Michael Hudson on the Real Logic of the $14+ Billion Ukraine Rescue Package Posted on March 29, 2014 by Yves Smith Yves here. Michael Hudson gives a short, persuasive explanation of the real reason the US and the IMF are bailing out the Ukraine. Hint: it’s not the reason you read in the American press. From RT: 0003320 Post navigation ← Countries Rejecting Trade Deal Provisions that Let Investors Override National Regulation Links 3/29/14 → Subscribe to Post Comments 88 comments psychohistorian March 29, 2014 at 3:13 am It certainly is encouraging to see/hear/read in some venues the kabuki going on with America and the Ukraine. It certainly looks like the pieces of the merry-go-round of American empire are flying off. Michael Hudson’s joke about all the plumbers from Ukraine “flooding” the EU if allowed to immigrate was as good as his tidbit about trying to force Greece to sell its gas until Russia’s Gazprom was the highest bidder and then the position became, Oh, never mind. The bad part about all this is the brainwashed US public and the paucity of sane adults in positions of power in our government. America and its cancerous relationship with Israel is finally being pushed back on and one can only hope the neocons and Israel don’t get to push the world into nuclear winter over this evolving comeuppance. PaulW March 29, 2014 at 8:53 am To be fair, if the American public is brainwashed it is due to the media brainwashing them. Most people do not have hours to devote to finding out the truth and must take what’s handed to them. The problem is the dishonesty of the people passing out the information – politicians and media alike. I remember mid 1990s listening to Bill Moyers warning about the consolidation of the US media. We are now reaping what lawmakers have sown. Yet it is not just in the USA. Media in Canada is horrendous. Even worse, the trend is to catch up, perhaps even pass the US media. Worst of all is the “trojan horses” in the Canadian media. CBC and TVO are funded by taxpayers and considered left wing – though their propaganda ceased being left wing ages ago. Thus people see right wing agenda reports on TVO/CBC and conclude: “if that’s what the left is saying then it must be true.” You see America is not exceptional, not even when it comes to media propaganda. Plus Bill Moyer’s warning applies to all western countries. Media consolidation must be broken up. digi_owl March 29, 2014 at 10:44 am There is also the issue of the inland states being pretty much insulated from world events. Meaning that unless they where drafted, or signed up, for some foreign adventure they don’t know the up front price of war. And ever since the PR mess that was the Vietnam draft, DC has avoided doing drafts. And so you get a rise in recruitment drives in poor areas, and a reliance on contractors/mercenaries. Giabo March 29, 2014 at 4:05 pm “Most people do not have hours to devote to finding out the truth and must take what’s handed to them. The problem is the dishonesty of the people passing out the information – politicians and media alike”. Is the above meant to be a serious comment? Are you blind to the facts when it comes to the number of hours americans willfully choose to spend watching garbage on TV, playing video games, using their smart phones and such tweeting and using other social media to mindlessly babble, and following other distractions like college and professional sporting events. The sheeple you refer to have more than adequate time for educating themselves, seeking truth and finding alternate sources in order to escape the government sponsored MSM propaganda machine. Our stupid, passive citizens allow themselves to be brainwashed. Have you ever heard the term cognitive dissonance? It’s simply far easier to insert ones head into ones rectum and hide from that which one does not wish to believe because one cannot accept facts and evidence. It’s also much easier to point the finger and blame someone or something else for personal shortcomings. Ray Phenicie March 29, 2014 at 5:04 pm I noticed after a conservative government was elected in Canada (right after Sept 11, 2001) that TVO news and commentary took a decided turn to the right. The same happened in on TV Stations in this country as well. I gave up on broadcast TV about three years later and have not returned since. To me, CNN, CBS, NBC, ABC, Fox News, the New York Times, Washington Post are all of one voice; they simply can’t be trusted. But then, readers should always be willing to fact check any news source. The process for doing that is intuitive but a ton of background is usually needed for any area of news and it is that context that is so often missing. RudyM031513 March 29, 2014 at 5:25 pm Most people do not have hours to devote to finding out the truth and must take what’s handed to them. Many people, maybe most people, don’t have time for this, but there is a sizeable group of individuals which does have enough leisure to do more digging than it does. I work in a job where my co-workers do spend a fair amount of time surfing the internet (while being on call to provide customer service). All of these people are college educated. Some have achieved much more academically than I have. Yet I see so many of them relying on CNN or the BBC for their news; and I hear them making comments which strongly suggest they aren’t exposing themselves much, if at all, to information and analyses outside of what’s found in the mainstream media. Here we have this tremendous resource, the internet, and yet people might as well be watching network today for all the use they make of it. Russian Patriot March 29, 2014 at 4:45 am Please don’t use RT to get your facts, dear NC and readers. It is Kremlin’s vanity channel. A lot of loaded words, scaremongering and insinuations masquerading as fact there. The fact that they have brought only one guy to speak for one side of the argument only is also very telling. Please add a healthy pinch of salt to everything you see and hear from these kinds of channels! abynormal March 29, 2014 at 5:19 am Забавный! Черный Встречают Чайник impermanence March 29, 2014 at 3:46 pm 不同信 同無效的意義。 abynormal March 29, 2014 at 6:15 pm 搞笑！黑色的满足电水壶 impermanence March 29, 2014 at 7:33 pm “Туш! Yves Smith Post authorMarch 29, 2014 at 5:33 am Michael Hudson is not a Russian tool and also happens to be well informed about that part of the world. And it has been reported on other sites (oh, and not Russian outlets) that Russian hedge funds and investors will be major beneficiaries of the IMF rescue package. So this is hardly spin by Hudson, it’s reported on legitimate sites but the Western MSM is reluctant to defy official messaging. Both sides are running very heavy propaganda, and you are naive if you think the reporting here isn’t badly distorted. Barry Fay March 29, 2014 at 11:54 am Yves – first, thank god for Naked Capitalism. It is one of the main sources for opening up eyes. As for the “badly distorted” media, the Crimea reporting has been pure propaganda on a level as bad as anything seen in the old Soviet Union. And strangely enough, the onslaught against Putin actually began BEFORE the Crimea “crisis”: the coverage of Sochi was an embarrassment to journalism and pointedly insulting to Russia – not to mention the phony “terrorist alerts”. Anyone paying attention must now be thoroughly cynical regarding America and its role in the world. I know I am and I used to be its biggest defender here in Berlin. No more. tommy strange March 29, 2014 at 4:56 pm Just as Al Jazerra can give us great reporting about Katrina,Iraq, etc. .. but none about Bahrain. Just as Agence France gave us facts before the invasions. Just like the New York Times can give us great investigative reports about corruption in politics, and actual reporting on the working class’ plight, it cannot be trusted on reporting on USA’s enemies. I guess this is why, we as human beings, with a brain, and with supposed critical thinking were to embrace the internet. Too bad it is acting as a filter to those that cannot challenge their entrenched belief systems. Wherein, even when you go to a ‘left’ sight, so many still just knee jerk react. And me saying that, can in some minds, mean I give credence to the government blew up the towers. Really, I think it is such a minority, but very vocal, and very “typing’ all the time …..that actually believes state prop anymore. It helps to get off the internet and speak in groups with regular people. These ‘news sources’ don’t reach more than a minority. We should so newspapers again. Phil March 30, 2014 at 2:23 am The NYT, WAPO, etc. are not bad, but one has to be able to read between the lines and go to other sources. News reporting has always been about individual bias and perspective. Thank god for NK; I love this site. Foppe March 29, 2014 at 5:52 am Not at all, or just not on Russia? I find it’s a perfectly serviceable source of news on things that aren’t directly related to Russian state interests. And when it comes to reporting on events relevant to British geopolitical interests the exact same thing could be said of the BBC or ‘even’ the Guardian (their reporting on Russia-related events is frequently atrocious), never mind all of the US mainstream outlets. All that aside, did you even watch the segment with MH? Because I really don’t think your disclaimer applies in this particular case. allcoppedout March 29, 2014 at 6:39 am RT does on occasion sound like the Radio Moscow I used to listen to as a kid. The old RM was still better than American Forces Network or Luxembourg. I can’t think of any main media able to do other than be a pot calling the kettle black, or whatever Aby’s Russian means. I’d say RT is less biased than the BBC, Hudson a Russian tool? I hope so. That would mean they are using a genuine and erudite democrat, not a noted tactic of fascist and dangerous states. Not sure the US funded Ukrainian Nazis, though I’m open to the idea USUK funded the actual ones when they were a tiny quasi-religious group. Not worth bothering with the troll – but I wonder if we could track such to origin. I think we’d be more likely to find secret state funding there, than Michael with a brown envelope from Putin. We don’t get much reporting here or on RT of the hatred of Russians living in non-Russian bits of the old eastern block and even Israel. This has nothing to do with Nazis. Yves Smith Post authorMarch 29, 2014 at 11:49 pm Hudson is very well off, some say wealthy. He inherited the rights to all of Trotsky’s writings (he is Trotsky’s godson). So he’s not a great target for bribes. allcoppedout March 30, 2014 at 12:43 am Didn’t know that Yves, though there was an immediate retrospective family-resemblance flash. An old Detective Sergeant of mine used to visit the university for a drink with me on Fridays in the SU bar. He always made a point of handing me a brown envelope (rumoured to be my continuing cut of some police scam). I gave the same back. We were, in fact, avid readers exchanging books before going off to the Yacht Club for lunch (how could we possibly afford membership let alone a yacht)? His mum worked there and fed us in the kitchen. Always found the rich easier to bribe than the poor. Indeed, in some parts the rich insist on the practice as a mark of respect. Hudson doesn’t look like the kind of ‘wasta or fakilaki operative’ my government once had me deal with. The poor may be distinguished from the rich by being more honest. I tend to distrust people with money, but I don’t stereotype. After all, the proletariat must destroy itself to achieve its ends. Just an afterthought – we don’t discuss what bribes are much, given most of us accept the ‘loan, looting, resource curse’ stuff. The prostitute in the car picking you up at the airport is usually just the start. The poor often are the bribe. When you say no, a whole other train of events take place. Honesty is a kind of loose canon thing. Our own institutions are now full of this attitude. allcoppedout March 30, 2014 at 12:48 am Must just say someone on Golem came up with the term ‘presstitutes’ for the main media. Excellent. Penny Bloater April 25, 2014 at 5:45 am I don’t understand Yves. To be Trotsky’s god son Hudson would surely have to be over 75 years old given the former’s murder in 1940? Yves Smith Post authorApril 25, 2014 at 12:59 pm He is Trotsky’s godson. He also inherited Trotsky’s publication rights. PaulW March 29, 2014 at 8:44 am It’s all about credibility and each individual must decide what is and is not credible. For many, the western media’s credibility has completely collapsed. Even Al Jazeera has been compromised since Libya. We’re left with RT practically by default. if nothing else, we can compare different propaganda then choose what we want to believe ourselves. However I will say that, with me, RT still has credibility. Bring back Lauren Lyster!!!! NotTimothyGeithner March 29, 2014 at 10:25 am Oh good! I know lets read the NYT. I bet they have found the WMDs in Iraq. digi_owl March 29, 2014 at 10:46 am Never rely on any single news source, be it Russian, middle eastern, US, or any other part of the world. Instead check them all on various topics, and watch for how much of it lines up… Carla March 29, 2014 at 8:53 pm That’s why I love and rely on NC’s daily links! Thanks again to Yves, Lambert and the whole NC team. Banger March 29, 2014 at 12:12 pm If you look at Hartman’s program you will see quite a variety of views you don’t even come close to seeing in the mainstream U.S. Media that, in the main parrots USG propaganda. While I get annoyed with RT and their natural tendency to present the Russian POV they are not shills for the Russian government in the same way as say the NYT are virtually a government information service or MSNBC is virtually a Democratic Party official network. RT has a long history of providing alternate news with much the same content (and even more diverse than you see here) as Counterpunch or Truthdig as well as strong libertarian content. I would guess you have a political agenda that has nothing to do with truth. About the Ukraine the mainstream coverage has been mainly lies–RT has been much more truthful with some distortions but nowhere near the utterly crappy coverage by the mainstream Western propaganda organs. JGordon March 29, 2014 at 2:17 pm You see Russian Patriot, due to the revelations of the US government employing or wishing to employ Trojan forum spies to influence debate (or as Cass Sunstein advocated, to counter “conspiracy theories”) comments like yours can no longer be credible. Now isn’t a sad thing that even if you aren’t a paid plant your well-thought and intelligent comments on the subject, which just coincidentally align with the US government position, make it seem like you are? You should add some kind of a disclaimer like this: “Even though my position here is a carbon copy of the position of the US government and many well-moneyed corporations, I am not in fact in the pay of any of these entities and my opinion here is strictly my own”. Thereafter your thoughtful words should become much more credible. By the way, in all sincerity as far as media credibility goes, Alex Jones has become one of the most credible and well-respected members of the US media. Which is not a compliment for Alex Jones so much as it’s an indictment of US media. Comparatively speaking, RT makes all the “official” corporate US media look like a putrid piece of crap. Murky March 29, 2014 at 3:44 pm True. There’s lots of propaganda on RT in recent weeks. Also true that RT carries a lot of high quality content, not available anywhere else. I put the Hudson interview in the second category, as good economic analysis. If there needs to be a general alert put out about propaganda, that alert should be applied equally to Western media. Consume at your own risk. The New Statesman has a fairly well-balanced essay about Russian and Western propaganda. Also includes good comment about botched statecraft. http://www.newstatesman.com/politics/2014/03/russias-revenge-why-west-will-never-understand-kremlin Was a good read until the author’s final words. Angus Roxburgh writes, “To be clear, what Putin has done in annexing part of Ukraine is unacceptable and should be punished.” I choked on that. Otter March 29, 2014 at 8:53 pm I choked on the first sentence. It went downhill from there. MRW March 30, 2014 at 7:52 pm You need to read more, Russian Patriot. This isn’t new news. Sovereign debt contracts have been in the news lately. Even Templeton has 20% of Ukraine’s distressed debt. http://www.project-syndicate.org/commentary/ngaire-woods-and-taylor-…ties-could-undermine-debt-restructuring-efforts#m06JHEl7kDMGhvQI.99 allcoppedout March 29, 2014 at 5:18 am Back in the 80s we used to teach about the benefits of long-term European trade and energy deals between Europe and the USSR (particularly West Germany and Scandinavia). These deals gave the European manufacturers what we called ‘strategic’ business, typically over 5 years they could tool up for and then look for ‘tactical’ business (usually shorter term) to exploit the investment. This was typically in contrast to British short-termism, and we felt a source of considerable competitive advantage. We took a dim view of IMF and other international financing back then not much different to Michael’s now. Back then (somewhat inevitably as an ex-cop) I thought the banks making these dud loans must be involved in such as drug-trading to recoup the losses (a theme in Miami Vice), but this didn’t tally either with the amounts involved or my knowledge of kick-back schemes. I fully agree with Michael. In more than 20 years though, I have not been able to establish the money-trail in detail (Shaxson is good in principle). It all looks like the way slot-machines take their money. Huge tracts have been written on controlling such investment money, most coming to Bill Black type conclusions. But the looting model seems everywhere – only 10% of university fees and charges to students goes on teaching and they get, mostly, crap and debt. We need revolution, but how? Our message has been failing for 40 years. I found people all over Eastern Europe who knew better than my undergraduates that neo-liberal economics was as daft as anything Soviet. They weren’t exactly taught this at school and university. Banger March 29, 2014 at 2:30 pm Great observations. Now, on the matte of how we got this bad: our culture values money/wealth/power more than virtue. By virtue I mean the values that allow us to live together like honesty, integrity, honor and so on. As I repeat, to the annoyance of some at NC, the problem is cultural and shared across all classes. Nothing can be done unless this fact is accepted. The left is moribund because the values of civic virtue, compassion, courage and so on are not “cool.” Solution: make virtue “cool.” Jessica March 29, 2014 at 8:10 am Notice that the map in the background says “Ukaraine”. I see typos in places I don’t think I used to see them before. Front page NYTimes even. I think this is more than just my proofreader’s crotchediness. TedWa March 29, 2014 at 12:19 pm I think everyone is getting tired of reporting false flag news and/or propaganda but dare not attack the real powers that be behind it for fear of losing their jobs, so lapses like simple proof-reading errors are becoming more common. Apathy sufferin' succotash March 29, 2014 at 9:02 am Hudson’s comment about Nuland & the Neocons is in line with I’ve suspected from the start. Their agenda really isn’t about Ukraine at all, but about doing doo-doo all over US-Russian relations so as to prevent any nuclear deal with Iran. In other words, the goal is still to march on Tehran, though that will probably have to wait until Mr. Adelson puts Jeb in the White House in ’16. There may be another angle involved in this thinly-disguised windfall for Russia: a payoff in return for Putin keeping his mitts off the rest of Ukraine. It would be irresponsible not to speculate. James Levy March 29, 2014 at 10:09 am What always bothers me as a military historian is the idea that Iran can be defeated militarily in the same way that America’s other post-Vietnam victims could. It is a large, populous country with few invasion routes, all far from the centers of Iranian national power, is decently well armed, has many motivated fighters, and strong support for its government in the rural areas. You’d need six divisions, roughly half the US Army, just to smash the door in. Occupying the place would call for hundreds of thousands more. We’re talking about another Desert Storm, only fought over months and then leading to an occupation that couldn’t end in less than a decade. The cost would likely be 5-10 trillion dollars when all was said and done. And the disruption to global oil would sink the planet into a recession. I guess eliminating that .0001% chance of an Iranian nuclear attack on Israel is worth it to those neocons, but frankly I think they should be run out of the country on a rail. paul March 29, 2014 at 10:22 am Who says they want to occupy Iran? Shock and Awe, with a prolonged application of rolling thunder will do the job required. The Libya / Laos option. NotTimothyGeithner March 29, 2014 at 10:59 am Iran isn’t Iraq or Libya. It can retaliate, and unlike Iraq, there won’t be as many willing partners or domestic approval for the prolonged build up necessary to launch a coordinated strike which could prevent a corporate embarrassment*. Drones are nice for blowing up weddings, but they have limited range, limited payloads, and can be hijacked or brought down without firing a shot. *Can you imagine the fallout if an Iranian or Russian anti-aircraft platform knocks out some U.S. F-22s or a B-2? Every country in the world would drop Boeing/Lockheed/etc. contracts in a second. A war would devastate the arms dealers. paul March 29, 2014 at 12:00 pm When have practicalities influenced these people? This is about principle! James Levy March 29, 2014 at 12:24 pm Gorilla in the room: the Holocaust. Most of the Israeli population and its overseas acolytes believe that the raison d’etre of the Jewish State is to prevent another Holocaust. This has now morphed into an absolute need for her neighbors and near-neighbors to be rendered impotent. To feel safe, Israel demands that the rest of the Middle East be a poor, weak, disrupted, disorganized mess or under the heal of reliable dictators who are satraps of the USA. That millions of Arabs find this unbearable and humiliating is out of bounds in US discourse–if they want to be strong and independent, it must be because they are dangerous psychopaths bent of genocide. This is the framework in which we are stuck. For various reasons, it is the de facto official position of the US Power Elite (because it dovetails with their own perceived interests, not out of love for the Jews). I see no way out of it given the emotional commitment of all the players to the righteousness of their positions. bob March 29, 2014 at 5:52 pm Add in our other ME ultra-ally, Saudi Arabia, which wants the same things as Israel. James Levy March 29, 2014 at 12:11 pm Paul, Libya was a country already wracked by civil war and with a tiny population and little ability to “take to the hills”. Iranians have plenty of mountains to retreat to, could get at least some supplies over the border from Russia, and, as has been pointed out, could and would retaliate if they were getting the crap bombed out of them and the world would be hard to convince they would be acting illegitimately in doing so. Russia and China would be happy to broadcast images of bombed Iranian towns and slaughtered Iranian civilians to the world. I just do not believe that the majority of Iranians, and the vast majority of their civilian and religious leaders, can be bombed into submission, at least not short of the level of mass slaughter the US unleashed on Japan in March-August 1945. Could a US government get away with that, against a power that is no threat to it? Banger March 29, 2014 at 1:46 pm James, you ask if the government could get away with attacking Iran. My answer to you is, at present, probably not because Washington is disunited and going in many directions at once but this could change if those that are generally in the neocon camp manage to “win” the current struggle that is going on under the sheets of an increasingly weak Administration. The advantage of the neocon movement is that it is a morally motivated force within government, the press and a large part of the national security state. This group has an ideology of struggle in the present for the sake of a “end of history” narrative which would result in the establishment of a New Rome in Washington insuring peace and prosperity. This has been a dream in the West since the Western part of the Roman Empire fell in the fifth century. I believe history is kind of a living thing and this dream remains hungry and waiting to be fulfilled. We should not underestimate its power. This vision flies in the face of another dynamic–the weakening of nation-states in the wake of increasing corporate power that points to a neo-feudal rather than an imperial future. Wall Street/City of London and most corporations don’t want war unless they are minor wars like Libya–an Iranian war would be too unpredictable and the corporate types are opposed. They are happy to keep the public distracted but will censor war with either Russia or Iran. The wild card, for me, is what the men with guns are thinking. As far as I know senior Army an Marine officers do not want to go to war anywhere. I am told that Air Force officers alway are happy to bomb. Jackrabbit March 29, 2014 at 2:22 pm Washington is disunited and going in many directions at once . . . current struggle that is going on under the sheets Color on this? Those who actually have power (neolibs and neocons) seem united enough to me. increasingly weak Administration By what standard? From who’s perspective? The Administration seems to work fine for the powerful interests that it has _always_ served. If you are right about their losing strenght, then isn’t it strange, that they would choose to expend that dwindling power on protecting the Bush Administration (they are withholding from Congress material related to CIA rendition and torture) and the NSA? And somehow, despite the austerity and record deficits, they just got Congress to approve funds for Ukraine. . . . an Iranian war would be too unpredictable and the corporate types are opposed. And yet how does one adequately explain Ukraine without talking about Syria and Iran? (Isn’t Iran the real focus of the neocons? Syria is a stepping stone – and Russia stands int he way.) Indeed, what has the much vaunted Iran peace initiative achieved? What did Obama say when he announced the initiative? That it was a last chance for peace that was necessary to unite allies for war. Banger March 29, 2014 at 2:49 pm To me the disunity is somewhat obvious. If you look at the mainstream media since the Ukraine crisis started it pretty much put the issue front and center–then as the whole thing came to a head the aircraft mystery dominated the news sending Ukraine to increasing obsrcurity (considering the consequences). I believe, after over a half-century of observation of the media, that this means elements in the ruling elites and the Administration is telling the media to cool it–keep it on low. How many times have we seen people talk about an attack on Iran being imminent–carrier groups steaming to the region, troops ready to ship out then it passes and no one says anything. Because this has gone on for so long I think it indicates divisions. During the end of the Bush administration I had some inside info on what the Iraq Study Group was talking about and had a chance to find out, what I heard through other channels, some of the divisions within CIA and within the Pentagon about the whole ME policy. Most of the senior professionals wanted to defuse Iraq and Iran through a regional conference including the front-line states, Russian and the U.S. I believe that constituency is still there and still influential and these people are deeply distrustful of those we call neocons–they, like Bush 1, considered them “crazy” and dangerous true believers . As for a “weak” administration just look at their inability to deal with the nihilists in Congress–llok at the moves that they made during budget negotiations and their inability on deciding on a clear and strong course of action. Look at Obama’s reluctant decision to surge in Afghanistan–he clearly did not want to and let that be known in public but agreed , not because there was popular support from the public but because, in my view, voices within the national security state insisted on it–everyone knowledgeable knew it would fail and it did. You get my drift here. As for Iran, everything I’ve been able to find out is that most senior mlitary officers outside the Air Force have come close to threatening mutiny if such a course was adopted. It was out of the question seven years ago and it is even more so now. Jackrabbit March 29, 2014 at 4:44 pm Banger, sometimes your comments make it difficult to know where you stand (seemly taking different sides to a greater or lesser degree) and/or appear to be constructed to ease concerns (like when you said that gun ownership is a check on government power – which was convincingly debunked by Yves). Unfortunately, your many assertions that there is a ‘struggle’ between neocons and realists is another example of pushing this hopey/changey POV, especially as it is based on nothing more than: 1) your hunch regarding media coverage: (aircraft coverage => “disunity” => “struggle”) (* see below for a simple explanation of the coverage) 2) some information from the Iraq Study Group “at the end of” Bush I (1992?!) and a belief/hope that “that constituency is still there and still influential”. Your hopey/changey thinking – which I have complained of before – is as disturbing as it is beguiling. From what I see is caution and concern are very much warranted as neocon and neolib ideologues are firmly in control and there is a strong effort by them and their allies to obfuscate their intentions and keep the public in the dark about future outcomes. This is why I was so concerned about your comment in the Cass Sunstein post. Sunstein has advocated that the government influence public debate to head off extremism. Promoting a hopey/changey POV seems rather consistent with such a suggestion. And one more note: Your mention of the Afghan ‘surge’ is strange. The decision to do this was taken what – four years ago? I don’t see how its relevant to your claims regarding neocon struggles or Administration ‘weakness’ today. = = = * First, people were genuinely interested in the plane’s disappearance; and dialing back on Ukraine coverage could just be due to Putin’s having made an unexpected move that required some rethinking – not necessarily a vigorous debate or ‘struggle’. Jackrabbit March 29, 2014 at 6:06 pm I think its worthwhile to note another hopey/changey position that you’ve taken: that Obama’s punting the Syrian bombing decision to Congress means that our leaders are listening. Democracy is working! Many NC-ers have taken issue with this POV – and for good reason. Yet you have persisted. Now, you are welcome to your views but I am a bit skeptical that anyone that has been in Washington as long as you claim would not be more skeptical. In fact, the Ukrainian gambit probably demonstrates the lie of the view that our leaders were checked by public opinion. Because Russia blocked US bombing of Syria (compounding their unhelpfulness regarding Iran and Snowden) neocons got the go-ahead to topple the Ukrainian govt. I don’t think many Americans would’ve agreed to such action, nor would they be willing to pay the price to sustain (grants and loan guaranties) or protect (bodybags) Ukraine. So this gambit makes a mockery of western democracy as it only makes sense to sideline Russia to make ‘space’ for more assistance to the Syrian rebels. Such assistance may be direct (bombing) or indirect (covert support). If that is that intent (and its difficult to see otherwise) then the wishes of the people will be ignored and subverted (exactly the opposite of your hopey/changey view). Jackrabbit March 29, 2014 at 4:48 pm At the same time, I’ve been somewhat encouraged by comments you make that vigorously attack corruption, lack of a coherent climate change policy, and neolib excesses. Banger March 29, 2014 at 6:52 pm I sympathize with your frustration. I don’t have a particular ideology. I have, for example a lot of sympathy for conservatives of all stripes. I try to practice deep listening particularly when people are really coming from the heart. I take Jesus suggestion to love my enemies, or to put it another way, I have deep compassion for them rather than paint them as “bad guys.” In the case of Sunstein he is about as much of an enemy as anyone can be. His views and those of his wife are abhorrent to me but I do believe they believe they are doing the right thing. I have, also, a keen appreciation for paradox which comes from my decades long Buddhist practice along with other spiritual perspectives. In fact, spirituality is my main interest and always has been; but, I’m a big fan of domestic and international politics and have spent most of my life, including childhood in that milieu. It so happens that our political crisis happens also to be a profound philosophical and moral crisis and only by addressing those issues are we likely to see some improvement in our public life. paul March 29, 2014 at 3:04 pm James, Libya was wracked by civil war about as much the Ukraine was. A well armed, well funded insurrection was being beaten back until the no fly (which happens to include a shit load of flying and bombing) zone was declared to blast the way clear for these forces, whose main motivation seemed to be creating a central bank, and culminated in the mainstream snuff movie of its leader at the behest of the ghoul Clinton. Who pays attention to the wreckage left today? As the neocons are pretty much a death cult, I could see them trying to smash Iran to pieces in the same way. These are not rational people. SufferinSuccotash March 29, 2014 at 10:54 am Look on the bright side. A multi-trillion dollar war against Iran would rule out any spending on wasteful domestic programs, ensure the perpetuation of the Surveillance State and provide a useful diversion from the ongoing financialization of the economy. What’s not to like? [snarkometer redlines] Matt March 29, 2014 at 3:37 pm Yes, an attack on Iran that did not result in its replacement with a pro-US/Saudi regime (the only aim that makes sense) would be yet another Made in USA disaster a la Iraq. digi_owl March 29, 2014 at 10:50 am Seems to me the neocons wants to revert to cold war so that they can maintain their simplistic “us vs them” world view. Banger March 29, 2014 at 2:52 pm It’s more than that–they want to get to “the end of history” by creating a Pax America and global empire. They are true-believers in this mad quest for world-domination. par4 March 29, 2014 at 9:50 am What’s $14 billion when the Fed is creating $85 billion a month out of thin air? Michael Hudson March 29, 2014 at 10:02 am OK, for the record, I have often addressed the Russian Duma, urging a land-rent and natural resource rent tax. None of my proposals have been put into effect. I’ve criticized their income tax law (heading a delegation that included Reagan-era Council of Economic Advisor economists and NYU deans) urging policies to recapture what the kleptocrats have taken. All to no avail. Anyone who wants to review my blueprint for post-Sovbiet economies can read Latvia Renewed, which summarizes my approach and the group that I brought to Latvia to promote it. Regarding accusations such as above, I had a ball; in high school (U/Chi Lab School). True, the social sciences teacher Mr. Edgett called me a Commie. But the Stalinist classmate Dan called me a fascist. It was the only time in my life I was the voice of reason in the middle. I think I’m an equal opportunity offender. OIFVet March 29, 2014 at 11:15 am Dear Professor Hudson, as your fellow Labbie (Class of ’96) I thank you for speaking the truth in the middle of this propaganda war. allcoppedout March 29, 2014 at 2:53 pm The favoured term for people like Michael amongst Metropolitan Police colleagues was ‘Pinko’. All university lecturers were presumed thus. Driving instructions were such as ‘Top the next Pinko, young John’, meaning ‘hang a left here’. Early in my university teaching career I complemented a colleague for some excellent detective work in a research project. It took her two weeks to forgive me. Stereotyping runs deep. OIFVet March 29, 2014 at 4:56 pm Here most people, particularly if they happen to watch a certain Rupert Murdoch network, still think that academia is populated by “pinkos.” Which is simply laughable for anyone with even a passing familiarity with places like UChicago. What I found fascinating about Professor Hudson’s comment is the way it provided a time capsule of our alma mater. Seems like Lab was rather more politically diverse in his day than it was in mine. Not that it lacked for diversity of political opinions, but during my time there the predominant political inclination was the conformity of establishment Chicago Lakefront liberalism (think types who still say that Obama is a progressive and actually believe it). Most of the debates would nibble around the extreme edges of its narrow confines, with zero chance of anyone being called a commie or a fascist. Great place to attend but perhaps a bit boring in comparison to the mid-50’s. allcoppedout March 29, 2014 at 10:35 pm I liked most of the cops I worked with Vet. They were more motivated by fairness than Marxist lecturers driving Volvos to long-weekend cottages in Wales and commiserating with the working class during 6 month vacations. I favour free-table communism myself, though we can hardly be so dire as to found it on top of a slave economy. My experience in 40 years at work is you can rarely do the right thing without subverting the bureaucracy. The idea of academics as ‘Pinkos’ is ludicrous, as you correctly point out. That ‘we’ should be bothered is an indicator of poor education. skippy March 29, 2014 at 10:40 pm L.A.P.D. obviously was not part of that experience… snicker. allcoppedout March 30, 2014 at 1:32 am We wanted to be Choirboys Skippy. It just doesn’t work with our small truncheons and lack of hand guns. We can turn accidental deaths at a soccer match into a 25 year series of enquiries blaming the deaths on the drunken bastards who died. Each enquiry is now known to be a cover up of the last one. Some far, they have found 200 false alterations of statements by police and 50 more false alterations of statements by cops investigating the cops. There now seem to be 30 cops who should be charged or disciplined. Oddly, they have all retired. We are not expected to find 25 year investigations into cops who serve an average 25 years suspicious. Ramparts would emerge here in about 2050 and probably be reported as a series of accidental shooting unrelated to corruption. skippy March 30, 2014 at 2:48 am I just did not like the ones that took the offers from business, you know goods and services to be around or the ones that partook but. apprehended others for the same conduct, nor the corn fed kids brought out of the country to serve in the city – just because they were big. To bad most of their work is socioeconomic and not serving the peace. skippy… really regret teaching the military grade stuff to them… bug eaters. Abe, NYC March 29, 2014 at 10:32 am I thought Ukraine had no choice: it couldn’t default on its debt because it needed the support of the West. If their debts are really mostly owed to Russia, of course they should default. They couldn’t do worse than Argentina, and Russia had a boom post-1998. Ukrainians have strong human capital, which they will hopefully be able to put to good use now. I have no doubt in the long term they will do better than Russia, which is not only kleptocratic but also repressive, authoritarian, and obsessed with delusions of grandeur. The question is, how long is long term. 1 Kings March 29, 2014 at 12:26 pm ‘Klepto, repressive, authoritaran, and obsessed with grand delusions’. Hmm… now where have I seen these attriubutes applied somewhere locally?… Abe, NYC March 29, 2014 at 2:15 pm Yep. But it’s a question of degree. According to Marx, quantity transforms into quality, and Russia’s regime is so far down this road that it’s qualitatively different from the US or any other in the West. guest March 29, 2014 at 4:18 pm “If their debts are really mostly owed to Russia, of course they should default.” There have been increasingly irritated grumblings in Austria and Italy for the past six months or so because banks such as Raiffeisen and Unicredit have lent billions to Ukrainian businesses kleptocrats — billions which are at a high risk of having to be written off as irrecoverable. And of course, Austria and Italy have plenty of problems with propping up their rotten banks already. Hence, expect much wrangling to ensure that no default whatsoever takes place, and that the IMF bailout package benefits those hapless EU bankers — again… Abe, NYC March 29, 2014 at 5:33 pm That seems more likely to me, and that would illustrate just how desperate Ukraine’s position really is. If they default, they risk losing Europe’s support with enemy at the gate. If they accept fresh loans, they risk turning their economy over to the City and Wall Street oligarchs. And they fought and died to prevent their economy being turned over to the Russian oligarchs (of course, to support the oligarch-in-chief, Prof Hudson conveniently dismisses the struggle for the soul of the country as a Neo-Nazi coup). To sum up…. Ukraine is too small and its situation too precarious to conduct an independent economic policy, not to mention the transitional nature of the current government. It’s caught between resurgent Russian imperialism on the East, and the softer version on the West. With it become another Poland or another Greece – only time will tell. bob March 29, 2014 at 5:59 pm Time for another Italian tax holiday? Fiver March 29, 2014 at 3:09 pm I have real problems with this argument. 1) Just because Russia, Russian companies, and some Russian individuals are owed much of the money does not mean Putin and Obama conspired to enforce payment, which is what Hudson is essentially claiming. Russia could’ve attained that goal by doing nothing while Ukraine’s finances imploded on their own, or when Russian demanded gas payments or whatever. You have to wind this back. Putin’s goal over time has been to renew Russia and to establish stronger economics linkages with some of the former Soviet Republics. For that, just like anywhere else, he needed peace and stability, not a volcano on his doorstep. 2) The notion that the neocons were engaged in this subversive activity without Obama’s knowledge is ridiculous. We knew about it, so how could he not? If Hudson is correct, a number of Americans have committed very serious crimes, and Obama’s interest would be to finally lay the lumber on them. I see no evidence of that. 3) The IMF deal is going to devastate the Ukrainian economy, which is closely connected to the Russian economy. Russian business is going to take it on the chin, Ukraine will go even further into debt and most importantly, its society is going to explode. The great majority of Ukraines have no idea what’s about to hit them, and of course the eastern half of the country was disenfranchised by the coup. Russia has no interest whatever in having a collapse in Ukraine. The Russian offer of $15 billion had none of the idiotic IMF smash and grab conditions attached to it. 4) Huge US and EU corporations and “investors” are slavering at the opportunity to snap up Ukrainian assets that will be going up for sale. Sure, Russia can also bid, but Cargill, ExxonMobil, Chevron, John Deere – in other words, big resource and agricultural outfits – already in Ukraine are going to go hog wild. This has been set up for looting on a stupendous scale. 5) Setting off the biggest crisis in the post-Soviet era surely was taking the long way around to get Putin’s ‘help’ in Syria, on Iran etc., especially when one considers Russia has actively opposed US policy on both. No sir. This was an effort to de-stabilize Ukraine and to put extremely heavy pressure on Putin. Obama was undoubtedly part of it, but as with earlier gambits, has been called. The difference between Obama and the neocons is that Obama is not quite insane – at least let’s hope so. This is not over by a long shot, and as noted, the situation internally in Ukraine is going to get dramatically worse. The damage already done to Ukraine and Russia is in many tens of billions of dollars. Hudson is whistling past the graveyard if he thinks Putin would be anything other than livid over what has taken place – and rightfully so. Fortunately, Putin is an adult. Let’s hope the children don’t drive him to the brink. allcoppedout March 29, 2014 at 10:59 pm I agree a lot of this Fiver, though I think Michael is just pointing to standard looting practices. I’m not sure Russian or Chinese money is any sounder than IMF/World Bank financing. The common factor in all of it seems klepto or vulture. We lack the transparent money-trails, but who ends up with the money in the British Virgin Islands and money-laundering exempt properties in London, New York, Vancouver and the rest? In Moldova and Ukraine I was given a driver to ‘make sure the Russians didn’t get me’. I suspect finance is just exploiting the very real tensions and hatreds of hundreds of years. Any society we might have validly transferred to the former Soviet Block, Middle East or Africa is largely gone in USUK anyway. And if we went back to 1751, I guess most of us would have sided with Moscovites against the raiding Crimean Tartars who sacked Moscow and took thousands into slavery. Though our governments might not have in order to keep Russia weak. Evidence of development aid bringing democracy and genuine benefits across communities seems amazingly absent. Chauncey Gardiner March 29, 2014 at 3:09 pm This is a deeply informative interview with Dr. Hudson. Thank you for posting it. I would also like to know the exposures of Western banks to the Ukraine, both directly and indirectly; the potential effects of defaults on Western banks; and the role that Neocon-RW Israeli ire over Putin’s success in forestalling military action in the M.E. has played in these developments. It seems to me that much of the information iceberg still lies hidden, largely undisturbed below the surface. These developments are rarely undertaken for only one reason. I am not a fan of corrupt, totalitarian regimes anywhere, and those families of members of Russian media who have been murdered and those who have protested and visibly opposed the corruption of the current regime and been imprisoned there have my deepest sympathies. Nonetheless, the corporate media in the U.S. has lost so much credibility over the past three decades as to have become almost irrelevant to me. As an American citizen I still question why the situation in Ukraine is in our national interest and of more than passive interest to the USG. Banger March 29, 2014 at 7:01 pm I think Russian cannot be described as a totalitarian state, not even close. It is a state with a strong authoritarian character that deals rather harshly with people the leadership considers dangerous. The U.S. is less authoritarian and there’s much more scope for dissent–but also the U.S. leadership is much more secure and not under constant covert and, at this point, overt assault by foreign powers the way Russian currently is. Forces in the American nexus of power would certainly not hesitate to murder anyone who was a threat as they have on many occasions when they were directly threatened. allcoppedout March 29, 2014 at 11:56 pm There are about 143 million Russian citizens, with 81% identifying themselves as Russian ethnic, So that’s about 120 million Russians in Russia. There are about 128 million Japanese (98.5% ethnic Japanese). There are about 62 million Brits (92% ethnic white). I suspect Britain and Japan would fit into Ukraine. Just a bit of perspective. British firms are doing large-scale farming in Ukraine, sometimes for Middle Eastern interests. Next year’s wheat harvest in Saudi will be the last (aquifers screwed) and Syria is screwed by global warming (aquifers screwed). Seen the pics of dust storms across the US? I’m only guessing, but there seem some real reasons to suspect there are plenty with interests in depressing Ukraine land prices. Screwing the currency and having kleptos in government are usually key in land grabs. Off hand, I wonder who is buying Argentina too. There are about 700 million in the Middle East and North Africa with decreasing food/water supply. There is money. Only thinking we might need a bigger spreadsheet on the looting. With food prices rising sharply, the smart money may be looking for farming land. I guess Putin’s anschluss of Crimea puts him in a good position to threaten a blockage of the Ukraine’s other ports should they get sniffy about the pipeline that runs near Kiev. Most MENA potentates know their regimes wobble on increasing wheat and rice prices and might do a long-term deal to develop farming in Ukraine (convenient transport at Odessa) and maybe Moldova. Full circle to 1751 and the slave trade then? Only no need to transport the people. They can work on western-owned mega-farms as serfs now MENA is screwed by global warming. Even Putin might like this plan as threats to shut off his gas could be countered with threats to blockade Odessa or the Bosporus once the valuable food trade was established. Ray Phenicie March 29, 2014 at 5:21 pm The Obama administration is in violation of laws that forbid giving aid to a government that sits in power after a violent overthrow. Also, the CIA may have had a lot to do with this whole mess. http://www.4thmedia.org/2014/03/14/obama-and-kerry-ignore-u-s-law-on-aiding-ukraine-coup-leaders/#.UyT8QZxXMac.facebook bob March 29, 2014 at 6:18 pm What is the current state of industry in Ukraine? I haven’t been able to find much on this at all. Yeah, the “economy” sucks, but what capacity do they have? A lot of the Russian/USSR space program was developed in Ukraine, as well as other aerospace tech. http://en.wikipedia.org/wiki/Antonov http://en.wikipedia.org/wiki/AJ-26 “In 2010 stockpiled NK-33 engines were successfully tested for use by the Orbital Sciences Antares light-to-medium-lift launcher.” Stockpiled? They were stolen out of Ukraine. Orbaital Science ended up slapping a new badge on them and competing with Elon’s stolen US based ideas. Feature, or bug? bob March 29, 2014 at 6:30 pm Oh, there is a court case pending…. http://www.parabolicarc.com/2013/12/13/court-rejects-ula-motion-dismiss-orbital-lawsuit-rocket-engines/ bob March 29, 2014 at 6:37 pm One more name- http://en.wikipedia.org/wiki/Yuzhmash bob March 29, 2014 at 6:43 pm http://en.wikipedia.org/wiki/National_Space_Agency_of_Ukraine The idea that Ukraine is in a class with Ecuador is insane. You don’t go from potato’s to rocket launches. Lots of very heavy industry, knowledge and skilled labor in between. Yves Smith Post authorMarch 30, 2014 at 1:07 am I read somewhere that Ukrainian heavy industry is lousy, basically steel-making with old plants and high production costs. Russia buys the stuff to help the Ukraine out. So where will they find replacement customers? bob March 30, 2014 at 1:56 am I went wandering this afternoon on that. It seems the IP is very valuable, and has already been looted. For this reason both the US and Russia are on the same side. Both win with less industry in Ukraine. I did discover some very interesting links between US and Russia “space” firms. Touched on in that lawsuit link- http://en.wikipedia.org/wiki/RD_AMROSS Do ‘they’ know there are Russians building rockets in Florida? allcoppedout March 30, 2014 at 2:11 am This page at google scholar gives access to some reasonable free papers. The one by Kishnirsky from 1994 is old but gives a good idea of the post-transition stage. I’ve been to Kiev a few times since. Unemployment and poverty are very obvious once you leave the westernised hotel/restaurant/stripclubs behind. My elder daughter speaks great Russian and we got a lot of opportunity to meet the people. The following is quite accurate: http://kse.org.ua/uploads/work,%20employment%20and%20society.pdf Everywhere I’ve been in Eastern Europe there was a massive presence of super-educated workers and no real jobs. This and so-called transition economics finally made me realise our economic and business models were complete dulldung. Huge amounts of the Ukraine are agrarian although much of the land is hardly farmed by western standards. Inefficiency is everywhere. Some good points here – http://www.policy.hu/mykhnenko/Institutions_Advantages_Performance_of_Eastern_European_Capitalism.pdf People survive by not paying bills and in black market activities. People have left in droves. ‘We’ promised them transition in 150 days! Women and kids are trafficked. I no longer believe we can start anywhere without analysis of what needs doing to provide full employment, including restricting imports and making modular economies. We should change the way we regard comparative advantage and insist on egalitarianism of some kind. Abe, NYC March 29, 2014 at 7:35 pm It’s hard to have a good assessment of Ukraine’s industry. It used to be one of the most developed republics of the USSR. It appears though the industry has slowly deteriorated over the past 20 years, hasn’t seen much investment. Of course unlike Russia, Kazakhstan, or Azerbaijan, Ukraine doesn’t have much oil. In addition, most of Ukraine’s industrial facilities are in the Eastern, mostly Russian-speaking parts. Having said that, off the top of my head I can only name two world-class brands unrelated to raw materials, that come from the former USSR: Kaspersky and Nemiroff. The latter is Ukrainian. Jackrabbit March 29, 2014 at 9:48 pm Hudson claims that the neocons want to disrupt US-Russian cooperation. I’m not sure that that makes sense because it seems to me that there’s been more friction between US and Russia lately. I think Russia backed Iran more than the US/neocons would like. I think the neocons benefited from the anger of the security state toward Russia for not returning Snowden. And I think Putin’s refusal to allow bombing of Syria irritated the neocons. (Taking out Assad would accomplish much for the neocons: it eliminates a potential threat to Israel, eliminates an ally of Iran, ends Russia’s port access and allows for gas pipelines to Europe.) So an alternative view would be that revolt and an unfriendly govt in Ukraine was a way to sideline Russia by getting them bogged down in Ukraine affairs. Thus allowing neocons to focus on Syria and Iran. What really gives credence to the view, I think, is the NGOs and Sochi Olympics. Putin got tired of the US effort to use NGOs to make trouble and took action against them. And the US/West did what it could to highlight human rights abuses and the potential for terror at Sochi. Importantly, the view that Hudson espouses here seems to (conveniently) let the Obama/the Obama Administration off the hook. Hey, it was those rouge neocons that caused this foreign relations clusterf@#k! No. Obama/the Obama Administration is knee deep in this muck. It seems clear by Nuland’s call (she was arranging for administration officials like Biden to make an appearance) and Obama’s actions that they FULLY supported Nuland’s efforts. Lafayette March 30, 2014 at 6:35 am Hudson has got a lot of facts dead wrong. First of all, the Ukraine has every right to ask an International Court to negotiate a settlement with Russia over the Crimea. Russia is not getting off scot-free and the Ukraine can be expected to be indemnicized for its agreement that the Crimea revert to the Russia. I figure that’s worth about the same amount that the Ukraine owes Rosneft (?) for past gas purchases (of about $12B). After all, the real reason Russia occupied the Crimea is because Sevastopol houses its Mediterranean navy fleet, and from the Black Sea through the Dardanelles is the only way the Russian Navy can get out to the Mediterranean Sea. Also, I cannot imagine why Hudson thinks that the US needs Russia for anything. Certainly not Syria, where Putin is adamant at sustaining the Assad government in power – despite its atrocities to the Syrian people. And, no, there will not likely be any large expatriation to the West for young Ukrainians. They are not members of the EU (today) and therefore they will have not the same privileges as EU-nationals – who can go from EU country to country without the need of asking each for a work-permit. The Poles do have such a right, which is why so many Polish doctors have turned up in both France and the UK … Otoh, what could happen is that the EU could indeed seek skilled Ukrainians to whom they will contract development work, especially in Information Technology. As long as the Ukrainians will bid their services at lower-cost prices (and stay home). The REAL AND PRESENT DANGER are the Ukrainian oligarchs. The Ukraine just got rid of one such president (Loukanovitch), but seems to be electing (today) yet another. What the Ukraine needs most is good management, and not from someone who, because of crony-contacts, obtained a privileged status (in the gas/oil resale business) after the Soviet Union fell into ruin, then bilked the Ukrainians to amass large fortunes. The perhaps best known of which is Yulia Timoschenko. Banger March 30, 2014 at 7:50 am Clearly you make several assumptions. First, the coup in Ukraine overthrew an elected government using, in part, U.S. funds and solid political support by the EU and US. There was a remedy to the abuses of the President it was called impeachment. Since the pattern here is similar to many covert operations on the part of various U.S. government agencies since, at the very least, WWII I consider the current “government” in the Ukraine not to be particularly valid. Second, as for Russia’s takeover of the Crimea–heavy handed and, at best, semi-legal but understandable considering the intent of U.S./EU policy is to harass and undermine Russian power not just on the periphery but within Russia as part of the attempt of the usual power politics that has gone on for some time in the region. Plus the referendum was there and I”m sure it reflected the will of the people who live in Crimea–I don’t know who doubts that. Finally, you accept, uncritically it seems, the account of Western media who have turned out to be little more than propaganda organs for the ruling elites–particularly the U.S. media that still, despite the criticisms following the Iraq debacle (one of many) parrots whatever the USG tells it without fact-checking or dissent except at the edges. I’m not saying I know the full truth but I do know that if its in the American mainstream and it involves national security concerns it is probably wrong. sadness March 30, 2014 at 2:08 pm ….a late question, so possibly forgotten (moi with too much else to do)….but the interesting question for me is “what would have been the difference for ordinary folk if Ukraine had gone with the Russian money and therefore stayed away from the EU?” ….and another thing: ‘do neolibs and neocons not talk to each other about their world domination plans?’ …. or am i missing something Comments are closed. Tip Jar Please Donate or Subscribe!