Dear friends,
A very interesting question was recently asked by a reader of the French Saker Blog, “FD”:
Should we expect a coup AGAINST Putin or a coup BY Putin? Given the power of the pro-USA forces at the top political, intellectual, financial and media circles, will Putin not have to make his own “18 Brumaire“?
This is a very interesting idea because, in a way, it might appear to be, if not a good solution, then at least a needed one. Clearly, the extremely negative and yet central role played in Russian politics by what I call the “Atlantic Integrationists” is a real threat to Putin and Russia. This “5th column” of saboteurs is even represented in the Medvedev government and they are openly refusing to implement Putin’s decrees and decisions. Over and over again we have seen how his decisions are basically ignored by the government and how Putin is trying to reduce their influence but with very limited success. And since the “power ministries” (Military, Internal, FSB, FSO, Justice, Police, Emergencies, etc.) are firmly on Putin’s side, why would he not use the latter against the former? In a direct confrontation between “big money” and “big guns”, big guns will always win.
Alas, this is not that simple.
The first thing to remember here is that the real power base of Putin are not the “power ministries” but the 80%+ of people who support him. That support is not unconditional, however. There are already reports that it has already taken a slide down (by a few points only) because of the economic problems. And Russians have a very bad recollection of the GKChP coup in 1991 or the bloody mess in 1993. Furthermore, there are a number of key achievements which the vast majority of Russians do not want to give up, including their freedoms of assembly, speech, organization, demonstration and all the other civil and political rights. Oh sure, Russians still like a “strong leader”, but they want it to be a strong and legal leader. And for all the often very real nostalgia for the good aspects of the Soviet regime, very few people would truly want a return to the old style authoritarian rule of the CPSU. Of course, if Putin did decide to make a coup against the “Atlantic Integrationists” he could easily explain to the people all the good reasons for doing that, but once the rule of law has been broken, it is very, very hard to re-create it. I think that Putin knows that very well (he has a law degree) and I think that this roots in the KGB make him particularly sensitive to this point (yes, I know, in the West there is this idea that the KGB was above the law, this is not true. The KGB had to act strictly within the Soviet laws).
Again, I will repeat this absolutely crucial fact: the real power base of Putin are not the “power ministries” but the 80%+ of people who support him. Whatever political move he makes, he absolutely needs to have the popular support for it. By the way, he is acutely aware of that. This is why he began his speech to the Federal Assembly this year with the following words:
Today’s address will be related to the current situation and conditions, as well as the tasks we are facing. But before delivering it I’d like to thank all of you for the support, unity and solidarity you have shown during the landmark events that will seriously influence the future of our country.
This year we faced trials that only a mature and united nation and a truly sovereign and strong state can withstand. Russia has proved that it can protect its compatriots and defend truth and fairness.
Russia has done this thanks to its citizens, thanks to your work and the results we have achieved together, and thanks to our profound understanding of the essence and importance of national interests. We have become aware of the indivisibility and integrity of the thousand-year long history of our country. We have come to believe in ourselves, to believe that we can do much and achieve every goal.
This is quite amazing and very revealing. He could have thanked the Russian military or the “polite armed men in green”, but instead if thanked the people for their support which he clearly put as the cornerstone of the Russian successes even in this very difficult year.
Big guns are powerful, but crude instruments. Yes, the Russian military could obliterate the Ukrainian military and take Kiev in just a few days and yes, Putin could easily seize power in Russia and simply fire, or even jail, all the “Atlantic Integrationists”. But that would only make things worse and Putin knows that.
Far from being a delusion for naive and Pollyanna-type people, the rule of law – international and national – is crucial for the survival and well-being of a civilized nation. Yes, there are circumstances when a head of state has to give a illegal but vitally needed order, and Putin understands that too, but these have to be the ultimate last resort, something to do only in the most extreme circumstances and kept to a minimum. Putin cannot hope to built a society based on the rule of law while at the same time completely disregarding the Russian Constitution.
One look at the horrors happening in the Ukraine can remind us all, including the Russian people, what can happen once the rule of law is tossed out of the window and replaced by the rule of the gun: utter and complete chaos which will take years, if not decades, to undo.
So no, I don’t see Putin engaging on a coup and nor do I have any reasons to believe that a majority of Russian people would welcome that. And I am very happy about this simply because I believe that modern Russia is better than that.
Kind regards,
The Saker
http://www.liveleak.com/view?i=284_1418605085
Aussies protest war criminal Porshenko in Sydney.
Well, at least Medvedev gets it now, at least in Yandex translation.
http://www.ng.ru/ideas/2014-12-15/1_medvedev.html
“Putin must to decide will stay in hιstory like a Peter the great or like a Gorbatjov .Soon USA will send a decide.surrender or war.Must to clean Kremlin from persons like Andrej Vlasov before is too late.
Wow. It was only a few weeks ago that we were treated to “everything is fine” in conjunction with the U.S. is about to collapse arguments.
Now everyone seems to acknowledge Russia and Putin are in deep, deep trouble.
This is what I’ve always thought would happen, but in the back of my mind there was always this hope that Putin would pull a stroke of genius or completely revolutionize the monetary system by taking some bold decisions, not half-ass reforms.
In that sense I am firmly on Imran Hosein’s side. But does Putin have the balls to go all in?
I’ve come to the conclusion that he’s not this great white knight we all thought he would be. Far from it.
I remember posting about the extremely bold measures that De Gaulle took against the empire in the late 60’s. That was bold. He almost brought the empire to its knees (Imran Hosein gave good lectures on this). As an answer to this some other commener told me Putin’s dad had fought at Stalingrad… sigh…
Something is brewing. You can sense it. It’s not looking good for Putin. For instance I did not like that Hollande visit ONE BIT.
I’m from France and I can tell you the French governments, today completely beholden to the empire, have stabbed other governments time and again in the last 30 years.
When I saw Hollande shaking hands with Putin, I thought of the photo-ops with Kadhafi and Assad at the Elysée Palace… events that preceded the massive wars against those leaders.
I’m not optimisitc for Russia.
Judiciary, other Turkey state bodies must be ‘cleansed of traitors’ – Erdogan
The judiciary and some other state institutions, including the state scientific agency Tubitak, must still be “cleansed of traitors” following the detention of two dozen opposition journalists and others, Reuters quoted Turkish President Recep Tayyip Erdogan as saying on Monday. Erdogan earlier accused followers of the US-based Muslim cleric Fethullah Gulen of trying to topple the government. Hundreds of police officers, prosecutors and Tubitak scientists have been purged.
Turkish President Recep Tayyip Erdogan on Monday defended weekend raids on media outlets closely linked to a US-based Muslim cleric. Sunday’s raids on the Zaman daily and Samanyolu television marked an escalation in Erdogan’s battle with former ally Fethullah Gulen, Reuters said. The president described them as a necessary response to “dirty operations” by the government’s political enemies. “They cry press freedom, but [the raids] have nothing to do with it,” Erdogan said, speaking at the opening of an extension to an oil refinery near Istanbul. “We have no concern about what the EU might say, whether the EU accepts us as members or not, we have no such concern.”
Great Saker, I admire your clena perception of things, your ablity to analyze the elements of reality without overcharge or illusions of any kind. A clean, good-cut sight, mixed to a discriminating mind and a non-ego charged thinking. Great saker.
Putin will have to pry open the law and wedge in national security interests.
He cannot manage the internal growth and stability of the economy (and thereby, maintain social stability and development), without changing the government’s lineup of players.
He did it with the defense ministry and now it must be the central bank and the ministries that are in the hands of the wrong people.
Tap a phone, publish the communication of the Liberals with the West, and demonstrate to the people that Liberals are working against the national interests.
Use the law and the Constitution. That’s the road to solutions. What they hide behind is what you use against them.
Treason comes large and small. The Liberals didn’t win the election. Putin did. He must get this done now, not in the Spring or Summer.
Well said, Saker. And Ukraine is only a sad reflection of the absence of the rule of law in the United States. It is very sad to see for an American citizen that there is no rule of law here.
Ordinary citizens are being arrested for trying to re-establish a rule of law by means of peaceful, law-abiding, escalating protests against injustice across the country, while the powerful oligarchical mafia goes scot free and is encouraged to continue looting the public treasury with Obama’s blessing, because his goal has always been to be one of them, not one of us.
Do not be fooled by the lip service he pays to democratic principles. He is no democrat, nor every was. He professed to be what Putin clearly is, a man of the people, and we eagerly voted him into office. As did Clinton before him, Obama betrayed our trust and is a traitor to the nation’s founding principles. He above all other leaders has earned impeachment.
This example Putin has ever before him, and even especially perhaps because of this example, he will not betray his people. That way goes annihilation of the state, and we in the US are seeing that happen.
Rather than carry out a coup, Putin may simply allow the policies of the government to lead to a serious economic crisis in Russia.
In that crisis environment he will be in a much better political position to get rid of the Atlanticists at one fell swoop. A night of the long knives.
Putin, the grandmaster strategist may just be luring them on, giving them enough rope to hang themselves.
From everything I’ve seen about Putin until now, there is no way he 1) does not know whats going on and 2) does not have a plan to deal with it.
Update on that Willy Wonkers & The Chocolate Shop scripted photo-op fraud just pulled off in OZ:
UPDATE: The name of the “mastermind” of this great chocolate revolt has been released and he is apparently a sleazeball who’s been helping Australia demonize Muslims for a while. There he is, Man Haron Monis.
Apparently Man Patsy has been in trouble with the law several times, the last episode being where he helped his current girlfriend murder and burn his ex-wife. Somehow, miraculously, he got out on bail for that one.
UPDATE: Talk about scripted bullshit. Man Patsy is letting the hostages send out Facebook updates which Di$info Jone$ and Paul Joseph Watson publish unquestioningly as authentic:
http://willyloman.wordpress.com/2014/12/15/the-lindt-cafe-isis-siege-australias-bush-league-911/
Respecting the rule of law,ok very nice concept I agree,but there is a ‘but’,when you are at war(which is the case)this does not matter anymore.Do you think that the US/UE/NATO/SAUDIS etc are ‘respecting the rule of law’?It is being very naive.By implementing sanctions,crashing the ruble crashing the oil price via a plot with the saudis,these people are NOT respecting anything.
Defending your people has nothing to do with the respect of the rule of law.You respect these rules with civilized people,and we all know that they are not(eventhough they think they are).
War (even financial)is war.
Or you defend yourself and your country interests or you surrender.
It has now become clear that the foul tide of western imperialism will break and then recede on the shores of Russia.
The level of delusion and detachment from reality among western elites is now such that there can be no salvaging the west’s fate.
All the crying and moaning about Russia falling, the ruble collapsing etc etc is nothing but BS reflecting off brains calcified from consumption of too much propaganda.
Everything is not about money, the financial system or central banks. The real economy matters. Real things matter. The financial system is just a means of controlling the real economy. Its not the only one.
Unlike , say, Zimbabwe which almost (but did not) succumbed to western economic attack, Russia has enormous real assets. It has land, labor and capital aplenty. And I mean capital in the economic not financial sense. Some economic trouble and pain will not bring Russia down. It will make it stronger.
@Saker
Have you heard the rumors that NATO is planning a nuclear false flag in Ukraine, to be blamed on Putin? Apparently an overhyped Ukie military offensive will be launched. With this fake offensive going from media victory to media victory a tactical nuke will be detonated somewhere in Novorussia. This will be said to be Russia’s doing as the only way to halt the imminent defeat of Novorussia.
Saker you are in denial mode for the moment(even since sept).We are all on NR and RF side,but one thing you don’t want to understand is that WAR has been decided and declared against Putin.They will use ALL MEANS including WWIII if necessary.They will destroy the ruble(it is almost a done deal),they will crash the oil price to 20 usd even 10 if necessary.These people must ”save” their dollar and petrodollar at ANY cost.If they don’t succeed the US is simply finished.No more free lunch paid by the world via the dollar to build up the most powerfull military with zero real money,the US society will totaly collapse and the West as well.They are seated on a ponzi scheme of more than xxxx trillions of debts and derivates.They are cornered,there is no way out except QE forever,endles wars,and the take over of energy ressources of other countries(pirates)via coup,wars,false flags.
The US,the banksters are a bunch of mafiosi,a bunch of criminals.You don’t negociate with terrorists.It is either them or you who will survive.
You underestimate their financial force,they do not even need a hot war anymore.
George Bush was fond of saying we are a nation of laws.
The Law is commonly written by liars and hypocrites. Clinging to it as an ultimate good, in the face of mounting contradictions and evidence to the contrary, is always a mistake.
The people want Justice.
The solution is to teach people to think and act according to their own innate sense of Justice — lawyers be damned.
Unfortunately I see no willingness on the part of anyone to empower the people to think for themselves and act accordingly.
http://journal-neo.org/2014/12/14/no-pensions-water-electricity-ukrainian-way-to-the-eu/
I will say this: I led quite an interesting discussion with the representatives, let’s say bigger Ukrainian business, and many of them say the following: they are not able to continue its business for the very simple reason, they are not able to buy any raw materials or components because the guarantees given by the Ukrainian banks are not recognized and accepted by any European companies, by any partners from other countries.
Therefore, there is a complete paralysis of the Ukrainian economy and without tens of billions of euro aid, resuscitation of the economy seems to be impossible. Socially, of course it will result in the degradation of large areas of Ukraine and the ongoing process of migration. Mass emigration of working age Ukrainians who will also come to Poland. There will be hundreds of thousands of them and in the future already millions of people. Infrastructure of the Ukrainian industry will also be progressively degrading.
Putin playing for time: This spring there will be an attack in Europe ( Ukraine or Poland/Baltic state corridor) maybe using Sweden to create false flag and with simultaneous action against Iran( using Israel)perhaps in the Persian gulf. These may be incidents-low level perhaps- but the purpose will be testing, testing, always testing.
Putin really has until Jan 20, 2017 when the Republican coup is accomplished in the USA. Much can happen in two years.
“anonymous”
The Means are the Ends.
The Vision of a Democratic Republic, filled with feisty Citizens, who will defend their Constitutional government, and who are free to enjoy a fair and unbought electoral political culture, represents the best our species can aspire to.
The imperialist nations, the United States, England, and the Zionist entity, among others, have surrendered their Republics to their totalitarian Oligarchs. In America, the heady (yes-not perfect) days of Jefferson, Lincoln, the Roosevelts, Wilson, and ending with the courageous Kennedy, are but a distant memory.
American Oligarchs, after fifty years of declining political culture, have submerged the planet with the blood of millions, as they pollute our only home – to its breaking point.
There is no time for short cuts, hoping for heroes to materialize, and almost magically make everything better. The duty of restoring human society is ours. We must not conceal our aims; (didn’t Marx and Engels write that in 1848?).
Listen! What we want is what we’ll get. Wish well. Is there anyone who does not want a Democratic Redpublic? With all that requires?
Russian President, Vladimir Putin, is the finest leader the Russian nation has produced. And he is not the only impressive Russian. We Americans have some noble individuals, Ron Paul, Dennis Kucinich, Ralph Nader, and Edward Snowden. They are still breathing; but they are not in charge.
Other fine Americans, the Kennedys, Malcalm X, King, Lennon, were liquidated – long ago. The CIA does much more than torture.
The Oligarchs, Rothschilds, Rockefellers, Duponts, etc., preside over an increasingly impoverished and intimidated and misdirected populace.
Our citizens have not yet begun to fight; Hell, they have not begun to organize; they have not even begun to conceptualize resistance. Don’t ask for a Vision. It was buried with Lennon and Kennedy, and Malcalm X, and King.
Vladimir Putin and the Russian people, and the heroic Vietnamese, y los de Playa Giron, could use some help – from the unconscious and intimidated, and ignorant, and timid Americans.
It is our responsibility to enter the political stage (as did the Founders of our nation in 1776). There are no shortcuts.
*We must restore the Republic!
and end the pain.
Peter J. Antonsen
It is Putin’s wanting to do everything legally that I’ve admired him for.But I think he can do that as well as be a strong leader.The powers of the President should be enough to remove most of the 5th column from power now.As well as exposing their treason fully, should gain the peoples support.I see countless posts from Russians everyday complaining about his not taking action.I’m not saying shoot people or send them to Gulags.But use his power to remove them from doing harm to the nation.Certainly they must have treason laws in Russia.And if plotting a violent maidan.And taking money from US interests can’t be classed as treason,what on earth can.
I remember a few other leaders that were concerned with legally when their nation was at stake.And they lost everything, in one case their own life, because of their wanting to make certain to not appear to do anything illegal,Gustavo Arbenz,Salvador Allende,and very recently Victor Yanukovich.How many have suffered from those three’s over consideration of appearing in a bad light.Will Putin join them as number four.The Empire loves it when they see timidity and weakness in their prey.Legality is never their concern.They can always find ways to twist the law.Or hire lawyers to do it for them.As I believe Talleyrand once said “it is worse than a crime,it was a blunder”.
Uncle Bob
Indeed, it is not about chosing one wrong among two, a binary choice, but to restore the republic, remove the revolving door connecting the state and the corporations, enpowering the people, not having them reading the news and taking the brunt for a state whose disfunctionality is that chosen by the Empire, not a product of hazard.
The same with Novorossya, where the appointed FM is an oligarch, a friend to Kolomoyski and buddies, an agentbof the Empire
These systemic disfunctionality is of the making of the Empire.
Indeed, it is not about chosing one wrong among two, a binary choice, but to restore the republic, remove the revolving door connecting the state and the corporations, enpowering the people, not having them reading the news and taking the brunt for a state whose disfunctionality is that chosen by the Empire, not a product of hazard.
The same with Novorossya, where the appointed FM is an oligarch, a friend to Kolomoyski and buddies, an agentbof the Empire
These systemic disfunctionality is of the making of the Empire.
Hey MK Ngoyo, the Russian Central Bank announcing THIS MORNING that the Russian economy will contract by 4.5% next year is western propaganda?
I’m getting tired of being a supporter of Russia but being called all kinds of names simply for trying to analyze the situation objectively.
Russia is under enormous stress. How does it help the situation to deny that?
The problems being faced by Russia at the moment are basically three. One is the festering wound that the west has created in Ukraine. The second is the depletion of the Russian currency reserves through the inane if not treasonous attempt by the Russian central bank to support the ruble by open market intervention. The third is of course the falling value of the ruble.
As I see it, Ukraine as an anti-russia entity cannot last for too long as the Western powers are more than reluctant to provide any kind of meaningful financial assistance. They care nothing at all for Ukraine, but only to harm Russia. As for the economic threat that Russia is currently faced with, the only possible remedy that I can think of is for an outright imposition of capital controls. This is of course against neoliberal doctrine and that is why the oligarchs and pro-Western elements within Russia oppose it. I am sure that Putin and his honest advisers know this and are probably waiting for the opportune moment in which to make their move. I don’t think that anything like a coup is required for Russia to shield herself from the malignant influence of the oligarchs and the neoliberals. A well advised and thorough reshuffle of the cabinet will suffice.
Putin is in charge of appointing ministers, isn’t he? How is sacking Medvedev and a few others a coup? Yeltsin used to do it all the time.
The people of Ukraine will have to flood the maiden and take on the nazi fascist thugs and force a new election by way of a recall referendum.
Similarly the people of Russia will have to come out on the streets and force their opinion on the President and government by way of a recall referendum to remove the pro US atlanticists.
As the article suggests ‘Let the People Decide”.
Well, today is supposedly the day russia is testing that SWIFT alternate bank transfer system.
so retribution is instant.
2nd row on right: crude oil
(click on red box for big chart)
$55 today, now down by $50 in 6 months.
http://finviz.com/futures.ashx
BUT it’s all going according to plan & on schedule–once O’Zero signs this omnibus, it allows the banksters first serve at the pensions money trough to collect on THEIR derivatives scam they cooked up decades ago.
it took merely 1 month for the ‘newly assembled’ elected ones to pass this, so they must be in a hurry to detonate it SOON.
Which is why the astounding coincidence of this exact time building up uke with supplies to start a war with russia!
they’ll blame the collapse on them, or maybe coinciding with a “hacker attack” on some western institutions somewhere.
http://www.zerohedge.com/news/2014-12-12/presenting-303-trillion-derivatives-us-taxpayers-are-now-hook
Following on from the closing of three airports airspace,making them essentially military airstrips.
http://fortruss.blogspot.co.uk/2014/12/united-states-is-creating-three.html …3 US bases.
This details Psychopathy and Sociopathy.
https://www.youtube.com/watch?v=RXFmo6WipNk
psychopaths both known and unknown….hint…our rulers do not love us.
cheers.
Many say rule of law is a luxury you can’t afford when half the world is hell bent on your destruction.
This is far from wrong, but there is more than a way to skin a cat even within the rule of law.
Putin enjoys overwhelming support within the Duma and, as far it’s known, within the judicial power. With these two tools you can take decisive steps to sack your saboteurs or scare them into submission, if you want. You don’t need tanks. But it is dead time to act
How about this POS article from the Moscow Times telling Putin to shape up or face a coup.
http://www.themoscowtimes.com/opinion/article/putin-must-change-direction-or-face-a-coup/512204.html
I don’t have too much time to waste on inane propaganda but in this case I think that the MT are correct. Of course I know that they are advocating for Russia to capitulate to the west, but I think that most of us in here realize full well that such a policy would be disastrous for Russia and for most of the rest of the world. Putin must create a bullet proof patriotic government or this will end in disaster, for him, for the Russian people, and at least for 90% of the world’s population. Yes, the stakes are that high. Unfortunately history is again demanding from Russia to save herself from pure evil and by extension the rest of the planet.
Saker ! Have you read this article ?
http://www.paulcraigroberts.org/2014/12/12/brink-war-economic-collapse-paul-craig-roberts/
We must admit that Russia , so far, has been very patient for a country that was looted of the gold of the Tsars and undergoing a form of economic war . How long this patience will last ?
In the article in the above link , PC Roberts discussed the fact that it is preferable an economic collapse to a nuclear war .
So Putin has to try to short circuit the dollar ,only then the USA will be deprived of the weapons to wage war to Russia .
Morte al Nuovo ordine
Developments are racing ahead :
1) The Russian currency has halved in value since the start of the year.
2) The oil price has also halved in value since the summer highs. WTI crude oil is now trading at 55 bucks per barrel. Brent crude is a bit higher than that.
3) The Russian central bank has just hiked interest rates from 10.5% to 17%. That is a colossal move which unfortunately reeks of panic.
My take on all this is that Putin must within the next few weeks declare some kind of emergency and place the Russian economy on a war footing. By that I don’t mean that civilian production must be sacrificed for arms manufacturing, but rather that the following steps should be taken.
a) Very strict capital controls on Russia’s current account. No one can take money out of the country without government permission.
b) The ruble price in relation to all other major currencies to be fixed as the Russian authorities see fit.
c) Subsidies to all vital industries within Russia. Food production to be ramped up.
d) The military to be placed on full alert. This may already be in place.
e) Liberals to be purged from
positions of power.
f) Military spending to be increased as much as possible.
The real question is : How long can Russia survive in this situation?
Putin will probably wait until the last minute so he can prepare for the shock of change better.
I would like to know that time so I will be able to tell if Putin is ‘real’ or not.
By the way modern ‘democracy’ never worked for the people. There is no shame for putin to become a dictator. We are all living in covert dictactures already.
It all depends by what happens with the oil price and the ruble exchange rate. The more those two fall, especially oil, the more Russia is under pressure. Of course things are not as linear as that. In fact the devalued ruble protects the Russian government from the collapse in the price of oil, balancing the budget. But the fact of the matter is that the fall in the ruble exchange rate has been significantly overdone creating panic. Capital controls should provide some much needed stability.
Putin could seriously undermine the Atlantic Integrationist influence by naming and condemning names, allegiances and behaviour akin to treason. The clearer his public condemnation the more threatening would be the passive sympathy of the 80%.
I think “coup” is the wrong word. After all, Putin is already legally in office.
I find that I know nothing about the obstacles Putin faces, and so can only ask a string of questions:
Is there a legal remedy to the failure to carry out his orders and programs? Is it illegal for him to fire the obstructionists and the inept? This need not be sweeping, but can occur a few at a time. Surely when the higher-ups in a ministry are replaced those below him will become more responsive.
Are the ministries under the control of the Duma, and is the Duma is corrupt?
What does Medvedev control?
What is the legal pathway to achieving responsiveness of the govt to Putin and the Eurasian Sovereignists? Can this be achieved before the economy/public support is decimated?
Is Putin allowing the legally perfect to be the enemy of the good/lifesaving?
Stavros H @ 2300
My read of the MT is that with its *bold* call for more democracy, it is in effect calling for Putin to shape up or get kicked out. Just my way of reading the article.
My read of Putin is that he is doing the rope-a-dope to buy time, until ….. what?
With the further devastation of the ruble today, he will have get a new plan or capitulate.
Read my post below on the ruble and how its price relates to the price of oil and other relevant factors for the Russian economy and the grand strategic game taking place. The common perception that the fall in the exchange rate of the ruble is somehow disastrous for Russia is not clear cut at all.
I keep thinking about this outright attack on the Russian currency and what lies behind it. Some thoughts:
a) It is quite conceivable that the AZ empire has decided that their very best weapon against Russia is to devalue her currency. Since outright war is virtually out of the question, and even a proxy war with NATO arms for Ukraine is still too risky, then this is their very best bet. The sanctions will take years to have a serious effect and even then the net effect may prove positive for Russia. It is for these reasons that the enemies of Russia have decided to launch a full spectrum attack on the Russian currency. This is at least my speculation.
b) As I have claimed many times before, the collapse in the oil price is not only hurting Russia (which it does to a more than significant degree) but pretty much everyone who sells oil. To be certain, the Gulf States are here the most resilient. Their costs of production are the lowest, and their populations are the smallest. But still, they will be hurting as well. Venezuela, Iran, Iraq and Nigeria are in massive troubles. The same goes for the Western oil supermajors (Chevron, ExxonMobil, Shell, BP, Total, ENI and Phillips) It should be noted here that while the Western supermajors are largely drilling for very marginal oil, their losses are partly mitigated by the fact that these corporations are vertically integrated (drilling – refining – distributing – retailing) But make no mistake here, these giant corporations will be hurting real bad due to the catastrophic collapse in the oil price. At current price levels, offshore drilling is wholly unprofitable and all investment in that field will have to be placed on hold for now. The effect of this will take time to play out of course. But the trillion dollar question here is definitely the following : what will happen with Canadian tar sands oil production and what will happen with US shale oil production? The companies involved in this type of production have already seen their stock prices plummeting but even more crucially they are seeing the yield on their bond issuance spiking significantly. There is already word that these companies cannot raise new funds in the HY market. This means that they will have to rely on their credit lines for the time being. Even if the shale producers keep all their existing wells on stream (which is what they will probably do) the massive decline rates of the shale wells will lead to rapid falls in production within months. If Russia can outlast the shale bubble of the US and the tar sands bubble of Canada, then this war is largely won.
I am guessing that this task is a lot easier than the one faced by the Russian people in the early 1940s.
The purpose of the rule of law is to secure the Will and welfare of the people.
Securing the Will & welfare is the end. The rule of law is only an instrumentality, not an absolute.
Under the present conditions is there a pathway to the desired ends while following the rule of law?
I would just like to point out one thing.Look at the exchange rate of Ukraine money compared to Ruble.
Is west trying to tell the world that Ukraine money is four times more valuable than russian money.
Best thing Russia can do is ditch this currency exchange thing,nationalize Ruble and ask for payment in Ruble or gold for its gas and oil.Instant collapse for west.
O,and like Glaziev says fire the central banker and close central bank.
I lighten me,anybody.
Branko
If Russia now took in rubles instead of dollars for oil, then she would be in some very deep shit. Only after the petrodollar system is overthrown by the world at large something like that would be possible. The time for the overthrow of dollar tyranny is getting close but is not here yet. That will be done in time in conjunction with China the rest of the BRICS, as well as the major oil exporters. In fact as I have explained, Russia now receives very valuable dollars and transforms them into plentiful rubles for domestic expenditures.
With regard to the President’s control over the Central Bank (a.k.a “Bank of Russia”), my reading of the relevant legislation is that the President can effectively control it if he chooses. He can appoint and remove the Bank’s Chairman and Directors with the consent of the Duma, which he now has. He could also get the Duma and SovFed to clarify that the Bank cannot veto legislation governing it, as has been asserted elsewhere. See below:
“The Federal Law on the Central Bank”: (http://www.consultant.ru/document/cons_doc_LAW_170640/) states that the Chairman of the Bank of Russia is appointed and removed by the Duma on the motion of the President. The same article adds that the Duma appoints and removes the members of the Board of Directors of the Bank on the motion of the Chairman of the Bank with the agreement of the President:
(Глава I.
Статья 5. Банк России подотчетен Государственной Думе Федерального Собрания Российской Федерации.
Государственная Дума:
назначает на должность и освобождает от должности Председателя Банка России по представлению Президента Российской Федерации;
назначает на должность и освобождает от должности членов Совета директоров Банка России (далее – Совет директоров) по представлению Председателя Банка России, согласованному с Президентом Российской Федерации. )
It has been asserted the Central Bank must approve any legislation affecting it, evidently based on the following section:
“Article 7. [Part 9] Draft federal laws and regulatory legal acts of the federal executive authorities concerning the implementation of the Bank of Russia of its functions are directed to the conclusion of the Bank of Russia.”
(Статья 7. [Часть 9 if I count right. Части are not numbered explicitly.] Проекты федеральных законов, а также нормативных правовых актов федеральных органов исполнительной власти, касающиеся выполнения Банком России своих функций, направляются на заключение в Банк России)
While Part 9, above, could be so interpreted, the Federal Assembly (Duma and SovFed) could easily amend Part 9 to exclude “The Federal Law on the Central Bank”, since all legislative authority is vested in the Federal Assembly. It could take back what it has been asserted it granted. It is not a self-denying ordinance.
While we are all panicking about the collapse in the value of the ruble, we may also wish to consider an alternative explanation to the one peddled by the anti Russian MSM media. It seems highly plausible that the Russian government (in light of the sanctions and open hostility from the west) has decided to peg the ruble to the price of oil. In this way Russia hopes to achieve the following :
a) To maintain the ruble – value of a barrel of oil. Since the Russian government as well as Russian oil companies do not pay for their employees or for their supplies in dollars or euros or yen or pound sterling, but in rubles this means that their revenue has remained constant despite the massive collapse in oil prices. To put it in different and simpler terms, thanks to the devaluation of the ruble, the ruble price of a barrel of oil has remained constant. In matter of fact, it has increased a little bit.
b) The devalued ruble also means that the revenues from natural gas (which has declined by around 20% in dollar terms, much much less than oil) in ruble terms have massively increased.
c) The massively devalued ruble acts as a de facto sanction against the EU (remember that Russia’s main import market for quality consumer goods is the EU) as Euroland goods become prohibitively expensive for the vast majority of Russians.
d) It goes without saying that the devalued ruble acts as a massive stimulant for domestic Russian industry.
e) As Ukraine nears default (Russian and Austrian banks are mainly on the hook) the sanctioned Russian corporations may very well default on their own obligations to Western financial institutions. This is a powerful leverage for Russia if things get even uglier than they are now. The sums involved range anywhere from 700 billion to 300 billion. In any case more than considerable sums and enough to send Western financial markets into frenzy and panic.
There is an article on zerohedge.com that partly backs the view expressed here. It is titled: What America doesn’t understand about Russia and oil.
H.Stavros, I don’t believe that currency controls are a presidential power. Doubtless, it’s a CBR power. By law, only the CBR can issue the rouble, and only in quantities balanced by dollar-income. For this reason & others it will be necessary to nationalize the rouble & the CBR. Currently the CBR has raised the interest rate beyond the usual industrial profit margin, causing inability to expand businesses and some bankruptcies. The CBR is following the disastrous neo-liberal policies which are always foisted upon “developing” countries. (Not the econ rules US follows for itself).
Russian Federation constitution was a “present” from the US at USSR dissolution. Law governing the CBR is enshrined in the constitution. CBR is itself somewhat legally bound by rules set out by RF’s membership in IMF.
Starikof’s online book: copy this link to another file, then click on it to open.
[pdf] Rouble Nationalization – the Way to Russia’s Freedom by Nikolay Starikov
Much is history that reads a bit like a novel. You can read just the econ chapters.
For the long term development of Russia, I completely agree with you that the neoliberal model must be completely abandoned by Russia. I have repeatedly stated that Russian monetary policy should largely take a lead from the ultra successful Chinese precedent. Capital controls and the rest of it. But as things stand we are in a period of emergency and none of us here is really in a good position to know what exactly is going on. I am open to any theory that is internally consistent and can at the very least be backed up by some hard evidence. One plausible theory is the one I have outlined above. Another is the theory of the “gold bugs” as was posted by the Saker on the Russia Insider website. My point here is that we should examine a variety of possibilities instead of making vague declarations in support of one or the other policy.
In any case, thanks a lot for the link which I will definitely look into.
In any case I will keep following the developments with the Russian economy (as well as all related issues such as the unconventional oil production of North America) and try and bring in as much information as possible.
Another thing. The overnight rise in RCB interest rates is at least partly justified due to the expected rise in inflation. As for those that are worried about a possible recession. Well, a recession is all but inevitable for all oil exporting economies at this time. There is virtually nothing that can be done about it. Veteran experts on oil matters claim (with good reason) that oil will find a bottom at around 40 to 35 dollars per barrel, before staging a remarkable rally. I would expect oil prices to remain subdued throughout 2015. Then, once marginal production has been eliminated (Russia is not a party in this marginal production) the players left standing will reap rich rewards.
http://fortruss.blogspot.com/2014/12/transcarpathia-is-ready-to-open-second.html
Transcarpathia still pushing for independence.
SUVOROV: I believe you are in error as to the President’s ability to sack chair & directors of the CBR. In another article of the law governing the CBR it specifies the only causes for which they may be sacked. These are very restrictive.
According to Starikov’s book & he quotes the law, any law regarding the CBR must be approved by the CBR. CBR is such a power onto itself that it has the power to take the Rus govt to an international court if Russ Federation breaks these laws.
I’m not going to quote the book– too lengthy. Much of this is on pp24-34 if I remember correctly.
Copy the link to a temporary file, then click on it to open it:
[pdf] Rouble Nationalization – the Way to Russia’s Freedom by Nikolay Starikov
Businesses everywhere must have access to credit. As Evgeny Fedorov has commented, RF’s businesses are now blocked by sanctions from credit by the West. And the CBR is blocking them from credit from within by raising the interest rate (now at 17%). At this interest rate businesses die.
If inflation was low.
Penelope @16 December, 2014 02:09:
I suggest you read the law itself, using the URL I’ve given. It’s quite long, but reasonably clear as legislation goes. The power of the President to appoint and dismiss the Chairman (taken directly from the Constitution) is unequivocaL, as is the power to appoint the Board of Directors in agreement with the Chairman.
There is indeed a clause, which I cite in both languages, that could be read to give the Bank power to veto changes to the law. I contend first of all the Federal Assembly, in which all legislative power is vested by the Constitution, can amend its own law. In the worst case, if a court should rule in favor of the Bank, the President could simply appoint an amenable Chairman, with whom he could jointly appoint an amenable Board, who would agree to an amendment that the law didn’t apply to amending itself.
As far as the IMF is concerned, Russia could (and in my opinion would be wise to) withdraw at any time. It is only a treaty, which can be denounced at any time.
Don’t take my word for it. Read the law yourself. If you don’t read Russian, there may even be an English translation of it somewhere. I didn’t look.
Stavros, I understand some of what you are saying, but the rubel depreciation is a disaster. Exporting companies are happy and the books look good, but the truth is the russians must work harder to buy less imported goods and some of the goods they can’t substitute. The people gets poorer while exporting companies and their owners get richer.
It is an error to look only at currencies. Forget money for a moment. The streams of goods and services over the borders are what counts. Russia will export more, but that translates to exporting more for importing less. I stopped trying to explain this to friends and family 30 years ago, but perhaps some will understand. Wealth from the real economy will be distributed from Russia to other countries.
I saw a currency fall with 20 percent after an attack by speculators in the 90s. The results were massive unemployment, poverty, divorces and malnutrition among the elderly.Less welfare, no more widows pensions and higher taxes. More than 200.000 government employees lost their jobs. The politicians raided the pension funds and old people still suffer from their actions. Some kids went to bed without dinner and apartments and houses were sold for a fraction of their former prices, while the sellers had to keep on paying bank loans for years. There were many personal tragedies.
What has happened to the rubel is much much worse and will have farreaching consequences, if nothing is done. When the currency rate falls, an economy must adapt by allowing wages and prices to adapt and it is not pretty. The majority will get poorer while the rich get richer.
The weak rubel supports the budget. Russians will suffer, but they will see the government get rich. This is income redistribution inside Russia and it takes place at the expense of the people. Relative changes have a tendency of becoming absolute. Count your many new billionaires in the Western world.
Suvarov: Thanks for your continuing comments. Here’s Starikov, quotig sections of the law. I don’t read Russian but you can check to see if these passages are present where he quotes them.
I’ve worked as a legal assistant, and it’s quite common for things to look as if they mean one thing, until you read on & discover all the strictures around them.
—From Article 12 of the law on the Bank of Russia: (Starikov p32-33)
‘The Chairman of the Bank of Russia can only be dismissed from the position in the following cases: 1) expiry of term in office; 2) disability which makes performance of duty impossible and which is confirmed by a state in the medical commission; 3) there is a personal resignation letter; 4) the person in question committed a penal offence and was found guilty and sentenced; 5) if federal acts regulating issues related to the activities of the Bank of Russia have been violated’.
Article 7: ‘Drafts of federal law and regulatory documents of the federal bodies of executive power concerning duties of the Bank of Russia and it performance shall be submitted to the Bank of Russia for approval’ Starikov p36
Suvorov, when you say, “I contend first of all the Federal Assembly, in which all legislative power is vested by the Constitution, can amend its own law,” you are applying logic. You may not do that; you must find the law. This point is counter-intuitive for a novice legal researcher, but I promise you that your application of logic will not necessarily lead you to the law as written.
Stavros H., No, not the gold-bugs. Modern Monetary Theory (MMT). Michael Hudson.
He’s all over the web in video & articles. I have his book ‘The Bubble & Beyond’.
There’s a newer one too.
I think there’s a several hours’ long video course in MMT on the web.
“And what is most important: the gold and foreign currency reserves of the Central Bank of Russia are not stored in Russia. Except for a small percentage of gold stored in Russia, the rest of the reserves of our Central Bank does not look like wads of cash from various countries bound with rubber bands but digital ‘zeros’. Which are stored, incidentally, in computers abroad. Gold and foreign currency reserves of our Central Bank are invested in state bonds of other countries, mostly in US state bonds: ‘Russia has spent over 30% of the gold and foreign currency reserves on buying securities issued by the US Treasury… According to the American Ministry of Finance, our country’s investments in American state bonds have grown by 3.5 times over the last year — from 32.6 billion up to 116.4 billion dollar”
(Starikov p28-29)
The book was written in 2013.
Copy the link to a temporary file, then click it to see the online book.
[pdf] Rouble Nationalization – the Way to Russia’s Freedom by Nikolay Starikov
Please won’t someone else look at this material. Start on p24 & read 10-12 pp.
Saker
What does Putin and RF stand to lose by invading Ukraine now to rid the state of fascism and restore peace?
It’s obvious that the US will again order its puppet government in Kiev to continue the genocide in the Donbass and plan yet another, probably far more damaging, false flag attack which it would use to blame Russia (I keep reading of a nuclear strike).
Wouldn’t a Russian invasion of Ukraine thwart any attempt by US/NATO to escalate the situation? The impending economic collapse of Transatlantic nations will also be blamed on Russia… so how much more damage can the Anglozionists force upon the Russion economy?
Isn’t it a safeguard for Russia to play its hand to occupy Ukraine until the fascists are removed and peace is restored?
MK Ngoyo said…@ 15 December, 2014 17:42
“The level of delusion and detachment from reality among western elites”
Why restrict yourself to elites or detached passivity by blogging, unless you wish to increase the levels of delusion, detachment and passivity?
To catalyse increasing levels of delusion, detachment and passivity is a worthwhile action, but more effective when pursued in conjunction with other efforts to ensure “imperialism will break”
Anonymous Anonymous said…
Hey MK Ngoyo, the Russian Central Bank announcing THIS MORNING that the Russian economy will contract by 4.5% next year is western propaganda?
Read my comment again. I’m not saying that Russia is not under stress or is not feeling the pain of western attack. What I did say is all this doomsaying is nonsense. Russia can and will survive the western attack and it will prevail.
Will this be a painful, even very painful process? No doubt.
Equating the fact that the attack is hurting Russia to Russia is being defeated, is a result of consuming too much western propaganda.
The US is very powerful and can cause countries much pain, but that does not mean that it prevails. We saw this in Vietnam, more recently in Iran, Zimbabwe and currently Syria and even Russia. The west has lost, is losing or will lose in all those places.
@Yes, there are circumstances when a head of state has to give a illegal but vitally needed order…
It is only politically correct ignorance which deems a dictatorship “illegal”, or immoral or whatever. Dictatura is a provision of any Constitution.
E.g.
“Roman dictators were allocated absolute power during times of emergency. Their power was originally neither arbitrary nor unaccountable, being subject to law and requiring retrospective justification”.