Showing posts with label SWIFT a US Tool. Show all posts
Showing posts with label SWIFT a US Tool. Show all posts

Friday, 11 June 2021

Foreign Minister Sergey Lavrov’s remarks and answers to media questions at the Primakov Readings International Forum, via videoconference, Moscow, June 9, 2021


Foreign Minister Sergey Lavrov’s remarks and answers to media questions at the Primakov Readings International Forum, via videoconference, Moscow, June 9, 2021

June 10, 2021

Mr Dynkin,

Ladies and gentlemen,

Friends,

I am grateful for the invitation to speak again at the Primakov Readings International Forum. It is one of the most highly respected international venues for a committed professional dialogue, although probably the youngest. I would like to thank the leadership of Institute of World Economy and International Relations (IMEMO) for suggesting the idea of this forum and for the commendable organisation of this year’s event amid the COVID-19 restrictions.

I would like to welcome all the forum’s participants, who represent the Russian and international community of experts and political analysts. A dialogue on all aspects of the current international order is especially important at this stage.

These readings are integrally connected with the intellectual heritage of Yevgeny Primakov, an outstanding statesman. It was during his term as the Foreign Minister of Russia that the principles of Russia’s current foreign policy were formulated. These principles are independence, pragmatism, a multi-vector approach, respect for international law and openness to cooperation with anyone who is willing to interact on the basis of equality and mutual respect.These principles have been incorporated in the Concept of the Foreign Policy of the Russian Federation, which was approved in 2000 after Vladimir Putin’s election as President of Russia and subsequently modified. The current wording of the Concept was adopted in 2016. But the principles I have mentioned, which Academician Primakov formulated, remain effective to this day.

Russia’s major advantage is that these principles allow us to ensure the predictability and sustainability of our foreign policy. This is especially important now that the world order is at an extremely contradictory stage of its development marked by increased turbulence. But as a Chinese saying goes, such periods also offer enormous opportunities, which we must make use of to boost cooperation in the interests of all nations. We can see that positive trends are gaining momentum. I would like to mention in this context primarily the strengthening of the new centres of economic and political influence and the promotion of democracy in interstate relations in general. Incidentally, Yevgeny Primakov predicted this process back in the middle of the 1990s in his concept of a multipolar world.

Russia will energetically promote the continuation of the peaceful movement towards a polycentric world based on the leading states’ collective guidance of efforts to resolve global problems. But we are also realists and hence cannot disregard the stubborn, and I would even say aggressive unwillingness of our Western colleagues to accept this objective reality. We cannot disregard the striving of the collective West to ensure itself a privileged international position at all costs. The results of the upcoming G7, NATO and US-EU summits will be a gauge of the current mentality in the leading Western countries.

Not only Russia but also many others face the situation where the West’s representatives are unprepared for an honest, facts-based dialogue, preferring to act in the “highly likely” spirit. There are many instances of this approach. This is certain to undermine trust in the very idea of dialogue as a method of settling differences and to erode the capabilities of diplomacy as a crucial foreign policy tool.

The zeal, with which our Western colleagues started promoting the notorious “rules-based world order” concept, looks even more irrational and devoid of prospects.  Rules are always needed. Let me remind you that the UN Charter is also a body of rules, but these rules have been universally accepted and coordinated by all members of the international community, and they are not called into question by anyone. This is called international law. The UN Charter is the main part of international law and its foundation. While dodging the term “international law” and using instead the expression “rules-based world order,” our Western colleagues have in mind a totally different thing: they want to develop certain West-centric concepts and approaches to be later palmed off as an ideal of multilateralism and the ultimate truth. These actions are undertaken in areas such as chemical weapons, journalism, cyber security, and international humanitarian law.  There are universal organisations dealing with all these issues, but our colleagues, primarily in the EU as well as in the United States, are eager to promote their own concept in each of these areas.  If asked why this is not being done at the top organisation of multilateralism, the UN, they give no clear answer. We understand that it is, of course, more difficult to advance some initiatives of theirs and reach agreements in a universal format, where there are not only the “docile” members of the Western club but also Russia, China, India, Brazil and African countries. We will see how this “rules-based world order” concept will be reflected in the outcomes of the events that have already been announced, including the so-called Summit for Democracy announced by US President Joe Biden, or in the initiatives in the area of multilateralism announced by President of France Emmanuel Macron and a number of other leaders.

I am confident that we cannot ignore the incontrovertible fact that the present world order is a sum of agreements between the countries that won World War II. Russia will object to those wishing to cast doubt on the outcome of that war. We cannot and will not play up to those who would like to reverse the natural course of history. We, incidentally, have no superpower ambitions, no matter how hard some people try to convince themselves and everyone else of the opposite. Nor do we have the messianic zeal, with which our Western colleagues are attempting to spread their axiological “democratising” agenda to the rest of the world.It has long been clear to us that the outside imposition of development models will do no good. Look at the Middle East, Northern Africa, Libya, Yemen and Afghanistan.

A specific feature of the current situation is that the coronavirus pandemic has greatly accelerated the events, helping to settle existing problems and at the same time creating new ones.  I am referring to the global economic decline, destroyed industrial and marketing chains, growing isolationism and geopolitical opportunism. This common trouble is also reminding us, through growing problems, about the unprecedented connection between all members of the international community. Nobody can weather it out in a safe haven. This is probably one of the main lessons we must draw from what is happening.

Russia calls for cooperation with everyone, as I have already mentioned, on the basis of mutual respect, equality and a balance of interests. We are aware of the value of each international partner, both in bilateral relations and in the multilateral format. We value our friendship with everyone who reciprocates this feeling and is willing to look for honest agreements, without ultimatums and unilateral demands.

The issues we are ready to discuss cover nearly all important spheres of life: security, trade, environmental protection, climate change, digital transformation, artificial intelligence and plenty more.

Russia is promoting its ideas in Eurasia. The principles I have mentioned underlie the operation of the Commonwealth of Independent States (CIS), the Collective Security Treaty Organisation (CSTO), the Eurasian Economic Union (EAEU) and the Shanghai Cooperation Organisation (SCO). These associations are based exclusively on the principle of voluntary participation, equality and the common good. There are no “bosses” and “subordinates” in them. These organisations have creative goals and are not spearheaded against anyone, and neither do they claim to spread their narrow values throughout the world, demanding that absolutely all states without exception comply with them, as some other integration structures are doing.

Our unconditional priorities include the strengthening of our comprehensive interaction with China. This year we will celebrate the 20th anniversary of the Treaty of Good-Neighbourliness and Friendly Cooperation between Russia and China. Another similar goal is to promote our privileged strategic partnership with India. This is how it is defined in the documents that were adopted at the top level. We are expanding our cooperation with ASEAN nations and other Asian-Pacific countries. We are doing this within the framework of the unification philosophy, which constitutes the basis of President Vladimir Putin’s initiative of the Greater Eurasian Partnership. It is open to absolutely all countries of our common Eurasian continent, and the membership of this association will dramatically increase the comparative advantages of all Eurasian countries in this highly competitive world upon the assumption that they will make good use of their natural, God-given advantages and will not try to create new or deepen the existing dividing lines on our continent.

Both China and India support, in principle, the concept of the Greater Eurasian Partnership, which I have already mentioned. Its merits have been highly assessed at the SCO. We are discussing it with ASEAN nations. We are also open for discussions with the EU as our natural neighbour on this huge continent.

I believe that forums such as the Primakov Readings provide ideal venues for discussing any related ideas. There can be alternative approaches by all means, but we would like our discussions to be focused on the future in the interests of all countries of this vast region.

Russia will actively continue to facilitate the settlement of international conflicts. We are working in Syria and helping the people of Nagorno-Karabakh to restore peaceful life after we stopped the bloodshed there. We are taking a vigorous part in international efforts to achieve a settlement in Afghanistan, Libya, around Iran, the Korean Peninsula and many other hot spots.

I am referring to this not to attract attention to our achievements. We do not have an inferiority complex (just as we do not have a superiority complex in global politics) but we are always ready to help those who need assistance. This is our historical mission that is rooted in the centuries of our ancient history. Therefore, we will continue working to this end even on those problems that seem insoluble at first sight like a settlement in the Middle East. We are actively trying to restore the work of the Quartet of International Mediators and promoting the concept of ensuring collective security in the area of the Persian Gulf. We are willing to host a meeting of the Israeli and Palestinian leaders in Moscow as soon as possible. Now it is necessary to wait for the results of the internal political processes in Israel. It is very unfortunate that no attention was paid to our repeated reminders over many years that the concept of normalising Israeli-Arab relations cannot be carried out at the expense of the Palestinian problem. I believe that this is a very serious problem that will only continue to get worse.

We are actively working to coordinate the rules of responsible conduct in the information space now in the UN’s multilateral format. We are promoting cooperation in countering the coronavirus. I would like to emphasise that contrary to the Western allegations, we are invariably interested in pragmatic, mutually beneficial relations with all parties, including the West, be it the United States, its NATO allies or the EU. We are promoting a package of initiatives to prevent the complete collapse of the agreements and understanding in disarmament, arms control and non-proliferation after the Americans destroyed many treaties, for instance, START-3. We suggested a voluntary moratorium on the deployment of the missiles covered by it at least in Europe. Despite our proposals on verifying the moratorium, the West continues avoiding any honest discussion. In much the same manner, NATO has been literally talking our ear off for over two years in response to our very specific proposals aimed at reducing tension and military threat along the entire Russia-NATO contact line.

We are willing to work with any partner but there will be no one-sided game. Neither sanctions nor ultimatums will help anyone talk with us and reach any agreements.

In conclusion, I will quote these words by Yevgeny Primakov: “A strong Russia should not be seen as a threat to world stability. Only the inertia of thinking may suggest the conclusion about a threat emanating from Russia…”

Russia will never give up its fundamental values and will be true to its spiritual sources and its stabilising role in world politics.Therefore, we will continue doing everything for the firm, non-confrontational promotion of our national interests and developing cooperation with as many countries as possible.

I would like to emphasise only one idea: do not interpret our willingness for dialogue with any partner as a weakness. President of Russia Vladimir Putin stressed recently in his response to Western ultimatums that we will determine ourselves the red lines in relations with our Western partners and will primarily uphold our views on the world arrangement, on how to develop international relations in full conformity with the principles fixed in the UN Charter rather than some agreements between a narrow circle of parties.

Question: A question from Wolfgang Schussel, head of the Dialog-Europe-Russia forum and Federal Chancellor of the Republic of Austria in 2000-2007. The leaders’ summit for Russia and the United States is invariably a major international event that introduces new vectors into the work of the diplomats, the military and business on specific issues. The meetings are not always successful like, for example, the most recent summit in Helsinki with the 45th US President Donald Trump. We hope this time everything will be different. President Biden is interested in arms control and resuming the Iranian nuclear deal.

What are your expectations for a possible new agenda after the meeting of the two leaders in any area, in particular, cyberspace, autonomous weapons, or the regional conflicts in Afghanistan, Syria, Libya and North Korea?

Sergey Lavrov: I am happy to greet my good friend Wolfgang Schussel. I thank him for the question.

We have repeatedly made our position known in connection with the upcoming summit in Geneva on June 16. We do not set our expectations high, nor do we entertain any illusions about potential “breakthroughs.” But there is an objective need for an exchange of views at the highest level on what threats Russia and the United States, as the two largest nuclear powers, see in the international arena. The fact that a conversation is happening between the leaders of the two leading nuclear powers is, of course, important. We strongly support this approach by our US colleagues.

Clearly, normalisation of Russian-US relations, I’ll stress this again, can only be possible if the principles of equality, mutual respect and non-interference in each other’s internal affairs are observed. This is a prerequisite not only for maintaining a normal, predictable and steady dialogue (which the Americans claim they want), but it is also important for removing the accumulated issues of confrontation between our countries. We are ready for a candid conversation like this.

I hope that in preparation for the summit, those who are now dealing with Russia in the Biden administration (they used to say “Sovietology,” which would now be called “Russology, I would guess,” though it would be nice if it was “Russophilia”), will finally appreciate the actions, interests and position of the Russian Federation, and our red lines, and will be willing to correct the mistakes in recent years and will not conduct a dialogue solely from a position that claims hegemony in global affairs.

Clearly, any dialogue is better than no dialogue.But if a hegemonic mindset continues to determine the US’s position, if our colleagues from the United States continue to follow in the footsteps of their own propaganda, which deafens the US elite as well, then there’s not much we can expect from this summit. In any case, I think it is important to have a candid exchange of views at the highest level, even if there are differences that many believe are insurmountable.

We share an interest in strategic stability. We have fairly strong contacts on how to approach this area of ​​international politics at this point. Frankly, we advocate a comprehensive approach and taking into account all, without exception, factors influencing strategic stability in our dialogue with the United States. I mean nuclear and non-nuclear, and offensive and defensive weapons. Anything that affects strategic stability must be discussed during a dialogue.

The Americans have a much narrower approach. They are only interested in certain aspects of our nuclear triad and are not inclined, at least at this point, to agree on a comprehensive concept that would include everything without exception.

I hope that, based on the preliminary work and consultations in preparation for this summit, President Vladimir Putin and President Joseph Biden will be able to determine a strategic policy for future work in these areas.

Mr Schussel mentioned cyber security as well. We have no shortage of goodwill here. Ever since 2016, when the Obama administration began accusing us of “meddling” in their elections, we have suggested dozens of times sitting down and laying out specific facts and concerns that both sides have in a professional and trust-based manner. What we received was a strong refusal to do so. Now, I hope, we will discuss this matter and see to what extent the Biden administration is ready to do sincere work in this area.

You mentioned Afghanistan, Syria, Libya and North Korea. We maintain communication on all these matters, especially Afghanistan, North Korea and certain aspects of the Syria crisis and the situation in Libya. Together with the Americans, we are participating in internationally recognised multilateral forums. I’m referring to the talks on the nuclear issue on the Korean Peninsula and what we call the expanded Troika on Afghanistan (Russia, the United States, China and Pakistan).

There is a bilateral mechanism for Syria, primarily dealing with deconfliction. We always emphasise the US’s illegal presence on Syrian soil, especially since it includes plundering Syria’s natural resources and taking advantage of its oil fields and farm land. They use the proceeds to support (everyone is aware of this) separatism on the eastern bank of the Euphrates River thus flirting with a very dangerous problem – I mean the Kurdish problem. These games could come to a sticky end.

Since the US armed forces and combat aircraft are present in Syria, we have a deconflicting mechanism maintained by our respective defence ministries. In addition, sometimes we also have political consultations on how to move forward. We would welcome the United States resuming its participation as an observer in the Astana format and, in general, being more committed to the key principles of UN Security Council Resolution 2254 on the Syrian settlement.

The summit has no agreed upon agenda on paper. Sometimes our colleagues from the European Union (at a time when we still had relations and interaction bodies) focused on the word-for-word, scrupulous coordination of each item, which should then become the agenda of the negotiations. We didn’t have this with the Americans. We just listed the topics that the parties intended to touch on. We are doing the same this time. The work continues. It won’t be a long wait. I think things will become clear soon.We are interested in positive results from the summit, but, as they say, it takes two to tango. And if one party is break dancing, tangoing becomes a more difficult proposition.

Question: The Trump administration threw out the mechanism of the INF Treaty. Russia responded with an unprecedented act of goodwill. The Russian leaders sent a proposal to the United States and NATO to introduce a moratorium on the deployment of medium and shorter-range missiles in Europe. The Trump administration did not respond. There was only a weak reaction from European capitals. Is it possible to continue the dialogue on this problem? Is the proposed moratorium possible at all?

Sergey Lavrov: The INF Treaty is history. It doesn’t exist anymore. We have expressed regret over this.

You mentioned a very important fact. Immediately after this happened, apart from expressing regret over the treaty’s demise, President of Russia Vladimir Putin announced a unilateral moratorium on the deployment of ground-based medium and short-range missiles in Russia. It banned the deployment of the missiles prohibited by the defunct treaty unless similar US systems appeared in a given area. This was a unilateral moratorium.

Later, a few years ago, when this moratorium failed to generate much interest, President Putin took one more step. He sent a detailed message to the US and the other NATO and EU members and our Eastern neighbours (about 50 states in all). In this message, the Russian leader described in detail our moratorium proposal and supplemented it with an invitation to cooperate. He suggested that the Western countries also announce a reciprocal moratorium on their own without signing any legally binding agreements, simply as a goodwill gesture. In this detailed message, we discussed the West’s skeptical statements about Russia’s unilateral moratorium on the deployment of ground-based systems that were banned by the former treaty. The West’s politicians reasoned: “Russia is as cunning as a fox. It has already deployed Iskanders in the Kaliningrad Region that violate the parameters of the former treaty” while the NATO countries have no counterpart, thus this would be an inequitable exchange. However, to begin with, nobody has proved that Iskanders violate INF-established criteria and bans on the range of missiles. The Americans refused to provide any rationale on this.

I would also like to note at this point that they are still stubbornly refusing to present satellite photos from July 2014 when the Malaysian airliner crashed. The court in the Netherlands openly announced recently that there is no hope that the Americans will provide them. So, this question is closed for the court. In other words, evidence of paramount importance is being concealed.

Likewise, nobody has ever shown us the satellite photos that were used by the Americans to prove that our Iskanders violate the INF Treaty.

Considering that the Western countries believe Russia has already done this ahead of them and as we suggested freezing this situation, Russia would benefit from this, President Vladimir Putin said it straight in his Address to the Federal Assembly: considering the mutual mistrust, we suggest measures to verify a reciprocal moratorium. We invite you to come to the Kaliningrad Region and see these Iskanders. In exchange, we want our experts to visit missile defence bases in Romania and Poland because Lockheed Martin, the producer of missile launchers openly promotes them on its website as dual purpose: for launching both counter-missiles and anti-strike cruise missiles. I think this is a very honest proposal. Let’s check: you are concerned about our Iskanders, and we are worried about the dual purpose of those missile defence launchers.

The only positive response came from President of France Emmanuel Macron. He said this was an interesting proposal and that he was ready to take part in implementing it via a multilateral dialogue. But this didn’t happen. The Americans ignored the proposal for obvious reasons since they do not want to let anyone visit their missile defence sites (this is a separate question), while all the others obediently kept silent.

Our proposal remains on the table. I think we will certainly bring this up at the Geneva summit on June 16. Let’s see the response.

Question: Often, especially recently, you have said that the European Union is an unreliable partner. Unfortunately, this is the case, especially against the backdrop of insane and unbecoming for the 21st century Russophobic propaganda and scandals that are made up without providing any evidence.

You have extensive political experience. Do you think the low level of leadership in the EU may be at least partially mitigated during this year’s elections in Germany and other countries? Will the overall crisis be able to give rise to modern European leaders who will “emancipate” themselves, at least a little, from the United States and fulfil their mission which is to serve their respective peoples? This calls for a radical change in the EU’s policy towards Russia. Unfair and ineffective sanctions must be forgotten and we must return to dialogue and mutual trust in order to overcome common problems which cannot be resolved without a full dialogue and cooperation, including with Russia.

We look forward to seeing you in Bulgaria for the unveiling of the bust of our teacher Yevgeny Primakov.

Sergey Lavrov: God willing, I will definitely be there. We maintain a dialogue with Bulgaria via our respective foreign ministries. However, recently, certain factors have appeared, not from our side, that are not conducive to an expansion of constructive interaction. I hope this is temporary.

As for your question about the European Union and our relations with the EU, I have covered this issue many times. We want relations with the European Union that are equal and mutually respectful. We cannot have relations with the EU based on demands for Russia to change its behaviour. The foreign ministers of Germany and other European countries have said many times that we need to be partners (they no longer say friends) with Russia, but it must change its behaviour first. This is a mindset that cannot be changed.

I was talking about the rules-based order which they came up with. In fact, it is the Western vision of how to maintain relations between countries in the 21st century and, moreover, how to organise life within a country. These “messianic” processes on the advancement of democracy are quite aggressive. But as soon as you start talking with the West about democracy in the international arena and ways to promote it not only within the borders of a country (this is each individual state’s concern), but in international affairs so everyone is treated equally and heeds the voice of the majority, but also respects the minority, they immediately back pedal. They do not want to discuss the democratisation of international relations. The very concept of a “rules-based international order” negates any hope that the West will get drawn into a discussion on democratising global processes in international relations.

Literally in May, promoting one of the main elements of the concept of a rules-based world order, namely effective multilateralism, French President Macron bluntly stated that multilateralism does not imply the need to achieve unanimity. “The position of conservatives should not be an obstacle for ambitious frontrunners,” he said. I think this is clear. “Conservatives” are revisionists (you can call them that, although these words are antonyms). We and China are called “conservatives who do not want change” and “revisionists who want to slow things down that move the Western world forward.” At the same time, President Macron did not mention either the UN or international law.

There are “ambitious front-runners” who promote this concept, and there are those who want to “conservatively” hold on to UN Charter principles. That’s the problem. This was expressed by the president of the country, which was among those who, at some point, called for the EU’s strategic autonomy. But these discussions have been muted even in Germany.

At one EU event, President of the European Council Charles Michel praised the return of the United States to Euro-Atlantic solidarity. EU leadership was clearly relieved to know that everything is “good” again, the United States is “at the helm” again and they can follow in its wake.

I’m not trying to hurt anyone’s feelings. I hope no one takes offense, but it’s a fact. These are publicly stated assessments that have been repeatedly uttered by EU leadership.

The Munich Security Conference was held in May where Charles Michel said that the alliance between the United States and Europe is the basis for a rules-based international order. International law was not mentioned. He stressed that it is necessary to aggressively promote democracy to protect this order from “attacks” by Russia, China, Iran and other “authoritarian regimes.” That is, it follows that democracy for these purposes needs to be promoted within these respective countries and not in the international arena. This is more than self-revelatory. Without reservation, a concept is being put forward that is openly seeking dominance, at least claiming it.

European Commission President Ursula von der Leyen said, for example, that with respect to digital transformation, it is necessary for the United States and Europe to develop a “rulebook” that the world can follow.

More recently, our US colleagues said that new trade rules must be determined by the West, not China. What does this mean? A reform of the World Trade Organisation (WTO) is being discussed, because the Americans have understood one simple thing: that based on the currently approved rules of international trade and economy, which the United States initiated after WWII (the Bretton Woods system, the International Monetary Fund, the World Bank and the World Trade Organisation), that determined the course of globalisation, China has achieved much greater success in playing the Americans on their field. So, WTO activities are now blocked. The United States does not allow the appointment of officers for vacancies in the Dispute Settlement Body. All claims brought to this body that the Americans would have surely lost, cannot be considered.

We are talking about creating a new system and reforming the WTO. It is being clearly said that “the new rules of international trade must be determined by the United States and Europe, not China.” That is what this is about. This underlies the concept of a rules-based order.

You asked about the potential outcome of the upcoming elections in European countries, in particular, Germany. This is a question that only the German people and the peoples of the other EU countries can answer.

I have already covered the prospects for the “emancipation” of the EU from the United States.

Question: The United States often introduces sanctions against foreign companies or countries by suspending them from SWIFT, a major financial tool, which they use by virtue of their position of hegemony in the world. As a matter of fact, many countries, including China and even some European countries are suffering from SWIFT, which is controlled by the United States. Recently, the Russian government said the dollar might be removed from the country’s currency reserve. The Chinese government has started issuing digital currency. In theory, digital currency could lead to the creation of a new international financial system, which would significantly alleviate the threat of being suspended from SWIFT. What do you propose that Russia and China do to create a new international financial transaction system and reduce their financial dependence on the US?

Sergey Lavrov: Russian President Vladimir Putin gave a detailed answer to this question when speaking at the St Petersburg International Economic Forum last week. We are not looking to pull out of the existing system, which largely relies on the dollar. The problems stem from the United States being unaware of its responsibility as the country issuing the main reserve currency in the world, or else the US is aware but blatantly abuses its role. There are quite a few stories of how everyone argued that the dollar could be used for political purposes, which makes it unreliable. As we continue to make the point that everyone must honour the universal multilateral approach and not politicise the mechanisms that have been agreed on once and for all but rather use them to achieve objectives that underlie these mechanisms, we, of course, are considering how to respond if our colleagues show yet again their willingness to dictate and punish and use international trade and transaction leverage for this purpose

I want to note that not a single official in the West ever in my memory demanded that Russia, China or any other country be disconnected from SWIFT. That is what some politicians are calling for, but this has never been borne out either in statements by officials from leading Western countries or in SWIFT administration statements.

We really want, and this was officially announced, to remove the dollar from our economy and our financial system. The other day a decision was taken to cease holding the country’s gold and forex reserves in dollars. Appropriate measures have already been taken. But I want to emphasise again that this does not mean that we are discarding the dollar altogether, however, for the reasons mentioned earlier we are interested in relying more on other currencies, including national currencies, in bilateral trade with our partners, including our Chinese partners, other SCO members and many other countries. We are also ready to support transactions that are not denominated in dollars and but that are based on the use of other currencies.

In this context, crypto-currency is a very popular topic today. China is vigorously developing it and has achieved remarkable results. We are also working on this in a substantive manner. I believe there will be a time when crypto currencies will play a significant role and occupy a considerable niche in international settlements, but it might be better to discuss the details of this with economists. The Russian Foreign Ministry watches political developments. We are concerned about how to make sure our country’s economic ties do not pose threats to our security.

Question: Currently, a fairly intensive three-way process is underway to restore transport connections in the region. This process involves Armenia, Russia and Azerbaijan, but not Turkey, which was a full participant in the last war in Karabakh and which is actually a party to the conflict. Meanwhile, you know that the Armenian-Turkish border has been blocked for 30 years after Armenia gained independence. This, by the way, is the only blockade on the territory of geographical Europe and transport lines are there, in particular, a railway which was built in Czarist Russia. It uses electricity from high-voltage power lines that have existed since Soviet times. Don’t you think that Turkey should be involved in this process of unblocking transport connections in the region and bear its share of the responsibility for this?

Sergey Lavrov: I would like to add that Iran does not take part in the work of this trilateral group either, and Iran is no less and, perhaps, more interested in having its interests taken into account. You asked whether we should involve Turkey in this work and make it bear responsibility. The work of the trilateral group on restoring economic ties and transport links is not about punishment; it is about resuming normal economic life, which existed until the late 1980s when the war broke out, which stopped only four years later.

Now the bloodshed is over. It ended a little later than we proposed to the parties. It is not our fault that the war lasted longer than it could have and the truce was reached later than it could have been reached. We were only intermediaries; we could not force either side to do this or that. We only convinced them that further bloodshed was pointless and extremely dangerous, first of all, for how people will continue to live on this land.

Currently, our peacekeepers are carrying out their mandate. There have been no major incidents. Both Baku and Yerevan recognise this. Any minor problems are quickly corrected. Yes, there are tensions at some sections of the border between Armenia and Azerbaijan but they have nothing to do with Nagorno-Karabakh. Simultaneously with the ceasefire, the leaders of our countries agreed on November 9, 2020 to unblock all communications. This was one of the main items that was agreed upon years ago by the OSCE Minsk Group chaired by Russia, France and the United States.

Following this agreement of principle, the leaders of Russia, Armenia and Azerbaijan met in January. They established a trilateral working group at the prime minister level to deal exclusively with unblocking of all economic, transport and other connections in the region. The examples you gave – railways, roads and electricity lines are all subject to negotiation where professionals will prioritise opening them.

Naturally, the parties are considering the interests of their other neighbours. It would probably be unrealistic to hope that having reached agreement the three sides could neglect the views of Turkey or Iran. This would be a mistake. Many strategic routes pass through this critical area: both north-south and east-west. The most important goal is to develop relations for the long-term perspective rather than think of involving or not involving someone else.

I understand that many people say that the status of Nagorno-Karabakh remains open. This will eventually be coordinated with the co-chairs of the OSCE Minsk Group. At this point, they should not worry too much about its status. Instead, they need to promote confidence measures and the settling of humanitarian issues, and help both Armenians and Azerbaijanis live together in peace, security and economic wellbeing. I can assure you that if we help establish this lifestyle in two or three years, it will be much easier to resolve all the problems of the status of this area.

I would not focus on these or other statements from the capitals of the countries in the region or the immediate parties to the conflict. Emotions tend to prevail in these statements for the most part. We urge everyone involved in this to continue to help those on the ground to remain calm and return to normal life. We are actively involved in doing this via our peacekeeping contingent and the Emergencies Ministry. The results of the efforts by the trilateral group will depend on how much the unblocking efforts help improve everyday life.

Regarding Turkey and its role in this, as I said, the participants of these trilateral discussions do consider the interests of Turkey and Iran because otherwise the opening of links will not produce the best results.

The Russia-Turkey centre is monitoring compliance with the ceasefire from Azerbaijan. With technical equipment, it ensures joint observation of the developments on the ground. This is a very useful part of this general agreement. It ensures the involvement of our Turkish colleagues in this process and is a stabilising factor.

Question: The Russia-India partnership continues to flourish even though the world is going through hard times. Our cooperation on the Sputnik V vaccine confirms this. India and all Indians are grateful for the assistance offered by our Russian friends during the receding second wave of the pandemic.

What short- and long-term lessons can the international community learn about the origin and spread of COVID-19? Some people are worried that even 18 months later, we do not know about the origin of the virus that first appeared in Wuhan. This will not help us in preventing future pandemics.

How can we balance our national responsibility and international cooperation to follow the international health regulations and help the WHO to identify and prevent future outbreaks?

Sergey Lavrov: In general, the coronavirus pandemic has certainly created an unprecedented challenge. It has become a kind of test for “true friendship.” As we know, a friend in need is a friend indeed. However, several states decided not to share their vaccines. Probably, this approach is not justified by human morality or ethics, especially under conditions of interdependence and globalisation. We share these moral principles, as do our dear Indian friends.

Thank you for your kind words about the assistance we have been providing to Indians in these difficult times. During the past month, we managed to organise several large consignments of humanitarian medical aid, including the Sputnik V vaccine and other medications. We are currently developing the production of this vaccine in India. We hope that by taking these and other steps, by pooling our efforts, we will manage to deal with this grievous disease and protect the health of our people as soon as possible.

As for revealing the source of the virus, as you know, the WHO has made serious efforts in this respect. It sent experts to China. They came from 10 countries, including Russia. They also represented related international agencies. The results of their inquiry were published immediately after their visit. They were also presented at the 74th World Health Assembly that ended last week.

You are right. There are no decisive conclusions on the initial origins of COVID-19 so far, but this is not unique. Neither WHO specialists nor we know yet the origins of the Ebola virus that appeared in the 1970s. The specialists continue working on this. As you know, I am not well versed in this discipline, but I am convinced that the specialists must continue this work without politicising it. Any attempt to politicise the situation around COVID-19 is similar to efforts we are seeing in other areas. They reflect a striving of some countries to use methods of unfair competition. We need to develop comprehensive and transparent international cooperation on further studies of the origin of the virus, and, most importantly, on overcoming the pandemic. Talk about who is to blame and who is innocent must not obstruct any response effort.

When emergencies in health protection occur, the main goal is to have strong national healthcare and sanitary-epidemiological systems. The COVID-19 pandemic has confirmed this conclusion. I think the countries with well-organised healthcare systems and a high ability to mobilise medical and other resources have made a more effective response to the challenge of the coronavirus infection.

As for international cooperation, we have been developing this for some time, practically from the start of the pandemic through both bilateral channels and via international agencies. We promote the realisation of the International Health Regulations. They were drafted at our initiative and approved by the WHO but have not yet been incorporated into practical systems in many countries. These regulations are the main instrument of international law in developing national systems for preventing and dealing with epidemics like this. So, the way out of the current crisis probably lies in coordination, transparency, as well as an ability and willingness to share experience and pool efforts.

Question: Would it be possible and desirable for the United States and Russia to undertake, as part of studying cyberspace challenges, to work on countering cyber attacks by criminal groups that use ransomware against a particular country emanating from Russia or the United States? What could the parameters of such cooperation be? Or is the level of mistrust so great that this kind of cooperation is simply not possible now?

Sergey Lavrov: We have been hearing accusations against us of all kinds of transgressions for many years now. With regard to the cyber world, I mentioned the 2016 elections. In later occurrences, a number of incidents in the United States or other countries were immediately and publicly ascribed to the Russian Federation. Not a single fact has ever been presented to us. Now, the latest incident (President Vladimir Putin commented on this at the St Petersburg International Economic Forum) is the notorious attack against Colonial Pipeline and meat processor GBS. Even you in your question wonder whether it is possible to establish cooperation between Russia and the United States on investigating such incidents and on fighting criminal groups, in particular those that demand ransom. Even from this question, it becomes clear that you are motivated by a surge in public opinion about two specific incidents. Notably, I would like to stress, that the US administration does not promote the thesis that the Russian state is responsible for these incidents.

Antony Blinken recently said that these are probably private hackers, but Russia must stop them, because they originate from its territory. As a reminder in this regard (double standards), when the problems in the United States were at their height, American social media and internet platforms were blocking access to information on a particular issue. This topic was discussed, among other things, at the OSCE and the Council of Europe. We emphasised the responsibility of the United States, just like any other country, to ensure that its citizens have 100 percent access to any kind of information. Then the American side told us: “Right, but these are the obligations of the state, and we are talking about the actions of private corporations. We cannot be responsible for their actions.” In this case, the Americans are urging Russia to find these “private operators” and still fulfil the function of the state to suppress illegal actions. Let’s make sure we all follow the rules, and that the rules are universally applicable. Any state that has signed on to the obligation to ensure freedom of access to information is obliged to do so regardless of who is hiding the information – a state entity or a private corporation. Moreover, the bulk of all information is now in the hands of private corporations.

Now, I would like to say a few words about cybersecurity. We not only want, but we have repeatedly proposed to the United States, even, perhaps, somewhat obtrusively, to deal with this issue. When, as part of the above accusations we heard in 2016 (the Obama administration began alleging these things back in October, before the election day) we were presented with claims, we reminded our American colleagues that there’s a closed channel between Moscow and Washington in case of incidents, including in cyberspace. After accusations against the Russian Federation of interfering in the US elections were loudly read out, we suggested that the Americans provide us, through this closed channel, with the facts corroborating their concerns. We sent this proposal, I think, seven times from October 2016 to January 2017, right up to the Trump inauguration. None of these proposals were answered by the Obama administration’s relevant services. Instead, an annoyed Barack Obama, at the end of his tenure, raided and seized our diplomatic property in the US and drove the diplomats out. This impulsive step was a response to our professional offers to do honest and specific work.

This is not the only example. The cybersecurity dialogue with Washington was frozen through no fault of ours. Subsequently, we proposed returning to it. In July 2017, we handed over a draft memorandum on establishing a Russian-American ICT security group. The response appeared to be positive, and we agreed to hold the first meeting in Geneva in early 2018. The US delegation went there, and the Russian delegation was on its way there, too, but when our specialists landed at the Geneva airport, they were told that the Americans canceled the meeting without providing any meaningful reason.

In September 2020, President Vladimir Putin, at his level, issued a statement on how we would want to see cooperation between the United States and the Russian Federation in developing a comprehensive programme of measures to restore cooperation in this sphere. It included specific proposals. After President Biden’s inauguration, we reaffirmed this proposal. It is being reviewed by the US administration. I hope that we will find out in Geneva the reaction of President Biden and his team. The UN is working on international cybersecurity in the context of military-political problems, and at the same time a decision was made to start developing a convention on combating cybercrime. This is exactly what happened to Colonial Pipeline and the GBS meat processing company. In both cases, a consensus was reached, although before that our Western colleagues had objections. But consensus was reached on both issues. I have reason to hope that this will help advance the bilateral dialogue as well. But most importantly, the dialogue must be conducted professionally, rather than loudly and without facts.

Question: Angela Merkel has been Germany’s chancellor for 16 years. What is your opinion of Russian-German relations over this period? How will they change?

Sergey Lavrov: This is another issue President Vladimir Putin spoke about during the St Petersburg International Economic Forum (SPIEF). He expressed his opinion of the professionalism and experience of Chancellor Merkel and his satisfaction with their cooperation. Of course, we are monitoring the developments in Germany in the context of the upcoming elections. We hope that their outcome will ensure what I wanted to describe as continuity in our relations, but it would be better if it were not just continuity in the form of a regular dialogue, but continuity that would also take into account the lessons of the past 16 years.

When President Putin assumed his position in the Kremlin after the 2000 election, one of his first foreign visits was to Germany. He addressed the Bundestag in German. Many of us, including yours truly, perceived the emotional and positive energy of his address as the addition of a personal dimension to the previous historical reconciliation of the Russian and German nations. This was obvious.  He invested a huge part of his authority and his policy into Russian-German relations, into reconciliation that should take the form of practical deeds in great many spheres. We are not to blame that our relations have cooled. Incidentally, alarming signs appeared even before 2013 or 2014. For example, in 2010, then President of Russia Dmitry Medvedev had a summit meeting with Chancellor Merkel in Meseberg. One of the decisions reached concerned the establishment of a Russian-German crisis management committee. It was not designed as a simple discussion venue, but as a body that would coordinate joint crisis settlement mechanisms. On the practical level they mentioned Transnistria. The document was coordinated, but Germany later abandoned all efforts to implement it.

Of course, we are aware that the main reason for a far from sunny state of our bilateral relations is support provided by Berlin, the EU in general and the West as a whole to the armed, bloody and anti-constitutional coup that took place in Ukraine in February 2014, barely 12 hours after Germany, France and Poland, acting through their foreign ministers, said they would guarantee compliance with the agreement on a settlement between President Viktor Yanukovych and the opposition.  The agreement was buried by the opposition signatories the very next day. Germany, France, Poland and the EU, which these countries represented, did nothing to challenge the opposition in response to our calls; worse than that, they even encouraged the new turn of events. Those who came to power put forth their anti-Russia position in their very first statements; they called for throwing Russians out of Crimea and sent trains with armed thugs there.

Germany and other European countries closed their eyes to these developments (the United States did the same), saying that reality on the ground had changed. In addition to this extremely negative policy, they accused us of violating the rules they themselves invented, and denounced the free expression of the people’s will in Crimea as annexation. Sanctions were adopted against Russia for the failure of European diplomacy to force the opposition to honour the agreements reached with President Yanukovych through the mediation of Germany, France and Poland.

This is when it all began. But we did not get confrontational; we did not cancel the planned Russia-EU summit. Despite all of this, in 2014 President Putin attended the celebrations of the allied landing in Normandy and the opening of the Second Front. It was there that the sides coordinated the Normandy Format, which led to the signing of the Minsk Agreements in February 2015. We thought once again that the document would be honoured. But just as in the case of the February 2014 agreement, the Minsk Agreements are not being implemented, and it is deeply regrettable that Germany and France, as parties of the Normandy format, are trying to justify Kiev’s absolutely destructive position. Vladimir Zelensky said more than once that he doesn’t want to implement the Minsk Agreements, but that he wants to keep them because as long as they exist there will be sanctions against Russia. Our German, French and other colleagues have never tried to overturn this logic or as much as comment on such statements.   We do want to have normal relations with Germany and work together with it to settle the crises that exist in our common space, in our neighbourhood. But we would like to see that Germany is able to honour agreements.

We appreciate Berlin’s stand in the face of US attacks on Nord Stream 2, which began during Donald Trump’s presidency. President Putin mentioned this as well. But he also pointed out that Germany has done this for a reason, because this is in the fundamental interests of Germany. Incidentally, the story with Nord Stream 2 is not over yet. I have read comments by Antony Blinken to the effect that they are discussing ways for Ukraine to preserve fees for the transit of gas to the EU. We have a transit agreement with Ukraine until 2024. What will happen after that should be discussed, but the US administration is already discussing what should be done to protect Ukraine from harm. According to Blinken, one of the possible ways is to extend the transit agreement “for many years into the future,” so that Ukraine will continue to benefit from the transit fees. If this doesn’t work out, another option is to compensate for the transit fees that Kiev may lose, which is something the Europeans should do.

In other words, the Europeans’ attitude to the issues on which we are cooperating will be put to the test many times yet. I hope very much that the German people will be guided by their interests, just as they always have been throughout their history. We are interested in strengthening our partnership as much as possible. Many people say that the Russian-German partnership and rapprochement threaten the trans-Atlantic alliance. But this is an issue for the future periods of geopolitical research.


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Friday, 21 May 2021

A little less conversation, a little more action

Foreign Minister Sergey Lavrov’s opening remarks at a meeting with US Secretary of State Antony Blinken on the sidelines of the Arctic Council Ministerial Meeting, Reykjavik, May 19, 2021

A little less conversation, a little more action

May 20, 2021

by Pepe Escobar and first posted at Asia Times

So Sergey Lavrov and Tony Blinken met for nearly two hours at the Harpa Concert Hall in Reykjavik, on the sidelines of the ministerial session of the Arctic Council.

Frosty? Not really. Even if the get together may not have been a throwback to a Reagan-Gorbachev funfest in the good old Cold War days. After all, there was a NATO warship parked right outside the windows of Harpa Hall – like a prop in a Marvel blockbuster.

Self-described “amateur guitarist” Blinken may have been relatively swayed by the charms of the 1968 Elvis stunner A Little Less Conversation.

Well, at least there was some conversation. As for “a little more action”, as Elvis sang it, it remains to be seen. A good sign is that they addressed each other as “Sergey” and “Tony”. Blinken even attempted a “Spasiba”.

Let’s start with Lavrov – who routinely dwells in the Valhalla of diplomacy, unlike average apparatchik Blinken.

We agreed to continue our joint actions, which are developing quite successfully, on regional conflicts where the interests of the United States and Russia coincide. This is the nuclear problem of the Korean Peninsula, and the situation with efforts to restore the Joint Comprehensive Plan of Action on the Iranian nuclear program. This is Afghanistan, where the expanded troika consisting of Russia, China, the United States, Pakistan is actively working. We discussed how at this stage we can make all our joint actions more effective.

So there was “a very useful conversation” (Lavrov again) on what they do coincide (revival of the JCPOA), don’t coincide (Afghanistan) and hardly coincide (North Korea).

More than useful, actually: “constructive”. Lavrov again: “There is an understanding of the need to overcome the unhealthy situation that developed between Moscow and Washington in previous years.”

Lavrov made it very clear what we are at a stage of mere “proposal” to “start a dialogue, considering all aspects, all factors affecting strategic stability: nuclear, non-nuclear, offensive, defensive. I have not seen a rejection of such a concept, but experts still have to work on it.”

So Blinken did not reject it. The devil is how the “experts” will “work on it”.

Those pesky “laws of diplomacy”

It’s quite useful to compare what they said to each other – at least according to what was leaked.

Lavrov stressed discussions must be “honest, factual and with mutual respect”. Most important area of cooperation is “strategic stability”. He crucially invoked the “laws of diplomacy” – something that the Hegemon has not exactly been fond of lately: they “call for reciprocity, especially when it comes to responding to any kind of unfriendly action.” Implied is Moscow’s willingness to solve problems “inherited from previous US administrations.”

Blinken said the US wants a predictable and stable relationship: “It’s our view that if the leaders of Russia and the United States can work together cooperatively, our people, the world can be a safer and more secure place.” Areas where interests “intersect and overlap” include battling Covid-19 and climate change, apart from Iran, Afghanistan and North Korea.

“Russian aggression” though could not simply be thrown into the Arctic Sea: “If Russia acts aggressively against us, our partners, our allies, we will respond… not for purposes of escalation, not to seek conflict, but to defend our interests.”

So “experts” will have a field day – actually, days, weeks and months – figuring out how which brands of “Russian aggression” attack “our interests.”

As it stands, it looks like the bilateral Putin-Biden summit next month in a “European diplomatic capital” – as rumors swirl in Brussels – may be a go. To hope that it would take place, for instance, in Nursultan – the diplomatic capital of Eurasia – is a long shot.

Lavrov: “We will prepare proposals for our presidents both on these issues [the work of diplomatic missions] and the matters related to our dialogue on strategic stability.”

It’s quite enlightening to consider two parallel developments to Reykjavik.

The State Dept. confirmed it will waive sanctions against the Swiss-based company overseeing the construction of Nord Stream 2. And SWIFT confirmed to the Russian Central Bank that business continues as usual, and Moscow won’t be cut off from the system.

These may be interpreted as goodwill gestures ahead of the possible June summit. Afterwards, no one knows.

It’s also enlightening to note what Lavrov and Blinken did not discuss: vaccine diplomacy.

Sergey Naryshkin, the director of the SVR foreign intel, is now on the record saying that the registration of Sputnik V vaccine at the EU is being stalled by “signals from the corridors of power” in Brussels – something I confirmed weeks ago with relatively independent diplomats. The European Medicines Agency (EMA) still sustains that the vaccine may be registered before the end of the month.

And then there are glaring cases like Brazil, the target of tremendous pressure by Washington to prevent Sputnik V’s approval. Sputnik V has been registered by 61 nations, overwhelmingly in the Global South.

Let’s assume that Cold War 2.0, in theory, may have been put on hold. Now it’s time then for a “little more action”. Will it come to the point that Sergey and Tony will agree on “a little less fight, a little more spark” and dance to the rhythm of “all this aggravation ain’t satisfactioning me”?

Related


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Friday, 16 April 2021

America’s Neoliberal Financialization Policy vs. China’s Industrial Socialism

America’s Neoliberal Financialization Policy vs. China’s Industrial Socialism

April 15, 2021

By Michael Hudson and posted with special permission

Nearly half a millennium ago Niccolo Machiavelli’s The Prince described three options for how a conquering power might treat states that it defeated in war but that “have been accustomed to live under their own laws and in freedom: … the first is to ruin them, the next is to reside there in person, the third is to permit them to live under their own laws, drawing a tribute, and establishing within it an oligarchy which will keep it friendly to you.”[1]

Machiavelli preferred the first option, citing Rome’s destruction of Carthage. That is what the United States did to Iraq and Libya after 2001. But in today’s New Cold War the mode of destruction is largely economic, via trade and financial sanctions such as the United States has imposed on China, Russia, Iran, Venezuela and other designated adversaries. The idea is to deny them key inputs, above all in essential technology and information processing, raw materials, and access to bank and financial connections, such as U.S. threats to expel Russia from the SWIFT bank-clearing system.

The second option is to occupy rivals. This is done only partially by the troops in America’s 800 military bases abroad. But the usual, more efficient occupation is by U.S. corporate takeovers of their basic infrastructure, owning their most lucrative assets and remitting their revenue back to the imperial core.

President Trump said that he wanted to seize Iraq’s and Syria’s oil as reparations for the cost of destroying their society. His successor, Joe Biden, sought in 2021 to appoint Hillary Clinton’s loyalist Neera Tanden to head the government’s Office of Management and Budget (OMB). She had urged that America should make Libya turn over its vast oil reserves as reparations for the cost of destroying its society. “We have a giant deficit. They have a lot of oil. Most Americans would choose not to engage in the world because of that deficit. If we want to continue to engage in the world, gestures like having oil rich countries partially pay us back doesn’t seem crazy to me.”[2]

U.S. strategists have preferred Machiavelli’s third option: To leave the defeated adversary nominally independent but to rule via client oligarchies. President Jimmy Carter’s national-security advisor Zbigniew Brzezinski referred to them as “vassals,” in the classical medieval meaning of demanding loyalty to their American patrons, with a common interest in seeing the subject economy privatized, financialized, taxed and passed on to the United States for its patronage and support, based on a mutuality of interest against local democratic assertion of nationalistic self-reliance and keeping the economic surplus at home to promote domestic prosperity instead of being sent abroad.

That policy of privatization by a client oligarchy with its own source of wealth based on the U.S. orbit is what American neoliberal diplomacy accomplished in the former Soviet economies after 1991 to secure its Cold War victory over Soviet Communism. The way in which client oligarchies were created was a grabitization that utterly disrupted the economic interconnections integrating the economies. “To put it in a terminology that harkens back to the more brutal age of ancient empires,” Brzezinski explained, “the three grand imperatives of imperial geostrategy are to prevent collusion and maintain security dependence among the vassals, to keep tributaries pliant and protected and to keep the barbarians from coming together.”[3]

After reducing Germany and Japan to vassalage after defeating them in World War II, U.S. diplomacy quickly reduced the Britain and its imperial sterling area to vassalage by 1946, followed in due course by the rest of Western Europe and its former colonies. The next step was to isolate Russia and China, while keeping “the barbarians from coming together.” If they were to join up, warned Mr. Brzezinski, “the United States may have to determine how to cope with regional coalitions that seek to push America out of Eurasia, thereby threatening America’s status as a global power.”[4]

By 2016, Brzezinski saw Pax Americana unravelling from its failure to achieve these aims. He acknowledged that the United States “is no longer the globally imperial power.”[5] That is what has motivated its increasing antagonism toward China and Russia, along with Iran and Venezuela.

TRANSITION: the problem was not Russia, whose Communist nomenklatura let their country be ruled by a Western-oriented kleptocracy, but China. The U.S.-China confrontation is not simply a national rivalry, but a conflict of economic and social systems. The reason why today’s world is being plunged into an economic and near-military Cold War 2.0 is to be found in the prospect of socialist control of what Western economies since classical antiquity have treated as privately owned rent-yielding assets: money and banking (along with the rules governing debt and foreclosure), land and natural resources, and infrastructure monopolies.

This contrast in whether money and credit, land and natural monopolies will be privatized and duly concentrated in the hands of a rentier oligarchy or used to promote general prosperity and growth has basically become one of finance capitalism and socialism. Yet in its broadest terms this conflict existed already 2500 years ago. in the contrast between Near Eastern kingship and the Greek and Roman oligarchies. These oligarchies, ostensibly democratic in superficial political form and sanctimonious ideology, fought against the concept of kingship. The source of that opposition was that royal power – or that of domestic “tyrants” – might sponsor what Greek and Roman democratic reformers were advocating: cancellation of debts to save populations from being reduced to debt bondage and dependency (and ultimately to serfdom), and redistribution of lands to prevent its ownership from becoming polarized and concentrated in the hands of creditors and-landlords.

From today’s U.S. vantage point, that polarization is the basic dynamic of today’s U.S.-sponsored neoliberalism. China and Russia are existential threats to the global expansion of financialized rentier wealth. Today’s Cold War 2.0 aims to deter China and potentially other counties from socializing their financial systems, land and natural resources, and keeping infrastructure utilities public to prevent their being monopolized in private hands to siphon off economic rents at the expense of productive investment in economic growth.

The United States hoped that China might be as gullible as the Soviet Union and adopt neoliberal policy permitting its wealth to be privatized and turned into rent-extracting privileges, to be sold off to Americans. “What the free world expected when it welcomed China into the free trade body [the World Trade Organization] in 2001,” explained Clyde V. Prestowitz Jr, trade advisor in the Reagan administration, was that, “from the time of Deng Xiaoping’s adoption of some market methods in 1979 and especially after the collapse of the Soviet Union in 1992 … increased trade with and investment in China would inevitably lead to the marketization of its economy, the demise of its state-owned enterprises.”[6]

But instead of adopting market-based neoliberalism, Mr. Prestowitz complained, China’s government supported industrial investment and kept money and debt control in its own hands. This government control was “at odds with the liberal, rules-based global system” along the neoliberal lines that had been imposed on the former Soviet economies after 1991. “More fundamentally,” Prestowitz summed up:

China’s economy is incompatible with the main premises of the global economic system embodied today in the World Trade Organization, the International Monetary Fund, the World Bank, and a long list of other free trade agreements. These pacts assume economies that are primarily market based with the role of the state circumscribed and micro-economic decisions largely left to private interests operating under a rule of law. This system never anticipated an economy like China’s in which state-owned enterprises account for one-third of production; the fusion of the civilian economy with the strategic-military economy is a government necessity; five year economic plans guide investment to targeted sectors; an eternally dominant political party names the CEOs of a third or more of major corporations and has established party cells in every significant company; the value of the currency is managed, corporate and personal data are minutely collected by the government to be used for economic and political control; and international trade is subject to being weaponized at any moment for strategic ends.

This is jaw-dropping hypocrisy – as if the U.S. civilian economy is not fused with its own military-industrial complex, and does not manage its currency or weaponize its international trade as a means of achieving strategic ends. It is a case of the pot calling the kettle black, a fantasy depicting American industry as being independent of government. In fact, Prestowitz urged that “Biden should invoke the Defense Production Act to direct increased U.S.-based production of critical goods such as medicines, semiconductors, and solar panels.”

While U.S. trade strategists juxtapose American “democracy” and the Free World to Chinese autocracy, the major conflict between the United States and China has been the role of government support for industry. American industry grew strong in the 19th century by government support, just as China is now providing. That was the doctrine of industrial capitalism, after all. But as the U.S. economy has become financialized, it has de-industrialized. China has shown itself to be aware of the risks in financialization, and has taken measures to attempt to contain it. That has helped it achieve what used to be the U.S. ideal of providing low-priced basic infrastructure services.

Here is the U.S. policy dilemma: Its government is supporting industrial rivalry with China, but also supports financialization and privatization of the domestic economy – the very policy that it has used to control “vassal” countries and extract their economic surplus by rent-seeking.

Why U.S. finance capitalism treats China’s socialist economy as an existential treat

Financialized industrial capital wants a strong state to serve itself, but not to serve labor, consumers, the environment or long-term social progress at the cost of eroding profits and rents.

U.S. attempts to globalize this neoliberal policy are driving China to resist Western financialization. Its success provides other countries with an object lesson of why to avoid financialization and rent-seeking that adds to the economy’s overhead and hence its cost of living and doing business.

China also is providing an object lesson in how to protect its economy and that of its allies from foreign sanctions and related destabilization. Its most basic response has been to prevent an independent domestic or foreign-backed oligarchy from emerging. That has been one first and foremost by maintaining government control of finance and credit, property and land tenure policy in government hands with a long-term plan in mind.

Looking back over the course of history, this retention is how Bronze Age Near Eastern rulers prevented an oligarchy from emerging to threaten Near Eastern palatial economies. It is a tradition that persisted down through Byzantine times, taxing large aggregations of wealth to prevent a rivalry with the palace and its protection of a broad prosperity and distribution of self-support land.

China also is protecting its economy from U.S.-backed trade and financial sanctions and economic disruption by aiming at self-sufficiency in essentials. That involves technological independence and ability to provide enough food and energy resources to support an economy that can function in isolation from the unipolar U.S. bloc. It also involves decoupling from the U.S. dollar and from banking systems linked to it, and hence from U.S. ability to impose financial sanctions. Associated with this aim is creation of a domestic computerized alternative to the SWIFT bank-clearing system.

The dollar still accounts for 80 percent of all global transactions, but less than half of today’s Sino-Russian trade, and the proportion is declining, especially as Russian firms avoid dollarized payments or accounts from being seized by U.S. sanctions.

These protective moves limit the U.S. threat to Machiavelli’s first option: destroy the world if it does not submit to U.S.-sponsored financialized rent extraction. But as Vladimir Putin has framed matters: “Who would want to live in a world without Russia?”

Kin Chi: My quick comment: The USA surely would want to destroy its rival, taking the first option. But it knows it is impossible to succeed, even in the case of Russia, and not to mention China. Thus it hopes for the rival to disintegrate from within, or for substantial interest blocs from within to be complicit with US interests. Hence we need to assess how Russia and China are reacting to this challenge, given that there are multiple contesting forces within each country. And that is also why we have been very concerned with pro-US neo-liberal political economists and policy-makers in these two countries.

I agree with you that China has put much investment into infrastructure and industry. However, we have been concerned with China’s financialization moves. Hence your statement that “China has avoided financialization” may not be the actual case, as various moves have been taken in financialization, but we can say that China seems to be aware of the risks in financialization, and has taken measures to attempt to contain it, causing discontent from US financial interests which would want to see China going further down the road.

It is interesting that yesterday, the White House expressed concern over the China-Iraq use of digital RMB to settle oil accounts as this would be beyond US monitoring of transactions.

  1. Niccolo Machiavelli, The Prince (1532), Chapter 5: “Concerning the way to govern cities or principalities which lived under their own laws before they were annexed.” ↑
  2. Neera Tanden, “Should Libya pay us back?” memo to Faiz Shakir, Peter Juul, Benjamin Armbruster and NSIP Core, October 21, 2011. Mr. Shakir, to his credit, wrote back: “If we think we can make money off an incursion, we’ll do it? That’s a serious policy/messaging/moral problem for our foreign policy I think.” As president of the Center for American Progress, Tanden backed a 2010 proposal to cut Social Security benefits, reflecting the long-term Obama-Clinton objective of fiscal austerity at home as well as abroad. ↑
  3. Zbigniew Brzezinski, The Grand Chessboard: American Primacy and its Geostrategic Imperatives (New York: 1997), p. 40. See the discussion by Pepe Escobar, “For Leviathan, It’s So Cold in Alaska,” Unz.com, March 18, 2021. ↑
  4. Brzezinski, ibid., p. 55. ↑
  5. Brzezinski, “Towards a Global Realignment,” The American Interest (April 17, 2016) For a discussion see Mike Whitney, “The Broken Checkboard: Brzezinski Gives Up on Empire,” Counterpunch, August 25, 2016. ↑
  6. Clyde Prestowitz, “Blow Up the Global Trading System, Washington Monthly, March 24, 2021.. ↑

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