By Ben Aris, Intellinews, 8/21/26

A fresh corruption scandal broke out in Ukraine – this time, it was racketeering by relative junior members of the Zelenskiy administration. Corruption is not a problem of the system in Ukraine; corruption is the system.

Ukrainian President Volodymyr Zelenskiy’s deputy head of staff, Iryna Mudra, has been arrested and found to have assets of just over $6mn and together with a dozen other high officials, connected to Bankova, to have been running mafia-like racketeering schemes. Before I go on, I should point out that the fact they have been caught, arrested and charged is something of a revolution in Ukraine, but nevertheless, it also highlights how fundamentally corrupt the government of Ukraine is.

Russia is famously corrupt, but I don’t think people realise just how much worse it is in Ukraine. When the war started, the foreign ministries called their embassies for advice and were warned by those that actually lived and worked in Kyiv to be very careful. There is a reason why Ukraine, which has significant resources – agricultural, metals, manufacturing, excellent human capital, etc, and is one of the biggest retail markets in Europe – has been the poorest or second poorest (after Moldova), country in Europe for all of the last three decades. Any money available gets stolen.

Superficially it looks much better than Russia as, unlike Russia, it has a vibrant civil society thanks to two coloured revolutions. And the elections are more or less real. But on the economic front Ukraine is still in the stone ages and even the heroes of Orange Revolution were rotten to the core (with the big exception of Viktor Yushchenko, who they tried to kill).

The way it works is Ukraine’s the lack of progress in setting up institutions and the dysfunctional courts drives corruption. Leaders give deputies lucrative posts that control cashflows and they are expected to help themselves. The hold of the leader becomes his ability to take that job away, which ensures loyalty. The weakness of the legal system and the irrelevance of elections allows deputies to steal with impunity and they are not accountable to public opinion.

Ex-Orange Prime Minister Yulia Tymoshenko was an early media star with her trademark hair braid and seen as a “firebrand” democratic leader. In Ukraine she is more widely known as the “gas princess” as she is believed to have stolen some $350mn while she was minister of gas. After the Euromaidan Revolution of Dignity was over and she was let out to jail, where President Viktor Yanukovych put her, the crowds were happy to see her released but had no interest in seeing her back in power. To highlight the point she has also recently been fingered by NABU in its latest vote buying investigations. She was caught on camera with huge bundles of dollars that she uses to get votes through the Rada.

Yanukovych is even more old school and stripped-mined the country while he was president. He is accused of nicking a third of the country’s hard currency reserves – some $35bn – that has never been recovered. His Mezhyhirya Residence is famously a palace where amongst the many trappings of wealth was a loaf of bread made out of solid gold – and even that has been stolen in the meantime; no one knows where it is.

I had personal experience of this. While in Odesa, Yanukovych had dinner at a very famous restaurant there and liked it so much he decided to take the restaurant over. The owner was a friend of a friend in Kyiv who told me he came to lobby Bankova to back off. He was offered half the value of the restaurant and took it. “Getting half of its value was a pretty good deal under Yanukovych as usually he just takes what he wants and pays nothing.”

Ukraine became a true mafia state under Yanukovych – a label usually reserved for Russia.

He was ousted and replaced by former President Petro Poroshenko who was a bit better, but even Poroshenko remains an oligarch, having earned billions from his Roshen chocolate empire. He was supposed to put all his assets into trust after taking office and never did it – maintain business and sales in Russia even after the 2014 annexation of the Crimea and eventually ended up in the Panama Papers leak.

He wasn’t as bad as Yanukovych – I’d say the only leader worse than Yanukovych in the Former Soviet Union (FSU) in the last 30 years was probably Turkmenbashi, the late leader of Turkmenistan – but while he did make some reforms, the old system was alive and well.

One of the good things he did was appoint Lithuanian born ex-investment banker Aivaras Abromavičius, who worked for Sweden’s East Capital and married a local and was appointed Economics Minister. Abromavičius, who I know personally, was the real McCoy and one of the few high ups with real international investment banking experience and could actually spell “corporate governance.”

Abromavičius made a real stab at cleaning things up and, for example, closed down a scheme where uber-oligarch Ihor Kolomoisky, and Zelenskiy’s business partner and election sponsor, had injected a “trading company” between the state oil company Ukrnafta and state procurement that was charging 15% for any deal, but did nothing else. That deal was worth tens of millions of dollars a year.

However, eventually Abromavičius gave up and quit in spectacular fashion with a public press conference on February 3, 2016 where he accused the Poroshenko regime of endemic corruption.

“My team and I have no wish to be a cover for open corruption or puppets under the control of those who want to establish control over state money in the style of the old authorities,” he said at the presser. “I don’t want to be part of this free-for-all… but we have to wake up from lethargic sleep. I don’t think things will change quickly.”

The problem he explained to me was Poroshenko tried to appoint a deputy to the head of a ministry department making procurements and control its cashflow; as minister, Abromavičius was supposed to be in charge of all appointments in his own ministry and was trying to oust these placemen as a key part of his anti-corruption efforts. His press conference caused a major political crisis as it completely undermined Poroshenko’s efforts to get the EU and US on board in his escalating war with Russia, which was in the process of splitting the Donbas off from the government’s control.

Some progress

Still, despite all this, some real progress has been made in selected directions. First of all, to note that the creation of the triumvirate of the National Anti-Corruption Bureau of Ukraine (NABU), the Specialized Anti-Corruption Prosecutor’s Office (SAPO) and the Anti-Corruption Court (ACC) – forced on Ukraine by its western partners – is a revolution. Nothing like this exists in any of the other FSU states.

Tellingly, Poroshenko couldn’t stop the creations of NABU and SAPO, but successfully blocked the creation of the ACC for years. And NABU has itself been stymied by the powers that be for years; when it arrested its first big fish, Poroshenko’s right-hand man Roman Nasirov in 2017, and charged him with embezzling millions of dollars he spent a weekend in jail. However, before the judge arrived to arraign him on Monday morning, a delegation of Rada deputies showed up along with Nasirov’s wife who brought a bag containing a million dollars to pay his bail – scenes that have been repeated in the last month with high officials close to Zelenskiy coming up with millions of dollars for bail in the Energoatom corruption scandal. Not only did NABU never get Nasirov in front of the bench, he went on to run against Zelenskiy in the 2019 elections.

But the triumvirate is real and has real powers. In what is now widely taken as a sign that Zelenskiy administration is little different from all the others, he tried to close them down last year with Law 21414 in an obvious authoritarian style: the Rada deputies were ordered back from summer holiday at the weekend and the three votes were rammed through in one sitting that would have put the two agencies under direct presidential control. It was a move worthy of Putin, but thanks to Ukraine’s vibrant civil society, demonstrations immediately broke out and Zelenskiy was forced to back down and cancel the law. NABU is now on a roll and actually arresting people from the very top of the tree.

Maybe the most significant change is Kolomoisky has been arrested and is in jail. One of IntelliNews claims to fame is our cover story “Privat Investigations” that uncovered the rampant stealing at Ukraine’s largest commercial bank, caused it to be nationalised in December 2016.

The banking sector has been comprehensively cleaned up by former NBU governor Valeria Gontareva, but she decided to leave the country after Kolomoisky threatened her life and had a coffin with her effigy delivered to the doors of the NBU. She was later hospitalised in London after being hit by a car in what UK police have called “suspicious circumstances.” Oh, and her house in Kyiv was burnt to the ground by “unknown” arsonists.

But maybe the biggest success has been the reforms at Naftogaz, the state-owned gas company. Corruption in the gas business in the 1990s was insane. Ukraine was transiting huge amounts of gas from Russia to Europe and earning $3bn a year in transit fees, not counting the money that could be made from stealing Russian gas from the pipes. Everyone had a hand in this – Russian government officials, Ukrainian government officials, the board members of Gazprom and Naftogaz. It was the major gravy train at time, organised via another set of “trading” companies that did nothing.

And it was so blatant. I once sent our Romanian correspondent to the “office” of Eural Trans Gas, one of the main traders doing several billion dollars of business a year. The office turned out to be an empty apartment in a rundown block in Transylvania where neighbours said no one lives. I also interviewed the CEO of Itera, Igor Makarov, the Russian gas trading company in this partnership, who plays gold in his office with a solid golf putter, which he showed me. One of the reasons Ukraine is so poor is that this gas business, which should have funded investment, was bled dry by Ukraine’s own elite and the Russian executives.

That has stopped now. Naftogaz is a well-run business and where it used to be a black hole supported by massive budget grants, it is now the biggest taxpayer in the country. The fact that Zelenskiy appointed Serhii Koretskyi the new Prime Minister is really good news. He is not a politician, but an oil and gas man and comes to his new job from running Naftogaz. He is as close as you can get in Ukraine to a clean and professional pair of hands in charge of one of the country’s biggest sources of cash.

So, there is hope. But there is so much work left to do. The judiciary remains rotten to the core. Brussels downgraded Ukraine to a “B” in its last EU accession bid assessment report precisely because of the lack of progress in the anti-corruption fight and judicial reforms in the so-called “Fundamental” cluster.

Zelenskiy was elected in 2019 on an anti-corruption platform, and compared to oligarch Poroshenko, he was clearly a cleaner pair of hands. And he has taken that pledge seriously, at least until the war started three years in. He broke ties with Kolomoisky and even put him in jail. He forced through the anti-Kolomoisky law in May 2020 that made it impossible for the former owner of a bank that has been nationalised to retake control of it – aka PrivatBank. Hethen followed up with an anti-oligarch speech in March 2021 and anti-oligarch law in September 2021 which has redrawn the map.

But he made almost no progress on reforming the judiciary or beefing up property rights, without which Ukraine has no hope of attracting the circa $600bn of private capital it needs to rebuild. To be fair he has been distracted by fighting a major war against Russia, but he can also be accused of turning a blind eye to the blatant racketeering by deputies who he shares an office with.

Personally, I think it’s because everyone in Ukraine is so inured to corruption they don’t see it as a major problem. A common attitude I have heard in Kyiv is: “If you can, of course you steal. Why not? I would.”

Russia Matters, 8/7/26

Russian confidence in the Ukraine war’s success drops to 50%: The share of Russians who believe their country’s war against Ukraine is “proceeding successfully” has declined by 19 percentage points in the past year, totaling 50%, according to a poll conducted by the {western backed]  Levada Center in 50 regions of Russia in July. As many as 62% of Russians believed in July that it was time to initiate peace negotiations (which is two percentage points less than in June), while some 38% said Russia should continue “military actions,” according to the poll. Some 59% of the poll’s respondents believe that if “peace cannot be achieved for now,” then Russia should “escalate strikes on Ukraine, including with use of new types of weapons.” Only 21% believe Russia should make “additional concessions” to Ukraine and the West in such a scenario. Meanwhile, a July-August poll by KIIS has found that 60% of Ukrainians categorically oppose handing all of Donbas to Russia in exchange for security guarantees, but 59% say they could accept a “freeze” of the war along the current front line. Separately, 45% of Ukrainians now expect the war to last until at least the second half of 2027 or longer, according to Ukrainska Pravda’s analysis of the KIIS poll.

By Sylvia Demarest, Substack, 8/22/26

Introduction

The US has spent the last fifty years weaponizing the US financial system and the US dollar by imposing sanctions on many countries, corporations and individuals. In most cases, these sanctions were planned with and agreed to by US allies. The US and the EU have also jointly engaged in seizures of government and individual assets. Sanctions and asset seizures raise a serious question, are global assets, including the assets of foreign countries, safe in the US and the western financial system? Moreover, under international law, to be legal, sanctions require UN approval. Most US sanctions have not been approved by the UN.

One recent example of unilateral sanctions is the seizure Russian central bank assets and the imposition of severe economic sanctions on Russia in early 2022. The US, UK and EU imposed the “shock and awe” sanctions before Russia launched the Special Military Operation and invaded Ukraine. The trigger for the sanctions was Russia’s recognition of the Donbass republics along with entering a mutual defense pact with the republics that required Russia to intervene when the republics were attacked by Ukraine. The fact that the sanctions were so massive and were announced in coordination with the EU and the UK meant they had been planned and agreed to well in advance. These sanctions, which included banning Russia banks from using the SWIFT international clearing system, were supposed to weaken Russia economically and force President Putin from office. The sanctions failed. The main impact has been to force Russia and her allies to develop alternative structures.

Since Trump’s Inauguration the US has gone out of its way to tariff, harass, and insult a growing number of the countries of the world, including US allies. Trump has placed tariffs on countries, then taken them off, then threatened tariffs again. Trump has demanded that countries follow US dictates, demanded they invest billions in the US, denigrated their leaders and tried to undermine their governments.

US allies and other countries must be wondering what the possible benefit there could be to being a US ally, especially when Trump insinuates the US may not help them if they get into trouble.

Although the US has weaponized the dollar and the US financial system, we still expect foreigners to not only go along with US policy, and with US sanctions, but to also to stash their savings in the dollar, and the US stock and bond markets. It raises the question; does the US still know how to play the geo-strategic game?

Now the US is demanding that the entire world isolate and refuse to do any business with Iran or face US sanctions.

US Sanctions on Iran

US sanctions on Iran go all the way back to the hostage crisis of 1979. Over the years, the US and her allies have frequently added new sanction on Iran. In many ways, Iran is the most sanctioned country in the world. Now the US wants to place more sanctions on Iran which will include sanctioning any country or entity that does business with Iran. This time, US allies have not been consulted nor have they agreed to abide by these new sanctions.

Here’s Secretary of the US Treasury Scott Bessent: “Oil markets are misinterpreting what this economic pressure means. This is going to be the greatest coordinated economic isolation in the history of the world. We’re going to our allies and saying, you are either with us or against us. If you insist on doing business with Iran, transferring money, buying their oil, or doing seaborne ship transfers, the US Treasury and US gov’t will put their full might and force toward enforcing against you.”

The key bit: “We’re going to our allies.” This means, US allies have not yet agreed. What Bessent is implying is that he and Trump will have to get “allies” to agree. These are the same “allies” that have had tariffs imposed on them and have refused to supply navy ships to assist the US in opening the Strait of Hormuz.

Iran sells 80% of her oil to China. China is now expected to refuse to do any business with Iran. Here’s China’s reaction: China announces it does not accept U.S. sanctions against Iran. Here’s Philip Pilkington: “They’re (China?) ready for a big fight over secondary sanctions.” In fact, China has made it illegal for any Chinese entity to obey unilateral sanctions that are illegal under international law.

China’s Ministry of Foreign Affairs says baseless unilateral sanctions on Iran will only lead to further escalation: “China opposes unilateral sanctions that lack basis in international law and UN Security Council mandate. Military force and pressure tactics will only lead to escalation that serves no one’s interests. We call on parties to act responsibly and solve disputes through dialogue and negotiation.”

As this Substack has discussed, China has a virtual monopoly on rare earths and many other inputs that are essential for weapons and many essential products. Moreover, the US has made it clear that the intent is to weaken China and bring China under US economic and political control. How can the US expect China to fall into line and go along with sanctioning Iran?

Daniel Drumbrill nailed the US dilemma on X: “This is genuinely hilarious, and peak on-brand American tone-deafness.”

“The United States is now asking China, the same China it has spent years trying to economically isolate, sanction, and technologically contain, to help it economically isolate & sanction one of China’s own partners: Iran.”

“US Treasury Secretary Scott Bessent is telling Beijing to “get with the programme” and join Washington’s “most crushing economic operation” against Iran. “You are either with us or against us.” China is Iran’s largest oil customer. And yet America expects Beijing to help crush Tehran’s economy.”

“This is the same America that put Huawei on the Entity List, expanded the Foreign Direct Product Rule to strangle its supply chain, pressured allies to ban it from 5G, restricted advanced chips and manufacturing equipment, targeted DJI and Chinese drones, and placed hundreds of Chinese companies under export controls, all while talking about maintaining technological superiority and reducing economic dependence on China. That’s the kind of “with us” they were hoping China would continue playing along with.”

“After years of trying to isolate China, they now want China’s help isolating China’s ally.”

“The lack of self-awareness is almost impressive.”

“Still, it’s deeply satisfying to finally see meaningful pushback against the economic tools that have long been used to pressure, constrain, and punish countries around the world.”

The Strait of Hormuz

Martin Armstrong’s recent essay: “The Strait of Hormuz is Repricing the Entire World Economy” discusses the dilemma the US faces in dealing with the consequences of the illegal war on Iran–the impact of the closing of the Strait of Hormuz on prices and inflation. Here’s Armstrong:

“The politicians continue to speak about the Strait of Hormuz as though this were merely a regional dispute between Iran and its neighbors. That is complete nonsense. The strait is one of the most important arteries in the global economy, carrying roughly one-fifth of the world’s oil and gas shipments. Brent crude has moved above $91, but the headline price of oil is only the beginning. The real economic damage appears in shipping rates, insurance premiums, refinery margins, diesel prices, electricity costs, and ultimately government borrowing. War does not remain confined to the battlefield. It enters every household through inflation.”

“Washington claims the strait is open while Iran insists it remains closed. Both statements are political propaganda because it is the shipowners, insurers, and commodity traders who determine whether a waterway is commercially open. A tanker can theoretically pass through Hormuz, but that means nothing if the insurance premium becomes prohibitive or the crew refuses to accept the risk. Most politicians have never operated a business and do not understand that commerce depends upon confidence—not government declarations. Once confidence collapses, trade will retreat regardless of how many officials stand before cameras insisting that everything remains under control.”

“The more serious warning is coming from refined products, particularly diesel. Politicians obsess over crude because that is the price quoted every evening on television. Yet modern civilization runs on diesel. Trucks transport food and consumer goods, farmers operate machinery, construction companies run heavy equipment, and emergency generators protect hospitals and critical infrastructure. When diesel rises, the cost of virtually everything rises with it.”

Diesel is now above $5.00 a gallon in most places. Moreover, US diesel prices are currently sitting at just below $190 per barrel. That’s higher than all but three days in March-April and trending toward the all-time highs of 2022. All with crude prices much lower and the crack doing much of the work.

The Proxy War on Russia is also not going well–the impact on wheat exports and food prices

Simplicius goes through the reasons why the proxy war on Russia is failing and what Zelensky’s probable reaction will be: “The closer Ukraine comes to battlefield defeat, the more it will redirect all of its available resources to targeting Russian civilian infrastructure in order to spur some kind of popular uprising of discontent against Putin.”

“The problem for Ukraine is, this creates an accelerating feedback loop of self-defeat: the more resources Ukraine pours into hitting militarily insignificant targets, the more Russia’s actual military might remain unaffected by Ukrainian combat power, which means the faster Ukraine’s collapse will accelerate on the real front. In essence, Ukraine is vesting its entire strategy into a war against Russia’s civilian sentiment, which is as risky a move as it was for the US in Iran, wherein strikes against civil infrastructure turned even the diehard anti-clerical contingent against the US and enshrined their support of the Iranian leadership.”

One serious impact of the proxy war on Russia is on the export of wheat by both Ukraine and Russia, two of the largest wheat exporters globally. This unfortunate war will have a huge impact on future food prices if the export of wheat continues to be blocked. Here’s one reaction: “It’s worse for the #wheat market than Hormuz was for crude.” Capacity in the region cut from about 3.3mn tons a month to about 250,000 tons at Russia’s only remaining operational facility at the Black Sea port of Tuapse.

The three-year high reached in wheat futures in July could soon be surpassed as the war continues to block wheat exports.

One Other Potential Impact: The US Stock Market

The Economic Longwave points to the current “extreme valuations” of the current US stock market as financial managers navigate what he calls “late Financial Autum” in preparation for “Financial Winter.”

“According to the Advisor Perspectives composite of four major U.S. stock-market valuation measures, the market ended July 2026 at roughly 176% above its long-term geometric mean. This means that stocks are not merely expensive, it means that stock valuations are historically extreme. The composite includes: Crestmont P/E, Cyclically Adjusted P/E, Q Ratio, S&P Composite relative to its long-term regression trend. Individually, each measure has limitations. Taken together, however, they tell a powerful story.”

As this Substack has pointed out, the U.S. stock market is trading at valuation levels that exceed those seen around several of the most famous speculative peaks in modern financial history. This includes: the late 1920s; the late 1960s; the technology bubble of 2000; the post-pandemic speculative surge. Yet this creates a conundrum. Extreme valuations do not mean that valuations cannot get more extreme and while risk may be high, there is no way to know if or when the market might fall or how such a market decline might progress.

Right now, global money flows continue to support US stock prices, but this could change. As they say, the US is still “the cleanest dirt shirt”. The US stock and bond markets not only depend on global money flows but also hold the savings of not only millions of Americans, but the rest of the world.

Conclusion

We live in interesting, complex, and very dangerous times.

“When plunder becomes a way of life for a group of men living together in society, they create for themselves in the course of time a legal system that authorizes it and a moral code that glorifies it.” Frédéric Bastiat’s “The Law”, 1850.

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By Uriel Araujo, InfoBrics, 8/24/26

The US national debt has surpassed $40 trillions for the first time amid fiscal pressures, the ongoing US-Israeli war with Iran and renewed inflation fears, with government borrowing on the rise.

The figure carries psychological weight, so to speak yet the real story here is the trajectory: gross federal debt reached 40.047 trillion on August 18, with about $32.3 trillion held by the public and around $7.8 trillion intragovernmental. It has more than doubled since 2017.

Six months earlier, the Congressional Budget Office had projected that gross federal debt would reach about $39.4 trillion by the end of the fiscal year. This faster-than-expected accumulation reflects, among other things, increased borrowing needs, including the fiscal effects of Middle East spending, while higher oil prices and bond yields add to inflationary and debt-service pressures. The 30-year Treasury yield hit 5.33 percent, its highest since 2007.

To be clear, the United States still issues the world’s main reserve currency, borrows in its own money and retains deep markets. No Greek-style crisis seems to be imminent yet. The problem here is what the debt constrains: interest costs are already huge while deficits stay large.

Washington must finance its Social Security, Medicare, defense increases, the Iran war, missile replenishment, industrial policy, infrastructure, tax cuts and possible further commitments in Europe and Asia. This creates a difficult equation: the US tries to sustain the world’s most expensive military and the leading reserve-currency system while fiscal room shrinks.

The military angle is what makes the debt more revealing: the ongoing munitions crisis does not necessarily mean America has suddenly grown weak – yet it shows military power has become costlier and harder to scale. The recent Council on Foreign Relations report is clear: the Iran war has drained high-end interceptors and stand-off weapons. Patriot, THAAD and Tomahawk inventories are significantly reduced – and restocking takes years.

In the same tone, CSIS calls rebuilding the missile inventory a “multiyear project” that opens a window of vulnerability in the Western Pacific.

From an American perspective, the answer would not be just throwing another $50 billion: it would require factories, supply chains, skilled labor, multiyear contracts and sustained spending over years.

A recent 22.9 billion dollar Tomahawk deal, for one thing, aims to lift production to more than 1,000 a year. Having sophisticated weapons after all is not the same as having enough for prolonged conflict.

The aircraft carrier situation points the same way: the (temporary) lack of a US carrier in the Western Pacific does not mean America “left” Asia. Alliances and bases remain. But moving the USS George Washington from Japan to relieve the Abraham Lincoln means one theater is consuming assets needed elsewhere. That is strategic overstretch: America can fight, but must increasingly choose where – to put it simply.

Human strain is also real, with a mental health problem: sailors on the Abraham Lincoln have reportedly tried suicidally to “go overboard” after record deployments. Recruitment may have improved recently, but public health, motivation and industrial capacity have simply not: it is always worth recalling that China’s shipbuilding capacity has been estimated at more than 200 times that of the US.

The obvious conclusion is that a Great Power that struggles to man ships or restock weapons will struggle to sustain multi-front high-intensity war, to put it mildly.

And then the Strategic Petroleum Reserve (SPR) adds an energy layer to this picture: it has fallen below 300 million barrels, the lowest level in over four decades.

Add to that disruptions around the Strait of Hormuz that have removed roughly 5–6 million barrels a day from global oil flows, leaving less buffer.

In this context, war raises oil prices, inflation and debt-service costs while also driving weapons depletion and costly rearmament. Those loops reinforce each other.

Meanwhile, China has reduced its holdings of US Treasuries to 633.4 billion dollars, the lowest since 2008. This is not evidence of a sudden sell-off, but it is consistent with Beijing’s longer-term diversification away from the US Treasuries.

The euro accounts for roughly 20% of global official foreign-exchange reserves, compared with about 58% for the dollar, while the Chinese renminbi remains near 2%.

De-dollarization is thus gradual: the dollar remains “number one,” but its share of reserves is declining as central banks diversify into other currencies and gold, whose purchases remain high amid geopolitical uncertainty. Gold, after all, is no one’s liability.

The euro in turn may benefit from this diversification, but it is no automatic substitute for the dollar; the Iran war has itself weighed on the euro through higher energy costs.

Meanwhile, America’s “exorbitant privilege” increasingly carries heavier costs, as military commitments, debt service and domestic spending compete for shrinking fiscal space. At some point the “warfare state” collides with the welfare state.

In any case, China still holds large dollar assets – its strategic interest arguably lies in a world where Washington can no longer turn dollar dominance into unlimited leverage. With US debt, depleted weapons stocks, stretched Pacific deployments and a diminished SPR set against China’s industrial edge, the superpower dispute today is increasingly about whether American intervention can remain financially and politically sustainable.

In other words, the 40 trillion dollar debt reveals the financial constraints underlying American power, while depleted missiles stocks expose its industrial constraints. The low SPR in turn points to an energy-security limit. And carrier shifts show the limits of force allocation. Taken together they are yet another sign of a shift from unipolar dominance toward a more constrained multipolar order.

America remains the strongest single power, yet it can no longer convert financial strength into military reach without paying a clearer price. That change should shape future US choices, given the increasing constraints on the sustainability of American primacy.

***

CIA director Ratcliffe arrives in Moscow on secret visit, US reports claim

Euronews, 8/25/26

CIA Director John Ratcliffe reportedly arrived in Moscow on an unannounced trip on Tuesday, according to US media outlets.

CBS News reported that Ratcliffe was in the Russian capital, citing sources familiar with the situation.

Neither Washington nor Moscow have confirmed Ratcliffe’s presence, and it was not immediately clear who the US spy chief was expected to meet or what would be discussed.

News of the visit came after a US Air Force Boeing C-17A Globemaster III transport aircraft landed at Moscow’s Vnukovo airport earlier in the day.

Flight-tracking data showed that the aircraft had arrived in Moscow from Riga. It landed in the Latvian capital on Sunday after departing from Camp Springs, Maryland, home to Joint Base Andrews near Washington.

The unexplained flight initially prompted speculation that senior US officials could be travelling to Moscow, including possibly President Donald Trump’s envoys Steve Witkoff and Jared Kushner, who have repeatedly held talks with Russian officials.

US diplomatic motorcade was also spotted travelling through the Russian capital after the aircraft landed.

Kremlin spokesman Dmitry Peskov said earlier on Tuesday that he had no information about the US military aircraft and that no meetings with representatives of the US administration were planned at the Kremlin this week.

The reported visit comes just a day after Ukraine marked its 35th Independence Day, with European leaders travelling to Kyiv to demonstrate their support for the country defending itself from Russia’s ongoing all-out war.

No serving representatives of the Trump administration attended Monday’s events. Witkoff and Kushner did not attend either, despite earlier speculation that the anniversary could bring their first visit to Ukraine.

Neither envoy has travelled to Kyiv since taking a leading role in the Trump administration’s diplomatic efforts, despite repeated meetings with Russian officials and Witkoff’s eight visits to Moscow.

Ratcliffe has maintained contacts with his Russian intelligence counterparts and previously participated in negotiations with Moscow.

He was directly involved in negotiations with a senior Russian intelligence official that led to the April 2025 release of US-Russian dual national Ksenia Karelina.

The last CIA director known to have travelled to Moscow was William Burns in November 2021, months before Russia launched its full-scale invasion of Ukraine.

By Ben Aris, Substack, 8/19/26

The Telegraph came out with a story yesterday: “Russians withdraw billions from banks on fears the Kremlin will confiscate savings” of the genre “Russia is about to collapse,” that has been a staple of Russia coverage for more than 20 years.

It’s BS. Not only are savings in deposit accounts not falling, they have doubled since the war in Ukraine began and are currently at an all-time high, and still rising by 10% pa. The exact opposite to the implied run on banks the piece is suggesting is going on.

Moreover, the confiscation thing is a meme that appeared about two years ago and has been virulently denied by the authorities several times. Plus, it makes no sense. CBR governor Elvia Nabiullina fully realises that if she did attempt to seize everyone’s savings that would wreck the financial system. According to banking professionals the rumour was started by real estate developers, who were trying to boost sales and get people to move their savings into bricks and mortar. And actually, that has happened to some extent as money has been on the move, but for an entirely different set of reasons.

I won’t go into all the details here, but I did a deep dive into what is going on (unlike The Telegraph, I looked all the numbers up) and what came out was a lot of interesting detail on the forces currently at play in the Russian economy and some very real problems that do exist in the banking sector.

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Briefly, if you can’t be bothered to wade through the piece, the story is pretty simple. Following the initial shock of invasion two important things happened: the labour shortage drove wages up dramatically; and interest rates spiked. Since 1991, Russians’ favourite store of wealth has been high-yielding bank accounts so cash has been flooding into bank accounts – you could earn 20% pa from just putting your rubles on deposit for most of the last couple of years. You try and get a return like that anywhere else – a guaranteed return that is also covered by the comprehensive and highly efficient deposit insurance scheme.

But this year a bunch of things changed. The two most important are that inflation expectations are up to around 15%, which is above the 14% overnight rates, so it makes more sense to spend your money than keep it. After Nabiullina put through 700bp of rate cuts, more cuts are on the cards making the inflation eating away at your savings problem worse => get cash and spend it.

Another is that the economy has stalled and swelling personal incomes have deflated so the savings rate has slowed simply as people are getting less money.

And the one point The Telegraph piece makes that is true is the demand for cash has jumped. But that is not because people fear confiscation, but simply the shadow economy has grown thanks to a 2pp hike in VAT: the situation for SMEs has deteriorated rapidly from the triple whammy of a sharp economic slowdown, falling disposable incomes and increased sales tax, so they have gone into cash to avoid paying taxes.

Another factor driving the switch to cash is the internet outages this year that forced people to change from contactless payments to cash – April was the worst month for disruptions and it was also the same month for a spike in cash withdrawals. That shows you how far Russia has gone towards a cashless economy – something you’d realise if you lived there: your phone is your wallet in Russia. They love gizmos.

As for the banking sector, it remains solid. Sberbank, which is about half the banking sector on its own, just reported record profits of $12.6bn and will pay a whopping dividend to the state. (Part of the reason is it can just buy OFZ that are paying over 13% using much cheaper depositor’s money. The Ukraine banking sector is also extremely profitable for the same reasons, buying OVDPs from MinFin.)

The one black spot is that NLPs have risen from about 4% of the loan book to over 11% now, which is not great. And the true number is almost certainly higher, as what banks do is restructure AWOL debt, pushing repayment down the road so they can keep bad debt off the “problem” list as they are required to provision for non-performing debt which eats up their capital – and they hate that. It’s an old trick that has gotten Russian banks through multiple crises. But as all the debt is provisioned thanks to Nabiullina’s clean up, that debt is covered ruble for ruble with cash so it can’t blow the sector up.

Taken all together this paints a picture for me of an extremely well-run financial sector, but an economy under pressure where the punters are making rational decisions about what to do with their wealth – and having options. During the hyperinflation of the 1990s people made the same sort of decisions: buying dollars (if you could get them) was obviously a favourite option but buying cars and washing machines were popular alternatives as they were easy to sell later when you wanted cash again. These days there are even more choices, like money market funds or apartments where the developers are subsidising mortgages to keep demand up – that’s a bet that interest rates will come down over the next 8-25 years, which is a pretty solid bet.

The final point is that the accumulated savings is now RUB70 trillion, which is an enormous pool of money – more than ten times the size of the budget deficit, so it could fund Russia’s war for a decade. The question facing MinFin is how to get that money. Confiscating it is a mindless solution that would be self-destruction.

But I have made this point before: Russia is not on a full war footing – nowhere near it. When the US joined WWII its budget deficit jumped to 22% of GDP and stayed there for three years. Russia’s budget deficit is “high” but it’s still only 2.9% of GDP – less than the EU’s “excessive deficit” threshold.

Still, while the deficit number is low in absolute terms and external debt is also less than 20% (the lowest in the world of any major economy by a wide margin), the cost of servicing the bonds needed to cover these shortfalls is extremely high – so high that it eating up as much money as if the debt was well over 100% of GDP – more than France and the UK are paying and they are both basket cases – so this is a real issue for the Kremlin.

During WWII both the US and the UK sold “war bonds” as a way to tap the population’s savings, which is a really obvious mechanism. And given the average Russian is ten-times more interest rate savvy than the average Brit or American, it would definitely work – if you offered enough, but with the population you could offer longer maturities than you could with banks. However, this idea has not even been floated yet. And there are plenty of other things the Kremlin could do to tap into this pool of liquidity that is doing nothing other than sitting about in the vaults.

So, a nice headline, that has led to some insights, but the bottom line is the quality of the reporting and analysis of what is really happening in Russia remains pretty thin as all these numbers are publicly available and easy to get. And even if you are not an expert in banking or economics then you have AI now to explain it to you.