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Michael Hudson
THE world’s geopolitics, major trade patterns and military alliances have changed radically in the past month.
Russia has re-oriented its gas and oil trade, and also its trade in military technology, away from Europe toward Eurasia.The result is the opposite of America’s hope for the past half-century of dividing and conquering Eurasia: setting Russia against China, isolating Iran, and preventing India, the Near East and other Asian countries from joining together to create an alternative to the US dollar area.

American sanctions and New Cold War policy has driven these Asian countries together in association with the Shanghai Cooperation Organisation as an alternative to NATO, and in the BRICS moves to avoid dealing with the dollar area, the IMF and World Bank austerity programs.

Regarding Europe, America’s insistence that it join the New Cold War by imposing sanctions on Russia and blocking Russian gas and oil exports has aggravated the Eurozone’s economic austerity, making it even more of a Dead Zone.

This week a group of Germany’s leading politicians, diplomats and cultural celebrities wrote an open letter to Angela Merkel protesting her pro-US anti-Russian policy.

By overplaying its hand, the United States is in danger of driving Europe out of the US economic orbit.

Turkey already is moving out of the US-European orbit, by turning to Russia for its energy needs.

Iran also has moved into an alliance with Russia.

Instead of the Obama administration’s neocons dividing and conquering as they had planned, they are isolating America from Europe and Asia.

Yet there has been almost no recognition of this in the US Press, despite its front-page discussion throughout Europe and Asia.

Instead of breaking up the BRICS, the dollar area is coming undone.

This week, President Putin is going to India to negotiate a gas and arms deal.

Last week he was in Turkey diverting what was to be the South Stream pipeline away from southern Europe to Turkey.

And Turkey is becoming an associate of the Shanghai Cooperation Organisation integrating the BRICS in a defensive alliance against the US, now that it is obvious that it has no chance of joining the EU.

A few months earlier, Russia announced the largest oil and gas trade and pipeline investment ever, with China — along with a transfer of missile defence technology.

There has been almost no discussion of this vast geopolitical realignment in the US media, largely because it represents a defeat for the New Cold War policy pushed by the neocons over the past year, ever since Russia convinced President Obama not to go to war in Syria, which had been a neocon military aim.

Their response was to isolate Russia and economically attack its trade and hence balance-of-payments strength: its gas and oil trade with Europe.

Last February, US diplomats engineered a Pinochet-style coup d’état in Ukraine, and used this as a lever to reverse Europe’s build-up of trade with Russia.

The aim was to punish Russia’s economy — and in the process to press for a regime change against Putin, putting in place a more pro-US, neoliberal Yeltsin-style regime by causing a financial crisis.

The assumption underlying this policy was that since the Soviet Union was dissolved in 1991, Russia was turning toward Europe to re-integrate its economy and society.

And Europe for its part sought to make Russia its main energy supplier — of oil as well as gas, through new pipelines being built to circumvent Ukraine.

Northstream ran via the North Sea to northern Europe.

Southstream was to be built via Bulgaria and Serbia to southern Europe — mainly Italy and Austria.

Germany for its part looked to Russia as an export market, to earn the rubles to pay for Russian gas and oil.

Other European countries stepped up their agricultural trade with Russia, and France agreed to build the enormous Mistral aircraft carrier.

In short, the ending of the Cold War promised to bring a much closer economic and hence political integration of Russia with Europe — cemented largely by a gas pipeline network.

US Cold Warriors have tried to disrupt this trade.

The plan was to isolate Russia and lock Europe into the US economy.

The dream was to export US shale gas to Europe, squeezing out Russia and thereby hurting its balance of payments.

This was always a pipedream. But what US heavy-handed military confrontation with Russia really has done is to drive a political wedge between the US and Europe.

Last week, Putin gave a speech saying that he found little point in negotiating with European politicians, because they simply followed US orders via NATO and by US pressure on German politicians, French politicians and other European politicians.

In following US New Cold War confrontation, Europe has been acting against its own economic interests.

Its neo-liberal Third Energy law has effectively blocked Russia from having any economic gain in selling more gas to Europe.

The US neo-liberal plan has been to insist on non-Russian control of the pipelines that would carry Russian gas and oil to Europe.

The idea is to use this pipeline as a tollbooth to siphon off the revenue that Russia had hoped to receive from Europe.

Here’s the best way to understand what has occurred. Imagine that the United States had a law that owners of buildings could not also own the elevators in them.

This would mean that the owners of the Empire State Building, for instance, could not own their elevators.

Some other investors could buy the elevators, and then tell the building’s renters or other occupants that they would have to pay a fee each time they rode up to the 40th floor, the 50th floor, the 60th floor, and so forth.

The result would be that instead of the landlord receiving the rental value of the Empire State Building, the elevator owner could demand the lion’s share.

Without access, the building would be a walk-up and its rents would fall — unless renters paid the elevator tollbooth.

This is what would happen with an oil pipeline owned by parties hostile to Russia.  —Counterpunch.