Crush Europe and Strengthen the US | RAND Corporation

January 25, 2022 

Confidential

Distribution: WHCS, ANSA, Dept. of State, CIA, NSA, DNC 

 

Executive Summary

[...] The current German economic model is based on two pillars. These are unlimited access to cheap Russian energy resources and to cheap French electric power, thanks to the operation of nuclear power plants. The importance of the first factor is considerably higher. Halting Russian supplies can well create a systemic crisis that would be devastating for the German economy and, indirectly, for the entire European Union. The French energy sector could also soon begin to experience heavy problems. The predictable stop of Russian-controlled nuclear fuel supplies, combined with the unstable situation in the Sahel region, would make French energy sector critically dependent on Australian and Canadian fuel.

 

"A reduction in Russian energy supplies - ideally, a complete halt of such supplies -
would lead to disastrous outcomes for German industry." - RAND Corporation, Jan 25, 2022.

 

[...] The only feasible way to guarantee Germany's rejection of Russian energy supplies is to involve both sides in the military conflict in Ukraine. Our further actions in this country will inevitably lead to a military response from Russia. Russians will obviously not be able to leave unanswered the massive Ukrainian army pressure on the unrecognized Donbas republics. That would make possible to declare Russia an aggressor and apply to it the entire package of sanctions prepared beforehand. Putin may in turn decide to impose limited counter-sanctions - primarily on Russian energy supplies to Europe. Thus, the damage to the EU countries will be quite comparable to the one to the Russians, and in some countries - primarily in Germany - it will be higher.

 

The prerequisite for Germany to fall into this trap is the leading role of green parties and ideology in Europe. The German Greens are a strongly dogmatic, if not zealous, movement, which makes it quite easy to make them ignore economic arguments. In this respect, the German Greens somewhat exceed their counterparts in the rest of Europe. Personal features and the lack of professionalism of their leaders - primarily Annalena Baerbock and Robert Habeck - permit to presume that it is next to impossible for them to admit their own mistakes in a timely manner.

 

Thus, it will be enough to quickly form the media image of Putin’s aggressive war to turn the Greens into ardent and hardline supporters of sanctions, a ‘party of war’. It will enable the sanctions regime to be introduced without any obstacles. The lack of professionalism of the current leaders will not allow a setback in the future, even when the negative impact of the chosen policy becomes obvious enough [...] This will ensure a sufficiently long gap in cooperation between Germany and Russia, which will make large German economic operators uncompetitive.

"The prerequisite for Germany to fall into this trap is the leading role of the German Greens."

[...] A reduction in Russian energy supplies - ideally, a complete halt of such supplies - would lead to disastrous outcomes for German industry. The need to divert significant amounts of Russian gas for winter heating of residential and public facilities will further exacerbate the shortages [...] A complete standstill at the largest in the chemical, metallurgical, and machine-building, plants is likely, while they have virtually no spare capacity to reduce energy consumption. It could lead to the shutting down of continuous-cycle enterprises, which would mean their destruction.

The cumulative losses of the German economy can be estimated only approximately. Even if the restriction of Russian supplies is limited to 2022, its consequences will last for several years, and the total losses could reach 200-300 billion euros. Not only will it deliver a devastating blow to the German economy, but the entire EU economy will inevitably collapse. We are talking not about a decline in economy growth pace, but about a sustained recession and a decline in GDP only in material production by 3-4% per year for the next 5-6 years. Such a fall will inevitably cause panic in the financial markets and may bring them to a collapse.

The euro will inevitably, and most likely irreversibly, fall below the dollar. A sharp fall of the euro will consequently cause its global sale. It will become a toxic currency, and all countries in the world will rapidly reduce its share in their forex reserves. This gap will be primarily filled with dollar and yuan.

 

NATO's purpose is "keep the Russians out, the Americans in, and the Germans down",
as Lord Hastings Lionel Ismay, NATO's first Secretary General, put it.

Another inevitable consequence of a prolonged economic recession will be a sharp drop in living standards and rising unemployment (up to 200,000-400,000 in Germany alone), which will entail the exodus of skilled labour and well-educated young people. There are literally no other destinations for such migration other than the United States today. A somewhat smaller, but also quite significant flow of migrants can be expected from other EU countries.

 

Since 1871 the prime U.S. geopolitical foreign policy doctrine for Europe is:
"Keep Germany and Russia separate and in conflict."
Or as Victoria Nuland put it in 2014: "Fuck the EU!"

The scenario under consideration will thus serve to strengthen the national financial condition both indirectly and most directly. In the short term, it will reverse the trend of the looming, economic recession and, in addition, consolidate American society by distracting it from immediate economic concerns. This, in turn, will reduce electoral risks.

In the medium term (4-5 years), the cumulative benefits of capital flight, re-oriented logistical flows and reduced competition in major industries may amount to USD 7-9 trillion. Unfortunately, China is also expected to benefit over the medium term from this emerging scenario. At the same time, Europe's deep political dependence on the U.S. allows us to effectively neutralise possible attempts by individual European states to draw closer to China [...]

Quoted from:
RAND Corporation (Jan 25, 2022) - Executive Summary: Weakening Germany, Strengthening the U.S.

See also:

Hans-Benjamin Braun (Apr 07, 2023) - Nord Stream Pipeline Blast by US-Nuke. 

Michel Chossudovsky (Aug 30, 2023) - Niger’s Military Junta is Supported by the Pentagon.

Washington’s Unspoken Objective: “Remove France from Africa”.

Max Blumenthal & Aaron Maté (2023) - German Greens, the world's most hypocritical party? (video)

 Bruno Maçães (2018) - Greater Eurasia: Russia’s New Energy Gamble.

Greater Eurasia | Russia’s New Energy Gamble

Bruno Maçães (Apr 2018) - In October 2017, Rosneft Chief Executive Officer Igor Sechin took the unusual step of presenting a geopolitical report on the “Ideals of Eurasian integration” to an audience in Verona, Italy. One of the maps projected on the screen during the presentation (HERE) showed the supercontinent—what Russian circles call “Greater Eurasia”—as divided between three main regions. For Sechin, the crucial division is not between Europe and Asia, but between regions of energy consumption and regions of energy production. The former are organized on the western and eastern edges of the supercontinent: Europe, including Turkey, and the Asia Pacific, including India. 

Between them we find three regions of energy production: Russia and the Arctic, the Caspian, and the Middle East. Interestingly, the map does not break these three regions apart, preferring to draw a delimitation line around all three. They are contiguous, thus forming a single bloc, at least from a purely geographic perspective. 

Sechin’s map has a number of other interesting elements. As noted already, Turkey is left on the European side of the line delimiting the energy production core in the west. The same is true for Ukraine, which although unavoidable in this context is still an unusual inclusion in a map sanctioned by the highest echelons of Russian state power. If one looks at the world through the prism of energy geopolitics, then Ukraine is a European country—a consumer, not a producer. 

[...] The map illustrates an important point about Russia’s new self-image. From the point of view of energy geopolitics, Europe and the Asia Pacific are perfectly equivalent, providing alternative sources of demand for energy resources. Russia has been struggling to abandon its traditional orientation toward Europe, hoping to benefit from the flexibility of being able to look both east and west to promote its interests. It seems that Sechin and Rosneft can place themselves in that position much more effortlessly. 

Sechin’s map subtly makes one final—and decisive—point. As you consider the three areas it delimits, it becomes apparent that two of them are already led and organized by a leading actor: Germany in the case of Europe and China for the Asia Pacific. Production chains within these highly industrial regions are increasingly managed by German or Chinese companies, which tend to reserve the higher value segments for themselves. Their spheres of influence extend to all important inputs, with one glaring exception: energy. In order to address this vulnerability, the two regions of energy consumption will be attracted to the core region, where they need to ensure ready and secure access to energy resources. And their efforts may well be made easier by the fact that the core region of energy production lacks a hegemon capable of ensuring its survival as an autonomous unit in the Eurasian system.

The very same day he delivered his speech on Eurasian geopolitics, Sechin announced that Rosneft would take control of Iraqi Kurdistan’s main oil pipeline, boosting its investment in the autonomous region to $3.5 billion, despite Baghdad’s military action sparked by a Kurdish vote for independence. The move helped shield Kurdistan from increasing pressure from Baghdad. Two weeks later, Sechin went on to sign a preliminary pact with the National Iranian Oil Company, the first step before a binding deal to participate in Iran’s oil and gas projects over the next few years, with investments totaling up to $30 billion and a production plateau of 55 million tons of oil per year.

Four Russian oil companies have even begun negotiating for opportunities in Syria, a venture driven as much by politics as by commercial interest. The aim is not to explore and extract Syria’s modest petroleum reserves, of course. By actively participating in rebuilding and operating Syrian oil and gas infrastructure, Russian energy companies will be in control of a critical transit route for Iranian and Qatari oil and gas heading to Europe, bringing two rival producers closer to its orbit and tightening its stranglehold on the European gas supply. In 2009, Qatar proposed to run a natural gas pipeline through Syria and Turkey to Europe. Instead, Al-Assad forged a pact with Iran to build a pipeline from the Persian Gulf and then through Iraq and Syria and under the Mediterranean. This project had to be postponed because of the war. When it is resumed, Russia will be in control.

It is in the very nature of the Eurasian system described by Sechin that the core energy production region—provided it is sufficiently united and organized—will benefit from its central position, being able to pick and choose between east and west in order to obtain the most favorable terms. Russia and the Middle East are now part of the same geopolitical unit. It took the Russian military intervention in Syria for the world to start to come to terms with this reality.

One Belt, One Road | Eurasian Century Unstoppable

There has never been a period in which China’s diplomats were more active on the global stage.
Under President Xi, the Chinese leadership has substantially stepped up its foreign policy
ambitions, heavily expanding the scope of its activities in the region and its global reach.
By altering long-standing traditions of relative restraint and adjusting key foreign policy
priorities, Beijing is engineering a new course in global affairs. Enlarge map.

Moritz Rudolf (Oct 04, 2016) - In autumn 2013, Chairman of the CCP and President of the PRC, Xi Jinping, announced the “One Belt, One Road (OBOR)” initiative. This core element of a more pro-active Chinese foreign policy comprises of the land-based “Silk Road Economic Belt”, and the “Maritime Silk Road of the 21st Century”. The OBOR initiative by far exceeds the development of linear connections between Europe and Asia. In fact, Beijing strives to establish a comprehensive Eurasian infrastructure network. Trans-regional corridors are to link the land and sea routes. As the primary investor and architect of the Eurasian infrastructure networks, Beijing is creating new China-centred pipeline, railway and transport networks. In addition to this the Chinese leadership is focused on the expansion of deep-sea ports, particularly those in the Indian Ocean.

With the OBOR the Chinese leadership is primarily pursuing three main goals: (1) Economic diversification; (2) Political stability and (3) the Development of a multi-polar global order. From an economic perspective, China strives that the development of new trade routes, markets and energy sources will result in growth impulses and at the same time reduce dependencies. Projects linked to the OBOR are to once again fill the order books of Chinese SOEs which are presently suffering from over-capacities. Furthermore, with the expansion of the Eurasian transport infrastructure Beijing aims to lay the foundations for China-centered production networks, for instance with Chinese companies relocating production to South-East Asia. Politically speaking, the Chinese leadership hopes that the OBOR initiative stabilizes Beijing’s western Provinces, as well as the neighboring trouble spots, like Pakistan or Afghanistan. As China finances most infrastructure projects Beijing is also able to increase its political influence. Many countries along the Silk Roads depend on Chinese infrastructure investments.

The overarching goal is to be an active part in the establishment of a multi-polar world-order. China seeks to play a constructive role in the reform the international system. The OBOR-Initiative is intended to be the foundation of a new type of international relations. The Chinese leadership speaks of the establishment of a “community of common destiny”. Core elements are more connectivity in Eurasia, “win-win-cooperation”, “mutual progress and prosperity” as well as upholding the UN principle of non-interference in the internal affairs of other states. So far, the OBOR-initiative has not been embedded in an overarching international framework and primarily is a concept, a meta-strategy. It is still unclear whether the initiative will be realized through a bilateral or multilateral process. The Chinese leadership speaks of an inclusive process, which means, that all involved parties are invited to shape and promote the “Silk Road Economic Belt” and the “Maritime Silk Road of the 21st Century” in line with their own economic interests. First steps of institutionalization are already emerging. The recently established AIIB and the Silk Road Fund serve to finance the projects. In May, China and Russia agreed to link the Silk Road Initiative with the Russian Far East Development Program for Siberia. In addition to this Moscow and Beijing agreed to link the Eurasian Economic Union with OBOR. Moreover, in June Hungary and China signed a Memorandum of Understanding to jointly promote the Silk Road Initiative.

A brilliant plan: Xi Jinping’s ambitious strategic initiative – an adaptation of the historical
Silk Road – could sow the seeds for a new geopolitical era. Enlarge map.

While central banks continue to "print" liquidity, now at a pace of nearly $200 billion per month, they are
unable to print trade, perhaps the single best indicator of deteriorating global economic conditions. The
latest confirmation comes from China: In 2015 China’s import growth slowed starkly, driven by both
external and domestic factors, including a rebalancing of demand. Econometric results point to weak investment
and rebalancing as the main causes of the import slowdown. Spillover effects from China’s rebalancing are
estimated for some 60  countries using value-added trade data, and are found to be more negative on Asia and
commodity exporters than others (HERE).

William Engdahl (Oct 11, 2016) - The totality of the strategy behind Xi Jinping’s Eurasian One belt, One Road rail, sea and pipeline initiative (OBOR), which is moving quietly and impressively forward, is transforming the world geopolitical map. In 1904 a British geographer, Sir Halford Mackinder, a fervid champion of the British Empire, unveiled a brilliant concept in a speech to the London Royal Geographical Society titled “The Geographical Pivot of History”. That essay has shaped both British and American global strategy of hegemony and domination to the present. It was complemented by US Admiral Alfred Thayer Mahan’s 1890 work, “The Influence of Sea Power Upon History”, which advocated “sea power,” stating that nations with domination of the seas, as the British Empire or later the USA, would dominate the world.

The One Belt, One Road, by linking all the contiguous land areas of Eurasia to the related network of strategic new or enlarged deep-water ports of OBOR’s Maritime Silk Road, has rendered US geopolitical strategy a devastating blow at a time the hegemony of America is failing as never in its short history. The Eurasian Century today is inevitable and unstoppable. Built on different principles of cooperation rather than domination, it just might offer a model for the bankrupt United States and the soon-bankrupt European Union, to build up true prosperity not based on looting and debt slavery.

The Asian Infrastructure Investment Bank (AIIB) has 57 member states (all "Founding Members") and was
proposed as an initiative by the government of China. The bank started operation on 25 December 2015;
the capital of the bank is $100 billion, equivalent to  2⁄3 of the capital of the Asian Development
Bank and about half that of the World Bank (HERE).

The United States is the number one trading partner for 56 countries, with important relationships
throughout North America, South America, and Western Europe. Meanwhile, China is the top partner
for 124 countries, dominating trade in Asia, Eastern Europe, Africa, and Australia (HERE).