By Yves Smith, Naked Capitalism, 11/20/23

Yves Smith is creator of the influential blog, Naked Capitalism, a top ranked economics and finance blog with over 250,000 unique visitors each month. She is the author of ECONned: How Unenlightened Self Interest Undermined Democracy and Corrupted Capitalism. Smith has been working in and around the financial services industry since 1980 as an investment banker, management consultant, and corporate finance advisor. Smith has appeared, on CNBC, CNN, and FOX Business News, and has written over 40 articles in venues such as The New York Times, Slate, and the Christian Science Monitor. She lives in Manhattan.

Putin and Medvedev recently made statements that took an expansive view of what “Russian lands” in Ukraine amounted to. At least as far as Putin is concerned, what he said at the November 3 meeting with members of the Civic Chamber is, philosophically, not all that different than the sort of historical observations Putin had made before. Nevertheless, both Ukrainian Pravada and Alexander Mercouris regarded the Putin remarks as potentially significant, and Medevedev reiterating them would seem to confirm that take. And both suggested that Kiev might wind up as part of Russia. From Medvedev, who loves trolling Western officials:

Now admittedly, Ukraine has plenty of reason to be jumpy, Putin was arguably just ringing the changes on favored themes before a relevant audience, and Medvedev was putting on his usual tough cop hat. Or perhaps both Russian leaders are trying to get Ukraine and the West to understand that Russia will control the end-game and reset their views as to what that could amount to.

Regardless of whether these remarks represent a meaningful shift, they serve as a reminder that Russia is on track to take a maximalist stance in terms of territorial acquisition. For instance, even Russia-friendly commentators wondered if Russia would take Odessa. Most now seem to see that as a given and are adding more sections of Ukraine as potential acquisitions. But as we flagged from the very outset, Russia could lose the peace by not coming up with a good solution as to what to do about Western Ukraine.

So does the renewed talk about Ukraine being an artificial construct carved out of Russia, and of Ancient Rus? Or is this just posturing, to make those paying attention less unhappy about the endgame, to act as if Russia has serious designs on parts of Western Ukraine so that when Russia integrates less into Russia, that the West can claim a face saving success?

Ukraine’s Appallingly Poor Prospects

Things are so bad it is hard to know where to begin.

Big Serge recently posted a fine, detailed account of why it was vanishingly unlikely that Ukraine would achieve its aims of pushing Russia back to Ukraine’s 1991 borders. Admittedly, hindsight is 20/20. At the start of the war, many thought, including many in Russia, that the shock and awe sanctions would cripple Russia, ideally lead to Putin’s ouster or at least severely destabilize Russian leadership, and undermine industrial, particularly military, output. The West also believed what is now clear was its own nonsense, that Russia had a poorly armed and led military, when it was was the US and NATO that had optimized their forces to fight insurgents, and had gotten very good at building super expensive, fussy weapons systems that didn’t necessarily perform all that well when tested. Even worse, it still has not been adequately acknowledged that Russia is ahead in many critical categories, such as air defense, hypersonic missiles, and signal jamming.

What is striking about the current state of play is not simply that Ukraine is losing the war with Russia, and it’s just a matter of time before Russia dictates terms, but that the Ukraine government is acting in ways that benefits the Russian military, to the destruction of what is left of its society and economy.

Militarily, Ukraine is approaching a catastrophic condition. That does not mean a collapse is imminent; key variables include whether the Ukraine military leadership revolts against Zelensky and how hard Russia pushes into growing Ukraine weakness. Russia may prefer to go slowly (mind you, it is making a concerted effort to crack the well fortified Avdiivka1), not just to reduce losses of its troops, but also to more throughly bleed out Ukraine and give the West time to adjust psychologically to Ukraine’s prostration.

Another factor that bears repeating is that Russia knows well this is a war against NATO. That will make the eventual defeat more consequential, even if the US and its minions come up with a face-saving pretense, like Putin was going march all the way to Paris (or Poland) and they succeeded in stopping that. That is one aspect that Big Serge gives short shrift: that this was a messy coalition war, which meant that for Ukraine to message success often trumped realistic assessments (how often was Russia just about to run out of missiles? Or having to raid washing machines for chips?). So not only were Ukraine’s backers not making enough weaponry to keep up with Russia’s output (which Russia then kept increasing), it was not the right equipment. Ukraine first stripped NATO cupboards bare of old Soviet style gear, which their troops were trained to handle. They then got a hodge podge of Western materiel, which they were often not well trained enough to handle proficiently, plus the mix of weaponry created a logistical nightmare. Scott Ritter argued that so many different types of equipment put Ukraine in a worse position.

And that’s before getting to poorly (barely) trained forces. Depending on how you are counting, Ukraine is on its third or fourth army. A recent story in Time Magazine serves as one-stop shopping for the deteriorating state of its forces and its difficulty in replenishing losses. The average age at the start of the war (30 to 35, due in part to a demographic dearth of men in their 20s) is now up to 43. And:

Now recruitment is way down. As conscription efforts have intensified around the country, stories are spreading on social media of draft officers pulling men off trains and buses and sending them to the front. Those with means sometimes bribe their way out of service, often by paying for a medical exemption. Such episodes of corruption within the recruitment system became so widespread by the end of the summer that on Aug. 11 Zelensky fired the heads of the draft offices in every region of the country.

The decision was intended to signal his commitment to fighting graft. But the move backfired, according to the senior military officer, as recruitment nearly ground to a halt without leadership. The fired officials also proved difficult to replace, in part because the reputation of the draft offices had been tainted. “Who wants that job?” the officer asks. “It’s like putting a sign on your back that says: corrupt.”

A new CNN article also discusses Ukraine’s manpower problems, but weirdly tries to spin Ukraine as having headroom by not having yet gone to full conscription. But it does point out that Ukraine has imposed martial law and restricts travel

Ukraine’s military was about 15% female as of 2020, and recent rule changes allowed for conscription of women with medical and pharmacy training, so recent claims that Ukraine is conscripting women look largely to be misrepresentations of existing policy. However, it may still be that Ukraine is using more women in combat roles of late: Dima of Military Summary reported this week of seeing a video of a trench with dead women soldiers in it.

Experts have argued that even with diminishing levels of equipment and shells, that absent a revolt or surrender by the military, Ukraine could keep up a fight for a while. The West, after all, is probably capable of sending in materiel at some level. But the manpower, particularly trained manpower, problem is only going to get worse. And it’s now acknowledged in the Western press as pretty bad.

There’s been much less discussion of the Ukraine economy, which is set to go off a more dramatic cliff than its combat capability. Western journalists go almost entirely to Kiev, and then likely only near government buildings and foreign-official venues (tony restaurants) and so have little feel for day to day life. The reporters who do venture further afield are going mainly to combat areas. We need to do a bit more digging and give a fuller report, but it doesn’t take a lot of effort to work out that the near and long-term prospects for Ukraine are terrible, and it was staring out as the poorest and most corrupt country in Europe.

Ukraine is facing a demographic disaster, as Moon of Alabama and others have chronicled. It already had a dearth of young adults due to a birth collapse (similar to what Russia suffered) in the 1990s. It’s no secret that many Ukrainians have fled for Europe and the majority are not expected to come back. Moreover, that population is also likely to skew young. Douglas Macgregor had said that his sources estimate that Ukraine is down from a pre-war population of 43 million to 19 million in the territories the government in Kiev controls. And the scuttlebutt is Zelensky, to keep the fight up, is looking to or has actually started throwing more young people into the meat grinder, by tightening up on essential employment and college exemptions.

And keep in mind that Ukraine is also suffering a high level of debilitation among war survivors. The Wall Street Journal reported months ago that orders for prosthetics might be as high as 50,000. That was before the famed counteroffensive got going.

As we pointed out and the Western press has also been acknowledging, Ukraine has not done a very good job of repairing its grid after the Russian attacks last fall and winter, to the degree it may fall over in certain areas under higher winter loads. Some sources have suggested the repair funds were partly looted. That may be true. But we’ve also pointed out that Ukraine is using Soviet gear and has been exhausting stocks of spared among former Warsaw Pact members. No one is going to set up new factories to do a very large but limited run of various components for Ukraine’s rebuilding. That means that any of the areas that have suffered critical damage that can no longer get replacements from the West will find Russia controls their reconstruction.

Ukraine tax receipts have collapsed as defense spending has spiked. Ukraine projected a budget deficit of $38 billion in March. Given optimistic assumptions about its super duper counteroffensive, one has to think that forecast was similarly optimistic. Set that against two stopgap spending bills with no Ukraine funding and Europe saying loudly that it can’t fill the US money gap. I have no idea what the lag is between allocation approvals and cash actually arriving in Ukraine official coffers, but one would have to think the US till is about to be emptied. And Ukraine will crash from its already fallen level of functioning. In Russia even during its mass privatizations, loss of services and economic/demographic decline, some critical public servants kept working for no or little compensation. Putin made a point of giving teachers their back pay in his early years as President. How much social cohesion is there in Ukraine, particularly after so many have already abandoned it?

Also keep in mind Ukraine had a nominal GDP in 2022 of $160 billion on a nominal basis, nearly $380 billion on a PPP basis. Those figures are likely exaggerated by including the parts of Ukraine that voted to join Russia. So even looking at these results in the most generous way possible, Ukraine is running a deficit of 10% of GDP, when it already has inflation of 30%. Big deficits after a sudden reduction of productive capacity is a textbook prescription for hyperinflation.

We’ve also pointed out the Western reconstruction talk was a bunch of hooey, since private sector types do infrastructure deals only as exercises in looting (we’ve posted on how new-build deals go bankrupt). So at best, this initiative was set to be an exercise in strip mining what was left of Ukraine. That’s now been indirectly confirmed by the reconstruction czar Penny Pritzker herself. From Ukrainska Pravda via Yahoo in Imagine there may be no help: conclusions of US Special Representative’s visit to Ukraine:

Penny Pritzker, US Special Representative for Ukraine’s Recovery, has suggested that officials imagine how the country could survive economically without US aid during her first visit to Ukraine….

Ukrainska Pravda stated that her first visit to Ukraine had left “a rather disturbing aftertaste in many government offices” here.

One of the sources, familiar with the course of Pritzker’s meetings, said that she tried to “lead [them] to the idea” of how Ukraine could survive economically without American aid.

Quote from the source: “At the meetings, Penny tried to get people to think, like, let’s imagine that there is no American aid: what do you need to do over the next year to make sure that your economy can survive even in this situation? And it really stressed everyone out.”

More details: Andrii Hunder, the president of the American Chamber of Commerce in Ukraine, told Ukrainska Pravda that Pritzker’s main question during her visit and meetings with businesses was “What hinders success and who hinders it?”

The UP article reads that perhaps the strongest concern among most people who interacted with Biden’s representative was her call not to wait for Western assistance, but to seek areas of growth as if it wouldn’t be coming.

Does the Russian Map Talk Represent New Thinking About the End Game?

John Mearsheimer has argued that Russia wants a dysfunctional rump Ukraine. The same way the US, NATO and Ukraine obliged Russia’s war of attrition game plan by continuing to throw ever weaker forces against Russian lines, so to have they managed to do even more damage to Ukraine’s economy that the war already would have done by pumping up the military and government with support it could not maintain for the long haul, and then withdrawing it abruptly.

However, even though Russia looks like it will eventually impose its will on Ukraine, Russia still faces constraints. The more of Ukraine Russia decides to incorporate, the more it will have to rebuild. Those efforts would compete with another Putin initiative, announced early in the SMO, of greatly improving public amenities in remote areas (I envision manufacturing and mining towns in the hinterlands). Russia is also already facing labor shortages. To some degree, it might be able to redeploy men now working in manufacturing, particularly arms related, to reconstruction. But Russia may face labor constraints on how quickly it can restore infrastructure and buildings.

Putin and his inner circle likely also recognize the risk and cost of tying to hold areas where Russia is not welcome. Putin even said words to that effect early on. Putin also seems to value referendums as validating integrating territory into Russia. These would argue, all things being equal, for limiting the parts of Ukraine that are candidates for integration to ones with a solidly ethnic Russian majority.

To look at an overlapping set of consideration, ever since the Munich Security Conference, Putin has been trying to get a hostile Europe and US to acknowledge and respect Russia’s security needs. So what territorial end state is optimal, or alternatively, the least bad compromise, particularly given that ex Hungary and Belarus, Russia would continue to have hostile neighbors to its west?

This is why both Putin and Medvedev suggesting Kiev might be part of the equation would seem to be a significant shift. There are lots of maps of electoral results that Western pundits have used as proxies for ethnic Russian versus ethnic Ukrainian representation. This one from the Washington Pos is indicative. You can see Kiev is most assuredly in a European-leaning part of the country, as if that were in doubt:

But in Putin’s November 3 speech, he described long form as to how Russia has claims on “Ancient Rus” and that would seem to include Kiev2:

Contrast this with Medvedev’s not-exactly-a-joke earlier proposal:

Admittedly, Putin has said repeatedly, such as in his 2021 article, On the Historical Unity of Russians and Ukrainians, that Russians and Ukrainians are one people and the recent divisions were engineered to facilitate control. But it’s going to be hard to put the discord genie back in the bottle.

One guess is that Russia has decided it eventually has to take, or ideally, find some other way to subdue Kiev as the administrative center of Ukraine. But what does it do then? Even if Russia is able to create a puppet state, how does it exercise enough control without it becoming a governance and financial albatross? Remember, Kiev is a physically sprawling city of 3 million, straddling the Dnieper. It would be hard to secure it against the will of its inhabitants….unless, say, even more could be encouraged to decamp.

But it seems any other way, with rump Ukraine entering into some sort of victor’s peace with Russia, is ripe for the West trying to undo that. Perhaps (as we and John Helmer have suggested) Russia creates a particularly impoverished and very low population buffer zone (one way is by de-electrifying it) as a DMZ of sorts.

Again, at a minimum Russia’s leadership recognizes it has ever more degrees of freedom in terms of what Ukraine’s end state might be. And I may not be imaginative enough. But I don’t see how things have gotten much better regarding the potentially festering problem of western Ukraine. Perhaps there have been better remedies bandied about by Russian pundits and pols that have not gotten coverage here. Any reader intel or informed speculation very much welcomed.

Link here.

Mischa Paullin is a satirist and producer for the Jimmy Dore Show.

By Ben Aris, Intellinews, 11/17/23

Russian President Vladimir Putin held a late-night oligarch meeting on November 16 where dozens of Russia’s top oligarchs expressed anxiety over a wave of nationalisations since the start of the war in Ukraine just under two years ago, Vedomosti reports.

As reported by bne IntelliNews, there has been a tsunami of M&A deals in the last year, as leading Russian companies and people close to the government have snapped up the businesses of departing multinationals. Amongst the victims of forced takeovers have been some leading Russian companies like Tinkoff bank and Yandex that have been acquired, or are being acquired, by state-owned businesses of people close to the Kremlin.

This is the third time that Putin has called in Russia’s business elite for a meeting. The first was held on July 28 just after he took office for the first time in 2000, where the president famously made the pact: keep what you got but stay out of politics.

Oil tycoon Mikhail Khodorkovsky famously reneged on that deal and was arrested in 2003, convicted of fraud in May 2005 and spent the next nine years in a Russian labour camp. Putin held a second oligarch meeting shortly after Khodorkovsky’s arrest where he added to the terms of the unwritten agreement, “… and use your wealth for the betterment of the country,” ushering in the “ZAO Kremlin” economic model. For several years Putin held one-on-one meetings with leading businessmen, who had to present their investment plans. Putin, acting more like a CEO than a president, would then “explain” how those plans could be adjusted to dovetail with the Kremlin’s own development plans.

ZAO Kremlin was a failure as the oligarchs continued to buy influence and pursue their own goals. In one famous incident at the end of this era Putin flew to the mono-city of Pikalyovo in 2009 and publicly humiliated a top oligarch Oleg Deripaska who had a factory there where the workers had not been paid for months. Putin, playing on the anger of protesting workers in the town, forced Oleg Deripaska, a top metals tycoon and once Russia’s richest man and a close Kremlin insider, to sign a contract for supplies to help idle factories restart operations on live TV. The coup de grace was Putin’s venomous comment: “Give me back my pen” after Deripaska had signed the deal, but walked off the pen he had been given by Putin.

Putin abandoned trying to co-op the oligarchs into his programme to develop the economy and focused more on containing their avarice, turning instead to the stoligarchs, the small group of state-sponsored oligarchs that were personal friends of Putin’s and came to control a fifth of the Russian economy. The rest of the oligarchs were left largely alone to run their business in the privately owned part of the economy, managed by the liberal economics team, headed by former Finance Minister Alexei Kudrin and his protegees.

The details of the third meeting, held between 10am and midnight on November 16 remain vague, as few of those that attended where willing to talk, but leading Russian business daily Vedomosti reports that one of the topics of conversation was the rising anxiety amongst Russia’s captains of industry over the Kremlin’s aggressive policy of taking control of some of Russia’s biggest businesses.

At the meeting with dozens of Russian business leaders they complained of the increasing number of nationalisations that have occurred since the invasion of Ukraine, according to anonymous sources cited by Vedomosti.

The sources highlighted the trend of state seizures of private businesses over the past year and a half as “frightening” and expressed alarm. While officials attempted to address the 80 business mens’ concerns during the two-hour meeting, participants left with the impression that the Kremlin would also raise taxes for increased war spending, rather than tightening fiscal policies, and that would also cause them problems.

The stated purpose of the meeting was to discuss ways to “improve Russia’s investment climate” in the face of extreme Western sanctions and create conditions for companies transferring assets to Russian jurisdiction from “unfriendly” countries. However, the meeting can be characterised as yet another addition to Putin’s pact with the oligarchs: “… and pay more taxes to support the war effort or I will take your companies away after all.”

Prominent attendees at the meeting included Sberbank CEO German Gref and Russian Railways head Oleg Belozerov, who are both stoligarchs identified in bne IntelliNews’ 2016 cover article. Also in attendance were Kamaz head Sergei Kogogin, as well as government officials like presidential economic advisor Maxim Oreshkin, First Deputy Prime Minister Andrey Belousov, and Economics Minister Maxim Reshetnikov.

Russian Finance Minister Anton Siluanov has been working hard to avoid raising taxes to fund the war, where state spending has been ballooning as Putin clearly is preparing for a long war.

The sanctions were designed to starve the Kremlin of funds to fuel its war machine and that goal has clearly failed. After reporting deep twin deficits in December 2022 and January 2023, the economy has made a strong recovery and the economy is on course to turn in 2.2% growth this year, while most of the rest of Europe is teetering on the edge of recession. “The worst is over”, declared Prime Minister Mikhail Mishustin at an economic conference in October. The realisation that sanctions have failed to do enough damage to Russia to end the war quickly is starting to sink in as epitomised by a Wall Street Journal editorial on November 16 entitled “It’s Time to End Magical Thinking About Russia’s Defeat”, which admits sanctions have failed.

“At the front line, there are no indications that Russia is losing what has become a war of attrition. The Russian economy has been buffeted, but it is not in tatters. Putin’s hold on power was, paradoxically, strengthened following Yevgeny Prigozhin’s failed rebellion in June. Popular support for the war remains solid, and elite backing for Putin has not fractured,” the Wall Street Journal wrote.

Russia has survived the first two years of a proxy war against the West, but analysts are unanimous that the sanctions will tell over the longer term. Putin’s third oligarch meeting was all about getting ready for the problems to come, not the problems he already has to cope with.

Russia has already transformed from an open, largely private sector economy with an open current account, to a closed system where the state’s share and interference in the economy has rapidly escalated.

The threat of nationalisation is seen as a component of Russia’s approach to punishing countries that have seized Russian [assets] in the rest of Europe, but well connected opportunistic entrepreneurs are also making use of the war chaos and the complete shake up nearly ever sector to enrich themselves and establish new empires, as bne IntelliNews reported in Russia’s new business elite.

By Lee Fang, Substack, 11/15/23

In an exchange that came to light in the “Twitter Files” revelations about media censorship, Crovitz, former publisher of the Wall Street Journal, touted his product, NewsGuard, as a “Vaccine Against Misinformation.” His written pitch highlighted a “separate product” – beyond an extension already on the Microsoft Edge browser – “for internal use by content-moderation teams.” Crovitz promised an out-of-the-box tool that would use artificial intelligence powered by NewsGuard algorithms to rapidly screen content based on hashtags and search terms the company associated with dangerous content.

How would the company determine the truth? For issues such as COVID-19, NewsGuard would steer readers to official government sources only, like the federal Centers for Disease Control. Other content-moderation allies, Crovitz’s pitch noted, include “intelligence and national security officials,” “reputation management providers,” and “government agencies,” which contract with the firm to identify misinformation trends. Instead of only fact-checking individual forms of incorrect information, NewsGuard, in its proposal, touted the ability to rate the “overall reliability of websites” and “’prebunk’ COVID-19 misinformation from hundreds of popular websites.”

NewsGuard’s ultimately unsuccessful pitch sheds light on one aspect of a growing effort by governments around the world to police speech ranging from genuine disinformation to dissent from officially sanctioned narratives. In the United States, as the Twitter Files revealed, the effort often takes the form of direct government appeals to social media platforms and news outlets. More commonly the government works with through seemingly benign non-governmental organizations – such as the Stanford Internet Observatory – to quell speech it disapproves of. 

Or it pays to coerce speech through government contracts with outfits such as NewsGuard, a for-profit company of especially wide influence. Founded in 2018 by Crovitz and his co-CEO Steven Brill, a lawyer, journalist and entrepreneur, NewsGuard seeks to monetize the work of reshaping the Internet. The potential market for such speech policing, NewsGuard’s pitch to Twitter noted, was $1.74 billion, an industry it hoped to capture.

Instead of merely suggesting rebuttals to untrustworthy information, as many other existing anti-misinformation groups provide, NewsGuard has built a business model out of broad labels that classify entire news sites as safe or untrustworthy, using an individual grading system producing what it calls “nutrition labels.” The ratings – which appear next to a website’s name on the Microsoft Edge browser and other systems that deploy the plug-in – use a scale of zero to 100 based on what NewsGuard calls “nine apolitical criteria,” including “gathers and presents information responsibly” (worth 18 points), “avoids deceptive headlines” (10 points), and “does not repeatedly publish false or egregiously misleading content” (22 points), etc. 

Critics note that such ratings are entirely subjective – the New York Times, for example, which repeatedly carried false and partisan information from anonymous sources during the Russiagate hoax, gets a 100% rating. RealClearInvestigations, which took heat in 2019 for unmasking the “whistleblower” of the first Trump impeachment (while many other outlets including the Times still have not), has an 80% rating. (See the NewsGuard-RCI exchange over the whistleblower.) Independent news outlets with an anti-establishment bent receive particularly low ratings from NewsGuard, such as the libertarian news site Antiwar.com, with a 49.5% rating, and conservative site The Federalist, with a 12.5% rating.

As it stakes a claim to being the Internet’s arbiter of trust, the company’s site says it has conducted reviews of some 95% of news sources across the English, French, German, and Italian web. It has also published reports about disinformation involving China and the Ukraine-Russia and Israel-Hamas wars. The model has received glowing profiles in CNN and the New York Times, among other outlets, as a viable solution for fighting fake news. 

NewsGuard is pushing to apply its browser screening process into libraries, academic centers, news aggregation portals, and internet service providers. Its reach, however, is far greater because of other products it aims to sell to social media and other content moderation firms and advertisers. “An advertiser’s worst nightmare is having an ad placement damage even one customer’s trust in a brand,” said Crovitz in a press release touting NewsGuard’s “BrandGuard” service for advertisers. “We’re asking them to pay a fraction of what they pay their P.R. people and their lobbyists to talk about the problem,” Crovitz told reporters.

NewsGuard’s largest investor and the biggest conglomerate of marketing agencies in the world. Its clients include Pfizer, whose COVID vaccine has been questioned by some news outlets that have received low scores. 

NewsGuard’s BrandGuard tool provides an “exclusion list” deters advertisers from buying space on sites NewsGuard deems problematic. But that warning service creates inherent conflicts of interest with NewsGuard’s financial model: The buyers of the service can be problematic entities too, with an interest in protecting and buffing their image.

A case in point: Publicis Groupe, NewsGuard’s largest investor and the biggest conglomerate of marketing agencies in the world, which has integrated NewsGuard’s technology into its fleet of subsidiaries that place online advertising. The question of conflicts arises because Publicis represents a range of corporate and government clients, including Pfizer – whose COVID vaccine has been questioned by some news outlets that have received low scores. Other investors include Bruce Mehlman, a D.C. lobbyist with a lengthy list of clients, including United Airlines and ByteDance, the parent company of much-criticized Chinese-owned social media platform TikTok. 

NewsGuard has faced mounting criticism that rather than serving as a neutral public service against online propaganda, it instead acts as an opaque proxy for its government and corporate clients to stifle views that simply run counter to their own interests. 

The criticism finds support in internal documents, such as the NewsGuard proposal to Twitter, which this reporter obtained during Twitter Files reporting last year, as well as in government records and discussions with independent media sites targeted by the startup. 

And although its pitch to Twitter (now Elon Musk’s X) “never went anywhere,” according to Matt Skibinski, the general manager of NewsGuard, his company remains “happy to license our data to Twitter or any platform that might benefit.” Coincidentally (or not), X comes in for criticism in NewsGuard’s latest “misinformation monitor” headlined: “Blue-Checked, ‘Verified’ Users on X Produce 74 Percent of the Platform’s Most Viral False or Unsubstantiated Claims Relating to the Israel-Hamas War.”

Meanwhile, one of the sites targeted by NewsGuard earlier, Consortium News, has filed a lawsuit against it claiming “First Amendment violations and defamation.”

Beginning last year, users scanning the headlines on certain browsers that include NewsGuard were warned against visiting Consortium News. A scarlet-red NewsGuard warning pop-up said, “Proceed With Caution” and claimed that the investigative news site “has published false claims about the Ukraine-Russia war.” The warning also notifies a network of advertisers, news aggregation portals, and social media platforms that Consortium News cannot be trusted.

But Consortium News, founded by late Polk Award-winning investigative journalist Robert Parry and known for its strident criticism of U.S. foreign policy, is far from a fake news publisher. And NewsGuard, the entity attempting to suppress it, Consortium claims, is hardly a disinterested fact-checker because of federal influence over it. 

NewsGuard attached the label after pressing Consortium for retractions or corrections to six articles published on the site. Those news articles dealt with widely reported claims about neo-Nazi elements in the Ukrainian military and U.S. influence over the country – issues substantiated by other credible media outlets. After Consortium editors refused to remove the reporting and offered a detailed rebuttal, the entire site received a misinformation label, encompassing over 20,000 articles and videos published by the outlet since it was founded in 1995.

The left-wing news site believes the label was part of a pay-for-censorship scheme. It notes that Consortium News was targeted after NewsGuard received a $749,387 Defense Department contract in 2021 to identify “false narratives” relating to the war between Ukraine and Russia, as well as other forms of foreign influence.

Bruce Afran, an attorney for Consortium News, disagrees. “What’s really happening here is that NewsGuard is trying to target those who take a different view from the government line,” said Afran, He filed an amended complaint last month claiming that NewsGuard not only defamed his client, but also acts as a front for the military to suppress critical reporting. 

“There’s a great danger in being maligned this way,” Afran continued. “The government cannot evade the Constitution by hiring a private party.” 

Joe Lauria, the editor in chief of Consortium News, observed that in previous years, anonymous social media accounts had also targeted his site, falsely claiming a connection to the Russian government in a bid to discredit his outlet. 

“NewsGuard has got to be the worst,” said Lauria. “They’re labeling us in a way that stays with us. Every news article we publish is defamed with that label of misinformation.” 

Both Lauria and Afran said that they worry that NewsGuard is continuing to collaborate with the government or with intelligence services. In previous years, NewsGuard had worked with the State Department’s Global Engagement Center. It’s not clear to what extent NewsGuard is still working with the Pentagon. But earlier this year, Crovitz wrote an email to journalist Matt Taibbi, defending its work with the government, describing it in the present tense, suggesting that it is ongoing:

For example, as is public, our work for the Pentagon’s Cyber Command is focused on the identification and analysis of information operations targeting the U.S. and its allies conducted by hostile governments, including Russia and China. Our analysts alert officials in the U.S. and in other democracies, including Ukraine, about new false narratives targeting America and its allies, and we provide an understanding of how this disinformation spreads online. We are proud of our work countering Russian and Chinese disinformation on behalf of Western democracies.

The company has not yet responded to the Consortium News lawsuit, filed in the New York federal court. In May of this year, the Air Force Research Lab responded to a records request from journalist Erin Marie Miller about the NewsGuard contract. The contents of the work proposal were entirely redacted.  

Asked about the company’s continued work with the intelligence sector, Skibinski replied, “We license our data about false claims made by state media sources and state-sponsored disinformation efforts from China, Russia and Iran to the defense and intelligence sector, as we describe on our website.” 

Take the case of The Daily Sceptic, a small publication founded and edited by conservative English commentator Toby Young. As a forum for journalists and academics to challenge a variety of strongly held public-policy orthodoxies, even those on COVID-19 vaccines and climate change, The Daily Sceptic is a genuine dissenter. 

Last year, Young reached out to NewsGuard, hoping to improve his site’s 74.5 rating. 

In a series of emails from 2022 and 2023 that were later forwarded to RealClearInvestigations, NewsGuard responded to Young by listing articles that it claimed represent forms of misinformation, such as reports that Pfizer’s vaccine carried potential side effects. The site, notably, has been a strident critic of COVID-19 policies, such as coercive mandates. 

Anicka Slachta, an analyst with NewsGuard, highlighted articles that questioned the efficacy of the vaccines and lockdowns. The Daily Sceptic, for example, reported a piece casting COVID-19 lockdowns as “unnecessary, ineffective and harmful,” citing academic literature from Johns Hopkins University.

Rather than refute this claim, Slachta simply offered an opposing view from another academic, who criticized the arguments put forth by lockdown critics. And the Hopkins study, Slachta noted, was not peer-reviewed. The topic is still, of course, under serious debate. Sweden rejected the draconian lockdowns on schools and businesses implemented by most countries in North American and Europe, yet had one of the lowest “all-cause excess mortality” rates in either region. 

Young and others said that the issue highlighted by NewsGuard is not an instance of misinformation, but rather an ongoing debate, with scientists and public health experts continuing to explore the moral, economic, and health-related questions raised by such policies. In its response to NewsGuard’s questions about the lockdown piece, Young further added that his site made no claim that the Hopkins paper was peer-reviewed and added that its findings had been backed up by a paper from the National Bureau of Economic Research. 

Yet to NewsGuard, Young’s site evidently posed a misinformation danger by simply reporting on the subject and refusing to back down. Emails between NewsGuard and the Daily Sceptic show Young patiently responding to the company’s questions; he also added postscripts to the articles flagged by NewsGuard with a link to the fact checks of them and rebuttals of those fact checks. Young also took the extra step of adding updates to other articles challenged by fact-checking non-governmental organizations. “I have also added postscripts to other articles not flagged by you but which have been fact checked by other organisations, such as Full Fact and Reuters,” Young wrote to Slachta.

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