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Paul Merrell

From Energy War to Currency War: America's Attack on the Russian Ruble | Global Research - 0 views

www.globalresearch.ca/...5421554

war & peace U.S.-foreign-policy Russia China de-dollarization blowback

shared by Paul Merrell on 29 Dec 14 - No Cached
  • Putin announced that Russia has cancelled the South Stream project on December 1, 2014. Instead the South Stream pipeline project has been replaced by a natural gas pipeline that goes across the Black Sea to Turkey from the Russian Federation’s South Federal District. This alternative pipeline has been popularly billed the «Turk Stream» and partners Russian energy giant Gazprom with Turkey’s Botas. Moreover, Gazprom will start giving Turkey discounts in the purchase of Russian natural gas that will increase with the intensification of Russo-Turkish cooperation. The natural gas deal between Ankara and Moscow creates a win-win situation for both the Turkish and Russian sides. Not only will Ankara get a discount on energy supplies, but Turk Stream gives the Turkish government what it has wanted and desired for years. The Turk Stream pipeline will make Turkey an important energy corridor and transit point, complete with transit revenues. In this case Turkey becomes the corridor between energy supplier Russia and European Union and non-EU energy customers in southeastern Europe. Ankara will gain some leverage over the European Union and have an extra negotiating card with the EU too, because the EU will have to deal with it as an energy broker.
  • For its part, Russia has reduced the risks that it faced in building the South Stream by cancelling the project. Moscow could have wasted resources and time building the South Stream to see the project sanctioned or obstructed in the Balkans by Washington and Brussels. If the European Union really wants Russian natural gas then the Turk Stream pipeline can be expanded from Turkey to Greece, the former Yugoslav Republic (FYR) of Macedonia, Serbia, Hungary, Slovenia, Italy, Austria, and other European countries that want to be integrated into the energy project. The cancellation of South Stream also means that there will be one less alternative energy corridor from Russia to the European Union for some time. This has positive implications for a settlement in Ukraine, which is an important transit route for Russian natural gas to the European Union. As a means of securing the flow of natural gas across Ukrainian territory from Russia, the European Union will be more prone to push the authorities in Kiev to end the conflict in East Ukraine.
  • From the perspective of Russian Presidential Advisor Sergey Glazyev, the US is waging its multi-spectrum war against Russia to ultimately challenge Moscow’s Chinese partners. In an insightful interview, Glazyev explained the following points to the Ukrainian journalist Alyona Berezovskaya — working for a Rossiya Segodnya subsidiary focusing on information involving Ukraine — about the basis for US hostility towards Russia: the bankruptcy of the US, its decline in competitiveness on global markets, and Washington’s inability to ultimately save its financial system by servicing its foreign debt or getting enough investments to establish some sort of innovative economic breakthrough are the reasons why Washington has been going after the Russian Federation. [13] In Glazyev’s own words, the US wants «a new world war». [14] The US needs conflict and confrontation, in other words. This is what the crisis in Ukraine is nurturing in Europe. Sergey Glazyev reiterates the same points months down the road on September 23, 2014 in an article he authors for the magazine Russia in Global Affairs, which is sponsored by the Russian International Affairs Council — a think-tank founded by the Russian Foreign Ministry and Russian Ministry of Education 2010 — and the US journal Foreign Affairs — which is the magazine published by the Council on Foreign Relation in the US. In his article, Glazyev adds that the war Washington is inciting against Russia in Europe may ultimately benefit the Chinese, because the struggle being waged will weaken the US, Russia, and the European Union to the advantage of China. [15] The point of explaining all this is to explain that Russia wants a balanced strategic partnership with China. Glazyev himself even told Berezovskaya in their interview that Russia wants a mutually beneficial relationship with China that does reduce it to becoming a subordinate to Beijing. [16]
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  • It is because of the importance of Irano-Turkish and Russo-Turkish trade and energy ties that Ankara has had an understanding with both Russia and Iran not to let politics and their differences over the Syrian crisis get in the way of their economic ties and business relationships while Washington has tried to disrupt Irano-Turkish and Russo-Turkish trade and energy ties like it has disrupted trade ties between Russia and the EU. [9] Ankara, however, realizes that if it lets politics disrupt its economic ties with Iran and Russia that Turkey itself will become weakened and lose whatever independence it enjoys Masterfully announcing the Russian move while in Ankara, Putin also took the opportunity to ensure that there would be heated conversation inside the EU. Some would call this rubbing salt on the wounds. Knowing that profit and opportunity costs would create internal debate within Bulgaria and the EU, Putin rhetorically asked if Bulgaria was going to be economically compensated by the European Commission for the loss.
  • It is clear that Russian business and trade ties have been redirected to the People’s Republic of China and East Asia. On the occasion of the Sino-Russian mega natural gas deal, this author pointed out that this was not as much a Russian countermove to US economic pressure as it was really a long-term Russian strategy that seeks an increase in trade and ties with East Asia. [10] Vladimir Putin himself also corroborated this standpoint during the December 18 press conference mentioned earlier when he dismissed — like this author — the notion that the so-called «Russian turn to the East» was mainly the result of the crisis in Ukraine. In President Putin’s own words, the process of increasing business ties with the Chinese and East Asia «stems from the global economic processes, because the East – that is, the Asia-Pacific Region – shows faster growth than the rest of the world». [11] If this is not convincing enough that the turn towards East Asia was already in the works for Russia, then Putin makes it categorically clear as he proceeds talking at the December 18 press conference. In reference to the Sino-Russian gas deal and other Russian projects in East Asia, Putin explained the following: «The projects we are working on were planned long ago, even before the most recent problems occurred in the global or Russian economy. We are simply implementing our long-time plans». [12]
  • According to Presidential Advisor Sergey Glazyev, Washington is «trying to destroy and weaken Russia, causing it to fragment, as they need this territory and want to establish control over this entire space». [18] «We have offered cooperation from Lisbon to Vladivostok, whereas they need control to maintain their geopolitical leadership in a competition with China,» he has explained, pointing out that the US wants lordship and is not interested in cooperation. [19] Alluding to former US top diplomat Madeline Albright’s sentiments that Russia was unfairly endowed with vast territory and resources, Putin also spoke along similar lines at his December 18 press conference, explaining how the US wanted to divide Russia and control the abundant natural resources in Russian territory. It is of little wonder that in 2014 a record number of Russian citizens have negative attitudes about relations between their country and the United States. A survey conducted by the Russian Public Opinion Research Center has shown that of 39% of Russian respondents viewed relations with the US as «mostly bad» and 27% as «very bad». [20] This means 66% of Russian respondents have negative views about relations with Washington. This is an inference of the entire Russian population’s views. Moreover, this is the highest rise in negative perceptions about the US since 2008 when the US supported Georgian President Mikheil Saakashvili in Tbilisi’s war against Russia and the breakaway republic of South Ossetia; 40% viewed them as «mostly bad» and 25% of Russians viewed relations as «very bad» and at the time. [21]
  • In more ways than one the Turk Stream pipeline can be viewed as a reconfigured of the failed Nabucco natural gas pipeline. Not only will Turk Stream court Turkey and give Moscow leverage against the European Union, instead of reducing Russian influence as Nabucco was originally intended to do, the new pipeline to Turkey also coaxes Ankara to align its economic and strategic interests with those of Russian interests. This is why, when addressing Nabucco and the rivalries for establishing alternate energy corridors, this author pointed out in 2007 that «the creation of these energy corridors and networks is like a two-edged sword. These geo-strategic fulcrums or energy pivots can also switch their directions of leverage. The integration of infrastructure also leads towards economic integration». [8] The creation of Turk Stream and the strengthening of Russo-Turkish ties may even help placate the gory conflict in Syria. If Iranian natural gas is integrated into the mainframe of Turk Stream through another energy corridor entering Anatolia from Iranian territory, then Turkish interests would be even more tightly aligned with both Moscow and Tehran. Turkey will save itself from the defeats of its neo-Ottoman policies and be able to withdraw from the Syrian crisis. This will allow Ankara to politically realign itself with two of its most important trading partners, Iran and Russia.
  • Whatever Washington’s intentions are, every step that the US takes to target Russia economically will eventually hurt the US economy too. It is also highly unlikely that the policy mandarins in Beijing are unaware of what the US may try to be doing. The Chinese are aware that ultimately it is China and not Russia that is the target of the United States.
  • The United States is waging a fully fledged economic war against the Russian Federations and its national economy. Ultimately, all Russians are collectively the target. The economic sanctions are nothing more than economic warfare. If the crisis in Ukraine did not happen, another pretext would have been found for assaulting Russia. Both US Assistant-Secretary of State Victoria Nuland and US Assistant-Secretary of the Treasury Daniel Glaser even told the Foreign Affairs Committee of the US House of Representatives in May 2014 that the ultimate objectives of the US economic sanctions against Russia are to make the Russian population so miserable and desperate that they would eventually demand that the Kremlin surrender to the US and bring about «political change». «Political change» can mean many things, but what it most probably implies here is regime change in Moscow. In fact, the aims of the US do not even appear to be geared at coercing the Russian government to change its foreign policy, but to incite regime change in Moscow and to cripple the Russian Federation entirely through the instigation of internal divisions. This is why maps of a divided Russia are being circulated by Radio Free Europe. [17]
  • Without question, the US wants to disrupt the strategic partnership between Beijing and Moscow. Moscow’s strategic long-term planning and Sino-Russian cooperation has provided the Russia Federation with an important degree of economic and strategic insulation from the economic warfare being waged against the Russian national economy. Washington, however, may also be trying to entice the Chinese to overplay their hand as Russia is economically attacked. In this context, the price drops in the energy market may also be geared at creating friction between Beijing and Moscow. In part, the manipulation of the energy market and the price drops could seek to weaken and erode Sino-Russian relations by coaxing the Chinese into taking steps that would tarnish their excellent ties with their Russian partners. The currency war against the Russian ruble may also be geared towards this too. In other words, Washington may be hoping that China becomes greedy and shortsighted enough to make an attempt to take advantage of the price drop in energy prices in the devaluation of the Russian ruble.
  • Russia can address the economic warfare being directed against its national economy and society as a form of «economic terrorism». If Russia’s banks and financial institutions are weakened with the aim of creating financial collapse in the Russian Federation, Moscow can introduce fiscal measures to help its banks and financial sector that could create economic shockwaves in the European Union and North America. Speaking in hypothetical terms, Russia has lots of options for a financial defensive or counter-offensive that can be compared to its scorched earth policies against Western European invaders during the Napoleonic Wars, the First World War, and the Second World War. If Russian banks and institutions default and do not pay or delay payment of their derivative debts and justify it on the basis of the economic warfare and economic terrorism, there would be a financial shock and tsunami that would vertebrate from the European Union to North America. This scenario has some parallels to the steps that Argentina is taken to sidestep the vulture funds.
  • The currency war eventually will rebound on Washington and Wall Street. The energy war will also reverse directions. Already, the Kremlin has made it clear that it and a coalition of other countries will de-claw the US in the currency market through a response that will neutralize US financial manipulation and the petro-dollar. In the words of Sergey Glazyev, Moscow is thinking of a «systemic and comprehensive» response «aimed at exposing and ending US political domination, and, most importantly, at undermining US military-political power based on the printing of dollars as a global currency». [22] His solution includes the creation of «a coalition of sound forces advocating stability — in essence, a global anti-war coalition with a positive plan for rearranging the international financial and economic architecture on the principles of mutual benefit, fairness, and respect for national sovereignty». [23] The coming century will not be the «American Century» as the neo-conservatives in Washington think. It will be a «Eurasian Century». Washington has taken on more than it can handle, this may be why the US government has announced an end to its sanctions regime against Cuba and why the US is trying to rekindle trade ties with Iran. Despite this, the architecture of the post-Second World War or post-1945 global order is now in its death bed and finished. This is what the Kremlin and Putin’s presidential spokesman and press secretary Dmitry Peskov mean when they impart—as Peskov stated to Rossiya-24 in a December 17, 2014 interview — that the year 2014 has finally led to «a paradigm shift in the international system».
Paul Merrell

Foreign investment in Israel plummets by half since Gaza massacre | The Electronic Inti... - 0 views

electronicintifada.net/...el-plummets-half-gaza-massacre

war & peace Israel BSD foreign-investment stats

shared by Paul Merrell on 26 Jun 15 - No Cached
  • Foreign investment in Israel plummeted almost 50 percent in 2014, a fact attributed to last summer’s assault on Gaza and the growing impact of boycotts. This week the UN’s trade and development agency UNCTAD released its annual World Investment Report on foreign direct investment (FDI) – a measure of money that investors from overseas put into a country to invest in businesses, build factories or start other economic projects. According to the report, FDI into Israel in 2014 plummeted to just $6.4 billion from almost $12 billion in 2013. The 2014 figure appears to be the lowest in more than a decade. Foreign direct investment into Israel averaged around $9 billion per year from 2005 to 2012. “We believe that what led to the drop in investment in Israel are Operation Protective Edge and the boycotts Israel is facing,” Roni Manos, an Israeli economist who co-authored the report, told Israel’s Ynet.
  • “Operation Protective Edge” is the name Israel gave its 51-day assault last summer that devastated much of Gaza and killed more than 2,200 Palestinians, including 551 chidren. In line with global trends, FDI fell in other regional countries, but nowhere near as sharply as in Israel. FDI fell 1.7 percent in Turkey, 6.8 percent in Iraq, 4 percent in the United Arab Emirates and 9.6 percent in Saudi Arabia. But it actually rose by 6.6 percent in Lebanon. Iran, which has been under brutal international sanctions, saw inward investment decline by about a third to just over $2 billion.
  • The news that investors are fleeing is only the latest economic blow to Israel as a result of its attack on Gaza. In May, Ynet revealed a dramatic plunge in visits to the country in an article headlined “Tourists have stopped coming to Israel.” During the Gaza assault, Palestinian resistance organizations considered it a significant strategic achievement that they managed to force a shutdown of Israel’s main international airport for several days, dealing Israel a severe economic and reputational blow. But it appears the damage may have lasted far longer than the airport shutdown. “Despite the hopes for a recovery two or three months after last summer’s operation in Gaza, it seems the crisis is only getting worse,” Ynet reported, “the number of tourists is dropping, the number of hotel stays is declining and the number of organized tours has been significantly cut.”
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  • Ynet cited figures from the Israel Hotel Association for the first quarter of this year pointing to a 28 percent drop in tourist stays, with some areas including the Red Sea resort of Eilat – heavily marketed as a seaside destination for Europeans – seeing a 51 percent decline. The report quoted one tour operator saying he didn’t expect matters to improve next year. “We are only left with the pilgrims and Jewish tourists,” the tour operator complained, adding that Christian religious tourists spent most of their time in the Palestinian city of Bethlehem in the occupied West Bank.
Paul Merrell

Trump, Kissinger and Ma playing on a crowded chessboard | Asia Times - 0 views

www.atimes.com/...-ma-playing-crowded-chessboard

geopolitics U.S.-foreign-policy China Russia Jack-Ma Kissinger Trump

shared by Paul Merrell on 27 Jan 17 - No Cached
  • And that brings us once again to Henry Kissinger, the putative dalang — puppet master — of Trump’s foreign policy. As leaked late last year in Germany’s Bild Zeitung newspaper, Kissinger has drafted a plan to officially recognize Crimea as part of Russia and lift the Obama administration’s economic sanctions.
  • The plan fits into Kissinger’s overall strategy — call it a traditional British Balance of Power, or Divide and Rule, approach — of breaking up the Eurasian front (Russia-China-Iran) that constitutes the real “threat” to what Mattis defines as the “established world order.” The strategy consists in seducing the alleged weaker top “threat” (Russia) away from the stronger (China), while keeping on antagonizing/harassing the third and weakest pole, Iran. Kissinger is certainly more sophisticated than predictable US Think Tankland in his attempt to dismember the Shanghai Cooperation Organization, one of key nodes of the Russia-China strategic partnership. The SCO has been on the go for a decade and a half now. Iran, an observer, will soon become a full member, as will India and Pakistan; and Turkey — after the failed coup against Erdogan — is being courted by Moscow. German analyst Peter Spengler adds a juicy teaser — if Kissinger’s “Metternichian approach would include some degree of ‘harmonization’ with Russia, how will a Trump presidency then manage to contain the re-engineered ally Germany?” After all, a key priority for sanctions-averse German industrialists is to vastly expand business with Russia.
  • Kissinger’s strategy essentially tweaks the early 1970s Trilateral Commission, largely advanced by his rival dalang Dr Zbigniew “Grand Chessboard” Brzezinski, according to which geopolitics is to be managed by North America, Western Europe and Japan.
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  • The US deep state plutocracy never sleeps. Admitting both Russia and China, linked by a strategic partnership, as equal stakeholders in the “established world order” is anathema; that would imply the end of US hegemony. And that’s where the top Western would-be dalangs diverge, as they look for the most efficient Divide and Rule opening. Kissinger privileges Russia; Dr Zbig privileges China, painting it as a threat to Russia. Meanwhile, Russian Eurasianists — in frontal opposition to the Atlanticists — visualize the US, China and Russia on an equal geopolitical footing. It will be fascinating to watch how the New Great Game develops in the Central Asian “stans”. That’s a privileged theater in which to see the Russia-China strategic partnership, or division of labor, in action: China goes no holds barred on investment — via One Belt, One Road, aka the New Silk Roads — while Russia remains paramount in politics and security.
  • The bottom line: Moscow feels no existential “threat” from Beijing because for China, Central Asia and the Russian Far East register essentially as economic/investment opportunities along the New Silk Roads.
  • Once again, Kissinger’s strategy will run into a solidified Russia-China strategic partnership — already manifested in Pipelineistan (multibillion-dollar oil and gas projects); security deals; the SCO; cooperation inside BRICS; exchange of cutting-edge military technology; and the progressive interlocking of the New Silk Roads and the Eurasian Economic Union. When the New Silk Roads hit the next level, by the start of the next decade, the Eurasian heartland, as well as the rimland, will be deeply immersed in a connectivity frenzy. Welcome to Mackinder and Spykman revisited — and there’s no “offer” Washington can come up with to make it go away.
  • Into this crucial juncture steps Jack Ma. The Trump-Ma meeting at Trump Tower was niskala disguised as sekala. The House That Ma Built — Alibaba — is no less than the New Great Wall, resisting the assault of behemoth Amazon.com in the ultimate commercial arena of the 21st century: e-commerce. Ma also happens to be very close to Chinese President Xi Jinping. Like an upgraded we-mean-business Deng Xiaoping, Ma proposed, on the record, the creation of 1 million US jobs. That’s an offer Trump cannot possibly refuse. And this after shadow US Secretary of State Jared Kushner had a Chateau Lafite Rothschild-inundated lunch with another Chinese tycoon, Anbang Insurance Group’s Wu Xiahoui, who married Deng’s niece and whose company owns the Waldorf Astoria hotel in Manhattan.
  • Ma’s business firepower should not be underestimated. Alibaba is involved in a massive project to modernize even rural China. He’s the face of Chinese business not only internally but globally. Xi Jinping knows this all too well — who better than Ma as China’s top business ambassador? This is not, as Japanese interests spin it, about the “death” of Made in China; it is about globalized China exporting business and jobs to the West. All of the above points to a very crowded chessboard. Trump will do business and clinch deals with China, while his deep state-tinged cabinet barks the usually explosive national security rhetoric, dalang Kissinger plots a Russia-China split, and Moscow-Beijing secretly concoct concerted moves. Place your bets on who will be the major partner in the Trump, Kissinger and Ma law firm.
Paul Merrell

Mystery Sponsor Of Weapons And Money To Syrian Mercenary "Rebels" Revealed | Zero Hedge - 0 views

www.zerohedge.com/...d-money-syrian-rebels-revealed

war & peace Syria Qatar Saudis Russia China Pipelinestan

shared by Paul Merrell on 25 May 13 - No Cached
  • Previously, when looking at the real underlying national interests responsible for the deteriorating situation in Syria, which eventually may and/or will devolve into all out war with hundreds of thousands killed, we made it very clear that it was always and only about the gas, or gas pipelines to be exact, and specifically those involving the tiny but uber-wealthy state of Qatar. Needless to say, the official spin on events has no mention of this ulterior motive, and the popular, propaganda machine, especially from those powers supporting the Syrian "rebels" which include Israel, the US and the Arabian states tries to generate public and democratic support by portraying Assad as a brutal, chemical weapons-using dictator, in line with the tried and true script used once already in Iraq. On the other hand, there is Russia (and to a lesser extent China: for China's strategic interests in mid-east pipelines, read here), which has been portrayed as the main supporter of the "evil" Assad regime, and thus eager to preserve the status quo without a military intervention
  • However, one question that has so far remained unanswered, and a very sensitive one now that the US is on the verge of voting to arm the Syrian rebels, is who was arming said group of Al-Qaeda supported militants up until now. Now, finally, courtesy of the FT we have the (less than surprising) answer, which goes back to our original thesis, and proves that, as so often happens in the middle east, it is once again all about the natural resources. From the FT: The tiny gas-rich state of Qatar has spent as much as $3bn over the past two years supporting the rebellion in Syria, far exceeding any other government, but is now being nudged aside by Saudi Arabia as the prime source of arms to rebels.
  • Why would Qatar want to become involved in Syria where they have little invested?  A map reveals that the kingdom is a geographic prisoner in a small enclave on the Persian Gulf coast.   It relies upon the export of LNG, because it is restricted by Saudi Arabia from building pipelines to distant markets.  In 2009, the proposal of a pipeline to Europe through Saudi Arabia and Turkey to the Nabucco pipeline was considered, but Saudi Arabia that is angered by its smaller and much louder brother has blocked any overland expansion.   Already the largest LNG producer, Qatar will not increase the production of LNG.  The market is becoming glutted with eight new facilities in Australia coming online between 2014 and 2020.   A saturated North American gas market and a far more competitive Asian market leaves only Europe.  The discovery in 2009 of a new gas field near Israel, Lebanon, Cyprus, and Syria opened new possibilities to bypass the Saudi Barrier and to secure a new source of income.  Pipelines are in place already in Turkey to receive the gas.  Only Al-Assad is in the way.
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  • Qatar has proposed a gas pipeline from the Gulf to Turkey in a sign the emirate is considering a further expansion of exports from the world's biggest gasfield after it finishes an ambitious programme to more than double its capacity to produce liquefied natural gas (LNG).   "We are eager to have a gas pipeline from Qatar to Turkey," Sheikh Hamad bin Khalifa Al Thani, the ruler of Qatar, said last week, following talks with the Turkish president Abdullah Gul and the prime minister Recep Tayyip Erdogan in the western Turkish resort town of Bodrum. "We discussed this matter in the framework of co-operation in the field of energy. In this regard, a working group will be set up that will come up with concrete results in the shortest possible time," he said, according to Turkey's Anatolia news agency.   Other reports in the Turkish press said the two states were exploring the possibility of Qatar supplying gas to the strategic Nabucco pipeline project, which would transport Central Asian and Middle Eastern gas to Europe, bypassing Russia. A Qatar-to-Turkey pipeline might hook up with Nabucco at its proposed starting point in eastern Turkey. Last month, Mr Erdogan and the prime ministers of four European countries signed a transit agreement for Nabucco, clearing the way for a final investment decision next year on the EU-backed project to reduce European dependence on Russian gas.
  • Specifically, the issue at hand is the green part of the proposed pipeline: as explained above, it simply can't happen as long as Russia is alligned with Assad.
  • So there you have it: Qatar doing everything it can to promote bloodshed, death and destruction by using not Syrian rebels, but mercenaries: professional citizens who are paid handsomely to fight and kill members of the elected regime (unpopular as it may be), for what? So that the unimaginably rich emirs of Qatar can get even richer. Although it is not as if Russia is blameless: all it wants is to preserve its own strategic leverage over Europe by being the biggest external provider of natgas to the continent through its own pipelines. Should Nabucco come into existence, Gazpromia would be very, very angry and make far less money! As for the Syrian "rebels", who else is helping them? Why the US and Israel of course. And with the Muslim Brotherhood "takeover" paradigm already tested out in Egypt, it is only a matter of time.
  • Perhaps it is Putin's turn to tell John Kerry he prefer if Qatar was not "supplying assistance to Syrian mercenaries"? What is worse, and what is already known is that implicitly the US - that ever-vigilant crusader against Al Qaeda - is effectively also supporting the terrorist organization: The relegation of Qatar to second place in providing weapons follows increasing concern in the West and among other Arab states that weapons it supplies could fall into the hands of an al-Qaeda-linked group, Jabhat al-Nusrah. Yet Qatar may have bitten off more than it can chew, even with the explicit military Israeli support, and implicit from the US. Because the closer Qatar gets to establishing its own puppet state in Syria, the closer Saudi Arabia is to getting marginalized:
  • What Saudi Arabia wants is not to leave the Syrian people alone, but to install its own puppet regime so it has full liberty to dictate LNG terms to Qatar, and subsequently to Europe.
  • Sadly, when it comes to the US (and of course Israel), it does have a very hidden agenda: one that involves lying to its people about what any future intervention is all about, and the fabrication of narrative about chemical weapons and a bloody regime hell bent on massacring every man, woman and child from the "brave resistance." What they all fail to mention is that all such "rebels" are merely paid for mercenaries of the Qatari emir, whose sole interest is to accrue even more wealth even if it means the deaths of thousands of Syrians in the process. A bigger read through of the events in Syria reveals an even more complicated web: one that has Qatar facing off against Syria, with both using Syria as a pawn in a great natural resource chess game, and with Israel and the US both on the side of the petrodollars, while Russia and to a lesser extent China, form the counterbalancing axis and refuse to permit a wholesale overthrow of the local government which would unlock even more geopolitical leverage for the gulf states. Up until today, we would have thought that when push comes to shove, Russia would relent. However, with the arrival of a whole lot of submarines in Cyprus, the games just got very serious. After all the vital interests of Gazprom - perhaps the most important "company" in the world - are suddenly at stake.
Paul Merrell

Egypt's foreign policy accommodates world's multipolarity: ECFA discussion | Cairo Post - 0 views

www.thecairopost.com/...-multipolarity-ecfa-discussion

economic-warfare Egypt Russia China New-Silk-Road Suez-Canal

shared by Paul Merrell on 11 Feb 15 - No Cached
  • In a step to follow the world’s political  evolution, Egypt is working on changing its foreign policy to accommodate the “multipolarity” system, former Minister of Foreign Affairs Mohamed Kamel Amr said in a conference held by the Egyptian Council for Foreign Affairs (ECFA), Tuesday. The two-day international conference dubbed “Egypt and the World… a New Era” was held in order to “correct misconceptions” of Egypt’s political development after the ouster of President Mohamed Morsi. The members of ECFA, which was formed 15 years ago, are predominantly former diplomats. “To say that Egypt is turning its back to a certain power is emotional for it is rebalancing its relations,” Amr said at the “Egypt and the World’s Major Powers” session of the conference. The U.S. delivered 10 Apache Helicopters to Egypt in November, but other than that, strategic cooperation has pretty much stopped in the past two years, said Mostafa Elwi, a Cairo University professor of political science. China and Russia supported the change after June 30, 2013, when millions marched to topple Morsi, and exchanged visits between Egyptian officials and their counterparts from these two countries have been “very fruitful,” unlike U.S. Secretary of State John Kerry’s visits to Egypt, Elwi added. Amr explained that Egypt’s foreign policy has been successful in moving forward in coalitions, rather than its own, in the face of major powers, such as the Non-Aligned Movement, the Arab League and as part of coordination with regional forces.
  • “Ridding Egypt of the U.S. dominancy is not an easy task because it is the only country in the world that has the four factors of being a dominant power: military, economy, culture and science,” Elwy said. However, he added that as bilateral relations with China and Russia have very wide and open horizons, renewed strategic relations with them should not stop at purchasing arms, but should expand to cooperation in manufacturing weapons in Egypt.
  • For his part, Councilor of the Chinese People’s Institute of Foreign Affairs Wu Sike emphasized that China respects the Egyptian people’s will, and that foreign interference in Egypt’s internal affairs is “unacceptable.” Economically, Elwy and Sike underlined that their countries realize the potential of their anticipate cooperation, especially in the New Suez Canal Project and the proposed project of the New Silk Road, planned to pass through Egypt and expected to change the course of world trade. “After the revolution of June 30, relations with Egypt, including strategic relations, will deepen. Our government encourages Chinese companies to invest in Egypt’s Suez Canal and the route of the Silk Road in its territory,” said Sike, who was also a former Egyptian Ambassador, calling on Egypt to focus on development efforts to “compensate for the time it lost.”
  • Paul Merrell on 11 Feb 15
     
    One I had missed in December, 2014. China is bankrolling an upgrade of the Suez Canal and Egypt has rejected U.S. hegemony. Egypt will buy Russian and Chinese weapons but wants to expand to collaborative manufacture of weapons in Egypt.  The U.S. is paying the price of having initiated a failed "color revolution" in Egypt that gave temporary control of Egyptian government to the non-secular Muslim Brotherhood, subsquently overthrown by the Egyptian military with enormous public support. 
Paul Merrell

Venezuela Moves Forward with Special Economic Zones to Attract Investment in Developmen... - 0 views

venezuelanalysis.com/11313

war & peace economic-warfare Venezuela China

shared by Paul Merrell on 04 Apr 15 - No Cached
  • The Venezuelan government will unveil its comprehensive plan for the creation of Special Economic Zones (SEZ) by the end of the month. The plan, as presented by Vice-President of Planning Ricardo Menendez on Monday, will outline strategic areas of the country where policy incentives will attract foreign and national investment with the aim of promoting export-oriented production and "integral development". The SEZ represent an important dimension of the economic development strategy laid out by late president Hugo Chávez and President Nicolas Maduro, which seeks to fortify Venezuela's vital infrastructure, particularly in the areas of telecommunications, electricity, and water and land transport.
  • So far 47 firms have committed to setting up operations in the SEZ, and a further 100 have requested more information regarding potential projects. Chinese firms constitute the bulk of the foreign partners, with $2 billion in contracts already desisgnated to manufacturing and construction projects, The Bolivarian government has imposed a series of regulations governing the SEZs which include a minimum 50% Venezuelan share in all projects as well as a mandate obliging all firms to open accounts with the National Public Banking System.
  • Paul Merrell on 04 Apr 15
     
    So the U.S. issues trade sanctions against Venezuela while China invests in Venezuela infrastructure and trade. 
Gary Edwards

Strategic Investment - 0 views

www.strategicinvestment.com/...capitalism_video.php

Petrodollars End-of-America Strategic-Investment Oil

shared by Gary Edwards on 11 Apr 12 - No Cached
  • Gary Edwards on 11 Apr 12
     
    Stunning stuff.  The end of the petrodollar is explained, incluiding it's history, meaning and importance to the American way of life.  March 20th was the trigger date, when Iran begqan accepting settlement payments for oil in non dollar denominations.  A currency basket backed by hard commodity ratios (gold :) is being used instead of the dollar.  China is now aggresively promoting the yuan as a gold backed alternative to the inflated dollar.  The tipping point will probably happen in June of 2012.  
Paul Merrell

Russia and China: Watch Out Moody's, Here We Come! | New Eastern Outlook - 0 views

journal-neo.org/...watch-out-moody-s-here-we-come

banksters ratings-agencies history Russia China

shared by Paul Merrell on 22 Jan 15 - No Cached
  • In 1945 it was easy to get a defeated Europe to agree to Bretton Woods Gold Exchange Standard in which all currencies would be fixed to the US dollar and the dollar alone fixed to gold at $35 an ounce, where it remained until the system collapsed in August 1971 and Nixon abandoned gold-dollar convertibility. By then Europe was booming with modern reconstructed industry and the USA was becoming a rustbelt. France and Germany demanded US gold bullion instead of inflated dollars, and US gold reserves were vanishing. After 1971, the dollar flooded the world unfettered by gold reserve requirements and US military might during the Cold War forced Japan, Western Europe and others including OPEC to accept constantly inflating paper US dollars. From 1970 until about 2000 the volume of dollars in the world had risen some 2,900%. Because the dollar was the world “reserve currency” needed by all for trade in oil, goods, grains, the world was forced to swallow a de facto mammoth inflation after 1971.First appeared: http://journal-neo.org/2015/01/22/watch-out-moody-s-here-we-come/
  • Paul Merrell on 22 Jan 15
     
    The established New York credit agencies would play a strategic role in this post-1971 dollar system. During the 1970's the US Government's Securities & Exchange Commission, charged with oversight of bond and stock markets, issued a ruling giving the then-dominant New York credit rating agencies-Moody's and Standard & Poor's (and later Fitch Ratings)-a de facto guaranteed monopoly in an unregulated market, when they ruled that only "Nationally Recognized Statistical Rating Organizations" would be qualified to issue appropriate ratings, i.e. only Moody's and S&P. Corruption was made endemic to the US ratings game and Washington was party to the dirty deal. By the end of the 1970's, using the vast amount of OPEC "petro-dollars" from the two oil price shocks in 1973 and 1979, New York international banks, using London, began to loan to the rest of the world to finance imports of oil and other essentials. The New York credit rating agencies, previously primarily rating US corporate bonds, expanded into the new foreign debt markets as the largest and only established rating agencies in the new phase of dollarization and globalization of capital markets. They set up branches in Germany, France, Japan, Mexico, Argentina and other emerging markets much like the US Big Five accounting firms. During the 1980s the rating agencies played a key role in down-rating the debt of the Latin American debtor countries such as Mexico and Argentina. Their ratings determined if the debtor countries could borrow or not. Financial market insiders in London and New York openly spoke of the "political" rating agencies using their de facto monopoly to advance the agenda of Wall Street and the Dollar System behind it. Then in the 1990's, the New York rating agencies played a decisive role in spreading the "Asia Crisis" of 1997-98. With the precise timing of its downgrades they could worsen the panic because they had been suspiciously silent right up un
Paul Merrell

Russia may accept Chinese control of oil and gas fields | Economy | Worldbulletin News - 0 views

www.worldbulletin.net/...-control-of-oil-and-gas-fields

economy Russia China oil-field-investments

shared by Paul Merrell on 28 Feb 15 - No Cached
  • ussia may consider allowing Chinese investors more than 50 percent stakes in its strategic oil and gas fields, an official said on Friday, an about-face by Moscow that underlines its need for foreign help to develop energy reserves. While closely guarding control of the oil and gas fields that supply the lifeblood of its economy, Russia has forged alliances with some Western companies to obtain the know-how it needs to tap hard-to-reach deposits. But now that Western sanctions over Moscow's role in Ukraine have all but halted that cooperation, Russia has overcome a "psychological barrier" and is ready to deepen its economic ties with China, Deputy Prime MinisterArkady Dvorkovich said. "We have a strategic partnership with China and now decisions are made much faster than before. In particular, we have a gas contract, a second one will be signed soon. Now we know China better: their motives and intentions are understood," he told a conference in the Siberian city of Krasnoyarsk. "There used to be a psychological barrier. Now it doesn't exist any more. We are interested in maximum investments in new industries. China is an obvious investor for us."
Paul Merrell

Responding to Failure: Reorganizing U.S. Policies in the Middle East | Middle East Poli... - 0 views

mepc.org/...nizing-us-policies-middle-east

war & peace Mideast Israel Arabs Shia-nations U.S.-foreign-policy recommendations

shared by Paul Merrell on 17 Mar 15 - No Cached
  • I want to speak with you today about the Middle East. This is the region where Africa, Asia, and Europe come together. It is also the part of the world where we have been most compellingly reminded that some struggles cannot be won, but there are no struggles that cannot be lost. It is often said that human beings learn little useful from success but can learn a great deal from defeat. If so, the Middle East now offers a remarkably rich menu of foreign-policy failures for Americans to study. • Our four-decade-long diplomatic effort to bring peace to the Holy Land sputtered to an ignominious conclusion a year ago. • Our unconditional political, economic, and military backing of Israel has earned us the enmity of Israel’s enemies even as it has enabled egregiously contemptuous expressions of ingratitude and disrespect for us from Israel itself.
  • • Our attempts to contain the Iranian revolution have instead empowered it. • Our military campaigns to pacify the region have destabilized it, dismantled its states, and ignited ferocious wars of religion among its peoples. • Our efforts to democratize Arab societies have helped to produce anarchy, terrorism, dictatorship, or an indecisive juxtaposition of all three. • In Iraq, Libya, and Syria we have shown that war does not decide who’s right so much as determine who’s left. • Our campaign against terrorism with global reach has multiplied our enemies and continuously expanded their areas of operation. • Our opposition to nuclear proliferation did not prevent Israel from clandestinely developing nuclear weapons and related delivery systems and may not preclude Iran and others from following suit.
  • • At the global level, our policies in the Middle East have damaged our prestige, weakened our alliances, and gained us a reputation for militaristic fecklessness in the conduct of our foreign affairs. They have also distracted us from challenges elsewhere of equal or greater importance to our national interests. That’s quite a record.
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  • One can only measure success or failure by reference to what one is trying achieve. So, in practice, what have U.S. objectives been? Are these objectives still valid? If we’ve failed to advance them, what went wrong? What must we do now to have a better chance of success? Our objectives in the Middle East have not changed much over the course of the past half century or more. We have sought to 1. Gain acceptance and security for a Jewish homeland from the other states and peoples of the region; 2. Ensure the uninterrupted availability of the region’s energy supplies to sustain global and U.S. security and prosperity; 3. Preserve our ability to transit the region so as to be able to project power around the world; 4. Prevent the rise of a regional hegemon or the deployment of weapons of mass destruction that might threaten any or all of these first three objectives; 5. Maximize profitable commerce; and 6. Promote stability while enhancing respect for human rights and progress toward constitutional democracy. Let’s briefly review what’s happened with respect to each of these objectives. I will not mince words.
  • Israel has come to enjoy military supremacy but it remains excluded from most participation in its region’s political, economic, and cultural life. In the 67 years since the Jewish state was proclaimed, Israel has not made a single friend in the Middle East, where it continues to be regarded as an illegitimate legacy of Western imperialism engaged in racist removal of the indigenous population. International support for Israel is down to the United States and a few of the former colonial powers that originally imposed the Zionist project on the Arabs under Sykes-Picot and the related Balfour Declaration. The two-state solution has expired as a physical or political possibility. There is no longer any peace process to distract global attention from Israel’s maltreatment of its captive Arab populations. After years of deference to American diplomacy, the Palestinians are about to challenge the legality of Israel’s cruelties to them in the International Criminal Court and other venues in which Americans have no veto, are not present, or cannot protect the Jewish state from the consequences of its own behavior as we have always been able to do in the past. Israel’s ongoing occupation of the West Bank and siege of Gaza are fueling a drive to boycott its products, disinvest in its companies, and sanction its political and cultural elite. These trends are the very opposite of what the United States has attempted to achieve for Israel.
  • In a stunning demonstration of his country’s most famous renewable resource — chutzpah — Israel’s Prime Minister chose this very moment to make America the main issue in his reelection campaign while simultaneously transforming Israel into a partisan issue in the United States. This is the very opposite of a sound survival strategy for Israel. Uncertainties about their country’s future are leading many Israelis to emigrate, not just to America but to Europe. This should disturb not just Israelis but Americans, if only because of the enormous investment we have made in attempts to gain a secure place for Israel in its region and the world. The Palestinians have been silent about Mr. Netanyahu’s recent political maneuvers. Evidently, they recall Napoleon’s adage that one should never interrupt an enemy when he is making a mistake. This brings me to an awkward but transcendently important issue. Israel was established as a haven from anti-Semitism — Jew hatred — in Europe, a disease of nationalism and Christian culture that culminated in the Holocaust. Israel’s creation was a relief for European Jews but a disaster for the Arabs of Palestine, who were either ethnically cleansed by European Jewish settlers or subjugated, or both.  But the birth of Israel also proved tragic for Jews throughout the Middle East — the Mizrahim. In a nasty irony, the implementation of Zionism in the Holy Land led to the introduction of European-style anti-Semitism — including its classic Christian libels on Jews — to the region, dividing Arab Jews from their Muslim neighbors as never before and compelling them to join European Jews in taking refuge in Israel amidst outrage over the dispossession of Palestinians from their homeland. Now, in a further irony, Israel’s pogroms and other injustices to the Muslim and Christian Arabs over whom it rules are leading not just to a rebirth of anti-Semitism in Europe but to its globalization.
  • The late King `Abdullah of Saudi Arabia engineered a reversal of decades of Arab rejectionism at Beirut in 2002. He brought all Arab countries and later all 57 Muslim countries to agree to normalize relations with Israel if it did a deal — any deal — with the Palestinians that the latter could accept. Israel spurned the offer. Its working assumption seems to be that it does not need peace with its neighbors as long as it can bomb and strafe them. Proceeding on this basis is not just a bad bet, it is one that is dividing Israel from the world, including Jews outside Israel. This does not look like a story with a happy ending. It’s hard to avoid the thought that Zionism is turning out to be bad for the Jews. If so, given the American investment in it, it will also have turned out to be bad for America. The political costs to America of support for Israel are steadily rising. We must find a way to divert Israel from the largely self-engineered isolation into which it is driving itself, while repairing our own increasing international ostracism on issues related to Israel.  
  • Despite Mr. Netanyahu’s recent public hysteria about Iran and his efforts to demonize it, Israel has traditionally seen Iran’s rivalry with the Arabs as a strategic asset. It had a very cooperative relationship with the Shah. Neither Israelis nor Arabs have forgotten the strategic logic that produced Israel's entente with Iran. Israel is very much on Daesh’s list of targets, as is Iran. For now, however, Israel’s main concern is the possible loss of its nuclear monopoly in the Middle East. Many years ago, Israel actually did what it now accuses Iran of planning to do. It clandestinely developed nuclear weapons while denying to us and others that it was doing so. Unlike Iran, Israel has not adhered to the Nuclear Non-Proliferation Treaty or subjected its nuclear facilities to international inspection. It has expressed no interest in proposals for a nuclear-free zone in the Middle East. It sees its ability to bring on nuclear Armageddon as the ultimate guarantee of its existence.
  • To many, Israel now seems to have acquired the obnoxious habit of biting the American hand that has fed it for so long. The Palestinians have despaired of American support for their self-determination. They are reaching out to the international community in ways that deliberately bypass the United States. Random acts of violence herald mayhem in the Holy Land. Daesh has proclaimed the objective of erasing the Sykes-Picot borders and the states within them. It has already expunged the border between Iraq and Syria. It is at work in Lebanon and has set its sights on Jordan, Palestine, and Israel. Lebanon, under Saudi influence, has turned to France rather than America for support. Hezbollah has intervened militarily in Iraq and Syria, both of whose governments are close to Iran. Egypt and Turkey have distanced themselves from the United States as well as from each other. Russia is back as a regional actor and arms supplier. The Gulf Arabs, Egypt, and Turkey now separately intervene in Libya, Syria, and Iraq without reference to American policy or views. Iran is the dominant influence in Iraq, Syria, parts of Lebanon, and now Yemen. It has boots on the ground in Iraq. And now Saudi Arabia seems to be organizing a coalition that will manage its own nuclear deterrence and military balancing of Ir
  • To describe this as out of control is hardly adequate. What are we to do about it? Perhaps we should start by recalling the first law of holes — “when stuck in one, stop digging.” It appears that “don’t just sit there, bomb something” isn’t much of a strategy. When he was asked last summer what our strategy for dealing with Daesh was, President Obama replied, “We don’t yet have one.” He was widely derided for that. He should have been praised for making the novel suggestion that before Washington acts, it should first think through what it hopes to accomplish and how best to do it. Sunzi once observed that “tactics without strategy is the noise before defeat." America’s noisy but strategy-free approach to the Middle East has proven him right. Again the starting point must be what we are trying to accomplish. Strategy is "the discipline of achieving desired ends through the most efficient use of available means" [John Lewis Gaddis].Our desired ends with respect to the Middle East are not in doubt. They have been and remain to gain an accepted and therefore secure place for Israel there; to keep the region's oil and gas coming at reasonable prices; to be able to pass through the area at will; to head off challenges to these interests; to do profitable business in the markets of the Middle East; and to promote stability amidst the expansion of liberty in its countries. Judging by results, we have been doing a lot wrong. Two related problems in our overall approach need correction. They are “enablement” and the creation of “moral hazard.” Both are fall-out from  relationships of codependency.
  • Enablement occurs when one party to a relationship indulges or supports and thereby enables another party’s dysfunctional behavior. A familiar example from ordinary life is giving money to a drunk or a drug addict or ignoring, explaining away, or defending their subsequent self-destructive behavior.  Moral hazard is the condition that obtains when one party is emboldened to take risks it would not otherwise take because it knows another party will shoulder the consequences and bear the costs of failure. The U.S.-Israel relationship has evolved to exemplify codependency. It now embodies both enablement and moral hazard. U.S. support for Israel is unconditional.  Israel has therefore had no need to cultivate relations with others in the Middle East, to declare its borders, or to choose peace over continued expansion into formerly Arab lands. Confidence in U.S. backing enables Israel to do whatever it likes to the Palestinians and its neighbors without having to worry about the consequences. Israel is now a rich country, but the United States continues to subsidize it with cash transfers and other fiscal privileges. The Jewish state is the most powerful country in the Middle East. It can launch attacks on its neighbors, confident that it will be resupplied by the United States. Its use of U.S. weapons in ways that violate both U.S. and international law goes unrebuked. 41 American vetoes in the United Nations Security Council have exempted Israel from censure and international law. We enable it to defy the expressed will of the international community, including, ironically, our own.
  • We Americans are facilitating Israel's indulgence in denial and avoidance of the choices it must make if it is not to jeopardize its long-term existence as a state in the Middle East. The biggest contribution we could now make to Israel's longevity would be to ration our support for it, so as to cause it to rethink and reform its often self-destructive behavior. Such peace as Israel now enjoys with Egypt, Jordan, and the Palestinians is the direct result of tough love of this kind by earlier American administrations. We Americans cannot save Israel from itself, but we can avoid killing it with uncritical kindness. We should support Israel when it makes sense to do so and it needs our support on specific issues, but not otherwise. Israel is placing itself and American interests in jeopardy. We need to discuss how to reverse this dynamic.
  • Moral hazard has also been a major problem in our relationship with our Arab partners. Why should they play an active role in countering the threat to them they perceive from Iran, if they can get America to do this for them? Similarly, why should any Muslim country rearrange its priorities to deal with Muslim renegades like Daesh when it can count on America to act for it? If America thinks it must lead, why not let it do so? But responsible foreign and defense policies begin with self-help, not outsourcing of military risks. The United States has the power-projection and war-fighting capabilities to back a Saudi-led coalition effort against Daesh. The Saudis have the religious and political credibility, leadership credentials, and diplomatic connections to organize such an effort. We do not. Since this century began, America has administered multiple disappointments to its allies and friends in the Middle East, while empowering their and our adversaries. Unlike the Gulf Arabs, Egypt, and Turkey, Washington does not have diplomatic relations with Tehran. Given our non-Muslim identity, solidarity with Israel, and recent history in the Fertile Crescent, the United States cannot hope to unite the region’s Muslims against Daesh.  Daesh is an insurgency that claims to exemplify Islam as well as a governing structure and an armed force. A coalition led by inhibited foreign forces, built on papered-over differences, and embodying hedged commitments will not defeat such an insurgency with or without boots on the ground.
  • When elections have yielded governments whose policies we oppose, we have not hesitated to conspire with their opponents to overthrow them. But the results of our efforts to coerce political change in the Middle East are not just failures but catastrophic failures. Our policies have nowhere produced democracy. They have instead contrived the destabilization of societies, the kindling of religious warfare, and the installation of dictatorships contemptuous of the rights of religious and ethnic minorities. Frankly, we have done a lot better at selling things, including armaments, to the region than we have at transplanting the ideals of the Atlantic Enlightenment there. The region’s autocrats cooperate with us to secure our protection, and they get it. When they are nonetheless overthrown, the result is not democracy or the rule of law but socio-political collapse and the emergence of  a Hobbesian state of nature in which religious and ethnic communities, families, and individuals are able to feel safe only when they are armed and have the drop on each other. Where we have engineered or attempted to engineer regime change, violent politics, partition, and ethno-religious cleansing have everywhere succeeded unjust but tranquil order. One result of our bungled interventions in Iraq and Syria is the rise of Daesh. This is yet another illustration that, in our efforts to do good in the Middle East, we have violated the principle that one should first do no harm.
  • Americans used to believe that we could best lead by example. We and those in the Middle East seeking nonviolent change would all be better off if America returned to that tradition and forswore ideologically motivated hectoring and intervention. No one willingly follows a wagging finger. Despite our unparalleled ability to use force against foreigners, the best way to inspire them to emulate us remains showing them that we have our act together. At the moment, we do not. In the end, to cure the dysfunction in our policies toward the Middle East, it comes down to this. We must cure the dysfunction and venality of our politics. If we cannot, we have no business trying to use an 8,000-mile-long screwdriver to fix things one-third of the way around the world. That doesn’t work well under the best of circumstances. But when the country wielding the screwdriver has very little idea what it’s doing, it really screws things up.
  • Paul Merrell on 17 Mar 15
     
    Chas Freeman served as US ambassador to Saudi Arabia during the war to liberate Kuwait and as Assistant Secretary of Defense from 1993-94. He was the editor of the Encyclopedia Britannica entry on "diplomacy" and is the author of five books, including "America's Misadventures in the Middle East" and "Interesting Times: China, America, and the Shifting Balance of Prestige."  I have largely omitted highlighting portions of the speech dealing with Muslim nations because Freeman has apparently lost touch with the actual U.S., Saudi, UAE, Kuwait, and Turish roles in creating and expanding ISIL. But his analysis of Israel's situation and recommendations for curing it seem quite valid, as well as his overall Mideast recommendation to heed the First Law of Holes: "when stuck in one, stop digging."   I recommend reading the entire speech notwithstanding his misunderstanding of ISIL. There is a lot of very important history there ably summarized.
Paul Merrell

Chinese delegation offers $250M investment in Egypt | Cairo Post - 0 views

www.thecairopost.com/...ffers-250m-investment-in-egypt

economic-development Egypt China steel-roilling-factory

shared by Paul Merrell on 09 Mar 15 - No Cached
  • CAIRO:  A Chinese delegation from Star Oil & Gas (SOG) holdings along with partners from the International Drilling Material Manufacturing (IDM) company met Sunday with Minister of Petroleum and Mineral Resources Sherif Ismail, offering new projects of $250M to be completely funded by the Chinese government and Chinese banks. A statement released from the ministry added that the delegation discussed a feasibility study of a new steel rolling factory to produce seamless pipes to supply the entire African market, that will be considered as a “development step” in the whole IDM system. SOG’s representative in Egypt Mohamed Al-Gohary stated that this project is going to be “a first” in the Middle East on the field of drilling and oil exploration. He assured that the Chinese trust in Egypt’s economic vision, that was one of the main reasons that encouraged them to prepare the study and discuss it with the government. Li Yang, SOG holdings head, said that the Chinese government considers Egypt as a “key investment country” in Africa.
  • A presidential statement released during that visit stated it would “usher in a new phase of relations between the two countries, as China has expressed an interest in promoting their relationship to the level of ‘strategic partnership’—a level China maintains with only a limited number of countries globally.” During the visit, President Sisi held talks and signed a number of cooperation agreements with his Chinese counterpart President Xi Jinping, on bilateral economic and technical cooperation. In previous presidential statement, spokesperson Alaa Youssef, noted that China is Egypt’s second largest trading partner. The trade between Egypt and China amounted to $10.3 billion in 2013, of which $1.9 billion were Egyptian exports to China and $8.4 billion were imports from China, according to government figures. The history of modern bilateral relations between the two countries dates back to 1956, when Egypt became the first Arab and African country to recognize the communist government of the People’s Republic of China.
Paul Merrell

Abbott to say No to Xi and the New Asia Infrastructure Investment Bank - Twice | nsnbc ... - 0 views

nsnbc.me/...tructure-investment-bank-twice

banksters de-dollarization AIIB China dollar-collapse Australia

shared by Paul Merrell on 10 Nov 14 - No Cached
  • Australian Prime Minister Tony Abbott is expected to say no to Chinese President Xi about joining the new Chinese-led Asia Infrastructure Development Bank (AIIB) when he will meet Xi at the ASEAN summit in Beijing this week. Abbott’s no to joining the bank would come against the advise of Australian treasurer Joe Hockey and after intense U.S. pressure for Australia to reject the proposed participation.
  • The decision to reject Australia’s participation in the 21 nation regional bank was made during a session of the Australian government’s National Security Committee and was explained as a “decision made on strategic grounds”. The decision has been criticized by several of Australia’s leading experts on economy. The Asian Development Bank  (ADB) estimated in 2011 that Asia would require some US$750 per year through 2020 to meet the needs for regional infrastructure development. In 2012 the ADB merely lent US$7.5 billion reported Australia’s Treasury.
  • A growing number of regional governments including Thailand, Malaysia, Indonesia, Laos, Myanmar and many other are gravitating towards China as China increasingly opens up its economy and banking system for foreign businesses and investment.
  • ...3 more annotations...
  • Australian Treasurer Joe Hockey repeatedly stressed that Australia’s national interests would be better served by joining the new AIIB while Abbott attempted to position the AIIB as a “unilateral institution”. While it is correct that China is the main investor into the bank, it is a 21 nation project and Abbott’s explanation is given little credence by objective economists who are aware of the inherent problems with U.S. dominance and the dominance of rogue corporate cartels who hold e.g the World Bank, the IMF and the US government in a state of capture.
  • The development gains perspective, considering that the former Chief Economist of the Bank for International Settlements (BIS) William White in 2013, and other top-economists are predicting that a collapse of the U.S. dollar and the Bretton Woods institutions has become unavoidable, that it may happened overnight, and that it is likely to happen sometime by the end of 2014 or the first half of 2015. A recent analysis of the development described U.S. pressure against nations’ joining the new Asia Infrastructure Development Bank as the choice between gold and gunfire, noting that the U.S. applies relative soft pressure against Australia, while it won’t hesitate to provoke civil wars in for example Thailand to prolong the (f)ailing new American Century, just a little bit longer.
  • Gold or Gunfire: Hedging Against the Collapse of the Dollar
Paul Merrell

Asia Times Online :: Russia, China mock divide and rule - 0 views

www.atimes.com/...WOR-02-231214.html

war & peace economic-warfare China Russia U.S.-foreign-policy

shared by Paul Merrell on 25 Dec 14 - No Cached
  • At the symposium, held in a divinely frescoed former 15th century Dominican refectory now part of the Italian parliament's library, Sergey Glazyev, on the phone from Moscow, gave a stark reading of Cold War 2.0. There's no real "government" in Kiev; the US ambassador is in charge. An anti-Russia doctrine has been hatched in Washington to foment war in Europe - and European politicians are its collaborators. Washington wants a war in Europe because it is losing the competition with China. Glazyev addressed the sanctions dementia: Russia is trying simultaneously to reorganize the politics of the International Monetary Fund, fight capital flight and minimize the effect of banks closing credit lines for many businessmen. Yet the end result of sanctions, he says, is that Europe will be the ultimate losers economically; bureaucracy in Europe has lost economic focus as American geopoliticians have taken over.
  • What he did emphasize was this was outright financial war, helped by a fifth column in the Russian establishment. The only equal component in this asymmetrical war was nuclear forces. And yet Russia would not surrender. Leontyev characterized Europe not as a historical subject but as an object: "The European project is an American project." And "democracy" had become fiction. The run on the rouble came and went like a devastating economic hurricane. Yet you don't threat a checkmate against a skilled chess player unless your firepower is stronger than Jupiter's lightning bolt. Moscow survived. Gazprom heeded the request of President Vladimir Putin and will sell its US dollar reserves on the domestic market. German Foreign Minister Frank-Walter Steinmeier went on the record against the EU further "turning the screw" as in more counterproductive sanctions against Moscow. And at his annual press conference, Putin emphasized how Russia would weather the storm.
  • Essentially, the Empire of Chaos is bluffing, using Europe as pawns. The Empire of Chaos is as lousy at chess as it is at history. What it excels in is in upping the ante to force Russia to back down. Russia won't back down.
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  • Russia could outmaneuver Western financial markets by cutting them off from its wealth of oil and natural gas. The markets would inevitably collapse - uncontrolled chaos for the Empire of Chaos (or "controlled chaos", in Putin's own words). Imagine the crumbling of the quadrillion-plus of derivatives. It would take years for the "West" to replace Russian oil and natural gas, but the EU's economy would be instantly devastated. Just this lightning-bolt Western attack on the rouble - and oil prices - using the crushing power of Wall Street firms had already shaken European banks exposed to Russia to the core; their credit default swaps soared. Imagine those banks collapsing in a Lehman Brothers-style house of cards if Russia decided to default - thus unleashing a chain reaction. Think about a non-nuclear MAD (Mutually Assured Destruction) - in fact warless. Still, Russia is self-sufficient in all kinds of energy, mineral wealth and agriculture. Europe isn't. This could become the lethal result of war by sanctions.
  • Russia could always deploy an economic "nuclear" option, declaring a moratorium on its foreign debt. Then, if Western banks seized Russian assets, Moscow could seize every Western investment in Russia. In any event, the Pentagon and NATO's aim of a shooting war in the European theater would not happen; unless Washington was foolish enough to start it.
  • To top it off, in 2014 President Xi Jinping has deployed unprecedented diplomatic/geostrategic frenzy - ultimately tied to the long-term project of slowly but surely keeping on erasing US supremacy in Asia and rearranging the global chessboard. What Xi said in Shanghai in May encapsulates the project; "It's time for Asians to manage the affairs of Asia." At the APEC meeting in November, he doubled down, promoting an "Asia-Pacific dream". Meanwhile, frenzy is the norm. Apart from the two monster, US$725 billion gas deals - Power of Siberia and Altai pipeline - and a recent New Silk Road-related offensive in Eastern Europe, [4] virtually no one in the West remembers that in September Chinese Prime Minister Li Keiqiang signed no fewer than 38 trade deals with the Russians, including a swap deal and a fiscal deal, which imply total economic interplay.
  • A case can be made that the geopolitical shift towards Russia-China integration is arguably the greatest strategic maneuver of the last 100 years. Xi's ultimate master plan is unambiguous: a Russia-China-Germany trade/commerce alliance. German business/industry wants it badly, although German politicians still haven't got the message. Xi - and Putin - are building a new economic reality on the Eurasian ground, crammed with crucial political, economic and strategic ramifications. Of course, this will be an extremely rocky road. It has not leaked to Western corporate media yet, but independent-minded academics in Europe (yes, they do exist, almost like a secret society) are increasingly alarmed there is no alternative model to the chaotic, entropic hardcore neoliberalism/casino capitalism racket promoted by the Masters of the Universe.
  • And yet, as much as Lao Tzu, already an octogenarian, gave the young Confucius an intellectual slap on the face, the "West" could do with a wake-up call. Divide et impera? It's not working. And it's bound to fail miserably. As it stands, what we do know is that 2015 will be a hair-raising year in myriad aspects. Because from Europe to Asia, from the ruins of the Roman empire to the re-emerging Middle Kingdom, we all still remain under the sign of a fearful, dangerous, rampantly irrational Empire of Chaos.
Paul Merrell

The Virtue of Subtlety: A U.S. Strategy Against the Islamic State - 0 views

www.forbes.com/...tegy-against-the-islamic-state

war & peace ISIL U.S.-foreign-policy

shared by Paul Merrell on 11 Sep 14 - No Cached
  • U.S. strategy is sound. It is to allow the balance of power to play out, to come in only when it absolutely must — with overwhelming force, as in Kuwait — and to avoid intervention where it cannot succeed. The tactical application of strategy is the problem. In this case the tactic is not direct intervention by the United States, save as a satisfying gesture to avenge murdered Americans. But the solution rests in doing as little as possible and forcing regional powers into the fray, then in maintaining the balance of power in this coalition. Such an American strategy is not an avoidance of responsibility. It is the use of U.S. power to force a regional solution. Sometimes the best use of American power is to go to war. Far more often, the best use of U.S. power is to withhold it. The United States cannot evade responsibility in the region. But it is enormously unimaginative to assume that carrying out that responsibility is best achieved by direct intervention. Indirect intervention is frequently more efficient and more effective.
  • The United States cannot win the game of small mosaic tiles that is emerging in Syria and Iraq. An American intervention at this microscopic level can only fail. But the principle of balance of power does not mean that balance must be maintained directly. Turkey, Iran and Saudi Arabia have far more at stake in this than the United States. So long as they believe that the United States will attempt to control the situation, it is perfectly rational for them to back off and watch, or act in the margins, or even hinder the Americans. The United States must turn this from a balance of power between Syria and Iraq to a balance of power among this trio of regional powers. They have far more at stake and, absent the United States, they have no choice but to involve themselves. They cannot stand by and watch a chaos that could spread to them. It is impossible to forecast how the game is played out. What is important is that the game begins. The Turks do not trust the Iranians, and neither is comfortable with the Saudis. They will cooperate, compete, manipulate and betray, just as the United States or any country might do in such a circumstance. The point is that there is a tactic that will fail: American re-involvement. There is a tactic that will succeed: the United States making it clear that while it might aid the pacification in some way, the responsibility is on regional powers. The inevitable outcome will be a regional competition that the United States can manage far better than the current chaos.
  • There is then the special case of the Islamic State. It is special because its emergence triggered the current crisis. It is special because the brutal murder of two prisoners on video showed a particular cruelty. And it is different because its ideology is similar to that of al Qaeda, which attacked the United States. It has excited particular American passions. To counter this, I would argue that the uprising by Iraq’s Sunni community was inevitable, with its marginalization by Nouri al-Maliki’s Shiite regime in Baghdad. That it took this particularly virulent form is because the more conservative elements of the Sunni community were unable or unwilling to challenge al-Maliki. But the fragmentation of Iraq into Shiite, Sunni and Kurdish regions was well underway before the Islamic State, and jihadism was deeply embedded in the Sunni community a long time ago. Moreover, although the Islamic State is brutal, its cruelty is not unique in the region. Syrian President Bashar al Assad and others may not have killed Americans or uploaded killings to YouTube, but their history of ghastly acts is comparable. Finally, the Islamic State — engaged in war with everyone around it — is much less dangerous to the United States than a small group with time on its hands, planning an attack. In any event, if the Islamic State did not exist, the threat to the United States from jihadist groups in Yemen or Libya or somewhere inside the United States would remain.
  • ...11 more annotations...
  • The issue is whether the United States can live with this situation or whether it must reshape it. The immediate question is whether the United States has the power to reshape it and to what extent. The American interest turns on its ability to balance local forces. If that exists, the question is whether there is any other shape that can be achieved through American power that would be superior. From my point of view, there are many different shapes that can be imagined, but few that can be achieved. The American experience in Iraq highlighted the problems with counterinsurgency or being caught in a local civil war. The idea of major intervention assumes that this time it will be different. This fits one famous definition of insanity.
  • A national strategy emerges over the decades and centuries. It becomes a set of national interests into which a great deal has been invested, upon which a great deal depends and upon which many are counting. Presidents inherit national strategies, and they can modify them to some extent. But the idea that a president has the power to craft a new national strategy both overstates his power and understates the power of realities crafted by all those who came before him. We are all trapped in circumstances into which we were born and choices that were made for us. The United States has an inherent interest in Ukraine and in Syria-Iraq. Whether we should have that interest is an interesting philosophical question for a late-night discussion, followed by a sunrise when we return to reality. These places reflexively matter to the United States. The American strategy is fixed: Allow powers in the region to compete and balance against each other. When that fails, intervene with as little force and risk as possible. For example, the conflict between Iran and Iraq canceled out two rising powers until the war ended. Then Iraq invaded Kuwait and threatened to overturn the balance of power in the region. The result was Desert Storm.
  • The American strategy is fixed: Allow powers in the region to compete and balance against each other. When that fails, intervene with as little force and risk as possible. For example, the conflict between Iran and Iraq canceled out two rising powers until the war ended. Then Iraq invaded Kuwait and threatened to overturn the balance of power in the region. The result was Desert Storm. This strategy provides a model. In the Syria-Iraq region, the initial strategy is to allow the regional powers to balance each other, while providing as little support as possible to maintain the balance of power. It is crucial to understand the balance of power in detail, and to understand what might undermine it, so that any force can be applied effectively. This is the tactical part, and it is the tactical part that can go wrong. The strategy has a logic of its own. Understanding what that strategy demands is the hard part. Some nations have lost their sovereignty by not understanding what strategy demands. France in 1940 comes to mind. For the United States, there is no threat to sovereignty, but that makes the process harder: Great powers can tend to be casual because the situation is not existential. This increases the cost of doing what is necessary. The ground where we are talking about applying this model is Syria and Iraq. Both of these central governments have lost control of the country as a whole, but each remains a force. Both countries are divided by religion, and the religions are divided internally as well. In a sense the nations have ceased to exist, and the fragments they consisted of are now smaller but more complex entities.
  • This strategy provides a model. In the Syria-Iraq region, the initial strategy is to allow the regional powers to balance each other, while providing as little support as possible to maintain the balance of power. It is crucial to understand the balance of power in detail, and to understand what might undermine it, so that any force can be applied effectively. This is the tactical part, and it is the tactical part that can go wrong. The strategy has a logic of its own. Understanding what that strategy demands is the hard part. Some nations have lost their sovereignty by not understanding what strategy demands. France in 1940 comes to mind. For the United States, there is no threat to sovereignty, but that makes the process harder: Great powers can tend to be casual because the situation is not existential. This increases the cost of doing what is necessary. The ground where we are talking about applying this model is Syria and Iraq. Both of these central governments have lost control of the country as a whole, but each remains a force. Both countries are divided by religion, and the religions are divided internally as well. In a sense the nations have ceased to exist, and the fragments they consisted of are now smaller but more complex entities.
  • There is then the special case of the Islamic State. It is special because its emergence triggered the current crisis. It is special because the brutal murder of two prisoners on video showed a particular cruelty. And it is different because its ideology is similar to that of al Qaeda, which attacked the United States. It has excited particular American passions. To counter this, I would argue that the uprising by Iraq’s Sunni community was inevitable, with its marginalization by Nouri al-Maliki’s Shiite regime in Baghdad. That it took this particularly virulent form is because the more conservative elements of the Sunni community were unable or unwilling to challenge al-Maliki. But the fragmentation of Iraq into Shiite, Sunni and Kurdish regions was well underway before the Islamic State, and jihadism was deeply embedded in the Sunni community a long time ago. Moreover, although the Islamic State is brutal, its cruelty is not unique in the region. Syrian President Bashar al Assad and others may not have killed Americans or uploaded killings to YouTube, but their history of ghastly acts is comparable. Finally, the Islamic State — engaged in war with everyone around it — is much less dangerous to the United States than a small group with time on its hands, planning an attack. In any event, if the Islamic State did not exist, the threat to the United States from jihadist groups in Yemen or Libya or somewhere inside the United States would remain.
  • The issue is whether the United States can live with this situation or whether it must reshape it. The immediate question is whether the United States has the power to reshape it and to what extent. The American interest turns on its ability to balance local forces. If that exists, the question is whether there is any other shape that can be achieved through American power that would be superior. From my point of view, there are many different shapes that can be imagined, but few that can be achieved. The American experience in Iraq highlighted the problems with counterinsurgency or being caught in a local civil war. The idea of major intervention assumes that this time it will be different. This fits one famous definition of insanity.
  • Because the Islamic State operates to some extent as a conventional military force, it is vulnerable to U.S. air power. The use of air power against conventional forces that lack anti-aircraft missiles is a useful gambit. It shows that the United States is doing something, while taking little risk, assuming that the Islamic State really does not have anti-aircraft missiles. But it accomplishes little. The Islamic State will disperse its forces, denying conventional aircraft a target. Attempting to defeat the Islamic State by distinguishing its supporters from other Sunni groups and killing them will founder at the first step. The problem of counterinsurgency is identifying the insurgent. There is no reason not to bomb the Islamic State’s forces and leaders. They certainly deserve it. But there should be no illusion that bombing them will force them to capitulate or mend their ways. They are now part of the fabric of the Sunni community, and only the Sunni community can root them out. Identifying Sunnis who are anti-Islamic State and supplying them with weapons is a much better idea. It is the balance-of-power strategy that the United States follows, but this approach doesn’t have the dramatic satisfaction of blowing up the enemy. That satisfaction is not trivial, and the United States can certainly blow something up and call it the enemy, but it does not address the strategic problem. In the first place, is it really a problem for the United States?
  • There is no reason not to bomb the Islamic State’s forces and leaders. They certainly deserve it. But there should be no illusion that bombing them will force them to capitulate or mend their ways. They are now part of the fabric of the Sunni community, and only the Sunni community can root them out. Identifying Sunnis who are anti-Islamic State and supplying them with weapons is a much better idea. It is the balance-of-power strategy that the United States follows, but this approach doesn’t have the dramatic satisfaction of blowing up the enemy. That satisfaction is not trivial, and the United States can certainly blow something up and call it the enemy, but it does not address the strategic problem. In the first place, is it really a problem for the United States? The American interest is not stability but the existence of a dynamic balance of power in which all players are effectively paralyzed so that no one who would threaten the United States emerges. The Islamic State had real successes at first, but the balance of power with the Kurds and Shia has limited its expansion, and tensions within the Sunni community diverted its attention. Certainly there is the danger of intercontinental terrorism, and U.S. intelligence should be active in identifying and destroying these threats. But the re-occupation of Iraq, or Iraq plus Syria, makes no sense. The United States does not have the force needed to occupy Iraq and Syria at the same time. The demographic imbalance between available forces and the local population makes that impossible.
  • The danger is that other Islamic State franchises might emerge in other countries. But the United States would not be able to block these threats as well as the other countries in the region. Saudi Arabia must cope with any internal threat it faces not because the United States is indifferent, but because the Saudis are much better at dealing with such threats. In the end, the same can be said for the Iranians. Most important, it can also be said for the Turks. The Turks are emerging as a regional power. Their economy has grown dramatically in the past decade, their military is the largest in the region, and they are part of the Islamic world. Their government is Islamist but in no way similar to the Islamic State, which concerns Ankara. This is partly because of Ankara’s fear that the jihadist group might spread to Turkey, but more so because its impact on Iraqi Kurdistan could affect Turkey’s long-term energy plans.
  • The United States cannot win the game of small mosaic tiles that is emerging in Syria and Iraq. An American intervention at this microscopic level can only fail. But the principle of balance of power does not mean that balance must be maintained directly. Turkey, Iran and Saudi Arabia have far more at stake in this than the United States. So long as they believe that the United States will attempt to control the situation, it is perfectly rational for them to back off and watch, or act in the margins, or even hinder the Americans. The United States must turn this from a balance of power between Syria and Iraq to a balance of power among this trio of regional powers. They have far more at stake and, absent the United States, they have no choice but to involve themselves. They cannot stand by and watch a chaos that could spread to them. It is impossible to forecast how the game is played out. What is important is that the game begins. The Turks do not trust the Iranians, and neither is comfortable with the Saudis. They will cooperate, compete, manipulate and betray, just as the United States or any country might do in such a circumstance. The point is that there is a tactic that will fail: American re-involvement. There is a tactic that will succeed: the United States making it clear that while it might aid the pacification in some way, the responsibility is on regional powers. The inevitable outcome will be a regional competition that the United States can manage far better than the current chaos.
  • U.S. strategy is sound. It is to allow the balance of power to play out, to come in only when it absolutely must — with overwhelming force, as in Kuwait — and to avoid intervention where it cannot succeed. The tactical application of strategy is the problem. In this case the tactic is not direct intervention by the United States, save as a satisfying gesture to avenge murdered Americans. But the solution rests in doing as little as possible and forcing regional powers into the fray, then in maintaining the balance of power in this coalition. Such an American strategy is not an avoidance of responsibility. It is the use of U.S. power to force a regional solution. Sometimes the best use of American power is to go to war. Far more often, the best use of U.S. power is to withhold it. The United States cannot evade responsibility in the region. But it is enormously unimaginative to assume that carrying out that responsibility is best achieved by direct intervention. Indirect intervention is frequently more efficient and more effective.
  • Paul Merrell on 11 Sep 14
     
    The article is by the Chairman of Stratfor, a private intelligence company. I don't agree with its analysis because I am decidedly non-interventionist. But this article should be required reading for all who have fallen for the war fever being spread by the War Party for full-scale military invasion of Iraq and Syria. The article at least lays a sound basis for a large degree of restraint.
Paul Merrell

Air Force Awards Contract for Long Range Strike Bomber > U.S. DEPARTMENT OF DEFENSE > A... - 0 views

www.defense.gov/...t-for-long-range-strike-bomber

war & peace military-procurement LRS-B

shared by Paul Merrell on 28 Oct 15 - No Cached
  • The Air Force announced today the contract award of engineering and manufacturing development and early production for the Long Range Strike Bomber, or LRS-B, to Northrop Grumman Corp. 
  • Air Force Secretary Deborah Lee James said the LRS-B is critical to national defense and is a top priority for the Air Force. “We face a complex security environment,” she said. “It’s imperative our Air Force invests in the right people, technology, capability, and training to defend the nation and its interests – at an affordable cost.” The future threat will evolve through the introduction of advanced air defense systems and development of more capable surface to air missile systems. The LRS-B is designed to replace the Air Force’s aging fleets of bombers – ranging in age from 50+ years for the B-52 to 17+ years for the B-2 – with a long range, highly survivable bomber capable of penetrating and operating in tomorrow’s anti-access, area denial environment. The LRS-B provides the strategic agility to launch from the United States and strike any target, any time around the globe. “The LRS-B will provide our nation tremendous flexibility as a dual-capable bomber and the strategic agility to respond and adapt faster than our potential adversaries,” said Gen. Mark A. Welsh III, Chief of Staff of the Air Force. “We have committed to the American people to provide security in the skies, balanced by our responsibility to affordably use taxpayer dollars in doing so. This program delivers both while ensuring we are poised to face emerging threats in an uncertain future.”
  • The Long Range Strike Bomber contract is composed of two parts. The contract for the Engineering and Manufacturing Development, or EMD, phase is a cost-reimbursable type contract with cost and performance incentives. The incentives minimize the contractor’s profit if they do not control cost and schedule appropriately. The independent estimate for the EMD phase is $21.4 billion in 2010 dollars. The second part of the contract is composed of options for the first 5 production lots, comprising 21 aircraft out of the total fleet of 100. They are fixed price options with incentives for cost.  Based on approved requirements, the Average Procurement Unit Cost (APUC) per aircraft is required to be equal to or less than $550 million per aircraft in 2010 dollars when procuring 100 LRS-B aircraft. The APUC from the independent estimate supporting today’s award is $511 million per aircraft, again in 2010 dollars.
  • Paul Merrell on 28 Oct 15
     
    Here we go again, another cost overrun nightmare 
Paul Merrell

Israel Grants Oil Rights in Syria to Murdoch and Rothschild - Craig Murray - 0 views

www.craigmurray.org.uk/...yria-to-murdoch-and-rothschild

war & peace Israel Golan-Heights oil Genie-Energy

shared by Paul Merrell on 31 Mar 16 - No Cached
  • srael has granted oil exploration rights inside Syria, in the occupied Golan Heights, to Genie Energy. Major shareholders of Genie Energy – which also has interests in shale gas in the United States and shale oil in Israel – include Rupert Murdoch and Lord Jacob Rothschild. This from a 2010 Genie Energy press release: Claude Pupkin, CEO of Genie Oil and Gas, commented, “Genie’s success will ultimately depend, in part, on access to the expertise of the oil and gas industry and to the financial markets. Jacob Rothschild and Rupert Murdoch are extremely well regarded by and connected to leaders in these sectors. Their guidance and participation will prove invaluable.” “I am grateful to Howard Jonas and IDT for the opportunity to invest in this important initiative,” Lord Rothschild said. “Rupert Murdoch’s extraordinary achievements speak for themselves and we are very pleased he has agreed to be our partner. Genie Energy is making good technological progress to tap the world’s substantial oil shale deposits which could transform the future prospects of Israel, the Middle East and our allies around the world.” For Israel to seek to exploit mineral reserves in the occupied Golan Heights is plainly illegal in international law. Japan was succesfully sued by Singapore before the International Court of Justice for exploitation of Singapore’s oil resources during the second world war. The argument has been made in international law that an occupying power is entitled to opeate oil wells which were previously functioning and operated by the sovereign power, in whose position the occupying power now stands. But there is absolutely no disagreement in the authorities and case law that the drilling of new wells – let alone fracking – by an occupying power is illegal.
  • Israel tried to make the same move twenty years ago but was forced to back down after a strong reaction from the Syrian government, which gained diplomatic support from the United States. Israel is now seeking to take advantage of the weakened Syrian state; this move perhaps casts a new light on recent Israeli bombings in Syria. In a rational world, the involvement of Rothschild and Murdoch in this international criminal activity would show them not to be fit and proper persons to hold major commercial interests elsewhere, and action would be taken. Naturally, nothing of the kind will happen.
  • Paul Merrell on 31 Mar 16
     
    From Wikipedia: "Genie Energy's Strategic advisory board is composed of: Dick Cheney (former vice president of the United States), Jacob Rothschild, 4th Baron Rothschild, Rupert Murdoch (media mogul and chairman of News Corp), James Woolsey (former CIA director), Larry Summers (former head of the US Treasury), and Bill Richardson, an ex-ambassador to the United Nations and energy secretary."
Paul Merrell

More Bang for the Buck - nsnbc international | nsnbc international - 0 views

nsnbc.me/...more-bang-for-the-buck

war & peace weapons U.S. Russia

shared by Paul Merrell on 31 Oct 16 - No Cached
  • More bang for the buck is the most apt description when we compare spending of the United States Government with that of the Government of the Russian Federation on its defense sector and military technology development. A closer look at the two budgets reveals the huge fault line that cuts across the entire US economy today. It also mirrors the true collapse of the American hegemon as a world power. It need not have been.
  • In the official Fiscal Year 2017 the US Department of Defense officially requested $523.9 billion in what they call “discretionary funding,” as in, “we use it as we please, no independent audit allowed.” Another $58.8 billion was requested for so-called Overseas Contingency Operations, typical Pentagon-speak for wars everywhere from Afghanistan to Syria to military operations around the South China sea. That made an official total of $583 billion requested and granted by a docile Congress. On October 13, the Russian wire-service Tass.ru reported that the Russian government is set to spend 948.59 billion rubles on national defense in 2017, according to the draft federal budget posted. It sounds like a lot, almost one trillion rubles. If we convert at the current dollar exchange rate, this translates into a mere $15 billion. Of that 793.79 billion rubles or $12.7 billion is planned to be spent on the Russian Armed Forces. In 2015 the Russian Federation spent $26 billion on the state military-industrial complex development program will reach 1.67 trillion rubles. That total for military industry investment and maintaining Russia’s armed forces, some $49 billion, equals 8.4 % of the dollar amount the United States Defense Department plays with annually. To that must be added the separate amount of $400 billion for modernization of Russian armed forces military capabilities by 2020. That’s roughly another $80 billion a year.
  • Now the relevant question at a time when Washington-led NATO forces are aggressively moving to the borders of the Russian Federation, when US Pentagon Special Forces and mercenaries like Blackwater aka Academi are mucking around Ukraine causing mischief, destruction and murder, is which country is getting better defense or military capacities for every dollar spent.
  • ...1 more annotation...
  • The answer came following the September 30, 2015 Russian announcement that it had agreed to respond with military support to the call of the legitimate government of Syria. What Russian military efforts have accomplished with meager resources, has astonished most western military experts. Far from being the dilapidated, technologically obsolescent Soviet-era military that many US planners reckon, Russia’s armed forces have undergone a quiet and impressive modernization ever since it became clear around 2007 that Washington was intent on pushing NATO to Moscow’s front door in Ukraine and Georgia as well as threatening with US missile “defense” in Poland, Czech Republic and now also in Bulgaria, Romania and Turkey. Russian Defense Minister Sergey Shiogu is a remarkable organizer who is known for reorganizing large Russian government departments. Before becoming Defense Minister he was head of the large Russian Ministry of Emergency Situations, responsible for emergency situations, such as floods, earthquakes and acts of terrorism. The result of Russia’s military modernization, partly demonstrated in the military intervention in Syria, has been a strategic shift in the global military balance of power that Washington’s neo-conservatives, none of whom have served in active duty military theatres, did not reckon with. Russian science and engineering have accomplished astonishing results with minimum investment. Just a select glance at what is being developed is instructive.
Paul Merrell

Tomgram: Alfred McCoy, It's About Blackmail, Not National Security | TomDispatch - 0 views

www.tomdispatch.com/...kmail%2C_not_national_security

surveillance state blackmail power-projection empire Obama BushII

shared by Paul Merrell on 29 Jan 14 - No Cached
  • For more than six months, Edward Snowden’s revelations about the National Security Agency (NSA) have been pouring out from the Washington Post, the New York Times, the Guardian, Germany’s Der Spiegel, and Brazil’s O Globo, among other places.  Yet no one has pointed out the combination of factors that made the NSA’s expanding programs to monitor the world seem like such a slam-dunk development in Washington.  The answer is remarkably simple.  For an imperial power losing its economic grip on the planet and heading into more austere times, the NSA’s latest technological breakthroughs look like a bargain basement deal when it comes to projecting power and keeping subordinate allies in line -- like, in fact, the steal of the century.  Even when disaster turned out to be attached to them, the NSA’s surveillance programs have come with such a discounted price tag that no Washington elite was going to reject them.
  • What exactly was the aim of such an unprecedented program of massive domestic and planetary spying, which clearly carried the risk of controversy at home and abroad? Here, an awareness of the more than century-long history of U.S. surveillance can guide us through the billions of bytes swept up by the NSA to the strategic significance of such a program for the planet’s last superpower. What the past reveals is a long-term relationship between American state surveillance and political scandal that helps illuminate the unacknowledged reason why the NSA monitors America’s closest allies. Not only does such surveillance help gain intelligence advantageous to U.S. diplomacy, trade relations, and war-making, but it also scoops up intimate information that can provide leverage -- akin to blackmail -- in sensitive global dealings and negotiations of every sort. The NSA’s global panopticon thus fulfills an ancient dream of empire. With a few computer key strokes, the agency has solved the problem that has bedeviled world powers since at least the time of Caesar Augustus: how to control unruly local leaders, who are the foundation for imperial rule, by ferreting out crucial, often scurrilous, information to make them more malleable.
  • Once upon a time, such surveillance was both expensive and labor intensive. Today, however, unlike the U.S. Army’s shoe-leather surveillance during World War I or the FBI’s break-ins and phone bugs in the Cold War years, the NSA can monitor the entire world and its leaders with only 100-plus probes into the Internet’s fiber optic cables. This new technology is both omniscient and omnipresent beyond anything those lacking top-secret clearance could have imagined before the Edward Snowden revelations began.  Not only is it unimaginably pervasive, but NSA surveillance is also a particularly cost-effective strategy compared to just about any other form of global power projection. And better yet, it fulfills the greatest imperial dream of all: to be omniscient not just for a few islands, as in the Philippines a century ago, or a couple of countries, as in the Cold War era, but on a truly global scale. In a time of increasing imperial austerity and exceptional technological capability, everything about the NSA’s surveillance told Washington to just “go for it.”  This cut-rate mechanism for both projecting force and preserving U.S. global power surely looked like a no-brainer, a must-have bargain for any American president in the twenty-first century -- before new NSA documents started hitting front pages weekly, thanks to Snowden, and the whole world began returning the favor.
  • ...12 more annotations...
  • As the gap has grown between Washington’s global reach and its shrinking mailed fist, as it struggles to maintain 40% of world armaments (the 2012 figure) with only 23% of global gross economic output, the U.S. will need to find new ways to exercise its power far more economically. As the Cold War took off, a heavy-metal U.S. military -- with 500 bases worldwide circa 1950 -- was sustainable because the country controlled some 50% of the global gross product. But as its share of world output falls -- to an estimated 17% by 2016 -- and its social welfare costs climb relentlessly from 4% of gross domestic product in 2010 to a projected 18% by 2050, cost-cutting becomes imperative if Washington is to survive as anything like the planet’s “sole superpower.” Compared to the $3 trillion cost of the U.S. invasion and occupation of Iraq, the NSA’s 2012 budget of just $11 billion for worldwide surveillance and cyberwarfare looks like cost saving the Pentagon can ill-afford to forego. Yet this seeming “bargain” comes at what turns out to be an almost incalculable cost. The sheer scale of such surveillance leaves it open to countless points of penetration, whether by a handful of anti-war activists breaking into an FBI field office in Media, Pennsylvania, back in 1971 or Edward Snowden downloading NSA documents at a Hawaiian outpost in 2012.
  • In October 2001, not satisfied with the sweeping and extraordinary powers of the newly passed Patriot Act, President Bush ordered the National Security Agency to commence covert monitoring of private communications through the nation's telephone companies without the requisite FISA warrants. Somewhat later, the agency began sweeping the Internet for emails, financial data, and voice messaging on the tenuous theory that such “metadata” was “not constitutionally protected.” In effect, by penetrating the Internet for text and the parallel Public Switched Telephone Network (PSTN) for voice, the NSA had gained access to much of the world’s telecommunications. By the end of Bush’s term in 2008, Congress had enacted laws that not only retrospectively legalized these illegal programs, but also prepared the way for NSA surveillance to grow unchecked. Rather than restrain the agency, President Obama oversaw the expansion of its operations in ways remarkable for both the sheer scale of the billions of messages collected globally and for the selective monitoring of world leaders.
  • By 2012, the centralization via digitization of all voice, video, textual, and financial communications into a worldwide network of fiber optic cables allowed the NSA to monitor the globe by penetrating just 190 data hubs -- an extraordinary economy of force for both political surveillance and cyberwarfare.
  • With a few hundred cable probes and computerized decryption, the NSA can now capture the kind of gritty details of private life that J. Edgar Hoover so treasured and provide the sort of comprehensive coverage of populations once epitomized by secret police like East Germany’s Stasi. And yet, such comparisons only go so far. After all, once FBI agents had tapped thousands of phones, stenographers had typed up countless transcripts, and clerks had stored this salacious paper harvest in floor-to-ceiling filing cabinets, J. Edgar Hoover still only knew about the inner-workings of the elite in one city: Washington, D.C.  To gain the same intimate detail for an entire country, the Stasi had to employ one police informer for every six East Germans -- an unsustainable allocation of human resources. By contrast, the marriage of the NSA’s technology to the Internet’s data hubs now allows the agency’s 37,000 employees a similarly close coverage of the entire globe with just one operative for every 200,000 people on the planet
  • Through the expenditure of $250 million annually under its Sigint Enabling Project, the NSA has stealthily penetrated all encryption designed to protect privacy. “In the future, superpowers will be made or broken based on the strength of their cryptanalytic programs,” reads a 2007 NSA document. “It is the price of admission for the U.S. to maintain unrestricted access to and use of cyberspace.” By collecting knowledge -- routine, intimate, or scandalous -- about foreign leaders, imperial proconsuls from ancient Rome to modern America have gained both the intelligence and aura of authority necessary for dominion over alien societies. The importance, and challenge, of controlling these local elites cannot be overstated. During its pacification of the Philippines after 1898, for instance, the U.S. colonial regime subdued contentious Filipino leaders via pervasive policing that swept up both political intelligence and personal scandal. And that, of course, was just what J. Edgar Hoover was doing in Washington during the 1950s and 1960s.
  • Indeed, the mighty British Empire, like all empires, was a global tapestry woven out of political ties to local leaders or “subordinate elites” -- from Malay sultans and Indian maharajas to Gulf sheiks and West African tribal chiefs. As historian Ronald Robinson once observed, the British Empire spread around the globe for two centuries through the collaboration of these local leaders and then unraveled, in just two decades, when that collaboration turned to “non-cooperation.” After rapid decolonization during the 1960s transformed half-a-dozen European empires into 100 new nations, their national leaders soon found themselves the subordinate elites of a spreading American global imperium. Washington suddenly needed the sort of private information that could keep such figures in line. Surveillance of foreign leaders provides world powers -- Britain then, America now -- with critical information for the exercise of global hegemony. Such spying gave special penetrating power to the imperial gaze, to that sense of superiority necessary for dominion over others.  It also provided operational information on dissidents who might need to be countered with covert action or military force; political and economic intelligence so useful for getting the jump on allies in negotiations of all sorts; and, perhaps most important of all, scurrilous information about the derelictions of leaders useful in coercing their compliance.
  • In late 2013, the New York Times reported that, when it came to spying on global elites, there were “more than 1,000 targets of American and British surveillance in recent years,” reaching down to mid-level political actors in the international arena. Revelations from Edward Snowden’s cache of leaked documents indicate that the NSA has monitored leaders in some 35 nations worldwide -- including Brazilian president Dilma Rousseff, Mexican presidents Felipe Calderón and Enrique Peña Nieto, German Chancellor Angela Merkel, and Indonesia’s president Susilo Bambang Yudhoyono.  Count in as well, among so many other operations, the monitoring of “French diplomatic interests” during the June 2010 U.N. vote on Iran sanctions and “widespread surveillance” of world leaders during the Group 20 summit meeting at Ottawa in June 2010. Apparently, only members of the historic “Five Eyes” signals-intelligence alliance (Australia, Canada, New Zealand, and Great Britain) remain exempt -- at least theoretically -- from NSA surveillance. Such secret intelligence about allies can obviously give Washington a significant diplomatic advantage. During U.N. wrangling over the U.S. invasion of Iraq in 2002-2003, for example, the NSA intercepted Secretary-General Kofi Anan’s conversations and monitored the “Middle Six” -- Third World nations on the Security Council -- offering what were, in essence, well-timed bribes to win votes. The NSA’s deputy chief for regional targets sent a memo to the agency’s Five Eyes allies asking “for insights as to how membership is reacting to on-going debate regarding Iraq, plans to vote on any related resolutions [..., and] the whole gamut of information that could give U.S. policymakers an edge in obtaining results favorable to U.S. goals.”
  • Indicating Washington’s need for incriminating information in bilateral negotiations, the State Department pressed its Bahrain embassy in 2009 for details, damaging in an Islamic society, on the crown princes, asking: “Is there any derogatory information on either prince? Does either prince drink alcohol? Does either one use drugs?” Indeed, in October 2012, an NSA official identified as “DIRNSA,” or Director General Keith Alexander, proposed the following for countering Muslim radicals: “[Their] vulnerabilities, if exposed, would likely call into question a radicalizer’s devotion to the jihadist cause, leading to the degradation or loss of his authority.” The agency suggested that such vulnerabilities could include “viewing sexually explicit material online” or “using a portion of the donations they are receiving… to defray personal expenses.” The NSA document identified one potential target as a “respected academic” whose “vulnerabilities” are “online promiscuity.”
  • Just as the Internet has centralized communications, so it has moved most commercial sex into cyberspace. With an estimated 25 million salacious sites worldwide and a combined 10.6 billion page views per month in 2013 at the five top sex sites, online pornography has become a global business; by 2006, in fact, it generated $97 billion in revenue. With countless Internet viewers visiting porn sites and almost nobody admitting it, the NSA has easy access to the embarrassing habits of targets worldwide, whether Muslim militants or European leaders. According to James Bamford, author of two authoritative books on the agency, “The NSA's operation is eerily similar to the FBI's operations under J. Edgar Hoover in the 1960s where the bureau used wiretapping to discover vulnerabilities, such as sexual activity, to ‘neutralize’ their targets.”
  • Indeed, whistleblower Edward Snowden has accused the NSA of actually conducting such surveillance.  In a December 2013 letter to the Brazilian people, he wrote, “They even keep track of who is having an affair or looking at pornography, in case they need to damage their target's reputation.” If Snowden is right, then one key goal of NSA surveillance of world leaders is not U.S. national security but political blackmail -- as it has been since 1898. Such digital surveillance has tremendous potential for scandal, as anyone who remembers New York Governor Eliot Spitzer’s forced resignation in 2008 after routine phone taps revealed his use of escort services; or, to take another obvious example, the ouster of France’s budget minister Jérôme Cahuzac in 2013 following wire taps that exposed his secret Swiss bank account. As always, the source of political scandal remains sex or money, both of which the NSA can track with remarkable ease.
  • By starting a swelling river of NSA documents flowing into public view, Edward Snowden has given us a glimpse of the changing architecture of U.S. global power. At the broadest level, Obama’s digital “pivot” complements his overall defense strategy, announced in 2012, of reducing conventional forces while expanding into the new, cost-effective domains of space and cyberspace. While cutting back modestly on costly armaments and the size of the military, President Obama has invested billions in the building of a new architecture for global information control. If we add the $791 billion expended to build the Department of Homeland Security bureaucracy to the $500 billion spent on an increasingly para-militarized version of global intelligence in the dozen years since 9/11, then Washington has made a $1.2 trillion investment in a new apparatus of world power.
  • So formidable is this security bureaucracy that Obama’s recent executive review recommended the regularization, not reform, of current NSA practices, allowing the agency to continue collecting American phone calls and monitoring foreign leaders into the foreseeable future. Cyberspace offers Washington an austerity-linked arena for the exercise of global power, albeit at the cost of trust by its closest allies -- a contradiction that will bedevil America’s global leadership for years to come. To update Henry Stimson: in the age of the Internet, gentlemen don't just read each other’s mail, they watch each other’s porn. Even if we think we have nothing to hide, all of us, whether world leaders or ordinary citizens, have good reason to be concerned.
Paul Merrell

Obama Visits Jamaica, Urges Caribbean Nations to Break from PetroCaribe | venezuelanaly... - 0 views

venezuelanalysis.com/11322

war & peace economic-warfare U.S.-foreign-policy Venezuela PetroCaribe

shared by Paul Merrell on 09 Apr 15 - No Cached
  • US President Barack Obama arrived today in Jamaica as part of an ongoing effort to persuade the island and its neighbors to reduce dependency on Venezuela’s bilateral PetroCaribe program.As the first active US president to visit Jamaica in 33 years, the primary goal of Mr. Obama’s trip will be to develop, in coordination with the World Bank, an investment plan in the Caribbean’s energy sector. Vice-president Joe Biden has alleged that PetroCaribe, founded by Hugo Chavez in 2005, is being used as a “tool of coercion” against the region by the South American nation. For almost a decade, Venezuela has shipped fuel to 18 nations in the Caribbean and Central America with favorable terms for payment, such as low-interest loans, while investing in community projects including hospitals, schools, highways, and homeless shelters.
  • Last week, the Bolivarian government, through the Petrocaribe initiative, donated US$16 million to help the government of St. Kitts and Nevis provide for former sugar industry workers.In January, Biden gathered Caribbean heads of state in Washington as part of his Caribbean Energy Security Initiative, which he claims is seeking clean energy solutions for small island governments. However, the focus of the event was less about environmentalism and more about breaking away from Venezuelan trade.“Whether it’s the Ukraine or the Caribbean, no country should be able to use natural resources as a tool of coercion against any other country,” he told the leaders in attendance.Last month, US Secretary of State John Kerry warned of “strategic damage” on Venezuela’s part which could cause “a serious humanitarian crisis in our region.”
  • According to a Miami Herald report published on March 26th, Venezuela has halved subsidized shipments of crude oil to Cuba and other PetroCaribe member nations from 400,000 barrels per day in 2012, to 200,000 barrels per day.The article, which claimed to cite a Barclay’s Bank report, has since been refuted by the Venezuelan government. Venezuelan Foreign Affairs Minister Delcy Rodriguez insisted last week that the information was “not true,” and was being published in a concerted effort to discredit PetroCaribe.
  • ...1 more annotation...
  • Maintaining that the organization remains “pretty strong” despite sliding oil prices and a contracting economy, Rodriguez said a “war” is being waged against the socialist program, because it “brings solutions to poor people.”
  • Paul Merrell on 09 Apr 15
     
    It seems the banksters are truly upset with Venezuela's leaders for failure to be in hock to the IMF and for spreading their natural resoices and wealth amongst the poor. 
Paul Merrell

US's Saudi Oil Deal from Win-Win to Mega-Loose | nsnbc international - 0 views

nsnbc.me/...eal-from-win-win-to-mega-loose

must-read banksters big oil Saudis Russia shale-oil U.S.-foreign-policy

shared by Paul Merrell on 09 Aug 15 - No Cached
  • Who would’ve thought it would come to this? Certainly not the Obama Administration, and their brilliant geo-political think-tank neo-conservative strategists. John Kerry’s brilliant “win-win” proposal of last September during his September 11 Jeddah meeting with ailing Saudi King Abdullah was simple: Do a rerun of the highly successful State Department-Saudi deal in 1986 when Washington persuaded the Saudis to flood the world market at a time of over-supply in order to collapse oil prices worldwide, a kind of “oil shock in reverse.” In 1986 was successful in helping to break the back of a faltering Soviet Union highly dependent on dollar oil export revenues for maintaining its grip on power. So, though it was not made public, Kerry and Abdullah agreed on September 11, 2014 that the Saudis would use their oil muscle to bring Putin’s Russia to their knees today.
  • It seemed brilliant at the time no doubt. On the following day, 12 September 2014, the US Treasury’s aptly-named Office of Terrorism and Financial Intelligence, headed by Treasury Under-Secretary David S. Cohen, announced new sanctions against Russia’s energy giants Gazprom, Gazprom Neft, Lukoil, Surgutneftgas and Rosneft. It forbid US oil companies to participate with the Russian companies in joint ventures for oil or gas offshore or in the Arctic. Then, just as the ruble was rapidly falling and Russian major corporations were scrambling for dollars for their year-end settlements, a collapse of world oil prices would end Putin’s reign. That was clearly the thinking of the hollowed-out souls who pass for statesmen in Washington today. Victoria Nuland was jubilant, praising the precision new financial warfare weapon at David Cohen’s Treasury financial terrorism unit. In July, 2014 West Texas Intermediate, the benchmark price for US domestic oil pricing, traded at $101 a barrel. The shale oil bonanza was booming, making the US into a major oil player for the first time since the 1970’s. When WTI hit $46 at the beginning of January this year, suddenly things looked different. Washington realized they had shot themselves in the foot.
  • They realized that the over-indebted US shale oil industry was about to collapse under the falling oil price. Behind the scenes Washington and Wall Street colluded to artificially stabilize what then was an impending chain-reaction bankruptcy collapse in the US shale oil industry. As a result oil prices began a slow rise, hitting $53 in February. The Wall Street and Washington propaganda mills began talking about the end of falling oil prices. By May prices had crept up to $62 and almost everyone was convinced oil recovery was in process. How wrong they were.
  • ...5 more annotations...
  • Since that September 11 Kerry-Abdullah meeting (curious date to pick, given the climate of suspicion that the Bush family is covering up involvement of the Saudis in or around the events of September 11, 2001), the Saudis have a new ageing King, Absolute Monarch and Custodian of the Two Holy Mosques, King Salman, replacing the since deceased old ageing King, Abdullah. However, the Oil Minister remains unchanged—79-year-old Ali al-Naimi. It was al-Naimi who reportedly saw the golden opportunity in the Kerry proposal to use the chance to at the same time kill off the growing market challenge from the rising output of the unconventional USA shale oil industry. Al-Naimi has said repeatedly that he is determined to eliminate the US shale oil “disturbance” to Saudi domination of world oil markets. Not only are the Saudis unhappy with the US shale oil intrusion on their oily Kingdom. They are more than upset with the recent deal the Obama Administration made with Iran that will likely lead in several months to lifting Iran economic sanctions. In fact the Saudis are beside themselves with rage against Washington, so much so that they have openly admitted an alliance with arch foe, Israel, to combat what they see as the Iran growing dominance in the region—in Syria, in Lebanon, in Iraq.
  • This has all added up to an iron Saudi determination, aided by close Gulf Arab allies, to further crash oil prices until the expected wave of shale oil company bankruptcies—that was halted in January by Washington and Wall Street manipulations—finishes off the US shale oil competition. That day may come soon, but with unintended consequences for the entire global financial system at a time such consequences can ill be afforded. According to a recent report by Wall Street bank, Morgan Stanley, a major player in crude oil markets, OPEC oil producers have been aggressively increasing oil supply on the already glutted world market with no hint of a letup. In its report Morgan Stanley noted with visible alarm, “OPEC has added 1.5 million barrels/day to global supply in the last four months alone…the oil market is currently 800,000 barrels/day oversupplied. This suggests that the current oversupply in the oil market is fully due to OPEC’s production increase since February alone.” The Wall Street bank report adds the disconcerting note, “We anticipated that OPEC would not cut, but we didn’t foresee such a sharp increase.” In short, Washington has completely lost its strategic leverage over Saudi Arabia, a Kingdom that had been considered a Washington vassal ever since FDR’s deal to bring US oil majors in on an exclusive basis in 1945.
  • That breakdown in US-Saudi communication adds a new dimension to the recent June 18 high-level visit to St. Petersburg by Muhammad bin Salman, the Saudi Deputy Crown Prince and Defense Minister and son of King Salman, to meet President Vladimir Putin. The meeting was carefully prepared by both sides as the two discussed up to $10 billion of trade deals including Russian construction of peaceful nuclear power reactors in the Kingdom and supplying of advanced Russian military equipment and Saudi investment in Russia in agriculture, medicine, logistics, retail and real estate. Saudi Arabia today is the world’s largest oil producer and Russia a close second. A Saudi-Russian alliance on whatever level was hardly in the strategy book of the Washington State Department planners.…Oh shit! Now that OPEC oil glut the Saudis have created has cracked the shaky US effort to push oil prices back up. The price fall is being further fueled by fears that the Iran deal will add even more to the glut, and that the world’s second largest oil importer, China, may cut back imports or at least not increase them as their economy slows down. The oil market time bomb detonated in the last week of June. The US price of WTI oil went from $60 a barrel then, a level at which at least many shale oil producers can stay afloat a bit longer, to $49 on July 29, a drop of more than 18% in four weeks, tendency down. Morgan Stanley sounded loud alarm bells, stating that if the trend of recent weeks continues, “this downturn would be more severe than that in 1986. As there was no sharp downturn in the 15 years before that, the current downturn could be the worst of the last 45+ years. If this were to be the case, there would be nothing in our experience that would be a guide to the next phases of this cycle…In fact, there may be nothing in analyzable history.”
  • October is the next key point for bank decisions to roll-over US shale company loans or to keep extending credit on the (until now) hope that prices will slowly recover. If as strongly hinted, the Federal Reserve hikes US interest rates in September for the first time in the eight years since the global financial crisis erupted in the US real estate market in 2007, the highly-indebted US shale oil producers face disaster of a new scale. Until the past few weeks the volume of US shale oil production has remained at the maximum as shale producers desperately try to maximize cash flow, ironically, laying the seeds of the oil glut globally that will be their demise. The reason US shale oil companies have been able to continue in business since last November and not declare bankruptcy is the ongoing Federal Reserve zero interest rate policy that leads banks and other investors to look for higher interest rates in the so-called “High Yield” bond market. Back in the 1980’s when they were first created by Michael Millken and his fraudsters at Drexel Burnham Lambert, Wall Street appropriately called them “junk bonds” because when times got bad, like now for Shale companies, they turned into junk. A recent UBS bank report states, “the overall High-Yield market has doubled in size; sectors that witnessed more buoyant issuance in recent years, like energy and metals mining, have seen debt outstanding triple or quadruple.”
  • Assuming that the most recent downturn in WTI oil prices continues week after week into October, there well could be a panic run to sell billions of dollars of those High-Yield, high-risk junk bonds. As one investment analyst notes, “when the retail crowd finally does head for the exits en masse, fund managers will be forced to come face to face with illiquid secondary corporate credit markets where a lack of market depth…has the potential to spark a fire sale.” The problem is that this time, unlike in 2008, the Federal Reserve has no room to act. Interest rates are already near zero and the Fed has bought trillions of dollars of bank bad debt to prevent a chain-reaction US bank panic. One option that is not being discussed at all in Washington would be for Congress to repeal the disastrous 1913 Federal Reserve Act that gave control of our nation’s money to a gang of private bankers, and to create a public National Bank, owned completely by the United States Government, that could issue credit and sell Federal debt without the intermediaries of corrupt Wall Street bankers as the Constitution intended. At the same time they could completely nationalize the six or seven “Too Big To Fail” banks behind the entire financial mess that is destroying the foundations of the United States and by extension of the role of the dollar as world reserve currency, of most of the world.
  • Paul Merrell on 09 Aug 15
     
    I give a lot of credibility to this article's author when it comes to matters involving the oil market. Remember when reading that the only thing propping up the U.S. dollar is the Saudi (later extended to all OPEC nations) insistence that they be paid for their oil and natural gas in U.S. dollars, which creates artificial demand for the dollar globally. If the Gulf Coast States begin accepting payment in rubles or yuan, it is curtains for the U.S. dollar in global markets.  
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