Jack Rasmus

by Dr. Jack Rasmus
April 22, 2024

This past weekend, April 20, 2024 the US House of Representatives passed a bill to provide Ukraine with another $61 billion in aid. The measure will quickly pass the Senate and be signed into law by Biden within days.

The funds, however, will make little difference to the outcome of the war on the ground as it appears most of the military hardware funded by the $61 billion has already been produced and much of it already shipped. Perhaps no more than $10 billion in additional new weapons and equipment will result from the latest $61 billion passed by Congress.

Subject to revision, initial reports of the composition of the $61 billion indicate $23.2 billion of it will go to pay US arms producers for weapons that have already been produced and delivered to Ukraine. Another $13.8 billion is earmarked to replace weapons from US military stocks that have been produced and are in the process of being shipped—but haven’t as yet—or are additional weapons still to be produced. The breakdown of this latter $13.8 amount is not yet clear in the initial reports. One might generously guess perhaps $10 billion at most represents weapons not yet produced, while $25-$30 billion represents weapons already shipped to Ukraine or in the current shipment pipeline.

In total, therefore, weapons already delivered to Ukraine, awaiting shipment, or yet to be produced amount to approximately $37 billion.

The remainder of the $61 billion includes $7.8 billion for financial assistance to Ukraine to pay for salaries of government employees through 2024. An additional $11.3 billion to finance current Pentagon operations in Ukraine—which sounds suspiciously like pay for US advisors, mercenaries, special ops, and US forces operating equipment like radars, advanced Patriot missile systems, etc. on the ground. Another $4.7 billion is for miscellaneous expenses, whatever that is.

In other words, only $13.8 billion of the $61 billion is for weapons Ukraine doesn’t already have!

And that $13.8 billion is all Ukraine will likely get in new weapons funding for the rest of 2024! Like the $23 billion already in theater, that will likely be burned up in a couple of weeks this summer once Russia’s coming major offensive—its largest of the war—is launched in late May or early June. So what does the US do in order to continue to fund Ukraine’s economy, government and military efforts this fall and thereafter?

In other words, what’s the Biden/NATO strategy for aiding Ukraine, militarily and economically, after the $37 billion is expended by late this summer? Where’s the money to come from?

To understand how the US/NATO plan to fund subsequent weapons production for Ukraine in late 2024 and early 2025, one must consider not only the $61 billion bill but a second bill also passed by Congress this past weekend that hasn’t been given much attention in the mainstream media.

That second bill may potentially provide up to $300 billion for Ukraine from USA and its G7 allies, especially NATO allies in Europe where reportedly $260 of the $300 billion resides in Eurozone banks.

Biden/US Short Term Strategy 2024

The $61 billion is clearly only a stopgap measure to try to get the Ukraine army and government funded through the summer. Beyond that, the broader Biden strategy is to keep Ukraine afloat until after the US November elections. In addition to the $61 billion—which the US hopes will get Ukraine through the US November election (but likely won’t)—US strategy includes getting the Russians to agree to begin some kind of negotiations. The US will then use the discussions to raise a demand to freeze military operations on both sides while negotiations are underway. But Biden’s ‘freeze and negotiate’ strategy is dead on arrival, since it is abundantly clear to the Russians it is basically about US and NATO ‘buying time’ and Russia has already been played by that one. As the popular US saying goes: “fool me once shame on you; fool me twice shame on me”.

The Russians already fell for that ‘let’s suspend fighting and negotiation ploy’ with the Minsk II treaty back in 2015-16. It agreed to halt military operations in the Donbass back then but NATO and the Ukraine government used the Minsk agreement as cover to re-build Ukraine’s military force which it thereafter used to attack the Donbass provinces. European leaders Angela Merkel of Germany and Francois Holland of France thereafter publicly admitted in 2022 that Minsk II was just to ‘buy time’.
The Russian’s were again similarly snookered at the Istanbul peace discussions held in April 2022. They were asked by NATO to show good faith in negotiations by withdrawing their forces from around Kiev, which they did. Negotiations were then broken off by Zelensky, on NATO’s strong recommendation, and Ukraine launched an offensive chasing the withdrawing Russians all the way back to the Donbass borders.

Russia is therefore extremely unlikely to fall a third time for a Biden/NATO request to ‘freeze’ military operations and negotiate again.

Biden may want to ‘buy time’ once more, but that hand’s been played twice already and the West will be (is being) told by Russia they aren’t interested in buying anything from the West and its ‘money’ no longer has any value.

Speaker Johnson’s Volte Face

The passage of the stop-gap $61 billion for Ukraine by the US House of Representatives was the result of House Speaker, Johnson, doing an about face and allowing the vote on the House floor after saying he wouldn’t for weeks. There’s been much speculation in the US mainstream media as to why Johnson reversed his position and allowed the Ukraine aid bill to the House floor for a vote. However, it’s not difficult to understand why he did reverse his view.

In recent weeks there was intense lobbying behind the scenes by US weapons companies with key Republican committee chairmen in the House. After all, at least $37 billion in payments for weapons—both already delivered and to be delivered—was involved. Not a minor sum even for super-profitable companies like Lockheed, Raytheon and the like. Rumors are that corporate lobbying had its desired effect on Republican committee chairs in the House, who then in turn pressured Johnson to allow the vote on the floor. The final vote in the House was 310 to 111 with 210 Democrats joining 100 Republicans to pass the measure—revealing that the core support for the US Military Industrial Complex in the House of Representatives is at least three-fourths (the US Senate likely even higher).

So the vote was the result of a ‘parliamentary maneuver’ in which all the Democrats crossed over to support the Republican Speaker of the House (who de factor switched parties for the moment). A minority of Republicans joined him. A slim majority of Republicans opposed the measure. Their opposition remains. Thus it is highly unlikely Congress will appropriate more funding for Ukraine for the rest of this year—even when the $61 billion for weapons and Ukraine’s government run out by this late summer.

So what happens if and when the $61 billion is exhausted well before the November elections?

A possible answer to that question lies in the passage of a second Ukraine funding measure this past weekend. The $61 billion was not the most important legislative action in the US House. While most of the media commentary has been on that Ukraine aid bill, hardly anything has been said in the mainstream media about another bill that the US House also passed over the weekend. This second measure has greater strategic implications for US global interests than the $37 billion in actual weapons shipments for Ukraine. This second measure is HR 8038, a 184 page bill misnamed the ‘21st Century Peace Through Strength Act’ which amounted to yet another package (the 16th?) of US sanctions.

Transferring Russia’s $300 Billion Assets to Ukraine

The first section of the bill arranges a procedure for the US to force the sale of the China company, Tik Tok, to a consortium of US financial investors, reportedly led by former US Treasury Secretary under Trump, Steve Mnuchin. This is part of the expanding list of sanctions on China. Also sanctioned are China purchases of Iranian oil, as well as a host of additional sanctions on Iran itself. However the most significant measure related to sanctions on Russia.

The 21st Century Peace Through Strength Act calls for the US to transfer its $5 billion share of Russia’s $300 billion of seized assets in western banks that were frozen in 2022 at the outset of the Ukraine war. It provides a procedure to hand over the $5 billion to Ukraine to further finance its war efforts! This move has been rumored and debated in the USA and Europe since the assets were seized two years ago. But now the process of actually transferring the seized funds to Ukraine has begun with the passage of this second bill by the US House.

The USA’s $5 billion share in US banks is just a drop in the bucket of the $300 billion. Russia could probably care less about it, i.e. a mere ‘rounding error’ in its total revenue from sale of oil, gas and other commodities. But Europe holds $260 of the $300 billion, according to European Central Bank chair, Christine LaGarde. A tidy sum which Russia has threatened to retaliate against Europe should the EU follow the US/Biden lead and also begin to transfer its $260 billion to Ukraine.

The US bill is very clear that the transfer of the US’s $5 billion is imminent. The bill requires the Biden administration to establish a ‘Ukraine Defense Fund’ into which the US’s $5 billion will be deposited. If parts of the $5 billion are not in liquid asset form, the US president is further authorized by the bill to liquidate those assets and deposit the proceeds in the fund as well. So the seizure and transfer of the $5 billion to Ukraine is a done deal. And when it happens a legal precedent will be made that Europe may use to follow and transfer its $260 billion.

One can expect the US to pressure Europe strongly to do so. Biden is further authorized by the bill to ‘negotiate’ with Europe and other G7 partners to convince them to do the same—i.e. seize their share of the $300 billion, liquidate and then transfer the cash assets into the US ‘Ukraine Defense Fund’. And to date the US has been able to ‘convince’ Europe—via its control of NATO and influence over Europe’s economy and its umbrella political elites in the European Commission and European Parliament—to follow US policy without too much resistance.

Europe is fast becoming an economic satrapy and political dependency of the USA in recent decades, more than willing to bend in whatever policy direction the USA wants.

It is clear the seizure & redistribution to Ukraine of the $300 billion via the Ukraine Defense Fund is the means by which the US/NATO plan longer term to continue to finance the Ukraine war after the $61 billion runs out sometime in 2024; and certainly in 2025 and beyond. For the US has no intention of ending its NATO led proxy war in Ukraine anytime soon. It is just seeking to ‘buy time’ in the interim before its November elections.

For a majority of both parties in the US—Democrat and Republican—are united on continuing the war. It will matter little who wins the presidency or which party has majorities in Congress after November. Political elites on both sides of the aisle in Congress are united in pursuing the war in Ukraine—just as they are united in continuing to fund Israel as well as to continue the US’s steadily expanding economic war with China. In just the past week it is obvious more US sanctions on China are also coming soon, including possibly an announcements of financial sanctions on China for the first time after US Secretary of State, Blinken’s, most recent visit.

Failed Russian Sanctions: Past and Future

The geopolitical objectives of the US and its commitment to continuing its three wars are resulting in unintended, negative effects on the economies of the US and its G7 allies, especially Germany. But those same sanctions have had little to no negative impact on Russia’s economy.

The recently passed US transfer of its $5 billion share of Russia’s $300 billion will accelerate the negative consequences especially for Europe should the latter follow the US lead and distribute its $260 billion share to Ukraine, which it eventually will.

As EBC chairperson, Lagarde, put it referring to the US plan and legislation: “It needs to be carefully considered”. UK political leaders are already on record advocating the confiscation and transferring of Europe’s $260 billion holdings of Russian assets to Ukraine. Europe in recent years has a strong history of capitulating to US economic policies and demands. It will be no different this time.

Should Europe join the USA in transferring its $260 billion share of Russian assets in European banks (most of which is in Belgium), it’s almost certain that Russia will reply similarly and seize at least an equal amount of European assets still in Russia. The Russian Parliament has officially recently said as much.

Part of the G7/NATO sanctions to date included forcing western businesses in Russia to liquidate and leave Russia. Some have done so. But many have not. Russia’s response has been to arrange the transfer of those EU companies’ assets that have left to Russian companies. This has actually stimulated the Russian economy. It resulted in Russian government subsidies—and thus government spending—to Russian companies assuming the assets, as well as additional investment by those companies after their acquisition of the departed EU companies’ assets.

In short, western sanctions measure pressuring western companies to leave Russia has backfired in its predicted result of reducing Russian government spending and business investment.
In contrast, the US/NATO’s fifteen or so sanctions packages to date have had little, if any, impact on Russia’s economy since the commencing of the war in February 2022. To cite just a few of the performance of Russia’s key economic indicators under the sanctions regime: (Note: all following data is from the US global research source https://tradingeconomics.com ):

Russia’s GDP in the latest six months has risen between 4.9% (3rd quarter 2023) to 5.5% (4th quarter). Russia’s PMI statistics show robust expansion for both manufacturing and services during the same period while in most of the major European economies both PMI indicators are contracting. Wage growth in Russia over the six months has averaged 8.5% for both quarters (whereas in the US is it less than half that and in Germany less than 1%).

Russian government revenues rose from roughly 5 trillion rubles in the third quarter to 8.7 trillion in the 4th. Military expenditures are up from $69.5 billion (dollars) to $86.3 billion. Consumer spending is at record levels in the latest quarter. Russian household debt as a percent of GDP remains steady at around 22% (whereas in the USA it is 62.5%). Crude oil production and general exports continue to steadily rise. Gasoline remains at 60 cents a liter (whereas in US five-six times that and in Europe more than ten times). And the unemployment rate in Russia remains steady at 2.9% (whereas in the US and Europe it’s a quarter to a half higher). Interest rates and inflation are higher in Russia but that represents an economy firing on all economic cylinders and is not necessarily a negative.

In short, it’s hard to find a single statistic that shows the Russian economy has been negatively impacted by the US/NATO sanctions regime over the past two years. Indeed, an argument can even be made the sanctions have stimulated the Russian economy not undermined it.

The latest sanction in the form of the US and G7 transfer of the $300 billion in seized Russian assets in western banks will almost for certain have a similar effect on Russia’s economy. Namely, distributing the $300 billion will result in Russian government seizure of at least an equivalent of European companies’ assets still in Russia. And that will provide funding for still further government subsidy spending benefiting Russian companies followed by more private investment.

Is the US Empire Shooting Itself in the Foot?

But there is an even greater consequence to follow the US and Europe’s desperate act of transferring Russia’s $300 billion in assets in western banks to Ukraine.

Western bankers, economic policymakers, and many economists alike have warned against the seizure and transfer of the $300 billion. Heads of US and other central banks, CEOs of large commercial banks, and even mainstream economists like Shiller at Yale have continually warned publicly that transferring the assets will seriously undermine faith in the US dollar system which is the lynchpin of the US global economic empire.

What countries in the global South will now want to put (or leave) their assets in western banks, especially in Europe, if they think the assets could be seized should they disagree on policies promoted by the empire? It’s clear the US has now begun to impose ‘secondary’ sanctions on countries that don’t abide by its primary sanctions on Russia. Will the US also seize the assets of these ‘secondary’ countries now in western banks if they don’t go along with refusing to trade with Russia? And what about China, as the US has now begun to expand its sanctions—primary and secondary—on that country as well? Watch for unprecedented financial sanctions on China that may be forthcoming following Blinken’s visit to China this week.

The US does not realize this is not the 1980s. The global south has developed massively in recent decades. They are insisting on more independence and more say in the rules of the empire—without which they will simply leave now that an alternative is beginning to appear in the expansion of the BRICS countries.

Recently expanded to 10 members (all of which in the middle east and heavily oil producers), no fewer than 34 more countries have now petitioned to join the BRICS. Furthermore, it is reported that at the BRICS next conference in late 2024 an ‘alternative global financial framework’ will be announced! That will likely include some alternative currency arrangement as well as an alternative international payments system to replace the US SWIFT system (by which the USA via its banks can see who is violating its sanctions). Likely forthcoming will be something to replace the US-run IMF in order to ensure currency stability and an expansion of China’s Belt & Road as an alternative to the US run World Bank. (Perhaps that is the real topic of Blinken’s forthcoming China visit?)

In short, the US global economic empire is entering its most unstable period. And yet US policy is to accelerate alternatives to it by seizing and transferring funds to Ukraine to continue the war! The blowback from the seizure and transfer will prove significant, both to US and European interests. It will render past resistance to US sanctions pale in comparison.

How to Crash an Empire!

History will show that US geopolitical objectives and strategies in the 21st century were the single greatest cause of the decline of US global economic hegemony over the last quarter century. Much of those objectives and strategies have been the work of the most economically ignorant foreign policy team in US history, who are generally referred to as the Neocons.

The seizure and transfer of the $300 billion may provide a way to continue funding Ukraine in the US/NATO proxy war against Russia through 2024 and beyond. But the timing could not be worse for US/Europe imperial interests, coming on the eve of the historic BRICS conference later this year. The desperate act of seizure and transfer will only convince more countries of the global South to seek another more independent alternative by joining the BRICS, or increasingly trade with that bloc.

History shows empires rest ultimately on economic foundations. And they collapse when those underlying economic foundations fracture and then crumble.

The longer run consequence of the $300 billion transfer and the exiting of the global South from the US empire can only be the decline in the use of the US dollar in global transactions and as a reserve currency. That sets in motion a series of events that in turn undermine the US domestic economy in turn: Less demand for the dollar results in a fall in the dollar’s value. That means less recycling of dollars back to the US, resulting in less purchases of US Treasuries from the Federal Reserve, which in turn will require the Fed to raise long term interest rates for years to come in order to cover rising US budget deficits. All this will happen to an intensifying fiscal crisis of the US state rapidly deteriorating already.

In other words, blowback on the US economy from declining US global hegemony—exacerbated by sanctions in general and seizure of countries like Russia’s assets in particular—is almost certain in the longer run, just as it will be for Europe’s economy in the even more immediate term.

But such is the economic myopia of the US neocons and the incompetent political elite leadership in both parties in the USA in recent years. As that other American saying goes: ‘We have found the enemy and they are us!’

Dr. Jack Rasmus
April 22, 2024

My latest update on status of Ukraine War, shifting strategies & potential NATO (France & NATO allies) troop intervention into Ukraine discussed in my April 5 Alternative Visions radio show + 2 shorter radio interviews (Critical Hour show) on war, sanctions and forces behind decline of US global economic empire.

TO LISTEN GO TO

Alternative Visions show Ukraine War Strategies Update:

https://alternativevisions.podbean.com/e/alternative-visions-shifting-strategies-in-the-ukraine-war/

Critical Hour radio show US Empire in Decline interviews:

https://drive.google.com/file/d/1Ngr7J1eXPphxeuOZzdWe7lg8HBndgcp2/view

https://drive.google.com/file/d/19W3XkyObGYv-MHQ1VJJmIqYKLA4peQn7/view

Economist Dr. Jack Rasmus discusses the decline of American Empire, Ukraine, dying dollar, rising BRICS, the global finance capital elites, EU economy & polity in crisis & the Pentagon’s plan for war with China by 2030. The empire isn’t going away quietly. The one-party system will continue to restrict democracy.

To watch the 1:17 minute interview GO TO:

https://geopoliticsandempire.com/2024/04/01/rasmus-empire-war-china-democracy-brics

The most important focus of today’s March 29, 2024 Alternative Visions show is whether the US Treasuries market is growing unstable with $27T bonds, notes and T-bills issued by year end 2023? Janet Yellen is in China. What does that mean for the future of the US dollar? The show also considers the latest on evidence of Moscow’s Mall Terrorist attack, including the pros & cons of evidence to date whether Ukraine sources were involved. The key remark of the past week re. the war is Putin’s dire warning re. F-16s from NATO to be delivered to Ukraine. Russia says it will attack F-16s even if on NATO country airfields. The show next turns to matters in Europe per se: Is Macron’s threat last week for France to send troops now suspended? Will Europe re-arm and create its own defense industry if US under Trump pulls out? Why is the Euro economy stagnating vs. USA economy records modest growth; Why has USA GDP been so far positive in 2024? Are US recent Inflation statistics reliable?

TO LISTEN GO TO:

https://alternativevisions.podbean.com/e/alternative-visions-russian-mall-attack-europe-s-economy-us-treasury-market

Watch my most comprehensive analysis to date interview on the growing crisis of US & global economy, US imperial hegemony, worsening contradictions of US fiscal-monetary policy, deepening recessions & financial instability in the 21st century US economy, periodic and next US capitalist restructuring, how the Ukraine and other US wars are accelerating these trends, and projections for US 2024 elections. Watch my 2 hour interview with the FreeThinkers’ Forum on March 21, 2024.

GO TO: https://www.youtube.com/watch?v=EWJjxymJYXA

by Dr. Jack Rasmus

This week, February 24, 2024 marks the beginning of the third year of the war in Ukraine. Hundreds, if not thousands, of assessments of the first two years of the war will be published, heard, or viewed.

As the war now enters its third year, Russia recently announced victory in a major regional battle for the strategic city of Avdeyevka in the Donetsk region of east Ukraine. Avdeyevka was the lynchpin for Ukrainian defenses throughout the region which, by some indications, are beginning to fracture.

After similar Russian strategic victories in the strategic cities of Bakhmut in 2023, and Mariupol in 2022, Russia lacked sufficient numerical forces to capitalize on those victories and launch new offensives to further expand its area of control. However, after the taking of Avdeyevka it appears that now may be changing. This time Russia is pressing westward and taking more villages and towns formerly in Ukrainian control. Moreover, rumors of an ever bigger Russian offensive coming soon are being reported by reliable sources.

Some of those sources report more than 110,000 new, additional Russian forces have been positioning in the north Kharkhov-Kupiansk area directly bordering Russia. A new Russian front and offensive may soon emerge in that region. If so, it would make Russia’s recent Avdeyevka victory—where 40,000 Russian troops were employed— appear as mere dress rehearsal. Others have identified another 60,000 Russian troops are also amassing in the far south Zaporozhiye region.

In short, the bigger picture that emerges is that Russian forces have now significantly increased in number all along the Ukraine front. While its initial invasion in February-March 2022 involved only 190,000, spread across roughly 1500 miles of front from Kiev to Crimea, the Russian Ministry of Defense admits it has more than 600,000 troops now deployed along a front in East Ukraine half that long. This number is also more or less confirmed by the Ukrainians as well. In contrast, while Ukraine had a total force of more than 500,000 in 2022, and likely significantly more by the summer of 2023, it now has by various accounts no more than 350,000 available combat troops.

In 2023 Ukraine launched a general offensive starting in early June. It called a halt to the offensive by early fall 2023 after suffering massive losses in killed and wounded. Estimates vary from 100-300,000 Ukrainian forces killed and wounded depending on sources.

Most independent sources put Ukraine’s losses around 200,000 during the summer 2023 offensive and including all of 2023. The magnitude of the losses have resulted in Ukraine recently announcing plans to draft another 500,000 in 2024 to replenish its ranks. Initially this 2024 mobilization was to include women and students. However, a public outcry has now forced the Ukraine government to reconsider and change the composition of that planned draft, the results of which have yet to be finalized yet. In the meantime reports and smartphone videos abound showing ‘recruitment teams’ composed of Ukrainian police and other para-military forces kidnapping military age Ukrainian men off the streets who are then sent to quick military training and then to military units on the front in east Ukraine.

In contrast to Ukraine’s difficulties replenishing its military forces, in the fall of 2023 Russia announced it was already training 420,000 new troops in 2023, available for combat by the winter 2024 and after. This mobilization of manpower was composed, according to the Russian Ministry of Defense, completely of volunteers, not draftees. Russia said Russian citizens were volunteering to join the Russian army at a rate of 1500 per day. It’s likely some of the 420,000 may have already been committed to the recent strategic battle of Avedeyevka, as part of Russia’s 40,000 troops there who took that city in mid-February 2024.

Some of the 420,000 recruited and trained in 2023 are also certainly among the 110,000 Russia has amassed in the north Kharkhov-Kupiansk front, as well as among the 60,000 Russia has additionally assembled at its southern Zaporozhiye front.

All this preceding reference to the relative force numbers engaged at the outset of the conflict, then lost over two years, and now being mobilized in the third year is with a purpose.

The Principles of War

Wars are seldom won when both sides are roughly evenly matched in numbers of troops, weapons and equipment. According to the Principles of War a decided military advantage lies with the side that is able to concentrate superior forces and commit that relatively superior force at the opponent’s weakest point.

Concentration of Force is probably the first principle of war, although there are clearly others—not least of which include: element of Surprise, Mobility, Maneuver, sufficient Reserves, which side has Internal lines of Communication and Supply, quality of Intelligence, Morale, Deception, etc. However, all these other principles mostly serve in various ways to enhance the principle of Concentration of Force.

The principle of Surprise may allow a smaller attacking force to catch a larger off guard, create confusion and disarray, disperse its forces, and disrupt its ability to respond. Mobility is about moving forces to a point to quickly create a concentration; Mobility and Maneuver enables the concentration temporarily of superior forces along an opponent’s various weak points. Having sufficient Reserves is a principle of particular importance the longer the conflict; Reserves restore a concentration when depleted; Intelligence discovers weakness of an opponent along a line of conflict; Deception convinces an opponent to incorrectly deploy its forces, etc.

The point here is not a lesson in basic military tactics or strategy. It is to provide a basis for explaining why the Ukraine war over the past two years has appeared to swing back and forth in its outcome.

When conflict initially erupted in February 2022 there were significant Russian gains and advances in spring of 2022; thereafter Ukrainian gains later that late summer-fall 2022; followed by Ukraine’s defeat in its summer 2023 offensive by Russia’s superior defense; now, in 2024 once again, Russia is advancing at multiple locations across the Donbas front and appears may soon launch even broader offensives elsewhere.

The Principles of War are universal and apply in every conflict, whether during the world wars of the 20th century, US wars of Empire in the 21st, civil wars, regional wars, and even guerilla insurgencies—in the latter case one side may be outnumbered but is able nonetheless to concentrate its forces at a single point to gain a relative force advantage temporarily and thereby defeat a larger opponent.

These and other basic principles of war have been observed and written about for centuries. Julius Caesar wrote of them in his War Commentaries and in his reflections on the Roman civil war. So did Napoleon’s general and military theorist, Bertrand de Jomini, during the Napoleonic wars. Britain’s Liddell Hart during the world wars of the 20th century. And in guerrilla warfare both Mao and Vietnam’s general Giap.

Perhaps best known to the general public, however, are summations of the Principles of War by the Prussian general von Clausewitz. Clausewitz wrote about applying the Principles of War both tactically as well as strategically. The latter includes how the Principles are impacted by economic power, political maneuvering by elites, and psychological factors.

The infamous phrase, ‘war is the extension of politics by other means’ is generally attributed to him. Although others have reversed that phrase to say no, in contrast, ‘politics is an extension of war’ (Henry Kissinger).

So how have the Principles of War appeared to influence the current Ukraine war? How have the two sides–NATO/Ukraine on the one hand and Russia on the other— applied (or misapplied) the principles to date, such that the seesaw outcomes between the two sides is the result? Which side has Clausewitz’s Ghost haunted the most?

Russia’s Initial Special Military Operation (SMO): 1st Offensive Spring 2022

For the past two years western media and the Biden administration has tried to create the message that Russia’s Special Military Operation (SMO) launched in February 2022 was about capturing the capital of Ukraine, Kiev. As the message goes, Russia was then defeated in some mystical battle of Kiev and retreated from Kiev that spring. Ukraine’s army then drove the Russians all the way back to the eastern Donbas region of the breakaway ‘provinces’ (called Oblasts) of Lughansk and Donetsk.

However, evidence that has appeared over the past year, and in recent months in particular, reveals this was not true. There was no battle of Kiev. And Russian forces withdrew from around Kiev and were not defeated in some assumed major combat event.

This actual alternative reality was revealed by public statements of participants of both sides in the secret negotiations held in Istanbul, Turkey in March-April 2022 where the representatives of Ukraine and Russia apparently reached a tentative peace deal and compromise at that time. The key elements of that tentative deal were that Ukraine would not join NATO and the eastern ‘states’ of Lughansk and Donetsk would remain in Ukraine, albeit with a degree of autonomy.

In the middle of the Istanbul negotiations Russia was asked by leaders of France and Germany (Macron and Sholtz) to show good faith in the negotiations by withdrawing its troops around Kiev. It did. While the withdrawal was underway, and the Istanbul tentative peace deal was being considered by Ukraine’s president Zelensky, it is now confirmed that British Prime Minister, Boris Johnson, flew overnight to Kiev and convinced Zelensky to reject the tentative deal and continue the war. Johnson reportedly promised Zelensky all the military arms, money and NATO support necessary to defeat Russia militarily.

Johnson and NATO’s military strategy was based on NATO’s inaccurate intelligence assessment at the time that the Russian military was weak and disorganized; that its economy could not survive the sanctions being imposed by the US and NATO; and that Putin’s political position was tenuous and regime change likely as Russia losses mounted and its economy crashed. That intelligence and that NATO strategy proved completely erroneous as the historical record has since shown. But Russia’s own intelligence assessment when it launched its initial SMO in February 2022 may not have been any more accurate than NATO’s. In terms of Principles of War, the principle of Intelligence was misapplied by both sides.

It is now known that the initial objective of Russia’s SMO was political, not military. As the tentative Istanbul deal in March-April, shortly after the invasion revealed, the goal was a military show of force by Russia in order to convince Ukraine to come to the negotiations table in Istanbul. In that regard, Russia’s SMO was successful. It brought Ukraine to the negotiations table in Istanbul.

However, Russian intelligence politically underestimated the influence of NATO in the Zelensky government and the ability of NATO (Johnson) to convince Zelensky to continue the war. Russia’s political objective was thus trumped by NATO’s political influence to convince Zelensky to continue the military conflict.

Politics thus drove Russia’s initial SMO while NATO political counter-measures by Boris Johnson led to a continuation of military conflict. Clausewitz’s famous dictum ‘war is an extension of politics’ was confirmed by Zelensky’s decision to continue fighting. But so apparently was Kissinger’s reverse dictum: ‘politics is an extension of war’ was confirmed as Russia succeeded in bringing Ukraine to the negotiations table.

There was no way that Russia’s initial SMO intended to take Kiev by military action—let alone conquering all of Ukraine as western media . The SMO force was composed of only around 190,000 Russian troops. That’s about four divisions, spread along a 1500 mile front from Kiev to Crimea. That wasn’t even a sufficient Concentration of Force to even take Kiev let alone all of Ukraine. The initial phase SMO was therefore ultimately and fundamentally a political not a military strategy. Its objectives were ultimately political, not military. If the SMO first phase failed in its political objective, it was due to poor application of the principle of Intelligence.

Putin’s intelligence advisors reportedly assured him Ukraine would come to the table and compromise if a military show of force were undertaken. That intelligence assessment underestimated US/NATO ability to ensure the war’s continuation, however. Not surprising, after Ukraine rejected the Istanbul compromise and opted for more war, Putin reported sacked a hundred of Russia’s intelligence operatives.

Putin himself was also deceived during the Istanbul negotiations by the request of France’s Macron and Germany’s Sholtz to show good faith by withdrawing Russian forces from around Kiev. Putin admitted he fell for that NATO use of the Principle of Deception in his public interviews later in 2024.

NATO failed in its Intelligence as well. NATO grossly underestimated the political, economic and military strength and durability of Russia. But NATO’s intelligence failure was more long term consequential, while Russia’s was more short term tactical.

It wasn’t the first time Putin fell for NATO deception. He recently also admitted he trusted France and Germany’s assurances in 2015 when they, in the persons of then German Chancellor, Merkel, and France President, Holland, assured him Germany and France would enforce the Minsk agreement of 2015. That agreement called for a halt in hostilities between Ukraine and the Donbas breakaway provinces, Lughansk and Donetsk. But Ukraine’s Kiev government did not halt its attacks on the Donbas for the next eight years, continually shelling Donbas from 2015 to 2022, in the process killing 14,000 of Donbas Ukraine citizens.

Of course the grandest deception was US and EU assurances in 1991 when the USSR collapsed that NATO would not ‘move east’. Starting in 1999 it did so. So in its effort to reach some strategic security arrangement with NATO, Russia has repeatedly been duped.

Given the events of 1991, 2015 at Minsk, and now March 2022 in Istanbul, it’s not likely Putin will ever trust any verbal assurances by Germany and France—or the UK or US—ever again. As the well-known American saying goes: ‘fool me once, shame on you; fool me twice, shame on me’.

It is thus highly unlikely Putin and Russia will fall for any tentative agreements in the Ukraine war. In 2024 any resolution of the conflict will be determined by military force. Kissinger’s reverse statement ‘politics is the extension of military action’ (not military action the extension of politics) seems more likely the application in 2024 and beyond.

Ukraine’s 1st Offensive: Summer-Fall 2022

If Concentration of Force, Intelligence and Deception were the key Principles of War at play in the initial phase of the Ukraine War in spring 2022, by late summer 2022 Concentration of Force and the element of Surprise were the dominant forces.

In the summer of 2022 Ukraine quickly followed up on Russia’s withdrawal from Kiev and northern Ukraine and launched an offensive of its own. It used the four months from February 2022 to build its manpower and arm itself with western weapons (or older Soviet weapons that East Europe was giving it). By summer it had 500,000 troops available, to Russia’s still limited 190,000 most of which were no longer located in the north but were committed to the taking of the strategic city of Mariupol in the south. That left the northern Kharkhov region sparsely defended and overly extended. With the planning and strategy assistance of NATO officers, including US generals in Kiev, that summer 2022 Ukraine overwhelmed Russian forces in Kharkhov province in the north and drove them back to Lughansk. It was a clear tactical defeat for Russia.

Russia consolidated its forces in Lughansk by mobilizing an emergency force of 300,000 from its reservists in Russia. That regrouping also included pulling some forces back across the Dnipr river in the southern province of Kherson. That too was a withdrawal not a defeat, notwithstanding the spin by western and Ukraine government media.

Thus by early 2023 Ukraine’s initial advantage in numerical forces committed to its 1st offensive in Kharkhov was neutralized by Russia’s call up of 300,000 reservists. As 2022 came to a close both sides were about numerically equal with around 400,000 troops.

Ukraine’s Defeated 2nd Offensive: Summer 2023

A new military phase in the conflict was about to begin in 2023. Russia went over to the defensive while Ukraine planned on yet another, larger 2nd offensive for some time in the spring or early summer 2023. And here Ukraine made a major strategic mistake which may in hindsight indicate a turning point in the war long term: Ukraine waited nine months to launch a second offensive in June 2023. While it delayed, Russia built massive defenses in depth all along the now shorter 800 mile front. Those defenses were especially deep in Zaporozhiye where Russia expected Ukraine’s next offensive to concentrate. It was not difficult to assume that location was where Ukraine would concentrate its forces. Zelensky and his government repeatedly said publicly that’s where the offensive would come. So much for the Principle of Surprise which Ukraine used to its advantage in its prior summer 2022 offensive in the north.

Clausewitz and every general before and after knows that defensive forces have a numerical advantage over offensive when it comes to Concentration of Force. Typically and on average an offensive force needs to be at least three times as large as a defensive one in order to prevail. In attacking a major urban area, the ratio needs to be perhaps as much as five to one. (Another reason why Russia in February-March could not have planned to take Kiev with only around 40,000 in that area).

Russia’s massive defense, called the Surovikin line, were at least three lines deep. Extensive fields of mines, anti-tank gun emplacements, artillery or all kinds were positioned on the high points, along with drones, thousands of tanks and around 400,000 Russian troops most of which were concentrated in the Zaporozhiye line. Ukraine in turn failed to concentrate sufficient force in that region as part of its offensive, keeping large forces deployed elsewhere. US military advisors at the time reportedly criticized Ukraine’s failure to concentrate sufficient forces in its major point of offensive in Zaporozhiye. The outcome of Ukraine’s 2023 offensive was predictable. The Principle of relative Concentration of Force determined Ukraine’s failed offensive. Defensive warfare–which Russia has always been good at–prevailed—as the Nazis in world war II discovered in battles for Moscow in 1941, Stalingrad in 1942, and then Kursk in summer 1943.

Ukraine’s summer 2023 offensive proved a military disaster and a huge tactical defeat. Reports of Ukrainian losses ranged from 90,000 killed or wounded in the summer offensive alone and 250 to 300,000 through the first two years of the war. The western source Mediazone estimates Russia’s total losses in killed and wounded for the first two years of the war at 37,000.

Ukraine’s 2nd offensive gains for that expenditure of manpower during were measured in mere hundreds of meters in a handful of locations. Many tens of thousands more of its troops were also lost trying to hold the strategic city of Bakhmut in central Donetsk in spring 2023. These losses were sorely felt when a couple of months later the main 2nd offensive was launched. Ukraine’s summer offensive needed a force of perhaps one million to prevail over Russia’s dug in 400,000. It barely had a ratio of 1.5 to 1, if that. Clausewitz’s primary Principle of War was thus fundamentally violated, with predictable results.

Ukraine’s 2nd offensive was decimated by Russia’s 1st Defensive. Actually ‘decimated’–a word taken from the old Roman word for 1/10 of losses–was an underestimation. Ukraine may have lost one third and certainly one-fourth. Clausewitz must have looked down and just shook his head.

As Ukraine’s 2nd offensive cracked its teeth on the rock of the Surovikin line, Russia was already preparing for 2024. Once Ukraine’s 2023 offensive was halted by fall 2023 Russia announced it had been training 420,000 new troops. These forces be available to join the front in 2024.

In contrast, by year end 2023 Zelensky announced Ukraine needed to recruit (draft) and mobilize another 500,000 in 2024 to replenish forces lost in 2023. At first that draft plan included students and women but Ukrainian public protests forced him to back off that plan. To date, the final plan has not yet been defined in final form; nor recruitment begun. Reportedly the new plan will employ means to force the estimated 6 million Ukrainian men who emigrated to Europe when the war began to return. In the interim teams of Ukrainian police and paramilitaries have been forcibly kidnapping military aged Ukrainian men off the streets and sending them to the military.

So the picture as of February 2024 entering the third year of war is Russia with 600,000 men in arms on the front at start of 2024, as confirmed by Russia’s Ministry of Defense, with possible more of the 420,000 enlisted and trained in 2023 also coming on line. Assuming some rotation, Russia’s total deployment in Ukraine should reach around 800,000 this year. Meanwhile, Ukraine’s forces are estimated at 350,000 which includes 100,000 of reserves of its best units.

Russia’s 2nd Offensive: Spring 2024?

Russia forces are amassing across multiple fronts. There are the 60,000 located reportedly in south Zaporozhiye province who may be planning to take the rest of that province still occupied by Ukraine. And an estimated 110,000 more amassed in the north reportedly preparing to retake Kharkhov province as well. One or both of those regional offensives are expected to begin sometime this spring. In the meantime, Ukrainian forces are steadily being driven back from their recent defeat in Avdeyevka—the third major strategic city taken by Russia (the first Mariupol and second Bakhmut)–as 40,000 Russian forces push a third front west from Avdeyevka. This time the Concentration of Force advantage lies decisively with the Russians.

Internal Lines of Supply and Communication are also key principles of war. Here as Russia’s anticipated second offensive begins, Russia has another strategic advantage. It has virtually all internal lines of supply. In contrast, Ukraine has to depend on lines reaching back into Europe and across the Atlantic. And Ukraine’s lines appear to be drying up for two reasons.

First, Europe has run out of the old USSR weapons it had been given Ukraine. Now it is dipping into its store of more modern US provided weapons like cruise missiles and F-16s. More troublesome, both the USA and Europe appear unable to provide Ukraine with necessary military ammunition, most notably 155mm artillery shells. EU at best produces only 4-5,000 a month. (During the summer offensive Ukraine was using 6,000 a day!) US production of 155mm is barely more sufficient. It began the war producing 14,000 a month. Now it’s 28,000 a month. Still not enough. After one more year US claims it will produce 50,000 a month. But Zelensky says he needs 1m shells a year now.

The US has had to arrange ammunition for Ukraine from South Korea and reportedly now from Japan. Russia on the other hand produces 1m shells a year. That’s nearly 100,000 a month plus the additional shells it’s getting from No. Korea. This ammunition problem is replicated across other ammunition production to varying degrees.

At the same time, opposition appears to be growing within the US military to provide Ukraine with more modern US weapons thereby depleting US stocks. For example, only a small number of Abrams tanks have been provided Ukraine to date. F-16s will be drawn from Europe’s stock but of older versions of the aircraft. The US has provided so far only 7 Patriot anti-missile defense units but 5 have already been destroyed. Patriot systems cost billions and take a long time to produce. It’s not likely the US military will want to sacrifice too many more in 2024 quickly.

Then there’s the matter of US funding for Ukraine which continues to struggle through Congress with little light at the end of that tunnel. Ukraine’s totally dependent, in other words, on sources other than its own production and those supply lines are susceptible to political winds changing in the west. Even Ukraine’s early advantage in battlefield intelligence via surveillance is fading. It initially had total use of Elon Musk’s Starlink satellite system but Russia has reportedly found a way to tap into that on the battlefield as well now.

In short, Ukraine’s disadvantage in critical weapons is growing. So too is its disadvantage in air superiority on the front. It’s main successes have been sinking several Russian ships with west provided drones and long range missiles. But that has not had any appreciable impact on the progress of the ground war. Nor have any of the western media’s many NATO ‘game changing’ weapons throughout the war.

Shifting Strategies in the Ukraine War

Ukraine may have lost the war as far back as its failed summer-fall 2023 offensive. Since then it has not been able to recoup its losses in men or material, as Russia’s advantages in both grows steadily. Ukraine is totally dependent on US/NATO funding, both for weapons and for keeping its economy afloat. Half of Ukraine’s budget has been provided by the west. And that funding is getting harder to provide, as events in Congress have shown recently with the failure of the Biden administration to convince it to pass his requested $61B further aid to Ukraine. For its part, Europe has passed legislation to provide Ukraine with another $54 billion, but that’s in the form of loans distributed over several years.

But no amount of funding by the west can substitute for Ukraine’s simply running out of men (and women) in arms as war depletes its available sources of military manpower. Whether Ukraine can restore a Concentration of Force to neutralize Russia’s is highly doubtful.

At the outset of the conflict, US and NATO strategy was to arm Ukraine to the teeth with weaponry to fight the war, impose sanctions on Russia they thought would undermine its economy and ability to produce military arms, reduce its ability to sell oil globally with which to fund its military and even its civilian economy, and bet that the losses in the war and economic crises would result in political instability in Russia and Putin’s overthrow. But none of the above had, or will, happen. If anything, the war has strengthened Putin’s position in which polls show a 80% pubic favorable impression. His re-election this spring is all but ensured.

In contrast, Zelensky’s government is rift with discontent and rumors of coups. He has replaced most senior military generals and many government officials. His ability to continue martial law runs out in a couple months after which elections are likely and, if held, most independent accounts predict he’ll lose re-election by wide margins.

In this increasing bleak scenario for NATO and the Biden administration, the US and NATO strategy is now shifting as well. The US new strategy is not formally finalized but appears to be moving toward the following elements: Ukraine militarily must shift to a defensive strategy with a new line somewhere east of the Dnipr river in the Donbas-Zporozhiye area and Kharkhov in the north. It must rebuild its military forces in 2024. The US/NATO will provide it new advanced weaponry needed (F-16s, ATACMS long range missiles, long range drones, etc.) to hold the Russians back from bigger gains. After the US elections in November 2024, Ukraine can then launch yet another, 3rd offensive in 2025 after it has rebuilt its forces. In the meantime, Ukraine (and NATO) should ‘play for time’ behind the scenes, as it had in 2015.

However, not all in Washington DC accept this future change in US strategy. Some neocons want again to ‘double down’, either sending NATO troops to west Ukraine to release more Ukraine forces to the front; to allow Ukraine to use US provided long range weapons (F-16s, ATACMS missiles, drones) to attack deep inside Russia; to seize and distribute Russia’s $300B assets in western banks frozen at the start of the war and use them to fund Ukraine; and even to consider using tactical nuclear weapons should Russia ever cross the Dnipr river or try to take Kiev.

For its part, Russia’s SMO has changed as well. While Russia is open for discussions with the west (some early contacts reportedly going on in secret), military action will determine the outcome of the war. No more western verbal ‘assurances’. At minimum, Ukraine must clearly reject joining NATO. It must remove fascist influences in its military and government—i.e. de-nazify. It must henceforth be neutral and no longer a strategic threat to Russia. NATO must agree to a longer term security arrangement with Russia. But there may be more.

Signals from Putin and other high ranking Russian officials in recent months also suggest that, should Ukraine continue the war, or the west escalate further, then Russia considers all the Russian speaking provinces must become part of Russia just as the four eastern ones already have. That means the area of Kharkov, all the provinces east of the Dnipr river and the southern provinces of Mykolaiv and Odessa as well. Perhaps even Kiev. Russia will likely not talk to Zelensky either, but only with NATO. In other words, continued military action will determine the eventual outcome of the war.

As the respective positions indicate, all sides are still quite far apart. Negotiations or a deal is not on any table or about to be. That means all sides are still betting on a military solution.

But as Clausewitz’s Principles of War have already shown, which side has the greater Concentration of Forces, both tactically and strategically, has the ultimate advantage. In addition, the equation of war is influenced as well by which side runs out of Reserves first; which has the stronger Internal Lines; which can deceive the other better as to how and where it will attack next; which forces have the better training and morale; which economy can out produce the other; which has the more and better weapons. And, not least, which leaders are more capable and can remain in office to provide continuity of effective leadership. In 2024 it appears Russia either has, or is gaining, advantage in all the above.

(For an audio discussion of these same topics, listen to the podcast of my Friday, February 23, 2024 Alternative Visions radio show at: https://alternativevisions.podbean.com/e/alternative-visions-ukraine-war-and-the-ghost-of-clausewitz/ )

Dr. Jack Rasmus

February 25, 2024

Since Tucker Carlson’s Interview with Putin, pro-UK and Ukraine sources have issued rebuttals saying it was Russia Foreign Minister, Lavrov, that broke off negotiations in Istanbul not UK’s Boris Johnson who arrived in Kiev a day later. Following my posting of the Carlson-Putin interview (see below) in which Putin said it was Johnson and that Russia and Ukraine negotiators had a tentative peace deal, only to be signed off by Zelensky, pro-Johnson propagandists took issue with my posting reporting Putin’s position. The pro-Ukrainian trolls say the proof of their view is that China state TV reporters supported it.

I rarely allow third parties to post on this blog but in this case I am. What follows is a third party’s analysis of the debate ‘did Lavrov or Zelensky reject the tentative peace deal’. Check out the following analysis, time lines and the references. Decide for yourself. Who’s wrong: Putin or the pro-Ukraine trolls.

ANOTHER VIEW OF WHO REJECTED THE ISTANBUL DEAL

“Between March 14-17, a fifth round of peace talks took place via video conference. This produced the best outcome so far. On March 15, Ukrainian President Zelensky reported ‘real progress’; next day Lavrov spoke of ‘some hope for reaching a compromise’. The Financial Times of March 16 signalled a 15-point draft deal by which Kyiv gave up its NATO ambitions in return for security guarantees outside NATO. In an interview with ABC news , Ukrainian negotiator Podolyak said Russia’s demands and position have “softened significantly” and :therefore, we have much confidence that we will have a cease-fire in the coming days”.

By this time, a certain amount of peace momentum had replaced war momentum. There was no breakthrough at the sixth round of negotiations on March 21. However, according to BBC news and Vedomosti ( Russian newspaper) President Zelensky requested a face-to-face meeting with Putin. Lavrov rejected this and said, “ It should happen once the two sides are closer to agreeing on key issues”.

The seventh round of talks on March 29 saw the renewal of face-to-face negotiations in Istanbul. European Pravda reported that this had so far been the ‘most effective round of Ukraine-Russian negotiations’. The discussion centred on a draft treaty, the gist of which was permanent Ukrainian neutrality and non-nuclear status, in return for which Ukraine would have security guarantees similar to Article 5 of the NATO military alliance from China, Russia, UK, France, Belarus and others. Ukraine would also start a 15-year consultation period on the status of Crimea, though reserving the right to reconquer Luhansk and Donetsk (Ukrainian Pravda). For its part, Russia would “drastically reduce” military activity near Kyiv to ‘create the necessary conditions for further negotiations”. Ukraine’s successful counter-offensive had started a week before the Istanbul peace talks. The Russian offer to ‘withdraw’ on March 29 was thus far from voluntary.
This draft was the one Putin waved on television on June 17, 2023. He called it a “not bad result”.

What happened then?

Kyiv official says ex-UK PM Johnson derailed 2022 talks with Russia – (https://www.dailysabah.com/world/europe/kyiv-official-says-ex-uk-pm-johnson-derailed-2022-talks-with-russia_) Davyd Arakhamiia, a top advisor to Ukrainian leader Volodymyr Zelenskyy and the leader of the Servant of the People faction, said the Russian delegation at the 2022 negotiations in Istanbul had promised Kyiv peace in return for neutrality. “The war could have ended in the spring of 2022 if Ukraine had agreed to neutrality,” Arakhamia, who led the Ukrainian delegation, told Ukrainian TV channel 1+1 on Friday.

“Russia’s goal was to put pressure on us so that we would be neutral. This was the main thing for them: They were ready to end the war if we accepted neutrality, like Finland once did. And for us to make a commitment that we will not join NATO. This is the main thing,” he added.

In reply to why Ukraine did not agree to the proposal, Arakhamia said: “Firstly, it was necessary to change the Constitution, and secondly, there was no trust in the Russians that they will do this.”

“Further, after we returned from Istanbul, Boris Johnson visited Kyiv and said that we should not sign anything with the Russians and ‘let’s just fight.'”

Common Dreams Jake Johnson reports it as follows:
Boris Johnson Pressured Zelenskyy to Ditch Peace Talks With Russia: Ukrainian Paper

“The British government has become an obstacle to peace in Ukraine,” said the Stop the War Coalition. “The conflict there is developing into a proxy war between Russia and NATO and it is the Ukrainian people who will suffer the consequences.”

The Ukrainian news outlet Ukrayinska Pravda reported Thursday that British Prime Minister Boris Johnson used his surprise visit to Kyiv last month to pressure President Volodymyr Zelenskyy to cut off peace negotiations with Russia, even after the two sides appeared to have made tenuous progress toward a settlement to end the war.

Citing unnamed sources from Zelenskyy’s “inner circle” and advisory team, Pravdareported that “Johnson brought two simple messages to Kyiv”:

“The first is that Putin is a war criminal; he should be pressured, not negotiated with. And the second is that even if Ukraine is ready to sign some agreements on guarantees with Putin, they are not. We can sign [an agreement] with you [Ukraine], but not with him. Anyway, he will screw everyone over,” is how one of Zelenskyy’s close associates summed up the essence of Johnson’s visit…

Johnson’s position was that the collective West, which back in February had suggested Zelenskyy should surrender and flee, now felt that Putin was not really as powerful as they had previously imagined.

Moreover, there is a chance to “press” him. And the West wants to use it.

In public remarks during his trip, Johnson vowed that the U.K.–in line with the U.S., Germany, and other western powers–would continue ramping up its “military and economic support and convening a global alliance to bring this tragedy to an end, and ensure Ukraine survives and thrives as a free and sovereign nation.”

“I made clear today that the United Kingdom stands unwaveringly with them in this ongoing fight,” the right-wing British leader said, “and we are in it for the long run.”

Dr. Wilmer Leon
February 12, 2024

by Dr. Jack Rasmus, copyright 2024

For months the mainstream media and Washington Pols have been pushing the metaphor that the US economy is a plane on its final approach to a ‘soft landing’. Soft landing is defined as inflation steadily coming down to the Federal Reserve’s goal of a 2% price level AND does so without provoking a recession.

However, as revealed by the inflation statistics in the US Labor Department’s latest Consumer Price Index (CPI), the ‘soft landing’ plane is clearly stuck circling the airport!

The government’s just released January 2024 Consumer Price Index report shows not only that prices are stuck at a level (i.e., ‘circling’?) where they’ve been since last summer 2023, but January’s CPI report shows signs of prices even beginning to rise once again.

Moreover, if one lifts some of the questionable assumptions and methodologies used to estimate inflation in the CPI, inflation may be even higher than officially reported. Perpetually circling for months, the soft landing plane may even be running out of gas.

The CPI is one of several government price indices. The other two are the Personal Consumption Expenditures (PCE) index and the GDP Deflator Index. These latter are produced by the Commerce Department. The PCE typically estimates inflation only two thirds to three-fourths the price level provided by the CPI, using different assumptions and methodologies than the CPI.

Having said that, let’s look at the January CPI report (after which Part 2 of this article will show why even the CPI undershoots inflation and why the PCE and GDP Deflator undershoot even more).

January 2024 Consumer Price Index

The CPI slices and dices inflation in many ways. Its aggregate number is called the All Items CPI-U. It’s the summary of price changes for all the goods and services estimated by the CPI. All means around 450 or so of the most often purchased by households. There are literally millions of goods and services in the US economy but households’ budgets are almost totally spent on the CPI’s 450 or so ‘basket of goods and services’ that are mostly purchased by households.

The All Items category is then broken down into what’s called ‘Headline’ inflation and ‘Core’ inflation. Since food and energy (i.e., gasoline, natural gas, electricity, fuel oil, groceries, food at home, food away from home, etc.) are goods that tend to fluctuate a lot, subtracting food and energy from All Items results in what’s called ‘Core’ inflation. Add back in food and energy goods and that’s ‘Headline’ inflation.

Another important breakdown of ‘All Items’ is Goods vs. Services inflation. The Goods sector of the economy is roughly 20% of GDP (Construction—residential and commercial—is about 8% of GDP and Manufactured goods about 12%). All the rest (80%) of the US economy is Services. So Services contributes a bigger part of the overall CPI and inflation.

So what does the latest January 2024 CPI report show us for ‘All Items’, ‘Headline’, ‘Core’ and the important sub-categories of Goods vs. Services inflation?

The most important takeaway from the January CPI is the ‘All Items’ rate of inflation last month is at the same level that it was seven months ago in June 2023—that is, inflation continued to rise at the same 3% annual rate of change in January 2023 that it was in June 2023!

To continue the ‘soft landing’ metaphor, what that means is the Inflation plane had entered its ‘downward leg’ from January 2022 to January 2023, slowing from a 7.5% annual rate increase at the start of 2022 to 6.4% a year later in January 2023. It then slowed further the following six months from January 2023 to June 2023, from the 6.4% to 3%.

Thereafter, since last June 2023, it has plateaued at a 5,000 foot level above the US economy airport, where it’s been circling ever since.

Peeling the onion of the ‘All Items’ aggregate indicator, and considering just ‘Core’ inflation—i.e. ‘All Items’ minus energy and food prices—It’s a similar picture: Core inflation has also been stuck, at around 3.9%-4% since October 2023.

Slicing ‘All Items’ yet another way, into Goods vs. Services inflation what the latest January CPI stats further reveal is that since October 2023 Services inflation has also been stuck, in this case in roughly the 5% range.

In other words, except for gasoline and some food prices, the CPI has not slowed in the last seven months. The plane has not landed but just keeps circling!

And it may be running out of gas as well. The latest CPI stats, on a month to month change basis, suggest the rate of inflation may now have started to rise again last month. Unadjusted for seasonality (i.e. the actual price changes), January’s CPI stats show a month to month rising trend for the CPI as follows:

• October 2023: 0.0%
• November 2023: -0.2%
• December 2023: -.0.1%
• January 2024: +0.5%

Within the January numbers were some worrisome trends: Services inflation nearly doubled in January compared to December (0.7% vs 0.4%); food prices did double (0.4% vs 0.2%) with grocery prices rising the fastest in the entire previous twelve months. Meanwhile shelter costs rose from 0.4% to 0.6% for January with its biggest component, Rent, rising the fastest in nine months. And other services like hospital and airlines, the prices of which had slowed in 2023, surged again in January.

Forces pointing to higher gasoline and energy Goods inflation in the coming months are appearing as well. The business media in US and abroad report that global crude oil supply problems are mounting—at a time when typically in the spring oil refineries also shut down for maintenance and consumers begin to drive more.

The Goods vs. Services Inflation Conundrum

To sum up thus far: if CPI reports for the past seven months show Services prices are stuck at 5%, Core prices at around 4%, and All Items stuck at 3%. Those numbers suggests Goods prices—gasoline and some food prices—have indeed come down. The January CPI report shows that Goods prices have been either flat or slightly negative over the past twelve months.

But Services inflation remains stuck at around 5% for months now. The main culprits in continuing Services inflation have been Rent services which have consistently been responsible more than half of all the CPI services price increases for several months; Day Care services; Sporting and Entertainment events prices; Auto Repairs; and Auto Insurance services which have risen by 20.6% over the past year. In addition, hospital services costs are now surging anew and rising at the fastest rate since 2015.

So why have Goods (especially gas and food) inflation significantly abated over the past year while the Services price level has barely done so?

There are several explanations. Here’s a couple:

Fed Interest Rates Are Increasingly Inefficient

Federal Reserve interest rate hikes since 2022 have clearly had an effect on Goods inflation—i.e., on energy and food and some other commodities. But so may have other economic forces.

The US economy has slowed due to rate hikes. But so has the global economy slowed. Which has had more impact on dampening demand for oil, commodities and thus US energy related goods prices in general? US rate hikes or slowing global economy? And what about food/grocery prices? Prices for milk and eggs surged in 2021-22 but have since come down. However, processed foods like bakery goods and other processed items like juice and beverages have not. They’re still rising at more than 20% annual rate? The difference likely lies in the fact that milk and eggs are produced locally and are not monopolistic; processed foods are monopolistic and dominated by a handful of companies. That strongly suggests corporate price gouging is going on in the processed foods sector of food prices. Recent media and government are now also talking about ‘shrinkflation’ (a hidden price hike by lowering content) which suggests evidence of processed food corporations’ price gouging as well.

2021-22: Supply Driven Inflation

The big problem in Goods inflation that emerged initially back in 2021 was domestic US and global ‘supply chains’. As this writer discussed back then (see my ‘The Anatomy of Inflation’ Counterpunch article of June 23, 2022), what drove inflation to its 9.1% peak were mostly Supply side forces—i.e. supply chains exacerbated by price gouging by monopolistic US corporations jacking up prices as the US economy reopened in the summer of 2021 from the Covid shutdowns. That’s a topic to which mainstream economists and politicians have paid too little attention of late.

Productivity also collapsed in 2021-22 falling to the worse levels since 1947, which in turn raised business unit labor costs that many companies simply passed on to consumers in higher prices. Like supply chains and price gouging, that too was basically a supply matter.

Inflation at the time in 2021-22, in other words, was thus largely supply—not demand—driven.

The Covid shutdown of 2020-21 was a major shock to much of the US economy, especially supply. Workers laid off did not immediately return. Some businesses like railroad companies found it convenient and profitable not to brink all their workers back but to run on more profitable skeleton crews. Other businesses did not immediately or fully ramp up production once the economy began to reopen in the summer of 2021. They at first waited to see if the reopening could be sustained. But once the economy began to successfully reopen by late summer 2021 many services businesses tried to recoup lost revenue by rapidly raising prices (A typical example was the Airlines companies and Hotels which clearly price-gouged consumers with record prices for travel in 2021-22.

The Covid shutdowns restructured labor, product and financial markets in ways still not fully understood by economists or policy makers. Fiscal and monetary stimulus measures in particular did not work very well or efficiently (a topic for another article). A given amount of monetary and fiscal stimulus simply did not produce an expected magnitude of real economic recovery.

A dramatic fact of the past two years US economic recovery has been its tepid growth rate. In 2020-21 the Federal Reserve pumped $5 trillion into the US banking system and directly to investors via its QE program. Congress provided an additional $4 trillion in government spending and tax cuts. That’s $9 trillion in combined stimulus! About twice that provided in 2008-10 What has resulted, in the first two years 2022-23 after the economy reopened in 2021 was a growth rate in GDP terms of a mere 2.1% in 2022 and unimpressive 2.5% in 2023.

In short, a mountain of $9T fiscal-monetary stimulus resulted in a molehill GDP recovery!

Overlaid on the supply problems that emerged in 2021 and which lingered into 2022 was global commodity prices surging in 2022-23 as a consequence of the Ukraine war and US Russian (and China to lesser extent) sanctions policies and the Ukraine War.

All these factors contributed to the primarily supply side driven inflation of 2021-22. Those supply forces were only partially abated by the demand depressing policies of the Federal Reserve after it began raising rates.

And now since mid-2023 Fed rate hikes have stopped. And with it so too has Services inflation decline. Fed rate hikes to 5.5% appear to have little effect on Services inflation. So how high might interest rates have to go to have an effect? A little history as follows might give some idea.

Volcker’s 1980-82 Solution vs. Powell’s 2022-23

Despite US inflation’s largely supply side character, in 2022 US politicians and the Federal Reserve decided the strategy to address supply side inflation would be to depress consumer demand in the US economy. The Federal Reserve set out to attack consumer demand to dampen inflation. Its main tool was raising interest rates and the Fed commenced in 2022 to raise rates at the rapidest pace in decades. The idea was to create enough unemployment that would reduce wage incomes and thus consumption spending to bring down demand and theoretically prices in turn. In other words: even if the main drivers were Supply side (which the Fed can do nothing about) the strategy was to make households pay the price to abate inflation by depressing household wage incomes and consumption demand. So the Fed raised interest rates to 5.5% over the course of 2022-2023.

After all, the same rate hike strategy to compress demand worked under Reagan in 1981-83 when Paul Volcker was Fed chair. 10%+ annual CPI inflation at the time was lowered via Fed rate hikes that attacked the Goods sector, raised unemployment, and subsequently depressed wage incomes and consumption. It was a demand side approach to price reduction—employed to address a Supply side inflation problem back then as well. Nevertheless it worked. Prices came down, but only after the Fed raised rate to more than 15%! A deep recession in 1982-83 followed the Fed rate hikes of 1980-81. But that was then. The US economy has changed dramatically since. It doesn’t work that way anymore. Indeed, monetary policy hardly works at all.

As in 1980-82, Powell’s Fed rate hikes in 2022-23 have succeeded in dampening goods prices but have NOT succeeded this time around in bringing down services prices very much, as the CPI data for the past seven months clearly shows. Goods inflation has indeed come down, but services prices remain stuck at levels of last summer 2023 now for months and may be rising once again. So why is it that four decades later monetary policy (rate hikes) has not succeeded as it did in 1980-82 in reducing the price level very much?

In his December 2022 press conference following the Fed’s commencing to raise rates, Fed Chairman Jerome Powell indicated the Fed’s strategy in 2023 would be to continue raising rates. He specifically cited his main goal of bringing Services prices down, adding for that more unemployment was needed in Services in order to lower Services consumption. That was the Fed’s inflation strategy for 2023. But that strategy—and lower Services prices—didn’t happen.

Contradictions of Fed Monetary Policy

Halfway into 2023 Powell stopped raising rates. But why? Why didn’t he continue raising rates and stopped halfway through 2023? There are several possible answers, but as this writer has argued before, perhaps the main reason was the crisis that emerged concurrently in the US regional banking system in March 2023. Raising interest rates even higher would have exacerbated that regional banking crisis. So Powell raised rates for the last time in May-June 2023 after the Regional Bank Crisis erupted that March 2023.

By doing so the Fed decided to trade off reducing Services and Core inflation further in 2023 in order to prevent further exacerbating regional bank instability. Powell apparently has placed his bet on assuming the already 5.5% interest rate level will prove sufficient over time to eventually, if albeit slowly, bring down Services prices. Thus far it hasn’t. Services sector unemployment and Services consumption has not abated. Powell has lost his bet. Services prices are ‘stuck’ at 5% and Core at around 4% now.

What this scenario suggests is that the US and global economy has changed in fundamental ways since the early 1980s. The US is a much more Services centric economy today compared to forty years ago. Services don’t respond as efficiently to rate hikes. Nor does the economy in general, it appears. To put that in economists’ parlance: Services inflation has become ‘interest rate inelastic’.

That lack of real economy response to interest rates (i.e. the inelasticity) may be due in part to the US economy becoming more ‘financialized’ today compared to 1981-83. What that means is Fed periodic liquidity (aka money) injections into the economy get redirected from going into real investment and flow relatively more into financial asset markets instead of the real economy. That makes Fed rate policy ‘inefficient’—i.e. more monetary injection is required to get an equivalent stimulus ‘bang for the buck’.

The converse is also true: Fed rate hikes have less effect on dampening inflation and slowing the real economy because it has become more financialized. Rate hikes simply don’t retract as much liquidity (money) from the economy as they used to. And even if they did it wouldn’t matter. Businesses (and consumers) today, forty years later, have access to alternative sources of funds besides bank lending, in the US and worldwide. Or perhaps businesses and investors cut back on investing in the real economy first, before they consider reducing their investing in financial markets. After all, didn’t financial markets and profits boom during Covid while opportunities for investing in the real economy collapsed?

The preceding paragraph suggests globalization may also be resulting in less effective Federal Reserve interest rate policy when it comes to rate hikes dampening inflation. Here financialization and globalization of the 21^st century capitalist economy overlap.

Multinational corporations in particular aren’t limited by Fed interest rate hikes or levels when they need money capital to invest. They can go anywhere in the world for lower rates. That’s presuming they even bother to borrow from banks at all any more. Multinationals raise far more money by issuing corporate bond debt of their own. And they loaded up on bond issuance in the years of near zero Fed rates from 2009-2018 and then during 2020-21 when the Fed injected $5T more of virtually free money into the banks and directly to investors via QE. Corporations just issued mountains of bond debt prior to Covid that they didn’t even need and then just hoarded the cash throughout the pandemic. Or else redistributed the virtually free Fed money to their stockholders in buybacks and dividends and hoarded their own cash earnings. Once the Fed started raising rates in 2022 those rate hikes were irrelevant for many big businesses. They were flush with unspent cash from issuing bonds or new stock.

A good example was Apple Corporation. Sitting on a $252 billion cash hoard, given the Fed’s zero rates in 2020 Apple nonetheless issued multi-billions in its corporate bonds. It then mostly distributed that money to its shareholders in stock buybacks while continuing to hoard its $252B cash pile. Only the smallest businesses are impacted any more by Fed rate hikes, or rate cuts for that matter.

Some Conclusions

In conclusion, in terms of inflation, what all this means is Fed chair Powell will have to raise rates much higher than 5.5% if he wants to reduce Services and Core inflation significantly further. Maybe not as high as Paul Volcker’s 15% in 1981. But higher than the current 5.5% for sure.

However Powell won’t do either so long as Services inflation levels remain stuck at current levels. He’s decided he can live with that level of Services inflation, while betting perhaps rates kept at current levels may yet reduce inflation further over the longer run.

Powell won’t risk higher rates that will certainly exacerbate a regional bank crisis again, which by the way continues to deteriorate slowly and which now faces the threat of commercial property defaults coming in 2025-26, to which already unstable regional banks remain highly exposed.

He also won’t raise rates because the US economy is teetering on the brink of recession already. The US construction sector has fallen one-third and appears stuck at that level while the manufacturing sector has been contracting for the last nine months, according to the Purchasing Managers’ Index (PMI). A deeper recession in 2024 would certainly not help the politicians. And regardless what apologists for the Fed say, Fed policies are politically a-tuned in election years.

So expect CPI and inflation to remain at levels largely similar to what they have for the past half year. Goods inflation will likely stay low (subject to uncertain oil prices). Companies that can, will continue to price gouge. Rents and home prices, Insurance services, processed food items, select services will remain at current levels or even drift up further. So consequently will the CPI, fluctuating perhaps marginally around its January levels month to month.

However, as will be explained in a Part 2 sequel to this article, even reported CPI is a low- balled estimate of the price level, due to the many questionable assumptions and methodologies that go into its estimation of inflation.

So if the US economy plane does decide eventually to descend, its landing may be anything but ‘soft’.

Jack Rasmus is author of the recently published book, ‘The Scourge of Neoliberalism: US Economic Policy from Reagan to Trump’, Clarity Press, 2020. He publishes at Predicting the Global Economic Crisis

By Dr. Jack Rasmus
February 9, 2024

The following are my ‘takeaways’ from listening closely to the Tucker Carlson-Putin Interview of this past week. A number of revelations came out of the interview (e.g. repeated role of France, Germany, UK and CIA scuttling a resolution to the conflict) as well as Putin’s deep commitment to continue until Ukraine is no longer a threat to Russia. One comes away from listening to the interview that Putin feels he has been ‘had’ by the US/EU so often he no longer trusts its politicians and doesn’t believe US presidents have the power to decide; he, and Russians in general, have a deep belief that Russia and Ukraine (and Belarus) are ‘one people’ who have been divided by invaders in the past but always re-united again; and that he’s ready to negotiate but Zelensky and US/NATO have ruled it out and would have to initiate it. Finally, US sanctions have failed, the world is changing fast, and many countries have developed to the point they no longer do whatever the US wants and are demanding more independence.

(Note: For another more detailed audio commentary on the Interview, listen to my Friday, February 9, Alternative Visions radio show at:

https://alternativevisions.podbean.com/e/alternative-visions-carlson-putin-interview/

Here’s my “X” (twitter) posts on main points of the Carlson-Putin interview:

1. Putin says he’s ready to negotiate but Zelensky has outlawed discussions and US/NATO doesn’t want to. Zelensky is “head of Ukraine state. He could cancel his decree” and negotiate. Russia’s ready but will not ask for negotiations. Russia’s minimal demands: No NATO. Neutral Ukraine. Nazis out of Ukraine government & military

2. Russia & Ukraine had a signed deal in Istanbul in April ’22 to end war. As part of deal Donbass remained in Ukraine but with some autonomy. Russia asked to withdraw troops from Kiev as sign of good faith during negotiations in Instanbul and did. Zelensky reneged on deal after Boris Johnson flew in and told him to, promising him all the money and weapons he needed.

3. Putin gave long historical introduction on history of Russia & Ukraine since 862. He explained attempts (in 1200s, 1650s, 1918-21, 1941-44) by invaders to split Ukraine from Russia that all eventually failed. (Suggesting current NATO effort would too). A major repeated Putin theme as Ukraine & Russia have always been one people

4. Western Ukraine (Lvov region) before WW2 was Poland-Hungarian-Romanian, but given to Ukraine by Stalin after WW2 after Poland was given eastern Germany. Putin implied the West could have western Ukraine back (as Putin suggested in prior speeches). West Ukraine is not part of historic Russian homeland which is Russia-Ukraine-Belarus.

5. Russia wanted to join Europe after 1991 but was repeatedly rejected by West. Putin described face to face meetings with Clinton & Bush Jr. where they agreed re. Russia joining NATO (Clinton) and stopping US intervention in Chechnya (Bush) but both Clinton and Bush then reversed after conferring with advisors. Putin’s impression US presidents can’t make a deal and are often overturned by other powers in Washington. China’s Xi has same impression, per Putin.

6. After meeting with Bush, Putin gave him proof CIA was involved in Chechnya war. Bush replied “Well, I’m going to kick their ass”. Bush never got back to Putin after. In 2008 US/NATO in Bucharest NATO meeting declared Ukraine & Georgia would soon join NATO. Russia’s 2008 War with Georgia followed

7. Re. 2014 coup, Putin said “CIA did its job” but it was unnecessary. It “could have been done all legally”. Ukraine president at the time (Yanukovich) was warned by US/EU at the time of the coup not to use police or army against demonstrators in Maidan. He didn’t. Yanukovich agreed to a 3rd re-election not provided by Ukraine’s constitution but hey went ahead with coup anyway. US representatives bragged they spent $5B on the coup. Putin would not mention names (Victoria Nuland). Regarding 2015 Minsk agreement: Putin said Ukraine refused to implement it. EU leaders (Germany’s Merkel & France’s Holland) admitted in 2022 Minsk agreement in 2015was ‘just to buy time’ to rearm Ukraine. In Putin’s words: “They simply led us by the nose”

8. When asked by Carlson if current talk in the west that if Russia wins in Ukraine it means it will invade Europe, Putin replied ‘only if they attack Russia first’. US mercenaries are already fighting in Ukraine. And when Carlson mentioned US Sen. Shumer’s statement that the US might have to fight in Ukraine, Putin sarcastically said: “Does the US have nothing better to do than fight in Ukraine”. If US did commit troops to Ukraine, it would push world to “brink of humanity”.

9. When asked by Carlson who blew up Nordstream pipeline, Putin: “CIA has no alibi” and “look at those interested and have capability of doing it” and “beneficiaries are American institutions”. When Carlson asked for more evidence US did it, Putin replied Russia has the evidence but no purpose to reveal it now. Germany has shut down 2 other pipelines that can still be opened & Russia will gladly resume sending gas (naming names might obviously jeopardize that he implied). Germany goes along with US because “German leaders are driven by interests of collaborative west rather than German interests”.

10. Putin: Biden’s Russian sanctions are “a grave mistake”. By weaponizing the US $, the US is undermining its global economic influence. Putin: The dollar is the cornerstone of US of US power. “Do you even realize what’s going on or not? You are cutting yourself off”. He added, before 2022, “80% Russia trade was in $” and only 3% in Yuan. Now 30% is in Yuan, 30% in Rubles and only 13% in $US.

11. Sanctions failed. Russia now 5th largest economy in ‘purchasing power parity’ measure. China 1st. Russia-China trade now >$240B. BRICS economies are now as large in GDP as US/G7. Sanction “tools US uses don’t work”

12. World is changing very fast. US can’t stop it but is reacting aggressively & militarily to the change. Threats from genetics, AI technologies, ‘brain chip’, etc. Much like gunpowder in prior era. There’s “no stopping Elon Musk” (i.e. technological change)

13. Carlson asked if Russia will negotiate. Putin: “They’re options if there’s a will”. Those in power must realize Russia can’t be defeated. West “stopped negotiations”.. “Let them correct their mistake”..”I know they want it; let them think how to do it.” Ukraine is now a satellite of the USA, which spends $72B a year on it

14. Putin: what’s happening “to an extent is a civil war”. Ukraine and Russia will be reunited again. “No one can separate the Russian soul” (once again returning to theme at start of interview that historically) Russia, Ukraine, Belarus are one people

15. Among the various reporting ‘bombshells’ revealed by Carlson’s interview was Putin’s clarification it wasn’t Ukraine negotiators at Istanbul that requested Russia pull back from Kiev in ’22 as show of good faith..it was Macron (France) and Sholtz (Germany) request. And so much for the western media myth of Ukraine’s great military ‘victory’ driving the Russians out of Kiev in April ’22

There’s lots of spin and talk coming out of Washington that the condition of the US economy is quite ‘good’ and, consequently, workers are doing great with wages rising, prices falling, and jobs expanding. Beltline politicos therefore just can’t understand why all the public polling shows Americans don’t agree. It’s not so great out there. In the following interview with the california internet podcast ‘This Is Revolution’ I peel off the scab of cherry picked statistics to reveal, per other govt stats, that the reality re. Jobs, wages, inflation, US economic growth (GDP) is not as rosy as the politicians and their mainstream media say.

TO WATCH GO TO:

https://www.youtube.com/live/lPkkTTXG0kQ?si=023_7AIy7vQ9RdgQ