Thursday, December 28, 2017

China Plans to Break Petrodollar Stranglehold

Petrodollars have dominated the global energy markets for more than 40 years. But now, China is looking to change that by replacing the word dollars for yuan.

Nations, of course, have tried this before since the system was set up by former US Secretary of State Henry Kissinger in tandem with the House of Saud back in 1974

Vast populations across the Middle East and Northern Africa quickly felt the consequences when Iraq’s Saddam Hussein decided to sell oil in euros. Then there was Libya’s Muammar Gaddafi’s pan-African gold dinar blueprint, which failed to create a splash in an oil barrel.

Fast forward 25 years and China is making a move to break the United States petrodollar stranglehold. The plan is to set up oil-futures trading in the yuan, which will be fully convertible into gold on the Shanghai and Hong Kong foreign exchange markets.

The Shanghai Futures Exchange and its subsidiary, the Shanghai International Energy Exchange (INE), have already run four simulations for crude futures.

It was expected to be rolled out by the end of this year, but that looks unlikely to happen. But when it does get off the ground in 2018, the fundamentals will be clear – this triple oil-yuan-gold route will bypass the mighty green back.

The era of the petroyuan will be at hand.

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Tuesday, December 26, 2017

Iraq Redux in the Making? US Rhetoric on Iran Brings Back Memories of 2003

Sometimes you wake up in the morning and it’s 2003 all over again. That was the year when the United States embarked on its catastrophic course of intervention in Asia. It was at least "somewhat justified" in invading Afghanistan to eliminate al-Qaeda but then made the mistake of sticking around to fix the country, a repair job that has lasted sixteen years and counting with no end in sight. And it was also the time when the neoconservatives who were then controlling the Pentagon and White House decided that it was necessary to go after Iraq.

As Baghdad in no way threatened the United States, and everyone who had examined the actual evidence knew that to be the case, a false narrative about Saddam Hussein had to be contrived. The White House claimed that Iraq was supporting al-Qaeda, that it was seeking uranium to construct a nuclear weapon and that it was building gliders that could cross the Atlantic Ocean with cargoes of chemical and biological weapons.

None of that turned out to be true, but the piece de resistance of the go-to-war crowd was the presentation made by Secretary of State Colin Powell before the United Nations on February 5, 2003. With Central Intelligence Director George Tenet sitting behind him presumably to establish bona fides for the information that was about to be revealed, Powell detailed how Iraq was preparing and concealing from inspectors weapons of mass destruction, was avoiding disarming and was colluding with al-Qaeda. It was all a lie, intended only to make a minimal case to the U.N. that increasing the military pressure on Iraq was a supportable, indeed a necessary, policy. One month later President George W. Bush called on President Saddam Hussein to resign based on his failure to comply with U.N. demands and, when he did not do so, launched an invasion of Iraq.

America’s current United Nations Ambassador Nikki Haley is no Colin Powell either in terms of intellect or credibility, but she did try to act like him when she spoke on December 14th in front of a sparsely attended press conference that was focused on a much larger US television audience. Haley displayed parts of what she claimed to be fragments from an Iranian-sourced missile that was allegedly used in an attack initiated by Houthi “rebels” and directed against the Saudi capital Riyadh. Haley denounced what she described as Tehran’s “increasing military role” all around the Middle East. She claimed hyperbolically “It’s hard to find a conflict or terrorist group in the Middle East that doesn’t have Iran’s fingerprints all over it,” and warned that Washington will “build a coalition to really push back against Iran and what they’re doing.” To give weight to her message, she pointed at the fragments and said “They are allowing missiles like this to be fired over to innocent civilians.”

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Friday, December 22, 2017

Russia and China Challenge Dollar Domination

The Russian government has recently announced it will issue nearly $1 billion equivalent in state bonds, but denominated not in US dollars as is mostly the case. Rather it will be the first sale of Russian bonds in China’s yuan. While $1 billion may not sound like much when compared with the Peoples’ Bank of China total holdings of US Government debt of more than $1 trillion or to the US Federal debt today of over $20 trillion, it’s significance lies beyond the nominal amount. It’s a test run by both governments of the potential for state financing of infrastructure and other projects independent of dollar risk from such events as US Treasury financial sanctions.

Russian Debt and China Yuan

Since the August 1998 sovereign default triggered by the West, Russian state finances have been prudent to almost a fault. The size of the national government debt is the lowest of any major industrial country, a mere 10.6% of GDP for the current year. This has enabled Russia to withstand the US financial warfare sanctions imposed since 2014, and forced the country to turn elsewhere for their financial stability. That “elsewhere” is increasingly called the Peoples’ Republic of China.

Now the Russian Ministry of Finance is reportedly planning the first sale of Russian debt in the form of bonds denominated in Chinese yuan currency. The size of the first offering, a testing of the market, will be 6 billion yuan or just under $1 billion. The sale is being organized by the state-owned Russian Gazprombank, the Bank of China Ltd., and China’s largest state bank, Industrial & Commercial Bank of China. The move is being accelerated by reports that the US Treasury is examining potential consequences of extending penalties, until now concentrated on Russian oil and gas projects, to include Russian sovereign debt in its sanctions warfare. The new yuan bond will be traded on the Moscow Exchange and will aim to sell to mainland Chinese investors as well as international and Russian borrowers at attractive interest rates.

Western sanctions or threats of sanctions are forcing Russia and China to cooperate more strategically on what is becoming the seed of a genuine alternative to the dollar system. The Russian yuan debt offerings will also give a significant boost to China’s desire to build the yuan as an accepted international currency.

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Wednesday, December 20, 2017

No positive responses to Trump’s Jerusalem shock

Donald Trump’s flouting of international law with his recognition that [occupied] Jerusalem is Israel’s capital elicited worldwide condemnation, not least from predominately Muslim states. Protestors have taken to the streets throughout the Middle East, Asia and Europe to vent their frustrations burning effigies of the US president. To date there is no nation on earth willing to follow the Trump administration’s lead.

However as always the case, it is the Palestinian people who are bearing the brunt of Israeli retaliation against their valid objections. At least four Palestinians have been killed, over 800 have suffered injuries and more than 80 have been arrested, including boys under the age of ten.

Videos have emerged showing a very young child being dragged away by dozens of Israeli soldiers in riot gear, an elderly man being brutally beaten and a 29-year-old man, robbed of both legs by an Israeli bomb, was shot in the head for the ‘crime’ of waving a Palestinian flag.

Without doubt Trump’s unilateral announcement has been strongly denounced by Arab and Muslim leaders. The Arab League was united in characterising the decision as being “dangerous and unacceptable” as well as “a flagrant attack on a political solution” to the conflict.

Lebanon’s Foreign Minister Jibran Bassil was the most impassioned and outspoken delegate calling for economic sanctions to be imposed on the United States, a call that was met with applause.

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Monday, December 18, 2017

The Case Against Iraqing Iran

The case against Iraqing Iran includes the following points:

Threatening war is a violation of the U.N. Charter.

Waging war is a violation of the U.N. Charter and of the Kellogg-Briand Pact.

Waging war without Congress is a violation of the U.S. Constitution.

Have you seen Iraq lately?

Have you seen the entire region?

Have you seen Afghanistan? Libya? Syria? Yemen? Pakistan? Somalia?

War supporters said the U.S. urgently needed to attack Iran in 2007. It did not attack. The claims turned out to be lies. Even a National Intelligence Estimate in 2007 pushed back and admitted that Iran had no nuclear weapons program.

Having a nuclear weapons program is not a justification for war, legally, morally, or practically. The United States has nuclear weapons and no one would be justified in attacking the United States.

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Thursday, December 14, 2017

Here Comes the Next ‘Defense’ Shakedown

“Today with the signing of this defense bill,” US president Donald Trump said as he affixed his signature to the 2018 National Defense Authorization Act on December 12, “we accelerate the process of fully restoring America’s military might.”

Is Trump truly under the mistaken impression that US military might is ailing? Or is he mindlessly aping Ronald Reagan and hoping it brings in the re-election votes? Or perhaps something else entirely?

The NDAA budgets nearly $700 billion for the US military next year. Despite its name, there’s precious little “defense” involved.

While it’s true that the United States is involved in several ongoing wars ($65.7 billion of the NDAA’s appropriations go to the “Overseas Contingency Fund” for continuing those wars), none of them serve any vital, let alone existential, US interest, and none of them are defensive in nature.

The US has no militarily significant adversaries in the western hemisphere. Further afield, it already floats by far the most powerful naval and expeditionary capability on Earth. Of the world’s 41 aircraft carriers, the US operates 20, including 11 flat-top “supercarriers.” The remaining 21 are scattered among the navies of 12 other countries, mostly US allies. America’s two most likely military adversaries, China and Russia, each operate one light STOBAR (“Short Take-Off But Arrested Recovery”) carrier.

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Tuesday, December 12, 2017

Why the Documentary Must Not Be Allowed to Die

I first understood the power of the documentary during the editing of my first film, The Quiet Mutiny.

In the commentary, I make reference to a chicken, which my crew and I encountered while on patrol with American soldiers in Vietnam.

“It must be a Vietcong chicken – a communist chicken,” said the sergeant. He wrote in his report: “enemy sighted”.

The chicken moment seemed to underline the farce of the war – so I included it in the film.

That may have been unwise.

The regulator of commercial television in Britain – then the Independent Television Authority or ITA – had demanded to see my script.

What was my source for the political affiliation of the chicken? I was asked. Was it really a communist chicken, or could it have been a pro-American chicken?

Of course, this nonsense had a serious purpose; when The Quiet Mutiny was broadcast by ITV in 1970, the US ambassador to Britain, Walter Annenberg, a personal friend of President Richard Nixon, complained to the ITA.

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Friday, December 8, 2017

BATTLESHIP ADMIRALS IN CYBER-SPACE

On December 7,1941 Japan attacked and destroyed most of the US Navy fleet based at Pearl Harbor. In many ways the bloody war in the pacific was a combat of codes. In late 1941, the American leadership was aware of the tensions with Japan because we were able to read most of the diplomatic and military communications.

However, the attack on Pearl Harbor was not made available in the Japanese coded traffic. The US Army broke into the highest level of Japanese diplomatic cypher - code named "PURPLE" - well before the attack on Pearl Harbor. Yet, PURPLE produced little of military value, as the Japanese Foreign Ministry was considered unreliable by the Tokyo political leadership.

The strike, devised and led by the brilliant Japanese Naval commander, Admiral Isoruko Yamamoto, crippled the American fleet, killing over 2,000 Americans, and sinking nine US Navy battleships.

In 1941, the battleship was considered to be the most powerful weapon of war. In the 1920s, US Navy "Battleship" Admirals were the most powerful force in America's military command. The Battleship admirals led an effort to disgrace airpower advocate General Billy Mitchell because he predicted that tiny airplanes could sink the mighty battleships. Mitchell knew of the coming science in flight and that aircraft would soon dominate. The entrenched naval command would have nothing of this new idea and hounded Mitchell out of the service in 1926.

On December 7, 1941, in the span of a few short minutes, Admiral Yamamoto demonstrated that Mitchell was right. Fortunately, Yamamoto missed the US Navy aircraft carriers which were out on exercises that day. Yet, the devastating attack propelled America into World War II.

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Wednesday, December 6, 2017

Russiagate Becomes Israelgate

Reading the mainstream media headlines relating to the flipping of former National Security Adviser Michael Flynn to provide evidence relating to the allegations about Russian interference in America’s last presidential election requires the suspension of one’s cognitive processes. Ignoring completely what had actually occurred, the “Russian story” with its subset of “getting Trump” was on display all through the weekend, both in the print and on the live media.

Flynn’s guilty plea is laconic, merely admitting that he had lied to the Federal Bureau of Investigation (FBI) about what was said during two telephone conversations with then Russian Ambassador to the United States Sergey Kislyak, but there is considerable back story that emerged after the plea became public.

The two phone calls in question include absolutely nothing about possible collusion with Russia to change the outcome of the U.S. election, which allegedly was the raison d’etre behind the creation of Robert Mueller’s Special Counsel office in the first place. Both took place more than a month after the election and both were initiated by the Americans involved. I am increasingly convinced that Mueller ain’t got nuthin’ but this process will grind out interminably and the press will be hot on the trail until there is nowhere else to go.

Based on the information revealed regarding the two conversations, and, unlike the highly nuance-sensitive editors working for the mainstream media, this is the headline that I would have written for a featured article based on what I consider to be important: “Israel Colluded with Incoming Trump Team to Subvert U.S. Foreign Policy,” with a possible subheading “FBI Entraps National Security Adviser.”

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Monday, December 4, 2017

From the Caucasus to the Balkans, China’s Silk Roads are Rising

The 19th Chinese Communist Party Congress made it clear that the New Silk Roads – aka, the Belt and Road Initiative (BRI) – launched by President Xi Jinping just four years ago, provides the concept around which all Chinese foreign policy is to revolve for the foreseeable future. Up until the symbolic 100th anniversary of the People’s Republic of China, in 2049, in fact.

Virtually every nook and cranny of the Chinese administration is invested in making the BRI Grand Strategy a success: economic actors, financial players, state-owned enterprises (SOEs), the private sector, the diplomatic machine, think tanks, and – of course – the media, are all on board.

It’s under this long-term framework that sundry BRI projects should be examined. And their reach, let’s be clear, involves most of Eurasia – including everything from the Central Asian steppes to the Caucasus and the Western Balkans.

Representatives of no fewer than 50 nations are currently gathered in Tbilisi, Georgia, for yet another BRI-related summit. The BRI masterplan details six major economic “corridors,” and one of these is the Central Asia-West Asia Economic Corridor. That’s where Georgia fits in, alongside neighboring Azerbaijan: both are vying to position themselves as the key Caucasus transit hub between Western China and the European Union.

On the first day of the summit, Georgia’s Prime Minister Giorgi Kvirikashvili extolled the drive to “strengthen the economic and civilizational ties between Europe and Asia.” In practice, that translates into a push to build an economic free zone, in accordance with the memorandum of understanding signed by the Chinese and Georgian economic ministers.

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