Chinese diplomat tells West to consider Russia’s security concerns over Ukraine
Western powers should take into consideration Russia’s legitimate security concerns over Ukraine, a top Chinese diplomat has said in an unusually frank and open display of support for Moscow’s position in the crisis.
Qu Xing, China’s ambassador to Belgium, was quoted by state news agency Xinhua late on Thursday as blaming competition between Russia and the West for the Ukraine crisis, urging Western powers to “abandon the zero-sum mentality” with Russia.
He said the “nature and root cause” of the crisis was the “game” between Russia and Western powers, including the United States and the European Union.
He said external intervention by different powers accelerated the crisis and warned that Moscow would feel it was being treated unfairly if the West did not change its approach.
“The West should abandon the zero-sum mentality, and take the real security concerns of Russia into consideration,” Qu was quoted as saying.
His comments were an unusually public show of understanding from China for the Russian position. China and Russia see eye-to-eye on many international diplomatic issues, but Beijing has generally not been so willing to back Russia over Ukraine.
Qu’s comments coincide with talks between the United States and its European allies over harsher sanctions against Moscow.
Qu said Washington’s involvement in Ukraine could “become a distraction in its foreign policy”.
“The United States is unwilling to see its presence in any part of the world being weakened, but the fact is its resources are limited, and it will be to some extent hard work to sustain its influence in external affairs, ” Qu was quoted as saying. Full story
The world is starting to see that the emperor is actually fat, bald, ugly, has foul breath, and he is naked. The landscape is changing. The two top players of the future are now cementing their allegiance. This is a truly profound move for China as they are overtly illustrating their support for Russia. The hands of time are moving in a different direction. Change is in the air, and the new masters are moving in for the kill. Expect both Russia and China to be significantly more bellicose in the weeks, months and years to come. The title of the next book for any serious author should be “the fall and decline of the U.S. Empire”
China defends its South China Sea activities as restrained
China defended its activities in the South China Sea as restrained and responsible Friday after the U.S. intelligence chief called its expansion of outposts in the region an “aggressive” effort to assert sovereignty.
Chinese Foreign Ministry spokesman Hong Lei said the country’s activities on shoals and in surrounding waters it claims are “reasonable, legitimate and legal” and that its attitude has been one of “restraint and responsibility.”
China says it has historical claims to a huge swath of the South Sea China that overlaps the claims of several neighbors including Vietnam, Malaysia, Taiwan and the Philippines, and it objects to what it considers U.S. meddling. The U.S. says it has a national interest in the peaceful resolution of the disputes in the region.
U.S. Director of National Intelligence James Clapper cited China’s expansion of its outposts, including for the stationing of ships and potential airfields, at a U.S. Senate hearing in Washington on Thursday. His comments underscored U.S. concerns about land reclamation activities that could fuel tensions between China and its neighbors.
Clapper described China’s claim to more than 80 percent of the South China Sea as “exorbitant.”
Hong said China hopes the U.S. can be more “circumspect” regarding the issue. “No other country has a right to make unfounded accusations,” he said at a daily ministry briefing. Full Story
Whether China has a legitimate claim or not is a separate story. What matters now is that China is openly challenging the U.S. and this is something the U.S. will have to get used to. These challenges are going to increase in frequency and intensity. The good old days are about to end.
America’s Dollar, the World’s Problem
When officials from the Group of 20 nations gather in Turkey next week, the worsening currency wars will likely be a source of friction. The biggest question is whether the United States will finally get sick of being a casualty in the ongoing skirmishes.
With nations from Canada to Australia to China to Denmark springing surprise rate cuts on investors in recent weeks, everyone has been in a race to the bottom, devaluing their currencies to boost exports and growth. Everyone, that is, except the U.S.
In the past year, the dollar has surged against the currencies of the U.S.’s trading partners. It’s up more than 16 percent against the Federal Reserve’s trade-weighted index of 26 other currencies, ranging from the euro (which accounts for 16 percent of the basket) to Switzerland (1.73 percent) to Colombia (0.66 percent): Full story
Very interesting to see an article carried on mainstream media employ the same phrase we have used for years. The race to the bottom has just begun, but as we stated many smart countries will leave this race and most of the West and the USA will have no option but to continue accelerating the pace at which they destroy their currencies. In the race to the bottom, there can be no winners only delayed losers. To bypass this game, you need to have some money in precious metals.
No, Obama, Russia’s Economy Isn’t ‘in Tatters’
Bashing the Russian economy has lately become a popular pastime. In his state of the nation address last month, U.S. President Barack Obama said it was “in tatters.” And yesterday, Anders Aslund of the Peterson Institute for International Economics published an article predicting a 10 percent drop in gross domestic product this year — more or less in line with the apocalyptic predictions that prevailed when the oil price reached its nadir late last year and the ruble was in free fall.
Aslund’s forecast focuses on Russia’s shrinking currency reserves, some of which have been earmarked for supporting government spending in difficult times. At $364.6 billion, they are down 26 percent from a year ago and $21.6 billion from the beginning of this year. Aslund expects $166 billion to be spent on infrastructure investments and bailing out companies, and another $100 billion to exit via capital flight and other currency outflows. As a result, given foreign debts of almost $600 billion, “Russia’s reserve situation is approaching a critical limit,” he says.
What this argument ignores is that Russia’s foreign debts are declining along with its reserves — that’s what happens when the money is used to pay down state companies’ obligations. Last year, for example, the combined foreign liabilities of the Russian government and companies dropped by $129.4 billion, compared with a $124.3 billion decline in foreign reserves. Beyond that, a large portion of Russian companies’ remaining foreign debt is really part of a tax-evasion scheme: By lending themselves money from abroad, the companies transfers profits to lower-tax jurisdictions. Such loans can easily be extended if sanctions prevent the Russian side from paying.
The declining price of oil is also less of a threat than many have warned. True, the Russian government’s revenues from energy exports will fall in dollar terms. But because Russia’s central bank has allowed the ruble’s value against the dollar to decline, the ruble value of the revenues will be higher than they otherwise would be. As a result, Russia no longer requires $100 oil to balance its budget — and the effect of lower oil prices on the broader economy will be muted.
Economists at the respected Gaidar Institute, for example, expect the floating of the ruble to roughly halve the negative GDP impact of the decline in oil prices. They estimate that Russian GDP will shrink by a moderate 2.7 percent this year, even if Brent oil trades at $40 (it traded at $61 today). That’s just a bit more optimistic than the consensus among 39 economists polled by Bloomberg between Feb. 20 and Feb. 25: On average, they see a decline of 4 percent.
Economic sanctions, which most forecasts assume will continue this year, are having less impact that many in the West would like to believe. Sergei Tsukhlo of the Gaidar Institute estimates that the sanctions have affected only 6 percent of Russian industrial enterprises. “Their effect remains quite insignificant despite all that’s being said about them,” he wrote, noting that trade disruptions with Ukraine have been more important.
Granted, there’s no avoiding a significant drop in Russians’ living standards because of accelerating inflation. The economics ministry in Moscow predicts real wages will fall by 9 percent this year — which, Aslund wrote, means that “for the first time after 15 years in power,” Russian President Vladimir Putin “will have to face a majority of the Russian people experiencing a sharply declining standard of living.” So far, though, Russians have taken the initial shock of devaluation and accompanying inflation largely in stride. The latest poll from the independent Levada Center, conducted between Feb. 20 and Feb. 23 actually shows an uptick in Putin’s approval rating — to 86 percent from 85 percent in January.
It’s time to bury the expectation that Russia will fall apart economically under pressure from falling oil prices and economic sanctions, and that Russians, angered by a drop in their living standards, will rise up and sweep Putin out of office. Western powers face a tough choice: Settle for a lengthy siege and ratchet up the sanctions despite the progress in Ukraine, or start looking for ways to restart dialogue with Russia, a country that just won’t go away.Full Story
Well, stated old boy; you have just elaborated what we have been saying indirectly for several months. You can now see the misinformation wars in their full glory. Russia will not collapse as there is a massive player (China) ready and willing to help if necessary, but more importantly Russia is actually divesting away from the dollar so there is no point to maintain dollar reserves. Why would you want to have dollar reserves when you know the dollar is doomed? So they are paying down debt, conducting more deals in Roubles and alternative currencies and when possible purchasing more gold.
Putin’s push into Ukraine is rational
A HYPER-AGGRESSIVE Russia, in the view of some Americans, is setting off a new and dangerous Cold War. Loud voices in Washington depict the Russian leader, Vladimir Putin, as a richly empowered thug who is using his vast resources to lash out against his neighbors, Europe, the United States and the world. In fact, Putin is a dangerously weak thug who is desperately trying to prevent the consummation of a Washington-based plan to surround his country with unfriendly forces.
The immediate reason for American outrage at Russia is its intervention in Ukraine. Washington’s goal is to turn Ukraine and other countries bordering on Russia into political partners. That would bring Western power directly to Russia’s borders. American weaponry already stares into Russia from Latvia and Estonia. If Ukraine can be brought into NATO, as some in Washington openly hope, that would be another step toward the encirclement of Russia.
Rather than allow this to happen, Russia has mobilized its allies in Ukraine to resist. Russia’s enemies, based principally in Washington, consider this a form of aggression. Yet any Russian leader who allowed Ukraine to join an enemy alliance would be betraying his country’s vital security interests.
All countries try to prevent the emergence of enemies on or near their borders. They seek what geo-politicians call “strategic depth.” It means the seizure, overtly or covertly, of control over enough adjacent territory to protect their homeland.
Russia knows the value of “strategic depth” as well as any country on earth. It was invaded by Napoleon’s army in the 19th century and by Nazi Germany in the 20th century. The reason it brutally subjugated nations in Eastern Europe after World War II was that it wanted a buffer to prevent history from repeating itself.
After the Soviet Union collapsed in 1991, the NATO alliance, which is dominated by the United States, saw its chance to advance against a prostrate Russia. Taking advantage of the trusting and naive Mikhail Gorbachev, one of the worst negotiators in modern history, NATO pushed Western military power into the Baltic states. The next step in this plan was to advance that power into Ukraine, the Caucasus, and Central Asia.
The Ukraine piece of this strategy nearly worked. In 2013 American-supported protesters succeeded in overthrowing Ukraine’s elected government. The new regime endorsed the idea of inviting anti-Russian forces into Ukraine. That raised the specter of more American weapons directly on Russia’s borders. No responsible Russian leader could tolerate this.
Behind their crocodile tears, few Russian or American leaders care about Ukraine itself.
The United States, unlike Russia, respects the sovereignty of its neighbors — but only because they are friendly. If Mexico were to invite Russia to build a military base in Tijuana, or if Canada were to allow Chinese missiles to be deployed in Vancouver, the United States would certainly react. We would not wait to be attacked but would preempt the threat — by military means if necessary. This is precisely what Russia is doing in Ukraine. Rather than wait to be encircled, it is acting to defend its security perimeter.
These cold calculations are little comfort to suffering Ukrainians. Both of Ukraine’s main political factions — those favoring and opposing Russia — are sacrificing their country’s stability to big-power conflict. This does not perturb politicians or generals in Moscow and Washington. They are engaged in a high-stakes political battle in which the lives of ordinary people are expendable. Behind their crocodile tears, few Russian or American leaders care about Ukraine itself. They treat it as a pawn in big-power rivalry.
In the West, President Putin is often portrayed as a scheming despot determined to project Russian power as far as he can. That he is — but it is not the whole story. Putin leads a declining nation that is politically and militarily weak, riddled with corruption, and on the brink of economic collapse.
By pushing potentially hostile power onto Russia’s borders, Western leaders give Putin a chance to divert public attention away from his failures and cloak himself in the garb of Russian nationalism. Putin now enjoys sky-high approval ratings despite having guided his country into a pitiful morass. Full Story
Most of what he states is true to some extent, and indirectly supports many of our prior statements on the current situation. However, we disagree with this chaps take on the economic outlook of Russia (long term). We think this period of sanctions will actually allow Russia to wean itself from the West and help create many new growth sectors. It will also provide Putin with the power to get rid of a huge dose of corruption. Believe it or not, in a few years, it will/should actually be easier to do business in Russia than doing business in many western nations. The trend is about to turn positive on Russia and once it does it will remain in effect for a very long time as its going to be a very long-term trend change. From just being a top energy player it will eventually become a top player in many other segments. Its economy is in the early stages of a massive transformation.
The US recovery story is a fraud: SocGen bear
Societe Generale’s notoriously bearish strategist, Albert Edwards, has poured scorn on the belief that the U.S. economy is recovering and predicts “violent” reactions in asset markets during the second half of 2015.
“The downturn in U.S. profits is accelerating and it is not just an energy or U.S. dollar phenomenon – a broad swathe of U.S. economic data has disappointed in February,” he said in a research note published Thursday.
U.S. indexes have continued to hit all-time highs this year and the Nasdaq is also looking to break through a level last seen at the peak of the tech bubble in 2000. However, Edwards said that, rather than concentrating on these corporate earnings or dismal economic data points, market participants were too focused on the “pillow talk” about decent payroll data from the U.S. Federal Reserve.
Fed Chair Janet Yellen sounded a dovish tone this week in front of Congress, saying the central bank would be patient with its goal of normalizing benchmark interest rates. Analysts have been busy dialing back their estimates for the next rate hike in the U.S., with many now believing that it could be September, or even later – rather than June – when a change in policy takes place.
“The reality is that the vast bulk of economic, as well as earnings, data (even outside the energy sector), has been simply dreadful,” Edwards said. “The economic cycle will be brought down by asset bubbles bursting long before ‘tight’ policy has any effect. Lessons were learned from the global financial crisis, but not that one.” Full story
You have been proven wrong in the past, not because you do not have your facts straight, but because you are fighting the trend. Thus despite all the negative economic news, the so-called death cross you mentioned in 2012, etc., the markets continued to soar higher; no matter what news comes out if the trend is up, the markets will go up. We are in the era of lies, more lies and even more lies; anything goes so long as it can keep the masses sedated. One day, it will end, but in the meantime we will not fight the trend. Read the full article for he lists some interesting facts.