June 19, 2016
Between August 9 and 12, 1941, taking their battleships in turn to meet in a Canadian bay, US President Franklin Roosevelt (centre, left) and British Prime Minister Winston Churchill (centre, right) discussed what to do about their adversaries at the time, Germany and Japan. Roosevelt had whispered, and Churchill later reporting him as saying aloud: “I will wage war, but not declare it.”
Until February 21, 2014, President Barack Obama’s (right) whispers were audible; President Vladimir Putin (left) didn’t believe what he was hearing. Now there is armed US war against Russia on the Ukraine and Syria-Turkey fronts; exchanges of armed signals in the Black and Baltic Seas; and an all-fronts war against Russian capital. For the US, no declaration; for Russia, no way back.
Putin said as much at last week’s St. Petersburg meetings: “People feel no danger and that is alarming for me. Why can’t we see that we are dragging the world into an utterly new dimension? This is the problem.” “I am not interested in laying blame now. I simply want to say that if this policy of unilateral actions continues and if steps in the international arena that are very sensitive to the international community are not coordinated then such consequences are inevitable.” By consequences, Putin meant war, undeclared by the US against Russia, compelling Russia to forestall in its defence. “If we continue to act according to this logic, escalating [tensions] and redoubling efforts to scare each other, then one day it will come to a cold war.”
Cold is not the kind of war Putin means. “I don’t know where it [the deployment of the U.S. missile defense system in Europe] might lead to but I know for sure that we will have to respond.”
For the precedents of undeclared US warmaking, provoking the Japanese attack on Pearl Harbour, and that as the intended backdoor to US war with Germany, it’s necessary to open, The Challenge of Grand Strategy. This is a little-known collection of essays by US historians of the period between World War I and World War II. Open it here.
The nine American academics and one Japanese don’t present their research results to make pro-Soviet or pro-Russian points. They recognize Russian and German policy in the inter-war period as ideological; American exceptionalism isn’t the same thing, they write. Stalin, they regard as delusional and paranoid.
The research is presented instead as demonstrating, not how reluctant, appeasing, misguided, fanatical or uncompromising the Americans, British, Germans and Japanese were; but rather how deliberate, calculating, and reasonable each was in what they thought were their own best interests, facing the only choices they believed their own and their adversaries’ capabilities and intentions allowed.
In retrospect, the evidence proves Roosevelt planned US economic sanctions against Japan, first against trade in strategic minerals, then against Japan’s offshore cash and capital, and finally against the sale of oil, in order to provoke war in the Pacific. As Roosevelt is quoted as telling his Secretary of War in October 1941, seven weeks before the Pearl Harbour attack: “we face the delicate question of the diplomatic fencing to be done so as to be sure that Japan was put in the wrong and made the first bad move – overt move.”
“MAGIC”, concludes Jeffrey Tagliaferro about the US cracking of Japan’s most important coded communications from Tokyo and from Berlin, “confirmed the underlying suppositions of Roosevelt’s strategy since mid-1940, namely to wage an undeclared naval war on Germany in the north Atlantic in the expectation that Hitler would provoke a casus belli. If that failed [it did, Tagliaferro adds] – Roosevelt would use economic sanctions to provoke Japan into striking against US possessions in the Pacific, on the assumption that Hitler would enter a US-Japan war.”
Today, according to Russian sources, it is the conclusion of the Kremlin and General Staff that Obama and his would-be successor, Hillary Clinton, are following the Roosevelt line. Putin made the point last Friday when asked how differently he views the presidential candidacies in the US of Donald Trump and Clinton.
Trump, said, Putin, “is a vivid personality. Is he not? He is. I did not ascribe any other characteristics to him. However, what I definitely note and what I definitely welcome – and I see nothing wrong about this, just the opposite – is that Mr Trump said that he is ready for the full-scale restoration of Russian-US relations. What is wrong with that? We all welcome this! Don’t you?”
About Clinton, Putin said: “I did not work with her, [Foreign Minister Sergei] Lavrov did. Ask him. He is sitting here… I worked with Bill Clinton, although for a very short time, and we had a very good relationship. I can even say that I am grateful to him for certain moments as I was entering the big stage in politics. On several occasions, he showed signs of attention, respect for me personally, as well as for Russia. I remember this and I am grateful to him. About Ms Clinton. Perhaps she has her own view on the development of Russian-US relations.”
It was the objective of the St. Petersburg International Economic Forum (SPIEF) last week to warn Europeans not to over-estimate their own or US capabilities in fighting the current war with Russia; nor underestimate Russian capabilities and intentions to fight back. Record-breaking announcements from the SPIEF secretariat were planned to substantiate the fight-back on the business front. According to Tass, “332 formal agreements for around 1 trillion rubles ($15.44 billion) were signed, Adviser to the Russian President, Deputy Chairman of the Organizing Committee – Executive Secretary, Anton Kobyakov said on Friday at a press conference of the results of the forum.”
This compares with the reported SPIEF result in 2015 — 205 agreements for a total of Rb293.4 billion ($4.52 billion); and in 2014, 175 agreements for Rb401.4 billion ($11.5 billion). In 2013, the last pre-war SPIEF, 102 contracts were reportedly signed for a value estimated at Rb9.6 trillion ($294 billion).
Financially, the 2013 result was the acme. This year, though, a record number of 12,000 participants attended; a record number of 130 countries were represented.
Russia, Putin told his session with foreign corporation chiefs, has the advantage of knowing the measure of its enemies’ capabilities, Europe and the US lack the measure of Russian intentions. Americans have capabilities, especially in economic warfare, Putin conceded. But the price is being paid in Europe, which cannot sustain the losses as hardily as Russia can, and lacks Russia’s military options. “The world needs a powerful country like the United States, and we also need it,” Putin told the table on Friday.
“But we do not need it to continuously interfere in our affairs, telling us how to live, and preventing Europe from building a relationship with us. How are the sanctions that you have mentioned affecting the United States? In no way whatsoever. It could not care less about these sanctions because the consequences of our actions in response have no impact on it. They impact Europe but not the United States. Zero effect. However, the Americans are telling their partners: ‘Be patient.’ Why should they? I do not understand. If they want to, let them.”
Some European businessmen in St. Petersburg speak sceptically of the capabilities of Russian businessmen to sustain war; a few are scornful. According to an international banker, “the well-known oligarchs of the first rank — we know they want to be too much like us, live in our palaces. They like our life better than the one at home. For them, this war is turning them from paragons into pariahs. They don’t like it. They indulge in wishful thinking. But politically they are impotent. [Gennady] Timchenko, [Yury] Kovalchuk, and the Rotenbergs [Boris and Arkady], whom the Americans have hit with the crony sanctions, were never going to make it in the west, so sanctions against them will also have no political effect. [Former finance minister Alexei] Kudrin stands for capitulation. He stands alone. There’s no lobby in Moscow for peace on US terms.”
City of London bankers add they don’t believe the leaders of Russia’s state banks and state-controlled corporations are better capable of warfighting than the oligarch-owned and market listed companies. For evidence the sources point to the failure of the Russian Finance Ministry and the state banks in the issue of the state’s Eurobond in the last week of May.
A first attempt at issuing the bond in February had been postponed after the US Government persuaded US banks not to underwrite or subscribe. Then Finance Minister, Anton Siluanov (below, left), announced that “Russia will raise $3 billion in single tranche, regardless of the position of the US banks.”
Siluanov also authorized the bond prospectus to undertake that none of the proceeds would help in the financing of sanctioned individuals or companies; this was despite the fact that the underwriter and issuer of the prospectus, the state bank VTB, was on the sanctions list.
The attempt by VTB, headed by Andrei Kostin (above, right), reportedly had attracted between $5.5 billion and $7 billion in offers by the close of bidding on May 23. The next day, however, according to the Finance Ministry announcement, the bank and the ministry were only able to sign buyers for $1.75 billion. “More than 70% of the bond was purchased by foreign investors”, Siluanov announced to the press. “This is the group we focused on. We are satisfied with the placement.”
Spokesman for Siluanov and Kostin refuse to provide a copy of the prospectus; identify the officials they delegated to manage the bond issue; or substantiate Siluanov’s claim. US officials leaked to business reporters in New York and London that the bond had failed to achieve its foreign target because the two bond market trading organizations, Euroclear and Clearstream, had refused to participate. The Wall Street Journal called the issue “so-called Eurobonds”, adding market comment that traders were “not aware of any major foreign investors who have participated due to the concerns over the settlement of the bonds.”
A veteran bond market source in London says Euroclear and Clearstream did not refuse to accept the bonds. “They simply delayed replying to VTB’s application. That meant there was no security number assigned to the bond, confirming it could be traded among their members. If you can’t trade, you can’t buy. So the majority of those who applied to buy the bonds withdrew when they realized what Euroclear and Clearstream were up to. The big success in the bidding stage was a big failure at the settlement stage.”
Euroclear is owned by J.P. Morgan, while Clearstream is owned and operated by the Deutsche Borse, run by an American, Jeffrey Tessler (right). Neither organization responds to questions about the Russian bond issue. The source adds: “There was serious negligence at the Finance Ministry and VTB in Moscow. They should have checked and obtained the trading guarantees in advance. Instead, they had to say in the prospectus they were still negotiating, but had received ‘no assurance’ of compliance from Euroclear and Clearstream. Also, it’s obvious in retrospect that the London advisors to MinFin on the bond failed to anticipate the clearance problem. Who was deceived by this? Maybe Putin.”
Market sources say Siluanov and Kostin were forced into arranging offshore buyers to disguise what they had failed to anticipate, and what had happened. “Nothing could be a clearer illustration of how the US is waging its war, and how the Russians, on the civilian side, are incapable of fighting back. The Russians say they are applying the rules of the market. They use the words. They don’t seem to appreciate that the US is waging a well-co ordinated, command war.”
“We remember how it all started,” Putin said last week at SPIEF. “Russia did not initiate the current breakdown, disruption, problems and sanctions. All our actions have been exclusively reciprocal. But we don’t hold a grudge, as they say, and are ready to meet our European partners halfway. However, this can by no means be a one-way street.”
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