Debt Rattle Jul 22 2014: Phase Next: Economic Warfare

By The Automatic Earth

Jack Delano. Engine taking on coal at Illinois Central Railroad yard, Chicago Nov 1942 

Amidst the heightened media hysteria that expresses itself in claims of an “increasing burden of proof” of Putin and separatist involvement in the MH17 crash, where there is still no proof anywhere to be seen after 5 days, events are taking a sharp left (can’t bring myself to say ‘right’) turn towards a new, next, phase. Which promises to not be pretty. It’s, as we say, on.

With the earthly remains of the victims now outside the rebel controlled area, even the Dutch government starts talking about more, and more severe, sanctions against Russia. While, I can’t repeat this enough, there is no proof of any Russian involvement that has been shared by any ‘authority’, with either the media – who’ve proven they need no proof, since it just gets in the way of the story – or the public – who follow the “justified anger” of the herd -. Perhaps that alone should tell us plenty about what is going on behind the scene, and what that next phase is.

There’s a black irony in hearing the Dutch PM say that the victims’ bodies are now in ‘safe’ territory, i.e. that part of Ukraine which is under Kiev control. If there is once source of info that has proven to be beyond unreliable, since the February coup but certainly in the past 5 days, it’s the Kiev government.

Kiev’s claims about the ‘terrorists’ tampering with, if not desecrating, the bodies? The bodies are in reasonable to good state, declared the investigators yesterday (considering, of course, they fell 33,000 feet before they hit the ground). Tampering with the black boxes? They look fine, said the Malaysian colonel who took possession of them. But the accusations hover in the media-controlled air.

Here’s guessing you’d be hard pressed to find one inch of actual truth in any media report issued since Thursday by the Kiev government. Which is in place because “we” put it there and support it. Which ordered its army, less than 24 hours after the crash, to keep shelling the civilian population of parts of east Ukraine, knowing full well that might hamper the investigation of the crash.

No, the ‘terrorists’ don’t trust Kiev, for obvious reasons, and they don’t trust the US or EU for equally obvious reasons, since the latter put Yatsenyuk and Poroshenko in place, and these are the people who order the killing of their friends and families. There’s not that much difference between the Gaza strip and the people’s republic of Donetsk. Both get shot at an awful lot, both bury friends and loves ones on a daily basis, and both are trapped and cornered and have nowhere else to go. There is a point where ‘who started’ becomes an irrelevant question; most of us learn that when we’re 5-6 years old.

And I can’t leave out that the New Yorker quotes Joe Biden as saying that Putin “has no soul”. That is on exact over-the-top par with the proverbial age old accusations against those you’d want to wage war against: that they eat babies. It’s also nice and darkly funny because George W., when he met Putin, said he could “see into his soul”. Biden: stupid warhorse. Anyone who listens to another word he says: not very bright. Since time immemorial, people have painted off their – perceived – enemies as inhuman animals. Check: the separatists.

Before I get to that next phase I mentioned, first of all here’s a few statements and questions, as formulated by Ron Paul and the Russian military, that may serve as a way to tell truth from fantasy. I could ask a hundred more myself, but let’s have these things be asked and stated by others. And by all means, let’s have our governments answer them. How hard can it be? Or as Ron Paul puts it: Is it so hard to simply demand a real investigation? We don’t think Russia or the ‘rebels’ can be trusted to conduct an impartial investigation. They think the same about us. And how wrong are they in that, really?

Ron Paul: What the Media Won’t Report About MH17

Just days after the tragic crash of a Malaysian Airlines flight over eastern Ukraine, Western politicians and media joined together to gain the maximum propaganda value from the disaster. It had to be Russia; it had to be Putin, they said. President Obama held a press conference to claim – even before an investigation – that it was pro-Russian rebels in the region who were responsible. His ambassador to the UN, Samantha Power, did the same at the UN Security Council – just one day after the crash! While western media outlets rush to repeat government propaganda on the event, there are a few things they will not report.

  • They will not report that the crisis in Ukraine started late last year, when EU and US-supported protesters plotted the overthrow of the elected Ukrainian president, Viktor Yanukovych. Without US-sponsored “regime change,” it is unlikely that hundreds would have been killed in the unrest that followed. Nor would the Malaysian Airlines crash have happened.
  • They will not report that the post-coup government in Kiev has, according to OSCE monitors, killed 250 people in the breakaway Lugansk region since June, including 20 killed as government forces bombed the city center the day after the plane crash! Most of these are civilians and together they roughly equal the number killed in the plane crash. By contrast, Russia has killed no one in Ukraine, and the separatists have struck largely military, not civilian, targets.
  • They will not report that the US has strongly backed the Ukrainian government in these attacks on civilians, which a State Department spokeswoman called “measured and moderate.”
  • They will not report that neither Russia nor the separatists in eastern Ukraine have anything to gain but everything to lose by shooting down a passenger liner full of civilians.
  • They will not report that the Ukrainian government has much to gain by pinning the attack on Russia, and that the Ukrainian prime minister has already expressed his pleasure that Russia is being blamed for the attack.
  • They will not report how similar this is to last summer’s US claim that the Assad government in Syria had used poison gas against civilians in Ghouta. Assad was also gaining the upper hand in his struggle with US-backed rebels and the US claimed that the attack came from Syrian government positions. Then, US claims led us to the brink of another war in the Middle East. At the last minute public opposition forced Obama to back down – and we have learned since then that US claims about the gas attack were false.

Of course it is entirely possible that the Obama administration and the US media has it right this time, and Russia or the separatists in eastern Ukraine either purposely or inadvertently shot down this aircraft. The real point is, it’s very difficult to get accurate information so everybody engages in propaganda. At this point it would be unwise to say the Russians did it, the Ukrainian government did it, or the rebels did it.

Is it so hard to simply demand a real investigation?

The Russian military, which for western media are of course the devil incarnate, poses a number of questions:

10 More Questions Russian Military Pose To Ukraine, US Over MH17 crash

Russia has released military monitoring data, which shows Kiev military jets tracking the MH17 plane shortly before the crash – and posed yet another set of questions to Ukraine and the US over the circumstances of the tragedy. Military officials – chief of General Staff of the Armed Forces Lt. Gen. Andrey Kartopolov and chief of the Air Force Main Staff Lt. Gen. Igor Makushev – posed a number of questions to Kiev and Washington concerning the possible causes of the catastrophe in Eastern Ukraine that killed almost 300 people last Thursday.

1. Why did the MH17 plane leave the international corridor?

2. Was MH17 leaving the route a navigation mistake or was the crew following instructions by Ukrainian air traffic controllers in Dnepropetrovsk?

3. Why was a large group of air defense systems deployed to the militia-held area if the self-defense forces have no planes?

5. On the day of the crash Kiev increased activity on its Kupol-M1 9S18 radars, which are components of the Buk system in the area. Why?

6. What was a military plane doing on the route intended for civilian flights? Why was the military jet flying at almost the same time and the same altitude with a passenger plane?

8. Where did the launcher – from the video circulated by Western media and showing a Buk system being moved allegedly from Ukraine to Russia – come from? As the video was made on the territory controlled by Kiev, where was the launcher being transported? Where is it right now? Why are some of the missiles missing on the launcher? When was the last time a missile was launched from it?

10. Why haven’t US officials revealed the evidence supporting claims that the MH17 was shot down by a missile launched by the militia?

My own main question, if I had only the one, would be something like: Supposing it was the Ukrainian army who shot down the plane (even just accidentally), how would that affect statements from western media and politicians? For now, looking at what solid proof we have and what we don’t, it’s just as possible, and just as likely, as the ‘rebels’ having done it. Or the US army. Or Blackwater.

To what lengths do you think ‘we’ would go to cover up such an event if it had indeed happened? I think you can answer that for yourself.

And besides, even if the rebels were the ones who shot down the plane, and again there is not proof for that, that should probably be a reason to make sure the conflict between them and the US installed Kiev “government” is halted, so no-one there has any reason to ever fire on a plane again. Or on innocent women and children, for that matter. But no such initiative is apparently seen as useful. The reason for that leads us to ‘phase next’: economic warfare.

All the accusations and insinuations that have been uttered in increasing frequency and fever pitch lead into what has been prepared for years: break Putin’s, and Russia’s, power. It doesn’t matter what it takes, it doesn’t matter how many people have to die to achieve it, Putin controls oil and gas, just like Saddam did, and he therefore has to be brought down.

What better way to achieve that than to use a terrifying deadly event and, evidence be damned, blame it on the man you want to topple? And squeeze his financial wherewithal while you’re at it.

The US could invade Iraq and topple Saddam. They can’t do the same with Russia and Putin. So, economic warfare it is.

The main proponents of economic warfare are from the Anglo Saxon world and the Baltics. Australian PM Abbott increasingly sounds like he’s on the 180º wrong drugs. The ones UK PM Cameron takes are not much better. And the rest of Europe follows in their footsteps, not all all that eager, but too afraid of the soaring eagle looking for the fossils to power its empire.

Ambrose Evans-Pritchard, in his own unique – often erroneous – style, leads the information vanguard:

Russia Vastly Outgunned In Economic Showdown With West

The economic showdown unfolding between Russia and the West is almost entirely one-sided. The US has the power to bring Russia to its knees through hegemonic control over the world’s banking system, using an array of lethal financial weapons developed by a cell at the US Treasury, and already deployed against Iran and North Korea.

Richard Christopher Granville, from Trusted Sources, said the US “crossed the Rubicon” last week even before the apparent missile strike against Malaysia Airlines flight 17, imposing sanctions that effectively shut the energy trio of Rosneft, Novatek, and Gazprombank out of international finance. “The Americans have the power to throttle Russia unilaterally because no European or Western bank of any importance is going to defy the US after the fines imposed on BNP Paribas,” he said.

Good to note that the game was on way before the MH17 crash.

“What has been holding them back is fear of a damaging split between the US and Europe, since it is Europe that suffers the full blow-back from sanctions. This issue has been blown away completely by the crash. Europe’s leaders now have a duty to their own citizens to be tough,” he said. Mr Granville said the yawning gap that was building up last week between the two sides of the Atlantic has suddenly closed, making it much harder for Russian president Vladimir Putin to keep playing Europe off against America.

Europe’s anger over the apparent missile strike and the abuse of the crime scene has denied him his last trump card. Former Russian premier Mikhail Kasyanov told Bloomberg that any further escalation of sanctions to “tier 3” action against the whole financial sector will cause the economy to “collapse in six months”. [..]

Perhaps, but at the same time, let’s not forget that Europe’s anger is based on nothing but spin and allegations.

Europe remains starkly divided over calls for “tier 3” measures against key pillars of the Russian economy, with EU officials warning that any such action risks spinning out of control and suffocating Europe’s fragile economic recovery. While Britain’s David Cameron called for “a new range of hard-hitting economic sanctions”, the body language was very different in southern capitals.

Spain’s foreign minister, José Manuel García-Margallo, refused to criticise Mr Putin on Monday, and insisted that the EU should not prejudge the crash investigation. Mr Cameron said “tier 3” measures must be spread across the key sectors of finance, energy and Russian defence in order to share the pain. If it is restricted to financial sanctions, the City of London will suffer a disproportionate hit since it serves as Russia’s offshore hub for raising debt and issuing equity.

Mr. García-Margallo says what everyone should be saying, but has forgotten in the hunt for a guilty party. Many a lynching party in the southern US, and throughout the world through time, was conducted in that fashion.

France has so far refused to give up a €1.2 billion sale of Mistral warships to Russia. “Frankly, in this country, it would be unthinkable to fulfil an order like the one outstanding that the French have,” said Mr Cameron in the House of Commons. Germany’s Angela Merkel did not even mention further sanctions in her statement over the weekend, and will clearly resist any serious measures against Russian gas suppliers. Diplomats say Tuesday’s meeting of EU foreign ministers is likely to be a holding action with token gestures until there is more clarity on the crash. But that is small comfort for Russia.

The US has an arsenal of measures that it can roll out, and intends to do so to punish the Kremlin for redrawing Europe’s borders by force. The sanctions so far target long-term finance beyond 90 days maturity. This is slow suffocation. The International Energy Agency says Russia needs $750 billion of fresh investment over the next 20 years – and imported Western technology – just to stop oil and gas output declining.

Is it the Kremlin, or the White House, that has ‘redrawn Europe’s borders by force?” Or, in different words, does the US care one bit about European borders? Yeah, right. The goal is Russia’s fossil fuels. And Europe blindly follows the call to war, because people like Cameron know how vulnerable and “energy empty” their nations are. Nothing to do with any plane crash, that’s just a handy excuse that’s being played for all it’s worth.

The measures have frozen almost all Russian companies and banks out of the global capital markets. This matters because they owe most of Russia’s $715 billion in foreign currency debt. They cannot roll over $10 billion coming due each month. This is not yet a major problem. Russia’s oil giant Rosneft has $20 billion of cash reserves. Yet Moody’s issued a credit warning on the company on Monday, saying it must repay $26 billion by December next year, with peak repayment demands over this winter.

The longer the stand-off with the West goes on, the more serious it becomes. Sberbank said the government may have to step in with emergency funding for companies but this would eventually raise questions about the Russian state itself.

Does this perhaps tell us something about why Janet Yellen is on her way to taper QE and let the US dollar rise to super dollar status? A higher buck would greatly increase the pressure on Putin. Too late for that BRICS ‘banking union’.

The US can at any time tighten the noose. There are reports from Washington that it may soon start to use the nuclear option of money-laundering and terrorist laws to cut off all operational finance for targeted Russian companies, effectively preventing any major bank acting as a counter-party on any transaction. In extremis, this could paralyse much of Russia’s oil and gas industry, reducing it to cash transactions.

The great question is whether China would come to the rescue with loans and trade conduits in defiance of the Western world, if it is shown beyond doubt that Mr Putin’s proxy forces shot down an Asian airliner. “The Chinese will not cut him any slack,” said Mr Granville.

That last bit is the main issue: 5 days after the MH17 crash, nothing has been shown beyond doubt. All we’ve seen so far is innuendo. It would all be so much easier if the US shows us, and the media, the proof it claims to have. Nothing to date. So when Obama asks what the ‘rebels’ have to hide when they don’t give researchers – which as far as they know could well include CIA etc. – full access to the disaster scene, we all have the right to ask the US president what he has to hide in view of the fact that he hasn’t provided one piece of solid evidence.

Until he does, I would tend to lean towards economic, political and energy warfare as the underlying theme to the entire situation. But I’m open to being corrected by any and all proof America’s brilliant, highly sophisticated and powerful intelligence community has to offer.

There is a picture being painted before our eyes that is demonstrably false, simply because it relies on blaming parties for things our governments and media have not provided any proof for. And I’ll say it once more: the one thing we, at this time, do have proof of, is that painting such a fantasy picture demonstrates a grave lack of respect for the people who died, and for their loved ones.

TLB recommends you visit The Automatic Earth for more great articles and pertinent information.

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