To understand the complexity of the Ukraine–Russia conflict, analysts have to go back into the past to the disintegration of the Soviet Union and its after–effects. The 1990s was a time of immense confusion, insecurity and suffering for the people of the new nations that were formed after the collapse of the USSR. A few years prior to the impending collapse, the Soviet insiders ensured the continued influence of Soviet era officials by transferring State assets to off–shore companies and relocating its wealth.
Those who were factory directors or government ministers’ were made owners due to privatization. This was not due to government policy, but through simple theft, by seizing what was already in existence. The new Russian oligarchs [in Russia, oligarchs are powerful politicians who also control vast business interests] did not build anything. They simply took ownership of infrastructure and facilities that previously belonged to the state and claimed ownership. And, it was not only the oligarchs who took advantage of the fall of USSR to become rich. Many government officials did just as well. There were also a number of those who focused on enhancing their institutions more than themselves, and by extension the scope of Russia’s national influence. Their actions were focused on the promotion of Russia’s political and strategic interests even at the risk of negative economic and financial consequences.
One of the outcomes of this was the formation of the Financial Management Company Ltd (FIMACO) which was registered in the island of Jersey, which is notable for being one of the world’s largest off-shore financial centers. On August 23, 1990, a secret memorandum from Vladimir A. Ivashko, who was Gorbachev's deputy general secretary, outlined strategies to hide the Communist Party's assets through Russian and international joint ventures. The memorandum was to organize the transfer of CPSU (Communist Party of the Soviet Union) funds, CPSU financing and support of its operations through associations, ventures, foundations, etc. which are to act as invisible economics. In November 1990, FIMACO was formed by documents signed by Yury Ponomaryov under the direction of V. Gerashchenko of the Russian Central Bank, formerly known as Gosbank, to hide these funds.
FIMACO's existence was disclosed by Russia's chief prosecutor Yuri Skuratov in February 1999 when Skuratov stated that about $50 billion was transferred from the Central Bank to FIMACO and then out of Russia including IMF funds between 1993 and 1998 and that he had given to Carla del Ponte, the Prosecutor General of Switzerland, a list of about twenty names which had received a total of $40 billion of the IMF money in accounts at Swiss banks. An early beneficiary of this arrangement was Mikhail Khodorkovsky, who had started his career as a minor Soviet official and whose Yukos oil conglomerate was tied to FIMACO.
In late 1991, the then Russian President Boris Yeltsin announced plans to privatize Russia’s national assets. Western business networks saw this as a unique opportunity to acquire Russian industries. The US Government under President Clinton proposed to redesign the economic policies of the newly formed Russian Federation using the strategy of privatization, deregulation, austerity, and the opening up of Russia’s companies to purchase by ultra-wealthy American corporations. During this early period of privatization, an exclusive society of seven Russian oligarchs was formed, called the ‘Semibankirschina’, which included Boris Berezovsky, Mikhail Khodorkovsky, Mikhail Fridman, Petr Aven, Vladimir Gusinsky, Vladimir Potanin, and Alexander Smolensky; and which had almost full control over the administration of Yeltsin. This society was allegedly funded by Jacob Rothschild, the Chairman of RIT Capital Partners of London, who with his private fortune of over $500 Billion is considered to be one of the richest persons in the world.
In late 1999, Vladimir Putin; who was the former director of the Russian FSB, federal security service, became the President of Russia. A new group of Putin insiders, the ‘Siloviki’, made up of Russian nationalists from the security and business world, replaced the previous access that the Semibankirschina had to the president. With this, the oligarchs with business ties to London lost their powers of influence over Russia’s policies.
In a parallel strategy of the West, the United States wanted to bring Russia into the dollar world; and quietly influenced a series of confrontations on Russia’s borders to serve their goal. It started with the Chechen wars of 1994 and 1999-2000; which Putin ended quickly and ruthlessly. The 2003 American invasion of Iraq, under the pretext of then President Saddam Hussein being in possession of weapons of mass destruction, WMDs, was their first major step to gain control of the global oil resources. Russian investments in Iraq were lost when USA occupied Iraq. Prior to this, their invasion of Afghanistan in 2001 had allowed the USA to spread its military presence in Central Asia; leading to heightened tensions with Russia and China. During all of this, USA could not admit openly that since the fall of the Soviet Union in 1991, its strategic goal had been to reconstruct Russia into its own financial colony, thereby gaining effective control over its huge oil and gas reserves. A new war had been initiated by the USA under its ‘War against Terror’ strategy, but the goals were simple; control all significant oil and gas reserves in the world and its transport, influence the emerging Eurasian economies of Russia and China (and later India), and ensure that America retains its hegemony as the sole superpower, with the US dollar as the supreme global currency. The goals would be achieved by any means necessary. The NATO encirclement of Russia, sponsored political revolutions across Eurasia and the wars in Afghanistan, Iraq, Syria and the instability in North Africa were all part of the same strategy to ensure America’s grip on global power.
What the Americans had not fully considered was that Vladimir Putin was a ruthless nationalist and cunning strategist. Just as America was consolidating its hold in Iraq in 2003, Putin had Russia’s billionaire oligarch Mikhail Khodorkovsky arrested on charges of tax evasion. Putin then bought Khodorkovsky owned Yukos Oil group under Russian state control and froze its shares in the market. Khodorkovsky was targeted for three reasons. The first was that he had broken his commitment to Putin to stay out of Russian politics and to repatriate the money he had stolen from the Russian treasury, the second was that Khodorkovsky was busy buying support of members of the Duma, the Russian parliament in a plan to run against Putin in the 2004 elections, and third; and most importantly, he was in negotiations with the Western oil companies Exxon and Chevron to sell 40% of Yukos oil ownership, thereby putting Russia’s financial and economic independence at risk. The 40% shareholding in Yukos would have given the Americans a de-facto veto power over Russia’s future oil and gas trade and the pipelines that carry these to Europe and Asia. At the time of Khodorkovsky’s arrest, Yukos had just begun steps to acquire Sibneft, another large Russian oil company. The combined Yukos–Sibneft enterprise, with 20 billion barrels of oil and gas, would then have owned the second-largest oil and gas reserves in the world – in private hands, and not state-owned. The Exxon buy-up of Yukos–Sibneft would have been a literal energy coup-d’état for the West. The Americans and the Western oil companies knew this, as well as Khodorkovsky himself. Above all, Vladimir Putin knew it and moved decisively to block it.
These events in Russia were soon followed by a counter-attack by the U.S. and its allies; the covert destabilizations of governments in Eurasia, which were on Russia’s periphery. After occupying Iraq 2003 onwards, the U.S. made it a priority to attain control over Russian oil, gas and pipelines. They sponsored coups in Georgia and Ukraine, in an attempt to install pro-U.S. regimes in both countries; with the hope that this would compromise the military security of Russia, and also severely hamper Russia’s ability to control the export of its oil and gas to the EU.
In 2004, the Americans succeeded in putting their candidate Mikheil Saakashvili in power as the President of Georgia. With Tbilisi firmly in their control, the Anglo-American oil consortium moved swiftly to complete the 1,800 km pipeline from Baku via Tbilisi to Ceyhan on Turkey’s Mediterranean shore, at a cost of some $3.6 billion. It was assumed that this would play a major part in the weakening of Russia’s oil and energy independence. This was followed by the coup in Ukraine in November 2004, dubbed the Orange Revolution that put Viktor Yushchenko into power. Ukraine is of greater strategic importance than Georgia, for Russia; since several oil and gas pipelines transit Ukraine to the EU countries. With Poland already a part of NATO, membership of NATO to Ukraine and Georgia would have encircled Russia with Western backed hostile neighbors, creating an existential threat to Russia. This was an undeclared economic war of high stakes between the West and Russia, and the U.S. was doing everything short of open war against a nuclear opponent to push its agenda of dominance.
By 2005; the Anglo–American oil consortium of BP, Shell, Total, Exxon and Chevron had gained control over most of the oil of the Caspian Sea. The control of energy supplies, globally; was the cornerstone of the U.S. policy of world domination. The U.S. was clear that in order to control those global oil and gas flows; it needed to project its military power aggressively, to achieve total military supremacy, which is part of its ‘Full Spectrum Dominance’ strategy. The strategists of Full Spectrum dominance envisioned control of pretty much the entire universe, including outer and inner-space, global politics, universal world order, influencing opinions and thoughts; and ensuring Western dominance over the world.
At the height of the Cold War, St. Petersburg was about 1,600kms from NATO forces, and Moscow about 2,100kms. Today, St. Petersburg is about 150kms away and Moscow about 800kms. For Putin, the primary threat to Russia is from the west. The emerging dynamic Russia with growing economic ties to China and to key nations in Europe, threatens American dominance across Eurasia.
At the 2007 annual Munich Security Conference, just after the George W. Bush administration had announced plans to install U.S. missile defense systems in Poland, Romania and the Czech Republic, Russia’s Putin delivered a scathing critique of the U.S. lies and violation of their 1990 assurances on NATO. By this time 10 former communist Eastern states had been admitted to NATO despite the 1990 US promises. Putin spoke in Munich in general terms about Washington’s vision of a “unipolar” world, with one center of authority, one center of force, one center of decision making, calling it a “world in which there is one master, one sovereign. And at the end of the day this is pernicious not only for all those within the system, but also for the sovereign itself because it destroys itself from within.”
Russia lost no time in reacting to the announcement of U.S. plans for its ballistic missile defense systems in Eastern Europe. The commander of Russia’s strategic bomber force said on March 5, 2007, that his forces could easily disrupt or destroy any missile defense infrastructures in Poland and the Czech Republic – precisely where the U.S. was preparing to install them. In clear words, Putin was responding to the escalating Washington provocations by declaring openly that a New Cold War was on. What was not said by the U.S. was that its missile defense in Eastern Europe was not defensive in nature, but actually offensive. If the U.S. was able to shield itself effectively from a potential Russian retaliation for a U.S. nuclear First Strike, then it would be able to dictate its terms to the entire world, not just to Russia.
The formation of the CSTO, the Collective Security Treaty Organization, is an inter-government military alliance in Eurasia and comprising of six post–Soviet states of Russia, Armenia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan to counter NATO. Similar to Article 5 of the North Atlantic Treaty Organization, Article 4 of the Collective Security Treaty (CST) establishes that an aggression against one signatory would be perceived as an aggression against all. The current strategic cold war between Western allies and Russia is ongoing and unfinished, with the world as a potential battle-field.
Underlying all of these tensions is NATO’s expansion through Eastern Europe to the Russian border, in violation of commitments Western officials made at the end of the Cold War. The U.S. and NATO’s refusal to acknowledge that they have violated those commitments or to negotiate a diplomatic resolution with the Russians is a central factor in the breakdown of U.S.-Russian relations.
Both Ukraine and Russia are former states of the Soviet Union and are intertwined economically, socially and culturally, so that it is difficult to distinguish one from the other. Most of Russia’s natural gas pipelines from West Siberia cross through Ukraine to reach Germany, France and other EU states. The genesis of the current conflict is that Ukraine as a NATO member would pose a near fatal security blow to Russia. Currently, Russia is the only country with strategic nuclear deterrence potential as well as sufficient energy reserves, to make it a credible rival to global U.S. military and political nuclear predominance.
Further a Eurasian combination of China and Russia, plus allied Eurasian states, mainly Central Asian, present an even greater counter force to unilateral U.S. dominance. Following the 1998 Asian financial crises, Beijing and Moscow formed a mutual security agreement with surrounding states, Kazakhstan and Tajikistan. In June 2001, Uzbekistan joined, and the group renamed itself the Shanghai Cooperation Organization, or the SCO.
Ukraine, like few other Eurasian countries, is a product of its special geography, as it uniquely straddles east and west. It is what, in the study of the relations of political power to geography, is called a “pivot” state. Ukraine has the unique ability to transform the geopolitical position of Russia, for better or worse. The country Ukraine itself is an historical anomaly. Almost 1000 years ago, Kievan Rus under Vladimir the Great had been the empire of the East Slavic peoples of today’s Ukraine, Russia and Belarus. For more than 350 years, Kievan Rus, which is east of the Dnieper River, had been a part of the Russian Czarist Empire. After 1795, Ukraine was divided as a result of wars of partitioning Poland, between the Orthodox Tsardom of Russia and Roman Catholic Habsburg Austria. The western part of Ukraine is largely agricultural and is known as the ‘bread basket of Europe’. The Eastern parts of Europe; Donbass, Donetsk, Crimea; are the center of industry, from military manufacturing to steel, coal, oil and gas.
The U.S. and NATO’s interest in Ukraine is not really about resolving its regional differences, but about something else altogether. The U.S. sponsored coup of 2013 was calculated to put Russia in an impossible position. If Russia did nothing, a post-coup Ukraine would sooner or later join NATO, as NATO members had already agreed to in principle in 2008. NATO forces would advance right up to Russia’s border, and Russia’s important naval base at Sevastopol in the Crimea would fall under NATO control. On the other hand, if Russia had responded to the coup by invading Ukraine, there would have been no turning back from a disastrous new war with the West. The United States has given Ukraine $2.7 billion in military aid since 2014, including $650 million since President Biden took office, along with deployments of U.S. and NATO military trainers.
By late 2021, military buildup had taken place in Eastern Ukraine. The aim was to capture the Donbass region and its citizens. The Russian military was undergoing exercises on its borders with Ukraine during the last quarter of 2021, and it moved its equipment and troops to its western front. Starting February 17th, the Ukrainian military began an almost non-stop shelling of Donbass. The tipping point was when confirmation came that the U.S. was preparing to install nuclear-tipped missiles which would take 5 minutes from launch to target; meaning not enough time for the Russian military to detect, confirm, and launch counter measures, were poised to strike Moscow from either Poland or Western Ukraine.
On February 19, Ukrainian President Zelenskyy made a threat to deploy nuclear weapons on Ukrainian territory. He expressed this as his unilateral revocation of the 1994 Budapest Memorandum, although Ukraine was not a signatory of the agreement. Two days later on the evening of February 21, Putin made his speech recognizing the sovereign independence of the Donetsk and Lugansk People’s Republics, and the start of the military campaign in the Ukraine.
As of today, Ukraine which is heavily funded by the USA is fighting the Russian forces across multiple battle- sites. While the Western media is shrilly announcing the various victories of Ukraine, the Russian media is more subtle, relaying on that news that the Russians consider as important. Clearly, at this point there are no winners in this war, but the prospects of it going out-of-control when Russia encircles the U.S. mainland with its nuclear armaments is a rude reality.
If the United States and NATO are not prepared to negotiate new disarmament treaties, remove U.S. missiles from countries bordering Russia, and reduce NATO expansion, Russian officials say they will have no option but to respond with “appropriate military-technical reciprocal measures.” This expression may not refer to a complete invasion of Ukraine, but to a broader strategy that could include actions that hit much closer to home for Western leaders. For example, Russia could place short-range nuclear missiles in Kaliningrad (between Lithuania and Poland), within range of European capitals; it could establish military bases in Iran, Cuba, Venezuela, and other countries; and it could deploy submarines armed with hypersonic nuclear missiles to the Western Atlantic. Hypersonic nuclear missiles off the U.S. East Coast would put the United States in a similar position to that in which NATO has placed the Russians. Thus, it is very much possible that the cold war could turn into a hot one where the U.S. would find itself encircled and just as endangered as Russia today.
