Iran Joins EAEU - 45 Years Of US Foreign Policy Down The Drain

Authored by Tom Luongo,

Iran is joining the Eurasian Economic Union (EAEU). By early next year, February by this account, Iran will join the five founding members of the Union and open the door for Turkey to do so later in 2018.

Between this and the end of the war in Syria, it’s not hard to declare the Brzezinski Doctrine of U.S.-led Central Asian chaos as gasping its last breaths.

Iran finally joining the EAEU is a response to a number of factors, the most important of which is the continued belligerence by the U.S. Expanded economic sanctions on Iran and the EAEU’s leader Russia has created the need for greater coordination of economic and foreign policy objectives between them.

And it is creating the new realities in the region that will reshape the word for the next hundred years.

The Nuclear Gambit

In the dying days of the Obama administration it looked like the goal was to placate Iran to stop its pivot towards Russia and China. I believe that was the driving force behind Obama’s negotiating the controversial nuclear deal.

In effect, Obama tried to trade unfreezing Iran’s hundreds of billions in assets held in Western banks for Iran to ignore our atomization of Syria and the creation of a complete mess there.

When you stop to think about it like that how venal are we? After putting Iran under economic lockdown, having frozen its accounts, barring them from interbank communication with customers (SWIFT removal), inducing hyperinflation to sow regime change they would agree to allowing its ally, Syria, to be handed over to Wahabist animals.

In exchange they would repudiate Russisa and be thankful for the opportunity to get their money back by signing a deal which forbade them from obtaining nuclear weapons?

Such is the ‘logic’ of the mental midgets running our foreign policy under Obama.

So, now, having assisted Russia and the Syrian army in defeating ISIS Iran is making the smart move by further integrating its economy in need of diversification and investment by joining an economic union which should align all of Central Asia’s interests along a similar path.

Chaos no longer. Zbigniew Brzezinski isn’t just dead, his strategy is as well.

Left to the likes of Obama, Hillary Clinton, John McCain and the dimbulbs of the Bush the Lesser administration before them, these buffoons were outplayed at every turn by Vladimir Putin, Chinese Premier Xi Jinping and Iranian President Hassan Rouhani.

And the world will soon be a better place for it.

The Status Whoa!

Everything about the status quo of the last thirty years is changing. Syria has made it clear to everyone that the U.S. is no longer infallible. In fact, it is close to incompetent in both military and diplomatic efficacy.

The Russian intervention exposed the real roots of the conflict as well as the lengths to which our leadership would lie, cheat and steal to achieve its chaotic regional goals. President Trump is changing the direction of this ship of state, but it is a slow process being fought at every level by those embedded in departments up and down the bureaucracy.

That said, Iran’s entry into the EAEU as a full member will break open the floodgates of new members into it. Russia has been courting everyone around the region as the EAEU members work on the rules and build the organization.

Adding Iran should see the union grow quickly and help facilitate China’s Belt and Road Initiative projects get completed.

Taking that one-step further, the bigger picture comes into focus with the establishment of the New Development Bank to challenge the U.S.-led Asian Development Bank, to fund infrastructure projects.

With the flurry of big projects announced recently, including the new version of the IPI – Iran/Pakistan/India – gas pipeline this announcement isn’t so much a diplomatic coup for Putin and Russia but rather a fait accompli.

It was always a matter of when not if Iran would join the EAEU. And with it on board, countries like India, Pakistan and Turkey can join and know that they have a level playing field on which to trade which will dampen down animosities and lingering disputes.

Peak U.S.

As Federico Pieraccini points out this morning at Strategic Culture Foundation, even the tensions between India and China have calmed down as it becomes obvious to all and sundry that the U.S. is simply neither willing under Trump nor able to maintain its dominance over central Asia anymore.

In this sense, the lack of interest from the Trump administration in certain areas of the globe is emblematic. While the chemistry between Trump and Modi appears to be good, the tensions between India and China, heightened by border disputes, seems to have nevertheless dissolved. Following on from the failure of the neocons to divide Russia and China, even the border tensions between India and China seem to be now dissipating. In addition, in Ukraine, even the decision to send lethal weapons to Kiev has been downplayed, and the country now faces a counter-coup led by Saakashvili (yes, him again). Ukraine is a country in a mess, experiencing first-hand the consequences of an evil Atlanticist posture with its vicious anti-Russia policies.

Pieraccini’s argument is the Trump is a mix of ineptitude and pragmatism when it comes to foreign policy. And that mix has led to the current state of affairs, where the U.S., Israel and Saudi Arabia are flailing about trying to remain relevant.

I won’t go nearly that far, as those countries all still have a powerful hand of cards to play, if only to stabilize most of what they currently have. And they will play those cards to the hilt in the creation of something approaching peace.

But, Iran is charting a new path, turning away from the open wounds in the West and towards the opportunities that lie all about them in every other direction. As I’ve been saying recently, the framework for a Grand Bargain in the Middle East is possible. And Iran joining the EAEU is a strong indicator that it wants to join the larger world economy as a trustworthy actor.

Putin has become the de facto negotiator for those allied against Israel and Trump is stepping up to do so for Israel. Once that deal is in place and Trump agrees to remove U.S. military presence in most of the region, then we’ll begin to see what the world can look like without manufactured conflict.

Oil Producers Turning To Crypto To Solve Sanctions Problems

Authored by Tom Luongo,

Last week, Venezuela announced it would develop a national cryptocurrency backed by its oil reserves, the Petro.  Now there is a report that Russia is considering the same thing.  Iran will likely follow suit.

As of right now this is just a rumor, but it makes some sense.  So, let’s treat this rumor as fact for the sake of argument and see where it leads us.

The U.S. continues to sanction and threaten all of these countries for daring to challenge the global status quo.  There is no denying this.  And so much of what we see in the geopolitical headlines are knock-on effects of this challenge.

The Geopolitical “Why”

From the Middle East to North Korea, the Dutch changing their laws to block Nordstream 2 to the Saudis breaking off relations with Qatar, everything you read about in the news is a move on the geopolitical “Go” board.

Because at the heart of this is the petrodollar. Contrary to what many believe, the petrodollar is not the source of the U.S. dollar’s power around the world, but rather the U.S.’s main fulcrum by which to keep competition out of the markets.

It is a secondary effect of the dollar’s dominance in global finance today.  But it is not the main driver.  Financial market are simply too big relative to the size any one commodity market for it to be the fulcrum on which everything hinges.

It was that way in the past. But it is not now.  That said, however, getting out from underneath the petrodollar gives a country independence to begin building financial architecture that can be levered up over time to threaten the institutional control it helped create.

U.S. foreign policy defends the petrodollar along with other systems in place – the IMF, the World Bank, SWIFT, LIBOR and the central banks themselves – to maintain its control.

The main oil producers, however, can escape this control simply by selling their oil in currencies other than the U.S. dollar.  That’s not enough to dethrone the dollar, but, like I just said, it is where the process has to start.

Therefore, any and all means must be employed to defend the dollar empire by keeping everyone inside that system. 

So, it looks like the petrodollar is all-important, but only in the long-run.  In the short run, monetary policy, diplomacy and political stability are far more powerful actors on the system.

Russia’s Crypto-Upside

However, the oil-backed cryptocurrency by Venezuela is very important.  And it’s why attaching a rumor to Russia makes sense.  Who do you think put this idea in President Maduro’s head, anyway?  Martians?  No, it was Putin.

Because it deepens Russia’s tools to combat U.S. hybrid war tactics, which include financial sanctions.  They’ve already announced their plans for a crypto-ruble, as well as supporting cryptocurrency research, massive Bitcoin mining operations, and the possibility of a BRICS-Coin as well.

And, most importantly, legal frameworks under which all of this will operate.  In short, these things create certainty in the minds of companies doing business in Russia that the government will act in predictable ways.

Those ways may still not be profitable enough to lay off other risks and attract capital, but predictability first and fine-tuning second.

Adding in a cryptocurrency backed by their oil reserves which can trade on the open market then only makes sense.  It allows smaller oil and gas companies to avoid the worst of U.S. banking sanctions.  It will help create secondary markets for corporate debt and equity issuance, fast-international clearing without need of centralized systems like SWIFT, etc.

This can facilitate a shift in the oil supply chain economy away from banks sanctioned by the U.S. and spur development in that space across not only Russia, but the entire region served by the Eurasian Economic Union.

Especially if this potential “Neft-coin”(Neft is Russian for ‘oil’) is convertible into crypto-Rubles and, by extension, Rubles themselves.  There will be no barrier for Russian businesses to use the “Neft-coin” to get around sanctions since it the crypto-Ruble was predictable tax consequences.

Moreover, since the crypto-Ruble will only be taxed at 13%, the capital gains tax rate in Russia, this, in effect, could be a back-door way for companies to lower their corporate tax rate to 13% from the current 20% Russian corporate tax rate.   I am just spitballing here.  But, if I were Vladimir Putin I would consider this, highly to compete with the U.S. pushing their corporate tax rate down from 35%.

The Other Side of the Coin

Those are the benefits, but what are the potential drawbacks?

The problem with backing any currency with physical reserves is the fluctuations in value of those reserves.  It’s not like oil is a low-beta commodity or anything.  But, like everything else in the commodity space, price movements are supposed to be smoothed out by the futures markets helping to coordinate price with time.

But the bigger problem is the estimation of those reserves the coin’s value is based on.  First, how do you accurately quantify them?  Can holders of Petro or Neft-coin trust the Russian or Venezuelan governments to provide accurate assessments of their reserves?

Second, there is the ability of the country to pull it out of the ground and sell it into the market at anything close to a fair price.  This isn’t a concern for Russia, the world’s 2^nd largest supplier of oil and very stable government but Venezuela is the opposite.  And, its “Petro” would probably trade at quite a discount early on to the dollar price of oil.

It will open up all kinds of arbitrage opportunities.

Moreover, the blockchain that backs this “Neft-coin” is subject to hacking by hostile actors… I wonder who those will be?

A cryptocurrency is only as secure as its blockchain is.  And, the size of the mempool backing that blockchain is the elephant in the room and it has to be big, deep and incorruptible.

Don’t think for a second that various U.S. ‘intelligence’ agencies are not developing ways to attack anything crypto-based that either of these countries put in place.  And, as well, don’t think that the Russians, masters themselves of cryptography, aren’t thinking of ways to combat this at a fundamental level.

Bitcoin Solves Other Problems

Now, there are schemes emerging in the blockchain space that can mitigate this possibility very simply.  And it all depends on the architecture of this “Neft-coin” or Venezuela’s “Petro.”  Tying either of these coins to a massive proof-of-work based blockchain like Ethereum or Bitcoin would be the right way to do this.

Like I said at the outset, this is purely speculation on my part, but it’s important to ask these questions now to see what shakes out.

I wouldn’t be surprised to see this “Neft-coin” if it’s happening, is employing some form of double-proofing that ties back into the plans for Russian Miner Coin, and the employment of not only the best new Bitcoin mining ASICs but the incredibly cheap Russian electrical grid.

I wrote about this when it was first announced back in August, seeing it as a way to get around sanctions and create a potential crypto-reserve system for the Russian economy.

Not only does Bitcoin get potentially elevated to the level of reserve asset to reside right next to Russia’s enormous pile of gold that represents nearly 20% of M2 in Rubles at insanely depressed prices, but it also furthers the argument for Russia to be a destination for capital as the sovereign debt crisis unfolds.

 

Capital is flowing into cryptos at an astounding pace.  Governments are completely behind the curve in their adoption of this technology.  Russia under Putin is moving quickly to remedy this and now fully groks how it can help him acheive his goals for Russia’s financial independence from the U.S.

 

Lastly, if this proves successful, Russia’s new Bitfury chips that will power this system could see wide demand in the global mining market.

And now you know why Russia is interested in taking over 10% of the Bitcoin mining hashing power.  In cryptocurrency mining, he who controls the hashing power controls the network, in essence.  Russia wants in on this for the strategic purpose of leveraging it for a number of reasons.

Both a crypto-Ruble and this potential “Neft-coin” can be tied to the Bitcoin blockchain by proxy and insulate it from any number of attack types.  For an example of how they could structure this read about Komodo’s delayed-Proof-of-Work system.

The drive to attract global capital away from the existing and (in my opinion) failing monetary and political system is what is driving the creation of these new types of digital assets.  Contrary to the opinion of many America Firsters, the U.S. is not capable of militarily taking on the world.  It does most of its fighting through the financial markets and political backrooms.

Moves like this and assets like Bitcoin itself happen because of that very natural human desire to be free from external control which enriches the few at the expense of the many.  Even if Russia isn’t working on a “Neft-coin” because of its relationship with China and its developing a crypto-Ruble, it’s obvious that there is a coordinated effort via the blockchain to secure Russia’s future free from U.S. control.

China Launches Yuan-Ruble Payment System

The monetary regimes of China and Russia, two of the world"s most resource-rich nations, are drawing closer with every passing day.

In the latest push for convergence, China has established a payment versus payment (PVP) system for Chinese yuan and Russian ruble transactions in a move to reduce risks and improve the efficiency of its foreign exchange transactions. The PVP system for yuan and ruble transactions, designed to streamline commerce and curency transactions between the two nations, was launched on Monday after receiving approval from China’s central bank, according to a statement by the country’s foreign exchange trading system.

It marks the first time a PVP system has been established for trading the yuan and foreign currencies, said the statement, which was posted on Wednesday on the website of the China Foreign Exchange Trade System (CFETS). PVP systems allow simultaneous settlement of transactions in two different currencies.

According to CFETS, the system would reduce settlement risk as well as the risk of transactions taking place in different time zones, and improve foreign exchange market efficiency. Of course, if the two countries had a blockchain-based settlement system, they would already have all this and much more.

CFETS said it plans to introduce PVP systems for yuan transactions with other currencies based on China’s Belt and Road initiative, and complying with the process of renminbi internationalization. Russia, however, is a top priority: the world"s biggest oil producer recently became the largest source of oil for China, the world’s top energy consumer.

To be sure, the monetary convergence between Beijing and Moscow is hardly new. The most notable recent development took place in April, when the Russian central bank opened its first overseas office in Beijing on March 14, marking a step forward in forging a Beijing-Moscow alliance to bypass the US dollar in the global monetary system, and to phase-in a gold-backed standard of trade. As the South China Morning Post reported at the time, the new office was part of agreements made between the two neighbours "to seek stronger economic ties" since the West brought in sanctions against Russia over the Ukraine crisis and the oil-price slump hit the Russian economy.

At the time, Vladimir Shapovalov, a senior official at the Russian central bank, said the two central banks were drafting a memorandum of understanding to solve technical issues around China’s gold imports from Russia, and that details would be released soon, to which we said that If Russia - the world"s fourth largest gold producer after China, Japan and the US - is indeed set to become a major supplier of gold to China, the probability of a scenario hinted by many over the years, namely that Beijing is preparing to eventually unroll a gold-backed currency, increases by orders of magnitude.

Furthermore, also around the same time, as the Russian central bank was getting closer to China, China was responding in kind with the establishment of a clearing bank in Moscow for handling transactions in Chinese yuan. The Industrial and Commercial Bank of China (ICBC) officially started operating as a Chinese renminbi clearing bank in Russia on Wednesday this past Wednesday

"The financial regulatory authorities of China and Russia have signed a series of major agreements, which marks a new level of financial cooperation," Dmitry Skobelkin, the abovementioned deputy head of the Russian Central Bank, said. "The launching of renminbi clearing services in Russia will further expand local settlement business and promote financial cooperation between the two countries," he added according to.

Irina Rogova, a Russian financial analyst told the Russian magazine Expert that the clearing center could become a large financial hub for countries in the Eurasian Economic Union.

* * *

The creation of the clearing center, and the launch of PVP systems enables the two countries to further increase bilateral trade and investment while decreasing their dependence on the US dollar. It will create a pool of yuan liquidity in Russia that enables transactions for trade and financial operations to run smoothly. In expanding the use of national currencies for transactions, it could also potentially reduce the volatility of yuan and ruble exchange rates. The clearing center is one of a range of measures the People"s Bank of China and the Russian Central Bank have been looking at to deepen their co-operation, Sputnik reported.

But one of the most significant measures under consideration is the previously reported push for joint organization of trade in gold.

In recent years, China and Russia have been the world"s most active buyers of the precious metal. On a visit to China last year, the deputy head of the Russian Central Bank Sergey Shvetsov said that the two countries want to facilitate more transactions in gold between the two countries.

"We discussed the question of trade in gold. BRICS countries are large economies with large reserves of gold and an impressive volume of production and consumption of this precious metal. In China, the gold trade is conducted in Shanghai, in Russia it is in Moscow. Our idea is to create a link between the two cities in order to increase trade between the two markets," First Deputy Governor of the Russian Central Bank Sergey Shvetsov told Russia"s TASS news agency.

In other words, China and Russia are continuing to shift away from dollar-based trade, to commerce which will eventually be backstopped by gold, or what is gradually emerging as an Eastern gold standard, one shared between Russia and China, and which may day backstop their respective currencies.

Meanwhile, the price of gold continues to reflect none of these potentially tectonic strategic shifts, just as China - which has been the biggest accumulator of gold in recent years - likes it.

Turkey Faces Threats For Inking Landmark Arms Deal With Russia

Authored by Alex Gorka via The Strategic Culture Foundation,

The long awaited deal has taken place. A deposit has already been paid. Turkey has finally signed the $2.5bn (£1.9bn) contract with Russia to buy S-400 advanced missile defense system. With a range of 400 kilometers (248 miles), the system can shoot down up to 80 targets simultaneously, aiming two missiles at each one, at an altitude of up to 30 km.

The system is not operationally compatible with the systems used by NATO countries, which gives Turkey a military capacity independent of the alliance. NATO commanders will not have control over it. The identification friend or foe (IFF) equipment won’t prevent Turkey from using it against NATO aircraft and missiles. Reaching full operational capability will require Russian personnel to be stationed in Turkey on advice, assistance and training missions.

The technology transfer component of the S-400 deal is especially important as it would allow Turkey to rapidly expand domestic defense industry with Russia’s help. Russia would supply two batteries and help Ankara build two more such systems. A few years ago, the US refused to let Turkey produce Patriot air defense systems on its soil and the deal was off.

Ankara does not have industrial infrastructure to produce air defense systems. Russian specialists will have to come and build it from scratch. As a result, Russia will get access to the defense infrastructure of a NATO member state. The agreement to build the Akkuyu nuclear power plant in Turkey, which is to be launched by 2023, is another example of fruitful economic cooperation.

NATO insists members of the alliance are obligated to use military hardware that is interoperable with each other"s systems. But the S-400 deal is not the first time the principle of interoperability is not observed. Greece purchased Russia"s S-300 missile system several years ago.

The move - a further sign of Ankara"s gradual estrangement from its Western allies – meets the strategic goal to acquire the nationally controlled defense capability. Turkey has also criticized the US and its allies for their reticence about selling it military arms and technology.

As had been expected, the deal triggered the anger of the United States and other NATO members. The US had long been warning Turkey against the deal. "We have relayed our concerns to Turkish officials regarding the potential purchase of the S-400. A NATO interoperable missile defense system remains the best option to defend Turkey from the full range of threats in its region," Pentagon spokesman Johnny Michael said in a statement.

Maryland Sen. Ben Cardin, the ranking Democrat on the Senate Foreign Relations Committee, asked the US administration to assess how the deal might affect Turkey’s NATO membership and US security assistance to Ankara, which includes weapons sales. He issued the warning on September 14 in a letter to Secretary of State Rex Tillerson and Treasury Secretary Steve Mnuchin. According to him, the deal violated a bill signed into law in August that imposes sanctions "on any person that conducts a significant transaction with the Russian Federation’s defense or intelligence sectors."

The idea of introducing sanctions against Turkey has been on the EU’s agenda for quite some time. The announcement of the deal with Russia came after German Foreign Minister Sigmar Gabriel said his country was suspending all major arms exports to Turkey because of the deteriorating human rights situation in the country and the increasingly strained ties. Gabriel added he believed that Turkey had also abandoned NATO’s common values. The idea of economic sanctions against Turkey is quite popular in Germany.

So, the three big powers, Russia, Turkey and Iran, united by the desire to end the bloodshed in Syria and rout terrorists, have become the targets of Western sanctions already imposed or still to be introduced. The pressure makes them get closer to each other. The cooperation between Russia and Turkey is on the rise and offers great prospects. Iran"s Armed Forces Chief of Staff, Major General Mohammad Bagheri visited Turkey in mid-August - the first visit by an Iranian chief of staff since Iran’s 1979 Islamic revolution. The common threat of terrorism and Western pressure nudge Russia, Turkey and Iran towards one another.

The three states work together within the framework of Shanghai Cooperation Organization (SCO) where Russia is a full-fledged member, Turkey has the status of dialogue partner and Iran, an observer, is expected to become a member soon. Last November, Turkish President Recep Tayyip Erdogan said Turkey could become part of the SCO.

Ankara is also showing increasing interest in the Eurasian Economic Union (EAEU). It was invited to join the organization in 2014. This will open new opportunities for developing trade. Furthermore, many of the present and potential members of the EAEU are countries with whom Turkey already has close relations. The Eurasian Economic Union aims to finalize a free-trade deal with Iran by the end of the year. Reaching a deal with Iran on free trade would represent a notable victory for the organization. With Turkey and Iran as members, the EAEU would acquire a global dimension.

Obviously, there is one result the Western sanctions produce – the targeted countries come together to create alternative poles of power. Threats and restrictive measures spur the process. This policy has failed to keep Turkey away from military cooperation with Russia. In the multipolar world there is always an alternative to turn to.

The Russia-China Plan For North Korea: Stability & Connectivity

Authored by Pepe Escobar via The Asia Times,

Moscow has been busy building agreements that would extend Eurasian connectivity eastward. The question is how to convince the DPRK to play along...

Chinese President Xi Jinping (centre) and his wife Peng Liyuan welcome Russian President Vladimir Putin ahead of a banquet dinner during the BRICS Summit in Xiamen, Fujian province, on September 4, 2017

The United Nations Security Council’s 15-0 vote to impose a new set of sanctions on North Korea somewhat disguises the critical role played by the Russia-China strategic partnership, the “RC” at the core of the BRICS group.

The new sanctions are pretty harsh. They include a 30% reduction on crude and refined oil exports to the DPRK; a ban on exports of natural gas; a ban on all North Korean textile exports (which have brought in US$760 million on average over the past three years); and a worldwide ban on new work permits for DPRK citizens (there are over 90,000 currently working abroad.)

But this is far from what US President Donald Trump’s administration was aiming at, according to the draft Security Council resolution leaked last week. That included an asset freeze and travel ban on Kim Jong-un and other designated DPRK officials, and covered additional “WMD-related items,” Iraqi sanctions-style. It also authorized UN member states to interdict and inspect North Korean vessels in international waters (which amounts to a declaration of war); and, last but not least, a total oil embargo.

“RC” made it clear it would veto the resolution under these terms. Russian Foreign Minister Sergey Lavrov told the US’ diminishing Secretary of State Rex Tillerson Moscow would only accept language related to “political and diplomatic tools to seek peaceful ways of resolution.” On the oil embargo, President Vladimir Putin said, “cutting off the oil supply to North Korea may harm people in hospitals or other ordinary citizens.”

Russian Foreign Minister Sergei Lavrov. Photo: Reuters

“RC” priorities are clear: “stability” in Pyongyang; no regime change; no drastic alteration of the geopolitical chessboard; no massive refugee crisis.

That does not preclude Beijing from applying pressure on Pyongyang. Branch offices of the Bank of China, China Construction Bank and Agricultural Bank of China in the northeastern border city of Yanji have banned DPRK citizens from opening new accounts. Current accounts are not frozen yet, but deposits and remittances have been suspended.

To get to the heart of the matter, though, we need to examine what happened last week at the Eastern Economic Forum in Vladivostok – which happens to be only a little over 300 km away from the DPRK’s Punggye-ri missile test site.

It’s all about the Trans-Korean Railway

In sharp contrast to the Trump administration and the Beltway’s bellicose rhetoric, what “RC” proposes are essentially 5+1 talks (North Korea, China, Russia, Japan and South Korea, plus the US) on neutral territory, as confirmed by Russian diplomats. In Vladivostok, Putin went out of his way to defuse military hysteria and warn that stepping beyond sanctions would be an “invitation to the graveyard.” Instead, he proposed business deals.

Largely unreported by Western corporate media, what happened in Vladivostok is really ground-breaking. Moscow and Seoul agreed on a trilateral trade platform, crucially involving Pyongyang, to ultimately invest in connectivity between the whole Korean peninsula and the Russian Far East.

South Korean Prime Minister Moon Jae-in proposed to Moscow to build no less than “nine bridges” of cooperation: “Nine bridges mean the bridges of gas, railways, the Northern Sea Route, shipbuilding, the creation of working groups, agriculture and other types of cooperation.”

Crucially, Moon added that the trilateral cooperation would aim at joint projects in the Russian Far East. He knows that “the development of that area will promote the prosperity of our two countries and will also help change North Korea and create the basis for the implementation of the trilateral agreements.”

Russian President Vladimir Putin and his South Korean counterpart Moon Jae-in visit the Far East Street exhibition at Russky Island in Vladivostok. Photo: Sputnik / Mikhail Klimentyev

Adding to the entente, Japanese Foreign Minister Taro Kono and South Korean Foreign Minister Kang Kyung-wha both stressed “strategic cooperation” with “RC”.

Geo-economics complements geo-politics. Moscow has also approached Tokyo with the idea of building a bridge between the nations. That would physically link Japan to Eurasia – and the vast trade and investment carousel offered by the New Silk Roads, aka, the Belt and Road Initiative (BRI) and the Eurasia Economic Union (EAEU). It would also complement the daring plan to link a Trans-Korean Railway to the Trans-Siberian one.

Seoul wants a rail network that will physically connect it with the vast Eurasian land bridge, which makes perfect business sense for the fifth largest export economy in the world. Handicapped by North Korea’s isolation, South Korea is in effect cut off from Eurasia by land. The answer is the Trans-Korean Railway.

Moscow is very much for it, with Putin noting how “we could deliver Russian pipeline gas to Korea and integrate the power lines and railway systems of Russia, the Republic of Korea and North Korea. The implementation of these initiatives will be not only economically beneficial, but will also help build up trust and stability on the Korean Peninsula.”

Moscow’s strategy, like Beijing’s, is connectivity: the only way to integrate Pyongyang is to keep it involved in economic cooperation via the Trans-Korean-Trans-Siberian connection, pipelines and the development of North Korean ports.

The DPRK’s delegation in Vladivostok seemed to agree. But not yet. According to North Korea’s Minister for External Economic Affairs, Kim Yong Jae: “We are not opposed to the trilateral cooperation [with Russia and South Korea], but this is not an appropriate situation for this to be implemented.” That implies that for the DPRK the priority is the 5+1 negotiation table.

Still, the crucial point is that both Seoul and Pyongyang went to Vladivostok, and talked to Moscow. Arguably the key question – the armistice that did not end the Korean War – has to be broached by Putin and the Koreans, without the Americans.

While the sanctions game ebb and flows, the larger strategy of “RC” is clear – a drive aimed at Eurasian connectivity. The question is how to convince the DPRK to play along.

Suddenly, "De-Dollarization" Is A Thing

Authored by John Rubino via DollarCollapse.com,

For what seems like decades, other countries have been tiptoeing away from their dependence on the US dollar.

China, Russia, and India have cut deals in which they agree to accept each others’ currencies for bi-lateral trade while Europe, obviously, designed the euro to be a reserve asset and international medium of exchange.

These were challenges to the dollar’s dominance, but they weren’t mortal threats.

What’s happening lately, however, is a lot more serious.

It even has an ominous-sounding name: de-dollarization. Here’s an excerpt from a much longer article by “strategic risk consultant” F. William Engdahl:

(Global Research) – China, increasingly backed by Russia—the two great Eurasian nations—are taking decisive steps to create a very viable alternative to the tyranny of the US dollar over world trade and finance. Wall Street and Washington are not amused, but they are powerless to stop it.

So long as Washington dirty tricks and Wall Street machinations were able to create a crisis such as they did in the Eurozone in 2010 through Greece, world trading surplus countries like China, Japan and then Russia, had no practical alternative but to buy more US Government debt—Treasury securities—with the bulk of their surplus trade dollars. Washington and Wall Street could print endless volumes of dollars backed by nothing more valuable than F-16s and Abrams tanks. China, Russia and other dollar bond holders in truth financed the US wars that were aimed at them, by buying US debt. Then they had few viable alternative options.

Viable Alternative Emerges

Now, ironically, two of the foreign economies that allowed the dollar an artificial life extension beyond 1989—Russia and China—are carefully unveiling that most feared alternative, a viable, gold-backed international currency and potentially, several similar currencies that can displace the unjust hegemonic role of the dollar today.

For several years both the Russian Federation and the Peoples’ Republic of China have been buying huge volumes of gold, largely to add to their central bank currency reserves which otherwise are typically in dollars or euro currencies. Until recently it was not clear quite why.

For several years it’s been known in gold markets that the largest buyers of physical gold were the central banks of China and of Russia. What was not so clear was how deep a strategy they had beyond simply creating trust in the currencies amid increasing economic sanctions and bellicose words of trade war out of Washington.

Now it’s clear why.

China and Russia, joined most likely by their major trading partner countries in the BRICS (Brazil, Russia, India, China, South Africa), as well as by their Eurasian partner countries of the Shanghai Cooperation Organization (SCO) are about to complete the working architecture of a new monetary alternative to a dollar world.

Currently, in addition to founding members China and Russia, the SCO full members include Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, and most recently India and Pakistan. This is a population of well over 3 billion people, some 42% of the entire world population, coming together in a coherent, planned, peaceful economic and political cooperation.

Gold-Backed Silk Road

It’s clear that the economic diplomacy of China, as of Russia and her Eurasian Economic Union group of countries, is very much about realization of advanced high-speed rail, ports, energy infrastructure weaving together a vast new market that, within less than a decade at present pace, will overshadow any economic potentials in the debt-bloated economically stagnant OECD countries of the EU and North America.

What until now was vitally needed, but not clear, was a strategy to get the nations of Eurasia free from the dollar and from their vulnerability to further US Treasury sanctions and financial warfare based on their dollar dependence. This is now about to happen.

At the September 5 annual BRICS Summit in Xiamen, China, Russian President Putin made a simple and very clear statement of the Russian view of the present economic world. He stated, “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

To my knowledge he has never been so explicit about currencies. Put this in context of the latest financial architecture unveiled by Beijing, and it becomes clear the world is about to enjoy new degrees of economic freedom.

China Yuan Oil Futures

According to a report in the Japan Nikkei Asian Review, China is about to launch a crude oil futures contract denominated in Chinese yuan that will be convertible into gold. This, when coupled with other moves over the past two years by China to become a viable alternative to London and New York to Shanghai, becomes really interesting.

China is the world’s largest importer of oil, the vast majority of it still paid in US dollars. If the new Yuan oil futures contract gains wide acceptance, it could become the most important Asia-based crude oil benchmark, given that China is the world’s biggest oil importer. That would challenge the two Wall Street-dominated oil benchmark contracts in North Sea Brent and West Texas Intermediate oil futures that until now has given Wall Street huge hidden advantages.

That would be one more huge manipulation lever eliminated by China and its oil partners, including very specially Russia. Introduction of an oil futures contract traded in Shanghai in Yuan, which recently gained membership in the select IMF SDR group of currencies, oil futures especially when convertible into gold, could change the geopolitical balance of power dramatically away from the Atlantic world to Eurasia.

In April 2016 China made a major move to become the new center for gold exchange and the world center of gold trade, physical gold. China today is the world’s largest gold producer, far ahead of fellow BRICS member South Africa, with Russia number two.

Now to add the new oil futures contract traded in China in Yuan with the gold backing will lead to a dramatic shift by key OPEC members, even in the Middle East, to prefer gold-backed Yuan for their oil over inflated US dollars that carry a geopolitical risk as Qatar experienced following the Trump visit to Riyadh some months ago. Notably, Russian state oil giant, Rosneft just announced that Chinese state oil company, CEFC China Energy Company Ltd. Just bought a 14% share of Rosneft from Qatar. It’s all beginning to fit together into a very coherent strategy.

Meanwhile, in Latin America:

(Zero Hedge) – Did the doomsday clock on the petrodollar (and implicitly US hegemony) just tick one more minute closer to midnight?

Apparently confirming what President Maduro had warned following the recent US sanctions, The Wall Street Journal reports that Venezuela has officially stopped accepting US Dollars as payment for its crude oil exports.

As we previously noted, Venezuelan President Nicolas Maduro said last Thursday that Venezuela will be looking to “free” itself from the U.S. dollar next week. According to Reuters, "Venezuela is going to implement a new system of international payments and will create a basket of currencies to free us from the dollar,” Maduro said in a multi-hour address to a new legislative “superbody.” He reportedly did not provide details of this new proposal.

Maduro hinted further that the South American country would look to using the yuan instead, among other currencies.

“If they pursue us with the dollar, we’ll use the Russian ruble, the yuan, yen, the Indian rupee, the euro,” Maduro also said.

The state oil company Petróleos de Venezuela SA, known as PdVSA, has told its private joint venture partners to open accounts in euros and to convert existing cash holdings into Europe’s main currency, said one project partner.

This first step towards one or more gold-backed Eurasian currencies certainly looks like a viable and — for a lot of big players out there — welcome addition to the global money stock.

Venezuela, meanwhile illustrates the growing perception of US weakness. It used to be that a small country refusing to take dollars could expect regime change in short order. Now, maybe not so much.

Combine the above with the emergence of bitcoin and its kin as the preferred monetary asset of techies and libertarians, and the monetary world suddenly looks downright multi-polar.

Endless Regional Chaos: American Presence In Afghanistan Explained

Authored by Federico Pieraccini via The Strategic Culture Foundation,

The geographic location of Afghanistan has always occupied a central role in many geopolitical studies. Donald Trump’s reasons for reinforcing US troops in the region are driven by the continuing US need to prevent a complete Eurasian integration among regional powers.

The April peace talks between Afghanistan, India, Pakistan, Russia and China seemed to have put an end to the persistent and dominant American presence in the country. In Washington, following fifteen years of war and a series of failures, many had come to the conclusion that the time had come for the United States to return home.

Trump had throughout his electoral campaign criticized the foreign policy of his predecessors, giving the indication that he would be looking to leave Afghanistan once he assumed the presidency.

The road plan for Afghanistan laid out by the April peace talks seemed to offer the prospect of national reconciliation between the Taliban and the central authority in Kabul, assisted by parties with great interest in the country like India and Pakistan, given their geographic proximity, as well as Russia, China and Turkey.

The first talks in April 2017 capitalized on America"s absence at the conference as well as on the will of the protagonists to reach an agreement after fifteen years of war and terror. Afghanistan is a key crossroad in the eastward expansion strategy that illustrates the special partnership between Russia and China, as seen with the steady progress of the Silk Road 2.0 initiative and the Eurasian Economic Union. Given Afghanistan’s geographic position, sharing boundaries with Pakistan, Turkmenistan, Iran, Tajikistan, Uzbekistan, it is useful to emphasize the role the country could play as a commercial and energy hub in the not too distant future.

Due to incompetence or perhaps due to facing insurmountable pressures, Donald Trump is undergoing a gradual and inexorable diminution with the elimination of all the most representative members of his administration. At the same time, the appointment of military personnel to civilian roles has pushed the administration into unexplored directions not foreshadowed in the electoral campaign. Trump spoke of less US military presence in the internal affairs of other nations. But as we shall see, nothing could be further from the truth.

The appointment of Generals McMaster, Kelly and Mattis (Mattis perhaps being the most powerful US defense secretary since the end of World War II) is Trump"s attempt to withstand and bargain with the most significant elements of America’s deep state. A strong military component in the White House helps ensure continuity in US foreign policy. Contrary to what was professed during the elections, Donald Trump immediately traded American foreign policy in exchange for explicit GOP backing for key legislation that will help secure a 2020 re-election. Without bills on health, tax and immigration reform being passed, there will be no arguments in favor of the GOP and Trump during the midterm and presidential elections in 2018 and 2020 respectively.

The deep state in Washington has slowly but inexorably taken over Trump"s presidency, a task made all the simpler by Trump’s character, which dismisses his lack of experience with an overweening self-confidence. The military component of the deep state, in concert with GOP leaders, took less than six months to quash Trump"s electoral promises and turn the president’s foreign policy into a dangerous reprise of the Obama and Bush years.

More and more frequently, American intervention in foreign lands lead to situations of uncontrollable chaos, with no real central authority able to govern and obey Washington’s orders. The current state of the Middle East is reflective of this. In Afghanistan, Washington, especially Mattis, is cognizant of the country"s rebirth under Sino-Russian leadership after fifteen years of America’s presence. This is a scenario that the US deep state is not willing to tolerate.

Leaving aside Afghanistan’s huge amounts of natural resources (about one trillion in precious metals), as well as its strategic location linking east and west, a peaceful Afghanistan led by a single central authority would hardly cohere with US objectives in the country. The US loves to consider itself the indispensable nation for peace in Afghanistan, when actually it is the main obstacle to peace.

For American foreign policy continuity, Afghanistan needs to remain in a chaotic situation. Above all, the US military industrial complex is not willing to surrender its political and military power in the country, only to be substituted by Moscow or Beijing. With these unofficial motives, General Mattis announced a surge of several thousand American troops to the country. It is immediately clear that numerically and tactically, four or five thousand soldiers will make no difference. The intent is purely demonstrative, as seen in Syria with a few missiles lobbed at an empty airbase. The purpose is to send a clear and unambiguous message to Russia, China, Pakistan and even India, to the effect that without American consensus, no strategic reorganization is permissible in Afghanistan.

General Mattis and all those who for decades have been constantly thinking of MacKinder"s geopolitical theory (Heartland Theory) are aware of the strategic importance of keeping Afghanistan hostile towards regional powers like China and Russia. The USSR"s war in defense of the country, and the socialist superpower’s subsequent collapse, offers a historical warning.

In April, Moscow and Beijing, with the tacit approval of New Delhi and Islamabad, launched a peace process in Kabul that should have facilitated talks between the central authority and the Taliban to bring about a truce that would bring to an end the violence and destruction that had over fifteen years left the country bleeding in endless poverty and suffering.

The American surge will not advance American interests in the country. It will not change the delicate balance negotiated between the parties back in April. It will not affect the efforts of Moscow and Beijing to stabilize the country. It will only buy Washington more time by bombing and killing civilians, always viewed by American generals as an acceptable and privileged option available to them.

Like in other parts of the world, the presence of American troops does not fully explain the long-term goals of military planners. Afghanistan in some respects resembles a similar situation to Southeast Asia. In South Korea, the American presence has persisted since 1950, and with it the destabilization of the Korean peninsula. As in Asia, the central purpose of the American presence in Afghanistan is to occupy geo-strategic zones in order to prevent Eurasian integration between powers like India, China and Russia. Secondly, it is the constant presence of troops and military bases in locations close to or around the two major powers of China and Russia that aims to overburden and thereby diminish the defensive capabilities of these two strategic threats. In 1962, when the USSR did something similar in response to the US deployment of patriot missiles in Turkey, it started building up its offensive capability in the Western Hemisphere using Cuba as a military base. The US was willing to go to war to halt this domestic threat and for weeks the world was on the verge of a nuclear conflict. Only dialogue between American and Soviet leaders averted this threat to human existence.

Conclusions

Washington cares for nothing other than its own interests. But twenty-five years after the end of the Cold War, the world is changing, and more and more fruitful efforts to replace the chaos wrought by US policies can be seen with peaceful, mutually beneficial cooperation increasingly being the order of the day. The road to economic prosperity and a re-established unity among the Afghan people is still a work in progress, but once the country manages to establish its independence, Washington will have a hard time dictating conditions. Countries like Russia, China and India have every intention of using diplomacy and peacekeeping to prevent a dangerous escalation in Afghanistan.

India and China have some divergence over the future of the region, but by the start of the 2017 BRICS conference, they had already resolved a border dispute that lasted over two months. The ability to create diverse organizations like BRICS, AIIB and SCO provides the opportunity to begin any kind of negotiation with a legal and economic foundation. This represents a commendable example of overcoming differences through diplomacy and economic benefits.

While the United States exhales the last breaths as a declining global power, no longer able to impose its will, it lashes out in pointless acts like lobbing 60 cruise missiles at Syria or sending 4000 troops to Afghanistan. Such acts do not change anything on the ground or modify the balance of forces in Washington’s favor. They do, however, have a strong impact on further reducing whatever confidence remains in the US, closing the door to opportunities for dialogue and cooperation that may otherwise have offered themselves.

Trump promised isolationism. His generals, behind the scenes, have managed to make this electoral promise come true, leaving Washington alone in the international arena in the near term.

NATO Member Turkey Turns To Russia For Air Defense Cooperation

Authored by Peter Korzun via The Strategic Culture Foundation,

Turkey has agreed to pay $2.5 billion to acquire S-400 – the Russia-made most advanced long-range missile defense system in the world. Russian President Vladimir Putin has already said that Moscow is ready to sell it. According to Russian Presidential Adviser for Military and Technical Cooperation Vladimir Kozhin, Russia’s contract with Turkey has been agreed in general, with financial details still to be ironed out. The system is capable of intercepting all types of modern air weaponry, including fifth-generation warplanes, as well as ballistic and cruise missiles at a maximum range of nearly 250 miles.

According to the preliminary agreement, Ankara is to receive two S-400 missile batteries within the next year, and then produce another two inside Turkey, although the Turkish defense industry has no experience of producing such systems. Not yet.

Unlike NATO’s US-made Patriots temporarily deployed in Turkey some time ago, the Russian S-400 deal has no political strings attached, and could, potentially, boost Turkey’s defense industry bringing Russian-Turkish military cooperation to an unprecedented level. The two nations will work together for many years and the process is likely to encompass other areas of interaction.

Last year, Russia and Turkey signed a declaration on partnership in defense industry. The parties agreed to form a joint military and intelligence mechanism to coordinate their activities in the Middle East. Ankara also seeks procurement deals with Russia in electronic systems, ammunitions and missile technology.

In 2013, Turkey wanted to purchase the HQ-9 long-range air defense system from China but had to scupper the deal in 2015 due to political pressure from NATO allies. Not this time. The pressure is there but Turkey stands tall - it wants the best and the best is S-400. Today, the Turkish government is pursuing a more independent policy while its ties with NATO, the EU and the US are getting increasingly strained.

The deal is a clear shift of Turkey away from NATO and the West. The system won’t be compatible with the rest of the alliance for the purposes of integration. In March, 2017, Turkish President Recep Tayyip Erdogan said, «Being a NATO member does not mean we are not independent. We can have close ties with Russia while performing our responsibilities toward NATO. We find objections on this matter inappropriate».

Turkey has been angered by what it sees as lukewarm condemnation by its Western allies of the abortive July 2016 putsch against President Tayyip Erdogan. Ankara suspected that the West had a role to play. Russia was the first country to be visited by the Turkish president after the failed coup.

The idea of joining the EU has lost its attraction for Ankara as the union is facing a number of problems, including Brexit, the refugee crisis, the surge of far-right movements and the creation of blocs within the bloc while the concepts of «two-speed Europe» and «multi-speed Europe» are seriously considered as alternatives to the EU we know today.

The territorial dispute between Greece and Turkey in the Aegean Sea and Turkey’s support for Northern Cyprus has traditionally spoiled relations between Turkey and NATO. According to the NATO 2016 annual report, Turkey took part in only four of the 18 key NATO exercises held last year. Despite having the fourth-strongest military in the bloc and the second-highest number of military personnel, Turkey’s involvement in NATO"s deployments amounts to just 4 percent of the personnel in the mission to train the Afghan security forces, and 7 percent of the Kosovo force.

Turkey has recently blocked some rolling programs with NATO, including political events, civilian projects and military training, in an escalation of its diplomatic dispute with a number of European states. The action encompasses many more areas of NATO’s activities as the programs cover most of Europe, plus many countries in the Middle East and Asia. As its relations with the West sour, Turkey is looking for other partners.

Russia and Turkey lead the management crisis process in Syria. With the Islamic State (IS) retreating everywhere, the time draws nearer when Russia and Turkey will face the question about what to do next. It could be the start of forming a broader alliance.

If the coordination of efforts in Syria is successful, the lucrative prospect in bilateral trade, mutual investment, tourism and the Turkish Steam gas project will provide a powerful impetus to the development of relationship.

Turkish President Recep Tayyip Erdogan made the first statement about the possibility of Turkey’s accession to the Shanghai Cooperation Organization as far back as 2013. In 2016, he repeated it again, saying «Some may criticize me but I express my opinion. For example, I have said ‘why shouldn’t Turkey be in the Shanghai 5?» Turkey was granted dialogue partner status in the SCO in 2012. This year, Ankara chairs the Shanghai Cooperation Organization (SCO) Energy Club. The SCO’s clout is rapidly increasing in the world. The accession would bring economic benefits for Turkey.

Ankara is also showing increasing interest in the Eurasian Economic Union (EAEU). It was invited to join the organization in 2014. Many of the present and potential members of the EAEU are countries with whom Turkey already has close relations in many fields.

Ankara is also getting closer to Beijing. The two countries are closely cooperating to implement China’s the One Belt One Road project. Turkey is again taking the position as a key investment and cooperation partner that will help bridge the East and the West.

Turkey’s gradual shift from the West to Eurasia and other partners is part of a broader process as the West gets weakened, divided and less attractive. The very notion of «Western unity» is fading away. Unsurprisingly, as its relations with the West sour, Turkey is reaching out to other poles of power. The S-400 deal conforms to the trend.

Why Bother?

The best strategy for dealing with crazies is to keep your distance.

You try to ignore the ravings of the paranoid lunatic on a street corner, but if he’s waving a gun, you can’t.  He may kill himself, but he may kill you. Protecting yourself is your first consideration. You want to get as far as possible from him.

As an intellectual exercise, imagine how the Chinese and Russian leadership look at the United States, its government, and those of its allies. It will get you labeled as a “sympathizer” or “agent,” but take the risk and try seeing the world through their eyes:

We hear the Americans raving about the exceptional and indispensable nation, the American imperium, and maintaining world order. What other conclusion can be drawn: like many lunatics, the US suffers from delusions of grandeur. As we know, it’s difficult to maintain order in one country, and the US wants to take on the whole world? They’re having a tough time maintaining order in the US. Half the country hates the other half, and many of their experts warn of civil unrest that could be ignited with the smallest of sparks. Take it from us, spark suppression is a full-time job in big countries with many people and few common interests, even those with powerful, intrusive governments like the US.

How can the US think that it can rule the world when it can’t win wars in Vietnam, Afghanistan, and Iraq? That’s crazy talk! There are smart people in their military. They must recognize that guerrilla warfare, terrorism, knowledge of the people, language, and terrain, and the availability of cheap but effective defensive weapons and munitions give a huge advantage to nationals resisting domination in their own territory. Why hasn’t the US learned anything from their disastrous wars, or the Soviet fiasco in Afghanistan?

We in Russia are not altogether comfortable with our Syrian involvement and know it poses substantial risks. However, Syria is in the same neighborhood, is a long-time Russian ally, and hosts Russia’s only Mediterranean port. The US has no such compelling interests and is apparently there at the behest of Saudi Arabia, the Gulf States, Turkey, and Israel. (How do these nations get the US to fight its wars? It must be baksheesh.) It pretends to fight Islamic terrorists while aiding them in another idiotic, and so far futile, attempt at regime change. The biggest danger for us in Syria isn’t the rebels, it’s those crazy Yanks.

The US and its allies’ (what curious allies—the US defends them and picks up most of the tab while they fund cradle-to-grave welfare states) interventions have created refugees—some innocent victims, some potential terrorists—who have fled en masse to Europe and trickled into the US. More intervention will create more refugees, yet that is their policy. Russia and China both have problems with native Muslim populations; it’s pure lunacy to import them. Yet, the American and European intelligentsia condemn not the proponents but the detractors of military intervention and refugee creation and admittance.

If those are supposed to be the smart people, it’s no wonder those countries are in such poor shape. A country is only as good as its people. The Americans and Europeans have voted themselves benefits from their governments that can only be paid for with debt. How long can that last? What will beneficiaries do when the well runs dry? The US used to be one of the most industrious countries on the planet. Now most of its people are fat, lazy, and soft, with no idea how to provide for themselves. The so-called smart people worry if transgenders can enter the bathroom of their choice, and cheer a great Olympic decathlon champion who turned himself into an approximation of a woman. These idiots are not useful to anybody.

The only rational policy is to keep our distance from the US, while trying to protect ourselves from its depredations, and concentrate on jointly developing the immense potential of Eurasia. In other words, to continue doing what we’ve been doing. Our primary economic initiatives, One Belt One Road and the Maritime Silk Road, under the auspices of the Eurasian Economic Union, are going well. We will develop extensive commercial and transportation links among nations stretching from China to Europe, an area which encompasses over half the world’s population and natural resources. China will providing much of the infrastructure investment through the Asian Infrastructure Investment Bank. Russia will spearhead security arrangements, particularly against Islamic extremists, through the Shanghai Cooperation Organization, which includes China and central Asian nations that were formerly part of the USSR, and will soon admit India, Pakistan, and Iran.

Financially, self-protection means moving away from fiat dollars and euros and stockpiling real money—gold. China is reducing its vast pile of US treasury securities, and Russia its much smaller pile. We will continue to advocate for replacement of the dollar as the world’s reserve currency, preferably with the International Monetary Fund’s Special Drawing Rights. The Chinese yuan recently became part of that currency basket. We have also taken steps to develop an alternative to the SWIFT system, the US’s monopoly on international bank clearing.

Militarily, some of the bluster coming out of the US is insanity: the possibility of “winning” a nuclear war. No matter what their computer simulations might suggest, there is no way that a US first strike would wipe out our means and will to retaliate, regardless of their anti-ballistic missile systems in Eastern Europe and South Korea. Sometimes it is an advantage to be underestimated by one’s enemy, but in this case, US underestimation could lead to extinction of the human race. Our nuclear weaponry, military strategies, and defense systems must continue to be state of the art, to assure that destruction in the event of a US attack is mutual.

Keeping our distance from the US certainly does not entail getting involved in their elections. Donald Trump didn’t have a positive thing to say about China during his campaign. Although he made noises about reducing America’s foreign interventions, we heard the same from George W. Bush and Barack Obama and look how that turned out. Trump also made noises about rapprochement with Russia, but it was clear that he’d be fighting his own Deep State if he won, which we did not expect. Why would we poison relations with Hillary Clinton, who we and most experts did expect to win, before she even took office? It’s a further sign of rampant delusion, a complete unwillingness to deal with reality, that Clinton’s Democrats are blaming Russia for problems they brought upon themselves.

Why bother manipulating an election when America seems so bent on self-destruction? It would be like trying to leash a rabid dog.

Shaping The Future: Moscow And Beijing's Multipolar World Order

Authored by Federico Pieraccini via The Stratgic Culture Foundation,

Once in a while, think tanks such as the Brookings Institute are able to deal with highly strategic and current issues. Often, the conferences held by such organizations are based on false pretences and copious banality, the sole intention being to undermine and downplay the efforts of strategic opponents of the US. Recently, the Brookings Institute"s International Strategy and Strategy Project held a lecture on May 9, 2017 where it invited Bobo Lo, an analyst at Lowy Institute for International Policy, to speak. The topic of the subject, extremely interesting to the author and mentioned in the past, is the strategic partnership between China and Russia.

The main assumption Bobo Lo starts with to define relations between Moscow and Beijing is that the two countries base their collaboration on convenience and a convergence of interests rather than on an alliance. He goes on to say that the major frictions in the relationship concern the fate that Putin and Xi hold for Europe, in particular for the European Union, in addition to differences of opinions surrounding the Chinese role in the Pacific. In the first case, Lo states that Russia wants to end the European project while China hopes for a strong and prosperous Europe. With regard to the situation in the Pacific, according to this report, Moscow wants a balance of power between powers without hegemonic domination being transferred from Washington to Beijing.

The only merit in Lo’s analysis is his identification of the United States as the major cause of the strategic proximity between Moscow and Beijing, certainly a hypothesis that is little questioned by US policy makers. Lo believes Washington"s obsession with China-Russia cooperation is counterproductive, though he also believes that the United States doesn’t actually possess capabilities to sabotage or delimit the many areas of cooperation between Beijing and Moscow.

What is missing in Lo’s analysis are two essential factors governing how Moscow and Beijing have structured their relationship. China and Russia have different tasks in ushering in their world order, namely, by preserving global stability through military and economic means. Their overall relationship of mutual cooperation goes beyond the region of Eurasia and focuses on the whole process of a sustainable globalization as well as on how to create an environment where everyone can prosper in a viable and sustainable way. Doing this entails a departure from the current belligerent and chaotic unipolar world order.

Moscow and Beijing: Security and Economy

Beijing has been the world"s economic engine for over two decades and shows no signs of slowing down, at least not too much. Moscow, contrary to western media propaganda, has returned to play a role not only on a regional scale but as a global power. Both of these paths of military and economic growth for China and Russia have set things on a collision course with the United States, the current global superpower that tends to dominate international relations with economic, political and military bullying thanks to a complicit media and corrupt politicians.

In the case of Beijing, the process of globalization has immensely enhanced the country, allowing the Asian giant to become the world"s factory, enabling Western countries to outsource to low-cost labor. In this process of economic growth, Beijing has over the years gone from being a simple paradise for low-cost outsourcing for private companies to being a global leader in investment and long-term projects. The dividends of years of wealth accumulation at the expense of Western nations has allowed Beijing to be more than just a strategic partner for other nations. China drives the process of globalization, as recently pointed out by Xi Jinping in Davos in a historic speech. China"s transition from a harmless partner of the West to regional power with enormous foreign economic investments place the country on a collision course with Washington. Inevitably, Beijing will become the Asian hegemon, something US policymakers have always guaranteed will not be tolerated.

The danger Washington sees is that of China emerging as a regional superpower that will call the shots in the Pacific, the most important region of the planet. The United States has many vested interests in the region and undeniably sees its future as the leader of the world order in jeopardy. Obama"s pivot to Asia was precisely for the purposes of containing China and limiting its economic power so as to attenuate Beijing’s ambitions.

Unsurprisingly, Washington"s concerns with Moscow relate to its resurgence in military capabilities. Russia is able to oppose certain objectives of the United States (see Ukraine or Syria) by military means. The possibility of the Kremlin limiting American influence in Eastern Europe, the Middle East and Eurasia in general is cause for concern for American policy makers, who continue to fail to contain Russia and limit Moscow’s spheres of influence.

In this context, the strategic division of labor between Russia and China comes into play to ensure the stability of the Eurasian region as a whole; in Asia, in the Middle East and in Europe. To succeed in this task, Moscow has mainly assumed the military burden, shared with other friendly nations belonging to the affected areas. In the Middle East, for example, Tehran"s partnership with Moscow is viewed positively by Beijing, given its intention to stabilize the region and to eradicate the problem of terrorism, something about which nations like China and Russia are particularly concerned.

The influence of Islamist extremists in the Caucasian regions in Russia or in the autonomous region of Xinjiang in China are something that both Putin and Xi are aware can be exploited by opposing Western countries. In North Africa, Egypt has signed several contracts for the purchase of military vehicles from Moscow, as well as having bought the two Mistral ships from France, thereby relying on military supplies from Moscow. It is therefore not surprising that Moscow and Egypt cooperated with the situation in Libya and in North Africa in general.

In Southeast Asia, Moscow seeks to coordinate efforts to reach an agreement between Afghanistan, Pakistan and India. The entry into the Shanghai Cooperation Organization (SCO) of New Delhi and Islamabad (Tehran will be next), with the blessing of Beijing as the protagonist of the 2017 SCO meeting, is a keystone achievement and the right prism through which to observe the evolution of the region. Moscow is essentially acting as a mediator between the parties and is also able to engage with India in spite of the dominating presence of China. The ultimate goal of Moscow and Beijing is to eradicate the terrorist phenomenon in the Asian region with a view to what is happening in North Africa and the Middle East with Iran and Egypt.

Heading to a Multipolar World Order

The turning point in relations between Moscow and Beijing concerns the ability to engage third countries in military or economic ways, depending on these countries’ needs and objectives. Clearly in the military field it is Moscow that is leading, with arms sold to current and future partners and security cooperation (such as with ex-Soviet Central-Asian republics or in the Donbass) and targeted interventions if needed, as in Syria. Beijing, on the other hand, acts in a different way, focusing on the economic arena, in particular with the Asian Infrastructure Investment Bank (AIIB) at its center.

Initiatives such as the One Belt One Road (OBOR) and the Maritime Silk Road have the same strategic aim of the Russian military initiative, namely, ensuring the independence of the region from a geo-economic perspective, reaching win-win arrangements for all partners involved. Naturally, the win-win agreement does not mean that China wins and then wins again; rather, a series of bilateral concessions can come to satisfy all actors involved. An important example in this regard that explains the Sino-Russian partnership concerns the integration of the Eurasian Union with the Chinese Silk Road. The Russian concerns over the predominant status of the Chinese colossus in Central Asia have been assuaged by a number of solutions, such as the support of the OBOR infrastructure program to that of the Eurasian Union. Beijing is not interested in replacing Moscow"s leading role the post-Soviet nations in Central Asia but rather with providing significant energy and economic development to particularly underdeveloped nations that are in need of important economic investment, something only Beijing is able to guarantee.

The linking of the Eurasian Economic Union (EEU) with the One Belt One Road initiative guarantees Moscow a primary role in the transit of goods from east to west, thereby becoming the connecting point between China and Europe while expanding the role and function of the EEU. All participants in these initiatives have a unique opportunity to expand their economic condition through this whole range of connections. Beijing guarantees the money for troubled countries, and Moscow the security. The SCO will play a major role in reducing and preventing terrorist influence in the region, a prerequisite for the success of any projects. Also, the AIIB, and to some extent the BRICS Development Bank, will also have to step in and offer alternative economic guarantees to countries potentially involved in these projects, in order to free them from the existing international financial institutions.

One Belt One Road, and all the related projects, represent a unique occasion whereby all relevant players share common goals and benefits from such transformative geo-economic relationships. This security-economy relationship between Moscow and Beijing is  the heart of the evolution of the current world order, from the unipolar to the multipolar world. The US cannot oppose China on the economic front and Russia on the military front. It all comes down to how much China and Russia can continue to provide and guarantee economic and security umbrellas for the rest of the world.

World Leaders Gather In Beijing While The US Sinks Into Irrelevancy

Authored by Wayne Madsen via The Strategic Culture Foundation,

While vaudevillian comedy-like shouting matches broke out in the West Wing of the White House between President Donald Trump and his senior advisers and between the White House press secretary and various presidential aides, world leaders gathered in Beijing to discuss the creation of modern-day land and maritime «silk roads» to improve the economic conditions of nations around the world. Nothing more could have illustrated the massive divide between the concerns of many of the nations of the world and those of the United States, which is rapidly descending into second-rate power status, along with its NATO allies Britain, France, and Germany.

While Mr. Trump was threatening to fire his senior White House staff, reprising his one-time role in his reality television show «The Apprentice», China’s President Xi Jinping, Russian President Vladimir Putin, and presidents and prime ministers from around the world sat down to discuss the creation of new international and intercontinental highways, railways, and maritime routes under China’s proposed Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Even countries that are cool on the Chinese initiative, including India and Japan, sent representatives to the summit that carried a bit more clout than the pathetic representation of the United States, Matt Pottinger, a little-known special assistant to Trump and the senior director for East Asia of National Security Council. In fact, the only reason Trump sent anyone to represent the United States at the Beijing gathering was because of a special request made by President Xi during his recent meeting with Trump at the president’s private Mar-a-Lago Club resort in Palm Beach, Florida.

South Korea, which saw relations with China sour over America’s placement of Terminal High Altitude Area Defense (THAAD) missile system in South Korea, sent a delegation to Beijing after a phone call between South Korea’s new liberal president, Moon Jae-in, and President Xi. Moon responded to the phone call by sending a delegation led by his Democratic Party’s veteran legislator to Beijing.

Even North Korea, which rankled South Korea, Japan, and the United States by firing a ballistic missile into waters near Russia, sent a delegation to the Beijing meeting headed by Kim Yong Jae, the North’s Minister of External Economic Relations. The Trump administration, which sent a virtual unknown to Beijing, complained loudly about North Korea’s representation at the Silk Road summit. But Washington’s complaint was conveyed by someone as unknown as Mr. Pottinger, Anna Richey-Allen, a low-level spokesperson for the U.S. State Department"s East Asia Bureau. The reason why the United States is being spoken for by middle-grade bureaucrats is that the nation that still believes it is the world’s only remaining «superpower» is now governed by an administration rife with top-level vacancies, inter-agency squabbling, and amateur league players.

Even though major European Union member states were not represented in Beijing by their heads of government, Germany sent its Economy Minister, Brigitte Zypries. She warned, however, that the EU would not sign a Silk Road agreement with China unless certain EU demands on free trade and labor conditions were guaranteed. Germany’s reticence did not seem to faze other EU nations, which were represented in Beijing by their heads of government and appeared to be more avid in their support of the Chinese initiative. These EU member state leaders included Italian Prime Minister Paolo Gentiloni, Spanish Prime Minister Mariano Rajoy, Polish Prime Minister Beata Szydlo, Greek Prime Minister Alexis Tsipras, Czech President Milos Zeman, and Hungarian Prime Minister Viktor Orban. Moreover, had British Prime Minister Theresa May not been in the middle of a general election campaign, she would have been in Beijing. Nevertheless, she sent British Chancellor of the Exchequer Philip Hammond in her place.

If the Trump administration hoped to convince world leaders to stay away from Beijing, it was sorely disappointed. The United Nations Secretary General, Antonio Guterres, was there, along with the President of the World Bank Jim Yong Kim and International Monetary Fund Managing Director Christine Lagarde. Also present in Beijing were the presidents of Turkey, Philippines, Argentina, Chile, Indonesia, Kyrgyzstan, Belarus, Kazakhstan, Switzerland, Kenya, Uzbekistan, and Laos, as well as the prime ministers of Vietnam, Pakistan, Sri Lanka, Serbia, Malaysia, Mongolia, Fiji, Ethiopia, Cambodia, and Myanmar.

Ministerial delegations from Afghanistan, Australia, Azerbaijan, Bangladesh, Brazil, Egypt, Finland, Iran, Kuwait, Lebanon, Maldives, Romania, Nepal, New Zealand, Saudi Arabia, Singapore, South Sudan, Sudan, Syria, Tanzania, Thailand, Tunisia, Uganda, and the United Arab Emirates were at the Beijing summit. Japan was represented by the senior adviser to Prime Minister Shinzo Abe and Secretary General of the Liberal Democratic Party, Toshihiro Nikai. France, which was experiencing a change of presidents, sent former Prime Minister Jean-Pierre Raffarin.

The Silk Road initiative has projects planned in all the nations whose governments were represented in Beijing, except for the United States and Israel. In addition to the nations represented by their government heads of state and ministers, Silk Road agreements were signed between China and Palestine, Georgia, Armenia, Bosnia and Herzegovina, Montenegro, Albania, Tajikistan, Brunei, Croatia, and East Timor.

The one clear message the Beijing meeting sent out to the world is that America’s «unipolar» vision of the world was dead and buried. Even among Washington’s longtime friends and allies, one will not hear Donald Trump referred to as the «leader of the Free World.» That phrase has been discarded into the waste bin of history along with America’s insistence that it is the world’s only «superpower.» The United States is a power, a second-rate one that happens to possess a first-rate nuclear arsenal. But nuclear weapons were not being discussed in Beijing. Major projects were on the agenda, projects that when completed will leave the United States at sea in the propeller wash.

President Xi, in his keynote address to the conference, said that the «One Belt and One Road» initiative is «a project of the century» and that will benefit everybody across the world. And to put his money where his mouth is, Xi said China will contribute 80 billion yuan (US$113 billion) as added financial impetus to create a global network of highway, railway, and maritime links in a recreation of the ancient Silk Road that linked China to the West. Meanwhile, in Washington, Trump spoke of having recorded «taped» conversations with his fired director of the FBI James Comey, setting off a political firestorm. A new global infrastructure being spoken about in Beijing and political hijinks the major topic of conversation in Washington. The United States has fallen into second-rate global status and is seriously ill as a cohesive nation-state but does not even realize it.

China and Russia used the Beijing summit to showcase several Eurasian initiatives, including the Russia-inspired Eurasian Economic Union (EEU) and the China-initiated Asian Infrastructure Investment Bank (AIIB). Both the Chinese and Russian heads of state let it be known that the BRICS alliance of Brazil, Russia, India, China, and South Africa was still a potent world entity, even though South Africa was not represented in Beijing by its president and India chose not to send any representative to Beijing.

President Putin’s words to the conference about the new geopolitical status in the world were noteworthy: «the greater Eurasia is not an abstract geopolitical arrangement but, without exaggeration, a truly civilization-wide project looking toward the future.» In other words, the European Union, which is losing the United Kingdom as a member and will never see membership for Turkey, is a dying international organism. Other international initiatives, like the EEU, BRICS, AIIB, and the One Belt, One Road (OBOR), are leaving the EU and the United States in the dust. That was evident by the fact that the United States was represented in Beijing by an overrated desk clerk and the EU by a Brussels «Eurocrat,» the European Commission vice president Jyrki Katainen.