Cold war will never happen!

It’s been three weeks since much-talked-of interview (18 March) of US President Joe Biden during which he answered in the affirmative to a question of political analyst and news anchor of ABC News George Stephanopoulos if Biden believes Vladimir Putin to be murderer. This notwithstanding, political analysts proceed with debates over possible consequences of this unexpected verbal attack on the Russian leader.

Many of them talked of the outbreak of a new cold war. This is explained as being due to the fact that even at the height of confrontation no American Presidents dared to insult Soviet leaders. Even Ronald Reagan shied away from disturbing diplomatic etiquette; he confined himself to describing the USSR as Evil Empire. In the meanwhile, Biden inflicted a public penalty upon Putin.

It is no secret that Putin is not ranked among those forgiving offence. For this reason, it cannot be assumed that Putin will ever forget the deadly insult, especially as it was a deliberate act on the part of Biden.

An assumption that the interviewer «tripped up» an old person exhibiting a decline in mental faculties is beneath criticism. Stephanopoulos falls outside the purview of journalists capable of neglecting public and party interests and putting President in an awkward position in pursuit of sensationalism. Suffice it say that in December 2005 he was officially recognized «general correspondent of Washington». More importantly, Stephanopoulos is a long-time follower of Democrats: in 1992 he was Bill Clinton’s consultant to the Presidential elections, then became his PR director. There is no indication that a Putin question proved to be a hidden catch for Biden. Besides, the interview was recorded a day before the program translation, so Biden had opportunity to amend the interview and dress it up properly.

It should be added that the interview came into being straight after the National Intelligence Council made public a report on March 16 under which «…Russian President Putin sanctioned, and some Russian governmental organizations held operations aimed at defaming a reputation of President Biden and the Democratic Party through discrediting the electoral process and aggravating the social and political split in the United States».  Most probably, Biden comprehended the fact that «fair play» with such an opponent is fraught with defeat.

In other words, the die was cast: Biden decided to play the game by his own rules.

Does this mean that he is minded to continue opposing Russia?

The fact that Biden has taken it upon himself to prolong SNF-3 Treaty (for the next five years, i. e. till February 5, 2026) which previous US President Donald Trump declined to sign, makes it think that” no”.

As for aggravation of the international situation, it changed for the worse long before the interview, as evidenced by Biden’s sanction policy. As a matter of fact, he has just legalized the existing status quo and US modified attitudes toward Russia. 

At present, sanctions are imposed in all the areas, including commercial, technological, information, financial, etc. against physical and legal entities of Russia.

Sanctions against Kremlin

On March 17, the US Ministry of Trade and State Department posted in the Federal Register information about new export restrictions against Moscow due to Russia’s use of chemical weapons against its own citizens.

The document says that the Russian government, straight after attempted poisoning of Sergey and Yulia Skripal with nerve gas «Novichok» in March 2018 in Great Britain, reused it in August 2020 against Russian oppositionist Alexey Navalniy. 

In turn, the US Department of State imposed a ban on export and import of arms, as well as rendering defense servicers to Russia. 

By the way, the same was true of sanctions imposed by previous Obama and Trump administrations. However, there is a conceptual difference between Obama/Trump and Biden sanctions as follows:

The previous administrations aimed to reveal an enterprise related to the Russian military-industrial complex, etc. And everything here bumped on the traditional Kremlin «Bring it on!».

In a word, earlier sanctions were imposed on a truly guilty individual or organization. Now it is very difficult to prove guilt due to the fact that ties of this sort are informal, undocumented. That’s why technologies safely infiltered to Russia.

There is increasing evidence of foreign investments and technology import being made into Russia. This is not about oil and gas production only. Suffice it say that western investors made essential investments into the development of the Russian motor industry. Renault and Nissan came to a motorcar factory in Tolyatti; Skoda (Volkswagen Group) to a motorcar factory in Nizhniy Novgorod. Also, a lot of new motorcar factories were built in Kaluga (Peugeot-Citroen, Volkswagen and Volvo Trucks), Mercedes in Solnechnogorsk region of Moscow Region. Note that foreign companies have long since anchored in Russia turning their Russian branches into integral part of global technological processes. Recent reports of the American Chamber of Commerce in Russia - AmCham Russia and the world’s largest British audit-consulting company Ernst & Young corroborate the above-mentioned: 41% of investors work in Russia from 21 to 30 years; and 22% — for more than 30 years. Impressive figures !

Another evidence of the same sort is activities of the American Arconic company (referred to as Alcoa before 2016) owning Samara metallurgic plant for more than 15 years. This is Russia’s biggest manufacturer of can sheet for drinks. Besides, the plant produces aluminum alloys for aerospace industry and defense industry.

At present, the USA is acting to comply with another paradigm: «we are not going to prove anything; we are not needed in proofs»: technologies, weapons, money, finances, etc. won’t go to Russia, and that’s it.

In so doing, the United States designated Russia as opponent. They insist: we are not going to prove or disprove anything. We think that transfer of our twofold technologies to Russia pose threat to the US national security. We don’t care if any company is guilty or not. Export of specific technologies is banned. We’ll consider your requests on the individual basis.

It should be added that Biden’s sanctions are not directed, as was before, against specific enterprises. They deal with national security related export (as a matter of fact, it refers to embargo on technology transfer). 

Real American investments

There are ins and outs in the issue. According to the United Nations Conference on Trade and Development - UNCTАD statistics, realistic US investments to Russia exceed Central Bank’ data by nearly 13.

According to conference data coupled with an annual research of foreign investments worldwide, by the end of 2017 (most recent data), the United States was the biggest investor to the Russian economy. The USA accounts fort 8,9% of all cumulative investment, or $39,1 billion out of  $441,1 billion. In the meanwhile, the Central Bank of Russia data say that later 2017 US investments in Russia made up $3,05 billion ($3,1 billion in the end of 2018). This disparity is explained as being due to the fact than many foreign investments in Russia are made through countries, not direct sources of these investments. For instance, an American corporation can buy a share in a Russian company’ capital via its «offshoot» in another country. In this case, investments of this sort are registered in Russian Bank’ official statistics (like most other national institutions) as investments of Luxemburg or Netherlands.  

As a result, data on investments from western countries are regularly underrated while flows from Netherlands, Luxemburg or offshores are overrated. Note that US position as one of the largest investors to Russia is mentioned in a recent joint research of the American Chamber of Commerce and world’ largest Ernst & Young (British audit-consulting company).

Calculations reveal that total volume of direct investments of US companies to Russia over the whole period of their work in Russia made up $85,1 billion. Ernst & Young emphasized that in 2018 the United States came out on top by the number of investment projects in Russia — 33 out of 211.

According to the US Ministry of Trade, as of later 2017 US investments to Russia made up $13,9 billion (according to historical value of appropriate investments).

It is obvious that American investments to Russia are greater than is considered to be the case, so that might become a constraining factor for the USA to adopt foreign political decisions. The same is true of Europe where investments of West European business to Russia are greater than Central Bank-2017 statistical data. According to United Nations Conference on Trade and Development - UNCTАD statistics, investments of Germany and Great Britain made up $64,5 billion while Central Bank figures stand at $36,7 billion only.

The figures stated above are indicative of mutual dependence between Russia and the United States which seems to be stronger than political and ideological differences. It is not surprising that despite US sanctions against some Russian companies, Americans have not imposed sanctions against the Russian sovereign debt – this draft-bill is still motionless at the US Congress since 2018.

When adjusted for the fact that as of year-end 2019 a share of USA in the world GDP made up 15,93%, Russia’s - 3,07%, it is fair to assume that Russia’s dependence upon the United States is higher than the US dependence upon Russia. It follows that US capacity to influence Kremlin is greater than latter’s. A testimony to the above-mentioned is a story of Oleg Deripaska and his aluminum company «Rusal».

In spring 2018, the US Ministry of Finance put on sanction lists names of 7 Russian businessmen, 17 top officials and 14 companies explaining this by «Russian hostile actions across the world», particularly, Crimea and Syria.

Most badly affected was Deripaska: in addition to personal sanctions, the list was supplemented with 8 related companies, including subordinated En+ Group, groups «GAZ», «Basic element» and «Rusal».

The United States voiced its preparedness to lift sanctions if Deripaska would reduce a share in «Rusal» lower than the control one. Deripaska agreed to reduce a share in En+ and respectively in «Rusal» lower than 50%. Also, he decided to leave the board of directors and agreed to appoint new independent directors as majority.

Another example of Washington’s ability to pressure Kremlin is a situation around implementation of gas pipeline «Northern stream -2». Piping is still underway.

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To conclude, we’ll try to answer a question: Why Biden, responding to the Stephanopoulos’ question: «You think that he is a murderer?» replied «Umph, yes».

As one can see, Biden was not prepared to the question.

Worthy of note is a story of the question. On November 11, 2017 at a press-conference after a summit of Asia-Pacific Economic Cooperation member-countries in Vietnam US President Donald Trump stated that he believed in Russian President Putin’s statement about Kremlin’s non-interference with US Elections. Trump added that Putin felt insulted when hearing a question of interference with elections of foreign state.

In a few months (on Sunday, February 17), touching upon a North Korean  missile’s ability to reach the American territory CBS channel preferred to believe Russian President Vladimir Putin’ view on the subject rather than that of the US intelligence.

When Trump repeated these formulations, he was asked a question on Fox News channel. Trump gave an interview to Fox News anchorman Bill O’Raily. The journalist picked Trump’s brain on Putin.

«I respect Putin. In fact I respect many people but that does not mean that I can get in tune with all of them», Trump emphasized. «But Putin is a murderer», declared O’Raily. «There are numerous murderers. We have many of them. Do you really think that our country is as gentle as a lamb?» replied Trump. There was no excuse for his words from that time on, and the question (of his attitude to Putin) proved to be a loyalty test for America.

Judging by diplomatic point of view, Biden tried to send out a message that «I’m not Trump! He dared not say a naughty word against Russia but I do». Otherwise, he’d be criticized, they say, you slighted Trump but cannot say a word against Moscow.

The post-interview situation is rather alarming; however, a new cold war is unlikely to happen. A new sanction policy is likely to follow, more radical and sequential than his predecessor’s. It is not about extending sanctions but a new approach to their imposition and assessment of Russia’s actions and response thereto.