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.

US allegedly threatens withdraw military, air defenses from Saudi Arabia over oil prices: media

By News Desk -2020-04-08

BEIRUT, LEBANON (4:30 P.M.) – The United States may withdraw its military and air defense systems from Saudi Arabia if Riyadh and Moscow do not reach an agreement on stabilizing oil prices, the Russian news site Top War reported, citing U.S. media sources.

“A bill providing for the withdrawal of the U.S. Army and air defense systems from Saudi Arabia was prepared by Republican Senators Kevin Kramer and Dan Sullivan,” Top War reported.

“According to the new law, if Riyadh and Moscow do not agree to lower oil production to stabilize world oil prices, the United States will withdraw from the kingdom its U.S. Army personnel, Patriot anti-aircraft missile systems and THAAD anti-ballistic missile systems. It is emphasized that the withdrawn equipment and army units can be deployed on the territory of another country in the region,” they continued.

The publication reported that Saudi and U.S. officials plan to hold a conversation regarding the oil prices after the planned meeting of OPEC.

During the OPEC meeting, Russia and Saudi Arabia will negotiate to stabilize the world oil markets, which witnessed an increase in output after Riyadh and Moscow’s spat.

Russia, Saudi ‘Very Close’ to Deal Despite Earlier Reports of Delaying Meeting on Oil Output Cuts

Russia, Saudi ‘Very Close’ to Deal Despite Earlier Reports of Delaying Meeting on Oil Output Cuts

By Staff, Agencies

Saudi Arabia and Russia are “very, very close” to a deal on oil production cuts, CNBC cited Head of Russia’s Sovereign Wealth Fund, Kirill Dmitriev, as saying on Monday.

The two countries were initially set to meet Monday to discuss output cuts, but that has now been pushed back to April 9, as oil prices continue to come under pressure.

“I think the whole market understands that this deal is important and it will bring lots of stability, so much important stability to the market, and we are very close,” Dmitriev, also one of Moscow’s top negotiators, told CNBC.

Dmitriev was first to make a public declaration of the need for an enlarged supply pact, potentially involving producers outside the OPEC+ group that currently consists of the Organization of Petroleum Exporting Countries [OPEC] and some other oil producers led by Moscow.

A previous three-year deal to stabilize oil prices collapsed a month ago, with Saudi Arabia and Russia trading blames for failure to find a compromise at an OPEC+ meeting in Vienna on March 6.

Meanwhile, the G20 energy ministers and members of some other international organizations will hold a video conference to be hosted by Saudi Arabia on April 10, a senior Russian source told Reuters Monday, as part of the efforts to get the United States involved in a new deal on production cuts.

هل يستفيد اليمن من الصراع الروسيّ ـ السعوديّ؟

د. وفيق إبراهيم

لا بدّ في المنطلق من الإشارة الى ان هذا الصراع الروسي – السعودي يندلع بعد علاقات جيدة بين البلدين ابتدأت قبل نحو خمس سنوات، كما أنه يتضمن دوراً أميركياً كبيراً يقف وراء التصعيد السعودي.

لذلك فهو قتال شرس بأسلحة النفط والغاز، من شأنه الانسحاب على مجمل مواقف هذه البلدان الثلاثة في اسواق الطاقة والاقتصاد والعلاقات السياسية، ويتطلب حشد أكبر كمية ممكنة من التحالفات والمؤيدين.

ضمن هذه المعطيات يجوز السؤال عن مدى الاستفادة الممكنة لليمن من تراجع العلاقات بين السعودية وروسيا واتجاهها الى تصعيد أكبر.

لمزيد من التوضيح، فإن موسكو والرياض نسجتا قبل خمس سنوات تحالفاً في اسواق النفط ادى الى نشوء حلف بين منظمة اوبيك وروسيا اسمه «اوبيك» منجزاً استقراراً في اسعار النفط حول 68 دولاراً للبرميل على اساس محاصصات دقيقة بين دول الانتاج.

لقد انعكس هذا الوضع بتحسن كبير في العلاقات السياسية بين موسكو والرياض، فكانت السياسة الروسية تؤيد ما يتعلق بآل سعود مباشرة وتبتعد عما يضايقهم بشكل غير مباشر.

لكن سورية شكلت استثناء على هذه القاعدة بدليل ان هذين البلدين كانا في مواقع متنافسة حتى تاريخ انكفاء الدور السعودي في سورية قبل أكثر من سنة.

اما ما يتعلق باليمن، فإن روسيا قبل خمس سنوات أيّدت في مجلس الأمن الدولي تدخلاً سعودياً – إماراتياً في اليمن لمواجهة ما أسماه القرار «انقلاباً حوثياً» على السلطة الشرعيّة فيه.

وظلت موسكو مصرّة حتى قبل شهر تقريباً أن «دولة صنعاء» مشروع انقلابيّ صرف لا يمكن التعاون معه، هذا على الرغم من الانتصارات الكبيرة التي أنجزتها هذه الدولة اليمنية في وجه قوات سعودية – إماراتية وحشد كبير من المرتزقة السودانيين واليمنيين والباكستانيين ودعم بحري وجوي اميركي – بريطاني – اسرائيلي ومصري ومتنوّع.

ان انكشاف هذه الهجمات التي اتضح انها تندرج في اطار الهيمنة القطبية الاميركية مع مصالح مباشرة للسعودية في اليمن ومصالح إماراتية ايضاً، واتضاح مدى ضعف القوى اليمنية المؤيدة لهذه الهجمات، لم ترغم موسكو على تغيير مواقفها بشكل بدا فيه التنسيق النفطي بينها وبين الرياض اكثر اهمية من تداعيات حرب اليمن. هنا ظهرت روسيا دولة براجماتية لكنها لم تشارك على الاقل في الهجوم الخليجي على اليمن واكتفت بتصريحات انما عند اللزوم فقط.

إلا أن هناك مستجدات تدفع نحو خروج روسيا عن صمتها في الحرب الاميركية – السعودية على اليمن وصولاً الى حدود دعمها لدولة صنعاء اذا اقتضى الامر.

ما هو هذا الجديد؟

يندرج في إطار عاملين مستجدين: الاول هو انفجار حلف «اوبيك» لخلاف على الحصص الإنتاجية وبالتالي على تحديد الاسعار.

والثاني صمود دولة صنعاء ونجاحها في الوصول على مقربة من حدود السعودية من ناحية محافظة الجوف.

بالنسبة لانفجار حلف اوبيك مع روسيا، فسببه إصرار سعودي على خفض حصص دول هذا التحالف نحو مليوني برميل يومياً يضاف الى خفض كان قد حدث قبل بضعة اشهر.

هنا تذرّعت السعودية بضرورات الخفض للمحافظة على السعر.

فلم تقبل روسيا بهذه الذريعة وفهمت انها لإنقاذ صناعة النفط الصخري الأميركي الشديد الكلفة، فأميركا تحتاج الى اكثر من 45 دولاراً لإنتاج البرميل الواحد. وهذا ليس ممكناً في ظل المحافظة على وتيرة الإنتاج نفسها في وقت تراجع فيه الإنتاج العالمي بمعدل 40 في المئة بسبب الذعر الذي يجتاح العالم من انتشار وباء الكورونا، لكن روسيا رفضت خفض إنتاجها لأنها اعتبرت ان تداعيات كورونا لن تكون طويلة الأمد بما لا يستدعي خفض الانتاج. وحافظت على معدل إنتاجها، وذهبت ردة الفعل السعودية المنسّقة مع السياسة الاميركية نحو الاعلان عن وقف التنسيق النفطي مع روسيا ورفع انتاجها من9.5 ملايين برميل الى 13 مليون برميل يومياً في موقف تحدّ لافت للروس وفعلت مثلها الإمارات التي اعلنت عن رفع انتاجها بمعدل مليون برميل يومياً.

هنا ظهر الاميركيون علناً معلنين ان خفض الاسعار الذي اوصل سعر البرميل الى 33 دولاراً مفيد جداً للطبقة الشعبية الاميركية التي اصبح باستطاعتها شراء الوقود بأسعار رخيصة.

هنا ظهر تناقض عند الاميركيين الذين بدوا كمن يحاول الاستفادة السياسية من حركة اسعار النفط صعوداً ونزولاً، فإذا ارتفع زعموا أنه لحماية النفط الصخري الذي يتطلب استخراجه كلفة عالية، زاعمين أنهم يحمون بذلك الشركات الاميركية وعمالتها، اما اذا انخفض فيدعون على الفور انه لصالح شراء الفئات الشعبية وقوداً رخيصاً.

إلا انهم يفضلون بالحقيقة خفض الإنتاج لدعم آلاف شركات النفط الصخري ذات التأثير الكبير على التفاعلات السياسية الاميركية.

لجهة العامل الثاني، فإن دعم مجلس الأمن للهجوم السعودي على اليمن لم يؤد الى حسم المعركة، بل كشف عن نجاح دولة صنعاء بصد الهجوم عن مناطقها واستدارتها نحو هجمات مضادة وصلت الى الحدود السعوديّة بمعارك برية مع تمكّنها من الوصول الى وسط السعودية بهجمات صاروخية وأخرى بالطائرات المسيرة.

فانقلبت المعركة الى محاولات سعودية لإبعاد قوات صنعاء عن بعض انحاء محافظة الجوف حيث توجد آبار نفطية وغازية.

فأين هي مصلحة روسيا؟

اصبحت التفاهمات مع السعودية صعبة وتتجه الى مزيد من التصعيد بسبب الاصرار الاميركي على قطع العلاقات السعودية مع كل من روسيا والصين باستغلال حاجة ولي العهد السعودي محمد بن سلمان لهم في معركته الداخلية في السعودية لمحاصرة إيران بشكل دائم.

كما ان الحلف السعودي العاجز عن تحقيق انتصار في اليمن اتضح أنه أضعف من مشروع السيطرة على صنعاء، لذلك فإن روسيا المنتصرة في سورية ترى تقدمها الاقليمي رهن بمدى انسجامها مع تحالفات الدولة السورية في العراق واليمن وضرورة نسجها لعلاقات معهما في اطار استراتيجي يجمع بين السياسة والاقتصاد، علماً ان اليمن يحتوي على اهم معابر عالمية وكثير من النفط والغاز والرجال.

TRUMP IS BEING PUSHED TO CONFLICT WITH RUSSIA AMID ESCALATING OIL WAR

South Front

Trump Is Being Pushed To Conflict With Russia Amid Escalating Oil War
ILLUSTRATIVE IMAGE
On March 10th, Kuwait and Iraq, as well as the UAE joined Saudi Arabia in reducing oil prices. Iraq cut the official selling price for its Basrah Light crude for buyers in Asia by $5 a barrel for April shipments.
That’s less than the $6 reduction for Aramco’s comparable Arab Medium grade. Kuwait reduced its selling price to Asian customers by the same as the Saudis.
The UAE, the only major producer that still sets prices retroactively, lowered the cost of its four grades for February sales by $1.63 a barrel from January.
“Any price war to acquire the largest market share does not serve the interests of the producing countries,” Iraqi Oil Ministry spokesman Asim Jihad said. His country is trying to bridge oil producers’ viewpoints to reach a deal to stabilize and rebalance markets, he said in a statement.
Iraq’s state oil-marketing company, SOMO, plans to increase exports in April, according to an unnamed person, cited by Bloomberg.
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Kuwait set its April Export Crude OSP for Asian customers at a $4.65 a barrel discount to the regional benchmark, according to a price list seen by Bloomberg. That’s 60 cents lower than Aramco’s Arab Medium and $1.45 below than Iraq’s Basrah Light to the region. Kuwait’s exports to Northwest Europe were set at a record-low of a $12.60 discount.
Meanwhile, Riyadh is continuing on its “warpath” and is about to flood Europe with crude oil at a price of about $25 per barrel. The Saudi shipments, coupled with unprecedented discounts, are turning the European oil market into a major price battlefield.
Diplomatic and OPEC sources quoted by mainstream media directly say that the ongoing Saudi-led effort to crush the oil market is a pre-planned ‘agressive campaign’ against Russia. One of the main targets is the Russian ability to sale oil to Europe. The fall of oil prices allready caused a major fall of the Russian ruble and impacted negatively the Russian economy.
Trump Is Being Pushed To Conflict With Russia Amid Escalating Oil War
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European refiners including Royal Dutch Shell Plc, BP Plc, Total SA, OMV AG, Repsol SA and Cepsa SA have all received crude allocations from state-owned Saudi Aramco significantly above their normal levels, according to sources cited by Bloomberg.

The increase in volumes, known in the industry as nominations, was confirmed by Aramco to the European oil companies on Wednesday, the same people said, asking not to be named discussing private information. One of Europe’s major refiners got double its normal allocation, an unnamed source said.

Aramco cut its official selling prices by the biggest amount in more than three decades. The company made its biggest cuts for buyers in northwest Europe. An $8 a barrel reduction in most grades amounts to a direct challenge to Russia, which sells a large chunk of its flagship Urals crude in the same region.

Aramco will sell Arab Light at an unprecedented $10.25 a barrel discount to Brent in Europe.
Discounts for Russian crude immediately ballooned. Vitol Group and Trafigura Group Ltd. failed to find buyers on March 9th when they offered to sell Urals crude at the deepest discounts to a regional benchmark in almost two months.
Currently, the two countries who are suffering most from the oil war are Russia and Iran, both are also under heavy sanctions by the US. Iran’s oil sector is especially crippled owing to Washington’s “maximum pressure” campaign.
In Iraq, which as above mentioned is a major oil producer, a camp housing US-led coalition troops was hit by more than a dozen Katyusha rockets. The Taji base was hit and two US marines, as well as a British soldier were killed in the attack.
“Three Coalition personnel were killed during a rocket attack on Camp Taji, Iraq, March 11. The names of the personnel are withheld pending next of kin notification, in accordance with national policies,” the statement said.
“Approximately 12 additional personnel were wounded during the attack. The attack is under investigation by the Coalition and Iraqi Security Forces. Camp Taji is an Iraqi base that hosts Coalition personnel for training and advising missions,” it added.
A spokesperson for the UK Ministry of Defense said, “We can confirm we are aware of an incident involving UK service personnel at Camp Taji, Iraq. An investigation is underway, it would be inappropriate to comment further at this time.”
Iraq is a hot point in tensions between the US and Iran.

Furthermore, on March 11th, the US House of Representatives approved War Powers resolution, which would require US President Donald Trump receive Congressional approvement for any attacks launched against Iran. He is, however, likely to veto it.

Regardless, this means that if, for example, Yemen’s Houthis strike Aramco’s infrastructure again, and both Riyadh and Washington blame Iran, Trump will have less options in the military sphere and face much more political pressure if he opts such a move. So, one could say that the Washington political establishment is limiting the freedom of actions of the Trump administration against Iran, but, at the same time, keeps the window of opportunities for anti-Russian actions open.

Taking into account that recentl US threatened Russia with more sanctions (this time over the situation in Idlib) and the US mainstream media is in the state of constant anti-Russian hysteria, US ‘experts and analysis’ will easily find the ‘Russian trace’ in any escalation in the Middle East or any other place around the world. They already found that the Kremlin should be blamed for the ongoing oil prices collapse, despite Russia being one of the most affected parties. This happens amid the ongoing consitutional reform in Russia itself. Pro-Western forces inside Russia and the neo-liberal part of the Russian elites are actively trying to use this reform to destabilize the situation in the country and turn its course in what they call the ‘right direction’ (the surrender of the national interests to the global capital). These forces as well as their foreign backers are openly interested in the escalation of tensions between the United States and Russia.

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How black swans are shaping planet panic

March 11, 2020

by Pepe Escobar – posted with permission

Is the planet under the spell of a pair of black swans – a Wall Street meltdown, caused by an alleged oil war between Russia and the House of Saud, plus the uncontrolled spread of Covid-19 – leading to an all-out “cross-asset pandemonium” as billed by Nomura?

Or, as German analyst Peter Spengler suggests, whatever the averted climax in the Strait of Hormuz has not brought about so far “might now come through market forces”?

Let’s start with what really happened after five hours of relatively polite discussions last Friday in Vienna. What turned into a de facto OPEC+ meltdown was quite the game-changing plot twist.

OPEC+ includes Russia, Kazakhstan and Azerbaijan. Essentially, after enduring years of OPEC price-fixing – the result of relentless US pressure over Saudi Arabia – while patiently rebuilding its foreign exchange reserves, Moscow saw the perfect window of opportunity to strike, targeting the US shale industry.

Shares of some of these US producers plunged as much as 50% on “Black Monday.” They simply cannot survive with a barrel of oil in the $30s – and that’s where this is going. After all these companies are drowning in debt.

A $30 barrel of oil has to be seen as a precious gift/stimulus package for a global economy in turmoil – especially from the point of view of oil importers and consumers. This is what Russia made possible.

And the stimulus may last for a while. Russia’s National Wealth Fund has made it clear it has enough reserves (over $150 billion) to cover a budget deficit from six to ten years – even with oil at $25 a barrel. Goldman Sachs has already gamed a possible Brent crude at $20 a barrel.

As Persian Gulf traders stress, the key to what is perceived in the US as an “oil war” between Moscow and Riyadh is mostly about derivatives. Essentially, banks won’t be able to pay those speculators who hold derivative insurance against a steep decline in the price of oil. Added stress comes from traders panicking with Covid-19 spreading across nations that are visibly unprepared to deal with it.

Watch the Russian game

Moscow must have gamed beforehand that Russian stocks traded in London – such as Gazprom, Rosneft, Novatek and Gazprom Neft – would collapse. According to Lukoil’s co-owner Leonid Fedun, Russia may lose up to $150 million a day from now on. The question is for how long this will be acceptable.

Still, from the beginning Rosneft’s position was that for Russia, the deal with OPEC+ was “meaningless” and only “cleared the way” for American shale oil.

The consensus among Russian energy giants was that the current market setup – massive “negative oil demand,”positive “supply shock” and no swing producer – inevitably had to crash the price of oil. They were watching, helplessly, as the US was already selling oil for a lower price than OPEC.

Moscow’s move against the US fracking industry was payback for the Trump administration messing with Nord Stream 2. The inevitable, steep devaluation of the ruble was gamed.

Still, what happened post-Vienna essentially has little to do with a Russia-Saudi trade war. The Russian Energy Ministry is phlegmatic: Move on, nothing to see here. Riyadh, significantly, has been emitting signs the OPEC+ deal may be back in the cards in the near future. A feasible scenario is that this sort of shock therapy will go on until 2022, and then Russia and OPEC will be back to the table to work out a new deal.

There are no definitive numbers, but the oil market accounts for less than 10% of Russia’s GDP (it used to be 16% in 2012). Iran’s oil exports in 2019 plunged by a whopping 70 %, and still Tehran was able to adapt. Yet oil accounts for over 50% of Saudi GDP. Riyadh needs oil at no less than $85 a barrel to pay its bills. The 2020 budget, with crude priced at $62-63 a barrel, still has a $ 50 billion deficit.

Aramco says it will be offering no fewer than 300,000 barrels of oil a day beyond its “maximum sustained capacity” starting April 1. It says it will be able to produce a whopping 12.3 million barrels a day.

Persian Gulf traders say openly that this is unsustainable. It is. But the House of Saud, in desperation, will be digging into its strategic reserves to dump as much crude as possible as soon as possible – and keep the price war full tilt. The (oily) irony is that the top price war victims are an industry belonging to the American protector.

Saudi-occupied Arabia is a mess. King Salman is in a coma. Every grain of sand in the Nefud desert knows Jared of Arabia Kushner’s whatsapp pal MBS has been de facto ruler for the past five years, but the timing of his new purge in Riyadh speaks volumes. Princes Mohammed bin Nayef, the king’s nephew, and Ahmed bin Abdulaziz, his younger brother, are now really in detention.

The CIA is fuming: Nayef was and remains Langley’s top asset. When Saudi regime spin denounced “Americans” as partners in a possible coup against MBS, that word needed to be read as “CIA.” It’s just a matter of time before the US Deep State, in conjunction with disgruntled National Guard elements, comes for MBS’s head – even as he articulates taking over total power before the G-20 in Riyadh next November.

Black Hawk down?

So what happens next? Amid a tsunami of scenarios, from New York to all points Asia, the most optimistic say that China is about to win the “people’s war” against Covid-19 – and the latest figures confirm it. In this case, global oil demand may increase by at least 480,000 barrels a day.

Well, that’s way more complicated.

The game now points to a confluence of Wall Street in panic; Covid-19 mass hysteria; lingering, myriad aftershocks of Trump’s global trade mess; the US election circus; total political instability in Europe. These interlocked crises do spell Perfect Storm. Yet the market angle is easily explained: that may be the beginning of the end of Wall Street artificially inflated by tens of trillions of US dollars pumped by the Fed through quantitative easings and repos since 2008. Call it the calling of the central bankers’ bluff.

A case can be made that the current financial panic will only subside when the ultimate black swan – Covid-19 – is contained. Borrowing from the famous Hollywood adage, “No one knows anything,” all bets are off. Amid thick fog, and discounting the usual amount of disinformation, a Rabobank analyst, among others, came up with four plausible Covid-19 scenarios. He now reckons it’s getting “ugly” and the fourth scenario – the “unthinkable” – is not far-fetched anymore.

This implies a global economic crisis of, yes, unthinkable magnitude.

To a great extent it will all depend on how fast China – the inescapable crucial link in the global just-in-time supply chain – gets back to a new normal, offsetting interminable weeks of serial lockdowns.

Despised, discriminated against, demonized 24/7 by the “system leader,” China has gone full Nietzsche – about to prove that whatever does not kill you makes you stronger when it comes to a “people’s war” against Covid-19. On the US front, there’s scant hope that the gleaming Black “helicopter money” Hawk will crash down for good. The ultimate Black Swan will have the last word.

Saudi-Initiated All-Out Oil War Could Lead To Collapse Of Kingdom Itself

South Front

Saudi Arabia launched an all-out oil war offering unprecedented discounts and flooding the market in an attempt to capture a larger share and defeat other oil producers. This “scorched earth” approach caused the biggest oil price fall since the war in the Persian Gulf in 1991.

It all began on March 8 when Riyadh cut its April pricing for crude sales to Asia by $4-$6 a barrel and to the U.S. by $7 a barrel. The Kingdom expanded the discount for its flagship Arab Light crude to refiners in northwest Europe by $8 a barrel offering it at $10.25 a barrel under the Brent benchmark. In comparison, Russia’s Urals crude trades at a discount of about $2 a barrel under Brent. These actions became an attack at the ability of Russia to sell crude in Europe. The Russian ruble immediately plummeted almost 10% falling to its lowest level in more than four years.

Another side that suffered from Saudi actions is Iran. The Islamic country is facing a strong US sanctions pressure and often selling its oil via complex schemes and with notable discounts already.

Saudi Arabia is planning to increase its output above 10 million barrel per day. Currently, it pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day. According to OPEC and Saudi sources of The Wall Street Journal, Riyadh’s actions are part of an “aggressive campaign” against Moscow.

The formal pretext of this campaign became the inability of the OPEC+ (a meeting of representatives of member states of the Organization of the Petroleum Exporting Countries and non-OPEC members) to extend output agreements.

Saudi Arabia was seeking up to 1.5 million b/d in further oil production cuts, but this proposal was rejected by Russia. After the inability to reach the new OPEC+ deal, Saudi Arabia became the frist and only power that took aggressive actions on the market. However, it is hard to imagine that Saudi Arabia would go for such an escalation without at least an order or approval from Washington.

This came amid the detention of two senior members of the Saudi royal family – Prince Ahmed bin Abdulaziz, the younger brother of King Salman, and Mohammed bin Nayef, the king’s nephew – on March 7. This development took place just ahead of the Saudi offensive on the oil market, and was likely a tip of the ongoing undercover struggle between the pro-US and pro-national factions of the Saudi elites; and the pro-US bloc seems to have the upper hand in this conflict.

In this case, the real goal of the Saudi campaign is not only to secure larger share of the oil market and punish Moscow for its unwillingness to accept the proposed OPEC+ deal, but to deliver a powerful blow to Washington’s geopolitical opponents: Russia and Iran. Pro-Western and anti-government forces existing in both Russia and Iran would try to exploit this situation to destabilize the internal situation in the countries.

On the other hand, Saudi Arabia may soon find out that its actions have backfired. Such economic and geopolitical games amid the acute conflict with Iran, military setbacks in Yemen and the increasing regional standoff with the UAE could cost too much for the Kingdom itself.

If the oil prices fall any further and reach $20 per barrel, this will lead to unacceptable economic losses for Russia and Iran, and they could and will likely opt to use nonmarket tools of influencing the Saudi behavior. These options include the increasing support to Yemen’s Houthis with intelligence, weapons, money, and even military advisers, that will lead to the resumption of Houthi strikes on Saudi oil infrastructure.

On top of these, the Saudi leadership may suddenly find that the internal situation in the Kingdom is being worsened by large-scale protests rapidly turning into an open civil conflict.

Such a scenario is no secret for international financial analysts. On March 8, shares of Saudi state oil company Aramco slumped below their initial public offering (IPO) and closed 9.1% lower. On March 9, it continued the fall plunging another 10%.  There appears to be a lack of buyers. The risks are too obvious.

At the same time, the range of possible US actions in support of Saudi Arabia in the event of such an escalation is limited by the ongoing presidential campaign. Earlier, President Donald Trump demonstrated that a US military base could become a target of direct missile strike and Washington will not order a direct military action in response. Taking into account other examples of the US current approach towards non-Israeli allies, Riyadh should not expect any real support from its American allies in this standoff.

Political Maneuver or Economic Move: What Caused the Oil Price Collapse?

Sputnik

10.03.2020

On 9 March, oil prices plunged by over 30 percent after OPEC member states failed to agree on production cuts. Analysts are now seeking to take stock of the situation, determine what factors caused the crash, and forecast the impact of the downswing on the global economy.

A three-year pact between OPEC and Russia ended on Friday after Moscow refused to support an additional 1.5 million barrels per day cut to oil production to cope with the outbreak of coronavirus. OPEC, led by key swing producer Saudi Arabia,  responded by removing all limits on its own production, leading oil prices to plummet.

The Shale Sector

Goran Radosavljevic, Secretary General of the National Petroleum Committee of Serbia, argued that Russia’s move essentially means that Moscow “no longer wants to subsidize US shale oil production”.

“That’s what was happening de facto during the last several years, when we witnessed the United States pumping more and more oil, reaching its maximum capacity due to oil market stabilization and the decrease of oil production in OPEC+”, he explained.

Dr Huang Xiaoyong, Director of the Center for International Energy Security Studies of the Chinese Academy of Social Sciences, also mentioned the situation in the shale sector as one of the possible reasons for the current collapse of oil prices (with other possible factors being the effect of the ongoing coronavirus outbreak and a possible conflict of interests between Russia and Saudi Arabia).

“Saudi Arabia announced that they’re investing $100 billion in the launch of projects related to shale oil and gas extraction. The United States not only controls a significant share of that market, but (shale) also has high oil extraction expenses. Therefore, lower oil prices might contribute to the US being ‘pushed out’ of the market”, he suggested.

Deja Vu

Energy analyst Jeloca Putnikovic  argued that a similar situation already occurred during the past decade, when “Saudi Arabia was responsible for oil becoming cheaper”.

“As you may recall, Saudi Arabia and the United States made a deal in a bid to halt Russia’s economic growth via crude oil prices – back then, the price of oil fell to nearly $30 per barrel”, she claimed, noting that Russia and other major oil producing countries eventually agreed to coordinate on output levels with the “Saudi cartel”, in order to maintain oil prices at a level that would be acceptable to all.

Putnikovic argued that the decision made by Saudi Arabia to ramp up oil production seems to be a political rather than economic move given that Riyadh previously spoke of $80 per barrel as an acceptable price.

The MISSING Six Million BARRELS

Augusto Tandazo, an oil industry analyst from Ecuador, posed the following question in order to try and explain the current state of affairs at the oil market: if the global demand for crude oil is 100 million barrels per day, and the non-OPEC countries produce 64 million barrels per day while OPEC countries officially account for 30 million barrels per day, where do the “missing” six million barrels per day come from?

According to Tandazo, there’s a “hidden excess supply of oil from certain states, such as Saudi Arabia, Kuwait and Iraq, that is aligned with the developed countries”.

“The oil price is being manipulated and controlled by the developed countries. They present themselves as fearless defenders of the free market, but they manipulate the price via excessive supply”, he postulated.

Future Prospects

And Rafael Quiroz, a professor at the Central University of Venezuela and an oil industry expert, warned that we may witness an even bigger oil price tumble, “especially if Saudi Arabia keeps its word and opens its taps even more”.

“This would lead to excessive supply of oil that would be greater that the global demand for energy resources, and therefore would lead to an immediate and devastating collapse of oil prices”, Quiroz said.

He also dismissed earlier claims made by US President Donald Trump, who blamed the current state of affairs on disagreements between Russia and Saudi Arabia, with Prof. Quiroz arguing that Trump simply regards OPEC as an enemy of the free market and open economy, and therefore tries to meddle in the organization’s affairs.

© REUTERS / BRYAN R SMITHUS Stock Market Closes With Record 2,000-Plus Loss Amid Coronavirus Panic

On 9 March, oil prices fell by over 30 percent after OPEC member states failed to agree on production cuts amid the ongoing coronavirus outbreak.

Earlier, the organization and its non-member allies, known collectively as OPEC+, convened in Vienna to discuss a potential cut of another 1.5 million barrels per day in addition to their existing pact to reduce oil production.

The views and opinions expressed in the article do not necessarily reflect those of Sputnik.

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