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Russia cuts interest rates whilst maintaining tough monetary policy

As inflation falls, Russia’s Central Bank cuts key rate to 10% but insists its tight monetary policy intended to reduce inflation will continue.

Alexander Mercouris

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The Russian Central Bank has, as predicted, cut its key rate from 10.5% to 10%.

This is consistent with the continuing rapid fall in inflation.  With inflation zero in the first two weeks of September after being zero in the last week of July and through most of August, its annualised rate is now just 6.6%.  The Central Bank has said that it intends to keep its key rate 3% above the annualised rate of inflation for the foreseeable future, so that with annualised inflation running at 6.7% it had the space to announce this rate cut.

However that is where the good news stops.  The Central Bank has signalled that it intends no more cuts to its key rate this year, meaning that the earliest possible date for a further rate cut will not be before January next year.  The Central Bank also says that it will maintain what it calls its “moderately tight monetary policy” – a policy which is in fact giving Russia the highest real interest rates of any major economy in the world – throughout 2017 and indeed beyond.

Here in its own words is the Central Bank’s guidance from its own press release

“On 16 September 2016, the Bank of Russia Board of Directors decided to reduce the key rate from 10.50 to 10.00% p.a. given the inflation slowdown, in line with the forecast, decrease in inflation expectations and unstable economic activity. However, for the trend towards sustainable decline in inflation to strengthen, according to the Bank of Russia’s estimates, the current value of the key rate needs to be maintained till end-2016 with its further possible cuts in 2017 Q1-Q2. Considering the decision made and persistent moderately tight monetary policy, the annual consumer price growth will stand at 4.5% in September 2017 and will then go down to the 4% target in late 2017. When making its key rate decisions in the coming months, the Bank of Russia will assess inflation risks alongside economy and inflation dynamics’ consistence with the baseline forecast.”

The Central Bank admits the market is expecting cuts in the key rate to take place faster, and it even brags that it intends to cut its key rate more slowly than the market expects. 

Its rationale is that the market still expects inflation at the end of next year to be higher than 4%, which is the Central Bank’s target.  However the Central Bank says it is determined, come what may, to achieve its target, which is why it is going to keep its key rate higher than the market expects

“The Bank of Russia expects that the decision made and maintenance of the key rate at the level it reached will bring down inflation expectations. At present, the structure of market interest rates by maturity and survey findings indicate that, in contrast to the Bank of Russia, market players forecast a faster drop in interest rates. Additionally, their end-2017 inflation forecasts exceed the 4% target of the central bank. In reality, the decrease of nominal rates has a limited capacity, and the economy will maintain moderately tight monetary conditions for quite a long period of time. This is implied by the need to keep positive real interest rates at the level supporting demand for credit that does not raise inflationary pressure and keeps incentives for saving.”

In what is the single most extraordinary paragraph in the entire press release, the Central Bank admits that Russia will only achieve 1% growth next year, but denies that this has anything to do with its “moderately tight monetary policy”

“Persistent revival in production activity is still unstable and patchy across industries and regions. According to Bank of Russia estimates, the moderately tight monetary conditions do not hamper recovery in economy, whereas the main obstacles are caused by structural effects. The labour market tries to adjust to new economic conditions, and the unemployment remains stable and low. Import substitution steps up and non-commodity exports expand for certain items. Industry, including technology-intensive production types, discovers new opportunities for growth. Nonetheless, they fail to ensure an overall robust positive production dynamics. At the same time, certain industries stagnate or show slowdown in output growth, while investment continues to contract. More time is needed for positive trends to develop and get rooted.”

(bold italics added)

This is a fantastic claim, and by making it the Central Bank undermines its own credibility.  Quite simply, it is absurd to say that high real interest rates – currently the highest real interest rates of any major economy in the world – are not going to impact on growth. 

Moreover the Guidelines the Central Bank published in November last year explaining its monetary policy shows that the Central Bank is fully aware of the fact.  As the Central Bank knows the reason output is struggling to rise is because of low rates of consumption and falling investment. 

The Central Bank’s press statement actually refers to the fact that “investment continues to contract” (see above).  This is what the Central Bank said in its Guidelines about the effect of interest rates on levels of consumption, investment and inflation

“All things being equal, a downturn in interest rates stimulates lending, helps increase consumption, and leads to investment growth, but inflationary pressure can also increase. By contrast, high interest rates contribute to growth in savings and constrain lending and investment activity, but reduce inflationary pressure.”

(bold italics added)

Yet the Central Bank would have us believe that the high interest rates it is imposing, which in its Guidelines it admits “all things being equal” cause consumption and investment to fall, are not the reason why in Russia consumption and investment are continuing to fall!

What is little understood – and is scarcely ever said – about the present state of Russia’s economy is that though the underlying rate of inflation is now running at 5-6%, which is below its pre-devaluation level, interest rates are higher than they were before the devaluation, and that despite the recent cuts in the Central Bank’s key rate real interest rates in Russia are actually rising. 

This chart shows movements in the Central Bank’s key rate since 2013, the year in which Nabiullina was appointed Chairman of the Central Bank

russian-interest-rate-chart

In 2013, at the time Nabiullina took over as Chairman of the Central Bank, and before she started raising interest rates in 2014, the Central Bank’s key rate was below 6% in a year when annual inflation was 6.48%.  Today she intends to hold the key rate at 10% despite the government’s forecast that inflation this year will be 5.7-5.9%.

Annual inflation in Russia was in double figures in every single year post 1991 up to the crisis year of 2009 save for 2006, when it briefly dipped to 9.02%.  Inflation was in double figures throughout the period 1998 to 2008, when Russia was regularly achieving annual growth rates of 7% and more.

Inflation fell from double figures to single figures in 2009, and has been in single figures ever since save for the brief period of the inflation spike of 2014 to 2015, which was caused by the one-off factor of the devaluation of the rouble in 2014, which caused inflation to rise back into double figures in 2014 and 2015.

This period of single figure inflation since 2009 is the same period during which Russia’s growth rate has fallen from the annual rate of 7% it was achieving before the 2008 crisis to 4.3% in 2011, 3.5% in 2012, and 1.3% in 2013.

In other words there is a direct correlation between the decline in Russia’s growth rate post 2008, and the fall in inflation which has taken place since then – and the rise in interest rates which has happened to achieve it. 

To see how see this World Bank graph which shows movements of real as opposed to nominal interest rates in Russia since 1991.

Russia experienced negative real interest rates from the 1998 crisis until the 2008 crisis.  During the period of the 2008 crisis real interest rates briefly surged into high positive territory as part of the government’s anti-crisis measures.

They then fell back again into negative territory directly after the 2008 crisis was overcome as the Central Bank and the government looked for ways to support the recovery.  However since 2011, as the Central Bank and the government have become more focused on inflation reduction, they have been rising steadily, turning positive in 2012, and remaining positive ever since, even during the period of the 2014-2015 inflation spike when they might have been expected to go negative.

Since the end of the inflation spike in mid 2015, and despite the round of key rate cuts Nabiullina has announced since January 2015, they have been rising again.

Prior to 2008 high growth was the priority, causing the Central Bank to keep real interest rates negative and to increase the money supply in order to sustain growth and to prevent over-rapid appreciation of the rouble in conditions of rising oil prices.  The result was double digit inflation in every year between 1998 and 2008, apart from the brief dip in 2006. 

Since recovery from the 2008-2009 crisis the priority has been inflation reduction, with monetary policy being tightened steadily in order to choke off inflation.  The result is that inflation fell into single figures after 2009, and apart from the short period of the 2014-2015 inflation spike has remained so ever since, and is now falling further.   

Since Nabiullina became Chairman the Central Bank has taken the policy a whole step further, tightening monetary policy even more, so that it is now significantly tighter than it was even during the post-recovery period of 2011-2013 and before the 2014 devaluation, despite the fact that inflation is now actually below the level it was in that period.

In other words Nabiullina and the Central Bank – and indeed the whole government – are using the 2014-2015 inflation spike to give themselves political cover to carry out a policy of monetary tightening the likes of which post-Soviet Russia has not seen since Putin became President.  This objective is to bring inflation down to 4% by late 2017 in order to achieve the long term results I discussed in my previous article

As for the famous ‘structural factors’ about which we hear so much, the Central Bank’s latest press release shows what they really are: an alibi conjured up by the Central Bank and the government so they can pretend that the sharp fall in the economy’s growth rate caused by their own anti-inflation policy and the high real interest rates they are imposing has nothing to do with them. 

That is unless inflation is the ‘structural factor’ which they see as limiting growth in the long term – something which it might be reasonable to say, but which for some reason no-one ever does.

In truth the wonder is that despite interest rates being so high there is any growth in the Russian economy at all, especially as there is no countervailing fiscal stimulus from the budget to offset Nabiullina’s “moderately tight monetary policy”. 

On the contrary – and though you would never know it from the way some people talk – since the start of the recession budget spending has actually been cut, so that coming out of recession Russia’s federal budget deficit in the first 8 months of this year was just 2.9% of GDP.

There are of course many people who find this policy approach commendable.  Reducing inflation to 4% is a worthy aim, and over time it may – and indeed probably will – achieve the good results people like Nabiullina and Kudrin say it will.  I must however say that I can think of no other Central Bank or government in any other G20 economy which in the same conditions would behave in this way. 

At a time when Russia has suffered a recession any other G20 Central Bank or government finding itself in such a position would surely focus on ending the recession, not on further reducing inflation from what is by Russian standards an already historically low level. 

This would be especially so given that the moderate loosening of monetary policy this would call for would be most unlikely to compromise the anti-inflation policy in any serious way.  At worst it might delay achievement of the 4% by a few months, or perhaps a year.

Russia however is different.  With unemployment very low at 5.7% at a time when the country’s labour force participation rate is at an unprecedentedly high 70%, and with political and macroeconomic conditions stable, the Central Bank and the government obviously feel they have the political and economic space to see the policy through, and it seems they are determined to see it through come what may.   Not for nothing is Nabiullina being called “the most orthodox Central Banker in Europe”. 

As for Putin, as I said in my previous article I have no doubt he supports the policy.  With the political situation in Russia stable and his popularity at stratospheric levels, he is moreover under no real pressure to change it.  If only for that reason I don’t expect the policy to change.

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Curious Bedfellows: The Neocon And Progressive Alliance To Destroy Donald Trump

The neocon metamorphosis is nearly complete as many of the neocons, who started out as Democrats, have returned home, where they are being welcomed for their hardline foreign policy viewpoint.

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Authored by Philip Giraldi via OffGuardian.com:


The Roman poet Ovid’s masterful epic The Metamorphoses includes the memorable opening line regarding the poem’s central theme of transformation. He wrote In nova fert animus mutatas dicere formas corpora, which has been translated as “Of shapes transformed to bodies strange, I purpose to entreat…”

Ovid framed his narrative around gods, heroes and quasi-historical events but if he were around today, he would no doubt be fascinated by the many transformations of the group that has defined itself as neoconservative.The movement began in a cafeteria in City College of New York in the 1930s, where a group of radical Jewish students would meet to discuss politics and developments in Europe. Many of the founders were from the far left, communists of the Trotskyite persuasion, which meant that they believed in permanent global revolution led by a vanguard party. The transformation into conservatives of a neo-persuasion took place when they were reportedly “mugged by reality” into accepting that the standard leftist formulae were not working to transform the world rapidly enough. As liberal hawks, they then hitched their wagon to the power of the United States to bring about transformation by force if necessary and began to infiltrate institutions like the Pentagon to give themselves the tools to achieve their objectives, which included promotion of regime change wars, full spectrum global dominance and unconditional support for Israel.

The neocons initially found a home with Democratic Senator Henry “Scoop” Jackson, but they moved on in the 1970s and 1980s to prosper under Ronald Reagan as well as under Democrat Bill Clinton. Their ability to shape policy peaked under George W. Bush, when they virtually ran the Pentagon and were heavily represented in both the national security apparatus and in the White House. They became adept at selling their mantra of “strong national defense” to whomever was buying, including to President Obama, even while simultaneously complaining about his administration’s “weakness.”

The neoconservatives lined up behind Hillary Clinton in 2016, appalled by Donald Trump’s condemnation of their centerpiece war in Iraq and even more so by his pledge to end the wars in Asia and nation-building projects while also improving relations with the Russians. They worked actively against the Republican candidate both before he was nominated and elected and did everything they could to stop him, including libeling him as a Russian agent.

When Trump was elected, it, therefore, seemed that the reign of the neocons had ended, but chameleonlike, they have changed shape and are now ensconced both in some conservative as well as in an increasing number of progressive circles in Washington and in the media. Against all odds, they have even captured key posts in the White House itself with the naming of John Bolton as National Security Adviser and Mike Pompeo as Secretary of State. Bolton’s Chief of Staff is Fred Fleitz, a leading neocon and Islamophobe while last week Trump added Iran hawk Richard Goldberg to the National Security Council as director for countering Iranian weapons of mass destruction. Goldberg is an alumnus of the Foundation for Defense of Democracies, which is the leading neocon think tank calling incessantly for war with Iran.

Meanwhile, the neocon metamorphosis is nearly complete as many of the neocons, who started out as Democrats, have returned home, where they are being welcomed for their hardline foreign policy viewpoint. Glenn Greenwald reports that, based on polling of party supporters, the Democrats have gone full-Hillary and are now by far more hawkish than the Republicans, unwilling to leave either Syria or Afghanistan.

The neocon survival and rejuvenation is particularly astonishing in that they have been wrong about virtually everything, most notably the catastrophic Iraq War. They have never been held accountable for anything, though one should note that accountability is not a prominent American trait, at least since Vietnam. What is important is that neocon views have been perceived by the media and punditry as being part of the Establishment consensus, which provides them with access to programming all across the political spectrum. That is why neocon standard-bearers like Bill Kristol and Max Boot have been able to move effortlessly from Fox News to MSNBC where they are fêted by the likes of Rachel Maddow. They applauded the Iraq War when the Establishment was firmly behind it and are now trying to destroy Donald Trump’s presidency because America’s elite is behind that effort.

Indeed, the largely successful swing by the neocons from right to left has in some ways become more surreal, as an increasing number of progressive spokesmen and institutions have lined up behind their perpetual warfare banner. The ease with which the transformation took place reveals, interestingly, that the neocons have no real political constituency apart from voters who feel threatened and respond by supporting perpetual war, but they do share many common interests with the so-called liberal interventionists. Neocons see a global crisis for the United States defined in terms of power while the liberals see the struggle as a moral imperative, but the end result is the same: intervention by the United States. This fusion is clearly visible in Washington, where the Clintons’ Center for American Progress (CAP) is now working on position papers with the neoconservative American Enterprise Institute (AEI).

One of the most active groups attacking President Trump is “Republicans for the Rule of Law,” founded by Bill Kristol in January 2018, as a component of Defending Democracy Together(DDT), a 501(c)4 lobbying group that also incorporates projects called The Russia Tweets and Republicans Against Putin. Republicans Against Putin promotes the view that President Trump is not “stand[ing] up to [Vladimir] Putin” and calls for more aggressive investigation of the Russian role in the 2016 election.

DDT is a prime example of how the neoconservatives and traditional liberal interventionists have come together as it is in part funded by Pierre Omidyar, the billionaire co-founder of eBay who has provided DDT with $600,000 in two grants through his Democracy Fund Voice, also a 501(c)4. Omidyar is a political liberal who has given millions of dollars to progressive organizations and individuals since 1999. Indeed, he is regarded as a top funder of liberal causesin the United States and even globally together with Michael Bloomberg and George Soros. His Democracy Fund awarded $9 million in grants in 2015 alone.

Last week, the Omidyar-Kristol connection may have deepened with an announcement regarding the launch of the launch of a new webzine The Bulwark, which would clearly be at least somewhat intended to take the place of the recently deceased Weekly Standard. It is promoting itself as the center of the “Never Trump Resistance” and it is being assumed that at least some of the Omidyar money is behind it.

Iranian-born Omidyar’s relationship with Kristol is clearly based on the hatred that the two share regarding Donald Trump.

Omidyar has stated that Trump is a “dangerous authoritarian demagogue… endorsing Donald Trump immediately disqualifies you from any position of public trust.”

He has tweeted that Trump suffers from “failing mental capacity” and is both “corrupt and incapacitated.”

Omidyar is what he is – a hardcore social justice warrior who supports traditional big government and globalist liberal causes, most of which are antithetical to genuine conservatives. But what is interesting about the relationship with Kristol is that it also reveals what the neoconservatives are all about. Kristol and company have never been actual conservatives on social issues, a topic that they studiously avoid, and their foreign policy is based on two principles: creating a state of perpetual war based on fearmongering about foreign enemies while also providing unlimited support for Israel. Kristol hates Trump because he threatens the war agenda while Omidyar despises the president for traditional progressive reasons. That hatred is the tie that binds and it is why Bill Kristol, a man possessing no character and values whatsoever, is willing to take Pierre Omidyar’s money while Pierre is quite happy to provide it to destroy a common enemy, the President of the United States of America.

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Nancy Pelosi tries to deplatform U.S. President Trump over the wall (Video)

The Duran – News in Review – Episode 170.

Alex Christoforou

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In response to Pelosi’s disgusting act of censorship, Trump trolled the Speaker of the House in epic fashion by forcing the cancellation of a trip to Afghanistan, Brussels and Egypt by Nancy Pelosi and her massive entourage.

In a letter addressed to Pelosi, U.S. President Trump told House Speaker Nancy Pelosi…

“I am sorry to inform you that your trip to Brussels, Egypt, and Afghanistan has been postponed. We will reschedule this seven-day excursion when the Shutdown is over.”

“I am sure you would agree that postponing this public relations event is appropriate.”

According to a congressional aide, Pelosi and several other politicians were already on buses preparing to leave the U.S. Capitol when the U.S. President cancelled their trip.

Trump suggested that Pelosi fly commercial to Afghanistan and elsewhere should she wish.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss how Nancy Pelosi is trying to censor Trump and prevent the U.S. President from delivering the State of the Union to the American people, in what is clearly another liberal left deplatforming ploy.

Instead of debating the issues about the wall and immigration with fact, logic, and policy positions, Pelosi (out of fear) is trying to silence Trump and squash debate and political discourse.

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Via The Gateway Pundit

Speaker Nancy Pelosi (D-CA) sent a letter to President Donald Trump on Wednesday asking him to postpone the State of the Union Address to a Joint Session of Congress scheduled for January 29.

Pelosi cited security concerns over the partial government shutdown.

Pelosi said both the U.S. Secret Service and the Department of Homeland Security have not been funded for 26 days now – with critical departments hamstrung by furloughs. Therefore, they would not be ready for the speech.

Pelosi posted her letter to Trump on Twitter, saying, “Today, I wrote to  recommending that we delay the State of the Union until after government re-opens, as the , the lead federal agency for  security, faces its 26th day without funding.” (Text version of letter below tweet.)

The Department of Homeland Security refuted the Speaker’s claims — The Secret Service is ready for the SOTU.

And on Thursday FOX News reported that Speaker Pelosi was using “all kinds of security” manpower for her pricey trip with Democrats to Belgium and Afghanistan.

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BuzzFeed pushes fake Michael Cohen news, as real news breaks on HUGE conspiracy against Trump at FBI and DOJ (Video)

The Duran – News in Review – Episode 169.

Alex Christoforou

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According to Zerohedge, in an almost unprecedented event – having rarely commented on stories related to the special counsel’s investigation – Robert S. Mueller III’s office put out a statement firmly disputing the reporting of the news site BuzzFeed reported that the president instructed his personal attorney to lie to Congress about his push for a Moscow real estate project

BuzzFeed’s description of specific statements to the Special Counsel’s Office, and characterization of documents and testimony obtained by this office, regarding Michael Cohen’s Congressional testimony are not accurate,” the special counsel’s office said.

As The Hill reports, BuzzFeed had released a statement earlier Friday defending the reporters behind the story and saying that it “stands by this story 100%,” and for his part, Cohen adviser Lanny Davis refused to confirm or deny the report during an interview with MSNBC on Friday afternoon.

President Trump retweeted a few social media reactions…

And then made his own views clear:

Meanwhile the real election collusion bombshell had nothing to do with Russia, Moscow hotels, or Michael Cohen, and everything to do with bullet proof evidence that DOJ official, Bruce Ohr, warned all the higher-ups at the FBI and DOJ (Comey, Rosenstein, McCabe, etc…) that the Steele dossier was connected to Hillary Clinton, and was extremely biased against Donald Trump.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss how BuzzFeed pushed out a clear, fake propaganda story on Trump, Cohen, and more stupidity about Moscow hotel deals, as real reporter, John Solomon broke a massive story, with solid evidence and facts, that show the FBI and DOJ knew that the Steele dossier was a complete work of fiction, and knowingly hide that fact from FISA courts.

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Authored by John Solomon, via The Hill

When the annals of mistakes and abuses in the FBI’s Russia investigation are finally written, Bruce Ohr almost certainly will be the No. 1 witness, according to my sources.

The then-senior Department of Justice (DOJ) official briefed both senior FBI and DOJ officials in summer 2016 about Christopher Steele’s Russia dossier, explicitly cautioning that the British intelligence operative’s work was opposition research connected to Hillary Clinton’s campaign and might be biased.

Ohr’s briefings, in July and August 2016, included the deputy director of the FBI, a top lawyer for then-Attorney General Loretta Lynch and a Justice official who later would become the top deputy to special counsel Robert Mueller.

At the time, Ohr was the associate deputy attorney general. Yet his warnings about political bias were pointedly omitted weeks later from the Foreign Intelligence Surveillance Act (FISA) warrant that the FBI obtainedfrom a federal court, granting it permission to spy on whether the Trump campaign was colluding with Russia to hijack the 2016 presidential election.

Ohr’s activities, chronicled in handwritten notes and congressional testimony I gleaned from sources, provide the most damning evidence to date that FBI and DOJ officials may have misled federal judges in October 2016 in their zeal to obtain the warrant targeting Trump adviser Carter Page just weeks before Election Day.

They also contradict a key argument that House Democrats have made in their formal intelligence conclusions about the Russia case.

Since it was disclosed last year that Steele’s dossier formed a central piece of evidence supporting the FISA warrant, Justice and FBI officials have been vague about exactly when they learned that Steele’s work was paid for by the law firm representing the Clinton campaign and the Democratic National Committee (DNC).

A redacted version of the FISA application released last year shows the FBI did not mention any connection to the DNC or Clinton. Rather, it referred to Steele as a reliable source in past criminal investigations who was hired by a person working for a U.S. law firm to conduct research on Trump and Russia.

The FBI claimed it was “unaware of any derogatory information” about Steele, that Steele was “never advised … as to the motivation behind the research” but that the FBI  “speculates” that those who hired Steele were “likely looking for information to discredit” Trump’s campaign.

Yet, in testimony last summer to congressional investigators, Ohr revealed the FBI and Justice lawyers had no need to speculate: He explicitly warned them in a series of contacts, beginning July 31, 2016, that Steele expressed biased against Trump and was working on a project connected to the Clinton campaign.

Ohr had firsthand knowledge about the motive and the client: He had just met with Steele on July 30, 2016, and Ohr’s wife, Nellie, worked for Fusion GPS, the same firm employing Steele.

“I certainly told the FBI that Fusion GPS was working with, doing opposition research on Donald Trump,” Ohr told congressional investigators, adding that he warned the FBI that Steele expressed bias during their conversations.

“I provided information to the FBI when I thought Christopher Steele was, as I said, desperate that Trump not be elected,” he added. “So, yes, of course I provided that to the FBI.”

When pressed why he would offer that information to the FBI, Ohr answered: “In case there might be any kind of bias or anything like that.” He added later, “So when I provided it to the FBI, I tried to be clear that this is source information, I don’t know how reliable it is. You’re going to have to check it out and be aware.”

Ohr went further, saying he disclosed to FBI agents that his wife and Steele were working for the same firm and that it was conducting the Trump-Russia research project at the behest of Trump’s Democratic rival, the Clinton campaign.

“These guys were hired by somebody relating to, who’s related to the Clinton campaign and be aware,” Ohr told Congress, explaining what he warned the bureau.

Perkins Coie, the law firm that represented both the DNC and the Clinton campaign during the 2016 election, belatedly admitted it paid Fusion GPS for Steele’s work on behalf of the candidate and party and disguised the payments as legal bills when, in fact, it was opposition research.

When asked if he knew of any connection between the Steele dossier and the DNC, Ohr responded that he believed the project was really connected to the Clinton campaign.

“I didn’t know they were employed by the DNC but I certainly said yes that they were working for, you know, they were somehow working, associated with the Clinton campaign,” he answered.

“I also told the FBI that my wife worked for Fusion GPS or was a contractor for GPS, Fusion GPS.”

Ohr divulged his first contact with the FBI was on July 31, 2016, when he reached out to then-Deputy Director Andrew McCabe and FBI attorney Lisa Page. He then was referred to the agents working Russia counterintelligence, including Peter Strzok, the now-fired agent who played a central role in starting the Trump collusion probe.

But Ohr’s contacts about the Steele dossier weren’t limited to the FBI. He said in August 2016 — nearly two months before the FISA warrant was issued — that he was asked to conduct a briefing for senior Justice officials.

Those he briefed included Andrew Weissmann, then the head of DOJ’s fraud section; Bruce Swartz, longtime head of DOJ’s international operations, and Zainab Ahmad, an accomplished terrorism prosecutor who, at the time, was assigned to work with Lynch as a senior counselor.

Ahmad and Weissmann would go on to work for Mueller, the special prosecutor overseeing the Russia probe.

Ohr’s extensive testimony also undercuts one argument that House Democrats sought to make last year.

When Republicans, in early 2018, first questioned Ohr’s connections to Steele, Democrats on the House Intelligence Committee sought to minimize the connection, insisting he only worked as an informer for the FBI after Steele was fired by the FBI in November 2016.

The memo from Rep. Adam Schiff’s (D-Calif.) team claimed that Ohr’s contacts with the FBI only began “weeks after the election and more than a month after the Court approved the initial FISA application.”

But Ohr’s testimony now debunks that claim, making clear he started talking to FBI and DOJ officials well before the FISA warrant or election had occurred.

And his detailed answers provide a damning rebuttal to the FBI’s portrayal of the Steele material.

In fact, the FBI did have derogatory information on Steele: Ohr explicitly told the FBI that Steele was desperate to defeat the man he was investigating and was biased.

And the FBI knew the motive of the client and did not have to speculate: Ohr told agents the Democratic nominee’s campaign was connected to the research designed to harm Trump’s election chances.

Such omissions are, by definition, an abuse of the FISA system.

Don’t take my word for it. Fired FBI Director James Comey acknowledged it himself when he testified last month that the FISA court relies on an honor system, in which the FBI is expected to divulge exculpatory evidence to the judges.

“We certainly consider it our obligation, because of our trust relationship with federal judges, to present evidence that would paint a materially different picture of what we’re presenting,” Comey testified on Dec. 7, 2018. “You want to present to the judge reviewing your application a complete picture of the evidence, both its flaws and its strengths.”

Comey claims he didn’t know about Ohr’s contacts with Steele, even though his top deputy, McCabe, got the first contact.

But none of that absolves his FBI, or the DOJ for that matter, from failing to divulge essential and exculpatory information from Ohr to the FISA court.

John Solomon is an award-winning investigative journalist whose work over the years has exposed U.S. and FBI intelligence failures before the Sept. 11 attacks, federal scientists’ misuse of foster children and veterans in drug experiments, and numerous cases of political corruption. He is The Hill’s executive vice president for video.

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