Russia’s New Middle Class Can’t Afford for Putin’s War to End

‘Deathonomics’ is transforming Russian society. Few would welcome peace

By Eir Nolsøe economics Correspondent and Tim Wallace Deputy Economics Editor via The Telegraph (UK)
https://www.telegraph.co.uk/business/2025/08/24/russias-new-middle-class-cant-afford-for-putins-war-to-end/

The Russian city of Volgograd was the location of one of the bloodiest fights in world history. The seven-month-long Battle of Stalingrad, as the city was known in 1943, claimed half a million Soviet lives.

More than 80 years later, the Russian version of Facebook is awash with government ads encouraging men in the city to join today’s war effort in Ukraine.

“Men aged 18 to 63, we consider those with diseases – HIV, hepatitis. We accept those on parole and convicts,” reads one such ad on Vkontakte, or VK, as it is known.

Having flat feet, an intellectual disability or being a foreigner also need not be a disqualifier, it adds. In return, big prizes await.

One advert offers 8m rubles (£74,000) for the first year of military service – more than 10 times the region’s average wage of 712,883 rubles (£6,592) last year.

This includes hefty sign-on bonuses, extra payments for those with children and other perks like priority nursery places, discounted mortgages and tax breaks.

The payments are one example of how Russia’s war economy has created a new middle class in the country’s industrial heartlands.

Military families are receiving big cheques while men are on the frontlines, many of them facing death.

Blue-collar workers’ wages have also surged in the wake of the invasion of Ukraine.

While money is a paltry way to make up for the death of a loved one, there are some Russians on the home front who do not want the war to end.

It comes as Donald Trump and European leaders try to broker a peace deal between Russia and Ukraine, seemingly with little success.

Running out of patience with Moscow’s tricks and bombardments, Volodymyr Zelensky warned: “They don’t want to end this war.”

While the comment was aimed at Vladimir Putin, Russians lifted out of poverty as a result of the conflict may also feel apprehensive. For many of the new middle class, they cannot afford peace.

‘They are getting respect’

When Russia invaded Ukraine in February 2022, many Western economists predicted it would face impending economic collapse in the face of the world’s harshest sanctions.

As the war approaches its fourth anniversary, the economy is under strain – but there has been no crisis. If anything, for some Russians life has improved.

The biggest benefactors are impoverished industrial areas that have suffered decades of decline, experiencing a fate similar to once-wealthy parts of the West.

Many towns and smaller cities across Russia that relied on a single industry such as defence or manufacturing never recovered after the fall of the Soviet Union in 1991.

“In the years after the dissolution of the Soviet Union, these areas went into decline, and people struggled to find jobs. But the facilities were still there,” says Tatiana Orlova, from Oxford Economics.

A safer world meant the need for ammunition, guns and other types of manufacturing had faded. That was, until Putin brought war to Europe.

“All that changed three years ago when the Russian leadership realised that it could not wrap up the war quickly. So it started moving the economy into a different mode,” says Orlova.

“Suddenly, these mothballed industrial facilities were hiring new workers, and new investment started flowing. These enterprises were competing with other sectors for workers, and they were offering good wages.”

Factories under pressure to churn out goods to support the war – munitions, uniforms and so on – started running three shifts a day.

Meanwhile, hundreds of thousands of working-age men joined the military, and Moscow restricted immigration – creating crippling worker shortages.

The result can be seen in wage data from Russia’s statistics office, Rosstat. Pay has surged in sectors related to the war effort, while other professions typically lucrative in peacetime have suffered.

Wages for workers making “finished metal items” rose by 78pc before accounting for inflation between 2024 and 2021, the fastest of any occupation.

In contrast, healthcare workers such as doctors and nurses and employees in the oil industry have seen the slowest growth, at 40pc and 48pc respectively.

“If you look at teachers or doctors, the increase is much, much smaller than in manufacturing,” says Orlova.

Putin has effectively done what Trump has promised American voters: creating well-paid factory jobs en masse in the poorest parts of the country. Workers with no education and few skills are benefiting.

“These people live in underdeveloped regions. They work in once underperforming industries. They don’t have higher education. But now these assets and skills are in demand,” says Ekaterina Kurbangaleeva, a visiting scholar at the George Washington University in Washington DC.

“They are getting higher salaries. Their savings are growing. And they are also getting social respect.”

It is a good time to be a Russian factory worker. But the real money comes if you join the military.

“When a man in the family joins the army on a military contract, first of all he gets his bonus and he starts getting monthly wages. The wages are decent. It’s something like $2,000 a month. All that money started flowing mostly into the Russian regions because people are less keen to sign up for the contractual army in the big cities,” Orlova says.

“I call this deathonomics,” says Russian economist Vladislav Inozemtsev. He co-founded the Cyprus-based Centre for Analysis and Strategies in Europe in 2023 alongside Dmitry Gudkov, one of the leaders of the Russian opposition in exile.

“This was actually a fascinating know-how on the part of Putin’s regime because he transformed the lives of – I’d say very impolitely – people [who were] kind of social waste, into a vehicle for economic development.

“These people were almost useless. Many of them had no work in the small towns and villages and were conducting a very anti-social way of life. Then all of a sudden, these people were taken out of the environment.”

The environment in which they now find themselves – a war zone – is a grim one. But Inozemtsev believes many of those left in Russia will have little sympathy.

“In some cases, I would say their neighbours were absolutely happy they disappeared from their lives. Their relatives got a lot of money and became quite prosperous people in their local communities.

“You take useless resources from the economy and you pour money instead of that. But of course, this all is only a temporary solution because the stock of these people is limited.”

Soldiers are offered big financial incentives to join the army, ranging from sign-on bonuses to debt forgiveness.

“Russian regions have been literally competing to sign people on military contracts. They got targets from above, and they had to fulfil them. They started offering sign-up bonuses in central regions, which reached something like $25,000-equivalent in rubles,” adds Orlova at Oxford Economics.

One can catch glimpses of how the lure of the big financial rewards is playing out all across Russia on Vkontakte.

A 23-year-old married father asks in a group discussing the military effort where he can get the most money by signing on, adding that he has heard in some areas families wait months for the payments.

Others express remorse. “I stupidly signed the contract, now I don’t need the money. I don’t know what to do, I’m not a warrior at all. I’m 21 years old,” despairs one man.

While the soldiers receive handsome salaries and bonuses, the biggest financial rewards come in death. Families of Russian soldiers killed on the frontline are entitled to payouts of up to 11m rubles – equivalent to around £100,000.

This includes an automatic “presidential” payment of 4.9m rubles, insurance worth 3.3m rubles and a “governor” payout of up to 3m rubles, according to independent Russian economic news outlet The Bell.

Officials from Russia’s ruling party have also been known to hand bereaved mothers and widows gifts, ranging from fridges, bags of onions to actual meat grinders.

On Vkontakte, a user whose account has been deleted replied to the 23-year-old father urging him not to sign up as he will be “cannon fodder”.

“Stay home, I buried mine, he died on his first mission. Enough deaths already,” another message reads.

Coming in from the cold

The influx of cash into Russia’s poorest regions has helped fuel a spending boom, as impoverished families have suddenly come into money.

“Many soldiers came from the very poor regions. This provoked a huge increase of real disposable incomes in very remote and poor regions in Russia like the Republic of Altai, the Republic of Tuva and some others – mostly North Caucasus and Siberia regions,” says Inozemtsev.

Families in tiny villages and small towns received “enormous” sums of money by local standards, he says. Many bought apartments in big regional cities with better schools and universities for their children, he adds.

The influx of cash has also fuelled redevelopment in some of Russia’s poorest areas.

“It gave rise to development of services in the poor regions where people previously, for example, could not even think of spending money on something like a monthly gym subscription,” says Orlova.

“Suddenly, new gyms and beauty salons started springing up. More cafes and restaurants opened as well. People really started spending on services.”

Visa restrictions and high costs mean foreign holidays are out of reach for most ordinary Russians. Instead, domestic travel has flourished.

“The number of hotel rooms is increasing 15pc-20pc per year. The whole hospitality industry – hotels, restaurants, catering – is growing. So the salaries of waiters, chefs and hotel managers are increasing too,” says Kurbangaleeva.

And so, a new social class is emerging.

Experts like Kurbangaleeva point out that what we refer to as middle class usually reflects three things: income levels, education and social standing.

In other words, becoming middle class isn’t something that happens overnight.

But there are signs of a bigger shift. One of the perks military families are entitled to is that soldiers and their children get priority access to Russia’s competitive public universities.

In families where no one has gone to university, the barriers have been lowered substantially.

“The Russian government imposed a special university admission quota for soldiers and their children. They can apply without contest,” says Kurbangaleeva.

“Before this quota, they had no chance. They don’t get a good education [growing up] or a high enough level of knowledge. So they could not compete with other children who live in big cities or go to better schools. They now face an obstacle-free road to apply to the best universities in the country.”

This year’s quota is 50,000 places across the country. Actual enrolment figures will only be available in September. However, last year nearly 15,000 students made use of the offer, up from 8,000 in 2023.

Kurbangaleeva believes it is the start of a bigger trend. “The social hierarchy is changing right now,” she says.

‘Social disaster’

Putin has achieved what many Western leaders have failed at: lifting the fortunes of some of the very poorest in society in a short period of time.

The price? One million Russian casualties, and counting.

In recent weeks, the promise of an end to the war briefly seemed closer than ever. The Russian leader flew to Anchorage, in Alaska, to meet President Trump on Aug 15, under the guise of peace negotiations.

Coverage was dominated by the images of Putin beaming as he strutted down the red carpet to engage in a warm handshake and chummy catch-up with America’s president.

If the war does end, Russians who have grown accustomed to much higher living standards may pay the price. Surviving soldiers returning from the frontline and their families are likely to quickly slip back into their old lives, believes Inozemtsev.

“These people are not accustomed to accumulate and to save money. They will spend it in a year or two, and return to the type of life they were accustomed to. The service in the army will not change your social behaviour,” he says.

“If 500,000 people will come back to the regions with very low wages and their savings from the service time will be exhausted in months, or in one or two years, it might be a huge social disaster.”

Such returns can prove hugely destabilising, as in Germany after the First World War in the 1920s. After returning from the war, Adolf Hitler founded the Nazi Party and assembled a private army made up of mostly unemployed and disillusioned veterans.

The collapse of the Soviet Union was in part driven by the end of the Afghan war, experts also point out.

“It’s a big question for the government, for Putin – how to take care of those people after the war is over,” says a Russian economist based in Europe who did not want to be named.

“I wouldn’t be that optimistic about their future. The government will do everything to disseminate those people and not allow them to turn into a powerful group. Cynically, the Russian political class have experience, or at least prior knowledge of how to deal with that.”

Other workers who have benefited from the war are also likely to take a hit once the economy normalises. Blue-collar workers, business people buying up stranded Western assets and state employees working in law enforcement are all likely to lose out in a demobilised economy.

“All these people are not interested in the return to peacetime,” says Kurbangaleeva. “It seems to me that the Russian authorities feel that. These beneficiaries would be more confident if they could sustain the current situation, because when and if the war ends, a lot might change.

“For them, it’s more beneficial to continue.”

While the summit in Alaska was billed as an effort for peace, Putin made sure to dangle the promise of lucrative commercial deals in front of Trump at the brief press conference that followed their talks.

“When the new administration came to power, bilateral trade started to grow. It is clear that the US and Russian investment and business cooperation has tremendous potential,” the Russian president said.

“My best guess is that Putin is trying to sow division between the US and Europe,” says Robin Brooks, at the Brookings Institution.

US exports to Russia so far this year have jumped by a fifth compared to the same period of 2024. Much of that is pharmaceuticals and medical products. Sales going the other way – including nuclear materials and fertilisers – are up by one third.

Putin’s strategy may be to make Zelensky’s and Europe’s concerns seem like a sideshow compared to the real business of carving up resources, whether in Russia’s far north or in newly conquered lands in Ukraine.

“Trump is a real-estate guy, and Russia has a lot of real estate and a lot of resources. Why don’t we strike a great deal on that?” says Holger Schmieding, at Berenberg Bank, of Moscow’s approach.

“From all we know about Trump, that appeals to his gut reactions – who cares about laws and rules, there is land, there is stuff you can make money on, there is someone with whom he can strike a business deal.”

As a result, many fear peace is no closer. That means more misery in Ukraine – but there will be those cheering in Volgograd.

“It’s easy to begin the war, but it’s so hard to end it,” says Kurbangaleeva

With Putin, ‘Ultimately, Trump Holds the Cards’

Stephen Kotkin, the pre-eminent historian of Russia, on Moscow’s long record of overreach, Biden’s Ukraine failure, and prospects that Kyiv can ‘win the peace.’

By Tunku Varadarajan via Wall Street Journal

Mr. Varadarajan, a Journal contributor, is a fellow at the American Enterprise Institute and at NYU Law School’s Classical Liberal Institute.

https://www.wsj.com/opinion/with-putin-ultimately-trump-holds-the-cards-history-europe-russia-ukraine-war-8fdf5771

Excerpts

Few in the West have a deeper understanding of Mr. Putin than Mr. Kotkin, 66, a historian whose monumental biography of Joseph Stalin—one of Mr. Putin’s heroes—awaits its third and final volume. Mr. Kotkin is a fellow at Stanford University’s Hoover Institution and a professor emeritus at Princeton.

His comments shouldn’t be taken as a show of admiration for Mr. Trump. At the Aug. 15 Alaska summit—which Mr. Kotkin disdainfully calls the president’s “surrender photo-op”—Mr. Putin “evidently told Trump that Russia is going to win anyway, so let’s just hand the territories taken over to Russia and save lives in the process.” But Mr. Trump “cannot surrender Ukraine,” he says. “The Ukrainians are not going to accede to that. And Mr. Trump cannot grant Putin a sphere of influence in his neighborhood because it’s been lost for good by Putin himself.”

Mr. Kotkin is similarly scornful of Monday’s White House summit with Ukraine’s Volodymyr Zelensky, which he calls the “European rescue photo-op.” Europe’s leaders are “talking about providing security guarantees. Well, if they can do that, why are they flying to the White House to ask President Trump to make them do that? They were there to beg the president to help them deliver security. There was lots of theater, melodrama, and attention on President Trump, which, of course, is what he’s after. But I don’t know what, if anything, really happened in terms of Ukraine’s self-defense against Russia.”

Speaking by Zoom from his Hoover office, he’s keen to establish that we need to grasp three truths in the “big picture” of the war in Ukraine.

The first is a “paradox that people don’t usually put together”: Although much-smaller Ukraine may be “losing a war of attrition,” Mr. Putin “made an enormous strategic blunder and is damaging Russia severely for the long term.” He has lost his country’s old sphere of influence: “All his neighbors hate him and are afraid of him.” Even Alexander Lukashenko, the dictator in fraternal neighbor Belarus, is “looking for some distance, to get out of the stranglehold of Russia.” Mr. Putin has also “lost his civilian economy.”

Second, Ukraine is “an asset, not a liability—but we don’t seem to be able to appreciate how it’s an asset, and why.” He means that “Ukraine has an army”—a serious one, unlike, say, Germany. “We’ve been able to send a lot of our weapons and test them in battlefield conditions because of Ukrainian bravery and ingenuity.” As a result, “we’ve been able to see what a 21st-century land war looks like, and we’ve been able to change our defense industrial investments at home as a result.” He adds that military aid to Ukraine is “actually going to the American defense industry.”

Third, Mr. Trump is “correct” to seek an end to the war: “I applaud his forced imposition of a negotiation process.” But the president “lacks follow-through and patience. He lacks consistency. This is a hard problem. He promised to solve it in 24 hours,” but it’s “been going on since 1783,” when Catherine the Great annexed the Khanate of Crimea. Even so, “Trump’s instincts are correct. Ukraine, more than Russia, needs this war to end. And he’s groping towards that solution.”

Mr. Kotkin warns against facile obsessions with “winning.” We talk all the time, he says, about “who’s going to win the war. But what matters is winning the peace.” In Afghanistan, America won the war and lost the peace. In Vietnam, the other way around.

What does that mean for Ukraine? Russia is a “giant neighbor, armed with nuclear weapons, willing and able to build a war machine well beyond its GDP and ostensible means, and indifferent to the loss of its own lives.” Winning the peace isn’t easy against a foe like that: “That’s the conundrum we face, and have faced from the beginning. But we haven’t faced up to it,” he says, exasperated.

In the minds of most Ukrainians and many friends of Ukraine in high places, a win must include the return of Crimea, which Russia conquered in 2014. “We’re all talking about how Ukraine needs to get Crimea back, because Russia took it by force in a violation of international law.” Mr. Kotkin says with the laugh of an unsentimental realist. “Crimea is going back to Ukraine the day after Texas goes back to Mexico.”

Then he proposes a careful-what-you-wish-for exercise, inviting me to “fantasize” that Crimea is back with Ukraine. “Then Russia has two million ethnic Russians inside the Ukrainian state, and can mount a permanent insurgency and sabotage campaign with this gigantic population to recruit from.” There’s also the threat of external force. The return of Crimea to Ukraine would “incentivize Russia to attack again tomorrow, or 20 or 30 years from now. Regaining Crimea is terrible for Ukraine winning the peace in the long term.” The West needs to understand that “what makes sense to some people in terms of a violation of norms and the stability of the international order as a whole may not make sense for the Ukrainian cause they’re advocating for.”

So how could Ukraine win the peace? Membership in the North Atlantic Treaty Organization is out of the question, if only because the U.S. opposes it. The alternative is “joining the West through accession to the European Union,” Mr. Kotkin says. “They’ll need massive domestic reforms to be able to join. But it’s a great process for bringing countries into constitutional rule-of-law, open-society, and market-economy institutions.”

The other marker of a Ukrainian win is “some type of security, which some people call ‘security guarantees’, but which looks more like the ‘steel porcupine’ approach.” This is a phrase Kaja Kallas, the EU’s high representative for foreign affairs and security policy, introduced in March. European Commission President Ursula von der Leyen defines it as fortifying Ukraine to make it “undigestible for potential invaders.” Mr. Kotkin says it would mean helping Ukraine set up a “strong defense establishment with weapons production at home and continued financing for that from its European partners. So you get both EU accession and a version of security where Ukraine is doing most of the heavy lifting.”

A win for Mr. Putin would have grave consequences for the West, Mr. Kotkin says. The Russian dictator is “looking for the surrender of Ukraine and the surrender of the United States.” He wants to subjugate Ukraine, to “destroy it as an independent, sovereign state. But more than that, he wants to destroy the Reagan-George H.W. Bush Cold War victory.”

Mr. Putin is at an advantage, Mr. Kotkin says, because he doesn’t need “the maximalist win”—a restoration of the Soviet empire or even the Soviet Union. “He wins by wrecking Ukraine, which is hurt by the continuation of the war.” He gains merely by keeping the war going: “Putin doesn’t need Ukraine. He’s already got Russia. But Ukraine needs Ukraine. They don’t have another state. And Putin’s saying, ‘If I can’t have Ukraine, well, then nobody can have Ukraine, especially the Ukrainians.’ ”

Thus Mr. Kotkin concludes “Trump is correct. Ending the war is Ukraine’s best hope. This is the only country they have, and it’s being devastated.”

Mr. Kotkin is critical of Mr. Biden’s Ukraine policy, though in a more measured way than Mr. Trump is. He says Mr. Biden “deserves credit for supporting Ukraine’s self-defense” and also for working closely with U.S. allies and partners. “But overall, the Biden strategy failed. Why? Because the argument was that we’re supporting Ukraine to put them in the best position to negotiate a more favorable settlement. But the problem was, there were never any negotiations.” The support, Mr. Kotkin laments, was “endless and pointless—there was no pathway for negotiations.”

Enter the 47th president: “He comes in. He forces the issue. Immediate negotiations!” Mr. Kotkin sums up Mr. Trump’s strategy as follows: “We’re not going to wait till Ukraine is, quote, in a better position for negotiations. We’re just going to impose an imperative that we have negotiations starting now.” This compelled Mr. Zelensky and the Ukrainians to become “more realistic about their war aims.”

The flaw in Mr. Trump’s approach “is that he didn’t put the same pressure on the other party,” Mr. Kotkin says. “He put all the pressure on the Ukrainians and, so far, next to no pressure on Putin and the Russian establishment to force the negotiations.” The result: “We’re kind of stuck. Even though Trump was correct to move away from the Biden strategy, he’s failed in part to execute a negotiation strategy where he’s built leverage with the Russian side.”

The bottom line, Mr. Kotkin says, is that there’s been insufficient pressure on Mr. Putin. “There’s been military pressure on a high level, thanks to the Ukrainians’ courage and ingenuity, but not on a scale that’s working.” Russia has a bigger army and support from China and North Korea, “which helps quite a bit.” Mr. Putin is also willing to sacrifice Russian lives: “Bleed and bleed and bleed, sending boys to their death on the battlefield in ways that most democratic countries—including a flawed democracy such as Ukraine—cannot do.” That leaves Ukraine in a war of attrition “where it counts lives and the other side doesn’t.”

Economic pressure has been severe, but oil revenue still flows to Mr. Putin, delivering a “massive cash flow that floats this war. So unless you cut off all oil revenues, your economic pressure is going to be insufficient.”

Most important, the West needs “very severe political pressure on Putin’s regime, and that comes in the form of alternatives to his rule.” Many prominent Russians “feel that Russia is on a self-defeating trajectory right now.” These are nationalists; “they are not democrats, they’re authoritarians. They don’t look like the kind of Russian opposition we might associate with in terms of values. They have no sympathy for Ukraine, but they have a lot of sympathy for Russia, and they feel that an end to the war would help Russia regain the civilian economy that it’s lost.” U.S. and European intelligence agencies are “recruiting them inside. We know who they are.”

These sentiments, Mr. Kotkin says, are widespread in the Russian establishment, and even in the armed forces, and became visible with the public comments of retired Col. Gen. Leonid Ivashov, who in February 2022 accused Mr. Putin of engaging in “a criminal policy of provoking war” and urged him to resign. “Obviously sitting officers of the armed forces and security services cannot voice such public sentiments,” Mr. Kotkin says. “The vast increase during the war in cases brought for alleged treason indirectly testifies to the existence of the sentiments, and the regime’s knowledge and fear of them.”

Mr. Kotkin believes Mr. Trump should make an offer to these patriotic Russians “in exchange for retrenchment, defined as an end to the aggression against Ukraine and a turn to focusing on developing Russia, its people and economy, for the future.” If Mr. Putin refuses a deal, “maybe President Trump can appeal to others inside Russia who would be willing to do it or urge Putin to do it. Maybe the start of a ‘political bank run,’ or the fear of it, could destabilize the regime enough to force retrenchment.” It’s a long shot, “but military and economic pressure without political pressure has not worked.”

There are other things Mr. Trump could do. These include a removal of Russia’s Gazprombank from the Swift international banking system, to which it still has tenuous access, greenlighting the confiscation of $300 billion worth of Russian deposits in European banks, getting India to “buckle” and stop buying of Russian oil, and, most audacious, “cutting a deal with Xi Jinping behind Putin’s back to reduce China’s support for Russia in a bargain between the U.S. and China. It’s thinkable.”

Of all the threats Mr. Putin faces, Mr. Kotkin says again, “none is bigger than President Trump. Putin may smirk. He may walk down that red carpet in a strut. He may joke for the camera with President Trump. But ultimately, Trump holds the cards. And if the president uses those cards, he could unsettle Putin’s smirk, his self-confidence, and his maximalist demands. Will this happen? I don’t know. But it’s there for the taking.”

August 15, 1971 – The Beginning Of The End For US Hegemony

Authored by Matthew Piepenburg via VonGreyerz.gold

Fifty-four years ago (August 15, 1971), Nixon took the USD off its gold standard, thereby officially putting the final nail in the Constitutionally mandated concept of US money.

But hey, at least the Constitution can still serve as a nice museum piece for kids to walk past.

First, the decoupling from gold has lasted more than half a century, so it hardly feels “temporary.”

As for the USD holding its purchasing power, well, when measured against a milligram of gold, that paper dollar has lost > 99% of its value since 1971.

Meanwhile, and contrary to the expert hearing testimony of a 1971 Fed Chairman and Treasury Secretary, gold has not got down in price, but has risen, by well… 8000%.

EIGHT THOUSAND PERCENT.

Huh?

Looking Ahead? It Looks Bad…

All of the foregoing facts confirm just how debt-distorted the US economy and narrative are, as of 2025.

They also confirm just how debt-trapped US policies have become. More importantly, they confirm just how doomed the US economy is going forward.

This is because the US growth narrative has zero good options left to it. Once debt/GDP ratios cross the 100% Rubicon (we are now at 120%+), growth mathematically slows by 1/3.

And the only way to bring this debt ratio down is via massive spending cuts well beyond the DOGE or USAID cuts. The real debts come from entitlements and military spending, which no politician can or will touch.

The US Already in Default?
Again, this leaves the US with only bad options to address unsustainable debt. It can either default or inflate away its debt.

Guess which option DC will (and has) take(n)?

But here’s the rub.

By inflating away its debt via currency debasement, inflation levels are soaring past UST yields, resulting in negative real rates – i.e. a NEGATIVE returning UST, which by definition, IS a defaulting bond.

The ironies abound…

But the US avoids publicly displaying this irony and default by simply lying about (i.e., misreporting) the US inflation rate, measured by a CPI scale that has been “modified” over 20 times since the Volcker era to mask actual inflation data.

Again: Just more desperation hiding in plain sight.

Why Putin and Trump Had to Talk in Person

by Timofey Bordachev, Program Director of the Valdai Club

History shows summits rarely change the world – but this one might prevent disaster.

The meeting between the presidents of Russia and the United States in Alaska is not an end point, but the beginning of a long journey. It will not resolve the turbulence that has gripped humanity – but it matters to everyone.

In international politics, there have been few moments when meetings between the leaders of major powers have decided questions of universal importance. This is partly because situations requiring attention at such a level are rare. We are living through one now: since the start of Russia’s military operation against Ukraine, Washington has declared its aim to be the “strategic defeat” of Russia, while Moscow has challenged the West’s monopoly over world affairs.

Another reason is practical. Leaders of the world’s most powerful states do not waste time on problems that can be solved by subordinates. And history shows that even when top-level meetings do occur, they rarely change the overall course of international politics.

It is no surprise, then, that the Alaska meeting has been compared to famous encounters from the past – notably the 1807 meeting between the Russian and French emperors on a raft in the Neman River. That summit did not prevent Napoleon from attacking Russia five years later – an act that ultimately brought about his own downfall.

Later, at the 1815 Congress of Vienna, Russia was the only power represented by its ruler on a regular basis. Tsar Alexander I insisted on presenting his personal vision for Europe’s political structure. It failed to win over the other great powers, who, as Henry Kissinger once noted, preferred to discuss interests rather than ideals.

History is full of high-level talks that preceded war rather than preventing it. European monarchs would meet, fail to agree, and then march their armies. Once the fighting ended, their envoys would sit down to negotiate. Everyone understood that “eternal peace” was usually just a pause before the next conflict.

The 2021 Geneva summit between Russia and the US may well be remembered in this way – as a meeting that took place on the eve of confrontation. Both sides left convinced their disputes could not be resolved at the time. In its aftermath, Kiev was armed, sanctions were readied, and Moscow accelerated military-technical preparations.

Russia’s own history offers parallels. The most famous “summit” of ancient Rus was the 971 meeting between Prince Svyatoslav and Byzantine Emperor John Tzimiskes, following a peace treaty. According to historian Nikolay Karamzin, they “parted as friends” – but that did not stop the Byzantines from unleashing the Pechenegs against Svyatoslav on his journey home.

In Asia, traditions were different. The status of Chinese and Japanese emperors did not permit meetings with equals; such encounters were legally and culturally impossible.

When the modern European “world order” was created – most famously in the 1648 Peace of Westphalia – it was not through grand encounters of rulers but through years of negotiations among hundreds of envoys. By then, after 30 years of war, all sides were too exhausted to continue fighting. That exhaustion made it possible to agree on a comprehensive set of rules for relations between states.

Seen in this historical light, top-level summits are exceedingly rare, and those that produce fundamental change are rarer still. The tradition of two leaders speaking on behalf of the entire global system is a product of the Cold War, when Moscow and Washington alone had the ability to destroy or save the world.

Even if Roman and Chinese emperors had met in the third century, it would not have transformed the fate of the world. The great empires of antiquity could not conquer the planet in a single war with each other. Russia – as the USSR before it – and the United States can. In the last three years, they have often stood on the brink of a path from which there would be no return. This is why Alaska matters, even if it does not yield a breakthrough.

Summits of this kind are a creation of the nuclear age. They cannot be treated as just another bilateral meeting between important states. The very fact of direct negotiations is a measure of how close or far we are from catastrophe.

The United States will arrive at the summit as the leader of a Western bloc whose members – even nuclear powers such as Britain and France – defer to Washington on strategic questions. Russia, for its part, will be watched closely by what is often called the “global majority”: dozens of states across Asia, Africa, and Latin America that resent Western dominance but cannot overturn it alone. These countries know that US mediation in local conflicts will not change the fact that the structure of that dominance remains unjust.

Could Alaska lay the foundation for a new international order? Probably not. The very concept of a fixed “order” is fading. Any order requires an enforcing power – and none exists today. The world is moving toward greater fluidity, to the frustration of those who crave neat arrangements and predictable futures.

Even if a new balance of power emerges, it will not come from one meeting. The wartime summits of Roosevelt, Churchill, and Stalin are not a fair comparison. Those were preceded by the most destructive battles in human history.

Fortunately, we are not in that situation now. The likely outcome in Alaska is the start of a long and difficult process, rather than an immediate settlement. But it is still of fundamental importance. In today’s world, only two states possess vast nuclear arsenals capable of ending human civilization.

This alone means that the leaders of Russia and the United States have no more important duty than to speak directly to one another – especially when they are, for now, the only invincible powers at the edge of the world.

This article was first published by Vzglyad newspaper and was translated and edited by the RT team.

On Friday: Capitulation or War?

by Claudiu Secara

What I think is the purpose of Friday’s meeting between Trump and Putin is that Trump, in the name of the West, is giving Russia an ultimatum. It’s not about a ceasefire, not about a truce. It is about the most sacred of Russia’s stated claims: its claim to the status of a sovereign empire of its own.

The ceasefire is a first step. The goal is to bend Russia, little by little, forcing Russia to cross its own red lines one by one, and forcing it to accept vasality to the Western system in the new feudal-like vasality pyramid.

For Putin, calling for a temporary suspension of hostilities against the battered Ukrainian army, is no-brainer. Obviously, he can do that. But the question that comes to his mind immediately is: what’s next? Would that truce bring a return to the status quo ante?

Of course not. It will only bring more demands and more demands. The war in Ukraine is hardly about Ukraine. It is about the maverick Russia who defied the West. This war, so far, is not even seen by the Masters of the Universe as a confrontation between two powerful stand-alone sovereign states.

The West sees Putin’s actions as a rebellion by an underling. Just simple insubordination by one of its lieutenants, like Pugachev’s rebellion against the all-mighty Tsar.

The West seems like it has hardly mobilized itself, so far, to deal with one of the few remaining insubordinates. (And there are a few more, on the ‘mapamond’. Netanyahu, Orban, Maduro and that funny guy from North Korea. Oh, and Iran.)

So, what are we going to see as the outcome on Friday? More likely some form of ritual dance around the fire with no real commitments by Russia. And that will not be pleasing to the West. At best we could have a replica of the famous Munich appeasement by British PM Chamberlain in September 1938, who waved the famous piece of paper claiming to guarantee a thousand years of peace in Europe just as World War II was about to start a year later.

Hard to anticipate the immediate consequences, but in such a case, the real war is most likely coming soon. The ultimatum is: either full capitulation by Russia or all out WAR.

Trump Extorts Companies To Pay Taxes On Exports

U.S. President Donald Trump has imposed tariffs under the false claim that certain trade imbalances with other countries created a national emergency.

This is contested in courts and should have no legal standing. As the U.S. constitution explicitly says:

No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, …

Congress has not been asked to and has not consented to the arbitrary tariffs imposed by Trump since he, on April 2, declared his fake ‘Liberation Day’.

Moreover, Trump did not impose tariffs to balance trade. He immediately weaponized them by trying to to impose (archived) U.S. policy goals, as well as interests of individual companies, on foreign countries:

This month, State Department officials considered demanding that U.S. trading partners vote against an international effort to reduce greenhouse gas emissions by the oceangoing container ships that are the backbone of global trade. In a draft “action memo,” Secretary of State Marco Rubio was told that department officials had sought “to inject this issue into the ongoing bilateral trade negotiations” with maritime nations such as Singapore.
That move came after administration officials this past spring debated broadening trade negotiations with more than a dozen nations, including by requiring Israel to eliminate a Chinese company’s control of a key port and insisting that South Korea publicly support deploying U.S. troops to deter China as well as Seoul’s traditional rival, North Korea, the documents said.
Administration officials saw trade talks as an opportunity to achieve objectives that went far beyond Trump’s oft-stated goal of reducing the chronic U.S. trade deficit. In the first weeks after the president paused his “reciprocal” tariffs April 9 to allow for negotiations, officials drew up plans to press countries near China for a closer defense relationship, including the purchase of U.S. equipment and port visits, the documents said.

Tariff impositions have thus become a form of blackmailing at large.

This was not only done to pursue general U.S. foreign policy interests but also in favor of individual, U.S. owned companies:

In Lesotho, a poor southern African nation that Trump had threatened with 50 percent tariffs, negotiators wanted the government to finalize deals with “multiple U.S. firms.”
OnePower, a renewable energy start-up, should be granted “a five-year withholding tax exemption” and a license to develop a 24-megawatt project. Regulators should waive a legal requirement for Starlink, Musk’s satellite-based internet provider, to provide a physical address in Lesotho before conducting business there, the document said.

To do so is not illegal, some may argue. Why shouldn’t the U.S. use its heft to press foreigners to make good deals?

One counter is that such mafia like behavior by a government against foreigners, once allowed, will come back to hit at home.

We did not have to wait long for that to happen. As the Financial Times headlines:

Nvidia and AMD to pay 15% of China chip sale revenues to US government (archived)
Chipmakers agree to unusual arrangement to secure export licences from Trump administration

Nvidia and AMD have agreed to give the US government 15 per cent of the revenues from chip sales in China, as part of an unusual arrangement with the Trump administration to obtain export licences for the semiconductors.
The two chipmakers agreed to the financial arrangement as a condition for obtaining export licences for the Chinese market that were granted last week, according to people familiar with the situation, including a US official.
The US official said Nvidia agreed to share 15 per cent of the revenues from H20 chip sales in China and AMD will provide the same percentage from MI308 chip revenues. Two people familiar with the arrangement said the Trump administration had not yet determined how to use the money.

The U.S. under Trump is imposing export duties on U.S. companies. This is, like the arbitrary imposing of tariffs on imports, highly illegal. Under the U.S. constitution not even Congress would be allowed to do this:

Section 9 Clause 5
No Tax or Duty shall be laid on Articles exported from any State.

Trump arbitrarily imposed export restrictions on certain computer chips made by Nvidia and AMD on national security grounds. He then used these export restrictions to blackmail the companies into agreeing to pay a certain ‘kick back’ tax to the U.S. government. Once they did the export restrictions were lifted.

As the NY Times reports (archived):

While the Trump administration publicly said a month ago that it was giving the green light to Nvidia to sell an A.I. chip called H20 to China, it did not actually issue the licenses making those sales possible.
On Wednesday, Jensen Huang, Nvidia’s chief executive, met with President Trump at the White House and agreed to give the federal government its 15 percent cut, essentially making the federal government a partner in Nvidia’s business in China, said the people familiar with the deal. The Commerce Department began granting licenses for A.I. chip sales two days later, these people said.

The deal agreed to last week could funnel more than $2 billion to the U.S. government. Nvidia was expected to sell more than $15 billion worth of its H20 chip to China through the end of the year, and AMD was expected to sell $800 million, according to Bernstein Research.

If I were a Nvidia shareholder I would immediately sue the U.S. over this.

That such a deal was agreed to by Trump proves that the export restrictions previously imposed on H20 chips arbitrary and were never for national security reasons. (By the way: the $2 billion the U.S. is gaining from this deal is couch lint compared to the Pentagon budget.) The restrictions on sales were solely imposed to extort Nvidia, illegally, into paying additional taxes:

Christopher Padilla, a top export control official in the George W. Bush administration who is now a senior adviser with the Brunswick Group consulting firm, echoed those fears, describing the deal as “unprecedented and dangerous.”
“Export controls are in place to protect national security, not raise revenue for the government,” Padilla said. “This arrangement seems like bribery or blackmail, or both.’’

If this holds for chips one has also to ask about other items (archived):

The deal to license A.I. chips caused immediate outcry among national security experts who have been opposed to A.I. chip sales to China. They worry that the Trump administration’s decision to leverage export licenses for money will encourage Beijing to pressure other companies to make similar arrangements to loosen restrictions on other technology like semiconductor manufacturing tools and memory chips.

National security hawks, via FT, are enraged by the deal:

“Beijing must be gloating to see Washington turn export licences into revenue streams,” Liza Tobin, a China expert who served on the National Security Council in the first Trump administration, now at the Jamestown Foundation.
“What’s next — letting Lockheed Martin sell F-35s to China for a 15 per cent commission?”

Hmm – China would not F-35s as it is already making better planes. Nor will it use H20 chips from Nvidia for any security related activity. It has good ground to believe that those chips were specifically made for China with a backdoor to be hacked.

The Trump administration, like its boss personally, has obviously no qualms about making deals against U.S. interests, as long as they guarantee a large sounding income.

I wonder how much President Putin of Russia will have to offer on Friday to regain control of Alaska.

All Eyes on the Trump-Putin Summit – But the US-Russia Rift Runs Deep

Washington’s next geopolitical plays in the post-Soviet space – from the Caucasus to Transnistria – threaten to widen the East-West divide

This text was originally published by the Greek media outlet NeoStrategy.gr and has been translated and edited by the RT team. [https://neostrategy.gr/meta-ti-synthikologisi-tis-armenias-i-seira-moldavias-georgias/]

All eyes may be on the scheduled meeting between US President Donald Trump and his Russian counterpart, Vladimir Putin, set for August 15 in Alaska – which is likely to be critical for Ukraine. But fears are growing that tensions between Russia and the West are far from resolved.

Recently, with American “mediation” – if not outright pressure – Armenia and Azerbaijan signed a preliminary peace agreement that went largely unnoticed in Greece. In reality, it marks Armenia’s official capitulation after its defeats in recent wars with Azerbaijan. The consensus is that the big winner is Türkiye, which has been openly backing Azerbaijan – and still is.

The peace deal, signed in Washington on August 8 with the help of Trump, is widely seen as a geopolitical win for Turkish President Recep Tayyip Erdogan. Ankara, which supported Baku in its “blitzkrieg” in Karabakh, stands to gain the most – first and foremost by securing a direct land link to Azerbaijan via Nakhichevan. That said, the geopolitical and geoeconomic benefits for American interests are hardly smaller.

New ‘Kosovos’ in the making

Following the US-Turkish-engineered deal in the Caucasus, observers expect Washington to push similar plans elsewhere in the post-Soviet space. Georgia and Moldova top the list of likely next targets.

Both countries have their own “thorny” territories – self-declared autonomous regions, Kosovo-style, lacking international recognition and hosting Russian military bases. Kosovo itself, of course, is recognized by most of the West, though it technically still lacks full independent-state status. Notably, Greece, Romania, Cyprus, and Spain refuse to recognize it, while Serbia still considers it part of its territory.

Risky scenarios for war

The hottest flashpoint inside Europe – especially with elections in Moldova this September – is Chisinau’s ambition to “reintegrate” Transnistria.

In recent years, disputed elections have brought pro-Western governments and a pro-Western president to power in Moldova. Now, at least on paper, Chisinau could call on Kiev for help and attempt a military solution to the Transnistria question. No one can rule out such a move – especially with Russian forces largely tied down in the Ukraine conflict.

Parliamentary elections are adding to the tension. The country is split almost evenly for and against pro-Western President Maia Sandu and her PAS party. A new military adventure could serve as the perfect pretext to shift the domestic political climate – and to escalate the broader standoff between Europe and Russia.

Greece – Romania – Türkiye

If another European war were to break out – this time over Moldova – NATO member Romania would almost certainly side with Chisinau.

As Romania’s ally, Greece would face a hard choice: back Bucharest (and by extension, Moldova) or keep its distance from another European conflict? In the case of Ukraine, Prime Minister Kyriakos Mitsotakis’s government took no such distance – instead, openly declaring that Greece was “at war with Russia.”

Whatever Athens decides will depend in part on Türkiye’s stance toward this – for now – hypothetical scenario. Ankara would likely get involved indirectly, if only to boost its geopolitical influence in the region and its standing within NATO. It has done so repeatedly in recent years – in Europe, the Middle East, North Africa, and beyond.

Türkiye’s and Azerbaijan’s success in Karabakh – at the expense of Armenia and Russia – has emboldened Ankara in other arenas of foreign policy. Erdogan has repeatedly stated that Türkiye will not give up “a single inch of land once Turkish soldiers have set foot on it.” History suggests those are not idle words.

Washington’s blueprint

The United States is clearly playing a bigger game across the post-Soviet geopolitical chessboard. By closing the chapter on the Armenia-Azerbaijan conflict in the Caucasus – a confrontation dating back to the collapse of the USSR – Washington has engineered a settlement tailored to its own strategic script. Next up are other “frozen conflicts” in the former Soviet Union.

Georgia wants to peacefully “reintegrate” Abkhazia and South Ossetia, two breakaway territories in the Caucasus that split from Tbilisi after bloody conflicts – the first in the early 1990s, the second in 2008. They are, in effect, the “Kosovos” of the Caucasus.

In Moldova, the president and government have made deepening ties with the US and NATO a top priority. Like Kiev in years past, Chisinau sees this as its ticket to security guarantees against Moscow – and, more importantly, as its “golden opportunity” to retake Transnistria.

A Karabakh-style “blitzkrieg” would be hard to pull off against territories hosting Russian military bases. But Washington doesn’t seem in a rush – even if events are moving at a dangerously fast pace.

NATO in the wings?

It hasn’t gone unnoticed that NATO military exercises have included scenarios simulating a crisis in these “Kosovos” of Georgia and Moldova.

One telling example: Agile Spirit 2025, the 12th such exercise hosted jointly with Georgia, ran from July 25 to August 6 with participants from 13 countries – including the US, Türkiye, Poland, Germany, Italy, Romania, Bulgaria, Slovakia, Lithuania, and Ukraine – not counting observer nations.

Adding fuel to the speculation, online rumors claim that during joint “Fiery Shield-2025” drills with the US and Romania, which began August 4, Moldovan troops fired at targets depicting Russian soldiers.

Military ties between Greece and Romania – and between Greece and Moldova – have been strengthening. On June 26, 2025, Greece’s chief of the Hellenic National Defense General Staff, Dimitris Choupis, awarded Moldova’s deputy chief of the General Staff, Brigadier General Sergiu Cirimpei, the Medal of Merit and Honor.

Diplomatic contacts are also on the rise. Deputy Foreign Minister Charis Theocharis recently visited Moldova, adding to a string of earlier meetings.

Finally, the former US ambassador to Athens and later Biden-era deputy secretary of state for energy, Geoffrey Pyatt, has repeatedly emphasized the “Vertical Gas Corridor” – a network that would allow bidirectional flows from south to north, specifically from Greece through Bulgaria, Romania, Hungary, Slovakia, Moldova, and Ukraine, via both existing and new European natural gas and LNG infrastructure

Why Russia’s Economy is Beginning to Falter

Hit by falling oil revenues and Western sanctions, growth in the country has slowed while the budget deficit has exploded.

By Marie Jégo and Benjamin Quénelle via Le Monde https://www.lemonde.fr/en/economy/article/2025/08/11/why-russia-s-economy-is-beginning-to-falter_6744266_19.html

The war in Ukraine is beginning to take its toll on the Russian economy, which is facing a sharp slowdown due to declining oil revenues and Western sanctions. The country is “on the verge of recession,” said Maxim Rechetnikov, the economy minister, during the St. Petersburg Forum – the so-called “Russian Davos” – in June.

President Vladimir Putin immediately rejected that assessment, eager to praise Russia’s resilience in the face of sanctions. But the numbers do not lie. In July, the International Monetary Fund lowered its growth forecast for the country from 1.5% to 0.9% for 2025. This is a far cry from the spectacular rates of 4% seen in 2023 and 2024, when the state devoted all its financial resources to the war.

Another troubling sign: The budget deficit has exploded, reaching, according to the Finance Ministry, 4.9 trillion rubles (about €56 billion) at the end of July – a surge of 30% compared to the annual target set by the government. The economic slowdown, the drop in oil and gas revenues, as well as the depletion of reserve funds – practically exhausted after three years of war – make up a new reality: Cuts are coming. The Finance Ministry will find it difficult to slash spending on defense and security, which account for just over 40% of expenditures. The government will therefore have to reduce social contributions as well as support for civilian industries.

Exports at rock-bottom prices

While overall budget spending has increased (20.8% in one year), revenues have dwindled. Oil and gas sales, which make up about one third of federal revenues, fell by 18.5% during the first seven months of the year. The main reason is the falling price of oil on the global market ($66.40 per barrel at the start of August, or about €51.80), with Russian crude falling even further due to its price cap at $47.60, imposed as part of the 18th package of sanctions recently adopted by the European Union. With the West refusing to buy its oil, Russia has redirected sales to China, India and Turkey, but it is exporting at rock-bottom prices. Circumventing sanctions is also costly for producers, who are forced to use multiple intermediaries.

For now, life in Moscow and other medium-sized cities in the Russian Federation still appears vibrant, with crowded restaurants, theaters and luxury shops. But the combination of several factors – declining revenues, high interest rates, persistent inflation – suggests the economy is in a tailspin. While the defense industry, well-fed by state orders, “runs like clockwork,” according to Sergei Aleksashenko, a former vice president of the Central Bank of Russia (1995-1998), the civilian sector is struggling.

During the first seven months of 2025, entire segments of the civilian economy – metallurgy, mining, construction and the automotive industry – saw production decline. In the steel sector, MMK, the plant of Magnitogorsk, one of the world’s largest steel producers and a leader in Russian ferrous metallurgy, reduced its output by 18% in the second quarter. For the period from January to June, its net profit plummeted by 88.8% compared to the same period in 2024.

The coal industry has been hit especially hard: Production is falling, export revenues are down and debts are rising. Even the largest companies are in the red. The sector’s net loss in 2025 could reach between 300 and 350 billion rubles (over €3 billion), warned Dmitri Lopatkine, deputy director of the coal industry department at the Energy Ministry. Directly impacted by the war and sanctions, this sector is struggling to compensate for the loss of European markets, where it was once a leading supplier. Shifting toward the Asian market, where competition is tougher – especially with Australia, Indonesia and South Africa – is no easy task.

Resorting to ‘cannibalization’

Moreover, China, Moscow’s main trade partner, increased its imports by 14% in 2024 but reduced its purchases from Russia by 7%. Finally, sanctions have made it difficult for Russian companies to access equipment and components from Europe, the United States and Japan, which they traditionally relied on. Having failed to overcome their dependence on Western equipment, companies have had to resort to “cannibalization” – dismantling several units in order to assemble a single working one.

The automotive industry has also been particularly hard-hit. In the first half of the year, car production fell by 28%, truck production by 40% and several factories will switch to a four-day work week. This is the case for the truck manufacturer KamAZ, the Avtovaz and GAZ car factories and the tractor factories in Chelyabinsk and Saint Petersburg. These reduced hours will lead to a 20% loss of income for workers and employees at the factories concerned, contributing to a further decline in consumption.

For months, industrialists and bankers have been demanding a cut in the key interest rate set by the Central Bank of Russia, which has been kept high to combat inflation, estimated at 10%. Both companies and households want to be able to borrow again and take out consumer loans. On July 25, the Central Bank lowered its key rate from 20% to 18%, which is insufficient to revive lending. With rates this high, it is difficult for businesses to borrow for investment. In July, Alexei Krapivin, CEO of construction giant Natsproektstroy, said that many companies could neither sustain their ongoing projects nor honor their debts. More than 55% of loans granted to companies carry variable rates, and since interest rates remain high, many companies find themselves on the verge of default.

Toxic mix

Banks have also grown concerned about the rapid rise in unpaid loans. Between the beginning of 2022 and May 2025, corporate debt to banks nearly doubled. At the end of June, Bloomberg, citing sources in the banking sector, warned of the growing risks of a systemic banking crisis. Banks granted loans at reduced rates to support the Kremlin’s war effort and are now threatened by “bad debts.” Nearly half – 48 out of the 100 largest Russian banks – saw their financial results worsen in the first half of the year compared to 2024. Fifteen of them posted losses.

“With full access to the data of the banking system, I can confidently state that fears of a banking crisis are unfounded,” said Elvira Nabioullina, governor of the Russian Central Bank, on July 3. But other officials are more worried. For example, Sberbank CEO German Gref sounded the alarm in June, warning that the toxic mix of soaring interest rates and an overvalued ruble was creating a “perfect storm” likely to stifle investment and drag the Russian economy into long-term decline.

A return to growth will not happen anytime soon. “Any future growth is only possible if labor productivity increases. But over the past 10 years, it has grown by just over 1% per year on average. Investment is needed, and that is difficult in wartime and with a key interest rate of 18%,” said Dmitri Nekrasov, an expert at the Center for Analysis and Strategies in Europe.

Putin’s Meeting with Trump: The Triumph of Delusion Over Reality

by Paul Craig Roberts

A couple of days ago Trump said it wasn’t worthwhile meeting with Putin, but suddenly ordered his aides to arrange a meeting with Putin in a week. The explanations we have been given for this is that Putin said Trump’s negotiator Witcoff had made an acceptable proposal. Putin’s negotiator Kirill Dmitriev declared “a historic meeting in which dialogue will prevail.” One dreamer proclaimed that Putin and Trump “may reconfigure the world order.”

These premature declarations of agreement and success have led to further romantic theorizing. One Russian commentator declared that Alaska was chosen for the historic meeting because it “so clearly embodies the spirit of neighborliness and mutually beneficial cooperation lost during the Cold War.” The Russian Atlanticist-Integrationists whose hearts and interests are in the West are hopeful that their declarations of bliss, even if involves Russian surrender, will prevail over Russian nationalism.

For example, Putin’s negotiator is Kirill Dmitriev, nominally a Russian, but in fact a graduate of Stanford University and Harvard Business School–entrances into the American Establishment–who began his career at Goldman Sachs, an establishment member. He is a Young Global Leader of the World Economic Forum. His long list of honors and directorships of Russian companies is provided by the WEF. Currently he is chief of the Russian Direct Investment Fund and Putin’s Special Envoy on International Economic and Investment Cooperation. Could Putin have chosen a more conflicted person to negotiate with Washington?

Among these and other highly hopeful statements, what is the reality of the situation? Does it conform to the expressed expectations?

No. As far as I can tell, Trump is headed into a “historic meeting” with his Russian counterpart and still has no idea what Putin’s position is. Trump most recently spoke of a peace deal based on a “swapping of territories,” which Zelensky’s European supporters say must be a “reciprocal” swap of territory. Zelensky’s position is that all territory must be returned to Ukraine. Putin’s position is that all territory now incorporated into the Russian Federation must be accepted as Russian by Ukraine and the West. Otherwise, Russia has to repudiate its military victories in a war that was provoked by Washington.

But the main problem with Trump’s approach is that he is thinking of the meeting in a very limited context of ending the military conflict with a land swap, whereas Putin wants a mutual security agreement with Washington and NATO that gets NATO off of Russia’s borders. The war that Putin wants to end is the West’s hostility toward Moscow. The war in Ukraine Russia can take care off.

Putin’s objective is a highly desirable goal, because the worsening provocations of Moscow will eventually result in nuclear war. But how realistic is Putin’s goal?

I would say it is not realistic.

First, the Wolfowitz Doctrine is in the way. The Wolfowitz doctrine declares the principal goal of US foreign policy to be to prevent the rise of any power that can serve as a constraint on American unilateralism. The neoconservatives who originated this doctrine are still very influential in US policy-making circles. No US president or Secretary of State has repudiated this doctrine. Trump himself recently declared the policy when he said “I rule America and the world.” That is a hegemonic statement.

Indeed, the current military conflict in Ukraine is entirely the product of Washington’s hegemonic foreign policy. Washington orchestrated the “Maidan Revolution” in order to overthrow a Russian-friendly democratic government and to install a Russophobic puppet. The puppet government then attacked the people in the Russian territories of Ukraine until they forced a Russian intervention after the West used the Minsk Agreement to deceive Putin and after the West refused the Kremlin’s request for a mutual security agreement during December 2021-February 2022. At this point Putin was forced to intervene in order to prevent the slaughter of the Russians in the independent Donbas republics by a large Ukrainian army trained and equipped by Washington. If Putin had had the foresight to accept the Donbas republics’ request in 2014 to be reunited with Russia like Crimea, the war would have been avoided. But Putin, badly advised, confused a defense of Russian people with a provocation to the West. In 2014 the Atlanticists-Integrationists, whose interests are in the West, not in Russia, still intended for the Kremlin to crawl on its belly back into Western acceptance by being a good subject of Washington’s hegemonic rule..

The entire point of Washington’s orchestrated conflict in Ukraine was to destabilize Russia. Has Washington abandoned this policy goal?

Second, there is the interest of the US military/security complex. The power and profit of the military/security complex depends on having enemies. The collapse of the Soviet Union led to the creation of the “Muslim Threat” used to sustain the military/security’s profits and powers with Washington’s 21st century wars that destroyed, so far, five Muslim countries, while supporting with money, weapons, and diplomatic cover Israel’s genocide of Palestine, and Washington is now being aligned with Israel to destroy Iran. A few days ago President Trump bragged that he had negotiated a deal with the EU to purchase hundreds of billions of dollars of US weapons to send to Ukraine. What happens to this deal if peace comes to Ukraine? How does the military/security complex see the loss of its Russian enemy? Has Trump promised them an Iranian war and/or a war with China as replacements?

Third, if Trump favors peace with Russia, why did he just reinstall in Europe the US intermediate-range nuclear missiles that President Reagan had removed, and in addition deploy two submarines with nuclear missiles closer to Russia?

More importantly, why has Washington suddenly struck a massive blow against Russia, China, and Iran in the South Caucasus by obtaining for 99 years the Zangezur Corridor that runs along Iran’s northern borders with Armenia and Azerbaijan? This move by the Trump regime is a strike at the heart of China’s New Silk Road, BRICS, and Russia’s influence in former Soviet provinces, and it completes Washington’s encirclement of Iran. Washington is opening more points of military confrontation with Russia and its allies while Russia backs away, thereby inviting more provocations

This audacious Washington strike against Russia, Iran, and China should shatter the Russian illusion that a mutual security agreement is obtainable with Washington. Washington has made a decisive move against three powers which indicates Washington’s seriousness about its hegemony.

Russian commentators downplay the loss of the corridor as they fight to keep reality out of their hopes that Russia will become part of the West.

Before Putin goes to Alaska, Putin should ask Dmitrive how Washington’s takeover of the Zangezur corridor fits in with the “acceptable American proposal” about Ukraine.

And someone, if there is anyone, should ask Putin, XI, and the Iranians why they were yet again asleep at the switch.

Will Putin also be asleep at the switch in Alaska, lulled into illusionary dreams by the likes of Dmitrive?

In his two masterful histories, The First World War and The Origins of the Second World War, A.J.P. Taylor explains the triumph of delusion over reality when governments are confronted with conflict. We are watching it again in our time.

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