Biden Administration Grants Saudi’s MBS ‘Immunity’ in Khashoggi Murder Case

November 18, 2022

US President Joe Biden with Saudi Crown Prince Mohammed Bin Salman during a visit to the Kingdom in July 2022.

The Biden administration has told a US court that Mohammed bin Salman should be granted sovereign immunity in a civil case involving the murder of journalist Jamal Khashoggi, effectively ending a last-ditch attempt to hold the Saudi crown prince legally accountable for the 2018 killing.

In a filing released late on Thursday night, the Biden administration said the crown prince’s recent promotion to the role of prime minister meant that he was “the sitting head of government and, accordingly, immune” from the lawsuit.

“The United States government has expressed grave concerns regarding Jamal Khashoggi’s horrific killing and has raised these concerns publicly and with the most senior levels of the Saudi government,” the Department of Justice said in its filing, adding that the US had also imposed financial sanctions and visa restrictions related to the murder.

“However, the doctrine of head of state immunity is well established in customary international law and has been consistently recognized in longstanding executive branch practice as a status-based determination that does not reflect a judgment on the underlying conduct at issue in the litigation,” it said.

The government’s filing included an attached letter from Richard Visek, acting legal adviser to the US state department, instructing the Department of Justice to submit a “suggestion of immunity” to the court.

Legal experts say the US government’s position, which was filed to a US district court, will likely lead judge John Bates to dismiss a civil case brought against Prince Mohammed, known by his initials MBS by Hatice Cengiz, the outspoken fiancee of Khashoggi.

Back in 2019, in the wake of the assassination of Washington Post, then-presidential candidate Biden promised to make Saudi Arabia a “pariah” over the kingdom’s human rights record.

Biden repeatedly talked about reevaluating and reassessing US-Saudi relations. To his credit, Biden seemed to follow through on this early in his presidency by suspending offensive weapons sales to Saudi Arabia, freezing contacts with MBS, and releasing a brief assessment by the Office of the Director of National Intelligence establishing the Saudi crown prince’s role in and responsibility for Khashoggi’s death.

Thursday’s decision is likely to provoke an angry reaction. The White House had hoped the July trip by President Joe Biden to Saudi Arabia would get the rocky US-Saudi relationship back on track but since then, relations have only continued to sour.

The relationship is being reevaluated, the White House has said earlier in October, in the wake of an oil production cut by Saudi-led OPEC+ that the administration saw as a direct affront to the US. Members of Congress, already infuriated by the oil cut and calling for a reevaluation, will likely only be angered further if the prince is given immunity.

Source: Agencies

US hands down ‘immunity’ to MBS in Khashoggi murder case

Algeria Declaration: Palestine is our central cause

2 Nov 2022 19:06

Source: Al Mayadeen Net

By Al Mayadeen English 

The concluding statement of the Arab Summit emphasizes supporting OPEC+’s decision to cut oil production by two million barrels a day.

The Arab Summit demanded lifting the unjust blockade on Gaza.

The Arab League Summit issued, on its second day in the Palace of Conferences in Algiers, the Algeria Declaration document.

The heads of the Arab states stressed “the centrality of the Palestinian cause and full support for the rights of the Palestinian people, including the right to freedom and self-determination and the right to return, in addition to making the compensation payments for the Palestinian refugees, in accordance with the United Nations General Assembly Resolution No. 194 of 1948.”

The Summit demanded lifting the Israeli blockade on the Gaza Strip and condemning the Israeli occupation’s brutality and barbaric practices against Palestinians, including assassinations and arbitrary arrests.” The Summit also called for the release of all prisoners and detainees, especially children, women, the sick, and the elderly.

The statement emphasized the necessity of “endorsing the pursuit of the Palestinian state to obtain full membership at the United Nations and urging the countries that have not yet recognized the state of Palestine to do so, coupled with the necessity of supporting the legal Palestinian efforts and attempts to hold the Israeli occupation accountable for its war crimes.”

Moreover, the statement confirmed that the Summit supports the policy of OPEC+, which includes oil-producing countries from inside and outside the OPEC organization, in the global energy market.

Algeria confirmed that it “appreciates the balanced policy of the OPEC+ alliance in order to ensure the stability of the global energy markets and sustainability of investments in this sensitive sector as part of an economic approach that ensures protecting the interests of producing and consuming countries alike.”

On October 5, OPEC+ announced reducing oil by two million barrels a day in order to support the markets facing the risk of a decrease in demand for crude oil due to the economic crisis.

The attending states also rejected “all forms of foreign intervention in the Arab countries’ internal affairs” and expressed their insistence on the principle of finding Arab solutions to Arab problems by strengthening the role of the Arab League in preventing crises and solving them through peaceful means and working to strengthen inter-Arab relations.

The attending Arab countries expressed “full solidarity with the Libyan people and support for the efforts aimed at ending the Libyan crisis through a Libyan-Libyan solution that preserves the unity and sovereignty of Libya and safeguards its security and that of the neighboring countries.”

The statement concluded, “All the states should assume a collective leading role to contribute to the efforts made in order to reach a political solution for the Syrian crisis and address all the political, security, humanitarian, and economic repercussions, through what ensures the unity and sovereignty of Syria and realizes the ambitions of its people.”

Algerian FM Ramtane Lamamra: The success of the Algerian summit is the success of all Arabs

Algerian Foreign Minister Ramtane Lamamra considered on Wednesday that the success of the Algerian summit is the success of all Arabs who knew how to come together and agree after the Corona pandemic and realized the importance of unity and the sensitivity of the regional and global situation.

Lamamra said that “the attendance was significant, positive, and constructive, and everyone was eager to apply whatever can contribute to the Arab unity.”

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Opec+ row: The US has lost control of its Gulf allies

13 October 2022 

David Hearst

The Biden administration is now paying the price for its chaotic and inconsistent policy on Saudi Arabia

On Wednesday, US President Joe Biden issued his national security strategy, which boasted, among other things, of his country’s unique capacity to “defend democracy around the world”.

US President Joe Biden at the White House, on 4 October 2022 (AFP)

One of the standout phrases of this unashamed piece of geopolitical fiction was this one: “We are forging creative new ways to work in common cause with partners around issues of shared interest.”

This statement was released just days after Opec+, led by Saudi Arabia and Russia, unleashed the biggest shock to oil markets this century by cutting production by two million barrels a day.

It’s chaos – not in the unstable Middle East, but in the corridors of the National Security Council

Despite Riyadh’s latest protestations that the decision was based only on “economic considerations”, the move has triggered a tidal wave of anger among Democratic members of Congress, who are now threatening to suspend arms sales to the kingdom for a year. National security adviser Jake Sullivan has also said the White House was looking into a halt to arms sales. As 73 percent of the kingdom’s arms imports come from the US, this is no mere rhetorical threat.

“If it weren’t for our technicians, their airplanes literally wouldn’t fly… We literally are responsible for their entire air force,” Ro Khanna, a Democratic congressman from California, told reporters. “What galls so many of us in Congress is the ingratitude.”

Incidentally, the same is true of the British firm BAE Systems, which supplies and maintains aircraft for Saudi Arabia, but the UK government is staying silent. 

It should not. Because the national security strategy shows that, among other things, the US has lost control of its allies, especially in the Middle East and particularly in the Gulf.

Courting a ‘pariah’

To take Biden’s tenure as an illustration, one of the first things he did upon taking office was to appoint Brett McGurk, a diplomat who had served under previous presidents, as his National Security Council coordinator for the Middle East.

McGurk is famous, or rather infamous, among Sunni political circles in Iraq – let alone pro-Iran Shia ones – for being rather too close to Mohammed bin Salman, the crown prince of Saudi Arabia and latterly its prime minister. McGurk set up the disastrous “fist bump” encounter between Biden and Mohammed bin Salman by negotiating an agreement between Israel, Saudi Arabia and Egypt over the transfer of two uninhabited but strategically placed islands in the Red Sea, Tiran and Sanafir.

How, then, could Mohammed bin Salman poke such a large finger in Biden’s eye just before the midterm elections, if McGurk had been doing his job? It’s chaos – not in the unstable Middle East, but in the corridors of the National Security Council.

Biden and Saudi Crown Prince Mohammed bin Salman are pictured in Jeddah, Saudi Arabia, on 16 July 2022 (AFP)
Biden and Saudi Crown Prince Mohammed bin Salman in Jeddah, Saudi Arabia, on 16 July 2022 (AFP)

Or take the decisions that Biden made over Jamal Khashoggi, the Saudi journalist and Middle East Eye columnist murdered in the Saudi consulate in Istanbul in 2018. Biden abandoned the principles he touted as a presidential candidate to treat the Saudi crown prince as a pariah, the moment he took office. 

Upon the publication of a summary of a CIA report on the murder, which concluded that Mohammed bin Salman had ordered the killing, Biden had an opportunity to put US weight behind a UN investigation into the killing. He notably declined to do so.

The US announced visa restrictions against 76 Saudis implicated in the plot, but did nothing against the man its intelligence services said was behind it. 

“The relationship with Saudi Arabia is bigger than any one individual,” Secretary of State Antony Blinken said at the time of the so-called Khashoggi ban. “What we’ve done by the actions that we’ve taken is really not to rupture the relationship, but to recalibrate it to be more in line with our interests and our values.”

Dennis Ross, a former Middle East negotiator, applauded Biden for “trying to thread the needle”, telling the New York Times that the affair was “a classic example of where you have to balance your values and your interests”.

Not unnaturally, Mohammed bin Salman concluded that he had gotten away with it. Now, Biden is paying the price.

State of surprise

The American foreign policy establishment has been, since the end of the Cold War, in a permanent state of surprise.

There was surprise that it had “lost Russia” at the end of the 1990s; surprise at the devastation caused by its invasion of Iraq; surprise over Vladimir Putin’s 2007 Munich speech, in which the Russian leader called out the US’s “almost uncontained hyper use of force in international relations”; surprise at Putin’s intervention in Syria; surprise over the fall of Kabul; and surprise that strategic decisions such as expanding Nato eastwards would ultimately lead to Putin’s invasion of Ukraine

At least the US is showing consistency in its faulty analytics and strategy, and massive blind spots. You can now rely on it to make the wrong choice

A world power that, until Putin’s intervention in Syria, held a monopoly on the use of international force but has squandered its authority in a series of mainly unforced errors. That is why it can no longer lead the democracies of the world.

Alienating China at the very time the US needs President Xi Jinping to contain Putin and stop him from using battlefield nukes, which he is quite capable of doing, is perhaps the biggest strategic mistake it is currently making. 

At least the US is showing admirable consistency in its faulty analytics and strategy, and massive blind spots. You can now rely on it to make the wrong choice. 

But what of its wayward allies, Saudi Arabia and the United Arab Emirates?

Saudi miscalculations

Saudi foreign policy cannot be untangled from the personality of its de facto ruler, Mohammed bin Salman. He is to international relations what a Nintendo game console is to careful reflection. He presses a button and thinks it can happen. He has an idea, and it has to be true.

I recently met an academic in Tehran who believed Mohammed bin Salman had moved beyond his Game Boy past. He is involved in backchannel negotiations with the Saudis.

Saudi Arabia: Mohammed bin Salman is now the state

Read More »

“A senior Saudi diplomat told me that MBS started as a kid playing video games,” he told me. “Killing Khashoggi, starting a military intervention in Yemen which would last ‘two weeks’, the siege of Qatar, getting rid of [Lebanese Prime Minister Saad] Hariri were all video games for him, buttons you can press, enemies disappearing from the screen. Out of necessity, he is becoming more strategic.

“Strategic maturity does not come from what you would like to have. It comes out of necessity,” the academic added. “I don’t think the Saudis decided to move beyond that strategic relationship with America. The American hand is still strong. But there are differences happening. The Americans are not seen with the same confidence that was seen in Riyadh.

“Where does it leave the Saudis? The Saudis have been trying to build relations with China and Russia and in the region. Vision 2030 cannot move without calm all around the kingdom. The Saudis see Yemen in two tracks: one, the Saudi-Yemeni track [with the Houthis]; two, the national reconciliation track. But the two rely on each other, and MBS is moving towards a compromise.”

The Iranian academic admitted that this was music to his ears, which was why he thought his Saudi counterpart was playing it, but nor could he discount the temptation to believe it.

Machiavellian tutor

Mohammed bin Salman admires Putin personally. Multiple sources have told me that the inspiration for the Tiger Squad – which killed and dismembered the body of Khashoggi and tried to do the same to Saad al-Jabri, a former minister of state and adviser to deposed crown prince Mohammed bin Nayef – came from the killing of former Russian agent Alexander Litvinenko in London and the attempted poisoning of defector Sergei Skripal in Salisbury.

But beyond that, Mohammed bin Salman sees the limits of the kingdom’s ties to the US. He used former President Donald Trump as his ticket to the top of the Saudi royal family, but now that the Trump clan is – for the moment – out of power, he sees no reason not to court Russia. 

But he remains impulsive, and his tutor in the modern art of Machiavelli, UAE President Mohammed bin Zayed, is more astute.

Abu Dhabi Crown Prince Mohammed bin Zayed (R) and Saudi Crown Prince Mohammed bin Salman are pictured in Abu Dhabi in November 2019 (AFP/Saudi Royal Palace)
Saudi Crown Prince Mohammed bin Salman (left) with Abu Dhabi Crown Prince Mohammed bin Zayed in Abu Dhabi, in November 2019 (AFP/Saudi Royal Palace)

In distinction to his pupil, Mohammed bin Zayed still sees his country’s growing trade alliance with Israel as his ticket to influencing US policymakers. It was his ambassador in the US, Yousef al-Otaiba – not the Saudi ambassador – who introduced Mohammed bin Salman to the Trump family and to Washington.

But Mohammed bin Zayed hates being told what to do. One official familiar with relations between the Saudi and Emirati crown princes told me of a plan Mohammed bin Salman once had to run a maglev railway around the Gulf. Only a few of these systems, such as the Shanghai Transrapid, are running in the world, due to the enormous cost of construction. 

“MBS makes a plan and tells everyone else how much to invest without consulting them,” the official said. “He had an idea to run a maglev train going around the Gulf. Its [cost] was $160bn, because it’s $1bn a mile. Abu Dhabi’s share was huge. They were furious and stopped the plan.

“MBZ resents being told what to do by MBS, because he thinks he created him. MBS could not conceive of a relationship to him where he is subservient.”

New era of power projection

So while Mohammed bin Zayed went to Russia courting Putin, his officials distanced themselves from the Opec+ oil cut. The Financial Times reported that the UAE and Iraq had “expressed misgivings”.

Foreign policy in the hands of Mohammed bin Zayed is more nuanced than in those of his Saudi protege. This means that every move Mohammed bin Zayed makes is reversible, and therefore tradeable. He calculates each move before he makes it.

Although the two men look in public to be close to each other, in reality, Mohammed bin Salman is moving faster than his neighbour wants him to. The one thing that Mohammed bin Zayed does not want is for Mohammed bin Salman to become his own man. At the same time, the one thing that Mohammed bin Salman will not tolerate is for anyone else to issue him orders. 

The US is being tested as much by its allies as by its foes. And for good reason

It happened once over Yemen, where the announcement of the pullout of UAE troops left the Saudi crown prince on his own.

Biden and his advisers may be tempted to take a successful pushback of Russian troops in Ukraine as a starting gun for a new era of American power projection around the world – one whose target is China. But even if Putin is turned back in Ukraine, they would be profoundly wrong to do so.

The US is being tested as much by its allies as by its foes. And for good reason: they sense that the US won’t resume the role of unchallenged leader, which it held briefly for three decades.

The US has learned no lessons from the fall of Kabul. It reacted to its military defeat in Afghanistan by trading up. A geographically limited conflict in Central Asia was replaced by a potentially much larger conflict with China. Large parts of the world have rightly lost faith in this type of leadership.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye. 

This article is available in French on Middle East Eye French edition.

David Hearst is co-founder and editor-in-chief of Middle East Eye. He is a commentator and speaker on the region and analyst on Saudi Arabia. He was the Guardian’s foreign leader writer, and was correspondent in Russia, Europe, and Belfast. He joined the Guardian from The Scotsman, where he was education correspondent.

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«أوبك +» هل تقصم ظهر العلاقات الأميركية ـ السعودية

الثلاثاء 18 أكتوبر 2022 

بتول قصير

يبدو أنّ خيبات الولايات المتحدة الأميركية تتوالى. فقد أثار قرار الدول المصدرة للبترول “أوبك” والدول المنتجة للنفط المتحالفة معها “أوبك بلس” خفض إنتاج النفط بمقدار مليوني برميل يومياً، حالة من الهستيريا والغضب في واشنطن، لما له من تداعيات سلبية على الولايات المتحدة وحلفائها. فعلى خلفية القرار عبّر الرئيس جو بايدن أنه “أصيب بخيبة أمل” ووصف القرار بـ “قصير النظر”، واتهم دول المنظمة النفطية بالانحياز إلى روسيا.

شكل قرار خفض الإنتاج حالة إرباك بالنسبة لإدارة الرئيس بايدن، فالتوقيت الحرج لهذا القرار يأتي قبل شهر تقريباً من موعد إجراء انتخابات التجديد النصفي للكونغرس. وثمة خطر في أنّ هذا الخفض الذي سيدخل سريان المفعول في الأول من تشرين الثاني/ نوفمبر من شأنه أن يتسبّب في ارتفاع أسعار البنزين والغاز، ما يعني انّ واشنطن أمام كارثة سياسية كاملة الأركان على إدارة الرئيس الديمقراطي بايدن، خاصة أنّ خصومه الجمهوريين سيستغلون الفرصة الثمينة هذه للإطاحة بمصداقيته أمام الناخبين الأميركيين خلال عملية الاقتراع، كإثبات على السياسة الفاشلة التي تمتع بها عهده.

وعلى خلفية هذا القرار تعالت الأصوات في الكونغرس الأميركي التي تدعو لإعادة النظر في العلاقة مع الرياض، وتأطير العلاقة مع الأخيرة التي اعتبرت الإدارة الأميركية خطوتها بأنها بمثابة انحياز للمملكة في صراعات دولية وأنه قرار بُني على دوافع سياسية ضدّ الولايات المتحدة الأميركية. واللافت انّ ارتفاع وتيرة التوتر بين البلدين ترافق مع طرح النائب الأميركي الديمقراطي توم مالينوفسكي مشروع قانون في مجلس النواب يطالب إدارة الرئيس بايدن بسحب أنظمة الدفاع ضدّ الصواريخ و3000 جندي، وهم قوام القوات الأميركية من السعودية والإمارات. وقال مالينوفسكي في بيان صادر عنه: “لقد حان الوقت لكي تستأنف الولايات المتحدة دورها كدولة عظمى في علاقتها بزبائنها في الخليج”.

وعليه فإنّ حفلة الجنون الأميركية عقب قرار “أوبك بلس”، يفسّرها انشغال واشنطن وحلفائها في السعي الدؤوب لضمان أمنهم الطاقي نظراً لأهمية مصادر الطاقة العالمية. خاصة بعد أزمة أوكرانيا وإغلاق روسيا لصنابير الطاقة والغاز عن أوروبا.

وكخطوات عاجلة أمر الرئيس الأميركي وزارة الطاقة بالإفراج عن 10 ملايين برميل من الاحتياطي البترولي الاستراتيجي الأميركي في الأسواق مع دخول خفض الإنتاج حيّز التنفيذ في الأول من تشرين الثاني/ نوفمبر، والاستمرار في اللجوء إلى احتياطي البترول الاستراتيجي كلما اقتضت الحاجة. كما باشر بايدن بمشاورات مع الكونغرس للبحث في آليات إضافية لتقليص تحكم أوبك في أسعار الطاقة وتقليص اعتماد الولايات المتحدة على المصادر الأجنبية للوقود الأحفوري وتسريع ضخ الاستثمارات في الطاقة النظيفة.

من منظورٍ آخر، يبدو أنّ واشنطن تسبّبت بطريقة أو بأخرى بدفع “أوبك بلس” لخفض الإنتاج، عندما قرّرت مؤخراً رفع أسعار الفائدة والدولار، في وقت يستورد العالم النفط بالعملة الأميركية، ورفع قيمته يؤثر على الدول المستوردة للنفط، ما تسبّب بقلة الطلب عليه، ما أدّى لخلق فائض نفطي لدول “أوبك بلس”. واشنطن المذهولة من القرار حمّلت الرياض مسؤولية تداعياته، معتبرة أنّ دوافعه سياسية وانحياز لروسيا وسيشكل دعماً لها لا يُستهان به.

بدورها السعودية رفضت الاتهامات الأميركية التي لا تستند إلى الحقائق، وعلقت بأنّ القرار اتخذ بالإجماع من كافة دول المجموعة، وهو قرار اقتصادي بحت. وما زاد الطين بلة، أنّ قراراً مدعوماً من السعودية بأن تتوقف مجموعة “أوبك بلس” عن استخدام بيانات وكالة الطاقة الدولية، وهي الهيئة الغربية لمراقبة قطاع الطاقة، ما يعكس المخاوف من التأثير الأميركي على البيانات.

وأخيراً، يبدو انّ زيارة بايدن للسعودية في تموز/ يوليو لم تفعل شيئاً يُذكر لتغيير تصميم محمد بن سلمان على رسم سياسة خارجية مستقلة عن النفوذ الأميركي، خاصة أنّ الزيارة أغضبت ولي العهد، الذي كان منزعجاً من أنّ بايدن تحدث علناً عن تعليقاته الخاصة مع العائلة المالكة بشأن وفاة الصحافي جمال خاشقجي. وهذا لا يعني انّ البيت الأبيض سيتجه لاتخاذ قرارات عقابية واضحة تجاه الرياض، فهو وعلى الرغم من العلاقات بين كلّ من المملكة والولايات المتحدة شهدت مداً وجزراً على مدى عقود خلت وحتى الفترة الحالية، إلا انّ الدولتين تتمتعان بشراكة استراتيجية، مدعومة بمصالح مشتركة. فالبلدان يشتركان في رؤية متوافقة تجاه العديد من القضايا الدولية والإقليمية، من مسألة الملف النووي الإيراني، والتحالف الرباعي ضدّ اليمن، وغيرها من الملفات الإقليمية والدولية.

وعليه فإنّ ما يجمع واشنطن والرياض أكبر بكثير مما يمكن أن يزعزع علاقة البلدين الشاملة في كافة المستويات. بيد أنَّ هذه العلاقات تعرّضت وتتعرّض في أوقات كثيرة لمثل هذه الهزات، إلا أنَّه من المستبعد أن تذهب ردود الأفعال إلى مستويات بعيدة، خصوصاً أنّ قرار «أوبك بلس» لم يكن سعودياً بحتاً.

US-Saudi Rift on OPEC Plus: Bruised Ties or Beyond That?

October 15, 2022

By Hiba Morad | Press TV

The US-Saudi partnership has often been described as a transactional one; majorly owing to Saudi Arabia’s oil supply in return for US arms in bulk. Since 1943, the equation has been protecting the interests of American oil companies in Saudi Arabia’s oil and gas industry in return for weapons and military equipment.

Saudi Arabia is a vital US asset in West Asia. Since the kingdom has the world’s largest oil reserves, enjoys a geo-strategic position, and has influence in the Arab and Islamic worlds, it remains to be the imperialist US’s pivot to Asia. Saudi Arabia has also been the US’ milking cow, paying tremendous sums of money in return for arms deals over the years.

Tensions, however, rose between the two countries following Saudi pressure on the Organization of the Petroleum Exporting Countries and allies [OPEC Plus] alliance last week to cut oil production by 2 million barrels per day.

This was after the US was acting in collusion with Saudi Arabia to patch things up in July on the Mohammed Bin Salman-ordered killing of the Saudi journalist Jamal Khashoggi in 2018. The US Intelligence had earlier released a report in which it said that MBS approved the operation to kill and dismantle the journalist.

Recently given a “made up” title of prime minister to secure his impunity at US courts on his role in the killing of Khashoggi, MBS claimed that the decision of OPEC Plus, in which Riyadh is a top producer, was “merely” economic and not politically motivated.

John Kirby, a top spokesperson for the US National Security Council denied the claims and said the Saudi move was wrong. He stated that the Saudis conveyed during the recent weeks their intention to reduce oil production, privately and publicly, knowing this would increase Russian revenues and blunt the effectiveness of sanctions.

In reaction, President Biden issued a vague warning to Saudi Arabia on Wednesday, pledged “consequences” and vowed to “take action.” The US claimed that OPEC Plus is aligning with Russia.

Of course, Biden is concerned that decreased oil output could push up the price of gasoline right before the November 8 US midterm elections, when Democrats will defend their control of both the House of Representatives and the Senate.

Meanwhile, some Senate Democrats are demanding a swift and concrete response.

In a strong expression of US anger over the Saudi oil-production cuts, Senate Foreign Relations Committee Chairman Robert Menendez called for freezing all US cooperation with Saudi Arabia on Monday. Menendez claimed that the move serves to boost Russia in its war in Ukraine.

He vowed he “will not green-light any cooperation with Riyadh until the Kingdom reassesses its position with respect to the war in Ukraine. Enough is enough.”

Gulf sources rushed to conclude that the rift between the two countries will not break ties, while pro-US sources lashed MBS and OPEC Plus for the decision and said this move proves Bin Salman is siding with Russia, and that Western leaders should abandon him.

In the wake of the Russia-Ukraine war, the West has gone to great lengths to isolate Russia’s economy, which relies in large part on energy exports.

As part of their economic sanctions against Moscow, the US and EU are trying to impose a cap on the price paid to Russia for its oil exports. But that effort could now collapse as global oil prices rise and Europe heads into a winter season when heating costs are expected to soar due to the Ukraine war.

OPEC Plus, which groups the Organization of the Petroleum Exporting Countries and other producers including Russia, has refused to raise output to lower oil prices despite pressure from major consumers, including the United States.

Russia has hailed the recent decision made by OPEC Plus. The Kremlin’s spokesman Dmitry Peskov made the remarks on October 9, saying the move successfully at least “balances the mayhem that the Americans are causing.”

It is very good that such “balanced, thoughtful and planned work of the countries, which take a responsible position within OPEC, is opposed to the actions of the US,” Peskov said.

For months, the US and Saudi monarchy have been in a tit-for-tat game, seemingly contemplating how to pressure each other in return for gains. Of course, Mohammed bin Salman has gained leverage on the international level following the beginning of the Russia-Ukraine war since he controls the oil game, if possible to say.

MBS, who was described by The Economist as “one of the most dangerous leaders” of the world in September is opportunistic; he will do whatever it takes to get what he wants.

Middle East Eye quoted an academic from Tehran as saying “A senior Saudi diplomat told me that MBS started as a kid playing video games. Killing Khashoggi, starting a military intervention in Yemen which would last ‘two weeks,’ the siege of Qatar, and getting rid of [Lebanese Prime Minister Saad] Hariri were all video games for him, buttons you can press, enemies disappearing from the screen. Out of necessity, he is becoming more strategic.”

“Strategic maturity does not come from what you would like to have. It comes out of necessity,” the academic said. “I don’t think the Saudis decided to move beyond that strategic relationship with America. The American hand is still strong. But there are differences happening. The Americans are not seen with the same confidence that was seen in Riyadh.”

By the OPEC Plus move, yes, MBS has shown his influence over the global oil market, but he did upset the foreign policy establishment in Washington. Of course, Washington will not want to risk oil security which is in the hands of the kingdom to a great extent, or drive Riyadh closer to Russia and China; a too simplistic of a prediction. Saudi Arabia still cannot make it through without the US, but Biden needs to take action for the Saudi humiliation.

A serious issue remains in question; what will happen to the West as winter becomes harsher in light of power cuts, the absence of hot water and scarcity and high prices of oil?

Also on the current rift, will Biden invite MBS to Washington and “spank” him like the Saudi game boy did to Lebanon’s Hariri, perhaps in one way or another? Will relations deteriorate and the world see different coalitions as the US says it will reconsider relations with the Saudi monarchy? Or will this be just another bruise in ties between the oil-rich country and the imperialist US before the two resume their US-Saudi waltz?

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Global finance vs global energy: who will come out on top?

October 13 2022

Photo Credit: The Cradle

In the war between global finance and energy, one fact remains clear: You can print money but you can’t print oil

There is more to the current struggle between the oil-consuming west and the oil-producing nations than meets the eye and it runs far deeper than the war in Ukraine

By Karin Kneissl

On 6 October, when the European Union (EU) agreed to impose a Russian oil price cap as part of a new package of sanctions against Moscow, 23 oil ministers from the OPEC+ group of oil-producing countries spoke out in favor of a sharp cut in their joint production quota.

Their collective decision to decrease output by about two million barrels of oil per day elicited strong reactions in the US in particular, and there was even talk of “declarations of war.” The EU feels duped, as the OPEC+ production cuts could drive up fuel prices and dampen their eight sanctions packages. Despite the narrative of the world edging toward a “post-oil era,” it seems there’s life in the old dog yet, as OPEC remains the talk of the town.

OPEC is as relevant as ever

OPEC and ten non-OPEC energy producers – including Russia – have been coordinating their production policy since December 2016. At the time, analysts gave this “OPEC-plus” format little chance of having an impact.

Back then, I recall the mockery of many who scorned the announcement in the press room of the OPEC General Secretariat in Vienna. But OPEC has weathered the storm of the global oil market in recent years, and has emerged as a key player.

Recall the exceptional situation in the spring of 2020 during the global COVID-19 pandemic lockdown, when futures trading for US oil grades were even quoted at negative prices at times, only to rise again to new heights in April 2021.

In contrast to the escapades in the oil market between 1973 and 1985, when there was little consensus among OPEC’s members and many had already written the organization’s obituary – today, former rivals such as Saudi Arabia and Russia are managing to converge their interests into powerful cards.

In those days, it was normal practice for Riyadh to take into account and execute Washington’s interests within OPEC: A single phone call from the US capital was enough. When the US oil company ARAMCO – which acted like an extended arm of the US in the kingdom – was nationalized by Saudi Arabia in the early 1970s as part of the sweeping nationalization trends around the world, compensation was promised to the US on a mere handshake.

The era of the “Seven Sisters,” a cartel of oil companies that divided up the oil market, came to an end then. However, for US policymakers – at least, psychologically – this era still persists. “It’s our oil,” is an expression I often hear uttered in Washington. Those voices were particularly loud during the illegal US-led 2003 invasion of Iraq.

Financial market versus the energy market

To really understand the core of the conflict in Ukraine – where a proxy war rages – one must break down the confrontation thus: The US and its European allies, who represent and back the global financial sector, are essentially engaged in a battle against the world’s energy sector.

In the past 22 years, we have seen how easy it is for governments to print paper currency. In just 2022, the US dollar has printed more paper money than in its combined history. Energy, on the other hand, cannot be printed. And therein lies a fundamental problem for Washington: The commodity sector can outbid the financial industry.

When I wrote my book “The Energy Poker” in 2005, I also dealt with the currency question, i.e. whether oil will be traded in US dollars in the long term. At the time, my interlocutors from the Arab OPEC countries unanimously said that the US dollar would not be changed. Yet, 17 years later, that view has devolved starkly.

Riyadh is warming up to the idea of trading oil in other currencies, as indicated this year in discussions with the Chinese to trade in yuan. The Saudis also continue to purchase Russian like other West Asian and Global South states, they have opted to ignore western sanctions on Moscow, and are increasingly preparing for the new international condition of multipolarity.

Washington, thus, no longer maintains its ability to exert absolute leverage on OPEC, which is now repositioning itself geopolitically as the enlarged OPEC+.

US reacts: Between defiance and anger

The OPEC+ ministerial meeting on 6 October was a clear foreshadowing of these new circumstances. The inherent tensions between two world views unfolded immediately in the post-meeting press room where a Saudi oil minister put the western news agency Reuters in its place, and where US journalists fiercely attacked OPEC for “holding the world economy hostage.”

The next day, a tough policy was grudgingly announced by the White House. The OPEC+ production cuts has Washington vacillating between sulking and seeking revenge – against the once-compliant Saudis, in particular. In a few weeks US midterm elections will be held, and the ramifications of spiking fuel prices will no doubt unfold at the ballot box.

For almost a year, President Joe Biden has been expanding US fuel supply via the Strategic Petroleum Reserve, but has been unable to calibrate either the price of oil or runaway inflation. The US Congress is threatening to use the so-called “NOPEC” bill – under the legal pretext of banning cartels – to seize the assets of OPEC governments.

The concept has been floating around for decades on Capitol Hill, but this time new irrational emotions may own the momentum. But hostile or threatening US actions are likely to backfire and even accelerate the geopolitical shifts taking place in West Asia, which has been edging out of the US orbit in recent years. Many Arab capitals have not forgotten the unseating of Egyptian President Hosni Mubarak in 2011, and how quickly the US abandoned its longterm ally.

“It’s the economy, stupid”

The price of oil is a seismograph of the world economy and also of global geopolitics. With the production cuts, OPEC+ is simply planning in anticipation of upcoming recessionary consequences. Moreover, some producing countries are failing to create new capacities in view of the investment gap that has persisted since 2014: a low price of oil simply cannot be sustained if there is no major capital investment in its sector.

The energy supply situation is expected to further worsen as of 5 December, when the oil embargo imposed by the EU comes into force.

The fundamental laws of supply and demand will ultimately determine the many distortions in the commodity markets. The anti-Russian sanctions created by the EU and other states (a total of 42 states) have disrupted global supply, and that has man-made supply and pricing consequences.

The two major global financial crises – real estate and banks in 2008, and the pandemic in 2020 – led to the excessive printing of paper money. Ironically, it was China that moved the paralyzed global economy out of the first crisis: Beijing stabilized the entire commodity market in 2009/10 by serving as the global locomotive and bringing the yuan into the trading schemes.

China, the well-oiled machine

Until the early 1990s, China satisfied its domestic oil consumption with domestic oil production, ranging from 3-4 million barrels per day. But fifteen years and a rapidly-expanded economy later, China had turned into the world’s number one oil importer.

This status reveals the crucial role of Beijing in the global oil market.  While Saudi Arabia and Angola are important oil providers, Russia is the main gas supplier for China. As former Premier Wen Jiabao once aptly observed: “any small problem multiplied by 1.3 billion will end up being a very big problem.”

For the past 20 years, I have argued that pipelines and airlines were moving east not west. Arguably, one of Russia’s biggest mistakes was to invest in infrastructure and contracts for a promising but ungrateful European market. The cancellation of the South Stream project in 2014 should have served as a lesson to Moscow not to enlarge Nord Stream as of 2017.  Times, nerves, and money could have been better spent on expanding the grid heading east.

It’s never been about Ukraine

Ever since the start of Ukraine’s military conflict in February 2022, we have essentially been watching the western-led financial industry waging its war against the eastern-dominated energy economy. The momentum will always be with the latter, because as stated above, in contrast to money, energy cannot be printed.

The oil and gas volumes needed to replace Russian energy sources cannot be found on the world market within a year. And no commodity is more global than oil. Any changes in the oil market will always influence the world’s economy.

“Oil makes and breaks nations.” It is a quote that epitomizes the importance of oil in shaping global and regional orders, as was the case in West Asia in the post-World War I era: First came the pipelines, then came the borders.

The late former Saudi oil minister Zaki Yamani once described oil alliances as being stronger than Catholic marriages. If that is the case, then the old US-Saudi marriage is currently undergoing estrangement and Russia has filed for divorce from Europe.

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

Oil cuts: A perfect storm in US foreign policy 

The Biden administration’s poor dealings with oil producing countries will have major political and economic ramifications for the west

October 11 2022

By MK Bhadrakumar

The old adage is that a good foreign policy is the reflection of the national policy. In this sense, a perfect storm is brewing on the foreign policy front in the US, triggered by the OPEC decision on 5 October to cut oil production by 2 million barrels a day.

On the one hand, this will drive up the gas price for the domestic consumer and on the other, will expose the US administration’s lop-sided foreign policy priorities. 

At its most obvious level, OPEC’s move confirms the belief that Washington has lost its leverage with the cartel of oil-producing countries. This is being attributed to the deterioration of the US’ relations with Saudi Arabia during the presidency of Joe Biden. But, fundamentally, a contradiction has arisen between the US interests and the interests of the oil producing countries.

Petro-diplomacy

That being said, contradictions are nothing new to the geopolitics of oil: the 1970s and 1980s witnessed two major “oil crises.” One was man-made while the other was an interplay of historical forces — the Yom-Kippur War of 1973 and Iran’s Islamic Revolution of 1979. In the downstream of the former, the Arab nations weaponized oil and proclaimed an oil embargo on western nations which were perceived to have supported Israel in the war.

The result was that the price of oil rose nearly 300 percent in less than six months, crippling the world’s economy. In the US, President Richard Nixon asked petrol stations not to sell gasoline from Saturday night through until Monday morning to cope with the crisis, which affected industry more than the average consumer.

In 1979, the Iranian Revolution hit oil production rates and the world’s oil supply shrunk by 4 percent. As panic set in, demand for crude oil shot up and prices more than doubled.

Biden’s folly

The Biden administration has tempted fate by underestimating the importance of oil in modern diplomacy, and ignoring that oil will remain the dominant energy source across the world for the foreseeable future, powering everything from cars and domestic heating to huge industry titans and manufacturing plants.

Even the steady transition to green energy over time is largely dependent on the continued availability of plentiful, cheap fossil fuel. However, the Biden administration overlooked the fact that those who have oil reserves wield a huge amount of power over our oil-centered energy systems, while those who buy oil are, on the contrary, cripplingly dependent on the market and the diplomatic relations which drive it.

The western powers are far too naive to think that an energy superpower like Russia can be simply “erased” from the ecosystem. An “energy war” with Russia is therefore destined for failure.

Historically, western nations understood the imperative to maintain good diplomatic relations with oil-producing countries. But Biden threw caution into the wind by insulting Saudi Arabia – when in the run-up to the 2020 presidential elections, he vowed to make the kingdom a “pariah” state.

Despite his highly-publicized visit to Jeddah in July 2022 to mend fences, the Saudis distrust American intentions, and we are unlikely to see any improvement in US-Saudi relations under Biden’s administration.

The congruence of interests on the part of the OPEC to keep the prices high is essentially because they need the extra income for their expenditure budget and to maintain a healthy investment level in the oil industry. The International Monetary Fund (IMF) in April projected Saudi Arabia’s breakeven oil price — the oil price at which it would balance its budget — at $79.20 a barrel.

Although the Saudi government does not disclose its assumed breakeven oil price, a Reuters report suggested that a preferred price level would be around $90 to $100 a barrel for Brent crude — at which level, it won’t have a huge impact on the global economy. Of course, anything over $100 will be a windfall.

Dictating who can and can’t sell oil

Meanwhile, a “systemic” crisis is brewing. It is only natural that OPEC views with skepticism the recent moves by the US and the EU to curtail Russia’s oil exports. The west rationalizes these moves as being aimed at drastically reducing Russia’s revenues from oil exports (which translates into resilience to fight the war in Ukraine.)

The latest G7 move to put a cap on the prices at which Russia can sell its oil is taking matters to an extreme.

OPEC regards price caps as a paradigm shift, as it implicitly challenges the cartel’s assumed prerogative to ensure that global oil supply matches demand, where one of the key measures of supply-demand balance is price. Arguably, the west is de facto setting up a rival cartel of oil-consuming countries to regulate the oil market.

No doubt, the west’s move is precedent-setting — namely, to prescribe for geopolitical reasons the price at which an oil-producing country is entitled to export its oil. If it is Russia today, who is to say it will not be Saudi Arabia or Iraq tomorrow? The G7 decision – if it gets implemented – will erode OPEC’s key role regulating the global oil market.

OPEC fights back

As such, OPEC is proactively pushing back with its recent decision to cut down oil production by 2 million barrels per day and keep the oil price above $90 per barrel. OPEC estimates that Washington’s options to counter OPEC+ are limited. Unlike in the past energy history, the US does not have a single ally today inside the OPEC+ group.

Due to rising domestic demands for oil and gas, it is entirely conceivable that the US exports of both items may be curtailed. If that happens, Europe will be the worst affected. In an interview with the Financial Times last week, Belgian Prime Minister Alexander De Croo warned that as winter approaches, if energy prices are not brought down, “we are risking a massive deindustrialization of the European continent and the long-term consequences of that might actually be very deep.”

He added these chilling words: “Our populations are getting invoices which are completely insane. At some point, it will snap. I understand that people are angry . . . people don’t have the means to pay it.” De Croo was warning about the likelihood of social unrest and political turmoil in European countries.

The economic and political fallout

Without a doubt, this is a tectonic shift in geopolitics which may probably turn out to be more important than the conflict in Ukraine in the making of the multipolar world order.

This perfect storm in Biden’s foreign policy can also impact the US midterm elections in November and deliver a Republican majority in the Senate, which could set the tempo for the 2024 US presidential election.

The Kremlin’s spokesman Dmitry Peskov has said that by turning away from Russian energy, Europe has become a captive market for the US oil companies which are now making “crazy money,” but the high cost of it is draining away the competitiveness of the European economy.

“Production is collapsing. Deindustrialization is coming. All this will have very, very deplorable consequences for the European continent over probably, at least, the next 10-20 years,” Peskov said.

Incidentally, Russia stands to gain the most from OPEC+cuts. The expert opinion is that oil prices will move higher from current levels through year-end and next year. That is to say, Russia will not cut any output while the price of oil is set to rise in the coming months.

As oil prices rise, Russia will not have to cut even a barrel of its production so long as it has a big enough market after December to sell the crude now going to Europe. Again, Moscow, for its part, reiterates that it will not supply oil to countries that would join the G7 price cap. In doing so, it is matching the Biden administration’s non-market instruments.

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

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US Senator Sanders Calls for Troop Withdrawal from Saudi Arabia, End of Selling Weapons

October 8, 2022

By Staff, Agencies

Independent US Senator and former Democratic presidential candidate Bernie Sanders has called for the withdrawal of American troops from Saudi Arabia and an end to military aid to the conservative kingdom for lowering oil production.

“If Saudi Arabia, one of the worst violators of human rights in the world, wants to partner with Russia to jack up US gas prices, it can get Putin to defend its monarchy,” the Vermont senator tweeted Friday after the OPEC+ bloc announced a cut in daily oil production.

“We must pull all US troops out of Saudi Arabia, stop selling them weapons & end its price-fixing oil cartel,” he added.

In August, the United States approved massive arms sales to Saudi Arabia and the United Arab Emirates worth more than $5 billion, amid criticism of their ongoing military aggression in Yemen which has inflicted heavy civilian casualties.

The State Department said Saudi Arabia would buy 300 Patriot MIM-104E missile systems and related equipment for an estimated $3.05 billion. The missile systems can be used to shoot down long-range incoming ballistic and cruise missiles, as well as fighter jets.

Separately, the United States will sell Terminal High Altitude Area Defense [THAAD] System Missiles and related equipment to the UAE for $2.25 billion.

Saudi Arabia and other members of OPEC-PLUS, which groups up the Organization of the Petroleum Exporting Countries and other producers including Russia, announced this week it would cut oil production to prop up falling prices.

“Saudi Arabia’s crown prince ordered the murder of a Washington Post columnist with a bone saw. Its disastrous war in Yemen has led to the deaths of 377,000 people and a humanitarian crisis. It’s now siding with Russia to damage our economy. Our support for Saudi Arabia must end,” Sanders tweeted on Friday.

Sanders also expressed similar feelings on Wednesday when he said the US “must end OPEC’s illegal price-fixing cartel, eliminate military assistance to Saudi Arabia, and move aggressively to renewable energy.”

The No Oil Producing and Exporting Cartels Act of 2021, or the NOPEC bill prohibits a foreign state from engaging in collective action impacting the market.

The NOPEC bill allows the US Attorney General to sue companies such as Saudi Aramco in federal court. 

In a related move, a group of lawmakers has introduced a new bill that aims to end the US’ military support to Saudi Arabia.

House Representatives Tom Malinowski, Sean Casten and Susan Wild launched the motion on Wednesday.

“We see no reason why American troops and contractors should continue to provide this service to countries that are actively working against us,” they said.

Several congressional Democrats have had similar remarks on the announcement, which is poised to counter sanctions on Russian oil and potentially drive up gas prices ahead of the midterm US elections.

US Senate Majority Leader Charles Schumer rebuked Saudi Arabia. The senior Democratic senator from New York threatened Saudi Arabia, saying Riyadh will pay the price for what he called its “deeply cynical action” of supporting a 2 million-barrel cut in oil supplies, which will put more pressure on the American economy.

 “What Saudi Arabia did to help Putin continue to wage his despicable, vicious war against Ukraine will long be remembered by Americans. We are looking at all the legislative tools to best deal with this appalling and deeply cynical action, including the NOPEC bill,” Schumer tweeted on Friday.

Legislation introduced in the House by Representatives Sean Casten [D-Ill.], Tom Malinowski [D-N.J.] and Susan Wild [D-Pa.] would remove American troops and military hardware from Saudi Arabia and the United Arab Emirates.

The number two Democrat in the Senate, Senator Dick Durbin, also demanded the passage of the legislation this week, and voiced support for a broader reevaluation of the Washington-Riyadh relationship, specifically seeking “unanswered questions” about the role of the Saudi state in the 9/11 attacks.

“The Saudi royal family has never been a trustworthy ally of our nation,” Durbin said Thursday. “It’s time for our foreign policy to imagine a world without this alliance with these royal backstabbers.”

Families of victims of the attacks have for years pushed the US government to declassify and make public more information about 9/11, which was a series of strikes that killed nearly 3,000 people and caused about $10 billion worth of property and infrastructure damage in the United States.

US officials assert that the attacks were carried out by 19 al-Qaeda terrorists but many experts and independent researchers have raised questions about the official account.

They believe that rogue elements within the US government, such as former Vice President Dick Cheney, orchestrated or at least encouraged the 9/11 attacks in order to accelerate the US war machine and advance the Zionist agenda.

Certain documents related to the FBI’s investigation of 9/11 reportedly contain evidence of Saudi involvement in the strikes.

Successive US administrations have refused to release the classified documents because they reportedly could expose a potential link between Saudi Arabia and the 9/11 attacks. Fifteen out of 19 alleged 9/11 attackers were Saudi nationals.

Several US senators and House lawmakers have been calling for the disclosure of 28 pages that purportedly contain evidence of Saudi involvement in financing and backing the alleged 9/11 hijackers. The pages were extracted from a 2002 Congressional inquiry into the September 11, 2001 attacks.

Irate US officials ‘weigh response’ against Saudi Arabia for OPEC+ cut

October 07 2022

Lawmakers have called on the White House to slash military sales to Saudi Arabia, professing a sudden concern for the US-sponsored war in Yemen

(Photo credit: Drew Angerer/Getty Images)

ByNews Desk

US State Secretary Antony Blinken said on 6 October that Washington is reviewing various options regarding its relationship with Saudi Arabia after the decision by OPEC+ nations to cut oil production levels by two million barrels per day (bpd).

“As for the relationship [with Riyadh] going forward, we’re reviewing a number of response options. We’re consulting closely with Congress,” Blinken said during a visit to Peru on Thursday.

But while he failed to detail any of the steps being considered in response to what many called a humiliating blow for US President Joe Biden, the state secretary did say Washington “would not do anything that infringes upon its interests.”

The decision to significantly cut production levels by OPEC+ – a group of OPEC and non-OPEC nations that includes Russia – was allegedly made to prevent a crash in the energy market by driving up oil prices.

In the hours ahead of Blinken’s comments, Democrat lawmakers in the US congress called to slash military sales to Saudi Arabia, professing a sudden concern for the brutal war in Yemen – which Washington has been fueling since 2015.

“I think it’s time for a wholesale re-evaluation of the US alliance with Saudi Arabia,” Senator Chris Murphy, chairman of the Senate foreign relations subcommittee on West Asia, told CNBC.

Representative Ruben Gallego, meanwhile, suggested Washington once again take back Patriot missile defense systems deployed in Saudi Arabia. “If they like the Russians so much they can use their very ‘reliable’ military technology,” Gallego said on Twitter.

Saudi Arabia is the largest customer of US-made military equipment, with billions of dollars in orders approved by the State and Defense departments every single year.

During the 2020 presidential campaign, Biden promised to end military support for Saudi Arabia’s brutal war in Yemen.

However, he has failed to keep his promises, whitewashing the atrocious human rights records of both Saudi Arabia and Israel, and even considering lifting a ban on selling “offensive weapons” to the kingdom.

Washington has recently increased its military presence in Yemen, in what officials say is an attempt to control the country’s oil fields as it does in Syria.

But despite Biden’s bid to keep the US as the largest exporter of weapons in the world, a recent poll by the Eurasia Group Foundation (EGF) shows that the majority of young US citizens – aged 18 to 29 – are opposed to the continued supply of US weapons to Saudi Arabia and Israel.

OPEC+ confirms oil production cut

5 Oct, 2022 15:02

The biggest output reduction since early 2020 has come despite US pressure to pump more

© Getty Images / Mlenny

OPEC+ member states have agreed an oil production cut of two million barrels per day, a statement published on the group’s website reads.

The reduction, which is the largest cut since early 2020, will take effect in November, the cartel announced on Wednesday.

According to OPEC, the step comes “in light of the uncertainty that surrounds the global economic and oil market outlooks, and the need to enhance the long-term guidance for the oil market, and in line with the successful approach of being proactive, and preemptive, which has been consistently adopted” by the group.

The cuts are much harsher than most experts had anticipated earlier this week, and are now expected to stem the latest drop in global prices for crude.

Energy ministers from the OPEC+ group led by Saudi Arabia and its allied non-members, including Russia, have held a meeting at the cartel’s Vienna headquarters on Wednesday for the first time since the start of the pandemic in early 2020.

READ MORE: Washington ‘panicking’ over potential Russian and Saudi oil cut – CNN

The decision on output reduction comes despite intense lobbying by the White House to keep oil production at current levels or higher – something US President Joe Biden had hoped to secure during his visit to Saudi Arabia in July.

On Tuesday, CNN cited an unnamed senior official as saying that Washington had mobilized all available resources ahead of the oil cartel gathering, with the Biden administration “having a spasm and panicking.” The efforts were described as “taking the gloves off.” Some of the talking points drafted by the US administration suggested the potential cut would be viewed as “a hostile act” and a “total disaster.

Meanwhile, most officials from OPEC+ member states said any reduction would be a “technical, not a political decision” and cited a “risk of recession” as contributing to the cuts, as they entered the OPEC headquarters in Vienna.

Suhail Al Mazrouei, the energy minister of the United Arab Emirates (UAE), said that OPEC+ is a “technical organization,” when asked whether the proposal would potentially damage relations with the US.

For more stories on economy & finance visit RT’s business section

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MBS: Despot in The Desert

July 31, 2022 

Nicolas Pelham- The Economist

No one wanted to play football with Muhammad bin Salman. Sure, the boy was a member of Saudi Arabia’s royal family, but so were 15,000 other people. His classmates preferred the company of his cousins, who were higher up the assumed order of succession, a childhood acquaintance recalls. As for the isolated child who would one day become crown prince, a family friend recounts hearing him called “little Saddam”.

Home life was tricky for bin Salman, too (he is now more commonly known by his initials, [MBS]. His father, Salman, already had five sons with his first wife, an educated woman from an elite urban family. MBS’s mother, Salman’s third wife, was a tribeswoman. When MBS visited the palace where his father lived with his first wife, his older half-brothers mocked him as the “son of a Bedouin”. Later, his elder brothers and cousins were sent to universities in America and Britain. The Bedouin offspring of Prince Salman stayed in Riyadh to attend King Saud University.

As young adults, the royals sometimes cruised on superyachts together; MBS was reportedly treated like an errand boy, sent onshore to buy cigarettes. A photo from one of these holidays shows a group of 16 royals posing on a yacht-deck in shorts and sunglasses, the hills of the French Riviera behind them. In the middle is MBS’s cousin, Prince Alwaleed bin Talal, a billionaire investor dubbed “the Arabian Warren Buffett”. MBS, tall and broad-shouldered in a white t-shirt, is pushed to the farthest edge.

Fast forward to today, and MB has moved to the center of the frame, the most important decision-maker in Saudi Arabia, the world’s biggest oil exporter. Saudi Arabia is an absolute monarchy but MBS’s 86-year-old father, though nominally head of state, is rarely seen in public anymore. It has been clear for several years that MBS is in charge. “In effect,” a former Saudi intelligence agent told me, “King Salman is no longer king.”

At first glance the 36-year-old prince looks like the ruler many young Saudis had been waiting for, closer in age to his people than any previous king – 70% of the Saudi population is under 30. The millennial autocrat is said to be fanatical about the video game “Call of Duty”: he blasts through the inertia and privileges of the mosque and royal court as though he were fighting virtual opponents on screen.

His restless impatience and disdain for convention have helped him push through reforms that many thoughts wouldn’t happen for generations. The most visible transformation of Saudi Arabia is the presence of women in public where once they were either absent or closely guarded by their husband or father. There are other changes, too. Previously, the kingdom offered few diversions besides praying at the mosque; today you can watch Justin Bieber in concert, sing karaoke or go to a Formula 1 race. A few months ago, I even went to a rave in a hotel….

But embracing Western consumer culture doesn’t mean embracing Western democratic values: it can as easily support a distinctively modern, surveillance state. On my recent trips to Saudi Arabia, people from all levels of society seemed terrified about being overheard voicing disrespect or criticism, something I’d never seen there before. “I’ve survived four kings,” said a veteran analyst who refused to speculate about why much of Jeddah, the country’s second-largest city, is being bulldozed: “Let me survive a fifth.”

The West, beguiled by promises of change and dependent on Saudi oil, at first seemed prepared to ignore MBS’s excesses. Then, in late 2018, Saudi officials in Istanbul murdered a Washington Post columnist, Jamal Khashoggi, and dismembered his body with a bone saw. Even the most pro-Saudi leaders turned away.

…. After Putin invaded Ukraine in February, the price of crude shot up. Boris Johnson was on a plane within weeks. Turkey’s Recep Tayyip Erdogan, previously a sworn enemy of the crown prince, embraced MBS in Riyadh in April. War even forced America’s president into a humiliating climbdown. On the campaign trail in 2020 Joe Biden had vowed to turn Saudi Arabia into a “pariah”. But on July 15th he went to make his peace with MBS– trying to avoid shaking MBS’s hand, he instead opted for a fist bump that left the two looking all the chummier. Even critics at home acknowledged MBs’s victory. “He made Biden look weak,” said a Saudi columnist in Jeddah. “He stood up to a superpower and won before the world.”

For MBS, this is a moment of triumph. His journey from the fringe of a photograph to the heart of power is almost complete. He will probably be king for decades. During that time, his country’s oil will be needed to sate the world’s enduring demand for energy.

A kingdom where the word of one man counts for so much depends utterly on his character. The hope is that, with his position secure, MBS will forswear the vengefulness and intolerance that produced Khashoggi’s murder. But some, among them his childhood classmates, fear something darker. They are reminded of the Iraqi dictator Saddam Hussein, a one-time modernizer who became so addicted to accumulating power that he turned reckless and dangerous. “At first power bestows grandeur,” a former Western intelligence officer told me, of MBS. “But then comes the loneliness, suspicion and fear that others will try to grab what you grabbed.”

During the early years of MBS’s ascent, I was vaguely aware of him as one prince among many. I probably wouldn’t have paid him much attention if an old contact of mine hadn’t joined his staff. His new boss, my contact said, was serious about shaking things up. He arranged the meeting at a faux-ancient mud-brick village on the outskirts of Riyadh in 2016. As my Economist colleagues and I approached, the gates of MBS’s compound suddenly slid open, like a Bond-villain’s lair. In the inner chamber sat MBS.

Reform has often been promised in Saudi Arabia – usually in response to American hectoring – but successive kings lacked the mettle to push change through. When the Al-Saud conquered Arabia in the 1920s, they made an alliance with an ultra-conservative religious group called the Wahhabis. In 1979, after a group of religious extremists staged a brief armed takeover of the Grand Mosque in Mecca, the Al-Saud decided to make the kingdom more devout to fend off a possible Islamic revolution, as had just happened in Iran. Wahhabi clerics were empowered to run society as they saw fit.

The Wahhabis exercised control through the Committee for the Promotion of Virtue and Prevention of Vice, otherwise known as the religious police. They whacked the ankles of women whose hair poked through their veil and lashed the legs of men who wore shorts. The arrangement suited the House of Saud. Wahhabism provided social control and gave legitimacy to the Saudi state, leaving the royals free to enjoy their oil wealth in the more permissive environments of London and Paris, or behind the gates of their palaces.

I’m loth to admit it now, but as the prince talked in Riyadh about his plans to modernize society and the economy, I was impressed by his enthusiasm, vision and command of the details. He gave what turned out to be accurate answers about how and when his reforms would happen. Though he was not yet crown prince, he frequently referred to Saudi Arabia as “my” country. We arrived at around 9pm. At 2am, MBS was still in full flow.

MBS was affable, self-assured, smiling. His advisers were more subdued. If they spoke at all, it was to robotically repeat their master’s lines. Yet when MBS left the room to take a call, they started chatting animatedly. As the prince re-entered, silence fell.

Like many in those early years, I was excited about what MBS might do for the kingdom. When I returned to the capital a few months later I saw a number of men wearing shorts. I kept looking over my shoulder for the religious police, but none came – they had been stripped of their powers of arrest.

As crown prince, MBS introduced a code of law so that judicial sentencing accords with state guidelines, not a judge’s own interpretation of the Koran. He criminalized stoning to death and forced marriage. The most overt change involved the role of women. MBS attacked guardianship laws that prevented women from working, travelling, owning a passport, opening a business, having hospital treatment or divorcing without approval from a male relative. In practice, many Saudi women have found these new rights hard to claim in a patriarchal society, and men can still file claims of disobedience against female relatives. But MBS’s reforms were more than cosmetic. Some clerics were jailed; the rest soon fell into line.

For foreigners, Riyadh is less forbidding these days. “I’m afraid I’ll be caught for not drinking,” a teetotal businessman told me. “There’s cocaine, alcohol and hookers like I haven’t seen in southern California,” says another party-goer. “It’s really heavy-duty stuff”.

When MBS first entered public life, he had a reputation for being as strait-laced as his father, rare among royals. That quickly changed. Many of the people interviewed for this article said that they believe MBS frequently uses drugs, which he denies. A court insider says that in 2015 his friends decided that he needed some r&r on an island in the Maldives. According to investigative journalists Bradley Hope and Justin Scheck in their book “Blood and Oil”, 150 models were recruited to join the gathering and were then shuttled “by golf cart to a medical center to be tested for sexually transmitted diseases”. Several international music stars were flown in, including Afrojack, a Dutch dj. Then the press blew MBS cover.

Thereafter, the prince preferred to unwind off the Red Sea coast. At weekends his entourage formed a flotilla by mooring their yachts around his, Serene, which has a driving range and a cinema. According to a former official, “dj MBS”, as his friends called him, would spin the discs wearing his trademark cowboy hat. The yacht is only one of the luxuries MBS has splurged on. He also bought a £230m ersatz French chateau near Versailles, built in 2008 (the meditation room doubles as an aquarium). He is said to have boasted that he wanted to be the first trillionaire.

We put these and other allegations in this article to MBS’s representatives. Through the Saudi embassy in London, they issued a broad denial, saying “the allegations are denied and are without foundation.”

MBS’s loosening of social mores reflects the values of many of his youthful peers, in Saudi and beyond – as does his taste for the flashier side of life. Yet despite the social revolution, the prince is no keener than Wahhabi clerics on letting people think for themselves. Shortly before lifting a ban on women driving in 2018, MBS’s officials imprisoned Loujain al-Hathloul, one of the leaders of the campaign for women’s rights. Her family say jailers waterboarded and electrocuted her, and that Saud al-Qahtani, one of MBS’s closest advisers, was present during her torment and threatened to rape her. [A un investigation found reasonable grounds to believe that Qahtani was involved in the torture of female activists. Qahtani allegedly told one of these women: “I’ll do whatever I like to you, and then I’ll dissolve you and flush you down the toilet.”] Hathloul was charged with inciting change to the ruling system. The message was clear: only one person was allowed to do that.

MBS is ruthlessly ambitious – he reportedly loved reading about Alexander the Great as a teenager – but he also owes his rise to some extraordinary twists of fortune. Succession can be an unpredictable affair in Saudi Arabia. The monarchy is only two generations old, founded in 1932, and the crown has so far moved from brother to brother among the founding ruler’s sons. That has become harder as the prospective heirs age. MBS’s father wasn’t tipped to be king, but after his two older brothers died unexpectedly in 2011 and 2012, he was catapulted up the line of succession.

When Salman became the heir-designate aged 76, he needed a chief of staff. Most courtiers expected him to choose one of the suave, English-speaking children of his first wife. Instead he appointed a son who spoke Arabic with a guttural Bedouin accent. [MBS has learned English fast since then: when we met in 2016 he sometimes corrected his translator.]

The choice to elevate MBS was less surprising to those who knew his father well. Salman had dedicated himself to his job as governor of Riyadh rather than chasing more lucrative commissions, and was a stickler for 8am starts, even in his 70s. He was known as the family disciplinarian, not averse to giving wayward royals a thwack with his walking stick or even a spell in his private prison. He clearly saw something of himself in his sixth son. MBS might love video games, but he was also a hard worker and keen to advance.

MBS put few limits on what he was prepared to do to achieve control. He earned the nickname Abu Rasasa – father of the bullet – after widespread rumors that he sent a bullet in the post to an official who ruled against him in a land dispute [Saudi officials have previously denied this rumor]. He was fearsome in private, too. “There are these terrible tempers, smashing up offices, trashing the palace,” says a source with palace connections. “He’s extremely violent.” Several associates describe him as having wild mood swings. Two former palace insiders say that, during an argument with his mother, he once sprayed her ceiling with bullets. According to multiple sources and news reports, he has locked his mother away.

It’s hard to say how many wives he has; officially, there’s just one, a glamorous princess called Sara bint Mashour, but courtiers say he has at least one more. MBS presents his family life as normal and happy: earlier this year he told the Atlantic magazine that he eats breakfast with his children each morning [he has three boys and two girls, according to Gulf News – the eldest is said to be 11]. One diplomat spoke of MBS’s kindness to his wife. But other sources inside the royal circle say that, on at least one occasion, Princess Sara was so badly beaten by her husband that she had to seek medical treatment.

We put this and other allegations in this piece to MBS’s representatives, who described them as “plain fabrication”, adding that “the kingdom is unfortunately used to false allegations made against its leadership, usually based on politically [or other] motivated malicious sources, particularly discredited individuals who have a long record of fabrications and baseless claims.”

MBS finally got a taste of political power in 2015 when Salman became king. Salman appointed his son deputy crown prince and minister of defense. One of MBS’s first moves was to launch a war in neighboring Yemen. Even America, the kingdom’s closest military ally, was told only at the last minute.

There was an obvious obstacle in MBS’s path to the throne: his cousin, the 57-year-old heir-designate, Muhammad bin Nayef. Bin Nayef was the intelligence chief and the kingdom’s main interlocutor with the CIA. He was widely credited with stamping out al-Qaeda in Saudi after 9/11. In June 2017 bin Nayef was summoned to meet the elderly king at his palace in Mecca.

The story of what happened next has emerged from press reports and my interviews. It seems that bin Nayef arrived by helicopter and took the lift to the fourth floor. Instead of the monarch, MBS’sagents were waiting. Bin Nayef was stripped of his weapons and phone, and told that a royal council had dismissed him. He was left alone to consider his options. Seven hours later, a court videographer filmed the charade of MBS kissing his cousin, then accepting his abdication as crown prince. King Salman kept a back seat throughout. Bin Nayef is now in detention [his uncle, who also had a claim to the throne, apparently intervened to try and protect bin Nayef, but was himself later detained]. The staged resignation – an old trick of Saddam Hussein’s – would become MBS’s signature move.

That was just the warm-up act. In October 2017 MBS hosted an international investment conference at the Ritz-Carlton in Riyadh. At “Davos in the desert”, the likes of Christine Lagarde, Son Masayoshi and other business glitterati listened to MBS’s pitch for Saudi Arabia’s post-oil future, including the construction of Neom, a new $500bn “smart city”. The event was a hit. Diplomatic grumblings about the war in Yemen or the fate of America’s security partner, Muhammad bin Nayef, faded.

The gathering was also an opportunity to invite back royals who were often abroad. Once the foreigners had left, MBS pounced. Hundreds of princes and businessmen were swept up. According to a biography of MBS by Ben Hubbard, a New York Times journalist, one of them realized something was amiss only when they got to their hotel room: there were no pens, razors or glasses – nothing that could be used as a weapon.

MBS held the detainees in the Ritz-Carlton for several weeks [the Marriott and other hotels were also commandeered to house the overflow]. Prisoners’ phones were confiscated. Some were said to have been hooded, deprived of sleep and beaten until they agreed to transfer money and hand over an inventory of their assets. All told, MBS’s guests at the Ritz-Carlton coughed up about $100bn.

Even royals previously thought untouchable, such as the powerful prince who ran the national guard, got similar treatment. Princess Basma, the youngest child of the second king of Saudi Arabia, was jailed for three years without charge or access to a lawyer; after being released she still had to wear an electronic ankle bracelet, according to a close associate of hers.

The crushing of the royals and business elite was billed as a crackdown on corruption – and undoubtedly it netted many corruptly acquired assets, which MBS said would be returned to the Saudi treasury. The methods, however, looked more like something from a gangster film than a judicial procedure.

Interrogations were overseen by Saud al-Qahtani, who reported directly to MBS whenever a detainee broke and gave out their bank details. [All the allegations in this piece concerning Qahtani were put to him via his lawyer. No response was given.] Qahtani had installed himself as one of MBS’s favored henchmen, though earlier in his career, he’d plotted against Salman and his son, trying to sideline them with rumors that Salman had dementia. Qahtani was so loyal to the former faction that he’d named his son after his then boss. According to a former courtier, on the day of the old king’s funeral the two men had it out: MBS slapped Qahtani in the face. Later, MBS let Qahtani prove his worth and brought him on to his staff. Qahtani duly named his younger son Muhammad.

On paper, Qahtani was a communications adviser, a former journalist who understood Twitter and used an army of bots and loyal followers to intimidate critics on social media [his office included giant screens and holograms that staff used for target-practice with laser guns]. In practice he was entrusted with MBS’s most important and violent missions – the ones that established his grip on power.

His remit extended far beyond Saudi’s borders. In 2016 he kidnapped Prince Sultan, a minor royal who had been bad-mouthing MBS. MBS offered his jet to fly Sultan from Paris to Cairo – instead, the plane was diverted to Saudi Arabia. According to Hope’s and Scheck’s book, Qahtani posed as Captain Saud, an airline pilot, though surprisingly one who had an expensive Hublot watch.

Even people who have nothing to do with politics have become afraid to speak near a functioning mobile phone

With rendition strategies like this, and the cash tap shut off, even royals who weren’t inside the Ritz-Carlton felt the pressure to divest themselves of ostentatious assets. The father of the Saudi ambassador to Britain put Glympton Park, his beloved 2,000-acre estate in the Cotswolds, up for sale. Riyadh’s jewellers did a roaring trade pawning the diamonds of lesser royals. “It’s like the Romanovs selling their Fabergé eggs,” said an adviser to an auction house.

Many commoners rejoiced at the downfall of their entitled elite. Princes and princesses who once lived off huge handouts began looking for jobs. Their titles became irrelevant. Unable to afford the cost of irrigation, their green ranches became desert again. Banks turned them away. One financial adviser recalled his response to princes trying to get credit on the strength of their royal status: “You call yourselves princes, but they say there’s only one prince now.”

The Ritz-Carlton episode was just one element of an extraordinary project of centralization. MBS yanked control of various security services back from the princes. He took charge of Aramco, the semi-autonomous state oil company. He installed himself as boss of the sovereign-wealth fund, the Public Investment Fund. “He destroyed all the powerful families,” says a retired diplomat. By late 2017, law, money and security in Saudi all flowed directly from him.

Among those who lost out were the fellow princes who had pushed a young MBS to the edge of the family photo on the yacht all those years ago. Prince Alwaleed bin Talal, in the center of that shot, surrendered part of his $17bn wealth. As the shakedown widened, MBS’s elder half-siblings put up their yacht for sale. Many of his cousins were locked up. “Payback time,” one victim said.

While MBS was squeezing the elite at home, he was forging some important friendships abroad.

MBS and Donald Trump, who was elected president in 2016, had a lot in common. Both had the hunger of the underdog and loathed the snooty policymaking establishments in their countries; they reveled in provocation. The historic compact, by which Saudi Arabia provided oil to American consumers and America guaranteed the country’s security, had frayed in recent years. Barack Obama’s hurried exit from Iraq in 2011 and his nuclear deal with Iran in 2015 had left Saudi Arabia worried that it could no longer rely on American protection. America’s development of its own shale-oil reserves had also reduced its dependence on Saudi oil. Then Trump and MBS got cozy.

With the Trump administration’s tacit [and sometimes explicit] support, MBS set about treating the entire Middle East much as he did Saudi Arabia, trying to push aside rulers whom he found to be inconvenient. He announced a blockade of Qatar, a tiny gas-rich state to the east of Saudi Arabia. In 2017, angered by Lebanon’s dealings with Iran, MBS invited the prime minister, Saad Hariri, a long-time beneficiary of Saudi patronage, on a starlit camping trip. Hariri turned up, had his phone confiscated and soon found himself reading out a resignation speech on tv.

Both moves ultimately backfired. But Trump’s Middle East adviser, his son-in-law Jared Kushner, did little to discourage such antics. Together, he and MBS dreamt up a new regional order over WhatsApp, calling each other “Jared” and “Muhammad”. Their rapport was so great that, at Kushner’s prompting, MBS started the process of recognizing “Israel”. His father, still officially king, put a stop to that.

MBS visited America in March 2018, hanging out in Silicon Valley with Peter Thiel and Tim Cook, and meeting celebrities, including Rupert Murdoch, James Cameron and Dwayne “the Rock” Johnson. Many people were keen to meet the man who controlled a $230bn sovereign-wealth fund. To his frustration, they were less willing to reciprocate by investing in the kingdom.

That October the intercontinental bonhomie came to an abrupt halt. I was due to go to a conference in Turkey that month. A Saudi journalist I knew, Jamal Khashoggi, got in touch to suggest meeting up: he was also going to be in Istanbul, for an appointment at the consulate. Khashoggi was a court insider whose criticisms of MBS in the Washington Post and elsewhere had attracted much attention. He seemed to be making more effort than usual to stay in touch. While I was at the conference a friend of his phoned me: Jamal still hadn’t emerged from the consulate, he said. By the time I got there, Turkish police were cordoning off the building.

The full story soon came out in leaked intelligence reports and, later, a un inquiry. A Saudi hit squad, which reportedly coordinated with Saud al-Qahtani, had flown to Istanbul. As they waited for Khashoggi to enter the consulate, they discussed plans for dismembering his body. According to tapes recorded inside the consulate by Turkish intelligence, Khashoggi was told, “We’re coming to get you.” There was a struggle, followed by the sound of plastic sheets being wrapped. A CIA report said that MBS approved the operation.

MBS has said he takes responsibility for the murder, but denies ordering it. He sacked Qahtani and another official implicated in the intelligence reports. The fallout was immediate. Companies and speakers pulled out of that year’s Davos in the desert; the Gates Foundation ended its partnership with Misk, an artistic and educational charity set up by the prince. Ari Emanuel, a Hollywood agent, cancelled a $400m deal with the kingdom.

The crown prince seems to have been genuinely surprised at the animus – “disappointed”, says an associate. Hadn’t he committed to all the reforms the West had been asking for? Perhaps he had underestimated the outcry provoked by going after a well-connected international figure, as opposed to a royal unknown outside Saudi Arabia. Or perhaps he understood Western governments’ priorities better than they did themselves. They had done little when Muhammad bin Nayef, their partner in battling terrorism, had disappeared; they had shrugged at reports of torture in the Ritz-Carlton, and at MBS’s reckless bombardment of Yemen. Why did they have so much to say about the killing of a single journalist?

Three years after the Khashoggi killing, Davos in the desert opened with the singer Gloria Gaynor. As images of smiling children flashed up on a giant screen behind her, she broke into her disco anthem, “I Will Survive”, asking the audience: “Did you think I’d crumble? Did you think I’d lay down and die?”

The chief executives of private-equity giants BlackRock and Blackstone were back, as were the heads of Goldman Sachs, SocGen and Standard Chartered. Even Amazon sent a representative despite the fact that its boss, Jeff Bezos, owns the Washington Post, the paper that employed Khashoggi. Meanwhile, Qahtani was creeping back into favor at the royal court – although he had been implicated by the un for Khashoggi’s murder, a Saudi court took the decision not to charge him.

MBS revitalized the near-dormant sovereign-wealth fund, pumping tens of billions of dollars into tech, entertainment and sports, to create a softer, more appealing image of Saudi and co-opt new partners. In April 2020, the fund led a consortium to buy Newcastle United, a premier-league football team [the deal took 18 months]. The following year it launched an audacious bid to create Saudi’s own golf tour, the LIV series, hoping to lure players with a prize pot of $255m, far larger than that of American tournaments. At the first LIV tour this year, some top players boycotted the event, others went for the cash.

Joe Biden has proved tougher to woo. Soon after becoming president, Biden withdrew American military support for the war in Yemen. He wouldn’t talk to MBS, insisting that communications go through King Salman instead. He didn’t even nominate an ambassador to Riyadh for 15 months. The chat everywhere was that Saudi-American relations were in a deep freeze. Then, in February 2022, MBS had a stroke of luck: Russia invaded Ukraine.

In the days after war broke out, Biden himself tried to call MBS. The crown prince declined to speak to the president. He did take Putin’s call, however. The two men were already close. MBS had personally brought Russia into an expanded version of the OPEC cartel in order for Saudi Arabia to keep control of global oil production. Putin cemented the friendship in 2018 at the g20 summit in Buenos Aires, which took place weeks after the Khashoggi killing. While Western leaders shunned MBS, Putin gave the Saudi ruler a high-five before sitting down next to him.

MBS’s defiance of America seems to have paid off. After months of evasion, Biden reluctantly agreed to meet MBS in Jeddah in July, on the prince’s own turf and his own terms. The visit gave MBS recognition but did little to rebuild relations. There wasn’t even a concrete assurance of increasing oil production.

Some in the American foreign-policy establishment remain hopeful that MBS could become a helpful partner in the region, pointing to his recent retreat from confrontation with Qatar and his eagerness to find a diplomatic exit from Yemen. Perhaps, they say, he is maturing as a leader.

This seems optimistic. MBS’s disastrous campaign in Yemen was ostensibly in support of the country’s president but in April, hours after being summoned to a meeting and offered Arabic coffee and dates, Yemen’s president was reading out a resignation speech on tv. MBS took it upon himself to get rid of him personally – suggesting that his mode of international diplomacy remains as high-handed as ever. “What they’ve learned”, says one foreign analyst, “is don’t murder journalists who dine regularly with congressmen in the United States.”

The West has taught MBS something else, too – something that autocrats the world over may draw comfort from. No matter the sin, they would argue, if you sit tight through the odium and fury, eventually the financiers, the celebrities, even the Western leaders, will come running back. At 36, MBS has time on his side. Some observers fear that he may become only more dangerous as oil reserves start to decline and the treasure trove shrinks. “What happens when he’s a middle-aged man ruling a middle-income country and starts to get bored?” asks a diplomat who knows MBS personally. “Will he go on more adventures?”

Earlier this year, I visited an old friend in his office in Saudi Arabia. Before we started talking, he put his phone in a pouch that blocks the signal, to prevent government spies from listening in. Dissidents do that kind of thing in police states like China, but I’d never seen it before in Saudi Arabia. It isn’t just people involved with politics who are taking such precautions: most Saudis have become afraid to speak near a functioning mobile phone. People used to talk fairly openly in their offices, homes and cafés. Now, they are picked up for almost nothing.

As we chatted over the whir of his office air conditioning, my friend reeled off a list of people he knew who had been detained in the past month: a retired air-force chief who died in prison, a hospital administrator hauled away from his desk, a mother taken in front of her seven children, a lawyer who died seven days after his release from prison. “These people aren’t rabble rousers,” my friend said. “No one understands why.”

Officially, the government says it has no political prisoners. Rights groups reckon that thousands have been swept up in MBS’s dragnet. I’ve covered the Middle East since the 1990s and can’t think of anywhere where so many of my own contacts are behind bars.

Few ordinary Saudis predicted that when MBS was done trampling on the elites and the clerics, he would come for them next. Bringing Saudis into the modern, networked, online world has made it easier for the state to monitor what they are saying. A Red Crescent employee called Abdulrahman al-Sadhan used to run a satirical Twitter account under a pseudonym. In 2018 MBS’s agents arrested him and held him incommunicado for two years. American prosecutors later charged two former Twitter employees with allegedly handing over the real names behind various accounts to a Saudi official – al-Sadhan’s family believes that his name was among them. [The trial of one employee is ongoing; he denies passing on information to Saudi officials.]

On the face of it, MBS has nothing to worry about. Public opinion polls – if they can be trusted – suggest he is popular, particularly with younger Saudis. But there is a growing sense that discontent is brewing beneath the surface. MBS has broken crucial social contracts with the Saudi populace, by reducing handouts while, at the same time, dispensing with the tradition of hearing the feedback of ordinary people after Friday prayers.

It isn’t hard to imagine some of the issues they’d raise if they had the chance. Many people are struggling as the cost of living rises. When other governments were cushioning their citizens during the pandemic, MBS slashed fuel subsidies and tripled vat. Unable to afford the cost of pumping water, some farmers left crops to wither in the field. Fees for permits and fines have spiraled, too. Though MBS speaks eloquently about the country’s youth, he is struggling to find them jobs. Unemployment remains stubbornly stuck in double digits. Half of the jobless have a university degree, but most white-collar workers I met on MBS’s mega-projects were foreign.

Saudi Arabia’s attempts to diversify its economy – and so compensate for the long-term decline of oil reserves – isn’t going well either. The pandemic delayed plans for a rapid increase in international tourism. Extorting billions of dollars from your relatives may not be the best way to convince investors that the kingdom is a liberal haven.

The young prince has reversed even the baby steps towards democracy taken by previous kings. Municipal elections have been suspended – as a cost-cutting exercise, explains the supine press. The Shura Council, a consultative body of 150 people, has only met online since the pandemic [other institutions have gathered in person for months]. “I wish I had more of a voice,” said one member. Whenever I mentioned the prince, his leg twitched.

A frequent visitor to the royal court says MBS now gives the impression of someone who’s always thinking that people are plotting against him. He seems to be preoccupied with loyalty. He fills key posts either with young royals, foreigners with no local base to threaten him or people he has already broken. A government minister, Ibrahim Assaf, was one of those locked up in the Ritz-Carlton – two months later MBS sent him to the World Economic Forum as his representative. A senior executive on one of his construction projects is someone who says he was tortured in one of his prisons. “He went from being strung naked from his ankles, beaten and stripped of all his assets to a high-level project manager,” says a close acquaintance of the man.

All remain vulnerable to MBS’s tantrums. Saudi sources say he once locked a minister in a toilet for ten hours. [The minister later appeared on tv blabbering platitudes about the prince’s wisdom.] A senior official I’ve spoken to says he wants out. “Everyone in his circle is terrified of him,” says an insider. And that could make it hard for him to govern a country of 35m people effectively. Former courtiers say no one close to MBS is prepared to offer a truthful assessment of whether his increasingly grandiose schemes are viable. “Saying no”, says one, “is not something they will ever do.”

If MBS has a mission beyond extending his power, you might expect to find it in Neom, the city he promised to build in the desert. Neom would be nothing less than “a civilizational leap for humanity”, he said in 2017. Head-spinning details followed. The city’s food would be grown on hydroponic walls on a floating structure. It would be powered by the world’s largest green-hydrogen plant. Thousands of snow-blowers would create a ski resort on a nearby mountain. One day it would have driverless cars and passenger drones.

According to the official timetable, the main city would be completed by 2020. Further districts would be added by 2025. The prince’s tourism minister, Ahmed al-Khateeb, dismissed rumors that the timetable was proving over-ambitious. “Come see with your eyes and not with your ears,” he urged. So, I went.

Finding Neom was the first problem. There were no road signs to it. After three hours’ drive we came to the spot indicated by the map. It was bare, but for the odd fig tree. Camels strolled across the empty highway. Piles of rubble lined the road, remnants of the town bulldozed to make way for the mighty metropolis.

The designated area is nearly the size of Belgium. As far as I could tell, only two projects had been completed, MBS’s palace, and something Google Earth calls “The Neom Experience Centre” [when I drove to see it, it was obscured by a prefabricated hut]. The only other solid building I could see was a hotel constructed before Neom was conceived: The Royal Tulip. A poster in the lobby urged me to “Discover Neom”. But when I asked for a guide the hotel manager cursed my sister with Arabic vulgarities and tried to shoo me away. There was no sign of the media hub with “frictionless facilitation”, “advanced infrastructure” and “collaborative ecosystems” promised by the Neom website. Neom’s head of communications and media, Wayne Borg, said he was “out of Kingdom at present”.

The hotel restaurant was teeming with consultants – all the ones I met were foreign. I later found a Saudi project manager. “We think we’re about to start working, but every two months the consultants coin a new plan,” he told me. “They’re still doing plans of plans.” There was a kind of manic short-termism among these foreigners. Many were paid $40,000 a month, plus handsome bonuses. “It’s like riding a bull,” one of the Neom consultants told me. “You know you’re gonna fall, that no one can last on a bull longer than a minute and a half, two minutes, so you make the most of it.”

Despite the high salaries, there are reports that foreigners are leaving the Neom project because they find the gap between expectations and reality so stressful. The head of Neom is said by his friends to be “terrified” at the lack of progress.

Eventually, I found a retired Saudi air-force technician who offered to drive me around the city for $600. He took me to a sculpture standing in the desert with the words, “I love Neom”. A short way farther on we found a new stretch of tarmac, said to mark the edge of the dream city. Beyond it, the lone and level sands stretched far away.

The power troika trumps Biden in West Asia

The presidents of Russia, Iran, and Turkey convened to discuss critical issues pertaining to West Asia, with the illegal US occupation of Syria a key talking point

July 20 2022

Photo Credit: The Cradle

Oil and gas, wheat and grains, missiles and drones – the hottest topics in global geopolitics today – were all on the agenda in Tehran this week.

By Pepe Escobar

The Tehran summit uniting Iran-Russia-Turkey was a fascinating affair in more ways than one. Ostensibly about the Astana peace process in Syria, launched in 2017, the summit joint statement duly noted that Iran, Russia and (recently rebranded) Turkiye will continue, “cooperating to eliminate terrorists” in Syria and “won’t accept new facts in Syria in the name of defeating terrorism.”

That’s a wholesale rejection of the “war on terror” exceptionalist unipolarity that once ruled West Asia.

Standing up to the global sheriff

Russian President Vladimir Putin, in his own speech, was even more explicit. He stressed “specific steps to promote the intra-Syrian inclusive political dialogue” and most of called a spade a spade: “The western states led by the US are strongly encouraging separatist sentiment in some areas of the country and plundering its natural resources with a view to ultimately pulling the Syrian state apart.”

So there will be “extra steps in our trilateral format” aimed at “stabilizing the situation in those areas” and crucially, “returning control to the legitimate government of Syria.” For better or for worse, the days of imperial plunder will be over.

The bilateral meetings on the summit’s sidelines – Putin/Raisi and Putin/Erdogan – were even more intriguing. Context is key here: the Tehran gathering took place after Putin’s visit to Turkmenistan in late June for the 6th Caspian summit, where all the littoral nations, Iran included, were present, and after Foreign Minister Sergei Lavrov’s travels in Algeria, Bahrain, Oman, and Saudi Arabia, where he met all his Gulf Cooperation Council (GCC) counterparts.

Moscow’s moment

So we see Russian diplomacy carefully weaving its geopolitical tapestry from West Asia to Central Asia – with everybody and his neighbor eager to talk and to listen to Moscow. As it stands, the Russia-Turkey entente cordiale tends to lean towards conflict management, and is strong on trade relations. Iran-Russia is a completely different ball game: much more of a strategic partnership.

So it’s hardly a coincidence that the National Oil Company of Iran (NIOC), timed to the Tehran summit, announced the signing of a $40 billion strategic cooperation agreement with Russia’s Gazprom. That’s the largest foreign investment in the history of Iran’s energy industry – badly needed since the early 2000s. Seven deals worth $4 billion apply to the development of oil fields; others focus on the construction of new export gas pipelines and LNG projects.

Kremlin advisor Yury Ushakov deliciously leaked that Putin and Iran’s Supreme Leader Ayatollah Ali Khamenei, in their private meeting, “discussed conceptual issues.” Translation: he means grand strategy, as in the evolving, complex process of Eurasia integration, in which the three key nodes are Russia, Iran and China, now intensifying their interconnection. The Russia-Iran strategic partnership largely mirrors the key points of the China-Iran strategic partnership.

Iran says ‘no’ to NATO

Khamenei, on NATO, did tell it like it is: “If the road is open for NATO, then the organization sees no borders. If it had not been stopped in Ukraine, then after a while the alliance would have started a war under the pretext of Crimea.”

There were no leaks on the Joint Comprehensive Plan of Action (JCPOA) impasse between the US and Iran – but it’s clear, based on the recent negotiations in Vienna, that Moscow will not interfere with Tehran’s nuclear decisions. Not only are Tehran-Moscow-Beijing fully aware of who’s preventing the JCPOA from getting back on track, they also see how this counter-productive stalling process prevents the collective west from badly needed access to Iranian oil.

Then there’s the weapons front. Iran is one of the world’s leaders in drone production: Pelican, Arash, Homa, Chamrosh, Jubin, Ababil, Bavar, recon drones, attack drones, even kamikaze drones, cheap and effective, mostly deployed from naval platforms in West Asia.

Tehran’s official position is not to supply weapons to nations at war – which would in principle invalidate dodgy US “intel” on their supply to Russia in Ukraine. Yet that could always happen under the radar, considering that Tehran is very much interested in buying Russian aerial defense systems and state of the art fighter jets. After the end of the UN Security Council-enforced embargo, Russia can sell whatever conventional weapons to Iran it sees fit.

Russian military analysts are fascinated by the conclusions Iranians reached when it was established they would stand no chance against a NATO armada; essentially they bet on pro-level guerrilla war (a lesson learned from Afghanistan). In Syria, Iraq and Yemen they deployed trainers to guide villagers in their fight against Salafi-jihadis; produced tens of thousands of large-caliber sniper rifles, ATGMs, and thermals; and of course perfected their drone assembly lines (with excellent cameras to surveil US positions).

Not to mention that simultaneously the Iranians were building quite capable long-range missiles. No wonder Russian military analysts estimate there’s much to learn tactically from the Iranians – and not only on the drone front.

The Putin-Sultan ballet

Now to the Putin-Erdogan get together – always an attention-grabbing geopolitical ballet, especially considering the Sultan has not yet decided to hop on the Eurasia integration high-speed train.

Putin diplomatically “expressed gratitude” for the discussions on food and grain issues, while reiterating that “not all issues on the export of Ukrainian grain from the Black Sea ports are resolved, but progress is made.”

Putin was referring to Turkiye’s Defense Minister Hulusi Akar, who earlier this week assured that setting up an operations center in Istanbul, establishing joint controls at the port exit and arrival points, and carefully monitoring the navigational safety on the transfer routes are issues that may be solved in the next few days.

Apparently Putin-Erdogan also discussed Nagorno-Karabakh (no details).

What a few leaks certainly did not reveal is that on Syria, for all practical purposes, the situation is blocked. That favors Russia – whose main priority as it stands is Donbass. Wily Erdogan knows it – and that’s why he may have tried to extract some “concessions” on “the Kurdish question” and Nagorno-Karabakh. Whatever Putin, Russia’s Security Council Secretary Nikolai Patrushev and Deputy Chairman Dmitry Medvedev may really think about Erdogan, they certainly evaluate how priceless is to cultivate such an erratic partner capable of driving the collective west totally bonkers.

Istanbul this summer has been turned into a sort of Third Rome, at least for expelled-from-Europe Russian tourists: they are everywhere. Yet the most crucial geoeconomic development these past few months is that the western-provoked collapse of trade/supply lines along the borders between Russia and the EU – from the Baltic to the Black Sea – finally highlighted the wisdom and economic sense of the International North-South Transportation Corridor (INTSC): a major Russia-Iran-India geopolitical and geoeconomic integration success.

When Moscow talks to Kiev, it talks via Istanbul. NATO, as the Global South well knows, does not do diplomacy. So any possibility of dialogue between Russians and a few educated westerners takes place in Turkey, Armenia, Azerbaijan and the UAE. West Asia as well as the Caucasus, incidentally, did not subscribe to the western sanctions hysteria against Russia.

Say farewell to the ‘teleprompter guy’

Now compare all of the above with the recent visit to the region by the so-called “leader of the free world,” who merrily alternates between shaking hands with invisible people to reading – literally – whatever is scrolling on a teleprompter. We’re talking of US President Joe Biden, of course.

Fact: Biden threatened Iran with military strikes and as a mere supplicant, begged the Saudis to pump more oil to offset the “turbulence” in the global energy markets caused by the collective west’s sanction hysteria. Context: the glaring absence of any vision or anything even resembling a draft of foreign policy plan for West Asia.

So oil prices duly jumped upward after Biden’s trip: Brent crude rose more than four percent to $105 a barrel, bringing prices back to above $100 after a lull of several months.

The heart of the matter is that if OPEC or OPEC+ (which includes Russia) ever decide to increase their oil supplies, they will do it based on their internal deliberations, and not under exceptionalist pressure.

As for the imperial threat of military strikes on Iran, it qualifies as pure dementia. The whole Persian Gulf – not to mention the whole of West Asia – knows that were US/Israel to attack Iran, fierce retaliation would simply evaporate with the region’s energy production, with apocalyptic consequences including the collapse of trillions of dollars in derivatives.

Biden then had the gall to say, “We have made progress in strengthening our relations with the Gulf states. We will not leave a vacuum for Russia and China to fill in the Middle East”.

Well, in real life it is the “indispensable nation” that has self-morphed into a vacuum. Only bought-and-paid for Arab vassals – most of them monarchs – believe in the building of an “Arab NATO” (copyright Jordan’s King Abdullah) to take on Iran. Russia and China are already all over the place in West Asia and beyond.

De-Dollarization, not just Eurasian integration

It’s not only the new logistical corridor from Moscow and St. Petersburg to Astrakhan and then, via the Caspian, to Enzeli in Iran and on to Mumbai that is shaking things up. It’s about increasing bilateral trade that bypasses the US dollar. It’s about BRICS+, which Turkey, Saudi Arabia and Egypt are dying to be part of. It’s about the Shanghai Cooperation Organization (SCO), which formally accepts Iran as a full member this coming September (and soon Belarus as well). It’s about BRICS+, the SCO, China’s ambitious Belt and Road Initiative (BRI) and the Eurasia Economic Union (EAEU) interconnected in their path towards a Greater Eurasia Partnership.

West Asia may still harbor a small collection of imperial vassals with zero sovereignty who depend on the west’s financial and military ‘assistance,’ but that’s the past. The future is now – with Top Three BRICS (Russia, India, China) slowly but surely coordinating their overlapping strategies across West Asia, with Iran involved in all of them.

And then there’s the Big Global Picture: whatever the circumvolutions and silly schemes of the US-concocted “oil price cap” variety, the fact is that Russia, Iran, Saudi Arabia and Venezuela – the top powerful energy-producing nations – are absolutely in sync: on Russia, on the collective west, and on the needs of a real multipolar world.

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

In Eurasia, the War of Economic Corridors is in full swing

July 15, 2022

Photo Credit: The Cradle

Source

Mega Eurasian organizations and their respective projects are now converging at record speed, with one global pole way ahead of the other.

By Pepe Escobar

The War of Economic Corridors is now proceeding full speed ahead, with the game-changing first cargo flow of goods from Russia to India via the International North South Transportation Corridor (INSTC) already in effect.

Very few, both in the east and west, are aware of how this actually has long been in the making: the Russia-Iran-India agreement for implementing a shorter and cheaper Eurasian trade route via the Caspian Sea (compared to the Suez Canal), was first signed in 2000, in the pre-9/11 era.

The INSTC in full operational mode signals a powerful hallmark of Eurasian integration – alongside the Belt and Road Initiative (BRI), the Shanghai Cooperation Organization (SCO), the Eurasian Economic Union (EAEU), and last but not least, what I described as “Pipelineistan” two decades ago.

Caspian is key

Let’s have a first look on how these vectors are interacting.

The genesis of the current acceleration lies in Russian President Vladimir Putin’s recent visit to Ashgabat, Turkmenistan’s capital, for the 6th Caspian Summit. This event not only brought the evolving Russia-Iran strategic partnership to a deeper level, but crucially, all five Caspian Sea littoral states agreed that no NATO warships or bases will be allowed on site.

That essentially configures the Caspian as a virtual Russian lake, and in a minor sense, Iranian – without compromising the interests of the three “stans,” Azerbaijan, Kazakhstan and Turkmenistan. For all practical purposes, Moscow has tightened its grip on Central Asia a notch.

As the Caspian Sea is connected to the Black Sea by canals off the Volga built by the former USSR, Moscow can always count on a reserve navy of small vessels – invariably equipped with powerful missiles – that may be transferred to the Black Sea in no time if necessary.

Stronger trade and financial links with Iran now proceed in tandem with binding the three “stans” to the Russian matrix. Gas-rich republic Turkmenistan for its part has been historically idiosyncratic – apart from committing most of its exports to China.

Under an arguably more pragmatic young new leader, President Serdar Berdimuhamedow, Ashgabat may eventually opt to become a member of the SCO and/or the EAEU.

Caspian littoral state Azerbaijan on the other hand presents a complex case: an oil and gas producer eyed by the European Union (EU) to become an alternative energy supplier to Russia – although this is not happening anytime soon.

The West Asia connection

Iran’s foreign policy under President Ebrahim Raisi is clearly on a Eurasian and Global South trajectory. Tehran will be formally incorporated into the SCO as a full member in the upcoming summit in Samarkand in September, while its formal application to join the BRICS has been filed.

Purnima Anand, head of the BRICS International Forum, has stated that Turkey, Saudi Arabia and Egypt are also very much keen on joining BRICS. Should that happen, by 2024 we could be on our way to a powerful West Asia, North Africa hub firmly installed inside one of the key institutions of the multipolar world.

As Putin heads to Tehran next week for trilateral Russia, Iran, Turkey talks, ostensibly about Syria, Turkish President Recep Tayyip Erdogan is bound to bring up the subject of BRICS.

Tehran is operating on two parallel vectors. In the event the Joint Comprehensive Plan of Action (JCPOA) is revived – a quite dim possibility as it stands, considering the latest shenanigans in Vienna and Doha – that would represent a tactical victory. Yet moving towards Eurasia is on a whole new strategic level.

In the INSTC framework, Iran will make maximum good use of the geostrategically crucial port of Bandar Abbas – straddling the Persian Gulf and the Gulf of Oman, at the crossroads of Asia, Africa and the Indian subcontinent.

Yet as much as it may be portrayed as a major diplomatic victory, it’s clear that Tehran will not be able to make full use of BRICS membership if western – especially US – sanctions are not totally lifted.

Pipelines and the “stans”

A compelling argument can be made that Russia and China might eventually fill the western technology void in the Iranian development process. But there’s a lot more that platforms such as the INSTC, the EAEU and even BRICS can accomplish.

Across “Pipelineistan,” the War of Economic Corridors gets even more complex. Western propaganda simply cannot admit that Azerbaijan, Algeria, Libya, Russia’s allies at OPEC, and even Kazakhstan are not exactly keen on increasing their oil production to help Europe.

Kazakhstan is a tricky case: it is the largest oil producer in Central Asia and set to be a major natural gas supplier, right after Russia and Turkmenistan. More than 250 oil and gas fields are operated in Kazakhstan by 104 companies, including western energy giants such as Chevron, Total, ExxonMobil and Royal Dutch Shell.

While exports of oil, natural gas and petroleum products comprise 57 percent of Kazakhstan’s exports, natural gas is responsible for 85 percent of Turkmenistan’s budget (with 80 percent of exports committed to China). Interestingly, Galkynysh is the second largest gas field on the planet.

Compared to the other “stans,” Azerbaijan is a relatively minor producer (despite oil accounting for 86 percent of its total exports) and basically a transit nation. Baku’s super-wealth aspirations center on the Southern Gas Corridor, which includes no less than three pipelines: Baku-Tblisi-Erzurum (BTE); the Turkish-driven Trans-Anatolian Natural Gas Pipeline (TANAP); and the Trans-Adriatic (TAP).

The problem with this acronym festival – BTE, TANAP, TAP – is that they all need massive foreign investment to increase capacity, which the EU sorely lacks because every single euro is committed by unelected Brussels Eurocrats to “support” the black hole that is Ukraine. The same financial woes apply to a possible Trans-Caspian Pipeline which would further link to both TANAP and TAP.

In the War of Economic Corridors – the “Pipelineistan” chapter – a crucial aspect is that most Kazakh oil exports to the EU go through Russia, via the Caspian Pipeline Consortium (CPC). As an alternative, the Europeans are mulling on a still fuzzy Trans-Caspian International Transport Route, also known as the Middle Corridor (Kazakhstan-Turkmenistan-Azerbaijan-Georgia-Turkey). They actively discussed it in Brussels last month.

The bottom line is that Russia remains in full control of the Eurasia pipeline chessboard (and we’re not even talking about the Gazprom-operated pipelines Power of Siberia 1 and 2 leading to China).

Gazprom executives know all too well that a fast increase of energy exports to the EU is out of the question. They also factor the Tehran Convention – that helps prevent and control pollution and maintain the environmental integrity of the Caspian Sea, signed by all five littoral members.

Breaking BRI in Russia

China, for its part, is confident that one of its prime strategic nightmares may eventually disappear. The notorious “escape from Malacca” is bound to materialize, in cooperation with Russia, via the Northern Sea Route, which will shorten the trade and connectivity corridor from East Asia to Northern Europe from 11,200 nautical miles to only 6,500 nautical miles. Call it the polar twin of the INSTC.

This also explains why Russia has been busy building a vast array of state-of-the-art icebreakers.

So here we have an interconnection of New Silk Roads (the INSTC proceeds in parallel with BRI and the EAEU), Pipelineistan, and the Northern Sea Route on the way to turn western trade domination completely upside down.

Of course, the Chinese have had it planned for quite a while. The first White Paper on China’s Arctic policy, in January 2018, already showed how Beijing is aiming, “jointly with other states” (that means Russia), to implement sea trade routes in the Arctic within the framework of the Polar Silk Road.

And like clockwork, Putin subsequently confirmed that the Northern Sea Route should interact and complement the Chinese Maritime Silk Road.

Russia-China Economic cooperation is evolving on so many complex, convergent levels that just to keep track of it all is a dizzying experience.

A more detailed analysis will reveal some of the finer points, for instance how BRI and SCO interact, and how BRI projects will have to adapt to the heady consequences of Moscow’s Operation Z in Ukraine, with more emphasis being placed on developing Central and West Asian corridors.

It’s always crucial to consider that one of Washington’s key strategic objectives in the relentless hybrid war against Russia was always to break BRI corridors that crisscross Russian territory.

As it stands, it’s important to realize that dozens of BRI projects in industry and investment and cross-border inter-regional cooperation will end up consolidating the Russian concept of the Greater Eurasia Partnership – which essentially revolves around establishing multilateral cooperation with a vast range of nations belonging to organizations such as the EAEU, the SCO, BRICS and ASEAN.

Welcome to the new Eurasian mantra: Make Economic Corridors, Not War.

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

Algeria: 60 years of endless support for the Palestinian cause

July 5, 2022

Source: Al Mayadeen Net + Agencies

By Ahmad Karakira 

Algeria has always demonstrated unconditional support for the country of Palestine and the Palestinian cause, which dates back to fighting “Israel” and helping Egypt claim back Sinai in the 1973 October War.

Algeria’s unconditional support for the Palestinian cause

On July 5, 1962, after 132 years of French colonialism, Algeria declared its independence. The Evian agreements of March 18, 1962, ended the war between France and the Algerian National Liberation Army (ALN), and a referendum of self-determination took place on the first of July, 1962.

The results of the referendum came in favor of transferring power from the French to the Algerian authorities on July 3, ending decades of occupation, settler colonialism, and massacres.

The date – July 5 – was deliberately chosen by the Algerian government in reference to July 5, 1830, when the city of Algiers was occupied by France.

The seven-year war between the French occupier and the Algerian resistance left around one million Algerian martyrs on the path of Algeria’s freedom and liberation.

Endless stories about heroic epic battles by the Algerian resistance against Western colonialism can be recounted on the 60th anniversary of Algeria’s independence.

However, this piece aims to shed light on Algeria’s endless support for Palestine, the Palestinian cause, and fellow Arab states against all forms of oppression and occupation since the north African country gained its liberation through resistance.

“We are with Palestinians, be they the oppressed or the oppressors”

To begin with, Palestinians supported the Algerian Revolution from 1954-1962 and showed solidarity through organizing fundraisers for Algeria.

Despite some Arab states shamefully signing normalization agreements with the Israeli occupation in exchange for some benefits, Algeria has strongly opposed such deals, considering normalization with the occupation as a betrayal to the Arabs and the Palestinian cause.

In the early 1970s, former Algerian President Houari Boumediene said his famous phrase, “We are with Palestinians, be they the oppressed or the oppressors.”

It is noteworthy that similar to the official Algerian stance on Palestine, Algerians, according to the Center for Middle Eastern Studies, oppose normalizing ties with the Israeli occupation with a 99% rate.

One would wonder about the secret behind Algeria’s unconditional support for the Palestinian cause.

Historically, Algeria has always been advocating the Palestinian cause and supporting fellow Arab states against the Israeli occupation.

In fact, after only five years of gaining its liberation from the French occupation, Algeria supported the Arab allies against “Israel” by sending troops and aircrafts to fight alongside the Arab states in the 1967 Six-Day War.

The Algerian army also played an important role during the 1973 October war.

Significantly, when Egypt signed the Camp David Agreement and established ties with the Israeli occupation, Algeria severed its ties with Egypt.

In addition, Algeria established close relations with the Palestine Liberation Organization (PLO), providing it with weapons, training its fighters during the 70s, and helping the PLO obtain observer status in the UN in 1974.

After the former US President Donald Trump’s administration, the UAE, and “Israel” revealed the so-called “Abraham Accords” in August, current Algerian President Abdelmadjid Tebboune stressed his country’s deep commitment to the Palestinian cause, affirming that Algeria deems Palestine as a sacred cause.

Algiers also harshly criticized the normalizing states (the UAE, Bahrain, Morocco, and Sudan). It also paid the price for its anti-normalization stance, as the US acknowledged the Moroccan sovereignty over Western Sahara after years of unresolved disputes and unachievable status.

In trying to understand the reason behind Algeria’s official and popular support for the Palestinian cause, Sami Hamdi, the Editor-in-Chief of the International Interest magazine, explained that “Algerians feel a deep resonance with the Palestinians who have been colonized for some 82 years and believe that whatever the difficulties, resistance will eventually succeed.”

In the same context, TRT had quoted Jalel Harchaoui, a Senior Fellow at the Geneva-based Global Initiative Against Transnational Organized Crime, as saying that Algeria’s “somewhat exceptional history makes resistance against colonial powers writ large a narrative crucially central to the Algerian state as we know it.”

Algeria’s participation in the 1973 October War

Aiming to restore the lands that “Israel” occupied during the 1967 Six-Day War – Sinai in Egypt and the Golan Heights in Syria – on October 6, 1973, Cairo and Damascus launched an attack on the Zionist entity. The war coincided with the holy month of Ramadan.

During that time, Algeria played a significant role in providing Egypt and Syria with Soviet weapons and bringing in troops to the Egyptian front to fight the Israeli occupation, despite its then-instable economic situation as a result of the pre-independence era of French colonialism.

In fact, then-Algerian President Houari Boumedienne reportedly flew to Moscow to secure military aid for the Egyptians and the Syrians.

In a reiteration of its role in supporting anti-colonialist movements, Algeria sent more than 2,100 troops, 815 non-commissioned officers, and 192 officers to Sinai. It also sent 96 tanks and over 50 fighters and bomber aircraft to Egypt, according to the Egyptian authorities.

Algiers also participated in the oil embargo imposed by the Arab members of the Organisation of Petroleum Exporting Countries (OPEC) on the US over its support of the Israeli occupation during the war, which led to significant price hikes around the world.

On October 17, Arab oil producers decided to increase the price of oil by 17% and cut oil production by 5%, vowing to “maintain the same rate of reduction each month thereafter until the Israeli forces are fully withdrawn from all Arab territories occupied during the June 1967 War, and the legitimate rights of the Palestinian people are restored.”

Sharon underestimated the power of Algerian forces

In the context of the 1973 October War, the former Chief of Staff of the Israeli occupation forces, David Eliezer, acknowledged in his released diaries that “Israel” lost this war as a result of the arrogance of then-Major General Ariel Sharon, who underestimated the power of the Algerian forces and thought that they wouldn’t stand a chance against the IOF forces, thinking that they would flee as soon as they set their eyes on Israeli tanks.

Eliezer said that 900 IOF soldiers were killed and 172 tanks were destroyed in just one day during the war.

On his part, the former Israeli Security Minister Moshe Dayan revealed that all the intelligence information showed that Algerians did not have weapons capable of intercepting the Israeli forces.

Dayan also said the Israelis received intelligence about a state of division between the Egyptians and the Algerians. The Israelis were surprised by the Algerian forces downing a giant US Lockheed C-5 Galaxy aircraft by a missile, which frightened the US Staff and frustrated the Nixon administration.

The former Israeli minister said the Egyptian forces deceived the Israeli forces, making them believe that the strategic Al-Adabiya port was not fortified enough. However, the Algerian forces were in charge of protecting the port.

One cannot but hail the role of Algeria in supporting the Palestinian cause and anti-colonial liberation movements, whether on the official or popular level. Despite the geographical distances separating Palestine from Algeria, Algerians believe that the two countries share the same pain, torture, grief, sorrow, and hopefully the same liberation to be achieved in the near future.

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Sitrep Operation Z: + consequences = petty Tabaquis howling

May 26, 2022

by Saker Staff

After the Russian forces took POPASNA, the pace increased. There are still battles, but the Russians are now rolling over everything else in the Donbas. The Ukrainians are being annihilated, more and more soldiers are refusing to fight, reports of mass surrenders pour in, and the Russian strategy of cauldrons and partial cauldrons is proving incredibly effective. It is a bloody war in that area exacerbated by the Ukrainian leaders because orders for a sensible retreat are not forthcoming.

Two videos today – both quite detailed:

This first video from Military Summary on Rumble, describes the logjam against sensible retreat.

This second video describes some of the very recent battles and how these brought the Ukraine to this point.  Very detailed and he draws his maps on the fly as he talks.

A few hours ago reports started filtering in of huge forces of the Russian Aerospace Forces passing over Lugansk towards the front, and powerful explosions thundered everywhere. The correspondent of “Russian Spring” rusvesna.su from the capital of the LPR reports that he sees this for the first time, a lot of combat aircraft and helicopters swept over the city in several waves. Of course we do not know yet the what, why and where of this, excepting the Russian MoD report of this morning tells the story of the increased pace.

Take a look at the numbers:

💥High-precision air-based missiles have hit 48 areas of AFU manpower and military equipment concentration, 2 artillery batteries, and 2 ammunition depots near Nikolaevka and Berestovoe in Donetsk People’s Republic during the day.

▫️1 Ukrainian electronic reconnaissance centre near Dneprovskoe, Nikolaev Region, has been destroyed, including 11 servicemen from the combat unit, as well as 15 foreign engineering specialists who arrived with security guards.

▫️In addition, 1 Osa-AKM anti-aircraft missile system launcher has been destroyed near Nikolaevka in Donetsk People’s Republic, and 1 radar of the Ukrainian S-300 anti-aircraft missile system near Chuhuev in Kharkov region.

✈️💥Operational-tactical and army aviation have hit 49 areas of AFU manpower and military equipment concentration, 2 mortar crews, as well as 1 depot of missile and artillery weapons and ammunition.

▫️The attacks have resulted in the elimination of more than 350 nationalists and up to 96 armoured and motor vehicles.

💥Russian air defence means have shot down 1 Ukrainian Mi-24 helicopter over Husarovka, Kharkov Region. 1 Ukrainian Air Force military transport aircraft delivering ammunition and weapons has been also shot down in mid-air near Kremidovka, Odessa Region.

▫️In addition, 13 Ukrainian unmanned aerial vehicles have been shot down near Zelenyi Gai in Kherson Region, Bolshie and Malye Prokhody, Gavrilovka, Veseloe in Kharkov Region, and Epifanovka and Kirovsk in Lugansk People’s Republic, including 2 Soviet-made Tu-143 Reis jets near Melovatka in Lugansk People’s Republic.

💥Missile troops and artillery have hit 62 command posts, 407 areas of AFU manpower and military equipment concentration, 47 artillery and mortar units at firing positions, as well as 3 ammunition depots.

▫️Units and military equipment of the Ukrainian Armed Forces’ 10th Mountain Assault Brigade, which arrived to reinforce the Ukrainian grouping in Donbass, have been destroyed during unloading near Pokrovsk railway station in Donetsk People’s Republic.

……………

Ukrainian General Staff says “The invaders are actively advancing in several directions at once.” — Specifically, the Russians are advancing simultaneously in Severodonetsk, Bakhmut, Avdeevsky, Novopavlovsk and Liman directions.

……………

We also had a short explanation of why the perceived slow down in the Russian operation. The slowdown of Russia’s military operation in Ukraine is intentional with a view to evacuating the population and avoiding casualties among civilians, Russian Defense Minister Sergey Shoigu said.  Russia’s Armed Forces are creating humanitarian corridors and announcing ceasefires to ensure the safe evacuation of residents from encircled settlements, Russian Defense Minister Sergey Shoigu explained, despite this approach stalling the progress of the country’s forces.  “Of course, this slows down the pace of the offensive, but it is being done deliberately to avoid civilian casualties,” he explained at a meeting of the Collective Security Treaty Organization (CSTO) Council of Defense Ministers.

Russian Security Council Secretary Nikolai Patrushev spoke on the Ukraine specifically and geopolitics:

▪️All the goals set by the President of the Russian Federation during the special military operation will be achieved, it cannot be otherwise. Russia is not chasing deadlines in the course of a special military operation in Ukraine.

The ideal scenario for US-led NATO is an endlessly smoldering conflict in Ukraine.

▪️Nazism must either be eradicated by 100%, or it will raise its head in a few years, and in an even uglier form.

▪️Ukraine, if it had remained an independent country, and not controlled from outside, “would have long ago expelled all Nazi evil spirits from its land.”

▪️Moscow will be obliged to respond to the entry of Sweden and Finland into NATO, which is a direct security threat to Russia. Finland and Sweden will be accepted into NATO, despite the objections of Turkey and Croatia, “because Washington decided so.”

▪️The West is today obscuring Russia’s contribution to the preservation of other states in different historical periods with all its might.

……………

The political and geopolitical situation is heating up and at the same time becoming more surreal.

They’re even dusting off Kissinger at Davos.  (Note Pepe Escobar’s ascerbic entry to his telegram channel at the end.)**

There is a small window of opportunity to wind down the armed conflict in Ukraine and find a peace settlement, former US secretary of state Henry Kissinger has told a gathering of Western elites in Davos, Switzerland. Beyond that, Russia may break from, the rest of, Europe for good and become a permanent ally of China, he said on Monday during a speech at the World Economic Forum.

“Negotiations on peace need to begin in the next two months or so, [before the conflict] creates upheavals and tensions that will not be easily overcome,” the 98-year-old veteran diplomat said of the crisis. The outcome will determine the rest of Europe’s relationships with Russia and Ukraine alike, he said. “Ideally, the dividing line should return to the status quo ante,” he said.

“I believe pursuing the war beyond that point would turn it not into a war about the freedom of Ukraine, which had been undertaken with great cohesion by NATO, but into a war against Russia itself,” he added.

There are more voices from Europe asking for a peace process to start but first, the Ukrainian response:

Ukrainian presidential advisor Alexey Arestovich resorted to obscene language to criticize those in the West urging Kiev to cede part of the country’s territory to Russia for the sake of peace.

“Go f**k yourselves with such proposals, you dumb f**ks, to trade Ukrainian territory a little bit! Are you f**king crazy? Our children are dying, soldiers are stopping shells with their own bodies, and they are telling us how to sacrifice our territories. This will never happen,” Arestovich said in an interview on Wednesday.

Soros calls for Putin’s defeat:  George Soros told the World Economic Forum in Davos the West needs a quick victory over Russia in Ukraine so it can focus on climate change

The process of ‘disowning’ the Ukraine has started.

Gen. Milley notes that the US has reopened military-to-military level talks with the Russians. His call to his Russian counterpart last week was “important” and it was “purposeful”

Of course, the talk of another peace plan is not born of care for people or human rights or democracy or deep held care for the Ukrainian people.  It is driven by desperation and is a desperate grasp at avoiding a psychological defeat bigger than Afghanistan.

TASS/ Russia’s State Duma Speaker Vyacheslav Volodin took to his Telegram channel to highlight that the US and its partners do not plan to provide real assistance to Ukraine.

  • Ukraine will only get 15% of the $40 billion promised by the US, he said.
  • “Washington and Brussels do not really intend to help Ukraine, or solve its economic and social issues. They only need Ukraine to fight Russia till the last Ukrainian,” Volodin said.
  • According to the recent aid to Ukraine legislation signed by President Joe Biden, 35% of the $40 billion is going to finance the US Armed Forces, he explained. Meanwhile, 45.2% of that amount is set to be spent on other countries, not Ukraine, while another 4.8% will be earmarked to support refugees, and restore the US diplomatic mission in Ukraine. “Ukraine will only receive 15% of the allotted sum,” the speaker revealed.
  • But Ukrainians will have to pay off the whole sum, he said. The US is aware that Kiev will not be able to service the debt in the future. “That is why they are seizing Ukraine’s last reserves, including grain, which is what we are seeing right now”.

Quo Vadis Ukraine?

A list of those that want a piece of the pie is shaping up. Of course, Poland is not suddenly in love with the Ukraine without a reason.  They want their piece of the land pie. I suspect Hungary is also not innocent in this matter. Will the Ukraine be apportioned? Or will it lose its nation-state status completely, and cease to exist? Nobody knows because nobody knows the Russian plan. In Europe and the US/NATO, fear is taking hold. Nobody knows where Russia plans to stop after liberating the two new Republics, Donesk and Luhansk. Is this the moment that they will choose to push NATO back to its agreed borders?

Maria Zakharova noted that these peace proposals that are appearing (talking about the Italian one specifically) could show that Rome is perhaps “beginning to think about the depressing consequences of the military psychosis that was caused by the reaction of the West to the special military operation of Russia in Ukraine” – and the supposed plan could be an attempt “to offer some alternatives to the current escalation, which threatens to develop into a full-scale military conflict between Russia and NATO.”

The deputy chair of the Russian Security Council, former Russian President Dmitry Medvedev, said that “any peace proposal built purely in the interest of NATO and the Western world order should simply be ignored.”

“Or rather, their authors should be told to go in a certain direction,” Medvedev said.

Russia is ‘building back better’ and major reconstruction is starting as well as President Putin signed a decree relaxing rules for granting Russian citizenship to residents of Ukraine’s Zaporozhye and Kherson Region.

The amendments are added to the decree that previously introduced a similar procedure for residents of the Donetsk and Lugansk People’s Republics (DPR and LPR).

Russia continues to do business.  Delegations from over 90 countries have confirmed their participation in the 25th edition of the St. Petersburg International Economic Forum (SPIEF) scheduled for June.  Russia and Iran also agreed to implement the MIR payment card system in Iran.

That is it for today. Enjoy your discussion and careful on the Ukie propaganda. It is still everywhere.

**Escobar Telegram Channel:

THE PLIGHT OF DR. K – IN ONE MINUTE

War criminal Kissinger’s performance at Davos should be summed up as yet another massive failure of his master’s trademark Divide and Rule.

Ukraine/404 has always been a sort of Rubicon in terms of downsizing Russia (think Brzezinski).

It consumed A LOT of capital – physical and political. It was THE red line – success or failure – setting the stage for the triumph of the NWO and its top secretion, The Great Reset.

Kissinger – even as a mere Rockefeller messenger boy – was at the center of this racket for DECADES. It was Kissinger, under Rockefeller’s orders, that groomed cypto Dr. Evil Klaus Schwab to build the WEF and the Davos ethos.

Even if Davos is a mere outlet for the people who really run the show, the WEF remains the premier Influence Scoundrels club on the planet bent on forcing their agenda all across the spectrum. Still toxic after all these years. Yet now even Kissinger knows it’s bound to fail.

The US wants to keep its status as a superpower at any cost

May 14, 2022

Source

By Zamir Awan

The US is desperate to sustain its hegemony and supremacy. It is taking extreme measures and can go to any extent to keep its hegemony and supremacy. Its Petrodollars policy has been playing a significant role, but, facing challenges recently and the US is getting nervous and crazy.

The petrodollar is any U.S. dollar paid to oil-exporting countries in exchange for oil. The dollar is the preeminent global currency. As a result, most international transactions, including oil, are priced in dollars. Oil-exporting nations receive dollars for their exports, not their own currency.

In addition, most oil-exporting nations own their oil industries. That makes their national income depends on the dollar’s value. If it falls, so does their government’s revenue. As a result, most of these oil exporters also peg their currencies to the dollar. That way, if the dollar’s value falls, so does the price of all their domestic goods and services. That helps these countries avoid wide swings in inflation or deflation.

The petrodollar system is tied to the history of the gold standard. After World War II, the United States held most of the world’s supply of gold. It agreed to redeem any U.S. dollar for its value in gold if the other countries pegged their currencies to the dollar. Other countries signed this deal at the 1944 Bretton Woods conference. It established the U.S. dollar as the world’s reserve currency.

On February 14, 1945, President Franklin D. Roosevelt initiated the alliance with Saudi Arabia.1 He met with Saudi King Abd al-Aziz. The United States built an airfield at Dhahran in return for military and business training. This alliance was so critical that it survived subsequent years of differences of opinion over the Arab-Israeli conflict.

The 1945 agreement between the United States and Saudi Arabia cemented the relationship between the dollar and oil. The petrodollar was born. In 1971, U.S. stagflation prompted runs on the dollar. Many countries asked to redeem their U.S. dollars for gold. To protect the remaining U.S. gold reserves, President Richard Nixon removed the dollar from the gold standard. As a result, the value of the dollar plummeted. That helped the U.S. economy as its export values also decreased, making them more competitive. A falling dollar hurt oil-exporting countries because contracts were priced in U.S. dollars. Their oil revenue dropped along with the dollar. The cost of imports, denominated in other currencies, increased.

In 1973, Nixon asked Congress for military aid to Israel in the Yom Kippur War. The newly-formed Organization of the Petroleum Exporting Countries halted oil exports to the United States and other Israeli allies. The OPEC oil embargo quadrupled the price of oil in six months. Prices remained high even after the embargo ended. In 1979, the United States and Saudi Arabia negotiated the United States-Saudi Arabian Joint Commission on Economic Cooperation. They agreed to use U.S. dollars for oil contracts. The U.S. dollars would be recycled back to America through contracts with U.S. companies. These companies improve Saudi infrastructure through technology transfer.

The United States uses the power of petrodollars to enforce its foreign policy. But many countries don’t fight back. They are afraid it would mean the collapse of the petrodollar system.

However, there was strong thinking against the Petrodollar concept and few Arab leaders declared to trade oil; in local currencies or any other currency, de-linking from dollars. The leading role was played by President Sadden Hussain, Col. Qaddafi of Libya, and the Syrian President. The US has punished them and changed the regimes in such countries.

China called for a replacement of the U.S. dollar as a global currency. Although, it is one of the largest foreign holders of the dollar. China influences the U.S. dollar by pegging its currency, the yuan, to it. China has signed a currency swap agreement with more than twenty countries and already trading with them in Yuan or local currencies. China is importing oil and gas from a few Arab nations in Yuan.

Russia has demanded to settle Gas bills in Rubles and a few European countries are already agreed to pay in Rubles. EU has also no objections if any member state pays in Rubles instead of Dollars. Russia is trading with few other nations in Rubles or local currencies instead of Dollars.

Russia has slashed the value of the dollar and the euro by 30% in a jiffy by linking the Russian Ruble to the value of gold and declaring to supply oil only against the Russian Ruble. Russia’s move means that now the entire world, especially Western Europe and Japan will buy the Russian Ruble by selling dollars in huge quantities, as the Russian Ruble has become the world’s most stable currency overnight after being linked to gold.

America, which does not mass-produce anything other than weapons and ammunition, is caught in a terrible economic crisis. In the event of a shrinking dollar, the US cannot cover its 306 billion budget deficit. This will cause severe unemployment and adversely affect the social safety net. This is the economic atom bomb that Joe Biden was aware of when he was talking about the removal of Putin in Poland.

Putin orders European countries to make payments of Gas and Oil in terms of Rubble and open the account in Russian banks. It will weaken the American sanctions on Russia. Although Russia has not retaliated against the American sanctions so aggressively, introduced its policies to counter the sanctions successfully.

The rapid decline of the US has made its leadership nervous and crazy. They are taking all possible measures to sustain their hegemony and supremacy. Even, though the Ukraine war is only a phenomenon, the objective is to maintain status-co. unfortunately, the US is not interested in global peace, stability, or saving human lives. The only priority is to maintain its hegemony and supremacy. To achieve this goal, the US can sacrifice Ukraine, Europe, or any heavy price. The US policy in the Ukraine war is to add fuel to fire, there is no will to stop the war, ceasefire, or save human lives. They are providing weapons, and arming civilians to lead toward a prolonged civil war, to bleed Russian and keep many countries over-engaged and let the US maintain its monopoly and the upper hand.

Russia was reluctant to attack Ukraine and has been observing restrains for quite along. Showing its genuine security concerns and alarming the US with serious consequences, but, the US kept its policy to encircle Russia.

The haphazard joining of NATO by Finland and the defense agreement with the UK is also equally a genuine threat to Russia. Russia and Finland share a long common border. Joining NATO, means, the deployment of NATO forces along the Russian border, which is a direct threat. Joining NATO by other Scandinavian nations is also a serious and matter of deep concern for Russia.

It seems the US has only one priority which is to sustain its position in the geopolitics, it ignores the genuine concerns of other nations. We are scared of the future of geopolitics and afraid the days to come may be harsh for humankind.

In history, many nations rose to the status of superpowers and ruled the world for a certain period of time, then, meltdown and passed the status of superpower to other rising nations. Like Roman Empire, Ottoman Empire, Greek Empire, British, and French empires, etc. But, The US is not willing to accept the natural cycle of superpowers and can go to any extent to keep its status of superpower forever, which is not rational nor natural, it might cause irrecoverable loss to humankind. Unfortunate!


Author: Prof. Engr. Zamir Ahmed Awan, Sinologist (ex-Diplomat), Editor, Analyst, Non-Resident Fellow of CCG (Center for China and Globalization). (E-mail: awanzamir@yahoo.com).

Is the Petrodollar swaying?

March 20, 2022

Source

By Ghassan Kadi

The Russian special operation in Ukraine has created the potential for an avalanche of geopolitical and geo-economic changes. Some of them were bound to happen; just waiting for a trigger factor.

Is the end of the Petrodollar one of them?

To understand the importance of the Petrodollar, we need to go back to its origin and definition.

Many articles and definitions have been given over the years to explain what the Petrodollar is all about; but none in my opinion comes close to the one explained by Mamdouh Salameh. Back in 2015, he predicted that the Petrodollar might have outlived its use-by date. His prediction is perhaps now outdated, but that aside, an extract of the abstract of his article outlines the definition and the importance of the Petrodollar for the US economy

‘The Petrodollar came into existence in 1973 in the wake of the collapse of the international gold standard which was created in the aftermath of WWII under the Britton Woods agreements. These agreements also established the US Dollar as the reserve currency of the world. The Nixon Administration understood that the collapse of the gold standard system would cause a decline in the global demand for the US Dollar. Maintaining demand for the US Dollar was vital for the United States’ economy. So, the United States under Nixon struck a deal in 1973 with Saudi Arabia.

Under the terms of the deal, the Saudis would agree to price all of their oil exports in US Dollar exclusively and be open to invest their surplus oil proceeds in US debt securities. In return, the United States offered weapons and protection of Saudi oil fields from neighboring countries including Israel. For the Americans, the Petrodollar increases demand for the US dollar and also for US debt securities and allows the US to buy oil with a currency it can print at will. In 1975, all of the OPEC nations agreed to follow suit. Maintaining the Petrodollar is America’s primary goal’.

Do you get the picture?

The Petrodollar was meant to be a win-win agreement in which America propped up its economy, and in return supplied Saudi Arabia with security.

As time went by, the deal became increasingly one-sided, one in which Saudi Arabia was getting the spiky end of the pineapple. The Saudis have been feeling shafted for a long time, but they did not have enough intestinal fortitude to stand up and show their dismay to Uncle Sam.

When America asked old-school Saudi royals to jump, they asked how high. Love him or hate him, young Saudi Crown Prince Muhamed Bin Salman (MBS) is different.

Over the last few years, I have written many scathing articles about MBS’s character, ambitions, thirst for power, sneaky behind-the-scenes deals with Israel, but the biggest black mark against him will always be his war on Yemen. I will not suddenly make a 180 degree turn and start praising him. But credit must be given when credit is due.

MBS happened to rise to power on the eve of Saudi Arabia’s failure in Syria. For fairness, this was not a war he started.

When he took control, Saudi Arabia had already lost its war in Syria, its biggest ally in Lebanon (Hariri) proved to be a wimp and a hopeless ally despite all the support and bottomless funds he received in order to put Hezbollah under control. In Yemen, the Houthis had already taken control of the capital Sanaa. Iran was moving in on Saudi Arabia on 3 fronts; or at least this was how he perceived it.

This is not to forget the oil price war that Saudi Arabia waged on Russia. It is difficult to put all of those events in exact chronological order because they are all interwoven and happened almost concurrently. Back in 2016, Saudi Arabia decided to increase its oil production in order to drop the crude oil price and put pressure on Russia in Syria. The plan backfired and only resulted in a huge slump in the price of oil, and when MBS tried to reverse that decision and bring the crude price back up again, he was unable to.

MBS inherited a Saudi Arabia that was teetering on the edge. He had few options to restore its image and stature. It faced bankruptcy and for the first time since its oil boom nearly a whole century ago, it fell into debt and he took drastic domestic spending cut measures.

He had to do something.

His American allies during the Obama Administration convinced him that defeating the Houthis was going to be a walk in the park. MBS was led to believe that his venture in Yemen will be a swift blitz, and he gave it a name to that effect; Operation Decisive Storm.

The last thing that MBS wanted was a letdown from his American allies.

The Obama Administration however proved to be either unable or unwilling to provide him with what it took to win that war.

Trump, on the other hand, made his first overseas visit as a President to Saudi Arabia. He reassured the Saudis of America’s adherence to its obligations of protecting them and canceled Obama’s nuclear deal with Iran.

But the tables turned later on when Biden went further than Obama, making a 180-degree turn. He didn’t only threaten to cut off arms supplies to Saudi Arabia, but openly said that he is also desirous to resume talks with Iran in an attempt to resurrect the nuclear deal. In effect, Biden has breached the 1973 Petrodollar agreement and which clearly stipulates that the USA must protect Saudi Arabia.

A couple of weeks short of the seven years anniversary, nothing can excuse MBS for putting his ego before the lives and welfare of Yemeni people. That war has raged on for so long and created massive human tragedies.

So how do the events in Ukraine come into the picture?

With the global repercussions of the Russian operation in Ukraine reverberating all over the world, MBS is eyeing Uncle Sam, vowing that it is pay-back time.

America has actually requested ‘friendly’ countries to condemn the Russian action. Thus far, some, including Saudi Arabia and the UAE, have refrained from responding. This is an unprecedented Saudi stand.

In my previous article, I predicted that America’s sanctions against Russia would backfire. But, is MBS’s stand now related to the sanctions against Russia? The simple answer is yes.

America does not expect MBS to only condemn Russia and mirror the sanctions, but it also expects him to pump more oil into the global market in order to meet the shortfall created by the sanctions.

MBS is not playing ball the way America wants him to play. He is refusing to condemn Russia, thus far refusing to lift oil production. But most seriously, he is discussing with China doing oil transactions in the Yuan (Renminbi) instead of the USD.

Whilst the talks are not about doing all oil transactions in Yuan, it is however the beginning of a new trend that may see the eventual end of the Petrodollar. This is the first serious nail in its coffin.

If the Petrodollar collapses, quantitative easing (ie printing money) will constitute a more serious problem for the American economy.

Whilst writing the previous above-mentioned article, I did not expect that events were going to happen so quickly and that cracks alluding to the fall of the USD as the single global reserve currency were going show in less than a week. But here we are. The first steps have already been taken.

MBS seems to be maturing enough to know how to play the game of the big boys. What is really pertinent is that the so-called Petrodollar, and what is left of its future, rest in his hands; and America has no say in this. Even as I finalize this article, news of a USD collapse is already being reported on the mainstream media. With the deployment of the Kinzhal missile yesterday, the first-ever use of hypersonic weapons in combat, we can surely be certain that the changes we are witnessing now, economic or military, are not ones that the West ever desired or envisaged.

Raeisi Takes Oath of Office as Iran’s 8th President

By Staff, Agencies

After having his mandate endorsed by Leader of the Islamic Revolution His Eminence Imam Sayyed Ali Khamenei, Sayyed Ebrahim Raeisi has taken the oath of office to be officially inaugurated as the eighth president of the Islamic Republic of Iran.

The swearing-in ceremony was held at the Iranian parliament on Thursday afternoon, attended by high-ranking Iranian civil and military officials as well as a great number of foreign dignitaries from more than 70 countries.

The ceremony started with a speech by Iran’s Parliament Speaker Mohammad Baqer Qalibaf followed by an address delivered by head of Iran’s Judiciary Gholamhossein Mohseni Ejei.

After speeches were delivered by heads of the Judiciary and Legislature, Ebrahim Raeisi took to the podium to be sworn in as Iran’s eighth president following the Islamic Revolution of 1979.

During the oath-taking ceremony, Raeisi read out the text of the oath, which says, “I, as the President, upon the Holy Qur’an and in the presence of the Iranian nation, do hereby swear in the name of Almighty God to safeguard the official Faith, the system of the Islamic republic and the Constitution of the country; to use all my talents and abilities in the discharge of responsibilities undertaken by me; to devote myself to the service of the people, glory of the country, promotion of religion and morality, support of right and propagation of justice; to refrain from being autocratic; to protect the freedom and dignity of individuals and the rights of the nation recognized by the Constitution; to spare no efforts in safeguarding the frontiers and the political, economic and cultural freedoms of the country; to guard the power entrusted to me by the nation as a sacred trust like an honest and faithful trustee, by seeking help from God and following the example of the Prophet of Islam and the sacred Imams, peace be upon them, and to entrust it to the one elected by the nation after me.”

Addressing the inaugural ceremony, Iranian Parliament Speaker Mohammad Baqer Qalibaf first welcomed the Iranian and foreign guests of the ceremony.

Iran’s top diplomat then focused on the problems facing the country and the nation in his speech, especially economic problems, stressing the importance of taking decisive steps to solve people’s problems without bringing any excuses.

“We have entered a new phase of management in the country. The [Iranian] people, through their participation in the parliamentary and presidential elections, gave us the opportunity to solve people’s problems, particularly those problems that are nagging the underprivileged and middle classes, in order to prove that a Jihadi [strong and relentless] managerial system is the solution to all material and spiritual problems in the country,” he said.

Iran’s parliament speaker emphasized the importance of boosting the efficiency and accountability in the country to make progress during the new phase of governance, saying that all Iranian officials are duty-bound to restore the economic stability, hope and cheerfulness to the country and its people.

The administration shoulders the main responsibility in this regard because it possesses the highest executive capacities of the country, Qalibaf said, adding, however, that synergy and cooperation among all branches of the government will play a leading role in solving the country’s problems.

“We know that the enemy’s threats and sanctions have created difficulties in the country’s management, but there are also considerable God-given, popular, economic and international capacities that can help us overcome these challenges,” the top Iranian parliamentarian pointed out.

Addressing the ceremony, Mohseni Ejei expressed the readiness of the Judiciary to help the administration fight against corruption.

According to the Constitution, he added, the president is the highest ranking official in the country after the Leader and shoulders the responsibility to execute the Constitution except for those affairs relating to the Leader.

He wished success for the president in fulfilling such an important responsibility in cooperation with other branches of the government, the elite and the public.

He expressed hope that Raeisi would take swift steps to solve the people’s problems at the earliest, eliminate corruption and discrimination and amend complicated administrative structures.

“Iran’s Judiciary will be more serious than ever in the fight against corruption,” Mohseni Ejei said.

According to Seyyed Nezamoddin Mousavi, the spokesman for the Parliament’s presiding board, long lists of foreign officials and political figures have accepted Iran’s invitation to attend the event despite the COVID-19 pandemic.

More than 100 officials from 73 countries took part in Raeisi’s inauguration ceremony, including 10 heads of state, 20 parliament speakers, 11 foreign ministers and 10 ministers, as well as special envoys, deputy parliament speakers and chairmen of parliamentary commissions and parliamentary delegations.

A high-level delegation from the European Union [EU], led by the Deputy Secretary General of the European External Action Service Enrique Mora, has participated in Raeisi’s inauguration. Mora is accompanied by Stephan Klement, head of the EU delegation to the international organizations in Vienna, and Head of Task Force European Union Bruno Scholl.

Afghanistan’s President Ashraf Ghani is also taking part in Raeisi’s swearing-in ceremony.

A high-ranking delegation representing the Palestinian Hamas movement also arrived in the Iranian capital at dawn Thursday to attend the inauguration of president-elect Ibrahim Raeisi. The Hamas delegation is led by head of the movement’s political office, Ismail Haniyeh.

Syrian Parliament Speaker Hammouda Sabbagh is also present at new Iranian president’s inauguration ceremony, representing the Arab country’s President Bashar al-Assad.

The heads of 11 international and regional organizations and the representative of the UN chief; officials from the Inter-Parliamentary Union [IPU], including its President Duarte Pacheco; the Economic Cooperation Organization [ECO]; the Conference on Interaction and Confidence-Building Measures in Asia [CICA] and the D-8 Organization for Economic Cooperation also known as Developing-8 are also present at the event.

The Organization of the Petroleum Exporting Countries [OPEC]’s Secretary General Mohammed Sanusi Barkindo, President of Iraq’s semi-autonomous Kurdistan Region Nechirvan Barzani and Serbia’s Parliament Speaker Ivica Dacic are among the guests at the inauguration ceremony.

Some 170 domestic and foreign journalists have been invited to provide coverage of the event.

Saudi Arabia and the UAE: When crown princes fall out

Andreas Krieg

6 July 2021 

Dr. Andreas Krieg is an assistant professor at the Defence Studies Department of King’s College London and a strategic risk consultant working for governmental and commercial clients in the Middle East. He recently published a book called ‘Socio-political order and security in the Arab World’.

The growing divergence of interests between the two neighbours has created serious cracks in the thin veneer of their once-hailed ‘strategic entente’

Abu Dhabi Crown Prince Mohammed bin Zayed meets Saudi Crown Prince Mohammed bin Salman in Jeddah in 2018 (Bandar al-Jaloud/Saudi Royal Palace/AFP)

They were the Gulf power couple of the Trump era: the two crown princes and de facto rulers of the UAE and Saudi Arabia shook up the region, imposing their will on their neighbours.

Ever since Abu Dhabi strongman Mohammed bin Zayed (MBZ) took Mohammed bin Salman (MBS) under his wing in 2015, the latter did not seem bothered at being framed as the former’s protege. The notion in Riyadh was that Abu Dhabi’s model of authoritarian liberalisation could be one to emulate, bringing the kingdom from the Middle Ages into the 21st century. 

As MBS now sits more firmly in the driver’s seat in Riyadh, the honeymoon period between the crown princes is certainly over

But over the past two years, it has dawned on MBS’s inner circle that the assumed ally next door was not interested in creating win-win situations for both states. Rather, the UAE’s assertive zero-sum mentality – emboldened by former US President Donald Trump’s laissez-faire Middle East policy – often came at the expense of Saudi interests.

The rise of the UAE as arguably the most powerful Arab state over the past decade has only been possible because Abu Dhabi ruthlessly pursues its own interests, with little regard for Riyadh’s reputational struggle in Washington, security concerns in Yemen, urgent need for economic diversification and existential dependence on stable oil prices. 

Since 2019, the growing divergence of interests between the two neighbours has created serious cracks in the thin veneer of their once-hailed “strategic entente”. The relationship between Riyadh and Abu Dhabi in recent years has been underwritten by ideological synergies over the UAE’s grand strategic counterrevolutionary narratives, including securitising political Islam, the Muslim Brotherhood and civil society more widely.

While these synergies remain, the other factor that has traditionally sustained this bilateral relationship – the personal ties between MBZ and MBS – has suffered, as the leader-to-leader relationship has noticeably cooled since the election of US President Joe Biden

Buying political credit

While the two leaders previously cemented their “bromance” with joint hunting trips, official state visits and phone calls, according to press releases, MBS and MBZ have spoken only once since the Trump era came to an end. It became clear that under Biden, Washington would withdraw its carte blanche for Riyadh and Abu Dhabi to do as they pleased in the region. Both needed to buy credit with the new administration and the Democrats in Washington.

Instead of featuring as the bullies in the region, both MBS and MBZ needed to reframe their image as more constructive players, eager to support the Biden administration’s soft-handed regional policy of leading from behind.  

When Trump got elected in 2016, MBZ personally visited the Trump team in New York, lobbying for his protege MBS as the next king. Four years later, with a Democrat elected president, the UAE is noticeably trying to create distance between itself and the Saudi leadership. Any affiliation with MBS is seen as potentially tainting Emirati efforts to turn the country’s image around.

US President Donald Trump shakes hands with MBS at the 2019 G20 Summit in Osaka, Japan (Bandar al-Jaloud/Saudi Royal Palace/AFP)
US President Donald Trump shakes hands with MBS at the 2019 G20 Summit in Osaka, Japan (Bandar al-Jaloud/Saudi Royal Palace/AFP)

Under pressure for its joint ventures with Moscow in Libya, its mercenary adventures in Yemen, and its rise as a force multiplier for China’s global information power, Abu Dhabi has demonstrated that its zero-sum mentality means it is willing to throw a “strategic ally” under the bus. 

The war in Yemen, which the UAE helped to frame as “Saudi-led”, was the first arena in which the Saudi leadership learned that Emirati policy was ruthless when it came to preserving the UAE’s interests, even at the expense of Saudi Arabia.

Some in MBS’s circles have, according to sources close to the palace, raised concerns that MBZ might have pushed Saudi Arabia into risky adventures in order to create a shield behind which the UAE could consolidate its gains in Yemen’s south.

While Saudi Arabia had to bear the operational and reputational burdens of the costly war against the Houthis, Abu Dhabi secured its foothold along Yemen’s strategically important coastline via its surrogate, the Southern Transitional Council.  

Left out in the cold

The UAE’s comet-like rise amid the regional power vacuum left by a disengaging US created the illusion in Abu Dhabi that, as the new middle power in the Gulf, it would not need to yield to anyone. The ongoing standoff between the UAE and Saudi Arabia within the Organization of the Petroleum Exporting Countries (OPEC) shows that Abu Dhabi is confident to stand its ground.

The UAE will not compromise on national interests, even if it comes to the detriment of Saudi Arabia, as with Abu Dhabi’s blatant ignoring of OPEC output quotas.

On the issue of the Qatar blockade, where MBZ led and MBS willingly followed, the UAE showed very little willingness to compromise. Although the reputational and political costs of the ongoing blockade continued to rise for both – especially in Washington – Abu Dhabi was willing to sustain it in the interests of its counterrevolutionary crusade.The Saudi-Emirati axis: United against Gulf unity

In the end, Saudi Arabia broke ranks and let pragmatism prevail. Ending the blockade was a first sign of Saudi leadership in the Gulf under MBS, which Riyadh viewed as a win-win opportunity for the blockading quartet and for Qatar. Abu Dhabi, on the other hand, was deeply concerned about the pace and depth of normalisation, which not only pressured the Emiratis to fall in line, but allowed MBS to reap the positive messages.

This was just the beginning. Left out in the cold time and again by its neighbour, Saudi Arabia has since embarked on its own more assertive strategy for diversification. The kingdom’s new economic policies, aiming to attract investments from multinationals based in the UAE, directly target the success story of Dubai, which has been in economic limbo since the start of the Covid-19 pandemic. 

The unhealthy nature of this competition means that it becomes ever-more difficult to create win-win situations. And as MBS now sits more firmly in the driver’s seat in Riyadh, the honeymoon period between the crown princes is certainly over.

As the gloves come off, MBS is eager to show that Abu Dhabi has been punching above its weight, and that there are limits to smart power in compensating for lack of size. Nonetheless, their relations remain underwritten by ideological synergies over fears of political Islam, the Muslim Brotherhood and civil society. It remains to be seen whether this is enough to prevent another Gulf crisis.

The views expressed in this article belong to the author and do not necessarily reflect the editorial policy of Middle East Eye.

This article is available in French on Middle East Eye French edition.

China’s Communist Party – A 100-Year Legacy of Success and a Forward Vision

June 30, 2021

China’s Communist Party – A 100-Year Legacy of Success and a Forward Vision

By Peter Koenig with permission and written for China’s Chongyang Institute of the Renmin University in Beijing – for the 100 Anniversary – 1 July 2021 – of China’s Communist Party.

The legendary Chinese success story goes hand-in-hand with the evolution of the Communist Party of China (CPC) and China’s Communist Revolution that began in 1945. The foundation of the CPC on 1 July 1921 signaled the end of some 200 years of China’s oppression by foreign powers, to western invasions and exploitation, grabbing China’s territories and especially her rich natural resources – and to gain trading advantages, including from the riches of China’s resources and crafts.

Background and History
About two centuries ago, foreign interferences were dominated by illegal Opium Trade that eventually culminated in two Opium WarsIn the 18th and 19th centuries Western countries, mostly Great Britain, exported opium grown in India to China. In turn, the Brits used the profits from opium sales largely to buy Chinese luxury goods, like porcelain, silk, and tea. These goods were in high demand in the west.

Much of this opium export was illegitimate and created widespread addiction throughout China, causing serious social and economic calamities. The wars were triggered by China’s attempting to suppress the trade, that grew tremendously from about 1820 onwards. In early 1839 the Chinese government confiscated and destroyed more than 20,000 chests of opium (chest = about 63.5 kg) — some 1,400 tons of the drug—that were warehoused at Canton, Guangzhou Province by British merchants. By 1838 imports had grown to some 40,000 chests annually.

In July 1839, British sailors killed a Chinese villager. The British government refused to turn the accused over to be judged in Chinese courts. The Brits did not wish its subjects to be tried in the Chinese legal system, and refused to turn the accused men over to the Chinese courts.

This conflict prompted the first Opium War (1839 – 1842), fought between the UK and the Qing dynasty (1644 to 1912), with the British objective to legalize the opium trade. This did not happen, which led to the Second Opium war (1856 – 1860), also called the Anglo-French war. But China did not win the wars and the nefarious addiction-causing trade continued for several more decades.

China’s British-forced war-concession to the winner, was to hand over the island of Hong Kong to British administration. In addition, China had to legalize the opium trade and concede a number of trading ports to the Brits, as well as opening travel for foreigners into China and granting residencies for Wester envoys to China. And an important concession for a predominantly Buddhist country was that China had to grant freedom of movement to Christian missionaries throughout China.

The wars and the resulting multiple concession of China, prompted an era of unequal treaties between China and foreign imperialist powers, aka, the UK, France, Germany, the United States, Russia and Japan. China was forced to concede many of her territorial and sovereignty rights. These encroachments on Chinese sovereignty weakened and eventually brought down the Qing dynasty, leading to a revolution on October 10, 1911, bringing the Kuomintang (KMT) to power. They are also referred to as the Chinese National Party and founded the Republic of China on 1 January 1912. 

The founder of the KMT and initial ruler of China after the 1911 revolution, Sun Yat-sen attempted to modernize China along western lines and values – which was not accepted by the Chinese people. The next couple of decades of KMT rule were rather chaotic times, during which Sun Tat-sen was unable to control China which fractured into many regions controlled by warlords. To strengthen its position and to gain back control of the country, the KMT was seeking alliance with the new fledgling Communist Party, forging the first United Front, but was still unable to control all of China. After Sun Yat-sen died in 1925, Chiang Kai-shek (1887–1975) took over and became the KMT strong man.

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The creation of the Communist Party of China on 1 July 1921, was deeply marked by the preceding history. One of the CPC’s key objective was that China would never again be dominated by wester colonial powers. The CPC became a force to be reckoned with, as it grew stronger by increased solidarity forged throughout communities and regions of China which all pursued the same goal – independence from foreign colonization and exploitation and the creation of a sovereign communist China, with a sovereign socialist economy.

With the support of the west, notably the UK and the United States, the KMT-led government of the Republic of China (ROC) entered in 1927 into a civil war with the forces of the CPC. The war was intermittent, but basically played out in two major phases, until 1949. The first phase can be described as a war of attrition. It lasted until 1937, when due to the Japanese invasion of China, KMT-CPC hostilities were put on hold. Instead, a KMT-CPC alliance fought and defeated the Japanese. This was also called the War of Resistance against Japanese Aggression(1937–1945).

The KMT – CPC civil war resumed with the victory over the Japanese forces, and entered its second, but most violent and decisive final phase from 1945 to 1949. This phase is also called the beginning of the Chinese Communist Revolution, during which the CPC gained the upper hand and finally defeated the Kuomintang on the Chinese mainland.

The leader of KMT (1928 – 1975), Chiang Kai-shek, fled the mainland and established himself and the KMT in what was originally called by her Portuguese discoverers in 1542, Ilha Formosa (“beautiful island”), located north of the Philippines and the South China Sea, some 180 km off the Southeastern coast of China.

In 1895 Formosa became “Taiwan” meaning “foreigners” referring to the early Chinese settlers on the island. Today Taiwan is again integral part of China, since the Treaty of San Francisco (WWII Allied Forces Peace Agreement with Japan, signed on 8 September 1951), when Japan ceased its occupation of Taiwan, returning the island back to China.

Though an integral part of China, Taiwan is still occupied by the KMT Regime, calling it the Republic of China or ROC, the name taken over from KMT’s reign over mainland China until their defeat by the CPC in 1949, which also marked the beginning of the new communist People’s Republic of China (PRC).

This internationally illegal control of Taiwan by the KMT has been going on since 1949, but especially for the last 50 years, when on 25 October 1971, the United Nations General Assembly recognized the PRC, led by the CPC, as “the only legitimate representative of China to the United Nations” and removed the representatives of the Chiang Kai-shek ROC regime of Taiwan from the United Nations. Nevertheless, today still 15 nations, including the Vatican, of the 193 UN member nations recognize Taiwan as the official China. Many of them would like to switch to the officially recognized CPC-led mainland China, but are coerced, predominantly by the US and the UK, not to do so.

Over the past several decades, the United States, the UK and other western allies have continually sought to destabilize China by interfering in Taiwan, meaning in China’s internal affairs. The latest such events include the US weapons sale for US$ 5 billion to Taiwan in December 2020, and earlier this year, the U.S. Ambassador to the Pacific Island of Palau (Palau being one of the states recognizing Taiwan), became the first US envoy to travel to Taiwan in an official capacity, since Washington cut formal ties with Taipei in favor of Beijing in 1979.

In addition, the US is promoting closer relations with Taiwan through the so-called Taipei Act, signed in April 2020, calling for strengthening trade relations and diplomatic ties between the US and Taiwan to bring Taiwan closer into “international space”, meaning politically distancing the island territory from the mainland.

This and other interferences of the US in China’s internal affairs, are attempts at disrupting peaceful co-existence with China. They include the US-provoked trade war with Beijing, during the last almost 4 years; the stationing of about 60% of the American Navy in the South China Sea; the Washington orchestrated interference in Honk Kong, seeking independence from Beijing; and wildly falsified accusation of Human Rights abuses of the Uyghurs in the officially known as the Xinjiang Uyghur Autonomous Region, in Northwestern China; as well as similar claims in Tibet. 

Thanks to the steadfast leadership of President Xi Jinping of the People’s Republic of China and of the Communist Party of China, these interferences are being dealt with carefully by Beijing, always trying to find diplomatic and non-belligerent solutions. China is a master in following the paths of non-aggression, while constantly creating and moving peacefully forward – always with the goal of achieving a multipolar world, where people of different nations, regions, races, roots, cultures and believes can prosper peacefully together.
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Present – and Vision for the Future
Since the foundation of the Communist Party on 1 July 1921, China strove for total independence, and never surrendered to foreign invasions or attempts to influence China’s internal, as well as foreign relations policies. What the CPC has attained over the past 100 years is truly remarkable. It comprises not only maintaining internal solidarity, but also and foremost, people’s trust in the government, moving peacefully forward, becoming food, health and education-wise autonomous and self-sufficient and, not least, lifting 800 million people out of poverty. No other nation in the world has achieved such extraordinary objectives for their people’s well-being.

The CPC has today 91 million members. It is by far the largest single party in the world. In addition, thanks to her leadership, starting with Mao Tse Tung in 1949 and today by President Xi Jinping, China, with a population of 1.4 billion people, has become the second largest economy in the world in absolute terms, and since 2017 already the largest, assessed by the only real measure – the Purchasing Power Parity (PPP). This is an indicator of how much people can buy for their money. Within a few years, China is expected to surpass the currently largest economy, the United States, also in absolute terms.

This is, of course, representing a threat for the country that has declared itself as THE Empire of the world, controlling all vital essentials, like energy, food supply and the international monetary system – though faltering, but still dominated by the US-dollar. The self-styled empire is already crumbling. And Washington knows it. Its strongest asset, the US-dollar, is gradually being dismantled. The US-currency has been widely used throughout the world, almost exclusively, to buy vital goods and services, like energy, food and communication services, as well as for other international trade, but it is losing its weight in the international arena.

The reasons for this are both political and economic. On the economic front, the US have created by their 1913 Federal Reserve Act, a fiat currency without any backing, a currency of which the flow and money mass can be expanded at will. This allowed and still allows Washington to “print” money as per necessities, i.e. to finance extensive wars and conflicts around the globe and to accumulate debts that the US Treasury and Federal Reserve (the totally privately owned US Central Bank), will never be able to pay back.

The US-dollar has absolutely no backing whatsoever. When Washington abandoned in 1971 their self-designed so-called gold-standard (Bretton Woods Conference, 1944), the US-dollar became de facto the “new gold standard”, since the gold standard was based on the value of the US-dollar (US$35 / troy ounce, about 31 grams), instead of on a basket of currencies. Since everybody needed US dollars for their reserves, this gave the US Treasury free range to increase its money supply almost infinitely.

When the US, also at the beginning of the 1970s, negotiated with Saudi Arabia, head of OPEC (Organization of Petroleum Exporting Countries), that all hydrocarbons, petrol gas and coal, should be traded in US-dollars, it gave the US another dollar boost – printing freely dollars in abundance, because the entire world needed US-dollars to buy hydrocarbon energy. Even today about 84% of all energy consumed worldwide consists of hydrocarbons (2019 Forbes).

As a counter-measure, the US promised the House of Saud to always protect Saudi Arabia, and proceeded almost immediately building numerous military bases in Saudi Arabia, from which they are now waging different wars in the Middle East.

Due to this phenomenon of freely generating new US-dollars, creating new debt, the US is by far the most indebted country in the world, with currently US$ 49.8 trillion debt, compared with a 2020 GDP of about US$ 21 trillion (Debt – GDP ratio 2.3 = 237% debt over GDP).

There is another important component of US debt, called by the General Accounting Office (GAO), “Unfunded Liabilities”, US$ 213 trillion (all figures 16 April 2021: US Debt Clock – https://www.usdebtclock.org/current-rates.html). These exceptionally high ratios have undoubtedly also to do with incurred covid-debt.

Unfunded liabilities are debt obligations that do not have sufficient funds or assets set aside to pay them. These liabilities generally refer to the U.S. government’s debt-service (unpaid interest on debt), or pension plans and their impact on savings and investment securities, as well as  health-insurance and social support coverage for soldiers returning from wars.

These astronomical debt figures and an unbacked fiat currency are even further reducing worldwide confidence in the US-dollar. It is clear, the US debt will never be paid-off. The Federal Reserve Chair, Allan Greenspan (1987 – 2006), once answered to a journalist’s question, when will the US pay back her debt: Never. We just print new money. So, spoken, so it was and so it is.
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Today and for the last about 10 years the US-dollar has no longer a hydrocarbon trade monopoly, nor are other international contracts primarily established in US-dollars as used to be the case a couple of decades ago. China, Russia, Iran, Venezuela and others have stopped using the US-dollar and are trading in local currencies and increasingly in Chinese yuan.

Why? – Countries’ treasurers around the world started realizing that the dollar is a highly volatile fiat currency, based on nothing, as shown by the above figures. Equally important for the loss of trust in the US-currency is that dollar-denominated international assets and the US banking system are frequently used by Washington to impose draconian, illegal economic sanction on countries that do not follow Washington’s dictate, including blocking countries’ foreign placed reserve assets. These economic and political realities are signaling the end of the US-dollar hegemony.

The trend of diminishing trust in the US-dollar may increase when China rolls out her digital Renminbi (RMB = people’s money) or international Yuan (the terms RMB and Yuan are used interchangeably) which may be used for international trade without touching the international US-dominated SWIFT transfer and US banking system. The Chinese currency being backed by a strong and solid Chinese economy, confidence in the Chinese currency is growing rapidly. Already today, the Chinese currency’s use as an international reserve asset is increasing quickly.

While the US Federal Reserve (FED) is also contemplating a new digital currency, it is not clear to what extent it can be detached from the current dollar and its debt burden. In any case, with US international trade waning, and Chinese trade rapidly increasing, it will be very difficult, if not impossible, for a declining empire to catch up with China.

For example, in the first quarter of 2021, Chinas foreign trade (exports and imports) soared by 29.2%, with Exports jumping 38.7% from the year before, while imports climbed 19.3 percent in yuan terms, according to the General Administration of Customs (GAC).

If anything, these developments – plus the fact that China has been highly successful in overcoming the covid-crisis – within less than 6 months – and putting her industrial apparatus back on line, are testimony for a solid CPC leadership, a sound Chinese economy and fiscal policy. China is the world’s only major economy reporting economic growth in 2020, amounting to 2.3% according to the Wall Street Journal. It is what China calls “Socialism with Chinese Characteristics” – a feature demonstrating a spirit of constant creation and evolution of the CPC.
These facts will further enhance international trust in the Chinese economy, as well as in the Chinese way of seeking a more equal, more egalitarian and more just multipolar world, where nations may keep their national sovereignty over their internal and external political inclinations, their culture, national resources, monetary policies and foreign relations – and live peacefully together.
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CPC and the Chinese Vision

The New Silk Road, or Belt and Road Initiative (BRI), is President Xi Jinping’s brilliant brainchild. It’s based on the same ancient principles as was the original Silk Road, adjusted to the 21st Century, building bridges between peoples, exchanging goods and services, research, education, knowledge, cultural wisdom, peacefully, harmoniously and ‘win-win’ style. On 7 September 2013, President Xi presented BRI at Kazakhstan’s Nazarbayev University. He spoke about “People-to-People Friendship and Creating a better Future”. He referred to the Ancient Silk Road of more than 2,100 years ago, that flourished during China’s Western Han Dynasty (206 BC to 24 AD).

Referring to this epoch of more than two millenniums back, President Xi pointed to the history of exchanges under the Ancient Silk Road, saying, “they had proven that countries with differences in race, belief and cultural background can absolutely share peace and development as long as they persist in unity and mutual trust, equality and mutual benefit, mutual tolerance and learning from each other, as well as cooperation and win-win outcomes.”

President Xi’s vision may be shaping the world of the 21st Century. The Belt and Road Initiative is designed and modeled loosely according to the Ancient Silk Road. President Xi launched this ground-breaking project soon after assuming the Presidency in 2013. The endeavor’s idea is to connect the world with transport routes, infrastructure, industrial joint ventures, teaching and research institutions, cultural exchange and much more. Since 2017, enshrined in China’s Constitution, BRI has become the flagship for China’s foreign policy.

BRI is literally building bridges and connecting people of different continents and nations. The purpose of the New Silk Road is “to construct a unified large market and make full use of both international and domestic markets, through cultural exchange and integration, to enhance mutual understanding and trust of member nations, ending up in an innovative pattern with capital inflows, talent pool, and technology database”.

BRI is a global development strategy adopted by the Chinese Government. Already today BRI has investments involving more than 150 countries and international organizations – and growing – in Asia, Africa, Europe, the Middle East and the Americas. Since the onset of BRI in 2013, BRI investments have exceeded US$ 5 trillion equivalent.

BRI is a long-term multi-trillion investment scheme for transport routes on land and sea, as well as construction of industrial and energy infrastructure and energy exploration – as well as trade among connected countries. Unlike WTO (World Trade Organization), BRI is encouraging nations to benefit from their comparative advantages, creating win-win situations. In essence, BRI is to develop mutual understanding and trust among member nations, allowing for free capital flows, a pool of experts and access to a BRI-based technology data base.  At present, BRI’s closing date is foreseen for 2049 which coincides with the People’s Republic of China’s 100th Anniversary. The size and likely success of the program indicates, however, already today that it will most probably be extended way beyond that date. It is worth noting, though, that only in 2019, six years after its inception, BRI has become a news item in the West. Remarkably, for six years, the west was in denial of BRI, in the hope it may go away. But away it didn’t go. To the contrary, many European Union members have already subscribed to BRI, including Greece, Italy, France, Portugal – and more will follow, as the temptation to participate in this projected socioeconomic boom is overwhelming.

The BRI, also called Belt and Road, or One Belt One Road, is not the only initiative that will enhance China’s economy and standing in the world.

After decades of western aggressions, denigrations and belligerence towards China, in a precautionary detachment from western dependence, China is focusing trade development and cooperation on her ASEAN partners. In November 2020, after 8 years of negotiations, China signed a free trade agreement with the ten ASEAN nations, plus Japan, South Korea, Australia and New Zealand, altogether 15 countries, including China.

The so-called Regional Comprehensive Economic Partnership, or RCEP, covers some 2.2 billion people, commanding some 30% of the world’s GDP. This is a never before reached agreement in size, value and tenor.

The RCEP’s trade deals will be carried out in local currencies and in yuan – no US dollars. The RCEP is, therefore, also an instrument for dedollarizing, primarily in the Asia-Pacific Region, and gradually moving across the globe. Moving away from the dollar-based economies may be an effective way to stem against the western “sanctions culture”. China is soon rolling-out her new digital Renminbi (RMB) or yuan, internationally, as legal tender for inter-country payments and transfers. The digital RMB is primed to become also an international reserve currency, thereby further reducing demand for the US-dollar.

Orientation towards China’s internal economic development – so-called horizontal instead of vertical growth – is a strategy to develop local Chinese internal production and infrastructure to build up and enhance Chinese internal capacities and markets and bringing about wellbeing and a better equilibrium between China’s vast hinterland and China’s prosperous eastern coastal areas.

The future belongs to China
After two thousand years of western “white supremacy”, relentless exploitation, colonization, discrimination and outright enslavement of other colored people, other cultures, throughout the world, the time has come to turn the wheel – and to veer the future of mankind into a more peaceful, more just and more egalitarian world.

During the next hundred years and under the leadership of the Chinese Communist Party – China will guide the East into the era of the Rising Sun – prosperity and good health for all.

This new epoch will strive for a multi-polar world, with win-win trade relations, and bringing about new environmental, social and technological challenges, but also a new awakening for a social consciousness and solidarity. A key instrument for achieving major goals for human wellbeing is the Belt and Road Initiative, providing a steady flow of new ideas, creations, cultural exchange and mutual learning. The future focus may be on:

  • Renewable sources of energy, based mainly on hydro- and solar power, developed with cutting edge technologies, i.e. capturing solar power with a process of photosynthesis, producing high efficiency energy yields;
  • Increasing green areas in urban centers to bring about a balance of natural CO2 absorption and Oxygen production, aiming at zero pollution;
  • Protecting the world’s rain forests and water resources;
  • Keeping natural resources and public services – health, education, food supply, water and sanitation services, electricity, and public transport – in the public domain;
  • Promoting biological and multi-crop agriculture;
  • Developing Artificial Intelligence (AI) to help increase production and transport efficiency and to serve humanity; and
  • Adopting public banking as the primary means of socioeconomic development funding, Leading humanity to building a community with a shared future for mankind.

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Peter Koenig is a geopolitical analyst and a former Senior Economist at the World Bank and the World Health Organization (WHO), where he has worked for over 30 years on water and environment around the world. He lectures at universities in the US, Europe and South America. He writes regularly for online journals. He is also the author of Implosion – An Economic Thriller about War, Environmental Destruction and Corporate Greed; and  co-author of Cynthia McKinney’s book “When China Sneezes: From the Coronavirus Lockdown to the Global Politico-Economic Crisis” (Clarity Press – November 1, 2020).

Peter Koenig is a Research Associate of the Centre for Research on Globalization and a Non-resident senior fellow of Chongyang Institute for Financial Studies at Renmin University of China

皮特·凯尼格(Peter Koenig),世界银行前高级经济学家、中国人民大学重阳金融研究院外籍高级研究员(瑞士)

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