This week the French President, Nicolas Sarkozy, warned against Russia’s use of energy as an instrument of foreign policy. Speaking before his ambassadors, the French President said: “Russia is imposing its return [as a great power] on the world scene by employing its assets, notably oil and gas, with a certain brutality.” A great power ought to be gentle in its economic or political superiority. The Russians, however, are accustomed to a more cynical use of their advantages. The language of the Russian president includes mockery, condescension and threats. The West cringes, the East advances. Who cares what the weak countries think? Their feelings are without consequence.
Russia is not only engaged in a military buildup. Russia wants to use its economic muscles. You might ask what economic muscles Russia could have? It is bankrupt, backward, hobbled, demoralized and generally dismissed as an effective economic actor. We must remember, however, that positions in the world economy can change, that tables can be turned. Last June, at the International Economic Forum in St. Petersburg, the Russians called for a “new international financial architecture.” Here is Russia’s “Final Phase” economic strategy. The financial vulnerability of capitalism is growing. Keep pushing oil prices higher. Weaken the dollar. Precipitate the inevitable “crisis of capitalism.” Let the have-not nations rise up. Let them throw off their dollar shackles. Let them unite with Russia and China in “one clenched fist.”
Russian President Vladimir Putin believes the United States is vulnerable. The emerging economies of Brazil, India and China – combined with Russia – can shove the hollowed-out American economy aside. After all, American economic ascendancy is “archaic, undemocratic and unwieldy,” according to Putin. As for Europe, its dependence on Russian energy exports will assure a smooth process of “Finlandization.” Such a process begins with gentle warnings from Russia’s ambassadors in Europe and ends with self-censorship. Russia’s economic penetration of Europe gives special leverage to Moscow. In other words, the Kremlin has entered into the Fabric of European political life – through agent networks, influence operations and business pressure. These relationships can be used to influence powerful people, to adversely affect the careers of anyone who opposes Russian interests.
Economic influence means political influence. As America is humiliated, as America retreats, Russia advances. The day might come when Europe pays for its energy in rubles. If this occurs, Europe would have to acquire a large store of Russian currency. Russia’s economic position would grow, and so would Russia’s hold on Europe. Moscow wants to build a global old exchange on Russian territory, knocking big financial players to one side. The Russians want to stun the American economy. They want to weaken an already weakened dollar.
Financial Sense
