16-Nov-17 – Senator Mark Warner from Virginia is the congressional spearhead for the fictitious story of Russian interference in the 2016 election

Senator MarkWarner is well aware of the rising social tensions in the United States which form the backdrop and impetus to the anti-Russia campaign. In May 2016, speaking before an audience of business and political elites at the Milken Institute’s 2016 Global Conference, Warner warned: “If you don’t think the frustration of Americans with our overall system—not just our political system, but our business system, our tax code—is at the boiling point, then Katy bar the door! The walls that are gonna have to be built, may not be at borders, they may be around neighborhoods the way they are in many Third World countries around the world.

http://russia-insider.com/en/democrat-mark-warner-auditions-role-grand-inquisitor-anti-russia-campaign/ri21594

12-Nov-17 – Iraq War Deaths Exceed Vietnam War Numbers

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Department of Veterans Affairs Reports 73 Thousand U.S. Gulf War Deaths

By Gary Vey for viewzone

More Gulf War Veterans have died than Vietnam Veterans. This probably is news to you. But the truth has been hidden by a technicality. So here is the truth.

The casualties in the Vietnam War were pretty simple to understand. If a soldier was dead from his combat tour, he was a war casualty. There are 58,195 names recorded on the Vietnam War Memorial in Washington, DC.

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Some of these brave men died in the jungles of Vietnam while others died in Medivac units or hospitals in Japan and America. A dead soldier can surrender his life anywhere in service to his country. It really doesn’t matter where this happens. The location of a soldier’s death in no way colors his sacrifice.

But something odd has happened with the Iraq War. The government, under the Bush administration, did something dishonest that resulted in a lie that’s persisted since the war began — and continues to this very day. They decided to report the war deaths in Iraq only if the soldier died with his boots on the ground in a combat situation.

What’s the difference, you might ask?

The combat in Vietnam was in rural areas, far removed from medical treatment centers. Injured soldiers were treated by a Medic. Most died at the scene of the battle before they could be evacuated. Many died on route or were declared dead at the medical treatment facilities. The situation in Iraq is vastly different.

Fighting in Iraq is mainly in urban areas. Soldiers who are injured are quickly evacuated with armored personnel carriers or helicopters. It’s a much more efficient system than what was possible in Vietnam, but for those that are seriously injured it means that death is more likely to happen while they are in transit or at the treatment facility.

Under the new reporting system, deaths that happen en route or post evacuation are not counted as combat deaths. This is why the number seems unusually low — a little over four thousand as of 2009.

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The actual figures have been hidden from the American public just like the returning, flag draped coffins were censored from the press. But the figures are now available and we can only hope that the American people will be outraged when they learn how they have been misled.

According to The Department of Veterans Affairs, as of May 2007, reports in the Gulf War Veterans Information System reveal these startling numbers:

Total U.S. Military Gulf War Deaths: 73,846
* Deaths amongst Deployed: 17,847
* Deaths amongst Non-Deployed: 55,999

The stastics for non-lethal injuries are likewise staggering:

Total "Undiagnosed Illness" (UDX) claims: 14,874
Total number of disability claims filed: 1,620,906
* Disability Claims amongst Deployed: 407,911
* Disability Claims amongst Non-Deployed: 1,212,995

Percentage of combat troops that filed Disability Claims 36%

I know you probably will think this is another conspiracy theory — I did when I first heard about this — so please read the original report for yourself. [Source: http://www1.va.gov/rac-gwvi/docs/GWVIS_May2007.pdf Note: Sometimes this link is not active so we have posted the pdf file on viewzone 393 kb.]

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More deaths and mysery to follow…

More than 1,820 tons of radioactive nuclear waste (i.e. depleted uranium) were exploded in Iraq alone in the form of armor piercing rounds and bunker busters. This represents the worlds worst man made ecological disaster ever. 64 kg of uranium were used in the Hiroshima bomb. The U.S. Iraq Nuclear Holocaust represents far more than fourteen thousand Hiroshima’s.

The nuclear waste the U.S. has exploded in the Middle East will continue killing for hundreds of years! That’s how long these particles of radioactive dust will continue to blow around, get lodged in someone’s lungs or be ingested. Scientists calculate that there is now enough radioactive material in Iraq to wipe out a third of the world’s current population.

While we never found any WMD’s (Weapons of Mass Destruction) in Iraq, we sure made up for it by importing our own! Birth defects among Iraqi newborns are up a whopping 600% from before the war. The defects are typical of the kind produced by exposure to radioactive poisons. And these injuries are happening to the civilian population of Iraq — the people we were supposedly "liberating."

This writer happened to visit Iraq back in 2001, at the time Saddam Hussein was still in power. The world’s nations were imposing an embargo on all imports in an attempt to punish the nation for invading the neighboring nation of Kuwait. I remember the good people of Iraq who treated me with kindness and hospitality — even while knowing I was an American. Despite the embargo on such vital things as medicine and hospital supplies, the markets were thriving with local produce. Children freely played in the streets and there was laughter. To see what this war has done to Iraq is especially painful and speaks loudly of the immorality that has caused these innocent people to suffer. And now, to see that this same immorality extends to the American people in the form of deception and lies crosses the line.

I live in a small town in New England. We have known of many casualties from Iraq — too many. Yet the numbers being reported in the media make it seem that this is a rare occurrence. Just over 4,000? How can this be? In short — it’s NOT.

What will it take to awaken people and make them angry enough to hold our government responsible for these lies? A democracy is only good if its people are well informed. How else can we make decisions about what’s best for us? If we are fed s*** and kept in the dark we truly are a nation of mushrooms.

Before I end this I want to say a big THANK YOU to all the vets who put their country and its people before themselves. We are proud of you and believe that you put your lives on the line for something a little better than what we are currently experiencing with our government. Thanks to you we’re still a democracy. So it’s up to us, the people you fought for, to make your effort worthwhile.

What do you think about this? Do you care

11-Nov-17 – Paul Craig Roberts on Roosevelt’s support for Social ism

Authored by Paul Craig Roberts,

Once upon a time the leftwing of the political spectrum was committed to the advancement of the working class and its protection from political and economic abuse by the owners of the means of production. Consequently, the leftwing was politically potent and reached a pinnacle of power when Henry Wallace was selected by Franklin D. Roosevelt as his third term vice president. Despite his wealth from the company he founded, Wallace stood for the farmer and the working class.

The Democratic Party power brokers refused to accept Wallace as the vice president candidate until FDR told them he otherwise would decline the presidential nomination.

Wallace was Roosevelt’s and the Democratic voters’ choice for vice president in Roosevelt’s fourth term. But Wallace’s progressive views had alienated the party bosses, Wall Street bankers, anti-union businesses, and America’s British and French allies with his support for labor unions, women, minorities, and victims of colonialism. When he called for the emancipation of colonial subjects and for working with the Soviet Union in the cause of peace and working class justice, he sealed his fate. Despite a Gallup Poll released during the Democratic national convention in July 1944 showing that Wallace was the favorite with 65% of the vote and Roosevelt’s announcement that if he were a delegate, he would choose Wallace, the party bosses chose Harry Truman who was preferred by only 2% of Democratic voters.

This was a turning point in US politics and world history. If the people had prevailed over the corrupt Democratic party bosses, Wallace instead of Truman would have become the first postwar US president. Most likely, there would have been no Cold War, no Korean War, no Vietnam War, no NATO, and no decades of mutual distrust between the US and Russia that today threatens life on earth.

Moreover, in place of today’s highly skewed income and wealth distribution toward the very rich fraction of one percent, there would be an equitable distribution that would support a strong consumer market instead of declining real incomes and debt expansion that threatens economic growth, business profits, employment, and high equity values.

Oliver Stone and Peter Kuznick in their best seller, The Untold History of the United States, describe the Clinton-style Democratic Party corruption that was used to block Wallace as the vice presidential candidate:

Party insiders made sure they had an iron grip on the convention. Yet the rank-and-file Democrats would not go quietly, staging a rebellion on the convention floor. The groundswell of support for Wallace among the delegates and attendees was so great that despite the bosses’ stranglehold over the proceedings and strong-arm tactics, Wallace’s supporters almost carried the day as an uproarious demonstration for Wallace broke out on the convention floor. In the midst of the demonstration, Florida Senator Claude Pepper realized that if he got Wallace’s name into nomination that night, Wallace would sweep the convention. Pepper fought his way through the crowd to get within five feet of the microphone when the nearly hysterical Mayor Kelly, purporting that there was a fire hazard, got the Chairman, Senator Samuel Jackson, to adjourn the proceedings. Had Pepper made it five more feet and nominated Wallace before the bosses forced adjournment against the will of the delegates, Wallace would have become president in 1945 and the course of history would have been dramatically altered.”

The next day Senator Jackson apologized to Senator Pepper:

“I had strict instructions from Hannegan not to let the convention nominate the vice president last night. So I had to adjourn the convention in your face.”

Thus was the power of interest groups to prevail over democracy 73 years ago when there was still a press that would on occasion speak for the people. Dave Kranzler and Brett Arends describe the power of the interests and the degeneration of the media today:

“It’s been my view since circa 2003 that [the oligarchs] would hold up the system with printed money and credit creation until every last crumb of middle class wealth was swept off the table and into the pockets of those in position to do the sweeping.

“Obama delivered nothing on his original campaign promises. He was going to “reform” Wall Street. But the concept of Too Big To Fail was legislated under Obama, and Wall Street indictments/prosecutions fell precipitously from the previous Administration.

“Obama left office and entered into a world of high six-figure Wall Street-sponsored speaking engagements and to live in a $10 million estate in Hawaii paid for by the Chicago elite (Pritzkers etc). Now Obama will be paid off $10’s of millions for his role in aiding and abetting the transfer of trillions from the middle class to the elitists. Look at Bill and Hillary – need I say more? Trump has reversed course on his campaign promises twice as quickly as Obama. Almost overnight after his inauguration, Trump became a war-mongering hand-puppet for the Deep State’s ‘Swamp’ creatures.

“The media has been willingly complicit in this big charade. Much to my complete shock, Brett Arends has published a commentary on Marketwatch which, from an insider, warns about the media:

‘Do you want to know what kind of person makes the best reporter? I’ll tell you. A borderline sociopath. Someone smart, inquisitive, stubborn, disorganized, chaotic, and in a perpetual state of simmering rage at the failings of the world. Once upon a time you saw people like this in every newsroom in the country. They often had chaotic personal lives and they died early of cirrhosis or a heart attack. But they were tough, angry SOBs and they produced great stories.

‘Do you want to know what kind of people get promoted and succeed in the modern news organization? Social climbers. Networkers. People who are gregarious, who “buy in” to the dominant consensus, who go along to get along and don’t ask too many really awkward questions. They are flexible, well-organized, and happy with life. And it shows.’

“This is why so many reporters are happy to report that U.S. corporations are in great financial shape, even though they also have surging debts, or that a ‘diversified portfolio’ of stocks and bonds will protect you in all circumstances, even though this is not the case, or that defense budgets are being slashed, when they aren’t, or that the U.S. economy has massively outperformed rivals such as Japan, when on key metrics it hasn’t, or that companies must pay CEOs gazillions of dollars to secure the top ‘talent’ when they don’t need to do any such thing and such pay is just plunder.”

The American leftwing has been transmogrified. The left, which formerly stood for “peace and bread,” today stands for Identity Politics and war. The working class has been redefined as “the Trump deplorables” and splintered into separate “victim groups”—women, racial minorities, homosexuals, transgendered. The oppressors are no longer oligarchs who own the means of production. The oppressor is the sexist, misogynist, homophobic, heterosexual, fascist, white supremacist male working class.

The rise of Identity Politics has brought with it politically controlled speech. Primarily white people, especially heterosexual white males, are subject to this control. The limits on their free speech are growing ever more severe, and no one has to be concerned about white heterosexual males being offended by offensive or threatening speech. White males can be called anything and they are.

By splintering the working class into victim groups, Identity Politics has made opposition to war and income inequality impossible. In place of unity, Identity Politics has dismembered the working class and directed its energies into internal disputes. We now have fistfights in London’s Hyde Park between radical feminists and transgendered activists.

Diana Johnstone has shown how Antifa, the violent arm of Identity Politics, has turned the leftwing into a suppressor of free speech and a supporter of war.

A splintered society cannot recognize or resist its oppression by a ruling elite.

Feminism turns wives and husbands from complements into rivals. Indeed, Sarah Knapton, science editor for the London Telegraph, reports on the rise of “bromance,” strong emotional relationships between heterosexual men. Feminist attacks on men and political correctness have reduced millennial heterosexual males’ relationships with women to sex only. Their emotional commitments are to their male friends. This doesn’t seem like a victory for women.

The cultivated hyper-sensitivity of political correctness, which arises from Identity Politics, is destroying language, history, and free speech. The UK government opposes the term “pregnant woman” because it excludes and offends transgender people.

The British Medical Association has issued guidelines that doctors should not use the word “mother” to refer to a pregnant woman as the term could offend transgender people. Instead, the term “pregnant people” should be used.This has led to more conflict between feminists and the transgendered. Feminists see it as a plot to make “women” unmentionable. British National Health Service doctors are no longer to use the term “expectant mother” because it is “non-inclusive.”

Identity Politics, together with the rising American police state, have just about destroyed the First Amendment. A professor at one of America’s research universities told me that he was dressed down by a dean because he used the word “girls” in class and a woman was offended. Google fired one of its senior software engineers because he wrote a memo that men and women have different traits that make them suitable for different kinds of jobs. This statement of ordinary common sense got the engineer fired for “gender stereotyping.”

Economic commentator Marc Faber was removed from the board of the investment company, Sprott, and banned from CNBC and the Fox Business Network for expressing his views against monument removal and that white Americans have done a better job of building an economy than black Zimbabwe.

Free speech is not supposed to be limited to words that give no offense to anyone. What this definition of free speech does is to eliminate all criticism of wrong or criminal activity and all dissent against war, police brutality, and political, social, and economic programs. In other words, political correctness silences a population. Silencing is permitted regardless of whether the “offensive” statement is true or false. Just expressing a truth, as the Google engineer did, can destroy a person’s career. There is no freedom in such a system. As George Orwell said, “If liberty means anything at all, it means the right to tell people what they do not want to hear.”

Universities themselves, traditionally dependent on free speech, are now themselves banning free speech. Controversial speakers likely to offend some “victim group” are simply prevented from speaking at universities. For example, speakers in favor of multiculturalism are welcomed even though the speech might offend those who believe the US is a white Christian society, but a white supremacist, whose speech at the University of Florida could not be blocked, caused the Florida governor to declare a state of emergency.

It seems simple enough that if a person doesn’t want to be offended by a speaker, don’t go to the speech. On the other hand, if a person wants to learn what the opposition is up to, why miss the chance? In the end, political correctness is about regulating what can be said and controlling explanations, not about protecting the hyper-sensitive from hurtful words.

What Identity Politics and political correctness are doing is demonizing white people and heterosexual males. Only white people are racists. Only heterosexual males – essentially white gentile ones except for Bill Cosby and Harvey Weinstein – commit sexual violence. As David Rosen writes in CounterPunch, “Male sexual violence: as American as cherry pie.”

Rosen defines sexual abuse as “a form of sexual terror, an all-American male sport” that is “as old as the country.” In other words, all or most American males practice sexual terror on women. We have reached the point where a wife who gets angry at her husband can accuse him of rape and have him imprisoned, a far departure from the days when husband and wife were legally regarded as one and neither could testify against the other. When the most intimate personal relationship is subject to outside intervention, how does marriage prosper?

It doesn’t. According to the American Psychological Association, “about 40 to 50 percent of married couples in the United States divorce. The divorce rate for subsequent marriages is even higher.”

If husband and wife, mother and father, can’t stay together, how does society stay together?

How does society stay together when Identity Politics teaches hate and inflames social divisiveness?

How does society stay together when thugs claiming to be offended offend others by destroying historical monuments that are associated with the memory or identity of others?

How does society stay together when its history is erased, its schools, streets, and public buildings are renamed?

As George Orwell said, “The most effective way to destroy people is to deny and obliterate their own understanding of their history.” The next monuments to be removed are those of the Founding Fathers, racists all who adopted a Constitution that permitted slavery, an inherited institution that they had no power to reform.

In the United States history is being rewritten and language corrupted in order to foster hatred of white “oppressors,” especially white heterosexual males.

Little wonder Russia responds diplomatically to Washington’s aggression. No need to reply in kind when an enemy is destroying itself.

10-Nov-17 – Corporate offices and call centers with almost 100% unlicensed moms

By Endgame Napoleon

I remember a ZH article from a long time ago, describing the problem with too many unsecured loans in China and a so-called expansion of American financial services jobs in places like credit processing to investigate those loans. It seems like Chinese speakers would get those jobs, but maybe not.

It was probably those financial “activities” jobs that raised the job numbers slightly one month for back-office mommas in $10-per-hour jobs like credit processing. The low-wage daycare worker job numbers arose in alignment with those hires, as financial services jobs are dominated by near-100%, non-college-educated, frequently absentee mom workers in the state where I live.

I do not see how this will change the job scene in the USA very much, and that is what concerns Deplorables about trade with China: JOBS, not stock market gains or ownership opportunities for the rich.

But maybe, the Chinese will hire a [lot] of foreign workers, not just a few highly paid experts in that field, married to other highly paid people, which will change the dynamics of the employment scene here very little.

As for the rich and their investments in foreign countries, it seems like ownership of unsecured loan bundles would be a recipe for another 2008, even if “bundles” of married, Chinese homebuyers are better bets than bundles of American, single-mom homebuyers with help from government to purchase homes they cannot afford due to their womb productivity.

During the housing collapse, which was close to a decade ago now, it was also made clear that Asian life insurance policies were a big part of the business of one of the bailed-out companies.

Interesting.

Knowing plenty of licensed insurance agents who struggle to cover rent here in the USA, I find that pretty interesting.

Without a large and responsible middle class in the USA to pay premiums regularly, licensed agents working in pyramid sales arrangements on straight commission, paying twice-as-high SS tax due to 1099 employment, with expenses for leads and other things, also must weather more cancellations than in past eras, when the mostly married, middle-class households in the USA were a much more stable clientele.

Now, we have a 62% out-of-wedlock birth rate and mommas, getting more pay-per-birth freebies from government than ever before in history—free rent, free food, monthly cash assistance, electricity assistance and child-tax-credit checks that, at the $6,269 max, equal four months of full-time wages in many insurance jobs. But they still do not provide a stable market for agents.

They would rather spend their $6,269 “child” tax credit checks on trips to Florida with their latest boyfriend than a life insurance policy to protect their kids. Although the few married households have two incomes to cover major expenses, like rent, they, too, are not the market they once were due to the same type of parent-pampering allocation of available funds.

Agents who actually made a decent amount of income for all of that effort and expense sold most of their policies in the pre-fake-feminist era, when jobs were more stable due to less humans with unearned income for womb productivity chasing jobs and driving down wages, to people who maintained them over time, possibly because parents had a greater commitment to their children when they made more sacrifices for them, rather than being showered with welfare, tax-code welfare and workplace privileges for sex and reproduction.

As the middle class decreased to a narrow sliver of the US population, shipped off to China and other countries, more policies cancelled. If you have ever worked in insurance, you know that it is often the first thing people drop when they experience a job loss or a pay downgrade.

These giant companies make straight-commission agents who also have zero company-provided benefits pay chargebacks when policies cancel.

Most of the companies staff corporate offices and call centers with almost 100% unlicensed moms, with one or two licensed signers. They pay the mommas between $9 ad $11 per hour, and many talk about receiving EBT free food, reduced-cost housing and child tax credits up to $6,269 that bridge the gap between low pay and living expenses for unlicensed moms selling insurance. Other mom-gang employees have spousal income or child support that covers their major household bills.

Insurance management talks openly about locating in areas where many such unlicensed moms, willing to work for beans due to their unearned income for womb productivity, live, and they indulge them with lots of excused absenteeism and frequent mom-bonding activities, like Halloween dress-up days and baby-mommy-look-alike-bulletin-board-decorating contests.

In other financial services, like credit processing, all the distraction of mommy-baby hoopla and absentee employees likely does not serve the interests of customers, seeking loan refinances, etc.

Meanwhile, agents who were told that licensing was a legal requirement for insurance sales pay recurring license renewal fees and take state-required test after test after test to get and maintain these licenses, while mom-gang workers sell insurance without licenses in many cases, when they are not absentee due to all of the back-watching gangs in “financial activities” offices.

On the sales side, with an upsurge in foreign business, I wonder if any of that will change to the benefit of those who jump through all those hoops to maintain the so-called legally required licenses.

Doubt it. It probably just gives the rich another place to invest their money, with a trickle down of jobs to the same ole groups.

9-Nov-17 – The Intrigue At The Heart Of The Beijing-Riyadh-Washington Triangle

Authored by Valentin Katasonov via The Strategic Culture Foundation,

Saudi Aramco (the Saudi Arabian Oil Company) is the world’s largest petroleum business. It owns more than 100 oil and gas fields in Saudi Arabia with reserves of at least 264 billion barrels of oil, which is estimated to be approximately one-fourth of the world’s known reserves of this raw material. The company’s production figures do not give the full picture, as data exists only for a few years. But as an example, in 2013 Saudi Aramco produced 3.4 billion barrels of crude oil. Analysts calculate that every year the Saudi company extracts about twice as much oil and gas, in terms of barrels of oil equivalent, as the largest US company ExxonMobil. Interestingly, Saudi Aramco never appears in the rankings of the world’s largest oil producers, since it does not publish financial information such as profit, sales, assets, or market capitalization. Therefore America’s ExxonMobil and Chevron, China’s Sinopec and PetroChina, the Anglo-Dutch company Royal Dutch Shell, Great Britain’s BP, and France’s Total top the rankings. But everyone knows perfectly well that these leaders in the global oil industry are mere dwarfs compared to Saudi Aramco.

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Saudi Aramco’s management set off a real bomb in early 2016 when they announced their plans to privatize part of the company through a stock market IPO. The proposal was to sell shares in Saudi Aramco equal to about 5% of the company. But an estimate of the company’s potential market price is needed in order to understand how much this would be in absolute terms. Almost the next day after the announcement of the potential sale of part of the company (in January 2016), the global media published a stunning evaluation by the independent oil analyst Mohammad Al Sabban, a former senior adviser to the Saudi Arabian oil ministry. He estimated the company’s worth at $10,000,000,000,000 (ten trillion USD). For comparison I should add that in 2016 the largest US oil company, ExxonMobil, barely exceeded $350 billion in share capital. And yes, It’s true that later on some of the hype in the assessments died down and more rational numbers were cited, most often $2 trillion. This meant that Saudi Arabia would be able to rake in approximately $100 billion from the sale of 5% of the company. But the company’s biggest trump card isn’t even the current record levels of oil production, but rather the reserves of hydrocarbon raw materials at Saudi Aramco’s disposal. And that’s a number that none of the companies named in the rankings of the global oil industry can even begin to approach.

At present, Riyadh adjusts and verifies the data on the hydrocarbon reserves in the fields owned by Saudi Aramco.Financial reports are painstakingly drafted in the needed formats for a public offering of shares. The company is being restructured to optimize the way it is organized and managed. And finally, a crucial step was taken to lower the taxes on the company’s profits. The traditional tax rate has been 90%, but this year it was set at 50%, which roughly corresponds to the level at which the leading Western oil companies are taxed. Lowering the tax rate raises dividends and makes the company a more attractive target for investment.

But beginning in early 2017, the estimates of Saudi Aramco’s market value have unexpectedly begun to decline. Appraisals began to surface that claimed the company’s share capital was only worth $1.5 trillion, then $1 trillion. The consulting firm Wood Mackenzie estimated Saudi Aramco’s worth at $400 billion overall, bringing it closer to US-based ExxonMobil. And suddenly Western consultants began talking about the need to “discount” the value of the Saudi company, since it is state-owned, and in the securities markets all government issues are by convention sold “at a discount.” They point out that although Saudi Aramco currently pays 50% of its profits in taxes, since the government owns the company anyway it could restore the 90% tax rate tomorrow with a simple stroke of the pen. There is also the fear that oil prices could be low for the next few years, and Saudi Aramco might not be able to generate big profits. But none of that can remotely explain why the valuations of the Saudi company have dropped so precipitously in the past year.

Analysts blame this on the pressure Washington is putting on Riyadh, for reasons that have as much to do with the currency market as the oil market. And the pressure coming from Washington is, in turn, a response to the pressure also being exerted on Riyadh by China, which wants to buy oil from Saudi Aramco in renminbi instead of dollars. China is currently the world’s biggest oil importer, knocking the US out of its former first-place position. China is also the Saudi oil industry’s biggest customer, and Beijing does not want to pay extra for that black gold using American currency. A number of oil exporters that sell to China have already partially or entirely transitioned to settling their accounts in renminbi. Topping that list are Nigeria and Iran. Russia has also recently begun to sell some oil to China for renminbi (although only small percentage as yet).

Saudi Arabia, however, is heavily dependent on the US and has thus far refused to settle its accounts in renminbi. And that rebuff is costing the country dearly: Beijing is gradually finding other suppliers to take Riyadh’s place. The Saudis used to be China’s biggest foreign supplier of oil, but recently Russia has squeezed them out for that number-one spot. If this continues, Saudi Aramco might lose its Chinese market altogether.

Riyadh now finds itself caught between a rock and a hard place. It’s hard to imagine what Saudi Arabia could be hit with from across the Atlantic, should it sell even one barrel of oil for Chinese currency. After all, that would be a direct challenge to the petrodollar, which was born right there in Saudi Arabia in the 1970s, midwifed by the negotiations between Henry Kissinger and King Faisal.

Washington has sternly warned Riyadh to refrain from any ill-considered move to replace the dollar with the renminbi in its transactions with China, lest other players in the oil market follow suit (oil might then be traded for rubles, rupees, rials, etc.) And tomorrow that epidemic of transitioning to national currencies could infect other commodity markets. Incidentally, this year Beijing will begin to trade oil futures priced in renminbi on its commodity exchanges and claims that this is only the first step.

Voices have already been heard within the US president’s entourage that suggest blocking the listing of Saudi Aramco shares on the New York Stock Exchange. Signs have emerged of an organized campaign to short-sell the Saudi oil company. In light of that development, Riyadh has announced that it will put off its share listing until a later date. But its problem isn’t going to go away – Saudi Arabia will still have to make a choice between the dollar and the renminbi.

Although Beijing is upping its pressure on Riyadh, it is also simultaneously offering to directly buy out 5% of Saudi Aramco, while allowing the Saudis to forgo the usual ritual of listing shares on Western stock markets. And China is prepared to shell out a “fair” price (about $100 billion). The Chinese government has already announced that it is forming a consortium of energy and finance companies, plus China’s sovereign wealth fund, in order to purchase a “chunk” of the Saudi company. The Chinese media reports that that consortium is ready to become a cornerstone investor in Saudi Aramco.

Beijing’s winning move in its chess game against Washington has neutralized the US threat to disrupt the sale of Saudi Aramco, while simultaneously pushing Riyadh toward a decision to transition Saudi oil sales to the renminbi.

And so the plot thickens inside the Beijing-Riyadh-Washington triangle of intrigue.

CEOoftheSOFA Nov 3, 2017 2:42 AM

Saudi Aramco is selling reserves that don’t exist:

It is well known that in 2011 Wikileaks reported that the Saudi Aramco oil reserves were overstated by as much as 40%. As reported in the Guardian, Sadad al Hussini, former Saudi Aramco exploration chief, stated that “recoverable reserves are overstated by 300 billion barrels (Bbbl)” Many other oil analysts concur with this view. Saudi Aramco disputes this statement and insists that recoverable reserves are much higher than the skeptics contend. This paper will attempt to explain, in laymen terms, the oil reserve situation in Saudi Arabia.

This information is now critical because Saudi Aramco has recently announced that they intend to sell a portion of the company in an IPO. Proven reserves are typically a significant source of value for an oil company, despite the Wall Street Journal article of 24 January, 2016 which stated “Saudi Arabia’s potential sale of shares in its state-owned oil giant wouldn’t include the kingdom’s oil reserves”. The Journal article also stated that the company would be “valued in the trillions of dollars”. The only way to achieve a value in the “trillions” would be to include the reserves, so it is necessary to ignore the fiction being peddled by the Wall Street Journal.

Reserves Calculation

Oil reserves are calculated by this simple equation:

Present Reserves = Initial Reserves – Production + Discoveries.

Initial Reserves

The last audited, published production and reserve calculation for Saudi Aramco was done in 1980 by BP. Production and reserve figures have been secret since then. BP calculated the proven recoverable reserves to be 260 billion barrels in 1980. This will use for the Initial Reserves. Saudi Aramco states that the current, proven, recoverable reserves are still 260 billion barrels.

Production

Figure 1, below, from the USEIA, lists the annual and total oil production from Saudi Arabia from 1980 to 2015. The production since 1980 totals 110 billion barrels.

Two of the three variables in the equation are now known with reasonable certainty:

Current Reserves = 260 – 110 + Discoveries

Discoveries

There has only been one significant oil discovery in Saudi Arabia since the 1960’s, the Hawtah Trend. The problem is that the primary producing formation, the “Arab D” formation, does not exist outside the immediate Gulf area.

Hawtah Trend

The Oil Drum reports that the only oil discovery in Saudi Arabia since the 1960’s is the Hawtah (Najd) Trend, discovered in 1988, which reportedly had an initial production rate of 400,000 barrels per day (BPD) from a group of nine small fields. Saudi Aramco added 30 billion barrels to their reserves in 1988 for the Hawtah Trend. It would take 2 centuries to produce 30 billion barrels at 400,000 BPD, and the field production had already declined by 50,000 BPD by the early 1990’s. Extrapolating this decline rate, I estimate the field had initial reserves of 5 billion barrels.

Other Reserve Additions

Other reported reserve additions are as follows (from World Oil Magazine):

Shaybah: Discovered in 1968 but was not brought online until 1998 at 500,000 BOPD. Production was increased to 750,000 BOPD in 2009. Reserves are reportedly 14 billion barrels. Using typical decline curves, I estimate the field has proven recoverable reserves of 2 billion barrels.

Khurais: The Khurais field was discovered in 1957 and shut down in 1961. The oil reservoir had little pressure and required water injection to initiate production. In 2009, water injection was initiated which increased production to 1.2 million BOPD. Aramco assigned 19.4 billion barrels of reserves to Khurais. Using a typical decline curve, I estimate the proven, recoverable reserves of this field to be 3 billion barrels.

Manifa: Discovered in 1957 but shut down almost immediately because the oil was extra heavy and contaminated with H2S and vanadium. The field was put on line in April 2013 and was reportedly producing 900,000 BOPD in 2014. Aramco states that the production rate will increase to 1.4 million BOPD. Aramco assigned 11 billion barrels of reserves to Manifa. Using a typical decline curve, and an initial production rate of 1.4 billion BOPD, I estimate that this field has proven, recoverable reserves of 8 billion barrels.

Technology Improvements

In 1988, Saudi Aramco increased their reserves by 70 Billion barrels for “technology improvements”, like horizontal drilling. The reserve number is suspect and politically motivated, according to the Oil Drum. Horizontal drilling in the KSA oil fields would only increase the short term production rate, not the reserves. It is more likely that the reserve increase was politically motivated since Aramco was negotiating with OPEC for an increased share of production. I estimate the reserve additions due to technology improvements to be zero.

All of my reserve estimates are very rough since there is very little public information available. However, I think my estimates are closer to reality than the numbers released by Aramco. Reserve additions since 1980 are therefore 5+2+3+8=18 billion barrels.

Remaining reserves for Aramco should therefore be in the neighborhood of:

Remaining reserves = 260 – 110 + 18 = 168 Billion barrels

Aramco still estimates the remaining proven, recoverable reserves to be 260 billion barrels, despite producing 110 billion barrels since 1980 and having few reserve additions. My rough estimate is therefore 35% less than the stated Aramco reserves. This is close to the reserve number reported by Wikileaks, who stated that reserves were overstated by 40%.

Production Rate

A number that is more important than reserves is the sustainable production rate. The sustainable production rate has a problem called “Ghawar”.

Ghawar Field

The Ghawar field was discovered in 1948, and is by far the largest oil field in the world and is 3 times the size of the second largest oil field in the world. The field has had a water production problem since the 1970’s and is nearing the end of its’ producing life.

The producing formation is a carbonate (limestone) called the “Arab D” formation, with a thickness of 250 feet. The formation is in the shape of an elongated dome with a length of 174 miles. Oil occupies the higher elevations of the dome. Salt water occupies the lower elevations. The field is underlain by an active aquifer which fills the lower elevations of the reservoir with water as the oil is produced from above. This helps to sustain the reservoir pressure. The Ghawar field has produced 5 million BOPD for decades and continues to produce 6% – 8% of the world’s oil production.

The Aramco engineers employed a unique method of injecting water into the aquifer along the periphery of the field during the primary production phase. Water injection rates are 8 million BWPD in Ghawar to sustain oil production of 5 million BOPD. A total of 12 million BWPD is injected into all Saudi oil fields in this manner to sustain reservoir pressure, according to the book, “Twilight In the Desert”.

Most Saudi oil fields were producing large volumes of water by the end of the 1970’s. The Aramco engineers began an aggressive recompletion program to reduce the water production. When a well starts producing water, the water has a tendency to “crowd out” the oil due to waters’ lower viscosity. Most of the producing wells had an “open-hole” completion, where there is no production casing across the producing formation. Aramco ran production casing into many wells and then perforated the upper levels of the oil reservoir in an effort to produce the oil without water. This resulted in water cuts being reduced only slightly, according to “Twilight in the Desert”.

In the 1990’s, the original vertical oil wells were abandoned and replaced by new horizontal wells. The new wells were drilled horizontally in the upper elevations of the oil reservoir, to keep the wells away from the encroaching aquifer.

Aramco engineers had published articles through the Society of Petroleum Engineers for decades, outlining the production problems and their remedies for controlling the problems. Each article in itself does not indicate a significant, country-wide problem. Matt Simmons was the first to read all the articles and piece together the puzzle of the Saudi Arabian oil fields. He realized that maintaining the oil production has been a constant struggle, over a period of decades, involving the deployment of substantial capital and the employment of state-of–the-art technology. This was covered in detail in the book “Twilight In the Desert”.

The Oil Drum also estimated a decade ago that the aquifer was beginning to encroach into the upper levels of the reservoir. When the water level reaches the horizontal wells, the individual wells will “water out” in a short period of time. As the water level works its’ way up to the upper elevations of the reservoir, the production rate will exhibit steep declines. It is of utmost importance to know the rate of decline that is expected, and when the decline will begin.

Ghawar Decline Rate

One way to estimate the production decline rate for Ghawar is to examine the decline rates for other similar fields. Oil fields completed in limestone formations tend to have higher decline rates than sandstone formations. Limestone tends to have a lot of fractures, which become super highways for water.

According to “Twilight in the Desert”, The Yibal field in neighboring Oman has the most in common with Ghawar. This carbonate reservoir also has an active aquifer, with additional water injected into the lower elevations, in the periphery of the field. When the original vertical wells began producing excessive water, the wells were abandoned and replaced with horizontal wells. Engineers were shocked at the steepness of the decline rates and had to substantially reduce the expected remaining reserves of the field. The annual decline rate from peak production is 22%.

Zero Hedge reported that the Haradh field in Saudi Arabia declined by 60% between 2006 and 2010. This decline rate is 20% per year.

If Ghawar declines at a rate of 22%, production declines could be similar to the table below:

Daily

Production

Year

BOPD

Current

5,000,000

1

3,900,000

2

3,042,000

3

2,372,760

4

1,850,753

In 4 years, 3.2 million BOPD of production will be lost, just from the Ghawar field. This problem will be replicated in many Saudi fields, and many others in the Arab Gulf area. There are no new oil fields in Saudi Arabia large enough to replace this production.

When will the production rate begin to decline?

If this were a conventional oil reservoir, this question could have been answered accurately in the 1960’s. The active aquifer complicates the reserves calculation, because the production rates and pressures have remained constant for decades. This is further complicated by the existence of the horizontal wells. If the wells were vertical, the increases in the water cuts could be extrapolated to the point where the well becomes uneconomic. When the water level reaches a horizontal well, production from that well will “water-out” completely in a short period of time. When the lower elevation horizontal wells start watering out, the water level will continue to rise and eventually water out the higher elevation wells. As the water level works its’ way up to the higher elevation wells, the field will experience steep production declines. One way to determine when this will happen is to drill observation wells to measure the water level. This data has to be input into a sophisticated computer reservoir model. Aramco has observation wells and a reservoir model that was developed in-house. Complicating the reserves calculation is the fact that field production data has been secret since 1982, as are the results of the computer model. This leaves us with having to make a guess.

The Oil Drum reported that there are indications that the level of the aquifer is starting to encroach into the upper levels of the reservoir but it’s anyone’s guess when the production rate will begin to decline. My hunch is that it is no longer a long term problem, it is now a short term to medium term problem. If the production rate begins to decline in 10 years, the remaining reserves for Ghawar would be in the range of 25 billion barrels and not the 70 billion estimated by the IEA.

Conclusions

·

There is ample evidence which indicates the Aramco oil reserves are significantly overstated.

·

Proven, recoverable oil reserves are closer to 168 billion barrels than the 260 billion barrels claimed by Saudi Aramco.

·

The sustainable production rate will decline rapidly when the level of aquifer in the Ghawar field approaches the higher elevations of the reservoir. It is not known when this will occur, but it is reasonable to assume that this is a short term to medium term problem.

·

In order to properly price an IPO, reserves must be audited by an independent engineering firm.

·

Individual investors should ignore the Wall Street Hype Machine that will be in overdrive if this IPO becomes a reality.

CEO of the Sofa

07-07-17 – We Need A New American (Social) Revolution

Authored by Charles Hugh Smith via OfTwoMinds blog,

The solution is a new decentralized way of living that bypasses the chokepoints of centralized political and financial power.

I’m going to tell a story here using charts–a story that leads to one conclusion: we need a New American Social Revolution–a peaceful revolution that transforms our understanding of the corrupt, destructive status quo we currently inhabit, an understanding that leads to a withdrawal of our consent of the governed and a national search for new social, political and economic structures that actually serve the interests of the entire citizenry rather than the interests of a self-serving parasitic elite.

Solutions abound outside the confines of the elite-controlled centralized status quo.

The story has three dynamics: energy, debt and money. (If charts leave you cold, just read the short descriptions of the dynamics.)

Here’s the happy story we’re told: economic growth no longer depends on rising energy consumption: our GDP can shoot to the stars while energy consumption continues moving higher at a modest rate of expansion.

GDP-energy.jpg

This chart contradicts the happy story that we can grow consumption to the sky using only a bit more energy every year.What the first chart doesn’t show is what we’ve used to grow the GDP–debt, i.e. borrowing from future earnings and future energy consumption.

energy-GDP7-17.jpg

My insightful colleague Lance Roberts of Real Investment Advice published this chart of total system leverage (i.e. the amount of debt piled on actual collateral) that shows leverage is climbing higher while GDP growth declines: the yield on increasing debt and leverage is diminishing rapidly.

GDP-debt-LanceR.png

Look at how debt in all sectors–household, corporate and government–has skyrocketed while GDP growth has been weak. Borrowing from future earnings and energy consumption only works when debt and leverage are low. Once the total cost of interest absorbs much of the national income, debt service chokes off growth.

debt-totals2.jpg

The rising tide of debt and financialization has eroded the share of the economy going to wages for decades. Simply put, financialization takes money out of the wage economy and funnels it to financial elites who are closest to central bank credit spigots.

GDP-wages8-15a.png

This reality is visible in measures of rising wealth inequality. The incomes of the bottom 90% have gone nowhere for 45+ years when adjusted for inflation. The financial elites have enjoyed a nearly 400% increase in income during the same time span.

income-disparity8-12.png

This chart, again courtesy of Lance Roberts, depicts how the bottom 90% has managed: by borrowing money to fill the gap between the rising cost of living and their stagnating real income. All that debt accrues interest, which flows to banks and the owners of the debt.

And we don’t “owe it to ourselves:” the vast majority of financial wealth such as debt (bonds, etc.) is held by the top 5% of households, and the vast majority of that concentrated wealth is owned by the top .5%.

Debt-Cost-Of-Living5-17.png

Here’s how the status quo has attempted to mask the destructive consequences of relying on massive expansions of debt to paper over our insolvency: rising home prices. As real incomes have gone nowhere and the debt loads on the average household have soared, the financial trick that makes it all right is to boost the price of homes so the owners experience a “wealth effect”: you’re not poorer, you’re richer–look at your expanding home equity.

home-prices4-17.png

That these sorts of credit-asset bubbles eventually pop is not mentioned. Once the asset bubbles pop, the illusion of wealth that can be drawn upon for decades to come vanishes.

The solution is a new decentralized way of living that bypasses the chokepoints of centralized political and financial power. Technologies enable such arrangements; now all we need is a social revolution in which we become aware that the dominance of a parasitic, self-serving elite class is not ordained; it is the output of the way we create and distribute currency at the top of the wealth-power pyramid rather than at the bottom, where people are actually working to improve their communities and households.

Why do we need a social rather than a political or economic revolution? Political and financial systems–including money–are social constructs. Political revolutions simply substitute one elite for another–Meet the new boss, same as the old boss.

The bedrock of systemic solutions is social revolution that re-aligns the social constructs of governance (politics), money and production / work / ownership (economics).

My book A Radically Beneficial World describes a DeGrowth Community Economy with full employment paid by a currency that’s distributed at the bottom of the wealth-power pyramid where useful, valuable work–the work we need to accomplish–actually gets done.

There are many proposals for a new way of living that isn’t exploitive and designed to enrich and empower parasitic elites at the expense of everyone else. We need to seek these systemic solutions, rather than tinker with worthless tweaks of broken, corrupt systems.

7-June-17 – Qatar may be Russia’s trump card to boost gas supplies to Europe

The world’s biggest liquefied natural gas (LNG) exporter Qatar is facing supply problems with the Saudi-led alliance isolating the country’s trade. This may help Russia on the European gas market.

Read more
LNG tanker © Haryadi Be / Global Look PressSaudi beef with Qatar may be about gas, not terrorism

Qatar’s tanker fleet is barred from using regional ports and anchorages, posing a threat to the country’s LNG supplies.

Traders are worried Saudi Arabia and allies would refuse to accept LNG shipments from Qatar, and that Egypt might even bar tankers carrying Qatari cargo from using the Suez Canal, despite Cairo’s obligation under an international agreement to allow the use of the waterway.

If LNG supplies are disrupted, Europe will have to buy more gas from Russia.

Gazprom is building new pipelines in Europe – Nord Stream-2 and Turkish Stream, but the Russian energy major is facing opposition on the continent.

The larger stumbling block is the Nord Stream extension, which will double the pipeline’s existing capacity to 110 billion cubic meters a year. The new pipeline, which bypasses Ukraine, will cover Germany’s and France’s combined annual consumption of gas. Poland is one of the fiercest Nord Stream opponents and has built an LNG terminal at the port of Swinoujscie.

Read more
CEO of Russia's state gas giant Gazprom Alexei Miller © Sergei KarpukhinGazprom CEO sees Russian dominance of European gas market

While Russia supplies about 10 billion cubic meters (bcm) a year of the country’s gas, the new Polish terminal has a capacity of 5 bcm which can be increased to 7.5 bcm.

Poland bought less than 10 percent of its gas from Qatar last year, but Polish authorities say the country wants to become a large seller of Qatari LNG in Europe.

According to GIIGNl Report 2017, Qatar exported 79.6 million tons of LNG last year, of which 52.7 went to Asia. Qatar delivered 17.9 million tons to Europe.

“Who can supply gas to Europe? Without Qatar, it is Norway, the United States, and Russia. Europeans will buy American gas for diversification. However, volumes are a question. American gas is not cheap. Norway is not cheap, either. Scandinavians need to open new projects to increase exports, and this is costly,”an expert in energy Igor Yushkov told Life.ru.

“This leaves Russia. Gazprom CEO Aleksey Miller says that Gazprom can supply another 150 billion cubic meters from the gas fields that have already been opened. Russia now exports 178 billion cubic meters. Russia could almost double its exports. The situation around Qatar plays into Gazprom’s hands,” he added.

6-June-17 – Trump Defies Corporate America

Baltimore, Maryland
June 6, 2017

Brian MaherDear Reader,

Many Americans hold a cartoonist’s view of the corporate titan.

They see him as a sort of Wild West cowboy… or an Ayn Rand oversoul cursing the heavy hand of government… as a fellow who pounds his drum for laissez faire.

Yet after Trump withdrew from the Paris climate accord and its bible of government regulations, who sobbed loudest?

The corporate titans.

From a New York Times editorial, bearing date of 1 June 2017:

In January, 630 businesses and investors — with names like DuPont, Hewlett-Packard and Pacific Gas and Electric — signed an open letter to then-President-elect Trump and Congress, calling on them to continue supporting low-carbon policies, investment in a low-carbon economy and American participation in the Paris agreement.

In fact, a “nearly united corporate front” took out full-page advertisements in the Times, the New York Post and The Wall Street Journal, all declaring for Paris.

And so the fierce corporate man of myth goes herding into the regulatory pens… willingly and happily.

This because Corporate America has discovered its soul… or at least its conscience.

That’s the impression they’d like to leave, anyway.

Elon Musk, CEO of Tesla, announced his piety by revealing he would no longer counsel Trump:

“Am departing presidential councils. Climate change is real. Leaving Paris is not good for America or the world.”

Elon Musk, CEO of Tesla, announced his piety by revealing he would no longer counsel Trump:
“Am departing presidential councils. Climate change is real. Leaving Paris is not good for America or the world.”

Alex Gorsky of Johnson & Johnson moans: “We have established science-based goals to decrease our carbon footprint and we remain committed to achieving them.”

Ah, but here, Wal-Mart president and CEO Doug McMillon gives the game away:

“Addressing climate change is a win-win: good for society and good for Wal-Mart.”

Key element: “Good for Wal-Mart.”

One eye fixes on society, that is… the other on the bottom line.

Which eye do you think Mr. McMillon favors… or the other gentlemen?

Cast to one side your opinion of climate change and consider this question:

Why is Corporate America so hot to be regulated?

Real America deserves a square answer.

Regulation saddles business with extra costs and saws into profits, after all.

And a study by National Economic Research Associates suggests that complying with Paris emissions targets could cost 2.7 million jobs by 2025.

Another study says Paris would have slashed U.S. GDP over $2.5 trillion by 2035.

According to our lights, the answer is this:

Corporate America embraced the Paris accord because it would have gained from it.

Regulation annoys the Johnson & Johnsons, Whirlpools and DuPonts.

But it’s an impossible burden for the striving upstart or the fellow on the middle rungs. They can’t afford it. So they can’t compete.

Regulation therefore builds protective moats around corporations. It pulls up the drawbridge on competitors. It repels invaders.

In nuce: corporations consider costly regulation a trade-off well worth the annoyance.

Economists have a term for it: “rent seeking.”

To cement our case, we summon the small businesses of America to the witness stand…

The New York Times:

The move… has opened up a fissure between smaller companies and some of the biggest names in business…

While multinational corporations such as Disney, Goldman Sachs and IBM have opposed the president’s decision to walk away from the international climate agreement, many small companies around the country were cheering him on, embracing the choice as a tough-minded business move that made good on Mr. Trump’s commitment to put America’s commercial interests first.

“This just heightens the divide between big business and small business,” testifies Jeffrey Korzenik, investment strategist for Fifth Third Bank. “They really have different worldviews.”

And so the prosecution rests…

Here at The Daily Reckoning, we have no heat against corporations as such.

And no one has ever accused us of hostility to capitalism… or to the shade of Adam Smith.

But we hold a violent prejudice against swindle… against fraud in all his forms… in brief, against crony capitalism itself.

We say stand business on its own two legs and let it rise or fall on its merit — let the winners take their cut and let the devil take the hindmost.

Or to return to our castle metaphor, drain the moat… pull down the drawbridge… and let society’s true innovators through the gates.

It might not necessarily be the American way… but it’s the honest way…

Regards,

Brian Maher
Managing Editor, The Daily Reckoning

Sent from my iPad

6-June-17 – West’s Russophobia Will be the Salvation of Russia, Orthodox Priest Says

Paul Goble

Staunton, June 6 – Now that Vladimir Putin has accused the West of "racist Russohobia," Father Aleksandr Shumsky says, the Kremlin leader is close to a clear recognition of the need to destroy "the Russophobic part of the Russian ruling elite." And if he does, the West’s Russophobia will prove the salvation of Russia.

In a Russkaya liniya commentary entitled "Thank the West for Russophobia!" the priest who is also an active member of the Russian Writers’ Union argues that Putin has approached this problem much in the same way that detective Columbo does in the television series by that name.

Like Columbo, Putin sometimes appears not to be fully cognizant of what is going on around him but then he focuses in a mistake by his opponents and gives an absolutely correct diagnosis and then takes action, Shumsy says. That is especially the case with the issue of Russophobia.

Not long ago, the priest continues, "the very word ‘Russian’ was under an unwritten ban and the use of the term ‘Russophobia’ in general was considered a criminal act." Indeed, he suggests, "if the prime minister even uttered the words ‘Russian culture,’ this generated sincere surprise" and predictions by liberals of the imminent return of Stalinism and the GULAG.

Patriotic Russians in contrast were encouraged by any such references, Shumsky says, but for a long time, their hopes that any such words would be followed by action were routinely dashed. But in fact, even this silence showed that "everyone understood that ‘the Russian question’ is the main issue not only of all Russian life but also of all world politics."

Things might have continued this way for a long time, Shumsky suggests, had it not been for the rise in the West "not simply" of Russophobia but of a bestial variant of that "in no way less than Nazi racism. And it is precisely in this that the main mistake of the representatives of the criminal Western elite lies."

"And our president," Shumsky says, "just like Columbo, immediately ‘got’ them. Vladimir Vladimirovich precisely and clearly declared to the entire world that racist Russophobia from now on is the leitmotif of all Western policy toward Russia" and that the West has "crossed a line" which makes a return even to tense relations of the recent past impossible.

"Never before this" had Putin or his predecessors been "bold enough to say such things at a high level in public," Shumsky says. "What then does this mean?" According to this Russian priest, it means that "our relations with the West have reached their end, one that points to an inevitable global military clash."

"Putin no longer wants to conceal that the main goal of the Russophobic West is the complete destruction and ‘cleansing’ of Russia. And that is very valuable: the last illusions regarding the ‘peace-loving’ West have finally been cast aside by Russia’s supreme power," the priest says.

It took a long time to get to this point, Shumsky continues. One would have wished for it to come sooner, "but the main thing is that it has come." And that in turn means that Putin must now move to eliminate "the Russophobic part of the Russian ruling elite," which forms an "enormous" part of the upper reaches of his regime.

Without the elimination of such people, the priest says, "resistance to the Russophobic West will be impossible, a West which is unleashing a war against us." That war cannot be fought successfully "with such a quantity of traitors in power." Putin has now shown that he understands this, and "we with impatience will await when he begins to solve it in a real way."

"Thanks to the West for Russophobia!" Father Aleksandr concludes.

6-June-17 – “Forget Terrorism”: The Real Reason Behind The Qatar Crisis Is Natural Gas

Tyler Durden's pictureby Tyler Durden

Jun 6, 2017 11:07 AM

According to the official narrative, the reason for the latest Gulf crisis in which a coalition of Saudi-led states cut off diplomatic and economic ties with Qatar, is because – to everyone’s “stunned amazement” – Qatar was funding terrorists, and after Trump’s recent visit to Saudi Arabia in which he urged a crackdown on financial support of terrorism, and also following the FT’s report that Qatar has directly provided $1 billion in funding to Iran and al-Qaeda spinoffs, Saudi Arabia finally had had enough of its “rogue” neighbor, which in recent years had made ideologically unacceptable overtures toward both Shia Iran and Russia.

However, as often happens, the official narrative is traditionally a convenient smokescreen from the real underlying tensions.

The real reason behind the diplomatic fallout may be far simpler, and once again has to do with a long-running and controversial topic, namely Qatar’s regional natural gas dominance.

Recall that many have speculated (with evidence going back as far back as 2012) that one of the reasons for the long-running Syria proxy war was nothing more complex than competing gas pipelines, with Qatar eager to pass its own pipeline, connecting Europe to its vast natural gas deposits, however as that would put Gazprom’s monopoly of European LNG supply in jeopardy, Russia had been firmly, and violently, against this strategy from the beginning and explains Putin’s firm support of the Assad regime and the Kremlin’s desire to prevent the replacement of the Syrian government with a puppet regime.

Note the purple line which traces the proposed Qatar-Turkey natural gas pipeline and note that all of the countries highlighted in red are part of a new coalition hastily put together after Turkey finally (in exchange for NATO’s acquiescence on Erdogan’s politically-motivated war with the PKK) agreed to allow the US to fly combat missions against ISIS targets from Incirlik. Now note which country along the purple line is not highlighted in red. That’s because Bashar al-Assad didn’t support the pipeline and now we’re seeing what happens when you’re a Mid-East strongman and you decide not to support something the US and Saudi Arabia want to get done.

Now, in a separate analysis, Bloomberg also debunks the “official narrative” behind the Gulf crisis and suggests that Saudi Arabia’s isolation of Qatar, “and the dispute’s long past and likely lingering future are best explained by natural gas.

The reasons for nat gas as the source of discord are numerous and start in 1995 “when the tiny desert peninsula was about to make its first shipment of liquid natural gas from the world’s largest reservoir. The offshore North Field, which provides virtually all of Qatar’s gas, is shared with Iran, Saudi Arabia’s hated rival.”

EIA-Qatars-North-Field-Infrastructure_0.png

The result to Qatar’s finances was similar to the windfall that Saudi Arabia reaped from its vast crude oil wealth.

The wealth that followed turned Qatar into not just the world’s richest nation, with an annual per-capita income of $130,000, but also the world’s largest LNG exporter. The focus on gas set it apart from its oil producing neighbors in the Gulf Cooperation Council and allowed it to break from domination by Saudi Arabia, which in Monday’s statement of complaint described Qataris as an “extension of their brethren in the Kingdom” as it cut off diplomatic relations and closed the border.

In short, over the past two decades, Qatar become the single biggest natural gas powerhouse in the region, with only Russia’s Gazprom able to challenge Qatar’s influence in LNG exports.

qatar%20exports%20LNG_0.jpg

To be sure, Qatar has shown a remarkable ability to shift its ideological allegiance, with the FT reporting as recently as 2013, that initially Qatar was a staunch supporter, backer and financier of the Syrian rebels, tasked to topple the Assad regime, a process which could culminate with the creation of the much maligned trans-Syrian pipeline.

The tiny gas-rich state of Qatar has spent as much as $3bn over the past two years supporting the rebellion in Syria, far exceeding any other government, but is now being nudged aside by Saudi Arabia as the prime source of arms to rebels.

The cost of Qatar’s intervention, its latest push to back an Arab revolt, amounts to a fraction of its international investment portfolio. But its financial support for the revolution that has turned into a vicious civil war dramatically overshadows western backing for the opposition.

As the years passed, Qatar grew to comprehend that Russia would not allow its pipeline to traverse Syria, and as a result it strategically pivoted in a pro-Russia direction, and as we showed yesterday, Qatar’s sovereign wealth fund agreed last year to invest $2.7 billion in Russia’s state-run Rosneft Oil, even as Qatar is host of the largest US military base in the region, US Central Command. This particular pivot may have also added to fears that Qatar was becoming a far more active supporter of a Russia-Iran-Syria axis in the region, its recent financial and ideological support of Iran notwithstanding.

As a result of the tiny nation’s growing financial and political “independence”, its neighbors grew increasingly frustrated and concerned: “Qatar used to be a kind of Saudi vassal state, but it used the autonomy that its gas wealth created to carve out an independent role for itself,” said Jim Krane, energy research fellow at Rice University’s Baker Institute, quoted by Bloomberg.

Furthermore, Qatar’s natural gas output has been “free from entanglement” – and political pressure – in the OPEC, the oil cartel that Saudi Arabia dominates.

“The rest of the region has been looking for an opportunity to clip Qatar’s wings.”

And, as Bloomberg adds, “that opportunity came with U.S. President Donald Trump’s recent visit to Saudi Arabia, when he called on “all nations of conscience” to isolate Iran. When Qatar disagreed publicly, in a statement the government later said was a product of hacking, the Saudi-led retribution followed.”

To be sure, in a series of tweets, Trump himself doubled down on the “official narraitve”, taking credit for Qatar’s isolation (perhaps forgetting that a US base is housed in the small nation).

So good to see the Saudi Arabia visit with the King and 50 countries already paying off. They said they would take a hard line on funding…

— Donald J. Trump (@realDonaldTrump) June 6, 2017

…extremism, and all reference was pointing to Qatar. Perhaps this will be the beginning of the end to the horror of terrorism!

— Donald J. Trump (@realDonaldTrump) June 6, 2017

The cynics may be forgiven to assume that if Trump is tweeting that the reason for Qatar’s isolation is “to end the horror of terrorism”, even as the US just signed a $100+ billion arms deal with the single biggest supporter of terrorism in the world, Saudi Arabia, then indeed the Trump-endorsed “narrative” is to be dismissed outright.

Which again brings us back to nat gas, where Qatar rapidly emerged as the dominant, and lowest cost producer at a time when its neighbors started demanding the commodity on their own, giving the tiny state all the leverage. As Bloomberg adds “demand for natural gas to produce electricity and power industry has been growing in the Gulf states. They’re having to resort to higher-cost LNG imports and exploring difficult domestic gas formations that are expensive to get out of the ground, according to the research. Qatar’s gas has the lowest extraction costs in the world.”

Of course, with financial wealth came the need to spread political infludence: ”

Qatar gas wealth enabled it to develop foreign policies that came to irritate its neighbors. It backed the Muslim Brotherhood in Egypt, Hamas in the Gaza Strip and armed factions opposed by the UAE or Saudi Arabia in Libya and Syria. Gas also paid for a global television network, Al Jazeera, which at various times has embarrassed or angered most Middle Eastern governments.

And, above all, “gas prompted Qatar to promote a regional policy of engagement with Shiite Iran to secure the source of its wealth.

And here the source of tension emerged: because as Steven Wright, Ph.D. Associate Professor at Qatar University told Bloomberg, “you can question why Qatar has been unwilling to supply its neighboring countries, making them gas poor,” said Wright, the academic, speaking by telephone from the Qatari capital Doha. “There probably was an expectation that Qatar would sell gas to them at a discount price.”

It did not, and instead it took a step backward in 2005, when Qatar declared a moratorium on the further development of the North Field that could have provided more gas for local export, adding to the frustrations of its neighbors.

Qatar said it needed to test how the field was responding to its exploitation, denying that it was bending to sensitivities in Iran, which had been much slower to draw gas from its side of the shared field. That two-year moratorium was lifted in April, a decade late, after Iran for the first time caught up with Qatar’s extraction rates.

As Qatar refused to yield, the resentment grew.

“People here are scratching their heads as to exactly what the Saudis expect Qatar to do,” said Gerd Nonneman, professor of international relations and Gulf studies at Georgetown University’s Doha campus. “They seem to want Qatar to cave in completely, but it won’t call the Muslim Brotherhood a terrorist organization, because it isn’t. And it isn’t going to excommunicate Iran, because that would jeopardize a relationship that is just too fundamental to Qatar’s economic development.

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Whether nat gas is the source of the Qatari isolation will depend on the next steps by both Saudi Arabia and Iran. Saudi Arabia, along with the United Arab Emirates and Egypt – are all highly reliant on Qatari gas via pipeline and LNG.

According to Reuters, traders startled by the development, have begun to plan for all eventualities, especially any upsets to piped gas supplies from Qatar to the UAE. The UAE consumes 1.8 billion cubic feet/day of Qatari gas via the Dolphin pipeline, and has LNG purchase agreements with its neighbor, leaving it doubly exposed to tit-for-tat measures, industry sources and traders said.

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So far flows through Dolphin are unaffected but traders say even a partial shutdown would ripple through global gas markets by forcing the UAE to seek replacement LNG supply just as its domestic demand peaks.

With LNG markets in bearish mood and demand weak, the UAE could cope with Qatar suspending its two to three monthly LNG deliveries by calling on international markets, but Dolphin piped flows are too large to fully replace.

“A drop off in Dolphin deliveries would have a huge impact on LNG markets,” one trader monitoring developments said.

And since it all boils down to who has the most leverage as this latest regional “balance of power” crisis unfolds, Qatar could simply take the Mutual Assured Destruction route, and halt all pipeline shipments to its neighbors crippling both theirs, and its own, economy in the process, to find just where the point of “max pain” is located.

Nonfiction for the Nonplussed