The Duran: Is Moldova the next Ukraine?

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the crisis in Moldova, where President Igor Dodon has now overturned a decree dissolving parliament, which was instituted by the pro-EU Democratic Party. Following the elections in February, Moldova’s parliament failed to establish a ruling coalition government, and on Saturday avoided the dissolution of Parliament after the Party of Socialists, supporting Moldovan President Igor Dodon, agreed to govern together with the other pro-EU bloc ACUM, in order to oppose the pro-EU Democratic Party led by the oligarch Vladimir Plahotniuc, which controlled the former parliament and the cabinet.

The leader of the Party of Socialists Zinaida Greceanii was elected the parliament’s speaker, and the government was formed with Maia Sandu, who heads the Party of Action and Solidarity, a part of the ACUM bloc, as prime minister. The Democratic Party initially refused to recognize the new government, but in the end they had to cave in. Alexander Mercouris raises the alarm on the increasingly polarized situation in Moldova and Alex Christoforou asks what the EU has to gain from another problem state. The militarized, separatist republic of Transnistria is also mentioned.

My Comment: I have to bring in a little historical background before giving my 2 cents on contemporary events. The Principalities of Moldova and Wallachia united between 1856 and 1862. The key moment of unification was in 1859 when Alexandru Ioan Cuza became ruler. This covered the historical regions of Oltenia, Muntenia, western Moldova, and southern Bessarabia. The political union between the two Principalities was the first step towards the creation of the Kingdom of Romania. The country joined the Russo-Turkish war [1877-1878], and at the end of that conflict, Romania alongside Montenegro and Serbia gained their independence from the Ottoman Empire. Later on, Romania entered World War 1 on the side of the Entente, with the goal of forming Greater Romania, which happened in 1918, when Bessarabia, Bukovina, and Transylvania joined the Romanian Kingdom.

In 1939, the Soviet Union and Nazi Germany signed the Molotov–Ribbentrop Pact, which divided Eastern Europe into the German and Soviet spheres of influence. Bessarabia was among those regions assigned to the Soviets. Article 3 of this secret protocol stated, “With regard to Southeastern Europe attention is called by the Soviet side to its interest in Bessarabia. The German side declares its complete political disinterest in these areas.”

In the month of March 1940, Molotov declared, “We [the USSR] do not have a pact of non-aggression with Romania. This is due to the presence of an unsolved issue, the issue of Bessarabia, the seizure of which the Soviet Union never recognized although it never raised the issue of returning it by military means.” The Romanian state viewed such statements as a threat and rightly so – for on June 26 that same year, the same Molotov, as Soviet People’s Commissar, gave an ultimatum to the Romanian plenipotentiary minister to Moscow, in which the Soviet Union demanded the evacuation of the Romanian military and civil administration from Bessarabia and from the northern part of Bukovina. The state had no choice but to do as ordered. Romania not only lost those regions to the Soviets, but Hitler’s arbitration of the claims held by Hungary over Romanian territory made matters worse. Under the Vienna Dictate of August 30th 1940, Northern Transylvania was ceded to the Hungarians [who were not pleased and wanted more].

Fast forward to today’s events, unionist sentiments remain pretty strong among both countries, more so in Romania, however, the political class in both states is wholly unconcerned with such aspirations. From my understanding, Maia Sandu is only pro-EU and not a unionist. I agree with Mr. Mercouris that the Constitutional Court’s decision was a political coup. It seems this Vladimir Plahotniuc of the Democratic Party is firmly in control of Moldova’s police and justice systems. The popular uproar was triggered when the Constitutional Court basically annulled the elections’ result, suspended Igor Dodon as President, and named Pavel Filip as the interim President. This new coalition of opposites between [pro-Russian] Dodon and [pro-EU] Sandu put an end to Plahotniuc’s gambit, at least for now.

I do believe Moldova and Romania can unite to re-form Greater Romania [leaving the separatists of Transnistria to their own fate], but only if unionist forces manage to convince Washington and Moscow to agree to a settlement. One major point necessary for Russia to give its blessing is for Moldova’s territory to remain unintegrated with NATO’s military forces and infrastructure. I don’t think Russia would have a problem with Moldova becoming part of the EU, so long as the EU normalizes financial and economic relations with Moscow and NATO tones down its provocative statements and military exercises. I fear that such an outcome is just implausible, at least with the current US administration.

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Apples of Discord, RT Documentary

Russia’s 2014 embargo on European food imports cut European farmers out of their second biggest export market. At first, they hoped the measure, taken in response to Western financial sanctions following Crimea’s adherence to Russia, would be temporary. Five years down the road, the consequences for farmers throughout Europe are dreadful. RTD travels around the continent to meet Spanish, Italian, French, Polish, German and Dutch farmers and Farmers’ Union Reps. They explain how the embargo dramatically hit their turnover and bargaining power. They worry about whether they still have a future in agriculture and question the European Union’s response to the crisis.

This particular situation is the best argument, I think, for bringing back the tradition of buffer stock policies. This prudent custom had been scrapped in favor of neoliberal market reforms; but we all know that foreign interests don’t necessarily coincide with the national interest. The role of a buffer stock policy is to ensure an acceptable base level price for both consumers and producers, irrespective of the business cycle. During times of exceptional harvests, when supply exceeds demand and prices favor consumers to the detriment of producers, the Government steps in with a bid to purchase this excess. It’s not mandatory for them to sell the unsold produce they have left, so the Government’s action in this sense cannot be labeled as coercive. The opposite occurs during periods of poor harvests. The Government steps in to sell from its stockpiles to cover the gap in supply and, in so doing, normalize prices. It’s not a silver bullet policy by any stretch of the imagination, but it’s better to have a safety net for consumers and producers.

Another good policy for agriculture, set in a fully phased in Land-Value Tax [LVT] system [also known as the single tax system], land taken out of production for soil or water regeneration purposes would no longer be considered productive land and would be exempt from the LVT, thus helping disadvantaged farmers and protecting nature at the same time. Under the present system, however, it’s the norm for farmers to put all their available land under cultivation just to pay the bills. For more info on the subject of agriculture under the LVT system, see this short video.

Prudence should come before ideology; and make no mistake, many of these trans-national accords are based on ideology. The EU political class must come to grips with the fact that European geopolitics cannot ignore the fate of neighbouring countries, unlike the US geopolitical mentality, based on the island nation context. And making bad decisions on Washington’s behalf hurts not only Russia, but the EU states as well.

The Duran: US-Mexico Deal

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the tariff deal reached between the United States and Mexico to “stem the tide of migration”. Donald Trump announced that the tariff threat in response to a surge in illegals from Mexico to the US has been suspended. Both men emphasize this fine detail. For its part, the Mexican Government has agreed to restrain migration through its territory and toward the Southern Border. House leader Nancy Pelosi had her own thoughts on Trump’s big PR win, saying: “Threats and temper tantrums are no way to negotiate.” Christoforou and Mercouris also discuss the past trade relationship between the US and China, pointing out that while American blue collar workers suffered as China’s trade surplus with the US grew, the US political establishment saw this and did nothing.

My Comment: Alexander Mercouris is exactly right that US elites [republicans and democrats] did nothing to protect blue collar workers from cheap Chinese imports. This graph clearly illustrates this, and, like Mercouris pointed out, it wasn’t China’s fault. Big US capital was happy to profit.

As the Chinese were selling more and more net wealth to the US in exchange for US dollars, this not only impacted the quantity of trade, but also the composition of trade, the makeup of domestic industry, its associated labor segment and remuneration. It’s also important to note that, even with fewer labor inputs, US manufacturing output did grow over time.

And despite Trump’s bogus claims that the economy is booming like never before, the country’s output capacity has yet to recover to pre GFC levels. This next graph shows us that.

The relative good economy now is due to private debt growth, not anything else. By the by, dollar reserves obtained by China [earned through trade and unearned via interest from US treasury bonds] even though being owned by the Chinese central bank, these dollar accounts sit at the Federal Reserve’s ledger. In case of serious conflict or just whim [like in the case of Venezuela], the US central bank can freeze these accounts or delete them outright, which would deny China’s ability to use these funds to purchase output [from vendors legally allowed to sell to Chinese firms]. No amount of tariffs, however, can replace domestic investment in infrastructure, R&D, and education.

Many people think the Chinese got the competitive advantage because they allowed foreign capital to come in, rape the environment, neglect workers’ rights and labor conditions and pay them slave wages. But there are other countries on the globe that do the exact same things, yet they are not manufacturing powerhouses. The key difference is that the Chinese state invested in education and infrastructure, including hospitals. And at long last, it seems the Chinese leadership is determined to focus more on domestic consumption, rather than exports.

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The Duran: Trump snubs Corbyn, Johnson snubs Trump, but Farage & the Queen meet Trump

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss the US President’s trip to the UK. Trump sounded off on Brexit, he declined to meet with Labour Party leader Jeremy Corbyn who then spoke at an anti-Trump rally. Conservative leader front runner, Boris Johnson, snubbed a meeting with the US President, saying he was too busy. Brexit Party leader Nigel Farage did meet with Trump who is a “believer in Brexit.”

London’s SJW mayor Sadiq Khan had a public meltdown over Trump’s visit, for which Trump tweeted at Khan, ridiculing his track record and height. And then there was the ‘scandal’ that erupted because Donald Trump touched the Queen. Christoforou and Mercouris go on to discuss the UK’s dependency on the United States and its fate outside the EU with respect to the hegemon and its blacklisted companies like Huawei.

My comment: I agree with Alexander Mercouris that Trump isn’t interested in a neoliberal world order, but I disagree that Trump is interested in a world of sovereign states that negotiate hard with each other. If a country negotiates hard, instead of caving in to the US, the war hawks in power [less concerned with euphemistic language] go on to blacklist foreign companies [Huawei, Gazprom, the National Iranian Oil Company, Petróleos de Venezuela S.A. and others], government institutions [the IRGC] and heads of state [Nicolas Maduro].

Trump is interested in a world of client states obedient first and foremost to Washington, and not anyone else. To contrast it to Obama’s stance of – hey, UK, stick in the EU, because we negotiate with the EU, and if you exit, you’ll be pushed down the list of priorities… Trump says, if the EU as a political organization won’t bend to Washington’s demands [demands, not requests, because requests don’t have threats associated with them], then we’ll negotiate directly with the EU member states [and their parties] to oppose the EU from within.

There’s nothing wrong with bilateralism, but we can clearly see that Washington is trying to keep the European states economically and militarily dependent on the US – while demanding they take a belligerent stance against Russia, China, Iran, Venezuela, and to a lesser extent Turkey, at least for now. Should Britain get a more independent PM, his or her foreign policy will have to be that of bringing the influence of other great powers in the region, in order to shrink the USA’s grip over it.

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How the Allies guaranteed a 2nd World War

by Serban V.C. Enache

John Maynard Keynes, as a young adviser to the UK Treasury, successfully predicted another great conflict in Europe after what transpired at the so-called peace of Versailles. In preparation for the conference, Keynes argued that it would be better for Germany to owe no reparations, or a maximum of 2 million pound sterling at the most. He was in favor of a general forgiveness of war debts, including for Britain. Lastly, he wanted the US Government to begin a large credit program to quickly restore Europe to prosperity. But the Allies argued differently, and here is what they insisted on in Article 231 of the Versailles treaty on war debt (1919).

“The Allied and Associated Governments affirm and Germany accepts the responsibility of Germany and her allies for causing all the loss and damage to which the Allied and Associated Governments and their nationals have been subjected as a consequence of the war imposed upon them by the aggression of Germany and her allies.”

Let’s compare the cold sentiments of Versailles to the peace of Westphalia from 1648, which put an end to the Thirty Years’ War.

Article I: “[…] And this Peace must be so honest and seriously guarded and nourished that each part furthers the advantage, honor, and benefit of the other… A faithful neighborhood should be renewed and flourish for peace and friendship, and flourish again.”

Article II: “On both sides, all should be forever forgotten and forgiven. What has from the beginning of the unrest, no matter how or where, from one side or the other, happened in terms of hostility, so that neither because of that, nor because of any other reason or pretext, should commit, or allow to happen, any hostility, unfriendliness, difficulty, or obstacle in respect to persons, the status, goods, or security himself, or through others, secretly or openly, directly or indirectly, under the pretense of the authority of the law, or by the way of violence within the Kingdom, or anywhere outside of it, and any earlier contradictory treaties should not stand against this. Instead, all and every, from here as well as from there, both before as well as during the war, committed insults, violent acts, hostilities, damages, and costs, without regard of the person or the issue, should be completely put aside, so that everything, whatever the one could demand from the other under his name, will be forgotten in eternity.”

Keynes described the Versailles conference as a clash of values and world views among the principal leaders, “the cynical traditions of European power politics [vs] the promise of a more enlightened order.” Keynes held Woodrow Wilson as the game maker. “When President Wilson left Washington he enjoyed a prestige and a moral influence throughout the world unequalled in history. […] The enemy peoples trusted him to carry out the compact he had made with them; and the Allied peoples acknowledged him not as a victor only but almost as a prophet. In addition to this moral influence the realities of power were in his hands.”

In 1919, Keynes wrote The Economic Consequences of the Peace in which he criticized the Versailles treaty and its authors, while accurately predicting its grave socio-economic and political effects: high inflation, stagnation, and revanchism. He had two main points: that the treaty made it economically impossible for Europe to revive itself, and that the Allies had betrayed the tenets of the Armistice, in which they pledged to the defeated side a degree of fairness with regard to territorial and economic impositions. He judged these violations as a stain on the honor of the Allies and a primary cause for a future conflict. His prediction, that another war would begin in the next twenty years, was surgically precise.

Keynes wrote:

“Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the equity of the existing distribution of wealth. […] Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose. […] Economic privation proceeds by easy stages, and so long as men suffer it patiently the outside world cares very little. Physical efficiency and resistance to disease slowly diminish, but life proceeds somehow, until the limit of human endurance is reached at last and counsels of despair and madness stir the sufferers from the lethargy which precedes the crisis. The man shakes himself, and the bonds of custom are loosed. The power of ideas is sovereign, and he listens to whatever instruction of hope, illusion, or revenge is carried to them in the air. […] But who can say how much is endurable, or in what direction men will seek at last to escape from their misfortunes?”

Woodrow Wilson’s Fourteen Points [of the Armistice] had been widely disseminated in Germany prior to the end of the war, and were well known by the German public. Sadly, these promises turned out to be nothing but propaganda. The clear gap between this document and the final treaty of Versailles caused great anger in Germany and fueled ultra nationalist sentiments.

There’s a prevalent myth out there, which states that the nazis came to power in Germany due to hyperinflation. It can be easily debunked through the following observations…

Germany did experience hyperinflation in the early 1920s. By October 1922, the mark stood at 130 billion to the dollar. Marks had to be carried in wheelbarrows and life savings were wiped out. Yet the inflationary spiral was brought under control in November 1923 largely through the efforts of Hjalmar Schacht, currency commissioner and president of the Reichsbank and Finance Minister Hans Luther. For an in depth explanation of their policies, see this previous article.

With inflation in check by 1924, Germany entered a time of relative growth. Hitler, while active in German politics, was consigned to the political fringe. Beginning in late 1929, the German economy fell victim to the Great Depression. Industrial production, employment, and sales fell in the early ’30s , while Hitler’s support increased. Price inflation was nonexistent. Rather, by 1933, when Hitler became Chancellor, prices were going down as a result of collapsing demand. Price deflation is good when nominal economic growth is positive, not negative. Tight credit and tremendous unemployment left millions of people with very few marks to spend on anything.

What brought the nazis to power if not hyperinflation? Austerity! During the years of skyrocketing prices, the percentage of the nazis [NSDAP] ranged below 4 percent (see the 1928 elections). The Government imposed harsh austerity measures in the early 1930s [after the hyperinflation had been reined in]; this increased unemployment drastically and it also gave the nazis their first success (18.5 percent in September 1930). Two years later, the ever growing levels of unemployment and poverty drove Hitler to 37.2 percent in the 1932 elections. This graph speaks for itself.

In 5 years time (between ’33 and ’38), the Nazi Government rebuilt the army, built industries and infrastructure, eliminated unemployment, real wage growth was in the double digits – and all of this in a climate of price stability. As such, contrary to popular mythology, the hyperinflation years didn’t bring the nazis to power. What brought them to power was private debt deflation in combination with harsh fiscal austerity. The end of WW1 wasn’t the end of ‘the war to end all wars.’ Sadly, it was the groundwork for a new one, far deadlier than the first.

In an interview with William Buckley, the founder of the British Union of Fascists, Oswald Mosley, explained why Hitler got into power in Germany and why he didn’t in the UK.

“When I began, in the following six years, right until Roosevelt’s doubling of the price of gold and many other things of that sort, unemployment in Britain was halved. Those six years before Hitler came to power, unemployment in Germany was quadrupled. Now, all those things, and your analysis of the English character, simply depend on the economic situation. Neither fascism, communism, nor any new policy, whether decent, humane, or not, will succeed ever, unless you have a grave economic crisis. That’s the only thing which moves people at all.”

Liberals are so terrified of the profound psycho-political impact of economic crises [second only to war itself and similar in some ways], they dare not speak of such phenomena even when they are happening, nor admit that crises, even unmediated, have severe psychological consequences. The liberals practice this fetishistic disavowal. That’s why the status quo [the so-called center left and center right] is so dangerous to public order and peace itself. It’s a paradox, and paradoxes are nature’s way of telling us [observers] that we’re missing something, that something new waits to be discovered. By shunning alternate points of view and trying to silence them outright, the center misses the dialectic and loses the moral legitimacy in the eyes of increasingly larger sections of the population. I personally hold the creditors of the Versailles treaty, Britain, France, and the US, responsible for nurturing what was to become the most devastating conflict in human history.