Dear Readers,
For this installment of my free geopolitical newsletter I want to share
a piece I wrote in the midst of the US and EU economic sanctions war against
the Russian Federation in late 2015. In it I outline the history of how
Washington and the International Monetary Fund robbed the new post-Soviet
Russian Federation under Boris Yeltsin of the very core essentially of
economic sovereignty, namely the state’s control over money issue. They did
so through the aid of government insiders who had bet their personal futures
on siding with Western “shock therapy” economists against the interests of
their own country and its people.
In this piece I outline my proposal for generating state-initiated--but
Soviet-style controlled-- economic growth in urgently-needed basic
infrastructure. It draws on how federal Germany after World War II financed
its own reconstruction using state institutions of subsidized credit such as
the Kreditanstalt für Wiederaufbau (Credit Institute for Reconstruction)
during the 1950s to stimulate what became known by the 1960s as the German
Economic Miracle. It was no miracle, rather an appreciation of the role of
public banks and directed credit into select economic infrastructure. For
those of you interested in a deeper treatment of the history of the Russian
Federation during the tumult of the Yeltsin era of the 1990’s and the
incredible measures Washington took to destroy Russia as a functioning nation
state, you should watch for the appearance soon of my newest book, Manifest
Destiny: Democracy as Cognitive Dissonance.
For a better reading experience I converted the text to a pfd-file
which You can find in the attachment of this mail. It's 7 pages in A4
format.
I also encourage you to consider making a support contribution at my
website,www.williamengdahl.com, that I am able to continue
offering my content for free.
Thank you again for your interest,
F. William Engdahl
Frankfurt, Germany
Russia Can Solve All Economic Problems Itself
F. William Engdahl
November, 2015
Since Washington and the EU imposed hostile and unwarranted financial
and economic sanctions on Russia after the spring of 2014, President Putin
and the Russian government have made many sometimes brilliant moves to
respond to the de facto acts of financial warfare. However, they have avoided
dealing with fundamental deeper distortions and vulnerabilities in the
Russian economy and monetary order. Failure to do so in the future could
prove to be Russia’s Achilles Heel if not addressed. Fortunately, Russia can
do something about it even before an alternative currency to the US dollar is
at hand. It requires simply a bit of consequent rethinking about the
situation.
The key to Russia’s economy, to any economy for that matter, is the
question of who controls the issue and circulation of credit or money, and
whether they do it to serve, directly or indirectly, private special
interests or for the common national economic good.
Chaos swept the Union of Soviet Socialist Republics after the fall of
the Berlin Wall in November 1989. In July 1990, one of the first acts of
“democrat” and Western media hero, Boris Yeltsin, the newly elected President
of the Russian Soviet Socialist republic, one month after declaring
independence from the USSR, was to create the independent Central Bank of The
Russian Federation. That was one of the first acts, fully three years before
formal adoption of a new Russian constitution in 1993, where the independent
role of the Central Bank of Russia would be outlined in Article 75.
At the time US hedge fund speculator, George Soros, had brought Jeffrey
Sachs and Sweden’s Anders Aaslund to Russia to “guide” Yeltsin “shock
therapy” advisers such as Yegor Gaidar and Anatoly Chubais. Together, along
with pressure from the IMF, they turned the country into an impossible chaos
and economic collapse for most of the 1990’s. Pensions were wiped out as the
Russian National Bank under the leadership of Viktor Gerashchenko, printed
endless supplies of worthless rubles, creating a mammoth hyperinflation of
prices. A handful of favored Russian oligarchs close to the Yeltsin family,
such as Mikhail Khodorkovsky or Boris Berezovsky, became staggeringly wealthy
oligarchs while the vast majority barely survived. This was the social petri
dish in which the Article 75 mandating the new Central Bank of the Russian
Federation was formally adopted.
The Russian Central Bank, which is today a member of the
western-controlled Bank for International Settlements in Basle, has the
explicit constitutional mandate to be an independent entity, with primary
responsibility of protecting the stability of the national currency, the
ruble. It also holds exclusive right to issue ruble banknotes and
coins. That’s de facto life and death power over Russia’s economy.
With Article 75 the Russian Federation de facto gave away sovereignty
over her most essential power–the power to issue money and create credit.
Amid the horror of hyperinflation which few Russian citizens understood was a
deliberate strategy of Gerashchenko and his Western advisers, a strict,
politically “independent” US-style central bank seemed an urgency. It was in
fact a trap.
Today that central bank trap has come home to haunt President Putin,
his government and the Russian people as a US-imposed financial warfare and
targeted sanctions forced the Central Bank to raise key interest rates
December 2014 threefold to 17% to try to defend a ruble in free-fall. Today,
despite a significant stabilization of the ruble, central bank rates remain a
severe 11%.
The Russian Central Bank, no matter how patriotic the person running
it, is a monetarist institution not an arm of sovereign state policy. To keep
the Ruble “stable” means stable against the US dollar or the Euro. That means
the independent Russian Central Bank is de facto hostage to the US dollar,
hardly an ideal circumstance in the current state of de facto war by other
means underway from NATO, the US Treasury Department, the CIA, Pentagon and
US neoconservative warhawk circles.
During the June 2015 St. Petersburg International Economic Forum I was
told by a quite senior Russian government minister that there was an intense
internal debate inside the government and around Putin’s advisers, about
re-establishing a public national bank, as opposed to the independent
BIS-modelled central bank imposed by the West on Russia in 1990.
National Development Bonds |
