Michael Hudson: American Sanctions on Russia Backfire as Putin Partners With China

Out of the week’s Asia-Pacific Economic Cooperation (APEC) meetings has emerged the understanding that “the center of global economic investment is shifting to Asia, leaving the United States out as well as Europe,” economist Michael Hudson told The Real News Network.

“The United States is attending [the meetings] as the odd man out,” Hudson continued. He went on to explain how China and Russia are forming a new strong and independent economic bloc:

At issue are two different views of how economies should evolve. China is moving for its own trading bloc instead of being in a privatized pro-corporate bloc, it’s a mixed economy. So what you have is the Chinese economy growing very rapidly, and the American economy that’s been going flat.

… What’s been clear at the meeting is that there’s a coming together between China and Russia. This has been the opposite of what American foreign policy has been trying to push for since the 1980s. What is ironic is that where the United States thought that it was putting pressure on Russia and sanctions following the NATO adventure in Ukraine, what it’s actually done is bring Russia and China closer together.

The most important way in which they’re coming together is reflected in Mr. Putin’s announcement that Russia is setting up its own bank clearing house system independent of the so-called SWIFT system. When you transfer funds from one bank to another, or when any bank uses U.S. dollars, it has to go through the SWIFT clearing house system in the United States.

Right now the only country that’s not part of this is Iran. To Russia, this has tipped America’s hand. It showed that what U.S. Cold Warriors really want is to break up Russia and China, and to interrupt their financial and banking services to disorient their economies. So Russia, China and Iran – and presumably other Asian countries – are now moving to establish their own currency clearing systems. To be independent of the SWIFT system and the U.S. dollar, Russia and China are denominating their trade and investments in rubles and yuan instead of the dollar. So what you’ve seen in the last few days in Beijing is a rejection of the dollar standard, and a rejection of American foreign policy behind it.

… That’s why Mr. Obama has looked so uncomfortable at these meetings. He knows that he hasn’t gotten anything he wants. Asian countries are not about to join the Trans-Pacific Partnership, and they’re moving on now to [the G20 summit in] Brisbane, Australia.

President Obama “knows that the strategy that he was given by his neocons is backfiring,” Hudson concluded.

Read the full transcript of Hudson’s remarks here.

— Posted by Alexander Reed Kelly