A note arrived a few days ago from one of my best informants in Europe. He had just met across a hotel dining table with a senior German executive, and the topic quickly turned to the crisis in Ukraine and the sanctions regime Washington has imposed on Russia.
I can do no better than give you the pertinent passage in the note:
“… I spoke … breakfast time in Europe… with the head of one of the largest companies in Germany. This declaration was one of the first items he mentioned. I took notes—because it is one of my clients—and here is what he said: ‘It is urgent for Europe to bring Obama and the people making the decisions behind him back to reality. If not, this will spiral first into a financial collapse, which will slam into all of Europe, and then who knows where it goes after that? Everywhere, far-right nationalist forces are building. Look at the last U.S. Congressional elections, and think what is coming. Will America ever have had a more nationalist Congress? Le Pen would be right at home in this crowd. The course we are on now is folly. Can’t they see that?’”
I wish I could say the German exec’s question is a good one, but the grim answer is too obvious. They can see nothing in Washington. We witness the single most reckless, destructive foreign policy this administration has yet devised, comparable in magnitude to Bush II’s decision to invade Iraq in 2003.
President Obama and Secretary of State Kerry wanted Middle East peace to stand as their legacy on the foreign side. Now they propose restored relations with Cuba as the bronze monument. Forget about it. The devastation of ties with a global power, the dissolution of Ukraine and very possibly the ruination of Europe’s barely beating economic recovery will be what we live with after this administration makes its exit.
I am awestruck as news of recent events unfolds. Ukraine is more than an economic, political and military mess: It is a major humanitarian tragedy now. As the German CEO wants to know, how can we possibly arm neo-Nazis in Ukraine while right-wing extremists and anti-immigration atavists rise all over Europe?
The body blows the State Department and Treasury are dealing Russia in response to the Ukraine crisis—as precipitated by State, of course—would be irresponsible under any circumstances for the risks they carry. In the current global environment, this starts to shape up as monomania.
Thoughtful readers point out that this is a standoff between two nuclear powers, and, indeed, this has to be on our minds. But for the moment, and thank goodness, that is in the background. The very immediate menace is a global economic calamity that could make the 2008 crisis look like a blip on the chart.
Last week Fitch, the credit-rating agency, downgraded Russia’s status to BBB, putting it a few notches away from junk status. This is hardball, we had better recognize: You cannot shove the world’s No. 8 economy into the gutter and expect it to land there alone. A lot of suffering beyond Ukraine’s borders, where it is awful enough already, is frighteningly near.
Before I go any further: No, you are not reading much about this in the American press. You can read about it in the German press, the French press and elsewhere on the Continent, in the Czech press, the Russian press (obviously), some of the British press, and even the Chinese press. But all those journalists and all their readers are in a propaganda bubble, the world’s greatest newspaper wants us to know.
It is crowded inside the propaganda bubble and lonely here outside of it, it seems. To this topic we will return.
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At year-end I predicted in this space that one of two key relationships stood to fracture in the course of this year: These were either Europe’s ties with Russia or America’s with Europe. I continue to think the latter would be the breach that will leave us all better off.
In my read Washington has drastically overplayed its hand with the Europeans from the first round of sanctions onward. Now those overly courteous Europeans are at last taking the kidskin gloves off. We had hints of this before the holidays, when Matteo Renzi, the Italian premier, said at a European summit in Brussels, “Absolutely no to more sanctions.”
Now François Hollande asserts that, no, Moscow has no desire to annex eastern Ukraine, no, there is no need for more sanctions, and yes, sanctions now in place must be lifted if, as Hollande and other European leaders continue to anticipate, what you may read notwithstanding.
This is what it sounds like inside the propaganda bubble, where people such as Renzi and the president of France live and breathe.
Alas, you never know whom you are going to bump into inside the bubble. A couple of weeks ago Heinz Fischer, Austria’s president, rejected sanctions—past and to come—as well as the E.U.’s association deal with Ukraine. The latter, of course, is the holy covenant at the heart of the Ukraine crisis:
“The approach that more and more sanctions should be implemented against Russia until it is weak enough to forcefully accept the E.U.’s own political objectives is a mistake,” Fischer said in an interview with Wirtschaftsblatt, Vienna’s financial daily. “A serious crisis in Russia and an economic collapse would only create more problems.”
And on the E.U.-Ukraine pact: “It was recognized only at the last moment that it was a real ordeal for Ukraine to choose between the E.U. offer and the [comprehensive bailout] offer from Vladimir Putin, which was better suited to the realities faced by Ukraine in the fall of 2013. Ukraine needs to be free to build its own relationships with both Europe and Russia.”
With these kinds of comments in view, it emerges now that Europeans have been seduced. Beginning with the Danes at yearend, they have one by one complained that the intent was never to devastate the huge economy next door but to win Russia’s cooperation in Ukraine.
Washington’s ambitions have been grander from the first. This is the context of Victoria Nuland’s infamous “F the E.U.” remark last February. And we now witness the love act as Nuland and her colleagues at State seem to like it. Rough sex after the seduction, let us say.
The same disregard Washington displays toward Europe seems to be the case in Ukraine itself. The news coming from Kiev starts to make Greece look like the Klondike. The economy shrank 7.5 percent last year and will recede at least as much this. No one knows. It could shrink as much as 10 percent.
Here is what Roland Hinterkoerner, a thoughtful analyst at RBS Asia-Pacific, the Royal Bank of Scotland’s Hong Kong outpost, had to say about Ukraine in a recent economic report:
“The country is clinically dead…. There is nothing government or the central bank can do to stop the decline. The population is being pushed further and further into poverty. Food prices are up 25 percent and rent, electricity, gas and water by 34 percent…. This is the picture of a Ukraine that is looking an economic collapse in the eye. But its government is still attempting to channel money into the military to fend off the big bear’s aggression…. The danger for Ukraine is not Russia. It is its own demise….”
Bloomberg published an interesting report earlier this month on Ukraine’s external position. Read it here. The news in it is that Ukraine’s 2017 bond is now selling at 58 cents, down from par ($1) a year ago. Translation: The markets are now pricing in an across-the-board default. Kiev currently pays a yield of 35 percent on its debt.
Connect a few dots in the Bloomberg piece. Further tranches of the IMF’s $17 billion bailout, launched last April, are now blocked until Kiev makes more and very deep cuts in public spending.
O.K., $17 billion from the IMF, once the government savages its budget. Against this, Kiev has payments of $10 billion in debt service alone due this year—that is interest, not principal. With principal, Bloomberg puts the figure at $14 billion, and an additional $10 billion is due next year. It is not clear it can cover these payments even with the IMF funds.
Do you see what is going on here? The IMF’s bailout is not marked for Ukrainian social services or any other benefit to the citizenry. All that is about to be taken away, in the neoliberal style. The bailout money goes to Kiev and back out again to the Western financial institutions holding Ukrainian debt. In effect, debt held by private-sector creditors is transferred to the IMF, which uses it to leverage Ukraine into a free-market model via its standard conditionality: No austerity, no dough.
Now you know why the new finance minister in Kiev is an American apparatchik with long experience in the Hillary-era State Department. Now you know what Washington means when it uses the words “democracy” and “freedom.”
What makes all this go down so bitterly is the atrocious news coming out of Ukraine these days. Last week a long-scheduled new round of ceasefire talks, set to take place in Minsk, collapsed when the Poroshenko government refused to participate. Why?
Well, your source of information probably told you the reasons for Kiev’s abrupt withdrawal were “unclear.” DPA, the German news agency, was alone so far as I can make out in explaining it thus:
“Former Ukrainian President Leonid Kuchma, who represents the government at the talks, had demanded that the separatists send their top leaders—Alexander Zakharchenko and Igor Plotnitsky—instead of envoys, but the separatists refused.”
Absolutely horse manure. These people will make any possible excuse not to progress toward a political solution even as Poroshenko professes to desire one.
In my read, Poroshenko has no choice. Once again, I quote a recent note from a close observer in Europe, and I will leave it as it arrived:
“The presid. of Ukr cannot sue for peace, whatever he says, as the extreme right nationalists will not allow it.... So the only other way to get some resolution is to provoke war with Russia, which would then give cover to the U.S.-led blockade to move to another level. The state of the Ukr economy and politics are such that they desperately need a clash with Russia to draw the US / EU in more deeply….”
Proof of the pudding being in the eating, simultaneous with Ukraine’s withdrawal from the Minsk talks, it launched a new military offensive in eastern regions. Day to day now, the airport at Donetsk, or what is left of it, changes hands as the body count rises toward 5,000.
Sure enough, Kiev now charges (yet again) that Russian forces have crossed the border in support of the Ukrainian rebels. A few points here: (1) It may be true this time. (2) If it is the Russians cannot be rationally blamed. (3) We had better look very closely at who is waging Kiev’s new campaign. (4) It is unlikely on the way to impossible that Kiev would act without direction from Geoffrey Pyatt, the American ambassador to Ukraine (and the other end of Nuland’s porny telephone call last February).
It has been more or less evident for some time that extreme-right nationalists have been key to Kiev’s military strategy as an advance guard and as shock troops in the streets of eastern Ukraine’s cities. Here is a Facebook entry posted the other day on Voice of Ukraine by Right Sector USA, which reps for said right-wing group in the States:
“As promised, here's the news you are probably aware of by now—the combat has moved into Donetsk. The Right Sector and the 93rd Mechanized Brigade have wedged themselves into the city and continue to fight. Separatists are suffering heavy losses and keep running away. Despite this, the support is still needed, so we need you to share [this info] for maximum resonance and forcing the authorities to act immediately…. Please offer your support by sharing and sending prayers to our heroes! Glory to Ukraine!”
Horse’s mouth. And there is worse from the same source. Considering the cynical American role in creating and now worsening the Ukraine crisis, the following is a source of shame.
On New Year’s Day members of Svoboda, the extreme-right party that many neo-Nazis count their political home, held a candle-lit parade through Kiev to mark the 106th anniversary of Stepan Bandera’s birth. Bandera was the Jew-hating, Russian-hating, Pole-hating Third Reich collaborator, assassin and terrorist now honored as an icon of Ukrainian nationalism.
Look at the video, provided by Liveleak. Listen to the crazed chanting. Czech President Milos Zeman did, and the images reminded him of similar scenes during Hitler’s occupation of Czechoslovakia. Here is what Zeman said: “There is something wrong with Ukraine.”
Here is what the E.U. said: Nothing.
Here is what the State Department said: Nothing.
Here is what the American press reported: Nothing.
There is yet more, per usual with this bunch in Kiev. The day after the neo-Nazi parade Liveleak posted a video, with transcript, of a lengthy interview Channel 5 TV in Kiev conducted with a Ukrainian soldier. Poroshenko owned the station until he became president last year.
The station did the interview but killed it: “This interview was not aired, because the Ukrainian Government decided that it wasn’t appropriate for their purposes.” This is to put it mildly.
Forget about neo- or crypto- or any of that. This “trooper,” as the transcript unfortunately calls this man, is a right-in-the-open Nazi, worse than the most committed skeptic might have conjured. Ukraine is even better than Europe: “Only gays, transvestites and other degenerates live there.” Then: “When we have liberated Ukraine, we will go to Europe under our banners and revive all national socialist organizations there.”
All sorts of talk about “the purification of the nation,” a phrase Hitler liked, “a strong state,” who can stay in Ukraine and who must go. Now comes repellent language, readers, but we should all know of it:
“First of all, we ought to oust, and if they do not wish to leave, then cut the throats of all of the Muscovites, or kikes—we will exterminate all of them. Our principle is ‘One God, one country, one nation’”—this also from Hitler. “As far as the current government is concerned, can you see that they are the same scum? Poroshenko is a kike….”
The blood boils. And it boils over with the haunting knowledge that American officials support these people. Beyond the sewer consciousness and language, there is the apparent danger: These people have the Kiev government backed into a corner, unable to behave responsibly.
* * *
This is my report from the propaganda bubble. And I had better explain where this thought originates.
Earlier this month the New York Times published a lengthy takeout purporting to clear a lot of fetid air. This, at last, was to be the definitive piece as to just what happened when Viktor Yanukovych, the Ukrainian president until last February, left office and then left Ukraine.
It was not a coup, two Times correspondents took thousands of words to tell us. It was something closer to a legitimate political defeat. “An investigation by The New York Times into the final hours of Mr. Yanukovych’s rule… shows that the president was not so much overthrown as cast adrift by his own allies, and that Western officials were just as surprised by the meltdown as anyone else.”
Part 1 of this nonsense. The final hours bit is sheer ruse. Giving the impression of exhaustive reporting—it was hardly an “investigation”—the narrow time frame excludes all context and excuses a vast exercise in omission.
Part 2. Yanukovych’s allies indeed deserted him because the streets were filling with armed putchists and Yanukovych’s people understood, accurately, that their lives were in danger. Here we have a classic distinction without a difference.
Part 3. If Western officials were at all surprised, it was at the speed of the events they—or the Americans, at least—set in motion. There were no other surprises.
Interestingly, the Times correspondents quote Geoffrey Pyatt, the American ambassador then and now and Nuland’s sidekick. In the infamous telephone call, Pyatt was taking orders as to which Ukrainian puppet ought to be directed to do what.
No mention of the Nuland-Pyatt exchanges? No thought that Pyatt may be a compromised source with a conflict of interest the size of the State Department? Shame on you, correspondents, although this little bit of leaving out is hardly the worst of it.
The objectives of this extensive piece, splashed on page one a couple of Sundays back, were two so far as I can make out. One, to salvage the official American narrative in the face of excellent reporting refuting it and a crumbling consensus within the policy cliques, both noted in recent columns. Two, to wash a lot of soiled hands at the Times.
But the big takeout—never mind the quality, feel the weight, as correspondents sometimes quip—demonstrates nothing of any use, unless it is that the Times has finally realized it has dug itself into a hole on Ukraine and cannot get out.
That bubble bit came this way:
Russia attributed Mr. Yanukovych’s ouster to what it portrays as a violent, ‘neo-fascist’ coup supported and even choreographed by the West and dressed up as a popular uprising…. Few outside the Russian propaganda bubble ever seriously entertained the Kremlin’s line. But almost a year after the fall of Mr. Yanukovych’s government, questions remain about how and why it collapsed so quickly and completely.
I love the quotation marks around “neo-fascist.” These people never give up. Consider this passage against those above concerning the recent doings in Kiev. Nobody outside the Russian propaganda bubble, whatever this may consist of, has any need to “entertain the Kremlin line” to entertain the truth. How dare these self-serving hacks suggest otherwise?
In my analysis, the Times -- and all the media that never say anything until the Times says it -- got caught holding the bag this time. Washington launched off on a reckless adventure, it is not coming good in any dimension, all manner of distortions, lies and omissions are required to sustain it, and the Times thought it was business as usual. Now they are stuck. Good money after bad at this point, but the Times has a lot of it to spend yet.