The US Encirclement of Russia

While the credit crunch, bank collapses and the housing crash have kept us busy analyzing what is next for the markets, we must reflect on the recent headlines of Russia’s invasion of Georgia. We feel that we need to study this event very closely as it confirms our earlier concerns expressed in our June 3, 2007 issue of the TREND letter.

In that issue we highlighted an Associated Press story where Russian Prime Minister Vladimir Putin at that time said that tests of new Russian missiles were a response to the planned deployment of U.S. missile defense installations and other forces in Europe, suggesting Washington has triggered a new arms race.

“In a clear reference to the United States, he harshly criticized “imperialism” in global affairs and warned that Russia will strengthen its military potential to maintain a global strategic balance.” “Putin described the tests of a new ballistic missile capable of carrying multiple nuclear warheads and a new cruise missile as part of the Russian response to the planned deployment of new U.S. military bases and missile defense sites in ex-Soviet satellites in Central and Eastern Europe. He assailed the United States and other NATO members for failing to ratify an amended version of the 1990 Conventional Forces in Europe (CFE) treaty, which limits the deployment of heavy non-nuclear weapons around the continent.

“We have signed and ratified the CFE and are fully implementing it. We have pulled out all our heavy weapons from the European part of Russia to (locations) behind the Ural Mountains and cut our military by 300,000 men,” Putin said.

“And what about our partners? They are filling Eastern Europe with new weapons. A new base in Bulgaria, another one in Romania, a (missile defense) site in Poland and a radar in the Czech Republic,” he said. “What we are supposed to do? We can’t just sit back and look at that.” Putin and other Russian officials have repeatedly rejected U.S. assurances that the planned missile defense installations are meant to counter a potential threat from nations such as Iran and pose no danger to Russia.

So the warnings were very clear. What we cannot quite understand is why this situation was allowed to get to where it is today. From what we can see, the US has its hands pretty full with wars in Iraq and Afghanistan, the very real potential of trouble with Iran, and of course the destabilizing situation in Pakistan. Why does the west, especially the US, want to piss off the Russians – especially at a time when the US is russia Ukraine war in no position to act to intervene in a new conflict with a growing power?

Russia has some of the largest oil, gold, uranium and other natural resource supplies in the world. Its foreign reserves are growing at a phenomenal rate. It has an economic growth rate of over 7% in each of the past 6 years, it has no credit crisis, no housing crisis, and a declining inflation rate.

It seems to us that for reasons that we cannot quite grasp, the US led NATO has opened a new window to allow Putin to reassert Russia’s influence in the former Soviet Union and Europe. Make no mistake; the Georgian planned invasion of Southern Ossertia was not done without the full knowledge of the American administration. The United States is Georgia’s closest ally. They have over 140 military advisers in Georgia, in addition to many civilian advisers, and contractors assisting with Georgian government. There is no way that the Bush administration was taken by surprise by this invasion.


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