Posts Tagged ‘Iran’

 

The geopolitical reality in the Middle East is changing dramatically.

The impact of the Arab Spring, the retraction of the U.S. military, and diminishing economic influence on the Arab world – as displayed during the Obama Administration – are facts.

The emergence of a Russian-Iranian-Turkish triangle is the new reality. The Western hegemony in the MENA region has ended, and not in a shy way, but with a long list of military conflicts and destabilization.

The first visit of a Saudi king to Russia shows the growing power of Russia in the Middle East. It also shows that not only Arab countries such as Saudi Arabia and the UAE, but also Egypt and Libya, are more likely to consider Moscow as a strategic ally.

King Salman’s visit to Moscow could herald not only several multibillion business deals, but could be the first real step towards a new regional geopolitical and military alliance between OPEC leader Saudi Arabia and Russia.

This cooperation will not only have severe consequences for Western interests but also could partly undermine or reshape the position of OPEC at the same time.

Russian president Vladimir Putin is currently hosting a large Saudi delegation, led by King Salman and supported by Saudi minister of energy Khalid Al Falih.

Moscow’s open attitude to Saudi Arabia—a lifetime Washington ally and strong opponent of the growing Iran power projections in the Arab world—show that Putin understands the current pivotal changes in the Middle East.

U.S. allies Saudi Arabia, Egypt, Turkey and even the UAE, have shown an increased eagerness to develop military and economic relations with Moscow, even if this means dealing with a global power currently supporting their archenemy Iran. Analysts wonder where the current visit of King Salman will really lead to, but all signs are on green for a straightforward Arab-Saudi support for a bigger Russian role in the region, and more in-depth cooperation in oil and gas markets.

In stark contrast to the difficult relationship of the West with the Arab world, Moscow seems to be playing the regional power game at a higher level. It can become an ally or friend to regional adversaries, such as Iran, Turkey, Egypt and now Saudi Arabia. Arab regimes are also willing to discuss cooperation with Russia, even though the country is supporting adversaries in the Syrian and Yemen conflicts and continues to supply arms to the Shi’a regime in Iran.

Investors can expect Russia and Saudi Arabia to sign a multitude of business deals, some of which have already been presented. Moscow and Riyadh will also discuss the still fledgling oil and gas markets, as both nations still heavily depend on hydrocarbon revenues. Arab analysts expect both sides to choose a bilateral strategy to keep oil prices from falling lower. Riyadh and Moscow have the same end goal: a stable oil and gas market, in which demand and supply keep each other in check to push price levels up, but without leaving enough breathing space for new market entrants such as U.S. shale.

Putin and Salman will also discuss the security situation in the Middle East, especially the ongoing Syrian civil war, Iran’s emerging power, and the Libya situation. Until now, the two have supported opposite sides, but Riyadh has realized that its ultimate goal, the removal of Syrian president Assad, is out of reach. To prevent a full-scale Shi’a triangle (Iran-Iraq-Syria-Lebanon), other options are now being sought to quell Tehran’s power surge. Moscow is key in this.

Putin’s unconditional support of the Iranian military onslaught in Iraq and Syria, combined with its support for Hezbollah in Lebanon or Houthis in Yemen, will be discussed and maybe tweaked to give Riyadh room to maneuver into the Russian influence sphere. The verdict on this isn’t yet out, but Riyadh’s move must be seen

in light of ongoing Moscow discussions with Egypt, Libya, Jordan and the UAE.

A growing positive Putin vibe in the Arab world is now clear. The strong leadership of Russia’s new Tsar has become a main point of interest for the (former pro-Western) Arab regimes. The U.S. and its European allies have only shown a diffuse political-military approach to the threats in the MENA region, while even destabilizing historically pro-Western Arab royalties and presidents. Putin’s friendship, however, is being presented as unconditional and long lasting.

Even though geopolitics and military operations in the Middle East now are making up most headlines, the Saudi-Russian rapprochement will also have economic consequences. Riyadh’s leadership of OPEC is still undisputed, as it has shown over the last several years. Saudi Arabia’s eagerness to counter the free-fall of oil prices has been successful, but a much bigger effort is required to bring prices back to a level of between $60-75 per barrel. Russia’s role—as the largest of non-OPEC producers—has been substantial, bringing in not only several emerging producers, but also by putting pressure on its allies Iran, Venezuela and Algeria.

The historically important Moscow-Riyadh cooperation in oil and gas is unprecedented. Without Russia’s support, overall compliance to the OPEC production cut agreement would have been very low, leading to even lower oil prices.

The Saudi-Russian rapprochement could, however, be seen as a threat by the West and OPEC itself. Western influence in the region has waned since the end of the 1990s, not only due to the peace dividend of NATO, but especially because OECD countries are moving away from oil. Saudi Arabia had to find new markets, which happened with China and India. The Saudi future is no longer based on Western customers or support, but lies in Asia and other emerging regions. The FSU region has also popped up on Saudi screens. Investment opportunities, combined with geopolitical support and military interests, are readily available in Russia and its satellite states.

For OPEC, the Moscow-Riyadh love affair could also mean a threat. Throughout OPEC’s history, Riyadh has been the main power broker in the oil cartel, pushing forward price and production strategies; most of the time this was done in close cooperation with all the other members, most of them Arab allies. This changed dramatically after Saudi Arabia and Russia agreed to cooperate in global oil markets. Through the emergence of this OPEC/ non-OPEC cooperation, Moscow and Riyadh have grown closer than expected. The two countries now decide the future of global oil markets before they discuss it with some of the other main players like UAE, Iran, Algeria and Nigeria. King Salman’s visit is seen as another step toward a more in-depth cooperation in oil and gas related issues.

Besides global oil market cooperation, Saudi Arabia is and will become more interested to invest in natural gas development, not only to have an interest in Russia’s gas future but also to bring in Russian technology, investment and LNG to the Kingdom.

At the same time, media sources are stating that Saudi Arabia is NOT asking Russia to take part in the long-awaited Aramco IPO in 2018. Russian individual investors and financial institutions, however, are expected to take an interest.

Putin understands not only Russian chess tactics but also the Arab “Tawila” approach. Saudi Crown Prince Mohammad bin Salman already will prepare his Tawila strategy, putting enough stones on the table to ensure his successful end game. MBS, currently de-facto ruler of the Kingdom, is targeting a full house—Russian cooperation in energy, defense and investments—while softening Moscow’s 100% percent support of the Shi’a archenemy Iran.

For both sides, Moscow and Riyadh, the current constellation presents a win-win situation. Moscow can reach its ultimate goal in the Middle East: to become the main power broker and knock the US from the pedestal. For Riyadh, the option to counter the Iranian threat, while also bolstering its own economy and hydrocarbon future, is now within reach.

King Salman’s trip could go down in history as the point of no return for the West. Pictures of Russian President Vladimir Putin and King Salman of Saudi Arabia could replace historic pictures of King Saud and U.S. President Roosevelt (Bitter Lake, 1945). In a few years, King-to-be Crown Prince Mohammad bin Salman might tell his children that this was one of the pillars that changed not only the Middle East but also supported his Vision 2030 plan of becoming a bridge between the old (West) and the new (Russia-Asia).

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Alleged Plan B

Posted: September 19, 2017 in Uncategorized
Tags: , , , , ,

by: Lech Biegalski

 

Partition of Syria has always been plan „A” for the US. Now, it has been renamed as Plan „B”, but it still is the same plan. The US wants to control the NE part of Syria for two, and only two reasons:

1.That’s where the Syrian oil and gas deposits are located;
2.That’s where the projected new pipelines, connecting the Gulf States through Turkey to Europe, are to merge.

 

Map A: The oil corridor between Oman and Turkey

 

Map B: Oil and natural gas deposits around Baku

 

The situation in Syria is part of the attempt, by the West, to control crude oil and natural gas reserves, as well as to control pipeline corridors connecting Arab and Azerbaijani oil and gas fields with Europe. These projected pipelines are planned by American oil companies. On their side are the producers (Saudi Arabia, Qatar, Azerbaijan) as well as the transit countries (Turkey, Ukraine). This explains why the U.S., Saudi Arabia, Turkey and Qatar support terrorists attempting to destabilize Syria.

https://regionpojezierze.files.wordpress.com/2016/02/rurociagi1.jpg?w=640&h=480

In map C, the blue lines represent existing and projected Russian pipelines, the red lines represent the existing and projected Western pipelines.

(Please see the Updates at the bottom of this article for new developments)

One look at Map C, above, shows that projected pipeline corridors from Azerbaijan have to run through Georgia, South Ossetia, Abkhazia, with Ignushetia, Dagestan and Chechnya, then through Crimea, Ukraine and Moldova. There was a big push by the West to incite color revolutions, armed rebellions, regime changes and wars along this route in order to control these pipeline corridors. All these „revolutions”, „rebellions”, and wars were not a coincidence. They happened along these pipeline corridors for a reason.

Pipelines running from the Arab countries on both sides of Persian Gulf have to tap into the reserves in Yemen, Oman, U.A.E., Qatar, Kuwait, Iran, Iraq, and Syria, before entering Turkey on their way to Europe. And this explains why we have war in Yemen, Iraq, and Syria, as well as pressure on Iran. Now, (June 2017), also pressure on Qatar.

Russia has invested a lot of money into its existing pipelines to Europe and Russia does not want to lose the European energy markets. Therefore, Russia is blocking the western projected Baku pipelines along the Georgia-Chechnya-Dagestan-Ignushetia-South Ossetia-Abkhazia-Armenia line, then on the line of Crimea-Doneck-Luhansk-Kharkiv, with some attempts to secure its interests in Moldova. It is also blocking the Persian Gulf pipelines in Iran, Iraq, and Syria.

Now, look at maps A and C, above, and locate the huge crude oil i natural gas deposits along the eastern shore of the Caspian Sea, mainly in Kazakhstan and Turkmenistan, as well as in Uzbekistan. If only these energy resources could be sold and shipped eastward, to India and China, somebody would make a lot of money, again. To achieve this goal, that somebody needs to run pipelines through Kazakhstan, Turkmenistan, Uzbekistan, Tajikistan, Kyrgyzstan, and yes, through Afghanistan and Pakistan. Isn’t it a lucky coincidence that in those countries, along these projected pipeline corridors, we also had a series of color revolutions, a putsch in Pakistan, and a major war in Afghanistan, where we now have US military bases making sure that the project runs smoothly?

There is no mystery about it, it’s realpolitik and lots of money are involved. Color revolutions and armed rebellions just don’t happen because the people have had enough of the existing regimes. Wars don’t happen to „help the poor Afghani women” or to „protect civilians.” They are carefully planned and manufactured, usually from abroad and always for economic objectives.

In short, Russia is attempting to protect the existing status quo, while the US and its allies are trying to change it. This is why the US and its allies must organize revolutions, rebellions, and wars, and must break international law, employ proxies, and sponsor terrorists. Russia, on the other hand, uses international law to prevent changes and defend its interests.

The name of the game is who is going to sell oil and natural gas to Europe, who the transit countries are going to be, and who is going to run and control the pipelines. The NE corner of Syria is what the Americans want to control, as this is where the two pipelines running from the Persian Gulf are to merge. It also contains the Syrian deposits of oil and natural gas.

In NE Syria, the US forces are enlarging a small rural airstrip near Rmaylan, establishing military bases, and concentrating their ground troops. Terrorists sponsored by the US and their allies attempt to carve out NE Syria by developing strongholds along the Euphrates River (Jarbulus, Manbij, Sarrin, Raqqa, Deir ez-Zur). This is also where the US is planning some kind of Kurdish entity, of course with a government friendly to Washington and its plans.

Such is the real truth. It’s the gas, the oil, and the pipelines. And lots of lettuce. The rest of the story is a smoke and mirrors, diversion, and propaganda.

 

Major Russian gas pipelines (click to enlarge)

Yamal – Europe pipeline

Nord Stream

South Stream

Nabucco and South Stream pipelines

 

 

 

 

Confirming, and sending the clearest sign of his previously discussed pivot toward Russia and away from NATO and the West, on Tuesday President Recep Tayyip Erdogan announced that Turkey had signed a deal to purchase a Russian surface-to-air missile system, and paid the first installment. The deal cements Turkey’s recent rapprochement with Russia, despite differences over the war in Syria, the downing of a Russian fighter jet over Turkey in late 2015 and the assassination of a Russian ambassador earlier this year, and comes as Turkey’s ties with the United States and European Union have become strained to the point of breaking.

Although the missile purchase from Russia was made public several months ago, Erdogan’s announcement was the first confirmation that Turkey had transferred money to pay for the S-400 missile system.

“Signatures have been made for the purchase of S-400s from Russia,” Erdogan said in comments published in several newspapers on Tuesday. “A deposit has also been paid as far as I know.”

As the NYT writes, “the purchase of the missile system flies in the face of cooperation within the NATO alliance, which Turkey has belonged to since the early 1950s. NATO does not ban purchases of military hardware from manufacturers outside the American-led alliance, but it does discourage members from buying equipment not compatible with that used by other members.”

According to reports in the Russian media, Turkey is to get four batteries of S-400 launchers complete with targeting radar and control posts. Some aspects of the deal are reportedly to be finalized, but Russian officials said the contract furthers Russia’s geostrategic interests.

* * *

Predictably, the Pentagon promptly reiterated its concerns over the deal, which it said undermines inter-operability of weapons systems among NATO allies. “We have relayed our concerns to Turkish officials regarding the potential purchase of the S-400. A NATO inter-operable missile defense system remains the best option to defend Turkey from the full range of threats in its region,” spokesman Johnny Michael said in a statement.

A NATO official in Brussels where the alliance is headquartered, said that no NATO member currently operates the Russian missile system and that the alliance had not been informed about the details of the purchase by Turkey. “What matters for NATO is that the equipment allies acquire is able to operate together,” the official said, speaking on the condition of anonymity as required by alliance procedures. “Interoperability of allied armed forces is essential to NATO for the conduct of our operations.”

However, on Wednesday Turkish President Recep Tayyip Erdogan slammed the critics of Turkey’s deal with Russia, saying Ankara had no intention of waiting for the protection of its NATO allies.

“They have gone crazy because we made a deal for S-400s,” Erdogan said Wednesday in a speech to the ruling AKP mayors in Ankara, as cited by Hurriyet.

“What do you expect? Should we wait for you? We take care of ourselves in every security point. We are taking precautions and we will continue to do so,” the Turkish leader said.

Erdogan criticized the reluctance of US and Israel to authorize supply of combat drones to Turkey as another example of how Turkish security was sidelined by its allies.

“When they did give [drones], their repair and maintenance put us in a difficult position. Now [Turkey] has come to a point where it can produce its own unmanned, armed air vehicles. And now they are uncomfortable with that,” Erdogan added.

Erdogan also dismissed issues of interoperability, brand loyalties or the geopolitical optics of such a sale. “Nobody has the right to discuss the Turkish republic’s independence principles

or independent decisions about its defense industry,” the daily newspaper Hurriyet reported him as saying.

“We make the decisions about our own independence ourselves,” he said. “We are obliged to take safety and security measures in order to defend our country.”

As the NYT adds, Erdogan’s announcement — made to Turkish journalists aboard his presidential jet as he returned from Kazakhstan — appeared timed as a response to two judicial cases announced last week in the United States. One is against his presidential bodyguards, who are charged with assaulting protesters when Mr. Erdogan visited Washington this year. The other is against a group of Turks, including a former minister, accused of breaking United States sanctions against Iran. Erdogan has angrily criticized both cases.

* * *

The S-400 SAM is designed to detect, track and then destroy aircraft, drones or missiles. It’s Russia’s most advanced integrated air defense system, and can hit targets as far as 250 miles away. Russia has also agreed to sell them to China and India, both nations who are masters at reverse engineering. Most concerning for NATO, however is that the systems delivered to Turkey would not have a friend-or-foe identification system, which means they could be deployed against any threat without restriction.

Turkey has been weighing options for acquiring long-range SAMs for years. In 2013, Ankara surprised other NATO members by announcing that it was going to purchase the FD-2000 system from China, sparking criticism from Washington. Defense observers speculated that Turkey played the China card to put pressure on its allies and get better terms for buying a NATO-compatible SAM system, such as the US-made Patriot PAC-3. The Chinese deal stalled and was eventually scrapped, with Turkey reportedly unhappy over Beijing’s reluctance to hand over the technology behind the advanced system. Last year Ankara announced that it was in talks with Russia over a potential purchase of the S-400.

Turkey has other reasons for the missile purchase. It needs to cultivate good relations with Russia, and it also needs to build its own military defense, said Asli Aydintasbas, a fellow at the European Council on Foreign Relations. “Turkey wants the deal,” she said, “and Russia is only too happy to drive a wedge into the NATO alliance.”

While NATO’s collective defense should have been sufficient for Turkey – NATO deployed Patriot missiles there during a rise of tensions with Syria in the past – Erdogan lost trust in the West since last year’s failed “coup attempt”, which he slammed repeatedly as a Western plot to oust him, and appears determined to secure his own defense.

Furthermore, the transfer of technology from Russia is attractive to Turkey: Erdogan has spoken also of his frustration at having requests to the United States for drones turned down, and of his satisfaction that Turkey developed its own.

Notably, Erdogan’s announcement of the deal with Russia came after Germany said that it was suspending all major arms exports to Turkey because of the deteriorating human rights situation in the country and the increasingly strained ties. “We have put on hold all big requests that Turkey sent to us, and these are really not a few,” the German foreign minister, Sigmar Gabriel, said during a panel discussion in Berlin on Monday, according to Reuters.

While the purchase of Russian missiles will take cooperation between the two nations to a new level, but is not the first time that Turkey has bought military equipment from Russia. It turned to Moscow in the early 1990s to buy military helicopters and armored personnel carriers. Last year, Russia and Turkey reached an agreement to revive a suspended natural-gas pipeline project.

Meanwhile, as the US military-industrial complex has flourished in recent months following a spike in deals with Saudi Arabia, South Korea and other nations courtesy of rising geopolitical tensions, Russia has remained largely squeezed out of the arms market in Western and Eastern Europe, even in countries that once bought nearly all their weapons from the Soviet Union, has looked for years to NATO’S eastern flank as a promising market and the alliance’s weakest link. It has also sold weapons to Greece, another NATO member and to Cyprus, which is not a member of NATO but houses British military bases and effectively serves as an outpost of the alliance.

Meanwhile, as Turkey’s suspicions toward the West have grown, relations with Russia warmed, driven by the personal relationship between Erdogan and Vladimir Putin. Erdogan has expressed personal admiration for Putin, to the consternation of many European and American leaders, if not President Trump. Erdogan has also shown a preference for the Russian model, with its sense of restoring a lost empire, returning Turkey to a more independent place in the world and rejecting Western democracy.

At the same time, the fact that Turkey belongs to NATO has only increased Mr. Putin’s desire to forge strong relations with Mr. Erdogan despite their differences over the conflict in Syria.

Mr. Putin and myself are determined on this issue,” Erdogan told journalists about the missile deal.

 

For the better part of a year now Americans have speculated over precisely what pressing national security issue may have prompted the Obama administration to take the extreme measure of unmasking the names of Trump officials captured in foreign intelligence reports…you know, because bypassing the typical warrant process and violating an American citizen’s fourth amendment protections is kind of a big deal.

So what was it…intelligence concerning an imminent terrorist attack…concrete evidence that Putin stole Hillary’s emails? No, according to CNN, National Security Advisor Susan Rice ultimately made the call to unmask Trump officials because Obama was offended that the crown prince of the United Arab Emirates traveled to New York last December, after the election mind you, without giving him a heads up first.

 

Former national security adviser Susan Rice privately told House investigators that she unmasked the identities of senior Trump officials to understand why the crown prince of the United Arab Emirates was in New York late last year, multiple sources told CNN.

The New York meeting preceded a separate effort by the UAE to facilitate a back-channel communication between Russia and the incoming Trump White House.

The crown prince, Sheikh Mohammed bin Zayed al-Nahyan, arrived in New York last December in the transition period before Trump was sworn into office for a meeting with several top Trump officials, including Michael Flynn, the president’s son-in-law, Jared Kushner, and his top strategist Steve Bannon, sources said.

The Obama administration felt misled by the United Arab Emirates, which had failed to mention that Zayed was coming to the United States even though it’s customary for foreign dignitaries to notify the US government about their travels, according to several sources familiar with the matter. Rice, who served as then-President Obama’s national security adviser in his second term, told the House Intelligence Committee last week that she requested the names of the Americans mentioned in the classified report be revealed internally, a practice officials in both parties say is common.

Of course, CNN attempts to downplay the gravity of these new revelations but somehow we suspect that Obama getting his feelings hurt over a breach in travel protocol of a foreign dignitary is not a valid reason to spy on American citizens…though we’re not lawyers.

CNN noted that it’s unclear precisely which Trump officials Rice discussed at the House meeting, and thus which officials were ultimately unmasked, but multiple sources apparently confirmed to them that Zayed met at the time with Flynn, Kushner and Bannon. The three-hour discussion focused on a range of issues, including Iran, Yemen and the Mideast peace process, according to two of CNN’s sources who insisted that opening up a back-channel with Russia was not a topic of discussion.

 

A senior Middle East official told CNN that the UAE did not “mislead” the Obama administration about the crown prince’s visit, but acknowledged not telling the US government about it in advance. The meeting, which took place December 15, 2016, the official said, was simply an effort to build a relationship with senior members of the Trump team who would be working in the administration to share assessments of the region.

“The meeting was about ascertaining the Trump team’s view of the region and sharing the UAE’s view of the region and what the US role should be,” the official said. “No one was coming in to sell anything or arrange anything.”

Meanwhile, Republican responses on the hearing have been mixed with Trey Gowdy saying it appears as if Rice did nothing illegal while White House press secretary Sarah Sanders simply deferred on the legality of her actions.

 

Rep. Trey Gowdy, a South Carolina Republican who is helping lead the House investigation, told the Daily Caller “nothing that came up in her interview that led me to conclude” that she improperly unmasked the names of Trump associates or leaked it to the press.

Sarah Sanders, the White House press secretary, did not say explicitly whether Trump still believes Rice committed a crime but added the issue of leaking and unmasking needs to be investigated.

“We’ve seen illegal leaking of classified materials, including the identities of American citizens unmasked in intelligence reports,” Sanders told CNN. “That’s why the President called for Congress to investigate this matter and why the Department of Justice and Intelligence Community are doing all they can to stamp out this dangerous trend that undermines our national security.”

Just to summarize, Susan Rice unmasked the names of American citizens, which effectively means she spied on them without a warrant, because President Obama was offended that the crown prince of the UAE met with the newly elected administration without first giving him a heads up? Does that sound reasonable to everyone?

Then again, maybe this entire story from Rice/CNN is complete bullshit and was only concocted as a way to avoid admitting that the Obama White House was pissed they lost an election and basically turned the entire U.S. intelligence apparatus into a political weapon to dig up any dirt they could find on an adversary.

So, what say you?

 

Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?

Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters,

“Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

And today, as The Wall Street Journal reports, in an effort to circumvent U.S. sanctions, Venezuela is telling oil traders that it will no longer receive or send payments in dollars, people familiar with the new policy said.

 

Oil traders who export Venezuelan crude or import oil products into the country have begun converting their invoices to euros.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

The new payment policy hasn’t been publicly announced, but Vice President Tareck El Aissami, who has been blacklisted by the U.S., said Friday, “To fight against the economic blockade there will be a basket of currencies to liberate us from the dollar.”

There is no major market reaction for now – a modest bid to Bitcoin and some weakness in EUR and Gold (seems someone wants this to look like nothing).

However, as Nomura debt analyst Siobhan Morden warns:

“You can say whatever you want for your domestic propaganda and make it look like you’re retaliating against the U.S…. This political posturing will only be to their detriment.”

So what happens if Europe also sanctions Venezuela? Will Rubles or Yuan… or Gold be the only way to buy Venezuela’s oil?

* * *

This decision by the nation with the world’s largest proven oil reserves comes just days after China and Russia unveiled the latest Oil/Yuan/Gold triad at the latest BRICS conference.

It’s when President Putin starts talking that the BRICS reveal their true bombshell. Geopolitically and geo-economically, Putin’s emphasis is on a “fair multipolar world”, and “against protectionism and new barriers in global trade.” The message is straight to the point.

“Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan.

Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.

The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.

RC – via the Russian Central Bank and the People’s Bank of China – have been developing ruble-yuan swaps for quite a while now.

Once that moves beyond the BRICS to aspiring “BRICS Plus” members and then all across the Global South, Washington’s reaction is bound to be nuclear (hopefully, not literally).

Washington’s strategic doctrine rules RC should not be allowed by any means to be preponderant along the Eurasian landmass. Yet what the BRICS have in store geo-economically does not concern only Eurasia – but the whole Global South.

Sections of the War Party in Washington bent on instrumentalizing India against China – or against RC – may be in for a rude awakening. As much as the BRICS may be currently facing varied waves of economic turmoil, the daring long-term road map, way beyond the Xiamen Declaration, is very much in place.

* * *

Having threatened China today with exclusion from SWIFT, we suspect Washington is rapidly running out of any great ally to sustain the petrodollar-driven hegemony (and implicitly its war machine). Cue the calls for a Venezuelan invasion in 3…2..1…!

CA.L- How unfortunately hilarious this is…

Authored by Simon Black

 

Late yesterday afternoon the federal government of the United States announced that the national debt had finally breached the inevitable $20 trillion mark.

This was a long time coming. It should have happened back in March, except that a new debt ceiling was put in place, freezing the national debt.

For the last six months it was essentially illegal for the government to increase the debt.

This is pretty brutal for Uncle Sam. The US government hasn’t run a budget surplus in two decades; they depend on debt in order to keep everything running.

And without the ability to ‘officially’ borrow money, they’ve basically spent the last six months ‘unofficially’ borrowing money by plundering federal pension funds and resorting to what the Treasury Department itself calls “extraordinary measures” to keep the government running.

Late last week the debt ceiling crisis came to a temporary armistice as the government agreed once again to temporarily suspend the debt limit.

Overnight, the national debt soared hundreds of billions of dollars as months of ‘unofficial’ borrowing made its way on to the official books.

The national debt is now $20.1 trillion. That’s larger than the size of the entire US economy.

You’d think this would be front page news with warnings being shouted from the rooftops of America.

Yet curiously the story has scarcely been covered.

Today’s front page of the New York Times tells us about Hurricane Irma, North Korea, and alcoholism in Iran.

Even the Wall Street Journal’s front page has zero mention of this story.

In fairness, the number itself is irrelevant. $20 trillion is merely a big, round, psychologically significant number… but in reality no more important than $19.999 trillion.

The real story isn’t the number or the size of the debt itself. It’s the trend. And it’s not good.

Year after year after year, the US government spends far more money than it collects in tax revenue.

According to the Treasury Department’s own figures, the government’s budget deficit for the first 10 months of this fiscal year (i.e. October 2016 through July 2017) was $566 billion.

That’s larger than the entire GDP of Argentina.

Since the government has to borrow the difference, all of this overspending ultimately translates into a higher national debt.

Make no mistake, debt is an absolute killer.

History is full of examples of once-dominant civilizations crumbling under the weight of their rapidly-expanding debt, from the Ottoman Empire to the French monarchy in the 1700s.

Or as former US Treasury Secretary Larry Summers used to quip, “How long can the world’s biggest borrower remain the world’s biggest power?”

It’s hard to project strength around the world when you constantly have to borrow money from the Chinese… or have your central bank conjure paper money out of thin air.

And yet tackling the debt has become nearly an impossibility.

Just look at the top four line items in the US government’s budget: Social Security, Medicare, Military, and, sadly, interest on the debt.

Those four line items alone account for nearly NINETY PERCENT of all US government spending.

Cutting Social Security or Medicare entitlements is political suicide.

Not top mention, both of those programs are actually EXPANDING as 10,000 Baby Boomers join the ranks of Social Security recipients every single day.

Then there’s military spending, which hardly seems likely to fall significantly in an age of constant threats and warfare.

The current White House proposal, in fact, is a 10% increase in military spending for the next fiscal year.

And last there’s interest on the debt, which absolutely cannot be cut without risking the most severe global financial meltdown ever seen in modern history.

So that’s basically 90% of the federal budget that’s here to stay… meaning there’s almost no chance they’re going to be able to reduce the debt by cutting spending.

But perhaps it’s possible they can slash the national debt by growing tax revenue?

Possible. But unlikely.

Since the end of World War II, the US governments’ overall tax revenue has been VERY steady at roughly 17% of GDP.

You could think of this as the federal government’s ‘slice’ of the economic pie.

Tax rates go up and down. Presidents come and go. But the government’s slice of the pie almost always remains the same 17% of GDP, with very small variations.

With data this strong, it seems rather obvious that the solution is to allow the economy to grow unrestrained.

If the economy grows rapidly, tax revenue will increase. And the national debt, at least as a percentage of GDP, will start to fall.

Here’s the problem: the national debt is growing MUCH faster than the US economy. In Fiscal Year 2016, for example, the debt grew by 7.84%.

Yet even when including the ‘benefits’ of inflation, the US economy only grew by 2.4% over the same period.

In other words, the debt is growing over THREE TIMES FASTER than the economy. This is the opposite of what needs to be happening.

What’s even more disturbing is that this pedestrian economic growth is happening at a time of record low interest rates.

Economists tell us that low interest rates are supposed to jumpstart GDP growth. But that’s not happening.

If GDP growth is this low now, what will happen if they continue to raise rates?

(And by the way, raising interest rates also has the side effect of increasing the government’s interest expense, essentially accelerating the debt problem.)

Look– It’s great to be optimistic and hope for the best. But this problem isn’t going away, and it would be ludicrous to continue believing this massive debt is consequence-free.

There’s no reason to panic or be alarmist.

But it’s clearly time for rational people to consider this obvious data… and start thinking about a Plan B.

Do you have a Plan B?

An Iranian vessel has aimed their weapon at a US Navy helicopter during an encounter in the Strait of Hormuz on Saturday.

The incident is being described as “unsafe and unprofessional” by US Defense Agencies, Reuters reports.

The encounter took place as the US SH-60 helicopter was flying over international waters and had reportedly flown within a half mile of two Iranian vessels. Deciding that the helicopter was too close, one of the vessels then fixed their weapon on the aircraft.
The unnamed officials who spoke to Reuters stated that those on the aircraft did not feel threatened by being in the line of fire. The officials noted that if they had felt threatened, they could have been lead to retaliate, making the actions by those aboard the Iranian vessel extremely dangerous.
The Strait of Hormuz is the home to approximately 40% of the world’s oil tanker traffic, Sky News reports. Iran has previously threatened to close off foreign access to it in tense times, but has never actually followed through.