Russia - Europe v. USA

Chris Burford cburford at
Sun Sep 6 15:15:04 PDT 1998

We should note a contradiction potentially opening up between Europe and the USA about Russia... A cloud not bigger than a man's fist.

It surfaced very indirectly in the absence of the British Foreign Secretary from a meeting in Austria to coordinate Europe's policy towards Russia. This was followed by an invitation from Britain to the senior officials of the Group of 7 to a meeting in London about Russia.

Now it looks on the surface that on this, as on the hostilities with Iraq last year, as with the recent US raids against Sudan and Afghanistan, the New Labour British government is choosing to align itself with US rather than a European agenda.

But the Europeans are potentially much more interested in Russia. Austria has the direct experience of refugees from Soviet bloc countries after civil disturbances. Germany has a developed Ost-Politik of trying to open up and stabilise the countries to the East of it. It has for example invested heavily in Poland. Germany was more exposed to the Russian crisis than the UK or the USA.

Coupled with that, the Christian Democrat traditions in Europe may be more able to accept some compromise in the free market reforms in Russia.

But even more significantly if the result of the shufflings in Moscow lead to a compromise over the rouble which is almost non-convertible, with a currency board, where will it hold its reserves? It would be far more tactful to the Communist-led Duma and to the population, if Chernomyrdin or whoever is around, proposes it holds its reserves in Euros rather than dollars.

And bearing in mind that the dollar has a larger trade deficit than the Euro will have (check?), the Euro could look stronger than the dollar, as witness the surprising or not so surprising, falling back of the dollar in the last week.

And China has indicated its readiness to keep some of its reserves in the Euro.

So at this moment of final humiliation of its old enemy, the USA may have more problems maintaining its hegemony than might at first appear. Global capitalist power relations may come to look less monolithic.

Chris Burford


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