Re: [Salon] ' It’s Over' in Ukraine' as Wall Street Buys Russian Bonds, MbS Snubs US Investments, Biden Tries to Arm-Twist India, and Putin Can Still Blow the Peace



Reader Apologies re Highlighting Out of Date Scott Ritter Video; Wall Street Buys Russian Bonds, MbS Snubs US Investments, Biden Tries to Arm-Twist India, and Putin Can Still Blow the Peace

Posted on March 4, 2022 by Yves Smith

I pulled down a post because the non-financial section, at the top, was based on a Scott Ritter post YouTube dated March 3 but was actually a repost of an earlier video I had missed. So I mistook his information as fresh when it was stale. That led me to reach inaccurate conclusions about the current situation and repeat them in the post.

I should have connected the dots because an on-the-ground and fresh video from the very rah rah Robert Bentley showed him and some buddies in a town outside Mariupol, not in Mariupol, when Ritter prematurely said it had fallen.

This major miscue also means I can no rely on Ritter as reporting accurately on a current basis, as opposed on the background, balance of forces, and incentives, where he presumably still has valid insights. This is disappointing, because what we have left are extremely partisan sources on both sides. The bias from anti-Russian sources has regularly been extreme, with extensive fabrications of narratives (the non-surrender after the famed “Fuck you,” admitted even by the BBC, the use of a video of a Palestinian girl defying Israeli troops as being Ukrainian v. Russian, and more recently, last night a fire at an outbuilding at a nuclear reactor complex that the Russians captured blown up into “nuclear terror“). It has hit the point that it’s hard to trust anything from Western sources, even though Russian aligned ones are clearly problematic too.

However, as I did indicate in the earlier piece, the key to whether Putin can take Ukraine without sowing the seeds of an insurgency is how the Russians deal with resistant cities, with Mariupol an exception due to it being in the hands of the Azov Battalion. The big question is whether Russia can largely encircle these cities and let residents either flee or stay to be starved out, or bombs them into submission. I have assumed Russia will need to use considerable force to subdue Mariupol and so what it does there was not necessarily dispositive of its tactics generally (as in you’d have to see destruction of civilian infrastructure elsewhere before you could determine that this was going to be the Russian approach to resistance generally). However, up to this date, the press has also taken to depicting so far isolated shellings of residential buildings as Russia trying to target civilians, when those cases haven’t yet added up to demonstrating intent, as opposed to “shit happens.”

And that gets back to video evidence. Lambert has seen such routine and extensive falsifications that his reflex has become to distrust anything that does not have someone holding a newspaper with a current date (and I failed to use something approaching the same standard with Ritter). So even if the innertubes starts to report on Russian destruction of civilian infrastructure, that’s not in Russia’s interest. One needs to vet evidence that makes claims like that.

Now back to the sections of the earlier post not based on the out of date and troublingly premature statements that turned out to be inaccurate by Ritter.

And again apologies. Lambert and I both find this is the worst informational environment either of us have faced, orders of magnitude worse than the war in Iraq, and I am distressed at having tried one-source shopping on the state of play and badly wrong-footed it.

* * *

The press reports that Macron and Putin had a heated 90 minute talk. Reuters said Putin is upping the ante. If Kiev does not come to the table soon, Russia will increase its demands. Oddly the report is based on a Kremlin account; apparently France has not yet provided its readout:

In a statement issued after the French and Russian presidents spoke by phone, the Kremlin made clear its goals included the demilitarisation and neutrality of Ukraine.

Any attempts by Kyiv to delay negotiations between Russian and Ukrainian officials would result in Moscow adding more items to a list of demands it has already set out, it said..

The statement said Russia’s “special operation” in Ukraine was going “according to plan”. It said reports that Russian forces were bombarding Kyiv were part of an “anti-Russia disinformation campaign”, and that Russian forces were doing all they could to protect civilians.

Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.

A couple of days ago, Matt Levine reported no one wanted Russian assets. That’s changed. Bottom feeders are hoovering them up….although perhaps not yet enough to offset the selling pressure. From Bloomberg:

As the U.S. and allies tighten sanctions on Russia and choke off investor demand for its assets, parts of Wall Street are jumping on the buying opportunity that it’s creating.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. have been purchasing beaten-down company bonds tied to Russia in recent days, as hedge funds that specialize in buying cheap credit look to load up on the assets, according to people with knowledge of the private transactions.

Bloomberg piously notes that trading Russian assets isn’t banned.

Blackrock is also increasing some Russian holdings. From Sharecast:

Private equity giant Blackrock has taken a punt on beleaguered Russian gold miner Polymetal, doubling its stake to just over 10% even as the stock takes a battering from sanctions imposed against Moscow.

Note here Blackrock is buying this stake when the giant Norwegian sovereign wealth fund is selling.

As we pointed out earlier this week, support of the US and NATO isn’t uniform once you get outside Europe. Saudi Arabia tartly rejected America’s request to pump more oil to help the West out. Crown Prince Mohammed bin Salman then decided to rub some salt into that wound by suggesting the kingdom might lighten up on its dollar assets. From Reuters:

Saudi Arabia has the option of decreasing its investments in the United States, state-run news agency SPA cited Crown Prince Mohammed Bin Salman as saying on Thursday.

“In the same way we have the possibility of boosting our interests, we have the possibility of reducing them,” he said, speaking about Saudi Arabian U.S. investments that SPA said amount to $800 billion

And as reader RobertC pointed out, Biden is trying to muscle India into line….by threatening sanctions, with India’s use of Russian military equipment as the pretext. Does the Administration not understand that fertilizer is in a global shortage, and India depends on Russian supplied fertilizer? With fuel inflation that will squeeze the poor and middle classes already baked in, the Indian government needs to do everything it can to limit additional hardship. From The Hill:

The Biden administration is weighing whether to impose sanctions against India over its stockpile of and reliance on Russian military equipment as part of the wide-ranging consequences the West is seeking to impose on Moscow over its invasion of Ukraine.

Donald Lu, the assistant secretary of State for South Asian affairs, on Thursday told lawmakers in a hearing that the administration is weighing how threatening India’s historically close military relationship with Russia is to U.S. security.

Funny that this Administration has such a short memory that it forgets that its ham-handed AUKUS submarine deal not only outraged France, but also deeply offended Indian. Its foreign minister issued an unusually direct statement which amounted to: “We’ll keep this in mind in assessing who our friends are.”

But as to how things finally shake out, and whether Russia can succeed in achieving surgical goals like exercising the neo-Nazis and demilitarizing and turfing out the current regime without leaving so many Ukrainians dead and displaced as to facilitate an insurgency, David’s guess is as good as any. From comments yesterday:

Demilitarising Ukraine means effectively rendering useless (not necessarily destroying) major items of military equipment. At one extreme, you can destroy automatic rifles by putting the barrels in a hand-turned machine, as was done after some conflicts in Africa. At the other extreme, at end of the Cold War, tanks were disabled by a single carefully-placed plastic explosive charge, before being towed off for scrap. Aircraft and helicopters can be rendered useless fairly easily. That said, I doubt if the Russians are worried about small arms as such: indeed, the more there are, the more unstable the country will be. And finally, you can make air bases unusable by trashing the runways with explosives, and even booby-trap them to prevent repair.

Denazification is really two things. The people the Russians are principally interested in are the leaders, and I would assume that, as a matter of course the Russians have had SVR/GRU teams in Ukraine for a while, identifying and tracking them. Once the area is secure, they can be picked up and taken out by helicopter. For the rest, there’s some indication that extreme nationalist militias aren’t all ready to fight to the death when they’re out of food and completely surrounded. I expect the Russians will do their usual thing, and those who surrender first will get the best treatment, especially if they are a useful source of intelligence.

Assuming that those two things are accomplished, the Russians believe that they can turn back the clock to before 2014, and leave the country. At that point, it becomes extremely difficult,, if not impossible, for the West to continue with sanctions, especially when westerners are being hurt. Sanctions normally have an objective, and if the war is over and the Russians have left, there’s no objective. Biden will just have to like it, unless he really believes that he can mobilise his own country, and everybody else’s, for a suicidal economic war. And there’s no point in the West funding militia groups or mercenaries, because they won’t have any targets.

Needless to say, this would not be a good outcome for the US, but what is best for the US is less and less looking like what is sound for the world at large, particularly Europeans who have no appetite for large scale conflict. The US is resisting adapting to a multipolar world. Ironically, heavy-handed moves like over-reliance on dollar sanctions, will accelerate the loss of power it is fighting to retain.


On Fri, Mar 4, 2022 at 10:25 AM Chas Freeman <cwfresidence@gmail.com> wrote:
https://www.nakedcapitalism.com/2022/03/scott-ritter-its-over-in-ukraine-as-wall-street-buys-russian-bonds-mbs-snubs-us-investments-biden-tries-to-arm-twist-india-and-putin-can-still-blow-the-peace.html

Scott Ritter: “It’s Over” in Ukraine as Wall Street Buys Russian Bonds, MbS Snubs US Investments, Biden Tries to Arm-Twist India, and Putin Can Still Blow the Peace

Yves SmithMarch 4, 2022

Scott Ritter, a commentator with a solid record of good calls on foreign affairs, and particularly on Russia, says the war in Ukraine is over. Ritter reports that Mariupol, expected to be the most stubborn holdout thanks to the Azov Battalion taking its stand there, has been captured:

Typical quotes:

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We already have reports of Russian troops taking the city of Mariupol, supposed to be the hardest fought, that’s where the Azov Battalion is. In less than an hour the city fell. Russian troops have landed in Odessa, the tanks are pouring out of Crimea and pouring down towards Chortkiv [sp?]….It’s all over. This is a massive operation. The Urkainian military is not up to the task. I feel bad for those guys, because they’ve been led to believe they can fight the Russians. They’ve had NATO trainers there, they’ve received, you know, so called lethal weapons. Those lethal weapons were in warehouses. Those warehouses are destroyed right now. I’ve seen the explosions. They’re gone. [0:48]

Ukraine is not going to exist as it currently exists. The Ukrainian ambassador to the UN, raising hell and havoc right now, he represents a dead government. [21:40]

The fact that the outcome of the war is certain does not mean that a lot can’t still go wrong for the Russians. The government still has not surrendered and Russia has yet to take major cities like Kiev, and the major force outside Donbass, which is effectively encircled, has yet to be captured and disarmed. 

As Ritter and other experts have stressed, it is not in Russia’s interest to occupy Ukraine. Russia therefore needs to continue to try to keep down the level of civilian deaths and the destruction of non-military infrastructure. That implies that Russia can’t take any holdout cities by bombardment. It would need to starve them out, which could take time. 

The press reports that Macron and Putin had a heated 90 minute talk. Reuters said Putin is upping the ante. If Kiev does not come to the table soon, Russia will increase its demands. Oddly the report is based on a Kremlin account; apparently France has not yet provided its readout:

In a statement issued after the French and Russian presidents spoke by phone, the Kremlin made clear its goals included the demilitarisation and neutrality of Ukraine.

Any attempts by Kyiv to delay negotiations between Russian and Ukrainian officials would result in Moscow adding more items to a list of demands it has already set out, it said..

The statement said Russia’s “special operation” in Ukraine was going “according to plan”. It said reports that Russian forces were bombarding Kyiv were part of an “anti-Russia disinformation campaign”, and that Russian forces were doing all they could to protect civilians.

Russia calls its actions in Ukraine a “special operation” that it says is not designed to occupy territory but to destroy its southern neighbour’s military capabilities and capture what it regards as dangerous nationalists.

A couple of days ago, Matt Levine reported no one wanted Russian assets. That’s changed. Bottom feeders are hoovering them up….although perhaps not yet enough to offset the selling pressure. From Bloomberg:

As the U.S. and allies tighten sanctions on Russia and choke off investor demand for its assets, parts of Wall Street are jumping on the buying opportunity that it’s creating.

Goldman Sachs Group Inc. and JPMorgan Chase & Co. have been purchasing beaten-down company bonds tied to Russia in recent days, as hedge funds that specialize in buying cheap credit look to load up on the assets, according to people with knowledge of the private transactions.

Bloomberg piously notes that trading Russian assets isn’t banned.

Blackrock is also increasing some Russian holdings. From Sharecast:

Private equity giant Blackrock has taken a punt on beleaguered Russian gold miner Polymetal, doubling its stake to just over 10% even as the stock takes a battering from sanctions imposed against Moscow.

Note here Blackrock is buying this stake when the giant Norwegian sovereign wealth fund is selling. 

As we pointed out earlier this week, support of the US and NATO isn’t uniform once you get outside Europe. Saudi Arabia tartly rejected America’s request to pump more oil to help the West out. Crown Prince Mohammed bin Salman then decided to rub some salt into that wound by suggesting the kingdom might lighten up on its dollar assets. From Reuters:

Saudi Arabia has the option of decreasing its investments in the United States, state-run news agency SPA cited Crown Prince Mohammed Bin Salman as saying on Thursday.

“In the same way we have the possibility of boosting our interests, we have the possibility of reducing them,” he said, speaking about Saudi Arabian U.S. investments that SPA said amount to $800 billion

And as reader RobertC pointed out, Biden is trying to muscle India into line….by threatening sanctions, with India’s use of Russian military equipment as the pretext. Does the Administration not understand that fertilizer is in a global shortage, and India depends on Russian supplied fertilizer? With fuel inflation that will squeeze the poor and middle classes already baked in, the Indian government needs to do everything it can to limit additional hardship. From The Hill:

The Biden administration is weighing whether to impose sanctions against India over its stockpile of and reliance on Russian military equipment as part of the wide-ranging consequences the West is seeking to impose on Moscow over its invasion of Ukraine. 

Donald Lu, the assistant secretary of State for South Asian affairs, on Thursday told lawmakers in a hearing that the administration is weighing how threatening India’s historically close military relationship with Russia is to U.S. security.

Funny that this Administration has such a short memory that it forgets that its ham-handed AUKUS submarine deal not only outraged France, but also deeply offended India. Its foreign minister issued an unusually direct statement which amounted to: “We’ll keep this in mind in assessing who our friends are.”

But as to how things finally shake out, and whether Russia can succeed in achieving surgical goals like exercising the neo-Nazis and demilitarizing and turfing out the current regime without leaving so many Ukrainians dead and displaced as to facilitate an insurgency, David’s guess is as good as any. From comments yesterday:

Demilitarising Ukraine means effectively rendering useless (not necessarily destroying) major items of military equipment. At one extreme, you can destroy automatic rifles by putting the barrels in a hand-turned machine, as was done after some conflicts in Africa. At the other extreme, at end of the Cold War, tanks were disabled by a single carefully-placed plastic explosive charge, before being towed off for scrap. Aircraft and helicopters can be rendered useless fairly easily. That said, I doubt if the Russians are worried about small arms as such: indeed, the more there are, the more unstable the country will be. And finally, you can make air bases unusable by trashing the runways with explosives, and even booby-trap them to prevent repair.

Denazification is really two things. The people the Russians are principally interested in are the leaders, and I would assume that, as a matter of course the Russians have had SVR/GRU teams in Ukraine for a while, identifying and tracking them. Once the area is secure, they can be picked up and taken out by helicopter. For the rest, there’s some indication that extreme nationalist militias aren’t all ready to fight to the death when they’re out of food and completely surrounded. I expect the Russians will do their usual thing, and those who surrender first will get the best treatment, especially if they are a useful source of intelligence.

Assuming that those two things are accomplished, the Russians believe that they can turn back the clock to before 2014, and leave the country. At that point, it becomes extremely difficult,, if not impossible, for the West to continue with sanctions, especially when westerners are being hurt. Sanctions normally have an objective, and if the war is over and the Russians have left, there’s no objective. Biden will just have to like it, unless he really believes that he can mobilise his own country, and everybody else’s, for a suicidal economic war. And there’s no point in the West funding militia groups or mercenaries, because they won’t have any targets.

Needless to say, this would not be a good outcome for the US, but what is best for the US is less and less looking like what is sound for the world at large, particularly Europeans who have no appetite for large scale conflict. The US is resisting adapting to a multipolar world. Ironically, heavy-handed moves like over-reliance on dollar sanctions, will accelerate the loss of power it is fighting desperately to retain.



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