BORIS DUBROVSKY IS NOW SWISS – THE DIRTY AIR MAN OF CHELYABINSK FINDS A CLEAN PLACE FOR HIS LUNGS AND HIS WALLET

By John Helmer, Moscow
  @bears_with

Boris Dubrovsky (lead images), President Vladimir Putin’s governor of Chelyabinsk between 2014 and March 19, 2019, has long been at risk of lung disease, and he is now reported to be in a Swiss clinic for treatment. His prognosis is uncertain.

More certain it is that Dubrovsky will not be returning to Chelyabinsk. That’s not because the  city air is injurious to his health, as federal regulators and citizens’ groups have measured throughout Dubrovsky’s gubernatorial term;  but rather because Dubrovsky has been charged by the Investigative Department of the Ministry of Internal Affairs with the criminal scheme of monopolizing road construction contracts in the Chelyabinsk region. The sum of the criminal damage for which Dubrovsky is accused currently stands at Rb20 billion ($308 million). That’s damage to the regional and federal budgets. How much money Dubrovsky has trousered for himself is not charged or reported.  

No Russian prosecution claims have been filed against Dubrovsky to the Swiss authorities. The Swiss press are now investigating the accommodations in local banks and real estate where Dubrovsky’s money may be located under his own or his son’s name. (more…)

ROMAN ABRAMOVICH DOESN’T DRINK NOVOKUZNETSK RIVER WATER, PREFERS THE MEDITERRANEAN FOR HIS AQUATHERAPY

By John Helmer, Moscow

Roman Abramovich (lead image) is the leading shareholder of the Russian steel, iron-ore and coal mining group called Evraz. Among Russia’s leading steel groups, it ranks second in output of crude steel; fourth in market value. It is the leader in indebtedness.

By international measures, Evraz also leads its Russian peers in its record of controlling noxious air and water emissions from mill and mine operations. CDP, an international agency for monitoring industrial pollution, reported a year ago its global answer to the question, “who’s ready to get tough on emissions?” Evraz came 12th in CDP’s table of the world steel emission control leaders; no other Russian steelmaker was ranked.  That was  not exactly a commendation in international terms. According to CDP, “Evraz ranks third last. It performs among the bottom companies on our emissions and energy benchmarking, and does not disclose forward-looking reduction targets, or any participation in research toward breakthrough emissions reduction technologies.

If you live in Novokuznetsk city, where Evraz operates two steel plants, the company’s international status is too good to be true. For the past decade, Evraz has been under local court and federal orders to put a stop to its waste water pollution by building a new water treatment plant. The company refuses.  It won’t explain, hoping that its influence with city, regional and federal government officials, will ensure that there will no enforcement, and no news of this either. (more…)

ILL WIND BLOWS PROFIT FOR IGOR ZYUZIN AND HIS MECHEL STEEL AND COAL COMPANY — IN CHELYABINSK WHERE THERE IS PROFIT, THERE’S CORRUPTION

By John Helmer, Moscow

Sergei Ivanov had been in charge of protecting Russia’s environment for just ten weeks when he arrived in Chelyabinsk city last November 1. The former Kremlin chief of staff and principal advisor to President Vladimir Putin took with him a large delegation of federal officials, including a deputy prime minister, the minister of natural resources and environment, and the chief of the environmental control agency, Rosprirodnadzor,  to meet Boris Dubrovsky, the Chelyabinsk governor (lead image, right).  

Much was promised for cleaning up the air of the city and region. A month later, on December 5, President Vladimir Putin visited Chelyabinsk region, and flew by helicopter with Dubrovsky over several of the worst air pollution areas.  Dubrovsky announced  that he favoured a new set of air control standards for enforcement by federal and regional governments. Putin replied with the acknowledgement that air pollution was especially serious in Chelyabinsk.  He claimed: “we need to encourage entrepreneurs, and industry to apply the latest technology, the best technology available. This program starts to work, and I very much hope that it will have the desired effect in 2017.”

Then in mid-January the smog struck Chelyabinsk city. Ivanov, Dubrovsky and Putin had all failed to prevent the longest air pollution crisis in the city for years.  Mechel’s owner, Igor Zyuzin (lead image, left), had succeeded in keeping his plants operating with minimal interruption, a promise to do better, and no criminal charges.  A local environmental activist says:  “People in the west think Putin is so powerful he can change the outcome of elections in the US, UK, France and Germany. So how come he can’t put a stop to the говно in the Chelyabinsk air coming from one oligarch who owns the plants?” (more…)

ALEXEI MORDASHOV HAS GOT WOOD! THE OLIGARCH’S FULL FRONTAL TAKEOVER OF RUSSIA’S PLYWOOD BUSINESS

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By John Helmer, Moscow

In the seedier studios of California, when the director cries “We’ve got wood!” he means the male lead has an erection, and it’s his cue to start his business while the cameras roll at a pornographic scene. Russia’s plywood business isn’t as sexy, but it’s faster growing and bigger too. It’s also becoming a oligopoly for Alexei Mordashov, who is already the well-known oligarch of the Russian steel and mining sectors.

Mordashov (lead image) met President Vladimir Putin in January. He claims he got the president’s go-ahead to build a new wood-processing complex at the village of Suda, outside Cherepovets. Public opposition is fierce – so fierce that the Kremlin is concealing what exactly Putin and Mordashov said about the project at their meeting; how much state money will be given to Mordashov for the scheme; and what Putin intends to do next. Not since Putin took sides with the locals in Irkutsk region against Oleg Deripaska’s paper and pulp plant on the edge of Lake Baikal, has there been such a test of Russians, oligarchs, the President – and who has wood.
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NEW CAT’S PAW AWARD – FINANCIAL TIMES MAKES IGOR ZYUZIN HERO FOR STANDING UP TO VLADIMIR PUTIN

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By John Helmer, Moscow

In publishing on Russia, there comes a time when a writer, journalist, bank analyst, television presenter, or academic produces something so lacking in truthfulness, so replete with fawning and meretriciousness, that this website must kill and skin another goat; dry out the vellum; and have a fresh scroll inscribed with the Cat’s Paw – that’s the Personal Abasement Award (PAW).

This award is designed to encourage accountability and ethical reporting on Russia. The PAW committee decided to suspend the Cat’s Paw awards when the start of the Ukraine civil war threatened to overwhelm the supply of vellum and the goat population on which it depends. The goats who have earned the Cat’s PAW scroll have also multiplied exponentially.
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SEQUEL: OPENING THE RUSSIAN RAILWAYS SCRAP BOOK

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By John Helmer, Moscow

For the first time Moscow analysts have issued precise estimates of the ferrous scrap sold in the domestic Russian market by the major scrap companies, and identified the market shares of the leading companies by name. The disclosures also confirm that the state-owned Russian Railways (RZhD) is one of largest scrap producers and traders in the market, trailing three of the large steel groups – Novolipetsk, Magnitogorsk, and Evraz – but far ahead of the scrap operators which are independently owned.

Reliable is not, however, the term to use for volumes of scrap either in the domestic or export trade. What is missing is not only a measure of the size of the black trade in scrap, but also the reluctance of everyone, including the industry analysts in Moscow, London, and Washington, to acknowledge, let alone count the value of what is going on.
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IRON MAN TAKES A TUMBLE – WILL AFRICA SUCCEED AUSTRALIA, BRAZIL, RUSSIA TOO, AS THE NEW LOW-COST GLOBAL SUPPLIER OF IRON-ORE?

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By John Helmer, Moscow

The Ukrainian civil war, and its aftermath, economic warfare between the US, the European Union, and Russia, are transforming the global flows of the minerals from which steel is made. Starting with iron-ore, the future for steelmaking will start at the minehead, not in Australia, nor Brazil, but in West Africa. That is if Gennady Bogolyubov, the Ukrainian miner, can help to produce high-grade iron-ore at a cash cost of $20 per tonne. At that price, Bogolyubov and China’s iron-ore traders and bankers calculate, they will be able to break free of the global price-fixing for the mineral which has been dominated, until now, by BHP Billiton and Rio Tinto in the US camp, and Vale of Brazil.
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EVRAZ IPO — ROMAN ABRAMOVICH INVITES US STOCK BUYERS TO OVERLOOK WHO HE IS, AND WHERE HE COMES FROM

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By John Helmer, Moscow

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”.
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US DECLARES WAR ON RUSSIA — TITANIUM

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By John Helmer, Moscow

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.”
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INTERPIPE PRESENTS ITS FINANCIALS — VICTOR PINCHUK PLAYS KING CANUTE

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By John Helmer, Moscow

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.
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O! WHAT A LUCRATIVE WAR IN EASTERN UKRAINE RINAT AKHMETOV IS HAVING, SO FAR

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By John Helmer, Moscow

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.
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SEVERSTAL SETTLES US LITIGATION WITH RG STEEL — ALEXEI MORDASHOV DEMONSTRATES PARACHUTE TECHNIQUE TO SHAREHOLDERS

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By John Helmer, Moscow

Three years of litigation in New York and Delaware between Severstal and US steelmaker RG Steel over a failed Maryland steelmill, for which Alexei Mordashov paid $810 million, will be finalized at a US court hearing on July 15. Moscow and US sources report that lawyers for the two sides are expected to present for the judge’s approval an agreement for RG Steel to receive $30 million in cash from Severstal, and in exchange, Severstal will acquire RG Steel’s 50% stake in their joint coke venture, Mountain State Carbon (MSC).

At most, this outcome for Severstal is worth $70 million – one-eleventh of what Mordashov originally paid in March 2008, announcing at the time: “We believe in the long-term promise of the U.S. market.”
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KREMLIN LOSES FEAR OF REGIONAL DEMONSTRATIONS — THE STEEL OLIGARCHS ISSUE PINK “PRODUCTION RELEASE” SLIPS

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By John Helmer, Moscow

Last year Russia’s six major steelmakers cut 33,500 jobs from their payrolls, because, they explain, they are struggling to reduce losses and cut bank debt. That amounted to a loss of almost one in ten jobs in the Russian steel sector. At the end of 2013, the headcount of steelworkers was 355,900, down 9.4% from 2012.

Government officials and sector analysts acknowledge that five years ago during the collapse in steel trade in the last months of 2008 and first half of 2009, such a job cull would have been impossible because the Kremlin warned the mill proprietors against mass layoffs. Magnitogorsk Metallurgical Combine (MMK) announced it was reducing its steel output by 15% in October 2009 after earlier claiming the cutback would be 25%. Alexander Mastruev, head of personnel at MMK, said at the time: “It is not necessary to dramatise the situation, and to panic.” MMK was considering a furlough of employees, not dismissal and job cuts, he added. At Mechel, it was claimed at the time there was no plan to review production plans “for now” but the length of the working day might be cut. According to Mechel, “we are making all effort to save all working places and our employees.”
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DISQUIET ON THE EASTERN FRONT — VICTOR PINCHUK’S INTERPIPE REPORTS FINANCIAL DAMAGE, OFFERS TO SELL OUT

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By John Helmer, Moscow

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.
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ALEXEI MORDASHOV AND IGOR ZYUZIN VIOLATE THE NEW KREMLIN RULE ON NOT AIRING THEIR DIRTY LINEN IN FOREIGN AIR

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By John Helmer, Moscow

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.
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ALEXEI MORDASHOV HITS US WITH SANCTIONS — DEMANDS $1.5 BILLION FOR LAST TWO US STEELMILLS

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By John Helmer, Moscow

The disclosure that Severstal is planning to sell its remaining two US steelmills has taken the Russian steel industry by surprise, triggering speculation the Kremlin has asked for the move as part of the ongoing conflict between the US and Russia in Ukraine.

For the time being, Severstal’s owner and chief executive Alexei Mordashov is making no official statement. Assessments in Moscow are divided over whether Mordashov has discussed the US asset sale plan with President Vladimir Putin as part of Russia’s reaction to the threat of US sanctions against the energy and metals sectors of the Russian economy. Russian steel industry sources believe Mordashov has authorized the press leak to advertise his asset sale in an attempt to lift the price.
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EVRAZ PLAYS THE HIDDEN HAND — VITKOVICE STEEL SALE IS A RELATED-PARTY TRANSACTION (IN WHICH SERGEI TARUTA, ACTING DONETSK GOVERNOR, GETS A REWARD HE CAN’T AFFORD)

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By John Helmer, Moscow

The Evraz group, controlled by Roman Abramovich and Alexander Abramov, is listed on the main board of the London Stock Exchange (LSE). It is also the second most indebted steelmaker in Russia, with a current debt of about $6.5 billion, and a loss on its 2013 balance-sheet of $572 million.

This parlous condition is obliging Abramovich and Abramov to get rid of as many of their lossmaking steelmills as they can, and avoid defaulting on their bank loan covenants. Because the duo miscalculated when they paid premium prices for their foreign assets, the writedowns to the current value of their purchases are inflicting big numbers on the loss line of the Evraz financial reports, eliminating shareholder dividends, and cutting market capitalization. At the moment, the market values Evraz at £1.3 billion ($2.2 billion) – that’s to say, one-third of what Evraz owes its banks. The market capitalization has been dwindling steadily since February 2012 when it was £6.9 billion. Among Russian steelmakers only Igor Zyuzin, owner of the Mechel group, has generated more debt, and destroyed more asset value.
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IS IT CURTAINS FOR IGOR ZYUZIN? VLADIMIR LISIN AND MIKHAIL FRIDMAN ON THE ATTACK

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By John Helmer, Moscow

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.
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NO ROSATOM REACTOR SALE TO SOUTH AFRICA, NO EVRAZ SALE OF HIGHVELD STEEL, NO COINCIDENCE

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By John Helmer, Moscow

After almost a year of inconclusive negotiations with a secretive South African group called Nemascore, Evraz, the Russian steelmaker and miner, has announced to the Johannesburg Stock Exchange that negotiations have opened to sell its control stake in Highveld Steel & Vanadium to new buyers. The notice to the exchange last week said Evraz informed the Highveld board that “it is, in addition to Nemascore (Proprietary) Limited, currently engaging with other potential bidders with a view to disposing of its 85.11% stake in the Company. The independent board of the Company has agreed to allow these potential bidders to conduct a due diligence investigation into the affairs of the Company.” The Evraz notice added that the talks are “incomplete, confidential and non-binding, hence there is no certainty that a transaction will take place.”
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PARTITIONING UKRAINE — WHO GAINS FROM FIGHTING RUSSIA TO THE LAST UKRAINIAN?

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By John Helmer, Moscow

When the last war with Germany was ending, the British intelligence services rounded up as many of their German counterparts as they could find, and interrogated them. They were taken by surprise, as a series of reports by Hugh Trevor-Roper, then a signals intelligence analyst, uncovered as early as 1944.* For the British, the surprise was that neither German military intelligence (Abwehr) nor the SS intelligence organization (Sicherheitsdienst) had the doctrine or the resources for strategic deception: that’s the capacity to mask from your opponent what your plans are, and thereby fool your target into positioning himself for defeat. By the standards of British deceit, as British historians and thriller writers have proclaimed ever since, the Germans were naïve – exposing a colossal Achilles heel to be exploited just because it was always possible to persuade them to put their Achilles foot into a trap.

Predictability and naivety aren’t recommended for war-fighting — nor just for Germans, and not just then. The British intelligence services’ reports on the Russian capacity for deception remain top secret. But what the British believed was once their own superiority in deception tactics, they have now dispensed with, or lost. So when it comes to waging the Anglo-American war against Russia, there’s been no disguise for the Achilles Heels on display in the war for Chechnya or in the Georgian War of August 2008 – both of them lost by the Anglo-American side.
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UKRAINIAN BID TO REENTER RUSSIAN STEEL MARKET IS STALLED

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By John Helmer, Moscow

The Kremlin has yet to agree to a Ukrainian application for the resumption of duty-free quotas for steel pipe imports to Russia. In December, Ukrainian Industry Minister Mykhaylo Korolenko told Bloomberg that there had been an agreement with the Kremlin to reinstate the quotas which were cancelled on July 1 and a penalty duty of 19% introduced instead. In effect, this killed the Ukrainian trade.
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VICTOR PINCHUK’S INTERPIPE DEFAULTS AGAIN — IT’S A WRAP!

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By John Helmer, Moscow

Interpipe, the heavily indebted Ukrainian pipemaker owned by Victor Pinchuk (left foreground), has defaulted on its pledge to list its Eurobonds on the Luxembourg Stock Exchange by December 27, a notice from Deutsche Bank, the bond trustee, has revealed. This is Pinchuk’s second default in two months. On November 1, Interpipe announced it was unable to pay its international banks $106 million due on at least half a billion dollars in loans.

According to the latest disclosure, Deutsche Bank now has the authority to call for repayment of the face value of the Interpipe bonds plus interest. Interpipe’s last financial report indicates that as of December 31, 2012, the sum owing would be more than $198 million. A repayment call would also trigger repayment demands from Interpipe’s international banks and the Italian export agency SACE. The banks, led by ING of the Netherlands, Commerzbank of Germany, and Royal Bank of Scotland (RBS), are owed more than $543 million; SACE, $156 million.
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EVRAZ STILL UNABLE TO SELL HIGHVELD STEEL; DEAL TIMING APPEARS TIED TO SOUTH AFRICAN REACTOR PURCHASE FROM ROSATOM

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By John Helmer, Moscow

Evraz, the steelmaking group owned by Roman Abramovich (third figure from left) and Alexander Abramov (fourth from left), has just issued a notice to the Johannesburg Stock Exchange that it has been unable to complete the proposed sale of its South African unit, Highveld Steel & Vanadium, by a December 31 deadline. First announced on March 27, the heavily indebted Evraz said the terms of sale for its 85% shareholding in Highveld called for the acquiror, a South African company called Nemascore, to pay a purchase price of $320 million. Prior to the deal announcement, the Evraz stake had been valued in the market between $106 million and $135 million. Since March the market value of the stake has failed to reach 50% of the transaction price; it is currently just $138.4 million.

The new announcement acknowledges that closure of the sale has been postponed three times already, and that six cautionary notices have been issued to the Johannesburg market. Neither Evraz nor Nemascore has explained the reasons for the delay, claiming this is prevented by a non-disclosure agreement covering their deal. In its December 19 announcement, Evraz claims that a “due diligence process is still progressing”, and that the “Transaction is expected to be concluded towards the end of Q1 2014.” The story of Nemascore and its ties to the South African President, Jacob Zuma, can be read here.
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INTERPIPE IS IN THE LION’S MOUTH — THAT’S THE RUSSIAN BANKS

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By John Helmer, Moscow

Interpipe, the heavily indebted Ukrainian pipemaker owned by Victor Pinchuk (centre), owes at least $120 million to Russian banks, led by state-owned Sberbank controlled by former Minister of Economic Development, German Gref (wall picture, left). But the Russian bankers are not represented in any of the loan restructuring negotiations which are currently under way, following Interpipe’s default on $106 million in debts owed to its international lenders on November 1.

The Russian debt and the Russian influence over Interpipe’s financial survival have been disclosed by Interpipe executives at a briefing for Interpipe’s Eurobond holders on December 9. The Russian loan agreements carry standard protective clauses allowing a call for full repayment when Pinchuk and his holding are in default to other lenders, suppliers, or creditors. If the Russians decide to do this, Interpipe’s executives acknowledge they cannot pay. They have less than $90 million in free cash at present, and admit they cannot borrow extra money.
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DANIELI IN THE LION’S DEN — VICTOR PINCHUK CHEWS OVER $1.3 BILLION DEBT

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By John Helmer, Moscow

Victor Pinchuk, the owner of Interpipe, the Ukrainian steelmaker which defaulted on its debts on November 1, has called his first-ever public business meeting. The date is December 9, and the meeting will be telephonic. Deutsche Bank, which is acting as trustee for Interpipe’s $200 million Eurobond issue, is promising to answer questions about the company’s financial collapse, and provide a copy of the debt repayment agreement Pinchuk has with his banks.

Those attending the meeting will not be able to read Interpipe’s presentation until the start of the conference call. They will then have just 60 minutes to read, ask their questions, and listen to the answers. According to Deutsche Bank, the conference call will “last no more than one hour.”
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INTERPIPE STARTS DEBT REFINANCING TALKS, BLAMES RUSSIA FOR DEFAULT, AS VICTOR PINCHUK BEGS PRESIDENT VICTOR YANUKOVICH FOR RUSSIAN REWARD

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By John Helmer, Moscow

Interpipe, the Ukrainian pipemaker owned by Victor Pinchuk (left), son-in-law of ex-President Leonid Kuchma (centre, right), has released its first official acknowledgement that it is in default on $106 million of debt owed to its banks. In a statement yesterday on the company website, Interpipe said negotiations are under way with the banks, and that they had been informed in advance of the company’s failure to meet the repayment amount due on November 1. “The creditor banks”, according to Interpipe, “have formed a steering committee of creditors. The parties will have to agree to change the schedule of payments on the main body of the loans, as well as some other changes in the loan agreement conditions. The company plans to continue to pay interest on all borrowings in full. The operating activities of Interpipe run in the normal mode.”

Interpipe’s debts currently exceed $1.3 billion; it has less than $50 million in cash. The banks, which negotiated with Interpipe for an earlier debt restructuring agreement in 2011, include Citi, Barclays, Intesa, ING, and Credit Agricole. The banks are not commenting publicly except for Intesa in Milan; it said this week it is aware of the default and is evaluating the situation with the other lenders.
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MECHEL’S IGOR ZYUZIN EVOLVES — FROM OLIGARCH TO DEADBEAT DEBTOR TO GOSPLAN APPARATCHIK

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By John Helmer, Moscow

The sharp selloff of Mechel, the steel and coal group controlled by Igor Zyuzin, ought to demonstrate — if fresh proof were needed — that this is no longer a commercial operation in the normal sense of the term. Today Mechel is a nationalized enterprise kept solvent by five state banks in order to preserve the economies of several cities and regions across the country.

The stock market gyrations this week, in which almost $330 million in market capitalization was liquidated, should also demonstrate – if that too were necessary – how little a Russian company listing on the New York Stock Exchange provides by way of accountable financial reporting or effective regulation by the US Securities and Exchange Commission (SEC).
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VICTOR PINCHUK TRIPS HIMSELF UP — INTERPIPE FAILS PAYMENT DEADLINE, FACES DEFAULT AND LIQUIDATION

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By John Helmer, Moscow

Interpipe, the leading Ukrainian pipemaker, failed to meet last Friday’s deadline for repayment to its international bankers of $106 million, sources in Kiev have confirmed. Interpipe, owned by Victor Pinchuk (image above) and his wife Elena, daughter of former Ukrainian President Leonid Kuchma, is the largest steelmaker in the former Soviet Union to face bankruptcy and liquidation in recent years. According to sources close to Interpipe, who ask not to be identified, Interpipe’s debts now exceed $1.3 billion; its free cash on hand is less than $50 million.

The group says it continues to produce pipes at its new electric arc furnace plant at Dniepropetrovsk, despite market shut-out measures adopted by Russia, the CIS Customs Union, and the US, which have introduced, or plan shortly to impose penalty duties on pipe imports of 19.4% and 30.8%, respectively. These measures, compounding the generally depressed market demand for pipes, have led Fitch Ratings to slash Interpipe’s earnings estimate for this year by more than $100 million to $260 million, possibly less.
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MORE FROM FIBBER — EVRAZ INCREASES PRODUCTION AT CLAYMONT STEEL; EVRAZ CLOSES CLAYMONT STEEL: IS THIS A PLOY TO STOP UKRAINIAN EXPORTS TO THE US?

fibber_evraz

By John Helmer, Moscow

Struggling with a rising debt burden of more than $8.2 billion, the Evraz group, owned by Roman Abramovich (left), Alexander Abramov (centre) and Alexander Frolov (right), has suspended production at its Claymont steelmill in Delaware. The production halt is indefinite. A company announcement from Moscow on Monday says that “due to subdued market demand and the high volume of imports, it will suspend operations at its steel mill in Claymont, Delaware. Over the next two months, about 375 employees will complete processing and shipping of existing products and prepare the mill for idling. EVRAZ will consider restarting the operations as soon as the market conditions improve. Evraz doesn’t expect any adverse financial effect on its operations in North America as a result of this action, and customers of the Claymont mill will be served by other EVRAZ facilities in Portland, Oregon, and Regina, Saskatchewan.”

Dated October 14, this was a big surprise. If what Evraz says now is believable, why did the company say publicly on August 29 that it was planning to increase production at Claymont Steel? Less than seven weeks ago, in the Evraz half-yearly financial report this is what the company claimed: “The key focus of the flat product group, in the period, was enhancing capacity utilisation. To this end, EVRAZ North America is currently finalising works to increase the rolling speed at EVRAZ Claymont which should improve productivity and provide capacity for higher output levels when the order book is strong.” (page 17).
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FIBBER ABRAMOVICH — EVRAZ TELLS TALL TALES ON COST-CUTTING, BUT DEBTS KEEP GROWING

whisper

By John Helmer, Moscow

Fibber McGee was one of the first situation comedy serials on American radio; from 1935 to 1959, it was also one of the longest running. The situation joke was that Fibber would tell tall tales which his wife Molly would expose. Fibber (left image-1) stood (and fell) for hare-brained schemes; Molly, his wife on stage and off (left image-2), stood for commonsense.

Evraz is one of Russia’s largest steel and mining companies employing about 110,000 people worldwide. In Russia the group operates three steelmills in two regions; ten coalmines in two other regions, five iron-ore mines, and two vanadium refineries near Moscow. It is controlled by Roman Abramovich (right image-1), whose way of telling tales managed to persuade the UK High Court judge Dame Elizabeth Gloster, in the well-known case brought by the late Boris Berezovsky. But no Molly, Gloster. She decided that to protect her judgement from the Court of Appeal, she believed one of the two claimants rather than dismissing both of them for lying their heads off. A good part of Russia was wise to what was true, what was false. Gloster did something else. “I bethcha!”, one of Molly’s famous lines, turned out to be Gloster’s in the end. Or, as the Greek character used to refer to their names in the radio show, it was a case of “Fizzer and Kewpie”.
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FITCH DOWNGRADES INTERPIPE TO DEFAULT — VICTOR PINCHUK TO ASK ITALIANS FOR RESCUE FROM RUSSIAN AND AMERICAN MOVES

ukr_eu_interpipe

By John Helmer, Moscow

The international ratings agency Fitch has downgraded its assessment of the Ukrainian pipemaking group Interpipe, owned by Victor Pinchuk, warning that Russian action since July to impose penalty duties on Ukrainian pipe imports is causing a serious loss of sales and a grave shortage of cash for Interpipe. If that continues, a release from Fitch says, the company “is unlikely to be able to meet its scheduled debt repayments.” The Fitch report was issued in London on Monday. It comes just three months after the agency had reported that the outlook for Interpipe as stable, confirming at the time Interpipe’s B- rating.

In the latest action Fitch says it is downgrading Interpipe to CCC. Sources close to recent talks between Fitch and Interpipe describe the triple-C rating as indicating, according to the Fitch methodology, the high probability of default.
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RED HAS TURNED YELLOW – THE GREEK AND CYPRIOT COMMUNISTS ARE FLYING A DIFFERENT FLAG IN THE UKRAINE WAR



By John Helmer, Moscow
  @bears_with

The Ukraine war is splitting the communist parties of Europe between those taking the US side, and those on the Russian side.

In an unusual public criticism of the Greek Communist Party (KKE) and of smaller communist parties in Europe which have endorsed the Greek criticism of Russia for waging an “imperialist” war against the Ukraine, the Russian Communist Party (KPRF) has responded this week with a 3,300-word declaration:  “The military conflict in Ukraine,” the party said, “cannot be described as an imperialist war, as our comrades would argue. It is essentially a national liberation war of the people of Donbass. From Russia’s point of view it is a struggle against an external threat to national security and against Fascism.”

By contrast, the Russian communists have not bothered to send advice, or air public criticism of the Cypriot communists and their party, the Progressive Party of Working People (AKEL). On March 2, AKEL issued a communiqué “condemn[ing] Russia’s invasion of Ukraine and calls for an immediate ceasefire and the withdrawal of the Russian troops from Ukrainian territories….[and] stresses that the Russian Federation’s action in recognising the Donetsk and Luhansk regions constitutes a violation of the principle of the territorial integrity of states.”

 To the KPRF in Moscow the Cypriots are below contempt; the Greeks are a fraction above it.

A Greek-Cypriot veteran of Cypriot politics and unaffiliated academic explains: “The Cypriot communists do not allow themselves to suffer for what they profess to believe. Actually, they are a misnomer. They are the American party of the left in Cyprus, just as [President Nikos] Anastasiades is the American party of the right.” As for the Greek left, Alexis Tsipras of Syriza – with 85 seats of the Greek parliament’s 300, the leading party of the opposition – the KKE (with 15 seats), and Yanis Varoufakis of MeRA25 (9 seats), the source adds: “The communists are irrelevant in Europe and in the US, except in the very narrow context of Greek party politics.”

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IF IT SMELLS ALLURING, IT’S RUSSIAN – IN WARTIME L’ORÉAL (FRANCE) AND ESTÉE LAUDER (US) MAKE A BAD SMELL



By John Helmer, Moscow
  @bears_with

The war plan of the US and the European allies is destroying the Russian market for traditional French perfumes, the profits of the French and American conglomerates which own the best-known brands, the bonuses of their managers, and the dividends of their shareholders. The odour  of these losses is too strong for artificial fresheners.

Givaudan, the Swiss-based world leader in production and supply of fragrances, oils and other beauty product ingredients, has long regarded the Russian market as potentially its largest in Europe; it is one of the fastest growing contributors to Givaudan’s profit worldwide. In the recovery from the pandemic of Givaudan’s Fragrance and Beauty division – it accounts for almost half the company’s total sales — the group reported “excellent double-digit growth in 2021, demonstrating strong consumer demand for these product categories.”    Until this year, Givaudan reveals in its latest financial report, the growth rate for Russian demand was double-digit – much faster than the  6.3% sales growth in Europe overall; faster growth than in Germany, Belgium and Spain.    

Between February 2014, when the coup in Kiev started the US war against Russia, and last December, when the Russian non-aggression treaties with the US and NATO were rejected,   Givaudan’s share price jumped three and a half times – from 1,380 Swiss francs to 4,792 francs; from a company with a market capitalisation of 12.7 billion francs ($12.7 billion) to a value of 44.2 billion francs ($44.2 billion). Since the fighting began in eastern Ukraine this year until now, Givaudan has lost 24% of that value – that’s $10 billion.  

The largest of Givaudan’s shareholders is Bill Gates. With his 14%, plus the 10% controlled by Black Rock of New York and MFS of Boston, the US has effective control over the company.

Now, according to the US war sanctions, trade with Russia and the required payment systems have been closed down, alongside the bans on the importation of the leading European perfumes. So in place of the French perfumers, instead of Givaudan, the Russian industry is reorganizing for its future growth with its own perfume brands manufactured from raw materials produced in Crimea and other regions, or supplied by India and China. Givaudan, L’Oréal (Lancome, Yves Saint Laurent), Kering (Balenciaga, Gucci), LVMH (Dior, Guerlain, Givenchy), Chanel, Estée Lauder, Clarins – they have all cut off their noses to spite the Russian face.

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THE WAR AGAINST FOOD – WHO IS TO BLAME



By Nikolai Storozhenko, introduced and translated by John Helmer, Moscow
  @bears_with

This week President Joseph Biden stopped at an Illinois farm to say he’s going to help the  Ukraine ship 20 million tonnes of wheat and corn out of storage into export, thereby relieving  grain shortages in the international markets and lowering bread prices around the world.  Biden was trying to play a hand in which his cards have already been clipped. By Biden.  

The first Washington-Kiev war plan for eastern Ukraine has already lost about 40% of the Ukrainian wheat fields, 50% of the barley, and all of the grain export ports. Their second war plan to hold the western region defence lines with mobile armour, tanks, and artillery  now risks the loss of the corn and rapeseed crop as well as the export route for trucks to Romania and Moldova. What will be saved in western Ukraine will be unable to grow enough to feed its own people. They will be forced to import US wheat, as well as US guns and the money to pay for both.

Biden told his audience that on the Delaware farms he used to represent in the US Senate “there are more chickens than there are Americans.”  Blaming the Russians is the other card Biden has left.  

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EXILE



By John Helmer, Moscow
  @bears_with

The problem with living in exile is the meaning of the word. If you’re in exile, you mean you are forever looking backwards, in geography as well as in time. You’re not only out of place; you’re out of time — yesterday’s man.

Ovid, the Roman poet who was sent into exile from Rome by Caesar Augustus, for offences neither Augustus nor Ovid revealed, never stopped looking back to Rome. His exile, as Ovid described it, was “a barbarous coast, inured to rapine/stalked ever by bloodshed, murder, war.” In such a place or state, he said, “writing a poem you can read to no one is like dancing in the dark.”

The word itself, exsilium in Roman law, was the sentence of loss of citizenship as an alternative to loss of life, capital punishment. It meant being compelled to live outside Rome at a location decided by the emperor. The penalty took several degrees of isolation and severity. In Ovid’s case, he was ordered by Augustus to be shipped to the northeastern limit of the Roman empire,  the Black Sea town called Tomis; it is now Constanta, Romania. Ovid’s last books, Tristia (“Sorrows”) and Epistulae ex Ponto (“Black Sea Letters”), were written from this exile, which began when he was 50 years old, in 8 AD, and ended when he died in Tomis nine years year later, in 17 AD.  

In my case I’ve been driven into exile more than once. The current one is lasting the longest. This is the one from Moscow, which began with my expulsion by the Foreign Ministry on September 28, 2010.  The official sentence is Article 27(1) of the law No. 114-FZ — “necessary for the purposes of defence capability or security of the state, or public order, or protection of health of the population.” The reason, a foreign ministry official told an immigration service official when they didn’t know they were being overheard, was: “Helmer writes bad things about Russia.”

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IN THE FOG OF WAR THERE’S THE GUTERRES CERTAINTY AND THE CADIEU CERTAINTY – GORILLA RADIO SEES THROUGH THE COVER-UP



By John Helmer, Moscow
  @bears_with

Antonio Guterres is the Secretary-General of the United Nations (UN), who attempted last month  to arrange the escape from Russian capture of Ukrainian soldiers and NATO commanders,  knowing they had committed war crimes. He was asked to explain; he refuses.   

Trevor Cadieu is a Canadian lieutenant-general who was appointed the chief of staff and head of the Canadian Armed Forces last August; was stopped in September; retired from the Army this past April, and went to the Ukraine, where he is in hiding. From whom he is hiding – Canadians or Russians – where he is hiding, and what he will say to explain are questions Cadieu isn’t answering, yet.

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DID UN SECRETARY-GENERAL GUTERRES COMMIT A WAR CRIME AT AZOVSTAL?

By John Helmer, Moscow
  @bears_with

Antonio Guterres, the United Nations Secretary-General, is refusing this week to answer questions on the role he played in the recent attempt by US, British, Canadian and other foreign combatants to escape the bunkers under the Azovstal plant, using the human shield of civilians trying to evacuate.

In Guterres’s meeting with President Vladimir Putin at the Kremlin on April 26 (lead image), Putin warned Guterres he had been “misled” in his efforts. “The simplest thing”, Putin told Guterres in the recorded part of their meeting, “for military personnel or members of the nationalist battalions is to release the civilians. It is a crime to keep civilians, if there are any there, as human shields.”  

This war crime has been recognized since 1977 by the UN in Protocol 1 of the Geneva Convention.  In US law for US soldiers and state officials, planning to employ or actually using human shields is a war crime to be prosecuted under 10 US Code Section 950t.  

Instead, Guterres ignored the Kremlin warning and the war crime law, and authorized UN officials, together with Red Cross officials,  to conceal what Guterres himself knew of the foreign military group trying to escape. Overnight from New York, Guterres has refused to say what he knew of the military escape operation, and what he had done to distinguish, or conceal the differences between the civilians and combatants in the evacuation plan over the weekend of April 30-May 1.May.

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THE LAST DITCH IS POLAND – RUSSIA’S PHASE-3 PLAN FOR WESTERN UKRAINE



By Vlad Shlepchenko, introduced & translated by John Helmer, Moscow
  @bears_with

The more western politicians announce pledges of fresh weapons for the Ukraine, the more Russian military analysts explain what options their official sources are considering to destroy the arms before they reach the eastern front, and to neutralize Poland’s role as the NATO  hub for resupply and reinforcement of the last-ditch holdout of western Ukraine.

“I would like to note,” Defense Minister Sergei Shoigu, repeated yesterday, “that any transport of the North Atlantic Alliance that arrived on the territory of the country with weapons or material means for the needs of the Ukrainian armed forces is considered by us as a legitimate target for destruction”.  He means the Ukraine border is the red line.

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THE MATLIN PLOT, THE BROWDER PLOT AND THE NEW YORK TIMES PLOT



By Lucy Komisar,  New York*
  @bears_with

Here’s a story the New York Times has just missed.

US politicians and media pundits are promoting the targeting of “enablers” of Russian oligarchs who stash their money in offshore accounts. A Times article of March 11   highlighted Michael Matlin, CEO of Concord Management as such an “enabler.” But the newspaper missed serious corruption Matlin was involved in. Maybe that’s because Matlin cheated Russia, and also because the Matlin story exposes the William Browder/Sergei Magnitsky hoax aimed at Russia.

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YELLOW COAL, THE FUEL MADE OUT OF RACE HATRED — MAY DAY MESSAGE FROM SIGIZMUND KRZHIZHANOVSKY, 1939



By John Helmer, Moscow
  @bears_with

In 1939 a little known writer in Moscow named Sigizmund Khrzhizhanovsky published his idea that the Americans, then the Germans would convert human hatred into a new source of energy powering everything which had been dependent until then on coal, gas, and oil.

Called yellow coal, this invention originated with Professor Leker at Harvard University. It was applied, first to running municipal trams, then to army weapons, and finally to cheap electrification of everything from domestic homes and office buildings to factory production lines. In Russian leker means a quack doctor.

The Harvard professor’s idea was to concentrate the neuro-muscular energy people produce when they hate each other.  Generated as bile (yellow), accumulated and concentrated into kinetic spite in machines called myeloabsorberators, Krzhizhanovsky called this globalization process the bilification of society.

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IS CAESARISM THE PROBLEM, THE SOLUTION, A FANCY DRESS COSTUME, OR A PROPAGANDA CARTOON?



By John Helmer, Moscow
  @bears_with

In imperial history there is nothing new in cases of dementia in rulers attracting homicidal psychopaths to replace them.  It’s as natural as honey attracts bees.

When US President Woodrow Wilson was incapacitated by a stroke on October 19, 1919, he was partially paralysed and blinded, and was no longer able to feed himself, sign his name, or speak normally; he was not demented.

While his wife and the Navy officer  who was his personal physician concealed his condition, there is no evidence that either Edith Wilson or Admiral Cary Grayson were themselves clinical cases of disability, delusion,  or derangement. They were simply liars driven by the ambition to hold on to the power of the president’s office and deceive everyone who got in their way.  

The White House is always full of people like that. The 25th Amendment to the US Constitution is meant to put a damper on their homicidal tendencies.

What is unusual, probably exceptional in the current case of President Joseph Biden, not to mention the history of the United States,  is the extent of the president’s personal incapacitation; combined with the clinical evidence of psychopathology in his Secretary of State Antony Blinken;  and the delusional condition of the rivals to replace Biden, including Donald Trump and Hillary Clinton.

Like Rome during the first century AD, Washington is now in the ailing emperor-homicidal legionary phase.  But give it another century or two, and the madness, bloodshed, and lies of the characters of the moment won’t matter quite as much as their images on display in the museums of their successors craving legitimacy, or of successor powers celebrating their superiority.  

Exactly this has happened to the original Caesars, as a new book by Mary Beard, a Cambridge University professor of classics, explains. The biggest point of her book, she says, is “dynastic succession” – not only of the original Romans but of those modern rulers who acquired the Roman portraits in marble and later copies in paint, and the copies of those copies, with the idea of communicating “the idea of the direct transfer of power from ancient Romans to Franks and on to later German rulers.”

In the case she narrates of the most famous English owner of a series of the “Twelve Caesars”, King Charles I — instigator of the civil war of 1642-51 and the loser of both the war and his head – the display of his Caesars was intended to demonstrate the king’s self-serving “missing link” between his one-man rule and the ancient Romans who murdered their way to rule, and then apotheosized into immortal gods in what they hoped would be a natural death on a comfortable bed.

With the American and Russian successions due to take place in Washington and Moscow in two years’ time, Beard’s “Twelve Caesars, Images of Power from the Ancient World to the Modern”,  is just the ticket from now to then.

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