Putin's Unreported Genius On Ukraine: Currency Warfare

Putin-dancing-lighter

Putin did not invade Ukraine to invade Ukraine, but as a genius invasion against the U.S. Dollar. Almost all media have missed the high-level geopolitical chess at play and focused so narrowly on the individual moves, that they’re completely missing the big picture. There’s currently a war about what reserve currency the world should use – and the U.S. is poised to lose.

We can see this in how biased the reporting is toward Western political actions being favorable and working. The sanctions are not only not working, they were a trap for the U.S. Dollar in the first place. Putin has been the one in control of the situation for the past decade and more, and he’s playing a long-term game.

Any reporter who regurgitates the oft-repeated statement that Western sanctions are the cause of Russian economic problems is 100% wrong. Not just wrong on details or nuance, but wrong in the worst “politicians-are-right-because-they-said-so-themselves” type of way.

Background

Putin is trying to unsettle the U.S. Dollar’s reserve-currency status. If that succeeds, the U.S. Empire will collapse like a house of cards. Today, if you live in Germany and want to buy something from China, you must first purchase U.S. Dollars from the U.S., and then exchange those USD for the goods you want from China. This means that the U.S. is literally in a position to print as much money as they want, and the world is supporting consumption levels in the U.S. that go way beyond their means – not to mention a military that is vastly overstretched.

The key to maintaining this reserve-currency status lies in the vital energy trade. As long as energy (oil, gas, uranium, coal) is traded in USD, the USD is a reserve currency for all other trade. The usual term for this lock-in arrangement is the “petrodollar” – the connection between the USD and oil trade which reinforces the USD’s de-facto status as default trade currency.

Putin has spent the past 15 years making the world’s largest economy – Europe – completely dependent on Russian energy: oil, natural gas, and uranium. Europe cannot do without Russian energy at this point in time.

However, it is still traded in US Dollars. And Russia is not in a position to demand that its customers start paying in Rubles or something else than USD at this point. It needed to get its customers to demand the ability to pay for Russian energy in something else than USD. If Russia could make her own energy trade happen in something else than USD, the United States’ overstretched empire would collapse in short order.

So what could Russia possibly do to cause its energy customers to demand settlement for Russian energy to happen in something else than USD?

Russia needed its customers to ban trade in US Dollars – or needed the US to ban Russian customers from using the US Dollar when buying energy from Russia.

Russia needed sanctions from the United States, so its energy supply to Europe couldn’t be denominated in US dollars anymore.

So how do you willingly cause the US to invoke sanctions? You need to provoke the international community in a way that goes well beyond acceptable behavior, but does not meet the bar for a military response. That’s a very delicate dance to perform.

Putin needed a non-NATO country to harass in order to lay the intended trap for the U.S. Dollar.

Invading Ukraine

Hence the invasion of Ukraine, a series of moves that have defied any normal military routine. It has been constant and consistent provocation, but has equally consistently not met the bar for a military response from the West.

And Obama took the bait hook, line and sinker, and issued the sanctions in question against the Russian economy. Western media has falsely and parrotly portrayed these sanctions as successful, when they were the desired outcome all along from the Russian side.

Putin’s invasion of Ukraine was not an invasion of Ukraine. It was a trap for the US Dollar, a trap that sprung perfectly.

And in the months that have followed, Russia has successfully withdrawn from the petrodollar, which has negative exports for the first time in 18 years. The trap is working perfectly, despite the current fall (crash) in oil price that has other causes entirely.

So now, when the largest French energy company Total is looking to exploit a new large Russian natural gas project in Yamal, a joint venture with Russia’s Novatek and China’s CNPC, it is going to invest “yuan, euros, rubles… anything but the US Dollar”. And it doesn’t care that it’s not using the USD. It’s not allowed to and it doesn’t care. This is the company with the CEO that went on record saying there’s no reason to uphold the petrodollar, and who died in a plane crash shortly after making that statement.

This is geopolitics at high levels, where laws do not apply.

In effect, Putin has successfully defeated the US Empire by defeating the petrodollar, unless Obama has a last-ditch ace up his sleeve at this point.

Finally, there is an impression in Western media that Putin would be “incapable” of sophisticated schemes like this – that Vladimir Putin would be an unsophisticated simpleton. That image doesn’t pass the simplest of smell tests.

Putin is the president of Russia. Russian power is cutthroat to unimaginable levels. To not just reach the top, but also stay at the top, you need to be long-term, cynical, and results-oriented to levels not even understood in the West. Long-term as in taking 15 years to set the bait by making Europe dependent on Russian energy. That’s why Putin comes across as “mad and irrational” to Western policymakers; the Russian thought processes are more ruthless than anything relatable in the West.

But “mad and irrational” doesn’t make somebody a Russian president. “Mad and irrational” makes somebody a Russian homeless. Therefore, Western media are either painting a propagandistic picture of Putin on purpose, or not understanding the utterly pragmatic way of thinking. Therefore, claims that Putin is unpredictable and irrational don’t pass the simplest of smell tests. To the contrary, he’s genius and he’s a very very skilled power player.

Shale Oil and the Ruble

Now, the Russian economy and the Ruble are failing short-term, but not because Russia is locked out from access to the dollar; that part is helping the Russian economy. The reason the Russian economy is failing is because half of their GDP is based on fossil fuels, and that U.S. domestic oil production has halved the cost of oil.

But that’s a different story, and one that hurts the United States almost as much as it hurts Russia. That’s primarily Saudi Arabia flexing its muscles and also trying to outcompete the United States and Russia and Iran, which is another problem entirely.

Rick Falkvinge

Rick is the founder of the first Pirate Party and a low-altitude motorcycle pilot. He works as Head of Privacy at the no-log VPN provider Private Internet Access; with his other 40 hours, he's developing an enterprise grade bitcoin wallet and HR system for activism.

Discussion

  1. Jacob Gadikian

    Well, there’s a refreshing point of view! I am more and more of the opinion that the USA is going to tear itself to shreds– our politics has become too unspeakably corrupt, and when people realize that there’s truly no plan for what happens when jobs are automated out of existence at an even larger scale, I think that things begin to look very dark indeed. Living abroad, one thing that strikes me is the total lack of good news surrounding the United States.

  2. Stevie B

    It is refreshing to see someone writing Putin isn’t stupid, which has been an unbelievable narrative in our media.

    However, the question of world’s reserve currency does not hang merely on the institution of petrodollar. It is also the availability of an alternative. It is hardly imaginable that Euro would become the new currencies, as there isn’t enough money supply to cover the vastness of global trade, and EU doesn’t have economies strong enough to back the needed rise in quantity.

    The Chinese government is well served by the undervalued, tightly-controlled renmibi, not just because it helps exports, but because it gives a massive domestic power boost to anyone with access to hard currency income – and access to hard currency is tightly controlled.

    So there is no alternative to US dollar. When the Chinese economy gets large enough to cope on its own and the local power structure stops needing external hard currency to keep in check it’s rising entrepreneurial middle class, US dollar will be history just as the pound sterling is.

    A world trade without “official” reserve currency is hardly imaginable. It was possible in the later part of the 19th century, when all major currencies were on the gold standard and so the world currency, in essence, was gold – or rather, gold I.O.U.s. That situation is unlikely to comeback – unless something like bitcoin really gains momentum that is currently hardly imaginable (though not impossible).

    1. Christopher

      No one ever said that Putin was stupid.
      Evil, bloodthirsty, pining for Soviet Russia days….. all of the above, but stupid? No.

      However, I have to disagree here. Countries are NOT going to move of the USD for petroleum, period and done with. It is the BEST and MOST STABLE currency in the entire world, even taking the yuan into account.

      1. gurrfield

        Not quite bloodthirsty if you compare to the leaders in the Soviet Union who literally occupied other countries with military for decades… He is a much “softer” kind of ruler, relying on much more charm and humour than is common in Russian politics. That is probably a very strategically smart thing to do, because he understands that softness is appreciated in the west and he wants russian oligarchs to be able to sell gas to the EU.

        Losing Sevastopol naval base would have been huge for Russia strategically speaking. Putin managed to handle that quite well.

        1. Christopher

          Apparently, you missed the whole Pussy Riot flap.
          Putin is JUST as willing to kill and intimidate people as Stalin and his successors, up until Gorbachev, were.

        2. gurrfield

          Yeah right. Imprisoning a small group of people is not the same as killing or forcing millions of people to siberia. I agree that it is not very nice thing to do, but it is not on the same level of “evil” at all. It is on the same level of injustice and brutality we see in the USA where policemen harm, intimidate or even shoot innocent people and get away with it. You don’t blame Obama for that do you?

      2. Scary Devil Monastery

        “Evil, bloodthirsty, pining for Soviet Russia days…”

        As compared to GWB, Wolfowicz, Rumsfeld and “Torture is Necessary” Cheney?

        I think looking either west or east it’ll be hard coming out with a winner as far as “Good Guys” go. After the Patriot Act I and II, the NDAA and the international extortion scheme known as ACTA and now TTIP you really can’t compare the US to Russia and say they aren’t doing the exact same thing.

        Putin does have a very good reason to invade the Ukraine – a better one than the US did when they invaded Iraq. Ukraine, you see, has been pilfering from the main lines of natural gas going through it from Russia, to the point where you can claim that Ukraine’s entire energy supply is being stolen from it’s neighbor. A political hot potato which Russia has been screaming about for over ten years.

        Invading Ukraine makes Putin ruthless. Not evil. He’s trying to strengthen his own country which is ostensibly what a statesman should do. Problem is, he’s trying to do this in a world where a strong russia is something no one else wants. also for good reason.

        “Countries are NOT going to move of the USD for petroleum, period and done with. It is the BEST and MOST STABLE currency in the entire world, even taking the yuan into account.”

        Yes they will. Russia already has done so. Thanks to the US sanctions anyone who wants a hold of the vast energy reserves east of the baltics will have to settle for something other than the dollar…or not trade at all.

        Did you miss the entire OP? It’s either trade the oil in something other than dollar or let someone else less picky trade in it! The toppling of the petrodollar is now a fait accompli, not a theory.

        1. Scary Devil Monastery

          Although, as Rick mentioned, thanks to Saudi Arabia tanking the oil price the selection pressure isn’t where Putin may have wante dit yet.

          It looks a bit like the 60’s, 70’s and 80’s all over again, when the USSR kept trying to open the window on establishing their own currency as a basis for oil exchange. Difference being that the USSR was hindered by marxism whereas Putin’s russia is as capitalist cutthroat as they come, so far.

  3. LennStar

    Well, the US tried for 10 years to get Russia out of the gas market. Just befoer the Revolution in Ukraine the big players like Exxon made contracts to fracking. Not purely random.

    http://www.nytimes.com/2012/11/13/business/energy-environment/making-an-energy-boom-work-for-us.html?_r=0
    The big losers could be the current exporters at high prices — Russia and Qatar

    If Putin is one thing not, then thats an idiot. He may liek everyone to look like a simpleton with his hunting stunts, but he is not.

  4. next_ghost

    I completely agree that Putin is a calculating bastard, not a fool, and he’s playing a really deep game of geopolitical chess right now. But there are some things that you got wrong.

    First, sanctions against Russia are extremely limited in scope. Last time I checked, they were against a single bank and a long list of individuals (high government officials and billionaires). The only sanctions that prohibit trade of certain commodities came from the Russian side.

    Second, Europe isn’t as dependent on Russian energy as you think. After the 2010 dispute between Russia and Ukraine about gas prices (when Ukraine cut the rest of Europe off from Russian gas for a while), Czech republic and Slovakia retrofitted its gas lines to allow transport of gas both ways at full capacity (before that, the backflow capacity was less than 1/3 of normal flow). So Germany, Czech republic and Slovakia can simply switch to Norwegian gas at any time without anybody noticing the difference. Finland is the only country that would run out of gas reserves in about a month. Baltic countries, Romania and Bulgaria would last at least 3 months and at least 50% of their current gas consumption could be immediately supplied by Norway.

    I don’t think that the invasion of Ukraine was planned. My interpretation of events is that the invasion of Crymea was an opportunistic knee-jerk reaction to Ukrainian revolution and somebody else used it as precedent for starting a civil war. Putin’s speeches about Crymea now make it very embarrassing to let the separatists lose so Putin had to choose between sending troops to Ukraine and losing credibility at home. All attempts to use this disaster for improving Russia’s geopolitical situation in the future are only an afterthought.

    1. Mark Snova

      Congratulations, Next Ghost

      AT LAST … a contributor that get’s it.. Putin’s stunt in Crimea was indeed opportunistic and the repercussions and fall out are something Putin hopes nationalistic fervour will overcome.

      The sanctions were targeted and Putin’s response was designed to try ‘split’ the EU unanimous vote.

      Putin has simply stirred up trouble in SE Ukraine and simultaneously sought to strengthen laws against the promotion of separatism at home.

      This chess game is a battle of wills between 140 million Russians and 700 million peoples of other nations who have implemented sanctions – plus the oil producing nations that can survive on a price WAY below what Russia needs to balance a budget that now needs a price of 125 USD – at the current rate of spending of reserves to prop up the ruble and increased military spending.

      Seems that Moscow is falling into the same trap that brought down the old USSR.

    2. Mark Snova

      Congratulations, Next Ghost

      AT LAST … a contributor that get’s it.. Putin’s stunt in Crimea was indeed opportunistic and the repercussions and fall out are something Putin hopes nationalistic fervour will overcome.

      The sanctions were targeted and Putin’s response was designed to try ‘split’ the EU unanimous vote.

      1. gurrfield

        Opportunistic? It was a defensive measure. Sevastopol was Soviets biggest naval base at the Black Sea. Would’ve been a huge loss to lose that.

        1. next_ghost

          Considering that Sevastopol was located in another sovereign country, it was about as “defensive” as US invasion of Afghanistan and Iraq.

        2. gurrfield

          Defensive in the sense that they tried to keep / protect something they once had control over. The Soviet Union was a union once, you know.

          Imagine parts of the union of states in america being dissolved but a core of most states remained. Would not that core try and reclaim / protect important military and strategic positions? Of course they would! Especially along the former external borders of the union.

          Not that I think or hope that would ever happen. Just trying and put things in perspective.

  5. doug555

    Why not use an “international currency” that is already in “circulation”?

    This currency instrument is something each person in every country already receives daily in their mail.

    It is called a “bill”.

    Is not a “bill” and instrument of commerce, a “currency” enabling the exchange of goods and services to flow?

    When fiat currencies fail, will not “bills” continue to circulate?

    See below website page that describes this “usufruct currency”:
    http://usufructremedy.blogspot.com/p/usufruct-currency.html

    The “usufruct paradigm” is in place in every country in the world due to the universal military takeover of this world by unseen forces (Daniel 11:36-39). See:
    http://usufructremedy.blogspot.com/p/military-rule.html

    However, these “usufructuaries” are currently under indictment. See:
    http://usufructremedy.blogspot.com/p/usufruct-parable.html

    The fulfillment of Holydays 2 & 3 will see the “Holy Nation” literal Kingdom of Mt 24:14 and Rev 5:9-10 as the new usufructuary, replacing “commerce” with “cooperation” (Isaiah 55:1). See:
    https://pentecostnation.wordpress.com/

    If you agree with the above, please sign this Petition:
    http://www.thepetitionsite.com/430/661/915/worldwide-petition-for-divine-intervention/

    Clearly, the world situation today requires Divine Intervention.

    It is time to petition for this Divine Intervention in sincerity and in truth, and in fasting (Joel 2:15). See:
    https://pentecostnation.wordpress.com/the-fast/

    Please listen to the below message of the truly “Good News” about what is about to happen on this Earth, and WHY:
    http://recordings.talkshoe.com/TC-30428/TS-902205.mp3

    in accord with Isaiah 41:27,
    doug555

    1. joc

      You are hilarious! You did joke, right?

      1. doug555

        Thanks for reinforcing my post post, joc.

        Such mocking is exactly what led to Hezekiah’s petition in 2 Kg 19!

        And now may lead more to signing THIS PETITION at:
        http://www.thepetitionsite.com/430/661/915/worldwide-petition-for-divine-intervention/

        He who has an ear, let him hear Rom 1:16 and 2 Pet 3:3-9, and be encouraged.

        1. jxm

          Hmmmm, so isn’t divine intervention petitioned by praying?

        2. jcm

          Hmmmm, so were exactly are you going todo deliver this petition to? Or to whom? I’m just curious. I mean, the great tribulation has been nigh for quite a while now (several times even), so I’m not sure we should be taking drastic measures like signing online petitions already.

    2. hue

      Choke on a Jewish cut penis, Christard goy.

  6. Anonymous

    Does anyone know how fast and far-reaching the dollar crash will become in Europe and other parts of the world? Is it a matter of not having the luxury of buying the latest iPhone in a few years, or is it a matter of not being able to eat or drink in a cold, powerless home the week after? To list the two extremes.

    1. Autolykos

      That’s completely unprecedented and thus hard to guess. But my prediction would be that you’ll basically lose access to everything produced in the US when their economy has crashed hard (after a short period of getting it almost for free while it is crashing). But that’s mostly new electronics and software (so it seems Windows XP is here to stay for another decade, albeit without updates). We have a surplus of agricultural products in the EU anyway, so nobody has to starve, and our energy mostly comes from Russia, so the lights won’t go out either. Unless there’s a distribution problem because the markets can’t cope with losing the Dollar:
      A crashed USD might completely fork up many major banks who “never saw it coming” and learned that they are “too big to fail” (except when the fail is even bigger) so you should be ready to lose your savings (if any). And since much of the Internet depends upon the US, I wouldn’t bet that Bitcoin helps you there, either.

  7. One who comments

    Does anyone know how fast and far-reaching the dollar crash will become in Europe and other parts of the world? Is it a matter of not having the luxury of buying the latest iPhone in a few years, or is it a matter of not being able to eat or drink in a cold, powerless home the week after? To list the two extremes.

  8. Werner Van Belle

    ”The sanctions are not only not working, they were a trap for the U.S. Dollar in the first place. Putin has been the one in control of the situation for the past decade and more, and he’s playing a long-term game.”

    Are you saying that Putin has been planning the Ukrainian mess for the past 15 years ? Are you serious about that ?

    From what I see, this is a planned attempt by American banks to get Russia in line. The Maidan revolution was planned by EU/US interests. The shooting of civilians was planned to escalate the conflict and overthrow the regime. Then later MH17 was planned to escalate the conflict even further. The hope of course being that the EU would start a war with Russia. If that didn’t work, they finally decided to crash the Ruble in broad daylight. I would even go as far as to say that without Putin we might actually be in a war with Russia.

    To show how ridiculous your argument is: most banks cannot even estimate what will happen next year, do you really believe that Putin planned all this 15 years ahead and predicted what the EU / US would do when, where and how ? And not only that, he was so polite to wait until America had run out of enemies and had finally some time to turn their eye on them. He was feeling neglected and lonely.. or so…

    ”Putin has spent the past 15 years making the world’s largest economy – Europe – completely dependent on Russian energy: oil, natural gas, and uranium.”

    Europe needed something and was happy to buy it from Russia, or _anyone_ who would sell it. Your statement sounds like a junkie who blames his dealer. ‘He forced me to take the drugs’

    ”That’s why Putin comes across as “mad and irrational”
    He seems to be the only sane one to me. Have you not noticed how the EU shot itself in the foot. Talk about irrational.

    Anyway, you have some good thoughts, but it is difficult to consider that Putin has planned this all ahead. The past 15 years, the world stage was not silent and waiting for Putin to make his move.

    1. Rick Falkvinge

      Are you saying that Putin has been planning the Ukrainian mess for the past 15 years ? Are you serious about that ?

      Nope. Not to anywhere near that level of detail (including the choice of country). I do think, however, that getting Europe hooked on Russian energy might have been part of a long-term plan to get into a position where Putin could threaten the USD dominance in energy trade through leverage of Russia’s sheer own trade volume.

      The way to challenge the USD, though, I believe that was nothing but opportunistic. Specifically including the choice of Ukraine. But there’s been a consistent pattern of trying to undermine the USD in Russia’s past. There were similar moves in 2009.

      Makes sense?

      Cheers,
      Rick

      1. Scary Devil Monastery

        ” But there’s been a consistent pattern of trying to undermine the USD in Russia’s past. There were similar moves in 2009.”

        Actually, trying to topple the petrodollar has been an ongoing project ever since Sovjet Russia. Try “1960” for a date in which they started trying to push that through.

        Difference being that the USSR were hopeless at economy and their economists shackled by marxist ideology meaning that even if they could get their satellites to trade oil in rubles it all turned to USD in the end.

        Putin’s maneuvers take place in a Russia which is even more cutthroat capitalist than the US.

        This is a very old game of chess and Putin simply managed to move it to endgame.

      2. Anymouse

        If you’re looking at those undermining the USD, then look at those who inflate its value – creating house boubles – and then let it crash.

        For who benefits from it? The middleclass or anyone else with big loans that they cannot pay and thus lose their house, cars, boat, summer house, and then divorce, hurt their children, commit suicide?

        ONLY THE BANKSTERS WIN BY CRASHING AN ECONOMY.
        Industrialists or any producer of goods or services loses as they sell less.
        Thus, Bankerism and Industrialism (etc.) is not compatiable.

        Recently Mario Draghi of EU said the quantitative easing – inflating the Euro by low or zero interest – would continue.

        The 777 point drop that occured in 2007 has been surpassed this year.

        Deutche Bank has made consecutive losses since January 2014.

        The Banksters are doing all they can to crash the Euro and every other economy in the world once again but far greater this time.

        AUSTERITY IS THEIR GAME – because the middleclass is gradually waking up and becoming a threat to their existence.

        A prosecutor has to fulfill four criteria to have a case:
        * Means
        * Aim
        * Possibility
        * Intent with confirmation

        The last criteria isn’t hard to find.
        For one, read the pdf THE FIRST GLOBAL REVOLUTION: A REPORT BY THE COUNCIL OF THE CLUB OF ROME, by Alexander King & Bertrand Schneider.

        The introductory poem spills the beans:

        “Ah love! Could thou and I with fate conspire,
        to grasp this sorry scheme of things entire,
        would not we shatter it to bits and then,
        remould it nearer to the heart’s desire?”

        If you can answer who “fate” is, for it is a character, then you know who and which you’re dealing with…

        It’s not Putin, the exception does not make the rule.

        1. Anymouse

          Forgot to mention.

          “Europe hooked on Russian energy”… The EU is hooked on energy and Moscow is not the cause, Europe is.

          The EU had a huge trade surpluss against Russia, so Russia had to lose and the EU had loads more.

          Who had to win?

          Find out who wants to sell energy to Europe instead of Russia.

          The Kabbalist US and the similarly Kabbalist Takfiris in Quwait and S.Arabia?

          You’re castin suspission on Moscow for managing not to have Russias neck broken by this Goliathan swing; for saving 300 million Russian lives from AUSTERITY – the love of the Troika.

          The authors conclusions fault in many places because the premises are wrong.

          The Banksters are the only ones that gain on crashes. It’s the EU that creates austerity for Europeans – is anti-European.

    2. Scary Devil Monastery

      “Are you saying that Putin has been planning the Ukrainian mess for the past 15 years ? Are you serious about that ?”

      You should check on the Ukraine situation. In essence their entire energy budget consists of natural gas they’ve been pilfering from the russian main gas lines going through. And they’ve refused to pay that bill which today amounts to a worth of a few billions USD. It’s been like that since before the Sovjet union fell. Russia had no need to “plan” the mess which was, in essence, already there for over fifteen years.

      What Putin must have realized is that in a situation where he’s sitting on a country heavily penalized in every foreign market but abundantly wealthy in natural resources the one and only way to end up on top is to ensure his products are needed and traded in.

      Ukraine simply became a very convenient lever to employ. And yes, he’s probably been looking at it like that for most of his career.

      Getting oil and gas traded in other currencies than the USD has been a primary agenda for the russians since the 60’s so in essence Putin just found himself with the exact chess pieces needed to pull of the moves required.

      Check mate, russian style.

  9. Tobias

    As for the “next global reserve currency”: Keynes did NOT want the USD to become the global reserve currency. He wanted a currency that does not belong to a single country which he called Bancor: http://en.wikipedia.org/wiki/Bancor

    However the US forced their currency in the Bretton Woods agreement on the world as federal reserve currency. In doing so the copied plans the German Commerce Secretary “Walther Funk” first announced 1940, about how the future global trade and all other currencies should depend on the Reichsmark
    http://weltmachtgeld.tnparty.eu/index.php/Nazi-Deutschland_1940:_G%C3%BCtertausch_und_Reichsmark
    see footnoes for the original transcripts (all in German)

    The original idea of Kaynes, a country-independant reserve currency, is currently also what the Cineese Central Bank is advocating. While I agree that Putin is smart and wants to get rid of the USD for oil trade because it would benefit Russia (and all other oil exporting nations), I doubt he had it planned this way. Even as a vague long-term strategy. Wouldn’t he have secured more non-USD oil contracts with China and other countries BEFORE that?

  10. Max Pont

    Interesting analysis. But I think you are pushing your arguments too far.

    Anyone who knows anything and all academic studies of important historical processes and events knows that decision making in governments, the military and large corporations are haphazard, uninformed, contradictory, sometimes random, often short-sighted, but above all incompetent.

    Putin is a strategic mastermind. But even if he has a long-term strategy to unseat the US petrodollar, the events in Ukraine took Russia by surprise last year. It took less than three months from the first protests against the pro Russian president until the US backed coup kicked him out. There is no way in hell that Putin could have orchestrated this process and been sure of the outcome.

    It is a bad way of arguing to build extensive theories on top of a few facts and make a number of logical jumps in free air without any supporting facts to reach the grand conclusions. At best it is an interesting speculation, at worst it is a just another crackpot conspiracy theory, adding to the pollution of the internet.

    You have a point and it is obvious that Putin wants to weaken the US by unseating the dollar. But if the sanction ever have the desirable effect it is unintentional. Not the result of Putin’s genious.

    (It is a a common fallacy. To ascribe almost superhuman intelligence and power to some feared powerholder and then believe that everything that happens is the deliberate result of some sinister masterplan by this dark powerholder in the shadows. This is classical conspiracy paranoia. For example: illuminati, secret hidden Nazis, Napoleon, Satan, CIA, CIA and Aliens, David Icke’s claim that the global power elite are cloaked alien reptilians, the secret world government, the Freemasons, the Jews, the muslims, the rapture, the anti-Christ, the pope, that the earthquake outside Japan was man made on order by the secret world government to punish Japan for disobedience, CIA and the secret program for mind control implants on the entire population, blah blah, blah.)

    1. gurrfield

      But there was a fixed date which probably bugged both “sides”: an aggreement that the Sevastopol naval base on Crimea was to be returned to Ukraine (from Russia) by 2017. The largest naval base and Russias’ key to the Black Sea in the cold war. Would be a huge geopolitical strategical loss if they lost it.

    2. Scary Devil Monastery

      “To ascribe almost superhuman intelligence and power to some feared powerholder…”

      Isn’t what’s happening either. Russia has been wanting a way to ensure the USD is a no-go for oil since the 60’s. Ukraine has, for the last fifteen years or so simply been a top contender for a “lever”. Rick mentions 2009 when the last maneuvers took place, but Ukraine’s pilfering of Russian gas has presented a most excellent casus belli to Russia for over ten years.

      You are using the word “planned”. I’m saying he probably HOPED for the proper opportunity. That presenting itself he was fast to move.

      Faster by far than the west which, it has to be said, is a LOT slower to react and a great deal more muddled in it’s responses these days. Before congress can even make a decision to pour water out of a boot in the US these days a democrat has to ritually shank a republican on the senate floor.

      1. jcm

        But isn’t politics more about paving the road than actually traveling it? Putin may be just flexing muscle as he stumbled upon opportunity, but he’s not cleaning up the mess. I don’t think the US is going down easy if it comes to that, but they’ll have to barter for it. Or invade someone, like Venezuela, or Mars. Republicans are good at that and they’re up next.

        1. Scary Devil Monastery

          “But isn’t politics more about paving the road than actually traveling it?”

          Normally, yes. This road has been paved extensively for quite a long time though. And there’s something else to consider as well – Russia is one of the absolutely wealthiest nations on earth in oil and minerals. And yet they have never been able to make use of those.

          There are two reasons as to why. One of which is historical western opposition. Like it or not the US main influence is in Saudi Arabia, Kuwait, and the rest of OPEC. As long as all the traded commodity comes from those regions the US has a modicum of control over where that commodity goes and which currency it props up.

          If Russian oil and gas flows cheaply on the market in large quantities, traded in rubles to boot then quite a lot of international muscle will cease to flex in favor of the US. It’s that simple.

          Soviet Russia knew this as does Putin. If he sees an opportunity to break a wedge into the US monopoly he has no other political choice than to go for it, no matter how. If Russia is to grow as an economic power Ukraine has to be hammered flat in the current political state of tension.

          Next_ghost brings some interesting facts to the table here as well. The US isn’t being dumb enough to fall for the spiel hook, line and sinker. Their imposed sanction list is limited. Russia’s countersanction list is not.

          Now if the saudis hadn’t tanked the oil price below 50$ pro barrel Putin might have come out a real winner. As is there’s suddenly a glut of cheap oil.

  11. Ninja

    You see, while I tend to agree that Putin is no stupid simpleton and that he has long-term plans I have a few issues with this analysis. First of all it ignores the moves from involved players, namely Europe. As somebody wisely pointed out above, Europe is actively working to have a plan B in case Russia pulls the lever and halts oil and gas exports or tries any funny move. Russia wouldn’t survive an year without their incoming revenue from petrol so they don’t need a permanent alternative to their supply. They need enough time to bring Russia to its knees. Second, as much as we want to believe the US Govt is ran by stupid people it surely has its backup plans. Also pointed above is the fact that the sanctions are mostly cosmetic and nobody is moving a finger to really help Ukraine. Part of me reached the conclusion that the conflict is being prolonged on purpose by the West but since it enters the conspiracy theory field I’m mostly leaving it on the sidelines.

    Then there’s Bitcoin. There are moves to rein it in already. I’m guessing that the nation that dominates it will get the strategic advantage. Even if there are other crypto currencies out there none of them benefit from a fragmented landscape as it is today.

  12. Cirvis

    The Rouble is not a currency – it’s a bad parody of a currency and no sane person would accept it as payment for goods or labour.
    People want real currencies instead – like EUR or USD.

    1. i_err

      Foregin currencies had replaced RUBle as a defacto currency in run russia during it’s free fall (simmilar to former Yugoslavian pueoples adoption of DEM during hyperinfaltion in the late 80’s and galloping inflation during early 90’s). The authorities made a hard crackdown on that since then.

  13. ike

    What a load of rubbish Putin has been trying to achieve a stable normal trading relationship with Europe. The USA pushed Russia into a stronger alignment with China and into an appositional stance towards USA. USA wants to rule the world on their terms and cannot tolerate an alternative almost equal power so we are at the sad state of affairs that exists today . Once more contemplating planetary destruction in a nuclear war

  14. i_err

    Zero Hedge? Realy Rick Falkwinge. What next? Wisdom of Global Research?

    Putin couldn’t have made Europe dependant on their gas without bribing the key policy makers (like the rejected candidate for the commissioner of energetics Alenka Bratušek). Or without creating frozen conflicts wherever Europe was making it’s alternative gas-lines.

    Western sanctions are a large part why Russian economy in a crisis. And despite the crisis they aren’t working. And of a much simpler reason: hate. Not only Russian Fedaration relies on it’s energetics exports, but western sanctions have blocked russian banks from western financial markets. Without the Chinese help the banking system would have collapsed. He made west the enemy a long time ago, and this is an ideological struggle against the west and the USA. Common man in Russia thinks west is out to get them and wants to destroy them, while in reality west just wants a reasonable trading partner, to sell their junk to.

    According to their meadia Sweeden is almost as bad as Germany with has over 70 kinds of legalised kinds of Homosexuality? When you walk the German streets you can hear dogs howling in pain, as the Germans are raping them (zophilia is legalised in Germany), becouse they dont have enough women. – all according to their mainstream media.

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  52. Patrick V.

    You write:
    “Invading Ukraine
    Hence the invasion of Ukraine, a series of moves that have defied any normal military routine. It has been constant and consistent provocation, but has equally consistently not met the bar for a military response from the West…”

    May I ask if you have any hard and undeniable proofs that Russia invaded Ukraine? Do you have some links to websites? NATO has tons of proof. You might borrow some of their.

    1. epi

      He cannot prove it because its a fantasy, or a stretched-beyond-recognition reframing of the R2P mission in Crimea. Shame on such an interesting conspiracy theory.

  53. Eric

    Normally I would say you are an intelligent and informed person with an interesting point of view, but on the topic of global energy you’re clearly out of your depth. As a result, you end up sounding like a mad conspiracy theorist.

    The whole piece is full of very stretched generalizations with little evidence to back it up. There are numerous flaws and misunderstandings. For example, gas isn’t traded like oil, but your argument insists that it is. Because it is hard to transport gas, it tends to be sold through long-term bilateral deals, not via an open market in the way oil is. The increase in Saudi oil production has done most to drive down the price of oil, and Saudi policy is as much motivated by their desire to undermine Iran, a Russian ally you’ve not properly factored into your geopolitical analysis. In fact, it’s odd you don’t mention the Iranians more, as Iran is a major oil producer that has long tried to subvert the role of the US dollar in the buying and selling oil, and they’ve been subject to sanctions for longer too. Finally, you make reference to US domestic oil production, though I assume you mean North American production given the significance of Canada as a supplier to the US. However, you made no mention of the much more significant boom in North American gas production, which is a benefit to the US economy but contradicts your analysis because it simply means that North American self-sufficiency makes it less likely that bilateral gas deals will be negotiated with reference to the American economy.

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  55. Anymouse

    Interesting point of view, making the Kremlin the agent behind its own economic suffering.

    Although, there are some obvious faults, and regarding Putin harassing Ukraine, for one, look at what good prices Ukraine bought the natural gas for under Yanukovich and after the Blackwater coup those solidaric prices with the people of Ukraine continue.

    Second, look at the $3 Billion in debt that together with the “high” gas prices that allegely was the cause behind the Maidan movement, Putin has done everything for the Ukrainans to keep their heat and cooking abilities despite Kiev officials like Julia Tymochenko shouting “Russia should be nuked”.

    Third, in August 2008 Georgia occupied South Ossetia and Abchasia. Russias southern military district was mobilized and in only five (5!) days Georgia was defeated; totally thrown out of those independent republics.

    Mind you that Georgia had major battle experience from being the third largest force occupying Iraq and had for years been trained and equipped by NATO countries.

    Russia on the other hand despite winning proved its armed forces was in way poorer shape than the they could have imagined after almost two decades of underfinancing equipment, training and research.

    Defence minister Shoigu’s new doctrine changed a lot in these few years while the Ukrainian army instead continued to deteriorate – for 23 consecutive years.

    Now the author claims that Russia in a staggering 1.5 years (!) only has managed to “occupy” about half of Luhansk and Donetsk regions…

    …when it beat Georgia in 5 days…

    This does not follow logically, nor is some of the premises factual, and the whole analysis is fragmentized. But I agree Putin plays it well now, but not as a cause but as a consequence – a very given move.

  56. Anymouse

    RT.com:

    “Putin signs decree suspending free trade treaty with Ukraine starting January 1, 2016”

    https://www.rt.com/business/326132-putin-ukraine-decree-trade/

    Does Rick Falkvinge seriously mean that Russia has been conducting a “war” against Ukraine for nearly two years but not included economic warfare?!

    Please check the facts, check your logic, for the consequences of your simulacra reproduces human suffering on a mass level.

  57. George Knight

    Rick, have you become nuts? ‘Putin’s invasion of Ukraine was not an invasion of Ukraine. It was a trap for the US Dollar, a trap that sprung perfectly’. Perfectly in which way and for whom? You probably mean it was a trap for the Russian ruble and economy. Maybe it’s better for your credibility to write about matters where you have an understanding of. I like your writing about privacy, the Pirate movement and digital human rights a lot, really, but don’t make yourself ridiculous with ill-founded, crazy conspiracy theories. You are far better than that.

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