Russia Proposed Full Normalization of Relations to Trump Administration; Civilian Deaths & Injuries in Donbas Amid Russian Proposal for UN Peacekeepers to Protect OSCE Mission; Putin Orders Refusal of US Dollars at Russian Seaports as Venezuela Drops Dollar and Russia & China Tag Team to Sidestep Dollar; Washington to Expand Green Zone in Kabul as Pentagon Caught Falsifying Weapons Transfers to Syria

Church on Spilled Blood, St. Petersburg; photo by Natylie Baldwin, May 2017

In mid-September CNN reported that Russia had proposed a full restoration of diplomatic ties and a path toward normalization of relations with Washington in the early days of the Trump administration:

Russia offered a plan to the United States for a full and immediate move toward normalization — or a restoration of diplomatic ties — in the opening weeks of President Donald Trump’s administration, the Kremlin confirmed Wednesday.

Kremlin spokesman Dmitry Peskov told reporters on Wednesday that “of course” Russia floated proposals such as this one to the US.

“Moscow systematically advocated for a resumption of the dialogue, for an exchange of opinion and for attempts at finding joint solutions,” Peskov said. “But, unfortunately, it saw no reciprocity.”

As we all know, these proposals went nowhere as Putin’s spokesman said.  So much for Trump being in Putin’s pocket.   The article went on to state that the proposals were submitted through various diplomatic channels at various points.

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Sputnik News has reported that, according to the OSCE Special Monitoring Mission (OSCE SMM),  68 civilians have been killed and over 300 injured since the beginning of this year in the Donbas region.

Recently, Russia proposed to the UN Security Council a plan for UN Peacekeepers to accompany and protect the OSCE SMM, a proposal that was supported by Germany, Austria, and the Donetsk People’s Republic.    According to The Duran:

Russia has formally submitted a draft resolution to the United Nations which calls for the deployment of UN peacekeepers to Donbass in order to shield officials from the Organisation for Security and Cooperation in Europe (OSCE) from violence.

Austria which currently chairs the OSCE welcomed the Russian proposals, according to an official cited by TASS.

Germany’s Foreign Minister also welcomed the move saying that if implemented, it could lead to a detente between Europe and Russia, paving the way for the eventually lifting of anti-Russian sanctions which the EU has enforced since 2014.

The move which calls for UN peacekeepers to engage in direct dialogue between the leaders of the Donetsk and Lugansk People’s Republics as well as the Ukrainian regime in Kiev was met with a generally positive attitude by the leaders of the Donbass Republics who have pledged to carefully review the final proposals in a spirit of cooperation.

Russian President Vladimir Putin who first discussed the proposals at the 9th annual BRICS summit in Xiamen, described Russia’s aims in the following way,

“I consider the presence of peacekeepers, or rather people who would provide security for the OSCE (Organization for Security and Cooperation in Europe) mission, absolutely appropriate, and see nothing wrong with it”.

Unsurprisingly, the proposal is facing opposition from Kiev.  As international law expert, Alexander Mercouris, explains:

However for the same reasons that Putin made the proposal Ukraine opposes it.  Just as the Russians want to secure a ceasefire in the Donbass, so Ukraine adamantly opposes a ceasefire since that might increase pressure on Ukraine to fulfil the political provisions of the February 2015 Minsk Agreement, which are totally unacceptable to Ukraine.

Beyond this there are two points about Putin’s proposal which the Ukrainians must find especially infuriating.

The first is the demand in Putin’s proposal that the remit of the UN peacekeepers be agreed through direct negotiations between the Ukrainian government and the authorities of the Donetsk and Lugansk People’s Republics.

Direct talks between the Ukrainian government and the authorities of the Donetsk and Lugansk People’s Republics were in fact envisaged by the February 2015 Minsk Agreement, which Ukraine has signed.  Such direct talks have however never happened.  The Ukrainian government adamantly opposes them since it correctly sees such talks as conferring legal recognition on the Donetsk and Lugansk People’s Republics as parties to the conflict, thereby admitting that it is an internal Ukrainian conflict (as the Russians say) and not a case of aggression against Ukraine by Russia (as the Ukrainians say).

It is, therefore, unlikely that this plan will be implemented unless enough pressure can be placed by the rest of Europe on Kiev.  I’m uncertain of what kinds of pressure that Europe will realistically impose on the Ukrainian government.  It depends on how truly tired of the Ukrainian mess and the attendant sanctions that Germany and other major players are.  I don’t see them having reached their breaking point yet, however, so this situation will probably continue to limp along as it is – unfortunately for the people of the Donbas who will continue to suffer.

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According to Russian media, Putin has ordered legislation to mandate Russian seaports to stop accepting the U.S. dollar as payment for goods, instead requiring that the ruble be the main currency of trade.   RT reports:

The proposal to switch port tariffs to rubles was first proposed by the president a year and a half ago. The idea was not embraced by large transport companies, which would like to keep revenues in dollars and other foreign currencies because of fluctuations in the ruble.
Artemyev said the decision will force foreigners to buy Russian currency, which is good for the ruble. 

Zerohedge had the following comment on the announcement:

While Russia’s stated motive for the unexpected redenomination of trade at some of its largest trading hubs has to do with domestic economic policies, there is speculation that the timing of this decision has been influenced by the recent diplomatic fallout between the US and Russia, the result of which would be an heightened demand for the ruble, especially since it is rather complicated to find alternative sources for Russia’s largest export by a wide margin: crude.

Meanwhile, the Venezuelan government has announced that it has dropped the petrodollar and will now trade its oil in yuan:

In response to sanctions from Washington, Venezuela has started reporting its oil prices in Chinese yuan, going against the international trend of listing prices in US dollars.

On Friday [September 15th], the weekly Oil Ministry bulletin published its prices for September in yuan, rather than the US dollar. The price-per-barrel posted on Friday was 306.26 yuan, or $46.76 on the more commonly-used exchange rate, up from last week’s price of 300.91 yuan, or $46.15.

“This format is the result of the announcement made on September 7th by the President [Nicolas Maduro]… that Venezuela will implement new strategies to free the country from the tyranny of the dollar,” the Venezuelan Oil Ministry said in a statement.

The decision to move to Chinese currency was made last week as a way to get around the sanctions imposed on Venezuela by the US government in August, which froze some Venezuelan assets and prohibited American citizens from doing business with the country.

Maduro, who is already facing Washington-supported opposition in the country that is contributing to instability, had better make sure he has a competent and trustworthy security apparatus to protect him since he has made the bull’s eye on his back much bigger with this announcement (see Hussein and Qaddafi).

China, for its part, is making time with a lot of countries who are tired of Washington’s shenanigans.  Beijing has recently bought out Qatar’s stake in the Russian state-owned oil company, Rosneft. Qatar purchased the share just last year and now, due to its rivalry with Saudi Arabia, which is trying to economically squeeze Qatar, the country is looking for a quick cash infusion.  Enter China which has its own reasons for the purchase (or bailout, depending on one’s perspective) as explained by financial blogger, Tom Luongo:

Fast forward to today, and Qatar is suffering under heavy pressure from the Saudis blockading their business, the U.S. put stringent sanctions on European banks doing business with the Russian oil and gas sector, and China is being targeted by the Trump administration on multiple fronts. So, while the economics of this deal vis-à-vis Rosneft’s current share price do not make much sense, as Mr. Pirro pointed out, there is a lot more at stake for all involved then simply a few hundred million in share arbitrage that could change in a few days.

China is stepping in here to save not only Intesa, the Italian bank that floated most of the financing for the deal, but also Qatar which gets a major cash infusion in much-needed dollars. Russia further integrates into China’s oil trading system in Shanghai, including the much-discussed futures contract convertible to gold. This disentangles the deal with respect to the new round of US sanctions. In fact, this is a perfect pivot away from those sanctions. Remember, Treasury Secretary Steve Mnuchin made a not-so-veiled threat the other day towards China’s banks and expulsion from the SWIFT system.

Noted geopolitical and financial writer, F. William Engdahl, writes over at New Eastern Outlook, that Russia and China – with their steady purchases of gold – appear to be slowly putting in place the foundation of an alternative international trade currency based in Eurasia:

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

Now it’s clear why.

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

Read the full article here

Journalist Pepe Escobar’s report from the BRICS conference supports this theory.   Escobar writes for the Asia Times that it was Putin’s speech that evidenced that Russia and China are getting serious on providing an alternative to the petrodollar:

And then, Putin delivers the clincher; “Russia shares the BRICS countries’ concerns over the unfairness of the global financial and economic architecture, which does not give due regard to the growing weight of the emerging economies. We are ready to work together with our partners to promote international financial regulation reforms and to overcome the excessive domination of the limited number of reserve currencies.”

“To overcome the excessive domination of the limited number of reserve currencies” is the politest way of stating what the BRICS have been discussing for years now; how to bypass the US dollar, as well as the petrodollar.

Beijing is ready to step up the game. Soon China will launch a crude oil futures contract priced in yuan and convertible into gold.

This means that Russia – as well as Iran, the other key node of Eurasia integration – may bypass US sanctions by trading energy in their own currencies, or in yuan. Inbuilt in the move is a true Chinese win-win; the yuan will be fully convertible into gold on both the Shanghai and Hong Kong exchanges.

The new triad of oil, yuan and gold is actually a win-win-win. No problem at all if energy providers prefer to be paid in physical gold instead of yuan. The key message is the US dollar being bypassed.

Read his full report here

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Washington now plans to “massively” expand the Green Zone in Kabul, Afghanistan, another sign, along with the planned deployment of thousands more soldiers there, that the U.S. intends to stay in the country indefinitely.

Not only does Washington plan to further extend what’s already the longest-running American war in history in Afghanistan, but a new investigative report shows that it’s not giving up on continuing to destabilize Syria with sneaky schemes to transfer weapons to the east of the country.  As Zerohedge reports:

A new bombshell joint report issued by two international weapons monitoring groups Tuesday confirms that the Pentagon continues to ship record breaking amounts of weaponry into Syria and that the Department of Defense is scrubbing its own paper trail. On Tuesday the Organized Crime and Corruption Reporting Project (OCCRP) and the Balkan Investigative Reporting Network (BIRN) produced conclusive evidence that not only is the Pentagon currently involved in shipping up to $2.2 billion worth of weapons from a shady network of private dealers to allied partners in Syria – mostly old Soviet weaponry – but is actually manipulating paperwork such as end-user certificates, presumably in order to hide US involvement.

The OCCRP and BIRN published internal US defense procurement files after an extensive investigation which found that the Pentagon is running a massive weapons trafficking pipeline which originates in the Balkans and Caucuses, and ends in Syria and Iraq. The program is ostensibly part of the US train, equip, and assist campaign for the Syrian Democratic Forces (SDF, a coalition of YPG/J and Arab FSA groups operating primarily in Syria’s east). The arms transfers are massive and the program looks to continue for years.

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