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Putin’s Team is United: Talk of a Purge is Wrong

As the Russian government weathers a period of unpopularity caused by the recession, there is talk that Putin is about to purge his cabinet, but this is almost certainly wrong.

Alexander Mercouris

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An article has recently appeared in The Huffington Post which discusses rumours of an imminent purge of liberals from Russia’s government.

According to this view Russia’s President Putin is coming under increasing pressure from hardliners within Russia’s political elite to carry out a thorough purge of Atlanticists and liberals within the government.

The hardliners are also supposedly demanding a thorough overhaul of economic policy.  They want Putin to jettison the current liberal oriented free-market policy in favour of an economic mobilisation of the country to withstand the challenge of the West.  The details are sketchy but undoubtedly what is being talked about involves the reintroduction of capital controls and of forms of central planning that go far beyond what Russia has now.

The first point to make about this article in The Huffington Post is that it essentially repeats something that was said a month ago in an article by The Saker published by the Unz Review and on his own website.  The similarity is in fact so great that I find it impossible to put it down to mere coincidence.  There are clearly rumours circulating and both The Saker and the historian Stephen Cohen (the main source for The Huffington Post article) are picking up on them. 

What however are the prospects of a purge of liberals happening in Russia?

The short answer I am sure is none. 

The Saker and the Huffington Post are both right to say that the Russian government headed by Dmitry Medvedev is coming under fierce criticism in Russia, with strongly expressed demands by many people for a radical change of direction. 

They are also both right to say that Putin is not the target of this criticism and that his popularity is unaffected.  Those who criticise the government are not challenging Putin.  Rather they want him – as they think – to be himself by sacking the liberals in his government.

It is also the case that in discussion programmes on Russian television criticisms of the government are being increasingly and fiercely made and that some of these criticisms are being taken up by officials like Bastrykhin, the tough-minded head of Russia’s elite crime-busting agency, the Investigative Committee.

None of this however in my opinion points to a purge being in the works.  It is a fallacy that the media in Russia is tightly controlled and that no unauthorised criticism of the government is allowed on it.  On the contrary the media in Russia – including the television media – is full of debate and criticism, not just of the government but of virtually everything in Russia. 

Russia nowadays has an active and diverse public opinion which is no longer afraid to express itself, and it is a mistake to make assumptions about what is happening inside the Kremlin from the things it says.

I have to say that I get no impression that Putin is thinking of sacking the government or any of the senior officials who are currently being criticised.  On the contrary he repeatedly goes out of his way to signal his support for them.  He did so for example at some length during his recent television marathon.  Moreover his meetings with his officials as reported by his website give every impression of being supportive and cordial.

As for the conduct of the officials themselves, I get no impression from the behaviour of people like Medvedev, Ulyukaev, Siluanov or Nabiullina that they feel themselves to be under pressure or that they consider themselves to be at serious risk of losing their jobs.

There is no reason to think Putin disagrees with the current direction of economic policy.  That can be summarised as an overriding emphasis on inflation reduction (with the aim being to bring inflation down to 4% next year), strict budget discipline and work to improve the business climate, all done in order to foster an increase in the economy’s investment rate. 

All this goes along with a willingness to embrace planning in industrial policy, for example in the aircraft building industry.

I would add that I have seen and heard nothing that suggests the officials and ministers who are being criticised are disloyal to Putin or oppose his foreign or defence policies.  Not one of them has so much as hinted at disagreement with policy towards Crimea, Ukraine or Syria. 

The supposed tension within the government over the size of the military budget looks to me to be overstated and may be a myth. As I have said before claims Kudrin resigned from the Finance Ministry over this issue are wrong.  Claims of disagreement over the size of the military budget are anyway based on the theory Russia is experiencing a budget crisis.  That is simply wrong, just as claims Russia was facing a credit crunch were.

The one major area of disagreement between Putin and his ministers has in the past been over pension policy. 

There is little doubt the government wants to see the pension age raised.  Putin has until recently resisted that idea.  However some months ago he finally signalled that he had come round to it.  It is unlikely to happen before the Presidential election of 2018.

For the rest, Putin has consistently ruled out capital controls, price controls or proposals to raise income tax thresholds, and he undoubtedly supported the decision taken in 2014 to float the rouble.

Putin’s views on the vexed issue of privatisation also seem to be very similar to those of his ministers. 

He is broadly sympathetic to the idea and has shown no wish to reverse the privatisations of the 1990s.  However – to the exasperation of many in the Western investment community – he is no privatisation fanatic and clearly feels the government has a continued role to play in the direct management of key enterprises crucial to the economy.   

Though he welcomes foreign investment in Russia he is clearly determined to keep key sectors such as energy, banking, national infrastructure and key enterprises important to the defence sector under Russian control.   

He has specifically ruled out allowing Western banks from opening branches in Russia.  Whilst Western banks are welcome to work in Russia – and many of them do – their operations have to be regulated by the Russian Central Bank in just the same way as those of Russian banks are.

Similarly, though Putin supports foreign investment in Russia’s energy sector, Gazprom and Rosneft – both state-controlled – remain the dominant players with Gazprom still having a monopoly on gas exports.

There is nothing to suggest that anyone in the government disagrees with any of this.  As I have said previously, Kudrin as Finance Minister supported the project to create national champions in key branches of the economy. 

Today when privatisation is again being discussed it is being proposed – as it was in 2009 – for purely functional reasons – to fill gaps in the budget – not out of some ideological quest to privatise everything.  The government intends to keep blocking shares in all the enterprises involved, whilst Central Bank Chair Nabiullina opposes privatising Sberbank, the country’s biggest bank.

The overwhelming impression is of a united team essentially agreed on the main parameters of economic policy. 

All of them believe in an open economy where prices are decided by the market through supply and demand.  All of them believe in strict monetary and fiscal discipline.  All of them agree that some elements of industrial planning and state control should be retained and are essential at this stage of Russia’s development.

If the team is united why then the talk of a purge?

The short answer is that Russia over the last two years has been in recession.  It is entirely natural during a recession that the country’s government should come under criticism.  It happens in every country.

Though the criticism is loud and strong that does not make it politically dangerous.  There are none of the usual symptoms – mass demonstrations, sit-ins, walkouts, strikes – that point to widespread disaffection. 

The reason for that is not because the Russian people have been zombified by mass propaganda – as the Western media likes to claim – but because of the form the recession has taken. 

Strict financial discipline has paid dividends with a recession that has been relatively shallow with no significant layoffs, bankruptcies, plant closures or mortgage foreclosures. Though incomes took a heavy knock last year because of the inflation spike, employment has remained steady creating confidence that the recession is only temporary.  Importantly the two most socially sensitive sectors – food and housing – continue to boom.

There are also political factors.  The main political effect of the sanctions on Russia is that they lead to Russians blaming the recession not on Putin and the government but on the West.  That in part explains Putin’s extraordinary popularity, though his exceptional political skill, the popularity of many of his policies, and the sense of authority and sheer competence he conveys, would surely have kept him popular anyway.

The fact of Putin’s popularity makes it even less likely he is going to purge his government of people who give every impression of being loyal to him, especially when all the indications are he agrees with them.  His popularity means he is under no pressure to do so. 

With all the indications pointing to the recession being close to its end, it makes no sense for him to carry out such a purge anyway.

This whole issue of the purge is interesting because of what it says about the nature of political debate in Russia. 

It shows that when the government in Russia becomes unpopular the criticism of it that gains traction with the Russian public is that which comes from the patriotic “left” of Russia’s political spectrum rather than from its pro-Western liberal “right”.   On that spectrum Putin and his government are significantly more to the “right” than most Russians would like them to be.  The Western assumption that Putin’s “regime” is preventing Russians from pursuing their natural pro-Western liberal course could not be more wrong.

However those who look for or want a fundamental change in the Russian government’s present makeup or direction are likely to be disappointed.

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Foreign Banks Are Embracing Russia’s Alternative To SWIFT, Moscow Says

Given its status as a major energy exporter, Russia has leverage that could help attract partners to its new SWIFT alternative.

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Via Zerohedge


On Friday, one day after Russia and China pledged to reduce their reliance on the dollar by increasing the amount of bilateral trade conducted in rubles and yuan (a goal toward which much progress has already been made over the past three years), Russia’s Central Bank provided the latest update on Moscow’s alternative to US-dominated international payments network SWIFT.

Moscow started working on the project back in 2014, when international sanctions over Russia’s annexation of Crimea inspired fears that the country’s largest banks would soon be cut off from SWIFT which, though it’s based in Belgium and claims to be politically neutral, is effectively controlled by the US Treasury.

Today, the Russian alternative, known as the System for Transfer of Financial Messages, has attracted a modest amount of support within the Russian business community, with 416 Russian companies having joined as of September, including the Russian Federal Treasury and large state corporations likeGazprom Neft and Rosneft.

And now, eight months after a senior Russian official advised that “our banks are ready to turn off SWIFT,” it appears the system has reached another milestone in its development: It’s ready to take on international partners in the quest to de-dollarize and end the US’s leverage over the international financial system. A Russian official advised that non-residents will begin joining the system “this year,” according to RT.

“Non-residents will start connecting to us this year. People are already turning to us,”said First Deputy Governor of the Central Bank of Russia Olga Skorobogatova. Earlier, the official said that by using the alternative payment system foreign firms would be able to do business with sanctioned Russian companies.

Turkey, China, India and others are among the countries that might be interested in a SWIFT alternative, as Russian President Vladimir Putin pointed out in a speech earlier this month, the US’s willingness to blithely sanction countries from Iran to Venezuela and beyond will eventually rebound on the US economy by undermining the dollar’s status as the world’s reserve currency.

To be sure, the Russians aren’t the only ones building a SWIFT alternative to help avoid US sanctions. Russia and China, along with the European Union are launching an interbank payments network known as the Special Purpose Vehicle to help companies pursue “legitimate business with Iran” in defiance of US sanctions.

Given its status as a major energy exporter, Russia has leverage that could help attract partners to its new SWIFT alternative. For one, much of Europe is dependent on Russian natural gas and oil.

And as Russian trade with other US rivals increases, Moscow’s payments network will look increasingly attractive,particularly if buyers of Russian crude have no other alternatives to pay for their goods.

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US leaving INF will put nuclear non-proliferation at risk & may lead to ‘complete chaos’

The US is pulling out of a nuclear missile pact with Russia. The Intermediate-Range Nuclear Forces Treaty requires both countries to eliminate their short and medium-range atomic missiles.

The Duran

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Via RT


If the US ditches the Intermediate-Range Nuclear Forces Treaty (INF), it could collapse the entire nuclear non-proliferation system, and bring nuclear war even closer, Russian officials warn.

By ending the INF, Washington risks creating a domino effect which could endanger other landmark deals like the Strategic Arms Reduction Treaty (START) and collapse the existing non-proliferation mechanism as we know it, senior lawmaker Konstantin Kosachev said on Sunday.

The current iteration of the START treaty, which limits the deployment of all types of nuclear weapons, is due to expire in 2021. Kosachev, who chairs the Parliament’s Upper House Foreign Affairs Committee, warned that such an outcome pits mankind against “complete chaos in terms of nuclear weapons.”

“Now the US Western allies face a choice: either embarking on the same path, possibly leading to new war, or siding with common sense, at least for the sake of their self-preservation instinct.”

His remarks came after US President Donald Trump announced his intentions to “terminate” the INF, citing alleged violations of the deal by Russia.

Moscow has repeatedly denied undermining the treaty, pointing out that Trump has failed to produce any evidence of violations. Moreover, Russian officials insist that the deployment of US-made Mk 41 ground-based universal launching systems in Europe actually violates the agreement since the launchers are capable of firing mid-range cruise missiles.

Leonid Slutsky, who leads the Foreign Affairs Committee in parliament’s lower chamber, argued that Trump’s words are akin to placing “a huge mine under the whole disarmament process on the planet.”

The INF Treaty was signed in 1987 by then-President Ronald Reagan and Soviet leader Mikhail Gorbachev. The deal effectively bans the parties from having and developing short- and mid-range missiles of all types. According to the provisions, the US was obliged to destroy Pershing I and II launcher systems and BGM-109G Gryphon ground-launched cruise missiles. Moscow, meanwhile, pledged to remove the SS-20 and several other types of missiles from its nuclear arsenal.

Pershing missiles stationed in the US Army arsenal. © Hulton Archive / Getty Images ©

By scrapping the historic accord, Washington is trying to fulfill its “dream of a unipolar world,” a source within the Russian Foreign Ministry said.

“This decision fits into the US policy of ditching the international agreements which impose equal obligations on it and its partners, and render the ‘exceptionalism’ concept vulnerable.”

Deputy Foreign Minister Sergey Ryabkov denounced Trump’s threats as “blackmail” and said that Washington wants to dismantle the INF because it views the deal as a “problem” on its course for “total domination” in the military sphere.

The issue of nuclear arms treaties is too vital for national and global security to rush into hastily-made “emotional” decisions, the official explained. Russia is expecting to hear more on the US’ plans from Trump’s top security adviser, John Bolton, who is set to hold talks in Moscow tomorrow.

President Trump has been open about unilaterally pulling the US out of various international agreements if he deems them to be damaging to national interests. Earlier this year, Washington withdrew from the Joint Comprehensive Plan of Action (JCPOA) on the Iranian nuclear program. All other signatories to the landmark agreement, including Russia, China, and the EU, decided to stick to the deal, while blasting Trump for leaving.

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Converting Khashoggi into Cash

After two weeks of denying any connection to Khashoggi’s disappearance, Riyadh has admitted that he was killed by Saudi operatives but it wasn’t really on purpose.

Jim Jatras

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Authored by James George Jatras via The Strategic Culture Foundation:


The hazard of writing about the Saudis’ absurd gyrations as they seek to avoid blame for the murder of the late, not notably great journalist and Muslim Brotherhood activist Jamal Khashoggi is that by the time a sentence is finished, the landscape may have changed again.

As though right on cue, the narrative has just taken another sharp turn.

After two weeks of denying any connection to Khashoggi’s disappearance, Riyadh has ‘fessed up (sorta) and admitted that he was killed by Saudi operatives but it wasn’t really on purpose:

Y’see, it was kinda’f an ‘accident.’

Oops…

Y’see the guys were arguing, and … uh … a fistfight broke out.

Yeah, that’s it … a ‘fistfight.’

And before you know it poor Jamal had gone all to pieces.

Y’see?

Must’ve been a helluva fistfight.

The figurative digital ink wasn’t even dry on that whopper before American politicos in both parties were calling it out:

  • “To say that I am skeptical of the new Saudi narrative about Mr. Khashoggi is an understatement,” tweeted Republican Sen. Lindsey Graham of South Carolina. “First we were told Mr. Khashoggi supposedly left the consulate and there was blanket denial of any Saudi involvement. Now, a fight breaks out and he’s killed in the consulate, all without knowledge of Crown Prince. It’s hard to find this latest ‘explanation‘ as credible.”
  • California Rep. Adam Schiff, the ranking Democrat on the House Intelligence Committee, said in a statement that the new Saudi explanation is “not credible.” “If Khashoggi was fighting inside the Saudi consulate in Istanbul, he was fighting for his life with people sent to capture or kill him,” Schiff said. “The kingdom and all involved in this brutal murder must be held accountable, and if the Trump administration will not take the lead, Congress must.”

Turkish President Recep Tayyip Erdogan must think he’s already died and gone to his eternal recreation in the amorous embraces of the dark-eyed houris. The acid test for the viability of Riyadh’s newest transparent lie is whether the Turks actually have, as they claim, live recordings of Khashoggi’s interrogation, torture, murder, and dismemberment (not necessarily in that order) – and if they do, when Erdogan decides it’s the right time to release them.

Erdogan has got the Saudis over a barrel and he’ll squeeze everything he can out of them.

From the beginning, the Khashoggi story wasn’t really about the fate of one man. The Saudis have been getting away with bloody murder, literally, for years. They’re daily slaughtering the civilian population of Yemen with American and British help, with barely a ho-hum from the sensitive consciences always ready to invoke the so-called “responsibility to protect” Muslims in Bosnia, Kosovo, Libya, Syria, Xinjiang, Rakhine, and so forth.

Where’s the responsibility not to help a crazed bunch of Wahhabist head-choppers kill people?

But now, just one guy meets a grisly end and suddenly it’s the most important homicide since the Lindbergh baby.

What gives?

Is it because Khashoggi was part of the MSM aristocracy, on account of his relationship with the Washington Post?

Was it because of his other, darker, connections? As related by Moon of Alabama: “Khashoggi was a rather shady guy. A ‘journalist’ who was also an operator for Saudi and U.S. intelligence services. He was an early recruit of the Muslim Brotherhood.” This relationship, writes MoA, touches on the interests of pretty much everyone in the region:

“The Ottoman empire ruled over much of the Arab world. The neo-Ottoman wannabe-Sultan Recep Tayyip Erdogan would like to regain that historic position for Turkey. His main competition in this are the al-Sauds. They have much more money and are strategically aligned with Israel and the United States, while Turkey under Erdogan is more or less isolated. The religious-political element of the competition is represented on one side by the Muslim Brotherhood, ‘democratic’ Islamists to which Erdogan belongs, and the Wahhabi absolutists on the other side.”

With the noose tightening around Saudi Crown Prince Mohammad bin Salman (MbS), the risible fistfight cock-and-bull story is likely to be the best they can come up with. US President Donald Trump’s having offered his “rogue killers” opening suggests he’s willing to play along. Nobody will really be fooled, but MbS will hope he can persuade important people to pretend they are fooled.

That will mean spreading around a lot of cash. The new alchemy of converting Khashoggi dead into financial gain for the living is just one part of an obvious scheme to pull off what Libya’s Muammar Kaddafi managed after the 1988 Lockerbie bombing: offer up some underlings as the fall guys and let the top man evade responsibility. (KARMA ALERT: That didn’t do Kaddafi any good in the long run.)

In the Saudi case the Lockerbie dodge will be harder, as there are already pictures of men at the Istanbul Consulate General identified as close associates of MbS. But they’ll give it the old madrasa try anyway since it’s all they’ve got.Firings and arrests have started and one suspect has already died in a suspicious automobile “accident.” Heads will roll!

Saving MbS’s skin and his succession to the throne of his doddering father may depend on how many of the usual recipients of Saudi – let’s be honest – bribery and influence peddling will find sufficient pecuniary reason to go along. Saudi Arabia’s unofficial motto with respect to the US establishment might as well be: “The green poultice heals all wounds.”

Anyway, that’s been their experience up to now, but it also in part reflects the same arrogance that made MbS think he could continue to get away with anything. (It’s not shooting someone in the middle of Fifth Avenue, but it’s close.) Whether spreading cash around will continue to have the same salubrious effect it always has had in the past remains to be seen.

To be sure, Trump may succeed in shaking the Saudi date palm for additional billions for arms sales. That won’t necessarily turn around an image problem that may not have a remedy. But still, count on more cash going to high-price lobbying and image-control shops eager to make obscene money working for their obscene client. Some big American names are dropping are dropping Riyadh in a sudden fit of fastidiousness, but you can bet others will be eager to step into their Guccis, both in the US and in the United Kingdom. (It should never be forgotten how closely linked the US and UK establishments are in the Middle East, and to the Saudis in particular.)

It still might not work though. No matter how much expensive PR lipstick the spinmeisters put on this pig, that won’t make it kissable. It’s still a pig.

Others benefitting from hanging Khashoggi’s death around MbS’s neck are:

  • Qatar (after last year’s invasion scare, there’s no doubt a bit of Schadenfreude and (figurative) champagne corks popping in Doha over MbS’s discomfiture. As one source close to the ruling al-Thani family relates, “The Qataris are stunned speechless at Saudi incompetence!” You just can’t get good help these days).

Among the losers one must count Israel and especially Prime Minister Bibi Netanyahu. MbS, with his contrived image as the reformer, was the Sunni “beard” he needed to get the US to assemble an “Arab NATO” (as though one NATO weren’t bad enough!) and eliminate Iran for him. It remains to be seen how far that agenda has been set back.

Whether or not MbS survives or is removed – perhaps with extreme prejudice – there’s no doubt Saudi Arabia is the big loser. Question are being asked that should have been asked years ago. As Srdja Trifkovic comments in Chronicles magazine:

“The crown prince’s recklessness in ordering the murder of Khashoggi has demonstrated that he is just a standard despot, a Mafia don with oil presiding over an extended cleptocracy of inbred parasites. The KSA will not be reformed because it is structurally not capable of reform. The regime in Riyadh which stops being a playground of great wealth, protected by a large investment in theocratic excess, would not be ‘Saudi’ any longer. Saudia delenda est.”

The first Saudi state, the Emirate of Diriyah, went belly up in 1818, with the death of head of the house of al-Saud, Abdullah bin Saud – actually, literally with his head hung on a gate in Constantinople by Erdogan’s Ottoman predecessor, Sultan Mahmud II.

The second Saudi state, Emirate of Nejd, likewise folded in 1891.

It’s long past time this third and current abomination joined its antecedents on the ash heap of history.

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