German/Austrian Objections to Washington's Latest Expansion of Economic War vs. Russia
Aside from 'punishing Russia for its election meddling' which has never been proven beyond reasonable doubt, the Senate legislation applies Washington's extraterritorial edicts to firms in U.S. allied nations or third countries to transact business with Russia. The bipartisan (read: globalist uniparty policy imposing) bill, which still awaits the verdict in the Republican-led U.S. House, has already angered European governments like those of Austria and to many Atlanticists surprise, the country they though they'd 100% neutered -- Germany.
The Austrians, who host the Central European gas storage hub at Baumgarten in which Russia's state-owned Gazprom has a stake, see this legislation as a scam to force expensive tanker shipped American liquefied natural gas (LNG) on the EU at the expense of cheaper, piped Russian gas on the Continent:
Less than a day after the Senate overwhelmingly voted to impose new sanctions against the Kremlin, on Thursday Germany and Austria - two of Russia's biggest energy clients in Europe - slammed the latest U.S. sanctions against Moscow, saying they could affect European businesses involved in piping in Russian natural gas.
Shortly after the Senate voted Wednesday to slap new sanctions on key sectors of Russia's economy over "interference in the 2016 U.S. elections" and aggression in Syria and Ukraine, in a joint statement Austria's Chancellor Christian Kern and Germany's Foreign Minister Sigmar Gabriel said it appeared that the Senate bill was aimed at securing US energy jobs and pushing out Russian gas deliveries to Europe.
While Vladimir Putin was correct to state in this week's annual marathon call in question session, that sanctions are a tool whereby the U.S. government attempts to restrict geoeconomic rivals, Moscow and its Eurasian partner China are not without sharp tools of their own. Where the Cold War 2.0 waging Senators like John "McInsane" McCain have badly erred, is assuming that the 'correlation of (geoeconomic) forces' in 2017 is like 2014. But a lot can change in three fast years -- in much the same way that German panzer generals found the Soviet defenses at Kursk in 1943 much tougher nuts to crack than the blitzed Red Army of 1941.
Money is the Sinews of War, and Information Technology is the DNA of a New Eurasian Economy
Since Cold War 2.0 if not World War IV is being fought by means 80% economic, 15% information warfare, and only 5% kinetic battles (mostly in Syria and Ukraine), the analogy of Mother Russia fighting back on the decisive economic battlefield holds. As Russian historians will readily admit, the victory over the Axis in WWII was mostly achieved through American mass production, but the western Allies successes in 1944 were only made possible by Russian blood, and the Russians astounding ability to outproduce the Germans in armaments as early as the summer of 1942, under far more brutal conditions of mass evacuation than the Americans or British endured. That is, with the richest national territories of the USSR and much of the Soviet population under the jackboots of the enemy, and entire cities shipped east of the Urals or to Siberia.
Modern Russia is of course, not facing total war, or the same type of ideological or geoeconomic pressures that broke the Soviet Bloc and the USSR itself at the end of the 1980s. But the Russian Federation, which is a different creature from the USSR despite sharing many of its military industrial and bureaucratic legacies, has indeed faced economic pressure since the return of Crimea in 2014 that can only be exceeded by wartime austerity. For a Russian patriot, the response of Russia's people and private sector, if not always the more slow-moving ship of State, has been inspiring. The Russians' hope is not that Russia will reemerge as a superpower, to dominate their neighbors as the mighty Soviet Union did after the terribly costly victory in WWII. Rather, they are looking fora multipolar world, on a planet no longer dominated by the worst creatures in Washington, Brussels, and London. The hope is that Americans, like Russians before them, will force their elites to admit that maintaining an empire is not only an economic dead end, but bad for their nation as well.
The New Multipolarity is Made Possible by the Russo-Chinese Eurasian 'Double Helix'
In the last three years, Moscow has established a SWIFT alternative payments system connected to China's CIPS, allowing for credit card payments that cannot be easily shut off by unannounced sanctions. The U.S. and its now feuding Sunni Gulf allies efforts to topple the Russian backed legitimate government of Syria failed miserably -- demonstrating Moscow and Tehran's worth as allies to a Middle East quietly turning away from the Anglo-American-Israeli-Saudi consortium. The Beijing and Moscow-led Shanghai Cooperation Organization (SCO), with India, Pakistan and soon Iran joining includes nearly half the world's population in a non-NATO security framework, with greater economic cooperation via the Eurasian Economic Union (EEU) and Chinese-created Asian Infrastructure Investment Bank (AIIB) creating abundant alternatives to dollar-centric hegemony.
The Russian agribusiness sector is booming, thanks to Moscow's counter sanctions against EU foodstuffs and aggressive import substitution policies. Looking to the future, the One Belt One Road (OBOR)/New Silk Road mega-projects are attracting investors seeking the long term economic expansion that a demographically moribund, immi-vaded by a new underclass EU cannot offer. Europe's only hope then is to break free of the Washington elite death grip which demands it invade the world while inviting the world, and join with the Eurasian powers Iran, Russia and China.
What must disturb the eternal Cold Warriors of the Atlantic Council or Freedom House neolibcon crowd, is how undeterred the Austrian and especially German Foreign Minister Sigmar Gabriel were by the prospect of facing their wrath for defying Washington's latest sanctions gambit. Bashing Russian media while sitting with the new president of France Emmanuel Macron makes the Atlanticist press feel good about Merkel as their 'leader of the free world' (and nevermind her Stasi past or how many Germans and other Europeans truly detest her open borders policies making Europe safe for rapefugees). But demanding German industry deprive itself of affordable hydrocarbons from Russia is a bridge too far -- even an Anglo-American media praised empty pantsuit vassal like Angela Merkel can't shut off the Russian gas pipe to her country and sit in a cold and browned out Berlin.
Why Russia is Embracing Blockchains and the Technologies of Building Trust
With all this seemingly triumphalist discourse about the unstoppable rise of Eurasia, there still remains a serious problem for Russia, and its far more populous and economically dominant neighbor, China. Namely, the issue of social capital, or in summed up in one word: trust. China is a notoriously low trust society outside of one's own relatives, and decades under Communism and the break up of extended families during decades of war, collectivization and state directed economics made post-Soviet Russia also a low trust society -- though institutions like the Russian Army and the Orthodox Church have regained some of their former Tsarist era prestige. The Interior Ministry run Russian police, judiciary and especially the chinovniks of the still largely despised state bureaucracy, on the other hand, are far less trusted, and with good reason.
Despite the undeniable fact (no longer denied even by the most fanatical of neolibcons) that faith in institutions is rapidly eroding in the United States and within the EU, since the first two world wars the Western powers accumulated reservoirs of financial and legal faith, affirmed by lavish paper market returns under the umbrella of American dominance in the 20th and the first decade of the 21st centuries. It is for this reason, like wastrel heirs living off the legacy of a fading dollar-centric world, that the United States Senators and more importantly their aides, still believe that sanctions can still bring 'Putin's Russia' to its knees. They believe this, long after that delusion should have expired, buried under the weight of contrary evidence. Washington still believes in its own geoeconomic dominance, and ability to impose its will on rivals, even if doubts accumulate on the military side of that wager against Russia, and the economic side of the gods of the copybook headings' ledger versus China.
The neoliberal reinvention of Western economies, begun in the deregulatory 1980s and running out of debt-servicing runway by the 2008 crash, bought the system more time, but at a cost of eroding social trust, with post-industrial, low wage service job workers becoming more atomized and 'alienated from their labor' in Marxist terms. Today as W the Intelligence Insider likes to say, the train from the economically if not culturally rising East has long since passed the train from the declining West in the night, headed in opposite directions. Nonetheless, not many from the Western train line are prepared to get off at the next stop, much less pay good money for a ticket or to invest in some freight on the Eastern line.
What the Narod Want to Know:
Can Blockchain Finally Bring Russia's Notorious Stealing Chinovniks to Heel?
The reason of course, is corruption, both real (all those Londongrad apartments and ridiculous dumps bought in Vancouver or Toronto by Chinese investors didn't pay for themselves through honest investment) and imagined -- it is contrary to popular belief, still possible to have a business in Russia without paying a bribe to some arm of the authorities. However, if one's operation isn't purely digital, it is not an easy thing to pull off in staying totally legitimate, particularly in the less-developed regions beyond relatively affluent Moscow and St. Petersburg.
This is why Vladimir Putin, or at least some people whose counsel he heeds very close to him, have intuitively embraced the block chain technology. More than warm bodies (as Russia's demographic problem has drastically improved in recent years, largely at neighboring Ukraine's expense), and more than the natural resources Russia has developed in a harsh climate or Western technologies, Russia needs to build trust. Not necessarily in a leader like Vladimir Putin, who spoke this week of his grandchildren, hinting at his own sense of mortality in office, but in institutions that can outlast one man or his St. Petersburg 'clan', and if necessary also resist outside pressure from so-called colored revolutions or sanctions by actually delivering the better governance that Western (G)NGOs promise. Just as Russian analysts from the Academy of Sciences to numerous think tanks have spoken of the Chinese cadre-building model for a post-retired Putin Russia, Moscow needs to make transactions both online and offline more trustworthy. In doing so, it can fight the phishing and hacking that Western propaganda tries to make synonymous with Russians! -- ignoring the fact that so many U.S. government and private sector firms use Kaspersky programs developed by Russians to fight cybercrime.
Not surprisingly, the fight against crimes committed in cyberspace and the potential for blockchain to reduce corruption has been a major theme of esteemed RogueMoney regular guest London Paul's talks on the Eurasian agenda. With Russia already a world-class center for information technology and so many young Russians entering the field, Moscow's potential to rapidly scale up and create entirely new applications of the technology is enormous. Thank God Russia has a leader, in Vladimir Putin, capable of giving an often self-serving bureaucracy a strong push from the top towards embracing the technology -- with the added bonus (from a 'no such thing as former' KGB agent's perspective), that greater encryption paired with open source code could make the NSA/GCHQ's job of spying on Russian transactions harder. Putin is also almost certainly aware of the late Russophobe Zbigniew "Zbig" Brzezinski 's boast, that if Russian officials educate their children in Great Britain and stash their ill gotten loot in British or American banks, can they really be said to belong to Russia anymore, or do they now belong to the (post)West? Putin may not recall ZBig's exact words, but he knows Who said 'where your treasure is, there your heart will be also.'
Social Awareness: The Russian Analyst's Muscovite Mother in Law Knows How Much a BTC Costs, and Legacy Media is Catching On to Russia's Rapid Embrace of Crypto-Currencies/Blockchain
The Russian Analyst was surprised to learn this week that our nearly 60 year old mother-in-law, a former M.D. who works in medical HR, knows what bitcoin is. Moreover, she also knows that one bitcoin is now valued more in U.S. dollars than the spot price for an ounce of gold, and that BTC is a highly volatile asset. While our mother-in- law is not by herself a reliable barometer of what mostly apolitical Muscovites or millions of Russians who watch the same channels she does believe, she does demonstrate that Russians are curious about digital currencies in a low-trust society that mostly still prefers cash to plastic.
The Moscow Times, which was once a semi-respectable expat-run English language paper that has now gone purely digital in its slide toward irrelevance, has picked up on the trend, profiling a Russian farmer in the Moscow region who has raised capital through an initial coin offering (ICO):
Farmer Mikhail Shlyapnikov says creating his own virtual currency allowed him to raise almost $2 million in two months. The currency, the kolion, is named after the Moscow region village of Kolionovo, where Shlyapnikov lives. During its April launch period, investors from around the world bought $500,000 worth of the currency. Since trading began at the beginning of May, one kolion has almost doubled in price to be worth just under $2.
Shlyapnikov says that buyers of his agricultural produce are now looking to acquire kolions—gambling the currency will continue to strengthen.
“I have a new instrument,” he says. “It’s like getting a tractor.”
Shlyapnikov’s kolion project is a rare case of cryptocurrencies—of which bitcoin is the most famous—underwriting real-life ventures. Up until now, their use has been mostly restricted to online projects. But experts say examples like that of Shlyapnikov will become more common as the popularity of cryptocurrencies grows at break-neck speed.
And expansion in Russia is likely to be fueled further by a change in rhetoric from officials. Just last week, President Vladimir Putin made the development of the “digital economy” a centerpiece of his keynote speech to the St. Petersburg International Economic Forum.
“It’s an international trend and we are only at the beginning of this journey,” says Shlyapnikov.
So too, has the magazine of Hollywood beautiful people portraits and fashionably liberal Democrat politics, Vanity Fair:
After catching the eye of both the Singapore government and Russian President Vladimir Putin, Ethereum—the second-biggest cryptocurrency in the world, after Bitcoin—continues to skyrocket. On Monday morning, the cryptocurrency was trading at a record-high level of $407.10, more than a 5,000 percent rise since the beginning of 2017, when it was trading at $7.98.
Ethereum’s founder, Vitalik Buterin, recently met with Putin during the St. Petersburg International Economic Forum, a signal that the country may be interested in using digital currency to move its economy beyond gas and oil. “The digital economy isn’t a separate industry, it’s essentially the foundation for creating brand-new business models,” Putin said at the forum. (Russian entities, like the state development bank VEB, have agreed to use Ethereum to help implement blockchain technology in the country). As investors look for a place to put their assets amid mounting geopolitical instability, some are turning to cryptocurrency. Singapore’s government has released a report saying it has carried out a test using ethereum blockchain technology to create a national digital currency. Regulators in Japan are issuing new rules that make cryptocurrencies like Ethereum a valid form of payment. And companies such as Toyota and Microsoft, which are members of an organization called the Enterprise Ethereum Alliance, are throwing their weight behind the cryptocurrency, too.
Ethereum, which has a total valuation of $36 billion, trails only Bitcoin (valued at $49 billion) in terms of market capitalization. Bitcoin has been rallying all year, reaching a high of above $3,000 for the first time on Sunday as a growing number of people turn to virtual currencies as a safer, faster way to exchange money. But Ethereum’s rally may still have a ways to go: Pavel Matveev, the co-founder of banking start-up Wirex, tells CNBC that Ethereum’s price could reach $600 by the end of the year.
Team RogueMoney's Ken Schortgen Jr. On Ethereum for Energy Trade Settlement, and EEU Member Kyrgyzstan Creating a National Crypto-Currency of Its Own
On June 2, RogueMoney published an article on 'Ru-coin', the yet to be officially named national cryptocurrency Russian central bank officials announced at the St. Petersburg International Economic Forum (SPIEF). In that story, we covered the Moscow Bourse (formerly known as the now merged MICEX and RTS)'s announcement that they would soon begin trading in bitcoin, ethereum, dash and potentially national cryptocurrencies like Kyrgyzstan's on the biggest exchange by volume in the former Soviet space. While it's easy for some Westerners to scoff at a poor, landlocked country like Kyrgizia creating its own crypto-coin, Russia cannot ignore the use of crypto-wallets by a key source of Eurasian migrant labor to the country, and Russia's biggest European trade partner Germany is also looking into establishing a crypto-mark. While ordinary Russians are unlikely to be the main players on the exchanges, the country's largest corporations including 'national champions' such as Rosneft are looking at crypocurrencies, and the blockchain technology as a means of energy trade settlement (h/t Ken Schortgen Jr.):
Over the past few weeks there has been a great deal of chatter regarding Russia's central bank looking into adopting its own sovereign cryptocurrency sometime in the future. And while this topic had significant discussion during the recent St. Petersburg International Economic Forum (SPIEF), the reality is that the Eurasian power is much more intrigued in blockchain technology rather than in cryptocurrencies.
And even more specific... the Ethereum platform model, which according to a new report is being seriously looked at as a means to integrate Russia's oil and gas industry.
You’ve likely heard of Bitcoin as the future of money, but it is not the only cryptocurrency in the running for cashless economy dominance. The second largest among them is found on the Ethereum blockchain and is called Ether. One of the critical differences between Bitcoin and Ether is that while Bitcoin is first and foremost a currency, Ether, however, can be a platform for a variety of decentralized applications. In short, Ether can do much more than Bitcoin.
The adaptive quality of the platform may be part of the reason why Russia, under President Vladimir Putin, seem to be showing great interest in Ethereum. Reporting from Bloomberg reveals that Putin has been thinking about digital currency. “The digital economy isn’t a separate industry, it’s essentially the foundation for creating brand new business models,” he said at last week’s St. Petersburg Economic Forum. Russia could be looking at Ethereum as a way to expand the country’s economic profile of fossil fuels with technology. Bloomberg’s Leonid Bershidsky suggests that Putin is “…under the impression that, to wean the country off its oil dependence, they needed a major leap in some specific area of technology that wasn’t yet dominated by Western, Chinese, or Japanese tech giants.” - Futurism
While Russians often glance at the dollar or euro exchange rate which is listed on digital boards all over downtown Moscow and St. Petersburg as well as on the most-watched First Channel nightly newscast, the rates for other currencies like the yen or swiss franc are shown on the screen crawl for RBK (RosBusinessConsulting, pronounced R-Bah-Kah), the Russian version of Bloomberg available with every cable/satellite package. To these tendencies, which accelerated after the ruble devaluation of 2014 increased demand for USD/EUR, we may now add some speculator Russian pensioners and not just tech savvy youths are starting to watch ethereum or dash prices. If the Kremlin continues to encourage the trend, we could soon see kiosks already set up to process utility and cable bill payments all over Russia start accepting Dash. After all, the Americans and their European lapdogs haven't sanctioned cryptocurrencies -- yet.