The War in South Ossetia

Russia’s Geo-Political Position

The Russia of 2008 could not be further away from the dark, grim reality of Russia in 1998. The collapse of the Ruble, the record low oil price, the brisk movement of “the West’s” borders encroaching towards the borders of the former Soviet Union looks unstoppable. Russia was in a midst of an existential crisis, unsure of its status as a Western power, a Eurasian power, or whether or not it was even a power at all. From the depth’s of disappear also arises a means to rise from the ashes.

The appointment of Vladimir Putin in 1999 to the position of Prime Minister was possibility the best move that President Yeltsin ever made. Nineteen ninety-nine did bring about the end of the neoliberal, pro-western alignment in Moscow. The liberals were maligned by the inability of market reforms to jump start the economy, the brushing aside of Moscow’s objections to the use of force against Serbia, the terrorist attacks in Moscow by Chechen rebels, and finally the slowly rising oil price all enabled a strategic change in Moscow’s thinking.

What is not and what is being said in the Western mainstream media/analysis:

Mainstream media outlets in the West deride the rise of Russia as being the coming of the second Cold War, that Russia is the aggressor nation breaking the sacred bounds of international law. Russia after the invasion of Iraq made it clear that it would also preemptively attack nations that it considered threats to its national security. When George Bush said this in 2003 to the run-up to the war, it was lauded by the media as the only logical course of action in the post-9/11 world.

The war in Georgia was qualitatively different; Russia was defending its citizens in South Ossetia, citizens who voluntarily accepted Russian passports. Thus, Russia’s war justified on grounds more than sufficient because Russia is indeed defending its citizens in a foreign country. The Georgian’s started the war against South Ossetia, read Russia. It was not as if Saakashvili did not know that the citizens of South Ossetia were Russian, and even more egregious, that Russian military personnel were located as peacekeepers in the region. It was that negligence, if not criminality, that led to the invasion of Russian forces in to Georgia. Saakashvili even lacked the legal right to attack South Ossetia, as it went the 1992 peace agreement which set-up a buffer zone to protect the enclave from Georgian aggression.

The notion in the Western media, is that tiny democratic Georgia is being invaded by Russia, that’s the headline; within the footnote it says, due to a Georgian attack on South Ossetia. The reality is that Saakashvili’s Georgia is nominally democratic, with a record of flouting the rule of law, restricting the freedom of speech, the press, and questionable electioneering. However, since Saakashvili is unwaveringly pro-American, neoliberal, and actively supports the subversion of Russian interests in the Caspian/Caucausus region, these blights on Saakashvili’s democratic record are routinely overlooked by the mainstream Western press.

Some of the conservative commentators even go as far to defend Georgia’s action justified on the mere fact that it is a “democracy” and Russia is a tyranny. In reality, neither Russia nor Georgia are model liberal-democracies, but to explain away Georgia’s actions solely on its faux liberal democratic credentials is propaganda.

The Western media also makes the claim that Russia has lost the PR battle, that its already negative image has been compounded by its “neo-imperialist” act of aggression against Georgia. Russia’s actions may indeed have turned off some members of the Western community, but in many parts of the world, where American hegemony is consistently challenged, Russia’s actions are popular. Russia received its most vivid and unequivocal support from anti-hegemonic factions in the global south—Venezuela, Hamas, Hezbollah, Syria, Belarus, etc.--indicating that Russia’s actions are realigning Russia’s position as a counter-hegemonic force.

Hypocrisy abounds:

Certainly, Russia is not without its own contradictions, it claims to care about the human rights and safety of its citizens from aggression. This obviously begs the question, Chechnya? There are some differences between South Ossetia and Chechnya legally and geopolitically, but Russian’s claims to protect the lives and property of its citizens “anywhere at any time” rings hollow with its own record within its own borders. Russia’s demand for the self-determination of the South Ossetians also rings hallow considering Russia’s own minorities who may also demand such a right that Moscow has denied them.

The United States is also highly hypocritical, and its hypocrisy has even been noted by the mainstream media; principally the hypocrisy stems from the administration giving Moscow a tongue-lashing for invading a “sovereign state” like Georgia, one need only point to Iraq to end that argument. The difference that is made, either implicitly or explicitedly, is that since Georgia is “democratic” its sovereignty is qualitatively different from autocratic Iraq. This argument degrades international law to an even more base level, by creating a legal apartheid, whereby state-rights are guaranteed by their adherence to certain, read American, standards of government and the free market.

Lessons Learned:

Russia may very well be recovering lost ground since 1991, the Russians now are increasing their links in the Middle East, principally Syria; Venezuela, where Chavez is actively campaigning for the basing of the Russian fleet; and even Cuba where overtures of a reestablishment of Russian bases has been growing. What is more important for Russia is that its influence in the CIS has grown exponentially. The lesson has been learned for any former Soviet state that seeks to undermine Russia’s geo-political position; Russia will be relentless in its perceived self-defense.

The other lesson is that the United States and NATO will not come to the defense of these nations in any real substantive way. No American will sacrifice Atlanta, GA. For Tbilisi, Georgia. This is a major strategic reverse for the United States, and its Eurasian strategy of encirclement and re-routing energy resources away from the Russian near-monopoly.

The other lesson that is being is not being learnt in the halls of Washington D.C. is that state-owned companies like Gazprom represent the new form of the state, the corporate state of the early twenty-first century. The interests of Gazprom are the interests of the Russian state and visa versa. While the United States decentralizes and privatizes the most elementary functions of government, the rising powers are doing the opposite. America’s pyrrhic affair with neoliberal decentralization is already leading to crisis and disenchantment may soon follow, and a different American state may form; however, one should not hold their breath!

Challenging hegemony...by catering to it...?

Latin America again may be on America's radar.


There have been a recent string of discoveries of large reserves of oil and natural gas in the Southern Cone (Brazil, Uruguay, Argentina) in the last 6 months. The most notable of these has been the massive find of oil off Brazil, known as the Tupi and Sugarloaf fields. According to Bloomberg:

"A tripling of proved reserves from 12.6 billion barrels would move Brazil into the world's top 10 nations in oil supplies, according to estimates from London-based BP Plc. Brazil, Latin America's largest economy, would overtake Nigeria, currently No. 10 with 36.2 billion barrels, and put it close to Kazakhstan, which has 39.8 billion barrels."

This has massive implications for geopolitics of the world and Latin America in particular. Since the oil is readily accessible to the American market, conceivably it can supplement or replace Venezuelan oil supplies to the US. Hugo Chavez is not a dumb one, he has signed an agreement with China to supply China with 1 million barrels of oil a day, and before people say that he can't because the oil is too heavy, China is building a refinery in Southern China for the express purpose of refining Vene. oil. What this means is that since Venezuela's oil production has been falling, if Venezuela wants to keep its commitment to China it has to reduce exports to the US.

This is actually against US interests because in so doing, Chavez is enabling China to become vested in the future of the pseudo-socialist regime of Hugo Chavez, meaning political, material,and possibly even military support to his administration and project. Hugo Chavez is also making overtures to Moscow:

"President Hugo Chavez says that Venezuela is fortifying "all levels of cooperation" with Russia, including the purchase of more arms."

"Venezuela spent $4.4 billion in weapons purchases from 2003 to 2006 to modernize its armed forces, according to a report by the U.S. Congressional Research Service."

"Venezuela's military fired its first test missile from a recently acquired Russian Sukhoi fighter jet and launched its first seaborne missile in 13 years, showcasing new capabilities in exercises carried live on state television."

The Chavez regime has every reason to beef up its military in light of the record of the Bush regime and traditional American imperialism in the Caribbean basin. It would rather impossible to have a socialist revolution without the force of arms to protect yourself against American intrigues (lest we forget Chavez was overthrow by an American supported coup d'etat in 2002). By appealing to China for diplomatic assurances, and Russia for investment (Gazprom, which is really an arm of Russia's corporate state, and foreign policy apartus) Chavez is building a truly powerful coalition of international forces to protect him against the United States.

Brazil though has the capacity to undermine Chavez, with the large reserves of oil recently found in Brazil's waters, it could change the whole dynamic. For Venezuela, the more centrist, but still socialist Brazilian government could spread Brazilian semi-peripheral imperialism to safeguard against "revolutionary" socialism of Hugo Chavez, while still appealing to the redistributionist demands of the populations. The oil find will give Brazil major power status, and its oil monopoly Petrobras the ability to challenge Exxon and other major Western oil firms (it is already bigger than Chevron). Brazil can also challenge American or support the United States in the region, certainly Brazil wants to replace the United States as the hegemonic power in Latin America, and has succeeded imo in Mercosur. The United States needs Brazil more than ever, also considering that Brazil will now export major amounts of ethanol to the United States:

"America’s thirst for ethanol is set to grow in line with targets in last year’s Energy Independence and Security Act. Brazil would like to sell more to Europe and Japan too...This year Brazil hopes to export up to 3 billion litres of ethanol to the United States. But this market depends on the corn price being so high as to make it profitable to pay the import tariff...For those worried about climate change, Brazilian ethanol is worth buying only if it is as green as it claims to be. It is certainly much greener than its corn-based rival in America: it packs 8.2 times as much energy as is used in its production, compared with just 1.5 times for corn ethanol, according to the Woodrow Wilson Centre, a Washington think-tank."

So Brazil has the capability of become America's new Saudi Arabia...instead its MUCH COOLER!

The Endemic Crisis of American Capitalism

With the massive increases in the price of oil and other commodities, it is becoming obvious to just about everyone-with the exception of the Treasury-that these price forces are a result of institutionalized speculation. Looking at this historically, this point was inevitable considering that since 1975 there has been looming financial crisis that have not fully corrected themselves. Conservatives deride the government for being pro-lazy, etc. The reality is that the government works in the interests of corporations and their interests.

Since the first oil crisis in 1973, the American economy has transformed itself from a industrial society with a fairly equitable distribution of income and a strong progressive bent, whereas today the United States could not be further from that. In that process of rising inequality, deindustrialization, and increasing poverty has seen the role of FIRE (financials) increase exponentially to becoming the major industry in the United States. As the financial sector was gradually deregulated and given freer and freer reign with less and less government oversight the curses of rampant financial speculation has created a monster beneath the surface of a calm economy.

Consider the number of unresolved crisis' in the financial sector since 1975:

-1982: Debt Crisis
-1987: S&L Crisis
-1998: LTCM Crisis
-2000: DOT-COM Bubble
-2001: ENRON/TYCO/Global Crossing
-2007: Sub-prime mortgage Crisis
-2008: Oil Bubble
-20??: Next Crisis

Each succeeding crisis has gotten worse, and there are troubling reasons why. First, the Fed and the government since the early 1980s has engaged in the logic of "Too Big To Fail" T.B.T.F, whereby they save banks and after Bear Sterns, investing institutions. This is known as a moral hazard, if these massive amalgamated corporations with such leverage over the whole economy know that the government and the tax payer will bail them out, they will continue their highly speculative behaviour for short-term profit. The welfare state does not exist for the poor, rather it exists for the rich who make stupid decisions.

Secondly, with the take over of Bear Sterns by the Fed and J.P. Morgan, the concentration of power increases exponentially in smaller and smaller hands. Each succeeding crisis has lead to collapses of financial corporations, and the selling of assets to a smaller and smaller group of what is termed "dominant capital". Thus, as these mega-corporations become more and more mega...the government will have no choice to come in and save them.

Thirdly, the government has been increasingly lax in the regulation of the markets. Hedge-funds are basically free of any regulatory oversight, as evidenced in the LTCM affair in 1998:

Hedge funds are not regulated by anybody. Indeed, they are legally exempt from the two major pieces of legislation which govern other firms in the financial industry: the Securities Exchange Commission Act of 1934 and the Investment Company Act of 1940. In order to remain exempt from the Investment Company Act, hedge funds must have fewer than a hundred investors, or, alternatively, their investors must be worth at least five million dollars each. (In order to avoid the reporting requirements of the Securities Exchange Act, hedge funds must have fewer than five hundred investors.) The securities laws were designed to protect ordinary investors from Wall Street tricksters. Rich people were viewed as smart enough to look after themselves. (New Yorker, 1999)

About the current crisis in oil:

"A June 2006 US Senate Permanent Subcommittee on Investigations report on “The
Role of Market Speculation in rising oil and gas prices,” noted, “...there is
substantial evidence supporting the conclusion that the large amount of
speculation in the current market has significantly increased prices.”

What the Senate committee staff documented in the report was a gaping loophole
in US Government regulation of oil derivatives trading so huge a herd of elephants
could walk through it. That seems precisely what they have been doing in ramping
oil prices through the roof in recent months." (Engdahl, May 2)*

Without any meaningful government oversight, these super-elite can do whatever they want and not suffer the consequences. CEO's do not care about the economy, or even their own corporations they care about their own value. Meaning they manipulate the market by creating hype, and when they know things are going to tank they short their stocks or sell their long positions. Then they are exposed, are fired (and paid millions to be fired) and get a new CEO position somewhere else. This is a totally new class of rich, they have no loyalty to country, company, nothing but themselves. These transient CEO's remind me of those unemployed men in the 1930s on the trains looking for work, hobo's. According to eminent American sociologist, Thorstein Veblen on this very subject (written in 1904):

It follows, further, that under these circumstances the men
who have the management of such an industrial enterprise,
capitalized and quotable on the market, will be able to induce a
discrepancy between the putative and the actual earning-capacity,
by expedients well known and approved for the purpose. Partial
information, as well as misinformation, sagaciously given out at
a critical juncture, will go far toward producing a favorable
temporary discrepancy of this kind, and so enabling the managers
to buy or sell the securities of the concern with advantage to
themselves. If they are shrewd business men, as they commonly
are, they will aim to manage the affairs of the concern with a
view to an advantageous purchase and sale of its capital rather
than with a view to the future prosperity of the concern, or to
the continued advantageous sale of the output of goods or
services produced by the industrial use of this capital.

That is to say, the interest of the managers of a modern
corporation need not coincide with the permanent interest of the
corporation as a going concern; neither does it coincide with the
interest which the community at large has in the efficient
management of the concern as an industrial enterprise. It is to
the interest of the community at large that the enterprise should
be so managed as to give the best and largest possible output of
goods or services; whereas the interest of the corporation as a
going concern is that it be managed with a view to maintaining
its efficiency and selling as large an output as may be at the
best prices obtainable in the long run; but the interest of the
managers, and of the owners for the time being, is to so manage
the enterprise as to enable them to buy it up or to sell out as
expeditiously and as advantageously as may be.

(Veblen, Theory of Business Enterprise)

Fourthly, the warfare state has been another source of corporate welfare. The perpetual "War on Terror" and its corresponding imperialist war in Iraq have lead to a privatization of the most basic functions of the liberal state, the monopolization of the legitimate use of violence in the state's hands.Iraq's oil fields now-as mentioned by Cenk-are now back in the hands of Western dominant capital, principally the five-sisters, Exxon, Shell, BP, Total, Chevron.** Iraq is being neoliberalized as it was one of the only state's in the post-Cold War period that refused to accede to American hegemony. A warning about the effects of imperialism within a liberal democratic country was sounded by J.A. Hobson back in 1902, from my essay on the subject of imperialism:

"Understandably, Hobson perceived imperialism to be a destabilizing factor to the
future of Britain as a liberal democracy; the much larger scale of imperialism, the capture
of the state by investing class interests, the forcible submission of large foreign
populations, and imperial competition with other imperialist states. Hobson wrote, “as a
result of imperial competition, an ever larger proportion of the time, energy, and money
of ‘imperialist’ nations is absorbed by naval and military armaments” (Hobson II.I.40).
An observation not lost on Etherington who noted that “two-thirds of government
spending” is due to these military expenditures (Etherington 22). This militarization had
social effects that Hobson saw as being anti-democratic and authoritarian. “Both the
colonial administrator and the professional soldier acquired habits of mind fundamentally
at odds with liberal democracy” (Etherington 23). Hobson also warned about the consequences of this move towards militarism, and the growing tendency towards
illiberality in Europe and Britain in the early twentieth century as inter-imperialist
competition began to grow"

The US government has been engaging in right-wing populism (corporatism) for the last 30 years, prejudicing against the average working man and woman in the United States, destroying the family, and creating increasingly precarious situations for the youth. Meanwhile incomes of the super-rich have increased hundreds of times. In 2006, 50% of the nations income went to the richest 20% and that has increased since then. This is the REAL welfare state, one of neglect, negligence and subsidy at the cost of your living standards and that of your heavily indebted children born with the "original debt".