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Here’s why the latest anti-Russian sanctions will actually HURT the US economy

US sanctions on Oleg Deripaska and Rusal create chaos in world aluminium market, hurt US pension funds, force US Treasury to backtrack

Alexander Mercouris

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In the immediate aftermath of the US Treasury Department’s extraordinary decision to impose sanctions on the Russian businessman Oleg Deripaska and by extension his Rusal group, a very interesting article penned by the financial analyst Tim Ashe appeared in the Financial Times.

Discussing the sanctions imposed on Deripaska and Rusal, Ashe made this highly interesting comment

The sharp drop in Russian markets over the past few days and the limited contagion to global markets will have been noted by the US sanctions team. I think they have previously been very nervous over this idea of backdraught from their actions, hurting US institutional investors and causing systemic risks to other emerging markets and indeed global markets. The fact that the April 6 sanctions designations only really impacted Russian markets raises the prospect that the US can roll out asymmetric sanctions against Russia, that officials can be less worried about their actions having a more global impact. This means the Treasury is more likely to follow on from its April 6 actions, assuming no improvement in the relationship with Russia.

(bold italics added)

Rarely have comments spoken with such confidence been proved wrong so quickly.  In fact they provide a classic case study of why when analysing events it is essential to hold back and see how they will develop before rushing to give dogmatic opinions about them.

Since Ashe wrote those words on 10th April 2018 Russian markets have stabilised as has the rouble, which has proved resilient in face of the pressure which is hitting hard the currencies of other so-called ’emerging market’ economies and which is coming from the stronger dollar and from talk of more interest rate hikes in the US.

The rouble at least for the time being appears to have stabilised at a rate of 62 to 64 roubles to the dollar – an exchange rate which I consider healthy – despite the Russian Central Bank refusing to take steps to support it, and refusing to raise interest rates.

By contrast the currencies of other so-called ’emerging market’ economies have taken a hammering, with the worst performer being the Argentinian peso, which is coming under exceptionally heavy pressure, forcing the Argentinian Central Bank to raise interest rates to an eye-watering 40% to support it.

In the meantime, as Russian markets have stabilised, the world aluminium market in which Rusal – the world’s second biggest aluminium producer – is a major player, has descended into chaos.

Aluminium prices at one point surged up 30%, with the hike in aluminium prices and general shortages of aluminium caused by the sanctions impacting on industrial users of aluminium worldwide, including the US and German car industries.

It is only a matter of time before the instability in the world aluminium market also hits the other major industrial consumer of aluminium: the aircraft building industry, in which the US is a major player.

Meanwhile the sudden increase in risk for holders of Russian debt caused by the US Treasury Department’s implicit threat to impose sanctions on any and every Russian businessman (“oligarch”) perceived as too close to the Kremlin irrespective of what they do, has hurt Western institutional investors including US pension funds.

The result is that the US Treasury Department is – without of course admitting the fact – beating a retreat.

Investors have been given more time to unwind their positions in Rusal – though that does not explain how they are supposed to do that if the sanctions remain in place – US Treasury Secretary Steven Mnuchin has said that the US has no wish to destroy Rusal, and – following not so secret negotiations between the US and the Kremlin which are known to have taken place – a compromise is being sought whereby Deripaska will sell some but by no means all his stake in Rusal’s parent company in return for the sanctions on Rusal being lifted.

Meanwhile Bloomberg is calling the sanctions a mess

I remain convinced that Deripaska was chosen because his company deals in aluminum — the target of Trump’s import tariffs, which are meant to revive domestic production. The opportunity to kill two birds with one stone — punish Russia and get a major foreign player off the U.S.  aluminum market — must have looked too good to pass up.

But no one in the Treasury Department appeared to have considered the consequences for the global aluminum market, where Rusal was included in international value chains.

Aluminum prices jumped (which can only be bad for U.S. buyers), Australian-British Rio Tinto was forced to search frantically for new buyers for its alumina (a raw material for aluminum production), and a Rusal plant in Ireland was threatened with closure, creating the potential for job losses and an alumina shortage throughout Europe.

These problems, reported to Treasury, appeared to soften Mnuchin’s heart. “The U.S. government is not targeting the hardworking people who depend on Rusal and its subsidiaries,” his department quoted him as saying. The U.S. government’s problem, Mnuchin said, was limited to Deripaska himself.

The new edition of the Rusal sanctions gives the company an extra six months, until October 23, to wind down its U.S. operations, but Mnuchin has clearly indicated that if Deripaska divests Rusal shares, the company could be taken off the sanctions list.

Business partners will still be leery of dealing with Rusal, and they’ll still work on contingency plans, but at least there’ll be less urgency about it. That’s been reflected in an aluminum price drop almost as sharp as the spike after the original sanctions announcement.

The sanctions the US Treasury Department imposed on Deripaska and Rusal were the most ambitious and far reaching sanctions that the US has imposed on Russia since the sectoral sanctions which the US and the EU imposed on Russia in July 2014.

What this episode has illustrated is a point which I have repeatedly made: the 2014 sanctions were carefully calibrated to cause the maximum hurt to the Russian economy, and the minimum hurt to the US economy and to the world economy upon which the US depends.

Any sanctions that go significantly beyond the sanctions which were imposed in 2014 risk hurting the US as much or even more than Russia in that, even if their economic effect is less their political effect risks being greater.

Certainly no US President is going to risk a cost crisis in the US car and aircraft building industries simply out of some juvenile desire to spite Russia.

A US President like Donald Trump, whose electoral success depends heavily on the votes of blue collar workers with jobs in the US manufacturing industries, which he has set out to revive, is going to be even less willing to risk such a crisis.

Trump’s decision to refuse to impose the further sanctions on Russia that people like Nikki Haley and Steven Mnuchin were pressing him to impose following the Syrian missile strike illustrates the point.

The big question is whether following the Rusal debacle the US will now draw back, finally accept that the sanctions route of pressuring Russia has been exhausted and has failed, and starts looking instead for other ways of dealing with Russia.

Given the pathological hatred of Russia of so much of the US political class a further sanctions offensive against Russia is not impossible, with officials in the US Treasury Department possibly hunting around for targets against whom sanctions would cause less disruption to the US and world economies than the sanctions against Deripaska and Rusal did.

My own view is that so long as Donald Trump remains in the White House that is unlikely to happen, not because Trump is some sort of stooge of Russia but because he has now seen the hurt further sanctions on Russia can cause to the people who make up his electoral base.

If so then with the Rusal debacle ‘peak sanctions’ has passed.

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Defeat in Bavaria delivers knockout punch to Merkel’s tenure as Chancellor (Video)

The Duran – News in Review – Episode 136.

Alex Christoforou

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The stunning CSU defeat in Bavaria means that the coalition partner in Angela Merkel’s government has lost an absolute majority in their worst election results in Bavaria since 1950.

In a preview analysis before the election, Deutsche Welle noted that a CSU collapse could lead to Seehofer’s resignation from Merkel’s government, and conceivably Söder’s exit from the Bavarian state premiership, which would remove two of the chancellor’s most outspoken critics from power, and give her room to govern in the calmer, crisis-free manner she is accustomed to.

On the other hand, a heavy loss and big resignations in the CSU might well push a desperate party in a more volatile, abrasive direction at the national level. That would further antagonize the SPD, the center-left junior partners in Merkel’s coalition, themselves desperate for a new direction and already impatient with Seehofer’s destabilizing antics, and precipitate a break-up of the age-old CDU/CSU alliance, and therefore a break-up of Merkel’s grand coalition. In short: Anything could happen after Sunday, up to and including Merkel’s fall.

The Financial Times reports that the campaign was dominated by the divisive issue of immigration, in a sign of how the shockwaves from Merkel’s disastrous decision to let in more than a million refugees in 2015-16 are continuing to reverberate through German politics and to reshape the party landscape.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the stunning Bavarian election defeat of the CSU party, and the message voters sent to Angela Merkel, the last of the Obama ‘rat pack’ neo-liberal, globalist leaders whose tenure as German Chancellor appears to be coming to an end.

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Via Zerohedge

Voters in Germany’s economically dominant southern state of Bavaria delivered a stunning rebuke to the ruling Christian Social Union, in an election that delivered another crushing blow for the parties in Angela Merkel’s grand coalition in Berlin.

With all eyes on Sunday’s Bavaria election, moments ago the first exit polls showed a historic collapse for the ruling CSU party, which has ruled Bavaria continuously since 1957, and which saw its share of the vote collapse from 47.7% in the 2013 election to just 35.5%, losing its absolute majority and suffering its worst result since 1950, as voters defected in their droves to the Greens and the far-right Alternative for Germany.

German newspaper Welt called the election “the most painful election defeat of the past 50 years for the CSU”. As predicted in the polls, the CSU experienced a “historic debacle” in the Bavarian state elections, according to Welt. The CSU was followed by the Greens which soared in the election, more than doubling to 18.5% from 8.6% in 2013, the Free Voters also rose to 11% from 9.0%, in 2013.

Meanwhile, the nationalist AfD are expecting to enter Bavaria’s parliament for the first time ever with 11% of the vote, and as such are setting up for their post-election party. Party leader Alice Weidel already is having the first beer in the small community of Mamming in Lower Bavaria.

Establishment party, left-of-center SPD also saw its support collapse from 20.6% in 2013 to just 10% today.

The full initial results from an ARD exit poll are as follows (via Zerohedge):

  • CSU: 35.5 %
  • Grüne: 18.5 %
  • FW: 11.5 %
  • AfD: 11.0 %
  • SPD: 10.0 %
  • FDP: 5.0 %
  • Linke: 3.5 %
  • Sonstige: 5.0 %

The breakdown by gender did not show any marked variations when it comes to CSU support, although more women voted for the Greens, while far more men supported the AfD:

There was a greater variation by educational level, with highly educated voters tending more towards the green GRÜNE (G/EFA) and liberal FDP (ALDE) then the average, while low/middle educated voters tended more towards CSU (EPP) and AfD (EFDD).

This was the worst result for the CSU since 1950.

Zerohedge further reports that alarmed by the rise of the anti-immigration, populist AfD, the CSU tried to outflank them by talking tough on immigration and picking fights with Ms Merkel over asylum policy.

But the strategy appeared to have backfired spectacularly by alienating tens of thousands of moderate CSU voters and driving them into the arms of the Greens.

Meanwhile, as support the CSU and SPD collapsed, the result confirmed the Greens’ status as the rising force in German politics. Running on a platform of open borders, liberal social values and the fight against climate change the party saw its support surge to 18.5%, from 8.4% in 2013. Meanwhile the AfD won 11%, and for the first time entered the Bavarian regional assembly.

“This is an earthquake for Bavaria,” said Jürgen Falter, a political scientist at the University of Mainz.

The CSU had governed the state with an absolute majority for most of the last 60 years. “It was Bavaria and Bavaria was the CSU. That is now no longer the case.”

The latest collapse of Germany’s establishment parties highlights the shaky ground the grand coalition in Berlin is now resting on as all three parties in the alliance, Merkel’s Christian Democratic Union, the CSU and the SPD, are haemorrhaging support. Some are now questioning whether the coalition, already frayed by personal rivalries and near constant bickering over policy, can survive a full term in office.

“This outcome throws ever more doubt on the future of the grand coalition,” said Heinrich Oberreuter, head of the Passau Journalism Institute and an expert on the CSU. “Based on current polls, if an election were held now, the CDU, CSU and SPD would not even command a majority in the Bundestag.”

The CSU will now be be forced to form a coalition government — a humiliating outcome for a party that has run Bavaria single-handedly for 49 of the last 54 years. Its preference is probably for a three-party coalition with the Free Voters, a small party that is mainly focused on local politics. It could also team up with the Greens, though it would be highly reluctant to do so: the two parties are deeply divided over immigration, transport and environmental policy.

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Elizabeth Warren’s DNA ploy backfires big time (Video)

The Duran Quick Take: Episode 1.

Alex Christoforou

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RT CrossTalk host Peter Lavelle and The Duran’s Alex Christoforou take a quick look at Senator Elizabeth Warren’s ‘genius’ idea to accept POTUS Trump’s ‘Native American DNA’ challenge. Let’s just say that Warren will never recover from this self-inflicted wound.

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The Cherokee Nation issued a statement crushing Elizabeth Warren for her “continued claims of tribal heritage.”

“A DNA test is useless to determine tribal citizenship. Current DNA tests do not even distinguish whether a person’s ancestors were indigenous to North or South America. Sovereign tribal nations set their own legal requirements for citizenship, and while DNA tests can be used to determine lineage, such as paternity to an individual, it is not evidence for tribal affiliation. Using a DNA test to lay claim to any connection to the Cherokee Nation or any tribal nation, even vaguely, is inappropriate and wrong. It makes a mockery out of DNA tests and its legitimate uses while also dishonoring legitimate tribal governments and their citizens, who ancestors are well documented and whose heritage is prove. Senator Warren is undermining tribal interests with her continued claims of tribal heritage.

– Cherokee Nation Secretary of State Chuck Hoskin, Jr

Zerohedge reports that Elizabeth Warren just owned herself after releasing a DNA test confirming that she’s as little as 1/1024th Native American – about half the percentage of the average white person.

What’s more, the DNA expert she used, Stanford University professor Carlos Bustamente, “used samples from Mexico, Peru, and Colombia to stand in for Native American” as opposed to, say, DNA from a Cherokee Indian which Warren has claimed to be throughout her career.

Adding to the absurdity are two major corrections by the Boston Globe (which has become the media mouthpiece of Warren’s 2020 damage control efforts of late), letting readers know that “Due to a math error, a story about Elizabeth Warren misstated the ancestry percentage of a potential 10th generation relative. It should be 1/1,024,” and later updating it to “between 1/64th and 1/1,024th Native American.”

Adding to the absurdity are two major corrections by the Boston Globe (which has become the media mouthpiece of Warren’s 2020 damage control efforts of late), letting readers know that “Due to a math error, a story about Elizabeth Warren misstated the ancestry percentage of a potential 10th generation relative. It should be 1/1,024,” and later updating it to “between 1/64th and 1/1,024th Native American.”

Elizabeth Warren’s got trolled by Trump in the most epic fashion, pushing the Senator to make a blunder that will follow her for the rest of her career.

The Daily Caller’s Benny Johnson exposed Elizabeth Warren’s history of lies in 10 simple tweets…

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Hillary Clinton: Democrats have been TOO CIVIL with GOP (VIDEO)

Civil war becomes more likely as Clinton calls for greater civil unrest after weeks of absolutely insane behavior from leftist activists.

Seraphim Hanisch

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Former presidential candidate Hillary Rodham Clinton just called for an end to civil behavior towards Republicans and conservatives. In an interview with Christiane Amanpour of CNN expanded on in a piece by USA Today, the failed candidate had this to say:

“You cannot be civil with a political party that wants to destroy what you stand for, what you care about… That’s why I believe, if we are fortunate enough to win back the House and / or the Senate, that’s when civility can start again.”

Clinton said that Senate Republicans under Majority Leader Mitch McConnell, R-Ky., “demeaned the confirmation process” and “insulted and attacked” Christine Blasey Ford – who testified before the Senate Judiciary Committee about a sexual assault she alleges Kavanaugh committed in 1982 – along with other “women who were speaking out.”

It should be pointed out here that Clinton told a lie. The Senate Republicans did everything possible to hear out Dr Ford’s testimony, and no one has gone on record with any sort of insults or demeaning comments about her. Every Republican Senator who stated anything agreed that something happened to her, but they also agreed that there was no corroboration showing that Judge Kavanaugh was actually involved in any misdoings. USA Today’s piece continues:

Clinton compared the handling of Kavanaugh’s confirmation to “Republican operatives shutting down the voting in 2000,” the “swift-boating of John Kerry,” attacks on former Arizona Sen. John McCain in the 2000 Republican primary and “what they did to me for 25 years.

“When you’re dealing with an ideological party that is driven by the lust for power, that is funded by corporate interests who want a government that does its bidding, you can be civil but you can’t overcome what they intend to do unless you win elections,” she told Amanpour.

Clinton compared Kavanaugh’s swearing-in ceremony at the White House on Monday to a “political rally” that “further undermined the image and integrity of the court.”

She told Amanpour the effect on the court “troubles” and “saddens” her “because our judicial system has been viewed as one of the main pillars of our constitutional government.”

“But the President’s been true to form,” Clinton added. “He has insulted, attacked, demeaned women throughout the campaign – really for many years leading up to the campaign. And he’s continued to do that inside the White House.”

Here, Clinton told at least two more incendiary whoppers.

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First, no one has been specifically after her, and second, President Donald Trump’s record with women including in the White House has been nothing short of stellar and gentlemanly. Nikki Haley, who supported Marco Rubio in the 2016 campaign and has at times been openly critical of Donald Trump, yesterday announced her full support of his 2020 campaign and her intent to campaign with and for him.

By all accounts, Mrs. Haley is a woman.

The first American Civil War had economic policy and states’ rights as its central focus. Slavery was a part of that issue, though slavery was practiced in the North as well in the South before this war began.

Now a new civil war is coming, but perhaps it should be called the American Social War. It is not about any real policy matter at all. It is hysteria, but it appears to be hysteria with a purpose.

The first American Social War has two apparent sides and allying forces and groups:

The Left:

  • pro-gay marriage
  • pro-death (in other words, pro-abortion)
  • anti-Christian, especially Christianity that says these first two issues are wrong
  • anti-GOP / Republican / Conservative
  • “victim class” – feminists, some millenials
  • supporters of legalized use of mind-altering / mood-altering drugs
  • appears to support overreaching socialist style government, featuring “fair” wages, such as a $15.oo minimum wage
  • anti-traditionalist
  • Mainstream media is strongly allied here
  • George Soros is a supporter
  • social media outlets, like Facebook and Twitter are supporters through “scrubbing” of media content
  • anti-white, anti-male, and if you are white, male and Christian, look out. You are Enemy Number One
  • supports and executes violence against all these people they are against, including family members.
  • very zealous, and very monolithic in terms of alignment and energy

The Right:

  • Conservatives
  • people who generally want the government to leave them alone
  • generally favors life, considering abortion tragic and to be avoided, though some consider that it should be made illegal
  • marriage has always been between one man and one woman and it should not be redefined to fit the whims of a few
  • God is sovereign (though many conservatives would never make this connection)
  • No real animus against the left, but at the same time, fed up with being hectored by the left all the time, as we saw in Senator Lindsey Graham’s explosive confrontation against Senate Democrats
  • Generally Republican by party affiliation, though many libertarian and conservatives are also present as well as a number of conservative democrats.
  • seeks to avoid violence. While there do exist a very few neo-Nazi types, their numbers are infinitesimal, and their behavior is rejected by the Right
  •  generally against drug use, though many have unfortunately moderated on the matter of actual illegality

The main characteristic of this approaching war, as stated before, is little more than some sort of outrage over identity politics and perceived victimization. This is something both new and old, as there is always a party in any war that claims that they are fighting because they are in fact the aggrieved party, under the other side’s aggression and suppression.

That factor exists with this war too. However, the reality of that aggression or suppression is that it does not exist, and this makes it very difficult for the “perceived aggressors” to ramp up the zeal needed to carry out the fight.

This factor is often very maddening for conservative people. As a whole they do not wish to fight. They wish to be left alone. The left on the other hand insists that everything must be fought for because the right has somehow managed to take it away from them, or is keeping it away from them.

This is purely fiction but it is almost impossible to convince a leftist that this is so. Tucker Carlson expands on this matter in this report. He makes reference at 6:37 about how Hillary Rodham Clinton is now openly calling for civility to the GOP to end (as if it hasn’t already!), but the entirety of this report begs to be seen to give perspective to the look and feel of this crisis:

This is unfamiliar territory in many ways, and it is unclear how far this will go. But one this is clear: it is testing all available limits, and it may come to real fighting, and real killing, for no reason better than perceived victimization.

It should be understood that the advocates for violence are all people that reject God and traditional values openly. There is certainly a connection.

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