if reparations (however crazy it may sound), we would be talking about very, very large amounts of money.

One can think here of the planned conference on a financial package for Ukraine or this seemingly strange and also relevantly recent interview of a possible British insider (MI 5?) Tim Bell: "Make Putin pay!" And the first figure which Bell gives is $500 billion.

On this occasion, Tim Bell also noted: "You may not believe this, but I've discovered that ... telling the truth is a damn sight more effective than not telling the truth."

While Lavrov and Putin declared they want Donbass to be part of Ukraine, Kiev rightly sees it as making its position on Crimea that stronger.

Following visit to Poland, Poroshenko promises to abolish de iure Ukraine's neutrality, which, for most part, does no longer exist anyway.

Kiev's message to Moscow from the mouth of Poroshenko and Turchinov as of today: returning Donbass is not enough; capitulation, loss of Crimea, face, and soul must go to the very end.

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