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Russia and China actively collude to bring down the only thing America cares about

China and Russia are working openly and of course legally to undermine the linchpin of US power. The almighty Dollar is losing its might and this is the REAL scandal in the eyes of the US.

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Russia is not actually interested in undermining American “democracy”. In fact, the United States isn’t particularly concerned either. But Russiagate continues to give mainstream media a narrative that it can sell to its dwindling core audience. However, when it comes to the real linchpin of American power, the almighty Dollar, things are very different.

Since it typically takes millions of Dollars at minimum, to even enter major US elections, it is clear that the American electoral system, like just about everything in the US, is as tied in to the power of the Dollar as any other institution. The entire contrived narrative about Russia is really a thinly placed mask which hides the real worry in the US about Russia’s latest geo-strategic moves.

Today, Russia’s Prime Minister and Deputy Prime Minister took part in an official visit to China where both countries signed agreements to expand bilateral trade in national currencies, as opposed to using the US Dollar as the standard transaction currency.

In the summer of 2017, the Presidents of Russia and China led a large meeting of top government and private sector officials from both countries. Scores of agreements were signed, including those which set into motion, bilateral trade in national currencies.

Today, Russia’s Deputy Prime Minister Sergey Prikhodko commented on the progress of these arrangements. He said,

“At present, financial regulators of the two countries are working on extending the bilateral currency swap agreement for the next three years.

In 2016, the share of national currencies in payments for exports of Russian goods and services amounted to 13 percent, imports, 16 percent. In the first quarter of 2017, these figures rose to 16 percent and 18 percent, respectively”.

With countries throughout the world, including Turkey, Venezuela and Iran beginning to trade in national currencies or in Chinese Yuan, the power of the US Dollar as a standard trading and reserve currency is being actively and openly undermined by China, Russia and their trading partners. This of course is perfectly legal as countries can trade in any currency they wish. They can even use barter as a means of exchange, as Iran sometimes still does with Russia.

Venezuelan President Maduro tells Russia its time to ditch the Dollar and embrace the Rouble and Yuan

This year has been a watershed in the de-Dollarisation of world trade. China’s willingness to sell oil futures contrasts in Yuan, the easy convertibility of the Yuan to gold on the Shanghai and Hong Kong gold exchanges, multiple bilateral agreements signed with China and her partners to trade in national currencies and the possibility of a new BRICS-wide currency, currency basket or BRICS crypto-currency, have all led to a perfect storm which is set to slowly but surely capsize the Dollar.

I previously outlined why this has geo-political implications that are already being felt, beyond currency markets. As I wrote at the time:

The US has again sailed a Naval destroyer, this time the USS Chafee, through Chinese waters in the South China Sea, in direct violation of Beijing’s sovereign maritime claims over the sea. The US repeatedly provokes China by sailing its vessels through the South China Sea, in a deceptively named strategy called ‘freedom of navigation’, which seeks to undermine Chinese claims to its neighbouring south sea. While other countries with regional maritime claims, including Philippines have begun cooperating with China, the United States continues unilateral provocations against China.

In response to the USS Chafee’s presence in the South China Sea, Beijing scrambled a missile-guided frigate, helicopter and two fighter jets to intercept the US vessel.

China also issued a stern warning to the United States against further provocations. Chinese Foreign Ministry Spokeswoman Hua Chunying has said,

“The US destroyer’s behaviour violated Chinese law and relevant international law, severely harmed China’s sovereignty and security interests, and threatened the lives of both sides”.

Hua further warned that any further such provocations could result in “unwanted incidents”.

She continued,

“In the face of repeated provocation by the US forces, the Chinese military will further strengthen preparation for combat at sea and in the air and improve the defences to resolutely defend national sovereignty and security interests”.

As the US continues to feel threatened by Chinese economic dominance in the global marketplace, Washington’s military provocations in the South and East China Seas, its militarisation of the Korean peninsula and proxy wars along China’s One Belt–One Road trade and infrastructure routes, are likely to increase.

While the US has long felt threatened by Chinese trade and industrial dominance, now the US Dollar is being actively challenged by the growing power of the Chinese Yuan. The Yuan is now positioned to threaten the hegemony of the Dollar as a major trading and reserve currency.

This has expressed itself in the following ways:

–China offering the sale of oil futures contracts in gold backed Yuan

–Countries as wide ranging as Venezuela, Turkey and Russia conducting major bilateral trade in national currencies (as opposed to the US Dollar)

–The possibility of a new BRICS trading standard based on the Yuan, gold or other ‘eastern’ currencies

–The possibility of a BRICS regulated crypto-currency

Additionally, other nations which have been hit by unilateral sanctions, including Iran, have also showed a willingness to embrace a new Dollar free trading regime with its existing and new partners.

Most worryingly for the US, its longtime Middle Eastern ally Saudi Arabia, may find itself trading oil in Chinese Yuan in the coming years. Chief economist and managing director at High Frequency Economics, Carl Weinberg has spoken with the US based finance outlet CNBC and stated the following, 

“I believe that yuan pricing of oil is coming and as soon as the Saudis move to accept it — as the Chinese will compel them to do — then the rest of the oil market will move along with them”.

Saudi’s infrequently discussed but good economic relations with Beijing, as well as its warming relations with Russia, indicate that Riyadh is looking towards the wider global ‘east’ and in so doing, may find it self moving towards an energy trade that is independent of Dollar hegemony. This may be accelerated as the US becomes a net energy exporter while China’s demand for oil increases, leaving Saudi and fellow OPEC members in a position where it would become not only necessary but inevitable to trade in Yuan. OPEC member and Sino-Russian partner, Venezuela has already ceased trading its oil in US Dollars. 

In this sense, while the US has often criticised China for pegging the Yuan to the Dollar, the combination of China being willing and able to convert Yuan to gold in respect of oil futures contracts, as well as the increasing global confidence in the Yuan as a reliable trading and reserve currency, may eventually lead to China floating the Yuan or pegging it to another standard.

As China holds billions in US sovereign debut, China holds the fate of the Dollar in its hands more than ever, as now China has many other options at its disposal when it comes to diversifying its monetary policies.

In this sense, it is important to see US military provocations against China as symptoms of the wider economic and now monetary pressure the US is feeling as China moves to take its place as the undisputed leading economic power of the world.

In spite of many figures in the US ranging from neo-cons to Steve Bannon, being united around an anti-Chinese campaign, many members of the US armed forces are apparently growing demoralised with their country’s increasingly frequent, yet unfruitful missions to Asia.

In a recent report form the US based Navy Times, journalists interviewed sailors aboard the USS Shiloh cruiser. The ship which is based in Japan, has been running missions throughout East Asia in an attempt to allegedly deter North Korea.

But far form deterring North Korea, the American seamen have stated that their conditions have left them demoralised and even suicidal.

According to the report,

“Each survey (of US sailors) runs hundreds of pages, with crew members writing anonymously of dysfunction from the top, suicidal thoughts, exhaustion, despair and concern that the Shiloh was being pushed underway while vital repairs remained incomplete.

It feels like a race to see which will break down first, the ship or it’s […] crew”.

The report was commissioned after many members of the USS Shiloh’s crew anonymously contacted the Navy Times to complain of dire conditions.

One American sailor stated,

“I just pray we never have to shoot down a missile from North Korea, because then our ineffectiveness will really show”.

Others described the conditions aboard the USS Shiloh as “prison like” while others warned that “it’s only a matter of time before something horrible happens”.

The incidents aboard the USS Shiloh are not unique. Multiple incidentals, including deadly collisions have recently plagued US Navy ships in Asia over the last year.

In this sense, one sees US sailors used and abused by their chiefs, preparing for battles which many believe cannot be won, all the while, provoking the Chinese superpower in its own maritime territory.

At the same time, it is crucial to understand that the military endeavours of the US have nothing to do with security the territory or people of the US, but instead follow on from the perceived financial and monetary benefits that the US intends to achieve by disrupting the peace and stability of regions vital for Chinese trade. At the same time, the US is surprised and reacting unreasonably to the reality that as China’s trading, logistical, fiscal and monetary might grows, so too will its geo-political influence necessarily grow. The US being so keen to protect its hegemony, a hegemony built increasingly on excessive military spending and the power of the Federal Reserve’s monetary manipulation, seems unwilling to gracefully accept China’s rise to global prominence as a leading power of the 21st century. China is consequently faced with the perfect storm of the US fighting for its monetary hegemony using its military, all the while attempting to restrain China’s growing political clout.

In short, the US is not fighting for the security of its realm, but for the security of the Wall Street based financial industry and that of the Federal Reserve, in addition to the overarching geo-political hegemony that both have allowed the US to exercise with impunity.  It is not a transparent war, but it may become a deeply ugly war, nevertheless.

America’s cold war on China is no longer just a trade war – it is a war for the Dollar and Federal Reserve

With its weakening domestic industrial base, high-tax and investor unfriendly regulations and its soaring national debt, the primacy of the US Dollar as the go-to reserve currency and means of international trade, is one of the only things which is keeping the US economy buoyant in the eyes of medium and long term speculators.

Should the US Dollar’s value plummet as a result of international markets losing confidence in the USD, the US economy and those which are directly tied into it, will feel the sting.

These developments also call into question, the long term feasibility of the Yuan being effectively pegged to the Dollar. The moment that China feels that floating the Yuan will incur greater aggregate advantages vis-a-vis the pegged Yuan, China will float its currency.

While it used to be received wisdom that it was the Dollar which gave the Yuan its value, the new dynamics in international trading markets and the sheer size and diversity of the Chinese economy, are changing this reality and changing it rapidly. If the Yuan is allowed to float on currency markets, the US Dollar is the currency that has the most to lose from such an event and it is now an event whose proximity in time is becoming ever closer. It will also be a further sign of China diversifying its international points of sale away from the US.

While people like Steve Bannon speak of China frequently, most US commentators and politicians are focused on Russia. The reason for this is because Russia is still considered to be more geo-politically active superpower in areas which cause embarrassment for the US, primarily Syria. The other reason is that because of the US economy being so dependant on China and because China owns so much US sovereign debt, many in the US are still more afraid of fully alienating China, whilst Russia by contrast, has comparatively few economic ties to the USA.

The flip side of this reality, is that Russia is in many ways even more free when it comes to developing new anti-Dollar currency solutions. China still needs the US consumer market and thus, things will have to necessarily progress in a gradual manner in respect of the inter-dependant but mutually distrustful economic and monetary ballet between Beijing and Washington.

Russia has no strings attached in this sense and US sanctions against Russia and many of her traditional partners, only serve to further drive home the importance of de-Dollarising Russia’s trading networks. This indeed is one of the reasons that Russia is set to launch a crypto-Rouble which will compete directly with both the Dollar and existing western cryptocurrencies for small and medium sized international transactions.

As I recently reported,

“Russian monetary experts and political leaders have recently begun engaging in a debate which pitted monetary conservatives against monetary radicals. Most Russian officials agreed that allowing the use of western designed (though not western state endorsed) cryptocurrencies such as Bitcoin, was not compatible with Russian financial security concerns. China, for example, reached a similar conclusion about existing cryptocurrencies.

In Russia, the debate then quickly evolved into to a question over what role if any, a government and central bank should have in respect of cryptocurrencies. Conservatives argued that the entire process of blockchain cryptocurrency technology should not be accepted as a legal alternative to traditional state issued notes, while radicals argued for the creation and regulation of a uniquely Russian cryptocurremcy. The radials have clearly won and appear to have been embraced by President Putin.

Here’s What We Know About CryptoRouble

The CryptoRouble is being worked on at the moment and should be available soon, although a precise timeline is not yet available.

According to Sputnik,

“They can be exchanged for regular roubles at any time, though if the holder is unable to explain the source of their CryptoRubles, a 13 percent tax will be levied. The same tax will be applied to any earned difference between the price of the purchase of the token and the price of the sale”.

Existing cryptocurrency exchange rates are based on the supply of a given cryptocurrency, in proportion to demand for converting such a cryptocurrency into a traditional currency, at a given time. By contrast, it is expected that the CryptoRouble will have an exchange rate related to the Rouble, although it is not clear if it will be formally pegged to the Rouble. Such a pegging scenario does however seem initially probable.

While advocates of autonomous cryptocurrency exchange will almost certainly adopt the traditional ultra-libertarian line that any government regulation into cryptocurrencies makes them scarcely different from using traditional currencies in the online domain (Paypal for example), long time advocates of cryptocurrency in the retail and wholesale sector will almost certainly look with interest to this new development.

The Benefits 

A Russian CryptoRouble that can be easily exchanged for traditional Roubles in Russia and ostensibly anywhere else in the world, will automatically give the new cryptocurrency a marketplace  confidence that many alternatives currently lack. Such a phenomenon will de-mystify the process for many possible cryptocurrency users.

At the same time, if in the eyes of the Russian government, a CryptoRouble is as legitimate a currency as the Rouble, it will allow wholesalers, retailers and possibly even independent financial traders to use the CryptoRouble to avoid the sanctions against Russian banks which their own anti-libertarian western governments have imposed.

Additionally, if the CryptoRouble becomes easily convertible to popular western originated cryptocurrencies such as Bitcoin, it would solve the problem of Bitcoin users being ‘shut out’ of the Russian market. All one would need to do in order to engage in transactions with Russian businesses using a cryptowallet, would be to digitally exchange one’s Bitcoins (or any other existing cryptocurrency) for a desired amount of CryptoRoubles. The aforementioned process would generally take the same amount of time or even less than a traditional online bank transfer.

In this sense, the CryptoRouble helps open up Russia for new entrepreneurial ventures while insuring that possible fraud and money laundering loopholes are closed.

The Potential 

During September’s BRICS Summit in Xiamen, there was a great deal of discussion regarding the establishment of a cryptocurrency for the BRICS nations (Brazil, Russia, India, China South Africa) and their partners.

Such a coin would have all of the advantages of the CryptoRouble with the added benefit of instant legitimacy and even desirability across some of the world’s most dynamic and growing economies. It could also facilitate easier money transfers between BRICS members. This would be particularly helpful for Chinese businessmen who often have trouble getting large sums of Yuan out of the country in single transactions. A BRICSCoin, if based on the Russian security net could plausibly alleviate similar existing Chinese concerns about cryptocurrencies. As China has begun trading oil futures contracts in Yuan which can be converted to gold at the Shanghai and Hong Kong gold exchanges, one could foreseeably be looking at a BRICScoin that would effectively be backed by gold, in certain instances.

Furthermore, Russia has become the number one global market for the Chinese mega online retailer AliExpress. An easily convertible CryptoRouble has the potential to make such transactions even more beneficial in the future.

India, which is currently suffering a monetary crisis after Prime Minister Narendra Modi eliminated the 500 and 1,000 rupee notes, could stand to benefit from a new, legal and legitimate means of monetary exchange. A BRICSCoin could help to stabilise India’s monetary markets after Modi’s decision to ban the 500 and 1,000 rupee notes, hit the incomes of many working class Indians. In a country where more people have modern phones than old fashioned bank accounts, a BRICSCoin could be a form of salvation, as well as a way to modernise the monetary sector with few infrastructural requirements.  In this sense, a BRICSCoin could also help to draw India back into the BRICS fold after the recent Doklam/Donglang border dispute caused tension between New Dheli and Beijing.

Overall, having a cryptocurrency that is directly tied to a traditional Rouble, could end up making the Rouble an increasingly popular international currency of exhcange and in so doing, take a bite out of Dollar dominance for small and medium exchanges just as Russia’s commitment to conduct bilateral international trade in national currencies, is steadily doing in respect of large sovereign transactions and deals between major corporations.

The Rationale 

While monetary radicals throughout Russia have welcomed the move, President Putin justified the creation of the CryptoRouble on far more pragmatic grounds. He stated,

“I confidently declare that we run CryptoRuble for one simple reason: if we do not, then after 2 months our neighbours in the EurAsEC (Eurasian Economic Community) will”.

In other words, ‘if you can’t beat them join them’. Implicit in this logic however, is that since Russia has blazed a self-described inevitable trail, others will now be even more likely to get on the state sanctioned cryptocurrency bandwagon. Thus, Russia could be at the forefront of a pan-Asian phenomena that could eventually go global. This will also translate into Russian blockchain technology becoming uniquely attractive to other states looking to develop their own ‘official’ cryptocurrency.

In this sense, Putin has done what the music industry infamously did not do in the late 1990s. In the late 1990s, illegal peer-to-peer music download services allowed web users to download free music that did not pay the owners of the copyrighted sound material. Using Metallica as the public face of the lawsuit, the major western record labels sued the largest such service, Napster. The record labels won the lawsuit and the battle, but ultimately lost the war.  By the time the legal actions against Napster were won in favour of the record companies, the cat was out of the bag and new illegal file sharing services popped up every day, but more importantly, entrepreneurs from the e-commerce and software world, developed legal alternatives to Napster that continue to dominate the marketplace (iTunes, Spotify, Amazon, Google Play etc).

Where the music industry used to handle the distribution of recorded music, often up to and sometimes including the retail point of sale, today, the music industry is having to work in a largely subservient role, with companies that are newer than many of their best selling digital albums. The music industry tried to sue technology into oblivion and instead, the next generation of technology companies have largely consigned the music industry to being a shell of its former self in both North America and much of Europe.

Conclusion 

Russia has avoided the pitfall of the 1990s US/EU music industry, albeit on a much more substantial scale. Just as Paypal and other online apps have destroyed many physical bank branches, in the coming years, there is a very real possibility that as cryptocurrencies get easier to use and become more widely accepted for day-to-day transactions, they could supplement the largely old fashioned banking/monetary system. When this happens, countries that reject cryptocurrencies for fear of not being able to collect revenue from such transactions, will find themselves totally shut out.

Russia has avoided this pitfall by embracing technology and making it work both for Russia, for consumers and for commercial interests. It’s a win-win situation and this is almost certainly, only the beginning”.

Crypto-Rouble: Russia to launch first state sanctioned cryptocurrency in the world

Russia is therefore very much at the forefront of challenging US Dollar hegemony, which is itself, the bedrock of US geo-political hegemonic power. With two of the three superpowers openly working on systems of exchange to dig into the Dollar’s market share, it is no wonder that the US is working so hard to undermine the Sino-Russian partnership. This is the real story, not the Russiagate myth.

 

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Theresa May’s soft Brexit plan continues to fail, as EU now pushing for UK to leave (Video)

The Duran – News in Review – Episode 138.

Alex Christoforou

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Theresa May’s soft Brexit strategy has been such a monumental failure that even Brussels negotiators are now pushing for the UK to simply leave the union, in what has becoming a British debacle, and a thorn in the Conservative Party’s side.

Many media pundits and analysts are now asking if the latest impasse in Brexit talks means that we are indeed seeing the last days of Theresa May?

While much of the mess the Conservative Party finds themselves in because of Brexit is squarely Theresa May’s fault, much of the damage done by May’s inability to close the deal on Brexit will not go away, even if she does.

The Duran’s Alex Christoforou and Editor-in-Chief Alexander Mercouris discuss Theresa May’s continued failure to obtain her soft Brexit dream, placing herself (and her Conservative Party) in such an embarrassing position, that European Union negotiators, tired of never ending talks, are eager to see Britain go away, in what will be an inevitable hard Brexit.

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“Are these the last days of Theresa May?”, authored by Stephen Bush via The New Statesman:


Are these the last days of Theresa May? This morning’s papers are full of stories of plots and ultimatums to the Prime Minister unless she changes her Brexit strategy, whether from her Scottish MPs over any extension of the transition period due to concerns over fisheries policy, from her Brexiteer MPs over the backstop or from her Cabinet over practically everything.

All this before the Budget next Monday, when Philip Hammond is going to have to find some way to pay for the extra cash for the NHS and Universal Credit all while keeping to May’s pledge that debt will continue to fall as a share of GDP. So added to all May’s Brexit woes, a row over tax rises could be coming down the track.

Of course, the PM’s position has been perilous for a very long time – in fact, when you remember that her period of hegemony ran from July 2016 to June 2017, she’s actually been under threat for more of her premiership than she hasn’t. But just because you roll heads 36 times in a row doesn’t mean your chances of rolling tails aren’t 50/50 on roll 37, and May’s luck could well be running out.

But while May shares a good size of the blame for the mess that the Conservative Party are in, it’s not all her fault by any means and none of those problems will go away if May is replaced or changes tack to win over her internal opponents in the European Research Group.

Ireland has a veto over the end state and only an indefinite and legally binding backstop for the island of Ireland will do if any deal is to be signed off. It’s true to say that no deal also means a hard border on the island of Ireland, but it’s also true that it will always been in the political interests of whoever is in office in Ireland for a hard border to be imposed as a result of no deal rather than for the Irish government to acquiesce in the creation of one through a EU-UK treaty.

The DUP can bring the Conservative government to an early end so they, too, have a de facto veto over any deal that creates barriers between Northern Ireland and the United Kingdom. But the only UK-wide solution – for the backstop to encompass the whole of the United Kingdom – is nothing doing with pro-Brexit Conservative MPs who don’t want an indefinite backstop. It’s also politically tricky with many EU member states, who don’t want the default outcome of the talks to be a UK-wide backstop, which many regard as a threat to the sanctity of single market. (The only reason why it is acceptable on the Irish border is because Ireland is still a member state and because the Irish border was both the location and the cause of political violence within living memory.)

Added to that, the Conservative parliamentary party seems to be undergoing a similar psychological journey to the one that Steve van Riel described during the 2015 Labour leadership election: that groups of any kind tend to reach a more extreme position the longer an issue is debated. Brexiteers who spent 20 years saying they wanted a Norway style deal now talk of Norway as a betrayal. Leavers who cheerily talked about making Northern Ireland into its own customs area before Brexit now talk of the backstop as a constitutional betrayal. And Conservative Remainers who only reluctantly backed an In vote to avoid the political upheaval of negotiating Brexit, or the loss of David Cameron, now call for a referendum re-run and privately flirt with the idea of a new party.

Some of that is May’s fault, yes. But none of it is going to go away if she does and all of it makes the prospect of reaching a Brexit deal considerably less likely.

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Saudi Crown Prince Spoke To Khashoggi By Phone Moments Before He Was Killed: Report

The shifting Saudi narrative of the killing has been met with scepticism and condemnation from the international community.

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Via Zerohedge


In the latest bombshell report involving the Khashoggi murder, Saudi Crown Prince Mohammed bin Salman reportedly spoke on the phone with journalist Jamal Khashoggi moments before he was murdered in the Saudi consulate in Istanbul. Turkish pro-government daily Yeni Safak disclosed the new alleged details of the case in a report on Sunday, contradicting claims by Saudi authorities that Prince Mohammed played no part in Khashoggi’s murder.

“Khashoggi was detained by the Saudi team inside the consulate building. Then Prince Mohammed contacted Khashoggi by phone and tried to convince him to return to Riyadh,” the report said.

“Khashoggi refused Prince Mohammed’s offer out of fear he would be arrested and killed if he returned. The assassination team then killed Khashoggi after the conversation ended,” it added.

While the report is so far unconfirmed, the New Arab reports that so far Turkish pro-government media have been receiving a steady stream of leaks many of which turned out to be accurate, including pictures of the hit team as they entered Turkey and reports of audio recordings of the murder said to be in the possession of Turkish authorities.

Meanwhile, the Saudi version of events has been changing significantly over the past two weeks with authorities conceded Saturday that Khashoggi, the Washington Post columnist and a Riyadh critic, was killed inside the kingdom’s Istanbul diplomatic compound following a “brawl”. The admission came after a fortnight of denials with the insistence that the journalist left the consulate alive, starting on October 5, when Crown Prince MBS told Bloomberg that Khashoggi was not inside the consulate and “we are ready to welcome the Turkish government to go and search our premises”.

On Saturday, the kingdom announced it had fired five top officials and arrested 18 others in an investigation into the killing – a move that has widely been viewed as an attempt to cover up the crown prince’s role in the murder.

The shifting Saudi narrative of the killing has been met with scepticism and condemnation from the international community, and has left the U.S. and other allies struggling for a response on Sunday. As Bloomberg reports, France demanded more information, Germany put arms sales to Riyadh on hold and the Trump administration stressed the vital importance of the kingdom and its economy to the U.S.

In Sunday radio and TV interviews, Dominic Raab, the U.K. politician in charge of negotiating Britain’s exit from the European Union, described the latest Saudi account as not credible; French Finance Minister Bruno Le Maire called for “the truth’’; and Germany’s Foreign Minister Heiko Maas said his government would approve no arms sales so long as the investigation was ongoing.

Earlier on Sunday, Saudi Foreign Minister Adel al-Jubeir acknowledged a cover-up attempt. The dramatic reversal, after Saudi officials had previously said the columnist left the building alive, has only complicated the issue for allies.

Saudi Arabia’s al-Jubeir told Fox News on Sunday that the journalist’s death was an “aberration.”

“There obviously was a tremendous mistake made and what compounded the mistake was the attempt to cover up,” he said, promising that “those responsible will be punished for it.”

More importantly, he said that Prince Mohammed had no knowledge of the events, although if the Turkish report is confirmed, it will be yet another major flaw with the official narrative.

Several senior members of US President Donald Trump’s Republican Party said they believed Prince Mohammed was linked to the killing, and one called for a “collective” Western response if a link is proved. In an interview with The Washington Post, President Trump, too, said the Saudi narrative had been marked by “deception and lies.’’ Yet he also defended Crown Prince Mohammed bin Salman as a “strong person,’’ and said there was no proof of his involvement in Khashoggi’s death. Some members of Congress have questioned his willingness to exonerate the prince.

“Obviously there’s been deception and there’s been lies,” Trump said on the shifting accounts offered by Riyadh.

On Sunday, Turkish President Recep Tayyip Erdogan promised to disclose details about the case at a meeting of his AK Party’s parliamentary faction on Tuesday, Haberturk newspaper reported.

Meanwhile, as Western firms and high-ranked officials scramble to avoid any Saudi involvement, Russia is more than happy to step in and fill the power vacuum void left by the US. As a result, Russian businesses are flocking to attend the investment forum in Saudi Arabia, as Western counterparts pull out.

Russian President Vladimir Putin has had considerable success boosting Moscow’s influence in the Middle East at U.S. expense, by standing by regimes that fall afoul of the West, including in Syria and Iran. Last week Putin signed a strategic and partnership agreement with Egypt’s President Abdel-Fattah El-Sisi, backed by $25 billion in loans to build nuclear reactors. Until El-Sisi came to power, Egypt had been closely allied to the U.S.

Meanwhile, all eyes are fixed squarely on the Crown Prince whose position of power is looking increasingly perilous. Congressional leaders on Sunday dismissed the story proffered earlier by the Saudis, with Republican Senators Lindsey Graham of South Carolina and Bob Corker of Tennessee saying they believed the crown prince was likely involved in Khashoggi’s death.

Lawmakers said they believe the U.S. must impose sanctions on Saudi Arabia or take other action if the crown prince is shown to have been involved. Speaking on NBC’s “Meet the Press,” Senator Dick Durbin of Illinois, the chamber’s No. 2 Democrat, said the Saudi ambassador to the U.S. should be formally expelled until a third-party investigation is done. He said the U.S. should call on its allies to do the same.

“Unless the Saudi kingdom understands that civilized countries around the world are going to reject this conduct and make sure that they pay a price for it, they’ll continue doing it,”’ Durbin said.

The obvious question is what happens and how the Saudi royal family will respond if it is pushed too far, and whether the worst case scenario, a sharp cut in oil exports, could be on the table if MBS feels like he has little to lose from escalating the situation beyond a point of no return.

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The Biggest Winners In The Mediterranean Energy War

Energy companies are flocking to the Mediterranean after oil and gas discoveries in the territorial waters of Israel, Cyprus, and Egypt.

The Duran

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Authored by Vanand Meliksetian via Oilprice.com:


Former Vice-President of the United States Dick Cheney once said: “the good lord didn’t see fit to put oil and gas only where there are democratically elected states… Occasionally we have to operate in places where, all considered, one would not normally choose to go. But we go where the business is.” Europe is surrounded by states with abundant energy resources, but supply from these countries is not always as reliable. Russia, for example, is regularly accused of using energy as a weapon. However, major discoveries of gas in the Eastern Mediterranean could mitigate dependence on Russian gas.

The discovery of a gas field named Tamar near the coast of Israel in 2009 set off a wave of investments in the energy sector. After 9 years, companies are flocking to the region after other discoveries in the territorial waters of Israel, Cyprus, and Egypt. Ever larger finds in the Mediterranean Sea’s Levant Basin such as the Leviathan gas field in 2010 and Zohr in 2015, have the potential to transform the strategic importance of the region.

Turkey’s energy hub ambitions

Few states in the world are geographically so well positioned as Turkey. The country controls Russia’s only warm water port in the Black Sea and serves as a bridge between east and west. Therefore, during the Cold War Ankara was an indispensable member of NATO. More recently, Turkey has the ambition to become an energy hub for Middle Eastern and Caspian energy. Ankara has had mixed successes in attracting investors and maintaining political stability.

After Israel’s significant discoveries, a U.S. backed initiative presented Turkey as an energy hub. Although a land pipeline is the cheapest option to transport gas from the Mediterranean to Europe, political developments have stalled construction. President Erdogan’s escalating public denunciations of Israel have made Jerusalem look for other options. Furthermore, relations with Europe have also been damaged which would be dependent on Turkey as a transit country.

Egypt as the regional gas hub

Egypt’s has the third largest gas reserves in Africa. Therefore, its export-oriented LNG industry came on-stream in 2004 but was shut mid-2013 due to a lack of resources. The growth of the domestic market demanded ever larger volumes, which went at the expense of exports. Instead, Egypt started importing LNG. However, the discovery of the massive Zohr gas field, the largest in the Eastern Mediterranean, has turned around the situation. Egypt imported its last shipment of LNG in September 2018.

Although relations between Egypt and Israel are far from normal, privately held companies have been able to strike a deal. Starting from the first quarter of 2019, in 10 years 64 bcm worth $10 billion will be delivered. The agreement has stirred controversy in Egypt, which until recently was exporting to Israel. However, with this deal, Cairo comes closer in becoming an energy hub.

The recent signing of another agreement, this time with Nicosia to develop a subsea pipeline from Cyprus’ Aphrodite gas field, has been another important step. Cypriot gas will be pumped 400 miles (645 kilometers) to the south to Egypt’s LNG facilities. Difficult relations with Nicosia’s northern neighbors make a pipeline to the north highly unlikely.

Cairo has been able to act pragmatically concerning its relations with its neighbors such as Israel while taking advantage of the limited amount of options for exporting gas. The obvious winner in this context has been Egypt and its LNG industry. Its chances of becoming the regional energy hub instead of Turkey have significantly increased.

Turkey’s hope for luck

All littoral states of the Eastern Mediterranean struck ‘gold’ in the shape of natural gas except for Turkey. Ankara strongly opposes the exploitation of the gas resources in the exclusive economic zone of the Republic of Cyprus without a sharing agreement with Northern Cyprus’ Turkish inhabitants. The Turkish Navy prevented ships from Italy’s Eni from performing exploratory drilling off the coast of the Republic of Cyprus.

In search of its own luck, Ankara has set up a project to start looking for gas in the EEZ of the Turkish Republic of Northern Cyprus (TRNC), which is only recognized by Turkey. Kudret Özersay, TRNC deputy prime minister and minister of foreign affairs, proclaimed the desire to turn the TRNC into an energy and electricity hub. However, it seems unlikely that investors will be willing to participate due to political and legal reasons.

The legal situation of the TRNC is an impediment to any major decision involving a longtime commitment worth billions. From an international point of view, the region is de jure part of the Republic of Cyprus, despite holding no control over the region. The TRNC holds no seat in the WTO.

Large investments require solid legal and political support for companies to earn back their investments. The current economic situation of Turkey makes it dependent on foreign money. However, stringent due diligence rules could impede some international banks in lending the necessary funds.

The Eastern Mediterranean Sea basin promises great rewards, but the risks are also high. With Turkey potentially being the only country that doesn’t profit from the gas bonanza, Ankara has acted aggressively to get what it regards as its fair share. However, it faces a united front from the other littoral states of the Eastern Mediterranean. Therefore, it is highly unlikely that Turkey will be able to profit in the same way as Cyprus, Egypt or Israel.

By Vanand Meliksetian for Oilprice.com

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