MOSCOW, December 18 (Sputnik) — Russian President Vladimir Putin held the tenth annual press conference earlier today. During the session, Putin discussed important issues that Russia is currently facing: the situation in Ukraine, the fall of the ruble and economic problems, as well as intensifying relations with the West.On Ukraine:
The residents of the self-proclaimed eastern Ukrainian republics have the right to decide their future under the internationally accepted right of people to self-determination. “We must follow the general principles of the international law, and the people of Novorossiya have the right to decide their own fate,” Putin said.
The economic blockade of Ukraine’s eastern regions is an absolutely futile and counterproductive path for the country’s statehood.
Putin believes Ukrainian President Petro Poroshenko is willing to restore peace in his country, but a numer of other senior officials oppose the idea. “Naturally, the president of Ukraine wants to settle [the crisis], I have no doubts of his determination to do that. But he is not the only one [political force] there,” Putin told reporters.

The planned “all-for-all” prisoner swap between the Ukrainian government in Kiev and eastern Ukraine was broken by Kiev. “Yesterday there was an agreement on swapping 30 individuals. Representatives from the militia went to the swapping area and an official representative from Kiev showed up and said: “No, we’re not going to swap until the next meeting in Minsk,” Putin said.Putin said the appropriate path to settling the Ukrainian crisis was to stop building walls and start building a common humanitarian space.
Putin said Russia’s position regarding the Ukrainian crisis was right, while the Western position was wrong. The West has accused Moscow of meddling in Ukraine’s internal affairs after the government coup in Kiev. A number of countries have imposed several rounds of economic sanctions on Russia. Moscow has repeatedly denied any involvement in Ukraine’s internal affairs and underlined the importance of allowing Donbas residents to be heard, calling on Kiev to establish political dialogue with the breakaway regions.
On Economy:

The current downturn in the Russian economy is provoked by external factors, mainly the slump in global oil prices. Russia’s budget, which is largely dependent on energy exports, is currently suffering from the sharp decline in oil prices. The Russian economy is now facing a backlash from Western sanctions that were imposed on Moscow due to its alleged involvement in the Ukrainian crisis, although Moscow has repeatedly denied such claims.The Economic situation in Russia may start improving already in the first quarter of 2015. “I said that even given the most unfavorable internal market condition this situation may last for about two years … But the situation may start improving even earlier … in the first, second quarter, in mid-2015 or at the end of the next year. No one can say for sure,” Putin said during a press conference.
The Russian economic recovery will take two years at worst. “If the situation takes a negative turn, then we will have to introduce some amendments to our plans. Naturally, something will have to be trimmed. However, I would like to stress that a “positive rebound,” as experts call it, and subsequent growth are inevitable under present circumstances,” the Russian leader told reporters.
On the Ruble and Central Bank:
Putin expressed hope that the ruble would continue to strengthen again foreign currencies. The Russian authorities are planning a series of measures that proved successful back in 2008.

Putin also urged the Central Bank to act faster in order to overcome the current economic slowdown. “Their actions need to be coordinated, collective and prudent, but without interference into the Central Bank or the government’s sphere of competence. Nevertheless, there must be coordination and it must be timely,” Putin said.Russia’s Central Bank needs to hike key rates in order to stabilize the country’s macroeconomy. In an effort to halt the devaluation of the national currency the Russian Central Bank on Monday raised its key interest rate from 10.5 percent to 17 percent.
Relations With the West:

Putin thinks the West considers itself an empire and sees other regions as its vassals, who must be oppressed. “They [the West] will always try to chain the bear”, said Putin.Putin said Russia was not attacking the West politically, but only protecting its own national interests. “The problem of modern international relations,” he believes, “is that our [Russia’s] partners refuse to stop; they think they have won.”
Russia is willing to develop cooperation with the West, but on an equal basis and only if its national interests are respected. “Do we want relations on an equal basis? Yes, we do, but on the condition that our national interests are respected, in the sphere of security and in the sphere of economy,” the Russian leader said.
On Issues of Gas:

The contract for the delivery of Russian gas to China is not detrimental for any side, even despite mutual discounts, Putin said. The president did not specify the details of the discounts, but stressed that the project turned out to be “undoubtedly profitable” for both Beijing and Moscow.Putin said there was a possibility of creating a European gas hub on the Turkey-Greece border and it would depend on the European Union’s will. Russia is ready to work in this direction.
President Putin stressed that Russia is the only reliable gas supplier to Europe.
On Extrajudicial Executions:
Although relatives of terrorists could be aware of their plans, this does not give anyone, including the Chechen leader Ramzan Kadyrov, the right for extrajudicial executions. Everyone living in Russia must comply with the existing laws and nobody should be considered guilty, unless the court rules so, Putin said.
On Opposition:

Putin said there was a fine line between the political opposition and the so-called fifth column, a group that operates in the interests of foreign governments. “An opposition figure, even if he’s very harsh, in the end he fights for the interests of his motherland, but the ‘fifth column’ represents people who fulfill what is dictated to them in the interests of another government and they are used as an instrument to reach political goals that are foreign to us,” Putin said.According to Putin, the Russian government does not repress people who are against its policies. “I would like to assure you that there is no organization or any sort of repression against people who don’t agree with our actions, for example in Ukraine, Crimea, or any other external issues, no one from  official government organs do this,” Putin said.
On Military Budget and External Threats:
The Russian Defense Ministry’s budget will increase to $50 billion in 2015. “The Defense Ministry’s budget has grown for next year to about $50 billion, but the Pentagon’s budget is almost 10 times higher, about $575 billion,” Putin said.

Russia has only two military bases abroad, in Tajikistan and Kyrgyzstan.Washington’s planned deployment of US missile defense elements in Europe threatens Russia. “They have been deploying strategic missile defense elements not only on Alaska, but also in Europe, in Poland and Romania, right at our borders,” Putin said.
Russia is worried about Washington’s plans to install an Aegis Ashore ballistic missile defense complex in Romania by 2015, and a similar system in Poland by 2018. Putin urged the international community to address this issue.
On His Private Life:
Putin assured that his private life was fine. “Everything is fine, don’t worry,” Putin said. In 2013, Putin and his wife Lyudmila announced a decision to terminate their marriage, attributing the outcome to the pressure created by constant public attention.
On Khodorkovsky:

Putin said former Yukos CEO Mikhail Khodorkovsky was pardoned in December 2013 for “humanitairan reasons,” and that he now has the right to engage in politics, including running for senior positions. Just like any other Russian citizen, Khodorkovsky has the right to engage in politics if he is willing to do so, Putin said.Khodorkovsky, who was arrested on October 25, 2003, spent ten years in prison for fraud and tax evasion until he was pardoned this year. The former energy magnate has since relaunched his “Open Russia” foundation to push for political reforms in Russia.
On Georgia:
Russia is ready to further liberalize its market for Georgian goods, Putin said.
Putin said he would be glad to meet with senior Georgian officials in Moscow. “If the Georgian leadership believes it is possible, we will be ready to meet any representative of the Georgian leadership, including the president and the prime minister, here in Moscow,” Putin said.
On Iran:

Putin said he might visit the Iranian capital Tehran. The issue is currently being discussed through diplomatic channels.According to Putin, Iranian leaders are demonstrating considerable flexibility and the issue with the country’s nuclear development will soon be settled.
On Possibility of Next Presidential Term:
Putin said it was too early for him to decide whether to run for another term in office. Putin also mentioned he took full responsibility for everything that was happening in the country.
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Russia not attacking west, just defending its interests – Putin

Published time: December 18, 2014 11:03
Edited time: December 18, 2014 15:36

Russia is protecting its national interests, but it not attacking any western nations politically, Russian President Vladimir Puitn said.READ MORE:Putin’s 2014 Q&A marathon LIVE UPDATESPutin said that the only contribution Russia made toward the current period of tension “is an increasingly strong stance in defending its national interests.”
“We are not attacking anyone in the political sense,” he said. “We are only defending our interests… The displeasure of our Western partners, particularly the Americans, comes from that.”
Russia’s actions, described as aggressive in the West, are a response to what Western nations are doing, Putin said.
“Russia in the 1990s completely stopped the long-range bomber flights that the Soviet Union used to carry out,” he said. “But American strategic bombers with nuclear weapons still flew. Why? Against whom? Who was being threatened?”
READ MORE: Moscow to Sweden: Alleged ‘colliding’ jet 70km from civil route, used NATO tactics

Reuters / Ints Kalnins

Putin’s comments came in response to a question from the BBC’s veteran world news editor, John Simpson, who asked Putin whether the current crisis in relations between Russia and the West was a result of Russia’s aggression. Simpson cited the increased patrols of the Russian Air Force in international airspace as an example of such aggression. The exchange happened at Putin’s annual Q&A session in Moscow.
[soundcloud url=”https://api.soundcloud.com/tracks/182084376″] The US has been ignoring Russian interests despite Moscow’s complaining about this many times, the president said.
“Take the anti-ballistic missile system. Who unilaterally withdrew from the ABM Treaty, which was a cornerstone of the international security system? Was that us? No, the US did it. They unilaterally withdrew and are creating threats toward us,” Putin said.
READ MORE: Pentagon confirms military buildup along Russian borders for ‘peace and stability’
Unlike the United States, which has dozens of military bases around the world, Russia has only two, Putin said. And those are in places where Russia’s national security is directly threatened, in Kyrgyzstan and Tajikistan, the president said.

U.S. soldiers stand next to a Patriot surface-to-air missile battery at an army base in Morag, Poland (Reuters)

“And you are telling now that we have an aggressive policy? Do you have common sense? Do we place our troops at US borders? Who is placing NATO troops, military infrastructure closer to us? Does anyone listen to us, talk to us about it? No, nothing. There is always the same response: it’s not your business,” Putin said.
Putin added that Russia simply wants to be treated as equal partners by the West.
[soundcloud url=”https://api.soundcloud.com/tracks/182101011″] “We want to develop normal relations on security, counterterrorism. We will work together on nuclear non-proliferation. We will work on threats like illegal drugs, organized crime, dangerous infectious diseases, including Ebola. We will do it all together as we will cooperate on the economy, as long as our partners want that,” Putin said.
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What Putin is not telling us

December 18, 2014. President of Russia Vladimir Putin during his tenth annual major news conference at the World Trade Centre on Krasnopresnenskaya Embankment (RIA Novosti / Vladimir Astapkovich)

Even facing what under any circumstances is a perfect storm; President Putin delivered an extremely measured performance at his annual press conference and Q&A marathon.
The perfect storm evolves in two fronts; an overt economic war – as in siege by sanctions – and a concerted, covert, shadow attack to the heart of the Russian economy. Washington’s endgame is clear: impoverish and defang the adversary and force him to meekly bow to the ‘Empire of Chaos’s’ whims. And bragging about it all the way to “victory.”
The problem is Moscow happens to have impeccably deciphered the game – even before Putin, at the Valdai Club in October, pinned down the Obama doctrine as “our Western partners” working as practitioners of the “theory of controlled chaos.”
So Putin neatly understood this week’s monster controlled chaos attack. The Empire has massive money power; a great deal of influence over the world’s GDP at $85 trillion, and the banking power behind that. So nothing easier than using that power through the private banking systems that actually controls central banks to create a run on the ruble. Think about the ‘Empire of Chaos’ dreaming of driving the ruble down by 99% or so – thus wrecking the Russian economy. What better way to impose imperial discipline on Russia?

The “nuclear” option

Russia sells oil in US dollars to the West. Lukoil, for instance, would have a deposit in US dollars in an American bank for the oil they sell. If Lukoil has to pay wages in rubles in Russia, then they will have to sell the US dollar deposits and buy in Russia a ruble deposit for their bank account. This in effect supports the ruble. The question is whether Lukoil, Rosneft and Gazprom are hoarding US dollars overseas – and holding back. The answer is no. And the same applies to other Russian businesses.
Russia is not “losing their savings”, as Western corporate media gloats. Russia can always require foreign companies to relocate to Russia. Apple, for instance, may open a manufacturing plant in Russia. The recent Russia-China deals include the Chinese building factories in Russia. With a depreciated ruble, Russia is able to force manufacturing that might have been located in the EU to be located in Russia; otherwise these companies lose the market. Putin somewhat admitted that Russia should have been demanding this much earlier. The – positive – process is now inevitable.
And then there’s a “nuclear” option – which Putin didn’t even have to mention. If Russia decides to impose capital controls and/or imposes a “holiday” on repayment of larger debt tranches coming due in early 2015, the European financial system will be bombed – Shock and Awe-style; after all, much of the Russian bank and corporate funding was underwritten in Europe.
Exposure to Russia per se is not the issue; what matters is the linkage to European banks. As an American investment banker told me, Lehman Brothers, for instance, brought down Europe just as much as New York City – based on inter-linkages. And yet Lehman was based in New York. It’s the domino effect that counts.
Were Russia to deploy this “nuclear” financial option, the Western financial system would not be able to absorb a shock of default. And that would demonstrate – once and for all – that Wall Street speculators have built a ‘House of Cards’ so fragile and corrupt that the first real storm turns it to dust.

It’s just a shot away

And what if Russia defaults – creating a holy mess out of the country’s $600 billion debt? This scenario reads as the Masters of the Universe telling Janet Yellen and Mario Draghi to create credits in the banking systems to prevent “undue damage” – as in 2008.
But then Russia decides to cut off natural gas and oil from the West (while keeping the flow to the East). Russian intel may wreak non-stop havoc in pumping stations from the Maghreb to the Middle East. Russia may block all the oil and natural gas pumped in the Central Asian ‘stans’. The result: the greatest financial collapse in history. And the end of the ‘Empire of Chaos’s’ exceptionalist panacea.
Of course this is a doomsday scenario. But don’t provoke the bear, because the bear could pull that off in a flash.
Putin was so cool, calm, collected – and eager to delve into details – at his press conference because he knows Moscow is able to move in total autonomy. This is – of course – an asymmetrical war – against a crumbling, dangerous empire. What those intellectual midgets swarming the lame duck Obama administration are thinking? That they can sell American – and world – public opinion the notion Washington (European poodles, actually) will brave nuclear war, in the European theater, in the name of failed state Ukraine?
This is a chess game. The raid on the ruble was supposed to be a checkmate. It’s not. Not when deployed by amateur scrabble players. And don’t forget the Russia-China strategic partnership. The storm may be abating, but the match continues.
Pepe Escobar is the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia.
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