Ukraine trap; EU stuck in old era as Global South crafts multipolarity

May 2 2023

Source: Al Mayadeen English

By Hussein Assaf 

Europe must accept the fact that the world today is no longer the Western playground and that the growing anti-hegemonic sentiment among nations is irreversible.

It’s important to emphasize that Europe was not a victim in the current world order run by Washington, but rather a participant. Its contributions were destructive, filled with colonialism, theft, dismantling, and murder of nations that directly led to corruption, poverty, and injustice worldwide.

Europe’s bloody history

Despite Europe joining the global financial systems established by the US in the 20th century, such as the IMF and World Bank, the continent has used these tools to deepen its colonialism and expansion policies towards countries worldwide. It has even leveraged its position with bodies like the UN and UNSC to exploit weaker states and enforce its hegemonic agendas, including wealth looting and proxy wars against rivals politically and economically. 

However, the rise of the Global South in recent years has allowed its nations to counter the hegemonic exploitation of international bodies by funneling their resources into their economies to advance in the new world order. By engaging with the Western coalition while shielding themselves from their malicious agendas, these nations can benefit in the long run. 

Post-WW2 world order

After World War II, the United States emerged as an unrivaled superpower, untouched by the catastrophic destruction of the war and claiming a barely earned victory. Between 1944 and 1949, milestone events secured the unipolar order under the US and placed the EU under Washington’s direct influence for decades to come.

Bretton Woods in 1944 established the USD as the global reserve and trade currency, while the Marshall Plan in 1945 provided funding to Western European countries that agreed to follow America’s dictates to rehabilitate and rebuild their infrastructure and industrial capabilities (note that the plan’s funds were used to purchase American goods). 

The establishment of the IMF and World Bank enforced the new world monetary and financial system crafted by Washington. The Truman Doctrine finally ensured that Western Europe became a follower of Washington’s foreign policies. 

Establishing NATO, a war coalition under Washington’s direct control, was the highlight of that period. It served the interests of the United States and ensured that Europe did not attempt to create a sovereign military power but rather relied on the US for protection. 

The final blows to Europe’s industrial complex in the 20th century were the Nixon Shock in 1971, where the bloc’s member states found themselves stuck with paper notes whose value was solely determined by Washington, and in 1974 when the United States and Saudi Arabia agreed to peg oil to the USD – establishing the petrodollar. This meant that Europe’s access to the world’s largest energy reserve was now controlled by Washington. 

The petrodollar required Europe to maintain an abundance of USD reserves for oil purchases, resulting in increased investment in American treasury bonds and currency inflow to US markets. Despite partnering with the US in its bloody crusades over the past decades, the EU’s interests were not taken into consideration by Washington. 

The US has used its European allies as tools in the invasion of Afghanistan and Iraq, the destruction of Libya and Syria, and relations with the Arab world (the world’s richest energy region). Although Europe faced similar political and public backlash, it was the US that acquired the real strategic interests. 

Disregarding the changed world we live in, the EU continues to live under a WW2 mentality. 

Despite warnings against militarily provoking Russia, the EU doubled down on the American-NATO illusion that being the strongest military coalition worldwide guarantees inevitable victory, and using force to impose the West’s worldview remains a viable option. 

Self-destructive tendencies

After years of Russia sending signals and after many world vocal warnings, including from prominent Western figures like Kissinger, regarding NATO’s eastward expansion, European member states made the same mistake and adopted Washington’s doctrine on Moscow, leading to a conflict with Russia. Despite the historic failure of this approach, EU leaders repeatedly attempted to humiliate Russia and publicly claimed that the West aimed to bring Moscow to its knees since the beginning of the war in Ukraine until recently. 

The conflict with Russia has deeper repercussions on the EU than just preventing mutually beneficial trade ties that would put both economies on a trajectory of development and growth. The United States aims to fight against the growing Global South, with China at the top, and to cut off any attempts by its European allies to further integrate with Asia’s rising powers.

Following the start of the war in Ukraine, Europe not only faced energy shortages, while US energy companies continued to extract oil from Iraq, Syria, and Libya but also realized how Washington was profiting from the very war they had incited. They were overcharged for LNG at three to four times the price sold within the domestic US market, which itself impacted their major industry’s capabilities to continue production.

On the other hand, the US led an international campaign to force its European allies mainly to adopt a price cap on Russian oil. But despite Washington’s push for this bill, Americans themselves were not affected nor were they directly part of the pressure campaign in Moscow, mainly since they did not rely on Russian oil, and with the petrodollar in place, it did not matter how much the EU paid for oil, as the currency used would go back to US banks. 

Soon, Europe, left alone after countries such as Japan did not abide by the price cap, found that it still had to buy Russian Urals but with additional middlemen fees through countries such as India.

The EU witnessed firsthand the US tearing down their economies, which are under increased levels of deindustrialization, with industry giants moving to the US for lower energy prices and a more business-friendly environment crafted by Washington to lure companies mainly from its European allies.

As a result, Europe found itself seeking energy from African nations that it had previously colonized and destroyed. EU officials scrambled through countries like Algeria and Libya to secure gas and oil. 

As the world order shifts towards a more multipolar one with a center of gravity shifting towards China, Europe has begun to become aware that the US-led model that has dominated the world order for decades has not brought the desired outcome for the bloc. Despite benefiting immorally from genocidal campaigns and being America’s partner in crime, Europe’s gains were short-lived. 

With a history of self-destructive tendencies and after years of psycho-preparation and media propaganda, Europe was politically and economically prepared to repeat its historic mistakes in its approach to Russia and later to China.

The West quickly convinced its public that the rivalry with Russia was ideological and existential, that joining NATO and dropping neutrality (as with Finland and Sweden) was the only secure way to protect against the demons of the East, and that China is at the core of everything against the neoliberal values of the West.

Inevitable Multipolar world order 

During a speech to the Council of Foreign Relations in New York on April 18, European Central Bank President Christine Lagarde noted that the world is becoming more multipolar, with a fragmentation of the global economy into competing blocs. 

Lagarde stated that this new “global map” would have “first-order implications,” with the possibility of two blocs emerging, led by China and the US.

On many levels, Lagarde’s statement hits the core of the current world state of affairs.

The US reintroduced the political bloc mentality on a wider scale through the proxy war in Ukraine, pulling all its strings and employing all its accumulated influence to focus its power on obstructing a Eurasian uprising and realigning Europe’s foreign policy towards dismantling connections with China and Russia.

The post-WW2 era, characterized by bloc politics pushed by the US, is no longer feasible in the current period of deep integration, interest overlaps, and political complexity established by globalization, advanced trading networks, financial intertwining, and complementary production needs.

The West’s expansion of NATO forces to Russia’s border, followed by Moscow’s campaign to protect its national security, has put the global change on a pedestal.

The fallout of the Western-Russian war in Ukraine and the historic barrage of sanctions against Moscow has led to the fracturing of the financial system, and exposed the fragility of the West’s proclaimed “rules-based international world order”.

During an event hosted at Renmin University’s Chongyang Institute for Financial Studies last January to discuss the current state of world powers, the editor-in-chief of the Beijing Cultural Review (BCR) said that the fallout of the Western-Russian war in Ukraine led to events that could have never been imagined earlier.

“These [events] include the fracturing of the financial system, the expropriation and seizure of Russian private assets, and the freezing of Russian foreign exchange reserves. These are all abominable and unimaginable forms of confrontation,” Yang Ping said in his speech.

“The world is moving inexorably in the direction of decoupling. The phenomenon of politics affecting the economy and the capitalist political order no longer upholding the capitalist economic order is extremely striking.”

If not for the war in Ukraine, Ping’s statement regarding the world taking shape would have been shunned by Western experts as an illusion or merely a forecast, but now, and thanks to the West’s undivided efforts, the world is moving inexorably towards decoupling, and the phenomenon of politics affecting the economy is becoming strikingly apparent; a world with limited Western hegemony is on track to becoming an irreversible reality.

Europe’s amputated foreign policy

In recent months, top EU leaders including German Chancellor Olaf Scholz, French President Emmanuel Macron, President of the European Commission Ursula von der Leyen, and German Foreign Minister Annalena Baerbock have visited China amid rising global tensions.

Their visits aimed to balance relations between the US and China as Washington’s hostility towards Beijing escalated, its sanctions against the Asian giant increased, and its provocative actions in the South China Sea intensified.

Macron’s visit, in particular, was noteworthy, as it seemed to reassure China of Europe’s distinct position from Washington’s policies against Asian giants. Despite announcing that the main reason for his visit was to push Beijing against arming Russia and push Moscow to end the war, behind the scenes, Macron’s visit aimed to assert Europe’s position.

He stated that Europe should not be caught up in a disordering of the world and crises that aren’t ours and that the government must build a “third pole.”

“We must be clear where our views overlap with the US, but whether it’s about Ukraine, relations with China, or sanctions, we have a European strategy,” the French leader said then.

“We don’t want to get into a bloc versus bloc logic.”

At first, many European leaders publicly announced or hinted at their support for Macron’s move, considering it a positive approach to their largest trading partner.

But later, some European leaders expressed their rejection of his statements, the most blatant of which was the finance minister in Scholz’s government, Christian Lindner, who said that Macron’s “Idea of strategic autonomy of the European Union,” is “naïve.” Of course, the statement was not objected to by the German Chancellor, signaling that the minister has also voiced Scholz’s opinion.

Following Lindner’s remarks, and after von der Leyen reaffirmed the bloc’s neutral position on the Taiwan Strait issue provoked by the US during an EU parliamentary hearing on April 18, Manfred Weber, who helms the Parliament’s largest group, the center-right European People’s Party (EPP), accused Macron of “destroying” European unity with his trip to China, and that the French president “weakened the EU” and “made clear the great rift within the European Union in defining a common strategic plan against Beijing.”

To counter Macron’s position that the Taiwan issue is not a European concern, Weber also compared the matter to the war going on in Ukraine from Washington’s perspective.

“We shouldn’t be surprised if Washington starts asking whether Ukraine is a European issue,” Weber said. The question they may ask, he warned: “Why should American taxpayers do so much to defend Ukraine?”

His comments, of course, are nothing but shortsighted and delusional, given that the war in Ukraine was created and pushed forward by the US’ decades-long policies on NATO’s take against Russia.

From an outside observer, the contradicting statements – while also taking into account that the bloc members are dividing roles – can only be described as a political mess, a loss of strategic planning, and entails that the union is currently lacking the tools to form a united framework to establish a basis to approach the Global South as a whole, and especially China.

Is the EU’s policy being molded by an actual comprehensive overview of the world’s geopolitical shifts, or is it being dictated by a handful of US pawns that have served nothing but American hawks since they took office?

Blind Economic outlook as bloc 

The disunity in Europe extends beyond just their political approach to China, as trade policies with their largest business partner also show division. 

In 2020, China and the EU agreed on a trade framework, eliminating Chinese restrictions on European companies and investments in China. However, the deal was put on hold after the bloc sanctioned Beijing for alleged human rights abuses and China responded with sanctions of its own.

Just under two weeks after Macron’s and von der Leyen’s trip to China, the EU leaders said that they consider the deal with China as not applicable anymore, following the events since it was reached in 2020.

“We started negotiations around about 10 years ago and concluded the comprehensive agreement on investment two years ago. A lot has happened since then,” she said, adding that Europe’s “position is that we do have to reassess the Comprehensive Agreement on Investment,” she said earlier in April.

On his part, Macron considered that the agreement today is “less urgent,” and “just not practicable”.

On the other hand, Germany’s Chancellor Olaf Scholz lately has been pushing for “reactivating” the agreement and considered it was time to reinstate the deal and put it back on track.

It is understandable that this dynamic is not unusual between world powers, especially at a time when the globe is witnessing historic geopolitical shifts, and it is definitely not unusual considering that the American influence across Europe and its leaders is still very significant, and Washington’s sanctions sword is constantly raised against its allies.

However, the lack of a united foreign policy within the bloc may negatively impact its position in the emerging multipolar world order and lead to the weakening or collapse of the union. Europe’s incomplete and fragile relations with growing global pillars, especially China and the emerging Global South, may also be observed from Beijing’s perspective.

Losing post-WW2 against Global South 

Europe’s lack of clear foreign policy extends beyond its position on China, as it also pertains to the US’s declared soft war on the Asian giant. 

For decades, Brussels relied on the assumption of a long-term realm by Washington as the unipolar power, which led the bloc to neglect sustainable and strong relations with the Global South.

Since the start of the war in Ukraine, the Global South has made unexpected, unprecedented moves, guided by the goal of forming sovereign policies that are far from Western hegemony led by Washington. They declared historic political shifts, leading to the formation of a new and influential world pillar in the multipolar era.

Protectionist economic policies, accompanied by subsidization, act for vital sectors like electric vehicles and batteries.

More systems (such as BRICS and SCO) and countries are growing monetary bodies and alternative trade frameworks to those dominated and influenced directly by the United States. It has become clear that political global organizations such as the UNSC and the UN, which were long exploited by Washington and its European allies to extend their hegemony and colonialism, are slowly losing more relevance and impact on the global arena.

On April 16, US Treasury Secretary Janet Yellen, in an interview with CNN, said that the United States economic sanctions imposed on Russia and other nations have put the dollar’s hegemony at risk as targeted countries seek out an alternative.

“There is a risk when we use financial sanctions that are linked to the role of the dollar that over time it could undermine the hegemony of the dollar,” she said then.

Financial global institutions and systems such as the IMF, World Bank, and SWIFT, are gradually declining as de-dollarization proceeds and countries are finding alternatives to bypass the West’s complete influence, including mutual lending and local currency trade, sovereign projects, in addition to domestic SWIFT alternatives such as China’s CIPS, Russia’s SFPS, and Iran’s SEPAM, to name some.

The movement today is driven by Beijing along with other powers including Brazil, India,  Russia, Iran, and South Africa, among others.

Despite all signs in previous years of the emergence of the new geopolitical reality, Europe failed to form appropriate policies and outline a vision to engage and adapt to these drastic global shifts, nor did it take advantage of some of the outcomes that fall into its interest, such as de-dollarization and the end of the petrodollar. Instead, Europe insisted on following Washington’s agenda, further sidelining its world influence.

Sidelined 

On March 10, Iran and Saudi Arabia agreed to restore diplomatic relations and reopen missions after seven years of strained ties. 

Talks were brokered in Beijing under the auspices of Chinese President Xi Jinping. The Western role, especially that of Washington, in inciting dispute and rift between the two nations was criminal, leading to tens of thousands of deaths, mass destruction, displacement of hundreds of thousands, and feelings of hate among the people of the region.

China managed in just a few months to achieve what the United Nations and other international political bodies failed to do, marking Beijing’s first public political approach to the Middle East. The Beijing-brokered rapprochement between Tehran and Riyadh reveals Europe’s falling influence in the region and the growing tendency of countries to sideline the West in bilateral issues. It also highlights China’s rise as a peace-bringing and key power in the region.

Oppressed nations rejoice 

Europe’s centuries-long history of producing global superpowers makes it a hybrid bloc with a combined cultural, political, social, economic, and institutional maturity that can quickly adapt to world geopolitical shifts and overcome emerging challenges. 

However, it can be argued that the current world challenges are unprecedented, especially with the concept of globalization and the world’s interconnectedness.

Europe today has limited options that require a new approach and view of the world, with a humble and realistic policy that acknowledges the end of its hegemony and the adoption of sovereignty and mutual respect in bilateral relations.

The EU must also accept that the world is no longer a Western playground and that anti-hegemonic sentiment among nations is irreversible in a multipolar world. Regardless of Europe’s decisions, oppressed nations are watching the declining global influence of the colonial bloc with joy.

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The first China-UAE gas deal in yuan: A new blow to dollar dominance

April 06 2023

Chinese allies control 40 percent of OPEC+ oil reserves, and the GCC controls another 40 percent. With this China-UAE gas trade settled in yuan, the petrodollar today is under serious threat.

Photo Credit: The Cradle

ByA Cradle Correspondent

On 28 March, the Shanghai Petroleum and Natural Gas Exchange (SHPGX) made history by announcing the first-ever deal on importing 65,000 tons of liquefied natural gas (LNG) from the UAE, settled in the Chinese yuan currency. China National Offshore Oil Company (CNOOC) and French TotalEnergies finalized the transaction, and TotalEnergies confirmed that the LNG imported was from the Persian Gulf state.

China’s Global Times in a report the following day, cited the chairman of the SHPGX, Guo Xu as saying that the deal is:

“A meaningful attempt to promote multi-currency pricing, settlement and cross-border payment in international LNG trading. It also provides a new channel for international players to participate in the Chinese market, helping to build a new pattern of dual circulation in China.”

Beijing pushes yuan for energy trade

The yuan settlement of international LNG trading is a “major event in China’s market-oriented oil and gas reform, which will help promote the docking of international and domestic markets,” the report quoted experts as saying.

The development comes after Chinese President Xi Jinping announced in December 2022, during a landmark visit to Riyadh, that his country should make “full use” of the SHPGX as a platform to carry out yuan settlement of oil and gas trade.

This deal represents a departure from the decades-long practice of conducting global oil sales exclusively in US dollars. A prominent economist, who spoke to The Cradle, speculated that “the French either resorted to the yuan due to the acute shortage of Russian gas supplies to the European continent, or they have reserves in the Chinese currency that they want to use.”

The deal came as a surprise, as French President Emmanuel Macron typically does not take such steps without the approval of the US. As for the UAE, the move is part of a larger trend of Persian Gulf countries opening up to China in the aftermath of the US withdrawal from Afghanistan and the Biden administration’s shift in regional policies.

The yuan payment also follows the global polarization taking place over the Ukraine war and further demonstrates the reluctance of Persian Gulf states to align with western hostility toward Russia, China, and other US adversaries. According to the same economist, “The Emirati move cannot be separated from the changes taking place in the world. Abu Dhabi and Riyadh sense the global imbalance of power, and decided to expand the margins of their international relations.”

Yuan’s growing acceptance

Given the current global geopolitical shifts, the yuan is gaining increased acceptance as an international currency. Since President Xi Jinping assumed office, China has settled agreements with several countries in its local currency in an attempt to challenge the dominance of the US dollar in global trade.

As a result, the yuan has become the world’s fifth-largest payment currency, the third-largest currency in trade settlement, and the fifth-largest reserve currency. According to the Global Times, the yuan today accounts for 7 percent of all foreign exchange trades worldwide and has experienced the most significant expansion in currency market share over the past three years.

Experts have noted that “with the recovery of the momentum of China’s economic growth and the further opening of the financial market, the investment and hedging function of the yuan has gradually increased.”

In an article earlier this year for The Cradle, Pakistani analyst F. M. Shakil cited the Currency Composition of Official Foreign Exchange Reserves (COFER) report by the International Monetary Fund (IMF), which shows that:

“The percentage of US dollars in central bank reserves has decreased by 12 percent since 1999, while the percentage of other currencies, particularly the Chinese yuan, have shown an increasing trend with a 9 percent rise during this period.”

Shakil also noted that the “cumulative cross-border yuan settlement handled in Xinjiang (western China), the financial hub between China and Central Asia, exceeded 100 billion yuan ($14 billion) as early as 2013 and reached 260 billion yuan in 2018.”

He concluded that “dollar reserves are dwindling and the influence of the United States of America is receding in the global economy, which represents an opportunity for regional powers’ currencies and alternative payment systems.”

Rise of the petroyuan

Since 2009, Beijing has implemented a policy to reduce its reliance on the US dollar in commercial transactions. This policy includes settling the majority of its goods in foreign markets in its local currency, establishing mutual lines of credit with several central banks worldwide, and negotiating with West Asian and North African countries to conduct trade using the yuan. These efforts have started to show results recently, with a number of Asian governments partially adopting the Chinese currency.

Iraq is one of the countries that have partially adopted the yuan in trade. In February, the Iraqi Central Bank announced plans to allow direct settlement of trade from China in yuan to improve access to foreign currency and compensate for the dollar shortage in local markets, largely due to measures imposed by the Federal Reserve on money transfers leaving Iraq to prevent them from reaching Tehran and Damascus. Egypt also announced its intention to issue yuan bonds last August.

Russia has played a significant role in changing the course of the yuan by signing the Eastern Natural Gas Pipeline Agreement from Russia to China and converting the currencies of gas payments from the US dollar to the Chinese yuan and the Russian ruble.

According to the latest data from the Russian Central Bank, the yuan has become a major player in Russia’s foreign trade, with its share of import settlements increasing from just 4 percent in January 2022 to 23 percent by the end of the year. The yuan’s share of exports rose from 0.5 percent to 16 percent in the same period.

During his trip to Saudi Arabia, the Chinese president encouraged Gulf Cooperation Council (GCC) countries to use the SHPGX for yuan-based energy deals. The visit also saw China and Saudi Arabia sign over $30 billion in trade deals, which some analysts believe marks the rise of the petroyuan.

According to US-based Credit Suisse analyst Zoltan Pozsar, Russia, Iran, and Venezuela – all allies of China – account for 40 percent of OPEC+’s proven oil reserves, with the GCC making up another 40 percent. If these three states alone settle their energy exports in yuan, the petroyuan is here to stay.

A response to US policy 

In a January interview with Bloomberg, during the World Economic Forum in Davos, Saudi Finance Minister Mohammed al-Jadaan said that “the kingdom is open to trading in currencies other than the US dollar in order to improve trade.”

Interestingly, despite being a stalwart US ally for decades, Riyadh is deepening its ties with key trading partners, including Beijing, as China imported over 500 million tons of crude oil and over 100 million tons of natural gas, including 63.44 million tons of LNG, in 2022.

Middle East Briefing suggests that this shift towards national currencies in global trade “is partly due to Washington’s sanctions policy against Russia.” Riyadh is now “following an increasing trend of hedging against US dollar use in trade” amid concerns that the US may use its currency as a weapon for trade and sanctions.

The trend towards using national currencies in global trade chains has continued to mature, with recent developments, including the announcement of two large-scale investment plans in China by Saudi oil giant Aramco.

The first plan involves building an integrated refining and chemicals plant in Liaoning Province, while the second plan involves Aramco’s acquisition of 10 percent of the shares of Rongsheng Petrochemical Company.

Meanwhile, the emirate of Dubai has opened its door to dealing in the Chinese currency in its global financial center, and Brazil and China have agreed to ditch the dollar and use their local currencies in their commercial dealings. In addition, Brazil and Argentina have announced the start of work on launching a common currency in their commercial dealings, dubbed “Sur.”

The petrodollar under threat

Petrodollars refer to US dollars used to purchase crude oil following a 1974 deal struck between Washington and Riyadh. The agreement not only ensured the military defense of the kingdom through US guarantees but also secured a steady stream of foreign purchases of US Treasury bonds and debt, which is a strategy of recycling the petrodollars back to Washington through Saudi Arabia’s reserves.

This transformed the ability of oil-rich Arab states to weaponize their vast energy resources against malign western policies – into a powerful economic weapon for the Americans, who, overnight, became the masters of the oil market. Today, however, with China’s rapid steps to challenge this entrenched system, there is a global spotlight on the rise of the Petroyuan versus the decline of the Petrodollar.

Asia Financial describes China’s deal with TotalEnergies as a “step forward in China’s long-term battle to reduce the power and reach of US dollar hegemony,” adding that “further such moves appear to be in the winds.” Importantly, according to Viktor Katona, lead crude analyst at Kpler:

“While the dollar will likely remain the dominant global currency in the near future, the rise of a so-called petroyuan will gain momentum as China leverages its status as the world’s largest oil importer.”

Saudi Arabia is reportedly considering accepting payment for its oil exports to China in yuan. However, any such shift is likely to be marginal, as most West Asian currencies are pegged to the US dollar, and accepting payments in other currencies increases foreign exchange risk.

Researcher P.S. Srinivas opined last year that oil deals with countries in West Asia “do not constitute a threat to the US dollar,” and the likelihood of the yuan replacing the US dollar as the benchmark currency for pricing is even more remote due to China’s capital controls and the yuan’s lack of convertibility.

While the possibility of the yuan gaining greater prominence in the global oil trade cannot be ruled out, it is unlikely to replace the US dollar as the primary currency for pricing in the oil and gas industry in the short term.

Most West Asian nations continue to maintain a vested interest in preserving the strength of the dollar, and any shift towards accepting payments in other currencies is likely to be minimal, at first. In the next few years, it will be important to keep an eye on China’s slow but steady ascent to global economic dominance and the growing usage of the yuan in international trade.

The views expressed in this article do not necessarily reflect those of The Cradle.

The US scapegoat: Europe dragged into yet another conflict

27 Feb, 2023

Source: Al Mayadeen

By Mohammad Al-Jaber 

The United States, like the great ally that it is, has dragged Europe into another conflict, this time right at home, and bleeding it dry economically and politically under the pretext of fighting Russia.

The US scapegoat: Europe dragged into yet another conflict

It is a tale as old as time; ever since their declared allyship in the wake of World War II and the global status quo amid the Cold War, the United States and Europe – at least Western Europe – have been as close as allies can be. However, the United States is quite the abusive partner, forcing Europe to bear the brunt of any conflict it gets into as it emerges unscathed from its far-away lands across the Atlantic Ocean, and the Ukraine war serves as another prime example of how the US treats its allies.

Months before the Ukraine war, the United States and its European allies began bolstering their eastern flank through NATO member states. Little did Europe know what it was diving headfirst into: years of brewing tensions between Russia and the United States over Ukraine and its treatment of the people of the Donbass, as well as its usage as a political tool in the face of Moscow, exploded, and Europe was covered in ash while Washington was watching everything unfold from the comfort of its distant lands.

The situation hit the fan; Russia was now knee-deep in Ukraine and the United States started using everything in its power, including Europe, to curb Moscow and bolster Kiev’s standing. Washington had many tools at hand, most notably sanctions on Russia and arms shipments to Ukraine, both of which would be quite costly for Europe, especially due to how inconvenient the time was, given that the world was just now going back into full throttle after the pandemic brought the entire global economy into a grinding halt. 

The West, somehow underestimating the repercussions of an economy as tremendous as Russia’s being thrown out of the global market, sanctioned the country in a bid to “punish” it for going against their expansionist aspirations, and the sanctions in question were not your run-of-the-mill sanctions because we are not talking about your run-of-the-mill economy here. The sanctions at hand affected everything from natural gas to gold – key pillars in any economy aspiring not to crash – which had massive reverberations throughout the West, all the way from Germany to the United States. 

Gas prices reached all-time highs, and the global economy was bracing for disaster as inflation was affecting some of its biggest players. Economic powerhouses such as Germany, France, and the United States were being driven up walls due to the economic woes they were experiencing, all of which they were attributing to Russia itself rather than admitting to having committed numerous mistakes when it came to the measures they took against Russia.

US economy holding up better

A swift study of inflation rates and energy prices would be more than sufficient to exhibit the suffering inflicted on the West in the wake of war:

According to Eurostat, the European Union’s official statistical office, inflation in the EU in November 2022 was 11.1%, a stark year-on-year increase from November 2021’s 5.2% inflation rate. The Eurozone, meanwhile, was also suffering, just a little less. In November 2022, the inflation rate in the Eurozone was 10.1%, a less significant year-on-year increase from November 2021’s 4.9%. 

Energy prices, on the other hand, are something else entirely. What had been 82.81 euros per megawatt-hour in terms of monthly electricity wholesale prices months before the war in August 2021 in Germany rose to a whopping 469.35 euros per megawatt-hour, an increase of 466.7%, a year later in August of 2022, six months after the start of the Ukraine war and about three months after the West to decided to try and take Russia entirely out of the global energy market.

Other countries were not better off. In fact, some were dealt even worse hands, as energy prices in Italy soared 382.4% to 543 euros per megawatt-hour, in Hungary, they rose 354.4% to 495.65 euros per megawatt-hour, and in Switzerland, they rose 490.5% to 488.14 euros per megawatt-hour. France was by far the worst off, with a striking increase of 536.9% to 492.99 euros per megawatt-hour.

At the same time, energy prices in the US averaged $167 per megawatt-hour in August 2022, a very mild year-on-year increase from August 2021’s $144 per megawatt-hour, showing that the energy crises barely affected the United States as it was not at all reliant on Russian gas.

Historic lows

Of course, the governments of the EU states had to heavily subsidize electricity as their citizens would not be able to pay off their bills if they were as high as they were driven up due to the sanctions on Russia, which led the governments in question to print more money in order to cover all the new, extra costs they had, plunging the Eurozone into record-high inflation, the likes of which had not been seen in decades. 

The euro had not gone down below a dollar per since the early 2000s when it hit the low of $0.98 in January 2000, a year-on-year depreciation of 15% against the USD. The euro went through more woes, dropping to as low as $0.83 before bouncing back above the threshold three years later. What must be understood is that the decline of the euro in 2000 was the consequence of a free market reigning in the West, with many investors selling the euros they were holding in anticipation of an appreciation in the Eurozone’s currency after it had been tied with the greenback for some time at that point, with impatience prevailing, which led the euro to lose value. Securities had dominated in the euro, but as it had been at near-parity with the USD, investors felt forced to sell as the US government was making various moves that made the US economy more attractive for investors, such as the US Treasury’s 30-year bond posting strong gains and the US government reporting that orders for durable goods sharply increased before the new years, prompting experts to speculate incoming interest rate hikes. 

Many things just happened to go right for the USD at the same time, making the greenback tremendous gains and putting it above the euro until the dollar fell in 2003 and made for one of the causes of the 2000s energy crisis. All in all, the euro was holding strong against the USD for nearly two decades before it made a sharp drop throughout 2022 that culminated in the Eurozone’s currency briefly dipping below parity against the USD in August amid fears of a worse energy crisis. 

The euro was doing tremendously for decades, but European countries being forced to subsidies energy for their citizens and businesses so as not to leave their economies in shambles led the USD to rise above the euro due to the inflation the money-printing machines caused. The euro reached a low of $0.97 in September 2022 after having been at $1.17 a year earlier. It managed to slightly recover since, selling at $1.10 in early February, nearing pre-war levels, but the latest data shows that the euro is now on a downturn even against a struggling USD that is being bolstered by austerity measures from the Federal Reserve.

Struggling across the Atlantic, still doing better

In light of all the suffering in Europe, the United States was doing quite badly for itself. With energy prices reaching all-time highs and inflation soaring uncontrollably, Washington was between a rock and a hard place.

However, it wanted to ensure that Europe was just in a bad a position and wanted to ensure its own prosperity at the expense of the Europeans’, selling them energy with stark hikes that were unbearable, which largely affected the euro and gave further impetus to the USD. French Finance Minister Bruno Le Mair even went as far as taking shots at Washington, saying it should not be allowed to dominate the global energy market as the EU suffers the consequences of the conflict in Ukraine, stressing that it was unacceptable to let the US export LNG at prices four times higher than those paid by companies in the country.

According to the Consumer Price Index (CPI) measurement, inflation in the United States increased by 7.7% in a year until October of 2022, rising at its slowest rate in nine months after topping a forty-year high of 9.1% in a year until June of 2022. The inflation rates, though better than the EU’s, were mitigated by the Federal Reserve raising interest rates consecutive times, increasing the rate by 4.25% between March and December of last year.

Meanwhile, as the US economy showed growth in Q4 of 2022, increasing by 2.9%, the Eurozone was left in the dust with a mere 0.1% in growth after experts were expecting a recession for one of the most significant economic players in the international arena. At the same time, the European Union’s economy was stagnant, remaining stable in Q4 of 2022.

Despite the lack of a recession in the Eurozone as a whole, the German economy contracted by 0.2% in the last quarter of 2022, prompting experts to believe that the economic powerhouse was heading into a recession. 

Italy, the EU’s third-largest economy, also experienced negative growth, as its GDP contracted by 0.1% in Q4 of 2022. Both Germany and Italy were among the hardest hit due to their heavy reliance on Russian gas, the stream of which was cut off from Europe in light of the Ukraine war.

The latest signs are showing that the Eurozone is heading for a recession in Q1 or Q2 of 2023, with experts saying that the European Central Bank’s policy of economic tightening through various austerity measures will cause the region’s economy to struggle as households themselves struggle with the cost of living crisis and sluggish demand.

Buddy-buddy with the wrong guy

One key aspect of the crisis that the EU and the Eurozone have been hit by is that they were caused by a conflict that spurred out between Russia and the United States that Washington sought to turn into a proxy war by using its allies in Europe against Moscow rather than embroiling itself in any direct conflict.

The European Union is no stranger to getting dragged into conflict by the United States, but the extent to which Washington is alienated from the ongoing war is quite stark in comparison to previous wars.

As discussed previously in “Analysis of Euro-paralysis: Uncle Sam’s last Afghan stand” while shedding light on the United States dragging Europe into the Afghanistan war, when Washington dragged NATO into a multi-generational war in Afghanistan, the organization’s first commitment outside European territories, the United States is not the best ally one could have by their side.

In the end, the European hand was forced into Afghanistan, and the burden was basically split in half, with Europe reaping fewer benefits, the US was in control of a geopolitically significant country, and it was intimidating its regional foes, namely Russia, China, and Iran.

Europe has been the chief bearer of consequences whenever there was a US-related flop anywhere in the Eastern hemisphere, such as the Syrian refugee crisis that took place in the wake of the war on Syria. Alongside many other crises, this is a fine testament to Washington’s strategy toward Europe.

All that Europe gained from Afghanistan was more refugees, more dead soldiers, and wasted taxpayer money. The UK and Germany, the second-largest troop contributors, spent an estimated $30 billion and $19 billion, respectively, throughout 20 years of war in Afghanistan.

The situation today is not too different from how it was back during and after the Afghan war, as the United States is now emerging with loads of profits made from the war after having Europe spend hundreds of millions on Ukraine, with the Kiel Institute for the World Economy reporting that: “The United States, for example, spent more than 3 times as much per year compared to their expenses in the Afghanistan war after 2001 (measured as a percent of GDP). Germany committed more than 3 times as much to Allies in the Gulf War of 1990/91 compared to what it has committed to Ukraine (again measured in percent of GDP).”

According to the institute, “The Americans have earmarked a total of just over 73.1 billion euros for Ukraine support. For the EU, the comparable figure is 54.9 billion euros.”

The head of the German Chambers of Industry and Commerce said the Ukraine war will have cost the German economy around 160 billion euros ($171 billion), or some 4% of its gross domestic output, in lost value creation by the end of the year.

‘Give’ only to take

Though the United States gave more aid to Ukraine, around $20 billion more, Europe is still doing worse than the US. The US economy is doing far better than expected, especially as key companies, especially energy companies, and firms within the military-industrial complex, are making bank off the suffering of Europeans and Ukrainians alike.

The share price of Lockheed Martin was up 37% by the end of 2022 as the production of Javelin anti-tank missiles by the company increased from 2,100 to about 4,000 a year. The arms company signed a $7.8 billion contract on the modification of the F-35 aircraft and $431 million to deliver new HIMARS and “support services for the US Army and its foreign allies.”

Meanwhile, in November last year, the US awarded Raytheon a $1.2 billion contract for the supply of six National Advanced Surface-to-Air Missile Systems (NASAMS) to Ukraine. Last year, it was reported that Washington was intending to send 6,500 Javelin anti-tank missile systems made by Raytheon and Lockheed Martin to Ukraine. Other contractors, such as Boeing and Northrop Grumman, are among other profiteers from the war.

The EU is not making similar profits in light of all the losses it is dealing with. Even when it comes to post-war reconstruction efforts. “The Ministry of Economy of Ukraine and BlackRock, the world’s largest investment company, have signed a Memorandum of Understanding agreeing on a framework for consultative assistance in developing a special platform to attract private capital for the recovery and support of Ukraine’s economy,” the Ukrainian government announced in November, meaning the US is making profits when it comes to the destruction of Ukraine and is making profits when it comes to its reconstruction. 

One conclusion can be drawn from the whole debacle surrounding Ukraine: The United States is using the situation to subvert Europe and leave its economy in shambles, prompting many to talk about the de-industrialization of the European Union, with numerous economic sectors, such as glass, chemicals, metals, fertilizer, pulp and paper, ceramics, and cement suffering in light of the ongoing crisis.

Additionally, with gas prices four times that of the US and six times higher than they were before, several industries are considering the option of relocating abroad for cheaper energy prices, meaning that at the end of the day, many European powerhouses might be left with nothing, or just crumbs, if this situation is upheld.

Europe is before a grim reality once again because of the United States, with its economy heading toward the ghastly unknown and its industry dealing with the repercussions of terrible policy-making. Europe, once a US ally, might become a vassal for Washington as it grows more dependent on a country that only seeks to exploit it to bolster its standing in the international arena.

Related Stories

• The Ukraine war: A spark for de-globalization?
• War in Ukraine: A conflict that will decide the global system’s fate
• West in too deep in Ukraine war, ‘can’t afford’ to lose: Newsweek

TotalEnergies, Eni transfer 30 percent stake of Lebanese economic waters to QatarEnergy

January 30 2023

(Photo Credit:AP)

Qatar now has a 30 percent stake in Lebanon’s economic zone, with TotalEnergies and Eni having a 35 percent stake each

ByNews Desk- 

On 29 January,  France-based TotalEnergies and the Italian corporation Eni transferred a 30 percent stake in Lebanon’s economic zone to Qatar’s national energy corporation for gas exploration in blocks four and nine.

This agreement entails that QatarEnergy has a 30 percent stake within these zones, while 70 percent of Lebanon’s economic zone will continue to be distributed among the two European energy corporations. Qatar’s entry into the partnership came after the withdrawal of Russian company “Novatek,” which previously owned a 20 percent share in Beirut’s economic zone.

The agreement was ratified during a ceremony attended by Lebanon’s Minister of Energy and Water, Walid Fayyad, the Qatari Minister of State for Energy Affairs and CEO of QatarEnergy, Patrick Pouyanné, and the CEO of TotalEnergies, Claudio Descalzi.

“We are very pleased to welcome QatarEnergy to our exploration acreage in Lebanon. The recent delineation of Lebanon’s maritime border with Israel has created a new momentum for the exploration of its hydrocarbon potential. Along with our partners, we are committed to drilling as soon as possible in 2023 an exploration well in Block 9, and our teams are mobilized to conduct these operations,” Pouyanné said.

Due to the global energy crisis incited by western sanctions against Russia, Qatar has to expand bilateral cooperation with nations on a regional and international scale, facilitating liquefied natural gas (LNG) to countries in need.

Saad al-Kaabi, Qatar’s Energy Minister, claimed that the dire need for LNG would persist “for some time to come,” as little new LNG would enter the market until 2025.

Earlier this month, Qatar and US-based Chevron Phillips Chemical Company LLC signed a multi-billion dollar deal to invest in an energy complex that would boost Doha’s status as a top petrochemical supplier in the world.

The Gulf kingdom also signed deals with China and Germany to export large quantities of LNG from the ambitious North Field East (NFE) expansion project starting in 2026.

• Qatar Partners for Joint Exploration in Lebanese Gas Blocks: A Ray of Hope?

Europe’s gas emergency: A continent hostage to seller prices

January 16 2023

Europe’s reliance on Russian gas imports has been upended by sanctions against Moscow. With few options for practical alternatives, the continent will remain energy-dependent and financially-vulnerable regardless of who it imports from.

Photo Credit: The Cradle

By Mohamad Hasan Sweidan

The 2022 outbreak of war between Russia and Ukraine revealed the importance of energy security in bolstering Moscow’s geopolitical power in Europe. The continent, which imported about 46 percent of its gas needs from Russia in 2021, found itself in a vulnerable position as it sought alternative sources.https://thecradle.co/Article/Analysis/20403

This presented an opportunity for the US to replace Russia and become the primary supplier of natural gas to Europe at significantly higher prices, resulting in large profits at the expense of its European allies. According France-based data and analytics firm, Kpler, in 2022 the EU imported 140 billion cubic meters (BCM) of liquefied natural gas (LNG), an increase of 55 BCM from the previous year.

Around 57.4 BCM of this amount (41 percent) now comes from the US, an increase of 31.8 BCM, 29 BCM from Africa (20.7 percent) – mainly from Egypt, Nigeria, Algeria and Angola – 22.3 BCM from Russia (16 percent), 19.8 BCM from Qatar (14 percent), 4.1 BCM from Latin America (2.92 percent) – mainly from Trinidad and Tobago – and 3.37 BCM from Norway (2.4 percent).

European gas imports 2022

In 2022, France was the leading importer of LNG in Europe, accounting for 26.23 percent of total imports. Other significant importers included Spain (22.3 percent), the Netherlands (12.65 percent), Italy (11 percent), and Belgium (10.42 percent).

These countries, along with Poland (4.7 percent), Greece (2.9 percent), and Lithuania (2.31 percent), imported over 90 percent of LNG exported to Europe at prices higher than Russian pipeline gas. It is worth noting that upon arrival, LNG is converted back to its gaseous state at receiving stations in Europe before being distributed to countries without such infrastructure, such as Germany.

Graph: 2020-2022 European gas imports, by month 

Switching dependencies

Europe was able to reduce its reliance on Russian pipeline gas from 46 percent to 10 percent last year. This decrease, however, came at a high cost to the economy, as the price of gas rose to $70 per million British thermal units (Btu), up from $27 before the Ukraine war. By the end of the year, the price had fallen to $36, compared to $7.03 in the US.

This price disparity has been hard to stomach. French President Emmanuel Macron went public with his annoyance: “American gas is 3-4 times cheaper on the domestic market than the price at which they offer it to Europeans,” criticizing what he called “American double standards.”

High gas prices have made Europe an appealing destination for gas exporters from around the world, with increased interest from countries such as Egypt, Qatar, Turkey, UAE, Iran, Libya, Algeria, and those bordering the Mediterranean basin, as they either export gas, or possess gas but lack infrastructure.

To replace the cheaper Russian pipeline gas, European countries are being forced to seek out the more expensive LNG. The EU and Britain are working to increase LNG import capacity by 5.3 billion cubic feet (BCF) per day by the end of 2023, and by 34 percent, or 6.8 BCF per day, by 2024.

Can West Asia, North Africa meet Europe’s gas needs?

The West Asia and North Africa region has the potential to partially meet Europe’s gas needs due to its geographic proximity and the presence of countries with large gas reserves and export infrastructure, such as Palestine/Israel, Algeria, and Egypt. However, there are several obstacles that must be considered.

Map of natural gas pipelines to Europe

For example, Egypt’s high production costs and increasing domestic consumption limit its export capacity. Additionally, Europe would need to be willing to pay a higher price than the Asian market for Egyptian gas.

Israel, on the other hand, has seen an increase in gas exports to Europe in the first half of 2022 after the pipeline to Egypt via Jordan was restored in March, but it is unlikely to significantly increase exports in 2023 due to factors such as limited export capacity and high domestic consumption. Experts predict that Israel may export around 10 BCM of gas to Europe this year, similar to the amount exported in 2022.

Qatar is the only Persian Gulf emirate that has increased its gas exports to Europe for 2022. This is largely because Persian Gulf countries prefer to sell their gas to Asian markets, where they can garner higher profits due to lower shipping costs and longer-term contracts.

Last year, Qatar took advantage of the significant increase in gas prices to sell part of its shipments on the European spot market. According to the Qatari Minister of Energy, between 10 percent and 15 percent of Qatar’s production can be diverted to this market.

However, it may be difficult for Europe to attract Qatari gas away from the Asian market, especially as China is expected to recover its demand for gas in 2023. In a policy home-goal, western sanctions on Iran, which has the second-largest natural gas reserves in the world, impede the investment needed to increase Iranian production.

No real alternatives

Iran’s lack of infrastructure connecting it to Europe and high domestic consumption also affect its export capacity. According to a report by BP, Iran produced 257 BCM of gas in 2021, of which 241.1 BCM were consumed domestically.

With regards to Algeria, the main obstacle in increasing its gas exports to Europe is political tension with Morocco and Spain that led to the suspension of the Moroccan-European gas pipeline project, which can export 10.3 billion cubic meters of Algerian gas.

In the case of the UAE, despite having the seventh-largest proven natural gas reserves in the world, its production is not sufficient to meet the demands of the local market and it imports a third of its gas consumption from Qatar through an undersea pipeline. European countries are currently in talks with Abu Dhabi to accelerate work on gas projects and increase production.

As for Saudi Arabia, it consumes all of its gas production domestically and does not export any, with a total production of 117.3 BCM in 2021. There are also expectations for a significant increase in the demand for oil and coal in 2023. The World Bank reports that this is due to an increase in European countries’ reliance on these fossil fuels instead of natural gas. This increase in demand will keep oil prices high, allowing Saudi Arabia and other OPEC+ members to make large profits.

The dilemma of growing demand

The Paris-based International Energy Agency (IEA) predicts that global demand for natural gas will increase to 394 BCM this year, driven in part by Europe’s need to diversify its sources of gas away from Russia. And West Asia, with its significant reserves, remains a key region for Europe to tap into for this purpose.

The challenge remains in finding cost-effective ways to transport the gas from the region to Europe, which will necessitate building a pipeline connecting the Mediterranean Basin to the Old Continent.

Failure to do so will result in Europe continuing to pay a high premium for its energy security without achieving true independence. The alternative for Europe is to rely on LNG from the US. This gives Europe almost complete independence from Russian gas, but keeps it weak, obedient, and dependent on American energy supplies.

The views expressed in this article do not necessarily reflect those of The Cradle.

• Iranian oil exports hit record high, reach pre-sanction levels
• Iran to receive Russian Su-35s ‘soon’: Official

The 2023 War – ‘Setting the Theatre’

January 13, 2023

Source

Alastair Crooke

The China-Russia axis are lighting the fires of a structural insurrection against the West across much of the Rest of World. Its fires are aimed at ‘boiling the frog slowly’

A top US Marine General, James Bierman, in a recent interview with the Financial Times, explained in a moment of candour how the US is “setting the theatre” for possible war with China, whilst casually admitting as an aside, how US defence planners had been busy inside Ukraine years ago, “earnestly preparing” for war with Russia — even down to the “pre-positioning of supplies”, identifying sites from which the US might operate support, and sustain operations. Simply put, they were there,readying the battle space for years.

No surprise really, as such military responses flow directly from the core US strategic decision to actuate the 1992 ‘WolfowitzDoctrine’ that the US must plan and preemptively act, to disable any potential Great Power — well before it reaches the point at which it can rival or impair US hegemony.

NATO today has progressed to war with Russia in a battlespace, which in 2023, may or may not stay limited to Ukraine. Simply put the point is that the shift to ‘War’ (whether incremental or not) marks a fundamental transition from which there is no going back to ab initio — ‘war economies’ in essence, are structurally different to the ‘normal’ from which the West began, and to which it has grown accustomed over recent decades. A war society — even if only partly mobilised — thinks and acts structurally differently from peacetime society.

War is not about gentlemanly conduct… either. Empathy for others is its first casualty — the latter being a requirement for sustaining a fighting spirit.

Yet, the carefully curated fiction in Europe and the US continues that nothing really has, or will ‘change’: we are in a temporary ‘blip’. That’s all.

Zoltan Pozsar, the influential finance ‘oracle’ at Credit Suisse, has already made the point in his latest War and Peace essay (subscription only) that War is well underway – by simply listing the events of 2022:

• The G7’s financial blockade of Russia (The West setting the battle space)
• Russia’s energy blockade of the EU (Russia begins setting its theatre)
• The U.S.’s technology blockade of China (America pre-positioning of sites to sustain operations)
• China’s naval blockade of Taiwan, (China demonstrating preparedness)
• The U.S.’s “blockade” of the EU’s EV sector with the Inflation Reduction Act. (The US defence planners preparing for future ‘supply-lines)
• China’s “pincer movement” around all of OPEC+ with the growing trend of invoicing oil and gas sales in renminbi. (The Russia-China ‘Commodity Battlespace’).

This list amounts to one major geo-political ‘upset’ occurring, on average, every two months — moving the world decisively away from the so-called ‘normal’ (for which so many in the Consuming Class ardently yearn) to an intermediate state of War.

Pozsar’s list shows that the tectonic plates of geo-politics are seriously ‘on the move’ — shifts, which are accelerating and becoming ever more intertwined, yet that still remain far from arriving at any settled place. ‘War’ will likely be a major disruptor (at the very least), until some equilibrium is established. And that may take some years.

Ultimately, ‘War’ does make its impact on the conventional public mindset — albeit slowly. It seems to be fear of the impact on an unprepared mindset that is behind the decision to prolong Ukraine’s suffering, and thus trigger the War of 2023: An admission of failure in Ukraine is seen to risk spooking volatile western markets (i.e. higher interest rates for longer). And frank-talking represents a hard option for a western world — used to ‘easy decisions’, and ‘can kicking’ — to take.

Pozsar, being a finance guru, understandably is focussed in his essay on finance. But conceivably, the reference to Kindleberger’s Manias, Panics and Crashes is therefore not whimsical, but included as a hint to the possible ‘hit’ to the conventional psyche.

In any event, Pozsar leaves us four key economic takeaways (with brief comments added):

1. War is history’s principle driver of inflation, and the bankruptcy for states. (Comment: war-driven inflation and Quantitative Tightening (QT) enacted to fight inflation, are policies working in radical opposition to each other. Central Banks’ role attenuates to supporting war needs — at the expense of other variables – in wartime.
2. War implies an effective and expandable industrial capacity for producing weapons (rapidly), which, in itself, requires secure supply-lines to feed that capacity. (A quality which the West no longer possesses, and which is costly to recreate);
3. Commodities which often serve as collateral to loans become scarce – and with that scarcity, show up as commodity ‘inflation’;
4. And finally, War cuts new financial channels i.e. “the m-CBDC Bridge project” (see here).

The point needs underlining again: War creates different financial dynamics and shapes a different psyche. More importantly, ‘War’ is not a stable phenomenon. It can start with petty tit-for-tat strikes on a rival’s infrastructure and then — with every incremental ‘mission creep’ — slip along the curve towards full war. NATO is not just mission creeping in its war on Russia, it is mission jogging — fearing a Ukraine humiliation in the wake of the earlier Afghanistan débacle.

The EU hopes to halt that slide well short of full war. It is nonetheless a very slippery slope. The point of War is to inflict pain and attrit your enemy. To this extent it is open to mutation. Formal sanctions and caps on energy quickly metamorphose into the sabotage of pipelines or the seizure of tankers.

Russia and China however, are certainly not naïve, and have been busy setting their own theatre, ahead of a potential wider clash with NATO.

China and Russia can now claim to have built a strategic relationship, not only with OPEC+, but with Iran and key gas producers.

Russia, Iran, and Venezuela account for about 40% of the world’s proven oil reserves, and each of them are currently selling oil to China for renminbi at a steep discount. GCC countries account for another 40% of proven oil reserves — and are being courted by China to accept renminbi for their oil — in exchange for transformative investments.

This is a significant new battlespace being readied — ending Dollar hegemony through boiling the frog slowly.

The contesting party made the initial strike, sanctioning half of OPEC with those 40% of the world’s oil reserves. That thrust failed: the Russian economy survived — and unsurprisingly — the sanctions ‘lost’ those states to Europe, ‘handing them’ over instead to China.

China meanwhile is courting the other half of OPEC with an offer that is hard to refuse: “Over the next “three to five years”, China will not only pay for more oil in renminbi – but more significantly, ‘will pay’ with new investments in downstream petrochemical industries in Iran, Saudi Arabia, and the GCC more broadly. It will, in other words, build out the successor generation economy” for these fossil fuel exporters whose energy sell-by date approaches.

The key point here is that in the future, much more ‘value-added’ (in the course of production) will be captured locally — at the expense of industries in the West. Pozsar cheekily calls this: “Our commodity, your problem… Our commodity, our emancipation”. Or, in other words, the China-Russia axis are lighting the fires of a structural insurrection against the West across much of the Rest of World.

Its fires are aimed at ‘boiling the frog slowly’ — not just that of the dollar hegemony, but also that of a now uncompetitive western economy.

Emancipation? Yes! Here is the crux: China is receiving Russian, Iranian and Venezuelan energy at a big 30% discount.Meanwhile, Europe still gets energy for its industry — but only at a big mark-up. In short, more, and occasionally all, product added-value will be captured by cheap-energy ‘friendly’ states, at the expense of the uncompetitive ‘unfriendlies’.

“China – the nemesis – paradoxically has been a big exporter of high mark-up Russian LNG to Europe, and India a big exporter of high mark-up Russian oil and refined products such as diesel – to Europe. We should expect more [of this in the future] across more products – and invoiced not just in euros and dollars, but also renminbi, dirhams, and rupees’ ‘, Poszar suggests.

It may not look so obvious, but it is a financial war. If the EU is content to take the ‘easy way’ out of its fall into uncompetitiveness (via subsidies to allow for high-mark-up imports), then as Napoleon once remarked when observing an enemy making a mistake: Observe silence!

For Europe, this means much less domestic production – and more inflation — as price inflating alternatives are imported from the East. The West taking the ‘easy decision’ (since its renewable strategy has not been well thought through), likely will find the arrangement to be at the expense of growth in the West — a course prefiguring a weaker West, in the near future.

The EU will be particularly hard-hit. It has elected to become dependent on US LNG, just at the moment that production from US shale fields has peaked, with what output there is likely ear-marked to the US domestic market.

Thus, as general Bierman outlined how the US prepared the battlespace in Ukraine, Russia and China and the BRICS planners have been busy setting their own ‘theater’.

Of course, it doesn’t have to be like it ‘is’: Europe’s stumble towards calamity reflects an embedded psychology of the Western ruling élite. There is no strategic reasoning, nor ‘hard-decisions’ being taken in the West at all. It is all narcissistic Merkelism (hard decisions postponed, and then ‘fudged’ through subsidy handouts). Merkelism is so called after Angela Merkel’s reign at the EU, where fundamental reform was invariably postponed.

There is no need for thinking-things-through, or for hard decisions, when leaders are held by the unshakable conviction that the West IS the centre of the Universe. It is sufficient to postpone, awaiting the inexorable to unfold itself.

The recent history of US-led forever-wars is further evidence of this western lacuna: These zombie wars drag on for years with no plausible justification, only to be unceremoniously dropped. The strategic dynamics were easier suppressed and forgotten however, when fighting insurgency wars — as opposed to fighting two well-armed, peer competitor-states.

The same dysfunctionality has been apparent in many slow-rolling western crises: Nevertheless, we persist… because protecting the fragile psychology of our leaders — and an influential sector of the public — takes precedence. The inability to countenance losing drives our élites to prefer sacrifice by their own people, rather than see their delusions exposed.

Hence, reality has to be abjured. So, we live a nebulous between-times — so much happening, but so little movement. Only when the outbreak of crisis can no longer be ignored — by even the MSM and Tech censors — might some real effort be made to address root causes.

This conundrum however, places a huge burden on the shoulders of Moscow and Beijing to manage the War escalation in a careful fashion — in face of a West for whom losing is intolerable.

Why the CIA attempted a ‘Maidan uprising’ in Brazil

The failed coup in Brazil is the latest CIA stunt, just as the country is forging stronger ties with the east.

January 10 2023

Photo Credit: The Cradle

By Pepe Escobar

A former US intelligence official has confirmed that the shambolic Maidan remix staged in Brasilia on 8 January was a CIA operation, and linked it to the recent attempts at color revolution in Iran.

On Sunday, alleged supporters of former right-wing President Jair Bolsonaro stormed Brazil’s Congress, Supreme Court, and  presidential palace, bypassing flimsy security barricades, climbing on roofs, smashing windows, destroying public property including precious paintings, while calling for a military coup as part of a regime change scheme targeting elected President Luis Inacio “Lula” da Silva.

According to the US source, the reason for staging the operation – which bears visible signs of hasty planning – now, is that Brazil is set to reassert itself in global geopolitics alongside fellow BRICS states Russia, India, and China.

That suggests CIA planners are avid readers of Credit Suisse strategist Zoltan Pozsar, formerly of the New York Fed. In his ground-breaking 27 December report titled War and Commodity Encumbrance, Pozsar states that “the multipolar world order is being built not by G7 heads of state but by the ‘G7 of the East’ (the BRICS heads of state), which is a G5 really but because of ‘BRICSpansion’, I took the liberty to round up.”

He refers here to reports that Algeria, Argentina, Iran have already applied to join the BRICS – or rather its expanded version “BRICS+” – with further interest expressed by Saudi Arabia, Turkiye, Egypt, Afghanistan, and Indonesia.

The US source drew a parallel between the CIA’s Maidan in Brazil and a series of recent street demonstrations in Iran instrumentalized by the agency as part of a new color revolution drive: “These CIA operations in Brazil and Iran parallel the operation in Venezuela in 2002 that was highly successful at the start as rioters managed to seize Hugo Chavez.”

Enter the “G7 of the East”

Straussian neo-cons placed at the top of the CIA, irrespective of their political affiliation, are livid that the “G7 of the East” – as in the BRICS+ configuration of the near future – are fast moving out of the US dollar orbit.

Straussian John Bolton – who has just publicized his interest in running for the US presidency – is now demanding the ouster of Turkey from NATO as the Global South realigns rapidly within new multipolar institutions.

Russian Foreign Minister Sergey Lavrov and his new Chinese counterpart Qin Gang have just announced the merging of the China-driven Belt and Road Initiative (BRI) and the Russia-driven Eurasia Economic Union (EAEU). This means that the largest 21^st century trade/connectivity/development project – the Chinese New Silk Roads – is now even more complex, and keeps expanding.

That sets the stage for the introduction, already being designed at various levels, of a new international trading currency aimed at supplanting then replacing the US dollar. Apart from an internal debate among the BRICS, one of the key vectors is the discussion team set up between the EAEU and China. When concluded, these deliberations will be presented to BRI-EAEU partner nations and of course the expanded BRICS+.

Lula at the helm in Brazil, in what is now his third non-successive presidential term, will offer a tremendous boost to BRICS+, In the 2000s, side by side with Russian President Putin and former Chinese President Hu Jintao, Lula was a key conceptualizer of a deeper role for BRICS, including trade in their own currencies.

BRICS as “the new G7 of the East,” as defined by Pozsar, is beyond anathema – as much for Straussian neo-cons as for neoliberal.

The US is being slowly but surely expelled from wider Eurasia by concerted actions of the Russia-China strategic partnership.

Ukraine is a black hole – where NATO faces a humiliation that will make Afghanistan look like Alice in Wonderland. A feeble EU being forced by Washington to de-industrialize and buy US Liquified Natural Gas (LNG) at absurdly high cost has no essential resources for the Empire to plunder.

Geoeconomically, that leaves the US-denominated “Western Hemisphere,” especially immense energy-rich Venezuela as the key target. And geopolitically, the key regional actor is Brazil.

The Straussian neo-con play is to pull all stops to prevent Chinese and Russian trade expansion and political influence in Latin America, which Washington – irrespective of international law and the concept of sovereignty, continues to call “our backyard.” In times where neoliberalism is so “inclusive” that Zionists wear swastikas, the Monroe Doctrine is back, on steroids.

All about the ‘strategy of tension’

Clues for Maidan in Brazil can be obtained, for instance, at the US Army Cyber Command at Fort Gordon, where it’s no secret the CIA deployed hundreds of assets across Brazil ahead of the recent presidential election – faithful to the “strategy of tension” playbook.

CIA chatter was intercepted at Fort Gordon since mid-2022. The main theme then was the imposition of the widespread narrative that ‘Lula could only win by cheating.’

A key target of the CIA operation was to discredit by all means the Brazilian electoral process, paving the way for a prepackaged narrative that is now unraveling: a defeated Bolsonaro fleeing Brazil and seeking refuge at former US president Donald Trump’s Mar-a-Lago mansion. Bolsonaro, advised by Steve Bannon, did flee Brazil, skipping Lula’s inauguration, but because he’s terrified he may be facing the slammer sooner rather than later. And by the way, he is in Orlando, not Mar-a-Lago.

The icing on the stale Maidan cake was what happened this past Sunday: fabricating a 8 January in Brasilia mirroring the events of 6 January, 2021 in Washington, and of course imprinting the Bolsonaro-Trump link on people’s minds.

The amateurish nature of 8 January in Brasilia suggests CIA planners got lost in their own plot. The whole farce had to be anticipated because of Pozsar’s report, which everyone-who-matters has read across the New York-Beltway axis.

What is clear, is that for some factions of the powerful US establishment, getting rid of Trump at all costs is even more crucial than crippling Brazil’s role in BRICS+.

When it comes to the internal factors of Maidan in Brazil, borrowing from novelist Gabriel Garcia Marquez, everything walks and talks like the Chronicle of a Coup Foretold. It is impossible that the security apparatus around Lula could not have foreseen these events, especially considering the tsunami of signs on social networks.

So there must have been a concerted effort to act softly – without any preventive big sticks – while just emitting the usual neoliberal babble.

After all, Lula’s cabinet is a mess, with ministers constantly clashing and some members supporting Bolsonaro even a few months ago. Lula calls it a “national unity government,” but it is more like a tawdry patchwork job.

Brazilian analyst Quantum Bird, a globally respected physics scholar who has returned home after a long stint in NATO lands, notes how there are “too many actors in play and too many antagonistic interests. Among Lula’s ministers, we find Bolsonarists, neoliberal-rentiers, climate interventionism converts, identity politics practitioners and a vast fauna of political neophytes and social climbers, all well aligned with Washington’s imperial interests.”

CIA-stoked ‘militants’ on the prowl

One plausible scenario is that powerful sectors of the Brazilian military – at the service of the usual Straussian neo-con think tanks, plus global finance capital – could not really pull off a real coup, considering massive popular rejection, and had to settle at best for a “soft” farce. That illustrates just how much this self-aggrandizing and highly corrupt military faction is isolated from Brazilian society.

What is deeply worrying, as Quantum Bird notes, is that the unanimity in condemning 8 January from all quarters, while no one took responsibility, “shows how Lula navigates virtually alone in a shallow sea infested by sharpened corals and hungry sharks.”

Lula’s position, he adds, “decreeing a federal intervention all by himself, without strong faces of his own government or relevant authorities, shows an improvised, disorganized and amateurish reaction.”

And all that, once again, after CIA-stoked “militants” had been organizing the “protests” openly on social media for days.

The same old CIA playbook though remains at work. It still boggles the mind how easy it is to subvert Brazil, one of the natural leaders of the Global South. Attempted old school coups cum regime change/color revolution scripts will keep being played – remember Kazakhstan in early 2021, and Iran only a few months ago.

As much as the self-aggrandizing faction of the Brazilian military may believe they control the nation, if Lula’s significant masses hit the streets in full force against the 8 January farce, the army’s impotence will be graphically imprinted. And since this is a CIA operation, the handlers will order their tropical military vassals to behave like ostriches.

The future, unfortunately, is ominous. The US establishment will not allow Brazil, the BRICS economy with the best potential after China, to be back in business with full force and in synch with the Russia-China strategic partnership.

Straussian neo-cons and neoliberals, certified geopolitical jackals and hyenas, will get even more ferocious as the “G7 of the East,” Brazil included, moves to end the suzerainty of the US dollar as imperial control of the world vanishes.

The views expressed in this article do not necessarily reflect those of The Cradle.

Michael Hudson gives an interview to a German magazine

December 16, 2022

Posted with the author’s permission

Boos German interview Dec 15 2022

Dear Prof Hudson,

Once again: Herzliche Grüße aus Berlin!

Last time we spoke for German print magazine “Four” in June. Right now I also work for MEGA Radio, a radio news station for Germany, Austria and Switzerland. We broadcast from Vienna and are located in Berlin, Bavaria and Austria.

Hereby I would like to invite you to another interview via ZOOM to record it for our radio program. It would be an update on our last interview. Maybe around 20-30 Minutes long.

See also our last talk: https://www.vierte.online/2022/06/03/ukraine-a-trojan-for-germanys-us-dependence/

I don’t know if that’s too short notice, but would you have time for such a conversation next week or the week after?

Otherwise, also at the beginning of January.

Here are my questions:

(1.) You made some predictions in our last interview for “Four” magazine which became true.

You talked about crisis for German companies in the production of fertilizer. This just hit the headlines weeks after our interview.

You also said: “What you characterize as “blocking Nord Stream 2” is really a Buy-American policy.” This now also became more than clear after the destroyed Nord Stream pipelines.

Could you comment that?

MH: U.S. foreign policy has long concentrated on control of the international oil trade. This trade is a leading contributor to the U.S. balance of payments, and its control gives U.S. diplomats the ability to impose a chokehold on other countries.

Oil is the key supplier of energy, and the rise in labor productivity and GDP for the leading economies tends to reflect the rise in energy use per worker. Oil and gas are not only for burning for energy, but are also a basic chemical input for fertilizers, and hence for agricultural productivity, as well as for much plastic and other chemical production.

So U.S. strategists recognize that cutting countries off from oil and its derivatives will stifle their industry and agriculture. The ability to impose such sanctions enables the U.S. to make countries dependent on compliance with U.S. policy so as not to be “excommunicated” from the oil trade.

U.S. diplomats have been telling Europe for many years not to rely on Russian oil and gas. The aim is twofold: to deprive Russia of its major trade surplus, and to capture the vast European market for U.S. oil producers. U.S. diplomats convinced German leaders not to approve the Nord Stream 2 pipeline, and finally used the excuse of the NATO war with Russia in Ukraine to act unilaterally to arrange the destruction of both Nord Stream 1 and 2 pipelines.

(2.) For our audience, our listeners: In your new book “The Destiny of Civilization: Finance Capitalism, Industrial Capitalism, or Socialism”

You state that the world economy is now fracturing between two parts, the United States and Europe is the dollarized part.

And this Western neoliberal unit is driving Eurasia and most of the Global South into a separate group. You just stated this in an interview from November.

The Rentier Economy is a Free Lunch

Could you explain this for our outlet?

MH: The split is not only geographic but above all reflects the conflict between Western neoliberalism and the traditional logic of industrial capitalism. The West has deindustrialized its economies by replacing industrial capitalism with finance capitalism, initially in an attempt to keep its wages down by moving abroad to employ foreign labor, and then to try and establish monopoly privileges and captive markets or arms (and now oil) and high-technology essentials, becoming rentier economies.

A century ago, industrial capitalism was expected to evolve into industrial socialism, with governments providing subsidized basic infrastructure services (such as health care, education, communication, research and development) to minimize their cost of living and doing business. That is how the United States, Germany and other countries built up their industrial power, and it also is how China and other Eurasian countries have done so more recently.

But the West’s choice to privatize and financialize its basic infrastructure, dismantling the role of government and shifting planning to Wall Street, London and other financial centers, has left it with little to offer other countries – except or the promise not to bomb them or treat them as enemies if they seek to keep their wealth in their own hands instead of transferring it to U.S. investors and corporations.

The result is that when China and other countries build up their economies in the same way that the United States did from the end of its Civil War to World War II, they are treated as enemies. It is as if U.S. diplomats see that the game is lost, and that their economy has become so debt-ridden, privatized and high-cost that it cannot compete, that it simply hopes to keep making other countries dependent tributaries for as long as it can until the game finally is over.

If the U.S. succeeds in imposing financial neoliberalism on the world, then other countries will end up with the same problems that the United States is experiencing.

(3.) Now the first terminals for LNG from the US are opened in Germany. How will this effect trade and interdependence / dependency between Germany and United States?

MH: The U.S. sanctions and destruction of Nord Stream 1 and 2 have made Europe dependent on U.S. supplies, at so high a cost of LNG gas (about six times what Americans and Asians have to pay) that Germany and other countries have lost their ability to compete in steel making, glass making, aluminum and many other sectors. This creates a vacuum which U.S. affiliates home to fill from their investments in other countries or even from the U.S. itself.

The expectation is that German and other European heavy industry, chemical and other manufacturing will have to move to the United States to obtain oil and other essentials that they are told not to buy from Russia, Iran or other alternatives. The assumption is that they can be blocked from relocating in Russia or Asia by imposing sanctions, fines and political meddling European politics by U.S. NGOs and National Endowment for Democracy satellites in, as has been the case since 1945. We can expect a new Operation Gladio to promote politicians willing to sustain this Global Fracture and the shift of European industry to the United States.

One question is whether Germany’s skilled labor will follow. That typically is what occurs in such situations. This kind of demographic shrinkage is what the Baltic states have experienced. It is a byproduct of neoliberal policies.

(4.) What is your view on the current military situation in the Russian/Ukrainian war?

MH: It looks like Russia will easily win in February or March. It probably will create a Demiliarized Zone to protect the Russian-speaking areas (probably incorporated into Russia) from the pro-NATO West in order to prevent sabotage and terrorism.

Europe will be told to continue to boycott Russia and its allies instead of seeking mutual gains by reciprocal trade and investment. The U.S. may urge Poland and other countries to “fight to the last Pole” or Lithuanian, emulating Ukraine. It will put pressure on Hungary. But most of all, it will insist that Europe spend an immense sum to re-arm, mainly with U.S. arms. This expense will crowd out social spending to help Europe cope with its spreading industrial depression or subsidies to revive its industry. So a militarized economy will become a rising overhead – while consumer and industrial debt increase, along with government debt.

As this occurs, Russia may demand that NATO roll back its borders to pre-1991 boundaries. That is the most likely flash point of conflict.

(5.) What is your view on the current financial situation in this war. The G7 and EU governments talk already about rebuilding and reconstruction of Ukraine after the war. What does this mean for Western businesses and finance capitalism?

MH: Ukraine hardly can be rebuilt. First of all, much of its population has left, and is unlikely to return, given the destruction of housing and infrastructure – and husbands.

Second, Ukraine is owned mainly by a narrow group of kleptocrats – who are trying to sell out to Western agricultural investors and other vultures. (I think you know who they are.)

Ukraine is already debt-ridden, and has become a fiefdom of the IMF (meaning in practice, of NATO). Europe will be asked to “contribute,” and the foreign reserves seized from Russia may be spent on hiring U.S. companies to make a financial killing rebuilding a pretense of an economy in Ukraine – leaving the country even more debt ridden.

A new Democratic Party secretary of state will echo Madeline Albright and say that the killing of Ukraine’s economy, children and soldiers “was all worth it” as the cost of spreading democracy U.S.-style.

(6.) I’ve read lots of background reports on the sanctions against Russia. It seems more and more the sanctions hit Russia hard, because they cannot produce all products, esp. technology, by themselves. On the other hand Russia have now more stable business and buyers with and in China, India.

What real effect do the sanctions have according to your analysis?

MH: The U.S. sanctions have turned out to be an unanticipated godsend for Russia. In agriculture, for instance, sanctions against Lithuanian and other Baltic dairy exports has led to a flowering of a domestic Russian cheese and dairy sector. Russia is now the world’s largest grain exporter, thanks to the Western sanctions that have had much the same effect as protective tariffs and import quotas of the sort that the United States used in the 1930s to modernize its agricultural sector.

If President Biden were a secret Russian agent, he hardly could have helped Russia more. Russia needed the economic isolation of protectionism, but was still too entranced by neoliberal free-trade policy to do this by itself. So the U.S. did it for it.

Sanctions oblige countries to become more self-reliant, at least in basic needs such as food and energy. This self-reliance is the best defense against U.S. economic destabilization to force regime change and similar compliance.

One effect is that Russia will need to buy much less from Europe even after the fighting in Ukraine ends. So there will be less need for Russia to export raw materials to Europe. It can work these up themselves. The industrial core that was Europe may end up more in Russia and its Asian allies than in the United States.

That is the ironic result of NATO’s new Iron Curtain.

(7.) How would you describe China, Russia and India: Do you see Industrial Capitalism or Socialism there?

MH: RIC was the original core of the BRICS, now greatly extended to include Iran and much of Central Asia and the roads involved with China’s Belt and Road initiative. The goal is for Eurasia no longer to have to rely on Europe or North America.

Secretary of Defense Donald Rumsfeld often referred to “Old Europe” as a shrinking dead zone. It failed to follow its plans a century ago to evolve into an increasingly socialized economy with government subsidy of rising living standards and labor productivity, science and industry. Europe rejected not only Marxism but the basis of Marxist analysis in the classical economics of Adam Smith, John Stuart Mill and their contemporaries. That path has been followed in Eurasia, while the right-wing anti-government liberalism of the Austrian and Chicago Schools has destroyed the NATO economies from within.

As the locus of industrial and technological leadership moves eastward, European investment and labor probably will follow.

The Eurasian countries will still visit Europe as tourists, as Americans like to visit England as a kind of theme park of post-feudal gentry, the posting of the palace guards and other quaint memories of the days of knights and dragons. European countries will look more like that of Jamaica and the Caribbean, with hotels and hospitality becoming the main growth sectors, with Frenchmen and German waiters dressed in their quaint quasi-Hollywood costumes. Museums will do a thriving business as Europe itself turns into a kind of museum of post-industrialism.

(8.) Currently we saw the collapse and bankruptcy of the crypto exchange FXT. The management of this company seems to be highly criminal. How do you judge that?

MH: Crime is what made crypto a growth sector for the past few years. Investors bought crypto because it is a vehicle for the fortunes being made in international drug dealing, the arms trade, other crime and tax evasion. These are the great post-industrial growth sectors in Western economies.

Ponzi schemes often are good investment vehicles in their take-off stage – the pump-and-dump stage. It was inevitable that criminals would not only use crypto to transfer funds, but actually set up their own currencies “free of oppressive government regulation.” Criminals are the ultimate Chicago School free market libertarians.

Anyone can create their own currency, much as U.S. wild-west banks did in the mid-19^th century, printing currency at will. When one went shopping in the early 20^th century, the stores still had lists of the shifting valuations of various bank notes. The best designed ones tended to be the most successful.

(9.) Do you have any knowledge about business relations between FTX and Ukraine, the government in Kyiv? There were some rumours and press articles in the alternative media about it?

MH: The IMF and Congress have paid large amounts of money to the Ukraine government and its kleptocrats in charge. Newspapers report that much of this money has been turned over to FTX – which has become the second largest funder of the Democratic Party (behind George Soros, who also is said to be trying to buy up Ukrainian assets). So a circular flow seems to be at work: U.S. Congress votes for funding for Ukraine, which puts some of this money in FTX crypto to pay or the political campaign of pro-Ukrainian politicians.

(10.) Some months ago there were articles in the US press about plans by the FED: They are planning to establish a digital Dollar, a Central Bank Digitcal Currency (CBDC). Also in Europe ECB president Madame Lagarde and the German minister for finance, Lindner, talk about an introduction of the digital Euro.

Here in Germany some critical experts are warning this will only push the total surveillance of the population and customers.

What is your take on digital currencies?

MH: It’s not my department. All banking is electronic, so what does “digital” mean? To libertarians, it means no government oversight, but in government hands, the government will have a record of everything that anyone spends.

(11.) What is your view on the current weakness or strength of the US dollar, the Euro, the British Pound, Gold and Silver?

MH: The dollar will remain in demand, thanks to its success in making the Eurozone dependent on it. The British pound has little means of support, and little reason for foreigners to invest in it. The euro is a junior satellite currency to the dollar.

Without a dollar or other currency to hold their monetary reserves in, governments will continue to increase the proportion held in gold, because it doesn’t have government liabilities attached to it – so U.S. officials can’t simply grab it, as they did with Russia’s foreign reserves. Eurozone countries cannot be trusted not to follow U.S. orders to grab foreign countries’ reserves, so it will be shunned.

As the euro’s exchange rate declines against the dollar, foreign investment will decline, because investors will not want to invest in (1) a shrinking market, and (2) companies that earn domestic euros that are worth fewer and fewer dollars or other hard currency for head offices.

Of course, gold will have to be kept at home, so that it can’t simply be grabbed, as the Bank of England grabbed Venezuela’s gold and gave it to the right-wing U.S. proxy. Germany would be wise to accelerate its airlift of its own gold supply from the U.S. Federal Reserve Bank vaults in New York City.

(12.) What is your current analysis of the energy and financial crises in the world?

MH: No real crisis as much as a slow crash. Rising prices paid for what America exports: oil, food and IT monopoly goods, with living costs for consumers rising faster than wages. So there will be a tightening squeeze or most families. The middle class will discover that it really is the wage-earning class after all, and will go deeper into debt – especially if it tries to protect itself by taking out a mortgage to buy a home.

I’ve been studying the 11^th and 12^th centuries for my history of debt, and I came across a story that may have relevance to the questions that you’ve asked. NATO keeps claiming that it is a defensive alliance. But Russia has no desire to invade Europe. The reason is obvious: No army can invade a major country. More important, Russia does not even have a motive to destroy Europe as a U.S.-puppet adversary. Europe already is self-destructing.

I am reminded of the battle of Manzikert in 1071, when the Byzantine Empire lost to the Seljuk Turks (largely because its general on whom the emperor had depended, Andronikos Doukas, defected, and then overthrew the Emperor. Crusade of Kings, a game supplement, covers the battle extensively, and claims the following conversation took place between Alp Arslan and Romanos:^[52]

Alp Arslan: “What would you do if I were brought before you as a prisoner?”

Romanos: “Perhaps I’d kill you, or exhibit you in the streets of Constantinople.”

Alp Arslan: “My punishment is far heavier. I forgive you, and set you free.”

That is the punishment that Europe will receive from Eurasia. Its leaders have made their choice: to be a U.S. satellite.

The OUN-Russia war (no longer an SMO): What do the parties want and what does the future hold?

November 23, 2022

Source

By Eric Arthur Blair

During this current relative reduction of hostilities in Ukraine, the calm before the storm so to speak, it may be useful to reflect upon the goals of the various geopolitical players, whether stated overtly or intended covertly. This may enable us to make educated guesses as to how events may ultimately unfold.

WHAT DOES RUSSIA WANT?

The party whose openly stated goals appear to align most closely with their defacto goals seems to be Russia, who at the start of the special military operation stated that they wanted the denazification and demilitarisation of Ukraine, the cessation of hostilities against and the autonomy of Donbass (respecting the rights of Russian speakers) and the long term neutrality of Ukraine with no possibility of it being part of NATO, whether defacto (as it currently is) or dejure. Implicit in the latter is the indivisibility of security, the guarantee that US/NATO intermediate range missiles or so-called anti-ballistic missiles (which in reality can be fitted with nuclear warheads and function as INF) will never be stationed in Ukrainian territory. The Russian status of Crimea was never negotiable.

Current situation: having attempted peace negotiations many times but being repeatedly rebuffed by the Oligarchic States of America / Ukraine / NATO (henceforth termed OUN) regarding all the concerns above, and facing ongoing genocidal aggression by the OUN against Donbass, Russia was forced to occupy and denazify much of Eastern/Southeastern Ukraine to protect Russian speaking civilians and Russia’s own security, discovering along the way more than 30 bio-pathogen labs near the border of Russia which had been funded by the USA (as admitted by droolin’ Nuland herself):

https://russiaun.ru/en/news/271022_nb

Subsequent referenda conducted in the the four liberated oblasts (Donetsk, Lugansk, Zaporizhia and Kherson) all overwhelmingly voted to join Russia. Hence ensuring the security of these territories in perpetuity is now a priority. It seems likely that the majority population in Russia will also demand the liberation of Odessa (which has a huge number of Russian speakers, constantly under violent threat by the UkroNazis. Please recall that 48 Russian speakers were killed by the firebombing of the trade union building in Odessa in 2014 by Ukronazis). Odessa was historically a Russian city. The return of Odessa to Russia will shrink the remaining territory of Ukraine to an impoverished land-bound “rump” state, if it continues to exist at all.

There was a time Ukraine had one of the greatest prospects of any European state, with large, fertile steppes producing massive quantities of grain for export, with the lucrative status as an energy hub to distribute Russian gas to Western Europe and a base for heavy industry in Donbass. All of this is now lost (as will likely be Ukraine’s remaining access to the Black Sea) because of a violent corrupt fascist puppet regime that was installed by the USA. The former bread basket of Europe is now the basket case of Europe.

Presently Russia is hammering the crap out of Ukraine, lobbing 3 times more missiles into Ukraine daily than Ukraine can muster (20,000 vs 7,000 according to Colonel Doug MacGregor). “Most missiles launched by Ukraine are ground to air anti-missile missiles” (many are outdated S-300s, one which supposedly went “astray” into Poland, killing two civilians). The OUN also continue to shell the Russian occupied Zaporizhia nuclear power plant, even while insisting that the Russians are shelling themselves.

As far as the previous Russian “retreats” from Kharkov and Kherson were concerned, please see my footnote, to place these events in proper historical perspective.

Where to from here? The Russians only began to seriously target Ukrainian infrastructure (electricity, water etc) eight months into the SMO, after the OUN terrorist attacks against the Nordstream pipelines and Kerch bridge. When the OUN sent drones through the maritime corridor previously designated for peaceful grain export, in order to attack the Russian fleet in Sevastopol, the Russians then proceeded to demolish even more Ukrainian infrastructure. The big question is this: why has Russia not yet destroyed 100% of Ukrainian infrastructure, which it could easily have done months ago? To US analysts, this was a puzzle, because standard practice of the USA has always been to completely destroy vital civilian infrastructure from day one, as in the case of Yugoslavia or Iraq or Libya. Possible explanations for Russian reticence are:

• Russia has far greater concern and respect for civilian lives than the USA has ever had, certainly much more so than the terrorist Ukronazis – who were deliberately bombing civilian areas in Donbass for the eight years prior.
• Complete interruption of electrical and water supplies in Ukraine will inevitably lead to the abandonment of all western Ukrainian cities and a massive exodus of at least 8 million Ukrainians to the countries West. This, along with the economic and energy hardships now afflicting Western Europe (as a result of their sanctions against Russia backfiring), will lead to massive social unrest, possibly even the collapse of some Western European countries. This horrific prospect is a massive bargaining chip that Russia holds over the West and is a huge incentive for the OUN to sue for peace now, before the worst effects of Winter set in.
• As shown above, it will be exceedingly easy for Russia to depopulate all of Ukraine all the way to Lviv, which will achieve the goal of the demilitarisation of Ukraine. This can be achieved right now, even without a single Russian soldier crossing West of the Dnieper river. However it appears that Russia’s preferred option is to achieve demilitarisation of Ukraine without depopulation, so as not to inflict excessive hardship on their cultural kin.

WHAT DO EUROPEANS WANT?

By “Europeans” we must distinguish between the so-called “leaders” of Europe and the ordinary people of Europe. The former are totally corrupt, bought-and-paid-for and in the pockets of the US neocons. The latter are largely clueless and brainwashed by their Mainstream media to adopt mindless anti-Russian hatred and bigotry. As far as can be seen right now, even if the European people could cobble together a vaguely coherent idea of what they may or may not want, their wishes are utterly irrelevant. They have no agency in how events are going to unfold, unless they can overthrow their US controlled puppet governments and install leaders who truly work in their interests. The solutions to the European problems are simple: reverse all sanctions against Russia, request that gas is delivered to them through Nordstream 2B and that the other 3 pipelines are repaired, and agree to total demilitarisation of Ukraine with removal of all Nazis and all NATO “advisers”. These are the best ways to prevent Russia from opening a floodgate of Ukro refugees into the West. Sanity is unlikely to prevail because the Germs in particular seem to be terminally stupid and spineless. So my advice to the Germs is this: get ready for a shitstorm of events: industrial and economic collapse and a massive influx of refugees who you will have to support with your dwindling tax base and rising inflation.

WHAT DO UKRAINIANS WANT?

This is no more relevant than the wishes of flotsam tossed about by a stormy sea .

WHAT DOES THE USA WANT?

There is a huge disconnect between the officially stated goals and covertly pursued goals of the USA, as befits a two faced “non agreement capable” imperialist oligarchy. The official line from the US is that they are engaging in a noble struggle to “free” Europe from being held to ransom by an “unreliable” energy provider, Russia, and that this is a global confrontation between Western “Democratic” and Eastern “Authoritarian” regimes for the future of the world. That is of course total bullshit. In reality, the exact opposites apply. All actions by the US with regard to Russia and Ukraine, dating back not just to 2014 but to 1991, were deceitfully ignoble, the US is utterly focused on the enslavement, not the liberation of Europe (to be permanently kept under the jackboot of US hegemony), Russia has always been a completely reliable provider of cheap energy to Europe and the Oligarchic States of America are completely undemocratic: they neglect the well being of their own citizens while donating hundreds of billions of tax payer dollars to the US MIC. “Authoritarian” Putin has always been careful to address the wishes of the Russian public (via the Duma) and the wishes of the majority populations of Crimea and Donbass (via referenda, which were much better conducted and more legitimate than the recent suspect and dodgy US mid-term elections https://podbay.fm/p/the-duran-podcast/e/1668956802 ).

Some short term goals of the US neocons, as far as sabotaging the sale of Russian energy to Europe and railroading the Europeans into buying very expensive fracked US LNG, seem to have been successful. However this will not work in the medium to long term because expensive fracked LNG can never generate industrial products economically competitive with products manufactured using much cheaper energy eg by China using piped Russian gas. Hence the medium and long term collapse of the German industrial economy is certain (hence they will eventually be unable to buy expensive US LNG) if the Germs continue down this foolish path. I previously devoted an article to the real motivations of the US neocons and oligarchs who have hijacked US policy.

Cui bono? The Big Picture

The medium term US tactics and goals were these: to confiscate more than $300 billion of Russian foreign reserves and to impose economic sanctions (more than 10 thousand so far) which would turn the “Ruble to rubble” (as stated by sleepy Joe) and trigger Russian economic collapse. This would create public unrest in Russia which would enable a US sponsored colour revolution to depose Putin in favour of a US designated puppet (echoes of “Yats is our guy, fuck the EU” droolin’ Nuland). Astroturf revolutions are an old tactic taken directly from the CIA playbook, dating back to the antics of Kermit Roosevelt in Tehran. Embroiling Russia in a lengthy resource-sapping war in Ukraine, perpetrated by US terrorist proxies, was designed to weaken Russia as Lloyd “Raytheon” Austin so transparently admitted. Stinkin’ Blinken also admitted the Ukraine situation was a US/NATO proxy war with Russia, just as he had crowed about how the bombing of Nordstream represented a “tremendous opportunity” for the US to sell LNG to Europe.

The US long term goal would eventually be to fragment Russia into smaller states (just as the USSR had previously been broken up, following its embroilment in a lengthy resource-sapping war in Afghanistan, perpetrated by US terrorist proxies). Those smaller post Russian banana republics would each have puppet leaders appointed by the USA, who would then foil the “belt and road” initiative of China, the next target of the US neocons. All of this devious skulduggery has been outlined in many a Beltway think-tank document, especially that from the Rand corporation.

Not only have every single one of those US goals failed, they have backfired spectacularly. Especially laughable is smellin’ Yellin’s “oil price cap” policy, which is being ignored by everybody. The only sane strategy is to negotiate peace with Russia. Nevertheless the position of the US at present remains unchanged: any peaceful economic links between Germany and Russia must be sabotaged at all costs, because it would create an economic-industrial behemoth that, along with China, would sideline the USA into irrelevance on the world stage. The only excuse Germany has for “sanctioning” Russian gas today is the so-called “aggression” of Russia in Ukraine. If a peaceful outcome in Ukraine is achieved, there will no longer be any excuse for Germany to deny itself Russian gas. Hence, from the POV of the USA, peace in Ukraine must be avoided at all costs. The consequence of refusing to achieve a peaceful settlement, of obstinately continuing to lob missiles against the Russians, will be this: the complete and utter destruction of Ukraine by Russia, with massive out-flux of refugees into Western Europe. Does the US care if there are economic and humanitarian catastrophes in the making (and of their making) in Western Europe? Absolutely not. Not only is the USA happy to fight Russia to the last Ukrainian, the USA is happy to fight Russia to the last European.

THE SPECIAL CASE OF TURKEY:

Turkey has been a long standing NATO member. Readers will remember from history that the stationing of US nuclear capable missiles in Turkey was the catalyst for the Cuban missile crisis of 1962. Today, Turkey and the OUN are best described as “frenemies”, now leaning towards being enemies. The USA sees Turkey as an unreliable ally and was particularly miffed by the Turkish insistence on buying Russian energy in Rubles, of continuing to honour Mir transactions and its intention to become a Russian natural gas hub, supplying south eastern Europe via the Turkstream pipeline. Erdogan firmly believes that the attempted coup against him in 2016 was perpetrated by Gulenists sponsored by the USA. The recent terrorist bombing in Istanbul which killed 6 and injured 81 was traced to an individual that the Turks claimed was a Kurd from northern Syria who was a proxy of the AngloZionists. We do not know if this is true, but what matters is that the Turks believe this to be true and it is certainly consistent with the history of the US using terrorist proxies. Accordingly, when the US ambassador to Turkey offered his condolences for the bombing, the Turkish interior minister flatly rejected it, saying that Turkey knew who did it, expressing disgust for such US hypocrisy. All US interactions with Turkey in recent years have counter productively served to push it closer towards Russia and the BRICS+ countries.

CONCLUSION: The USA is the worst terrorist state in the world, they represent the greatest threat of global nuclear war to every one of us (USAnians included) – which could cause human extinction. Being an enemy of the USA is dangerous, but being an ally (especially if you are a Germ or a Ukie) is fatal. The Turks are discovering this to their chagrin and are wising up.

Footnote: The AngloEuroZionist mainstream media and their stooge pundits always crow loudly over every transient Pyrrhic victory “won” by the Ukie proxies, while demonstrating a profound ignorance of history and strategy and reality. General Surovikin is nothing if not rational. Given a choice between precariously holding on to Kherson city located on the “wrong” side of the river (which can and will later be recaptured) and preserving the lives of Russian soldiers, he chose his soldiers. All civilians who appreciated the protection of Russia were evacuated. Die hard Ukie ideologues who prefer to freeze and starve this winter in an eviscerated city were allowed to stay.

This echoes the much higher stakes situation of 1812 when General Kutuzov had to choose between Moscow and his army and he chose his army. He allowed Napoleon to march into Moscow which had been stripped of any and all resources that could support the French, who eventually had to withdraw, enabling Russian forces to recapture Moscow. The Russians slaughtered the French as they withdrew. Today’s Ukie/NATO forces are tactically and strategically far more stupid than Napoleon.

Remember the “massive victory” of Ukies advancing into Kharkov oblast empty cow paddocks not long ago? The Russians had staged a tactical withdrawal* and suffered almost no casualties, but enticed the Ukies into open territory where the Ukies were sitting ducks to Russian artillery and rockets. The Ukies lost around 8000 dead. With such a great “success”, it is just a matter of time before the Ukies suicide their way to moribund victory.

(*this was a classic Mongol tactical “withdrawal” which the Kievan Rus had learned from history to their great cost, and now inflicted upon the stupid Ukies to their great cost.)

BTW, Kiev was founded by the primordial Rus, it was the first capital city of the Russian people who were then known as the Kievan Rus. That is historical fact.

EAB is not Russian, knows no Russians and has never been to Russia. Inspired by Tolstoy, he is learning more about Russian history day by day.

Russia, India, China, Iran: the Quad that really matters

Tuesday, 15 November 2022 3:55 PM 

By Pepe Escobar

Southeast Asia is right at the center of international relations for a whole week viz a viz three consecutive summits: Association of South East Asian Nations (ASEAN) summit in Phnom Penh, the Group of Twenty (G20) summit in Bali, and the Asia-Pacific Economic Cooperation (APEC) summit in Bangkok.  

Eighteen nations accounting for roughly half of the global economy represented at the first in-person ASEAN summit since the Covid-19 pandemic in Cambodia: the ASEAN 10, Japan, South Korea, China, India, US, Russia, Australia, and New Zealand. 

With characteristic Asian politeness, the summit chair, Cambodian Prime Minister Hun Sen (or “Colombian”, according to the so-called “leader of the free world”), said the plenary meeting was somewhat heated, but the atmosphere was not tense: “Leaders talked in a mature way, no one left.”

It was up to Russian Foreign Minister Sergey Lavrov to express what was really significant at the end of the summit.

While praising the “inclusive, open, equal structure of security and cooperation at ASEAN”, Lavrov stressed how Europe and NATO “want to militarize the region in order to contain Russia and China’s interests in the Indo-Pacific.”

A manifestation of this policy is how “AUKUS is openly aiming at confrontation in the South China Sea,” he said.

Lavrov also stressed how the West, via the NATO military alliance, is accepting ASEAN “only nominally” while promoting a completely “unclear” agenda. 

What’s clear though is how NATO “has moved towards Russian borders several times and now declared at the Madrid summit that they have taken global responsibility.”

This leads us to the clincher: “NATO is moving their line of defense to the South China Sea.” And, Lavrov added, Beijing holds the same assessment.

Here, concisely, is the open “secret” of our current geopolitical incandescence. Washington’s number one priority is the containment of China. That implies blocking the EU from getting closer to the key Eurasia drivers  – China, Russia, and Iran – engaged in building the world’s largest free trade/connectivity environment.

Adding to the decades-long hybrid war against Iran, the infinite weaponizing of the Ukrainian black hole fits into the initial stages of the battle.

For the Empire, Iran cannot profit from becoming a provider of cheap, quality energy to the EU. And in parallel, Russia must be cut off from the EU. The next step is to force the EU to cut itself off from China.

All that fits into the wildest, warped Straussian/neo-con wet dreams: to attack China, by emboldening Taiwan, first Russia must be weakened, via the instrumentalization (and destruction) of Ukraine.

And all along the scenario, Europe simply has no agency.     

Putin, Raeisi and the Erdogan track

Real life across key Eurasia nodes reveals a completely different picture. Take the relaxed get-together in Tehran between Russia’s top security official Nikolai Patrushev and his Iranian counterpart Ali Shamkhani last week.

They discussed not only security matters but also serious business – as in turbo-charged trade.

The National Iranian Oil Company (NIOC) will sign a $40 billion deal next month with Gazprom, bypassing US sanctions, and encompassing the development of two gas fields and six oilfields, swaps in natural gas and oil products, LNG projects, and the construction of gas pipelines.

Immediately after the Patrushev-Shamkhani meeting, President Putin called President Ebrahim Raeisi to keep up the “interaction in politics, trade and the economy, including transport and logistics,” according to the Kremlin.

Iranian president reportedly more than “welcomed” the “strengthening” of Moscow-Tehran ties.

Patrushev unequivocally supported Tehran over the latest color revolution adventure perpetrated under the framework of the Empire’s endless hybrid war.

Iran and the EAEU are negotiating a Free Trade Agreement (FTA) in parallel to the swap deals with Russian oil. Soon, SWIFT may be completely bypassed. The whole Global South is watching.

Simultaneous to Putin’s phone call, Turkiye’s Recep Tayyip Erdogan – conducting his own diplomatic overdrive, and just back from a summit of Turkic nations in Samarkand – stressed that the US and the collective West are attacking Russia “almost without limits”. 

Erdogan made it clear that Russia is a “powerful” state and commended its “great resistance”.

The response came exactly 24 hours later. Turkish intelligence cut to the chase, pointing out that the terrorist bombing in the perpetually busy Istiklal pedestrian street in Istanbul was designed in Kobane in northern Syria, which essentially responds to the US.

That constitutes a de-facto act of war and may unleash serious consequences, including a profound revision of Turkiye’s presence inside NATO.

Iran’s multi-track strategy

A Russia-Iran strategic alliance manifests itself practically as a historical inevitability. It recalls the time when the erstwhile USSR helped Iran militarily via North Korea, after an enforced US/Europe blockade.

Putin and Raeisi are taking it to the next level. Moscow and Tehran are developing a joint strategy to defeat the weaponization of sanctions by the collective West.

Iran, after all, has an absolutely stellar record of smashing variants of “maximum pressure” to bits. Also, it is now linked to a strategic nuclear umbrella offered by the “RICs” in BRICS (Russia, India, China).

So, Tehran may now plan to develop its massive economic potential within the framework of BRI, SCO, INSTC, the Eurasia Economic Union (EAEU), and the Russian-led Greater Eurasia Partnership.

Moscow’s game is pure sophistication: engaging in a high-level strategic oil alliance with Saudi Arabia while deepening its strategic partnership with Iran.

Immediately after Patrushev’s visit, Tehran announced the development of an indigenously built hypersonic ballistic missile, quite similar to the Russian KH-47 M2 Khinzal.

And the other significant news was connectivity-wise: the completion of part of a railway from strategic Chabahar Port to the border with Turkmenistan. That means imminent direct rail connectivity to the Central Asian, Russian and Chinese spheres. 

Add to it the predominant role of OPEC+, the development of BRICS+, and the pan-Eurasian drive to pricing trade, insurance, security, investments in the ruble, yuan, rial, etc.

There’s also the fact that Tehran could not care less about the endless collective West procrastination on the Joint Comprehensive Plan of Action (JCPOA), commonly known as Iran nuclear deal: what really matters now is the deepening relationship with the “RICs” in BRICS. 

Tehran refused to sign a tampered-with EU draft nuclear deal in Vienna. Brussels was enraged; no Iranian oil will “save” Europe, replacing Russian oil under a nonsensical cap to be imposed next month.

And Washington was enraged because it was betting on internal tensions to split OPEC.  

Considering all of the above, no wonder US ‘Think Tankland’ is behaving like a bunch of headless chickens.  

The queue to join BRICS

During the Shanghai Cooperation Organization (SCO) summit in Samarkand last September, it was already tacit to all players how the Empire is cannibalizing its closest allies.

And how, simultaneously, the shrinking NATO-sphere is turning inwards, with a focus on The Enemy Within, relentlessly corralling average citizens to march in lockstep behind total compliance with a two-pronged war – hybrid and otherwise – against imperial peer competitors Russia and China.

Now compare it with Chinese President Xi Jinping in Samarkand presenting China and Russia, together, as the top “responsible global powers” bent on securing the emergence of multipolarity.

Samarkand also reaffirmed the strategic political partnership between Russia and India (Indian Prime Minister Narendra Modi called it an unbreakable friendship).

That was corroborated by the meeting between Lavrov and his Indian counterpart Subrahmanyam Jaishankar last week in Moscow.

Lavrov praised the strategic partnership in every crucial area – politics, trade and economics, investment, and technology, as well as “closely coordinated actions” at the UN Security Council, BRICS, SCO and the G20.

On BRICS, crucially, Lavrov confirmed that “over a dozen countries” are lining up for membership, including Iran: “We expect the work on coordinating the criteria and principles that should underlie BRICS expansion to not take much time”.

But first, the five members need to analyze the ground-breaking repercussions of an expanded BRICS+. 

Once again: contrast. What is the EU’s “response” to these developments? Coming up with yet another sanctions package against Iran, targeting officials and entities “connected with security affairs” as well as companies, for their alleged “violence and repressions”.

“Diplomacy”, collective West-style, barely registers as bullying.

Back to the real economy – as in the gas front – the national interests of Russia, Iran and Turkiye are increasingly intertwined; and that is bound to influence developments in Syria, Iraq, and Libya, and will be a key factor to facilitate Erdogan’s re-election next year.

As it stands, Riyadh for all practical purposes has performed a stunning 180-degree maneuver against Washington via OPEC+. That may signify, even in a twisted way, the onset of a process of unification of Arab interests, guided by Moscow.

Stranger things have happened in modern history. Now appears to be the time for the Arab world to be finally ready to join the Quad that really matters: Russia, India, China, and Iran.

(The views expressed in this article are the author’s own and do not necessarily reflect those of Press TV.)

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Rewiring Eurasia: Mr. Patrushev goes to Tehran

The meeting this week between two Eurasian security bosses is a further step toward dusting away the west’s oversized Asian footprint.

November 10 2022

Photo Credit: The Cradle

By Pepe Escobar

Two guys are hanging out in a cozy room in Tehran with a tantalizing new map of the world in the background.

Nothing to see here? On the contrary. These two Eurasian security giants are no less than the – unusually relaxed – Russian Security Council Secretary Nikolai Patrushev and Ali Shamkhani, the Secretary of Iran’s Supreme National Security Council.

And why are they so relaxed? Because the future prospects revolving around the main theme of their conversation – the Russia-Iran strategic partnership – could not be more exciting.

This was a very serious business affair: an official visit, at the invitation of Shamkhani.

Patrushev was in Tehran on the exact same day that Russian Minister of Defense Sergey Shoigu – following a recommendation from General Sergey Surovikin, the overall commander of the Special Military Operation – ordered a Russian retreat from Kherson.

Patrushev knew it for days – so he had no problem to step on a plane to take care of business in Tehran. After all, the Kherson drama is part of the Patrushev negotiations with US National Security Advisor Jake Sullivan on Ukraine, which have been going on for weeks, with Saudi Arabia as eventual go-between.

Besides Ukraine, the two discussed “information security, as well as measures to counter interference in the internal affairs of both countries by western special services,” according to a report by Russia’s TASS news agency.

Both countries, as we know, are particular targets of western information warfare and sabotage, with Iran currently the focus of one of these no-holds-barred, foreign-backed, destabilization campaign.

Patrushev was officially received by Iranian President Ebrahim Raisi, who went straight to the point: “The cooperation of independent countries is the strongest response to the sanctions and destabilization policies of the US and its allies.”

Patrushev, for his part, assured Raisi that for the Russian Federation, strategic relations with Iran are essential for Russian national security.

So that goes way beyond Geranium-2 kamikaze drones – the Russian cousins of the Shahed-136 – wreaking havoc in the Ukrainian battlefield. Which, by the way, elicited a direct mention later on by Shamkhani: “Iran welcomes a peaceful settlement in Ukraine and is in favor of peace based on dialogue between Moscow and Kiev.”

Patrushev and Shamkhani of course discussed security issues and the proverbial “cooperation in the international arena.” But what may be more significant is that the Russian delegation included officials from several key economic agencies.

There were no leaks – but that suggests serious economic connectivity remains at the heart of the strategic partnership between the two top sanctioned nations in Eurasia.

Key in the discussions was the Iranian focus on fast expansion of bilateral trade in national currencies – ruble and rial. That happens to be at the center of the drive by both the Shanghai Cooperation Organization (SCO) and BRICS towards multipolarity. Iran is now a full SCO member – the only West Asian nation to be part of the Asian strategic behemoth – and will apply to become part of BRICS+.

Have swap, will travel

The Patrushev-Shamkhani get together happened ahead of the signing, next month, of a whopping $40 billion energy deal with Gazprom, as previously announced by Iranian Deputy Foreign Minister Mahdi Safari.

The National Iranian Oil Company (NIOC) has already clinched an initial $6.5 billion deal. All that revolves around the development of two gas deposits and six oilfields; swaps in natural gas and oil products; LNG projects; and building more gas pipelines.

Last month, Russian Deputy Prime Minister Aleksandr Novak announced a swap of 5 million tons of oil and 10 billion cubic meters of gas, to be finished by the end of 2022. And he confirmed that “the amount of Russian investment in Iran’s oil fields will increase.”

Barter of course is ideal for Moscow and Tehran to jointly bypass interminably problematic sanctions and payment settlement issues – linked to the western financial system. On top of it, Russia and Iran are able to invest in direct trade links via the Caspian Sea.

At the recent Conference on Interaction and Confidence Building Measures in Asia (CICA) summit in Astana, Kazakhstan, Raisi forcefully proposed that a successful “new Asia” must necessarily develop an endogenous model for independent states.

As an SCO member, and playing a very important role, alongside Russia and India, in the International North-South Transportation Corridor (INSTC), Raisi is positioning Iran in a key vector of multilateralism.

Since Tehran entered the SCO, cooperation with both Russia and China, predictably, is on overdrive. Patrushev’s visit is part of that process. Tehran is leaving behind decades of Iranophobia and every possible declination of American “maximum pressure” – from sanctions to attempts at color revolution – to dynamically connect across Eurasia.

BRI, SCO, INSTC

Iran is a key Belt and Road Initiative (BRI) partner for China’s grand infrastructure project to connect Eurasia via road, sea, and train. In parallel, the multimodal Russian-led INSTC is essential to promote trade between the Indian subcontinent and Central Asia – at the same time solidifying Russia’s presence in the South Caucasus and the Caspian Sea region.

Iran and India have committed to offer part of Chabahar port in Iran to Central Asian nations, complete with access to exclusive economic zones.

At the recent SCO summit in Samarkand, both Russia and China made it quite clear – especially for the collective west – that Iran is no longer going to be treated as a pariah state.

So it is no wonder Iran that is entering a new business era with all members of the SCO under the sign of an emerging financial order being designed mostly by Russia, China and India. As far as strategic partnerships go, the ties between Russia and India (President Narendra Modi called it an unbreakable friendship) is as strong as those between Russia and China. And when it comes to Russia, that’s what Iran is aiming at.

The Patrushev-Shamkhani strategic meeting will hurl western hysteria to unseen levels – as it completely smashes Iranophobia and Russophobia in one fell swoop. Iran as a close ally is an unparalleled strategic asset for Russia in the drive towards multipolarity.

Iran and the Eurasian Economic Union (EAEU) are already negotiating a Free Trade Agreement (FTA) in parallel to those swaps involving Russian oil. The west’s reliance on the SWIFT banking messaging system hardly makes any difference to Russia and Iran. The Global South is watching it closely, especially in Iran’s neighborhood where oil is commonly traded in US dollars.

It is starting to become clear to anyone in the west with an IQ above room temperature that the Joint Comprehensive Plan of Action (JCPOA, or Iran nuclear deal), in the end, does not matter anymore. Iran’s future is directly connected to the success of three of the BRICS: Russia, China and India. Iran itself may soon become a BRICS+ member.

There’s more: Iran is even becoming a role model for the Persian Gulf: witness the lengthy queue of regional states aspiring toward gaining SCO membership. The Trumpian “Abraham Accords?” What’s that? BRICS/SCO/BRI is the only way to go in West Asia today.

The views expressed in this article do not necessarily reflect those of The Cradle.

How bright are EUropeans ?

November 05, 2022

Source

by Jorge Vilches

no contract

Several indications lead to the conclusion that EUropeans at large — exceptions aside — should not be very bright. Or at least not brighter than anyone else as they claim to be. The fact is that – despite their undeniably copious amounts of individual and collective achievements – they have not yet been able to articulate a peacefull co-existence strategy amongst themselves and with third parties. Having failed at that implies that EUropeans are not really that bright, how could they be ? True enough, EUrope´s macro-economic and consumer society development has been ´successful´… but still under a highly unstable political co-existence. IMNSHO the main reason for such disqualifying historical flaw is that – contrary to their own self-image frequently preached sanctimoniously onto others – in political EUrope a “deal” is never a deal. It´s rather an expression of possible temporary abidance always subject to their own interpretation and circumstances yet un-defined. Basically, there is no valid contract, social or political or otherwise in EUrope. Humpty Dumptyness at its best. And the EU governance experiment made things worse with all the key decisions imposed by un-elected officials very clearly in the case of Greece, Italy, Ireland, Portugal, Spain, Poland, and Hungary. The argument could possibly be made that other societies today also struggle along equivalent lines, but then again this would swiftly confirm that EUropeans cannot be considered to be brighter than others… as they bloody insist they are.

EUropean ´superiority´ (not)

Dr. Josep Borrell is the EU´s topmost senior diplomat as High Representative for Foreign Affairs and Security Policy.

Recently joined by another un-elected official namely the EU Commission President Ursula von den Leyen both now roughly insist that EUrope´s problems stem from its addictiveness to excellent and cheap Russian energy and resources, to China´s humongous export markets and high productivity dependency, and to the military ´security´ that the US today supposedly renders to them. So, accordingly their solution for EUrope would be to (a) get itself up in arms yet again and (b) to double-down on the ‘battle of narratives´ which should be interpreted to be just some more effective EU propaganda. So from this perspective rather than being bright EUropeans would just appear to be aggressive, manipulative, and conceited… and not superior to anyone else. So why be so proud about it all ?.

the EU thorny garden

Objectively searching into the EUropean political soul it´s easy to find EUrope´s self-EUthanization vis-á-vis its sheer lack of any ´affectio societatis´. This makes EUrope an un-viable business associate to and for anyone, even amongst themselves in view of the current widespread infighting. But JB´s ´brightness´ does not stop there, now proclaiming that “the world needs Europe” and that EUrope is a “garden” and the rest a mere ”jungle” ready to encroach upon it… So at this rate it would be wise to copernically acknowledge that EUrope is not any “global super-power” and that God Almighty has not appointed the un-elected European Commission as the rule-maker for the rest of the world to follow. Furthermore, the “international community”(sic) is not headquartered at Davos or Brussels and 85% of planet Earth does not even wake up in the West every morning. Making that clear would focus EU politics better than complaining about “too many abstentions” in the UN votes regarding this conflict which EU officials fail to understand and accept.

Ref #1 https://www.eeas.europa.eu/eeas/foreign-affairs-council-remarks-high-representative-josep-borrell-upon-arrival-1_en

Ref #2 http://www.euronews.com/my-europe/2022/10/19/josep-borrell-apologises-for-controversial-garden-vs-jungle-metaphor-but-stands-his-ground

Ref #3 https://news.cgtn.com/news/2022-10-12/Josep-Borrell-looks-backwards-on-China-Russia-and-U-S–1e3XRtUKOJy/index.html

Ref #4 https://www.eeas.europa.eu/eeas/european-diplomatic-academy-opening-remarks-high-representative-josep-borrell-inauguration_en

7 historical catastrophes 7

During the past one hundred years (approx.) aided or not by its supposed “superiority” collective Europe fostered 7 major historical vintage TM® failures, namely (1) enthusiastically fostered World War I – the Great War – “the war to end all wars” amongst themselves + (2) cradled and fully developed Nazism + (3) instigated and deployed World War II + (4) allowed for the firm establishment of ruinous “King Dollar” by calmly and willingly accepting the 1971 US unilateral default on the Bretton Woods Agreement thus perpetuating until today a highly detrimental “exhorbitant privilege” for a thus fiat US dollar + (5) established the currently ticking Euro currency time bomb + (6) fully accepted and even participated with impunity in many dozens of US military unsolicited interventions worldwide as the sole un-elected “world cop” thru its 800+ military bases in 80 countries (7) in 2022 unilaterally provoked an unnecessary and stupid self-harming divorce from Russia which has led the world closer than ever to a nuclear war. Readers may have different opinion regarding the individual interpretation of related events but still all of the above are categorically accepted historical facts. And a society that lies so much – onto itself and third parties — cannot be too bright, can it ?

Ref #5 http://www.theepochtimes.com/on-the-path-to-hyperinflation_4782143.html

Ref #6 http://www.zerohedge.com/markets/path-hyperinflation

no ´Greater Europe´

Forget any and all dreams about forging a Greater Europe from Lisbon to Vladivostok. Russia tried it, worked very hard at it, and invested tons in such century-milestone project, to no avail. Fact #1: Russia focused on Greater Europe for 30 years. Fact #2: Russia failed miserably in such endeavor. Under deep ´political hypnosis´ — for want of a better term — EUropean leaders supported by complicit constituents ended up deploying their self-harming strategy. For starters, no Referendum on the NATO-imposed, suicidal “let´s divorce Russia” initiative was ever proposed even though many dozens referenda have been held in the EU´s recent past. It´s simple: there is no valid contract in the EU

Russophia was also firmly established as a national cross-border regional sport of sorts spear-headed by complicit Western MSM and loudly outspoken and highly payed for EU officials. Of course, if challenged, Russians have the advantage of becoming quite stubborn when circumstances so require it, so they insisted in the Greater Europe project success and strictly followed the required EUropean Market & Financial Rules. But, yet again, there was no contract compliance. So led by the G-7 leadership, the collective West just plain took effective advantage of Russia in every way it possibly could provoke … and so the Minsk Accords were conveniently extended, postponed… and duly forgotten despite being squarely – and deceitfully — brokered by both Germany and France. The EU´s supposed Ostpolitik was betrayed with every trace of ´affectio societatis´ absent thus DE-stabilising the area and using third parties as pawns. Because, of course, EUropean flagrant unilateralism dictates that there is no room for anything close to having willingness and interest to engage and relate constructively with high-quality business partners beyond the EU´s – and NATO´s — full control. So Russia finally got fed up sick and tired of the West´s lack of “agreement capability” and will thus fully pivot to thriving Eurasia. Meanwhile Europe will immolate itself thru its NATO-induced suicide with shamefull colonialistic sins hovering its soul for the last 500 years until today. Is any of this “bright” ?

NATO´s ´hypnotic´ spell

British Gral. Hastings Ismay — the first Secretary General of NATO — defined that the purpose of the North Atlantic Treaty Organization was “to keep Russians out, Americans in, and Germans down” which has since become the common way to describe its dynamics and goals. Ismay also proposed that NATO “must grow until the whole free world gets under one umbrella.” So EUrope today and per its own fault, in more than one way and through not-publicized non-sanctum mechanisms, is actually ruled and governed directly by the US. Accordingly, the inclusion of Russia in the Greater Europe project was to be boycotted to death – most specially its association with Germany — and it certainly was. The European leadership thus offered and deployed highly pro-active support to provoke the Ukraine conflict, be it “militarily, financially or politically” thus confirming yet again its direct and unequivocal commitment and participation. During 8 years the Ukraine Armed Forces were trained by NATO to meet NATO combat standards while the Eastern Russian-speaking areas were systematically intimidated and bombed . NATO members proudly admitted to constantly supply the UAF with heavy modern weapons, military advisers and intel.

Ref #7 https://en.wikipedia.org/wiki/Hastings_Ismay,_1st_Baron_Ismay

Ref #8 https://www.azerbaycan24.com/en/eu-again-urged-to-open-wallet-for-kiev/

To weaken Germany and simultaneously strengthen the US required pitting Russia against Germany in a mutually destructive conflict so that the two countries could not re-establish normal relations for decades to come. The collapse of the EUropean economy would come about by denying cheap Russian energy to Germany. Thus, trillions of dollars of European resources would supposedly relocate to the US jointly with their best and brightest. According to the Rand Report, the main obstacle to Europe´s plundering on a scale which rivaled the Jewish looting of Russia in the 1990s was “the growing independence of Germany” which followed Britain’s exit from the European Union (Brexit) which gave “Germany greater independence and decreased the US influence upon European governments.”

the EU ´bright´ new oil & gas markets

No matter how diced or sliced, under the planned nat-gas EU ´capped-price´ purchase policy Western markets would be missing access to some 50% (approx.) of the 2021 effectively traded and consumed natural gas volumes. Besides, serious doubts remain on (a) the technical quality of such new possible “capped” price nat-gas (b) its delivery terms and conditions and (c) the reliability of such type of possible nat-gas suppliers. But at any rate when EUrope soon necessarily runs out of all possible nat-gas vendors willing to comply with its new capped-price policy — which would never fulfill its physical needs — then Russia and others will be able to charge whatever they want for the remaining nat-gas which EUrope will require in order to function ASWKI. Unless, of course, the deliberate ruinous EUropean plan were exactly THAT …which is an ever larger possibility. High quality nat-gas is high quality nat-gas, markets are markets, and business is business. An equivalent “absurd” sourcing conundrum would also be triggered by the soon-coming EU ban on Russian sea-borne oil with serious refinability problems (diesel !!!) vis-á-vis the different quality and quantity of the replacements yet to be found and the un-vetted reliability of the yet non-existent suppliers. Tom Kloza, Global Head of Energy Analysis says “Without new inventory, by the end of November the wolf will be at the door. And it will look like a big ugly wolf if it’s a cold winter” Ref #9 http://www.nakedcapitalism.com/2022/11/the-u-s-diesel-shortage-is-worsening.html

not-so-bright useful green idiots ?

The reference below describes the green parties in Europe “as being particularly easy to manipulate into running the errands of American imperialism. The prerequisite for Germany to fall into this trap is the dominant role of Green Parties and European ideologies. The German environmental movement is a highly dogmatic, if not fanatical, movement, which makes it quite easy to get them to ignore economic argument.”

Ref #10 https://fair.org/home/us-medias-intellectual-no-fly-zone-on-us-culpability-in-nord-stream-attack/

Ref #11 https://www.veteranstoday.com/2022/10/08/the-attack-on-the-pipeline-and-the-resurrection-of-the-morgenthau-plan-as-the-long-arm-of-jewish-vengeance/ Ref #12 https://nyadagbladet.se/utrikes/shocking-document-how-the-us-planned-the-war-and-energy-crisis-in-europe/

Eurasian pivot

On their part, the Russians — many still astonished by suicidal EUrope – seem to basically be thinking (approx.) …

“EUropeans, you didn´t have to love us or even be friends you know… but why hate us ? Always, systematically, by default. Why are you Russophobic ? We only wanted to continue being your vetted trade partners as repeatedly proven with flying colors for 30 years. So just what is wrong with you ? Why do you allow your leaders to lie to you, cheat and mislead you so much ? If you actually wished to scare us away consider it done, good job and good bye EUrope. Now, despite your fully un-necessary EUthanization of our relationship, we still welcome you to set up your investments as our business associates here in Russia. Just consider that your only gateway to the world´s next all-time winner anyway you dice it or slice it — namely Mackinder´s Eurasia — is by relocating to Russia with all our known advantages. Otherwise – per WEF logic — you will not have any worthwhile fuels or natural resources left ( just hyperinflation…and no markets ) and you will not be happy”. So the remaining bright Germans – and other bright minds still in EUrope — would finally understand that 85% of the world´s population is not Western let alone part of today´s non-sensical NATO, fully “brain dead” per French President Emmanuel Macron. And once that the NS1 & NS2 sabotage perpetrators are proven and known, EUropean public opinion – most specially Germans – will see things very differently from today understanding how they have been mis-led into an entirely un-justified Russophobia.

EUropean RE-location

Development requires cheap and excellent all-around energy and natural resources which Germany and others do not have and that Russia has plenty of. It also requires markets with which to trade. So the alternatives are (a) “NATO out” which does not seem feasible right now, meaning “to revolt en masse against the NATO-imposed trade/financial sanctions against Russia, and force Berlin to repair NS1 and commission Nord Stream 2”…or… (b) relocate to the US, meaning total vassalization of the EUropean industrial burgeoisie a-la Werner von Braun…or… (c) relocate to Russia and be part of Eurasia´s new bright future, jointly with China & BRICS & SCO & Global South. Of course, sooner or later some of (b) will surely take place but chances are that (c) — per the assumed Russian offering proposed — will at least be the German predominant choice. Obviously, this would probably mean the sudden demise of the EUro and, soon after, of the US dollar ASWKI. The smarter part of the remaining EUrope would also follow the relocation of bright Germans to Russia. Unexpectedly, along these lines events may pick up unusual speed and EUrope as we know it today would cease to exist. And this would be the final evidence proving that EUropeans at large are not as bright as they think they are. They would all act differently if they were, with no room for cannibalism.

the Overton window

Bright Europeans do exist, but in EUropean politics they are very few and far between. So most today focus on (1) ruining Russia per NATO mandate to supposedly uphold ´democracy everywhere´ even corrupt kleptocracies… and while they are at it…(2) also saving planet Earth. Still, a handfull are finally understanding that this is too high a price to pay as EUropeans would not be willing to accept the MAGNITUDE and DEPTH of the hardships soon to come in what up until today was a flourishing consumer society with an enviable standard of living. Hypothetically, what some few political leaders were waiting and jockeying for was an Overton window large enough to get their heads in, their bets made, and their feet wet. The Overton window defines what is politically possible per the existing public opinion at a given point in time. So it is a very convenient tool to apply in view of the EU Commissariat Master Plan.

Ref #13 https://thesaker.is/natos-green-masochistic-euthanasia/

Ref #14 https://thesaker.is/europe-hypnotized-into-war-economy/

Ref #15 https://oilprice.com/Energy/Energy-General/Europes-Energy-Crisis-Will-Not-Be-A-One-Winter-Story.html

the German oath

All members of the elected government of the German Federal Republic have necessarily taken an oath of office details of which are explicit below. That is the basis for the social and political contract between German leadership and their constituents. But apparently many / all have decided to conveniently dismiss such sworn obligations until the Overton window – Main Street´s hidden weapon — forces them to act accordingly, not before.

“ I swear that I will devote my energies to the well-being of the German people, increase their benefit, protect them from harm, uphold and defend the Basic Law and the laws of the Federation, perform my duties conscientiously and do justice to everyone. So help me God.” Not a single word is ever mentioned relating directly or indirectly to the EU, its governance impact, its interests and/or its goals.

the “most stupid” government in EUrope

Recently Sahra Wagenknecht has defined Germany’s government as the “most stupid” in EUrope for managing to embroil itself in a full-blown economic war with its top – and thus un-replaceable — energy supplier, namely Russia. Speaking at the Bundestag, the former co-chair of the party Die Linke (“The Left”) urged for an immediate end to the anti-Russian sanctions and also for the resignation of German Vice Chancellor and Minister of the Economy, the now infamous ´Herr Green´ Robert Habeck. While still describing the ongoing conflict in Ukraine as a “crime” Wagenknecht insisted that the anti-Russian sanctions are “fatal” for Germany itself. She told her fellow Bundestag leaders in-their-face that “The biggest problem is your grandiose idea of launching an unprecedented economic war against our most important energy supplier. The idea that we are punishing Putin by impoverishing millions of families in Germany and destroying our industry while Gazprom is making record profits – how stupid is that?” she wondered out loud. So, an important German at an important German venue publically told many other important Germans how stupid they were. Not me, she did. “The promise of NATO membership did not help any. Militarily, this war cannot be won”. Of course, this has meant that some Left Party members now demand the expulsion of Sahra Wagenknecht for good.

Ref #16 https://www.wsws.org/en/articles/2022/09/19/qunz-s19.html

Ref #17 https://www.rt.com/business/563382-high-energy-costs-eu-companies/

Ref #18 https://www.rt.com/business/563490-thousands-firms-italy-closure/

Ref #19 https://www.reuters.com/article/ukraine-crisis-eu-energy-smes-idAFL8N30E4WV

Ref #20 https://oilprice.com/Energy/Natural-Gas/Europe-Faces-An-Exodus-Of-Energy-Intensive-Industries.html

´the grandiose idea´ …

Firms in the metal and chemical industries, among others, are trying to relocate to the US, The Wall Street Journal reports: “High energy costs drive companies away from EU”. This means obvious consequences only fools would not foresee: DEpression & UN-employment. German producers warn of food shortages. Die Welt now reports that “There are significant supply gaps in the daily food supply for people in Germany. The situation is “more than serious” an open letter from the industry said. “Companies now fear that production lines will soon come to a standstill and that refrigerated logistics centers for food distribution will be closed. Some are even preparing for possible insolvency.”

Manufacturers of both frozen and fresh products say they cannot cope with soaring energy costs. “The food industry is currently experiencing the worst crisis since the end of the Second World War… It’s a minute to twelve. Act now – otherwise the refrigerators and freezers of the German population will soon be empty” the letter urges. Germany, along with the broader EU, is facing a sharp rise in energy prices and a record inflation surge amid the intensifying anti-Russian sanctions and a policy of abandoning all possible Russian fuels. The situation could also soon lead to energy rationing and shortages, also meaning NO energy, NO fuels at ANY price, period. And forget LNG from whomever or wherever. Too little, too late, too cumbersome, too risky, way dirtier, and way too expensive. Germany needs Russian pipelined nat-gas for many good reasons that they cannot ignore and will necessarily live by soon.

The frozen food industry is particularly susceptible to energy supply problems, due to its strong reliance on electricity for freezers. The EU risks a ‘Wild West’ scenario says IEA head Fatih Birol warning that member states could possibly abandon solidarity to secure their own gas supplies. Many dozens of thousands of small and medium-size businesses (SMEs) in Italy can’t cope with soaring energy bills, ´Corriere della Sera´ reports. Italy is badly dependant on Russian pipelined nat-gas, no substitutes are possible in practice. Supposed “stored” reserves cannot be extracted from sub-surface unless Russian pipelines are also flowing thus allowing to add-on such stored reserves to the main flow. By themselves, underground nat-gas reserves can hardly be produced on surface and still with lots of negative impact.

Ref #21 https://thesaker.is/germanys-failing-stored-nat-gas-lng-experiment/

Larger companies will also add to the un-employed. According to a recent survey, over 70% of Italians are having difficulty or are simply unable to pay their energy bills. SMEs represent 99% of all businesses in the 27-nation EU. SMEs employ around 100 million people, or two thirds of all employed and account for 53% of Europe’s GDP.

Nearly one in six people over 65 in Germany is at risk of poverty, meaning they have less than 60% of the median income at their disposal according to the Federal Statistical Office and published by the German media group Funke. Europe maybe could have articulated a far better and softer transition and slower pathway into “some” renewables under excellent quality and already available + pipeline delivered, cheap Russian nat-gas. But they chose otherwise and now Europe must pay the piper. And with only a fraction of the EU imploding generalized chaos will prevail.

True enough, Hungarian Prime Minister Viktor Orbán led the pack weeks ago by saying “the approach has clearly failed — sanctions have backfired — and our car now has 4 four flat tires”. Just as a reminder, vehicles carry only one spare tire (maybe two) but never four and more to come… Now, also Greek Prime Minister Kyriakos Mitsotaki proposes to lift sanctions on Russia by December at the latest. But the questions remains: beyond some optics, the audio and the visual… just where precisely is the ACTION ? Are these two Heads of State bright enough per the circumstances ? Or are they just better sounding than the overwhelming EUropean political mediocrity ? Oh, you say they aren´t allowed to do any more than that ? If that´s the established system then EUropeans were not very bright…

Ref #22 https://www.euractiv.com/section/global-europe/news/orban-urges-new-eu-strategy-on-ukraine-says-sanctions-have-failed/

Michael Kretschmer

“Germany needs Russian gas” – says Michael Kretschmer, Saxony’s Minister-President. Okay, that´s a good starting point to acknowledge don´t you think ? A valid diagnosis is necessarily behind any reasonable therapy and at least in this case – besides being bloody obvious – it´s still reconforting to see that a spanking new “common denominator” is being put together by some in Germany. Herr Kretschmer added that the current exorbitant prices for the fuel are “ruining Germany’s industry”. Okay, sorry to hear that. So that means that Russian energy matters lots, correct ?

“Russian gas supplies are critical for Germany, and will remain so in the foreseeable future”. In an interview with Germany’s Funke Mediengruppe Michael Kretschmer also added: “We are already witnessing that we can’t do without Russian gas.” Hmmm….. But then Kretschmer went on to say that now Berlin should try to make sure that it keeps receiving Russian gas after the armed conflict is over. But would that be soon, please tell us ? Because saying that implies ignoring that the end of the armed conflict will most probably not be decided in the battlefield and just come about by a NATO-EU surrender. Why so you may ask ? Well precisely because NATO & the EU leadership provoked and sustained Russian gas to be cut off, so that can be reverted only by them, not the other way around. So whatever happens militarily in the battlefield does not actually matter that much any more unless it were 101% decisive. But many months have elapsed and it does not seem to be anywhere close to that, does it ? So finally EU politicians on their own will have to end this unnecessary war that they started simply because the Overton window for European public opinion will not stand it and they will have to admit they were dead wrong and plain go home, if not to jail.

Ref #23 https://www.rt.com/news/563458-saxony-governor-germany-needs-russian-gas/

Clare Daly (Irish MEP)

Clare Daly is a Member of the European Parliament (MEP) and from the very beginning in March 2022 she has voted against its Resolutions on this matter basically considering them to be “a recipe for prolonging war with escalation”. She believes that “ignoring the role played by the US and NATO in destabilising the area for the past decade,using Ukraine as a pawn in its battles with Russia, only serves to prevent an understanding of the measures necessary to secure peace”. Per Clare Daly, the EP Resolutions “accelerate the provision of military equipment and weapons to Ukraine, strengthen NATO’s forward presence, increase defence spending…and strengthen the European pillar within NATO” while also ”opportunistically call for opening the European energy market to fracked American liquefied natural gas (LNG)…which is far more polluting and terribly far more expensive”. Clare Daly believes that ”there is no military solution to this crisis as the policy of flooding Ukraine with weapons will, at worst, lead to a permanent condition of conflict, as has happened in Afghanistan, Libya and Syria, at best, a greater loss of life and destruction in Ukraine”. Furthermore, Clare Daly believes that the EP Resolutions on this topic do not sufficiently “take into account the impact of the war on workers,their working conditions, and the recognition of the hardship that this entails”.

Ref #24 https://www.europarl.europa.eu/meps/en/197731/CLARE_DALY/other-activities/written-explanations

Ref #25 https://rmx.news/article/shock-eu-commission-president-threatens-italy-on-eve-of-election-says-brussels-has-tools-if-wrong-parties-win/ Ref #26 https://tomluongo.me/2022/09/23/as-democracy-dies-eu-its-sins-are-revealed/

Ref #27 https://oilprice.com/Latest-Energy-News/World-News/London-Banks-Prepare-For-Possible-Blackouts.html

Saint Greta of Thunberg

Days ago Greta Thunberg at the London’s Royal Festival Hall left on record that there is no going “back to normal” as it would mean returning to the Global North climate crisis “system” i.e. “colonialism, imperialism, oppression, genocide and racist, oppressive extractionism”. So only the overthrow of “the whole capitalistic system” will suffice, says Greta. No explanation was given — or even a mild attempt made — to describe how the required transition could possibly be made to get from our current evil point A to future greatly-improved point B. Apparently, there’s no GDP growth — especially of the capitalist sort — without increasing carbon emissions. Supposedly the only solution to this state of emergency is “for rich countries to immediately abandon economic expansion as a social goal.” Full interview credit to Nicholas Harris at Ref #28 https://unherd.com/thepost/greta-thunberg-throws-her-lot-in-with-the-anti-capitalist-left/

entitlements & cakeism vs. the chicken and the egg & DE-globalization economics: FIRE vs real STUFF

If really interested in reducing greenhouse gas emissions mankind worldwide would need to drastically change its way of life in many important ways already very firmly considered by the collective mind-set as genuinely valid entitlements So, politically speaking such proposal is a non-starter waaaay outside any current Overton window we may come up with. In turn, we also can´t have our own cake and eat it too. So which will it be ? On top of it, let´s add that “All service industries (– including FIRE finances –) remain completely dependent on the raw materials and manufactured goods sectors to function… So DE-globalization will increasingly favor those who produce and control the STUFF which underpins everything else…(of course necessarily) leading to devastating closures of (almost all ?) energy and/or resource-intensive industrial operations in Europe due to high energy prices that make their products uncompetitive.” Ref #29 https://oilprice.com/Energy/Energy-General/East-vs-West-Stuff-vs-Finance.html . Full credit to Kurt Cobb via OilPrice.com.

• Love Letter to Ireland! (and to ALL the Debt-Enslaved Nations of the World)
• NATO and the Kh-32 missile
• Pyrrhic victory or strategic defeat?
• NATO escalates (again) and achieves nothing (again)
• The New Cuban Missile Crisis That Isn’t

Germany’s position in America’s New World Order

November 02, 2022

Source

by Michael Hudson

Germany has become an economic satellite of America’s New Cold War with Russia, China and the rest of Eurasia. Germany and other NATO countries have been told to impose trade and investment sanctions upon themselves that will outlast today’s proxy war in Ukraine. U.S. President Biden and his State Department spokesmen have explained that Ukraine is just the opening arena in a much broader dynamic that is splitting the world into two opposing sets of economic alliances. This global fracture promises to be a ten- or twenty-year struggle to determine whether the world economy will be a unipolar U.S.-centered dollarized economy, or a multipolar, multi-currency world centered on the Eurasian heartland with mixed public/private economies.

President Biden has characterized this split as being between democracies and autocracies. The terminology is typical Orwellian double-speak. By “democracies” he means the U.S. and allied Western financial oligarchies. Their aim is to shift economic planning out of the hands of elected governments to Wall Street and other financial centers under U.S. control. U.S. diplomats use the International Monetary Fund and World Bank to demand privatization of the world’s infrastructure and dependency on U.S. technology, oil and food exports.

By “autocracy,” Biden means countries resisting this financialization and privatization takeover. In practice, U.S. rhettoric means promoting its own economic growth and living standards, keeping finance and banking as public utilities. What basically is at issue is whether economies will be planned by banking centers to create financial wealth – by privatizing basic infrastructure, public utilities and social services such as health care into monopolies – or by raising living standards and prosperity by keeping banking and money creation, public health, education, transportation and communications in public hands.

The country suffering the most “collateral damage” in this global fracture is Germany. As Europe’s most advanced industrial economy, German steel, chemicals, machinery, automotives and other consumer goods are the most highly dependent on imports of Russian gas, oil and metals from aluminum to titanium and palladium. Yet despite two Nord Stream pipelines built to provide Germany with low-priced energy, Germany has been told to cut itself off from Russian gas and de-industrialize. This means the end of its economic preeminence. The key to GDP growth in Germany, as in other countries, is energy consumption per worker.

These anti-Russian sanctions make today’s New Cold War inherently anti-German. U.S. Secretary of State Anthony Blinken has said that Germany should replace low-priced Russian pipeline gas with high-priced U.S. LNG gas. To import this gas, Germany will have to spend over $5 billion quickly to build port capacity to handle LNG tankers. The effect will be to make German industry uncompetitive. Bankruptcies will spread, employment will decline, and Germany’s pro-NATO leaders will impose a chronic depression and falling living standards.

Most political theory assumes that nations will act in their own self-interest. Otherwise they are satellite countries, not in control of their own fate. Germany is subordinating its industry and living standards to the dictates of U.S. diplomacy and the self-interest of America’s oil and gas sector. It is doing this voluntarily – not because of military force but out of an ideological belief that the world economy should be run by U.S. Cold War planners.

Sometimes it is easier to understand today’s dynamics by stepping away from one’s own immediate situation to look at historical examples of the kind of political diplomacy that one sees splitting today’s world. The closest parallel that I can find is medieval Europe’s fight by the Roman papacy against German kings – the Holy Roman Emperors – in the 13^th century. That conflict split Europe along lines much like those of today. A series of popes excommunicated Frederick II and other German kings and mobilized allies to fight against Germany and its control of southern Italy and Sicily.

Western antagonism against the East was incited by the Crusades (1095-1291), just as today’s Cold War is a crusade against economies threatening U.S. dominance of the world. The medieval war against Germany was over who should control Christian Europe: the papacy, with the popes becoming worldly emperors, or secular rulers of individual kingdoms by claiming the power to morally legitimize and accept them.

Medieval Europe’s analogue to America’s New Cold War against China and Russia was the Great Schism in 1054. Demanding unipolar control over Christendom, Leo IX excommunicated the Orthodox Church centered in Constantinople and the entire Christian population that belonged to it. A single bishopric, Rome, cut itself off from the entire Christian world of the time, including the ancient Patriarchates of Alexandria, Antioch, Constantinople and Jerusalem.

This break-away created a political problem for Roman diplomacy: How to hold all the Western European kingdoms under its control and claim the right for financial subsidy from them. That aim required subordinating secular kings to papal religious authority. In 1074, Gregory VII, Hildebrand, announced 27 Papal Dictates outlining the administrative strategy for Rome to lock in its power over Europe.

These papal demands are strikingly parallel to today’s U.S. diplomacy. In both cases military and worldly interests require a sublimation in the form of an ideological crusading spirit to cement the sense of solidarity that any system of imperial domination requires. The logic is timeless and universal.

The Papal Dictates were radical in two major ways. First of all, they elevated the bishop of Rome above all other bishoprics, creating the modern papacy. Clause 3 ruled that the pope alone had the power of investiture to appoint bishops or to depose or reinstate them. Reinforcing this, Clause 25 gave the right of appointing (or deposing) bishops to the pope, not to local rulers. And Clause 12 gave the pope the right to depose emperors, following Clause 9, obliging “all princes to kiss the feet of the Pope alone” in order to be deemed legitimate rulers.

Likewise today, U.S. diplomats claim the right to name who should be recognized as a nation’s head of state. In 1953 they overthrew Iran’s elected leader and replaced him with the Shah’s military dictatorship. That principle gives U.S. diplomats the right to sponsor “color revolutions” for regime-change, such as their sponsorship of Latin American military dictatorships creating client oligarchies to serve U.S. corporate and financial interests. The 2014 coup in Ukraine is just the latest exercise of this U.S. right to appoint and depose leaders.

More recently, U.S. diplomats have appointed Juan Guaidó as Venezuela’s head of state instead of its elected president, and turned over that country’s gold reserves to him. President Biden has insisted that Russia must remove Putin and put a more pro-U.S. leader in his place. This “right” to select heads of state has been a constant in U.S. policy spanning its long history of political meddling in European political affairs since World War II.

The second radical feature of the Papal Dictates was their exclusion of all ideology and policy that diverged from papal authority. Clause 2 stated that only the Pope could be called “Universal.” Any disagreement was, by definition, heretical. Clause 17 stated that no chapter or book could be considered canonical without papal authority.

A similar demand as is being made by today’s U.S.-sponsored ideology of financialized and privatized “free markets,” meaning deregulation of government power to shape economies in interests other than those of U.S.-centered financial and corporate elites.

The demand for universality in today’s New Cold War is cloaked in the language of “democracy.” But the definition of democracy in today’s New Cold War is simply “pro-U.S.,” and specifically neoliberal privatization as the U.S.-sponsored new economic religion. This ethic is deemed to be “science,” as in the quasi-Nobel Memorial Prize in the Economic Sciences. That is the modern euphemism for neoliberal Chicago-School junk economics, IMF austerity programs and tax favoritism for the wealthy.

The Papal Dictates spelt out a strategy for locking in unipolar control over secular realms. They asserted papal precedence over worldly kings, above all over Germany’s Holy Roman Emperors. Clause 26 gave popes authority to excommunicate whomever was “not at peace with the Roman Church.” That principle implied the concluding Claus 27, enabling the pope to “absolve subjects from their fealty to wicked men.” This encouraged the medieval version of “color revolutions” to bring about regime change.

What united countries in this solidarity was an antagonism to societies not subject to centralized papal control – the Moslem Infidels who held Jerusalem, and also the French Cathars and anyone else deemed to be a heretic. Above all there was hostility toward regions strong enough to resist papal demands for financial tribute.

Today’s counterpart to such ideological power to excommunicate heretics resisting demands for obedience and tribute would be the World Trade Organization, World Bank and IMF dictating economic practices and setting “conditionalities” for all member governments to follow, on pain of U.S. sanctions – the modern version of excommunication of countries not accepting U.S. suzerainty. Clause 19 of the Dictates ruled that the pope could be judged by no one – just as today, the United States refuses to subject its actions to rulings by the World Court. Likewise today, U.S. dictates via NATO and other arms (such as the IMF and World Bank) are expected to be followed by U.S. satellites without question. As Margaret Thatcher said of her neoliberal privatization that destroyed Britain’s public sector, There Is No Alternative (TINA).

My point is to emphasize the analogy with today’s U.S. sanctions against all countries not following its own diplomatic demands. Trade sanctions are a form of excommunication. They reverse the 1648 Treaty of Westphalia’s principle that made each country and its rulers independent from foreign meddling. President Biden characterizes U.S. interference as ensuring his new antithesis between “democracy” and “autocracy.” By democracy he means a client oligarchy under U.S. control, creating financial wealth by reducing living standards for labor, as opposed to mixed public/private economies aiming at promoting living standards and social solidarity.

As I have mentioned, by excommunicating the Orthodox Church centered in Constantinople and its Christian population, the Great Schism created the fateful religious dividing line that has split “the West” from the East for the past millennium. That split was so important that Vladimir Putin cited it as part of his September 30, 2022 speech describing today’s break away from the U.S. and NATO centered Western economies.

The 12^th and 13^th centuries saw Norman conquerors of England, France and other countries, along with German kings, protest repeatedly, be excommunicated repeatedly, yet ultimately succumb to papal demands. It took until the 16^th century for Martin Luther, Zwingli and Henry VIII finally to create a Protestant alternative to Rome, making Western Christianity multi-polar.

Why did it take so long? The answer is that the Crusades provided an organizing ideological gravity. That was the medieval analogy to today’s New Cold War between East and West. The Crusades created a spiritual focus of “moral reform” by mobilizing hatred against “the other” – the Moslem East, and increasingly Jews and European Christian dissenters from Roman control. That was the medieval analogy to today’s neoliberal “free market” doctrines of America’s financial oligarchy and its hostility to China, Russia and other nations not following that ideology. In today’s New Cold War, the West’s neoliberal ideology is mobilizing fear and hatred of “the other,” demonizing nations that follow an independent path as “autocratic regimes.” Outright racism is fostered toward entire peoples, as evident in the Russophobia and Cancel Culture currently sweeping the West.

Just as Western Christianity’s multi-polar transition required the 16^th century’s Protestant alternative, the Eurasian heartland’s break from the bank-centered NATO West must be consolidated by an alternative ideology regarding how to organize mixed public/private economies and their financial infrastructure.

Medieval churches in the West were drained of their alms and endowments to contribute Peter’s Pence and other subsidy to the papacy for the wars it was fighting against rulers who resisted papal demands. England played the role of major victim that Germany plays today. Enormous English taxes were levied ostensibly to finance the Crusades were diverted to fight Frederick II, Conrad and Manfred in Sicily. That diversion was financed by papal bankers from northern Italy (Lombards and Cahorsins), and became royal debts passed down throughout the economy. England’s barons waged a civil war against Henry II in the 1260s, ending his complicity in sacrificing the economy to papal demands.

What ended the papacy’s power over other countries was the ending of its war against the East. When the Crusaders lost Acre, the capital of Jerusalem in 1291, the papacy lost its control over Christendom. There was no more “evil” to fight, and the “good” had lost its center of gravity and coherence. In 1307, France’s Philip IV (“the Fair”) seized the Church’s great military banking order’s wealth, that of the Templars in the Paris Temple. Other rulers also nationalized the Templars, and monetary systems were taken out of the hands of the Church. Without a common enemy defined and mobilized by Rome, the papacy lost its unipolar ideological power over Western Europe.

The modern equivalent to the rejection of the Templars and papal finance would be for countries to withdraw from America’s New Cold War. They would reject the dollar standard and the U.S. banking and financial system. that is happening as more and more countries see Russia and China not as adversaries but as presenting great opportunities for mutual economic advantage.

The broken promise of mutual gain between Germany and Russia

The dissolution of the Soviet Union in 1991 promised an end to the Cold War. The Warsaw Pact was disbanded, Germany was reunified, and American diplomats promised an end to NATO, because a Soviet military threat no longer existed. Russian leaders indulged in the hope that, as President Putin expressed it, a new pan-European economy would be created from Lisbon to Vladivostok. Germany in particular was expected to take the lead in investing in Russia and restructuring its industry along more efficient lines. Russia would pay for this technology transfer by supplying gas and oil, along with nickel, aluminum, titanium and palladium.

There was no anticipation that NATO would be expanded to threaten a New Cold War, much less that it would back Ukraine, recognized as the most corrupt kleptocracy in Europe, into being led by extremist parties identifying themselves by German Nazi insignia.

How do we explain why the seemingly logical potential of mutual gain between Western Europe and the former Soviet economies turned into a sponsorship of oligarchic kleptocracies. The Nord Stream pipeline’s destruction capsulizes the dynamics in a nutshell. For almost a decade a constant U.S. demand has been for Germany to reject its reliance on Russian energy. These demands were opposed by Gerhardt Schroeder, Angela Merkel and German business leaders. They pointed to the obvious economic logic of mutual trade of German manufactures for Russian raw materials.

The U.S. problem was how to stop Germany from approving the Nord Stream 2 pipeline. Victoria Nuland, President Biden and other U.S. diplomats demonstrated that the way to do that was to incite a hatred of Russia. The New Cold War was framed as a new Crusade. That was how George W. Bush had described America’s attack on Iraq to seize its oil wells. The U.S.-sponsored 2014 coup created a puppet Ukrainian regime that has spent eight years bombing of the Russian-speaking Eastern provinces. NATO thus incited a Russian military response. The incitement was successful, and the desired Russian response was duly labeled an unprovoked atrocity. Its protection of civilians was depicted in the NATO-sponsored media as being so offensive as to deserve the trade and investment sanctions that have been imposed since February. That is what a Crusade means.

The result is that the world is splitting in two camps: the U.S.-centered NATO, and the emerging Eurasian coalition. One byproduct of this dynamic has been to leave Germany unable to pursue the economic policy of mutually advantageous trade and investment relations with Russia (and perhaps also China). German Chancellor Olaf Sholz is going to China this week to demand that it dismantle is public sector and stops subsidizing its economy, or else Germany and Europe will impose sanctions on trade with China. There is no way that China could meet this ridiculous demand, any more than the United States or any other industrial economy would stop subsidizing their own computer-chip and other key sectors.^[1] The German Council on Foreign Relations is a neoliberal “libertarian” arm of NATO demanding German de-industrialization and dependency on the United States for its trade, excluding China, Russia and their allies. This promises to be the final nail in Germany’s economic coffin.

Another byproduct of America’s New Cold War has been to end any international plan to stem global warming. A keystone of U.S. economic diplomacy is for its oil companies and those of its NATO allies to control the world’s oil and gas supply – that is, to reduce dependence on carbon-based fuels. That is what the NATO war in Iraq, Libya, Syria, Afghanistan and Ukraine was about. It is not as abstract as “Democracies vs. Autocracies.” It is about the U.S. ability to harm other countries by disrupting their access to energy and other basic needs.

Without the New Cold War’s “good vs. evil” narrative, U.S. sanctions will lose their raison d’etre in this U.S. attack on environmental protection, and on mutual trade between Western Europe and Russia and China. That is the context for today’s fight in Ukraine, which is to be merely the first step in the anticipated 20 year fight by the US to prevent the world from becoming multipolar. This process, will lock Germany and Europe into dependence on the U.S. supplies of LNG.

The trick is to try and convince Germany that it is dependent on the United States for its military security. What Germany really needs protection from is the U.S. war against China and Russia that is marginalizing and “Ukrainianizing” Europe.

There have been no calls by Western governments for a negotiated end to this war, because no war has been declared in Ukraine. The United States does not declare war anywhere, because that would require a Congressional declaration under the U.S. Constitution. So U.S. and NATO armies bomb, organize color revolutions, meddle in domestic politics (rendering the 1648 Westphalia agreements obsolete), and impose the sanctions that are tearing Germany and its European neighbors apart.

How can negotiations “end” a war that either has no declaration of war, and is a long-term strategy of total unipolar world domination?

The answer is that no ending can come until an alternative to the present U.S.-centered set of international institutions is replaced. That requires the creation of new institutions reflecting an alternative to the neoliberal bank-centered view that economies should be privatized with central planning by financial centers. Rosa Luxemburg characterized the choice as being between socialism and barbarism. I have sketched out the political dynamics of an alternative in my recent book, The Destiny of Civilization.

This paper was presented on November 1, 2022. on the German e-site
https://braveneweurope.com/michael-hudson-germanys-position-in-americas-new-world-order. A video of my talk will be available on YouTube in about ten days.

1. See Guntram Wolff, “Sholz should send an explicit message on his visit to Beijing,” Financial Times, October 31, 2022. Wolff is the director and CE of the German Council on Foreign Relations. ↑

Everybody wants to hop on the BRICS Express

Eurasia is about to get a whole lot larger as countries line up to join the Chinese and Russian-led BRICS and SCO, to the detriment of the west

October 27 2022

By Pepe Escobar

Photo Credit: The Cradle

Let’s start with what is in fact a tale of Global South trade between two members of the Shanghai Cooperation Organization (SCO). At its heart is the already notorious Shahed-136 drone – or Geranium-2, in its Russian denomination: the AK-47 of postmodern aerial warfare.

The US, in yet another trademark hysteria fit rife with irony, accused Tehran of weaponizing the Russian Armed Forces. For both Tehran and Moscow, the superstar, value-for-money, and terribly efficient drone let loose in the Ukrainian battlefield is a state secret: its deployment prompted a flurry of denials from both sides. Whether these are made in Iran drones, or the design was bought and manufacturing takes place in Russia (the realistic option), is immaterial.

The record shows that the US weaponizes Ukraine to the hilt against Russia. The Empire is a de facto war combatant via an array of “consultants,” advisers, trainers, mercenaries, heavy weapons, munitions, satellite intel, and electronic warfare. And yet imperial functionaries swear they are not part of the war. They are, once again, lying.

Welcome to yet another graphic instance of the “rules-based international order” at work. The Hegemon always decides which rules apply, and when. Anyone opposing it is an enemy of “freedom,” “democracy,” or whatever platitude du jour, and should be – what else – punished by arbitrary sanctions.

In the case of sanctioned-to-oblivion Iran, for decades now, the result has been predictably another round of sanctions. That’s irrelevant. What matters is that, according to Iran’s Islamic Revolutionary Guard Corps (IRGC), no less than 22 nations – and counting – are joining the queue because they also want to get into the Shahed groove.

Even Leader of the Islamic Revolution, Ayatollah Ali Khamenei, gleefully joined the fray, commenting on how the Shahed-136 is no photoshop.

The race towards BRICS+

What the new sanctions package against Iran really “accomplished” is to deliver an additional blow to the increasingly problematic signing of the revived nuclear deal in Vienna. More Iranian oil on the market would actually relieve Washington’s predicament after the recent epic snub by OPEC+.

A categorical imperative though remains. Iranophobia – just like Russophobia – always prevails for the Straussians/neo-con war advocates in charge of US foreign policy and their European vassals.

So here we have yet another hostile escalation in both Iran-US and Iran-EU relations, as the unelected junta in Brussels also sanctioned manufacturer Shahed Aviation Industries and three Iranian generals.

Now compare this with the fate of the Turkish Bayraktar TB2 drone – which unlike the “flowers in the sky” (Russia’s Geraniums) has performed miserably in the battlefield.

Kiev tried to convince the Turks to use a Motor Sich weapons factory in Ukraine or come up with a new company in Transcarpathia/Lviv to build Bayraktars. Motor Sich’s oligarch President Vyacheslav Boguslayev, aged 84, has been charged with treason because of his links to Russia, and may be exchanged for Ukrainian prisoners of war.

In the end, the deal fizzled out because of Ankara’s exceptional enthusiasm in working to establish a new gas hub in Turkey – a personal suggestion from Russian President Vladimir Putin to his Turkish counterpart Recep Tayyip Erdogan.

And that bring us to the advancing interconnection between BRICS and the 9-member SCO – to which this Russia-Iran instance of military trade is inextricably linked.

The SCO, led by China and Russia, is a pan-Eurasian institution originally focused on counter-terrorism but now increasingly geared towards geoeconomic – and geopolitical – cooperation. BRICS, led by the triad of Russia, India, and China overlaps with the SCO agenda geoeconomically and geopoliticallly, expanding it to Africa, Latin America and beyond: that’s the concept of BRICS+, analyzed in detail in a recent Valdai Club report, and fully embraced by the Russia-China strategic partnership.

The report weighs the pros and cons of three scenarios involving possible, upcoming BRICS+ candidates:

First, nations that were invited by Beijing to be part of the 2017 BRICS summit (Egypt, Kenya, Mexico, Thailand, Tajikistan).

Second, nations that were part of the BRICS foreign ministers’ meeting in May this year (Argentina, Egypt, Indonesia, Kazakhstan, Nigeria, UAE, Saudi Arabia, Senegal, Thailand).

Third, key G20 economies (Argentina, Indonesia, Mexico, Saudi Arabia, Turkiye).

And then there’s Iran, which has already already shown interest in joining BRICS.

South African President Cyril Ramaphosa has recently confirmed that “several countries” are absolutely dying to join BRICS. Among them, a crucial West Asia player: Saudi Arabia.

What makes it even more astonishing is that only three years ago, under former US President Donald Trump’s administration, Crown Prince Muhammad bin Salman (MbS) – the kingdom’s de fact ruler – was dead set on joining a sort of Arab NATO as a privileged imperial ally.

Diplomatic sources confirm that the day after the US pulled out of Afghanistan, MbS’s envoys started seriously negotiating with both Moscow and Beijing.

Assuming BRICS approves Riyadh’s candidacy in 2023 by the necessary consensus, one can barely imagine its earth-shattering consequences for the petrodollar. At the same time, it is important not to underestimate the capacity of US foreign policy controllers to wreak havoc.

The only reason Washington tolerates Riyadh’s regime is the petrodollar. The Saudis cannot be allowed to pursue an independent, truly sovereign foreign policy. If that happens, the geopolitical realignment will concern not only Saudi Arabia but the entire Persian Gulf.

Yet that’s increasingly likely after OPEC+ de facto chose the BRICS/SCO path led by Russia-China – in what can be interpreted as a “soft” preamble for the end of the petrodollar.

The Riyadh-Tehran-Ankara triad

Iran made known its interest to join BRICS even before Saudi Arabia. According to Persian Gulf diplomatic sources, they are already engaged in a somewhat secret channel via Iraq trying to get their act together. Turkey will soon follow – certainly on BRICS and possibly the SCO, where Ankara currently carries the status of extremely interested observer.

Now imagine this triad – Riyadh, Tehran, Ankara – closely joined with Russia, India, China (the actual core of the BRICS), and eventually in the SCO, where Iran is as yet the only West Asian nation to be inducted as a full member.

The strategic blow to the Empire will go off the charts. The discussions leading to BRICS+ are focusing on the challenging path towards a commodity-backed global currency capable of bypassing US dollar primacy.

Several interconnected steps point towards increasing symbiosis between BRICS+ and SCO. The latter’s members states have already agreed on a road map for gradually increasing trade in national currencies in mutual settlements.

The State Bank of India – the nation’s top lender – is opening special rupee accounts for Russia-related trade.

Russian natural gas to Turkey will be paid 25 percent in rubles and Turkish lira, complete with a 25 percent discount Erdogan personally asked of Putin.

Russian bank VTB has launched money transfers to China in yuan, bypassing SWIFT, while Sberbank has started lending out money in yuan. Russian energy behemoth Gazprom agreed with China that gas supply payments should shift to rubles and yuan, split evenly.

Iran and Russia are unifying their banking systems for trade in rubles/rial.

Egypt’s Central Bank is moving to establish an index for the pound – through a group of currencies plus gold – to move the national currency away from the US dollar.

And then there’s the TurkStream saga.

That gas hub gift

Ankara for years has been trying to position itself as a privileged East-West gas hub. After the sabotage of the Nord Streams, Putin has handed it on a plate by offering Turkey the possibility to increase Russian gas supplies to the EU via such a hub. The Turkish Energy Ministry stated that Ankara and Moscow have already reached an agreement in principle.

This will mean in practice Turkey controlling the gas flow to Europe not only from Russia but also Azerbaijan and a great deal of West Asia, perhaps even including Iran, as well as Libya in northeast Africa. LNG terminals in Egypt, Greece and Turkiye itself may complete the network.

Russian gas travels via the TurkStream and Blue Stream pipelines. The total capacity of Russian pipelines is 39 billion cubic meters a year.

Map of Russian gas route via Turkey

TurkStream was initially projected as a four-strand pipeline, with a nominal capacity of 63 million cubic meters a year. As it stands, only two strands – with a total capacity of 31,5 billion cubic meters – have been built.

So an extension in theory is more than feasible – with all the equipment made in Russia. The problem, once again, is laying the pipes. The necessary vessels belong to the Swiss Allseas Group – and Switzerland is part of the sanctions craze. In the Baltic Sea, Russian vessels were used to finish building Nord Stream 2. But for a TurkStream extension, they would need to operate much deeper in the ocean.

TurkStream would not be able to completely replace Nord Stream; it carries much smaller volumes. The upside for Russia is not being canceled from the EU market. Evidently Gazprom would only tackle the substantial investment on an extension if there are ironclad guarantees about its security. And there’s the additional drawback that the extension would also carry gas from Russia’s competitors.

Whatever happens, the fact remains that the US-UK combo still exerts a lot of influence in Turkey – and BP, Exxon Mobil, and Shell, for instance, are actors in virtually every oil extraction project across West Asia. So they would certainly interfere on the way the Turkish gas hub functions, as well on determining the gas price. Moscow has to weigh all these variables before committing to such a project.

NATO, of course, will be livid. But never underestimate hedging bet specialist Sultan Erdogan. His love story with both the BRICS and the SCO is just beginning.

The views expressed in this article do not necessarily reflect those of The Cradle.

Germany´s failing ´stored´ nat-gas & LNG experiment

October 15, 2022

Source

by Jorge Vilches

the LNG click-bait

The sitting US Secretary of State very recently declared in an official press conference that the NS1 and NS2 pipeline sabotage will have “no impact on European energy resilience”…

We should assume that Secretary Antony Blinken was referring to the timely supply of US LNG substitute equivalent to pipeline nat-gas now theoretically available (not) which would save the European day. With a clear smile, Blinken considered it to be a “tremendous opportunity” for the US to help Europe wean off of Russian energy… with the USA ready to be “the leading supplier (of dirty fracked seaborne LNG) to Europe”. And all of it despite the great ripoff “mondepreise” moon-high prices charged by US vendors according to the German Minister of Economics Robert Habeck who is now sorrowfully surprised by the very market dynamics that he actively contributed to establish.

the oh-lá-lá connection

The French Minister of the Economy, Finance and Industrial Sovereignty – namely Bruno Le Maire, well known as President´s Emmanuel Macron 4×4 all-terrain strong-man — went a bit further by warning that the US should not be allowed to dominate the global energy market while the EU just suffers from the consequences of the conflict in Ukraine. “The conflict in Ukraine must not end in American economic domination and a weakening of the EU” said the French Minister at the National Assembly. Le Maire hastened to add that it’s unacceptable for Washington “to sell us its liquefied natural gas at four times the price that it sets for itself” also explaining that “the economic weakening of Europe is not in anyone’s interest”. Frequently donning a dark-colored turtle neck, his tone and attitude corresponded to an ecclesiastical authority announcing a yet unknown truth taken from the Book of Revelations ready to be applied to the “Industrial Sovereignty” agenda of his Ministry.

Bruno Le Maire par Claude Truong-Ngoc

´Oktoberfreeze einfrosten´

Be that as it may, and as per the US State Dept. the NS1 and NS2 pipeline sabotage would supposedly have “no impact on European energy resilience”… then we should guess that Germans should just enjoy their Oktoberfest and — why not ? — also prepare to celebrate Christmas 2022 as if nothing negative had happened. On the contrary,

if technical brain-power (currently AWOL) prevailed, then career strategists both sides of the Atlantic would now be spending all day and night trying to brush up hard on nat-gas management 101, better yet with a touch of sophomoric physics if all possible. And thus no-nonsense contingency plans would already be prepared and under deployment.

The reason is, as explained below, by EU and German design and commitment this is a failing EXPERIMENT. The planned ´stored´ nat-gas & LNG supply strategies have never ever been applied in equivalent circumstances with this strange methodology and humongous scale. Thusly, the 2022 German Oktoberfest will probably turn into a very acid sauerkraut with solid-beer icicles bizarrely hanging from the spouts. The Main Event would still be the December 2022 ´Jinglemerkel Santakaputt´ with nowhere to hide as all of Europe would be undergoing a thorough DE-industrialization process with sharp lowering of standards of living, and in many areas most probably with food issues, darkness & cold, deep frustration and un-heard-of unemployment with massive migrants wishing they had stayed back home (yes)

Ref #1 https://www.state.gov/secretary-antony-j-blinken-and-canadian-foreign-minister-melanie-joly-at-a-joint-press-availability/

Ref #2 https://twitter.com/reuters/status/1574853885382037505

Ref #3 https://www.thelocal.de/20221005/german-minister-accuses-gas-supplying-countries-of-ripoff-prices/

Ref #4 https://www.rt.com/business/564457-us-seeks-economic-domination-eu/

´molecules of illusion´

Be it from Qatar, Norway, or the US… or Russia…Liquefied Natural Gas cannot and will not save the day for Europe. First of all, LNG is and will be for a huge long time to come very scarce worldwide. Furthermore, there are very few loading and unloading terminals available at either end. For example, Germany has 0 (zero) LNG terminals. None. And even some loading terminals at source docks that are already built have serious operational problems or simply do not meet EU standards. Besides, there are not anywhere near enough LNG tankers available and very few are under construction. Who needed ugly dirty fracked LNG only 6 months ago ? And these infrastructure beasts take very long time to be conceived, approved, designed, funded, built, commissioned, certified, and offered to the market.

But it gets worse because many wrongly imagine that fracked sea-borne Liquified Natural Gas (LNG) is a substitute of nat-gas (not). First, it´s terribly more expensive, most explosive & dangerous to handle, and definetly way too scarce to meet European needs. Environmentally, LNG is “fracking” dirty and very cumbersome to liquefy, load and re-gassify with yet non-existant infrastructure at both ends… and is far more difficult to store and many times more costly to freight (Suez could be a limitation) from ackward overseas sources yet unknown (in tankers that do not yet exist) and only in risky seaborne batches onto many dozens of delivery terminals not yet built nor adequately planned for…

Let´s delve further in depth regarding the LNG illusion while sharing the always knowledgeable and helpful comments from the SKovacs summarized posts (in italics below) based on 30-years of first-hand operational experience.

the LNG cryogenic conundrum

1. There is an extreme shortage of LNG tankers, so who would build them, per what specs and costs, by when?
2. There are is an extreme shortage of LNG terminals at both ends. Europe is extremely bureaucratic, so it will require many years to have a single LNG terminal ready and running if not vetoed by the local council. Meanwhile, a pipeline must be connected from the terminal to the existing grid… with further complications at every level which take TIME. What capacity should these terminals have vis-á-vis the related new distribution pipelines? Nobody can know that today thus adding even more load to timing and technical demands.
3. Transit times on the tankers change and existing EU southern pipelines are probably at full capacity already.
4. Tankers are far more costly to operate as liquefied gas has to be kept liquefied re power-hungry refrigeration.
5. Tankers have a more costly service life than all other bulk tankers, due to the regulation/inspection/cryogenic requirements which also take TIME. So therefore they are a higher risk with higher cost per cubic meter of gas transported vs. cheap, reliable, safe, environmentally friendlier pipelines to which Europe is used to.
6. Europe needs dozens of new LNG terminals.The pre-feasibility and feasibility studies have not yet been planned for, let alone detailed engineering, plans & specs, manpower, contracting of engineering expertise,etc
7. LNG terminal sites have to be carefully chosen, their expensive and cumbersome environmental impact assessments completed (which can take years) with engineering design that by itself can also take years with no room for direct carbon copy of other designs, plus ground preparation construction which would take 1-2 years + manufacturing of plant and modules (usually in Korea and China, but would they now agree ? ) all of which need contracts, schedules, materials, etc, lots of TIME and shipping + certification & commissioning.
8. Funding: all LNG terminals are owned/built/operated by consortiums of gigantic multinational companies, not governments. They cost 10’s of billions to design and build, which need to be borrowed from banks. The borrower must prove that it has a solid plan with guarantees in place to repay the loan with interest. The owner/operator of the terminal has all sorts of other very important liabilities. This is a no nonsense business.

So it seems that European leadership is unexplainably calm after both NS1 & NS2 have been blown up and now relying on timely LNG supplies (not) and /or European nat-gas “stored reserves”…(double not)

use-LESS European supposedly stored nat-gas ´reserves´ (not)

Europeans know bloody well a rough winter is coming, but no one has warned them that the supposed 90% “reserves” that would sorta get them through okay will not be available as announced. There are 2 main reasons for this which were already explained to boring death and intricate depth at Ref #5 https://thesaker.is/the-euthanized-european-nat-gas-reserves/

The first reason #1 is the impossibility of constant RE-pressurization of such “stored” nat-gas reserves in order to maintain the required sub-surface driving force push to produce it onto surface. Now, along broad areas of Germany and Northern Europe the lack of pipeline nat-gas flow will not allow to comply this requirement. Without pipeline nat-gas, at the very best only 25% to 30% of the “supposed” 90% reserves could possibly ever be timely recovered and only very slowly through a period of time stretched out in months. The culprit is the mandatory DE-pressurization whenever such underground reserves are produced onto surface (plus sub-surface losses) with the consequent geometrical drawdown of pressure. With a decreasing sub-surface pressure as driving force, ever smaller and slower nat-gas volumes can be produced onto surface or even none at all per circumstances and operational requirements.

The second reason #2 is the current impossibility in many areas of now having the much required constant massive King Kong pipeline surface flow to adequately push along and warm up the underground reserves that could be produced onto surface by pressure differential when RE-pressurized enough and if all the other requirements are met. This has never ever been tried out by anyone before anywhere near at this scale and without prior notice as later explained. Now suffice to say that the impact will be enormously negative and that Europeans are not anywhere close to being aware of this. All they get to hear is that “our 90% stored nat-gas reserves will get us through this winter if we just save up consumption a bit ”. No they won´t and below it is proven with hard figures. Read my lips ugly “methane hydrates” nightmares will be the new name of the game and it will not be fun, trust me. More later, just bear with me.

high school physics

The problem starts when bureaucratic ignoramuses (politicians et al) dream up the stupid idea that nat-gas reserves can be used as a 100% substitute for nat-gas flowing feedstocks such as thru surface pipelines. They simply cannot, period. Actually, God invented nat-gas reserves as a supplement to – never a substitute of (NOT) – flowing nat-gas feedstocks so that in high demand season (winter) the cheaper nat-gas reserves piled up during the low consumption season (summer) could be added to the main pipeline flow by 10% approx. This would help to satisfy the higher winter demand and also to lower the average yearly cost. Nat-gas reserves are good for nothing more than that and definetly not a substitute of surface flowing feedstocks. No matter how hard they try or how frequently they model their brand new dark colored turtle necks, politicians both sides of the Atlantic will not change that, I promise. Nat-gas sub-surface reserves can never ever be adequately produced onto surface by themselves and can only be ´lightly´ and slowly ADDED onto pre-existing actively flowing surface feedstocks such as pipeline flows nothing more. Anything else is a dream ready to become a very ugly nightmare.

misnomer

Something certainly widespread and that may be misleading — for which I am not responsible of — is using the term “storage” for such ´reserves´ as “storage” in a warehouse or closet. It is not anywhere near that. A better term would be “lung” but then we get the ambiguity derived from the organ that living beings breathe with. But at any rate such nat-gas reserves are not kept like you and I — and our wives — would keep dishes in a cupboard shelf. It´s not easy to explain it just with words, but still allow me to try. Water plays a role of course and that is why before injecting down to underground storage caverns the nat-gas MUST be thoroughly and intensively dehydrated as much as technically possible which is difficult to do and very expensive. Furthermore, during underground storage such nat-gas picks up even additional water content from subsurface structures which could be coped with (maybe, yet again it depends) if they had readily available a surface super King Kong flow — as later explained — to thermically cushion it and incorporate it into its MASSIVE mass. But then, by not having such driving force No. 2, means being able to produce such undergound stored nat-gas onto surface only with driving force No.1, namely pressure differential.

Then, with only No.1 driving force available to extract such underground nat-gas reserves… well (a) the consequent pressure drop taking place as the first nat-gas sub-surface “reserves” get to surface will mean that the process has to be very slow and (b) lots of nat-gas will be left behind underground because of gradual pressure drawdown will reduce and weaken the upward push required and (c) you better be VERY carefull with veeeery sloooow production (meaning not enough when most needed) because a sudden methane DE-compression will FREEZE up everything and also producing methane hydrates a well-known nightmare of operational engineers which would clog the pipeworks forever

Furthermore this has never ever been attempted (what for ?) and the variations of the different animals in the storage facilities “zoo” I describe below do not allow for any standardized procedure for simultaneous input from different sources also managed differently with no training, no coordination, nor awareness of the nature of the problem.

But it gets to be MUCH worse…

not yours

Any underground stored nat-gas that may possibly be recovered — not much, as we shall see right below — will be sold not to the local community of nearby consumers but rather to the wholesale market through the pipeworks grid described later in greater detail. So that if Germans living in, say, Frankfurt for whatever reason feel they´ll sorta be okay by having such and such large volume nat-gas storage facility close-by, well… they are freezing wrong because the nat-gas to be potentially produced from such large size Frankfurt storage will be very democratically distributed thru the grid (at market prices) and not thru a direct connection to nearby Frankfurt homes.

Jinglemerkel Santakaputt

In 2021 Germany spent 100 bcm of nat-gas (approx.) with a maximum storage volume capacity of 24 bcm which German officials now say is filled up to 90% meaning that they have 22 bcm of nat-gas available throughout Germany. BTW, no specific distribution breakdown is ever given just total values for all of Germany which could eventually mean a very UN-even problematic distribution. Furthermore, saying and repeating that is fully misleading as you could have your car´s gas tank 90% filled but you would still require MANY gas tanks for you to get to destination. Be that as it may, total 2021 consumption from October to February in Germany was 52 bcm with an estimated breakdown of 26 bcm for the October, November and December period and an additional 13 bcm during January plus yet another 13 bcm for February. Total = 52 bcm. Now then, out of the 22 bcm supposedly already ´stored´ approximately a minimum 30% cannot ever be recovered (probably even more) so that means that only 15 bcm maximum are available to cover consumption only for the months of October and November… as by mid-December (Christmas comes to mind) even in the best scenario under current circumstances Germany would run out of available nat-gas, stop. Sorry it´s math.

Some EU countries such as Cyprus, Estonia, Finland, Greece, Ireland, Lithuania, Luxembourg, and Slovenia have ZERO nat-gas storage capacity of their own and basically depend upon solidarity from other EU countries…

Ref #5 https://youtu.be/gplfrKT627k Ref #6 https://www.reuters.com/article/europe-gas-kemp-idAFL1N2Z81RA

Yet more on the use-LESS European nat-gas “reserves” (not)

In practice — per Yogi Berra – today´s underground European “stored” nat-gas reserves cannot be conveniently extracted from sub-surface. The reason is, that in order to achieve it, these ´reserves´ would need to

(1) be constantly RE-pressurized as briefly explained before, which now without NS1 and NS2 cannot ever be done through large parts of Germany and throughout Northern Europe with the consequent enormous impact this implies

and

(2) have abundant Russian pipeline nat-gas constantly flowing thus allowing to add-on such pressurized stored underground reserves to a comparatively far larger surface flow. This is the only possible practical way to extract underground nat-gas and also to distribute such buried reserves through the surface distribution system pipeworks.

By themselves, without the help of flowing pipeline nat-gas, such stored nat-gas reserves can hardly be produced onto surface and still with lots of negative impact. To attempt it would be an experiment never ever tried out before in the history of physics — or politics for that matter. “A bloody unnecessary experiment” Sir Isaac Newton would have mumbled in a low-tone whisper. Without a surface pipeline full of massively abundant flowing nat-gas (now absent) the supposed European “reserves” will mostly just end up sitting pretty underground as they are today, period.

API-SPE-ASTM-NACE-ASME-AAPG

Please also accept that trying to explain highly technical issues of what´s really going on to a very broad audience (politicians included) is not simple. It is most important, mind you, but not simple… Boredom is a constant risk which by the way I am running right now. Losing the audience altogether is a very real possibility. And that´s the reason why many times I repeat the same ideas with slightly different language (and angle of perspective) as best I can … and as technical considerations allow it. And that´s why I also try to make these articles naturally lively and colorfull so as to get your attention. Now if the audience were the API-SPE-ASTM-NACE-ASME-AAPG types I would of course explain stuff differently. But no Western technical venue would ever allow me to submit the thesis you all already know about as all of them (and I do mean ALL) just kow-tow the official line to move on with “nothing to see here”.

constant RE-pressurization

Constant RE-pressurization of subsurface stored nat-gas is required to maintain enough (large) volume and enough underground pressure as No.1 driving force to produce it onto surface. This is needed to compensate for the unavoidable and also constant DE-pressurization due to underground losses (thermal, friction, permeation, dissipation, fissures, cracks, porosity, etc.) and pressure drawdown (loss) produced every time that sub-surface reserves are brought onto surface. Without RE-pressurization, future required pressure would not be available and possible surface soil collapse or subsidence could lead to seismographic activity nobody wants such as with fracking. But furthermore this driving force No.1 also needs an active and fully operational surface pipeline to bring in nat-gas for re-injection of underground nat-gas reserves, namely driving force No.2. Besides, whenever the traditional surface pipeline inflow is interrupted or non-existant (such as today in Northern Germany and Northern Europe) storage nat-gas will also be depleted way earlier because it was not ever supposed to constitute the only winter load by itself… and as explained later no surface King Kong express bull-dozing effect would exist for surface pipeworks distribution.

Catherine´s comments

So without nat-gas flowing through the NS1 and NS2 pipelines the extraction of the nat-gas supposedly “stored” (not) in European underground caverns or sub-surface deposits would be highly problematic or even impossible. The Saker commenter Catherine worded it out short & sweet…“ Germany says it has enough gas in storage to get through winter. Thanks for demolishing that statement – I had no idea an inflow was needed to make it a viable solution” Congratulations Catherine gal, I always look out for your valid down-to-earth comments such as “inflow is needed”.

Please conceive the NS nat-gas pipelines as huge 8-lane x 18-wheeler freight truck King Kong autobahns. Yes, differential pressure from the pressurized underground nat-gas does actually play a role, but better be very careful or you will end up freezing everything around you including the young field engineers and their sisters. So, per Catherine, additionally a King Kong pipeline “is needed” with a far larger nat-gas mass to also offer a required thermal stability cushion for the underground ´reserves´. So King Kong “pushes along” or displaces anything in its way incorporating the possible nat-gas that would be very slowly released-produced-extracted-bubbled up from underground European storage caverns as slightly aided by the pressure differential between stored depth and surface.

Accordingly… highly pressurized subsurface caverns by themselves will not work as expected unless a constant flow – even at low flow rates and pressures — is always maintained from the NS pipelines sources… thus pushing the stored nat-gas “out there” as required for distribution through surface grid pipeworks for this mix between (a) Siberian pipeline nat-gas plus (b) possible European underground stored nat-gas. So the latter (b) can only be added-on to a much larger flow-rate of the former (a) probably with a ratio below 10% as we shall later see. But the point is we do NEED the surface pipeline flow to incorporate, drag along and thermically stabilize the expanding sub-surface nat-gas.

the bulldozing King Kong Express (AWOL)

At any rate, the Russian pipeline is the “monster” which carries an overwhelming amount of nat-gas with sustained internal flow-rate thus performing as our “King Kong” bulldozer express. Accordingly, it rules with the overpowering momentum (or inertia Newton would say) of the massive amount – which also performs as a thermally stabilizing cushion — of nat-gas it naturally carries by design and always “pushing along” and incorporating everything it finds in its way…including the possible well-managed, small, non-freezing inflow from sub-surface storage deposits.

Now here comes an additional concept relating to comparative amounts of nat-gas from both the pipeline and the possible sub-surface storage deposits quantity, type, and capabilities of which we fully ignore but must assume are highly variable and heterogenous animals. Of course, the volume and mass of nat-gas that the surface pipeline brings along always has to be much larger than the possible inflow received from underground storages so as to “bull-doze” it along as King Kong would and thus thermally absorb it also. That is why the very first paragraph entitled “high school physics” stated that

“ The problem starts when ignorant fools dream up the idea that nat-gas reserves can be used as a 100% substitute for nat-gas flowing feedstocks. They simply cannot, period. Actually, God invented nat-gas reserves as a supplement to – not a substitute of – flowing nat-gas feedstocks so that in high demand season (winter) the cheaper nat-gas reserves piled up during low consumption season (summer) could be added to help satisfying winter´s high demand. Nat-gas reserves are good for nothing more than that and definetly not a substitute of flowing feedstocks”.

stored nat-gas %

You may now ask exactly what ratio should that proportion be ? Well we can´t know precisely although it surely varies but it does not really matter because (1) it´ll be set for whatever is needed (2) what matters is the very existence of this King Kong express having a massive bull-dozing and thermally stabilizing nat-gas cushion flow which would forcefully push along whatever it finds in its way thus adequately incorporating / adding the nat-gas inflow received from underground storage thru very very carefull pressure differential management to be explained later. Historically, European nat-gas storage percentages vary between 80% at the end of summer and 30% at the end of winter(approx) So we can infer that 50% of the stored volume spent during such 6-month period would require to – in average – to spend 8% per month x 6 months = 50% of the stored nat-gas (approx.). So that´d mean an average of 8% per month inflow of whatever volume each facility may have stored (unknown in absolute figures) during a 6-month period of far cheaper gas purchased and stored during low-demand season (summer). But by no means is ´stored´ nat-gas able to substitute for massive King Kong surface inflows without such it cannot be adequately surfaced in enough quantities just producing a generalized freeze-out to be explained later. Because underground stored nat-gas cannot suddenly and massively be surfaced onto an empty pipeline because the high differential pressure would expand the methane and freeze up rapidly plus it would be spent-up in a hurry with the consequent pressure drop, a very bad idea.

Europe, we have a problem

And the problem now for Europe is precisely that such pipelines NS1 and NS2 are not operational thus not allowing for anything of what has been described herein so far. For without such active King Kong pipelines almost unsolvable problems appear as later described. So once the Russian pipeline nat-gas flow stops dead,such European stored gas would not be conveniently displaced or “moved along” to elsewhere it may be needed, be it for home heating or power generation, or anything else. And if the push pressure applied to the sub-surface nat-gas were substituted by pressure exerted by any other gas or mixtures thereof (air or otherwise) the Russian pure nat-gas already stored would soon inter-mix and dilute beyond possible practical use as European installations, equipment and devices are contractually fine-tuned to be fed by pure Russian nat-gas, not anything else. Furthermore, mixing with air (oxygen) would be very risky and no one in his right mind would try that, trust me. Any other gas or mix thereof is impossible.

driving forces No.1 + No. 2

So two (2) driving forces are required to extract / produce the EU underground ´stored´ nat-gas. Both are needed. Driving force No.1 is sub-surface pressure so that the stored nat-gas is barely allowed to emerge to surface veeeeery slowly just timidly bubbling on to surface where it would meet and ride along with the King Kong express absorbed onto its thermally stable mass. This is known as pressure differential between the under-ground nat-gas and the King Kong flow on surface. If operators were careless enough to allow for a larger than required pressure differential all hell would break lose and we would have a very short-lived disaster with everything frozen. The reason is that nat-gas sudden and abundant expansion because of large pressure differentials means temperature drop – let alone in European mid-winter — to the point of forming one of the most feared problems in the business known as “methane hydrates” which would mean that everything breaks down seized bloody frozen. More on that later, including “solutions” found for Alaskan and Arctic reservoirs but NOT applicable to these European underground stored nat-gas facilities which are many different funny animals just put together, like in a zoo. There is no need to explain the danger of methane hydrates, just google it.

Now driving force No.2 is precisely the King Kong pipeline bull-dozing flow as already explained. What driving force No. 1 does is to get the nat-gas bubbling barely on to surface under the lowest possible pressure differential so as not to freeze everything up just “presenting” the nat-gas on surface for it to be “blown away” or “moved along” or “pushed along” or “displaced ” thru the surface pipeworks to final destination… or whichever wording suits everyone´s fancy (mission impossible, trust me). The soccer equivalent would be Neymar passing the ball on to Messi – at full speed and on the run of course — for the Argentine genius to score just by shoving the ball past the goalposts with his chest.

Alaska & Siberia & the Artic and beyond…

I can already hear the howling of experienced “experts” letting us all know that the freezing-up problems of a strong differential pressure between nat-gas stored underground and surface pipeline (even empty, as it would now come to be) are today perfectly solvable. If such were possible (not) then a strong Delta P — as engineers call it — would all by itself be enough of a driving force No.1 to solve such problem without King Kong and get the sub-surface nat-gas all along the surface pipeworks… Oh, yes, I agree such “freezing-up” problems are pretty much “solved” yes of course … but only in Alaska and Siberia or wherever you happen to have a small ocean of sub-surface nat-gas reservoirs which justifies the design, construction, investment, equipment and huge operational expenses and expertise for the injection of methanol, pipe heating, etc. etc. all of which are very expensive and difficult solutions to operate with.. But not repeat not in a comparatively very small size and highly atomized zoo of European underground nat-gas ´storage´ facilities all pretty much different (no carbon copy solution possible) from each other requiring specific variations and modifications as widely distributed throughout different environments which are already installed and running… which certainly do not allow for such expensive ´solution´. It´s impossible now to up-end and retro-fit each individual sub-surface storage facility everywhere in Europe whatever its size, location and type so that it may have the means to deal with the impact of such suddenly de-pressurized nat-gas and further evenly distribute it on surface pipeworks at precise and agreed constant and homogenous pressure and flow-rate without planned coordination amongst the different cross-border stakeholders. Not. Sourcing, logistics, just-in-time distribution and injection of humongous volumes of methanol without prior notice is an unfathomable project.

Furthermore, as if the above not were enough, a high differential pressure between undergound nat-gas and the surface would mean that the stored volume would be consumed / depleted / drawed down way too fast thus defeating the purpose of the whole concept and process. The experiment proposed was never ever foreseen by anyone decades ago including the original geologists, designers and engineering contractors… or current operators for that matter. Overabundant nat-gas inflow from Russia was always a “given” taken for granted.

the nat-gas zoo failing EXPERIMENT

So let´s summarize the nat-gas zoo experiment that has never-ever been needlessly thought of in the history of physics and nat-gas extraction and/or surface distribution management. Let alone as designed and proposed by EU politicians that obviously know jack about basic physics & chemistry and could not care less about its consequences.

But you will, trust me. Oh, BTW these are NOT naturally flowing wells nor sucker-rod pumped wells with surface mechanical “grasshoppers” sucking oil & gas out, nor bottom hole producing wells with Electro Submersible Pumps (ESP)… These also are not water-swept wells such as in secondary recovery with water injected from near-by wells pushing the oil & gas to the producing wells, etc etc etc. These are sub-surface artificially pressurized nat-gas storage deposits, completely different animals altogether.

tools and resources absent

+ NO Russian nat-gas pipeline inflow (zero) – NO King Kong express – plain EMPTY shut-down of Russian pipeline

+ ZERO possibility of the “move along” King Kong express effect. None. AWOL.

+ ZERO possibility of RE-pressurizing any/all sub-surface nat-gas deposits throughout Europe meaning that they will all DE-pressurize at unknown different variable rates both amongst different underground storage caverns and within such due to their enormous heterogeneity regarding type, size, and specific location within the surface network, etc.

exclusive driving force

+ Only current sub-surface pressures (whatever it happens to be, all different) as exclusive driving force to extract underground ´stored´ nat-gas from highly variable deposits (the zoo) meaning variable pressure differentials and flow rates requiring yet an additional layer of overall nat-gas production plus distribution & timing / scheduling management

available tools

+ highly heterogenous and variable cross-borders sub-surface deposits / caverns & reservoirs of different sizes, types and requirements hereinafter to be called “the unpredictable zoo” current and future pressures of which are fully unknown and can´t possible ever be known because of the heterogeneity variations amongst the zoo animals.

They are all different zoo animals in so many ways that no standardized solution is possible. All the zoo animals were commissioned at different times with different criteria and different designs, not ever inspected as surface structures would be, all of them found in different underground and soil conditions, no internal known lining, all with varying degrees of fissures, cracks, porosities and permebilities, etc etc.etc

All requiring different sub-surface pressure tests re fill-up, shut-in, and pressure drawdown values to control the possibility of a fracture or large enough crack which would seriously endanger everyone in a 10-mile radius (or more)

unknowns

+ No specific breakdown available regarding what “supposed” % of nat-gas reserves held exactly by which sub-surface “animal“ and at what current and future sub-surface pressure which will necessarily decrease through time

+ temperature, flow-rate and pressure subsurface inflow variations all along the surface pipeworks grid depending upon the cooling effect allowed for each individual underground nat-gas deposit by each individual un-regulated cross-border operator

+ 85% average nat-gas storage fill-up throughout Europe at unknown pressure and variation profile until March 2023.

+ Not ever equivalent to an oil & gas well provided by wise Mother Earth under completely different conditions

no vacuum nor gas replacement

If nat-gas were substituted by any other gas or mixtures thereof (air or otherwise) the Russian pure nat-gas already stored would soon inter-mix and dilute beyond possible practical use as European installations and equipment are contractually fine-tuned for pure Russian nat-gas, not anything else. Pulling an extraction vacuum would not help or change anything as it would mean the same impact as the sub-surface pressure differential and would freeze up everything just the same and/or FUBAR the surface pipeworks distribution grid. Adding or “pushing” nat-gas with air or an air mix would be explosive.

conclusions

The sub-surface storage and delivery of methane in enormously large quantities without having the traditional and foreseen huge Russian pipeline inflow is a spanking new and most probably unsuccessfull and dangerous experiment.

Question #1: Are all stakeholders AWARE of the above and have planned accordingly ? I don´t think so, do you ?

The abundant “iffy” explanations received ring many alarms for contingency planning. There is no crystal ball regarding what could happen, but for sure it will NOT be “normal” service everywhere for everybody all the time.

Today absolutely everybody throughout Europe is used to, requires and fully expects what we shall call “normal” everyday nat-gas supply service. BTW, there are other nat-gas sources for certain parts of Europe besides Russian pipelines which should function normally although at much higher prices than in the recent past. At least such exist today and are operated at 125% of capacity and may suffer from such abuse, of course. So here we referred only to the NS1 & NS2 pipeline nat-gas non-supply, an absolute requirement most specially for Germany & Northern Europe.

Question #2 : assuming that was explained herein is 100% wrong and everything just works out hunky-dory ? Once that the nat-gas storage is fully depleted throughout Northern Europe ( at best March 2023 ) what would happen then exactly ?

So whenever we hear about supposed European 90% nat-gas storage “reserves” please recall that such were conceived and recoverable by design, construction and operation only in addition to… and if and when… Russian pipeline nat-gas inflow were constantly maintained (not anymore) with at least a minimum inflow rate and pressure.

more questions

(3) have any of the experimental procedures described herein ever been followed before throughout Europe? (4) What positive experience is there available in facilities this large and so heterogenous and widespread with so much at stake and no time to plan and prepare ? (5) why would all of these procedures under the new unforeseen conditions not be considered to be truly experimental ? (6) would absolutely everybody in charge of European nat-gas storage facilities know about these problems in advance and proceed exactly as required by a PLAN without risking any experimentation and/or improvisation ?

sub-surface pressure management

Chances are that hurriedly over-pressurized sub-surface caverns and nat-gas reservoirs will crack or fracture.

There are serious sub-surface cavern pressure limitations to avoid the risk of fracturing… with bad consequences.

Not well-studied and inadequate soil mechanics on possibly un-consolidated formations were already discussed in the original article of Reference #5. Accidents will happen. So it´s a very tricky and potentially dangerous game to be played out with extreme care. Initially these sub-surface storage facilities may possibly be pressurized enough. But as winter comes on, the sub-surface pressures will decline and accordingly their production rate will also decline. So, by mid-winter, even if the quantity of gas remaining were apparently enough (50% ? ) the rate of production to surface would not meet the traditional demand. Storing and later extracting nat-gas in sub-surface deposits under very high pressure requires tons of specialized operation, maintenance expertise, and funding. Extraction and delivery is very slow. Higher speed delivery to satisfy peak demand can only be sustained momentarily and necessarily running serious systemic risks as explained hereinbefore.

Asia’s future takes shape in Vladivostok, the Russian Pacific

September 08, 2022

by Pepe Escobar, posted with the author’s permission and widely cross-posted

Sixty-eight countries gathered on Russia’s far eastern coast to listen to Moscow’s economic and political vision for the Asia-Pacific

The Eastern Economic Forum (EEF) in Vladivostok is one of the indispensable annual milestones for keeping up not only with the complex development process of the Russian Far East but major plays for Eurasia integration.

Mirroring an immensely turbulent 2022, the current theme in Vladivostok is ‘On the Path to a Multipolar World.’ Russian President Vladimir Putin himself, in a short message to business and government participants from 68 nations, set the stage:

“The obsolete unipolar model is being replaced by a new world order based on the fundamental principles of justice and equality, as well as the recognition of the right of each state and people to their own sovereign path of development. Powerful political and economic centers are taking shape right here in the Asia-Pacific region, acting as a driving force in this irreversible process.”

In his speech to the EEF plenary session, Ukraine was barely mentioned. Putin’s response when asked about it: “Is this country part of Asia-Pacific?”

The speech was largely structured as a serious message to the collective west, as well as to what top analyst Sergey Karaganov calls the “global majority.” Among several takeaways, these may be the most relevant:

• Russia as a sovereign state will defend its interests.
• Western sanctions ‘fever’ is threatening the world – and economic crises are not going away after the pandemic.
• The entire system of international relations has changed. There is an attempt to maintain world order by changing the rules.
• Sanctions on Russia are closing down businesses in Europe. Russia is coping with economic and tech aggression from the west.
• Inflation is breaking records in developed countries. Russia is looking at around 12 percent.
• Russia has played its part in grain exports leaving Ukraine, but most shipments went to EU nations and not developing countries.
• The “welfare of the ‘Golden Billion’ is being ignored.”
• The west is in no position to dictate energy prices to Russia.
• Ruble and yuan will be used for gas payments.
• The role of Asia-Pacific has significantly increased.

In a nutshell: Asia is the new epicenter of technological progress and productivity.

No more an ‘object of colonization’ 

Taking place only two weeks before another essential annual gathering – the Shanghai Cooperation Organization (SCO) summit in Samarkand – it is no wonder some of the top discussions at the EEF revolve around the increasing economic interpolation between the SCO and the Association of Southeast Asian Nations (ASEAN).

This theme is as crucial as the development of the Russian Arctic: at 41 percent of total territory, that’s the largest resource base in the federation, spread out over nine regions, and encompassing the largest Special Economic Zone (SEZ) on the planet, linked to the free port of Vladivostok. The Arctic is being developed via several strategically important projects processing mineral, energy, water and biological natural resources.

So it’s perfectly fitting that Austria’s former foreign minister Karin Kneissel, self-described as “a passionate historian,” quipped about her fascination at how Russia and its Asian partners are tackling the development of the Northern Sea Route: “One of my favorite expressions is that airlines and pipelines are moving east. And I keep saying this for twenty years.”

Amidst a wealth of roundtables exploring everything from the power of territory, supply chains and global education to “the three whales” (science, nature, human), arguably the top discussion this Tuesday at the forum was centered on the role of the SCO.

Apart from the current full members – Russia, China, India, Pakistan, four Central Asians (Kazakhstan, Uzbekistan, Tajikistan, Kyrgyzstan), plus the recent accession of Iran – no less than 11 further nations want to join, from observer Afghanistan to dialogue partner Turkey.

Grigory Logvinov, the SCO’s deputy secretary general, stressed how the economic, political and scientific potential of players comprising “the center of gravity” for Asia – over a quarter of the world’s GDP, 50 percent of the world’s population – has not been fully harvested yet.

Kirill Barsky, from the Moscow State Institute of International Relations, explained how the SCO is actually the model of multipolarity, according to its charter, compared to the backdrop of “destructive processes” launched by the west.

And that leads to the economic agenda in the Eurasian integration progress, with the Russian-led Eurasia Economic Union (EAEU) configured as the SCO’s most important partner.

Barsky identifies the SCO as “the core Eurasian structure, forming the agenda of Greater Eurasia within a network of partnership organizations.” That’s where the importance of the cooperation with ASEAN comes in.

Barsky could not but evoke Mackinder, Spykman and Brzezinski – who regarded Eurasia “as an object to be acted upon the wishes of western states, confined within the continent, away from the ocean shores, so the western world could dominate in a global confrontation of land and sea. The SCO as it developed can triumph over these negative concepts.”

And here we hit a notion widely shared from Tehran to Vladivostok:

Eurasia no longer as “an object of colonization by ‘civilized Europe’ but again an agent of global policy.”

‘India wants a 21st Asian century’

Sun Zuangnzhi from the Chinese Academy of Social Sciences (CASS) elaborated on China’s interest in the SCO. He focused on achievements: In the 21 years since its founding, a mechanism to establish security between China, Russia and Central Asian states evolved into “multi-tiered, multi-sector cooperation mechanisms.”

Instead of “turning into a political instrument,” the SCO should capitalize on its role of dialogue forum for states with a difficult history of conflicts – “interactions are sometimes difficult” – and focus on economic cooperation “on health, energy, food security, reduction of poverty.”

Rashid Alimov, a former SCO secretary general, now a professor at the Taihe Institute, stressed the “high expectations” from Central Asian nations, the core of the organization. The original idea remains – based on the indivisibility of security on a trans-regional level in Eurasia.

Well, we all know how the US and NATO reacted when Russia late last year proposed a serious dialogue on “indivisibility of security.”

As Central Asia does not have an outlet to the sea, it is inevitable, as Alimov stressed, that Uzbekistan’s foreign policy privileges involvement in accelerated intra-SCO trade. Russia and China may be the leading investors, and now “Iran also plays an important role. Over 1,200 Iranian companies are working in Central Asia.”

Connectivity, once again, must increase: “The World Bank rates Central Asia as one of the least connected economies in the world.”

Sergey Storchak of Russian bank VEB explained the workings of the “SCO interbank consortium.” Partners have used “a credit line from the Bank of China” and want to sign a deal with Uzbekistan. The SCO interbank consortium will be led by the Indians on a rotation basis – and they want to step up its game. At the upcoming summit in Samarkand, Storchak expects a road map for the transition towards the use of national currencies in regional trade.

Kumar Rajan from the School of International Studies of the Jawaharlal Nehru University articulated the Indian position. He went straight to the point: “India wants a 21st Asian century. Close cooperation between India and China is necessary. They can make the Asian century happen.”

Rajan remarked how India does not see the SCO as an alliance, but committed to the development and political stability of Eurasia.

He made the crucial point about connectivity revolving around India “working with Russia and Central Asia with the INSTC” – the International North South Transportation Corridor, and one of its key hubs, the Chabahar port in Iran: “India does not have direct physical connectivity with Central Asia. The INSTC has the participation of an Iranian shipping line with 300 vessels, connecting to Mumbai. President Putin, in the [recent] Caspian meeting, referred directly to the INSTC.”

Crucially, India not only supports the Russian concept of Greater Eurasia Partnership but is engaged in setting up a free trade agreement with the EAEU: Prime Minister Narendra Modi, incidentally, came to the Vladivostok forum last year.

In all of the above nuanced interventions, some themes are constant. After the Afghanistan disaster and the end of the US occupation there, the stabilizing role of the SCO cannot be overstated enough. An ambitious road map for cooperation is a must – probably to be approved at the Samarkand summit. All players will be gradually changing to trade in bilateral currencies. And creation of transit corridors is leading to the progressive integration of national transit systems.

Let there be light

A key roundtable on the ‘Gateway to a Multipolar World’ expanded on the SCO role, outlining how most Asian nations are “friendly” or “benevolently neutral” when it comes to Russia after the start of the Special Military Operation (SMO) in Ukraine.

So the possibilities for expanding cooperation across Eurasia remain practically unlimited. Complementarity of economies is the main factor. That would lead, among other developments, to the Russian Far East, as a multipolar hub, turning into “Russia’s gateway to Asia” by the 2030s.

Wang Wen from the Chongyang Institute for Financial Studies stressed the need for Russia to rediscover China – finding “mutual trust in the middle level and elites level”. At the same time, there’s a sort of global rush to join BRICS, from Saudi Arabia and Iran to Afghanistan and Argentina:

“That means a new civilization model for emerging economies like China and Argentina because they want to rise up peacefully (…) I think we are in the new civilization age.”

B. K. Sharma from the United Service Institution of India got back to Spykman pigeonholing the nation as a rimland state. Not anymore: India now has multiple strategies, from connecting to Central Asia to the ‘Act East’ policy. Overall, it’s an outreach to Eurasia, as India “is not competitive and needs to diversify to get better access to Eurasia, with logistical help from Russia.“

Sharma stresses how India takes SCO, BRICS and RICs very seriously while seeing Russia playing “an important role in the Indian Ocean.” He nuances the Indo-Pacific outlook: India does not want Quad as a military alliance, privileging instead “interdependence and complementarity between India, Russia and China.”

All of these discussions interconnect with the two overarching themes in several Vladivostok roundtables: energy and the development of the Arctic’s natural resources.

Pavel Sorokin, Russian First Deputy Minister of Energy, dismissed the notion of a storm or typhoon in the energy markets: “It’s a far cry from a natural process. It’s a man-made situation.” The Russian economy, in contrast, is seen by most analysts as slowly but surely designing its Arctic/Asian cooperation future – including, for instance, the creation of a sophisticated trans-shipment infrastructure for Liquified Natural Gas (LNG).

Energy Minister Nikolay Shulginov made sure that Russia will actually increase its gas production, considering the rise of LNG deliveries and the construction of Power of Siberia-2 to China: “We will not merely scale up the pipeline capacity but we will also expand LNG production: it has mobility and excellent purchases on the global market.”

On the Northern Sea Route, the emphasis is on building a powerful, modern icebreaker fleet – including nuclear. Gadzhimagomed Guseynov, First Deputy Minister for the Development of the Far East and the Arctic, is adamant: “What Russia has to do is to make the Northern Sea Route a sustainable and important transit route.”

There is a long-term plan up to 2035 to create infrastructure for safe shipping navigation, following an ‘Arctic best practices’ of learning step by step. NOVATEK, according to its deputy chairman Evgeniy Ambrosov, has been conducting no less than a revolution in terms of Arctic navigation and shipbuilding in the last few years.

Kniessel, the former Austrian minister, recalled that she always missed the larger geopolitical picture in her discussions when she was active in European politics (she now lives in Lebanon): “I wrote about the passing of the torch from Atlanticism to the Pacific. Airlines, pipelines and waterways are moving East. The Far East is actually Pacific Russia.”

Whatever Atlanticists may think of it, the last word for the moment might belong to Vitaly Markelov, from the board of directors of Gazprom: Russia is ready for winter. There will be warmth and light everywhere.”

Germany’s energy suicide: an autopsy

September 08, 2022

by Pepe Escobar, posted with the author’s permission and widely cross-posted

When Green fanatic Robert Habeck, posing as Germany’s Economy Minister, said earlier this week “we should expect the worst” in terms of energy security, he conveniently forgot to spell out how the whole farce is a Made in Germany cum Made in Brussels crisis.

Flickers of intelligence at least still glow in rare Western latitudes, as indispensable strategic analyst William Engdahl, author of A Century of Oil, released a sharp, concise summary revealing the skeletons in the glamour closet.

Everyone with a brain following the ghastly Eurocrat machinations in Brussels was aware of the main plot – yet hardly anyone among average EU citizens. Habeck, Chancellor “Liver Sausage” Scholz, the European Commission (EC) Green Energy VP Timmermans, EC dominatrix Ursula von der Leyen, they are all involved.

In a nutshell: as Engdahl describes it, this is about “the EU plan to de-industrialize one of the most energy-efficient industrial concentrations on the planet.”

That’s a practical translation of the UN Green Agenda 2030 – which happens to be metastasized into crypto Bond villain Klaus Schwab’s Great Reset – now renamed “Great Narrative”.

The whole scam started way back in the early 2000s: I remember it vividly, as Brussels used to be my European base in the early “war on terror” years.

At the time, the talk of the town was the “European energy policy”. The dirty secret of such policy is that the EC, “ advised” by JP MorganChase as well as the usual mega speculative hedge funds, went all out into what Engdahl describes as “a complete deregulation of the European market for natural gas.”

That was sold to the Lugenpresse (“lying media”) as “liberalization”. In practice, that’s savage, unregulated casino capitalism, with the “free” market fixing prices while dumping long-term contracts – such as the ones struck with Gazprom.

How to decarbonize and destabilize

The process was turbo-charged in 2016, when the last gasp of the Obama administration encouraged massive export of LNG out of the US’s huge shale gas production.

For that one needs to build LNG terminals. Each terminal takes as much as 5 years to build. Within the EU, Poland and Holland went for it from the start.

As much as Wall Street in the past invented a “ paper oil” speculative market, this time they went for a speculative “paper gas” market.

Engdahl details how “the EU Commission and their Green Deal agenda to ‘decarbonize’ the economy by 2050, eliminating oil, gas and coal fuels, provided the ideal trap that has led to the explosive spike in EU gas prices since 2021.”

The creation of this “single” market control implied forcing illegal rule changes on Gazprom. In practice, Big Finance and Big Energy – which totally control anything that passes for “EU policy” in Brussels – invented a new pricing system parallel to the long-term, stable prices of Russian pipeline gas.

By 2019, an avalanche of Eurocrat energy “ directives” by the EC – the only thing these people do – had established a totally deregulated gas market trading, setting the prices for natural gas in the EU even as Gazprom remained the largest supplier.

As lots of virtual trading hubs in gas futures contracts started popping up across the EU, enter the Dutch TTF (Title Transfer Facility). By 2020 the TTF was established as the real EU gas benchmark.

As Engdahl points out, “TTF is a virtual platform of trades in futures gas contracts between banks and other financial investors. Outside, of course, of any regulated exchange.

So LNG prices soon started to be set by futures trades in the TTF hub, which crucially happens to be owned by the Dutch government – “the same government destroying its farms for a fraudulent nitrogen pollution claim.”

By any means necessary Big Finance had to get rid of Gazprom as a reliable source to allow powerful financial interests behind the Green Deal racket to dominate the LNG market.

Engdahl evokes a case very few know about across Europe: “On May 12, 2022 although Gazprom deliveries to the Soyuz gas pipeline through Ukraine were uninterrupted for almost three months of conflict, despite Russia’s military operations in Ukraine, the NATO-controlled Zelensky regime in Kiev closed a major Russian pipeline through Lugansk, that was bringing Russian gas both to his Ukraine as well as EU states, declaring it would remain closed until Kiev gets full control of its pipeline system that runs through the two Donbass republics. That section of the Ukraine Soyuz line cut one-third of gas via Soyuz to the EU. It certainly did not help the EU economy at a time Kiev was begging for more weapons from those same NATO countries. Soyuz opened in 1980 under the Soviet Union bringing gas from the Orenburg gas field.”

Hybrid War, the energy chapter

On the interminable soap opera involving the Nord Stream 1 turbine, the crucial fact is that Canada deliberately refused to deliver the repaired turbine to Gazprom – its owner – but instead sent it to Siemens Germany, where it is now. Siemens Germany is essentially under American control. Both the German and Canadian governments refuse to grant a legally binding sanction exemption for the transfer to Russia.

That was the straw that broke the (Gazprom) camel’s back. Gazprom and the Kremlin concluded that if sabotage was the name of the game, they couldn’t care less whether Germany received zero gas via Nord Stream 1 (with brand new Nord Stream 2, ready to go, blocked by strictly political reasons).

Kremlin spokesman Dmity Peskov took pains to stress

“problems in [gas] deliveries arose due to sanctions that have been imposed on our country and a number of companies by Western countries (…) There are no other reasons behind supply issues.”

Peskov had to remind anyone with a brain that it’s not Gazprom’s fault if “the Europeans (…) make a decision to refuse to service their equipment” which they are contractually obligated to do. The fact is the whole Nord Stream 1 operation hinges on “one piece of equipment that needs serious maintenance.”

Deputy Prime Minister Alexander Novak, who knows one or two things about the energy business, cleared up the technicalities:

“The entire problem lies precisely on [the EU’s] side, because all the conditions of the repair contract have been completely violated, along with the terms of shipping of the equipment.”

All that is inscribed into what Deputy Foreign Minister Sergey Ryabkov describes as “a total war declared against us”, which is “being waged in hybrid forms, in all areas”, with “the degree of animosity of our opponents – of our enemies” being “enormous, extraordinary.”

So none of this has anything to do with “Putin weaponizing energy”. It was Berlin and Brussels – mere messengers of Big Finance – which weaponized the supply of European energy on behalf of a financial racket, and against the interests of European industry and consumers.

Beware of the toxic trio

Engdahl has summarized how, “by systematically sanctioning or closing gas deliveries from long-term, low cost pipelines to the EU, gas speculators via the Dutch TTP have been able to use every hiccup or energy shock in the world, whether a record drought in China or the conflict in Ukraine, to export restrictions in the USA, to bid the EU wholesale gas prices through all bounds.”

Translation: casino capitalism at its finest.

And it gets worse, when it comes to electricity. There is a so-called EU Electricity Market Reform in progress. According to it, producers of electricity – from solar or wind – automatically receive “the same price for their ‘renewable’ electricity they sell to the power companies for the grid as the highest cost, i.e. natural gas.” No wonder the cost of electricity in Germany for 2022 increased by 860% – and rising.

Baerbock incessantly parrots that German energy independence cannot be secured until the country is “liberated from fossil fuels.”

According to Green fanaticism, to build the Green Agenda it’s imperative to completely eliminate gas, oil and nuclear power, which happen to be the only reliable energy sources as it stands.

And it’s here that we see the toxic trio Habeck/Baerbock/von der Leyen ready for their close up. They pose as saviors of Europe preaching that the only way out is to invest fortunes in – unreliable – wind and solar power: the “answer” from Providence to a gas price debacle manufactured by none other than Big Finance, Green fanaticism and Eurocrat “leadership”.

Now tell that to struggling pan-European households whose bills will surge to a whopping, collective $2 trillion as General Winter knocks on the door.

Beggaring Europe: switching cheap Russian gas for expensive American LNG

EU steps to significantly reduce Russian gas imports will see Europe newly dependent on much pricier US liquefied natural gas

June 15 2022

Photo Credit: The Cradle

By Daoud Baalbaki

Europe’s dependency on Russian natural gas has been a contentious issue for European Union (EU) policy makers for decades. Dozens of policies have been proposed over the years to diversify the continent’s gas supply, or to switch to green energy sources in order to minimize reliance on Russian gas.

There are only two ways to transport natural gas – via pipelines, or by liquifying the gas, transporting it as cargo, then re-gasifying it at the destination. Both processes require time and considerable infrastructure investment.

Pipelines: In 2021, Russian natural gas accounted for about 46 percent of the EU’s total natural gas imports with an amount of 155 bcm (billion cubic meters). Figure 1 shows that Russian pipelines provided about 41 percent (about 139 bcm) of these gas imports to the EU over the same period.

Norway is Europe’s second-biggest natural gas supplier, followed by pipelines from North Africa and Azerbaijan.

LNG: Imports of LNG constitute about 21 percent of total European natural gas imports.

Figure 2 shows the sources for the LNG shipments that were imported by the EU in 2021. It is important to note that the United States represents the main supplier for LNG to the EU, and is likely to be the main beneficiary if Russian gas pipelines cease operations. The US only commenced exports of LNG to the EU in 2016, but rapidly reached 22.3 bcm in 2021, representing 23 percent of all LNG exports from the US.

Europe’s dependency

Before the conflict in Ukraine, Russia was still a major supplier for LNG in Europe with about 20 percent of the total LNG imports (equivalent to 16 bcm). This means the EU imported a total of 155 bcm of natural gas from Russia annually – 139 bcm via pipelines and 16 via LNG. This accounts for almost half of all European natural gas imports.

This strategic failure in achieving independence from Russian natural gas was mainly due to lack of a coherent and unified strategy among EU members. As shown in Figure 3 the dependency on Russian natural gas varies from one European country to another.

Countries like the Czech Republic, Slovakia, Latvia, Estonia, Finland, and Hungary are fully dependent on Russian natural gas, while the countries that import the largest quantities like Germany, France, Italy Poland, and Greece are semi-dependent, and countries like Portugal are quasi-independent.

With intense pressure from Washington, this issue of over-reliance on Russian resources became further securitized following the conflict in Ukraine. Even after the west announced sanctions on Russian imports, the EU imported 39 billion euros worth of fossil fuel from Russia, until as recently as mid-May.

Reducing reliance on Russia

According to a Flash Eurobarometer survey for the European Commission (EC), 85 percent of Europeans believe that the EU should reduce its dependence on Russian gas and oil as soon as possible to support Ukraine. Meanwhile the EC, international agencies, and independent think tanks have proposed short term plans to decrease the EU’s dependence on Russian fossil fuels by the end of 2022.

The main three short term plans are the EC’s REPowerEU Plan under which two-thirds of Russian gas (101.5bcm/155bcm) could be replaced by next winter; the International Energy Agency’s (IEA) ten-point plan which proposes a one-third (50bcm / 155bcm) reduction of the Russian natural gas imports, finding alternative sources, and switching to renewable energy; and economic think tank Bruegel’s plan which says, in theory, the EU should be able “to replace Russian [gas] flows entirely,” even in the short term, by calculating Europe’s spare gas import capacity. Realistically, however, Bruegel calls for a reduction (86 bcm/155 bcm) by possibly switching electricity production to nuclear and coal, while applying energy saving policies.

What’s the plan?

Essentially, what these plans all have in common is a call for the EU to diversify its natural gas imports portfolio, switch to renewable energy, and apply policies for energy saving. Of the aforementioned plans, the REPowerEU strategy appears to be the most feasible.

The plan suggests cutting Russian natural gas imports to 101.5 bcm from 155 bcm in 2021 – in theory, by increasing non-Russian gas supply by 63.5 bcm, and reducing gas demand by 38 bcm.

To increase non-Russian gas supply by 63.5 bcm, the plan assumes the following can be achieved:

1. Increase non-Russian LNG imports by 50 bcm
2. Increase non-Russian pipeline imports by 10 bcm.
3. Increase biomethane production by 3.5 bcm.

Complimentary to this, they also recommended reducing gas demand by 38 bcm. For this, they proposed 4 points:

1. Energy savings to cut demand by 14 bcm
2. Rooftop solar power to reduce gas demand by 2.5 bcm
3. Heat pumps to reduce gas demand by 1.5 bcm
4. Deploying wind and solar in the power sector to reduce gas demand by 20 bcm.

The first problem with the EC study is that it expects the demand for gas in Europe in 2022 to remain the same as in 2021. Studies shows that the continent may need around 20-25 bcm more than in the same period last year. So, the target gas requirement is actually 121.5 – 126.5 bcm – not just replacing the Russian imports of 101.5 bcm.

Increasing non-Russian LNG

By far the most important metric here is the EU’s current regasification capacity. As mentioned above, when imported as LNG, the liquified gas needs to be regasified by specialized plants in ports in order to be reinjected into pipelines. All combined, the EU countries had around 74 bcm spare regasification capacity last year.

The problem is that about half this spare capacity is concentrated in Spain and Portugal, which are linked to the rest of the EU with a pipeline of just 7.5 bcm/year capacity. Therefore, the EU has insufficient re-gasification plants to import an additional 50 bcm of LNG.

The proposed solution is to use the UK (now, officially outside the EU) – which has around 29 bcm spare regasification capacity – as a land bridge to import LNG and then reexport it to the EU via pipelines. In this scenario, the EU may succeed in importing an extra 50 bcm of LNG.

But even if Europe overcomes the regasification obstacle, is there enough LNG supply in the world to cover the demand?

Switching dependency from Russia to the US 

Due to many export plants struggling with technical and feed gas issues during the year, global LNG export capacity actually declined in 2021, despite the continued rise in capacity in the US. At the beginning of 2022, it was estimated that the LNG global export capacity will increase by some 43 bcm if all plants that had technical issues and shutdowns were to come back online.

In the second quarter of this year, the International Energy Agency’s gas market report estimated that the EU’s LNG imports may increase by a maximum of 25 bcm and that 65 percent of this quantity will be supplied by the US.

If this transpires, US LNG exports will increase by a whopping 19 percent, making it the global leader of LNG exports overnight. Meanwhile, Africa, Europe, Central and South America and Eurasia will have smaller contributions to global LNG supply growth in 2022, while the supply of the Asia Pacific and West Asian regions are expected to decline.

If we take Qatar as an example, despite its leading role in LNG markets and close relations with western states, Qatar is unable to supply Europe with extra large quantities in the short term because it suffers from a lack of spare LNG export capacity. Furthermore, over 70 percent of these exports are sold to Asian buyers via long term contracts. Europe would have to wait until 2024-25 to be able to count on Qatari LNG supplies.

This high-level demand for LNG projected by Europe will saturate the market and increase the competition for flexible LNG cargoes. In order to attract more LNG cargoes, spot prices in Europe should be $2-3/MMBtu higher than the Asian markets. This is leveling now at $35/MMbtu for the rest of 2022 which is more than five times their five-year average.

The bottom line is that it will be impossible for the EU to increase their LNG imports by the crucial 50 bcm milestone. Even if the EU overcomes the technical issues represented by the regasification capacities and the interconnections between the EU countries and Britain, the supply in the global LNG market simply cannot meet the demand.

Although Europe may receive an extra 25 bcm of LNG, it will come attached to a very high price tag, while prices in North America will be largely unaffected. The US is the big winner in this scenario, raking in exorbitant profits while establishing itself as the world’s biggest LNG exporter.

Where are the non-Russian gas pipelines?

Norway: As the main non-Russian gas supplier of natural gas to Europe via pipelines, Norway’s total capacity of supply is 94.3 bcm per year. Only 86.3 percent of this capacity was used in 2021, theoretically leaving 12.9 bcm of spare annual capacity.

However, in the first two quarters of 2022, the pipelines have been working close to effective full capacity, and this capacity is expected to be lower in the summer, as previous records indicate.

North Africa: The other source of pipeline natural gas to Europe is via three pipelines from North Africa: The Medgaz pipeline from Algeria to Spain, the Trans-Mediterranean Pipeline (also known as Transmed which carries Algerian gas from Tunisia to Italy), and the Green Stream pipeline, from Libya to Italy. A fourth pipeline, the Gas Pipeline Maghreb-Europe (GME), runs from Algeria to Spain via Morocco, but has not been used since 1 November 2021, following the breakdown of diplomatic relations between Algeria and Morocco that August.

The flow in Medgaz pipeline to Spain can increase by around 2 bcm, after increasing its capacity.  These extra quantities can cover a part of the quantities that have been delivered via GME in 2021. However, Algeria has also recently suspended trade ties with Spain over the latter’s decision to side with Morocco over the disputed Western Sahara territory, which has exacerbated tensions between Rabat and Algiers.

The Transmed pipeline to Italy has around 10 bcm spare capacity, but recent analysis shows that Algeria will not be able to offer additional gas quantities since reaching its production capacity and needing to address its own growing domestic demand.

Exports in Libya ranged around 5 bcm before 2020 but declined to 3.2bcm in 2021. A recovery can offer the extra 1-2 bcm, but ongoing political instability in Libya can offer no such guarantees.

As a result, North Africa is not foreseen to provide any extra-large quantities of gas to Europe in 2022.

Azerbaijan: In 2021, the EU started receiving natural gas from Azerbaijan via the Trans Adriatic Pipeline (TAP). The capacity of TAP is around 11 bcm, and flows in 2021 totaled 8.1 bcm, meaning there is extra capacity of around 2.5 bcm.

Overall, the EU plan is based on making a year-on-year increase of 2-3 bcm from Azerbaijan, 2-3 from Algeria, and 4-5 bcm from Norway. These appear to be achievable with regards to the pipelines’ spare capacities, but ambitious in terms of gas production quantities for the suppliers.

Trading dependencies

This European demand for non-Russian gas will mainly be covered by the United States which is the only player that stands to gain economically. It is therefore in Washington’s interests that Europe converts a big part of its gas imports from Russian pipelines into LNG. It is also why the US has remained determined for years to stop the Russia-to-Germany NordStream 2 pipeline from becoming operational – which it succeeded in doing in February, as tensions over Ukraine worsened.

As the US has its own independent pricing system, it is not affected by the international gas prices, which are expected to rise significantly in the European and Asian markets, bringing instant value to LNG production activities in the US.

The EU plan to cut two-thirds of its Russian gas imports and replace it elsewhere – by the end of 2022 – is very optimistic. Closer scrutiny shows it will come with a very high cost – around five times the price that Europe used to pay. Whichever plan the EU implements, Europe will have to acknowledge that it will be neither an energy independent or politically independent continent for the foreseeable future.

The views expressed in this article do not necessarily reflect those of The Cradle.