The View From Olympus: The S Weapon

Just as Germany had its V weapons, the V-1 and V-2, so Washington now has its S weapon. If another country does something we don’t like, Washington hits it with economic sanctions.

As Iran’s economy shows, sanctions can do a country quite a bit of damage. The burden falls mainly on the middle class; just as in Washington, the elites know how to protect themselves. From Washington’s perspective, sanctions are an ideal weapon, in that they seem to cost us little or nothing.

In fact, they may end up costing us a great deal. All around the world, a state’s legitimacy now depends in no small part on ensuring a growing economy. A state that cannot do that may fail. Because Washington has no understanding of Fourth Generation war, it thinks the result will be merely a new government, one that will bend to Washington’s (and Globalism’s) will. In reality, in a 4GW world, the consequence may be another failed state and the effective conquest of another region by non-state elements.

More, whenever a state thinks it has discovered a new weapon to which there is no reply, its opponents surprise it by coming up with one or several. Other countries are growing tired of Washington dictating to them and threatening sanctions if they do not obey. At least two are not little countries Washington can easily step on. I refer to China and, especially, Russia.

Following its now-usual pattern when Russia recovered the Crimea and moved to protect ethnic Russians in eastern Ukraine from a hostile government in Kiev, the U.S. put economic sanctions on Russia. Reluctantly, the EU went along, partly because its elites share the Globalist ideology and partly because it is afraid to act independently of Washington. Russia hit back with sanctions of its own, which did no harm to the U.S. but did brake an already slow-moving EU economy.

Washington continues to threaten Russia with further sanctions. But if I read the tea leaves correctly, Russia is preparing some counter-moves that could inflict serious pain on both the EU and the U.S.

Russia currently owes foreign institutions about $800 billion in debt. The fall in the price of oil, engineered by the Saudis to put the frackers out of business, has undermined Russia’s earnings of foreign exchange. Russia has a large foreign currency reserve, but not large enough to cover the $800 billion. Washington is smirking, saying to Moscow, “OK, let’s see you get out of this one.”

Moscow has what I see as an obvious answer. Normally, it would roll the debt over. Sanctions now prevent that, because any EU financial institution that lends to Russia will be prosecuted by Washington. So why does not Moscow merely announce that it is suspending payment to institutions in any country that is participating in sanctions? It would still pay whatever is due to institutions in countries not taking part in the sanctions, so that while it would be in technical default, it would not be in what I would call policy default. It could pay; it was merely, in some cases, choosing not to as a matter of policy, a policy of replying to the S weapon.

As an old saying goes, if you owe your banker $100,000, you have a problem. If you owe him $100 million, he has a problem. The EU’s share of that $800 billion is large enough that Moscow would immediately hand Europe a new and massive banking crisis.

Washington won’t much care, because it regards Europe with the contempt satellites usually receive. But both Russia and China recently bought large amounts of gold to add to their already considerable reserves.

This points to a possibility that would hurt Washington: a joint Russian-Chinese move to put some international trade back on a gold basis. That would bypass sanctions because it could bypass banks. Iran has already done this to some extent, but Iran is not big enough to make much difference. Russia and China are.

The lesson here is one war has long taught: every move has countermoves. There ain’t no such thing as a free MRE. One-way war, war where only one side gets hurt (unless it is over quickly), turns into two-way war. That was the real lesson of 9/11, although Washington has refused to learn it. The S weapon, used often enough and casually enough, will elicit replies that will hurt us. Russia and China, especially if they act together, can give Washington and the EU both a good birching. favicon

3 thoughts on “The View From Olympus: The S Weapon”

  1. Meanwhile, in the big (i.e. long-term) scheme of things, China is challenging the US for global dominance. Forget the military, this struggle is about what really runs things: money.

    World trade runs mainly on USD. Not renminbi. That isn’t because it’s written in the stars, but because it works for the various international players: The USD is considered relatively strong and reliable, backed by a reliable financial system. Every time the US imposes sanctions on a country, they’re breaking that reliability. What good is a reliable financial system if access to it is subject to somebody’s whim? What good is a “strong” dollar if there’s nowhere to spend it? All of a sudden, the USD doesn’t look so reliable if you’re on the wrong end of sanctions, or if you’re merely trying to do business with someone in the penalty box. And you can be sure that lesson isn’t lost on players and observers around the world: the USD is subject to failing you. Not due to weakness, but perversely due to the US’ strength! Risk is risk, no matter the reason.

    Sanctions are becoming more and more common. Sanctions actually force the sanctioned parties into the arms of the competition, and more importantly all the other big players are realizing that they’d be fools to put all their eggs in the US basket. The way things are trending, anybody could be next. The Chinese are only too happy to help, creating an ever-expanding parallel financial system where credit is granted and accounts are settled in Renminbi. See . It’s one thing to play the sanctions game with little players like Iran, but it’s another thing to do it with Russia and its huge energy trade. That’s a big bloc of transactions lost, a big loss for the USD’s power and a big gain for China and other alternates.

    As Lind’s article points out, changes of macro trading practices are a hard thing to change, but change they will when absolutely necessary. Thing is that they won’t change back one the change is done, not unless the Chinese in turn screw up big time. The US chips away at the USD’s status every time it imposes sanctions, along with the huge advantages conferred by that status. Advantages like the ability to “prop” up the US economy by printing money without having to answer for it.

    What’s going on? Is the US drunk on its power as globocop and, convinced of it’s “inevitability,” willing to cut off its nose to spite its face?

  2. Well the obvious limitation to this policy of declaring states that oppose you a “pariah state” and throwing them out of the global economy, is that once you get enough pariah states, they can construct their own global economy, probably with help from states that have concluded that they are next on the list to go.

    However, China is the key or swing player, in that if you want global domination, an alliance of the US and Chinese elites would be difficult if impossible to beat. I actually don’t understand why this is not happening. An alliance of the Chinese elites plus various regional powers could probably defeat the US, even if the US was supported by the other English speaking countries and the Western Europeans. The US elites themselves could retain their dominant position, like the nineteenth century British elites, if they didn’t insist on dominating absolutely everything.

  3. > I actually don’t understand why this is not happening.
    The Chinese are smart enough to stay out of the Globocop business, tend to their own business, and just let the US do itself in. That was historically the US’ strategy for a long time vis a vis Europe’s incessant squabbling and it made the US rich. Clearly that lesson isn’t lost on the Chinese elites.

Leave a Reply

Your email address will not be published. Required fields are marked *