Sanctionstein: What is the real cause of America’s latest sanctions regime?

“Light, feeling, and sense will pass away; and in this condition must I find my happiness […] Polluted by crimes and torn by the bitterest remorse, where can I find rest but in death?

—Mary Shelly’s Frankenstein, Chapter 24

On 25th July, a united Congress issued a new round of economic sanctions against Russian, Iranian, and North Korean industries, ignoring US President Donald Trump’s provisions, and after last month’s attempts stalled due to unintended economic consequences.

House Rules Committee Chairman Pete Sessions [R-TX] feared that they would cause “huge problems to companies in Dallas, Texas, that I represent,” putting them at a disadvantage.

Despite this, White House Press Secretary Sarah Huckabee Sanders rallied Congress.

“We […] will continue to work with the House and Senate to put those tough sanctions in place on Russia until the situation in Ukraine is fully resolved,” she read carefully from her talking points.

However, the actual legislation, “Countering Russian Influence in Europe and Eurasia Act of 2017” (S.1221) deems it necessary to “authorize the appropriation of $530 million […] to counter Russian influence in Europe and Eurasia and to promote energy security in Ukraine.”

In reality, the bill, a mess of incoherent reasoning, attempts to ‘isolate’ Russia and promote post-coup Ukraine’s privatised (and failing) oil and gas industry, now controlled by American investors.

For example, section 8 does not specify which companies to promote; however, Burmisa Holdings, the private Ukrainian oil conglomerate to which Hunter Biden, former US Vice President Joe Biden’s son, is a member of the board of directors, will eventually take precedence.

“Burisma owns several Ukrainian oil and gas companies, including Esko Pivnich and Pari [and] the company also has assets in Ukraine’s Dnepr-Donetsk, the Carpathian and the Azov-Kuvan basins”, a May 2014 Moscow Times article reported.

“[Joe Biden] has pledged to support efforts to reduce [Ukraine’s] dependency on Russian energy”, it continued.

Lickspittle Ben Cardin (D-MD) of the Senate Foreign Relations’ Committee lavished the sanctions, citing the ubiquitous ramblings of ‘Russian aggression’ to Politico.

“I believe the proposed changes to the bill have helped to clarify the intent of members of Congress as well as express solidarity with our closest allies in countering Russian aggression and holding the Kremlin accountable for their destabilizing activities,” he droned.

However, his ‘closest allies’—members of the European Union—were never consulted in the sanctions’ regime and did not share his sentiments.

Several high-ranking German, French, and Austrian officials have openly condemned the unilateral moves, RT reports.

Most salient was European Commission President Jean-Claude Junker’s scathing response:

[The bill] foresees the imposition of sanctions on any company (including European) which contributes to the development, maintenance, modernisation or repair of energy export pipelines by the Russian Federation [which] could affect infrastructure transporting energy resources to Europe [and] have an impact on projects crucial to the EU’s diversification objectives such as the Baltic Liquefied Natural Gas project.

This is why the Commission concluded today that if our concerns are not taken into account sufficiently, we stand ready to act appropriately within a matter of days. America first cannot mean that Europe’s interests come last.

Russian President Vladimir Putin also commented on the sanctions, calling them “extra-cynical”.

“We, as you know, are behaving with restraint, very patiently, but at some point we will have to respond, it is impossible to tolerate arrogance toward our country forever,” he expressed.

The growing deterioration in EU-US relations threatens to midwife a powerful rebellion to which Congress cannot extricate itself, and this time, American’s disruptive meddling may irreversibly isolate it from longstanding allies.

Alienation, Commodity Fetishism, and American Sanctions

Karl Marx’s theory of historical materialism illustrates the contradiction within America’s sanctions’ regime.

Marx’s manuscript, A Contribution to the Critique of Political Economy, points out that:

At a certain stage of their development, the material productive forces of society come into conflict with the existing relations of production [which] turn into their fetters.

Those ‘fetters’ are the dying petrodollar—oil as a commodity to dominate global productive forces—diminished by rising international currencies, which a previous Duran article explains.

Furthermore, the Trump administration hallmarks the transition of America into alienation. Simply put, as the US attempts to ‘isolate Russia, Iran, etc.’—whatever that means—it becomes further ostracised from other great powers who fight to assert themselves in the global market.

No longer are the American bourgeoisie controllers of the petrodollar, but quite the contrary, they fetishise it, invoking the monster of late-stage imperialism that compels them both to demise.

This is precisely what Marx implied in “Critique of Hegel’s Philosophy of Right”, section 2,

“The mystical substance becomes the real subject and the real subject appears to be something else, namely a moment of the mystical substance.”

The American bourgeoisie’s wretched creation now demands a companion (empire), lest the vile creature completely destroys its creator as an impending consequence.

Inevitably, the bourgeoisie and petrodollar will share the same fate as Shelly’s antagonist, immolated together in the destructive flames of that (em)pyre.

Historical Developments Influencing the Sanctions

Several highly important developments have given rise to the blanket US sanctions regime.

One must note that the sanctions do not affect the European economy, but directly target it, as the EU is the single greatest existential threat to US dollar hegemony after China and Russia.

Growing investment between Iran, China, Russia, and the EU has followed the Joint Comprehensive Plan of Action (JCPOA), to which the P5+1 (United Nations Security Council permanent members China, Russia, France, the UK, and US with Germany) are signatories.

Earlier this month, delegates of Russian energy giant Gazprom and German petrochemicals company BASF negotiated completion of the Nord Stream-2 project in Moscow.

[…] in the first half of 2017 Gazprom supplied Germany with 26.5 billion cubic meters of gas, an increase of 3.8 billion cubic meters (+16.7 percent) against the first six months of 2016. The parties stressed the importance of the timely implementation of the project.

This is why EU Commission President Junker seeks retaliation: energy demands are increasing and the sanctions threaten the scheduled completion of the Nord Stream-2.

France, however, is the most relevant case study to date and the focus of the sanctions.

French President Emanuel Macron has long desired to end anti-Russian sanctions, even whilst serving as former President Francois Hollande’s finance minister.

“The objective we all share is to provide the lifting of sanctions by the summer, as far as the peace process in south-eastern Ukraine is respected,” he stated in Jan 2016.

FARS news details France’s motivations perfectly,

Sanctions that are prohibitive or otherwise too restrictive to foster trade risk driving business to foreign markets — and, in doing so, broker new alliances between longtime American friends and foes. Tensions wrought by US sanctions against Russia, for example, have divided US allies in Europe that were already financially struggling before being hit with the economic penalties’ knock-on effects. That’s why the lower house of France’s parliament has voted [302-16] in a nonbinding agreement to lift EU sanctions against Russia.

EU Commission figures show that the global recession (2008-2014) and volatile oil prices compelled the Sarkozy and Hollande administrations to ‘diversify’ its Middle Eastern sources.

In this period, France’s domestic oil imports fell sharply from 610 mln. barrels at 59.5 bln. USD to 410 mln. barrels at 39.9 bln due to fluctuating crude oil costs and lower manufacturing demands.

Whist supply volumes diminished, 2011-2013 was the most expensive period for crude oil supply costs, with an average of 111 USD per barrel.

In 2011, at its most severe point, the Sarkozy administration invaded Libya along with its NATO allies. France’s Total also joined the now-defunct Nabucco pipeline, which was originally proposed in 2009 to diversify EU oil.

Ironically, Syria rejected it in favour of a pan-Islamic pipeline, which sparked the Saudi and US-backed coup and cancelled the Nabucco project; later, the war facilitated the future Iranian-Syrian-Iraqi security initiative.

“[The] natural gas pipeline would run through Syria’s Aleppo and Turkey unto Europe. However, Assad dampened this dream in 2011 when he instead forged a pact with Iraq and Iran to run an ‘Islamic pipeline’ eastward to the European market,” Christina Lin highlighted.

French oil conglomerate Total finally conceded and greenlighted the Iranian South Pars 11 project last November, defying previous US sanctions, in order to make up for the lost pipeline.

Total has signed a Heads of Agreement (HoA) with the National Iranian Oil Company (NIOC) for the development of phase 11 of South Pars, the world’s largest gas field [which] will have a production capacity of 1.8 billion cubic feet per day, or 370 000 barrels of oil equivalent [and] the produced gas will be fed into Iran’s gas network.

French, Iranian, and Chinese companies will finance the entire South Pars project, Total continues:

[We] will operate the SP11 project with a 50.1% interest alongside Petropars (19.9%), a 100% subsidiary of NIOC, and the Chinese state-owned oil and gas company CNPC (30%).

Total’s strategic partnership combines its technical experience with the financial autonomy of its investors and vast untapped reserves of Iranian natural gas.

“[Total] could not be immune to U.S. embargo due to investment in Iran’s oil sector. Over recent years, by setting up international consortiums, Total has managed to circumvent US’s D’Amato sanctions and join South Pars. CNPC’s presence is for the same reason of getting around the sanctions,” IRNA states

The trilateral partnership will also finance the project in Euros instead of dollars, which is the fundamental reason for the unilateral US sanctions.

“With U.S. sanctions still in place prohibiting trading with Iran in dollars, Total will finance the project in euros from its own resources,” Reuters mentioned.

At the 1 June St. Petersburg International Economic Forum (SPIEF), CEO Patrick Pouyanne assured investors of his commitment to the project.

“It is worth taking the risk […] because it opens a huge market. We are perfectly conscious of some risks. We have taken into account (sanctions) snap-backs [and] regulation changes,” he stated.

The agreement will spark a European race for Iranian oil, which will guarantee longterm energy security, as most EU bureaucrats still wish to diversify (not divest) fuel sources away from Russia and find the Azerbaijani Shah Deniz project difficult and expensive to finance.

ADVFN explains further,

This contract, which has a 20-year duration, is the first Iranian Petroleum Contract (IPC) and is based on the […] Heads of Agreement signed on November 8, 2016.

Euronews also implies this as the source of last month’s Saudi-Qatari diplomatic row, as Qatar geographically shares the South Pars gas field with Iran,

South Pars is Iran’s section of the world’s biggest gas deposit, shared also with Qatar, and the Persian Gulf field lies at the center of a dispute embroiling Qatar and several Arab neighbors. Saudi Arabia severed commercial links with Qatar last month, accusing it of cozying up to arch-rival Iran. Qatar initially faced a Monday deadline to comply with 13 demands from a Saudi-led coalition, including a cutback in relations with Iran.

The Saudi monarchy now shares the fate of its American counterparts: self-imposed isolation due to economic meddling and bleeding profits due to new currencies entering the oil and gas sector.

In return for cooperating on the South Pars 11, France has offered Rouhani a spectacular deal: revitalising Tehran’s beleaguered airline industry and resuming flights after an 8-year suspension.

“Zagros Airlines [will] buy 20 aircraft from the […] Airbus A320neo family and eight A330neo planes. Iran Airtour’s order would comprise 45 planes of the A320neo type,” FARS notes.

Iran’s former deputy Transport Minister Ali Abedzadeh also met last year with former French Transport Minister Alain Vidalies to discuss aviation training schemes along with the Airbus deal.

Finally, both France‘s AREP and Italy‘s Ferrovie dello Stato have signed 7 mln. and 1.3 bln. Euro agreements, respectively, to expand and modernise Iran’s ageing railway system.

To facilitate this, both President Macron and French Finance Minister Michel Sapin have prioritised normalising banking ties with Iran.

“The French president vowed to do his utmost for deepening of economic, scientific and cultural relations with Iran during his tenure as French president,” FARS stated.

“It’s our aim and our will to normalized banking ties with Iran even if it can’t be done in one day,” Sapin urged during the meeting.

By using the EU as a human shield for its sanctions regime, the United States has expedited its demise by speeding up global USD divestment.

It is of the utmost importance that the P5-1 (minus the US) begin using alternative payment systems such as the Chinese CIPS and Russian SPFS to facilitate their trade agreements.

If France wishes to redeem itself by leading the European pivot, it should facilitate and offer feedback on these new systems to accrue empirical data for other EU member states; other economic powers within the European Economic Area (EEA) will follow suit.

If the European Union, Russia, China and Iran can do this, the US sanctions will mean nothing.