EU dilemma: how to deal with China

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EU dilemma: how to deal with China

March 19, 2019

by Pepe Escobar (cross-posted with the Asia Times ) by special agreement with the author)

Facing China’s irresistible rise all across the chessboard, and under relentless US pressure, the not exactly democratic EU leadership is on a backbreaking exercise to position itself between a geopolitical/geoeconomic rock and a hard place.

The 28-member EU holds a crucial meeting next week in Brussels where it may adopt a 10-point action plan detailing, in a thesis, the terms of an equitable economic relationship with China going forward.

This will happen as Chinese President Xi Jinping visits Italy and then France – ahead of the very important, annual China-EU summit in Brussels on April 9, to be co-chaired by Chinese Premier Li Keqiang.

That’s the crucial context under which the European Commission (EC) has recommended what it describes as 10 concrete “actions” to the EU Heads of State for their debate at the European Council in March 21 and 22.

The full report, EU-China – A Strategic Outlook, is here.

The EC shows how in 2017 – the latest available figures – the EU was “China’s largest partner with a share of 13% of imports of goods in China and a share of 16% of exports of goods from China.” At the same time, the EC stresses that China is an “economic competitor” and “a systemic rival promoting alternative models of governance.”

Yet the EC’s “contribution” to the European Council debate next week is far from confrontational. It is a balancing act couched in Eurocratic terminology attempting to shape common “resolve” among the 28 member-states.

Predictable real problem

Coming from the EC/EU, support for “effective multilateralism with the United Nations at its core” is the norm – with China fully integrated.

Beijing is praised for its support for the Iran nuclear deal, its role in the denuclearization of North Korea, its upcoming role in the peace process in Afghanistan and tackling the Rohingya crisis in Myanmar. The real problem, predictably, is China’s maritime claims in the South China Sea.

Virtually no one apart from Brussels Eurocrats knows about the existence of an “EU Strategy on Connecting Europe and Asia.”  That’s one of those joint communiqués that no one reads, issued late last year, “enabling the Union to seek synergies between the EU and third countries, including China, in transport, energy and digital connectivity, on the basis of international norms and standards.”

Curiously, in the EC report, there’s no mention whatsoever of the New Silk Road, or Belt and Road Initiative (BRI) – which happens to be China’s synergy masterplan for the whole of Eurasia. We could define it as Globalization 3.0.

On the other hand, Made in China 2025 is duly referenced – and not demonized, Trump administration-style.

From the EU perspective, the key problem remains “lack of reciprocal market access.” The EU wants greater access for European companies, less Chinese subsidies for Chinese companies and curtailment of technology transfer from European firms to their state-owned joint venture partners in China.

All this should be part of a deal on investment rules to be clinched by 2020.

Action 9 in the EC report is quite revealing: “To safeguard against potential serious security implications for critical digital infrastructure, a common EU approach to the security of 5G networks is needed.” To deal with it, the EC will issue – what else – another “recommendation.”

A hefty degree of Eurocratic puzzlement seems to be in the cards; one cannot disassociate BRI from Made in China, 5G and Huawei technology; it’s all part of the same package. Yet the EU is under heavy pressure from Washington to ban Huawei and forget about joining BRI, even as nearly 20 EU member-states are already linked or interested in linking to BRI, and a majority are also interested in Chinese 5G technology.

Brussels diplomats confirmed to Asia Times that the EC report was basically authored by Berlin and Paris. And yes, they had to deal with heavy Washington pressure.

The report harbors a subtle, inbuilt element of “Chinese threat” – perhaps not as overtly as in a Pentagon report. This stance is how the Franco-German alliance believes it may influence “recalcitrants” such as the 16+1 group of Central and Eastern European nations doing business with China, as well as soon to be BRI-linked Italy.

Yet that’s already a done deal – as I detailed in the case of Italy.

‘Existential threat’

Beijing is accomplishing, little by little, something that is unbearable for the Beltway; extending its influence not only inside the EU but inside the NATO space.

The US Deep State may have lumped BRI – along with Made in China 2025 and Huawei’s 5G – as part of an “existential threat”; but that’s not the case for most EU latitudes, from Greece and Portugal to German industrialists and the new Lega/Five Stars administration in Rome.

Brussels very well knows that Washington will punish any “ally” who gets too close to Beijing. It’s never enough to be reminded that the list of economic “threats” to the US features, in that order, China, Russia and Germany. And Italy is now caught in the crossfire – because it is committed to good economic relations with both China and Russia.

Rome has already sent a clear message to Brussels; beyond any EU common “resolve” facing China, what matters is the Italian national economic interest in, for instance, linking the ports of Venice, Trieste and Genoa to the New Silk Road. Alarmed Atlanticists are essentially warning that Italians cannot cross a red line; they need to ask permission to act independently. That’s not going to happen – whatever the EC decides to “recommend.”

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Kashmir, Korea, Venezuela, Iran: hot, cold, hybrid war

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March 01, 2019

Kashmir, Korea, Venezuela, Iran: hot, cold, hybrid war

by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)

Turning and turning in a widening gyre, the geopolitics of the young  21st century resembles a psychedelic mandala conceived by Yama, the Lord of Death.

Kim Jong Un, chairman of the Democratic People’s Republic of Korea, fresh from a 70-hour train journey, meets in prosperous, communist Hanoi with fellow Nobel Peace Prize contender Donald Trump under the benevolent gaze of Uncle Ho.

This very sentence, if announced not long ago, would have elicited transcontinental howls of derision.

Chairman Kim, owner of a small nuclear arsenal, is deemed worthy of dialogue by the hyperpower while the nuclear-deprived leadership in Iran is not, even as the hyperpower ditched a multilateral, UN-approved, working nuclear deal.

In parallel, the hottest border in Asia reveals itself not to be the DMZ between the Koreas, but once again the Line of Control between nuclear powers India and Pakistan in Kashmir.

Although Islamabad and Delhi might, in theory, escalate to pointing nuclear missiles towards each other, the DPRK won’t point a nuclear-tipped missile at Guam and Tehran points to nothing at all, as it does not hold any nuclear missiles.

In a lighter, Looney Tunes vein, exit regime change in Pyongyang, while regime change in Iran stays, and enter regime change in Venezuela. Iran may still be placed in the Axis of Evil, but the new motto is the troika of tyranny (Venezuela, Cuba, Nicaragua) as the government in Caracas plays ‘Beep Beep’ to the hyperpower’s Wily Coyote.

An array of dodgy US neocons and shady “foundations” keep the flame of regime change in Iran alive, even fabricating a Tehran-al-Qaeda axis, while in Venezuela a stealth scenario advances. An astonishing briefing at the Ministry of Foreign Relations in Moscow this past Friday revealed that “US special forces and tech units will be delivered closer to Venezuela’s borders. We do have information that the US and its NATO partners are organizing for a mass delivery of weapons for the opposition in Venezuela, which will come from an Eastern European country.”

Facts are implacable. NATO, after nearly two decades, was miserably defeated in Afghanistan. The NATO-Gulf Cooperation Council war by proxy in Syria failed. The winners are Damascus, Tehran and Moscow. The conflict in Donbass is frozen. So, a remixed Monroe doctrine is back, even as a humanitarian ploy – reminiscent of the “humanitarian imperialism” that led to the destruction of Libya – may have failed, for now.

Brazilian Vice-President General Hamilton Mourao has introduced a dose of sanity going against the “all options on the table” regime change of his own President, Jair Bolsonaro. Mourao constantly insists “the Venezuela question must be decided by Venezuelans”, adding that US threats sound “more like rhetoric than action” as a military attack would be “purposeless”.

Watch that K

What’s in a name? Pakistan may indeed mean “land of the pure” in Urdu, but the key is in the acronym; K stands for Kashmir – alongside P for Punjab, A for Afghania (actually the Pashtun tribal areas), S for Sindh and T for the “tan” in Balochistan. K is a matter of national identity.

The first Indo-Pak war after Partition in 1947 was over Kashmir. In the following year, Kashmir was divided by the Line of Control (LoC), which remains the de facto Berlin Wall of Asia, way more dangerous than the demilitarized zone (DMZ) between the Koreas. Another mini-war across the LoC took place in 1999.

Kashmir is a crucial geostrategic prize. Assuming India would ever own it all, that would represent a direct bridge to Central Asia and a border with Afghanistan while depriving Pakistan of a border with China, thus nullifying to a great extent the China-Pakistan Economic Corridor (CPEC), one of the key projects of the Belt and Road Initiative (BRI).

If Pakistan ever owned it all, that would solve the country’s worries about water security. The Indus River starts in the Himalayas, in Tibet, and skirts through Indian-controlled Kashmir before entering Pakistan and running all the way down to the Arabian Sea. The Indus and its tributaries provide water to two-thirds of Pakistan. New Delhi has just threatened to weaponize the flow of water to Pakistan.

There’s no end in sight to Kashmir being roiled over and over by skirmishes or even partial conflagration between jihadis – protected by Islamabad at different levels – and the Indian army. The Islamist Jaish-e-Mohammed (JeM) wants the whole of Kashmir annexed to a Pakistan governed by Sharia law.

JeM’s Kashmir obsession is also shared by their de facto allies Lashkar-e-Taiba (LeT). Both are supported – with degrees of nuance – by Pakistan’s intelligence agency, the ISI. Most of all, both are heavily supported, financially, by the Wahhabi House of Saud and the United Arab Emirates.

There’s no solution for Kashmir that does not involve cutting off Saudi proselytizing, financing and weaponizing – the toxic cocktail that nurtured Pakistan’s famous Kalashnikov culture. And there can be no solution when the House of Saud’s ability to have nuclear weapons “on order” from Islamabad remains the number-one open secret in South Asia.

Russia and China as voices of reason

Were this a sensible realm, oblivious of Yama, India and Pakistan would talk, like Prime Minister Imran Khan has just offered, within a framework such as the Shanghai Cooperation Organization, of which both are members, with Russia and China as mediators.

And that brings us to what happened in Yueqing, China, on Wednesday, totally under the Western radar; a de facto, ministerial-level meeting of the “RIC” in BRICS, uniting Russian Foreign Minister Sergey Lavrov, Chinese Foreign Minister Wang Yi and Indian Foreign Minister Sushma Swaraj.

Lavrov may have denounced “absolutely brazen attempts” to “artificially create a pretext for military intervention” in Venezuela. But the game-changer should have been what Russia, China and India discussed on Kashmir, which may eventually have a direct impact on both Islamabad and New Delhi attempting to defuse a still explosive scenario.

China and Russia’s coordinated positions were absolutely instrumental in facilitating North Korea’s dialogue with the Trump administration. Yet it’s still a long way away from South Korean President Moon’s dream: Trump officially declaring an end to the 1950-53 Korean war, via a peace treaty replacing the current armistice with iron-clad security guarantees. After all, that is the number-one condition for the DPRK to start contemplating denuclearization.

China and Russia, in theory, also have what it takes to bring India and Pakistan to reason – plus the clout to put pressure on Saudi Arabia’s weaponized Wahhabism.

And yet, from Washington’s perspective, China and Russia are “threats” – from the National Security Strategy all the way down to functionaries such as Air Force General Terrence O’Shaughnessy, the Northcom commander, who just told a Senate committee that Russia’s “intent to hold the US at risk” presents an urgent threat.

Some more equal than others

China, Russia and Iran are essential nodes of Eurasia integration, which interlock key vectors of the New Silk Roads, via Iran’s trade agreement with the Eurasia Economic Union and expansion of the International North-South Transportation Corridor (INSTC). Considering the stakes, Lavrov and Yi could not but be stunned by Iranian Foreign Minister Mohammad Javad Zarif resigning from his post via Instagram.

Sources in Tehran maintained that the key reason for Zarif resigning was that he was not informed – and did not attend – an ultra high-level meeting in Tehran on Monday of Syria’s Bashar al-Assad, Supreme Leader Ayatollah Khamenei, the IRGC’s Quds Force commander Qassem Soleimani and President Hassan Rouhani when they discussed strictly Syrian military matters, not diplomacy. Zarif may not have been in the room, but his number two, Abbas Araghchi, was.

In the end, Rouhani rejected Zarif’s resignation, stressing that it was against Iran’s national interests. And crucially, Soleimani said that Zarif had total support from Khamenei. Even as various factions of Iran’s hardliners may be fuming with both Zarif and Rouhani, characterizing them as fools who fell into an American trap, the last thing Tehran needs at the moment – under pressure by hybrid war – is internal division. In parallel, support from both Russia and China won’t waiver.

Washington may deploy variations of Hybrid War but most reflexes remain undiluted Cold War. The mechanism remains the same. A fortune in US taxpayers’ money is showered on the industrial-military complex, with defense contractors and major corporations paying back fabulous campaign contributions to the political class. That’s why someone like Tulsi Gabbard, who is anti-war – hot, cold and hybrid – and anti-regime change, will be smeared to Kingdom Come by the weapons lobby, and prevented from making a run for the presidency.

The Global South has learned that turning and turning in the widening gyre, some countries are indeed more equal than others. Even though some may be relentlessly blasted as terrorist enablers (Pakistan), and nuclear powers as a rule must be appeased (DPRK) and seduced (India as a plank of the “Indo-Pacific” strategy). Chairman Kim is now a “great leader” who can hand his nation a “tremendous future”.

Non-nuclear powers, especially those rich in natural resources and implementing strategies such as bypassing the US dollar, like Iran and Venezuela, face the fate of being regime change targets, slowly and painfully devoured by Yama, the Lord of Death.

Russian President warns West that deploying missile launchers in Europe could ignite ‘tit for tat’ response

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February 23, 2019Russian President warns West that deploying missile launchers in Europe could ignite ‘tit for tat’ response

by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)

President Putin’s state of the nation address to the Federal Assembly in Moscow this week was an extraordinary affair. While heavily focused on domestic social and economic development, Putin noted, predictably, the US decision to pull out of the Intermediate-Range Nuclear Forces (INF) treaty and clearly outlined the red lines in regard to possible consequences of the move.

It would be naïve to believe that there would not be a serious counterpunch to the possibility of the US deploying launchers “suitable for using Tomahawk missiles” in Poland and Romania, only a 12-minute flight away from Russian territory.

Putin cut to the chase: “This is a very serious threat to us. In this case, we will be forced – I want to emphasize this – forced to take tit-for-tat steps.”

Later that night, many hours after his address, Putin detailed what was construed in the US, once again, as a threat.

“Is there some hard ideological confrontation now similar to what was [going on] during the Cold War? There is none. We surely have mutual complaints, conflicting approaches to some issues, but that is no reason to escalate things to a stand-off on the level of the Caribbean crisis of the early 1960s”.

This was a direct reference to the Cuban missile crisis in 1962 when President Kennedy confronted USSR’s Nikita Khrushchev over missiles deployed off the US mainland.

The Russian Defense Ministry, meanwhile, has discreetly assured that conference calls with the Pentagon are proceeding as scheduled, every week, and that this bilateral dialogue is “working”.

In parallel, tests of state-of-the-art Russian weaponry such as the Sarmat intercontinental ballistic missile and the hypersonic Khinzal also proceed, alongside mass production of the hypersonic Avangard. The first regiment of the Russian Strategic Missile Forces will get the Avangard before the end of this year.

And then there’s the Tsircon, a hypersonic missile capable of reaching US command centers in a mere five minutes – leaving the whole range of NATO military assets exposed.

What Putin meant in his address about Russia targeting “centers for decision-making” was fundamentally related to NATO, not the American mainland.

And once again, it’s crucial to underline that none of these disturbing developments mean that Russia would engage in a pre-emptive strike against the deployment of US missiles in Eastern Europe. Putin was adamant that there’s no need for it. Moreover, Russian nuclear doctrine forbids any sort of pre-emptive strikes, not to mention a nuclear first strike.

House of the Rising (Nuclear) Sun

To allow this new paradigm to sink in, I went on a long walk across Zamoskvorechye – “behind the Moskva river” – stopping on the way back in front of the Biblioteka Lenina to pay my respects to the Grandmaster Dostoevsky. And then it hit me; this was entirely connected to what had happened the day before.

The day before Putin’s state of the union address I went to visit Alexander Dugin at his office in the deliciously Soviet, art nouveau building of the former Central Post Office. Dugin, a political analyst and strategist with a refined philosophical mind, is vilified in Washington as Putin’s ideologue. He has also been targeted by US sanctions.

I was greeted in the lobby by his multi-talented daughter Daria – active in everything from philosophy and music to geopolitics. Dugin was being interviewed by RAI correspondent Sergio Paini. After the wrap-up, the three of us immediately engaged in a discussion on populism, Salvini, the Italian politician, and the Gilets Jaunes (Yellow Vests in France), in Italian. (Dugin is fluent in many languages).

Then we picked up on what we had left behind, when I was in Moscow last December and talked extensively with Daria. Dugin was in Shanghai teaching an international relations course at Fudan University (see here and here), and gave lectures at Tsinghua and Peking University. He returned quite impressed by Chinese academia’s interest in populism, plus German philosopher Martin Heidegger and the Gilets Jaunes, as well as the evolving paths of Russia and China’s strategic partnership.

Eurasia debate

So inevitably we delved into Eurasianism – and strategies towards Eurasian integration. Dugin sees China applying a sort of remixed Spykman outlook to the “Road” component of the Belt and Road Initiative (BRI), which is maritime, along the rimland. He privileges the “Belt” component, which is overland, with one of the main corridors going through Russia via the upgraded Trans-Siberian railway. I tend to view it as a mix of Halford Mackinder, the famed English academic, and the influential American political scientist Nicholas Spykman; China advancing on the West, simultaneously in the heartland and the rimland.

Dugin’s office has the atmosphere of a revolving think tank. I was trying to inform him on how Brazil – under the ‘leadership’ of Steve Bannon, who walks and talks like he runs the Bolsonaro presidential clan – has been dragged to the frontline in the US in contrast to the Eurasian integration chessboard. Suddenly, none other than Alastair Crooke drops in. Serendipity or synchronicity?

Alastair, with his consummate diplomatic flair, is, of course, one of the world’s foremost experts in the Middle East and Europe – and much else. He’s in Moscow as a guest for one of the Valdai Club’s famed discussions, on the Middle East, along with key figures from Syria and Iran.

Soon the three of us are engaged in an absorbing conversation on the soul of Islam, the purity of Sufism, the Muslim Brotherhood (those fabled friends of the Clinton machine), what President Erdogan and the Qataris are really up to, and the sterility – intellectual and spiritual – of the Wahhabi House of Saud and the Emirates.

We tend to agree that discussions like this, going on in Moscow – and in Tehran, Istanbul, Shanghai – would greatly profit from the presence of a progressive Steve Bannon, capable of organizing and promoting a running, non-ideological debate on multipolarity.

A day before Putin’s stark reminder against any slip towards nuclear Armageddon, we were also discussing the post-INF world, but with emphasis on post-Mackinder (and post-Brzezinski) Eurasian integration. And that includes Russian and Chinese intellectual elites acutely aware that they can’t afford to be isolated by American hyperpower.

I walked Alastair to his hotel, past a gloriously illuminated Bolshoi. I kept going, and as Lubyanka disappeared from view, a sidewalk busker was playing ‘House of the Rising Sun’, the Animals version. In Russian.

Hopefully, it will not feature a rising nuclear sun.

US elites remain incapable of understanding China

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February 17, 2019

by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)US elites remain incapable of understanding China

A new report on US policy toward China launched by the Asia Society in New York is another example of how supposedly bipartisan US intellectual elites, instead of offering impartial advice, do little more than parrot Washington’s talking points, failing to admit they know nothing of substance about the existential “threats” posed by Russia and China.

The report ‘Course Correction: Toward an Effective and Sustainable China Policy‘ was written in collaboration with the 21st Century Chinese Center at the University of California, San Diego. Orville Schell, one of the chairs of the Task Force Report, should be seen as one of the least biased among an uneven basket of self-declared US experts on China.

Still, he frames the report as trying to find a way between “confronting China” and “accommodating China.” That does not include “respecting” China – considering all the nation’s achievements 40 years after the reforms launched by Little Helmsman Deng Xiaoping.

Then Schell admits his experts are left “wondering what’s going on in the upper reaches of the leadership in China.” That’s even more serious, implying no intel on the ground.

So we’re left with China-bashing. We learn of devious attacks against the “rules-based global order” – which is always not so subtly equated with the “interests and values of the United States;” China’s “mercantilist zero-sum policies;”and the “lavishly funded state-led effort to build China into a high-tech superpower” – as if no country in the Global South should be allowed to go high-tech.

On foreign policy, the report warns about “expansive claims of sovereignty in the South China Sea,” which is a de facto regurgitation of the Pentagon’s master narrative.

Earlier this week, the head of the US Indo-Pacific Command, Admiral Philip Davidson, testified to the Senate Armed Services Committee that US-China competition represents “two incompatible visions of the future”, and that China is the “greatest long-term strategic threat to a free and open Indo-Pacific and to the United States.”

What about BRI?

The full report is here. The Asia Society is promoting it as the most comprehensive analysis of the state of play between the US and China – the result of two years of work. Yet it walks and talks more like a summary of the frantically repetitive news cycle always focusing on China’s “hegemonic” designs on 5G, the suspicious, technology-stealing Made in China 2025, attacks on “freedom of navigation” and China’s insidious nationalism.

As if the Trump administration was not applying myriad forms of economic pressure – and not only on China – ranging from exercises of sovereignty to unabashed protectionism.

The report recommends applying more pressure and exercising more control to “correct” Chinese behavior. So, it’s easy to imagine how this condescending, exceptionalist-based attitude is totally dismissed by Beijing.

When one looks at the signatories of the report, it’s easy to see why.

Among them, there’s Winston Lord, a former US ambassador to China and former right-hand man to Henry Kissinger; Kurt Campbell, the man who invented the “pivot to Asia,” sold it to former Secretary of State Hillary Clinton, who convinced President Obama about it; former trade negotiator and Clinton acolyte Charlene Barshevsky; and David Shambaugh from George Washington University, who used to be reliable but has recently veered toward a Sinophobic path.

Instead of “confronting” or “accommodating” China, what passes for the upper reaches of the US intellectual elite could do worse than trying to understand China. And that means understanding the scope of an actual policy; the New Silk Roads, or Belt and Road Initiative.

BRI is the de facto foreign policy developed for a geoeconomic superpower all the way to 2049, based on trade, investment and internationalization of what is bound to become a major currency, the yuan.

Up to the end of last year, the China Development Bank, Exim Bank, the Silk Road Fund, the Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) set up by the major emerging economies had invested at least $460 billion in myriad BRI projects.

BRI is already a global band. For all the 24/7 demonization, the absolute majority of BRI-related investments accrue China’s power projection, soft power included. That’s visible all across the Global South. Fine tunings, as in Malaysia or Sri Lanka, are inevitable. This is a massive work in progress – and it’s just beginning.

Until US elites understand what Belt and Road is all about, economically and geopolitically, expect think tank-concocted containment and accommodation strategies to flounder in irrelevance.

Iran looks East amid US trials and tribulations

February 12, 2019

Iran looks East amid US trials and tribulations

by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)

February 12, 2019

On the 40th anniversary of the Islamic Revolution, this past Friday, Supreme Leader Ayatollah Khamenei made an effort to express Iran’s geopolitical stance in simple terms: ‘We have good relations with all nations in the world, we don’t want to break relations with any European nation’, and an explanation of the slogan ‘Death to America’.

The Ayatollah said ‘Death to America’ “means death to Trump, John Bolton and Mike Pompeo. It means death to American rulers. We have no problems with the American people.”

So, the slogan is indeed a metaphor – as in death to US foreign policy as conducted for much of the past four decades.

That includes, of course, the dismantling, by the Trump administration, of the nuclear deal with Iran, known as the Joint Comprehensive Plan Of Action (JCPOA).

In a rash rebuke of the centrist government of President Hassan Rouhani and Foreign Minister Muhammad Javad Zarif – who negotiated the JCPOA with the Obama administration, as well as Russia, China, France, the UK and Germany – Khamenei stressed he would not have signed it. His legendary distrust of the US now seems more than vindicated.

Payment system

For the Europeans who signed the JCPOA, what’s left is trying to pick up the pieces. Enter Instex – the Instrument in Support of Trade Exchanges, a mechanism backed by the European Union, with its headquarters in Paris and run by a German banker, which in theory allows European banks and companies to keep trading with Iran without being fined, extra-territorially, by the US Department of Justice, or being totally excluded from the American market.

French Foreign Minister Jean-Yves Le Drian called it “an important geopolitical gesture.” But a “gesture” may not be enough, especially because initially it just covers humanitarian goods sold to Iran, such as pharmaceuticals, food and medical supplies.

Tehran pays Instex, and Instex reimburses the food and pharma companies involved. Further on down the road, small and medium-sized European companies might also use Instex to trade with Iran without being slapped with US sanctions.

What’s crucial in the long run about Instex is that the mechanism bypasses the US dollar. So, it will be under immense scrutiny all across the Global South. Instex won’t replace the Swift payment system anytime soon, because the capitalization is set at only $1 billion. The thing is whether other heavyweights, such as Russia, China and Turkey, will start using Instex to bypass US dollars and sanctions, trading way beyond “humanitarian goods”.

Instex, although an embryonic response, shows how Brussels and major European capitals are exasperated by the Trump administration’s unilateralism. Diplomats have been saying on and off the record that nothing will prevent the Europeans from doing business with Iran, buying their energy, investing in their market, and bypassing the US dollar in the process.

This has the potential to offer some breathing space to President Rouhani. The latest internal polls reveal that 40 years after the Islamic Revolution, over 70% of Iranians of all social classes have zero trust in any negotiations involving the US government. And that even includes an increasing number of millennials, for whom the Islamic Revolution is just an echo of a distant past.

That may not be the exact sentiment in Teherangeles, California – the capital of the Iranian diaspora, which may number over half a million people worldwide, mostly upper-middle-class. But it does reflect the pulse of the nation.

PayMon, crypto alternative

Over and over again, the Rouhani administration must tackle an insurmountable contradiction. National pride, boosted by Iran recapturing its role as a major power in Southwest Asia, is always undermined by intimations of social despair, as in countless families surviving on less than $200 a month, under rampant inflation and suffering the effects of the non-stop fall of the rial, whatever the feel-good factors constantly exhorted by the government.

An Iranian girl holds a poster of the late founder of the Islamic Republic Ayatollah Khomeini on the 40th anniversary of his return from exile in Paris at his mausoleum in Tehran on February 1. Photo: AFP

Already in regard to Instex, there has been a backlash. Iran has been told it must join the Financial Action Task Force (FATF), a global body that seeks to combat money laundering and the financing of terrorism, and that it must compromise on its missile program, which it regards as non-negotiable. The chief of Iran’s judiciary, Ayatollah Sadeq Amoli Larijani, branded the two conditions set by the Europeans as “humiliating”.

And on the European front, there’s no evidence yet that small companies trust that the Instex payment system will make them immune to retaliatory action by the US.

Iranians though are opening other creative fronts. Four banks – Bank Melli, Bank Mellat, Parsian Bank and Bank Pasargad – have developed a gold-backed cryptocurrency named PayMon, and negotiations are already advanced with the Europeans as well as Russia, Switzerland and South Africa to expand PayMon trading. Iranian officials are adamant that blockchain will be crucial to improve the nation’s economy.

The Iranian move mirrors Venezuela’s action in launching its own oil-backed cryptocurrency, the petro, last October. But count on the Blocking Iran Illicit Finance Act to swing into overdrive in the US Congress.

Meanwhile, Russia and Iran have all but bypassed the US dollar in bilateral trade, using only ruble and rial and “in case of urgent need, the euro, if we have no other options”, according to the Russian Ambassador to Iran, Levan Dzhagaryan.

China, Russia, Iran and Turkey – the four key vectors of ongoing Eurasia integration – are investing in bypassing the US dollar on trade by any mechanism necessary. The Eurasia Economic Union (EAEU) is also working on a common system for “boosting economic sovereignty”, as defined by President Putin. It has free-trade agreements with an array of partners, including China and Iran.

Arab NATO roll-call

This is the background in the run-up towards what is essentially an anti-Iran conference convened by the Trump administration in Warsaw this Wednesday.

No one in Europe that really matters wants to be publicly associated with Iranian demonization. Federica Mogherini, the EU foreign policy chief, is not going. EU-wide businesses increasingly tell their puny political leaders that the way to go is Greater Eurasia – from Lisbon to Vladivostok, from Murmansk to Mumbai, with Tehran in between, and everything linked to the China-driven Belt and Road Initiative.

Poland is an exception. Ruled by hardcore nationalists, it has been lobbying for a permanent US military base, which President Andrzej Duda wants to call “Fort Trump”.

Unable to force France, the UK, Germany and Italy out of doing business with Iran, what’s left for Washington is to have Persian Gulf governors plus Israel assembled in the same room, pledging their efforts towards an ill-defined, anti-Iran Arab NATO.

What this will certainly accomplish inside Iran is to promote even more hardliners and “Principlists” who are lobbying for a return to former President Ahmadinejad’s “Look East” strategy.

Iran is already looking East – considering its top Asian energy clients and the close ties with the Belt and Road Initiative and the EAEU. Team Rouhani now knows, in realpolitik terms, they cannot trust the US; and the EU is an immensely problematic partner. The next major step would be for Iran to become a full member of the Shanghai Cooperation Organization. China wants it. And Russia wants it.

Venezuela looks to have been targeted for regime change essentially because it’s trying to bypass the US dollar on trade. That should not be a problem for Iran, which has been a target for regime change for decades.

Get over it: Asia rules

February 09, 2019

by Pepe Escobar (cross-posted with the Asia Times by special agreement with the author)

Get over it: Asia rulesGet over it: Asia rules

New book helps explain why the 21st Century will be the Asian Century

The greatest merit of Parag Khanna’s new book, The Future is Asian, is to accessibly tell the story of a historical inevitability – with the extra bonus of an Asian point of view. This is not only a very good public service, it also blows out of the water countless tomes by Western “experts” pontificating about Asia from an air-con cubicle in Washington.

Asia hands from the West tend to be extremely protective of their extra-territoriality. In my case, I moved to Asia in 1994, and Singapore was my first base. In time I found out – along with some of my colleagues at Asia Times – nothing would ever compare to following the ever-developing, larger than life Asian miracle on the spot.

Khanna has always been in the thick of the action. Born in India, he then moved to the UAE, the West, and is now a resident in Singapore. Years ago we spent a jolly good time in New York swapping Asia on-the-road stories; he’s a cool conversationalist. His Connectography is a must read.

Khanna found a very special niche to “sell” Asia to the Western establishment as a strategic adviser – and is very careful not to ruffle feathers. Barack Obama, for instance, is only guilty of “half-heartedness”. When you get praise from Graham Allison, who passes for a Thucydides authority in the US but would have major trouble understanding Italian master Luciano Canfora’s Tucidide: La Menzogna, La Colpa, L’Esilio, you know that Khanna has done his homework.

Of course, there are a few problems. It’s a bit problematic to coin Singapore “the unofficial capital of Asia”. There’s no better place to strategically follow China than Hong Kong. And as a melting pot, Bangkok, now truly cosmopolitan, is way more dynamic, creative and, let’s face it, funkier.

In 1997 I published a book in Brazil titled 21st: The Asian Century, based on three years of non-stop on-the-road reporting. It came out only a few days before the Hong Kong handover and the collapse of the baht that sparked the Asian financial crisis – so the book’s argument might have been seen as passé. Not really; once the crisis was over, the development push by the Asian tigers was overtaken by China. And 10 years later, slightly before the Western-made global financial crisis, the road to the Asian Century was more than self-evident.

Khanna hits all the right tones and multiple overtones stating the case that the Asian century “will…” begin when Asia crystallizes into a whole greater than the sum of its many parts”. It’s already happening, and it’s a wise choice to set the point of no return towards an Asia-led new world order at the first Belt and Road Initiative (BRI) summit in May 2017 in Beijing.

Yet throughout the book Khanna feels the need to take immense pain showing frightened Anglo-American readers that China won’t lead the Asian future; there will be no “Chinese tianxia, or harmonious global system guided by Chinese Confucian principles”. And that offers room for references to the push by the US and its allies to “deter China”, or the push by “Japan, India, Australia and Vietnam” to “counter China aggression”. Not to mention credit to the pathetic notion of “clash of civilizations”. But, on a whole, Khanna nails it. “By joining BRI, other Asian countries have tacitly recognized China as a global power – but the bar for hegemony is very high.”

No East and West

Within the scope of an article, and not a book, it’s possible to show that this epic story is not about hegemony, but connectivity.

First of all, there’s no East and West; as Edward Said has shown, this is essentially inherited from Eurocentrism and colonialism, starting way back when the Ancient Greeks situated the western borders of Asia in the eastern Mediterranean.

Asia, the term, comes from the ancient Assyrian assu – which means rising sun. A clear distinction between East and West was stamped by the end of the 3rd century, at the time of Diocletian, when the Roman empire was cut in half following a meridian from Dalmatia to Cyrenaica, a partition confirmed at the death of Theodosius 1 in 395 AD.

The East then organized itself around Constantinople while the West was divided and regarded as Europe, a distinct unity under Charlemagne (800 AD). What’s interesting is that in contrast with China – self-defined as the center of the world – neither the Roman Empire nor Islam saw themselves as such, admitting the existence of other quite populated worlds: China and India.

The notion of a “continent” only came up in the 16th century, based on the tri-partition Europe-Asia-Africa made by the Greeks in the Eastern Mediterranean, adopted by Judaism, Christianity and Islam, and ratified by the “discovery” of the New World: the Americas. So once again, “continent” is a Western invention.

Eurasia is essentially a giant, elliptical, unified space. Crack geographers tend to see it to the north – from Central Asia up to the northwest of India – as the realm of caravan routes, Silk Roads, cosmopolitan oases, steppes and deserts crisscrossed by nomads.

To the south, it’s a sort of monsoon “shawl” draped over a unique ocean; maritime routes through straits; and cosmopolitan ports and warehouses.

Southeast Asia enjoys a unique status, squeezed in a historical and cultural pincer movement between two major forces, constituted in an independent manner from one another as two major civilizations; India to the west and China to the northeast.

The inner logic of all this immense space is mutation, trade exchanges, and migrations. So Eurasia is essentially unified as two major “on the move” spaces; continental and steppe (on horseback), plus maritime (via navigation). Historically, between these two corridors, we find the creative hubs of civilizations and more durable empires: China, the Indian world, Persia/Iran, the Arab world, the Byzantine-Ottoman empire.

Hard node of history

In one of his exceptional books, French geographer Christian Grataloup conclusively shows how Eurasia is a geo-historic entity – exhibiting a “system of inter-relations from one end to another”. Yes, it’s all about connectivity, as the Chinese are stressing with the New Silk Roads or BRI.

Already by the 15th century, every society in Eurasia exhibited the same presence of cities, writing, monetary exchange. So it’s possible to conceive a common history, from the Mediterranean to Japan, for over two millennia. Grataloup’s intuition is breathtaking. “This is the hard node of world history”.

Historically, it’s all about the confluence of eastern routes in the north, the Silk Roads at the center, and southern routes, mostly the Spice Route. In the central segment of the major axis, decisive innovations occurred; the first villages, the first forms of agriculture, writing, the birth of the State. As the great Mongol caravan empire, built around the Silk Roads in the 13th century, fractured, while societies in the extremities of Eurasia developed maritime power.

Khanna offers myriad details on the key fact; that the Eurasian space is finally being rearranged, rebuilt via economic development, along transversal axes configured as economic corridors; the result of a modernization process that started in Japan in the second half of the 19th century to expand to all of East and Southeast Asia, then China, and finally India. The genius of the BRI project is to make it happen.

The Chinese ambition to be the economic leader of the Eurasia ensemble – by land and by sea – is a unique development in the region’s history, combining the continental approach of the Mongol empire of the steppes, or the Russia empire, with the maritime approach of the West, especially via the British Empire.

But contrary to Western imperialism, it’s all based on economy and culture. So, China will have a lot of work mastering the art of soft power. Time though is on the BRI side; the horizon is 2049 – not profits in the next quarter. Maritime routes in the north like the Arctic Silk Road, and via the South China Sea and Indian Ocean to the south, will envelop Eurasia, which will articulate itself in the center over high-speed rail and highway corridors of the New Silk Roads and the upgraded Trans-Siberian links.

They call it Euro-Asia in Beijing, and they call it Greater Eurasia in Moscow. The whole process is historically inexorable, already forging the future – call it Asian or Eurasian.

Insights on the Iran deal, BRICS and Venezuela

January 28, 2019

Insights on the Iran deal, BRICS and Venezuela

by Pepe Escobar (cross-posted with The Asia Times by special agreement with the author)

An exclusive interview with former Brazilian foreign minister Celso Amorim on how BRICS came into being, how the nuclear deal was done with Tehran and how the South dealt with Chavez

Brazil is once again in the eye of a political hurricane, after President Jair Bolsonaro’s appearance at Davos and explosive revelations directly linking his clan to a criminal organization in Rio de Janeiro.

With his administration barely a month old, Bolsonaro is already being seen as expendable to the elites that propelled him to power – from the powerful agribusiness lobby to the financial system and the military.

The new game among the elites of a major actor in the Global South, BRICS member and eighth biggest economy in the world consists of shaping a scenario capable of rescuing one the great frontiers where global capitalism is expanding from total irrelevancy.

That includes the possibility of a “soft coup”, with the Bolsonaro clan sidelined by the Brazilian military rallying around the vice-president, General Hamilton Mourao.

Under these circumstances, a conversation with former Brazilian foreign minister Celso Amorim is more than sobering. Amorim is universally recognized as one of the top diplomats of the young 21st century, a symbol of the recent past, under President Lula, when Brazil was at the top of its game as a resource-rich continental nation actively projecting power as a BRICS leader.

I had the pleasure of meeting Ambassador Amorim, who is also the author of ‘Acting Globally: Memoirs of Brazil’s Assertive Foreign Policy’ in Sao Paulo. Here are some highlights of our conversation – from the birth of BRICS to the current Venezuela crisis.

BRICS – the most important group in the drive towards a multipolar world – is a very dirty word in Washington. How did it all start?

I had met [British economist] Jim O’Neill a few times, who first talked about BRIC, which was not yet a group and nobody saw as a group. This may sound pretentious, but it’s a curious story. I told him, ‘It is you that invented the BRICS, right?’ He said, ‘Yes, of course, I’m very proud of it’. Then I replied, ‘Yes, but I’m the one who made it happen’. Well, it was not exactly me – under the Lula government and all that it entails. The first action in terms of creating the BRIC group – still without an “S” – came from Sergey Lavrov, in a meeting we had in New York in 2006. They had the RIC [Russia, India, China], but they did not hold many summits. And we had IBAS [India, Brazil, South Africa]. Both China and Russia were always trying to get into IBAS. There was the idea that these were three great democracies, each one in a continent and in a major developing country – so the Russians and Chinese might have thought, ‘we also want to get in, why not, because we are not democracies?’ IBAS was also present in the commercial G-20 at the WTO, and IBAS had similar ideas about reform of the UN Security Council; so the geopolitical interests were not the same.

Then Lavrov proposed BRIC as a forum, I think maybe to find some more equilibrium inside the RIC. I always talked in terms of BRICS, so one day he asked me ‘Why do you say BRICS?’ and I replied, “because it’s plural, in Portuguese’, so in a sense, we were already anticipating the entry of South Africa.

We first agreed we would have a meeting on the sidelines of the UN General Assembly. Lavrov and I already had something more substantial, the Indians and the Chinese just read a speech, so it looked like there would not be a consequential follow-up. Next year we met at the Brazilian UN mission, outside of the UN, and decided to do it later out of New York. Lavrov then offered Yekaterinburg, where we had the first ministerial meeting in 2008, and then next year the first presidential summit, also in Yekaterinburg, and in Brazil in 2010. It was here that the idea of BRIC was expanded into BRICS – through a dinner that concluded IBAS and inaugurated BRICS.

At the time, did you think about expanding to other top emerging economies, such as Indonesia, South Korea, Turkey, Iran?

IBAS was born on the second day of President Lula’s government [in January 2003], out of an idea to create a group of developing countries, around seven or eight. I thought a larger group would be very complicated, based on my experience – how to coordinate positions and engage in concrete projects. For instance, Egypt would have to be a member.

When did you start to seriously discuss practical steps towards the emergence of a multipolar world – such as trade in members’ currencies? Was it in 2010?

In 2010 certainly, we had the idea of trade using each member’s currency, not yet the idea – that happened under the Dilma government – of the BRICS bank. But we were already talking about the coordination of our development banks. The concept of multipolarity, the Russians may have been the first to outline it. What I do remember about the use of the concept was by the French, especially when there were serious divergences about the attack on Iraq.

Former French foreign minister Dominique de Villepin insisted on it.

Villepin, yes, but even Hubert Vedrine [foreign minister under Jacques Chirac from 1997-2002] before him, who came up with the concept of ‘hyperpower’. So the ones who spread the concept were the French, and we adhered to it, among developing countries. The French, when they talked about the expansion of the UN Security Council, they said they were in favor regarding Germany and Japan, but also ‘three great nations of the South’, Brazil included.

The Lula government started in January 2003. Geopolitics at the time was conditioned by the war on terror. We were already expecting the invasion of Iraq. How did you, in the first days of January 2003, knowing that Dick Cheney and the neocons were about to turn the Middle East upside down, with direct and indirect repercussions on the Global South, how did you start conceiving a multi-vector Brazilian foreign policy? Which were the priorities?

I think neither President Lula nor myself used the term “multipolar” – even though the concept was already on the table. We wanted to have good relations with the US but also with the largest developing countries. When we started the greatest problems were the Free Trade Area of the Americas [FTAA], so we had to look for other partners; the WTO and negotiations in the Doha round; and Iraq. The combination of all these led Brazil to get closer to India and South Africa, to a great extent via the WTO, and because of Iraq, we got closer to Russia, Germany and France. When President Lula went to Davos…

That was Lula’s first Davos, right?

Yes, but first he went to the World Social Forum in Porto Alegre [in Brazil], then he went to Davos. The message was the search for an equilibrium; to do business, of course, but based on the idea of democratic social change.

Were you discussing Iraq in detail with Russia, Germany and France?

Yes, we were, with Schroeder in Germany and Chirac, as well as Villepin at the Security Council. And there was a fourth problem: Venezuela. Lula had already talked about it with Chavez. During the inauguration of President Gutierrez of Ecuador, Lula’s first foreign trip, on January 15, Lula proposed, in a meeting in a room full of presidents, the creation of the Friends of Venezuela Group, at a moment when the crisis was acute, even though the country was not as debilitated as today.

Already in January 2003 was there neocon pressure on Brazil in relation to Venezuela?

I think they did not know how to deal with Lula and the new government. But they were very strong on Venezuela – especially [US diplomat] Roger Noriega. And yet they saw Brazil was proposing something and accepted it. Fidel was against it, but Chavez, in the end, was convinced by Lula. And this is also relevant for today. Lula said it in so many words; this is not a Friends of Chavez group, it’s a Friends of Venezuela group. So this must also include the United States, Spain and Portugal – under conservative administrations. That was a way to escape from the OAS [Organisation of American States] and its penchant for the Monroe doctrine [the US policy of opposing European colonialism in the Americas].

I used to talk to Colin Powell quite frequently – and not to receive instructions. There were many issues he wanted to know about, and he trusted Brazil. He had a notion of the importance of Brazil, our capacity for dialogue.

Switching to the Obama era, tell us about the role of Brazil, alongside Turkey, in the Iran nuclear negotiation, when you clinched a deal in Tehran in less than 24 hours, only for it to be smashed by then-Secretary of State Hillary Clinton the next day.

It was a long process, followed by 19 hours of negotiations, the Iranians tried to reopen one of the issues, both Lula and Erdogan refused. What facilitated our role as mediators was that the US had its hands full in the Middle East. I already had contacts with Javier Solana, then a sort of Foreign Affairs Minister of the EU, and also [Egyptian diplomat] ElBaradei, from my time at the UN. Obama, in a meeting of the G-8 + 5 in Italy, during a bilateral with us, he said three things: ‘I extended my hand and they did not answer’; ‘We need to solve the nuclear dossier’; ‘And I need friends to say what I cannot say’. What we did in the end, because we thought it was the right thing to do, with a lot of work and facing hardships, was exactly what the Americans wanted. One month before the deal I thought it would not happen. But then we received a letter from Obama, and to my greatest surprise, that was a reiteration of the same initial three points.

Hillary always had a different position. I foresaw her reaction as a possibility. We talked on the phone, in Madrid, when I was coming back from Iran, and I said, ‘Look, in Brazil we have this expression, ‘I didn’t read it, and I didn’t like it’. She did not want a deal. In a phone call before my trip, she was adding some other points of discussion and I said, ‘Hillary, this is a trust-building agreement. And these points that you mention were not in the letter delivered by your own President’. I’m not exaggerating, what followed was a silence lasting half a minute. So I thought; did she read the letter? Or she read it, and because they are a great power they can do what they want, and we have to take it, and adapt to it?

So what about China and Russia accepting the American line – no deal, more sanctions?

I know the sweeteners that made them accept it – concessions on the sanctions front. But geopolitically…

What’s your informed hypothesis?

There are two. This was a problem they did not solve. Who’s part of the global directory? The five permanent members of the Security Council. Now we have two developing countries, who are not even part of the Security Council, and they solve it? By coincidence, both were non-permanent members of the Security Council at the time. The other thing is whenever we are discussing a nuclear issue, the five get closer, because they are all nuclear powers.

What’s your insider view, as a statesman, of Vladimir Putin, demonized 24/7 in the US as a major existential threat to the West?

The first time I saw Putin face to face was when he received three nations from the Group of Rio, and the main topic of discussion was Iraq. That was before the invasion in March 2003. What most impressed me was his great knowledge of the dossiers – something you usually don’t expect from presidents. He’s extremely sharp, very intelligent, obviously cares for Russian interests but at the same time pays attention to the balance of power. A very realist politician. I don’t see him as a great idealist. He’s like a 19th-century politician, very conscious geopolitically.

Now, in the South American chessboard, regarding the Venezuelan crisis, we are seeing a direct confrontation between the four major poles of Eurasia – Russia, China, Iran, Turkey – against the US. And with another BRICS member, Brazil, siding against Russia and China.

In a multipolar world, we now have a huge test, because Brazil presides over the BRICS in 2019. How is Brazil going to be seen inside BRICS? There used to be an atmosphere of trust inside BRICS.

I’ve got to say that based on my experience at the Security Council, when I was ambassador, during the government of Fernando Henrique Cardoso [from 1995 to 2003], the Russians and the Chinese gave immense weight to respect for national sovereignty. In terms of international law, they always stress non-intervention. I hope we won’t have a confrontation like Vietnam in our region. But when President Trump says that all options are on the table, he’s obviously accepting a military solution. This is very dangerous. I see a very sound Brazilian position coming from General Mourao [the Brazilian vice-president]. And yet the Foreign Ministry says Brazil will support politically and economically a government that does not exist – so that already means intervention.

On a personal level, in the drive towards multipolarity, what is the most important story in the world for the next 10 or 20 years? What is the issue that drives you the most?

I think that the fundamental theme is psychological – and also civilizational. It’s respect for The Other – and the acceptance of alterity. And this also concerns international relations. We need to understand that the common good is part of our well-being. This reflects on individual attitudes, in internal attitudes in politics, and in international relations. Look at the current, violent attack on multilateralism. We should see that it’s better to work multilaterally than capitulate to the law of the jungle.

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