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Paul Merrell

Russia Just Pulled Itself Out Of The Petrodollar | Zero Hedge - 0 views

www.zerohedge.com/...-pulled-itself-out-petrodollar

war & peace economic-warfare de-dollarization Russia oil-wars pipelinestan-war

shared by Paul Merrell on 16 Jan 15 - No Cached
  • Back in November, before most grasped just how serious the collapse in crude was (and would become, as well as its massive implications), we wrote "How The Petrodollar Quietly Died, And Nobody Noticed", because for the first time in almost two decades, energy-exporting countries would pull their "petrodollars" out of world markets in 2015.  This empirical death of Petrodollar followed years of windfalls for oil exporters such as Russia, Angola, Saudi Arabia and Nigeria. Much of that money found its way into financial markets, helping to boost asset prices and keep the cost of borrowing down, through so-called petrodollar recycling. We added that in 2014 "the oil producers will effectively import capital amounting to $7.6 billion. By comparison, they exported $60 billion in 2013 and $248 billion in 2012, according to the following graphic based on BNP Paribas calculations."
  • The problem was compounded by its own positive feedback loop: as the last few weeks vividly demonstrated, plunging oil would lead to a further liquidation in foreign  reserves for the oil exporters who rushed to preserve their currencies, leading to even greater drops in oil as the viable producers rushed to pump out as much crude out of the ground as possible in a scramble to put the weakest producers out of business, and to crush marginal production. Call it Game Theory gone mad and on steroids. Ironically, when the price of crude started its self-reinforcing plunge, such a death would happen whether the petrodollar participants wanted it, or, as the case may be, were dragged into the abattoir kicking and screaming. It is the latter that seems to have taken place with the one country that many though initially would do everything in its power to have an amicable departure from the Petrodollar and yet whose divorce from the USD has quickly become a very messy affair, with lots of screaming and the occasional artillery shell. As Bloomberg reports Russia "may unseal its $88 billion Reserve Fund and convert some of its foreign-currency holdings into rubles, the latest government effort to prop up an economy veering into its worst slump since 2009." These are dollars which Russia would have otherwise recycled into US denominated assets. Instead, Russia will purchase even more Rubles and use the proceeds for FX and economic stabilization purposes. 
  • "Together with the central bank, we are selling a part of our foreign-currency reserves,” Finance Minister Anton Siluanov said in Moscow today. “We’ll get rubles and place them in deposits for banks, giving liquidity to the economy." Call it less than amicable divorce, call it what you will: what it is, is Russia violently leaving the ranks of countries that exchange crude for US paper.
  • ...3 more annotations...
  • Bloomberg's dready summary of the US economy is generally spot on, and is to be expected when any nation finally leaves, voluntarily or otherwise, the stranglehold of a global reserve currency. What Bloomberg failed to account for is what happens to the remainder of the Petrodollar world. Here is what we said last time: Outside from the domestic economic impact within EMs due to the downward oil price shock, we believe that the implications for financial market liquidity via the reduced recycling of petrodollars should not be underestimated. Because energy exporters do not fully invest their export receipts and effectively ‘save’ a considerable portion of their income, these surplus funds find their way back into bank deposits (fuelling the loan market) as well as into financial markets and other assets. This capital has helped fund debt among importers, helping to boost overall growth as well as other financial markets liquidity conditions. ... [T]his year, we expect that incremental liquidity typically provided by such recycled flows will be markedly reduced, estimating that direct and other capital outflows from energy exporters will have declined by USD253bn YoY. Of course, these economies also receive inward capital, so on a net basis, the additional capital provided externally is much lower. This year, we expect that net capital flows will be negative for EM, representing the first net inflow of capital (USD8bn) for the first time in eighteen years. This compares with USD60bn last year, which itself was down from USD248bn in 2012. At its peak, recycled EM petro dollars amounted to USD511bn back in 2006. The declines seen since 2006 not only reflect the changed global environment, but also the propensity of underlying exporters to begin investing the money domestically rather than save. The implications for financial markets liquidity - not to mention related downward pressure on US Treasury yields – is negative.
  • Considering the wildly violent moves we have seen so far in the market confirming just how little liquidity is left in the market, and of course, the absolutely collapse in Treasury yields, with the 30 Year just hitting a record low, this prediction has been borne out precisely as expected. And now, we await to see which other country will follow Russia out of the Petrodollar next, and what impact that will have not only on the world's reserve currency, on US Treasury rates, and on the most financialized commodity as this chart demonstrates...
  • ... but on what is most important to developed world central planners everywhere: asset prices levels, and specifically what happens when the sellers emerge into what is rapidly shaping up as the most illiquid market in history.
Gary Edwards

Generals conclude Obama backed al-Qaida - 0 views

www.wnd.com/...conclude-obama-backed-al-qaida

Benghazi

shared by Gary Edwards on 13 Mar 15 - No Cached
  • Gary Edwards on 13 Mar 15
     
    Petrodollars. Obama has lost Iraq, Afghanistan, Libya and Yemen to Al-Queda / Muslim Brotherhood extremists. He has nearly lost Egypt and Syria. They hang by a thread. We could see this as an Islamic revolution trying to overtake the despots that have ruled the middle East since the WWI break up of the Ottoman Empire, and shamelessly enriched themselves in petrodollars in the process. Or, we could look at this as religious war between Sunni and Shiite Islamic factions, with Iran leading the Shiites, and the Saudis leading the Sunnis. Except, that divide doesn't seem to gel with the idea of a Shiite Muslim Brotherhood alliance with a Sunni Al-Queda. For sure though, Iran has taken over the formerly Sunni led Iraq and is now executing any and all Sunni rebels. Including all of Saddam Hussein's Revolutionary Guard members now fighting in northern Irag and Syria as ISIL. With the help, air cover and weapons provided by Obama, the Muslim Brotherhood has taken over Libya, and nearly took Egypt. The only way of looking at this mess and making sense of it is through the lens of petrodollars and pipelines. Gadafi, Saddam Husein, the Shah of Iran, and Bashir in Syria all have one thing in common: they were selling oil and accepting payment in something other than petrodollars. They were building pipelines for the shipment of non petrodollar oil. I don't expect Iraq or Lybian oil to ever return to market. Civil war will keep that oil in the ground; making the petrodollar bankers and oligarchs very very wealthy, and the USA-NATO military industrial complex very busy profiting from the sale of war making machinery. ..................................... "The Obama White House and the State Department under the management of Secretary of State Hillary Clinton "changed sides in the war on terror" in 2011 by implementing a policy of facilitating the delivery of weapons to the al-Qaida-dominated rebel militias in Libya attempting to oust Moammar Gadhafi from powe
Paul Merrell

Russia Abandons PetroDollar By Opening Reserve Fund - 0 views

oilprice.com/...r-By-Opening-Reserve-Fund.html

war & peace economic-warfare Russia U.S. 2015 oil-forecast

shared by Paul Merrell on 19 Jan 15 - No Cached
  • 2015 has not been good to Russia; the spread between Brent and WTI is gone in anticipation of US exports and both benchmarks have flirted with sub $45 prices. A hostage to such prices, the ruble has yet to begin its turnaround and the state’s finances are in extreme disarray. President Vladimir Putin’s approval ratings remain sky-high, but his country has not faced such difficult times since he took office more than 15 years ago. Since the turn of the new year the ruble has fallen over 13 percent and Russia’s central bank and finance department are running out of options – to date, policy makers have hiked interest rates to their highest level since the 1998 Russian financial crisis and embarked on a 1 trillion-ruble ($15 billion) bank recapitalization plan to little effect. Their latest, and most dramatic, plan is to abandon the dollar – at least somewhat.
  • In late December, the Kremlin ordered five large state-owned exporters – including oil and gas giants Rosneft and Gazprom – to sell their foreign currency reserves. Specifically, the companies must bring their foreign reserves to October levels by the beginning of March. To comply, the exporters may have to sell a combined $1 billion per day until March. Private companies have not yet been hit by these soft capital controls, but have instead been advised to manage their foreign exchange maneuvers responsibly. More recently, the Kremlin announced it will open its $88 billion sovereign wealth fund and flip it for rubles. The plan will see Russia convert as much as $8 billion to rubles (~500 billion) over a two-month span and place them in deposits for banks. Overall, the move will provide the Russian economy with some much needed liquidity and could speed up the healing if oil were to rebound, but it sends the wrong signals to investors and Economy Minister Alexei Ulyukaev believes the country’s credit rating will soon be marked below investment grade.
  • In any case, the move does little for the country’s ailing oil industry. The domestic market is projected to shrink amid the economic slowdown, and competition for market share abroad is increasingly competitive. Production forecasts are no rosier and the EIA predicts Russian crude production growth will be among the worst performers in both 2015 and 2016 – contrasted by continued growth in North America. Russia’s gas industry has fared no better. Gazprom’s 2014 output was historically awful and LNG is ever more a counter to the country’s pipeline politics.
  • ...2 more annotations...
  • While Russia likely envisioned abandoning its dollars under far better circumstances, the news is just as worrying for the United States and its dollar hegemony. Along with Russia, energy exporters worldwide are pulling their petrodollars out of world financial markets and other USD-denominated assets in favor of greater, and certainly necessary, spending domestically. In the past, these dollars have given life to the loan market and helped fund debt among energy importers, contributing to overall growth.
  • Petrodollar exports – otherwise known as petrodollar recycling – were negative in 2014 for the first time in nearly two decades. The result is falling global market liquidity, record low US Treasury rates, and higher borrowing costs for everyone – a tough pill to swallow for energy producers if oil prices remain low. The US dollar remains the global reserve currency for now, but the fact remains that nations are increasingly transacting on their own terms, and often times without the USD.
  • Paul Merrell on 19 Jan 15
     
    Re: "EIA predicts Russian crude production growth will be among the worst performers in both 2015 and 2016 - contrasted by continued growth in North America." That's not what is being reported. Many shale oil production facilities are no longer profitable in North America and credit for new efforts has completely dried up. And unless Congress can raise enough votes in both houses to overried Obama's promised veto of a bill to alow construction of the KXL Pipeline, Most of Canada's new oil production capacity will never reach the market. (Canada has ruled out pipelines from the Alberta tar sands to its own ocean coasts, so there is no alternative to KXL.)
Paul Merrell

Non-Dollar Trading Is Killing the Petrodollar -- And the Foundation of U.S.-S... - 0 views

www.huffingtonpost.com/...us-saudi-policy_b_6245914.html

economic-war de-dollarization OPEC rouble yuan petrodollar MSM

shared by Paul Merrell on 30 Dec 14 - No Cached
  • A profound transformation of the global monetary system is underway. It is being driven by a perfect storm: the need for Russia and Iran to escape Western sanctions, the low interest rate policy of the U.S. Federal Reserve to keep the American economy afloat and the increasing demand for Middle East oil by China.The implications of this transformation are immense for U.S. policy in the Middle East which, for 50 years, has been founded on a partnership with Saudi Arabia.
  • A profound transformation of the global monetary system is underway. It is being driven by a perfect storm: the need for Russia and Iran to escape Western sanctions, the low interest rate policy of the U.S. Federal Reserve to keep the American economy afloat and the increasing demand for Middle East oil by China.The implications of this transformation are immense for U.S. policy in the Middle East which, for 50 years, has been founded on a partnership with Saudi Arabia.
  • s economic sanctions are increasingly part of the West's arsenal, those non-Western countries that are the target -- or potential target -- of such sanctions are devising a counterpunch: non-dollar trading. It would, in effect, nullify the impact of sanctions. Whether in yuan or roubles, non-dollar trading -- which enables countries to bypass U.S. claims to legal jurisdiction -- will transform the prospects facing Iran and Syria, particularly in the field of energy reserves, and deeply affect Iraq which is situated between the two. President Putin has said (in the context of reducing Russia's economic vulnerabilities) that he views the dollar monopoly in energy trade as damaging to the Russian economy. Since hydrocarbon revenues form the most substantive part of Russia's revenues, Putin's desire to take action in this area is not surprising. In the face of sanctions, Putin is seeking to reduce its economic dependence on the West. Russia has signed two "holy grail" gas contracts with China and is in negotiations to offer the latter sophisticated weaponry. It is also in the process of finalizing significant trade deals with India and Iran. All of this will be to the benefit of Iran, too: the Russians recently announced a deal to build several new nuclear power plants there.
  • Paul Merrell on 30 Dec 14
     
    Is this a trend? This is the second article I've read in MSM during the last two days that sounds the alarm that the petrodollar system is collapsing and that de-dollarization is in motion, along with noticing that U.S. fiscal and foreign policy is helping to accelerate de-dollarization. Perhaps the propagandameisters have decided that they can't squelch this information any longer because the alternative press has publicized it too widely?
Paul Merrell

Russia Holds "De-Dollarization Meeting": China, Iran Willing To Drop USD From Bilateral... - 0 views

www.zerohedge.com/...lling-drop-usd-bilateral-trade

war & peace economic-warfare dollar Russia China Iran

shared by Paul Merrell on 14 May 14 - No Cached
  • That Russia has been pushing for trade arrangements that minimize the participation (and influence) of the US dollar ever since the onset of the Ukraine crisis (and before) is no secret: this has been covered extensively on these pages before (see Gazprom Prepares "Symbolic" Bond Issue In Chinese Yuan; Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China; Russia And China About To Sign "Holy Grail" Gas Deal; 40 Central Banks Are Betting This Will Be The Next Reserve Currency; From the Petrodollar to the Gas-o-yuan and so on). But until now much of this was in the realm of hearsay and general wishful thinking. After all, surely it is "ridiculous" that a country can seriously contemplate to exist outside the ideological and religious confines of the Petrodollar... because if one can do it, all can do it, and next thing you know the US has hyperinflation, social collapse, civil war and all those other features prominently featured in other socialist banana republics like Venezuela which alas do not have a global reserve currency to kick around. Or so the Keynesian economists, aka tenured priests of said Petrodollar religion, would demand that the world believe. However, as much as it may trouble the statists to read, Russia is actively pushing on with plans to put the US dollar in the rearview mirror and replace it with a dollar-free system. Or, as it is called in Russia, a "de-dollarized" world.
  • Voice of Russia reports citing Russian press sources that the country's Ministry of Finance is ready to greenlight a plan to radically increase the role of the Russian ruble in export operations while reducing the share of dollar-denominated transactions. Governmental sources believe that the Russian banking sector is "ready to handle the increased number of ruble-denominated transactions". According to the Prime news agency, on April 24th the government organized a special meeting dedicated to finding a solution for getting rid of the US dollar in Russian export operations. Top level experts from the energy sector, banks and governmental agencies were summoned and a number of measures were proposed as a response for American sanctions against Russia. Well, if the west wanted Russia's response to ever escalating sanctions against the country, it is about to get it. The "de-dollarization meeting” was chaired by First Deputy Prime Minister of the Russian Federation Igor Shuvalov, proving that Moscow is very serious in its intention to stop using the dollar. A subsequent meeting was chaired by Deputy Finance Minister Alexey Moiseev who later told the Rossia 24 channel that "the amount of ruble-denominated contracts will be increased”, adding that none of the polled experts and bank representatives found any problems with the government's plan to increase the share of ruble payments.
  • Further, if you thought that only Obama can reign supreme by executive order alone, you were wrong - the Russians can do it just as effectively. Enter the "currency switch executive order": It is interesting that in his interview, Moiseev mentioned a legal mechanism that can be described as "currency switch executive order”, telling that the government has the legal power to force Russian companies to trade a percentage of certain goods in rubles. Referring to the case when this level may be set to 100%, the Russian official said that "it's an extreme option and it is hard for me to tell right now how the government will use these powers". Well, as long as the options exists. But more importantly, none of what Russia is contemplating would have any practical chance of implementation if it weren't for other nations who would engage in USD-free bilateral trade relations. Such countries, however, do exist and it should come as a surprise to nobody that the two which have already stepped up are none other than China and Iran.
  • ...1 more annotation...
  • Of course, the success of Moscow's campaign to switch its trading to rubles or other regional currencies will depend on the willingness of its trading partners to get rid of the dollar. Sources cited by Politonline.ru mentioned two countries who would be willing to support Russia: Iran and China. Given that Vladimir Putin will visit Beijing on May 20, it can be speculated that the gas and oil contracts that are going to be signed between Russia and China will be denominated in rubles and yuan, not dollars. In other words, in one week's time look for not only the announcement of the Russia-China "holy grail" gas agreement described previously here, but its financial terms, which now appears virtually certain will be settled exclusively in RUB and CNY. Not USD. And as we have explained repeatedly in the past, the further the west antagonizes Russia, and the more economic sanctions it lobs at it, the more Russia will be forced away from a USD-denominated trading system and into one which faces China and India. Which is why next week's announcement, as groundbreaking as it most certainly will be, is just the beginning.
  • Paul Merrell on 14 May 14
     
    Soon to be joined by the other two BRICS?
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

Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China | Zero H... - 0 views

www.zerohedge.com/...unce-holy-grail-gas-deal-china

pipelinestan China Russia U.S. Ukraine settlement currency

shared by Paul Merrell on 22 Mar 14 - No Cached
  • While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source. Here is what will likely happen next, as explained by Reuters:
  • Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.   The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.    The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West. More details on the revelation of said "Holy Grail": State-owned Russian gas firm Gazprom hopes to pump 38 billion cubic meters (bcm) of natural gas per year to China from 2018 via the first pipeline between the world's largest producer of conventional gas to the largest consumer.   "May is in our plans," a Gazprom spokesman said, when asked about the timing of an agreement. A company source said: "It would be logical to expect the deal during Putin's visit to China."
  • Summarizing what should be and is painfully obvious to all, but apparently to the White House, which keeps prodding at Russia, is the following: "The worse Russia's relations are with the West, the closer Russia will want to be to China. If China supports you, no one can say you're isolated," said Vasily Kashin, a China expert at the Analysis of Strategies and Technologies (CAST) think thank. Bingo. And now add bilateral trade denominated in either Rubles or Renminbi (or gold), add Iran, Iraq, India, and soon the Saudis (China's largest foreign source of crude, whose crown prince also happened to meet president Xi Jinping last week to expand trade further) and wave goodbye to the petrodollar.
  • Paul Merrell on 22 Mar 14
     
    The follies of an empire in decline that still imagines itself the master of the planet. 
Paul Merrell

Fear And Loathing in the House of Saud - 0 views

sputniknews.com/...ear-loathing-saudi-arabia.html

war & peace Saudis Iran U.S.-foreign-policy Saudi-desperation tipping-point

shared by Paul Merrell on 10 Jan 16 - No Cached
  • Riyadh was fully aware the beheading of respected Saudi Shi'ite cleric Nimr al-Nimr was a deliberate provocation bound to elicit a rash Iranian response. The Saudis calculated they could get away with it; after all they employ the best American PR machine petrodollars can buy, and are viscerally defended by the usual gaggle of nasty US neo-cons.    In a post-Orwellian world "order" where war is peace and "moderate" jihadis get a free pass, a House of Saud oil hacienda cum beheading paradise — devoid of all civilized norms of political mediation and civil society participation — heads the UN Commission on Human Rights and fattens the US industrial-military complex to the tune of billions of dollars while merrily exporting demented Wahhabi/Salafi-jihadism from MENA (Middle East-Northern Africa) to Europe and from the Caucasus to East Asia. 
  • And yet major trouble looms. Erratic King Salman's move of appointing his son, the supremely arrogant and supremely ignorant Prince Mohammad bin Salman to number two in the line of succession has been contested even among Wahhabi hardliners. But don't count on petrodollar-controlled Arab media to tell the story. English-language TV network Al-Arabiyya, for instance, based in the Emirates, long financed by House of Saud members, and owned by the MBC conglomerate, was bought by none other than Prince Mohammad himself, who will also buy MBC. With oil at less than $40 a barrel, largely thanks to Saudi Arabia's oil war against both Iran and Russia, Riyadh's conventional wars are taking a terrible toll. The budget has collapsed and the House of Saud has been forced to raise taxes. The illegal war on Yemen, conducted with full US acquiescence, led by — who else — Prince Mohammad, and largely carried out by the proverbial band of mercenaries, has instead handsomely profited al-Qaeda in the Arabic Peninsula (AQAP), just as the war on Syria has profited mostly Jabhat al-Nusra, a.k.a. al-Qaeda in Syria.
  • Saudi Arabia is essentially a huge desert island. Even though the oil hacienda is bordered by the Red Sea and the Persian Gulf, the Saudis don't control what matters: the key channels of communication/energy exporting bottlenecks — the Bab el-Mandeb and the Straits of Hormuz, not to mention the Suez canal. Enter US "protection" as structured in a Mafia-style "offer you can't refuse" arrangement; we guarantee safe passage for the oil export flow through our naval patrols and you buy from us, non-stop, a festival of weapons and host our naval bases alongside other GCC minions. The "protection" used to be provided by the former British empire. So Saudi Arabia — as well as the GCC — remains essentially an Anglo-American satrapy.          Al Sharqiyya — the Eastern Province of Saudi Arabia — holds only 4 million people, the overwhelming majority Shi'ites. And yet it produces no less than 80% of Saudi oil. The heart of the action is the provincial capital Al Qatif, where Nimr al-Nimr was born. We're talking about the largest oil hub on the planet, consisting of 12 crisscrossed pipelines that connect to massive Gulf oil terminals such as Dhahran and Ras Tanura.
  • ...3 more annotations...
  • Enter the strategic importance of neighboring Bahrain. Historically, all the lands from Basra in southern Iraq to the peninsula of Musandam, in Oman — traditional trade posts between Europe and India — were known as Bahrain ("between two seas"). Tehran could easily use neighboring Bahrain to infiltrate Al Sharqiyya, detach it from Riyadh's control, and configure a "Greater Bahrain" allied with Iran. That's the crux of the narrative peddled by petrodollar-controlled media, the proverbial Western "experts", and incessantly parroted in the Beltway.  
  • There's no question Iranian hardliners cherish the possibility of a perpetual Bahraini thorn on Riyadh's side. That would imply weaponizing a popular revolution in Al Sharqiyya.  But the fact is not even Nimr al-Nimr was in favor of a secession of Al Sharqiyya.  And that's also the view of the Rouhani administration in Tehran. Whether disgruntled youth across Al Sharqiyya will finally have had enough with the beheading of al-Nimr it's another story; it may open a Pandora's box that will not exactly displease the IRGC in Tehran.   But the heart of the matter is that Team Rouhani perfectly understands the developing Southwest Asia chapter of the New Great Game, featuring the re-emergence of Iran as a regional superpower; all of the House of Saud's moves, from hopelessly inept to major strategic blunder, betray utter desperation with the end of the old order.  
  • That spans everything from an unwinnable war (Yemen) to a blatant provocation (the beheading of al-Nimr) and a non sequitur such as the new Islamic 34-nation anti-terror coalition which most alleged members didn't even know they were a part of.  The supreme House of Saud obsession rules, drenched in fear and loathing: the Iranian "threat". Riyadh, which is clueless on how to play geopolitical chess — or backgammon — will keep insisting on the oil war, as it cannot even contemplate a military confrontation with Tehran. And everything will be on hold, waiting for the next tenant of 1600 Pennsylvania Avenue; will he/she be tempted to pivot back to Southwest Asia, and cling to the old order (not likely, as Washington relies on becoming independent from Saudi oil)? Or will the House of Saud be left to its own — puny — devices among the shark-infested waters of hardcore geopolitics?
  • Paul Merrell on 10 Jan 16
     
    If Pepe Escobar has this right (and I've never known him to be wrong), the world is a tipping point in Saudi influence on the world stage with U.S. backing for continued Saudi exercise of power in the Mideast unlikely and with Iran as the beneficiary.  Unfortunately, Escobar did not discuss why this is true despite the Saudis critical role in propping up the U.S. economy via the petro-dollar. That the U.S. would abandon the petro-dollar at this point in history seems unlikely to say the least. Does Obama believe that Iran would be willing to occupy that Saudi role? Many unanswered questions here. But the fact that Escobar says these changes are in process counts heavily with me. 
Paul Merrell

Venezuela Bucks Petrodollar, Announces Cryptocurrency Backed by Oil - 0 views

www.mintpressnews.com/...235131

war & peace economic-warfare Venezuela cryptocurrency reserve currrencies

shared by Paul Merrell on 05 Dec 17 - No Cached
  • Months after Russia became the first country to announce the creation of a state-backed Cryptorouble, Venezuela has followed suit, announcing the creation of El Petro, a state-sanctioned cryptocurrency to be backed by Venezuela’s extensive reserves of crude oil. Venezuela has already broken free of Dollar dependence months ago when Caracas announced it would be trading its oil using China’s Petroyuan. Venezuelan President Nicolas Maduro also stated that he would like to begin trade with Russia in the Rouble. With Venezuela heavily sanctioned by the United States, El Petro looks to be another tool which Venezuela can use to continue and conduct international commerce without relying on Dollar based financial institution.
  • Crucially, while existing Cryptocurrencies tend to create their initial value through an arithmetic process called “mining”, leaving them heavily subject to market fluctuation, El Petro will be backed by a known commodity, oil, thus giving it a clear advantage for risk-averse investors. While the world’s most popular cryptocurrency Bitcoin, has seen its value skyrocket against the Dollar, some remain unconvinced of its long-term prospects for stability. A currency, backed by oil would, by contrast, ostensibly fluctuate in accordance with the well established global price of Brent Crude.
  • An official oil-backed cryptocurrency could work in tandem with Russia’s soon to be launched Cryptorouble, a digital currency which will ostensibly be backed by the vast resources of the Russian state. With western governments ambivalent about how to treat existing cryptocurrencies, Russia and Venezuela have taken the lead to both normalize cryptos while backing them by well-known assets.
  • Paul Merrell on 05 Dec 17
     
    The petrodollar takes another hit.
Gary Edwards

The Libertarian View: Are Tariffs Bad? - 1 views

www.ronpaulforums.com/showthread.php

Libertarian Austrian-Economics Tariffs-NAFTA China Ron-Paul

shared by Gary Edwards on 26 Jan 12 - No Cached
  • Gary Edwards on 26 Jan 12
     
    As many know, i spent quite a bit of time working for a Chinese Company seeking to enter the USA-European software market.  My task was to research the market, discover and define a market opportunity, design the product, and then work as product manager to get that service to market.  I took this job to better understand the Chinese marketplace and how sovereign Chinese companies work.  What i learned is how the Chinese seek to exploit and totally dominate open markets.  Software is just a category whose time has come.  and there are thousands of Chinese companies lining up.  The first step though is to fine tune the existing blueprint used by other Sina sovereigns.  amazing stuff. My take away from this experience is that the USA MUST set up a 30% tariff on ALL imports, and do so IMMEDIATELY!!!  Yesterday is not soon enough! As a newly minted libertarian, i wondered about the obvious conflict with Austrian Economics and their dedication to free markets and free trade?  I found the answer at this Libertarian forum, where many members were in heated discussion.  Comment #7 sums it up best i think.  Including a link to Ron Paul's Tariff-NAFTA speech. The thing is, the 30% Tariff should be part of an overall TAX REDUCTION PLAN.  I support the FAIR TAX and the Balanced Budget Amendment.  As an alternative to the Fair Tax, I would also support a 17% flat tax with no exceptions.  The ideal situation being an immediate, uncompromising, no exceptions 30% tariff on ALL imports coupled with the Fair Tax and the Balanced Budget Amendment.   And yes, i do believe this plan is consistent with the Founding Fathers Constitution.  But it took some kind of research to establish that opinion.   I've also concluded that "conservatism" is a convenient philosophical vehicle for the corrupt crony corporatism of both the military-industrial-complex, banksters and, international corporations.  Free trade and open markets concepts are perverted to become a thin veil
Paul Merrell

Obama Issues Threats To Russia And NATO -- Paul Craig Roberts - PaulCraigRoberts.org - 0 views

www.paulcraigroberts.org/...russia-nato-paul-craig-roberts

surveillance state EU USTR WTO Russia reserve currrencies NATO

shared by Paul Merrell on 08 Apr 14 - No Cached
  • The Obama regime has issued simultaneous threats to the enemy it is making out of Russia and to its European NATO allies on which Washington is relying to support sanctions on Russia. This cannot end well. As even Americans living in a controlled media environment are aware, Europeans, South Americans, and Chinese are infuriated that the National Stasi Agency is spying on their communications. NSA’s affront to legality, the US Constitution, and international diplomatic norms is unprecedented. Yet, the spying continues, while Congress sits sucking its thumb and betraying its oath to defend the Constitution of the United States. In Washington mumbo-jumbo from the executive branch about “national security” suffices to negate statutory law and Constitutional requirements. Western Europe, seeing that the White House, Congress and the Federal Courts are impotent and unable to rein-in the Stasi Police State, has decided to create a European communication system that excludes US companies in order to protect the privacy of European citizens and government communications from the Washington Stasi.
  • The Obama regime, desperate that no individual and no country escape its spy net, denounced Western Europe’s intention to protect the privacy of its communications as “a violation of trade laws.” Obama’s US Trade Representative, who has been negotiating secret “trade agreements” in Europe and Asia that give US corporations immunity to the laws of all countries that sign the agreements, has threatened WTO penalties if Europe’s communications network excludes the US companies that serve as spies for NSA. Washington in all its arrogance has told its most necessary allies that if you don’t let us spy on you, we will use WTO to penalize you. So there you have it. The rest of the world now has the best possible reason to exit the WTO and to avoid the Trans-Pacific and Trans-Atlantic “trade agreements.” The agreements are not about trade. The purpose of these “trade agreements” is to establish the hegemony of Washington and US corporations over other countries. In an arrogant demonstration of Washington’s power over Europe, the US Trade Representative warned Washington’s NATO allies: “US Trade Representative will be carefully monitoring the development of any such proposals” to create a separate European communication network. http://rt.com/news/us-europe-nsa-snowden-549/ Washington is relying on the Chancellor of Germany, the President of France, and the Prime Minister of the UK to place service to Washington above their countries’ communications privacy.
  • It has dawned on the Russian government that being a part of the American dollar system means that Russia is open to being looted by Western banks and corporations or by individuals financed by them, that the ruble is vulnerable to being driven down by speculators in the foreign exchange market and by capital outflows, and that dependence on the American international payments system exposes Russia to arbitrary sanctions imposed by the “exceptional and indispensable country.” Why it took the Russian government so long to realize that the dollar payments system puts countries under Washington’s thumb is puzzling.
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  • Now that the Russian government understands that Russia must depart the dollar system in order to protect Russian sovereignty, President Putin has entered into barter/ruble oil deals with China and Iran. However, Washington objects to Russia abandoning the dollar international payment system. Zero Hedge, a more reliable news source than the US print and TV media, reports that Washington has conveyed to both Russia and Iran that a non-dollar oil deal would trigger US sanctions. http://www.zerohedge.com/news/2014-04-04/us-threatens-russia-sanctions-over-petrodollar-busting-deal Washington’s objection to the Russian/Iranian deal made it clear to all governments that Washington uses the dollar-based international payments system as a means of control. Why should countries accept an international payments system that infringes their sovereignty? What would happen if instead of passively accepting the dollar as the means of international payment, countries simply left the dollar system? The value of the dollar would fall and so would Washington’s power. Without the power that the dollar’s role as world reserve currency gives the US to pay its bills by printing money, the US could not maintain its aggressive military posture or its payoffs to foreign governments to do its bidding. Washington would be just another failed empire, whose population can barely make ends meet, while the One Percent who comprise the mega-rich compete with 200-foot yachts and $750,000 fountain pins. The aristocracy and the serfs. That is what America has already become. A throwback to the feudal era. It is only a matter of time before it is universally recognized that the US is a failed state. Let’s pray this recognition occurs before the arrogant inhabitants of Washington blow up the world in pursuit of hegemony over others.
  • Washington’s provocative military moves against Russia are reckless and dangerous. The buildup of NATO air, ground, and naval forces on Russia’s borders in violation of the 1997 NATO-Russian treaty and the Montreux Convention naturally strike the Russian government as suspicious, especially as the buildups are justified on the basis of lies that Russia is about to invade Poland, the Baltic States, and Moldova in addition to Ukraine. These lies are transparent. The Russian Foreign Minister Sergey Lavrov has asked NATO for an explanation, stating: “We are not only expecting answers, but answers that will be based fully on respect for the rules we agreed on.” http://rt.com/news/lavrov-ukraine-nato-convention-069/ Anders Fogh Rasmussen, Washington’s puppet installed as NATO figurehead who is no more in charge of NATO than I am, responded in a way guaranteed to raise Russian anxieties. Rasmussen dismissed the Russian Foreign Minister’s request for explanation as “propaganda and disinformation.” Clearly, what we are experiencing are rising tensions caused by Washington and NATO. These tensions are in addition to the tensions arising from Washington’s coup in Ukraine. These reckless and dangerous actions have destroyed the Russian government’s trust in the West and are moving the world toward war. Little did the protesters in Kiev, called into the streets by Washington’s NGOs, realize that their foolishness was setting the world on a path to armageddon.
Paul Merrell

Russia's Petro-Ruble Challenges US Dollar Hegemony. China Seeks Development of Eurasian... - 0 views

www.globalresearch.ca/...5377086

war & peace Ukraine U.S.-foreign-policy sanctions banksters Russia China Germany New-Silk-Road

shared by Paul Merrell on 09 Apr 14 - No Cached
  •  Russia has just dropped another bombshell, announcing not only the de-coupling of its trade from the dollar, but also that its hydrocarbon trade will in the future be carried out in rubles and local currencies of its trading partners – no longer in dollars – see Voice of Russia Russia’s trade in hydrocarbons amounts to about a trillion dollars per year. Other countries, especially the BRICS and BRCIS-associates (BRICSA) may soon follow suit and join forces with Russia, abandoning the ‘petro-dollar’ as trading unit for oil and gas. This could amount to tens of trillions in loss for demand of petro-dollars per year (US GDP about 17 trillion dollars – December 2013) – leaving an important dent in the US economy would be an understatement. Added to this is the declaration today by Russia’s Press TV – China will re-open the old Silk Road as a new trading route linking Germany, Russia and China, allowing to connect and develop new markets along the road, especially in Central Asia, where this new project will bring economic and political stability, and in Western China provinces,where “New Areas” of development will be created. The first one will be the Lanzhou New Area in China’s Northwestern Gansu Province, one of China’s poorest regions.
  • Curiously, western media have so far been oblivious to both events. It seems like a desire to extending the falsehood of our western illusion and arrogance – as long as the silence will bear. Germany, the economic driver of Europe – the world’s fourth largest economy (US$ 3.6 trillion GDP) – on the western end of the new trading axis, will be like a giant magnet, attracting other European trading partners of Germany’s to the New Silk Road. What looks like a future gain for Russia and China, also bringing about security and stability, would be a lethal loss for Washington. In addition, the BRICS are preparing to launch a new currency – composed by a basket of their local currencies – to be used for international trading, as well as for a new reserve currency, replacing the rather worthless debt ridden dollar – a welcome feat for the world. Along with the new BRICS(A) currency will come a new international payment settlement system, replacing the SWIFT and IBAN exchanges, thereby breaking the hegemony of the infamous privately owned currency and gold manipulator, the Bank for International Settlement (BIS) in Basle, Switzerland – also called the central bank of all central banks.
  • Paul Merrell on 09 Apr 14
     
    Will Obama rethink his push for sanctions against and military encirclement of Russia? One would suspect that the banksters will soon be pushing him to do so.
Gary Edwards

Did Money Seal Israeli-Saudi Alliance? | Consortiumnews - 0 views

consortiumnews.com/...ey-seal-israeli-saudi-alliance

Sunni-Shiite-War

shared by Gary Edwards on 15 Apr 15 - No Cached
  • Exclusive: The odd-couple relationship between Saudi Arabia and Israel may have been sealed with more than a mutual desire to kiss-off Iran. According to an intelligence source, there was a dowry involved, too, with the Saudis reportedly giving Israel some $16 billion, writes Robert Parry.By Robert Parry
  • For more than half a century, Saudi Arabia has tried to use its vast oil wealth to build a lobby in the United States that could rival the imposing Israel Lobby. At top dollar, the Saudis hired law firms and PR specialists – and exploited personal connections to powerful families like the Bushes – but the Saudis never could build the kind of grassroots political organization that has given Israel and its American backers such extraordinary clout.Indeed, Americans who did take Saudi money – including academic institutions and non-governmental organizations – were often pilloried as tools of the Arabs, with the Israel Lobby and its propagandists raising the political cost of accepting Saudi largesse so high that many people and institutions shied away.
  • Gary Edwards on 15 Apr 15
     
    Thanks to Marbux we have this stunning summary explaining how Israel and Saudi Arabia are working together to stop Iran and the Shiite Crescent from taking over the Middle East and establishing an oil rich Shiite Caliphate. ........... "New Terrorist Gains Saudi Arabia and its Persian Gulf allies, along with Turkey, are also ramping up support in Syria for Al-Qaeda's Nusra Front and the Islamic State. Flush with jihadist reinforcements, the two terrorist organizations have seized new territory in recent weeks, including the Islamic State creating a humanitarian crisis by attacking a Palestinian refugee camp south of Damascus. All of these Saudi actions have drawn minimal criticism from mainstream U.S. media and political circles, in part, because the Saudis now have the protection of the Israel Lobby, which has kept American attention on the supposed threat from Iran, including allegedly controversial statements from Iranian leaders about their insistence that economic sanctions be lifted once the nuclear agreement is signed and/or implemented. Neocon warmongers have even been granted space in major U.S. newspapers, including the Washington Post and the New York Times, to openly advocate for the bombing of Iran despite the risk that destroying Iran's nuclear reactors could inflict both human and environmental devastation. That might serve the Saudi-Israeli interests by forcing Iran to focus exclusively on a domestic crisis but it would amount to a major war crime. [See Consortiumnews.com's "NYT Publishes Call to Bomb Iran."] The strategic benefit for Israel and Saudi Arabia would be that with Iran unable to assist the Iraqis and the Syrians in their desperate struggles against Al-Qaeda and the Islamic State, the Sunni jihadists might well be hoisting the black flag of their dystopian philosophy over Damascus, if not Baghdad. [See Consortiumnews.com's "The Secret Saudi Ties to Terrorism."] Beyond the slaughter of innocents that would follow
Paul Merrell

ClubOrlov: Whiplash! - 0 views

cluborlov.blogspot.com/...whiplash.html

oil-market forecast pipelinestan-wars geopolitics

shared by Paul Merrell on 21 Jan 15 - No Cached
  • Over the course of 2014 the prices the world pays for crude oil have tumbled from over $125 per barrel to around $45 per barrel now, and could easily drop further before heading much higher before collapsing again before spiking again. You get the idea. In the end, the wild whipsawing of the oil market, and the even wilder whipsawing of financial markets, currencies and the rolling bankruptcies of energy companies, then the entities that financed them, then national defaults of the countries that backed these entities, will in due course cause industrial economies to collapse. And without a functioning industrial economy crude oil would be reclassified as toxic waste. But that is still two or three decades off in the future.
  • An additional problem is the very high depletion rate of “fracked” shale oil wells in the US. Currently, the shale oil producers are pumping flat out and setting new production records, but the drilling rate is collapsing fast. Shale oil wells deplete very fast: flow rates go down by half in just a few months, and are negligible after a couple of years. Production can only be maintained through relentless drilling, and that relentless drilling has now stopped. Thus, we have just a few months of glut left. After that, the whole shale oil revolution, which some bobbleheads thought would refashion the US into a new Saudi Arabia, will be over. It won't help that most of the shale oil producers, who speculated wildly on drilling leases, will be going bankrupt, along with exploration and production companies and oil field service companies. The entire economy that popped up in recent years around the shale oil patch in the US, which was responsible for most of the growth in high-paying jobs, will collapse, causing the unemployment rate to spike.
  • The game they are playing is basically a game of chicken. If everybody pumps all the oil they can regardless of the price, then at some point one of two things will happen: shale oil production will collapse, or other producers will run out of money, and their production will collapse. The question is, Which one of these will happen first? The US is betting that the low oil prices will destroy the governments of the three major oil producers that are not under their political and/or military control. These are Venezuela, Iran and, of course, Russia. These are long shots, but, having no other cards to play, the US is desperate. Is Venezuela enough of a prize? Previous attempts at regime change in Venezuela failed; why would this one succeed? Iran has learned to survive in spite of western sanctions, and maintains trade links with China, Russia and quite a few other countries to work around them. In the case of Russia, it is as yet unclear what fruit, if any, western policies against it will bear. For example, if Greece decides to opt out of the European Union in order to get around Russia's retaliatory sanctions against the EU, then it will become entirely unclear who has actually sanctioned whom.
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  • The US is making a desperate attempt to knock over a petro-state or two or three before its shale oil runs out, with the Canadians, their tar sands now unprofitable, hitching a ride on its coat-tails, because if this attempt doesn't work, then it's lights out for the empire. But none of their recent gambits have worked. This is the winter of imperial discontent, and the empire is has been reduced to pulling pathetic little stunts that would be quite funny if they weren't also sinister and sad.
  • But a bunch of deluded people muttering to themselves in a dark corner, while the rest of the world points at them and laughs, does not an empire make. With this level of performance, I would venture to guess that nothing the empire tries from here on will work to its satisfaction.
  • Because it will recover. The fix for low oil prices is... low oil prices. Past some point high-priced producers will naturally stop producing, the excess inventory will get burned up, and the price will recover. Not only will it recover, but it will probably spike, because a country littered with the corpses of bankrupt oil companies is not one that is likely to jump right back into producing lots of oil while, on the other hand, beyond a few uses of fossil fuels that are discretionary, demand is quite inelastic. And an oil price spike will cause another round of demand destruction, because the consumers, devastated by the bankruptcies and the job losses from the collapse of the oil patch, will soon be bankrupted by the higher price. And that will cause the price of oil to collapse again. And so on until the last industrialist dies. His cause of death will be listed as “whiplash”: the “shaken industrialist syndrome,” if you will. Oil prices too high/low in rapid alternation will have caused his neck to snap.
  • Paul Merrell on 21 Jan 15
     
    Dmitry Orlov with a humorous yet inscisient take on the state and future of the oil market. Spoiler: He sees signs of desperation amongst the leaders of the American Empire, reduced to no viable options. 
  • Paul Merrell on 21 Jan 15
     
    "inscisient"? Make that "incisive." Follow reading Orlov's piece by reading Mike Whitney's latest at http://www.counterpunch.org/2015/01/20/are-plunging-petrodollar-revenues-behind-the-feds-projected-rate-hikes/ A lot of confirmation of what Orlov said in Whitney's article, citing hard numbers. Mass layoffs in the U.S. and Canadian oil industry; the petrodolar has stopped providing liquidity for the dollar; and the Fed plans to raise interest rates to force an influx of dollars from developing nations, in order to replace the petrodollar liquidity crisis. Whitney makes a strong case that it's a plot by the big banksters to steal another huge pile of cash at the expense of a huge number of jobs in the U.S. Both Orlov and Whitney say that it's going to be a very rough ride for the 99 per cent and for the population of developing nations. Indeed, Whitney's numbers say we are already over the precipice on jobs and well into free-fall.
  • Paul Merrell on 21 Jan 15
     
    But last night, Obama had the gall to claim that all is just peachy-k een on the jobs front. As he helps the banksters offshore another huge number of U.S. jobs.
Paul Merrell

'Realists' Warn Against Ukraine Escalation | Consortiumnews - 0 views

consortiumnews.com/...arn-against-ukraine-escalation

war & peace Ukraine Russia U.S.-foreign-policy Mearsheimer Wald

shared by Paul Merrell on 11 Feb 15 - No Cached
  • The neocons’ war-and-more-war bandwagon is loaded up again and rolling downhill as “everyone who matters” in Washington is talking up sending sophisticated weapons to Kiev to escalate Ukraine’s civil war, but some “realists,” an endangered species in U.S. foreign policy, dissent, notes Robert Parry.
  • In Foreign Policy, Wald notes that despite the emerging consensus to ship arms to Ukraine, “few experts think this bankrupt and divided country is a vital strategic interest and no one is talking about sending U.S. troops to fight on Kiev’s behalf. So the question is: does sending Ukraine a bunch of advanced weaponry make sense? The answer is no.”
  • Paul Merrell on 11 Feb 15
     
    While I have a lot of respect for Mearsheimer and Wald, they have completely missed why the U.S. is involved in the Ukraine. The U.S. has done its level best to create an arc of instability from Russia south to the Mediterranean and Suez Canal in order to protect the petrodollar from merger of the European and Asian markets. It's about pipelines and railroads both existing and to be built in the future. It's about getting in the way of China's rising economy. It's about combating de-dollarization. It makes sense to Western banksters, in a "prolong the decline of the American Empire as long as possible" way.  
Paul Merrell

One Map That Explains the Dangerous Saudi-Iranian Conflict - 0 views

theintercept.com/...ngerous-saudi-iranian-conflict

war & peace Saudis Shia Sunni oil pipelinestan-wars

shared by Paul Merrell on 12 Jan 16 - No Cached
  • The Kingdom of Saudi Arabia executed Shiite Muslim cleric Nimr al-Nimr on Saturday. Hours later, Iranian protestors set fire to the Saudi embassy in Tehran. On Sunday, the Saudi government, which considers itself the guardian of Sunni Islam, cut diplomatic ties with Iran, which is a Shiite Muslim theocracy. To explain what’s going on, the New York Times provided a primer on the difference between Sunni and Shiite Islam, informing us that “a schism emerged after the death of the Prophet Muhammad in 632” — i.e., 1,383 years ago. But to the degree that the current crisis has anything to do with religion, it’s much less about whether Abu Bakr or Ali was Muhammad’s rightful successor and much more about who’s going to control something more concrete right now: oil.
  • In fact, much of the conflict can be explained by a fascinating map created by M.R. Izady, a cartographer and adjunct master professor at the U.S. Air Force Special Operations School/Joint Special Operations University in Florida. What the map shows is that, due to a peculiar correlation of religious history and anaerobic decomposition of plankton, almost all the Persian Gulf’s fossil fuels are located underneath Shiites. This is true even in Sunni Saudi Arabia, where the major oil fields are in the Eastern Province, which has a majority Shiite population. As a result, one of the Saudi royal family’s deepest fears is that one day Saudi Shiites will secede, with their oil, and ally with Shiite Iran.
  • This fear has only grown since the 2003 U.S. invasion of Iraq overturned Saddam Hussein’s minority Sunni regime, and empowered the pro-Iranian Shiite majority. Nimr himself said in 2009 that Saudi Shiites would call for secession if the Saudi government didn’t improve its treatment of them.
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  • As Izady’s map so strikingly demonstrates, essentially all of the Saudi oil wealth is located in a small sliver of its territory whose occupants are predominantly Shiite. (Nimr, for instance, lived in Awamiyya, in the heart of the Saudi oil region just northwest of Bahrain.) If this section of eastern Saudi Arabia were to break away, the Saudi royals would just be some broke 80-year-olds with nothing left but a lot of beard dye and Viagra prescriptions. Nimr’s execution can be partly explained by the Saudis’ desperation to stamp out any sign of independent thinking among the country’s Shiites. The same tension explains why Saudi Arabia helped Bahrain, an oil-rich, majority-Shiite country ruled by a Sunni monarchy, crush its version of the Arab Spring in 2011. Similar calculations were behind George H.W. Bush’s decision to stand by while Saddam Hussein used chemical weapons in 1991 to put down an insurrection by Iraqi Shiites at the end of the Gulf War. As New York Times columnist Thomas Friedman explained at the time, Saddam had “held Iraq together, much to the satisfaction of the American allies Turkey and Saudi Arabia.”
  • Of course, it’s too simple to say that everything happening between Saudis and Iranians can be traced back to oil. Disdain and even hate for Shiites seem to be part of the DNA of Saudi Arabia’s peculiarly sectarian and belligerent version of Islam. In 1802, 136 years before oil was discovered in Saudi Arabia, the ideological predecessors to the modern Saudi state sacked Karbala, a city now in present-day Iraq and holy to Shiites. The attackers massacred thousands and plundered the tomb of Husayn ibn Ali, one of the most important figures in Shiite Islam. Without fossil fuels, however, this sectarianism toward Shiites would likely be less intense today. And it would definitely be less well-financed. Winston Churchill once described Iran’s oil – which the U.K. was busy stealing at the time — as “a prize from fairyland far beyond our brightest hopes.” Churchill was right, but didn’t realize that this was the kind of fairytale whose treasures carry a terrible curse.
  • Paul Merrell on 12 Jan 16
     
    A very interesting map, indeed. It explains a lot the situation in the Mideast. And if Pepe Escobar is right about the U.S. moving to reduce its dependency on Saudi oil with a corresponding tilt toward Iran, the map tells a lot about why the U.S. would do so. But to make it work, I can't see the U.S. pulling it off unless a deal is cut with Iran for it to step into the Saudi's shoes in maintaining the petrodollar, i.e., Iran would have to insist on being paid in U.S. dollars for all of its oil and gas. Was a side deal made to that effect during the negotiations over Iran's nuclear energy development program? If so, that's bad news for the Saudis and for its new ally, the right-wing government of Israel, which has ambitions to be dominant military *and* economic power in the Mideast and to extend its borders from the Nile River in Egypt to the Euphrates River in Iraq and east across the Arabian Peninsula. But what Israel cannot bring to the table is large oil and gas reserves. Iran can.  
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

Asia Times Online :: All that pivots is gold - 0 views

www.atimes.com/...OB01Ad01.html

gold gold reserves settlement currency China U.S.

shared by Paul Merrell on 01 Feb 13 - No Cached
  • To quote the immortal line in Dashiell Hammett's The Maltese Falcon, as filmed by John Huston, "Let's talk about the black bird" - let's talk about a mysterious bird made out of gold. Oh yes, because this is a film noir worthy of Dashiell Hammett - involving the Pentagon, Beijing, shadow wars, pivoting and a lot of gold. Let's start with Beijing's official position; "We don't have enough gold". That leads to China's current, frenetic buying spree - which particularly in Hong Kong anyone can follow live, in real time. China is already the top gold producing and the top gold importing nation in the world. Gold accounts for roughly 70% of reserves held by the US and <a href='http://asianmedia.com/GAAN/www/delivery/ck.php?n=a9473bc7&cb=%n' target='_blank'><img src='http://asianmedia.com/GAAN/www/delivery/avw.php?zoneid=36&cb=%n&n=a9473bc7&ct0=%c' border='0' alt='' ></a>  Germany - and more or less the same for France and Italy. Russia - also on a buying spree - is slightly over 10%. But China's percentage of gold among its whopping US$3.2 trillion reserves is only 2%.
  • Beijing is carefully following the current shenanigans of the New York Federal Reserve, which, asked by the German Bundesbank to return the German gold it is holding, replied it would take at least seven years. German financial journalist Lars Schall has been following the story since the beginning, and virtually alone has made the crucial connection between gold, paper money, energy resources and the abyss facing the petrodollar. Whenever Beijing says it needs more gold, this is justified as a hedge "against risks in foreign reserves" - aka US dollar fluctuation - but especially to "promote yuan globalization". As in, suavely, having the yuan compete with the US dollar and the euro "fairly" in the "international market". And here's the (elusive) heart of the matter. What Beijing actually wants is to get rid of the US dollar peg. For that to happen, it needs vast gold reserves. So here's Beijing pivoting from the US dollar to the yuan - and trying to sway vast swathes of the global economy to follow the path. This golden rule is Beijing's Maltese Falcon: "The stuff dreams are made of".
Paul Merrell

The Dying Dollar -- Paul Craig Roberts - PaulCraigRoberts.org - 0 views

www.paulcraigroberts.org/...ying-dollar-paul-craig-roberts

financial-collapse China U.S. reserve currrencies yuan dollar settlement currency

shared by Paul Merrell on 02 Dec 13 - No Cached
  • Since 2006, the US dollar has experienced a one-quarter to one-third drop in value to the Chinese yuan, depending on the choice of base.   Now China is going to let the dollar decline further in value.  China also says it is considering undermining the petrodollar by pricing oil futures on the Shanghai Futures Exchange in yuan. This on top of the growing avoidance of the dollar to settle trade imbalances means that the dollar’s role as reserve currency is coming to an end, which means the termination of the US as financial bully and financial imperialist.  This blow to the dollar in addition to the blows delivered by jobs offshoring and the uncovered bets in the gambling casino created by financial deregulation means that the US economy as we knew it is coming to an end. The US economy is already in shambles, with bond and stock markets propped up by massive and historically unprecedented Fed money printing pouring liquidity into financial asset prices.  This month at the IMF annual conference, former Treasury Secretary Larry Summers said that to achieve full employment in the US economy would require negative real interest rates.  Negative real interest rates could only be achieved by eliminating cash, moving to digital money that can only be kept in banks, and penalizing people for saving. The future is developing precisely as I have been predicting. As the dollar enters its death throes, the lawless Federal Reserve and the Wall Street criminals will increase their shorting of gold in the paper futures market, thereby driving the remnants of the West’s gold into Asian hands.
  • The People’s Bank of China said the country does not benefit any more from increases in its foreign-currency holdings, adding to signs policymakers will rein in dollar purchases that limit the yuan’s appreciation. “It’s no longer in China’s favor to accumulate foreign-exchange reserves,” Yi Gang, a deputy governor at the central bank, said in a speech organized by China Economists 50 Forum at Tsinghua University yesterday. The monetary authority will “basically” end normal intervention in the currency market and broaden the yuan’s daily trading range, Governor Zhou Xiaochuan wrote in an article in a guidebook explaining reforms outlined last week following a Communist Party meeting.
  • Paul Merrell on 02 Dec 13
     
    By Paul Craig Roberts
Paul Merrell

Asia Times Online :: The self-beheading House of Saud - 0 views

www.atimes.com/...MID-02-221013.html

war & peace Saudis U.S. Syria UAE Bahrain

shared by Paul Merrell on 23 Oct 13 - No Cached
  • By Pepe Escobar Don't count on a female Saudi playwright writing a 21st century remix of John Osborne's Look Back in Anger starring a bunch of non-working class Saudi royals. But anger it is - from King Abdullah downwards; not only at the UN's "double standards" but especially - hush hush - at the infidel Obama administration. This is the official Saudi explanation for spurning a much-coveted two-year term at the UN Security Council, only hours after its nomination. No wonder the House of Saud's unprecedented self-beheading move was praised only by the usual minion suspects; petro-monarchies of the Gulf Counter-revolution Club, aka Gulf <a href='http://asianmedia.com/GAAN/www/delivery/ck.php?n=a9473bc7&cb=%n' target='_blank'><img src='http://asianmedia.com/GAAN/www/delivery/avw.php?zoneid=36&cb=%n&n=a9473bc7&ct0=%c' border='0' alt='' ></a> Cooperation Council (GCC) as well as Egypt, who now depends on Saudi money to pay its bills and barely survive. Kuwait shared Riyadh's pain, enough to send "a message to the world". The UAE said the UN now had the "historical responsibility" to review its role. Bahrain - invaded by the Saudis in 2001 - stressed the "clear and courageous stand". Cairo said the whole thing was "brave".
  • How brave, indeed, to lobby Arab and Pacific nations for two years, and to spend a fortune training a dozen diplomats in New York for months just to say "no" when you get the prize. The House of Saud would have replaced Pakistan with a Pacific seat; Morocco stays until 2015, in an African seat. As early as five months ago the Saudi seat was considered a done deal at the UN.
  • Apart from a few Middle Eastern spots, no one is seriously losing sleep over the adolescent Saudi move - which displays a curious notion of leverage, as in choosing a PR spin reinventing the corrupt petro-monarchy as the "principled" champions of a cause (UN reform) just as they might have a crack at trying to influence it from within. That would have implied more scrutiny. For instance, this Monday the Human Rights Council, another UN institution, duly blasted Saudi Arabia on its sterling record of discrimination against women and sectarianism, following reports by Human Rights Watch and Amnesty International. As a member of the UN Security Council, the discrepancy between the medievalist reality inside Saudi Arabia and its lofty "reformist" agenda would be even more glaring.
  • ...3 more annotations...
  • The perennial Saudi Foreign Minister, Prince Saud al-Faisal had lunch with US Secretary of State John Kerry at the Prince's very private luxury digs in Paris this Monday. The mystery is which kafir fluid was consumed; no doubts though in the official, harmless spin; they agreed on a nuclear-free Iran, an end to the war in Syria and a "stable" Egypt. Before the Paris bash, during the weekend, Bandar Bush was already in his trademark full gear, openly announcing to European diplomats in Riyadh that he will buy his Syria-bound weapons somewhere else, will dissociate his scheme from the CIA, and will train "his" rebels with other players, mostly France and Jordan. The Wall Street Journal has the story, which predictably has not surfaced in Arab media (90% of it controlled by different branches of the House of Saud). Even more interesting is two other pieces of information leaked by diplomats. The House of Saud wanted the US to provide them with targets to be hit inside Syria when Obama's kinetic whatever would start. Washington adamantly refused.
  • Better yet; Washington allegedly told Riyadh the US would not be able to defend the Shi'ite majority, oil-rich Eastern Province if the Tomahawks started flying over Syria. Imagine the horror show in Riyadh; after all, mob protection against petrodollars recycled/invested in the US economy is the basis of this dysfunctional marriage for nearly seven decades. So that should lead us to the now much hyped "independent Saudi foreign policy posture" to be implemented in relation to Washington. Don't hold your breath. As much as the House of Saud is completely paranoid regarding the Obama administration's latest moves, throwing a fit will not change the way the geopolitical winds are blowing. Iran's geopolitical ascent is inevitable. A Syrian solution is on the horizon. No one wants batshit crazy jihadis roaming free from Syria to Iraq to the wider Middle East. The Saudi spin about creating "a new security arrangement for the Arab world" is a joke - as depicted by Saudi-financed shills such as this.
  • The bottom line is that an angry, fearful House of Saud does not have what it takes to confront benign protector Washington. Throwing a fit - as in crying to attract attention - is for geopolitical babies. Without the US - or "the West" - who's gonna run the Saudi energy industry? PhD-deprived camels? And who's gonna sell (and maintain) those savory weapons? Who's going to defend them for smashing the true spirit of the Arab Spring, across the GCC and beyond? Perennial Foreign Minister Prince Saud is gravely ill. He will be replaced by a recently appointed deputy prime minister. Guess who? Prince Abdul Aziz bin Abdullah, the king's son. Instead of a "principled" stance against "double standards", the House of Saud move at the UN feels more like nepotism.
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