EU Antitrust Case Against Gazprom: Allow Backflow to Ukraine, Beat Back Pipeline to Greece

The New Cold War enters a potentially more dangerous phase today with the announcement (James Kanter, "E.U. Charges Russian Energy Giant Gazprom With Abusing Its Dominance") by the European Commission that it will bring antitrust charges against Russia's Gazprom:

BRUSSELS — European antitrust regulators on Wednesday charged the Russian energy giant Gazprom with abusing its dominance in natural gas markets, a move amounting to a direct challenge to the authorities in Moscow. 

The European Commission, the European Union’s executive arm, said that unfair pricing might have resulted in higher gas prices in Bulgaria, Estonia, Latvia, Lithuania and Poland, which have long been wholly or substantially dependent on Russian gas. In those countries, the commission said, Gazprom was suspected of charging wholesalers prices that were significantly higher compared with the company’s costs or to benchmark prices. 

The commission also suspects Gazprom of quashing competition by restricting gas flows to some parts of Europe. Gazprom seems to be “pursuing an overall strategy to partition Central and Eastern European gas markets, for example by reducing its customers’ ability to resell the gas cross-border,” the commission said.

The commission also said that Gazprom might have been leveraging its dominant market position in Bulgaria and Poland by making supplies of gas conditional on those countries’ participating in infrastructure plans such as building a new pipeline route to Europe under the Black Sea.

“Keeping national gas markets separate also allowed Gazprom to charge prices that we, at this stage, consider to be unfair,” said Margrethe Vestager, the European Union’s competition commissioner. 

“If our concerns were confirmed, Gazprom would have to face the legal consequences of its behavior,” she said. 

The charges make it more likely that Gazprom could eventually face a fine theoretically running higher than 10 billion euros, or about $10.7 billion. But the larger worry for Gazprom is the prospect of being forced to allow more competition in markets it has long controlled. Russia supplies about one-third of the European Union’s natural gas.

Gazprom said in a statement that it “considers the objections put forward by the European Commission to be unfounded.”

A couple points need to be made. First, Gazprom is synonymous with the rebirth of the Russian state under Putin. With the success of Gazprom you have the success of Russia with Putin at the helm. I am a believer in Russia; therefore, ten years ago, wanting to express this belief, I decided to become a shareholder in Gazprom.

Point two: Up until now, despite all the fighting in Ukraine, the destruction of the country's industrial heartland by the junta in Kiev, the myriad U.S. and EU sanctions, it has been hands off Gazprom, with a few exceptions: some financial restrictions placed on dealings with Gazprombank, a ban on the export of cutting-edge drilling technology, and the vetoing of the South Stream pipeline under the Black Sea bypassing Ukraine.

Now all that changes. James Kanter had a longer piece yesterday on the EU antitrust case, "Europe Is Expected to Bring Antitrust Charges Against Gazprom," where, even from within the standard Russophobic confines purveyed by The New York Times, he guided his readers to the end game being played here by Brussels officials -- backflow to Ukraine:

The larger worry for Gazprom would be the prospect of being forced to allow more competition in markets it has long controlled. The company, for example, could eventually have to drop conditions in its contracts that restrict those utilities’ power to share the gas with other countries. That would give individual countries more control over whether they consume all the gas themselves or sell some of it on to other countries, including Ukraine, something Gazprom has opposed.

An EU antitrust against case Gazprom has been hanging out there for years. Why now? I would imagine it has something to do with the deal Russia is negotiating with Greece on a pipeline. Russia could then forward cash to the Syriza-led government that would provide it with some much-needed leverage against the ghoulish troika.

I would also speculate that the antitrust case provides more proof that Ukraine as presently ruled by the junta in Kiev is not a viable state; many structural changes need to be engineered by the U.S./EU to make it one, and the ability for EU members to backflow Russian gas is key.

Oil-Price Drop Russian Currency Collapse: The Lunacy of the Washington-Riyadh Axis

A top story today is the collapse of Russia's currency. Yesterday, despite the central bank raising interest rates to 17%, the ruble reached the depths of 80 to the dollar before climbing back to 68. The ruble has lost half its value since the beginning of the year. 

What's the cause of this panic? The oil-price drop engineered by the Saudis. Saudi Arabia has refused to cut production despite demands from others in OPEC. Mike Whitney has a helpful primer on the issue, "The Oil Coup: US-Saudi Subterfuge Send Stocks and Credit Reeling," which appeared yesterday on the Counterpunch web site:

Here’s what’s happening: Washington has persuaded the Saudis to flood the market with oil to push down prices, decimate Russia’s economy, and reduce Moscow’s resistance to further NATO encirclement and the spreading of US military bases across Central Asia. The US-Saudi scheme has slashed oil prices by nearly a half since they hit their peak in June. The sharp decline in prices has burst the bubble in high-yield debt which has increased the turbulence in the credit markets while pushing global equities into a tailspin. Even so, the roiled markets and spreading contagion have not deterred Washington from pursuing its reckless plan, a plan which uses Riyadh’s stooge-regime to prosecute Washington’s global resource war. Here’s a brief summary from an article by F. William Engdahl titled “The Secret Stupid Saudi-US Deal on Syria”:

The details are emerging of a new secret and quite stupid Saudi-US deal on Syria and the so-called IS. It involves oil and gas control of the entire region and the weakening of Russia and Iran by Saudi Arabian flooding the world market with cheap oil. Details were concluded in the September meeting by US Secretary of State John Kerry and the Saudi King . . . 

. . . [T]he kingdom of Saudi Arabia, has been flooding the market with deep discounted oil, triggering a price war within OPEC… The Saudis are targeting sales to Asia for the discounts and in particular, its major Asian customer, China where it is reportedly offering its crude for a mere $50 to $60 a barrel rather than the earlier price of around $100. That Saudi financial discounting operation in turn is by all appearance being coordinated with a US Treasury financial warfare operation, via its Office of Terrorism and Financial Intelligence, in cooperation with a handful of inside players on Wall Street who control oil derivatives trading. The result is a market panic that is gaining momentum daily. China is quite happy to buy the cheap oil, but her close allies, Russia and Iran, are being hit severely . . . 

According to Rashid Abanmy, President of the Riyadh-based Saudi Arabia Oil Policies and Strategic Expectations Center, the dramatic price collapse is being deliberately caused by the Saudis, OPEC’s largest producer. The public reason claimed is to gain new markets in a global market of weakening oil demand. The real reason, according to Abanmy, is to put pressure on Iran on her nuclear program, and on Russia to end her support for Bashar al-Assad in Syria….More than 50% of Russian state revenue comes from its export sales of oil and gas. The US-Saudi oil price manipulation is aimed at destabilizing several strong opponents of US globalist policies. Targets include Iran and Syria, both allies of Russia in opposing a US sole Superpower. The principal target, however, is Putin’s Russia, the single greatest threat today to that Superpower hegemony.

The danger of the the Washington-Riyadh oil-price-drop strategy to bring Russia to heel is that the panic will spread globally. The Dow has already dropped close to 1,0000 points in a week, while yesterday European markets were roiled. As Jack Ewing reports in "Anxiety Over European Banks Amid Ruble Crisis," companies perceived to have exposure to Russia took a hit. Ewing makes clear this is panic selling. European banks are much less exposed to Russia than, say, for instance, tiny Greece. Part of the problem is lack of information. When the European Central Bank ran its stress tests earlier this year it failed to include Russian loans because the ruble was perceived to be stable. Now -- after a year that saw a U.S.-backed coup in Kiev, the EU herded into a sanctions campaign against Russia following Crimea joining the Russian Federation, a civil war in Ukraine, and the recent oil-price drop -- things look very different.

Adding to the nervousness on Tuesday was the lack of precise, up-to-date information about which European banks might have large holdings of, say, Russian government debt. When the European Central Bank began its examination of the resilience of eurozone lenders at the beginning of the year, a ruble decline seemed like a remote possibility. Hardly anyone anticipated the steep fall in energy prices that would undercut the Russian economy. 

As a result, the European Central Bank did not include a ruble crisis among the hypothetical scenarios it used to test banks’ ability to withstand stress. Data released by the central bank in October following the bank review provide detailed information on individual banks’ exposure to the government debt of countries like Malta or Slovenia, but not Russia. 

The European Central Bank declined to comment on Tuesday, but a person with knowledge of its bank supervisory arm said that officials were closely monitoring banks that are exposed to the Russian economy or Russian debt.

In the vacuum of public data, investors ganged up on banks and other companies known to have large Russian holdings. The targets included Raiffeisen Bank International in Vienna and the Danish brewer Carlsberg. 

Shares of Carlsberg, whose Baltika brand is the biggest selling beer in Russia, fell 7.5 percent. A Carlsberg spokesman declined to comment, except to refer to an earnings report published last month that described the Russian market as “difficult.” Shares of Raiffeisen Bank, which earned more than 70 percent of its pretax profit from its Russian subsidiary in the first nine months of this year, fell more than 8 percent on Tuesday. 

“All financials with exposure to Russia are currently suffering,” Ingrid Krenn-Ditz, a Raiffeisen spokeswoman, said in an email. “In Russia we continue to pursue a policy of selective underwriting” with a focus on customers, she added.

The flames of panic are being fanned, and on top of this the U.S. Congress has weighed in with a new sanctions bill which also includes $350 million in direct military aid to the Kiev junta. Peter Baker writes ("Obama Signals Support for New U.S. Sanctions to Pressure Russian Economy") that the legislation empowers Obama to go after Gazprom (I wonder if this means that U.S. citizens can no longer purchase Gazprom stock); it also provides for tens of millions in "democracy promotion" in the former Soviet Union:

The legislation also authorizes the president — but does not require him — to impose sanctions on international companies that invest in certain types of unconventional Russian crude-oil energy projects and to further restrict the export of equipment for use in Russia’s energy sector. And it authorizes the president to bar investment or credit to Gazprom, the Russian state energy giant. 

In addition, the legislation authorizes the provision of lethal arms to the Ukraine government, including antitank weapons, tactical surveillance drones and counter-artillery radar. Mr. Obama has resisted sending weaponry to Kiev on the theory that it would only escalate the fighting in eastern Ukraine, so it is not clear whether he will follow through on the authorization. 

The measure went beyond only penalties to authorize $10 million in each of the next three fiscal years to counter Russian propaganda in the former Soviet Union and prioritize Russian-language broadcasting in Ukraine, Moldova and Georgia. And it authorized $20 million in each of the next three years to promote democracy, independent news media, uncensored Internet access and anticorruption efforts in Russia.

But under pressure from the Obama administration, lawmakers removed elements that would have tied the president’s hands, including a provision that would have barred lifting sanctions until Russia was not only out of Ukraine but Moldova and Georgia, too, where lingering conflicts are not likely to be resolved soon. 

“President Putin bears responsibility for any outcomes that flow from his actions and breach of the international order,” said Senator Robert Menendez, Democrat of New Jersey, the chairman of the Foreign Relations Committee, who pushed for the sanctions along with the panel’s senior Republican, Senator Bob Corker of Tennessee. “The United States Congress stands with Ukraine in the face of Russian aggression,” Mr. Menendez said.

What we need are some of those millions of dollars to be spent here at home, starting with Menendez's New Jersey. If only we could have real democracy in New Jersey then the planet wouldn't be cursed with a blatantly corrupt, bought-and-paid-for neocon machine pol like Bob Menendez. The nation would also be spared the likes of dangerous Chris Christie.

And the reason I have hope is that we are on the cusp of a democratic awakening here in the United States. I am almost convinced that popular consciousness has been raised to a level sufficient to reject Hillary Clinton's presidential candidacy. What this portends -- merely a GOP victory, another false Dem messiah (Elizabeth Warren?), or an actually split in the Democratic Party with the possibility for a third-party alternative movement -- is yet to be determined. Something is definitely happening here. The power elite are out of touch to such extent that they think they can jigger and job their way out of the mess that they have created and maintain their death grip on the control switch. The status quo is so bent and corrupted the people in charge will blow up the planet to maintain the power they have amassed

Iran Nuclear Deal No Chickenshit

From my perch in the early morning dark of a 100-plus-year-old apartment building, located in a city by the sound that used to be known for its jets and now is synonymous with an online retail giant, the tectonic plates of global governance seem to be grinding into motion. A slight realignment is in the offing. What are the signs?

To begin with let's start with the ridiculous, the "chickenshit" feud between USG and Israel over anonymous disparaging comments made by an Obama official to Jeffrey Goldberg in The Atlantic magazine about Bibi Netanyahu's manliness. As Jodi Rudoren summarized in a story the other day, "Israel Jabs Back After U.S. Official Calls Netanyahu a Coward," the barroom beer-muscle persiflage is all about a deal with Iran over its nuclear program:

Israeli politicians spent most of Wednesday responding with outrage and concern to an article in The Atlantic quoting a senior American official calling Prime Minister Benjamin Netanyahu a “coward” — and also using a more colorful but vulgar synonym that starts with “chicken.” Mr. Netanyahu and his allies denounced such a personal attack as inappropriate, while his critics declared it evidence of the dangerous deterioration of the state’s most treasured alliance that Mr. Netanyahu has caused.

Then, in late afternoon, a senior Israeli official offered a new spin. “It appears that someone in the administration is trying to pre-empt Prime Minister Netanyahu’s criticism of an imminent and highly problematic deal with Iran,” said the official, speaking on the condition that he not be named, since that is how this game is played. “It is a transparent attempt to discredit the messenger instead of dealing with the substance of his criticism.”

It would be easy to write all this off as what Aaron David Miller, a veteran Washington observer on all things Middle East, called “the nanny-nanny-boo-boo kindergarten school,” where “they call each other names.” But there are serious underlying differences in Israel and the United States regarding the fate of Iran’s nuclear program, and the downward dip between their leaders comes at a critical juncture. 

With a Nov. 24 deadline looming, Israelis have watched, with rising concern, signs of an international deal that would allow Iran to preserve at least some of its nuclear program and would bring about the lifting of crippling economic sanctions. Worse for Jerusalem, President Obama’s aides have indicated that they will try to bypass a vote on the deal in Congress, where Israel’s support is strongest and Mr. Netanyahu has occasionally made direct appeals. 

Mr. Netanyahu, who has spent much of his career arguing that a nuclear Iran is an existential threat to Israel, insists that allowing Iran to continue to enrich uranium at any level leaves it on the threshold of producing a bomb, and that a flawed deal is worse than no deal. 

“There is no way to bridge this gap, because whatever is acceptable to America is not acceptable to us,” said Giora Eiland, a former Israeli national security adviser. “So there could be some kind of deliberate attempt to put Netanyahu in some kind of uncomfortable position, so when he says whatever he says in a month, it will be less relevant or attract less attention.”

The magisterial Gareth Porter outlines the deal taking shape between Iran and the P5+1 (the UN Security Council permanent five members plus Germany) in an article that appeared yesterday on the Counterpunch web site, "Is an Iranian Nuclear Deal in the Works? A Compromise on Enrichment":

US and Iranian negotiators are working on a compromise approach to the issue of Iran’s uranium enrichment capabilities, which the Barack Obama administration has said in the past Iran was refusing to make concessions on. 

The compromise now being seriously discussed would meet the Obama administration’s original requirement for limiting Iran’s “breakout capability” by a combination of limits on centrifuge numbers and reduction of Iran’s stockpile of low enriched uranium, rather than by cutting centrifuges alone. 

That approach might permit Iran to maintain something close to its present level of operational centrifuges. 

The key to the new approach is Iran’s willingness to send both its existing stockpile of low enriched uranium (LEU) as well as newly enriched uranium to Russia for conversion into fuel for power plants for an agreed period of years. 

In the first official indication of the new turn in the negotiations, Iranian Foreign Ministry spokesperson Marzieh Afkham acknowledged in a briefing for the Iranian press October 22 that new proposals combining a limit on centrifuges and the transfer of Iran’s LEU stockpile to Russia were under discussion in the nuclear negotiations. 

The briefing was translated by BBC’s monitoring service but not reported in the Western press. 

Undersecretary of State Wendy Sherman, who heads the US delegation to the talks, has not referred publicly to the compromise approach, but she appeared to be hinting at it when she said on October 25 that the two sides had “made impressive progress on issues that originally seemed intractable”. 

Despite the new opening to a resolution of what had been cited for months as the main obstacle to a comprehensive agreement, the negotiations could nevertheless stall in the final weeks over the timing of sanctions removal. 

Iran’s willingness to negotiate such arrangements with the US delegation will depend on Russia’s agreement to take the Iranian enriched uranium. 

The beginning of discussions on the new approach was reported in September – just days after Iranian President Hassan Rouhani and Russian President Vladimir Putin had met to discuss key issues in Iranian-Russian cooperation on the building of two nuclear power plants and fuel supply for Bushehr.

Russia is the key to any successful bargain over Iran's nuclear program. But what about the New Cold War? Isn't this an impediment to securing Russia's help? As James Kanter reports, "Ukraine and Russia Reach Accord on Natural Gas Deliveries," one of the main casus belli of the New Cold War, Europe's vulnerability vis-a-vis its dependence on Russian natural gas, has been resolved, at least nominally:

BRUSSELS — Russian and Ukrainian officials reached an agreement on Thursday night to resume Russian deliveries of natural gas to prevent shortages over the winter. 

The deal caps months of laborious talks under the aegis of European Union authorities on how much, and how soon, Ukraine needed to pay Russia for gas it has already consumed, and on the terms for future deliveries. 

The standoff between Moscow and Kiev also prompted concerns in Europe that Russian gas piped across Ukraine, a former Soviet state, could be interrupted.

The particulars of the deal are as follows:

• Ukraine will pay $3.1 billion by the end of the year to cover its outstanding debts. These payments are based on a price of $268.50 per 1,000 cubic meters of gas.

• Going forward Ukraine will purchase "Russian gas at a cost of $378 per 1,000 cubic meters until the end of the year, and at a cost of $365 per 1,000 cubic meters from January to March next year."

Of course, this assumes a lot. To begin with, can Ukraine come up with the loot? Secondly, is the government in Kiev stable enough to last until March?

In any event, the deal signed is significant. The health of Gazprom is inseparable from the rise of Russia under Putin; hence, Moscow has always been preoccupied with making sure the crisis in Ukraine doesn't impact the long-term soundness of the energy giant's operations.

There is one more development that augurs a global tectonic shift is underway -- Egyptian bulldozing of homes in the Sinai along the Gaza border. According to a story yesterday by the superb reporter Kareem Fahim written in tandem with Merna Thomas, "Egypt Flattens Neighborhoods to Create a Buffer With Gaza":

CAIRO — With bulldozers and dynamite, the Egyptian Army on Wednesday began demolishing hundreds of houses, displacing thousands of people, along the border with Gazain a panicked effort to establish a buffer zone that officials hope will stop the influx of militants and weapons across the frontier. 

The demolitions, cutting through crowded neighborhoods in the border town of Rafah, began with orders to evacuate on Tuesday and were part of a sweeping security response by the government of President Abdel Fattah el-Sisi to months of deadly militant attacks on Egyptian security personnel in the Sinai Peninsula, including the massacre of at least 31 soldiers last Friday.

That assault was the deadliest on the Egyptian military in years, and a blow to the government, which has claimed to be winning the battle against insurgents. The resort to a harsh counterinsurgency tactic — destroying as many as 800 houses and displacing up to 10,000 people to eliminate “terrorist hotbeds,” as Mr. Sisi’s spokesman put it — highlighted the difficulties the military has faced in breaking the militants as well as the anger that operations like Wednesday’s inevitably arouse.

*** 

The border clearing came as the authorities have signaled a growing determination to expand their security reach throughout Egypt, to counter militants, they say, but also to crush outbreaks of ordinary dissent, rights advocates say. It was also the latest instance of the government using the overwhelming force of its security apparatus to confront what it sees as a threat to Egypt’s existence, whether the growing strength of militants or the demonstrations by thousands of Islamists during the overthrow of the government of Mohamed Morsi. 

Some of the recent measures, including a crackdown on university protests and a presidential decree issued Monday putting public facilities like power stations and roads under the protection of the military, were “confirmation of a conviction we have had for months,” said Gamal Eid, the head of the Cairo-based Arab Network for Human Rights Information. “Egypt is solidifying the rule of the police and the military,” he said.

There have been two responses to the Arab Spring by the U.S. chaos-inducing unipolar system of global governance. One, is co-optation by means of Wahhabi-exported Salafists. This is on display in Libya and Syria. The other, in states to be maintained whole and not cracked into pieces, there is the Sisi option, a massive police state crackdown on any dissent. Egypt is leading the way on this with fulsome support from Israel, Saudi Arabia, Russia, and, regardless of a bit of meek pro forma mewling, the United States.

Israel cannot pursue another Operation Protective Edge-type genocide of the Palestinians in Gaza. One more and the BDS Movement will reach critical mass. Now what appears to be in the offing is a plan by Israel to create a "Greater Gaza." As Jonathan reported in September, "Is there a plan to force Palestinians into Sinai?"

Desperately overcrowded, short on basic resources like fresh water, blockaded for eight years by Israel, with its infrastructure intermittently destroyed by Israeli bombing campaigns, Gaza looks like a giant pressure cooker waiting to explode. 

It is difficult to imagine that sooner or later Israel will not face a massive upheaval on its doorstep. So how does Israel propose to avert a scenario in which it must either savagely repress a mass uprising by Palestinians in Gaza or sit by and watch them tear down their prison walls? 

Reports in the Arab and Israeli media – in part corroborated by the Palestinian president, Mahmoud Abbas – suggest that Egypt may be at the heart of plans to solve the problem on Israel’s behalf. 

This month Israeli media reported claims – apparently leaked by Israeli officials – that Egypt’s president, Abdel Fattah al-Sisi, had offered the Palestinian leadership the chance to annex to Gaza an area of 1,600 sq km in Sinai. The donated territory would expand Gaza fivefold. 

The scheme is said to have received the blessing of the United States. 

‘Greater Gaza’ plan 

According to the reports, the territory in Sinai would become a demilitarised Palestinian state – dubbed “Greater Gaza” – to which returning Palestinian refugees would be assigned. The Palestinian Authority of Mahmoud Abbas would have autonomous rule over the cities in the West Bank, comprising about a fifth of that territory. In return, Abbas would have to give up the right to a state in the West Bank and East Jerusalem. 

The plan, which would most likely result in significant numbers of Palestinians moving outside the borders of historic Palestine, was quickly dismissed as “fabricated and baseless” by Egyptian and Palestinian officials.

It could be that what we are looking at here is an elaborate game of musical chairs. Peace with Iran will be achieved at the price of a Greater Gaza solution to the ongoing genocide of Palestinians. The future of the caliphate in all this seems to be in the form of Sunnistan, which the odious Thomas Friedman riffed on this week in the disinformation manifesto, "ISIS and Vietnam." Sunnistan, so the thinking goes, is to balance Kurdistan and Shiastan.

New Cold War to Grow Hot Again?

The New Cold War between Russia and the West seems to be heating up again in Ukraine. Judging by the number of stories this morning in the Gray Lady, informational flagship of U.S. unipolarity, something is afoot.

NATO is squawking about a large presence of Russian military aircraft over the Black, Baltic and North Seas as well as the Atlantic. If one reads to the end of the AP story, "Spike Seen in Russian Military Flights," it seems as if this is more a case of Western fear-mongering than a serious new threat:

Brynjar Stordal, spokesman for the operational command of Norway’s armed forces, said Norwegian F-16s intercepted one formation of Bear bombers and tankers west of Norway. The tankers turned back north, he said, but the bombers kept flying south all the way to international airspace west of Portugal and Spain. 

“We’ve had several of these incidents, around 40 a year,” Mr. Stordal said. “What sets this apart from some of the missions we see from the Russian side is the formation was a little bit larger than we usually see, and they went a bit further south than they usually do.”

Hardly the stuff that merits an entire story or a scary headline.

Then there is the David Jolly story, "France Denies It Agreed to Deliver Mistral-Class Warship to Russia," about France overriding the contractor on delivery of the first of two Mistral-class helicopter carrier warships:

On Wednesday, Mr. Rogozin [deputy prime minister of Russia] posted a photograph on Twitter of what appeared to be an invitation letter to Anatoly Isaikin, the head of Rosoboronexport, from Pierre Legros, a senior vice president in DCNS’s surface ships and naval systems division [the contractor] and a member of the company’s executive board. 

In the letter, Mr. Legros thanks Russia’s Defense Ministry for having accepted a modified delivery date and adds, “Accordingly, it is now my pleasure to invite you personally to this ceremony, which will take place on Nov. 14, 2014, in St.-Nazaire.” 

The day’s itinerary includes “transfer of ownership and delivery act signature on board the Vladivostok.” 

DCNS could not immediately be reached for comment on the Twitter post.

So what is going on?

Several things. For one, Yats, Arseniy Yatsenyuk the prime minister who set off the election that was just completed when he tendered his resignation last summer, is improbably poised -- based on the surprising first-place finish of his People's Front party, edging the Bloc Petro Poroshenko 22.2 percent to 21.8 percent -- to return to the Rada as prime minister. David Herszenhorn has the story, "After Ukraine Vote, a New Test: Burying a Legacy of Dysfunctional Politics."

Let's not forget that Yats is the U.S. man in Kiev, the one memorialized in the famous Victoria Nuland cell-phone "Fuck the EU" intercept as State Department property; he's the one that is going to bring the neoliberal wood to Ukrainian behinds as they say goodbye to fuel subsidies and pension benefits in order to align with European "norms."

All I can say about Yats' miraculous victory is to quote a passage from an earlier Herszenhorn story, "Ukraine President Claims Win for Pro-West Parties." The guy, Yuri Boiko, who led a reformed Party of Regions under the name of "the Opposition Bloc," called the recent parliamentary elections "the dirtiest ever."

The exit polls showed one party that is generally regarded as pro-Russian winning enough votes to clear the threshold for forming a faction in the Parliament. That party, the Opposition Bloc, includes some of Mr. Yanukovych’s former allies with strong ties to the embattled east, and it could ultimately prove crucial to future negotiations with Mr. Putin and to resolving the simmering conflict there. 

The party is led by Yuri Boiko, a former deputy prime minister and energy minister under Mr. Yanukovych. Mr. Boiko also has served as energy minister and was head of the Ukrainian national energy company, Naftogaz, from 2002 to 2005, giving him extensive business dealings with Russia. 

The Opposition Bloc was also heavily supported by Sergiy V. Liovochkin, one of Ukraine’s richest businessmen and a former chief of staff to Mr. Poroshenko. Mr. Liovochkin had a falling out with Mr. Yanukoych over the response to the protests last fall and tried to resign. 

After the polls closed, Mr. Boiko thanked voters, but called the elections “the dirtiest ever.” Ukraine has a long history of corruption and ballot fraud.

 I think it highly likely that Yats bribed and ballot-stuffed his way to first place.

This is all happening against the high-stakes poker of the tripartite -- Russia, Ukraine and EU -- gas talks in Brussels, which apparently have collapsed (Gazprom representatives have flown home to Moscow) over Europe's unwillingness to guarantee Ukraine's loan.

As Professor Nicolai Petro explained to RT:

RT: What about gas agreements? Do you think there are still some points that require discussion? 

NP: No, I don’t because all of the aspects of the gas agreement have been negotiated and agreed to except for the amount of the loan that Ukraine needs to pay for its debt without which Russia will not allow gas to flow, without the amount that it ships being paid for in advance. The decision on that loan, at least as President Putin sees it, is entirely in the hands of European Union, how it wants to negotiate that loan. Clearly, Ukraine does not have the money to pay for it. There is a conceptual understanding and agreement that the EU or some private bank within Europe must provide that loan guarantee until the next IMF tranche comes through. So it is basically entirely in the hands of the EU negotiators at this point.

The U.S./EU appears to be back to playing hardball -- NATO squawking about the menacing Russian bear; trade sanctions reaffirmed; Yats back at the helm -- all that needs to happen is for the Minsk ceasefire protocol, always frail, to be completely rescinded. And there is plenty to argue that is about to happen.

Putin Predicts Peace Deal to Emerge Tomorrow from Minsk Negotiations

Up here in the Pacific Northwest the autumn chill can already be felt in the mornings. With gas deliveries having been suspended for the entire summer while fighting has raged in the Donbass, I'm sure the change in weather can felt by Ukrainian president Petro Poroshenko.

Putin announced yesterday that a ceasefire agreement will be signed tomorrow in Minsk. Neil MacFarquhar describes what the deal would look like in today's "Putin Lays Out Proposal to End Ukraine Conflict":

In announcing the plan, Mr. Putin said he expected Ukraine and the separatists to wrap up an agreement after a new round of negotiations in Minsk, Belarus, on Friday. Ukraine, Russia and Europe are all party to the talks there, and they include representatives of the separatists. The two-day NATO summit meeting is also scheduled to end Friday. 

Aside from the cease-fire, the plan laid out by Mr. Putin called for Ukrainian artillery to pull back and out of range of the eastern separatists’ strongholds; an end to airstrikes; an exchange of all detainees; opening up humanitarian corridors for residents of the separatist areas; repairing damaged infrastructure; and deploying international observers to monitor the cease-fire. 

It made no mention of autonomy for the separatist eastern regions, the central political demand that Russia has emphasized since March. That is widely seen as critical to the Kremlin’s long-term goal of maintaining influence over Ukraine’s domestic affairs and blocking any future attempt to join NATO. 

Putin's plan made no mention of autonomy for Donetsk and Luhansk because it is unnecessary: a real ceasefire guarantees autonomy for the Donbass. It is the oft quoted "facts on the ground."

After a long phone call with Putin yesterday, Poroshenko declared that a lasting ceasefire agreement had been reached. He then walked it back, saying that the need for a ceasefire was agreed upon.

Likely what happened is that the U.S. nixed the deal. Obama, about to take his "great statesman" star turn at the Cardiff NATO summit, did not want to be upstaged yet again by Putin. A clue to this is the yapping of the neocon miniature terrier nonpareil, junta prime minister Arseniy Yatsenyuk. According to MacFarquhar:

In Kiev, the idea of a cease-fire was received with mixed emotions. 

There is open hostility to the idea that Russia will be able to dictate terms to its weaker neighbor after already wrenching away the Crimean peninsula in March. Any compromise after months of condemning the separatists as “terrorists” risks weakening Mr. Poroshenko in central and western Ukraine. 

Prime Minister Arseniy P. Yatsenyuk called Mr. Putin’s proposal “an attempt to confuse the international community” before the NATO summit meeting and the expected announcement of new sanctions from the European Union. 

“Putin’s real plan is the destruction of Ukraine and the resumption of the U.S.S.R.,” Mr. Yatsenyuk said, according to a statement posted on a government website. Peace will come only once Russia withdraws its troops and proxy force, it said. 

But many Ukrainians, horrified by the mounting toll of more than 2,600 dead and uneasy about the economic costs for a country already on the edge of bankruptcy, want an end to the violence. Winter is approaching, and the other confrontation with Russia, over gas sales, seems unlikely to be resolved while fighting rages in the east. 

“We are in a situation where any kind of cease-fire would be progress,” said Olexander Scherba, an ambassador at large in the Ukrainian Foreign Ministry. “Last week was devastating after Russia started this open invasion of Ukraine.”

Even if a agreement is penned tomorrow in Minsk, it doesn't solve any of the problems of how to implement such a ceasefire:

There is a long road ahead before any real settlement can be reached, analysts noted. Moscow does not fully control the separatists; nor is it clear that Kiev can automatically rein in the armed militias it has unleashed alongside its military in the east. 

Vladislav Brig, a senior official in the self-declared Donetsk People’s Republic, said by telephone that the rebels expected Ukrainian forces to withdraw from the entire region as a condition for peace. “The negotiating side here is not Russia; it is the Donetsk People’s Republic,” he said. “We will stop the offensive when Ukrainian troops leave our territory.” 

Ukraine has said repeatedly that it will not contemplate a full withdrawal from the Donbass region. “It depends on Russia,” Mr. Scherba said. “Russia is the one that started this and can bring it to an end.”

In this analysis, MacFarquhar, a reliable USG voice, is not that far off from some of the more independent commentators of the blogosphere -- El Murid (as translated on Niqnaq's page), for instance.

What we know is this: Fall is approaching and Ukraine's standoff with Gazprom cannot be ignored for too much longer; Ukraine has been defeated militarily by the Novorossiya militias; and the political turmoil among the constituent junta parties is growing. A deal must be struck sooner rather than later.

Another hurdle to factor in for the junta is that as early as tomorrow the Dutch Safety Board is going to publish its report on the downing of Malaysia Airlines Flight 17. Even if the report avoids an opinion as to who was responsible for shoot-down of the commercial airliner and the death of its 298 passengers and crew, Kiev could come in for some criticism. This is from Nicola Clark's "E.U. Urges Sharing Data to Avert Air Disasters":

European legislators at the hearing [of the European Parliament’s transportation committee] on Wednesday expressed consternation as to why Ukrainian officials did not close the airspace to civilian air traffic and why international safety regulators appeared not to have questioned Ukraine’s assessment of the threat to passenger traffic.

Maybe I was right a few weeks back when I saw a deal coming out of Minsk. I was just a couple weeks off.

Another End Game on Ukraine Approaches

I have gotten into the habit of announcing an approaching end game in Ukraine for months. When the uprising in the Donbass started in April and it looked like the Kiev junta was going to sue for peace because it couldn't field a military response, I thought a rational conclusion to the putsch crisis -- namely, federalization and neutralization of Ukraine -- was nigh. Somehow, probably with ample support from the U.S. and her European allies, the Kiev junta put its newly created national guard, the one filled with Right Sector fascists, front and center and the assault on the southeast continued.

Then there was the thought that once the chocolate king was elected president in May Russia would have a willing bargaining partner to bring the fighting to an end. Once elected, Poroshenko expanded the "anti-terror operation" (ATO).

Finally, this month, there was Gazprom's suspension of gas deliveries to Ukraine because of non-payment. I thought that would hasten the junta to the bargaining table, but nothing of the sort happened. It is summer now and fuel tanks are topped out.

Now it is time for me to announce that yet another end game is upon us. Friday European leaders meet to debate and decide whether to support an effort by the United States to increase sanctions on Russia. The U.S. position is that Russia is not doing enough to tamp down the Donbass uprising, even though Putin has recently said that he will ask the Russian Parliament to rescind its authorization allowing military intervention in Ukraine.

Peter Baker has the story, "Doubting Putin, Obama Prepares to Add Pressure," which is quite good. (Baker is a cut above the normal mercenary scribe. Reporters like David Sanger, Rick Gladstone, Michael Gordon generally do nothing to inform; they act merely as receivers of official talking points. But Peter Baker can write. And while he sticks to the government-sanctioned narrative there is usually something in his stories that illuminates what is really going on.)

Even as the Kremlin voices support for a cease-fire in eastern Ukraine, American officials remain unconvinced that it has backed up words with deeds. Russia has moved troops back to the border and positioned heavy artillery there in what American officials consider an effort to help the separatists, who on Tuesday shot down a Ukrainian military helicopter. 

But President Obama faces hurdles as he tries to keep the pressure up on the government of President Vladimir V. Putin. European Union leaders, who are scheduled to meet Friday in Brussels, are reluctant to go along if it looks like Mr. Putin may be backing down. And American business leaders objecting to unilateral actions that would hurt their companies are kicking off an advertising campaign to oppose Mr. Obama’s plans. 

Mr. Obama spoke with Mr. Putin on Monday to urge him to take more tangible steps to defuse the crisis, and the Russian leader on Tuesday seemed to respond by asking his Parliament to rescind formal authorization to intervene militarily in Ukraine. American officials considered the move positive but symbolic, assuming that it was really meant to undercut European support for additional sanctions.

The sanctions themselves will go after Russian banking, military and energy:

The Obama administration has developed three options for further actions, according to government officials: banning any interactions with some of Russia’s largest banks; cutting off technology transfers to Russian energy and defense firms; and shutting down business with Russian defense companies. 

Believe it or not, the U.S. Chamber of Commerce and the National Association of Manufacturers (NAM) are about to launch a big public offensive against Obama's New Cold War. The reason is obvious. U.S. corporate interests will lose out to European competitors if Obama leads with new sanctions without Europe in tow:

The drive for more sanctions comes as American businesses are growing more vocal in protesting the possibility that the United States may act on its own. While lobbying the White House and Congress quietly until now, leading business groups plan to start a wide advertising campaign voicing their concerns. 

“With escalating global tensions, some U.S. policy makers are considering a course of sanctions that history shows hurts American interests,” reads an advertisement to be placed in major newspapers on Thursday. “We are concerned about actions that would harm American manufacturers and cost American jobs." 

The ad, signed by Jay Timmons, president of the National Association of Manufacturers, and Thomas J. Donohue, president of the U.S. Chamber of Commerce, will be placed in The Financial Times, The Hill, The New York Times, Politico, Roll Call, The Wall Street Journal and The Washington Post. A copy was provided on Tuesday by someone not directly affiliated with either sponsoring organization. 

Linda Dempsey, the vice president for international economic affairs at the manufacturers association, would not discuss the ad campaign but said American businesses would be unduly harmed if Washington proceeded with sanctions that were not matched by Europe. 

“Unilateral sanctions by the United States end up with other countries and their industries filling the void,” she said. “The harm and the real impact of those unilateral sanctions is on U.S. industries and U.S. workers. It’s not that we’re out of the market for a year or two. We could get out of the market for decades.”

Europe could end this charade here and now by forcefully stating that no further sanctions will be considered and that Putin has been a good-faith actor since the Kiev coup in February sent the elected president fleeing for his life.

But don't count on strong, principled action from European leaders. Their conduct in all of this has been feckless. Nonetheless, the ad roll out by NAM and the U.S. Chamber says that this is about to change. Friday Europe could very well stand upright on its hind legs and seriously bring an end to the fighting in Donbass.

But the U.S. is wily. Assuming that they can't reach consensus this Friday, the Obama administration is looking for Europe to sign off a set of sanctions that will go into effect if Russia is perceived to have begun backsliding:

If the Europeans are not willing to impose new sanctions after Friday’s meeting, the American side hopes to reach agreement on a package that would be ready to use if Mr. Putin does not follow through on his recent positive statements or reverts back to more hostile actions once the meeting has passed. In effect, that would make the sanctions package a deterrent.

This of course opens the door for a false-flag provocation, the kind of dark art in which the USG specializes. So it could very well be that I will be back here in another couple weeks or a month announcing another end game.

End Game Approaching in Ukraine

We have arrived at the moment of truth in Ukraine. Sad to say that moment didn't come back in April when the junta launched its "Anti-Terrorist Operation" (ATO) against the southeast region of the country. Shelling and murder of civilians will not rouse the leaders of the West to broker a settlement, but I believe Gazprom's suspension of gas deliveries very well could. Neil MacFarquhar has the story this morning, "Gazprom Stops Supplying Natural Gas to Ukraine":

The Russian energy giant Gazprom stopped supplying natural gas to Ukraine on Monday, warning that the reduction could diminish the amount of gas flowing to the rest of Europe and escalating the political crisis between the two countries. 

After the government in Kiev failed to meet a 10 a.m. deadline imposed by Moscow to pay a nearly $2 billion installment for gas, Gazprom announced that it would no longer supply on credit. 

“Gazprom supplies to Ukraine only the amount that has been paid for, and the amount that has been paid for is zero,” a Gazprom spokesman, Sergei Kupriyanov, told reporters. 

A source close to Gazprom said the gas flow into Ukraine had been reduced by the amount intended for Ukraine itself. 

All of the gas flowing into Ukraine as of 10 a.m. Monday was meant only for transporting across the country to Europe, the source said.

The thing to keep in mind here is that Russia has been very balanced and measured in its handling of the coup aftermath in Ukraine. Many wanted Russia to go in with guns blazing and rout the junta military and fascist national guard from Novorossiya. Instead, Putin pulled Russian forces away from the border in a show of working with the West in allowing the junta to conduct its sham presidential election.

My impression is that Russian leadership, mindful of its many advantages in the conflict, has been careful not to create any opening for the United States to force energy sector sanctions against Gazprom. Hence, the apparent pussyfooting of Putin in the face of the shrieking of Yatsenyuk and the mendacious braying of Kerry.

Putin's rise and the rise of post-Yeltsin Russia is synonymous with the success of Gazprom. So Gazprom must be protected. That's why Gazprom chief Aleksei Miller went out of his way to make concessions to the junta.

One has to read to the very end of MacFarquhar's story to understand the bargaining positions of the parties. First, you have to wade through more shrieking by Yatsenyuk, Washington's man in Kiev, about Russian aggression before finding out that Gazprom wants Ukraine to pay the same price as Europe:

Russia and Ukraine have been negotiating for weeks over the price for gas, which Russia had been delivering at a subsidized rate that was lower than that which it charged European customers. Russia wants Ukraine to pay $385 per 1,000 cubic meters, which is the standard measure for gas in Europe. That figure was up from $268, an increase of about 44 percent. 

Gazprom, the world’s largest natural gas producer, increased the price after Ukrainian protesters toppled the government, a Russian ally, in February.

What MacFarquhar does not say is that the subsidized rate Ukraine was receiving was in exchange for the Russia military leases in Crimea. Now that Crimea is no longer part of Ukraine, having voted to join the Russian Federation three months back, there is no reason for Gazprom to supply Ukraine gas at the subsidized rate.

Ukraine gets two-thirds of its natural gas from Russia; Europe receives about one-fifth from Russia.

Both Russia and Ukraine have gone to court seeking restitution on previous gas shipments:

[Gazprom], which is 50.01 percent owned by the Russian government, also said that it was filing a lawsuit in an arbitration court in Stockholm to force Ukraine to pay $4.5 billion for gas that had already been delivered. Gazprom has repeatedly insisted that the dispute is more about getting paid than about the political tensions between the two countries. 

[Ukraine's] Naftogaz responded by saying that it had filed a suit of its own in the Stockholm court against Gazprom to establish a fair market price for the gas. Naftogaz said the suit would also ask the court to fine Gazprom for what the Ukrainian company claims to be $6 billion in overcharging since 2010. 

The Stockholm trade court, formally known as the Arbitration Institute of the Stockholm Chamber of Commerce, has long been used to settle East-West trade disputes because of Sweden’s neutrality.

This is the moment of truth in Ukraine because it is going to force Europe to take a position. Either Europe continues following the U.S. path of the New Cold War and embraces preferential treatment for Ukraine in supplying it with gas, the outcome of which is likely a broad trade war and energy sector sanctions against Russia, or Europe breaks from the U.S. and demands that the junta pay up and shut up.

The U.S. wants mayhem and war. Europe wants peace and the continued economic integration of Eurasia.

At the end of the month, June 27, Ukraine is set to sign the association agreement with the European Union, the same one that led to the coup when Yanukovych refused to sign it. Also at the end of the month the U.S. has promised more sanctions if the fight is still raging in Donbass, something which obviously puts the junta in control.

I must say, banking on a supine Europe to suddenly stand on its hind legs does not seem to me like a good bet.

Russia Signs 30-Year Gas Deal With China: Let the Decline and Fall of American Global Hegemony Commence Posthaste

Jane Perlez reported yesterday from Beijing that  the China-Russia gas deal was stalled. This morning she reports that the deal is done, "China and Russia Reach Major 30-Year Gas Deal":

BEIJING — China and Russia agreed to a major 30-year natural gas deal on Wednesday that would send gas from Siberia by pipeline to China, according to the China National Petroleum Corporation. 

The announcement caps a decade-long negotiation and helps bring Russia and China closer than they have been in many years. The contract was driven to a conclusion by the presence of President Xi Jinping of China and President Vladimir V. Putin of Russia in Shanghai for the last two days. 

The notice posted on China National Petroleum’s website said that beginning in 2018, Russia would supply 38 billion cubic meters of natural gas each year to China. China will build the pipeline within its own borders, while Russia will be responsible for the development of the fields and pipeline construction in its territory, the notice said.

This is an enormous blow to American unipolarism. Development will flow east. The BRICS will continue to surge. Europe will gradually decouple from the U.S. (For all these points, see the Pepe Escobar essay linked to in yesterday's post.)

Domestically, the United States is headed for a realignment. The Democratic Party is going to suffer a substantial defeat in November. The only question is if it is going to rise to the level of the 2010 midterm. The political system is headed for either collapse or renewal. The renewal would have to come from a third party renaissance or a complete overhaul of the duopoly by trustworthy, charismatic leadership.

Russia-China Gas Deal Stalled Over Price

Today offers a rare example of the Gray Lady publishing a story that completely confirms an article published on a left-of-center, anti-imperialist web site. The story is today's "Ukraine Crisis Pushing Putin Toward China" by Neil MacFarquhar and Davids Herszenhorn; the article it confirmed is Pepe Escobar's "Who's Pivoting Where in Eurasia?" which appeared this past Sunday afternoon on TomDispatch.com.

Russia and China according to RT News are about to conclude a long-term gas deal:

Russia and China are due to sign a long-awaited gas contract on Tuesday, in which Beijing could pay up to $456 billion for Russian gas over the next 30 years. 

While Russian President Vladimir Putin visits Shanghai on May 20-21, Gazprom and the China National Petroleum Corporation (CNPC) are due to sign a deal for 38 billion cubic meters of natural gas to power China's growing economy, starting in 2018.

But this morning, Jane Perlez, reporting for the Gray Lady from Beijing, says that there is no deal, "China and Russia Fail to Reach Agreement on Gas Plan." The two countries could not agree on a price.

MacFarquhar and Herszenhorn had reported in their story that price, a barrier to any deal for a long time, was likely to be settled in favor of China since Russia was eager to show the North Atlantic Alliance that it had other avenues of development than the Western financial system. Escobar was convinced that it was a done deal, part of a BRICS-initiated paradigm shift.

I interpret yesterday's DOJ indictments of PLA hackers as a publicity stunt meant as a warning for China not to launch an attack on the status quo.

The deal might still come off.

The Coming Collapse of U.S. Hegemony

Events seem to be moving in the direction of a big battle for control of Slovyansk city center. The junta military has established checkpoints surrounding the city, according to putschist interior minister Arsen Avakov. Since Avakov does a great job impersonating Joseph Goebbels, it is difficult to assess how strong these roadblocks are and how likely it is that junta troops will storm Slovyansk. But if they do, there is no doubt that the conflict in Ukraine will graduate to another level of violence.

Based on a reading of the blogs -- Moon of Alabama, The Vineyard of the Saker -- over the weekend, the sense out there is that Russia is being provoked by the United States to intervene militarily in Ukraine in order to block European integration east with the Russia and China. A Russian invasion would force Europe to side with its North Atlantic partner in building up NATO military forces on Russia's border as well as severing trade ties with the Russian Federation. At this point, barring mass slaughter of civilians by the putsch government, it doesn't look like Russia is going to take the bait.

Energy supply is the obvious vulnerability in any plan to sever Europe from Russia. Andrew Higgins explores the current U.S.-generated fantasy of how Ukraine can achieve independence from Gazprom in "Kiev Struggles to Break Russia’s Grip on Gas Flow." The idea is that Slovakia has the pipeline capacity to reverse flow natural gas to Ukraine. But for some reason -- Higgins sees the baleful, corrupting influence of Vlad Putin at work -- the Slovak government has been slow to embrace the scheme. It is a long story. One has to read to the end to get to the obvious. Reverse flows depend on the agreement of all parties, meaning that Gazprom would have to sign off in it. Why would they do that?

Alexander Medvedev, the head of Gazprom’s export arm, said he had no problem in principle with reverse-flow supplies to Ukraine but said such arrangements “require the agreement of all parties involved,” including Gazprom. 

“Normally, you can’t arrange a physical reverse flow without a new pipeline,” he added, indicating Gazprom’s opposition to the use of existing Slovak pipelines.

The main event over the weekend was the Friday massacre in Odessa. Federalist, pro-Russian protesters were attacked by Ukrainian nationalist soccer hooligans, chased into a building and the building was set on fire. Forty people died. Putsch prime minister Yatsenyuk in a gross perversion of common decency immediately blamed Russian provocation and police ineptitude. The Gray Lady dutifully echoed his words, even though video evidence and crime-scene reporting established that the slaughter was caused by Ukrainian nationalist mobs. Robert Parry, whose Consortium News web site does an excellent job keeping the February Ukrainian coup in proper perspective, asks, "Will Ukraine Be NYT's Waterloo?"

Andrew Kramer brings the Gray Lady back closer to what really happened in Odessa over the weekend with his "Ukraine’s Reins Weaken as Chaos Spreads":

Yanus Milteynus, a 42-year-old construction worker and pro-Russian activist, said he watched from the roof as the pro-Ukrainian crowd threw firebombs into the building’s lower windows, while those inside feared being beaten to death by the crowd if they tried to flee. 

“Some people jumped or tried to run away, but they chased them and beat them,” he said. Videos of the inferno, however, also show pro-Ukrainian activists trying to move scaffolding from a stage to the building, to rescue those inside. 

Only when the police managed to form a cordon to escort out those rescued by firefighters was he able to leave. If the roof caught fire before then, he said, “I would have stayed and sizzled like a sausage in a frying pan.” 

The conflict is hardening hearts on both sides. As the building burned, Ukrainian activists sang the Ukrainian national anthem, witnesses on both sides said. They also hurled a new taunt: “Colorado” for the Colorado potato beetle, striped red and black like the pro-Russian ribbons. Those outside chanted “burn Colorado, burn,” witnesses said. Swastikalike symbols were spray painted on the building, along with graffiti reading “Galician SS,” though it was unclear when it had appeared, or who had painted it. 

“The biggest thing they ever did to make me hate this country was sing the anthem,” Mr. Milteynus said. “I was going to die, and they sang the anthem. I hate them deeply.”

The United States will pay a large price for fomenting this coup in Ukraine. This is no Kosovo. In what increasingly looks like a desperate, reckless attempt to maintain its global hegemony, the USG is paving the way for its collapse. Democrats cannot win as a pro-war party. This means that Republicans will reap the reward. GOP national leadership will further fracture and discredit the country. Get ready. This is what is in store.

The Putschist Ruse in Ukraine is Almost Up

Putschist interior minister Arsen Avakov has distinguished himself among the Kiev gang for a Goebbels-like facility for distortion of the truth. Today he is front and center with the coinage of a cute acronym for the second failed putschist offensive in as many weeks against the uprising in eastern Ukraine. Andrew Higgins, David Herszenhorn and Alan Cowell have the story this morning, "Ukraine Says Its Efforts to Regain Control of East Will Continue":

Sounding increasingly strident alarms, Ukraine’s interim prime minister, Arseniy P. Yatsenyuk, accused Moscow on Friday of seeking to create a wider conflict. “Attempts at military conflict in Ukraine will lead to a military conflict in Europe,” Mr. Yatsenyuk told the interim cabinet in remarks broadcast live, according to Reuters. “The world has not yet forgotten World War II, but Russia already wants to start World War III.”

In a posting on Facebook, Interior Minister Arsen Avakov declared that Ukraine’s military operations in the east — known as “ATO,” meaning Anti-Terrorist Operation — had not been suspended.

“There has been no suspension of the ATO in connection to the threat of invasion by Russia’s armed forces,” Mr. Avakov said, apparently responding to local news reports saying the operation had been called off because of the “heightened risk” of a Russian invasion. “The ATO goes on. The terrorists should be on their guard around the clock. Civilians have nothing to fear.” 

Despite the minister’s warning, there have been no reports of renewed conflict since Ukrainian forces moved briefly against pro-Russian positions on Thursday in what Mr. Avakov, apparently playing down the action, described on Friday as an operation by “insignificant” government forces that had deployed “without the use of tanks or other heavy armor.”

So there you have it. The putschists cannot control the east. A military attack on the buildings occupied by pro-Russian protesters is unlikely as long as Russia is conducting large drills on the Ukrainian border. This means that the chances of the putschist May 25 presidential election being deemed free and fair are remote. Gazprom is ratcheting up the pressure for Ukraine to pay its gas bill. Europe is getting queasy about the trade war that is barreling its way. We are getting close to the "put up or shut up" point for the U.S. Cue Secretary of State John Kerry, a noxious manikin and lie machine. Kerry's remarks last night amounted to nothing more than a doubling down on a busted hand.

We're getting close now, very close, to the ruse being up. Sanctions and the threat of creating capital flight out of Russia is the last act in this U.S.-sponsored drama. According to Higgins et al.,

In Washington, Secretary of State John Kerry warned Russia on Thursday night that it would face additional economic sanctions if it failed to carry out that agreement. “The window to change course is closing,” he said. Sanctions could be announced as soon as Friday if the Russians do not respond, said one administration official who asked not to be identified while discussing internal planning.

The threat of intensified sanctions was under underscored on Friday when the rating agency Standard & Poor’s downgraded its assessment of Russia.

“In our view, the tense geopolitical situation between Russia and Ukraine could see additional significant outflows of both foreign and domestic capital from the Russian economy and hence further undermine already weakening growth prospects,” the agency wrote. 

In his most detailed accusation of Russian interference to date, Mr. Kerry said that American intelligence services had concluded that Russia’s “military intelligence services and special operators are playing an active role in destabilizing eastern Ukraine with personnel, weapons, operational planning and coordination.” 

“Some of the individual Special Operations personnel who were active on Russia’s behalf in Chechnya, Georgia and Crimea have been photographed in Slovyansk, Donetsk and Luhansk,” Mr. Kerry said. “Some are even bragging about it by themselves on their Russian social media sites.” 

On Friday, Mr. Kerry’s Russian counterpart, Sergey V. Lavrov, hit back, accusing Washington of seeking only to further its interests in Ukraine. 

“The West wants to take control of Ukraine while exclusively putting its geopolitical interests, not the interests of the Ukrainian people, at the forefront,” Mr. Lavrov told a conference of young diplomats from former Soviet republics. 

“We are talking about the methods that Americans use with states of different regions,” Mr. Lavrov said. “This is not our method. We will not blackmail, we will not threaten, we are all polite people,” he said. 

“Without batting an eye, our Western partners keep demanding day after day that Russia stop interfering in Ukrainian affairs, pull out troops and remove certain agents who have reportedly been caught in the southeast and who are reportedly guiding these processes,” Mr. Lavrov said, adding, “I even find it difficult to respond. I try to make the conversation constructive.”

This is the moment of truth. And since the United States is a power that does not deal in the truth, expect the moment to be avoided. Any sanctions announced in the next few days will remain largely cosmetic, targeting members of the Russian ruling elite and possibly some banks or other institutions. The sanctions cannot be too biting because once they bite London, Berlin and Paris will part company with the Obama administration.

As for Gazprom, the putsch government does not have the ability to pay its bill, and the West will not unless it can secure future pricing and supply guarantees (which will not be forthcoming).

So we are right at the place we have been all along: the putschists and their U.S. backers are cradling a crock of shit, and that crock of shit is a place called "Banderastan."

****

There is some news this morning that an assault on Slovyansk is in the offing. Ukrainian military are encircling the city, blocking roads and sending snipers into the surrounding woods. It sounds like a siege.

NATO Brays, Putin Shows His Hand

Taking the "satellite" view of events in Ukraine this Friday, when the only story in the Gray Lady is David Herszenhorn's "Satellites Show Russian Forces Poised Near Ukraine," it should be apparent to all news consumers that now that the West has its neo-foot in Russia's front door there is no going back. We are experiencing, and have been for the last month, the first days of the New Cold War.

As for Herszenhorn's article about 40,000 Russian troops with all sorts of hardware massed on Ukraine's eastern border, it basically repeats the NATO press release built around satellite photos taken by a company called DigitalGlobe. No word is mentioned of Russian claims that the images actually capture drills conducted last August.

What is afoot here is the West providing flak for the putschists and there impending crackdown in Donetsk. With enough keening and braying coming out of Brussels, the hope emanating from Western capitals is that the Russians will stay on their side of the border when security forces led by the re-branded Blackwater (Greystone) mop up the retirees occupying government buildings. What a triumphant display of force by mercenaries and neo-Nazis will accomplish other than more unrest I know not.

Lavrov made a statement on Wednesday regarding the possibility of four-party talks at some point in the near future to take place in Geneva. But I wouldn't hold my breath:

Russian Foreign Minister Sergei Lavrov said on April 9 that the meeting on Ukraine should help foster equal dialogue in Ukraine. He said Russia would attend a four-party meeting on Ukraine with the United States, the European Union and the Ukrainian authorities only if it helped Kiev foster contacts with all political and regional forces inside the country. 

The West has suggested holding a meeting on the situation in Ukraine. “April was named as a tentative date,” he recalled and stressed that Russia’s position was simple. “This is an internal Ukrainian crisis, and those who are holding the reins of power in Kiev now must invite all regions, all political forces to start a dialogue on the constitution, on the language and all other aspects.

Lavrov said Russia had so far received no reply to its inquiries, including those concerning rumours that Kiev is planning to sell ballistic missile technologies. “We asked the Americans what they think about this. They keep silence,” the minister said. 

Another inquiry that remains unanswered was about reports claiming that personnel of the private American security company Greystone had been deployed in Ukraine. “They say: we see no reason for this to be true. What a strange answer. Why don’t you simply say: there is none of them there?” Lavrov said, adding that there were also other inquiries that had not been answered by the US authorities.

“If this meeting focuses on urging the Ukrainian authorities not to wait for the south-eastern regions to boil over, as is the case now, and on urging them to talk with these regions, we will join this call,” he said. 

Lavrov recalled that the new Ukrainian authorities had not visited the southern and south-eastern regions of the country even once since February 22 when they took power in Kiev. “They say: there is the Party of Regions and there are communists in the Verkhovna Rada [parliament] and that’s enough. But it’s not so because many regions think that those who sit in the Verkhovna Rada do not represent their interests,” he said. 

The minister said he did not know where the meeting could take place. “We want to understand the purpose of convening this meeting,” he said. 

If the organisers intend to urge the Kiev authorities to take care of the country, Russia will support it wholeheartedly. “But if they say: ‘take your seats at the table and give them cheap gas’, this is probably senseless,” he said. 

In discussing ways to resolve the Ukrainian crisis some time ago, Lavrov and US Secretary of State John Kerry did not rule out a meeting between Ukrainian, Russian, EU and US officials.

Concerning that cheap gas, Putin released a letter he penned to European heads of state patiently explaining the next Russian moves if the West refuses to come to the bargaining table. Pre-payment will be required for future energy supplies if no effort is made by the putschists to whittle down some of the substantial debt Ukraine has accumulated:

The debt of NAK Naftogaz Ukraine for delivered gas has been growing monthly this year. In November-December 2013 this debt stood at 1.451,5 billion US dollars; in February 2014 it increased by a further 260.3 million and in March by another 526.1 million US dollars. Here I would like to draw your attention to the fact that in March there was still a discount price applied, i.e., 268.5 US dollars per 1,000 cubic meters of gas. And even at that price, Ukraine did not pay a single dollar. 

In such conditions, in accordance with Articles 5.15, 5.8 and 5.3 of the contract, Gazprom is compelled to switch over to advance payment for gas delivery, and in the event of further violation of the conditions of payment, will completely or partially cease gas deliveries. In other words, only the volume of natural gas will be delivered to Ukraine as was paid for one month in advance of delivery. 

Undoubtedly, this is an extreme measure. We fully realize that this increases the risk of siphoning off natural gas passing through Ukraine’s territory and heading to European consumers. We also realize that this may make it difficult for Ukraine to accumulate sufficient gas reserves for use in the autumn and winter period. In order to guarantee uninterrupted transit, it will be necessary, in the nearest future, to supply 11.5 billion cubic meters of gas that will be pumped into Ukraine’s underground storage facilities, and this will require a payment of about 5 billion US dollars. 

However, the fact that our European partners have unilaterally withdrawn from the concerted efforts to resolve the Ukrainian crisis, and even from holding consultations with the Russian side, leaves Russia no alternative.

In all of this, the Russian position is legal, rational, forward looking. What does the West stand for here? Subterfuge, violence, austerity. Apparently that is the only game the U.S. and its European toadies know how to play.

****

Going forward, I apologize about the spottiness of my usual Friday Hippies vs. Punks posts. Owing to a combination of busyness at work, the eruption of the New Cold War and gradual loss of physical conditioning, I haven't been able to devote the amount of time necessary to write the posts, which require aural immersion during the work week as well as some textual research.

Also, I have been meaning to begin a regular "Nihilism" post. Look for the first installment this weekend.

Until then I'll leave you with The Troggs song, "With a Girl Like You." Nihilism in simple form is the rejection of the Romantic world view. There is no loving embrace from the feminine; there is no bull's-eye for your arrow.

Impasse Likely in Negotiations on New Constitution for Ukraine

It is unclear at this point the next time Kerry and Lavrov will meet. The Ukrainian presidential election is May 25. The conventional wisdom, as polled in a story today by Neil MacFarquhar, "Russia Plotting for Ukrainian Influence, Not Invasion, Analysts Say," is that Putin and Lavrov want a new constitution in place prior to presidential elections. I'm not sure. It seems that a new constitution would have to be ratified by a referendum coinciding with national elections for a new parliament and regional governments. It is unlikely that this could take place prior to the end of next month.

MacFarquhar's story starts off well by giving a reasonably clear picture of what Russia is looking for in a new constitution:

[T]he Kremlin has made one central demand, which does not at first glance seem terribly unreasonable. It wants Kiev to adopt a federal system of government giving far more power to the governors across Ukraine. 

“A federal structure will ensure that Ukraine will not be anti-Russian,” said Sergei A. Markov, a Russian political strategist who supports the Kremlin. 

Russian officials have said they envision a system in which regions elect their own leaders and protect their own economic, cultural and religious traditions, including the forging of independent economic ties with Russia.

Why federalization is important actually receives a bit of an airing in today's offering from Andrew Higgins on Donetsk's Peoples Republic, "In Eastern Ukraine, a One-Building, Pro-Russia Realm Persists Despite Criticism":

The government installed after Mr. Yanukovych fled the capital on Feb. 21 ended the dominance of Russian-speaking politicians from the east of the country — most of whom had opposed the pro-European protests in Kiev that toppled Mr. Yanukovych — and shifted power sharply to Ukrainian speakers from western and central regions.

State-run Russian television, which is widely watched here despite efforts by officials in Kiev to block access, has fanned fears that this shift will bring discrimination and even persecution by nationalist extremists. The Ukrainian Parliament contributed to this anxiety by voting in late February to scrap a law that allows Russian to be used instead of Ukrainian in schools, courts and elsewhere in regions where it is widely spoken. The decision was quickly reversed but left fertile grounds for pro-Russian activists to plant seeds of alarm. 

Few Donetsk residents can cite concrete examples of how life has become worse as a result of the change of power in Kiev, but opinion polls show that the eastern regions take a dim view of Ukraine’s new order. A recent poll commissioned by the International Republican Institute showed that 72 percent of people in the Russian-speaking east think the country is going in the wrong direction, compared with only 36 percent in the Ukrainian-speaking west. 

East and west are also sharply divided on where their future should lie. Ninety percent of those polled in the west want Ukraine to enter an economic union with Europe, while 59 percent of easterners want to join a Russian-led customs union.

Clearly this is a country at odds with itself. The putschists solution so far has been to appoint pro-Western oligarchs to run the regional governments in the Russian-speaking areas; that, and gradually militarize the East with mercenaries and fascists. This is a recipe for more instability.

As I see it, federalization is the only hope for Ukraine going forward. A rump government composed of Fatherland Party retreads and oligarchs and neo-Nazis cannot keep the country together, even if the chocolate king wins in a landslide.

The two other key Russians demands for a new Ukrainian constitution are 1) neutrality a la Finland, and 2) official status for the Russian language. All these demands seem reasonable to me.

But the U.S. desires at some point in the not-to-distant future to include Ukraine in NATO. So neutralization is going to be a sticking point for Kerry and the putschists. That is why I anticipate more unrest. The putschists are fundamentally unstable. They cannot govern without distraction and crisis. Russia holds all the cards, not the least of which is Gazprom's energy portfolio. Time is on Putin's side, not the putschists. The putschists can only create more crises and hope the West will arrive to the rescue. Barring some sort of dramatic shift in the status quo -- like massive violence in the East -- all this adds up to impasse in the negotiations for Ukraine's new constitution.

Russia Triumphant, West Apoplectic

“They cheated us again and again, made decisions behind our back, presenting us with completed facts. That’s the way it was with the expansion of NATO in the East, with the deployment of military infrastructure at our borders. They always told us the same thing: ‘Well, this does not involve you.’ ”

President Vladimir Putin                                                          

Address on the Treaty of Accession with Crimea and Sevastopol

St. George's Hall, Kremlin                                                        

The orgy of Russophobia on display today in the Gray Lady is remarkable. One story after another is chock full of acidic disdain and an ignorance of the basic facts of recent history. Case in point is Steven Erlanger's think piece on NATO, "Russia’s Aggression in Crimea Brings NATO Into Renewed Focus." Nowhere mentioned is the fundamental betrayal of the verbal agreement between Bush I and Gorbachev, that German reunification would be allowed to proceed as long as the former Warsaw Pact countries would not be gobbled up by NATO. Clinton promptly broke the agreement and expanded NATO. This is what Putin refers to in the quote above.

Putin's speech was refreshing to behold, in stark contrast to Joe Biden's tired, obviously mendacious statement in Warsaw where he makes more stale threats. At what point does the U.S. foreign policy elite realize that they are losing and just, please, you know, stop talking, stop blustering?

A perfect example is White House Press Secretary Jay Carney yesterday trying to take credit for punishing the Russian economy on a day when the markets responded positively to Putin's Crimea address. Here is how Peter Baker describes it in the best piece to be found in today's paper, "Obama’s Test: Can Penalties Change Russia’s Course?":

Mr. Carney said the United States would also expand its sanctions, and noted that the geopolitical uncertainty had already taken a toll on Russia’s currency and markets. “I wouldn’t if I were you invest in Russian equities right now unless you’re going short,” he said. 

And yet world markets rose on Tuesday after Mr. Putin’s speech and action, either shrugging off the crisis or interpreting his reassurance that he did not want to split Ukraine as a signal that he would be satisfied after taking Crimea. The ruble, bolstered by Russia’s central bank, backed off the record lows it had fallen to in recent days.

Either way, Mr. Obama was left on the defensive against critics who said he was not being strong enough. Mitt Romney, his Republican challenger in the 2012 election, said Tuesday that Mr. Obama and his team waited too long to project strength and prepare possible punishments before Mr. Putin sent troops into Crimea. “Part of their failure, I submit, is due to their failure to act when action was possible, and needed,” Mr. Romney wrote in The Wall Street Journal. 

Mr. Carney said it was “preposterous” and “provably wrong” to suggest, as other critics have, that the president sent a signal of weakness that emboldened Mr. Putin after failing to follow through on threats to retaliate against Syria last year for a chemical weapons attack on civilians. Mr. Carney went on to note that Mr. Bush’s willingness to invade Iraq “didn’t seem to affect Russia’s calculations when it came to its actions in Georgia” in 2008. 

Mr. Obama has given himself more tools to use against Russia, if he chooses to do so. An executive order he signed on Monday authorizes sanctions against not just Russian government officials but also the Russian arms industry and Russian oligarchs who support Mr. Putin’s rule. 

One Russian who has been on some lists of possible targets circulated in Washington and Brussels is Igor Sechin, a longtime Putin adviser who is now the president of Rosneft, the state oil company. 

Rosneft is deeply entwined in a variety of projects with ExxonMobil, including a joint venture signed in December to develop oil reserves in Siberia. If Mr. Sechin is barred from traveling to the United States and has his personal assets frozen, current and former government officials said that could put the partnership between the oil companies in real jeopardy. 

Republicans in Washington are also pushing Mr. Obama to be more assertive to break Russia’s energy grip over Ukraine and Europe. “If we are serious about challenging Putin’s aggression,” said Representative Ed Royce, Republican of California, the chairman of the House Foreign Affairs Committee, “the U.S. and our European allies should make an all-out effort to break that grip.”

That is a marker of the seriousness of Western talk of sanctions: Does the Russian energy sector get targeted? In order to go after Rosneft or Gazprom you would have to guarantee that Europe and the United States march together in lockstep, otherwise one country's loss would just be another's gain. Europe has already declared that the energy sector is off-limits. The result? Serious economic sanctions are as probable as a thermonuclear war between East and West.