(Thanks to C. for pointing these out to me - VS)
Ukraine will receive a discount of $100 per 1,000 cu m at the natural gas price of $330 and a 30% discount on other prices, Russian President Dmitry Medvedev said on Wednesday. Medvedev's announcement came after a meeting with his Ukrainian counterpart Viktor Yanukovych in Kharkov in eastern Ukraine. "Discounts for Ukraine will come into effect from April this year," Yanukovych said.
Ukraine has agreed to extend the term of Russian Black Sea Fleet presence in the country's Crimea for 25 more years, the Russian president said on Wednesday. The new agreement, signed after talks between Russian President Dmitry Medvedev and his Ukrainian counterpart Viktor Yanukovych, also stipulates the extension for an additional five years after the term expires.
-------
Commentary: All this is excellent news. After years of NATO-sponsored folly, it does appear that Russia and the Ukraine are finally going to start to work together. Such a collaboration could be extremely beneficial for both countries, and the backlog of joint projects which needs to be revived is long (think, for example, of the AN-70). I just hope that the Ukrainians will never forget that bitter lesson: neo-Nazi nationalists and US/NATO agents have wrecked their country and set it back by at least a decade, if not more. I want to believe that the Ukrainians will not repeat that mistake again.
The Saker
PS: I just came across an interesting news item: looks like the Antonov company is now under Russian ownership!
Showing posts with label petrochemicals. Show all posts
Showing posts with label petrochemicals. Show all posts
Wednesday, April 21, 2010
Tuesday, January 12, 2010
Russia, China, Iran redraw energy map
By M K Bhadrakumar for The Asia Times:
The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran's northern Caspian region with Turkmenistan's vast gas field may go unnoticed amid the Western media cacophony that it is "apocalypse now" for the Islamic regime in Tehran.
The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing. Are we hearing the faint notes of a Russia-China-Iran symphony?
The 182-kilometer Turkmen-Iranian pipeline starts modestly with the pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual capacity is 20bcm, and that would meet the energy requirements of Iran's Caspian region and enable Tehran to free its own gas production in the southern fields for export. The mutual interest is perfect: Ashgabat gets an assured market next door; northern Iran can consume without fear of winter shortages; Tehran can generate more surplus for exports; Turkmenistan can seek transportation routes to the world market via Iran; and Iran can aspire to take advantage of its excellent geographical location as a hub for the Turkmen exports.
We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world's largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy.
The Turkmen-Iranian pipeline mocks the US's Iran policy. The US is threatening Iran with new sanctions and claims Tehran is "increasingly isolated". But Mahmud Ahmadinejad's presidential jet winds its way through a Central Asian tour and lands in Ashgabat for a red-carpet welcome by his Turkmen counterpart, Gurbanguly Berdymukhammedov, and a new economic axis emerges. Washington's coercive diplomacy hasn't worked. Turkmenistan, with a gross domestic product of US$18.3 billion, defied the sole superpower (GDP of $14.2 trillion) - and, worse still, made it look routine.
There are subplots, too. Tehran claims to have a deal with Ankara to transport Turkmen gas to Turkey via the existing 2,577km pipeline connecting Tabriz in northwestern Iran with Ankara. Indeed, Turkish diplomacy has an independent foreign-policy orientation. Turkey also aspires to be a hub for Europe's energy supplies. Europe may be losing the battle for establishing direct access to the Caspian.
Second, Russia does not seem perturbed by China tapping into Central Asian energy. Europe's need for Russian energy imports has dropped and Central Asian energy-producing countries are tapping China's market. From the Russian point of view, China's imports should not deprive it of energy (for its domestic consumption or exports). Russia has established deep enough presence in the Central Asian and Caspian energy sector to ensure it faces no energy shortage.
What matters most to Russia is that its dominant role as Europe's No 1 energy provider is not eroded. So long as the Central Asian countries have no pressing need for new US-backed trans-Caspian pipelines, Russia is satisfied.
During his recent visit to Ashgabat, Russian President Dmitry Medvedev normalized Russian-Turkmen energy ties. The restoration of ties with Turkmenistan is a major breakthrough for both countries. One, a frozen relationship is being resumed substantially, whereby Turkmenistan will maintain an annual supply of 30bcm to Russia. Two, to quote Medvedev, "For the first time in the history of Russian-Turkmen relations, gas supplies will be carried out based on a price formula that is absolutely in line with European gas market conditions." Russian commentators say Gazprom will find it unprofitable to buy Turkmen gas and if Moscow has chosen to pay a high price, that is primarily because of its resolve not to leave gas that could be used in alternative pipelines, above all in the US-backed Nabucco project.
Third, contrary to Western propaganda, Ashgabat does not see the Chinese pipeline as a substitute for Gazprom. Russia's pricing policy ensures that Ashgabat views Gazprom as an irreplaceable customer. The export price of the Turkmen gas to be sold to China is still under negotiation and the agreed price simply cannot match the Russian offer.
Fourth, Russia and Turkmenistan reiterated their commitment to the Caspian Coastal Pipeline (which will run along the Caspian's east coast toward Russia) with a capacity of 30bcm. Evidently, Russia hopes to cluster additional Central Asian gas from Turkmenistan (and Kazakhstan).
Fifth, Moscow and Ashgabat agreed to build jointly an east-west pipeline connecting all Turkmen gas fields to a single network so that the pipelines leading toward Russia, Iran and China can draw from any of the fields.
Indeed, against the backdrop of the intensification of the US push toward Central Asia, Medvedev's visit to Ashgabat impacted on regional security. At the joint press conference with Medvedev, Berdymukhammedov said the views of Turkmenistan and Russia on the regional processes, particularly in Central Asia and the Caspian region, were generally the same. He underlined that the two countries were of the view that the security of one cannot be achieved at the expense of the other. Medvedev agreed that there was similarity or unanimity between the two countries on issues related to security and confirmed their readiness to work together.
The United States' pipeline diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran, has foundered. Russia is now planning to double its intake of Azerbaijani gas, which further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline.
The "big picture" is that Russia's South Stream and North Stream, which will supply gas to northern and southern Europe, have gained irreversible momentum. The stumbling blocks for North Stream have been cleared as Denmark (in October), Finland and Sweden (in November) and Germany (in December) approved the project from the environmental angle. The pipeline's construction will commence in the spring.
The $12-billion pipeline built jointly by Gazprom, Germany's E.ON Ruhrgas and BASF-Wintershall, and the Dutch gas transportation firm Gasunie bypasses the Soviet-era transit routes via Ukraine, Poland and Belarus and runs from the northwestern Russian port of Vyborg to the German port of Greifswald along a 1,220km route under the Baltic Sea. The first leg of the project with a carrying capacity of 27.5bcm annually will be completed next year and the capacity will double by 2012. North Stream will profoundly affect the geopolitics of Eurasia, trans-Atlantic equations and Russia's ties with Europe.
To be sure, 2009 proved to be a momentous year for the "energy war". The Chinese pipeline inaugurated by President Hu Jintao on December 14; the oil terminal near the port city of Nakhodka in Russia's far east inaugurated by Prime Minister Vladimir Putin on December 27 (which will be served by the mammoth $22-billion oil pipeline from the new fields in eastern Siberia leading to China and the Asia-Pacific markets); and the Iranian pipeline inaugurated by Ahmadinejad on January 6 - the energy map of Eurasia and the Caspian has been virtually redrawn.
The year 2010 begins on a fascinating new note: will Russia, China and Iran coordinate future moves or at least harmonize their competing interests?
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey
The inauguration of the Dauletabad-Sarakhs-Khangiran pipeline on Wednesday connecting Iran's northern Caspian region with Turkmenistan's vast gas field may go unnoticed amid the Western media cacophony that it is "apocalypse now" for the Islamic regime in Tehran.
The event sends strong messages for regional security. Within the space of three weeks, Turkmenistan has committed its entire gas exports to China, Russia and Iran. It has no urgent need of the pipelines that the United States and the European Union have been advancing. Are we hearing the faint notes of a Russia-China-Iran symphony?
The 182-kilometer Turkmen-Iranian pipeline starts modestly with the pumping of 8 billion cubic meters (bcm) of Turkmen gas. But its annual capacity is 20bcm, and that would meet the energy requirements of Iran's Caspian region and enable Tehran to free its own gas production in the southern fields for export. The mutual interest is perfect: Ashgabat gets an assured market next door; northern Iran can consume without fear of winter shortages; Tehran can generate more surplus for exports; Turkmenistan can seek transportation routes to the world market via Iran; and Iran can aspire to take advantage of its excellent geographical location as a hub for the Turkmen exports.
We are witnessing a new pattern of energy cooperation at the regional level that dispenses with Big Oil. Russia traditionally takes the lead. China and Iran follow the example. Russia, Iran and Turkmenistan hold respectively the world's largest, second-largest and fourth-largest gas reserves. And China will be consumer par excellence in this century. The matter is of profound consequence to the US global strategy.
The Turkmen-Iranian pipeline mocks the US's Iran policy. The US is threatening Iran with new sanctions and claims Tehran is "increasingly isolated". But Mahmud Ahmadinejad's presidential jet winds its way through a Central Asian tour and lands in Ashgabat for a red-carpet welcome by his Turkmen counterpart, Gurbanguly Berdymukhammedov, and a new economic axis emerges. Washington's coercive diplomacy hasn't worked. Turkmenistan, with a gross domestic product of US$18.3 billion, defied the sole superpower (GDP of $14.2 trillion) - and, worse still, made it look routine.
There are subplots, too. Tehran claims to have a deal with Ankara to transport Turkmen gas to Turkey via the existing 2,577km pipeline connecting Tabriz in northwestern Iran with Ankara. Indeed, Turkish diplomacy has an independent foreign-policy orientation. Turkey also aspires to be a hub for Europe's energy supplies. Europe may be losing the battle for establishing direct access to the Caspian.
Second, Russia does not seem perturbed by China tapping into Central Asian energy. Europe's need for Russian energy imports has dropped and Central Asian energy-producing countries are tapping China's market. From the Russian point of view, China's imports should not deprive it of energy (for its domestic consumption or exports). Russia has established deep enough presence in the Central Asian and Caspian energy sector to ensure it faces no energy shortage.
What matters most to Russia is that its dominant role as Europe's No 1 energy provider is not eroded. So long as the Central Asian countries have no pressing need for new US-backed trans-Caspian pipelines, Russia is satisfied.
During his recent visit to Ashgabat, Russian President Dmitry Medvedev normalized Russian-Turkmen energy ties. The restoration of ties with Turkmenistan is a major breakthrough for both countries. One, a frozen relationship is being resumed substantially, whereby Turkmenistan will maintain an annual supply of 30bcm to Russia. Two, to quote Medvedev, "For the first time in the history of Russian-Turkmen relations, gas supplies will be carried out based on a price formula that is absolutely in line with European gas market conditions." Russian commentators say Gazprom will find it unprofitable to buy Turkmen gas and if Moscow has chosen to pay a high price, that is primarily because of its resolve not to leave gas that could be used in alternative pipelines, above all in the US-backed Nabucco project.
Third, contrary to Western propaganda, Ashgabat does not see the Chinese pipeline as a substitute for Gazprom. Russia's pricing policy ensures that Ashgabat views Gazprom as an irreplaceable customer. The export price of the Turkmen gas to be sold to China is still under negotiation and the agreed price simply cannot match the Russian offer.
Fourth, Russia and Turkmenistan reiterated their commitment to the Caspian Coastal Pipeline (which will run along the Caspian's east coast toward Russia) with a capacity of 30bcm. Evidently, Russia hopes to cluster additional Central Asian gas from Turkmenistan (and Kazakhstan).
Fifth, Moscow and Ashgabat agreed to build jointly an east-west pipeline connecting all Turkmen gas fields to a single network so that the pipelines leading toward Russia, Iran and China can draw from any of the fields.
Indeed, against the backdrop of the intensification of the US push toward Central Asia, Medvedev's visit to Ashgabat impacted on regional security. At the joint press conference with Medvedev, Berdymukhammedov said the views of Turkmenistan and Russia on the regional processes, particularly in Central Asia and the Caspian region, were generally the same. He underlined that the two countries were of the view that the security of one cannot be achieved at the expense of the other. Medvedev agreed that there was similarity or unanimity between the two countries on issues related to security and confirmed their readiness to work together.
The United States' pipeline diplomacy in the Caspian, which strove to bypass Russia, elbow out China and isolate Iran, has foundered. Russia is now planning to double its intake of Azerbaijani gas, which further cuts into the Western efforts to engage Baku as a supplier for Nabucco. In tandem with Russia, Iran is also emerging as a consumer of Azerbaijani gas. In December, Azerbaijan inked an agreement to deliver gas to Iran through the 1,400km Kazi-Magomed-Astara pipeline.
The "big picture" is that Russia's South Stream and North Stream, which will supply gas to northern and southern Europe, have gained irreversible momentum. The stumbling blocks for North Stream have been cleared as Denmark (in October), Finland and Sweden (in November) and Germany (in December) approved the project from the environmental angle. The pipeline's construction will commence in the spring.
The $12-billion pipeline built jointly by Gazprom, Germany's E.ON Ruhrgas and BASF-Wintershall, and the Dutch gas transportation firm Gasunie bypasses the Soviet-era transit routes via Ukraine, Poland and Belarus and runs from the northwestern Russian port of Vyborg to the German port of Greifswald along a 1,220km route under the Baltic Sea. The first leg of the project with a carrying capacity of 27.5bcm annually will be completed next year and the capacity will double by 2012. North Stream will profoundly affect the geopolitics of Eurasia, trans-Atlantic equations and Russia's ties with Europe.
To be sure, 2009 proved to be a momentous year for the "energy war". The Chinese pipeline inaugurated by President Hu Jintao on December 14; the oil terminal near the port city of Nakhodka in Russia's far east inaugurated by Prime Minister Vladimir Putin on December 27 (which will be served by the mammoth $22-billion oil pipeline from the new fields in eastern Siberia leading to China and the Asia-Pacific markets); and the Iranian pipeline inaugurated by Ahmadinejad on January 6 - the energy map of Eurasia and the Caspian has been virtually redrawn.
The year 2010 begins on a fascinating new note: will Russia, China and Iran coordinate future moves or at least harmonize their competing interests?
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey
Wednesday, July 1, 2009
Absolutely brilliant piece by Eric Walberg - MUST READ!
June was a busy month for two of Washington’s real ‘Axis of Evil’. Venezuela’s Chavez completed his nationalisation of oil and Iran’s Ahmedinejad stemmed a Western-backed colour revolution, leaving both bad boys in place, muses Eric Walberg
What drives US foreign policy? Is it primarily the domestic economy, as it logically should be, or, as many argue, the powerful Israel lobby, or as other argue, the need to secure energy sources? Of course, the answer is all three, in varying degrees depending on the geopoltical importance of the country in question. And woe to any country that threatens any of the above.
Russia is perhaps a special case, as US politics was dependent for so long on the anti-communist Cold War that ideologues found it impossible to dispense with this useful bugaboo even after the collapse of Communism. But it was not only Sovietologists like Condoleezza Rice that perversely prospered from this obsession, but the US domestic economy itself, which was transformed into what is best described as the military-industrial complex (MIC). It would take very little to placate today’s Russia -- pull in NATO’s horns and stop pandering to the Russophobes in Eastern Europe -- but that would hurt the MIC and would hamper the US plans for empire and oil. So it remains an enemy of choice, though not part of the Axis of Evil.
This crude characterisation by Bush/Cheney lumped North Korea, Iraq and Iran together as the worst of the worst. With the US invasion of Iraq, the current score is one down, two to go. But North Korea is a red herring. It is merely a very useful Cold War foil, beloved of the MIC, justifying its many useless, lethal weapons programmes. A popular whipping boy, a bit of innocent ideological entertainment.
Without Saddam Hussein in Iraq, and ignoring Korea, we are left with Iran. But Bush could easily have added Venezuela to his list, as it is these two countries that pose the greatest real threat to the US empire. Both have charismatic leaders who not openly denounce US and Israeli empire but do something about it. And both have large, nationalised oil sectors. Chavez’s successful defiance of the US has directly inspired Bolivia, Ecuador and Paraguay to elect socialist leaders and given Cuba a new lease on life. Ahmedinejad has defied the many Israel-imposed bans on supporting the Palestinian resistance and even publically questioned the legitimacy of Israel itself. These bold and principled men are thereby pariahs, albeit useful ones for the MIC, along with their Cold War ghost Kim Jong Il.
That is the catch. While the empire officially frets, the US military-based economy thrives on its official enemies. It would collapse without them. This is the supreme irony to be noted by observers of what can only be described as the bizarre and contradictory world of US foreign policy.
Venezuela and Iran are indeed threats to the US empire. President Hugo Chavez not only thoroughly nationalised the oil sector after the crippling strike led by oil executives in 2002-03, but proceeded to use the revenues to transform his country, putting it on the albeit bumpy road to socialism -- subsidised basic goods, mass literacy and free health care. He has even been providing poor Americans with discount gas. “The oil belongs to all Venezuelans,” Chavez emphasised to reporters last month in Argentina, after the government announced it was taking over oil service companies along with US-owned gas compression units, adding to the heavy oil projects Venezuela took over in 2007. Natural gas looks like it will be next. The point of this is to “regain full petroleum sovereignty,” that is, full political sovereignty. No more attempted colour revolutions for Venezuela.
Which brings us to Iran. When Mahmoud Ahmedinejad took office in 2005, with the backing of Supreme Leader Ayatollah Ali Khamenei, he tried to wrest control of key ministries, especially oil and the government’s National Iranian Oil Company (NOIC), from the Rafsanjani/ Mousavi capitalist elite, replacing officials with his own choices -- primarily from the Iranian Revolutionary Guard Corps (IRGC). It was not till 2007 that he was able to install his candidate for oil minister, also head of the NIOC, Gholamhossein Nozari. Like Chavez, he proceeded to use state oil revenues to consolidate his base among the poor, something which the so-called reformists under his predecessor Mohammed Khatami or earlier nonreformists under Rafsanjani/ Mousavi were not noted for.
While Hashemi Rafsanjani was parliamentary speaker with Mirhossein Mousavi his prime minister in the 1980s, younger Iranians, including Ahmedinejad, were fighting in the IRGC (many martyring themselves) in the war with Iraq in the 1980s. Rafsanjani became Iran ’s first president in 1989 and added to his family’s vast fortune, much of it connected with oil, during his privatisation programme when he opened the oil industry to private Iranian contractors. This continued under the “reformist” Khatami, who took over the presidency in 1997.
Ahmedinejad’s ascendancy in 2005 on a platform to fight and eliminate the “oil mafia” confirmed the IRGC as the underlying force confronting Rafsanjani and the reformists. Throughout the 2009 electoral campaign, Ahmedinejad attacked his opponents as leaders of the corrupt elite, now trying to claw back control.
The elite had had enough, and the election ruckus last month was their last stand against the clearly populist, essentially leftist Ahmedinejad (in the West labelled a “hardliner”). Some pundits call Ahmedinejad’s decisive win a coup d’etat by the IRGC, but the recent demonstrations in Teheran look eerily similar to those in Caracas in 2002-03 when Venezuelan society was paralysed by its economic elite, mobilising its own Gucci crowd, strongly backed by the US, protesting a populist president’s determination to use oil revenues to help the common people. Chavez risked his life in the process, but his careful planning foiled the plotters and he survived to carry out his agenda. Whether Ahmedinejad can do the same, and to what extent the IRGC is a vehicle for promoting social welfare is a drama which is only now unfolding.
The Western media has uniformly denounced the Iranian elections, with no real evidence, as fraudulent, much as it denounced the many elections that Chavez had to undergo in the face of US-inspired strikes and even a military coup, before the opposition and its US backers relented. The US has generously financed Iranian expatriate dissidents and has penetrated Iranian society with the clear intent to overthrow Ahmedinejad, exactly like they did in Venezuela, though it is rarely mentioned in the Western press.
The US policy of using soft power to undermine unfriendly governments is well known to both Latin American socialists and Iranian clerics. Khamenei insisted in his sermon last week that Iran would not tolerate the green “colour revolution” underway. No wonder that Ahmedinejad, Chavez and Russian Prime Minister Vladimir Putin are such good friends. They have much in common.
In similar electoral contests in Latin America between nationalist-populists and pro-Western liberals, the populists have consistently won in fair elections, so the results in Iran should come as no surprise. Past examples include Peron in Argentina and, most recently, Chavez in Venezuela, Evo Morales in Bolivia and Lula da Silva in Brazil, all of whom have consistently polled 60 per cent or more of the vote in free elections. The people in these countries prefer social welfare over unrestrained markets, national security over alignments with military empires.
The parallel between Iran and Venezuela coincides with a flowering of relations between Iran and Latin American countries as it seeks a way out of the US-imposed blockade. Iran will help develop Bolivia’s oil and gas sector, has opened a trade office in Ecuador, and entered into agreements with Nicaragua, Cuba, Paraguay, Brazil and, of course, Venezuela. Council of Hemispheric Affairs analyst Braden Webb reports that “Venezuela and Iran are now gingerly engaged in an ambitious joint project, putting on-line Veniran, a production plant that assembles 5,000 tractors a year, and plans to start producing two Iranian-designed automobiles to provide regional consumers with the ‘first anti-imperialist cars’.”
Perhaps what upsets the US most about Ahmedinejad is his continued attempts to establish an Iranian Oil Bourse in the Iranian Free Trade Zone on the island of Kish, an idea which Chavez heartily approves of. The bourse is meant to attract international oil trading to the Middle East and to help move international trade away from the dollar as the oil currency, currently accounting for 65 per cent of trade. Over half of Iran’s oil business is now conducted in euros, despite the EU’s support for the US boycott. An indication of just how evil the US considers this move is the fact that his Evil Axis colleague Saddam Hussein was executed not long after switching his accounts to euros. Note that Kim Jong Il remains comfortably in place despite his own penchant for euros.
Both the Venezuelan and Iranian thorns have incensed Washington for daring to use their oil revenues to redistribute wealth in their societies and then organise resistance to US hegemony in their respective neighbourhoods. They are examples which continue to inspire and which pose a threat to US imperial policy, both international and domestic. For what better way to solve all the ills of US society -- lack of secure health care, poverty, violence -- than dismantling the MIC and initiating a foreign policy based on peace rather than war?
The big difference between these two thorns, of course, is Islam and Iran’s interference with the US-Israeli agenda. Now that the oil companies have resigned themselves to Venezuela’s new assertiveness, they and their government spokesmen are not so concerned with trying to overthrow Chavez. However, the extra weight of the Israel lobby in Washington makes sure that another Iranian revolution remains at the top of the list of Obama’s things-to-do.
Another curious difference is that US attempts to turn Venezuela’s neighbours against it backfired, as they came to Chavez’s defence and followed his example, while similar efforts to conspire against Iran have had considerable success.
The schism in both Venezuelan and Iranian societies is very real and is being taken advantage of by the US and friends, who are doing their “best” to engineer a collapse of the populist governments to make room for more US-friendly colour revolutions. But there is too much Yankee baggage for this to work anymore. It is time for a colour revolution at home.
***
Eric Walberg writes for Al-Ahram Weekly http://weekly.ahram.org.eg/. You can reach him at http://ericwalberg.com
What drives US foreign policy? Is it primarily the domestic economy, as it logically should be, or, as many argue, the powerful Israel lobby, or as other argue, the need to secure energy sources? Of course, the answer is all three, in varying degrees depending on the geopoltical importance of the country in question. And woe to any country that threatens any of the above.
Russia is perhaps a special case, as US politics was dependent for so long on the anti-communist Cold War that ideologues found it impossible to dispense with this useful bugaboo even after the collapse of Communism. But it was not only Sovietologists like Condoleezza Rice that perversely prospered from this obsession, but the US domestic economy itself, which was transformed into what is best described as the military-industrial complex (MIC). It would take very little to placate today’s Russia -- pull in NATO’s horns and stop pandering to the Russophobes in Eastern Europe -- but that would hurt the MIC and would hamper the US plans for empire and oil. So it remains an enemy of choice, though not part of the Axis of Evil.
This crude characterisation by Bush/Cheney lumped North Korea, Iraq and Iran together as the worst of the worst. With the US invasion of Iraq, the current score is one down, two to go. But North Korea is a red herring. It is merely a very useful Cold War foil, beloved of the MIC, justifying its many useless, lethal weapons programmes. A popular whipping boy, a bit of innocent ideological entertainment.
Without Saddam Hussein in Iraq, and ignoring Korea, we are left with Iran. But Bush could easily have added Venezuela to his list, as it is these two countries that pose the greatest real threat to the US empire. Both have charismatic leaders who not openly denounce US and Israeli empire but do something about it. And both have large, nationalised oil sectors. Chavez’s successful defiance of the US has directly inspired Bolivia, Ecuador and Paraguay to elect socialist leaders and given Cuba a new lease on life. Ahmedinejad has defied the many Israel-imposed bans on supporting the Palestinian resistance and even publically questioned the legitimacy of Israel itself. These bold and principled men are thereby pariahs, albeit useful ones for the MIC, along with their Cold War ghost Kim Jong Il.
That is the catch. While the empire officially frets, the US military-based economy thrives on its official enemies. It would collapse without them. This is the supreme irony to be noted by observers of what can only be described as the bizarre and contradictory world of US foreign policy.
Venezuela and Iran are indeed threats to the US empire. President Hugo Chavez not only thoroughly nationalised the oil sector after the crippling strike led by oil executives in 2002-03, but proceeded to use the revenues to transform his country, putting it on the albeit bumpy road to socialism -- subsidised basic goods, mass literacy and free health care. He has even been providing poor Americans with discount gas. “The oil belongs to all Venezuelans,” Chavez emphasised to reporters last month in Argentina, after the government announced it was taking over oil service companies along with US-owned gas compression units, adding to the heavy oil projects Venezuela took over in 2007. Natural gas looks like it will be next. The point of this is to “regain full petroleum sovereignty,” that is, full political sovereignty. No more attempted colour revolutions for Venezuela.
Which brings us to Iran. When Mahmoud Ahmedinejad took office in 2005, with the backing of Supreme Leader Ayatollah Ali Khamenei, he tried to wrest control of key ministries, especially oil and the government’s National Iranian Oil Company (NOIC), from the Rafsanjani/ Mousavi capitalist elite, replacing officials with his own choices -- primarily from the Iranian Revolutionary Guard Corps (IRGC). It was not till 2007 that he was able to install his candidate for oil minister, also head of the NIOC, Gholamhossein Nozari. Like Chavez, he proceeded to use state oil revenues to consolidate his base among the poor, something which the so-called reformists under his predecessor Mohammed Khatami or earlier nonreformists under Rafsanjani/ Mousavi were not noted for.
While Hashemi Rafsanjani was parliamentary speaker with Mirhossein Mousavi his prime minister in the 1980s, younger Iranians, including Ahmedinejad, were fighting in the IRGC (many martyring themselves) in the war with Iraq in the 1980s. Rafsanjani became Iran ’s first president in 1989 and added to his family’s vast fortune, much of it connected with oil, during his privatisation programme when he opened the oil industry to private Iranian contractors. This continued under the “reformist” Khatami, who took over the presidency in 1997.
Ahmedinejad’s ascendancy in 2005 on a platform to fight and eliminate the “oil mafia” confirmed the IRGC as the underlying force confronting Rafsanjani and the reformists. Throughout the 2009 electoral campaign, Ahmedinejad attacked his opponents as leaders of the corrupt elite, now trying to claw back control.
The elite had had enough, and the election ruckus last month was their last stand against the clearly populist, essentially leftist Ahmedinejad (in the West labelled a “hardliner”). Some pundits call Ahmedinejad’s decisive win a coup d’etat by the IRGC, but the recent demonstrations in Teheran look eerily similar to those in Caracas in 2002-03 when Venezuelan society was paralysed by its economic elite, mobilising its own Gucci crowd, strongly backed by the US, protesting a populist president’s determination to use oil revenues to help the common people. Chavez risked his life in the process, but his careful planning foiled the plotters and he survived to carry out his agenda. Whether Ahmedinejad can do the same, and to what extent the IRGC is a vehicle for promoting social welfare is a drama which is only now unfolding.
The Western media has uniformly denounced the Iranian elections, with no real evidence, as fraudulent, much as it denounced the many elections that Chavez had to undergo in the face of US-inspired strikes and even a military coup, before the opposition and its US backers relented. The US has generously financed Iranian expatriate dissidents and has penetrated Iranian society with the clear intent to overthrow Ahmedinejad, exactly like they did in Venezuela, though it is rarely mentioned in the Western press.
The US policy of using soft power to undermine unfriendly governments is well known to both Latin American socialists and Iranian clerics. Khamenei insisted in his sermon last week that Iran would not tolerate the green “colour revolution” underway. No wonder that Ahmedinejad, Chavez and Russian Prime Minister Vladimir Putin are such good friends. They have much in common.
In similar electoral contests in Latin America between nationalist-populists and pro-Western liberals, the populists have consistently won in fair elections, so the results in Iran should come as no surprise. Past examples include Peron in Argentina and, most recently, Chavez in Venezuela, Evo Morales in Bolivia and Lula da Silva in Brazil, all of whom have consistently polled 60 per cent or more of the vote in free elections. The people in these countries prefer social welfare over unrestrained markets, national security over alignments with military empires.
The parallel between Iran and Venezuela coincides with a flowering of relations between Iran and Latin American countries as it seeks a way out of the US-imposed blockade. Iran will help develop Bolivia’s oil and gas sector, has opened a trade office in Ecuador, and entered into agreements with Nicaragua, Cuba, Paraguay, Brazil and, of course, Venezuela. Council of Hemispheric Affairs analyst Braden Webb reports that “Venezuela and Iran are now gingerly engaged in an ambitious joint project, putting on-line Veniran, a production plant that assembles 5,000 tractors a year, and plans to start producing two Iranian-designed automobiles to provide regional consumers with the ‘first anti-imperialist cars’.”
Perhaps what upsets the US most about Ahmedinejad is his continued attempts to establish an Iranian Oil Bourse in the Iranian Free Trade Zone on the island of Kish, an idea which Chavez heartily approves of. The bourse is meant to attract international oil trading to the Middle East and to help move international trade away from the dollar as the oil currency, currently accounting for 65 per cent of trade. Over half of Iran’s oil business is now conducted in euros, despite the EU’s support for the US boycott. An indication of just how evil the US considers this move is the fact that his Evil Axis colleague Saddam Hussein was executed not long after switching his accounts to euros. Note that Kim Jong Il remains comfortably in place despite his own penchant for euros.
Both the Venezuelan and Iranian thorns have incensed Washington for daring to use their oil revenues to redistribute wealth in their societies and then organise resistance to US hegemony in their respective neighbourhoods. They are examples which continue to inspire and which pose a threat to US imperial policy, both international and domestic. For what better way to solve all the ills of US society -- lack of secure health care, poverty, violence -- than dismantling the MIC and initiating a foreign policy based on peace rather than war?
The big difference between these two thorns, of course, is Islam and Iran’s interference with the US-Israeli agenda. Now that the oil companies have resigned themselves to Venezuela’s new assertiveness, they and their government spokesmen are not so concerned with trying to overthrow Chavez. However, the extra weight of the Israel lobby in Washington makes sure that another Iranian revolution remains at the top of the list of Obama’s things-to-do.
Another curious difference is that US attempts to turn Venezuela’s neighbours against it backfired, as they came to Chavez’s defence and followed his example, while similar efforts to conspire against Iran have had considerable success.
The schism in both Venezuelan and Iranian societies is very real and is being taken advantage of by the US and friends, who are doing their “best” to engineer a collapse of the populist governments to make room for more US-friendly colour revolutions. But there is too much Yankee baggage for this to work anymore. It is time for a colour revolution at home.
***
Eric Walberg writes for Al-Ahram Weekly http://weekly.ahram.org.eg/. You can reach him at http://ericwalberg.com
Tuesday, January 20, 2009
Europe ’s winter of discontent: the Russian-Ukrainian gas war
This will appear in the next issue of Al-Ahram Weekly http://weekly.ahram.eg.org/
More tricks and hot air from across the Atlantic leave Europeans in the cold, notes Eric Walberg
A hurried resolution to the Ukraine-Russia gas war was reached during a visit to Moscow by Ukrainian Prime Minister Yulia Timoshenko to meet with her Russian counterpart, Vladimir Putin this week. Ukraine finally agreed to pay higher European prices for Russian gas from 2010, after a 20 per cent discount in 2009.
This accord came in the wake of sharp criticism of Ukraine by European leaders and Putin's first official visit to Germany as prime minister, where he presented a more ambitious long term solution to the unending troubles with Ukraine that have left European countries without winter fuel more than once. His proposal involves leading European energy companies forming a consortium with Russia ’s Gazprom to ensure that Russian supplies reach their destination. “Trust has been damaged,” German Chancellor Angela Merkel said after the talks, without specifying who was to blame. “We hope this idea of a consortium has a chance in succeeding.”
In Soviet days, there was never a reliability problem in dealing with Moscow , so what’s the problem now that we are all one big, happy, capitalist family? Quite simply, Ukraine refuses to pay market prices for its own gas imports from Russia, and even stopped paying its gas debt, preferring to steal Europe ’s gas as it transits Ukrainian territory and create a reserve for its own use, a strange and shortsighted policy to say the least. Whereas in the past, world price fluctuations among the “free nations” were of little concern to Soviet planners, Russian politicians today very sensibly want to extract every last kopeck from trade partners. They certainly will not put up with blatant theft and nonpayment of debts.
But Ukraine is the West’s “friend” and would-be member of NATO, while Russia is now the West’s “enemy”. Still, theft is theft, and the EU is beginning to sour on its eastern friend. Talks on a new association agreement with the Ukraine and on energy cooperation are now on hold. “This is about their credibility in terms of their entire relationship,” said an EU official. European Commission President Jose Manuel Barroso warned with uncharacteristic bluntness, “If Ukraine wants to be closer to the EU, it should not create any problems for gas to come to the EU.”
Ukraine ’s bonanza of gas transit fees could disappear as well. Putin raised with Merkel the issue of Gazprom’s NordStream pipeline, being built with German energy companies Wintershall and Ruhrgas which would allow Russia to send gas directly to Europe under the Baltic Sea as part of its policy of diversifying its export routes. At present 80 per cent of Gazprom’s exports — supplying a quarter of Europe ’s gas — must transit Ukraine. The best remedy against theft is to avoid dealing with the thief.
But in the meantime, EU and Russian officials are still pressuring Ukraine for an acceptable way to monitor gas supplies. Russia wants a 50 per cent share in the Ukrainian portion of the pipeline, as it has with a similar pipeline network through Belarus, which would put an end to the pilfering, but Ukraine refuses. Thus Putin's idea of a compromise international consortium, with Russia ’s involvement, to manage the pipeline, a proposal quickly approved of by Merkel. She has an election coming and Ukraine ’s defiant anti-Russian stance — and its shenanigans — do not impress potential voters, however much they may please Washington .
Hardest hit in early January were Bulgaria, Slovakia, the Czech Republic, Hungary, Bosnia, Serbia, Slovenia, Croatia and Macedonia during an especially cold winter spell. But the fractious 27-member EU, with its latest additions — the Polands and Croatias — is not amenable to making big deals with Russia in the common interest. Anti-Russian rhetoric is a big vote-getter for the new guys on the block, and it is no surprise Putin chooses to bypass the toothless EU and speak to Germany directly.
The factors leading up to the gas war are well known. On 2 October, the Russian and Ukrainian prime ministers agreed to switch to market prices in the business between their gas companies — Gazprom and Nafotgaz — with the Russian side allowed to sell directly to end users in Ukraine. In late November Kiev stopped payment of pending debts, making a new gas deal for 2009 impossible. Russia has been heavily subsidising Ukraine, buying from Central Asian producers at $375 per 1,000 cubic meters and selling to Ukraine at $179.5. It has been more than generous in easing Ukraine ’s transition to market prices, accepting a gradual increase to $250 for the 2009 contract. Based on 2008 sales, Gazprom lost $12 billion by selling gas at a subsidised price to Ukraine and had to ask for a bailout from the Russian government.
With no contract for 2009 in place, Moscow was forced to cut off the gas supplies to Ukraine on 1 January. Ukraine retaliated by refusing to allow the transit of Russian gas to Europe and using gas destined for the European market to create a gas reserve of its own at no cost, enough to last six months even if Russia cuts off all supplies.
Ukraine pleads its coffers are bare, which is no doubt true. Its industrial production sharply declined in November and GDP is forecast to contract by 10 per cent in 2009. It just accepted a $16.4 billion loan from the IMF. Chief Economist of the European Bank for Reconstruction and Development Erik Berglof recently warned that the IMF package might not suffice: “Ukraine is heading toward a twin currency and banking sector crisis that could well bring down most of the economies of Eastern Europe .” However, the IMF, no friend of Russia, also argues that Ukraine could easily solve its debt by transferring partial ownership of the pipeline to Gazprom, the obvious solution, which Merkel surely approves of as well. Russia is a reliable partner as both she and the IMF know perfectly well, but justifiably balks at being robbed by an ungrateful neighbour.
The missing link in this tedious and unnecessary “crisis” is the meeting Ukrainian President Viktor Yushchenko had with US officials in mid-December, where he signed a strategic partnership agreement that included a clause on energy cooperation. Ukraine ’s refusal to pay its debts or negotiate joint control of the pipeline with Russia were no doubt part of this agreement. This trail of events was not lost on the Russians. Medvedev openly blamed the US for the shutoff, saying Ukraine ’s actions were directed from Washington . Editor-in-chief of Russia in Global Politics Fedor Lukyanov said, “ Ukraine chose a tactic of deliberately creating a crisis through its rejection of talks and agreement, with the expectation that ultimately any major disruption of gas deliveries to Europe would hurt Gazprom’s reputation as a reliable energy partner. Everything that has happened after 31 December seems to me a delaying tactic. We are losing not a mere propaganda war but a real gas war. It is not accidental that countries that have excellent relations with Russia such as Greece, Hungary and Bulgaria, which are among our main European partners, are experiencing the worst difficulties.”
Yushchenko has played the anti-Russian card to the hilt since his suspicious “Orange Revolution”, financed by US government-funded “nongovernmental” organisations, amid accusations that he was poisoned by KGB (excuse me, FSB) agents. He has presided over a Wild West “democracy” since then, which has little to show for itself beside his failed attempt to push a divided Ukraine into NATO and his disastrous support of Georgia’s mini-war last summer, for which he provided some rusty tanks, a scandal which is still smoldering. According to a recent poll conducted by the Swedish International Development Cooperation Agency, 84 per cent of Ukrainians feel that things are going seriously wrong in their country, with 49 per cent calling it “critical and explosive”. Analysts do not rule out Ukraine sliding toward authoritarian rule.
Like the war in South Ossetia last summer, this latest “crisis” has “Made in the USA” written all over it, like the US-approved invasion of South Ossetia by Georgia, a trap set by the Cheneyites to snare both the Russians and the new administration in Washington. They even concluded a last-minute security pact with Georgia on 9 January which will most probably lead to a permanent US military presence in the Caucasus. The Kremlin has so far been cautiously optimistic about a fresh start to US-Russia relations under Obama, but he has his own Russophobe advisers, Robert Gates and Zbigniew Brzezinski, so the omens are poor for a turn-around.
Just as the US used the Georgian war to depict Russia as expansionist, and to push its unpopular missile defence project on Europe, it appears to have a hand in this made-to-measure energy crisis, yet another link in its latest Cold War, which is almost sure to proceed despite the cosmetic change of power in Washington this week. US media did its part, with the Washington Post exhorting the Europeans to “grasp the real message of this cold week”, as “Mr Putin’s regime plainly intends to use Europe ’s dependence on Russian energy to advance an imperialist and anti-Western geopolitical agenda.”
***
Eric Walberg writes for Al-Ahram Weekly. You can reach him at www.geocities.com/walberg2002/
Tuesday, January 6, 2009
The Ukies are taking Europe hostage. Good!
It appears that the Ukrainians have siphoned off the Russian gas destined to Europe for themselves because they don't want (or cannot) to pay market prices for their own gas. The Ukies have in fact taken the Europeans hostage. Good.
Serves the bloody Europeans well for their support for the worst forms of Ukrainian nationalism and their anti-Russian policies, including in the war in Georgia this summer.
The Ukraine - some 'ally' for NATO, eh?
Serves the bloody Europeans well for their support for the worst forms of Ukrainian nationalism and their anti-Russian policies, including in the war in Georgia this summer.
The Ukraine - some 'ally' for NATO, eh?
Wednesday, October 22, 2008
Russia, Iran and Qatar to form an organization of gas-exporting countries similar to OPEC
Press TV reports:
The Russian Foreign Minister, Sergei Lavrov, has defended the formation of an organization of gas-exporting countries similar to OPEC.
Iranian Oil Minister Gholam-Hossein Nozari, his Qatari counterpart Abdulla Bin Hamad al-Attiya and the head of Russia's Gazprom, Alexei Miller, had a Tuesday meeting in Tehran in which the three countries vowed to seriously pursue the formation of an OPEC-like gas group.
Lavrov told journalists on Wednesday that the expansion of natural gas cooperation between Doha, Moscow and Tehran was a 'healthy phenomenon'.
He added that the current fluctuations in oil prices were a negative factor which would affect gas prices as well.
Gazprom's chief executive officer, Miller, said on Tuesday that the three countries would also create a technical committee to implement joint projects.
Russian Deputy Prime Minister Igor Sechin said on Wednesday that the country might create an oil reserve to ' work more efficiently with prices on the market'.
The Russian Foreign Minister, Sergei Lavrov, has defended the formation of an organization of gas-exporting countries similar to OPEC.
Iranian Oil Minister Gholam-Hossein Nozari, his Qatari counterpart Abdulla Bin Hamad al-Attiya and the head of Russia's Gazprom, Alexei Miller, had a Tuesday meeting in Tehran in which the three countries vowed to seriously pursue the formation of an OPEC-like gas group.
Lavrov told journalists on Wednesday that the expansion of natural gas cooperation between Doha, Moscow and Tehran was a 'healthy phenomenon'.
He added that the current fluctuations in oil prices were a negative factor which would affect gas prices as well.
Gazprom's chief executive officer, Miller, said on Tuesday that the three countries would also create a technical committee to implement joint projects.
Russian Deputy Prime Minister Igor Sechin said on Wednesday that the country might create an oil reserve to ' work more efficiently with prices on the market'.
Friday, September 12, 2008
Chavez threatens to halt US oil supply
Press TV reports:
Venezuelan President Hugo Chavez has threatened to cut off oil export to the US in case of any 'aggression' against his country.
"If there is any aggression towards Venezuela" from Washington, "there would be no oil for the people of the United States," said Chavez as quoted by Reuters.
The threat came after Chavez accused a group of current and former military officers of trying to assassinate him with tacit backing from his political opponents and the United States.
The Venezuelan President urged the White House not to “think of launching a coup or some madness such as this. I warn you, I am not the Hugo Chavez of 2002," he said, referring to a failed coup attempt against him in April of that year.
Tensions between the two countries grew this week after Russia deployed two of its strategic bombers to the country. The measure came in response to Washington's sending its warships to the Black sea in order to deliver what it calls humanitarian aid to Georgians after the Caucasus crisis.
"I have no doubt at all that the United States is behind plans to bomb this palace," Chavez said, warning that "difficult times" lied ahead for Venezuela.
US officials have repeatedly denied Chavez's accusations that Washington has backed attempts to overthrow him.
Venezuela also expelled the US ambassador to Caracas, Patrick Duddy, granting him 72 hours to leave the country.
Bolivian President Evo Morales has also declared the US ambassador to La Paz 'persona non grata', accusing the envoy of provoking separatism.
Morales last week charged that rebel governors in the east were mounting a "civil coup" against the government after two weeks of road blocks and other anti- government protests in the relatively prosperous states of Santa Cruz, Chuquisaca and Tarija.
Chavez also vowed that his country would take a military action if Morales were overthrown or killed.
Venezuelan President Hugo Chavez has threatened to cut off oil export to the US in case of any 'aggression' against his country.
"If there is any aggression towards Venezuela" from Washington, "there would be no oil for the people of the United States," said Chavez as quoted by Reuters.
The threat came after Chavez accused a group of current and former military officers of trying to assassinate him with tacit backing from his political opponents and the United States.
The Venezuelan President urged the White House not to “think of launching a coup or some madness such as this. I warn you, I am not the Hugo Chavez of 2002," he said, referring to a failed coup attempt against him in April of that year.
Tensions between the two countries grew this week after Russia deployed two of its strategic bombers to the country. The measure came in response to Washington's sending its warships to the Black sea in order to deliver what it calls humanitarian aid to Georgians after the Caucasus crisis.
"I have no doubt at all that the United States is behind plans to bomb this palace," Chavez said, warning that "difficult times" lied ahead for Venezuela.
US officials have repeatedly denied Chavez's accusations that Washington has backed attempts to overthrow him.
Venezuela also expelled the US ambassador to Caracas, Patrick Duddy, granting him 72 hours to leave the country.
Bolivian President Evo Morales has also declared the US ambassador to La Paz 'persona non grata', accusing the envoy of provoking separatism.
Morales last week charged that rebel governors in the east were mounting a "civil coup" against the government after two weeks of road blocks and other anti- government protests in the relatively prosperous states of Santa Cruz, Chuquisaca and Tarija.
Chavez also vowed that his country would take a military action if Morales were overthrown or killed.
Thursday, July 31, 2008
Russia Takes Control of Turkmen (World?) Gas
By M K Bhadrakumar for Asia Times (via Informationclearinghouse)
From the details coming out of Ashgabat in Turkmenistan and Moscow over the weekend, it is apparent that the great game over Caspian energy has taken a dramatic turn. In the geopolitics of energy security, nothing like this has happened before. The United States has suffered a huge defeat in the race for Caspian gas. The question now is how much longer Washington could afford to keep Iran out of the energy market.
Gazprom, Russia's energy leviathan, signed two major agreements in Ashgabat on Friday outlining a new scheme for purchase of Turkmen gas. The first one elaborates the price formation principles that will be guiding the Russian gas purchase from Turkmenistan during the next 20-year period. The second agreement is a unique one, making Gazprom the donor for local Turkmen energy projects. In essence, the two agreements ensure that Russia will keep control over Turkmen gas exports.
The new pricing principle lays out that starting from next year, Russia has agreed to pay to Turkmenistan a base gas purchasing price that is a mix of the average wholesale price in Europe and Ukraine. In effect, as compared to the current price of US$140 per thousand cubic meters of Turkmen gas, from 2009 onward Russia will be paying $225-295 under the new formula. This works out to an additional annual payment of something like $9.4 billion to $12.4 billion. But the transition to market principles of pricing will take place within the framework of a long-term contract running up to the year 2028.
The second agreement stipulates that Gazprom will finance and build gas transportation facilities and develop gas fields in Turkmenistan. Experts have estimated that Gazprom will finance Turkmen projects costing $4-6 billion. Gazprom chief Alexei Miller said, "We have reached agreement regarding Gazprom financing and building the new main gas pipelines from the east of the country, developing gas fields and boosting the capacity of the Turkmen sector of the Caspian gas pipeline to 30 billion cubic meters." Interestingly, Gazprom will provide financing in the form of 0% credits for these local projects. The net gain for Turkmenistan is estimated to be in the region of $240-480 million.
From all appearance, Gazprom, which was headed by Russian President Dmitry Medvedev for eight years from 2000 to May 2008, has taken an audacious initiative. It could only have happened thanks to a strategic decision taken at the highest level in the Kremlin. In fact, Medvedev had traveled to Ashgabat on July 4-5 en route to the Group of Eight summit meeting in Hokkaido, Japan.
Curiously, the agreements reached in Ashgabat on Friday are unlikely to enable Gazprom to make revenue from reselling Turkmen gas. Quite possibly, Gazprom may now have to concede similar terms to Kazakhstan and Uzbekistan, the two other major gas producing countries in Central Asia. In other words, plain money-making was not the motivation for Gazprom. The Kremlin has a grand strategy.
Coincidence or not, Russian Deputy Prime Minister Igor Sechin traveled to Beijing at the weekend to launch with his Chinese counterpart, Vice Premier Wang Oishan, an energy initiative - a so-called "energy negotiation mechanism". The first round of negotiations within this framework took place on Saturday in Beijing. There has been an inexplicable media blackout of the event, but Beijing finally decided to break the news. The government-owned China Daily admitted on Monday, "Both China and Russia kept silent on the details of the consensus they reached on energy cooperation in the first round of their negotiation in Beijing on the weekend."
Without getting into details, China Daily merely took note of the talks as "a good beginning" and commented, "It seems that a shift of Russia's energy export policy is under way. Russia might turn its eyes from the Western countries to the Asia-Pacific region ... The cooperation in the energy sector is an issue of great significance for Sino-Russian relations ... the political and geographic closeness of the two countries would put their energy cooperation under a safe umbrella and make it a win-win deal. China-Russia ties are at their best times ... The two sides settled their lingering border disputes, held joint military exercises, and enjoyed rapidly increasing bilateral trade."
It is unclear whether Gazprom's agreements in Ashgabat and Sechin's talks in Beijing were inter-related. Conceivably, they overlapped in so far as China had signed a long-term agreement with Turkmenistan whereby the latter would supply 30 billion cubic meters of gas to China annually for the 30-year period starting from 2009. The construction work on the gas pipeline leading from Turkmenistan to China's Xinjiang Autonomous region has already begun. China had agreed on the price for Turkmen gas at $195 per thousand cubic meters. Now, the agreement in Ashgabat on Friday puts Gazprom in the driving seat for handling all of Turkmenistan's gas exports, including to China.
Russia and China have a heavy agenda to discuss in energy cooperation far beyond the price of Turkmen gas supplies. But suffice it to say that Gazprom's new stature as the sole buyer of Turkmen gas strengthens Russia's hands in setting the price in the world gas (and oil) market. And that has implications for China. Moscow would be keen to ensure that Russian and Chinese interests are harmonized in Central Asia.
Besides, Russia is taking a renewed interest in the idea of a "gas cartel". Medvedev referred to the idea during the visit of Venezuelan President Hugo Chavez to Moscow last week. The Russian newspaper Nezavisimaya Gazeta reported on Friday that "Moscow finds the idea of coordination of gas production and pricing policy with other gas exporters to be too tempting to abandon". The daily quoted Miller as saying, "This forum of gas exporters will set up the global gas balance. It will give answers to the questions concerning when, where and how much gas should be produced."
Until fairly recently Moscow was sensitive about the European Union's opposition to the idea of a gas cartel. (Washington has openly warned that it would legislate against countries that lined up behind a gas cartel). But high gas prices have weakened the European Union's negotiating position.
The agreements with Turkmenistan further consolidate Russia's control of Central Asia's gas exports. Gazprom recently offered to buy all of Azerbaijan's gas at European prices. (Medvedev visited Baku on July 3-4.) Baku will study with keen interest the agreements signed in Ashgabat on Friday. The overall implications of these Russian moves are very serious for the US and EU campaign to get the Nabucco gas pipeline project going.
Nabucco, which would run from Turkey to Austria via Bulgaria, Rumania and Hungary, was hoping to tap Turkmen gas by linking Turkmenistan and Azerbaijan via a pipeline across the Caspian Sea that would be connected to the pipeline networks through the Caucasus to Turkey already existing, such as the Baku-Tbilisi-Ceyhan pipeline.
But with access denied to Turkmen gas, Nabucco's viability becomes doubtful. And, without Nabucco, the entire US strategy of reducing Europe's dependence on Russian energy supplies makes no sense. Therefore, Washington is faced with Hobson's choice. Friday's agreements in Ashgabat mean that Nabucco's realization will now critically depend on gas supplies from the Middle East - Iran, in particular. Turkey is pursuing the idea of Iran supplying gas to Europe and has offered to mediate in the US-Iran standoff.
The geopolitics of energy makes strange bedfellows. Russia will be watching with anxiety the Turkish-Iranian-US tango. An understanding with Iran on gas pricing, production and market-sharing is vital for the success of Russia's overall gas export strategy. But Tehran visualizes the Nabucco as its passport for integration with Europe. Again, Russia's control of Turkmen gas cannot be to Tehran's liking. Tehran had keenly pursed with Ashgabat the idea of evacuation of Turkmen gas to the world market via Iranian territory.
There must be deep frustration in Washington. In sum, Russia has greatly strengthened its standing as the principal gas supplier to Europe. It not only controls Central Asia's gas exports but has ensured that gas from the region passes across Russia and not through the alternative trans-Caspian pipelines mooted by the US and EU. Also, a defining moment has come. The era of cheap gas is ending. Other gas exporters will cite the precedent of the price for Turkmen gas. European companies cannot match Gazprom's muscle. Azerbaijan becomes a test case. Equally, Russia places itself in a commanding position to influence the price of gas in the world market. A gas cartel is surely in the making. The geopolitical implications are simply profound for the US.
Moreover, Russian oil and gas companies are now spreading their wings into Latin America, which has been the US's traditional backyard. During Chavez's visit to Moscow on July 22, three Russian energy companies - Gazprom, LUKoil and TNK-BP - signed agreements with the Venezuelan state-owned petroleum company PDVSA. They will replace the American oil giants ExxonMobil and ConocoPhillips in Venezuela.
At the signing ceremony, Medvedev said, "We have not only approved these agreements but have also decided to supervise their implementation." Chavez responded, "I look forward to seeing all of you in Venezuela."
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.
From the details coming out of Ashgabat in Turkmenistan and Moscow over the weekend, it is apparent that the great game over Caspian energy has taken a dramatic turn. In the geopolitics of energy security, nothing like this has happened before. The United States has suffered a huge defeat in the race for Caspian gas. The question now is how much longer Washington could afford to keep Iran out of the energy market.
Gazprom, Russia's energy leviathan, signed two major agreements in Ashgabat on Friday outlining a new scheme for purchase of Turkmen gas. The first one elaborates the price formation principles that will be guiding the Russian gas purchase from Turkmenistan during the next 20-year period. The second agreement is a unique one, making Gazprom the donor for local Turkmen energy projects. In essence, the two agreements ensure that Russia will keep control over Turkmen gas exports.
The new pricing principle lays out that starting from next year, Russia has agreed to pay to Turkmenistan a base gas purchasing price that is a mix of the average wholesale price in Europe and Ukraine. In effect, as compared to the current price of US$140 per thousand cubic meters of Turkmen gas, from 2009 onward Russia will be paying $225-295 under the new formula. This works out to an additional annual payment of something like $9.4 billion to $12.4 billion. But the transition to market principles of pricing will take place within the framework of a long-term contract running up to the year 2028.
The second agreement stipulates that Gazprom will finance and build gas transportation facilities and develop gas fields in Turkmenistan. Experts have estimated that Gazprom will finance Turkmen projects costing $4-6 billion. Gazprom chief Alexei Miller said, "We have reached agreement regarding Gazprom financing and building the new main gas pipelines from the east of the country, developing gas fields and boosting the capacity of the Turkmen sector of the Caspian gas pipeline to 30 billion cubic meters." Interestingly, Gazprom will provide financing in the form of 0% credits for these local projects. The net gain for Turkmenistan is estimated to be in the region of $240-480 million.
From all appearance, Gazprom, which was headed by Russian President Dmitry Medvedev for eight years from 2000 to May 2008, has taken an audacious initiative. It could only have happened thanks to a strategic decision taken at the highest level in the Kremlin. In fact, Medvedev had traveled to Ashgabat on July 4-5 en route to the Group of Eight summit meeting in Hokkaido, Japan.
Curiously, the agreements reached in Ashgabat on Friday are unlikely to enable Gazprom to make revenue from reselling Turkmen gas. Quite possibly, Gazprom may now have to concede similar terms to Kazakhstan and Uzbekistan, the two other major gas producing countries in Central Asia. In other words, plain money-making was not the motivation for Gazprom. The Kremlin has a grand strategy.
Coincidence or not, Russian Deputy Prime Minister Igor Sechin traveled to Beijing at the weekend to launch with his Chinese counterpart, Vice Premier Wang Oishan, an energy initiative - a so-called "energy negotiation mechanism". The first round of negotiations within this framework took place on Saturday in Beijing. There has been an inexplicable media blackout of the event, but Beijing finally decided to break the news. The government-owned China Daily admitted on Monday, "Both China and Russia kept silent on the details of the consensus they reached on energy cooperation in the first round of their negotiation in Beijing on the weekend."
Without getting into details, China Daily merely took note of the talks as "a good beginning" and commented, "It seems that a shift of Russia's energy export policy is under way. Russia might turn its eyes from the Western countries to the Asia-Pacific region ... The cooperation in the energy sector is an issue of great significance for Sino-Russian relations ... the political and geographic closeness of the two countries would put their energy cooperation under a safe umbrella and make it a win-win deal. China-Russia ties are at their best times ... The two sides settled their lingering border disputes, held joint military exercises, and enjoyed rapidly increasing bilateral trade."
It is unclear whether Gazprom's agreements in Ashgabat and Sechin's talks in Beijing were inter-related. Conceivably, they overlapped in so far as China had signed a long-term agreement with Turkmenistan whereby the latter would supply 30 billion cubic meters of gas to China annually for the 30-year period starting from 2009. The construction work on the gas pipeline leading from Turkmenistan to China's Xinjiang Autonomous region has already begun. China had agreed on the price for Turkmen gas at $195 per thousand cubic meters. Now, the agreement in Ashgabat on Friday puts Gazprom in the driving seat for handling all of Turkmenistan's gas exports, including to China.
Russia and China have a heavy agenda to discuss in energy cooperation far beyond the price of Turkmen gas supplies. But suffice it to say that Gazprom's new stature as the sole buyer of Turkmen gas strengthens Russia's hands in setting the price in the world gas (and oil) market. And that has implications for China. Moscow would be keen to ensure that Russian and Chinese interests are harmonized in Central Asia.
Besides, Russia is taking a renewed interest in the idea of a "gas cartel". Medvedev referred to the idea during the visit of Venezuelan President Hugo Chavez to Moscow last week. The Russian newspaper Nezavisimaya Gazeta reported on Friday that "Moscow finds the idea of coordination of gas production and pricing policy with other gas exporters to be too tempting to abandon". The daily quoted Miller as saying, "This forum of gas exporters will set up the global gas balance. It will give answers to the questions concerning when, where and how much gas should be produced."
Until fairly recently Moscow was sensitive about the European Union's opposition to the idea of a gas cartel. (Washington has openly warned that it would legislate against countries that lined up behind a gas cartel). But high gas prices have weakened the European Union's negotiating position.
The agreements with Turkmenistan further consolidate Russia's control of Central Asia's gas exports. Gazprom recently offered to buy all of Azerbaijan's gas at European prices. (Medvedev visited Baku on July 3-4.) Baku will study with keen interest the agreements signed in Ashgabat on Friday. The overall implications of these Russian moves are very serious for the US and EU campaign to get the Nabucco gas pipeline project going.
Nabucco, which would run from Turkey to Austria via Bulgaria, Rumania and Hungary, was hoping to tap Turkmen gas by linking Turkmenistan and Azerbaijan via a pipeline across the Caspian Sea that would be connected to the pipeline networks through the Caucasus to Turkey already existing, such as the Baku-Tbilisi-Ceyhan pipeline.
But with access denied to Turkmen gas, Nabucco's viability becomes doubtful. And, without Nabucco, the entire US strategy of reducing Europe's dependence on Russian energy supplies makes no sense. Therefore, Washington is faced with Hobson's choice. Friday's agreements in Ashgabat mean that Nabucco's realization will now critically depend on gas supplies from the Middle East - Iran, in particular. Turkey is pursuing the idea of Iran supplying gas to Europe and has offered to mediate in the US-Iran standoff.
The geopolitics of energy makes strange bedfellows. Russia will be watching with anxiety the Turkish-Iranian-US tango. An understanding with Iran on gas pricing, production and market-sharing is vital for the success of Russia's overall gas export strategy. But Tehran visualizes the Nabucco as its passport for integration with Europe. Again, Russia's control of Turkmen gas cannot be to Tehran's liking. Tehran had keenly pursed with Ashgabat the idea of evacuation of Turkmen gas to the world market via Iranian territory.
There must be deep frustration in Washington. In sum, Russia has greatly strengthened its standing as the principal gas supplier to Europe. It not only controls Central Asia's gas exports but has ensured that gas from the region passes across Russia and not through the alternative trans-Caspian pipelines mooted by the US and EU. Also, a defining moment has come. The era of cheap gas is ending. Other gas exporters will cite the precedent of the price for Turkmen gas. European companies cannot match Gazprom's muscle. Azerbaijan becomes a test case. Equally, Russia places itself in a commanding position to influence the price of gas in the world market. A gas cartel is surely in the making. The geopolitical implications are simply profound for the US.
Moreover, Russian oil and gas companies are now spreading their wings into Latin America, which has been the US's traditional backyard. During Chavez's visit to Moscow on July 22, three Russian energy companies - Gazprom, LUKoil and TNK-BP - signed agreements with the Venezuelan state-owned petroleum company PDVSA. They will replace the American oil giants ExxonMobil and ConocoPhillips in Venezuela.
At the signing ceremony, Medvedev said, "We have not only approved these agreements but have also decided to supervise their implementation." Chavez responded, "I look forward to seeing all of you in Venezuela."
Ambassador M K Bhadrakumar was a career diplomat in the Indian Foreign Service. His assignments included the Soviet Union, South Korea, Sri Lanka, Germany, Afghanistan, Pakistan, Uzbekistan, Kuwait and Turkey.
Friday, June 20, 2008
Iran fully converts its foreign currency reserves into non-dollar denominations
Press TV reports: Iran says a decision to convert its dollar-denominated foreign reserves to non-dollar reserves is critical and needs to be properly publicized.
Iran's government has had great achievements in various fields that must be publicized by the country's officials, Mujtaba Samereh-Hashemi, Iran's Senior Presidential Advisor, told reporters at the end of a cabinet minister's meeting.
One of the most important decisions made by the government was to convert its dollar-denominated foreign reserves to non-dollars, a move that prevented a decrease in the value of Iran's foreign reserves, Samereh-Hashemi added, considering the more than 20 percent depreciation of the dollar against major currencies.
Since last year, Iran's oil transactions have also been conducted in euro and yen, as the dollar has been completely replaced by these two major currencies.
Iran's government has had great achievements in various fields that must be publicized by the country's officials, Mujtaba Samereh-Hashemi, Iran's Senior Presidential Advisor, told reporters at the end of a cabinet minister's meeting.
One of the most important decisions made by the government was to convert its dollar-denominated foreign reserves to non-dollars, a move that prevented a decrease in the value of Iran's foreign reserves, Samereh-Hashemi added, considering the more than 20 percent depreciation of the dollar against major currencies.
Since last year, Iran's oil transactions have also been conducted in euro and yen, as the dollar has been completely replaced by these two major currencies.
Wednesday, June 18, 2008
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.
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.
Monday, June 9, 2008
Why we all owe Shaul Mofaz a big 'thank you!'
The big news last week was the report that Shaul Mofaz, a Lieutenant-General and former IDF Chief of Staff under no less than four prime ministers, declared that an Israeli attack on Iran was "inevitable". Most observers understood that Mofaz, who is currently a Deputy Prime Minister and Minister of Transportation, made these statements as an opening shot in his campaign to succeed Ehud Olmert. Even the US immediately distanced itself from such threats. Still, the barrel of crude immediately shot up by 11 dollars to $139 and that send a panic throughout the world economy (the oil prices have since diminished, just a little).
What is interesting here though is that all it took to spike up the price of oil were the reports of the threats made by one Israeli politician; so just imagine what will happen when the real shooting war actually begins!
It is often debated whether the Iranians can shut down the traffic across the Strait of Hormuz, but is this really the only big threat to the world economy out there? Just imagine what will happen when the shooting war starts and the Iranians only *threaten* to mine the strait. That will be plenty enough to create a huge panic, and while the USN might or might not be able to keep the strait open, there is exactly nothing the USN can do to prevent such a panic rippling across the markets.
Mofaz, in his reckless sabre-rattling, actually made us all a huge favor by showing how truly volatile and panic prone the markets are nowadays. Whether that will be enough to stop the Neocons is dubious, but at least it gives us all a much needed warning and one less excuse to plead ignorance for the Neocons when they will have to answer for the many disasters their crazy policies inflicted upon the world.
What is interesting here though is that all it took to spike up the price of oil were the reports of the threats made by one Israeli politician; so just imagine what will happen when the real shooting war actually begins!
It is often debated whether the Iranians can shut down the traffic across the Strait of Hormuz, but is this really the only big threat to the world economy out there? Just imagine what will happen when the shooting war starts and the Iranians only *threaten* to mine the strait. That will be plenty enough to create a huge panic, and while the USN might or might not be able to keep the strait open, there is exactly nothing the USN can do to prevent such a panic rippling across the markets.
Mofaz, in his reckless sabre-rattling, actually made us all a huge favor by showing how truly volatile and panic prone the markets are nowadays. Whether that will be enough to stop the Neocons is dubious, but at least it gives us all a much needed warning and one less excuse to plead ignorance for the Neocons when they will have to answer for the many disasters their crazy policies inflicted upon the world.
Saturday, December 8, 2007
Iran completely dumps the dollar
Press TV reports: Iran abandons dollar in oil deals
Iran has completely stopped carrying out its oil deals in dollar following the OPEC proposal to trade crude in non-dollar currencies.
"The dollar is no longer a reliable currency, considering its devaluation and the loss suffered by oil exporters," said Iranian Oil Minister Gholam-Hossein Nozari.
"Iran proposed in the last OPEC (Organization of Petroleum Exporting Countries) summit that member states use a reliable currency in their oil transactions to prevent further losses," he said, adding that the organization will come to a decision on the issue in the Vienna meeting on February 2.
Meanwhile, the organization decided to keep oil output unchanged at the Abu Dhabi summit on December 5, arguing that there was enough oil in the market to meet winter fuel demand.
AFP reports:
Major crude producer Iran has completely stopped carrying out its oil transactions in dollars, Oil Minister Gholam Hossein Nozari said on Saturday, labelling the greenback an "unreliable" currency.
"At the moment, selling oil in dollars has been completely halted, in line with the policy of selling crude in non-dollar currencies," Nozari was quoted as saying by the ISNA news agency.
"The dollar is an unreliable currency, considering its devaluation and the oil exporters' losses," he added.
The world's fourth largest oil exporter, Iran has massively reduced its dependence on the dollar over the past year in the face of US pressures on its financial system and the fall in the dollar.
Nozari did not specify in which currencies Iran was now being paid. In the past, officials have said most oil income was in euros, with a significant percentage in yen.
Japan, which purchases 20 percent of Iran's crude oil, has recently agreed to pay for the crude oil in yen, officials have said. The UAE dirham has also been mooted as a possible payment currency.
Iran has in the past months been whittling down the proportion of dollars in its oil revenue income. Officials in October said that dollars accounted for only 15 percent of payments and predicted the amount would fall to zero.
However, the oil income is still being booked in dollars.
The United States has in recent months successfully encouraged major European and Asian banks to cut their dealings with Iran in a bid to make the Islamic republic give way on its controversial nuclear programme.
Washington has also blacklisted major Iranian banks for alleged support of terrorism and seeking nuclear weapons, charges denied by Tehran.
Iran has also reduced its dollar assets held in foreign banks and urged OPEC to take collective action to price oil in other currencies such as the euro, instead of the US currency which is used across the world at present.
The fall of the dollar, which has weakened considerably against the euro and other currencies in the past 12 months, has affected the revenues of OPEC members because most of them price and sell their oil exports in the US currency.
Iran has completely stopped carrying out its oil deals in dollar following the OPEC proposal to trade crude in non-dollar currencies.
"The dollar is no longer a reliable currency, considering its devaluation and the loss suffered by oil exporters," said Iranian Oil Minister Gholam-Hossein Nozari.
"Iran proposed in the last OPEC (Organization of Petroleum Exporting Countries) summit that member states use a reliable currency in their oil transactions to prevent further losses," he said, adding that the organization will come to a decision on the issue in the Vienna meeting on February 2.
Meanwhile, the organization decided to keep oil output unchanged at the Abu Dhabi summit on December 5, arguing that there was enough oil in the market to meet winter fuel demand.
AFP reports:
Major crude producer Iran has completely stopped carrying out its oil transactions in dollars, Oil Minister Gholam Hossein Nozari said on Saturday, labelling the greenback an "unreliable" currency.
"At the moment, selling oil in dollars has been completely halted, in line with the policy of selling crude in non-dollar currencies," Nozari was quoted as saying by the ISNA news agency.
"The dollar is an unreliable currency, considering its devaluation and the oil exporters' losses," he added.
The world's fourth largest oil exporter, Iran has massively reduced its dependence on the dollar over the past year in the face of US pressures on its financial system and the fall in the dollar.
Nozari did not specify in which currencies Iran was now being paid. In the past, officials have said most oil income was in euros, with a significant percentage in yen.
Japan, which purchases 20 percent of Iran's crude oil, has recently agreed to pay for the crude oil in yen, officials have said. The UAE dirham has also been mooted as a possible payment currency.
Iran has in the past months been whittling down the proportion of dollars in its oil revenue income. Officials in October said that dollars accounted for only 15 percent of payments and predicted the amount would fall to zero.
However, the oil income is still being booked in dollars.
The United States has in recent months successfully encouraged major European and Asian banks to cut their dealings with Iran in a bid to make the Islamic republic give way on its controversial nuclear programme.
Washington has also blacklisted major Iranian banks for alleged support of terrorism and seeking nuclear weapons, charges denied by Tehran.
Iran has also reduced its dollar assets held in foreign banks and urged OPEC to take collective action to price oil in other currencies such as the euro, instead of the US currency which is used across the world at present.
The fall of the dollar, which has weakened considerably against the euro and other currencies in the past 12 months, has affected the revenues of OPEC members because most of them price and sell their oil exports in the US currency.
Tuesday, October 2, 2007
Iran is now selling 65% of its oil in euros
by Lew Rockwell
Iran is now selling 65% of its oil in euros, 20% in yen, and only 15% in dollars, and
even that 15% it plans to switch to "more creditworthy currencies" such as the UAE dirham.
With the Bush administration threatening fullscale war against Iran almost every day, and taking any number of other warlike steps (sanctions, funding of terrorism, etc.), political reasons are enough to explain this pricing decision, but as an Iranian spokesman noted, there is also "the fluctuations of the dollar on the currency markets and the depreciation of its value since 2004."
-------
(Note: also see original article here)
By the way, the dollar has been tumbling for a long while already. Chek out this graph from the US Dollar Index USDX, a measurement of the strength of the Dollar against six other freely exchangeable currencies (for an explanation of the USDX check here):
(click on image to enlarge)
Iran is now selling 65% of its oil in euros, 20% in yen, and only 15% in dollars, and
even that 15% it plans to switch to "more creditworthy currencies" such as the UAE dirham.With the Bush administration threatening fullscale war against Iran almost every day, and taking any number of other warlike steps (sanctions, funding of terrorism, etc.), political reasons are enough to explain this pricing decision, but as an Iranian spokesman noted, there is also "the fluctuations of the dollar on the currency markets and the depreciation of its value since 2004."
-------
(Note: also see original article here)
By the way, the dollar has been tumbling for a long while already. Chek out this graph from the US Dollar Index USDX, a measurement of the strength of the Dollar against six other freely exchangeable currencies (for an explanation of the USDX check here):
(click on image to enlarge)
Friday, September 21, 2007
Fears of dollar collapse as Saudis take fright
By Ambrose Evans-Pritchard, International Business Editor, "The Telegraph"
Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.
"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.
"Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.
The Saudi central bank said today that it would take "appropriate measures" to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.
As a close ally of the US, Riyadh has so far tried to stick to the peg, but the link is now destabilising its own economy.
The Fed's dramatic half point cut to 4.75pc yesterday has already caused a plunge in the world dollar index to a fifteen year low, touching with weakest level ever against the mighty euro at just under $1.40.
There is now a growing danger that global investors will start to shun the US bond markets. The latest US government data on foreign holdings released this week show a collapse in purchases of US bonds from $97bn to just $19bn in July, with outright net sales of US Treasuries.
The danger is that this could now accelerate as the yield gap between the United States and the rest of the world narrows rapidly, leaving America starved of foreign capital flows needed to cover its current account deficit - expected to reach $850bn this year, or 6.5pc of GDP.
Mr Redeker said foreign investors have been gradually pulling out of the long-term US debt markets, leaving the dollar dependent on short-term funding. Foreigners have funded 25pc to 30pc of America's credit and short-term paper markets over the last two years.
"They were willing to provide the money when rates were paying nicely, but why bear the risk in these dramatically changed circumstances? We think that a fall in dollar to $1.50 against the euro is not out of the question at all by the first quarter of 2008," he said.
"This is nothing like the situation in 1998 when the crisis was in Asia, but the US was booming. This time the US itself is the problem," he said.
Mr Redeker said the biggest danger for the dollar is that falling US rates will at some point trigger a reversal yen "carry trade", causing massive flows from the US back to Japan.
Jim Rogers, the commodity king and former partner of George Soros, said the Federal Reserve was playing with fire by cutting rates so aggressively at a time when the dollar was already under pressure.
The risk is that flight from US bonds could push up the long-term yields that form the base price of credit for most mortgages, the driving the property market into even deeper crisis.
"If Ben Bernanke starts running those printing presses even faster than he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems," he said.
The Federal Reserve, however, clearly calculates the risk of a sudden downturn is now so great that the it outweighs dangers of a dollar slide.
Former Fed chief Alan Greenspan said this week that house prices may fall by "double digits" as the subprime crisis bites harder, prompting households to cut back sharply on spending.
For Saudi Arabia, the dollar peg has clearly become a liability. Inflation has risen to 4pc and the M3 broad money supply is surging at 22pc.
The pressures are even worse in other parts of the Gulf. The United Arab Emirates now faces inflation of 9.3pc, a 20-year high. In Qatar it has reached 13pc.
Kuwait became the first of the oil sheikhdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth.
Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signalling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East.
"This is a very dangerous situation for the dollar," said Hans Redeker, currency chief at BNP Paribas.
"Saudi Arabia has $800bn (£400bn) in their future generation fund, and the entire region has $3,500bn under management. They face an inflationary threat and do not want to import an interest rate policy set for the recessionary conditions in the United States," he said.
The Saudi central bank said today that it would take "appropriate measures" to halt huge capital inflows into the country, but analysts say this policy is unsustainable and will inevitably lead to the collapse of the dollar peg.
As a close ally of the US, Riyadh has so far tried to stick to the peg, but the link is now destabilising its own economy.
The Fed's dramatic half point cut to 4.75pc yesterday has already caused a plunge in the world dollar index to a fifteen year low, touching with weakest level ever against the mighty euro at just under $1.40.
There is now a growing danger that global investors will start to shun the US bond markets. The latest US government data on foreign holdings released this week show a collapse in purchases of US bonds from $97bn to just $19bn in July, with outright net sales of US Treasuries.The danger is that this could now accelerate as the yield gap between the United States and the rest of the world narrows rapidly, leaving America starved of foreign capital flows needed to cover its current account deficit - expected to reach $850bn this year, or 6.5pc of GDP.
Mr Redeker said foreign investors have been gradually pulling out of the long-term US debt markets, leaving the dollar dependent on short-term funding. Foreigners have funded 25pc to 30pc of America's credit and short-term paper markets over the last two years.
"They were willing to provide the money when rates were paying nicely, but why bear the risk in these dramatically changed circumstances? We think that a fall in dollar to $1.50 against the euro is not out of the question at all by the first quarter of 2008," he said.
"This is nothing like the situation in 1998 when the crisis was in Asia, but the US was booming. This time the US itself is the problem," he said.
Mr Redeker said the biggest danger for the dollar is that falling US rates will at some point trigger a reversal yen "carry trade", causing massive flows from the US back to Japan.
Jim Rogers, the commodity king and former partner of George Soros, said the Federal Reserve was playing with fire by cutting rates so aggressively at a time when the dollar was already under pressure.
The risk is that flight from US bonds could push up the long-term yields that form the base price of credit for most mortgages, the driving the property market into even deeper crisis.
"If Ben Bernanke starts running those printing presses even faster than he's already doing, we are going to have a serious recession. The dollar's going to collapse, the bond market's going to collapse. There's going to be a lot of problems," he said.
The Federal Reserve, however, clearly calculates the risk of a sudden downturn is now so great that the it outweighs dangers of a dollar slide.
Former Fed chief Alan Greenspan said this week that house prices may fall by "double digits" as the subprime crisis bites harder, prompting households to cut back sharply on spending.
For Saudi Arabia, the dollar peg has clearly become a liability. Inflation has risen to 4pc and the M3 broad money supply is surging at 22pc.
The pressures are even worse in other parts of the Gulf. The United Arab Emirates now faces inflation of 9.3pc, a 20-year high. In Qatar it has reached 13pc.
Kuwait became the first of the oil sheikhdoms to break its dollar peg in May, a move that has begun to rein in rampant money supply growth.
Wednesday, July 18, 2007
Japan okays yen transactions with Iran
A Japanese official says his country will use yen in half of its future crude transactions with Iran as requested by the Islamic Republic.
Head of Japan's Petroleum Association, Fumiaki Watari, noted substituting yen with dollar for half of Japan's transactions is feasible.
Watari who also chairs Nippon Oil Corp. pointed out that the Japanese refining companies are presently working to change the currency unit for their transactions, Shana reported.
Iran has called on the Japanese oil contractors to change the unit of currency in transactions to yen from dollar as a way to counterbalance the US sanctions against the country.
Nippon will also change currency of its transactions into yen. Nippon will be the first Japanese oil company to convert the currency to yen. The new decision will take effect as of October.
Watari reiterated that Iran crude is important for Japan and the Japanese company will study replacing dollar with yen.
Iran is the third largest supplier of Japan's crude after Saudi Arabia and UAE.
Head of Japan's Petroleum Association, Fumiaki Watari, noted substituting yen with dollar for half of Japan's transactions is feasible.
Watari who also chairs Nippon Oil Corp. pointed out that the Japanese refining companies are presently working to change the currency unit for their transactions, Shana reported.
Iran has called on the Japanese oil contractors to change the unit of currency in transactions to yen from dollar as a way to counterbalance the US sanctions against the country.
Nippon will also change currency of its transactions into yen. Nippon will be the first Japanese oil company to convert the currency to yen. The new decision will take effect as of October.
Watari reiterated that Iran crude is important for Japan and the Japanese company will study replacing dollar with yen.
Iran is the third largest supplier of Japan's crude after Saudi Arabia and UAE.
Friday, July 13, 2007
Iran wants oil pay in yen not dollars
Fri, 13 Jul 2007 21:39:03
The dollar has sharply plummeted against the yen this afternoon on reports Iran has asked Japan to stop paying for its oil in dollars.
The dollar was driven down against the Japanese yen this afternoon, hit by the news that Iran had asked Japan to pay for its oil purchases in the Japanese currency and not in dollars.
Iran has sent a letter to Japanese refiners, signed by Ali A Arshi, the general manager of crude marketing and exports for Iran's national Iranian Oil Company, according to a report by Bloomberg.
The letter asks for yen payments "for any/all of your forthcoming Iranian crude oil liftings."
The request is for all shipments "effective immediately".
Japan's oil payments to Iran rose 12 per cent last year to 1.24 trillion yen (£5 billion).
The yen dropped against the dollar initially coming down to below 120 from 122.40 but later recovered somewhat on strong consumer confidence data from the US.
Three big oil producing nations - Iran, Venezuela and Russia - have all been moving much of their foreign currency reserves from dollars to euros in recent months.
The latest move can only add to the long-term pressure on the dollar, already hit by worries about the US economy based on the crisis in the sub-prime mortgage market.
It was also under pressure against the euro and sterling as US retail sales for June showed their sharpest drop for two years. This was later countered by consumer sentiment data showing consumers had high confidence in July.
By mid session Wall Street was trading up on its record rise from yesterday with the Dow Jones index up 29 points at 13890.
Against the euro, the dollar was still close to all-time highs this afternoon at $1.378 and against sterling it was $2.033.
The dollar has sharply plummeted against the yen this afternoon on reports Iran has asked Japan to stop paying for its oil in dollars.
The dollar was driven down against the Japanese yen this afternoon, hit by the news that Iran had asked Japan to pay for its oil purchases in the Japanese currency and not in dollars.
Iran has sent a letter to Japanese refiners, signed by Ali A Arshi, the general manager of crude marketing and exports for Iran's national Iranian Oil Company, according to a report by Bloomberg.
The letter asks for yen payments "for any/all of your forthcoming Iranian crude oil liftings."
The request is for all shipments "effective immediately".
Japan's oil payments to Iran rose 12 per cent last year to 1.24 trillion yen (£5 billion).
The yen dropped against the dollar initially coming down to below 120 from 122.40 but later recovered somewhat on strong consumer confidence data from the US.
Three big oil producing nations - Iran, Venezuela and Russia - have all been moving much of their foreign currency reserves from dollars to euros in recent months.
The latest move can only add to the long-term pressure on the dollar, already hit by worries about the US economy based on the crisis in the sub-prime mortgage market.
It was also under pressure against the euro and sterling as US retail sales for June showed their sharpest drop for two years. This was later countered by consumer sentiment data showing consumers had high confidence in July.
By mid session Wall Street was trading up on its record rise from yesterday with the Dow Jones index up 29 points at 13890.
Against the euro, the dollar was still close to all-time highs this afternoon at $1.378 and against sterling it was $2.033.
Sunday, July 1, 2007
Tehran ,Caracas Strengthen Ties
TEHRAN, July 1-- Iran's President Mahmoud Ahmadinejad in a meeting with his visiting Venezuelan counterpart Hugo Chavez on Sunday said imperialism is facing a strong wave of opposition in a majority of the world regions, and added that victory is close due to the shaky pillars of the world arrogance.
Ahmadinejad pointed to Iran's policy for developing relations with independent countries, and stressed that Tehran and Caracas seek to bolster cooperation in the different sectors in a bid to lay the required grounds for the development of Iran's relations with the independent states in Latin America.
He also viewed expansion of ties and boosting of cooperation among the world free and independent nations as necessary, and underlined that independent countries can pave the way for the progress and welfare of their nations through assisting each other.
The president further referred to the ample potentials existing in Latin America, and cited establishment of joint trade companies, arrangement of fairs to display manufactured goods and products and reinvigoration of a joint investment fund as among possible ways for the Latino states to develop ties with other countries, specially Iran.
For his part, Venezuelan president briefed Ahmadinejad about the latest conditions in Latin American, and stressed that cooperation among independent countries, including Iran and Venezuela, plays an effective role in defeating imperialistic policies and rescuing nations.
Venezuelan President Hugo Chavez said that cooperation between independent countries such as Iran and Venezuela could play an effective role "in defeating imperialistic policies and deliverance of nations."
Chavez predicted that Iran's resistance against the US would eventually be successful.
Iran's President Mahmoud Ahmadinejad and his Venezuelan counterpart Hugo Chavez are to take part in a ceremony to break the ground for construction of a joint methanol complex on Monday.
The National Petrochemical Company (NPC), the methanol complex will annually produce one million tons of methanols with the cooperation of the National Petrochemical Industries Company of Iran and the Venezuelan Petrochemical Company.
The complex lies in the Pars Special Economic Energy Zone.
After establishing Iran-Venezuela joint petrochemical company, the two countries will construct a methanol unit in the southern area of Assalouyeh, Iran, and another one in industrial zone of Zigma in Venezuela.
The two sides will benefit from establishing the methanol units including easy access to the markets of Latin America and Brazil as well as Pakistan and India.
Iranian Oil Minister Kazem Vaziri Hamaneh and a number of officials active in petrochemical and oil sectors will accompany Ahmadinejad and Chavez at the ceremony of breaking ground for methanol project.
Chavez, who is visiting Iran for the third time during the presidency of Mahmoud Ahmadinejad, was welcomed at Tehran Mehrabad International Airport by Minister of Industries and Mines Alireza Tahmasbi.
The Venezuelan president's current visit is the last leg of a tour that has taken him to Russia and Belarus.
He is scheduled to hold talks with senior Iranian officials, during his official two-day visit, on bilateral ties and key regional and international developments.
Ahmadinejad pointed to Iran's policy for developing relations with independent countries, and stressed that Tehran and Caracas seek to bolster cooperation in the different sectors in a bid to lay the required grounds for the development of Iran's relations with the independent states in Latin America.
He also viewed expansion of ties and boosting of cooperation among the world free and independent nations as necessary, and underlined that independent countries can pave the way for the progress and welfare of their nations through assisting each other.
The president further referred to the ample potentials existing in Latin America, and cited establishment of joint trade companies, arrangement of fairs to display manufactured goods and products and reinvigoration of a joint investment fund as among possible ways for the Latino states to develop ties with other countries, specially Iran.
For his part, Venezuelan president briefed Ahmadinejad about the latest conditions in Latin American, and stressed that cooperation among independent countries, including Iran and Venezuela, plays an effective role in defeating imperialistic policies and rescuing nations.
Venezuelan President Hugo Chavez said that cooperation between independent countries such as Iran and Venezuela could play an effective role "in defeating imperialistic policies and deliverance of nations."
Chavez predicted that Iran's resistance against the US would eventually be successful.
Iran's President Mahmoud Ahmadinejad and his Venezuelan counterpart Hugo Chavez are to take part in a ceremony to break the ground for construction of a joint methanol complex on Monday.
The National Petrochemical Company (NPC), the methanol complex will annually produce one million tons of methanols with the cooperation of the National Petrochemical Industries Company of Iran and the Venezuelan Petrochemical Company.
The complex lies in the Pars Special Economic Energy Zone.
After establishing Iran-Venezuela joint petrochemical company, the two countries will construct a methanol unit in the southern area of Assalouyeh, Iran, and another one in industrial zone of Zigma in Venezuela.
The two sides will benefit from establishing the methanol units including easy access to the markets of Latin America and Brazil as well as Pakistan and India.
Iranian Oil Minister Kazem Vaziri Hamaneh and a number of officials active in petrochemical and oil sectors will accompany Ahmadinejad and Chavez at the ceremony of breaking ground for methanol project.
Chavez, who is visiting Iran for the third time during the presidency of Mahmoud Ahmadinejad, was welcomed at Tehran Mehrabad International Airport by Minister of Industries and Mines Alireza Tahmasbi.
The Venezuelan president's current visit is the last leg of a tour that has taken him to Russia and Belarus.
He is scheduled to hold talks with senior Iranian officials, during his official two-day visit, on bilateral ties and key regional and international developments.
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