More Bad News from the Upside Down: first thoughts on the evolving US (NATO) vs. Russia situation

Topics incl. war and peace, natural gas (pipelines), the role of NATO--spoiler alert: it's to keep the German-led EUropeans from getting chummy with the Russians, and much more

At first, I didn’t want to write anything about the overly dynamic situation in (Eastern) Ukraine, mainly because as a professional historian, it’s hard to apply any kind of analysis to such fast-paced events. Then I read the transcript of Mr. Biden’s remarks on this occasion, which were so…underwhelming that I had to write down my thoughts on this one.

Hence, for a slight change, this will be a post in the form a Q&A. Please let me know in the comments what you think.

Q: what are the main trajectories that led to this present quagmire?

Domestic Ukrainian issues first: in 2014, a US-instigated coup d’état swept away the tentatively pro-Russian government in Kiev (the ‘Maidan revolution’) and brought a firmly, if rabidly so, pro ‘Western’ régime to power. The new government depended on the goodwill of its sponsors for virtually everything, hence it’s hardly surprising that the post-2014 Ukrainian régime swiftly sold most of the country’s remaining industrial base (and since last year also it’s famously productive black earth regions) to foreign investors, typically for cents on the dollar or euro.

Q: but wait, shouldn’t we also be talking about natural gas here?

Geopolitics, then: in addition, the spectre of Nord Stream 2, that infamous direct natural gas pipeline connecting Russia and Germany while bypassing Ukraine (whose post-Soviet ‘business model’, if one would like to call it that, consisted of ripping of EUropean consumers by pocketing transfer fees for gas pumped across Ukraine), haunts the Kiev régime as well as its mainly US sponsors, with what’s called ‘reverse gas’ being the second leg of the Ukrainian putschists, and the proceeds of these shenanigans were used to enrich specifically the associates of the current US president, Mr. Biden (look up ‘Naftogaz’, ‘Burisma’, and ‘Hunter B.’

Q: hold on, what’s ‘reverse gas’?

One of the major activities the post-2014 Ukrainian régime engaged in—to, and I’m not making this up, Crimea’s ‘annexation by’, or ‘self-determined return to’, Russia was to betray its citizens and stick it to them. The vehicle for this was Kiev’s cutting of ties with Russia, in particular its announcement not to buy Russian natural gas anymore. Here’s how these intersections between the US ‘intelligence community’ (sic), the Biden crime’n’fraud family, and the Kiev régime worked:

Ukraine would continue to allow the transport of Russian gas to EUropean customers (while pocketing transfer fees), and to avoid buying Russian gas (which was sold quite cheaply), Kiev—for political reasons—bought ‘EUropean’ gas: but this ‘EUropean’ gas was actually the same Russian gas, which was turned around about 100m into Hungarian territory, but sold, via Burisma and Naftogaz, at approx. 100$ per million cubic metres more expensive.

Now you know how Poroshenko and Zelenskyi sold out ‘their’ country to the sinister pushers connected to Biden and the American lapdogs in EUrope all the while these same ‘Western’ protagonists continue to blame Russia for the deplorable state of Ukraine.

Q: now, well, this sounds awful, but wouldn’t that be, you know, kinda stupid of the EUropeans?

Yes, of course it would be, but don’t forget that EUrope is a subsidiary of the US empire whose ‘leaders’ (ahem) are fully bought by, and subservient to, the dictates emanating from Washington.

One of the little-known side-shows of the current energy crisis—high energy costs, rising food costs, accelerating inflation—are intimately tied to what, some 15-odd years ago seemed like a swell idea to the EUrocrats: the ‘liberalisation’ of energy markets across the EEC. The key term, which you’ve probably don’t know nearly enough about, is ‘unbundling’, which is EUrocrat-speak for ‘the separation of the activities potentially subject to competition (such as production and supply of energy)’.

Rendered into something approximating plain English, ‘unbundling’ means that companies that produce ‘energy’ (e.g., oil or natural gas) may do so, but they may neither own or operate the transportation infrastructure (pipelines) nor the processing plants (refineries), to say nothing about end-point distribution (e.g., gas stations). This was heralded a while ago by the EU Commission as another stepping-stone in their desire to (neo-) liberalise energy markets.

Q: hmm, sounds like they attempted to induce competition, so—what’s wrong with that?

In principle, nothing. In all honesty, I’m all for price discovery in competitive markets, but what the EUrocrats created is more like a Frankenstein sibling than a healthy and organic market.

There are two problems, though, that must be considered here: first, the capital investment required to find, develop, ‘produce’, transport, process, and distribute refined products is immense. This is why energy companies need long-term contracts to raise capital, plan production and distribution, and break even before making a profit. This also allows customers to offer long-term and above all quite stable prices to its customers (that would be you and me).

Second, note that this EU-wide energy ‘market’ was created by the EU Commission. It didn’t naturally occur, in part for the above-related capital investment requirements. Yet there’s a second issue to consider, which is what economists call ‘natural monopolies’, typically held by the state or the public because one cannot really run any such thing like a for-profit business without depriving the customers of discretionary income to be spent (or saved) on goods and services. The most common examples are municipal water supply companies, transportation infrastructure, and the like, for it simply doesn’t pay for private companies to compete against each other in these fields. The best example, though, are emergency services or first providers: just think, for however long you’d like to take (or need), how much worse a, say, burning building would be if the firefighters would need to check first whose apartment to safe (because they are paying into the insurance pool) and whose to let burn.

In some contexts—not in all (!)—it is simply cheaper and more efficient to have such a monopoly provider, but the energy markets created by these unbundling policies is clearly not one of them.

Q: alright, that makes some sense, so, what are the consequences of the Russian aggression in these regards?

In short—significantly higher energy prices for EUropean consumers, which will soon translate into significantly higher food prices. This will quite likely be a rather grim spring and summer for many people, esp. those on the lower rungs of the socio-economic distribution. You know, as if 2+ years of ‘Covid-19’ wouldn’t have been bad enough already…

Q: ah, since you bring Covid-19 into this—will we see another wave of infections, hospitalisations, and deaths because of the destitute Ukrainian refugees crowding together in camps and the like?

Honestly, I don’t know, but I’d rather worry about the socio-economic consequences of the ending of the mandates. Talking about lessening restrictions etc. is all well, but the revocation of these mandates will also bring with them the petering out of state-provided subsidies because of Covid-19.

Now, I’m not saying that the ‘Western’ agit-prop shitstorm with respect to the Russian military intervention is a smokescreen to extend, however differently marketed, state-provided subsidies and equally massive interventions into the economy now that these Covid-associated measures are petering out.

Q: hold it right there. Are you suggesting that the excitement in the ‘Western’ press and the condemnation hurled at Mr. Putin might be done for economic reasons?

Well, never say never, but given the wobbly nature of many ‘Western’ governments faced with high energy costs—which will not only lead to increases in the cost of living irrespective of what Mr. Putin does or doesn’t. These higher costs of living will cut, perhaps significantly so, into the discretionary spending abilities of large segments of the EUropean population. In macroeconomic terms, the peoples’ reduced spending capabilities also means less consumer spending, which is super-bad in our service-based consumption-driven economies. In other words: higher food and energy prices leave less money in everyone’s wallets to be spent on eating out, buying new clothes, or going on vacation.

A large-scale drop in consumer spending typically heralds an economic contraction, which will only get worse by the same high energy prices because they also squeeze the producers (and importers) dry, which will respond with price hikes, layoffs, and the like, thus further contributing to the contraction of the economy.

Q: this is so bad, I don’t want to hear it. Is there a solution?

Poha, you’re asking the wrong guy, I suppose. If you’re asking for a silver bullet, I’m afraid there isn’t. Are there things we could do? Absolutely, and a tentative listing of things we should discuss include, but is by now means limited to, the following:

• Commence work to undo the ‘unbundling’ of EUropean energy markets.

• Work to reduce the role of so-called public-private partnerships, which is a smokescreen for the privatisation of profits due to the socialisation of risks and costs. There are some things—like sewer systems, water supplies, transportation infrastructure, etc.—that should be natural monopolies controlled by the state or public to lower the cost of living for everyone.

• Work to undo the pseudo-political part of the EU, and do so consciously (but fear not, this ghastly behemoth of technocratic ‘expertise’ will come down before too long anyways) before we must do so under multiple emergency pressures.

• Restore the ‘active’ part of citizenship, because the widespread disillusionment with (of) politics is due in no small part to precisely this kind of EUrocratic rule (domination) by far-away experts. All politics is local, and the EU is the antithesis of citizenship (so is rule by DC, my American friends).

Q: that’s a tall order, and I shall certainly keep that in mind and thing about them. Any last words on Russia and (vs.) Ukraine right now? Is Mr. Putin a reborn Hitler?

He isn’t.

Q: well, he might be a bloodthirsty expansionist lunatic, then?

I doubt that, too.

The one question before us, I’d argue instead, is—why wouldn’t the Russians simply do the same as they did in Georgia in 2008, by which is meant respond to an attack by the government on its own people, many of whom also hold Russian passports?

You know, back in 2008, this is what has happened, according to the EU-financed independent fact-finding report, hostilities were initiated by Georgian armed forces, as can be seen on p. 10: ‘On the night of 7 to 8 August 2008, a sustained Georgian artillery attack struck the town of Tskhinvali…In a counter-movement, Russian armed forces…penetrated deep into Georgia…and stop[ed] short of Georgia’s capital’ (emphases mine).

Q: wow, I didn’t know that. So, you’re saying Mr. Putin is a shrewd politician? I doubt that, but I’m willing to hear you out. Where, pray tell, would he get his ideas from?

I would bet the farm on Mr. Putin knowing his Clausewitz. In On War (1832), that long-dead Prussian general and military strategist famously held that ‘war is the continuation of politics by other means’. (Note that Clausewitz’s thinking also played a considerable role in Marxist-Leninist thought, hence it’s perfectly plausible to assume that Mr. Putin knows quite a bit about it.)

Q: ok, stop the history lesson here and explain to me why a long-dead Prussian soldier matters today?

I think that the main objective of the US-led military alliance is to keep control of continental Europe. With the Cold War firmly in the rear-mirror, British general Hasting Ismay’s time-worn dictum about NATO’s role was ‘to keep the Russians out, the Americans in, and the Germans down’ is about as helpful as it gets to understand the present quagmire:

The Russians don’t need any more territory, especially in Europe (they already are the largest country by territorial size). The EUropeans and their decision to mimic the US-led diversity, inclusion, and equity (or ‘DIE’) push is, if anything, off-putting to many, if not most, Russians.

So, if NATO isn’t needed to keep the Russians out, what is good for? From the US perspective, I think it’s to keep the Germans down, hence the Americans are here to stay, for time being.

My counter-question for you, then, would be this: do the Europeans actually need to ‘keep the Americans in’ in 2022?

To be continued…