Balance of payments economist Michael Hudson presents his analysis of U.S. strategy in the war against Russia:
The [expected] results are a very large increase in fuel prices, oil and energy prices, a very large increase in agricultural prices with declining supplies of food. This will leave most of Africa and Latin America, third world countries, the global south, unable to pay their foreign debts, which is going to result either in a massive debt default or it will result in a debt repudiation.
Countries are going to have to choose: are they going to have to operate their homes without energy, their factories without energy? And energy consumption per capita is directly connected to GDP for the last 150 years. Every chart shows energy use and GDP and personal income go up together. So what is a country going to do when they can’t afford to pay the higher prices for energy?
Well, Janet Yellen, who is the Federal Reserve head and the Secretary of the Treasurer, says, well, what we’re going to do is use the International Monetary Fund to preserve America’s unipolar hegemony. I think she used almost those words. We have to keep American control of the world, and we’re going to do it through the IMF. And that means, in practice, using the IMF to create special drawing rights, which will be sort of like free money, the bulk of which will go to the United States to support its military spending abroad for all of this huge military escalation. And it will enable the IMF to go to countries and say, we will help you pay your debts and not be foreclosed on and get energy, but it’s conditional on the usual conditions. You have to lower your wages. You have to pass anti-labor legislation. You have to agree to begin selling off your public domain and privatize.
The energy and food crisis caused by the NATO war against Russia is going to be used as a lever not only to push privatization largely under control of US investors and banks and financiers, but it’s also going to lock countries into the US orbit all the more. Both the global south and especially Europe.
One casualty is obviously going to be Europe and the euro. The euro has been plunging in value day after day after day, as people realize that it’s lost its export markets in Russia and much of Asia and now at home, too, because exports require energy to be made. Its cost of imports are going up, especially of energy it’s agreed to use. I think now $3 billion to build new facilities to buy US natural gas, liquefied natural gas at three to seven times the price it’s paying now, which will make it almost impossible for German firms to produce fertilizer to grow crops.
In Germany, the euro is plunging. The largest plunge of all has been the Japanese yen because Japan imports all of its energy and most of its food, and that’s keeping its interest rates very low in order to support the financial sector. And so the Japanese economy has been sacrificed and squeezed.
And I think you can say, “Gee, this is an accident.” [But no] this is part of the plan, because now the United States can say, of course, we don’t want your yen to go down so much that your consumers have to pay more. We will, of course, give you SDRs (special drawing rights) and we’ll give you American aid. But we do want you to rewrite your constitution so that you can have atomic weapons on your soil so that we can fight against China to the last Japanese, just like we’re doing in Ukraine. Let us do it for you.
And of course, the Japanese love that idea. The government loves that idea. They love sacrificing the population, which is what they’ve been doing ever since the Plaza Accord and the Louvre Accords of the 1980s that basically wrecked the Japanese industrial economy from a huge upswing to just mass shrinkage. So those are the economic effects of the war.
And in the newspaper, you think the war is all about Ukrainians and NATO fighting Russians, when it’s really a war by the United States to use the NATO Russia conflict as a means of locking in control over its allies and the whole Western world.
If Hudson is correct, U.S. geopolitical strategy at this moment in history is going to get a lot of people killed. Also, it is a big gamble we could lose. We should stop supporting the war in Ukraine and use our power to find a diplomatic solution.