It would appear that the West’s desperate gambit to “isolate” Russia and punish her for her “aggression” will fall flat on its face.

The recent escalation of tensions between the US and Russia is so utterly bizarre, it truly defies all sensible explanations. It took a dangerous turn for the worse with the Washington Post’s recent allegation, thoroughly corroborated by reliable anonymous sources, that Russia was mobilizing 175,000 troops near Ukraine’s borders and planning a “massive military offensive…” And of course, nothing is more sacrosanct to the American and European democracies than defending democracy and freedom in Ukraine. Inflation, unemployment, energy crisis, censorship and the rise of a draconian Covid tyranny are all minor irritants by comparison. The fact that WaPo’s allegations are highly dubious and that Russia has categorically denied that it intends to invade Ukraine has not helped relax the hostile posturing among the hawkish western leaders. But why all this all of a sudden isn’t entirely clear.

From the military standpoint, it is clear even to the most hawkish of hawks, that even if Russia did resolve to invade Ukraine, neither the US nor NATO could do anything to stop it. Accordingly, the tough responses brandished at Russia amount to more sanctions, including blocking the Nord Stream 2 pipeline and cutting Russia off from the SWIFT payments system. These would indeed be very tough responses, but they would be even tougher for European nations. In fact, the fanatical opposition of western power structures to the Nord Stream 2 Natural Gas pipeline is something of mystery. Already in June 2019 at an energy security conference I attended, NATO’s former head, Anders Fogh Rasmussen fulminated that Nord Stream 2 had to be stopped by any means necessary. But why? Given that Europe needs Natural Gas and Russia can export it, this stance requires an explanation. The fib that the pipeline would undermine European energy security is absurd on its face, so what is the real reason? Well, because we’re not being offered any coherent explanation for the lunacy, we are obliged to speculate about the true nature of this conflict and the real objectives of its instigators.

It’s all about energy economics and the Great Reset

The powers that still have the predominant influence in the West – the empire builders beholden to the international banking cartel – are fully committed to their hare-brained Great Reset agenda under various banners like the Green New Deal, Build Back Better, Agenda 2030, and the Fourth Industrial Revolution. One of the key parts of all these programs is a radical energy transition in favor of renewable energy sources and away from “fossil” fuels. Unfortunately for the Fourth Industrial Revolutionaries, fossil fuels are still significantly less expensive, more reliable and more abundant than the renewables, even under best-case scenarios. Forcing this energy transition on households and businesses will prove complicated if they have unimpeded access to a better alternative.

In addition to the Nord Stream 2 pipeline, Russia, China and Iran are collaborating on future pipelines including a Natural Gas hub in the north of Iran that is planned to supply Natural Gas from the Caspian region to Europe. Just one of the recently developed fields, the Chalous is estimated to hold enough reserves to supply more than 50% of European gas demand for at least 20 years. The trouble is, the key players developing this energy infrastructure are Russia’s Gazprom and Transneft, China’s CNPC and CNOOC and Iran’s KEPCO. It would appear that Western corporations and collateral-starved financial institutions are no longer in position to dictate the terms of energy trade. That’s a far more likely explanation for the current geopolitical conflicts than the struggle for Ukraine’s democracy. Indeed, this mindset does occasionally leak out from western leaders’ various public statements. One of the best examples was Boris Johnson’s recent remarks addressed to European leaders, that “a choice is shortly coming between mainlining ever more Russian hydrocarbons in giant new pipelines and sticking up for Ukraine and championing the cause of peace and stability.”

The implication of all this is that the crescendo of stoking tensions in absence of a winnable war scenario is most probably aimed at orchestrating some polarizing event that could be sold to the western public as a unifying cause to close ranks against Russia and isolate it from other European powers, and justify the mutually destructive disruption in trade and finance (block off Nord Stream 2 and Swift). According to Reuters, some US officials indicated that they had an agreement with German officials that Germany would shut down the Nord Stream 2 pipeline if Russia invaded Ukraine.

Forging a new Iron Curtain

The lose-lose scenario would however be a winning outcome for the “elites” in the west who are seeking to consolidate their power on the Euro-Atlantic axis. In last October’s interview with the “Geopolitics and Empire” podcast (Covid 19: The Banking Cartel is Driving the Agenda), I did predict this outcome. Given that the empire’s unipolar moment has been irrevocably lost, the consolation prize would be to consolidate power in a new block and erect an iron curtain around it, strictly limiting trade and flow of capital as well as travel and cultural exchange.

Thankfully, this week’s summit between Joe Biden and Vladimir Putin, while achieving nothing concrete seems to have diffused tensions somewhat and hopefully cooler heads will prevail. Diffusing tensions would not only improve things for most of the people, businesses and nations involved, they would also prevent a storm of drastic and unpredictable consequences that could result from the “tough sanctions” some in the west are itching to impose. Namely, we are facing an intractable energy crisis that’s becoming increasingly acute in the West. Trade with Russia could prove to have a disproportionate impact in this sense. In addition to her Natural Gas reserves and pipelines to Europe, Russia has become a de-facto swing oil producer and No. 1 oil exporter to the United States:

With prices at the gas pumps in some parts of the United States already near social revolt levels and much of the public directly blaming the Biden administration for this situation, jeopardizing the trade relationship with Russia seems dismayingly reckless. Indeed, the self-destructive policy vis-a-vis Russia can only be explained in the context of the imperial agenda pushed by a very narrow group of vested interests. The logic of empires through history has dictated that any rival must be destroyed, no matter the cost to the rest of the society. Empire builders do not pursue equitable trade between nations for the greatest prosperity of all involved: the over-arching goal is simply hegemony and full-spectrum dominance in all spheres. Rivals simply can’t be tolerated.

Given that these goals only suit a small section of the society in the west, we can expect that the policies currently pursued by certain western governments will generate a great deal of internal friction and political infighting. Their window of opportunity to act is shrinking and the pressure to prevail could lead to further reckless escalation. For investors, the near future might see further volatility and unpredictable market reactions including energy and commodity price inflation, interest rates shock and further strengthening of the US dollar against the euro and the British pound. We can also count on the central banks to accommodate and QE with new and improved justifications. This should be the time to scale back risk and pay close attention to the developments.

Alex Krainer@NakedHedgie is a former hedge fund manager, founder of KRAINER ANALYTICS and publisher of the daily TrendCompass reports. I-System TrendCompass provides daily CTA signals on over 200 financial and commodities markets so you can navigate trends profitably, with confidence and peace of mind. To sign up for a one month free trial, please visit TrendCompass page or drop us an e-mail at The books are free: since Amazon has recently banned all of my books, including the award-winningMastering Uncertainty in Commodities Trading,” they are now available for free at this link.

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