06/13/15

Russia China Pact with Snowden in the Middle

Going beyond the major hack by China into the Office of Personnel Management that cultivated at least 14 million personnel files of government, intelligence and military, China is building a database of individuals in America. Would they share it with Russia? The wake of destruction is yet to be known and future predictions are impossible to imagine.

Russia is turning to China and likewise China is delighted for the relationship as proven by the Silk Road Economic objectives.

Putin’s vision of a ‘greater Europe’ from Lisbon to Vladivostok, made up of the European Union and the Russian-led Eurasian Economic Union, is being replaced by a ‘greater Asia’ from Shanghai to St. Petersburg.

In part:

The rupture between Russia and the West stemming from the 2014 crisis over Ukraine has wide-ranging geopolitical implications. Russia has reverted to its traditional position as a Eurasian power sitting between the East and the West, and it is tilting toward China in the face of political and economic pressure from the United States and Europe. This does not presage a new Sino-Russian bloc, but the epoch of post-communist Russia’s integration with the West is over. In the new epoch, Russia will seek to expand and deepen its relations with non-Western nations, focusing on Asia. Western leaders need to take this shift seriously.

Russia’s Pivot to Asia

Russia’s pivot to Asia predates the Ukraine crisis, but it has become more pronounced since then. This is in part because China is the largest economy outside of the coalition that has imposed sanctions on Russia as a result of the crisis.

What was originally Moscow’s “marriage of convenience” with Beijing has turned into a much closer partnership that includes cooperation on energy trade, infrastructure development, and defense.

Putin’s vision of a “greater Europe” from Lisbon to Vladivostok, made up of the European Union and the Russian-led Eurasian Economic Union, is being replaced by a “greater Asia” from Shanghai to St. Petersburg.

Russia is now more likely to back China in the steadily growing competition between Beijing and Washington, which will strengthen China’s hand.

Takeaways for Western Leaders

Russia’s confrontation with the United States will help mitigate Sino-Russian rivalries, mostly to China’s advantage. But this doesn’t mean Russia will be dominated by China—Moscow is likely to find a way to craft a special relationship with its partner.

With China’s economic might and Russia’s great-power expertise, the BRICS group (of which Russia is a part, along with Brazil, India, China, and South Africa) will increasingly challenge the G7 as a parallel center of global governance.

The Shanghai Cooperation Organization, due to include India and Pakistan this year, is on its way to becoming the principal development and security forum for continental Asia.

Through its enhanced relations with non-Western countries, Russia will actively promote a concept of world order that seeks to reduce U.S. global dominance and replace it with a broader great-power consensus. Much more detail here.

Enter Snowden

Russia, China Decrypt Snowden Files

Russia and China have allegedly decrypted the top-secret cache of files stolen by whistleblower Edward Snowden, according to a report from The Sunday Times, to be published tomorrow.

The info has compelled British intelligence agency MI6 to withdraw some of its agents from active operations and other Western intelligence agencies are now actively involved in rescue operations. In a July 2013 email to a former U.S. Senator, Snowden stated that, “No intelligence service—not even our own—has the capacity to compromise the secrets I continue to protect. While it has not been reported in the media, one of my specializations was to teach our people at DIA how to keep such information from being compromised even in the highest threat counter-intelligence environments (i.e. China).” Many in the intelligence agencies at the time greeted this claim with scepticism. Now, one senior British official said Snowden had “blood on his hands,” but another said there’s yet no evidence anyone was harmed. Snowden eventually fled to Russia via Hong Kong after downloading some 1.7 million documents from U.S. government computers and leaking them to journalists out of a desire to protect “privacy and basic liberties.” The revelations of mass spying outraged populations and governments around the world, at least temporarily damaged relations, and eventually led to changes in the mass surveillance policies of the NSA and British GCHQ.

03/29/15

Bone Weary

Arlene from Israel

Anyone who is tracking the news these days, and genuinely cares for the security of Israel and the future of the US – not to mention Europe and the Mideast – has got to have an extremely heavy heart. We are facing some very dark times.

With regard to Israel, serious thinkers are pondering the best way to survive the 22 months until Obama is out of office. But the problem is actually a great deal bigger than the issue of how Obama is behaving towards Israel – as much as this remains huge for us here.

~~~~~~~~~~

Obama. In addition to his irrational and venomous attacks on Israel, there is his courting of Iran. One is the flip side of the other: Alienate Israel, buddy up to Iran.

We are now a mere two days away from the presumed deadline on a signed framework deal between Iran and P5 + 1. (In reality this is a negotiation between Iran and the US, as the other negotiating partners, with the exception of France, have largely pulled back.) How likely it is that a deal really will take place depends on whom you ask. What is clear is that Obama – and Kerry, operating in his stead – are doing all they can to achieve this “diplomatic success.”

Because of Obama’s eagerness, what we are seeing is the stuff of nightmares. Definitely nightmares, as it’s hard to believe this could be happening in the light of day. The Iranians – recognizing very well with whom they are dealing – have consistently stonewalled on US demands. Last Wednesday, the Wall Street Journal broke with a story on yet another US pullback, each in turn design to conciliate the Iranians (emphasis added):

“Talks over Iran’s nuclear program have hit a stumbling block a week before a key deadline because Tehran has failed to cooperate with a United Nations probe into whether it tried to build atomic weapons in the past, say people close to the negotiations.

“In response, these people say, the U.S. and its diplomatic partners are revising their demands on Iran to address these concerns before they agree to finalize a nuclear deal, which would repeal U.N. sanctions against the country.”

http://www.wsj.com/articles/iran-stalls-u-n-probe-into-its-1427327943

The issue is “possible military dimensions” (PMD). As Omri Ceren of The Israel Project has explained (emphasis added):

“PMD disclosure is about base-lining all of Iran’s nuclear activities – not just its known civilian parts – as a prerequisite for verifying that those activities have been halted under a nuclear deal. Iran has uranium mines; some are civilian and some are military. It has centrifuges; some are operated by civilians and some by IRGC personnel. It has uranium stockpiles; some are maintained by civilians and some by the military. There’s no way for future inspectors to verify that Iran has shuttered its mines, stopped its centrifuges, and shipped off its stockpile – for instance – unless the IAEA knows where all the mines and stockpiles are.

“No PMDs mean no verification.”

~~~~~~~~~~

And there’s more. On Thursday, AP reported (emphasis added):

“The United States is considering letting Tehran run hundreds of centrifuges at a once-secret, fortified underground bunker in exchange for limits on centrifuge work and research and development at other sites…”

http://abcnews.go.com/Politics/wireStory/ap-exclusive-iran-run-centrifuges-fortified-site-29925489

As Ceri explains here (emphasis added):

“Allowing the Iranians to enrich at Fordow means they could kick out inspectors at any time and have a fully-functioning enrichment facility hardened against military intervention. Since sanctions will be unraveled by design at the beginning of a deal, that means the West would have literally zero options to stop a breakout…

“The White House started out promising that Fordow would be shuttered, then that it would be converted into an R&D plant where no enrichment would take place, and now they’ve collapsed.”

~~~~~~~~~~

Add to the above the fact that the US is ignoring the violent hegemonic encroachment of Iranian proxies across various areas of the Middle East – as if it were only the issue of nuclear capacity that must be dealt with.

There are, of course, Syrian president Assad, and Iranian proxy Hezbollah in Lebanon (and Syria). But most recently what we’ve seen is the takeover of Yemen by the Shiite Houthis, also supported by Iran. Houthi control of Yemen has enormous importance because of its strategic location, adjacent to Saudi Arabia. From the Yemenite port city of Aden, the straits of Bab el-Mandeb, which are only about 20 miles wide, can be controlled. The straits constitute a major chokepoint – so the party that controls the area has the capacity to block marine traffic from the Indian Ocean via the Red Sea to the Mediterranean. Somewhere in the neighborhood of 3.8 million barrels of oil and refined petroleum products pass through the straits daily on their way to destinations in Asia, Europe and the US.

This is before we mention that increased Iranian backed presence in the Middle East is worrisome to Israel.

But the US is not paying a whole lot of attention. US special forces fled Yemen a while ago, and US negotiators are not raising this issue. There are commentators who believe that the US should have walked out on negotiations until Iran withdrew support for the Houthis. But that might have jeopardized the deal, which has first priority for Obama – the rest of the world be damned.

~~~~~~~~~~

You want to know how crazy it is? While Obama is promoting diplomatic ties with Iran and “reaching out” to the Iranians, we can see in a MEMRI video that Iranian leader Khamenei cries “Death to America.”

http://www.memri.org/clip/en/0/0/0/0/0/0/4838.htm

~~~~~~~~~~

Amir Hossein Motaghi is an Iranian journalist who was supposed to be covering the negotiations, but has defected because he could not longer tolerate Iranian demands that he write his reports according to their specifications.

In a TV interview, he has now said:

“The U.S. negotiating team are mainly there to speak on Iran’s behalf with other members of the 5+1 countries and convince them of a deal.”

http://www.algemeiner.com/2015/03/28/iranian-defector-us-negotiating-team-mainly-there-to-speak-on-iran%e2%80%99s-behalf/

If this does not blow your mind, you are not getting it.

~~~~~~~~~~

What I really cannot grasp – even beyond the question of how a man such as Obama secured two terms in the White House – is why the other negotiating nations are being so passive, when Iran is a threat to them, or why the American people are not truly up in arms (meant figuratively here).

~~~~~~~~~~

There are just a small number of possible recourses with regard to this situation:

The first is the US Congress, many of whose members – Republicans, but a handful of Democrats as well – indeed are grievously distressed by what is going on. What is required is a sufficient number of votes in the Senate to over-ride a veto by Obama, so that sanctions to weaken Iran can be put in place appropriately. We are seeing signs that this may be possible.

“The U.S. Senate voted unanimously on Thursday for a non-binding amendment to a budget bill intended to make it easier to re-impose sanctions if Iran violates a nuclear deal.

“The vote was 100-0 for the amendment, sponsored by Republican Senator Mark Kirk, which would establish a fund to cover the cost of imposing sanctions if Tehran violated terms of an interim nuclear agreement now in effect, or the final agreement negotiators hope to reach before July.”

http://www.reuters.com/article/2015/03/26/iran-nuclear-congress-idUSL2N0WS30W20150326

~~~~~~~~~~

And then there is Israel.

According to Minister Gilad Erdan (Likud) there is time between the signing of a framework agreement now and the final agreement in June – at which point details would be factored in – when diplomatic maneuvering can still be done. This would involve, it seems to me, key communication with France first – as France has the greatest unease about what is taking place.

Beyond this, there is the military option, with the moment of truth advancing rapidly. We are now probably past the 11th hour, perhaps at about 15 minutes to midnight.

Prime Minister Netanyahu has said, again and again, that he will never permit Iran to become a nuclear power. He has also made it clear that Israel is not bound by the terms of a very bad P5 + 1 deal with Iran.

Just today, Deputy Foreign Minister Tzachi Hanegbi, a close Netanyahu associate, declared on public radio that Israel “will not be bound by an accord concluded by others and will know how to defend itself.” (Emphasis added)

https://news.yahoo.com/dangerous-accord-iran-worse-israel-feared-pm-094154014.html

What our government will do in the end, and what our military is capable of doing, remains to be seen. Israel cannot take out Iran’s capacity for nuclear development entirely – but can, as I understand it, do considerable damage.

The scuttlebutt is that Netanyahu wants to attack, although I know people who are convinced he never will. (Please, do not write to share opinions on this.) Some months ago, information was revealed indicating that at one point Defense Minister Ya’alon was opposed to an attack but has now changed his mind.

A key factor here is the readiness of Saudi Arabia, which is absolutely enraged with Obama’s inaction on Iran, to lend passive assistance, at a minimum, should Israel decide to attack. The Saudis would be delighted – make no mistake about this. This assistance might make a difference in the end. Because the other piece of the story is that Obama is trying his best to track Israeli intentions and to block us.

~~~~~~~~~~

Leon Panetta – former director of the CIA and Secretary of Defense under Obama, gave an interview to Andrea Mitchell on MSNBC three days ago that merits mention here. Put simply, what he said was that he learned at the CIA and Defense that “The Iranians can’t be trusted.”

This is the bottom line. Said Panetta (emphasis added):

“…the real test is going to be, and the whole world will be looking at it — the test will be have we truly made sure that Iran can be stopped from developing a nuclear weapon. And to do that in my book demands transparency and it demands accessibility so that we have a firm inspection regime that will guarantee they cannot do this.”

http://dailycaller.com/2015/03/26/former-obama-defense-secretary-the-iranians-cant-be-trusted-video/

Precisely! And that is never, ever going to happen.

~~~~~~~~~~

I recently encountered an article that asked, in its lead: Which side is Obama on? That, my friends, is a rhetorical question. It is clear that he is on Iran’s side.

That being the case, it is inevitable that the president would come down on Netanyahu in every way possible. He wants to discredit him, and weaken him, and delegitimize his position, for Netanyahu is the key stumbling block to what he is trying to achieve. There is no way for Bibi to make it “right” with Obama. It’s not really about the negotiations with the Palestinian Arabs or other related issues.

And facing the truth straight on also helps explain why Obama worked so hard behind the scenes to defeat Netanyahu in the elections, and why he is so frustrated now.

~~~~~~~~~~

Just a moment here, then, to look at what is happening at home. I wrote last week about the apparent halting of building scheduled for Har Homa in Jerusalem (and indeed I’ve received no information that it was anything else such as a bureaucratic mix-up). That did not sit well. Since I wrote about that, information has surfaced about Israel agreeing to release to the Palestinian Authority tax monies that had been collected – with some held back against money owed to Israel for electricity and other services. On top of this, there is apparently a deal for Israel to sell gas to Gaza, with Qatar paying the bill.

This did not sound good. Really not good. Certainly at first blush it looks like a caving to Obama under pressure, because there is so much talk about Israel’s “readiness’ for a “two state” deal.

But that’s at first blush, and I’ve been struggling with this long and hard over the last couple of days. Because there is another way to look at this. If Netanyahu is making concessions to please Obama it is the height of foolishness, a terrible weakness, as nothing will please Obama where we are concerned. The only way to respond to him is with strength. Anything that smacks of weakness will simply invite more pressure.

But suppose Netanyahu is doing this to remove some of the poison spewed by Obama (Netanyahu is a racist, he does not want peace, etc.), in order to deal more placidly with others? Suppose he wants to approach Democrats in Congress conveying the image of someone who is willing to compromise for peace, so that they will hear him on Iran? Suppose he wants to speak with French leaders – who are eager for “two states” – from a position that will make them more amenable to his message? Or with other European countries? Intelligence Minister Yuval Steinitz suggests several nations are uneasy about the deal.

In light of the enormous weight of what our prime minister has to deal with, I prefer to cut him some slack here, for the moment, and see how the situation evolves. Today he told the Cabinet:

“This deal, as it appears to be emerging, bears out all of our fears, and even more than that.”

http://www.jpost.com/Breaking-News/Netanyahu-says-expected-Iranian-nuclear-deal-even-worse-than-Israel-feared-395468

~~~~~~~~~~

I had hoped to discuss some matters related to the formation of the coalition here, but will table this. Before closing, I want simply to look at a couple of relative bright spots in an otherwise grim picture.

Saudi Arabia, alarmed by the Houthi take-over in Yemen, and absolutely furious at Obama for opting out of involvement, decided to act, in concert with other Sunni allies. This was promising, as the Iranian takeover by proxy in Yemen is being pushed back as a result of Saudi airstrikes that are being hailed a success. There is further talk of ground forces in Yemen, although my information is that it will not be necessary, as there are tribal groups in Yemen that are ready to act on the ground against the Houthis.

Even further, the Arab League, at the closure of a meeting in Egypt, has announced in principle the creation of a joint Arab rapid response force. Egypt, which would be a prime mover in the establishment of such a force, declared that it would consist of some 40,000 elite troops, backed by jets, warships and light armor. What this means is that even though the US has totally abdicated its role of confronting Iranian regional aggression, there are Sunni Arab states presumably ready to step up, lest the feared and detested Iran take over the region.

http://www.usatoday.com/story/news/world/2015/03/29/yemen-rebels-air-bases/70625166/

~~~~~~~~~~

Then see this report that says Hezbollah – operating at the behest of Iran – has been stopped by paramilitary rebel forces from establishing a major presence on the Golan directly adjacent to the Israeli border.

http://www.timesofisrael.com/on-the-syrian-golan-unlike-in-yemen-an-iranian-offensive-fails/

02/22/15

There Will Always Be War

By: Alan Caruba
Warning Signs

We begin with the reality that the United States and many other nations are at war with militant Islamists. They are a growing army of religious zealots murdering Christians, Jews, others who are not Muslim, and even other Muslims.

In my youth America knew how to win wars. In Europe it bombed Germany into submission, leading its allies in an invasion that left Germany divided for decades until the Soviet Union collapsed. In Asia Truman dropped two atomic bombs on Japan because they didn’t get the message when Hiroshima was destroyed on August 6, 1945. It took a second bomb on Nagasaki on August 9 to bring about Japan’s surrender.

Millions died in World War II but the alternative would have been the loss of freedom for millions worldwide.

If one spends any time learning history, the primary lesson is that war has been a constant factor from the beginning of what we call civilization about five thousand years ago.

The Bronze Age introduced new weapons that gave the residents of the Fertile Crescent in the Middle East a distinct advantage over invading nomadic people, but the invaders introduced chariots and it took the Egyptians and Babylonians a while to catch up. War has always been about new, more lethal weaponry.

Why would we be surprised to learn that the Assyrians who originated in what is now northern Iraq or the Islamic State (ISIS) were the most violent and bloodthirsty of the ancient world’s peoples? Known to all their neighbors by 1300 B.C.E., their army become a source of terror for the Middle East during the ninth century. They destroyed the Kingdom of Israel around 732 B.C.E., but the southern part of the Kingdom of Judah survived. In time the Babylonians would defeat the Assyrians.

Not all wars involved religion. The Greeks fought each other and then fought the Persians. Alexander the Great, a Macedonian, loved waging war and was very successful. The constant factor, however, was war and, of course, Rome would become the greatest empire of its time, beginning around 509 B.C.E., fighting three Punic wars with Carthage, but losing an estimated 400,000 in the first war and 150,000 in the second.

Eventually, Rome was so powerful it imposed a “Pax Romana” on the entire Mediterranean area it controlled. In time, Rome would be destroyed by the “barbarians”, Visigoths, Vandals, Ostrogoth’s, and Burgundians. By 476 C.E., the Roman Empire was history.

After establishing a group of followers in the Arabian Peninsula as the “last prophet”, proclaiming Islam as the one, true faith, Muhammad died in 632 C.E. Within ten years, the Arabs had conquered Jerusalem and were taking aim at Damascus and Cairo. Baghdad and the Libyan Desert were the next to be conquered. They moved on to Spain and Central Asia.

During his lifetime, Ali, Mohammad’s son-in-law, was the leader of the Arab forces. As noted in Samuel Willard Crompton’s ‘The Handy Military History Answer Book’, by the time the Arabs fought the Byzantines and the Persians they had also initiated the great split that remains today between the Sunnis and the Shiites.” Shiite means “follower of Ali.” The Sunnis wanted to elect their own caliph.

After taking the southern half of Spain, the Muslim army was poised to take all of Europe, but their 732 C.E. defeat in the Battle of Tours put an end to further expansion. Their momentum in Asia was stopped in 751 C.E. with a defeat in the Battle of Talas. As Crompton notes, “in the century that followed the Prophet’s death, the Arabs took over ninety percent of all the urban centers in the Western world, and their conquests equaled those of ancient Rome.”

The Crusades

Which brings us to the first Crusade; it began when Pope Urban II in 1095 told a gathering of 10,000, mostly French and German knights, that a “new accursed group”, the Muslims, had taken control of the holy land were preventing pilgrims from visiting holy sites. The knights responded to his call to liberate Jerusalem by chanting “Deus Volt! Deus Volt!”—God wills it.

They were joined by a “Peasants Crusade” between 1095 and 1096. By June 1099 the knights arrived outside Jerusalem and what followed was a wholesale murder of everyone there. In 1185, Saladin, the emir of Cairo and Lord of Damascus, proclaimed a jihad—a holy war—against the Christians in the Kingdom of Jerusalem. The knights defending it were defeated.

A Second Crusade followed in 1147 C.E. but accomplished little and the Third Crusade had the same result. A Fourth Crusade resulted in the Europeans taking control of Constantinople in August 1204 C.E. They would rule it for the next fifty years. Years later, in 1489, a war drove the Muslims from Spain.

The spokeswoman from our Department of State who said that the present generation of Muslim holy warriors can’t all be killed doesn’t know that this is the way wars are won. You kill the enemy until the enemy decides that dying for their cause is not worth it.

If ISIS is insane enough to bring the war to our homeland (and even if it doesn’t), a war of total destruction will be the only way to end the present conflict. Currently, the Jordanians and the Egyptians are doing what they can to resist ISIS, but recent polls confirm that Americans are beginning to conclude that our active boots-on-the-ground participation is the only way this will end.

Obama is merely going through the motions of conducting a war against ISIS, but retired generals and diplomats have told Congress that only full-scale war will end the threat they represent.

Meanwhile, ISIS is committing genocide against the Christians of the Middle East while Boko Haram is doing the same in Africa. Hezbollah would do the same against Israel if it could. Given nuclear arms, Iran will assert control over all of the Muslim warriors, threatening both Israel and the U.S.

Our next President will have to commit to destroying ISIS. There is no alternative. That is history’s primary lesson.

Editor’s Note: The Handy Military History Answer Book is published by Visible Ink, $21.95, softcover.

02/15/15

Are We Seeing History Repeat Itself?

By: Alan Caruba
Warning Signs

“Those who do not remember the past are condemned to repeat it” is the famed quote of George Santayana, a Spanish philosopher (1863-1952). I am beginning to think that the world is making its way toward a future that repeats the horrors of the last century’s wars and earlier times when Europeans battled Islam to free Jerusalem, to protect their homelands in Europe, and to eject Muslims from Spain.

In his book, “Jihad in the West: Muslim Conquests from the 7^th to the 21^st Centuries” historian Paul Fregosi documented the history of Islam and its attacks on European nations, characterizing jihad as “essentially a permanent state of hostility that Islam maintains against the rest of the world.” It is a Muslim sacrament, a duty they must perform.

Occurring at the same time is the agenda of the global environmental movement and on February 4 Christina Figueres, the executive secretary of the United Nations Framework Convention on Climate Change, said “This is probably the most difficult task we have ever given ourselves; which is to intentionally transform the economic development model, for the first time in human history.”

“This is the first time in the history of mankind that we are setting ourselves the task of intentionally, within a defined period of time, to change the economic development model that has been reigning for the, at least, 150 years, since the industrial revolution.” (Italics added)

Figueres was wrong. The objective of the 1917 Communist revolution that began in Russia and Mao’s “Great Leap Forward” (1958-1961) was the same that is now being openly embraced by the United Nations in 2015. The result of both was the death of millions.

Humanity is under attack from an Islam that intends to impose its barbaric seventh century Sharia law and from the environmental movement’s intention to end capitalism and replace it with the income distribution central to Communism.

Both spell a terrible future for the people of the world.

The President of the United States is devoted to pursuing both of these goals as the defender of Islam and the opponent of “income inequality.” We have twenty-two months to survive Barack Obama’s remaining time in office.

Obama was first elected on the promise to end the U.S. engagement in conflicts in Iraq and Afghanistan. After many years Americans welcomed the prospect of ceasing the loss of lives and billions those wars represented. With the rise of the Islamic State (ISIS) they are now seeing the true price of that policy. Just because we don’t want to fight a war doesn’t mean our enemy will cease to pursue it.

We are at a critical moment in time because it is evident that Obama wants to provide Iran the opportunity to build its own nuclear weapons arsenal. It is a time as well when the military capability of the U.S. has been diminished to what existed before the beginning of World War II. All of Europe and much of Asia would have fallen under the control of Nazi Germany and the Empire of Japan if the U.S. had not stepped up to the task of defeating them.

Relentlessly, Obama has done everything he can to reduce the size of our military fighting force and the ships, planes and other weapons needed to protect our security or support that of our allies. He has withdrawn the U.S. from its position of global leadership and left behind allies that no longer trust us and enemies who no longer fear us.

Raymond Ibrahim of the Middle East Forum wrote on February 5 that “approximately 100 million Christians around the world are experiencing the persecution by Muslims of all races, nationalities, and socio-political circumstances.”

At the same time, we are witnessing a new exodus of Jews from Europe, mindful of the Holocaust in the 1940s. According to the Pew Research Center, as of 2013 the Jewish population worldwide was approximately 14 million. Just over 6 million reside in Israel, another 6 million are U.S. citizens, and the rest are in Europe and elsewhere around the world. What has not changed from the last century, however, is the level of anti-Semitism and it appears to be on the rise.

What we are witnessing is a full-scale attack on the West—Christianity and Judaism—and upon Western values of morality, democracy, and freedom.

Whether it will erupt in a new world war is unknown, but if history is a guide, we are moving in that direction.

12/29/14

Did The Saudis And The US Collude In Dropping Oil Prices?

The oil price drop that has dominated the headlines in recent weeks has been framed almost exclusively in terms of oil market economics, with most media outlets blaming Saudi Arabia, through its OPEC Trojan horse, for driving down the price, thus causing serious damage to the world’s major oil exporters – most notably Russia.

While the market explanation is partially true, it is simplistic, and fails to address key geopolitical pressure points in the Middle East.

Oilprice.com looked beyond the headlines for the reason behind the oil price drop, and found that the explanation, while difficult to prove, may revolve around control of oil and gas in the Middle East and the weakening of Russia, Iran and Syria by flooding the market with cheap oil.

The oil weapon

We don’t have to look too far back in history to see Saudi Arabia, the world’s largest oil exporter and producer, using the oil price to achieve its foreign policy objectives. In 1973, Egyptian President Anwar Sadat convinced Saudi King Faisal to cut production and raise prices, then to go as far as embargoing oil exports, all with the goal of punishing the United States for supporting Israel against the Arab states. It worked. The “oil price shock” quadrupled prices.

It happened again in 1986, when Saudi Arabia-led OPEC allowed prices to drop precipitously, and then in 1990, when the Saudis sent prices plummeting as a way of taking out Russia, which was seen as a threat to their oil supremacy. In 1998, they succeeded. When the oil price was halved from $25 to $12, Russia defaulted on its debt.

The Saudis and other OPEC members have, of course, used the oil price for the obverse effect, that is, suppressing production to keep prices artificially high and member states swimming in “petrodollars”. In 2008, oil peaked at $147 a barrel.

Turning to the current price drop, the Saudis and OPEC have a vested interest in taking out higher-cost competitors, such as US shale oil producers, who will certainly be hurt by the lower price. Even before the price drop, the Saudis were selling their oil to China at a discount. OPEC’s refusal on Nov. 27 to cut production seemed like the baldest evidence yet that the oil price drop was really an oil price war between Saudi Arabia and the US.

However, analysis shows the reasoning is complex, and may go beyond simply taking down the price to gain back lost marketshare.

“What is the reason for the United States and some U.S. allies wanting to drive down the price of oil?” Venezuelan President Nicolas Maduro asked rhetorically in October. “To harm Russia.”

Many believe the oil price plunge is the result of deliberate and well-planned collusion on the part of the United States and Saudi Arabia to punish Russia and Iran for supporting the murderous Assad regime in Syria.

Punishing Assad and friends

Proponents of this theory point to a Sept. 11 meeting between US Secretary of State John Kerry and Saudi King Abdullah at his palace on the Red Sea. According to an article in the Wall Street Journal, it was during that meeting that a deal was hammered out between Kerry and Abdullah. In it, the Saudis would support Syrian airstrikes against Islamic State (ISIS), in exchange for Washington backing the Saudis in toppling Assad.

If in fact a deal was struck, it would make sense, considering the long-simmering rivalry between Saudi Arabia and its chief rival in the region: Iran. By opposing Syria, Abdullah grabs the opportunity to strike a blow against Iran, which he sees as a powerful regional rival due to its nuclear ambitions, its support for militant groups Hamas and Hezbollah, and its alliance with Syria, which it provides with weapons and funding. The two nations are also divided by religion, with the majority of Saudis following the Sunni version of Islam, and most Iranians considering themselves Shi’ites.

“The conflict is now a full-blown proxy war between Iran and Saudi Arabia, which is playing out across the region,” Reuters reported on Dec. 15. “Both sides increasingly see their rivalry as a winner-take-all conflict: if the Shi’ite Hezbollah gains an upper hand in Lebanon, then the Sunnis of Lebanon—and by extension, their Saudi patrons—lose a round to Iran. If a Shi’ite-led government solidifies its control of Iraq, then Iran will have won another round.”

The Saudis know the Iranians are vulnerable on the oil price. Experts say the country needs $140 a barrel oil to balance its budget; at sub-$60 prices, the Saudis succeed in pressuring Iran’s supreme leader, Ayatollah Ali Khamanei, possibly containing its nuclear ambitions and making the country more pliable to the West, which has the power to reduce or lift sanctions if Iran cooperates.

Adding credence to this theory, Iranian President Hassan Rouhani told a Cabinet meeting earlier this month that the fall in oil prices was “politically motivated” and a “conspiracy against the interests of the region, the Muslim people and the Muslim world.”

Pipeline conspiracy

Some commentators have offered a more conspiratorial theory for the Saudis wanting to get rid of Assad. They point to a 2011 agreement between Syria, Iran and Iraq that would see a pipeline running from the Iranian Port Assalouyeh to Damascus via Iraq. The $10-billion project would take three years to complete and would be fed gas from the South Pars gas field, which Iran shares with Qatar. Iranian officials have said they plan to extend the pipeline to the Mediterranean to supply gas to Europe – in competition with Qatar, the world’s largest LNG exporter.

“The Iran-Iraq-Syria pipeline – if it’s ever built – would solidify a predominantly Shi’ite axis through an economic, steel umbilical cord,” wrote Asia Times correspondent Pepe Escobar.

Global Research, a Canada-based think tank, goes further to suggest that Assad’s refusal in 2009 to allow Qatar to construct a gas pipeline from its North Field through Syria and on to Turkey and the EU, combined with the 2011 pipeline deal, “ignited the full-scale Saudi and Qatari assault on Assad’s power.”

“Today the US-backed wars in Ukraine and in Syria are but two fronts in the same strategic war to cripple Russia and China and to rupture any Eurasian counter-pole to a US-controlled New World Order. In each, control of energy pipelines, this time primarily of natural gas pipelines—from Russia to the EU via Ukraine and from Iran and Syria to the EU via Syria—is the strategic goal,” Global Research wrote in an Oct. 26 post.

Poking the Russian bear

How does Russia play into the oil price drop? As a key ally of Syria, supplying Assad with billions in weaponry, President Vladimir Putin has, along with Iran, found himself targeted by the House of Saud. Putin’s territorial ambitions in the Ukraine have also put him at odds with US President Barack Obama and leaders of the EU, which in May of this year imposed a set of sanctions on Russia.

As has been noted, Saudi Arabia’s manipulation of the oil price has twice targeted Russia. This time, the effects of a low price have hit Moscow especially hard due to sanctions already in place combined with the low ruble. Last week, in an effort to defend its currency, the Bank of Russia raised interest rates to 17 percent. The measure failed, with the ruble dropping another 20 percent, leading to speculation the country could impose capital controls. Meanwhile, Putin took the opportunity in his annual televised address to announce that while the economy is likely to suffer for the next two years and that Russians should brace for a recession, “Our economy will get diversified and oil prices will go back up.”

He may be right, but what will the effect be on Russia of a sustained period of low oil prices? Eric Reguly, writing in The Globe and Mail last Saturday, points out that with foreign exchange reserves at around $400 billion, the Russian state is “in no danger of collapse” even in the event of a deep recession. Reguly predicts the greater threat is to the Russian private sector, which has a debt overhang of some $700 billion.

“This month alone, $30-billion of that amount must be repaid, with another $100-billion coming due next year. The problem is made worse by the economic sanctions, which have made it all but impossible for Russian companies to finance themselves in Western markets,” he writes.

Will it work?

Whether one is a conspiracy theorist or a market theorist, in explaining the oil price drop, it really matters little, for the effect is surely more important than the cause. Putin has already shown himself to be a master player in the chess game of energy politics, so the suggestion that sub-$60 oil will crush the Russian leader has to be met with a healthy degree of skepticism.

Moscow’s decision on Dec. 1 to drop the $45-billion South Stream natural gas pipeline project in favor of a new pipeline deal with Turkey shows Putin’s willingness to circumvent European partners to continue deliveries of natural gas to European countries that depend heavily on Russia for its energy requirements. The deal also puts Turkey squarely in the Russian energy camp at a time when Russia has been alienated by the West.

Of course, the Russian dalliance with China is a key part of Putin’s great Eastern pivot that will keep stoking demand for Russian gas even as the Saudis and OPEC, perhaps with US collusion, keep pumping to hold down the price. The November agreement, that would see Gazprom supply Chinese state oil company CNPC with 30 billion cubic meters of gas per year, builds on an earlier deal to sell China 38 bcm annually in an agreement valued at $400 billion.

As Oilprice.com commented on Sunday, “ongoing projects are soldiering on and Russian oil output is projected to remain unchanged into 2015.”

“Russia will go down with the ship before ceding market share – especially in Asia, where Putin reaffirmed the pivot is real. Saudi Arabia and North America will have to keep pumping as Putin plans to uphold his end in this game of brinksmanship.”

Source: http://oilprice.com/Energy/Oil-Prices/Did-The-Saudis-And-The-US-Collude-In-Dropping-Oil-Prices.html

By Andrew Topf of Oilprice.com