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Financial Times: Russia’s oil and gas industry booming BECAUSE of sanctions

Financial Times shows sanctions have triggered a technological boom and a successful restructuring within Russia’s oil and gas industry

Alexander Mercouris

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The sectoral sanctions the Western powers imposed on Russia in July 2014 because of the conflict in the Donbass continue to have paradoxical results.

The financial sanctions, which effectively prevented Russian companies from borrowing in Western financial markets, instead of causing the Russian economy to implode, have caused it to deleverage at an unprecedented rate, hugely strengthening Russia’s financial sector and the balance sheets of Russia’s companies, setting the scene for a coming investment boom.

The counter-sanctions Russia imposed prohibiting the importation of Western foodstuffs into Russia have led to a huge boom in Russia’s agriculture sector, as even the Financial Times was recently forced to admit, making Russia almost completely self-sufficient in food, and making it a major food exporter.

However perhaps the most paradoxical result of all has been in Russia’s oil and gas industry.

Western sanctions were supposed to cripple this industry – wrongly assumed in the West to be existentially important for Russia’s very existence – by depriving it of the technology it needed to develop the huge untapped oil and gas reserves Russia is known to have in the Arctic, and making development of its huge shale reserves, which are known to dwarf those of the US, impossible.

In the event the Financial Times has now admitted in a lengthy article that within less than three years of the sanctions being imposed the Russian oil and gas industry is in the throes of a technological boom, as Russian companies forge ahead with Arctic drilling, successfully replicating the very same Western technologies which were supposed to be beyond them

………..a drill began its 5,000m journey downwards, in search of oil deposits that the country is banking on to provide more than a quarter of its future output. Perched on the edge of a peninsula deep in the Arctic Circle, Tsentralno- Olginskaya-1 will be Russia’s northernmost oil well. Closer to the North Pole than to any city, it is a feat of engineering that uses equipment shipped 3,600km through icy waters navigable only for two months of the year.

The well is one of the most technologically challenging ever attempted in Russia. With the deposits located beneath the icy, frequently frozen waters of the Laptev Sea, cutting-edge horizontal drilling techniques will be used to reach up to 15,000m from the main site.

But it was also a moment of triumph for Mr Putin, who was beamed in via video conference from St Petersburg as Mr Sechin braved the frigid elements and who celebrated the start of drilling as an act of homegrown ingenuity.

Three years ago, when the US and EU imposed sanctions on the country that restricted companies such as Rosneft from foreign capital and technology, complex wells were exactly the kind of ambitious projects that were supposed to be rendered impossible. Western governments hoped that pressure on Russia’s main energy companies would help change Mr Putin’s political calculations. But as projects like Tsentralno-Olginskaya-1 attest, Russia’s oil and gas majors have found ways to carry on regardless.

“Horizontal drilling is a complex and high-tech operation. This is just the first well. There is much more work ahead,” Mr Putin told Mr Sechin in the heavily scripted conversation.

It seems according to the same article that the Russians are forging ahead with shale technology as well

……..2,000km south-west of Tsentralno-Olginskaya-1 in western Siberia, Gazprom Neft, Russia’s third-largest oil producer, is showing few ill effects. Late last year, it became the first Russian company to demonstrate shale oil fracking expertise with a 1km-long horizontal well 2.3km below ground at a site in the vast Bazhenov field, estimated to be the world’s largest shale oil deposit.

Gazprom Neft was able to use homegrown technology that it was forced to develop after the sanctions prompted its international partners to walk away from the project.

“We are like a snowball,” says Sergey Vakulenko, head of strategy and innovation at the company, a unit of gas giant Gazprom. “The harder you squeeze, the harder we get.” ……

“Sure, in terms of shale technology, we are a little behind the Americans. But in time, and definitely before we absolutely need to, we will get to where we need to be, sanctions or no sanctions,” says Mr Vakulenko.

“We could do it now, but we don’t need to,” he adds, referring to even more complex fracking techniques that will be required to fully exploit the Bazhenov field’s 75bn barrels of estimated reserves. “Why go after the high-hanging fruit when there is lower stuff available right now?”

The point about Russia not needing to go after the high-hanging fruit when there is an abundance of lower-hanging fruit for it to exploit is not bragging or propaganda.  It was made to me a few months ago in person by a Russian scientist who is an expert in hydraulic fracking.

Perhaps even more striking than this news of technological advances is the Financial Times’s admission that the effect of the sanctions has been to make the Russian oil and gas industry financially stronger and more efficient

“In terms of today’s projects, we are not at all affected [by the sanctions],” [Yakulenko] says in an interview at the company’s St Petersburg offices, where engineers use vast computer screens to remotely control drills at more than 600 wells across the country. “At their current configuration, they aren’t and won’t be painful, irrelevant of how long they are in place.”

Between 2013 and 2016, Russian crude oil production rose almost 6 per cent, more than twice as much as the rise in combined output from the Opec group of countries. Revenues at the country’s three largest producers have risen 11 per cent in that period.

The curtailment of foreign cash forced many to restructure their balance sheets with the help of domestic lenders, cut loss-making or costly new projects, and increase their efficiency.

Acquisitions and international expansion projects have followed. “The accepted narrative is that there is only upside risk from sanctions [being lifted] as the majority of the companies affected have shown few ill effects,” says the head of a western bank in Moscow. “In fact, lots of them have been forced to be smarter and have increased their competitiveness.”

Articles such as this one in the Financial Times are still comparatively rare.  The orthodoxy amongst Western governments and in the Western media is that Russia is suffering badly from the sanctions.  That is one reason why there is still so much resistance to any move whether by the Trump administration or by anyone else to lift them.

The truth is that though the sanctions caused the Russian economy genuine difficulties in late 2014, when Russian companies had to repay debts they struggled to finance because of the sanctions and the oil price fall, once Russia got through those initial difficulties the effect of the sanctions on the Russian economy has been entirely beneficial, and is becoming more so.

The West seriously underestimated Russia in 2014.  It failed to realise to what an extent the country had advanced beyond the disastrous times of the 1990s.

Whereas the sort of sanctions the West imposed on Russia in 2014 would have crushed the Russian economy if they had been imposed in say 2000, today Russia is fully capable of developing its economy by drawing on its own financial resources and its own technology, both of which it has in abundance.

What the West did in 2014, by imposing the sanctions at a time when there was an oil price fall, was force the Russians to do this more efficiently and more quickly than they would have done if they had been left alone.

Westerners always seem to cling on to their idea of Russia as a poor, technologically backward, ill-governed, irredeemably corrupt, ‘third world’ country (“Upper Volta with missiles”).  This is what leads them to make foolish decisions, such as the decision to impose sectoral sanctions, which they took in July 2014.

On the subject of Russia being ill-governed, the Financial Times quotes Apurva Sanghi, lead economist for Russia at the World Bank in Moscow, as having this to say

There is a pretty uniform consensus that the oil price shock dwarfed the sanctions.  If you look at what the authorities have done over the past few years for macro stability, it has been pretty outstanding and the results are there to be seen.

On the macro-economic facts, it is impossible to disagree with this assessment, and on the oil and gas industry facts as described in the Financial Times article, it is impossible to say anything different.

On 27th May 2016, when I discussed the West’s failed attempt to stop Russia floating a eurobond, I made this point in relation to how the West’s actions had actually strengthened Russia’s financial system

Truly Western governments when it comes to Russia seem intent on proving Nietzsche’s dictum true: that which does not break us makes us stronger.  Certainly that has been true of Russia’s eurobond sale.  By trying and failing to sabotage it the West has only managed to make Russia stronger.

The same it turns out is true of Russia’s oil and gas industry.

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DS Analysis
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DS Analysis

Most people understand the basic theory of “free” trade and how it theoretically is better for everyone. That would be true if trade was actually free like it is in the micro economy. The reality is, international trade is anything but free. The whole system is based on the US dollar monopoly and Federal reserve cartel that the US controls at gunpoint. Increased production by a country leads to a higher value currency which leads to cheaper food and energy which leaves more discretionary income to save or spend on other things. That is how free trade is supposed to… Read more »

Simon
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Simon

Excellent article. But that FT – as ever, so condescending, even in praise. Didn’t the Russian barbarians do well. All by themselves. Who would have thought it. It must be stolen technology (nudge nudge wink wink). But hold on – Rosneft’s output is bigger than Exxon. Gazprom alone is like BP+Shell+Total combined. It seems those Russians do know something about extracting oil and gas from below the ground after all. Still – it’s Russia, so their companies must be worth less. Much less. Just don’t look at Big Oil’s balance sheet debt or worry about their ridiculous share prices pumped… Read more »

Le Ruscino
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Le Ruscino

This list is the Industry Joke !

Why is it a Joke ? Just look at the reserves to asset value ratios as can be seen – Rosneft in truth sits on more crude oil reserves than any oil company on the planet & Gazprom is massively bigger.

What’s more interesting is that Russia has always under declared their assets & by how much is anyone’s guess but its minimum 30% but could be over 100% ?

Simon
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Simon

Agreed. Those numbers are actually production, but your point about reserves is also absolutely correct. The Russian companies are massively undervalued.

Stavros Hadjiyiannis
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Stavros Hadjiyiannis

Several factors contribute so that Russian corporations are so grotesquely undervalued: a) The state has controlling stakes, this makes some undervaluation legitimate. b) RUS energy corporations don’t have the downstream business that Western and Chinese corporations do. c) Active economic sabotage from “Western partners”

Simon
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Simon

You are right of course.
But I’d still rather own 10% of Surgutneftagas than 1 % of Conoco, and take my chances (and Surgut is the darkest horse of the lot!) 😉

Stavros Hadjiyiannis
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Stavros Hadjiyiannis

Those are excellent stats. Good work.

Stavros Hadjiyiannis
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Stavros Hadjiyiannis

This is of course not the first time that the “West” has grossly underestimated Russia. On the article itself, these are my observations/comments: a) In my opinion, the oil and gas industry is indeed of existential importance to Russia, on this NATO was correct. What they failed to fully integrate into their calculations is that Russia is in fact the world’s most efficient and low-cost producer of hydrocarbons. If Russia’s oil & gas reserves were not easily and cheaply exploitable, then the oil price crash would have bankrupted Russia very quickly, there would have been no need for NATO to… Read more »

Kimppis
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Kimppis

I wouldn’t necessarily say that the oil and gas sector is existentially important for Russia. After all, it’s something like 15-20% of the overall GDP. That said, it’s certainly the single most important sector. Also, Russia’s GDP per capita isn’t actually low. It’s reasonably high, something like $25 000. I’m obviously talking about purchasing power parity here. And that is for almost 150 million people, so the PPP GDP is comparable to Germany. That explains it all, really. So the per capita GDP is considerably higher than the world average. If you look at the list of countries that have… Read more »

DS Analysis
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DS Analysis

Yeah as you said, oil/gas is 15% of the economy now. It was 40% in the 90’s.

And the west uses dollar bloc GDP figures that don’t account for production that is consumed within Russia. This is where all of this “California has a bigger econ”nonsese comes from.

Alex Popoff
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Alex Popoff

Russian standards of accounting GDP varie from the western. For example till recent times military inner payments between army and military factories weren’t acoountable into GDP.

Large gvmnt sector in economy is badly accountable regarding GDP issue, because whole GDP concept was invented for other type of economy.

So Russia could be estimated as Poland with high technologies, 3,5 times population higher and endless resourses.

Le Ruscino
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Le Ruscino

Agree wholeheartedly with your well informed comment. There is a sad point to note & its that the US would cut off its arm to bleed on Russia’s shirt & this is exactly what they have done. US oil reserves are high cost for lifting as are Canada’s (Shale & Tar) & as you say Russian lifting costs are low mainly due to traditional nature of underground caverns being tapped aided by good tech. The BIG double whammy here is that Global oil consumption never stopped marching toward 100mio bbls per day & with low prices investment in new projects… Read more »

AMHants
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AMHants

Didn’t Obama and Saudi miscalculate oil/gas GDP and the Russian economy, when they decided to play with the oil market? Believing it made 50% of Russian GDP, rather than 16%? Together with forgetting that Russia could produce a barrel of oil for $12 dollars, production costs being in ruble and selling in $USD. So how much does it cost the US to produce a barrel of oil? How many of their oil companies ended up facing bankruptcy?

DS Analysis
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DS Analysis

There was shale oil plays that were not profitable at $100 a barrel. The whole shale industry in the US has not yet even faced a US recession. Just like US banks, there is tons of zombie shale producers out there that will be taken out back and shot in the next recession.

AMHants
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AMHants

Nice one as Russia gets stronger at the expense of those who decided to have a teenage or perhaps toddler temper trantrum, based on envy and greed. Also, with Exxon begging the US to let them ignore the sanctions and help Russia offload the oil in The Black Sea, would Russia actually need there help?

Has anybody seen the latest Ukraine hissy fit?

Ukraine demands confiscation of Gazprom property… http://www.fort-russ.com/2017/04/ukraine-demands-confiscation-of-gazprom.html

Gary Sellars
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Gary Sellars

“Has anybody seen the latest Ukraine hissy fit?”

Does anyone really care what the 404 nation says, wants, thinks or does?

AMHants
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AMHants

Sadly the idiots that run our nations and those so supportive of the failed state.

Kyler Phoenix
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Kyler Phoenix
AMHants
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AMHants

Hahahaha -Newsweek. Really and who controls Newsweek? Personally I look at what the debt clock has to say. Russia Foreign Exchange Reserves US Foreign Exchange Reserves Russia Gold Reserves Russia National Debt: $155,410,825,045 Interest per Year $9,541,556,000 Interest per Second $303 Debt per Citizen $1,062 Debt as % of GDP 15.59% GDP $997,000,000,000 Population 146,300,000 United States National Debt: $19,853,203,835,571 Interest per Year $442,585,040,366 Interest per Second $14,034 Debt per Citizen $61,209 Debt as % of GDP 106.31% GDP $18,675,300,000,000 Population 324,352,551 Russia, a creditor nation, in control of their vast wealth of natural resources. The middle class sector on… Read more »

Kyler Phoenix
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Kyler Phoenix

The information shared can be verified online on myriad sites. Your info comes from?

AMHants
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AMHants

A myriad of sites? Can you site them in an academic paper? National Debt Clock … http://www.nationaldebtclocks.org/ US Foreign Exchange Reserves http://www.tradingeconomics.com Federal Reserve (America) Russia Foreign Exchange Reserves http://www.tradingeconomics.com Russia Central Bank Russian Central Bank Gold Reserves… http://goldsilverworlds.com/wp-content/uploads/2014/07/Russian-Gold-Reserves-June-2014.jpg Your article, just happend to cite Moscow Times. Did you know that the paper has no loyalty to Russia? However, doesn’t Genie Energy Murdoch still have shares in Moscow Times, despite who he sells it to? There was no facts in that article that could be substantiated. Except for GDP. However, they ignore GDP Debt. Russia, as shown by the debt… Read more »

Kyler Phoenix
Guest
Kyler Phoenix

That is not an argument nor does it speak to their current economy. Are you a dropout? You are quoting Russian government sources.

AMHants
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AMHants

Are you a dropout? Russian Government Sources? When has the National Debt Clock been Russian? Russian Gold Reserves Since when has Trading Economics been part of the Russian Government? ‘… ABOUT US Trading Economics provides its users with accurate information for 196 countries including historical data for more than 300.000 economic indicators, exchange rates, stock market indexes, government bond yields and commodity prices. Our data is based on official sources, not third party data providers, and our facts are regularly checked for inconsistencies. TradingEconomics.com has received more than 270 million page views from more than 200 countries. ..’ http://www.tradingeconomics.com/about-te.aspx http://goldsilverworlds.com… Read more »

Kyler Phoenix
Guest
Kyler Phoenix

So, BS right wing blogs huh? Any credible sources? You look like a fool, cretin.

AMHants
Guest
AMHants

You argue with legality. You argue with fact. Failing that you spit you dummy out, throw your toys out of the pram and use personal abuse. That is so media disinformation agent style. What is the script they are given? Besides the 5Ds? Deny, discourse, disagree, derail, discredit. ‘…5. Sidetrack opponents with name calling and ridicule. This is also known as the primary attack the messenger ploy, though other methods qualify as variants of that approach. Associate opponents with unpopular titles such as “kooks”, “right-wing”, “liberal”, “left-wing”, “terrorists”, “conspiracy buffs”, “radicals”, “militia”, “racists”, “religious fanatics”, “sexual deviates”, and so forth.… Read more »

Kyler Phoenix
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Kyler Phoenix

No, you share irrelevant, cherry picked facts. No one denies the facts about the Russian economy. It is easily verifiable. You discredited yourself with obvious BS, cretin.

AMHants
Guest
AMHants

Pot, kettle, black, cutie.

‘…You discredited yourself with obvious BS, cretin…’

Kyler Phoenix
Guest
Kyler Phoenix

I shared verifiable facts. You shared fantasy.

AMHants
Guest
AMHants

Rothschilds darling. Can you cite cnbc in an academic paper, based on assumption? The same article as the Moscow Times. World Bank – Rothshcild and who has minimal debt and is not in need of a Rothschild loan? Didn’t the World Bank fail to notice the crash of 2008? The Diplomat – 2016 Time.com – 2015 Well, all I can say is BRICS. Now what is happening there, besides the AIIB Bank and the BRICS Bank? The $6 trillion, currency reserves, between the 5 nations. The New Silk Road Project. Not forgetting their dominance in the manufacturing and service industries.… Read more »

Kyler Phoenix
Guest
Kyler Phoenix

Everyone is lying except you and some blogs huh? You must be proud. Is that why you hide. Or is there another reason. Let’s find out…https://www.fbi.gov/contact-us

AMHants
Guest
AMHants

Everybody is lying except me? Hahahaha. Darling, one makes up their own opinion, whatever side of the argument. I am more than happy to own my opinion, but, have no desire to take the responsibility of others. I actually care nought about who believes what. However, owing to simple facts, I do not believe Russia is on her knees.

Now why on earth would I wish to contact the FBI?

Kyler Phoenix
Guest
Kyler Phoenix

Iam contacting them. I get a weirdfeeling about youraccount. You definitely are not American and you are spewing pro-Russia propaganda that flies in the face of facts. Good luck.

AMHants
Guest
AMHants

Contact them and I have never said I am American.

I am English. Like the people of America, one gets sick and tired of living in the land of the free, with fascist rules. You explain it perfectly. Report me to the FBI because I had the audacity to poste the findings of the National Debt Clock and Russian and American Foreign Exchange Reserves, with a chart showing how much Russian Gold they have in their vaults.

Excuse me whilst I laugh and have a good day.

Kyler Phoenix
Guest
Kyler Phoenix

No, you aren’t. You posted cherry picked facts that inno way disproved what anyone can easily research and see, the Russian economy is bad. It is forwarded.

AMHants
Guest
AMHants

Yeeah, whatever cutie pie. They have had a file on me since the 70s, am I bovvered? Not at all. If I walk out the door and end up in dead in a briefcase, three bullet holes in the head or worse, but, arranged as a suicide, it is covered. Who cares, I can walk across the road, but, it does not mean I will get to the other side. Death does not bother me, what does bother me, is keeping my mouth shut and being frightened to open it. What a waste of a life. We all come with… Read more »

Kyler Phoenix
Guest
Kyler Phoenix

You seem mentally ill. It is forwarded. You can stop replying now, if you have the ability to control yourself.

Kyler Phoenix
Guest
Kyler Phoenix

Oh, and what would you know of any academic paper, wantwit?

Isabella Jones
Guest
Isabella Jones

Ah, that wonderful Law of Unintended Consequences. All we need now is a couple more plus a Black Swan event against America and that will be the end of the Empire of Cowards and it’s blood money $.

Kyler Phoenix
Guest
Kyler Phoenix
Bente Petersen
Guest
Bente Petersen

very good reporting thank you… The Duran delivers !!!!!

Aby
Guest

Well, sanctions are not the solution of any conflicts and this have to be understand to the nation. The global trade is open momentum & this shouldn’t be blocked.

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The real reason Western media & CIA turned against Saudi MBS

The problem with MBS isn’t that he is a mass murdering war criminal, it is that he is too “independent” for the United States’ liking.

RT

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Via RT…


Forces are aligning against Saudi Arabia’s Crown Prince, lead by elements within the CIA and strong players in the mainstream media. But what is really behind this deterioration in relationship, and what are its implications?

Following the brutal murder of Washington Post columnist Jamal Khashoggi, western media and various entities, including the CIA, appear to have turned their back on Saudi Crown Prince Mohammad Bin Salman (MBS). In response to the scandal, the Guardian released a video which its celebutante, Owen Jones, captioned“Saudi Arabia is one of the biggest threats on Earth. Time to stop propping up its repulsive regime.”

The Guardian was not alone in its condemnation. “It’s high time to end Saudi impunity,” wrote Hana Al-Khamri in Al-Jazeera. “It’s time for Saudi Arabia to tell the truth on Jamal Khashoggi,” the Washington Post’s Editorial Board argued. Politico called it “the tragedy of Jamal Khashoggi.”

Even shadowy think-tanks like the Council on Foreign Relations (CFR) and the Atlantic Council released articles criticising Saudi Arabia in the wake of Khashoggi’s death.

A number of companies began backing away from Saudi money after the journalist’s death, including the world’s largest media companies such as the New York Times, the Economist’s editor-in-chief Zanny Minton Beddoes, Arianna Huffington, CNN, CNBC, the Financial Times, Bloomberg, Google Cloud CEO, just to name a few.

The CIA concluded that MBS personally ordered Khashoggi’s death, and was reportedly quite open in its provision of this assessment. Antonio Guterres, secretary-general of the UN, also took time out of his schedule to express concern over Saudi Arabia’s confirmation of the killing.

At the time of the scandal, former CIA director John Brennan went on MSNBC to state that the Khashoggi’s death would be the downfall of MBS. Furthermore, the US Senate just voted in favour of ending American involvement in Saudi Arabia’s war in Yemen (a somewhat symbolic victory, though this is a topic for another article), but nonetheless was a clear stab at MBS personally.

The only person who appeared to continue to uphold America’s unfaltering support for MBS, even after all the publicly made evidence against MBS, was the US president himself. So after years of bombarding Yemen, sponsoring terror groups across the Middle East, Asia, the Pacific and beyond, why is it only now that there has been mounting opposition to Saudi Arabia’s leadership? Let’s just bear in mind that western media had spent years investing in a heavy PR campaign to paint MBS as a “reformer.”

Former national security adviser under Barack Obama’s second term, Susan Rice, wrote an article in the New York Times, in which she called MBS a “partner we can’t depend on.” Rice concludes that MBS is “not and can no longer be viewed as a reliable partner of the United States and our allies.” But why is this? Is it because MBS is responsible for some of the most egregious human rights abuses inside his own kingdom as well as in Yemen? Is it because of MBS’ support for groups such as ISIS and al-Qaeda? No, according to Rice, we “should not rupture our important relationship with the kingdom, but we must make it clear it cannot be business as usual so long as Prince Mohammad continues to wield unlimited power.”

One will observe that the latter segment of Rice’s article almost mirrors former CIA director Brennan’s word on MSNBC word for word who stated that:

“I think ultimately this is going to come out. And it’s very important for us to maintain the relations with Saudi Arabia. And if it’s Mohammed bin Salman who’s the cancer here, well, we need to be able to find ways to eliminate the cancer and to move forward with this relationship that is critical to regional stability and our national interests.”

In reality, this is probably the issue that western media and government advisors have taken up with MBS. Aside from the fact he allegedly held a huge hand in the brutal murder of one of their own establishment journalists (Saudi Arabia reportedly tortured and killed another journalist not long after Khashoggi, but western media was eerily silent on this incident) MBS is not opposed for his reckless disregard for human rights. With insight into Rice’s mindset, we actually learn that if the US were to punish MBS, he would be likely to “behave more irresponsibly to demonstrate his independence and exact retribution against his erstwhile Western partners.”

You see, the problem with MBS isn’t that he is a mass murdering war criminal, it is that he is too “independent” for the United States’ liking.

Last week, Saudi Arabia and the other major oil producers met in Vienna at the year’s final big OPEC meeting of the year. As Foreign Policy notes, Saudi Arabia remains the largest oil producer inside OPEC but has to contend with the US and Russia who are “pumping oil at record levels.” Together, the three countries are the world’s biggest oil producers, meaning any coordinated decision made between these three nations can be somewhat monumental.

However, it appears that one of these three nations will end up drawing the short end of the stick as the other two begin forming a closer alliance. As Foreign Policy explains:

“But Saudi Arabia has bigger game in mind at Vienna than just stabilizing oil prices. Recognizing that it can’t shape the global oil market by itself anymore but rather needs the cooperation of Russia, Saudi Arabia is hoping to formalize an ad hoc agreement between OPEC and Moscow that began in 2016, a time when dirt-cheap oil also posed a threat to oil-dependent regimes. That informal agreement expires at the end of the year, but the Saudis would like to make Russia’s participation with the cartel more permanent.”

Russian officials have been signalling their intention to formalise this agreement for quite some time now. Given the hysteria in western media about any and all things Russian, it is not too much of a stretch to suggest that this is the kind of news that is not sitting too well with the powers-that-be.

Earlier this year, Russia and Saudi Arabia announced that it would “institutionalize” the two-year-old bilateral agreement to coordinate oil production targets in order to maintain an edge on the global market.

While US president Trump has been supportive and incredibly defensive of MBS during this “crisis”, the truth is that the US only has itself to blame. It was not all too long ago that Trump announced that he had told Saudi King Salman that his kingdom would not last two weeks without US support.

Saudi Arabia is learning for themselves quite quickly that, ultimately, it may pay not to have all its eggs in one geopolitical superpower basket.

Saudi Arabia has been increasingly interested in Moscow since King Salman made a historic visit to Moscow in October 2017. While Trump has openly bragged about his record-breaking arms deals with the Saudis, the blunt truth is that the $110 billion arms agreements were reportedly only ever letters of interest or intent, but not actual contracts. As such, the US-Saudi arms deal is still yet to be locked in, all the while Saudi Arabia is negotiating with Russia for its S-400 air defence system. This is, as the Washington Post notes, despite repeated US requests to Saudi Arabia for it disavow its interest in Russia’s arms.

The economic threat that an “independent” Saudi Arabia under MBS’ leadership poses to Washington runs deeper than meets the eye and may indeed have a domino effect. According to CNN, Russia and Saudi Arabia “are engaged in an intense battle over who will be the top supplier to China, a major energy importer with an insatiable appetite for crude.”

The unveiling of China’s petro-yuan poses a major headache for Washington and its control over Saudi Arabia as well.According to Carl Weinberg, chief economist and managing director at High-Frequency Economics, China will “compel”Saudi Arabia to trade oil in Chinese yuan instead of US dollars. One must bear in mind that China has now surpassed the US as the “biggest oil importer on the planet,” these direct attacks on the US dollar will have huge implications for its current world reserve status.

If Saudi Arabia jumps on board China’s petro-yuan, the rest of OPEC will eventually follow, and the US might be left with no choice but to declare all of these countries in need of some vital freedom and democracy.

Therefore, ousting MBS and replacing him with a Crown Prince who doesn’t stray too far from the tree that is US imperialism may put a dent in pending relationships with Saudi Arabia and Washington’s adversaries, Russia and China.

Once we get over the certainty that the US media and the CIA are not against MBS for his long-list of human rights abuses, the question then becomes: why – why now, and in this manner, have they decided to put the spotlight on MBS and expose him exactly for what he is.

Clearly, the driving force behind this media outrage is a bit more complex than first meets the eye.

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The Indiscreet Charm of the Gilets Jaunes

Nothing scares the Identity Politics Left quite like an actual working class uprising.

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Authored (satirically) by CJ Hopkins via The Unz Review:


So it appears the privatization of France isn’t going quite as smoothly as planned. As I assume you are aware, for over a month now, the gilets jaunes (or “yellow vests”), a multiplicitous, leaderless, extremely pissed off, confederation of working class persons, have been conducting a series of lively protests in cities and towns throughout the country to express their displeasure with Emmanuel Macron and his efforts to transform their society into an American-style neo-feudal dystopia. Highways have been blocked, toll booths commandeered, luxury automobiles set on fire, and shopping on the Champs-Élysées disrupted. What began as a suburban tax revolt has morphed into a bona fide working class uprising.

It took a while for “the Golden Boy of Europe” to fully appreciate what was happening. In the tradition of his predecessor, Louis XVI, Macron initially responded to the gilets jaunes by inviting a delegation of Le Monde reporters to laud his renovation of the Elysée Palace, making the occasional condescending comment, and otherwise completely ignoring them. That was back in late November. Last Saturday, he locked down central Paris, mobilized a literal army of riot cops, “preventatively arrested” hundreds of citizens, including suspected “extremist students,” and sent in the armored military vehicles.

The English-language corporate media, after doing their best not to cover these protests (and, instead, to keep the American and British publics focused on imaginary Russians), have been forced to now begin the delicate process of delegitimizing the gilets jaunes without infuriating the the entire population of France and inciting the British and American proletariats to go out and start setting cars on fire. They got off to a bit of an awkward start.

For example, this piece by Angelique Chrisafis, The Guardian‘s Paris Bureau Chief, and her Twitter feed from the protests last Saturday. Somehow (probably a cock-up at headquarters), The Guardian honchos allowed Chrisafis to do some actual propaganda-free reporting (and some interviews with actual protesters) before they caught themselves and replaced her with Kim Willsher, who resumed The Guardian‘s usual neoliberal establishment-friendly narrative, which, in this case, entailed dividing the protesters into “real” gilets jaunes and “fake” gilet jaunes, and referring to the latter fictional group as “thuggish, extremist political agitators.”

By Sunday, the corporate media were insinuating that diabolical Russian Facebook bots had brainwashed the French into running amok, because who else could possibly be responsible? Certainly not the French people themselves! The French, as every American knows, are by nature a cowardly, cheese-eating people, who have never overthrown their rightful rulers, or publicly beheaded the aristocracy. No, the French were just sitting there, smoking like chimneys, and otherwise enjoying their debt-enslavement and the privatization of their social democracy, until they unsuspectingly logged onto Facebook and … BLAMMO, the Russian hackers got them!

Bloomberg is reporting that French authorities have opened a probe into Russian interference (in the middle of which report, for no apparent reason, a gigantic photo of Le Pen is featured, presumably just to give it that “Nazi” flavor). According to “analysis seen by The Times,” Russia-linked social media accounts have been “amplifying” the “chaos” and “violence” by tweeting photos of gilets jaunes who the French police have savagely beaten or gratuitiously shot with “less-than-lethal projectiles.” “Are nationalists infiltrating the yellow vests?” the BBC Newsnight producers are wondering. According to Buzzfeed’s Ryan Broderick, “a beast born almost entirely from Facebook” is slouching toward … well, I’m not quite sure, the UK or even, God help us, America! And then there’s Max Boot, who is convinced he is being personally persecuted by Russian agents like Katie Hopkins, James Woods, Glenn Greenwald, and other high-ranking members of a worldwide conspiracy Boot refers to as the “Illiberal International” (but which regular readers of my column will recognize as the “Putin-Nazis“).

And, see, this is the problem the corporate media (and other staunch defenders of global neoliberalism) are facing with these gilets jaunes protests. They can’t get away with simply claiming that what is happening is not a working class uprising, so they have been forced to resort to these blatant absurdities. They know they need to delegitimize the gilets jaunes as soon as possible — the movement is already starting to spread — but the “Putin-Nazi” narrative they’ve been using on Trump, Corbyn, and other “populists” is just not working.

No one believes the Russians are behind this, not even the hacks who are paid to pretend they do. And the “fascism” hysteria is also bombing. Attempts to portray the gilets jaunes as Le Pen-sponsored fascists blew up in their faces. Obviously, the far-Right are part of these protests, as they would be in any broad working class uprising, but there are far too many socialists and anarchists (and just regular pissed-off working class people) involved for the media to paint them all as “Nazis.”

Which is not to say that the corporate media and prominent public intellectuals like Bernard-Henri Lévy will not continue to hammer away at the “fascism” hysteria, and demand that the “good” and “real” gilets jaunes suspend their protests against Macron until they have completely purged their movement of “fascists,” and “extremists,” and other dangerous elements, and have splintered it into a number of smaller, antagonistic ideological factions that can be more easily neutralized by the French authorities … because that’s what establishment intellectuals do.

We can expect to hear this line of reasoning, not just from establishment intellectuals like Lévy, but also from members of the Identity Politics Left, who are determined to prevent the working classes from rising up against global neoliberalism until they have cleansed their ranks of every last vestige of racism, sexism, homophobia, xenophobia, transphobia, and so on. These leftist gatekeepers have been struggling a bit to come up with a response to the gilets jaunes … a response that doesn’t make them sound like hypocrites. See, as leftists, they kind of need to express their support for a bona fide working class uprising. At the same time, they need to delegitimize it, because their primary adversaries are fascism, racism, sexism, homophobia, xenophobia, and assorted other isms and phobias, not the neoliberal ruling classes.

Nothing scares the Identity Politics Left quite like an actual working class uprising. Witnessing the furious unwashed masses operating out there on their own, with no decent human restraint whatsoever, Identity Politics Leftists feel a sudden overwhelming urge to analyze, categorize, organize, sanitize, and otherwise correct and control them.

They can’t accept the fact that the actual, living, breathing working classes are messy, multiplicitous, inconsistent, and irreducible to any one ideology. Some of them are racists. Some are fascists. Others are communists, socialists, and anarchists. Many have no idea what they are, and don’t particularly care for any of these labels.This is what the actual working classes are … a big, contradictory collection of people who, in spite of all their differences, share one thing in common, that they are being screwed over by the ruling classes. I don’t know about you, but I consider myself one of them.

Where we go from here is anyone’s guess. According to The Guardian, as I am sitting here writing this, the whole of Europe is holding its breath in anticipation of the gilets jaunes’ response to Macron’s most recent attempt to appease them, this time with an extra hundred Euros a month, some minor tax concessions, and a Christmas bonus.

Something tells me it’s not going to work, but even if it does, and the gilets jaunes uprising ends, this messy, Western “populist” insurgency against global neoliberalism has clearly entered a new phase. Count on the global capitalist ruling classes to intensify their ongoing War on Dissent and their demonization of anyone opposing them (or contradicting their official narrative) as an “extremist,” a “fascist,” a “Russian agent,” and so on. I’m certainly looking forward to that, personally.

Oh… yeah, and I almost forgot, if you were wondering what you could get me for Christmas, I did some checking, and there appears to be a wide selection of yellow safety vests online for just a couple Euros.

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Washington Is Changing The World Order Against Its Own Interests

Any country sufficiently stupid to ally with the US is allied with a dead man walking.

Paul Craig Roberts

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Authored by Paul Craig Roberts:


The hubris and arrogance of Washington have been at work since the Clinton regime to destroy the power and relevance of the United States.

This website has an international audience. The most asked question from this audience is the world order. There is a realization that Washington’s control might weaken, a development people abroad see as hopeful. They ask me for verification of their hope.

Here is my answer:

The world order has already changed.  China has a larger and more powerful industrial and manufacturing based economy than the US, and China’s potential domestic consumer market is four times larger than that of the US. As economies are consumer based, China’s potential is an economy four times larger than that of the US.

Russia has a far more capable military with weapon systems unmatched by the US. The US is drowning in debt, and the illegal and irresponsible sanctions that Washington tries to impose on others are driving the world’s largest countries away from the use of the US dollar as world reserve currency and away from Western clearance systems such as SWIFT.  The United States already has one foot in the grave.  Any country sufficiently stupid to ally with the US is allied with a dead man walking.

President Eisenhower, a five-star general, warned Americans 57 years ago to no effect that the military/security complex was already a threat to the American people’s ability to control their government. Today the military/security complex is the Government. As Udo Ulfkotte documented in his book, Journalists for Hire: How the CIA buys the News—no you can’t buy a copy unless you can find a used copy in German in a German book store, the CIA has seen to that—journalism independent of official explanations no longer exists in the Western world.

Much of the world does not understand this. Aside from the material interests of Russian and Chinese capitalists, a portion of the youth of both superpowers, and also even in Iran, have succumbed to brainwashing by American propaganda. Gullible beyond belief, they are more loyal to America than they are to their own countries.

The United States itself is extremely unsuccessful, but its propaganda still rules the world. The consequence is that, based on its propagandistic success, Washington thinks it still holds the balance of economic and military power. This is a delusion that is leading Washington to nuclear war.

Considering the hypersonic speed, trajectory changeability and massive power of Russian nuclear weapons, war with Russia will result in nothing whatsoever being left of the US and its vassals, who sold out European peoples for Washington’s money.

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