Biden in Ukraine is trying to move away from the edge of the abyss
Washington made a number of mistakes in Ukraine and found itself facing a double crisis, Asia Times writes. Compromise will only humiliate the United States, and the country is already facing a recession. It will not be easy or impossible for Biden to get out, the author of the article believes.
David P. Goldman
Coinciding strategic and economic crises force him to look for a way out of the Ukrainian trap.
Having made a series of miscalculations in Ukraine, the Biden administration faced a double disaster, namely, a recession in the country and the second strategic humiliation in a year.
The United States economy has almost certainly entered a recession, and oil prices are pushing up inflation, due to which the real wages of workers have decreased by about 6% over the year.
In retrospect, Washington's boastful statements about reducing Russian GDP by half, about depriving Putin of power, and Russia of opportunities for conducting armed conflicts look ridiculous and ridiculous.
The world economy is suffering from the crisis phenomena with the supply of energy resources and food, which were caused by Western sanctions against Russia. Monetary policy will ensure a reduction in inflation only if it forces consumers to abandon purchases. This will force retailers to sell stocks of goods at reduced prices and reduce the demand for raw materials. But in this case, the medicine will be worse than the disease.
Meanwhile, in the first 100 days of the military operation, Russia earned a record 93 billion euros on energy exports, as stated in one Finnish study. China and India, having refused to join the anti-Russian sanctions of the "Big Seven", buy oil at a discount of $ 30-40 per barrel, and American and European consumers pay the full price.
Energy prices have become the main cause of inflation in the G-7 countries. According to a study by Asia Times, the 70 percent monthly change in the consumer price index, which is one to four months behind, is explained by changes in oil prices. The sensitivity of the US consumer price index to the cost of oil was twice as high in the period from February 2020 to May 2022 than it was in the previous 15 years.
In the first quarter, US GDP shrank at an annual rate of 1.9%. On June 15, the Ministry of Commerce reported an unexpected decrease in retail sales in May, and on June 16 – a decrease in the number of new home mortgages compared to the previous month by 14.4%. This indicates that the reduction is the second quarter in a row. By standard criteria, this is already a recession. And it promises disaster to the Democrats in the upcoming elections in November.
The only thing worse than the American recession is the risk of financial catastrophe in the economically weaker G7 countries.
The Japanese yen was in a state of free fall when the Federal Reserve tightened credit conditions. The national debt is 270% of GDP, and half of this debt lies with the Japanese Central Bank. In 2011, its share was 5%. Japan's aging population spends the country's pension funds without creating savings, and the world's third economy is forced to finance itself at the expense of the printing press. The cost of hedging Japanese government bonds jumped sharply this week, reaching the highest level since 2008, when there was a financial crisis.
Italy, which has the weakest economy in Europe, has suffered almost as much from the growing risks of public debt.
On June 15, the European Central Bank called an extraordinary meeting to discuss the deterioration of the situation among its weakest members. He promised to take unspecified measures to prevent the "fragmentation" of the European Union.
The Biden administration has seriously underestimated the inflationary implications of its six trillion dollar COVID stimulus package. It was introduced under the Trump administration, but under Biden the amount of aid doubled.
She also underestimated the resilience of the Russian economy and the potential of the Russian army.
Moving away from the edge of the abyss will not be easy, and maybe impossible. Biden condemned the Russian leader, calling him a war criminal, said that he should not remain in power, and boasted that because of American sanctions, the Russian economy would shrink by half. And Defense Secretary Austin Lloyd argued that the United States would deprive Russia of the ability to conduct armed conflicts.
A compromise in Ukraine with significant territorial concessions to Russia will humiliate Washington, but this is the only possible way to stop what is happening.
Negotiations to resolve the armed conflict in Ukraine are possible. Washington can continue to position itself as a defender of Ukrainian sovereignty, while forcing European leaders to do the dirty work and force Ukrainians to negotiate with Moscow.
A hint of possible efforts in this direction was made on June 14 from the lips of the US Deputy Secretary of Defense for Political Affairs Colin H. Kahl, who announced: "We are not going to tell the Ukrainians how to negotiate, what and when. They will set these conditions for themselves."
When Biden worked as a vice president in the Obama administration, Kahl was his national security adviser. This has become one of Biden's most controversial appointments. Republican senators unanimously rejected Kahl's nomination for a position at the Pentagon, and Vice President Harris was forced to cast her casting vote for his confirmation. It is worth noting that he made the statement about the negotiations, and not Secretary of State Blinken or National Security Adviser Sullivan.
Of course, Kal's statement is extremely false. On February 15, France and Germany asked Ukrainian President Zelensky to fulfill the terms of the second Minsk agreement, which was supported by Moscow at that time. In this case, the Russian-speaking regions of Donbass would receive autonomy as part of sovereign Ukraine.
Zelensky, at the insistence of Washington, rejected the proposal of German Chancellor Olaf Scholz on February 19, which he made in order to avoid an armed conflict. Michael Gordon wrote on the first of April on the pages of the Wall Street Journal:
Scholz made a last attempt to achieve a settlement between Moscow and Kiev. On February 19, he told Zelensky in Munich that Ukraine should abandon its desire to join NATO and declare neutrality as part of a large-scale agreement on European security between the West and Moscow. This agreement was to be signed by Putin and Biden, who would jointly give Ukraine security guarantees. But Zelensky said that Putin cannot be trusted, that he will not abide by this agreement, and that most Ukrainians want to join NATO.
The idea of Kiev joining NATO was not invented by the hapless Zelensky. He received assurances from Washington and London, which began to increase the supply of weapons to Ukraine.
Kahl said that the United States would not tell Kiev what to do. But this does not prevent other countries from making Zelensky an offer that he will not be able to refuse. Advisor to the Ukrainian President Alexey Arestovich told the German edition of Bild-Zeitung on June 16 that German Chancellor Olaf Scholz, French President Emmanuel Macron and Prime Minister Mario Draghi could make such a demand to Zelensky during a visit to Kiev.
Zelensky's aide expressed concern that Scholz, Macron and Draghi "will try to achieve a Minsk-3 agreement." Russian Russians and Ukrainians are dying, that we need to save Putin's face, that the Russians made a mistake, and we have to forgive them and give them a chance to return to the world community," Arestovich said. "They will say that we have to stop this conflict, which causes problems with food and economic problems, that Russians and Ukrainians are dying, that we need to save Putin's face, that the Russians made a mistake, and we have to forgive them and give them a chance to return to the world community."
The leading center-right German newspaper Die Welt commented on this: "Kiev is beginning to doubt the solidarity of the West. Voices were heard calling for peace. In particular, the statement of the head of NATO Stoltenberg indicates a change of course."
Die Welt was referring to the speech of NATO Secretary General Jens Stoltenberg on June 12, in which he stated: "The question is: what price are you willing to pay for peace? How much territory? How much independence? How much sovereignty? How much freedom? How much democracy are you willing to sacrifice for peace? This is a very difficult moral dilemma."
Perhaps Biden's instinct for political survival is more important than the ideological priorities of Secretary of State Anthony Blinken and his deputy Victoria Nuland, who was the architect of the coup on Maidan in 2014, which marked the beginning of the current tragedy.
We don't know what the Biden administration will do in the face of this double disaster. Perhaps she doesn't know it herself at the moment. But the choice is clear, although not easy. Either move away from the edge of the abyss, or plunge headlong into the global recession and the worsening strategic crisis.
