The wave pain for the EU is now slowly turning into a tsunami of mutually reinforcing problems

This is great stuff!  RT reports:

Ukraine ready to impose sanctions against any transit via its territory, including air flights and gas supplies to Europe, Prime Minister Arseniy Yatsenyuk said Friday.  Ukraine's Parliament will vote on the sanctions on Tuesday.  Kiev has also prepared a list of 172 Russian citizens and 65 legal enitites to put under sanctions for “sponsoring terrorism, supporting the annexation of Crimea, and violating the territorial integrity of Ukraine,” Yatsenyuk said at a briefing on Friday.  Proposed sanctions include asset freezes, bans on certain enterprises, bans on privatizing state property, refusing to issue licenses, and a complete or partial ban on transit- both aviation and gas.

Let me see if I got this right: the US/EU impose sanctions on Russia because Russia does not stop the Novorussian Resistance.  In retaliation, Russia imposes sanctions on the EU and a ban on Ukie overflights over Russia.  And in response to that, the Ukies prevent gas which the EU badly needs and which it paid for from reaching the EU.  Who will get hurt by that?  The EU, of course.  So, in fact, these idiots in Kiev, no doubt under US orders again, are now strengthening the Russian sanctions against the EU!  We can think of it as "Russia cutting off gas supplies to the EU in a way for which it cannot be blamed".

Beautiful, no?

The wave pain for the EU is now slowly turning into a tsunami of mutually reinforcing problems.

Well, the sure deserve it.  As I said yesterday: you wanna be Uncle Sam's bitch?  Pay the price!

The Saker

Sanctions: Diplomacy's Weapon of Mass Murder

Note: While I am taking a couple of weeks off, others are working hard and resisting the Empire with every ounce of energy. Today, my friend Soraya has sent me this excellent piece of the real WMD of our times: sanctions. I am most grateful to her for allowing me to publish it and for all her excellent work.

The Saker

Sanctions: Diplomacy’s Weapon of Mass Murder

In 1945, the United States of America dropped two atomic bombs on the cities of Hiroshima and Nagaski immediately killing 120,000 civilians. The final death toll of the horrendous bombings has been conservatively estimated at well over 200,000 men, women, and children. To this day, the world continues to be shocked and horrified by the visual images that captured the death and destruction caused by the bombs. The negative impact prompted America to devise a different weapon of mass murder – sanctions.

Unlike the shock and horror which accompanied the atomic bombs dropped on Japan, there were no images of the 500,000 Iraqi children whose lives were cut short by sanctions to jolt the world into reality. Not only has America taken pride in the mass killing of innocent children, but encouraged by silence and the surrender to its weapon of choice, it has turned diplomacy’s weapon of mass murder on another country – Iran.

There has been little resistance to sanctions in the false belief that sanctions are a tool of diplomacy and preferable to war. Enforcement of this belief has been a major victory for American public diplomacy. The reality is otherwise. Sanctions kill indiscriminately – they are far deadlier than “Fat Man” and “Little Boy” – the two atomic bombs that took the lives of over 200,000 people. In the case of Iraq, the United Nations estimated 1,700,000 million Iraqi civilians died as a result of sanctions. 1.5 million more victims than the horrific atomic bombs dropped on Japan. Diplomacy’s finest hour.

Even though Denis Halliday, former Assistant Secretary General of the United Nations, and many other top officials resigned from their posts in protest to the sanctions saying: "The policy of economic sanctions is totally bankrupt. We are in the process of destroying an entire society. It is as simple and as terrifying as that", the murders continued. In 1999, seventy members of Congress appealed to President Clinton to lift the sanctions and end what they termed "infanticide masquerading as policy." But America continued its lead with its diplomatic death dance.

America, a morally bankrupt nation and the self-appointed global morality police, obeying the wishes of the pro-Israel lobby groups, has for years now pointed its deadly weapon of mass murder at Iran -- sanctions disguised as diplomacy. The misinformed and misguided global community indulges itself in the false belief that war has been avoided, without thought to suffering and death.

In fact, the notion that economic sanctions are always morally preferable to the use of military force has been challenged by Albert C. Pierce, Ethics and National Security professor at the National Defense University. His analysis showed that economic sanctions inflict great pain, suffering, and physical harm on the innocent civilians--so much so that small-scale military operations were sometimes preferable (Ethics and International Affairs,1996).

But America prefers not to engage in battle. Not only would military confrontation bring global condemnation, but history has shown us that while America can win battles, it cannot win wars (Vietnam, Iraq, Afghanistan…..). It therefore resorts to sanctions- a coward’s ruthless “diplomacy” tool in order to disguise its role as the enemy with the purpose of depriving the target nation of self-defense against such horrendous aggression. Sanctions, the warfare by an enemy unidentified by a military uniform is intended to eliminate resistance, to attack women and children, the weak and the old, to being about regime change, without fear of retaliation or censure by the ‘peace-loving’ community.

In this election year, as in the past, appeasement of the pro-Israel lobbies takes precedent to humanity, to the well-being of Americans, and to the security of the global community.

A 2005 report developed by economists Dean DeRosa and Gary Hufbauer demonstrates that if the United States lifted sanctions on Iran the world price of oil could fall by 10 percent translating into an annual savings of $38-76 billion for the United States alone. The current global recession would dwarf the figures cited.

At war even with itself to please the lobbies, House passed H.R. 1905 - Iran Threat Reduction and Syria Human Rights Act. Putting aside the oxymoron of sanctions and human rights for now, America is demanding that the world community not only partake in deadly sanctions, but to do so in direct opposition to the national interests of each and every sovereign nation. This is a sharp departure from the arguments presented by AIPAC in 1977 in response to the Arab league boycott.

AIPAC successfully defined the Arab League boycott as " harassment and blackmailing of America, an interference with normal business activities ... that the boycott activities were contrary to the principles of free trade that the United States has espoused for many years … and the Arab interference in the business relations of American firms with other countries is in effect an interference with the sovereignty of the United States." i

However, the United States has successfully blackmailed other nations to be its accomplice in suffering and mass murder - diplomacy’s weapon of choice. To believe that Iran (or Syria) is the only target of these sanctions is as naïve as believing that sanctions are diplomacy put in place to avoid war. The global impact of the lethal weapon – sanctions -- is simply cushioned in diplomacy ; A brilliantly and ruthlessly executed diplomatic coup.

Soraya Sepahpour-Ulrich is a Public Diplomacy Scholar, independent researcher and blogger with a focus on U.S. foreign policy and the role of lobby groups.

i H. Alikhani, Sanctioning Iran, Anatomy of a Failed Policy, New York, 2000, p.321

The US-Iran economic war

By Pepe Escobar for the Asia Times

Here's a crash course on how to further wreck the global economy.

A key amendment to the National Defense Authorization Act signed by United States President Barack Obama on the last day of 2011 - when no one was paying attention - imposes sanctions on any countries or companies that buy Iranian oil and pay for it through Iran's central bank. Starting this summer, anybody who does it is prevented from doing business with the US.

This amendment - for all practical purposes a declaration of economic war - was brought to you by the American Israel Public Affairs Committee (AIPAC), on direct orders of the Israeli government under Prime Minister Benjamin "Bibi" Netanyahu.

Torrents of spin have tried to rationalize it as the Obama administration's plan B as opposed to letting the Israeli dogs of war conduct an unilateral attack on Iran over its supposed nuclear weapons program.

Yet the original Israeli strategy was in fact even more hysterical - as in effectively preventing any country or company from paying for imported Iranian oil, with the possible exceptions of China and India. On top of it, American Israel-firsters were trying to convince anyone this would not result in relentless oil price hikes.

Once again displaying a matchless capacity to shoot themselves in their Ferragamo-clad feet, governments in the European Union (EU) are debating whether or not to buy oil from Iran anymore. The existential doubt is should we start now or wait for a few months. Inevitably, like death and taxes, the result has been - what else - oil prices soaring. Brent crude is now hovering around $114, and the only way is up.

Get me to the crude on time

Iran is the second-largest Organization for Petroleum Exporting Countries (OPEC) producer, exporting up to 2.5 million barrels of oil a day. Around 450,000 of these barrels go to the European Union - the second-largest market for Iran after China.

The requisite faceless bureaucrat, EU Energy Commissioner Gunther Ottinger, has been spinning that the EU can count on Saudi Arabia to make up the shortfall from Iran.

Any self-respecting oil analyst knows Saudi Arabia does not have all the necessary extra spare capacity. Moreover, and crucially, Saudi Arabia needs to make a lot of money out of expensive oil. After all, the counter-revolutionary House of Saud badly needs these funds to bribe its subjects into dismissing any possibility of an indigenous Arab Spring.

Add to it Tehran's threat to block the Strait of Hormuz, thus preventing one-sixth of the world's oil and 70% of OPEC's exports from reaching the market; no wonder oil traders are falling over themselves to lock up as much crude as they can.

Forget about oil at an accessible $50 or even $75 a barrel. The price of oil may be destined to soon reach $120 a barrel and even $150 a barrel by summer, just as in crisis-hit 2008. OPEC, by the way, is pumping more oil than at any time since late 2008.

So what started as an Israeli-concocted roadside improvised explosive device has now developed into a multiple economic suicide bombing targeting whole sections of the global economy.

No wonder the chairman of the Iranian parliament's national security and foreign policy commission, Ala'eddin Broujerdi, has warned that the West may be committing a "strategic blunder" with these oil sanctions.

Translation: as it goes, the name of the game for 2012 is deep global recession.

Obama rolls the dice

First Washington leaked that sanctions on Iran's central bank were "not on the table". After all, the Obama administration itself knew this would translate into an oil price hike and a certified one-way ticket for more global recession. The Iranian regime, on top of it, would be making more money out if its oil exports.

Still, the Bibi-AIPAC combo had no trouble forcing the amendment through those Israel-firster Meccas, the US Senate and Congress - even with US Secretary of the Treasury Tim Geithner expressly against it.

The amendment just passed may not represent the "crippling sanctions" vociferously demanded by the Israeli government. Tehran will feel the squeeze - but not to an intolerable level. Yet only those irresponsible people at the US Congress - despised by the overwhelming majority of Americans, according to any number of polls - could possibly believe they can take Iran's 2.5 million barrels of oil a day in exports off the global market with no drastic consequences for the global economy.

Asia increasingly will need more oil - and will continue to buy oil from Iran. And oil prices will keep flirting with the stratosphere.

So why did Obama sign it? For the Obama administration, everything now is about electoral calculus. Those terminal wackos in the Republican presidential circus - with the honorable exception of Ron Paul - are peddling war on Iran the moment they're elected, and substantial swathes of the American electorate are clueless enough to buy it.

No one, though, is doing some basic math to conclude the American and European economies certainly don't need oil flirting with the $120 level if some minimal recovery is in the cards.

Show me your balls

Apart from that self-defeating, terminally in crisis euro/North Atlantic Treaty Organization bunch, everyone and his neighbor will be bypassing this Israeli-American declaration of economic war:

• Russia already said it will circumvent it.
• India is already paying for Iranian oil via Halkbank in Turkey.
• Iran is actively negotiating to sell more oil to China. Iran is China's second-largest supplier, only behind Saudi Arabia. China pays in euros, and soon may be paying in yuan. By March they both will have sealed an agreement about new pricing.
• Venezuela controls a bi-national bank with Iran since 2009; that's how Iran gets paid for business in Latin America.
• Even traditional US allies want out. Turkey - which imports around 30% of its oil from Iran.
• Will seek a waiver exempting Turkish oil importer Tupras from US sanctions.
• And South Korea will also seek a waiver, to buy around 200,000 barrels a day - 10% of its oil - from Iran in 2012.

China, India, South Korea, they all have complex two-way trade ties with Iran (China-Iran trade, for instance, is $30 billion a year, and growing). None of this will be extinguished because the Washington/Tel Aviv axis says so. So one should expect a rash of new private banks set up all across the developing world for the purpose of buying Iranian oil.

Washington wouldn't have the balls to try to impose sanctions on Chinese banks because they will be dealing with Iran.

On the other hand, one's got to praise Tehran's balls. After a relentless campaign of covert assassinations; abductions of Iranian scientists; cross-border attacks in Sistan-Balochistan province; Israeli sabotage of its infrastructure, with viruses and otherwise; invasion of territory via US spy drones; non-stop Israeli and Republican threats of an imminent "shock and awe"; and the US sale of $60 billion of weapons to Saudi Arabia, still Tehran won't balk.

Tehran has just tested - successfully - its own cruise missiles, and in the Strait of Hormuz of all places. Then when Tehran reacts to the non-stop Western aggressive barrage, it is blamed with "acts of provocation".

Last Friday, the New York Times editorial board was totally in love with the Pentagon's threats against Iran, as well as calling for "maximum economic pressure".

The bottom line is that average Iranians will suffer - as average, crisis-hit, indebted Europeans will also suffer. The US economy will suffer. And whenever it feels the West is getting way too hysterical, Tehran will keep reserving the right to send oil prices skyrocketing.

The regime in Tehran will keep selling oil, will keep enriching uranium and, most of all, won't fall. Like a Hellfire missile hitting a Pashtun wedding party, these Western sanctions will miserably fail. But not without collecting a lot of collateral damage - in the West itself.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007) and Red Zone Blues: a snapshot of Baghdad during the surge. His new book, just out, is Obama does Globalistan (Nimble Books, 2009).  He may be reached at pepeasia@yahoo.com. 

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Commentary:  I really like Pepe Escobar a lot and I consider him one of the very best reporters out there.  Which makes it even more mind boggling for me that he could be so wrong about the elections in Iran, in particular with the passage of time which clearly proved that a majority of Iranians did, and still does, support the "Ahmadinejad-Khamenei tandem" (the former being largely symbolic, the latter being the real cornerstone of the regime; also - there are clear signs of tensions between the two, but nevermind that at this point).  I wonder if Escobar has ever back off his initial analysis of the elections in Iran.  If he has (or ever will, in the future) and you come across some a re-evaluation, please let me know.  Many thanks in advance.
The Saker

Michael Hudson explains why Federal Reserve will pump $600 billion more into the US economy and keep interest rates at historical low levels

This guy is, IMHO, the single best economist out there.  Highly, highly recommended!

According to the BBC:

German Finance Minister Wolfgang Schaeuble said the US policy was "clueless" and would create "extra problems for the world".

South Africa's finance minister Pravin Gordhan warned that "developing countries, including South Africa, would bear the brunt of the US decision to open its flood gates without due consideration of the consequences for other nations." The US policy "undermines the spirit of multilateral co-operation that G20 leaders have fought so hard to maintain during the current crisis," he said.

"If the domestic policy is optimal policy for the United States alone, but at the same time it is not an optimal policy for the world, it may bring a lot of negative impact to the world," said Mr Zhou (China's Central Bank head Zhou Xiaochuan)

"There is a spill over."

China's Vice Foreign Minister Cui Tiankai said the Federal Reserve had the right to take steps without consulting other countries beforehand, but added: "They owe us some explanation."

Germany's finance minister Wolfgang Schaeuble said on German television that "with all due respect, US policy is clueless."

"It is not that the Americans have not pumped enough liquidity into the market and now to say let's pump more into the market is not going to solve their problems."

On Thursday, Brazil's finance minister Guido Mantega had warned that the Fed's move would hurt Brazil and other exporters.

The latest move by the Fed has been dubbed QE2 as it follows the central bank's decision to pump $1.75tn into the economy during the downturn in its first round of quantitative easing.

They get our oil and give us a worthless piece of paper (UPDATED)

It appears that Iran is on the offensive on the question of oil prices. First, the Iranian OPEC Governor, Mohammad Ali Khatibi, has disputed that supply is the cause of high oil prices blaming "international political tensions, a weak dollar and speculation" instead. Then Iran predicted that the price of oil would reach $150 "shortly" (Goldman Sachs agreed). A couple of weeks later, Iranian President Ahmadinejad urged OPEC members to dump the weak dollar, a proposal that Iran had already made six months ago, adding: "They get our oil and give us a worthless piece of paper". Hugo Chavez, President of oil-rich Venezuela, also attended the same OPEC meeting where he declared: "The empire of the dollar has to end". Finally, today, Iran announced that it officially opposes the Saudi increase in oil production.

What is this all about? Let get some context for starters. First, the official version:



Now, for an alternative point of view, let's take a look at some analysis by American Goy, one of the sharpest bloggers out there. Check out his articles Why are gas prices rising and The speculation that is killing us - oil, food and greed. American Goy does not deny that demand is rising, but he crucially points out that "it is not the demand for ACTUAL oil, the black goo, that is driving the prices up so high (although it is rising, per standard market rules of supply and demand). It is the demand for oil futures, a commodity market, in other words for a shitty piece of paper" and he backs up his claim with this astounding fact:

According to the US Department of Energy, annual Chinese demand for petroleum has increased over the last five years from 1.88 billion barrels to 2.8 billion barrels, an increase of 920 million barrels. Over the same five-year period, Index Speculatorsʼ demand for petroleum futures has increased by 848 million barrels. The increase in demand from Index Speculators is almost equal to the increase in demand from China!

and

In fact, Index Speculators have now stockpiled, via the futures market, the equivalent of 1.1 billion barrels of petroleum, effectively adding eight times as much oil to their own stockpile as the United States has added to the Strategic Petroleum Reserve over the last five years.

Now does Iran's stance make more sense in the light of all this? Iran refuses the participate into what American Goy calls a "pyramid scheme" and, in particular, in the Saudi cover-up thereof (by increasing production the Saudis are suggestion that the root cause is a lack of oil on the supply side, thus hiding the real origins of the crisis).

Now look at this form the Iranian perspective: they are getting paid for their oil in increasingly worthless dollars while fattening oil commodities futures speculators who, I betcha, are not keeping their billions in greenbacks. Thus, what the Iranians are doing now, with the help of Venezuela, is nothing short of a declaration of war on speculators. We can therefore expect the anti-Iranian propaganda to reach new heights very soon.

UPDATE: Iran and Venezuela have announced that they are creating a joint bank with one billion dollars as start-up funds.

Banks recruited to wage financial war on Teheran

David Blair

America is waging a financial war on Iran designed to isolate its economy from the world banking system and compel Teheran to abandon its nuclear programme.

Step by step, the US Treasury is tightening the noose by persuading European and Japanese banks to join their American counterparts and stop conducting any transactions for Iranian clients.

Deutsche Bank was the latest to begin closing all accounts held by any customers — whether companies or individuals — based in Iran. For an economy largely dependent on oil revenues, these steps are severe.

Iran finds it increasingly difficult to raise loans, obtain foreign currency or hold any assets offshore.

Because obtaining dollars, euros or yen becomes harder by the day, Iran's ability to buy essential imports is steadily being eroded.

Foreign investment, especially in its critical oil installations, is minimal.

In effect, America is using its financial might to shut Iran out of the global economy. While the United Nations has passed two resolutions imposing sanctions on named Iranian individuals and companies — a third is likely to follow later this month — observers believe these measures are having far less impact than the financial embargo.

In a recent interview, Stuart Levey, the under-secretary for financial intelligence at the US Treasury, said these counter-measures were proving effective. "There is significant evidence that it's working in the sense that Iranian business is being subjected to greater scrutiny and it's more difficult for them to operate," he said.

Mr Levey is running America's financial campaign against Iran. The Treasury has now excluded two of Iran's biggest state-owned banks, Saderat and Sepah, from conducting dollar transactions. American banks were formally banned from doing business with Iran 23 years ago.

Under US pressure, European and Japanese banks are treading the same path. "We have informed our clients who have an account in Germany but are based in Iran that we will close their accounts," said a spokesman for Deutsche Bank, the eighth largest bank in the world as ranked by total assets.

UBS, the world's biggest bank as measured by total assets, took the same step last January.

A spokesman for HSBC, Britain's biggest bank and the world's fourth largest, said that no dollar transactions were being conducted for Iranian clients and business links with Teheran were now minimal.

Three of Japan's largest banks announced in June that no new business would be conducted for Iranian clients. Iran had avoided the US restrictions on dollar transactions by transferring assets into euros or yen. But this window is closing as European and Japanese banks enforce the same restrictions.

Iran has endured years of economic stagnation. High oil prices should be fuelling a boom, but financial sanctions limit Teheran's ability to use this windfall.

A diplomat who specialises in the Muslim world said this was exerting real pressure on President Mahmoud Ahmadinejad's government.

One Teheran newspaper recently reported that Iranian companies had seen their import costs rise by 20 or 30 per cent because they had to employ middlemen to evade financial restrictions.

Iran says that its nuclear programme is peaceful and designed only to generate electricity.

Mr Ahmadinejad accuses America of deliberately inflicting hardship on Iran's people and insists that he will press ahead with his nuclear ambitions.

Iranian banking officials in Europe are bracing themselves for a huge wave of lawsuits from European clients following the Iranian government’s decision to withdraw millions of dollars worth of deposits to Teheran.

The government took the action in the summer to prevent the funds being seized under the terms of UN sanctions, but the move has left several leading Iranian banks, such as Sepah, on the brink of collapse.

Banking experts estimate the Iranian banks are struggling to meet commitments worth an estimated £2 billion, and Iran’s Central Bank is refusing to provide the necessary backing.

The crisis in the Iranian banking sector, which is a direct result of the measures taken by the US Treasury, has already resulted in the resignation of Ibrahim Shibani as governor of Iran’s Central Bank.

Although other Iranian banks such as Bank Melli and Bank Saderat have been badly affected by the action of the Central Bank, the crisis facing Sepah has seen customers abandon the bank which has struggled to pay workers’ salaries