Having lived in the former USSR before immigrating to the US, Dmitry Orlov has an invaluable perspective on both the US and Russian perspectives, as well as Ukraine.

With the western propaganda flying thick and heavy, it's more important than ever to cut through the chaff and learn what we can about the most important geopolitical realignment (and renewed tensions) in recent memory.
Well, look, Russia is a place that's extremely dynamic as changing response to challenging environment, to changed environment, very popular throughout the world, at peace with most of the world, even with nations that are at war with each other, both sides will still talk to Russia and have friendly relations. Russia has a splendid relationship with both Israel and Iran for instance.

The United States is a nation that can't get anything together, can't get anything on, not education, not healthcare, nothing. It's basically sinking into a cesspool of its own making it can't respond at all. And now, it is basically being shown up to be quite incompetent in playing this international game. Now, what happens if you can't play a game by the rules is you're penalized and you forfeit the game. So, either the US leadership will learn how to play by the rules or they forfeit. I see those are as the only two real outcomes.

There's a difference to how the Russians approach the world and how the Americans approach the world. So, for instance, Americans like to threaten. If you don't do this, then we will do X, Y and Z. That's a typical American behavior.

That's not something that the Russians would ever do because they don't threaten, they just act because if you threaten, then you take away the element of surprise which is very important. The other thing is Americans refuse to talk to their enemies, they won't negotiate with terrorists, they won't do X, Y and Z and can't be reasoned with at all. You can just listen to them and do what they say or they'll bomb you whereas the Russians always talk to their enemies. Russia keeps the channels of communication open.

And the other thing is that all of this endless trash talking is very detrimental to the business of democracy and there's been a constant stream of basically garbage emanating from the west, some of it social media, some of it through the old fashioned press. But, just basically all kinds of lies and disinformation and slander, which makes the tedious business of diplomacy establishing various links at various levels very difficult, if not impossible. So there's just this incredible level of disgust with their, as they say, partners in the west in Moscow and the result is they're not really eager to talk anymore. They're not very interested in communicating. They're far more interested in acting. So, what we'll probably see is a constant stream of surprises coming from Russia that will be completely unannounced and not predicted by anyone.


Chris Martenson: Welcome to this Peak Prosperity Podcast, I am your host Chris Martenson. And today, at the top of my mind is what's happening in Russia and Ukraine and the very obvious and massive geopolitical shifts happening as Russia realigns herself with China. And the recent APEC, the APEC meeting in Beijing and the G20 in Brisbane, hey, those both confirm for me that Europe, Japan and United States are quite intent it seems on both creating and enlarging a rift between Russia and them.

Now, why would they do this? This has been puzzling me, I don't have a good answer for it and it just doesn't make sense on most levels when we look at it through the lens of what's being presented to us in the Western media, that's for sure.

Fortunately, we have with us today one of the very keenest, astute and humorous even observers and commentators on the whole US, Russia dynamic. Dmitry Orlov was born and raised in Leningrad in the former Soviet Union and then immigrated to the United States in the mid 70s. And he was an eye witness to the Soviet collapse over several extended visits to his Russian homeland in the late '80s and mid '90s.

Dmitry is an engineer who has contributed to fields as diverse as high energy physics and internet security. And as you know, it's especially those who are comfortable with numbers who most rapidly seem to understand our modern predicaments. Now, starting in 2005, he has written extensively on the subject of the approaching collapse of the United States and the many similarities and differences between the post American and post Soviet experience. Dmitry argues that collapse of the US, although inevitable, is survivable given the right attitude and some timely preparation. So, we're in complete agreement on that. He is the author of Reinventing Collapse, The Soviet Experience and American Prospects, written in 2011. And he runs the blog, Club Orlov at cluborlov.blogspot.com. I'm quite excited to have Dmitry here on the show today because of his unique perspective on the US, Russia and what is still happening in Ukraine. Welcome, Dmitry.

Dmitry Orlov: Thank you Chris. Great to be on your show.

Chris Martenson: Well, Ukraine, let's begin there because I think so much springs from there. The Western narrative is that back in February of 2014, the former President Yanukovych, he was corrupt, he was democratically ousted, and now freedom and democracy can flourish in Ukraine. Is there anything wrong with that story?

Dmitry Orlov: Well, everything. Yeah. I mean first of all, there are no noncorrupt Ukrainian politicians. The place has been pretty much cesspool of corruption ever since Ukrainian independence. In fact, the only sort of demographic competition happening in Ukraine is in terms of who can rob the place faster. And there are all sorts of new schemes being hatched all the time. For instance, they just recently figured out how to sell off all of the gold that Ukraine once possessed and they probably pocketed quite a bit of that. So, there's nothing new about Yanukovych being a corrupt bastard. That's par for the course. That's why he was elected. And, he was elected and then he was overthrown and then he was elected again which is also par for the course because you basically have a revolving door of scoundrels in Ukraine that's been going on forever. Nothing new there, but the way he was overthrown was in direct opposition to the constitution. He actually wanted to have early elections. He conceded all of the points that the opposition clamored for. He signed an international accord with the participation of Moscow in terms of the reforms he was going to introduce and he got overthrown anyway. So, basically, the narrative that this is a flourishing of freedom and democracy, is just basically fake.

Chris Martenson: Well, so, this all happened so suddenly, I had to dial back. When it happened, I had to go back and understand why. To me, it happened, his fate was sealed actually I believe in November of 2013 when he failed to sign the agreement the West wanted which was an association agreement with Europe which basically would've opened boarders up and I think taken them one step closer to NATO. That was really something the US was really looking forward I guess and so was much of Europe. And then, Yanukovych didn't sign that. So, I think that's when his fate was sealed. But, boy, everything unwound quickly. I think he was ousted sometime in February 20th, 21st or something, and by the 23rd the United States had recognized the next people who stepped in charge. How did those people actually get in charge so quickly?

Dmitry Orlov: First of all, to back up a little bit, the reason Yanukovych didn't sign the cooperation agreement with the EU was because it was clearly an attempt to do two things. One is bankrupt Ukraine so that it could be basically put up at a fire sale with international investors just picking up the pieces. And secondly, to disrupt the customs union, which is the counterpart to the EU. It's basically everything that was great about the Soviet Union. Nothing was all that great about the Soviet Union except that it unified a gigantic territory into a customs free zone. And that's what the new customs union is. It's basically an attempt to reestablish what was good about the Soviet Union from one large building in Moscow and it's working out pretty well.

Now, if Ukraine joined, then we would've have this gigantic Eurasian trading block that would've competed successfully with the EU and with the United States. And that's what this was an attempt to disrupt. And for the time being, it seems to be working, although the future of Ukraine is very murky at this point. Now, in terms of how the events unfolded, there was this handpicked crew that was thrust into power with the help of the CIA and the state department operatives and NGOs, who've been pretty much running roughshod over Ukraine for years now and so, they know how to manipulate the place. And, there were a lot of very, very nasty elements in the people who took over. There was this Svoboda party, the freedom party who are basically neo-Nazis. There was the Right Sector who are basically a bunch of jackbooted thugs. And so, the whole thing became quite precarious very quickly because instead of putting these vetted operatives in place, what they ended up with is sort of a hodge-podge of rabid nationalists and racists and all kinds of unsavory characters, which is what we have now.

Chris Martenson: And that's been really fascinating to me as a quick aside because normally the New York Times in particular is highly allergic to Anti-Semitism and this Svoboda party is you would think something that would be meriting a lot of attention. In the western press, they've been given, as far as I can tell, a nearly complete pass. We've got awesome video of people with old SS insignias and torches marching around in Kiev. And I would think that that would be good fodder for news and it's very salacious and all of that and plus it plucks some of the strings. My perspective is like that's been given a complete pass in the West. Do you agree and if so why?

Dmitry Orlov: Well, yes, I mean one of the things I noticed is that - I run a blog where I pretty much publish whatever I want. And it's not hugely popular and I don't actually make an effort to be hugely popular. But, some of my traffic during recent posts especially on subjects around Ukraine has been absolutely through the roof in terms of traffic. And the only explanation for that that I can find is that suddenly, I am a replacement for western media or a big chunk of it because they just won't cover certain stories. And you're absolutely right that certain things are so egregious that not to cover them is basically making western media look ridiculous. I mean why don't you run a story where prisoners, taken prisoner of war by Ukrainian troops end up with swastikas branded on their buttocks? Is that enough to make the bar, to score the right sort of level of interest for western media to carry it? So, the only explanation is that there's an actual blackout. There's an actual news blackout covering all things Ukrainian.

Chris Martenson: And I agree with that because I have to wander all over the world to find what I consider to be useful in current news. Even though things are happening that are quite traumatic, bombings of cities, tales, if not videos of civilian round ups and executions, I mean really awful stuff and it just doesn't show up in my media very often. And so, when I look at some of the earliest statements that Putin was out making and he gave some good ones and also his foreign minister and said some things that I thought were quite reasonable. One of which was "hey, you guys, we've seen what happens when ultranationalists get a foothold in the Ukrainian region in particular. So, since it's on our boarder and there are these eight million Russian-speaking people also in that territory, this is of obvious interest to us and obviously we can't just let this go, so we have to now involve ourselves." That to me felt pretty reasonable but I didn't usually see that that point of view was not reflected well in the western press. It was Russian meddling where they shouldn't and Putin particularly responsible for all kinds of things. But, in your mind, tell us a little bit about Russia's - do I have that right in terms of how we would characterize Russia's interest in say Crimea individually but then the eastern provinces more generally?

Dmitry Orlov: Okay. Well, this is very few degrees of separation for me because my father was born in Ukraine, in Kiev, so I'm technically Ukrainian. And also, I've been to Ukraine. When I listen to Ukrainian, after a little while, I stop understanding that it's Ukrainian because it's similar enough to Russian. It's just sort of like Russian with an accent to me. And my feeling is that the Ukrainians are Russian, always have been, always will be. There isn't really some kind of a national division. The other thing to understand about Ukraine is that it's not just some number of Russian speakers there, it's like 95% of all education there was in Russian and like 99% of the websites were in Russian. If you look at the television they watch, that was all Russian. So, this Ukrainian Nationalist thing is a bunch of politicians learning Ukrainian from a textbook in order to impersonate Ukrainian Nationalists, who are actually very _____ [00:11:19] number. And the weird thing there, they weren't properly de-Nazified after the end of World War II. There is this Nazi element that was sort of maintained the entire time. It was never actually gotten rid off completely. And now, thanks to western NGOs and state department activity and all of that, they have been empowered in Ukraine to the detriment of the population which don't really see the dividing line between Russian and Ukrainian because there really isn't one.

Chris Martenson: So, Russia obviously has certainly has to have a fairly strong compelling interest which seems easy for me to understand, from a national standpoint. Not least of which is they don't want the trouble on their border, but they have this - to look at the history of Crimea for instance and particular the battles of Sevastopol that happened through time and the amount of Russian blood that was lost there and over time. It feels to me like there's a lot of very deep, old, entwined history there. And so, in particular, the Crimean annexation is one of the big things that even Angela Merkel comes out and says "oh, that was awful Russia, you shouldn't have done that." How did you see the Crimean referendum vote? Was it as tainted as they try to portray it over here?

Dmitry Orlov: Well, it wasn't tainted; everybody there is Russian. And the other thing you have to understand is, telling Russians that Crimea isn't Russian is sort of like telling Texans that the Alamo is Mexican. It's exactly like that.

Chris Martenson: Uh-huh.

Dmitry Orlov: So, where are you going to get with that? Why don't you go to Texas and try that and see how well that works as practice for doing that to Russia. And so, these politicians who are mouthing off about Crimea not belonging to Russia - they don't know what they're doing. And the important thing to understand about them is that they're not really actually trying to produce results. They are just sort of... I don't how to put it politely. They're masturbating into public, is what they're doing. They're not going to achieve anything by saying these things.

Chris Martenson: Well, this idea then of what they're after and what they're really doing, this is really the core of what I'm trying to get at in this show because it's been bothering me greatly. We even had Henry Kissinger came out of his bat cave and said, "hey, you guys, diplomacy is about knowing where you're going and I don't you guys know where you are going on this whole Ukraine thing." To me, it feels like there's elements in the state department and the Obama administration that are acting in ways which is to demonize and polarize and push Russia away and I can't understand why that would be. So, with the whole Ukraine piece, I'm trying to establish that Russia does have a compelling interest in the region. Their Alamo is their Alamo. So, just to combat with some of the perspective that's been put out in the western press. But can you turn your turn your attention... like do you have a sense of what the game plan is? What is it that Europe, the EU more widely I guess and the US, what are they after here do you think?

Dmitry Orlov: Well, basically, the EU is just to rubber stamp for Washington. All of their politicians kind of like get a nice golden parachute when they retire, from Washington. And that's why they toe Washington's line. They're not really independent thinkers at all. And the periphery states, like Hungary or even Serbia, they know pretty well that they're going to be dealing with an Orange Revolution of their own if they don't do what Washington's ambassador tells them to do. Right now, they're having a lot of trouble in Serbia because Russia and Serbia are kind of like the same country in a lot of ways. The Serbians would never do anything to offend Russia, and yet they're being asked to impose sanctions on Russia even though Serbia is not even part of the EU yet. So, things like that are a bit troubling around the periphery but the core of Europe is really solidly just basically a rubber-stamp body for Washington.

Now, in terms of the way Washington thinks and acts, they are indisposed to having people to say "no" to them. So, people in Washington, they come up with a policy and they think that everybody in the world should follow it and if somebody says "well, no, that doesn't make any sense," then they figure out what they have to do to make those people follow their policy. Do they have to bomb them? Do they have to impose sanctions on them? So the idea is that they imposed sanctions on Russia, and now Russia will change their tune and actually do what Washington wants. And there is no understanding in Washington that the effect is the exact opposite. If you impose sanctions on Russia, that makes Russia think that you're no longer their friend, and behave accordingly. So, all they're actually getting is an escalation of a crisis they could never control.

Chris Martenson: I agree with that analysis and it still mystifies me because there must be people who can think further ahead than that somewhere in the state department. But, let's turn now, this is something I'd be very interested in is from this side... you read The Economist or Financial Times and they say, "look, Russia is all isolated" and "the economic sanctions are really beginning to bite." I wander as best as I can over into the Russian side of the story and read subtitled news programs and things like that. What I'd love is to know is if you've been touring the Russian press and what's the mood over there and how are people inside Russia viewing this? Are they ready to cave? Have the sanctions driven them to their knees?

Dmitry Orlov: Well, no, not at all. I mean it takes a lot to actually bring Russians to their knees, and there's no real way to do that except physically destroy them. And as the Russian saying goes: "They can't kill us all." That's basically the bottom line.

Chris Martenson: We don't have that saying in America. We don't have that one. But, keep going.

Dmitry Orlov: So, if Washington wants its way, that's the task. I don't think it's happening. And what this has all resulted in is an incredible level of disgust with the West and with the United States in particular. "American" is now a curse word. Russians at large never particularly liked gays, homosexuality, it was never really part of the culture there. So, they used to call people "fagots" there; now they call them "American fagots." And that's kind of the trend there. Whatever the West has won in term of mind share in the Russian population, they have lost this year. So, it's taken 20 years to make a lot of Russians like and respect all sorts of things western, and that's been wiped off. And that's really a very, very interesting turn of events I think.

The other one is that people there are quite attuned to the bad mouthing of Putin that takes place in the West, which is extremely unfair and misplaced because he's actually a very competent manager and very popular. So, what people in the West need to realize is that when their press attacks Putin, they're actually attacking Russians, most of them, something like 80% of them who stand solidly behind their leadership. And that's not very helpful either.

So, I think that what will happen as a result of the sanctions is probably to some extent okay because in Russia recently especially in the big cities, it's been consumerism on steroids. And consumerism is sort of a vapid exercise. And this crisis is giving Russians a reason to rethink consumerism and think that there might be more important things in life to fight for than just the right to mindlessly consume plastic items, imported ones mostly.

The other thing that's happening is that Russia found it very easy to just export gas and some minerals and buy everything. It's just - this is the curse of resource-rich economies. But, now that oil prices are down and they're not making as much revenue from the exports of energy products and minerals (because commodities are down too), they actually have to concentrate on building things again. It will be interesting to see which way Russia goes with that because they're sort of stuck between two giant industrial power houses. China, which has pretty much cornered the market in consumer good, so there's no way Russia can outcompete China in the consumer goods space. And Germany, which is really good at all sorts of industrial products and machinery. So, Russia can't possibly out compete Germany in that segment either. And then, they're dependent on some things that are very difficult to generate locally such as pharmaceuticals, which are mostly imported from the EU.

So, what is Russia good at? Russia is good at gigantic projects that nobody else can possibly tackle. And I think that that's what Russia is going to get involved in and attract other people to it.

In terms of Russia being isolated, well, no, Russia is part of SCO, Shanghai Cooperation Organization. It's very tight with the BRICS nations. It's signing bilateral agreements with countries left and right. It's very popular around the world. Russia is much more popular around the world than say the United States. And so, I don't see much of a problem there, instead I see Russia being a leader in terms of very large, very important, very visible projects that other nations not aligned with the West will see as their chance and will buy into.

Chris Martenson: Now, speaking of these large projects, the one that caught my eye and I've written about extensively was the first big gas deal that was signed back in March with China and - 400 billion dollars, multi-decade kind of a deal. And this is now the world's largest construction project. It's a many thousand kilometer pipeline, and they broke ground on it in September, which I know they've been negotiating this thing for a decade but to me that's light speed. You scratch a deal in March and you're breaking ground by September. That's a very, very large project and seems to be trundling along at good speed. The thing that caught my eye though was that when I add up where I look at Russia's gas production over the past 20 years, it's fairly stable, and I know that it's all accounted for currently and that they just don't produce it and just pile it up somewhere. So, in that accounting, they use some domestically and they export a bunch. And in the exports, a bunch of that goes to Europe. And Europe's here antagonizing Russia and then Russia inks this deal which is going to send 30 to 38 billion cubic meters per year to China. And then, there was this second deal inked at the APEC conference in Beijing, right? Another one for another 30 billion cubic meters. That has to come from existing exports I think. Have you looked at that at all?

Dmitry Orlov: Yes, I think what they're counting on is that European energy demand will continue to fall as Europe spirals down economically. Basically, Russia - the view from Russia is that the western economic model is basically this financialised cesspool that is dragging down those countries and will continue to do so until the banker class is somehow overthrown. So, they're not going to count on Europe being a very good economic partner. Plus there are all these political problems where a lot of the gas transits Ukraine and when they tried to propose the South stream, a lot of countries bought into it (like Austria for instance). But, then, all of these Americans started running around and threatening people if they cooperated and got Brussels' bureaucrats to do the same thing. So, now, that's stuck. So this is a headache.

Russia doesn't really make all that much from gas exports to Europe, they make more money exporting oil. Gas is sort of so far kind of adjunct, but it's a huge headache because gas - it's not as fungible as oil. You can't just figure out where the tankers will go next month. You have to establish pipelines, they have to be kept at pressure, you have to have controlled flow rates and all those sorts of things, which in this environment are a complete headache. So, Russia would rather deal with China where they can ink a deal and it's set in stone for the next however many decades than deal with Europe which might come up with another thing next week. So, that's very easy to understand.

Chris Martenson: I guess I understand it from Russia's perspective. From Europe, I don't because Europe's own native gas production is declining. They get 30% of their gas from one single field, the Groningen Field up there in Holland. The North Sea is basically in decline and the shale gas efforts are going nowhere with Germany blocking it, France blocking it for ten years and forever depending on who we're talking about. Poland's old shale gas turned out to be a complete bust. What they thought was in Romania turned out not to be good because of geology and for other reasons. So, to me, Europe like clearly has a supply problem and I think they just watched a lot what might turn out to be their supply get inked off in a deal with China. I'm surprised at the lack of panic or even commentary on that at this stage.

Dmitry Orlov: Well, I think that there's kind of a disconnect in Western Europe. The one thing that you can definitely assume about Western politicians is that if somebody in Washington tells them to shoot themselves on the foot, they will. Other than that, it's very hard to discern any sort of rational thought going on there, except to keep the game going, keep the financial markets churning for as long as possible. But, there's no level of strategic thinking because if you think along those lines, then it becomes really obvious that all of Western Europe has to partner with Russia in terms of energy - that there's no other solution. Are they doing that? No, I don't think so.

Chris Martenson: Yeah, so again there's just a black hole of logic there for me that I can't cross. I can't understand what's happening. So, I have to either assume it's just as vapid as it looks or that there's some stuff going on behind the scenes. They're fully aware of it but they've got different game plan going on. And on that front... so all this stuff is breaking in Ukraine, we got February. And then, by March, Russia conducts one of the largest nuclear readiness drills ever. And it wasn't just they mobilized 10,000 or 11,000 people who are doing their nuclear stuff, but, they fired every single platform that I could see. They fired missiles from subs, planes, cruise missiles, rocket launchers, mobile transports, silos, you name it, they basically cooked off every single thing they had that could carry a nuclear warhead, filmed it all and put it up on YouTube for the world to see. And to me, that was a really powerful message. Do you think - was that accidental timing or was that Russia saying "hey, look, this stuff still works?"

Dmitry Orlov: Well, I think that this was actually a very reasonable calculation on Russia's part because look, if it turns out that your diplomatic and political counterparts in the West are not worth talking to, who's left in terms of avoiding a military confrontation and potential nuclear war? Well, you still have the Pentagon. So, the bet is that okay, everybody in the state department and the White House are out to launch permanently. But, maybe the people in the Pentagon kind of don't want to die and know what it takes to kill them. And so, maybe if you show them that okay, well, if you escalate this beyond a certain point, then you will die. Then, there will be some level of rationality infusing the process. The joint chiefs of staff will start telling Obama not to do certain things because it's too risky, for instance. So, that's a reasonable calculation I think.

Chris Martenson: I could see it in that vein as well. To me, it was clearly an obvious message. It was pretty powerful to me to see all those things getting lit up and they all flew where they were supposed to. And that's continued; we've seen additional bomber incursions, which I think were always happening, but now we're telling ourselves that they're happening or maybe they are happening more, with Russian bombers flying in various places. Again, it's always misrepresented in the West. They have not invaded any air space yet, they've been flying in international waters, international air space, but closer than they used to I guess is how I read it if I've read that right. And then, there was another missile launch recently where Russia had one of their biggies, one of the ones that can carry ten multiple independent reentry vehicles as they call it - so a 10MIRV. And so, this is all just some posturing again which basically says "look, we're still a force to be reckoned with." I think the confusion as far as I can detect is that nobody in the west seems to be responding in a way that Putin would look back and say that's rational. Like if we did respond rationally to the nuclear readiness drills, it didn't show up in the accounts that I read. I'm wondering if you have any thoughts on that.

Dmitry Orlov: Well, there's a difference to how the Russians approach the world and how the Americans approach the world. So, for instance, Americans like to threaten. If you don't do this, then we will do X, Y and Z. That's a typical American behavior. That's not something that the Russians would ever do because they don't threaten, they just act. Because if you threaten, then you take away the element of surprise, which is very important. The other thing is Americans refuse to talk to their enemy, they won't negotiate with terrorists, they won't do X, Y and Z and can't be _____ [00:30:27] at all. You can just listen to them and do what they say or they'll bomb you, whereas the Russians always talk to their enemies. They always keep the channels of communication open. And the other thing is that all of this endless trash talking is very detrimental to the business of democracy and there's been a constant stream of basically garbage emanating from the west, some of it social media, some of it through the old fashioned press. But, just basically all kinds of lies and disinformation and slander, which makes the tedious business of diplomacy establishing various links at various levels, etc. very difficult, if not impossible. So there's just this incredible level of disgust with their, as they say, "partners" in the west, in Moscow. And the result is they're not really eager to talk anymore. They're not very interested in communicating. They're far more interested in acting. So, what we'll probably see is a constant stream of surprises coming from Russia that will be completely unannounced and not predicted by anyone.

Chris Martenson: You know, there was a very interesting piece that just came up. Somebody had analyzed Russia's total export revenues from oil over the last three months and then how much gold they've imported and noted almost a 1:1 correlation, which to me would be the most surprising thing in the world if the number two exporter in the world said "we're now exporting oil for gold," that would be a game changer. And yet, it seems to have happened but there was no real announcement around it, which I think strategically I can understand why you might do it that way, which is let me run this game as long as I can before anybody notices, and then say that's what we're up to. But, whether that's just simple correlation and an accidental line up of numbers or not, it feels to me like a way in which it makes sense because that's one of the few ways I could understand how Russia could separate herself from the petrodollar and the US reserve currency, which Putin had a big, long impassioned speech about a month ago where he said "this is a reserve currency that's being abused. It's basically a 'do what we say, not as we do' sort of a mandate that comes along with it and the extent to which we're exposed to that particular system is the extent to which this is going to continue to be a painful experience for us, so let's get away from it."

Dmitry Orlov: Yes, he did make that point. There's also a kind of behind the scenes, not terribly public, more specialist discussion about making the Ruble gold backed. And how much gold would be sufficient to back every Ruble in circulation. Because that would just make the whole process much simpler in terms of making the Ruble convertible around the world, introducing it as a reserve currency so that people actually stockpile Rubles in order to buy, say, energy products in the future. It would make it much more difficult for the currency traders to attack the Ruble, it would make it unnecessary to have such a level of foreign reserves, including the dollar and Euro reserves in order to defend the Ruble, all of those sorts of things. So, there's a very active discussion in terms of basically introducing the gold Ruble to replace what the Russians fondly called the "wooden Ruble."

Chris Martenson: The wooden Ruble [laughter], okay. Well, that would certainly be a fairly significant game changer and in the vein of you saying Russia doesn't threaten, they act, it feels to me like there's a chance that they've already started to maneuver in that direction, at least with the gold things that are going on. But, the whole gold story is just a big bizarre thing to me because we saw these reports again. Well, here's what I do know. I do know, and you mentioned this earlier, that Ukraine's gold is no longer where it used to be which is in the vaults of the banks with the central bank, it's gone. Do we have any sense of where it went?

Dmitry Orlov: Well, the story that was circulated, I don't know whether it's true or not, but sometime this year, earlier this year, all of the gold was secretly loaded onto a plane that took off for the United States. And that's one thing that we heard. And then, I think it was last week or the week before, we heard that Ukraine - this was an official announcement - that Ukraine no longer has much of a gold reserve at all. It's all been sold off and converted into the US Dollar in what must be the most brain-dead trade in the world. Why not do that when gold is at its lowest and the US Dollar is at its highest? Those Ukrainian bankers certainly know how to trade. So, this is all we know.

Chris Martenson: Yup. Well, there's always a great deal of mystery around gold. It's something I've observed before is that when Libya fell apart, its gold went missing; when Iraq fell apart and United States went in, its gold went missing. So, there's a little pattern developing here. Stop me when you've heard this one before but for a substance that's so roundly reviled in Western press, it just seems to command a lot of early interests in the unstable part of a country's undoing. And the United States is somehow always in the story on that one. So, connect those dots how you will.

Here's something that caught me as well was the rough treatment that Putin got at the hands of who I consider to be sort of second rate players on the stage - Harper out of Canada and then Abbott out of Australia. And Abbott in particular wanting to really sort of rub in Putin this whole idea of Putin's responsibility for the MH17 shoot down. And of course immediately after the plane went down within hours, within the first few days, headlines across British press in particular calling Putin a murderer, and all of this stuff. And then, very quietly, it's all gone away and nobody in the press talks about it anymore. But, Russia, as far as I'm reading it, continues to say "you all had these particular assets right over the region at the time of the shoot down, you had this satellite, you should have this telemetry data, you ought to have these pieces, we would very much like to see that information." As far as I know, Russia is the only country out there right now asking for specific information that could be used to conclusively identify what actually happened. You followed this story haven't you?

Dmitry Orlov: Well, yes, from the very beginning. There was this group of hackers, Ukrainian hackers, called Kiber Berkut, CyberBerkut and they get their name from the now dismantled special forces that the Ukrainians had. And they hack into all sorts of things. They recently hacked into one of the laptops that Joe Biden's crew was carrying on him. And that was a revelation, it turned out that the Ukrainian military is on Pentagon's payroll. But, they also...

Chris Martenson: Really?

Dmitry Orlov: Yeah, all of them and they have expense accounts and it's really disgusting, large ones. But, before that, they hacked into another server and actually got phone logs between various people discussing how to stage the false flag attack on that Boeing 777. And it was all like half in Ukrainian, half in Russian, kind of mangled together but it was pretty clear that they were organizing television footage to be put together artificially before the fact, they were going to introduce certain things into the social media to make it look like the rebels did it, etc. So, it appears that the whole thing was staged. But, since it didn't really go the way they wanted and they couldn't really pin it on the rebels for a number of reasons, technical reasons, that are very hard to whittle away at - like the rocket wouldn't have flown that far sort of logic. It would've been out of range. There wasn't any radar system that the rebels had in their possession that could've detected that flight from that far away in order to target it. And then, various other things came out like eye witnesses that said there were jet fighters in the air near where the plane went down. So, basically, once the story started stinking to high heaven, they just basically hushed it up. So, no information about it is ever going to be released in the west. And the Russians, they have the information, they're probably just sitting on it.

Chris Martenson: Well, then, doesn't that... I can't imagine how it must be more diplomatically frustrating. It's almost like you're trying to play big league games and suddenly you're over here at amateur hour. To have somebody like Tony Abbott walk up and say "boy, you have a lot to answer for around MH17," when you know perfectly well everybody at that level should know what's going on. How do you read that besides that being just a really awkward moment in diplomacy?

Dmitry Orlov: Well, I can read Putin pretty well. And from the way he behaved and his early departure from the meeting, it is very indicative of his very complete disgust. I mean his whole demeanor showed that basically he was wasting his time talking to these amateurs about nothing in particular, nothing was going to get done in this conference, so he left. And that's basically it, I mean nobody actually was brave enough to say what his answer to Harper was when Harper said, "I have just one thing to say to you: Get out of Ukraine." People said that it wasn't particularly impolite but they couldn't say exactly what it was, which is kind of indicative that the love is in both directions between those two. And this is sad, but this is what happens when politicians start basing policy on just complete falsehood.

Chris Martenson: Yeah, well, the risks seem high in that. This leads me to the final set of questions, which is around where do you think this goes now? My sense is that relations are sort of not just frosty but I think they're increasingly getting worse, rather than sort of stabilized at a frosty level. Do you agree with that and if so where do you see this is heading?

Dmitry Orlov: Well, I think that the relations will stay frosty and I don't know what exactly could defrost them because it's sort of like you only lose your reputation once. Same thing with any good will that you accumulate. So, after the collapse of the Soviet Union, Russians looked to the West for consumer products, freedom and democracy, freedom of speech, all sorts of cultural imports, a chance to go and see how people live around the world and copy some of their ways, etc. And the understanding was that if they behaved like Europeans, if they played by the rules, then they'd be allowed to win. And so, that's been the attitude. It's okay, "well, we're weak now, but we'll do everything right, we'll play our cards as we dealt them, we'll play this game and we'll win." And then, a couple of decades go by, first one was very dicey, second one was much better. In this century, Russia has been doing remarkably well and Russia has started winning. And then, it turns out that, new rule: Russia is not allowed to win. That's just a new rule and you have to accept it. So, that didn't really rub them the right way, shall I say. So, their new attitude is "okay, well, if you think that you have your gentlemen's club that we can't be part of, then you can't be in our gentlemen's club either. In fact, you're not gentlemen at all." And, that's going to be the new attitude, so this old way of dealing with Russia that sort of worked for the United States and the west in the past no longer works at all. And it will be a very harsh learning experience, very steep learning curve for the West to figure out that they can't actually exist without Russia and without Russian cooperation. And that what they have to do to secure that cooperation is not threaten, not trash talk their leadership, not impose sanctions, but actually play an honest game.

Chris Martenson: That might be a tall order at this stage. So, that gets to the final part which is where you see this going. My assessment is that the current crop of people who are in charge at the US State Department seem uniquely incapable of introspection or humility at this point. That's just my personal assessment of them. It's either my way or the highway. They seem to be very, very clear about that. So, you see this going forward, I mean if you agree with that, then there's sort of intransigence on one side and an unwillingness to deal with people under those terms on the other side. It feels like a stalemate at best.

Dmitry Orlov: Well, look, Russia is a place that's extremely dynamic, fast changing, responds to a challenging environment, a changed environment, very popular throughout the world, at peace with most nations of the world, even nations that are at war with each other still talk to, both sides will still talk to Russia and have friendly relations. Russia has a splendid relationship with both Israel and Iran, for instance. The United States is a nation that can't get anything together, can't get anything _____ [00:49:55], not education, not healthcare, nothing. It's basically sinking into a morass of its own making; it can't respond at all. And now, it's basically being shown up to be quite incompetent at playing this international game. Now, what happens if you can't play a game by the rules is you're penalized and you forfeit the game. So, either the US leadership will learn how to play by the rules or they forfeit. I see those as the only two real outcomes.

Chris Martenson: And how would that play out in your mind? I know you've got lots of material pointing out that the United States is on a path towards collapse. And here's a quick anecdote: I got an Uber lift the other day. I was in South Carolina, the guy who picked me up in his car was from Sudan. He'd escaped here 20 years ago, political asylum. And within a few sentences we connected and he said, "you know, what makes me really sad is that the same things that ultimately led me to leave Sudan 20 years ago, I see those same things beginning to happen here now in the United States." And he was just talking about that, that the obvious lack of rule of law really bothered him between like how the bankers got away with everything but little people still get charged with stuff. It's just basic sort of things like that. And so, the question to you is: When you look at where the United States is headed in this particular trajectory and you say the leaders will have to either forfeit the game or figure out how to change the game, would you agree that they're probably going to forfeit, and how does forfeit play out in your mind? What does that mean?

Dmitry Orlov: Well, to keep their positions, they have to continue posturing and part of that posturing is pretending that you're acting from a position of strength whereas you're actually acting from a position of weakness. That's already happening in the US and the posturing isn't working out very well either. So, in China recently, Obama made a speech about American leadership in the world and all of these young Chinese people in the audience started laughing. Now, if you send your leader somewhere across the world, and young people laugh at him, that's not a good sign, right?

Chris Martenson: Right.

Dmitry Orlov: But, it still plays okay for the domestic audience. So, what I will probably see first is a split between what the Americans are shown, which is this typical rah rah stuff - "we will get our way in the world" sort of nonsense - and very sheepish behavior by American officials when they're abroad. They will probably try to curry personal favor in case they lose their jobs. It's like where in the world do you go if you have to run away? Some of them might start secretly getting foreign passports since they know all these diplomats, they might curry favor and get a passport so they can escape with their families when the time comes. So, that's kind of how it comes apart. It's like on the one hand, they'll still be talking up this superpower game, but secretly they will be looking to buy a sea side cottage in China.

Chris Martenson: All right. Well, I have this personal sense that Russia actually holds a lot of cards in this game and the main cards, one of the biggest ones obviously is the energy card. And that I do agree with you that in this story, I don't know how it plays out, but by the end of it, the West discovers that it needs Russia even more than Russia needs the West at this particular junction probably through time. And my personal assessment is that's going to be a hard learning, because I've lost faith that my crop of leadership has the capability of behaving rationally. When JohnMcCain is one of your senior statesman, I mean my goodness, it's not a good sign. Or if you've got people like Victoria Nuland in there, saying what she says out of the assistant position at the State Department. Those are just hard pieces for me. So, final question: What's the chance in your mind that there's an actual confrontation that spills over - it could be a cyber war, it could be an economic war, it could be a kinetic war between the West and Russia?

Dmitry Orlov: I think there'll be a lot of this sort of mixed conflict going on, a lot of fishing in muddy waters. I don't think there'll be any outright all out confrontation because total war between the United States and Russia is unwinnable by definition. I think that basically, there will be efforts by the US to continue what it tries to do with less and less success, various types of Orange Revolutions. And they're working out worse and worse every time. I mean look at the results. It used to be that they actually kind of got the government they wanted for a little while. But now, they don't even get that for any length of time and the countries that they try to set up, like Libya for instance, fall apart really quickly. If you look at Georgia, where they put in Mikheil Saakashvili as the President, well, now he's basically a wanted men in his own country. He's been hiding out somewhere in the states. It's just not working out very well but they'll continue doing it until it just all falls apart.

Chris Martenson: Well, with that, Dmitry, really it's so good to talk to you because we absolutely need to decode this. I think this is one of the most critical things that's happening is this breakdown and geopolitical realignments that are happening. It's absolutely vital and important and it disappoints me that my own country stirs this stuff up and then gets all inflamed about Kardashian's back side in the next month or so because we've lost interest. So, it really feels like we put some very big things in motion and then lost interest because they didn't resolve themselves quick enough or something. So, I really love what you bring to the conversation, it helped me understand and helped other people. And in that vein, I got your blog that we mentioned at Club Orlov over at cluborlov.blogspot.com. You've got the book I've mentioned. Is there anything else, any other way that people can follow what you're doing, talks you're doing, books you've got coming up?

Dmitry Orlov: Well, no. Actually, right now, I'm working on a completely different project which started out as a teaching English reading to English-speaking kids. Now it's morphing into teaching English to people in other countries. Japan is the first one. And so, I'm going in a completely different direction. Collapse is only a hobby for me. I like to have my hand in other things to. So, I don't have any books right now but I'm just watching the situation. And what's happening now is that once in a while, because Western media is so lame, I get a ridiculous amount of web traffic on my blog because I just run some story that they refuse to run. So, I'll keep doing that. So, keep watching my blog for various types of little blog busters.

Chris Martenson: All right. Very good. And all the best on your entrepreneurial efforts to work with teaching English. I think that's a great thing to do and lots of need for it out there.

Dmitry Orlov: Thank you Chris.

Chris Martenson: All right. Well, thank you Dmitry and I hope we can do this again soon.

Dmitry Orlov: Absolutely.