Warning: Ukraine Is At A Flashpoint

By: Chris Martenson | Wed, May 7, 2014
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Ukraine Is At A Flashpoint

The stability between Russia & the West is failing

Sunday, May 4, 2014, 1:16 AM

Regrettably, I am very close to issuing an official Alert over the situation in Ukraine as it has continued to both escalate and deteriorate.

More than 50 people died in violence on Friday, May 2, in Odessa and other eastern cities in Ukraine. Relations between Russia and the US are finding new lows while China and Russia grow closer.

For those living in Europe who are exposed to the possible fallout that would result from the loss of supplies of Russian energy, the time to begin preparing is right now. As we say often on this site, you'd much rather be a year early than a day late in your preparations.

The situation involving the tug of war between the West and Russia regarding Ukraine has steadily worsened over time and now involves outright economic warfare. Certainly, if Russia had levied sanctions on American and European individuals and companies similar to those levied by the West on Russian targets, we can only imagine the howls of protest the West would make over such obvious 'provocations' and 'acts of war'.

For an already weakened western and Japanese financial system that is still heavily leveraged, the risks are very high for financial blowback by Russian - and possibly Chinese - agencies. Imagine a possible energy war, where Russia basically cuts off gas for Europe (that could spill over more broadly if things go badly). Or even more worrisome, a shooting war between the East and the West.

One significant risk in this story is that the die-hard 'military first' neocons who control US foreign policy have not encountered a real foe in a very long time. They appear to be under-appreciating what a real adversary like Russia could do if (when) push comes to shove.

These policy hawks only know how to push harder when things don't immediately go their way and, based on previous ridiculous notions they've held such as the idea that the Coalition of the Willing would be met with flowers in Baghdad, they are delusional.

The list of US military involvements is long, but not very impressive when considering the strength of the adversaries (dates mark start of conflict):

Of course, those are just the wars we know about.

You might notice that Iran is not (yet) on that list; but recall that the US had a spy drone shot down over Iran recently, as well as managed to insert several nasty computer viruses into Iranian industrial and governmental targets, and led the issuance of full blown country-wide economic sanctions on Iran.

Further, the US has been deeply involved in supporting the insurgents in Syria (and certainly many other places) and has recently provided those Jihadists with sophisticated and portable anti-aircraft missiles and TOW anti-tank rockets.

Warfare is now conducted on multiple fronts; one being via the usual information and propaganda channels, another being in the electronic space, a third being economic, and the final one being military. Each of them are effective and damaging in their own ways.

Warfare is what you resort to when diplomacy fails, or at least that used to be the saying. Now it seems that warfare is the preferred means of 'diplomacy' for the US and I suppose there's a certain rationale for that when your potential adversaries are small and easily over-powered.

Which is absolutely *not* the case with Russia; but before we get to that, we need some additional context.


Ukraine and NATO

The basic outline of the Ukrainian situation is not all that hard to follow: the US and Europe have been working hard for years to convince Ukraine to join the EU both economically and militarily via inclusion in the NATO structure.

Since the dissolution of the former USSR, the US has funneled some $5 billion into Ukraine to assure that it favors the West with these goals in mind.

Although $5 billion sounds like a lot, when it comes to advancing US interests abroad, it's practically pocket change.

After 15 years of wooing, the US thought it had things pretty well locked up and everything appeared to be going according to plan as recently as early November 2013. Our man in charge over there was Victor Yanukovych and he seemed to be playing ball with the West.

But everything fell apart for (the now deposed) Yanukovych -- and Ukraine at large -- in early November 2013 when he balked at what everyone thought was going to be a signing ceremony, although very few in the public knew it at the time. This editorial is from November 2013:

In a controversial move, Ukrainian President Viktor Yanukovych decided not to sign the country's anticipated Association Agreement with the European Union at a summit this week in Vilnius, Lithuania. This pact would have advanced a comprehensive framework for relations between the former Soviet republic and Western Europe. In the aftermath of Yanukovych's regrettable decision, the United States and the European Union must reaffirm efforts to help Ukraine improve its governance, strengthen its economy and deepen ties with the West.

Over the long term, Ukraine would enjoy overwhelming economic and political benefits by signing the E.U. deal. As U.S. Assistant Secretary of State for European and Eurasian Affairs Victoria Nuland told the Senate Foreign Relations Committee earlier this month, if Kiev concludes the Associate Agreement, "it will be able to export its goods" to the European Union, "the largest single market in the world, tariff-free, by early 2014."

At that same hearing, the Peterson Institute's Anders Åslund said that the pact - which also includes a so-called Deep and Comprehensive Free Trade Agreement - could add as much as 12 percent to the country's gross domestic product and boost its exports by 46 percent. The Association Agreement would also intensify efforts by the European Union and its member states to provide technical assistance to improve good governance and combat corruption in Ukraine.

Russia, however, has successfully used political and economic leverage to dissuade Ukraine from signing the E.U. deal. In the months prior to the Vilnius summit, Russian President Vladimir Putin engaged in a trade war with Kiev, blocking nearly all imports from Ukraine and cutting energy supplies to the country. In turn, this reduced Ukrainian exports by 25 percent and shrank the economy by 1.5 percent. As the Wall Street Journal reported, "Ukrainian officials say the Russian sanctions cost them $15 billion in lost trade and could run up to half a trillion by signing the E.U. deal."

What's more, Åslund recently warned, "The Kremlin has publicly threatened to drive Ukraine into default," adding: "Once again, as in January 2006 and January 2009, the notoriously unreliable Russian state-dominated gas company Gazprom may cut its supplies to Ukraine."

(Source)

The basic theme here is that Ukraine was caught in a tug of war. On the one side you had the EU offering plenty of economic carrots, but virtually no tangible assistance besides "Hey, we'll buy a lot of stuff from you...we promise!" while Russia was supplying Ukraine with lots of tangible assistance in the form of heavily-subsidized natural gas. Moreover, Russia was owed a huge amount of money in back payment for natural gas already shipped to and used by Ukraine.

The spurned West was outraged by that last minute scuttling of the Association Agreement by Yanukovych. Almost immediately, it began working on supporting his opposition and eventual replacement. By failing to sign that agreement, Yanukoyvych had sealed his eventual ouster and indeed he was gone within months.

Of course, nothing happens in a vacuum, and the above article does little to help us understand why Russia was messing with the plans of the Western meddlers. There's a lot of missing context in that article, as there seems to be in nearly every article I've read from western sources. So, we must dig a bit deeper.


NATO - The Missing Context

The essential and missing context concerns the fact that, back in the early 1990's when Mikhail Gorbachev agreed to the reunification of Germany, he got an explicit agreement from then US Secretary of State James Baker that NATO would "not move one inch to the East".

Without ever renegotiating that agreement, NATO (quelle surprise!) proceeded to move into a dozen countries to the East over the following years. When it started making the move on the final piece of the chessboard -- the Ukraine -- Russia, understandably and for a number of reasons, was not too keen on that.

We might consider Ukraine the final straw for a very patient Russia that did not resist as NATO steadily advanced East many millions of inches. Here's a recent map of NATO membership:

Nato Expansion

On March 12 1999, the Czech Republic, Hungary and Poland joined NATO.

Then, on March 20 2004, Bulgaria, Estonia, Latvia, Lithuania, Slovakia and Slovenia all joined.

And finally on April 1 2009 Albania and Croatia joined.

Now the really interesting part of this story is that the original reason NATO was founded for was to counteract the combined strength of the former Soviet Union. Note that several of the recent NATO members are former members of the Warsaw Pact, which was the USSR's equivalent of NATO.

So if NATO represents no threat to the East, as the feckless western press regularly implies, then why all the military advancement towards the East? Why have NATO at all in these post-Soviet days?

An easy answer that makes sense here is that the West, indeed, still considers the East a threat and is doing what it can to assert its dominance to prevent that threat from materializing. It's just a big power game. The unfolding events have about as much to do with advancing democracy as Donald Trump's hairpiece has to do with advancing good taste.

After so much prior success in steadily advancing NATO eastwards, the EU and the US thought they could just roll up Ukraine, too. But their efforts were stymied by Putin and the West has not responded to that 'provocation' very well. Which brings us to the present.


Diplomacy By Other Means

Apparently, instead of trying to resolve the situation through normal diplomatic channels, the US decided that the best path forward was to get rid of Yanukovych by any means necessary and get someone (anyone!) else installed who might be more compliant to US wishes.

There's plenty of supporting evidence to make the claim that much of the recent political and social turmoil in Ukraine was due to US involvement (although that should be the first assumption of anybody who has paid the slightest bit of attention to the conduct of US foreign policy over the past decades).

Okay, so here's the plot so far. The President of Ukraine, the not terribly likeable and corrupt Yanukovych, balked at the EU Association Agreement in November 2013. After booking a hasty plane ticket, US Senator John McCain landed in Kiev soon after in December, meeting with the various players that might reasonably depose the President.

McCain meets Yatsenyuk and Tyahnybok
(Source)

That's what happens when you disappoint the US. You can expect them to come after your job even if you happen to be the President of a country of 45 million people with a territory the size of France.

Please note that even as McCain was shaking hands with the next leader of Ukraine, Yanukovych was still the properly elected and sitting President, and would be for several more months.

We next draw your attention to the recording of Assistant Secretary of State Victoria Nuland speaking with US Ukrainian ambassador Pyatt leaked in February of 2013. Almost certainly, it was Russia that recorded and leaked this conversation -- as it was (and still is) mightily embarrassing to prior US claims that it was simply a detached observer with an interest in Democracy.

Instead, what the transcript clearly shows is that the US was actively plotting to work with various and specific opposition leaders before the then-sitting President had been removed from office. According to my dictionary, this is the definition of a coup d'état.

Here's a portion of that transcript:

Pyatt: I think we're in play. The Klitschko [Vitaly Klitschko, one of three main opposition leaders] piece is obviously the complicated electron here. Especially the announcement of him as deputy prime minister and you've seen some of my notes on the troubles in the marriage right now so we're trying to get a read really fast on where he is on this stuff. (...)

Nuland: Good. I don't think Klitsch should go into the government. I don't think it's necessary, I don't think it's a good idea.

Pyatt: Yeah. I guess... in terms of him not going into the government, just let him stay out and do his political homework and stuff. I'm just thinking in terms of sort of the process moving ahead we want to keep the moderate democrats together. The problem is going to be Tyahnybok [Oleh Tyahnybok, the other opposition leader] and his guys and I'm sure that's part of what [President Viktor] Yanukovych is calculating on all this.

Nuland: I think Yats is the guy who's got the economic experience, the governing experience. He's the... what he needs is Klitsch and Tyahnybok on the outside. He needs to be talking to them four times a week, you know. I just think Klitsch going in... he's going to be at that level working for Yatseniuk, it's just not going to work.

(Source - BBC)

What's being discussed here is an assessment of which of the several possible replacements for Yanukovych might be in the US' best interests. The person selected, "Yats", was indeed the eventual replacement, and he did indeed get a coveted visit from the Vice President of the US, Joseph Biden, as promised, with a later meeting at the White House.

However, you should know that Yatseniuk is a member of the Fatherland Party, of which Yulia Tymochencko (she of the famous and iconic hair braids) is a member. Tymochencko is most recently (in)famous for saying that the ~8 million Russian speaking citizens in her country should be 'nuked'. She pretty much has generally called for wiping out all Russians and Russian speaking people from the Ukraine.

An even worse character is the other figure in this dialog, Oleh Tyahnybok. He's the leader of the Svoboda party, which is a not-very-nice group of ultranationalists with inclinations towards xenophobia, anti-semitism and fascism.

Here's some relevant information on the Svoboda party, which has 36 out of 450 seats in Parliament.

The leader of Svoboda, Oleh Tyahnybok, who has appeared at the Kiev protests, has a long history of making inflammatory anti-Semitic statements, including the accusation during a 2004 speech before parliament that Ukraine is controlled by a "Muscovite-Jewish mafia." Miroshnychenko also called the Ukrainian-born American film actress Mila Kunis a "dirty Jewess."

Tyahnybok has also claimed that "organized Jewry" dominate Ukrainian media and government, have enriched themselves through criminal activities and plan to engineer a "genocide" upon the Christian Ukrainian population. Another top Svoboda member, Yuriy Mykhalchyshyn, a deputy in parliament, often quotes Nazi Propaganda Minister Joseph Goebbels, as well as other Third Reich luminaries like Ernst Rohm and Gregor Strasser.

(Source)

Goodness gracious. These are the sorts of people that the US has decided to support after Yanukovych disappointed its efforts at corralling Ukraine?

One of Russia's chief complaints all along, besides the obvious transgression of the NATO agreement, has been that the Ukraine has a bad history when fascist elements get in charge. Russia, understandably, believes it has a strong and compelling interest in seeing that such groups do not take power on its western border.

We might reasonably imagine that if, say, a group of people in Mexico or Canada with a long history of inciting hatred and violence against Americans were seeking to take over the country, the US would have a compelling interest in preventing their success.

In managing the PR for this power transition within Ukraine, we see a concerted attempt to win over public opinion by hidden power players masquerading as grassroots activists, on fine display in this excellent video that went viral:

I am a Ukranian - Whisper Roar
(Source)

Having been viewed more than 8 million times, this video can be called effective at getting its message across.

However, if we look at who put that video up, we see the name Whisper Roar at the bottom. When we track that down, we find that it's an organization putting out very professional video and movie assets that happen to tell just one side of the Ukraine story.

This video, then, was not produced by a young Ukrainian woman by herself - she had very professional and deep pocketed help from western interests and governments.

Whisper to Roar is staffed at least in part by US NGO personnel, and is very closely aligned with Yulia Tymoshenko of the Fatherland Party, the very same one that the US now backs in Ukraine. Here's a group photo of the key Whisper to Roar staff taken form their website:

Whisper to Roar
(Source)

The woman with the braids is none other than Yulia Tymoshenko, who apparently thinks Russian speaking Ukrainians should be nuked. Perhaps that explains why so many wish to rejoin Russia..

And do you see that guy in the middle marked by the red arrow? That's Larry Diamond, described as the executive producer and inspiration for the project. And who's he? A big player in the world of advanced statecraft with an interesting background:

During 2002-3, Diamond served as a consultant to the U.S. Agency for International Development (USAID) and was a contributing author of its report Foreign Aid in the National Interest. He has also advised and lectured to the World Bank, the United Nations, the State Department, and other governmental and nongovernmental agencies dealing with governance and development. During the first three months of 2004, Diamond served as a senior adviser on governance to the Coalition Provisional Authority in Baghdad.

(Source)

I pulled the above bio from the website of the National Endowment for Democracy (NED) where Mr. Diamond now works, at least part of the time. He seems to be a busy guy, so I assume he has other roles at other organizations, too. For the record, anybody involved with the Coalitional Authority in Baghdad is automatically on my personal probation list because I consider the entire Iraqi adventure to have been illegal at the start and deeply corrupt throughout.

To have been a part of all that means he was on the inside of a very illegitimate episode in history.

The NED is an NGO fully funded by the US government with the intention of 'spreading democracy' around the world. In this case, though, it looks like they spent their money producing and spreading a very effective piece of propaganda rather than advancing the intellectual case for why a US-style democracy (whatever that means in today's oligarchical and very un-democratic US framework) would be in the best interests of the Ukrainian people.

The NED has long been a supporting player in the role of bringing Ukraine into the EU and NATO fold. It has funded numerous meetings and writing meant to further that exact agenda (as pulled from their own website).

At any rate, that viral video supposedly telling the tale of a passionate, pretty Ukrainian woman is actually a professionally-produced piece made by people with deep ties to both the US government and the specific parties in the Ukraine that the US just happens to be backing.

In other words: propaganda. Which is fine, I suppose, as long as you are not trying to also claim that it is only Russia being the provocateur in this story, as the US still maintains. Or tries to.


What Comes Next?

Okay, so that was a long tour through just some of the antics surrounding the US' involvement in bringing about change (you can believe in!(TM)) in the Ukraine, and it's by no means complete. I raise these items to counter the usual clutter and complete lack of context being provided in the US press and to illustrate that the US is already in pretty deep and therefore unlikely to back down now.

Before we move on, do you not find it at all strange that the US media, usually extremely sensitive to anti-semitism, has given the McCain and Nuland support of the Svoboda party a complete pass? I find it to be like the case of "the dog that did not bark", meaning the silence reveals a very fickle moral compass at the heart of the western press.

The demonization of Putin as the bad guy here is near complete in western media. But there's plenty of mischief all around and, as usual, the US finds itself with some pretty strange bedfellows as it seeks an outcome it likes.

 


In Part 2: How This Situation Can Quickly Get Much Worse, we look at the severe retaliatory damage an angry Russia can inflict on Western interests and lives -- and that's before considering the military angle. The West has already initiated economic sanctions with Russia; and so Russia is eyeing using its vast energy resources -- which Europe is very dependent on -- as a club to swing back in return. Both of these are forms of warfare, which increasingly risk pushing us over the slippery -- and terrifying -- slope towards outright military conflict.

Click here to access Part 2 of this report (free executive summary, enrollment required for full access).

 


 

Chris Martenson

Author: Chris Martenson

Chris Martenson
Peak Prosperity

Chris Martenson

Executive summary: Father of three young children; author; obsessive financial observer; trained as a scientist; experienced in business; has made profound changes in his lifestyle because of what he sees coming.

I think it's important that you understand who I am, how I have arrived at my conclusions and opinions, and why I've dedicated my life to communicating them to you.

First of all, I am not an economist. I am trained as a scientist, having completed both a PhD and a post-doctoral program at Duke University, where I specialized in neurotoxicology. I tell you this because my extensive training as a scientist informs and guides how I think. I gather data, I develop hypotheses, and I continually seek to accept or reject my hypotheses based on the evidence at hand. I let the data tell me the story.

It is also important for you to know that I entered the profession of science with the intention of teaching at the college level. I love teaching, and I especially enjoy the challenge of explaining difficult or complicated subjects to people with limited or no background in those subjects. Over the years I've gotten pretty good at it.

Once I figured out that most of the (so-called) better colleges place "effective teacher" pretty much near the bottom of their list of characteristics that factor into tenure review, I switched gears, obtained an MBA from Cornell (in Finance), and spent the next ten years working my way through positions in both corporate finance and strategic consulting. From these experiences I gather my comfort with numbers and finance.

So much for the credentials.

The most important thing for you to know is the impact that the information that I've now placed on this site had on me. Let's do this as a Before and After.

Before: I am a 40-year-old professional who has worked his way up to Vice President of a large, international Fortune 300 company and is living in a waterfront, 5 bathroom house in Mystic, CT, which is mostly paid off. My three young children are either in or about to enter public school, and my portfolio of investments is being managed by a broker at a large institution. I do not really know any of my neighbors, and many of my local connections are superficial at best.

After: I am a 45-year-old who has willingly terminated his former high-paying, high-status position because it seemed like an unnecessary diversion from the real tasks at hand. My children are now homeschooled, and the big house in Mystic was sold in July of 2003 in preference for a 1.5 bathroom rental in rural western Massachusetts. In 2002, I discovered that my broker was unable to navigate a bear market, and I've been managing our investments ever since. Since that time, my portfolio has gained 166%, which works out to a compounded yearly gain of 27.8% for five years running (whereas my broker, by keeping me in the usual assortment of stocks, would have scored me a 38% return, or 8.39%/yr). I grow a garden every year; preserve food, know how to brew beer & wine, and raise chickens. I've carefully examined each support system (food, energy, security, etc), and for each of them I've figured out either a means of being more self-sufficient or a way to do without. But, most importantly, I now know that the most important descriptor of wealth is not my dollar holdings, but the depth and richness of my community.

I hope you find what I have to offer here useful.

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