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Russia’s energy export revenues forecast to soar

Samizdat | August 19, 2022

Russia will see a 38% year-on-year increase in energy earnings due to higher oil export volumes, coupled with rising natural gas prices, Reuters reported on Wednesday, citing a document from the German Economy Ministry.

According to the report, the country’s revenues are expected to jump to $337.5 billion this year, which will help shore up the Russian economy in the face of Western sanctions.

The document predicted that energy export earnings will ease to $255.8 billion next year, but will still be higher than the 2021 figure of $244.2 billion.

According to the forecast, the average gas export price will more than double this year to $730 per thousand cubic meters, before gradually falling until the end of 2025.

The document pointed out that Moscow has started to gradually boost its oil production following the sanctions-related curbs and as a result of increased purchases by Asian buyers.

Moscow has also improved its forecasts for output and exports until the end of 2025.

Overall, the German Economy Ministry forecast cited by Reuters suggested that the Russian economy is coping well with the sanctions regime and will contract by less than expected.

August 19, 2022 Posted by | Economics | | Leave a comment

Venezuela Stops Oil Shipments To Europe As Alternatives To Russian Energy Dry Up

Tyler Durden | Zero Hedge | August 19, 2022

The writing is on the wall for Europe in terms of this coming winter – It’s going to get ugly. With natural gas imports from Russia cut by 80% through Nord Stream 1 along with the majority of oil shipments, the EU is going to be scrambling for whatever fuel sources they can find to supply electricity and heating through the coming winter. Two sources that were originally suggested as alternatives were Iran and Venezuela.

Increased Iranian oil and gas exports to the west are highly dependent on the tentative nuclear deal, but as Goldman Sachs recently suggested, such a deal is unlikely anytime soon as deadlines on proposals have not been met and the Israeli government calls for negotiators to ‘walk away.’

Venezuela had restarted shipments to Europe after 2 years of US sanctions under a deal that allows them to trade oil for debt relief. However, the country’s government has now suspended those shipments, saying it is no longer interested in oil-for-debt deals and instead wants refined fuels from Italian and Spanish producers in exchange for crude.

This might seem like a backwards exchange but Venezuela’s own refineries are struggling to remain in operation because of lack of investment and lack of repairs. Refined fuels would help them to get back on their feet in terms of energy and industry. Some of Venezuela’s own heavy oil operations require imported diluents in order to continue. The EU says it currently has no plans to lift restrictions on the oil-for-debt arrangement, which means Europe has now lost yet another energy source.

Sanctions on Venezuela along with declining investments have strangled their oil industry, with overall production dropping by 38% this July compared to a year ago. Joe Biden’s initial moves to reopen talks with Maduro triggered inflated hopes that Venezuelan oil would flow once again and offset tight global markets and rising prices. Europe in particular will soon be desperate for energy alternatives, which will probably result in a scouring of markets this autumn to meet bare minimum requirements for heating.

If this occurs and no regular sources of energy can be found to fill the void left by Russian sanctions, prices will rise precipitously in the EU. Not only that, but with European countries buying up energy supplies wherever they can find them, available sources will also shrink for every other nation including the US. Get ready for oil and energy prices to spike once again as winter’s chill returns.

August 19, 2022 Posted by | Economics, Russophobia | , | Leave a comment

Russian gas transit to EU via Nord Stream to be halted – Gazprom

Samizdat | August 19, 2022

Russian energy giant Gazprom announced on Friday that transit of natural gas to the European Union via the Nord Stream 1 pipeline will be halted from August 31 to September 2 for maintenance.

“On August 31, the only working Trent 60 gas compressor unit will be shut down for three days for maintenance,” the company stated, noting that all repairs will be carried out jointly with specialists from the German manufacturer, Siemens.

Gazprom added that “Upon completion of work and the absence of technical malfunctions of the unit, gas transportation will be restored to the level of 33 million cubic meters per day,” representing roughly 20% of the pipeline’s full capacity.

The unit is the last one of the pipeline’s six turbines that was operational, with the rest in need of an overhaul. One of the turbines is currently stranded in Germany due to sanctions, after returning from repair works in Canada.

Russian gas supplies to the EU via Nord Stream 1 dropped to 20% of the maximum level last month. According to Gazprom, five turbines need to be operating to pump gas at full capacity.

European gas prices spiked after Friday’s announcement, jumping 7% to above $2,600 per thousand cubic meters.

August 19, 2022 Posted by | Economics | , | Leave a comment

‘Call to Boost Arm Supplies to Kiev by Former US Officials Violates UN Charter, US Laws’

By Ekaterina Blunova – Samizdat – 18.08.2022

Nearly 20 national security officers and former diplomats have claimed that Washington must further arm Kiev in an open letter to US President Joe Biden. According to them, the US’ “vital interests are at stake” as the Russian special operation in Ukraine allegedly poses “a clear danger to US security and prosperity.”

“The United States has no interest in Ukraine other than to avoid war with Russia,” explained Michael Springmann, a political analyst and former US diplomat with postings in Germany, India and Saudi Arabia. “That country is the holder of half the supply of atomic bombs in the world. This is extremely unprofessional, extremely dangerous, and shows the horrible ties between the military, big business and the American government. They all control the government rather than the politicians or the people.”

According to Springmann, it is especially troubling that former diplomats, national security professionals and State Department officials openly called to intensify weapons supplies to a third country.

“It’s a violation of the UN Charter and America’s own regulations and laws,” he said. “This is an absolute outrage (…) It’s dangerous nonsense.”

Among the open letter signatories are 17th Supreme Allied Commander for Europe General Philip Breedlove, former State and Defense Department official Debra Cagan, 12th Supreme Allied Commander for Europe General (Ret.) Wesley K. Clark, former Ambassador to Finland and Turkey Eric Edelman, and former Ambassador to Ukraine, Uzbekistan and others John Herbst.

The former officials urged the US president to provide Kiev with more ammunition, spare parts, short- and medium-range air defense systems and, most notably, ATACMS munitions fired by High Mobility Artillery Rocket Systems (HIMARS) “with the 300km range necessary to strike Russian military targets anywhere in Ukraine” as well as in Crimea. Previously, the Biden administration ruled out delivering long-range munitions for HIMARS.

Moreover, the authors of the open letter also cited the nuclear card as a possible option.

“The US is also a nuclear power, and it is a strategic mistake to suggest that nuclear deterrence no longer works. Nuclear deterrence still works,” they argued.

US Record of Subversive Actions Against Russia

If the letter’s signatories think that they can win a war against the Russian Federation, they are completely detached from reality, argued Springmann. Still, the letter’s agenda does not surprise him: the crux of the matter is that the US has a long record of subversive actions against Russia, he explained.

“The United States has been at war with first the Soviet Union and now the Russian Federation for the past century,” he said. “In 1919, Peace President Woodrow Wilson sent 13,000 American soldiers to fight the Bolsheviks after the Russian Revolution, and in 1940s and 50s and really into the 60s and 70s, the CIA worked closely with Nazi collaborators such as [Ukrainian nationalist leaders] Stepan Bandera and Micola Lebed, who had engaged in murder, war crimes and human rights violations.”

Much in the same vein, the former diplomat claimed that the United States staged a coup in Ukraine in 2014 and “had done their best to ensure that former CIA officials had gone to Ukraine to help set up NGOs and other government agencies.” He warned that the Biden administration is currently arming Kiev and neo-Nazi battalions, thus prolonging the conflict.

“Biden and his predecessors had advanced NATO up to the very frontier of the Russian Federation and now has NATO members stretching from the Baltic to the Balkans,” Springmann said. “They have American bases in these countries and there are other American bases encircling the Russian Federation and other countries.”

Who Benefits From Ramping Up the Russo-Ukraine Conflict?

While US military contractors like Lockheed Martin, Boeing and Raytheon have benefitted from Biden’s arming of Ukraine, US and European economies have already suffered from the anti-Russia strategy, according to Springmann. Anti-Russia sanctions and the energy embargo have backfired on the US and Europe by sending food and gasoline prices higher and accelerating already soaring inflation.

“The result, of course, has been a collapse of the American economy, a collapse of the European economy,” said the former diplomat. “I’ve seen articles in Germany about how the country is cutting back its lighting systems, telling people not to use hot water for showers and not to use the heating system in their homes and apartments. What Biden and his neocon crazies have done is essentially destroy the European and the American economies.”

According to Business Insider, the US has already provided Kiev with roughly $10 billion in security assistance under Joe Biden. The aid packages included HIMARS, Stinger anti-aircraft systems, Javelin anti-armor systems, drones, small arms, and attack helicopters, among other systems.

On August 8, the Pentagon detailed the content of a $1 billion assistance package for Ukraine provided under presidential drawdown authority, the 18th drawdown so far. According to the DoD’s official website, among the items included in the latest package are additional ammunition for HIMARS; 75,000 rounds of 155 mm artillery ammunition; twenty 120 mm mortar systems and 20,000 rounds of 120 mm mortar ammunition; munitions for the National Advanced Surface-to-Air Missile Systems, or NASAMS; and 1,000 Javelin and hundreds of AT4 anti-armor systems.

August 18, 2022 Posted by | Economics, Mainstream Media, Warmongering, Militarism, Timeless or most popular | , , | Leave a comment

UNSC Sanctions on Hiring of Workers From North Korea Do Not Apply to Donbas

Samizdat – 18.08.2022

The UN Security Council sanctions against North Korea do not apply to the Donbas republics, Director of the Department of International Organizations at the Russian Foreign Ministry Pyotr Ilyichev said in an interview with Sputnik.

Earlier, the head of the Donetsk People’s Republic (DPR), Denis Pushilin, said the republic is negotiating with Pyongyang on the arrival of builders from North Korea. In July, North Korea recognized the independence of the DPR and Lugansk People’s Republic (LPR).

“The recruitment of labor from North Korea is subject to international restrictions established by UN Security Council resolutions. However, it must be taken into account that they apply to the member states of the world organization, which the people’s republics of Donbas are not,” Ilyichev said.

He said Russia will not force Donbas and North Korea to avoid cooperation.

August 18, 2022 Posted by | Economics | , | Leave a comment

No longer a pariah? Russia and China could be about to ‘normalise’ North Korea

By Timur Fomenko | Samizdat | August 18, 2022

At the beginning of this week the North Korean Central News Agency (KCNA) reported that Russian President Vladimir Putin had exchanged letters with Supreme Leader Kim Jong Un.

The report stated both countries had agreed to “expand the(ir) comprehensive and constructive bilateral relations with common efforts”.

Matching the anniversary of Korean independence on August 15th, Putin’s outreach comes as Russia seeks new partners away from the West. It also follows reports that North Korean expatriate workers would be assisting in the reconstruction of liberated territories in the Donetsk and Lugansk People’s Republics, to which it recently granted diplomatic recognition.

But it’s also an indication that the world has changed, significantly. Only a few years ago Russia, as well as China, were at least somewhat willing to cooperate with the United States in imposing sanctions on the DPRK in the bid to curb its nuclear and missile development.

That situation no longer exists. The outbreak of the conflict in Ukraine, combined with America’s bid to try and contain the rise of China, now means we exist in a multipolar international environment where multiple great powers are competing for influence.

This breaks down the space for cooperation over common issues, but also increases the need for strategic thinking among the competitors. In the eyes of Moscow, this makes their calculus concerning North Korea even more important than it was before, drawing parallels to the Cold War era.

We should not forget that it was the Soviet Union that enabled the creation of the DPRK in the first place. It was following the closing days of World War II that a strategic contest for influence in East Asia began to emerge between the US and the USSR over the former territories of Imperial Japan. As the Red Army marched south, an agreement was made to divide the Korean Peninsula at the 38th parallel.

Although the original agreement was designed only to make the division temporary, geopolitical frictions soon saw it become permanent, and rival Korean states emerged. The US-backed Republic of Korea in the South, and the Soviet- and China-supported Democratic People’s Republic of Korea (DPRK) in the North, headed by former Red Army captain and guerrilla fighter Kim Il-sung.

The two young nations went to war in 1950, again supported by their respective superpower backers. Active fighting in that conflict ended three years later, but a formal peace agreement has not been signed to this day. And while Koreans on both sides of the divide wish for reunification, the scale of foreign involvement in the 1950s war stands as a reminder the peninsula is seen as a strategically critical landmass linking the continent of mainland Eurasia to the eastern seas.

Great powers have always seen it as a chess piece in the bid to dominate North East Asia. This had led to a tug of war which over the centuries has included the Ming and Qing Dynasties, the Russian Empire, the Empire of Japan and the United States, the People’s Republic of China and the Soviet Union.

But for the last three decades, since the end of the original Cold War, North Korea found itself increasingly isolated as China and Russia, for a period of time, both sought ties with the West, as well as the much more lucrative and successful South Korea. US unipolarity meant there was little interest from Moscow or Beijing in opposing America’s wishes to curb Pyongyang’s nuclear trajectory, which it sees as its last hope for regime survival.

But now a new paradigm is emerging, and just like in the times of old the DPRK, it’s seen yet again as a strategically indispensable bulwark against American power and military hegemony on Russia’s own border periphery, not least against its US-backed neighbors such as Japan.

In such an environment, there is no longer any benefit for Russia in cooperating with the US on the North Korean issue. The horse of “North Korea denuclearization” has long bolted, and instead the presence of a nuclear armed DPRK with ICBM capability is another thorn in Washington’s side, which if removed, only expands US power.

Thus, when America demanded another sanctions resolution against North Korea at the UN Security council earlier this year, both Russia and China vetoed it for the first time in over 15 years. It is a sign of the world we live in.

Moving on from here, Russia is likely to deepen its military and economic ties with North Korea, primarily because of its strategic and political worth.

In this view, history has completed a full circle and as the US shores up its allies to confront Moscow and Beijing, the theme of “bloc politics” re-emerges.

August 18, 2022 Posted by | Economics | , , | Leave a comment

EU gas prices are seven times higher than in US

Samizdat | August 18, 2022

European natural gas prices are trading at levels equivalent to about $70 per million British Thermal Unit (BTUs), which is roughly seven times higher than prices in the United States, CNN reported on Wednesday, citing Lipow Oil Associates.

Analysts told the outlet that Europe’s natural gas crisis is contributing to higher prices in America, noting however that it’s not the main driver. US natural gas prices have surged to levels unseen since 2008, closing at $9.33 per million BTU on Tuesday.

“Higher global prices are trickling down to the US. Natural gas has become a global commodity with the emergence of LNG,” said Rob Thummel, senior portfolio manager at Tortoise Capital Advisors.

The United States has stepped up its exports of LNG to Europe in an effort to mitigate the impact of declining flows from the continent’s major natural gas supplier, Russia.

“Every spare molecule we can find, we are shipping to the Eurozone,” Robert Yawger, vice president of energy futures at Mizuho Securities, said.

European gas prices have quadrupled since the start of the year on thinning Russian flows. This week, the cost of gas futures on the TTF hub in the Netherlands exceeded $2,600 per thousand cubic meters for the first time since March. Prices are forecast to spike 60% this winter, exceeding $4,000 per thousand cubic meters.

August 18, 2022 Posted by | Economics, Malthusian Ideology, Phony Scarcity | , | Leave a comment

Energy crisis forces EU aluminum plant to shut down

Samizdat | August 18, 2022

The Slovalco aluminum smelter in Slovakia announced on Wednesday it will shut down primary production by the end of September.

“The decision to terminate primary aluminum production at Slovalco comes in response to adverse framework conditions and high electricity prices, which show no signs of improvement in the short term,” the plant’s majority owner, Norsk Hydro, said in a statement.

It explained that the Slovalco casthouse in central Slovakia is continuing its recycling operation, serving customers in the region with 75,000 tons of recycled aluminum annually.

The plant’s CEO told media that the Slovalco plant was a key supplier for Slovak and other European companies. After stopping production, Europe will be forced to import aluminum from countries including Russia and China, he added.

Slovalco’s shutdown follows a similar decision this week to cease production at a zinc smelter in the Netherlands.

August 18, 2022 Posted by | Economics | | Leave a comment

World order looks different from Moscow, Beijing

BY M. K. BHADRAKUMAR | INDIAN PUNCHLINE | AUGUST 17, 2022

The Chinese Defence Ministry announced today its participation in the Vostok 2022 strategic command and staff exercise in Russia, which is slated for August 30-September 5. The low-key statement in Beijing said China will send some troops and the participation is within the framework of the two countries’ annual cooperation plan. 

The statement mentioned that “India, Belarus, Tajikistan, Mongolia and other countries will also participate.” It said the Chinese participation “aims to deepen pragmatic and friendly cooperation with the militaries of the participating countries, enhance the level of strategic coordination among all participating parties, and enhance the ability to deal with various security threats.”

In what can be construed as an oblique reference to the conflict in Ukraine and the big power tensions in general, Beijing stated that the exercise is “unrelated to the current international and regional situation.” 

Vostok is one of the capstone events of the Russian Armed Forces’ annual training cycle to test national preparedness for large-scale, high-intensity warfare against a technologically advanced peer adversary in a multidirectional, theatre-level conflict. 

Vostok 2018 involved approximately 300,000 troops –- as well as 1,000 fixed-wing aircraft and helicopters, 80 ships, and 36,000 tanks, armoured and other vehicles — and was unprecedented in scale. And Russian, Chinese and Mongolian forces were the sole participants and was hyped up as a carefully orchestrated Russian-Chinese military demonstration. 

It seems the Chinese participation will be scaled down, notwithstanding the gathering storms on the horizon for both Russia and China. The Chinese announcement comes a day after Russian President Vladimir Putin used exceptionally harsh language to condemn the “Western globalist elites,” accusing them of provoking chaos, “fanning long-standing and new conflicts and pursuing the so-called containment policy” in the pursuit of an agenda “to keep hold onto the hegemony and power that are slipping from their hands.” Putin alleged, “They need conflicts to retain their hegemony.” 

The speech while addressing the 10th Moscow Conference on International Security in Moscow on Tuesday, also contained some pointed references to the Asia-Pacific region. Putin said: 

“NATO is crawling east and building up its military infrastructure… US has recently made another deliberate attempt to fuel the flames and stir up trouble in the Asia-Pacific. The US escapade towards Taiwan is not just a voyage by an irresponsible politician, but part of the purpose-oriented and deliberate US strategy designed to destabilise the situation and sow chaos in the region and the world. It is a brazen demonstration of disrespect for other countries and their own international commitments. We regard this as a thoroughly planned provocation. 

“They want to shift the blame for their own failures to other countries, namely Russia and China, which are defending their point of view and designing a sovereign development policy without submitting to the diktat of the supranational elites. 

“We also see that the collective West is striving to expand its bloc-based system to the Asia-Pacific region, like it did with NATO in Europe. To this end, they are creating aggressive military-political unions such as AUKUS and others.”          

Significantly, Putin called for “a radical strengthening of the contemporary system of a multipolar world.” He said, “ All these challenges are global, and therefore it would be impossible to overcome them without combining the efforts and potentials of all states… 

“Russia will actively and assertively participate in such coordinated joint efforts; together with its allies, partners and fellow thinkers, it will improve the existing mechanisms of of international security and create new ones, as well as consistently strengthen the national armed forces and other security structures by providing them with advanced weapons and military equipment. Russia will secure its national interests, as well as the protection of its allies.” 

Notably, however, the Chinese commentaries generally steer clear of bracketing the Taiwan question and the conflict in Ukraine as analogous, as symptomatic of the birth throes of a multipolar world. In a commentary today, the senior editor with People’s Daily, Ding Yang once again flagged that the real danger is that the US and China may “sleepwalk into conflict.” 

He wrote that the US is “like a runaway horse running wildly to the precipice of war,” but the aim is how to profit from a war, or rather “how to profit from someone else’s war.” Ding took a Marxian perspective that the US policy is driven by the interests of US capital and “Washington sees China as an enemy because it has moved the US cheese.” 

As he sees it, at its core the US strategy is “to squeeze China out of the global market and manufacturing chain.” Thus, even with regard to Taiwan, “One of the main aims is to create tensions and further pulling Taiwan Semiconductor Manufacturing Company into the US chip siege against China.” 

Ideology, human rights, etc., are only alibis for the capital competition for markets. Plainly put, it unnerves the US that “Chinese capital is also starting to go global.” 

Deng is confident that “If we follow the logic of capital development as they see it, what matters is that Chinese manufacturing will eventually push them out of the global industrial chain, leaving them with no money to make and no work to do. So the first thing they want to do is to maximise their share of the Chinese market.” 

“Then the next thing to do is inevitably to implement a global stranglehold on Chinese capital and Chinese manufacturing.” This is where the danger lies, as “the option of war is an inherent part of US capital export and expansion.” 

But China’s advantage is that “in contrast to the historical path of Western capital’s global expansion, there is a logic of “common development” behind Chinese capital going abroad.” 

Interestingly, the government newspaper China Daily reported today that China’s holdings of US Treasuries have been further reduced through July, but China is only one of many other countries doing so, including Japan, reacting to the Fed’s tightening cycle.

But “the decline may gradually decelerate.” The point is, it is “unrealistic” for China to give up on US debt holdings so long as the US Treasuries remain a critical international reserve asset! This is diametrically opposite the revisionist path Russia took. 

August 17, 2022 Posted by | Economics | , , , , , , | Leave a comment

Cost of keeping Britons out of energy poverty revealed

Samizdat | August 15, 2022

The UK government will need to spend a further £12 billion ($14.5 billion) on a support package for households to keep pace with higher-than-expected energy prices, the Institute for Fiscal Studies (IFS) said in a report on Monday.

According to the research, the money is required if the government still wants to provide the same level of aid it set out this spring.

In May, former UK Chancellor Rishi Sunak announced that the government’s aim was to make up for half of the cost of energy price increases to households. The effect of that support has shrunk as energy costs continue to soar. In May, energy prices were expected to rise by 95% in 2022-23, but are now expected to rise by 141%, according to the report.

The IFS said the cost of living is now expected to be 11.3% higher this financial year than last, with inflation peaking in the last quarter of 2022 at 13.1%.

The think tank warned that the poorest households will experience inflation of an “eye-watering” 18% in October due to energy price growth, compared to 11% for the richest households.

“The government is still playing catch up as inflation and the cost of energy continue to spiral upwards,” IFS Director Paul Johnson said. “Just achieving what they wanted to achieve back in May will cost an additional £12 billion, and a package on that scale will still leave many households much worse off.”

August 15, 2022 Posted by | Economics, Malthusian Ideology, Phony Scarcity | | Leave a comment

Pelosi’s visit was a wake up call for China: Appeasing the US will never work

By Timur Fomenko | Samizdat | August 10, 2022

China’s announcement that it was suspending eight channels for cooperation and dialogue with the US following House Speaker Nancy Pelosi’s visit to Taipei appears to mark a break with the country’s previously overly indulgent approach to Washington’s caprice. The Americans’ reaction, meanwhile, was as predictable as it was revealing.

Washington unsurprisingly condemned the cutting of ties and insisted it did nothing wrong in giving the go-ahead for Pelosi’s visit.

Such a reaction might tell us a few things about US President Joe Biden’s China policy as a whole. In short, it can be described as ‘having your cake and eating it’. The US believes it can get away with treating China as an enemy in most areas but still selectively solicit cooperation in the pursuit of US interests in others. This stems from the unilateralist nature of American foreign policy, which strives to maximize its own advantages at all costs and never offer concessions in negotiations with adversaries.

But finally, the US went too far, and China has made clear that it has now had enough. Cooperation can now only be conditional on respecting China’s core interests. Some say this has been long overdue.

Why so? Because for a long time, China was perhaps way too patient with the United States. As Washington continually meted out malice, Beijing still believed the relationship could somehow be salvaged, repaired or rekindled, and kept showing the Americans good will they didn’t deserve.

China believed engagement was the answer. This is a product of the country’s post-Deng Xiaoping foreign policy doctrine, which above all emphasizes stability and taking only calculated risks. China reasoned that its development and rise would be jeopardized if it confronted the hegemon that sought to contain it.

This idea was great in the 1980s and 1990s, when China was not a threat to the US, and the Americans believed it was destined to liberalize. But that ‘end of history’ world doesn’t exist anymore.

And China has been slow to respond to that – meaning that its foreign-policy assumptions have recently led it to make strategic missteps again and again. During the first year of the Trump administration, Beijing decided to engage with Trump and give him what he wanted on the issue of North Korea, rolling out the red carpet for him in the Forbidden City, believing it would temper the feared anti-China turn his administration had promised previously.

It didn’t work. Once Trump got what he wanted from Xi on North Korea sanctions, he commenced his anti-China foreign policy the following year in 2018. He unleashed the trade war, he blacklisted Huawei and scores of other Chinese companies, while his administration rolled out the Xinjiang narrative to taint China’s engagement with the West.

But China still held firm to engagement, focusing on negotiating a trade deal with Trump. This seemed to work in January 2020. Then Covid-19 came, hitting the US hard, and the Trump administration’s hostility to China went off the charts. The opportunity was taken to permanently shift US foreign policy into an adversarial cold-war mode.

What did Beijing do? Seeing an election on the horizon, it waited. Trump after all, the Chinese reasoned, was just a bad spell, erratic and destabilizing, and the US surely would become reasonable again once he was gone. They decided to wait him out and pursue an all-out effort to engage Biden instead, again hoping to rekindle the relationship.

It was wrong again. The Biden administration not only immediately embraced Trump’s entire foreign policy but actually expanded it. China attempted to engage, but nothing changed and displays of relentless hostility continued. Every meeting the Biden administration pursued with China was accompanied by an announcement of new sanctions both before and after it.

The American rendering of China as new cold-war style adversary was now a permanent consensus and feature of US foreign policy that goes far beyond one man. Worse still, Washington began to ‘multilateralize’ this approach and co-opt allies into joining in.

China, of course, knew this but was naïve or too optimistic in believing the reality could be averted. It was not until late 2021 that it began to ‘wake up’ to this new normal. Yet, it has taken until Pelosi’s Taiwan trip for China to find the strength to come out with “we can no longer have business as usual” but even then, some people still think the Chinese are bluffing, prompting an online meme described as “China’s final warning,” which was a form of ridicule the Soviet Union used against China for issuing ‘final warnings’ it never followed up on.

Yet there is nonetheless a sense that this time things are different. China’s military exercises have been relentless, with claims that they will become ‘the new normal’. That’s because even if China has been duly lenient with the US in the past, it now sees Washington as taking the liberty to trample on the commitments it had taken on to normalize its relationship with Beijing.

If China is forced to back away from its lines in the sand, it becomes an enormous loss of face and political prestige. While economics have also been a primary consideration of China’s foreign policy, the pendulum is now swinging towards the realization that the US has to be confronted, rather than simply lived with. It doesn’t respect China’s interests, only its own.

Therefore, how can dialogue and engagement be unconditional? So far, this bilateral relationship has functioned only on the premise of “Hi China, we hate you, we’re going to accuse you of genocide, we’re going to blacklist your companies, we’re going to build military alliances against you, break our commitments on Taiwan… oh, please help us on climate change… nothing in return.” And China’s patience is apparently at its end.

August 10, 2022 Posted by | Economics | , | Leave a comment

Russia-Turkey reset eases regional tensions

BY M. K. BHADRAKUMAR | INDIAN PUNCHLINE | AUGUST 9, 2022 

The 4-hour meeting on Friday at Sochi between President Vladimir Putin and President Recep Erdogan promises to be a defining moment in regional politics. The single biggest takeaway from the Sochi meet is, of course, the “win-win” economic partnership between Russia and Turkey that helps Russia, on the one hand, to continue to interact with the world market circumventing Western sanctions, while, on the other hand, is a boon for the Turkish economy. 

Turkey is a member of the European Uinion’s Customs Union and it is no secret that there is a lot of Russian money floating around in the wake of the western sanctions. If that money can be turned into investments in Turkey to set up production units with western technology and market access, creating jobs and revving up the country’s economy, it is a “win-win”. This is one thing.

At Sochi, Putin and Erdogan agreed on phasing out the use of dollar in their transactions. Part of Turkey’s purchase of Russian gas will be settled in rubles, which will of course strengthen the Russian currency. Equally, the Sochi meeting tasked 5 Turkish banks to accept Russia’s Mir payment system, which Moscow developed following Russia’s exclusion from the SWIFT.

At its most obvious level, the Mir system enables Russian nationals, especially tourists, to freely visit Turkey. Indeed, the West’s prying eyes can also be kept out. A Bloomberg News report last week suggests that sensitive money transactions that are beyond western scrutiny may already be taking place. Basically, Turkey helps Russia to mitigate the effect of western sanctions while taking care that it won’t face any collateral sanctions either! 

Quite obviously, all this is only possible within a matrix of political understanding. The 4-hour conversation in Sochi was almost entirely conducted in one-on-one mode. Erdogan cryptically remarked later that his talks with Putin would benefit the region. He did not elaborate. 

Conceivably, there are three major areas where the matrix will be felt in immediate terms— Syria, Black Sea and Transcaucasia. Turkish and Russian interests crisscross here.  

In the Black Sea, Turkey, as the custodian of the Montreux Convention Regarding the Regime of the Straits (1936), has a key role to play with regard to the passage of warships in times of war through the the Dardanelles strait, the Sea of Marmara, and the Bosporus strait. The current implications are self-evident. 

Again, in Transcaucasia, Turkey can play a stabilising role, which Moscow expects, given Ankara’s influence in Baku. However, when it comes to Syria, a complex tapestry appears. The Turkish press has reported that Erdogan is planning to have a call with Syrian President Bashar al-Assad.

Putin has been encouraging Erdogan to think on these lines as the best way to address Turkey’s border security issues in northern Syria — by directly communicating with Assad instead of launching military incursions. 

Putin’s vision is that the moribund Adana Agreement (1998) still has a lot of unused potential, where Damascus had guaranteed the containment of militant Syria-based Kurdish separatist groups. The “Adana spirit” evaporated once the Obama administration lured Erdogan into its regime change project in 2011 to overthrow Assad. Until that time, Erdogan and Assad, including their families, had enjoyed a warm friendship. 

However, circumstances today are propitious for a rapprochement between Erdogan and Assad. First, Assad has successfully beaten back — thanks to Russian and Iranian backing — the US-led jihadi project in Syria. Damascus has liberated most of the regions from jihadi groups and the residual issue concerns the US occupation of a third of Syrian territory in the north and east. 

Assad has consolidated the government’s staying power for years to come. Second, Assad is steadily gaining regional acceptance too among Syria’s Arab neighbours. Syria is seeking membership of the SCO alongside Egypt, Saudi Arabia, Bahrain and the UAE. Third, Turkish-American relations have soured in recent years since the CIA-backed military coup in 2016 to overthrow Erdogan.

One main factor today is the US’ politico-military  alliance with the militant Syrian Kurds who are its foot soldiers and aspire to establish a Kurdish homeland in northern Syria bordering Turkey under American protection. Erdogan is deeply suspicious of US intentions. 

Fourth, stemming from the above, Turkey sees eye to eye with Moscow and Tehran (and Damascus) in their demand for the vacation of US occupation of Syria (which is neither mandated by the UN nor is at Syrian invitation.) Fifth, Russia and Iran have contacts with Syrian Kurdish groups but a reconciliation between the Kurds and Damascus cannot gain traction so long as the US military presence continues.

Quite obviously, any endeavour to cut this Gordian knot will have to begin with the reconciliation between Erdogan and Assad. It is in Turkish interests to strengthen Damascus and promote a Syrian settlement, which will ultimately make the US occupation of Syria untenable and open the pathway for pacifying the Kurdish regions in northern Syria. 

Meanwhile, in a development that has bearing on Syria’s security, Russia today launched an Iranian military satellite from its Baikanur Cosmodrome. It is a Russian-built Kanopus-V Earth-observation satellite that will boost Iran’s capability to conduct continuous surveillance on locations of its choosing, including military facilities in Israel. 

Moscow negotiated the satellite deal in secret with Iran’s elite Islamic Revolutionary Guard Corps (which is involved in Syria) and experts from Moscow have trained IRGC’s ground crews in the satellite’s operation. 

Russia’s ties with Israel have sharply deteriorated lately due to Israel’s involvement in Ukraine as a participant in Pentagon’s “coalition of the willing”. Moscow is probably expelling the hugely influential Jewish Agency, which has kept an office in Moscow since the Gorbachev era. 

Moscow’s criticism of Israeli missile strikes against Syria has noticeably sharpened lately. Russian-Israeli relations will languish for the foreseeable future. Israel seems acutely conscious of its growing isolation. President Isaac Herzog reached out to Putin today but it turned out to be an inconclusive conversation. Moscow will be extra-vigilant, given the Biden Administration’s strong nexus with Israeli PM Lapid. 

Suffice to say, together with Israel’s fraught ties with Moscow and Ankara and the deep antagonism toward Tehran, a Turkish-Russian-Iranian condominium in Syria is the last thing that Israel wants to see happening at the present juncture. Israel is the odd man out, what with the Abraham Accords losing its gravitas.  

Putin’s initiatives to create axis with Turkey and Iran  respectively mesh with the broader trend of the region reshaping itself through processes dominated by the countries within the region against the backdrop of the US retrenchment.    

August 9, 2022 Posted by | Economics | , , , , , | Leave a comment