by Lars Schall for the Saker blog
Introduction by Pepe Escobar:
William Engdahl is one of the world’s top geopolitical analysts. His books – from Century of War to Full Spectrum Dominance – are absolutely essential to understand how the self-described exceptional nation created and expanded its global hegemony tentacles.
A measure of his influence is that as much as Engdahl may be dismissed or derided across the Beltway, the usual suspects do read him – and are incapable of finding conclusive arguments to prove him wrong.
This extensive interview by financial journalist Lars Schall is largely centered on Chapter 3 – The Rape of Russia – of Engdahl’s new book Manifest Destiny: Democracy as Cognitive Dissonance.
Here you will find all you need to know about the genesis of the 1990s Russian oligarchs; the dirty deals of the Yeltsin mafia; everything from the plunder of Soviet gold to the dodgy operations of the elder Bush’s brother; the incredible Yamashita gold story; the “privatization coupon” scam; the way the Harvard mafia run the Russian economy – all the way to Putin’s uphill battle throughout the 2000s to turn Russia into a functioning economy as NATO kept marching east.
As Engdahl notes, if we don’t understand what happened in Russia in the 1990s it’s absolutely impossible to contextualize the neocons and US Think Tankland’s deep hatred and 24/7 demonization campaign of Putin’s Russia.
So sit back, relax, enjoy the crash course and keep it as an essential reference you will find nowhere else.
The Rape of Russia (full transcript)
Lars Schall: Hello ladies and gentlemen. I am now connected with F. William Engdahl, who has written a new book, Manifest Destiny: Democracy as Cognitive Dissonance. Hi William.
F. William Engdahl: Hello, Lars. Good to be with you again.
LS: Great to have you with us. And first off, let me read something to you and our audience that was written by the economist Dean Baker earlier this month.
As a long-term columnist at the NYT, Thomas Friedman apparently never feels the need to know anything about the topics on which he writes. This explains his sarcastic speculation that Putin could be a CIA agent since he has done so much to hurt Russia.
For all his authoritarian tendencies, it is likely that most Russians think primarily about Putin’s impact on the economy, just as is typically the case among voters in the United States. On that front, Putin has a very good record.
According to data from the IMF Russia’s economy had plunged in the 1990s under the Yeltsin presidency. When Putin took over in 1998, per capita income in the country had shrunk by more than 40 percent from its 1990 level. This is a far sharper downturn than the United States saw in the Great Depression. Since Putin took power its per capita income has risen by more than 115 percent, an average annual growth rate of more than 3.9 percent.
While this growth has been very unequal, that was also the case even as Russia’s economy was collapsing under Yeltsin. The typical Russian has done hugely better in the last two decades under Putin than they did in the period when Yeltsin was in power.
For this reason, there are probably few Russians who would have sympathy for Friedman’s speculation about Putin’s ties to the CIA. The same would not be the case for Boris Yeltsin.
Now, I think this is a good starting point for our discussion William because in your book, you have a chapter entitled The Rape of Russia, the CIA’s Yeltsin Coup d’état. Why do you talk about rape related to Russia?
FWE: What the US Government under George Herbert Walker Bush, Bush Senior organised together with CIA, old boy networks of his, in terms of the breaking up of the Soviet Union and the looting of the assets, this open theft, the destruction of pensions, security, the health system and everything. The only appropriate word is the rape of Russia. They just plunder anything that they could.
And what you just read from Mr. Friedman is of course horse rubbish but the real CIA asset of this whole collapse of the Soviet Union in the late 1980s was in fact Boris Yeltsin and the so called Yeltsin Family, the Yeltsin Mafia. And in my book, the Manifest Destiny book I document and detail at great lengths the relation of a handful of KGB very, very senior persons who worked with the Bush Senior old boys CIA networks in the West and their banks to create a group of oligarchs around Yeltsin, you know the famous Russian oligarchs, well, The New York Times and other Western Media portrayed them as Russian Mafia. They were kind of mafia but the real point was that they were a CIA-run mafia. They were run by the West. They betrayed their own country, their own people and literally stole billions and billions and billions of dollars of assets. And that’s the reason for the title in that chapter.
LS: And Boris Yeltsin was very essential for this.
FWE: He was the key figure. He had been selected as a regional governor and brought into Moscow and a certain point Gorbachev saw him as a rising star and someone that could help with a little bit more liberal image as [unclear] was – the Russian economy was running into serious trouble in the ‘80s, the Star Wars of Reagan, the Nicaragua and above all the war in Afghanistan which is a CIA project with the Mujahideen, that took 10 years long that was bleeding the Soviet economy, the Soviet Union’s Vietnam, as Brzezinski used to call it.
And the West, the Bush networks recruited a handful of KGB agents around Yeltsin who literally promoted Yeltsin to the top when they engineered the August 1991 fake coup. You remember, I’m sure many people remember the picture of Boris Yeltsin standing there courageously on top of a Soviet tank in front of the Russian White House or Soviet House, the Supreme Soviet building and reading a speech defying Gorbachev and so forth. Well, that was a KGB CIA-engineered coup d’état in June 1991. And through that the – this network, this corrupt network within the KGB that was working with the CIA, working with General Philip, Bob [unclear] is one of them, so called at that time the KGB brain. He was head of the KGB Fifth Directorate controlling to roll this in. And he later joined the [#inaudible 00:06:40-0#] oil and to this day he’s still a member of the State Duma giving him prosecution immunity.
So, some of these people are still around after some 23, 25 years and incredibly enough but others of them have died off, have been killed, or murdered or whatever. But the operation that was done with Yeltsin, this corrupt KGB network working with the CIA financed Yeltsin’s the silent seat of the presidency of the Russian Federation. And once they had their man in controlling the Russian Federation which is the largest of the former Soviet Union, the Socialist Republic, they were able to engineer through the international monetary fund that was mandated to oversee the transformation of the Soviet economy.
They engineered a complete opening up of the assets of the Russian Federation which called today the Russian Federation, the largest part of the former Soviet Union and they made it such that the Russian Federation would assume all of the debts of Ukraine, of Kazakhstan and the other socialist republics of the Soviet and all the assets, all the crucial assets that were within the Russian Federation so the aluminium Rusal that’s in the headlines yesterday, the nickel, the oil, the gas, just hundreds of billions if not trillions of dollars’ worth of assets that came into Yeltsin’s control.
LS: But those assets were sold to a price that was rather ridiculous.
FWE: Someone estimated that that gets into the whole coupon privatisation that was set up under Yeltsin in the ‘90s. The coupon privatisation issued one coupon to every single Russian man, woman and child 140 million in total. And the value of those coupons was such someone estimated that the totality of Russian Soviet’s Fed assets or Russian Federation assets now was equal to the value of the stock at that point of General Electric Company on the New York Stock Exchange. I mean that’s just laughable. Russia had financial bankruptcy because the shock therapy, the Jeffrey Sachs and others from Harvard and elsewhere brought in, George Soros and his pals. That created bankrupt companies that couldn’t stand on their own and suddenly they had no, no resources. But the assets, the assets on the ground, the nickel, the aluminium, the uranium that Hillary Clinton knows more than a little bit about them, all of these were estimated to be in the trillions of dollars. And this is what the Bush operation aimed at. And they used NGOs, they used the National Endowment for Democracy, they used, George Soros’ Open Society Foundation and so forth to bring this about.
LS: You’ve mentioned already the coup d’etat attempt of August 1991. Highly important for things to come was something that took place in early 1991 and that was the theft of the Soviet gold. Please tell us about this.
FWE: The, under the Soviet Union, this is a very crucial point about the transition that Washington forced on the Russian Federation because Yeltsin was, I think as long as he was well-supplied with vodka he didn’t protest very much. But under the Soviet system and the Russian Federation took this over, there was a state bank, not a private central bank like the Federal Reserve or the European Central Bank today but a state bank that was an entity of the Russian State apparatus and that was called the Gosbank. And a man named Viktor Gerashchenko was the chairman of Gosbank at the time of Yeltsin’s early start in 1991.
And Gerashchenko made a speech around that time in November of ’91 to the Russian Duma or the parliament such as it was and said, “I have to report to you ladies and gentlemen that of perhaps 3,000 tons of Gosbank state-owned gold reserves, we have an estimated less than 400 tons that we can account for.” And then he had to go to tell, shock members of parliament that he had no idea what happened to the missing gold, which of course was a lie. And Gerashchenko had created right after 1989 to prepare this coup d’etat coup, which was the CIA and Bush’s old boys, he had created something called [unclear] on the Channel Islands in the Island of Jersey to handle the Russian foreign currency reserves.
And the Jersey was exempt from European supervision, so this was a perfect place to hide money, dirty money or stolen money and they managed something like $37 billion between 1993 and 1998. The Gerashchenko and the Gosbank even went to the lengths of hiring a New York Financial Detective firm called the Financial CIA back then called Jules Kroll Associate. And they were told to track the Soviet gold, find out what happened to it and something like $14 billion of communist party assets that were missing as well. And the Cruel which was tied with the CIA linked AIG Insurance Group Hank Greenberg whom you remember from the 2008 to the bail out of Henry Paulson.
FEW: The Kroll Associates after a few months announced that they had no results in the attempt to find the missing Soviet Gosbank gold. Then to add insult to injury, the IMF came in and rewrote the constitution of the Russian Federation under Yeltsin and took the power of money creation just like the Federal Reserve took the power of money creation from the congress in 1913. They took the power of money creation from the state and created the Russian Federation Central Bank, the Russian Central Bank and gave it a mandate for two things. One, to control inflation and the other to create currency stability.
Now, in Russia that day that meant stability of the ruble against the US dollar. So it effectively hammer-locked the Russian money creation into the US dollar. And unfortunately that constitution amendment holds until the present day. It’s one of the difficulties that Vladimir Putin has been having to try to persuade the Independent Central Bank to lower interest rates more rapidly as inflation is simply managed as a problem in Russia in the last two years.
So, they looted the gold so that there would be no stability to the ruble. If you don’t have any gold-backing, then western investors are going to lack confidence which is sort of what happened. And then they began working with very select western bankers to get their money out of Russia.
LS: And instrumental to get money out of Russia were Valmet and Riggs. Can you tell us please about some crucial personnel that was employed there at Valmet and Riggs?
FWE: Valmet Riggs was kind of a fusion of a Swiss bank and Riggs Bank of Washington D. C. And Riggs Bank, this is really quite a fascinating and very little discussed aspect of the reign of Russia back in the ‘90s.
So you have something called Riggs Bank in Washington and they were set up decades earlier since the 1960s CIA Bay of Pigs operation, they were known as the CIA tied bank. They invested the assets of people like Marcos of the Philippines until when he was close to the CIA. And there was a former NATO Ambassador named Alton Keel and in 1989 when the Soviet KGB generals and they had a group of protégés called the ‘Kids’ by George Bush Senior. The protégés were in their 30s and a couple of them were in their 40s but rather young. And they were the ones who were nominated to become the oligarchs, the frontal men for taking these state assets the aluminium, the oil assets and other things and looting the Russian Federation.
And Alton Keel just as the Russians were setting up men at a bank for the oligarchs to funnel their stolen assets, de facto stolen assets, Keel went from NATO and the National Security Council to become a head of international banking of Riggs Bank in Washington and its deputy chairman.
Now, it gets even more interesting because the international banking group of Riggs included a new entity that had been created called Riggs Valmet SA in Switzerland, and Riggs Valmet was set up by a man named Jonathan J. Bush, a private banker, who just happened to be the brother of George Herbert Walker Bush. So, Bush brother and Alton Keel set up Riggs Valmet, there was a money laundering apparatus in Geneva and Riggs then through their help bought the major share in Geneva Valmet to create Riggs Valmet.
So, you have the brother of the president of the United States up to his eyeballs in this whole Yeltsin CIA money laundering operation. And then Jonathan Bush was created CEO of something called Riggs Investment in Connecticut where he lived and at that point the looting and taking of the dollar assets out of Russia was just unstoppable. It was in the billions and tens of billions of dollars.
LS: William, there is one guy who was working closely with those people and he was working on Wall Street but later on he was personally recruited by George Tenet then the Director of CIA to become the number three at the CIA, and this is Alvin Bernard “Buzzy” Krongard.
FWE: Yes. We meet “Buzzy” Krongard at Bankers Trust, which bought up Alex Brown, and Krongard became vice chairman of Bankers Trust along with another charming character named Carter Beese. And at the time of the 1998 collapse of the ruble, Krongard was formally made, as you’ve pointed out, number three, the executive director at the CIA under George Tenet. So, it’s a CIA network from beginning to end, from the banking side to you know the direct CIA side. You have Carter Beast, you have “Buzzy” Krongard, Jonathan Bush and Alton Keel and they were the ones working with Valmet as the Riggs Valmet Bank in Geneva to pull this money out through shell companies.
And the oligarchs, this is an interesting part of this whole thing that you know right now Theresa May and the foreign secretary Boris Johnson in the UK are accusing Putin of murdering almost everybody since the birth of Jesus Christ. And one of them was the person who had been the trusted bodyguard of one of the oligarchs living in London Boris Berezovsky.
And Berezovsky was one of the dirtiest of these oligarchs. He’d financed the Ukrainian Colour Revolution back in 2003, 2004 as a revenge against Putin because he at first thought Putin could be bought like Yeltsin and suddenly he realized that he was up against the faction of nationalists within of what had been the KGB but wanted to stabilise and preserve Russia as a functioning nation today. And so Mikhail Khodorkovskyi, Roman Abramovich, who is listed on the sactios list yesterday, and Berezovsky were some of the leading oligarchs that were created by this Bush operation.
LS: And to jumpstart all of this, we have to talk about something that is well, that is stranger than fiction and that is something called for example “Yamashita’s Gold”. If our audience is interested in this, they could for example look for an article written by Chalmers Johnson, the famous Asian expert, The Looting of Asia, which was published at the London Review of Books on the 20th of November of 2003 because then they can find something on this topic of Yamashita’s gold on an instant basis in the internet ( https://www.lrb.co.uk/v25/n22/chalmers-johnson/the-looting-of-asia). I think this is just fair…
LS: …because no one really is aware of this whole story. Please tell us about this.
FWE: The Yamashita Gold story is one of the, as you’ve said really incredible stories of post-World War II. During the Second World War, the Japanese Imperial Family looted the gold of occupied Arch of China, they looted the gold of all the parts of Asia that they had conquered.
LS: Basically from 1895 to 1945.
FWE: Yeah, yeah. And because they had no guarantee that Japan was going to win the war, the emperor ordered the gold to be hidden away in, mostly in the Philippines as far as we know and literally untold tons of gold were buried so deep underground in tunnels around the Philippines and the people who dug the tunnels in many cases were later shot you know so that they couldn’t tell. But Marcos who was a CIA asset initially, the dictator of the Philippines through much of the ‘70s and into the ‘80s, yeah through the ’70, Ferdinand Marcos somehow came upon some of this gold. So, the Japanese looted war body was buried in the early ‘40s before the end of the war on orders of Emperor Hirohito should they lose the war.
And at some point in the 1970s, Marcos discovered some of the sites where Hirohito’s soldiers had buried the gold and the gold was stolen from China, Korea, Philippines, Indonesia and other countries occupied by the Japanese forces. And Marcos, and I think this is the major reason the CIA dumped him, got a little bit greedy and took that gold and started selling it under the market through selective secret Swiss banks. But he used the CIA asset, the Saudi billionaire named Adnan Khashoggi to help them get the gold under the market. And what he didn’t realise was that Khashoggi would double cross him. He got a better deal from Bush Senior and the old boys.
LS: We have to say Khashoggi is a figure who is involved for example in B.C.C.I. and in Iran-Contra.
FWE: Back in the ‘70s he was involved in everything dirty that Bush and the CIA were involved in. B.C.C.I. Bank, the money laundering bank of the CIA, the arms deals, Khashoggi was a huge arms dealer during the Iran and Iraq war the CIA was feeding. He was involved in almost every dirty thing the CIA was doing.
LS: He was aware of this gold.
FWE: Supposedly he was helping Marcos to sell the gold out of the market. So he was not only aware of it, he was right in the middle of it. But then once Marcos was tackled by the CIA Bush got rid of Marcos in 1986. Then someone named Paul Wolfowitz and Richard Armitage and Khashoggi began to work with someone in Canada to create something called – Peter Munk was his name, a rather dubious businessman there – to found something called Barrick Gold of Canada and later it went on to become the world’s largest gold mining company.
But Barrick Gold, all available evidence is that buried gold was used to melt down the – I don’t want to get too much into the details of this but basically to melt down the Emperor Hirohito’s gold that had been discovered by Marcos in the Philippines, to melt it down and use that as collateral for derivatives that would be the collateral used to take over the Russian Federation assets.
LS: The money was basically transformed into bank loans into Russia so that the would-become oligarch people could buy up those assets…
FWE: Yes, exactly. So, Yegor Gaidar, the economic privatisation adviser of Yeltsin and his sidekick Anatoly Chubais privatisation had kind of guided this whole process together with Jeffrey Sachs and a group from Harvard University. #00:28:37-8#
LS: Yeah. Let us talk about this. This is known as Harvard Shock Therapy.
FEW: Well, the Jeffrey Sachs Shock Therapy, but the Harvard shock therapy is… – well, what happened, the next phase of this incredible story and it’s important to keep all this in mind, this is one reason that I wrote the book because of what was clear after the CIA coup d’etat of 2014 in Ukraine and all the sanctions against Putin’s Russia and so forth, that if you don’t understand what really happened in the ‘90s, the deep-seated hatred there is on these neoconservatives around Washington and their think tanks as well as, the US political establishment for Putin’s Russia and the nationalism behind group Russia. You can’t make much sense out of what’s going on today with all these incredible lies and accusations against Russia for every crime under the book.
So, what happened is the, as I mentioned the IMF, the International Monetary Fund which had done a beautiful job for Washington in terms of, and George Soros and others in terms of looting the assets of the dead economies of Latin America, Yugoslavia, Poland and others during the oil crisis in the 1970s. The IMF was used and a group of economists around Jeffrey Sachs, a young professor at Harvard University then to impose what Sachs called shock therapy.
And the idea was that Sachs convinced Yeltsin, let prices rise through western market prices and this will increase the supply of goods, you know the stores had a paucity of goods back in the Soviet Times and get rid of trade barriers so foreign commodities could flow in to fill the shelves of Russian stores. The problem was that was a lie. The shops had been full. Okay, you could say it wasn’t Kellogg’s Corn Flakes and Fried Perdue Chickens or whatever, but they were full of Russian food products until November of ’91 when Yeltsin announced that the exact date on December 31st of 1991, that price controls would be suddenly lifted. So, shop owners immediately hid their goods and waited for December 31st. So, suddenly the shops were empty and rationing was imposed and so forth. It’s just unbelievable.
So, into this, this was Jeffrey Sachs on shock therapy and a group of Harvard University under the auspices of the Harvard Institute for International Development, a group of, among other things later documented CIA agents set up shop in Moscow and worked with Yeltsin’s economic team Gaidar and Yegor Gaidar and Anatoly Chubais and themselves got in on the thunder the Russian East Harvard economist working. Now we have a transition in ’93 through the Clinton Administration and there former Harvard professor and former World Bank Chief Economist Lawrence Summers became the deputy secretary of treasury responsible for the looting of Russia, effective and responsible for the gold economic transition in the Russian Federation.
And all of the key actors were named by Summers and they were all involved in the privatisation of Russia. They were all from this Harvard Mafia. For example of David Lipton, a former consulting partner of the Jeffrey Sachs, became deputy assistant secretary of treasure for former Soviet Union and Eastern Europe and Sachs himself was named Director of Harvard HIID that oversaw the looting of Russia through the voucher privatisation and so forth. And they got grants from the USAID, AID works very closely with the CIA in different parts of the world, this is documented. And so it was really a tight-knit cabal around Lawrence Summers that oversaw this complete theft through these pieces of paper called privatisation coupons.
And what you had was the economic situation under Yeltsin had become so severe I mean people literally they had no jobs because of the freeing up of prices, they could afford to buy little or nothing. So, most people, millions of Russians sold their privatisation vouchers on the street corners to the highest bidder. And of course the would-be oligarchs were the ones with hard currency dollars that they could buy these things up as you pointed out earlier when we talked about them. So, they had credits from their friends in the West, the Riggs Valmet and so forth to buy up these vouchers and therefore they were able when the cost came up, were able to simply steal the property titles, the ownership titles of some of the most valuable investor assets and mineral assets in the world.
LS: And we can talk about this as a classical case of leveraged buyout – even though it was a covered leveraged buyout, if it was?
FEW: Well, you could call it a leveraged buyout. I know Anne Williamson has used that term, the earlier descriptions of it. I think it was simply legalised theft, leveraged buyout gives it too much dignity. That was a term that was quite popular in the financial world back in the ‘80s and the early ‘90s. But whatever name you want to give it, it was certainly not a conventional leveraged buyout, it was bizarre in every sense of the word.
LS: An influential figure in this was mentioned by you already, George Soros. And in 1994, as you point out in your book, he was described with the following words from The Guardian in London, “Soros extraordinary role not only as the world’s most successful investor but now possibly fantastically as the senior most powerful foreign influence in the whole of the former Soviet Empire, it tricks more suspicion than curiosity.” What was he doing back then in Russia?
FWE: Soros was very intermittently tied with Jeffrey Sachs and the whole Harvard to become a shock therapy group and working with Lawrence Summers team at the US Treasury under Clinton. And in 1993 already the opposition inside what was left of Russia when the old communist party was in the Duma and so forth and the population generally was such that the opposition threatened to get out of hand and Yeltsin was forced to agree to hold a national referendum on the entire privatisation. So, this was in April of ’93 and the referendum that was given to the population had four questions, yes or no. Do you support Yeltsin? Yes or no? Do you support Yeltsin’s economic policy? Yes or no? Do you want early election for president? Yes or no? And do you want early elections for parliament? Yes or no?
So, Chubais was as an adviser to Yeltsin at that time and the key person on the economy arranged the secret meeting with George Soros. And Soros agreed to finance of course on behalf of Yeltsin, the referendum campaign. So he funnelled money over a million dollars by some accounts to offshore accounts set up to be used by Chubais to buy media. And so the media campaign and by this time most of the national media had been bought up by the oligarchs around Yeltsin so they were able to exercise undue influence. So they barely squeak through and got a yes to the privatisation scheme that Harvard, Jeffrey Sachs and George Soros and others had going on. And then of course Soros’ company himself benefitted enormously from this privatisation just a little bit later when the auctions took place.
LS: A figure that connects yesterday with today is Vladimir Putin who came to international attention first in 1998, the same year when the ruble crisis took place.
FWE: This was 1999 and in August ’98 you had the collapse of the ruble. This was part of the Bush “Operation Hammer’s” original design. You had a huge scam going on in the GKO Russian Bond market where the interest rates were just unbelievably high. So, you had all sorts of hot money coming in, making profits and pulling it up including Soros Fund, quantum fund and so forth.
And finally, Yeltsin was getting near the end of his ability to hold this thing together. And he appointed in August ’99, he appointed a young former KGB officer who had been in Dresden during the Cold War in East Germany named Vladimir Putin. And briefly Putin had been a deputy mayor in St. Petersburg and briefly had been the head of the successor to the KGB called FSB and the oligarchs around Putin, I’ve heard various Russian accounts have had this happen but Berezovsky, Brzezinski and other, the Yeltsin oligarchs thought they could take this young guy Putin and do business with him and you know that he was young and had no political base.
So, at that point Putin gave the ultimatum to Yeltsin, resign or face serious consequences and it turned out that Putin which has later been confirmed was the spokesperson for a nationalist faction within the intelligence community, a patriotic faction, call it what you want but Russian nationalist. And so Yeltsin was told, “If you resign and just get out of politics, we’ll leave you alone.” So he took the offer and ran. And before he did that he named Vladimir Putin as acting president until elections in March the following year.
So, Putin then came into power and called a meeting as it were of the most powerful oligarchs who had made staggering fortunes at the expense of Russia and he called them creators of a corrupt state through insider dealings and began criminal prosecution against oligarchs like Vladimir Gusinsky and Media-Most, a financial group led by Vladimir Potanin who is in the newspaper today and soon left an oil company controlled by a Roman Abramovich and Boris Berezovsky. So, at that point Putin began the uphill battle of trying to stabilise Russia as a functioning economy. And the recent re-election of Putin indicates that the Russian people by and large support that effort of Putin’s.
LS: Meanwhile he also had to react to something new that was taking place then and that was NATO was marching east.
FWE: The negotiations and this is, has been confirmed by former US Ambassador to Russia Jack Matlock and that was the negotiations between the Bush administration in 1991 Germany and Gorbachev included a solemn guarantee as Jack Matlock, Ambassador Matlock who was in Moscow in ’87 until ’91 in this period. He said that we gave a categorical assurance to Gorbachev when the Soviet Union still existed that if United Germany was able to stay in NATO, NATO would not move eastward. So, of course that pledge like so many pledges of Washington under Bush successor governance was honoured in the breach and the newly created National Endowment for Democracy that I write about quite a bit in the Manifest Destiny.
You had, Vin Weber was the chairman of the NED at that time and he took US taxpayer money through the NED to supposedly bring democracy into former communist states. Then Weber was also a member of the Project for the New American Century (PNAC), the neocon think tank which really shaped the personnel of George W. Bush in the year 2000 and 2001. And Vin Weber was also a lobbyist for the largest military industrial conglomerate of the US Lockheed Martin.
So, he was instrumental together with another military industrial Lockheed Martin, former Vice President for Strategy named Bruce Jackson, Bruce P. Jackson to promote back democracy in former communist countries including Russia. And they started the process of expanding NATO to the east in strict violation of the pledges that had been given back in the early ‘90s. So, by 2003, they had begun this whole expansion of NATO into Poland, into Hungary, all the former communist countries.
LS: And the countries at the Baltic Sea.
FWE: So, at the Baltic Sea right on the doorstep of the Russian Federation, and Poland, Czech Republic, Slovakia, Hungary, Romania, Bulgaria and so forth. And you began to see a very definite NATO encirclement of Russia. And then in 2003-2004, the National Endowment for Democracy, George Soros’ Foundation, the whole arm of the fake democracy NGOs of Washington, began to create the so called Orange Revolution in Ukraine, and also the Rose Revolution in Georgia next door. And if you look at a map, if you bring a pro NATO government into power in Ukraine, this they did under Viktor Gerashchenko in 2004, then you’re presenting a pretty formidable military threat to the national security of Russia.
Now, at that time 2003, Russia was in no shape to do much more than feebly protest as loud as they could but of course they were ignored. Then you had something quite dramatic in 2006, the end of 2006. The George W. Bush administration Donald Rumsfeld was Secretary of Defence back then announced that they were installing ballistic missile defence now I’ll get to that in a minute but it’s anything but defensive. In Poland, in the Czech Republic and that those anti-missile defence installations which included missiles would be aimed at a rogue nuclear attack from Iran.
In early 2007, Vladimir Putin personally came as president of Russia Federation to the Munich Security Conference, the International Security Conference held here in Munich Germany and gave a speech which really defines the security position of Russia right up to the present date. He said of course this is not aimed at Iran or North Korea as Washington says. That’s a lie. It’s like taking your right arm to scratch your left ear we say in Russian. It’s aimed at Russia. And we consider this intolerable as a threat to our national security and we will be forced to respond.
LS: And it is aimed at Russia as a first strike possibility.
FWE: Yeah. Well, the point about the missile defence is I – in connection with the book, I interviewed, in an earlier book I wrote, I interviewed Colonel Robert Bowman who had been briefly the head of Ronald Reagan’s Star Wars or missile defence programme. And became a very, very severe critic of the Bush administration’s reckless policies withdrawing from the antiballistic missile ABM Treaty and so forth, said that missile defence is the missing link to Nuclear Primacy. First strike capability.
And that’s something that Pentagon planners had been opting for since the 1950s. And he said, “If you can block the counterattack from your opponent and you then have this possibility to make a first strike and wipe them out because they can’t simultaneously fire an effective counterstrike.” So, that in a nutshell destroys the whole cold war doctrine of mutual and sure destruction that kept nuclear options off the table up until that time. And the Russians understand military strategy rather well I would say. And said, “This is simply intolerable. We have to respond and we will respond but in our own way and you will see.”
LS: And the Russians have reacted.
B: The Russians have reacted, and if we can go for a minute up until the present…
FEW: On March 1st Putin gave an address to the Federal Assembly in Moscow televised to the nation. The beginning part of the speech, his annual speech there, was about the Russian economy and plans for the future. This was shortly before the Russian elections that overwhelmingly gave him a new term. But the crucial part of that speech to the Federal Assembly was Russia’s military technologies and this is as he put it. He referred to that 2007 speech in Munich and he said, “We said at that time that Russia would have to reply and since the expansion of NATO to the east which really to be honest that’s – see there is no reason after 1991 or certainly after 2000 for the existence of NATO other than the reason given when NATO was created by the first secretary general of NATO to keep the Russians out the Germans down and the Americans in.”
But Putin’s speech talked about nuclear primacy and the Russian response and he outlined the military are the developments that they had quietly brought online since Washington tore up, unilaterally tore up the ABM Treaty in 2002/2003. So he outlined an awesome array of missiles, hypersonic low flying stealth missiles carrying nuclear warheads, unpredictable trajectories, invisible against perspective missile defence and air defence systems, unmanned submersible vehicles to great depth that could go many times higher than the speed of submarines cutting edge torpedoes just and commentators in the West like CNN. They said, “Oh, this is just bluff and so forth.”
People who know Russian military technology and the intensity of the kind of research and development that’s focused on defending the nation confirm that this is no joke. Hypersonic aircraft five times the speed of sound, that’s hypersonic and they have something called the [unclear] which goes 10 times mark 10 and as Putin described it, “This missile flying 10 times faster than sound can manoeuvre in all phases of the flight trajectory, overcome all prospective and aircraft county missile defences in a range of 2000 kilometres.”
He outlined about six or seven of these I would call them not even cutting edge, bleeding edge military technology and as The Saker commented in his blogpost after the speech, it’s indeed set marching game over for the empire. There’s no more military option against Russia.
This all is to make a point that the entire history up until now, these fake accusations of Putin would have an interest or Russia would have an interest to meddle with the US elections when you have a choice between Hillary Clinton and Donald Trump to accuse Putin and Russia of international violations of law by allowing a referendum to take place in Crimea after the CIA coup d’etat in Kiev and now it’s come out from actual mercenary snipers that were brought in from Georgia under [#inaudible 00:55:08-0#] umbrella that they were paid by the CIA or promised to be paid by cut outs to the CIA to create the Maidan Square February 2014 chaos that led to the collapse of the government and the coup d’etat.
So, you know, this is not Russia is the arch Evel Knievel looking for a fight every corner of the world. It’s not Russia doing bad things in Syria. It’s Russia trying to stop a NATO and Saudi and other embedded destruction of the Middle East and create some kind of peace and stability. And anyone modest to take the slightest bit of care and follow this, they can read a running commentary on my website williamengdahl.com but not only there, it’s all over the place. You realise that the fake media is the media that dominates and is guided by NATO public relations strategy in the West and it’s not the so called critical media that’s being sanctioned and censored right now.
LS: Let’s talk further about the present, William, by closing one circle of our interview. As we’ve discussed the Russian gold vaults were empty since the early 1990s. This has changed since basically the financial crisis broke out in 2007, 2008, 2009. Since then the Russian Central Bank is buying gold like basically no other nation in a very rapid tempo.
FWE: Since the financial crisis and especially since the opposition of sanctions after the annexation of Crimea in 2014, it’s been the policy of the Russian Central Bank and the Russian Federation to buy as much gold for reserves of the ruble as they can get their hands on. And they are now I think number five or number six in the world in terms of gold reserves and correct me if I’m wrong but just slightly behind the people’s republic of China which has also been vigorously adding gold towards Central Bank reserves for the yuan.
So, what Russia is doing is creating a buffer gold, by the way in my view has never ceased being an object of value to stand behind currencies. If you have currencies like the dollar after all this 1971 when Nixon took the dollar off the Bretton Woods, gold exchange [unclear], then if you have a military you might or manipulate the oil price petrodollar and so forth, you can create money if you have the reserve currency you can create money without them. So what the Russia is doing is creating a security in terms of its currency and now that security is probably going to be tested by the economic warfare division of the US Treasury in these new sanctions.
But Russia is merging together with China. Interestingly enough after 2014 when the CIA coup d’etat Ukraine took place, Putin responded not by getting bogged down in the destructive war inside the Eastern Ukraine but he responded by turning east, strengthening his relationships with China, with the new president of China then Xi Jinping bringing the Asian economic Union which Russia is the leading economy in, together with Belarus and Kazakhstan, Armenia and others, bringing that in a coherence with Xi Jinping’s Belt and Road Initiative One Belt, One Road to link the infrastructure, the energy pipelines, the high-speed rail networks, the deep water ports and so forth to create a Eurasian, some people call it the land bridge but it’s an economic space in Eurasia that would have the majority of the world’s population, would have every raw material resource that the world needs including rare earth metals that China is world’s leading supplier of at the moment.
And Russia has vast oil and gas reserves and military technology, civilian technology, an educated labour force that is probably one of the finest in the world and scientific country and so forth. And independent of the bankrupt economies of Britain and the United States and very rapidly of the European Union where this banking crisis has, since the crisis of 2008 has just been swept under the rug but it’s ready to explode on a moment’s notice. So, you have a depth loaded western NATO world. Let’s call it a NATO world, a world of the NATO member countries and you have Russia together, which by the way, Russia has unbelievably small…
FWE: National debt.
FWE: Something like 13 to 17% of the gross domestic product.
LS: And now they have this huge stock of gold relative to very little sovereign debt. It’s almost ideal.
FWE: Yes, and that’s by design. That is by Putin’s intention to create this independence. And one thing, I am very often in Russia, have a very, very dear special friends in Russia over the years, the first time I was there was 1994. That was a vastly different, that was in the middle of the Yeltsin and the insanity. The Russians are very not only proud people but they are very determined and they protect their existence and have done that I would say for well over 1000 years going back to the great schism between the Western church in Rome and the Eastern Church in 1054. I think that was a pivotal date in modern history, the division there.
But certainly the Russians have gone through two World Wars and the rape of Russia under Yeltsin, unbelievable trials and tribulations and they are not shying away from defending their existence. That’s something I think the west or certainly Washington with these neocons really doesn’t have a sense of.
LS: One thing that I would like to ask you about as my final question is the following. You are a renowned expert for the geopolitics and the history of oil. And since this month we have a future’s contract in Shanghai, denominated in yuan for oil and we also hear that the Chinese are planning to price oil that they import in yuan which is safe for this buying of oil internationally via yuan, Russia would be the candidate number one as the exporter?
FWE: Definitely. Most definitely and Russia and China are connecting their financial markets ever closer. The Russian government is the in the process sometime this year of issuing Russian bonds denominated new Chinese yuan. The announcing of the petrol yuan, the oil futures contracts being sold in Shanghai, ultimately it won’t happen overnight but it’s certainly off to a positive start in the marketing acceptance. That has the basis for taking oil sales.
Let’s step back a moment to the 1970s and I document this at length in two of my books, Myths, Lies and Oil Wars and A Century of War. In the early 1970s when Nixon took the dollar off of gold, the dollar relative to the German mark and the Japanese yen dropped like a stone, something like 40% over a period of five or six months. And in order to stop that because the New York Banks were hurting quite a bit from that, there was a oil price shock that was orchestrated. I won’t go into the details it’s documented quite extensively in those two books of mine.
LS: And Sheikh Yamani had said something about this, too.
FWE: Yes. He invited me after reading my book to his annual energy retreat in London in 2000, September 2000. And then called me to a private dinner discussion at his home outside of London to talk about what I wrote about in the book. And he later went on CNN on an interview and mentioned my book by name. In the written transcript it’s in there and in the television version they spliced it out so that you couldn’t realise that it’d been in there. But Sheikh Yamani told me you are the first journalist or the first person outside of myself that writes correctly what happened with that oil shock. And that was manipulated by among others Henry Kissinger, the Secretary of State and by a group in the Atlantic establishment called the Bilderberg meeting in Saltsjöbaden, Sweden back in May of that period before the Yom Kippur War.
In any case, the US circles around Rockefeller, who at that point was the chairman of the board of USA Incorporated, I would say. They had engineered a 400% price rise in oil and to make sure that Germany and Japan and other countries wouldn’t make deals to buy oil in German mark but keep the dollar demand high and the dollar value high. They send a delegation from the US Treasury to sign an agreement with the Saudi Arabian monetary agency for a new relationship taking surplus Saudi petrodollars or OPEC petrodollars and buying US government debt.
LS: Yeah, and outside of the normal auction to privileged conditions.
FWE: Yes. In return, Washington agreed to give the Saudis tens and billions of dollars of defence equipment.
LS: Yeah, and Saudi Arabia would use its status as a swing producer in OPEC that it would only accept dollars as a pricing for oil.
FEW: And the quid pro quo was after 1975, this was formalised that Saudis would as swing producer in OPEC guarantee that OPEC sold its oil only in dollars and that held up until the time of Saddam Hussein during the sanctions shortly before the US invasion and Saddam Hussein began selling oil through a French bank denominated in Euros and not in dollars.
LS: And he made a plus, he made a net plus because he did sell his oil in Euro.
FWE: Yeah, yeah. And so this, what that has done up until the present is prop up the US dollars despite the fact that the internal industrial economy import activity of the United States went down the tubes over the past 40 years since the taking the dollar off of gold and the, putting of English dollars for the world economy. So, the idea than China and Russia would trade in energy and that other economies would begin to sell oil to China, Iran for example is a prime candidate in the petro yuan not in petrodollars, this began slowly like acid drops begins to erode the reserve currency status of the US dollar. And if that goes, it’s end game for the US as a financial global power.
LS: We have to make clear to our audience. The fact that you have to buy oil in dollar makes sure that you need dollar, that you acquire dollar in order to buy oil.
LS: And so if this mechanism goes, well then the US has a problem because the dollars that are floating around internationally would find their way back into the homeland of the US.
FWE: Well, the other thing is that in order to sell now you have under this wonderful Trumponomics as I call it, you have projections that the US annual government deficit, shortage of tax income from tax outgo, spending outgo will by 2020 exceed one trillion dollars a year for every year as far as the eye can see. And by end of 2020, 2028 I think was figured by the congressional budget office, the US public debt is estimated to be well over $33 trillion, it’s 20 now, 38 maybe, it’s just out of control. So, if the ability of the US dollar to command use in the world economy is severely undermined, you’re going to have to raise interest rates so high to sell this debt and it just becomes dysfunctional.
LS: Yes, but you have already in the last few years interest rates payments on this already existing that of per annum $400 billion.
LS: And if interest rates go up…
FWE: Yeah and that was under zero interest rates, but now, you know, if they have to put up interest rates to five, six, seven, 8% like it was in the 1980s. the whole thing just blows up sky high.
LS: And so coming back to gold, gold has the advantage relative to bonds or shares or the US dollar or other Fiat currencies that there is no counterparty risk. If you have the gold in physical form, there is no counterparty risk.
LS: So would you say that gold will be one of the ultimate winners of the ongoing financial crisis when it goes into full gear?
FWE: Well, it’s documented that J. P. Morgan, Chase and other select banks with this collusion of the Federal Reserve have been artificially depressing the price of gold for years. Every time there’s a new financial crisis, they intervene and keep gold within a very tight range. At a certain point that’s not going to work anymore and then some people estimate to follow the gold markets much more than I do but it could quickly go up to $10,000 an ounce or even beyond that.
Be that as it may, gold as you point out has no counterparty risk and it’s a historic store of value. It’s one of the beautiful commodities out there and it has a special – the other just being special significance economically and historically, the other thing is that China is the number one mining producer of gold in the world today, not South Africa. South Africa has fallen far behind…
LS: Yeah, and Russia is number three.
FWE: Russia is number three.
LS: And a lot of member states of the Shanghai Cooperation Organisation are producers or are buying gold.
FWE: At the rail connections of the circle of the China Belt Road Initiative in part are aiming to go in the areas where there are known gold reserves but no infrastructure during the Soviet era to bring that gold down to market. So, we have an extremely fascinating prospect, not just for China and Russia, for the world really to build up instead of tear down, destroy and burn and bankrupt which is the only policy that Washington seems able to follow these days.
LS: Yeah. To sum it up with a famous Chinese proverb. “May you live in interesting times” – you and all the others.
FWE: We certainly do.
LS: Okay. great. Thank you very much, William, for this interview.
FWE: Thank you, Lars.