Baghdad grapples with ‘curse’ of US sanctions on Iran
By Omar al-Jaffal | Asia Times | August 17, 2018
Iraqi Prime Minister Haider al-Abadi has raised the level of uncertainty over how Iraq will handle long-expected US sanctions on Iran.
In the span of less than a week, Abadi went from pledging to abide by the sanctions the day after they were imposed, to backtracking on his statement.
“I said yes, we will abide … but abide when it comes to dollar transactions,” Abadi told reporters Monday. The confusion for Iraqi citizens and political parties is even greater for the Central Bank of Iraq.
“Dealing in dollars with Iran has been banned for a very long time,” the bank’s director general of financial operations, Mahmoud Dagher, told the media. “Neither the bank nor the banking system deals with Iran in dollars when it comes to foreign trade.”
Iran is not only a neighbor to Iraq, with a land border of more than 1,000 kilometers. It dominates the Iraqi market and political scene.
Prime Minister Abadi’s vocal opposition to the US sanctions stems from this hegemony, especially as he is seeking a second term in office. His coalition placed third in the May parliamentary elections and he will need Tehran’s support moving forward.
Politically, Iran has influence on a large number of Shiite parties in the government and parliament. Some of these parties have announced they will mount a “break the siege” campaign to counter the US sanctions on Iran.
Militarily, Tehran supports and trains dozens of militias in Iraq, and these groups sharply criticized Abadi over his initial acquiescence to the sanctions. The United States also holds major influence in the military and economic spheres.
As in the past, Abadi is walking a tightrope between Tehran and Washington, both of which have their share of clout in green lighting the next prime minister.
Iranian dairy, Iranian cars
Where there is political and military influence in Iraq, there is economic reverberation.
Hamid Hosseini, the secretary-general of the Iran-Iraq Chamber of Commerce, said in December that “Iraq, for Iran, equals the markets of three continents: Europe, America and Africa.”
Iranian goods account for about 17% of the Iraqi market, making it the second largest destination for exports after Turkey in this respect. Iranian exports to Iraq have risen exponentially over the past decade.
Before US sanctions were reimposed, Iran said it was seeking to control a quarter of the Iraqi market and increase the volume of trade from $13 billion in 2017 to $20 billion in the coming years.
In the markets of central and southern Iraq, one can clearly observe how Iranian goods dominate shop shelves and how dairy products occupy a large place in the refrigerators.
On the streets, the Iranian-made SAIPA and Samand cars are too many to count. The cheap, poor-quality vehicles have not only entered Iraq by highway — they are assembled at factories in the heart of the country.
Iraq’s power plants are heavily reliant on diesel and gas to operate, and in this regard, Tehran has an agreement to export diesel and about 25 million cubic meters of gas per day to Iraqi power plants.
Even so, Iraq continues to suffer from major power shortages, which this summer prompted major waves of protests as temperature hovered around 50 degrees Celsius. The Iraqi government since 2005 has been compelled to conclude successive deals with Iran to ease the shortfall, importing 1,500 to 2,500 megawatts of electricity per year.
For Iraq, Iranian religious tourism is a major source of income.
Each year, about three million Iranian pilgrims flock to the shrines of the descendants of the the Prophet Mohammad in the provinces of central and southern Iraq.
Baghdad charges a $40 visa fee per tourist, but Abadi’s government quickly announced it would reduce that amount for pilgrims as sanctions on Tehran came into effect.
Iranian goods are often the source of ridicule in Iraq for their lack of quality. But they are hugely popular in the central and southern provinces of the country, as a much more affordable option than goods made in Turkey. Not to mention the foodstuffs Iraqis depend on for their daily diet.
For much of the population, those low prices make a major difference in the household budget, especially with the rise of unemployment and poverty following the price of oil – the key export on which Baghdad relies to conduct about 97% of its economic activities.
Iran’s trade surplus with the Iraqi private sector is more than $7 billion.
Against this backdrop, the Iraqi government appears at a loss, with scant plans in place to deal with the first package of US sanctions against Iran, which is light compared to the second round coming in November.
Dr. Mohammed Saleh, an economic adviser to the prime minister, says Iraq faces a dilemma in the coming period.
“Given the closed border with Syria and the dangerous situation [on the border] with Jordan, for Iraq only Turkey remains” to compensate for the shortage in Iranian goods when the second tranche of US sanctions comes into force. “But also [Turkey] is in a vague position as a result of the US sanctions,” he added, with a note of desperation.
“Iraq will have to comply with the US sanctions on Iran and it will have to compensate for the loss of Iranian goods by producing some of them,” Saleh told Asia Times, adding that this goes especially for the gas sector.
“We will also have to revive the manufacturing of oil products by reactivating refineries suspended from work. The same goes for agriculture, if Iraq can persuade the Turkish side to up Iraq’s water quotas.”
Asked whether Iraq had immediate plans to implement what he had referred to, he said: “Unfortunately, so far there are no actual plans on the ground,” stressing that Iraq was still reeling from the war against ISIS and the failure to form a government after the latest elections.
Made in Iraq?
Falah al-Rubaie, professor of economics at the Faculty of Management and Economics at Mustansiriya University in Baghdad, said the sanctions should be seen as an opportunity for Iraq. An opportunity to reconsider its economic policy in the fields of industry and agriculture, and to start competing with Iranian goods through local production.
“Iraq has the space to activate such a policy,” Rubaie told Asia Times. “But such a decision requires political will and belief in achieving development.”
He said Iraq’s economic predicament was not for a lack of strategies. “There have been more than 16 strategies developed by successive governments related to industry, agriculture, trade and others sectors, in addition to the existence of four development plans since 2003.
“All these plans sit on the shelf because of the confusion of political decision-makers and many of them are linked to Iran politically, which facilitates the import of their products at the expense of Iraqi development plans.
“The absence of development and the return to oil revenue is what Iraqi politicians have been doing since 2003 in order to secure their personal benefits at the expense of the country’s interest,” Rubaie added.
Up till now, Iraq has not faced major issues with Tehran or Washington over the latest US sanctions.
“Trade between the two countries (Iraq and Iran) is proceeding normally,” said Nasir Behrouz, Iran’s trade adviser in Baghdad. “The import and export process with Iraq continues at all ports.
“Iran is determined to expand its presence in the Iraqi market to suit the interests of the two countries,” Behrouz was quoted as saying by the official IRNA news agency.
The US, for its part, has not flagged any sanctions violations by Iraq to date, despite alarmist reports in the local press.
The US embassy in Baghdad issued a statement of clarification after State Department spokesperson Heather Nauret warned Tuesday that Washington would “continue to hold countries accountable for any violations.”
The embassy said Nauret’s statement had been misinterpreted and stated categorically that there was “no breach of sanctions” by Iraq in dealing with Iran.
The economic adviser to PM Abadi described the sanctions against Iran as “the curse” and said that the second round was an impending disaster that Iran must redress.
He did not say whether Iraq would be able to tackle this curse and find a substitute for Iranian imports.
Italy’s NATO Racket… A Bridge Too Far
By Finian CUNNINGHAM | Strategic Culture Foundation | 16.08.2018
The catastrophic bridge collapse in Italy this week has prompted a public outcry over the country’s crumbling infrastructure and how it is putting lives at risk. But the question the public in Italy and across Europe should be asking is: why are their governments spending extra tens of billions of dollars on NATO militarism, while neglecting vital civilian infrastructure?
When the iconic Morandi motorway viaduct came crashing down this week over the city of Genoa – with a death toll so far of 39 people – the consensus among Italian news media and members of the public is that the bridge was a disaster waiting to happen.
Nearly 200 meters of the motorway flyover section spanning a river, houses and an industrial area collapsed while dozens of cars and trucks were passing. Shocked witnesses described the scene as “apocalyptic” as vehicles plunged 40 meters along with concrete and iron girding to the ground below.
Lack of due maintenance has been blamed for why the bridge collapsed. Weather conditions at the time were reportedly torrential rain storms and lightning. But those conditions can hardly explain why a whole motorway viaduct wobbled and crashed.
The Morandi Bridge was built 51 years ago in 1967. Two years ago, an engineering professor from Genoa University warned that the viaduct needed to be totally replaced as its structure had seriously deteriorated. There seems little doubt that the disaster could have been avoided if proper action had been taken by the authorities rather than carrying out piecemeal repair jobs over the years.
Italian media reports say the latest is the fifth bridge collapse in the country over the past five years, as cited by the BBC.
Now the Italian government is calling for a nationwide survey of roads, tunnels, bridges and viaducts to assess public safety amid fears that other infrastructure facilities are prone to deadly failure.
What should be a matter of urgent public demand is why Italy is increasing its national spending on military upgrades and procurements instead of civilian amenities. As with all European members of the NATO alliance, Italy is being pressured by the United States to ramp up its military expenditure. US President Donald Trump has made the NATO budget a priority, haranguing European states to increase their military spending to a level of 2 per cent of Gross Domestic Product (GDP). Trump has even since doubled that figure to 4 per cent.
Washington’s demand on European allies predates Trump. At a NATO summit in 2015, when Barack Obama was president, all members of the military alliance then acceded to US pressure for greater allocation of budgets to hit the 2 per cent target. The alleged threat of Russian aggression has been cited over and over as the main reason for boosting NATO.
Figures show that Italy, as with other European countries, has sharply increased its annual military spending every year since the 2015 summit. The upward trend reverses a decade-long decline. Currently, Italy spends about $28 billion annually on military. That equates to only about 1.15 per cent of GDP, way below the US-demanded target of 2 per cent of GDP.
But the disturbing thing is that Italy’s defense minister Elisabetta Trenta reportedly gave assurances to Trump’s national security advisor John Bolton that her government was committed to hitting its NATO target in the coming years. On current figures that translates roughly into a doubling of Italy’s annual military budget.
Meanwhile, the Italian public have had to endure years of economic austerity from cutbacks in social spending and civilian infrastructure.
Rome’s new coalition government comprising the League and Five Star Movement has called for a reversal in austerity policies and has vowed to increase public investment. Its leaders, like deputy prime minister Matteo Salvini, have also at times expressed a lukewarm view of NATO.
After this week’s bridge disaster, the populist coalition government has renewed its calls for more investment in public services.
Nevertheless, why then is Italy’s defense minister giving assurances that the country will adhere to Washington’s demands for increasing its NATO budget? Minister Trenta, who belongs to the Five Star Movement, says her government remains committed to buying up to 90 units of the US new-generation F35 fighter jet.
Aggregate figures show that Italy spent nearly $300 billion over the past decade on military. The previous decade’s outlay was even higher in constant dollar terms, before the financial crash in 2008. And yet the Italian government – despite its populist appeal – is planning to allocate even more resources to military over the coming years in order to meet Washington’s ultimatum for the NATO 2 per cent of GDP target. A target figure that seems wholly arbitrary and abhorrent in the light of so many urgent social needs and neglected public infrastructure.
If Italian motorway bridges are collapsing now, the future for public safety looks even bleaker when more of the country’s economy is diverted to satisfy US-led NATO demands.
Moreover, this dilemma is not confined to Italy. All European members of NATO are being railroaded by Washington to significantly expand their military budgets. President Trump has lambasted European states as “free loaders” cadging off “American protection”. Trump has singled out Germany for harassment to boost its military budget. After all the hectoring, the Europeans seem to be responding too. At the annual NATO summit held last month in Brussels, the Norwegian secretary-general Jens Stoltenberg boasted that non-US members had increased their national military budgets by an aggregate $40 billion in one year alone.
A cruel irony is that last year NATO planners complained that Europe’s infrastructure of roads, tunnels and bridges needed significant upgrades to facilitate mass-transport of military forces in case of a war with Russia. The implication was that European governments would have to increase their national spending on civilian transport networks specifically to facilitate NATO military requirements.
That is tantamount to a parasite craving for more blood from its host. Already European infrastructure is in disrepair largely because of economic austerity enforced by disproportionate spending on NATO militarism. At a time when public need for social investment is acute, European governments are obeying orders from Washington to plough more financial resources into subsidizing the American military-industrial complex. All this madcap, irrational expenditure is supposedly to keep European citizens safe from Russian threats.
All too evidently, however, the biggest threat to European citizens is the way Washington and its NATO racket is bleeding Europe of financial resources – resources which instead should be spent on building safe roads, bridges and other infrastructure.
Trump’s sanctions on Iran dig deeper grave for US forces in Afghanistan
By Finian Cunningham | RT | August 16, 2018
The dramatic, and seemingly unstoppable, surge of Taliban offensives across Afghanistan is proof that the US is fast becoming the latest foreign power to succumb to failure in a land known for for being the “graveyard of empires”.
But unlike past empires defeated in Afghanistan, the US stands out as singularly contributing to its own ill-fate through excessive blundering and its legacy of criminal duplicity.
In particular, Washington’s obsession with confronting neighboring Iran and plotting regime change in Tehran could well be the tipping point in Afghanistan. The point, that is, where the US tips itself into a strategic, military grave it has been digging in Afghanistan over the past two decades.
After 17 years of US military occupation costing the US taxpayer trillions of dollars, the Taliban insurgents seem to be able to launch spectacular attacks at will against the Washington-backed government in Kabul. By any measure, that portends a historic defeat for Washington’s imperial ambitions. And not just in Afghanistan.
Over the past week, a strategic city, Ghazni, only 150 kms south from the capital was under Taliban occupation for several days before the militants appeared to make a tactical retreat to surrounding areas.
Then in the capital, Kabul, on Thursday, the Taliban mounted a gun battle on a military-intelligence training base, as if to underline the ineffectualness of US-backed security forces. A military intelligence base caught in a surprise attack?
Further north, in Faryab province, an Afghan National Army base was reportedly over-run by militants with the apparent loss of 30 troops and the remaining 70 captured. Provincial elders said the base was easily captured by the Taliban because it lacked reinforcements, ammunition and food. So much for US support.
Recall that Afghanistan was supposed to be the “Soviet Union’s Vietnam”. That was how US planners like Zbigniew Brzezinski gleefully referred to Afghanistan and their nefarious scheme to inflict on the Soviets what the US had ignominiously suffered in Vietnam only a few years earlier. In 1979, Soviet troops were lured into the Central Asian country to prop up an allied government in Kabul coming under attack from US-backed tribal fighters, the Mujahideen.
Like British imperial troops a century before, the Soviets suffered defeat in the rugged mountains of Afghanistan at the hands of fearless fighters.
Of course, the Soviets were not just up against Afghans. The CIA had weaponized the Mujahideen with Stinger anti-aircraft missiles and other sophisticated munitions. Along with Britain’s MI6, the Saudis and Pakistani military intelligence, the Afghan insurgents were turned into a jihadist army which later evolved into the Al Qaeda terror network.
The irony is, however, that the “Soviet Vietnam” has now turned into another US quagmire – an American Vietnam redux.
Following the September 11 terror attacks in 2001 on New York City and Washington DC, the George W Bush administration rushed into Afghanistan in an act of revenge against Al Qaeda – the very organization that the Americans had earlier helped create.
Nearly 17 years later, the US military is still bogged down in Afghanistan with no viable exit plan in sight. The war is officially America’s longest war, surpassing the duration of the Vietnam War (1964-75).
Although US casualties are much less than was incurred in Southeast Asia, the financial cost of Afghanistan to the US economy is crippling, estimated to be up to $5 trillion, along with the Iraq war. That’s a quarter of the US total national debt of $21 trillion.
US military operations were officially supposed to end in 2014 during the Obama administration. When Donald Trump ran for the presidency in 2016, one of his winning pledges to voters was to scale back US wars. Last year, however, Trump acceded to Pentagon advice to revamp military involvement in Afghanistan, albeit under the guise of “training and support” for local forces.
As this past week’s audacious attacks by the Taliban demonstrates, the US-backed government forces are fighting a losing war. Vast areas of the country are outside of their control. Even the capital appears vulnerable to heavily-mounted raids.
Moreover, the situation can only get worse for the US and its Afghan surrogates.
What may be a decisive factor is the Trump administration’s criminal policy of aggression towards neighboring Iran. In myopic fashion, Washington’s desire to squeeze Iran with “crushing” economic sanctions is liable to rebound, by significantly worsening the security conditions in Afghanistan for US-backed forces.
That’s because as the US imposes tougher sanctions on Iran, following Trump’s abandonment of the international nuclear treaty in May this year, the deteriorating Iranian economy will have a direct deleterious impact on Afghanistan. Thousands of migrant Afghan workers rely on Iran for employment. Their salary remittances are reportedly a major lifeline for families back in Afghanistan.
With the Iranian economy already faltering under US sanctions, droves of unemployed expatriate Afghan workers can be expected to pack up and leave, cutting off the remittances that sustain much of Afghanistan’s economy.
A further impact from Washington’s sanctions on Iran is that landlocked Afghanistan will not be able to avail of Iranian sea ports for imports and exports. Trump is threatening secondary sanctions on any country continuing to do business with Iran. Unless, the US gives Afghanistan a waiver, it will be cut off from commercial ties with Iran and its trading routes to the Indian Ocean.
So, as the US-imposed economic pressure on Iran intensifies through ratcheting up of sanctions – Washington wants a total oil embargo by November – the inevitable result will be worsening social conditions in Afghanistan for the general population there. That lamentable outcome, it is reasonable to assume, will only boost popular support for the Taliban, making the US-backed Afghan forces even more insecure and ineffectual in their operations.
A third factor is that Iran could exercise a more malicious option by increasing military support covertly to the Taliban. Iran is reckoned to have developed a formidable arsenal of advanced missile technology. This week, for example, Tehran showcased a new radar-evading ballistic missile.
Given that the Americans are trying to destroy the Iranian government through vicious economic measures, it would not be at all surprising if Tehran fought back by supplying the Taliban fighters with devastating fire power to hit US forces.
Thus, by running a sanctions vendetta against Iran in the calculation that the economic pain might elicit social unrest and regime change, Washington is likely to end up inflicting serious blowback on its military campaign in Afghanistan.
America’s longest overseas war could turn out to be its most ignominious and wasteful. That’s saying something given the dozens of dirty wars that the US has engaged in over the past century. The repercussions for US global standing cannot be underestimated.
It not only ran a nearly two-decade war in Afghanistan, which was arguably illegal from the very outset, resulted in tens of thousands of casualties and was financially ruinous for the US economy, but the supposed almighty US power will have been defeated in the graveyard of empires largely by its own criminality, stupidity and arrogance.
Finian Cunningham (born 1963) has written extensively on international affairs, with articles published in several languages. Originally from Belfast, Northern Ireland, he is a Master’s graduate in Agricultural Chemistry and worked as a scientific editor for the Royal Society of Chemistry, Cambridge, England, before pursuing a career in newspaper journalism. For over 20 years he worked as an editor and writer in major news media organizations, including The Mirror, Irish Times and Independent. Now a freelance journalist based in East Africa, his columns appear on RT, Sputnik, Strategic Culture Foundation and Press TV.
Qatar pledges $15bn of direct investments in Turkey – Ankara
RT | August 15, 2018
Qatar has pledged $15 billion of direct investment in Turkey’s financial markets and banks. The news comes in a statement released on Turkey’s President’s website following his meeting with Qatar’s Emir Tamim bin Hamad Al Thani.
“The Turkish President and Emir of Qatar met today [Wednesday] in the presidential complex in Ankara. They have exchanged views on bilateral relations and regional issues, Al-Thani said that Qatar intends to directly invest $15 billion in Turkey,” said a press release after the meeting.
The Turkish lira firmed to 5.8699, from 6.04 to the US dollar after the news. The record low level of 7.2 against the greenback happened on Monday.
The Turkish officials did not provide any further information on the nature of the investments, according to AP. Erdogan’s office said the pledge was made by Qatar’s head, Al Thani.
The investment will be channeled into Turkish financial markets and banks, a government source told Reuters.
The Turkish economy has recently been hit by a record depreciation in the national currency lira. On Friday, US President Donald Trump doubled tariffs on aluminium and steel from Turkey in response to the detention of a US citizen. American pastor Andrew Brunson is being held on terrorism charges in Turkey, facing up to 35 years in prison for his alleged role in a failed coup in 2016.
In response, Erdogan announced boycott of US electronic devices, including Apple iPhones. Turkey has also hiked tariffs on US goods such as tobacco, alcohol, cars, cosmetics and others.
Protectionism for liberals
By Robert Skidelsky | Asia Times | August 15, 2018
Liberal revulsion at US President Donald Trump’s mendacious and uncouth politics has spilled over into a rigid defense of market-led globalization. To the liberal, free trade in goods and services and free movement of capital and labor are integrally linked to liberal politics. Trump’s “America First” protectionism is inseparable from his diseased politics.
But this is a dangerous misconception. In fact, nothing is more likely to destroy liberal politics than inflexible hostility to trade protection. The upsurge of “illiberal democracy” in the West is, after all, the direct result of the losses suffered by Western workers (absolutely and relatively) as a result of the relentless pursuit of globalization.
Liberal opinion on these matters is based on two widespread beliefs: that free trade is good for all partners (so that countries that embrace it outperform those that restrict imports and limit contact with the rest of the world), and that freedom to trade goods and export capital is part of the constitution, of liberty. Liberals typically ignore the shaky intellectual and historical evidence for the first belief and the damage to governments’ political legitimacy wrought by their commitment to the second.
Countries have always traded with one another, because natural resources are not equally distributed round the world. “Would it be a reasonable law,” asked Adam Smith, “to prohibit the importation of all foreign wines, merely to encourage the making of claret and burgundy in Scotland?” Historically, absolute advantage – a country importing what it cannot produce itself, or can only produce at inordinate cost – has always been the main motive for trade.
But the scientific case for free trade rests on David Ricardo’s far more subtle, counter-intuitive doctrine of comparative advantage. Countries with no coal deposits obviously cannot produce coal. But assuming that some production of a naturally disadvantaged good (such as wine in Scotland) is possible, Ricardo demonstrated that total welfare is increased if countries with absolute disadvantages specialize in producing goods in which they are least disadvantaged.
The theory of comparative advantage greatly widened the potential scope of beneficial trade. But it also increased the likelihood that less efficient domestic production would be destroyed by imports. This loss to a country’s production was brushed aside by the assumption that free trade would allocate resources more efficiently and raise productivity, and thus the growth rate, “in the long run.”
But this is not the whole story. Ricardo also believed that land, capital, and labor – what economists call the “factors of production” – were intrinsic to a country and could not be moved around the world like actual commodities. “Experience … shows,” Ricardo wrote,
“that the fancied or real insecurity of capital, when not under the immediate control of its owner, together with the natural disinclination which every man has to quit the country of his birth and connexions, and intrust himself, with all his habits fixed, to a strange government and new laws, check the emigration of capital. These feelings, which I should be sorry to see weakened, induce most men of property to be satisfied with a low rate of profits in their own country, rather than seek a more advantageous employment for their wealth in foreign nations.”
This prudential barrier to capital export fell as secure conditions emerged in more parts of the world. In our own time, the emigration of capital has led to the emigration of jobs, as technology transfer has made possible the reallocation of domestic production to foreign locations – thus compounding the potential for job losses.
Economist Thomas Palley sees the reallocation of production abroad as the distinguishing feature of the current phase of globalization. He calls it “barge economics.” Factories float between countries to take advantage of lower costs. A legal and policy infrastructure has been built to support offshore production that is then imported to the capital-exporting country. Palley rightly sees offshoring as a deliberate policy of multinational corporations to weaken domestic labor and boost profits.
The ability of companies to allocate jobs globally changes the nature of the discussion about the “gains from trade.” In fact, there are no longer guaranteed “gains,” even in the long run, to those countries that export technology and jobs.
At the end of his life, Paul Samuelson, the doyen of American economists and co-author of the famous Stolper-Samuelson theorem of trade, admitted that if countries like China combine Western technology with lower labor costs, trade with them will depress Western wages. True, citizens of the West will have cheaper goods, but being able to purchase groceries 20% cheaper at Walmart does not necessarily make up for wage losses. There is no assured “pot of gold” at the end of the free-trade tunnel. Samuelson even wondered whether “a little inefficiency” was worth suffering to protect things that were “worth doing.”
In 2016, The Economist conceded that “short-term costs and benefits” from globalization are “more finely balanced than textbooks assume.” Between 1991 and 2013, China’s share of global manufacturing exports increased from 2.3% to 18.8%. Some categories of US manufacturing production were wiped out. The United States, the authors averred, would gain “eventually.” But the gains might take “decades” to be realized, and would not be equally shared.
Even economists who concede the losses that come with globalization reject protectionism as an answer. But what is their alternative? The favored remedies are somehow to slow down globalization, giving labor time to re-skill or move to more productive activities. But this is scant comfort to those stuck in the rust belts or decanted into low-productivity, low-paid jobs.
Liberals should certainly exercise their right to attack Trumpian politics. But they should refrain from criticizing Trumpian protectionism until they have something better to offer.
Copyright: Project Syndicate, 2018. www.project-syndicate.org
US-Turkish alliance reaches the point of no return
The sense of indignation among Turks should not be underestimated, which makes this an exceptional rupture
By M.K. Bhadrakumar | Asia Times | August 15, 2018
The Turkish lira fell 22% on Friday before recovering to 17% on the backdrop of the Trump administration’s announcement to double the tariffs on imports of Turkish steel and aluminum.
The tariffs affect Turkish exports worth more than $1 billion in trade with the United States.
The US was the top destination for Turkish steel exports in 2017. Turkey came in sixth place among the countries the US imported steel from last year, while the share of Turkish steel was 7% of total US steel imports.
More to the point, President Trump brazenly hinted that this was a political decision and he tauntingly noted that he also kept an eye on the Turkish lira’s exchange rate.
Trump tweeted: “I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!”
Trump’s tweet has been the proximate cause of the market mayhem hitting the Turkish lira. This comes on top of foreign investors pulling back money in recent months from the Turkish market even as the US Federal Reserve raised interest rates and cut back on asset holdings from quantitative easing. Unsurprisingly, the dollar has sharply increased in value and the lira has lost value and Turkish bond yields have risen.
Turkey traditionally resorted to external borrowing in foreign currency to bridge current account deficits. External funds were lured to the Turkish economy due to the higher yields, fueling growth in the Turkish economy, especially in the construction sector.
With the pullback of money from the Turkish market in recent months, Turkish companies and banks, which took out loans in dollars or euros, are staring at a potential crisis in repaying their debts. In sum, the currency exchange rate volatility is turning into a debt and liquidity crisis.
The financial crisis means that many Turkish companies may have to file for bankruptcy, which will hit the banks. Meanwhile, a cycle is forming as investor confidence dips despite Turkish President Recep Tayyip Erdogan’s economic policy of low interest rates.
At such moments, psychological factors inevitably play a big part. Indeed, the Trump administration increasingly prefers to wage economic wars than deploying military force to exert “maximum pressure” in pursuit of foreign policy objectives. Russia, China, Venezuela, Iran, etc are glaring examples. Turkey now joins the rogues’ gallery.
Erdogan too has become a marked man due to his independent foreign policies that are undermining American regional strategies. Trump’s tweet virtually brags about his pressure tactic. Trump’s agenda is unmistakably to bring Erdogan down on his knees.
Turkey’s ruling Justice and Development Party traditionally drew support from the “bazaar” and the so-called “Anatolian Tigers,” who form Erdogan’s core constituency and are the worst affected in this crisis.
The intervention by credit agencies Merrill Lynch and Standard & Poor’s at critical junctures to rubbish Turkey’s credit rating was an early warning of an impending economic conflict.
Erdogan’s dilemma is two-fold. He could approach the International Monetary Fund for a bail-out, which is what Wall Street and Trump expect him to do. But if he does that, Turkish policies will be subject to tight US scrutiny. And Erdogan will not capitulate.
The alternative is that Erdogan takes help from elsewhere. In an op-ed in the New York Times last week, Erdogan sternly warned Trump: “Before it is too late, Washington must give up the misguided notion that our relationship can be asymmetrical and come to terms with the fact that Turkey has alternatives. Failure to reverse this trend of unilateralism and disrespect will require us to start looking for new friends and allies.”
However, Trump has now snubbed him by promptly doubling the tariffs on Turkish steel and aluminum. Erdogan is furious. He said on Sunday: “I declare that we have seen your plot and we are challenging it. There is no economic reason for the present [currency plunge] situation. This a plot to force Turkey to surrender in every field from finance to politics, to make Turkey and its people kneel down.”
The sense of indignation among Turks should not be underestimated, which makes this an exceptional rupture in what has been all along a problematic relationship through the past seven decades. Erdogan on Tuesday said he would enforce an embargo on all American electronic products – including the iPhone famously used to FaceTime CNN Turk the fateful night of the failed coup attempt two years ago.
Alienating Turkey to this extent will be a risky foreign-policy venture on Trump’s part. The US cannot have an effective Middle East policy while antagonizing both Turkey and Iran.
The wider regional geopolitical ramifications are yet to sink in. Turkey is a “swing” state and its policies cast shadows on several regions – from the Balkans, Caucasus and Central Asia to the Middle East and North Africa and the Mediterranean.
Iran has vastly gained in strategic depth. Tehran has expressed strong solidarity with Erdogan. A special envoy from Tehran visited Ankara and met with Erdogan on the weekend. Erdogan expressed a desire for an early meeting with Iranian President Hassan Rouhani.
Statements from Berlin and Rome already convey a growing sense of exasperation over Trump’s unwarranted sanctions against Turkey. In tackling the migrant or refugee crisis, Erdogan is a crucial partner for the EU. Turkey also has a Customs Union agreement with the EU.
The astonishing part is that all this is unfolding at a time when the US and NATO are raring to redraw the strategic map of the Black Sea to challenge Russia and when the US military presence in Iraq and Syria is facing growing local opposition.
Erdogan said on Sunday that Turkey is considering other markets and political alternatives to its “strategic partnership” with Washington. No doubt, China will be the big winner. China prioritizes Turkey as a key partner in its Belt and Road Initiative.
Trump is seriously underestimating the potency of Turkish nationalism, which is rising to a crescendo. In his Art of the Deal, nationalism has no place – business goes to the highest bidder. The Turkish opinion is hardening that the US was behind the 2016 July failed coup attempt in a concerted strategy to take control of Turkish policies, and the “economic war” is its latest manifestation.
Ex-Canadian Envoy Slams US Call on Russia for Chem Weapons Inspections as Absurd
Sputnik – 14.08.2018
WASHINGTON – US demands for Russia to accept new inspections for chemicals weapons as a condition for not imposing sanctions are absurd since an international authority has confirmed Moscow scrapped all of them, former Canadian diplomat Patrick Armstrong told Sputnik.
On Monday, the Russian Foreign Ministry in a statement said that US Skripal-related sanctions unveiled last week calling for inspections undermines the authority of the Organization for the Prohibition of Chemical Weapons (OPCW), which confirmed that Russia had destroyed all such weapons.
“The official [US] justifications for this latest set of sanctions prove that they are not the real reasons because they are too ridiculous to be taken seriously by any thinking person,” Armstrong said. “The OPCW certified… that Russia had eliminated its chemical weapons stocks. Who is supposed to certify that it still has?”
The narrative claiming that Russia carried out the fatal poisoning of defector Sergei Skripal in the United Kingdom town of Salisbury had collapsed into incoherence, Armstrong pointed out.
Now that Washington was punishing countries and businesses that did not go along with its sanctions, the sanctions would hurt US allies and probably, as with the earlier sanctions and counter-sanctions, hurt them more than Russia, Armstrong predicted.
“The upshot? The Moscow-Beijing alliance will be strengthened and Moscow’s determination to reduce its exposure redoubled,” he argued.
On Wednesday, the US State Department rolled out two rounds of anti-Russia sanctions over the Skripal affair. The first set targeting security-related exports will be implemented August 22 and the second round three months later unless Russia agrees to chemical weapons inspections.
The US government and its allies have blamed Russia for the March 4 chemical attack on double agent Sergei Skripal in Salisbury, England. Russian authorities have strongly refuted the allegations as groundless, citing lack of evidence and London’s refusal to cooperate in a probe.
Is This The Most Important Geopolitical Deal Of 2018?
By Olgu Okumus | Oilprice.com | August 13, 2018
The two-decade-long dispute on the statute of the Caspian Sea, the world largest water reserve, came to an end last Sunday when five littoral states (Russia, Iran, Turkmenistan, Kazakhstan and Azerbaijan) agreed to give it a special legal status – it is now neither a sea, nor a lake. Before the final agreement became public, the BBC wrote that all littoral states will have the freedom of access beyond their territorial waters, but natural resources will be divided up. Russia, for its part, has guaranteed a military presence in the entire basin and won’t accept any NATO forces in the Caspian.
Russian energy companies can explore the Caspian’s 50 billion barrels of oil and its 8.4 trillion cubic meters of natural gas reserves, Turkmenistan can finally start considering linking its gas to the Turkish-Azeri joint project TANAP through a trans-Caspian pipeline, while Iran has gained increased energy supplies for its largest cities in the north of the country (Tehran, Tabriz, and Mashhad) – however, Iran has also put itself under the shadow of Russian ships. This controversy makes one wonder to what degree U.S. sanctions made Iran vulnerable enough to accept what it has always avoided – and how much these U.S. sanctions actually served NATO’s interests.
If the seabed, rich in oil and gas, is divided this means more wealth and energy for the region. From 1970 until the dissolution of the Soviet Union (USSR) in 1991, the Caspian Sea was divided into subsectors for Azerbaijan, Russia, Kazakhstan and Turkmenistan – all constituent republics of the USSR. The division was implemented on the basis of the internationally-accepted median line.
After the dissolution of the Soviet Union, the new order required new regulations. The question was over whether the Caspian was a sea or a lake? If it was treated as a sea, then it would have to be covered by international maritime law, namely the United Nations Law of the Sea. But if it is defined as a lake, then it could be divided equally between all five countries. The so-called “lake or sea” dispute revolved over the sovereignty of states, but also touched on some key global issues – exploiting oil and gas reserves in the Caspian Basin, freedom of access, the right to build beyond territorial waters, access to fishing and (last but not least) managing maritime pollution.
The IEA concluded in World Energy Outlook (WEO) 2017 that offshore energy has a promising future. More than a quarter of today’s oil and gas supply is produced offshore, and integrated offshore thinking will extend this beyond traditional sources onwards to renewables and more. Caspian offshore hydrocarbon reserves are around 50 billion barrels of oil equivalent (equivalent to one third of Iraq’s total oil reserves) and 8.4 trillion cubic meters of gas (almost equivalent to the U.S.’ entire proven gas reserves). As if these quantities were not themselves enough to rebalance Eurasian energy demand equations, the agreement will also allow Turkmenistan to build the Trans-Caspian pipeline, connecting Turkmenistan’s resources to the Azeri-Turkish joint project TANAP, and onwards to Europe – this could easily become a counter-balance factor to the growing LNG business in Europe.
Even though we still don’t have firm and total details on the agreement, Iran seems to have gained much less than its neighbors, as it has shortest border on the Caspian. From an energy perspective, Iran would be a natural market for the Caspian basin’s oil and gas, as Iran’s major cities (Tehran, Tabriz, and Mashhad) are closer to the Caspian than they are to Iran’s major oil and gas fields. Purchasing energy from the Caspian would also allow Iran to export more of its own oil and gas, making the country a transit route from the Caspian basin to world markets. For instance, for Turkmenistan (who would like to sell gas to Pakistan) Iran provides a convenient geography. Iran could earn fees for swap arrangements or for providing a transit route and justify its trade with Turkey and Turkmenistan as the swap deal is allowed under the Iran-Libya Sanctions Act (ILSA, or the D’Amato Act).
If the surface water will be in common usage, all littoral states will have access beyond their territorial waters. In practical terms, this represents an increasingly engaged Russian presence in the Basin. It also reduces any room for a NATO presence, as it seems to be understood that only the five littoral states will have a right to military presence in the Caspian. Considering the fact that Russia has already used its warships in the Caspian to launch missile attacks on targets within Syria, this increased Russian presence could potentially turn into a security threat for Iran.
Many questions can now be asked on what Tehran might have received in the swap but one piece of evidence for what might have pushed Iran into agreement in its vulnerable position in the face of increased U.S. sanctions. Given that the result of those sanctions seems to be Iran agreeing to a Caspian deal that allows Russia to place warships on its borders, remove NATO from the Caspian basin equation, and increase non-Western based energy supplies (themselves either directly or indirectly within Russia’s sphere of geopolitical influence) it makes one wonder whose interests those sanctions actually served?
‘US Creating Huge Amount of Antagonism Toward Itself in Iran’
Sputnik – August 13, 2018
Last week the US reimposed its first round of sanctions on Iran with more economic sanctions aimed at Iran’s oil industry to follow in November. This comes after US President Donald Trump announced his decision in May to pull out of the Iran nuclear agreement.
Professor Seyed Mohammad Marandi, from the University of Tehran, told Sputnik that the US will isolate itself on the international stage by introducing more anti-Iranian sanctions.
Sputnik: I’d like to begin by asking you about the effect these new sanctions are likely to have on Iran, on Iran’s economy?
Seyed Mohammad Marandi: They will have a substantial effect, especially in November. The sanctions that take effect today (last week) have a more limited impact and the psychological impact has already shown itself over the past two weeks. So I don’t think that today is a major event, but in general I think, though, that the United States is miscalculating because by trying to strangle the Iranian economy and by trying to make ordinary Iranians suffer: men, women, children, young, old, the United States is creating a huge amount of antagonism towards itself.
Contrary to what the Americans would like to think it has unified not only the political establishment but the population as a whole. There is, of course, dissatisfaction among people because of the economic situation, the fall of the Iranian rial but a lot of blame is being directed towards Trump.
I also think that at the international level the United States has isolated itself because the international community sees the United States weaponizing financial institutions and the dollar. This is the sort of new way the United States carries out warfare.
In the past, they would bomb countries, they’d destroy countries, they’d kill hundreds of thousands of people through airstrikes, and through invasion. Now they no longer have that capability because of the sheer amount of money that they have to spend and the damage that it causes to the US economy, so they’re using financial warfare, but financial warfare has its own problems, and that is that gradually countries begin to create defense mechanisms.
The more they’re used, the more countries are encouraged to move away from the US dollar and to use alternative methods of trade and financial transaction to become less vulnerable.
Sputnik: When the November sanctions hit, what do you see happening? What industries will be affected the most?
Seyed Mohammad Marandi: Well it depends, I think that in some respect some industries will benefit because one of the mistakes that the Iranian administration, the current administration made, and it’s not just their mistake, previous administrations have done the same, (is to depend on oil revenues).
Because of Iran’s addiction, the addiction of all oil-producing countries to oil and oil wealth, they regularly use oil money to boost up the local currency, and the Iranian currency has always been boosted or supported by this oil wealth. So while people’s wages increase and liquidity rises, the rate between the Iranian currency and the dollar stays about the same, and this gradually creates a bigger and bigger bubble. Not only does it create a bubble, it also makes local production very difficult.
Many factories over the past few years, because of this bubble in Iran, have been shut down or they’re facing major problems. Iranian goods have been becoming more expensive than imported goods, so the fall of the rial to a more realistic rate does have its benefits, it hurts Iranians, obviously, and it creates inflation but it has made Iranian products more competitive, much more competitive. So if the government manages the situation, there could be a rise in employment and the local industries could benefit enormously from it.
The industries that will be hit are those that are linked to foreign investment, especially, from Europe and South Korea, and Japan, but their investments really haven’t been all that great, because ever since the JCPOA was signed, the United States never really implemented it. So the JCPOA, the nuclear deal, wasn’t even implemented under Obama.
So, for example, in the last three years, if I wanted to send you a single dollar to your bank account or you wanted to send me a single dollar, you couldn’t, even though Iran was supposed to be re-integrated into the global banking system. Obama prevented this from happening. So the JCPOA was never implemented in full and therefore it was very difficult for foreign investors to come in, and the United States behind the scenes was also putting pressure on foreign companies not to do trade or business, or to carry out investment in the country. So there wasn’t a great deal of investment in the first place, but this is one sector that will be hit.The second, of course, is the oil industry, where the United States will attempt to prevent Iran from exporting oil. I’m not sure how this is going to play out, but the Iranians are trying to devise mechanisms where they will continue to be able to export oil, and that is by selling oil to private companies.
As oil goes through these companies it would be more difficult for the United States to monitor where it goes and also the Iranians will be using, I think, the yuan more extensively, so they will not be reliant on the US dollar, and probably to a degree they’ll be trying to be less reliant on the euro as well, because to the Europeans it’s not clear how capable they are in standing up to the United States.
I think the Iranians will, probably, be trying to keep their oil production as high as possible, or they will probably will be able, to a large degree, to keep exporting oil at a relatively significant high amount, perhaps, closer to the current levels, but they’ll probably have to give discounts to those private companies who want to take the oil.
For more information listen to this edition of Weekend Special with Professor Seyed Mohammad Marandi:
READ MORE:
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Caspian Sea Convention Bans Military Presence of Non-Littoral States in Region
RT | August 12, 2018
Vladimir Putin attended the Caspian Sea summit in Kazakhstan which he said has “milestone” significance. There five littoral powers finally made a breakthrough on trade, security and environment following 20 years of talks.
This year’s meeting has been “an extraordinary, milestone event,” Russian President Vladimir Putin told his counterparts in Kazakhstan’s port city of Aktau, where the summit took place. Leaders of the Caspian Five came there to seal a convention on the legal status of the sea washing shores of Azerbaijan, Iran, Kazakhstan, Russia and Turkmenistan.
“It is crucial that the convention governs … maritime shipping and fishing, sets out military cooperation among [Caspian] nations and enshrines our states’ exclusive rights and responsibilities over the sea’s future,” Putin said. He added the landmark accord also limits military presence in the Caspian Sea to the five littoral countries.
From now on, no country from outside the region will be allowed to deploy troops or establish military bases on the Caspian shores. The five states themselves will also decide on how to deal with issues currently affecting the Caspian Sea region, such drugs and terrorism.
“Hotspots, including Middle East and Afghanistan, aren’t far away from the Caspian Sea,” the President stated. “Therefore, the very interests of our peoples require our close cooperation.”
The summit may give boost to digitalization of commerce, mutual trade and logistics, Putin suggested. “Transportation is one of key factors of sustainable growth and cooperation of our countries,” he argued. Additionally, the five states will establish the Caspian Economic Forum “to develop ties between our countries’ businesses,” Putin told.
The Caspian Sea is home to some 48 billion barrels of oil and 292 trillion cubic feet of natural gas in proven offshore reserves. A range of important pipelines are going through the Caspian Sea, connecting Central Asia and Caucasus with the Mediterranean.
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From the Archives
Road map for a decease plan
By Trish Schuh | Tehran Times | April 28, 2005
TEHRAN — Yasser Arafat’s removal was a triumph for Israel. It fulfilled demands for the election of anti-Intifada Prime Minister Mahmoud Abbas and his associates who “work well with Israel and America,” and whose commitment to disarm the Palestinians will enable Israeli land theft for settlements to continue without resistance or reprisal from undefended Palestinians. Israel achieved Arafat’s demise: “The obstacle to peace(s of land?) will be eradicated forever.”
According to President Bush’s closest advisors, Bush had a radical change of heart in January 2002, when he decided for the first time that Yasser Arafat was an irredeemable terrorist unfit as a peace partner. Israel confiscated the Iranian freighter Karine A in the Red Sea, allegedly with a cargo of munitions en route to Gaza militants. Upon receiving “evidence” from the CIA via Mossad that Arafat had knowledge of the shipment, Ariel Sharon got what he always wanted: America’s de facto elimination of Arafat as leader of the Palestinian Authority.
With Washington watching, Israeli tanks surrounded Arafat’s Ramallah compound while Ariel Sharon’s cabinet discussed deporting Arafat. Under intense American and European pressure, Sharon promised Bush not to assassinate him. Middle East Newsline reported that Secretary of State Colin Powell then approached Egypt, Jordan and Tunisia to provide Arafat safe haven. All refused. … continue
Aletho News Original Content
Three Mile Island, Global Warming and the CIA
By Aletho News | January 9, 2012
This article will examine some of the connections between the US and UK National Security apparatus and the appearance of the anthropogenic global warming (AGW) theory beginning after the accident at Three Mile Island. … continue
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