http://journal-neo.org/2015/05/24/washington-blows-itself-up-with-its-own-bomb/
Washington Blows Itself Up With Its Own Bomb
These
are sad days in Washington and Wall Street. The once unchallenged sole
Superpower at the collapse of the Soviet Union some quarter century ago
is losing its global influence so rapidly that most would not have
predicted anything comparable six months ago. The key actor who has
catalyzed a global defiance of Washington as Sole Superpower is Vladimir
Putin, Russia’s President. This is the real background to the surprise
visit of US Secretary of State John Kerry to Sochi to meet with Russian
Foreign Minister Sergei Lavrov and then a four hour talk with “Satan”
himself, Putin.
Far from a
“reset” try, Washington’s hapless geopolitical strategists are
desperately trying to find a better way to bring the Russian Bear to her
knees.
A
flash back to December 2014 is instructive to understand why the US
Secretary of State holds out an apparent olive branch to Russia’s Putin
at this juncture. At that point, Washington appeared about to pin Russia
to the ground, with its precision targeted financial sanctions and its
deal with Saudi Arabia to collapse oil prices. In mid-December the Ruble
was in free fall against the dollar. Oil prices were similarly
plummeting down to $45 a barrel from $107 only six months earlier. As
Russia is strongly dependent on oil and gas export revenues for its
state finances, and Russian companies held huge dollar debt obligations
abroad, the situation was bleak as seen from inside the Kremlin.
Here
fate, as it were, intervened in an unexpected way (at least by the USA
architects of the financial warfare and oil collapse strategy). Not only
was John Kerry’s September 2014 deal with ailing Saudi King Abdullah
delivering heavy pain in the Russian finances. It was also threatening
an explosion of an estimated $500 billion in high-risk-high-yield “junk”
bonds, debt that the US shale oil industry had taken on from Wall
Street banks in the past five years to finance the much-touted US shale
oil revolution that briefly propelled the USA ahead of Saudi Arabia as
the world’s largest oil producer.
US strategy backfires
What
Kerry missed in his clever Saudi horse trading was the sly double
agenda of the Saudi royals. They had earlier made clear they did not at
all want their role as world premier oil producer and market king to be
undercut by an upstart US shale oil industry. They were happy to give
Russia and also Iran pain. But their central aim was to kill the US
shale oil rivals. Their shale projects were calculated when oil was $100
a barrel, less than a year ago. Their minimum price of oil to avoid
bankruptcy in most cases was $65 a barrel to $80 a barrel. Shale oil
extraction is unconventional and more costly than conventional oil.
Douglas-Westwood, an energy advisory firm, estimates that nearly half of
the US oil projects under development need oil prices greater than $120
per barrel in order to achieve positive cash flow.
By
end of December a chain-reaction series of shale oil bankruptcies
threatened to detonate a new financial tsunami at a time the carnage
from the 2007-2008 securitization financial crisis was anything but
resolved. Even a few high-profile shale oil junk bond defaults would
have triggered a domino-style panic in the US $1.9 trillion junk bond
debt market, no doubt setting off a new financial meltdown that the
over-stressed US Government and Federal Reserve could scarcely handle.
It could have threatened the end of the US dollar as global reserve
currency.
Suddenly
in the first days of January, IMF head Lagarde was praising Russia’s
central bank for its “successful” handling of the ruble crisis. The US
Treasury Office of Financial Terrorism quietly eased off on further
attacks on Russia while the Obama Administration pretended it was “World
War III as usual” against Putin. The US oil strategy had inflicted far
more damage on the US than on Russia.
USA Russia policy failure
Not
only that. Washington’s brilliant total war strategy against Russia
initiated with the November 2013 Kiev EuroMaidan coup d’etat has become a
manifest, utter failure that is creating the worst imaginable
geopolitical nightmare for Washington.
Far
from reacting as a helpless victim and cowering in fear before the US
efforts to isolate Russia, Putin initiated a brilliant series of foreign
economic, military and political initiatives that by April added up to
the seed crystal of a new global monetary order and a new Eurasian
economic colossus to rival US sole superpower hegemony. He challenged
the very foundations of the US-dominated dollar system and her global
world order everywhere from India to Brazil to Cuba to Greece to Turkey.
Russia and China signed mammoth new energy deals that allowed Russia to
redirect its energy strategy from the west where the EU and Ukraine,
both under strong Washington pressure, had sabotaged Russian EU gas
deliveries via Ukraine. The EU, again under intense Washington pressure
threw one monkey wrench after another into Gazprom’s South Stream
natural gas pipeline project to southern Europe.
Rather
than be defensive, Putin shocked the EU during his visit to Turkey and
meeting with President Erdogan when he announced on December 1 that he
had cancelled Gazprom’s South Stream project. He announced he would seek
an agreement with Turkey to deliver Russian gas to the Greek border.
From there, if the EU wants the gas they have to finance their own
pipelines. The EU bluff was called. Their future gas needs were more
remote than ever.
The
EU sanctions on Russia also backfired as Russia retaliated with a ban
on EU food imports and a turn to Russian self-sufficiency. And billions
of dollars of contracts or exports from German firms like Siemens or
France’s Total were suddenly in limbo. Boeing saw large aircraft orders
to Russian carriers cancelled. Russia announced it was turning to
national suppliers in production of critical defense components.
Then
Russia became an “Asian” charter member of China’s remarkably
successful new Asian Infrastructure Investment Bank (AIIB) designed to
finance its ambitious New Silk Road Economic Belt high-speed rail
network across Eurasia into the EU. Rather than isolate Russia, US
policy backfired badly as, despite strong pressures, US staunch allies
including Britain, Germany, France and South Korea all rushed to join
the new AIIB.
Further,
at their May meeting in Moscow, China’s President Xi Jinping and
Vladimir Putin announced that the China silk road rail infrastructure
would be fully integrated with Russia’s Eurasian Economic Union, a
staggering boost not only to Russia bit to Eurasia into China, a region
containing the majority of the world’s population.
In
short, by the point John Kerry was told to swallow hard and fly to
Sochi, hat in hand, to offer some kind of peace pipe to Putin, US
leading circles, the American Oligarchs had realized their aggressive
neo-conservative warhawks like Victoria “F**k the EU” Nuland of the
State Department and Defense Secretary Ash Carter were propelling the
creation of a new alternative world structure that could spell the ruin
of the entire post-Bretton Woods Washington-dominated Dollar System.
Oops.
In
addition, by forcing her European “allies” to toe the US anti-Putin
line, to the severe detriment of EU economic and political interests,
alone her vigorous participation in the New Silk Road Economic Belt
project and the economic boom in investment that will bring with it,
Washington’s neo-conservatives have managed also to accelerate a
probable parting of the ways between Germany, France and other
Continental European powers to Washington.
Finally,
as the whole world (including even Western anti-Atlantists) came to
view Putin as the symbol of resistance to the American dominance. This
perception first emerged at the time of the Snowden story but has
solidified after the sanctions and blockade. Such perception, by the
way, plays a significant psychological role in the geopolitical struggle
– the presence of such a symbol opens up novel venues in the fight
against the hegemony.
For
all these reasons, Kerry was clearly sent to Sochi to sniff out
possible soft points for a renewed assault in the future. He told the
rogue US-backed lunatics in Kiev to cool it and respect the Minsk
cease-fire accords. The demand came as a shock in Kiev. US-installed
Prime Minister Arseniy Yatsenyuk told French TV, “Sochi is definitely
not the best resort and not the best place to have a chat with Russian
president and Russian foreign minister.”
At
this juncture the only thing clear is that Washington has finally
realized the stupidity of its provocations against Russia in Ukraine and
globally. What their next scheme will entail is not yet clear. Clear is
that a dramatic policy shift has been ordered on the Obama
administration from the highest levels of US institutions. Nothing else
could explain the dramatic shift. If sanity replaces the neo-con
insanity remains to be seen. Clear is that Russia and China are resolute
about never again leaving themselves at the mercy of an incalculable
sole superpower. Kerry’s pathetic attempt at a second Russia “reset” in
Sochi will bring Washington little at this point. The US Oligarchy, as
Shakespeare’s Hamlet put it, is being “hoist with their own petard,” as
the bomb maker blows himself up with his own bomb.
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”.
First appeared:http://journal-neo.org/2015/05/24/washington-blows-itself-up-with-its-own-bomb/
First appeared:http://journal-neo.org/2015/05/24/washington-blows-itself-up-with-its-own-bomb/
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