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.

——–

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.
——
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.
—–

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.
—-
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.

—–

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)

أنيس فلسطين… لم ينته النقاش!

ناصر قنديل

لن ينتهي النقاش حول أنيس الذي طوى مرحلة من المسيرة، وسيبقى حاضراً أبعد من الذكريات الكثيرة، والأسرار الدفينة، فالروح التي تقاتل تحضر ولا تغادر وروح أنيس النقاش واحدة من هذه الأرواح النادرة في الصفاء والنقاء والتوثب والشجاعة والمبادرة واللطف والحضور. في مطلع السبعينيات ونحن نتلمّس مكانتنا في ساحات النضال كان أنيس القدوة والمثال الذي نتبع ظله ونبحث عن حضوره، من دون أن نعرفه عن قرب. ونحن هنا جيل شبابي كامل كان يتأهب لحمل السلاح نحو فلسطين، وعندما شاهدناه في عمليّة وزراء أوبك صفّقنا لهذه البصمة التي شرّفت لبنان واللبنانيين بحضور عرس كبير لفلسطين، وكان أنيس العريس، وعندما التقينا في بنت جبيل ورشاف عام 1977 ولاحقاً في مقاومة احتلال 1978 والصواريخ إلى خلف الحدود، لم نستطع جمع الرموز بين محطات محورها أنيس النقاش، وكأن الذي عرفناه في كل حلقة هو شخص مختلف، لكنّه كان أنيس، الذي تيقنا من جمعه لهذه الحلقات في سلسلة حريته وهو سجين في باريس بعد محاولته إعلان بصمته في عقاب شعوب المنطقة لنظام الشاه ورموزه، وإشهار الموقف الى صف الثورة الإسلاميّة التي رفعت علم فلسطين في طهران، لنعرف لاحقاً أن أنيس كان من المجموعة الصغيرة التي خططت لذلك مع رفاقه الذين صاروا لاحقاً قادة الحرس الثوريّ، الذي ألقيتهم في طهران عام 1980، وهم يتحدثون عن أنيس وحريته كالتزام لا حياد عنه في مستقبل أي علاقات فرنسية إيرانية.

من تلك اللحظة كان الشهيد القائد عماد مغنية حاضراً، حتى لحظة حريّة أنيس بمفاوضات أدارها العماد، وهو يدير ما سيغدو أعظم تجارب المقاومة في المنطقة، والتي سيغدو أنيس العائد أحد أبرز مفكّريها، بعقله الحر وفكره اللامع وثقافته الموسوعيّة وتهذيبه ورفعة أخلاقه، وتصدّيه لكل صعب لا يُنال، وتحدّيه ليقدم القدوة والمثال، فهو حتى لو لم يكن منذ هذه اللحظة بين من يحملون السلاح، لا يترك للنضال الساح. ومنذ هذه اللحظة بدأت صداقتنا القريبة، وصار التواصل بلا انقطاع، وكرم الأنيس في اللقاء عندما يكون في طهران انشغال واهتمام بكل قادم من رفاق الدرب من بيروت، مرّة يكون العماد مضيفاً ومرة يكون الأنيس، حتى رحل العماد، فحاول ما استطاع ألا يشعر أحد أن شيئاً قد تغيّر، وهو في كل المعارك في أول الصفوف، وفي كل الاحتفالات في آخرها، تخجله الأضواء ويكره المناصب والمكاسب ولا يهزّ عضده الإغواء، يبحث عن المقاتلين ويأنس جلساتهم وسماعهم في قلب كل معركة، وينصت لتقييماتهم بعدها، حتى حضر القاسم فصار رفيقاً وأنيساً، وربما كان للحرب على سورية فضل اتخاذها مسكناً ومقراً لأنيس، ليتاح لهما تواتر اللقاء وبساطته، يعزّي أحدهما الآخر بغياب العماد ويحاولان ملأ الفراغ، حتى جاء رحيل القاسم جرحه البليغ وهو يبتسم بانتظار اللحاق.

كل مَن يفكر ويبحث عمّا هو أبعد من سطح الأحداث، ولا يهدأ بحثاً عن حل لقضية في قلب الحرب، كان لا بد أن يهرع الى انيس عارضاً ما التمع في عقله، ويقدح معه زناد الفكر ليستكشفا معاً تحليقاً لا يتوقف في فضاءات الفلسفة والوجود والاستراتيجيات والتكتيكات حتى تتبلور الفكرة مشروعاً، وحين تصير صديقاً لأنيس لن يفوتك منه سعي لنقاش حول فكرة جديدة تشغل باله ويسعى لإنضاجها، فقد أصبحت محظوظاً بأنيس فكر ورفيق درب، قد يتصل آخر الليل أو في الصباح الباكر ليقول بأدب ولطف، ألديك وقت للتحدّث قليلاً، وتجيب بالطبع فيبدأ تحليقه وتدفقه بلا توقف، وتلتقيان وتقرّران كتابة التصورات والسعي لإيصالها، وأنيس صاحب مشروع التشبيك بين لبنان وسورية والعراق وإيران وصولاً إلى تركيا بعد انضباطها بمعايير الخروج من العدوان على سورية، لبناء سوق مشتركة، وحلّ الأزمة الكردية، وتشكيل محور اقتدار إقليمي لا يمكن كسره، يشكل ظهيراً للمقاومة التي لم يشكّ يوماً بأنها ذاهبة بكل فخر وعز وقوة الى فلسطين.

قبل حرب تموز 2006 بأيام وفي ظل توقعات بحرب مقبلة، تشكلت مجموعة عمل استراتيجية وإعلامية لدعم المقاومة في أي حرب، وكان أنيس في الطليعة، وكل صباح من صباحات أيام الحرب كان دفتره مليئاً بالملاحظات، وصوته متدفقاً في الحضور، وكان أستاذاً في التواضع والأخلاق، ومصنعاً للأفكار، ومتطوعاً لأبسط المهام، مثبتاً أنه لا يتعب ولا يستصغر عملاً، وهمّه الأول والأخير أن مسيرة شكلت هاجسه وقضية حياته تتقدّم، وخلال الحرب على سورية كنا نتقاسم الحضور والمواقع والأدوار ونتبادل الآراء والتحليلات، ونشغل محرّكات عقولنا بعيداً عن العلب التقليدية بحثاً عن جديد، ويفرح أحدنا لكل التماعة فكر جديدة، وكل استنتاج يخرج عن المألوف، ونضحك كثيراً عندما نسمع أوصاف من يقفون في المعسكر الآخر لنا، يقول، اللي بيعرف بيعرف واللي ما بيعرف بيقول كف عدس، دعهم يا صديقي يتلهّون في تحليلنا ولننصرف نحن لتحليل الحرب وكيف يُصنع النصر.

في عام 2013 وفي احتفال لتكريم المتسابقين في إحدى دورات شبكة توب نيوز التي أطلقتها في الحرب، دعوت أنيس مكرّماً ومتحدثاً، فكان حضوره المتواضع والمتدفق آسراً، لا يزال الذين حضروا يستذكرونه وسيتذكرونه أكثر اليوم وهم يعلمون أنهم صافحوا يد قائد، لم تلوّثها عمولة ولا عمالة، ويد مفكر تعرف رائحة الحبر في جيناتها ورائحة البارود بين جنباتها، رحم الله القائد المفكر أنيس النقاش.

ستبقى الأنيس، أنيس فلسطين وسورية واليمن والعراق وإيران والبحرين ولبنان، وأنيس بيروت التي أحببت، وأنيس الشهداء، ولم ينته ولن ينتهي النقاش!

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Al-Manar TV Channel, Al-Nour Radio Station Lament Al-Naqqash Death: He Disappeared amid Bad Need for His Revolutionary Vision

February 22, 2021

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The Lebanese Communication Group (Al-Manar TV Channel and Al-Nour Radio Station) on Monday mourned the Lebanese and Arab struggler, Anis Al-Naqqash, who sculpted his name on the way to Palestine and defended its flag.

In a statement, the Lebanese Communication Group maintained that Al-Naqqash was the voice of right in face of oppression, adding that he passed away amid a bad need for his revolutionary vision necessary to confront the normalization and Arab disgrace campaigns.

The Lebanese Communication Group lamented Al-Naqqash as a companion of its voice and image that conveys and defends the causes of the oppressed, especially that of Palestine,offering deep condolences to his family and lovers and asking Holy God to grant him His Mercy along with the righteous martyrs and mujahidin (fighters).

Born on 1951, Al-Naqqash joined the ranks of Fatah movement in 1968. He was tasked with several missions in Lebanon, occupied territories and Europe as well. He played vital role in coordination between Palestinian revolution and revolution in Iran.

Al-Naqqash was among the first operatives who formed the Lebanese resistance against Israeli occupation in 1978. He witnessed the Lebanese civil war and documented its behind-the-scenes events.

In 1980, he was accused for being involved in a failed assassination attempt on the last Prime Minister of Iran under Pahlavi monarchy, Shapour Bakhtiar, in a court in Paris and was sentenced to life in prison. Al-Naqqash was freed on 27 July 1990, after being pardoned by President François Mitterrand.

He is well known for being a pro-resistance political analyst who opposes Western-backed Arab regimes. In the last years, he had run Beirut-based Al-Aman Network for Studies and Researches.

Source: Al-Manar English Website

Hezbollah Mourns Al-Naqqash: He Defended Palestinian Cause, Lebanese Resistance, Islamic Republic and Syria

February 22, 2021

Hezbollah mourned on Monday the mujahid, thinker, and major researcher Mr. Anis Al-Naqqash, who died on the same day of coronavirus, offering deep condolences to his family. friends and lovers and asking Holy God to grant him His Mercy along with the righteous martyrs.

In a statement, Al-Naqqash was one of the most important thinkers and researchers in our region and presented numerous researches and strategic studies, which enhanced the comprehensive confrontation with the Zionist enemy.

The statement mentioned that Al-Naqqash, spent long years of his life as a resistance fighter and carried the Palestinian cause in his heart and mind, mobilizing the free people everywhere to support it and defend its oppressed people.

He also defended forcefully the “honorable” resistance in Lebanon and its political ans well as military choices in various local and international forums, according to Hezbollah statement, which added that Al-Naqqash supported the Islamic Republic of Iran in face of the aggression and blockade and defended its values.

The statement, moreover, indicated that Al-Naqqash confronted the conspiracies which were devised in the context of the global terrorist war on Syria.

Born on 1951, Al-Naqqash joined the ranks of Fatah movement in 1968. He was tasked with several missions in Lebanon, occupied territories and Europe as well. He played vital role in coordination between Palestinian revolution and revolution in Iran.

Al-Naqqash was among the first operatives who formed the Lebanese resistance against Israeli occupation in 1978. He witnessed the Lebanese civil war and documented its behind-the-scenes events.

In 1980, he was accused for being involved in a failed assassination attempt on the last Prime Minister of Iran under Pahlavi monarchy, Shapour Bakhtiar, in a court in Paris and was sentenced to life in prison. Al-Naqqash was freed on 27 July 1990, after being pardoned by President François Mitterrand.

He is well known for being a pro-resistance political analyst who opposes Western-backed Arab regimes. In the last years, he had run Beirut-based Al-Aman Network for Studies and Researches.

Source: Hezbollah Media Relations (Translated by Al-Manar English Website)

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What Wall Street fears

January 30, 2021

What Wall Street fears

By The Ister for the Saker Blog

The origin of modern banking can be found in the early days of the gold trade. In the Middle Ages, goldsmiths accepted deposits of gold in return for paper notes, which could be exchanged for the deposits at a later date. Because these paper notes were more convenient for commercial use than physical metal, they were usually not redeemed for gold right away. The goldsmiths noticed their customers’ deposits could be used in the meantime to generate interest and began surreptitiously lending out the savings of their depositors. Over time fractional reserve banking developed from this tendency of lending out money in excess of the actual reserves being held.

Goldsmith became banker, and from this early monetary system, banking families emerged. Prior to the existence of modern financial institutions, these houses were the entities which could be relied upon for large amounts of credit. A reputable surname gave confidence to depositors that their gold was in good hands, and from the intergenerational accumulation of wealth grew large pools of loanable capital. As nobles required weapons and pay for their armies, the conflicts of medieval Europe were fueled by families such as the Medici, Fuggers, and Welsers. Today, it is the Federal Reserve which finances America’s enormous military and conquests abroad.

To truly understand banking, the concept of free markets must be cast aside. Just as oil is a strategic resource for the real economy capitalist, gold and silver are strategic resources for the financial capitalist. Physical bullion is the basis from which all other lines of credit extend; we know this because the same central banks which publicly proclaim gold to be a barbarous relic still feel the need to maintain enormous hordes in their vaults.

As in oil markets, pricing is not influenced primarily by a large number of producers and buyers but by concentrated cartel dynamics. So while we witness yet another energy battle between OPEC and Russia unfold, it should be understood that similar dynamics are at play in the upper echelons of the monetary world as bankers seek to fix prices and control physical bullion flows in a manner which is beneficial to their interests.

A key difference from oil is that while the pump leads to the refinery and the refinery to the end-user, bankers do not generally like to part with their gold. Accordingly, markets have been designed so that prices are determined not by physical delivery but by the trading of unbacked or fractionally backed “claims” on the underlying metal: certificates, ETFs, and futures. We can be certain that there is not enough physical bullion to cover all these paper metal claims, just like the medieval goldsmith did not hold his deposits in full.

These paper markets set the price, although bars rarely leave the vault

Where is the vault? While Fort Knox claims the largest holdings, the price is set by the London Bullion Market Association and CME Group which together account for around 70% and 20% of global trading volume respectively. The London Bullion Market began in 1850, when N. M. Rothschild and Sons and several other banking families created a cartel to oversee the operations of the global gold market, including the establishment of the “London good delivery” list which created trading standards for size, dimensions, shape and fineness of bullion; today trading on London markets requires a high purity and being between 350-450 ounces.

This domination of the world’s gold market was not achieved through peaceful means: look into the forces behind the conquest of Transvaal’s gold mines, for it bears a direct parallel to America’s invasions of oil-rich nations today. Another similarity with oil markets is that military interventions have a habit of “liberating” the target nation of their gold: just ask Muammar Gaddafi.

The price of such a strategic resource could not be determined by an open market, thus alongside good delivery standards the “gold fix” was established in 1919 and was held in the offices of New Court until 2004, when its operations were passed on to a cartel of bullion banks such JP Morgan and HSBC. Ever since, these banks have been investigated and convicted countless times of manipulating and spoofing the prices.

How do we know that there isn’t enough gold to cover physical deliveries? Back in the 1970s the dollar was under a lot of pressure and Western banks maintained secret gentlemen’s agreements not to request delivery of bullion. In 1971 Dutch central bank chief Jelle Zjilstra ignored these formalities and planned to convert $600 million of the Dutch dollar reserves to gold, prompting Federal Reserve chair Paul Volcker to fly out to the Netherlands and warn him: “you’re rocking the boat.” Shortly after Zijlstra refused Volcker’s pressure and continued with the purchase, the US decoupled from the gold standard.

Abandonment of the gold standard risked a reduction in dollar demand, so Nixon enlisted Wall Street scion Gerry Parsky to negotiate with oil exporting Arab nations. After discussion, the Saudi state agreed to sell oil priced exclusively in dollars and to invest the proceeds of oil sales in America.

To those who say dismissively that the dollar is now backed by “nothing,” I say it is backed by oil and the threat of the US military.

Look at the somber fates of those that tried to ditch the dollar for gold or the Euro: Libya in a state of permanent civil war; starving Syrians picking through landfills in search of food only miles from occupied wheat fields.

So maintaining confidence in our reserve currency requires the undermining of confidence in gold, as its reemergence would unnecessarily democratize the international monetary order. Confidence is undermined first by price suppression, which is accomplished by the manipulation of precious metals futures markets. While it would be hugely wasteful for a private individual or consortium to manipulate such a market with their own money, that is where the unlimited fiat available at central bank trading desks come in: and we know central banks are secretly trading precious metals futures due to leaked documents from CME Group.

Leo Melamed, chairman of CME Group and the putative father of modern commodity futures markets noted in his book Escape to the Futures that CME’s Globex system was inspired by the original London gold fix:

Sandner, Kilcollin and I were in London with the chairman of the Rothschild Bank seeking his advice on how to bring the “gold fix” to Chicago. From the heated debate that followed one would have concluded that Kilcollin knew more about the subject than the legendary Rothschilds, the people who had founded the concept ages before.

What we can see from this is that strategic commodities such as gold and oil are far from a free market: recall my previous article The Empire is Losing the Energy War which described how the Saudi state functions as a price-suppression weapon against Russia’s oil exports. This global commodity suppression schema allows the importation of the planet’s finite resources at a fraction of the true cost in return for theoretically unlimited currency. Recall Fed governor Kevin Warsh’s comments in December of 2011 when gold hit an all time high that banks were:

“finding it tempting to pursue financial repression- suppressing market prices that they don’t like”

There are signs, however, that the thin pool of physical bullion which exists to maintain confidence in paper markets is drying up. In March of 2020, CME Group had to relax its own requirement of 100oz bars to allow 400oz London good delivery bars to be shipped from overseas and used for trade settlement. Some would say: if price suppression exists then why has the gold price gone up over the last few years?

The middle ground between setting the price to very low or very high levels, say, $100 or $10,000, is that the prices are set high enough to minimize outflows from vaults, while at the same time using futures to hammer down the prices at psychologically important levels and initiating margin calls on those who are long gold using leverage. Those who have watched gold for a long time can attest to the sudden and inexplicable drops which originate in the futures market and which occur every time the gold price appears *just* ready to break out.

It’s a very complicated charade for the bullion bank cartel. Allow the price per ounce to go too low and you risk running out of the gold necessary to facilitate markets. At the same time, if the price rises too high it attracts international attention and risks gold reemerging in monetary policy. Notice how as soon as the supply shortages became apparent in March 2020 the bankers were forced to reset gold from $1230 to over $2000 in order to stem the outflows of physical delivery.

Putin is intentionally exacerbating this drought of physical gold in Western banks by expanding the Russian central bank’s purchases of gold. For the past few years Russia has been the number one global purchaser of bullion, having spent over $40 billion to bring Moscow’s reserves to the highest level in history: a sum close to the annual military budget because it is a strategic asset.

Just last week, Russia’s gold reserves passed its dollar reserves for the first time reaching a sum of $583 billion, highlighted by the central bank as part of Putin’s de-dollarization agenda. Given that purchases have grown at roughly 15% per year we can predict that even if the price does not rise, the value of these holdings will be around $1 trillion in three years. Read the anxious commentary about these purchases in Bloomberg and Forbes, and remember the nervousness in the business press when Germany demanded its gold back in 2013, which would only exist if behind-the-scenes physical gold flows were disjointed and there was internal muttering in the financial world as to whether the demand could be fulfilled.

To any who doubt that this is an overt move, in the pre-WW2 monetary system the mass accumulation of gold was well understood among central bankers as an aggressive act intended to starve competitor states of their ability to create credit. For example, French and American hoarding resulted in hyperinflation for Germany and forced Britain’s pound sterling off the gold standard.

Russia’s acquisition of precious metal is a direct threat to the financial system. How funny that the system is so fraudulent that it is an act of aggression to simply demand in physical form what one has paid for in full on an open market; an act which the designers of the system cannot protest lest they reveal their own bankruptcy. Just as it did in the 1920s, the hoarding of gold in the East will eventually limit the West’s ability to extend credit, it is simply unfolding on a longer time frame.

So why is a tiny stock like GameStop causing billionaire Leon Cooperman to cry on CNBC, and why is the SEC threatening small-time investors?

Simply, the financial markets are being revealed as a highly illiquid house of cards. Retail investors from Reddit began trolling short-sellers by rapidly buying small stocks and causing hedge funds to blow up from expensive margin calls. The losses are now estimated at around $70 billion, and as these small-time investors funnel their unemployment and stimulus checks into their aggressive trades they have fought wealthy investors in a more effective way than Occupy Wall Street ever did. They have now turned their eyes to the small and illiquid silver market…

Look at the fate of the Hunt brothers fortune: they were oil billionaires who tried to exercise their legal right to take physical delivery of a large volume of silver futures contracts and had CME pull the rug out from under them before it could be achieved. CME Group defeated the Hunt brothers by instituting Silver Rule 7 which limited the dollar amount of physical silver that an individual investor could buy. But how will that stop the hordes of young low net worth traders who are now telling one another to purchase physical bullion and intentionally strain the rigged silver market?

This arcane financial system is doomed to fail because it is based on ever-higher and more unstable abstractions of underlying wealth: CDOs squared and cubed, dark pool derivatives markets totaling trillions of dollars, and so on: all of which depends on the financial sector sucking as much money as possible out of a shrinking global economy through securitization. Now that people are demanding the underlying assets themselves, change is beginning.

What an interesting timeline: where Russia and unemployed youths have come to the same conclusion for how to defeat the banks.


The Ister is a researcher of financial markets and geopolitics. Author of The Ister: Escape America

The Sword of Damocles Over Western Europe: Follow the Trail of Blood and Oil

The Sword of Damocles Over Western Europe: Follow the Trail of ...

Cynthia Chung June 3, 2020

In Part 1, we left off in our story at the SIS-CIA overthrow of Iran’s Nationalist leader Mohammad Mosaddegh in 1953. At this point the Shah was able to return to Iran from Rome and British-backed Fazlollah Zahedi, who played a leading role in the coup, replaced Mosaddegh as Prime Minister of Iran.

Here we will resume our story.

An Introduction to the ‘Shah of Shahs’, ‘King of Kings’

One important thing to know about Mohammad Reza Shah was that he was no fan of British imperialism and was an advocate for Iran’s independence and industrial growth. That said, the Shah was a deeply flawed man who lacked the steadfastness to secure such a positive fate for Iran. After all, foreign-led coups had become quite common in Iran at that point.

He would become the Shah in 1941 at the age of 22, after the British forced his father Reza Shah into exile. By then, Persia had already experienced 70 years of British imperialism reducing its people to near destitution.

Mohammad Reza Shah had developed very good relations with the U.S. under President FDR, who at the behest of the Shah, formed the Iran Declaration which ended Iran’s foreign occupation by the British and the Soviets after WWII.

His father, Reza Shah came into power after the overthrow of Ahmad Shah in 1921, who was responsible for signing into law the infamous Anglo-Persian Agreement in 1919, which effectively turned Iran into a de facto protectorate run by British “advisors” and ensured the British Empire’s control of Iran’s oil.

Despite Reza Shah’s problems (Mosaddegh was sent into exile during his reign), he had made significant achievements for Iran. Among these included the development of transportation infrastructure, 15 000 miles of road by 1940 and the construction of the Trans-Iranian Railway which opened in 1938.

Mohammad Reza Shah wished to continue this vein of progress, however, he would first have to go through Britain and increasingly the U.S. in order to fulfill Iran’s vision for a better future.

In 1973, Mohammad Reza Shah thought he finally found his chance to turn Iran into the “world’s sixth industrial power” in just one generation…

OPEC and the European Monetary System vs the ‘Seven Sisters’

In 1960, OPEC was founded by five oil producing countries: Venezuela, Iraq, Saudi Arabia, Iran and Kuwait in an attempt to influence and stabilise the market price of oil, which would in turn stabilise their nation’s economic return. The formation of OPEC marked a turning point toward national sovereignty over natural resources.

However, during this period OPEC did not have a strong voice in such affairs, the main reason being the “Seven Sisters” which controlled approximately 86% of the oil produced by OPEC countries. The “Seven Sisters” was the name for the seven transnational oil companies of the “Consortium of Iran” cartel which dominated the global petroleum industry, with British Petroleum owning 40% and Royal Dutch Shell 14%, giving Britain the lead at 54% ownership during this period.

After 1973, with the sudden rise of oil prices, the Shah began to see an opportunity for independent action.

The Shah saw the price increase as a way to pull his country out of backwardness. To the intense irritation of his sponsors, the Shah pledged to bring Iran into the ranks of the world’s top ten industrial nations by the year 2000.

The Shah understood that in order for this vision to become a reality, Iran could not just stay as a crude oil producer but needed to invest in a more stable future through industrial growth. And as it just so happened, France and West Germany were ready to make an offer.

In 1978, France and West Germany led the European community, with the exception of Great Britain, in the formation of the European Monetary System (EMS). The EMS was a response to the controlled disintegration that had been unleashed on the world economy after the fixed exchange rate became a floating exchange rate in 1971.

French foreign minister Jean Francois–Poncet had told a UN press conference, that it was his vision that the EMS eventually replace the IMF and World Bank as the center of world finance.

For those who are unaware of the devastation that the IMF and World Bank have wreaked upon the world, refer to John Perkins’ “Confession of an Economic Hit Man”… the situation is 10X worst today.

As early as 1977, France and West Germany had begun exploring the possibility of concretizing a deal with oil producing countries in which western Europe would supply high-technology exports, including nuclear technology, to the OPEC countries in exchange for long-term oil supply contracts at a stable price. In turn, OPEC countries would deposit their enormous financial surpluses into western European banks which could be used for further loans for development projects… obviously to the detriment of the IMF and World Bank hegemony.

The Carter Administration was not happy with this, sending Vice President Walter Mondale to France and West Germany to “inform” them that the U.S. would henceforth oppose the sale of nuclear energy technology to the Third World…and thus they should do so as well. West Germany’s nuclear deal with Brazil and France’s promise to sell nuclear technology to South Korea had already come under heavy attack.

In addition, the Shah had started a closer partnership with Iraq and Saudi Arabia cemented at OPEC meetings in 1977 and 1978. In a press conference in 1977 the Shah stated he would work for oil price stability. Together Saudi Arabia and Iran at the time produced nearly half of OPEC’s entire output.

If an Iran-Saudi-Iraq axis established a permanent working relationship with the EMS it would have assembled an unstoppable combination against the London world financial center.

Recall that France and West Germany had already ignored British calls to boycott Iranian oil in 1951 under Mosaddegh, and therefore, there was no indication that they were going to follow suit with Britain and the U.S. this time either.

As far as London and Washington were concerned, the Shah’s reign was over.

British Petroleum, BBC News and Amnesty International as Servants to the Crown

Were we to select a date for the beginning of the Iranian revolution it would be November 1976, the month that Amnesty International issued its report charging brutality and torture of political prisoners by the Shah of Iran.

Ironically, the SAVAK which was the secret police under the Shah from 1957 to 1979, was established and pretty much run by the SIS (aka MI6), CIA and the Israeli Mossad. This is a well-known fact, and yet, was treated as somehow irrelevant during Amnesty International’s pleas for a humanitarian intervention into Iran.

For those who haven’t already discovered Amnesty International’s true colors from their recent “work” in Syria… it should be known that they work for British Intelligence.

Gruesome accounts of electric shock torture and mutilation were printed in the London Times, the Washington Post and other respected press. Within a few months, President Carter launched his own “human rights” campaign. With this, the international humanitarian outcry got bigger and louder demanding the removal of the Shah.

The Shah was caught between a rock and a hard place, as he was known not to be strong on “security” matters and often left it entirely up to the management of others. Once Amnesty International sounded the war-cry, the Shah made the mistake of not only defending the undefendable SAVAK in the public arena but continued to trust them entirely. It would be his biggest mistake.

With the international foment intensifying, the British Broadcasting Corporation’s (BBC) Persian language broadcasts into Iran fanned the flames of revolt.

During the entire year of 1978 the BBC stationed dozens of correspondents throughout the country in every remote town and village. BBC correspondents, often in the employ of the British secret service, worked as intelligence operatives for the revolution.

Each day the BBC would report in Iran gory accounts of alleged atrocities committed by the Iranian police, often without checking the veracity of the reports. It is now acknowledged that these news reports helped to fuel and even organise the political foment towards an Iranian revolution.

In 1978, British Petroleum (BP) was in the process of negotiating with the government of Iran the renewing of the 25 year contract made in 1953 after the Anglo-American coup against Mosaddegh. These negotiations collapsed in Oct 1978, at the height of the revolution. BP rejected the National Iranian Oil Company’s (NIOC) demands, refusing to buy a minimum quantity of barrels of Iranian oil but demanding nonetheless the exclusive right to buy that oil should it wish to in the future!

The Shah and NIOC rejected BP’s final offer. Had the Shah overcome the revolt, it appeared that Iran would have been free in its oil sales policy in 1979 – and would have been able to market its own oil to the state companies of France, Spain, Brazil and many other countries on a state-to-state basis.

In the American press hardly a single line was published about the Iranian fight with BP, the real humanitarian fight for Iranians.

The Sword of Damocles

The “Arc of Crisis” is a geopolitical theory focused on American/western politics in regards to the Muslim world. It was first concocted by British historian Bernard Lewis, who was regarded as the leading scholar in the world on oriental studies, especially of Islam, and its implications for today’s western politics.

Bernard Lewis was acting as an advisor to the U.S. State Department from 1977-1981. Zbigniew Brzezinski, the National Security Advisor, would announce the U.S.’ adoption of the “Arc of Crisis” theory by the American military and NATO in 1978.

It is widely acknowledged today, that the “Arc of Crisis” was primarily aimed at destabilising the USSR and Iran. This will be discussed further in Part 3 of this series.

Egypt and Israel were expected to act as the initiating countries for the expansion of NATO into the Middle East. Iran was to be the next link.

Iran’s revolution was perfectly timed with the launching of the “Arc of Crisis”, and NATO had its “humanitarian” cause for entering the scene.

However, the fight was not over in Iran.

On Jan 4th, 1979, the Shah named Shapour Bakhtiar, a respected member of the National Front as Prime Minister of Iran. Bakhtiar was held in high regard by not only the French but Iranian nationalists. As soon as his government was ratified, Bakhtiar began pushing through a series of major reform acts: he completely nationalised all British oil interests in Iran, put an end to the martial law, abolished the SAVAK, and pulled Iran out of the Central Treaty Organization, declaring that Iran would no longer be “the gendarme of the Gulf”.

Bakhtiar also announced that he would be removing Ardeshir Zahedi from his position as Iran’s Ambassador to the U.S.

An apple that did not fall far from the tree, Ardeshir is the son of Fazlollah Zahedi, the man who led the coup against Mosaddegh and replaced him as Prime Minister!

Ardeshir was suspected to have been misinforming the Shah about the events surrounding the Iranian revolution and it was typical that he spoke to Brzezinski in Washington from Teheran over the phone at least once a day, often twice a day, as part of his “job” as Ambassador to the U.S. during the peak of the Iranian revolution.

With tensions escalating to a maximum, the Shah agreed to transfer all power to Bakhtiar and left Iran on Jan 16th,1979 for a “long vacation” (aka exile), never to return.

However, despite Bakhtiar’s courageous actions, the damage was too far gone and the hyenas were circling round.

It is known that from Jan 7th to early Feb 1979, the No. 2 in the NATO chain of command, General Robert Huyser, was in Iran and was in frequent contact with Brzezinski during this period. It is thought that Huyser’s job was to avoid any coup attempts to disrupt the take-over by Khomeini’s revolutionary forces by largely misleading the Iranian generals with false intel and U.S. promises. Recently declassified documents on Huyser’s visit to Iran confirm these suspicions.

During the Shah’s “long vacation” his health quickly deteriorated. Unfortunately the Shah was never a good judge of character and kept a close dialogue with Henry Kissinger as to how to go about his health problems. By Oct 1979, the Shah was diagnosed with cancer and the decision was made to send him to the U.S. for medical treatment.

This decision was very much pushed for and supported by Brzezinski and Kissinger, despite almost every intelligence report indicating this would lead to a disastrous outcome.

In Nov 18th 1979, the New York Times reported:

‘The decision was made despite the fact that Mr. Carter and his senior policy advisers had known for months that to admit the Shah might endanger Americans at the embassy in Teheran. An aide reported that at one staff meeting Mr. Carter had asked, “When the Iranians take our people in Teheran hostage, what will you advise me then?” ‘

On Oct 22, 1979, the Shah arrived in New York to receive medical treatment. Twelve days later, the U.S. Embassy in Teheran was taken over and 52 American hostages would be held captive for 444 days!

With the taking of the hostages, the Carter Administration, as preplanned under the “Arc of Crisis”, set into motion its scenario for global crisis management.

The hostage crisis, a 100% predictable response to the U.S.’ decision to accept the Shah into America, was the external threat the Carter Administration needed to invoke the International Emergency Economic Powers Act, authorising the President to regulate international commerce after declaring a national emergency in response to an extraordinary threat

With this new authority, President Carter announced the freezing of all U.S.-Iranian financial assets, amounting to over $6 billion, including in branches of American banks abroad. Instantly, the world financial markets were thrown into a panic, and big dollar depositors in western Europe and the U.S., particularly the OPEC central banks, began to pull back from further commitments.

The Eurodollar market was paralyzed and most international lending halted until complex legal matters were sorted out.

However, the most serious consequence by far from the Carter Administration’s “emergency actions,” was in scaring other OPEC governments away from long-term lending precisely at a time when West Germany and France were seeking to attract deposits into the financial apparatus associated with the European Monetary System (EMS).

In addition, the Carter Administration’s insistent demands that western Europe and Japan invoke economic sanctions against Iran was like asking them to cut their own throats. Yet, the raised political tensions succeeded in breaking apart the economic alliances and the slow blood-letting of Europe commenced.

Within days of the taking of the hostages, the pretext was given for a vast expansion of U.S. military presence in the Middle East and the Indian Ocean.

Sound familiar?

The message was not lost on Europe. In a Nov 28, 1979 column in Le Figaro, Paul Marie de la Gorce,  who was in close dialogue with the French presidential palace, concluded that U.S. military and economic intervention into Iran would cause “more damages for Europe and Japan than for Iran.” And that those who advocate such solutions are “consciously or not inspired by the lessons given by Henry Kissinger.”

During the 444 day hostage crisis, a full-scale U.S. invasion was always looming overhead. Such an invasion was never about seizing the oil supply for the U.S., but rather to deny it to western Europe and Japan.

If the U.S. were to have seized the oil supply in Iran, the body blow to the western European economies would have knocked out the EMS. Thus, during the 444 day holding of American hostages, this threat was held over the head of Europe like the sword of Damocles.

It is sufficed to say that today’s ongoing sanctions against Iran cannot be understood in their full weight and international ramifications without this historical background.

OPEC, Allied Nations Extend Nearly 10M Oil Barrel Cut by A Month

OPEC, Allied Nations Extend Nearly 10M Oil Barrel Cut by A Month

By Staff, Agencies

The Organization of the Petroleum Exporting Countries [OPEC] along with its allied nations agreed Saturday to extend a production cut of nearly 10 million barrels of oil a day through the end of July, hoping to boost energy prices hard-hit by the coronavirus pandemic.

Ministers of the cartel and outside nations like Russia met via video conference to adopt the measure, aimed at cutting out the excess production depressing prices as global aviation remains largely grounded due to the pandemic. It represents some 10 percent of the world’s overall supply.

However, danger still lurks for the market.

The decision came in a unanimous vote, UAE Energy Minister Suhail al-Mazrouei wrote on Twitter. He called it a “a courageous decision and a collective effort deserving praise from all participating producing countries.”

Crude oil prices have been gaining in recent days, in part on hopes OPEC would continue the cut. International benchmark Brent crude traded Saturday over $42 a barrel. Brent had crashed below $20 a barrel in April.

The oil market was already oversupplied when Russia and OPEC failed to agree on output cuts in early March. Analysts say Russia refused to back even a moderate cut because it would have only served to help US energy companies that were pumping at full capacity. Stalling would hurt American shale-oil producers and protect market share.

Russia’s move enraged Saudi Arabia, which not only said it would not cut production on its own but said it would increase output instead and reduce its selling prices in what became effectively a global pricing war.

Prices collapsed as the coronavirus and the COVID-19 illness it causes largely halted global travel.

Under a deal reached in April, OPEC and allied countries were to cut nearly 10 million barrels per day until July, then 8 million barrels per day through the end of the year, and 6 million a day for 16 months beginning in 2021.

The 2020 Oil Crash’s Unlikely Winner: Saudi Arabia

Source
 2020-05-06

It’s a year of carnage for oil nations. But at least one will emerge from the pandemic both economically and geopolitically stronger. 

With 4 billion people around the world under lockdown as the coronavirus pandemic grows, demand for gasoline, jet fuel, and other petroleum products is in freefall, as are oil prices. The price of a barrel of crude has been so low in the United States that sellers recently had to pay people to take it off their hands. As a result, oil-dependent economies are reeling. In the United States, the largest oil producer in the world, the number of rigs drilling for oil has plummeted 50 percent in just two months, almost 40 percent of oil and gas producers could be insolvent within the year, and 220,000 oil workers are projected to lose their jobs. Around the world, petrostates from Nigeria to Iraq to Kazakhstan are struggling and their currencies tanking. Some, like Venezuela, face an economic and social abyss.

While 2020 will be remembered as a year of carnage for oil nations, however, at least one will most likely emerge from the pandemic stronger, both economically and geopolitically: Saudi Arabia.

First, Saudi Arabia is proving that its finances can weather a storm such as this.
 

 Low oil prices are, of course, painful for a country that needs around $80 per barrel to balance its public budget, which is why Moody’s cut Saudi Arabia’s financial outlook last Friday. Saudi Arabia ran a $9 billion deficit in the first quarter of 2020. Like other nations, the kingdom has also seen tax revenues fall as it imposes economic restrictions to halt the pandemic’s spread. Last week, the Saudi finance minister said that government spending would need to be “cut deeply” and some parts of the kingdom’s Vision 2030 economic diversification plan would be delayed.
 

Yet unlike most other oil producers, Saudi Arabia has not only plump fiscal reserves but also the demonstrated capacity to borrow. On April 22, the finance minister announced the kingdom could borrow as much as $58 billion in 2020. Compared to most other economies, it has a relatively low debt-to-GDP ratio: 24 percent as of the end of 2019, although lately that figure has been rising. The finance minister also said Saudi Arabia would draw down up to $32 billion from its fiscal reserves. With $474 billion held by the central bank in foreign exchange reserves, Saudi Arabia remains comfortably above the level of around $300 billion, which many consider the minimum to defend its currency, the riyal, which is pegged to the dollar.
 

Second, Saudi Arabia will end up with higher oil revenues and a bigger share of the oil market once the market stabilizes, thanks to production cuts and shutdowns forced by the global economic collapse. The current oil bust lays the groundwork for a price boom in the years ahead—and burgeoning revenues for Saudi Arabia. While the outlook for future oil demand is highly uncertain, once you look beyond the immediate crisis, demand is likely to grow faster than supply.
 

The U.S. Energy Information Administration projects world oil demand to return to its pre-pandemic levels by the end of 2020. The International Energy Agency is almost as optimistic, projecting demand to be only 2 to 3 percent below its 2019 average of 100 million barrels per day by the end of the year. If measures to contain the pathogen last longer than expected or there is a second wave of the virus, the recovery will take longer, but most scenarios still expect demand to eventually recover.
 

Lifestyle changes could lower future oil demand, but the data suggests one should be skeptical of predictions of permanent shifts. In China, for example, car travel and shipping by truck is already nearly back to last year’s level, although air travel—which together with air freight accounts for 8 percent of world oil demand—remains down sharply. Oil demand could actually get a boost if more people decide private cars make them feel safer than crowded mass transit. Expectations that oil demand would be throttled by climate policy will likely be disappointed. The economic distress imposed by the pandemic risks undermining environmental policy ambition, as does the current shift to isolationism and away from the kind of global cooperation required for effective climate policy.
 

Oil supply, by contrast, will take longer to return as shut-in production is lost, investment in new supply is scrapped, and the U.S. shale revolution slows. With the oil glut pushing global oil storage to the limits—land-based storage will be full as soon as this month—an unprecedented number of producing oil wells will need to be shut off. Doing so risks damaging the reservoirs. Some of that supply will never come back, and some will take substantial time and investment to bring back online. Energy Aspects, an oil consultancy, projects 4 million barrels per day of supply could be at risk of semipermanent damage.
 

Major oil companies such as Chevron and Exxon Mobil have also slashed their capital expenditures in response to the price collapse. Even without any growth in oil demand, around 6 million barrels per day of new oil supply must be brought online each year just to offset natural production declines. Moreover, oil is already out of favor with investors concerned with the industry’s poor returns and rising political and social pressures.
 

U.S. shale oil, in particular, will take years to return to its pre-coronavirus levels. Depending on how long oil demand remains depressed, U.S. oil production is projected to decline by 30 percent from its pre-coronavirus peak of around 13 million barrels per day. To be sure, recovering oil prices will raise U.S. production again. Shale oil production remains economical, especially for the better-capitalized companies that will emerge once the assets of bankrupt companies change hands and the industry is consolidated.
 

Yet shale’s heady growth in recent years (with production growing by about 1 million to 1.5 million barrels per day each year) also reflected irrational exuberance in financial markets: Many U.S. companies struggling with uneconomical production only managed to stay afloat with infusions of cheap debt. One-quarter of U.S. shale oil production may have been uneconomical even before prices crashed, according to Citigroup’s Ed Morse. Without that froth, shale will grow more slowly, if at all. Former Goldman Sachs analyst Arjun Murti estimates that even with U.S. oil prices recovering to around $50 per barrel, annual U.S. output growth will be somewhere between zero and 500,000 barrels per day, a shadow of its former self.

Even if the United States, Saudi Arabia, and Russia make a historic show of cooperation, any respite for the oil industry will be short-lived.
 

The oil price collapse has sent shockwaves through financial markets. But the geopolitical earthquake could reach even farther.
 

Indeed, as COVID-19 sets the stage for tighter oil markets and higher prices, Saudi Arabia, along with a few other Gulf states and Russia, will not only benefit from higher prices but actually find opportunities to grow market share and sell more oil. Even now, with prices severely depressed, Saudi Arabia and Kuwait are discussing bringing more oil to market from a jointly held field straddling their border. More economically vulnerable OPEC members may find it harder to invest in restarting and maintaining (let alone increasing) supply and will thus see output growth slow. This is exactly what happened in Iran, Iraq, Nigeria, and Venezuela following the 1998-1999 oil crash.
 

Finally, by shoring up its fraying alliance with the United States and reestablishing itself as the global oil market’s swing producer, Saudi Arabia has strengthened its geopolitical position. As the major producers and consumers scrambled to prevent the oversupply of oil from overwhelming the world’s storage facilities, they finally turned to Saudi Arabia to lead OPEC and other key producers in a historic production cut. For all the talk of oil production quotas in Texas or creating a new global oil cartel through the G-20, calling Riyadh was the only real option available to policymakers at the end of the day—as it has long been. That is because Saudi Arabia has long been the only country willing to hold, at significant cost, a meaningful amount of spare production capacity that allows it to add or subtract supply to or from the market quickly. This singular position—which it just made plain once again to the world—gives the kingdom not only power over the global oil market but also significant geopolitical influence. In a global market, that will remain true until nations use much less oil, which continues to be an important goal of climate policy.
 

By leading the effort to craft an OPEC+ production cut, Saudi Arabia also reminded Moscow that Russia cannot go it alone, as it attempted to do when it walked out of OPEC+ negotiations in March and set off the price war. Moscow is more dependent on Riyadh in managing the oil market than vice versa, strengthening Saudi Arabia’s hand in their relationship—with likely repercussions in the Middle East, where Moscow has a growing military presence and cultivates allies including Syria and the Saudis’ archenemy, Iran.
 

Additionally, Saudi Arabia has improved its standing in Washington. Following intense pressure from the White House and powerful senators, Saudi Arabia’s willingness to oblige by cutting production will reverse some of the damage done when Saudi Arabia was blamed for the oil crash after it surged production in March. Saudi Arabia may also have undermined U.S. lawmakers’ plans for anti-OPEC legislation—it’s difficult to argue OPEC is a harmful cartel when both ends of Pennsylvania Avenue just begged it to act like one. U.S. vitriol will flare up again in the coming weeks, when a flotilla of Saudi tankers sent off during the price war two months ago will dump triple the normal level of deliveries onto an already saturated U.S. market. But this only means that U.S. politicians will once again have to beseech Riyadh to extend or deepen supply cuts at the next OPEC+ meeting in June.
 

Only a few weeks ago, the outlook for Saudi Arabia seemed bleak. But looking out a few years, it’s difficult to see the kingdom in anything other than a strengthened position. COVID-19 may end up doing what Saudi leaders failed to do once before, when they let oil prices crash in late 2014 in a misguided attempt to debilitate U.S. shale. Beyond the immediate crisis, the pandemic will end up bolstering Saudi Arabia’s geopolitical position, reinforcing its pivotal role in oil markets, and sowing the seeds for higher market share and oil revenues in the years ahead.

Source: U-feed

Saudi Arabia: What Happens When the Oil Stops

Saudi Arabia: What Happens When the Oil Stops
https://www.english.alahednews.com.lb/52702/499

By David Hearst, MEE

Saudi Arabia’s Crown Prince Mohammed bin Salman [MBS] can no longer plead youth or inexperience.

That time has passed.

What you see is what you get. The misrule, blunders and war associated with him as crown prince will only continue with him as king.

The full repertoire of the crown prince’s statecraft was on display in a stormy telephone call he made to Russian President Vladimir Putin on the eve of an OPEC meeting last month which ended in a calamitous price war between Saudi Arabia and Russia.

A big mistake

Mohammed bin Salman can see for himself just how big a mistake that call was. The price of oil has collapsed, storage will rapidly run out, and oil companies face the real prospect of having to cap wells. The oil and gas sector accounts for up to 50 percent of the kingdom’s gross domestic product and 70 percent of its export earnings. This has just disappeared.

As anyone who has met Putin will tell you, you can bargain as hard as you like with the Russian president. You can even be on opposing sides of two regional wars, in Syria and Libya, and still maintain a working relationship, as the Turkish President Recep Tayyip Erdogan continues to do.

But what you must not do is back Putin into a corner. This is what the Saudi crown prince did by giving Putin ultimatums and shouting at him. Putin just shouts back, knowing that the Russian balance of payments is in better shape to play that game of poker than the Saudi one is.

Report: Jared Kushner and Saudi Crown Prince communicated via ...

MBS is finding out now how weak his cards are. To be fair, before he made that call, he took advice from someone as arrogant and unthinking as he is. US President Donald Trump’s son-in-law and Middle East advisor Jared Kushner listened to what the Saudi crown prince was about to do and did not object.

This explains why Trump’s first reaction was to welcome the oil crash. Trump thought for every cent cut from the price of oil, a billion dollars of consumer spending power would be released at home. That was until his attention turned to what the oil price collapse was doing to his own oil industry.

Saudi Arabia without oil

With the price of Brent Crude less than $20, Mohammed bin Salman is about to find out what happens when the world does not need his oil. In the past, the standard response to that hypothesis was condescending looks. Not anymore. The prospect of Saudi becoming a debtor nation is real.

Saudi Arabia’s financial decline has been in the works for some time. When his father Salman took over as king on 23 January 2015, foreign reserves totaled $732bn. In December last year they had depleted to $499bn, a loss of $233bn in four years, according to the Saudi Arabian Monetary Authority [SAMA].

The kingdom’s GDP per capita has also declined, from $25,243 in 2012 to $23,338 in 2018, according to the World Bank. The nest egg has been diminished with speed. The IMF has calculated that net debt will hit 19 percent of GDP this year, 27 percent next year, while coronavirus and the oil crisis could push borrowing to 50 percent by 2022.

The war in Yemen, a coup in Egypt and interventions across the Arab world, outsized arms purchases from America, vanity projects like the building of a futuristic city NEOM, not to mention his own three yachts, paintings and palaces, each play a part in draining Saudi coffers.

Saudi’s economy was already struggling before coronavirus took hold with a growth rate of just 0.3 percent and a drop of 25 percent in construction since 2017. Add to that the lockdown imposed by coronavirus and the cancellation of the Umrah and Hajj, which attract up to 10 million pilgrims a year, and a further $8bn is wiped off the balance sheet.

But it isn’t just what the Saudi crown prince spent his money on that caused the problem. It was also what he put his money in that went bad.

Bad investments

One indication of bad investments is the decline in the relative value of sovereign wealth funds. Big brother Saudi Arabia now finds itself dwarfed by its much smaller Gulf neighbors on that score.

The chief sovereign wealth fund, Public Investment Fund [PIF], ranks at 11th in the world, behind Abu Dhabi Investment Authority, Kuwait Investment Authority and Qatar Investment Authority. When sovereign funds are pooled by nation, UAE comes first with funds worth $1.213 trillion then Kuwait with $522bn, Qatar with the $328bn and Saudi with $320bn.

Even before the coronavirus pandemic took hold, the IMF thought that plans to increase PIF to a trillion dollars would not be enough to generate the income needed if Saudi diversified from oil. If “Saudi Arabia were to grow its PIF from its current $300bn to this scale, financial returns alone would not constitute adequate income replacement in a post-oil world. Oil production of 10 million barrels per day, valued at $65 per barrel, translates to annual oil revenues of about $11,000 per Saudi at present,” the IMF wrote.

Another measure of decline is what has happened to the investments themselves. Masayoshi Son, the CEO of Japan’s Softbank, recalled how he got $45bn after spending just 45 minutes with MBS for his $100bn Vision Fund. “One billion dollars per minute,” Son said. Softbank announced last week it expects its Vision Fund to book a loss of $16.5bn.

PIF paid almost $49 a share for a stake in Uber Technologies Inc. in 2017. Uber shares have dived since. It sold almost of all its $2bn stake in Tesla toward the end of 2019, just before Tesla stock went through the roof, with an 80 percent rally this year. At this rate the PIF stake in Newcastle United is looking like a solid bet in comparison.

The oil crash comes less than two weeks after PIF splashed another $1bn on stakes in four European oil companies and the Carnival cruise liner – all of which casts in doubt the strategy of PIF diversifying away from oil. “I don’t understand why the PIF is doing what they are doing now when their country is going to need every penny,” one Middle Eastern banker told the Financial Times.

“It very much reminds me of the QIA [Qatar Investment Authority] in its early years. There’s a strategy, but they are not adhering to a strategy. They want high visibility but they also want to make money. They want to diversify the economy, but want to be opportunistic.”

No financial stimulus

Saudi Arabia today cannot afford the financial stimulus to cushion the impact of the pandemic that its Gulf neighbors are making. The kingdom is spending one percent of GDP on supporting its economy during the lockdown, while Qatar is spending 5.5 percent, Bahrain 3.9, UAE 1.8.

There are many examples of money running out. The king decreed that the state would pay 60 percent of salaries during the coronavirus shutdown.

But employees of the Saudi’s biggest telecoms company STC are only getting 10 percent of their salaries, I am told, because the government is not paying STC the money for the furloughed staff.

The Saudi Ministry of Health has been requisitioning hotels to run as hospitals. Instead of compensating hotel owners for the temporary loss of their property or paying them a cost price, they are forcing them to pay the running costs in addition to the costs of disinfecting the rooms.

Or take the paycut Egyptian doctors working in the Saudi private health sector are being forced to take. Those who are on annual leave, are not being paid. Those who are instructed to work from home on shifts by their hospitals to lessen the risk of infection, either have to take that time from their annual leave or work for free.

So, as Bloomberg reported, the prospect of Saudi becoming a net debtor nation is real. The question is how soon that happens.

The IMF calculated that with oil prices of $50 to $55 a barrel, Saudi Arabia’s international reserves would fall to about five months import coverage in 2024. With oil at zero, a once unthinkable balance of payments crisis and abandonment of the dollar peg is now all too likely.

Regional effect

Both pillars of Mohammed bin Salman’s plan to modernize and reform his country are crumbling. His plan to generate foreign investment by selling off five percent of Aramco on foreign stock exchanges has gone and now PIF, the main vehicle for diversifying his economy away from oil, is in chaos too.

Many in the region would cheer MBS’s demise. He has simply done so much harm to so many people, particularly in Egypt. In a post-oil era, MBS would lose his power of patronage, the power of an oligarch who can spend a billion pounds a minute and not blink.

But the collapse of Saudi Arabia’s economy, which for decades has been the engine room of the economy of the whole region, would quickly be felt in Egypt, Sudan, Jordan, Lebanon, Syria, Tunisia – all of which send millions of their workers and professionals to the kingdom and whose economies have grown to depend on their remittances.

This is not a prospect anyone should welcome.

هل هناك خلاف فعليّ بين الأميركيين وآل سعود؟

د. وفيق إبراهيم

يثير التهديد الأميركي لآل سعود بقطع التعاون معهم على مستويات التغطية السياسية والاستراتيجية والتسليح والتدريب والرعاية وسحب المستشارين والعسكريين الاميركيين المنتشرين في الخليج، الدهشة لأنه لا يتصل بأي توتر سابق بين الطرفين ولا يعكس تاريخاً طويلاً ومتواصلاً من الولاء السعودي الكامل للسياسة الاميركية في كل بقاع الارض.

فهذه العلاقات تطورت بعد توقيع معاهدة كوينسي في 1945 بين الرئيس الاميركي روزفلت والعاهل السعودي عبد العزيز على اساس التغطية الكاملة مقابل الولاء والتسهيلات النفطية والتبعية الاقتصادية بما جعل هذا التاريخ رمزاً لانصياع سعودي كامل وعلني وضع كامل الإمكانات الاقتصادية والدينية في خدمة الجيوبوليتيك الاميركي متيحاً بدوره للسعودية فرصة حيازة ادوار في كبيرة في الخليج والتأثير في جوارهما المباشر في العراق واليمن والعالمين العربي والاسلامي.

على هذا الاساس قامت معادلة القطبية الاميركية التي تشكل السعودية جناحها في محوريها العربي والاسلامي مع أهمية دولية نسبية.

اللافت هنا ان هذا الوضع لا يزال معتمداً حتى هذا التاريخ ويبدو منفصلاً الى درجة غريبة من نوعين من التهديد الأميركي.

الاول اطلقه الرئيس دونالد ترامب محذراً صديقته السعودية ومنافسته روسيا من الاستمرار في رفع انتاجيهما النفطي وإلا فإنه متجه الى فرض ضرائب ورسوم على صادراتهما من البترول.

اما الثاني فكان أشد عنفاً واطلقه الحزب الجمهوري الاميركي الذي ينتمي اليه ترامب معلناً فيه استعداد الدولة الاميركية قطع كامل علاقاتها مع السعودية اذا لم تتراجع عن رفع انتاجها النفطي الى مستويات اقل مما كان عليه قبل شهرين فقط.

وهذا يعني إعادته من 13 مليون برميل يومياً كما هو الآن الى تسعة ملايين كما كان في كانون الثاني الماضي… مع امل على خفضه اضافياً في اطار خفض جماعي لدول منظمة اوبيك يتعادل مع التراجعات الاقتصادية التي فرضها انتشار جائحة الكورونا المتواصل حتى الآن.

المدهش هنا أن الاميركيين يصرون على هذا الخفض رافضين تحديد سقف لإنتاجهم من النفط الصخري الشديد الكلفة والبترول العادي ويبررون بأن نفوطهم تراجعت في الآونة الأخيرة بسبب تراجع اسعار البترول الى 23 دولاراً للبرميل بعد الرفع السعودي – الروسي لإنتاجيهما فكان ان توقفت شركات النفط الصخري عن العمل، لأن كلفة استخراج البرميل الواحد من هذا النوع تتعدى الأربعين دولاراً، ما ادى الى تدهور كبير في اقتصاديات هذه الشركات الاميركية وتريد خفض الاسعار العالمية لإعادة انعاش الشركات الاميركية التي تؤمن وظائف لعشرات آلاف العمال وتؤدي دوراً مركزياً في التفاعلات الاقتصادية الكبرى، لذلك فإن هذه التطورات تدعو الى التساؤل عن اسباب صمت الاميركيين عن رفع السعودية لإنتاجها النفطي في تاريخ رفعه قبل أشهر عدة، ولماذا يعترضون الآن؟

الواضح أنهم في المرحلة الأولى اعتقدوا ان رفع الإنتاج السعودي يؤدي فوراً الى ضرب الاقتصاد الروسي المعتمد على النفط والغاز بمعدل اربعين في المئة من موازناتهم ويضاعف مصاعب ايران التي يقاطعها الاميركيون ويحاصرونها مع نفر كبير من دول تؤيدهم او تخشاهم.

لكن انتشار الكورونا والشلل الاقتصادي في العام احدث شللاً كبيراً وخطيراً وعاماً في الاقتصاد الاميركي وشركات النفط الصخري وذلك عشية انتخابات رئاسية واصبح المشروع الاميركي بضرب روسيا عبر استخدام النفط السعودي كارثة على الاميركيين ايضاً.

وإذا كان إقناع السعوديين بخفض إنتاجهم عملاً ممكناً بسهولة، فإن إقناع الروس هو المشكلة الفعلية لانهم سارعوا الى رفض الطلب الاميركي مصرين على خفض متواز بين دول «اوبيك +» اي اوبيك زائد روسيا مع النفط الأميركي.

في حين أن الأميركيين يريدون خفضاً عالمياً يسمح لشركاتهم بالعودة الى الإنتاج والتوظيف بقوة ما يسمح لترامب بكسب أصوات الفئات الشعبية في الانتخابات المقبلة.

الموضوع اذاً بالنسبة للبيت الابيض هو اقتصادي في جانبه المتعلق بإنتاج النفط وتحديد اسعاره، وهو أيضاً سياسي لعلاقته بالانتخابات الرئاسية في تشرين الثاني المقبل، وهو أيضاً استراتيجي جيوبوليتيكي لتعاطفه مع حالة التنافس الشديد مع روسيا، وتحالفاتها في ايران والصين.

الأمر الذي يوضح ان رفع الانتاج السعودي هو قرار اميركي لكن العودة عنه لم تعد كذلك بل اصبحت معادلة تحتاج الى موافقة روسيا ومنظمة الاوبيك وهناك تكمن المشكلة، لان الروس يقبلون بالخفض بمعدل يواكب تداعيات كورونا على تراجع الاقتصاد العالمي لكنهم يشترطون ان يسري هذا الخفض على النفط الاميركي ايضاً بما يؤدي الى عرقلة عودة النشاط النفطي الى الاقتصاد الاميركي.

لذلك فإن اقتصار هذا الخفض على السعوديين لن يؤدي الى النتائج الاميركية المطلوبة، فجاء التهديدان الاميركيان للسعودية بمثابة إنذار لروسيا لحلحلة تصلبها وخطاباً عاطفياً للناخبين الاميركيين بأن الحزب الجمهوري الاميركي لن يتورع عن معاقبة صديقة بلاده الاساسية اي السعودية اذا اكملت سياسة رفع انتاجها الموازية لشركات النفط الصخري وآلاف الاميركيين العاملين فيها، الامر الذي يكشف انهما ليسا اكثر من دبلجة لغوية غير قابلة للتطبيق العملي لان السعودية هي البقرة الاميركية الحلوب التي تنعش الاقتصاد الاميركي وتؤمن للسياسة الاميركية مدى اسلامياً واسعاً يزداد انصياعاً لواشنطن عندما يستعمل آل سعود أهمية بلادهم الدينية والتغطية في خدمته.

اما على المقلب الآخر الذي يذهب الى التساؤل حول امكانية آل سعود مقاومة الاميركيين بطلب خفض انتاج نفطهم فيثير الضحك لان آل سعود لم يبنوا دولة متماسكة تؤمن بشعبها وتعمل على رفع مستويات النمو والتقدم، بل عملوا على مفهوم من القرون الوسطى يعتبر ان الارض والناس والثروات والمياه هي ملك للسلطان يوزعها على من يشاء ويمنعها عما يريد، فهو ولي الامر واحكامه مطبقة على السمع والطاعة.

هناك نقطة اضافية وهي ان الحكم السعودي لم يؤسس منظومة تحالفات عربية واقليمية تعينه في اوقات الشدة، فهو يعادي ايران معتمداً على اميركا لاسقاط جمهوريتها ويعبث بالامن الاجتماعي والسياسي للعراق متلاعباً بمكوناته وطوائفه ويرتكب مجازر في اليمن تطال مئات الآلاف في هجوم مستمر من خمس سنوات ويدعم الارهاب في سورية ويعادي قطر متدخلاً في ليبيا والسودان والجزائر ومتعاوناً مع «اسرائيل».

فكيف يمكن لبلد من هذا النوع يفتقد لتأييد شعبه مثيراً كراهية جواره السياسي ان يقاوم الاوامر الاميركية وهي اصلاً غير موجودة حتى الآن؟

يتبين ان السعودية لا تزال حاجة ماسة للاميركيين بوضعيتها السياسية الحالية، وهذا يعني ان آل سعود مرتاحون ويواصلون سياسة الاسترخاء السياسي مع خنق شعبهم بأساليب القرون الوسطى.

OPEC’S STILLBORN DEAL AND COVID-19’S OVERESTIMATIONS

South Front

OPEC's Stillborn Deal And COVID-19's Overestimations
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On April 7th, Rystad Energy, a Norwegian independent energy consulting company released the 5th edition of its COVID-19 report. [pdf]

In it, several noteworthy factors are underlined.

As it’s quite apparent, and known for a while, but somehow entirely disregarded by both governments and media, the number of actual COVID-19 cases is much, much larger than the official one.

OPEC's Stillborn Deal And COVID-19's Overestimations
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Reported cases are only a fraction of the number of actual infected people:

  • Many infected people are asymptomatic. They are unaware of being infected and are never tested or registered.
  • Most sick people stay at home, and given the limited testing capacity in most countries, they are not registered as having been sick.

In populations where large groups have been tested, the following figures have been registered:

  • Infection mortality rates (IFR) of 0.3%-1.0%, averaging 0.66%
  • IFR appears stable across regions when adjusted for age.
  • Thus, IFR is a better indicator of actual infected people, rather than reported cases. However, as the time from onset to fatality is, on average, 18 days, number of fatalities is giving a rather precise figure for «true infected» 18 days earlier.

The number of critical cases could potentially be another indicator of true cases because:

  • 33% of all cases will need intensive care, according to our analysis as published earlier.
  • However, critical case reporting practices vary from country to country, and cannot be trusted in all countries.
  • Also, limited ICU capacity could lead to lower figures because people with a real need for ICU beds still do not get it.
  • The time from onset to the critical phase is typically 12 days
  • Still, the number of critical cases will also be used as an indicator to find the true number of Covid-19 cases.

Reported fatalities is currently 5.4%, or about 8 times higher than expected IFR. This is due to underreporting of actual cases.

For example, some countries tested 0.48% of the population, and of these 5% were tested positive (250 people per million, whereas the requirement for an epidemic, according to WHO is 100 sick people per 100,000).

“We can assume that primarily sick people were tested positive, but also some without symptoms. If theoretically these countries tested another 2% of the population (4x more than already tested), and 1.5% (30% of current intensity) of those were positive, total number of infected people would grow by 300 per million to 550 per million. IFR would then be 2788/(550*748) = 0.68%, i.e. close to our assumed true IFR.”

Additionally, there were, and still are, several scenarios for the pandemic, with their respective results on the economy and the moral of the general population.

Naturally, the most economically viable course of action would be for a country (or all countries together) to do nothing, the relatively low actual mortality rate would put some strain on healthcare systems, but still, demand of oil and other commodities would remain relatively high, some loved ones will pass, but what are a few lives for the good of capitalism.

The three general options of coping with the COVID-19 pandemic are presented below, and it is very apparent which course of action the countries in Europe have chosen.

The “very sudden market collapse” is likely meant in a manner that a drop in prices, margins, profits and so on would be very sudden and sharp, but then a normalization would follow, at lower, re-evaluated growth. And, as it can be seen, many (if not all) of the European countries are attempting a sort of double-sided approach, focused on both managing the virus and effective prevention.

The market collapse, however, wouldn’t effectively be “short term” since it will not return to its high levels prior to 2020 anytime soon.

OPEC's Stillborn Deal And COVID-19's Overestimations
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The “negative moral impact” means that, the propagation of the COVID-19 hype in media would mean that any government, or large business, that undertakes no actions to curb the spread of the deadly diseases is faced with a very real threat of being sent into oblivion. This is also seen from various celebrities who are churning out content, calling for people to stay home, and so on. Any action to the contrary currently has no hope of public approval (or at least very limited such approval that, in the long and even short term would lead to no benefit to the government or business).

Now, economically GDPs are going to shrink, there is no avoiding it at this part, the question is by how much.

Rystad Energy provides several graphs presented how GDP growth compares to oil demand, in thousands of barrels per day per year.

OPEC's Stillborn Deal And COVID-19's Overestimations
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Global oil demand growth is strongly related to GDP growth. The relationship is given by oil demand intensity, which gradually decreases with improved fuel efficiency and – going forward – electric vehicle market penetration. The correlation is not fully linear due to demand elasticities.

“Our research indicates that pre-virus global oil demand in 2020 would be flat if GDP growth was to slow down to 2% (IMF: “global recession”), while oil demand growth would be 1 million bpd if global GDP was to expand by 3%. However, based on the latest reporting on the spread of Covid-19 and the state of the stock markets, some macro analysts now see global GDP contracting.”

Thus, it is expected that a contraction of 4 million barrels per day in oil demand is possible in the current scenario.

“We now estimate that oil demand destruction in April could amount to 27 million barrels per day, of which nearly 5 million barrels per day will come from the three largest consumers; China, Japan and India. As a result we caution that the world may run out of storage capacity, causing refineries to shut-in and crude oil prices to reach extreme lows. With the very low oil prices expected in 2020, and high prices expected in 2022, oil companies might see a business case to close down fields today and reopen in 2022.”

And, now, to return to the OPEC+ deal, to reduce production by 10 million barrels per day in May and June would be too little too late, it is, also questionable if it would have been effective if it happened on March 6th, as well.

The deal was essentially stillborn, if the forecast of a 27-million-barrel oil demand destruction, the deal is approximately 3 times too little for it to cope, simply because there’s not enough storage capacity.

And the deal led to some increase in price, but this is simply a short-term effect and it is unlikely that it would last, or there would be a significant increase, rather, even still a decrease is expected.

Currently, Saudi Arabia aside (since a massive decrease in demand would lead the Kingdom possibly to near-bankrupt), Russia is the one most under threat of economic turmoil due to the situation.

For Russia, reducing production will require well conservation, which is associated with high costs. For example, in 2019, 7,861 new wells were commissioned in Russia, of which only 6% fell to the share of fountain wells (510 units), the operation of which is not as expensive as the wells for which sucker rod and centrifugal pumps are used (91% of the wells commissioned last year, 7,150 units).

Subsequent re-commissioning of wells will also require additional costs from companies.

But, for example, in March, Lukoil announced its intention to cut costs by $ 1.5 billion, i.e. 19% compared to 2019’s capital expenditures.

The deal was also opposed by Mexico, which only agreed to reduce production by 100,000 bpd, instead of 400,000.

At the same time, Norway did not join the agreement, which participated in the negotiations only as an observer and which, according to OPEC forecast, this year will increase production by 300,000 bps (up to 2.04 million bps). Despite OPEC calls, the United States did not coordinate production cuts.

According to Wood Mackenzie, with an average annual Brent price of $ 35 per barrel (versus $ 64 in 2019, according to the World Bank), production capacities of 4 million bpd will become unprofitable, and with a price of $ 25, the volume of lost production will increase to 10 million bpd.

The US is currently trying to benefit from this, as it will likely not reduce anything, despite US President Donald Trump saying that he would cooperate with Saudi Arabia and Russia, and praised the deal.

The other party that benefits much from this is China – as it is already, more or less, free of the COVID-19 it can begin importing cheap crude oil and fuel its recovery and further growth.

Reduced oil production could reach 20 million barrels per day by early June (compared with the announced 9.7 million), taking into account possible reductions in countries such as Brazil and Norway, as well as natural decline in production in the US and Canada, S&P Global Platts reported.

Energy Intelligence analysts add that even after a decline in production, global oil reserves in storage will increase this year by 730 million barrels and exceed the record of last August by 8%. The cuts are aimed at restraining further overstocking of the market, Energy Intelligence notes, predicting that oil prices will remain in the range of $30–40 in the next few months.

It also should be noted that while Canada formally welcomed the OPEC+ deal, it did not formally agree to a curtailment policy. Canada is the world’s fourth-largest oil producer. In February, its output was some 4.9 million barrels per day.

This paints a very clear picture of how the COVID-19 pandemic is heavily exploited for a purely economic purpose, and to pressure certain countries, who’s using the situation comes down to speculation (and possibly conspiracy theories).

At the same time, Russia, with its overly-conservative measures, supposed mistakes in estimating the situation, as well as unclarity in applying the decided measures is undermining itself, with public support for the leadership fading away.

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أوبك تخسر حربها على روسيا وإيران

د. وفيق إبراهيم

بدأت منظمة اوبك المحور الأساس للنفط على مستوى الإنتاج والسعر العالمي برحلة العودة الى اوبيك بعد أربعة اشهر تقريباً من صراعات كادت تدفع بأسعار البترول الى هاوية الخمسة دولارات للبرميل الواحد بتراجع قدره أربعون دولاراً تقريباً.

بداية يجب الإقرار بأن لا اقتصاد بلا سياسة تروّضه من أجل مصالحها الداخلية او الخارجية.

وبناء عليه، فإن السؤال هو حول الأسباب التي دعت السعودية الى رفع إنتاجها النفطي من تسعة ملايين برميل يومياً الى اثني عشرة مليوناً ونصف ينتظر الإجابة عليه لانه أدى الى خفض سعر البرميل من 45 دولاراً الى ثلاثة وعشرين فقط.

فبدا هذا الأمر كمن يطلق النار على نفسه.

فماذا جرى؟

للتنويه فإن الاتفاق الروسي السعودي منذ 2014 حول ضرورة تأمين الاستقرار لأسواق النفط أدّى عملياً الى تحالف روسي مع منظمة اوبيك التي تقودها فعلياً السعودية صاحبة الإنتاج الأكبر والاحتياطات الأضخم وهذا أنتج معادلة جديدة اطلق عليها المتخصصون اوبيك + بزيادة روسيا على اوبيك الأصلية. فنعمت اسواق النفط ابتداء باستقرار استفاد منه طرفان الروس من جهة والسعودية من جهة ثانية. انتفع الروس من تثبيت سعر البرميل في إطار 45 دولاراً للبرميل الواحد، علماً أن موارد النفط والغاز لديهم تشكل نحو 35 في المئة من موازنتهم.

اما آل سعود فاستفادوا من ابتعاد الروس عن مجابهتهم سياسياً واستراتيجياً في حروبهم وتدخلاتهم في اليمن والعراق ومجمل العالم الإسلامي باستثناء سورية طبعاً التي تربطها بروسيا علاقات تاريخيّة لم تنقطع حتى بعد انهيار الاتحاد السوفياتيّ بدليل بقاء قاعدة عسكريّة لها عند الساحل السوري على البحر الأبيض المتوسط.

لذلك فإن البحث عن المستجدّات التي حكمت الموقف السعودي برفع الإنتاج لا وجود لها في الداخل السعودي. فتبين بالتعمق أن شركات النفط الصخري الأميركي متعثرة وتخضع لديون تزيد عن 86 مليار دولار، أي أنها بحاجة إلى أسواق جديدة لبيع متزايد لنفطها مع أسعار أعلى، بذلك فقط يستطيع الرئيس الأميركي ترامب كسب هذه الشركات الصخريّة والعاملين فيها ومنع تدهور عموم الاقتصاد الأميركي خصوصاً في هذه السنة التي تشهد في خواتيمها انتخابات رئاسية أميركية يريد ترامب الفوز بها؛ ولما لا ومحمد بن سلمان مطية رائعة تتحكم باحتياطات بلاده من دون حسيب أو رقيب وبإمكانه تبديد أموالها لفرض حمايته أميركياً في مشروعه ليصبح ملكاً على السعودية.

هذه هي الاعتبارات التي أملت على إبن سلمان عقد اجتماعات طويلة مع الروس بهدف خفض الإنتاج بذريعة أن كورونا قلّص الاقتصاد العالمي بمعدلات كبيرة قابلة للمزيد من التراجع، لكن قيادة الرئيس الروسي بوتين توغّلت في تفسير الجديد السعودي وربطته بثمانينيات القرن الماضي عندما ضخت السعودية كميات كبيرة من النفط في الأسواق العالمية أدّت الى التعجيل في انهيار الاتحاد السوفياتي الذي كان يعاني أصلاً من صعوبات اقتصادية جراء منازلته الأميركيين وحيداً في حروب الفضاء والتسلّح.

واعتبروا أن هذا المشروع السعودي يبدو وكأنه مزيد من العقوبات الأميركية المفروضة عليهم والتي تكاد تحاصر كل ما يتعلق بعلاقة روسيا بالاقتصاد وأسواق الطاقة أي تماماً كمعظم العقوبات الأميركية الأوروبية الخليجية التي تخنق إيران.

لذلك رفض الروس المساعي السعودية لخفض الإنتاج لأنهم أدركوا اهدافها المزدوجة متأكدين من أنها خدمة من محمد بن سلمان لوليه ترامب على حساب الاقتصاد السعودي.

فاندفعوا بكل إمكاناتهم لمجابهة التحدّي الأميركي السعودي بالمحافظة على مستوى إنتاجهم والإصرار والضغط باتجاه خفض العقوبات على إيران ومجمل الدول المصابة بعقوبات مماثلة في سورية واليمن وفنزويلا وكوبا.

لقد اتضح للروس أن هذه العقوبات الأميركية تستهدف دولاً نفطية أساساً، وذلك لغرض وحيد وهو توفير المساحات الدولية الكبيرة لتسويق النفط الصخريّ الأميركيّ، وذلك لان استخراج هذا النوع من البترول كلفته تصل الى اربعين دولاراً أي أكثر بثلاثين دولاراً من النفوط السعودية والايرانية والروس بما يتطلب المحافظة على سعر فوق الـ 45 دولاراً للبرميل. وهذا يفترض تقليل الإنتاج لرفع السعر بالمعادلة الطبيعيّة للسوق فكانت العقوبات التي تحدّ من تسويق النفوط الإيرانية والفنزويلية وممارسة ضغط سعودي على روسيا لتخفيض إنتاجها.

اما المستفيد الوحيد هنا هو الأميركيون الذين يصبح بمقدورهم بيع نفطهم العالي الكلفة في أسواق مرحّبة به ومن دون منافسة.

فإذا كانت الدول الخاضعة للعقوبات هي الخاسر هنا، فإن السعودية أيضاً خاسرة بدورها، لأن رفعها إنتاجها يؤدي دائماً الى انخفاض الأسعار. وهذا ما تتلقاه منذ أربعة أشهر من بيع إنتاجها المتضخّم بسعر 22 دولاراً للبرميل الواحد.

ما هو واضح هنا أن الضغط الاميركي السعودي على روسيا بقذف كميات كبيرة من النفط في الأسواق أدى الى تراجع السعر، لكنه لم يكسر الموقف الروسي لذلك أصيب المخططون الأميركيون والسعوديون بيأس، لأن هذا الضغط أصاب شركات النفط الصخري الاميركي بتراجع دراماتيكي أكبر يدفعها نحو انهيار نهائيّ وشيك.

وبما أن السعودية هي الأداة الأميركية التي تهرول عند الطلب فأسرعت لنجدة وليها وحاميها وعادت لمفاوضة الروس حول إعادة إحياء أوبك + على قاعدة خفض الإنتاج نحو 35 في المئة إنما بشرط وضعه الروس وهو ان يسري هذا الخفض على النفط الأميركي أيضاً.

بذلك تتعادل القوى النفطية في الربح والخسارة على السواء بما لا يتيح لأصحاب الرؤوس الحامية في الادارة الاميركية احتكار القسم الأكبر من الأسواق بذرائع واهية منها على سبيل المثال ان الأميركيين اصحاب اكبر نفط احتياطاً وبيعاً، وهذا مردود لأن فنزويلا والسعودية هما اكبر اصحاب الاحتياطات وتليهما إيران وروسيا، فيما تتصدر روسيا رأس لائحة منتجي الغاز، لكنها لا تبيع منه أكثر من قطر صاحبة الموقع الثالث.

المشهد إذاً يكشف عن المعركة الأميركية السعودية الحالية على كل من روسيا وإيران بما يفترض استقرار اسواق النفط على أسعاره السابقة حول الـ 45 دولاراً.

لكن هذه معركة في حرب تكمن تارة وتندلع مرات أخرى فإذا كانت معركة الأسعار توقفت حالياً فإن معارك تحرير النفط الفنزويلي والإيراني والسعودي والآبار الممنوع استثمارها في اليمن بقرار أميركي سعودي هي معارك مقبلة قابلة للالتهاب في كل مرحلة تشعر فيها الأطراف العالمية أنها قادرة على تمرير سياساتها على حساب تراجع سياسات منافسيها في الفريق الآخر.

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