Month: April 2022

By Thomas Kirchner of Camelot Portfolios

• From substitute for war to forcing domestic policy change.

• Declining success rate of sanctions in the last 25 years.

• Russia sanctions cost West more than Russia.

• World needs a new Vienna Congress

In 433 BC, Athens barred merchants from neighboring Megara from selling their wares in the Athens market. These earliest recorded sanctions didn’t work out too well for the Athenians. The Megarians teamed up with the Spartans to wage the Peloponnesian War, which ended Athens’ golden age ^[i]. The effectiveness of sanctions has not become much better since antiquity. Famously, sanctions on Iraq and Cuba helped Saddam Hussein and Fidel Castro cement their power by allocating scarce imports to their most loyal supporters.

We decided to take a closer look at the Global Sanctions Data Base (GSDB) that is maintained by a team of researchers and spans 1,101 sanctions measures over the period 1950-2019 ^_[ii]. The database does not cover sanctions of the 1920s and 30s, when uncoordinated ad-hoc measures against the axis powers contributed to the collapse of world trade but failed to prevent World War II. After all, following the horrors of World War I, sanctions became the go-to tool for warfare in the 1920s, replacing military conflict through economic warfare. President Woodrow Wilson proclaimed in 1919: “A nation that is boycotted is a nation that is in sight of surrender.” [iii] That, at least, was the idea, which has since become religion. As we will discuss, wrongly so.

The most sanctioned regions will surprise you

The GSDB reveals that, not surprisingly, the countries of North America, Northwestern Europe and Oceania are the least frequently ones targeted by sanctions. Less obvious is that Africa and West Asia are targeted most frequently. Interestingly, most sanctions on African countries are imposed by other African countries. We wonder if much of Africa’s regionalism is due to these sanctions. After all, if you want to fly from one African city to another, the only flights available often make you connect through London, Paris or Frankfurt.

Since 1950, the U.S. has been the most frequent sanctioning nation, imposing more than one third of all sanctions worldwide. Under President Obama, the share of all sanctions imposed by the U.S. declined to 30%, in particular after Iran sanctions were lifted in 2016, but rose in the subsequent four years under President Trump to 40%. Trump is said to have been the most active sanctioner of all time, averaging three new measures per day ^[iv].

From avoiding war to influencing domestic policies

The policy objectives of sanctions have evolved over the years. Sanctions evolved from a substitute for war, as in Wilson’s days, to a tool to influence domestic policies in another country. Until 1960, war and territorial conflicts were the principal reasons for sanctions. From the 1970s, human right-related sanctions started to increase, which due to their sharp increase cumulatively represent the largest category since 1950. Democracy is the second-most frequent category. Ending wars is only the 4th most frequent objective for sanctions ^[iv]. We would assume that this drift toward domestic policy changes also makes sanctions less effective. After all, human rights violations or other objectionable domestic policies are often at the core of a regime’s power base. Being sanctioned then is just one of the many costs of staying in power.

Effectiveness

Not surprisingly, the effectiveness of sanctions is hotly contested. Clearly, sanctions labeled “crippling” are imposed with a strong conviction that they will achieve their stated goals. Unfortunately, the data stand in sharp contrast to such overconfident boisterous announcement. Successes are rare. A notable exception are the 1995 sanctions against Peru and Ecuador after border skirmishes along a long-contested area near the Cenepa river had broken out. The sanctions were lifted after both sides consented to the deployment of international observers. However, since this is not a controlled experiment, we can not rule out the possibility that the same outcome would have been had without the imposition of sanctions. Attributing such successes to sanctions might overrate their effectiveness.

Until the mid-1960s, 50% of sanctions in the GSDB are classified as failures, only 20-30% are successes. The situation improved over the following 30 years: by 1995, 50% of all sanctions were considered a complete success. Unfortunately, in the quarter century since 1995, there is a sharp decrease in the success rate. As of 2016, only 20% of sanctions are deemed a complete success, roughly 70% are “ongoing”, which in many cases probably means that nobody wants to admit their failure, so the path of least resistance is to keep them going ^[iv]. Partly, the decreasing success rate is due to the sharp rise in anti-terrorism sanctions, which we would expect to be of little deterrence on the determination of terror fanatics.

Sanctions against Russia over the Ukraine war

JP Morgan estimates the impact of sanctions on the Russian economy on 11% of GDP and reduced growth in the EU at 2.1% of GDP^[v]. This estimate amounts to $165 billion in annual sanction losses for Russia and at least $357 billion for the EU alone, even more if you add non-EU Europe and North America ^[vi]. As long as JP Morgan’s estimates are not completely wrong, the West will suffer more under its own sanctions than Russia. We estimate that only for a contraction of 30% or more will the harm to Russia be worse than for the West. Should gas deliveries to Western Europe be disrupted, then no crash of the Russian economy would be big enough to match the economic devastation of Western Europe.

We can think of other ways how the sanctions are likely to backfire. For example, the ban on exporting technology will only have a short-term impact. We would like to remind readers that the Soviet Union perfected the art of procuring Western technology at the time of the iron curtain. In fact, Soviet microprocessors were copies of Intel and Zilog chips, the export of which to the Warsaw Pact was illegal. We would expect this phenomenon to return as a result of the sanctions. Fake chips from China are already a major problem for the semiconductor industry. If China can manufacture fake chips on a large scale, there is no reason why Russia wouldn’t be able to do the same. Such fake chips, which will be much cheaper than the genuine ones, will then find their way into the Western market, where they will only aggravate the scourge of fake chips.

While we certainly wish that sanctions on Russia would end this war quickly, we won’t hold our breath. The deck is stacked against their effectiveness. What this conflict needs is a diplomatic solution: a new Vienna Congress.

A little over a week ago the US revealed that it is sending 100 killer drone systems to Ukraine as part of huge new $800 million weapons package approved by the Biden administration last month. The small, low-cost but high tech weapons, called “Switchblade” drones are a type of “kamikaze drone” in that they act as guided missiles capable of loitering before slamming into their targets.

“We have committed 100 Switchblade tactical unmanned aerial systems to be delivered in the most recent package of presidential drawdown,” assistant secretary of Defense for international security affairs Celeste Wallander previously told the House Armed Services Committee. This week the Pentagon revealed it has already trained a “small number” of Ukrainian soldiers in how to operate the Switchblade weapon system.

Presumably this training was done outside of Ukraine itself – likely in neighboring Poland given earlier President Biden confirmed that US advisers were training Ukrainian soldiers there.

Pentagon spokesman John Kirby told reporters in a Wednesday press briefing that “a very small number” of Ukrainian soldiers have been trained. He explained that they’re expected to “return to their country to train others on the equipment,” according to The Hill. 

“We took the opportunity — having them still in the country — to give them a couple of days’ worth of training on the Switchblade so that they can go back — and they will be going back soon, back home — to train others in the Ukrainian military,” Kirby said.  

So far the program might have included merely less than a dozen Ukrainian personnel trained on the Switchblade, which in the ‘600 series’ version is capable of destroying tanks after being able to loiter for up to 40 minutes.

NBC previously described, “The Switchblades are essentially robotic smart bombs, equipped with cameras, guidance systems and explosives. They can be programmed to automatically strike targets miles away, and they can be steered around objectives until the time is right to strike. The company says the 600 can fly for 40 minutes and up to 50 miles.”

One military analysis report suggested that as many as 1,000 Switchblade drones could be bound for Ukraine from the US manufacturer:

But the term “unmanned system” doesn’t actually refer to an individual drone, but rather to a complete package of ground launch and control systems, and potentially multiple drones. And indeed according to journalist Michael Weiss, a military source indicated each Switchblade Tactical System includes ten drones.

That means Ukraine may be receiving up to a thousand single-shot suicide drones, not 100.

That said, there might also be a mix of different drone types (such as unarmed surveillance drones) within the count of 100 drone systems or even different models of the Switchblade.

Below: the Switchblade being live tested at a Utah proving ground…

The 600 version, the more advanced and larger of the two variants, is said to be capable of taking out tanks and armored vehicles, and artillery. Wired magazine has previously described the small drone as a “six-pound foldable mashup of missile and drone.”

Authored by Jake Johnson via Common Dreams,

The fiancée of murdered journalist Jamal Khashoggi vowed to fight a Turkish court’s decision Thursday to move the trial of 26 Saudi suspects in the gruesome 2018 killing to Saudi Arabia, a ruling that human rights groups fear will spell an end to the case. Hatice Cengiz, who has been relentlessly ampaigning for justice in the years since Khashoggi’s murder, said Thursday that her fight “is not over.” 

As The Washington Post reported, the decision Thursday marked “a stunning reversal by Turkey, which in the years after the killing of Khashoggi… went to extraordinary lengths to publicize the Saudi government’s role in the plot.” The report said: “More recently, though, [Turkish President Recep Tayyip] Erdogan’s government has tried to improve ties with the kingdom as Turkey weathers one of its worst economic crises in decades,” the Post noted.

Khashoggi, a prominent critic of the Saudi regime, was assassinated inside the Saudi consulate in Istanbul by a 15-man hit team. U.S. intelligence agencies have concluded that Saudi Crown Prince Mohammed Bin Salman, the de facto ruler of the country, directly approved the murder.

“The courts might have decided that they can ignore the truth about his case, but I will not stop and I will not be quiet about it,” Cengiz said in response to the Turkish criminal court’s decision Thursday. “We all know who is guilty of Jamal’s murder and it is now more important than ever that I keep going.”

Cengiz, the plaintiff in the closely watched murder case, is vowing to appeal the court’s ruling, which was widely viewed as a politically motivated move aimed at mending strained relations between Turkey and Saudi Arabia.

In addition to ruling that the case should be moved to Saudi Arabia, the Turkish court “decided to lift arrest warrants issued against the defendants and gave the sides seven days to lodge any opposition,” according to the Associated Press.

Milena Büyüm, Amnesty International’s Turkey campaigner, tweeted that the court’s ruling is “appalling and clearly political.” Emma Sinclair-Webb, the Turkey director for Human Rights Watch, added that “it’s a scandalous decision.”

#UPDATE Hatice Cengiz, the fiancee of murdered Saudi critic Jamal #Khashoggi, said Thursday she would appeal a Turkish court’s decision to hand to Saudi Arabia a case involving 26 suspects linked to his killing https://t.co/EveAnBNV8x pic.twitter.com/mjb3vVefYg

— AFP News Agency (@AFP) April 7, 2022

In 2020, after what observers described as a “sham trial,” a Saudi court sentenced five mid-level officials and operatives to 20-year jail terms for their role in the Khashoggi murder. No high-ranking Saudi officials have been punished for ordering the assassination or attempting to cover it up.

Agnes Callamard, Amnesty International’s secretary-general, said in a statement ahead of the Turkish court’s decision that the Khashoggi murder “was not the action of a few ‘rogue’ individuals.”

“All elements of the operation demonstrate the responsibility of the state of Saudi Arabia,” said Callamard, who led an extensive U.N. investigation into the killing in 2019. “By deciding to transfer the case of the killing of Jamal Khashoggi to Saudi Arabia, Turkey is deciding to hand it back to those responsible for it.” Callamard added: “It is a sure and certain guarantee that only injustice and impunity will prevail.”

“Weapons, weapons, weapons” is what Ukraine’s government is still demanding of NATO countries, even after the Biden-approved $800 million package last month.

Foreign Minister Dmytro Kuleba issued the plea after meeting with NATO Secretary-General Jens Stoltenberg in Brussels, stating on Twitter that the “three most important things” for Ukrainians are “weapons, weapons, weapons.”

“Met with Secretary General Jens Stoltenberg at NATO HQ in Brussels. I came here today to discuss three most important things: weapons, weapons, and weapons,” Kuleba wrote. “Ukraine’s urgent needs, the sustainability of supplies, and long-term solutions which will help Ukraine to prevail,” he added.

Already the Pentagon has agreed to send more Javelin anti-armor systems, also as Stinger anti-aircraft missiles are being supplied, which Moscow sees as a huge provocation, with the war entering its sixth week.

During a press conference in Brussels, Kuleba said his agenda in meeting with NATO leaders remains “simple”…

“We know how to fight. We know how to win. But without sustainable and sufficient supplies requested by Ukraine, these wins will be accompanied by enormous sacrifices,” Kuleba said. “The more weapons we get and the sooner they arrive in Ukraine, the more human lives will be saved.”

Previously, CNN had documented that Kiev is increasingly pushing Washington for more advanced battlefield weapons, especially to take out Russia’s superior tanks and aircraft:

The Defense Department plans to accelerate production of Stinger anti-aircraft missiles and Javelin anti-tank missiles so it can refill its own depleted stocks as it continues to send the vital systems to Ukrainian forces fighting the Russian invasion, according to defense officials.

Ukraine wants 500 Javelin anti-tank missiles and 500 Stinger anti-aircraft missiles delivered from the US daily, according to a recent military assistance wish list. CNN viewed the document that details the items Ukraine believes it needs from the US.

CNN wrote further in an end of last month report: “By March 7, less than two weeks into Russia’s invasion of Ukraine, the US and other NATO members had sent about 17,000 anti-tank missiles and 2,000 anti-aircraft missiles to Ukraine. Since then, that number has certainly increased but an update has not been made public.”

Moscow has warned that it will hold outside powers responsible for instances where Russian troops come under attack by foreign-supplied weaponry – something which has clearly already happened many times.

Authored by Pieter Cleppe via The Critic.co.uk,

The Gulf countries may not be reliable partners against Russia…

Earlier this month, Syrian president Bashar al-Assad was welcomed in Dubai, in the United Arab Emirates. To the dismay of the United States, the red carpet was rolled out for him, on the anniversary of the uprising against Assad, amid war mongering by his Russian ally in Ukraine.

Just before, British PM Boris Johnson has been on a visit himself to both the United Arab Emirates and Saudi Arabia, not only to promote Global Britain, but also in a bid to convince both Gulf states to increase oil production. Johnson was acting as an emissary from the West, after the Gulf countries’ leaders declined to take a call from U.S. President Joe Biden to build international support for Ukraine and contain a surge in oil prices, signalling their unhappiness with the perceived Western lack of support for their security.  

These grievances include concerns about Biden’s move to take Yemenite Houthi rebels off of America’s official list of global terrorist groups. Drone and missile attacks on U.A.E. capital Abu Dhabi, launched earlier this year by the Iran-backed rebel group, and the prospect of a restoration of the Iran nuclear deal have added to the U.A.E. and Saudi Arabia’s complaints.  

It’s not just refusing to take Joe Biden’s calls, however. More broadly, the Gulf states are hedging their bets on the Ukraine issue. The Emirates abstained during a United Nations vote condemning Russia’s invasion, and the Emirati leader, popularly known as “MBZ”, referred to “Russia’s right to ensure its national security” in a call with Russian President Putin. There has even been speculation that the U.A.E. could help Russia avoid Western sanctions, with Emirati officials reportedly assuring Russians that they will not enforce sanctions unless mandated by the UN — something which Moscow would certainly veto. 

On top of that, there is a deal between Russia and the Saudi-led oil cartel, OPEC, which the Saudis and Emiratis are reluctant to abandon, as it was hard-fought in 2020 and involved great concessions from Russia. 

The OPEC question will become increasingly important, because the situation on the energy front is dire. The International Energy Agency has warned a global oil supply shock may be coming due to large-scale disruptions to Russian oil supplies, which would drive oil prices to even higher levels than today. While Saudi Arabia isn’t pumping oil at full capacity and has not yet pledged to do so, the U.A.E have promised to push OPEC to pump more oil, but this development has yet to materialize and wasn’t agreed upon with other OPEC members in advance. Despite the talk, actions on the ground further indicate the Emirates are moving away from the West, a shift which is in line with broader trends in the Gulf region. 

King dollar no more? 

Indeed, the sanctions which have cut off several Russian banks from the SWIFT international payments system and frozen reserves accumulated by the Russian central bank, have renewed debate on the role of the U.S. Dollar as global reserve currency, particularly in the Gulf.  

Some have argued that “we are witnessing the birth of Bretton Woods III — a new world (monetary) order centred around commodity-based currencies in the East that will likely weaken the Eurodollar system.” For the moment, however, this remains a minority view, while the general consensus is that there is little alternative to the U.S. dollar in the short- to medium-term. 

The lack of trust in China’s currency should stymy Beijing’s hopes of turning the yuan into a global reserve currency. Gold has proven to be a safe store of value, but despite the fiat money of governments being eroded to finance state spending, gold is not used as a regular payment method. The euro is still plagued by its shaky political underpinnings, while it is still an open question whether bitcoin will be able to resist state action banning it, if it will ever be widely adopted in the first place.  

King dollar also retains its primacy due to the fact that oil sales are conducted in USD — at least for now. This week, it emerged that Saudi Arabia is considering accepting yuan instead of dollars for Chinese oil sales.  

This is likely to be a bluff, or rather a Saudi cry for attention from Washington decision makers. Switching millions of barrels of oil trades from dollars to yuan every day could unsettle Saudi Arabia’s economy given that the Saudi currency is pegged to the dollar. Aides to the Saudi crown prince have apparently warned him of unpredictable economic damage which could result from moving ahead with the plan. It’s not hard to see how trading oil in a currency plagued by rampant capital controls could easily backfire — meaning that Gulf countries abandoning the imperfect dollar umbrella may soon find themselves in stormy weather. 

UK faces “tough” talks with Gulf countries  

The continued primacy of the U.S. dollar also makes the argument less convincing that Western sanctions against Russia will push into to a separate trading bloc led by China, creating a kind of dichotomy within the global economy. That is unlikely to happen fast. Not only is China far from enjoying the degree of trust required to offer the world’s reserve currency, it’s impossible for Russia to simply replace its trade with the West with Chinese trade, as the volume of Russia’s current trade with the West is simply too high.  

The West, however, is determined to reduce that trade. Ahead of his trip to the Gulf, Boris Johnson vowed the world must “starve Putin’s addiction to oil and gas”, adding that “Saudi Arabia and the United Arab Emirates are key international partners in that effort.” Then, only one day after Johnson’s visit, UAE Foreign Minister Sheikh Abdullah bin Zayed pledged, during a visit to Moscow, to cooperate with Russia on bolstering global energy security. 

Johnson’s government seems to be wary to embrace fracking, which before Putin’s war helped the United States enjoy gas prices that are only one sixth of the level in Europe. Unless Johnson revisits that stance, the UK has no choice but to become more energy dependent on the rest of the world, particularly petrol-rich states like the Gulf countries. So far, however, it’s unclear whether they’re ready to play ball. With UK talks with Gulf countries over increased oil production labelled “tough” and the Emirates gearing up to water down the effect of Western sanctions on Russia, something’s got to give. 

By Simon Watkins of OilPrice.com

For several years, China and Russia have been building an alternative world order to that offered by the U.S. and its allies. This was expedited by the unilateral withdrawal of the U.S. in May 2018 from the Joint Comprehensive Plan of Action (JCPOA) with Iran, its withdrawal from Afghanistan in August 2021, and its ‘end of combat mission’ in Iraq in December 2021, among other factors.

China’s strategy to achieve this new world order is one based on incremental advances of power, based around money flowing from its ‘One Belt One Road’ (OBOR) program. However, Russian Foreign Minister, Sergei Lavrov’s comments before his meeting last week with Chinese counterpart, Wang Yi, that Moscow and Beijing are paving the way “towards a multi-polar, just, democratic world order” are too much too soon as far as China is concerned. The widely-publicised remarks have left Beijing needing to be even more careful in how its dealings with Russia are interpreted by the U.S., especially in the energy sector in which high oil prices pose direct economic and political threats to Washington. China stated two weeks before Russia invaded Ukraine that “there is ‘no limit’ to how far Russian and Chinese friendship may go” and signed a swathe of huge oil and gas deals shortly thereafter that provided an additional layer of insulation to both from any U.S. sanctions in the future. However, signalling perhaps that Beijing did not believe that Russia would necessarily launch a full-scale invasion of Ukraine before it did so, only a day after the military conflict spread to Ukraine’s major cities, Chinese President Xi Jinping held urgent talks with Russian President Vladimir Putin and advocated peaceful negotiations between Russia and Ukraine. “China was signifying its discomfort over Russia’s military actions, [and] has reiterated that it respects the ‘sovereignty and territorial integrity of all countries’,” Eugenia Fabon Victorino, head of Asia Strategy for SEB, in Singapore, told OilPrice.com last week.

At the same time, though, she added, Beijing has refrained from calling Russia’s actions an ‘invasion’, and abstained to vote on a UN Security Council resolution that would have deplored Russia’s aggression against Ukraine. “In addition, so far, China has not indicated an intention to take direct action against Moscow, and has kept trading links with Russia open,” she said. A key reason for this, over and above any ideological aspirations of a new world order is that although Russia accounts for only 2.9 percent of China’s total imports, Moscow did resolutely step up to the plate in 2021 when China faced an energy crunch. “As a result, Russia now accounts for 20.1 percent of China’s total coal imports, and its share of China’s imported crude oil has steadily risen to 15.6 percent by end-2021 from 11 percent in 2014,” highlighted Victorino. Russia’s vital strategic importance to China was bolstered again with the 30-year contract for Russia to supply gas to China through its new Far Eastern pipeline – following the earlier installation of the Power of Siberia-1 pipeline which began pumping supplies in 2019 – as highlighted by OilPrice.com.

“Despite stronger ties between Beijing and Moscow in recent years, there are limits to China’s friendship,” Victorino underlined. “While Russia is an increasingly important source of energy, its total trade with China pales in comparison with China’s trade links with the United States and the European Union [EU],” she said. According to the latest figures, among China’s top trading partners, the EU accounts for 15.3 percent of China’s total trade, followed by the U.S. with 12.5 percent. “As sanctions against Russia mount, there are reports that some of China’s largest state-owned banks are already limiting financing for transactions of Russian commodities,” she told OilPrice.com. “Although sanctions have so far stopped short of Russia’s energy trading, Chinese banks may have already stopped issuing US$-denominated letters of credit related to Russian commodities,” she added. Having said this, she underlined, Chinese yuan-denominated financing for Russian commodities may still be available, albeit with a higher level of scrutiny. “Large Chinese banks would be reluctant to lose access to dollar transactions, in our view, and in the past, China’s big four banks have complied with U.S. sanctions against Iran and North Korea in a bid to maintain access to the dollar clearing system,” she concluded.

The precariousness of the position into which Russia has put China is further evidenced by the fact that increasing fears of U.S. retaliatory measures against Beijing added fuel to the sell-off in Chinese equities in the aftermath of the invasion on the 24th of February. “China will need to make a stronger gesture of neutrality if Beijing wishes to lower the risk of second order political and economic spillovers from the Russian invasion of Ukraine,” Rory Green, head of China and Asia research at TS Lombard, in London, told OilPrice.com last week. “Our view remains that China will comply with the existing sanctions regime and is prioritising three objectives in the current geopolitical turmoil: first, maintaining normal ties with Russia but avoiding aiding the war effort; second, non-alienation of the EU; and, third, avoiding secondary sanctions and economic damage.”

The relative importance of the first objective is now much lower, he said, as Beijing has made efforts to moderate its stance and move closer to European and Western positions. “Following intelligence leaks and U.S. accusations, Chinese officials have sought to clarify Beijing’s stance, with the Chinese Ambassador to the U.S., Qin Gang, writing a Washington Post editorial that underscored Ukraine’s sovereignty and played up China’s neutral position,” he told OilPrice.com. “Also, in a bilateral call, President Xi called on [U.S.] President [Joe] Biden and their respective countries to ‘work for world peace and tranquillity’,” Green underlined, “Additionally, earlier in the week, Xi described the conflict as a ‘war’ for the first time, and Chinese state media have also begun to report less favourably on Russia including coverage of civilian deaths,” he said. “Overall, despite the shared values and Beijing’s reluctance to succumb to Western pressure, we think strategic rationality will dominate,” highlighted Green. “China has indicated a strong preference for avoiding the economic consequences of Russia’s actions and, given the rising growth and market concerns in Beijing, we expect economics to dominate ideology,” he concluded.

Although being seen to comply with U.S. strictures on Russia is important to China, it remains the case that there are several legal and quasi-legal ways for it to continue to import Russian energy in significant volumes, so adding to the overall global supply and affecting oil prices. As analysed in depth by OilPrice.com recently, China has a long history of being able to work around sanctions – ranging across the gamut of legality and beyond – with basic factors working in its favour regarding Russia being the lack of exposure of China’s firms to the U.S. financial infrastructure and to the US dollar, and the direct oil and gas infrastructure between the two countries. It is apposite to note that around the same time as the two huge new oil and gas deals were signed between Russia and China, there were discussions between Gazprom and China National Petroleum Corporation that the contract would be settled in euros to diversify the payment from the U.S. currency.  

“As the U.S. dollar becomes more weaponized, there is an incentive to convert more FX reserves into yuan,” underlined SEB’s Victorino. “In the case of Russia, earlier restrictions imposed following the annexation of Crimea in 2014 led to the significant diversification of Russia’s foreign reserves away from U.S. dollars: of the US$643 billion reserves, the share of U.S. dollars has fallen to 16.4 percent as of Q2 2021 from 44.4 percent in 2014, whilst over the same period Russia made cumulative purchases of almost US$78 billion worth of Chinese yuan, meaning that the yuan’s current share is at 13.1 percent,” she said. 

While Russia launched hypersonic air-to-ground missiles during the invasion of Ukraine and China flew a hypersonic weapon around the world late last year, the US continues to fall behind the hypersonic curve as a new round of delays were announced by the US Air Force (USAF), according to Bloomberg. 

The AGM-183 Air-Launched Rapid Response Weapon (ARRW) was expected to be declared “early operational capability” by Sept. 30. However, according to a USAF statement, those timelines have been pushed back to the next fiscal year. 

ARRW, expected to be the Pentagon’s first hypersonic weapon, suffered three consecutive failed tests last year. ARRW’s latest hurdle was two upcoming ground-based booster motor tests by June 30. But, it appears “due to recent flight test anomalies,” the missile test would be shifted out to as late as December with additional tests planned next fiscal year, according to the USAF statement.

“The ARRW production decision remains event-driven and will occur after operational utility is demonstrated through successful system end-to-end flight tests,” the service continued.  

Lockheed-Martin’s ability to manufacture and deliver the new weapon appears to be a 2023 story. Western countries have yet to field a hypersonic weapon while the old world order crumbles as a multipolar world emerges, pushing Russia and China closer together. 

Perhaps that’s why President Biden is set to unveil a new trilateral security hypersonic pact with the UK and Australia to advance the development of hypersonic weapons. 

On Wednesday, Republican Rep. Mike Rogers of Alabama sounded the alarm at the House Armed Services Committee hearing that China has “more troops, ships, and hypersonic missiles than the United States.” Republican Rep. Michael Turner of Ohio said the US needs to increase its hypersonic development. 

Authored by Jeff Carlson and Hans Mahncke via The Epoch Times,

A newly released memo from the U.S. State Department reveals that government officials knew early on that the COVID pandemic likely originated at a lab in Wuhan, China.

That memo, dated April 2020, states that out of five possible origins for COVID, a lab leak was by far the most likely. The memo also suggests that alternative theories had been introduced to prevent a lab leak from being investigated. The memo, which focuses almost entirely on the likelihood of a lab leak, contains a large amount of information that wasn’t known publicly at the time it was written.

Although a lab leak is now widely accepted as a likely origin for the virus, when the memo was written, a concerted effort was underway to discredit that possibility. It also raises the question of what senior State Department leadership—including then-Secretary of State Mike Pompeo—knew and why the information was withheld from the public.

According to the newly released memo, the State Department knew as of April 2020 that the central issue surrounded an obsession with collecting and testing a massive amount of virus-carrying bats on the part of the Wuhan Institute of Virology and China’s Wuhan-located Center for Disease Control and Prevention (CDC).

The State Department noted that lab testing of the earliest-known patient at the Wuhan Central Hospital in December 2019 determined that the virus was a “Bat SARS-like Coronavirus.” At the time this patient was tested, the Chinese Communist Party (CCP) hadn’t disclosed that there was any problem at all.

When they finally acknowledged an outbreak, they initially blamed it on pneumonia. It was only at the end of January that the CCP finally started admitting that COVID-19 was caused by a new virus that was transmitted between humans.

By that time, the virus had already been seeded across the globe and any chance at suppression had been lost. It was during this same period that the director of the National Institute of Allergy and Infectious Diseases, Dr. Anthony Fauci, was made aware of the virus’s likely origin, having been told by a group of scientists whom he was funding that there was a high probability that the virus was engineered.

Although it’s been known since June 2021 that Fauci and the NIH covered up his knowledge of the virus’s origin, the State Department’s early insight into these matters wasn’t fully known until late March 2022, when the transparency group U.S. Right to Know obtained the April 2020 memo.

Two Labs

The memo, titled “An Analysis of Circumstantial Evidence for Wuhan Labs as the Source of the Coronavirus,” comprises five pages and is written in military BLUF style, meaning “bottom line up front.”

The memo begins by stating that one of two Wuhan labs is the likely source of the COVID outbreak. The two labs identified by the state department are the Wuhan CDC’s lab located in downtown Wuhan and the Wuhan Institute of Virology, where Shi Zhengli was known to have conducted dangerous gain-of-function experiments on bat viruses.

The State Department’s focus on the Wuhan CDC lab as a possible source is particularly significant as that facility is located only a few hundred feet from the Huanan Seafood Market where an already infected customer may have caused a superspreader event in December 2019.

Notably, the World Health Organization’s lead investigator of the virus’s origin, Peter Ben Embarek, privately told a Danish TV crew that he suspected that the Wuhan CDC lab was the origin of the pandemic. Embarek, who promoted a natural origin for the virus in his public report, privately noted that the CDC lab had mysteriously moved to its new downtown location in early December and that such a move may have increased the chances of a lab leak or accidental spillage.

The other lab identified by the State Department as the likely source of the pandemic is the Wuhan Institute of Virology, which has been the main focus of attention over the past two years.

The State Department memo noted that the Wuhan Institute, by far the most logical place to investigate the virus origin, had been completely sealed off from outside inquiry by the CCP. The memo also noted that a gag order regarding both Wuhan labs had been issued on Jan 1, 2020, and a major general from the People’s Liberation Army had assumed control over the Wuhan Institute of Virology since early January of 2020.

The State Department memo emphatically stated that “All other proposed theories are likely to be a decoy to prevent inquiry to Wuhan CDC and Wuhan Institute of Virology.”

It bears repeating that the memo was written in April 2020.

That’s because the State Department’s decoy argument mirrors the actions taken by Fauci and then-National Institutes of Health (NIH) head Dr. Francis Collins who–at the same time this memo was written–were actively suppressing and censoring any public discussion of the lab leak scenario. When Fox News ran a story in April 2020 suggesting that the virus came out of a Wuhan lab, Collins immediately contacted Fauci to explore ways the two men could “put down this very destructive conspiracy.”

Collins had previously told Fauci and his group of scientists that “science and international harmony” could be harmed if the lab leak theory took hold. Collins’s directive led Fauci’s group to publish two papers that categorically dismissed the lab leak theory, one in the medical journal the Lancet and the other in the scientific journal Nature. Those two papers would become the cornerstone of combined efforts from Fauci’s scientists, the media, Big Tech, and the U.S. government to suppress any discussion of a lab leak, while simultaneously promoting the natural origin theory.

The State Department memo also lists many facts that the public has only come to know in piecemeal fashion over the course of the past two years. We’ve previously covered many of these details on our show, including that the Wuhan CDC had a resident “Batman”—Tian Junhua—who bragged about personally having collected more than 10,000 virus-carrying bats as lab samples from Chinese caves.

Tian also was widely known for his recklessness and carelessness during his collection process.

Regarding the Wuhan Institute of Virology, the State Department memo noted that the director of the lab, Shi Zhengli, had conducted gain-of-function engineering of bat viruses to make them more easily transmittable to humans. As we now know, the defining feature of the COVID-19 virus, its furin cleavage site, is what makes the virus particularly transmissible in humans. While no furin cleavage site has ever been observed in naturally occurring SARS coronaviruses, Shi was part of a 2018 research proposal that aimed to insert exactly such a feature into coronaviruses.

The State Department’s memo also highlights the poor safety standards at the Wuhan Institute, a fact that could easily lead to an unintentional leak of the deadly virus to the outside population. Interestingly, the memo also questions the disappearance of lab worker Huang Yanling, whose bio, profile, and picture were scrubbed from the institute’s website shortly after the outbreak. To this day, Huang’s whereabouts and well-being remain unknown.

Lastly, the memo takes a detailed look at a Chinese medical professional whose online name is Wu Xiaohua. Wu claimed that Shi Zhengli was playing God by creating coronaviruses with the specific aim of making them more transmissible in humans. Wu also claimed that Shi used intermediate animals in her lab and that her lab’s management of deadly viruses was appallingly poor and negligent.

The State Department memo found Wu’s claims to be credible and that assessment holds up well, given the information that has been made public in the intervening two years. We now know Shi had an active plan to insert furin cleavage sites into bat viruses, we know that she used humanized mice to test how her virus creations would affect humans, and we know that her lab was repeatedly cited for its poor safety record.

The most striking takeaway from the memo is that it focuses almost entirely on the lab leak scenario, reflecting that the State Department was almost certain in April 2020 that the virus had originated in a lab. What remains entirely unclear is why neither the State Department nor Secretary Pompeo released this information as soon as they had it.

Had the memo been made public nearly two years ago when it was written, the course of events would have been very different. Knowing that the virus came out of a lab would have refocused public attention and the search for remedies could have been more focused.

There also would have been more concerted efforts to prevent future leaks. Rather than misdirecting the public toward a natural origin, Fauci and the NIH would have been exposed for their role in funding the work at the Wuhan Institute.

Most importantly, the Chinese Communist Party would have been subjected to greater international pressure for its role in suppressing any advance information regarding the outbreak. The memo might also have had an impact on the 2020 presidential election, as voters tended to see Donald Trump as far more capable than Joe Biden in taking on the CCP.

While we don’t know with certainty why the memo was concealed, the only person who had a constitutional role in deciding if suppression of a lab leak should be the policy of the U.S. government was President Trump. Although it’s possible that Trump decided it would be better to conceal the facts, it’s far more likely that, like all of us, the president was kept in the dark.