Russia Props Up Ruble

Speculators should be thnking about buying the ruble while there is blood in the streets of Georgia.

Russia’s central bank intervened heavily yesterday to support the ruble, FT is reporting. Reports indicate that as much as  $21 billion of foreign capital might have been pulled out of the country in August in the wake of the conflict with Georgia. The central bank said that the capital outflow from Russia last month were only $5 billion.

The ruble fell as low as R30.41, yesterday, its weakest level since the Russian central bank adopted its euro/dollar basket in February 2007. The central bank governor admitted there had been capital outflows since the war but said the amount was much lower.

The currency intervention was the first since the height of the war with Georgia at the beginning of August. Before the conflict the central bank’s interventions in the market were aimed at stemming the rise of the rouble, which it manages to a basket weighted 55 per cent in dollars and 45 per cent in euros.

As a result of strong oil prices and other natural resources ,Russia’s central bank still has a huge war chest to defend its currency. Its reserves measured in this week at $582  billion, the third-largest foreign currency reserves in the world.

Cheney Begins Visit to Georgia

Despte the fact that it was U.S. puppet Georgia whch first invaded South Ossetia, Vice President Dick Cheney condemned Russia today for what he called an "illegitimate, unilateral attempt" to change Georgia's borders by force.

The U.S. is at Georgia's side, Cheney told Georgia's President Mikhail Saakashvili, "as you work to overcome an invasion of your sovereign territory and an illegitimate, unilateral attempt to change your country's borders by force, that has been universally condemned by the free world."

"Russia's actions have cast grave doubts on Russia's intentions and on its reliability as an international partner," Cheney said.

Is The Curtain About To Fall On Globalization?

Paul Krugman has a thought provoking column, including historical perspective, on the potential ramifications of the Russian-Georgia war, here.

Russia Sponsors Concert In South Ossetian

The Principal conductor of the London Symphony Orchestra will lead a defiant performance from the shattered steps of the South Ossetian parliament tonight.

Valery Gergiev, an ethnic Ossetian who has been an outspoken critic of Georgia's action during the conflict, will conduct the Mariinsky Theatre of St Petersburg in a performance that is expected to feature Vladimir Putin, the Russian Prime Minister, as guest of honour.

The concert in the South Ossetian capital Tskhinvalii is expected to coincide with rallies demanding the recognition of South Ossetia as an independent state, a move confirmed today by the separatist leader Eduard Kokoity.

The performance would be "a requiem for those who died at the hands of the aggressors, for those who sacrificed their lives defending their homeland from a treacherous attack by Georgia", a South Ossetian spokesman said.

"The world should know what is happening. There were a thousand or more South Ossetians were killed at that time," he told the BBC last week. "The arrival of Russian troops saved maybe a thousand or more lives."

GW Looking To Cause Some Trouble

GW said this morning that the breakaway regions of South Ossetia and Abkhazia must remain part of Georgia.

Bush said in a speech at his ranch in Crawford, Texas that the two regions are "a part of Georgia," and "they will remain so."

"There is no room for debate on this matter," Bush added.

What the hell does this mean?

Are US troops going into Georgia to enforce this declaration?

Kremlin Agrees to Framework for Cease-Fire in Georgia

A day after Secretary of State Condoleezza Rice went to Georgia to press Russia to withdraw, President Dmitri A. Medvedev of Russia signed a six-point settlement, officials said, according to NYT.

A Russian Journalism Student in America, on the American Press Coverage of the Russia/Georgia War

Olga Ivanova is an intern at the Washington Post and writes:

For years I have respected American newspapers for being independent. But no longer. Coverage of the conflict between Russia and Georgia has been unprofessional, to say the least. I was surprised and disappointed that the world's media immediately took the side of Georgian President Mikheil Saakashvili last week...

Many accounts made it seem as though the conflict was started by an aggressive Russia invading the Georgian territory of South Ossetia. Some said that South Ossetia's capital, Tskhinvali, was destroyed by the Russian army. Little attention was paid to the chronology of events, the facts underlying the conflict.

Last week, Georgia's president invaded South Ossetia during the night...Within hours, Georgian troops destroyed Tskhinvali, a city of 100,000, and they killed more than 2,000 civilians. Almost all of the people who died that night were Russian citizens. They chose to become citizens of Russia years ago, when Georgia refused to recognize South Ossetia as a non-Georgian territory.

The truth is that, in this case, Russian aggression actually made some sense. Russia defended its citizens.

Yet American newspapers published stories that omitted mention of the Georgian invasion. And American media as a whole have been disturbingly pro-Georgian...

Over the past week, American media have achieved one thing for sure: They have lost prestige among a generation of young Russians who believed that America is a country of true, uncorrupted, independent information. Many Russian youths come to the United States for college and then go back to Russia to help build our own democracy. Russians believe in democracy. But I don't know whether many Russians will ever trust American media reports again.

U.S. newspapers have lost esteem among Russian journalists as well. These reporters have long looked to American newspapers as icons of quality journalism. They are supposed to stand for truth and serve the people's interests. But whose interests did newspapers serve by publishing stories in the best traditions of the Cold War?

Ivanov's full commentary is here.

Russia: Poland Risks Nuclear Attack

A top Russian general, Gen. Anatoly Nogovitsyn, said Friday that Poland's agreement to accept a U.S. missile interceptor base exposes the ex-communist nation to attack, possibly by nuclear weapons, the Interfax news agency reported.

Poland and the United States on Thursday signed a deal for Poland to accept a missile interceptor base as part of a system the United States says is aimed at blocking attacks by rogue nations. Moscow, however, feels it is aimed at Russia's missile force.

"Poland, by deploying (the system) is exposing itself to a strike — 100 percent," Nogovitsyn, the deputy chief of staff, was quoted as saying.

Clearly, the United States is egging on Russia on many fronts. It appears it was first moves by American influenced Georgia that provoked Russia's attack into Georgia.

Is this George Bush's endgame to his presidency, to get the entire world at war?

Deputy Secretary Robert M. Kimmitt Talks To Georgian Prime Minister Gurgenidze

Deputy Secretary of the Treasury Robert M. Kimmitt issued the following statement on his telephone conversation with Georgian Prime Minister Lado Gurgenidze:

Earlier today, I telephoned Prime Minister Gurgenidze to express the United States' continuing support for the democratically-elected government of Georgia and to reiterate our willingness to join other countries to support deeper engagement by the International Financial Institutions to assist Georgia's economy. Prime Minister Gurgenidze updated me on Georgia's economy and I noted that the Treasury Department continues to believe Georgia's sound macroeconomic and fiscal policies – as well as its excellent progress transitioning to a market economy – make it well-placed to weather the current crisis.

Ah, Bob,

Are you out of your frigging mind with this nonsense happy talk? The newest U.S, neo-con satellite, Georgia, is being shelled by the Russkies. "Sound macroeconomic polices"(yet to be verified) is a good thing, but just how will this stop a convoy of tanks? If I am dying of cancer, the last thing I want to hear is happy talk about my checkbook being balanced.

BP Reopens Georgia Gas Pipeline

BP resumed exports of Azerbaijani natural gas exports through a pipeline across Georgia to Turkey on Thursday. However its oil pipeline to the Georgian Black Sea port of Supsa remained out of action because of fears of fallout from Georgia’s conflict with Russia.

Oil exports from Azerbaijan were drastically reduced last week after an explosion on the Turkish section of the Baku-Tbilisi-Ceyhan pipeline to the Turkish Mediterranean, the main artery for Azerbaijan’s oil exports. Kurdish separatists claimed responsibility for the accident on the pipeline which was carrying about 850,000 barrels a day of oil to western markets at the time.
Repair work on BTC is expected to take several weeks.

Russia invited Azerbaijan on Wednesday to increase its oil exports through a pipeline from Baku to Novorrosiysk on the Russian Black Sea. Exports of Azerbaijani oil through the pipeline to Russia have slowed to a trickle since the Baku-Tbilisi-Cehyan pipeline began working in 2005.

Russia is also pressing Azerbaijan to export gas through Russian pipelines, diverting supplies away from the route across the Caucasus.

Another Take On Russia versus Georgia

Robert Lawson has been to Georgia and is headed back next week. Here's his view.

BP Shuts Pipelines On Fears Over Georgia

BP shut down a pipeline carrying Caspian oil from Azerbaijan to the Georgian Sea on Tuesday citing concern about security in Georgia.

Toby Odone, a BP spokesman, said the 150,000 barrels a day pipeline from Baku to Supsa on the Georgian Black Sea had been closed as a “security precaution.”

A natural gas pipeline linking a BP-operated field offshore Azerbaijan with Georgia and Turkey has also been closed.

Exports through the Baku-Tbilisi-Ceyhan pipeline to the Turkish Mediterranean, the main artery for exports from BP’s huge Azeri field offshore Azerbaijan, halted last week after an explosion on the Turkish section of the pipeline. The pipeline carries 850,000 barrels a day

Russia Halts Attack on Georgia

Well, of course.

The cover of the Olympics is almost gone.

The Treasury versus Raimondo

The U.S. Treasury Department's statement on the economy of Georgia:

Statement by Deputy Secretary Robert M. Kimmitt
on Support for Georgia’s Economy

Washington– Deputy Secretary of the Treasury Robert M. Kimmitt today issued a statement welcoming the statements of support for Georgia's economy by the International Monetary Fund (IMF), World Bank, and the European Bank for Reconstruction and Development (EBRD), as well as their signals of continued engagement with the Government and their clients and banks in the private sector:
"The U.S. Treasury Department welcomes the statements of support for Georgia's economy made earlier today by the IMF, World Bank, and EBRD."

"Given its sound macroeconomic and fiscal policies and excellent progress in transition to a market economy, Georgia is well placed to weather the current crisis. Georgia's economy has been one of the strongest in the region owing to its proven record of reforms, and this reform effort deserves continued international support. The United States has strongly supported Georgia's reform and economic development programs and is prepared to join other countries to support the International Financial Institutions' future engagement to promote a vibrant economy that builds on the existing foundations," said Kimmitt.

Raimondo on Georgia:

What's particularly disgusting is the spectacle of the fraudulent Saakashvili's smug mug all over Western television – the BBC and Bloomberg, for starters – invoking his great love of "democracy" and "freedom" and calling on the U.S. to intervene in the name of supposedly shared "values." What drivel! Up until very recently, Saakashvili has been busy rounding up his political opponents and charging them with espionage, as his police beat demonstrators in the streets. When this happened, even our somnolent media sat up and took notice, but they seem to have forgotten...

The Georgian strongman is a thug and an opportunist who does an excellent imitation of George W. Bush-times-10: whereas GWB merely implies his political opponents are traitors to the nation, Saakashvili comes right out and says it – then drags them into court on trumped up charges of high treason. GWB has presided over a regime that has legalized torture, but only for foreign "terrorists" (José Padilla excepted). Saakashvili, on the other hand, throws his domestic political opponents – whom he labels "terrorists" – in jail and tortures his own countrymen. Georgia's notorious prisons are chock full of political dissidents. GWB justifies his aggression by invoking "democracy" and the doctrine of "preemption," while Saakashvili doesn't bother with such theoretical niceties, denying his aggression against South Ossetia in defiance of the plain facts

.

My guess is that this is an oil pipelne play, the United States versus Russia, with the U.S. using Georgia as its proxy.

Georgian Invasion of South Ossetia: The Start of the New Cold War

Jutin Raimondo explains:.

The anti-Russian bias of the Western media is really something to behold: "Russia Invades Georgia," "Russia Attacks Georgia," and variations thereof have been some of the choice headlines reporting events in the Caucasus, but the reality is not only quite different, but the exact opposite. Sometimes this comes out in the third or fourth paragraph of the reportage, in which it is admitted that the Georgians tried to "retake" the "breakaway province" of South Ossetia. The Georgian bombing campaign and the civilian casualties – if they are mentioned at all – are downplayed and presented as subject to dispute.

The Georgians have been openly engaging in a military buildup since last year, and President Mikhail Saakashvili and his party have been proclaiming from the rooftops their aim of re-conquering South Ossetia...


Please don't tell me Saakashvili just woke up one day and decided to attack Ossetia, and that the Americans weren't notified well in advance. Georgia depends on U.S. military and economic aid, and Saakashvili is a savvy operator: he is pulling a Lebanon, having learned from the Israeli example, and the Bush administration is more than glad to oblige him. Georgian tanks would never have rolled into South Ossetia without being given a green light by Washington.

Georgia has embarked on a very dangerous course, and it's important to realize it hasn't done so alone. Saakashvili has the implicit backing of Washington in his quest to re-conquer the "lost" provinces of Ossetia and Abkhazia (and don't forget Adjaria!) – or else what are 1,000 U.S. troops doing engaged in "joint military exercises" with the Georgian military, just as the crisis reaches a crescendo of violence?

Putin Blasts The Unted States; Cheney Calls Saakashvili

Vladimir Putin, now Russia's prime minister lashed out at the US for airlfiting Georgia troops from Iraq. ”It’s a shame that some of our partners are not helping us, and are trying to interfere,” he said. ”I am talking about US military planes airlifting the Georgian military contingent from Iraq practically into the conflict zone.”

”I am suprised by the extent of this cynicism, the ability to pass off white as black and black as white. The ability to present the aggressor as a victim of aggression and to lay the responsibility for the consequences on the victims.”

Earlier, the US, which backs the Georgian government, stepped up confrontational rhetoric in an effort to get Russia to back down. Vice President Dick Cheney telephoned Gergia President Mikheil Saakashvili to express US solidarity in the conflict with Russia and told him “Russian aggression must not go unanswered,” the vice president’s office said on Monday.

Russia Bombs Pipeline

As the South Ossetia war escalates, Russian jets have reportedly bombed a pipeline in Georgia that supplies oil to the West.

The pipeline is 30 per cent owned by BP and supplies 1 per cent of the world’s oil, pumping up to a million barrels of crude per day to Turkey. It is the only oil and gas route that bypasses Russia’s stranglehold on energy exports from the region.

Georgia declared a state of war, recalled all its 2,000 troops from Iraq and ordered a mass call-up with reservists being sent to the war zone to ‘defend the motherland’.

Russia claimed that it had ‘completely liberated’ the capital of South Ossetia, Tskhinvali – a claim denied by Georgia.

Most of the 70,000 South Ossetians hold Russian passports and are allied to Moscow, while Georgia is an ally of the US and has applied to join Nato.

The Georgians are outnumbered and outgunned in every department. Russia has about 697,000 troops, while Georgia has only 19,500 full-time regulars.

And with Russia’s 1,200 combat aircraft confronting Georgia’s seven outmoded support planes, and 6,000 tanks against 100 ageing machines, Georgia appears to have no chance of winning.