THE ROVING EYE Russia, China mock divide and rule By Pepe Escobar

THE ROVING EYE Russia, China mock divide and rule By Pepe Escobar ROME and BEIJING - The Roman Empire did it. The British Empire copied it in style. The Empire of Chaos has always done it. They all do it. Divide et impera. Divide and rule - or divide and conquer. It's nasty, brutish and effective. Not forever though, like diamonds, because empires do crumble. A room with a view to the Pantheon may be a celebration of Venus - but also a glimpse on the works of Mars. I had been in Rome essentially for a symposium - Global WARning - organized by a very committed, talented group led by a former member of European Parliament, Giulietto Chiesa. Three days later, as the run on the rouble was unleashed, Chiesa was arrested and expelled from Estonia as persona non grata, yet another graphic illustration of the anti-Russia hysteria gripping the Baltic nations and the Orwellian grip NATO has on Europe's weak links. [1] Dissent is simply not allowed. At the symposium, held in a divinely frescoed former 15th century Dominican refectory now part of the Italian parliament's library, Sergey Glazyev, on the phone from Moscow, gave a stark reading of Cold War 2.0. There's no real "government" in Kiev; the US ambassador is in charge. An anti-Russia doctrine has been hatched in Washington to foment war in Europe - and European politicians are its collaborators. Washington wants a war in Europe because it is losing the competition with China. Glazyev addressed the sanctions dementia: Russia is trying simultaneously to reorganize the politics of the International Monetary Fund, fight capital flight and minimize the effect of banks closing credit lines for many businessmen. Yet the end result of sanctions, he says, is that Europe will be the ultimate losers economically; bureaucracy in Europe has lost economic focus as American geopoliticians have taken over. Only three days before the run on the rouble, I asked Rosneft's Mikhail Leontyev (Press-Secretary - Director of the Information and Advertisement Department) about the growing rumors of the Russian government getting ready to apply currency controls. At the time, no one knew an attack on rouble would be so swift, and conceived as a checkmate to destroy the Russian economy. After sublime espressos at the Tazza d'Oro, right by the Pantheon, Leontyev told me that currency controls were indeed a possibility. But not yet. What he did emphasize was this was outright financial war, helped by a fifth column in the Russian establishment. The only equal component in this asymmetrical war was nuclear forces. And yet Russia would not surrender. Leontyev characterized Europe not as a historical subject but as an object: "The European project is an American project." And "democracy" had become fiction. The run on the rouble came and went like a devastating economic hurricane. Yet you don't threat a checkmate against a skilled chess player unless your firepower is stronger than Jupiter's lightning bolt. Moscow survived. Gazprom heeded the request of President Vladimir Putin and will sell its US dollar reserves on the domestic market. German Foreign Minister Frank-Walter Steinmeier went on the record against the EU further "turning the screw" as in more counterproductive sanctions against Moscow. And at his annual press conference, Putin emphasized how Russia would weather the storm. Yet I was especially intrigued by what he did not say. [2] As Mars took over, in a frenetic acceleration of history, I retreated to my Pantheon room trying to channel Seneca; from euthymia - interior serenity - to that state of imperturbability the Stoics defined as aponia. Still, it's hard to cultivate euthymia when Cold War 2.0 rages. Show me your imperturbable missile Russia could always deploy an economic "nuclear" option, declaring a moratorium on its foreign debt. Then, if Western banks seized Russian assets, Moscow could seize every Western investment in Russia. In any event, the Pentagon and NATO's aim of a shooting war in the European theater would not happen; unless Washington was foolish enough to start it. Still, that remains a serious possibility, with the Empire of Chaos accusing Russia of violating the Intermediate-Range Nuclear Forces Treaty (INF) even as it prepares to force Europe in 2015 to accept the deployment of US nuclear cruise missiles. Russia could outmaneuver Western financial markets by cutting them off from its wealth of oil and natural gas. The markets would inevitably collapse - uncontrolled chaos for the Empire of Chaos (or "controlled chaos", in Putin's own words). Imagine the crumbling of the quadrillion-plus of derivatives. It would take years for the "West" to replace Russian oil and natural gas, but the EU's economy would be instantly devastated. Just this lightning-bolt Western attack on the rouble - and oil prices - using the crushing power of Wall Street firms had already shaken European banks exposed to Russia to the core; their credit default swaps soared. Imagine those banks collapsing in a Lehman Brothers-style house of cards if Russia decided to default - thus unleashing a chain reaction. Think about a non-nuclear MAD (Mutually Assured Destruction) - in fact warless. Still, Russia is self-sufficient in all kinds of energy, mineral wealth and agriculture. Europe isn't. This could become the lethal result of war by sanctions. Essentially, the Empire of Chaos is bluffing, using Europe as pawns. The Empire of Chaos is as lousy at chess as it is at history. What it excels in is in upping the ante to force Russia to back down. Russia won't back down. Darkness dawns at the break of chaos  Paraphrasing Bob Dylan in When I Paint My Masterpiece, I left Rome and landed in Beijing. Today's Marco Polos travel Air China; in 10 years, they will be zooming up in reverse, taking high-speed rail from Shanghai to Berlin. [3] From a room in imperial Rome to a room in a peaceful hutong - a lateral reminiscence of imperial China. In Rome, the barbarians swarm inside the gates, softly pillaging the crumbs of such a rich heritage, and that includes the local Mafia. In Beijing, the barbarians are kept under strict surveillance; of course there's a Panopticon element to it, essential to assure internal social peace. The leadership of the Chinese Communist Party (CCP) - ever since the earth-shattering reforms by the Little Helmsman Deng Xiaoping - is perfectly conscious that its Mandate of Heaven is directly conditioned by the perfect fine-tuning of nationalism and what we could term "neoliberalism with Chinese characteristics". In a different vein of the "soft beds of the East" seducing Marcus Aurelius, the silky splendors of chic Beijing offer a glimpse of an extremely self-assured emerging power. After all, Europe is nothing but a catalogue of multiple sclerosis and Japan is under its sixth recession in 20 years. To top it off, in 2014 President Xi Jinping has deployed unprecedented diplomatic/geostrategic frenzy - ultimately tied to the long-term project of slowly but surely keeping on erasing US supremacy in Asia and rearranging the global chessboard. What Xi said in Shanghai in May encapsulates the project; "It's time for Asians to manage the affairs of Asia." At the APEC meeting in November, he doubled down, promoting an "Asia-Pacific dream". Meanwhile, frenzy is the norm. Apart from the two monster, US$725 billion gas deals - Power of Siberia and Altai pipeline - and a recent New Silk Road-related offensive in Eastern Europe, [4] virtually no one in the West remembers that in September Chinese Prime Minister Li Keiqiang signed no fewer than 38 trade deals with the Russians, including a swap deal and a fiscal deal, which imply total economic interplay. A case can be made that the geopolitical shift towards Russia-China integration is arguably the greatest strategic maneuver of the last 100 years. Xi's ultimate master plan is unambiguous: a Russia-China-Germany trade/commerce alliance. German business/industry wants it badly, although German politicians still haven't got the message. Xi - and Putin - are building a new economic reality on the Eurasian ground, crammed with crucial political, economic and strategic ramifications. Of course, this will be an extremely rocky road. It has not leaked to Western corporate media yet, but independent-minded academics in Europe (yes, they do exist, almost like a secret society) are increasingly alarmed there is no alternative model to the chaotic, entropic hardcore neoliberalism/casino capitalism racket promoted by the Masters of the Universe. Even if Eurasian integration prevails in the long run, and Wall Street becomes a sort of local stock exchange, the Chinese and the emerging multipolar world still seem to be locked into the existing neoliberal model. And yet, as much as Lao Tzu, already an octogenarian, gave the young Confucius an intellectual slap on the face, the "West" could do with a wake-up call. Divide et impera? It's not working. And it's bound to fail miserably. As it stands, what we do know is that 2015 will be a hair-raising year in myriad aspects. Because from Europe to Asia, from the ruins of the Roman empire to the re-emerging Middle Kingdom, we all still remain under the sign of a fearful, dangerous, rampantly irrational Empire of Chaos. Notes: 1. See here. 2. What Putin is not telling us, Russia Today, December 18, 2014. 3. Eurasian Integration vs. the Empire of Chaos, TomDispatch, December 16, 2014. 4. China set to make tracks for Europe, China Daily, December 18, 2014. China's Li cements new export corridor into Europe, Channel News Asia, December 16, 2014. Pepe Escobar's latest book, just out, is Empire of Chaos. Follow him on Facebook. Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009). He may be reached at pepeasia@yahoo.com.

THE ROVING EYE - Asia will not 'isolate' Russia By Pepe Escobar

THE ROVING EYE
Asia will not 'isolate' Russia
Envy the fly on the wall in The Hague when cool Xi Jinping met Barack Obama, pivoting around himself because China and the rest of Asia will not "isolate" Russia. China is Russia's strategic partner and along with Japan and South Korea (essentially US protectorates) identifies more with a steady supply of oil and gas, and business deals struck in Moscow, than helping stir an anachronistic Western-provoked New Cold War.

Any (bureaucratic) doubts the New Cold War is on have been dispelled by the Group of Seven issuing a pompous, self-described Hague Declaration. Abandon all hope those who expected The Hague to become the seat of a tribunal judging the war crimes of the Cheney regime. 

The G-7 also cancelled its upcoming summer summit in Sochi as a means of "punishing" Moscow over Crimea. As if this carried any practical value. Russian Foreign Minister Sergei Lavrov responded with class; if you don't want us, we have better things to do. [1] Everyone knows the G-7 is an innocuous, self-important talk shop. It's in the G-20 - much more representative of the real world - where crucial geopolitical and geoeconomic issues gain traction. 

The Hague Declaration comes complete with the kiss of death, as in, "The International Monetary Fund has a central role leading the international effort to support Ukrainian reform, lessening Ukraine's economic vulnerabilities, and better integrating the country as a market economy in the multilateral system." That's code for "wait till structural adjustment starts biting". 

And then there will be "measures to enhance trade and strengthen energy security" - code for "we will destroy your industry" but "are not very keen on paying your humongous Gazprom bill". 

All this in the sidelines of a supposed summit on nuclear security in the Netherlands, where US President Barack Obama, at the Rijksmuseum, in front of Rembrandt's The Night Watch, extolled Washington's "support of the Ukrainian government and Ukrainian people". Rembrandt's watchers have never seen anything like it in their glorious lifespan. It pays to be a Nazi after all; you just need to be in the right government, against the right enemy, and fully approved by the hyper-power. 

King Willem-Alexander hosted a lavish dinner for the members of the nuclear security summit at the Royal Palace Huis ten Bosch in The Hague - after Obama met with Chinese President Xi Jinping in a (failed) bid to "isolate" Russia. The White House would later add that, as long as Russia continues "flagrantly" to violate international law, "there is no need for it to engage with the G7". Unless, of course, it starts conducting a drone war in Ukrainian badlands - with kill-list attached. 

All about NATO
The US Senate - always enjoying superb popularity ratings - laboriously laid the groundwork for debating a bill backing a US$1 billion loan guarantee for the regime changers in Kiev, plus $150 million in aid also including "neighboring countries". These figures are enough to pay Ukraine's bills for maybe two weeks. 

Meanwhile, in the facts on the ground department, Crimea will be booming soon - tourism included - and may even become a "special economic zone". [2] Subjects of the upcoming IMF/agrobusiness-plundered Khaganate of Nulands will see the results for themselves. 

Hysteria within the North Atlantic Treaty Organization that Russia is about to invade everyone and his neighbor literally tomorrow - remember The Russians Are Coming! - persists unabated. Independent observers, The Roving Eye included, always insisted this is all about NATO, and not the European Union. [3] 

Since the go-go days of the Bill Clinton era, NATO has been expanding to the doorstep of Russia. The process graphically represents US hegemony over Europe; NATO "annexed" Eastern Europe even before the EU. And even those certified US Cold Warriors such as Paul Nitze always thought this was a needless, dangerous provocation of Russia. 

Very few remember how "Bubba" Clinton, to make sure terminal alcoholic Boris Yeltsin was re-elected in 1996, postponed NATO's expansion for a year. Afterwards, the expansion turbocharged into NATO as global Robocop - from the Balkans to the intersection of Central and South Asia, and to Northern Africa. 

NATO's humanitarian bombing of Yugoslavia - 36,000 combat missions, 23,000 bombs and missiles - whose 15th anniversary is "celebrated" this week, codified the new realities. NATO had nothing to do with defense; it was a multi-lethal (transformer) attack dog. It was the epitome of clean war; aerial blitzkrieg, and no casualties. And it was totally legitimized by "human rights" over national sovereignty; that was humanitarian imperialism in the making, opening the way to "responsibility to protect" and the destruction of Libya. 

Moscow knows very well the lineaments of the neo-barbarian behemoth at its gates, in the form of NATO bases in Ukraine, assuming the regime changers in Kiev remain in power. And their response has absolutely nothing to do with "Putin's aggression". Or the so-called "Medvedev Doctrine" of Russia theoretically extending military protection to Russians everywhere. As if Russia was about to "threaten" its business interests in Kazakhstan, Kyrgyzstan, Turkmenistan, Tajikistan or Mongolia. 

What the White House calls "the international community" - roughly the "Hague Declaration" G-7 plus a few European minions - could not possibly admit that. Asia, on the other hand, clearly identifies it. China, Japan and South Korea, for starters, identify Russia with a steady supply of oil and gas and further business deals. Even considering that Japan and South Korea are essentially US protectorates, nothing could be more anachronistic in their calculations than a Western-provoked New Cold War. 

Asia will not "isolate" Russia - and Asians and Russians know it, as much as The White House is in denial. Beijing's abstention in "condemning" Moscow - talk about the American angry-schoolmaster brand of politics - is classic Deng Xiaoping-style "keep a low profile", as China is Russia's strategic partner and both are busy working for the emergence of a multipolar world. Not to mention Beijing's utmost rejection of US-style color-coded "revolutions" and regime change ops - as well as that "pivoting to Asia" encirclement ops. 

Oh, to have been an EU-regulated fly on the wall in that Hague room where Obama and Xi were talking; cool Xi meets Obama pivoting around himself. 

Notes:
1. Russia not clinging to G8 if West does not want it - Russian FM, Russia Today, March 24, 2014.
2. Crimea to become Russian special economic zone-Medvedev, Russia Today, March 24, 2014.
3. Why the EU won't annex Ukraine, Russia Today, March 24, 2014.


Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

He may be reached at pepeasia@yahoo.com. 

Chavez exploits oil to lend in Latin America, pushing IMF aside

by Christopher Swann; Bloomberg

Venezuelan President Hugo Chavez is squeezing the International Monetary Fund out of Latin America, the region that once accounted for most of its business.

IMF lending in the area has fallen to $50 million, or less than 1 percent of its global portfolio, compared with 80 percent in 2005. Meanwhile, Chavez has used his oil wealth to lend $2.5 billion to Argentina, offer $1.5 billion to Bolivia and hold $500 million out to Ecuador.

Chavez, 52, is promoting what he calls a “socialist” alternative to the Washington-based IMF and its biggest shareholder, the U.S. Treasury. The timing couldn't be worse for the IMF, whose global clout is diminishing as countries from Uruguay to the Philippines pay their debts.

“Chavez is the No. 1 enemy of the IMF in the region,” said Jose Guerra, a former head of economic research at Venezuela's central bank and now a professor at Universidad Central de Venezuela in Caracas. “He views the IMF as an agent in the service of the U.S.”

The international lender's worldwide portfolio has shriveled to $11.8 billion from a peak of $81 billion in 2004, and a single nation, Turkey, now accounts for about 75 percent. As its lending wanes, so does the fund's ability to influence government policies. The IMF and its sister institution, the World Bank, have used aid to promote free trade, unfettered investment flows and limited government.

“We don't accept the kind of development the World Bank and International Monetary Fund want to push on us to change our hopes, our souls, our pain,” Chavez told a summit of the Non-Aligned Movement in Havana last September.

Avoiding Conditions

Chavez has proposed creating Banco del Sur, or Bank of the South, to supplant international lenders. Such a bank would allow Latin American nations to avoid the policy conditions that generally come with IMF loans.

“Chavez's effort to undermine the IMF is also an effort to undermine the Washington consensus on privatization and liberal economics,” said Francisco Rodriguez, a professor of Latin American studies at Wesleyan University in Middletown, Connecticut.

Chavez's presidential press office said he was unavailable for comment. IMF spokesman Bill Murray declined to comment.

Chavez has used the wealth of Latin America's largest oil exporter to extend his financial influence. Oil exports last year rose 21 percent to $58.4 billion, according to Venezuela's central bank.

Oil revenue has helped Venezuela amass reserves of more than $34 billion. Chavez also controls an $18 billion pool of cash, known as the Fonden, transferred from the central bank and the state oil company Petroleos de Venezuela SA.

The bounty can't last, said Ted Truman, a former assistant U.S. Treasury secretary for international affairs.

‘Grave Risk’

“Chavez is at grave risk of running out of money,” said Truman, who is now a senior fellow at the Peterson Institute for International Economics in Washington.

Venezuela's budget deficit soared to 8.2 trillion bolivars ($3.8 billion) in the first 11 months of last year from 447 billion bolivars a year earlier. The bolivar has plunged 16 percent against the dollar on the black market this year, making it the world's worst-performing currency.

For now, Chavez shows no sign of slowing down.

Venezuela is offering to help Ecuador as its newly elected leader, Rafael Correa, threatens to default on $10 billion of overseas debt. On Feb. 22, Venezuela offered Ecuador as much as $500 million of “financial cooperation.”

Such offers allow Venezuela to take over the IMF's role as “lender of last resort” to governments, said Mark Weisbrot, an analyst at the Center for Economic and Policy Research in Washington.

Bond Sales

Venezuela is also backing bonds sold jointly with Argentina, Rodriguez said. Venezuela's Finance Ministry on Feb. 26 said it plans to sell $1.5 billion of the so-called “Bond of the South” this week following a $1 billion sale last November.

Venezuelan purchases of $2.5 billion of Argentine government bonds helped Latin America's third-largest economy replenish its reserves after it repaid $9.5 billion of debt to the IMF in late 2005. Chavez said he wanted to “help Argentina end its dependence on the IMF.”

Argentine President Nestor Kirchner, elected in May 2003, said IMF policies had “devastated” his country, which defaulted on $95 billion of debt in 2001. “There is life after the IMF, and it's a good life,” Kirchner said in Munich in April 2005.

IMF Managing Director Rodrigo de Rato defended the fund's record in Latin America in a speech in New York on Feb. 16, saying that the region's economy grew 5 percent last year, and “countries that liberalized trade and reformed the role of the state in the private sector have performed particularly well.”

Hard Times

Prosperity in Latin America means hard times for the IMF, which depends on income from loans. The fund projects a loss of $103 million this fiscal year and is considering selling and investing some of its estimated $6.6 billion gold hoard to cover losses.

“They're having problems, while here in Venezuela we're opening the Banco del Sur,” Chavez gloated during a news conference in Caracas on Feb. 24.

To contact the reporter on this story: Christopher Swann at cswann1@bloomberg.net .