The British Prime Minister is about to be bounced out by his Cabinet. From President Putin’s perspective, this is welcome news. Anything that undermines decision-making in NATO and destabilizes America and its close proxies gives him an advantage. The British may feel marginalized since Brexit but Putin views Britain as the long reach of America’s defense and offense apparatus. It is not just that Britain is home to American weapons systems. Britain is America’s best supplier of intelligence and intelligent sensemaking about what is going on in the world. But, with the mass shootings, the massive loss of confidence in government institutions, and the massive pressure Donald Trump and Boris Johnson brought to bear on politics, there is little time to listen to stories about what is happening in faraway places like the tiny island of Svalbard in Norway or the Central African Republic. Normally the British would have probably been briefing Washington, explaining how Russia is carefully gearing up to challenge the US in and from both places. How do you explain that very carefully though efforts are underway to give those “Smackers”, the US Dollar, a punch in the eye when they are occurring in ways and places that are too nuanced for clickbait-style summaries? But, with the resignation of the British Chancellor, Rishi Sunak, and the coming reconfiguration of the current government (and eventually elections), nobody will focus on why Svalbard is the next hot spot or why cryptocurrencies in the remote Central African Republic are all about challenging the supremacy of American Smackers. Sunak, Svalbard, and Smackers are all linked together.
Let’s start with the commonly held view that President Putin and Russia are running out of money, out of war machinery, and out of international support. This leads to the easy conclusion that it’s just a matter of time before Russia accepts its losses and retreats. Those who think this way measure the impact of the war in Ukraine and the sanctions arising from it on Russian GDP. It was small to start with and smaller now. Game over, right? The US and Britain and NATO work to make sure Putin doesn’t go into a fit of nuclear rage but the core strategy is to just let Putin run out of steam. Poor Ukraine. In this scenario, the Chancellor’s resignation and the reconfiguration of the British Cabinet are no big deal. No one needs to consider Putin’s accusation that Norway and NATO are blockading Russia via the strategically positioned island of Svalbard. In this scenario, anything that might be going on in the Central African Republic with a new cryptocurrency and Gold exports to Russia has nothing whatsoever to do with anything in this story so far.
Now let’s look at the world the way President Putin does. While he’s been at war in Ukraine, he has been harvesting rich cash flows and gathering strategic prizes in diverse locations. Sudan has given Russia access to a port on the Red Sea which makes it easier to transport Gold and other raw materials from Africa back to Russia. Russia’s major security constraint is a massive magnetometer system that NATO has installed in Svalbard, Greenland, and Tromso Norway. It allows the US, Britain, and NATO to track the movements of Russia’s Northern Fleet and all their nuclear weapons systems. Thanks to Cassidy Hutchison, the world just discovered that President Trump called for the magnetometers or “mags” (metal detectors) to be removed from the Capitol so that “his people” could enter the building with their weapons. The Svalbard-based Northern magnetometer system means Russia can’t really make a move from the headquarters of their Naval Fleet at Severomonsk in Murmansk and on The Kola Peninsula without being seen. As for missiles, it used to be that the West relied on an early warning system called the DEW line (Distant Early Warning Line), which would alert the US and NATO if Russia tried to deploy ICBMs or nuclear weapons in a Westward direction. The DEW line was a series of 57 radar stations built over 32 months in 1955. It ended in Greenland. But, once the Soviet Union ceased to exist and the Cold War ended, America and NATO expanded their reach by moving to Svalbard and setting up this new system that triangulates on Russia.
Fast forward to today. Russia is now challenging Norway’s sovereignty over Svalbard. The Speaker of the Russian Duma, Vyacheslav Volodin, has said Russia should no longer abide by or recognize the 2010 treaty that established the maritime border with Norway. But, the problem with Svalbard is tricky. Norway does not own it. Instead, The Spitsbergen Treaty, later renamed the Svalbard Treaty demilitarised the island and gave all the signatories equal rights to be present on the island and to engage in commercial activities there. Article 9 of the Treaty, which has been amended and changed over the years, basically says that nobody can have military bases or fortifications there. Article 1 says that all the contracting parties enjoy equal rights to fish, hunt, and mine there. The Russians have a town there called Barentsberg that is mainly focused on coal mining. Three are only about 400 people there. But, some of the miners are Russian (apparently 120 of them) and some are Ukrainian (apparently 220). So, naturally, local fights have broken out even though “they all used to be friends”. This provides Russia with reason to “actively defend” the Russians living abroad there, a policy he put in place globally since 2014. Sound familiar? Remember how Ukraine started? Others have also arrived in the Russian town. Russian military instructors began practicing airborne landings there in 2016 which is also when a “flying squad” of Chechen paratroopers began training there too. Russian Special Ops seems to have expanded their presence there more recently as well. The HMS Prince of Wales, a British aircraft carrier made a “rare visit” to Svalbard in April for one obvious reason. Svalbard has long been considered NATO’s “Arctic Achilles Heel” and now Russia is ramping up efforts to challenge Norway’s sovereignty over it and to protect the interest of its nationals there. Don’t forget that new oil fields have been found just South of Svalbard and Russia still considers the Artic to be the “Mecca of Resources”.
Other nations are now asking to be signatories to the Treaty so that they too can be present on the tiny island, namely Turkey! Yes, Turkey, which is a NATO member but which is also deeply involved in preventing Russian vessels from absconding with grain “stolen” from Ukraine. See the story of the Zhibek Zholy. Turkey’s President has just signed the bill which provides for Turkey to be a signatory to the Treaty. As one Turkish newspaper put it, “Turkish companies will be able to operate in the fields of maritime, industry, mining and trade in the Svalbard archipelago and territorial waters which are under the sovereignty of Norway”.
So, the assumption that Russia won’t pick other fights because Ukraine is too much of a drain, is not really looking like a good bet. Now let’s add the Central African Republic (CAR). This may seem a long way away, but Russia has to finance its militant activities. One source of cash comes from Africa. Russian security firms manned by Russian nationals have forged tight relationships with mining companies and with political leaders in a number of African countries including the CAR and increasingly Mali and Sudan, which shares a border with the CAR. All are famous for their extensive gold mines. In exchange for providing security and protection, the Russian firms get a cut of gold, diamonds, and political power. Is Russia or at least President Putin generating new cash flows that more than cover the cost of the war in Ukraine? Yes. Perhaps it would be wise to map these actual cash flows instead of relying on Russian national GDP as the measure of reality.
Notice that Russia has adopted a very particular policy with regard to cryptocurrency. It might be summarized as Rubles and Crypto for friends and Dollars for our enemies. The President of CAR just announced that it going to become the first legal crypto hub in Africa. The country adopted Bitcoin in April in a classic case of particularly bad timing given that Bitcoin crashed by 58% in the last three months. But, this has not perturbed the President of the CAR, Faustin-Archange Touadera, who has a Ph.D. in mathematics, and now wants to expand crypto capabilities with “Digital Gold”. He announced that the CAR will be Africa’s first legal Crypto Hub and it is launching the "Sango Coin". Its purpose is to allow the tokenization of the nation’s "mountain" of valuable natural resources such as gold, diamonds, iron ore, graphite, uranium, and timber. This strategy may be oriented at better supporting the domestic economy, although less than 10% of the residents have access to the internet and only 15% have access to electricity, so perhaps it also has a geopolitical angle. Notice that Gazprom Neft has partnered with BitRiver, a Russian firm that offers a green crypto mining platform. They were the first-ever crypto company to be targeted by the US Treasury’s Office of Foreign Assets Control. BitRiver relies on flared gas from Gazprom oil extraction operations to power its blockchain. Also, notice that The Russian Orthodox Church African Exarchate has just “received our first certificate of registration in Africa. ‘The Russian Orthodox Church in the Central African Republic (Moscow Patriarchate. Patriarchal Exarch of Africa)’ is now active in the CAR.” This “historic” event coincides with Russia ramping up its presence in Africa at a time the West believes Russia has lost its capacity for action due to the situation in Ukraine.
So, what strings all this together? Many questions do. Is there a systemic effort by Russia, supported by China, to discredit those Smackers known as US Dollars as the principal mechanism for trading in valuable commodities and to create a new currency, perhaps a cryptocurrency, that displaces the USD? Would the cash flows from these efforts be enough to embolden President Putin to challenge NATO in places like NATO’s “Achilles Heel” in Norway? Would Russia suddenly find itself needing to protect the interests of Russian nationals on Svalbard from Ukrainians and, luckily, have plenty of cash flows and resources from places in Africa like the Central African Republic to finance a new military action far from Ukraine?
Is Russia’s strategy, with the backing of Beijing, to discredit Smackers and move the world onto a digital platform that allows Moscow and Beijing to trade with the world using Digital Gold in exchange for actual Gold? Is anybody in the West able to concentrate long enough to see that banking, liability, and financial asset control (the West’s advantage) can be displaced by a system that controls commodities and real assets (Russia and China’s advantage now)? President Biden and the G7 may have announced a new $600b infrastructure plan to compete with Russia and China’s Belt and Road Initiative in Africa. But, remember that Americans and Brits are subject to the Foreign Corrupt Practices Act and held to account in ways the Russians and Chinese find laughable. How else would you do business other than sharing the rewards with everyone involved? Look at the recent record £1.2b fine applied to Glencore for bribes paid across Africa. The culture clash here is formidable and cannot be overcome with a G7 spending program and certainly not while everyone is too focused on domestic politics to think about global systems.
These are all just questions. But, it seems obvious that these faraway places and pursuits seem quite irrelevant to daily life in the political capitals of London and Washington DC. Most won’t connect the dots between Sunak, Svalbard, and those US Dollar Smackers let alone Digital Gold from CAR. Meanwhile, a few days ago Moscow’s Foreign Minister Lavrov said “As far as an iron curtain is concerned, it’s practically already coming into place.” Might the new Iron Curtain be a Gold-based digital curtain rather than a physical fence with people on one side using USD Smackers and those on the other using Russian Crypto? Who would suspect given that hardly any policymakers in the West really understand crypto? Plus, crypto has crashed! What is there to be concerned about especially given that Donald Trump and Boris Johnson (thanks to Cassidy Hutchinson and Mr. Sunak standing up for trust in government) are taking up all the bandwidth for thinking about the world? For Moscow, there may be no better time and no better way to surprise the West with a smack in the eye when they are not looking.
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Another great article. Do you follow Luke Gromen (https://mobile.twitter.com/LukeGromen)? Seems that you two share similar perspectives on the emerging global dynamics re: currencies, commodities, etc.
Very good piece Pippa. We need to be thinking about those things that I believe, firmly, that Putin's very capable mind is thinking. The Western press are eager to show Putin as ill, disturbed, alone, rash yet a deeper analysis raises questions about just how planned these events all are. Just in the past 2 days I have read about Russia now being forced to use old weapons in its aggressive war on Ukraine and that this is a sign they are running out of weaponary and their advices will soon bog down or that they are taken massive casualties which has totally demoralized the Russian forces. Yet I also listened to videos of American and British fighters who give a different message about who is taking the massive losses. The Russians look certain to take Donetsk next. If they then pivot toward Odessa I will become convinced this is a purely strategic war by Russia and that the West is in a sticky situation as the majority of the worlds countries are either in support of Russia / China or on the fence about the war. The West is looking extremely vulnerable to me at this point.
One last thing, not sure Cassidy Hutchinson is quite the heroine the liberal press is making her out to be. Not a Trump supporter at all, but she is too ambitious and too young to be believable. I would prefer you focus your excellent geopolitical insights and try to avoid the now polarized internal politics of the USA and the UK.