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Russia, the Western Media, and the Credit Crunch that Wasn’t

Western media’s reporting of a Russian credit crunch – which was never threatened – is a case study of how it gets the Russian economy repeatedly wrong.

Alexander Mercouris

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The journal Business New Europe (“BNE”) has written an interesting article discussing the deleveraging the Russian economy has undertaken in the two years since sanctions were imposed.

It notes that Russia has succeeded in radically reducing the level of its companies’ external debt without this resulting in the credit crunch that was widely predicted.  Its exact words are:

“As the ruble crashed at the end of 2014 and Western sanctions hit some of Russia’s largest and most indebted firms, some analysts predicted the country was headed toward a credit crunch. In fact, Russia’s total stock of foreign debt actually fell by nearly 30% over the subsequent two years.”

For a classic example of an article which did predict that Russia was heading for a credit crunch see this scaremongering piece from January 2015 by The Daily Telegraph’s Ambrose Evans-Pritchard.

What is really extraordinary about all this is why anyone supposed Russia was at risk of a credit crunch at all. 

I should say that I have form here because in a lengthy article published on 12th January 2015 I discussed – in the context of the downgrading of Russia’s credit rating – the threat of Russia experiencing a credit crunch and said it did not exist

The claim that Russia was heading towards a credit crunch was founded on a wholly wrong – indeed absurd – assumption that the only foreign currency available in Russia to pay foreign debt was that held in reserve by the Central Bank and that because of Western sanctions no other money was available. 

What seems to have happened was that people added together the total amount of foreign debt owed by Russian companies (around $750 billion in mid 2014), found it was more than the amount of foreign currency held in the Central Bank’s reserves (around $510 billion in mid 2014), and assumed that because of the fall in the oil price, the rouble’s devaluation and the sanctions that meant Russia would soon run out of money.

To add to the hysteria – and the gloating – bogus claims were made by individuals like the Swedish economist Anders Aslund – effortlessly demolished by the analyst Jon Hellevig – that the Central Bank’s “real” reserves were less – or just half – what the Russian authorities were saying they were.

In reality the truth was the exact opposite.  Not only were the Central Bank’s reserves every bit as large as the Central Bank was saying they were but a significant – though unknown – part of Russia’s foreign debt was actually nominal book debt held offshore by Russian companies that could be easily rolled over.

Russian companies – especially Russian banks – did indeed need help from the Central Bank to tide them over their initial payment difficulties.  It was partly the Central Bank’s delay in providing this help – as well as the delay in raising interest rates and the loan to Rosneft discussed in the BNE article – that caused the rouble to crash in December 2014.

However there have always been more than enough foreign currency and foreign assets held by Russian banks and companies and by the Russian authorities to ensure that Russian banks and companies – with help from the Central Bank – could meet their foreign currency debt obligations.  Together with the continued cash flow from the country’s export revenues this has proved more than enough to enable the deleveraging to take place without – as BNE notes – apparent strain. 

That the situation was never dangerous – or even critical – is shown by the limited extent of the help that the Central Bank was in the end required to give.  Central Bank reserves did fall but only to a still very healthy $350 billion – very far from crisis levels or any possible danger point.  They have recently been edging back up again towards $400 billion despite oil prices remaining below $50 a barrel in the year to date.

This whole story of the Russian credit crunch that wasn’t is in fact a textbook example of how Western commentary gets the Russian economy repeatedly wrong. 

A simple analysis of the facts – such as the one I undertook in January 2015 – would have shown that the danger of a credit crunch did not exist.  Yet instead of undertaking such an analysis Western commentators preferred to indulge themselves in farfetched and wildly improbable catastrophe scenarios that would have been derided if made about any other economy.

The Russian economy has its strengths and weaknesses as all economies do.  There is however no sense when reporting about it in talking only of its weaknesses – and then exaggerating them beyond reason. 

That is not commentary but (bad) propaganda, which can only lead to the sort of reporting errors of which the scaremongering over the credit crunch that wasn’t is just one example.

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It’s Back to the Iran-Contra Days Under Trump

Abrams and his cronies will not stop with Venezuela.

Strategic Culture Foundation

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Authored by Wayne Madsen, via The Strategic Culture Foundation:


Showing that he is adopting the neoconservative playbook every day he remains in office, Donald Trump handed the neocons a major win when he appointed Iran-contra scandal felon Elliott Abrams as his special envoy on Venezuela. Abrams pleaded guilty in 1991 to two counts of withholding information on the secret sale of US weapons for cash to help illegally supply weapons to the Nicaraguan right-wing contras, who were battling against the government of President Daniel Ortega. Abrams would have headed to a federal prison, but President George H. W. Bush, an unindicted co-conspirator in the scandal, issued pardons to Abrams and his five fellow conspirators – former Secretary of Defense Caspar Weinberger, former National Security Adviser Robert McFarlane, and former Central Intelligence Agency officials Alan Fiers, Duane “Dewey” Clarridge, and Clair George – on Christmas Eve 1991, during the final weeks of Bush’s lame duck administration.

Abrams escaped being charged with more serious crimes by Independent Counsel Lawrence Walsh because he cut a last-minute deal with federal prosecutors. Trump, who has made no secret of his disdain for cooperating federal witnesses, would have normally called Abrams a “rat,” a gangster term meaning informant. The man who helped engineer the pardons for Abrams and his five convicted friends was none other than Bush’s Attorney General, William Barr, who has just been sworn in as Trump’s Attorney General. Trump, who is always decrying the presence of the “deep state” that thwarts his very move, has become the chief guardian of that entity.

During a recent hearing of the US House of Representatives Foreign Affairs Committee, newly-minted congresswoman Ilhan Omar, Democrat of Minnesota, reminded her colleagues and the world about the sordid background of Abrams.

Omar zeroed in on Abrams’s criminal history:

“Mr. Abrams, in 1991 you pleaded guilty to two counts of withholding information from Congress regarding the Iran-Contra affair, for which you were later pardoned by President George H.W. Bush. I fail to understand why members of this committee or the American people should find any testimony you give today to be truthful.”

Abrams, as is the nature of neocons, refused to respond to Omar and cited her comments as “personal attacks.”

Abrams’s and his fellow criminals’ use of mercenaries and “death squads” to conduct secret wars in Nicaragua, Honduras, El Salvador, and Guatemala during the Ronald Reagan administration in the 1980s has made a re-entrance under Trump. Abrams was brought on board by neocons like National Security Adviser John Bolton, Vice President Mike Pence, and Secretary of State Mike Pompeo to oversee a US military build-up in Colombia, said to be 5000 US troops, to support Venezuelan paramilitary and military efforts to topple President Nicolas Maduro. Abrams and Bolton are also believed to have retained the services of another unindicted conspirator in the Iran-contra affair, Michael Ledeen, a colleague of the disgraced and convicted former Trump National Security Adviser, retired Lieutenant General Michael Flynn. Ledeen and Flynn co-authored a book titled, “The Field of Fight: How We Can Win the Global War Against Radical Islam and its Allies.” The book contains nothing more than the standard neocon tripe one might expect from the likes of Ledeen.

An official investigation of the Iran-contra scandal by the late Republican Senator John Tower of Texas concluded that Abrams’s and Ledeen’s friend, Iranian-Jewish middleman Manucher Ghorbanifar, a long-time Mossad asset and well-known prevaricator, was extremely instrumental in establishing the back-channel arms deals with Iran. Ghorbanifar has long been on the CIA “burn list” as an untrustworthy charlatan, along with others in the Middle East of similar sketchy credentials, including the Iraq’s Ahmad Chalabi, Syria’s Farid “Frank” Ghadry, and Lebanon’s Samir “Sami” Geagea. These individuals, however, were warmly embraced by neocons like Abrams and his associates.

Abrams, whose links with Israeli intelligence has always been a point of consternation with US counter-intelligence officials, is part of an old cabal of right-wing anti-Soviet Democrats who coalesced around Senator Henry Jackson in the 1970s. Along with Abrams, this group of war hawks included Richard Perle, Frank Gaffney, William Kristol, Douglas Feith, Lewis “Scooter” Libby, Abram Shulsky, and Paul Wolfowitz. Later, this group would have its fingerprints on major US foreign policy debacles, ranging from Nicaragua and Grenada to Lebanon, Iraq, and Libya. Later, in December 2000, these neocons managed to convince president-elect George W. Bush of the need to “democratize” the Middle East. That policy would later bring not democracy but disaster to the Arab Middle East and North Africa.

Abrams and his cronies will not stop with Venezuela. They have old scores to settle with Nicaraguan President Ortega. The initiation of “regime change” operations in Nicaragua, supported by the CIA and the US Southern Command (SOUTHCOM) in Miami, have been ongoing for more than a year.

The Trump administration has already achieved a regime change victory of sorts in El Salvador. Nayib Bukele, the former mayor of San Salvador, who was expelled from the formerly-ruling left-wing Farabundo Marti National Liberation (FMLN) party and joined the right-wing GANA party, was recently elected president of El Salvador. Bukele has quickly re-aligned his country’s policies with those of the Trump administration. Bukele has referred to President Maduro of Venezuela as a “dictator.” He has also criticized the former FMLN government’s recognition of China and severance of diplomatic ties with Taiwan. It will be interesting to see how a sycophant like Bukele will politically survive as Trump continues to call hapless asylum-seeking migrants from his country, who seek residency in the United States, “rapists, gang monsters, murderers, and drug smugglers.”

Another country heading for a US-installed “banana republic” dictator is Haiti. President Jovenal Moise has seen rioting in the streets of Port-au-Prince as the US State Department removed all “non-essential” personnel from the country. Moise, whose country has received $2 billion in oil relief from Venezuela, to help offset rising fuel prices, has continued to support the Maduro government. However, at the US-run and neo-colonial artifice, the Organization of American States (OAS), Moise’s envoys have been under tremendous pressure to cut ties with Venezuela and recognize the US puppet Juan Guaido as Venezuelan president. Moise’s refusal to do so resulted in armed gangs hitting the streets of Port-au-Prince demanding Moise’s resignation. It is the same neocon “regime change” playbook being used in Venezuela and Nicaragua.

There will be similar attempts to replace pro-Maduro governments in his remaining allies in the region. These include Suriname, Antigua and Barbuda, Dominica, and Saint Vincent and the Grenadines.

Abrams was also brought in as an adviser on Middle East policy in the George W. Bush administration. The carnage of Iraq is a stark testament to his record. In 2005, it was reported that two key Bush White House officials – Deputy Chief of Staff Karl Rove and Deputy National Security Adviser Elliot Abrams – gave a “wink and a nod” for the assassinations by Israeli-paid operatives of three key Lebanese political figures seeking a rapprochement with Syria and Lebanese Hezbollah – Member of Parliament Elie Hobeika, former Lebanese Communist Party chief George Hawi, and former Prime Minister Rafik Hariri.

In 2008, a United Nations panel headed by former Canadian prosecutor Daniel Bellemare later concluded Hariri was assassinated by a “criminal network” and not by either Syrian and Lebanese intelligence or Lebanese Hezbollah as proffered by Abrams and his friends in Washington.

Representative Omar was spot on in questioning why Abrams, whose name is as disgraced as his two fellow conspirators – Oliver North and John Poindexter – whose criminal convictions were overturned on appeal, is working for the Trump administration on Venezuela. The answer is that the neocons, who can sense, like raptors, Trump’s political weakness, have filled the vacuum left by top-level vacancies in the administration.

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Putin: If mid-range missiles deployed in Europe, Russia will station arms to strike decision centers

Putin: If US deploys mid-range missiles in Europe, Russia will be forced to respond.

RT

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Via RT…


If the US deploys intermediate-range missiles in Europe, Moscow will respond by stationing weapons aimed not only against missiles themselves, but also at command and control centers, from which a launch order would come.

The warning came from President Vladimir Putin, who announced Russia’s planned actions after the US withdraws from the INF Treaty – a Cold War-era agreement between Washington and Moscow which banned both sides form having ground-based cruise and ballistic missiles and developing relevant technology.

The US is set to unilaterally withdraw from the treaty in six months, which opens the possibility of once again deploying these missiles in Europe. Russia would see that as a major threat and respond with its own deployments, Putin said.

Intermediate-range missiles were banned and removed from Europe because they would leave a very short window of opportunity for the other side to decide whether to fire in retaliation after detecting a launch – mere minutes. This poses the threat of an accidental nuclear exchange triggered by a false launch warning, with the officer in charge having no time to double check.

“Russia will be forced to create and deploy weapon systems, which can be used not only against the territories from which this direct threat would be projected, but also against those territories where decision centers are located, from which an order to use those weapons against us may come.” The Russian president, who was delivering a keynote address to the Russian parliament on Wednesday, did not elaborate on whether any counter-deployment would only target US command-and-control sites in Europe or would also include targets on American soil.

He did say the Russian weapon system in terms of flight times and other specifications would “correspond” to those targeting Russia.

“We know how to do it and we will implement those plans without a delay once the relevant threats against us materialize,”he said.

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Labour MP split is a cheap and final ploy to derail BREXIT (Video)

The Duran – News in Review – Episode 179.

Alex Christoforou

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The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss a small group of UK Labour MPs decision to quit the party and sit as Independent MPs in the house of commons.

Their excuse for leaving Labour was directed at leader Jeremy Corbyn for presiding over an “institutionally anti-Semitic” party. The real reason they are leaving Labour is because they are staunch remain MPs and are hoping to derail Brexit.

The seven Labour MPs quitting the party to become ‘The Independent Group’, are Chuka Umunna, Luciana Berger, Chris Leslie, Angela Smith, Mike Gapes, Gavin Shuker and Ann Coffey.

RT reports that Luciana Berger, the MP for Liverpool Wavertree took to the stage first, to claim that she could not stay in the party any more because it had become “institutionally anti-Semitic.”

Chuka Umunna, MP for Streatham, a prominent ‘People’s Vote’ advocate appealed to all MPs, not just Labour, to join their group, as the current parties are part of the problem, not the solution.

He argued that “It is time we dumped this country’s old fashioned politics.” Umunna claimed the UK needed a political party “fit for the hear and now” and the “first step in leaving the tribal politics behind.”

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Via RT

Twitter has been rocked by the sudden departure of seven Labour MPs to form their own Independent Group, with party supporters feverishly debating whether the move is better for the party, or a wake-up call to Jeremy Corbyn.

Former shadow cabinet minister Chuka Umunna along with MPs Luciana Berger, Gavin Shuker, Angela Smith, Chris Leslie, Mike Gapes and Ann Coffey have all jumped ship in the biggest Labour Party split since 1981, when the so-called “gang of four” left to form the Social Democratic Party (SDP).

In a press conference, Umunna stated that the established parties “cannot be the change because they have become the problem” arguing that it is “time we dumped this country’s old-fashioned politics.”

Jewish MP Luciana Berger said she was “embarrassed and ashamed” at what the Labour Party had become and criticized her former party for becoming “sickeningly institutionally racist.”

“I am leaving behind a culture of bullying, bigotry and intimidation. I look forward to a future serving with colleagues who respect each other,” she added.

Reaction to the news online has been a mixture of shock and dismay, to outright derision. Some Labour supporters were quick to delight in the departures, suggesting the party will be stronger without detractors undermining it from within.

Others though said it was time for Jeremy Corbyn to take the criticism seriously.

Meanwhile, some Twitter users commented on Young Labour’s somewhat barbed response to the situation.

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