Will Russia Sanctions Accelerate Inflation, Devalue US Dollar and Strengthen Chinese Yuan?

Russia is a commodities superpower. The nation's Eurasian landmass is rich in all kinds of natural resources from food to fuel to metals. To punish Moscow for invading Ukraine, the US and G-7 nations have imposed sanctions on Russia. These sanctions have effectively removed Russian commodities from the global supply chain, triggering double digit price increases for food, fuels and metals. Will the G-7 actions leave the US dollar much weaker? Will the Chinese currency, backed by commodities, gain strength at the expense of the US dollar and Euro? Will the era of commodity-backed money return? In a note to clients, Credit Suisse investment strategist Zoltan Pozsar has answered some of these questions. He says "this (Russia) crisis is not anything we have seen since President Nixon took the U.S. dollar off gold in 1971". "After this war is over, "money" will never be the same again.....and bitcoin (if it still exists then) will probably benefit from all this,” he adds. 

Map of "International Community" Sanctioning Russia

Post World War II History:

The current global financial system was created in Bretton Woods located in the US State of New Hampshire.  Over 700 delegates representing 44 countries met in Bretton Woods in July 1944. The Bretton Woods System, now referred to as Bretton Woods I, required a currency peg to the U.S. dollar which was in turn pegged to the price of gold. This system collapsed in the 1970s but created a lasting influence on international currency exchange and trade through its development of the IMF and World Bank. Zoltan Pozsar believes it is now time for Bretton Woods III. What is Bretton Woods III? Here's how Zoltan Pozsar explains it:

"From the Bretton Woods era backed by gold bullion, to Bretton Woods II backed by inside money (Treasuries with un-hedgeable confiscation risks), to Bretton Woods III backed by outside money (gold bullion and other commodities)". 

Russia's Commodity Exports. Source: Bloomberg

Commodity Superpower: 

Russia is a vast country. Russian landmass extends from Europe to East Asia. It is one of the largest suppliers of oil, gas, metals and wheat. Russia is also a major exporter of fertilizer. China will likely take advantage of the western sanctions to buy up Russian commodities at lower prices. 

Pozsar argues that while Western central banks cannot close the gap between Russian and non-Russian commodity prices as sanctions lead them in opposite directions, the People’s Bank of China can “as it banks for a sovereign who can dance to its own tune.”

“If you believe that the West can craft sanctions that maximize pain for Russia while minimizing financial stability risks and price stability risks in the West, you could also believe in unicorns,” Pozsar wrote.

Pre-Ukraine War Inflation in US. Source: Wall Street Journal


Bretton Woods III:

Pozsar argues that the Bretton Woods II collapsed when the G7 countries seized Russia’s foreign exchange (FX) reserves, leading to a rise of outside money – reserves kept as commodities – over inside money – reserves kept as liabilities of global financial institutions. 

East vs West Economic Output. Source: Wall Street Journal


"We are witnessing the birth of Bretton Woods III – a new world (monetary) order centered around commodity-based currencies in the East (Chinese Yuan) that will likely weaken the Eurodollar system and also contribute to inflationary forces in the West,” Zoltan wrote. 

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Comments

Riaz Haq said…
Banning Russia from SWIFT is a big deal. But the real pain comes from sanctions.
Keeping Russian banks from using SWIFT is not the financial nuclear weapon some have suggested.

https://www.washingtonpost.com/politics/2022/03/07/swift-sanctions-russia-ukraine-banking/

While the United States might fear the growth of new messaging services in the future, this case isn’t likely to bring significant blowback. Russia is unlikely to use alternative financial channels, because the existing ones all have problems. For example, executing transactions over telephone or fax, or by using credit or debit cards that fuse communications technologies with transactions. That’s outdated and will not scale to the degree Russia would need.

Alternative financial communication networks are either in their infancy or depend on the SWIFT network. The Bank of Russia created a financial messaging system (FMS) after the 2014 Ukraine crisis — but it includes only 400 users and therefore isn’t that useful. China’s Cross-Border Interbank Payment System (CIPS) has about three times FMS’s users — but SWIFT includes nearly 10 times as many users as CIPS. What’s more, CIPS isn’t an alternative to SWIFT; it depends on SWIFT for international messaging.

Russian banks not facing sanctions may turn to CIPS. But China may be reluctant to welcome sanctioned banks, lest it jeopardize its use of SWIFT.

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Two days after Russia launched an attack on Ukraine, the United States, Canada and European allies agreed to disconnect a handful of Russian banks from SWIFT, the Society for Worldwide Interbank Financial Telecommunication. These “de-SWIFTed” Russian banks would no longer be able to use the financial interface to transfer money.

The long-standing, and controversial, threat to disconnect Russia from the SWIFT network has been touted as a centerpiece of the West’s retaliation. How big is it, really? And how will it affect the United States and its use of financial power in the future?

The limits of de-SWIFTing

SWIFT connects more than 10,000 financial institutions in a communications network where orders are sent and received. This messaging service enables participating banks to settle commercial, financial and foreign-exchange payments. Cutting banks off from SWIFT means they can no longer use the network to exchange information.


But keeping banks from accessing SWIFT is not, on its own, the financial nuclear weapon some suggest. Denying access to SWIFT, for example, does not stop banks from communicating or transacting with the 11,000 financial institutions outside the SWIFT network. Disconnected banks that do not face sanctions are free to use alternative messaging networks to settle payments.

In fact, without sanctions on actual money transfers, denying countries access to SWIFT could undermine the messaging service by encouraging users to rely on other financial communication networks.

Today, SWIFT continues to be dominated by major U.S. financial institutions, with 40 percent of recorded transactions occurring in U.S. dollars. Making the U.S.-centered financial order less attractive is precisely the type of collateral damage the United States seeks to avoid.

Riaz Haq said…
To evade western sanctions, #India and #Russia are exploring the possibility of using #China’s yuan as a reference currency to value the #rupee-#ruble #trade, It'll cover #oil purchase from Russia, availability of ships, insurance cover for imports, etc. https://www.livemint.com/industry/energy/india-and-russia-explore-payment-options-for-crude-11647198060477.html


This assumes importance given the Western sanctions on Russia and PJSC Rosneft Oil Co. stating that Indian companies can acquire stakes in Russian projects and purchase Russian crude oil.


Rosneft’s production cost per unit is considered to be among the lowest globally.

“Rupee-ruble trade is very much on the cards. We are working on a currency arrangement to facilitate trade, especially as we also plan to increase oil purchase from Russia," said one of the two Indian government officials cited above, requesting anonymity.

The rupee-ruble trade mechanism will allow Indian exporters to be paid in rupees for their exports to Russia instead of dollars or euros.

Under this arrangement, a Russian bank is required to open an account in an Indian bank while an Indian bank opens an account in Russia.

Incidentally, the rupee-ruble payment mechanism with Russia has been attempted earlier on a small scale for a few items such as tea.

“We can look at a floating exchange rate system. A third currency can be taken as a point of reference, maybe yuan," said the official. He added that the arrangement would not require the exchange rate to be pegged to any currency, especially as the ruble has been depreciating. The ruble has fallen by as much as 39% this year against the dollar.

The local currency trade mechanism is key to resuming trading with Moscow as India buys a lot of defence and nuclear products from Russia, while India exports pharmaceuticals, engineering and agriculture items.

Payments worth close to $500 million to Indian exporters for goods already shipped to Moscow remain stuck.

Meanwhile, the Reserve Bank of India is consulting banks, including UCO Bank, to appoint a third party for facilitating payments. UCO Bank acted as a facilitator when sanctions were imposed on Iran.

Queries sent to India’s ministries of finance, petroleum and natural gas on Sunday remained unanswered till press time. Also, emailed queries to spokespeople for the Reserve Bank of India on Sunday evening wasn’t immediately answered.

Under the currency arrangement, the Russian currency will be converted into rupees at a specified exchange rate, and the money will be deposited into an Indian bank account.

“We are yet to finalize the Russian and Indian banks," said another government official.

Russian oil-related exports to India is close to $1 billion, but the exports are still very small given that the South Asian country imports 85% of its oil and 55% of natural gas requirements.

“Increasing oil purchases from Russia is definitely being considered at a discounted price. But we need to resolve a few issues to make that happen. One is we need to figure out the availability of shipping vessels. The other pertains to the high insurance premiums for imports from Russia," said the second government official. “High premiums will erode all the benefits of the discounted price. Also, the refining capability and cost will need to be assessed as we buy a different blend," the official added.

He added that India need not worry about buying oil from Russia as long as Europe continues to buy from there.

While the European countries have exempted Russian banks involved in energy trade from sanctions due to their heavy dependence on Russian oil, the US has announced a complete ban on the import of all Russian oil products from 8 March.

Oil prices have been elevated since Russia invaded Ukraine last month. On 7 March, Brent touched $139.13 per barrel, the highest since 2008. On Friday, the May contract of Brent on the Intercontinental Exchange closed at $112.67 per barrel.

Riaz Haq said…
Saudi Arabia is in active talks with Beijing to price its some of its oil sales to China in yuan, people familiar with the matter said, a move that would dent the U.S. dollar’s dominance of the global petroleum market and mark another shift by the world’s top crude exporter toward Asia.

https://www.wsj.com/articles/saudi-arabia-considers-accepting-yuan-instead-of-dollars-for-chinese-oil-sales-11647351541


China introduced yuan-priced oil contracts in 2018 as part of its efforts to make its currency tradable across the world, but they haven’t made a dent in the dollar’s dominance of the oil market. For China, using dollars has become a hazard highlighted by U.S. sanctions on Iran over its nuclear program and on Russia in response to the Ukraine invasion.

China has stepped up its courtship of the Saudi kingdom. In recent years, China has helped Saudi Arabia build its own ballistic missiles, consulted on a nuclear program and begun investing in Crown Prince Mohammed bin Salman’s pet projects, such as Neom, a futuristic new city.

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The talks with China over yuan-priced oil contracts have been off and on for six years but have accelerated this year as the Saudis have grown increasingly unhappy with decades-old U.S. security commitments to defend the kingdom, the people said.

The Saudis are angry over the U.S.’s lack of support for their intervention in the Yemen civil war, and over the Biden administration’s attempt to strike a deal with Iran over its nuclear program. Saudi officials have said they were shocked by the precipitous U.S. withdrawal from Afghanistan last year.

China buys more than 25% of the oil that Saudi Arabia exports. If priced in yuan, those sales would boost the standing of China’s currency.

It would be a profound shift for Saudi Arabia to price even some of its roughly 6.2 million barrels of day of crude exports in anything other than dollars. The majority of global oil sales—around 80%—are done in dollars, and the Saudis have traded oil exclusively in dollars since 1974, in a deal with the Nixon administration that included security guarantees for the kingdom.

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Meanwhile the Saudi relationship with the U.S. has deteriorated under President Biden, who said in the 2020 campaign that the kingdom should be a “pariah” for the killing of Saudi journalist Jamal Khashoggi in 2018. Prince Mohammed, who U.S. intelligence authorities say ordered Mr. Khashoggi’s killing, refused to sit in on a call between Mr. Biden and the Saudi ruler, King Salman, last month.

It also comes as the U.S. economic relationship with the Saudis is diminishing. The U.S. is now among the top oil producers in the world. It once imported 2 million barrels of Saudi crude a day in the early 1990s but those numbers have fallen to less than 500,000 barrels a day in December 2021, according to the U.S. Energy Information Administration.

By contrast, China’s oil imports have swelled over the last three decades, in line with its expanding economy. Saudi Arabia was China’s top crude supplier in 2021, selling at 1.76 million barrels a day, followed by Russia at 1.6 million barrels a day, according to data from China’s General Administration of Customs.
Riaz Haq said…
#Pakistan presses ahead with #Russian-built #gas pipeline. FM Shaukat Tarin: “Either there’s an alternative for us or we’ll go ahead with this deal . . . This is the best alternative as of now, and this was obviously done before #Ukraine” #Energy #LNG
https://www.ft.com/content/9294890a-593c-442b-bc53-13099d14d36f

Islamabad strains ties with the west after refusing to condemn Moscow’s invasion of Ukraine

https://www.ft.com/content/9294890a-593c-442b-bc53-13099d14d36f

Khan visited Moscow on the same day Russia invaded Ukraine last month, the first visit by a Pakistani premier in more than 20 years. The EU, UK, Australia and others “urged” Pakistan to condemn Russia in a UN General Assembly vote. Pakistan abstained from the vote, with Khan attacking the western countries at a campaign rally for treating Pakistanis like “slaves”. Tarin said he hoped Russian officials would soon visit the country to finalise the deal for the Pakistan Stream pipeline following Khan’s Moscow visit. The pipeline, to be built by a collection of Russian companies, is estimated to cost more than $2bn. Recommended News in-depthOil & Gas industry The Soviet pipeline that keeps Europe hooked on Moscow’s oil Well before the latest surge in oil and gas prices, Pakistan was struggling with a widening current account deficit and double-digit inflation exacerbated by rising global commodity prices. Pakistan last month resumed a contentious $6bn IMF programme to stabilise the country’s balance of payments and shore up government revenues. But Tarin said the conflict presented a new “crisis” that would push up the cost of imports including energy and wheat, which Pakistan previously sourced from both Russia and Ukraine. Higher prices following the US’s ban on Russian oil and gas imports would affect Pakistan “very negatively” unless Washington unlocked alternate energy sources, he said. Energy makes up about a quarter of Pakistan’s import bill. He added that a nuclear deal between the US and Iran would allow Islamabad to revive a plan to build a pipeline delivering gas directly from Iran to neighbouring Pakistan, which is suspended because of international sanctions. “If there’s a deal . . . this is the cheapest [option]. It’s next door,” he said. “It’ll be very good for us.” Tarin said it was “only fair that people should respect” Pakistan’s “neutral” stance. The west “have been our allies for a very long time. We’re listening to them, but we told them, ‘Listen, we don’t believe in taking sides. We’re with you as much as China and others’,” he added.


Riaz Haq said…
How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.

https://www.wsj.com/articles/how-the-west-can-win-a-global-power-struggle-11647615557?mod=Searchresults_pos1&page=1

In the years preceding its invasion of Ukraine, Russia set out to sanction-proof its economy by developing local substitutes for key foreign products, such as microprocessors. The only problem: Since it lacks advanced semiconductor fabrication capacity, production of these Russian-designed chips was outsourced, mainly to Taiwan Semiconductor Manufacturing Co. After the invasion of Ukraine, Taiwan joined the U.S. in banning the export of sensitive technology to Russia. TSMC immediately promised to comply.

Russia may be an energy superpower but Taiwan is a semiconductor superpower, and semiconductors are harder to replace than oil. Therein lies a critical insight about the emerging Cold War between Russia and China on one side and the West—the U.S. and its democratic allies—on the other. This Cold War will be much more of an economic contest than the first, and the balance of economic power favors the U.S. and its allies. And it’s not even close.

Chinese President Xi Jinping likes to boast, “The East is rising, the West is declining.” When the rivalry was limited to China and the U.S., this had some resonance: At current rates of growth, China will surpass the U.S. as the world’s largest economy as soon as 2030 despite U.S. gains in the last year.

But with China partnered with Russia and the West more united than ever, this is turning into a contest of alliances, and Xi couldn’t be more wrong. In this framing, “East” and “West” are not geographic, but geopolitical, labels. If “the East” is defined as those countries with which China is closely aligned (it eschews formal alliances), only China is any sense rising. Russia was a stagnating petrostate even before sanctions eviscerated its economy. The others, such as Kazakhstan, Belarus, Pakistan, North Korea, Cambodia and Laos, are poor, slow-growing, or both. The West, defined as the European Union, the anglosphere (the U.S., Australia, Canada, Britain and New Zealand) and East Asia’s three big, rich democracies, Japan, South Korea and Taiwan, may not be growing rapidly, but it is growing and has a gigantic head start. As former U.S. Treasury Secretary Henry Paulson said a Chinese official once told him: “You have all the good allies.”

By itself, China accounted for 18% of global gross domestic product at current exchange rates last year, based on International Monetary Fund data. Adding Russia and their assorted allies brings the total to just 20%. The U.S., meanwhile, accounted for 24%, and adding its allies vaults the total to 59%.

While sanctions on Russia demonstrate the West’s control of the global financial system, long-run economic advantage will come from technology and knowledge. In pure science—such as space travel and atomic energy—Russia and China certainly hold their own. But in commercially useful technology, Western companies lead in almost every field, from commercial aviation and biotechnology to semiconductors and software.

“If you have a coherent strategy across the major democracies, you’re in an enormously robust position in terms of financial, economic and technological leverage,” said former Australian Prime Minister Kevin Rudd, now president of the Asia Society think tank.


Riaz Haq said…
How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.

https://www.wsj.com/articles/how-the-west-can-win-a-global-power-struggle-11647615557?mod=Searchresults_pos1&page=1

Of course the East plays a central role in the global economy. As recent market turmoil illustrates, Russia is a key supplier of not just oil and gas but metals such as palladium, used in catalytic converters, and nickel. China dominates manufacturing of countless goods whose value became abundantly clear during the pandemic, when demand for some, such as protective personal equipment, skyrocketed.

To a great extent these strengths reflect Russia’s comparative advantage in geology and China’s in factory labor. The West’s comparative advantage is in knowledge. That’s why Russia and China court Western investment. For example, to develop a complex liquefied natural gas (LNG) project in the Arctic, Russia relied on Norwegian, French and Italian contractors for essential expertise, research firm Rystad Energy notes.

Catching up with the West is no easy task, as semiconductors illustrate. Western companies dominate all the key steps in this critical and highly complex industry, from chip design (led by U.S.-based Nvidia, Intel, Qualcomm and AMD and Britain’s ARM) to the fabrication of advanced chips (led by Intel, Taiwan’s TSMC and South Korea’s Samsung ) and the sophisticated machines that etch chip designs onto wafers (produced by Applied Materials and Lam Research in the U.S., the Netherlands’ ASML Holding and Japan’s Tokyo Electron ).

Russia and China have made efforts to reduce this dependence. Russia developed locally designed microprocessors called Elbrus and Baikal to run data centers, cybersecurity operations and other applications. Though neither has achieved significant market share, they “represent the pinnacle of local design capability,” said Kostas Tigkos, principal at Jane’s, a defense intelligence provider. Russia hoped that they would eventually displace chips made by Intel and AMD, he said. “This would not only have been the foundation for diversifying their installed base, but a stepping stone for exports of those processors to other friendly nations.” But without manufacturers like TSMC to make the chips, Russia is facing “the complete disintegration of their aspirations to develop their own industry.”

China has a much bigger semiconductor industry than Russia, and its partly state-owned national champion, Semiconductor Manufacturing International Co. (SMIC), could in theory make Russia’s chips, but that would take at least a year, Mr. Tigkos said. Moreover, its efforts to catch up to its Taiwanese competitor have been set back by sanctions. In 2020 the U.S. required companies using American technology to obtain a license to sell to SMIC. This effectively limited its ability to acquire advanced equipment from Netherlands’ ASML, which is critical for “any country that wants to have a competitive semiconductor industry,” Mr. Tigkos said.

Why does all this matter to the outcome of the geopolitical contest? Over time economic weight, strength and vitality are what allow countries to sustain military capability, achieve and maintain technological superiority, and remain attractive partners for other countries.
Riaz Haq said…
How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.

https://www.wsj.com/articles/how-the-west-can-win-a-global-power-struggle-11647615557?mod=Searchresults_pos1&page=1

Yet GDP does not automatically equate to strategic influence. To win a Cold War, it’s not enough for the West to hold the best economic cards, it has to know how to play them. Economic statecraft, as this is called, does not come naturally to the West: Its institutions are built on the assumption that companies are private enterprises, not instruments of the state. They do business wherever it’s profitable, regardless of their home countries’ strategic interests.

No such division exists in Russia and China. Russian President Vladimir Putin used state control of key industries such as natural gas to reward or threaten neighbors. The Chinese Communist Party insists that state-owned and even private enterprises give priority to the state’s interests. In return, China tilts the playing field in those companies’ favor at home and abroad. Chinese state-sponsored hackers steal commercial secrets from Western companies, the U.S. has alleged. China is a master of economic coercion, punishing countries such as Australia or Lithuania or companies that cross its diplomatic red lines by depriving them of access to the Chinese market, knowing other countries and companies will eagerly take their place.

China has also learned how to play companies and countries in the West off against one another—favoring whoever promises to share more of its technology with Chinese partners, or avoids criticism of China.

Western governments, such as Germany, exaggerate China’s economic power and underappreciate their own, said Luke Patey, an expert on China’s international economic strategy at the Danish Institute for International Studies. “Germany has a full house when it comes to geoeconomics but plays like it has a pair of threes,” Mr. Patey said. The West frets that Chinese companies lead in fifth-generation telecommunications equipment—such as Huawei Technologies—and electric vehicle batteries. But, he said, “We sell short the fact that up there with Huawei are Ericsson, Nokia and Samsung,” based in Sweden, Finland and South Korea, respectively. Meanwhile Japan’s Panasonic and South Korea’s LG “are making the most sophisticated electric vehicle batteries in the world.”

For the West to play this game, it will have to more skillfully employ its ample economic assets toward geopolitical ends. The sanctions on Russia show that it can: The West showed a remarkable breadth and unity in its willingness to sustain significant economic discomfort in order to punish Russia. When the Trump administration imposed export controls on China, Taiwan did not join in but its companies were forced to comply because they use U.S. technology. This time Taiwan itself locked arms with the U.S. “Taiwan strongly condemns Russia’s invasion of Ukraine. Our country joins the U.S., EU & other like-minded partners in sanctioning Russia,” its Ministry of Foreign Affairs tweeted.

Riaz Haq said…
How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.

https://www.wsj.com/articles/how-the-west-can-win-a-global-power-struggle-11647615557?mod=Searchresults_pos1&page=1


Still, in one sense this is an easy test. Will the West’s unity persist if Ukraine slips from the headlines and economic pain mounts? More important, could it muster the same effort with China, a critical market and supplier to many companies and countries in the West?

If China attacks Taiwan, which it considers a renegade province, ostracizing it from the global economy would be next to impossible. Nonetheless, Western governments have begun circumscribing business ties with China in response to its more aggressive behavior toward its neighbors and “Made in China 2025,” an economic blueprint for dominance in key technologies. Germany and Italy are applying more stringent criteria to foreign investment in their companies, wary of advanced technology being transferred to Chinese competitors. Japan is now debating an economic security law to safeguard supply chains and screen foreign investment and equipment used in sensitive infrastructure. Companies that had prioritized expansion on China are now boosting their Western presence. TSMC is building fabrication plants in Arizona and Japan while Intel has announced new or expanded facilities in Ohio, France, Germany and Italy.

Western cooperation in such efforts, though nascent, is growing. When the U.S. and European Union settled a long-running dispute over each others’ subsidies to Boeing and Airbus last year, they also agreed to develop a common approach toward “non-market economies,” i.e. Russia and China, on civil aircraft. For example, they agreed those countries cannot make investment in their aviation sectors contingent on “the transfer of technology or jobs to the detriment” of the U.S. and Europe.

Sustaining an economic edge also requires continuous reinvestment. At present, the West holds a comfortable lead. Based on purchasing power rather than current exchange rates, China and Russia spent $570 billion on research and development in 2019, the latest figures available; the U.S. and its largest democratic allies spent more than twice as much, $1.5 trillion, according to the Organization for Economic Cooperation and Development.

When it comes to human capital, the lead narrows slightly: Russia and China have 2.5 million researchers, the U.S. and its allies about 5.2 million. It’s in the future talent pool that the gap really starts to close. China alone awards more science and engineering undergraduate degrees than the U.S., Britain, France, Germany, Japan and South Korea combined. Students in China are more likely to pursue science and engineering than in other countries. This pool of talent is a formidable engine for domestic innovation and a magnet for foreign and domestic investment. The lack of a similar pool constrains American efforts to bring critical manufacturing back to the U.S. In a speech in Taiwan last year Morris Chang, the founder of TSMC, complained that American engineers “don’t want to work in the manufacturing industry…Taiwan’s superiority in this is that it has a large number of excellent and dedicated engineers willing to throw themselves into manufacturing.”

Riaz Haq said…
How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.

https://www.wsj.com/articles/how-the-west-can-win-a-global-power-struggle-11647615557?mod=Searchresults_pos1&page=1

The West makes up for the shortage of homegrown talent through immigration. A study by the Peking University Institute of International and Strategic Studies earlier this year lamented that 34% of China’s top artificial intelligence talents worked in China while 56% worked in the U.S., whose “relatively relaxed and innovative scientific research environment is…favored by scientific and technological talents.” Tech entrepreneurs are motivated by freedom and wealth, both of which are slipping out of reach in China and Russia.

Thus a key factor in whether the West can sustain its edge is whether it can remain a magnet for talent. Yet the West’s openness to trade and immigration and even its commitment to democracy have come under stress. In the last decade support in Europe and the U.S. has surged for right-wing populists opposed to immigration and free trade, skeptical of NATO, and admiring of Mr. Putin. These include Marine Le Pen, a contender for president in France’s elections this spring, and former U.S. President Donald Trump, who may seek the White House again in 2024. Democracy has backslid in Hungary, Poland and the U.S., according to the think tank Freedom House.

This points to the final and perhaps biggest challenge for Western nations. Having shown how effectively they can sever ties with Russia, can they be equally effective in strengthening ties with each other and unaligned players like India, Brazil and Vietnam—and thus be an attractive alternative to the autocratic East?

After World War II the U.S. used trade to strengthen other democracies and bind allies, and its reward was a democratic and prosperous West. Yet since the 2000s Americans have soured on this model, as expanded trade with the likes of China brought economic turmoil and little geopolitical benefit. Mr. Trump saw trade as a zero-sum game and hit allies and adversaries alike with tariffs. He pulled the U.S. out of the Trans-Pacific Partnership with 11 other Pacific rim countries, a pact covering not just tariffs but investment, intellectual property, data and the behavior of state-owned enterprises, intended as an alternative to China. Mr. Biden has resolved tariff disputes but pushed to expand “Buy American” regulations that penalize imports. He has offered no trade-agreement analog to his expanded military ties with allies in Europe and Asia, although he has promised a less ambitious “Indo-Pacific Economic Framework.”
Riaz Haq said…
How the West Can Win a Global Power Struggle
In an economic Cold War pitting China and Russia against the U.S. and its allies, one side holds most of the advantages. It just has to use them.

https://www.wsj.com/articles/how-the-west-can-win-a-global-power-struggle-11647615557?mod=Searchresults_pos1&page=1

Meanwhile, China is fast cultivating its own economic sphere of influence, via foreign investment, its “Belt and Road” infrastructure initiative, and trade agreements, even applying to join the TPP, renamed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.

“China has studied very carefully the American postwar model of how their global and regional military domination was augmented by financial and economic domination,” said Mr. Rudd. China, he said, seeks to achieve its foreign policy aims by making countries throughout Asia, including American allies, dependent on its trade and investment, and eventually its currency. Mr. Rudd urged the U.S. to return to the TPP and revive a similar pact with Europe. The U.S. needs to recognize where its strategic advantage lies, “which is through free trade, open commerce and open capital flows.”
Riaz Haq said…
Chip Sanctions Challenge Russia’s Tech Ambitions
Losing access to some top-end chips from Asia over the invasion of Ukraine undercuts efforts to develop advanced weaponry, AI, robotics

https://www.wsj.com/articles/chip-sanctions-challenge-russias-tech-ambitions-11647682202

Taiwan Semiconductor Manufacturing Co., the world’s biggest contract chip maker, said it is committed to complying with the new export-control rules. South Korea’s Samsung Electronics Co., a leading memory-chip maker and an electronics producer, said this month it has suspended shipment of all its products to Russia because of geopolitical developments and is monitoring the situation to determine its next steps.

Russia’s chip-building technology lags behind that of industry leader TSMC by more than 15 years, said Western semiconductor-industry executives who have studied the state of Russia’s industry. The country’s leading chip maker, Mikron Group, has said it is the only local company capable of mass producing semiconductors with 65-nanometer circuitries—a technology introduced to the industry for mass production around 2006. Mikron didn’t respond to a request for comment.

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An international tech blockade threatens to deprive Russia of sophisticated semiconductors needed to power advanced weaponry and cutting-edge technologies like 5G, artificial intelligence and robotics, experts say.

In late February, the U.S. imposed a ban on selling high-tech products including semiconductors and telecommunications systems used by the defense, aerospace and maritime industries to Russia and its ally Belarus, days after Russia invaded Ukraine. The ban also extended to certain foreign items produced with U.S. equipment, software or blueprints.

South Korea and Taiwan, which dominate in high-end chips, and Japan, strong in chip-making materials and tools, have also banned exports of the items that the U.S. has put on its export-control list. Their moves cut off Russia’s access to many top-end chips, and materials and components needed to re-create production of such items locally.

For Russia, the impact from the coordinated sanctions will be significant, said Tom Rafferty, Asia regional director at the Economist Intelligence Unit. “The big export bans are going to be on semiconductors and high-end semiconductors in particular, for which Korea and Taiwan almost monopolize production. So there won’t be supply of that anywhere that Russia can lean on.”

While the sanctions would appear to limit Russia’s access to chip supplies, the actual impact couldn’t fully be determined. Russia’s Ministry of Industry and Trade, and the Ministry of Economic Development didn’t respond to requests for comment.

Russia continues to largely rely on foreign technology to design chips and has limited chip-production capabilities of its own. In 2020, Russia imported roughly $440 million worth of semiconductor devices, including components like diodes and transistors, and around $1.25 billion worth of electronic integrated circuits, or “chips,” built by incorporating various components, according to the United Nations Comtrade database.

While the majority of these imports come from Asian countries that aren’t imposing sanctions, Russia would still be left in the dark on high-end chips or homegrown chips. Taiwan produces most of the world’s cutting-edge semiconductors, with the rest produced in South Korea, data from Washington, D.C.-based trade group Semiconductor Industry Association showed. South Korea also dominates in memory chips, while Japan is a stronghold of semiconductor materials and manufacturing tools, both crucial for chip building.
Riaz Haq said…
Powell Says War May Speed China Moves to Insulate Against Dollar
Fed chief says China has been working on currency matters
Powell says Ukraine war may serve as accelerant to China moves
Powell: Fed Needs to Be 'Nimble' Amid Ukraine Crisis

Federal Reserve Chair Jerome Powell said the Ukraine war could have the effect of accelerating China’s moves to develop alternatives to the current dollar-dominated international payments infrastructure.

Powell was questioned Thursday in a Senate Banking Committee hearing on how China might view the U.S.-led efforts to isolate Russia’s economy, especially by damaging its ability to use the dollar.

https://www.bloomberg.com/news/articles/2022-03-03/powell-says-war-may-speed-china-moves-to-insulate-against-dollar
Riaz Haq said…
TSMC has suspended all sales to Russia and to third parties known to supply products to Russia while it sorts through the sanctions rules to ensure it fully complies, according to a person familiar with the company’s business, who spoke on the condition of anonymity to discuss sensitive matters.

https://www.washingtonpost.com/technology/2022/02/25/ukraine-russia-chips-sanctions-tsmc/

In a statement, TSMC said it is “fully committed to complying with the new export control rules announced.”


GlobalFoundries, the chip manufacturer based in Malta, N.Y., said it also has begun complying with the rules. The company has a system to review and block any prohibited sales to Russia, said Karmi Leiman, the company’s head of global government affairs and trade, though he added that the size of the company’s sales to Russian buyers is “not material.”

Leiman said the internal review system is similar to the one the company uses for Huawei, the Chinese tech giant that has been a target of U.S. sanctions for several years.


Intel, based in Santa Clara, Calif., said it “complies with all applicable export regulations and sanctions,” including the new Russia-focused export controls.

Russia is vulnerable to the export ban because it doesn’t produce consumer electronics or chips in large quantities, analysts say. In particular, it doesn’t make the highest-end semiconductors needed for advanced computing, an area dominated by Taiwan, South Korea, the United States, Europe and Japan.


TSMC’s participation in the sanctions is particularly damaging because the company is the world’s largest manufacturer of chips, including the most advanced.

Among the chips TSMC is no longer manufacturing and shipping are Elbrus-branded semiconductors that are designed in Russia, according to the person familiar with TSMC’s business.

Russia’s military and security services use Elbrus chips in some computing applications, according to Kostas Tigkos, an electronics expert at Janes, a U.K.-based provider of defense intelligence, who described the loss of TSMC’s help with the chips as “devastating” for Russia.

The Russian government has also been encouraging large domestic companies and banks to use Elbrus chips in their computers because the components are designed in Russia.

Russian drones shot down over Ukraine were full of Western parts

The Semiconductor Industry Association, a trade group representing big chipmakers, said its members are “fully committed to complying” with the new rules “in response to the deeply disturbing events unfolding in Ukraine.”


“While the impact of the new rules to Russia could be significant, Russia is not a significant direct consumer of semiconductors, accounting for less than 0.1% of global chip purchases, according to the World Semiconductor Trade Statistics (WSTS) organization,” the group’s president, John Neuffer, said in a statement.

The United States and other Western nations have long regulated sales to Russia of chips and other electronic components specifically designed for military use. Any such sales already required a government license to proceed, industry experts said.

The new rules largely block the sale of dual-use chips, which have both military and commercial applications, to nonmilitary users in Russia, including those in high-tech industries.

In a novel move that the United States has used only once before — against China’s Huawei — it is also requiring companies worldwide to abide by the rules and block such sales to Russia if they use U.S. manufacturing equipment or software to produce chips. Most chip factories around the world use software or equipment designed in the United States, analysts say.


Riaz Haq said…
U.S. tech dominance could offer leverage over Russia — or backfire
Silicon Valley’s increasingly aggressive stance against Russia could fuel the growth of rivals there and in China, Iran, too


https://www.washingtonpost.com/technology/2022/03/03/us-russia-technology-dependence/


Withholding technology can be a soft-power weapon to potentially turn a population against its leaders. Yet it also can be costly to the U.S. economy, slow to deliver results and scattershot in its effects — much more likely to affect ordinary Russians using their iPhones than generals firing missiles into Ukrainian cities.

There is another cost, as well. The United States’ dominance of global technology, experts warn, was built over generations but could be eroded in just a few years as rival powers — and especially Russia and China — invest billions of dollars to develop alternative technologies at home, in part to decrease U.S. leverage at moments such as these.


Even as Russians furiously buy iPads, Android devices and Windows-based computers, President Vladimir Putin is pushing hard to wean the country from Western technologies. And if Russia and other U.S. rivals succeed, there also could be long-term damage to the ability of American intelligence agencies — particularly skilled in exploiting U.S.-made tech — to track developments in the next conflict, experts say.

The upshot is that although technology sanctions can be unquestionably powerful, it’s a power that, when deployed, can spark backlashes that undermine its long-term utility. Depriving rivals of American-made technology also threatens the future global prospects of an industry that has driven U.S. economic growth for most of this century. The rise of a Russian Google — or a Chinese Facebook or an Iranian YouTube — are not theoretical developments. They are happening already.

“When you cut them off from American tech, they will find alternatives,” said Peter Micek, general counsel for Access Now, a human rights group that lobbies to keep Internet services available to people worldwide.

U.S. officials and technology executives are attempting to navigate this chessboard of risk and reward as they assemble a potent set of punitive moves against Russia.


The result has been growing restrictions on hardware, with Apple joining others in blocking sales to Russia, and moves by major social media platforms to curb the spread of Russian propaganda through its state-funded RT information service — often in response to the demands of Western governments. Digital purchasing tools, such as Apple Pay, also have stopped working as Western sanctions cut off Russian banks for ordinary operations.

But calls by Ukrainian officials to deprive Russians in general of access to social media and even the Internet itself have sparked significant resistance from both the companies and digital rights groups, which argue that the likes of Twitter, WhatsApp and Telegram are key to delivering information in Russia. They often are the only sources of news on the horrors Putin is inflicting on Ukrainians at a time when his control over national news media is nearly total.

The Russian government, meanwhile, has been squeezing these same companies, throttling Facebook and Twitter, and threatening action against Google in retaliation for its YouTube subsidiary limiting access to RT in response to demands by Western governments.

But as this conflict plays out, the idea of depriving Russia of software updates or online support from U.S. companies has not gained traction, even though such moves could gradually erode the functioning of technological tools used every day by the Russian government and its citizens.

Riaz Haq said…
#US Undersecretary Victoria Nuland: ‘#Russia-#China axis not good for #India… US can help (India) with defense supplies’. #Modi #BJP #Nuland #Ukraine https://indianexpress.com/article/india/russia-china-axis-not-good-for-india-us-can-help-with-defence-supplies-7831894/ via @IndianExpress

FRAMING the Russia-China alliance over Ukraine as a debate between democracies and autocracies, visiting US Under Secretary of State for Political Affairs Victoria Nuland told The Indian Express Wednesday that US was ready to help India move away from dependence on Russia for defence supplies. Excerpts from an exclusive interview:

On the Russia-Ukraine crisis, how do you read India’s statements?

We had very broad and deep conversations (Nuland met External Affairs Minister S Jaishankar and her counterpart Harsh Vardhan Shringla) about what’s in this war. Unfortunately, Indian students got trapped, and they were able to get out, but unfortunately one Indian lost his life which was very tragic.

The Chinese Vice Foreign minister drew a parallel between NATO’s eastward expansion in Europe and the Quad in the Indo-Pacific.

Obviously, China is trying to seek an advantage for itself in this conflict, as it always does. But again, what threatens China most: open and free societies who offer their people a different way of life than the Communist party of China offers for Chinese people.

So NATO is a defensive alliance, of voluntary alignment of countries who asked to join together to defend themselves. In the Indo-Pacific strategy, we are talking about the great democracies of the region, working together to protect themselves and to advance prosperity, and free and open commerce and navigation and all of these things. All of the things that the autocrats want to change, want to threaten. So I’m not surprised that the Chinese are trying to draw parallels here. Because, in both cases, we’re talking about trying to keep the world free for democratic governance.

Who is a bigger threat — Russia or China?

The worry now is that they intensify their efforts together. They learn from each other, whether it is how to coerce a neighbour economically, or militarily. Whether it’s about how to go in the UN system and undercut the rules of the road that the US, India and other democracies have built to favour freedom. Whether it is that they let each other off the hook by financing each other’s militaries.

All of these things are worrying. But I also think that this is an energizing moment for the democracies, because now we see very clearly what we are up against.
Riaz Haq said…
The takeaway from the US President Joe Biden’s European tour on March 25-26 is measly. Dissenting voices are rising in Europe as western sanctions against Russia start backfiring with price hikes and shortages of fuel and electricity. And this is only the beginning, as Moscow is yet to announce any retaliatory measures as such.

By M. K. BHADRAKUMAR

https://www.indianpunchline.com/bidens-reality-check-in-europe/

The unkindest cut of it all is that the Russian Defence Ministry chose Biden’s trip as the perfect backdrop to frame the true proportions of success of its special operation in Ukraine. The US and NATO’s credibility is perilously close to being irreparably damaged, as the Russian juggernaut rolls across Ukraine with the twin objectives of ‘demilitarisation’ and ‘denazification’ in its sights.

The Russian General Staff disclosed on Friday that the hyped up Ukrainian Armed Forces, trained by the NATO and the US, have sustained crippling losses: Ukrainian air force and air defence is almost completely destroyed, while the country’s Navy no longer exists and about 11.5% of the entire military personnel have been put out of action. (Ukraine doesn’t have organised reserves.)

According to the Russian General Staff’s deputy head Colonel General Sergey Rudskoy, Ukraine has lost much of its combat vehicles (tanks, armoured vehicles, etc.), one-third of its multiple launch rocket systems, and well over three-fourths of its missile air defence systems and Tochka-U tactical missile systems.

Sixteen main military airfields in Ukraine have been put out of action, 39 storage bases and arsenals destroyed (which contained up to 70% of all stocks of military equipment, materiel and fuel, and more than 1 million 54000 tons of ammunition.)

Interestingly, following the intense high-precision strikes on the bases and training camps, foreign mercenaries are leaving Ukraine. During the past week, 285 mercenaries escaped into Poland, Hungary and Romania. Russian forces are systematically destroying the Western shipment of weapons.

Most important, the mission to liberate Donbass is about to be accomplished. Simply put, the main objectives of the first phase of the operation have been achieved.

Apart from Kiev, Russian troops have blocked the northern and eastern cities of Chernigov, Sumy, Kharkov and Nikolaev, while in the south, Kherson and most of Zaporozhye region are under full control — the intention being to not only to shackle Ukrainian forces but to prevent their grouping in Donbass region. (See my article Dissecting Ukraine imbroglio, Tribune, March 21, 2022)

“We did not plan to storm these cities from the start, in order to prevent destruction and minimise losses among personnel and civilians,” Rudskoy said. But, he added, such an option is not ruled out either in the period ahead.

It stands to reason that Washington and European capitals are well aware that the Russian operation is proceeding as scheduled and there is no stopping it. Thus, the NATO’s extraordinary summit on March 24 confirmed that the alliance is unwilling to get into a military confrontation with the Russian Army.

Instead, the summit decided to strengthen the defence of its own territories! Four additional multinational NATO combat groups of 40,000 troops will be deployed in Bulgaria, Hungary, Romania and Slovakia on a permanent basis. Poland’s proposal to deploy NATO military units in Ukraine was outright rejected.

However, Poland has certain other plans, namely, to deploy contingents to the western regions of Ukraine to support the ‘fraternal Ukrainian people” with the unspoken agenda of reclaiming control over the historically disputed territories in the those regions. What Faustian deal has been struck in Warsaw on March 25 between Biden and his Polish counterpart Duda remains unclear. Clearly, vultures are circling Ukraine’s skies. (See my blog Biden wings his way to the borderlands of Ukraine, March 24, 2022)

Riaz Haq said…
#Pakistan’s #Energy Crunch Spurs ‘Barter’ #Trade for #Afghan #Coal. #LNG purchase tender scrapped after offers were too expensive. #Cement factories buying coal from #Afghanistan as prices surge. #russiasanctions
https://www.bloomberg.com/news/articles/2022-03-28/pakistan-s-energy-crunch-spurs-barter-trade-for-afghani-coal

Cash-strapped Pakistan can’t afford to buy fuel on the spot market and is either skipping purchases or turning to alternatives such as Afghani coal as it grapples with a worsening energy crisis.

State-owned Pakistan LNG Ltd. didn’t award a recent purchase tender seeking several shipments of liquefied natural gas through May due to high offer prices. Cement manufacturers, meanwhile, are buying coal from Afghanistan at roughly half the price of shipments from regular supplier South Africa.
Riaz Haq said…
Economic Weapons of Mass Destruction

https://www.project-syndicate.org/commentary/economic-wmds-and-the-risk-of-deglobalization-by-raghuram-rajan-2022-03

By RAGHURAM G. RAJAN


Because Russia's war against Ukraine could not go unpunished, the use of painful, sweeping economic sanctions is clearly justified. In the future, though, these powerful new tools will need to be subject to proper controls; otherwise, they could trigger a reversal of globalization – and of the prosperity that it has made possible.

CHICAGO – War is horrific, no matter how it is waged. Nevertheless, Russia’s unprovoked attack on Ukraine, with its scenes of Ukrainian civilians being murdered or driven from their homes, undoubtedly had to be opposed. In addition to supplying Ukraine with military weapons, governments around the world have deployed economic weapons against Russia. While Russia, an economic midget relative to its military power, may still lash out by expanding the range of military weapons it uses and the territories it targets, it is a risk the world had to take.

Compared to Russia’s indiscriminate bombing, economic weapons will not kill people as quickly, create as much visible destruction, or inspire as much fear. Nonetheless, the unprecedented economic weapons that have been deployed against Russia will be unquestionably painful.

The strictures on Russia’s central bank have already contributed to the ruble’s collapse, and new limitations on cross-border payments and financing have had an immediate impact, weakening confidence in Russian banks. Though trade sanctions (restricting exports of key inputs such as airplane parts to Russia, as well as purchases from Russia) and the exodus of multinational corporations from Russia will have a less immediate effect, they will reduce economic growth and increase unemployment significantly over time. If these measures are not reversed, they will eventually translate into lower living standards, poorer health, and more deaths in Russia.

That we have come to this point reflects a widespread political breakdown. Too many powerful countries are now being led by authoritarian rulers whose reliance on nationalism makes them less willing to compromise internationally and who face few domestic constraints on their behavior. If Russian President Vladimir Putin’s aggression were to go unpunished, more international provocations like his war in Ukraine would become inevitable.



https://youtu.be/yFCpMOCVdAw


Equally problematic is the breakdown of the international order. The United Nations Security Council cannot legitimately act against any of its permanent veto-wielding members (China, France, Russia, the United Kingdom, and the United States). The organization’s impotence translates into impunity for strongmen who flout international norms. Moreover, even if the UN could approve a military response, the will to confront a determined nuclear power militarily would probably be lacking.

Economic weapons, made possible by global integration, offer a way to bypass a paralyzed global governance system. They allow other powers an effective (that is, painful) but civilized way to respond to aggression and barbarity.



But the risks that these weapons can create must not be underplayed. When fully unleashed, sanctions, too, are weapons of mass destruction. They may not topple buildings or collapse bridges, but they destroy firms, financial institutions, livelihoods, and even lives. Like military WMDs, they inflict pain indiscriminately, striking both the culpable and the innocent. And if they are used too widely, they could reverse the process of globalization that has allowed the modern world to prosper.


Riaz Haq said…
In 2020, #Russia was the world's 11th-largest #economy, according to the World Bank. But by the end of this year (2022), it (#Russian #GDP) may rank no higher than No. 15, based on the end-February rouble exchange rate. #UkraineUnderAttack #Sanctions https://www.reuters.com/world/europe/four-weeks-war-scar-russias-economy-2022-03-24/

Russia's invasion of Ukraine on Feb. 24 sparked sweeping sanctions that ripped the country out of the global financial fabric and sent its economy reeling.

A month on, Russia's currency has lost a large part of its value and its bonds and stocks have been ejected from indexes. Its people are experiencing economic pain that is likely to last for years to come.

Below are five charts showing how the past month has changed Russia's economy and its global standing:


In 2020, Russia was the world's 11th-largest economy, according to the World Bank. But by the end of this year, it may rank no higher than No. 15, based on the end-February rouble exchange rate, according to Jim O'Neill, the former Goldman Sachs economist who coined the BRIC acronym to describe the four big emerging economies Brazil, Russia, India and China.

Recession looks inevitable. Economists polled by the central bank predicted an 8% contraction this year and for inflation to reach 20%.


Forecasts from economists outside Russia are even gloomier. The Institute of International Finance predicts a 15% contraction in 2022, followed by a 3% contraction in 2023.

"Altogether, our projections mean that current developments are set to wipe out the economic gains of roughly fifteen years," the IIF said in a note.
Riaz Haq said…
Pro-#Russia Sentiment on #Indian Twitter Draws Scrutiny. “There were dense clusters of communities engaging with it (#IStandWithPutin hashtag) , many of which were based in #India or based in #Pakistan” #UkraineUnderAttack https://www.nytimes.com/2022/03/29/technology/twitter-russia-india.html?smid=tw-share

https://twitter.com/haqsmusings/status/1508946186815770624?s=20&t=0bTDjFwjnkYoDd53P9u_wA

Some of the accounts used fake profile pictures, raising researchers’ suspicions. Others racked up thousands of retweets on their pro-Putin posts, despite having few followers and low engagement on the rest of their tweets.

Although the activity suggested the accounts may be inauthentic, there was no hard evidence that they were part of a coordinated influence campaign aimed at shifting sentiment about the war in India. A Twitter spokeswoman said the company was still investigating.

The challenge of identifying influence campaigns is further complicated by the split of public opinion in India. While some people have vehemently opposed the war, others have vocally backed Russia and held marches to show support.

“Russia and India have longstanding and deep security and economic relations,” said Graham Brookie, director of the Atlantic Council’s digital forensic research lab. “If you’re Russia and you’re facing increased global scrutiny, increased global closure, you look to countries like India to at least abstain from as many efforts to isolate Russia as humanly possible.”


---------

While India and Russia have long had close ties, researchers say there are signs that social media posts parroting Kremlin talking points may not be legitimate.


In the days after Russia’s invasion of Ukraine, thousands of Twitter accounts shared messages of support for Vladimir V. Putin, the Russian president.

They tried to deflect criticism of the war by comparing it to conflicts instigated by Western countries. Their commentary — along with tweets from other users who condemned it — made the hashtag #IStandWithPutin trend on Twitter in several regions around the world.

While some of the accounts said they were based in Nigeria and South Africa, the majority of those with a declared location on Twitter claimed to be from India and targeted their messages to other Indian users, researchers said.


The prevalence of accounts claiming to be from Indian users indicates that India’s social media landscape has become an important destination in the effort to influence public opinion of the war in Ukraine. Users who said they were from India made up nearly 11 percent of the hashtag trend in the two weeks after the invasion. Just 0.3 percent were from Russia and 1.6 percent from the United States during that time.

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The death of an Indian student in the fighting in Ukraine this month brought into focus India’s challenge of evacuating nearly 20,000 of its citizens who were in the country when Russia’s invasion began. Hundreds of Indian students remained stuck amid heavy shelling at the time. India’s prime minister, Narendra Modi, who has avoided condemning Russia, appealed to Mr. Putin and his Ukrainian counterpart, President Volodymyr Zelensky, for help.

Russia’s local embassy used Twitter to instruct Indian media outlets to not use the word “war” but to instead refer to it as a “special military operation,” as media outlets in Russia have been forced by law to do. Some Indian Twitter users responded by mocking the embassy, while others chastised local media outlets as inept and needing instruction from Russia.

Pro-Russian sentiment has taken hold in right-wing circles in the United States, misinformation that has spread within Russia claims Ukrainians have staged bombings or bombed their own neighborhoods, and myths about Ukrainian fortitude have gone viral across social media platforms. But in India and other countries where social media users joined the hashtag, pro-Russian narratives have focused on ethnonationalism and Western hypocrisy over the war, themes that have resonated with social media users.
Riaz Haq said…
The #Hindu Right is turning against the #US. Until a few years ago, #Modi Bhakts were largely pro-US. Now, Joe #Biden is seen as antagonistic — if not to #India, then to the sort of India that Modi’s supporters want to create. #Hindutva #Islamophobia https://theprint.in/opinion/the-hindu-right-is-turning-against-the-us-but-india-needs-to-see-reality-over-rhetoric/895977/


By VIR SANGHVI


Even while the war in Ukraine rages, however, we should be asking ourselves deeper questions. A few days ago, at the ABP Ideas of India Summit in Mumbai, I interviewed Fareed Zakaria. Fareed’s view was that over the last decade or so, India has become so inward-looking and obsessed with its own issues and divisions that it has not spent enough time thinking about its place in the world, going forward.

While we have been obsessed with headscarves and caste arithmetic, the world has rearranged itself. No matter what happens in Ukraine, Russia will come out of the war damaged. If it makes peace, then some of the sanctions imposed on it by the West may be moderated but it seems unlikely that Putin’s Russia will become a full-fledged member of the global economy for a long time.

In that case, it will have no choice but to move into the Chinese sphere of influence. One scenario sees Russia as a classic vassal state of the Chinese, supplying energy and raw materials to feed the Chinese military machine and its industrial complex. Pakistan and China are longstanding allies, so we will probably see the emergence of a Russia-China-Pakistan alliance.

India will then have two choices. Either we agree to accept China’s suzerainty over the East. Or we look for other options.

Should we choose the second path (and I imagine we will have to), then there really is nowhere to go but the West. At present, the West understands how India is constrained by its dependence on Russian weaponry. But in the long run, it will expect a greater measure of alignment. Is that something we have considered? Or are we too blinded by the rhetoric about anti-Hindu America and hypocritical Washington?

Sooner, rather than later, we will have to rescue reality from the rhetoric.
Riaz Haq said…
Putin and Xi Exposed the Great Illusion of Capitalism
Unless the U.S. and its allies mobilize to save it, the second great age of globalization is coming to a catastrophic close.


https://www.bloomberg.com/opinion/articles/2022-03-24/ukraine-war-has-russia-s-putin-xi-jinping-exposing-capitalism-s-great-illusion

The supply of basic commodities, from wheat to nickel to titanium to oil, has been disrupted. The West is doing everything it can to “cancel” Russia from the global economic system — sanctioning oligarchs, expelling Russian banks from the global financial plumbing, and preventing Russia’s central bank from accessing its reserves. There’s talk of throwing Russia out of the World Trade Organization.

Even when they haven’t been forced to do so by law, Western companies are boycotting Russia and closing down their Russian operations. Russian consumers can no longer use Visa, MasterCard and American Express. The McDonald’s in Pushkin Square is closed — along with 850 other branches. Photos have appeared on social media of Russians standing in interminable queues for sugar and other basic foods or else fighting over remaining scraps, just as they did in the Soviet days. For its part, the Kremlin has hit back by blocking access to Facebook and threatening to imprison or fine anyone suspected of spreading “fake” news, thereby essentially closing down Western news organizations inside the country.

We Didn’t Mean It
The Western policymakers meeting this week will say they have no intention of closing down the global order. All this economic savagery is to punish Putin’s aggression precisely in order to restore the rules-based system that he is bent on destroying — and with it, the free flow of commerce and finance. In an ideal world, Putin would be toppled — the victim of his own delusions and paranoia — and the Russian people would sweep away the kleptocracy in the Kremlin.

In this optimistic scenario, Putin’s humiliation would do more than bring Russia back to its senses. It would bring the West back as well. The U.S. would abandon its Trumpian isolationism while Europe would start taking its own defense seriously. The culture warriors on both sides of the Atlantic would simmer down, and the woke and unwoke alike would celebrate their collective belief in freedom and democracy. McDonald’s would be open again in Pushkin Square — and Keynes’s various serpents would slither out of the garden.


There’s a chance this could happen. Putin wouldn’t be the first czar to fall because of a misjudged and mishandled war. Many of Russia’s most powerful people are seeing their mansions, yachts and private planes confiscated, all for an invasion they weren’t consulted about. Younger Russians, particularly in the big cities, are more liberal than their parents. Russian shoppers don’t want to return to the Soviet era.

Meanwhile in the West, Ukraine has already prompted a great rethink. As German Chancellor Olaf Scholz has proclaimed, we are at a Zeitenwende — a turning point. Under his leadership, pacifist Germany has already proposed a defense budget that’s larger than Russia’s. Meanwhile, Ukrainian immigrants are being welcomed by nations that only a few months ago were shunning foreigners, and, after a decade of slumber in Brussels, the momentum for integration is increasing.

But this turning point can still lead in several directions. The chances of a regime change in the Kremlin remain slim, given Putin’s popularity and terror machine. Western Europe has heard pious words about integration and immigration before. And look at the West’s leaders! Joe Biden hardly conveys an image of world-changing dynamism; after his initial heroics, Olaf Scholz greeted Volodymyr Zelenskiy’s speech to the German parliament with pudding-like inertia; Emmanuel Macron is bent on winning an election while trying to look like Zelenskiy, in hoodie and stubble; while Boris Johnson has dared to compare the Ukrainian resistance to Brexit.
Riaz Haq said…
#India more than doubles price of locally produced #gas.The price of gas from regulated fields of state-owned ONGC and Oil India Ltd will rise to a record $6.10 per million British thermal unit from the current $2.90. #Energy #Economy #BJP #Modi https://www.livemint.com/industry/energy/india-more-than-doubles-domestic-natural-gas-price-to-6-1-mmbtu-for-6-months-beginning-1-april-11648729140812.html

The Central Government on Thursday more than doubled the price of domestically produced natural gas for the six months beginning tomorrow (1 April), reflecting a surge in global prices.

The Petroleum Planning and Analysis Cell of the federal oil ministry announced the new prices today.

This will raise the prices of gas sold to households, the power sector, industries and fertiliser firms, adding to overall inflation.

As per a notification issued by the oil ministry's PPAC, the price of gas from regulated fields of state-owned Oil and Natural Gas Corp Ltd and Oil India Ltd will rise to a record $6.10 per million British thermal unit from the current $2.90.

The rate paid for difficult fields like deepwater will rise to $9.92 for April-September from $6.13 per mmBtu, the notification stated.

India links prices of locally produced gas from old fields to a formula tied to global benchmarks, including Henry Hub, Alberta gas, NBP and Russian gas.

High natural gas prices will boost earnings of producer ONGC, Oil India Ltd and Reliance Industries.

India's annual retail inflation exceeded 6% for the second consecutive month in February.

Riaz Haq said…
Arif Rafiq
@ArifCRafiq
The chairman of an Indian think tank affiliated with the RSS — the parent group of India’s ruling BJP — floats the possibility of an India-Russia-China axis:

https://twitter.com/ArifCRafiq/status/1509880440932478982?s=20&t=Oj7AI6oU0WniCCACByd4Qg
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Ukraine crisis: The war that is changing relations, rules
S Gurumurthy, Chairman, VIF



https://www.vifindia.org/article/2022/march/28/ukraine-crisis-the-war-that-is-changing-relations-rules

The Ukraine war seems to have dented the US global leadership in more than one sense. First, it has delivered the most telling message that the US can’t protect its own protégé. Next, that it had to solicit a virtual meeting between Biden and Xi Jinping (XJP) to get China to the US side or to end the war itself, exposed its weakness. Donald Trump would perhaps have handled Russia and Ukraine differently, not allowed China to be the proverbial monkey between two tigers, the US and Russia.

Anyway the two-hour talk Biden had with XJP did not go well for him. XJP reportedly snubbed Biden saying “those who tied the bell to the tiger must untie it,” clearly blaming NATO for the war. XJP used the talk to advance China’s claim to be equal to the US, saying they should jointly shoulder “international responsibilities” for world peace and tranquility. According to a Chinese report, XJP seems to have said that one hand cannot clap, suggesting that NATO should have a dialogue with Putin and address his security concerns, implying NATO expansion as the issue. XJP, of course, has also spoken in support of the principles of sovereignty and territorial integrity of all states. He seems to have insisted on bringing the China-US ties under turmoil over a host of issues, including Taiwan, Hong Kong, Xinjiang and Tibet, on “right track” — something completely beyond the agenda of Biden on that day.

The US media had reported that Biden threatened XJP. On the contrary, he seems to have got snubbed. Biden’s effort to wean China away from Russia has failed at the minimum. If this is what the US got from China, The Wall Street Journal reported that Saudi Arabia and the UAE declined calls from Biden to ease oil prices unless the US supported them in Yemen and elsewhere. Arab allies of the US have refused to toe its line. Israel did criticise the Russian attack but its stand was so nuanced as not to take the side of the West. Turkey’s position is identical to Israel’s.

Al-Jazeera even sees a strong alliance between Russia and UAE. Another collateral setback to the US is Syrian president Assad’s visit (after 11 years) to UAE about which the US could only lament that it was “disappointed and troubled”. Syria and Russia are close. On top of it all, Saudi Arabia, whose oil has been priced in US dollars for five decades, is considering pricing it in Yuan for sales to China. One more important development. The Chinese foreign minister was invited for the first time to the meeting of the Organisation of Islamic Cooperation. These are not ordinary developments. The Ukraine war has undoubtedly eroded US influence over even its allies.

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China and India have had border clashes for the last two years. Surprisingly, its foreign minister Wang Yi is visiting Delhi on March 25 — a significant development. India’s independent position on Ukraine is itself a message to China that India would withstand US pressure. If it can lead to some trust and understanding between China and India on the borders, that can pave the way for an informal Russia-China-India axis for future. Naftali Bennett, the Prime Minister of Israel, a US ally, is making a four-day long visit to India in April first week at the invitation of “his friend” Indian Prime Minister Modi. India is boldly going ahead with the purchase of Russian oil amid US sanctions on Russia.

Riaz Haq said…
Opinion Biden’s sanctions against Russia are a double-edged sword
Image without a caption
By Fareed Zakaria

https://www.washingtonpost.com/opinions/2022/05/12/biden-sanctions-russia-could-erode-dollar-power-financial-economic/

...the unprecedented nature of these measures (US sanctions against Russia) is producing concerns around the world that the United States has “weaponized” its financial power and could lead, over time, to the decline of the dollar’s dominance, which is what gives America its financial superpowers in the first place.

I’ve been hearing about this firsthand from three sources I trust. The first, in New Delhi, recently told me about a conversation that took place at the highest levels of India’s government. The topic: how to make sure that the United States could never do to India what it has just done to Russia. The second, from Brussels, where staff at the European Commission has been tasked — even while working with Washington on the sanctions — with finding ways to reduce the role of the dollar in its energy imports. The third, an Asian observer of China, speculated that the overly severe lockdowns in Shanghai — which involved the rationing of food and basic supplies — might be part of an effort by Beijing to experiment with a scenario in which it faced economic sanctions from Washington (perhaps after an invasion of Taiwan).

A debate is raging around the world about whether the dollar’s total dominance of the international financial system is waning. Even Goldman Sachs and the IMF have warned that that might well happen. I tend toward the opposite view: Namely, that you can only beat the dollar if you have an effective alternative, which so far does not exist.

But it’s clear that many countries — from hostile powers such as China and Russia to friendly nations such as India and Brazil — are working hard on ways to reduce their vulnerability to Washington’s whims. None of these efforts has so far gained much traction, though it is worth noting that the share of global foreign exchange reserves held in dollars has declined from 72 percent to 59 percent over the past two decades.

Partly this is because the United States appears less stable and predictable in the use of its extraordinary privilege. In the two decades preceding Russia’s invasion, Washington massively ramped up sanctions for all kinds of reasons — by more than 900 percent. Many of these measures were overreactions and should be rolled back. After 9/11, Washington put in place highly intrusive measures aimed at tracking money going to terrorists. It has inflicted harsh punishments on banks that did not adhere to all U.S. sanctions. It has imposed sanctions on Iran, Venezuela, North Korea, Cuba and other countries often simply to satisfy domestic critics who wanted to “do something” without paying much of a price. This type of economic warfare has failed to change the regimes in these countries but has caused widespread misery for ordinary people in them. Sanctions against Russia are aimed at policy change, not regime change, and therefore could be more effective.

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The dollar maintains its crucial role in the international system because the United States has the world’s largest economy. It also has the most liquid debt markets, its currency floats freely, and, crucially, it is regarded as a country based on the rule of law and not one prone to arbitrary and unilateral actions. That last criterion is not one that Washington has lived up to in recent years. Biden should make sure that, in fighting this battle against Russia, he does not erode America’s unique financial superpower.

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