by Rostislav Ishchenko
Translated by Ollie Richardson and Angelina Siard
cross posted with http://www.stalkerzone.org/rostislav-ishchenko-seven-against-eight-or-223/
source: http://alternatio.org/articles/articles/item/60178-semyorka-protiv-vosmyorki-ili-2-2-3
On June 9th-10th, the G7 summit was held in Quebec and the Shanghai Cooperation Organization (SCO) summit simultaneously took place in Qingdao. For the first time in Qingdao, the SCO was represented by eight participants. India and Pakistan, which were added to the SCO at the last summit, were included in this summit. Another ten States with the status of observer countries and country-partners stand in the queue for dialogue. And another 10 (including, by the way, Ukraine) applied for observer status, but have not yet received any official status.
For us, 20 candidates for membership and candidates for candidacy are important only from the point of view that this demonstrates the significant potential of the organisation. As our “partners” from the EU and NATO said, explaining the inclusion in their structures of former members of the Warsaw Treaty Organisation and Comecon, “countries are fleeing from unpromising organisations to promising ones”. Judging by the queue for entrance, the SCO is a very promising organisation.
This is not surprising. As was stated at the last summit, it has already overtaken the G7 countries in terms of total GDP, and the gap in terms of GDP per capita is rapidly decreasing. Taking into account that in the SCO countries half the world’s population lives on 60% of the earth’s land, the potential for further growth of their economies is beyond doubt. There isn’t a more capacious and promising market on the planet, and there will not be.
However, the past summit was also characterised by the fact that if earlier the SCO countries were limited to discussing financial-economic problems, occasionally touching upon regional political issues, then this time they made policy program statements on issues that formally aren’t related to the SCO’s interests. The SCO countries called for compliance by all parties with their obligations concerning the Iranian nuclear deal, welcomed the contacts between the DPRK and China, reaffirmed the lack of an alternative to the political settlement of the Syrian crisis on the basis of the Astana agreements (they called for the implementation of the agreement on areas of de-escalation), and also the political settlement of the Ukrainian crisis based on the Minsk Agreements.
Let me remind you that the SCO is the #1 economy in the world today. And the world’s #1 economy has unanimously determined its global political priorities. Now everyone will be obliged to reckon with this. The fact is that everyone who has been following the rise of Russia and China in recent decades and the gradual reformatting of the global political space could have noticed that the Euro-Asian association has never been in a hurry to say something or threaten someone. Unlike the Euro-Atlantic alliance – which flailed around in constant hysterics, before making specific political statements or taking concrete steps in the international arena, both Moscow and Beijing accumulated forces, attracted allies, or at least transferred potential opponents to the status of neutrals, and only then acted. It is precisely this that allowed them to outplay the much more militarily and economically strong collective West.
The West’s military advantage was buried during Putin’s demonstration of the latest Russian weapons during his annual address to the Federal Assembly. Its economic superiority has also been in question for a long time, and suddenly on June 9th-10th at the SCO summit it was also finally buried. Now it’s not just the United States that is ceding the title of the #1 economy in the world to China, but the collective West also lost its economic superiority, being squeezed out from 1st place by the SCO. Let me remind you that the SCO consists of 8 members. I.e., the volume of the economy of the 8 SCO member States exceeded the volume of the economies of the 7 most developed Western countries.
I think that it is precisely for this reason that, having eliminated the superiority of the West in the military-political and economic sphere, the SCO started to make political statements only now. Now the SCO countries can back up their desires with real actions. The West itself destroyed the rules of world trade, having started, contrary to the rules of the WTO, to impose sanctions against anyone they want for political reasons. The Eurasian Union is not as greedy for applying sanctions as the Euro-Atlantic is, and does not impose them so quickly. But if it does impose them, it really hurts.
On June 10th, in a joint declaration, the SCO expressed its will, its vision of the prospects for solving current crises, and the rules for building a future world. What was the collective West able to respond with? Nothing. It would have been better if they hadn’t gathered for their G7. Then there wouldn’t be such a contrast.
Actually, Western countries had two main bullet points: how to avoid a trade war, caused by US prohibitive duties on basic European, Canadian and Japanese commodity exports, as well as what to do with Russia, without which the West found itself not being able to solve any current problems in international relations.
Concerning the first question, the “6” tried to organise a collective attack on Trump, in response to which the American President – in his usual free manner, without equivocation – stated that the “6” are used to enriching themselves at the expense of the US, but it won’t be able to do this anymore. The issue of the economic unity of the West was closed on this. Now the dear Europeans need to think whether to accept the challenge of the United States and start an economic war or to shamefully capitulate without even trying to resist. Given the fact that Trump has also personally managed to offend almost each of the participants of the meeting, the chances of making a choose in favor of war has dramatically increased.
In this regard, the course of the discussion about the second (Russian) issue is interesting. Firstly, it is Trump that took the bull by the horns and proposed to return Russia to the “8” – i.e., to expand the format of the G7 to the G8. He was enthusiastically supported by the Italian Prime Minister, but everyone else rejected such a radical change of policy. Then a completely empty statement was signed that once again called on Russia to show good will and to appease the West by abandoning its own position concerning all topical issues of the global agenda. But Trump managed to withdraw the US’ signature from it already on the way to Singapore.
By the way, the fact that the US President’s schedule was drawn up in such a way that he had to give up the final stage of the G7 meeting for the sake of the meeting with Kim Jong-un, which took place under Chinese mediation, is also very significant. The leader of the West left his main allies in order not to be late for the meeting with the leader of the DPRK, who the West only a couple years ago didn’t notice in general. It should be kept in mind that the meeting with Kim Jong-un was planned when the date and protocol of the G7 meeting were known at least a few months prior. If the US had insisted on the meeting in Singapore taking place a day or two later, then neither China nor North Korea would’ve gotten worked up.
But the Americans did not insist. Trump, by all accounts, was not averse to getting away from his rebellious allies much earlier by using a plausible excuse.
It is necessary to understand that Donald Trump is not an urban crazy but the US President, relying on the support of a large part of the political elite and has a good chance of being re-elected. Otherwise he would have been consigned to the dustbin of history by impeachment. I.e., his astonishing, disdainful behavior towards European allies is not the personal position of a businessman who lost his marbles (as he is sometimes presented as). This is the position of people who control the power in the US today and plan to control it for at least another six years, and this is the position that was supported by most voters.
Long ago I wrote that over the past decade we have seen the frantic attempts of the American elites to find the missing resources for carrying out a hegemonic policy. After the failure of the attempt to quickly loot Russia and China – turning them into secondary political entities that pursue a foreign and economic policy that is favorable to Washington – the Euro-Atlantic and Pacific allies of the United States, which were proposed to sign the TTIP and TTP quickly and without asking further questions, had to become the donors of the necessary resources. But the allies dug their heels in and the Obama administration was able to push forward these two “partnerships” in the right form.
Trump immediately refused to continue negotiations over the TTIP and withdrew from the already signed TTP. This marked a new American policy towards allies. If with their help it wasn’t succeeded to suppress Russia and to milk from them the resources needed to continue the American fight, then it is necessary to throw them from the ship as extra ballast.
Of course, all of this doesn’t happen in just one day. But the United States is quite clearly trying to abandon any support for allies and any trade relations that are profitable for them, while maintaining its trade and economic interests in Europe. In fact, if before it was proposed to the EU to relax and grab its ankles, then now the US switched to direct violence. At the same time, there is iron Western logic in the words and actions of Trump. The West as a united front was against Russia and China, but the US was its main force and carried the costs, while the others were mostly just counting the profits. The US has spent too much and can no longer provide resources for the collective policy of the West. It will be honest if the EU, Japan, Canada, and other allies tighten their belts and help the hegemon financially. Well, and if they do not want to do this, then the US has the great right of a hegemon to take away from its vassals everything that it needs, without asking the opinion of the vassals themselves.
It is clear that Washington can no longer carry out its hegemony in general without its allies, but it is not ready for an equal partnership and is trying to find a new junior partner (instead of the too expensive, too clumsy, and inefficient EU). Such a partner for Washington can be either Russia or China. Hence the policy of Trump in relation to Moscow and Beijing. Sanctions haven’t been lifted, new ones are even being introduced, but a desire for a timely solution of complicated and irritating political issues is being demonstrated. Especially if a compromise can be found at the expense of the interests of already unneeded allies (regardless of whether it is the EU or South Korea and Japan).
The United States would like to play in a pair, but so far they don’t know with who. That’s why they are trying to drag Russia into the G8. The calculation is simple: if you can play on the slowness of European politicians and institutions that are unable to quickly rebuild, then you can try within the framework of the G8 to oppose the “6” together with Putin. So then the impudent Europe will be punished, but the Russian-European rapprochement will come under attack.
At the same time, since a united Eurasia is the main project bringing Moscow and Beijing together, Russia’s game on the side of the US and against the EU, even if it is within the framework of the G8, can cause irritation in China. And in the Chinese direction Trump also creates platforms of common interests – for example, he launches a long negotiating process with Kim Jong-un in which the US clearly benefits from if they can convince the DPRK to abandon its nuclear weapons, and they will pay for it at the expensive of the interests of Japan, South Korea, and even China. Nuclear disarmament of the North in exchange for ending the state of war and withdrawing American troops from South Korea dramatically reduces the security of Seoul and Tokyo, and the unification of Korea placed on the agenda does not meet the interests of China and Japan.
Thus, Trump is trying to create for the US a new platform for trade, to close political formats that don’t leave Washington any room for manoeuvre, and to open new ones that allow to actively manoeuvre promising unions. Washington is trying to replace the losing format of 8 (SCO) against 7 (G7) with the format of 2 (Russia and the US) against 2 (the US and China), which in total involves only three countries.
Of course, Trump’s manoeuvring is extremely risky. But it rests on the slowness and clumsiness of the European Union, which simply will not have the time (due to the length of its procedures and the complexity of the agreements) to swap a pro-American policy for an anti-American one. He also hopes that Japan and South Korea have nowhere to go from under the American umbrella and will hope for the best until the last moment, and that their possible intrigues against the US are possible only with Russia, which also should arouse suspicion in China and close the Beijing direction off to Moscow.
After all, he has no options anyway. He is obliged to sacrifice piece after piece in order to win the race and as a result to try while exhaling at the last moment to overtake the opponent and to save the lost game. “Whoever doesn’t risk doesn’t drink champagne!” is the slogan of pure and non-turbid business. But Trump is indeed a businessman, and all American policies in the era of their success were pure and non-turbid business. And then the ideologised neocons came and ruined everything. Trump was push forward for the presidency in order to try to return to the old-good schemes in the context of a geopolitical zugzwang – where every new move worsens the situation. And it must be said that he found an interesting, although not winning continuation. However, he stands a chance only if the enemy makes gross errors, otherwise there is no chance at all. And there a lot of opponents, maybe someone will make a mistake.
In general, the group of 7 was sacrificed at the summit, and it was shown that they are ready to sacrifice the EU, special relations with Canada, a trusting partnership with the UK, and much more for the sake of preserving the freedom of hands in the global game. So far, they are not ready to sacrifice only their military presence on the territories of allies, and only because they want to keep this trump card for further geopolitical exchange.
Now the ball is in the EU’s court. Germany has long tried to reorientate critically important economic ties with the US towards other partners, including Russia, but the process is far from over. Similarly, the process of creating a single European army to replace NATO is not completed (it just started). Trump put his European friends in a very difficult situation – where it is impossible not to respond to his rudeness, but there still isn’t anything to respond with. Let’s see whether the savvy Europeans will find an effective move that can beat the Danaë sacrifices of Trump.
Rostislav Ishchenko wonders whether President Trump is debating the folding a US economic relationship with the EU in favor of double-twosome relationship with Russia and / or China. Rostislav does not address a further Presidential option, that of withdrawing from significant world trade altogether.
President Trump’s nation-wide social media communications cite repeatedly a $800 Billion US balance of trade deficit with the world — $350 Billion with China alone — and that this disaster is responsible for the:
1. Decay of 70,000 industrial plants in the American heartland and a ;
2. Decades long un-employment of 92 million of his fellow citizens.
The President does not blame foreign countries for “taking advantage of the US,” while insisting that his country’s trade with the rest of the world should be balanced, with no significant surpluses or deficits overall.
Furthermore, the President holds that America’s new-found energy resources free the country from oversight of oil-rich places such as Saudi Arabia and expensive naval oversight of trade routes on the high seas.
In effect, President Trump’s trajectory is a return to his nation’s historic policy of full employment and minimal external trade, through substantial 30%+ tariffs, which was abandoned after World War II in the interest of fighting a global enemy that dissolved in 1990. This trajectory is vehemently opposed by Wall Street — the 1% who corner world markets and meddle endlessly in foreign adventures — but is vehemently supported by the nation’s re-awakened blue-collar and middle-class, which has traditionally opposed foreign wars since WW II.
It goes without saying, President Trump knows he is in the gun-sights of Wall Street. He undoubtedly survives on the prayers of his “deplorable followers” besieging Heaven.
Petrel, I think you are missing the point. Who is the one who closed all those 70,000 plants? Do you know that since the Walmart started selling made in China products it became the largest corporation in the US. Yes it outdoes the likes of Westinghouse, GM, GE and so on. While talking to my friend who is a very big Trump supporter, I said “Make America Great again?” it ain’t happening. This train has left the station and it is not destined to return. No amount of tariffs and duties will bring the work back to the USofA. Trump knows it as he most likely discusses those things to his Grand Master at the Masonic Lodge.
Anonius
You are right. I am still having trouble understanding why a country would close down 70.000 manufacturing plants and depend on imports. Now the US Military Industrial Complex is even importing Chinese electrical components for it’s high tech, which is remarkable. Tariffs will not “Make America Great Again”, but production. I am waiting to see this happen. How many factories has Trump reopened so far ?
@B.F. ‘ I am still having trouble understanding why a country would close down 70.000 manufacturing plants and depend on imports’
The answer is rather simple: GREED. When the decision was taken by WalMart a certain Hillary Rodham Clinton was on the Board who feverishly opted for it. At that time the profit-margin was at 20%, to small ! Profit growth was stagnating, alarming !
This conundrum of excessive capital accretion which feverishly is looking for further investment is the end state of liberal capitalism, the more so the more liberal it is. In a way, the wealth transferred returns more hungry and aggressive (because it grows relentlessly) and finally eradicates those who created it in the first place without mercy. A machine destined to explode, unless someone releases the pressure in a non-destructive way.
HDan, sorry bud but it’s all about the profits. This is capitalism. The shareholders do not care how it’s done as long as they get big dividends at the end of the year.
To explain it in some detail. In the early 1980’s America was flooded with cheap IBM PC and Apple IIe clones from Taiwan. Do you think this was done by some small entrepreneurs in their basements? There was some big money behind it. The big money saw computer market skyrocketing so they decided to make more money by opening up Far East factories for other components. Before you knew (1990’s) it everything was moved to China. China itself represents a huge market the rest of the World is just a cream on a cake.
Here is one example from my field of expertise, process control:
In the 1970’s Single loop controller would sell for $2000-$3000, today you can buy one made in China for just over $200. OK it’s not the same quality but try to compete at this price difference. Enclosures used to be made in Michigan now those same Michigan companies closed their manufacturing in the States and have them made in China. Any user of those enclosures has to pay the same for the enclosure made in China. Guess who pockets the difference? Chicago, Detroit and other Cities became full of ghost factories now used by Hollywood for making movies. So to spell it out for you, unless an American Factory worker works for $2/hr and no benefits the work stays in China. So, Trump increases the tariffs and duties so he can get enough money to pay for the welfare cheques (checks).
The Hegemon is looking for a junior partner?
Very uncharacteristic of a Hegemon.
More likely that it is trying to whip the vassals (sorry allies) in line for the final showdown.
Dangerous times ahead.
A “nice” analysis, but with a certain bias.
Firstly, the Trump notion of getting a fair trade deal, is hogwash. The US mega cooperations have all to happily, outsourced production in the hunt for the last dollar profit. That will not come back, ever. The samme robber barons are now busy looting DOD, health and insurance sectors, all at the expense of the American ordinary citizen. And with the dumbing down of the populace, crumbling infrastructure, there is little incentive to start any production in the US.
Secondly, EU products, high value, high quality and high tech, still finds favor in the rest of the world, albeit expensive, they sell. China is very slowly approaching this level too and awkwardly faces the same problems as the EU, a huge trade surplus….
Hence the US blathering and posturing with tarifs. No matter what the US does it will not change matters, it is too late and unconcerted, there is no consensus, motivation or interest in the US to bring back production, as profits in the money markets are higher than in production. It is a service economy as is Britains, brought about by Thatcherism and Reaganism.
A warning to all nations.
The EU is NOT going to diminish its production base at the whim of the US, the US is not seen as the shining city on the hill in the EU political circles, on the contrary it is seen as a emerging failed state, possibly several states within a decade or two.
A trade war with the US will undoubtedly push the EU towards Eurasia, its natural and historical trade partner, this is slowly happening (Germany’s trade with Russia has risen despite sanctions) and will increase further.
A trade war with the US will probably void sanctions against Russia.
Whatever the EU is, it has kept peace in a erstwhile volatile region of Earth for 70 years, and made EU hugely prosperous, even Greece, Italy , Spain and Portugal. Inept governments, widespread corruption and graft mostly stopped wealth being distributed, as in Britain, instead funneling it off to the 1 %. Therefore all the upheaval in these places. Northern Europe has done fine under EU’s umbrella, but we do collect taxes here.
But China’s (Asias) pinch is felt here too, production must be directed at hight tech, high value goods, and that has been done, but the demand on education systems to keep at the front line are tough, both on pupils and institutions.
8 years of school will not make the cut. Minimum 13 years is the new cut.
That leaves a lot of people out of the wealth loop, hence the right wing fringe parties, the disenfranchised, the less educated. And that is a problem. Finland is trying to fix it with a basic income model, I wish them luck.
Europe which is not the Northern part, faces the same problems now or in a decade, how they will fix it, I don’t know, we may well see an EU, split in two classes, first and second, i.e. Denmark simply has no use for Bulgarian workers, there is no uses for them to come.
Where the EU has had the largest impacts has been on sucking rights, setting standards and taking on multinational companies bent on robbing us blind (mainly US, of course) and in these matters EU has been good.
So the EU is hardly a poodle, and it is no military power either, in fact there is little taste for that in the populations, Europe has been devastated twice and that is enough.
I am certain things will work out fine :)
Dear Den,
You say, „A “nice” analysis, but with a certain bias.” – Well, indeed, because there is no such thing as an un-evaluated “fact.” But you present a number of items, represented as fact, without contending with Ishchenko’s “bias”. Still, your facts also rest on bias. Reading through your collection, it almost seemed to me I was listening to / reading something from Jean Claude Junker. That is not a polemic, though it might seem comical. It is important for Europe / EU to do a reality-based assessment of its real power. That has not yet been done. Ishchenko’s analysis is far more based in realities.
I’ll pick up on a few things you bring forward:
“The EU is NOT going to diminish its production base at the whim of the US, the US is not seen as the shining city on the hill in the EU political circles, on the contrary it is seen as an emerging failed state, possibly several states within a decade or two. A trade war with the US will undoubtedly push the EU towards Eurasia, its natural and historical trade partner, this is slowly happening (Germany’s trade with Russia has risen despite sanctions) and will increase further. A trade war with the US will probably void sanctions against Russia.”
Your statement here is extremely compact – bravo! – but also highly mechanical, which is its weakness. Apart from that, it is straight EU-Juncker: he has been calling, especially in the wake (pun intended: in the backwash and at the funeral of) the G7, to stop “Russia bashing.” But the Germans especially are still bashing the Russians, the EU in general still wanted Russia-bashing in the final G7 declaration, which Trump refused to sign. First provisional conclusion: your mechanism of trade war = turn to Eurasia, voided sanctions has not yet taken hold. Why not?
Clearly, we have to look deeper than the gears and shafts of the machinery. One explanation might be that the EU and the Germans and the French have not yet figured out that they have to deal with the Trump reality instead of playing footsy with the Clinton-Obama globalist-Atlanticist gang. But that, I think, is just a shadow-political explanation. In fact, I suggest, Russia-bashing and sanctions serve an economic negotiating purpose for the EU, one which is ignored in the explanation that Europe imposed sanctions just because it had to follow the US.
The point is that you are wrong when you say “The EU is NOT going to diminish its production base at the whim of the US…” – No, not at the whim of the US: the EU has already diminished its production base so far that it is in no condition to simply compensate for its sales-drop to the US by shifting to Russia or Eurasia. But the EU would like to squeeze Russia to change the conditions for trade and investment to allow it to do just that. And in the process of attempting that squeeze-maneuver, the EU is in the process of discovering that it is not sitting on the longer arm of the lever. The fact that Russia-bashing and sanctions continue tell you that the EU has yet to reach a realistic assessment of its power.
Perhaps his explanation appears too general, so let me add some broad strokes and some details.
As far as real trade with the US is concerned, Germany is focused on its automotive industry: this consists in export of assemble luxury vehicles, but also the German side and global supply-chains for components. And it includes the machinery for assembly plants in the US as well as for component subcontractors in Mexico and Canada. So, if we consider statistics for German machinery exports to the US, we have to keep in mind that this is all a component of the supply-chain for the automotive industry. Were Trump to slap tariffs on German luxury cars exported to the US, it would have hardly any impact: if an American really wants to buy a top-of-the-line Mercedes, a Porsche or an Audi or BMW, this American is in an income-bracket where a 20% or more increased price is small change. The real point is that the vehicles bind industrial capacity solely in the direction of consumer-products. Where is the German industrial base for real and productive plant and equipment?
It is in fact miniscule. Lest you say, Aw, c’mon, that ain’t true, Germany is an industrial power-house, let me remind you of things we all presumably know.
Germany shut down its nuclear power plants, along with that the capacity to build such. It does not even now have the technical manpower to tear down the old plants. “Alternative energies” were supposed to be based on German ”high-tech,” an export boom was expected for German-made windmills and photovoltaic panels: that, of course, is a bust. I am not aware of any Russians interested in buying Siemens windmills with their generators requiring more maintenance than any insurance company wants to pay for. It’s a giant boondoggle, government subsidies packing the pockets of the “robber barons” – your terms – not only from Germany. And the boondoggle drives prices so high that German companies pay lower prices and the private consumers more. (Trump might go to the WTO to complain about unfair competition on that basis alone.)
So, if you want to tell me about European or German high-tech, tell me specifically what you are talking about: – The Russians will build the railways in Iran, electrificaion included, not the Germans or other EU companies. Russia will build the nuclear power plant, not Westinghouse. And these decisions werec made before Trump nixed the “Iran-nuclear-deal”.
And by the way, international robber baron “funds” have bought up the German health care system, sky-high costs, dirty clinics, patients dying in old-age homes. – German rail-and-road infrastructure is dilapidated. 40% of the bridges need to be torn down and built anew, but they are waiting for the boondoggle PPP hunters. If you are not a robber baron, you cannot afford to live in any major German population center.
But, as you say, German-Russia trade has increased. – We need to look at the detail here, too. The German BASF – yes, I am aware that anecdotes are not the best evidence, but birds’-eye view statistics hide more than they show—will build a big and entirely new plant in Russia to produce a lubrication material for tunnel-boring machines. For BASF it is a good deal: its entire production is already sold out for 5 years. But this lubrication material for the deep-underground cutting wheels of the giant tunnel-driving machines, will be used on Russian-built driving equipment, not the German Herrenknecht machines.
Let me generalize, but it is not my generalization: the Ostausschuss der deutschen Wirtschaft (East Committee of the German Economy) told its clients over a year ago, ‘if you are interested in the Russian market, get in now, it will soon be too late. You need to find a unique niche or you need to have a specific specialized technology, because otherwise, the Russian industry has already covered or will soon cover all of its major capital investment needs.’
Consequently, the lion’s share of the 25% increase in German-Russian trade for 2017 is due to SME-category companies, or such companies that set up joint-ventures with Russian companies, which therefore share equally in the engineering and development experience gained. Siemens, on the other hand, is a good example of what happens to larger companies: not only did they get slammed by EU (not US) sanctions for the delivery of supposedly Siemens turbines to Crimea, it turned out they were in a joint venture with a Russian company, which had itself all the know-how needed to make its own turbines. The reason for the sanctions on the side of the EU is not to punish Russia, which doesn’t work anyway. The money lost to European business may be painful, but more painful is the loss of position on the future Russian market. – This requires a cogent explanation, something that goes beyond the vassal-theory of the EU with respect to the US.
The reason is not hard to find. The Ost-Auschuss recently reported on a meeting between German “business” reps and Russian economic authorities. First point: the Germans want the Russians to loosen their regulations on localization for companies that want to set up business in Russia. Why? – Because their product is integrated into the global supply-chains and they cannot produce the components they need locally to get up to 70% localization within 5 years (I think). – Now, what does this tell you about companies making such a complaint? It tells you that such companies are functioning as a “financial fund”, buying components anywhere they get the prices cheap; they assemble a “product” they call their own, and make their own profit on the basis of functioning as an “interface manager” between a slew of subcontractors. Lo and behold, however: this is exactly what the Russians do not want. They are willing and eager to enter cooperation with companies who bring in their own competence and know-how, to build a product the Russian market needs or wants, but in which Russian companies and manpower also share in the profit-generation as suppliers. The problem with such “financial funds” posing as companies with a product is not only the financialization and asset-stripping which is common practice: it is that such companies paste their name on a product, but they are not responsible for the product.
The second point the German “businesses” were beefing about was Russian shareholder law: it is possible for foreign investors to invest in a Russian company, but they do not get voting rights at the Board or Supervisory Board level. – German companies, which mostly no longer exist, know this scam very well. Let’s say you have a company that produces a good product. One day some “fund-investor” shows up. He tells you “Look, if you had more financial power, which we can provide you, and if you would just apply our far superior American management systems, you could rapidly become a world-class global player.” Sounds great, huh? A bit of money flows, you get some of it for your own pocket, you surrender management, your patents are sold off, your machinery is sold off, your top engineers are fired, your company pension-fund is invested in derivatives… but you have your bag of cash, the grease paid for you to agree to the deal.
And that is what happened all over Germany in the period following German reunification. And that is why Germany is not the industrial power the EU-PR magicians sell it as being. If you want to claim the jobs are not going back to the US, you might as well claim that the industrial jobs are likewise not going to return to Germany. Germany is hot on the heels of collapsing US of A, but those currently in power still believe they have leverage.
Then come the banks. – Again as reported by the Ost-Ausschuss: the western, including German banks, are sour and downbeat on the prospects of the Russian economy and see no hope in the new government for the “deep structural reforms” needed to spur real dynamic growth. They probably have a long laundry list of “deep structural reforms” they would like to see, but the two points I identified above are part of them and tell pretty much the whole story. The Ost-Ausschuss also reported on an anonymous poll taken of “German elites”: the summary was, “keep the sanctions on, but talk more with the Russians.”
So what’s the “deal”: quite simply, “If you agree to let us play parasite on your future, we will take off the sanctions pressure; if you do not agree, we will play the Ukrainian fiddle until you go to your knees.”
Do you think that will work? Do you think the Europeans can simply “switch” to Eurasia? Do you think they even want to?
With Juncker’s appeal to stop Russia-bashing, you might think there is a real faction fight. I do not see it: Juncker is playing soft cop, as if the hard cop had any leverage. And Russia is not interested and does not need to play such games.
Ishchenko is addressing real power issues. Your bias is pinned on a Europe that has no power. I prefer Ishchenko.
A most informative comment.
Thanks Gg.
Wish you’d do an above – line op ed.
GeorgeG
When I compare your answer to the comment made by Den Lille Abe, then I am afraid I have to side with Den. I lived in the US on two occasions. The last time I was there I saw a marked contrast to what I saw during my first stay. The infrastructure was crumbling and the population was demoralized. After my departure from the US, I am seeing a US Government who is living in the past, issuing imperial decrees to the rest of the world, Europe included. This cannot last. Russia is in Europe, while the US is on the other side of the Atlantic. Russia and Europe, East and West, are interconnected, one way or another. Europe now looks at the US, as it does at Russia and China, the SCO and EEU included. In the end, whom will they pick ? Yes, Europe will not switch to the East overnight, not is that possible. But it will happen in the end.
As for the US, Den is certainly correct. It may well break up into a number of countries. It already fought one civil war, whose memories are still fresh.
I would not take that seriously Trumps outbursts at the G7 organization a a sign that the US intend to leave it for another with Russia and or China. This is just theater in my opinion. The US demmands more of the EU but in the way the master asks from its lackeys. Nothing extraordinary to expect out of it except the usual, ie. more Russia bashing, sanctions etc. It could be that there is some alarm for the way Russia and China are coordinating not only economically but they are and will reamain as the number “1” foes for the empire. Do not expect anything new here.
@
The West as a united front was against Russia and China, but the US was its main force and carried the costs, while the others were mostly just counting the profits. The US has spent too much and can no longer provide resources for the collective policy of the West.
—
US spent printed dolars, but it seems printing will not work in the near future. So, why would US share their profit from printing with non-useful allies, if they don’t have to?
The thing to add here is the fact that while China continues to increase it’s support for the failed USofA by bying more useless certs, Russia just halfed it’s holding from $80bln to $40+bln, while it is the biggest real-gold buyer. I recall the noise the West’s “economy analysts” made after the Maidan, that Russia was and had to reduce it’s holdings from hundred’s of $blns of useless certs in order to “keep its economy afloat”. Today we look at it and we are saying “Oh look Putin is destroying the fiat dollar”. Now we are told that Russia’s gold holdings are bigger than China’s. USofA’s holdings have never been audited so we can not trust any word regarding “paper gold holding”.
Stalin’s plan of German neutrality was the best one anyways, so the EU should declare neutrality, keep it’s budget low, improve the forces slowly..
Interesting analysis.
Eurasia is integrating gradually but methodically, while the West is disintegrating tweet by tweet.
It is said that among those that have submitted application for observor status/membership, is Israel.
Can you imagine the baggage that the SCO would be taking onto itself by even entertaining the application of this odious entity?
Selah
The Trump regime represents a faction of the American Empire that wants to cling to American hegemonic rule over the world but by getting its vassals … sorry … democratic allies to pay for it.
That’s what America’s hilarious cat fight with Germany, Japan, France, Canada, and Britain at the G7 meeting was really about.
The Trump Regime = American Evil Empire on the cheap.
Good luck with that. LoL.
Let’s see if America’s vassals grow a pair and start fighting back against America’s threats and economic extortion.
The G6 countries should learn that the only language that the USA understands is power–and the Americans will have to be dealt with as such.
A very interesting article. However, one point needs clarification, namely his support from a large part of the American political elite. What we are talking here are the neo-cons, the so called “Deep State”, which holds the bulk of political and economic power in the US.
During the election, Trump had the backing of 200 admirals and generals, which I found strange. Why would the US military back a 70 year old man without any political or military experience ? They obviously needed a puppet in the White House, and they got one. Trump appealed to the working man during the elections, ostensibly promising to fight against the “special interests” in the US, while at the same time working for them. How many of his campaign promises has he kept so far ? Any ? For example, he promised better relations with Russia and ended up beefing up the US military presence in Europe and expelling Russian diplomats. He promised to extricate the US from local wars an ended up beefing up the US military presence in Afghanistan, bombing Syria twice and threatening both North Korea and Iran. I have lost count how many countries he threatened with sanctions.
During the G-7 meeting, he proposed the return of Russia. A simple case of divide and conquer, hoping to use Russia against both the EU and China. Neither the G-7 nor Russia fell for this tactic, the G-7 “refusing” to readmit Russia, and Russia stating that it is not interested, pointing to the emergence of the Shanghai Cooperation Organization and the Eurasian Economic Union. Analysts are already stating that the G-7 is losing importance.
As for the SCO, it is indeed the future, together with the EEU and the Silk Road. As for the US, I am watching it’s performance and coming to the conclusion that both the Washington political establishment and Wall Street have lost all sense of reality, living in the past and making enemies left, right and center. I have my doubts if they know what is really happening nor if they really know what they are supposed to do, relying on old methods and hoping the world will accept them. It will not. Europe is slowly but surely moving towards the East.
The nugget: “Thus, Trump is trying to create for the US a new platform for trade, to close political formats that don’t leave Washington any room for manoeuvre, and to open new ones that allow to actively manoeuvre promising unions. Washington is trying to replace the losing format of 8 (SCO) against 7 (G7) with the format of 2 (Russia and the US) against 2 (the US and China), which in total involves only three countries.”
To defeat either or both Russia and China, containing Russia with Sanctions and NATO to its borders, trying to get it to spend on military and weaken its domestic economy, while using the QUAD and tariffs and trade rules (Congressional laws passed hegemonically) against Chinese businesses and investments in US).
Impossible to defeat the Double Helix, the scheme is to set either Russia or China against the other. For now, and the next six years, it will be impossible. President Xi and President Putin are close friends, as well as cohorts in the campaign against the Hegemon.
And both nations absolutely must have the other side of the Helix to survive.
China must have oil and gas for energy, food and water and high technology weapons, as well as integration with Russia’s missile defense and coordination with Russia’s navy for the Arctic route.
Russia must have China’s investments and the Yuan as support for the Ruble.
The Trump strategy is really a bundle of tactics. Bull in the china shop, Twitter snowstorm, barnstorming revisionist, and jockey fearful that the pace of the race is too much for the overweighted Beast of Empire.
Russia and China are agile and swift. They are adaptive and, worst of all, for the Hegemon, they have History on their side. The run of the US monstrosity as unipolar hegemon is over. The suet of waste and corruption and futility of its military operations has choked the breath out of the obese Exceptional Nation.
It could not even crush Syria or outwit North Korea. It is confused by Iran’s mullahs.
In desperation, it has tried to overthrow pathetic little Qatar, castigate and coup Erdogan, and now, the US is trying to emulate Bibi’s fanatical and murderous ways, but can’t stomach the idea of stones being thrown at its elite forces hidden in Israeli bases and inside fragile Jordan’s training camps for AQ and al Nusra.
All the signs we see are actions of desperation. It almost worked. But fate dealt the cards and Double Helix came up. US doesn’t even have a pair. Nothing to bet on. Nothing to bet with. Just a pauper’s hand full of nothing.
Faced with the grit and will of Putin and Xi’s global vision to end poverty on the planet using China’s wealth, a philosophy of inclusion and cooperation, Trump and the West are left with only the evils they have brandished for 70 years. They can wield them again, each time less effectively. Or they can miscalculate and stumble into a conflict that will be climactic and the final ruin.
They have pulled up in Syria (and must decide to fight a wider and heavier war, ultimately against Russia), pulled up in Ukraine (again, must decide to fight a blitz from Russia), pulled up in North Korea (or fight China and Russia, too), toying with Taiwan, toying with South China Sea, both unrealistic challenges to China’s red lines.
What the Hegemon has left is economic sanctions, insulation of its domestic economy, and propaganda.
Unipolarity has left the house (to paraphrase ole Elvis).
Larchmonter445
You are correct. The Chinese have some years back, via their media, openly stated that they will not fall for the divide and conquer tactic, the US turning them against Russia. The Russia-China partnership is here to stay, as both need each other. Worse for the US, Europe is turning towards this partnership.
One of the things Ishchenko doesn’t go into is the globalist control over finance in Europe, such that Europe is, well, just another bitch of the empire. All the G7 countries are within that globalist finance control. China won’t accept bu ping (unequal, unfair) treaties with the west again (it is to be hoped). Russia hasn’t extricated itself from bad economic and constitutional features yet, left from Yeltsin era. And so Russia in a sense, is still hobbled, and needs to free itself of those shackles. Saker, and others such as Peter Koening, write about some of these issues, so the grain of salt always needs to be applied when reading any one analysis like Ishchenko’s, who otherwise does write some interesting things.
My earlier comment (regarding Rostislav’s 2 + 2 = 3 article) presented the two-year trade position articulated by Candidate / President Trump in his social media messages. Some of the responses, eg by Oscar, treat the Donald’s statements as so much deceitful eyewash to be ignored. ‘By golly, the Donald has to, he must trade with Europe / Russia / China et al to keep the US (?) and certainly our own economies running.’
Well, the US added 223,000 full time jobs in May 2018 and the Federal Reserve has posted an annual US growth rate of 4.8% in the second quarter. Such extraordinary good news may be an outlier, but if sustained in coming months the US may well regain those 70,000 factories lost.
Anonius intimates that the US economy, and consequently President Trump, answer to a few super-powerful decision makers. Such Wall Street captains undoubtedly exist and have great power. But their candidate in 2016 was Hillary Clinton, whereas the Donald was supported by a ‘deplorable’ multitude known as Main Street. The current fight in the US Congress is not between Democrats and Republicans (who are largely bought), rather it is between those purchased by Wall Street versus a minority answerable to Main Street.
In normal situations, it is usually smart to bet on Wall Street, which is what Canada’s Foreign Minister is doing in Washington this week, as she visits the US Chamber of Commerce, the US Business Roundtable and fully purchased politicos on Capital Hill, such as Senator Corker. But these may not be normal times. Republican voters in the last tranche of primaries are asking 1 and only 1 question: ‘Do you support President Trump’s MAGA.’ Anything less than an enthusiastic YES, and the candidate goes down in defeat.
Both parties are owned lock, stock and barrel by the same class. Their candidate is always, both candidates.
“it’s easy to get elected, hard to get nominated”
“The USA added 223,000 full time jobs in May 2018.”
I have a slight problem with these government statistics.
After all, about 150,000 to 175,000 workers retire each month.
If we assume that they are replaced by others, then these are not
new jobs, but replacements.
So, the maximum of new full time workers, IMHO, in May was between
48,000 and 73,000.
Generals are famously reputed to misinterpret a present conflict in terms of their last. Such mis-perception may be not confined to them.
Candidate Trump cleared a primary slate of 16 carefully selected competitors, all proposed by and in the pay of Wall Street, by appealing to blue-collar and middle-class voters with a message of fair trade, regulation overhaul and re-industrialisation.
In the last 18 months, that program has been the focus of his effort, which seems to be paying off. This past week, David Buritt, CEO of US Steel, announced the re-opening of its Illinois plant and the hiring of 800 steelworkers. Mr. Burritt was quick to add that US Steel is doing so based on demand from US steel fabricators, so his 800 new jobs will be greatly magnified by others. Also, Craig Bouchard, CEO of Braidy Industries, announced plans to build a $1.3 Billion new aluminum plant in Kentucky, which will employ 550 at $38 per hour plus benefits. Again, that aluminum is be made in the US based on demand by fabricators, thereby greatly magnifying the Kentucky plant’s job growth.
In customary circumstances, Anonius would be entirely correct to be cynical –“this train has left the station.” But, unlike those reflexive generals of legend, he might begin a list of returning plants and, ultimately, re-examine his position.
Further good news apropos the return of steel production to the US.
JSW Steel has just announced an agreement to purchase and completely overhaul an old, 1929 steel plant in Mingo Junction, Ohio. The renovation will cost $500 million and will employ 300. This follows the Indian company’s decision to expand its current plant in Baytown, Texas and hire an additional 500 people — also at a cost of another $500 million. In short, a $1 Billion investment in US steel production, by an Indian company, in 4 months.
Did someone suggest primary steel manufacturing would never return to continental USA?