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What if Putin is Telling the Truth?

by F William Engdahl

New Eastern Outlook (May 15 2015)

On April 26 Russia’s main national TV station, Rossiya 1, featured President Vladimir Putin in a documentary to the Russian people on the events of the recent period including the annexation of Crimea, the US coup d’etat in Ukraine, and the general state of relations with the United States and the EU. His words were frank. And in the middle of his remarks the Russian former KGB chief dropped a political bombshell that was known by Russian intelligence two decades ago.

Putin stated bluntly that in his view the West would only be content in having a Russia weak, suffering and begging from the West, something clearly the Russian character is not disposed to. Then a short way into his remarks, the Russian President stated for the first time publicly something that Russian intelligence has known for almost two decades but kept silent until now, most probably in hopes of an era of better normalized Russia-US relations.

Putin stated that the terror in Chechnya and in the Russian Caucasus in the early 1990s was actively backed by the CIA and western Intelligence services to deliberately weaken Russia. He noted that the Russian FSB foreign intelligence had documentation of the US covert role without giving details.

What Putin, an intelligence professional of the highest order, only hinted at in his remarks, I have documented in detail from non-Russian sources. The report has enormous implications to reveal to the world the long-standing hidden agenda of influential circles in Washington to destroy Russia as a functioning sovereign state, an agenda which includes the neo-nazi coup d’etat in Ukraine and severe financial sanction warfare against Moscow. The following is drawn on my book, The Lost Hegemon to be published soon …

CIA’s Chechen Wars

Not long after the CIA and Saudi Intelligence-financed Mujahideen had devastated Afghanistan at the end of the 1980s, forcing the exit of the Soviet Army in 1989, and the dissolution of the Soviet Union itself some months later, the CIA began to look at possible places in the collapsing Soviet Union where their trained “Afghan Arabs” could be redeployed to further destabilize Russian influence over the post-Soviet Eurasian space.

They were called Afghan Arabs because they had been recruited from ultraconservative Wahhabite Sunni Muslims from Saudi Arabia, the Arab Emirates, Kuwait, and elsewhere in the Arab world where the ultra-strict Wahhabite Islam was practiced. They were brought to Afghanistan in the early 1980s by a Saudi CIA recruit who had been sent to Afghanistan named Osama bin Laden.

With the former Soviet Union in total chaos and disarray, George H W Bush’s Administration decided to “kick ’em when they’re down”, a sad error. Washington redeployed their Afghan veteran terrorists to bring chaos and destabilize all of Central Asia, even into the Russian Federation itself, then in a deep and traumatic crisis during the economic collapse of the Yeltsin era.

In the early 1990s, Dick Cheney’s company, Halliburton, had surveyed the offshore oil potentials of Azerbaijan, Kazakhstan, and the entire Caspian Sea Basin. They estimated the region to be “another Saudi Arabia” worth several trillion dollars on today’s market. The US and UK were determined to keep that oil bonanza from Russian control by all means. The first target of Washington was to stage a coup in Azerbaijan against elected president Abulfaz Elchibey to install a President more friendly to a US-controlled Baku-Tbilisi-Ceyhan (BTC) oil pipeline, “the world’s most political pipeline”, bringing Baku oil from Azerbaijan through Georgia to Turkey and the Mediterranean.

At that time, the only existing oil pipeline from Baku was a Soviet era Russian pipeline that ran through the Chechen capital, Grozny, taking Baku oil north via Russia’s Dagestan province, and across Chechenya to the Black Sea Russian port of Novorossiysk. The pipeline was the only competition and major obstacle to the very costly alternative route of Washington and the British and US oil majors.

President Bush Senior gave his old friends at CIA the mandate to destroy that Russian Chechen pipeline and create such chaos in the Caucasus that no Western or Russian company would consider using the Grozny Russian oil pipeline.

Graham E Fuller, an old colleague of Bush and former Deputy Director of the CIA National Council on Intelligence had been a key architect of the CIA Mujahideen strategy. Fuller described the CIA strategy in the Caucasus in the early 1990s:

The policy of guiding the evolution of Islam and of helping them against our adversaries worked marvelously well in Afghanistan against the Red Army. The same doctrines can still be used to destabilize what remains of Russian power.

The CIA used a dirty tricks veteran, General Richard Secord, for the operation. Secord created a CIA front company, MEGA Oil. Secord had been convicted in the 1980s for his central role in the CIA’s Iran-Contra illegal arms and drugs operations.

In 1991 Secord, former Deputy Assistant Secretary of Defense, landed in Baku and set up the CIA front company, MEGA Oil. He was a veteran of the CIA covert opium operations in Laos during the Vietnam War. In Azerbaijan, he setup an airline to secretly fly hundreds of bin Laden’s al-Qaeda Mujahideen from Afghanistan into Azerbaijan. By 1993, MEGA Oil had recruited and armed 2,000 Mujahideen, converting Baku into a base for Caucasus-wide Mujahideen terrorist operations.

General Secord’s covert Mujahideen operation in the Caucasus initiated the military coup that toppled elected president Abulfaz Elchibey that year and installed Heydar Aliyev, a more pliable US puppet. A secret Turkish intelligence report leaked to the Sunday Times of London confirmed that “two petrol giants, BP and Amoco, British and American respectively, which together form the AIOC (Azerbaijan International Oil Consortium), are behind the coup d’etat”.

Saudi Intelligence head, Turki al-Faisal, arranged that his agent, Osama bin Laden, whom he had sent to Afghanistan at the start of the Afghan war in the early 1980s, would use his Afghan organization Maktab al-Khidamat (MAK) to recruit “Afghan Arabs” for what was rapidly becoming a global Jihad. Bin Laden’s mercenaries were used as shock troops by the Pentagon and CIA to coordinate and support Muslim offensives not only Azerbaijan but also in Chechnya and, later, Bosnia.

Bin Laden brought in another Saudi, Ibn al-Khattab, to become Commander, or Emir of Jihadist Mujahideen in Chechnya (sic!) together with Chechen warlord Shamil Basayev. No matter that Ibn al-Khattab was a Saudi Arab who spoke barely a word of Chechen, let alone, Russian. He knew what Russian soldiers looked like and how to kill them.

Chechnya then was traditionally a predominantly Sufi society, a mild apolitical branch of Islam. Yet the increasing infiltration of the well-financed and well-trained US-sponsored Mujahideen terrorists preaching Jihad or Holy War against Russians transformed the initially reformist Chechen resistance movement. They spread al-Qaeda’s hardline Islamist ideology across the Caucasus. Under Secord’s guidance, Mujahideen terrorist operations had also quickly extended into neighboring Dagestan and Chechnya, turning Baku into a shipping point for Afghan heroin to the Chechen mafia.

From the mid-1990s, bin Laden paid Chechen guerrilla leaders Shamil Basayev and Omar ibn al-Khattab the handsome sum of several million dollars per month, a King’s fortune in economically desolate Chechnya in the 1990s, enabling them to sideline the moderate Chechen majority. US intelligence remained deeply involved in the Chechen conflict until the end of the 1990s. According to Yossef Bodansky, then Director of the US Congressional Task Force on Terrorism and Unconventional Warfare, Washington was actively involved in “yet another anti-Russian jihad, seeking to support and empower the most virulent anti-Western Islamist forces”.

Bodansky revealed the entire CIA Caucasus strategy in detail in his report, stating that US Government officials participated in,

… a formal meeting in Azerbaijan in December 1999 in which specific programs for the training and equipping of Mujahideen from the Caucasus, Central/South Asia and the Arab world were discussed and agreed upon, culminating in Washington’s tacit encouragement of both Muslim allies (mainly Turkey, Jordan and Saudi Arabia) and US ‘private security companies’ … to assist the Chechens and their Islamist allies to surge in the spring of 2000 and sustain the ensuing Jihad for a long time … Islamist Jihad in the Caucasus as a way to deprive Russia of a viable pipeline route through spiraling violence and terrorism.

The most intense phase of the Chechen wars wound down in 2000 only after heavy Russian military action defeated the Islamists. It was a pyrrhic victory, costing a massive toll in human life and destruction of entire cities. The exact death toll from the CIA-instigated Chechen conflict is unknown. Unofficial estimates ranged from 25,000 to 50,000 dead or missing, mostly civilians. Russian casualties were near 11,000 according to the Committee of Soldiers’ Mothers.

The Anglo-American oil majors and the CIA’s operatives were happy. They had what they wanted: their Baku-Tbilisi-Ceyhan oil pipeline, bypassing Russia’s Grozny pipeline.

The Chechen Jihadists, under the Islamic command of Shamil Basayev, continued guerrilla attacks in and outside Chechnya. The CIA had refocused into the Caucasus.

Basayev’s Saudi Connection

Basayev was a key part of the CIA’s Global Jihad. In 1992, he met Saudi terrorist Ibn al-Khattag in Azerbaijan. From Azerbaijan, Ibn al-Khattab brought Basayev to Afghanistan to meet al-Khattab’s ally, fellow-Saudi Osama bin Laden. Ibn al-Khattab’s role was to recruit Chechen Muslims willing to wage Jihad against Russian forces in Chechnya on behalf of the covert CIA strategy of destabilizing post-Soviet Russia and securing British-US control over Caspian energy.

Once back in Chechnya, Basayev and al-Khattab created the International Islamic Brigade (IIB) with Saudi Intelligence money, approved by the CIA and coordinated through the liaison of Saudi Washington Ambassador and Bush family intimate Prince Bandar bin Sultan. Bandar, Saudi Washington Ambassador for more than two decades, was so intimate with the Bush family that George W Bush referred to the playboy Saudi Ambassador as “Bandar Bush”, a kind of honorary family member.

Basayev and al-Khattab imported fighters from the Saudi fanatical Wahhabite strain of Sunni Islam into Chechnya. Ibn al-Khattab commanded what were called the “Arab Mujahideen in Chechnya”, his own private army of Arabs, Turks, and other foreign fighters. He was also commissioned to set up paramilitary training camps in the Caucasus Mountains of Chechnya that trained Chechens and Muslims from the North Caucasian Russian republics and from Central Asia.

The Saudi and CIA-financed Islamic International Brigade was responsible not only for terror in Chechnya. They carried out the October 2002 Moscow Dubrovka Theatre hostage seizure and the gruesome September 2004 Beslan school massacre. In 2010, the UN Security Council published the following report on al-Khattab and Basayev’s International Islamic Brigade:

Islamic International Brigade (IIB) was listed on 4 March 2003 … as being associated with Al-Qaida, Usama bin Laden or the Taliban for “participating in the financing, planning, facilitating, preparing or perpetrating of acts or activities by, in conjunction with, under the name of, on behalf or in support of” Al-Qaida … The Islamic International Brigade (IIB) was founded and led by Shamil Salmanovich Basayev (deceased) and is linked to the Riyadus-Salikhin Reconnaissance and Sabotage Battalion of Chechen Martyrs (RSRSBCM) … and the Special Purpose Islamic Regiment (SPIR) …

On the evening of 23 October 2002, members of IIB, RSRSBCM and SPIR operated jointly to seize over 800 hostages at Moscow’s Podshipnikov Zavod (Dubrovka) Theater.

In October 1999, emissaries of Basayev and Al-Khattab traveled to Usama bin Laden’s home base in the Afghan province of Kandahar, where Bin Laden agreed to provide substantial military assistance and financial aid, including by making arrangements to send to Chechnya several hundred fighters to fight against Russian troops and perpetrate acts of terrorism. Later that year, Bin Laden sent substantial amounts of money to Basayev, Movsar Barayev (leader of SPIR) and Al-Khattab, which was to be used exclusively for training gunmen, recruiting mercenaries and buying ammunition.

The Afghan-Caucasus Al Qaeda “terrorist railway”, financed by Saudi intelligence, had two goals. One was a Saudi goal to spread fanatical Wahhabite Jihad into the Central Asian region of the former Soviet Union. The second was the CIA’s agenda of destabilizing a then-collapsing post-Soviet Russian Federation.


On September 1 2004, armed terrorists from Basayev and al-Khattab’s IIB took more than 1,100 people as hostages in a siege that included 777 children, and forced them into School Number One (SNO) in Beslan in North Ossetia, the autonomous republic in the North Caucasus of the Russian Federation near to the Georgia border.

On the third day of the hostage crisis, as explosions were heard inside the school, FSB and other elite Russian troops stormed the building. In the end, at least 334 hostages were killed, including 186 children, with a significant number of people injured and reported missing. It became clear afterward that the Russian forces had handled the intervention poorly.

The Washington propaganda machine, from Radio Free Europe to The New York Times and CNN, wasted no time demonizing Putin and Russia for their bad handling of the Beslan crisis rather than focus on the links of Basayev to Al Qaeda and Saudi intelligence. That would have brought the world’s attention to the intimate relations between the family of then US President George W Bush and the Saudi billionaire bin Laden family.

On September 1 2001, just ten days before the day of the World Trade Center and Pentagon attacks, Saudi Intelligence head US-educated Prince Turki bin Faisal Al Saud, who had directed Saudi Intelligence since 1977, including through the entire Osama bin Laden Mujahideen operation in Afghanistan and into the Caucasus, abruptly and inexplicably resigned, just days after having accepted a new term as intelligence head from his King. He gave no explanation. He was quickly reposted to London, away from Washington.

The record of the bin Laden-Bush family intimate ties was buried, in fact entirely deleted on “national security” (sic!) grounds in the official US Commission Report on 911. The Saudi background of fourteen of the nineteen alleged 911 terrorists in New York and Washington was also deleted from the US Government’s final 911 Commission report, released only in July 2004 by the Bush Administration, almost three years after the events.

Basayev claimed credit for having sent the terrorists to Beslan. His demands had included the complete independence of Chechnya from Russia, something that would have given Washington and the Pentagon an enormous strategic dagger in the southern underbelly of the Russian Federation.

By late 2004, in the aftermath of the tragic Beslan drama, President Vladimir Putin reportedly ordered a secret search and destroy mission by Russian intelligence to hunt and kill key leaders of the Caucasus Mujahideen of Basayev. Al-Khattab had been killed in 2002. The Russian security forces soon discovered that most of the Chechen Afghan Arab terrorists had fled. They had gotten safe haven in Turkey, a NATO member; in Azerbaijan, by then almost a NATO Member; or in Germany, a NATO Member; or in Dubai-one of the closest US Allies in the Arab States, and Qatar-another very close US ally. In other words, the Chechen terrorists were given NATO safe haven.


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.

Categories: Uncategorized

John Kerry Admits Defeat

The Ukraine Story the Media Won’t Tell, and Why US Retreat is a Good Thing

The US seems to admit it overplayed its hand over Ukraine. Caving to reality is actually the best possible policy

by Patrick L Smith

Salon (May 20 2015)

It is just as well Secretary of State John Kerry’s momentous meetings with Russian leaders last week took place in Sochi, the Black Sea resort where President Putin keeps a holiday home. When you have to acknowledge that two years’ worth of pointless hostility in the bilateral relationship has proven none other than pointless, it is best to do so in a far-away place.

Arriving in the morning and leaving in the afternoon, Kerry spent three hours with Sergei Lavrov, Russia’s very competent foreign minister, and then four with Putin. After struggling with the math, these look to me like the most significant seven hours the former senator will spend as this nation’s face abroad.

Who cannot be surprised that the Obama administration, having turned the Ukraine question into the most dangerous showdown since the Cold War’s worst, now declares cordiality, cooperation and common goals the heart of the matter?

The question is not quite as simple as one may think.

On the one hand, the policy cliques’ long swoon into demonization has been scandalously juvenile, and there has been no sign until now of sense to come. Grown men and women advancing the Putin-is-Hitler bit with straight faces. Getting the Poles, paranoids for understandable reasons on all questions to with Russia, to stage ostentatious displays of teenagers in after-school military exercises. American soldiers in those silly berets they affect drilling Ukrainian Beetle Baileys in “war-making functions”, as the officer in charge put it.

When the last of these theatrics got under way in mid-April, it was time for paying-attention people to sit up. As noted in this space, it seemed to indicate that we Americans were prepared to go to war with another nuclear power to rip Ukraine from its past and replant it in the neoliberals’ hothouse of client states – doomed to weakness precisely because corrupt leaders were enticed with baubles to sever their people from history.

On the other hand, it took no genius to see what would eventually come. This column predicted long back – within weeks of the American-cultivated coup that deposed President Yanukovych in February of last year – that the Obama administration would one day be forced to retreat before it all came to resolution.

It was hard then to see how anyone could anticipate any other outcome, and so it has remained. You cannot turn basic miscalculation, indifference to history and diplomatic insensitivity into a winning hand. You turn it into an overplayed hand. And that is what sent Kerry to Sochi last week.

Surprise and no surprise, then.

What does the Sochi visit make Kerry? Is he Neville Chamberlain just back from Munich? The appeasement paranoids are not in evidence yet, which is curious. But the question is interesting nonetheless.

“Now if this sounds familiar, it’s what Hitler did back in the 1930s”, Hillary Clinton said of Putin’s Ukraine policy a month after the Yanukovych coup. Given the corner Clinton has painted herself into, can you wait to hear how she fields questions about Kerry’s new demarche? To hear her explain how she would, if elected, address Putin? I have trouble keeping my seat.

Emphatically, let us forget Clinton’s problems and dismiss any argument that Kerry is an appeaser before one is even made. There is no question of appeasement – a loaded word implying a false equivalence. Kerry is caving to realities, a very different thing.

As I have argued, the best thing American diplomats can do now is admit the failure of our long-expired strategies abroad. Implicitly, at least, Kerry has just done so in one of the most important theaters of American foreign policy. This is a sensible, productive thing to do. When you hit a wall, you can either sit there indefinitely or turn around.

What are these realities Kerry has caved to? I count five, two more than the State Department listed when it outlined Kerry’s agenda in Sochi:

* My sources in Moscow tell me that eighty percent of the exchange concerned the pending deal governing Iran’s nuclear program. Look back: Kerry and Obama have one significant foreign policy success to their credit – the opening to Cuba the exception – and a string of messy failures and successes (the restored dictatorship in Egypt, for instance) that would have been better had they failed.

Look forward: Kerry and Obama, both ambitiously aware of “legacy”, have eighteen months to land a big one. It does not get much bigger than rapprochement with Tehran.

Kerry should have come to his senses on Iran long before this. Lavrov has been instrumental in bridging an imposing divide between Iran and the P5 + 1 negotiating group – the US, Britain, France, Russia, China and Germany. Most immediately, it was the Russian foreign minister who persuaded Tehran to consider (for a second time) shipping its uranium stockpiles to Russia and re-importing what it needs for peaceful applications. This provision is on the table now and could prove make-or-break as the June 30 deadline for a deal approaches.

More broadly, relations between Russia and (what is now) Iran are 250 years older than the United States and make a complex, on-again-off-again tale. They are very “on” now, and of all P5 + 1 members, Russia holds more keys to the kingdom than any other.

* Same in Syria: A nearby neighbor, longtime relations. Moscow has supported Damascus since the 1940s and signed a non-aggression pact in 1950. Given how evident American impotence in the Syria crisis has become since the bombing campaigns began last September – and how obvious the common cause between Washington and Damascus – Kerry has been saying the unsayable since March: It is time to talk to Assad. And there is no point talking to Assad without talking to Moscow.

Let us not forget that it was Lavrov, once again, who got Obama and Kerry out of a serious political jam in September 2013, a month after the gas attacks in Damascus the administration instantly and implausibly – and wrongly, it soon turned out {1} –  assigned to Assad. The “red line” Obama drew brought the US to the eve of airstrikes, Lavrov then persuading Assad to give up his chemical-weapons inventories.

* Ukraine, like Syria, got ten percent of Kerry’s time in Sochi. I would have thought more, but this is what I am advised by sound Moscow sources. Of all the questions Kerry raised in Sochi, indeed, the new stance on Ukraine amounts to capitulation as well as a request for cooperation.

Readers will recall a rapid-fire sequence of events earlier this year. As the week of February 1 opened, the administration let it be known via a Times story – a straight feed, newspaper as bulletin board {2} – that it was considering arming the Kiev regime. Next day came an announcement that Kerry was traveling to Ukraine, due for meetings Thursday. The topic seemed obvious.

That Wednesday things got interesting. Chancellor Merkel called Francois Hollande, the French president, and told him to fly to Kiev immediately. Why interesting: These three – Kerry, Merkel and Hollande – were there the same day, talking to the same government, and did not meet. All three then went to Moscow, again separately.

So far as I can make out, all that has occurred since flowed from that week. Merkel, Hollande and Putin convened another round of ceasefire talks with the Ukrainians in Minsk, where the Minsk Two agreement was signed on February 11. Short work, which tells us something. Minsk Two is fragile but still in effect and remains the basis for a negotiated settlement.

The Americans were excluded from Minsk – point blank, so far as one can make out. And I love the Times sentence on this in Monday’s paper: “Russia, Germany and France previously made it clear that they did not necessarily welcome the Americans at the negotiating table …” It reminds me of Hirohito announcing the surrender on Japanese radio: “The war has not necessarily proceeded to our advantage”.

At the moment described a long-simmering confrontation between the Europeans and Americans was about to boil over. It was the suggestion that American arms might begin to flow into the Ukrainian conflict that prompted Merkel, with Hollande behind her, to tell Washington,

Enough. Cut it out. We are not with you. We settle this at the table, not with missile systems.

What we saw in Sochi was Kerry’s acceptance that Washington has been trumped in Ukraine: No one else will any longer stand by as Washington agitates for a military solution, no one is on board for ever-heightened confrontation with Moscow and – miss this not – no one else will any longer pretend that the Poroshenko government is other than a new crop of corrupt incompetents.

Where else does an American diplomat go at such a moment but to a Black Sea beach?

* Fourth, reality. European Union leaders are due to meet next month to consider whether to renew or drop sanctions against Russia that expire in July. What I get from sources in Europe is that six EU members are likely to oppose renewal and that Germany may make seven by the time of the EU talks. Since renewal requires a unanimous vote, the outcome seems to be clear.

As noted at the start of this year, Washington’s overly assertive strategy toward Russia risked a breach in one of two relationships: Europe’s with Russia or America’s with Europe. In my view, the increasing risk of trans-Atlantic damage was another factor in Kerry’s travels last week.

* Last but maybe first, in the best outcome the Obama administration has learned the most important lesson available to it in its foreign relations. No need to do any other than quote Stephen F Cohen, the Russianist interviewed here a few weeks ago {3}.

“The road to American national security still runs through Moscow”, Cohen said with that conviction that comes of long experience.

There is not a single major regional or issue-related national security problem we can solve without the full cooperation of whoever sits in the Kremlin, period, end of story. Name your poison: We’re talking the Middle East, we’re talking Afghanistan, we’re talking energy, we’re talking climate, we’re talking nuclear proliferation, terrorism, shooting airplanes out of the sky, we’re talking about the two terrorist brothers in Boston.

My reservation about the best outcome is that it is unlikely. To draw lessons from errors you have to acknowledge them, and our policy cliques rarely do, so missing all opportunity to learn from them. Kerry’s demarche has failure written all over it, but, per usual, it is advanced as merely the successful outcome of a successful strategy. This is how you will read of it, I assure you.

More interesting choreography comes our way already. Kerry was in Sochi last Tuesday. The frightening Victoria Nuland, his assistant secretary for European affairs, was in Kiev by Friday. There, and then in Moscow, Nuland was a misleading claim a minute, suggesting, among much else, that she and Kerry were “fully committed to Minsk implementation”.

What a charade. No one other Americans bamboozled by bad media can take this stuff seriously. Not only were Americans kept away from Minsk – not necessarily invited, I should say – but Nuland and her boss vigorously sought to undermine it as soon as it was signed.

Remember Al Haig at the White House after Reagan was shot in 1981? “I’m in charge here!” This is Victoria Nuland bouncing between Kiev and Moscow as we speak. She runs to catch up while claiming to lead, having been left behind by ministers and diplomats with better things to do than provoke confrontation.

We will have to see where this latest turn leads. I credit Kerry. I do not assign him any transcendently imaginative new take on American strategy in the Middle East, in Ukraine, or in Washington’s ties to Moscow. He has acknowledged failure without admitting it. It is force of circumstance, not more. It is not everything, but it could be a lot more than nothing.






Patrick Smith is the author of Time No Longer: Americans After the American Century (2013). He was the International Herald Tribune‘s bureau chief in Hong Kong and then Tokyo from 1985 to 1992. During this time he also wrote “Letter from Tokyo” for the New Yorker. He is the author of four previous books and has contributed frequently to the New York Times, the Nation, the Washington Quarterly, and other publications. Follow him on Twitter, @thefloutist.

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I’ve Read Obama’s Secret Trade Deal

Elizabeth Warren Is Right to Be Concerned

by Michael Wessel, ProPublica

Wolf Street (May 19 2015)

“You need to tell me what’s wrong with this trade agreement, not one that was passed 25 years ago”, a frustrated President Barack Obama recently complained about criticisms of the Trans Pacific Partnership (TPP). He’s right. The public criticisms of the TPP have been vague. That’s by design – anyone who has read the text of the agreement could be jailed for disclosing its contents. I’ve actually read the TPP text provided to the government’s own advisors, and I’ve given the president an earful about how this trade deal will damage this nation. But I can’t share my criticisms with you.

I can tell you that Elizabeth Warren is right about her criticism of the trade deal. We should be very concerned about what’s hidden in this trade deal – and particularly how the Obama administration is keeping information secret even from those of us who are supposed to provide advice.

So-called “cleared advisors” like me are prohibited from sharing publicly the criticisms we’ve lodged about specific proposals and approaches. The government has created a perfect Catch 22: The law prohibits us from talking about the specifics of what we’ve seen, allowing the president to criticize us for not being specific. Instead of simply admitting that he disagrees with me – and with many other cleared advisors – about the merits of the TPP, the president instead pretends that our specific, pointed criticisms don’t exist.

What I can tell you is that the administration is being unfair to those who are raising proper questions about the harms the TPP would do. To the administration, everyone who questions their approach is branded as a protectionist – or worse – dishonest. They broadly criticize organized labor, despite the fact that unions have been the primary force in America pushing for strong rules to promote opportunity and jobs. And they dismiss individuals like me who believe that, first and foremost, a trade agreement should promote the interests of domestic producers and their employees.

I’ve been deeply involved in trade policy for almost four decades. For 21 years, I worked for former Democratic Leader Richard Gephardt and handled all trade policy issues including “fast track”, the North American Free Trade Agreement and the World Trade Organization’s Uruguay Round, which is the largest trade agreement in history. I am also a consultant to various domestic producers and the United Steelworkers union, for whom I serve as a cleared advisor on two trade advisory committees. To top it off, I was a publicly acknowledged advisor to the Obama campaign in 2008.

Obama may no longer be listening to my advice, but Hillary Clinton and Elizabeth Warren might as well be. Warren, of course, has been perhaps the deal’s most vocal critic, but even the more cautious Clinton has raised the right questions on what a good TPP would look like. Her spokesman, Nick Merrill, said: “She will be watching closely to see what is being done to crack down on currency manipulation, improve labor rights, protect the environment and health, promote transparency and open new opportunities for our small businesses to export overseas. As she warned in her book Hard Choices (2014), we shouldn’t be giving special rights to corporations at the expense of workers and consumers.”

On this count, the current TPP doesn’t measure up. And nothing being considered by Congress right now would ensure that the TPP meets the goal of promoting domestic production and job creation.

The text of the TPP, like all trade deals, is a closely guarded secret. That fact makes a genuine public debate impossible and should make robust debate behind closed doors all the more essential. But the ability of TPP critics like me to point out the deal’s many failings is limited by the government’s surprising and unprecedented refusal to make revisions to the language in the TPP fully available to cleared advisors.

Bill Clinton didn’t operate like this. During the debate on Nafta, as a cleared advisor for the Democratic leadership, I had a copy of the entire text in a safe next to my desk and regularly was briefed on the specifics of the negotiations, including counterproposals made by Mexico and Canada. During the TPP negotiations, the  United States Trade Representative (USTR) has never shared proposals being advanced by other TPP partners. Today’s consultations are, in many ways, much more restrictive than those under past administrations.

All advisors, and any liaisons, are required to have security clearances, which entail extensive paperwork and background investigations, before they are able to review text and participate in briefings. But, despite clearances, and a statutory duty to provide advice, advisors do not have access to all the materials that a reasonable person would need to do the job. The negotiators provide us with “proposals” but those are merely initial proposals to trading partners. We are not allowed to see counter-proposals from our trading partners. Often, advisors are provided with updates indicating that the final text will balance all appropriate stakeholder interests but we frequently receive few additional details beyond that flimsy assurance.

Those details have enormous repercussions. For instance, rules of origin specify how much of a product must originate within the TPP countries for the resulting product to be eligible for duty-free treatment. These are complex rules that decide where a company will manufacture its products and where is will purchase raw materials. Under the North American Free Trade Agreement (Nafta), 62.5 percent of a car needed to originate within Nafta countries. In the US-Australia Free Trade Agreement, it was lowered to fifty percent. It further dropped to 35 percent in the US-Korea Free Trade Agreement (Korus). In essence, under our agreement with Korea, 65 percent of a car from South Korea could be made from Chinese parts and still qualify for duty-free treatment when exported to the US.

That fact is politically toxic, and for that reason, we should expect the TPP agreement to have higher standards. But will it reach the 62.5 percent Nafta requirement? Or will it be only a slight improvement over Korus? Without access to the final text of the agreement, it’s impossible to say.

State-owned enterprises may, for the first time, be addressed in the TPP. But, once again, the details are not clear. Will exemptions be provided to countries like Vietnam, Malaysia and Singapore, all of which could be heavily impacted by such a rule? What will be the test to determine what is or is not acceptable behavior? Will injury be required to occur over a substantial period of time, or will individual acts of non-commercial, damaging trade practices be actionable? Again, it’s impossible to say for sure.

Advisors are almost flying blind on these questions and others.

Only portions of the text have been provided, to be read under the watchful eye of a USTR official. Access, up until recently, was provided on secure web sites. But the government-run website does not contain the most-up-to-date information for cleared advisors. To get that information, we have to travel to certain government facilities and sign in to read the materials. Even then, the administration determines what we can and cannot review and, often, they provide carefully edited summaries rather than the actual underlying text, which is critical to really understanding the consequences of the agreement.

Cleared advisors were created by statute to advise our nation’s trade negotiators. There is a hierarchal structure, starting with the USTR’s Advisory Committee on Trade Policy & Negotiations at the top – a committee that includes people like Steelworkers President Leo Gerard, Mastercard CEO Ajay Banga, Etsy CEO Chad Dickerson and Jill Appell, co-owner of Appell’s Pork Farms. Then there are specific Committees covering subjects like labor, the environment and agriculture that make up the next tier. The last tier consists of the Industry Trade Advisory Committees (ITACS), which focus on individual sectors such as steel and aerospace. At last count, there were more than 600 cleared advisors. The vast majority of them represent business interests.

In an effort to diminish criticism, USTR is now letting cleared advisors review summaries of what the negotiators have done. In response to a question about when the full updated text will be made available, we’ve been told, “We are working on making them available as soon as possible”. That’s not the case overseas: Our trading partners have this text, but the government’s own cleared advisors, serving on statutorily-created advisory committees, are kept in the dark.

How can we properly advise, without knowing the details?

Questions pervade virtually every chapter of the proposed agreement, including labor and the environment, investor-state, intellectual property and others. The answers to these questions affect the sourcing and investment decisions of our companies and resulting jobs for our people. Our elected representatives would be abdicating their Constitutional duty if they failed to raise questions.

Senator Warren should be commended for her courage in standing up to the President, and Secretary Clinton for raising a note of caution, and I encourage all elected officials to raise these important questions. Working Americans can’t afford more failed trade agreements and trade policies.

Congress should refuse to pass fast track trade negotiating authority until the partnership between the branches, and the trust of the American people is restored. That will require a lot of fence mending and disclosure of exactly what the TPP will do. That begins by sharing the final text of the TPP with those of us who won’t simply rubber-stamp it.

But not everything is going according to script for the self-anointed architects of the new global order. Read


Michael Wessel is a cleared liaison to two statutory advisory committees and was a commissioner on the US Trade Deficit Review Commission, as well as the international trade co-chair for the Kerry-Edwards Presidential Campaign.

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How Much Longer Can The Oil Age Last?

by Gaurav Agnihotri (May 08 2015)

History has been so fascinated with oil and its price movements that it is indeed hard to imagine our future without oil. Over the last few months, we have witnessed how oil prices have fluctuated from a six year low level of $42.98 per barrel in March 2015 to the current levels of $60 per barrel. It is interesting to note that, in spite of the biggest oil cartel in the world deciding to stick to its high production levels, the oil prices have increased mainly due to falling US crude inventories and strong demand. However, the current upward rally might be short lived and there may yet be another drop in the international oil price when Iran eventually starts pumping its oil into the market at full capacity, potentially creating another supply glut. In these endless price rallies, it is important to take a holistic view of the global energy industry and question which way it is heading. Are the dynamics of global energy changing with current improvements in renewable energy sources and affordable new storage technologies? Can the oil age end in the near future? Will we ever stop feverishly analyzing the rise and fall of oil prices? Or, will oil remain irreplaceable in our life time?

Are Renewables Ready to Take Over?

With little or no pollution, renewables like solar, wind and biofuels are viewed by many as a means to curtail the rising greenhouse emissions and replace oil as a sustainable alternative. There is little doubt as to why China, US, Japan, UK and Germany, some of the world’s biggest energy gluttons have invested heavily in renewables.

Image Source: EIA

However, according to a study conducted by Frankfurt School-UNEP Collaborating Centre for Climate & Sustainable Energy Finance, the United Nations Environment Program (UNEP) and Bloomberg New Energy Finance, the total global investments in renewables fell by fourteen percent to $214 billion in 2013. One of the major reasons of this fall was the backing out of some big oil firms such as BP, Chevron and Conoco Phillips. These companies significantly reduced their investments in renewables and decided to focus on their ‘core’ business; that is, oil and gas. As per Lysle Brinker, an oil and gas equity analyst at IHS “It’s not their (Big oil majors) strong suit to be spending a lot of money and time on renewables when they are definitely challenged in their core industry”.

However, if we take the example of the solar industry, where the cost of an average photo voltaic panel is declining at a rate of more than ten percent per annum we see that, in spite of reduced global investments, renewables still hold a lot of promise. Some of the major integrated oil and gas companies such as Shell, Total and Statoil have actually been slowly and steadily increasing their renewable related investments. Shell is investing big time in biofuels, while Total, with its stake in Sunpower, is investing substantially in the solar sector while Statoil is placing its bets on wind energy. This shows that renewables are a phenomenon that many believe can give oil a run for its money.

Is Saudi Arabia Sensing an End of Oil Age?

“No one can set the price of oil –  It is up to Allah”, this is what Saudi Arabia’s oil minister Ali Al Naimi had to say while speaking to CNBC recently. OPEC, which holds around forty percent of the world’s crude output, is showing no signs of reducing its production levels, even if Iran starts pumping more oil after sanctions are lifted should the international nuclear deal with P 5+ 1 counties prove successful. Many see this move by OPEC as a means to protect its market share and drive US shale players out of business. But is the decision of OPEC (especially Saudi Arabia) part of a much bigger game? The Saudis, who lead OPEC, would obviously be very interested in delaying ‘Peak Oil Demand’ after which global demand for oil would start declining steadily, along with Saudi oil revenues.

According to Bank of America and Merrill Lynch commodity researchers, if crude prices stay in the range of fifty to seventy dollars per barrel, peak oil demand would be pushed beyond 2030. This delay in peak oil demand would definitely hurt renewables and anyone who is investing in them. As per Alex Thursby, Chief Executive at the National Bank of Abu Dhabi,

Renewable energy technologies are far further advanced than many may believe: solar photovoltaic (PV) and on-shore wind have a track record of successful deployment, and costs have fallen dramatically in the past few years. In many parts of the world, indeed, they are now competitive with hydrocarbon energy sources. Already, more than half of the investment in new electricity generation worldwide is in renewables. Potentially, the gains to be made from focusing on energy efficiency are as great as the benefits of increasing generation. Together, these help us to reframe how we think about the prospects for energy in the region.

Yes, OPEC has sensed the end of its glory days. And it is obvious that Saudi Arabia, with 85% of its export revenues coming from petroleum exports does not want the oil age to end anytime soon.

What Can We Expect?

If we look at China, the second biggest global consumer of oil, we find that its oil consumption rate constitutes about one third the world’s total consumption rates and shows no signs of slowing. In fact, EIA even predicts steady growth of China’s oil production reaching 4.6 million barrels per day in 2020 and 5.6 million barrels per day in 2040.

China has also invested heavily in building its strategic petroleum reserves and plans to expand them to 500 million barrels by 2020.

Now take India, a country that is considered by many as the next solar investment hotspot. India has been investing heavily in building its own strategic petroleum reserves and its public sector undertaking, Oil and Natural Gas Corporation Limited (ONGC) is planning to invest about $62 billion on its discoveries in Krishna Godavari Basin block KG-D5.

These are two of the world’s fastest growing economies that are investing heavily in renewables but also safeguarding their oil and gas aspirations. Moreover, when we analyze past oil price trends, we find that volatility related to geopolitical equations, speculations, wars, economic sanctions and climate change have always kept the global energy markets guessing about the future. The world is still myopic when it comes to energy. Yes, it wants to embrace renewables but not at the cost of oil. Whatever happens to oil prices in the coming years, one thing is certain: that the age of oil isn’t ending anytime soon, at least not in the next thirty years.


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No, You Can’t Go Back to the USSR!

2015/05/21 1 comment

by Dmitry Orlov

Club Orlov (May 19 2015)

One of the fake stories kept alive by certain American politicians, with the help of western media, is that Vladimir Putin (who, they vacuously claim, is a dictator and a tyrant) wants to reconstitute the USSR, with the annexation of Crimea as the first step.

Instead of listening to their gossip, let’s lay out the facts.

The USSR was officially dissolved on December 26 1991 by declaration Number 142-H of the Supreme Soviet. It acknowledged the independence of the fifteen Soviet republics, and in the place of the USSR created a Commonwealth of Independent States, which hasn’t amounted to much.

In the west, there was much rejoicing, and everyone assumed that in the east everyone was rejoicing as well. Well, that’s a funny thing, actually, because a union-wide referendum held on March 17 1991, produced a stunning result: with over eighty percent turnout, of the 185,647,355 people who voted 113,512,812 voted to preserve the USSR. That’s 77.85% – not exactly a slim majority. Their wishes were disregarded.

Was this public sentiment temporary, borne of fear in the face of uncertainty? And if it were to persist, it would surely be a purely Russian thing, because the populations of all these other Independent States, having tasted freedom, would never consider rejoining Russia. Well, that’s another funny thing: in September of 2011, fully two decades after the referendum, Ukrainian sociologists found out that thirty percent of the people there wished for a return to a Soviet-style planned economy (stunningly, seventeen percent of these were young people with no experience of life in the USSR) and only 22% wished for some sort of European-style democracy. The wish for a return to Soviet-style central planning is telling: it shows just how miserable a failure the Ukraine’s experiment with instituting a western-style market economy had become. But, again, their wishes were disregarded.

This would seem to indicate that Putin’s presumptuously postulated project of reconstituting the USSR would have plenty of popular support, would it not? What he said on the subject, when asked directly (in December of 2010) is this: “He who doesn’t regret the collapse of the USSR doesn’t have a heart; he who wants to see it reborn doesn’t have a brain”. Last I checked, Putin does have a brain; ergo, no USSR 2.0 is forthcoming.

Interestingly, he went on to say a few more words on the subject. He said that the USSR had a competitive advantage as a unified market and a free trade zone. This one element of the USSR is now embodied in the Customs Union, of which Russia, Belarus, Kazakhstan and several smaller countries are members, and it appears to be a success.

The Ukraine – with over forty million inhabitants, a major piece – refused to join while continuing to trade mostly with Customs Union members. This strategy has turned out to be, to put it mildly, disadvantageous, with Ukrainian economy now in rapid collapse, having declined over seventeen percent in just the first quarter of this year. Thus, while the theory of competitive advantage may or may not be valid, the converse competitive disadvantage of NOT joining the Customs Union is there for all to see.

* * *

To be sure, many aspects of the old USSR have been happily consigned to oblivion. Among them:

* The communist ideology: the Communist Party no longer has a monopoly on power.

* The bloc mentality: the Warsaw Pact evaporated, leaving Nato behind as the one hand clapping. The new system is a multipolar one.

* Central planning: replaced with a market economy

* Economic isolationism: replaced with an export-driven economy based on trade agreements with numerous nations around the world

* Authoritarian governance: replaced with authoritative governance, in which leaders derive their authority from their popularity, which is based on their performance in office, whereas previously the General Secretary of the CPSU was a bit like the Pope – infallible by definition.

These are all positive changes, and very few people regret that they have occurred, or wish for a return to status quo ante.

There are many other aspects of the old USSR which have been degraded, sometimes severely, but nevertheless remain in place. Among them are public health and public education.

The USSR had a system of socialized medicine that excelled at some things and was mediocre in others. The shift to privatized medicine has been a success in some ways, but is very hard on those who cannot afford the care or the medications. The educational system is still very good at all levels, but here too there has been significant degradation, bemoaned by many observers.

The USSR invested heavily in science and culture, and much has been lost during the difficult years of the 1990s – something that many people regret very much. The USSR led the world in basic scientific research, probing into matters that did not have any commercial applications, simply because they were scientifically interesting and led to publishable results. The US led the world in product design, something that Soviet engineers were happy to simply copy much of the time, to save time and effort. Since they were not attempting to export into the western consumer market, a slight lag in time to market was of no consequence to them.

On the other hand, Americans have always had trouble wrapping their heads around the idea of financing scientific research that had absolutely no conceivable commercial applications. In addition, the anti-intellectualism prevalent in American culture caused a proliferation of other sorts of “scientists”: political scientists, social scientists, food scientists … a certificate in “janitorial science” wouldn’t be too much of a stretch.

Basic science is the premier transnational intellectual endeavor of the human species in modern times, and the damage done to Soviet science has caused significant damage to the pursuit of scientific knowledge throughout the world, and a diminution in the stature of the scientific endeavor. Now even in Russia scientists are forced to chase after grant money by pursuing avenues of research that lead to patentable gizmos and gadgets.

One of the things that has been retained is the living arrangement. Over the seven decades of the USSR’s existence, there took place a thorough transformation from an agrarian population dispersed across the countryside to an industrialized population concentrated in major cities. The people went from being log cabin-dwellers to apartment-dwellers. Following the dissolution of the USSR, the housing stock was privatized, and now many families own their residences free and clear. The ability to live rent-free provides them with a very large competitive advantage compared to families in high-rent, debt-ridden countries such as the US.

Along with apartment buildings built in dense, walkable clusters went a system of public transportation. This, too, has remained largely intact, and in many cities has been expanded and modernized. This, again, provides numerous benefits to the population, and gives them an advantage vis a vis people in car-dependent countries, where the people spend much of their life stuck in traffic, and where the elderly, who are too old to drive safely, are often forced to choose between being stuck in their homes and taking their lives (and those of others) in their own hands behind the wheel.

* * *

When something is said to have collapsed, people often assume that it has simply ceased to exist. But the effects of collapse depend on the nature of the thing that collapses. When a hydroelectric dam collapses, it ceases to produce electricity, plus it destroys lots of things downstream from it, plus it may disrupt access to water. When a school collapses, it may kill some schoolchildren, and some teachers, but it doesn’t necessarily destroy the knowledge that was being imparted. And when a mausoleum collapses, only its description changes: it can then be described as “ruined”.

Some collapses are common, others not. Economies, especially bubble economies, collapse all the time. Empires collapse with great regularity. Civilizations are said to collapse, but do they really? A civilization can be viewed as a functioning apparatus, but doing so seems to confuse a set of principles with the entity that embodies them. Civilizational principles can be quite durable: the Roman empire was gone for a thousand years when Europe once again became capable of large-scale social organization, but, sure enough, the Europeans dusted off the old Roman legal codes and principles of organization, and started applying them. In the meantime, in the colleges and universities, Latin had remained the language of learned discourse, in absence of any surviving Latins being present to teach LSL classes. It would appear that civilizations don’t really collapse; they just become quescent. New developments may spark them back to life, or they may eventually be supplanted – by another civilization.

The USSR is gone as a political entity, but as a civilizational entity it appears to be holding its own, though it lacks a name. The two-part name – Soviet, plus “Soyuz” (Union) – fell apart. The word “Soviet”, used as an adjective, applies only to the past. As a noun, it means “council”, having originated from the revolutionary workers’ councils, and this is still used, although cautiously: “to help with council” is, to a Russian, to only pretend to help. But the term “Soyuz” lives on; it is the name of the only spaceship that can still ferry passengers to the International Space Station; the new Customs Union is a Customs Soyuz. And Russian children still grow up in the Soyuz, in a manner of speaking, thanks to Soyuzmultfilm, the Soviet-era studio that produced excellent children’s animated films, which are still hugely popular and are now available on Youtube.

Let us think of the Soyuz – as a civilization, rather than of the USSR – which was a political empire. A major effort was made to supplant it with western civilization, through the introduction of market economics and a flood of western imports, both material and cultural. Western civilizational principles dominated for a time, among them such western innovations as granting equal status to homosexual practices, disregarding the role of ethnicity in political organization, and the abnegation of economic and political sovereignty to the imperial center in Washington, DC. All of these were, for a time, masticated thoroughly. Then they were rather forcefully spat out, everywhere in the former USSR except for a few sorry basket cases, the Ukraine foremost among them. But everywhere else, once the full fiasco of western values became clear to all, previous civilizational principles came roaring back to life.

Perhaps foremost among them is social conservatism. The Russian Federation has two major religions: Orthodox Christianity and Islam, and a great deal of effort goes into maintaining their mutual compatibility, so that religion does not become a divisive factor. Introducing constructs that are alien to both, such as gay marriage, is a nonstarter. But polygamy is not off the table, and a senior Chechen official recently took a young bride to be his second wife. This event caused quite a sensation, but was allowed to proceed – in Moslem Chechnya.

Second is the principle that ethnicity is significant to social and political organization. Russia is not a nation – it is a multinational federation. There are over 190 different nations that make it up, with ethnic Russians accounting for a little over threen fourths of the population. This percentage is likely to decrease over time: Russia is second only to USA in the number of immigrants it absorbs, and their country of origin, sorted by the number of immigrants, is as follows: Ukraine, Uzbekistan, Tajikistan, Azerbaijan, Moldova, Kazakhstan, Kyrgyzstan, Armenia, Belarus, China, Germany and USA.

During the existence of the USSR, the multi-ethnic composition of the country was given much emphasis. Numerous small nations had their languages written down for the first time, using the ever-expanding Cyrillic alphabet, and endowed with a national literature. National languages were included in school curricula, and various nations used them in their local self-governance, to enlarge their autonomy and improve social cohesion. In essence, the Russian Federation provides for ethnic sovereignty – each nation can claim a measure of sovereignty for itself, rule itself and create its own laws, provided they do not conflict with the larger whole. A prime example of this is modern Chechnya: Moscow is content to let it persecute its own anti-terrorist campaign, to put down the remaining foreign-financed jihadis.

Imagine the principle of ethnic sovereignty being applied to the US, where one’s ethnicity is of no consequence provided one looks, sounds and behaves sufficiently Anglo. In the US, ethnicity has been reduced to questions of music and cuisine, with perhaps a festival here and there, but always with the tacit understanding that “ethnic” means “other”: there is no such thing as an “ethnic Anglo”. Since ethnicity is essentially taboo, the completely artificial construct of race is used instead, with artificial, discriminatory labels attached to categories of individuals. The label “Latino” is particularly bogus, since there is very little in common between, say, a Cuban and a Bolivian, except that both are likely to face discrimination, neither being considered sufficiently “white” – Anglo, that is. But imagine if the Mexicans or the African-Americans were to be granted a similar level of autonomy within the US? It would blow the country to pieces!

A country predicated on protecting “white privilege” cannot possibly survive such a corruption of its founding principles. The US fought a revolution to keep slavery legal (it was about to be abolished by the British); then it fought a civil war to change slavery from one form to another (there are more African-Americans in US jails now than there were slaves in the Confederate South prior to the Civil War).

Nobody knows what wars lie in its future, or what will provoke them, but this particular intercivilizational fault line is likely to be very important. For what is a nation? Is it your tribe, or is it a bunch of mercenaries pretending to be Anglo so that they are allowed into the country club? Only time will tell which of the two civilizations will prove to be more durable.

Categories: Uncategorized

US Wakes Up to New (Silk) World Order

2015/05/20 1 comment

by Pepe Escobar

Asia Times News (May 15 2015)

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

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

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

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

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

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

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

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

About those missiles …

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

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

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

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

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

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

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

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

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


(Copyright 2015 Asia Times Holdings Limited, a duly registered Hong Kong company. All rights reserved. Please contact us about sales, syndication and republishing.)

Categories: Uncategorized

The Untied State Of America

by Tyler Durden

Zero Hedge (May 19 2015)

Dis-united …

In Words …

As Robert Reich said yesterday, “yes, The Fed is feeding inequality; but it has to keep rates low for the good of the economy”.

And Pictures …

And Charts …

Source: Bloomberg and @Stalingrad_Poor

Categories: Uncategorized

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