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The Inevitable Winner of the War in Ukraine

No matter how the war ends, high finance will win.


“Pay no attention to that man behind the curtain" 

−Oz the Great and Terrible

As war shakes Eastern Europe, combatants on both sides have suffered heavy losses. Despite Ukraine’s tenacity and its latest battlefield gains, a long-term victory will likely be pyrrhic at best. Likewise Russia has acquired new NATO candidates on its northern flank and is burning through resources while its economy contracts. Watching the confrontation unfold it is difficult to envision how anyone could emerge a winner. Or is it? 


The anti-war commentariat has focused primarily on the American arms industry, their voices being joined recently by European leaders who have made public allegations of war profiteering. Granted, there is something to this in light of the billions of dollars of weapons and munitions headed overseas. Still, there is another faction of the American power structure that has been content to stand aside and let the defense contractors take all the heat. 

Recent history offers several important lessons about who benefits from wartime ruin. During the First World War, President Wilson was elected for a second term based on a platform of peace. His famous 1916 campaign slogan was “he kept us out of war.” Of course, that would change. Though the public’s attention at the time was focused on the threat posed by German submarines, a syndicate of bankers led by J.P. Morgan Jr. played a less conspicuous role in changing Wilson’s mind. 

Morgan’s syndicate had financed the Allied war effort to the tune of $1.5 billion and the threat of an Axis victory put the entire American economy at risk. In 1917 the GDP of the United States was around $60 billion. President Wilson knew the score, Morgan and company didn’t need to spell out what would happen if their loans defaulted. And, of course, not being one to miss a golden opportunity, in the aftermath of the war, Morgan extended $10 billion in loans to rebuild Europe. 

It is important to note that the American public didn’t necessarily share President Wilson’s newfound outlook. So the Wilson administration formed the Committee on Public Information (CPI), led by journalist George Creel. The CPI’s mission was to propagandize Americans to build support for military involvement in what was commonly viewed as a Europeans problem. The CPI created the perception that America’s entry in the First World War was necessary to “make the world safe for democracy” and protect Allied civilians from bloodthirsty Huns. Caveat emptor, atrocity stories like this have become part and parcel for media reporting in times of war. 

Decades later, large financial interests would once again use their clout. In the initial stages of the Second World War, the Rockefeller Foundation routed funds to the Council on Foreign Relations to launch the War and Peace Studies, a project that discreetly provided the State Department with foreign policy guidance. American elites predicted early on that, thanks to geography, the United States would be the only industrial and military power left in one piece at the end of the war, meaning that there would be a captive market for American exports and security guarantees. Former world powers, devastated by years of fighting, would be desperate for aid and therefore receptive to American terms. 


American elites were spot on, such that the War and Peace Studies served as a blueprint of sorts for the Pax Americana that ensued. Circa 1945 reconstruction took center stage, and loans were extended to transform allies and enemies alike into “reliable trading partners.” For example, the United States loaned England over $4 billion in 1945, making the once mighty British Empire into a mere junior partner. But the true lynchpin of American dominance was the Bretton Woods Agreement of 1944. That agreement imposed the U.S. dollar as the world’s reserve currency, meaning the dollar would be convertible to gold and other national currencies would be fixed in value relative to the dollar. 

The Bretton Woods Agreement created demand for dollars that, to this day, enables Uncle Sam to borrow at lower interest rates than other countries. This demand for dollars also allows the United States to run an unusually high federal debt, which it then uses to pay for protracted military campaigns like the 20-year War on Terror. Think of it this way: in a business sector where money serves as a raw material, American financial institutions possess a clear and enviable advantage. The Treasury can essentially print money and other countries have no choice but to accept the inflated currency. Another result of the Bretton Woods Agreement was the creation of the World Bank and International Monetary Fund, which were established to extend credit to nations trying to restore their economies. Nearly 80 years later both institutions still exist. In 2021, the World Bank issued debt in excess of $98 billion

Back in 2016 President Obama stressed that Ukraine was “a core Russian interest but not an American one.” So what accounts for the foreign policy U-turn that gave Ukraine a blank check

The public record yields an assortment of narratives. According the Secretary of Defense Lloyd Austin, the United States has intervened to “see Russia weakened”—an explanation that has some merit as the Russian war machine shows signs of duress. President Biden, opting for glittering generalities, told reporters that we’re “defending freedom and democracy” (sound familiar?) by confronting autocrats. That is an odd stance given his high profile fist bump with the leader of Saudi Arabia. Meanwhile the political screenwriters who inhabit globalist think tanks are warning that Putin wants to “relitigate the end of the Cold War” such that there is no choice but to get involved before Russia moves beyond Ukraine and tries to recover what the Soviet Union lost when it collapsed. That’s an awkward position that entails a degree of cognitive dissonance regarding Article V of the NATO Treaty and the prospect of nuclear war.  

Whatever the intentions of our leaders and the underlying considerations that motivate them, one thing is certain: the longer this war continues the greater the destruction it entails. War strip-mines afflicted regions. When the dust settles, the remnants of Ukraine will need to be rebuilt from the ground up. And that, dear reader, will cost a pretty penny. There will be debt, lots of it, on the same scale as the occupation of Iraq, where the United States spent more than it did in Germany and Japan after World War II. 

President Biden has declared that there is “nothing about Ukraine without Ukraine,” yet at this point it’s hard to view Ukraine as anything other than a client state, bought and paid for with pallets of tax money. When the fighting finally grinds to a halt, Team Zelensky will be desperate for loans—hundreds of billions of dollars of loans. Post-war economic renewal is the biggest of the big-ticket items. Guess who will be there when the time comes for Zelensky to sign on the dotted line? The same financial institutions currently eyeing Ukraine’s markets and natural resources—the institutions that walked away from the Great Recession of 2008 with even more capital and influence. No matter how the war ends, high finance will win.  


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