New Silk Road

This Week in Doom June 10, 2018


That-Was-The-Week-That-W-That-Was-The-Week-473964gc2smFrom the keyboard of Surly1
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Originally published on the Doomstead Diner on June 10, 2018

“It’s like these guys take pride in being ignorant.” ― Barack Obama  


This was a week in which The Orange Turd blasted our allies and trading partners, gave aid and succor to Russia, declared himself above the law and that he can pardon himself, called the special counsel unconstitutional and otherwise appealed to his rump base of hard core supporters and tagalong stupids. This stuff would be funny if it weren’t so dangerous. Anti-intellectualism has been the glue holding together the Republican platform, and is normalized for a third of the electorate, such that we are unequipped to deal with the complex problems we hasten to create all over the world. 

Right-wingers label intelligence and being well-informed as “elite,” implying that ignorance is somehow both valuable and under attack, because a sense of continued victimhood  is necessary to stoke the flames of grievance.  Richard Hofstadter described our anti-intellectualism as “older than our national identity” in his 1963 classic, Anti-Intellectualism in American Life. Observers from Tocqueville on noted American ignorance as an essential element of the national character, never found far from its running buddy, nativism. Yet our founders established a form of government that requires an informed citizenry. Hard to do when television prefers simplistic arguments, solutions, answers, and a story arc that resolves in 22 minutes. And even TV is losing the attention battle to the smartphone.

We can't agree on what constitutes a "fact." Trump's War on Truth starts with "No Collusion," and proceeds to denying climate change, asserting widespread voter fraud, and asserting evidence doesn't matter. Evidence-based communities are under attack — the intelligence community, law enforcement, think tanks and journalists. Such attacks come in various forms — disregard for data, ad hom attacks on messengers and motives, deflections and false analogies. And outright lying. Now any theory is valid if it sells books, earns ratings, or moves units, anything can be true if someone says it loudly enough, and fact is whatever enough people believe, determined by how fervently they believe it. Praise Jesus.

American 15-year-olds rank 24th out of 29 countries in math literacy, and their parents are as likely to believe in flying saucers as in evolution; roughly 30 to 40 percent believe in each. Almost half of Americans can’t name even one of the rights guaranteed by the First Amendment. 35 percent think gay people can choose to become straight. 29 percent say that a bloody fight against the U.S. government “isn’t just imminent but imperative.” A late-night comic interviewed a Georgia Rep about the bill she co-sponsored  that would require display of the Ten Commandments in both the House of Representatives and the Senate. When asked, she couldn't actually name the commandments. Apparently we don't need to know anything because, hey, we can look it up on the Internet.

Just don't lose your phone.


Trump cuts and runs from G7. End of the world order?

The G7 (G6?) is in apparent disarray after Trump rejected a joint communique and attacked Canada's Justin Trudeau as 'weak.' In a PR offensive meant to bring his low IQ voter base of to full erection, The Orange Lout managed to threaten new trade wars, insult our friends, coddle our enemies and call for Russia to be reinstated to the G7. He arrived late to a meeting on human rights, signaling his disdain for the proceedings, and then left early in case anyone missed the point.

Yet for all that, the US had appeared to agree a version of a draft statement on contentious issues thanks to an all-night negotiating session by officials from all sides. But then Trump's personal Iago, John Bolton, went to work on his erratic, easily swayed charge.

But after leaving for Singapore, Trump tweeted personal attacks on Trudeau and said that he had told his representatives not to sign the summit communique, turning what had already been a tense meeting of the world’s leading industrialized democracies into a fiasco.

A few minutes before Trump sent out his inflammatory tweets, his hawkish national security security adviser, John Bolton, appeared to anticipate them by sending a tweet of his own, deriding the G7 summit he had just attended.

“Just another G7 where other countries expect America will always be their bank. The President made it clear today. No more,” Bolton said.

On meeting Trump, Trudeau made a gift of a framed photo of The Orange Turd's  grandfather’s Canadian brothel in British Columbia, where Friedrich Drumpf made the fortune that was the foundation of the Trump family real estate empire. Orange Julius seemed happy with the gift, even bragging about it on Twitter. Some speculate it was a brilliant troll. 

Apparently this was not the only viral slight from Trudeau to Trump. In the released photo of the world leaders together, the two leaders also stood side-by-side and clearly showed that Trudeau is visibly taller than The Orange Lout. Trudeau is listed as 6-foot-2 while Trump was comically listed on his official White House physical as 6-foot-3. Compared to Trudeau, he appears to be at least two inches shorter than his listed height, which would classify him as obese.

It is not known whether the point of the gift slowly dawned on The Orange One only later, or whether that helped fuel his tantrum. In a related rumor, Vladimir Putin was heard singing a happy tune.


How Singapore, Astana and St Petersburg preview a new world order

Meanwhile, on the other side of the world, a meeting of a diffreent kind took place. Pepe Escobar outlines how Russia-China are now well-placed to have Turkey, Iran, Pakistan and India join them along with the central Asian stans, in a new mega trading bloc, even as the  US/Japan/EU western bloc is collapsing and divided.

The Astana Economic Forum in Kazakhstan centered on how mega-partnerships are changing world trade. Participants included the president of the Asian Infrastructure Investment Bank, the Eurasian Development Bank, the president of the EU Commission, the deputy director-general of the WTO, and academics. You may ask, "who cares?" 

In a nutshell; this New Great Game installment revolves around “Russia’s strategy to enhance its bargaining power with the West by pivoting to the East.”


While Putin's Man in the White House left the G7 early in a snit, he  left behind a giant turd in the punch bowl, demanding that Russia be re-admitted to the G-7. 

Cui bono?

Join now in another rousing chorus of "No Kollusion!"

As the New Silk Road initiative continues, along with mega-partnerships changing world trade, meetings like the Shanghai Cooperation Organization (SCO) occurring soon, the US is quickly becoming a pariah state.

Cui bono?

Maybe you missed this as well:

Add to the debate the crucial Astana headline, ignored by Western corporate media: Iran signed a provisional free-trade-zone agreement with the EAEU, lowering or abolishing customs duties, and opening the way for a final deal in 2021. For Iran, that will be a golden ticket to do business way beyond Southwest Asia, integrating it further with Russia and also Kazakhstan, which happens to be a key member of the Belt and Road Initiative (BRI).

The rest of the world is going its own way, and will be doing so without the US. Let's review the bidding: Trump hollows out the State department, and surrounds himself with "my generals." Military acumen replaces statecraft. Ambassadorships go unfilled. Wary of "globalists," the US retreats from the world, and China rushes in the fill the vacuum. Trump picks unnecessary fights with allies, who consider other trade and strategic options. Putin and Xi offer options. America become increasingly isolated as Trump Makes China Great Again.

Once again: cui bono?

We all like to forget that "the American standard of living" is financed by foreign debt, backed by the full faith and credit of the US nuclear arsenal and delivery systems. Which mean less ability to burden the rest of the world with all those troublesome dollars, and when all that debt comes home to roost, great will be the hue and cry therefrom. The "average American" will suffer a bigly shock to his and her standard of living, and our children might be able to afford a chicken for Sunday Dinner luxury once a month… Maybe only then will we put all the goddamn phones down.


Trump: 'I have the absolute right to pardon myself'

It's hard to think back thus far and realize that this happened within this week, such are the serial insults to our attention, but the Orange Lout continue to make his above-the Law-assertions that he could, indeed, pardon himself. He was quick to add that He didn't need to do that, because he had done nothing wrong. Just ignore all those indictments…

The DOJ ruled 44 years ago that the president cannot pardon himself

Trump took to Twitter on Monday to claim his "absolute right" to grant himself a presidential pardon, though he said it would be unnecessary as he has "done nothing wrong." He cited "numerous legal scholars" to back his claim.

However, as Bloomberg reporter Steven Dennis pointed out, that wasn't the case at the end of former President Richard Nixon's time in office. "Under the fundamental rule that no one may be a judge in his own case, the president cannot pardon himself," the Department of Justice declared in 1974. The DOJ spelled it out just four days before Nixon resigned, explaining that the president's pardoning power "does not extend to the president himself."

Even his designated TV legal rodeo clown, Rudy "9-11" Giuliani, added that Trump pardoning himself is "unthinkable" and "would lead to probably an immediate impeachment."

As we have already seen,the fact that this course of action may be illegal in no way precludes Trump from taking it and saying, in effect, "What are you going to do about it?" The Republican majority has proven themselves to be as craven a bunch of lickspittles as ever gathered together to submit to serial forcible sodomy, so expect no "rule of law" relief from that quarter.

Along those lines, Charlie Pierce submitted an article, Trump Has Access to Everything a Dictator Could Want, in which he outlines how Trump consolidates power based on deceit at an alarming rate, and is becoming more popular for doing so among the only voters that matter to him. They care only about winning at all costs, and immiserating godless "libruls" is just an added lagniappe.

The president*, installed at least in part by ratfckers in the employ of a former KGB thug now running a murderous kleptocracy, has at his easy disposal everything a dictator could possibly want. He has combined an instinctive contempt for democratic government with a swindler’s nose for easy cash and a junkie knifepoint robber’s reckless disregard for consequences. He has a tight, loyal cabal of flunkies who’d be chasing ambulances if it weren’t for their talents as sycophants. He has a largely impotent political opposition and a largely supine congressional majority. He is one vote away from a rubber-stamp Supreme Court…

The prion disease began when the party ate the monkeybrains provided by Ronald Reagan, who served up crackpot economics leavened with a cynical alliance with splinter American Protestantism. It has gathered strength within the party, its symptoms becoming more and more obvious year after year. 

Iran-Contra. Willie Horton. Atwater. Rove. Falwell. Graham. Luntz. Bauer. Gingrich. The Impeachment Kabuki. Florida. The lies undermining the Iraq War. Gay-baiting in the 2004 elections. The U.S. Attorneys scandal. Phony charges of voter fraud. The barbaric use of Terri Schiavo for political gain. The unprecedented obstruction, based in overt racism, of Barack Obama. The tolerance of Louie Gohmert, Steve King, Blake Fahrenhold, and Michele Bachmann. The endless flogging of the events at Benghazi. 

And, finally, confronted with genuine, uncut, unfiltered, un-consulted authoritarianism, these people affect surprise that their party was ready for this president* or someone like him? Or that their party was helpless to stop him, or to confront him once in office? The Republican party abandoned its political innocence long ago. It’s only now just noticing.

This administration is the culmination of 40 years of conservative Republican politics melded with an atavistic, fringe Christopathy. The executive is accumulating unchecked power at a breakneck pace, and it is debatable whether he can even be stopped. If you don't like it, get thee to the polls in November. And if you DO like it, eat a bullet.


Suicide Is Painless

The deaths by suicide of Kate Spade and Anthony Bourdain have called attention is rising suicide rates in The Home of the Brave, Land of the Free. NBC reports that US suicide rates are up 30 percent since 1999, according to the CDC. Only half of people who died by suicide had diagnosed mental health conditions.

That may be in part because it’s so difficult to get mental health care, said Dr. Jack Rozel, medical director of the Allegheny crisis services facility in Pittsburgh and president-elect of the American Association for Emergency Psychiatry.

“I run a major crisis center. We have 150 staff. We provide almost 150,000 services every year,” Rozel, also a psychiatry professor at the University of Pittsburgh Medical Center, said.

Yet even his team sometimes has problems finding help for people.

“I think I am reasonably well-connected. About a year ago a friend of mine reached out to me. He was feeling more sad, more anxious, than usual," Rozel said.

"It took me days to get him an appointment with someone. It’s a problem.”

AA calls suicide a "permanent solution to a temporary problem." Who among us really knows what the other guy is going through?

A couple of trends here: In the Reagan years, we de-funded and closed mental hospitals, and in one fell swoop created a homeless problem of off-their-meds schizophrenics wandering the streets, to swell the ranks of other unfortunates. Which was then exacerbated by a casino economy that picks winners, and criminalizes poverty. (Being poor in America is really the only unforgivable sin. My city has jerked up benches in almost every park , even at the airport, and recently fenced off a vacant lot in which Food Not Bombs fed the homeless.)

Another trend has been the pharmacologing of mental illness. Therapists are expensive; pills are cheap. No paychecks needed for pills, which we can make for $.05 and sell for $10 the each. And who gives a fuck about the problems of a handful of muppets? Bad for profits.

Who knows what private torments someone otherwise enjoying the fruits of fame may suffer. But when you look behind the headlines, many thousands of people suffer with depression, with mental illness, and other ills, and our solution is to throw medications at them to paper over the problem, and then blame them for "being weak." Weakness being a sin almost  as unforgivable as poverty.

In the search for answers, we'll look it up on the Internet on our phone. Everywhere except in a mirror. 



banksy 07-flower-thrower-wallpaperSurly1 is an administrator and contributing author to Doomstead Diner. He is the author of numerous rants, screeds and spittle-flecked invective here and elsewhere. He lives a quiet domestic existence in Southeastern Virginia with his wife Contrary. Descended from a long line of people to whom one could never tell anything, all opinions are his and his alone, because he paid full retail for everything he has managed to learn.

The New Silk Roads and the Rise of the ‘Chinese Dream’

chinese flagsgc2smFrom the keyboard of Pepe Escobar
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chinese flags

Originally published in Counterpunch on February 26, 2016

 


Beijing is advancing a Chinese-led globalization that will challenge U.S. hegemony both regionally and globally.

Earlier last week, the first Chinese commercial train, with 32 containers, arrived in Tehran after a less than 14-day journey from the massive warehouse of Yiwu in Zhejiang, eastern China, crossing Kazakhstan and Turkmenistan.

This is a 10,400 km-long trip. Crucially, it’s also no less than 30 days shorter compared to the sea route from Shanghai to Bandar Abbas. And we’re not even talking about high-speed rail yet – which in a few years will be installed all along from eastern China to Iran and onward to Turkey and, crucially, Western Europe, enabling 500-plus container trains to crisscross Eurasia in a flash.

When Mohsen Pour Seyed Aghaei, president of Iran Railways, remarked that, “countries along the Silk Road are striving to revive the ancient network of trade routes,” he was barely touching the surface in what is an earth-shattering process.

Chinese President Xi Jinping visited Iran only last month – the first global leader to do so after nuclear sanctions were lifted. Then the heirs to the former Silk Road powers – imperial Persia and imperial China – duly signed agreements to boost bilateral trade to $600 billion over the next decade.

And that is just the beginning.

Trade Wars and Air/Sea Battles

To frame the earth-shattering process in a strategic perspective, from the Chinese point of view, it’s enlightening to revert to a very important speech delivered last summer by General Qiao Liang at the University of Defense, China’s top military school. It’s as if Liang’s formulations would be coming from the mouth of the dragon – Xi – himself.

Beijing’s leadership assesses that the U.S. won’t get into a war against China within the next 10 years. Pay attention to the time frame: 2025 is when Xi expects China to have turned into a “moderately prosperous” society as part of the renewed Chinese Dream. And Xi for his part would have fulfilled his mandate – arguably basking in glory once enjoyed only by the Little Helmsman Deng Xiaoping.

The secret for the next 10 years, as General Liang framed it, is for China to overhaul its economy (a work in progress) and internationalize the yuan. That also implies striking an Asian-wide free trade pact – which is obviously not the Chinese-deprived American TPP (Trans-Pacific Partnership), but the Chinese-driven RCEP.

General Liang directly connects the internationalization of the yuan to something way beyond the New Silk Roads, or One Belt, One Road, according to the official Chinese denomination. He talks in terms of a Northeast Asia free trade agreement, but in fact what’s in play, and what China aims at, is the trans-Asia free trade agreement.

As a consequence, a “ripple effect” will divide the world:

“If only a third of the global money is in the hands of the dollar, how can the U.S. currency maintain its leadership? Could a hollowed out United States, left without monetary leadership, still be a global leader?”

So the decline of the U.S. dollar is the key issue, according to the Beijing leadership, of China’s “recent troubles” under which loom “the shadow of the United States.”

Enter the U.S. “pivot to Asia.” Beijing clearly interprets its goal as “to balance out the momentum of China’s rising power today.” And that leads to the discussion of the former AirSea Battle concept (it has now “evolved” into another mongrel), which General Liang qualifies as an “intractable dilemma” for the U.S.

“The strategy primarily reflects the fact that the U.S. military today is weakening,” said Liang. “U.S. troops used to think that it could use airstrikes and the Navy against China. Now the U.S. finds neither the Air Force nor the Navy by themselves can gain advantages against China.”

Only this previous paragraph would be enough to put in perspective the whole, tumultuous cat and mouse game of Chinese advances and American bullying across the South China Sea. Beijing is very much aware that Washington cannot “offset some advantages the Chinese military has established, such as the ability to destroy space systems or attack aircraft carriers. The United States must then come up with 10 years of development and a more advanced combat system to offset China’s advantages. This means that Americans may schedule a war for 10 years later.”

Have War, Will Plan

So, no major war up to 2025, which leaves Xi and the Chinese Communist Party (CCP) leadership free to advance like a juggernaut. Observers who follow the moves in Beijing in real time qualify it as “breathtaking “ or “a sight to behold.” The Beltway remains mostly clueless.

At the onset of the Chinese Year of the Monkey, the CCP under Xi’s orders released a sensational cartoon hip hop video that went mega-viral. Talk about Chinese soft power; that’s how Xi’s platform for his 10-year term, up to 2023, was announced to the masses.

Enter the Four Comprehensives: 1) to develop a “moderately prosperous society” (translated into a GDP per capita of US$10,000); 2) Keep deepening reforms (especially of the economic model); 3) Govern by the rule of law (that’s tricky; but essentially means the law as interpreted by the CCP); 4) Eliminate corruption from the CCP (a long work in progress).

None of this, of course, implies following a Western model; on the contrary, it shows off Beijing counteracting Western soft power on every domain.

And then, inevitably, all roads, sooner or later, lead to One Belt, One Road. And yet General Liang sees it as way beyond a globalization process, “the truly American globalization,” which he qualifies as “the globalization of dollars.” He – and the Beijing leadership – do not see the China-driven One Belt, One Road as “an integration into the global economic system. To say that the dollar will continue its globalization and integration is a misunderstanding. As a rising great power, One Belt, One Road is the initial stage of China globalization.”

Radically ambitious does not even begin to describe it. So as much as One Belt, One Road is the external vector of the Chinese Dream, bent on integrating the whole of Eurasia on a trade and commerce “win-win” basis, it is also “by far the best strategy China can put forward. It is a hedge strategy against the eastward move of the U.S.”

There we have it – mirroring what I have been writing since One Belt, One Road was launched. This is China’s “hedge strategy of turning its back to the U.S. eastward shift: You push in one direction; I go in the opposite direction. Didn’t you pressure me to it? I go west, neither to avoid you nor because I am afraid, but to very cleverly defuse the pressure you gave me on the east.” Welcome to China pivoting West.

Feel Free to Encircle Yourself

General Liang, predictably, prefers to concentrate on the military, not commercial aspects. And he could not spell it out more clearly.

“Given that China’s sea power is still weak, the first choice of One Belt, One Road should be to compete on land,” he said. Liang frames the top terrain of competition as the “belt” – overland New Silk Road routes; and that leads to worrying, still unanswered questions about the Chinese army “expeditionary capabilities.”

General Liang does not expand on this competition – arguably with the U.S. – along the New Silk Road belt. What he believes to be certain though, is “that in choosing China as its rival, America chose the wrong opponent and the wrong direction. Because in the future, the real challenge to the United States is not China; it is the United States itself, and the United States will bury itself.”

And how will that happen? Because of financial capitalism; it’s as if Gen. Liang has been reading Michael Hudson and Paul Craig Roberts (as he certainly does). He notes how “through the virtual economy, the United States has already eaten up all the profits of capitalism.”

And what about that “burial”? Well, it will be orchestrated by “the Internet, big data, and the cloud” as they are “pushed to the extreme” and will “gain a life of their own and oppose the government of the U.S.”

Who would have thought it? It’s as if the Chinese don’t even have to play go anymore. They just need to let the adversary encircle itself.


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).

Iran- the New China?

iran_china_afp.jpg_1718483346 gc2smOff the keyboard of Pepe Escobar
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iran_china_afp.jpg_1718483346 Iranian President Hassan Rouhani and Chinese President Xi Jinping | Photo: AFP

Originally published in TeleSur on January 29, 2016


If Iran successfully engages in a Chinese-style economic development program it would further enhance its geopolitical status and significance.

It’s currently quite a toss-up when it comes to naming the hardest working man in geopolitical business: Chinese President Xi Jinping or Iranian President Hassan Rouhani.

Their paths cross last week in Tehran in spectacular fashion as Xi and Rouhani clinched a crucial strategic partnership. The two nations agreed to increase bilateral trade to $600 billion over the next decade. Geostrategically, as I pointed out, that was a master class.

Beijing regards Iran, not only in Southwest Asia but across Eurasia, as the essential hub for countering Washington’s much-advertised “pivot to Asia,” centered on U.S. naval hegemony. No wonder Xi made it clear that Iran is to be accepted as a full member of the Shanghai Cooperation Organization (SCO) as early as this year.

A strategic partnership implies Beijing’s full support for the Iranian economic/political/diplomatic renaissance across the arc spanning the Persian Gulf to the Caspian – and beyond. The arc also happens to span all the crucial New Silk Road maritime and land routes that are vitally important for the global projection of the Xi-coined Chinese dream.

And then, only a few days later, Rouhani was in Rome in a warm closed door meeting with Pope Francis after clinching $17 billion in multiple deals.

This frantic post-sanction activity only enhances, in perspective, the absurdity of the Washington-manufactured Iranian nuclear crisis. Geopolitical realism, from Europe to Asia, cannot ignore a nation placed in the intersection of the Arab, Turk, Indian and Russian worlds, underscored by its role as privileged entry and exit point to the vast Caucasus-Central-Asia ensemble, which also includes Afghanistan.

Geostrategically, as the ultimate Eurasian crossroads, Iran is unbeatable, linking the Middle East, Caucasus, Central Asia, Indian subcontinent and Persian Gulf; between three seas – Caspian, Persian Gulf and Sea of Oman; relatively close to the Mediterranean and Europe; and on the doorstep of Asia.

Xi did not have to talk explicit politics in Tehran as he was suffice to clinch deal after deal to impress his point. The long-term trend, inevitably, is for China’s One Belt, One Road vision to bridge the gap toward a Sino-Russian leadership across Eurasia, which translates practically into the progressive sidelining of the British-American imperial continuum. Meanwhile, Italy and France, during Rouhani’s European tour, kept themselves busy playing catch-up.  

When Khamenei Becomes Deng

The frantic post-sanction Iranian scene at least punctures the previous, relentless Western demonization and lays out the bases for   economic development in just about every sphere. The Islamic Republic of Iran has faced a tremendous handicap for the past 36 years – something that would have broken any less-resourceful society.  

Sanctions over the past 10 years cost Iran at least 480 billion euros; that’s roughly one full year of Iranian GDP. In a world not ruled by the usual suspects of financial oligarchy, Tehran would have grounds to take Washington to court with a vengeance.  

As for the “Iranian aggression” meme – which, by the way, still persists – that’s a lousy imperial joke. Iran spends 3,9 percent of GDP on defense; compare it with 10.3 percent for the House of Saud oil hacienda. In total, Iran spends seven times less on defense compared to the Gulf petro-monarchies, which cannot subsist without their mostly U.S., British and French weaponizing.  

The road ahead for Iran will be bumpy. Serious problems include corruption, bureaucratic incompetence, and economic sectors reserved to special interests or barred from foreign investment. Sections of the power elite – like the bonyads (religious foundations) and the pasdaran (the IRGC) are not exactly prone to relinquish their grip on vital sectors of the national economy. The economic opening of Iran will inevitably accelerate the social transformation of the country.  

What happens next will largely depend on the crucial, upcoming February elections – which will yield a new Majlis (Parliament), and a new Assembly of Experts in charge of choosing the next Supreme Leader.

Iran is a unique geopolitical case – where a republic derives its legitimacy, simultaneously, from Islam and universal suffrage. This may not be your classic Western parliamentary democracy, but at the same time it’s not some sort of crude authoritarianism of Saudi Arabia. A quite complex system of checks and balances is in place, involving the presidency, the Parliament, the Council of Guardians, the Assembly of Experts and different bodies such as the Discernment Council and the National Security Council.

Supreme Leader Ayatollah Khamenei has made it very clear he will pay close attention to cultural, political and security consequences of an economic opening that could enfeeble the revolutionary ideology of the Islamic Republic. What’s certain is that the Supreme Leader – as an arbiter – will preserve the careful balance of political forces in Iran.  

This means, in practice, that Team Rouhani won’t be allowed to draw unlimited political capital from the economic opening, while at the same time the social and cultural transformation of the country won’t be synonymous to a Western cultural invasion.

The Vienna nuclear deal clinched last summer was no less than a seismic geopolitical event in Iran. Internally, it sealed a consensus between the Tehran state machine and the majority of the population, which wanted Iran to become a “normal” nation again.

Now comes the hard part. The most probable scenario spells out an Islamic Republic of Iran engaged in a Chinese-style economic development program. Sort of a Persian “get rich is glorious” remix, under strict political control.

This begs the question: are we ready for the new Supreme Leader role as the Iranian Deng Xiaoping?


Pepe Escobar is an independent geopolitical analyst. He writes for RT, Sputnik and TomDispatch, and is a frequent contributor to websites and radio and TV shows ranging from the US to East Asia. He is the former roving correspondent for Asia Times Online, where he wrote the column The Roving Eye from 2000 to 2014. Born in Brazil, he's been a foreign correspondent since 1985, and has lived in London, Paris, Milan, Los Angeles, Washington, Bangkok and Hong Kong. Even before 9/11 he specialized in covering the arc from the Middle East to Central and East Asia, with an emphasis on Big Power geopolitics and energy wars. He is the author of "Globalistan" (2007), "Red Zone Blues" (2007), "Obama does Globalistan" (2009) and "Empire of Chaos" (2014), all published by Nimble Books. His latest book is "2030", also by Nimble Books, out in December 2015. He currently lives between Paris and Bangkok. Follow him on Facebook: https://www.facebook.com/pepe.escobar.77377

The Myth of a Russian ‘Threat’

Off the keyboard of Pepe Escobar
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myth rusthreat

 

Originally published in Sputnik on August 25, 2015


Not a week goes by without the Pentagon carping about an ominous Russian "threat".

Chairman of the Joint Chiefs of Staff Martin Dempsey entered certified Donald “known unknown” Rumsfeld territory when he recently tried to conceptualize the “threat”; “Threats are the combination, or the aggregate, of capabilities and intentions. Let me set aside for the moment, intentions, because I don’t know what Russia intends.”

So Dempsey admits he does not know what he’s talking about. What he seems to know is that Russia is a “threat” anyway — in space, cyber space, ground-based cruise missiles, submarines.

And most of all, a threat to NATO; “One of the things that Russia does seem to do is either discredit, or even more ominously, create the conditions for the failure of NATO.”

So Russia “does seem” to discredit an already self-discredited NATO. That’s not much of a “threat”.

All these rhetorical games take place while NATO “does seem” to get ready for a direct confrontation with Russia. And make no mistake; Moscow does view NATO’s belligerence as a real threat.

It’s PGS vs. S-500

Pentagon chief Ashton Carter described Russia as a very, very significant threat

The “threat” surge happens just as US Think Tankland recharges the notion of containment of Russia. Notorious CIA front Stratfor has peddled a propaganda piece praising Cold War mastermind George Kennan as the author of the “containment of Russia” policy.

The US intel apparatus don’t do irony; before he died, Kennan said it was now the US that had to be contained, not Russia. 

Containment of Russia – via the expansion of the EU and NATO — has always been a work in progress because the geopolitical imperative has always been the same; as Dr. Zbigniew “The Grand Chessboard” Brzezinski never tired of stressing, it was always about preventing the – threatening — emergence of a Eurasian power capable of challenging the US.

Ultimately, the notion of “containment” can be stretched out towards the dismantling of Russia itself. It also carries the inbuilt paradox that NATO’s infinite expansion eastwards has made Eastern Europe less, not more, safe.

Assuming there would even be a lethal Russia-NATO confrontation, Russian tactical nuclear weapons would knock out all NATO airports in less than twenty minutes. Dempsey – cryptically – admits as much.

What he cannot possibly admit is if a decision had been made in Washington, a long time ago, preventing NATO’s infinite expansion, Russia’s concerted move to upgrade its nuclear weapon arsenal would have been unnecessary. 

Geopolitically, the Pentagon has finally seen which way the – strategic partnership – wind is blowing; towards Russia-China. This major game-changing shift in the global balance of power also translates as the combined military assets of China and Russia exceeding NATO’s.

In terms of military power Russia has superior offensive and defensive missiles over the US, with the new generation surface-to-air missile system, the S-500, capable of intercepting supersonic targets and totally sealing Russian airspace.

Moreover, despite short-term financial turbulence, the Sino-Russian combined strategy for Eurasia – an interpenetration of the New Silk Road(s) and the Eurasian Economic Union (EEU) – is bound to develop their economies and the region at large to an extent that may surpass the EU and the US combined by 2030.

 

Concert to mark 70th anniversary of Victory in 1941-1945 Great Patriotic War

What’s left for NATO is to stage military strength made-for-TV shows such as “Atlantic Resolve” to “reassure the region”, especially hysteria-prone Poland and the Baltics. 

Moscow, meanwhile, has made it clear that nations deploying US-owned anti-ballistic missile systems in their territory will face missile early-warning systems deployed in Kaliningrad.

And Major General Kirill Makarov, Russia’s Aerospace Defense Forces’ deputy chief, has already made it clear Moscow is upgrading its air and missile defense capabilities to smash any – real — threat by the US Prompt Global Strike (PGS).

In the December 2014 Russian military doctrine, NATO’s military build-up and PGS are listed as Russia’s top security threats. Deputy Defense Minister Yuri Borisov has stressed, “Russia is capable of and will have to develop a system like PGS.”

Where’s our loot?

The Pentagon’s rhetorical games also serve to mask a real high-stakes process; essentially an energy war – centering on the control of oil, natural gas and mineral resources of Russia and Central Asia. Will this wealth be controlled by oligarch frontmen “supervised” by their masters in New York and London, or by Russia and its Central Asian partners? Thus the relentless propaganda war. 

A case can be made that the Masters of the Universe have resurrected the same old containment/threat geopolitical alibis – peddled by what we could dub the Brzezinski/Stratfor connection — to cover, or conceal, another stark fact.

And the fact is that the real reason for Cold War 2.0 is New York/London financial power suffering a trillion dollar-plus loss when President Putin extracted Russia from their looting schemes.

And the same applies to the entire Kiev coup — forced through by the same New York/London financial powers to block Putin from destroying their looting operations in Ukraine (which, by the way, proceed unabated, at least in the agricultural domain).

Containment/threat is also deployed on overdrive to prevent by all means a strategic partnership between Russia and Germany – which the Brzezinski/Stratfor connection sees as an existential threat to the US.

The connection’s wet dreams – shared, incidentally, by the neo-cons – would be a glorious return to the looting phase of Russia in the 1990s, when the Russian industrial-military complex had collapsed and the West was plundering natural resources to Kingdom Come.

It’s not going to happen ever again. So what’s the Pentagon Plan B? To create the conditions of turning Europe into a potential theater of nuclear war. Now that’s a real threat – if there ever was one.
 

 


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).

 

Why the US is Finally Talking to Russia

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Nulandistan

Originally published in Sputnik on May 19, 2015

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So a woman walks into a room… That’s how quite a few jokes usually start. In our case, self-appointed Queen of Nulandistan Victoria “F**k the EU” walks into a room in Moscow to talk to Russian deputy foreign ministers Sergei Ryabkov and Grigory Karasin.

A joke? Oh no; that really happened. Why?

Let’s start with the official reactions. Karasin qualified the talks as "fruitful", while stressing Moscow does not approve of Washington becoming part of the Normandy-style (Russia, Ukraine, Germany and France) negotiations on Ukraine. Not after the relentless demonization not only of the Kremlin but also of Russia as a whole since the Maidan coup.

Ryabkov, for his part, made it known the current state of the US-Russia relationship remains, well, corrosive.

It’s crucial to remember the Queen of Nulandistan went to Moscow only after meeting with certified Washington vassal President Poroshenko and her own, hand-picked Prime Minister, “Yats”; and that was before accompanying Secretary of State John Kerry on the full regalia State Department trip to Sochi on May 12.

The president of the Russian Federation Vladimir Putin (in the center) during procession of Regional patriotic public organization Immortal Regiment Moscow along the Red Square

The Minsk-2 agreement – the actual product of the Normandy-style negotiations – directly involved Berlin and Paris, who finally saw the realpolitik on the wall and were compelled to divert from Washington’s monomaniac antagonistic approach. 
 

 

Inside the EU, chaos remains on the key subject of sanctions. The Baltics and Poland toe the “Russians are coming!” Cold War 2.0 hysteria line, while the adults in Brussels are represented by Italy, Greece, Spain and Hungary.

So Germany and France are already in deep trouble keeping the messy EU house in order. At the same time Berlin and Paris know nothing the self-described “Don't Do Stupid Stuff” Obama administration pulls off will mollify Moscow to abandon its precise red lines.

Watch Those Red Lines

It’s crucial to notice that Crimea does not seem to be on the table anymore; it’s a fait accompli. But then there are those U.S. “military trainers” who have been deployed to western Ukraine only for a “six-month mission” (historical reminder; this is how the Vietnam war started). For Moscow, expansion of this “mission” is an absolute red line. 

And then there’s the ultimate red line; NATO expansion, which remains unabated in the Baltics, Poland, Romania and Bulgaria. That won’t stop; it’s part of NATO’s obsession in solidifying a new Iron Curtain from the Baltics to the Black Sea. 

Thus, beyond all the talking, the next step to watch is whether the Obama administration will really refrain from weaponizing Kiev.

Ukraine for all practical purposes is now a massively indebted failed state turned into an IMF colony. The EU does not want it – although NATO does. For Moscow, the – ghastly – show will only be over when Ukraine, with or without the people’s republics of Donetsk and Lugansk, is neutral, and not part of a NATO strategic threat.  

I have examined here the possibility that the Obama administration’s strategic shift towards talking instead of cursing/threatening may signify that the real Masters of the Universe have finally understood the emerging New (Silk) World Order is bound to leave them behind.

President Putin knew that he was heading towards a major confrontation with the US after the dismemberment of Yugoslavia, the Georgian adventure, and NATO’s ceaseless expansion violating all those empty promises to Gorbachev. 

The difference is that now – and the Pentagon knows it – Moscow has amassed up to 10,000 tactical nuclear weapons. In the – apocalyptic — event of a war between Russia with NATO, the wet dream of many a US neo-con, these tactical nuclear weapons would knock out every commercial and military airfield of every NATO country in twenty minutes. That would leave no airfield for NATO combined air operations.

And then there’s the S-500 missile defense system, which can protect Russia against any form of Pentagon/NATO nuclear missile retaliation. No US offensive weapon, including Stealth bombers, could get through the S-500 maze, and the Pentagon also knows it.  

Strategy? What Strategy?

The Dr. Zbig “Grand Chessboard” Brzezinski-style strategy has always been to lure Russia into another Afghanistan in Ukraine, leading to a collapse of the Russian economy with the Big Prize being a Western takeover of Russia’s oil and natural gas wealth, and by extension Central Asia’s. Ukrainians would be used as cannon fodder, as were Afghans since the 1980s Arab-Afghan jihad.

Yet the Obama administration overplayed its hand, and realpolitik now spells out the deepening of the Russia-China strategic partnership across the entire Eurasian land mass; Eurasia as a prospective, massive commercial emporium stretching from Beijing to Berlin, or from Shanghai to St. Petersburg and beyond towards Rotterdam and Duisburg.

Without the exceptionalist obsession of some key Beltway factions, none of the elements of Cold War 2.0 would be in play, as Russia is a natural ally of the US in many fronts. That in itself reveals the state of “strategic thinking” by the current US administration.

Moscow, anyway, won’t be caught off-guard by the current, barely disguised, charm offensive, because Russian intelligence knows that may well veil a “Grand Chessboard”-style tactic of two steps back to regroup for a massive advance later.

Moreover, nothing has basically changed other than the original, dissuasive Cold War era MAD – Mutually Assured Destruction – doctrine being over.

The US still retains PGS (Prompt Global Strike) capability. Ukraine is just a detail. The real game-changer will happen when Russia is able to seal its whole territory, via the S-500s, against PGS. That will happen sooner than anyone thinks. And that’s why the real Masters of the Universe – via their emissaries – feel compelled to talk.   

The views expressed in this article are solely those of the author and do not necessarily reflect the official position of Sputnik.


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).

U.S. wakes up to New (Silk) World Order

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THE ROVING EYE

Marco Polo's Route On Silk Road To China

Originally published in Asia Times on May 15, 2015

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The real Masters of the Universe in the U.S. are no weathermen, but arguably they’re starting to feel which way the wind is blowing.

History may signal it all started with this week’s trip to Sochi, led by their paperboy, Secretary of State John Kerry, who met with Foreign Minister Lavrov and then with President Putin.

Arguably, a visual reminder clicked the bells for the real Masters of the Universe; the PLA marching in Red Square on Victory Day side by side with the Russian military. Even under the Stalin-Mao alliance Chinese troops did not march in Red Square.

As a screamer, that rivals the Russian S-500 missile systems. Adults in the Beltway may have done the math and concluded Moscow and Beijing may be on the verge of signing secret military protocols as in the Molotov-Ribbentrop pact. The new game of musical chairs is surely bound to leave Eurasian-obsessed Dr. Zbig “Grand Chessboard” Brzezinski apoplectic.

And suddenly, instead of relentless demonization and NATO spewing out “Russian aggression!” every ten seconds, we have Kerry saying that respecting Minsk-2 is the only way out in Ukraine, and that he would strongly caution vassal Poroshenko against his bragging on bombing Donetsk airport and environs back into Ukrainian “democracy”.

The ever level-headed Lavrov, for his part, described the meeting with Kerry as “wonderful,” and Kremlin spokesman Dmitry Peskov described the new U.S.-Russia entente as “extremely positive”.

So now the self-described “Don’t Do Stupid Stuff” Obama administration, at least apparently, seems to finally understand that this “isolating Russia” business is over – and that Moscow simply won’t back down from two red lines; no Ukraine in NATO, and no chance of popular republics of Donetsk and Lugansk being smashed, by Kiev, NATO or anybody else.

Thus what was really discussed – but not leaked – out of Sochi is how the Obama administration can get some sort of face-saving exit out of the Russian western borderland geopolitical mess it invited on itself in the first place.

About those missiles…

Ukraine is a failed state now fully converted into an IMF colony. The EU will never accept it as a member, or pay its astronomic bills. The real action, for both Washington and Moscow, is Iran. Not accidentally, the extremely dodgy Wendy Sherman — who has been the chief U.S. negotiator in the P5+1 nuclear talks — was part of Kerry’s entourage. A comprehensive deal with Iran cannot be clinched without Moscow’s essential collaboration on everything from the disposal of spent nuclear fuel to the swift end of UN sanctions.

Iran is a key node in the Chinese-led New Silk Road(s) project. So the real Masters of the Universe must have also — finally — seen this is all about Eurasia, which, inevitably, was the real star in the May 9 Victory Day parade. After his pregnant with meaning Moscow stop — where he signed 32 separate deals — Chinese President Xi Jinping went to do deals in Kazakhstan and Belarus.

So welcome to the New (Silk) World Order; from Beijing to Moscow on high-speed rail; from Shanghai to Almaty, Minsk and beyond; from Central Asia to Western Europe.

By now we all know how this high-speed trade/geopolitical journey is unstoppable — spanning the Beijing-led, Moscow-supported Asian Infrastructure Investment Bank (AIIB) and the BRICs Development Bank. Central Asia, Mongolia and Afghanistan — where NATO has just lost a war — are being inexorably pulled into this trade/geopolitical orbit covering all of central, northern, and eastern Eurasia.

What could be called Greater Asia is already shaping up — not only from Beijing to Moscow but also from business center Shanghai to gateway-to-Europe St. Petersburg. It’s the natural consequence of a complex process I have been examining for a while now — the marriage of the massive Beijing-led Silk Road Economic Belt with the Moscow-led Eurasia Economic Union (EEU). Putin described it as “a new level of partnership.”

The real Masters of the Universe may have also noted the very close discussions between Russian Defense Minister Sergei Shoigu and the deputy chairman of the Central Military Council of China, Gen. Fan Changlong. Russia and China will conduct naval exercises in the Mediterranean Sea and the Sea of Japan and will give top priority to their common position regarding U.S. global missile defense.

There’s the not-so-negligible matter of the Pentagon “discovering” China has up to 60 silo-based ICBMs – the CSS-4 – capable of targeting almost the whole U.S., except Florida.

And last but not least, there’s the Russian rollout of the ultra-sophisticated S-500 defensive missile system — which will conclusively protect Russia from a U.S. Prompt Global Strike (PGS). Each S-500 missile can intercept ten ICBMs at speeds up to 15,480 miles an hour, altitudes of 115 miles and horizontal range of 2,174 miles. Moscow insists the system will only be operational in 2017. If Russia is able to rollout 10,000 S-500 missiles, they can intercept 100,000 American ICBMs by the time the U.S. has a new White House tenant.

Once again, the real Masters of the Universe seem to have done the math. Can’t reduce Russia to ashes. Can’t win in the New (Silk) World Order. Might as well sit down and talk. But hold your (geopolitical) horses; they might still change their mind.


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).

Pakistan enters the New Silk Road

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silk-road1-1024x528

Originally published in Asia Times on April 24, 2015


 

Now how do you top this as a geopolitical entrance? Eight JF-17 Thunder fighter jets escorting Chinese President Xi Jinping on board an Air China Boeing as he enters Pakistani air space. And these JF-17s are built as a China-Pakistan joint project.

Silk Road? Better yet; silk skyway.

Just to drive the point home – and into everyone’s homes – a little further, Xi penned a column widely distributed to Pakistani media before his first overseas trip in 2015.

He stressed, “We need to form a ‘1+4′ cooperation structure with the Economic Corridor at the center and the Gwadar Port, energy, infrastructure and industrial cooperation being the four key areas to drive development across Pakistan and deliver tangible benefits to its people.”

Quick translation: China is bringing Pakistan into the massive New Silk Road(s) project with a bang.

The Chinese Foreign Ministry, also on cue, stressed that Pakistan would be in the frontline to benefit from the $40 billion Silk Road Fund, which will help to finance the Silk Road Economic Belt and Maritime Silk Road projects; or, in Chinese jargon, “One Belt, One Road”, that maze of roads, high-speed rail, ports, pipelines and fiber optics networks bound to turbo-charge China’s links to Europe through Russia, Central Asia and the Indian Ocean.

The Silk Road Fund will disburse funds in parallel with the new Asian Infrastructure Investment Bank (AIIB), which has already enticed no less than 57 countries. China’s assistant foreign minister, Liu Jianchao, has not delved into detailed numbers, but he assures China “stands ready to provide financing.”

So no wonder Pakistani media was elated. A consensus is also fast emerging that China is becoming “Pakistan’s most important ally” from either West or East.

Beijing’s carefully calibrated commercial offensive mixing Chinese leadership concepts such as harmonious society and Chinese dream with a “win-win” neighborhood policy seduces by the numbers alone: $46 billion in investment in Pakistan ($11 billion in infrastructure, $35 billion in energy), compared to a U.S. Congress’s $7.5 billion program that’s been in place since 2008.

The meat of the matter is that Washington’s “help” to Islamabad is enveloped in outdated weapons systems, while Beijing is investing in stuff that actually benefits people in Pakistan; think of $15.5 billion in coal, wind, solar and hydro energy projects bound to come online by 2017, or a $44 million optical fiber cable linking China and Pakistan.

According to the Center for Global Development, between 2002 and 2009 no less than 70% of U.S. aid was about “security” –  related to the never-ending GWOT (global war on terror). As a Pakistani analyst wrote me, “just compare Xi’s vision for his neighbors and the history of America in Latin America. It is like the difference between heaven and hell.”

That “X” factor

At the heart of the action is the China-Pakistan Economic Corridor (CPEC), whose embryo had already been discussed when Prime Minister Nawaz Sharif visited Beijing in the summer of 2013. The economic corridor, across 3,000 km, will link the port of Gwadar, in the Arabian Sea, not far from the Iranian border, with China’s Xinjiang.

China is already in Gwadar; China Overseas Port Holding Company is operating it for two years now, after helping to build the first phase. Gwadar formally opens before the end of the month, but a first-class highway and railway linking it to the rest of Pakistan still need to be built (mostly by Chinese companies), not to mention an international airport, scheduled to open by 2017.

All this action implies a frenzy of Chinese workers building roads, railways – and power plants. Their security must be assured. And that means solving the “X” factor; “X” as in Xinjiang, China’s vast far west, home to only 22 million people including plenty of disgruntled Uyghurs.

Beijing-based analyst Gabriele Battaglia has detailed how Xinjiang has been addressed according to the new guiding principle of President Xi’s ethnic policy. The key idea, says Battaglia, is to manage the ethnic conflict between Han Chinese and Uyghurs by applying the so-called three “J”: jiaowangjiaoliujiaorong, that is, “inter-ethnic contact”, “exchange” and “mixage”.

Yet what is essentially a push towards assimilation coupled with some economic incentives is far from assured success; after all the bulk of Xinjiang’s day-to-day policy is conducted by unprepared Han cadres who tend to view most Uyghurs as “terrorists”.

Many of these cadres identify any separatist stirring in Xinjiang as CIA-provoked, which is not totally true. There is an extreme Uyghur minority which actually entered Wahhabi-driven jihadism (I met some of them in Masoud’s prisons in the Panjshir valley before 9/11) and has gone to fight everywhere from Chechnya to Syria. But what the overwhelming majority really wants is an economic shot at the Chinese dream.

The Pakistani counterpart to Xinjiang is Balochistan, inhabited by a little over 6 million people. There have been at least three different separatist factions/movements in Balochistan fighting Islamabad and what they call “Punjabis” with a vengeance. Former provincial minister Jaffar Khan Mandokhel, for instance, is already warning there will be a “strong reaction” across Balochistan to changes in the corridor’s routes, which, he says, “are meant to give maximum benefit to Punjab, which is already considered the privileged province.” Islamabad denies any changes.

The corridor is also bound to bypass most of the key, northwestern province of Khyber Pakhtunkhwa. Opposition political star Imran Khan – whose party is on top in Khyber – has already condemned it as an injustice.

Beijing, for its part, has been very explicit to Islamabad; the Pakistani Taliban must be defeated, or at least appeased. That explains why since June 2014 the Pakistani army has been involved in a huge aerial bombing campaign – Zarb-e Azb – againt the Haqqani network and other hardcore tribals. The Pakistani army has already set up a special division to take care of the corridor, including nine battalions and the proverbial paramilitary forces. None of this though is a guarantee of success.

Karakoram or bust

It will be absolutely fascinating to watch how China and Pakistan, simultaneously, may be able to keep the peace in both Xinjiang and Balochistan to assure booming trade along the corridor. Geographicaly though, this all makes perfect sense.

Xinjiang is closer to the Arabian Sea than Shanghai. Shanghai is twice more distant from Urumqi than Karachi. So no wonder Beijing thinks of Pakistan as a sort of Hong Kong West, as I examined in some detail here.

This is also a microcosm of East and South Asia integration, and even Greater Asia integration, if we include China, Iran, Afghanistan, and even Myanmar.

The spectacular Karakoram highway, from Kashgar to Islamabad, a feat of engineering completed by the Chinese working alongside the Pakistan Army Corps of engineers, will be upgraded, and extended all the way to Gwadar. A railway will also be built. And in the near future, yet another key Pipelineistan stretch.

Pipelineistan is linked to the corridor also in the form of the Iran-Pakistan (IP) gas pipeline, which Beijing will help Islamabad to finish to the tune of $2 billion, after successive U.S. administrations relentlessly tried to derail it. The geopolitical dividends of China blessing a steel umbilical cord between Iran and Pakistan are of course priceless.

The end result is that early in the 2020s China will be connected in multiple ways practically with the mouth of the Persian Gulf. Large swathes of massive China-Europe trade will be able to avoid the Strait of Malacca. China will be turbo-charging trade with the Middle East and Africa. China-bound Middle East oil will be offloaded at Gwadar and transported to Xinjiang via Balochistan – before a pipeline is finished. And Pakistan will profit from more energy, infrastructure and transit trade.

Talk about a “win-win”. And that’s not even accounting for China’s thirst for gold. Balochistan is awash with gold, and there have been new discoveries in Punjab.

New Silk Road action is nothing short than frantic. The Bank of China is already channeling $62 billion of its immense foreign exchange reserves to three policy banks supporting New Silk Road(s) projects; $32 billion to China Development Bank (CDB) and $30 billion to Export-Import Bank of China (EXIM). The Agricultural Development Bank of China (ADBC) will also get its share.

And it’s not only Pakistan; the five Central Asian “stans” – rich in oil, gas, coal, agricultural land, gold, copper, uranium – are also targeted.

There’s a new highway from Kashgar to Osh, in Kyrgyzstan, and a new railway between Urumqi and Almaty, in Kazakhstan. We may be a long way away from the new high-speed Silk Rail, but trade between, for instance, the megacities of Chongqing or Chengdu in Sichuan with Germany now moves in only 20 days; that’s 15 days less than the sea route.

So it’s no wonder a “special leading group” was set up by Beijing to oversee everything going on in the One Road, One Belt galaxy. The crucial action plan is here. Those who’re about to go silk, we salute you.


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).

Russia, China, Iran: In sync

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S-300 (RIA Novosti / Alexey Danichev)

Originally published in RT on April 16, 2015


Over past decades, the pre-fabricated myth of an elusive “Iranian bomb” was never the real issue between the US and Iran; the issue was how to subdue – or “isolate” – a powerful, independent nation that refused to toe the exceptionalist line.

Now that the “rehabilitation” of Iran – at least for some exceptionalists and their minions – may be imminent, pending a nuclear deal to be clinched in June, various Washington factions still can’t get their act together.

The Pentagon has all but admitted the perennial wet dream of neocons and corporate media remains on the table; the military option.

The US Congress will go no holds barred in trying to scotch the deal. The US Senate Foreign Relations Committee unanimously passed a bill that would give Congress the right to interfere with anything related to the removal of sanctions.

Iranian Foreign Minister Mohammad Javad Zarif faces an even more uphill battle as the “fact sheet” the Obama administration insisted it needed to release to make the case in Washington complicates how the nuclear deal may be received in Iran. To top it off, “fact sheet” or not, the case was not made in Washington after all.

And now the usual suspects – from the State Department to Congress and the Israel lobby – are predictably going bonkers on a demented “Putin selling missiles to the ayatollahs” narrative.

Got “S”, will sell

What Russian President Vladimir Putin has just done is to get back to business as usual; even before sanctions are lifted, he signed a decree lifting Moscow’s own ban on the delivery of the S-300 surface-to-air anti-missile system to Tehran, following an $800 million 2010 contract that was not fulfilled due to relentless US pressure. Tehran expects to receive the S-300 by the end of the year.

Moscow’s official line has always been that the arms embargo on Iran must be lifted as soon as a final nuclear deal is clinched. The Obama administration insists that sanctions must be removed gradually. Tehran, from Supreme Leader Ayatollah Khamenei on down, is adamant that sanctions must be lifted“on the day of the deal”, in Khamenei’s words.

The Supreme Leader had added a conciliatory note though, remarking that, “if the other side avoids its ambiguity in the [nuclear] talks, it’ll be an experience showing it’s possible to negotiate with them on other issues.” That remains a galaxy-sized “if”.

Russian Foreign Minister Sergei Lavrov (R) shows the way to his Iranian counterpart Javad Zarif during a meeting in Moscow (Reuters / Maxim Zmeyev)

Russian Foreign Minister Sergei Lavrov (R) shows the way to his Iranian counterpart Javad Zarif during a meeting in Moscow (Reuters / Maxim Zmeyev)

Meanwhile, and in sync, the director-general of Russia’s top weapons exporting company Rosoborobexport, Anatoly Isaykin, confirmed China has just bought S-400 missile defense systems from Russia. Beijing is the first in a long list of foreign buyers – as the Russian defense industry is obliged to give priority on the S-400s to the Russian Defense Ministry

Each S-400 is capable of launching up to 72 missiles, engaging up to 36 targets simultaneously, and shield territory from air strikes, strategic, cruise, tactical and operating tactical ballistic missiles, and medium-range ballistic missiles. It’s been operational since 2007, replacing the S-300 systems now sold to Iran.

The crucial issue is that the S-300s will render Iran’s air defenses virtually secure against anything the Pentagon may throw at them, except fifth-generation stealth fighters. And these – the S-300 and S-400 – are not even Russian state-of-art; that would be the S-500 system, which I’ve referred to here, capable of definitely sealing Russian – and any other – territory from anything the Pentagon may come up with.

Strategically in sync

The simultaneous rolling out of the S-300s and S-400s to Iran and China are yet one more graphic example of the strategic partnership involving the three Eurasian nations that actively contest the hyperpower’s hegemony. They are certainly in sync.

In parallel, discreetly, Moscow has already started, in practice, a $20 billion oil-for-goods swap with Tehran – exchanging grain, equipment and construction materials for up to 500,000 barrels of Iranian crude a day. According to Deputy Foreign Minister Sergei Ryabkov, “this is not banned or limited under the current sanctions regime.”

Ryabkov only stated the obvious; “It takes two to tango. We are ready to provide our services and I am sure they will be pretty advantageous compared to other countries…We never gave up on Iran in a difficult situation…”

Tehran responded in sync, via the Chairman for the Committee for Foreign Policy and National Security of the Islamic Consultative Assembly of Iran, Alaeddin Boroujerdi; Iran is ready to expand cooperation with Russia in all spheres at the highest level. Crucially, “this is also the opinion of our supreme religious leader Ayatollah Ali Khamenei about development of relations with Russia.”

The usual suspects, as usual, are clinging to any argument that “proves” Russia-Iran cooperation is doomed. For instance, “rehabilitated” Iran will doom Russia’s energy industry because of the “serious impact” on the oil market from Iran’s increased supply and competition with gas exporter Gazprom.

Ryabkov dismissed it by going straight to the point; “I am not confident as yet that the Iranian side would be ready to carry out supplies of natural gas from its fields quickly and in large quantities to Europe. This requires infrastructure that is difficult to build.”

This infrastructure upgrade is costly and will take years; it may happen, but with help from – once again – the Russians and the Chinese. Russia will be back in play in full force in Iran’s energy sector, as Gazprom, its oil arm, Gazprom Neft, and Lukoil had to put on hold many projects because of sanctions. Rosatom, for its part, will be able to clinch further contracts at the Bushehr nuclear power plant.

The EU – and especially the US – are betting on Iran’s “rehabilitation” as an economic/political bonanza; the first real benefit would be Tehran becoming a supplier to yet another troublesome ‘Pipelineistan’ gambit, the Trans-Anatolian (TAP) gas pipeline, which may – or may not – be finished by 2018. TAP will supply gas to the EU via Turkey, but it’s still unclear how much gas potential suppliers – Azerbaijan or Iran – are able to commit.

TAP coming online does not mean Gazprom’s exports to the EU must be cut down. In fact, what Russian and Iranian officials have been discussing for a while now is how profitable exporting to the EU may be for both nations. Besides, Russia has still another key ‘Pipelineistan’ card to play – Turkish Stream, which will channel Russian gas to Turkey and Greece.

And yes, Gazprom is getting ready to be a key provider to two essential markets at the same time. Here’s what Gazprom’s CEO Alexei Miller told Rossiya-24: “The resource base of Western Siberia is a resource that is used for delivering gas for exports to Europe. In other words, at this point we are on the cutting edge when actual competitiveness will begin for our energy resources between two mega-markets: Asian and European.”

SWIFT business

Beijing, meanwhile, has also been on the offensive. As a top energy supplier – of both oil and gas – Iran is a matter of Chinese national security. So even with sanctions after sanctions, the US government was always forced to renew waivers for China, as Beijing kept importing energy from Iran at will.

Reuters / Petar Kujundzic

Reuters / Petar Kujundzic

Iran is an absolutely key node of the Chinese-led New Silk Road(s) – be it as part of the land route or as part of the Maritime Silk Road, which will touch the port of Chabahar. And the China-Iran partnership does not span only close ties on energy and trade/commerce; it also includes advanced Chinese defense technology, and Chinese input in Iran’s ballistic missile program.

China created a parallel SWIFT system to pay Iran for energy; Tehran, after the nuclear deal, will be free to access these funds in yuan. Iranian energy executives have already been to Beijing to discuss Chinese investment in the Iranian energy industry. Sinopec and CNPC will be instrumental in developing projects in the South Pars gas fields – the largest in the world – and in the monster Yadavaran and North Azadegan oil fields.

For Iran, all this will happen in parallel with European energy giants investing in liquefied natural gas (LNG) development and technology.

Investing in multiple fronts, China will also be instrumental in its push to finally help complete the much-troubled Iran-Pakistan (IP) pipeline, which in the future may even include an extension to Xinjiang.

Xi does Tehran

The icing in this vast energy cake is how both Russia and China are deeply committed to integrating Iran into their Eurasian vision. Iran may finally be admitted as a full member of the Shanghai Cooperation Organization (SCO) at the upcoming summer summit in Russia. That implies a full-fledged security/commercial/political partnership involving Russia, China, Iran and most Central Asian’stans’.

Iran is already a founding member of the Chinese-led Asian Infrastructure Investment Bank (AIIB); that means financing for an array of New Silk Road-related projects bound to benefit the Iranian economy. AIIB funding will certainly merge with loans and other assistance for infrastructure development related to the Chinese-established Silk Road Fund.

And last but not least, the China-Iran strategic partnership will be discussed in detail as Chinese President Xi Jinping visits Tehran next month.

It’s easy to remember how Iran was relentlessly derided as “isolated” by the exceptionalist crowd only a few months ago. Yet the fact is it was never isolated – but painstakingly building blocks towards Eurasian integration.

European firms are of course itching to unleash an avalanche of investment in the Iranian market post-sanctions, and most of all the energy giants badly yearn to lessen EU’s dependency on Gazprom. But they’ll be facing formidable competition, as it was up to Moscow and Beijing to identify, a long time ago, which way the wind was blowing; the inevitable (re)emergence of Iran as a key Eurasian power.

The statements, views and opinions expressed in this column are solely those of the author and do not necessarily represent those of RT.


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).

Eurasian emporium or nuclear war?

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THE ROVING EYE

art: Anthony Freda

art: Anthony Freda

Originally published in Asia Times on April 6, 2015


A high-level European diplomatic source has confirmed to Asia Times that German chancellor Angela Merkel’s government has vigorously approached Beijing in an effort to disrupt its multi-front strategic partnership with Russia.

Beijing won’t necessarily listen to this political gesture from Berlin, as China is tuning the strings on its pan-Eurasian New Silk Road project, which implies close trade/commerce/business ties with both Germany and Russia.

The German gambit reveals yet more pressure by hawkish sectors of the U.S. government who are intent on targeting and encircling Russia. For all the talk about Merkel’s outrage over the U.S. National Security Agency’s tapping shenanigans, the chancellor walks Washington’s walk.  Real “outrage” means nothing unless she unilaterally ends sanctions on Russia. In the absence of such a response by Merkel, we’re in the realm of good guy-bad guy negotiating tactics.

The bottom line is that Washington cannot possibly tolerate a close Germany-Russia trade/political relationship, as it directly threatens its hegemony in the Empire of Chaos.

Thus, the whole Ukraine tragedy has absolutely nothing to do with human rights or the sanctity of borders. NATO ripped Kosovo away from Yugoslavia-Serbia without even bothering to hold a vote, such as the one that took place in Crimea.

Watch those S-500s

In parallel, another fascinating gambit is developing. Some sectors of U.S. Think Tankland – with their cozy CIA ties – are now hedging their bets about Cold War 2.0, out of fear that they have misjudged what really happens on the geopolitical chessboard.

I’ve just returned from Moscow, and there’s a feeling the Federal Security Bureau and Russian military intelligence are increasingly fed up with the endless stream of Washington/NATO provocations – from the Baltics to Central Asia, from Poland to Romania, from Azerbaijan to Turkey.

This is an extensive but still only partial summary of what’s seen all across Russia as an existential threat: Washington/NATO’s intent to block Russia’s Eurasian trade and development; destroy its defense perimeter; and entice it into a shooting war.

A shooting war is not exactly a brilliant idea. Russia’s S-500 anti-missile missiles and anti-aircraft missiles can intercept any existing ICBM, cruise missile or aircraft. S-500s travel at 15,480 miles an hour; reach an altitude of 115 miles; travel horizontally 2,174 miles; and can intercept up to ten incoming missiles. They simply cannot be stopped by any American anti-missile system.

Some on the U.S. side say  the  S-500 system is being rolled out in a crash program, as an American intel source told Asia Times. There’s been no Russian confirmation. Officially, Moscow says the system is slated to be rolled out in 2017. End result, now or later: it will seal Russian airspace. It’s easy to draw the necessary conclusions.

That makes the Obama administration’s “policy” of promoting war hysteria, coupled with unleashing a sanction, ruble and oil war against Russia, the work of a bunch of sub-zoology specimens.

Some adults in the EU have already seen the writing on the (nuclear) wall. NATO’s conventional defenses are a joke. Any military buildup – as it’s happening now – is also a joke, as it could be demolished by the 5,000 tactical nuclear weapons Moscow would be able to use.

When in doubt, bully

Of course it takes time to turn the current Cold War 2.0 mindset around, but there are indications the Masters of the Universe are listening – as this essay shows. Call it the first (public) break in the ice.

Let’s assume Russia decided to mobilize five million troops, and switch to military production. The “West” would back down to an entente cordiale in a flash. And let’s assume Moscow decided to confiscate what remains of dodgy oligarch wealth. Vladimir Putin’s approval rate – which is not exactly shabby as it stands – would soar to at least 98%. Putin has been quite restrained so far. And still his childishly hysterical demonization persists.

It’s a non-stop escalation scenario. Color revolutions. The Maidan coup. Sanctions; “evil” Hitler/Putin; Ukraine to enter NATO; NATO bases all over. And yet reality – as in the Crimean counter coup, and the battlefield victories by the armies of the People’s Republics of Donetsk and Lugansk – has derailed the most elaborate U.S. State Department/NATO plans. On top of it Merkel and France’s Francois Hollande were forced into an entente cordiale with Russia – on Minsk 2 – because they knew that would be the only way to stop Washington from further weaponizing Kiev.

Putin is essentially committed to a very complex preservation/flowering process of Russia’s history and culture, with overtones of pan-Slavism and Eurasianism. Comparing him to Hitler does not even qualify as a kindergarten prank.

Yet don’t expect Washington neo-cons to understand Russian history or culture. Most of them would not even survive a Q&A on their beloved heroes Leo Strauss and Carl Schmitt. Moreover, their anti-intellectualism and exceptionalist arrogance creates only a privileged space for undiluted bullying.

A U.S. academic, one of my sources, sent a letter to Nancy Pelosi copied to a notorious neo-con, the husband of Victoria, the Queen of Nulandistan. Here’s the neo-con’s response, via his Brookings Institution email: “Why don’t you go (expletive deleted)  yourself?” Yet another graphic case of husband and wife deserving each other.

At least there seem to be sound IQs in the Beltway driven to combat the neo-con cell inside the State Department, the neo-con infested editorial pages of the Wall Street Journal and the Washington Post, an array of think tanks, and of course NATO, whose current military leader, Gen. Breedlove/Breedhate, is working hard on his post-mod impersonation of Dr. Strangelove.

Russian “aggression” is a myth. Moscow’s strategy, so far, has been pure self-defense. Moscow in a flash will strongly advance a strategic cooperation with the West if the West understands Russia’s security interests. If those are violated – as in provoking the bear – the bear will respond. A minimum understanding of history reveals that the bear knows one or two things about enduring suffering. It simply won’t collapse – or melt away.

Meanwhile, another myth has also been debunked: That sanctions would badly hurt Russia’s exports and trade surpluses. Of course there was hurt, but bearable. Russia enjoys a wealth of raw materials and massive internal production capability – enough to meet the bulk of internal demand.

So we’re back to the EU, Russia and China, and everyone in between, all joining the greatest trade emporium in history across the whole of Eurasia. That’s what Putin proposed in Germany a few years ago, and that’s what the Chinese are already doing. And what do the neo-cons propose? A nuclear war on European soil.


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).

Iran is ready to crash Pipelineistan

Off the keyboard of Pepe Escobar
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03_TURKMEN-PIPELINE (2)

Originally published in Asia Times on March 20, 2015

Way beyond an Iran nuclear deal, and way beyond the end of a nasty economic siege that’s been in place for 35 years since the Islamic Revolution, the coming Western embrace means above all that Iran is now ready to crash the chessboard I call Pipelineistan.

By the mid-2000s, one of the top mantras of energy analysts in Iran and across Asia was what was known as the Asian Energy Security Grid. Translation: a pan-Asian integration via energy flows of the region’s oil and gas. Pipelineistan connected these relevant dots in the Eurasian chessboard.

Washington was always set on stopping Pipelineistan in its tracks. Case in point: the Baku-Tblisi-Ceyhan (BTC) pipeline, a Dr. Zbig “Grand Chessboard” Brzezinski brainchild that was built for almost $6 billion as an explicit geopolitical weapon to bypass Iran’s energy exports.

Another example is frantic efforts by both the Bush junior and Obama administrations to derail the former Iran-Pakistan-India (IPI) pipeline, also known as “peace pipeline”, which may eventually be built and named  IP – for Iran-Pakistan.

Now it’s a completely different story. Even U.S. Big Oil is salivating at the prospect of doing business with Iran on energy.

Beijing, for its part, already is.  Iran is invariably among China’s top three energy sources. Not by accident, Chinese President Xi Jinping will soon visit Tehran; Foreign Minister Wang Yi has already promised “dramatic” announcements – and China’s Foreign Ministry is not exactly prone to hyperbole. For Beijing, the energy relationship with Tehran is no less than a matter of national security.

China also remains a top client of Saudi oil. But buying oil from the Persian Gulf and having it shipped via the vulnerable Strait of Malacca is not exactly Beijing’s idea of a bright future.

The vastly complex Chinese energy strategy, bent on diversification of sources, could be summarized as “escape from Malacca”. And now, with ISIS/ISIL/Daesh holding large – though mostly empty – parts of “Syraq”, the Middle East as a whole becomes even more of a problem.

Beijing is alarmed at the growing possibility of a demented Caliphate export contaminating large swathes of Xinjiang – the key Chinese node of the upcoming, overland New Silk Road.

The key branch of the overland New Silk Road – the other one will be via the Trans-Siberian – links China via Xinjiang to Central Asia, Iran and Turkey.

So Beijing needs to maintain excellent relations with both Iran and Turkey. At the same time, it must avoid antagonizing the House of Saud. In energy terms, the ideal solution would be massive investment in gas pipelines originating from Iran and linked to Turkmenistan, which is already linked to Western China via pipelines built by the Chinese.

Even during the Ahmadinejad years – via a “Look East” policy – Iran was already going into overdrive to make Pipelineistan a reality. This involved courting China, India and Pakistan, by keeping steady relations with Turkey.

The anticipated Asian Energy Security Grid, in many aspects, is already a go. Yet the big prize is, of course, the EU. There is talk about forming a Eurasia Security Grid.

For years, I’ve heard the same mantra in Brussels: If only we could buy loads of oil and gas from Iran to escape the grip of Russia’s Gazprom – but the Americans won’t let us.

The time is now. Euro Big Energy is dying to hit the road to do business with Tehran. The figure from eight years ago, given to me by an Iranian energy analyst, hasn’t changed much. Iran needs roughly $200 billion to upgrade its energy industry and start re-exporting oil en masse.

So it’s no wonder Tehran’s already holding close talks with Switzerland and the EU to work out the initial details of selling more gas to Europe. Hiking oil exports – from currently 1.1 million barrels a day to roughly 2 million – may also be feasible. But to go beyond that would take years and a veritable tsunami of investment.

At the same time, the major European players are willing  and able to make a geopolitical shift when it comes to oil and gas. All (energy) roads now lead to Tehran.

 

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).

Year of the Sheep, Century of the Dragon?

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New Silk Roads and the Chinese Vision of a Brave New (Trade) World…

Majority Of Flights In Eastern China Delayed By Red Alert

Published in Asia Times on February 22, 2015
Discuss this article here in the Diner Forum.

BEIJING — Seen from the Chinese capital as the Year of the Sheep starts, the malaise affecting the West seems like a mirage in a galaxy far, far away. On the other hand, the China that surrounds you looks all too solid and nothing like the embattled nation you hear about in the Western media, with its falling industrial figures, its real estate bubble, and its looming environmental disasters. Prophecies of doom notwithstanding, as the dogs of austerity and war bark madly in the distance, the Chinese caravan passes by in what President Xi Jinping calls “new normal” mode.

“Slower” economic activity still means a staggeringly impressive annual growth rate of 7% in what is now the globe’s leading economy. Internally, an immensely complex economic restructuring is underway as consumption overtakes investment as the main driver of economic development. At 46.7% of the gross domestic product (GDP), the service economy has pulled ahead of manufacturing, which stands at 44%.

Geopolitically, Russia, India, and China have just sent a powerful message westward: they are busy fine-tuning a complex trilateral strategy for setting up a network of economic corridors the Chinese call “new silk roads” across Eurasia. Beijing is also organizing a maritime version of the same, modeled on the feats of Admiral Zheng He who, in the Ming dynasty, sailed the “western seas” seven times, commanding fleets of more than 200 vessels.

Meanwhile, Moscow and Beijing are at work planning a new high-speed railremix of the fabled Trans-Siberian Railroad. And Beijing is committed to translating its growing strategic partnership with Russia into crucial financial and economic help, if a sanctions-besieged Moscow, facing a disastrous oil price war, asks for it. To China’s south, Afghanistan, despite the 13-year American war still being fought there, is fast moving into its economic orbit, while a planned China-Myanmar oil pipeline is seen as a game-changing reconfiguration of the flow of Eurasian energy across what I’ve long called Pipelineistan.

And this is just part of the frenetic action shaping what the Beijing leadership defines as the New Silk Road Economic Belt and the Maritime Silk Road of the twenty-first century. We’re talking about a vision of creating a potentially mind-boggling infrastructure, much of it from scratch, that will connect China to Central Asia, the Middle East, and Western Europe. Such a development will include projects that range from upgrading the ancient silk road via Central Asia to developing a Bangladesh-China-India-Myanmar economic corridor; a China-Pakistan corridor through Kashmir; and a new maritime silk road that will extend from southern China all the way, in reverse Marco Polo fashion, to Venice.

Don’t think of this as the twenty-first-century Chinese equivalent of America’s post-World War II Marshall Plan for Europe, but as something far more ambitious and potentially with a far vaster reach.

China as a Mega-City

If you are following this frenzy of economic planning from Beijing, you end up with a perspective not available in Europe or the U.S. Here, red-and-gold billboards promote President Xi Jinping’s much ballyhooed new tagline for the country and the century, “the Chinese Dream” (which brings to mind “the American Dream” of another era). No subway station is without them. They are a reminder of why 40,000 miles of brand new high-speed rail is considered so essential to the country’s future. After all, no less than 300 million Chinese have, in the last three decades, made a paradigm-breaking migration from the countryside to exploding urban areas in search of that dream.

Another 350 million are expected to be on the way, according to a McKinsey Global Institute study. From 1980 to 2010, China’s urban population grew by 400 million, leaving the country with at least 700 million urban dwellers. This figure is expected to hit one billion by 2030, which means tremendous stress on cities, infrastructure, resources, and the economy as a whole, as well as near-apocalyptic air pollution levels in some major cities.

Already 160 Chinese cities boast populations of more than one million. (Europe has only 35.) No less than 250 Chinese cities have tripled their GDP per capita since 1990, while disposable income per capita is up by 300%.

These days, China should be thought of not in terms of individual cities but urban clusters — groupings of cities with more than 60 million people. The Beijing-Tianjin area, for example, is actually a cluster of 28 cities. Shenzhen, the ultimate migrant megacity in the southern province of Guangdong, is now a key hub in a cluster as well. China, in fact, has more than 20 such clusters, each the size of a European country. Pretty soon, the main clusters will account for 80% of China’s GDP and 60% of its population. So the country’s high-speed rail frenzy and its head-spinning infrastructure projects — part of a $1.1 trillion investment in 300 public works — are all about managing those clusters.

Not surprisingly, this process is intimately linked to what in the West is considered a notorious “housing bubble,” which in 1998 couldn’t have even existed. Until then all housing was still owned by the state. Once liberalized, that housing market sent a surging Chinese middle class into paroxysms of investment. Yet with rare exceptions, middle-class Chinese can still afford their mortgages because both rural and urban incomes have also surged.

The Chinese Communist Party (CCP) is, in fact, paying careful attention to this process, allowing farmers to lease or mortgage their land, among other things, and so finance their urban migration and new housing. Since we’re talking about hundreds of millions of people, however, there are bound to be distortions in the housing market, even the creation of whole disastrous ghost towns with associated eerie, empty malls.

The Chinese infrastructure frenzy is being financed by a pool of investments from central and local government sources, state-owned enterprises, and the private sector. The construction business, one of the country’s biggest employers, involves more than 100 million people, directly or indirectly. Real estate accounts for as much as 22% of total national investment in fixed assets and all of this is tied to the sale of consumer appliances, furnishings, and an annual turnover of 25% of China’s steel production, 70% of its cement, 70% of its plate glass, and 25% of its plastics.

So no wonder, on my recent stay in Beijing, businessmen kept assuring me that the ever-impending “popping” of the “housing bubble” is, in fact, a myth in a country where, for the average citizen, the ultimate investment is property. In addition, the vast urbanization drive ensures, as Premier Li Keqiang stressed at the recent World Economic Forum in Davos, a “long-term demand for housing.”

Markets, Markets, Markets

China is also modifying its manufacturing base, which increased by a multiple of 18 in the last three decades. The country still produces 80% of the world’s air conditioners, 90% of its personal computers, 75% of its solar panels, 70% of its cell phones, and 63% of its shoes. Manufacturing accounts for 44% of Chinese GDP, directly employing more than 130 million people. In addition, the country already accounts for 12.8% of global research and development, well ahead of England and most of Western Europe.

Yet the emphasis is now switching to a fast-growing domestic market, which will mean yet more major infrastructural investment, the need for an influx of further engineering talent, and a fast-developing supplier base. Globally, as China starts to face new challenges — rising labor costs, an increasingly complicated global supply chain, and market volatility — it is also making an aggressive push to move low-tech assembly to high-tech manufacturing. Already, the majority of Chinese exports are smartphones, engine systems, and cars (with planes on their way). In the process, a geographic shift in manufacturing is underway from the southern seaboard to Central and Western China. The city of Chengdu in the southwestern province of Sichuan, for instance, is now becoming a high-tech urban cluster as it expands around firms like Intel and HP.

So China is boldly attempting to upgrade in manufacturing terms, both internally and globally at the same time. In the past, Chinese companies have excelled in delivering the basics of life at cheap prices and acceptable quality levels. Now, many companies are fast upgrading their technology and moving up into second- and first-tier cities, while foreign firms, trying to lessen costs, are moving down to second- and third-tier cities. Meanwhile, globally, Chinese CEOs want their companies to become true multinationals in the next decade. The country already has 73 companies in the Fortune Global 500, leaving it in the number two spot behind the U.S.

In terms of Chinese advantages, keep in mind that the future of the global economy clearly lies in Asia with its record rise in middle-class incomes. In 2009, the Asia-Pacific region had just 18% of the world’s middle class; by 2030, according to the Development Center of the Organization for Economic Cooperation and Development, that figure will rise to an astounding 66%. North America and Europe had 54% of the global middle class in 2009; in 2030, it will only be 21%.

Follow the money, and the value you get for that money, too. For instance, no less than 200,000 Chinese workers were involved in the production of the first iPhone, overseen by 8,700 Chinese industrial engineers. They were recruited in only two weeks. In the U.S., that process might have taken more than nine months. The Chinese manufacturing ecosystem is indeed fast, flexible, and smart — and it’s backed by an ever more impressive education system. Since 1998, the percentage of GDP dedicated to education has almost tripled; the number of colleges has doubled; and in only a decade, China has built the largest higher education system in the world.

Strengths and Weaknesses

China holds more than $15 trillion in bank deposits, which are growing by a whopping $2 trillion a year. Foreign exchange reserves are nearing $4 trillion. A definitive study of how this torrent of funds circulates within China among projects, companies, financial institutions, and the state still does not exist. No one really knows, for instance, how many loans the Agricultural Bank of China actually makes. High finance, state capitalism, and one-party rule all mix and meld in the realm of Chinese financial services where realpolitik meets real big money.

The big four state-owned banks — the Bank of China, the Industrial and Commercial Bank of China, the China Construction Bank, and the Agricultural Bank of China — have all evolved from government organizations into semi-corporate state-owned entities. They benefit handsomely both from legacy assets and government connections, or guanxi, and operate with a mix of commercial and government objectives in mind. They are the drivers to watch when it comes to the formidable process of reshaping the Chinese economic model.

As for China’s debt-to-GDP ratio, it’s not yet a big deal. In a list of 17 countries, it lies well below those of Japan and the U.S., according to Standard Chartered Bank, and unlike in the West, consumer credit is only a small fraction of total debt. True, the West exhibits a particular fascination with China’s shadow banking industry: wealth management products, underground finance, off-the-balance-sheet lending. But such operations only add up to around 28% of GDP, whereas, according to the International Monetary Fund, it’s a much higher percentage in the U.S.

China’s problems may turn out to come from non-economic areas where the Beijing leadership has proven far more prone to false moves. It is, for instance, on the offensive on three fronts, each of which may prove to have its own form of blowback: tightening ideological control over the country under the rubric of sidelining “Western values”; tightening control over online information and social media networks, including reinforcing “the Great Firewall of China” to police the Internet; and tightening further its control over restive ethnic minorities, especially over the Uighurs in the key western province of Xinjiang.

On two of these fronts — the “Western values” controversy and Internet control — the leadership in Beijing might reap far more benefits, especially among the vast numbers of younger, well educated, globally connected citizens, by promoting debate, but that’s not how the hyper-centralized Chinese Communist Party machinery works.

When it comes to those minorities in Xinjiang, the essential problem may not be with the new guiding principles of President Xi’s ethnic policy. According to Beijing-based analyst Gabriele Battaglia, Xi wants to manage ethnic conflict there by applying the “three Js”: jiaowang, jiaoliu, jiaorong (“inter-ethnic contact,” “exchange,” and “mixage”). Yet what adds up to a push from Beijing for Han/Uighur assimilation may mean little in practice when day-to-day policy in Xinjiang is conducted by unprepared Han cadres who tend to view most Uighurs as “terrorists.”

If Beijing botches the handling of its Far West, Xinjiang won’t, as expected, become the peaceful, stable, new hub of a crucial part of the silk-road strategy. Yet it is already considered an essential communication link in Xi’s vision of Eurasian integration, as well as a crucial conduit for the massive flow of energy supplies from Central Asia and Russia. The Central Asia-China pipeline, for instance, which brings natural gas from the Turkmen-Uzbek border through Uzbekistan and southern Kazakhstan, is already adding a fourth line to Xinjiang. And one of the two newly agreed upon Russia-China pipelines will also arrive in Xinjiang.

The Book of Xi

The extent and complexity of China’s myriad transformations barely filter into the American media. Stories in the U.S. tend to emphasize the country’s “shrinking” economy and nervousness about its future global role, the way it has “duped” the U.S. about its designs, and its nature as a military “threat” to Washington and the world.

The U.S. media has a China fever, which results in typically feverish reports that don’t take the pulse of the country or its leader. In the process, so much is missed. One prescription might be for them to read The Governance of China, a compilation of President Xi’s major speeches, talks, interviews, and correspondence. It’s already a three-million-copy bestseller in its Mandarin edition and offers a remarkably digestible vision of what Xi’s highly proclaimed “China Dream” will mean in the new Chinese century.

Xi Dada (“Xi Big Bang” as he’s nicknamed here) is no post-Mao deity. He’s more like a pop phenomenon and that’s hardly surprising. In this “to get rich is glorious” remix, you couldn’t launch the superhuman task of reshaping the Chinese model by being a cold-as-a-cucumber bureaucrat. Xi has instead struck a collective nerve by stressing that the country’s governance must be based on competence, not insider trading and Party corruption, and he’s cleverly packaged the transformation he has in mind as an American-style “dream.”

Behind the pop star clearly lies a man of substance that the Western media should come to grips with. You don’t, after all, manage such an economic success story by accident. It may be particularly important to take his measure since he’s taken the measure of Washington and the West and decided that China’s fate and fortune lie elsewhere.

As a result, last November he made official an earthshaking geopolitical shift. From now on, Beijing would stop treating the U.S. or the European Union as its main strategic priority and refocus instead on China’s Asian neighbors and fellow BRICS countries (Brazil, Russia, India, and South Africa, with a special focus on Russia), also known here as the “major developing powers” (kuoda fazhanzhong de guojia). And just for the record, China does not consider itself a “developing country” anymore.

No wonder there’s been such a blitz of Chinese mega-deals and mega-dealings across Pipelineistan recently. Under Xi, Beijing is fast closing the gap on Washington in terms of intellectual and economic firepower and yet its global investment offensive has barely begun, new silk roads included.

Singapore’s former foreign minister George Yeo sees the newly emerging world order as a solar system with two suns, the United States and China. The Obama administration’s new National Security Strategy affirms that “the United States has been and will remain a Pacific power” and states that “while there will be competition, we reject the inevitability of confrontation” with Beijing. The “major developing powers,” intrigued as they are by China’s extraordinary infrastructural push, both internally and across those New Silk Roads, wonder whether a solar system with two suns might not be a non-starter. The question then is: Which “sun” will shine on Planet Earth?  Might this, in fact, be the century of the dragon?

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).

Russia, China mock divide and rule

Off the keyboard of Pepe Escobar
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THE ROVING EYE

Map-New_Silk_Road

Originally published in Asia Times on December 23, 2014
Discuss this article here in the Diner Forum.

ROME and BEIJING – The Roman Empire did it. The British Empire copied it in style. The Empire of Chaos has always done it. They all do it. Divide et impera. Divide and rule – or divide and conquer. It’s nasty, brutish and effective. Not forever though, like diamonds, because empires do crumble.

A room with a view to the Pantheon may be a celebration of Venus – but also a glimpse on the works of Mars. I had been in Rome essentially for a symposium – Global WARning – organized by a very committed, talented group led by a former member of European Parliament, Giulietto Chiesa. Three days later, as the run on the rouble was unleashed, Chiesa was arrested and expelled from Estonia as persona non grata, yet another graphic illustration of the anti-Russia hysteria gripping the Baltic nations and the Orwellian grip NATO has on Europe’s weak links. [1] Dissent is simply not allowed.

At the symposium, held in a divinely frescoed former 15th century Dominican refectory now part of the Italian parliament’s library, Sergey Glazyev, on the phone from Moscow, gave a stark reading of Cold War 2.0. There’s no real “government” in Kiev; the US ambassador is in charge. An anti-Russia doctrine has been hatched in Washington to foment war in Europe – and European politicians are its collaborators. Washington wants a war in Europe because it is losing the competition with China.

Glazyev addressed the sanctions dementia: Russia is trying simultaneously to reorganize the politics of the International Monetary Fund, fight capital flight and minimize the effect of banks closing credit lines for many businessmen. Yet the end result of sanctions, he says, is that Europe will be the ultimate losers economically; bureaucracy in Europe has lost economic focus as American geopoliticians have taken over.

Only three days before the run on the rouble, I asked Rosneft’s Mikhail Leontyev (Press-Secretary – Director of the Information and Advertisement Department) about the growing rumors of the Russian government getting ready to apply currency controls. At the time, no one knew an attack on rouble would be so swift, and conceived as a checkmate to destroy the Russian economy. After sublime espressos at the Tazza d’Oro, right by the Pantheon, Leontyev told me that currency controls were indeed a possibility. But not yet.

What he did emphasize was this was outright financial war, helped by a fifth column in the Russian establishment. The only equal component in this asymmetrical war was nuclear forces. And yet Russia would not surrender. Leontyev characterized Europe not as a historical subject but as an object: “The European project is an American project.” And “democracy” had become fiction.

The run on the rouble came and went like a devastating economic hurricane. Yet you don’t threat a checkmate against a skilled chess player unless your firepower is stronger than Jupiter’s lightning bolt. Moscow survived. Gazprom heeded the request of President Vladimir Putin and will sell its US dollar reserves on the domestic market. German Foreign Minister Frank-Walter Steinmeier went on the record against the EU further “turning the screw” as in more counterproductive sanctions against Moscow. And at his annual press conference, Putin emphasized how Russia would weather the storm. Yet I was especially intrigued by what he did not say. [2]

As Mars took over, in a frenetic acceleration of history, I retreated to my Pantheon room trying to channel Seneca; from euthymia – interior serenity – to that state of imperturbability the Stoics defined as aponia. Still, it’s hard to cultivate euthymia when Cold War 2.0 rages.

Show me your imperturbable missile
Russia could always deploy an economic “nuclear” option, declaring a moratorium on its foreign debt. Then, if Western banks seized Russian assets, Moscow could seize every Western investment in Russia. In any event, the Pentagon and NATO’s aim of a shooting war in the European theater would not happen; unless Washington was foolish enough to start it.

Still, that remains a serious possibility, with the Empire of Chaos accusing Russia of violating the Intermediate-Range Nuclear Forces Treaty (INF) even as it prepares to force Europe in 2015 to accept the deployment of US nuclear cruise missiles.

Russia could outmaneuver Western financial markets by cutting them off from its wealth of oil and natural gas. The markets would inevitably collapse – uncontrolled chaos for the Empire of Chaos (or “controlled chaos”, in Putin’s own words). Imagine the crumbling of the quadrillion-plus of derivatives. It would take years for the “West” to replace Russian oil and natural gas, but the EU’s economy would be instantly devastated.

Just this lightning-bolt Western attack on the rouble – and oil prices – using the crushing power of Wall Street firms had already shaken European banks exposed to Russia to the core; their credit default swaps soared. Imagine those banks collapsing in a Lehman Brothers-style house of cards if Russia decided to default – thus unleashing a chain reaction. Think about a non-nuclear MAD (Mutually Assured Destruction) – in fact warless. Still, Russia is self-sufficient in all kinds of energy, mineral wealth and agriculture. Europe isn’t. This could become the lethal result of war by sanctions.

Essentially, the Empire of Chaos is bluffing, using Europe as pawns. The Empire of Chaos is as lousy at chess as it is at history. What it excels in is in upping the ante to force Russia to back down. Russia won’t back down.

Darkness dawns at the break of chaos
Paraphrasing Bob Dylan in When I Paint My Masterpiece, I left Rome and landed in Beijing. Today’s Marco Polos travel Air China; in 10 years, they will be zooming up in reverse, taking high-speed rail from Shanghai to Berlin. [3]

From a room in imperial Rome to a room in a peaceful hutong – a lateral reminiscence of imperial China. In Rome, the barbarians swarm inside the gates, softly pillaging the crumbs of such a rich heritage, and that includes the local Mafia. In Beijing, the barbarians are kept under strict surveillance; of course there’s a Panopticon element to it, essential to assure internal social peace. The leadership of the Chinese Communist Party (CCP) – ever since the earth-shattering reforms by the Little Helmsman Deng Xiaoping – is perfectly conscious that its Mandate of Heaven is directly conditioned by the perfect fine-tuning of nationalism and what we could term “neoliberalism with Chinese characteristics”.

In a different vein of the “soft beds of the East” seducing Marcus Aurelius, the silky splendors of chic Beijing offer a glimpse of an extremely self-assured emerging power. After all, Europe is nothing but a catalogue of multiple sclerosis and Japan is under its sixth recession in 20 years.

To top it off, in 2014 President Xi Jinping has deployed unprecedented diplomatic/geostrategic frenzy – ultimately tied to the long-term project of slowly but surely keeping on erasing US supremacy in Asia and rearranging the global chessboard. What Xi said in Shanghai in May encapsulates the project; “It’s time for Asians to manage the affairs of Asia.” At the APEC meeting in November, he doubled down, promoting an “Asia-Pacific dream”.

Meanwhile, frenzy is the norm. Apart from the two monster, US$725 billion gas deals – Power of Siberia and Altai pipeline – and a recent New Silk Road-related offensive in Eastern Europe, [4] virtually no one in the West remembers that in September Chinese Prime Minister Li Keiqiang signed no fewer than 38 trade deals with the Russians, including a swap deal and a fiscal deal, which imply total economic interplay.

A case can be made that the geopolitical shift towards Russia-China integration is arguably the greatest strategic maneuver of the last 100 years. Xi’s ultimate master plan is unambiguous: a Russia-China-Germany trade/commerce alliance. German business/industry wants it badly, although German politicians still haven’t got the message. Xi – and Putin – are building a new economic reality on the Eurasian ground, crammed with crucial political, economic and strategic ramifications.

Of course, this will be an extremely rocky road. It has not leaked to Western corporate media yet, but independent-minded academics in Europe (yes, they do exist, almost like a secret society) are increasingly alarmed there is no alternative model to the chaotic, entropic hardcore neoliberalism/casino capitalism racket promoted by the Masters of the Universe.

Even if Eurasian integration prevails in the long run, and Wall Street becomes a sort of local stock exchange, the Chinese and the emerging multipolar world still seem to be locked into the existing neoliberal model.

And yet, as much as Lao Tzu, already an octogenarian, gave the young Confucius an intellectual slap on the face, the “West” could do with a wake-up call. Divide et impera? It’s not working. And it’s bound to fail miserably.

As it stands, what we do know is that 2015 will be a hair-raising year in myriad aspects. Because from Europe to Asia, from the ruins of the Roman empire to the re-emerging Middle Kingdom, we all still remain under the sign of a fearful, dangerous, rampantly irrational Empire of Chaos.

Notes:
1. See here.
2. What Putin is not telling us, Russia Today, December 18, 2014.
3. Eurasian Integration vs. the Empire of Chaos, TomDispatch, December 16, 2014.
4. China set to make tracks for Europe, China Daily, December 18, 2014. China’s Li cements new export corridor into Europe, Channel News Asia, December 16, 2014.

Pepe Escobar’s latest book, just out, is Empire of Chaos. Follow him on Facebook.

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).

Go west, young Han

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THE ROVING EYE

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Originally published in Asia Times on December 17, 2014
Discuss this article here in the Diner Forum.

November 18, 2014: it’s a day that should live forever in history. On that day, in the city of Yiwu in China’s Zhejiang province, 300 kilometers south of Shanghai, the first train carrying 82 containers of export goods weighing more than 1,000 tons left a massive warehouse complex heading for Madrid. It arrived on December 9.

Welcome to the new trans-Eurasia choo-choo train. At over 13,000 kilometers, it will regularly traverse the longest freight train route in the world, 40% farther than the legendary Trans-Siberian Railway. Its cargo will cross China from East to West, then Kazakhstan, Russia, Belarus, Poland, Germany, France, and finally Spain.

You may not have the faintest idea where Yiwu is, but businessmen plying their trades across Eurasia, especially from the Arab world, are already hooked on the city “where amazing happens!” We’re talking about the largest wholesale center for small-sized consumer goods – from clothes to toys – possibly anywhere on Earth.

The Yiwu-Madrid route across Eurasia represents the beginning of a set of game-changing developments. It will be an efficient logistics channel of incredible length. It will represent geopolitics with a human touch, knitting together small traders and huge markets across a vast landmass. It’s already a graphic example of Eurasian integration on the go. And most of all, it’s the first building block on China’s “New Silk Road”, conceivably the project of the new century and undoubtedly the greatest trade story in the world for the next decade.

Go west, young Han. One day, if everything happens according to plan (and according to the dreams of China’s leaders), all this will be yours – via high-speed rail, no less. The trip from China to Europe will be a two-day affair, not the 21 days of the present moment. In fact, as that freight train left Yiwu, the D8602 bullet train was leaving Urumqi in Xinjiang Province, heading for Hami in China’s far west. That’s the first high-speed railway built in Xinjiang, and more like it will be coming soon across China at what is likely to prove dizzying speed.

Today, 90% of the global container trade still travels by ocean, and that’s what Beijing plans to change. Its embryonic, still relatively slow New Silk Road represents its first breakthrough in what is bound to be an overland trans-continental container trade revolution.

And with it will go a basket of future “win-win” deals, including lower transportation costs, the expansion of Chinese construction companies ever further into the Central Asian “stans”, as well as into Europe, an easier and faster way to move uranium and rare metals from Central Asia elsewhere, and the opening of myriad new markets harboring hundreds of millions of people.

So if Washington is intent on “pivoting to Asia,” China has its own plan in mind. Think of it as a pirouette to Europe across Eurasia.

Defecting to the East?
The speed with which all of this is happening is staggering. Chinese President Xi Jinping launched the New Silk Road Economic Belt in Astana, Kazakhstan, in September 2013. One month later, while in Indonesia’s capital, Jakarta, he announced a 21st-century Maritime Silk Road. Beijing defines the overall concept behind its planning as “one road and one belt”, when what it’s actually thinking about is a boggling maze of prospective roads, rail lines, sea lanes, and belts.

We’re talking about a national strategy that aims to draw on the historical aura of the ancient Silk Road, which bridged and connected civilizations, east and west, while creating the basis for a vast set of interlocked pan-Eurasian economic cooperation zones. Already the Chinese leadership has green-lighted a $40 billion infrastructure fund, overseen by the China Development Bank, to build roads, high-speed rail lines, and energy pipelines in assorted Chinese provinces. The fund will sooner or later expand to cover projects in South Asia, Southeast Asia, the Middle East, and parts of Europe. But Central Asia is the key immediate target.

Chinese companies will be investing in, and bidding for contracts in, dozens of countries along those planned silk roads. After three decades of development while sucking up foreign investment at breakneck speed, China’s strategy is now to let its own capital flow to its neighbors. It’s already clinched $30 billion in contracts with Kazakhstan and $15 billion with Uzbekistan. It has provided Turkmenistan with $8 billion in loans and a billion more has gone to Tajikistan.

In 2013, relations with Kyrgyzstan were upgraded to what the Chinese term “strategic level.” China is already the largest trading partner for all of them except Uzbekistan and, though the former Central Asian socialist republics of the Soviet Union are still tied to Russia’s network of energy pipelines, China is at work there, too, creating its own version of Pipelineistan, including a new gas pipeline to Turkmenistan, with more to come.

The competition among Chinese provinces for much of this business and the infrastructure that goes with it will be fierce. Xinjiang is already being reconfigured by Beijing as a key hub in its new Eurasian network. In early November 2014, Guangdong – the “factory of the world” – hosted the first international expo for the country’s Maritime Silk Road and representatives of no less than 42 countries attended the party.

President Xi himself is now enthusiastically selling his home province, Shaanxi, which once harbored the start of the historic Silk Road in Xian, as a twenty-first-century transportation hub. He’s made his New Silk Road pitch for it to, among others, Tajikistan, the Maldives, Sri Lanka, India, and Afghanistan.

Just like the historic Silk Road, the new one has to be thought of in the plural. Imagine it as a future branching maze of roads, rail lines, and pipelines. A key stretch is going to run through Central Asia, Iran, and Turkey, with Istanbul as a crossroads site. Iran and Central Asia are already actively promoting their own connections to it.

Another key stretch will follow the Trans-Siberian Railway with Moscow as a key node. Once that trans-Siberian high-speed rail remix is completed, travel time between Beijing and Moscow will plunge from the current six and a half days to only 33 hours. In the end, Rotterdam, Duisburg, and Berlin could all be nodes on this future “highway” and German business execs are enthusiastic about the prospect.

The Maritime Silk Road will start in Guangdong province en route to the Malacca Strait, the Indian Ocean, the Horn of Africa, the Red Sea and the Mediterranean, ending essentially in Venice, which would be poetic justice indeed. Think of it as Marco Polo in reverse.

All of this is slated to be completed by 2025, providing China with the kind of future “soft power” that it now sorely lacks. When President Xi hails the push to “break the connectivity bottleneck” across Asia, he’s also promising Chinese credit to a wide range of countries.

Now, mix the Silk Road strategy with heightened cooperation among the BRICS countries (Brazil, Russia, India, China, and South Africa), with accelerated cooperation among the members of the Shanghai Cooperation Organization (SCO), with a more influential Chinese role over the 120-member Non-Aligned Movement (NAM) – no wonder there’s the perception across the Global South that, while the US remains embroiled in its endless wars, the world is defecting to the East.

New banks and new dreams
The recent Asia-Pacific Economic Cooperation (APEC) summit in Beijing was certainly a Chinese success story, but the bigger APEC story went virtually unreported in the United States. Twenty-two Asian countries approved the creation of an Asian Infrastructure Investment Bank (AIIB) only one year after Xi initially proposed it. This is to be yet another bank, like the BRICS Development Bank, that will help finance projects in energy, telecommunications, and transportation. Its initial capital will be $50 billion and China and India will be its main shareholders.

Consider its establishment a Sino-Indian response to the Asian Development Bank (ADB), founded in 1966 under the aegis of the World Bank and considered by most of the world as a stalking horse for the Washington consensus. When China and India insist that the new bank’s loans will be made on the basis of “justice, equity, and transparency”, they mean that to be in stark contrast to the ADB (which remains a US-Japan affair with those two countries contributing 31% of its capital and holding 25% of its voting power) – and a sign of a coming new order in Asia. In addition, at a purely practical level, the ADB won’t finance the real needs of the Asian infrastructure push that the Chinese leadership is dreaming about, which is why the AIIB is going to come in so handy.

Keep in mind that China is already the top trading partner for India, Pakistan, and Bangladesh. It’s in second place when it comes to Sri Lanka and Nepal. It’s number one again when it comes to virtually all the members of the Association of Southeast Asian Nations (ASEAN), despite China’s recent well-publicized conflicts over who controls waters rich in energy deposits in the region. We’re talking here about the compelling dream of a convergence of 600 million people in Southeast Asia, 1.3 billion in China, and 1.5 billion on the Indian subcontinent.

Only three APEC members – apart from the US – did not vote to approve the new bank: Japan, South Korea, and Australia, all under immense pressure from the Obama administration. (Indonesia signed on a few days late.) And Australia is finding it increasingly difficult to resist the lure of what, these days, is being called “yuan diplomacy”.

In fact, whatever the overwhelming majority of Asian nations may think about China’s self-described “peaceful rise”, most are already shying away from or turning their backs on a Washington-and-NATO-dominated trade and commercial world and the set of pacts – from the Transatlantic Trade and Investment Partnership (TTIP) for Europe to the Trans-Pacific Partnership (TPP) for Asia – that would go with it.

When dragon embraces bear
Russian President Vladimir Putin had a fabulous APEC. After his country and China clinched a massive $400 billion natural gas deal in May – around the Power of Siberia pipeline, whose construction began this year – they added a second agreement worth $325 billion around the Altai pipeline originating in western Siberia.

These two mega-energy deals don’t mean that Beijing will become Moscow-dependent when it comes to energy, though it’s estimated that they will provide 17% of China’s natural gas needs by 2020. (Gas, however, makes up only 10% per cent of China’s energy mix at present.) But these deals signal where the wind is blowing in the heart of Eurasia. Though Chinese banks can’t replace those affected by Washington and EU sanctions against Russia, they are offering a Moscow battered by recent plummeting oil prices some relief in the form of access to Chinese credit.

On the military front, Russia and China are now committed to large-scale joint military exercises, while Russia’s advanced S-400 air defense missile system will soon enough be heading for Beijing. In addition, for the first time in the post-Cold War era, Putin recently raised the old Soviet-era doctrine of “collective security” in Asia as a possible pillar for a new Sino-Russian strategic partnership.

Chinese President Xi has taken to calling all this the “evergreen tree of Chinese-Russian friendship” – or you could think of it as Putin’s strategic “pivot” to China. In either case, Washington is not exactly thrilled to see Russia and China beginning to mesh their strengths: Russian excellence in aerospace, defense technology, and heavy equipment manufacturing matching Chinese excellence in agriculture, light industry, and information technology.

It’s also been clear for years that, across Eurasia, Russian, not Western, pipelines are likely to prevail. The latest spectacular Pipelineistan opera – Gazprom’s cancellation of the prospective South Stream pipeline that was to bring yet more Russian natural gas to Europe – will, in the end, only guarantee an even greater energy integration of both Turkey and Russia into the new Eurasia.

So long to the unipolar moment
All these interlocked developments suggest a geopolitical tectonic shift in Eurasia that the American media simply hasn’t begun to grasp. Which doesn’t mean that no one notices anything. You can smell the incipient panic in the air in the Washington establishment. The Council on Foreign Relations is already publishing laments about the possibility that the former sole superpower’s exceptionalist moment is “unraveling”. The US-China Economic and Security Review Commission can only blame the Chinese leadership for being “disloyal”, adverse to “reform”, and an enemy of the “liberalization” of their own economy.

The usual suspects carp that upstart China is upsetting the “international order”, will doom “peace and prosperity” in Asia for all eternity, and may be creating a “new kind of Cold War” in the region. From Washington’s perspective, a rising China, of course, remains the major “threat” in Asia, if not the world, even as the Pentagon spends gigantic sums to keep its sprawling global empire of bases intact. Those Washington-based stories about the new China threat in the Pacific and Southeast Asia, however, never mention that China remains encircled by US bases, while lacking a base of its own outside its territory.

Of course, China does face titanic problems, including the pressures being applied by the globe’s “sole superpower”. Among other things, Beijing fears threats to the security of its sea-borne energy supply from abroad, which helps explain its massive investment in helping create a welcoming Eurasian Pipelineistan from Central Asia to Siberia. Fears for its energy future also explain its urge to “escape from Malacca” by reaching for energy supplies in Africa and South America, and its much-discussed offensive to claim energy-rich areas of the East and South China seas, which Beijing is betting could become a “second Persian Gulf”, ultimately yielding 130 billion barrels of oil.

On the internal front, President Xi has outlined in detail his vision of a “results-oriented” path for his country over the next decade. As road maps go, China’s “must-do” list of reforms is nothing short of impressive. And worrying about keeping China’s economy, already the world’s number one by size, rolling along at a feverish pitch, Xi is also turbo-charging the fight against corruption, graft, and waste, especially within the Communist Party itself.

Economic efficiency is another crucial problem. Chinese state-owned enterprises are now investing a staggering $2.3 trillion a year – 43% of the country’s total investment – in infrastructure. Yet studies at Tsinghua University’s School of Management have shown that an array of investments in facilities ranging from steel mills to cement factories have only added to overcapacity and so actually undercut China’s productivity.

Xiaolu Wang and Yixiao Zhou, authors of the academic paper “Deepening Reform for China’s Long-term Growth and Development”, contend that it will be difficult for China to jump from middle-income to high-income status – a key requirement for a truly global power. For this, an avalanche of extra government funds would have to go into areas like social security/unemployment benefits and healthcare, which take up at present 9.8% and 15.1% of the 2014 budget – high for some Western countries but not high enough for China’s needs.

Still, anyone who has closely followed what China has accomplished over these past three decades knows that, whatever its problems, whatever the threats, it won’t fall apart. As a measure of the country’s ambitions for economically reconfiguring the commercial and power maps of the world, China’s leaders are also thinking about how, in the near future, relations with Europe, too, could be reshaped in ways that would be historic.

What about that “harmonious community”?

At the same moment that China is proposing a new Eurasian integration, Washington has opted for an “empire of chaos”, a dysfunctional global system now breeding mayhem and blowback across the Greater Middle East into Africa and even to the peripheries of Europe.

In this context, a “new Cold War” paranoia is on the rise in the US, Europe, and Russia. Former Soviet leader Mikhail Gorbachev, who knows a thing or two about Cold Wars (having ended one), couldn’t be more alarmed. Washington’s agenda of “isolating” and arguably crippling Russia is ultimately dangerous, even if in the long run it may also be doomed to failure.

At the moment, whatever its weaknesses, Moscow remains the only power capable of negotiating a global strategic balance with Washington and putting some limits on its empire of chaos. NATO nations still follow meekly in Washington’s wake and China as yet lacks the strategic clout.

Russia, like China, is betting on Eurasian integration. No one, of course, knows how all this will end. Only four years ago, Vladimir Putin was proposing “a harmonious economic community stretching from Lisbon to Vladivostok”, involving a trans-Eurasian free trade agreement. Yet today, with the US, NATO, and Russia locked in a Cold War-like battle in the shadows over Ukraine, and with the European Union incapable of disentangling itself from NATO, the most immediate new paradigm seems to be less total integration than war hysteria and fear of future chaos spreading to other parts of Eurasia.

Don’t rule out a change in the dynamics of the situation, however. In the long run, it seems to be in the cards. One day, Germany may lead parts of Europe away from NATO’s “logic”, since German business leaders and industrialists have an eye on their potentially lucrative commercial future in a new Eurasia. Strange as it might seem amid today’s war of words over Ukraine, the endgame could still prove to involve a Berlin-Moscow-Beijing alliance.

At present, the choice between the two available models on the planet seems stark indeed: Eurasian integration or a spreading empire of chaos. China and Russia know what they want, and so, it seems, does Washington. The question is: What will the other moving parts of Eurasia choose to do?

Pepe Escobar‘s latest book is Empire of Chaos (Nimble Books). Follow him on Facebook.

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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Americans are good on the "thoughts and prayers" thing. Also not so bad about digging in f [...]

In the echo-sphere of political punditry consensus forms rapidly, gels, and then, in short order…cal [...]

Discussions with figures from Noam Chomsky and Peter Senge to Thich Nhat Hanh and the Dalai Lama off [...]

Lefty Greenies have some laudable ideas. Why is it then that they don't bother to really build [...]

Top Commentariats

  • Our Finite World
  • Economic Undertow

I take that back.... There IS a cure for stuuuuupidity!!! https://youtu.be/tndNd4yhzvw [...]

Funny! Very funny! But of course the punchline would never occur to anyone in the west.... because p [...]

I agree, the costs will be exorbitant and likely recurring. it isn't like mass production where [...]

Humans are perfect the way they are .... the last thing they want is to 'evolve' and breed [...]

If I can find time I will make some calls to other Tesla dealers asking them where the electricity t [...]

Here"s one: https://seekingalpha.com/article/4210065-shale-oil-ponzi-scheme-evidence-decline-cu [...]

@Dolf Can't disagree with your solution for many people. But f you are involved in producing an [...]

Yes, exactly, the solution is relatively straight forward, whether it takes place by official channe [...]

Great big picture post Steve, thanks. The reason that MMT will never be allowed to reach mainstream [...]

DOlf dude - Looks like you are trying reverse psychology to get the ball rolling. All those years of [...]

RE Economics

Going Cashless

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Simplifying the Final Countdown

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Bond Market Collapse and the Banning of Cash

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Do Central Bankers Recognize there is NO GROWTH?

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Singularity of the Dollar

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Kurrency Kollapse: To Print or Not To Print?

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SWISSIE CAPITULATION!

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Of Heat Sinks & Debt Sinks: A Thermodynamic View of Money

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Merry Doomy Christmas

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Peak Customers: The Final Liquidation Sale

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Collapse Fiction

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Technical Journals

Forest management based on sustainability and multifunctionality requires reliable and user-friendly [...]

Nitrous oxide (N2O) is a potent greenhouse gas (GHG). Although it comprises only 0.03% of total GHGs [...]

This study presents a method to investigate meteorological drought characteristics using multiple cl [...]

El Niño–Southern Oscillation strongly influences rainfall and temperature patterns in Eastern Austra [...]