It’s midsummer, the weather and hot and everyone is feeling lazy. Yet we must press on with our relentless blogging and do our best to feed the cuckoo bird that lives inside your hat. And today I will write about Sanctions from Heaven which were designed to enrich Russia, destroy Europe and temporarily distract America from its failing economy and batshit-crazy society.
There are a couple of theories as to where these sanctions came from and how they were imposed. One theory is that they were drafted in Washington, and when the Russians found out about them, they absolutely loved them and launched the Special Military Operation in the former Ukraine to make sure that they are enacted forthwith because they couldn’t wait to reap their bounteous benefits.
Another theory is that the sanctions were drafted in the Kremlin, ratified in Washington and signed off on by Biden during Putin’s and Biden’s tête-à-tête in Geneva. Then Biden and Putin together did the whole endless shadow puppet theater around the Ukraine which culminated in the launch of the Special Operation once Putin could claim that Biden made him do it and Biden could say that Putin was going to do it all along and that it’s time to impose sanctions, gently elbowing his faithful Europuppets into issuing loud cries of “It’s all Putin’s fault!” before ceremonially slitting their wrists on Putin’s altar by mercilessly wrecking their economies and causing grave and irreparable harm to their constituents.
And that brings us to the metaphysical question of Who rules the world, really? If you think that it’s the Deep State or the Davos crowd or some other shadowy clan, then perhaps you should be reading some other blog. Yes, all of these groups have nefarious plans but, no, their plans are not working out as planned and the present, never mind the future, is looking nothing like what they had imagined. If Sanctions from Heaven were designed to maim and mangle the European economies while greatly benefiting Russia (as we will show) and briefly distracting Americans from their sorry predicament, then it follows that Russia rules the world. And who rules Russia? You could say that Putin rules Russia, but then Putin would beg to differ and say that Russia is ruled directly by God and that no other answer makes any sense.
There are a couple of takes on that is well. If you like the idea of God, then you could just agree with Putin and think that it’s all God’s doing and all Putin has to do is practice the ancient Taoist method of Doing Nothing, or Action Through Inaction, called wúwéi (traditional: 無為; simplified: 无为). Metaphysically speaking, Putin is then just God’s agent for ruling Russia while the West, which He wishes to destroy, He drives mad directly. An alternative take, for those who don’t like God, is that it’s all Putin’s doing: that Putin is a superhuman prime mover behind most human affairs. You may then quibble over whether he is an angelic or a satanic presence. A middle position is to claim that Putin is a god, but this immediately begs the question Who else is part of that pantheon? Stumblegramps Biden, perhaps, or bloviating buffoon Trump, or Ursula von der Lyin’?
At this I wish to suspend the metaphysical discussion, stating for the record that I personally prefer the view that Russia is a most unlikely country that would have ceased to exist ages ago were it not continuously willed into existence directly by a just and merciful God, and that Putin is no more than His faithful servant. But that’s just my wild-ass guess; feel free to formulate your own.
It remains to expound the wholesome and beneficial effects of the Sanctions from Heaven (as far as Russia is concerned) and their fire-and-brimstone effects on the Sodom and Gomorrah of contemporary European Union, which I will now go into in detail.
The first and most highly beneficial sanction was the freezing (or was it confiscation?) of foreign currency reserves belonging to Russia’s central bank. Since the term “reserves” does not apply to funds that can simply be blocked at a whim, this zeroed out the value of the US dollar and the euro as reserve currencies, and lots of actors, government and corporate, Russian and foreign, started looking for other places to park their reserves, starving the Federal Reserve’s and the ECB’s ongoing money-printing campaigns of new blood while fueling USD and EUR inflation.
As far as the effect of freezing these assets on Russia, it was expected to crash the Russian ruble, driving it from around 70 to the dollar to around 200, as was Biden’s ardent wish. And, indeed, the ruble did at first sink to 150 to the dollar, but then soared to 52 and has shown a distinct tendency toward strengthening. In a little over a month ruble-zone inflation went down to zero and prices for imported products started a gradual decline. Why did this happen?
All this asset freeze actually did was forbid the Russian central bank from holding funds in USD or EUR and depositing them in American or European banks. So much the worse for these banks and for USD and EUR generally, but these reserves were really quite useless to begin with. They were needed to prevent speculative attacks on the ruble (which could very easily be thwarted in other ways) and to bolster Russia’s credit rating. Russia’s central bank was (and to some extent probably still is) infested with people whose brains were damaged by exposure to the Western science of eek!-a-nomics, according to which speculative attacks on national currencies are OK (just ask George Soros) but currency controls are bad. But now these people’s wings have been clipped and sanity prevails.
Speaking of credit ratings, Western credit rating agencies have started to cancel their ratings for Russia… hampering Russia’s access to foreign capital, you’d think? Well, not really, because Russia is and has been for a long time now a net capital exporter and has no use at all for foreign capital. Add to that the fact that, given that EUR and USD are no longer reserve currencies (as far as Russia is concerned) foreign investors are no longer welcome in Russia (unless they come bearing rubles, which they first have to earn).
Another set of sanctions was imposed on foreign property held by Russian oligarchs: villas, yachts, bank accounts, etc. This amounted to a powerful anti-corruption drive, taking away much of the impetus for Russian oligarchs to steal, since the ill-begotten gains now had to remain in Russia, which is at this point rather big on financial transparency (remember, Mikhail Mishustin, tax man and big data maven extraordinaire, is now Russia’s prime minister). Having been shunned by the world’s major money-laundering centers in the US, London and Switzerland, a great many Russian oligarchs were forced to hastily repatriate their wealth and to look for ways to invest it in the Russian economy, giving it a boost. Until these sanctions were imposed, Russia was leaking on the order of $100 billion per year to foreign jurisdictions; this flow was briefly reversed and has now stopped.
Yet another set of sanctions embargoed Russian exports of metals, wood, coal and much else. This was most helpful to Russia, because these sanctions prevented Russian businessmen from earning now useless euros. These materials can now be put to better use within Russia itself by developing Russia’s own industries, investing all the capital that is no longer leaking out of the country.
A special gift to Russia was Canada’s refusal to return to Russia a Siemens gas turbine that had been sent to it for maintenance because it fell under Canadian sanctions. Now Russia has a perfectly good excuse to limit its exports of natural gas to Germany via the Nord Stream 1 pipeline. This gas can be put to better use right at home for uses such as fertilizer production (fertilizer being much in demand these days and much easier to ship than natural gas).
The flood of sanctions caused a number of European automakers to hastily exit Russia, losing their investment in Russian auto industry in the process. This allowed Russia to renationalize its auto industry, which is now in much better shape than it was when it had been first privatized, while paying almost nothing for it. Over the previous years, many foreign auto models, such as Mercedes-Benz, were built and sold in Russia while much of the profits went abroad; not any more! Now Russia has an excellent head start on rebuilding its auto industry, for both domestic sales and for export, all thanks to the bounteous sanctions.
And then there is the embargo on Airbus and Boeing aircraft. Now hundreds of planes that were leased to Russia are available to Russia pretty much free of charge (the leases are now paid for in rubles and the funds deposited with Russian banks) saving Russia some $10 billion per year. This action was also tremendously helpful in accelerating the development of Russia’s domestic passenger and cargo jet production.
The latest plan, bantered about at the latest G7 meeting, is to block the sales of Russian gold. First of all, it would be silly: sales of Russian gold bars have already been blocked for a few months. Secondly, it would be pointless: there are many other ways to sell gold internationally than to use the London or New York pseudo-market mechanisms. Third, it would move closer the day when the London “gold fix” and the “paper gold market” is bled dry of all physical gold and shown up for the fraud that it is, allowing, for the first time in decades, for proper price discovery in the precious metals market. Currently the US dollar is inflating away while the gold price remains pegged to it, negating gold’s main function as an inflation hedge. Blocking Russian gold, which makes up 10% of global annual output, from the Western gold market, is helping bring closer the day when that levy finally breaks.
In all, anti-Russian sanctions are very nice and Russia should be grateful for them. But it may be helpful to zoom out a bit and point out that although the proximate reason for them is the Special Military Operation to demilitarize and denazify the Ukraine, Russia has always been under sanctions—just for refusing to become a Western colony. There was the Jackson-Vanick Amendment to the Trade Act of 1974 which outlasted the USSR, only to be replaced by the Magnitsky Act of 2016. The Russians are fully cognizant that they will forever remain under Western sanctions no matter what they do. The best option, from the Russian point of view, is not to avoid or to evade sanctions but to learn to exploit them to their own advantage—which they have done.
Next, it would make sense to state some obvious facts about the Special Operation. First, it is not a war but similar to the Russian action against ISIS in Syria. The Russian contingent that is deployed in the Ukraine is rather small—150 to 200 troops—consisting of professional soldiers, not conscripts or reserves, and comprises perhaps as little as a third or a quarter of the total professional army. These troops are being rotated through the Ukraine as a sort of training exercise.
The goals of the operation are rather limited: demililitarization and denazification, meaning taking away the Ukraine’s ability to pose a military threat and physically eliminating all the Western-indoctrinated Russophobic Nazis. Demilitarization is proceeding apace: the Ukraine’s military capabilities are being blown up by precision rockets mostly before they reach the battlefront and the day that the Ukraine no longer has any military equipment left is perhaps two weeks away. Ongoing minor infusions of weapons from NATO countries is causing that date to creep to the right, although slower than real-time. Denazification is proceeding apace as well: Nazi battalions are being reduced to rotting meat by Russian artillery.
There is considerable evidence of mission creep. While the original goal was to liberate just Donetsk and Lugansk regions, now it turns out that Kherson, Zaporozhye and Kharkov are on the menu as well, to be followed by Nikolaev and Odessa. These Russian regions, which ended up shaded wrong on the political map when, after the USSR fell apart, arbitrary administrative boundaries within the USSR were mechanically transferred to the political map, are quite eager to rejoin Russia. It is as yet uncertain where this process will stop.
It is as yet also uncertain how long this process will take. Russia is in no hurry. First, it wants ample time to rotate its entire professional army (plus some volunteers, who are being let in quite reluctantly and after receiving significant training in Chechnya) through the Ukrainian theater of war, to avail them of the opportunity to train to defeat NATO forces with minimal casualties even while greatly outnumbered. This knowhow is considered quite important. This is similar to how Russia cycled troops through Syria, so that by now the entire Russian Air and Space force has real battlefield experience.
Second, Russia wants to receive the full benefit of the sanctions while watching the West crumble economically and politically as a result of galloping inflation, energy shortages, food shortages and all manner of other afflictions which anti-Russian sanctions produced as a boomerang effect. But most importantly, going faster would incur greater casualties among the Russian military, and that’s the opposite of what’s desired.
Russia’s traditional ally is Winter: every major military campaign against Russia (and this Ukrainian imbroglio is most definitely a consolidated Western attack on Russia, echoing Napoleon’s and Hitler’s) has to end with the enemy dying in droves from frostbite and exposure. Therefore, this campaign, sanctions and all, has to drag on until winter, by which time the Russian-liberated parts of the former Ukraine will be warm, well-fed and with all the lights on while the remaining Nazi/NATO-controlled parts of former Ukraine will be freezing in the dark, forsaken by their NATO allies who will be busy counting their own dead who will have died in their homes from lack of heat. Europe’s underground natural gas storage is barely at 50% right now and this situation is unlikely to improve, meaning that the gas will only last until December or so.
Denazification is also taking time. It proceeds as follows. The Ukrainian side, with the help from their NATO minders, indoctrinate, train, arm, equip and ship to the frontline a continuous stream of Nazis—both Ukrainian and mercenaries—for the Russians to turn into rancid meat using artillery and rocket fire. They’ve done rather well blowing them up from afar at their training centers in Western Ukraine, along with all of their equipment. A few have been captured and will in due course be executed by firing squad in the Donbass, which, unlike Russia itself, doesn’t have a standing moratorium on capital punishment. But denazification using artillery is very efficient and effective compared to sending cases through the Donetsk court system.
Another instance of mission creep is the fact that Russia is demilitarizing and denazifying not just the Ukraine but also NATO and the EU. NATO is sending in its weapons stockpiles for the Russians to destroy using rockets and EU/US are sending in mercenaries for the Russians to slaughter using either rockets, again, or artillery at the battlefront. It shouldn’t take too much more of this to leave NATO denuded of weapons systems and for Ukrainian Nazism to become distinctly unfashionable and not at all the Russian-killing safari some Nazis had dreamed of.
There is much talk currently of getting the Kiev regime to the negotiating table, to somehow compromise on the territory already lost to Russia and to stop the fighting. The EU sick of the war and the sanctions boomerangs and is in favor of a quick negotiated end to hostilities, the story goes, while the US and the UK are egging on the Kiev regime and feeding it false hopes. There is even talk of France and Germany giving Zelensky security guarantees, but there are no takers for them for a very simple reason: the Ukraine’s last legitimate, pre-coup president Yanukovich had been given such security guarantees and then had to flee for fear of getting killed while the guarantor nations looked the other way, then gave quick diplomatic recognition to the US-impose Nazi regime which overthrew him.
Given all of the above, it is entirely unclear why the by now almost completely hollow, defunct political entity formerly known as “the Ukraine” should be granted any sort of continued lease on life. It is reasonable to expect that most former Ukrainian regions will rejoin Russia while a few of the western ones, which were part of Austria-Hungary rather than Russia, will be cast adrift as a defunct and largely depopulated zone divided into areas of concern between Poland, Hungary, Slovenia and Romania with perhaps a small Russian enclave.
Thanks to the Special Operation, Russia’s Russian population has already expanded by 1% (counting just the people who have chosen to move to Russia) and stands to gain much more, plus considerable land (two or three times the size of France), much of it fertile arable land in a temperate zone. The fact that the Ukrainian military, while constantly retreating, keeps shelling residential districts it leaves behind, often reducing them to rubble, is sure to give the Russian building industry a major boost. (The Ukrainians shell civilian district first because they are Nazis and second because the Russian military shoots right back while the civilians they shell simply suffer and die.) In all, the Special Operation, together with the sanctions, sets the stage for a very growth spurt for the Russian economy.
It may be too much to expect the Kiev regime to ever actually capitulate in an honorable and forthright manner. It is more likely for that ghastly regime to simply crumble and dissolve. The final act may feature President Zelensky apprehended at some border checkpoint dressed in drag (stiletto heals, a black leather dress, a fan and a boa are already part of his comedic kit) and proffering fake documents. But this may take some time yet. The West is still feeding the Kiev regime lots of money for it to steal and weapons for it to resell to terrorist groups, Russia is still rotating soldiers through the battlefields of Eastern Ukraine while ponderously pounding their way across the landscape, and the Russian Winter is yet to have its last word.
Credit: Basil the 10th
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