Read below Dr. Michael Hudson’s analysis in a recent interview with Aaron Mate on the economic fallout of the Ukraine-Russia war and the American perspective on the economic gains to hope for.
Dr. Michael Hudson: “Well, it depends on what side you’re looking at. From the Russian side, I don’t think the economic factors were primary. They were threatened by NATO’s expansion and really a plan to attack the Russian-speaking areas of Ukraine.
So, I think Russia’s calculations were simply military. The West’s calculations were quite different.
And if you looked at what the results of the conflict are, you have to assume that everybody was talking about the results [as] were known. They’re very clear.
The results are a very large increase in fuel prices, oil, and energy prices, a very large increase in agricultural prices with declining supplies.
This will leave most of Africa and Latin America—third-world countries, the Global South—unable to pay their foreign debts, which is going to result either in a massive debt default or it will result in a debt repudiation.
Countries are going to have to choose. Are they going to have to operate their homes without energy, their factories without energy—and energy consumption per capita is directly connected to GDP for the last 150 years. Every chart shows energy use, GDP, and personal income go up together.”
Neocons Sacrifice the Ukrainians: “So, what are countries going to do when they can’t afford to pay the higher prices for energy? Well, Janet Yellen, who was the Federal Reserve head and [now] the Secretary of the Treasury says, ‘Well, what we’re going to do is use the International Monetary Fund to preserve America’s unipolar hegemony.’ I think she used almost those words.
We have to keep American control of the world and we’re going to do it through the IMF. And that means in practice using the IMF to create special drawing rights, which will be sort of like free money, the bulk of which will go to the United States to support its military spending abroad for all of this huge military escalation.
And it will enable the IMF to go to countries and say, ‘We will help you pay your debts and not be foreclosed on and get energy, but it’s conditional.’”
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“On usual conditions: you have to lower your wages; you have to pass anti-labor legislation; you have to agree to begin selling off your public domain and privatize.
The energy and food crisis caused by the NATO war against Russia is going to be used as a lever not only to push privatization, largely under control of US investors and banks and financiers, but it’s also going to lock countries into the US orbit all the more, both the Global South and especially Europe.
One casualty is obviously going to be Europe and the euro. The euro has been plunging in value day after day after day, as people realize that it’s lost its export markets in Russia and much of Asia, and now at home, too, because exports require energy to be made.
Its costs of imports are going up, especially energy. It’s agreed to use, I think, now $3 billion to build new port facilities to buy US natural gas—liquified natural gas at three to seven times the price that it’s paying now, which will make it almost impossible for German firms to produce fertilizer to grow crops in Germany.
The euro’s plunging.
The largest plunge of all has been the Japanese yen, because Japan imports all of its energy and most of its food and is keeping its interest rates very low in order to support the financial sector. And so, the Japanese economy is being sacrificed and squeezed.
And I think this is…you can’t say, ‘Gee, this is an accident.’ This is part of the plan, because now the United States can say, ‘Of course we don’t want your yen to go down so much that your consumers have to pay more.
We will, of course, give you SDRs—special drawing rights—and we will give you American aid. But we do want you to rewrite your constitution so that you can have atomic weapons on your soil so that we can fight against China to the last Japanese. Just like we’re doing in Ukraine, let us do it for you.’
And, of course, the Japanese love that. The government loves that idea. They love sacrificing the population, which is what they’ve been doing ever since the Plaza Accord and the Louvre Accord of the 1980s that basically wrecked the Japanese industrial economy from this huge upswing to just a mass shrinkage.
Neocons Sacrifice the Ukrainians: So, those are the economic effects of the war. And in the newspaper, you think the war is all about Ukrainians and NATO fighting Russians, and it’s really a war by the United States to use the NATO-Russia conflict as a means of locking in control over its allies and the whole Western world, and in Janet Yellen’s words, re-establishing American unipolar power.
Apparently, the military was not even consulted in the sanctions that were put against Russian energy. And the military wasn’t consulted even on the plans by the State Department and the National Security…the neo-cons that are running the NATO war. And so, obviously, there’s a lot of doubts within the military, but they don’t speak up—that’s not what they do.
It’s amazing that in Europe the only opposition to this is coming from the right wing, people like Marine Le Pen. Not from the left wing.
So, the left wing in Europe…I shouldn’t say the left, I should say what is now the right wing, the Social Democratic parties, the Labour Party, those are the parties that are thoroughly behind NATO. And there doesn’t seem to be a political imperative in these countries, except going along with the policy that’s going to squeeze their balance of payments and lock them into dependency on the United States.
So, what seems to be happening if there’s no fight back on the part of Europe?”
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