This neat little 10 minute video gives an overview of how NATO evolved into a never-ending military juggernaut that it was not originally intended to be. The video provides footage of Dwight Eisenhower – NATO’s first commander – explaining that if the alliance was still in existence 10 years hence, it would mean that it had failed in its objective.
The video goes over how the alliance expanded after the dissolution of its Soviet counterpart, the Warsaw Pact, and despite promises that it would not expand “one inch east” beyond a unified Germany. The video ends with AP State Department reporter Matt Lee taking then-State Department spokesman John Kirby to task during a press conference for suggesting that it was Russia at NATO’s doorstep when it was NATO that had expanded to Russia’s border. I remember this exchange when it occurred several years ago. It’s an example of what a real journalist is supposed to do: hold those in power to account for their words and actions, not simply be a mindless stenographer.
Beginning yesterday, the city of Moscow lifted most of its Covid-related restrictions. According to TASS:
Moscow Mayor Sergei Sobyanin has lifted most restrictions imposed on city residents due to the coronavirus pandemic, including self-isolation rules and digital travel permits. Hair salons will reopen on June 9, sidewalk cafes, museums and dental clinics on June 16, and restaurants and gyms on June 23. However, the wearing of face masks and gloves in public remains mandatory. The mayor attributed the move to a downward trend in coronavirus cases. Experts consider it to be a political decision stemming from lockdown fatigue, Kommersant writes.
The Moscow Times recently reported that Moscow authorities stated that the date when the first Covid case appeared in the country had been moved back from March to January.
“I don’t know how anyone noticed when [Covid-19] came to Moscow, but in reality it was in mid-to-late January. When China was making its first announcements there … in fact, [Covid-19] was already here,” the Moscow administration’s IT chief Eduard Lysenko told the Khabr news outlet in a YouTube interview Tuesday.
Various media outlets have been reporting since Friday that the U.S. has ordered a draw-down of 9,500 troops from Germany, which would leave around 25,000 remaining. However, German authorities have stated that they have received no formal communication from the U.S. about the troop reduction and their only knowledge of it is via media reports. The removal of U.S. troops is popular with the German public.
Apparently, these reports did not dissuade the Russian military from deploying more troops to its western front on the same day to counter what it sees as intensified and provocative NATO actions near its borders, including the scaled down Defender 2020 exercises that had initially been postponed to the pandemic. Newsweekreported:
The Western Military District press service said Friday that the Separate Guards Motorized Rifle Sevastopol Red Banner Brigade was included in Moscow’s Novomoskovsky Administrative District, joining the Guards Red Banner Tank Army “to perform tasks on ensuring the defense of the Russian Federation in the Western strategic direction,” according to the state-run Tass Russian News Agency.
The motorized rifle units are equipped with “more modern weapons and specialized vehicles,” including the T-90A tanks, BTR-82A armored carriers, BMP-3 combat vehicles, and 9A34 Strela-10 and 2S6M Tunguska air defense systems, the Russian military said.
The moves came just days after Colonel General Sergei Rudskoi of the Russian General Staff slammed “anti-Russian” activities conducted by the U.S. and allied states of the 29-member NATO defense pact near his country’s borders. The largest deployment of U.S. troops in a quarter-century was scaled down due to novel coronavirus concerns in March, but the U.S. still stepped up its presence through other maneuvers.
My first thought on hearing about the removal of troops from Germany is: where are they going? I wouldn’t be shocked to find out that they end up in Poland who would be more than happy to host them. This idea is reinforced by the actions of U.S. diplomats to Germany and Poland last month. As Scott Ritter discussed in an article right afterwards:
Richard Grenell, the US ambassador to Germany and the acting director of national intelligence, put matters into motion by writing an OpEd for the German newspaper Die Welt, criticizing politicians from within Chancellor Angela Merkel’s ruling coalition who were openly calling for the US to withdraw its nuclear weapons from German soil.
Adding fuel to the fire, the US ambassador to Poland, Georgette Mosbacher, tweeted out two days later that “If Germany wants to diminish nuclear capability and weaken NATO, perhaps Poland – which pays its fair share, understands the risks, and is on NATO’s eastern flank – could house the capabilities here.”
Granted, this was specifically in reference to nuclear capabilities but it likely reflects the overall thinking by Washington of possibly shifting military resources around Europe to keep the pressure on Russia. Needless to say, these kinds of actions would not go down well in Moscow.
On a more positive note, there were some signs last week of the beginning of a gradual economic rebound for Russia, including a modest increase in the price of oil. Ben Aris from Business New Europe’s Intellinews reported the following:
Oil prices have also recovered remarkably quickly, driven by optimism over a new OPEC++ production cut deal that will reduce the production of oil by 9.7mn barrels per day (bpd) that was signed on April 13. The price of oil broke back above $40 briefly on June 3, which is once again in the Kremlin’s comfort zone.
So far Russia and most of the other cartel members are sticking to the new deal. Indeed, Saudi Arabia has said that it will cut even more than it committed to in the deal to help prices recover even faster….
…According to the OPEC+ agreement signed in April, production cuts should ease on July 1 from a cumulative 9.7mn bpd to 8mn bpd. The Wall Street Journal reports that Saudi Arabia wants to extend the current 9.7mn bpd quota up until the end of the year, while Russia wants to increase output in July. The two countries reportedly see September as a middle ground and are close to reaching an agreement.
Russia’s official position is now that supply and demand in the oil market could finally be balanced by June or July. That is partly why it is reluctant to extend the OPEC++ production cut deal to the end of the year and wants to ramp up production as early as July. But the Kremlin appears willing to compromise. President Vladimir Putin held talks with Saudi Crown Prince Mohammed bin Salman (MbS) last week and pledged “close co-ordination” between their respective energy ministers. Saudi needs oil prices to be closer to $80 for its budget to balance.
Recovery already feeding through to the capital markets
Step back a moment and mull those changes. With oil prices at $40 Russia Inc. is back in business, as the budget more or less breaks even.
And with the ruble trading at RUB68 it even gains some competitiveness on exports as well as seeing budget revenues (which are denominated in rubles) improve from the increased revenues from the recovering oil price (which are converted from dollars). One of the quirks of the Russian budget is it is actually one of the biggest winners of ruble devaluations, as it gets more rubles to meet its obligations in the budget (which are not adjusted for devaluations), even if those rubles are worth less.
Indeed, Russia closed out the first quarter with a triple surplus – trade ($3.8bn), current account ($1.8bn) and federal budget (0.2%). While the budget will also certainly go into deficit in the second quarter – especially after the government just announced a new RUB7.3 trillion National Recovery Plan – the drain on the RUB9 trillion Russia holds in its National Welfare Fund (NWF) reserve fund to cover budget deficits in times of crisis will be greatly reduced.
That is not to say the economy has not been hurt by the coronacrisis. Russia’s economy will contract by 5% in 2020 and will start to recover at the end of the year, Economic Development Minister Maxim Reshetnikov said in a statement published on May 22.
In the midst of over 40 million people out of work – 1/3 of whom haven’t been able to access unemployment benefits due to dysfunctional application systems – a pandemic and unrest in the streets all over the country, the likes of which hasn’t been seen since the 1960’s, the Democratic Party establishment has decided to respond by trotting out a variation of the completely discredited Russiagate narrative yet again.
During an interview with CNN on May 31st in which former Obama-era National Security Adviser Susan Rice – who’s also in the running as Joe Biden’s VP – provided her opinion on the dynamics behind the George Floyd protests that were heating up throughout the nation. And what grand insight did Ms. Rice offer? Russia done it. Here’s part of the exchange:
“I’m not reading the intelligence today, or these days — but based on my experience, this is right out of the Russian playbook,” Rice, who served as national-security adviser to president Obama, said in a CNN interview on Sunday. “But we cannot allow the extremists, the foreign actors, to distract from the real problems we have in this country that are longstanding, centuries old, and need to be addressed responsibly.”
Anchor Wolf Blitzer responded, “you’re absolutely right on the foreign interference.” Blitzer then asked Rice if she thought the Russians were attempting to “embarrass” the U.S. by “promoting the racial divide in our country.”
“Well we see it all the time, we’ve seen it for years, including on social media where they take any divisive, painful issue . . . and they play on both sides,” Rice said. “I would not be surprised to learn that they have fomented some of these extremists on both sides on social media . . . [or] that they’re funding it in some way, shape, or form.”
Absolutely Incredible: Obama’s Former NSA Susan Rice on CNN talking about the protests and domestic strife
Note that Rice admits she’s not basing this on any actual evidence – “I’m not reading the intelligence today, or these days” – but that she’s basically just spit-balling this ludicrous idea that Russia is behind massive protests involving hundreds of thousands of Americans in every major city in the country and even some smaller ones. Let’s see, I guess that all-powerful and pernicious Putin decided, in the middle of dealing with a public health crisis and economic recession in his own country, that he was going to get into a time machine and create the slave trade, Jim Crow, lynching, and police brutality mixed with a poorly handled economic and health crisis and dilapidated infrastructure in the U.S. Damn, he’s good.
This constant flogging of a phantom Russian conspiracy to destroy the U.S. reminds me of Captain Queeg’s obsessive and paranoid quest to find an elusive key to explain the imaginary theft of a quart of strawberries aboard ship in The Caine Mutiny, ordering his officers to search the entire vessel and all the men to find it.
Here is the scene from the 1954 movie, starring Humphrey Bogart, in which Queeg convinces himself that someone stole a portion of leftover strawberries:
This is comparable to Hillary Clinton and the Democratic Party establishment convincing themselves of a conspiracy to explain their embarrassing loss to Trump in 2016, kicking off the Russiagate scandal.
Here is the scene where Queeg orders his officers to toss the ship in search of an imaginary key he thinks is at the center of an elaborate scheme to break into the icebox and steal the strawberries:
This is the equivalent of the Mueller investigation and the unhinged rantings of Representative Adam Schiff who kept insisting that he was privy to evidence of Trump-Russia collusion. Eventually the Mueller investigation ended with a whimper and not the bang we’d been promised for months. Now that the transcripts of closed-door interviews between Congress and members of the intelligence and security community as well as the CEO of Crowdstrike have been released, we know that Schiff was lying. There was no evidence of collusion or that the DNC had been hacked, much less by Russia. The Democratic Party establishment had no problem turning Washington upside down looking for the symbolic key that would prove their election strawberries had been stolen.
It’s becoming clear how the cynical political class will be shaping the narrative around the George Floyd protests for the upcoming election. The Democrats will blame Russia, while the Republicans blame the radical left (“antifa”). Though they will blame different parties, the bipartisan consensus will conveniently be that they don’t really have to offer anything to meaningfully help the American people – universal health care, a jobs program, UBI, and an end to the wars will be off the table.
Unlike this sad fiasco, The Caine Mutiny was based on good literature and Queeg, as it turns out, really did believe his own paranoid delusions, making him a pitiful character who elicited sympathy rather than the despised ogre he’d seemed throughout the story.
2019 view of Moscow International Business Center. (Dzasohovich, CC BY-SA 4.0, Wikimedia Commons)
By Natylie Baldwin, Originally Published at Consortium News, 6/3/2020
A common response in the Anglo-American media to Russia’s counter-sanctions against agricultural imports from the United States and EU in 2014 was that Russians would go hungry and were, therefore, shooting themselves in the foot. Within a matter of days of the announcement, however, numerous Latin American countries, namely Argentina and Brazil, got in line to fill the gap, as well as China, which started selling produce directly to Russia.
More importantly, according to the Food and Agriculture Organization, Russia ranked as one of the top three producers in the world for a range of agricultural products at the time, from various fruits and vegetables to grains, potatoes and poultry. As of 2018, it was the world’s top exporter of wheat. The government has also had plans in place since 2013 to significantly boost the country’s already respectable production of organic produce from small farms and gardens.
Natural Societyreported in May 2014 that 35 million Russian families are growing an impressive percentage of Russia’s fruits and vegetables on 20 million acres:
According to some statistics, they grow 92% of the entire countries’ potatoes, 77% of its vegetables, 87% of its fruit, and feed 71% of the entire population from privately owned organic farms or house gardens all across the country. These aren’t huge Agro-farms run by pharmaceutical companies; these are small family farms and less-than-an-acre gardens.
By autumn 2017, Vladimir Putin had publicly set a goal for Russia to become the world’s top producer and exporter of organic agriculture. In the summer of 2018, the Russian president signed legislation creating official standards, labeling and certification procedures for organic products produced for commercial sale in Russia that went into effect in 2020. Government support will be available to organic farmers, and a public registry will be created listing certified producers.
The agricultural sanctions created some immediate problems, mainly temporary shortages of some meat products and price increases due to the need to work out infrastructure issues to accommodate imports from countries at greater distances.
But Russians did not go hungry, as I witnessed plenty of food in markets, from street vendors, and in restaurants in all cities I visited during my trips in 2015 and 2017. There was, however, concern over price increases.
Author Sharon Tennison, who has traveled throughout Russia extensively since 1983, reported the general attitude of most Russians toward Western sanctions during her trip to Moscow and St. Petersburg in September 2014:
The general outlook of Russians I spoke with is one of quiet confidence, saying that sanctions will turn out good for Russia in the long run––that Russia must become self-sufficient––remarking that Russia became infatuated with foreign products in the 1990s. At that time they felt Russia didn’t need to manufacture high-end products that they could purchase them from other countries. However, the situation has changed. Today production has become the “in” discussion wherever one goes. The sanctions have helped bring this about. Several Russians remarked that they hoped the sanctions lasted for three years or more, since that would give Russians sufficient time to learn to manufacture formerly imported items themselves. The Russian government is offering financial support to entrepreneurs who are ready to move into consumer production.
Sanctions Imposed
In March of 2014, the U.S. and the European Union (EU) began imposing sanctions on Russia in retaliation for its “annexation” of Crimea. These initial sanctions were largely comprised of asset freezes and visa restrictions on certain Russian officials. As the situation in Eastern Ukraine escalated, with rebels taking over local government buildings and demanding autonomy from what they perceived as a coup government in Kiev, the list of individuals targeted for sanctions grew.
After the downing of the Malaysia Airlines flight MH-17 in July 2014, the west imposed more wide-ranging sanctions, which included several Russian banks as well as the defense and energy sectors. In March of 2018, there were diplomatic “sanctions” (expulsions) for the alleged Skirpal poisoning, which Russia responded to with its own expulsions. That same month, there were business/personal sanctions against a number of Russians for their alleged interference in the 2016 elections.
In order to provide the most accurate and comprehensive assessment of the effect of Western sanctions on Russia over the past five years, University of Birmingham professor Richard Connolly, in his 2018 book, “Russia’s Response to Sanctions: How Western Economic Statecraft is Reshaping Political Economy in Russia,” describes how Russia’s economy actually works in order to provide a contextual framework for understanding the success or failure of the West’s policy. He concluded that the ultimate effect of the sanctions is likely not what was intended by Washington policymakers.
Monument to the Soviet Worker, Moscow, Russia; photo by Natylie S. Baldwin
As of last week, Russian officials claimed that the spread of Covid-19 had stabilized throughout Russia, including in Moscow which has been hit the hardest. But some restrictions would remain in place in the capital until a vaccine was ready, which was estimated to be in July or August.
The coronavirus incidence rate in Russia has decreased by 13 times after lockdowns were imposed and now is about two percent a day, Anna Popova, chief of Russia’s sanitary watchdog, said on Monday.
As of that date, there were 414,878 confirmed cases of the virus and 4,855 deaths.
A new antiviral drug has been approved to treat Covid-19 and will be available later this month according to RT:
On Saturday, the country’s Ministry of Health registered Avifavir, a domestic version of the Japanese drug Favipiravir, which is used against severe forms of influenza. Produced in a joint venture by the Russian Direct Investment Fund (RDIF) and the ChemRar group, the drug could be vitally important in the battle to defeat Covid-19.
“Avifavir is not only the first antiviral drug registered against coronavirus in Russia, but it is also perhaps the most promising drug against Covid-19 in the world,” said Kirill Dmitriev, CEO of the RDIF.
“It was developed and tested in clinical trials in Russia in an unprecedented short period of time, enabling Avifavir to become the first registered drug based on Favipiravir in the world.”
Meanwhile, Putin has ordered that the referendum on the proposed constitutional changes be scheduled for July 1st. The voting might be spread out over a week but no details were provided for how exactly the logistics would work.
A study by a Russian bank revealed that the country’s retail industry took an even bigger than expected hit from the 2-month lockdown, meaning that it will likely take until well into 2021 to recover:
In April, Russia’s retail trade turnover decreased by 23.4% in annual terms, which turned out to be worse than earlier expert forecasts. According to the Alfa Bank report, the steep decline in Russian retail may be due to the low prevalence of online commerce.
Experts interviewed by Nezavisimaya Gazeta noted that this year, retail trade and consumer consumption will not be able to return to pre-pandemic levels. “We expect that at the end of 2020, retail trade turnover may be reduced by 10%-15%,” BCS Premier’s Anton Pokatovich said. In his opinion, pre-coronavirus levels might be reached in the second half or even at the end of 2021.
A Fitch ratings analysis reinforced the idea of a significant economic setback:
Russia’s GDP will contract by 5% this year. Fitch first estimated the pandemic to trim 3.3% off of Russia’s already relatively lackluster growth rate. Next year won’t be enough to replace this year’s loss. Fitch is looking at gains of just 3%, meaning Russia will need 2022 to recover from just around three months of forced economic closures in 2020…
….The Russian Ministry of Economy also expects a 5% economic contraction this year, including 9.5% decline in the second quarter versus a year ago. If lockdowns are lifted and Russians are feeling excited to be out and about, then growth will return next year. Russia’s official projections have the economy growing over 3% for 2022 and 2023. If that looks low, Russia was growing at about half that rate for much of the last two years.
Ben Aris of Intellinews confirmed that the economic numbers for the second quarter – which encompassed most of the lockdown period – took a nosedive. However, he reported some positives that Russia has going for it:
Against the bad news, many of the fundamental macro indicators are still faring well. Inflation has not budged, despite the 20% devaluation in the ruble. And the ruble has only devalued by 20% despite an almost 60% fall in the price of oil. Likewise, Russia has actually managed to add to its international FX reserves, bringing them up to $570bn as of the start of May, while incomes – both nominal and real – were still growing in April. And the banking sector remains in good health, although profits are obviously going to be hurt this year. These results suggest the Russian economy is still fundamentally healthy and although it has come to a stop, not that much fundamental damage has been done so far. If the Kremlin can restart the economy now by lifting the lockdown there is a good chance for a strong rebound in 2021.
