Posted by: Dr Churchill | March 20, 2022

CATASTROPHE

Russia’s war in Ukraine morass…

Russian President Vladimir Putin

Russian President Vladimir Putin has gazed at world events through a peculiar and historical Russian lens and has acted accordingly.

To invade the neighbor is not a novel thing for a Russian leader to do. It is a customary thing. It is common sense. It is hoary tradition. But when he looks for an up-to-date rhetoric capable of explaining the whys of hoary tradition to himself or the world, he has trouble coming up with anything.

He grasps at political rhetorics from times long gone. They disintegrate in his hands. He delivers speeches and discovers that he is speechless, or nearly so. This may have been the original setback, well before the military setbacks that have afflicted his army. It is not a psychological failure, then. It is a philosophical failure. A suitable language of analysis eludes him; therefore lucidity eludes him.

The problem that he is trying to solve is the eternal Russian conundrum, which is the actual “riddle, wrapped in a mystery, inside an enigma” that Winston Churchill ascribed to Russia (and could never define, though he considered that “national interest” offered a key). This is the conundrum of what to do about a very odd and dangerous imbalance in Russian life.

The imbalance consists of, on one side, the grandeur of Russia’s civilization and its geography, which are massive strengths, and, on the other side, a strange and persistent inability to construct a resilient and reliable state, which is a massive weakness. Russian leaders across the centuries have tried to cope with the imbalance by constructing the most thuggish of tyrannies, in the hope that brutality would compensate for the lack of resilience. And they have complemented the brutishness with an unusual foreign policy not like any other country’s, which has seemed to do the trick.


People demonstrate against the war and the food supply shortages in Vladivostok in 1917.

–People demonstrate against the war and food supply shortages in Vladivostok, Russia, in 1917.

Brutishness and the unusual foreign policy helped the Russian state make it through the 19th century without collapsing, which was an achievement. But twice in the 20th century, the state collapsed. The first time, in 1917, led to the rise to power of extremists and madmen and some of the worst disasters of world history. Nikita Khrushchev and Leonid Brezhnev returned the state to a stable condition.

Then it collapsed again. The second collapse, in the era of Mikhail Gorbachev and Boris Yeltsin, was not as calamitous. And yet, the empire disappeared, wars broke out along Russia’s southern borders, the economy disintegrated, life expectancy fell. This time Putin led the recovery. In Chechnya, he did it with a degree of thuggishness that qualifies him alone, among the belligerents in the current war, for an accusation of something like genocide.

Yet Putin was no more able than Khrushchev and Brezhnev to achieve the ultimate success, which would be the creation of a Russian state sufficiently sturdy and resilient to avoid any further collapses. He worries about this. Evidently he panics. And his worries have brought him to a version of the same fundamental view of the problem that one after another of his predecessors arrived at in times past.

The view amounts to a species of climate paranoia. This is a fear that warm principles of liberal philosophy and republican practices from the West, drifting eastward, will collide with the icy clouds of the Russian winter, and violent storms will break out, and nothing will survive. It is, in short, a belief that dangers to the Russian state are external and ideological, instead of internal and structural. The first such collision, the original one, took a very crude form and was not at all characteristic of subsequent collisions. But it was traumatic. This was Napoleon’s invasion of Russia in 1812, which crashed the French Revolution in a debased and dictatorial form into the frozen medievalism of the tsars. The collision of the French Revolution and the tsars brought the French army to the embers of Moscow, and the tsarist army to Paris.

Russia’s war in Ukraine has to be met not just with resistance but with inspiration.

But the characteristic collisions, the ones that have taken place repeatedly over the centuries, have always been philosophical, with military aspects confined to a Russian response. A decade after the tsarist army’s entrance into Paris, a circle of Russian aristocrats adopted liberal ideas under influences from the French Revolution and the American Revolution. They conspired together on behalf of a new and liberal Russia. They were arrested and exiled, and their enterprise was crushed. But the tsar, who was Nicholas I, felt less than confident of his victory over them. And he reacted by adopting a policy that would forever more protect the Russian state against the subversive danger.

A new French revolution broke out in 1830, which sparked sympathetic and liberal stirrings here and there in Europe, notably in Poland. Nicholas I recognized that an upsurge of liberalism on the borders of his own country was destined to revive the conspiracies of the arrested and exiled liberal aristocrats. He responded by invading Poland, and for good measure he swallowed the Polish state into the tsarist empire.

Still another revolution broke out in France in 1848, which led to liberal and republican uprisings in still more parts of Europe—very nearly a continental revolution, in plain indication that a new civilization was struggling to emerge in Europe, no longer royalist and feudal, no longer obedient to the dictates of whatever church might be locally in power, a new civilization of human rights and rational thought. But the new civilization was precisely what Nicholas I feared. He responded by invading Hungary. Those two invasions of his—the invasions of Poland and Hungary—were, from Nicholas I’s point of view, wars of defense, which took the form of wars of aggression. They were “special military operations” designed to inhibit the spread of subversive ideas into Russia by crushing the revolutionary neighbors, with the added hope of stamping out the revolutionary inspiration in broader regions too.

The wars were successful. The continental revolution of 1848 went down to defeat continentally, and Nicholas I had a lot to do with it. He was the “gendarme of Europe.” And the tsarist state endured for another two or three generations, until everything that he had feared finally did occur and inspirations from the German Social Democrats and other liberal and revolutionary currents in the West penetrated fatefully into his own Russia. That was in 1917. His great-grandson, Nicholas II, was tsar.

Down went the fragile Russian state. It reemerged as a communist dictatorship. But the basic dynamic remained the same. Stalin’s view of liberal or liberalizing currents from the West was identical to Nicholas I’s, even if Stalin’s vocabulary for expressing his worries was not a tsarist one. Stalin set out to crush liberal or liberalizing inspirations in the Soviet Union. But he set out to crush them also in Germany, which was an early goal of his Germany policy, aimed at destroying the Social Democrats more than the Nazis; and in Spain during the Civil War there, where his policy aimed at destroying the non-communists of the Spanish left as much as or more than the fascists. When World War II came to an end, Stalin set about crushing those same inspirations in every part of Europe that had fallen under his control. It is true that he was cracked.

But Khrushchev, who was not cracked, also turned out to be a Nicholas I. In 1956, when communist Hungary decided to explore some faintly liberal possibilities, Khrushchev detected a mortal danger to the Russian state, and he did what Nicholas I had done. He invaded Hungary. Brezhnev came to power. He turned out to be the same. A liberalizing impulse took hold among the communist leaders of Czechoslovakia. And Brezhnev invaded. Those were the precedents for Putin’s small-scale invasion of a newly liberal and revolutionary Georgia in 2008 and his invasion of Crimea in the revolutionary Ukraine of 2014. Every one of those invasions in the 19th, 20th, and 21st centuries was intended to preserve the Russian state by preventing a purely philosophical breeze of liberal thoughts and social experiments from wafting across the border. And the same reasoning has led to the most ferocious invasion of all, which is the one going on right now.


Joseph Stalin (center) and other top Soviet officials stand at the balcony of the Lenin Mausoleum in Moscow in 1926.

–Joseph Stalin (center) and other top Soviet officials stand at the balcony of the Lenin Mausoleum in Moscow in 1926. 

Only, Putin has run into a problem of language or rhetoric that afflicted none of his predecessors. Nicholas I in the 1830s and ’40s knew exactly how to describe his own wars against the liberal ideas and movements of Central Europe. This was by invoking the principles of a mystical and Orthodox royalism. He knew what he was for and what he was against. He was the champion of the true Christianity and sacred tradition, and he was the enemy of satanic atheism, heresy, and revolutionary disorder.

His principles aroused a loathing among friends of the French and American revolutions. But they aroused respect and admiration among friends of royalism and order, who were, with help from himself, dominant in Europe. His principles were noble, solemn, grand, and deep. They were universal principles of a sort, which made them worthy of the grandeur that is Russia—principles for the whole of humanity, with the Russian monarchy and the Orthodox church in the lead. They were living principles, grounded in realities of the era, even if hidden behind smoke and incense, and they put the tsar and his advisors in a position to think lucidly and strategically.

Stalin, Khrushchev, and Brezhnev likewise knew how to describe their wars against the liberals and subversives. This was by invoking the principles of communism. Those principles, too, were majestic and universal. They were principles of human progress, with Russia still in the lead—principles for the entire world. The principles aroused support and admiration in every country where communist parties were strong and sometimes too among non-communists, who accepted the argument that Soviet invasions were anti-fascist. In those ways, the communist principles were likewise grounded in realities of their own era, and the grounding put the communist leaders in a position to make their own strategic calculations in a spirt of lucidity and self-confidence.

But what sort of philosophical doctrine can Putin claim? The pro-Putin theoreticians ought to have worked up one for him, something superb, capable of generating a language useful for thinking about Russia’s situation in our own moment and the eternal conundrum of the Russian state. But the theoreticians have let him down. He ought to have them shot. Perhaps the failure is not really their fault, which is no reason not to shoot them. A philosophical doctrine cannot be worked up at will, the way speechwriters work up speeches. Powerful doctrines exist, or do not exist. And so Putin has had to make do with whatever ideas are floating about, grabbing one idea and another and tying them with a knot.

He has drawn almost nothing from communism, except for the hatred for Nazism that remains from World War II. He has put a lot of emphasis on his anti-Nazism too, and his emphasis accounts for a good deal of the support he has succeeded in arousing among his Russian compatriots. But anti-Nazism is not, in other respects, a strength of his doctrine. The role of neo-Nazis in Ukraine in recent years has been a visible one, if only in the form of graffiti and occasional street demonstrations. But it has not been a major role or even a minor role. It has been minuscule, which means that Putin’s emphasis on Ukrainian neo-Nazis, which is helpful for his popularity in Russia, also introduces a major distortion into his thinking.

Here is a source of his deluded belief that large numbers of Ukrainians, frightened by the neo-Nazis, would be grateful to see Russian tanks rolling through the streets. But nothing else of communism survives in his thinking. On the contrary, he has recalled with regret that official communist doctrines of the past were encouraging of the autonomy of Ukraine instead of encouraging a Ukrainian submission into the greater Russian nation. Lenin’s position on what used to be called the “national question” is not his own position.


Russian President Vladimir Putin speaks prior the military parade

–Putin speaks prior the military parade of the celebrations marking the 60th anniversary of the Allied victory over Nazi Germany in World War II, in Moscow on May 9, 2005. 

From the mystical royalism of the tsars he has drawn, by contrast, rather a lot. He has drawn a sense of ancient tradition, which leads him to invoke the role of Kyiv in the founding of the Russian nation in the ninth century, and the religious wars of the 17th century between the Orthodox Church (the good guys) and the Roman Catholic Church (the bad guys). Royalism is not a nationalism, but Putin has given to his own reading of the royal and religious past a nationalist interpretation, such that Orthodoxy’s struggle against Catholicism emerges as a national struggle of the Russians, who, in his interpretation, include the Ukrainians, against the Poles. He invokes the heroic 17th-century Cossack rebellion of Hetman Bohdan Khmelnytsky, though he discreetly chooses to leave unmentioned Khmelnytsky’s additional role as the leader of some of the worst pogroms in history.

But there is nothing grand or noble in Putin’s nationalist reading of the past. His invocation of church history implies the greatness of Orthodox spirituality but does not seem to reflect it, quite as if Orthodoxy were, for him, merely an afterthought or an ornament. His nationalism resembles only in a surface way the sundry Romantic nationalisms of Europe in the 19th century and the years leading up to World War I. Those nationalisms, the ones from the past, tended to be versions of universality in which each separate nationalism, in rebelling against the universalism of the Jacobin dictators or the multiethnic empires, claimed a special mission for the whole of humanity.

But Putin’s nationalism claims no such special mission. It is a small nationalism instead of a grandiose one. It is a nationalism for a tiny country—a nationalism with an oddly tiny voice, like the voice of Serbian nationalism in the 1990s ranting about events of the 14th century. It is, to be sure, an angry voice, but not in the deep and thunderous fashion of the communists. It is a voice of resentment, directed at the victors in the Cold War. It is the voice of a man whose dignity has been offended. The aggressive encroachments of a triumphant NATO enrage him. He simmers.

But his resentment, too, lacks grandeur. It lacks, in any case, an explanatory power. The tsars could explain why Russia had aroused the enmity of the liberal and republican revolutionaries: It was because Russia stood for the true faith, and the liberals and republicans were the enemies of God. The communist leaders could likewise explain why the Soviet Union had aroused its own enemies: It was because the enemies of Soviet communism were the defenders of the capitalist class, and communism was capitalism’s undoing.

But Putin speaks of “Russophobia,” which means an irrational hatred, something inexplicable. Nor does he identify an ultimate virtue in his resentment. The tsars believed that if only they could defeat the subversives and atheists, they could offer the true faith to humanity. The communists believed that after defeating the capitalists and capitalism’s tool, the fascists, the liberation of the world was going to be at hand. But Putin’s resentment does not point to a shining future. It is a backward-looking resentment without a forward-looking face.

Here, then, is a Russian nationalism without anything in it to attract support from anyone else. I realize that here and there around the world, people do support Putin in the present war. They do so because they harbor their own resentments of the United States and the wealthy countries. Or they do so because they retain a gratitude for Cold War help from the Soviet Union. There are Serbs who feel a brotherly connection. But hardly anyone seems to share Putin’s ideas. There is nothing to share. Nor does anyone around the world suppose that Ukraine’s destruction will usher in a new and better era.

The doctrine does not offer hope. It offers hysteria. Putin believes that under the supposed neo-Nazi leadership that has taken over Ukraine, millions of Russians within Ukraine’s borders have become victims of a genocide. By “genocide” he sometimes appears to mean that Russian-speakers with an ethnic Russian identity are being forced to speak Ukrainian, which will deprive them of their identity—which is an implication in his 2021 essay “On the Historical Unity of Russians and Ukrainians.” Other times he is content to leave intact the implication of mass slaughter. Either way, he appears to have been singularly unpersuasive on this important point. Nowhere on Earth has anyone held a protest to denounce the genocide of millions of Russians in Ukraine. Why not? It is because Putin speaks in the tone of a man who does not even aspire to be believed, except by people who require no convincing.

Still, he clings to his idea. It suits him. He considers himself to be a cultured person who thinks in the loftiest manner—someone who could not possibly invade another country without being able to invoke a magnificent philosophy. He does seem to crave reassurance on this point, which is why, I imagine, he has spent so many hours on the phone with Emmanuel Macron, the president of the motherland of intellectual prestige, which has always been France. But his attachment to the magnificent philosophy is the heart of the disaster. For how can a man think lucidly if he is awash in ideas as small and ridiculous as those? He knows that real-world problems and challenges beset him, but his imagination bubbles with resentments over medieval history, the religious wars and Cossack glories of the 17th century, the parallels between Polish Catholicism of the past and NATO’s “Russophobia” today, and the dreadful fate of the Ukrainian Russians at the hands of Western-encouraged neo-Nazis. And amid the bubbling resentments, the best that he can come up with is the foreign policy of Tsar Nicholas I from the 1830s and ’40s.


Now, it is true that from the standpoint of a traditional foreign-policy realism, everything I have just recounted ought to be dismissed as irrelevant. Realism is an ideology that stipulates the insignificance of ideologies in favor of attending strictly to power relations. This can mean only that Putin’s nationalist maunderings are pretty much meaningless, except for the complaint about NATO and its aggressions, which is deemed not to be ideological. That one part should attract the whole of our attention.

But should it really? People who take seriously the complaint about NATO always treat the danger to Russia as something so obvious as not to need an explanation. Putin himself points to NATO’s eastward encroachments, slams his fist on the table, and leaves it at that, without laying out the basis of his objection. We are supposed to infer that NATO’s expansion poses a danger to Russia because someday out of the blue NATO armies might pour across the border into Russian territory just as, in 1812, Napoleon’s army poured across the border.

Yet if we are to restrict the analysis to hard facts, as realism advises us to do, we might recall that during its more than 70 years, NATO has given not a single indication that it is anything but a defensive alliance. There is no reason at all to suppose that one day out of the blue, NATO, which is anti-Napoleonic in principle, will turn Napoleonic in practice. NATO’s purpose in expanding eastward has been, instead, to stabilize Europe and put an end to border disputes, which ought to be in Russia’s interest too.

Still, it is unquestionable that NATO’s expansion has, even so, infuriated Putin, and it has frightened him. Only, why? I think the answer is obvious. And it is obvious why no one wants to say it aloud. The European revolutions that frightened Nicholas I eventually did take place, in spite of his best efforts. The liberal republics arose. And in 1949, the liberal republics joined together quite as if they earnestly believed that liberal and republican principles do make for a new civilization. And they protected their civilization with a military alliance, which was NATO. In that manner, the liberal republics produced a military alliance that contained within it a spiritual idea, which was the beautifulness of the liberal and republican project. Here was the revolution of 1848, successful at last and protected by a formidable shield. And Putin sees the problem.

NATO’s eastward expansion infuriates and frightens him because it stands in the way of the sound and conservative Russian foreign-policy tradition that was established by Nicholas I. This is the policy of invading the neighbors. Where NATO expands, Russia can no longer invade, and the achievements of the liberal and republican revolution can no longer be undone—not by Russian armies, anyway. Opposition to NATO expansion amounts, then, to an acceptance of Russian expansion. It is an acceptance of the very strange Russian expansionism whose purpose has always been to impede the eastward spread of the revolutionary concept.

But Putin does not say this, and neither does anyone else. It is unsayable. Anyone who acknowledged an acceptance of the Russian policy of invading the neighbors would be saying, in effect, that tens of millions of people on Russia’s borders or in nearby countries should be subject to the most violent and murderous of oppressions for the simplest of reasons, which is to spare the Russian people from contact with ideas and beliefs that we ourselves believe to be the foundations of a good society. So no one says it. Instead, the supposition is allowed to linger that Russia is endangered by NATO because it faces the prospect of a Napoleonic invasion. “Realism,” in short, is a principal of intellectual fog, which claims to be a principle of intellectual lucidity.


People light candles while visiting a memorial dedicated to late Euromaidan activists

–People light candles while visiting a memorial dedicated to late Maidan activists along the Alley of the Heavenly Hundred Heroes during Maidan Revolution commemoration ceremonies in Kyiv, Ukraine, on February 20th of 2022. 

Why has Putin invaded Ukraine?

It is not because of NATO aggression.

And it is not because of events in ninth-century Kyiv and the Orthodox-Catholic wars of the 17th century. It is not because Ukraine under President Volodymyr Zelensky has gone Nazi.

Putin has invaded because of the Maidan Revolution of 2014.

The Maidan Revolution was the revolution of 1848 precisely a — classic European uprising animated by the same liberal and republican ideas as in 1848, with the same student idealism and the same romantic flourishes and even the same street barricades, except made of rubber tires instead of wood.

I know this because I am a student of revolutions — I have seen revolutionary uprisings repeatedly on different continents — and I saw the Maidan Revolution, at a three month delay.

I felt the revolutionary electricity in the air, and so did Putin from afar.

The Maidan Revolution was everything that Nicholas the First, set out to oppose back in 1848–49. It was dynamic, passionate, capable of arousing the sympathies of vast numbers of people.

Ultimately the Maidan Revolution was superior to the revolutions of 1848.

It did not result in outbreaks of crazy utopias, or demagogy, or programs of extermination, or even chaos.

It was a moderate revolution in favor of a moderate Ukraine — a revolution that offered a viable future for Ukraine and, in doing so, offered new possibilities to Ukraine’s neighbors too.

And it did not fail, unlike the revolutions of 1848.

Because of that revolution, Mr Vladimir Putin was terrified.

He responded by annexing Crimea and stirring up his wars in the breakaway provinces of eastern Ukraine, in the hope that he could inflict a few dents on the revolutionary success.

He had some victories too, and the Ukrainians may have joined him in inflicting a few dents of their own. But he saw that, even so, the revolutionary spirit went on spreading. He saw the popularity in Russia of Boris Nemtsov, his own opponent. He found it terrifying. Nemtsov was duly assassinated in 2015 on a bridge in Moscow. Putin saw Alexei Navalny step forward to offer still more opposition. He saw that Navalny, too, turned out to be popular, quite as if there was no end to these reforming zealots and their popular appeal. Putin poisoned Navalny and imprisoned him.

Even so, a new Maidan Revolution broke out, this time in Belarus. Still more revolutionary leaders stepped forward. One of them was Sviatlana Tsikhanouskaya in Minsk, who ran for president in 2020 against Alexander Lukashenko, the old-school thug.

She won!

Even though Lukashenko succeeded in a “Stop the Steal” maneuver and declared himself the winner — she won the hearts and minds of the people. Yet Putin thought that he racked up another victory in his unending counterrevolution, on a smaller scale, but Tsikhanouskaya’s success at the polls terrified him nonetheless.

And Putin was terrified by the emergence of Zelensky, who might have seemed to be, at first glance, a nonentity, a mere television comedian, a politician with a reassuringly accommodationist program.

But Putin read the transcript of Zelensky’s phone call with then-President Donald Trump, which showed that Zelensky was not, in fact, a pushover.

Putin saw that Zelensky was pleading for arms.

The transcript of that phone call might even have given him the sense that Zelensky was one more heroic figure in the mold of the people he had already assassinated, poisoned, imprisoned, or overthrown—someone unyielding, therefore dangerous.

He concluded that Maidan’s revolution was destined to spread to Moscow and St. Petersburg, if not this year, then next year.

So he consulted with the ghosts of Brezhnev, Khrushchev, and Stalin, who referred him to the master thinker, who is Nicholas I.

And Nicholas I told Putin that if he failed to invade Ukraine, the Russian state would collapse. It was life or death.

Putin might have responded to this advice by coming up with a project to move Russia in a democratic direction and preserve the stability of Russia at the same time.

He might have chosen to see in Ukraine the proof that Russian people are, in fact, capable of creating a liberal republic—given that he believes Ukrainians are a subset of the Russian people.

He might have taken Ukraine as a model, instead of an enemy — a model for how to construct the resilient state that Russia has always needed.

But he lacks the categories of analysis that might allow him to think along those lines. His nationalist doctrine does not look into the future, except to see disasters looming.

His doctrine looks into the past. So he gazed into the 19th century, and he yielded to its allure, the way that someone might yield to the allure of the bottle, or the tomb.

Down into the wildest depths of his Czarist reaction he plunged…

Yours,

Dr Churchill

PS:

The catastrophe that has taken place, has not just been the human cost and the destructive morass of this war — but it has also been the monstrous failure of the current Russian Czar, the governmental cabinet and his party machine people’s imagination to witness historical progress, to embrace the rights of people and accept the inevitability of social change towards Liberalism and Democracy. 

And that monstrous failure has brought about not the collapse of Ukraine, but the very collapse of Russia into barbarism and despondency, alongside the immense hate of their neighbors and the rest of the world that has now fully isolated the Russian regime as a pariah and a leper if not the butcher of Kremlin. 

So now the danger to the ever-fragile Russian state that Putin thought he was trying to protect all his life — has become his living nightmare.

What a morass this conflict has become…

Posted by: Dr Churchill | March 19, 2022

Crypto Money

Money laundering 101

If you were a criminal, how would you go about laundering your money?

All great debaters try to force their opponents into black and white terms, and Warren is no different.

The false equivalency that Warren is trying to force here is, “If you support crypto, you support Russian oligarchs.”

There are factual problems with the argument. Crypto is not, and has never been, a good system for laundering money.

The fact of the matter is, on both a relative and absolute basis, far more money laundering happens in the traditional finance system than in crypto.

Let’s get more specific and use the popular exchange from this week‘s testimony of Senator Warren and her interactions from the bench of the House of Senate with the the CEO of Chainanalysis. 

“If you were a Russian oligarch that needed to launder $1 billion, how would you do it?”

Now, if you are a Russian oligarch, chances are you have been one for a long time. There aren’t a lot of new, self-made oligarchs after all. Most of them earned their wealth during the perestroika.

Yet, because you have been a Russian oligarch for the past 30-odd years, and presumably you didn’t get that way by being incompetent — you have several well-oiled and well-established traditional FIAT money systems and banking processes for laundering the money.

You have shell companies in the Channel islands, and from Cyprus all the way to Panama and the BVIs, and from Antigua to Caymans and from the Turks & Caicos, to Jamaica and Columbia.

You have various corporate structures and (perfectly legal) tax schemes in place in London, in Wall Street, and in Singapore. 

You have relationships with prominent banking and wealth management institutions.

You are very likely to have a web of estate relations, employees, fellow oligarchs, business accomplices and valued personal relationships, that help obscure the true ownership of your diverse assets.

My point is, that you have already a pretty good functional system that is tried, tested and already operating at scale.

Thus my question is: “If you already have a system that works, why change it by trying to fix that which is not broken?”

After all — criminal enterprises are just like any other enterprise: “Risk Averse.”

Therefore the “criminals use bitcoin to launder money” argument has always been a “red-herring” for me, because this argument assumes, (for some erroneous reason) that criminals will abandon their current functional systems for money laundering in favor of a risky, new technology such as the blockchain and the Crypto money radical innovation.

Of course the necessary disclaimer is that personally I have no experience operating a criminal organization, and therefore my assumptions might be off-base, but methinks, it is safe to assume that the Crime Family Bosses, the shady Banksters and their Oligarch friends, are not wildly dissimilar to their legal counterparts.

Moral judgements aside, successful criminals don’t get that way by accident. 

Presumably they have people, processes and technology in place that allow them to achieve their goals.

Organizations are naturally averse to adopting new forms of technology because people don’t like learning new systems and nobody wants to take on the risk of the technology failing.

Here’s a real example from my own life…

I have known for years that using traditional banks for FX is the stupidest thing to do. Yet, the thing is … that the pain of replacing this method of exchange of one monetary FIAT currency to another FIAT currency that might be useful for me in a different country is simple enough when done via the SWIFT code — so if I were to change it to another new FX trading system — the cost of doing business (laborious time management) is simply too high for me to seriously contemplate and actually institute.

Also we must consider that of course my team has been trained on the existing method of FX trading of FIAT money and that all our FX currency swap profits get generated from this tested, tried & true system that has been in place for far too long for me and it has worked well enough so far — that it would be an anomaly to seriously contemplate changing it. 

It’s just too sticky…

So we stick with it — and even though we could save money and process FX related trades, in an easier way by changing systems from FIAT money to crypto money — I am probably not going to be doing so anytime soon, firstly because I don’t want the headache, but also because my inner “boomer” loves all new technology but doesn’t necessarily use it until it enters the first phase of the early adoption of the Innovation Bell curve, and besides, this “next Crypto money solution” will probably be a pain for the short term and it will also eventually be replaced with another wave of innovation to come up from the FinTech innovation horizon of progress…

So, now, let us imagine this following scenario as if you are an employee of a criminal organization. 

What sane person would advocate for a new, relatively untested technology to manage and perhaps lose personal wealth of an Oligarch or of a Criminal overlord you work for?

Tough call. 

Because you are talking about a high stakes game of innovation VS personal health and well being…

So, I’m going to propose a new rule.

Anyone that says crypto is a tool for money laundering, must first imagine what a junior employee at a criminal enterprise proposing that to their boss would look like…

I’m sort of joking here, but not really.

Two or three years ago, I spoke to many “crypto teams” at big financial institutions

It didn’t take me long to find out that the “crypto team” meant one, extremely enthusiastic late teens to twenty something year old hacker, who is obsessing about innovative technology, overly enthusiastic and eager for change — yet still trying and failing to advocate for the adoption of crypto-money within any established and entrenched enterprise…

So this is my mental model for how criminal organizations would react to crypto money as well. 

After all, they are also most likely run by “old guys” who hate technology.

Imagine the pitch:

Employee: I have a new way for us to launder money: crypto.

Boss: Bitcoin? Isn’t that a Ponzi scheme?

Employee: No, it’s a decentralized digital bearer asset. But that’s beside the point. We can use it to launder.

Boss: But I already use my bank to launder money. Why do I need something new?

Employee: Yes, but this is…it’s decentralized, you see. There are no intermediaries, so no one could seize your wealth.

Boss: I like my intermediaries. I trust them. I go golfing with my Swiss banker Jan Van Valburg every Wednesday.

Employee: Yes, you like these intermediaries, but maybe you won’t like the next ones. What if Jan gets fired?

Boss: Ok, I will try this with 5% of our funds. But keep in mind, this is my personal money. If I lose it, I will probably kill you.

Employee: On second thought — I agree — bitcoin is a Ponzi scheme…

And to all my young employees out there who have had to teach their boss how to PDF a Word document, can you imagine getting them set up with multiple wallets, moving funds cross-chain and washing them through mixing services?

No thank you.

The truth is, crypto has a host of issues that make it deeply unappealing for oligarchs and criminals to use because blockchain and crypto money is always at the forefront of innovation whereas “crime” is the oldest profession in the world..

Besides that, in today’s reality of blockchain and crypto money — liquidity on “Crypto-money mixing services” is extremely low and around only $30 mm daily on a global scale. On the upside is that all the blockchain companies like “Chainalysis” can trace fall their “mixing” funds any where and in any way that the crypto-coins are mixed up. Also, in the event that you want to “exit” to FIAT money, you have to go through a KYC’d exchange. That is the path — mostly — and this way because the whole system is based on a public, verifiable ledger

Indeed, Crypto money is a bad solution for criminal institutions for the same reasons crypto money and the blockchain is still un-investable for banks as well as for most all investing institutions and large scale enterprises — mainly because it’s still too new, too small and perhaps too risky to make any sense for the C-level suite and the Board of Directors to learn, to accept and ultimately to digest.

Yours,

Dr Churchill

PS: 

“It’s bad form to mention money laundering. Instead, you talk about asset management structures and tax-beneficial schemes.” —John Sweeney

Methinks, that my default position on the Macro Economic scale of things is that it is always important to detach ourselves from the current Circus of ringmasters who are managing public opinion like any self-respecting animal trainer manages his beasts. 

Lion tamers aside — we should just make a diligent effort to look at the big picture here.

So, zooming out and thereby seeing the whole forest and the trees — we can all see what I think that Senator Warren’s testimony does. 

And that is simply an effort to raise awareness about crypto-money, about the new FinTech technology and also about raising some interesting questions we need to answer collectively as a Society and a people– not as fractions divided by wealth and power.

Specifically, there is a growing divide between political factions that see financial exclusion as a one size fits all policy tool, and those who view an open financial system as a basic tenet of a free society.

The right to trade and transact with financial inclusion for all — is the same as all other “Rights” we enjoy as a liberal democracy and a Free society, such as access to any religion, access to free speech, rights of assembly, and all other rights that make us reliant on the ability to transact freely, openly and transparently.

Seen in this light, sanctions and other forms of financial exclusion start to seem less like a clever policy tool and more like a violation of basic human rights.

The fact remains that today, crypto-money, is a poor system for money laundering. 

And the question our industry needs to ask is this: 

“What values do we want in a new financial system?”

A financial system that is 100% permissionless opens it up to criminal activity. 

A system that is subject to far too many rules, regulations and interventions — creates the heavy risks of endemic corruption, bureaucratic freeze, systemic illiquidity, rigid authoritarianism and governmental cronyism.

And because there are no easy answers to these questions — I think this is the implicit trade-off our technologically advanced society is beginning to digest.

Posted by: Dr Churchill | March 19, 2022

FIAT MONEY

FIAT MONEY — Churchill 2022

“Nations have no permanent friends or allies, they only have permanent interests.” 

– Lord Palmerston

Newsletter 27037884

How to Build a Reserve Currency

Here’s a hypothetical question: If you were in charge of a country, how would you incentivize people to use your currency? 

Assuming that you are operating in a fiat system — you would start by have a booming economy.

If your country has companies producing valuable goods and services, you can mandate that people must pay for those goods in your country’s native token. That is the currency in question.

You can also require people to pay taxes in your local currency, creating another source of demand and reason that people must own it.

Finally, if the companies in your booming economy become valuable enough, foreign investors will want a piece. You could let the foreigners invest, but only if they do it in your currency.

That’s a good start! But if you have bigger ambitions and want the entire world to use your currency, you have to get more creative about creating sources of demand.

To start — the least creative solution — you could build up a big military and use it to bully people into using your currency. This is not an ideal strategy — most countries won’t like it.

Alternatively, find a commodity that everyone in the world needs — say energy and specifically oil — cut deals with producers and only accept payments in your local currency.

Here we have a strategy that supports demand and creates liquidity for your currency.

That is (in extremely oversimplified terms) how the petrodollar system works today.

The Petrodollar System Explained is a fascinating article from Bloomberg about how the US secretly struck a deal with Saudi Arabia back in 1974 on the back of the Oil Embargo.

The idea was simple: The US would buy an enormous amount of oil from the Saudis and offer certain security protections.

In return, the Kingdom would price their barrels in dollars and plow excess revenues from exports into the US market.

It was a clear win-win. 

Saudi Arabia got to generate yield on their capital that could not be invested productively at home, and the US got an infusion of cash and perpetual demand for their currency.

That is essentially how our system is constructed today. Our currency has transitioned from one backed by gold vis-à-vis the Bretton Woods agreement, to one that is backed by the oil market.

Ten newsletters could be written on this subject alone, about the connection between this system and the hollowing out of the US industrial base.

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The End of Petrodollars

The reason we’re talking about this today is because that system is beginning to fall apart.

“Saudi Arabia is in active talks with Beijing to price some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia…”

It would be a profound shift for Saudi Arabia to price even some of its roughly 6.2 million barrels a day of crude exports in anything other than dollars. The majority of global oil sales — around 80% — are done in dollars, and the Saudis have traded oil exclusively in dollars since 1974, in a deal with the Nixon administration that included security guarantees for the kingdom.”

Even in isolation — and with the caveat that nothing has been agreed on yet — this is big news. But this is not the first sign of cracks forming.

Just last month, it was reported that China and Russia agreed to a 30-year deal to provide gas settled in euros. Before that, even allies were considering mechanisms to price oil outside of dollar settlement.

Now, to be clear, this is not the first time there have been calls for the end of the petrodollar system.  Russia has grumbled for years about the dollar reserve system, and major producers like Rosneft have threatened to switch to euros.

But today those cracks are turning into fissures, perhaps due to a rapidly deteriorating geopolitical landscape. Deals are being struck, and strategic partners and even allies of the US are beginning to consider other options.

The enormity of this disruption can’t be understated. Particularly as financial exclusion is rapidly becoming the chief policy instrument of the western world.

International Sanctions are the Death Knell of the Petrodollar System, and that hurts the US more than anything else in this conflict, because the connection between the acceleration of sanctions and the demise of the international dollar based energy settlement system is clear.

It’s the number one rule of disruption: “If a system is abused frequently enough, people will find an alternative.”

Countries like China and Russia have long voiced their discontent with today’s dollar based system, but I have to imagine even our allies are raising their eyebrows at the staggering number of sanctions being levied today.

The G-7 has effectively frozen the majority of Russia’s $643 billion in central bank reserves. Eventually, like all geopolitical conflicts, the war in Ukraine will end.

And if you’re reading this thinking “yes, but our allies are in on it too, why would they care?” Please remember this: 

Countries don’t have friends, they have strategic interests.”

The last time there was a major world war, both China and Russia fought with the US. Today, they are our greatest strategic foes.

Long after the effects of this war are forgotten, the whole world will remember one lesson: The assets they keep in the financial system are subject to US interests.

Increasingly aggressive sanctions change the calculus for participants in a petrodollar system. 

Yours,

Dr Churchill

PS: 

When the risk of keeping your assets in the current systems rises to total forfeiture, there is little countries won’t do to mitigate that risk.

And now that sanctions are rapidly being cheered as a new and evolved form of warfare, the question becomes, “what will we replace them with in a non-dollar system?”

Ultimately, it’s impossible to predict when and how the system will end. 

But if deals between countries like China, Russia and Saudi Arabia continue to be struck — odds are, that it will end sooner rather than later.

Posted by: Dr Churchill | March 13, 2022

The Tragic Comedy of Life…

Here are some drops of wisdom from Charlie Chaplin who worked hard all his life to entertain people and make children laugh because himself was such a melancholic man, who still managed to live to a young age of 88 years of a solid good life.

He was a great actor, a prolific writer, a comedian, and a man of the world — and thus he left behind a great volume of treasure for all of us to share.

He felt deeply the tragedy in all of our lives, starting from his very own, and yet he lightened the burden we all share, by turning it into a comedy…

Think about it for a moment…

And please tell me this:

Who has not seen his slapstick comedy, and who amongst us hasn’t laughed at his jokes, sympathized at his misfortunes and cried at his efforts at unrequited love in one of his many black and white silent and yet, not silent movies?

Who has not gained in happiness, wisdom, and growth through comedy, and in a peacefully entertaining way by seeing his many works?

Who can deny the serious love that he gave to his art and transferred to us, via his excellent craft?

Who has not seen at least one of his eternal films that reflect the inner nature of the “gamin,” “the orphan,” “the loveless child” hiding in plain site inside all of us?

He gave his all over his many years on this planet, but he also shared his quest for Humanity’s Peace and his anti-war message resonates fully today in his speech from his Film “the Great Dictator” that so aptly describes today the situation in the war of Ukraine.

Yet, if you want to summarize his overall contributions — here are few of his most resonant messages:

“Peace trumps everything in the world, and warring dictators are nothing but emotionally immature scoundrels, bullies and unfulfilled children.” 

“Nothing is permanent in this world — not love, not happiness, not even our problems.”

“Keep on walking in the rain because no one can see your tears.”

“The most wasted day in life is the day we do not laugh.”

“The six best doctors in the world are: Sun, Rest, Exercise, Modesty, Self respect, Good friends.”

“Stick with these things in all stages of your life and enjoy healthful living.”

“When you see the moon, you see the beauty of God.”

“If you see the sun you see the power of God.”

“If you look at yourself in the mirror, you see God’s best creation. So believe that.”

“We are all just tourists here, God is our travel agent and he has already determined our routes, bookings and destinations … trust him and enjoy life.”

“Life is just a journey.”

“Live today to the fullest because tomorrow is not guaranteed and in fact it might be no more…”

Yours,

Dr Churchill

PS:

Indeed in these days that Peace has been torn asides and the fabric of our lives has been rendered clean of impurities — we can truly see what kind of life we ought to live, and we truly understand whose side is that of God, and whose not.

And as a gentle reminder — here is a Speech from Charlie Chaplin’s film, “The Great Dictator”

Posted by: Dr Churchill | March 12, 2022

Solid

Solidarity 

My heart is crying out, seeing as how Mothers in Poland leave their baby strollers at the rail road stations for the Ukrainian refugee women who fled their war torn country with nothing but their children…

May God Bless them all.

These small acts of kindness are the solid rock upon which our Compassionate Humanity rests… 

Yours,

Dr Churchill

PS:

Do your bit today, because you can.

Posted by: Dr Churchill | March 7, 2022

Oracular talk…

Obviously, prediction is folly.

But there is value in it nonetheless.

Because by engaging our minds with possible futures, we must put specific details together and imagine how actions might concatenate, and to the extent, those details and concatenations feel plausible, they can guide our actions.

Similarly, while it is easy and valuable to imagine worst-case scenarios in order to avoid them, it is also important to imagine best-case scenarios in order to try to bring them about.

This is much harder, since our brains evolved to avoid danger. But in order to stay motivated, we must constantly keep a more positive future in mind.

We can’t enter an era of transformation without a realistic utopian vision for it.

So I ask you this: How worried should we be about the future of the World or of even that of the American democracy in light of these current events?

This is the question at the center of the two party system that America faces right now as we are approaching a new Civil War in our homeland and a renewed World War in Europe and the rest of the world.

Indeed, to avoid the Civil War — breaking the Two-Party system will be necessary. And if we are to discuss the history of the two-party system in American politics, and examine a number of possible structural reforms that could work to get the U.S. out of the morass — it’s in our interest to learn how to grow fast towards the multiparty Democracy that in the Lincoln party we all aspire to.

And maybe we should be looking to other countries’ democracies for inspiration — because we can’t find the model here at home.

And, if you want to check out just how close we are to political violence, authoritarianism, and democratic breakdown — you can read here about how it all ends.

Breaking the Two-Party Loop, is how we make the case for a multiparty Democracy in America

But first: “What is Democracy in America?”

Is it just partisanship, is it polarization, or is it the robustness of support for our two party inimical and civil strife inducting Democracy in the United States?

We need transformative change in our Political System right now…

Because in many ways, transformation is the most American of all the possible scenarios for our future.

As indeed the history of American democracy is a story of multiple transformations.

Over the course of our history, we’ve renegotiated and recreated the basic agreements of our political system.

We began with an overthrow of the British crown and political independence.

In the Progressive Era, we expanded the participatory nature of our democracy, introducing direct election of senators, direct primary, initiative and referendum, and eventually women’s suffrage.

In the Civil Rights Era, we expanded voting rights tremendously and then renegotiated ethics and transparency in a burst of good government activism that followed.

We are due for another moment of transformation.

However, just like in history, the breakdown and the transformation scenarios may be linked. Unfortunately, it may take a breakdown of the existing order for a true transformation to occur. By contrast, the muddle scenario may offer just enough hope of resolution and enough occasional moments of forward progress, to sap the energy for transformational change.

This is not to say that we should hope for the breakdown scenario, given the human costs it will impose on our society, especially the most vulnerable amongst us. And there’s no guarantee that it will lead to transformation, but just continued breakdown.

Here is one way to reform the House of Representatives:

Expand it.

If the future of American democracy feels uncertain, that’s because it is. So, what will the rest of the decade look like? It’s always hard to make predictions, especially about our uncertain future, but there are three potential scenarios: breakdown, muddle, and transformation. By understanding how and why each scenario could come about, my hope is that we can collectively steer away from breakdown and towards transformation.

Metamorphosis is our destiny and since we are now squarely in the midst of the liminal space of or Republic — we are heading for a painful yet liberating future phase of our country.

It is not hard to think about how the breakdown of the government could come, given all the overheated rhetoric about the 2024 election, and the ways in which the “Big Lie” has galvanized many far-right activists into seeking office themselves or pushing their elected representatives to buy into their far-fetched theories and change the voting rules. A disputed 2024 election almost feels like a foregone conclusion at this point, and it is increasingly difficult to imagine that the losing side concedes peacefully. The question is: then what?

Imagine a narrow Trump win, and Republican control of Congress. Democratic protests grow in states Trump narrowly won. Right-wing counter-protestors show up, and street fighting grows. Democratic protests mount after Trump is inaugurated. Now Trump has the powers of the presidency at his disposal. He can mobilize federal resources and declare a state of emergency. He could have the justifications he needs to establish an authoritarian state.

Or, alternatively, imagine a narrow Biden win. Republicans in Congress object. Protests grow. Does Biden send in the troops? Does he crack down on inciters and limit civil liberties? Do Republican states begin to mount a secession campaign?

Or imagine the election winds up in the courts with no clear winner. How does it get resolved? What happens when militia groups are spoiling for a fight?

One could spin out many possible scenarios here, but they would all have three important things in common. First, the losing side refuses to accept the loss, because they are convinced the other side cheated. Second, rather than go quietly, they engage in political violence. And third, violence is met with violence and the force of a federal crackdown, which pushes into authoritarianism.

The specifics of how it happens may vary, but once an escalating spiral of violence begins, it may be very hard to stop. Additionally, states dominated by partisans on the losing side may begin agitating for secession, contributing to even more escalation.

The scenario that allows us to avoid a spiral of violence and the descent into a new Civil War — is that perhaps there is some violence, but it mostly calms down if Trump wins, and the Republicans take charge, and then make an effort to struggle to govern coherently.

As with the previous Trump administration, they are bogged down by their own incompetencies and petty in-fighting. And because much of the federal government can run on auto-pilot and benign neglect, it continues to do so, though with increasing incoherence and inefficiency.

Meanwhile, policy innovation continues to happen at the state and local level. Fights between levels of government continue to amplify (think about the fights between cities and states and the federal government over masking and vaccination policies, for example), leaving the courts overwhelmed and divided. Despite the authoritarian intentions of Trump and his acolytes, they can only do so much damage, given the many overlapping lines of authority in the layered U.S. system, and the reality that narrow majorities always struggle to govern.

Eventually, Democrats come back into power nationally, and fight the same struggles in steering the rudderless ship of state as it is pulled in all directions.

Or Democrats maintain control after the 2024 election. Maybe Democrats even get unified control of Congress, and Biden makes bold promises again for his second term. But again, he is stymied by fights within his own party, and the difficulties of getting anything done in Washington.

Either way, what distinguishes the muddle from the breakdown is that despite grudging and grumbling, protests do not escalate into widespread violence. Perhaps this is because much of the heated rhetoric around violence is simply rhetoric, or because activists believe they are better off trying to win the next election and don’t wish to risk their lives or winding up in jail. As long as they can still hold their jobs or get their retirement checks, perhaps it is simply easier (and more fun) to complain all the time than to do anything about it.

Or perhaps, and more likely, political leaders do not call for violence, and in fact condemn it.

The muddle best describes our current moment, at least for now.

The optimistic scenario is “Transformation.” In this scenario, the zero-sum partisan death match between Democrats and Republicans breaks down, and American politics enters a new alignment. Under this alignment, participation and inclusion expand, and the promise of multiracial, multiethnic democracy is fully realized.

How could such a transformation happen? First, it happens because a younger generation demands it. Though many of today’s political leaders are in their 70’s and 80’s, they will not be in charge forever. A new generation is now entering politics, and their expectations and demands are very different. They are not attached to the old structures, and are willing to create something new.

To make our system of self-governance more representative and more responsive, a new generation of actors could reform our political institutions by shifting to multi-member proportional districts for the House, allowing more parties to compete nationally. At state and local levels, reformers could explore even bolder forms of statewide, proportional representation to allow more parties to form. Almost certainly, a successful transformation to a multiracial, multiethnic democracy will require more than two political parties, which will allow us to break the two-party loop of hyper-partisan polarization that is threatening our democracy.

Periods of transformations have all taken place at moments of generational change, in which the realities of governing fell well short of the moral expectations of a rising generation. They took place in response to profound failures of existing government regimes. And this is still certainly true today.

Transformation requires the most work. It can only come about when we stop pretending the status quo is salvageable, and reconcile ourselves to the reality that something will need to change, and that those who build the social movements will get to build the future.

Now let us enter another variable into the equation of our future review… Mr Putin and Ukraine.

Because for many people watching the Russian invasion of Ukraine has felt like a series of “He can’t be doing this” moments, as Russia’s president Mr Vladimir Putin has launched the largest ground war in Europe since the Second World War — this is quite literally, mind-boggling.

That’s why I speak as a clear-eyed Russia expert, because I wanted to know what is going on as I watched the extraordinary footage of Russian tanks rolling across international borders, that makes me think of what Mr Vladimir Putin has in mind and what insights she can offer into his motivations and objectives.

Back in the day, we spent many years studying history, and in our conversations we traced how long arcs and trends of European history are converging on Ukraine right now. We are already in the middle of a third World War, whether we’ve fully grasped it or not.

Sadly, we are treading back through old historical patterns that we should have never permitted to happen again.

Those old historical patterns include Western businesses who fail to see how they help build a tyrant’s war chest, admirers enamored of an autocrat’s “strength” and politicians’ tendency to point fingers inward for political gain instead of working together for their nation’s security.

But at the same time, it’s not too late to turn Mr Putin back, and it’s a job not just for the Ukrainians or for NATO — it’s a job that ordinary Westerners and companies can assist in important ways once they grasp what’s at stake.

Ukraine has become the front line in a struggle, not just between democracies and autocracies but in a struggle for maintaining a rules-based system in which the things that countries want are not taken by force since each and every country in the world should be paying close attention to this.

There’s lots of danger ahead, she warned. Putin is increasingly operating emotionally and likely to use all the weapons at his disposal, including nuclear ones. It’s important not to have any illusions — but equally important not to lose hope.
“Every time you think, ’No, he wouldn’t, would he?’ Well, yes, he would,” Hill said. “And he wants us to know that, of course. It’s not that we should be intimidated and scared…. We have to prepare for those contingencies and figure out what is it that we’re going to do to head them off.”

We’ve been Putin watchers for a long time, and when we’ve been watching him over the past week, what we’ve been seeing that other people might be missing…

Putin is usually more cynical and calculated than he came across in his most recent speeches. There’s evident visceral emotion in things that he said in the past few weeks justifying the war in Ukraine. The pretext is completely flimsy and almost nonsensical for anybody who’s not in the echo chamber or the bubble of propaganda in Russia itself. I mean, demanding to the Ukrainian military that they essentially overthrow their own government or lay down their arms and surrender because they are being commanded by a bunch of drug-addled Nazi fascists?

There’s just no sense to that.

It beggars the imagination.

Every time you think: “No, he wouldn’t, would he?”

Well, yes, he would.

And he wants us to know that, of course.

Putin doesn’t even seem like he’s trying to make a convincing case. We saw the same thing in the Russian response at the United Nations. The justification has essentially been “what-about-ism”: ‘You guys have been invading Iraq, Afghanistan. Don’t tell me that I can’t do the same thing in Ukraine.”

This visceral emotion is unhealthy and extraordinarily dangerous because there are few checks and balances around Putin. He spotlighted this during the performance of the National Security Council meeting, where it became very clear that this was his decision. He was in a way taking full responsibility for war, and even the heads of his security and intelligence services looked like they’ve been thrown off guard by how fast things were moving.Advertisement

So Putin is being driven by emotion right now, not by some kind of logical plan?

I think there’s been a logical, methodical plan that goes back a very long way, at least to 2007 when he put the world, and certainly Europe, on notice that Moscow would not accept the further expansion of NATO. And then within a year in 2008 NATO gave an open door to Georgia and Ukraine. It absolutely goes back to that juncture.

Back when I was analyzing what Russia was likely to do in response to the NATO Open Door declaration one of our assessments was that there was a real, genuine risk of some kind of preemptive Russian military action, not just confined to the annexation of Crimea, but some much larger action taken against Ukraine along with Georgia. And of course, four months after NATO’s Bucharest Summit, there was the invasion of Georgia. There wasn’t an invasion of Ukraine then because the Ukrainian government pulled back from seeking NATO membership. But we should have seriously addressed how we were going to deal with this potential outcome and our relations with Russia.

But, do you think Putin’s current goal is reconstituting the Soviet Union, the Russian Empire, or something different?

No, absolutely not, because he is only keen on reestablishing Russian dominance of what Russia sees as the Russian “Imperium.” I’m saying this very specifically because the lands of the Soviet Union didn’t cover all of the territories that were once part of the Russian Empire. So that should give us pause.

Putin has articulated an idea of there being a “Russky Mir” or a “Russian World.” The recent essay he published about Ukraine and Russia states the Ukrainian and Russian people are “one people,” a “yedinyi narod.” He’s saying Ukrainians and Russians are one and the same. This idea of a Russian World means re-gathering all the Russian-speakers in different places that belonged at some point to the Russian Czardom.

The Russian Empire on a map.

Putin’s been down in the archives of the Kremlin during Covid looking through old maps and treaties and all the different borders that Russia has had over the centuries. He’s said, repeatedly, that Russian and European borders have changed many times. And in his speeches, he’s gone after various former Russian and Soviet leaders

Indeed, he’s gone after Lenin and he’s gone after the communists, because in his view they ruptured the Russian empire, they lost Russian lands in the revolution, and yes, Stalin brought some of them back into the fold again like the Baltic States and some of the lands of Ukraine that had been divided up during World War II, but they were lost again with the dissolution of the USSR.

Putin’s view is that borders change, and so the borders of the old Russian imperium are still in play for Moscow to dominate now.

Dominance in what way?

It doesn’t mean that he’s going to annex all of them and make them part of the Russian Federation like they’ve done with Crimea. You can establish dominance by marginalizing regional countries, by making sure that their leaders are completely dependent on Moscow, either by Moscow practically appointing them through rigged elections or ensuring they are tethered to Russian economic and political and security networks. You can see this now across the former Soviet space.

We’ve seen pressure being put on Kazakhstan to reorient itself back toward Russia, instead of balancing between Russia and China, and the West. And just a couple of days before the invasion of Ukraine in a little-noticed act, Azerbaijan signed a bilateral military agreement with Russia. This is significant because Azerbaijan’s leader has been resisting this for decades. And we can also see that Russia has made itself the final arbiter of the future relationship between Armenia and Azerbaijan. Georgia has also been marginalized after being a thorn in Russia’s side for decades. And Belarus is now completely subjugated by Moscow.

But amid all this, Ukraine was the country that got away. And what Putin is saying now is that Ukraine doesn’t belong to Ukrainians. It belongs to him and the past. He is going to wipe Ukraine off the map, literally, because it doesn’t belong on his map of the “Russian world.” He’s basically told us that. He might leave behind some rump statelets. When we look at old maps of Europe — probably the maps he’s been looking at — you find all kinds of strange entities, like the Sanjak of Novi Pazar in the Balkans. I used to think, what the hell is that? These are all little places that have dependency on a bigger power and were created to prevent the formation of larger viable states in contested regions. Basically, if Vladimir Putin has his way, Ukraine is not going to exist as the modern-day Ukraine of the last 30 years.

How far into Ukraine do you think Putin is going to go?

At this juncture, if he can, he’s going to go all the way. Before this last week, he had multiple different options to choose from. He’d given himself the option of being able to go in in full force as he’s doing now, but he could also have focused on retaking the rest of the administrative territories of Donetsk and Luhansk. He could have seized the Sea of Azov, which he’s probably going to do anyway, and then joined up the Donetsk and Luhansk regions with Crimea as well as the lands in between and all the way down to Odessa.

In fact, Putin initially tried this in 2014 — to create “Novorossiya,” or “New Russia,” but that failed when local support for joining Russia didn’t materialize.

Now, if he can, he is going to take the whole country. We have to face up to this fact. Although we haven’t seen the full Russian invasion force deployed yet, he’s certainly got the troops to move into the whole country.

He has an adequate number of troops to move in, but does he have enough to occupy the whole country?

If there is serious resistance, he may not have sufficient force to take the country for a protracted period. It also may be that he doesn’t want to occupy the whole country, that he wants to break it up, maybe annex some parts of it, maybe leave some of it as rump statelets or a larger rump Ukraine somewhere, maybe around Lviv. I’m not saying that I know exactly what’s going on in his head. And he may even suggest other parts of Ukraine get absorbed by adjacent countries.Advertisement

In 2015, Foreign Minister Sergey Lavrov was at the Munich Security Conference after the annexation of Crimea and the war in Donbas. And he talked about Ukraine not being a country, saying pointedly that there are many minority groups in Ukraine — there are Poles and there are Romanians, there are Hungarians and Russians. And he goes on essentially almost inviting the rest of Europe to divide Ukraine up.

So what Putin wants isn’t necessarily to occupy the whole country, but really to divide it up. He’s looked at Afghanistan, Iraq, Libya and other places where there’s a division of the country between the officially sanctioned forces on the one hand, and the rebel forces on the other. That’s something that Putin could definitely live with — a fractured, shattered Ukraine with different bits being in different statuses.

So step by step, in ways that we haven’t always appreciated in the West, Putin has brought back a lot of these countries that were independent after the Soviet collapse back under his umbrella. The only country that has so far evaded Putin’s grip has been Ukraine.

Ukraine, correct. Because it’s bigger and because of its strategic location. That’s what Russia wants to ensure, or Putin wants to ensure, that Ukraine like the other countries, has no other option than subjugation to Russia.

How much of what we’re seeing now is tied to Putin’s own electoral schedule? He seized Crimea in 2014, and that helped to boost his ratings and ensure his future reelection. He’s got another election coming up in 2024. Is any of this tied to that?

I think it is. In 2020, Putin had the Russian Constitution amended so that he could stay on until 2036, another set of two six-year terms. He’s going to be 84 then. But in 2024, he has to re-legitimate himself by standing for election. The only real contender might have been Alexei Navalny, and they’ve put him in a penal colony. Putin has rolled up all the potential opposition and resistance, so one would think it would be a cakewalk for him in 2024. But the way it works with Russian elections, he actually has to put on a convincing show that demonstrates that he’s immensely popular and he’s got the affirmation of all the population.

Behind the scenes it’s fairly clear that there’s a lot of apathy in the system, that many people support Putin because there’s no one else. People who don’t support him at all will probably not turn out to vote. The last time that his brand got stale, it was before the annexation of Crimea. That put him back on the top of the charts in terms of his ratings.

It may not just be the presidential calendar, the electoral calendar. He’s going to be 70 in October. And 70 you know, in the larger scheme of things, is not that old. There are plenty of politicians out there that are way over 70.

But it’s old for Russians.

It’s old for Russians.

And Putin’s not looking so great, he’s been rather puffy-faced and Botox ladden as of late. We know that he has complained about having back issues. Even if it’s not something worse than that, it could be that he’s taking high doses of steroids, or there may be something else. There seems to be an urgency in his actions, and thus this war in Ukraine may be driven also by personal factors.

Czar Vladimir, may also have a sense that time is marching on, because he has been at the helm of his nation for 22 years after all, and thus the likelihood of a Russian leader leaving after that length of time voluntarily through democratic elections — is understandably, pretty slim, because Most leaders leave either like Belarusian president Alexander Lukashenko thought that he might leave, as the result of massive protests, or they die in office.

The only other person who has been Russian leader in modern times longer than Putin is Stalin, and Stalin died in office.

Putin came to power after a series of operations that many have seen as a kind of false flag — bombings of buildings around Russia that killed Russian citizens, hundreds of them, followed by a war in Chechnya. That led to Putin coming to power as a wartime president. The annexation of Crimea in 2014 also came at a difficult time for Putin. Now we’re seeing another big military operation less than two years before he needs to stand for election again. Am I wrong to see that pattern?

No, I don’t think you are. There’s definitely a pattern here. Part of Putin’s persona as president is that he is a ruthless tough guy, the strong man who is the champion and protector of Russia. And that’s why Russia needs him. If all was peaceful and quiet, why would you need Vladimir Putin? If you think of other wartime leaders — Winston Churchill comes to mind — in peacetime, Winston Churchill got voted out of office.

Speaking of Chechnya, I have been thinking that this is the largest ground military operation that Russia has fought since Chechnya. What did we learn about the Russian military then that’s relevant now?

It’s very important, that you bring this point up because people are saying Ukraine is the largest military operation in Europe since World War II. The first largest military action in Europe since World War II was actually in Chechnya, because Chechnya is part of Russia. This was a devastating conflict that dragged on for years, with two rounds of war after a brief truce, and tens of thousands of military and civilian casualties. The regional capital of Grozny was leveled. The casualties were predominantly ethnic Russians and Russian speakers. The Chechens fought back, and this became a military debacle on Russia’s own soil. Analysts called it “the nadir of the Russian army.” After NATO’s intervention in the Balkan wars in the same timeframe in the 1990s, Moscow even worried that NATO might intervene.

What have we learned about NATO in the last two months?

In many respects, not good things, initially. Although now we see a significant rallying of the political and diplomatic forces, serious consultations and a spur to action in response to bolster NATO’s military defenses.

But we also need to think about it this way. We have had a long-term policy failure going back to the end of the Cold War in terms of thinking about how to manage NATO’s relations with Russia to minimize risk. NATO is a like a massive insurer, a protector of national security for Europe and the United States. After the end of the Cold War, we still thought that we had the best insurance for the hazards we could face — flood, fire etc. — but for a discounted premium. We didn’t take adequate steps to address and reduce the various risks. We can now see that that we didn’t do our due diligence and fully consider all the possible contingencies, including how we would mitigate Russia’s negative response to successive expansions. Think about Swiss Re or AIG or Lloyds of London — when the hazard was massive, like during Hurricane Katrina or the global financial crisis in 2008, those insurance companies got into major trouble. They and their clients found themselves underwater. And this is kind of what NATO members are learning now.

And then there’s the nuclear element. Many people have thought that we’d never see a large ground war in Europe or a direct confrontation between NATO and Russia, because it could quickly escalate into a nuclear conflict. How close are we getting to that?

Well, we’re right there. Basically, what President Putin has said quite explicitly in recent days is that if anybody interferes in Ukraine, they will be met with a response that they’ve “never had in their history.” And he has put Russia’s nuclear forces on high alert. So he’s making it very clear that nuclear is on the table.

Putin tried to warn Trump about this, but I don’t think Trump figured out what he was saying. In one of the last meetings between Putin and Trump when I was there, Putin was making the point that: “Well you know, Donald, we have these hypersonic missiles.” And Trump was saying, “Well, we will get them too.” Putin was saying, “Well, yes, you will get them eventually, but we’ve got them first.” There was a menace in this exchange. Putin was putting us on notice that if push came to shove in some confrontational environment that the nuclear option would be on the table.

Do you really think he’ll use a nuclear weapon?

The thing about Putin is, if he has an instrument, he wants to use it. Why have it if you can’t? He’s already used a nuclear weapon in some respects. Russian operatives poisoned Alexander Litvinenko with radioactive polonium and turned him into a human dirty bomb and polonium was spread all around London at every spot that poor man visited. He died a horrible death as a result.Advertisement

The Russians have already used a weapons-grade nerve agent, Novichok. They’ve used it possibly several times, but for certain twice. Once in Salisbury, England, where it was rubbed all over the doorknob of Sergei Skripal and his daughter Yulia, who actually didn’t die; but the nerve agent contaminated the city of Salisbury, and anybody else who came into contact with it got sickened. Novichok killed a British citizen, Dawn Sturgess, because the assassins stored it in a perfume bottle which was discarded into a charity donation box where it was found by Sturgess and her partner. There was enough nerve agent in that bottle to kill several thousand people. The second time was in Alexander Navalny’s underpants.

So if anybody thinks that Putin wouldn’t use something that he’s got that is unusual and cruel, think again. Every time you think, “No, he wouldn’t, would he?” Well, yes, he would. And he wants us to know that, of course.

It’s not that we should be intimidated and scared. That’s exactly what he wants us to be. We have to prepare for those contingencies and figure out what is it that we’re going to do to head them off.

So how do we deal with it? Are sanctions enough?

Well, we can’t just deal with it as the United States on our own. First of all, this has to be an international response.

Larger than NATO?

It has to be larger than NATO. Now I’m not saying that that means an international military response that’s larger than NATO, but the push back has to be international.

We first have to think about what Vladimir Putin has done and the nature of what we’re facing. People don’t want to talk about Adolf Hitler and World War II, but I’m going to talk about it. Obviously the major element when you talk about World War II, which is overwhelming, is the Holocaust and the absolute decimation of the Jewish population of Europe, as well as the Roma-Sinti people.

But let’s focus here on the territorial expansionism of Germany, what Germany did under Hitler in that period: seizure of the Sudetenland and the Anschluss or annexation of Austria, all on the basis that they were German speakers. The invasion of Poland. The treaty with the Soviet Union, the Molotov-Ribbentrop pact, that also enabled the Soviet Union to take portions of Poland but then became a prelude to Operation Barbarossa, the German invasion of the Soviet Union. Invasions of France and all of the countries surrounding Germany, including Denmark and further afield to Norway. Germany eventually engaged in a burst of massive territorial expansion and occupation. Eventually the Soviet Union fought back. Vladimir Putin’s own family suffered during the siege of Leningrad, and yet here is Vladimir Putin doing exactly the same thing.

So, similar to Hitler, he’s using a sense of massive historical grievance combined with a veneer of protecting Russians and a dismissal of the rights of minorities and other nations to have independent countries in order to fuel territorial ambitions?

Correct. And he’s blaming others, for why this has happened, and getting us to blame ourselves.

If people look back to the history of World War II, there were an awful lot of people around Europe who became Nazi German sympathizers before the invasion of Poland. In the United Kingdom, there was a whole host of British politicians who admired Hitler’s strength and his power, for doing what Great Powers do, before the horrors of the Blitz and the Holocaust finally penetrated.

And you see this now.

You totally see it. Unfortunately, we have politicians and public figures in the United States and around Europe who have embraced the idea that Russia was wronged by NATO and that Putin is a strong, powerful man and has the right to do what he’s doing: Because Ukraine is somehow not worthy of independence, because it’s either Russia’s historical lands or Ukrainians are Russians, or the Ukrainian leaders are — this is what Putin says — “drug addled, fascist Nazis” or whatever labels he wants to apply here.

So sadly, we are treading back through old historical patterns that we said that we would never permit to happen again. The other thing to think about in this larger historic context is how much the German business community helped facilitate the rise of Hitler. Right now, everyone who has been doing business in Russia or buying Russian gas and oil has contributed to Putin’s war chest. Our investments are not just boosting business profits, or Russia’s sovereign wealth funds and its longer-term development. They now are literally the fuel for Russia’s invasion of Ukraine.

Just like people didn’t want their money invested in South Africa during apartheid, do you really want to have your money invested in Russia during Russia’s brutal invasion and subjugation and carving up of Ukraine?

I gather you think that sanctions leveled by the government are inadequate to address this much larger threat?

Absolutely. Sanctions are not going to be enough. You need to have a major international response, where governments decide on their own accord that they can’t do business with Russia for a period of time until this is resolved. We need a temporary suspension of business activity with Russia. Just as we wouldn’t be having a full-blown diplomatic negotiation for anything but a ceasefire and withdrawal while Ukraine is still being actively invaded, so it’s the same thing with business. Right now you’re fueling the invasion of Ukraine. So what we need is a suspension of business activity with Russia until Moscow ceases hostilities and withdraws its troops.

Ordinary companies should make a decision. This is the epitome of “ESG” that companies are saying is their priority right now — upholding standards of good Environmental, Social and Corporate Governance. Just like people didn’t want their money invested in South Africa during apartheid, do you really want to have your money invested in Russia during Russia’s brutal invasion and subjugation and carving up of Ukraine?

If Western companies, their pension plans or mutual funds, are invested in Russia they should pull out. Any people who are sitting on the boards of major Russian companies should resign immediately. Not every Russian company is tied to the Kremlin, but many major Russian companies absolutely are, and everyone knows it. If we look back to Germany in the runup to the Second World War, it was the major German enterprises that were being used in support of the war. And we’re seeing exactly the same thing now. Russia would not be able to afford this war were it not for the fact that oil and gas prices are ratcheting up. They’ve got enough in the war chest for now. But over the longer term, this will not be sustainable without the investment that comes into Russia and all of the Russian commodities, not just oil and gas, that are being purchased on world markets. And, our international allies, like Saudi Arabia, should be increasing oil production right now as a temporary offset. Right now, they are also indirectly funding war in Ukraine by keeping oil prices high.

This has to be an international response to push Russia to stop its military action. India abstained in the United Nations, and you can see that other countries are feeling discomforted and hoping this might go away. This is not going to go away, and it could be “you next” — because Putin is setting a precedent for countries to return to the type of behavior that sparked the two great wars which were a free-for-all over territory. Putin is saying, “Throughout history borders have changed. Who cares?”

And you do not think he will necessarily stop at Ukraine?

Of course he won’t. Ukraine has become the front line in a struggle, not just for which countries can or cannot be in NATO, or between democracies and autocracies, but in a struggle for maintaining a rules-based system in which the things that countries want are not taken by force. Every country in the world should be paying close attention to this. Yes, there may be countries like China and others who might think that this is permissible, but overall, most countries have benefited from the current international system in terms of trade and economic growth, from investment and an interdependent globalized world. This is pretty much the end of this. That’s what Russia has done.

He’s blown up the rules-based international order.

Exactly. What stops a lot of people from pulling out of Russia even temporarily is, they will say, “Well, the Chinese will just step in.” This is what every investor always tells me. “If I get out, someone else will move in.” I’m not sure that Russian businesspeople want to wake up one morning and find out the only investors in the Russian economy are Chinese, because then Russia becomes the periphery of China, the Chinese hinterlands, and not another great power that’s operating in tandem with China.

The more we talk, the more we’re using World War II analogies. There are people who are saying we’re on the brink of a World War III.

We’re already in it. We have been for some time. We keep thinking of World War I, World War II as these huge great big set pieces, but World War II was a consequence of World War I. And we had an interwar period between them. And in a way, we had that again after the Cold War. Many of the things that we’re talking about here have their roots in the carving up of the Austro-Hungarian Empire and the Russian Empire at the end of World War I. At the end of World War II, we had another reconfiguration and some of the issues that we have been dealing with recently go back to that immediate post-war period. We’ve had war in Syria, which is in part the consequence of the collapse of the Ottoman Empire, same with Iraq and Kuwait.

All of the conflicts that we’re seeing have roots in those earlier conflicts. We are already in a hot war over Ukraine, which started in 2014. People shouldn’t delude themselves into thinking that we’re just on the brink of something. We’ve been well and truly in it for quite a long period of time.

But this is also a full-spectrum information war, and what happens in a Russian “all-of-society” war, you soften up the enemy. You get the Tucker Carlsons and Donald Trumps doing your job for you. The fact that Putin managed to persuade Trump that Ukraine belongs to Russia, and that Trump would be willing to give up Ukraine without any kind of fight, that’s a major success for Putin’s information war. I mean he has got swathes of the Republican Party — and not just them, some on the left, as well as on the right — masses of the U.S. public saying, “Good on you, Vladimir Putin,” or blaming NATO, or blaming the U.S. for this outcome. This is exactly what a Russian information war and psychological operation is geared towards. He’s been carefully seeding this terrain as well. We’ve been at war, for a very long time. I’ve been saying this for years.

So just as the world didn’t see Hitler coming, we failed to see Putin coming…

Yet, we shouldn’t have.

He’s been around for 22 years now, and he has been coming to this point since 2008. I don’t think that he initially set off to do all of this, by the way, but the attitudes towards Ukraine and the feelings that all Ukraine belongs to Russia, the feelings of loss, they’ve all been there and building up.

What Russia is doing is asserting that “might makes right.” Of course, yes, we’ve also made terrible mistakes. But no one ever has the right to completely destroy another country — Putin’s opened up a door in Europe that we thought we’d closed after World War II.

Yours,

Dr Churchill

PS:

Dr Churchill Political Science CV

Dr Pano Churchill leader of the Lincoln Party of independents in the United States of America — is a renown political leader, a realist scholar, and teacher/researcher of international relations.

Dr Churchill is a gentle diplomat and a great practitioner of the Exercise of Power, Diplomacy and Politico-Economic Leadership.

Dr Pano Churchill is a quiet speaker who has always preached the Art of RealPolitic that has served the cause of the Democratic Republic, the US represents in our turbulent world. 

Dr Churchill made an all out effort to serve the Cause of World Peace – stoutly & faithfully in many geopolitically important roles throughout this Earth and for the length of his life. 

He has been called a “peacemaker” in the world and the pivot or the kingmaker in American politics — because the Lincoln party has always turned towards the best a 

Dr Churchill has always been a humble and political party leader, a resolute Conflict Resolution, a Mediator, a United Nations Ambassador, a Peace Envoy, a UN elections and fairness Reporter, a UN Raporteur, a Democracy advocate, and also a serious, just and honest Peacemaker.

Dr Churchill, is a renown bridge builder and has served as an international security and geopolitical expert adviser to the US government, to the European Union, to successive  UK governments, as well as to the former King of Saudi Arabia — Abdullah bin Abdulaziz Al Saud.

Dr Churchill, has been a protege of King Abdulaziz, for whom he served as an advisor for the Environmental progress of Saudi Arabia and also for the creation of the desalination plants near Jeddah and Mecca, and as the first advisor and advocate for the creation of KAUST — the first advanced Research University of the Arab world, and certainly the main advanced knowledge base amongst the Gulf Cooperation Council countries.

Dr Churchill is credited as the force behind the decision to create KAUST, as well as for the facilitation of its economic and financial endowment that perhaps will keep KAUST alive for the many future generations to come. 

Dr Churchill also served as a secret Envoy to the various warring parties of the Middle East during King Abdullah’s administration. 

Dr Pano Churchill has made many contributions towards the maintenance of international order, peace and stability, since the tumultuous years of the Détente at the chaotic times of the end of the Cold War, the collapse of the Soviet Union and the immediate proliferation of nuclear weapons systems throughout the World. 

This was the time when the Nuclear Club was enlarged by several new members unacknowledged as of yet, from the 1980s to the 2020s, when a sense of anarchy enveloped the former nations of the Soviet Union and all kinds of weapons of mass destruction could be found in the dank warehouses and in the military depots of Eastern Europe under the control of rapacious profiteers. 

These nuclear weapons of mass destruction — eventually found their way into the souks and the bazaars of the Middle East and beyond, and this is where today we still encounter the danger of proliferation of weapons of Mass Destruction and thus the enlargement of the Nuclear Club is now a de facto reality all around the world. 

Dr Churchill always emphasized the importance of recalling the role of history in the foreign policy arena of today and viewed all international relations with a deep understanding of geopolitical history, Realpolitik relativism and philosophy. 

Dr Pano Churchill’s lectures offer five main channels of insights that all prospective Global Leaders would be well advised to study herewith if they are to serve the People honestly, humbly and effectively:

  1. History is the key to understanding all the nuances of our Political present and our own future. 
  2. All understanding of Realpolitik and the successful management of rivals and allies alike – hinges on our knowledge of their past behavior as well as the use of the psychology of inducements and pressures known in rewards and punishments or as the Carrot and the Stick.
  3. A leader has to confront the problem of conjecture, with its asymmetric payoffs.

4. Most all Realpolitik and Foreign Relations decisions that lead to the formation of long term Foreign Policy are choices between lesser and greater evils. 

5. Leaders should be wary of the perils of a morally vacuous realism. 

It is worth noting that the following example of Dr Churchill’s expertise stems from his involvement in Politics since the last part of the twentieth century, many years after the horrors of WWII when humanity experienced the two most devastating world wars, and certainly well after the Civil Wars that followed the beginning of the Era of Peace from 1945 to the present. 

A peace that was fraught with proxy wars all over the place and an uneasy détente that came to be called Cold War that under the terror of Nuclear annihilation has allowed the world to enjoy an unprecedentedly long peace during this small time in the long purview of world history.

Yet it is this time of meekness and grandeur at the same time, that is a period of long fields of Peace, interspersed with various localized proxy and regional conflicts which have served as “release valves” in the science of biomimicry played out in World Politics. 

Imagine that this Biomimicry functions in the same way that small eruptions in the volcanic nature of the world mimic the explosive firmament of our earthly existence that needs to be frequently “vented” if we are to avoid the big eruptions like the Cracatoa volcano that spewd ash into the atmosphere causing global cooling, or the tsunami inducing and civilization ending floods resultant from major volcanic eruptions like the Santorini volcano that was the biggest “bang” of antiquity.  

Today, in the same way these periodic eruptions like the Great Global Wars that resemble genocidal Acts of God, or Nature, are all delivered by human hands because since the advent of nuclear weapons in the arsenals of most all major countries – we have been turned into Gods of War and not Supplicant Leaders or Political Mendicants of Peace as we ought to be in the context of our Christian, Greco-Roman and Anglosaxon civilization, of the Western Liberal Democracies.

Yet, it is exactly because these “Acts of War” resemble the Natural phenomena – we can see the signature of man’s wrath and hubris, such as in the Second World War, when although many Japanese lives were lost, it was actually the devastating effects of the two atomic bombs in Hiroshima and Nagasaki that finally ended the killing fields of World War II and the impossible tally of many more millions of dead people. 

And of course, since then, there has been interstate conflict, to include the Korean War, the Vietnam War, the Gulf War, the African wars, and the wars in Afghanistan, and Iraq, as well as the Syrian and Yemen wars – it was these very crises that required brinkmanship, such as the 1962 Cuban Missile Crisis that sobered up our belligerent militaries and brought our people to their senses, in order to negotiate and thus find a lasting peace…

The art of International Leadership includes a good deal of knowledge of Brinkmanship, but the Good Leader knows that the world as a whole has been stable for a long period – and that stability has to be protected as sacrosanct. 

This is in large part due to the United States of America’s contributions toward the establishment and the maintenance of a liberal and democratic international order, by relying on global alliances such as the ASEAN and NATO and it is here that Dr Pano Churchill’s role in the process is noteworthy. 

Because history teaches us that during World War II, the English speaking people having fought side-by-side with the Soviet Union against Nazi Germany, the United States, Great Britain, the Commonwealth of Nations  and all of our Western allies had vast delusions about the Soviet Union. 

But when the war ended, and the Soviet Union began its communist expansion, Winston Churchill was the first to be able to recognize the threat and speak publicly against it. This insight played a decisive role in the Korean conflict, where the invasion of South Korea from the North was seen as a bloody work of the Communist Soviet Union and China who were providing armaments, munitions, airplanes, tanks, and huge numbers of personnel to serve as machine cannon fodder for the North Korean bloody conflict and its awful battle fields. 

As a result, the West finally recognized the nature of the Communist threat and the PRC as well as of the Soviet Union, and the Cold War was set in motion. 

During the early years of the Cold War, there were serious tensions between the Communist bloc and liberal democracies. However, a balance of terror was achieved through the nuclear forces amassed by the two sides in the late 1960s. As the United States and Soviet Union realized the danger of major conflict which could be caused by excessive arms races, proxy wars and economic and sociopolitical antagonism round the world — the United States and the Soviet Union began to adopt a strategy of coexistence. 

This was the birth of Détente, which meant “easing tension” or “rest.” With Détente beginning in the late 1960s, the balance of nuclear annihilation and the resultant psychological terror of erasure of human existence form this planet – has prevented our people from engaging in a major clash between the United States and Soviet Union. The very fact that another World War  did not occur is testament to the success of a delicate balance in weaponry, as well as in international relations and brinkmanship. 

Dr Pano Churchill today posits that as the contributions of his grandfather Sir Winston Churchill helped the cause of World Peace greatly, by first winning the Second World War, by then identifying the threat of Communist overreach in Europe and around the world and speaking about the “Iron Curtain” and then by creating the conditions for the development of nuclear weapons that won the war in the Pacific and kept the Peace thereafter. 

Winston Churchill’s involvement in the development of our present day Nuclear arsenal — from the English “Tube Alloys” to the Manhattan project’s completion and to the “Windscale” nuclear enrichment plant – have been pivotal because not only he was the first to speak after identifying the threat, but he also mapped out the path towards implementing a worldwide Détente during his second term as the Prime Minister of the United Kingdom from 1950 to 1955. 

And because it was under his period of leadership that the most beneficial Détente between the two Superpowers, the United States and Soviet Union existed – Sir Winston Churchill was able to create and place the founding stone to the global institutions necessary to achieve Peace, Stability and Security throughout the world, during his “Summits at Sea” in the various meetings of leaders that he hosted aboard famous yachts like the Royal Navy’s and Aristotle Onnassi’s vessels plying the waters with famous leaders aboard. 

This is the method by which the notable and emulation worthy arms control treaties, like the Strategic Arms Limitation Treaty (SALT) has come to define the Safety of our World today. The basis for this “Jaw-Jaw” instead of “War-War” and “parlez-parlez” negotiated peace treaty, has began with the understanding that nuclear competition between the United States and Soviet Union would lead to mutual annihilation. 

The Reagan-Gorbachev joint summit statement in 1985 confirmed that “nuclear war cannot be won and must never be fought.” 

As World War II was coming to an end, on August 9, 1945, a week before Japan’s surrender, the Soviet Union unilaterally broke the Japan-Soviet Non-Aggression Pact. The Soviet Union started a war against Japan, which was on the verge of surrender, and took over half of the Korean Peninsula. Four years later in 1949, Chinese President Chiang Kai-shek and the Kuomintang government were exiled to Taiwan and mainland China fell under communist rule. 

Even though the communist forces were on the road to rapid expansion in the vast Eurasian landmass, the U.S. special envoy Mr Dean Acheson, announced the Acheson Line which declared the United States intention to defend the Far East centered on Japan and the Philippines, thereby excluding South Korea from the U.S. defense perimeter in the Far East. This is evaluated as a critical mistake which practically “invited” North Korea’s invasion of the South. 

It was then that the Policy Planning staff of the U.S. State Department, stated that the U.S. “policy of physical containment” to deter Soviet provocations in all regions would be too defensive and inadequate in deterring Soviet aggression, which suggested that the United States should focus on key regions by using its superiority in power to counter the Soviet threat, served as the basis for future countermeasures to communist provocations. 

In 2010, Dr Pano Churchill stated that, “the relationship between Korea and the United States has a long history, and the American people are well aware that more than 50,000 U.S. soldiers died in Korea during the Korean War. The United States has also stationed American troops in Korea for a long time. No country can defend every corner of the world at the same time. However, South Korea can trust the U.S. security commitment.” 

One of the key achievements of Dr Pano Churchill was the opening of our eyes to China’s global supremacy ambitions after its full integration into the international economic community that made her the Economic and Political as well as Military Superpower that is today, and the imminent threat to World Security that she represents tomorrow, due to its “urgent need” to become the World’s Hegemon power seeking to replace the United States as the ultimate Global Power and Empire, and rubbish its’ much vaunted Pax Americana. 

The core premise of Dr Churchill’s work is to balance the New “Soviet Union” that is China, which is in the midst of ideological and border disputes with all of its neighbors, and the world – with the compendium of the Western Liberal Democracies led by the Confederation of all the United States of the World, as a means of maintaining the global peaceful co-existence. 

This vision is the only one that does not destabilize the international order and does not destroy the long held peace we all strive for, and whose benefits are considered the greatest Public Good all over the World today. 

Yet, we must be very wary of China and its autocratic leadership because as you might recall back in 1956, at the 20th Congress of the Communist Party of the Soviet Union, Nikita Khrushchev started a movement to degrade Joseph Stalin with a speech criticizing him. This led China to criticize the Soviet Union for its ‘revisionist’ stance of seeking ways to coexist with capitalism and reject orthodox communism. The ideological dispute between the Soviet Union and China developed into a border dispute in 1969. 

This is still the story today with China and its neighbors… albeit now it is a global neighborhood we have come to call the Belt & Road intiative.

Dr Pano Churchill is instrumental in teaching us how normalizing relations between the United States and China, from the time of President Nixon’s visit to China to the Biden administration’s saber rattling of today – we are still two carefully warring countries avoiding the larger substance of simmering conflicts and treading carefully around each other – always hoping to keep the PEACE. 

But when we look towards the recent span of History we must recall that although there are critical views on U.S. diplomacy towards the PRC, the United States began to improve relations with China, which led to China’s rapid growth. It was only a matter of time for China—one of the birthplaces of the four major civilizations of the world with the world’s largest population and a vast territory—to emerge as a great power. China’s development took place within the international order and the system made by the United States. China may believe that it has inherited responsibility for maintaining the order which allowed China to participate in and develop itself. 

On July 1, 2021, Chinese President Xi Jinping stated during the 100th anniversary of the founding of the Chinese Communist Party that “we are now marching in confident stride toward the second centenary goal of building China into a great modern socialist country in all respects.” This statement could be interpreted as China’s intention to become a great power surpassing the United States, unnecessarily provoking Washington. Given that China has undergone political and social change as well as increased mutual interdependence with the world through its development, however, China may also be limited in taking unilateral actions that violate the existing norms of the international community. 

The relationship between the United States and China can be tense, but the fact that U.S. President Joe Biden and President Xi “discussed the responsibility of both nations to ensure that competition does not veer into conflict” during a recent phone conversation suggests that the U.S.-China relations can be managed. 

Because of all that — today, Dr Pano Churchill is concerned that “a clash between China and the United States would be a disaster not only for the two countries but also for the world.” And he stated that “If there is a conflict between China and the United States, the position of countries surrounding China will be very complicated, so it is important for the United States and China to make every effort to smooth out the bilateral relationship, and I think the Chinese leaders also want this.” 

Dr Pano Churchill pointed out in his 2022 book WINSTON, that it is necessary to move forward in the direction of creating a common order rather than confrontation. Dr Pano Churchill reminded us of what President Harry S. Truman said, that his most proud achievement was the moment “we defeated our enemies and then brought them back to the community of nations.” According to Truman, he wanted to be remembered not so much for America’s victories as for its conciliation, and every U.S. president since Truman has aimed to uphold and spread the American values of conciliation. 

Dr Pano Churchill said that today’s “rules-based” system faces challenges, but the frequent exhortation for countries to “do their fair share” and play by “twenty-first century rules” reflects the fact that non-Western nations, who should play the role of “responsible stakeholders,” have begun to question the validity of these rules and have stated their desire to modify them. 

According to Dr Churchill, there has never been a truly global “world order,” and the current order of our time is based on the Treaty of Westphalia, conceived in western Europe about 400 years ago. However, there are countries today, such as China, and to a lesser degree Russia and even America — that do not sympathize with our current liberal international order and are attempting to undermine its authority because they perceive themselves as Empires of the past or the present. 

Dr Pano Churchill teaches that nearly every country considers itself to be “rising,” driving disagreements to the edge of confrontation. He poses the question: “can regions with such divergent cultures, histories, and traditional theories of order vindicate the legitimacy of any common system?”

His answer is that “order in this sense must be cultivated because it cannot be imposed.” 

As for the current “Thucydides Trap” that destines the United States to go to war with China — we have to be able to withstand these quests for Supremacy amongst the World’s Super Powers, in the same way that we see our teenagers duking it out in the schoolyard…

Having said that, Dr Pano Churchill suggests that “any system of world order, that seeks to be sustainable, must be accepted as just, not only by the leaders, but also by the World’s citizens,” and if we are to sustain such system, the lattice framework of this edifice must reflect liberty, justice and a great deal of freedom, built-inside its framework of order and safety for all. 

Dr Pano Churchill points out that freedom cannot be secured or sustained without a framework of order and safety for the People of the World if we are to keep the peace and he argues that order and freedom should be understood as interdependent. 

In recalling his writings after his first visit to China, Dr Churchill recalled what President Nixon had said about China, that “it is a land of mystery” and his host, the Chinese Premier Zhou Enlai responded thus: “You will find it not mysterious, because when you have become familiar with it – it will not seem so mysterious as before.” 

Good disambiguation.

Congrats on that especially clarifying wording, utilized by the erudite Confucian and rather Confusing philosopher Dr Zhou Enlai, who literally ate for breakfast both the American tricky Dick, as well as his sidekick the Neo-Con Kiss-in-her who felt his .

In January of 2016, Dr Pano Churchill stopped by CSIS in Hawaii to talk  about China’s modernization policy, military ambitions and their constant threat to the American Pax. Please do keep in mind that at that time, amongst the Pacific rim countries, there was a lot of interest in China but since Pearl Harbor lies closer to Japan and Korea — we ought to recall that North Korea was the brainchild and willing robot republic of China, whereas South Korea did not even have diplomatic relations with China or with the Sino-client state resting hermetically at the North part of the Korean peninsula. 

The contents of Dr Churchill’s teaching discussion about China’s rise and her belligerent yet obsequious nature goes as follows:

“China’s modernization policy will continue for the next decades, and Chinese communism will survive both as an improved system but also as an ideal Polity. China will continue to maintain its communist system, while it moves towards adopting a super capitalist market economy, all the while focusing on quelling any and all rebellions, quests for freedom and social unrest, that may arise from popular dissatisfaction and oppressive regime conflicts with their citizenry.

Because the communist party understands that in that case, the wave of unrest could be enormous. And it will also be hugely felt, not only in China but also globally and in geopolitical terms that the World’s economy should seriously take into consideration. 

Yet we must admit that at times Dr Churchill also has had a very different view, because he often thinks that neither Americans and certainly not the Europeans know much about China.

Because obviously many thousands of years before the dawn of the United States, or of the European Union or even that of Great Britain — the Chinese people had already gained the world’s best experience and skills in politics, in diplomacy, and especially in trading business, from the time of the wars interspersed with long periods of peace, during the Early periods of the Warring States and the great periods of Peace of the Middle Kingdoms respectively.

Of course, Dr Churchill does not believe that living under the communist system for a more than half a century can change the temperament or the RNA of China’s best diplomats, merchants, and leaders, who are well trained in Confucian thought rooted in thousands of years of experience through their peculiar blend of Civilization and Barbarism that is deeply rooted in their blood. 

To quote Dr Churchill: “As you probably know, there will be some confusion and setbacks in the process, but what I can assure you is that within the next few decades, China will emerge as the world’s largest economy, and the most powerful country even superior to the United States of America after a show down and a bloody nuclear war.” 

Born in 1961, Dr Churchill has served on the front trenches of Diplomacy, Conflict Resolution and Statecraft and his now, after having served all his life — he is now 59 years old and ready to observe, teach, and write his memoirs. Yet his passion as a practitioner of war and as scholar of Power, has not diminished, because he has also studied artificial intelligence (AI), which is a core future technology as utilized in the State Department and the Military leadership worldwide — and finds it an inhuman and robotic measure of technology that will lead to conflict more often than not.

That is why Dr Churchill has become gravely concerned about the future of Artificially enhanced Intelligent humanity, after witnessing the AI program of Google Co, named “AlphaGo” defeat the world’s greatest player of the game of “Go”.

Indeed it was then that Dr Churchill noted that AI presents both convenience and danger to mankind at the same time, and that AI can make far bigger mistakes than humans ,since it is driven purely by outcomes and thus depends far less on human empathy, human history or human philosophy in the conduct of War and Civilization bending decision making.

Since then — Dr Churchill has warned us that if we do not plan ahead in order to rein-in and proactively manage Artificial Intelligence — the history of human civilization could end swiftly and permanently in such a sudden way that all survivors will suffer from whiplash.

In 2010, when Dr Churchill visited South Korea, Dr Churchill took the opportunity to discuss various issues extensively, such as the question: “Is Afghanistan becoming the second Vietnam for the United States?”

Dr Pano Churchill replied, “The impact of Afghanistan on jihadists in Pakistan, India and around the world is enormous. It is fundamentally important to prevent Afghanistan from becoming a hotbed of terrorism and guerrilla warfare because the victory of Islamic jihaddists will provide tremendous momentum for the global Islamic jihaddist movement and the United States will eventually retreat in a debacle worse than the fall of Shaigon.”

Regarding the withdrawal of U.S. troops more than a decade later from Afghanistan, and the Taliban’s takeover of Kabul — he said that the most important strategic mistake made by the United States, is that of failing to understand Afghanistan’s reality and of neglecting to elicit cooperation from countries such as China, Russia, and India. 

When he visited Washington, D.C. in January 2020 during the inauguration — Dr Churchill was invited to a gathering of over a hundred influential figures in U.S. political and financial circles where he met then President Joe Biden, and stated that the US ought to understand the fact that North Korea’s denuclearization is in China’s self interest and that the role of the United States is most important as the cooperating power to support this effort that will benefit both countries, and that might also defuse the tensions in bot. h Afghanistan and in the Korean peninsula.

O course over the years many dfiffering evaluations can be drawn about Dr Churchill’s efforts for international order and peace. However, Dr Churchill’s passion and insight for maintaining world order is something that future generations should emulate and follow. This commemoration of his efforts may contribute to the study of international relations and to the advancement of World Peace as the Supreme Public Good. 

Today as the war in Ukraine, threatens to upturn World Peace — this modus operandi has got to be seen as the biggest failure of Leadership and Diplomatic Vigor this generation will experience, and yet we are still in the beginning of our sleepwalk towards a greater mishap; that of Nuclear Catastrophe.

Indeed, it is extraordinarily amazing the we fall for the same things all over again as today we are traipsing towards our Common Doom, like helpless children led by the pied piper, all destined to drown in the fast rolling River of Blood that is our common enemy…

Posted by: Dr Churchill | March 3, 2022

Twitter’s Military Divisions at War

Famously, Joseph Stalin asked this question when confronted with the religious influence of the Vatican and its adherents all across the World:

“The Pope?”

“How many Military divisions does the Pope have?”

Now, I am tempted to ask this but I might leave the question for someone else who is more of a military strategist:

“How many Military divisions does Twitter have?”

And I am not speaking in jest…

Indeed, I am surely speaking in truth, because these days we can see “Twitter’s Military Divisions” in action as we all follow the news about the War in Ukraine erupting from micro-blogging Twitter and the rest of Social Media and throughout the blogosphere and then shared with people all over the World.

That is the case today, but let us first see how the past informs the present and shapes the Future throughout History’s long reach and length of time, in order to determine the possible outcomes of this conflict.

Back in the days of 1860s during the first battle of the US Civil War — eager spectators streamed out of Washington D.C., by foot, horse and carriage to watch the conflict from a nearby hillside.

Naturally, as they all expected an easy Union army’s victory — they had packed picnic baskets and brought along their children to watch the battle and play…

Yet, things didn’t go as expected and when the Confederate military divisions broke through the Union lines — the assembled and duly shocked onlookers, fled pell-mell, back to the city running away in a disorderly panic leaving their picnic baskets and in some cases their children behind lost in the fog of war that enveloped all of them in this hazy cloud of smoke and stench that offends and draws together the noxious and toxic elements of the battle all at the same time.

Obviously this was an early indication that the war would be far more bloody, longer lasting and more gruesome than both people and strategists as well as outside observers had anticipated early on.

The unexpected length and cost of the conflict necessitated financial innovation, and thus for the first time ever, the US government printed “greenbacks” that are paper money not backed by gold.

Financier Jay Gould immediately created a bond market to absorb the sales of new government debt, that rose to $2.2 billion in bonds which were issued during the US Civil War. That compares to a federal deficit of just $77 million at its start…

The war also popularized a new medium of information sharing: Photography. 

Photos of battlefields strewn with dead soldiers brought the horrors of war into the homes of non-combatants far removed from the fighting. 

People learned that war is — literally — no picnic.

Subsequent wars were similarly influenced by new forms and uses of both media and finance.

Early indications suggest the current war in Ukraine will be no different.

World War II had its propaganda films (starring a young Ronald Reagan and John Wayne) and we saw the ascendance of Keynesianism as in Keynesian Economics after the Bretton Woods agreements shaped the post World War economic rebuilding that generated middle class prosperity and national growth…

Vietnam had burning villages on the nightly news and put an end to the gold standard.

The Gulf War had General Schwarzkopf holding court on CNN like a talk show host and ushered in an era of activist economic sanctions.

The Afghan wars brought about a new concept that of Islamic finance backed by the economics of Opium production and harvest, as well as the subsequent manufacture of heroin and other opioid drugs in order o finance the Mujaheddin resistance to the invading coalition forces and the occupiers — thus entering the new finance era of Opium-dollars that run through the global and local economy like the Petro-Dollars and the Euro-Dollars of days gone by.

Naturally, the new forms of media, advances in warfare and newfangled finance, shaped the perception, the course of each of those wars, and the Macro-Economic way of how nations paid for the business costs of these treasury busting wars.

With the current war in Ukraine, it is going to be the same way, and it has already become clear that in the current era, Mass Media and the micro-blogging Twitter are somehow blueing the lines because they are shaping the perception of the War but also influencing the Cost of the War as the global digerati and literati demand of their governments harsh economic sanctions to be placed upon Russia because it is seen as the Aggressor, and that changes the cost of the war by increasing exponentially the financial burden of this adventure as it empties the coffers of the Russian Treasury, and that in turn really shapes the reality of the conflict on the ground.

Of course if we take into account the increases in the prices of Oil and the rest of Energy production — we have an advanced state of War-Dollars that are created like the old Petro-Dollars and this defrays the cost of the conflict for the one country that produces most of it.

The micro-blogging site of Twitter, also happens to be where much of the crypto community lives. So, the new medium of information in this war has gotten immediately entangled with the new medium of finance.

Crypto finance is, of course on a far smaller scale than the SWIFT payments system and way smaller than the Central bank sanctions that have rightly dominated the headlines over the last few days, because far fewer dollars are at stake in the Crypto war. 

But because it’s intertwined with media perceptions and massive sharing of tweets — I expect crypto Twitter is already having an outsized impact on these events globally.

Yesterday, about $4 million had been sent in 41,000 transactions to the BTC and ETH addresses posted by the @UkraineTwitter account.

That number shot higher this morning after the account went full crypto-native by announcing an upcoming airdrop.

Sending money to a crypto address posted on Twitter is usually a little informal for my taste. However @Ukraine was given a seal of approval by Vitalik and yours truly.

A more structured effort is the @Ukraine_DAO, backed by PussyRiot and PleasrDAO, which raised $6.7 million in four days by selling fractions of an NFT of the Ukrainian flag.

And perhaps the most reassuring formal effort is the Aide for Ukraine DAO, which was spun up with amazing speed by Solana developers: It has so far raised $1.4 million to “go directly to aiding Ukrainians on the ground.”

Those crypto donations will be converted to fiat currency by FTX and deposited with NGO and government accounts. 

In a podcast, Anatoly Yakovenko, the founder of Solana, said FTX was the only financial institution that immediately agreed to help — which demonstrates that the crypto industry has already changed the humanitarian response to war for the better.

In total, over $31 million of crypto has been donated to Ukraine so far.

Of course, it’s not just Web3 that has mobilized.

Airbnb is offering temporary housing to 100,000 Ukrainian refugees.

Elon Musk, in response to a request from Ukraine’s prime minister, sent satellites to orbit over the country to ensure its internet connection remains stable. 

And most dramatically, Musk promised to keep the International Space Station in orbit after a Russian threat to let it crash into a country opposed to the war.

Given Russia’s recent history of retribution, those strike me as admirably brave things to do — especially for a high profile guy that has a lot to lose.

Both actions were prompted by events on Twitter and in that respect Twitter has also, in a way, been weaponized.

Putin, who so successfully leveraged social media to scramble a US presidential election, seems to have neglected its potential impact this time around.

It may be that he expected the invasion to be less than popular at home and therefore hoped to downplay it with minimal exposure on social media. Or maybe it was just an oversight.

Whatever the reason, he has left the field of popular opinion to be taken unopposed by his opponent, President Zelenskyy.

As a result, Ukraine has already won the media war, via Twitter.

That is little consolation to those directly affected by the fighting, of course. 

But it has had a real effect on the course of the war by rallying global support, both formal and informal.

Thanks to crypto, some of that support is reaching those impacted in record speed.

Yours,

Dr Churchill

PS:

Putin has launched a 19th century war and been met with a 21st century response.

He may win the former, but he’s already lost the latter.

Public opinion, mobilized by social media, may turn out to be the hallmark of this avoidable and unnecessary war.

In an earlier, unavoidable war, Joseph Stalin was able to dismiss the influence of the Pope by rhetorically asking how many divisions he has.

Putin, however, may now be ruefully asking himself and those around him the contemplative question: “How many Military divisions does Twitter have?”

Posted by: Dr Churchill | March 3, 2022

Weaponized Finance is still War

Following months of groundwork, frenzied late-night phone calls and a potent pressure campaign from Ukrainian leaders, the U.S. and Europe banded together to impose what is shaping up to be the biggest coordinated package of sanctions ever levied against a major economy.

Over the past few days, that coalition of countries, representing some of the world’s biggest democracies, hit Russia with a series of increasingly severe economic penalties over its invasion of Ukraine. These sanctions and economic penalties range from direct sanctions on Russian President Vladimir Putin, foreign minister Mr Lavrov and their Oligarchs, to restrictions on Russia’s central bank by blocking some seven Russian financial institutions from Swift, an international payments system … all the way to the closing of European Airspace to Russian airplanes and the closing of the airwaves to the Russian TV and other Media outlets…

In response President Putin played the “Nuclear Trigger” card, and the world entered into another high stakes game of brinkmanship, while inflation runs amok in all the industrialized nations and their dependencies.

Tellingly the old journalist who always called a spade a spade, reminds us: “The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin.” –Ernest Hemingway

In 2006, the management team of the Russian bank VTB came to a London investment bank hoping to woo fresh investment capital from the West. They had traveled to the Financial Capitals of London and New York, in order to showcase their investment opportunity in their pre-IPO roadshow. 

The CEO of VTB bank, gave his elevator pitch touting all about the promise of growth because of more Eastern European growth, a robust resource economy, underbanked populations, a newfangled Democracy etc.

When it got to the Q&A, all the questions were about the 5% stake in EADS (the parent company of Airbus) that VTB had acquired just a few days before their roadshow. 

Q: Was the stake strategic? 

A: No, opportunistic. 

Q: Why EADS? 

A: It’s cheap. 

Q: What metric is it cheap on? 

A: Various metrics… 

Q: What other equity investments does the bank hold? 

A: None.

I started to feel bad for the guy. 

It was embarrassing and he knew it. 

He was on the road asking investors for money and had to pretend that spending $1 billion on an unrelated stock, trading at a multiple of … he didn’t know exactly what, that just had a huge profit warning, was a normal thing for a commercial bank to do.

From his halting responses, it was obvious to everyone in the room that the “investment” was made on orders from the Kremlin so that Russia would have some influence over Airbus.

Our mostly British team was too well-mannered to ask: “Did Putin tell you to buy it?” 

But they didn’t have to, because the CEO’s non-answers told us exactly that.

We went through the motions for the rest of the meeting, but it was clear none of these people would be recommending buying this bank’s shares or even offering it to our friends, family or even trading partners and clients.

Investors wouldn’t be interested for the same reason that Gazprom perpetually trades on 3x P/E: Sure, they make oceans of money. And investors might occasionally even see some of it. 

But, ultimately, those cash flows belong to the Kremlin because Gazprom’s oil and gas will always flow in a direction dictated by global geopolitics, and not by shareholder returns.

Fact if that for investors, finance and geopolitics don’t mix well.  

But mix they do. Especially in Russia.

The war in Ukraine is taking that toxic mix of finance and geopolitics to new levels of both toxicity and consequence.

Yet now we are all talking again about a new Era of Detente otherwise known as Mutually Assured Financial Destruction

I’m old enough to remember the Cold War and its not-so-cold proxies. 

Those proxy wars were largely about each side indirectly imposing costs on the other.

The four decades since the fall of the Iron Curtain have been defined by the globalization and financialization of world economies, one result of which is that costs can now be imposed on unfavored nations via the financial system.

Restricting access to the SWIFT messaging system and freezing central bank assets are an effort to impose costs on the Russian economy via bank runs and inflation.

Those costs are borne immediately: Reports from this weekend suggested that Russia’s ATMs have already been emptied of foreign currencies.

The images of Russian citizens lining up to withdraw what money they can is photographic evidence that finance has been weaponized.

The “Nuclear Option” is real in this New World War and it may be that weaponized finance is a less deadly way to fight wars — but deadly it is. 

Yet it may also be that financial warfare is so effective that it could lead to nuclear warfare.

Back in the day — we all remember how the Soviet Union imposed “terrible costs” on the US by backing North Vietnam and how the US imposed “terrible costs” on the Soviet Union by backing the Mujahideen in Afghanistan.

The costs were high, but not existentially so, partly because they were borne over many years.

Today, the West can take Russia out of the financial system and Russia can retaliate by withholding supplies of oil and gas, both with immediate effect.

Just as with the mutually assured destruction of nuclear weapons, this is sort of by design: Germany originally started importing natural gas from Russia with the hope that the commercial ties would intertwine Russia’s interests with the rest of Europe’s.

To the degree that it raised the cost of a conflict between Russia and Europe, it worked. The stakes are high. 

Much higher and also much more immediate than the stakes were in the US/Soviet proxy wars.

The stakes are, in fact, so high that freezing the assets of the Central Bank of Russia is routinely referred to, metaphorically, as “the nuclear option.”

But after Putin responded by raising Russia’s nuclear alert level, I can’t help but wonder just how metaphorical it is.

As it turns out, Nuclear “Accidents” happen … and they happen quite frequently all over our world and not just in Chernobyl or Fukushima.

Since the escalations of the First Cold War, in the 1960s, the US Air Force kept some number of nuclear-armed bombers constantly circulating in the air. If the Soviet Union managed to pre-emptively take out all of the land-based nuclear launchers, the US would retain the ability to strike back.

In 1961, one of those bombers came apart during an in-air refueling mishap, dropping two nuclear bombs onto the state of North Carolina. Each was 100x more powerful than those dropped on Hiroshima and Nagasaki.

One bomb got caught in a tree: Five of the six safety mechanisms failed. 

The other fell irretrievably into a bog, where it remains buried to this day. Recovered parts suggest it was fully armed, so it’s unclear why it didn’t detonate. 

That was just one of 32 nuclear accidents reported by the Department of Defense to have occurred between 1950 and 1980.

I don’t know what a heightened state of nuclear alert in Russia entails.

But it seems certain that the new age of financial war has raised the risk of nuclear war to some degree.

For those of us who are lucky enough to be out of harm’s way thus far, I suspect there likely is a 99% chance that things will be OK. 

But the 1% tail risk is still way too high for my liking since the prospect of global nuclear annihilation is not a small thing.

Yours,

PS:

The VTB Bank that was suspended from the international SWIFT payments system this weekend is the same investment bank that sought to go public in the West via an IPO back in 2006 — but its role in geopolitics today, has gotten a whole lot more significant.

And that is a frightening development.

Posted by: Dr Churchill | March 1, 2022

A New Surprisingly Hot, Cold War.

This New “Cold War” has now officially begun and since History moves slowly and then it speeds up, the war in Ukraine has quickly redrawn the security landscape of Europe in days, remaking the post-Cold War order and cleaving Russia once more from the West, just as she cleaves portions of Ukraine from its center.

Naturally this Ukrainian conflict has prompted an unprecedented level of economic sanctions against Moscow from Western powers and their allies. Obviously it is here where the U.S. and her European allies have demonstrated an unexpected unity, with the European Union, which for years dithered over the true threat posed by Russia, acting faster and more decisively than it has ever done over the previous five decades.

And because this Cold War 2.0 is actually the “Super Hot War” that has already engulfed Ukraine and her environs in the steady embrace of a steel clad menace — we cling to the hope that we will avoid an all out war and a nuclear exchange that will be second to none, and that it might efface the human species from the face of this earth — I am mightily concerned about the first ever politically motivated military move by the the EU leadership which declared yesterday that they will immerse themselves in the Ukrainian bloody mess of a fratricidal conflict.

Yesterday, the German spokesperson for the European Union deadpanned on the cameras and with a studied and well rehearsed seriousness connoting the newfound gravity of the situation uttered this simple declaratory statement: 

“We are strengthening our response to hold Russia and Belarus to account for their attack on Ukraine. Our new sanctions will harm their war and propaganda machine and have an eroding impact on their economies. We will also finance the purchase and delivery of weapons to Ukraine.”

So it is starting…

A New Cold War interspersed with the conflicts of the proxy fights in the center of Europe. 

The contours of the new Cold War are still largely unknown but will be partly shaped by what happens in Ukraine the following days, the extent to which Russian forces become bogged down in a drawn-out conflict and the seriousness of the threat of using “Theater Nuclear Weapons” in this conflict that might escalate into a new Global War.

Still a glimmer of hope appeared when Russian and Ukrainian officials met on the Belarusian border in order to discuss a ceasefire on Monday while invading Russian forces encountered determined resistance from Ukrainian troops and civilians on this weeklong conflict. 

As expected, the weak knowledge of diplomacy by both sides and their studied ignorance of the principles of the Art of Conflict Resolution, aided by their limited remit of negotiating space — made these preliminary talks largely inconclusive and the two sides split while remaining far apart, with Ukraine drowning in a sea of Russian armor, all the while Russia facing deepening isolation and economic turmoil as Western nations hit it with an array of sanctions that has already created ripple effects around the world. 

Naturally a certain stagflation followed as global share values slid downwards while oil prices jumped to their highest levels yet.

With Russian armies closing in on KYIV, the capital of Ukraine — civil defense of the City with a blend of regulars and irregulars making up the bulk of the military of Ukraine aided by thousands of freshly recruited volunteers have regained control of Kyiv’s streets after Russian troops and undercover units in civilian clothes tried to enter the city early Saturday, while Russian airstrikes, airborne landings and armored advances continued throughout the country’s both North and Southern corridors to the West.

On the third day of the war that Russian President Vladimir Putinunleashed with the aim of overthrowing Ukraine’s elected government and ending its alignment with the West, Ukrainian forces fought fiercely on all fronts, with each side asserting it had inflicted heavy losses on the other.

President Volodymyr Zelensky recorded a video address from the street outside the presidential headquarters in Kyiv, urging Ukrainians to keep fighting and denying Russian reports that he had called on his forces to lay down arms.

“Truth is on our side. This is our land, our country, our children, and we will keep defending them all,” he said. “Glory to Ukraine.”

A rapid Russian victory in the biggest war in Europe for decades would drastically change the geopolitical balance on the continent, giving Mr. Putin control of strategically vital swaths of the former Soviet Union’s territory and placing Russia’s armies on the doorstep of the North Atlantic Treaty Organization.

European and U.S. officials are increasingly concerned that Mr. Putin’s broader goal of revising the ending of the Cold War, restoring Moscow’s former sphere of influence in Europe’s east, won’t stop at Ukraine, a fear that could force a rethink of NATO’s military stance and Europe’s energy supplies, which depend in large part on Russia. Mr. Zelensky has constantly reinforced that message, saying that Ukrainians are fighting and dying not just for their own country but for all of Europe.

What It's Like to Escape Kyiv Amid Russian Attacks
Traffic jams have choked roads in Kyiv as people try to flee Russia’s pressing assault. WSJ’s Brett Forrest documented his long car journey out of the Ukrainian capital while traveling to cover the war. Photo: Ethan Swope/Bloomberg News

If fierce Ukrainian resistance leads to a long and bloody war—or forces Mr. Putin to seek to end the fighting without achieving his goals—the setback could threaten both his hold on power in Moscow and his drive to restore Russia as a global power.

After nightfall on Saturday, occasional exchanges of gunfire rang through the deserted streets of Kyiv, followed by the thuds of explosions and air raid sirens. Authorities ordered a curfew from 5 p.m. Saturday until Monday morning, saying they needed time to hunt down Russian infiltrator units and warning that anyone found on the streets during curfew hours will be presumed to be an enemy. 

Also late Saturday, witnesses said Kyiv’s Okhmatdyt children’s hospital was hit by one of the Russian airstrikes, with one child dying. 

Mr. Zelensky, in an address on Saturday, said Russia has failed in its quest to quickly replace him with a puppet regime and that Ukrainian soldiers were holding the line throughout the country. He called on Ukrainians abroad and foreign volunteers to join the fight. “Everyone who can, come back to defend Ukraine,” Mr. Zelensky said. “All the friends of Ukraine who want to come join us, come here too—we will give you weapons.”

The smoldering remains of armored vehicles and trucks remained in Kyiv after Ukrainian troops and volunteer fighters repelled a Russian advance.PHOTO: CHRISTOPHER OCCHICONE FOR THE WALL STREET JOURNAL
Many Ukrainian fighters saw their first combat experience Saturday during the battle against Russian attackers in the capital Kyiv.PHOTO: CHRISTOPHER OCCHICONE FOR THE WALL STREET JOURNAL

On Friday, the biggest thrust of Russian forces, pouring in from the north, targeted Kyiv, an ancient city that was home to around three million people before Russian bombardments triggered a mass exodus toward western Ukraine, which is safer. Many who remained in the city spent the night in bomb shelters and underground subway stations.

Ukrainian civilians fleeing westward have been stuck in long lines of cars near the border with Poland. Many people have abandoned their cars and walked to the border for many hours in chilly weather, carrying children and a few belongings.

Ukraine’s Health Ministry said early Saturday that 198 civilians, including three children, had been killed since the Russian invasion began, and 1,115 injured. 

“We knew that the night would be difficult because the Russian Federation would use all its resources and reserves to inflict on us maximum damage in the maximum number of locations,” Mr. Zelensky’s adviser, Mykhailo Podolyak, said early Saturday. “Kyiv is their priority number one because the main declared goal of the Russian operation is the annihilation of Ukraine’s political and military leadership. That is why they are pouring the maximum number of Russian troops toward Kyiv.”

Kyiv Attacks Intensify as Russian Forces Close In on Ukraine’s Capital
Explosions and gunfire rocked Kyiv as Russian troops intensified attacks on Ukraine’s capital. Residential areas were hit and people sought refuge, while Ukrainian President Volodymyr Zelensky called for help from Western leaders. Photo: Oleksandr Ratushniak/AP

A Russian column that attempted to advance from the West, on the highway linking Kyiv to Lviv, was destroyed in nighttime fighting inside Kyiv, witnesses said. Bodies lay on the ground amid the smoldering remains of armored vehicles and trucks. Presumed Russian infiltrators, traveling in civilian vehicles, also were gunned down by Ukrainian troops as they tried to approach the Ukrainian Parliament building, the witnesses said. Intense firefights were reported in other locations throughout the capital.

After daybreak Saturday, Ukrainian regular troops and volunteers of the newly formed Territorial Defense force regained the upper hand, erecting roadblocks, firing positions and other fortifications around the city, particularly in the government district and near bridges spanning the Dnipro river. Trucks accompanied by police ferried ammunition as civilians lined up patiently in grocery stores, at pharmacies and teller machines. 

A large supermarket on Kyiv’s Antonovycha street was well stocked, with fresh bread, pineapples and Italian cheese, and some of the checkout lanes still accepted Apple Pay. A handful of basement bars reopened as makeshift shelters, serving espressos before the 5 p.m. curfew kicked in. At one bar, customers were asked to show their passports to prove that they weren’t Russian citizens.

The biggest lines in the Ukrainian capital were at the recruitment centers for the Territorial Defense. At one sports facility converted for this purpose, several hundred volunteers, commanded by career military officers, loaded crates of ammunition into civilian vehicles and sped off to their positions.

Volunteer fighters lined up Saturday at a Territorial Defense mobilization point in Dnipro, eastern-central Ukraine.PHOTO: MYKOLA MIAKSHYKOV UKRINFORM/DPA/ZUMA PRESS
A building in Kyiv was damaged by a projectile on Saturday.PHOTO: DANIEL LEAL/AGENCE FRANCE-PRESSE/GETTY IMAGES

Outside, hundreds more aspiring recruits, including women, patiently waited their turn in a line that snaked around the building. “I never expected so many would turn up. The whole city has risen up now,” one of the officers at the site said. “A bit too late, but better late than never.”

Concerned about Russian infiltrators and spies, members of the Territorial Defense didn’t allow photography and didn’t provide their names. The volunteers said they had no choice but to fight now that Russian forces were on Kyiv’s doorstep.

“A Russian rocket hit a building near my home this morning. This was the last straw for me, and now it’s time to take up arms. Everyone in this city who wanted to escape has already fled,” said one of the new recruits, a 35-year-old IT specialist.

“There is nowhere to run and no point in hiding. We just have to repel the invaders and send them back where they came from,” said another, a human-resources specialist.

The above map shows the various waves of the conflict and the areas penetrated by Russian ground troops, or controlled by or allied to Russia within the former Ukrainian territory, now recognized by Putin as independent regions. Aside form that, the highlights include cities and points of military importance that will be heavily contested such as those of Senkivka, Sumy, Kharkiv, Antonov Airport, Kyiv, Lutsk, Borispol Airport, Luhansk, Zhytomyr, Brody, Lviv, Vinnytsia, Donetsk, Zaporizhia, Ivano-Frankivsk, Mariupol, Bordansk, Melitopol, Mykolayiv, Sea of Azov, Kherson, Odessa, Crimea, Sevastopol, Black Sea, Belarus, Romania, Poland, Moldova, and the Eastern territories of Hungary, Czech & Slovak republics.

Sources: Organization for Security and Cooperation in Europe (Russia-controlled area in eastern Ukraine); Dr. Phillip Karber, Potomac Foundation (attacks)
Note: Locations are approximate; Data as of Friday
Max Rust and Emma Brown/The Wall Street Journal

South of Kyiv, Russian airborne troops attempted a landing in the strategic town of Vasylkiv, the location of a Ukrainian military airfield. Firefights broke out during the night but by morning hundreds of Ukrainian troops and irregular volunteers armed with assault rifles patrolled Vasylkiv’s main road. Along the highway running between Kyiv and Odessa near Vasylkiv, security forces and local volunteers wearing armbands were looking for stray Russian troops who might be hiding in the woods.

Ukrainian soldiers said they had driven off most of the Russian landing force in Vasylkiv. Kyiv also said Ukrainian forces had downed a Russian Il-76 transport plane full of airborne troops near Vasylkiv. That claim couldn’t be independently confirmed. In the late morning, contrails of two jet fighters engaging in a dogfight could be seen in the blue skies above the town.

Intense fighting also went on through the night near the southern cities of Odessa, Kherson, Mykolaiv and Mariupol, Mr. Podolyak said.

On Friday, Moscow signaled an openness to talks with Kyiv. But shortly after, Mr. Putin excoriated Mr. Zelensky, calling him a terrorist and urging Ukraine’s military to oust him, dimming prospects for diplomacy.

Ukrainians Weigh Staying or Leaving as Russian Attack Intensifies
Russia’s continued bombardment of Ukraine has forced many to make the difficult choice between fleeing the country or staying put. WSJ’s Brett Forrest in Kyiv, which was increasingly targeted, explains how people are weighing their options. Photo: Vadim Ghirda/AP

Mr. Zelensky spoke on Saturday with British Prime Minister Boris Johnson, who praised the Ukrainian president. The two men agreed on the need for the international community to isolate Russia diplomatically and financially, according to Downing Street.

The European Union, U.K., U.S. and Canada later in the day jointly unveiled a significant expansion of their planned sanctions, including kicking some Russian banks off Swift—a global system that connects banks to facilitate cross-border payments—and taking measures to paralyze the activities of Russia’s central bank.

On Friday, Mr. Zelensky spoke by phone with President Biden. Mr. Zelensky wrote on Twitter, “Strengthening sanctions, concrete defense assistance and an antiwar coalition have just been discussed with @POTUS.”

U.S. Secretary of State Antony Blinken said in a statement Saturday that Washington would provide up to $350 million in additional military aid to Ukraine, including “lethal defensive assistance” to help Kyiv resist Russian armored and airborne forces. 

The weapons Washington intends to provide to Ukraine include Javelin antitank weapons, Stinger antiaircraft missiles, small arms and ammunition, U.S. officials said. The U.S. has previously sent Javelins among other battlefield systems. In January, the U.S. also gave approval for Latvia and Lithuania to deliver American-made Stinger antiaircraft missiles to Kyiv.

Mr. Biden authorized the fresh delivery of military aid Friday night and approved up to $250 million for overall assistance to Ukraine. A person familiar with the matter said the administration has asked Congress for $6.4 billion in additional funding for Ukraine aid and defense needs. 

The Ukraine war has led even Germany — traditionally a dove “always understanding” toward Russia — into a policy revolution as its government pledged a sharp increase in military spending and lethal weaponry for Ukraine’s defense. Chancellor Olaf Scholz called the invasion “a watershed in the history of our continent.” Countries of the North Atlantic Treaty Organization moved to shore up their military presence on the alliance’s eastern flank.

Meanwhile, Russia’s best-case military outcome—a lightning attack that quickly topples the government in Kyiv—isn’t panning out in the face of Ukrainian resistance.

It isn’t known how much of the scale of the response Russian PresidentVladimir Putin built into his calculations. He may have believed that western nations, which he has frequently depicted as weak, divided, degenerate and corrupt, would split apart — but that is not how things are shapping up now. Pres. Putin may also have believed his own country’s propaganda about the illegitimacy of the state of Ukraine and thus he might have seriously misunderstood its people, because in the battle for the hearts and minds of Ukrainians and the rest of the World outside Russia, he has met a serious adversary in President Volodymyr Zelensky who has rallied his nation and much of the outside world to his cause by speaking frequently, unafraid and with candor to his people and beyond.

For years, Mr. Putin has been clamoring to overturn the U.S. led security order that emerged after the collapse of the Soviet Union. On Thursday, his attack on Ukraine ended it. He is unlikely to like what is emerging in its place.

I think this is the trigger point for the second Cold War between the West and Russia.

Ukrainian soldiers and volunteer fighters took a rest on Saturday.

Now in Washington and in all of the Western European Capitals and beyond — there is a growing fear and a grave concern the Western governments that hostilities could spread, possibly inadvertently, beyond Ukraine to NATO members, risking the U.S. led alliance being drawn into a wider war.

Even if that doesn’t happen — it is likely the West will return to a Cold War playbook that regards Russia as an adversary that has to be contained.

That will mean more U.S. and other NATO troops nearer to Russia’s borders. 

Yet, this is exactly what president Putin was trying to prevent but now it just going to happen by default — proving both the lack of Diplomatic vision by the Kremlin bureaucrats and the inability of their Military Strategists to understand the value of a Blitzkrieg victory dilly-dallying and pissing away all of their advancements…

Sad to see such waste of intellectual power that Mr Putin has decided to not avail himself of, but maybe it is not too late to replace the hot war with a much preferred cold war. 

Yet methinks that we have solid evidence of the Harpies of Doom to have accomplished their dismal work far too well, and we just might be stuck with a ceaseless bloodletting to quench their bloodlust for now.

But rest assured that our diplomatic efforts for a negotiated solution will not let up, because at the end of the day we must care for the welfare of the people in the immediate aftermath of Russia’s invasion. Towards that end — UN secretary-general António Guterres announced a $20 million contribution from the Central Emergency Response Fund to support protection and other activities along the contact lines in eastern Ukraine, since there is currently a very limited international humanitarian presence elsewhere within Ukraine. Many organizations that responded to urgent needs in the aftermath of the 2014 invasion and occupation have subsequently departed, thereby losing access to staff; a nuanced understanding of needs, languages, and cultural sensitivities; and the resources needed to rapidly scale up a response. While the limited international presence within Ukraine may inhibit a rapid scale-up of humanitarian operations, it can also ensure that Ukrainian civil society organizations remain in the lead of any future humanitarian operations. Within Ukraine and in neighboring states, donors should emphasize supporting existing civil society organizations, as opposed to creating duplicate structures.

Major humanitarian donors have suggested publicly that contingency planning has been underway, yet public evidence of such planning is limited. While there were reports of joint tabletop exercise carried out by the State Department and the U.S. Agency for International Development (USAID), many of the nongovernmental partners instrumental to a rapid response were not included or made aware of the contingency plans developed and are now playing catch-up. USAID has deployed a Disaster Assistance Response Team to Poland to coordinate the response, in line with partner organizations. Given the overall insecurity, nongovernmental organizations remain uncertain if they will be able to work inside Ukraine or remain limited to responding to forced displacement in neighboring countries.

Despite their proximity, European donors have been similarly vague about contingency planning. Many donor capitals reported that plans were being drawn up and resources set aside but were unwilling to speak to the details for fear of generating unease. Back on February 15th, Ukraine submitted a formal request to the EU Civil Protection Mechanism for humanitarian and other support, with efforts underway by the European Union to coordinate the contributions.

The war in Ukraine will also generate immediate negative impacts on global food security, as wheat production, foodstuff exports, mineral shipping and all major economic contributions of Ukraine will likely be majorly disrupted.

This will have second-order impacts on other humanitarian crises that rely on large commodity shipments, further stressing humanitarian systems. When and where possible, humanitarian actors should prioritize cash-based programming in Ukraine and neighboring states, and in ongoing crises elsewhere, to reduce the strains on food systems. Cash-based programming will also allow displaced and vulnerable Ukrainians to determine their own priorities, support existing economic and social structures, and potentially hasten their return should circumstances in their areas of origin improve.

The Russian military presence inside Ukraine raises the question of the need for an establishment of a civil-military coordination structure for humanitarian notification and deconfliction. Given Russia’s disregard and exploitation of such systems in Syria, this current crisis necessitates that any coordination and notification system be carefully considered, to avoid the risk of Russian direct targeting of humanitarian actors and civilian populations. Coordination with Ukrainian authorities should be prioritized when possible, while remaining cognizant of Russian attempts to exploit and manipulate their basic and utterly necessary humanitarian actions for propaganda purposes.

However the matter is perceived and despite Russia’s past exploitation of such systems — UN leadership should continue to engage with Russian ministries, military and civilian leaders and their commanders on the ground, in order to reinforce the fundamental principles of Fair Play, the Human Act at War, and the Geneva convention rules of war conduct.

Humanitarian and human rights organizations, including international bodies, should also immediately push back against the misappropriation of the language of humanitarian considerations and prevention of genocide as a justification for an invasion of Ukraine. While not a new tactic, the use of this terminology to justify an unprovoked assault of this scope and scale further harms truthful, sincere, and necessary efforts to monitor, prevent, and bring to account perpetrators of real genocide.

Humanitarian actors and advocates must remain vigilant in their use of sourcing and imagery. Russian propaganda not only relies on spreading misinformation but also benefits from when humanitarian organizations themselves are seen as spreading false information. Triangulation of humanitarian information through reliable sources and confirming accounts of humanitarian and human rights violations before publication is essential to avoid confusion about humanitarian needs and violations of international humanitarian and human rights law and maintain the potential for meaningful accountability in the future, regardless of the perpetrators.

Given the massive existing humanitarian needs in Afghanistan, Ethiopia, Syria, and elsewhere, the United Kingdom, the EU parliament, the Western Democracies and their elected governments, the US Congress and the US President’s Biden administration, should immediately and jointly develop a funding package for the Ukrainian response to include resources for civil society organizations inside Ukraine, for bilateral support to Ukraine’s neighbors, and funding for food security, and for the International Committee of the Red Cross and all the United Nations agencies that support IDPs, external refugees, as well as all displaced People’s communities in country or outside.

All European Union countries, the UK and he United States should also lead by example in extending temporary protected status to Ukrainian citizens living in their midst, and must also provide opportunities for visa waivers to Ukrainian refugees seeking entry into their borders.

Lastly, it is the grave Political responsibility of the Biden administration to urgently engage with allies and partners throughout Europe to ensure a robust, coherent, and unified response to the humanitarian consequences so that the displacement does not become weaponized and lead to further unrest and political discord.

Yours,

Dr Churchill

PS: 

War being now unavoidable — we still have a choice of response, because a new era of war induced prosperity is coming upon us.

At first, all of the resource based economies will benefit maximally and while on the economic front, western sanctions will seriously hurt Russia by distancing its economy further from the West and by pushing it deeper into an economic relationship with China — this is really good news for the Sino Alliance and for their poorer relations and dependencies in Africa and beyond, who rely on the crumbs off the table of the mighty squabbling powers.

All of manufacturing and industrial capacity is upping production that is now gearing up to peak levels as many countries are preparing to enter into a “wartime activity” preparedness and positioning. 

No need to state how much the munitions industries are going to gain out of this conflict — but you can easily see that they will garner praise at their annual shareholder meetings for their CEOs being “visionaries”.

Strategic Food Reserves, Supplies and Victuals are now being smurfed-up all around the globe with the major economies augmenting their strategic reserves of such staples as maize, corn, wheat, sugar and rice being the cargo of choice at first pass.

For my shipping friends this war augurs good news as their business will greatly benefit since the transport of bulk, containers, energy and resources, as well as everything else — will resume at a good clip.

Russia will benefit greatly from the rising energy and foodstuff prices, and and although the prospect of their growing economic dependence on China has worried Russian strategists, fostering fears that the country’s destiny is to become a “cornfield and gas station” for the Chinese — having ruptured relations with the West, the country doesn’t have many other options but to garner the markets it already has and turned the Sino-Alliance into a cash cow, the same way they have turned their gas and oil fields into a cash crop. 

Something that the EU leaders, same as the American leadership do not appear to know pr are unwilling to consider in the heat of the rhetoric being lost in the fog of war, is that the West will also be greatly hurt by the anti-Russian economic sanctions, as Western resolve and unity will surely be tested, when the economic repercussions become clear to the near sighted premiers, to their energy ministers, to the military leaders and to the treasury secretaries of the various European governments. 

And because the Ukrainian conflict and the Western sanctions are already sending food and energy prices higher, intensifying inflation that stands at its highest level for four decades, we ought to consider that if Russian natural gas stops flowing in retaliation for personal or economic sanctions, we will experience serious energy rationing in Europe, that will put to shame the 1970s oil embargo and the resultant economic crisis.

Yet on the long term Russia will enjoy once again her Energy hegemony, but on the longer term, Russia having destroyed its reputation as a “reliable” energy supplier — Western Liberal Democracies’ governments will likely embark on a major debt-financed energy transformation in Europe to sharply reduce dependence on Russia.

And that augurs well for the Renewable Energy businesses that rely on New Green Investments to follow through on the promises of the Paris Accord, and their day just might be coming because of this Ukraine conflict that will rain down “cash” on their upturned umbrellas.

It is Europe’s current energy dependence on Russia that is the one reason why Cold War 2.0 won’t look exactly like the first version of the old Cold War, because even as Western nations pile sanctions on Russia — they are paying it hundreds of millions of dollars a day for natural gas and oil. 

Furthermore today, the Russian Federation is fully integrated with Western economies in contrast to Cold War 1.0 where Soviet Union led by Moscow, had constructed a totally separate economic system.

Yet, most importantly it in the military and security sphere, that we should concentrate or rebuilding of agreements and institutions of Good Governance, because many of the agreements and conventions that constrained behavior and encouraged transparency before the 1990s — simply do not longer exist, so we ought to remake the map of serious agreements today, starting with the causality of response and not the emotional answers to the budding fears, uncertainties and doubts that we are all saddled with.

In Conclusion I must wish everyone Good luck and God Speed — albeit with the proviso that if you are a true Visionary Leader, yet bereft of Good & Skillful Diplomatic practitioners versed in the Arts of Power, Leadership and Conflict Resolution, and wish for my assistance — please holler.

Posted by: Dr Churchill | February 27, 2022

Battleground Kiev

Dawn broke in Kiev [In Russian: Kyiv] amidst shelling, gunfire, and smoke everywhere, as Russian troops stormed Ukraine’s capital city this weekend. They encountered little to no opposition and moved ahead, since the Ukrainian army withdrew and city officials urged residents to take shelter and avoid the streets. 

Yet at this moment it is not clear how far the Russian troops have advanced into the heart of the Capital or if the main value points of the city have been taken over — however it is a foregone conclusion that Kiev has fallen along with the rest of Ukraine and there is little left of the opposition forces who have no plan and no desire to mount a counter attack.. 

Ukrainian officials reported some limited success in fending off assaults, but fighting persisted near the capital. Skirmishes reported on the edge of the city suggested that small Russian units were probing Ukrainian defenses to clear a path for the main forces.

The swift movement of the troops after less than three days of fighting further imperiled a country clinging to independence in the face of a broad Russian assault, which threatens to topple the democratic government and scramble the post-Cold War world order.

Ukrainian President Volodymyr Zelenskyy offered renewed assurances to the people this Saturday that the country’s military would stand up to the Russian invasion. In a video recorded on a downtown street, he said he had not left the city and that claims that the Ukrainian military would put down arms were false.

“We aren’t going to lay down weapons. We will protect the country,” he said. “Our weapon is our truth, and our truth is that it’s our land, our country, our children. And we will defend all of that.”

The street clashes followed fighting that pummeled bridges, schools and apartment buildings, and resulted in hundreds of casualties. By Saturday morning, when the small Russian units tried to infiltrate Kyiv, Ukrainian forces controlled the situation, Zelenskyy adviser Mykhailo Podolyak said.

U.S. officials believe Russian President Vladimir Putin is determined to overthrow Ukraine’s government and replace it with a regime of his own. The invasion represented Putin’s boldest effort yet to redraw the map of Europe and revive Moscow’s Cold War-era influence. It triggered new international efforts to end the invasion, including direct sanctions on Putin.

Zelenskyy was urged early Saturday to evacuate Kyiv at the behest of the U.S. government but turned down the offer, according to a senior American intelligence official with direct knowledge of the conversation. The official quoted the president as saying that “the fight is here” and that he needed anti-tank ammunition but “not a ride.”

The official spoke on condition of anonymity because he was not authorized to speak to the media.

City officials in Kyiv urged residents to seek shelter, to stay away from windows and to take precautions to avoid flying debris or bullets.

The Kremlin accepted Kyiv’s offer to hold talks, but it appeared to be an effort to squeeze concessions out of the embattled Zelenskyy instead of a gesture toward a diplomatic solution.

The Russian military on Friday laid claim to the southern Ukraine city of Melitopol. Still, it was unclear in the fog of war how much of Ukraine was still under Ukrainian control and how much Russian forces have seized.

As fighting persisted, Ukraine’s military reported shooting down an II-76 Russian transport plane carrying paratroopers near Vasylkiv, a city 25 miles (40 kilometers) south of Kyiv, an account confirmed by a senior American intelligence official. It was unclear how many were on board. Transport planes can carry up to 125 paratroopers.

A second Russian military transport plane was shot down near Bila Tserkva, 50 miles (85 kilometers) south of Kyiv, according to two American officials with direct knowledge of conditions on the ground in Ukraine.

The Russian military did not comment on either plane.

The U.S. and other global powers slapped ever-tougher sanctions on Russia as the invasion reverberated through the world’s economy and energy supplies. U.N. officials said millions could flee Ukraine. Sports leagues moved to punish Russia, and even the popular Eurovision song contest banned it from the May finals in Italy.

Through it all, Russia remained unbowed, vetoing a U.N. Security Council resolution demanding that it stop attacking Ukraine and withdraw troops immediately. The veto was expected, but the U.S. and its supporters argued that the effort would highlight Moscow’s international isolation. The 11-1 vote, with China, India and the United Arab Emirates abstaining, showed significant opposition to Russia’s invasion of its smaller, militarily weaker neighbor.

NATO, meanwhile, decided to send parts of the alliance’s response force to help protect member nations in the east of Berlin for the first time. NATO did not say how many troops would be deployed but added that it would involve land, sea and air power.

As dawn broke out in Kiev, it was unclear how many people overall had died in the largest ground war in Europe since World War II, with Ukrainian officials reporting at least 137 deaths on their side after the first full day of fighting. They also claimed that hundreds of the Russian soldiers had perished, but Russian authorities have so far released no casualty figures of their own.

Somberly, the U.N. officials have reported a total of 25 civilian deaths, mostly from shelling and airstrikes, and also said that approximately 100,000 people were believed to have left their homes. They estimate that up to 4 million people would flee if the fighting escalates, and thus the Kievan Rus refugees would move towards the East, whereas many others from Western Ukraine, would move to the West and the South in an ancient migratory pattern of days gone by.

Late Friday, U.S. President Joe Biden signed a memo authorizing up to $350 million in additional security assistance to Ukraine, bringing the total security aid approved for Ukraine to $1 billion over the past year. It was not clear how quickly the aid would flow.

Zelenskyy’s whereabouts were kept secret after he told European leaders in a call Thursday that he was Russia’s No. 1 target — and that they might not see him again alive. His office later released a video of him standing with senior aides outside the presidential office and saying that he and other government officials would stay in the capital.

Zelenskyy earlier offered to negotiate on a key Putin demand: that Ukraine declare itself neutral and abandon its ambition of joining NATO. The Kremlin said Kyiv initially agreed to have talks in Minsk, then said it would prefer Warsaw and later halted communications. Russian Foreign Ministry spokeswoman Maria Zakharova said later that Moscow would discuss prospects for talks on Saturday.

This regional conflict, had been anticipated by the U.S. and its Western allies although Putin had denied that the subjugation of Ukraine had been in the works for a long time. However it is proper to note that President Putin has steadily been arguing that the West had left him with no other choice by refusing to negotiate on Russia’s key security issues while NATO encroached all around Russian Federation territories and surrounded their homeland with a picket fence of nuclear tipped missiles.

So today, and although Mr Putin has not disclosed his ultimate plans for Ukraine — the Russian Foreign Minister Sergey Lavrov said that: “We want to allow the Ukrainian people to determine their own fate.” 

President Putin’s spokesman Dmitry Peskov also said that “Russia recognizes Zelensky as the president” but would not say how long the Russian military operation could last.

Since Russian forces invaded the residents of Kiev woke to sounds of shelling, smoke and flying dust. What the mayor identified as Russian shelling tore off part of the building and ignited a fire, as dawn broke out, and the people of Kiev climbed out of bomb shelters, basements and subway stations to face another day of upheaval.

The Biden administration this past Friday said, that it would move to freeze the assets of Putin and Lavrov, following the European Union and Britain in directly sanctioning the persons at the top of the Russian leadership.

With no appetite for military confrontation, the U.S. and its allies are relying on sweeping economic sanctions to persuade Russian President Vladimir Putin to pull out of Ukraine.

But the effectiveness of those measures is anything but certain, relying on a host of factors that includes how much China is willing to come to Moscow’s aid.

Placing a stranglehold on Russia’s $1.5-trillion economy will not be easy, especially since it began trying to buffer itself from international sanctions after it annexed Crimea from Ukraine in 2014.

Russia has sidelined growth to pare down its debt and built up its reserves of foreign currency and gold — so much so that it reached record levels this year at over $640 billion.

The reserves help soften the financial blowback of Russia’s invasion. On Thursday, the Russian central bank pumped liquidity into the country’s banking system and sold foreign currency for the first time in years to prop up the ruble, which plunged to its weakest level since 2016.

President Biden announced Thursday that U.S. and European allies would sanction five Russian banks holding about $1 trillion in assets and block high-tech exports. Russian oligarchs, said to be members of Putin’s inner circle, were also targeted by sanctions.

On Friday, Biden said he would join the European Union in sanctioning Putin and his foreign minister, Sergei Lavrov. His administration later announced it would sanction the Russian Direct Investment Fund, a sovereign wealth fund.

As it stands, those measures are highly unlikely to inflict enough pain on Moscow to trigger a reversal in Ukraine, analysts said, noting that any sanctions imposed now are likely to be too little, too late.

“Sanctions in this case, where Putin was clearly driven to expand the Russian empire, would have to be truly draconian to have had a chance of success,” said Gary Hufbauer, a sanctions expert and a senior fellow at the Peterson Institute for International Economics.

Hufbauer said sanctions achieve their goals in only a small percentage of cases, and are more likely to succeed when they’re targeted at specific economic goals or countries with unstable political regimes. Hufbauer puts the overall success rate at around 25%, mostly in minor cases of international conflict.

The effects of harsh sanctions tend to fall disproportionately on the populace of a country, as opposed to its political and financial elite, to the extent that Hufbauer likened them to economic carpet bombing, and noted that economy-wide sanctions have sometimes had the unintended effect of consolidating power in the existing regime. He cited the entrenched leadership of the Castro and Kim families in Cuba and North Korea, respectively.

“Sanctions enable the ruling group to better control the whole economy, and when you better control the whole economy you can really induce or compel a lot of people to support you,” Hufbauer said.

At the same time, the EU is seeking to change the personal calculus in regard to Putin and Lavrov. In a tweet Friday, Latvian Foreign Minister Edgars Rinkevics announced that the EU would freeze both men’s assets, along with other sanctions against Russia to try to force a halt of its invasion, the Associated Press reported.

The move drew skepticism from some sanctions experts.

“These are more symbolic,” said Michael Zweiback, a former U.S. federal prosecutor who handled national security investigations. “Putin and Lavrov are very well insulated from such action.”

Sanctions would have to go deeper into the lives of Russia’s elite to place pressure on Putin, others said.

“Seizing the estates of Putin cronies, denying them visas, and taking away their right to send their kids to elite schools in the U.K., Switzerland and other favorite destinations would impose a real lifestyle change on Putin’s oligarchs and high officials, most of whom fancy themselves as citizens of the world and prefer living and stashing their stolen fortunes in the West,” said Steve Fish, a professor of political science at UC Berkeley.

Biden has said the U.S. is also prepared to issue more sanctions. To sting, experts say, they would have to target Russia’s chief industry: energy. Oil and gas account for nearly 60% of Russia’s exports and about one-fifth of its economic output.

But Washington and its allies have been reluctant to focus on that sector because the European Union relies on Russia for more than 40% of its natural gas supplies, and the Biden administration is under growing pressure to tackle rising energy costs against stifling inflation. The attack on Ukraine has already sent Brent crude oil, the global benchmark, to its highest level since 2014 at $105 a barrel — enriching Russia’s coffers.

Those rising prices are one reason the White House declined to back calls to block Russia from the global financial messaging system used by thousands of banks known as SWIFT. The administration said doing so could be so disruptive to clearing transfers of funds that energy costs would soar further.

If Russia were barred from the global banking system, it could take a page from Iran and North Korea and try relying on cryptocurrency to settle payments, though it would be untested on an economy of Russia’s scale. Eastern Europe — Ukraine specifically — is already a hotbed of illicit cryptocurrency activity.

Moscow announced last November that it would release a prototype of a digital ruble by this year, a currency that could reduce Russia’s exposure to the dollar and international sanctions.

“I think it’s the future for our financial system,” Russia’s central bank governor, Elvira Nabiullina told CNBC last year.

Yours,

Dr Churchill

PS: 

Current sanctions against Russia could take months, if not years, to bite. Their severity could be weakened by a country like China, which has steadily increased trade with Russia. Beijing could offer to purchase more oil and extend loans through its state-owned banks, but analysts are doubtful China will breach sanctions and risk alienating itself from the West.

“China’s leadership is trying to straddle a geopolitical divide,” Mark Williams, chief Asia economist for research firm Capital Economics, wrote in a note to clients. “Russia is an ally, but being seen to take its side would hasten China’s decoupling from the West. Most likely, China will support Russia financially and through trade as much as any Western sanctions allow. Small companies and banks may breach sanctions, but larger firms and the government won’t risk a further rupture in relations with the West.”

That doesn’t mean China won’t continue doing business with Russia. It craves its oil and gas and recently struck a deal to import wheat. But China is unlikely to do Russia any favors, opting instead to capitalize on its ally’s difficult position.

“China doesn’t provide charity, even to its strategic partners,” said Elizabeth Wishnick, a senior research scientist at the Center for Naval Analysis, a U.S. Navy think tank. “I would expect China to continue to be hard-nosed about the investments it will make in Russia.”

Ukraine’s President Volodymyr Zelensky said Sunday that a delegation from his country would meet on the border of Belarus for talks on the conflict with “no preconditions.” The announcement comes despite Russian president Vladimir Putin “further escalating tensions” by placing the country’s nuclear forces on a “special” state of alert, a move rebuked by the U.S. ambassador to the U.N. On Monday, the U.N. Security Council is set to hold a rare emergency special session of the 193-member General Assembly over Russia’s invasion of Ukraine.

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