AuthorTopic: Official WWIII Sino-Ruskie Alliance Thread  (Read 5597 times)

Offline RE

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Official WWIII Sino-Ruskie Alliance Thread
« on: May 20, 2014, 04:51:03 PM »
Will these two behemoths gang up on NATO?  Stay tuned to this channel as WWIII heats up.

RE

The Birth Of Eurasia - Russia & China Do Pipelineistan

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Submitted by Pepe Escobar, the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia.

A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass - at the expense of the United States.

And no wonder Washington is anxious. That alliance is already a done deal in a variety of ways: through the BRICS group of emerging powers (Brazil, Russia, India, China, and South Africa); at the Shanghai Cooperation Organization, the Asian counterweight to NATO; inside the G20; and via the 120-member-nation Non-Aligned Movement (NAM). Trade and commerce are just part of the future bargain. Synergies in the development of new military technologies beckon as well. After Russia’s Star Wars-style, ultra-sophisticated S-500 air defense anti-missile system comes online in 2018, Beijing is sure to want a version of it. Meanwhile, Russia is about to sell dozens of state-of-the-art Sukhoi Su-35 jet fighters to the Chinese as Beijing and Moscow move to seal an aviation-industrial partnership.

This week should provide the first real fireworks in the celebration of a new Eurasian century-in-the-making with Russian President Vladimir Putin visiting Xi in Shanghai this Tuesday and Wednesday. You remember Pipelineistan,” all those crucial oil and gas pipelines crisscrossing Eurasia that make up the true circulatory system for the life of the region. Now, it looks like the ultimate Pipelineistan deal, worth $1 trillion and 10 years in the making, will be inked as well. In it, the giant, state-controlled Russian energy giant Gazprom will agree to supply the giant state-controlled China National Petroleum Corporation (CNPC) with 3.75 billion cubic feet of liquefied natural gas a day for no less than 30 years, starting in 2018. That’s the equivalent of a quarter of Russia’s massive gas exports to all of Europe. China’s current daily gas demand is around 16 billion cubic feet a day, and imports account for 31.6% of total consumption.

Gazprom may still collect the bulk of its profits from Europe, but Asia could turn out to be its Everest. The company will use this mega-deal to boost investment in Eastern Siberia and the whole region will be reconfigured as a privileged gas hub for Japan and South Korea as well. If you want to know why no key country in Asia has been willing to isolate Russia in the midst of the Ukrainian crisis - and in defiance of the Obama administration - look no further than Pipelineistan.

Exit the Petrodollar, Enter the Gas-o-Yuan

And then, talking about anxiety in Washington, there’s the fate of the petrodollar to consider, or rather the “thermonuclear” possibility that Moscow and Beijing will agree on payment for the Gazprom-CNPC deal not in petrodollars but in Chinese yuan. One can hardly imagine a more tectonic shift, with Pipelineistan intersecting with a growing Sino-Russian political-economic-energy partnership. Along with it goes the future possibility of a push, led again by China and Russia, toward a new international reserve currency -- actually a basket of currencies -- that would supersede the dollar (at least in the optimistic dreams of BRICS members).

BRICS leaders (From L) India Prime minister Manmohan Singh, President of the People’s Republic of China Xi Jinping, South Africa's President Jacob Zuma, Brazil's President Dilma Rousseff and Russian Federation President Vladimir Putin, pose for a family photo in Durban on March 27, 2013.( AFP Photo / Alexander Joe )

Right after the potentially game-changing Sino-Russian summit comes a BRICS summit in Brazil in July. That’s when a $100 billion BRICS development bank, announced in 2012, will officially be born as a potential alternative to the International Monetary Fund (IMF) and the World Bank as a source of project financing for the developing world.

More BRICS cooperation meant to bypass the dollar is reflected in the Gas-o-yuan,” as in natural gas bought and paid for in Chinese currency. Gazprom is even considering marketing bonds in yuan as part of the financial planning for its expansion. Yuan-backed bonds are already trading in Hong Kong, Singapore, London, and most recently Frankfurt.

Nothing could be more sensible for the new Pipelineistan deal than to have it settled in yuan. Beijing would pay Gazprom in that currency (convertible into rubles); Gazprom would accumulate the yuan; and Russia would then buy myriad made-in-China goods and services in yuan convertible into rubles.

It’s common knowledge that banks in Hong Kong, from Standard Chartered to HSBC - as well as others closely linked to China via trade deals - have been diversifying into the yuan, which implies that it could become one of the de facto global reserve currencies even before it’s fully convertible. (Beijing is unofficially working for a fully convertible yuan by 2018.)

The Russia-China gas deal is inextricably tied up with the energy relationship between the European Union (EU) and Russia. After all, the bulk of Russia’s gross domestic product comes from oil and gas sales, as does much of its leverage in the Ukraine crisis. In turn, Germany depends on Russia for a hefty 30% of its natural gas supplies. Yet Washington’s geopolitical imperatives - spiced up with Polish hysteria - have meant pushing Brussels to find ways to “punish” Moscow in the future energy sphere (while not imperiling present day energy relationships).

There’s a consistent rumble in Brussels these days about the possible cancellation of the projected 16 billion euro South Stream pipeline, whose construction is to start in June. On completion, it would pump yet more Russian natural gas to Europe - in this case, underneath the Black Sea (bypassing Ukraine) to Bulgaria, Hungary, Slovenia, Serbia, Croatia, Greece, Italy, and Austria.

Bulgaria, Hungary, and the Czech Republic have already made it clear that they are firmly opposed to any cancellation. And cancellation is probably not in the cards. After all, the only obvious alternative is Caspian Sea gas from Azerbaijan, and that isn’t likely to happen unless the EU can suddenly muster the will and funds for a crash schedule to construct the fabled Baku-Tblisi-Ceyhan (BTC) oil pipeline, conceived during the Clinton years expressly to bypass Russia and Iran.

In any case, Azerbaijan doesn’t have enough capacity to supply the levels of natural gas needed, and other actors like Kazakhstan, plagued with infrastructure problems, or unreliable Turkmenistan, which prefers to sell its gas to China, are already largely out of the picture. And don’t forget that South Stream, coupled with subsidiary energy projects, will create a lot of jobs and investment in many of the most economically devastated EU nations.

Nonetheless, such EU threats, however unrealistic, only serve to accelerate Russia’s increasing symbiosis with Asian markets. For Beijing especially, it’s a win-win situation. After all, between energy supplied across seas policed and controlled by the US Navy and steady, stable land routes out of Siberia, it’s no contest.

Pick Your Own Silk Road

Of course, the US dollar remains the top global reserve currency, involving 33% of global foreign exchange holdings at the end of 2013, according to the IMF. It was, however, at 55% in 2000. Nobody knows the percentage in yuan (and Beijing isn’t talking), but the IMF notes that reserves in “other currencies” in emerging markets have been up 400% since 2003.

The Fed is arguably monetizing 70% of the US government debt in an attempt to keep interest rates from heading skywards. Pentagon adviser Jim Rickards, as well as every Hong Kong-based banker, tends to believe that the Fed is bust (though they won’t say it on the record). No one can even imagine the extent of the possible future deluge the US dollar might experience amid a $1.4 quadrillion Mount Ararat of financial derivatives. Don’t think that this is the death knell of Western capitalism, however, just the faltering of that reigning economic faith, neoliberalism, still the official ideology of the United States, the overwhelming majority of the European Union, and parts of Asia and South America.

As far as what might be called the “authoritarian neoliberalism” of the Middle Kingdom, what’s not to like at the moment? China has proven that there is a result-oriented alternative to the Western “democratic” capitalist model for nations aiming to be successful. It’s building not one, but myriad

new Silk Roads
, massive webs of high-speed railways, highways, pipelines, ports, and fiber optic networks across huge parts of Eurasia. These include a Southeast Asian road, a Central Asian road, an Indian Ocean “maritime highway” and even a high-speed rail line through Iran and Turkey reaching all the way to Germany.

In April, when President Xi Jinping visited the city of Duisburg on the Rhine River, with the largest inland harbor in the world and right in the heartland of Germany’s Ruhr steel industry, he made an audacious proposal: a new “economic Silk Road” should be built between China and Europe, on the basis of the Chongqing-Xinjiang-Europe railway, which already runs from China to Kazakhstan, then through Russia, Belarus, Poland, and finally Germany. That’s 15 days by train, 20 less than for cargo ships sailing from China’s eastern seaboard. Now that would represent the ultimate geopolitical earthquake in terms of integrating economic growth across Eurasia.

Keep in mind that, if no bubbles burst, China is about to become - and remain - the number one global economic power, a position it enjoyed for 18 of the past 20 centuries. But don’t tell London hagiographers; they still believe that US hegemony will last, well, forever.

Russia's President Vladimir Putin (L) and China's President Xi Jinping attend an agreement signing ceremony during a bilateral meeting at Xijiao State Guesthouse ahead of the fourth Conference on Interaction and Confidence Building Measures in Asia (CICA) summit, in Shanghai May 20, 2014.(Reuters / Carlos Barria)

 

Take Me to Cold War 2.0

Despite recent serious financial struggles, the BRICS countries have been consciously working to become a counterforce to the original and - having tossed Russia out in March - once again Group of 7, or G7. They are eager to create a new global architecture to replace the one first imposed in the wake of World War II, and they see themselves as a potential challenge to the exceptionalist and unipolar world that Washington imagines for our future (with itself as the global robocop and NATO as its robo-police force). Historian and imperialist cheerleader Ian Morris, in his book War! What is it Good For?, defines the US as the ultimate “globocop” and “the last best hope of Earth.” If that globocop “wearies of its role,” he writes, “there is no plan B.”

Well, there is a plan BRICS - or so the BRICS nations would like to think, at least. And when the BRICS do act in this spirit on the global stage, they quickly conjure up a curious mix of fear, hysteria, and pugnaciousness in the Washington establishment. Take Christopher Hill as an example. The former assistant secretary of state for East Asia and US ambassador to Iraq is now an advisor with the Albright Stonebridge Group, a consulting firm deeply connected to the White House and the State Department. When Russia was down and out, Hill used to dream of a hegemonic American “new world order.” Now that the ungrateful Russians have spurned what “the West has been offering” - that is, “special status with NATO, a privileged relationship with the European Union, and partnership in international diplomatic endeavors” - they are, in his view, busy trying to revive the Soviet empire. Translation: if you’re not our vassals, you’re against us. Welcome to Cold War 2.0.

The Pentagon has its own version of this directed not so much at Russia as at China, which, its think tank on future warfare claims, is already at war with Washington in a number of ways. So if it’s not apocalypse now, it’s Armageddon tomorrow. And it goes without saying that whatever’s going wrong, as the Obama administration very publicly “pivots” to Asia and the American media fills with talk about a revival of Cold War-era “containment policy” in the Pacific, it’s all China’s fault.

Embedded in the mad dash toward Cold War 2.0 are some ludicrous facts-on-the-ground: the US government, with $17.5 trillion in national debt and counting, is contemplating a financial showdown with Russia, the largest global energy producer and a major nuclear power, just as it’s also promoting an economically unsustainable military encirclement of its largest creditor, China.

Russia runs a sizeable trade surplus. Humongous Chinese banks will have no trouble helping Russian banks out if Western funds dry up. In terms of inter-BRICS cooperation, few projects beat a $30 billion oil pipeline in the planning stages that will stretch from Russia to India via Northwest China. Chinese companies are already eagerly discussing the possibility of taking part in the creation of a transport corridor from Russia into Crimea, as well as an airport, shipyard, and liquid natural gas terminal there. And there’s another “thermonuclear” gambit in the making: the birth of a natural gas equivalent to the Organization of the Petroleum Exporting Countries that would include Russia, Iran, and reportedly disgruntled US ally Qatar.

The (unstated) BRICS long-term plan involves the creation of an alternative economic system featuring a basket of gold-backed currencies that would bypass the present America-centric global financial system. (No wonder Russia and China are amassing as much gold as they can.) The euro - a sound currency backed by large liquid bond markets and huge gold reserves - would be welcomed in as well.

It’s no secret in Hong Kong that the Bank of China has been using a parallel SWIFT network to conduct every kind of trade with Tehran, which is under a heavy US sanctions regime. With Washington wielding Visa and Mastercard as weapons in a growing Cold War-style economic campaign against Russia, Moscow is about to implement an alternative payment and credit card system not controlled by Western finance. An even easier route would be to adopt the Chinese Union Pay system, whose operations have already overtaken American Express in global volume.

I’m Just Pivoting With Myself

No amount of Obama administration “pivoting” to Asia to contain China (and threaten it with US Navy control of the energy sea lanes to that country) is likely to push Beijing far from its Deng Xiaoping-inspired, self-described peaceful development strategy meant to turn it into a global powerhouse of trade. Nor are the forward deployment of US or NATO troops in Eastern Europe or other such Cold-War-ish acts likely to deter Moscow from a careful balancing act: ensuring that Russia’s sphere of influence in Ukraine remains strong without compromising trade and commercial, as well as political, ties with the European Union - above all, with strategic partner Germany. This is Moscow’s Holy Grail; a free-trade zone from Lisbon to Vladivostok, which (not by accident) is mirrored in China’s dream of a new Silk Road to Germany.

Increasingly wary of Washington, Berlin for its part abhors the notion of Europe being caught in the grips of a Cold War 2.0. German leaders have more important fish to fry, including trying to stabilize a wobbly EU while warding off an economic collapse in southern and central Europe and the advance of ever more extreme right-wing parties.

Reuters / Stringer

 

On the other side of the Atlantic, President Obama and his top officials show every sign of becoming entangled in their own pivoting - to Iran, to China, to Russia’s eastern borderlands, and (under the radar) to Africa. The irony of all these military-first maneuvers is that they are actually helping Moscow, Tehran, and Beijing build up their own strategic depth in Eurasia and elsewhere, as reflected in Syria, or crucially in ever more energy deals. They are also helping cement the growing strategic partnership between China and Iran. The unrelenting Ministry of Truth narrative out of Washington about all these developments now carefully ignores the fact that, without Moscow, the “West” would never have sat down to discuss a final nuclear deal with Iran or gotten a chemical disarmament agreement out of Damascus.

When the disputes between China and its neighbors in the South China Sea and between that country and Japan over the Senkaku/Diaoyou islands meet the Ukraine crisis, the inevitable conclusion will be that both Russia and China consider their borderlands and sea lanes private property and aren’t going to take challenges quietly - be it via NATO expansion, US military encirclement, or missile shields. Neither Beijing nor Moscow is bent on the usual form of imperialist expansion, despite the version of events now being fed to Western publics. Their “red lines” remain essentially defensive in nature, no matter the bluster sometimes involved in securing them.

Whatever Washington may want or fear or try to prevent, the facts on the ground suggest that, in the years ahead, Beijing, Moscow, and Tehran will only grow closer, slowly but surely creating a new geopolitical axis in Eurasia. Meanwhile, a discombobulated America seems to be aiding and abetting the deconstruction of its own unipolar world order, while offering the BRICS a genuine window of opportunity to try to change the rules of the game.

Russia and China in Pivot Mode

In Washington’s think-tank land, the conviction that the Obama administration should be focused on replaying the Cold War via a new version of containment policy to “limit the development of Russia as a hegemonic power” has taken hold. The recipe: weaponize the neighbors from the Baltic states to Azerbaijan to “contain” Russia. Cold War 2.0 is on because, from the point of view of Washington’s elites, the first one never really left town.

Yet as much as the US may fight the emergence of a multipolar, multi-powered world, economic facts on the ground regularly point to such developments. The question remains: Will the decline of the hegemon be slow and reasonably dignified, or will the whole world be dragged down with it in what has been called “the Samson option”?

While we watch the spectacle unfold, with no end game in sight, keep in mind that a new force is growing in Eurasia, with the Sino-Russian strategic alliance threatening to dominate its heartland along with great stretches of its inner rim. Now, that’s a nightmare of Mackinderesque proportions from Washington’s point of view. Think, for instance, of how Zbigniew Brzezinski, the former national security adviser who became a mentor on global politics to President Obama, would see it.

In his 1997 book The Grand Chessboard, Brzezinski argued that “the struggle for global primacy [would] continue to be played” on the Eurasian “chessboard,” of which “Ukraine was a geopolitical pivot.” “If Moscow regains control over Ukraine,” he wrote at the time, Russia would “automatically regain the wherewithal to become a powerful imperial state, spanning Europe and Asia.”

That remains most of the rationale behind the American imperial containment policy - from Russia’s European “near abroad” to the South China Sea. Still, with no endgame in sight, keep your eye on Russia pivoting to Asia, China pivoting across the world, and the BRICS hard at work trying to bring about the new Eurasian Century.

« Last Edit: May 20, 2014, 04:54:45 PM by RE »
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Offline Surly1

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Re: Official WWIII Sino-Ruskie Alliance Thread
« Reply #1 on: May 20, 2014, 06:10:48 PM »
One of the most penetrating and perceptive articles ever posted in this space.

And the end game of the gas-o-yuan only matters if you are paid or hold savings in dollars . . .
“The old world is dying, and the New World struggles to be born: now is the time of monsters.”

Offline Ka

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Re: Official WWIII Sino-Ruskie Alliance Thread
« Reply #2 on: May 20, 2014, 09:29:02 PM »
While I wouldn't be surprised if this article represents fairly the thinking in the various think tanks, my feeling while reading it is that whatever plans these countries are working on will be overtaken by events. The "sound" euro? Chinese banks able to support Russia? Sounds to me like generals planning for the last war.

Offline Surly1

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Re: Official WWIII Sino-Ruskie Alliance Thread
« Reply #3 on: May 21, 2014, 03:57:01 AM »
While I wouldn't be surprised if this article represents fairly the thinking in the various think tanks, my feeling while reading it is that whatever plans these countries are working on will be overtaken by events. The "sound" euro? Chinese banks able to support Russia? Sounds to me like generals planning for the last war.

That's what general officers do. It's written like a big day-glo yellow stripe through history.
“The old world is dying, and the New World struggles to be born: now is the time of monsters.”

Offline Petty Tyrant

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Re: Official WWIII Sino-Ruskie Alliance Thread
« Reply #4 on: May 21, 2014, 04:34:23 AM »
For those of us who tend to skim long articles, that one is worth the time to read every word.
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Offline Surly1

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Re: Official WWIII Sino-Ruskie Alliance Thread
« Reply #5 on: May 21, 2014, 04:52:31 AM »
For those of us who tend to skim long articles, that one is worth the time to read every word.

Emphatically agree. I find I'm going to ned to be reading more Pepe Escobar.

And this just in--

Russia And China Finally Sign Historic $400 Billion "Holy Grail" Gas Deal --

There was some trepidation yesterday when after the first day of Putin's visit to China the two countries did not announce the completion of the long-awaited "holy grail" gas dead, and fears that it may get scuttled over price negotiations. It wasn't: moments ago Russia's Gazprom and China's CNPC announced, that after a decade of negotiations, the two nations signed a 30 year gas contract amounting to around $400 billion. And with the west doing all it can to alienate Russia and to force it into China's embrace, this is merely the beginning of what will be a far closer commercial (and political) relationship between China and Russia.



So far there have been no public pricing details on the deal which accrording to Gazprom CEO Aleksey Miller is a "commercial secret", and which is believed to involve Russia supplying 38 billion cubic metres of gas per year to China via a new eastern pipeline linking the countries.

According to Itar-Tass, the compromise between Russian gas export monopoly Gazprom and Chinese National Petroleum Corporation (CNPC) on Russian gas price is estimated at $75 billion, citing the Deputy Head of the National Energy Security Fund Alexei Grivach. The differences on the price for 38 and 60 billion cubic meters supplies a year were $1.5 billion and $2.5 billion, he added, so the subject of the negotiations is quite a significant one.

Gazprom expected a base price of $400 for 1,000 cubic meters, an expert of the Eurasian Development Research Center of the Chinese State Council said in April, whereas the CNPC’s proposal was $350-360 for 1,000 cubic meters.

More details from RT:

A memorandum of understanding was signed in the presence of Russian President Vladimir Putin and President of China Xi Jinping on the second day of Putin’s two-day state visit to Shanghai. The price China will pay for Russian gas remains a "commercial secret" according to Gazprom CEO Aleksey Miller. Gas will be delivered to China's via the eastern 'Power of Siberia' pipeline.
 
RT producers were informed of the landmark energy deal prior to its signing after a conversation with Miller.
 
Under the long-term deal, Gazprom will begin providing China's growing economy with 38 billion cubic meters of natural gas per year for the next 30 years, beginning in 2018. The details of the deal were discussed for more than 10 years, with Moscow and Beijing negotiating over gas prices and the pipeline route, as well as possible Chinese stakes in Russian projects.
 
Just ahead of Putin's visit to Shanghai, Russian Prime Minister Dmitry Medvedev gave reassurance that the agreed price would be fair.
 
“One side always wants to sell for a higher price, while the other wants to buy for a lower price,” Medvedev said. “I believe that in the long run, the price will be fair and totally comparable to the price of European supplies.”
 
A major breakthrough in negotiations came on Sunday as Gazprom chief Aleksey Miller sat down with his CNPC counterpart, Zhou Jiping, in Beijing to discuss final details, including price formulas.
 
Although Europe is still Russia's largest energy market – buying more than 160 billion cubic meters of Russian natural gas in 2013 – Moscow will use every opportunity to diversify gas deliveries and boost its presence in Asian markets.
 
“I wouldn’t look for politics behind this, but I have no doubt that supplying energy to the Asia Pacific Region holds out a great promise in the future,” Medvedev said.
 
In October 2009, Gazprom and CNPC inked a framework agreement for the Altai project which envisions building a pipeline to supply natural gas from fields in Siberia via the western part of the Russia-China border.
 
In March 2013, Gazprom and CNPC signed a memorandum of understanding on Russian gas supplies to China along the so-called eastern 'Power of Siberia' route. When both pipelines are activated, Russia can supply Asia with 68 billion cubic meters of gas annually.
Last year, China consumed about 170 billion cubic meters of natural gas and is expected to consume 420 billion cubic meters per year by 2020.
Regardless of what the final price ended up being, and whether or not China got the upper hand in the negotiations, the final outcome is there and it is real: as a result of his disastrous foreign policy in the past two months, Barack Obama finally pushed Russia into China's hands, culminating with a deal that was ten years in the making and was never certain, until the Ukraine crisis.

And yes, this was all predictable from day one. Here is what we said precisely two months ago:

If it was the intent of the West to bring Russia and China together - one a natural resource (if "somewhat" corrupt) superpower and the other a fixed capital / labor output (if "somewhat" capital misallocating and credit bubbleicious) powerhouse - in the process marginalizing the dollar and encouraging Ruble and Renminbi bilateral trade, then things are surely "going according to plan."
 
For now there have been no major developments as a result of the shift in the geopolitical axis that has seen global US influence, away from the Group of 7 (most insolvent nations) of course, decline precipitously in the aftermath of the bungled Syrian intervention attempt and the bloodless Russian annexation of Crimea, but that will soon change. Because while the west is focused on day to day developments in Ukraine, and how to halt Russian expansion through appeasement (hardly a winning tactic as events in the 1930s demonstrated), Russia is once again thinking 3 steps ahead... and quite a few steps east.
 
While Europe is furiously scrambling to find alternative sources of energy should Gazprom pull the plug on natgas exports to Germany and Europe (the imminent surge in Ukraine gas prices by 40% is probably the best indication of what the outcome would be), Russia is preparing the announcement of the "Holy Grail" energy deal with none other than China, a move which would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. One which, as some especially on these pages, have suggested would lay the groundwork for a new joint, commodity-backed reserve currency that bypasses the dollar, something which Russia implied moments ago when its finance minister Siluanov said that Russia may refrain from foreign borrowing this year. Translated: bypass western purchases of Russian debt, funded by Chinese purchases of US Treasurys, and go straight to the source.
 
Here is what will likely happen next, as explained by Reuters:
Igor Sechin gathered media in Tokyo the next day to warn Western governments that more sanctions over Moscow's seizure of the Black Sea peninsula from Ukraine would be counter-productive.
 
The underlying message from the head of Russia's biggest oil company, Rosneft, was clear: If Europe and the United States isolate Russia, Moscow will look East for new business, energy deals, military contracts and political alliances.
 
The Holy Grail for Moscow is a natural gas supply deal with China that is apparently now close after years of negotiations. If it can be signed when Putin visits China in May, he will be able to hold it up to show that global power has shifted eastwards and he does not need the West.
* * *
 
To summarize: while the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the "Asian axis", the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market while at the same time trying to explain why 6.5% unemployment is really indicative of a weak economy, blames the weather for every disappointing economic data point, and every single person is transfixed with finding a missing airplane.
“The old world is dying, and the New World struggles to be born: now is the time of monsters.”

Offline Eddie

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Re: Official WWIII Sino-Ruskie Alliance Thread
« Reply #6 on: May 21, 2014, 08:18:29 AM »
I guess that explains the capital flight OUT of the rouble...oh, wait.
What makes the desert beautiful is that somewhere it hides a well.

Offline RE

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Re: Official WWIII Sino-Ruskie Alliance Thread
« Reply #7 on: May 24, 2014, 05:55:03 PM »
The pics in this article brought to mind my favorite Johnny Horton tune.

<a href="http://www.youtube.com/v/KecIdlEAKhU?feature=player_detailpage" target="_blank" class="new_win">http://www.youtube.com/v/KecIdlEAKhU?feature=player_detailpage</a>

RE

<html><h1 class="title">China And Russia Hold "Massive" Joint Naval Drill: This Is What It Looked Like</h1>
<div class="picture"><a title="View user profile." href="http://www.zerohedge.com/users/tyler-durden"><img title="Tyler Durden's picture" src="http://www.zerohedge.com/sites/default/files/pictures/picture-5.jpg" alt="Tyler Durden's picture" />[/url]</div>
<p><span class="submitted">Submitted by Tyler Durden on 05/24/2014 16:23 -0400</span>

</p>
<ul class="links inline">
<li class="taxonomy_term_139 first"><a title="China" href="http://www.zerohedge.com/taxonomy_vtn/term/139" rel="tag">China[/url]</li>
<li class="taxonomy_term_8436"><a title="" href="http://www.zerohedge.com/taxonomy_vtn/term/8436" rel="tag">Japan[/url]</li>
<li class="taxonomy_term_11710 last"><a title="" href="http://www.zerohedge.com/taxonomy_vtn/term/11710" rel="tag">Ukraine[/url]</li>
</ul>
<p>A month ago, when the fate of the historic (and now concluded) gas deal between Russia and China was still unknown we wrote that "Isolated Russia Makes Friends: To Hold Military Drill With China", a drill titled "Maritime Cooperation-2014", and which, coincidentally, is taking place in the northern part (ahem Japan and Taiwan) of the East China Sea, just as Russia is conducting another massive airforce drill along its border with Ukraine on the weekend of Ukraine's presidential election.</p>
<p>As part of the drill, which is taking place between May 20 and 26, the Chinese and Russian naval vessels conducted maneuvers in the exercise area covering such missions as joint escort, joint rescue the hijacked ship, a joint verification of identification and joint air, sea assault on joint exercises and other subjects.</p>
<p>Here are some snapshots of what has taken place so far</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 12.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 12_0.jpg" alt="" width="500" height="333" />[/url]</p>
<p>Chinese and Russian warships lined a single column appeared and began firing drills.</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 13.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 13_0.jpg" alt="" width="500" height="312" />[/url]</p>
<p>More ships sailing in single line.</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 6.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 6.jpg" alt="" width="500" height="318" />[/url]</p>
<p>Russian warships appeared.</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 7.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 7_0.jpg" alt="" width="500" height="333" />[/url]</p>
<p>Chinese and Russian warships lined up in a column appeared, ready for sea, air and underwater targets firing.</p>
<p>" width="501" height="334</p>
<p>Destroyer "Zhengzhou" , the supply ship "Qiandaohu"&nbsp; and destroyer "Ningbo"</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 8.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 8_0.jpg" alt="" width="500" height="295" />[/url]</p>
<p>Ship missile destroyer Harbin firing guns</p>
<p>" width="502" height="340</p>
<p>Missile destroyer Ningbo.</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 9.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 9_0.jpg" alt="" width="500" height="337" />[/url]</p>
<p>Missile destroyer Ningbo fires its auxiliary ship-to-air gunds</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 10.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 10_0.jpg" alt="" />[/url]</p>
<p>Missile destroyer Ningbo firing its gun</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 11.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 11_0.jpg" alt="" width="499" height="319" />[/url]</p>
<p>Resulting rocket depth</p>
<p>" width="498" height="332</p>
<p>Russian cruiser Varyag, flagship of the Pacific fleet</p>
<p>" width="498" height="332</p>
<p>Russian warship Admiral Panteleev</p>
<p>" width="504" height="335</p>
<p>Varyag again, with Ka-27 helicopter in background</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill_0.jpg" alt="" width="500" height="339" />[/url]</p>
<p>Liuzhou ship missile frigate conducting real fire drill. At 8:00 on the 24th of May, the first surface ship fleet ship missile destroyer Ningbo, again sounding the alarm combat exercises, joint anti-submarine exercises in full swing. The formation was composed of three warships conducting the submarine search.</p>
<p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 0.5.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/05/Russia China drill 0.5_0.jpg" alt="" width="500" height="339" />[/url]</p>
<p>The Zhengzhou missile destroyer first discovered the "enemy" submarines, reported the fleet command, guiding Russia "Admiral Panteleyev" large anti-submarine ship-borne helicopters sent successfully implemented on the target submarine attack.</p></html>
« Last Edit: May 24, 2014, 05:59:12 PM by RE »
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Russia-China Gas Deal: Financial Psychological Warfare?
« Reply #8 on: June 02, 2014, 01:11:57 AM »

The Sino-Russian Gas Deal: Psychological Warfare in Financial Markets


By Mahdi Darius Nazemroaya
Global Research, June 01, 2014
Mint Press News
Region: Asia, Russia and FSU
Theme: Global Economy

A natural gas deal between Russia and China was in the works for a long time, so why all the fuss over its unveiling?

One has to look beyond the headlines when considering world events. The ballyhoo that is made of many of these events is either newspeak or grossly disjointed by narrow-sighted interpretations. The announcement of the mega energy deal for just over 36.8 billion cubic meters (1.3 trillion cubic feet) of natural gas reached between the Russian Federation and the People’s Republic of China on May 21 is just one example of this.

The natural gas deal struck between Beijing and Moscow does not signal anything new or a shift in Russian economic policies and ties with China, but it’s being touted as such.

In one way or another, most news reports about the energy deal are distorting the nature of the Sino-Russian energy agreement and highlighting this particular deal in purely political terms. The gas deal has actually been — excuse the pun — in the pipeline for quite some time, as Beijing and Moscow have talked about and negotiated some sort of long-term gas export-import formula for about 10 years. Anyone that has been following these important negotiations would know this and immediately recognize the sensationalist and distorted nature of the current reporting on the gas agreement.

Vladimir Putin, Xi Jinping, Alexei Miller, Zhou Jiping

Russia’s President Vladimir Putin, background left, and China’s President Xi Jinping, background right, smile during signing ceremony in Shanghai, China. (AP/RIA Novosti, Alexei Druzhinin, Presidential Press Service)

Pundits and media outlets hostile to Moscow are billing the agreement as a sign that Russia plans on tightening the screws on the energy flow to the European Union. They are using this conjecture to argue for a diversification of energy sources to the EU, encourage EU leaders to rollback economic ties with Moscow, and promote the commencement of a U.S.-supported “fracking revolution” to exploit natural gas and oil reserves through the process of hydraulic fracturing.

On the other hand, pundits and media outlets which are overtly supportive of Moscow are portraying the deal between Gazprom and the China National Petroleum Corporation, or CNPC, as a move by the Kremlin to minimize its economic losses and divert its business Eastward since being confronted with economic sanctions and diplomatic disrespect by the so-called West over Ukraine and the Crimean Peninsula.
Rebranding an existing trend

In no uncertain terms, the Sino-Russian gas deal categorically does not mark the start of either a “looking East” policy or a “de-dollarization” policy. Nor is the strategic alliance between Russia and China just germinating as a result of the fallout from the Ukrainian crisis. Anything that makes it sound otherwise is sensationalism projected by media sources and uninformed pundits that overlook the actual facts about Russia and China. Instead, on the part of these outlets and pundits, there is either a deficit in a comprehensive understanding in their reporting of the news and in their analyses of the events shaping the world, or they are trying to frame events through a lens that suits present-day political interests.

In any case, there is nothing new, at all. First, nothing new has been signaled by the deal between Gazprom and CNPC. Second, Russia and China became strategic partners when their leaders announced that they would oppose Washington’s dreams for a unipolar world after the United States and NATO attacked the Federal Republic of Yugoslavia in 1999.

The natural gas deal itself is part of an existing trend and a process that has been well underway for several years. In reality, the Russian Federation has embarked on a path of increasing trade with Asia for over a decade now, and both Moscow and its Chinese partners announced their decisions to embark on the avenue of de-dollarization by trading in local currencies close to a decade ago. In 2007, the governments of China and Russia initiated the framework for the creation of a working group to de-dollarize trade in their bilateral trade transactions through a formal agreement. In 2008, when Vladimir Putin was serving as the prime minister of Russia, he and his Chinese counterpart, then-Premier Wen Jiabao, were even engaged in the process. Both Beijing and Moscow also have similar agreements with their other Eurasian partners.

The natural gas agreement announced in Shanghai was really put together by technocratic negotiators. It is the work of years of sturdy negotiations — not an agreement that was made or concluded in the matter of a few months. Nor was the Sino-Russian deal something that was initiated as an effort on the part of the Russians to circumvent the economic sanctions steadily being ratcheted up against their economy by Washington and its cohorts.

Regardless of the tensions between Moscow and Washington over the simmering crisis in Ukraine, the deal, which is valued at $400 billion, was going to be made and signed one way or another.

Because of the economic sanctions against the Russian Federation, the unveiling of the deal last week during the Conference on Interaction and Confidence Building Measures in Asia summit in Shanghai has been politically stage-managed and highlighted, with careful consideration paid to the ramifications its announcement would make.

While the deal has been largely technocratic, there is a strong possibility that the Russians could have made a change to the purchase price that they were asking from the Chinese, and both sides could have accelerated the finalization of the agreement on the basis of political considerations. In other words, the economic war that has been unleashed against the Russian Federation may have hastened the deal and introduced political variables or aims to what has largely been a technocratic affair for both sides.
The gas deal and psychological warfare

“Investor confidence” is the key phrase here. What the gas deal definitely marks is that China has Russia’s back in a psychological war over investor confidence. The announcement of the agreement in Shanghai is largely a Sino-Russian retort to the U.S. and its allies, which are strategically trying to undermine investor confidence in the Russian economy.

In her May 8 testimony to the Foreign Affairs Committee of the U.S. House of Representatives, Victoria Nuland, assistant secretary of state for European and Eurasian affairs, asserted the following from a prepared statement:

    “The Russian economy is already buckling under the pressure of these internationally imposed sanctions. Its credit rating is hovering just above ‘junk’ status. $51 billion in capital has fled Russia since the beginning of the year, approaching the $60 billion figure for all of 2013. Russian bonds are trading at higher yields than any debt in Europe. As the ruble has fallen, the Central Bank has raised interest rates twice and has spent close to $30 billion [US] from its reserves since early March to stabilize it.”

Although Nuland went out of her way to conclude that the Russian people were not the target of, but the collateral damage from the imposed sanctions, it was very clear at the hearing that the main targets of the sanctions were, in fact, the Russian people. During the hearing, Rep. Albio Sires candidly made it clear that the Russian people “have to feel” the sanctions and asked for evidence from the Obama administration that the Russian people were suffering from the punishment of economic sanctions. U.S. State Department and Treasury representatives at the hearing, in turn, made it clear to Sires that the Russian people “will begin to feel” the punishment of economic sanctions with the trade between Russia and the EU being damaged, costs of borrowing going up and inflation expanding.

Nuland’s sentiments were echoed by Daniel Glaser, assistant secretary for terrorist financing in the Treasury Department, at the hearing on Capitol Hill. Both made it clear that the U.S. government is working to impose economic costs against the Russians that will snowball gradually. Glaser also clarified that it takes time for the damage to the economy to be reflected politically — meaning that the creation of an economic recession in Russia is aimed at making the Russian people so miserable that they will demand that the Kremlin surrender to Washington’s demands.

Glaser testified thus:

    “Sanctions, and the uncertainty they have created in the market, are having an impact, directly and indirectly, on Russia’s weak economy. And as sanctions increase, the costs will not only increase, but Russia’s ability to mitigate costs will diminish. Already, market analysts are forecasting significant continued outflows of both foreign and domestic capital and a further weakening of growth prospects for the year. The IMF has downgraded Russia’s growth outlook to 0.2 percent this year, and suggested that recession is not out of the question.”

He also made the following points:

● Since the start of 2014, the Russian Federation’s stock market has declined by over 13 percent;

● Heavy capital outflows have started to hurt the Russian economy and have resulted in Standard and Poor’s Financial Services downgrading Russia’s sovereign credit to BBB- — one level above what S&P calls “junk status;”

● Investors now want higher returns from Russian bonds due to the higher risks involved with investing with Russia;

● The Central Bank of the Russian Federation has spent nearly $50 billion, or 10 percent of its total foreign exchange reserves, to defend the value of Russia’s national currency from the financial warfare that Washington has unleashed;

● Despite substantial market intervention by the Russian Central Bank and an interest rate hike, the Russian national currency has depreciated by almost 8 percent since the start of 2014.

What Glaser did not say is that the supposedly bad S&P BBB- status that the Russian Federation’s economy has been reduced to is the same rating as those of two of Russia’s BRICS partners, Brazil and India, which do not seem to be in a state of dread or panic at all. Nor did he mention that S&P’s analyses, like economics itself, are not free of political interests and manipulation. The emphasis on the rating being “one notch above junk status” is pure theatrics aimed at creating alarm and fear.

Washington’s strategy against Moscow clearly involves strategies to create general market uncertainty that will destabilize Russia or, as Nuland put it, “create market conditions that will make Russia increasingly vulnerable to financial” assault. A psychological war to undermine confidence in the Russian Federation’s economy using financial manipulation has been launched, and the timing of the announcement of the Sino-Russian natural gas deal is tied to this.

Although the deal was already in the works and independent of the events in Ukraine, and though Russia is turning to China for economic backing against the economic warfare it faces, the energy deal’s very public unveiling in Shanghai was a counter-move to Washington’s actions against Russia. Not only does the Sino-Russian gas deal indicate that Russia has economic alternatives, its announcement served as a psychological jab aimed at offsetting the financial assaults of the U.S. government on Russia that are aimed at undermining investor confidence in the Russian economy. What the gas deal is supposed to do is secure confidence in the Russian economy by showing that it will have large earnings for the next 30 years.
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