10/19/15
Daily Archives: October 19, 2015
10/19/15
Oil Market Showdown: Can Russia Outlast The Saudis?
“Two men enter, one man leaves, two men enter, one man leaves, two men enter…”
November 27, oil consuming countries will celebrate the first anniversary of the Saudi decision to let market forces determine prices. This decision set crude prices on a downward path. Subsequently, to defend market share, the Saudis increased production, which exacerbated market oversupply and further pressured prices.
While the sharp decline in crude prices has saved crude consuming nations hundreds of billions of dollars, the loss in revenues has caused crude exporting countries intense economic and financial pain. Their suffering has led some to call for a change in strategy to “balance” the market and boost prices. Venezuela, an OPEC member, has even proposed an emergency summit meeting.
In practice, the call for a change is a call for Saudi Arabia and Russia, the two dominant global crude exporters, which each daily export over seven-plus mmbbls (including condensates and NGLs) and which each see the other as the key to any “balancing” moves, to bear the brunt of any production cuts.
Both, it would seem, have incentive to do so, as each has lost over $100 billion in crude revenues in 2015—and Russia bears the extra burden of U.S. and EU Ukraine-related economic and financial sanctions. Yet, while both publicly profess willingness to discuss market conditions, neither has shown any real inclination to reduce output—in fact, both countries seem committed to keeping their feet pressed to their crude output pedals. In the course of 2015, both have raised output and exports over 2014 levels—Saudi Arabia by ~500 and 550~ mbbls/day respectively and Russia by ~100 and ~150. The Saudis have repeatedly cut pricing to undercut competitors to maintain market share in the critical U.S. and China markets, while the Russian Finance Ministry recently backed away from a tax proposal which Russian crude producers said would reduce their output.
This apparent bravado notwithstanding, the two countries’ entry into the low-price Crudedome is ravaging their economies. Should crude prices decline from current levels, or even just stagnate, it is possible neither country will exit the CrudeDomeunder its own power.
IMF WEO Data: Recessions as far as the Eyes can See
Both Saudi Arabia and Russia paint positive portraits on current and future economic performance. At a conference in Moscow on October 14, President Putin said that Russia had reached if not passed the peak of its economic crisis and predicted economic growth in coming years. Arab News announced in the first paragraph of its report on Q2 Saudi economic performance that Q2 GDP grew 3.79 percent year-over-year, up from 2.3 percent growth in Q1.
Yet IMF October 2015 and April 2015 World Economic Outlook projections for the Russian and Saudi economies a paint pessimistic portrait, as the following three tables, forecasting GDP through 2020 in current prices/national currency, constant prices/national currency, and current prices/US$ show (all data in billions).
– In each of the data series, except the April and October ones, Russian current prices/national currency and the Saudi constant prices/national currency series, GDP declines from 2014 to 2015. (When adjusted for estimated inflation, however, the forecasts for Russian GDP current prices/national currency show GDP declining from 2014 levels—to 64,039 billion Rubles given inflation of 17.943 percent in the April series; in the October series, to 64,463 billion rubles, given inflation of 15.789 percent. The growth shown in the Saudi constant prices/national currency series results from the reduction in the deflator, which the Saudi National Statistical Office, Central Department of Statistics and Information uses to convert current national currency GDP into constant national currency. For example, decreasing the deflator from 115.073 to 94.234 in the October series and to 97.066 from 115.889 in the April series turns a decrease in GDP in current prices into an increase in GDP in constant prices).
– Between the April and the October forecasts in most of the data series, GDP deteriorates (blue font). Crude prices bear much of the responsibility: the April forecasts were based on $58.14 and $65.65 per barrel oil in 2015 and 2016 respectively, while the October projections are based $51.62 and $50.36 respectively.
– The year in which GDP exceeds 2014 GDP is noted in red font. As a result of the deterioration in GDP forecasts between April and October in the Saudi current prices/national currency series, GDP does not exceed 2014 GDP until 2018 instead of 2017; in the Russian current prices, US$ series, GDP exceeds 2014 level after 2020 instead of 2019; in the Saudi current prices/US$, the recovery is pushed to 2018 from 2017. (In inflation adjusted terms, Russian GDP in current prices, national currency would be below 2015 levels in 2020).
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In Russia, the impact of low crude revenues on GDP has raised questions about Russia’s long term economic prospects. Some see Russia’s economic growth potential as 1 percent annually or less due to low energy prices, low productivity levels, and a shrinking population, while Alexei Kudrin, finance minister from 2001 to 2011, recently commented that Russia’s growth model for the last fifteen years—using income from energy exports to drive up wages, domestic demand and therefore growth—will no longer work. With the government strapped for funds, and energy income no longer supporting domestic demand, some see investment as the sole possible driver of growth.
IMF WEO Data: Budget Deficits as far as the Eyes can See
Both the Saudi and Russian governments depend on energy revenues to fund their budgets—oil funds ~90 percent of the Saudi budget and oil and natural gas ~52 percent of the Russian budget. With the decline in prices, the Saudi budget anticipates a deficit of 20 percent of GDP in 2015 and the Russian budget a deficit of 3.3 percent of GDP. The April and October WEO budget projections in national currencies (Rubles and Riyals) show the deficits decreasing, but continuing through 2020 for both countries:
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The following table shows that as a percentage of GDP, the deficits decline steadily through 2020. However, as a percentage of GDP, the WEO October projections show the Saudi deficits remain double-digit through 2020—the potential impact of which will be discussed in the section on currencies.
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As planning for the 2016 fiscal year proceeds, fiscal reality is forcing both governments to scramble for new sources of revenues and/or opportunities to cut spending to reduce their budget deficits. The Russian government suspended the budget rule using a long term average of crude prices to set spending, since the resulting $80 average price would have dictated unreasonable spending in 2016.
President Putin ordered a 10 percent cut in Interior Ministry personnel, imposed a one million headcount ceiling on this ministry, and planned cuts in Kremlin headcount. The Finance Ministry sought a change in the mineral extraction tax formula to generate an additional 609 billion rubles in 2015 and 1.6 trillion through 2018, but pressure from the Economic and Energy Ministries and Russian producers forced the Finance Ministry to consider alternatives with less negative impact on crude production. In addition, the government reportedly is taking some $13 billion from national pension funds, while the Russian Central Bank is preparing proposals on government pension guarantees that would shift some pension funding burden from the government budget to companies and individuals.
The Saudi government is also scrambling. After an eight year hiatus from issuing sovereign debt, the Saudi government announced a plan during the summer to borrow $28 billion in 2015 and launched the borrowing with a $5 billion offering in August. The Ministry of Finance has banned contracts for new projects, hiring and promotions, and purchase of vehicles or furniture in the fourth quarter, while the newly created Council for Economic and Development Affairs must now approve all government projects worth more than $27 million. The Saudi government also is preparing to privatize airports and contemplating seeking private financing for infrastructure projects.
The budget situation puts the Saudi government in a difficult situation. On the one hand, the size of the deficits requires drastic cuts in spending, but such drastic cuts would impact politically sensitive areas such as energy subsidies, government employment opportunities for Saudi citizens, education, and economic development projects. On the other hand, depleting Saudi government reserves to finance the deficits will put the Saudi sovereign credit rating at risk, which would raise the cost of borrowing as well as pressure the Saudi currency (the consequences of which are discussed below).
IMF WEO Data: Lagging Per Capita Income as far as the Eyes can See
In both Russia and Saudi Arabia, the governments have attempted to shield their citizens from job cuts. In Russia, the government has discouraged businesses from shedding employees, while the Saudi government has maintained headcount in the government and government-related bodies, where most Saudis nationals are employed.
In terms of income, however, the situation is different. IMF WEO projections show per capita income in 2015 declining from 2014 levels in both Russia and Saudi Arabia, and only slowly recovering (the year exceeding 2014 levels in red font). (The increases in per capita income in the Russia current prices, national currency and in the Saudi constant prices, national currency series results from the same factors discussed in the section on GDP).
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Impact on Currencies
The steep decline in crude prices has pressured both currencies. The Ruble has suffered two curses. First, it has declined substantially relative to “hard” currencies, such as the US$, the Euro, British Pound, and the Swiss Franc. Against the U.S. dollar, it depreciated ~29 percent from November 27, 2014 to October 13, 2015 (48.58/US$, to 62.77). Second, it has been and continues to be highly volatile, its fate tied to moves in crude prices. The Ruble reached its post-November 27 low on June 27 (33.73/US$) and twice reached its high of ~70/US$ (January 30 69.47, August 24 70.89). A chart is available on Bloomberg.
The pressure on the Ruble forced the Russian Central Bank to take a series of emergency measures. At the end of last year, it spent ~$100 billion from its foreign currency reserves to defend the Ruble (it finally abandoned the defense when it proved futile and allowed the Ruble to float). In the same period, it extended emergency “hard” currency funding to major Russian banks and businesses with “hard” currency obligations that were coming due at the end of 2014. The Central Bank also sharply raised interest rates—to 17 percent at one point—and has kept the rates high to defend the Ruble (currently ~11 percent). Two examples illustrate the impact of Ruble devaluation:
– Transaero, until recently Russia’s second largest passenger airline, attributed being forced into bankruptcy to high interest rates and a devalued Ruble—the former raised the cost of financing, the latter pushed up prices in Rubles and therefore reduced demand in Russia for international flights and increased the cost, in Rubles, of repaying foreign currency denominated loans and interest.
– The Association of European Businesses in Russia recently announced that sales of new cars and light commercial vehicles contracted 29 percent in August year-over-year and forecast a 37 percent decline for all of 2015. It cited price increases that the car manufactures were forced to take to cover the increased cost of foreign parts and systems used in domestic auto manufacturing.
Volatility is equally pernicious. As another Bloomberg article points out, Russian businesses, unsure of what the value of the Ruble will be long term or even day-to-day, are deferring investment despite generating substantial (Ruble) profits—the very investment which some believe the Russian economy needs to grow and which has been contracting for 20 months.
The Saudis have avoided both Riyal depreciation and volatility. The government has insisted it will keep the Riyal pegged at 3.75/US$ and financial markets thus far have taken comfort from Saudi reserves (estimated to exceed $660 billion). However, as deficits deplete reserves and events occur that threaten the peg and Saudi oil-related export revenues, this comfort quickly could dissipate. After the Chinese Central Bank unexpectedly devalued the Yuan by ~2 percent against the US$, bets that the Saudis would be forced to abandon the peg spiked.
Breaking the peg would devastate the Saudi economy. It would drive up the cost of imports—and Saudi Arabia depends substantially on imports for a wide variety and high percentage of necessary consumer, business, and government goods and services—from food to oil, petrochemical, and other industrial equipment and services to military equipment, supplies, and training. It would also harm the Saudis who recently have been increasing their exposure to “hard” currency denominated loans.
Sovereign Wealth and Foreign Currency Reserves
Both the Saudis and the Russians are drawing down reserves they accumulated during the $100-plus/barrel crude price era to finance their spending. Over the nine months to July 2015, Saudi reserves declined $76 billion, from $737 billion to $661 billion, implying an annual rate of $100 to $130 billion. Should large withdrawals continue, or the amounts increase, confidence in the Riyal will sink.
Besides the $100 billion the Central Bank spent defending the Ruble, the Russian government has used funds from its sovereign wealth funds (the National Welfare Fund and the Reserve Fund) to reduce to fund priority projects, particularly in the energy industry—Rosneft sought one of the largest amounts. In June, Stratfor put the draw on the sovereign wealth funds at $44 billion.
China: The Sword of Damocles
In an era of low crude prices, modest economic growth, and modest crude demand growth, both Saudi Arabia and Russia (and other crude exporters) look to China as a source of incremental revenue to make up for the massive absolute declines in revenue and are prepared to compete intensely for market share.
One can imagine, then, the panic in Riyadh and Moscow when they contemplated the implications of the Chinese Central Bank’s decision to devalue the Yuan by ~2 percent against the U.S. dollar and the possibility this was the first salvo in a series of devaluations.
– For the Saudis, devaluation, if continued, will force the government to decide between volume and revenue. Pegged to the US$, Saudi crude, priced in US$ will become more expensive for the Chinese. It will reduce demand for Saudi crude and/or make the crude of other exporters—e.g. the Russians—whose currencies float. Yet reducing the US$ price to support volumes to China will reduce crude export revenues, which, if sufficiently substantial, could undermine confidence in the Saudi economy and therefore the Riyal peg to the US$.
– For the Russians, the Chinese Central Bank announcement possibly produced excitement at the prospect of competitive advantage over the Saudis in pricing. Quickly, however, excitement may have turned into anxiety. Neither side has made public critical details—including the currency or currencies in which sales will be settled and priced—of three bilateral energy megadeals: Rosneft’s $270 billion 2013 agreement to supply 300,000 mbbl/day annually to China for 25 years; the $400 billion, 30 year agreement signed in 2014 to supply natural gas to China from Eastern Siberia; and the negotiations underway to supply natural gas from Western Siberia.
Are prices set in US$, Rubles, Yuan, a basket of currencies (US$, Euro, Swiss Franc)? Are the Chinese expected to pay in Yuan at the Yuan/Ruble exchange rate? In Rubles at the Ruble/Yuan exchange rate? In Yuan at the Yuan/US$ exchange rate? Each alternative has different implications for Rosneft’s and Gazprom’s gross and net revenues from the sale of crude (Rosneft) and natural gas (Gazprom).
And the Winner is…
Despite the intense pain they are suffering in the low price Crudedome, both the Russian and Saudi governments profess for public consumption that they are committed to their volume and market share policies.
This observer believes the two countries cannot long withstand the pain they have brought upon themselves—and this article only scratches the surface of the negative impact of low crude prices on their economies. They have, in effect, turned no pain no gain into intense pain no gain and set in motion the possibility neither will exit the low price Crudedome under its own power.
Article Source: http://oilprice.com/Energy/Oil-Prices/Oil-Market-Showdown-Can-Russia-Outlast-The-Saudis.html
By Dalan McEndree for Oilprice.com
10/19/15
A Huge Problem Confronts Us
It was eerie how precisely I called it. Yesterday, in describing the terror situation, I said: “I might write about the most recent attack and then, within hours, there might be another one.” As it turned out, it wasn’t even hours. I had just sent out my posting when word came in of another attack. But this wasn’t a relatively simple matter of an attempted knifing. This was an horrendous affair:
It happened in the Central Bus station in Be’ersheva, in the Negev:
Credit: barefootholy
A major attack. A terrorist carrying a pistol and a knife stormed into the bus station, killed a soldier, grabbed his rifle and began shooting.
The soldier was Omri Levi, 19, of the Golani Brigade. He was on his way to his base.
Courtesy
Before he was shot dead by security, the terrorist wounded ten people, including four security personnel – some critically, some less seriously.
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It is deeply regrettable that one other person died in the course of this attack: An Eritrean, standing nearby, was thought by security to be an accomplice to the terrorist, and so was shot. The crowd in the station, assuming he was complicit in the attack, then set upon him, beating him. He ultimately died of his wounds.
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The terrorist has been identified as an Israeli citizen – a Bedouin, Muhand Al-Okabi, 21,
Credit: radiojai
News reports that identify him as having come from the Bedouin town of Hura, near Be’ersheva, are incorrect: he lived in an illegal Bedouin village outside of Hura. (They like to call these villages “unrecognized,” as if the government has failed to give them their due, but “illegal” is the proper term.)
His father is an Israeli Bedouin from the area, his mother had been brought by his father from Gaza, and acquired citizenship when she married him. I’ll come back to this.
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What has been determined is that security was lax at the bus terminal – someone with a gun and a pistol should not have been able to enter.
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From all sides, Palestinian Arabs celebrated this attack.
On the Hamas website, spokesman Husam Badran blessed “the quality operation.”
http://www.timesofisrael.com/liveblog_entry/hamas-praises-quality-terror-attack-in-beersheba/
While Jibil Rajoub, Fatah strongman and former head of PA preventative security, in an interview with official PA media, referred to the attack as “an act of heroism.”
And a Lebanese Internet site reported “heavy celebratory gunfire” at Palestinian refugee camps al-Beddawi and Ain el-Hilweh in Lebanon.
http://www.timesofisrael.com/liveblog_entry/celebrations-reported-in-lebanon-after-beersheba-attack/
I doubt that many expected anything else.
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The big question being asked is how an Israeli citizen could have done this – this is not a Palestinian Arab from some village in Samaria.
Bedouin leaders in the Negev, including the mayor of Hura, have expressed horror at what happened. One insisted, “His family is known and not as a family that encourages terrorism.” The family was lauded, in fact, as having helped to found the State of Israel.
Another leader protested: “This is not our way. Our way is the way of peace and reconciliation, love and brotherhood, of intermeshing and loyalty.” (Quite a mouthful. Does he not protest too much?)
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Well, my friends, I am here to tell you that the situation is much more complicated and much uglier than what the Bedouin leaders would have us believe. We tend to think of the Bedouin of the Negev as loyal Israeli citizens and undoubtedly some still are. Undoubtedly some are genuinely horrified by what has taken place and are proud to serve in the army (though fewer do these days). What we need to face, however, is that for several reasons there has been a radicalization of the Negev Bedouins.
This is in part because the Islamist – Hamas affiliated – Islamic Movement in Israel, Northern Branch, comes down into the Negev to incite them. They are heavily invested in the Bedouin community there, including in the schools. There is a recent history of the Bedouins – incited and guided by the Islamic Movement – who make radicalized demands of the State with regard to illegally constructed villages, which they misrepresent as having a legitimacy that does not exist. Those of you who have been reading my posts for any length of time know I have reported. This is not a benign phenomenon, but rather one intended to marginalize Jewish settlement.
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Then there is the matter of his mother, who is from Gaza. This is another part of the story of the Israeli Bedouin, who adhere to the Muslim practice of polygamy. Since this is against Israeli law, they do it serially, nominally divorcing one wife before marrying another. When there is a “wife shortage,” they seek women from places such as Gaza. But these women are not pro-Israel.
Al-Okabi’s mother is not his father’s first wife. What ideology did she bring with her from Gaza, as she raised her son (and, presumably, other children)? Perhaps Muhand Al-Okabi’s family was a good family in the past, as is being claimed. But in his generation?
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This is a phenomenon, in all its aspects, that has not been addressed sufficiently by Israeli officials. More than once, I have been horrified by what I learned. For example: Bedouin in those illegal villages frequently extort. They come out and tell the company paving a road in the area that if a road is not also laid down in their illegal village, the road that is being put down will be torn up over night.
Because the rule of law has not been enforced on relatively small matters, the chickens are now coming home to roost – as we confront major issues.
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There is one other very major aspect to the problem of the Negev Bedouin that must be addressed.
Reports have surfaced that the terrorist was a supporter of ISIS. So says a man who worked with him (although I have not been able to discover what sort of “work” we are talking about).
“Channel 2 television reported that the worker said, ‘He talked about it all the time.’” (Emphasis added)
If this is so, how surprised could his family have been? But let’s carry it further: How startled could the Bedouins of Hura been, their elaborate protests not withstanding?
This past June, the Shin Bet arrested six residents of Hura, “after it was discovered they were actively spreading the ISIS ideology, and attended secret meetings for the movement. Four of the suspects are school teachers. The official statement said that the suspects used their position as educators to spread the ISIS ideology.” (Emphasis added)
http://www.ynetnews.com/articles/0,7340,L-4676824,00.html
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The best analysis I’ve seen with regard to what we are dealing with now is by Ari Soffer in Arutz Sheva, “Israel Must Tackle Its Own Extremism Problem” (emphasis added):
“…This is no ‘war’ against a foreign country or entity, but a struggle to wrest a portion of Israel’s own citizens from the claws of a poisonous ideology that is incinerating country after country in our immediate neighborhood…
“Yet far from countering it, in the absence of any real strategy Israel authorities are achieving the very opposite, with an approach which is in practice completely, absurdly, illogically backwards.
“As any counter-extremism expert will tell you, one of the most basic elements of such a strategy must be empowering moderates and marginalizing extremists as much as possible. Yet here in Israel, we do the very opposite.
“Extremist Arab MKS who openly support terrorist groups like Hamas, who actively engage in racist harassment against Jews (and police) on the Temple Mount, who have attacked soldiers in the past (remember the Mavi Marmari?), and who are even now calling for an ‘intifada,’ are free to serve in the Knesset and receive a government-funded salary.
“And while our politicians vow to crush Hamas and attack the Palestinian Authority for not doing more, we allow Hamas’s little brother, the Islamic Movement – particularly its jihadist northern branch – to operate openly and legally in Israel, alongside other fascist Islamic groups…Why are these organizations still legal in Israel?
“At the same time, those Israeli Muslims, Christians and Druze who are loyal citizens, who do serve in the army and contribute as much as any Israeli Jew to Israeli society are sidelined…drowned out by the extremists we ourselves allow to flourish here…
“Much of this is due to the rampant political-correctness of the Supreme Court and some politicians, who are afraid of ‘discriminating’ against Arabs by taking action against extremists. But the result is a perverse one: if discrimination and distrust towards Israeli Arabs still persists, it is in great part because the liberal elite has fed it by effectively legitimizing the most rabid extremists as their ‘legitimate representatives’ – whether their ‘constituents’ actually like it or not…And…it is Israel’s Arab population that ultimately suffers the most…
“So instead of battling the extremists who encourage and facilitate terrorism, while empowering moderates who encourage and facilitate integration and participation in Israel society (some of whom, like Father Gabriel Nadaf, are doing incredible work even with the limited resources they have) we are getting the worst of both worlds: sidelining the moderates while allowing the extremists to run riot.
“The time has come to flip that irrational approach on its head. The government must act decisively to not only follow through with Netanyahu’s latest pledge to ban the Islamic Movement, but toshow a true zero-tolerance policy towards all purveyors of Arab and Muslim supremacy. Extremist MKs such as Hanin Zoabi, Ahmed Tibi, Basel Ghattas, and Jamal Zahalka should not be free to abuse their positions and act as an effective fifth-column operating within Israel’s own legislature. And rabid anti-Semitic preachers should not be allowed to spread their hate on the Temple Mount, Judaism’s holiest site.”?
http://www.israelnationalnews.com/News/News.aspx/202111#.ViTib5uhfIU
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I have grown exceedingly weary in recent weeks of reading apologetics, including in mainstream Israeli media, about how we must be more sensitive to our treatment of Arabs in our midst – for we see that our treatment has fostered the current terrorism. Or about how it’s all about “occupation,” and how even the Israeli Arabs witness this and are radicalized by it.
The issues I’ve raised here are painful to confront, but it is very necessary to do so. The time has come to grapple with the situation with seriousness.
What our government requires most of all now is introspective honesty and a very determined strength in working to correct the problem. Everyone who truly cares about Israel must be behind our government on this. For we are going to face a firestorm of criticism from the politically correct, left-leaning international community – as well as from those same politically correct and left-learning elements inside our society. (Already there are pro-Palestinian Arab NGOs here registering distress about the “injustice” of depriving terrorists of their citizenship or residency rights.)
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What I’ve been doing, during this time of renewed terrorism, has been to track the government’s strength in taking sane steps to adjust the situation. I’ve been encouraged in several respects – as if the light had suddenly dawned, and major parties within the government had had enough. But we are not where we need to be yet, not by a long shot.
I will go back to doing this tracking, and discussing related issues, in my next post.
Here I simply want to report on what is happening with Hamas and Fatah. Yesterday, Hamas declared itself dissatisfied with the results of the ‘knife intifada,” which wasn’t killing many. Put down your knives, they advised and go back to killing with vehicles.
And now Hamas has ordered its followers to conduct suicide bombings.
“Mahmoud al-Zahar, a senior Hamas official, said Sunday that the ‘intifada’ needs to be turned from a ‘popular’ terror war into a fully-militarized terror war, making an open call for the use of guns and explosives”.
While Fatah brags that is can “blow up buses in Tel Aviv,” Jibil Rajoub isn’t sure it’s a good idea at this time:
“The world doesn’t accept exploding buses in Tel Aviv…
“However…the international community seems to allow the murder of IDF soldiers and Jewish residents of Judea and Samaria.
“The world doesn’t ask about a settler or soldier who is on occupied territories at the wrong place and the wrong time, no one asks about that.”
Got that?
http://www.israelnationalnews.com/News/News.aspx/202109#.ViUZspuhfIV
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And then, as with every post now, I close with good news. This is a beautiful video, that let’s people see who we are (with thanks to Deena M):
https://www.youtube.com/watch?v=EzfIuJkYl_Y&feature=youtu.be
10/19/15
Ukraine Rebels Give Rise to a ‘New Cult of Stalin’
By: Terresa Monroe-Hamilton
History is repeating itself in all its murderous glory in Russia. While the world swoons over Vladimir Putin taking charge in Syria and offing a bunch of blood-thirsty Islamists who are in his way and serve as bloody propaganda for his next moves into the Baltics, the Middle East and Europe, Putin is getting the old band back together a la the Soviet Union. He is using nationalism to stoke the hatred of America… blaming all of Russia’s ills on the US. You see this play out in Donetsk, Ukraine, where three giant portraits of the former Soviet dictator, Joseph Stalin, are proudly displayed in the center of the city. It is the rebel capitol of eastern Ukraine and separatists are fueling Soviet nostalgia there.
The young have no clue what a monster Stalin really was. They seem proud of the portraits and feel that they engender Russian pride. “I think the portraits of Stalin are a good thing. It’s our history and a lot of people have forgotten he even existed,” said Yekaterina, a 22-year-old student. Did you also forget the atrocities that Uncle Joe committed? Soviet customs are being revived to cement the rebels’ Moscow-backed rule.
The Stalin portraits feature a quote from the wartime leader: “Our cause is just. The enemy will be routed. We will claim victory.” Sounds a lot like Barack Obama or Hillary Clinton, doesn’t it? Under the glorified butchery of Stalin, approximately five million Ukrainians were starved to death in the Holodomor.
The Holodomor, or extermination by hunger, occurred in the Ukrainian Soviet Socialist Republic in 1932 and 1933 and it killed an estimated 2.5–7.5 million Ukrainians, with millions more counted in demographic estimates. It was part of the wider disaster, the Soviet famine of 1932–33, which affected the major grain-producing areas of the country. Scholars believe it was a long term plan of Joseph Stalin’s… an attempt to eliminate the Ukrainian independence movement. Actions such as rejection of outside aid, confiscation of all household foodstuffs and restriction of population movement confer intent, defining the famine as genocide. The massive loss of life has been compared to the Holocaust. The horrors of Stalin’s repressions and the deaths of Ukrainians in the 1930’s due to famine caused by forced collectivization go unmentioned.
Vasil Kiseliev, deputy mayor of the eastern Ukrainian town of Stakhanov
Now, the rebels have become nostalgic for the good ole days of the Soviet Union. The Donetsk rebel leader, Alexander Zakharchenko, told AFP how he regretted the break-up of the Soviet Union. “The Soviet Union was a great country and it was a huge mistake that it was destroyed by the CIA and other secret services,” said the 39 year-old former field commander, who seems to have a thing for camouflage gear. “Europe and other countries were scared stiff of us.”
In eastern Ukraine, the rebel separatists have killed more than 8,000. In their offices, stylish posters of Uncle Joe adorn their dens. Stalin was a fascist dictator draped in Communist attire. The Donetsk rebels’ Deputy Defence Minister Eduard Basurin wears a badge with Stalin’s profile on his uniform.
A Soviet Union flag flutters as people attend the unveiling of a Lenin statue in the town of Novoazo.
At one time, the coal mining city of Donetsk was known as Stalino. In the early 1960s, the city was renamed after Nikita Khrushchev. Khrushchev seized power after Stalin died and vociferously and aggressively condemned Stalin’s cult of personality.
It’s a different story in Kiev’s pro-western government. Last May, they made it illegal to display Soviet symbols, just as it is illegal to display Nazi swastikas. They pulled down and destroyed Stalin monuments. They renamed streets, towns and establishments that had Soviet names. Lenin statues were toppled across the Ukraine, which incensed the rebels. The Donetsk rebels’ culture minister, Alexander Paretsky, condemned “vandalism and barbarism” while the leader of the Lugansk rebel region, Igor Plotnitsky, warned of a “moral genocide.” In the town of Novoazovsk on the Azov Sea, the rebels ceremonially restored a Lenin statue to its pedestal after taking control from Ukrainian forces.
Soviet symbols of the hammer and sickle in the southeastern Ukrainian city of Mariupol (AFP Photo)
This is the revived Soviet nationalism that Putin has brought back. That and the Russian Orthodox Church. In hearkening back to pre-collapse days, a fierce Russian pride of the motherland is being reignited. This is the new face of the rebels.
The rebels’ territories are called “people’s republics,” echoing the Soviet-era names of Communist satellites such as Bulgaria, Mongolia and Romania. Lugansk People’s Republic has a new emblem featuring sheafs of corn and a red star, just like those of the USSR’s communist republics.
The rebels are also bringing back the Soviet-era Young Pioneer youth group. Think Boy Scouts for communists.
A portrait of Soviet dictator Joseph Stalin displayed in Donetsk, the rebel capital of eastern Ukraine.
I especially like what they have named their security agency… the Ministry of State Security or MGB. Does that sound familiar? It should… it’s the same name given to Stalin’s secret police from 1946 to 1953. And just to keep it authentic, if you are put on trial there, I wouldn’t count on an acquittal. Not in a Russian court. “It’s the Soviet model of the prosecutor’s office that we adopted in Donetsk,” said Andrei Spivak, the official charged with overhauling the system.
An additional exhibition of paintings pays homage to the Soviet hero “shock worker” Alexei Stakhanov, who achieved record coal production levels at a mine in the Lugansk region in the 1930s. Historians now see Stakhanov’s feats as carefully choreographed by the authorities as a propaganda tactic to push up norms. Always with the propaganda.
Young and old alike are romanticizing Russia’s past – remembering what they see as better, more prosperous times when they were a world power, as opposed to what has now become of Russia. If they can have that back, they’ll take the monsters with it. “Things were better back then. It was a totally different life,” says Galina, a 73-year-old.
With propaganda comes the whitewashing of history as well. In August, the Donetsk rebel authorities decided to pull down a monument to victims of the Stalin-orchestrated 1930’s famine in the Ukraine. Donetsk State University removed a monument to Ukrainian dissident Vasyl Stus, a poet and campaigner for national culture, who spent decades in jail and died in a prison camp in 1985 at the age of 47. “That was a criminal act,” said Maria, a pensioner — but her views seemed to be shared by very few.
In the last year alone, Russia and its proxies have begun a systematic campaign of harassing religious minorities in the Ukraine. The Department of State just released its annual report on International Religious Freedom. In it, it was noted that the conditions for religious minorities in the Ukraine and Crimea had severely deteriorated, thanks to the Russian-backed separatists. Those are the rebels. “In the areas they control, the separatists have kidnapped, beaten, and threatened Protestants, Catholics, and members of the Ukrainian Orthodox Church of the Kyiv Patriarchate, as well as participated in anti-Semitic acts,” the report said.
Rebels declared the primary religion to be the Christian Orthodox faith of the Russian Orthodox Church.
From the Washington Free Beacon:
Armed assailants in Donetsk, calling themselves the Russian Orthodox Army, abducted Tykhon Kulbaka, a Ukrainian Greek Catholic priest, last July.
According to the report, “His captors reportedly subjected him to repeated mock executions and took away his medication, threatening him with a ‘slow death’ unless he joined the Russian Orthodox Church. He also sustained physical injuries before his release July 14.”
Donetsk authorities also detained Fr. Pawel Witek, a Roman Catholic priest, last May and accused him of being a sniper. The separatists blindfolded him, tied his arms and hands, and guarded him in a basement before eventually releasing him.
Other churches that were targeted include God’s Church of Ukraine, Jehovah’s Witnesses, Seventh-day Adventists, and a variety of Protestant denominations.
In a statement last July, the heads of the Evangelical Protestant Churches of Ukraine said that militants had subjected their members to “abduction, beating, torture, murder threats, and damage to houses of worship, seizure of religious buildings, and damage to health and private property of the clergy.”
One pro-Russian group also placed anti-Semitic pamphlets near the Donetsk synagogue and threatened to force Jews to register with a local commissioner and pay a fee.
Russia’s occupation authorities used “harassment, intimidation, detentions, and beatings” against members of minority Christian denominations and Muslim Tatars, the report said. Russian forces prevented some priests from entering their churches, raided mosques, and sponsored a new Muslim organization to supplant the local leadership body for Tatars.
In one incident last June, unmarked Russian forces stormed into a Ukrainian Orthodox Church and “verbally abused the parish priest and beat his pregnant wife and daughter, who suffered from cerebral palsy.”
“The occupation authorities refused to investigate the incident,” the report said. “The church was since closed.”
Authorities also denied residency permits to Turkish imams within the Tatar community and priests in the Greek Catholic Church.
Putin has an alliance with the Russian Orthodox Church. It is the State-sanctioned church. Of course he denies anything to do with all of this and the rebels. Here’s my shocked face… because Putin never lies. Meanwhile, Moscow has continued to supply the rebels with advanced weapons systems such as a multiple rocket launchers.
Russia is creating an illiberal coalition to oppose NATO and the West, a theory consistent with the rising tide of nationalism and Soviet nostalgia in Russia. In the end, this all leads to war, which is what Russia wants. They feel it will reinvigorate the Russian bear economically and nationally. Plus, they are just itching for a fight with the US now that her military has been gutted by Obama. They will use Syria as a springboard into the Middle East and as a doorway for seizing territory in the Baltics. Europe is on the brink of war and doesn’t even seem to realize it. Looks like Stalin is back from the dead.
10/19/15
Trevor Loudon to Speak in Redding, Northern California Monday Night!!!
Trevor Loudon to speak to the Redding Tea Party in Redding, Northern California on Monday, October 19th.
Time: 6 pm
Place: 2570 South Bonnyview Road.
See you there!
In Memoriam
Available at Amazon.com 
