‘The time to invest in Iran is now’

March 08, 2017

by Pepe Escobar for the Asia Times‘The time to invest in Iran is now’

The shift in the global balance of financing power towards Russia, India and China — especially China — is opening up opportunities for Tehran

It’s a beautiful late winter morning, the snowy Alborz mountains glittering under the sun, and Professor Mohammad Marandi from the faculty of world studies at the University of Tehran is taking me on the road, westbound.

Sprawling west Tehran is a decentralization/connectivity spectacular, with its brand new highways, metro lines, artificial lakes and megamalls. While not on the epic scale of the construction rush in Beijing or Shanghai, it is similar in spirit and comparable to what’s going on in Istanbul.

The professor — arguably Iran’s leading political and cultural analyst —and I had been on a running conversation for days on all aspects of an evolving Russia-China-Iran strategic partnership, the massive Eurasia integration project pushed by China, and its myriad interconnected challenges.

Watching west Tehran go by, it was hard not to connect this new normal to the atmosphere of excitement surrounding the Iran nuclear deal struck in Vienna in the summer of 2015. But this had actually started even before President Hassan Rouhani came to power in 2013, “linked to Iran’s stability and rising regional status,” Marandi said.

Cue to the former head of the Iranian National Security Council’s Foreign Relations Committee and professor at Princeton, Seyed Hosein Mousavian. He has been adamant that “America’s four-decade push for regime change in Iran is a failure.” On the nuclear deal, Mousavian noted, regarding the Trump administration rumble, “it is 170 pages, too much technicalities, they might not have time to go through different resolutions – and therefore they really don’t know what they’re talking about.”

The implementation of the deal should have signaled the acceptance of Iran by the West – hence renewed trade and commerce. Instead, the new normal points towards the China-driven New Silk Roads, Asian Infrastructure Investment Bank and Shanghai Cooperation Organization, and the Russia-driven Eurasia Economic Union; and towards Iran, alongside other emerging economies, seeking infrastructure finance and foreign investment from BRICS nations, especially the RIC triumvirate. In sum: look east.

Tehran did sign a rash of memorandums of understanding with French industry. But the heart of the trade and investment action is China. When President Xi Jinping visited Tehran in January last year, Rouhani said, “Iran and China have agreed to increase trade to US$600 billion in the next 10 years.”

Most deals, of course, involve oil and gas – but crucially they also span cooperation on nuclear energy and Iran’s positioning as an absolutely crucial hub of One Belt, One Road.

Compared to it, Russia-Iran trade, at almost US$2 billion last year, is not exactly newsworthy, although rising rapidly.

Post-sanctions, Russia-Iran signed almost US$40 billion in MoUs – but projects are mostly still only on paper. The problem is the overwhelming majority of Iranian companies are cash-strapped, so financing should come from Russian sources. “Secret code” exports – as in weapons – are back, as in the US$900 million contract for the S-300 defense missile systems, the first batch delivered to Iran last April.

The real secret though in reference to incipient trade is that Russia and Iran do not have much to exchange at globally competitive rates. Russia exports mainly metals, wood, electrical machines, paper, grain, floating structures, mechanically engineered products and weapons. Iran exports agricultural and seafood products.

 

With India, the heart of the matter is the development of the port of Chabahar. Here’s where China’s Maritime Silk Road meets India’s drive to connect the Indian Ocean to Afghanistan bypassing Pakistan and the China-Pakistan Economic Corridor.

Enter Indian investment on the Chabahar-Zahedan railway, ending in Sistan-Balochistan, close to the Pakistani border, as well as in the still-in-planning Chabahar-Hajigak railway, which translates as a direct connection to Afghanistan. All this spells out Iran blooming as a crucial integration/connectivity hub for China, India and the intersection of South and Central Asia.

 

On the energy front, the news is also encouraging. According to the head of National Iranian Oil Company, Ali Kardor, by next month Iran will be producing 4 million barrels of oil a day (there was a peak at 4.2 million before sanctions were tightened in 2011).

Iran used to be the second-largest OPEC producer. Sanctions forced it down to 2.5 million barrels a day and exports of just above 1 million. Now it’s back to OPEC’s number three, behind Saudi Arabia (10 million barrels a day) and Iraq (4.5 million).

Natural gas production will reach 1.3 billion cubic meters a day by 2021. For that to happen, NIOC needs to drill at least 500 new offshore wells. The problem is NIOC is deep in US$50 billion of debt; not only because of low oil prices but also bad financial and management decisions. Royal Dutch Shell and Total are keen to strike deals, but nothing has been signed yet.

Once again, I got a similar figure to what NIOC provided me roughly 10 years ago; Iran needs at least US$200 billion to upgrade its energy industry infrastructure, and to really start profiting from an astonishing US$7 trillion in gas reserves. It’s fair to assume substantial funds could be provided, eventually, by the AIIB and other sources from Russia and China. Deputy Oil Minister Amir Hossein Zamaninia expects major developments “in a few months.”

Socially, Iran is not a powder keg. The average standard of living improved roughly 70% since the Islamic revolution. Women accounted for 70% of Iran’s science and engineering students in 2015. The healthcare system, by 2014, was the 30th most efficient in the world, way ahead of the US (in 50th).

Much will depend on the upcoming presidential elections. Former president Mahmoud Ahmadinejad was politely dissuaded by Supreme Leader Ayatollah Khamenei, in person, from running again. Marandi confirms President Rouhani, up for re-election, is way less popular than Foreign Minister Zarif, who in turn is less popular than the number one superstar: Major General Qassem Soleimani, the head of the elite Quds Force — who’s not running for office. The reason for Rouhani’s woes; his record on the economy has been far from stellar.

Tehran will soon drop the US dollar in its financial and foreign exchange reports. That will certainly imply more currency swap agreements, and Iran only accepting payment for oil and gas in euros or in a basket of currencies.

Iran trades mostly with China, the EU and the UAE. Trump claimed during his campaign that Iran was handed a US$150 billion gift by the nuclear deal. Not true. The Central Bank’s frozen oil funds repatriated since January 2016 from the UAE, Britain, India, Greece, Italy and Norway amount to less than US$10 billion. And only US$12 billion of blocked assets were released from Japan, South Korea and India, on installments.

Before we arrived back in Tehran, Marandi told me that all in all, “ I believe whoever invests now in Iran will have an amazing return. The time to invest is now.” The RIC in BRICS are doing it. Europeans are doing it – although not much so far. And Americans are not doing it – at their loss. We wrapped it up at a traditional Iranian restaurant downtown, serving first-class food to middle and upper middle class families. The bill: less than US$30 for two. A fabulous return on investment.

The swamp strikes back

FEBRUARY 16, 2017

The swamp strikes back

by Pepe Escobar for Sputnik International

The tawdry Michael Flynn soap opera boils down to the CIA hemorrhaging leaks to the company town newspaper, leading to the desired endgame: a resounding victory for hardcore neocon/neoliberalcon US Deep State factions in one particular battle. But the war is not over; in fact it’s just beginning.

Even before Flynn’s fall, Russian analysts had been avidly discussing whether President Trump is the new Victor Yanukovich – who failed to stop a color revolution at his doorstep. The Made in USA color revolution by the axis of Deep State neocons, Democratic neoliberalcons and corporate media will be pursued, relentlessly, 24/7. But more than Yanukovich, Trump might actually be remixing Little Helmsman Deng Xiaoping: “crossing the river while feeling the stones”. Rather, crossing the swamp while feeling the crocs.

Flynn out may be interpreted as a Trump tactical retreat. After all Flynn may be back – in the shade, much as Roger Stone. If current deputy national security advisor K T McFarland gets the top job – which is what powerful Trump backers are aiming at – the shadowplay Kissinger balance of power, in its 21st century remix, is even strengthened; after all McFarland is a Kissinger asset.

This call won’t self-destruct in five seconds

Flynn worked with Special Forces; was head of the Defense Intelligence Agency (DIA); handled highly classified top secret information 24/7. He obviously knew all his conversations on an open, unsecure line were monitored. So he had to have morphed into a compound incarnation of the Three Stooges had he positioned himself to be blackmailed by Moscow.

What Flynn and Russian ambassador Sergey Kislyak certainly discussed was cooperation in the fight against ISIS/ISIL/Daesh, and what Moscow might expect in return: the lifting of sanctions. US corporate media didn’t even flinch when US intel admitted they have a transcript of the multiple phone calls between Flynn and Kislyak. So why not release them? Imagine the inter-galactic scandal if these calls were about Russian intel monitoring the US ambassador in Moscow.

No one paid attention to the two key passages conveniently buried in the middle of this US corporate media story. 1) “The intelligence official said there had been no finding inside the government that Flynn did anything illegal.” 2) “…the situation became unsustainable – not because of any issue of being compromised by Russia – but because he [Flynn] has lied to the president and the vice president.”

Recap: nothing illegal; and Flynn not compromised by Russia. The “crime” – according to Deep State factions: talking to a Russian diplomat.

Vice-President Mike Pence is a key piece in the puzzle; after all his major role is as insider guarantor – at the heart of the Trump administration – of neocon Deep State interests. The CIA did leak. The CIA most certainly has been spying on all Trump operatives. Flynn though fell on his own sword. Classic hubris; his fatal mistake was to strategize by himself – even before he became national security advisor. “Mad Dog” Mattis, T. Rex Tillerson – both, by the way, very close to Kissinger – and most of all Pence did not like it one bit once they were informed.

A “man of very limited abilities”

Flynn was already compromised by his embarrassingly misinformed book co-written with neocon Michael Ledeen, as well as his juvenile Iranophobia. At the same time, Flynn was the point man to what would have been a real game-changer; to place the CIA and the Joint Chiefs of Staff under White House control.

A highly informed US source I previously called “X”, who detailed to Sputnik how the Trump presidency will play out, is adamant “this decision makes Trump look independent. It is all going according to script.”

“X” stresses how “the NSA can penetrate any telephone system in the world that is not secure. Flynn was a man of very limited abilities who talked too much. You never hear from the real powers in intelligence nor do you know their names. You can see that in Flynn’s approach to Iran. He was disrupting a peace deal in the Middle East relating to Russia, Iran and Turkey in Syria. So he had to go.”

“X” adds, “the Russians are not stupid to talk among themselves on unsecured lines, they assumed that Flynn controlled his own lines. Flynn was removed not because of his Russian calls but for other reasons, some of which have to do with Iran and the Middle East. He was a loose cannon even from the intelligence perspective. This is a case of misdirection away from the true cause.”

In direct opposition to “X”, an analytical strand now rules there’s blood on the tracks; the hyenas are circling; a vulnerable Trump has lost his mojo; and he also lost his foreign policy. Not yet.

In the Grand Chessboard, what Flynn’s fall spells out is just a pawn out of the game because the King would not protect him. We will only know for sure “draining the swamp” – the foreign policy section – is doomed if neocons and neoliberalcons continue to run riot; if neoliberalcons are not fully exposed in their complicity in the rise of ISIS/ISIL/Daesh; and if the much vaunted possibility of a détente with Russia flounders for good.

What’s certain is that the fratricide war between the Trump administration and the most powerful Deep State factions will be beyond vicious. Team Trump only stands a chance if they are able to weaponize allies from within the Deep State. As it stands, concerning the Kissinger grand design of trying to break the Eurasian “threat” to the unipolar moment, Iran is momentarily relieved; Russia harbors no illusions; and China knows for sure that the China-Russia strategic partnership will become even stronger. Advantage swamp.

Game-changers ahead on the (long) Maritime Silk Road

February 04, 2017

by Pepe Escobar for the Asia Times

Game-changers ahead on the (long) Maritime Silk RoadFrom the Bab al-Mandab to the strait of Malacca, from the strait of Hormuz to the strait of Lombok, all the way to the key logistical hub of Diego Garcia 2,500 miles southeast of Hormuz, the question pops up: How will the unpredictable new normal in Washington – which is not exactly China-friendly – affect the wider Indian Ocean?

At play are way more than key chokepoints in an area that straddles naval supply chains and through which also flows almost 40% of the oil that powers Asian-Pacific economies. This is about the future of the Maritime Silk Road, a key component of the Chinese One Belt, One Road (OBOR), and thus about how Big Power politics will unfold in a key realm of the Rimland.

India imports almost 80% of its energy from the Middle East via the Indian Ocean. Thus, for Delhi, protection of supply chains must be the norm, as in the current drive to develop three carrier battle groups and at least 160 naval vessels, including submarines, before 2022. That also implies boosting a cooperation agreement with the nations bordering the strait of Malacca – Malaysia, Singapore and Indonesia – and developing military infrastructure in the Andaman and Nicobar islands.

China for its part advances a relentless economic / infrastructural drive from Myanmar to Pakistan, from Bangladesh to the Maldives, from Sri Lanka to Djibouti – a counterbalance to the impossibility of fully implementing “escape from Malacca”, the complex, multi-pronged Beijing strategy for diversifying energy supplies.

The privileged infrastructure connectivity hub remains the megaport of Gwadar in the Arabian Sea – which will be controlled for the next 40 years by a Chinese company. Gwadar is the naval destination of the US$46 billion (and counting) China-Pakistan Economic Corridor (CPEC) originating in Xinjiang, which will be the economic New Silk Roads game-changer in South Asia.

This implies everyone jumping aboard the new Karakoram highway, currently under construction in Pakistan’s sublimely mountainous northern Gilgit-Baltistan, with the military watching over a frantic maze of Chinese engineers.

Islamabad/Rawalpindi took no prisoners in offering a sprawling support system to prevent possible interference by Uighur separatist groups. For all practical purposes, Pakistan’s Inter-Services Intelligence (ISI) is now focused on resident Uighurs in Pakistan like a laser, while not forgetting Balochistan’s separatist groups, who, with the right “incentive”, might also derail CPEC further on down the road.

Beijing treads a very fine – soft power – line. Islamabad offered the Chinese Navy a base in Gwadar, but was politely declined: the graphic message would totally freak out both Delhi and Washington. Gwadar will be inevitably developed over time as a trade hub for a vast swathe of South Asia, but Delhi’s anxieties relate to its virtually ready-to-roll capability for monitoring the Indian Navy in the Indian Ocean and the US Navy in the Persian Gulf.

Go North-South, young Eurasian

Gwadar happens to be not far away from Chabahar, in Iran – which is being designed as an Indian trade hub towards the markets of Central Asia, connecting India with Afghanistan via Iran and thus bypassing Pakistan. That’s the Southern – or Indian – Silk Road in action. Gwadar and Chabahar are the top two new hubs bound to link the Indian Ocean to central Eurasia, with Iran, India and Russia featuring as key members of the slowly-developing but potentially spectacular International North-South Transport Corridor (INSTC).

Moreover, Iran, China and India may all eventually converge towards a free trade zone with the Russia-led Eurasia Economic Union (EEU), as the CPEC for its part will allow Russia and Central Asia to boost trade with the Indian Ocean Rimland.

Then there’s the fascinating case of Sri Lanka. According to the 
Institute of Policy Studies in Sri Lanka, from 2006 to 2015 China invested over US$5 billion, with Sri Lanka’s minister of development strategies and international trade adding that China has pledged over US$10 billion more up to 2019.

The key project is the deep-sea port at Hambantota – plus an international airport in nearby Mattala. Sri Lanka struck a deal with China Merchants Port Holdings at the end of 2016 to sell 80% of Hambantota for US$1.1 billion and to lease 15,000 acres of nearby land for 99 years.

Needless to add, the proverbial “concern” with this Chinese win-win was registered in both Delhi and Washington. The possibility that China will eventually acquire a permanent naval military base in the Indian Ocean is a full-time obsession of US Think Tankland. Colombo, though, has always been adamant: Chinese-financed infrastructure does not imply basing rights for the Chinese Navy.

In fact, any Chinese move – from leasing a Maldives island for 50 years for US$4 million to building a military base in Djibouti (officially a base for “technical and logistical support” to the Chinese Navy) by the end of 2017, close to the Americans and the French, is a source of “concern”.

Where China in South Asia is concerned, the Pentagon / Naval War College always fall back to the “string of pearls” threat. Especially now with the Maritime Silk Road, a “string of pearls” is a categorical imperative for Beijing. But that does not imply Chinese military hegemony.

For Beijing, conscious of cost-efficiency, the logistical nightmare of maintaining naval bases in foreign lands far, far away from the Middle Kingdom is definitely not a win-win. So the notion of having a Chinese carrier battle group in the Indian Ocean ready to confront the Indian Navy is idle geostrategic speculation. The very long game is all about establishing key trade nodes for the Maritime Silk Road.

I got a naval offer you can’t refuse

It will be fascinating to watch how mechanisms such as the South Asian Association for Regional Cooperation (SAARC) develop.

Let’s see what Delhi – deeply committed to an official Make in India campaign – may offer in the way of “free” markets to Nepal (which is leaning towards China), Bangladesh (always in a complex relationship with Pakistan) and Sri Lanka.

Since 2008, China has been India’s largest trading partner. China and India will be involved in deeper cooperation inside the BRICS, and in managing the New Development Bank (NDB). Moreover, India is about to become a full member of the Shanghai Cooperation Organization.

The notion of Delhi reigning supreme in the Indian Ocean is misguided. From now on, with the emphasis on the Maritime Silk Road, it will be more a case of serious India-China economic competition and/or cooperation, as both countries invest in the protection/expansion of their extensive, complex supply chains.

The Pentagon, under James “Mad Dog” Mattis, will, of course, be watching closely. India’s NDTV recently reported that the US Pacific Command had tacitly admitted the obvious: that the US and India are sharing intel on Chinese warships and submarines in the Indo-Pacific. Moreover, there was a hint that Beijing could deploy a carrier battle group in the Indian Ocean today if it saw fit.

It’s unlikely Beijing will accept the challenge – just to be slapped with more charges of “Chinese aggression” and “threatening freedom of navigation”. Better invest in non-stop, cumulative Maritime Silk Road deals.

Trump Will Try to Smash China-Russia-Iran Triangle… Here’s Why He Will Fail

 

Trump Will Try to Smash China-Russia-Iran Triangle... Here's Why He Will Fail

TEHRAN (FNA)– China, Russia and Iran are the three key players in what promises to be the Eurasian Century.

Donald Trump may be The Joker; The Fool; The Ace of Spades; the ultimate trickster. What nobody can tell for sure is how this shifty chameleon will seduce, cajole, divide and threaten these three countries in his bid to “Make America Great Again”.

Considering the composition of his cabinet, as well as his motormouth twittering, the world according to Trump sees radical Islam as the No 1 threat, followed by Iran, China and Russia.

The strategy of Henry Kissinger, Trump’s unofficial foreign policy guru, is a mix of “balance of power” and “divide and rule”. It will consist of seducing Russia away from its strategic partner China; keeping China constantly on a sort of red alert; and targeting Islamic State while continuing to harass Iran.

All this has the potential to backfire splendidly. Even a real “reset” with Russia, of the non-Hillary Clinton kind, is not exactly assured.

Trump’s pick for secretary of state, Rex Tillerson, may in fact be a cipher, a privileged ExxonMobil dealmaker, or a Trojan Horse for Kissinger’s views. Tillerson is a trustee of the hardline Centre for Strategic and International Studies think tank, along with Kissinger.

So let’s see how Kissinger’s shadowplay might develop on the new geopolitical chessboard.

Trump starts out already pitted against America’s vast and powerful intelligence apparatus. The American “deep state” – the military-industrial complex that survives regardless of what political party is in power – requires an existential threat to operate. And that threat, according to the Pentagon, is Russia.

The ever-shifting “war on terror” is dead. The new normal, as demonstrated by the Obama administration, is the second cold war.

It all hinges on how – and if – Trump will be able to inflict pain on the US deep state, and how this might affect its “humanitarian” imperialist leanings.

Kissinger’s strategy implies having closer relations with Russia, whilst cajoling Moscow to betray its Eurasian ally Iran. Moscow is unlikely to betray Iran, and pursuing that strategy will only exacerbate Trump’s conflict with the deep state.

A Trumpian trade-off though is already on the cards; no more US sanctions on Russia if Moscow and Washington manage a common mechanism to smash Islamic State, as well as a new framework on nuclear disarmament.

There’s guarded optimism in Moscow that Trump’s business acumen will eventually lead him to discard counterproductive containment of Russia, freeing it to profit from the real deal across Eurasia: economic integration, via the Beijing-backed One Belt, One Road trade initiative to link economies into a China-centred trading network, and the Eurasian Economic Union.

Sensing a credible opening, Moscow has invited the Trump administration – represented by national security adviser Michael Flynn – to join the Syrian peace talks in Astana, Kazakhstan, alongside Iran, Turkey and the regime of Bashar al-Assad, due to start on Monday, only three days after Trump’s inauguration.

Russia and Iran are working as one in Syria. Russia has actively campaigned to bring Iran into the Shanghai Cooperation Organisation, the regional security group. Bilateral trade – from energy to railways, mining and agriculture – is booming. Russia and Iran are set to ditch the US dollar and use rials and rubles for trade. This means bypassing the usual US weapon of choice: sanctions. Thus, betraying Tehran is out of the question for Moscow.

Trump, for all his rhetoric, cannot renegotiate the Iran nuclear deal signed by the members of the UN Security Council plus Germany in 2015. Tehran has met all its obligations. Trump also cannot fulfil his campaign promise to smash Islamic State, without Iran. Instead of his army of Iranophobic generals, he would do better to listen to the National Iranian American Council in Washington, which really understands Tehran’s stakes in Syria, Iraq, Afghanistan and the volatile Iran-Saudi cold war.

And Trump “getting tough” on China will hit a BRICS wall. The next summit between those five leading emerging market economies (Brazil, Russia, India, China, South Africa) is in Xiamen (廈門), southeast China, next autumn, and the hosts will press for further integration.

Trump’s generals will also have to inform him that America cannot afford a war in the South China Sea or the western Pacific, wars it would have no guarantee of winning.

Trump’s advisers – even the Sinophobes – must have told him that Taiwan and the South China Sea are Beijing’s top priorities.

As Beijing’s foreign ministry put it: “The one-China principle… is non-negotiable.”

Then there’s the 45 per cent tariff that might be slapped on Chinese products, and possible import quotas. Chinese scholars have concluded it is the United States that has most to lose in a trade war.

After Xi Jinping’s (習近平) masterclass at Davos, is that all there is? Kissinger, 93, had better get back to the drawing board.

By Pepe Escobar

This article first appeared on South China Morning Post on January 22.

Here’s how the Trump presidency will play out

January 19, 2017

by Pepe Escobar

ThHere’s how the Trump presidency will play oute Trump era starts now – with geopolitics and geoeconomics set for a series of imminent, unpredictable cliffhangers.

I have argued that Trump’s foreign policy guru Henry Kissinger’s strategy to deal with the formidable Eurasia integration trio – Russia, China and Iran – is a remixed Divide and Rule; seduce Russia away from its strategic partnership with China, while keep harassing the weakest link, Iran.

In fact that’s how it’s already playing out – as in the outbursts of selected members of Trump’s cabinet during their US Senate hearings. Factions of US Think Tankland, referring to Nixon’s China policy, which was designed by Kissinger, are also excited with the possibilities of containment regarding at least one of those powers “potentially arrayed against America”.

Kissinger and Dr. Zbig “Grand Chessboard” Brzezinski are the two foremost, self-described Western dalangs – puppet masters – in the geopolitical arena. In opposition to Kissinger, Obama’s foreign policy mentor Brzezinski, true to his Russophobia, proposes a Divide and Rule centered on seducing China.

Yet an influential New York business source, very close to the real, discreet Masters of the Universe, who correctly predicted Trump’s victory weeks before the fact, after examining my argument offered not only a scathing appraisal of those cherished dalangs; he volunteered to detail how the new normal was laid out by the Masters directly to Trump. Let’s call him “X”.

The non-stop China watch

“X” starts by doing something US deep state-connected regulars, who revere their idols, never dare to, at least in public; “It is important not to attribute too much importance to either Kissinger or Brzezinski as they are merely fronts for those who make the decisions and it is their job to cloak the decisions with a patina of intellectuality. Their input means relatively nothing. I use their names on occasion as I cannot use the names of those who actually make the decisions.”

That’s the cue for “X” to detail the new normal; “Trump was elected with the support of the Masters to tilt towards Russia. The Masters have their tools in the media and Congress maintaining a vilification campaign against Russia, and have their puppet Brzezinski also come out against Russia, stating ‘America’s global influence depends on cooperation with China’. The purpose is to threaten Russia to cooperate and place these chips on the negotiating table for Trump. In a traditional good cop-bad cop approach, Donald is portrayed as the good cop wanting good relations with Russia, and Congress, media, Brzezinski are the bad cops. This is to aid Trump in the negotiations with Russia as Putin sees the ‘precarious’ position of his friend and should be willing to make major concessions as the line goes.”

And that brings us to how Taiwan – and Japan – got into the mix;

“Donald shows the Russian tilt by talking to the Taiwanese, demonstrating that the shift is serious. But it was decided to throw Japan into the mix as a predator against US industry, with an attack on Toyota, thoroughly deserved. That moderated the position as the Masters became afraid that the perception of our building up Japan against China would be too much of a provocation.”

So expect China – as “not too much importance” Kissinger prescribed – to be under non-stop scrutiny;

“The Masters have decided to reindustrialize the United States and want to take jobs back from China. This is advisable from the Chinese viewpoint; for why should they sell their work to the US for a dollar that has no intrinsic value and get really nothing back for the work. China should have a car in every Chinese worker’s garage and they will become a larger producer of cars than the EU, US and Japan combined, and their own nation will keep their wealth in their own country.”

And why China over Russia? “Russia in this sense being a natural resource country with a gigantic military industrial complex (the latter being the only reason she is secretly respected) is exempt from any tough trade talk as they hardly export anything but natural resources and military equipment. The Masters want jobs back from Mexico and Asia including Japan, Taiwan, etc., and you see this in Trump’s attack on Japan. The main underlying reason is that the US has lost control of the seas and cannot secure its military components during a major war. This is all that matters now and this is the giant story behind the scenes.”

In only a few words “X” details the reversal of an economic cycle;

“The Masters made money out of transfer of industry to Asia (Bain Capital specialized in this), and Wall Street made money from the lower interest rates on the recycled dollars from the trade deficits. But now, the issue is strategic; and they will make money on the return of industries scaling down their investments in Asia and returning them to the United States as we rebuild production here.”

“X” remains quite fond of Henry Ford’s business strategy; and that is the cue for him to address the crucial theme: national defense. According to “X”,

“Ford doubled the wages he paid and made more money than any other manufacturer. The reason was that a living wage where the mother can have many children on her husband’s wage was psychologically good for productivity in his car plants, and that his workers could then afford his cars. He thus recognized that in a society there must be a just distribution of wealth that his admirer Steve Jobs could not. Henry’s mass productivity was the wonder of the world and that was what won World War Two for the United States. Amazon does not contribute anything to national defense, being merely an internet marketing service based on computer programs, nor Google which merely organizes data better. None of this builds a better missile or submarine except in a marginal way.”

It’s the Pentagon, stupid

So yes; this all has to do with reorganizing the US military. “X” made a point to refer to a CNAS report I quoted in my initial column; “It is very important for what is visible between the lines. And that is we are in deep trouble being technologically behind Russia by generations in weapons, which is a follow-up on the Brzezinski quote that we are no longer a global power.”

This is a thorough, wide-ranging analysis of how Russia has managed to organize the best armed forces in the world. And that does not even take into account the S-500 missile defense system, which is now being rolled out and arguably seals the entirety of Russian airspace. And the next generation – S-600? – will be even more powerful.

“X” does venture into deep state taboo territory, as in how Russia, over the past decade, has managed to leap far ahead of the US, “eclipsing it as the strongest military power”. But the game may be far from over – wishful thinking or otherwise;

“We hope Secretary of Defense James Mattis will understand this and that the Deputy Secretary of Defense has advanced technological skills, organizational ability and the foresight to understand that the weapons of World War Three are offensive and defensive missiles, and submarines, and not air power, tanks and aircraft carriers.”

A realist, “X” admits that the warmongering neocon/neoliberalcon status quo – represented by most US deep state factions – will never abandon the default posture of unremitting hostility towards Russia. But he prefers to focus on change; “Let Tillerson reorganize the State Department along Exxon efficiencies. He may be worth something in that.  He and Mattis may be gutless but if you tell the truth to the Senate you may not be confirmed. So what they say means nothing. But notice this about Libya. The CIA had a goal of driving China out of Africa and so does AFRICOM. That was one of the secrets to our Libyan intervention.”

Not that it worked; NATO/AFRICOM turned Libya into a wasteland run by militias, and still China was not driven away from the rest of Africa.

“X” also admits,

“Syria and Iran are red lines for Russia. So is the eastern Ukraine from the Dnieper.” He is fully aware Moscow will not allow any regime change gambit on Tehran. And he’s also aware that “China’s investments in Iranian oil and gas imply that China also will not permit Washington’s overthrow of the Iranian government.”

The going really gets tough when it comes to NATO;

“X” is convinced Russia “will invade Romania and Poland if those missiles are not taken out of Romania and the missile commitment to Poland rescinded. The issue is not the worthless defensive missiles of the United States but the substitutability of offensive nuclear missiles in these silos. Russia will not tolerate this risk.  These are not subject to negotiation.”

In contrast to the “perpetual threat” perpetual propaganda by the US War Party, Moscow focuses on actual facts on the ground since the 1990s; the break up of historic Slavic ally Serbia; Warsaw Pact nations and even former USSR republics annexed by NATO, not to mention attempts to also include Georgia and Ukraine; US deployment of color revolutions; the “Assad must go “ fiasco, as in regime change forced on Syria even including the weaponizing of Salafi-jihadis; economic sanctions, an oil price war and raids on the ruble; and non-stop NATO harassment.

“X”, fully aware of the facts, adds,

“Russia has always wanted peace. But they are not going to play a game with the Masters of the Universe that has Trump as the good guy and the Congress, CIA, etc. as the bad guy as a negotiating ploy. That is how they see it. They do not regard this circus as real.”

The circus may be just an illusion. Or wayang – Balinese puppet theatre – as I suggested.

“X” advances a crisp interpretation of the shadow play ahead from Moscow’s point of view, allowing “several months to see if Putin can work out a detente with Trump that essentially creates an autonomous eastern Ukraine, a peace treaty in Syria with Assad in place, and a withdrawal of NATO forces back to their line of defense under Ronald Reagan.”

Who will prevail; the Masters, or the deep state? Brace for impact.

Global helmsman Xi Jinping steps up with charm offensive

January 17, 2017

by Pepe Escobar for the Asia TimesGlobal helmsman Xi Jinping steps up with charm offensive

He did it, his way; Chinese President Xi Jinping descended on the Swiss Alps; profited from a geopolitical vacuum only three days before Donald Trump’s inauguration with the Atlanticist West mired in stagnation and/or protectionism; unleashed a charm offensive; and deftly positioned China in the lead of “inclusive” globalization.

In a wide-ranging speech that went from global angst to China’s new normal, Xi sounded all the right notes that global capital needed to hear; protectionism is like “locking oneself in a dark room,” and “no one is a winner in a trade war.”

His speech delved into the necessity of peace in Syria, the perverse effects of the absence of financial regulation, and the struggle for “balance between efficiency and equity.”

So onwards with the fourth industrial revolution – and may China deliver.

Xi, the first Chinese president to visit the turbo-capitalist World Economic Forum talkfest, meant business from the start.

He arrived with an 80-strong delegation that included Alibaba’s Jack Ma, Dalian Wanda’s Wang Jianlin – China’s top two billionaires – as well as Baidu’s Zhang Yaqin.

Compare these “globalist princelings” with the Trump camp, represented by one of his official business advisers, Anthony Scaramucci, founder of hedge fund SkyBridge Capital and Salt, a not exactly stellar Las Vegas investment conference (the next one is at the Bellagio in May).

Where’s the ticket to the Rothschild party?

A “humanized” Davos 2017 is very worried about saving the world – or at least saving the wealthy from most of the world. The WEF has suddenly discovered that globalization as we know it fosters massive inequality, as much as globalization’s self-appointed managers remain inflexible about their moral right to bend whole nations to their will, as the “miraculous” numbers of the Irish economy attest.

Thus an alarmed WEF is promoting at least six sessions discussing inequality, from “Combating Rising Insecurity and Inequality” to “Squeezed and Angry: How to Fix the Middle Class Crisis,” starring IMF’s Christine “Vuitton” Lagarde and a bunch of hedge funders.

And this while Oxfam revealed to the world the real G8 of inequality – as in those individuals who own as much wealth as the poorest 50% of the world combined. Call them the Kings of Globalization – featuring, among others, Bill Gates, Amazon supremo Jeff Bezos, Facebook’s Mark Zuckerberg, Oracle’s Larry Ellison and Michael Bloomberg, .

In pure neo-Dadaist fashion, there could not be a more graphic emblem for inequality than Davos itself. To get a green card all-area-access, mostly in and around the Grandhotel Belvedere, corporations must become strategic partners of the WEF.

The list is a beauty. Each membership costs a whopping US$600,000, allowing a CEO to bring up to four cohorts; but still they must pay for each individual ticket. And even that does not guarantee an invitation to the glitziest party in town, thrown by Nat Rothschild in tandem with Russian billionaire Oleg Deripaska.

Still, those who shelled out the cash will hardly resist the chance to hear Facebook’s COO Sheryl Sandberg (with a US$1.3 billion fortune) expand on how “older” global leaders can profit from the optimism of youth. Eric Schmidt (worth US$11 billion), chairman of Google’s parent company Alphabet, is also in town, but this time he opted for discretion.

Listen to the sound of my ‘win-win’ clapping

Xi was very careful not to advertize a new “Chinese consensus,” or model, as the model itself is being carefully, and painstakingly, tweaked.

What stood out in his presentation is that Beijing does not interpret globalization in a Western, turbo-neoliberal sense.

There are indeed benefits. They also do mask the plunder of the developing world’s resources via stealth “international laws” and (now dead in the water) trade agreements such as the Transatlantic Trade and Investment Partnership (TTIP) or the Trans-Pacific Partnership  (TPP), mostly for the benefit of the West’s 0.01%, who then become alarmed by “inequality.”

A passerby casts a shadow over a map illustrating China's "One Belt, One Road" megaproject at the Asian Financial Forum in Hong Kong, China, on January 18, 2016. Photo: Reuters/Bobby Yip

A passerby casts a shadow over a map illustrating China’s One Belt, One Road project. Photo: Reuters/Bobby Yip

Xi instead is promoting the notion of serial win-win deals; and that’s why his positioning is essentially the ultimate glorious pitch for the New Silk Road, a.k.a. One Belt, One Road (Obor) project, largely featured in the last part of his speech.

Everyone knows about Obor as an essential tool to tweak the Chinese model; develop the Chinese Far West; open an array of Eurasian markets; promote the internationalization of the yuan; and of course consolidate a major geopolitical shift, not least by neutralizing most of the Obama/Clinton “pivot to Asia.”

So when we get the concerted firepower of the Asian Infrastructure Investment Bank (AIIB); the Silk Road Fund; and the New Development Bank (NDB) under Brics (Brazil, Russia, India, China and South Africa), we have enough capital to generate generous financing for an infrastructure bonanza from China, across Central Asia, and all the way to Western Europe and Eastern Africa.

Only in Kazakhstan, for instance, there are more than 50 deals valued at over US$20 billion in effect. The new peace in Syria negotiations – Russia, Iran and Turkey – will take place in Astana, not Geneva. Kazakhstan represents the intersection of the New Silk Roads and the Eurasia Economic Union (EEU). Russia and China are luring Iran – and later on Turkey – into the Shanghai Cooperation Organization (SCO) fold. Syria, pacified and rebuilt, will be a key plank of Obor. It’s all interlinked.

So what China is proposing has nothing to do with deglobalization. It’s rather about “localization.”

But trade deals never die. With the death of TPP, Xi had to extol the merits of the pan-Asian Regional Comprehensive Economic Partnership (RCEP), which excludes the US but crucially merges all of the Association of Southeast Asian Nations members with everyone ASEAN has trade deals with; China, India, Japan, South Korea, Australia and New Zealand.

RCEP will be a boon for manufacturing within the vastly complex and broader supply chain across Asia, smashing tariffs across the board. That will include China-India trade. Yet it remains to be seen how Prime Minister Narendra Modi’s Make in India campaign will cope with opening up its markets to Chinese imports.

And, of course, Xi had to refer to the yuan question. The yuan is currently overvalued. The People’s Bank of China does not want it to slide down even further; its priority is a stable exchange rate – to stabilize trade. Still, Danske Bank strategist Allen von Mehren, who’s usually spot on, predicts the yuan falling to 7.26 to the US dollar by the end of September.

Somebody’s got to explain all this to Trump, implications included. It won’t be Scaramucci. Not to mention Peter Navarro, Wilbur Ross, “Mad Dog” Mattis or Michael Flynn. It has to be global helmsman Xi in person.

Pepe Escobar is correspondent-at-large for Asia Times. His latest book is 2030, published by Nimble Books.

Shadow play: the New Great Game in Eurasia

January 11, 2017

Shadow play: the New Great Game in Eurasia

by Pepe Escobar for the Asia Times

So right in the heart of Bali, spellbound after a serious conversation with a dukun – a spiritual master – it struck me: this should be the new Yalta, the perfect setting for a Trump-Xi-Putin summit setting the parameters ahead in the ever-evolving New Great Game in Eurasia.

Balinese culture makes no distinction between the secular and the supernatural – sekala and niskala. Sekala is what our senses may discern. Niskala is what cannot be sensed directly and can only be “suggested”. Massive geopolitical shifts ahead could not be more shrouded by niskala.

Captive of the vertiginous velocity of the here and now, the West still has much to learn from a highly evolved culture that prospered 5000 years ago along the banks or the river Sindhu – now Indus – in what is currently Pakistan, and then migrated from the Majapahit empire in Java to Bali in the 14thcentury under the pressure of advancing Islam.

In the Hindu-Balinese conception of cosmic structure, Man is a kind of scale model of the universe – with exactly the same structure – as much as in Bali interlocking related structures provide balance to the whole island. Order is personified by Gods, disorder personified by earth demons. It’s all about dharma and adharma. As for the West, adharma rules, unchecked.

In Hindu-Balinese religious philosophy, for every positive force there is a counterbalance; a destructive force. The two are inseparable – coexisting in dynamic equilibrium. Western dualism is so unsophisticated compared to it.

In the Suthasoma – a great Mahayana Buddhist epic poem composed in central Java at the time when Buddhism was merrily mixing up with Shivaist Hinduism – we find an outstanding verse: Bhineka tunggal ika – meaning “it is different but it is one”.

That also happens to be the motto of Indonesia, emblazoned in the coat of arms, below the golden Garuda mythical bird. It’s a message of unity like the American e pluribus unum. Now it looks more like a message presaging Eurasia integration via the New Silk Roads; it’s not by accident that Xi Jinping officially launched the Maritime Silk Road in 2013 in Indonesia.

As the Trump era is about to begin, our current geopolitical juncture looks and feels like a massive Wayang kulit – the Balinese shadow play.

The historical origin of the shadow play lies most possibly in India, although it has been performed all across Asia. Good and evil do coexist in shadow play – but Hinduism seeks to depict the clash as a sort of quirky partnership.

Kulit means skin, covering. Wayang is the puppet made out of cow hide, painted and braced with sticks that the dalang – the puppet master – manipulates at will.

Every Wayang kulit performance is a story told by a dalang through voices (which he must impersonate); shadows on a screen; and atmospheric music. The dalang – a sort of priest – incarnates all characters and must know the stories he tells by heart.

Only a selected few in the West qualify as a dalang – especially in the geopolitical sphere. The real dalangs are in fact totally invisible – deep down in niskala. But then we have their emissaries, the visible, media-savvy, media-worshipped dalangs. Back to them in a New York minute.

The white bull and the Asian girl

Now compare the Balinese shadow play – acting out sekala and most of all niskala – with the made in the West approach; the Ariadne’s thread that might, just might, extricate us from the current geopolitical labyrinth by applying an exceedingly overhyped commodity: logic.

First, a rewind; let’s go back to the birth of the West, as in Europe. Legend tells us that one fine day Zeus happened to pose his roving eye on a girl with big, bright eyes: Europa. A while later, on a beach in the Phoenician coast, an extraordinary white bull showed up. Europa, intrigued, got closer and started to caress the bull; of course, that was Zeus in disguise. The bull then annexed Europa and darted towards the sea.

Zeus had three sons with Europa – and left her a spear that never missed its target. One of these sons, as we all know, was Minos, who built a labyrinth. But most of all what legend taught us was that the West was born out of a girl – Europa – who came from the East.

The question now is who will find the Ariadne’s thread to extricate us from the labyrinth, which five centuries after the Western-led Age of Discovery could be configured as The Decline of the West, with its leader, the United States, in the forefront.

The whole EU project is facing utter collapse. The myth of European/Western cultural and political superiority – cultivated over the past five centuries – lies in the dust, as far as “all Asiatic vague immensities”, as Yeats wrote in The Statues, are concerned. This is bound to be the Eurasian century.

A sound way forward would have been what Putin proposed way back in 2007; a unified continental trade emporium from Lisbon to Vladivostok, later picked up and expanded by the Chinese via the One Belt, One Road (OBOR) concept.

Instead, the Obama administration, leading the West “from behind”, counter-attacked with pivot to Asia (containment of China) and Cold War 2.0 (demonization of Russia).

Enter the Western dalangs

And that leads us, on the eve of a possible, new geopolitical era, to what the foremost, visible Western dalangs may be concocting across niskala.

Sekala displays out of control 24/7 hysteria by sectors of the US deep state over “evil” Russian deeds, with neocon/neoliberalcon Obama administration remnants pushing Cold War 2.0 to its limits. Yet niskala, where Henry Kissinger and Dr. Zbigniew “Grand Chessboard” Brzezinski operate, is where the real (conceptual) action is.

It’s no secret that “urbane”, “cerebral”, “legendary” Kissinger is now advising Trump. The long-term strategy could be characterized as classic Divide and Rule, but slightly remixed; in this case an attempt to break the Russia-China strategic partnership by allying with the – theoretically – weaker node, Russia, to better contain the stronger node, China.

From a “Nixon in China” moment to a “Trump in Moscow” moment.

It’s a no-brainer that vain sycophants of the Niall Ferguson variety will bathe Kissinger’s cunning in rivers of hagiography – oblivious to the fact that Kissinger might be entertaining a way more profitable sideshow, in the form of booming business for his star-studded consulting firm Kissinger Associates Inc., which happens to be a member of the US-Russia Business Council, side by side with ExxonMobil, JP Morgan Chase and Big Pharma anchor Pfizer.

So, in a nutshell: exit regime change, enters benign containment. Here’s Kissinger at his Primakov lecture, almost a year ago, already sketching how Washington should deal with Moscow; “The long-term interests of both countries call for a world that transforms the contemporary turbulence and flux into a new equilibrium which is increasingly multipolar and globalized… Russia should be perceived as an essential element of any global equilibrium, not primarily as a threat to the United States.”

Multipolar Kissinger extolling “no threat” Russia; one wonders why the Clinton machine back then did not expose the old man as yet another Putin bromance hostage.

Also months before Trump’s victory, but in marked contrast with Kissinger, Brzezinski was in deep red alert territory, alarmed by the “erosion of US military-technical advantages”, as detailed for instance in this CNAS report.

Brzezinski gloomily asserted the obvious; a militarily inferior US “would spell the end of America’s global role” and the result would “most probably” be “global chaos”.

His solution then was for the US to “fashion a policy in which at least one of the two potentially threatening states becomes a partner in the quest for regional and then wider global stability, and thus in containing the least predictable but potentially the most likely rival to overreach. Currently, the more likely to overreach is Russia, but in the longer run it could be China.”

There it was; Divide and Rule, over and over again, to counteract the unruly “threats”.

Brzezinski, after the Clinton machine/Obama debacle, is now no more than a sore loser. So he was forced to slightly shuffle the cards. Unlike Kissinger, and faithful to his rabid Russophobia, his Divide and Rule is centered on seducing China away from Russia; thus “American influence is maximized”.

In a predictable Western navel-gazing way, Brzezinski assumes China may not choose to go against the US, as it is “in their interest to belong to the dominant pack”. Yet the “dominant pack” is not the US anymore; it is Eurasia integration.

OBOR, or The New Silk Roads, is the only wide-ranging geoeconomic/ geopolitical integration project in the market. While Kissinger may remain, arguably, the ultimate realpolitik dalang, Obama mentor Brzezinski is still a hostage of Mackinder. The Chinese leadership, for their part, is already way ahead of both Mackinder and Alfred Mahan; the New Silk Roads aim to integrate, via trade and communications, not only the Heartland (One Belt) but also the Rimland (the Maritime Silk Road).

And a partnership with the Eurasian Economic Union (EEU) will be essential to the whole project. Few will remember that as Cold War 2.0 was running amok back in September, the Eastern Economic Forum was doing business in Vladivostok, with Putin proposing a “digital economy space” all over Asia-Pacific and China pledging further involvement in the development of the Russian Far East.

So what we have now is arguably both top Western dalangs trying hard to adapt to the new normal – Eurasian integration via OBOR/EEU – by proposing conflicting, benign versions of Divide and Rule, as US intel keeps hangin’ on, in far from quiet desperation, to the old confrontational paradigm.

As the key nodes – the Triple Entente? – of Eurasia integration, Moscow, Beijing and Tehran are very much aware of a stranger bearing gifts shrouded in niskala, aiming at Moscow selling out Tehran in Syria, as well as with the nuclear deal; Moscow parting ways with Beijing; Beijing selling out Tehran; and all sorts of wayang containment/plunder permutations in between.

That will be the key story to follow further on down the (New Silk) roads. Yeats memorably wrote that, “mirror on mirror mirrored is all the show.” Yet the show always must go on – dalangs East and West let loose in deep niskala. Welcome to the 21st century Tournament of Shadows.

Pepe Escobar wrote his The Roving Eye column for Asia Times from 2000-2015. His books include Globalistan (2007), Red Zone Blues (2007), Obama does Globalistan (2009), Empire of Chaos (2014) and 2030 (2015).

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