Ukrainian tensions: Russia may have gas, but the US has the dollar

BRICS: Breaking free of US monetary policy

To begin to understand the tensions that come with the Ukrainian crises we will have to zoom out and begin looking critically towards not just Russia, but also the west. From monetary policy to the political arena, ending with you. It is up to each of us to develop a more holistic understanding of our worldview. An understanding that cries out for the bravery of critical questions to be raised towards policies that do not serve the needs of societies. An understanding that can free social change from monetary and political dependence. For ultimately, this is no crisis of power, but of humanity.

Monetary Dependence on the US dollar in a multipolar worldTensions have been lingering for some time now as Russia and the US develop different world views on how to organise their economic trade and financial structures. Since the developing BRIC countries (Brazil, Russia, India, China) found each other in 2008 and were officially formed in the Russian Yekaterinburg meetings in 2009 (that in 2010 saw South Africa join, forming the BRICS), cooperation has been growing steadily. In 2013 the BRICS countries represented 40% of the worlds population and 20% of its economy.

Besides economic cooperation the BRICS as early as of 2009 have expressed the need for financial cooperation and called for a more “diversified, stable and predictable” international monetary system. With then Russian president Dmitry Medvedev stating more clearly “No currency system can be successful if we have financial instruments denominated in just one currency,”, “We must strengthen the international financial system not only by making the dollar strong, but also by creating other reserve currencies.”. At a BRICS meeting held July 15th 2014 in Brazil the New Development Bank (NDB) and Contingency Reserve Arrangement (CRA) was established as an alternative to the International Monetary Fund (IMF) and World Bank (WB) worth $150 billion dollars, planned to increase to $200 billion. Russia also seeks to break the dominance of Visa and Mastercard on Russian transactions. Today, around 59% of all transactions in Russia are done through debit and credit cards. Visa and MasterCard control 95% of this market. Visa and MasterCard currently hold 87% of the world’s processing market. These transactions all go through the United States and are done in USD.

With more and more trade between the BRICS countries and between those countries on the southern hemisphere, south-south trade, has now surpassed south-north trade. Both politically as economically (trade) relations with the US are of less importance for their countries stability. We could say the world is moving from a unipolar to a multipolar oriented world. This economic and political diversity is however still build on a unipolar financial system. And that makes all the difference. Using the dollar as global reserve currency gives the United States -and only the United States- a tool for setting the boundaries of this political and economic multipolar freedom.

Before we can see how dependence on the us dollar as global reserve currency can be used as a means of enforcing policy, we should first have a brief look at how the us dollar got this dominant position and how it is maintained.

Although dollar hegemony has a history well proceeding 1944, let’s start with the Bretton Woods conference that year that -alongside the WB- saw the IMF founded as thé source for global liquidity. Seeing the relative power of the US back than, the wish of pretty much all other delegations -including the British delegation led by Lord Keynes- to have a common world unit for currency preventing trade deficits or surpluses had to make way for the US dollar. To ensure trust, the US dollar would at any time be exchangeable for a fixed amount of gold, introducing the gold standard. As the rest of the world regained competitiveness, deficits grew. The world increased their savings in dollars whilst US consumption as well as US state expenditure increased, adding to the trade deficits. As money is made through debt, the US money supply soon outgrew its gold reserves. As of the 1950s the US persuaded foreign central banks to no longer exchange the USD for gold. As insolvency was looming the situation became unbearable and in August 1971 Nixon suspended gold-dollar convertibility, making the USD a fiat currency, meaning it is no longer backed up by commodity but by trust in value only. By now many countries were indebted to the IMF, in need of dollars to pay the loans/interest. And as the majority of the worlds central banks, indebted or not, held their reserves in dollars, dollar bankruptcy would see its own (central bank) reserves evaporate. But what would keep the world from diversifying their currency reserves? The currency regime for oil sales was now up for grab and OPEC countries started diversifying their baskets. In 1973 in exchange for the recognition of the OPEC cartel by the military strong United States, oil would be sold in USD only. With the worlds economy running on oil, the demand for dollars was guaranteed: the so called petrodollar was born. Dollars buy gold became dollars buy oil. As of 1973 fixed exchange rates were gone too, leaving them open to markets value.

As there now is a guaranteed demand for dollars, the us no longer has to worry about insolvency over its increasing deficits. This demand also helps keeps their interest rates low. For the rest of the world that’s a different story. With an 18% share of the US in the IMF and an 85% majority needed, it is long been seen as part of US policy. IMF loans come with interest rates, the devaluation of the currency and with privatisations. The interest rates make it hard to back away from the loan, where the devaluation of the currency makes it relatively cheap to buy up the country or labour force in US dollars. Privatisations make the common good of government up for sale on the global dollar market. The devaluation is presented as a means of increasing competitiveness on the global market. Understanding the following shows they are not competing for market share, but dollar share.

Money is created by creating debt and the US government can go into debt to buy OPEC’s oil. Since this will not fire back through interest rates on their deficit (dollar demand is guaranteed), it is basically oil for free. Also an increase in money supply makes the prices of goods go up, making for a double win for the US. Goods priced in dollars have just become more expensive for holders of other currencies. Their precious currencies will have to be converted back to dollars for their oil demand. To actually give their currency value and not have it become victim of speculative attacks, the central banks will have to keep an equal amount of reserves in dollars. No matter how uncompetitive the US economy is compared to other producing countries, the goods elsewhere are expressed in dollars and the amount of production can hardly outgrow the pace of rising petrodollar prices. Or in the words of Henry C.K. Liu, who coined the term dollar hegemony, “World trade is now a game in which the US produces dollars and the rest of the world produces things that dollars can buy.” The world creates, the US buys.

BEYOND DOLLAR DEPENDENCY

BRICS – Brazil, Russia, India, China, South Africa

Going back to the BRICS, their initiative for the New Development Bank (NDB) and Contingency Reserve Arrangement (CRA) now shows us how these new financial structures undermine dollar hegemony. The NDB, unlike for instance the South-American, Banco del Sur, will be doing their investments using their local currencies, without converting to USD. By offering countries loans that do not require devaluation or privatisation the NDB can create a truly diverse world, touching the very core of US dollar hegemony. Currencies being only half the story, oil forms the other half that sustains this hegemony. This is where Putin’s idea for a BRICS energy association, as expressed on July 10th 2014 comes in place. And then there is the Russia-China pipeline that has been discussed for ten years, that saw agreement last May 21st 2014 for a $400 billion worth deal gas pipeline from Russia to China spread over 30 years. China will slowly start paying for the gas in rubles, adding rubles to China’s reserves.

Russia seems to be the one that the US is sanctioning publicly, with little direct effective action towards China. In the five rounds of sanctions imposed by the US and EU on Russia, some of it was military aimed, but it was predominantly aimed at the financial and energy sectors. The sanctions bars those on the sanction list -editable at any time, without congressional approval- from US bond and stock markets, as well as U.S. Persons from any currency loans over 90 days towards these financial institutions or energy companies. “In theory, a “non-US person” (individual or company) could continue to buy new debt and equity issues from these companies denominated in any currency including US dollars, or lend to them in any currency including US dollars. But in practice, they would not would be able to lend to these companies in US dollars, because they wouldn’t be able to settle the transactions. If you want to clear US dollar transactions, you need a US bank – and a US bank would not be able to “transact in” the debt of these companies. The effect is, as the US Treasury says, to close the US dollar lending window to these companies, not by preventing non-US entities from lending to them, but by making it impossible for those transactions to be legally settled except in physical cash, which for oil and gas companies – and banks – is simply impractical. It’s very clever.”, Frances Coppola, contributor to Forbes, explains.

Russia’s largest bank, Sberbank, was sanctioned and is in the process of launching an alternative for the Visa and Mastercard card dominated market, the pro100 payment system. Russian and Chinese banks have recently started local currency trades. With 85% of world trade still in dollars that need to be cleared by US banks, Russia is finding ways of escaping US government policy sanctions enforced through the dollar onto the world as happened with Iran, Sudan and just recently with PNB Paribas. At the moment we are seeing just this happening with Argentina defying to be victimized into the debt spiral by the US verdict and having to try to keep their currency up. As for Russia, without a world limitlessly buying up rubles, it needs to find more than just central bank lending and gas income to keep the worlds trust in it’s ruble, it needs assets and exports. Russia now being the world fifth largest buyer of gold, shows their awareness of this. However, Putin’s ever more centralized way of running the economy to me shows a lack of understanding the need for a vibrant, diverse market for steady economic export. A gas deal here and there will not do the trick. The Russian reaction to the western sanctions, the banning of western food imports, might just begin to create this strong interdependent economic base for true monetary freedom.

CHINAFor China things are different, why? Where are Chinese sanctions? China already has many financial institutions. The China Development Bank (CDB) is now the biggest lender to developing countries. Chinese investments in Africa are huge. The west is dependant on it’s manufactured exports and huge imports from developing countries provide China with raw materials.

As China has been the worlds factory it created huge trade surpluses. The need to go into debt buying oil or other dollar denominated assets was outgrown buy it’s producing power. China would invest these surpluses in buying us bonds or other dollar denominated assets. Buying these bonds keeps US interest low and strengthens the value of the dollar. The huge reserves of the Chinese central bank in US bonds made it possible for the Chinese to keep their exchange rate down to a level that kept their goods priced low for Americans/the world to buy and kept their export up, further strengthening this process as well as providing jobs for a rapidly increasing urban way of living. China manufactured their way out of dollar hegemony.

The Chinese were uncomfortable with it’s heavy dependence on the dollar as they increasingly saw the US use their dollar as a foreign policy tool to lock countries out of the U.S. financial system. They sought to increase their trade and currency diversity to limit US unilateralism.

As exports in trade have been rising, the last decennia also saw Chinese demand for raw materials increase immensely. This increase gave way for new Chinese financial institutions and companies to spend it’s US dollars in securing the resources for import. Investment saw China changing its dollars for actual wealth. The Chinese-US deadlock prevented China from moving to rapidly, but also prevented the US from effective intervening. The US needs the creation of new debt to keep the economy running (on oil) and needs the Chinese to buy this debt. Furthermore, their economy is now dependant on Chinese manufactured goods. As the United States has their petrodollar well secured in the middle-east, China found ways to go past this with oil and gas investments in Africa, like Nigeria, Latin-America, South East Asia and Russia. China has no complicated structural adjustment programs, staying out of national policies. It’s more subtle, yet it’s well understood. Agree with us on our issues, like Tibet or UN votes. If not, simply expect to pay up. China will have it’s bill ready.

As the southern hemisphere has now greatly diversified their trade, china seeks to internationalise it’s renminbi currency. Amongst others, China is now trading oil with Iran and Nigeria in Chinese Yuan. The Nigerian central bank at the beginning of this year increased it’s Yuan reserves from 2% to 7%. More than thirty central banks already hold some Yuan as part of their reserves, basically already making it a world reserve currency.

With trade diversified to a somewhat more distributed trading network, currencies could be going the same way. This would place the United States in the position where the rest of the world gets to decide what levels of debt they find acceptable for the dollar assets. One last area where the US remains a strong unipolar force is it’s military presence in the world. As dollar hegemony could see it’s end, this could break up OPEC in diversifying their sales. Will the world still fund an economy so dependant on military spending for it’s GDP and with little less to export? Will popular uprising still be able to be withheld for a petrodollar-friendly regime?

It’s therefore not such a huge stretch of the imagination to hear claims that the self-determination of states was being undermined by US military intervention. This line of thinking could be well exemplified by the suggested link that when in 2000 Iraq had plans to sell oil in euros, never-to-be-found weapons of mass destruction was what made regime change possible with the 2003 invasion. It’s the same fear of losing dollar control when Libya expressed the will to slowly start selling their oil in a new gold currency they were planning to launch instead of using dollars. Also they were willing to start looking beyond the west for export as financial frictions kept arising. If there was one thing Libya had lots of to back up the currency, it was gold -a 144 tonnes. It took just little time for ‘democracy’ to arrive to Libya that saw a new central bank formed in just weeks even before a the formation of a new government. Libya is Africa’s most developed country according to the UN’s Human Development Index and was also in the unique position to have gotten there without having any foreign debt. Gaddafi’s political philosophy as expressed by his Green Book stretched the imagination to a moneyless society where scarcity by debt could be overcome, stating “The final step is when the new socialist society reaches the stage where profit and money disappear. It is through transforming society into a fully productive society, and through reaching in production a level where the material needs of the members of society are satisfied. On that final stage, profit will automatically disappear and there will be no need for money.“

An understanding of the workings of monetary policy shows us how this framework dictates the very boundaries of economic and political power. Yet modern money mechanics is an understanding shared by few. Simply by wondering how money is created should teach us it’s no neutral way in which to express economic activity. As, for example, fiat money is created through the creation of debt, the banks’ interest charged on it is to be payed from the money in circulation, in time leaving more debt in the economy than there is money to pay. As all money now IS debt, this requires constant economic growth as money needs to be created to pay the interest, setting the very boundaries for government: whether on the left or right spectrum of ideology, an increasing necessity for money makes for an abundant world to be expressed by the scarce measure of money, keeping us forever bound in need for money (thus debt).

EURASIAArriving at a somewhat better understanding of the geopolitics of our time, we can begin to zoom in on Ukraine. In light of all this, what makes Ukraine so relevant to create the US-Russia tension? As for Russia, it shares a border and important bridge to the EU. We now no longer have to wonder what brings the United States into the internal politics of many countries if asking ourselves how it fails to recognize and play by (US) dollar hegemony?

As of January 1st 2015 the Eurasion Economic Union (EEU) free trade zone, just like the EU, will be launched. This follows after the Eurasion Customs Union, sharing their boarders, came into existence January 1st 2010. Both now comprise of the states Russia, Belarus and Kazakhstan. Russia hopes to become the facilitator of trade between Europe and Asia. Ukraine is seen as a strategic connection between the European Union and Eurasion Economic Union. Well over 60% of gas exports to the EU also go through Ukraine -which just privatized it’s ownership of the pipelines. And with Turkey seemingly not welcome in the EU, a free trade agreement with the EEU could now be interesting. It’s in the US interests to keep Russia isolated. One China is enough already. Ironically, this powerplay by the US seems to push Russia-China relations to the highest in probably centuries, as the gas deal shows. China has long been willing to invest in Russia. With the EU and US sanctions imposed on Russia, they might just let it happen. Russian banks are even switching from Visa and Mastercard to the Chinese Unionpay credit cards.

UKRAINEAs you zoom into any conflict, it gets dirty. It’s where we get reminded how the international tensions for control meet the local dynamics and traditions, it’s where conformity and authority meet integrity and compassion, not simply between societies, but within. A summery of events that allows for perspective taking on the west’s quick judgement of the situation:

It’s September 2013 and Ukraine signs a deal with China to become it’s largest overseas farmer in a 3m hectare deal that could provide much needed stability to the country. As Ukraine is looking east, it’s four years of discussion on joining the EU now translate into the rise of political pressures from the west, aided by pressure over Ukraine’s debts that require settling. A choice now seems to have to be made: Russia’s Customs Union or the European Union; the IMF-loan or a Russian loan. In November president Yanukovich tells the EU it will postpone the decision to join the EU, sparking peaceful pro-eu protests until Kiev’s violent breakdown on November 30th that only saw the number of protesters increase. As the beginning of December sees Yanukovich start a big lender tour, it’s first stop is China, securing $8 billion in investment. Later that month a $15 billion Russian loan and 33% discount on gas would be settled: the US lost it’s grip on the Ukrainian government. The mass demonstrations persisted, but were fuelled by media reporting a deal with Russia to join the Eurasion Customs Union. Though both Russia and Kiev denied so, it set the tone. The demonstrators felt psychologically strengthened by high ranking US and EU officials that meddled these internal affairs by even coming to the very protests themselves. It moved the perception of sovereignty not to the democratically elected government, also representing the views held by the east of the country, but to the protesters that feel legitimized over the actual government. It’s best summarised by the words of US senator John McCain addressing the crowd from stage, “People of Ukraine, this is your moment. This is about you, no one else. This is about the future you want for your country. This is about the future you deserve. (…) We are here to support your just cause, the sovereign right of Ukraine to determine its own destiny freely and independently. And the destiny you seek lies in Europe. The US is with you.”

Percentage of native Russian speakers by subdivision according to the 2001 census (by oblast, ‘province’)

The end of January saw Ukrainians protests at the US embassy as well as Yanukovich offer top positions in government to the opposition in an attempt to reach agreement. The western focus was on the clashes with the police. Or clashes with the protesters. As with any situation, the framing is essential. As extreme nationalist groups and police use excessive force, is it the government fighting violence or is it the government breaking down on the right to demonstrate?

The Right Sector-group only came into existence in November 2013 and became one of the main actors in the protest. It’s rapidly well organised structure, similar to professional military made this a paramilitary force. Kiev responded with threatens of imprisonment over their extreme use of violence. The paramilitary group would later seize 1500 weapons from a government depot. These played only little role according to protest leaders and analysts,NY Times states. Before the weapons siege RT already talks of the violence protesters and foreign meddling, the days ahead violence would seriously escalate. One could say that generally speaking it’s terrorism/rebels if you choose to align your power with the status quo and a violation of human rights if it’s the status quo that’s in the way. We zoom in on gay rights in Russia and on terror to Israel. Notice how the Israelioffensive protects them of terror, not how Israeli state terrorism is attacking human rights(lives). The focus on the one issue makes us blind to the systemic conditions. At any rate, Kiev and Russia accused the protesters of having weapons, US and EU diplomats visiting later on the 28th inspected the opposition headquarters and saw no weapons or threat in the opposition forces. Russia and Kiev accused the west for meddling with internal Ukrainian affairs and accused paramilitary rebels for destabilisation. The US and EU accused Kiev of human rights offends and undemocratic values and Russia for using gas policies. A couple of days later Russia paused their loan to Ukraine.

The same day the weapons were stolen by The Right Sector, 19 feb 2014, the US and EU impose sanctions to Ukraine. The next day the army is now allowed the use of force by firearms in reply to the armed paramilitary violence. Gunfire kills 77 people that day. Another day further S&P ratings agency defaults Ukraine, the paramilitary/demonstrators take over the elected government.

The 22nd of February the president, already residing in eastern Ukraine, is impeached. Several ministers get fired a couple of days later. The eastern provinces unite in a statement declaring the impeachment unconstitutional and want to restore constitutional power. Fuelled by the ban on the recognition of minority languages just two days after, the predominantly Russian speaking eastern half of the country feels less and less associated with Kiev. Feb 27th the region of Crimea sees parliament sack local government, with support of 55 out of 64 of the MP’s. A referendum is to be held for sovereignty for the region on May 25th. March 1st sees the province of Donetsk give out a statement not recognising Kiev and also planning a referendum. Donetsk, Odessa, Crimea and other regions sees thousands of people demonstrating against Kiev.

CRIMEA

Crimea

March 1st is also the day the Russian army enters the Crimea. Yet, this needs some historical context. Crimea once belonged to Soviet Russia, until it was gifted to Soviet Ukraine on February 19th 1954, celebrating the 300thanniversary of Soviet Ukraine-Russian ties, nothing more than a “symbolic gesture” amongst Soviet states. Crimea has always been a very popular tourist destination for Russians for its wonderful beaches and spa’s and has had close cultural ties. A referendum on sovereignty held on the 20th of January 1991 saw 94% in favour and gave Crimea independence status as recognised by the Supreme Soviet of the Soviet Union. Little later the Soviet Union collapsed and Crimea became part of Ukraine, but with great autonomy. This included their own constitution, parliament and legislature. Three more referenda were held in 1994, asking (1) whether they were in favour of more independence from Ukraine, (2) citizens of Crimea should have dual citizenship (Ukrainian and Russian) and (3) whether a president should be installed with legislative powers. All three referenda saw about 80% in favour. Elections were held for president and with 72.9% of the vote pro-Russian Yuriy Meshkov was elected. The office was only held till March 17th as it disagreed with the Ukrainian constitution. The largest city of Crimea, Sevastopol, also holds the Black Sea fleet of Russia as is leased in an agreement until 2024. Russian military presence has always been common throughout it’s after Soviet era. During this period Crimea has had great autonomy unlike the provinces throughout the rest of the country. On March 11th 2014 Crimean parliament declares full independence from Ukraine, no longer awaiting referendum results. The May 25th referendum will be pulled forward to March 16th. This hastily organised referendum saw an apparent 95% in favour of joining Russia. Russia claims 136 international observers, including European MP’s, were present. These individuals however lack credibility. A US proposal at the UN sought to invalidate the Crimea vote was logically vetoed by Russia, but demonstrates the isolation policy the US starts to pursue as it’s dollar hegemony is not being recognised by Russia.

THE FRAMING OF EVENTS
The 11th of May has the eastern provinces of Lugansk and Donetsk present the results of the referendum for self-rule and independence from Ukraine, supported by respectively 79% and 75%. May 24th these two provinces declare themselves the new union of Novorossiya. They will not participate in the presidential elections of Ukraine the next day. The May 25th voter turnout for the Donetsk region was 12%, the Organization for Security and Cooperation in Europe (OSCE) reported no violations.

As orders from Kiev continue to clash with non-recognition of their authority, the beginning of June sees an escalation. The new president decides to use the air force against the “occupation” of government buildings in the eastern part of its country. The city of Lugansk, a mere 20 km from Russia, is hit by over 150 missiles on June 2nd. “On 2 June, shortly after 15:00 hrs, rockets hit the “occupied” regional administration building. Based on the SMM’s limited observation these strikes were the result of non-guided rockets shot from an aircraft.”, the OCSEreports. Kiev denies the attack on civilian buildings. June and July see the continuation of air strikes against eastern towns and villages.

July 17th has an another aircraft enter the picture as MH17 crashed near Donetsk. The day after the US states it was taken down from rebel ground by a BUK and Kiev states it has no BUK. The later has been shown to be incorrect, as is the famous youtube video that was to show the rebels had these BUK’s. During the days that followed, Kiev has accused Russia. The US State Department stated Russia is firing into Ukraine and the White House stated Russia was culpable. None of these statements have been proven to be true, as evidence has to this day not been provided. As the western dollar based hegemony is challenged, this environment lends itself to those courageous to be critical and further inspire western self-reflection, as this Associated Press (AP) journalist brings it home to the State Department, twice. It’s this critical thinking that needs to be expressed as a situation develops, for as time passes it does not matter much what was true or not. The situation has been set to build upon, for for a further series sanctions against Russia. The image and feeling connected to Russia are what stick and what can be build upon. What happened we still do not know, may never know or is yet to be the product of politics.

Whilst this humanitarian disaster was politically played around with, it is interesting to see what else was happening in Ukraine. Besides Yanukovich’s polical party, Party of Regions, the only remaining opposition party, The Communists, was banned on July 24th. They were critical of the austerity measures required for western loans and the military operation in the east. Surely such a ban on not only a party, but an ideology would undermine the very core of democracy. However, no media attention was given and Kiev’s cooperation with the west was untouched. With no other coalition possible, it was now safe for the Svoboda (Freedom) party, and the Udar (Strike) party to leave the coalition. Under Ukrainian law elections have to be held if no coalition is formed within a month. A great number of people in the eastern part will not vote, allowing the west to legitimize its cooperation with Kiev further and capitalize on the freedom and democracy talks coming up.

As I am writing this today, August 8th, the Dutch newspaper, de Volkskrant, summarises the western view and focus magnificently. It’s front page talks about a double confrontation with Russia: “NATO supports Ukraine as Russian invasion looms; meanwhile a trade war is escalating.”. The author, Fokke Obbema, chooses to focus the storyline around the quotes and actions of NATO secretary Rasmussen, without leaving the perspective provided through these quotes. The presence of Russian Military near the Ukrainian border are seen as a step to war. He also blames Russia for the downing of MH17 and for supporting the rebels, or so called self-defence forces in Asia and Latin-America. “In a reply to Russian aggression”, we will work closely with the Ukrainian military for “defence planning and defence reform and are ready to intensify the cooperation.” And as the rebels are pushed back, this “success” increases the fear of Russian intervention. US military activity coordinated with Kiev has now publicly been legitimized to the popular western masses, preventing future surprise backlashes. It’s safely framed.

As with any situation, framing is essential. As we read back, the choice of words is not neutral and have connotations that provoke emotions and perspective taking that blurs the line of moral justice and injustice. The protesters and later paramilitaries of the revolution that were fighting against elected government for freedom, now are Kiev. The brutal force that broke down the demonstrations before is now the essential force to counter the eastern rebels that terrorize. Perspective has changed.

Allowing for the picking of quotes to set the framing of the story you wish to develop is a choice. Yes, the information of Rasmussen on the events happening is correct, but frames them in a point of view that is not morally neutral in a greater understanding. It does not say ‘we moved to Ukraine’, which could have you second think that. No, you’ve read it in the frame presented and didn’t give it a thought. The presence of Russian military on Russian soil is war-provoking, yet the build up of US troops in Poland and Lithuania is defensive. The involvement of the CIA, and even the head of the CIA, John Brennan, visiting Ukrainian soil itself in the beginning of April is defensive. Dozens of FBI and CIA agents ‘assisting Ukraine security’ in the beginning of may is US defence. Working together with the military of a government you helped put there is defence too. This is defence. As for the other part, the food sanctions by Russia in response to the five rounds of sanctions before by the EU and US have only become a trade war now that Russia has taken action. Are we so lost in western perspective to have lost the ability of perspective taking? What if this all happened mere kilometres of the US border? What if Crimean’s ever-longing quest for autonomy was better preserved by choosing to align with Russia than with the CIA and IMF undermining sovereignty? Could it be the touristic, historical and cultural ties with Russia -in a Crimea where 97% of the inhabitants speak Russian instead of Ukrainian- actually prefer this? The Ukrainian situation is difficult in historical ties with Russia and the agenda’s of the US and BRICS countries. We can zoom in on Crimea, pointing at an easy explanation in Russian conquest but also zoom out and look at a context where countries are defying dollar hegemony to obtain recognition of their states’ sovereignty and their people. We can look at provided justifications for hegemony -thus conforming to it-, but also to a quest for freedom in (monetary) diversity.

Does Fokke Obbema, taken as example as a projection of our western conditional thinking, refuse to take perspective? In a way, yes, I would say so, there is always the effort that can be chosen to pursuit a new train of thought, to withhold judgement and to entertain the mind with an understanding you might not even agree with or can place, simply to understand and discover what motivates an action. However, in the quick landscape of continues news producing, information receiving and market efficiency society, time is scarce. The attention of the reader is scarce. Stepping outside of the routine, coming across that intriguing new train of thought, requires a break outside of the usual network/culture/routine. It might not be perspective taking as it is unawareness by the dynamics of our modern world. If not this ignorance, apathy remains. A way of living I strongly feel is not needed, as I have written before. Let’s learn to take perspective and begin to understand.

EUROPEWhere is Europe in all this? Europe, itself heavily caught in dollar debt through it’s troika of the European Central Bank (ECB), the European Commission and the IMF is not only monetarily tied to the US, but also politically and culturally. This is reflected or cultivated by it’s media coverage of worldly affairs. Most painfully shown in the aggression of Iraq, Libya, Syria or Israel. Ukraine is no exception here. Europeans would do well to remember to become pro-active upon hearing the doctrines of freedom, democracy, terrorism and human rights to then pursuit the commitment of perspective taking and start working on our understanding of the motives.

Europe is a whole story by itself and politically still surprisingly well aligned with the US and seems to show little room for change. There was inspiration in the occupy movement which saw the financial-monetary structures -not some government- as the underlying cause of the worlds ills. For the general public the image of banks changed from a safe deposit to the greedy. I hope more filtered through to the cultural and political ruling cultures. Another western peek into the stretches of dollar hegemony came with the NSA-leaks of Edward Snowden. If we are to take the political reaction of Europe to these leaks, the weak European voice demonstrates a continent with little part on the international arena but as an extension of dollar hegemony. The sadness is in the one-sided benefits of this alignment, as Europa faces more and more austerity and scarcity in providing it’s peoples needs. It’s most astonishing how even the bankruptcy of a country by Goldman Sachs, Greece, did not prompt a more diverse monetary future course for Europe. It is yet unclear if the euro and sepa payment system will allow Europe to play it’s own role on the international stage or if they are to be seen as an extension of dollar hegemony. For one European country however, this is a clear case.

GERMANYThere is hope for Europe, there is Germany. Germany has a surprisingly well informed public and political elite, comparatively. And Angela Merkel should be given great credit for not only her understanding -as none of the above is new to her-, but also for walking that fine line. However, as the US is pushing Germany into making choices and tries to undermine the political role of Germany, the moral courage should be found to draw the line and now also publicly align more with the BRICS countries and block US agreements. Careful steps are being taken.

Germans have a historic understanding of the dangers of mass surveillance and the need for privacy, making the debate about US surveillance by far the strongest in Germany. The surveillance included even Angela Merkel and the US senate and had US spies in the highest places of government. Germany expelled the NSA-chief in Germany and moved intelligence gathering resources from China and Russia to the US, showing a serious break between ‘allies’. The lack of respect for democracy and democratic rights as well as the political scandals have Germans seek for greater independence from the US with Der Spiegel asking the unthinkable just a year ago, now asking “Germany’s Choice: Will It Be America or Russia?”.

Last July 26th Germany solemnly rejected the EU-Canadian trade deal, seen as a test for the EU-US deal. The deal includes the bypassing of national governments to hold companies responsible in case of breaking laws, framed as “investor protection”. As the monetary debt and loans undermine the states sovereignty, so do the US trade deals in providing the legal framework for companies to bypass national governments. The US is seeing the BRICS countries work together and is now rapidly trying to fix the trade deals seeking to solidify their continued world role. India surprised the west as it blocked a great WTO deal on August first.

Germany is also the exception when it comes to the debate about Ukraine. Gregor Gysi from Die Linke, Germany’s largest opposition party, explained how historically Ukraine should be neutral and bringing NATO in is the provocation, as this article briefly explains as well. On March 25th he expressed concerns about the west’s deals with Kiev’s new government “There are real fascists in the government. They are currently in leading positions. They have the vice-prime minister position, defense minister, and minister of agriculture and environment minister positions. Besides that, there is the co-founder of Svoboda party, who is not a member of this party right now, but he is in charge of the security committee, some sort of intelligence service. Of course there are democratic forces in the government, but fascists never give up the power they have got hold of. There are terrible quotes, awful quotes from them, and I am not alone standing here. There are members of Social Democrats and a former EU commissioner who said they won’t speak a word with those people. I don’t understand how they can sign any agreements with them. It’s again a provocation, they want to send money over…” August … had Der Spiegel express these same worries.

The end of march saw retired German Air Force Lieutenant Colonel Jochen Scholz wrote an open letter to Putin in response to the speech Putin made on March 18, 2014 at the reunification of Crimea with Russia. The letter was cosigned by hundreds of Germans. An initiative I can not imagine as easily in the rest of Europe. May saw Merkel’s predecessor and Putin’s friend, Chancellor Gerhard Schroeder, blame the west for forcing Ukraine into a decision regardless of historic and cultural context.

Germany is the economic engine of Europe, but it can also be said they are the bank of Europe: the price for European unity is paid by Germany. If Europe is to stand on it’s own, saving it from a dollar devaluation, the Euro is essential in the greater scheme of monetary politics. Merkel’s mantra “If the Euro fails, Europe fails” should be seen in this light. Germany also has the gold to back the coin and would not like European IMF loans indirectly taking that. Recent efforts to get their gold back from the United States by Germany’s central bank failed, strengthening the popular assumption Fort Knox has spend it’s gold leaving the US insolvent. Now, can Germany keep Europe united, sovereign and free from US/IMF intervention in these matters to pursuit it’s own way in a more diverse world?

HERE AND NOW
As we are expanding our horizons to another layer of power besides political and economical, this underlying monetary perspective does not enter the public debate. It is a point of view we are not yet accustomed to, an environment with it’s dynamics yet to be explored by the public consciousness. Yet, there is no time more prominent than now in understanding this. China has been playing the monetary game well, understanding the balance required to take the road to more independence. As China paved the way, the world is now in a common position to reflect their policies in line with hegemony based on dollar scarcity or in a a direction that could seek to fulfil societies human needs in freedom through abundance. As Europe is tangled up with the US, they seem to choose hegemony. The BRICS seem to choose self-determination. What makes the situation so prominent now over any time since the petrodollar balance was established, is the movement of monetary politics into the public arena with the BRICS’ creation of the New Development Bank and even more so with Russia simply calling it out. Dollar hegemony has always been understood, but was never approachable to media, politicians or the public for the person’s lack of credibility or to either prevent Libyan consequences if acted upon. Russia not being isolated by a BRICS environment breaks this stalemate. Fokke Obbema, from that Dutch front page article, could have also heard Putin say these words just a week back and offer a different frame. It’s words -be it without context- that did find their way to reuters: Russian Prime Minister Vladimir Putin accused the United States Monday of living beyond its means “like a parasite” on the global economy and said dollar dominance was a threat to the financial markets. “They are living beyond their means and shifting a part of the weight of their problems to the world economy,” “They are living like parasites off the global economy and their monopoly of the dollar,”.

YOU
It’s only through public understanding of the workings of (monetary) hegemony that we can initiate meaningful social change. If we are to free ourselves from a scarcity structured society, the dependence that comes with scarcity and ultimately it’s power, we are to start an active commitment towards social change by creating local abundance in such a way that does not fight our outdated structure, but will make it obsolete. Figure it out. It starts with you, here and now.

(Additional links and pictures to be added.)
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My next article will go into the implications dollar hegemony and global politics have on the individual and will explore a practical, individual reply to global monetary hegemony. A peaceful, limpid story that does not seek to fight any hegemony, it will simple make the structure obsolete. Social change that can face today’s challenges. Here’s a taster of what to come.

Source: http://limpidus.org/2014/08/18/ukrainian-tensions-russia-may-have-gas-but-the-us-has-the-dollar/