Interpol has issued a Wanted Notice for Sergei Pugachev, making him the first Russian oligarch to have Russian charges of fraud endorsed by the international police organization – and to make a money-launderer of the Financial Times. If Pugachev crosses the border between his homes in England and France, the policemen on either side will see his name flashing on their computer screens, and they will be under standing orders to arrest him. (more…)
When Alfred Sloan ran General Motors in Detroit, he supplied Nazi Germany with engine technology, assembly lines, and working capital for Messerschmidt and Junker warplanes, Panzer tanks, troop and gun transports, along with land mines and torpedo detonators. The Germans said they couldn’t have invaded Poland, Belgium, Holland, Norway, France, or Russia without him. Sloan was breaking US law at the time, so he destroyed the company records of his collaboration with Berlin. He also supplied the US war effort with comparable military technology, if a bit slower in the air.
World War II was a good business for Sloan. “The business of business is business” is a motto attributed to Sloan. He may not have said it. There’s no doubt he thought it.
Since March of this year the US Treasury has declared war on Russia, and through the Office of Foreign Assets Control (OFAC) it has ordered US businesses and banks not to collaborate. The European Union (EU) and other US allies, like Switzerland, Japan, Norway, Canada, and Australia, have been asked by Washington to implement the same measures. But the country sanctions lists aren’t quite the same. In the gaps and differences, a model of Russian business is emerging into plain light. A theory of the political succession in Russia, too. (more…)
Mikhail Prokhorov thinks that his American basketball franchise, the Brooklyn (née New Jersey) Nets has grown eightfold in value in the five years since he acquired it for $223 million. For the time being, though, noone agrees with him. That’s to say there is no buyer at Prokhorov’s asking price of $1.7 billion. If Prokhorov drops his price to $1.2 billion, as some sports media reporters claim, there is still no buyer.
When Prokhorov bought the Nets – his stake is 80% — he told Bloomberg: “There is only one way to go – up. I like to find cheap assets with problems. It gives me power.” Today, if he’s obliged to accept a deal at the current industry valuation of $780 million for the team, Prokhorov must count that he has spent an additional amount of more than $600 million in player purchases, loss cover, debt service, and luxury taxes, ending up with no profit at all. If up was power in 2010, is down impotence today? (more…)
United Company Rusal, the Russian aluminium monopoly, has announced it has won a judgement of the London Court of International Arbitration (LCIA) confirming its shareholding control of the Aluminium Smelter Company of Nigeria (Alscon), the only aluminium producer in the west African state. The LCIA, Rusal claims, has defeated the Nigerian Government’s challenge to the legality of the privatization of the plant in Rusal’s favour in 2004, and Rusal’s subsequent purchase of Alscon shares in 2006. (more…)
Following the publication of yesterday’s report on the case of Vladimir Yevtushenkov, an insider from the Russian oil industry has communicated this analysis of what provoked Yevtushenkov’s arrest, and what will happen next. The insider has had more than 15 years of experience working with Igor Sechin, now chief executive of Rosneft.
“The problem of Yevtushenkov is in his misunderstanding of what it means to own an oil company. He was given a right just to touch the object [Bashneft]; to clean and polish it; and then to hand it over to Sechin [Rosneft]. But Yevtushenkov decided that he was the real owner, and he started disputing with Sechin over the price of the asset. That’s something that is totally indisputable.The Ukrainian theory [of the case] is just camouflage.” (more…)
During his lengthy testimony and cross-examination in the UK High Court, Roman Abramovich (below, left) claimed he couldn’t remember much about what taxes he paid. The judge believed him. That remarkable episode in the history of Russian taxation took place on November 5, 2011, at 3 in the afternoon.
Now Abramovich has presented the US Securities and Exchange Commission (SEC) with a prospectus for selling shares of the North American division of his steel company, Evraz. The document runs to 218 pages, and except for the minuscule print on one, Abramovich omits to say who he is, and how he controls Evraz. He glosses over one key word from his description of Evraz, and the big risk for shareholders in North America: that word is “Russia”. (more…)
Oleg Deripaska is flying to the rescue of the Fatherland, again.
Russia is now a war economy, even if not all the Kremlin officials in charge will admit it publicly, as they squabble privately over what to do, and who will gain. “A new industrialization for the country”, Deputy Prime Minister in charge of the military-industrial complex, Dmitry Rogozin, announced on Sunday night television – without saying what place the old, unsanctioned oligarchs may have to play, or the new oligarchs on the American proscription list. (more…)
What do Hillary, Bill and Chelsea Clinton, Anders Aslund, Steven Pifer, the Peterson Institute for International Economics, and the Brookings Institution have in common? Answer: they drink unpasteurised milk from the Ukraine. Lots of it.
How damaging this may be for the health depends on how Victor Pinchuk (image left, right), the Ukrainian pipemaker, responds to filings in the Moscow Arbitrazh Court. Reported publicly this week, the court papers suggest that through companies registered in Cyprus, Pinchuk milked about $200 million from the Rossiya Insurance Company in Moscow. For the time being, the Russian court action is a civil one, and seeks repayment by Pinchuk’s East One holding and related companies. If Pinchuk doesn’t repay, Cyprus, European Union, and US court action, alleging conspiracy to defraud, is likely to follow. Pinchuk’s innocence should be assumed in the meantime. Drinking raw milk, however, carries a contamination risk. (more…)
Ukrainian government and commercial interests are lobbying the US Government to support a stealth sanction against VSMPO-AVISMA, the Russian supplier of titanium to Boeing and other US aerospace companies. Instead of VSMPO, the Ukrainians are seeking US government financing for the establishment of new high-grade titanium production lines at Zaporizhye Titanium and Magnesium Combine (ZTMC), and expansion of Ukrainian titanium exports to the US.
This week, a confidential message from the US Department of Commerce revealed that, “in recent meetings with U.S. Department of Commerce officials, the GOU [Government of Ukraine] expressed that it would like to have U.S. companies involved in the development of the titanium resources in Ukraine. The Commerce Department is, of course, very interested in encouraging the involvement of all U.S. companies in all relevant sectors given such an opportunity, and we are inviting input from industry regarding this topic.” (more…)
On Sunday, September 14, Victor Pinchuk signed a declaration with a group of leading Russian and German businessmen, calling for decentralization of regional power in eastern Ukraine; self-determination and constitutional guarantees of minority rights; military non-alignment and neutrality barring Ukrainian membership of NATO or foreign military deployments, bases, advisors on Ukrainian territory, east or west; an end to sanctions; resumption of business as usual with Russia; modification of the European Union’s association agreement with Kiev by trade terms acceptable to Moscow; and Russian participation in multilateral financing for economic recovery and reconstruction of the war-damaged Donbass. (more…)
Petro Poroshenko disappointed most of the audience at Victor Pinchuk’s Kiev party on Friday and Saturday by suggesting that he is ready to trim the terms of Ukraine’s partnership agreement with the European Union in order to meet President Vladimir Putin’s demands. But that’s exactly what Pinchuk (front row, 6th left) needs if Interpipe, his steel and pipemaking group in Dniepropetrovsk region, is to trade its way out of bank default and insolvency.
According to Poroshenko, “We have to be the most flexible concerning the [EU] Agreement on association and do everything possible to keep those opportunities which we will have within association, and at the same time to make it comfortable for Russia. I will personally use my best efforts for this purpose.” (more…)
Mikhail Abyzov (centre) is the man in charge of keeping the Russian government transparent, accountable and so far as the name of his ministerial commission can be stretched through 235 government press releases since his appointment in May 2012, open. But the Minister for Open Government has a secret he keeps closed.
Abyzov is now fighting for political survival, as President Vladimir Putin is being urged by his advisors to replace the prime minister, Dmitry Medvedev, and purge Medvedev’s allies, especially those with substantial or hidden links to the United States. Abyzov is a target, the sources claim, because he is alleged to be one of the fund-raisers for Medvedev’s political campaigning; and because he keeps a large part of his wealth in the US. For Putin partisans, Abyzov’s personal ties to the US make his Russian loyalties vulnerable. (more…)
Interpipe, the steel and pipemaking group owned by Victor Pinchuk (lead image, centre) and based in Dniepropetrovsk, is high and dry, according to the latest financial report signed by the auditors on June 30, 2014. That is despite having suffered a 14% downturn of sales revenues for the year to $1.5 billion; a 5% increase in the bottom-line loss to $73.4 million; and its default on borrowings which now total $1.03 billion. Just $34.5 million in cash is on hand. With additional current liabilities of $343.2 million, Ernst & Young, Interpipe’s auditors calculate that , “the Group’s current liabilities exceed its current assets by $649.1 million.” That’s ground, the auditors warn, “of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern.”
Excerpts of the report were issued to creditors and bondholders two weeks ago. The full report can be read here. The company’s website has yet to publish the 55-page document. (more…)
Rinat Akhmetov (lead image, above left and right) is still the Ukraine’s richest man. If you believe the financial reports just issued by his Metinvest group, Ukraine’s largest steel, iron-ore, coal and coke maker, it’s a case of his singing all the way to the bank in Switzerland — without the irony of the musical, “O! What A Lovely War!”
A new ratings report issued by Moodys claims that Metinvest is benefitting from “the company’s ability to generate positive cash flows even in times of a severe downturn as observed in 2009 and more recently; (2) low leverage; (3) high degree of vertical integration; (4) large iron ore reserves; and (5) the geographically advantageous location of some of its major assets.” Exactly what advantage the geography of eastern Ukraine is conferring on Akhmetov’s business Moody’s analysts don’t say. (more…)
In a decision announced last week, the US Department of Commerce did Victor Pinchuk, owner of Interpipe, the Ukraine’s leading pipemaker and exporter, a favour worth between $6 million and $9 million per annum for the next three years.
At the same time, the International Monetary Fund (IMF) has ordered the government in Kiev to end the delay in collecting $38 million from Interpipe in overdue debt for deliveries of gas by the state gas supplier Naftogaz; and raise the price of this year’s gas deliveries to Interpipe by roughly two-thirds over last year’s subsidized price. Based on an unaudited estimate of energy costs which Interpipe paid in 2013, the IMF rescue will cost Interpipe the difference between $173 million for 2013 and $259 million estimated for this year; that’s $86 million. Add the Naftogaz debt; subtract the value of the US government benefit from the IMF obligation; and Pinchuk’s Interpipe will be poorer by about $100 million. (more…)
United Company Rusal has admitted that one large international bank is refusing to accept the restructuring terms the company has offered for loans totaling $5.15 billion which fall due for repayment by July 7. Until now, there has been speculation that state-owned Chinese banks had been pressing for repayment in cash, rather than accept extension of the loan maturity date and other terms. On Friday, the holdout banks were identified by Rusal sources as Royal Bank of Scotland (RBS), which is majority-owned by the UK Government; and the German bank WestLB, which has been in a form of bankruptcy management since June 2012. Today, Portligon, which has taken over WestLB, reportedly changed its mind, and accepted Rusal’s offer of terms.
The latest Rusal disclosures also provide for an international court to oblige the last holdout to accept another four to five months of negotiating time, thereby preventing it from pitching Rusal into default and bankruptcy next Monday. (more…)
Russian Customs reports this week that imports of steel pipes from Ukraine have dropped by 50% or more, compared to 2013. Steel industry sources in Moscow are predicting the Russian market may have closed to Ukrainian steelmakers, as Gazprom and Rosneft, the largest buyers of pipes, are directed by the Kremlin to buy instead from domestic pipemills.
By contrast, Interpipe, based in Dniepropetrovsk and owned by Victor Pinchuk (image), is reporting that within two years it expects the current conflict to have blown over. Sales to the Russian market, Pinchuk’s principal income-earner, will recover to the tonnage and revenue levels the company was achieving before July of 2013, according to the latest Interpipe forecast. That is when the Kremlin halted favourable import-quota arrangements for Ukrainian pipes, and imposed penalty import duties. Interpipe was already loss-making before the Russian market began to close. The year-end loss for 2013 has not yet been released by Interpipe. Counting both operating losses and writedowns of asset value, industry analysts and traders say this week the loss figure is between $100 and $200 million. “A perfect storm” is the way Interpipe is describing its financial situation to creditors. (more…)
Two Russian steelmaking oligarchs, Alexei Mordashov (above, left) of Severstal, and Igor Zyuzin (right) of Mechel, went to court early this month over a debt of $4 million. The debt stems from a contract for delivery of Mechel-made metallurgical coke to Severstal’s steelmill in Dearborn, Michigan. The court is the US District Court for the Northern District of Illinois, Eastern Division, in Chicago. The claim was filed by Severstal’s local lawyers on May 5.
Russian reporting of the case this week noted the irony in the situation that both Mordashov and Zyuzin are trying to sell the companies which are now facing each other in court as plaintiff and defendant. As yet unreported is the Kremlin directive, informally but directly from President Vladimir Putin to the control shareholders of Russia’s large metals and minerals companies, not to take their business disputes to foreign courts. The order, confirmed by insiders at a well-known metal company, has been put in the context of the threat the Russian economy is now facing from US sanctions over the conflict in Ukraine. (more…)
The oligarchs of Ukraine, who control the eastern regions’ principal assets, employment, tax base, and income, are at risk of being politically and financially squeezed to death. Unless they can quickly become Maoists — at least according to Mao Zedong’s Red Book saying: 枪杆子里面出政权 (“Every Communist must grasp the truth: Political power grows out of the barrel of a gun.”)
In short, the oligarchs must take power from barrels of guns they disclaimed having at their disposal until now. The first of the new Ukro-Maoists has been Igor Kolomoisky (left), acting governor of Dniepropetrovsk region since March 2. The second, according to his announcement of May 10, is Rinat Akhmetov (right). (more…)
When Alexander Shokhin was a junior official in the international economic department of the Soviet Ministry of Foreign Affairs in the 1980s, it was plain he was short-sighted. That was because of the glasses he wore – the old Soviet type, super-thick. He’s come a long way since then, and so has sight-correction technology. When Shokhin met President Vladimir Putin at the Kremlin on February 14, his eyewear was much improved. His short-sightedness wasn’t.
Now president of the Russian Union of Industrialists and Entrepreneurs (RUIE), the principal business lobby in Moscow, Shokhin tried telling Putin his clients would agree to paying more Russian tax on their corporate, and maybe personal incomes, if Putin agreed to let them keep legal title of their assets abroad, under the jurisdiction of foreign courts, not Russian. Putin rejected the offer. It was one week before the Ukrainian President Victor Yanukovich was ousted from office in Kiev, and the international position of Russian capital was to be exposed to unprecedented restrictions and risks – from a US Government attack on offshorization, not from the Kremlin’s. (more…)
Vladimir Lenin was one day asked about the ethics of a party member who was marrying an heiress. The party wasn’t a “finishing school”, Lenin said, but the money would come in handy, no matter how the lady in question, or her parents, acquired it. “A scoundrel,” Lenin recommended, “may be of use to us just because he is a scoundrel.”
This wasn’t the same thing as the adaptations attributed later to more than one US President regarding more than one foreign political leader. “He may be a sonofabitch (bastard, crook),” each of the presidents is reported to have said, “but he’s our sonofabitch (ditto).” (more…)
Multibillion dollar contracts between GlencoreXstrata and United Company Rusal, signed for trading of aluminium and alumina late in 2011, appear to have unravelled in a London arbitration court. However, because the arbitration has been conducted behind closed doors, Glencore is refusing to confirm or deny that the company is facing liability for a retrospective veto of their six-year $47 billion undertaking.
Glencore’s spokesman, Charles Watenphul for media and Paul Smith for investor relations, will not acknowledge that a ruling by the London Court of International Arbitration [LCIA] has upheld a veto of its Rusal contracts by Victor Vekselberg, the former chairman of the Rusal board and by SUAL Partners, a combination of Vekselberg and Len Blavatnik which holds an 8.75% shareholding in Rusal. The two Glencore spokesmen are also refusing to confirm or deny fresh evidence that Glencore has already paid SUAL Partners $80 million as their share of claims before the LCIA partially settled in January. (more…)
Victor Pinchuk is either the greatest of patriots among the oligarchs of eastern Ukraine for having promoted an alliance with the European Union and the US presidential campaign of Hillary Clinton. Or else he’s made a colossal miscalculation, sacrificing his Interpipe steel combine for no market benefit, not even relief for debts of more than $1.3 billion.
He’s not the only eastern Ukrainian oligarch to suffer from the transition government’s agreements with Brussels and Washington last month. The European Union’s Ukrainian trade assistance programme, released on March 11, refused to extend benefits to the major mining and metals businesses to the east of Kiev; for the details, click here. Likewise, the programme of the International Monetary Fund (IMF) which followed on March 27, has introduced devaluation of the hryvnia, gas and electricity price increases to “full cost recovery”, a hike in state rail tariffs, and a stop to rigged state procurement for steel products: these measures all inflate the cost line of the oligarch balance-sheets at the same time as closure of the Russian market and lack of alternative markets have already depressed their revenue line. (more…)
The European Union’s emergency trade assistance package for Ukraine provides duty-free entry into the European market if you are a Ukrainian exporter of asses, mules, and hinnies. If the regions of the Ukraine are to have a say in the trade terms, the enterprises of the southern and eastern regions aren’t likely to approve, because most of the new trade advantages have been granted by Brussels to farmers and foodstuff enterprises in the west.
One of the largest single beneficiaries, according to the European Trade Commissioner’s office, is the Roshen confectionery group owned by Petro Poroshenko (image, right). He is also the front-running candidate in the Ukrainian presidential election due on May 25. “Chocolate and cocoa products will benefit from a substantial preferential treatment,” says John Clancy, spokesman for Karel De Gucht, the EU trade commissioner, “as the large majority of them falls under the category that will be immediately liberalised (zero duty). For a few specific products, and for some confectionery, the liberalisation will apply within the quantitative limits established by the tariff quotas, as indicated in the annex to the schedule.” (more…)
Alfa Bank, owned by Mikhail Fridman, has issued an unexpected loan repayment demand from Mechel, controlled by Igor Zyuzin (left), for $150 million. That’s chicken-feed in Mechel’s debt pile of almost $10 billion. But with dozens of trade creditors in the arbitrazh courts demanding their invoices be paid; a collapsing share price; and nothing of value left to mortgage or to meet margin calls, Zyuzin is on the edge of bankruptcy. So why has Fridman issued his ultimatum? Since two out of every three dollars Zyuzin owes are under state bank control, Fridman’s notice appears to be a call on the banks, and on the government behind, to get rid of Zyuzin altogether and redistribute Mechel’s steelmaking and coal-mining assets. It isn’t likely Fridman, who abandoned the mining and metal lines of business after the 2008 crisis, is acting alone.
The Alfa Bank demand was issued during a meeting last Thursday, March 13, with government ministers and bankers to discuss Mechel’s financial position. Mechel and Alfa sources confirm that the meeting, chaired by Finance Minister Anton Siluanov, was told that Mechel was in violation of its loan covenants and that Alfa demanded pre-payment within 24 hours. (more…)
A new type of warfare is being tested in Ukraine. The strategem was first publicly disclosed on February 23, when Zbigniew Brzezinski — the wannabe Secretary of State if the Democratic Party wins the 2016 presidential election — proposed a billion-dollar levy on each of ten Ukrainian oligarchs. Brzezinski didn’t identify them by name, but suggested they were “principal beneficiaries of the country’s stunningly widespread corruption”. Another $10 billion, according to Brzezinski’s scheme, should be “matched” by the deposed president, Viktor Yanukovich, and his family.
Swiss sources reveal that the Swiss government and banks are under pressure right now to extend their freeze of the Yanukovich bank accounts to other Ukrainians on a US Government target list. Brzezinski’s proposal used the term “persuade” for his billion-dollar levy. The US Treasury has conveyed to the Swiss, as well as to banks of the European Union (EU), the targeting of as many Ukrainians as the new government in Kiev wants to threaten, especially if their business is concentrated in the eastern half of the country. (more…)
United Company Rusal, the Russian aluminium monopoly headed by Oleg Deripaska (image right), has won a fresh round in its battle to keep control of its Nigerian aluminium smelter, and ward off claims from a Nigerian-American group whom it defeated in the privatization of the asset almost a decade ago. For the time being, the Nigerian government, headed by President Goodluck Jonathan (left), will neither support Rusal, nor act against it. The indecisive Jonathan lost majority control of the Nigerian House of Representatives in December, and he faces an uncertain presidential election in a year’s time.
In a ruling of Nigerian High Court Justice Jude Okeke, issued in Abuja on January 27, the Nigerian Government’s Attorney-General and Minister of Justice were ordered to face trial with Rusal in the corruption and damages claim by BFI Group Divino Corporation (BFIG). Rusal had asked the court to join the government to the case. BFIG opposed, arguing that in a separate proceeding the Nigerian courts had already ruled against the government, and in favour of BFIG. According to BFIG’s lawyer in court, Rusal’s move threatened to “open a floodgate for everyone who seeks to interrupt proceedings.” (more…)
Bill Clinton and Hillary Clinton, the former and wannabe presidents of the US, say they have accepted more than $13 million from Ukrainian pipemaker Victor Pinchuk since 2006. But Pinchuk says he’s given the Clinton Foundation only $7.6 million.
It won’t help to employ accountants to ask where the missing $5.4 million was originally trousered, if not the Pinchuk Foundation, then which branch of Pinchuk’s business. That’s because the Clinton Foundation’s auditors – an Arkansas firm called BKD – have turned up this much money in revenues, and also in expenditures, which the Foundation’s annual report inexplicably fails to report and regularly understates. The Pinchuk Foundation also refuses to answer questions about discrepancies in its annual accounts, whose auditors are reported by Pinchuk’s organization to be Ernst & Young. Their signature is reproduced in the Pinchuk Foundation annual reports, although no copy of their financial reports and notes has been published. (more…)
A reporter for the New York Times has scooped the global press in Sochi. Named David Herszenhorn, the newspaper’s specialist on the New York City borough of Queens, the reporter has uncovered a plot to kill a group of stray dogs – by poison darts causing suffocation — in front of the main venues of the Sochi Winter Olympic Games. The dog death plot, according to Herszenhorm, was intended to “undercut the image of a friendlier, welcoming Russia that President Vladimir V. Putin has sought to cultivate in recent months.”
Herszenhorn (image, centre) also reveals that a counter-plan to save Sochi from televised images of violent canine death is being financed by Oleg Deripaska (image, left), chief executive of United Company Rusal. “Mr Deripaska, an industrialist who largely made his fortune in aluminum, provided $15,000 to get the shelter started on land donated by the local government. He has also pledged about $50,000 a year for operations.” (more…)
A UK High Court ruling on Friday has struck a surprise blow against Ukrainian pipemaker Victor Pinchuk (image), as he fights to stave off bankruptcy claims from international Eurobond holders, international and Russian banks, and Ukrainian suppliers. The timing could not be worse for the Ukrainian, who has been paying Bill and Hillary Clinton, Tony Blair, and a group of European politicians to back him in the current Ukrainian political crisis. (more…)
Philip Short, a journalist from the BBC, has published a new book which claims to be a biography of Vladimir Putin. It isn’t.
What it is instead is a biography of one hundred and twenty-three westerners — what they claim to know about Russia’s leader and what for commercial motive, reason of state, or vanity they have told Short in interviews he conducted for his book. They include spies he names without their cover – John Scarlett, Richard Dearlove, Richard Bridge, Kate Horner, Martin Nicholson, and Pablo Miller from the Secret Intelligence Service (MI6); Hans-Georg Wieck and August Hanning of the Bundesnachrichtendienst (BND); Jean-Francois Clair, Raymond Nart, and Yves Bonnet of the Direction de la Surveillance du Territoire (DST); Seppo Tiitinen of the Finnish Security Intelligence Service (SUPO); Mark Kelton, Michael Morell, Peter Clement, Michael Sulick, Michael Morgan, Paul Kolbe, and William Green of the Central Intelligence Agency (CIA); Juri Pihl, head of the Estonian Internal Security Service, and Eerik-Niiles Kross, chief of Estonian intelligence; and several dozen other ambassadors, consuls, advisers, headquarters staff, journalists, and think-tankers.
Not one of the spies was operational in Moscow for the past twenty-one years of Putin’s terms in office.
There is a flash of originality in this book. Not a single source on which Catherine Belton’s book on Putin relies has been interviewed by Short; in his references to Belton’s claims Short reports they “appear to be untrue”. He reaches the same conclusion about two other books about Putin, Karen Dawisha’s and Masha Gessen’s. “Neither book pretends to be a balanced account”, Short says. Dawisha’s book “is marred by numerous errors of fact”. “All three”, Short warns, “set out the case for the prosecution, and like all prosecutors, the authors select their evidence accordingly.”
The Poles have always had a serious problem with their neighbours.
They have the Germans on their western flank, the Russians on their eastern flank, and inside their borders there used to be the Jews, but now there are the Ukrainians. In September 1939 there were about 3.3 million Polish Jews. Since February 24 of this year, the Ukrainians in Poland have come to the same number.
The war which the Polish government and military have been fighting against Russia is proving to be almost worthless politically to Law and Justice (PiS), the ruling party in Warsaw; and also to the Civic Platform (PO) and its allies, the principal opposition coalition (KO). The PiS was 15 percentage points ahead of the KO in the voter polls a year ago, 35% to 20%; the margin between them now is 11 points, 38% to 27%. The gains for each are close to the margin for statistical error.
Economically, the war is costing much more in public outlays for the refugees than the value of US and NATO arms flows and related war income. By the time Warsaw pays for its new US weapons, it will owe more than when the war started; and there is still no relief from the European Union funding freeze and penalties.
What’s to be done, the Poles ask themselves – and who’s to blame when they realise the answer is something between not much and nothing.
When it comes to bulldogs fighting under a rug Winston Churchill thought they were Russians. Little did he know about Canadians in Ottawa.
The chief dogs in this fight are Trevor Cadieu and Chrystia Freeland (lead image, right). Cadieu is a lieutenant general who specialises in planning armoured operations against the Russian army in Europe; Freeland is the deputy prime minister, scion of Galicia in western Ukraine, and candidate prime minister to replace Justin Trudeau, if she can.
As the Canadian politician most directly connected to the Ukraine by family and property, and the most active advocate of war against Russia, Freeland has promoted Canadian military strategy and plans to wage that war on Ukrainian territory and across the Ukrainian borders for many years.
In Ottawa also, Cadieu has been director of war plans since mid-2019. No public record is known of his visits to the Ukraine in the following two years. His appointment as chief of Canada’s defence staff was announced in August 2021, then withdrawn in September following the start of an official investigation of sexual assault charges dating from his military cadet days. When the investigation ended in an official indictment, Cadieu resigned. By April he was in the Ukraine again, working directly on coordinating the new supplies of tanks, armoured vehicles, howitzers, and other artillery from NATO member states to the Ukraine.
Speaking through an Ottawa defence reporter named David Pugliese, Cadieu declared his innocence of the criminal charges and promised to return from the Ukraine to answer them. He then disappeared as the Russian forces intensified their targeting of Ukrainian and NATO general staff as they prepared operations to save Odessa in the southeast, and Lvov in the west.
On Friday Pugliese reported Cadieu had surrendered to Canadian police and been released to appear in a local court in August. In the meantime Pugliese has reported an active online debate between supporters and critics of the sexual misconduct charges; these include a comment in support of Cadieu from retired Brigadier-General James Cox claiming the charges against him amount to “sedition to undermine national leadership;” by that he meant mutiny by the politicians against the generals.
As deputy prime minister with supervision over most government ministers and war plans for the Ukraine, Freeland has claimed to have known nothing of the sexual misconduct which was identified a year ago against General Jonathan Vance, chief of the defence staff between 2015 and 2021. At the time Freeland declared: “No woman serving Canada should be sexually harassed while doing that, and I’m happy right now today to apologize to any woman who was sexually harassed while serving her country;” by that she meant to condemn no one by name of anything.
Freeland is missing from the list of high officials contacted by former judge Louise Arbour for her investigation of sexual violence in the Canadian military which began in May 2021 and concluded with the release of her 420-page report last month. Arbour is known in Europe as the NATO prosecutor of Yugoslav and Serbian President Slobodan Milosevic.
Arbour concluded her report on the Canadian Armed Forces (CAF): “Members of Indigenous and black communities, and other visible minorities and equity-seeking groups, have been largely absent, clearly not welcome. For years, women were simply shut out. When finally allowed to serve, women were made to feel they did not belong. They were denied opportunities to compete fairly and to thrive. They were harassed, humiliated, abused and assaulted, and, appallingly, many continue to be targeted today… One of the dangers of the model under which the CAF continues to operate is the high likelihood that some of its members are more at risk of harm, on a day to day basis, from their comrades than from the enemy.” By enemy, Arbour meant what Cadieu and Freeland mean.
There has been no disclosure, no indictment, no apology for the Canadian military role in the Ukraine, training and arming Ukrainians committed to reviving Nazi doctrine from World War II. Nor for the war crimes now alleged by eastern Ukrainians to have been committed by western Ukrainians during the civil war which began in 2014. According to Arbour, “the very success of CAF operations, which I am not in a position to assess, reinforces its view that it is unique, and that CAF can do everything without the assistance of outsiders, as it always has.” By not to assess, Arbour meant not to doubt nor criticize.
A Canadian with NATO warfighting experience comments: “The contradiction here is that the officer corps, heavily committed to the anti-Russia track that cuts across Canadian party lines, is heavily politicized and infected by the neo-Confederate faction in the US. They don’t appreciate what they see as [Prime Minister Justin] Trudeau’s ‘communism’. They believe the charges against Cadieu are an expression of it.”
“The truth, that no one, including Pugliese and other reporters will admit, is that the Canadian military, not to mention large swathes of law enforcement, is not reliable in terms of defending the Canadian state if the ruling faction pursues policies contrary to the officers’ wishes.”
There is no mutiny, at least not against the war against Russia, responds a veteran Canadian politician. “I have seen no indication that senior officers in the Canadian military oppose Canada’s hyper-aggressive approach to the Ukraine war. My impression from day one has been that Canada’s military is as belligerent toward Russia as any in NATO.”
The action the Lithuanian government implemented over the weekend to stop Russian trains carrying sanctioned cargos into Kaliningrad is regarded in Moscow as a long anticipated move, prompted among Lithuanian officials by the British government. The initial Lithuanian embargo action has been followed by a second one this week extending the blockade to trucks and road transport. Neither action has been publicly announced by the Lithuanian government.
The first news came from Anton Alikhanov, the governor of the Russian oblast of Kaliningrad, following a notice sent to him by Lithuanian officials. That notice has not been published.
Lithuanian president Gitanas Nauseda (lead image) has said nothing.
Lithuanian Prime Minister Ingrida Simonyte announced through the British Broadcasting Corporation that the blockade was not a blockade because only some cargoes were halted, and because “Lithuania is complying with the sanctions imposed by the European Union on Russia for its aggression and war against Ukraine ” . She also told the British state radio “it was important not to overreact”.
She tweeted: “Any talk of a blockade of Kaliningrad is a lie. Lithuania is complying with the sanctions imposed by the EU on Russia for its aggression and war against Ukraine. The sanctions were agreed by all the EU member states on March 15…. Passenger transit is also taking place, under a special agreement by the EU, RU, & LT. Steel and ferrous metal products account for only around 1% of the total rail freight to Kaliningrad via LT.”
In the three days which have followed the Lithuanian action, the US and British Governments, the European Union (EU), and the North Atlantic Treaty Organization (NATO) have not supported the Lithuanian blockade.
The Russian Security Council met on Wednesday morning, but issued no statement on Lithuania. The Secretary of the Council, Nikolai Patrushev, who was in Kaliningrad on Tuesday, had announced there that the “consequences will have a serious negative impact on the population of Lithuania.”
Yesterday, at the same time as President Vladimir Putin was chairing the Security Council meeting, the Russian Foreign Ministry announced it is delaying “concrete measures” in reaction: “The measures will not be diplomatic, but practical, they are now being worked out in an interdepartmental format, We are not talking about this not because we are hiding something, but because the process of their coordination and elaboration is underway. I would like to emphasize once again (the third time for today’s briefing): we have told the European Union and Lithuania about the need to change the steps they have taken. Perhaps something from that side will be changed, and, accordingly, our reaction will be different.”
In the rest of the world it is known as the cultural cringe. In Russia the wish to be loved by Americans is known as liberal reform.
In the very first paragraph of a new book called “Collapse: the Fall of the Soviet Union”, the author, Vladislav Zubok – the name in Russian means a small tooth — reveals that on the morning of August 19, 1991, when the first coup was attempted against Mikhail Gorbachev, then President of the Soviet Union, Zubok was flying to the US by arrangement with Strobe Talbott, Moscow correspondent for Time and soon to be the Clinton Administration’s principal Russia expert. At the time Zubok describes himself as a “Moscow-based academic intellectual”. By this, he means he was no simple worker with a Moscow university degree. In Soviet class terms, he insists the reader recognise him to be an “intellectual”. That then was upper class, and Zubok wants the reader to know the difference between the Russian upper and lower classes — immediately, on the nineteenth line of his very first page.
Zubok also wants the reader to know he had been hired with money from “the prestigious Amherst College in Massachusetts”. What exactly was prestigious about Amherst, or Massachusetts for that matter — and to whom? And why does Zubok think that in a history of Russian politics between 1983 and 1991, such a remote place, with such an adjectival tag, was worth the mention?
The answer, like the other revelations of the first paragraph, reveals what this book turns out to be. It’s an exercise in American-style reconstruction of what a small group of Russians for hire were keen to give their masters, about the circumstances of the years leading up to Boris Yeltsin’s replacement of Mikhail Gorbachev, and Russia of the Soviet Union. But this isn’t Russian history. It’s the history of Russians with cultural cringe – the desire to be loved by Americans, and to tell them what they wanted, paid for, insisted on hearing then, and demand now.
The payoff, reported on the dust jacket of the book, comes from Talbott, Zubok’s original employer. He is quoted as saying: “This is a deeply researched indictment of Mikhail Gorbachev’s timidity and mercurial policies which backfired.” “Instead,” Talbott adds, “Russia at the turn of the 21st century was ripe for the rise of Putin.” Zubok was ripe for what Talbott meant. “In 2008,” according to Zubok’s history, Putin “used military force against Georgia, and in 2014 he annexed Crimea and waged an undeclared war on Ukraine in Donbass.” The blame for that, Zubok means, was Gorbachev’s mistakes. Without them, “had the Kremlin ruler made different choices… the Soviet Union could have gradually made its way into the world economy by a process of trial and error, with a nomenklatura-style state capitalism, and certainly with its institutions of power preserved.”
As for the Russian cultural cringe, Zubok is sure it was one of Gorbachev’s biggest mistakes. During his well-known trips abroad in the 1980s, Gorbachev took with him, Zubok records, “a “huge entourage…of journalists, social scientists, writers, theatre directors, filmmakers and other cultural figures. Most of them shared [Gorbachev’s] fascination, admiration, and envy for things Western.”
Zubok has written a book to prove he doesn’t suffer this cringe. The work proves the opposite. This is the problem with cringers. They are too bent out of shape to recognize the shape they are in.
On March 15 the British Government announced it is imposing a ban on exports to Russia of “high-end luxury goods”.
According to the official press release, “the measures will cause maximum harm to Putin’s war machine while minimising the impact on UK businesses as G7 leaders unite to unleash a fresh wave of economic sanctions on Moscow. The export ban will come into force shortly and will make sure oligarchs and other members of the elite, who have grown rich under President Putin’s reign and support his illegal invasion, are deprived of access to luxury goods.”
Exactly what counts as “luxury goods” was loosely defined in the government’s statement as “luxury vehicles, high-end fashion and works of art” and “antiques”.
But the regulation issued to enforce the policy is much more comprehensive. Section 11 of this regulation identifies “pearls, precious and semi-precious stones, articles of pearls, jewellery, gold or silversmith articles”. Section 21 covers “Works of art, collectors’ pieces and antiques”; that’s the kybosh for oligarch luxury — the Russia warfighters in London say they believe — to “cause maximum harm to Putin’s war machine”.
The official regulation defines this to cover goods higher in price than £250 (before VAT). They have been listed to include horses, caviar, wrist watches, xylophones, vacuum cleaners, ski boots, saddles, perfumes, and pottery. Russian women buying lingerie, Russian men buying pyjamas, Russian children buying rollerskates, and Russian housekeepers buying toasters have all been hit with “maximum harm”. Russian spies have been banned from buying British-made false beards and wigs.
Compression stockings for varicose veins will be stripped off Russian legs at the airport, and confiscated under the new rule. Bathing suits, however, if worn instead of underwear, are exempted from the ban.
On June 13, for the first time since the Russian military operation began in the Ukraine, a detailed Russian intelligence assessment has been published in Moscow of Polish strategy for the future of Ukraine. This follows several weeks of brief statements by Russian security and intelligence officials claiming the government in Warsaw is aiming at an anschluss or union with the “eastern borderlands” known in Poland as Kresy Wschodnie, and in the Ukraine as Halychyna; that’s to say, Galicia.
These Russian claims have been dismissed as propaganda by the Poles. Polish strategy, according to Warsaw sources, is to preserve the Zelensky regime in Kiev and the unified Ukrainian military command — and not to acknowledge the possibility of their defeat by the Russian army east of the Dnieper River.
In this week’s discussion between Vlad Shlepchenko, a military analyst for Tsargrad in Moscow, and Vladimir Kozin, a leading academic attached to the Russian intelligence think tank, the Russian Institute for Strategic Studies, they consider the scope of the strategic problem which they think the Poles, and behind them the US and NATO, will continue to pose, after the objectives of Phase-1 and Phase-2 of the Russian military operation in the Ukraine have been completed.
The Cossacks are known for many things, but not for being Roman Catholics like the Galicians of western Ukraine around Lvov, or like the Poles around Cracow.
Originally, the Cossacks swore off eating horsemeat, veal, hare, and pork. Pork is the principal meat of Lvivska (lead image, right) and Krakowska (left), the traditional sausages of Lvov and Cracow. They differ from one another in the spicing – Lvov with onion, marjoram, coriander and bay leaves; Cracow with nutmeg and sugar. In ingredients, the original Cossack sausages were closer to the Jewish ones.
In the war which is now extending from Europe to the world, taste in sausage shouldn’t be confused with race hatred. On May 22, when Andrzej Duda, the President of Poland, declaimed in front of President Vladimir Zelensky at the Verkhovna Rada in Kiev, that “you are – as your national anthem has it – of Cossack stock! You are magnificent!” Duda was making a racial observation with a profound mistake – and not only about sausages.
The Cossacks of the Ukraine came from the lands between the Dnieper and the Don Rivers – that’s between 700 and 1,400 kilometres from Galicia and a journey of nine to twenty hours by motor, days by horse. The Cossacks were Slavs and they were Orthodox Christians. By their ethnic origin, language, culture, and religion, they had little in common with the people who lived to the west of the Dnieper; that’s between Kiev, Lvov and the Polish border today. The Cossacks didn’t start eating pork sausage until after they gave up the nomadic life, got off their horses, and settled to farming.
When Duda told the Kiev deputies “I trust the goodness, the friendships made between millions of Poles and Ukrainians will mean we will be good neighbours forever now. This is a great historic opportunity and the great historic break–through”, he was getting closer to the truth of the history. But that is the history of several hundred years of wars and race hatred between the Galicians and the Poles, and between the Galicians and Poles together against the Russian Slavs. It’s also a story Duda, his political party, and the Polish opposition backed by Mark Brzezinski, the US Ambassador in Warsaw, recognize as a cause of war inside Poland, as well as outside.
The “historic break-through” which Duda declared in Kiev is only 81 years old, from the time of Duda’s grandfather.* That was in 1941, when the German Wehrmacht incorporated Galicia into the General Government of southern Poland (Generalne Gubernatorstwo in Polish). Four years later, as the Germans retreated westwards to Berlin, it became the covert strategy of the US Army and then the policy of successive US governments for the extension eastwards of the North Atlantic Treaty (NATO) alliance; since 1945 that policy has also included regime change in Moscow, and the breakup, first of the Soviet Union, and then of the Russian Federation. That was also the announced strategy of Ambassador Brzezinski’s father, Zbigniew Brzezinski, the National Security Advisor of the Carter Administration between 1977 and 1981.
Duda’s speech of May 22 was a Polish call to the Galicians to put aside the race hatred between themselves, and revive the race hatred which the two Catholic peoples, plus the Germans, have shown towards the Russians – also the Jews from whom the Zelensky family comes.
“How can I speak now,” Duda began his address, “when I am almost overcome with emotion”. Duda’s emotion was also calculated for the Polish audience who will vote in the next national election in just twelve months’ time.
Duda’s call to race war against the Russians was also an attempt to secure Poland against its more recent enemy Germany, and neutralize the US government’s attempt to topple the government in Warsaw. For Duda to manage this combination and hold on to power requires the appearance of a much closer Polish alliance with the Kiev regime than the Ukrainian military commanders and the Galician nationalists are contemplating at the moment, as they are forced into retreat westwards, like the Wehrmacht. Their taste in sausage isn’t Duda’s, or Brzezinski’s, President Zelensky’s or the Cossacks for that matter.
There ought to be a law, or at least a sanction – tenure cancelled, travel visa blocked – for American experts on Russia who claim to know from their reading of other American experts on Russia why Russia does things, and what will happen next.
Thane Gustafson, a Georgetown University professor publishing at the Harvard University Press, claimed very recently “it’s not too hard to reconstruct at this point what was likely going through Putin’s mind as he gave the order to attack…Putin was not nuts, not deranged, not isolated, etcetera. It was all a reasonable bet—by his strange lights—except that every one of the premises turned out to be wrong.” Gustafson is certain he knows this; how he doesn’t say.
But then Gustafson concedes: “All the cards are up in the air, and who knows how they will come down…I don’t know how this ends.”
There’s modest uncertainty for you — except that Gustafson is kidding. He wants you to know, he also says, that Russia is now a fascist state, and there’s really only one thing left he doesn’t know: because it’s such an effective fascist state, “the fact is that because of the regime’s control of information, we have very little idea of how Russians actually feel about the war, and how they will react to Putin’s apparent defeat.”
Gustafson didn’t notice he was squatting on the horns of a dilemma. If Russian regime control of information is so total(itarian), Gustafson’s information must come from the other side – American, Canadian, British, NATO headquarters in Brussels. The technical terms which professors usually apply to information emanating from one side of a two-sided war are misinformation, disinformation, propaganda, active measures, fake news, lies. Between these things and the information Gustafson says he’s sure of, he has trolled himself.
So, to repeat the question, what if Russians actually support the war and blame the US for starting it? What if they are as certain of this as Gustafson is certain Putin started it?
And what if the war ends in the US and NATO alliance retreat to Lvov; after which the Polish government will notify NATO HQ it is reviving its treaty claim to the Galician territory of the Ukraine; the chancellery in Berlin will then inform Brussels it requires the return of the ancient Danzig Corridor and Breslau, Polish territories currently called Gdansk, Wroclaw, and the Ziemie Odzyskane; and the Hungarian government will follow suit with the announcement of the recovery of historical Kárpátalja (Transcarpathia), the Zarkarpatska oblast of the Ukraine?
These were the spoils of the World War II settlement between the US and the Soviet Union in 1945-46. The territorial reversion claims aren’t new. What is new is that the US and the NATO alliance, plus the Galician regime still ruling between Kiev and Lvov, also in Ottawa, have aimed to change the terms of the post-war settlement by continuing the war eastward on to the territory of Russia itself, all the way to regime change in Moscow.
That is what Russia says it is fighting now to defend itself against. As Russian officials have been hinting in recent days, the foreign and defence ministries and the intelligence services are currently discussing in the Kremlin Security Council whether Russia’s long-term security on its western front may be best served by terms of a Ukrainian settlement in which the German, Polish, and Hungarian territorial claims are recognised.
So, if these are indeed the cards that are up in the air, as the professor in Washington, DC, acknowledges, he isn’t the only one who doesn’t know how they will come down.
In the meantime he and the Harvard printers want their new book to be a weapon in this war, targeted directly at President Vladimir Putin in the Kremlin. But what if the weapon misfires and they lose this war? Will Gustafson admit his ignorance or his mistake or his deception? Should he resign his professorship? Should Harvard pulp the new book? Or is the state in which Gustafson lives and lectures such an effective fascist state, losing the war against Russia to Germany, Poland and Hungary, minus the Ukraine, plus Russia, won’t matter to US officials any more than losing Afghanistan, Iraq, Libya, and Syria?