Some of the best chess masters in the world have come from Russia, and Putin is frequently compared to one. Is this Ukrainian gambit simply a feint to commit the U.S. and Europe to a NATO-free zone in Ukraine? Or does Putin want to grab back all of what was once a locus of industrial might for the old Soviet Union as well as a key global breadbasket?
It is impossible for anybody to know other than Putin himself. This, however, we do know.
As Russia continues its aggression, the Biden regime will impose ever-harsher financial sanctions. From my days in the White House, I can say this is a losing “short term pain” strategy that will simply allow Putin to digest and consolidate his long-term gains.
In the Trump White House, the more we imposed sanctions, the more China and Russia pursued evasive “de-dollarization” and import substitution strategies. Today, more and more of China’s massive trade — including with Russia — is yuan-based. Russia has aggressively substituted dollars with euros, gold and yuan in its National Wealth Fund.
|GLD||SPDR GOLD SHARES TRUST – EUR ACC||181.62||+3.24||+1.82%|
In truth, the ubiquity of sanctions during the Trump years merely — and perversely — hastened China’s and Russia’s moves to liberate themselves from U.S. sanctions coercion, and both countries now rightly view digital currency as a powerful — perhaps the ultimate — de-dollarization tool.
Second, in a world of realpolitik, tough sanctions talk is rarely reflected in a real sanctions walk. The financial stakes are so high that globalist politics inevitably lead to slack in both coverage and enforcement.
|UNG||UNITED STATES NATURAL GAS FUND LP UNIT (POST REV SPLIT)||16.11||+0.65||+4.20%|
In Europe, too many countries are too dependent on Russian natural gas to risk a cutoff by truly tough sanctions. Germany, Italy and France fall into this category.
In the US, when I was in the White House, I watched Treasury Secretary Steven Mnuchin — the Neville Chamberlain of our time — repeatedly weaken President Trump’s sanctions strategy on behalf of Wall Street and corporate interests through unnecessary bureaucratic delays and numerous exemptions. I have little doubt such globalist interests have penetrated the Biden’s Treasury just as effectively — so don’t look for even the U.S. to walk its tough sanctions talk.
If Putin succeeds in Ukraine, look for Xi Jinping to make a move on Taiwan. Communist China will support Russia’s efforts to return Ukraine to “Mother Russia.” Russia will return the favor when Xi makes his move to crush “sacred” Taiwan. As Xi sat with Putin watching the opening ceremony of Beijing’s Genocide Olympics, this had to be at the top of their revanchist agenda.
There is some hope Putin may be playing checkers in a chess world. He has shot himself in both feet by putting an end to a new Nord Stream 2 pipeline to Germany. Putin is also pushing every country anywhere near Russia’s expansive borders into the arms of the West. And Russia’s fragile economy can ill afford a prolonged guerrilla war in Ukraine, which it will surely get if he tries to take all of Ukraine.
Russia has already also bolstered its pariah status around the world and therefore must become ever more dependent on Communist China, which, not without irony, has its own hungry, expansionist eye on Siberia and its massive natural resource wealth. Here, I have always thought the U.S. is a far more natural ally for Russia than China, but neither the U.S. nor Putin have been playing that hand well.
|USO||UNITED STATES OIL FUND L.P.||71.82||+4.34||+6.43%|
Russia’s revanchism might even bring a woke America Left back to its senses. Under Trump, we achieved energy dominance. With the right market and government signals, we could quickly achieve such dominance again and thereby help Europe wean itself from Russian gas. Fracking is dead; long live fracking.
Stripped of rhetoric, a dictator has invaded a democracy in Europe, and Putin is now the odds-on favorite to get away with it without provoking World War III. Yet, the sum of my own worst fears is this:
We are now in a post-nuclear age where cyber warfare can bring any nation to its knees without resort to the incineration of millions and a long nuclear winter. In this age of what Communist China calls “unrestricted warfare,” cyber soldiers can now readily destroy the transportation, food and energy systems of target countries even as they use sophisticated blockchain technologies to cripple and loot financial institutions.
Of those countries most skilled in such unrestricted warfare, Russia and China stand head and shoulders above all other nations, including the United States. If things spiral out of control in a Sarajevo redux scenario, we could all soon be cut off from each other, freezing and starving in the dark.
As the boss used to tell me in the White House, let’s see what happens. In the meantime, world financial markets will remain in turmoil. Along with a pending stagflation, supply chain fragily and pandemic uncertainties, the Russia Bear is but one of a number of bears stalking Wall Street.
If we have learned nothing else, it is that elections have consequences.
Peter Navarro is the former Assistant to the President for Trade and Manufacturing the Trump White House and author of In Trump Time: A Journal of America’s Late Year.