April 30, 2014

by Wayne Madsen
Wayne Madsen Report

The White House media spinmeisters and the talking heads of Bloomberg News and CNBC dare not say it but the sanctions on Russia being crafted by Treasury Secretary Jacob Lew’s team at the Department of Treasury are beginning to take their toll: on the economies of the United States and western Europe.

Once, we were told that Russia, as a member of the G8 and World Trade Organization, was a sign of the financial interdependency of the world. Now, we are told by the very same people who came up with all the “free trade” and “new world order” contrivances that imposing economic sanctions on energy-exporting Russia will have no effect on the global economy.

The report card on the adoption by the Obama administration of neoconservative-developed sanctions on Russia is now in. The U.S. economy has slowed dramatically since the Obama administration first began drawing up contingency sanctions on Russia as U.S.-financed rioters first began assembling on Kiev’s Maidan Square in January with the intent of violently ousting the pro-Russian government of President Viktor Yanukovych. Nothing that occurs within the Obama administration, even that which is done in secret, escapes the notice of international hedge fund mogul George Soros, without whose support Obama would have never become president, let alone a U.S. senator from Illinois.

With the inside knowledge of contingency sanctions against Russia being formulated in January, Soros began doing what Soros does best: betting for or against certain currencies and bonds based on his inside knowledge of White House plans.

During January, February, and March, the U.S. economy dramatically decelerated. The energy crisis in Europe brought about by U.S. destabilization of Ukraine and sanctions on Russia resulted in sudden increases in the price of gasoline in the United States as anyone owning an automobile witnessed at the pump.

Many key indicators on the strength of the U.S. economy have plunged as a result of what are not merely sanctions against Russia but a neocon-instituted trade war against one of the world’s largest economies. Not only have inventories fallen in America but so too have exports.

And why would U.S. exports suffer? Because U.S. sanctions are affecting the ability of U.S. firms to operate in Russia. McDonald’s imports over half of its products sold in over 400 restaurants in Russia. Much of those products come from the United States. The weaker ruble resulting from targeted U.S. sanctions has had an adverse effect on McDonald’s sales in Russia and, thus, its supply purchases from the United States. McDonald’s is not the only U.S. restaurant chain operating in Russia that is facing falling profits and a cut-back in exports from the United States.

Pepsico sells a number of food and soft drink products in Russia. Growing anti-American consumer backlash in Russia, coupled with a falling ruble, has placed in jeopardy the company’s profits in the Russian market.

Ford Motors is also being affected by the sanctions with the scaling back of its joint venture with Russian car manufacturer Sollers. With Ford Sollers operations being halted in Russia, there is no demand for car parts imported from Ford and third party manufacturers in the United States. Hence, we have the problem with weak inventories and lower exports now being reported in the United States.

Another key U.S. company operating in Russia is Caterpillar, a firm with a 100-year legacy in Russia and the Soviet Union. It’s CEO, Doug Oberhelman, is quoted by Reuters as issuing a dire warning for U.S. sanctions against Russia. Oberhelman said, “We are hoping for a peaceful resolution, but business confidence around the world could dampen, and trade and world GDP could slow should the situation deteriorate.”

So far, the Obama administration has shown every indication that it is prepared to go the distance in levying sanctions on Russia. There are already plans to increase sanctions to the level of those imposed on Iran. If that occurs, not only will the U.S. target every financial transaction involving Russian banks or corporations but also countries, such as the BRICS allies of Russia — Brazil, India, China, and South Africa — that refuse to abide by sanctions imposed by the U.S., Canada, European Union, Australia, and Japan. Sanctions and a trade war between the West and BRICS would be all that is needed to not only bring about a worldwide recession but a depression and history has shown us how countries facing such a calamity crawl out of their dilemmas. War — global war.

As usual, the same villain is behind the sanctions on Russia.

Not only are the BRICS potentially facing the curled wringing hands of the Treasury Department’s sanction planners but countries almost totally dependent on trade via Russia are feeling the economic doldrums. These include Russia’s two Eurasian Economic Union partners, Belarus and Kazakhstan.  The BRICS countries are now shedding their dependency on the U.S. dollar as a trading and reserve currency, thus making the U.S. fiat currency backed by the manipulative practices of the U.S. Federal Reserve Bank, even more worthless than it already is. Russia and China are already trading in the ruble and the yuan and there are plans for the Eurasian Economic Union to adopt a dollar- and euro-free monetary unit called the“altyn” by 2025.

A number of U.S. energy companies are active in Kazakhstan and all face problems with Obama’s sanctions on Russia. Russia is a gateway country for foreign oil and natural gas operations in Kazakhstan. U.S. sanctions on Rossiya Bank and the Russian state-owned oil company Rosneft, both of which are active in Kazakhstan, are merely intended to help exiled Russian Jewish tax scofflaw Mikhail Khodorkovsky attempt to get back some of his nationalized Yukos and other assets from Russian state-owned firms like Rosneft and banks like Rossiya Bank. After being freed from prison in an amnesty authorized by Russian President Vladimir Putin, Khodorkovsky immediately reneged on his promise to avoid politics, showing up in Kiev to support the usurper coup government that took power with the help of some of Khodorkovsky’s fellow travelers, individuals like State Department envoy chief diplomat for Europe Victoria Nuland and U.S. ambassador to Ukraine Geoffrey Pyatt.

Russia’s cutback on the natural gas supply to Ukraine has affected Russia’s supply of gas to fragile economies in southern Europe, especially Italy, Greece, Bulgaria, Macedonia, and Serbia. These nations, already squeezed economically by the austerity vultures of the EU and International Monetary Fund, are seeing their teetering economies further hurt by the sanctioneers of Washington, London, and Frankfurt. The rise of nationalist parties opposed to the EU and sanctions on Russia is a direct result of the globalists putting the economies of Italy, Serbia, Greece, Macedonia, and Bulgaria on the chopping block for the sole interests of a group of coup leaders in Kiev. The election for the EU Parliament on May 22 will have some nasty surprises in store for the globalists, bankers, and neocons like Nuland, Pyatt, and their friends in Kiev.

Further sanctions on Russia stand to harm farmers already beset by EU austerity policies. Farmers in Portugal, Spain, Italy, Austria, and Bulgaria who export fruit to Russia, which is 80 percent dependent on foreign imports of fruit and berries, stand to lose their livelihoods from further EU sanctions on Russia.

If U.S. imposes sanctions on the Russian energy giant Gazprom, nationals of third countries, like former German Chancellor Gerhard Schroeder, the chairman of Gazprom’s Nord Stream pipeline operation and friend of Putin, would likely see their foreign accounts frozen and a travel ban imposed by the United States. It is unlikely that real Germans, not the half-Polish hausfrau from the former East Germany who is the current chancellor, would object to a former chancellor being treated like a common criminal, especially after revelations that the U.S. National Security Agency has conducted wide scale surveillance of Germans’ communications.

Israel will have nothing to do with supporting the U.S. on sanctions on Russia because its floating natural gas platform, Tamar, has a deal with Gazprom to export liquefied natural gas.

Regardless of whether sanctions are increased on Russia or not, Soros has already made his killing by his speculative billion-fold “pump and dump” investing and short selling of currencies. His unique insight into what occurs inside the Obama White House, something that would not be possible without the connivance of Obama, himself, and his closest aides like Valerie Jarrett and Jacob Lew, have already made Soros an even wealthier man.