07.08.2017 Author: Caleb Maupin

New Sanctions on Russia, Gas Profits & The Ghost of Hjalamar Shacht

89546655It may sound almost routine for the US congress to pass sanctions against Russia, Iran, and North Korea, and for the President to sign them into law. However, a great deal of fanfare surrounded the lead up to August 2nd, 2017.

Support for the bill seemed almost unanimous within the political establishment. Within Congress, the loudest objection to the bill came from Senator Bernie Sanders of Vermont. Even Sanders did not dare condemn economic warfare against Russia. The objections from Sanders only involved stated fears about putting the future of the Iran nuclear deal, heralded as a crowning achievement of the Obama administration, into jeopardy.

On the international arena, objections to the bill were widespread. Iran, North Korea, Russia, and their allies were not alone. Within the NATO camp, a number of voices spoke up against the bill, the loudest of them coming from Germany. The bill specifically penalized and threatened companies that cooperated with Russia’s key natural gas pipelines.

“We must continue to focus on how we can get our gas to allies in Europe,” said Representative Tim Ryan of Ohio on the floor of Congress. The fact that the USA is attempting to push Russia off the international natural gas and oil market, and claim a bigger share for US energy corporations, was no secret at all.

Due to the invention of hydraulic fracking, the United States is now the top natural gas producer on earth, and third top producer of oil. However, Gazprom, the state owned natural gas corporation of Russia, remains a primary exporter on the global markets. From the Wall Street elites in Chevron, British Petroleum, Exxon-Mobil and Shell Oil, to the Koch Brothers, to Devon Energy, to tiny start-up fracking tycoons in Texas and Louisiana; all the US-based owners of natural gas companies would like to see Gazprom eliminated. Furthermore, they would like to see Gazprom’s customers purchasing from them.

Targeting Russia   

In the interests of their pocketbooks, the rich and powerful in the United States seemed almost completely unified in supporting new sanctions on Russia, despite offending European allies. The hostility to Vladimir Putin and the Russian government from US leaders and Wall Street monopolists has nothing to do with concerns about human rights or election meddling. It has nothing to do with Ukraine. It has nothing to do with homosexuality.

The Russian State is in the crosshairs because it is a competitor. After the chaos of the 1990s, the Putin administration restored order within the borders of the Russian Federation by centralizing the economy. Instead of being a mess of oligarchs, drug addiction, gangs, and mass poverty, the Putin administration has re-asserted state control over Russia’s economy. The government controlled natural resources are central, and the private sector no longer runs rampant, but is subordinated to it.

The Russian State, backed by a well-organized, patriotic, population and the Russian Orthodox Church, is a force to be reckoned with on the international markets.

While the fracking companies and the big oil monopolists have clashed over policy, in hating Russia they are completely unified. Their vassals in the terrorism linked Saudi monarchy and the corrupt Nigerian state are obediently lined up behind them.

Disagreements among the owners of oil and natural gas companies are limited. All the wealthy energy oligarchs in the financial orbit of the United States want Russia removed from the global markets. Some favor military escalation. Some favor CIA subversion. Some favor starving them out with artificially low oil prices. The disagreements are restricted to the question of “how”; What methods can be used to remove Russia as a competitor?

The notion that Exxon-Mobil (and by de-facto, Secretary of State Rex Tillerson) are “pro-Russian,” a conspiracy theory often touted by Democrats like Maxine Waters, is deeply mistaken. While Exxon-Mobil may have had joint ventures with Russia, it still sees the oil and natural gas entities of the Russian state as a competitor.

British Petroleum had joint ventures with the Islamic Socialist government led by Moammar Gaddafi, but they did nothing to stop the bombing and destruction of Libya. The destruction of Libya has eliminated the Islamic Socialist, oil exporting, Libyan state that was born in the 1969 revolution. However, British Petroleum’s profits have not been damaged. Joint ventures between Exxon-Mobil and the Russian State, like BP’s endeavors in Libya, do not eliminate the desire to make profits. Corporate entities would always prefer a market void of competitors.

New Mccarthyism? Or Worse?

The bill specifically prevented the President of the United States from lifting the sanctions without the approval of Congress. The White House objected to the constitutionality of this measure, which restricts the ability of the elected President, who happens to have authored a book called “The Art of the Deal” from negotiating on international stage.

Powerful figures in both the Democratic and Republican Parties crafted the new sanctions. The specific jab at Trump restricting his negotiating ability fits in with the “Russia-gate” hysteria, and the ongoing flagellation of Trump for his unfulfilled isolationist rhetoric on the campaign trail. Even if Trump had wanted to veto the bill, which is unlikely due to his alliance with fracking corporations, in the current atmosphere of anti-Russian hysteria, it would have been political suicide. The allegations of “Russian collusion” serve to force Trump into a corner, where he will be forced to cooperate with any proposed military action.

While many compare the current anti-Russian hysteria to Mccarthyism, they ignore the fact that the anti-Communist frenzies of the late 40s and early 50s were not specifically directed against a President. A more appropriate comparison would be the frenzy of anti-communist red-baiting that surrounded the Presidency of John F. Kennedy prior to his assassination.

Prior to Kennedy’s death, the John Birch Society and other right-wing sections of the public were mobilized against him. Similar to the escalating frivolous allegations made against Trump, it was said in the early sixties that Kennedy’s advocacy of détente, and his inconsistent alliance with the Civil Rights Movement, somehow proved he was a Communist sympathizer.

However, Kennedy was nothing of the kind. Kennedy simply had a strategic disagreement with the Pentagon about how to fight against the global Communist movement. Likewise, Trump is not a Russian sympathizer. However, his mild isolationist statements, despite winning him rustbelt votes, are an unforgivable sin in the eyes of many rich and powerful people, who are fully committed to hostility toward the Russian state.

Wall Street & London Lost Their Playground

The narrative commonly understood by Americans about Russia’s recent history is that prior to 1991, the people of Russia were “starving and miserable” because “Communism is bad.” Then, according to the commonly believed narrative, Russia “got freedom” in 1991, and everything got all better due to the “magic of the free market.”  No matter how often westerners repeat this fairy tale version of Russia’s recent history, it simply does not conform to reality.

Former US Senator Bill Bradley visited Russia and directly observed conditions in the aftermath of the fall of the Soviet Union. He described the situation saying “30% unemployment, rampant inflation, pensions gone, savings gone, 30 or 40 years… it’s all gone. No jobs. A few people doing very well, who bought all assets from the state, but the average person, no.”

After the Communist Party was toppled, neoliberal economist Jeffrey Sachs, who has a similar record in Latin America during the 1990s, was dispatched to oversee Russia’s “transition” to the “free market.” As Russia’s state controlled economy was ripped apart, the suicide rate doubled, drug addiction increased by 900%, and HIV infection became a nation-wide epidemic.

In her 2007 book “The Shock Doctrine,” Canadian academic Naomi Klein provides the details of a country devastated by the imposition of  capitalism.  Between 1992 and 2006, Russia’s population decreased by 10 percent, with roughly 6.6 million people either dying or fleeing the country. Klein writes “25 percent of Russians – almost 37 million people – lived in poverty described as ‘desperate.’”

When they lived as citizens of the Soviet Union, Russians were guaranteed employment, housing and education by the state. The imposition of free market capitalism by the Yeltsin administration resulted in mass poverty, a huge spike in crime, a rise in Islamic terrorism, as well as human trafficking. Only 6% of Russian’s approved of Yeltsin’s economic policies, many of which were dictated by Jeffrey Sachs and international banking institutions.

There’s no question that Yeltsin’s re-election in 1996 came about as a result of a huge amount of “meddling” from Washington DC. Measures to support Yeltsin by the Clinton Whitehouse are even bragged about on the website of the US Bureau of Public Affairs.

The narrative of American television, telling of the 1990s in Russia as an endless economic boom punctuated by celebrations of “freedom” and “democracy” is widely known to be false. The fall of the Soviet Union, and the transition to unbridled, unregulated capitalism was an economic disaster by any honest measurement.

However, there were certain forces that benefited from it. For example, due to the fact that 80% of Russian farms went bankrupt between 1991 and 1998, American agri-business made huge amounts of money exporting food to Russia.

The Truth About Bill Browder

Another group of people that greatly benefited from Russia’s financial ruin were certain British and American “investors.”

As Bill Browder testified before Congress on July 25th, and made a series of unproven allegations against the Russian government, nothing has been stranger than seeing his words echoed and promoted by rank-and-file Democrats. Many of the very people who protested at Occupy Wall Street with signs saying things like “Jump You F—ers!” and “Eat The Rich” now hate the Russian government, based on sob stories they have heard on television, from the mouth of a multi-millionaire hedge fund manager who has been convicted of tax fraud. While it was dressed up with all kinds of theatrics, the underlying message of the congressional hearing with Browder as an “expert” on Russia, boiled down to “Putin is mean to foreign millionaires who break the law.”

If it weren’t for the western media’s filter of reality, Bill Browder’s story would make the Russian government seem more attractive than ever to those concerned about economic justice. When has the US government ever responded to the actions of wealthy defrauding corporate criminals with such ire? The focus of any vengeful sentiments from US police forces seems to be low-income people involved in petty thefts or drug possession, not wealthy financiers who rob the public treasury.

Who is Bill Browder? He is a hedge fund manager who greatly benefited from Russia’s economic misery during the 1990s. Browder is the grandson of Earl Browder, a leader of the Communist Party USA who was deposed as the Second World War concluded. Bill Browder got a degree from the University of Chicago, and set up shop in Russia with various multi-million dollar financial outfits after the collapse of the Soviet Union.

Browder is particularly aligned with the British financial cartels. His outfit, Hermitage Capital Management worked closely with HSBC Bank, British Petroleum, and other entities primarily centered on the London Stock Exchange. Browder’s ties in Britain were so close that he actually gave up his US citizenship in 1998 and became a citizen of the United Kingdom.

In the 1990s, under Yeltsin, western corporations got rich and the Russian public suffered and died at astounding rates. More than one analyst has called it “economic genocide.” But Putin’s Kremlin has a very different mode of operation, and almost immediately started working to rebuild the country from economic devastation. Between 2000 and 2008, Russia’s industrial output increased by a total 125%. By 2007, Russia’s industrial output had finally reached the same level it was prior to the collapse of the USSR. Gross domestic product of Russia increased from $764 billion to $2096.8 billion between 2007 and 2014. As the economy got better, Putin launched his National Priorities Project, and began utilizing state energy revenue to directly improve the lives of the population. Under Putin, poverty has dropped by 14%. The wage of average Russian worker has multiplied.

As Russia’s economy rapidly stabilized and recovered in the first decade of the 21st century, primarily due to heavy state intervention and rising oil prices, the western financiers who coordinated to loot the country started to get nervous.

As he ran the show at Hermitage, Bill Browder called himself an “activist shareholder.” In essence, Browder worked to undermine the credibility of Gazprom and other state controlled entities in Russia’s economy as they got stronger and pushed the private sector into line. Browder and the bankers from HSBC ultimately fled.

In absentia, Bill Browder was convicted of defrauding the Russian government of 522 million rubles, the equivalent of $16.8 million, in taxes. The method utilized for the fraud was “falsifying tax declarations and illegally using benefits intended for disabled persons.”

With this overview of the facts in Bill Browder’s case we can gain an entire understanding of why western billionaires and bankers hate the Putin government so much. In the 1990s Russia was their playground. Today, it is a strong, independent competitor, selling natural gas and oil in competition with them. This transformation has vastly improved the lives of millions of people in Russia. It has also cut deeply into the profits of western corporations.

The Ghost of Hjalamar Shacht

While the German government has long been a friend of the USA and Britain, and has cooperated with continued economic warfare against the Russian State, even as it hurts their own economy, the new sanctions on Russia seem to have touched a nerve. The new sanctions seem to employ methods of coercion, attempting to force Germany to stop buying Russia’s natural gas. While previous sanctions have hurt shipping in German ports, the new move from Washington goes as far as to put the sovereignty of the country blatantly into question.

While Germany has tolerated a huge amount of anti-Russian policies harmful to its economies, in response to the new sanctions, German politicians have even talked of “counter-sanctions” against the USA.

While it has become cliché in the United States and other western countries to make analogies to Adolph Hitler, especially when discontent and nationalism arises in Germany, a real lesson for our times could be learned, not from studying the life of Hitler, but from the life of another key German figure of the 1930s, Hjalamar Shacht.

After the First World War, Germany was ruined. The Kaiser was toppled in a short-lived uprising. The Treaty of Versailles forced the country into prolonged economic ruin. The post-war Weimar Republic cooperated with the Versailles Treaty, paid reparations, banned military production, and made the country financially subservient to Britain and the United States.

Among the German working class, the Communist Party became very powerful, and led community based economic struggles for food, housing, and economic relief.

However, the Communists were not the only dissidents around at that time. German banks and corporations were being pummeled by the financiers of the countries that had won the war. Among German capitalists such as the industrial dynasties of Krupp and Thyssen, certain radical sentiments increased. A far-right political current that opposed both Communism and the submissive financial relationship to the west emerged among Germany’s rich and powerful.

Hjalamar Shacht, Germany’s most famous and well-loved economist, rallied the rich and powerful capitalists of Germany to get behind Adolph Hitler, and enable him to seize power. Despite the anti-western policies, certain British and American interests also quietly backed Hitler, seeing him as the only alternative to the Communist Party eventually setting up shop in Berlin.

After the 1933 “revolution” in which the Nazis took control, Shacht was put in charge of the German economy. He presided over the revival of armaments manufacturing, the construction of the autobahn highways, and the creation of a large network of government employees involved in political repression, i.e. secret police, concentration camp guards. Shacht personally delivered the message to US President Franklin Roosevelt the Germany would not repay its loans to Americans banks. Canceling foreign debt, and drastically increasing public spending had a good economic impact. The ensuing boom enabled the originally unpopular Nazi regime to smash and exterminate political opposition, and win a solid loyal base among the population.

Hitler’s rhetoric included all kinds of falsified history, racial pseudo-science, and bombastic propaganda. Behind it all was the violent seizure of power by the Shachtian elements in Frankfurt’s financial centers. Wealthy German bankers and corporations who decided ‘we won’t be kicked around by Wall Street and London anymore’ used Hitler and his Stormtroopers to get their way. At the same time, they also got to wipe out the Communists and Labor Unions that threatened their power from below.

The horrors of the Second World War in Europe can be traced back to the very questions that now burn throughout German society in the aftermath of the new sanctions bill. How much inconvenience and maltreatment should German businessmen be willing to accept in order to remain aligned with the USA and Britain? Is it really in Germany’s “national interest” to be dominated by foreign players with NATO?

Even after the Second World War, after he was acquitted at Nuremburg, the banker and economist Hjalamar Shacht remained committed to the same overall economic vision. In the later years of his life, Shacht worked to push West Germany to have trade and business relations with the Soviet Union, Abdul Nasser’s Egypt, and other countries targeted by the USA and Britain.

Shachtianism is the belief that Germany’s economic future is not with the West, but with the East, and these sentiments are widespread in Germany, and always have been, throughout the history of civilization in Europe. Though they became unpopular and in some cases almost legally prohibited after the Second World War, these sentiments are always present beneath the surface. The rise of the “Alternative for Duetschland” Party shows these sentiments re-emerging.

While it is easy to sound alarm bells about “Neo-Nazism,” what should be more obvious and concerning is that the kinds of economic factors and political decisions that drove a wedge between Germany and other western powers before both the first and second world wars are now emerging again.

While Nazism is dead and buried, the frustrations and tensions that birthed it and launched a path toward global catastrophe, are alive and well. Under Obama, the policy of the White House was to keep the EU and NATO happy while jointly targeting Russia and China. The policy under Trump seems to be less interested in maintaining the NATO alliance, and more focused on short term economic gains for US corporations. The attempt to coerce Germany into the sphere of US energy corporations with the new sanctions bill is a huge stimulus to the Shachtian sentiments among the German elites.

The new sanctions are intended to harm Russia’s economy, which is centered around state controlled oil and natural gas. However, in the process, the USA could be creating and awakening new enemies and opponents.

The new sanctions could be setting the stage for Germany and other EU countries to end their alliance with the United States.

Much like Bush’s invasion of Iraq involved a rivalry with France, “freedom fries” not forgotten, Trump’s new bill re-opens the possibility of the NATO bloc against Russia fracturing, as competing interests seek to define the strategy of western capitalism.

Caleb Maupin is a political analyst and activist based in New York. He studied political science at Baldwin-Wallace College and was inspired and involved in the Occupy Wall Street movement, especially for the online magazine “New Eastern Outlook”.


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