The Attack on the Dollar Was Not Averted. No Consensus on Iran

The first sign that President Barack Obama's Moscow visit was a letdown came after he ended is talks with President Dmitry Medvedev and prime minister Vladimir Putin Tuesday, July 7 in a statement by the Kremlin's top economic adviser Arkady Dvorkovich to journalists:

“Russia will continue to advocate at the meeting of the G8 leading nations this week the need to develop a new international reserve currency.”

Speaking of an immediate opportunity for some currencies to play a bigger regional role as reserve currencies at the G8 summit, Dvorkovich said: “We will, alongside China, stress the need to gradually develop a global financial system, which will be based on several new strong regional currencies.”

“With time, those new currencies will then take on a more global character.”

The Russian official denied Moscow was trying to undermine the US dollar as a reserve currency. Nevertheless, the US president's Russian hosts tried to make sure that Obama would arrive at his first G8 summit starting the next day in the Italian town of l'Aquila on the wrong foot, after failing in his main purpose, generally unreported, of deflecting or at least softening the assault on the dollar.

Obama struck back swiftly. Before the G8 deliberations began on July 8, he managed to get the dollar issue scratched from the industrialized nation's summit agenda.

Russia's main partner in the attack on the dollar, Chinese president Hu Jintao, was meanwhile forced to leave the G8 summit, reducing it to a G7, in order to deal with by the rising ethic violence in Xinjiang. But the assault, in which India too plans to take part, was only postponed. All three will go ahead with their bid to develop a new reserve currency to compete with the US dollar.

Putin has the muscle to back his campaign against the dollar, having amassed for Russia the world’s third-largest cash stockpile of almost $600 billion prior to the global economic recession.

(See next article for a report from DEBKA-Net-Weekly's special correspondent report on the Obama visit as viewed from Moscow)


Charm doesn't win a chess match


A major gap in perception bedeviled the first important US-Russian summit in years, according to DEBKA-Net-Weekly's analysts.

The US president's advisers still count heavily on the mesmerizing charm and oratory, which won him the presidency, for grappling with international issues. They failed to notice that those assets may be diminishing from the high point of his dramatic address to the Muslim world from Cairo on June 4. Obama's publicists are still crediting that speech with generating the pro-Western bloc's marginal achievement in winning the Lebanese election, although the pro-Iranian Hizballah picked up 55 percent of the vote. They also attribute to the resonance of that speech the wave of anti-government, street protests which greeted the reelection of Mahmoud Ahmadinejad as president of Iran.

But Obama's advisers are now running out of answers for hard dilemmas, such as for example explaining to the world the inconsistency between Iran's brutal crackdown on freedom-seekers and Washington's uninterrupted quest for diplomatic engagement on Tehran's nuclear program with the heads of the regime responsible for that crackdown, supreme leader Ayatollah Ali Khamenei and Ahmadinejad.

In Moscow, it was expected that White House strategists and Russian experts would use the president's first official trip to deliver on his high-toned rhetoric with solid moves that would play into the Russian chess board of superpower give-and-take.

The Russians looked forward to reestablishing the ties of cooperation in military affairs and the war on terror which Putin as president established with the Bush administration in 2001 – to be symbolized by the US giving way on its planned missile shield for East Europe.


The acid test for “reset” is missile shield removal


Putin hinted at his expectations in the warm personal message he sent the day before the US president arrived to George W. Bush, congratulating him on his 63rd birthday and remarking: “During the last years we have been working on strengthening Russia-US cooperation. Although there were differences…, I always valued your openness and sincerity.”

“With special warmth I recall your hospitality in the Crawford ranch and your family estate in Kennebunkport.”

But Obama failed to pick up on the Russian prime minister's expectations of a new rapport on the personal level too between the heads of the two powers and he flew out of Moscow without much to show in terms of the “reset US-Russian relations” – excepting only in one field.

US and Russian leaders were in accord on the single issue of fighting al Qaeda and Taliban. Hence the pact they signed, allowing US military personnel and military equipment bound for Afghanistan to be ferried through Russian skies and railways for the first time since World War II.

No agreement was reached on the remaining four key strategic issues:

1. Overshadowing all else, is Moscow's unyielding opposition to the US plan to station interceptor missiles in Poland and their supporting radar in the Czech Republic. The Russians say until this plan is scrapped, there will be no progress on any other fundamental bilateral political or military issues.

2. The argument over Georgia and its two breakaway regions of Abkhazia and South Ossetia has become a tussle between the US and Russia over spheres of influence and control in the Caucasus, the Caspian Sea basin and Central Asia, which Moscow regards as its back yard. The Obama administration continues to view the two regions as integral to Georgian sovereign territory; the Kremlin as independent republics and hosts to big Russian military and naval bases.

3. Obama made no headway in persuading the Russians to support his dialogue with Tehran by the threat of harsh Security Council sanctions. Moscow is not happy about Iran's military nuclear projects, but refuses to admit that Iran is developing nuclear weapons and does not therefore deserve punishment.

The US president flew out of Moscow looking rather tired and unusually frazzled.


Biden set a jarring tone


Our sources in Moscow report that the Russians saw the remarks by US Vice President Joe Biden, who said on Sunday, July 5 that Israel has a sovereign right to decide whether or not to attack Iran, as a covert US threat, that if Moscow does not cooperate in stopping the nuclear program, Washington will allow an Israeli attack on Iranian nuclear installations.

Wednesday, July 8, Russian Foreign Ministry spokesman Andrei Nesterenko remarked sarcastically: “We are very surprised at these remarks by US Vice President Biden,” he said. “As we see, they are drastically out of line with the approaches that US President Barack Obama is declaring regarding the Iranian nuclear program, in particular, on the US readiness to enter a dialogue with Iran.”

This comment left another chilly mark on the Obama visit.

4. The US president showed no more willingness to grant Moscow parity in Middle East peacemaking than his predecessor.

5. Even the acclaimed memorandum signed by Obama and Medvedev for cutting back their nuclear arsenals by 1,500-1,650 nuclear warheads each over the next seven years, was more a sign of discord that agreement.

The bombastic heading covered an almost blank page because the two parties could not agree which missiles and which warheads should be cut. Their formal statements said that American and Russian teams would work on filling in the gaps, but the fact is that here too Moscow is digging in its heels until Washington abandons its missile shield plan for East Europe.

Some Western media found a more appropriate heading for the non-document: “U.S.-Russia nuclear deal: spin or deep cut?”

Print Friendly, PDF & Email