House of Saud

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gc2smFrom the keyboard of James Howard Kunstler
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Anthony-Freda_web15

 

Originally Published on Clusterfuck Nation  August 29, 2016

 


Would fate permit it, the election of Hillary Clinton will be the supreme and perhaps terminal act in an Anything-Goes-And-Nothing-Matters society. Yet, even with the fabulous luck of running against a consummate political oaf, she struggles to get the upper hand, and she may land in the White House with the lowest voter turnout in modern history. And then her reward in office may be to dodge indictment for four years while the nation crumbles around her. This is the way the world ends: not with a bang or a whimper but with a cackle.

Imagine the scene following Hillary’s election. In order to salvage the last shred of its credibility, the Federal Reserve raises its overnight funds rate another quarter percent and crashes the last Potemkin semblance of a “recovering” economy, that is, the levitated stock markets. Tens of millions of retired individuals previously driven into them by zero interest rate policy are wiped out. Even more gravely, pension funds and insurance companies are destroyed, but not before their troubles trigger derivative contracts with big banks which then explode and expose the inability of counterparties to make good on their ends of the bet.

In a blind panic, the Federal Reserve reverses its policy in December, drops the Fed Funds interest rate back to 25 basis points and announces the grandest new round of “quantitative easing” (money printing) ever, while congress is coerced into voting for the greatest bailout of institutions the world has ever seen, along with a “one time” helicopter drop of a cool trillion dollars in the form of combined tax cuts and “shovel-ready infrastructure projects.” The media rejoices. The US Dollar tanks. Absolutely nobody wants US treasury bonds, bills, and notes. The pathetic remnant of the American middle class stares into the abyss. (If it looks hard enough, it sees the US government down there.)

We’re now living in the setup for this, treating the election shenanigans so far as just another sordid television entertainment. It’s more than that. It’s an engraved invitation to the worst crisis since the Civil War. The crisis may even feature events like a civil war with identity groups skirmishing around our already-ruined “flyover” cities just like the factions in Aleppo and Fallujah. Thank the “Progressive” Left for that. Believe me, history will blame them for chucking the idea of a unifying common culture onto the garbage barge.

And yes, for all our tribulations here in America, the rest of the world will be struggling with its own epic disorders. It remains to be seen whether they will lead to war as, say, the Chinese ruling party attempts to evade the crash of its own rickety banking system, and the inflamed millions of ruined “investors,” by starting a brawl with Japan over a few meaningless islands in the Pacific. Could happen. And, oh, is North Korea for real with its right out front nuclear bomb-and-missile program? What does the rest of the world plan to do about that?

You don’t even want to look at the Middle East. The grisly conflicts there of recent decades are just a prelude to what happens when the House of Saud loses its grip on the government. That will happen, and then the big question is whether Aramco can continue to function, or whether the critical parts of it end up damaged beyond repair as competing tribes fight over it. In any case, the world will begin to notice the salient fact of life in that part of the world: namely, that the Arabian desert, and much of the great band of arid territory on either side of it, cannot support the populations that mushroomed in the nutrient bath of the 20th century oil economy. And they won’t all be able to self-export to Europe either.

Speaking of that interesting region, around the same time Hillary sets up for intensive care in the third floor of the White House, the old order will be swept away across Europe. Farewell Merkel and Monsieur Hollandaise. Farewell to the squishy Left all over the place. Enter the hard-asses. You’d think if anything might unite that continent it might be the wish to defend secular freedom under the rule of law, but even that remains to be seen.

Yes, the world following 3Q 2016 is looking like one hot mess. If you remember anything, let it be this: the primary mission of your cohort of the human race is managing contraction. The world is getting wider and poorer again and the outcome everywhere will be determined by the success of people to manage their lives locally. The big things of this world — governments, corporations, institutions — are losing their traction and whatever we manage to rebuild will get done locally. In victory, Hillary may utterly cease to matter.

 


James Howard Kunstler is the author of many books including (non-fiction) The Geography of Nowhere, The City in Mind: Notes on the Urban Condition, Home from Nowhere, The Long Emergency, and Too Much Magic: Wishful Thinking, Technology and the Fate of the Nation. His novels include World Made By Hand, The Witch of Hebron, Maggie Darling — A Modern Romance, The Halloween Ball, an Embarrassment of Riches, and many others. He has published three novellas with Water Street Press: Manhattan Gothic, A Christmas Orphan, and The Flight of Mehetabel.

Fear And Loathing in the House of Saud

saudi wellgc2smOff the keyboard of Pepe Escobar
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saudi well

Originally published in Sputnik on January 8, 2016


Desperation does not even begin to describe the current plight of the House of Saud.

Riyadh was fully aware the beheading of respected Saudi Shi'ite cleric Nimr al-Nimr was a deliberate provocation bound to elicit a rash Iranian response.

The Saudis calculated they could get away with it; after all they employ the best American PR machine petrodollars can buy, and are viscerally defended by the usual gaggle of nasty US neo-cons.   

In a post-Orwellian world "order" where war is peace and "moderate" jihadis get a free pass, a House of Saud oil hacienda cum beheading paradise — devoid of all civilized norms of political mediation and civil society participation — heads the UN Commission on Human Rights and fattens the US industrial-military complex to the tune of billions of dollars while merrily exporting demented Wahhabi/Salafi-jihadism from MENA (Middle East-Northern Africa) to Europe and from the Caucasus to East Asia. 

And yet major trouble looms. Erratic King Salman's move of appointing his son, the supremely arrogant and supremely ignorant Prince Mohammad bin Salman to number two in the line of succession has been contested even among Wahhabi hardliners.

But don't count on petrodollar-controlled Arab media to tell the story.

English-language TV network Al-Arabiyya, for instance, based in the Emirates, long financed by House of Saud members, and owned by the MBC conglomerate, was bought by none other than Prince Mohammad himself, who will also buy MBC.

With oil at less than $40 a barrel, largely thanks to Saudi Arabia's oil war against both Iran and Russia, Riyadh's conventional wars are taking a terrible toll. The budget has collapsed and the House of Saud has been forced to raise taxes.

The illegal war on Yemen, conducted with full US acquiescence, led by — who else — Prince Mohammad, and largely carried out by the proverbial band of mercenaries, has instead handsomely profited al-Qaeda in the Arabic Peninsula (AQAP), just as the war on Syria has profited mostly Jabhat al-Nusra, a.k.a. al-Qaeda in Syria.

Three months ago, Saudi ulemas called for a jihad not only against Damascus but also Tehran and Moscow without the "civilized" West batting an eyelid; after all the ulemas were savvy enough to milk the "Russian aggression" bandwagon, comparing the Russian intervention in Syria, agreed with Damascus, with the 1979 Soviet invasion of Afghanistan.   

US Think Tankland revels in spinning that the beheading provocation was a "signal" to Tehran that Riyadh will not tolerate Iranian influence among Shi'ites living in predominantly Sunni states. And yet Beltway cackle that Riyadh hoped to contain "domestic Shi'ite tensions" by beheading al-Nimr does not even qualify as a lousy propaganda script. To see why this is nonsense, let's take a quick tour of Saudi Arabia's Eastern province. 

All Eyes on Al Sharqiyya

Saudi Arabia is essentially a huge desert island. Even though the oil hacienda is bordered by the Red Sea and the Persian Gulf, the Saudis don't control what matters: the key channels of communication/energy exporting bottlenecks — the Bab el-Mandeb and the Straits of Hormuz, not to mention the Suez canal.

Enter US "protection" as structured in a Mafia-style "offer you can't refuse" arrangement; we guarantee safe passage for the oil export flow through our naval patrols and you buy from us, non-stop, a festival of weapons and host our naval bases alongside other GCC minions. The "protection" used to be provided by the former British empire. So Saudi Arabia — as well as the GCC — remains essentially an Anglo-American satrapy.         

Al Sharqiyya — the Eastern Province of Saudi Arabia — holds only 4 million people, the overwhelming majority Shi'ites. And yet it produces no less than 80% of Saudi oil. The heart of the action is the provincial capital Al Qatif, where Nimr al-Nimr was born. We're talking about the largest oil hub on the planet, consisting of 12 crisscrossed pipelines that connect to massive Gulf oil terminals such as Dhahran and Ras Tanura.

Enter the strategic importance of neighboring Bahrain. Historically, all the lands from Basra in southern Iraq to the peninsula of Musandam, in Oman — traditional trade posts between Europe and India — were known as Bahrain ("between two seas").

Tehran could easily use neighboring Bahrain to infiltrate Al Sharqiyya, detach it from Riyadh's control, and configure a "Greater Bahrain" allied with Iran. That's the crux of the narrative peddled by petrodollar-controlled media, the proverbial Western "experts", and incessantly parroted in the Beltway.  

Workers rest at Ras Tannura's oil production plant near Dammam in Saudi Arabia's eastern province

There's no question Iranian hardliners cherish the possibility of a perpetual Bahraini thorn on Riyadh's side. That would imply weaponizing a popular revolution in Al Sharqiyya.  But the fact is not even Nimr al-Nimr was in favor of a secession of Al Sharqiyya. 

And that's also the view of the Rouhani administration in Tehran. Whether disgruntled youth across Al Sharqiyya will finally have had enough with the beheading of al-Nimr it's another story; it may open a Pandora's box that will not exactly displease the IRGC in Tehran.  

But the heart of the matter is that Team Rouhani perfectly understands the developing Southwest Asia chapter of the New Great Game, featuring the re-emergence of Iran as a regional superpower; all of the House of Saud's moves, from hopelessly inept to major strategic blunder, betray utter desperation with the end of the old order.  

That spans everything from an unwinnable war (Yemen) to a blatant provocation (the beheading of al-Nimr) and a non sequitur such as the new Islamic 34-nation anti-terror coalition which most alleged members didn't even know they were a part of. 

The supreme House of Saud obsession rules, drenched in fear and loathing: the Iranian "threat".

Riyadh, which is clueless on how to play geopolitical chess — or backgammon — will keep insisting on the oil war, as it cannot even contemplate a military confrontation with Tehran. And everything will be on hold, waiting for the next tenant of 1600 Pennsylvania Avenue; will he/she be tempted to pivot back to Southwest Asia, and cling to the old order (not likely, as Washington relies on becoming independent from Saudi oil)? Or will the House of Saud be left to its own — puny — devices among the shark-infested waters of hardcore geopolitics?


PepePepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

The Middle East oil/nuclear puzzle

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Reuters / Ali Jarekji

Reuters / Ali Jarekji

Originally published in RT on March 17, 2015

US Secretary of State John Kerry may be starting to enjoy the brinkmanship, as he says it’s “unclear” whether the US and Iran would reach a political framework nuclear deal before the end of this month.

Loud applause may be heard in corridors ranging from Tel Aviv to Riyadh.

As negotiations resume in Lausanne, the fact is a potential nuclear agreement between Iran and the P5+1 (US, UK, France, BRICS members Russia and China, and Germany) is bound to open the possibility of more Iranian oil exports – thus leading oil prices to fall even further. As of early this week, Brent crude was trading at $54.26 a barrel.

Assuming the US and the EU nations that are part of P5+1 really agree to implement the suspension of UN sanctions by the summer (Russia and China already agree), not only will Iran be exporting more energy – that should take a few months – but also OPEC as a whole will be increasing its oversupply.

The EU badly wants to buy loads of Iranian energy – and invest in Iranian energy infrastructure. Beijing, a key yet discreet member of the P5+1, is also watching these developments very carefully.

Whatever happens, for China this is a win-win situation, as Beijing keeps actively building up its strategic petroleum reserves profiting from low prices. And even as oil prices also remain under pressure from the strong US dollar – which makes oil way more expensive if you are paying with a different currency – that’s certainly no problem for China, with its mammoth US dollar reserves.

The oil price war essentially unleashed by Saudi Arabia has hit Iran with a bang. The country may be down, but not out. There were no good options for Tehran except to try to keep its market share by offering the same discounts – especially to Asia – the Saudis are offering.

Tehran has been under a tsunami of nasty Western sanctions for years, which limit its ability to export oil and increase production. It’s extremely difficult for the Iranian governments to reduce the gap of the expected revenue based on previous high oil prices.

Now the name of the game among major oil producers is to keep market share at all costs. Iran can’t escape it – as it needs to keep in check at all times the fear of oversupply and its desire to increase production. Some oil producing countries are definitely keeping upcoming oil supplies out of the market. The result is Iran will have serious trouble going for more production and more exports while trying to regain its pre-sanctions market share.

Reuters / Azad Lashkari

Reuters / Azad Lashkari

Wanna buy a Middle East condo?

While a sort of undeclared “oil war” is still far from reaching an endgame, the nuclear front promises some eye-popping breakthroughs.

Powerful – if sometimes conflicting – ‘Empire of Chaos’ factions in Washington are actively entertaining the dream of transferring US military assets from the Middle East to Europe to keep ratcheting up the pressure on Russia, under the pretext of the “aggression” on Ukraine.

That might happen only after “control” of the Middle East is somewhat shared between Turkey, Iran, and to a much lesser extent, the House of Saud. For the notoriously wobbly “Don’t Do Stupid Stuff” Obama administration’s foreign policy, this development would be a key rationale behind the push for a successful P5+1 nuclear deal with Iran to be reached this summer.

Iran has already cultivated – and blossomed – its own sphere of influence. It’s the Turkey-Saudi case that is way more complicated.

As much as Ankara is well aware of the fierce catfight for regional power between Tehran and Riyadh, it tries to maintain good relations with both.

Crucially it’s in Syria that Ankara and Riyadh are almost on the same “Assad must go” page. Almost – because in fact a pro-Muslim Brotherhood Turkey-Qatar alliance has found itself for four years in direct competition with a Salafi-boosting House of Saud.

Anyway, when Turkey’s President, also known as ‘Sultan’ Erdogan, visited the new Saudi King Salman in early March, they reached an understanding; they will both turbo-charge “support” – weaponized and otherwise – for the Syrian opposition. Problem is there is no credible Syrian opposition; virtually everyone that knows how to fight has migrated to the fake Caliphate of ISIS/ISIL/Daesh.

What this means in a nutshell is once again a Sunni against Shi’ite set up; a classic Divide and Rule gambit that is the perennial House of Saud priority.

The ’Empire of Chaos’, in theory, should but be pleased. But it’s not. The Obama administration’s objective – on the record – is “[prioritizing] the Islamic State, not Assad.”

But that may also change in a heartbeat. New Pentagon supremo Ashton Carter has just admitted, “the forces that we train in Syria, we will have some obligation to support them after they’re trained.” But that would also “include the possibility that, even though they’re trained and equipped to combat ISIL, they could come into contact with forces of the Assad regime.”

No wonder Damascus is weary, and will wait for US “actions” before any possible negotiation with Washington. One day Kerry says talks with Damascus are necessary to end the Syrian civil war. The next day he repeats, “Assad must go.”

Osama’s pal plays paranoia

As for a no-fly zone over northern Syria – heavily pushed by Erdogan, and a wet dream of neo-cons in Washington – it won’t fly. One extra reason for Ankara to stay away from this new Saudi anti-Iran push.

To complicate things further, power within the House of Saud remains diffused. Both the CIA and BND – German intelligence – agree, and there have been constant rumblings in Washington that the House of Saud eventually should go.

The House of Saud still has not understood that Syria is not the main “threat” against them. They are freaking out about their border with Iraq – as well as their borders with Yemen and Bahrain. On top of it they picked a fight with Russia via the oil price war. The Saudis say they are pumping only 9.5 million barrels of oil a day out of their 12.5 million barrels a day; Moscow is essentially saying they are pumping their entire capacity.

If the oil price war delights the Russia-demonizing ‘Masters of the Universe’, they are at the same time deeply enraged because it is decimating the US shale oil “revolution”. What’s left for masses of unemployed US workers? Find a job in Saudi Arabia. Still one more reason for the ‘Masters of the Universe’ to dump the House of Saud anytime they feel like it.

Predictably, House of Saud paranoia remains the norm. Former Saudi intelligence capo di tutti i capi (and former great pal of Osama bin Laden), Prince Turki, is on overdrive, charging Iran with being “a disruptive player in various scenes in the Arab world, whether it’s Yemen, Syria, Iraq, Palestine or Bahrain”; accusing Iran of “expanding its occupation of Iraq”; insisting “the enemy” is both Assad and ISIS/ISIL/Daesh; and last but not least unequivocally blasting any possible nuclear deal with Iran.

What’s even more worrisome is that King Salman brought Pakistani Prime Minister Nawaz Sharif to Riyadh – rushing to meet him at the airport – to confirm a key strategic, secret nuclear agreement before any Iran/P5+1 deal is clinched. The bottom line: the House of Saud does not trust the American nuclear umbrella anymore. They are making their own nuclear power play with the help of nuclear power Pakistan. The connection does exist, but remains extremely mysterious.

No need to outline the upcoming maze of ominous consequences. Demented nuclear Wahhabis, anyone?

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

The Dirtiest Secret of the War on Terror

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Zacarias Moussaoui The man known as the 20th 9/11 hijacker (image by YouTube)

Zacarias Moussaoui The man known as the 20th 9/11 hijacker
(image by YouTube)

Originally published in Sputnik on February 8, 2015

Out of the bowels of a US maximum-security prison in Florence, Colorado, al-Qaeda operative Zacarias Moussaui, currently serving a life sentence, providentially has shed light on what amounts to the dirtiest secret of the “war on terror.”

In over 100 pages of testimony, filed in a federal court in New York earlier this week, Moussaui drops several House of Saud-related bombs. Not least that among leading al-Qaeda donors prior to 9/11 we find former Saudi intel chief Prince Turki al-Faisal (also a former great buddy of Osama bin Laden); notorious former ambassador to the US and failed sponsor of hardcore jihadis in Syria, Prince Bandar bin Sultan, aka Bandar Bush; darling of Western markets (and Rupert Murdoch) Prince al-Waleed bin Talal; and a who’s who of Saudi Arabia’s top Wahhabi clerics.

None of this is any novelty for those among us who, since Afghanistan in the 1980s, have been following the extraordinarily murky adventures of Wahhabi-sponsored/derived jihadism.

The information is even more relevant when compared to an upcoming book by Michael Springmann — the former head of the US visa section in Jeddah, Saudi Arabia. In Visas for al-Qaeda: CIA Handouts that Rocked the World, Springmann essentially details how…

“…during the 1980s, the CIA recruited and trained Muslim operatives to fight the Soviet invasion of Afghanistan. Later, the CIA would move those operatives from Afghanistan to the Balkans, and then to Iraq, Libya, and Syria, traveling on illegal US visas. These US-backed and trained fighters would morph into an organization that is synonymous with jihadist terrorism: al-Qaeda….“The political purpose of these revelations, from Washington’s point of view, is to put pressure on the House of Saud to keep pumping their oil surplus. The recent rebound in oil is causing some hysteria in Washington, because it may be linked to the Saudis having second thoughts about their oil price war against, most of all, Russia.”

Well, in the beginning there was not even an “organization.” By the mid-1980s, “al-Qaeda” was only a database in a computer linked to the communications department of the secretariat of the Islamic Conference. At the time, when Osama bin Laden was nothing but a proxy US agent operating in Peshawar, al-Qaeda’s intranet was a good communication system for fighters to exchange code messages. “al-Qaeda” was neither a terrorist organization — an Islamist army — nor personal property of Osama bin Laden.

Later on, in the mid-2000s in Iraq, Abu Musab al-Zarqawi — the Jordanian thug precursor of ISIS/ISIL/Daesh — was recruiting militants/fanatics/angry young men by himself, without any direct input by bin Laden. His set-up was al-Qaeda in Iraq (AQI).

So al-Qaeda was and remains a brand, a successful franchising. It is not, and never was, an organization; rather a key operational element of an intel agency. Thus the categorical imperative; al-Qaeda is essentially a derivation of Saudi intel. The best evidence would be the murky role, from the beginning, of wily Prince Turki, the former, long-time director general of the Mukhabarat, the House of Saud intel (but Turki is not talking, and he never will). Turkish intel, for its part, has never bought the myth of an “al-Qaeda” organization.

Al-Qaeda in the House

The Moussaui revelations become really explosive when dots are connected between the political ideology of the House of Saud, al-Qaeda’s political platform, and even the warped ideology of the fake Caliphate of ISIS/ISIL/Daesh. The matrix for all these is 19th century Wahhabism — and its medieval interpretation/appropriation of Islam.

They are all applying different methods — some much gorier than others — towards essentially the same goal: the proselytizing of Wahhabism. The key difference is that al-Qaeda and ISIS/ISIL/Daesh are Wahhabi renegades, who ultimately would like to replace the House of Saud — a puppet of the West — with an even more intolerant Salafi rule and/or Caliphate.

House of Saud equals al-Qaeda equals the Caliphate. Once this “secret” bombshell is out of its Arabian Pandora’s box, the whole US rationale behind that gift that keeps on giving, the “war on terror” — which for the Pentagon equals Infinite War — collapses.

And that brings us to the new head of the House of Saud, Prince Salman, fast on his way to (literal) dementia. During the 1990s, he was a staunch supporter of Salafi-jihadism, and that of course included bin Laden. And later on, as Governor or Riyadh, he excelled on the hatred of Shi’ites department, which expanded to hatred of Iran as a whole — not to mention hatred of any vaguely remote democratic practices inside Saudi Arabia.

It’s useless to expect Salman to “reform” — as much as it’s useless to expect the Obama administration to let go of Washington’s love affair with “our” favorite bastards in the Persian Gulf. But now there’s a key new element; House of Saud desperation.

It’s no secret in Riyadh and across the Gulf that the new King and his Western-educated advisors are completely freaking out. They see themselves surrounded by Iran — which, to top if off, may finally strike a nuclear deal with the “Great Satan” this summer.

They see the fake Caliphate of ISIS/ISIL/Daesh controlling a great deal of “Syraq” – with their sights set on Mecca and Medina. They see the pro-Iran al Houthi Shi’ites now controlling Yemen. They see the majority Shi’ites in Bahrain barely repressed by mercenary forces. They see substantial Shi’ite unrest in the Eastern Province of Saudi Arabia, where the oil is.

They are spread out all over the Middle East still possessed by their “Assad must go” psychosis (he’s not going anywhere though). They need to finance the military junta now in power in Egypt to the tune of tens of billions of dollars (Egypt is essentially broke.) To top it off, they foolishly bought Washington’s fight against Russia by embarking in an oil price war which is corroding their own budget.

Substantially, what has happened so far in Riyadh is just a palace coup. Salman got rid of everyone associated with late King Abdullah. Notorious Bandar Bush – still fresh from his spectacular Syria fiasco – was fired from his post of Secretary-General for the National Security Council and special envoy of the King. Perhaps Dr. Ayman al-Zawahiri could find him a job.

There is no evidence Salman will crack down on a rash of influential, demented clerics – and pious wealthy donors — who export Wahhabism as global jihad. There is no evidence that if the House of Saud is really serious about fighting ISIS/ISIL/Daesh, Salman will make the effort to cooperate with the Shi’ite majority government in Baghdad. Or at least let Iran take care of the problem (and they can, with their military advisors and support for selected militias like the Badr brigade).

There is no evidence the House of Saud will try to reach a compromise with Tehran; instead, paranoia reigns, because not only ideologically but politically they see themselves marginalized once Iran rises as a regional superpower in case a nuclear deal is clinched this summer.

Most of all, there is no evidence the “Don’t Do Stupid Stuff” (Obama’s own words) administration has the capability to seriously review US-Saudi relations. What is certain is that the dirtiest secret of the war on terror will remain off-limits. All the “terror” we face, real or manufactured, springs out from just one source; not “Islam”, but intolerant, demented Wahhabism.

Read more: http://sputniknews.com/columnists/20150206/1017869785.html#ixzz3RH7VYAD5

 

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

What Game is the House of Saud playing?

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33.si

Originally published in Russia Today on January 16, 2015

[NOTE: This post is Pepe’s take on the Saudi succession, written just before King Abdullah’s death. ]

The House of Saud now finds itself in times of extreme trouble. Their risky oil price war may eventually backfire. The succession of King Abdullah may turn into a bloodbath. And the American protector may be musing a change of heart.

Let’s start with oil – and some background. As much as US supply has increased by a couple of million barrels a day, enough oil from Iran, Kirkuk in Iraq, Libya and Syria has gone out of production; and that offsets extra US oil on the market. Essentially, the global economy – at least for the moment – is not searching for more oil because of European stagnation/recession and the relative China slowdown.

Since 2011, Saudi Arabia has been flooding the market to offset the decrease in Iran exports caused by the US economic war, a.k.a. sanctions. Riyadh, moreover, prevented OPEC from reducing country production quotas. The House of Saud believes it can play the waiting game – as fracked oil, mostly American, is inexorably driven out of the market because it is too expensive. After that, the Saudis believe they will regain market share.

In parallel, the House of Saud is obviously enjoying “punishing” Iran and Russia for their support of Bashar Assad in Damascus. Moreover, the House of Saud is absolutely terrified of a nuclear deal essentially between the US and Iran (although that’s still a major “if”) – leading to a long-term détente.

Tehran, though, remains defiant. Russia brushed off the attack because the lower ruble meant state revenues remained unchanged – so there will be no budget deficit. As for oil-thirsty East Asia – including top Saudi customer China – it’s enjoying the bonanza while it lasts.

Oil prices will remain very low for the time being. This week Goldman Sachs lowered their 2015 WTI and Brent Crude forecasts; Brent was slashed from $83.75 a barrel to $50.40, WTI was cut from $73.75 to $47.15 a barrel. Prices per barrel could soon drop as low as $42 and $40.50. But then, there will be an inevitable “U-shaped recovery.”

Nomura bets that oil will be back to $80 a barrel by the end of 2015.

Reuters / Lucas Jackson

Reuters / Lucas Jackson

Punish Russia or bust

US President Barack Obama, in this interview, openly admitted that he wanted “disruptions” in the“price of oil” because he figured Russian President Vladimir Putin would have “enormous difficulty managing it.” So that settles the argument about hurting Russia and US-Saudi collusion, after US Secretary of State John Kerry allowed/endorsed King Abdullah in Jeddah to simultaneously raise oil production and embark on a cut price strategy.

Whether Kerry sold out the US shale gas industry out of ignorance or incompetence – probably both – is irrelevant. What matters is if the House of Saud were ordered to back off, they would have to do it in a flash; the ‘Empire of Chaos’ dominates the Persian Gulf vassals, who can’t even breathe without at least an implicit US green light.

What is way more troubling is that the current bunch in Washington does not seem to be defending US national and industrial interests. If humongous trade deficits based on currency rigging were not enough, now virtually the entire US oil industry runs the risk of being destroyed by an oil price racket. Any sane analyst would interpret it as contrary to US national interests.

Anyway, the Riyadh deal was music for the House of Saud’s ears. Their official policy has always been to slash the development of all potential substitutes for oil, including US shale gas. So why not depress oil prices and keep them there long enough to make investments in shale gas a lunatic proposal?

But there’s a huge problem. The House of Saud simply won’t get enough in oil revenues to support their annual budget with oil at below $90 a barrel. So as much as hurting Iran and Russia may be appealing, hurting their own golden pocketbooks is not.

The long-term outlook spells out higher oil prices. Oil may be replaced in many instances; but there isn’t a replacement – yet – for the internal combustion engine. So whatever OPEC is doing, it is actually preserving demand for oil vs. oil substitutes, and maximizing the return on a limited resource. The bottom-line: yes, this is predatory pricing.

Once again, there’s an immense, crucial, complicating vector. We may have the House of Saud and other Persian Gulf producers flooding the market – but its Goldman Sachs, JP Morgan and Citigroup who are doing the shadow, nasty work via leveraged derivative short futures.

Oil prices are such an opaque racket that only major oil trading banks such as Goldman Sachs or Morgan Stanley have some idea who is buying and who is selling oil futures or derivative contracts – what is called “paper oil.” The non-rules of this multi-billion casino spell out “speculative bubble” – with a little help from those friends at the Gulf oil pumps. With oil futures trading and the two major London and New York exchanges monopolizing oil futures contracts, OPEC really does not control oil prices anymore; Wall Street does. This is the big secret. The House of Saud may entertain the illusion they are in control. They’re not.

U.S. President Barack Obam.(Reuters / Kevin Lamarque)

U.S. President Barack Obam.(Reuters / Kevin Lamarque)

That dysfunctional marriage

As if this was not messy enough, the crucial succession of the House of Saud is propelled to the forefront. King Abdullah, 91, was diagnosed with pneumonia, hospitalized in Riyadh on New Year’s Eve, and was breathing with a tube. He may – or may not, this being the secretive House of Saud – have lung cancer. He won’t last long. The fact that he is hailed as a “progressive reformer” tells everything one needs to know about Saudi Arabia. “Freedom of expression”? You must be joking.

So who’ll be next? The first in the line of succession should be Crown Prince Salman, 79, also defense minister. He was governor of Riyadh province for a hefty 48 years. It was this certified falcon who supervised the wealth of private “donations” to the Afghan mujahedeen in the 1980s jihad, in tandem with hardcore Wahhabi preachers. Salman’s sons include the governor of Medina, Prince Faisal. Needless to add, the Salman family controls virtually all of Saudi media.

To get to the Holy Grail Salman must be proven fit. That’s not a given; and on top of it Abdullah, a tough nut to crack, already survived two of his crown princes, Sultan and Nayef. Salman’s prospects look bleak; he has had spinal surgery, a stroke and may be suffering from – how appropriate – dementia.

It also does not bode well that when Salman was promoted to Deputy Defense Minister, soon enough he was shown the door – as he got himself mixed up with Bandar Bush’s atrocious jihadi game in Syria.

Anyway, Salman already has a successor; second Deputy Prime Minister Prince Muqrin, former governor of Medina province and then head of Saudi intelligence. Muqrin is very, very close to Abdullah. Muqrin seems to be the last “capable” son of Ibn Saud; “capable” here is a figure of speech. The real problem though starts when Muqrin becomes Crown Prince. Because then the next in line will be picked from the grandsons of Ibn Saud.

Saudi Arabia's Foreign Minister Prince Saud al-Faisal.(Reuters / Brendan Smialowski)

Saudi Arabia’s Foreign Minister Prince Saud al-Faisal.(Reuters / Brendan Smialowski)

Enter the so-called third generation princes – a pretty nasty bunch. Chief among them is none other than Mitab bin Abdullah, 62, the son of the king; cries of nepotism do proceed. Like a warlord, Mitab controls his own posse in the National Guard. Sources told me Riyadh is awash in rumors that Abdullah and Muqrin have made a deal: Abdullah gets Muqrin to become king, and Muqrin makes Mitab crown prince. Once again, this being the “secretive” House of Saud, the Hollywood mantra applies: no one knows anything.

Abdullah’s sons are all over the place; governor of Mecca, deputy governor of Riyadh, deputy foreign minister, president of the Saudi Red Crescent. Same for Salman’s sons. But then there’s Muhammad bin Nayif, son of the late Crown Prince Nayif, who became Interior Minister in 2012, in charge of ultra-sensitive internal security, as in cracking down on virtually anything. He is the top competitor against Mitab among the third-generation princes.

So forget about family “unity” when such juicy loot as an oil hacienda impersonating a whole country is in play. And yet whoever inherits the loot will have to face the abyss, and the same litany of distress; rising unemployment; abysmal inequality; horrendous sectarian divide; jihadism in all its forms – not least the fake Ibrahim Caliphate in “Syraq”, already threatening to march towards Mecca and Medina; the unspeakably medieval Council of Ulemas (the lashing/amputating/beheading-loving bunch); total dependency on oil; unbounded paranoia towards Iran; and a wobbly relationship with His Masters Voice, the US.

When will they call the cavalry?

And it so happens that the real ‘Masters of the Universe’ in the Washington-New York axis are debating exactly the erosion of this relationship; as in the House of Saud having no one to talk to but the “puppets”, from Bush Two minions to Kerry at most on occasion. This analysis contends that any promises made by Kerry over the House of Saud “cooperation” to damage Russia’s economy really mean nothing.

Rumbles from ‘Masters of the Universe’ territory indicate that the CIA sooner or later might move against the House of Saud. In this case the only way for the House of Saud to secure its survival would be to become friendly with none other than Moscow. This exposes once more the House of Saud’s suicidal present course of trying to hurt Russia’s economy.

As everyone is inexorably an outsider when faced with the totally opaque House of Saud, there’s an analytical current that swears they know what they’re doing. Not necessarily. The House of Saud seems to believe that pleasing US neocons will improve their status in Washington. That simply won’t happen. The neocons remain obsessed about the House of Saud helping Pakistan to develop its nuclear missiles; some of them – once again, that’s open to speculation – might even be deployed inside Saudi Arabia for “defensive purposes” against that mythical Iranian “threat.”

Messy? That doesn’t even begin to describe it. But one thing is certain; whatever game Riyadh thinks it’s playing, they’d better start seriously talking to Moscow. But please, don’t send Bandar Bush on another Russian mission.

 

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge (Nimble Books, 2007), and Obama does Globalistan (Nimble Books, 2009).

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