Although the BRICS opted to use the dollar as the currency for its new development bank, the paramount position of the dollar as the world’s reserve currency nonetheless faces substantial challenges. In addition to reports of Russia and China dumping large amounts of its dollar holdings, many countries are opting to replace the dollar’s world reserve currency status. China and South Korea, announced an agreement for the creation of a market for direct trading of the yuan and won, their respective currencies. In Chinese President Xi Xinping’s visit to South Korea, a memorandum of understanding (MOU) between China’s central bank and the Bank of Korea to create a yuan clearing system was signed. This Sino-Korean agreement was by no means alone. A few days earlier the French Central bank also signed an MOU with China establishing a yuan payment system for clearing and settlement in Paris. China also signed similar MOU with Germany and Great Britain earlier.
Notably, France, American ally and NATO country, inveighed against the US dollar’s monopoly in international transactions. French Finance Minister Michel Sapin called for a “rebalancing” of currencies used in global payments. “I think a rebalancing is possible and necessary, not just regarding the euro, but also for the big currencies of the emerging countries, which account for more and more of global trade,” the finance minister told London’s Financial Times. In a lengthy interview to French magazine Investir, the governor of the French National Bank Christian Noyer echoed this sentiment. Noyer explained:
A movement to diversify the currencies used in international trade is inevitable. Trade between Europe and China does not need to use the dollar and may be read and fully paid in euros or renminbi. Walking towards a multipolar world is the natural monetary policy, since there are several major economic and monetary powerful ensembles.
This pointed anti-dollar reorientation from France came as a result of US punitive blackmail over the sale of France’s Mistral ships to Russia—an indication that France would be among European countries hesitant to mimic the US’s aggressively anti-Russian position in tangible terms.
Overall, not only France, but the general European response to the US’s aggressive anti-Russian position and bid for its “isolation” remained tepid. Additionally, Germany, Europe’s biggest economy and de facto leader, approached a rift with the United States. Despite passing symbolic sanctions against Russia in solidarity with the American “Empire of Chaos,” Europe’s overall economic interdependence with Russia, especially in the field of energy, banking, and its exports to Russia, made it reluctant to proceed with deeper sanctions involving the economy.
From the onset of the announcement of unilateral US sanctions, the European business community lobbied to protect Russo-European economic ties. This is typified by Germany’s Siemans traveling to Russia to reaffirm to this partnership. As the New York Times reported, the European business community lobbied “energetically” to “to head off or at least dilute any sanctions,” thereby impeding American efforts for a more aggressive posture against Moscow. As a result, the EU passed no substantial economic sanctions against Russia. Prior to the MH17 disaster 9 European countries opposed the imposition of additional sanctions.
In addition to this tepid response to the US’s call for confrontation, Europe maintained economic cooperation with Russia, and proceeded apace with plans for economic development projects. In Italy Russian businessmen joined the board of major Italian auto tire producing company Pirelli & C. S.p.A., with three representatives of Russian energy giant Rosneft joining its board of directors.
Russia notably continued with its designs for the construction of the South Stream gas pipeline to bypass Ukraine–while Washington labored to derail it. In June Russia and Austria signed an agreement for the development of a joint company to construct the Austrian arm of the $45 billion South Stream project, expected to deliver 32 billion cubic meters of Russian gas to the country. Meanwhile in Serbia, Russia reconciled all issues regarding Serbia’s involvement in South Stream. As a result, the companies South Stream Serbia AG and Russia’s Tsentrgaz signed a contract in Belgrade for the construction of the main section of the pipeline in Serbia with a contract valued at nearly 2.1 billion euros. Italy also reaffirmed its support for the project. Russia and Italy stated they would continue work on South Stream and were ready “to settle all of the issues, including those that concern dialog with the European Commission.” Italian ambassador to Russia Cesare Maria Ragaglini, confirmed in an interview with Interfax news agency that Italy “broadly supports” the South Stream project “both because of the project’s importance in diversifying gas supply routes, and because of Italy’s industrial and technological involvement in the project.”
The Dutch—who had the largest amount of nationals to die in the plane tragedy—also maintained economic ties to Russia despite rhetorically speaking of a “united front” with the US. Ben van Beurden, Chief Executive of Royal Dutch Shell, traveled to Moscow in early April to meet Russian President Putin. The Shell executive reportedly reassured Putin the energy giant would proceed with ambitious plans to expand oil and gas exploitation projects in Russia’s far east, despite Western sanctions. Shell was already partnered with Russian gas giant Gazprom in developing the Sakhalin-2 Project, reputed to be one of the world’s largest oil and gas exploration ventures. Notably, the project was aimed at developing Liquefied Natural Gas (LNG) for South Korean and Japanese markets in direct competition with the US. As part of its anti-Russian strategy, is America’s quixotic ambitions to supplant Russia’s preponderance in the European energy market through its shale gas boondoggle. This is in addition to the US’s Transatlantic Trade and Investment Partnership plan. The MH17 tragedy, blamed on Russia by the West, bolsters this American economic strategy.
In Germany, while Chancellor Angela Merkel engaged in anti-Russian rhetoric, elder statesmen such as former chancellors Gerhard Schroeder and notably Helmut Scmidt, as well as many in the German populace, expressed understanding for the Russian position. Additionally, before the MH17 tragedy, substantial frictions between the US and Germany were manifest. The German-American relationship faced a qualitative deterioration, with scandals over rampant US spying along with Germany’s general unwillingness to pursue stronger antagonism against Moscow for America’s aggrandizement.
A sampling of headlines vis-à-vis German-American relations is instructive. Germany’s Die Welt reported of a German intelligence employee arrested on suspicion of spying for US on the Bundestag NSA committee. NSA agents-turned-whistleblowers testified before a German parliamentary committee investigating America’s wiretapping methods against Germany that the NSA’s approach was “totalitarian.” Die Welt also reported that Germany was the NSA’s main target for spying. Germany’s Der Spiegel referred to the American embassy in Berlin as a “nest of spies” with the rooftop of the embassy apparently having been converted into a listening post. The New York Times reported that Germany canceled its contract with Verizon Communications. “The links revealed between foreign intelligence agencies and firms after the N.S.A. affair show that the German government needs a high level of security for its essential networks,” the German Interior Ministry stated.
In Germany, the constitutional court defines privacy as a basic human right. Thus, the arrogance of American spying is met with opprobrium in Germany, including among politicians. “If the reports are true, then we’re not talking about trifles,” the country’s foreign minister remarked. Meanwhile German President Joachim Gauck offered perhaps the sharpest rebuke stating “one really has to say, enough is enough.” The CIA’s station chief in Germany was subsequently asked to leave the country.
With Germany already having a general aversion to war—augmented with the commonplace notion of “never another war against Russia”—the US’s arrogant spying gave impetus to anti-American sentiment and unwillingness to antagonize Moscow. In truth, Germans, like much of the world, “tend to see the U.S. as a rogue state that poses more of a threat to global security than either Russia or Iran.” With a continuity of American militarism in both the Bush and Obama regimes, Germany was faced with the prospect of reassessing the value ties to America. Although relegated to the status of vassal with limited sovereignty since the postwar period, Germans are loathe to become entangled in America’s confrontations with Russia. Indeed, Germany stands to lose economically while the US would remain relatively insulated.“Germany’s Choice: Will It Be America or Russia?” Germany’s Der Spiegel posited in its July 10th article. It argued: “Following the NSA spying and other political scandals, many Germans want greater independence from the US. But does that mean getting closer to Moscow?” In this context, international relations theorist Immanuel Wallerstein offered:
The basic problem is that the United States is in geopolitical decline and has been for some time. It doesn’t like this. It doesn’t really accept this. It surely doesn’t know how to handle it — that is, minimize the losses to the United States. So it keeps trying to restore what is unrestorable: U.S. leadership (read: hegemony) in the world system. This makes the United States a very dangerous actor…
That is what Europeans in general and now Chancellor Angela Merkel of Germany in particular are realizing. The United States has become a very unreliable partner. So even those in Germany and elsewhere in Europe who are nostalgic for the warm embrace of the “free world” are reluctantly joining the less nostalgic others in deciding how they can survive geopolitically without the United States. And this is pushing them into the logical alternative, a European tent that includes Russia.
As the Germans and the Europeans in general move inexorably in this direction, they have their hesitations. If they can no longer trust the United States, can they really trust Russia? And more important, could they make a deal with the Russians that the Russians would find worthwhile and necessary to observe? You can bet that this is what is being discussed in the inner circles of the German government today and not how to repair the irreparable breach of trust with the United States.
Faced with this pressing question of proceeding lockstep with the American “Empire of Chaos”— intransigently preoccupied with exporting chaos—or tighter partnership with Russia, the MH17 tragedy has doubtless tipped the balance back towards the US. Certainly, before the MH17’s doomed flight, American officials quietly expressed agitation at the languidness of the European response to American calls for sanctions on Russia’s key economic sectors. The New York Times reported, “The Europeans declined to go as far as the United States
.” Following the downing of MH17, Western media pundits began talking of a “game-changer.” As a Reuters editorial comment explained, “While the West has imposed sanctions on Russia over Ukraine, the United States has been more aggressive than the European Union in this respect. Analysts believe the response of Germany and other European powers to the [the MH17 tragedy] — possibly imposing more sanctions — could be crucial in deciding the next phase of the stand-off with Moscow.” The Russo-European cooperation now stands to be upended with European bellicosity becoming as vociferous as the American in the aftermath of MH17.
Washington’s Puppet Kiev Junta Faces Defeat
As the attempt to “isolate” and checkmate Russia faltered, on the ground, Kiev’s armed forces faced tremendous losses and encirclement. As the Russian Foreign Ministry remarked, “The events in Ukraine have not developed the way Washington scripted them.” Mounting awareness of the atrocities of its so-called “ATO” increased as well. Domestically, the palpable human costs of the so-called “ATO” began to mount with the mothers and family members of conscripts staging protests and roadblocks. The Ukrainian economy faced the early stages of neoliberal austerity with it poised to face more dislocation after signing an EU Association agreement.
In early July following the cessation of the faux “ceasefire” plan, the junta’s army escalated attempts at routing anti-Kiev forces by planning to sever them from the Russian border and surround them. The result of this junta assault was defeat. Their designs while operating on a thin line of logistics worked against them. Repeated artillery and grad attacks as well as disorganization left them incapable of further advances. The Kiev junta regime’s forces were hit hard after the Ukrainian 79th and 24th brigades from western Ukraine were concentrated in Zelenopliya between rebel positions in the south east and the Russian border. Facing a barrage of grad rockets fired from the anti-Kiev militias, many of these units were largely annihilated. Available pictures and video showed the remnants of many destroyed vehicles such as battle tanks, APCs, and trucks. The initial casualty count was made out to be 67 killed and 175 wounded Kiev junta forces.
Further, Ukrainian troops subsequently found themselves surrounded and cut off from their resupplies in the so-called “Southern Cauldron.” Attempts to break out of this encirclement were abortive. The journal of Colonel Cassad offers one of the best analyses of the encirclement of junta forces. In his estimation of situation of the Ukrainian troops trapped in the “Southern Cauldron”:
[The] defeat of the junta groups which were advancing on Luhansk and Izvarino, and also the degradation of the South cauldron, became obvious to everybody.
In essence the offensive that started on July 1st and which had decisive goals concluded with a significant defeat, which has a number of signs of a catastrophe. A portion of forces ended up in an operational encirclement and with severed communications. Instead of a united front, the junta forces currently exist as a number of scattered and weakly coordinated groups, which perform some tactical operations which are weakly connected with the joint plan of closing the border and of surrounding Lugansk.
In the junta’s own estimation, “We understand that there are losses. The battle is continuing, our guys are fighting on but it is very hard there so far,” Andriy Lysenko spokesman for the Ukrainian National Security and Defense Council stated. That the junta forces faced devastating losses and desperation was confirmed by a phone call from a Ukrainian solider on the battlefront on post-coup President Porochenko’s own television channel 112. The soldier explained:
I am currently the area of Sverdlovsk, Krasno-Partisansk and Izvarino. There are only 400 of us left out of almost 800.
Since 02:00 am we are being pummeled with Grads. Right now, there was mortar shelling that lasted about two hours. We don’t have anything to respond with. All we have are the two wretched SAUs [Self-Propelled Artillery System]. We are sitting here and taking it. We are sustaining losses. There are dead and wounded. Yesterday there were dead; today there are dead. Yesterday there were wounded; today there are wounded.
There are no reinforcements. There is no food. They got us only 800 … 400 liters of water for four hundred men. It’s just a liter a day per person, or what? And that’s how it is here. And you write that everything is fine and we are attacking Sverdlovsk. We are not fucking attacking – we are retreating for the forth day in a row!
There is no order to withdraw. There are killing us like cannon fodder. They know where we are, but we have no idea who it is that we are fighting against! We can’t see them! They are hitting us and picking us off.
Commander of the 72nd Brigade, he gave the order to stand ground. Colonel Grishenko. Out of one company, a full company, only 35 men are left and only one unit of military equipment. And by protocol, there must be 10 units of equipment and 90 men. Can you imagine our losses? And that’s how we fight here.
Additionally, with the mainline of the Ukrainian armed forces treated as cannon fodder, the human costs of the so-called “ATO” began to mount, especially in the western regions. The mothers and family members of conscripts became increasingly discontent and began calling for an end of the deployment of troops to the eastern region with many even burning conscription writs en masse.
The dramatic downing of MH17 conceals these defeats of the junta forces and redirects attention from the continuing economic dislocation in the country under the Western neoliberal regime–which has only begun. It also burnishes the Kiev regime’s enemy image of Russia which has been its stock-in-trade since seizing power. After all, the reflexive blaming of Russia by the Kiev junta has gone so far as to blame Russia for everything from discontent over austerity—with the Prime Minister claiming those opposed to the austerity regime are Russian FSB agents–to the continued breakdown of law and order and drug production on the Maidan in Kiev. Most notably, the MH17 tragedy legitimizes the junta’s atrocities against the population of the eastern regions under the banner of an “Anti-terrorists Operation.” In fact, the junta forces have already stepped up their atrocities against civilians in Donbass under the so-called “ATO.”
Dangerous Confrontation with Russia
MH17 prompts a qualitative escalation in the US’s ongoing effort to checkmate Russia. First, MH17 initiated a new wave of massive demonization against Russian President Vladimir Putin. In the immediate aftermath of MH17 sensationalist headlines dominated with demagogic titles such as “baby’s death on your conscience,” and “Putin’s victims.” Western press is now inundated with hysterical screeds, including by French warmonger Benard Henri Levy, vilifying Putin as a state sponsor of terrorism (while mounting evidence points to the Kiev junta’s direct culpability). The “liberal” New Republic attempted to compare the shooting down of MH17 to the Lockerbie bombing (falsely attributed to the late Muammar Qaddafi of Libya. New Republic argued, “The plane’s downing is an international incident of no less consequence than the Lockerbie bombing ordered by Muammar Qaddafi in 1988, which transformed someone regarded as an eccentric despot into a lethally dangerous international pariah.” Taken to its logical conclusion, if Putin is akin to Qaddafi, then is the denouement his execution by the West? Doubtless, the escalating infantile celebrity profile demonization campaign against President Putin is preparation for Western public opinion to regard President Putin as “evil.” In fact, echoing the hysterical sentiments of the Kiev junta, corporate media outfit CNN has gone so far as to suggest Putin is literally “evil.”
In this unsubtle epoch of endemic Russophobia, these Manichean characterizations and latest wave of demonization sets the stage for military and strategic escalation. With Russia balking at intervening militarily in eastern Ukraine, the US was deprived of a pretext to justify its increasing militarization and recruitment of Europe expressed through its 1 billion dollar hammer and intensified military exercises on Russia’s peripheries. The strategic and military situation continues to escalate. With Ukraine already a NATO partner, and NATO announcing it will reform the Ukrainian armed forces, it is now poised to receive US military advisers to help direct the junta’s assault against the restive eastern region. The Dutch are also preparing to set the stage for military intervention into eastern Ukraine under the pretext of securing the MH17 crash-site–meaning a direct NATO military presence. In the US Congress the so-called “Russian Aggression Prevention Act” sets the stage for an aggressive escalation in the effort to smash the Russian state via an intensification of all existing vectors of subversion and encirclement. Meanwhile, in Russia public opinion of the United States is unsurprisingly at an all time low. Many circles in Moscow are coming to recognize that confrontation with the West is inexorable.
As the “Empire of Chaos” reeled in defeat, the MH17 tragedy could not have arrived at a more opportune time for its machinations to checkmate the Russian Federation. As the crisis continues to unfold, the US will intensify its efforts to export chaos and cynically use the deaths of the 298 MH17 passengers to do so. Ominously, 100 years ago World War I–the Great War–began. Despite striking parallels to this tragic big power confrontation, the bellicosity in Western Atlanticist circles becomes shriller. Regardless–as many erring adventurers have discovered throughout history–Russia can defend itself and it will.