COTW: The Ukrainian Connection

US Person is already known for his "anti-business" rants. So he will post this item without comment other than to refer his readers to his previous posts concerning one of the causes of the Ukrainian civil war: "Burisma Holdings, Ukraine's largest private gas producer has expanded its Board of Directors by bringing on Mr. R. Hunter Biden as a new director." Need he say more other than Hunter is the fortunate son? Need a second opinion? Ask retired Colonel and former aide to Colin Powell, now Professor, Lawrence Wilkerson, who says oligarchs control US foreign policy because war or just international volatility is profitable. Or how about former National Security Adviser, 'Zbig' Brzezinski? He wrote: "America's global primacy is directly dependent on how long and how effectively its preponderance on the Eurasian continent is sustained." Toward that end, the coup in Kiev was western instigated, supported by neo-Nazi militias, and regardless of the anti-Russian propaganda the corporate talking heads spew from their digitized bully pulpits. For a quarter of a century, Ukraine has been the football in a game of geopolitical domination between East and West according to the Financial Times.

Besides highlighting western corporatists' efforts to capture Ukrainian oil and gas, the crisis in Ukraine is bringing to a head Russia's efforts to escape the petrodollar strait jacket. Russia's Ministry of Finances is ready to begin phasing in the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. On April 24th the government organized a special meeting whose subject was finding a solution for "de-dollarizing" Russian export transactions. The meeting was chaired by First Deputy Prime Minister Igor Shuvalov. Of course such efforts depend on cooperation from Russian trading partners. China is ready to sign contracts with payments in a currency other than dollars and so is Iran. President Putin will visit Beijing on May 20th and bilateral trade will be on the top of his agenda.

Western sanctions will be ultimately ineffective against a resource-rich nation like Russia. Trade between the US and Russia is only 1% of US trade. Some large US companies rely on Russian natural resources such as Boeing which plans to buy $18bn worth of Siberian titanium and has already invested $7bn in Russia. However, Europe is much more vulnerable to Russian economic retaliation [chart below]. A gas cutoff by Gazprom, which it threatened recently, would wipe out Ukraine's supply and severely disrupt supplies to the EU. The recent delivery of crude oil from the Russia Arctic was made to Total, a French international oil company. Russia's ability to drive economic wedges between western allies is demonstrated by the French government's announcement this week that is will deliver two Mistral helicopter carriers despite requests to cancel the sale. Russia also conducts a significant grain export trade with Europe. Its gold bullion reserves and gold mining capacity pose a significant restraint for western financial oligarchs dependent on the dollar maintaining it value in international exchange. Some reasons why the sanctions imposed so far are targeted at individual allies of the "new Hitler", Vladimir Putin, not entire economic sectors. Ukraine is a dangerous geopolitical game that can spin out of control at any moment. President Putin must avoid loosing his balance to the West by invading a region obviously partial to Moscow.