TBR News October 31, 2014

Oct 30 2014

The Voice of the White House

             Washington, D.C. October 30, 2014:  ”There are two reasons for the frantic actions of various governmental groups to get their hands on the electronic, and written and spoken, communications of anyone in the United States, and Europe they wish.

            The first, and foremost, reason is to have the ability, if desired, to pinpoint any citizen of the United States or Europe who might be believed to harbor or express anti-government policy.  The government, now embarked on a series of punitive and seemingly endless small wars, remembers the national outrage after the Vietnam War was in progress for years.

            They do not want to have to cope with draft dodgers fleeing to Canada or, worse, taking to the streets in massive protests.

            Ergo the ability to spy on any citizen at any time.

            The second reason is far more serious.

            Muslim fundamentalists, outraged at America’s unquestioning support of an aggressive and very hostile Israel, have included America in their list of enemies.

            The observation of such groups and their attempts to launch any kind of terror attack on American soil is a necessity.

            It would only take one suicidal fanatic to blow up some school, church or a building housing a legislative body to create a wave of irrational fear in the American public.

            They would demand protection and it would be impossible to provide it, given the poor performances of many agencies.

            Like the dormant but very potent mortgage crisis, the government desperately wants these things to disappear for the immediate future.

            What happens later, in other administrations, is of no concern to them.

            And so the universal spying has both a positive and a negative aspect.”


Counterterrorism Patriot Act provision now widely used in criminal investigations

October 30, 2014


          A provision contained within the post-9/11 PATRIOT Act that allows investigators the power to conduct so-called “sneak and peek” searches has been used extensively for purposes not pertaining to counterterrorism, a new report reveals.

Instead, Mark Jaycox of the Electronic Frontier Foundation wrote recently, law enforcement agencies across the United States have for more than a decade been relying on Section 213 of the PATRIOT Act to conduct secret surveillance during the course of drug crime investigations.

Jaycox, a legislative analyst for the California-based digital rights group, wrote this week that an analysis of information about the use of “sneak and peek” warrants as allowed in Sec. 213 reveals that the controversial counterterrorism legislation is routinely evoked in order for investigators to conduct searches without first informing a suspect — something the Fourth Amendment of the US Constitution explicitly forbids.

As the American Civil Liberties Union warned all the way back in 2002, Sec. 213 affords investigators the power to “enter a house, apartment or office with a search warrant when the occupant was away, search through her property and take photographs, and in some cases seize physical property and electronic communications,” without the targeted person learning until later.

“Section 213 would take an extremely limited authority and expand it so that it would be available in any kind of search (physical or electronic) and in any kind of criminal case,” the ACLU warned before the provision was even authorized, writing then that potential passage of the bill would signal a “sea change in the way search warrants are executed in the United States.”

This week, Jaycox wrote that police have indeed been using the powers bestowed by Sec. 213 to serve “sneak and peek” warrants, albeit with terrorism rarely being involved. In fact, he found, fewer than one percent of the instances where these warrants are used have any nexus to terrorism whatsoever.According to Jaycox’s report, the US government has cited “terrorism” only 51 times during the more than 11,000 sneak and peek warrants that have been authorized since the PATRIOT Act went into law.

“Law enforcement made 47 sneak-and-peek searches nationwide from September 2001 to April 2003. The 2010 report reveals 3,970 total requests were processed. Within three years that number jumped to 11,129. That’s an increase of over 7,000 requests. Exactly what privacy advocates argued in 2001 is happening: sneak and peek warrants are not just being used in exceptional circumstances — which was their original intent — but as an everyday investigative tool,” Jaycox wrote.

“Out of the 3,970 total requests from October 1, 2009 to September 30, 2010, 3,034 were for narcotics cases and only 37 for terrorism cases (about .9%). Since then, the numbers get worse. The 2011 report reveals a total of 6,775 requests. 5,093 were used for drugs, while only 31 (or .5%) were used for terrorism cases. The 2012 report follows a similar pattern: Only .6%, or 58 requests, dealt with terrorism cases. The 2013 report confirms the incredibly low numbers. Out of 11,129 reports only 51, or .5%, of requests were used for terrorism. The majority of requests were overwhelmingly for narcotics cases, which tapped out at 9,401 requests,” he added.


Radly Balko, a frequent critic of the law enforcement tactics adopted since the Sept. 11, 2001 terrorist attacks, blogged for the Washington Post this week that the EFF report confirms what the likes of the ACLU raised more than a decade ago.

“Just as critics predicted,” he wrote, the use of Sec. 213 in non-terrorism cases is “…now a ubiquitous part of federal law enforcement.”



Putin Just Made the Most Important Speech of His Career. The West Should Listen More Closely

What he really wants are stability, rules, and a global balance of power – traditional conservative ideas. He thinks the rest of the world needs to rein-in out-of-control US global activism.

October 29, 2014

by Alexander Mercouris

            He showed his true colors – as a traditional, old-school, European conservative

            Last Friday, Vladimir Putin delivered the single most important speech on foreign policy since he became President of Russia in 2000. Mikhail Gorbachev said he thought it was the best, and most significant speech Putin has ever made.

In it he charted a clear course for Russia, defining its place in international affairs and setting out the principles and objectives of its foreign policy.

The response of the western political and media elite has been pitifully inadequate. The speech has attracted surprisingly little attention. The emphasis has been not on what Putin said about Russia or international relations in general but on what he specifically said about the US.

Western commentary wrongly but overwhelmingly treats the speech as simply a critique of US foreign policy (a “diatribe”) with Putin hypocritically condemning a US foreign policy he feels is targeted against him. Behind this is the assumption that the speech is Putin’s defiant response to the US sanctions policy imposed on Russia since the start of the Ukrainian crisis even though the actual speech barely touches on this question.

Putin did have a lot to say about US foreign policy and what he said was very critical. However to focus purely on that part of the speech is to fail to do it justice and to ignore its very coherent intellectual framework.

Putin came across a very different person from the aggressive expansionist and nationalist demagogue and gambler of western commentary. It is also different from the Putin some other people want him to be. Anyone looking to Putin to lead some great crusade against the US is on the evidence of this speech going to be disappointed. As some have noticed, what he actually wants from the US is not conflict but cooperation.

Putin’s vision of the international system is a profoundly conservative one – a fact he actually admitted himself after the speech in answer to a question. Running like a thread throughout the speech is a typical conservative’s yearning for stability and mistrust of change, a wish for a predictable rule based system in which the sovereign rights of nations are respected and in which change when it happens is contained and managed and never encouraged.

Since Putin’s concern is for stability, an aspect of his vision, which would be instantly familiar to an old style European conservative but which is totally alien to a modern western liberal, is that it is totally value neutral. Where westerners today habitually divide nations into democracies and dictatorships and decide their attitudes to them on that basis, Putin treats them all the same, considering their domestic arrangements to be something for them to worry about.

Underpinning everything is a belief in the need for an orderly system preserved by a balance of power. For Putin, the USSR’s greatest contribution was precisely in that by providing a counter weight to the US it secured international stability. Much of the speech is a lament for the loss of the counterweight provided by the USSR.

The part of the speech that criticises US foreign policy draws on these assumptions: the US became intoxicated by the unexpected position it achieved as a result of the USSR’s collapse and rather than acting to preserve the stability of the international system went instead on a rampage through a sequence of violent unilateral actions designed to reshape the world according to its image and interests and in order to perpetuate its dominance.

In the process order and stability have been thrown away and the result is violence and chaos. Putin recites the list: Kosovo, Iraq, Afghanistan (where he traces the story back to US support for jihadism against the Soviet army in the 1980s), Libya, Syria and now Ukraine, pointing out that none of these places is better off than it was before the US began to take an interest in them.

In a striking phrase that may cause offence in the US Putin compares the US to a nouveaux riche fecklessly squandering away the windfall.

The speech also shows where Putin wants to position Russia. In another striking phrase Putin says that he wants Russia to assume leadership of nothing save possibly the defence of international law.

Running like a thread through the speech is a deep commitment to international law interpreted in the most conservative way on the basis of legal documents, treaty texts and Court decisions. The creative efforts of (as Putin would put it) self-interested western reinterpretation of international law (such as R2P) are spurned as rationalisations for violating it.

By contrast Putin’s response to Western criticism of his Crimean policy is to defend it in the most traditional way by citing the UN Charter and the International Court of Justice’s Advisory Opinion on Kosovo.

Putin’s training as a lawyer is an aspect of his background that few in the west are aware of. Judging from his words, it is at least as formative as was his service in the KGB.

This is a vision of Russia as the sheet anchor of the international system, acting together with its allies China and the other BRICS states to restrain the US where possible, rescuing the US from its follies whilst upholding international law, world order and stability.

It is a vision European statesmen of the nineteenth century would have instantly recognised but which political leaders in the US and Europe today barely understand, which is one reason why his speech is little understood.

It is a vision that is very popular in Russia, a country with a history of turmoil where order and stability are highly prized. It is also arguably a vision that corresponds with Russia’s interests. As an emerging economy Russia needs a stable and orderly international environment to allow space for its economy to develop.

Importantly throughout the speech Putin made it repeatedly clear that economic development remains for Russia an overriding priority and that the government would take no retaliatory action that might get in the way.

It is also a vision that is likely to be very popular around the world outside the Western camp, where governments and people have become increasingly wary of western interference in their affairs.

In the west, and in the US especially, it will inevitably be seen as a challenge.


Binyamin Netanyahu ‘chickenshit’, say US officials in explosive interview

Quotes from senior Obama administration figures damn Israeli prime minister over stance on settlements and peace with Palestinians

October 29, 2014

by Peter Beaumont in Jerusalem

The Guardian

US relations with Israel have plunged to new depths of bitterness and hostility as senior officials in the Obama administration decried Binyamin Netanyahu as a “chickenshit prime minister”, “coward” and a man more interested in his own political survival than peace.

The furious assessment delivered in anonymous but no-holds barred comments in an interview with the American journalist Jeffrey Goldberg in the Atlantic underline a state of anger with Netanyahu that is characterised as “red hot”.

The remarks are particularly telling in having been made to Goldberg, a Washington insider who has interviewed both Obama and Netanyahu, and who warned US-Israeli relations were in a “full-blown crisis” that could only get worse after the midterm elections.

Speaking to the Israeli parliament – the Knesset – a few hours after the comments were revealed, Netanyahu angrily insisted he was “under attack simply for defending Israel”, adding that he “cherished” Israel’s relationship with the US.

“When there are pressures on Israel to concede its security, the easiest thing to do is to concede,” he said. “You get a round of applause, ceremonies on grassy knolls, and then come the missiles and the tunnels.”

The Obama officials’ comments underline the dismal state of relations between the Obama administration and Netanyahu after a series of damaging announcements by Israel – including again this week – regarding its determination to push ahead with settlement building in occupied East Jerusalem and the West Bank.

The temperature of relations plunged again last week when Israel’s defence minister, Moshe Yaalon, was pointedly snubbed by senior administration officials during a visit last week to Washington, which itself followed a public warning from the White House that Israel risked alienating its “closest allies”.

Despite the deepening frustration in Washington, Netanyahu continued to hit back over the latest settlement announcement, saying US criticism was “detached from reality”, even on the eve of the publication of the latest remarks.

“The thing about Bibi is, he’s a chickenshit,” said one official quoted in the Atlantic. “The good thing about Netanyahu is that he’s scared to launch wars. The bad thing about him is that he won’t do anything to reach an accommodation with the Palestinians or with the Sunni Arab states.

“The only thing he’s interested in is protecting himself from political defeat. He’s not [Yitzhak] Rabin, he’s not [Ariel] Sharon, he’s certainly no [Menachem] Begin. He’s got no guts.”

In a more diplomatic and public statement on the recent settlement announcements, the US national security council spokesman Alistair Baskey insisted the US would continue to criticise Israel.

“There are times when we disagree with actions of the Israeli government and we must raise our concerns, such as our concerns about Israel’s settlement policy,” he said. “We raise these concerns as a partner who is deeply concerned about Israel’s future and wants to see Israel living side by side in peace and security with its neighbours.”

In comments designed to further sting Netanyahu, who has expended huge diplomatic effort on attempting to derail any deal with Iran over its nuclear programme, another official suggested the White House no longer believed Netanyahu would launch a pre-emptive strike on Iran to prevent it obtaining nuclear weapons.

“It’s too late for him to do anything,” the official said. “Two, three years ago, this was a possibility. But ultimately he couldn’t bring himself to pull the trigger. It was a combination of our pressure and his own unwillingness to do anything dramatic. Now it’s too late.”

A White House spokesman sought to distance the administration from the remarks, insisting they were “inappropriate and counter-productive”, adding Netanyahu and Obama have “forged an effective partnership”.

The comments are the latest in a series of high-profile spats between Washington and Netanyahu’s government. Relations began their sharp decline when defence minister Yaalon accused the US secretary of state, John Kerry, of being “obsessive and messianic” in his pursuit of a peace deal between Israelis and Palestinians. Later, in off-the-record remarks, Kerry warned that Israeli risked becoming “an apartheid state”.

On Wednesday Netanyahu told the Knesset: “I am not prepared to make concessions that will endanger our state. Understand, our national interests, topped by security and the unity of Jerusalem, are not what top the interests of those anonymous forces attacking us, and me personally. I am under attack simply because I am defending the State of Israel. If I didn’t stand firm on our national interests, I would not be under attack.

“I respect and cherish the deep connection with the United States. Since the establishment of the state, we’ve had our arguments and then some. We have seen time after time, year and year, support rising among the American public. The strategic alliance between the stances is continuing and will continue.”

Responding to the remarks in the Atlantic late on Tuesday night, Israel’s far-right economics minister, Naftali Bennett, used his Facebook page to call for Washington to renounce the comments: “If what was written [in The Atlantic] is true, then it appears the current administration plans to throw Israel under the bus.

“The prime minister is not a private person but the leader of the Jewish state and the whole Jewish world. Such severe insults towards the prime minister of Israel are hurtful to millions of Israeli citizens and Jews all over the world.

“Instead of attacking Israel and forcing it to accept suicidal terms, it should be strengthened. I call on the US administration to renounce these coarse comments and to reject them outright.”


Why Israel doesn’t care what Obama thinks, or even what officials call Netanyahu

October 30, 2014

by Dimi Reider   

The Guardian

When a senior U.S. official calls Israeli Prime Minister Benjamin Netanyahu “chickens–t,” you know the Israeli-American relationship has reached a new low point. The putdown was reported in The Atlantic just days after the Israeli defense minister’s request to meet with U.S. national security officials was rebuffed. Adding insult to injury, the rebuff was leaked to the press. While the White House distanced itself somewhat from the mudslinging, it did not retract any of the more substantive claims about U.S. discontent with Netanyahu’s policies.

Still, however embarrassing this spat is, it will barely make a dent in the U.S.-Israeli “special relationship.”

It is an open secret that the Obama administration is exasperated with the Israeli prime minister, especially with his disinterest both in making a peace deal with the Palestinians and normalizing relations with Sunni Arab states. Senior aides are also understandably riled by the Israeli government’s confrontational approach toward the administration. Earlier this year, Secretary of State John Kerry was labeled “obsessive and messianic” by the Israeli Defense Minister Moshe Ya’alon, and Netanyahu accused the White House of being “un-American.” As if that weren’t enough, Israel continues to aggressively expand its settlements in the West Bank, despite persistent criticism from the United States.

Like any populist leader of a representative democracy, Netanyahu values constituents over allies — the latter, after all, don’t vote. To the disappointment of some U.S. policy wonks, most Israelis do not consider the two-state solution, or improving relations with their neighbors, a high priority. It therefore makes little sense for Netanyahu to pursue either goal, especially because he has always been openly hostile to both.

At home, Netanyahu knows he must compete for votes against other, more hard-line parties and factions. Internationally, however, he is confident that no other state in the Middle East can compete with Israel in terms of the strategic benefits it offers to the United States. This confidence allows him and other Israeli politicians to take U.S. support for Israel for granted and concentrate on pandering to a nationalistic electorate.

So far, this position appears to be bearing out.

For all the recent U.S. venting against Israel, the strains in the relationship are strictly presented in terms of personal acrimony between individual politicians. Any criticisms of Israeli policies are framed as concerns about the damage the policies are supposedly doing to Israeli interests. No senior officials in either country are seriously suggesting a falling out between the two nations, or that Israeli policies are damaging U.S. interests. The prevailing paradigm is that Israel is still a strategic asset, rather than a burden, to America.

The current popular belief in Israel is that this paradigm will outlive any U.S. president. As he did throughout his and President Barack Obama’s concurrent first terms, Netanyahu is playing for time. He trusts that no one in the United States will risk putting pressure on Israel ahead of the 2014 midterm elections and is gambling that whoever succeeds Obama in 2016 will be more conciliatory toward his country.

Hyperbolic support for Israel among Republican candidates is pretty much a given, and former Secretary of State Hillary Clinton has always been perceived as more pro-Israel than Obama. Whatever happens in the next two years, the 2016 elections are already seen in Israel as a win-win.

Clinton is trying hard to distance herself enough from the Obama administration to be seen as a genuine alternative rather than an inevitable successor. Paradoxically, if Obama adopts a tougher approach toward Israel in the remainder of his term, it would actually bolster Clinton’s pro-Israel credentials among donors and voters alike, allowing her to push for renewal of the two countries’ special relationship supposedly strained by the president.

This assumes that the Obama administration is interested in pressuring Israel rather than washing its hands of the Middle East peace process. To many, it has been doing the latter since the collapse of the Kerry-led negotiations in April. The chances of the formation of a viable Palestinian state in the next two years are slim to nonexistent, while continued instability in the Middle East is all but guaranteed.

So long as Israel is seen as serving U.S. interests in the region, U.S. support for Israel will not waiver to any significant extent.

Still, frustration with Israel on all levels of American policy-making is real and growing, and could soon begin eroding even the more fundamental certainties of the American-Israeli relationship. Israel would do well to remember that nations’ interests change, cultures shift and even strategic paradigms don’t last forever. This is the one scenario Netanyahu does not seem to have a plan for.


Why is Europe turning its back on Ukraine? Amid growing justification for Russian aggression and a trend towards engaging with post-Soviet dictators, the EU is missing the fact that Moscow is a threat to Europe as whole, writes Belarusian opposition leader Andrei Sannikov

October 28, 2014

by Andrei Sannikov for The Interpreter, part of the New East network

The Guardian

Ukraine’s chances of survival are weak today and gloomy in the future. The reason for this is the position of the major player in the war in Ukraine. This player is not Russia – the country that unleashed the war in Ukraine. This player is the west or, to be more precise, Europe.

The largest and most successful association of democratic countries in the world, the European Union, is showing more and more reluctance to help Ukraine to survive.

The number of political groups that are inclined to support Russia’s president Vladimir Putin is growing, both in the ruling parties of the European countries and in the opposition; from Hungary’s Victor Orban and his ruling Fidesz party to the far-right opposition parties that are performing spectacularly well in national elections, such as Marie Le Pen and her Front National of France. Sympathy and support also comes from Hungary’s Jobbik radical nationalists, the Flemish nationalist Vlaams Belang in Belgium, Greece’s far-right Golden Dawn, Austria’s Freedom Party, and Italy’s Lega Nord, just to name a few.

Moreover, the number of European politicians and intellectuals who justify Russian aggression is growing and expanding.

They start with a “safe” subject – Crimea, which is almost forgotten not only by Europe but by Ukraine itself – and keep on suggesting that the federalisation (read disintegration) of Ukraine will be a good solution.

They write open letters individually and in groups to support Putin’s aggression, following the examples from the Dutch professor Cees Hamelink (who apologised to Putin for the media’s lies about Ukraine) or 300 plus German intellectuals. Among them are heavyweight figures, not only notorious ones like Gerhard Schröder, the former German chancellor who is on Gazprom’s payroll, but also Helmut Schmidt, another former chancellor, and Günter Verheugen, a former European Union commissioner. More European analysts and journalists keep suggesting that Ukraine is a perpetual mess and it will serve no good to pump money into it until it delivers on good governance.

The largest and most successful association of democratic countries in the world is showing reluctance to help Ukraine to survive

Besides, there is a misplaced ideology that sees Eurosceptics go for anything that is against the European Union and leaves them inclined to support Putin’s policy on Ukraine and oppose sanctions against Russia.

Europe wants trade with Russia and is quite happy to accept Russian money in its capitals without questioning its origin, and so many leaders echo the voices of pro-Kremlin politicians, think tanks, newspapers, and intellectuals as a result. Money talks.

Russian domination

It looks as if Europe is about to declare its favourite postulate: “Russia is by far more important for us than any other former Soviet country.” That was always the case before the war in Ukraine broke out. Europe does not want to be disturbed. It doesn’t want to see the dangers to itself beyond Russia’s war in Ukraine. It wants to go back to “business as usual” with Russia as soon as possible. The war is a nuisance. Dead bodies of Ukrainian patriots are a nuisance.

Europe cannot understand that this is a war on Europe, not on Ukraine, and that Putin, if not convincingly defeated, will go ahead with his expansionism and revisionism. The ground is laid for that: Transnistria, South Ossetia and Abkhazia, Russian minorities in Baltic states, the Kaliningrad exclave, and now Donbass and Lugansk are more than enough of a major Kremlin offensive in Europe.

Ukrainians stood up against such a scenario between November 2013 and February 2014. They fought against Russian domination. They fought not for the EU Association Agreement but for their dignity, for the same values that Europe is built upon. They won only to become an object of aggression, and have received very little help from outside to cope with this aggression and save the country.

Europe was very slow to recognise this threat and even slower to respond. And today still there is a lack of understanding that the threat is much larger than Russia’s war in Ukraine. It has to be addressed as a threat to Europe.

It looks like Europe is about to declare its favourite postulate: ‘Russia is by far more important for us than any other former Soviet country’

Yes, Ukraine is a mess: politically, economically, financially. Most probably it will remain a mess for many years, but it doesn’t undermine the need to help. Moreover this need is becoming more urgent. There has to be a long term strategy in Europe to help itself, which means to help Ukraine.

Sanctions against Russia are the least Europe can do in this regard in the short term. European businesses and dissenting voices on sanctions should recognise or be persuaded to recognise that their political and business future depends on solidarity with the Ukrainian people in this difficult time.

Putin is more efficient in his decisions to continue aggression than the EU is in its decision to protect values. Putin is ready to sacrifice at the expense of the Russian people, while European businesses are not ready to risk profits for the sake of future prosperity in Europe.

            Lethal mistakes

Even if Europe eventually overcomes its slowness in decision-making and its shyness in rebuffing the aggressor, its long-term strategy on its own future is not even within the range of vision. Moreover, it is making serious if not lethal mistakes that will lead to more insecurity to say the least.

Putin is more efficient in his decisions to continue aggression than the EU is in its decision to protect values

While condemning Russia’s aggressive policies and discussing sanctions to oppose such policies, Europe is returning to its futile policies which appease dictators in Russia’s neighbourhood.

All of a sudden Belarus’s Alexander Lukashenko, only yesterday a European pariah, is regarded not even as a lesser evil but as a legitimate mediator and independent player on the side of Ukraine. He is becoming a star of European media who line up to interview him, including Euronews and France 24.

Europe abruptly agreed that Lukashenko is eligible to provide good offices for talks on Ukraine, which turned out to be treacherous offices helping Putin to leap forward on the issue of recognition of terrorists in eastern Ukraine. Under the disguise of the “peace” talks in Minsk, the EU’s high representative met Lukashenko, shamefully ignoring the EU policy banning high-level contacts with Belarus until all political prisoners are released.

Who cares about political prisoners and continued repressions in Belarus when half of Europe is courting Lukashenko to buy its salmon, milk, apples, seafood, cheese and sausages to sneak past Russia’s embargo on western food? “Parmigiano-Belarussiano” is a new brand in Moscow today.

The EU ban on high-level contacts disappeared, leaving the repressions intact and political prisoners in jail, one of whom was a presidential candidate in the last election, Nikolai Statkevich.

It doesn’t matter that Lukashenko voted against Ukrainian territorial integrity in the UN and that Russia does what it wants militarily on the territory of Belarus. It doesn’t matter that, in an interview with Euronews, he suggested sending troops to Ukraine under the disguise of peacekeepers, thus violating the Belarusian Constitution — a transparent attempt to help Putin to legitimise military presence in Ukraine since there is no such thing as Belarus peacekeepers.

Nobody cares since he helps Europe’s food industry and that is more than enough to forget about his record of atrocities and start opening doors for him in Europe. Lukashenko is more than happy and reacts predictably with more repression against civil society and independent media.

             ‘Dictators international’

Lukashenko is not alone. There is Ilham Aliyev of Azerbaijan, who has intensified repressions, harassment, beatings and arrests of opposition politicians, civil society activists, human rights defenders and journalists. There are about 100 political prisoners in Azerbaijan, including prominent human rights defenders Leyla and Arif Yunus. And this is happening when Azerbaijan chairs the committee of ministers of the Council of Europe.

Aliyev is known to spend a lot of money to buy lobbying for his regime in the west. There is even a term for this – “caviar diplomacy”. His investment pays back. There is a feeble condemnation of his brutality against dissenters and at the same time he was invited to the Nato summit in September and offered to take part in reconstructing Afghanistan together with western partners.

            Ukraine and Europe are in danger as long as this ‘dictators international’ exists

Europe makes an epic blunder by allowing itself to regard dictators in the post-Soviet area as lesser evils who can be used to thwart Putin’s aggression. Putin’s goal, maybe the main goal, is to preserve and defend “dictators international” by all means in order to attack western values and the west itself. He is ready to wait and pause and thoroughly prepare the attack with the help of the Lukashenkos.

It is quite hypocritical for Poland, Latvia and Lithuania, neighbours of Belarus, to raise alarm and to rightfully demand presence of Nato troops on their territory to defend them against potential Russia’s aggression, and at the same time reverse the policy of sanctions and start appeasement of the closest military ally of Putin and the founding father of “dictators international” in the post-Soviet area.

It is alarming to hear the new European leadership declaring the necessity to step up critical engagement with Belarus. It is well known that by this the EU means less criticism and more engagement with the dictator.

Ukraine and Europe are in danger as long as this “dictators international” exists. Any engagement with one dictator with the hope to deal with other ones will lead to more instability, more repression and more war in Europe.


The Zombie System: How Capitalism Has Gone Off the Rails

October 23, 2014

by Michael Sauga


A new buzzword is circulating in the world’s convention centers and auditoriums. It can be heard at the World Economic Forum in Davos, Switzerland, and at the annual meeting of the International Monetary Fund. Bankers sprinkle it into the presentations; politicians use it leave an impression on discussion panels.

The buzzword is “inclusion” and it refers to a trait that Western industrialized nations seem to be on the verge of losing: the ability to allow as many layers of society as possible to benefit from economic advancement and participate in political life.

The term is now even being used at meetings of a more exclusive character, as was the case in London in May. Some 250 wealthy and extremely wealthy individuals, from Google Chairman Eric Schmidt to Unilever CEO Paul Polman, gathered in a venerable castle on the Thames River to lament the fact that in today’s capitalism, there is too little left over for the lower income classes. Former US President Bill Clinton found fault with the “uneven distribution of opportunity,” while IMF Managing Director Christine Lagarde was critical of the numerous financial scandals. The hostess of the meeting, investor and bank heir Lynn Forester de Rothschild, said she was concerned about social cohesion, noting that citizens had “lost confidence in their governments.”

It isn’t necessary, of course, to attend the London conference on “inclusive capitalism” to realize that industrialized countries have a problem. When the Berlin Wall came down 25 years ago, the West’s liberal economic and social order seemed on the verge of an unstoppable march of triumph. Communism had failed, politicians worldwide were singing the praises of deregulated markets and US political scientist Francis Fukuyama was invoking the “end of history.”

Today, no one talks anymore about the beneficial effects of unimpeded capital movement. Today’s issue is “secular stagnation,” as former US Treasury Secretary Larry Summers puts it. The American economy isn’t growing even half as quickly as did in the 1990s. Japan has become the sick man of Asia. And Europe is sinking into a recession that has begun to slow down the German export machine and threaten prosperity.

Capitalism in the 21st century is a capitalism of uncertainty, as became evident once again last week. All it took were a few disappointing US trade figures and suddenly markets plunged worldwide, from the American bond market to crude oil trading. It seemed only fitting that the turbulence also affected the bonds of the country that has long been seen as an indicator of jitters: Greece. The financial papers called it a “flash crash.”


Running Out of Ammunition


Politicians and business leaders everywhere are now calling for new growth initiatives, but the governments’ arsenals are empty. The billions spent on economic stimulus packages following the financial crisis have created mountains of debt in most industrialized countries and they now lack funds for new spending programs.

Central banks are also running out of ammunition. They have pushed interest rates close to zero and have spent hundreds of billions to buy government bonds. Yet the vast amounts of money they are pumping into the financial sector isn’t making its way into the economy.

Be it in Japan, Europe or the United States, companies are hardly investing in new machinery or factories anymore. Instead, prices are exploding on the global stock, real estate and bond markets, a dangerous boom driven by cheap money, not by sustainable growth. Experts with the Bank for International Settlements have already identified “worrisome signs” of an impending crash in many areas. In addition to creating new risks, the West’s crisis policy is also exacerbating conflicts in the industrialized nations themselves. While workers’ wages are stagnating and traditional savings accounts are yielding almost nothing, the wealthier classes — those that derive most of their income by allowing their money to work for them — are profiting handsomely.

According to the latest Global Wealth Report by the Boston Consulting Group, worldwide private wealth grew by about 15 percent last year, almost twice as fast as in the 12 months previous.

The data expose a dangerous malfunction in capitalism’s engine room. Banks, mutual funds and investment firms used to ensure that citizens’ savings were transformed into technical advances, growth and new jobs. Today they organize the redistribution of social wealth from the bottom to the top. The middle class has also been negatively affected: For years, many average earners have seen their prosperity shrinking instead of growing.

Harvard economist Larry Katz rails that US society has come to resemble a deformed and unstable apartment building: The penthouse at the top is getting bigger and bigger, the lower levels are overcrowded, the middle levels are full of empty apartments and the elevator has stopped working.


‘Wider and Wider’


It’s no wonder, then, that people can no longer get much out of the system. According to polls by the Allensbach Institute, only one in five Germans believes economic conditions in Germany are “fair.” Almost 90 percent feel that the gap between rich and poor is “getting wider and wider.”

In this sense, the crisis of capitalism has turned into a crisis of democracy. Many feel that their countries are no longer being governed by parliaments and legislatures, but by bank lobbyists, which apply the logic of suicide bombers to secure their privileges: Either they are rescued or they drag the entire sector to its death.

It isn’t surprising that this situation reinforces the arguments of leftist economists like distribution critic Thomas Piketty. But even market liberals have begun using terms like the “one-percent society” and “plutocracy.” The chief commentator of the Financial Times, Martin Wolf, calls the unleashing of the capital markets a “pact with the devil.”

They aren’t alone. Even the system’s insiders are filled with doubt. There is the bank analyst in New York who has become exasperated with banks; the business owner in Switzerland who is calling for higher taxes; the conservative Washington politician who has lost faith in the conservatives; and the private banker in Frankfurt who is at odds with Europe’s supreme monetary authority.

They all convey a deep sense of unease, and some even show a touch of rebellion.

If there is a rock star among global bank analysts, it’s Mike Mayo. The wiry financial expert loves loud ties and tightly cut suits, he can do 35 pull-ups at a time, and he likes it when people call him the “CEO killer.”

The weapons Mayo takes into battle are neatly lined up in his small office on the 15th floor of a New York skyscraper: number-heavy studies about the US banking industry, some as thick as a shoebox and often so revealing that they have enraged industry giants like former Citigroup CEO Sandy Weill, or Stan O’Neal in his days as the head of Merrill Lynch. Words of praise from Mayo are met with cheers on the exchanges, but when he says sell, it can send prices tumbling.


Mayo isn’t interested in a particular sector but rather the core of the Western economic system. Karl Marx called banks “the most artificial and most developed product turned out by the capitalist mode of production.” For Austrian economist Joseph Schumpeter, they were guarantors of progress, which he described as “creative destruction.”

But financial institutions haven’t performed this function in a long time. Before the financial crisis, they were the drivers of the untenable expansion of debt that caused the crash. Now, focused as they are on repairing the damage done, they are inhibiting the recovery. The amount of credit ought to be “six times faster than it has been,” says Mayo. “Banks now aren’t the engines of growth anymore.”

Mayo’s words reflect the experience of his 25 years in the industry, a career that sometimes sounds like a plot thought up by John Grisham: the young hero faces off against a mafia-like system.

He was in his late 20s when he arrived on Wall Street, a place he saw as symbolic of both the economic and the moral superiority of capitalism. “I always had this impression,” says Mayo, “that the head of a bank would be the most ethical person and upstanding citizen possible.”

But when Mayo, a lending expert, worked for well-known players like UBS and Prudential Securities, he quickly learned that the glittering facades of the American financial industry concealed an abyss of lies and corruption. Mayo met people who recommended buying shares in technology companies in which they themselves held stakes. He saw how top executives diverted funds into their own pockets during mergers. And he met a bank director who only merged his bank with a lender in Florida because he liked boating in the Keys.

What bothered Mayo most of all was that his employers penalized him for doing his job: writing critical analyses of banks. He lost his job at Lehman Brothers because he had downgraded a financial institution with which the Lehman investment department wanted to do business. Credit Suisse fired him because he recommended selling most US bank stocks.

Only when the real estate bubble burst did the industry remember the defiant banking analyst, who already saw the approaching disaster even as then-Deutsche Bank CEO Josef Ackermann issued a yield projection of 25 percent. Fortune called him “one of eight people who saw the crisis coming.” The US Congress called on him to testify about the crisis.

Today Mayo writes his analyses for the Asian brokerage group CLSA and they still read like reports from a crisis zone. Central banks have kept lenders alive with low interest rates, and governments have forced them to take up additional capital and comply with thousands of pages of new regulations. Nevertheless, Mayo is convinced that “the incentives that drove the problems … are still in place today.”

Top bank executives are once again making as much as they did before the crisis, even though the government had to bail out a large share of banks. The biggest major banks did not shrink, as was intended, but instead have become even larger.


Incalculable Risks


New accounting rules were passed, but financial managers can still hide the value of their receivables and collateral behind nebulous terms like “transaction” or “customer order.” Bank balance sheets, British central banker Andrew Haldane said caustically, are still “the blackest of boxes.”

Before the crash, investment banks gambled with derivatives known by acronyms like CDO and CDS. Today Wall Street institutions try to get the upper hand with high-frequency trading, with their Dark Pools and millisecond algorithms. Regulators fear that high-frequency trading, also known as flash trading, could create incalculable risks for the global financial system.

When analyst Mayo thinks about the modern banking world, he imagines a character in the Roman Polanski film “Chinatown,” California detective Jake Gittes. The man solves one corruption case after another, and yet the crime level in Los Angeles doesn’t go down. “Why is that?” he finally asks another character, who merely replies: “Forget it, Jake. It’s Chinatown.”


It’s the same with the banking industry, says the analyst. Individual institutions aren’t the problem, he explains. The problem is the system. “The banks are Chinatown,” says Mayo, “and it is still the situation today.”

The little village of Wimmis lies in an area of Switzerland that still looks quintessentially Swiss, the Bernese Oberland, or Highlands, where Swiss flags flutter in front yards. The local tanning salon is called the “Sunne Stübli” (little sun room) and under “item five” of the latest edition of the town’s “Placard Ordinance,” posted outside the town administration building, organizations must secure their public notices “with thumbtacks” and “not with staples.” Everything has its place in Wimmis, as it does in Markus Wenger’s window factory. The business owner, with his thinning hair and crafty eyes, is the embodiment of the old saying, “time is money.” He walks briskly through his production building, the size of a football field, passing energy-saving transom windows, energy-saving patio doors and energy-saving skylights, which can be installed between solar panels, also to save energy, a system Wenger developed. “We constantly have to think of new things,” he says, “otherwise the Czechs will overtake us.”

Wenger could pass for a model businessman from the regional chamber of commerce were it not for his support for a political initiative that’s about as un-Swiss as banning cheese production in the Emmental region. Wenger advocates raising the inheritance tax.

For decades, Switzerland was based on a unique form of popular capitalism, which promised small craftsmen as many benefits as those who worked in high finance. Switzerland was the discreet tax haven for the world’s rich, while simultaneously laying claim to Europe’s highest wage levels — a Rolex model of the social welfare state.

But the country’s established class consensus was shattered by the excesses of the financial crisis — the $60 billion bailout of its biggest bank, UBS, and the millions in golden parachutes paid out to executives so that they wouldn’t go to the competition after being jettisoned by their companies.

Since then, a hint of class struggle pervades Swiss Alpine valleys. A series of popular initiatives have been launched, initiatives the financial newspapers have labeled “anti-business.” To begin with, the Swiss voted on and approved a cap on so-called “rip-off salaries.” Another referendum sought to impose a ceiling on executive compensation, but it failed. A proposal by Social Democrats, Greens and the socially conservative EVP, to support government pensions with a new tax on large inheritances, will be put to a referendum soon.


‘The Wealth of Medieval Princes’


Income isn’t the problem in Switzerland, where the gap between rich and poor is no wider than in Germany or France. The problem is assets. No other country has as many major shareholders, financiers and investors, and in no country is as much capital concentrated in so few hands. The assets of the 100 wealthiest Swiss citizens have increased almost fivefold in the last 25 years. In the Canton of Zürich, the 10 richest residents own as much as the poorest 500,000. When a Swiss business owner died recently, his two heirs inherited an estate worth as much as all single-family homes and owner-occupied flats in the Canton of Appenzell Innerrhoden. Wealth has become so concentrated in Switzerland, says the former head of the Zürich statistics office, that it “rivals the wealth of medieval princes.”

The government benefits hardly at all from this wealth. The Swiss tax authorities recently collected all of 864 million Swiss francs (€715 million) in inheritance tax, and this revenue source is unlikely to increase anytime soon. To attract wealthy individuals, the cantons have reduced their tax rates to such low levels that even estates worth billions can be left to the next generation without being subject to any taxation at all.

In the past, the Swiss were fond of their quirky high society, whose lives of luxury in places like Lugano were as spectacular as their bankruptcies. But now, a large share of the super-rich comes from the financial industry, and even an upright window manufacturer like Markus Wenger is often unsure what to make of the demands coming from his high-end customers.


A homeowner recently asked Wenger if he could gold-plate his window fittings. And when he was standing in an older couple’s 500-square-meter (5,380-square-foot) apartment not long ago, he found himself wondering: How do they heat this?


A Dangerous Path


Wenger is no revolutionary. He likes the market economy and says: “Performance must be rewarded.” His support for a higher inheritance tax is not as much the result of his sense of justice, but rather a cost calculation that he explains as soberly as the installation plan for his windows.

This is how Wenger’s calculation works: Today he pays about €8,000 a year in social security contributions for a carpenter who makes 65,000 Swiss francs (€54,000). But the Swiss population is aging, so contributions to pension insurance threaten to increase drastically soon. Doesn’t it make sense, he asks, to exact an additional, small contribution from those Swiss citizens who hardly pay any taxes at all today on their rapidly growing fortunes?

For Wenger, the answer is obvious. But he also knows that most of his fellow business owners see things differently. They are worried about an “attack by the left” and prefer to support their supposed champion, Christoph Blocher, the billionaire spiritual head of the Swiss People’s Party. Only recently, Blocher convinced the Swiss to limit immigration by workers from other European countries. Now Wenger expects Blocher to launch a new campaign under the motto: “Are you trying to drive our business owners out of the country?”

There is more at stake than a few million francs for the national pension fund. The real question is whether wealthy countries like Switzerland should become playthings for their elites. Wenger sees the industrialized countries embarking on a dangerous path, the path of greed and self-indulgence, and he believes Blocher’s party is the most visible expression of that. Blocher is pursuing a “policy for high finance,” says Wenger. “He is fighting on behalf of money.”

The entrepreneur from the Bern Highlands has no illusions over his prospects in the upcoming conflict with the country’s great scaremonger. The Swiss are likely to vote on the inheritance tax initiative next year. “In the end,” Wenger predicts, “the vote will be 60 to 40 against us.”

He was the face of the Reagan revolution, a young man with large, horn-rimmed glasses and thick hair, wearing a suit that was too big for him as he sat next to the hero of conservative America. As former President Ronald Reagan’s budget director, David Stockman was the architect of the biggest tax cut in US history and the propagandist of the “trickle-down” theory, the Republican tenet whereby profits earned by the rich eventually benefit the poorer classes.

Thirty years later, Stockman is sitting on a Chesterfield sofa in his enormous mansion in Greenwich, Connecticut, an affluent suburb of New York, where the stars of the hedge fund industry conceal their tasteless mansions behind red brick walls and jeeps owned by private security companies are parked on every street corner.

Stockman is wearing a green baseball cap and a black T-shirt. It’s a sunny early fall morning, but the mood in the brightly lit rooms is strangely somber. The rooms are empty, there are boxes stacked in the corners and a servant is wrapping the silverware in the dining room.

Stockman is moving to New York, into an apartment he has already rented in Manhattan. But it isn’t entirely clear whether he is only moving to be closer to TV studios and newspaper editors, or if the move signifies a departure from his previous life. It was a life that took him through the executive suites of Washington politics and the US financial industry, a life that has placed Stockman in an almost unparalleled position to recount the aberrations of American capitalism in the last three decades. “We have a financialized, central-bank dominated casino,” he says, “that is undermining the fundamentals of a healthy growing capitalist economy,” he says.

Ironically, Stockman was the one who wanted to reshape that society, back in the 1980s, when Reagan made him the organizer of his shift to so-called supply-side economics. Like the actor-turned-president from California, Stockman believed in free markets, low taxes and reducing the role of government.


The First Mistake


But Stockman also believed in healthy finances, which placed him at odds with the California contingent on Reagan’s team who saw themselves as lobbyists for industry and the military. When Reagan’s chief of staff, Donald Regan, declared the phrase “tax increase” to be taboo after the 1984 election, Stockman knew that he had lost. But it was more than a personal defeat. It was a triumph of irrationality, one that led Stockman to permanently disassociate himself from his party’s fiscal policies. “The Republican concept of starving the beast is the worst thing in terms of fiscal rectitude that you can imagine,” Stockman says today. “It’s even worse than the Keynesian models of the Democrats.”

The debt policy of the Reagan years was the first mistake of America’s conservative revolutionaries, but not the only one. There is another fallacy, one that Stockman also participated in when he went to work for the investment bank Salomon Brothers and later the private equity firm Blackstone after his ouster from the White House.

It was the time when it had become politically fashionable to unfetter the financial industry; a time when then-Fed Chairman Alan Greenspan, Stockman’s old acquaintance from the Reagan team, was inventing a new monetary policy: Whenever the economy and the markets showed signs of weakness, he reduced interest rates, and when a large financial institution ran into trouble, it was bailed out with the help of the central bank.

Greenspan’s policy of cheap money became a sweet poison for Wall Street, the chief ingredient of the dangerous debt cocktails brewed up by the wizards at London and New York investment banks, with Stockman front and center. The former politician became a virtuoso of the leveraged buyout, a complex financial deal in which in investor buys companies with borrowed money, restructures them or carves them up, and then sells them at a profit.

The deals made Stockman rich, but they also turned him into a junkie. His projects became increasingly risky and the towers of credit he constructed became taller and taller. “I was an addict,” he says. “I got caught up in the process.”


A Debt Republic


Disaster struck in 2007, when one of his highly leveraged companies went bankrupt. He was indicted on fraud charges, and the bankruptcy cost him millions and damaged his reputation. It became his “road to Damascus experience,” as he calls it, when the financial crisis erupted a short time later. He concluded that the same mistakes that had destroyed his company also took the United States to the brink of an abyss: cheap credit, excessively high debt and a false sense of security that everything would ultimately work out for the best.

Stockman again became the rebel he had been at the beginning of his career. He gave up his position in the financial industry, started a blog in which he settled scores with both policymakers in Washington and the financial oligarchy on Wall Street and he wrote an almost 800-page analysis of the “Great Deformation” of US capitalism.

The conservative is furious over his country’s transformation into a debt republic of the sort the Western world has never before seen in times of peace. A republic in which going to college is paid for with borrowed funds, as is the next military campaign. A country which hasn’t actually dismantled its gigantic pile of debt since the crisis — $60 trillion — but has merely redistributed it. While the banks were allowed to pass on a large share of their bad loans to taxpayers, the government is in more debt than ever before.

The mountain of debt appears smaller than it is because the Fed keeps interest rates low. At the same time, though, all this cheap money is driving the United States into a risky race against time, one in which no one knows what will happen first: the hoped-for economic boom or the next crash. Experts, like former Treasury Secretary Robert Rubin, believe the current rally in the markets is in fact the precursor to the next crash.

The primary beneficiaries of the market rally seen in recent months are the 10 percent of top earners who own more than 90 percent of financial assets. But for average Americans, the policies instituted in response to the crisis have been poverty inducing. After the crash, millions of US citizens first lost their homes and then their jobs — and now the social divide in the country is as big as it was in the 1920s. While wealth has grown at the top of the income scale, the median household, or the household that lies statistically at the exact middle of the scale, has become $50,000 poorer since 2007.

In the past, part of the promise of the American dream was that anyone who worked hard enough could eventually improve his or her situation. Today the wealthy enjoy most of the fruits of US capitalism and the most salient feature of the system is the fear of fear. No one knows what might happen if the Fed raises interest rates next year as planned. Will pressure from rising costs cause the government deficit to explode? Will the stock market bubble burst and will financial institutions collapse? Will the economy crash?

Only one thing is certain: In the seventh year of the financial crisis, the US economy is still addicted to debt and cheap money. Worst of all, the withdrawal phase hasn’t even begun.

“There is no possibility of a soft landing (with the) markets as completely distorted and disabled as they are today,” Stockman says in parting. “There will be some great conflagration. It’s just the question of when.”

Michael Klaus flips open his mobile phone, which he has been doing a lot of these days. He taps the screen with his finger to display the current yields on 10-year German government bonds. “Germany 10 Year: 0.80,” the screen reads, using the abbreviated terminology of the Bloomberg market service. “You see,” he says, “yields are down again. They were at 0.84 yesterday.”

It’s Wednesday of last week. The Frankfurt banker is walking down Friedrichstrasse in Berlin on his way to a meeting with fellow members of the Confederation of German Employers’ Associations. The latest labor agreement is on the agenda, but Klaus is still thinking about the number on the screen of his mobile phone, yet another reaction to the most recent plans of Mario Draghi, the president of the European Central Bank (ECB).

Such rates are almost always a reaction to Draghi, at least they have been since the euro crisis got going. According to economics textbooks, security prices are determined by supply and demand. But in the reality of the monetary union, they usually follow the rates set by the top monetary watchdog in Frankfurt. In Klaus’s assessment of the situation, “to put it in somewhat exaggerated terms, we live in a central-bank-administration economy.”

For the last quarter of a century, Klaus, a management expert, has been working for Metzler, a traditional, private bank based in Frankfurt. He is now a partner and exudes the self-confident nonchalance of a man who knows that his customers need to show up with at least €3 million to become his clients. His biggest asset is reliability. Unlike the large, powerful banks, his bank would be unable to count on government assistance in a crisis. It is not big enough to be too big to fail.

Partly for that reason, Klaus is particularly bothered by the ECB’s development in recent years. He sees it as a kind of hedge fund a kind of ministerial administration. Because Europe’s major banks are ailing and national governments are at odds, the ECB has developed into the most powerful bureaucracy on the Continent. It controls interest rates and the money supply, drives prices on the exchanges and financial markets, supervises financial institutions and audits governments. According to Klaus, the European Central Bank has all but “replaced” the European bond market.

It made sense at the time, because it protected the monetary union from breaking apart. But now emergency aid has turned into long-term assistance. The effects of ECB measures are subsiding, and financial experts aren’t the only ones to notice that their programs have recently done more harm than good.

That was the case with Draghi’s latest package last month. To stimulate lending to small and mid-sized companies, the ECB announced its intention to begin large-scale buying of special debt instruments known as asset-backed securities, or ABS. The only problem is that far too few of these securities exist in Europe.

This leads many experts to worry that lenders will simply fill the gap by transforming bad debt from their portfolios into ABSs and pass them on to the ECB. The investment effect would be next to nothing.


Draghi’s plan to provide long-term funds to banks if they can demonstrate that they passed it on in the form of loans to companies or households could also prove harmful. They must only offer proof in 2016, meaning they could first invest the money in government bonds, a surer bet these days than corporate bonds.


Achieving the Opposite


Another recent Draghi measure is particularly dangerous: the “negative deposit interest rate.” It means that banks no longer earn anything when they park their money with the ECB. On the contrary, they are required to pay for the privilege.

This too is meant to encourage banks to lend. In reality, however, the measure makes the situation even more difficult for financial institutions like savings banks and cooperative banks, which are dependent on customer deposits. Because of the current low interest rates, these banks already earn almost nothing from the spread between savings and lending rates. If interest rates are pushed down even further, profits will continue to decline. “Ironically, this torpedoes the business model of savings banks and cooperative banks, which have thus far managed to survive the crisis in relatively good shape,” says Klaus.

Many experts are worried that with measures like these, the ECB is achieving precisely the opposite of what it wants to achieve. Instead of being strengthened, the credit sector is weakened. Instead of reducing risks, new ones are being created. Instead of liquidating ailing banks, they are kept alive artificially.

The economy has had little experience thus far with the new crisis capitalism, with its miniature growth, miniature inflation and miniature interest rates. But economists learned one thing after large credit bubbles burst in recent years, in Japan and Scandinavia, for example: After a financial and banking crisis, the first order of business is to clean up the banks, and to do it quickly and radically. Institutions that are not viable need to be shut down while the others should be provided with capital.


‘Substantial Turbulence’


In Europe, however, this process has dragged on for years, under pressure from the financial lobby. The condition of the industry is now so dismal that experts are using metaphors from the world of horror films to describe it. “Zombie banks” are those that are being kept alive artificially with government bailouts and, like the zombies in Hollywood films, are wreaking havoc throughout Europe. They are too sick to lend money to the real economy but healthy enough to speculate with financial investments. Many banks today, says Bonn economist Martin Hellwig, can only “survive in the market by speculating.”

What distinguishes the current situation from the wild years before the financial crisis is that speculators were once driven by greed but have since turned into speculators motivated by need.

Private banker Klaus has seen enough on his market app. He closes the phone with a worried look on his face, and then he utters a sentence in the typically convoluted idiom of the financial industry: “If Europe slips into a recession, it could lead to substantial turbulence in the financial markets.”

The man who introduced the concept of “inclusion” into the political debate is sitting in his office in Boston. There are mountains of papers on the round conference table: academic papers, pages of statistics from the International Monetary Fund, and the latest issue of the Anarcho-Syndicalist Review.

Daron Acemoglu is currently considered one of the 10 most influential economists in the world, but the native of Istanbul doesn’t think much of titles and formalities. He prefers the relaxed look of the web community: a plaid shirt and jeans, and a Starbucks cup in his hand.

He became famous two years ago when he and colleague James Robinson published a deeply researched study on the rise of Western industrial societies. Their central thesis was that the key to their success was not climate or religion, but the development of social institutions that included as many citizens as possible: a market economy that encourages progress and entrepreneurship, and a parliamentary democracy that serves to balance interests.

The only problem is that such institutions do not arise automatically. They have to be promoted and defended, especially against those social classes and interest groups that use power to seal themselves off from competitors, secure their own benefits and seek to influence lawmakers accordingly.

Extremely well read, Acemoglu can cite dozens of such cases. One is 14th century Venice, where a small patrician caste monopolized maritime trade. Another is Egypt under former President Hosni Mubarak, whose officer friends divided up key economic posts among themselves but were complete failures as businessmen. These are what Acemoglu calls “extractive processes,” which lead to economic and social decline.


A Process of Extraction?


The question today is: Are Western industrial societies currently undergoing a similar process of extraction?

Acemoglu leans back in his chair. He isn’t one to make snap judgments, and he understands the contradictions of social trends, in the United States, for example. On the one hand, the US is more inclusive today than in the 1960s, because it has abolished racial segregation. On the other hand, says Acemoglu, he has noticed the growing influence of powerful interest groups: the pharmaceutical industry, insurance companies and, most of all, Wall Street. “The problem of money in politics,” says Acemoglu, “is particularly acute in the case of the financial industry.”

US politicians spend up to 70 percent of their time raising money for their campaigns, and Wall Street is one of their most important sources. Experts have calculated that Bill and Hillary Clinton alone have garnered at least $300 million in donations from the financial industry since the early 1990s.

In addition, money is no longer the only factor shaping the connections between Wall Street and Washington, as Acemoglu demonstrated in a recent study about former US Treasury Secretary Timothy Geithner. The stock prices of financial firms, with which he maintained close relationships, climbed significantly after his nomination. “The fact that some companies had the ear of the Secretary of the Treasury,” Acemoglu concludes, “was, at least by the market view, very valuable.”

It has nothing to do with bribery, Acemoglu clarifies. Still, the process highlights the dangerous closeness between the financial industry and the political world, a phenomenon which can be seen elsewhere in the world as well. In Germany, for example, Chancellor Angela Merkel took steps to prevent a Greek insolvency at least partly out of consideration for German banks invested there. The London financial industry, to cite another example, was instrumental in blocking EU plans for the introduction of a financial transaction tax. In Switzerland, billionaire Blocher finances referendum campaigns via his political party. “The rich are extremely powerful,” Acemoglu says, “and that is a concern.”


Not Enough


Limiting that influence is of the utmost importance, Acemoglu believes, so that today’s upper-class, high-finance capitalism can once again revert to being a capitalism of the real economy and the societal center. The necessary economic reforms are not Acemoglu’s primary focus, even if the relevant proposals have existed for a long time: a fiscal policy that doesn’t just benefit the rich; a monetary policy that knows its limits; a reform of the financial and banking industry that separates the traditional savings and lending business from risky investment banking.

That won’t be enough, Acemoglu believes. What is needed, he argues, is a new political alliance that takes a stand against the power of the financial industry and its lobby. He sees the anti-trust movement from the beginning of the last century in the United States as a model. It was a broad coalition from the center of society and finally achieved its great victory after decades of struggle: the breakup of major corporations like Standard Oil.


Will something comparable happen with the big international banks? Acemoglu doesn’t know, but he is convinced of one thing: Elitist conferences, at which bankers and fiscal policy experts hold sophisticated conversations about “inclusion,” will not bring about change.

The organizers of the World Economic Forum once again sent him an invitation to Davos recently. But Acemoglu declined, as he has done several times in the past. “Solutions to the world’s problems are not produced in a meeting between Bill Gates and George Soros,” he says. “Renewal has to come from below.”


 Translated from the German by Christopher Sultan


White House computer network ‘hacked’

October 29, 2014

BBC News

A White House computer network has been breached by hackers, it has been reported.

The unclassified Executive Office of the President network was attacked, according to the Washington Post.

US authorities are reported to be investigating the breach, which was reported to officials by an ally of the US, sources said.

White House officials believe the attack was state-sponsored but are not saying what – if any – data was taken.

In a statement to the AFP news agency, the White House said “some elements of the unclassified network” had been affected.

A White House official, speaking on condition of anonymity, told the Washington Post: “In the course of assessing recent threats, we identified activity of concern on the unclassified EOP network.

“Any such activity is something we take very seriously. In this case, we took immediate measures to evaluate and mitigate the activity.




“Certainly, a variety of actors find our networks to be attractive targets and seek access to sensitive information. We are still assessing the activity of concern.”

The source said the attack was consistent with a state-sponsored effort and Russia is thought by the US government to be one of the most likely threats.

“On a regular basis, there are bad actors out there who are attempting to achieve intrusions into our system,” a second White House official told the Washington Post.

“This is a constant battle for the government and our sensitive government computer systems, so it’s always a concern for us that individuals are trying to compromise systems and get access to our networks.”

The Post quoted its sources as saying that the attack was discovered two-to-three weeks ago. Some White House staff were reportedly told to change their passwords and there was some disruption to network services.

In a statement given to Agence France-Presse, a White House official said the Executive Office of the President received daily alerts concerning numerous possible cyber threats.

In the course of addressing the breach, some White House users were temporarily disconnected from the network.

“Our computers and systems have not been damaged, though some elements of the unclassified network have been affected. The temporary outages and loss of connectivity for our users is solely the result of measures we have taken to defend our networks,” the official said.

The US’s National Security Agency, Federal Bureau of Investigation and Security Service were reportedly investigating.

Requests for comment were referred to the Department for Homeland Security, a spokesman for which was not immediately available. A White House spokesman has not responded to the BBC’s request for comment


Turin shroud was made for medieval Easter ritual, historian says

Charles Freeman believes relic venerated as Jesus Christ’s burial cloth dates from 14th century and was used as a prop

October 23, 2014

by Charlotte Higgins

The Guardian  

When it is exhibited next year in Turin, for the first time in five years, 2 million people are expected to pour into the city to venerate a four-metre length of woven cloth as the shroud in which Jesus Christ was wrapped after his crucifixion, and on to which was transferred his ghostly image.

Despite the fact that the cloth was radiocarbon-dated to the 14th century in 1988, an array of theories continue to be presented to support its authenticity – including, this year, the idea from scientists at the Politecnico di Torino that an earthquake in AD 33 may have caused a release of neutrons responsible for the formation of the image.

But, according to research by British scholar and author Charles Freeman, to be published in the journal History Today, the truth is that the shroud is not only medieval, just as the radiocarbon dating suggests, but that it is likely to have been created for medieval Easter rituals – an explanation that flies in the face of what he called “intense and sometimes absurd speculation” that coalesces around it.

Freeman, the author of Holy Bones, Holy Dust: How Relics Shaped the History of Medieval Europe, studied early descriptions and illustrations of the shroud. None predates 1355, the year of its first documented appearance in a chapel in Lirey near Troyes in France, before it was acquired by the House of Savoy in 1453 and “converted into a high-prestige relic” to shore up the power base of the insecure Alpine dukedom.

In particular, he turned up a little-known engraving by Antonio Tempesta, an artist attached to the Savoyard court, who made a meticulously detailed image of one of the ceremonial displays of the cloth to pilgrims in 1613.

“Astonishingly,” he writes, “few researchers appear to have grasped that the shroud looked very different in the 16th and 17th centuries from the object we see today.”

The Tempesta engraving, as well as a number of 15th- and 16th-century first-hand descriptions, emphasise a feature that is much less obvious now – that the figure was covered in blood and scourge marks, relating to Christ’s flagellation. These extensive markings can be explicitly related, argues Freeman, to a focus on blood in depictions of the crucifixion that emerged in the 14th century – a “dramatic” change in iconography that sharply differentiates depictions of the crucified Christ from those of earlier centuries, and which reflects revelations of a bloody, wounded Christ reported by mystics such as Julian of Norwich in the 14th century.

The original purpose of the shroud, argues Freeman, is likely to have been as a prop in a kind of medieval, theatrical ceremony that took place at Easter – the Quem quaeritis? or “whom do you seek?”

“On Easter morning the gospel accounts of the resurrection would be re-enacted with ‘disciples’ acting out a presentation in which they would enter a makeshift tomb and bring out the grave clothes to show that Christ had indeed risen,” he said.

Freeman’s idea was shored up by his study of the earliest illustration of the shroud – on a pilgrim badge of the 1350s found in the Seine in 1855. On it, two clerics hold up the shroud, and beneath is an empty tomb.

The church officially regards the shroud with an open mind: as a object to be venerated as a reminder of Christ’s passion, rather than, necessarily, the physical imprint of his body.

Next year, millions of pilgrims will beg to disagree – as they will with Freeman’s argument that places the shroud at the birth of northern European drama rather than at the dawn of Christianity, and that identifies the images on it as traces of a “crude and limited” painting of the 14th century.

The cathedrals of Europe abound with the skulls of small children alleged to be this or that saint and it is a very old joke to remark that there are enough samples of the True Cross around to build a small house. People will believe what they wish but when you see the skull of St. Stephan in a jeweled casket in a church in Austria as a boy of twelve, laughter replaces awe every time. The number of faked relics from the Middle Ages is astronomical and often nonsensical. The greasy bones of St. Agnes, kissed, fondled and venerated for generations, have proven to be the spinal bones of a sheep while the Spear of Destiny, allegedly the spear thrust into a crucified Jesus by a Roman centurion is, without a question, a Saxon spear point dating from 700 AD.


The Religious Commentary

by Dr. Alan Dicker


Christ the Essene (excerpt)

by Dr. Phillip L. Kushner


The Essenes

            After his move to Judea, Jesus became an Essene, and Christianity as we know it today evolved directly from this sect of Judaism, with which it shared a majority of ideas and symbols

            The Essenes were a religious sect of Judaism that existed from the 2nd century BCE to the the 1st Century CE, in Qumran, a plateau in the Judean desert along the Dead Sea.

            The origin of the name Essene is debated. Some credible possibilities are either a version of the Greek word for “holy,” or an Aramaic dialect term for “pious.” In their writings, they refer to themselves as the “Sons of Light”.

            The Essenes are discussed in detail by Josephus and Philo. Scholars very clearly believe that the community at Qumran, that produced the Dead Sea scrolls, were Essenes, that Jesus was an Essene, and Christianity as we know it today evolved from this sect of Judaism.

            The Essenes were, in any case, an agricultural community that had a communistic approach to their life style. There was a common purse and shared wealth and much, if not most, of the first expressed Christian dogma came directly from the Essenes.

             Unfortunately for religious acceptance reasons, like the Spartans and Zulus who were essentially a military community cult, the agricultural Essenes were male-oriented and firmly homosexual in nature.  

            The Essenes were finally outlawed by the Romans following their participation in on-going revolts, and many members were subsequently crucified in a general crackdown under Titus, not because of their sexual practices but because of their political opposition to Roman rule.

            The small remnants of the Essenes either retreated to their Dead Sea area and eventually died out or chnged their names and joined other more acceptable Jewish religious groups.

            Before the discovery and publication of a number of the Dead Sea scrolls, little was popularly known about the Essenes other than from the writings of a few select contemporary authors.  These authors included; the Jewish priest and Galilean commander, Flavius Josephus, in his “Jewish Wars” written about 73-75 CE (Jewish Wars 2:119-161) and Josephus’ “Antiquities of the Jews” written about twenty years later. (Antiquities 18:11, 18-22); Josephus, claiming first hand knowledge, called the Essenes, the Essenoi.

            The earliest mention of the Essenes is by the Jewish philosopher Philo (20 BCE – c. 50 CE) of Alexandria.  Philo wrote that there were more than 4,000 Essenes (Essaioi) living in villages throughout  the Palestinian- Syrian area. Among their neighbours they were noted for their love of God and their concerns with piety, honesty, morality, philanthropy, holiness, equality, and freedom.

            The deeply religious Essenes did not marry and lived a celibate life, and practiced communal residence, money, property, food and clothing.

            They cherished freedom, possessed no slaves, and rejected the use of weapons or participation in commerce.

            Philo did not mention any names or places, nor any background to the origins of this group.

The next reference to the Essenes is by the Roman writer Pliny the Elder (died 79 CE) in his Natural History (N’H,V,XV). Pliny relates in a few lines that the Essenes did not marry, possessed no money, and had existed for “thousands of generations.”

            Unlike Philo, who did not mention any particular geographical location of the Essenes other than the whole land of Israel, Pliny, also a geographer and explorer, , located them in the desert near the northwestern shore of the Dead Sea, where the Dead Sea scrolls were discovered in the year 1947 by Muhammed edh-Dhib and Ahmed Mohammed, two Bedouin shepherds of the Ta’amireh tribe.

            At this point we find this passage, which contains the only description of local people in this section of Pliny’s work:

            “From [or towards] the west onward,Essenes flee the banks [or shores] that harm;  a group set apart [or isolated] and in the entire world beyond all others extraordinary [or unique] — without any women, stifling every urge, without money [or possessions], consort of palms.”

            The nature of the organization clearly indicates that it was an outspoken communism. They lived in common dwellings, 4000 strong in the time of Josephus, in various villages and rural cities of Judea.

“They live there together,” Philo says of them, “organized by corporations and clubs for friendship and dining (kata thasous, hetairias kai syssitia poioumenoi), and regularly occupied in labors for the community.

“None of them desires to have property of his own, neither a house nor a slave nor a piece of land nor herds nor whatever else constitutes wealth. But they put everything together indiscriminately, and all of them use it in common.

            “The money they earn by their labor in various ways they hand over to an elected administrator. Out of it he buys what is needed, and gives them ample food and whatever else is needed for life.”

It might be inferred from this that each man produced for himself or worked for wages.

             Somewhat later, Josephus gave a detailed account of the Essenes in The Jewish War (75 CE) with a shorter description in Antiquities of the Jews (94 CE) and The Life of Flavius Josephus (97 CE). Claiming first hand knowledge, he lists the Essenoi as one of the three sects of Jewish philosophy to include the Pharisees and the Sadducees.

            He relates the same information Philo did on the Essenes concerning piety, celibacy, the absence of personal property and of money, the belief in communality, alienation from associating with women, and commitment to a strict observance of the Sabbath.     According to Josephus, they had customs and observances such as collective ownership, the sharing of a common purse, the electing of a leader to attend to the interests of them all whose orders they obeyed, were forbidden from swearing oaths and sacrificing animals controlled their temper and served as channels of peace, carried weapons only as protection against robbers, had no slaves but served each other and, as a result of communal ownership, did not engage in trading. He further adds that the Essenes ritually immersed in water every morning, ate together after prayer, devoted themselves to charity and benevolence, forbade the expression of anger, studied the books of the elders, preserved secrets, and were an all-male society, enjoying their own company in preference to that of women.

            Also, there was the observation that the Essenes were an all-male cult, using women to produce male children. Women who produced female children were expelled from the Essene community along with their female child. Like the Spartans, and to a lesser degree, the Greeks, women were used exclusively for breeding purposes.

            Both Josephus and Philo have lengthy accounts of their communal meetings, meals and religious celebrations.

            Their theology included belief in the immortality of the soul and that they would receive their souls back after death. Part of their activities included purification by water rituals, which was supported by rainwater catchment and storage.

Josephus describes their life as follows:

“After this [the morning prayer] they are dismissed by their chiefs and each goes to the work he has learned, and when they have diligently labored until the fifth hour [counting from sunrise, about eleven o’clock] they come together at a stated place, gird themselves with white cloths and wash their bodies in cold water. After this purification they go into the refectory, into which no one has entry who is not a member of their sect. When they have sat down in silence, the baker puts bread before each man and the cook sets a dish before each with one kind of food. Then a priest blesses the food; and it is not permitted to taste anything before prayer. At the end of the midday meal they give thanks again, and thus before and after eating they praise God, the giver of all food. Then they put off their mantles like sacred clothing and go to work again until evening. Supper is taken in the same way as dinner, and when guests come [members of the order from elsewhere, since strangers were not allowed in the refectory.], they too sit at table with them. Neither outcries nor disorder sully the house, and when they converse, one speaks after the other, not all at once, so that people who are not of their order feel the quiet in the house as mysteriously impressive. The cause of their quiet life is their constant moderation, for they eat and drink no more than is required for maintaining their life.

“In general they do no work except on the instructions of their chiefs, with the exception that they may be free in showing sympathy and helpfulness. Whenever an emergency requires it, any one of them may assist those who need and deserve help, or bring food to the poor. But they may not contribute anything to their friends or relatives without the consent of their chief.”

Their communism was carried to an extreme. It extended to their clothing. Philo says:

“Not only food, but clothing as well is in common with them. For there are heavy cloaks prepared for the winter, and light outer garments for summer, so that every man may make use of them as he will. For what one has counts as the property of all, and what all of them have counts as everyman’s.”

They rejected slavery. Farming was their chief occupation, but they also engaged in crafts. Only the manufacture of luxury articles and weapons of war was forbidden, along with trade.

            The basis of their whole communistic system was community of consumption, not social production. There is some talk of the latter too, but it is only a question of work that brings in money for individuals either for wages or for goods sold, in either case the work is done outside the social organization.

All the members of the order however have their lodging and meals in common. That is what held them together, above all. It was the communism of common housekeeping. This requires giving up separate housekeeping, separate families and separate marriages.

            From the Essenes down through all the early Christian communistic-type sects we can see that all of them are very firmly  against marriage.         

            The Essenes, iin fact, rejected all social contact with women.

Josephus says this in the eighth chapter of the second book of his history of the Jewish War, from which these quotations on the Essenes have been taken. But in the eighteenth book of his Jewish Antiquities, chapter one, he says on the same question :

“They do not take wives and hold no slaves. They hold that the latter is unjust, and the first would give rise to disputes.”

“They reject marriage, but adopt strange children while they are still young and teachable, consider them as their own children and instruct them in their ways and customs. It is not that they would do away with or forbid marriage or the reproduction of the species. But they say that the unchastity of women must be guarded against, since none of them is satisfied with one man alone.”

            In both places it is only practical considerations, not asceticism, that is the basis of opposition to marriage. Josephus knew the Essenes from his own observations. He had been successively with the Sadducees. Essenes and Pharisees until he stayed finally with the latter.

Thus Josephus is in an excellent position to tell us the basis of the Essenes’ hostility to marriage with women.

            Not all the Essenes took the first way. Josephus reports in the previously cited eighth chapter of the second book on the Jewish War:

“There is still another sort of Essenes, who are in thorough accord with the previous ones in their way of living, their manners and rules, but differ from them in the matter of marriage. For they say, that those who refrain from marital relations would deprive life of its most important function (meros), reproduction would constantly decrease and the human race would soon die out, if everyone thought as they did. These people have the custom of trying (dokimazontes) wives for three years. If they have shown after three purifications that they are fit to bear children, they marry them. As soon as one is pregnant, her husband no longer sleeps with her. That is to show that they enter into marriage not for the sake of sensual pleasure, but only for the sake of producing children.”

The passage is not quite clear; but it says at least that these marriages of the Essenes were very different from the customary ones. The “trying” of wives does not seem conceivable except on the presumption of a sort of community of wives kept solely for breeding purposes.

Josephus uses the name Essenes in his two main accounts[as well as in some other contexts (“an account of the Essenes”; “the gate of the Essenes”; “Judas of the Essene race”  but some manuscripts read here Essaion; “holding the Essenes in honour”;”a certain Essene named Manaemus”; “to hold all Essenes in honour”; “the Essenes”;. In several places, however, Josephus has Essaios, which is usually assumed to mean Essene (“Judas of the Essaios race”; “Simon of the Essaios race”;”John the Essaios”; “those who are called by us Essaioi”; “Simon a man of the Essaios race”).

            Philo’s usage is Essaioi, although he admits this Greek form of the original name that according to his etymology signifies “holiness” to be inexact. Pliny’s Latin text has Esseni. Josephus identified the Essenes as one of the three major Jewish sects of that period.

            It was proposed, before the Dead Sea scrolls were discovered, that the name came into several Greek spellings from a Hebrew self-designation later found in some Dead Sea scrolls, ‘osey hatorah, “observers of torah.” Though dozens of etymology suggestions have been published, this is the only etymology published before 1947 that was confirmed by Qumran text self-designation references, and it is gaining acceptance among scholars. It’s recognized as the etymology of the form Ossaioi (and note that Philo also offered an O spelling) and Essaioi and Esseni spelling variations have been discussed by VanderKam, Goranson and others. In medieval Hebrew (e.g. Sefer Yosippon) Hassidim (“the pious ones”) replaces “Essenes”. While this Hebrew name is not the etymology of Essaioi/Esseni, the Aramaic equivalent Hesi’im known from Eastern Aramaic texts has been suggested

             If one identifies the community at Qumran with the Essenes (and that the community at Qumran are the authors of the Dead Sea scrolls), then according to the Dead Sea scrolls, the Essenes’ community school was called “Yahad” (meaning “unity”) in order to differentiate themselves from the rest of the Jews who are repeatedly labeled “The Breakers of the Covenant

            The Essenes were the followers of a group of priests who had essentially rejected the Second Temple. They argued that the Essene community was itself the new Temple, although they did not reject the notion of the Temple outright. Eventually, they believed, they would be triumphant, gaining control of the Temple and remaking it according to their own ideals.

             Accordingly, the destruction of the Second Temple in 70 CE was for them a symbol of imminent victory. With this Roman victory over the rebellious Jews came the end of the Sadducees and the end of the house of Shammai.

            The Essenes  also believed strongly in the end-times and wrote an entire scroll on that subject. The “Rule of War” detailed the battle plans for the “final” battle. When the Romans overran Jerusalem in 68-70 CE they believed that it was time for them to fight the last battle.

            They had been ready and prepared for it and therefore threw their entire beings and everything they had into it. They may have thought they were strong, but they were not strong enough to withstand the Romans. They, and other Jewish groups, were mercilessly and almost totally annihilated.

            The last few remaining Essenes in Judea were no longer able to maintain their identity, and some merged with the Hillelite Pharisees, out of which was born the tradition of Rabbinical Judaism.

              Traditional theological writings and, through them, sociatal attitudes, depict Christianity as the creation of a single man, Jesus the  Christ. This view persists even today amongst traditional Christian scholars.. At present, it is acknowledged by many scholars and historians that Jesus is no longer considered a deity, but he still held to have been an extraordinary personality, who came to the fore with the intention of founding a new religion, and did so, with tremendous, if delayed,  success.

            The British  historian, Gibbon, in his definitive Decline and Fall of the Roman Empire (written between 1774 and 1788), has clearly pointed out how striking it is that none of Jesus’ contemporary Jewish and Roman historians mentions him, although he is said, in the New Testament, to have accomplished such remarkable feats.

            “But how shall we excuse the supine inattention of the Pagan and philosophic world to these evidences which were presented by the hand of Omnipotence, not to their reason, but to their senses? During the age of Christ, of his apostles, and of their first disciples, the doctrine which they preached was confirmed by innumerable prodigies. The lame walked, the blind saw, the sick were healed, the dead were raised, daemons were expelled, and the laws of Nature were frequently suspended for the benefit of the church. But the sages of Greece and Rome turned aside from the awful spectacle, and, pursuing the ordinary occupations of life and study, appeared unconscious of any alterations in the moral or physical government of the world.”

            At Jesus’ death, according to Christian tradition, the whole earth, or at least all of Palestine, was in darkness for three hours. This took place in the days of the elder Pliny, who devoted a special chapter of his Natural History to eclipses; but of this eclipse and the darkness he says nothing. (Gibbon, Chapter 15).

            The first mention of Jesus by a non-Christian is apparently found in the Jewish Antiquities of Flavius Josephus. The third chapter of book 18 deals with the procurator Pontius Pilate, and says among other things:

            “About this time lived Jesus, a wise man, if he can be called human, for he worked miracles and was a teacher of men, who received the truth gladly; and he found many followers among Jews and Greeks. This was the Christ. Although later Pilate sentenced him to the cross on the complaint of the nobles of our people, those who had loved him remained true to him. For he appeared again to them on the third day, risen to new life, as the prophets of God had prophesied this and thousands of other wonderful things about him. From his comes the name of the Christians, whose sect (phylon) has continued to exist ever since.”

             Josephus speaks of Christ again in the 20th book, chapter 9,1, where the high priest Ananus is said in the time of the procurator Albinus to have brought it about that:

            “James. The brother of Jesus, said to be the Christ (tou legomenou christou), together with some others, was brought to court, accused as a breaker of the law and delivered over to be stoned to death.”

            These pieces of evidence have always been highly prized by Christians; for they come from a non-Christian, a Jew and Pharisee, born in the year 37 CE and living in Jerusalem, and so very well able to have authentic facts about Jesus. And his testimony was the more valuable in that as a Jew he had no reason to falsify on behalf of the Christians.

            But it was the promotion and exaltation of Jesus on the part of a pious Jew that made the first passage highly suspect and early-on. The authenticity of these passages was disputed as early as the sixteenth century, and today it is completely agreed by almost all Biblical scholars that it is forgery and does not stem from Josephus. It was inserted in the third century by a Christian copyist, who obviously took offense at the fact that Josephus, who repeats the most trivial gossip from Palestine, says nothing at all about the person of Jesus. The dedicated Christian felt, with understandable justice, that the absence of any such mention in Josephus weighed against the existence or at least the significance of his Savior. Now the discovery of this forgery became strong testimony against Jesus.

            But the passage concerning James is also in doubt. It is true that Origen (185 to 254 CE) mentions testimony by Josephus concerning James; this occurs in his commentary on Matthew. He remarks that it is surprising that nonetheless Josephus did not believe in Jesus as the Christ. In his polemic against Celsius, Origen cites this statement of Josephus about James and again notes Josephus’ unbelief. These statements by Origen constitute one of the proofs that the striking passage about Jesus in which Josephus recognizes him as the Messiah, the Christ, could not have been in the original text of Josephus. In point of fact, original period copies of the Josephus writings do not include the passages on Jesus or James.

            The passage about James that Origen found in Josephus was also an early Christian forgery. In it the destruction of Jerusalem is said to be a punishment for the execution of James; but this fabrication is not found in the other manuscripts of Josephus. The passage as it occurs in the manuscripts of Josephus that have come down to us is not cited by Origen, while he mentions the other version three times on other occasions. And yet he carefully assembled all the testimony that could be got from Josephus that had value for the Christian faith. It would seem likely that the passage of Josephus about James that has come down to us is also fraudulent, and was first inserted by a pious Christian, to the greater glory of God some time after Origen, but before Eusebius, who cites the passage.

            Like the mention of Jesus and James, the reference to John the Baptist in Josephus (Antiquities, XVIII, 5,2) is also highly suspect as another early Christian creation. And if John did exist, there is a body of thought that he might have been Jesus’ older brother, lover and mentor.   

            But even if the statement about James was genuine, it would prove at most that there was a Jesus, whom people called the Christ, that is, the Messiah. It could not prove anything more.

            The next mention of Jesus by a non-Christian writer is found in the Annals of the Roman historian Tacitus, composed around the year 100 CE. In the fifteenth book the conflagration of Rome under Nero is described, and chapter 44 says:

            “In order to counteract the rumor (that blamed Nero for the fire} he brought forward as the guilty ones, men hated for their crimes and called Christians by the people; and punished them with the most exquisite torments. The founder of their name, Christ, was executed by the procurator Pontius Pilate in the reign of Tiberius; the superstition was thereby suppressed for the moment, but broke out again, not only in Judea, the land in which this evil originated, but in Rome itself, to which everything horrible or shameful streams from all sides and finds increase. First a few were taken, who made confessions; then on their indications an enormous throng, who were not accused directly of the crime of arson, but of hatred of humanity. There execution became a pastime; they were covered with the skins of wild beasts and then torn to pieces by dogs, or they were crucified, or prepared for burning and set on fire as soon as it was dark, prepared for burning and set on fire as soon as it was dark. Nero lent his gardens for this spectacle and arranged the circus games, in which he mingled among the crowd in the clothing of a charioteer or drove a chariot himself. Although these were criminals who deserved the severest punishment, sympathy arose for them as being sacrificed not so much for the general good but to satisfy the rage of an individual.”

             However, its authenticity too is disputed, since Dio Cassius had known nothing of a persecution of Christians under Nero, although he lived a hundred years later than Tacitus. Suetonius, writing shortly after Tacitus, also speaks, in his biography of Nero, of a persecution of Christians, “men who had given themselves over to a new and evil superstition” (chapter 16).

            But Suetonius tells us absolutely nothing at all about Jesus and Tacitus does not ever mention his name.

            Christ, the Greek work for “the anointed,” is merely the Greek translation of the Hebrew work “Messiah.” As to Christ’s work and the contents of his doctrine, Tacitus says nothing.


(to be continued)


The Medieval Relic Trade

Throughout the Middle Ages, Europe hosted a thriving trade in holy relics. But many of the relics, if not almost all of them, were fake.

The relics collected and worshipped by medieval Europeans ranged from the mundane to the truly bizarre. Bones or body parts of saints and martyrs were always in high demand. One church proudly displayed the brain of St. Peter until the relic was accidentally moved and revealed to be a piece of pumice stone.

Relics of Christ or the Virgin Mary were considered to be extremely valuable and included items such as the milk of the Virgin Mary, the teeth, hair, and blood of Christ, pieces of the Cross, and samples of the linen Christ was wrapped in as an infant. Numerous churches even claimed to possess Christ’s foreskin, cut off during his circumcision. The Shroud of Turin, believed to be the funeral shroud in which Christ was buried, is perhaps the most famous medieval relic of all.

The biggest clue that the relics were fake was that there was often more than one… many more than one… of the same relic. The sixteenth-century protestant reformer John Calvin, who believed the veneration of relics to be a form of false worship, commented that if all the relics were brought together in one place “it would be made manifest that every Apostle has more than four bodies, and every Saint two or three.”

The real value of relics lay in their ability to perform miracles. A relic that was an acknowledged fake could become ‘real’ if it performed a miracle. The European faithful regularly made pilgrimages over hundreds of miles to visit the most powerful relics. This pilgrimage traffic had an enormous impact on local economies, leading towns to go to extreme lengths to obtain the relics that would draw the most pilgrims.

Some of the lengths to which towns would go in their quest to obtain the most popular relics have been documented by Patrick Geary in his book Furta Sacra: Thefts of Relics in the Central Middle Ages. He notes that towns were usually reluctant to simply buy or trade relics. After all, why would anyone willingly sell or part with a miracle-performing relic? Presumably they would only do so it if it no longer possessed its powers, meaning that the relic was worthless. Instead, towns often stole the relics they desired, or surreptitiously bought them while publicly claiming to have stolen them. Relic thefts were highly organized affairs, and the successful thieves were treated as local heroes. Geary tells the story of the Italian town of Bari which in 1087 commissioned a team of thieves to obtain the remains of Saint Nicolas (known more popularly today as Santa Claus) from the Turkish town of Myra. The expedition was a success, and for decades Bari basked in the glory of being the town that owned the stolen bones of Santa Claus 

The belief that the body of the Virgin was not interred on earth, but was taken to heaven, has deprived them of all pretext for manufacturing any relics of her remains, which otherwise might have been sufficiently abundant to fill a whole churchyard; yet in order to have at least something belonging to her, they sought to indemnify themselves for the absence of other relics with the possession of her hair and her milk.

The hair is shown in several churches at Rome, and at Salvatierra in Spain, at Maçon, St Flour, Cluny, Nevers, and in many other towns. With regard to the milk, there is not perhaps a town, a convent, or nunnery, where it is not shown in large or small quantities. Indeed, had the Virgin been a wet-nurse her whole life, or a dairy, she could not have produced more than is shown as hers in various parts. How they obtained all this milk they do not say, and it is superfluous here to remark that there is no foundation in the Gospels for these foolish and blasphemous extravagances.

The Virgin’s wardrobe has produced an abundant store of relics. There is a shirt of hers at Chartres, which has been fully celebrated as an idol, and there is another at Aix-la-Chapelle [Aachen]. I do not know how these things could have been obtained, for it is certain that the Apostles and first Christians were not such triflers as to amuse themselves in this way. It is, however, sufficient for us to consider the shape of these articles of dress, in order clearly to see the impudence of their exhibitors. The shirt at Aix-la-Chapelle is a long clerical surplice, shown hanging to a pole, and if the Blessed Virgin had been a giantess, she would still have felt much inconvenience in wearing so large a garment.

In the same church they preserve the shoes of St Joseph, which could only fit the foot of a little child or a dwarf. The proverb says that liars need good memories, so as not to contradict their own sayings. This rule was not followed out at Aix-la-Chapelle, otherwise care would have been taken to maintain a better proportion of size between the shoes of the husband and the shirt of the wife. And yet these relics, so devoid of all appearance of truth, are devoutly kissed and venerated by crowds!

I know of only two of her head-dresses; one is at the abbey of St Maximian at Treves, and the other is at Lisio in Italy. They may be considered quite as genuine as the Virgin’s girdle at Prato and at Montserrat, as her slipper at St Jaqueme, and as her shoe at St Flour.

Now, those who are at all conversant with this subject well know that it was not the custom of the primitive church to collect shoes and stockings, etc., for relics, and also that for five hundred years after the death of the Virgin Mary there was never any talk of such things. It really seems as if these well-known facts would be sufficient to prove the absurdity of all these relics of the Virgin…

.Once, the western world was full of relics. The bones and skin, fingernails and even heads of saints were preserved, bought and sold, stolen and chreished. Relics of holy people and of Jesus Christ were at the heart of medieval Christianity. Today many relics have been discredited. Museums display empty reliquaries, crafted from gold and silver and laden with jewels – but bereft of the body parts that once gave them meaning.

Still, some relics are still cherished. They have survived sceptics, scientists and in some cases detailed exposure, to be revered as holy objects of awe. As the Vatican puts the bones of St Peter on display, here are the top 10 extant Christian relics, from holy shroud to sacred head.


Holy Shroud of Turin

 Despite being extrensively analysed by scientists and fully discredited as a medieval forgery, this centuries-old cloth bearing the image of a man is still seen by many as the burial shroud of Christ. Its modern fame began when a photographer noticed it looks more detailed in negative, implying the image itself is a reversed “negative” imprint of a body, which some see as a bit beyond the capacities of medieval forgers.

Head of St Catherine of Siena

 This has to be the grisliest relic displayed by the Catholic church – a mummified head preserved in the Basilica Cateriniana San Domenico, Siena, and still shown to visitors. Siena is a beautifully preserved medieval city, famous for its annual horse race as well as the art of Duccio, but the head of St Catherine shockingly transports you to what feels like a dark and primitive living past.

Blood of Saint Januarius

Worshippers in Naples gather every September to see a miracle at the southern Italian city’s cathedral. The dried blood of St Januarius, martyred in the 4th century AD, is preserved there and has an organic connection with the city’s wellbeing. Every September – and on two other days in the year – the red powder liquefies. It becomes living blood – and the city is safe from volcano eruptions, earthquake and plague.

The Holy Foreskin

 It is said when the young Jesus Christ was circumcised, his foreskin was preserved. In the middle ages it became a much coveted relic and several churches claimed to own part or all of it. The foreskin was held to have great powers. However, the various relics of it were discredited by the end of the 18th century.

The Tongue of St Anthony of Padua

British Catholics recently gathered at Westminster Cathedral to pay respects to a piece of dried flesh and some facial skin that are said to have belonged to St Anthony of Padua. Seven hundred and fifty years ago the tongue of St Anthony was found to be perfectly preserved – an incorruptible relic. St Anthony was a great preacher, his tongue apparently holy.

The Finger of St Thomas

“Doubting” Thomas was unable to accept the resurrection even though Christ stood there before him. So Christ allowed him to put a suspicious finger inside the wound made in his side by a Roman soldier’s lance. It is a moment miraculously painted by Caravaggio. If you doubt the story, you can see Thomas’s finger itself, preserved in the church of Santa Croce in Gerusalemme in Rome (they’ve got three pieces of the True Cross, too. In point of fact, there are enough pieces of the True Cross in churches throughout the world to build a five room house.).

Relics of Sainte-Chapelle

The French king Louis IX – better known as Saint Louis – was so proud of the relics of Christ he bought from Byzantium that he built a spendid church in Paris to house them. Sainte-Chapelle is the world’s largest reliquary and one of the most ravishing of all gothic churches. Today the relics, including Christ’s Crown of Thorns, are kept in the cathederal of Notre Dame.

Body of St Mark

St Mark was martyred at Alexandria and his body – natch – was miraculously preserved. It was then taken to Venice in one of the greatest relic heists of the middle ages. A gang of daring Venetians stole St Mark’s mummified remains and took them to their own city, which identified deeply with St Mark. The mummy is still kept in a tomb in St Mark’s Basilica, whose glories celebrate this stolen relic. The theft itself is portrayed in a masterpiece by Tintoretto.

St Cecilia

The perfectly preserved body of this young saint was found in Rome four centuries ago. The discovery was commemorated by a creepily realistic marble sculpture of the corpse by Stefano Maderno. This can be seen at St Cecilia in Trastevere, Rome, which also preserves her relics.

Head of St John the Baptist

Salome famously asked Herod for the head of John the Baptist on a platter. This most famous of severed heads had a long afterlife as a relic. Amiens Cathedral was built in the middle ages as a shrine for it. A replica of the baptist’s head is still kept there, although the original was stolen in the 19th century.


A church in St. Omer claimed to have bits of the True Cross, of the Lance that pierced Christ, of his Cradle, and the original stone tablets upon which the Ten Commandments had been traced by the very finger of God!

Three churches in France each professed to have a complete corpse of Mary Magdalene. Jesus’ foreskin was preserved in at least six churches.

Vials of Jesus’ tears, vials of Jesus’ mother’s milk are in at least twenty church vaults..

One catalogue from that time includes the following: “A fragment of St. Stephen’s rib; Rusted remains of the gridiron on which St. Lawrence died; A Lock of Mary’s hair; A small piece of her robe; A piece of the Manger; Part of one of Our Lord’s Sandals; A piece of the sponge that had been filled with vinegar and handed up to Him; A fragment of bread He had shared with His disciples; A tuft of St. Peter’s beard; Drops of St. John the Baptist’s Blood.”

Many churches vied to become known for the number and importance of their relics.

As early as 1071 the cathedral at Eichstatt possessed 683 relics, while by the 1520s the Schlosskirche at Wittenburg had 19,013 and the Schlosskirche at Halle boasted more than 21,000 such objects.

“About 1200, Constantinople was so crammed with relics that one may speak of a veritable industry with its own factories”. Blinzler (a Catholic New Testament scholar) lists, as examples: “letters in Jesus’ own hand, the gold brought to the baby Jesus by the wise men, the twelve baskets of bread collected after the miraculous feeding of the 5000, the throne of David, the trumpets of Jericho, the axe with which Noah made the Ark, and so on…”

During the Middle Ages particularly, relic-mongering was rampant; and of course, there were no scientific means to test things, so all manner of things were sold as authentic. Including shrouds of Jesus.



Ukraine gas supplies in doubt as Russia seeks EU payment deal

October 30, 2014

by Alastair Macdonald


             BRUSSELS  – Ukraine’s efforts to unblock deliveries of Russian gas as winter sets in were deadlocked on Thursday as Moscow’s negotiators were quoted demanding firmer commitments from the European Union to cover Kiev’s pre-payments for energy.

EU-hosted talks were adjourned after running late into the night, Energy Minister Alexander Novak and the head of Russian gas firm Gazprom (GAZP.MM) told Russian news agencies. They would resume later in the day if Ukraine and the EU had a firm financing deal in place, Gazprom head Alexei Miller said.

Ukrainian and EU officials were not available. A spokeswoman for Energy Commissioner Guenther Oettinger issued a statement cancelling a news briefing that had been tentatively set for 8:30 a.m. (4.30 a.m. EDT) in the event of an agreement.

There has already been agreement on the price Kiev will pay for gas over the winter, the amount to be supplied and the repayment of some $3.1 billion in unpaid Ukrainian bills but Moscow, which cut off vital pipelines in June as the conflict with Ukraine and the West deepened, wants more legal assurances that Kiev can pay some $1.6 billion for new gas up front.

Some critics of Russia question whether its motivation is financial or whether prolonging the wrangling with ex-Soviet Ukraine and its Western allies suits Moscow’s diplomatic agenda.

Ukraine is in discussions with existing creditors the EU and the IMF and German Chancellor Angela Merkel, concerned about vital Russian gas supplies to the rest of Europe has spoken of bridging finance for Kiev. But the Russian negotiators said they wanted to see a signed agreement on EU financing for Ukraine.

Novak was quoted by RIA news agency as saying he had been told in the talks that Ukraine was discussing funding for 4 billion cubic meters of gas with the European Commission and the International Monetary Fund but he had seen no guarantee of it.

“This isn’t about guarantees, but only statements from the Ukrainians,” he said. “We were shown no written guarantees.”

He noted that Russia was only offering to open the taps once prepayments were made by Ukraine, whose economy is in crisis and which has a record of payment difficulties. “If there’s money, there will be gas,” Novak said.

“Everything to do with financial issues, everything to do with guarantees which the European Commission will give Ukraine, these arrangements will be set out in a bilateral protocol,” Miller was quoted as saying by Itar-Tass news agency.

“If such agreements are not reached, then accordingly, there will be no negotiations and no documents will be signed. If there is an accord between the European Commission and Ukraine, then we can expect to sign all the trilateral documents.”





The gas cut-off has had little impact for months. But pressure is mounting for a deal as temperatures start to drop below freezing and European energy commissioner Guenther Oettinger, who has been mediating, prepares to leave office on Friday, making way for a new European Commission.

The two sides came close in September, but last week differences were wide over Kiev’s ability to pay.

Some of Russian President Vladimir Putin’s many critics in eastern Europe question his interest in concluding an agreement on commercial grounds and see the temperature of Ukrainian homes in the coming months being determined more by Kremlin calculations of its geostrategic interests.

Oettinger, a German, said before talks began on Wednesday that there was a 50-50 chance of a breakthrough. If he cannot broker a solution, it will be down to his Slovak successor, Maros Sefcovic, who takes office on Saturday.

Weekend elections returned a pro-Western parliament in Kiev, potentially stoking tensions with Moscow, although Russia’s EU envoy, Vladimir Chizhov, said on Thursday the mood could be more relaxed now the vote had taken place.

“During the last rounds of talks, let’s not conceal it, the pre-election situation had its influence on Ukrainian side,” Chizhov told RIA. The only unresolved problem, he said, was from where to get the money for winter supplies.





Ukraine’s Naftogaz company has set aside $3.1 billion in a special escrow account to pay off a chunk of its debt to Gazprom, but Russia is also demanding prepayment for winter supplies before it is willing to turn the taps back on.

Kiev says it is working to raise more money from all possible sources of financing, including the European Union. The European Commission is considering Ukraine’s request, made last week, for a further loan of 2 billion euros.

But Kiev also says money alone may not be enough.

“I have an impression that the Russian side doesn’t want to agree,” Ukrainian Finance Minister Oleksander Shlapak said on Tuesday.

Analysts said it could be very hard to come up with enough assurances to satisfy Russia, even if Gazprom, and more widely the Russian treasury, would welcome new revenues as the economy suffers from the effects of Western trade sanctions.

Ukraine at the same time is pushing for written guarantees that any agreement on price will be lasting.

For all sides, there is much at stake.

Russia provides around a third of the European Union’s gas, roughly half of which is pumped via Ukraine.

Ukraine in turn relies on Russia for around 50 percent of its own gas and despite storage has a winter shortfall of around 3 billion to 4 billion cubic meters (bcm), depending on the weather.

For Russia, the gas sector contributes approximately a fifth of the national budget.

Sanctions on Russia, which EU officials decided to leave unchanged on Tuesday while conflict in Ukraine continues, are sapping an already weak economy. But Moscow could well be willing to endure much more hardship for political ends.

“Economic factors are generally not given precedence when national security concerns are at stake,” Pasquale De Micco, a national expert from the European Parliament’s policy department, said in a research paper on Europe’s gas supply options.

“What is certain is that a gas war risks harming both parties in the short term and that it would hamper future efforts to re-establish mutually trusting relations.”



(Additional reporting by Lidia Kelly and Vladimir Soldatkin in Moscow and Barbara Lewis in Brussels)


Ukraine, Russia and EU have agreed gas deal, to sign shortly: sources

October 30, 2014

by Alastair Macdonald


             BRUSSELS  – Negotiators from Ukraine, Russia and the European Union on Thursday agreed a deal on the resumption of Russian gas supplies to Ukraine and are to sign the accord shortly, sources close to the talks said.

A news conference scheduled for 9:45 p.m. (1645 ET) at the Brussels headquarters of the European Commission would formally announce the signing of the agreement, two sources told Reuters.

Russia’s Itar-Tass news agency cited an unidentified source as also saying that the three parties had reached a deal on gas.

Earlier, EU and Ukrainian officials had said the three were likely to conclude an accord that would see Moscow resume gas supplies to its ex-Soviet neighbor over the winter.

Nothing is certain after months of hard bargaining. But Russian negotiators, who broke off three-way talks overnight saying a deal depended on firmer EU commitments to Kiev to help it pay, returned to Brussels to renew trilateral discussions.

Earlier, European Commission President Jose Manuel Barroso said: “Apparently we have a deal.” Barroso, who leaves office on Friday, was scheduled to take part in the news conference.

Energy Minister Alexander Novak, who flew back from Moscow with Alexei Miller, the head of state gas firm Gazprom, was quoted by Russian news agencies as saying he hoped all the necessary documents would be signed at evening meetings.

His Ukrainian counterpart Yuri Prodan was quoted saying: “In all likelihood, all the documents will be signed today.”

The European Commission announced that negotiators from the three parties would hold a news conference at 9:45 p.m. (1645 ET). Its broadcasting service, which advertised a “signing ceremony”, showed live video of a table with three chairs set behind it backed by the flags of Russia, Ukraine and the EU.

EU officials said both Russia and Ukraine had bargained hard for commitments from the Western bloc, with Moscow looking for EU cash to help Ukraine pay off debts to Gazprom and the Kiev authorities anxious to get a deal that they could present to domestic voters as not overpaying for vital Russian supplies.

After breaking off the talks in the early hours, Novak and Miller said that an outline accord was in place but they wanted the European Union to guarantee Ukraine’s advance payments. Novak said a deal could be signed later in the day.

Ukrainian Prime Minister Arseny Yatseniuk said in Kiev that the EU had agreed to serve as guarantor for Kiev in holding Russia to an agreement, notably on the price Ukraine would pay.

Joint documents laying down a common understanding have been prepared and are now with the governments in Moscow and Kiev for approval, the Brussels-based European Commission said in a statement.

Yatseniuk, in figures later confirmed by Moscow, said Ukraine would pay $378 per 1,000 cubic meters to the end of 2014 and $365 in the first quarter of 2015. He said Kiev was ready to pay off debts for gas immediately after any deal was signed.

A total of $1.45 billion would be paid immediately and a further $1.65 billion paid by the end of the year, he said.

Novak insisted that Ukraine would still have to pay up front for new deliveries to see its 45 million people through winter. Moscow expects some $1.6 billion for gas to be supplied.

Some critics of Russia question whether its motivation is financial or whether prolonging the wrangling with ex-Soviet Ukraine and its Western allies suits Moscow’s diplomatic agenda.

Ukraine is in discussions with existing creditors the EU and the IMF.

German Chancellor Angela Merkel, concerned about Russian gas supplies to the rest of Europe which come via Ukraine, has spoken of bridging finance for Kiev. Russian negotiators said they wanted to see a signed agreement.





The gas cut-off has had little impact for months. But pressure is mounting for a deal as temperatures start to drop below freezing.

European Energy Commissioner Guenther Oettinger, who has been mediating, leaves office on Friday, making way for a new European Commission.

If he cannot broker a solution, it will be down to his Slovak successor, Maros Sefcovic, who takes office on Saturday.

The two sides came close to an agreement in September, but last week differences were wide.

Weekend elections returned a pro-Western parliament in Kiev, potentially stoking tensions with Moscow, although Russia’s EU envoy, Vladimir Chizhov, said on Thursday the mood could be more relaxed now the vote had taken place.

Ukraine’s Naftogaz company has set aside $3.1 billion in a special escrow account to pay the debt.

Kiev says it is working to raise more money from all possible sources of financing, including the EU. The Commission is considering Ukraine’s request, made last week, for a further loan of 2 billion euros.

Russia provides around a third of the European Union’s gas, roughly half of which is pumped via Ukraine.

Ukraine in turn relies on Russia for around 50 percent of its own gas and despite storage has a winter shortfall of around 3 billion to 4 billion cubic meters, depending on the weather.

For Russia, the gas sector contributes approximately a fifth of the national budget

Sanctions on Russia, which EU officials decided to leave unchanged on Tuesday while the conflict in Ukraine continues, are sapping an already weak economy.



(Additional reporting by Katya Golubkova, Lidia Kelly and Vladimir Soldatkin in Moscow and Tom Koerkemeier, Phil Blenkinsop, and Foo Yun Chee in Brussels; Writing by Dale Hudson and Alastair Macdonald; Editing by Andrew Roche)



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