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The Strange Story of Russia’s Eurobond or How the West is Forcing Russia to Improve its Financial System

The Western attempt to sabotage Russia’s recent Eurobond issue was not only an entirely predictable failure but it has ended up strengthening Russia’s financial system.

Alexander Mercouris

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The story of the floating of Russia’s eurobond is a revealing tale of Western arrogance and Western blindness, not just about Russia but about the operation of the financial markets.   In the process Western actions have achieved the opposite of what Western leaders intended.

On 5th January 2016, as the second oil price fall approached its lowest point, I wrote an article in which – amongst other things – I challenged the entire theory of a Russian budget crisis, which was at that time fashionable. 

I said that if the fall in oil prices did cause a gap in Russia’s budget that Russia would be unable to fill from its Reverse Fund, the Russian government would simply do what all other governments regularly do when they find themselves in the same situation, which is borrow the money to fill the gap.  My precise words were as follows:

“If Russia ever were to find itself in a position where it had to finance a budget deficit of 4.4% of GDP after the Reserve Fund had run out, it would do so by raising the money by floating a bond on the international money markets – or conceivably in Russia – something which most governments do most of the time.

The sanctions do not prevent Russia from doing this and – since what we are talking about is a sovereign bond – it is legally doubtful they can be extended to prevent it.”

As if to prove my point, just a few weeks later, on 5th February 2016, the Russian government unexpectedly announced that it was going to do just that – borrow on the international money markets by floating a eurobond.  The total amount it said it planned to raise this year in this way was $3 billion.

The announcement provoked surprise, with most people seemingly unaware that the sanctions do not prevent the Russian state – as opposed to certain sanctioned Russian individuals and companies – from borrowing in the international money markets.  Few people seemed to understand that without a UN Security Council Chapter VII Resolution it is almost certainly legally impossible to bar a sovereign state like Russia from borrowing in the international money markets in peacetime.

When the point was finally understood talk followed that the proposed eurobond was simply a device to circumvent the sanctions.  The Russian state acting as a sort of agent would supposedly borrow on the international money markets and pass the money on to the sanctioned individuals and companies to provide them with the money they were barred from raising themselves.

On 11th March 2016, in a subsequent article I said this was nonsense:

“Quite apart from the fact that doing something like that would be the one guaranteed way of scaring off Western buyers from future bond issues, it would mean the Russian government is willing to take on the foreign debt of Russian companies onto its books, thereby transforming their debt into sovereign debt. 

Anyone with any knowledge of the way the Russian government does its business would know that is inconceivable.  Given the exorbitant cost in interest payments to the country’s budget of doing such a thing, there is no possibility anyone in the Russian government is considering it, since it violates the fundamental principles of sound budgeting and financial management upon which the Russian government runs its budget.”

In the event the prospectus of the eurobond contained an undertaking that any money raised from the sale would not be provided to sanctioned individuals or companies but would be used to strengthen Russia’s budget and its foreign exchange reserves.

I also pointed out in the same article the true reason for Russia floating a eurobond when there are more than sufficient funds in the Reserve Fund to cover fully Russia’s budget needs this year:

“Briefly, the Russian government wants to show the world that it can fund its budget by borrowing if it has to and that the sanctions do not prevent it doing so.

In passing, a successful bond issue will also show that the market does not agree with the repeated downgrades of Russia’s credit rating carried out by the three big international credit rating agencies – a fact which the Russians, who are in constant dialogue with the credit rating agencies, will doubtless point out to them.”

Though over time the Western financial press rather grudgingly admitted there was nothing illegal about Russia floating a eurobond there continued to be claims – or hopes – it would fail to find buyers.

As to that here is what I said in the same article on 11th March 2016:

“Russia’s exceptionally strong financial position – with a strong government committed to keeping the deficit low and under control, very low levels of government debt, large foreign currency reserves, a big trade surplus, an abundance of natural resources, and a good recent history of paying debt on time despite the oil price fall and the sanctions – means it should have no difficulty (borrowing if it wants to).

As to the likely success of the issue, the growing consensus is that – as I predicted – barring a sudden catastrophic change in the international situation or in the world economy, it will find no lack of buyers and will therefore be a success, though – as The Economist also correctly points out – the Russian government can also borrow on its own domestic financial markets within Russia itself – as it has previously done – if it has to.”

Strong indications the eurobond issue would indeed be a success in fact came within days of my writing that.  In mid March 2016 Gazprom tapped the Swiss capital market looking to raise 500 million Swiss francs ($505 million).  The issue was be four times oversubscribed.

Faced with this situation Western governments had a choice.  They could have bowed to the inevitable accepting that Russia had a right to float a eurobond for which it would have no difficulty finding buyers.  Or they could try to sabotage it.  Not surprisingly they chose the second option.

The result was a sustained campaign by Western governments to sabotage the sale.  This took various forms.  The one that attracted most attention was a campaign to pressure Western banks – some of which had shown an interest in helping Russia place the eurobond – to boycott the sale. 

Other forms received less publicity.  They included warnings to Western fund managers to get their clients to boycott the eurobond. 

There were also legally dubious efforts to prevent Euroclear and Clearview, the main Western bond depositories, from providing clearing services despite trade in the bonds being entirely legal and despite the fact that Euroclear and Clearview are private entities which have agreements with Russia to provide Russia with such services for its bonds.

Western leaders and officials appear to have assumed these steps would stop the sale or would cause its failure with the bonds offered failing to find buyers.

Placing a government bond is a massively complex operation.  It is the job of the banks that manage the sale to place the bonds most advantageously on the market.  That requires deep knowledge of the market in order to achieve the most effective outreach to potential buyers.  There are also immense technical challenges in receiving and processing the bids, in deciding amongst them if the issue is oversubscribed, and in transferring the bonds to the buyers.

A small number of Western banks have the necessary expertise to carry out such operations and do so with great efficiency.  By contrast Russian banks like Sberbank and VTB have little such experience since by comparison with Western banks they are relatively small and have far shorter trading histories.  It is not therefore surprising that Western governments apparently assumed that without help from Western banks the bond sale could not happen or would fail.

As for Euroclear and Clearview, the clearing services they provide not only provide buyers with security for their bonds but mean they can dispose of them electronically without having to go through the cumbersome process of despatching paper certificates.

By mid April Western officials appear to have convinced themselves their campaign to stop the issue had worked.  Under Western government pressure most – though not all – Western banks had pulled out of involvement in the placement.  The banks that were left were smaller ones that do not usually take the lead in making such placements. 

Meanwhile reports circulated that worries about the lack of guaranteed clearing services by Euroclear and Clearview together with Western government warnings were deterring the big Western institutional investors from participating in the bond sale.

The Western financial press – obviously heavily briefed by Western officials – started to report that Russia’s attempt to float the bond was proving to be a failure.  Certain comments by Russian Finance Minister Siluanov that Russia did not actually need to borrow in the international money markets this year (which is true) were misrepresented to mean the sale of the bond had been called off.

The result was that when Russia floated its eurobond a few days ago  – with Russia’s VTB bank acting as the sales manager – the Western financial press was taken by surprise.  This was so even though the plan to float the bond had been announced more than 2 months ago. 

As news of the sale filtered in the Western financial press – again no doubt taking its lead from Western officials – retreated into denial. 

The Financial Times initially called the response “tepid”, reporting the Russians had only raised $1.7 billion out of the $3 billion they were seeking. 

If the Russians had indeed offered bonds worth $3 billion for sale but had only been able to sell bonds to a value of $1.7 billion that report would have been true and it would have been right to call the bond sale a failure.  In fact the Russians offered 8,750 10 year bonds each at a price of $200,000 with an annual yield of 4.75% and sold all of them.  The total asking price of the bonds offered for sale was $1.75 billion (8,750x200k) – exactly the amount which was raised from the sale.   

The Financial Times confused the $1.75 billion of bonds the Russians offered in this one issue with the figure of $3 billion of bonds the Russians say they may sell over the course of the whole year.  VTB – the bank that managed the sale – has confirmed there may be more sales of more bonds later this year.  The Russian Finance Ministry however says this will depend on whether the state of Russia’s budget justifies doing it.

As for the demand for the bonds, the Russians say the offering attracted bids totalling $7 billion ie. the sale was more than three times oversubscribed.  That does not make the response look “tepid”.

As the success of the sale became increasingly clear, the Western financial press switched to saying that demand for the bonds came largely from investors within Russia, or from Russian investors buying the bond from offshore.  They also claimed there was little trading in the bonds in the secondary bond market, and pointed out that the 4.75% annual interest Russia is paying on the bonds is high, which they say is proof that demand for the bonds was weak. 

Why the fact the bond might have been bought principally by Russian investors (investing in a bond issue of their own government) should be a problem is not explained.  However it seems it may not even be true.  The Russians have not provided a precise regional breakdown of all the bids they received.  However they say 70% of the bonds with a value totalling $1.2 billion were sold to foreign investors (a third of them British) and that these foreign investors were not Russians using offshore accounts.  Since the Russians checked all the bids before deciding which of them to accept they are in a position to know.

As for the two other claims – that there was little trading in the bonds in the secondary bond market and about the 4.75% interest rate – they are serve as good examples of the sort of portentous statements Western commentators like to make, which actually mean little and which more often than not – as in this case – simply beg the question.

This was a bond floated by a country – Russia – which is currently under sanctions and which is in conflict with the Western powers.  Its sale was managed without the involvement of any of the big Western banks.  There is for the moment uncertainty as to whether or not the two big depositories, Euroclear and Clearview, will provide clearing services for it.

Of course a bond floated in such circumstances would have to be offered at a higher rate of interest to attract buyers.  Of course some buyers would have doubts about buying it, which together with concerns about the the absence of clearing services provided by Euroclear and Clearview and the non-involvement of the big Western banks no doubt accounts for the alleged lack of trading in the bonds in the secondary bond market.  It tells us nothing about the relative success or failure of the bond sale to make these points.  The real point is that the bond was nonetheless and despite these obstacles successfully sold and that the interest Russia must pay on it – 4.75% – is by no means excessively high and is well below distress levels.  As for the alleged lack of trading in the bond in the secondary bond market, that will almost certainly pick up over time as investors doubts are assuaged.

In summary, not only has Russia successfully floated a bond despite the sanctions and despite the Western campaign to sabotage it, but the bond was heavily oversubscribed and was sold mostly to foreign investors.  Even Russia’s waspish former Finance Minister Alexey Kudrin – a man who has never been shy of talking down Russian economic successes – says the bond issue was a success.   On the facts it is impossible to disagree with him.

That however is only half the story.

Even if the Western campaign to sabotage the bond was on its own terms a failure, it did nonetheless produce a result, though one completely different from the one Western governments intended.  It showed that Russia can float bonds in the international money markets without the help of Western banks and despite the denial of clearing services by Euroclear and Clearview and in the face of a sustained campaign by Western governments to stop it doing so.  Russia has been able to do this by relying on its own institutions first and foremost its own banks.

By campaigning to stop Western banks from participating in the bond sale Western governments ensured that it was a Russian bank – VTB – that managed the sale.  In the process VTB has gained valuable experience in providing this service, making it more capable of doing so again in the future.

The reason the decision was taken to offer bonds worth only $1.75 billion for sale instead of the full $3 billion talked about was almost certainly VTB’s inexperience in managing such a sale, not worries about a lack of buyers.  The same was almost certainly true of the decision to conduct the sale over 2 days rather than one.  The total bids on the first day apparently came to $5 billion so it cannot have been worries about lack of buyers on the first day that lay behind these decisions.  However limiting the offering to $1.75 billion instead of $3 billion and holding the sale over 2 days rather than one is precisely the sort of step that is sensibly taken in order to reduce the pressure on an inexperienced bank and its sales team so as to avoid mistakes. 

The experience VTB has now gained through its successful conduct of the sale will make it more capable of carrying out such sales in future.  As it gains experience it will be able to manage larger sales over shorter periods.  With each offering its reach will grow, extending to more of the high value international investors Russia wants to attract when it sells its bonds.

As for the attempts to block Russia using the clearing services provided by Euroclear and Clearview, these are legally speaking so dubious – given that what is involved are trades in perfectly legal bonds – that if Euroclear and Clearview persist with them they are likely to face legal challenges.   The Russians have confirmed they are in talks with Euroclear and they are almost certainly in discussion with Clearview as well.  No doubt their lawyers – the British law firm Linklaters & Alliance – will be explaining to Euroclear and Clearview during those talks that the Russians are reserving all their legal options and that none have been ruled out.  Given that the attempt to sabotage the sale of the bonds has been a failure there is little point any longer in denying them clearing services.  Probably Euroclear and Clearview have already come round to this view and the probability is they will quietly agree to provide the bonds with the usual clearing services shortly.

The attempt to block Russia’s access to clearing services for its bonds – just like the earlier threats to drive Russia out of the SWIFT interbank payments system and to stop Russian banks from providing debit and credit card services through Visa and MasterCard – in fact exposes the basic fallacy of the West’s whole approach to Russia.  Western politicians and Western officials simply cannot grasp that Russia is as sophisticated a society as their own. 

Ultimately Euroclear and Clearviews are just a depositories, just as SWIFT is just an electronic payment system and Visa and MasterCard are just card providers.  There is no magic about what they do.  Western leaders and officials however always seem to think there is.  It never seems to occur to them that others like the Russians if barred from using them can simply duplicate what they do.  

This pattern of misguided belief in Western superiority – and Russian inferiority – recurs again and again.  Western leaders and Western officials wildly overestimated the effect of the sanctions on Russia, assuming they would result in a credit crunch.   They apparently believed the entire Russian banking system would grind to a stop if it was disconnected from SWIFT and that a threat to do so would panic the Russians into making political concessions.  They also seem to have believed that the mere suggestion that Visa and MasterCard might block debit and credit cards issued by Russian banks would lead to a crisis of confidence in the Russian banking system.

In the event the Russians have had no difficulty meeting their financial obligations despite the sanctions and the anticipated credit crunch has simply not happened.  Meanwhile, in response to the threats to disconnect Russian banks from SWIFT, the Russians have developed their own electronic interbank payment system as a potential alternative to SWIFT.  It was successfully tested earlier this year and though for the moment it is only functioning as a back-up, in the event of Russia’s disconnection from SWIFT it could be activated immediately.  Similarly what the veiled threats to interfere with the operation of Russian debit and credit cars has done is made Russia introduce its own Mir bank card, wholly independent of Visa and MasterCard, both as a back-up and as an alternative to them.

Notwithstanding this record of failure, Western politicians and Western officials seem to have been blinded by the same assumptions of Western superiority – and Russian inferiority – in relation to the recent bond sale.

They seem to have assumed that no Russian bank would be able to duplicate the sort of management of a multi-billion dollar sovereign bond sale that Western banks can provide.  They also seem to have assumed that if Western depositories like Euroclear and Clearview declined to offer the bonds their clearing services that would stop the sale of the bonds dead in its tracks.

In fact Russia already has its own bond depository systems, including ones set up in collaboration with China to provide clearing servicing for bonds issued in Chinese currency.  As Russia increasingly switches to bonds floated in its own currency and in Asian currencies there is no reason why these depository services should not be extended to provide clearing services for all types of bonds that Russia issues.  As a matter of fact, though it has received scant attention, at the same time that Russia was floating its eurobond in the international money markets, it also successfully floated over a 2 week period on its own domestic market three rouble bond issues to a total value of around $600 million.

The biggest mistake of all is however in Western leaders’ failure to understand their own markets. 

At a time when there is a general shortage of safe bonds it should have been obvious that a bond offered by Russia – financially one of the world’s strongest states – which comes with a very good rate of return because of the (relatively) high interest rate would have no difficulty finding buyers since it would be seen as both highly profitable and extremely safe.  Using legally dubious means to try to stop it was frankly foolish and was an invitation to failure.  So of course it has proved.

At its most basic level what it has done is confirm the point I made originally: the Russians are able to raise all the money they need on the international money markets and there is nothing Western governments can do – short of declaring war – to prevent them.

It is however even bigger than that.  By trying to block the Russians from using the services of Western banks and Western depositories to float their bond what Western governments have actually achieved is force the Russians to do it themselves.  The result is that the Russians have now gained knowledge of how to conduct a multi-billion dollar international sovereign bond sale, just as previous Western actions forced them to set up their own electronic interbank payment system in place of SWIFT and create their own Mir bank card. 

Having gained this knowledge the Russians have no reason not to use it and there is no reason to think they won’t.  The Finance Ministry is already saying Russia will in future use only its own banks and depositories when conducting future bond sales.  Perhaps it’s exaggerating but more likely it means what it says.  Why after all shouldn’t it?  

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.

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Second Canadian Citizen Disappears In China

According to the he Globe and Mail, the man was identified as Michael Spavor, a Canadian whose company Peaktu Cultural Exchange brings tourists and hockey players into North Korea.

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Via Zerohedge…


For a trade war that was supposed to be between the US and China, Canada has found itself increasingly in the middle of the crossfire. And so after the arrest of a former Canadian diplomat in Beijing in retaliation for the detention of the Huawei CFO in Vancouver, Canada said a second person has been questioned by Chinese authorities, further heightening tensions between the two countries.

The second person reached out to the Canadian government after being questioned by Chinese officials, Foreign Minister Chrystia Freeland said, at which point Canada lost contact with him. His whereabouts are currently unknown and Global Affairs Canada said they are in contact with his family.

“We haven’t been able to make contact with him since he let us know about this,” Freeland told reporters Wednesday in Ottawa. “We are working very hard to ascertain his whereabouts and we have also raised this case with Chinese authorities.”

According to the he Globe and Mail, the man was identified as Michael Spavor, a Canadian whose company Peaktu Cultural Exchange brings tourists and hockey players into North Korea. He gained fame for helping arrange a visit to Pyongyang by former NBA player Dennis Rodman, and he met North Korean leader Kim Jong Un on that trip, the newspaper reported. Attempts to reach Spavor on his contact number either in China, or North Korean went straight to voicemail.

Spavor’s personal Facebook page contains several images of him with North Korean leader Kim Jong-un including one of him with both Jong-un and former Dennis Rodman at an undisclosed location.

Michael P. Spavor, right, pictured here with North Korean leader Kim Jong-un, second from right, and Dennis Rodman.

Another image shows the two sharing a drink on a boat.

The unexplained disappearance takes place after China’s spy agency detained former Canadian diplomat Michael Kovrig in Beijing on Monday, who was on leave from the foreign service. The arrest came nine days after Canada arrested Huawei Chief Financial Officer Meng Wanzhou at the request of U.S. DOJ. While Canada has asked to see the former envoy after it was informed by fax of his arrest, Canada is unaware of Kovrig current whereabouts or the charges he faces.

“Michael did not engage in illegal activities nor did he do anything that endangered Chinese national security,” Rob Malley, chief executive officer of the ICG, said in a written statement. “He was doing what all Crisis Group analysts do: undertaking objective and impartial research.”

One possibility is that Kovrig may have been caught up in recent rule changes in China that affect non-governmental organizations, according to Bloomberg. The ICG wasn’t authorized to do work in China, Foreign Ministry Spokesperson Lu Kang said during a regular press briefing in Beijing Wednesday.

“We welcome foreign travelers. But if they engage in activities that clearly violate Chinese laws and regulations, then it is totally another story,” he said, adding he had no information on Kovrig specifically.

As Bloomberg further notes, foreign non-governmental organizations are now required to register with the Chinese authorities under a 2017 law that subjects them to stringent reporting requirements. Under the law, organizations without a representative office in China must have a government sponsor and a local cooperative partner before conducting activities. ICG said this is the first time they’ve heard such an accusation from the Chinese authorities in a decade of working with the country. The company closed its Beijing operations in December 2016 because of the new Chinese law, according to a statement. Kovrig was working out of the Hong Kong office.

Meanwhile, realizing that it is increasingly bearing the brunt of China’s retaliatory anger, Trudeau’s government distanced itself from Meng’s case, saying it can’t interfere with the courts, but is closely involved in advocating on Kovrig’s behalf.

So far Canada has declined to speculate on whether there was a connection between the Kovrig and Meng cases, with neither Freeland nor Canadian Trade Minister Jim Carr saying Wednesday that there is any indication the cases are related. Then again, it is rather obvious they are. Indeed, Guy Saint-Jacques, who served as ambassador to China from 2012 to 2016 and worked with Kovrig, says the link is clear. “There’s no coincidence with China.”

“In this case, they couldn’t grab a Canadian diplomat because this would have created a major diplomatic incident,” he said. “Going after him I think was their way to send a message to the Canadian government and to put pressure.”

Even though Meng was granted bail late Tuesday, that did not placate China, whose foreign ministry spokesman said that “The Canadian side should correct its mistakes and release Ms. Meng Wanzhou immediately.”

The tension, according to Bloomberg,  may force Canadian companies to reconsider travel to China, and executives traveling to the Asian country will need to exercise extra caution, said Andy Chan, managing partner at Miller Thomson LLP in Vaughan, Ontario.

“Canadian business needs to look at and balance the reasons for the travel’’ between the business case and the “current political environment,’’ Chan said by email. Chinese officials subject business travelers to extra screening and in some case reject them from entering, he said.

Earlier in the day, SCMP reported that Chinese high-tech researchers were told “not to travel to the US unless it’s essential.”

And so, with Meng unlikely to be released from Canada any time soon, expect even more “Chinese (non) coincidences”, until eventually China does detain someone that the US does care about.

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Multipolar World Order in the Making: Qatar Dumps OPEC

Russia and Qatar’s global strategy also brings together and includes partners like Turkey.

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Authored by Federico Pieraccini via The Strategic Culture Foundation:


The decision by Qatar to abandon OPEC threatens to redefine the global energy market, especially in light of Saudi Arabia’s growing difficulties and the growing influence of the Russian Federation in the OPEC+ mechanism.

In a surprising statement, Qatari energy minister Saad al-Kaabi warned OPEC on Monday December 3 that his country had sent all the necessary documentation to start the country’s withdrawal from the oil organization in January 2019. Al-Kaabi stressed that the decision had nothing to do with recent conflicts with Riyadh but was rather a strategic choice by Doha to focus on the production of LNG, which Qatar, together with the Russian Federation, is one of the largest global exporters of. Despite an annual oil extraction rate of only 1.8% of the total of OPEC countries (about 600,000 barrels a day), Qatar is one of the founding members of the organization and has always had a strong political influence on the governance of the organization. In a global context where international relations are entering a multipolar phase, things like cooperation and development become fundamental; so it should not surprise that Doha has decide to abandon OPEC. OPEC is one of the few unipolar organizations that no longer has a meaningful purpose in 2018, given the new realities governing international relations and the importance of the Russian Federation in the oil market.

Besides that, Saudi Arabia requires the organization to maintain a high level of oil production due to pressure coming from Washington to achieve a very low cost per barrel of oil. The US energy strategy targets Iranian and Russian revenue from oil exports, but it also aims to give the US a speedy economic boost. Trump often talks about the price of oil falling as his personal victory. The US imports about 10 million barrels of oil a day, which is why Trump wrongly believes that a decrease in the cost per barrel could favor a boost to the US economy. The economic reality shows a strong correlation between the price of oil and the financial growth of a country, with low prices of crude oil often synonymous of a slowing down in the economy.

It must be remembered that to keep oil prices low, OPEC countries are required to maintain a high rate of production, doubling the damage to themselves. Firstly, they take less income than expected and, secondly, they deplete their oil reserves to favor the strategy imposed by Saudi Arabia on OPEC to please the White House. It is clearly a strategy that for a country like Qatar (and perhaps Venezuela and Iran in the near future) makes little sense, given the diplomatic and commercial rupture with Riyadh stemming from tensions between the Gulf countries.

In contrast, the OPEC+ organization, which also includes other countries like the Russian Federation, Mexico and Kazakhstan, seems to now to determine oil and its cost per barrel. At the moment, OPEC and Russia have agreed to cut production by 1.2 million barrels per day, contradicting Trump’s desire for high oil output.

With this last choice Qatar sends a clear signal to the region and to traditional allies, moving to the side of OPEC+ and bringing its interests closer in line with those of the Russian Federation and its all-encompassing oil and gas strategy, two sectors in which Qatar and Russia dominate market share.

In addition, Russia and Qatar’s global strategy also brings together and includes partners like Turkey (a future energy hub connecting east and west as well as north and south) and Venezuela. In this sense, the meeting between Maduro and Erdogan seems to be a prelude to further reorganization of OPEC and its members.

The declining leadership role of Saudi Arabia in the oil and financial market goes hand in hand with the increase of power that countries like Qatar and Russia in the energy sectors are enjoying. The realignment of energy and finance signals the evident decline of the Israel-US-Saudi Arabia partnership. Not a day goes by without corruption scandals in Israel, accusations against the Saudis over Khashoggi or Yemen, and Trump’s unsuccessful strategies in the commercial, financial or energy arenas. The path this doomed

trio is taking will only procure less influence and power, isolating them more and more from their opponents and even historical allies.

Moscow, Beijing and New Delhi, the Eurasian powerhouses, seem to have every intention, as seen at the trilateral summit in Buenos Aires, of developing the ideal multipolar frameworks to avoid continued US dominance of the oil market through shale revenues or submissive allies as Saudi Arabia, even though the latest spike in production is a clear signal from Riyadh to the USA. In this sense, Qatar’s decision to abandon OPEC and start a complex and historical discussion with Moscow on LNG in the format of an enlarged OPEC marks the definitive decline of Saudi Arabia as a global energy power, to be replaced by Moscow and Doha as the main players in the energy market.

Qatar’s decision is, officially speaking, unconnected to the feud triggered by Saudi Arabia against the small emirate. However, it is evident that a host of factors has led to this historic decision. The unsuccessful military campaign in Yemen has weakened Saudi Arabia on all fronts, especially militarily and economically. The self-inflicted fall in the price of oil is rapidly consuming Saudi currency reserves, now at a new low of less than 500 billion dollars. Events related to Mohammad bin Salman (MBS) have de-legitimized the role of Riyadh in the world as a reliable diplomatic interlocutor. The internal and external repression by the Kingdom has provoked NGOs and governments like Canada’s to issue public rebukes that have done little to help MBS’s precarious position.

In Syria, the victory of Damascus and her allies has consolidated the role of Moscow in the region, increased Iranian influence, and brought Turkey and Qatar to the multipolar side, with Tehran and Moscow now the main players in the Middle East. In terms of military dominance, there has been a clear regional shift from Washington to Moscow; and from an energy perspective, Doha and Moscow are turning out to be the winners, with Riyadh once again on the losing side.

As long as the Saudi royal family continues to please Donald Trump, who is prone to catering to Israeli interests in the region, the situation of the Kingdom will only get worse. The latest agreement on oil production between Moscow and Riyad signals that someone in the Saudi royal family has probably figured this out.

Countries like Turkey, India, China, Russia and Iran understand the advantages of belonging to a multipolar world, thereby providing a collective geopolitical ballast that is mutually beneficial. The energy alignment between Qatar and the Russian Federation seems to support this general direction, a sort of G2 of LNG gas that will only strengthen the position of Moscow on the global chessboard, while guaranteeing a formidable military umbrella for Doha in case of a further worsening of relations between Saudi Arabia and Qatar.

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Truth and Free Speech Are Being Taken Away From Us

A population that does not respect and defend free speech, debate, and truth will not long have the liberty that results from free speech, debate, and truth.

Paul Craig Roberts

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Authored by Paul Craig Roberts:


Dear Readers:

This is my quarterly request for your support.

Many supporters are now monthly donors. This call is a reminder to those who respond to the quarterly requests and to the many who are yet to respond. In keeping with a decision made by the regular donors, those of limited means are exempt from the request.

Free speech and the ability to speak truth are being shut down. It is happening with the complicity of the print and TV media, the liberal/progressive/left, the US Department of Justice (sic), the law schools and bar associations, Congress, and the federal judiciary.

The attack on Julian Assange is the arrow aimed at the heart of the ability to publish the truth. If a journalist can be indicted for espionage for publishing leaked documents that a corrupt government has classified in order to conceal its crimes, the First Amendment is dead.

Moreover, as the claim is that government was harmed by Wikileaks publishing the truth, Assange’s secret indictment sets the precedent that truth is harmful to government. This precedent will be extended to include the publication of any information or opinion, classified or not, that the government regards as harmful. The media then officially becomes what it mainly already is in effect—a Ministry of Propaganda for the government and those who control it.

As a person who has held high security clearances, I can say with confidence that no more than one percent of classified information falls in the realm of national security. Most classification is simply to prevent the people and Congress from knowing what is going on. Classification allows the various components of government to put the spin where they want it. “National security” has always been an excuse accepted by patriots for the government to conceal its wrong doings and hidden agendas.

Give thought to the alleged harm done by Wikileaks publishing the information leaked by Bradley Manning and the Clinton emails that were downloaded onto a thumb drive and not hacked as security experts have proved. Give thought to the documents proving the warrantless and thereby illegal spying by the NSA that Edward Snowden revealed. How was government hurt by the information? Government should have been hurt, but it was not. The presstitutes did not take up the issue. No one in government was punished for the war crimes, lies, and illegal and unconstitutional acts that the publication of the leaked documents revealed. None of Washington’s vassal governments renounced its vassalage on the basis of the information that revealed they were spied on and deceived. Washington’s vassal governments already knew that Washington lies and deceives them. The Chancellor of Germany simply accepted that Washington listens to her private telephone calls. Vassals simply accept indignities as a consequence of their vassalage. The only people punished were those who revealed the truth—Manning, Snowden, and Assange.

Washington imprisoned Manning and seeks to imprison Assange for damage that Washington did not suffer.

As a country loses its liberty, legal scholars who formerly would have protected liberty turn against it in order to curry favor with power. Recently, I read a specious legal argument that the First Amendment did not really protect Ellsberg and the New York Times when the Pentagon Papers were published, but that no president wanted to be the first one to break the tradition of extending such protection. The author claims that Assange is not protected by the First Amendment even though he is a journalist. The author of the article did not realize that his argument means that journalists have squatters’ rights in First Amendment protection. For the Justice Department to bring a case against Assange means overturning a right that is ensconced in common law as well as in the Constitution.

Washington has shown that it is not interested in any rights but its own to do what it wants. The George W. Bush regime overturned the Constitutional protection of habeas corpus when the regime declared that it could detain citizens indefinitely in prison without presentation of evidence to a court. The Obama regime destroyed due process and the Constitutional right to life when the regime declared that it could assassinate citizens on suspicion alone. Both regimes ignored statutory and Constitutional prohibitions on torture and only punished those who revealed the torture. If Bush and Obama had the right to torture, what was the point of prosecuting those who revealed that torture happened?

As the truth revealed by Wikileaks has had no adverse consequence for Washington, what is the point of Washington’s assault on Assange? In part it is revenge on an individual brazen enough to stand up to Washington, and in part it is to criminalize the telling of truth that is critical of the government.

Once there was a time when the media would have been up in arms in defense of Assange and press freedom. That was before the media was illegally concentrated in a few hands by the Clinton regime and before the media became concentrated ideologically. The media hates Donald Trump and thereby hates Assange for publishing the Hillary emails that the media believes cost Hillary the election. The media is much more intent on helping the Deep State deep-six Assange than the media is in defending its First Amendment protections.

The liberal/progressive/left sees it the same way. The politics of the liberal/progressive/left is Identity Politics, and Identity Politics hates white fly-over America that elected Trump. This is why the media and the liberal/progressive/left are helping the military/security complex tie Assange to Trump, Putin, and “Russiagate.” The Guardian newspaper has destroyed what little credibility it still had by publishing obviously false information concocted to connect Assange to “Russiagate.” See: https://www.paulcraigroberts.org/2018/11/30/the-guardian-is-a-professional-liar-not-a-newspaper/and http://www.informationclearinghouse.info/50715.htm

The military/security complex planted on its media assets the fiction that Assange fled to the Ecuadorian Embassy to escape prosecution for rape.The presstitutes consistently repeat the lie, as Harriet Alexander in the UK Telegraph does, that “Mr Assange fled to the embassy to avoid charges of rape, sexual molestation and coercion. All charges were dropped by May 2017” (http://www.informationclearinghouse.info/50716.htm ).

There were never any such charges filed against Assange. Assange took asylum in the embassy, because it was clear that he was going to be extradited to Washington where he would get a show trial as a spy. It is not possible that Harriet Alexander and the editors at the Telegraph do not know this. Nevertheless, they repeat the lie, the purpose of which is to put Assange in a bad light that will aid his conviction on false charges.

Washington knew that it could tell this lie about Assange raping women because Washington knew that #MeToo and other radical feminists believe that that is what men do, and that #MeToo would be delighted to have yet another celebrity provided for their denunciation.

Washington also knew that its media whores hated Assange for having the integrity and courage that they do not have and that they would willingly stomp him to death with their hobnailed boots.

The US Justice (sic) Department knows it has concocted a false case and intentionally kept it secret, but has no worry because insouciant Americans will believe its indictment regardless.

The judiciary will permit the false case to be tried in a federal court because every judge wants to be elevated rather than criticized and even framed, and the jury will be too afraid to go against Assange’s public conviction in the media to find him innocent.

The jury’s guilty verdict will murder the First Amendment, but the jury will be able to go home to their neighborhoods without being ostracized.

It is not only the government that is attacking free speech. Free speech is under full scale attack by everyone who claims to be “offended,” by the invention of “hate speech” to control what can be said about “victim groups,” by the Israel Lobby that is having laws passed that prohibit the boycotting of Israel for its mistreatment of Palestinians and by equating criticism of the Israeli government with anti-semitism. ( See, for example, https://www.globalresearch.ca/the-film-the-israel-lobby-does-not-want-you-to-see/5661958 ). Twitter, Facebook, and Google are all active in deciding what can and cannot be said. (See, for example,https://www.paulcraigroberts.org/2018/11/30/stating-the-fact-that-men-are-not-women-gets-feminist-banned-from-twitter/ ). Public forums are denied to people who are disapproved of by other people.

A population that does not respect and defend free speech, debate, and truth will not long have the liberty that results from free speech, debate, and truth. This website respects truth, and it requires your support.

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