On Russian/American Relations

I originally posted this on social media last year. I'm rehosting it here with supporting links as a quick reference. 

Contrary to popular belief, the conduct of nations on the international stage is almost never driven by moral considerations, but rather by a shadowy cocktail of money and geopolitics. As such when you see the mouthpieces of the ruling class begin to demonize a foreign country, the first question in your mind should always be, “what is actually at stake here?” For some time now, Russia, China, Iran, and Syria have been in the crosshairs. Once you understand why, the events unfolding in the world right now will make much more sense.


The US dollar is a unique currency. In fact, its current design and its relationship to geopolitics is unlike any other in history. Though it has been the world reserve currency since 1944, this is not what makes it unique. Many currencies have held the reserve status often over the centuries, but what makes the dollar unique is the fact that since the early 1970s, it has been, with a few notable exceptions, the only currency used to buy and sell oil on the global market.


Prior to 1971, the US dollar was bound to the gold standard, at least officially according to the IMF. By 1966 foreign central banks held 14 billion US dollars, however, the United States had only 3.2 billion dollars and gold allocated to cover foreign holdings. Translation: the Federal Reserve was printing more money than it could actually back. The result was rampant inflation and a general flight from the dollar.


In 1971, in what later came to be called the Nixon shock, President Nixon removed the dollar from the gold standard completely. At this point the dollar became a pure debt-based currency. With debt-based currencies, money is literally loaned into existence. Approximately seventy percent of the money in circulation is created by ordinary banks which are allowed to loan out more than they actually have in their accounts. The rest is created by the Federal Reserve which loans money that they don't have mostly to the government. It’s kind of like writing hot checks except it's legal for banks. This practice, which is referred to as fractional reserve banking, is supposedly regulated by the Federal Reserve, an institution which just happens to be owned and controlled by a conglomerate of banks, and no agency or branch of government regulates the Federal Reserve.


Now, to make things even more interesting, these fractional reserve loans have interest attached but the money to pay that interest doesn't exist in the system. As a result, there is always more total debt than there is money in circulation, and, in order to stay afloat, the economy must grow perpetually. This is obviously not sustainable. Now you might be wondering how the dollar has maintained such a dominant position on the world stage for over 40 years if it's really little more than an elaborate Ponzi scheme. Well, this is where the dollar meets geopolitics.


In 1973, under the shadow of the artificial OPEC oil prices, the Nixon administration began secret negotiations with the government of Saudi Arabia to establish what came to be referred to as the petrodollar recycling system. Under the arrangement, the Saudis would only sell their oil in US dollars and would invest a majority of their excess oil profits into US banks and capital markets. The IMF would then use this money to facilitate loans to oil importers who were having difficulties covering the increase in oil prices. The payments and interest on these loans would of course be denominated in US dollars. This agreement was formalized in The US-Saudi Arabian Joint Commission on Economic Cooperation put together by Nixon’s Secretary of State Henry Kissinger in 1974. Another document released by the Congressional Research Service, revealed that these negotiations had an edge to them, as US officials were openly discussing the feasibility of seizing oil fields in Saudi Arabia militarily. The system was expanded to include the rest of OPEC by 1975.


Though presented as a buffer to the recessionary effects of rising oil prices, this arrangement had a hidden side effect: it removed the traditional restraints on U.S. monetary policy. The Federal Reserve was now free to increase the money supply at will. The ever-increasing demand for oil would prevent a flight from the dollar while distributing the inflationary consequences across the entire planet. The dollar went from being a gold-backed currency to an oil back currency. It also became America's primary export. Did you ever wonder how the US economy has been able to stay afloat while running multi-billion dollar trade deficits for decades? Did you ever wonder how it is that the U.S. holds such a disproportionate amount of the world's wealth when seventy percent of the US economy is consumer-based? In the modern era, fossil fuels make the world go round. They have become integrated into every aspect of civilization; agriculture, transportation, plastics, heating, defense, and medicine, and demand just keeps growing and growing. As long as the world needs oil, and as long as oil is only sold in US dollars, there will be a demand for dollars, and that demand is what gives the dollar its value.


For the United States, this is a great deal. Dollars go out either as paper or digits in a computer system, and real, tangible products and services come in. However, for the rest of the world, it's a very sneaky form of exploitation. Having global trade predominantly in dollars also provides Washington with a powerful financial weapon through sanctions. This is due to the fact that most large-scale dollar transactions are forced to pass through the US.


This petro-dollar system stood unchallenged until September of 2000 when Saddam Hussein announced his decision to switch Iraq's oil sales off of the dollar to Euros. This was a direct attack on the dollar and easily the most important geopolitical event of the year, but only one article in the Western media even mentioned it. In the same month that Saddam announced he was moving away from the dollar, an organization called The Project for a New American Century, of which Dick Cheney just happened to be a member, released a document entitled “Rebuilding America's Defenses: Strategy, Forces and Resources for the New Century”. This document called for massive increases in U.S. military spending and a much more aggressive foreign policy in order to expand US dominance worldwide. However, the document lamented that achieving these goals would take many years “absent some catastrophic and catalyzing event – like a new Pearl Harbor.” One year later they got it


Riding the emotional reaction to 9/11, the Bush administration was able to invade Afghanistan and Iraq and passed the Patriot Act without any significant resistance. There were no weapons of mass destruction in Iraq, and this wasn't a question of bad intelligence. This was a cold, calculated lie, and the decision to invade was made in full knowledge of the disaster which would follow. They knew exactly what was going to happen, but in 2003 they did it anyway. Once Iraqi oil fields were under US control, oil sales were immediately switched back to the dollar. Mission accomplished.


Soon after the invasion of Iraq, the Bush administration attempted to extend these wars to Iran. Supposedly the Iranian government was working to build a nuclear weapon. After the Iraq fiasco, Washington's credibility was severely damaged. As a result, they were unable to muster international or domestic support for an intervention. Their efforts were further sabotage by elements within the CIA and Mossad who came forward to state that Iran had not even made the decision to develop nuclear weapons, much less begin an attempt. However the demonization campaign against Iran continued even into the Obama administration. Why?


Well, might it have something to do with the fact that since 2004 Iran has been in the process of organizing an independent oil bourse (a market organized for the purpose of buying and selling securities, commodities, options and other investments)? They were building their own oil market, and it wasn't going to be tied to the dollar. The first shipments of oil were sold through this market in July of 2011.


Unable to get the war that they wanted, the US used the UN to impose sanctions against Iran. The goal of the sanctions was to topple the Iranian regime. While this did inflict damage on the Iranian economy, the measures failed to destabilize the country. This was due in large part to Russia's assistance in bypassing U.S. banking restrictions.


In February of 2009, Muammar Qaddafi was named chairman of the African Union. He immediately proposed the formation of a unified state with a single currency. It was the nature of that proposed currency that got him killed. In March of 2009 the African Union released a document entitled “Towards a Single African Currency.” Pages 106 and 107 of that document specifically discuss the benefits and technicalities of running the African central bank under a gold standard. On page 94, it explicitly states that the key to the success of the African monetary union would be the eventual linking of a single African currency to the most monetary of all commodities: gold. Note that the page number is different on other versions of the document that they released.


In 2011, CIA moved into Libya and began backing militant groups in their campaign to topple Qaddafi, and the U.S. and NATO pushed through and stretched the U.N.-authorized no-fly resolution to tip the balance with airstrikes. The presence of Al-Qaeda extremists among these rebel fighters was swept under the rug. Libya, like Iran and Iraq, had committed the unforgivable crime of challenging the US dollar.


The NATO intervention in Libya segued into a covert war on Syria. The armories of the Libyan government were loaded and the weapons were shipped via Turkey to Syrian rebel groups working to topple Assad. It was already clear at this point that many of these fighters had ties to terrorist organizations. However, the US national security apparatus viewed this as a necessary evil. in fact the Council on Foreign Relations published an article in 2012 stating that, “the influx of jihadis brings discipline, religious fervor, battle experience from Iraq, funding from Sunni sympathizers in the Gulf, and most importantly, deadly results.” In short the FSA needs Al-Qaeda now. Let's be clear here: the US put ISIS in power.


In 2013, these same Al-Qaeda-linked Syrian rebels launched two sarin gas attacks. This was an attempt to frame Assad and muster international support for military intervention. Fortunately they were exposed by UN and Russian investigators, and the push for airstrikes completely fell apart when Russia stepped in to broker a diplomatic solution.


The campaign for regime change in Syria, as in Libya, has been presented in terms of human rights. Obviously this isn't the real motive. In 2009 Qatar put forth a proposal to run a natural gas pipeline through Syria and Turkey to Europe. Assad however rejected this, and in 2011 he forged a pact with Iraq and Iran to run a pipeline eastward, cutting Qatar and Saudi Arabia out of the loop completely. Not surprisingly, Qatar, Saudi Arabia, and Turkey have been the most aggressive regional players in the push to topple the Syrian government.


But why would this pipeline dispute put Syria in Washington's crosshairs? Three reasons: one, this pipeline arrangement will significantly strengthen Iran's position, allowing them to export to European markets without having to pass through any of Washington's allies. This obviously reduces the US government's leverage. Two, Syria is one of Iran's closest allies. Its collapse would inherently weaken Iran. Three, Syria and Iran have a mutual defense agreement, and the US intervention in Syria could open the door to open conflict with Iran.


In February of 2014 this global chess game heated up in a new venue: Ukraine. The real target however was Russia. You see, Russia just happens to be the world's second largest oil exporter, and not only have they been a thorn in Washington’s side diplomatically, but they also opened an energy bourse in 2008 with sales denominated in rubles and gold. This project had been in the works since 2006. They have also been working with China to pull off of the dollar and all of their bilateral trade. Russia has also been in the process of organizing a Eurasian economic Union which includes plans to adopt a common currency unit and which is slated to have its own independent energy market.


Ukraine had been presented with a choice: either join the EU under an association agreement or join the Eurasian Union. The EU insisted that this was an either/or proposition. Ukraine couldn't join both. Russia, on the other hand, asserted that joining both poses no issue. President Yanukovych decided to go with Russia. In response, the US national security apparatus did what it does best, they toppled Yanukovych and installed a puppet government.


Though this all seem to be going well at first, the US quickly lost control of the situation. Crimea held a referendum, and the people voted overwhelmingly to secede from Ukraine and reunify with Russia. The transition was orderly and peaceful. No one was killed, yet the West immediately framed the entire event as an act of Russian aggression, and this became the go-to mantra from that point on.


Crimea is important geo-strategically because of its position in the Black Sea which allows for the projection of naval power into the Mediterranean. It has also been Russian territory for most of recent history. The US has been pushing for Ukraine's inclusion into NATO for years now. Such a movement places US forces right on Russia's border and could have potentially resulted in Russia losing their naval base in Crimea. This is why Russia immediately accepted the results of the Crimean referendum and quickly consolidated the territory.


Meanwhile, in eastern Ukraine, two regions declared independence from Kiev and held referendums of their own, the results of which overwhelmingly favored self-rule. Kiev responded to this with what they referred to as anti-terrorist operations. In practice, this was a massive and indiscriminate shelling campaign which killed thousands of civilians. Apparently killing civilians didn't qualify as aggression to the West. In fact, the IMF explicitly warned the provisional government that they're 17 billion dollar loan package could be in danger if they were not able to put down the uprising in eastern Ukraine.


While the war against eastern Ukraine was raging, elections were held and Petro Poroshenko was elected president. It turns out that Poroshenko was exposed by a leaked diplomatic cable released by WikiLeaks in 2008 as having worked as a mole for the US State

Department since 2006. They referred to him as our “Ukraine insider,” and much of the cable referred to information that he was providing. A separate cable showed that the US knew Poroshenko was corrupt even at that point. Having a puppet in place, however, hasn't turned out to be enough to give Washington the upper hand in this crisis.


What does Washington do when they have no other leverage? They impose sanctions. This isn't a very good strategy when dealing with Russia. In fact, it has already backfired. The sanctions have merely pushed Russia and China into closer cooperation and accelerated Russia’s de-dollarization agenda. And, in spite of the rhetoric this has not led to Russia being isolated. The US and NATO have put a wedge between themselves and Russia but not between Russia and the rest of the world. This new anti-dollar axis goes deeper than economics. These countries understand what's at stake here. This is why, in the wake of the Ukrainian crisis, China has proposed a new Eurasian security pact which would include Russia and Iran.


Consider the implications here as the Obama administration begins bombing in Syria which also has a mutual defense agreement with Iran. This is leading us straight to world war three. The masses may not have figured it out yet, but history will remember it that way. Alliances are already solidifying and a hot war is underway on multiple fronts. If the provocations and proxy wars continue, it's only a matter of time before the big players confront each other directly, and that is a recipe for disaster.