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Is Russia’s Central Bank Chief a “Hostile Foreign Agent” Deliberately Sabotaging the Russian Economy?
Mike Whitney Interviews Paul Craig Roberts about the Sanctions Against Russia
“We could completely offset the negative consequences of financial sanctions if the Bank of Russia fulfilled its constitutional duty to ensure a stable ruble exchange rate, and not the recommendations of Washington financial organizations…. It was the connivance of the Central Bank which led to the fact that Russia and its industry were drained of blood and unable to develop.” Sergey Glazyev [2], Russian economist and author
“A person has to wonder why Russia has taken none of these steps that would bring instant agonizing cries from the stupid West and an immediate end to all sanctions and Russophobic propaganda. Russia can dictate the terms. Why does she forgo this power?” Paul Craig Roberts
Question 1– Do you agree that the motive behind Washington’s sanctions on Russia is to bring the country to its knees, remove it as a competitive rival to the US in Central Asia, and force Putin from office?
Paul Craig Roberts– Possibly. Washington is sufficiently stupid to think this. For the sanctions to have deleterious effects on Russia requires bad decisions by Russia, such as the Russian central bank is making. The West has nothing that Russia needs, but Western countries are extremely dependent on Russian energy and minerals. Russia could reply to sanctions with counter-sanctions, such as turning off the oil, natural gas, and minerals. The West would soon be begging for mercy and agree to whatever Russia specified.
Russia is unable to use the vast power she has over the West, because Russian economists and the central bank have been brainwashed by American neoliberal economists that Russia needs foreign exchange to develop. This is amazing rubbish, as I demonstrated in my recent column [3]—
Indeed, Michael Hudson and I have explained it to the Russians a number of times. If you think your fate depends on foreign exchange, you continue keeping your enemy alive by selling your strategic assets to him.
What I think Washington is actually doing is taking advantage of the Kremlin’s go-slow war so as to minimize civilian casualties. This gives Washington time to conduct a psyops campaign that hardens hatred of Russia throughout the Western world and any other part of the world susceptible to Western media. Basically, it is an effort to protect Washington’s control over Europe from European negotiation with Russia. Washington with the aid of the presstitutes is putting Russia beyond the pale, making Russia off limit for European interaction.
This is actually in Russia’s interest as it defeats the internal Russian Fifth Column, the Atlanticist Integrationists who are willing to sacrifice Russian sovereignty to globalism and being a part of the West.
Once Russia is banned from foreign capital, the Russian central bank will have to do its job and finance Russia’s internal development. Foreign investment in Russia only serves to impoverish the country as the earnings are repatriated abroad and taken out of the country. Indeed, the sanctions and seizures of deposits of Russian banks is a great reason for Russia to regain ownership of its own resources by nationalizing all foreign investment in Russia. It is unclear whether the Kremlin is sufficiently sophisticated to understand this.
Question 2– Do you agree that the Russian Central Bank is doing precisely the wrong thing at the wrong time by raising rates (20%), allowing the ruble to be traded on the foreign exchange and by failing to fund domestic businesses through the printing of money?
Paul Craig Roberts– Yes, I agree. The brainwashed Russian central bank is serving, without understanding it, the West and the success of the West’s sanctions. Russia should be billing for its energy and minerals in rubles, thus supporting its own currency instead of the currencies of its enemies, and should establish exchange controls to prevent currency speculators from short-selling the ruble.
More on the Russian Central Bank from an earlier article by Paul Craig Roberts:
“The Russian central bank even thinks that it cannot create rubles to finance investment projects unless the rubles are backed up by foreign exchange. This has caused the central bank to borrow money it doesn’t need on which it pays interest. In other words, the Russian central bank’s policy is nonsensical and serves Western interests at Russia’s expense.
The Russians could close down Western industry if Russia ceased exporting energy and minerals, but is afraid to do so because of the foreign exchange loss….
Russia has no need for foreign exchange. She does not need to import energy and minerals. Russia is full of engineering and science and can make whatever she needs. The central bank can finance all internal projects. But as the Americans succeeded in brainwashing Russian economists, the Russians can’t use the powerful weapon they have at hand to bring the West to its knees begging for mercy. Moreover, the Russian economists don’t have enough sense to demand payment in rubles for their energy and minerals. This would strengthen their own currency rather than the currencies of their enemies. Why does the Russian central bank forgo the opportunity to use Russia’s exports to stabilize the Russian currency?
The conclusion is that in the sanctions game the Russians hold all the cards but do not know how to play them.
The West has nothing that Russia needs, but the West cannot survive without Russian energy and minerals.” (“Washington and Moscow vie for the Stupid Prize [3]“, Paul Craig Roberts Web Site)
Question 3– From your perspective, is the Central Bank chief, Elvira Nabiullina, acting as a hostile foreign agent by implementing policies that clearly undermine Russia’s financial position and greatly intensify the impact of the sanctions?
Paul Craig Roberts– I don’t think she understands that she is doing that, but, yes, that is what she is doing. Russia is still selling strategic resources to the West and accepting payment in dollars and euros, which strengthens the currencies of Russia’s enemies and weakens the ruble. To be precise, the Russian central bank is subsidizing the success of the Western sanctions. It is mindless.
More on the Russian Central Bank from an earlier article by Paul Craig Roberts:
“Russia has the opportunity created for her by the sanctions to correct her tragic strategic blunder of allowing foreigners to buy up her productive assets. Russia can nationalize the assets owned by companies of the sanctioning countries. The sanctioning countries are stealing Russian bank deposits so Russia should retaliate by stealing their real assets.
A person has to wonder why Russia has taken none of these steps that would bring instant agonizing cries from the stupid West and an immediate end to all sanctions and Russophobic propaganda. Russia can dictate the terms. Why does she forgo this power?…..
If Russia disempowers herself by refusing to play her winning hand, she will be brought down by her own stupidity, not by Western sanctions.” (“Washington and Moscow vie for the Stupid Prize”, [3] Paul Craig Roberts Web Site)
Question 4– Russia is now the most sanctioned country in the world. These sanctions have been imposed arbitrarily and without review by the WTO, without approval by the United Nations Security Council, and without any regard for due process. Russia has had no opportunity to defend itself in a court of law or make its case before an internationally-approved tribunal. How do explain the fact that the majority Americans enthusiastically applaud this anti-democratic abuse of power that is clearly designed to inflict maximum pain on the Russian people?
Paul Craig Roberts– Americans, like Canadians and Europeans, lack an independent media that reports honestly. Instead, the West gets a narrative handed down from the ruling elite and delivered into people’s heads by the presstitutes who through repetition turn lies into truth, fiction into fact.
There are no tribunals or international laws that can be enforced against the West. Russia’s mistake is that she responds to the accusations. She should ignore them and go about her business. What she should make clear is not the facts, as facts do not matter in the Western world. She should make clear her red lines and make clear that she means them by instantly destroying whoever crosses them. That is the only way Russia will have an end to Western provocations and the world will have peace.
Question 5– The death of George Floyd touched off a wave of anti-racism protests across the country. The Democrat party embraced these demonstrations and disparaged anyone who hesitated to offer their unquestioning support. Now these same faux liberals are openly expressing their unbridled hatred for all-things Russian. How do you explain this wave of ethnic hatred that has overtaken the American people particularly those people who never fail to remind us how anti-racist and virtuous they are?
Paul Craig Roberts– Liberals or conservatives, they are the same. The average person hasn’t the time, energy, interest, or know-how to find out what is happening. They are programmed by the presstitutes who repeat with one voice the elite’s narrative, whether it is Covid, Saddam Hussein, Russia, 9/11, it doesn’t matter. There is only the official narrative.
It is easy to make Americans hate Russia because they are accustomed to it by the 20th century Cold War. Americans are accustomed to Russians being the enemy. The Russian side of the story is blocked from being presented in the West. So, the only information people in the West have is the official narrative.
Pepe Escobar and Michael Hudson Wonder why the Russian Central Bank Left Russia’s Foreign Exchange and Gold Exposed
The Russian Finance Minister announced that half of Russian foreign reserves and gold has been frozen by sanctions. How is it possible that Russia’s central bank was keeping Russian reserves in countries where it could be confiscated? If this has happened, it is idiocy of the highest magnitude. Pepe Escobar asks Michael Hudson the explanation. If Russia was keeping her foreign reserves abroad, she is indeed hapless.
Show me that frozen Russian gold
PepeEscobar
https://www.unz.com/pescobar/say-hello-to-russian-gold-and-chinese-petroyuan/ [4]
Meanwhile, Russia has a serious problem to tackle. This past weekend, Finance Minister Anton Siluanov confirmed that half of Russia’s gold and foreign reserves have been frozen by unilateral sanctions. It boggles the mind that Russian financial experts have placed a great deal of the nation’s wealth where it can be easily accessed – and even confiscated – by the “Empire of Lies” (copyright Putin).
At first it was not exactly clear what Siluanov had meant. How could the Central Bank’s Elvira Nabiulina and her team let half of foreign reserves and even gold be stored in Western banks and/or vaults? Or is this some sneaky diversionist tactic by Siluanov?
No one is better equipped to answer these questions than the inestimable Michael Hudson, author of the recent revised edition of Super Imperialism: The Economic Strategy of the American Empire [5].
Hudson was quite frank: “When I first heard the word ‘frozen,’ I thought that this meant that Russia was not going to expend its precious gold reserves on supporting the ruble, trying to fight against a Soros-style raid from the west. But now the word ‘frozen’ seems to have meant that Russia had sent it abroad, outside of its control.”
“It looks like at least as of last June, all Russian gold was kept in Russia itself. Essentially, it’s all still up in the air: “My first reading assumed that Russia must be doing something smart. If it was smart to move gold abroad, perhaps it was doing what other central banks do: ‘lend” it to speculators, for an interest payment or fee. Until Russia tells the world where its gold was put, and why, we can’t fathom it. Was it in the Bank of England – even after England confiscated Venezuela’s gold? Was it in the New York Fed – even after the Fed confiscated Afghanistan’s reserves?”
So far, there has been no extra clarification either from Siluanov or Nabiulina. Scenarios swirl about a string of deportations to northern Siberia for national treason. Hudson adds important elements to the puzzle:
“If [the reserves] are frozen, why is Russia paying interest on its foreign debt falling due? It can direct the “freezer’ to pay, to shift the blame for default. It can talk about Chase Manhattan’s freezing of Iran’s bank account from which Iran sought to pay interest on its dollar-denominated debt. It can insist that any payments by NATO countries be settled in advance by physical gold. Or it can land paratroopers on the Bank of England, and recover gold – sort of like Goldfinger at Fort Knox. What is important is for Russia to explain what happened and how it was attacked, as a warning to other countries.”
As a clincher, Hudson could not but wink at Glazyev: “Maybe Russia should appoint a non-pro-westerner at the Central Bank.”
See also: https://www.statista.com/chart/26940/russian-central-bank-foreign-currency-and-gold-reserves-by-holder/ [6]