Via Rossa, this take on what is being proposed in Russia was interesting. Here is the opening:
A significant debate is underway in Russia since imposition of western financial sanctions on Russian banks and corporations in 2014. It’s about a proposal presented by the Moscow Patriarchate of the Orthodox Church.
The proposal, which resembles Islamic interest-free banking models in many respects, was first unveiled in December 2014 at the depth of the Ruble crisis and oil price free-fall. This August the idea received a huge boost from the endorsement of the Russian Chamber of Commerce and Industry. It could change history for the better depending on what is done and where it further leads.
Some 20 years ago during the Yeltsin era, within the chaos of Russian hyperinflation and IMF “shock therapy,” the Russian Orthodox Church introduced a similar proposal for interest-free banking as an alternative. During that time a gaggle of liberal pro-free-market Russian economists around Yeltsin, such as Yegor Gaider, prevailed. They instead opened Russia’s state-owned assets to literal plunder by western banks, hedge funds and corporations.
In my first visit to Russia in May 1994 to give a talk at a Russian economic institute on IMF shock therapy, I saw first-hand the lawless mafia, russkaya mafiya, speeding through the near-empty Tverskaya Street near Red Square in new state-of-the-art Mercedes 600 limos without license plates. It was a devastating time in Russia and Washington and the technocrats at the IMF knew exactly what they were doing to foster the chaos.
By 2014 much has changed in Russia. Most significantly, the infatuation with everything American of two decades ago has understandably vanished. The US Treasury financial sanctions were launched in stages in 1914 against specific individuals around President Putin, specific banks and corporations dependent on foreign credit. They had the effect of forcing a critical rethinking among Russian intellectuals, government officials and in the Kremlin itself.
The Washington attacks, legally-speaking acts of warfare against a sovereign nation, were initiated by the US Treasury’s Office of Terrorism and Financial Intelligence, the only government finance agency in the world with its own in-house intelligence agency.
The Office was created under the pretext of going after and freezing the assets and bank accounts of drug cartels and terrorists, something it seems strangely inept at if we judge from their record regarding groups like ISIS or Al Qaeda in Iraq. It seems to be far better going after “undesireable” countries like Iran and Russia. It has offices around the world, including in Islamabad and Abu Dhabi.
Those US Treasury financial warfare sanctions and the prospect of much worse to come have sparked a deep debate within Russia on how to defend the nation from more attacks.
Vulnerability to western sanctions in their banking system has led Russia, like China, to develop an internal Russian version of SWIFT interbank payments. Now the very nature of money and its control is at the heart of the debate.
I lived through that mid-90s period in Russia and spoke at some length with the Minister for overseas economic relations on the matter in the 2000s. What the PTB in Russia and the ordinary Russian does not seem to grasp is that if one borrows from a western source, e.g. the Club of Paris, one is not just borrowing money but signing up to a ruinous Them scheme to rob you of your sovereign wealth by degrees, by demanding money be physical when you have to pay it back but it can be invisible, invented, when Them creates it.
The EBRD essentially preyed on sub-primes.
The Russian is a very straightforward person in his understanding of issues – for example, if that man over there dallies with your wife, then as night follows day, he’ll end up in the forest with a bullet in the head – and he is also a one-way money man, i.e. at the point of buying or borrowing, the notion of repaying is just the promises you must make in order to get what you want. The actual repayment is not a concern.
This is what fuelled the payments crisis of 1997/8 – businesses had people working but they weren’t paid, just promised. Those businesses which should have paid weren’t paid themselves by others defaulting and they defaulted because others defaulted.
Compounding this was the govt. which undertook to pay teachers, doctors etc. and didn’t because someone had skimmed off the money – this is this fixation with physical money which the western crims such as the IMF had long ago abandoned. I was inside this and attended local meetings about it which resolved nothing but everyone had a good weeping and gnashing of teeth session.
The Newsweeks and Times of 1998/9 were all about the crisis of confidence and could the Russian be trusted to uphold his end of the bargain. With the Russian childlike view of money, i.e. it only ever goes one way, then the whole economy becomes a near impossibility and at any moment, on a whim, a whole store can completely disappear. Lines regularly just disappeared from shelves.
What it is really about is the wheeler and dealer mafiosi or “businessmen” as they’re known over there are out to rip you off in a transaction and pride themselves on extortionate deals. With the IMF, WB and EBRD, the Russian “businessman” and politician – often the same – met people who are the true dregs of global society, the out and out bandits we know who caused the sub-prime disaster, the RBS fiasco, the bailouts saga.
But for once, the western banksters met their match in people who do not play ball, do not try to repay ruinous debts. And there is zero the banksters can do – apply sanctions, yes, through their controlled govts, but the actual repayment is at the whim of the Russian President. And he is protected by his own mafiosi, just as vicious as the banksters’ henchmen.
May I insert an analogy here which explains it a bit better. Near my house over there, in the middle of winter, there were two paths through the waist-high snow, these paths intersecting. I was in one, a Russian man was in the other and I saw that we were going to reach that intersection at the same time. I could have increased my pace or decreased it and avoided any confrontation but decided this time to pace him, ensure we’d get there at the same time.
We did, he’d looked neither right nor left but had singlemindedly pressed on. His utter shock at our bumping each other into the snow was followed by his demand what the hell I thought I was doing. The concept that it might have been him did not occur for a second.
And this was reprised about a year later when a Russian and I were coming down into a valley from the opposite ends of the same path. We bumped far more injuriously that time. I’ve always wondered about his mind – was he being deliberately obtuse and bloodyminded as I was – or was he genuinely oblivious to anyone but himself?
On the roads, near our main corner, every single day – and that is no exaggeration – there was a crash. No one ever learned. Never. Someone wanted into the supermarket and crossed oncoming traffic at that time, assuming that whole stream of traffic would stop and wait for his chutzpah, as surely no one really wanted mayhem.
There was always mayhem. Always. That stream of traffic did not stop but ploughed straight through his car.
There is a perfect example of all this in the issue of the fur coats between the Russian and Greek mafias. In the end, it was a stand-off. This was no mafia and victim scenario, this was two equal mafias.
Mention was made in the quote of the Islamic zero interest loan. Everything Islamic is one way and you are aware of taqqiya, that a deal is only a deal as long as it benefits you, under Islam, mixed in with guff about usury.
Back to Russia:
There are other features to the detailed Glazyev proposal, among the most interesting his proposal to use Central Bank resources to provide targeted lending for businesses and industries by providing them with low interest rates between 1-4 percent, made possible by quantitative easing to the tune of 20 trillion rubles over a five year period. The program also suggests that the state support private business through the creation of “reciprocal obligations” for the purchase of products and services at agreed-upon prices.
During my latter years in Russia, our republic had a series of Economic Zones, within which participant western businesses would operate – again, these zones were quite physical, geographical – our nearest was 200 km away. The lure was that these businesses could operate for themselves, free of the dead weight of regulation and therefore payola.
The Russian plan was to decentralize at western expense. Wasn’t a bad plan but it never really came off, not at that time anyway. I once asked the Minister what trade was. Seemed to me it was two Ministers of two countries sitting down and speaking of partnerships and cooperation, when in reality it was trying to get the maximum amount of money into your own economy. Therefore, two astute ministers would negate one another.
He smiled before speaking of it coming down to who could negotiate better. The Russian concept is this – money comes in. End of. That’s it.
The crystal manufacturer of Vladimir who made Time magazine in 2008 set up the business, it worked well, then one day, on return from overseas, he found himself locked out of his factories and when he did eventually get back in, the machines had had their numbers filed off and they’d been repainted orange, meaning they weren’t his.
There was some irregularity in the title of the land, it seems and so the local council had seized everything on it. That was about the worst example and the global publicity did not do Russia any favours. Even Yeltsin realized that to attract western investment any more, they’d have to at least appear to play the western game.
Not sure but think it was 2000 or 2001 when the news came through that Russia had repaid its loan to the Club of Paris. The Club of Paris only lends if it can etch away at economic sovereignty – that’s the whole raison d’etre of the “clubs” – see Club of Rome for the EU.
That was a major coup for Russia under Putin and investment came back in. But the bottom line is that Russia is a maverick and always has been. They have good set-ups for their people – fully heated houses with two-foot thick walls, with running hot and cold water and electricity, plus lifts and balconies, subject, of course, to bureaucratic SNAFUs but the whole idea is this – take care of the people’s basic needs and then the real money can be fought over by the various mafias after that.
Unfortunately, even the idea of housing the people has taken a back seat to capitalist greed – or had at the time of my departure.
Any economic proposal is put for the one reason – repay as close to nothing as possible. I read an article on business etiquette, advising westerners how to approach a Russian boss, the role of vodka and the gift of whisky etc. etc. Had to smile – the only etiquette in a business meeting with a Russian, the way to make him happy, is to come away with a deal tilted towards the Russian. All the rest is flummery, as Nero Wolfe might say.
It’s all swings and roundabouts. As the jihadis are discovering, it’s unwise to rile the Russian bear as you find nasty things happening to your HQs. The Russian operates in a similar way at times to the Muslim himself. Erdogan, for example, with his new Ottoman Empire delusions, has been a fool. The Russian believes that no holds are barred.
So it will be interesting to see how this Glasyev proposal fares. Plus the Turkey stand-off.