Helmer's Status Report On The Global War

Over the past two weeks John Helmer has published several insightful articles that deal with the global war. The first in time, which I’ve placed last, dates back to January 31, deals with strictly military matters. The more recent two articles deal with the economic fronts involving Russia but also Israel. These are long article, and especially so because Helmer appends expert opinions that contain a lot of data. The economic front is supremely important, but I won’t be excerpting the detailed analysis. Instead I’ll provide what amounts to a thematic overview, for perspective on the big picture of this global war and hints at what to expect going forward.

We’ll start with the failure of the sanctions war against Russia. Now, we’re all most familiar with the general outlines of that story. Russia continues to sell its oil and gas to the world and has been able to not only maintain its productive industrial capacity but to expand it. Helmer looks at a different aspect, which is the way in which major Western businesses largely continue to do business in Russia. Helmer, via the reports of expert observers, provides the detail. For our purposes the importance of this is what it tells us about the views of businessmen who need to guide their companies through this crisis—how they assess the strengths of the countries involved and what outcome they expect. In other words, what sides they’re taking. Note that when Helmer uses the word “enemy” he’s speaking from a Russian perspective and means the US and its vassal states. He cites three “enemy” studies that all conclude that the campaign to pressure companies into leaving Russia has failed:

THE MAIDAN COOKIE HAS CRUMBLED

In the war of US, NATO and their Asian allies against Russia, it is turning out that almost all the major companies on the enemy side love Russia too much to leave.

They also think Russia has won the war, so they are convinced — the executive managers, boards of directors, control shareholders, and bankers — that there is no point in leaving. So they continue to do business in the Russian market profitably, while they wait for the military defeat of the Ukraine and their own governments to register, and the terms of capitulation allow them to tell their shareholders, “we told you so.”

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Two studies on the enemy side, one by the Kiev School of Economy’s (KSE) “Leave Russia” and “SelfSanctions” projects, and a follow-up by the Russian-language publication Novaya Gazeta Europa have reported results of their surveys of 110 international firms working in Russia. …

The survey results demonstrate that after two years of intense pressure and threat campaigns by the US, NATO and the Ukraine for the companies to wind up their Russian businesses and leave Russia, the outcome is defeat.

A summary report of the same material appeared on the same day in The Bell [this is the appended expert opinion to this article]. This is also a foreign agent publication; since 2019 it is reportedly  financed by the oligarch Mikhail Prokhorov; follow his business practices here.  Prokhorov has become an Israeli citizen and lives in that country.   

On the other hand, the economic attrition war on Israel progresses. The success of this war is largely hidden in the financial media, but the signs are there for those with the analytical skills to observe. In this article Helmer relies on an anonymous expert who explains—at considerable length—how to recognize the signs of stress. Despite the title of the article, the expert uses the example of Ukraine—which is a complete economic and financial basket case—to illustrate how to detect those signs of stress, before moving on to Israel itself.

ATTRITION WAR — HOW ISRAEL IS LOSING ON THE ECONOMIC FRONT

The Axis of Resistance — that’s the Arab militaries with Iran and in the background, Russia – knows how to wage economic warfare against the US and its proxy, Israel. The Houthi sanctions on shipping, for example, are showing more effectiveness in stopping Israel-bound or Israel-linked vessels in the Red Sea than US sanctions have been to block Russian oil shipments.

In attrition war, on the economic front just like the Gaza and other fire fronts, the Axis of Resistance wins by maintaining its offensive capacities and operations for longer than the US and US-backed Israeli forces can defend. Like troops, tanks, and artillery pieces, the operational goal is to grind the enemy slowly but surely into retreat, then capitulation.

In this regard, we observe that this dynamic is undoubtedly known to the US and the Israelis. The problem for the US and Israel is, How to counter such a strategy? The US strategy appears to be to present at least the appearance of strength through military strikes, while making sufficient concessions to, hopefully, alleviate the economic pressure. The Israeli approach, on the other hand, appears to be to do all in its power to draw the US into a major regional war. The difficulty, in the face of negative US public perceptions, is to create the appearance that the war is being forced on Israel and is unrelated to its war on Palestinians. So far Hezbollah continues its measured preparation strategy, so Israel is forced to up the ante in Gaza—launching a massive attack on refugees to solicit a military response from the Arab world that will draw the US in.

How to measure if this is happening now to the Israelis in the international money markets?

An international currency and bond trader answers by providing, first, a primer for each of the market indicators, and how to read them; and then a ready reckoner for the damage being done to Israel’s economic resources as those who operate in the money markets gauge their opportunity.

For making money, you see, the opportunity of capitalizing on Israel’s defeat may soon be more profitable than investing in its success. When the markets see this chance at profit-making, usually long before the politicians and their captive media acknowledge it, there is an inflection point in the flow of money. That does its damage, not by hitting the Israelis and Americans in their bunkers with bullets and bombs, but by moving the money the US-backed Israeli entity needs out of reach, and cutting them off, both the US and Israel,  from market confidence that they can win their war, genocide or not.

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Understanding market indicators is crucial during prolonged conflicts. To forecast the outcome of the conflict, you need a gauge for how financial markets respond to the evolving geopolitical situation.

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The Israeli bond market is heavily dependent on US state and local governments for 75% of their issue (about $150 million out of a total issue of $200 million) as of last October. This isn’t a bond market as traders understand it, because US government policy, backed by the media, and enforced by the Israel lobby and Jewish communities around the US, ensure there is no loss of confidence in the value to maturity of the bonds. This is market rigging with a difference – it is religious and ideological, as well as political. Even in the relatively short history of the Vatican banks,  there has never been a time or an example of an international religion, combined with state governments and their military forces, to insist that the value of their money is backed by their god, or G-d as they report his spelling. By definition and faith,  G-d cannot default; but the Israeli state can.

The Israel 5-year sovereign credit default swaps (CDS) are measured and reported to indicate market sentiment on the likelihood of a default,  and the premium required for upfront payment in case default occurs. In recent time this reached a maximum value in early 2009. The immediate impact of the start of war last October was the small uptick visible in the chart and the flat line from then until mid-January. Since then, however, with the growing demonstration of the Ansarallah (Houthi) capacity to blockade Israeli shipping in the Red Sea and Gulf of Aden, the increase of operational strikes on the northern (Hezbollah) front,  and the impact of new Arab and Iranian offensive operations in the west (Syria, Iraq, Jordan), the perception of default risk has been returning to the October peak.  

Reaction to these charts and values on the part of the international ratings agencies has been, first  to put Israel debt issues on negative outlook, and then, second,  on downgrades.  Negative ratings from the agencies raise the cost of servicing Israel’s state and corporate bonds, and put pressure on the state budget. A ratings downgrade is a signal to the markets to go negative against the issuer – this usually follows a change in trader sentiment.

In Israel’s case, however, there has been an exceptional delay between negative outlook and downgrade.  The last Fitch report on Israel was dated October 17; Moody’s followed on October 19; Standard & Poors (S&P) on October 24.  There has been no new ratings report from Fitch, Moody’s, and Standard & Poor’s since then.

This indicates that enormous pressure is being applied to the ratings agencies and individual analysts not to notice the steady deterioration of the IDF’s military positions in Gaza and Lebanon; the collapse of shipping into and out of the port of Eilat; and the escalation of the regional war against US bases supporting Israel, including US and allied military operations around the Arabian peninsula, bombing and missile attacks across Syria and Iraq.

So the important part above is that the ratings agencies are seeing that the Middle East front is going badly. This bad news is being suppressed—the lack of new ratings reports is a signal in that regard—but that can’t continue indefinitely.

As real estate and other tax collections collapse, Israel will have to make a large cash call on the US.  This is going to come in the near future, just as the government in Kiev has been forced into calling on Congress as the Ukraine war is being lost. The longer both wars are protracted, the more obviously the loss of confidence expresses itself in the US Congress.

And, yes, we are beginning to see signs of unrest in Congress. Obviously there are increasing concerns over throwing good money after bad—ultimately the voters will get their say over the Congress’ profligate support of foreign wars that keep failing.

The Axis of Resistance retains its military capacities for escalation on all fronts. But for the time being, the Arab states and Turkey have yet to introduce a blockade of their export shipments to Israel, and back a worldwide boycott along the lines of the anti-apartheid campaign against South Africa from 1959 until 1994.  

And so it comes to pass that the war of attrition is not just between Israel and the Palestinians, but between Israel and the US and the Arab states, Iran and the Islamic states. The extent of the battlefield is only now taking shape.

I read this last part regarding escalation to mean that, just as with Russia in Ukraine, so too on the Middle East front the forces of resistance to the American Empire and its proxies retain escalation dominance. They are in a position to determine the timing and the place and the extent of escalation. This explains Israel’s scheme to break out of the tightening circle—by involving the US in a major regional war.

Lastly, but earliest in time of publication, Helmer reports that the Russian General Staff are now optimistic that their breakthrough strategy is advancing ahead of schedule—bad news for the Neocons. That strategy—as Geroman has repeatedly enunciated it—has been to first smash the Ukrainian offensive while inflicting maximum losses, and then to apply pressure along the entire line of contact, probing for weak points while the Ukrainians frantically shift reserves to plug holes. Breaks are sure to occur, and those breaks—because they will result from the expenditure of reserves—will be significant. In this article Helmer appends a report by a prominent Russian military analyst, dated January 29:

What does the offensive of Russian troops in the Kharkov region mean?

By Yevgeny Krutikov

He also cites analysis by anonymous Western sources. Here’s the overview:

BREAKTHROUGH ON ALL FRONTS AHEAD OF SCHEDULE

When the General Staff have been discussing with President Vladimir Putin the timing of the Russian offensive to force the Kiev regime into capitulation, it has been agreed, understood, and repeated that the strategic reserves of the Ukrainian forces should be destroyed first, together with the supply lines for the weapons and ammunition crossing the border from the US and the NATO allies.

This process, they also agreed, should take as long as required with least casualties on the Russian side, as determined by military intelligence. …

This week military sources believe there has been a turning point – on the Ukrainian battlefield, and on the Russian clock.

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According to a military source outside Russia, “the Russian breakthrough is beginning to happen now. It’s being coordinated with strikes and raids along the northern border. The commitment of the ‘crack’ Ukrainian brigades at the expense of other sectors shows how desperate [General Valery] Zaluzhny is to plug the holes. He knows that the target is the isolation of Kharkov, the establishment of a demilitarized ‘buffer zone’, as well as the development of a situation whereby all Ukrainian forces east of the Dnieper are threatened with being cut off… and he’s quickly running out of ammunition, not to mention cannon fodder.”

“By the end of the winter,” the source has added overnight, “the Ukrainians will barely be able to move along the roads they use to feed the front due to the Russian drone, missile, conventional air, and artillery strikes. Once they can no longer plug the gaps with mechanized units acting as fire-fighting brigades, it’s just a matter of time before the big breakthroughs and encirclements begin. At the current burn rate of Ukrainian forces, I imagine we’ll start seeing Russian tanks with fuel tanks fitted for extended range appearing and Russian airborne troops making air assaults in the Ukrainian rear within weeks.”

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Behind the defensive fortifications of the Armed Forces of Ukraine, an open field for tens of kilometres opens up on a whole group of sites. Kiev’s military reserves are gradually being squandered, and there is practically no human materiel left to plug the holes. ...

There is another problem: the attrition of officers. Western military personnel cannot replace this crucial resource — they can only be used to service technically complicated weapons systems such as air defence or long-range artillery. ...

There are other factors weakening the Ukrainian defence, but they are not directly related to military operations. For example, the Western sponsors are really concerned about the corruption of the Ukrainian leadership. The inspections and audits which are taking place in Kiev on this issue right now are preventing Ukraine from building new defensive lines swiftly enough.

Another non-military factor: political discord among the various factions of the Ukrainian authorities. The premonition of defeat is triggering a drop in morale, not only in the troops, but also in the elites.

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Partial tactical successes must at some point turn into a major breakthrough in the enemy’s defence. Moreover, we are talking about such a breakthrough that will not stop in just two or three days at the next defensive line, but will lead inevitably, precisely, to the collapse of the front. This is exactly what the efforts of the Russian Armed Forces are now aimed at, probing for the weaknesses in Ukrainian defensive positions.

That’s it for now. From my position, this has the ring of reality.