Recent events, such as the overthrow of the government in Ukraine, the secession of Crimea and its decision to join the Russian Federation, the subsequent military campaign against civilians in Eastern Ukraine, western sanctions against Russia, and, most recently, the attack on the ruble, have caused a certain phase transition to occur within Russian society, which, I believe, is very poorly, if at all, understood in the west. This lack of understanding puts Europe at a significant disadvantage in being able to negotiate an end to this crisis.
Whereas prior to these events the Russians were rather content to consider themselves “just another European country,” they have now remembered that they are a distinct civilization, with different civilizational roots (Byzantium rather than Rome)—one that has been subject to concerted western efforts to destroy it once or twice a century, be it by Sweden, Poland, France, Germany, or some combination of the above. This has conditioned the Russian character in a specific set of ways which, if not adequately understood, is likely to lead to disaster for Europe and the world.
1. Take a nation of people who respond to offense by damning you to hell, and refusing to having anything more to do with you, rather than fighting. Make sure that this is a nation whose natural resources are essential for keeping your lights on and your houses heated, for making your passenger airliners and your jet fighters, and for a great many other things. Keep in mind, a quarter of the light bulbs in the US light up thanks to Russian nuclear fuel, whereas a cut-off of Russian gas to Europe would be a cataclysm of the first order.
2. Make them feel that they are being invaded by installing a government that is hostile to them in a territory that they consider part of their historical homeland. The only truly non-Russian part of the Ukraine is Galicia, which parted company many centuries ago and which, most Russians will tell you, “You can take to hell with you.” If you like your neo-Nazis, you can keep your neo-Nazis. Also keep in mind how the Russians deal with invaders: they freeze them out.
3. Impose economic and financial sanctions on Russia. Watch in dismay as your exporters start losing money when in instant retaliation Russia blocks your agricultural exports. Keep in mind that this is a country that, thanks to surviving a long string of invasion attempts, traditionally relies on potentially hostile foreign states to finance its defense against them. If they fail to do so, then it will resort to other ways of deterring them, such as freezing them out. “No gas for NATO members” seems like a catchy slogan. Hope and pray that it doesn’t catch on in Moscow.
4. Mount an attack on their national currency, causing it to lose part of its value on par with a lower price of oil. Watch in dismay as Russian officials laugh all the way to the central bank because the lower ruble has caused state revenues to remain unchanged in spite of lower oil prices, erasing a potential budget deficit. Watch in dismay as your exporters go bankrupt because their exports are priced out of the Russian market. Keep in mind, Russia has no national debt to speak of, runs a negligible budget deficit, has plentiful foreign currency reserves and ample gold reserves. Also keep in mind that your banks have loaned hundreds of billions of dollars to Russian businesses (which you have just deprived of access to your banking system by imposing sanctions). Hope and pray that Russia doesn’t put a freeze on debt repayments to western banks until the sanctions are lifted, since that would blow up your banks.
5. Watch in dismay as Russia signs major natural gas export deals with everyone except you. Is there going to be enough gas left for you when they are done? Well, it appears that this no longer a concern for the Russians, because you have offended them, and, being who they are, they told you to go to hell (don’t forget to take Galicia with you) and will now deal with other, friendlier countries.
6. Continue to watch in dismay as Russia actively looks for ways to sever most of the trade links with you, finding suppliers in other parts of the world or organizing production for import replacement.
Source Zero Hedge
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