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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.

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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.

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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.

* * *

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.

GULF-QATAR-ENERGY_0.jpg

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.

3-June-17 – China’s Yuan-for-Oil Deals Are a Direct Assault on the US Dollar

Yuan-for-oil will entirely change the monetary dynamics of global energy flows

Bryon King Subscribe to 17846
Fri, Jun 2, 2017 

If Saudi begins accepting yuan for oil, all bets are off on the petrodollar

If Saudi begins accepting yuan for oil, all bets are off on the petrodollar

Editor’s note: Russia and China have already inked energy deals in yuan. The fact that the Saudis are inching closer to a similar agreement with Beijing should be front page news.

China is currently modifying the terms of its oil trade with Saudi Arabia. Specifically, China is working on a deal to pay for Saudi oil using Chinese yuan. This effort poses a direct threat to the security of the dollar.

If this China-Saudi deal happens — yuan for oil — it’s another step closer to the grave for the petrodollar, which has dominated global finance since 1974. You can revisit Jim Rickards article about the Assault on the Dollar, here.

To recap, the petrodollar is weakening because the dollar is losing power as the world’s reserve currency. This is similar to the way pounds sterling gradually fell out of favor during the decline of the British Empire. The decline may take a long time, but what we’re seeing today is another step in the death march of the dollar.

I’ll tell you how to protect your wealth in dollars after I explain this shift.
Since 1974, Saudi has accepted payment for almost all of its oil exports — to all countries — in dollars. This is due to an agreement between Saudi and the U.S., dating back to the days of President Nixon.

Beginning about 15 years ago, China ceased being self-sufficient in oil, and began buying Saudi oil. As per all Saudi customers, China had to pay in dollars. Even today, China still pays for Saudi oil in U.S. dollars and not yuan, which perturbs China’s leaders.

Since 2010, China’s total oil imports have nearly doubled. According to Bloomberg News, China has surpassed the U.S. as the world’s largest oil importing nation. Here’s a chart, showing the trend.

As China imports more and more oil, the idea of paying for that oil in yuan instead of dollars becomes more critical. China does not want to use dollars to buy oil. So, China is beginning to squeeze Saudi over the form of currency in which their oil trade is conducted. China is doing this by steadily lowering its oil purchases from Saudi.
Presently, China’s three top oil suppliers are Russia, Saudi Arabia and the West African nation of Angola. Backing-up these three key suppliers are a combination of sources in Iran, Iraq and Oman, which help to diversify China’s oil-supply chain.

In the past few years, China has shifted oil purchases away from Saudi, and Russia’s oil exports have risen from 5% to 15% of the Chinese total.

China imports more oil from Russia, Iran, Iraq and Oman; less from Saudi.

Saudi’s share of Chinese imports has dropped from over 25% in 2008, to under 15% now. Meanwhile, Saudi competitors Russia, Iran, Iraq and Oman are selling more oil to China.

Saudi would like to reverse this declining trend of oil-trade with China. However, these kind of major oil flows don’t just happen in a vacuum.
There’s a good reason why Russian oil sales to China are increasing. As you’ll see in Nomi’s article, trade and financial services are often closely linked. Over the past few years, China has deepened its trading roots with Russia — now, China pays for Russian oil in yuan. Russia, in turn, uses yuan to buy goods from China.

Beyond trade in goods, within the past six months Russia has set up a branch of the Bank of Russia in Beijing. From there, Russia can use its Chinese yuan to buy gold on the Shanghai Exchange. In a sense, Chinese-Russian oil trade is now backed-up by a “gold standard.”

Looking ahead, Saudi Arabia will find itself more and more locked-out of the Chinese oil market if it won’t sell oil for yuan. But to do this, the Saudis must move away from U.S. dollars— and from petrodollars — if Saudi wants to maintain and increase access to China’s oil market.

We’ll know more about the likelihood of this after Donald Trump’s tour of the Middle East.

If Saudi begins accepting yuan for oil, all bets are off on the petrodollar. Yuan-for-oil will entirely change the monetary dynamics of global energy flows. I expect the U.S. dollar to weaken severely when that news breaks.
Much of this oil-for-yuan news is public information. Yet, for some strange reason, there’s a form of blindness within western policymaking and media circles concerning the implications of yuan-for-oil. The idea is so “off-the-wall” that many policy leaders simply ignore it.

Ignore away. But we could wake up one morning in the midst of a massive currency crisis, in which dollar values are falling and oil prices in dollars are soaring.

Source: Daily Reckoning

31-May-17 – Trump and Israel in Check-Mate

Badr Brigades fully kitted out for battle

Two major events just occurred in the last several hours which need to be seen together and connected. One is: Powerful pro-Iran Badr Brigades to enter Syria, as debka informs us. The other is: Comey To Testify Publicly That “Trump Did Push Him To End” Flynn’s Russia Probe. See both below.

On the singular issue of the war in Syria, we see the public display of forces arrayed with Trump on one side, together with Israel and Saudi Arabia, and on the other side we see Obama’s faction that wants to co-opt Iran, Iran itself, Iraq, Syria and Russia.

The battle plans are in place. The unfinished job of wiping out ISIS and defeating the Israeli incursion into Syria, set in motion under Obama, is taking its course. As of this moment, the pro-Iranian forces are attacking the remaining pockets of disarrayed ISIS in order to clear the critical Iraqi-Syrian border of Sunni invading forces. Now, should Trump order American forces to counter-attack, all hell will break loose at home and talk of impeachment is set to dominate the public discourse. It appears that Trump and his Mossad connection to Netanyahu are in check-mate. They cannot make a move.

A close reading of the attacks against Trump’s supposed links to Russia conveys the unmistakable impression of coded language for his links to Mossad and Israel. Every mention of Russia hides a reference to Israel. When Flynn is in the crosshairs for having had dinner with Putin, in fact it is his connection to Netanyahu and Mossad which are suspicious and are under question. Before his demise, Flynn already had the plans in place for the military assault against A-Assad’s forces, and, in concert with the Israelis, Assad’s his ouster. For Flynn’s connection to Israel, see: Flynn played crucial role ahead of Netanyahu-Trump summit. And this: Trump and Gen. Flynn move in on Syria, Iraq wars.

Powerful Pro-Iran Badr Brigades to Enter Syria

DEBKAfile Exclusive Report May 31, 2017, 4:02 PM (GMT+02:00)

Hadi al-Amiri, commander of the strongest Iraqi Shiite militia, the Badr Brigades, said Wednesday, May 31, that his forces are preparing to enter Syria. The advanced capabilities of this powerful Iranian-led militia, would tilt the Syrian war strongly in Iran’s favor, with alarming ramifications for the US, Israel and Jordan.

Al-Amri, in making this announcement, cited Iran’s new slogan: “Iraq’s security will be maintained only if Syria’s security is preserved.” In other words, the Syrian conflict would end only when pro-Iranian Shiite militias, including Hizballah, control Syria like they control Iraq.

debkafile’s military and intelligence sources report that the Badr Brigades’ path into Syria was secured this week when an Iraqi Shiite conglomerate breached the Iraqi-Syrian border in the north, on the orders of Al Qods chief Gen. Qassem Soleimani. This opened Iran’s coveted overland corridor through Iraq to Syria.
The combat capabilities of the Badr Brigades, estimated at between 30,000 and 50,000 strong, are impressive. One of the most professional and well-trained military forces in Iraq, its recruits receive instruction at special camps operated by Revolutionary Guard Corps on Iranian soil. The militia consists of special forces, tank, mechanized infantry, artillery and antiaircraft units. The high quality of their munitions may be seen in the photo at the top of the story.
Their entry into Syria could raise the total of pro-Iranian Shiite forces fighting in Syria to 80,000 to 100,000 troops.

Intelligence sources expect the Badr Brigades to first head south towards the Deir ez-Zor area to link up with the Syrian Arab Army and Hizballah forces, which are threatening the US special forces and allied hold on a key crossing that commands the triangle where the Jordanian, Syrian and Iraqi borders meet.
They would need to cover 230km from Palmyra to Deir ez-Zor, the while fighting small, scattered ISIS concentrations. Wednesday, May 31, Russia came down on the side of Tehran, with a cruise missile strike on ISIS targets around Palmyra. They were fired from the missile frigate Admiral Essen and the submarine Krasnodar for the purpose of softening jihadi resistance to the Badr Brigades’ southward advance.

The consequences of this massive pro-Iranian intervention in the Syrian war are dire for the US, Israel and Jordan. For Washington, it lays the ground for Tehran’s domination of Syria – in the face of President Donald Trump’s solemn vows to prevent this happening.

For Israel, Hizballah’s hostile penetration of Syrian borders abutting its territory is child’s play compared with a major military force capable of transforming Syria into a huge staging area for Iranian aggression against the Jewish state.

Jordan’s foreboding comes from its judgment that pro-Iranian Shiite militias sitting on its borders are a greater threat even that ISIS.

Comey To Testify Publicly That “Trump Did Push Him To End” Flynn’s Russia Probe

Tyler Durden's picture

by Tyler Durden

The showdown between Donald Trump and James Comey will be televised after all.

According to CNN, the former FBI director plans to testify publicly in the Senate as early as next week to confirm bombshell accusations that President Donald Trump “did push Comey to end his investigation into a top Trump aide’s ties to Russia.”

As a reminder, it was allegations that Trump was urging the former FBI director to end the FBI’s ongoing probe into Michael Flynn (all allegedly written down in Comey’s notebook, which so far few if anyone besides Comey has seen), that prompted the worst stock market selloff in mid-May, when some interpreted Trump’s actions as an attempt to obstruct justice, with some speculating that Trump could even be impeached if Comey’s allegations were confirmed.

As CNN adds, “final details are still being worked out and no official date for his testimony has been set. Comey is expected to appear before the Senate Intelligence Committee, which is investigating possible connections between the Trump campaign and Russia during last year’s presidential election.” Additionally, it emerged that Comey has spoken privately with Special Counsel Robert Mueller III to work out the parameters for his testimony to ensure there are no legal entanglements as a result of his public account, a source said. Comey will likely sit down with Mueller, a longtime colleague at the Justice Department, for a formal interview only after his public testimony.

When he testifies, Comey is unlikely to be willing to discuss in any detail the FBI’s investigation into the charges of possible collusion between Russia and the Trump campaign — the centerpiece of the probe, this source said. But he appears eager to discuss his tense interactions with Trump before his firing, which have now spurred allegations that the president may have tried to obstruct the investigation. If it happens, Comey’s public testimony promises to be a dramatic chapter in the months-long controversy, and it will likely bring even more intense scrutiny to an investigation that Trump has repeatedly denounced as a “witch hunt.”

Comey’s termination unleashed a firestorm of press coverage, with reports emerging in the New York Times, WaPo and elsewhere about the confrontations with Trump that Comey memorialized in memos afterward. A week after he took office in January, Trump allegedly demanded Comey’s “loyalty” if he kept him on as FBI director, and he urged Comey to drop his ongoing investigation into Michael Flynn, Trump’s fired national security adviser, in a separate, one-on-one meeting.

“The bottom line is he’s going to testify,” the CNN source said. “He’s happy to testify, and he’s happy to cooperate.”

28-May-17 – Eurasian Economic Transformation Goes Forward

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At this juncture it’s clear that the attempt of the Trump Administration and related circles in the US military industrial complex have failed in their prime objective, that of driving a permanent wedge between Russia and China, the two great Eurasian powers capable of peacefully ending the Sole Superpower hegemony of the United States. Some recent examples of seemingly small steps with enormous future economic and geopolitical potential between Russia and China underscore this fact. The Project of the Century, as we can now call the China One Belt One Road infrastructure development–the economic integration on a consensual basis by the nations of Eurasia, outside the domination of NATO countries of the USA and EU–is proceeding at an interesting pace in unexpected areas.

1971: America’s Twilight Begins

It’s very essential in my view to appreciate where the post-1944 development of America’s role in the world went seriously wrong. The grandiose project dubbed by Henry Luce in 1941 as the American Century, if I were to pick a date, began its twilight on August 15, 1971.

That was the point in time a 44-year-old Under-Secretary of the Treasury for International Monetary Affairs named Paul Volcker convinced a clueless President Richard Milhous Nixon that the treaty obligations of the 1944 Bretton Woods Treaty on a postwar Gold Exchange Standard should be simply ignored. Volcker rejected the express mandate of the Bretton Woods Treaty which would have seen a devaluation of the dollar in order to rebalance world major currencies. By 1971 the economies of war-ravaged countries such as Japan, Germany and France had rebuilt at a significantly higher level of efficiency than the US.

A devaluation of the dollar would have given a major boost to US industrial exports and eased the export of dollar inflation in the world arising from Lyndon Johnson’s huge Vietnam War budget deficits. The de-industrialization of the USA could have thereby been avoided. Wall Street would hear none of that. Their mantra in effect was, “Nothin’ personal, just bizness…” The banks began the destruction of the American industrial base in favor of cheap labor and ultra-high-profit manufacture abroad.

Instead of correcting that at a point it could have had an enormously positive economic effect, Volcker advised Nixon to in effect spit on America’s international treaty obligations and to brazenly dare the world to do something about it. On Volcker’s advice, Nixon simply ripped the treaty in shreds and ended Federal Reserve redemption of dollars held by foreign central banks for US gold reserves. The US dollar overnight was no longer “as good as gold.”

A serious dollar devaluation against currencies of America’s major trading partners, while it could have given a new lease on life to America’s industries, would have greatly reduced the power of the Wall Street banks. It was from David Rockefeller’s Chase Manhattan Bank that Volcker came to Washington.

Paul Volcker’s unilateral suspension of gold-dollar redemption began a series of moves, as I document in The Gods of Money: Wall Street and the Death of the American Century. The floating dollar allowed the increasingly more powerful and more unregulated banks of Wall Street to destroy the industrial base of the United States, the world’s once-great economy, and to create a debt burden that today is so out-of-control that it perhaps can only be managed through a possible war or countless wars everywhere, failing some variation of a US national Chapter 9 bankruptcy reorganization.

That a new war so readily can be considered a solution by the American oligarchs behind Wall Street and the huge military-industrial complex should not surprise us. We need only realize that since the nation’s founding in 1776, the United States has been at war with someone for 214 of her 235 years of existence as a nation. That’s impressive, at least in the negative.

The American Century is crumbling before our eyes, and has been doing so for the near-five decades since August, 1971. That willful ignoring of the health of the economy of the United States over decades has created a vast moral, political and economic vacuum in the world today.

Into that vacuum other nations outside Washington’s NATO control are building what I have termed a Eurasian Century, a very lawful and positive response to an increasingly totalitarian Washington role in the world.

The contrast between what China, together with Russia, and the other nations of the Shanghai Cooperation Organization in Eurasia are doing to build up their common economic space, and what the United States, Britain and other NATO nations are doing to destroy, could not be more stark.

A Eurasian Century Advances

I’ve often written about the 2013 initiative of China’s far-sighted President Xi Jinping, the project called One belt, One Road (OBOR), or the New Economic Silk Road. I’m now preparing a book dealing with the various levels of its strategic global impact. The three strategic partners in the economic projects around OBOR that are transforming the economic potentials of the world economy in a positive direction are China, Russia–including Russia’s partners in the Eurasian Economic Union–and Iran. Here I want to take a selection of game-changing projects going forward, with almost no appreciation by mainstream Western media, involving Russia and China.

The huge and ambitious infrastructure development of high-speed Trans-Eurasian railway connections together with a network of deep water ports from Asia to the Middle East and on to Greece and other parts of Europe, is a huge project creating over the next several years millions of new skilled jobs and economic spending in the trillions of dollars. This will take place over the next two or more decades.

OBOR is transforming the industrial geography of the world in a tectonic shift away from more than five centuries of European and later Trans-Atlantic domination. The shift is to a new world ordering in which the nations with the largest populations are emerging and expressing their rightful national sovereignty, and rightly demanding their sovereign right to decide how to develop their own vast resources for their own development. In effect it contrasts with a de facto imperial US-controlled globalization to the alternative defense of national sovereignty. This is a very serious difference between West (NATO) and East (OBOR).

Russian Grain as Strategic Asset

A little-noted area of strategic development between China and her neighbor, Russia, involves grain, lots of it. I want to put the focus briefly there.

In 2016, ironically as a direct consequence of the foolish and self-defeating US Treasury and EU economic sanctions against the Russian Federation, Russia counter-sanctioned EU agriculture imports and began to intensively revive her dormant agriculture production, including signing into law a total ban on GMO commercial crops in Russia, the land blessed by nature and geography with the richest nutrient-endowed black earth soils.

One of the lingering consequences of the catastrophic rape of Russia’s economy during the Yeltsin era by Washington and the Harvard Shock Therapy boys in the 1990s was the opening of Russia to EU food imports, most of it industrialized from giant Western agribusiness conglomerates like Kraft Foods, Tyson, Unilever, Nestle and others, food products of dubious nutritional value. Russians forgot how delicious and nutritious Russian domestic food was. After 1990 Russian supermarket shelves were filled indeed, but with Western “fake foods.”

With the recent USA and EU economic sanctions, Russian agriculture has boomed since 2014. In 2016 Russia surpassed the United States and the combined 28-nation EU as the world’s largest producer and exporter of grain.

The Western grain industry is astonished at the dramatic turnaround in Russian grain and agriculture output. What they likely did not realize was that in the years from 2008-2012–when according to the Russian Constitution Vladimir Putin was prohibited from serving a third consecutive term as President–Putin served as Prime MInister with responsibility over Russia’s economy among other areas. There he quietly initiated select market reforms that prepared the way for the dramatic renaissance of Russian agriculture after 2014 as a world factor.

During the 1980’s Russia had become far the world’s largest grain and agriculture importer after catastrophic harvest failures. US Secretary of State Henry Kissinger acted as broker for Cargill and the US Grain Cartel companies, at the same time that Kissinger’s Middle East “shuttle diplomacy” was manipulating a Yom Kippur War that triggered an OPEC oil embargo against the USA and Europe. Kissinger negotiated the huge sale of US grain to the Soviet Union at outrageously high prices. It was known in grain trading circles as the “Great Grain Robbery.” It was at that same time, with a Washington-orchestrated 400% oil price shock and a similar 300% rise in essential world grain prices, that Kissinger reportedly boasted, “If you control oil, you control entire nations; if you control food, you control the people…”

That Russian import dependency on western grain lasted until very recently. Now, for the harvest year 2016-2017 according to the US Department of Agriculture and the International Grains Council, Russia will export some 30 million tons of GMO-free grain, exceeding the EU’s 27 million tons and USA with 25.5 million tons.

The geopolitical as well as economic implications of this profound shift in Russian food production are strategic.

Russia-China Grain Trade

On April 8, 2017, the first freight train loaded with high-quality Russian wheat arrived in Manzhouli, a land port in north China’s Inner Mongolia Autonomous Region, across the border from Russia.

Why is this significant one might ask?

In 2015 China grain imports rose 20 per cent from 2014 to 120 million tons. More than 80 million tons were almost entirely GMO soybeans that came from the USA and Brazil. The rest were mostly cereals such as wheat. Now China for the first time has the possibility of importing directly from neighboring Russia by rail of Russian GMO-free grains. By contrast, more than 94% of all USA soybeans in 2016 according to the US Department of Agriculture was GMO and 89% of all USA corn. This is a huge advantage for GMO-free Russian grains in China.

In December, 2015 the relevant authorities in China and Russia came to a formal agreement on standards of import of wheat, corn, rice and soybeans from GMO-free Russia. The first delivery in April 2017 of Russian wheat was completed. Now the machinery is approved and in place to increase Russian grain imports to China.

China’s state-owned food conglomerate COFCO is responsible for quality control, import and distribution of the Russian grain to the Chinese market. Overland train transport from Russia significantly cuts transport time and cost compared with sea transport. As well, it is far less vulnerable to potential US or NATO economic sanctions.

Currently China grain imports must navigate the perilous conflict zones in the South China Sea and the East China Sea, both areas where the US Navy is escalating tensions under the false argument of maintaining “freedom of navigation.” With present US naval bases in Japan, South Korea and Singapore, Washington could impose an economic blockade on China seaborn grain imports as well as oil and other products.

China COFCO president Yu Xubo said they plan to import 1 million to 2 million tons of wheat from Russia a year, and it may increase to 4 million or 5 million tons a year.

If tensions between Washington and Beijing significantly escalate, the Russian overland railway share of grain exports to China could become geopolitically essential to China’s agriculture security. This “simple” first Russian trainload of wheat to China is not at all being greeted with joy in Washington.

HR 1644

The warhawk faction in the present US House of Representatives has recently introduced a bill deceptively titled HR 1644: The Korea Interdiction and Modernization of Sanctions Act.

The bill is not at all about putative missile threats from North Korea. It’s a sneaky way to try to impose grossly illegal sanctions, de facto acts of war, against China and Russia.

The bill, passed by the House of Representatives on April 29, now is in the Senate for debate. It provides a “legal basis” for US military control over Russian ports in the Far East, military and civilian, as well as over Chinese ports. If passed by the Republican-dominated US Senate, the Bill will allow the US military to “inspect, search and seize any vessel or aircraft suspected in violation of the anti-North Korea sanctions,” according to terms that would be defined unilaterally by Washington. The HR 1644 bill also gives the US military the authority to inspect the sea ports in Russia and China, implying that if they resist the brazen incursion into their sovereignty, they will face far more severe US sanctions.

The HR 1644 Korea Interdiction and Modernization Act bill, if signed into law by the US President, will also sanction Russia’s global food trade because North Korean workers are being employed in Russia’s agricultural sector. The HR 1644 Bill would completely ban the trade of Russia-produced food worldwide in order to replace it with US produced GMO crap that the USA sells as nutritious food.

Beijing moves OBOR forward

On May 14-15 leaders and heads of government of twenty nine nations met in Beijing to discuss the implications of the One Belt, One Road infrastructure development. In his opening greeting, China’s Xi Jinping, the author of the OBOR idea, told attendees that the OBOR should become “a road of peace, prosperity, opening up, innovation and connecting different civilizations. The ancient silk routes thrived in times of peace, but lost vigor in times of war. The pursuit of the Belt and Road Initiative requires a peaceful and stable environment.”

Xi added, “In pursuing the Belt and Road Initiative, we should focus on the fundamental issue of development, release the growth potential of various countries and achieve economic integration and interconnected development and deliver benefits to all.” Xi called for promoting land, maritime, air and cyberspace connectivity, focusing on key passageways, cities and projects, and connecting networks of highways, railways and sea ports. That I must say sounds far better to my ears than wars to defend the hegemony of a bankrupt US military-industrial complex and the Wall Street banks and oil companies.

Russian President Putin was present in Beijing for the OBOR forum. Turkey’s Erdogan also. Notably however, aside from the Prime Minister of Italy, not one leader from a G-7 Western industrial country choose to attend. Trump decided to send a middle-level National Security Council spook, Matthew Pottinger, former intelligence officer in Afghanistan under Lt. General Michael Flynn, who is now in the US National Security Council under McMaster. Trump decided not to send even his Secretary of State Tillerson. Could that be because Washington is fearing the success of the Eurasian Century and the One Belt, One Road? You can bet your booties it is!

F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook.

23-May-2017 – Donald Trump against Jihadism

by Thierry Meyssan, Voltaire Network

Donald Trump’s speech to the leaders of the Muslim world marks a radical change in US military policy. As from now, the enemy is no longer the Syrian Arab Republic, but jihadism, in other words the strategic tool of the United Kingdom, Saudi Arabia and Turkey.

During his electoral campaign, Donald Trump had declared that he had no interest in overthrowing régimes, although he intends to put an end to Islamic terrorism. Since his election, his adversaries have been attempting to force him to follow their policy – using the power of the Muslim Brotherhood to overthrow the Syrian Arab Republic.

They have used anything they could to destroy the team chosen by candidate Trump, notably by provoking the resignation of his National Security Advisor, General Michael Flynn. In 2012, Flynn had opposed Barack Obama’s project to create Daesh, and he continued to finger the Muslim Brotherhood as the source of Islamic terrorism.

Everything has been used to present the new US President as an Islamophobe. He was criticized for having promulgated a decree forbidding entry into his country to citizens of six Muslim States. Democrat magistrates abused their functions in order to uphold this accusation. In reality, Donald Trump has suspended entry for people whose consulates are unable to verify their identity, because they are subject to civil troubles or open war.

The problem that Donald Trump has to face is not posed by the survival of the Syrian Arab Republic, but by the loss of what would represent, for certain allies of Washington, the end of the terrorist strategy. It is clearly recognized in all international conferences that all states are publicly opposed to Islamic terrorism, although in private, some of these states have been organizing it for the last 66 years.

This is primarily the case of the United Kingdom, which, in 1951, built the Muslim Brotherhood on the ruins of the organization of the same name, which had been dissolved two years earlier, and almost all of whose leaders were in prison. It is also the case of Saudi Arabia, who, at the demand of London and Washington, created the Muslim World League in order to support both the Brotherhood and the Naqshbandi Order. It is this League, whose budget is superior to that of the Saudi Ministry of Defense, which supplies money and weapons to the jihadist system throughout the world. And finally, it is also the case of Turkey, which now supervises the command of the military operations of this system.

By concentrating his speech in Riyadh on the clarification of the misconceptions concerning his relations with Islam and the affirmation of his intention to put an end to the jihadist tool of the Anglo-Saxon secret services, Donald Trump imposed his will on the fifty states gathered to listen to him. In order to avoid misunderstanding, his Secretary for Defense, James Mattis, clearly explained his military strategy – to encircle the jihadist groups, and then to exterminate them without allowing a single one to escape.

We do not yet know what London’s reaction will be. As for Riyadh, Donald Trump was very careful to whitewash the Sauds for their past crimes. Saudi Arabia has not been accused of anything, but Iran has been handed the role of scapegoat. This is obviously absurd, since the Muslim Brotherhood and the Naqshbandis are Sunnis, while Teheran is Shiite.

The accusations against Iran have no importance, since Teheran knows which way the wind is blowing. For the last 16 years, Washington – which never misses an opportunity to spit in their faces – has been destroying, one by one, all their enemies – the Taliban, Saddam Hussein and soon Daesh.

What is now in play, as we announced eight months ago, is the end of the “Arab Springs” and the return to regional peace.

10-May-17 – Was Russia Tricked by an American Woman in Syria? – No way!

Written by Valentin Vasilescu, military analyst, former deputy commander of Otopeni Airport.

Trans. By Alice Decker

On April 7, 2017, President Trump famously launched 59 Tomahawk missiles at the Shayrat air base near Homs, a highly visible and much-vaunted gesture, even though only 23 of them actually landed. But even that begs the question: How did even one of them get through, if Russia has such a solid defense in place?

In Syria, the Russian army has deployed a multitude of land-based and ship-borne long-range and short-range AA systems and even has MiG-31BM, Su-30SM, and Su-35S cruise missiles capable of taking down cruise missiles. In its military actions in Syria, the Russians have applied the principles and laws of military science by the book [1]. Indeed, they have even surpassed world standards in the use of force for special operations [2].

Even so, all the Russian military installations were [seemingly] powerless against the US ship-based cruise missiles. The Americans managed to trick the Russians very handily.

Cruise missiles are no longer a technical novelty except for states with a weak military. Russia has demonstrated that their Kalibr can achieve the same performance as America’s Tomahawk. Moreover, under standard conditions, AA S-400 and S-300V4 air defense missiles can successfully counter a Tomahawk cruise missile launched from surface ships (though not from submerged submarines which are harder to spot).

So it wasn’t technological superiority that made the difference, but the commanders of the Fifth American Fleet who demonstrated a high level of skill. They made full use of intelligence and innovation to counter the Russians’ technological advantage. By the way, for those who do not know: the commander of Fleet VI is a woman, Admiral Michelle J. Howard, who graduated from the United States Naval Academy in 1982 and from the Army’s Command and General Staff College in 1998.

The apparent trajectory of cruise missiles.

If the Americans had chosen a direct trajectory for the cruise missiles, the distance between Crete (where the Arleigh Burke destroyers – the DDG 78 Porter and DDG 71 Ross – were deployed) and the Syrian air base Shayrat (40 km SE of Homs) would have been 1,070 km. The Tomahawk missiles used were Block III TLAM-C or Block IV TLAM-E, both with a range of 1,600 km.

On a direct trajectory, the cruise missiles would have overflown Cyprus and would have arrived over land at the 30 km strip that separates the port of Tartus from the Lebanese border. But the port of Tartus is used by the Russian navy and they have a division there (x 4 AA rockets), S-300V4. The new S-300V4 system became operational in 2014. It can detect cruise missiles flying just above sea level and launch air-to-air missiles when such targets pass Cape Greco in Cyprus (over 160 km). The S-300V4 division has 80 missiles.

US Navy photo by Paul Farley

Even if the cruise missiles had crossed this strip without being detected, the distance between Tartus and the Syrian air base at Shayrat is 85 km. Over rough terrain, the S-300V4 can detect Tomahawk missiles flying at an altitude of 50 m from 50 km away and can take them down from a distance of 38–40 km. Tomahawk rockets fly at 800 km / h, and at that speed they are within striking distance for more than 2 minutes and 30 seconds, enough time for 87% of them to be shot down by the S-300V4s.

The Khmemim airbase, located 68 km north of Tartus and used by Russian aviation, operates a Russian AA S-400 missile division. This division would have discovered them from more than 160 km away and would have knocked down the US cruise missiles if they had bypassed the island of Cyprus and made it to the coast of Turkey. The S-300V4 and S-400 divisions are protected by a Pantsir-S1 (X 8 launcher), each launcher having two 30 mm guns (4000 projectiles per minute) and 12 short range missiles (20 km). The Pantsir-S1 can detect and attack cruise missiles from a distance of 15 km. So, in this case, the American missiles would have had no chance of hitting the Shayrat air base.

The actual trajectory chosen.

An interesting explanation offered by Russian expert Alexandr Shishkin in his article “Missed Hit” on his blog (at http://navy-korabel.livejournal.com/161373.html or here). He said the US cruise missiles were programmed to follow a flight trajectory 250km south of Cyprus and to cross over Israel. On this route, the radars of the S-300V4s and S-400s could not see the cruise missiles as the mountainous terrain of Lebanon intervenes between them and Israel. The cruise missiles then crossed Jordan’s airspace for about 250 km, changing direction frequently, flying parallel to the Syrian–Jordanian border. The missiles crossed into Syrian airspace and flew across Syria to their targets over areas occupied by Islamist rebels, mostly in the desert.

In 2011, Syria had more than 200 radars, in the metic, decimetric and centimeter ranges, for detecting air-to-air missiles and directing fighter jets. Most of them were arrayed in the open field or on top of commanding heights. During Syria’s civil war, 85% of the radars were destroyed by Islamist rebels, while the rest were re-located around Damascus and the Mediterranean. That is why there are major gaps in the area covered by Syria’s radio-location facilities — i.e., in areas occupied by Islamist rebels, starting at the border with Jordan, and in central, eastern and northern Syria.

The Tomahawks’ fight path was chosen to bypass Damascus, where discovery radars and AA missiles were in place that could shoot down cruise missiles.

Did the Russians get it wrong?

After the collapse of the USSR, the US Navy Fleet in the Mediterranean no longer included a nuclear-powered aircraft carrier; submarines and many other combat ships disappeared. There are four destroyers at the Rota naval base in Spain and amphibious ships at Gaeta, Italy, homeport of the 6th Fleet flagship USS Mount Whitney.

A similar threat to Syrian cruise missiles existed in 2013, but at that time the Russians created an efficient blockade with a naval group that included the Slava-class cruiser Moskva (equipped with air-to-air S-300F Fort and OSA-M missile systems), the cruiser Peter the Great (with S-300F Fort, 3K95-Kinzhal and OSA-M), and other destroyers and anti-aircraft frigates. The Russian naval group, superior both quantitatively and qualitatively, was deployed in a circular formation some of 150–250 km from the US military ships. The Russian ships had onboard KA-31 helicopters equipped with early warning radars and turrets with opto-electronic sensors, which patrolled the area for 40–70 km around their own naval grouping. Any cruise missile launch could be immediately detected and neutralized because it would be within the range of radar discovery on Russian ships.

Bear in mind that any such cruise missile operation takes at least a month to prepare, and after that one waits for the right moment to strike. It is out of the question that President Donald Trump simply made a tempestuous decision to do this.

And from this standpoint it would appear that Russia’s military intelligence service was totally out of the picture. Meanwhile, the US naval and aero-cosmic reconnaissance had discovered that the Black Sea Fleet’s frigates Ladnyi and Pitlivy, armed with the AA Osa-MA-2 missile systems, were laid up for repair. So was the cruiser Moskva, lead ship of the Russian Black Sea Fleet, and the Smetlivy anti-submarine destroyer, armed with M-1 Volna AA rockets.

The Americans also knew that the Russian frigate Admiral Grigorovich had just left the Mediterranean Sea and crossed the Bosporus and Dardanelle Straits to move to the port of Novorossiysk. The ship is armed with Kalibr cruise missiles and Shtil-1 AA rockets (40 km range).

In the meantime, the frigate Admiral Makarov, sister ship to the Admiral Grigorovich, launched in 2015, has not been commissioned even today and handed over to the Black Sea Fleet. So on the date of April 7, 2017, the Russians did not have a single medium- to high-range AA battle system in the Mediterranean Sea.

If the Russians had put up the same naval blockade as in 2013 and had not blindly relied on a totally inadequate tactic for the S-300V4 and S-400 type AA systems, then the Americans would not have launched the cruise missiles — as they would have been destroyed by the Russians. After the cruise missile attack, Russia finally deployed an A-50U AWACS aircraft to the Hmeimim airbase in Syria. The A-50U is equipped with the Vega Shmel-M radar for launch detection, including air-to-air missiles on a 500-km flight.

So, was the new face of the US Navy that smart, or was perhaps the whole episode rigged? — most likely.

[1]. New details on the effort to insert airborne troops into Deir ez-Zor ( http://www.algora.com/blog/?p=235 ).

[2]. The role of the Spetsnaz in the liberation of Aleppo ( http://www.veteranstoday.com/2016/12/23/the-role-of-the-spetsnaz-in-the-liberation-of-aleppo/ )

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