In which the ruble gets too strong and has to be weakened, Pakistan bends the knee to the US and IMF, the media decides today that the US might go into recession (tomorrow they’ll probably change their minds), Russia strengthens their hold on occupied territory, there’s backlash against Kissinger for having a reasonable take, and China and Russia back up the DPRK.

Link back to the discussion thread.

Economically

Europe

  • UK imposes windfall tax on oil and gas company profits as inflation bites WaPo

Britain’s Conservative government announced Thursday a 25 percent windfall tax on the profits of oil and gas firms that would be used to support $19 billion in assistance for low-income households struggling with a sharp spike in the cost of living.

Chancellor Rishi Sunak said that the levy would be placed on energy companies that were making “extraordinary profits” due to the spike in commodity prices following the post-pandemic reopening of the global economy and Russia’s invasion of Ukraine. The profits did not arise because of “changes to risk-taking, innovation or efficiency,” said Sunak, Britain’s top finance official. “And for that reason, I am sympathetic to the argument to tax those profits fairly.”

  • Russia cools off red-hot ruble rally RT

The Russian ruble weakened to a two-week low on Thursday following an extraordinary meeting of the central bank at which the key interest rate was slashed three percentage points to 11%. The regulator suggested that more cuts would follow as inflation risks subside.

The Bank of Russia’s latest move was driven by the necessity to stem the ruble’s strength, which had raised concerns about the negative impact on Russia’s budget revenue from exports. On Monday, Russia cut the share of foreign currency revenue that exporters must convert into rubles to 50%, from the previous 80%. A rapidly appreciating ruble is a problem for both exporters and the government budget.

Despite the unprecedented sanctions imposed on Russia, surging exports and capital controls have sapped demand for foreign currencies and sent the ruble soaring to its strongest levels in years. Previous government attempts to slow the currency’s rise failed and the ruble continued to appreciate.

Suffering from success.

  • Europe Frets Over Oil Sanctions Stalemate Bloomberg

The EU’s stalemate over oil sanctions isn’t on the official agenda of next week’s leaders’ meeting in Brussels, but some may choose to bring it up. Hungarian Prime Minister Viktor Orban, the main obstacle to a deal, has made it clear he doesn’t want to discuss it, but frustration is mounting. Amid the scramble to find a deal before Monday, EU nations may discuss options including exempting pipeline oil from the ban or removing oil from the sanctions package altogether if they can’t sway Orban. But some nations don’t want to weaken the proposals further. Vladimir Putin, meanwhile, told Italy’s Mario Draghi that he’s willing to facilitate grain and fertilizer exports as global concern mounts about food shortages and rising prices — but only if sanctions on Russia are lifted, which isn’t likely.

  • Italian energy giant Eni signs deal to boost Algerian gas supply Al Jazeera

Italian energy giant Eni and Algeria’s state-owned Sonatrach have reached agreement to boost both gas exploration and the development of green hydrogen in the North African nation, as Rome seeks new ways to reduce its reliance on Russian hydrocarbons.

  • Rubles for gas: Who’s paid so far? Politico

Refused: Poland, Bulgaria, Finland

On the fence: Netherlands.

Accepted: Hungary, Germany, France, Italy, Austria, Czechia, Slovakia, Slovenia.

Asia and Oceania

  • Japan’s Kishida pledges to restart idled nuclear power plants Al Jazeera

Tokyo will take “concrete steps” to restart plants that suspended operations after the Fukushima disaster more than a decade ago but is not considering any new facilities, Kishida told parliament on Friday.

  • Thailand to borrow 20 billion baht [$600 million dollars] to maintain fuel subsidies Thaiger

  • Expect more power price hikes – a 1970s-style energy shock is on the cards The Conversation

Yesterday the Australian Energy Regulator increased the “default market offers” that apply to electricity retailers in New South Wales, South Australia, Queensland by 8% to 18%, depending on type of tariffs and location.

The day before, Victoria’s Essential Services Commission announced the default offer for Victorian consumers will increase by 1% to 5%, depending on tariff type and location.

These increases point to very serious issues within Australia’s electricity market. We may be in the early stages of an energy price shock comparable to the 1973 oil price crisis.

  • China’s Aircraft Industry Puts an End to Western Monopoly NEO

  • China PM Calls to Double Efforts To Ensure the Summer Harvest TeleSUR

Middle East

  • Pakistan hikes fuel prices to meet IMF loan conditions Al Jazeera

Pakistan’s government increased local fuel prices from Friday to meet a key condition set by the International Monetary Fund for reviving its bailout program.

The resumption of the bailout will provide a much-needed relief to keep the South Asian nation’s economy afloat and avert a default.

  • Pakistan’s foreign minister calls for a reset. Washington should hear him out. WaPo

Pakistan’s new civilian government is already under attack by the forces of recently removed prime minister Imran Khan, who is pushing the conspiracy theory that President Biden somehow orchestrated his ouster. Last week, the country’s new foreign minister came to the United States to explore yet another attempt to repair the U.S.-Pakistan alliance, which might look unsalvageable. Washington should hear him out.

“The way in which this relationship progressed in recent years doesn’t serve the interests of the people of Pakistan, but it also doesn’t serve the interests of the people of America,” Foreign Minister Bilawal Bhutto Zardari told me in an interview. “And I still believe that Pakistan and the United States agree on far more than we disagree on.”

The main lesson Zardari took from his family’s epic battles with other powerful Pakistani institutions was that change should be pursued slowly and through negotiation, not confrontation.

“Even though I’m young and I’m supposed to be a lot more idealistic and revolutionary, because of our [family’s] experience, I actually believe in evolution over revolution,” Zardari said.

Regardless of whether it was a deliberate US coup or not, the results look the same either way.

  • Kazakhstan Supports Putin’s Proposed Greater Eurasia Project TeleSUR

North America

  • Opinion: It’s time to prepare for a recession CNN

The economy is close to entering a recession, perhaps as soon as this year. To avoid taking too much of a financial hit, Americans will need to prepare.

  • The US will enter a recession as soon as this year and the Fed can’t stop food and energy inflation, hedge fund manager Kyle Bass says Business Insider

  • Ron Insana: The Federal Reserve may have already done enough to cool the economy CNBC

  • Blame monopolies for today’s sky-high inflation, Boston Fed researchers say Business Insider

Monopolies?! And not the freaking Putler?!?!

The decades-long decline of industry competition made today’s inflation crisis much worse than it needed to be, researchers at the Federal Reserve Bank of Boston said in a new paper.

Companies typically pass higher input costs on to consumer prices. Yet that pass-through “becomes about 25 percentage points greater when there is an increase in concentration similar to the one observed since the beginning of this century,” Fed economists Falk Bräuning, José L. Fillat, and Gustavo Joaquim said. Put simply, dwindling industry competition leads to companies raising prices at a much faster pace.

Global

  • Oil on track for weekly rise amid global supply concerns Reuters

  • White House expects minimal impact on U.S. and global economy from Russia default Reuters

“We expect the impact on the U.S. and the global economy to be minimal, given Russia has already been isolated financially,” White House spokesperson Karine Jean-Pierre said in a press briefing on Thursday.

  • Top financiers and millionaires just met up in the Swiss Alps. And the mood was terrible CNBC

Liberal billionaire financier George Soros, in his speech on Tuesday, took aim at Chinese President Xi Jinping’s doubling down on his “zero-Covid” policy and associated lockdowns, which he said have pushed the Chinese economy into a “freefall” since March.

…

Speaking on a CNBC-chaired panel on Monday, Citigroup CEO Jane Fraser said the prominence of each of the “three R words” – Russia, recession and rates – depended on geography.

…

“Food is the big worry here, because that could be the wildcard. When people are hungry around the world – and there’s going to be 1.5 billion hungry people without necessarily the means or the access to food, particularly in Africa but not only – that is a problem.”

…

“We have a commodity price shock in many countries, and the particular shock I want to bring your attention to is food price shock. Over the last week, because of that sense that maybe the economy is getting into tougher waters, the oil price went down but food price continues to go up, up, up, up,” Georgieva said.

…

In a blog post earlier in the week, Georgieva warned that the global economy faces a “confluence of calamities” and its “biggest test since the Second World War,” and the IMF estimates that global growth will slow to 3.6% in 2022 from 6.1% in 2021.

However, Georgieva was wary of sounding the global alarm, noting that “there is a long way from 3.6(%) to a global recession.”

Diplomatically and Politically

Involving Ukraine or Russia

  • Zaporzhye and Kherson regions switch to Russian phone numbers and Moscow time, so there will be no more transfers of clocks to winter and summer time.

  • The Russian authorities in charge on Kherson and Zaporozhye report that 80-90% of the population wants to become Russian citizens. If true, I think this reflects coercion and begrudging acceptance than any great wellspring of Russian support, but, as I’ve said, there’s no doubt a significant portion of the population is ethnically Russian or otherwise pro-Russian.*

  • Leading experts accuse Russia of inciting genocide in Ukraine and intending to “destroy” Ukrainian people CNN

The increasingly widespread use of the word “genocide” to describe bad things is, as many others on Hexbear have said, undermines the seriousness past genocides which really WERE systematic eradications of populations, and thus is a form of soft Holocaust minimization or even denial, whether the people saying it intend it or not.

  • ‘Stop playing’ with Russia, end war: Zelensky tells West Inquirer

President Volodymyr Zelensky urged the West to stop playing around with Russia and impose tougher sanctions on Moscow to end its “senseless war” in Ukraine, adding his country would remain independent, the only question was at what price.

Zelensky’s criticism of the West has mounted in recent days as the European Union moves slowly towards a possible Russian oil embargo and as thousands of Russian forces try to encircle two key eastern cities of Sievierodonetsk and Lysychansk.

Asia and Oceania

  • Vietnamese, Cuban Party officials hold talks [Vietnam News]

Senior Party officials of Việt Nam and Cuba have agreed that amid the COVID-19 pandemic, regular meetings and exchanges between the two Parties and countries vividly demonstrate their special friendship.

The two sides discussed orientations and measures to further implement cooperation agreements in different spheres like healthcare, agriculture, fishery, bio-technology and renewable energy, as well as specific projects.

Thưởng reaffirmed the consistent policy of the Vietnamese Party, State and people that is supporting the just revolutionary cause of Cuba, and noted his belief that under the leadership of the PCC, Cuban people will successfully update their socio-economic model, opening up a new development period.

  • China and Solomon Islands Ready to Forge ‘Iron-Clad’ Ties TeleSUR

Middle East

  • Turkey’s Rising Anti-Refugee Sentiment Adds to Erdogan’s Challenges Bloomberg

Turkey’s hosting of 3.7 million Syrians who fled their country’s war is stirring political tensions as rocketing prices and job insecurity take a toll just over a year before scheduled elections, ratcheting up pressure on President Recep Tayyip Erdogan.

He has announced a plan to return one million Syrians to a Turkish-controlled strip of territory, while breaking with some nationalist politicians to insist the repatriation program will be voluntary.

The proposal could help dial down growing resentment among Turks and resettle largely Arab refugees in an area Ankara wants to keep free of the armed Syrian Kurdish group at the heart of the current tussle over expanding NATO.

North America

  • White House welcomes Fiji to its Indo-Pacific economic plan Inquirer

Fiji is joining U.S. President Joe Biden’s Indo-Pacific Economic Framework (IPEF), the White House said on Thursday, making it the first Pacific Island country in the plan that is part of a U.S. effort to push back on China’s growing regional influence.

The announcement comes as China’s Foreign Minister Wang Yi begins a sweeping tour of Pacific Island nations – including Fiji – a region that is becoming an increasingly tense front in competition for influence between Beijing and Washington.

  • Cuba Not to Attend the US Summit No Matter What Biden Decides TeleSUR

South America

  • Why is the US easing some sanctions on Venezuela? Economic blackmail, oil, Russia Multipolarista

Militarily

General News

  • China plots fresh military exercises in South China Sea Inquirer

  • @granit with a comment in the previous megathread on how the M777s are far from the superweapons the West was making them out to be (hell, they might kill more Ukrainians than Russians). To quote:

    expand

    American M777 howitzers were perceived as a miracle weapon capable of turning the tide of hostilities in Ukraine. However, after appearing at the front, these cannons were urgently recalled due to a critical defect.

    The first and most important problem with the use of American howitzers is the shortage of ammunition. Most of Ukraine’s weapons depots in the eastern and central parts of the country have been destroyed, and “Kalibr” missiles and Russian aircraft regularly conduct raids to destroy “Western military aid” even as weapons are being brought to the intermediate point for distribution. But this problem is partially solved by sending 20,000 shells. However, their transfer and distribution among several divisions of 89 howitzers is unlikely to help the Ukrainian artillerymen.

    If you add reliability issues to this, then the weapon becomes dangerous, not effective. On August 12, 2017, half of the American crew of the M777 howitzer was killed while trying to fire at terrorist positions in Iraq. The chamber in which the projectile was located suddenly stopped locking, and the blast wave went left and right, immediately killing the crew commander and two other officers. The rest of the crew were wounded by shrapnel and were discharged from combat service.

    According to leaked Indian army documents the underperformance of the M777 howitzers was entirely predictable, and the guns had failed to meet critical performance requirements during previous field evaluation trials. According to the Hindustan Times, the Indian army had reported the M777 “had fared poorly in direct firing and air portability trials.” Severe shortcomings with the barrel life, minimum range, and anti-skid mechanism were also recorded. The reasons why the military proceeded with the purchases despite this can only be speculated, but they are likely linked to New Delhi’s recent moves to strengthen defence ties with Washington - for which increased arms purchases would be a key facilitator of military cooperation. US artillery do have a remarkable history of barrel bursts and accidents, and as recently as August 12th 2017 two U.S. soldiers were killed and five more injured when firing the M777 against Islamic State positions in Iraq due to a malfunction. Similarly to the Indian case, the shell exploded. This was just the most recent of a history of many similar such incidents for the M777. Some examples include the three Australian soldiers injured March 2014 when an M777 malfunctioned. The month before a U.S. soldier had been killed and two more were seriously injured during a live firing of the M777 at Fort Bragg - and three years before ten more personnel were injured in a similar incident with the same weapons system at the same place.

    In the case of not the most outstanding mental abilities, American engineers have come up with DFCS – Digital Fire Control System. In simple terms, this is an electronic unit that works like a car navigator and tells the calculation what coordinates one needs to enter to accurately hit the target. However, 80% of American howitzers arrived in Ukraine without this device, and when the artillerymen began to complain that “they could not understand how to shoot”, an elegant solution was found. Instead of the original units produced by General Dynamics, Canadian GDMS were installed on the Ukrainian M777. Similar in characteristics, but without the American electronics inside.

    The M777 howitzer brought to the position is detected in space using the onboard inertial navigation system, GPS and motion sensor, and coordinates for a combat mission can be “thrown” to the gun via a tactical communication channel. The Americans also equipped the Ukrainian army with communication systems in advance, about a year before the start of Operation Z.

    But it was not possible to solve the problem with the accuracy of shooting. Suddenly, it turned out that the American artillerymen used howitzers with the DFCS system to shoot at an enemy armed only with small arms. The positions of the Ukrainian Armed Forces in Donbass were actively “processed” by the Russian Army, equipped, among other things, not only with air defence, but also with electronic warfare systems that suppress any electronic systems at a distance of tens of kilometres. After switching on the electronic warfare system, the Canadian GDMS units stopped working, and the positions of the M777 howitzers were suddenly hit by artillery fire 25-30 minutes after deployment and loading.

    When the Ukrainian artillerymen and their American handlers realised how the Russian army was tracking down the M777 positions, the satellite navigation units were quickly dismantled. The effectiveness of American self-propelled artillery returned to its previous, almost zero level, but for some reason there were no fewer counter artillery strikes. The answer to this phenomenon probably lies in the “Zoopark” counter-battery radar of the Russian Army. The complex has been connected to a database since the operation to force Georgia to make peace, which stores not the sounds of the forest or music for sleeping, but key features of artillery pieces from different countries of the world, including the United States.

    According to a sound-measuring officer, Lieutenant Colonel of the Ground Forces in the reserve Ivan Soshkin, “three sevens”, like any artillery of NATO countries, has its own acoustic portrait and its work is clearly “audible”.

    Constant values, according to Soshkin, are the barrel length, caliber, type of gunpowder used, and much more, which makes up the “basic set” of target parameters. M777 has long been known to Russian counter-batteries — it is a 155-mm howitzer with a 39-calibre barrel. In addition, with a characteristic low-frequency sound after each shot, special cylinders also hiss to level the recoil. With this set of features, the M777 fires with a dull, low sound. As soon as these fluctuations are detected by “Zoopark”, a drone immediately takes off to the positions of the Ukrainian Armed Forces. If the drone visually recognises the parameters of the target (which, by the way, was done by Russian intelligence officers) and the commander of the artillery division gains several signs of the target’s reliability, the enemy positions are hit.

It looks like Peepee McPoopoo Ruskie-killer weapon number 93242 doesn’t work either, so, moving on to number 93243:

  • US preparing to approve advanced long-range rocket system for Ukraine CNN

The Biden administration is preparing to step up the kind of weaponry it is offering Ukraine by sending advanced, long-range rocket systems that are now the top request from Ukrainian officials, multiple officials say.

Senior Ukrainian officials, including President Volodymyr Zelensky, have pleaded in recent weeks for the US and its allies to provide the Multiple Launch Rocket System, or MLRS. The US-made weapon systems can fire a barrage of rockets hundreds of kilometers — much farther than any of the systems Ukraine already has — which the Ukrainians argue could be a gamechanger in their war against Russia.

I’m so fucking sick of the word “gamechanger” now.

  • Ukraine’s Summer Weather Forecast: Hot, Dry And Bloody Forbes

The weather in Ukraine this summer is forecast to be hotter than normal, according to meteorologists. If so, that could escalate the fighting as dry ground and clear skies enable tanks and aircraft to operate more freely than they could during winter snow and spring mud.

One drawback of warmer weather is that it deprives Russia of an excuse for failure, just as the Germans blamed the blizzards of 1941 for their failure to take Moscow, rather than their own arrogance and sloppy planning. If Russia can’t defeat Ukraine this summer, it won’t be because of the weather.

Southern Ukraine

  • Russians Claim to Find Plentiful Food and Water in Azovstal Plant After Surrender Newsweek

Russian sappers explored the abandoned Azovstal plant and say they discovered plentiful supplies of food, water and equipment left by the Azov Battalion after their surrender.

After seizing Mariupol last week, Russian sappers have cleared the area of mines and destroyed over 12,000 explosives, adding that the port city has now returned to normal activity.

Meanwhile, members of the People’s Militia of the Donetsk People’s Republic (DPR) said they found entire workshops and plentiful food supplies in the catacombs of the city’s Azovstal metallurgical plant, suggesting that hundreds of holed-up Azov fighters there did not need to surrender.

…

There was also a plentiful supply of drinking water that would have lasted the Azov Battalion for at least several more weeks.

According to the militia, there was also a healthy supply of food, medicine and electricity. Pro-Russian soldiers said they found pasta, sunflower oil, stewed pork, sardines, and different types of canned goods.

Meanwhile, Azov fighters apparently communicated with the use of portable satellite routers after a Starlink router was found in a pickup truck.

The DPR militia said they found electric devices such as phones and laptops that had been destroyed or wiped clean before the Azov soldiers gave themselves up.

Pro-Russian sappers are continuing to explore the abandoned plant after only searching around 30 percent so far, adding that they expect to discover many more secrets about its former inhabitants before the conflict is concluded.

Climate

  • As China mines more coal, levels of more potent greenhouse gas soar WaPo

The increased production and expanded capacity from mines is on track to add 10 percent to worldwide emissions of coal-mining methane, threatening to undermine international efforts to tackle global warming, according to the estimate released this week by Global Energy Monitor, a San Francisco-based nongovernmental organization that tracks fossil fuel projects.

A reminder that China spends more on renewable energy than every other country combined.

  • Hummingbirds Could Be Wiped Out By Global Warming: Scientists Newsweek

Dipshittery and Cope

  • Biden is considering canceling some student debt. Here’s why it might not be such a great idea CNN, Katie Lobosco.

But while some Democrats argue that the President should immediately erase large amounts of student loan debt for 43 million Americans with the stroke of his pen, the implications of such a significant policy move are complicated.

On the one hand, student debt cancellation could deliver financial relief to millions of Americans, helping them buy their first homes, start businesses or save for retirement – all investments that may take a back seat to pay off student debt. Loan forgiveness could also help narrow the racial wealth gap, some experts say.

But broad student loan forgiveness would also shift the cost – likely hundreds of billions of dollars – to taxpayers, including those who chose not to go to college or already paid for their education.

I agree, and we also shouldn’t make medicine because it won’t help people who are already dead.

Loan cancellation could also add to inflation while doing nothing to address the root of the problem: college affordability.

Borrowers currently hold $1.6 trillion in outstanding federal student loan debt, more than Americans owe in either credit card or auto loan debt. About 54% of borrowers with outstanding student loan debt owed less than $20,000 as of March 2021, according to the College Board. About 45% of the outstanding debt was held by the 10% of borrowers owing $80,000 or more.

A one-time cancellation of federal student loan debt would do nothing to bring down the cost of college for future borrowers or those who already paid for their degrees.

Smallpox eradication was an insult to the people who had already died of smallpox and does nothing to help them.

“Forgiving debt does not affect college affordability at all,” said Douglas Holtz-Eakin, president of the American Action Forum, a conservative think tank, and former director of the nonpartisan Congressional Budget Office.

In fact, it might even drive up the cost of college, he said. If prospective students have reason to believe that a future president may cancel their debt, they may be more willing to borrow more money – and colleges, in turn, may decide to charge more for tuition and fees.

“It creates this moral hazard and sets up an expectation that debt may be forgiven in the future,” Holtz-Eakin said.

Biden has acknowledged that college affordability is a problem and called for making community college free – but that move would require an act of Congress. The proposal was cut from the Biden-supported Build Back Better bill, which passed the House but stalled in the Senate.

If Biden cancels some student loan debt, it’s true that some borrowers will owe less money on a monthly basis and in turn, have more money in their pockets. But more consumer spending could add fuel to an already overheated economy.

“It’s a situation where what’s good for individuals is not necessarily good for society,” said Beth Akers, a senior fellow at the conservative American Enterprise Institute, where she focuses on the economics of higher education.

A report from the nonpartisan Committee for a Responsible Federal Budget estimated that canceling all $1.6 trillion in federal student loan debt would increase the inflation rate by 0.1 to 0.5 percentage points over 12 months. But Biden has suggested he would cancel less than $50,000 per borrower.

The group has also found that canceling student debt is not a cost-effective way of providing economic stimulus.

Many economists argue that canceling student loan debt would disproportionately benefit higher-wealth households, like those of doctors and lawyers, because those borrowers tend to have more student debt after attending graduate school.

An income threshold that cuts off borrowers who earn more than $125,000 a year could help make sure a bigger proportion of the relief goes to low-income borrowers.

“Canceling student debt is one of the most powerful ways to address racial and economic equity issues. The student loan system mirrors many of the inequalities that plague American society and widens the racial wealth gap,” wrote dozens of Democratic lawmakers in a March letter to Biden urging him to cancel “a meaningful amount of student debt.”

But the impact on the racial wealth gap could be muted by the fact that there are also fewer Black college students than White college students. Chingos' model found that 62% of the canceled student loan dollars would go to White borrowers while 25% would go to Black borrowers if Biden canceled up to $10,000 for those earning less than $125,000 a year.

  • Russia’s Economy Is Tanking but the Ruble Soared. Here’s Why. WSJ, by Caitlin McCabe.

Sanctions against Russia have pushed its economy into what could be the biggest decline in decades, but the country’s currency has gone the other way.

The ruble strengthened this week to levels not seen since 2018, making the currency the second-best performer against the dollar this year, based on a Dow Jones Market Data analysis of 56 currencies, trailing only the Brazilian real. The ruble has risen 16% against the greenback in 2022 and is up nearly 150% since it bottomed out days after Russia’s invasion of Ukraine three months ago.

Normally, currencies follow economies up or down. In Russia’s case, government efforts that limited selling and forced buying pushed it higher, so high in fact that it has started to weigh on the economy.

“I wouldn’t have anticipated this,” said Jane Foley, head of foreign-exchange strategy at Rabobank. “But when you put in the capital controls, you’re not looking at something real.”

NOOOOO! You can’t do capital controllarinos! That’s cheating! It’s not real!

  • In the last week, Putin became a one-man wage-price spiral and held the world’s food supply to ransom Fortune, by Tristan Bove.

I mentioned this yesterday and I made fun of what economists would say by saying that it’ll cause a wage-price spiral, and yet again, parody only lags slightly behind reality.

Russia’s inflation problem is getting out of hand, and the world’s food supply problem is also worsening, as the war in Ukraine rumbles on for a third month.

Vladimir Putin has plans to fix both of them, plans that overlook his role in worsening each.

First, Kremlin officials are claiming that Western sanctions on Russia were responsible for rising global food prices, despite experts agreeing that Russia’s blockade of Ukrainian grain leaving the country’s ports is largely to blame. Putin has made the same accusation himself multiple times, as part of an effort to get sanctions on Russia lifted.

“Fellas, what’s more important: the grain exports of a single country, or the global increase in fertilizer and diesel prices and limited supply due to western sanctions, which are fundamentally necessary for current agricultural practices the world over, and the heatwaves and droughts destroying crops?” Literally what the fuck are these “experts” talking about?

If the sanctions are lifted, Putin argues, the food supply will start to flow again.

More recently, Putin announced Wednesday that he would be raising pensions and the minimum wage by 10%.

While announcing the hikes at a televised State Council meeting in Moscow, Putin admitted that a “difficult year” lies ahead for Russia’s economy due to inflation, but he emphasized that the country’s economic troubles are not exclusively tied to the ongoing war in Ukraine.

Economists widely agree that Putin’s unprovoked invasion of Ukraine had a huge impact on worldwide inflation remaining high well into 2022, with the Biden administration going so far as to call it “Putin’s price hike.” Putin prefers to exclude that from his economic analysis.

“In countries that aren’t conducting any operations—say, overseas in North America, in Europe—inflation is comparable and, if you look at the structure of their economies, even more than ours,” Putin said, failing to mention that the war in Ukraine has been a big driver of inflation in the West.

The SANCTIONS are the big driver of inflation. NOT THE WAR! THE SANCTIONS! THEY ARE NOT THE SAME! THE WEST DID THE SANCTIONS!

But runaway prices are still a growing concern for Russia. Annual inflation in the country is currently sitting at 17.8%, a two-decade high. Russian inflation may reach as high as 23% this year, according to the country’s central bank, and prices are not expected to stabilize before 2024.

Putin’s move to raise minimum wages and pensions is likely political, Jacob Kirkegaard, a senior fellow with the Peterson Institute for International Economics, told Fortune, as it should appeal to a large demographic of people. But in economic terms, it is a risky plan.

Why is every single policy that seeks to improve the lives of people in foreign countries that are not friendly to the US “political” and not, say, wanting to improve the lives of people?! Very few western journalists looked at the China lockdowns and said “Oh, they’re doing it to save lives”, they had to enter their fucking thinking chambers to try and devise the true, evil motivations of those shifty Chinese politicians.

Raising wages should help more vulnerable consumers stay afloat in the short term, but it is far from an effective long-term strategy, as it could in theory force business owners to raise their prices to compensate for higher expenses, which could lead to higher consumer costs. A 2019 study in Germany found that a 1% increase in wages leads to an increase in consumer prices by around 0.3% over the next few years.

1% is greater than 0.3%.

This is known as a wage-price spiral, wherein workers’ higher wages lead to companies increasing prices across the board for their goods and services, which can in turn push more workers to ask for higher wages to accommodate the higher costs of living.

Why pay workers at all, then? Surely the logical endpoint of this sacred law of Economics 101 is that capitalism must create a slave class where we are all paid nothing in order to avoid the wage-price spiral and avoid inflation?

“This is sure to be inflationary, and could indeed be the starting point of more persistent price-wage spirals under the assumption that sanctions remain in place for the foreseeable future,” Kirkegaard said.

Western nations have accused Putin of holding the world at ransom by not lifting the blockade of Ukraine’s ports and leading to rising inflation around the globe. “It is completely appalling that Putin is trying to hold the world to ransom, and he is essentially weaponizing hunger and lack of food amongst the poorest people around the world,” UK Foreign Minister Liz Truss said during a diplomatic visit to Bosnia on Thursday.

When the Saudis and the US blockaded Yemen’s ports, the disgust from western nations was equally deafening, I assume.

  • An article in a similar vein, ‘Russia slams sanctions, seeks to blame West for food crisis’ Al Jazeera

  • Kissinger tells Ukrainians to get real Seattle Times, by David Horsey.

At Davos, Kissinger said the brave Ukrainians who have driven back the massive Russian assault on their country now need to be forced to give up some territory to the invaders in order to reach a peace deal that restores “the status quo ante.”

That position is about as Realist, or “realpolitik,” as it gets and several European leaders and many foreign policy experts agree with Kissinger. They believe the Ukrainians’ desire for victory and preservation of their country’s territorial integrity is naïve and, perhaps, dangerous if Russia’s dictator, Vladimir Putin, finds himself facing defeat. In other words, they favor a less-than-perfect deal that gives the war criminals in the Kremlin the ability to claim some kind of success.

More often than not, the Realists are correct; the only practical choice in diplomacy is an imperfect choice that is better than a worse one. But people like Kissinger also can be blinded by their worldly cynicism. In the 1970s, Kissinger wrote that the Cold War between the U.S. and the U.S.S.R. would probably remain a stalemate that would need to be carefully managed for many more decades, perhaps for another century. Instead, in 1989, the Soviet empire dissolved almost overnight.

In 2022, all the experts who said Russia’s overwhelming military power would crush Ukrainian resistance in a matter of days have been proven wrong. It turns out that the Russian army is a blunt, but hollow instrument. It is not impossible that Putin’s grip on power is also less than it appears. Tipping points in international affairs are rare, as Kissinger would no doubt point out, but they do come, more often than the experts ever predict.

It is way too early to tell Ukrainians to give up hope and compromise their independence. They may be on the verge of tipping the world in a better direction.

  • Russia’s Black Sea Fleet Needs Boats. Captured Ukrainian Vessels Might Be Just The Thing. Forbes, by David Axe.

The Russian navy’s battered Black Sea flotilla is so desperate for hulls that it’s begun putting its sailors on boats it captured from the Ukrainians.

Photos that circulated online Wednesday depict a Ukrainian Gyurza-class gunboat flying the Russian naval ensign in Sevastopol in Russian-occupied Crimea.

The gunboat is one of several of the Gyurzas that Russian forces captured when they swept across the eastern half of Ukraine’s Black Sea coast in the weeks following Russia’s wider attack on Ukraine starting the night of Feb. 23.

Seventy-five feet long and displacing 50 tons of water, the gun-armed Gyurza with its five crew isn’t a big or sophisticated vessel. But it’s not hard to understand why the Russian navy has taken a liking to the type.

The Russian fleet around Ukraine reportedly had eight 55-foot, gun-armed Raptor-class patrol boats when the wider war began. Today it might have just three undamaged Raptors left.

In March, a Ukrainian missile team in Mariupol—a historic port on the Sea of Azov that today is under Russian control—damaged, if not sank, one of the Raptors. But the losses really piled up a month later.

Ukrainian navy TB-2 drones starting in late April blasted four of the Russian boats as part of Kyiv’s ongoing aerial campaign targeting Russian forces on strategic Snake Island, 80 miles south of Odesa, Ukraine’s strategic port on the western Black Sea.

The depletion of the Raptor flotilla, combined with the sinking of the Black Sea Fleet cruiser Moskva by Ukrainian Neptune anti-ship missiles on April 14, has reduced by half the fleet’s front-line firepower. Moskva was the fleet’s main long-range air-defender.

A pair of missile frigates—as well as fighter jets flying from Crimea—have taken up the slack from the sunken Moskva. But the frigates are keeping 80 miles from the coast in order to avoid the Neptunes. There’s no easy substitute for the Raptors, however, as the Black Sea Fleet struggles to maintain the garrison on Snake Island with regular supply runs.

  • Military history is repeating for Russia under Putin’s regime of thieves The Conversation, by Tony Ward.

Of the world’s 20 major economies, Russia rates the worst on corruption. In 2021, the respected Corruption Perceptions Index compiled by anti-corruption body Transparency International scored Russia 29/100, alongside Liberia, Mali and Angola. This made it the 44th most corrupt nation on the index. (South Sudan was most corrupt, scoring 11/100, and Denmark the least corrupt, on 88/100.)

For context, they rate the United States to be the 27th least corrupt country, scoring 67/100 on the Pisscum Scale or whatever the fuck they use.

To be fair, Ukraine’s score isn’t much better, having gone though a similar post-Soviet privatisation process that delivered immense wealth to a few oligarchs. Its 2021 corruption score was 32/100. But President Volodymyr Zelenskyy has made tackling corruption a central policy, and Ukraine is improving on the index – unlike Russia. Ukraine also has some clear advantages for further improvements.

The US organisation Freedom House gives Ukraine a democracy score of 39.3%, compared with 5.4% for Russia. Transparency International rates Ukraine’s democratic processes as “generally free and fair”. It considers efforts in recent years to tackle corruption as slow and flawed, but nonetheless genuine and substantive.

THERE IS LITERALLY A RECORDED PHONE CALL OF VICTORIA NULAND DISCUSSING WHICH LEADER THEY WERE GOING TO INSTALL IN UKRAINE. WHAT THE FUCK ARE YOU TALKING ABOUT?!?!

Putin’s Russia, on the hand, is described by Transparency International as a kleptocracy – a government of thieves. Putin himself is estimated to have accrued a fortune of US$200 billion, making him (unofficially) the world’s second-richest man, after Elon Musk. Putin’s wealth accumulation methods are relatively straightforward. According to Bill Browder, a fund manager specialising in Russian markets, having Mikhail Khodorkovsky – then Russia’s richest man – sent to prison in 2005 proved particularly fruitful:

Much of Putin’s fortune is squirrelled away in foreign bank accounts and investments, as revealed by the Pandora Papers. But he also enjoys material comforts such as a palace on the Black Sea reputed to have cost about US$1 billion – paid in part out of a government program meant to improve health care.

Money supposed to be for Russia’s military capability has also been plundered. For example, defence minister Sergei Shoigu lives in an $18 million mansion – not bad for someone supposedly on a government minister’s salary.

It goes on like this. Hopefully nobody here is surprised that Russia is a deeply corrupt country (calling Russia a kleptocracy and not the US is hilarious though) but the idea that Ukraine is substantially better is pure fucking brainworms.

  • Germany’s Scholz says Russia will not win the war in Ukraine Al Jazeera

The Russian leader “underestimated” the “resolve and strength” of allies in countering his aggression in Ukraine, said Scholz. “Our goal is crystal clear – Putin must not win this war. And I am convinced that he will not win it.”

Russia’s plan to capture all of Ukraine is “further away today than it was at the beginning” of its invasion, as Ukraine continues to put up an impressive defence, he said.

Yeah, Scholz is literally in a different universe to us.

Scholz, who has spoken several times with Putin on the phone since Moscow’s invasion, said, “Putin will only seriously negotiate peace when he realises that he cannot break Ukraine’s defences.”

He is actively in the process of breaking them. In a sense, they’ve already broken.

The chancellor added that Putin underestimated the unity and strength with which the G7 major industrialised nations, NATO and the European Union had responded to his aggression.

Scholz, however, did not directly address criticisms from Ukraine that Germany was not moving fast enough in supplying Kyiv with heavy weapons. He only said that Germany’s support for Kyiv will continue to be coordinated with allies.

  • Russia uses Orwellian propaganda news vans in Mariupol Guardian

Russia has deployed mobile propaganda vans with large-screen televisions to humanitarian aid points in the captured city of Mariupol as the Kremlin has pushed forward with efforts to integrate newly occupied territories across the south of Ukraine.

Videos published by the Russian ministry of emergency situations showed the vans, which it called “mobile information complexes”, playing state TV news segments and political chat shows where pundits support the invasion to locals in the ruined city that still lacks electricity and running water.

The Orwellian turn comes as much of Mariupol was destroyed in an artillery bombardment that left thousands dead. One of the vans was deployed near the ruins of the Mariupol drama theatre, where hundreds were killed in an airstrike in March.

Several of the trucks now patrol the city, mainly playing Russian television news segments. “The people of Mariupol have been held in a virtual informational vacuum for three months due to the lack of electricity,” wrote the emergencies ministry in a statement.

“The practice of ‘there is nothing to eat, so feed them lies’ is gaining momentum,” wrote Petro Andryushchenko, an adviser to the Ukrainian mayor of Mariupol. It’s “cynicism of the highest level”.

There’s aid pouring into Mariupol. The ports are working again. The electricity is coming back on. There’s food aid coming in. And these people are the ones in an Orwellian state?

  • Breaking Russia’s Ukrainian Grain Blockade WSJ

Vladimir Putin’s Ukraine war is spreading humanitarian and economic hardship far and wide, and on deck is a global food shortage. The world needs a strategy to break Russia’s blockade of Ukrainian ports so it can export food and other goods, and that probably means a plan to use warships to escort merchant ships out of the Black Sea.

…

The civilized world will have to act soon to prevent this from becoming an even larger humanitarian crisis. United Nations Secretary-General António Guterres has been trying to strike a deal to free up exports, and he visited Moscow in April to ask Mr. Putin to help. That would be the best solution.

If diplomacy doesn’t work, former Army Gen. Jack Keane suggests an international food and commercial escort operation may be needed, led by the U.S. This is best planned and pitched as a humanitarian operation. The mission would be to form an international coalition of warships to escort commercial vessels safely out of Odessa and the Black Sea. This would work as a coalition of the willing, and not a North Atlantic Treaty Organization project that would let Mr. Putin claim it is another NATO provocation.

One practical obstacle is negotiating with Turkey, which controls access to the Black Sea under the 1936 Montreaux Convention. Turkey won’t want to offend Russia, but it also would be under considerable world pressure to allow such a mission if food prices soar and hardship expands across the world. Better if the negotiations begin quietly now.

Some critics will claim an escort mission would be too risky as a naval version of a “no-fly zone.” But it is much different. The escort ships would stick to international waters. They would not be denying those waters to Russian ships, but only ensuring that commercial vessels can travel safely. This is justified under the long-time British and then American roles in guaranteeing open international sea lanes. No military engagement would be needed if Russia doesn’t interfere.

Mr. Putin’s invasion is now entering its fourth month and may go on for many more. The economic suffering will increase, and food shortages will turn into political stress around the world. If Mr. Putin won’t yield, the civilized world, led by the U.S., will have to find a way to break his Ukraine food blockade.

We’re gonna re-do the Cuban Missile Crisis but over grain instead of nukes. Fucking awesome. Get your food supplies ready if these absolute failchildren politicians actually attempt this.

Good Takes that are Dope

  • Watch Western Sanctions On Russia Boomerang: A Global Energy And Food Crisis In The Making Forbes, by Tilak Doshi.

The subheading for this section is “Putin Must Go”, by the way.

In the aftermath of the Russia invasion of Ukraine on 24th February, the U.S., U.K. and the European Union along with their closest allies imposed the most comprehensive and unprecedented economic attack on a sovereign nation in recent history. The Western alliance expropriated half of the Russian Central Bank’s foreign exchange reserves held offshore – which had totalled some $650 billion — and blocked key Russian banks’ access to the SWIFT international payments system. The all-out economic warfare launched on Russia was meant to devastate the Russian economy, collapse the rouble and possibly lead to regime change with the ouster of President Vladimir Putin. President Joe Biden said “Putin must go” in off-script remarks, and not to be outdone, one U.S. senator even welcomed Putin’s assassination. This was instantly cheer-led by commentators in the media.

The financial sanctions had an immediate effect, and Russia’s rouble fell by almost half of its value, to 136 to the dollar from the pre-invasion levels of around 70. The Moscow stock market got shuttered. It would have seemed that the country’s economy faced ruin in short order. Remarkably, the rouble soon recovered sharply to beyond pre-invasion levels. On Friday, the rouble was trading at 61.5 to the dollar, making the rouble the world’s best performing currency against the dollar in 2022. The value of the rouble is hardly a comprehensive indicator of Russia’s economic performance but other indicators, such as the central bank’s recent cut in its interest rate from 17% to 14% and the continued health of retail spending at cafes, bars, and restaurants, suggest that Russia’s economy is holding up well despite the wide-ranging Western financial sanctions.

Russia is not Cuba, North Korea, Iran or Venezuela. “Experts” often cited in the media point out that Russia’s GDP is comparable to the EU’s economic laggard Spain, as if that explains the limits of Russia’s potential in geopolitical affairs. But Russia is geographically the largest nation on earth with 140 million citizens across 11 contiguous time zones. It has the world’s third most powerful military commanding the largest arsenal of nuclear warheads. Above all, it is a powerhouse for commodity exports. Ambrose Evans-Pritchard of The Daily Telegraph calls Russia “a full-spectrum commodity superpower, less vulnerable to sanctions than Europe itself”.

Russia is a major food producer, being the world’s third largest wheat producer and leading net exporter. It is also the world’s largest fertilizer exporter and ranks number three in aluminium exports and number four or five among the world’s largest iron and steel exporters (depending on whether EU as a whole is ranked in this list). It is also a leading exporter of key industrial metals such as palladium, platinum, nickel and copper which are critical to the West’s ambitions for the “energy transition” to renewables such as wind and solar power and electric vehicles. Most critically, Russia is a heavyweight fossil fuel exporter in world markets. Fossil fuels, it should be noted, still account for some 80% of global energy consumption. It is the world’s largest natural gas exporter, the 2nd largest oil exporter (after Saudi Arabia) and the third largest coal exporter (after Australia and Indonesia).

The article then goes into the gas-for-rubles scheme, then a section titled “…And Europe Goes For Economic Suicide”, then:

The “global campaign” against Russia covered breathlessly by the mainstream media is nothing of the sort: the vast majority of nations outside of the transatlantic alliance of the US, EU and their closest allies, accounting for over 80% of the world’s population, have not participated in the anti-Russia sanctions. The “striking unity of purpose” in the US and Europe over the Russia sanctions has meant little for most governments in the Middle East, Asia, Africa and Latin America intent on navigating what looks like a rapidly bifurcating world economy. Nor is it very evident in the EU’s failed attempts to get consensus on plans for an embargo on Russia’s energy exports.

Dmitry Medvedev, the former President of Russia and current Deputy Chairman of the Security Council of the Russian Federation, wrote on Telegram: “Only a few weeks after the imposition of the ‘hellish’ sanctions against Russia, it turns out, as expected, that they will boomerang back on the West.” For leading developing countries such as Brazil, India, China and South Africa, protecting their freedom to trade with a commodity superpower such as Russia is as important as ensuring that they do not become the next victims of a globalizing West wielding its dominance in international financial institutions. While bureaucrats in Brussels and Washington DC push their wishful renewable energy dreams, the rest of the world has to get on with the ordinary business of making ends meet.

  • The Ukraine Aid Bill Is a Massive Windfall for US Military Contractors Jacobin

Last Saturday, Joe Biden signed a bill that provides $40.1 billion in emergency funding for Ukraine, including $24.6 billion for military programs and $15.5 billion for nonmilitary ones. By Washington’s standards, the legislation moved through Congress in the blink of an eye. Congress received the funding request from the White House on April 28, and just three weeks later — after easily passing the House (368 to 57) and the Senate (86 to 11) — the bill was ready for Biden’s signature.

But what’s in the bill? Who is the main beneficiary? And will it bring the conflict closer to an end?

While it’s difficult to tell how much of the $40.1 billion Ukraine aid bill will end up as direct aid to Ukraine, it is clear that private contractors will receive a significant amount to provide the weapons and military-related services whether they’re for Ukraine or another country “impacted by the situation in Ukraine,” as the bill puts it. In fact, the domestic arms industry may turn out to be the bill’s main financial winner.

The legislation, according to my estimates, will produce at least $17.3 billion in revenue for US military contractors — more than the total amount of nonmilitary funding ($15.5 billion). This estimate — a conservative one — is based on the bill’s language, accompanying documents from the White House and House Appropriations Committee, and overall trends in military contracting.

Bloomerism and Hope

  • China and Russia veto new UN sanctions on North Korea for first time since 2006 CNN

Russia and China on Thursday vetoed a US-drafted United Nations Security Council resolution to strengthen sanctions on North Korea in a vote the US ambassador to the UN called dangerous, disappointing and likely to fuel Pyongyang’s program to develop nuclear-capable missile systems.

US Ambassador to the UN Linda Thomas-Greenfield blasted the vetoes from Russia and China, which hadn’t blocked any of the nine previous sanction votes made since 2006, saying the gravity of the threat from North Korea’s weapons program has not changed.

“The vetoes today are dangerous. Those members today have taken a stance that not only undermines the Security Council’s previous action to which they have committed but also undermines our collective security.”

Speaking in a session at UN headquarters, Thomas-Greenfield added: “These council members have decided to shield a proliferator from facing the consequences of its actions and they have demonstrated the worthlessness of their word by giving an explicit nod of approval to the DPRK.”

Solidarity and respect to the people of the DPRK, and may their US-occupied lower half be returned to them soon.

  • Blinken calls China ‘most serious long-term’ threat to world order Politico

“China is the only country with both the intent to reshape the international order and, increasingly, the economic, diplomatic, military and technological power to do it,” Blinken said. “Beijing’s vision would move us away from the universal values that have sustained so much of the world’s progress over the past 75 years.”

“We have to compete effectively with China because it’s become increasingly clear we have different visions — for whether the world should be safer for democracy or authoritarianism … and for whether the strong can bully the weak,’' Sen. Jeff Merkley (D-Ore.) told POLITICO.

I agree with the Senator on this issue, though I don’t think in the way he means.

“We have no choice but to compete because the world of [Chinese President] Xi Jinping’s vision would be unacceptable.”

To you.

“I found the speech to contain many contradictions — on the one hand [Blinken] says there is no adversarial relationship or Cold War with China, but on the other hand he outlines steps for the U.S. to shape the environment around Beijing with an eye to advance U.S. strategic interests,” said Lina Benabdallah, assistant professor of politics and international affairs at Wake Forest University.

The contradictions continue to heighten.

Secretary of State Antony Blinken delivered a frankly underwhelming address outlining the Biden administration’s policy towards China on Thursday.

The speech at George Washington University had been scheduled for earlier in the month, but it was postponed because Blinken tested positive for COVID the day before he was set to give it. Coming on the heels of Biden’s visit to Asia and his controversial remarks committing the U.S. to intervene to defend Taiwan, Blinken’s speech offered little more than a rehashing of previous administration statements.

  • We’re Organizing Unions at Amazon and Starbucks. We Won’t Back Down. Jacobin, an interview with Chris Smalls and Jaz Brisack.

Supporters of organized labor have long regarded megacorporations like Amazon and Starbucks as key sites of struggle. Workers in Amazon warehouses and Starbucks coffeehouses help millions of customers every day and bring in billions of dollars in revenue for their companies every year. But while workers keep these businesses running, top brass like Jeff Bezos and Howard Schultz collect the profits, stiffing workers on pay and benefits while subjecting them to difficult working conditions.

Workers are increasingly unwilling to put up with it. Since December 2021, over two thousand Starbucks workers have unionized. And in April of this year, the independent Amazon Labor Union (ALU) won a massive victory: the first unionized Amazon warehouse.

These triumphs have changed the terrain of the American labor movement. In a conversation with Dan Denvir of Jacobin and The Dig, Chris Smalls and Jaz Brisack, lead organizers from Amazon and Starbucks, explain how they organized with their coworkers to form unions, the challenges they face from hostile management, and how the growing labor movement can shape local and national politics.

Some choice quotes from Smalls:

“Right. Yeah. I’m a thug — thug life. It’s always gonna be that way. You know, I’m going to be a thug for workers every day. And that’s just what it is.”

“We didn’t have any support. You’re going to have to wait for the documentary to see this, but it’s crazy. We obviously had to start real grassroots. We didn’t have any support, any money, any resources. I think I sent out a tweet asking for a lawyer about twelve months ago, and I got one reply. He’s still with us till this day — shout out to Seth Goldstein. That was it.”

“Yeah, we do need support. It would have been a lot easier. But to say that it can’t be done — I disagree on that. I think that the power’s always with the workers, and if the workers want to organize, they can organize. They just have to be aware of that.

That’s what we would have to prove to these workers. We had to get to a point where they started to organize themselves. They didn’t do that in the beginning. They had to have several conversations. I had to be cursed out a lot, and I had to endure that. And I had to watch people walk past me for two or three months, without saying a word to me, but then one day they came over, and I knew that was my chance.

It’s a marathon, not a sprint. You have to be there for the long haul as an organizer. The hardest thing you can do is organize people. I learned that in my short two years. You go off of what’s working for y’all, and if it ain’t broke, don’t fix it.”

“Once again, we’re gonna organize. We’ve already been contacted by over a hundred buildings — every building in the country, probably. The list is growing every day. And if we launch what I want to launch, there will be a national conference to set everybody up. They can’t avoid us, and it’ll be under the ALU umbrella. They’ll have to come to the table.”

“What do they want from me? I don’t know. That’s a question you have to ask them. I wasn’t supposed to be in the White House. I was outside with the guillotine just two years ago.”

Link back to the discussion thread.