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Juan Cole: China & the Axis of the Sanctioned
By Juan Cole, Consortium News, 5/19/23
A photo Beijing released on March 6 delivered a seismic shock in Washington.
There was Wang Yi, a top foreign Chinese foreign affairs official, standing between Ali Shamkhani, the secretary of Iran’s National Security Council, and Saudi National Security Adviser Musaad bin Mohammed al-Aiban. They were awkwardly shaking hands on an agreement to reestablish mutual diplomatic ties.
That picture should have brought to mind a 1993 photo of President Bill Clinton hosting Israeli Prime Minister Yitzhak Rabin and PLO chief Yasser Arafat on the White House lawn as they agreed to the Oslo Accords. And that long-gone moment was itself an after-effect of the air of invincibility the United States had gained in the wake of the collapse of the Soviet Union and the overwhelming American victory in the 1991 Gulf War.
This time around, the U.S. had been cut out of the picture, a sea change reflecting not just Chinese initiatives but Washington’s incompetence, arrogance, and double-dealing in the subsequent three decades in the Middle East.
An aftershock came in early May as concerns gripped Congress about the covert construction of a Chinese naval base in the United Arab Emirates, a U.S. ally hosting thousands of American troops. The Abu Dhabi facility would be an add-on to the small base at Djibouti on the east coast of Africa used by the People’s Liberation Army-Navy for combating piracy, evacuating noncombatants from conflict zones, and perhaps regional espionage.
China’s interest in cooling off tensions between the Iranian ayatollahs and the Saudi monarchy arose, however, not from any military ambitions in the region but because it imports significant amounts of oil from both countries. Another impetus was undoubtedly Xi’s ambitious Belt and Road Initiative, or BRI, that aims to expand Eurasia’s overland and maritime economic infrastructure for a vast growth of regional trade — with China, of course, at its heart.
China has already invested billions in a China-Pakistan Economic Corridor and in developing the Pakistani Arabian seaport of Gwadar to facilitate the transmission of Gulf oil to its northwestern provinces.
Having Iran and Saudi Arabia on a war footing endangered Chinese economic interests. Remember that, in September 2019, an Iran proxy or Iran itself launched a drone attack on the massive refinery complex at al-Abqaiq, briefly knocking out 5 million barrels a day of Saudi capacity.
Map and satellite imagery of the Abqaiq — Biqayq in Arabic— and Khurais facilities attacked by drones on Sept. 14, 2019. (VOA, Public domain, Wikimedia Commons)
That country now exports a staggering 1.7 million barrels of petroleum daily to China and future drone strikes (or similar events) threaten those supplies. China is also believed to receive as much as 1.2 million barrels a day from Iran, though it does so surreptitiously because of U.S. sanctions.
In December 2022, when nationwide protests forced the end of Xi’s no-Covid lockdown measures, that country’s appetite for petroleum was once again unleashed, with demand already up 22 percent over 2022.
So, any further instability in the Gulf is the last thing the Chinese Communist Party needs right now. Of course, China is also a global leader in the transition away from petroleum-fueled vehicles, which will eventually make the Middle East far less important to Beijing. That day, however, is still 15 to 30 years away.
Things Could Have Been Different
China’s President Xi Jinping with Russian President Vladimir Putin on March 20 in Moscow. (Sergei Karpukhin, TASS)
China’s interest in bringing to an end the Iranian-Saudi cold war, which constantly threatened to turn hotter, is clear enough, but why did those two countries choose such a diplomatic channel?
After all, the United States still styles itself the “indispensable nation.” If that phrase ever had much meaning, however, American indispensability is now visibly in decline, thanks to blunders like allowing Israeli right-wingers to cancel the Oslo peace process, the launching of an illegal invasion of and war in Iraq in 2003 and the grotesque Trumpian mishandling of Iran.
Distant as it may be from Europe, Tehran might nonetheless have been brought into NATO’s sphere of influence, something President Barack Obama spent enormous political capital trying to achieve. Instead, then-President Donald Trump pushed it directly into the arms of Vladimir Putin’s Russian Federation and Xi’s China.
Things could indeed have been different. With the 2015 Joint Comprehensive Plan of Action (JCPOA) nuclear deal, brokered by the Obama administration, all practical pathways for Iran to build nuclear weapons were closed off.
It’s also true that Iran’s ayatollahs have long insisted they don’t want a weapon of mass destruction that, if used, would indiscriminately kill potentially vast numbers of non-combatants, something incompatible with the ethics of Islamic law.
July 14, 2015: U.S. Secretary of State John Kerry, seated, shakes hands in parting with Iranian Foreign Minister Javad Zarif in Vienna after Zarif read a declaration of the nuclear agreement in his native Farsi. (State Department)
Whether one believes that country’s clerical leaders or not, the JCPOA made the question moot, since it imposed severe restrictions on the number of centrifuges Iran could operate, the level to which it could enrich uranium for its nuclear plant at Bushehr, the amount of enriched uranium it could stockpile, and the kinds of nuclear plants it could build.
According to the inspectors at the U.N.’s International Atomic Energy Agency, Iran faithfully implemented its obligations through 2018 and — consider this an irony of our Trumpian times — for such compliance it would be punished by Washington.
Iran’s Ayatollah Ali Khamenei only permitted President Hassan Rouhani to sign that somewhat mortifying treaty with the permanent members of the U.N. Security Council in return for promised relief from Washington’s sanctions (that they never got).
In early 2016, the Security Council did indeed remove its own 2006 sanctions on Iran. That, however, proved a meaningless gesture because by then Congress, deploying the Department of the Treasury’s Office of Foreign Assets Control, had slapped unilateral American sanctions on Iran and, even in the wake of the nuclear deal, congressional Republicans refused to lift them. They even nixed a $25 billion deal that would have allowed Iran to buy civilian passenger jets from Boeing.
Worse yet, such sanctions were designed to punish third parties that contravened them. French firms like Renault and TotalEnergies were eager to jump into the Iranian market but feared reprisals. The U.S. had, after all, fined French bank BNP $8.7 billion for skirting those sanctions and no European corporation wanted a dose of that kind of grief.
In essence, congressional Republicans and the Trump administration kept Iran under such severe sanctions even though it had lived up to its side of the bargain, while Iranian entrepreneurs eagerly looked forward to doing business with Europe and the United States.
In short, Tehran could have been pulled inexorably into the Western orbit via increasing dependence on North Atlantic trade deals, but it was not to be.
And keep in mind that Israeli Prime Minister (then as now) Benjamin Netanyahu had lobbied hard against the JCPOA, even going over Obama’s head in an unprecedented fashion to encourage Congress to nix the deal.
March 3, 2015: Israel’s Prime Minister Benjamin Netanyahu addresses a joint meeting of Congress. (Speaker John Boehner, Flickr, CC BY-NC 2.0)
That effort to play spoiler failed — until, in May 2018, Trump simply tore up the treaty. Netanyahu was caught on tape boasting that he had convinced the gullible Trump to take that step. Although the Israeli right wing insisted that its greatest concern was an Iranian nuclear warhead, it sure didn’t act that way. Sabotaging the 2015 deal actually freed that country from all constraints.
Netanyahu and like-minded Israeli politicians were, it seems, upset that the JCPOA only addressed Iran’s civilian nuclear enrichment program and didn’t mandate a rollback of Iranian influence in Lebanon, Iraq, and Syria, which they apparently believed to be the real threat.
Trump went on to impose what amounted to a financial and trade embargo on Iran. In its wake, trading with that country became an increasingly risky proposition. By May 2019, Trump had succeeded handsomely by his own standards (and those of Netanyahu).
He had managed to reduce Iran’s oil exports from 2.5 million barrels a day to as little as 200,000 barrels a day. That country’s leadership nonetheless continued to conform to the requirements of the JCPOA until mid-2019, after which they began flaunting its provisions. Iran has now produced highly enriched uranium and is much closer to being capable of making nuclear weapons than ever before, though it still has no military nuclear program and the ayatollahs continue to deny that they want such weaponry.
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In reality, Trump’s “maximum pressure campaign” did anything but destroy Tehran’s influence in the region. In fact, if anything, in Lebanon, Syria, and Iraq the power of the ayatollahs was only strengthened.
After a while, Iran also found ways to smuggle its petroleum to China, where it was sold to small private refineries that operated solely for the domestic market. Since those firms had no international presence or assets and didn’t deal in dollars, the Treasury Department had no way of moving against them.
In this fashion, Trump and congressional Republicans ensured that Iran would become deeply dependent on China for its very economic survival — and so also ensured the increasing significance of that rising power in the Middle East.
The Saudi Reversal
Crown Prince of Saudi Arabia Mohammad bin Salman in 2019. (Kremlin)
When Russia invaded Ukraine in February 2022, oil prices spiked, benefiting the Iranian government. The Biden administration then imposed the kind of maximum-pressure sanctions on the Russian Federation that Trump had levied against Iran. Unsurprisingly, a new Axis of the Sanctioned has now formed, with Iran and Russia exploring trade and arms deals and Iran allegedly providing drones to Moscow for its war effort in Ukraine.
As for Saudi Arabia, its de facto leader, Crown Prince Mohammed bin Salman, recently seemed to get a better set of advisers. In March 2015, he had launched a ruinous and devastating war in neighboring Yemen after the Zaydi Shiite “Helpers of God,” or Houthi rebels, took over the populous north of that country.
Since the Saudis were primarily deploying air power against a guerrilla force, their campaign was bound to fail. The Saudi leadership then blamed the rise and resilience of the Houthis on the Iranians. While Iran had indeed provided some money and smuggled some weapons to the Helpers of God, they were a local movement with a long set of grievances against the Saudis. Eight years later, the war has sputtered to a devastating stalemate.
The Saudis had also attempted to counter Iranian influence elsewhere in the Arab world, intervening in the Syrian civil war on the side of fundamentalist Salafi rebels against the government of autocrat Bashar al-Assad.
In 2013, Lebanon’s Shiite Hezbollah militia joined the fray in support of al-Assad and, in 2015, Russia committed air power there to ensure the rebels’ defeat. China had also backed al-Assad (though not militarily) and played a quiet role in the post-war reconstruction of the country.
As part of that recent China-brokered agreement to reduce tensions with Iran and its regional allies, Saudi Arabia just spearheaded a decision to return the al-Assad government to membership in the Arab League (from which it had been expelled in 2011 at the height of the Arab Spring revolts).
By late 2019, in the wake of that drone attack on the Abqaiq refineries, it was already clear that Bin Salman had lost his regional contest with Iran and Saudi Arabia began to seek some way out.
Among other things, the Saudis reached out to the Iraqi prime minister of that moment, Adil Abdel Mahdi, asking for his help as a mediator with the Iranians. He, in turn, invited General Qasem Soleimani, the head of the Jerusalem Brigade of the Iranian Revolutionary Guards Corps, to Baghdad to consider a new relationship with the House of Saud.
Demonstrations in Iran over the killing of Qassem Soleimani. (Fars News Agency, CC BY 4.0, Wikimedia Commons)
As few will forget, on Jan. 3, 2020, Soleimani flew to Iraq on a civilian airliner only to be assassinated by an American drone strike at Baghdad International Airport on the orders of Trump who claimed he was coming to kill Americans.
Did Trump want to forestall a rapprochement with the Saudis? After all, marshaling that country and other Gulf states into an anti-Iranian alliance with Israel had been at the heart of his son-in-law Jared Kushner’s “Abraham Accords.”
The Rise of China, the Fall of America
Washington is now the skunk at the diplomats’ party. The Iranians were never likely to trust the Americans as mediators. The Saudis must have feared telling them about their negotiations lest the equivalent of another Hellfire missile be unleashed. As 2022 ended, Xi actually visited the Saudi capital Riyadh, where relations with Iran were evidently a topic of conversation.
This February, Iranian President Ebrahim Raisi traveled to Beijing by which time, according to the Chinese Foreign Ministry, Xi had developed a personal commitment to mediating between the two Gulf rivals. Now, a rising China is offering to launch other Middle Eastern mediation efforts, while complaining “that some large countries outside the region” were causing “long-term instability in the Middle East” out of “self-interest.”
China’s new prominence as a peacemaker may soon extend to conflicts like the ones in Yemen and Sudan. As the rising power on this planet with its eye on Eurasia, the Middle East, and Africa, Beijing is clearly eager to have any conflicts that could interfere with its Belt and Road Initiative resolved as peaceably as possible.
Although China is on the cusp of having three aircraft carrier battle groups, they continue to operate close to home and American fears about a Chinese military presence in the Middle East are, so far, without substance.
Where two sides are tired of conflict, as was true with Saudi Arabia and Iran, Beijing is clearly now ready to play the role of the honest broker.
Its remarkable diplomatic feat of restoring relations between those countries, however, reflects less its position as a rising Middle Eastern power than the startling decline of American regional credibility after three decades of false promises (Oslo), debacles (Iraq) and capricious policy-making that, in retrospect, appears to have relied on nothing more substantial than a set of cynical imperial divide-and-rule ploys that are now so been-there, done-that.
Juan Cole, a TomDispatch regular, is the Richard P. Mitchell collegiate professor of history at the University of Michigan. He is the author of The Rubaiyat of Omar Khayyam: A New Translation From the Persian and Muhammad: Prophet of Peace Amid the Clash of Empires. His latest book is Peace Movements in Islam. His award-winning blog is Informed Comment. He is also a non-resident Fellow of the Center for Conflict and Humanitarian Studies in Doha and of Democracy for the Arab World Now (DAWN).
This article is from TomDispatch.com.
Medea Benjamin & Nicholas JS Davies: G7 Versus Diplomacy for Ukraine
By Medea Benjamin & Nicholas JS Davies, Consortium News, 5/31/23
When Japan invited the leaders of Brazil, India and Indonesia to attend the G7 summit in Hiroshima, there were glimmers of hope that it might be a forum for these rising economic powers from the Global South to discuss their advocacy for peace in Ukraine with the wealthy Western G7 countries that are militarily allied with Ukraine and have so far remained deaf to pleas for peace.
But it was not to be. Instead, the Global South leaders were forced to sit and listen as their hosts announced their latest plans to tighten sanctions against Russia and further escalate the war by sending U.S.-built F-16 warplanes to Ukraine.
The G7 summit stands in stark contrast to efforts of leaders from around the world who are trying to end the conflict. In the past, the leaders of Turkey, Israel and Italy have stepped up to try to mediate. Their efforts were bearing fruit back in April 2022, but were blocked by the West, particularly the U.S. and U.K., which did not want Ukraine to make an independent peace agreement with Russia.
Now that the war has dragged on for over a year with no end in sight, other leaders have stepped forward to try to push both sides to the negotiating table. In an intriguing development, Denmark, a NATO country, has stepped forward to offer to host peace talks. On May 22, just days after the G7 meeting, Danish Foreign Minister Lars Løkke Rasmussen said that his country would be ready to host a peace summit in July if Russia and Ukraine agreed to talk.
“We need to put some effort into creating a global commitment to organize such a meeting,” said Rasmussen, mentioning that this would require getting support from China, Brazil, India and other nations that have expressed interest in mediating peace talks. Having an EU and NATO member promoting negotiations may well reflect a shift in how Europeans view the path forward in Ukraine.
Also reflecting this shift is a report by Seymour Hersh, citing U.S. intelligence sources, that the leaders of Poland, Czechia, Hungary and the three Baltic states, all NATO members, are talking to Ukraine’s President Volodymyr Zelensky about the need to end the war and start rebuilding Ukraine so that the 5 million refugees now living in their countries can start to return home.
On May 23, right-wing Hungarian President Viktor Orban said, “Looking at the fact that NATO is not ready to send troops, it’s obvious that there is no victory for poor Ukrainians on the battlefield,” and that the only way to end the conflict was for Washington to negotiate with Russia.
Meanwhile, China’s peace initiative has been progressing, despite U.S. trepidation. Li Hui, China’s special representative for Eurasian affairs and former ambassador to Russia, has met with Russian President Vladimir Putin, Zelensky, Ukraine’s Foreign Minister Dmytro Kuleba and other European leaders to move the dialogue forward. Given its position as both Russia’s and Ukraine’s top trading partner, China is in a good position to engage with both sides.
Lula Appoints Peace Envoy
Another initiative has come from President Lula da Silva of Brazil, who is creating a “peace club” of countries from around the world to work together to resolve the conflict in Ukraine. He appointed renowned diplomat Celso Amorim as his peace envoy.
Amorim was Brazil’s foreign minister from 2003 to 2010, and was named the “world’s best foreign minister” in Foreign Affairs magazine. He also served as Brazil’s defense minister from 2011 to 2014, and is now Lula’s chief foreign policy adviser. Amorim has already had meetings with Putin in Moscow and Zelenskyy in Kyiv, and was well received by both parties.
On May 16, South African President Cyril Ramaphosa and other African leaders stepped into the fray, reflecting just how seriously this war is affecting the global economy through rising prices for energy and food. Ramaphosa announced a high-level mission by six African presidents, led by President Macky Sall of Senegal. He served, until recently, as Chairman of the African Union and, in that capacity, spoke out forcefully for peace in Ukraine at the U.N. General Assembly in September 2022.
The other members of the mission are Presidents Denis Sassou Nguesso of Congo, Abdel Al-Sisi of Egypt, Yoweri Musevini of Uganda and Hakainde Hichilema of Zambia. The African leaders are calling for a ceasefire in Ukraine, to be followed by serious negotiations to arrive at “a framework for lasting peace.” U.N. Secretary-General Guterres has been briefed on their plans and has “welcomed the initiative.”
Pope Francis and the Vatican are also seeking to mediate the conflict. “Let us not get used to conflict and violence. Let us not get used to war,” the pope preached. The Vatican has already helped facilitate successful prisoner exchanges between Russia and Ukraine, and Ukraine has asked for the pope’s help in reuniting families that have been separated by the conflict. A sign of the pope’s commitment is his appointment of veteran negotiator Cardinal Matteo Zuppi as his peace envoy. Zuppi was instrumental in mediating talks that ended civil wars in Guatemala and Mozambique.
Will any of these initiatives bear fruit? The possibility of getting Russia and Ukraine to talk depends on many factors, including their perceptions of potential gains from continued combat, their ability to maintain adequate supplies of weapons, and the growth of internal opposition. But it also depends on international pressure, and that is why these outside efforts are so critical and why U.S. and NATO countries’ opposition to talks must somehow be reversed.
The U.S. rejection or dismissal of peace initiatives illustrates the disconnect between two diametrically opposed approaches to resolving international disputes: diplomacy vs. war. It also illustrates the disconnect between rising public sentiment against the war and the determination of U.S. policymakers to prolong it, including most Democrats and Republicans.
A growing grassroots movement in the U.S. is working to change that:
- In May, foreign policy experts and grassroots activists put out paid advertisements in The New York Times and The Hill to urge the U.S. government to be a force for peace. The Hill ad was endorsed by 100 organizations around the country, and community leaders organized in dozens of congressional districts to deliver the ad to their representatives.
- Faith-based leaders, over 1,000 of whom signed a letter to President Biden in December calling for a Christmas Truce, are showing their support for the Vatican’s peace initiative.
- The U.S. Conference of Mayors, an organization that represents about 1,400 cities throughout the country, unanimously adopted a resolution calling on the President and Congress to “maximize diplomatic efforts to end the war as soon as possible by working with Ukraine and Russia to reach an immediate ceasefire and negotiate with mutual concessions in conformity with the United Nations Charter, knowing that the risks of wider war grow the longer the war continues.”
- Key U.S. environmental leaders have recognized how disastrous this war is for the environment, including the possibility of a catastrophic nuclear war or an explosion in a nuclear power plant, and have sent a letter to President Biden and Congress urging a negotiated settlement.
- On June 10-11, U.S. activists will join peacemakers from all over the world in Vienna, Austria, for an International Summit for Peace in Ukraine.
- Some of the contenders running for president, on both the Democratic and Republican tickets, support a negotiated peace in Ukraine, including Robert F. Kennedy and Donald Trump.
The initial decision of the United States and NATO member countries to try to help Ukraine resist the Russian invasion had broad public support.
However, blocking promising peace negotiations and deliberately choosing to prolong the war as a chance to “press” and “weaken” Russia changed the nature of the war and the U.S. role in it, making Western leaders active parties to a war in which they will not even put their own forces on the line. [Consortium News argues that the nature of the war didn’t change; it was the nature of the Western war from the beginning.]
Must our leaders wait until a murderous war of attrition has killed an entire generation of Ukrainians, and left Ukraine in a weaker negotiating position than it was in April 2022, before they respond to the international call for a return to the negotiating table?
Or must our leaders take us to the brink of World War III, with all our lives on the line in an all-out nuclear war, before they will permit a ceasefire and a negotiated peace?
Medea Benjamin is co-founder of Global Exchange and CODEPINK: Women for Peace. She is the co-author, with Nicolas J.S. Davies, of War in Ukraine: Making Sense of a Senseless Conflict, available from OR Books in November 2022. Other books include, Inside Iran: The Real History and Politics of the Islamic Republic of Iran (2018); Kingdom of the Unjust: Behind the U.S.-Saudi Connection (2016); Drone Warfare: Killing by Remote Control (2013); Don’t Be Afraid Gringo: A Honduran Woman Speaks from the Heart (1989), and with Jodie Evans, Stop the Next War Now (2005).
Nicolas J. S. Davies is an independent journalist and a researcher with CODEPINK. He is the co-author, with Medea Benjamin, of War in Ukraine: Making Sense of a Senseless Conflict, available from OR Books and the author of Blood On Our Hands: the American Invasion and Destruction of Iraq.
This article is from Common Dreams.
It’s time for Russia to turn inward
Emphasis in original. – Natylie
Edward Slavsquat is a moniker sometimes used by Riley Waggaman, an American writer and journalist who has lived in Russia for close to a decade. He has contributed to many websites, including Anti-Empire, Russian Faith, Brownstone Institute, Unlimited Hangout, and Geopolitics & Empire. He worked for Press TV, Russia Insider, and RT before going solo.
By Edward Slavsquat (Riley Waggaman), Substack, 5/20/23
Close your eyes and imagine that the United States is swallowed by a giant sinkhole.
Within a matter of seconds, Earth is instantly and permanently dedollarized. Suddenly, as if roused from deep hypnosis, the world’s money-grubbing elites see the error of their ways, and renounce Moloch.
This great awakening is keenly felt in Moscow.
Spiritual enlightenment pulsates through Russia’s halls of power; the unapologetic nepotism, greed, cynicism, and insolence—the institutionalization of perverse untruths—all gone.
Instead of using embezzled funds to buy super-yachts with hulls that span three time zones, Russia’s judicious public servants and God-fearing “entrepreneurs” build hospitals and roads and other useful, life-nurturing things.
Nikolai Gogol predicted this wonderful turn of events in his famous novel, Dead Souls: Once Russia Dumps The Dollar, Our Souls Will Feel Much Better.
Yes, even back in 1842, US dollar hegemony was the leading cause of needless suffering in Russia. But this multi-generational nightmare has finally come to an end.
If only Gogol could have lived to see it…
You can open your eyes now.
For far too many decades, Washington has wielded dollar hegemony to carry out a global campaign of extortion and outright terror. That is to say, our current global financial system is a bit unsound; it should be replaced with something different. It will be, eventually.
But whether the global reserve currency is the US dollar, or Pokémon cards, or a digital ruble pegged to borscht, nothing will fundamentally change for Russians if their political elites continue their time-honored tradition of stubbornly refusing to invest in Russia.
Even now, when the stakes are rather high—and becoming increasingly higher—Moscow has shown little interest in harnessing the country’s vast natural wealth for the betterment of ordinary Russians.
In fact, even as Russia is practically donating oil and gas to its many “trusted partners”, Gazprom is pursuing a policy of price “liberalization” at home. (That’s a euphemism for “unrestricted price hikes”, in case you were wondering.)
Well, there’s no such thing as discounted oil—someone, somewhere, has to pay for it. And why not the Russian people?
Dedollarization and Russia’s “turn to the East” won’t amount to much without comprehensive deoligarchization, and the adoption of a new economic model, which prioritizes domestic development and social uplift over servicing the needs of foreign “partners”.
There’s a lot to discuss. Let’s use oil-for-rupees as a springboard.
On May 4, your humble correspondent described oil-for-rupees as a face-melting farce. Mostly because Moscow was trading discounted oil for currency it didn’t need and couldn’t even use, while New Delhi sold its refined Urals crude to the West—for dollars and euros, obviously.
On May 5, Russian Foreign Minister Sergei Lavrov called an emergency press conference, and with the cameras rolling, announced that “everything Edward Slavsquat said about oil-for-rupees is absolutely 100% correct; he is a very astute and handsome young man.”
That’s a paraphrase. In Lavrov’s own words:
[Russia has] billions of rupees in Indian bank accounts, and we need to use this money. But for this, rupees must be converted into other currencies. This is being discussed.
Alas, this is not exactly news. Russian media quickly realized Moscow was getting the fuzzy end of the lollipop after this settlement scheme was introduced in mid-December.
The lopsided deal was aptly summarized by a Russian economist back in March:
A huge trade imbalance is forming in Russian-Indian trade, and Russian banks [with vostro accounts in India] are already refusing to accept rupees: they do not want to accumulate surpluses of Indian currency, since there is nowhere to use them.
In other words, it turned out that oil companies, in general, gave India “oil for nothing.”
There hasn’t been much progress towards converting Russia’s mountain of rupees into currencies that Moscow can actually use. But credit where credit is due: New Delhi announced earlier this week that it would allow Russia to dip into its stockpile of rupees to settle outstanding debts.
Of course, in an ideal world, Russia would be allowed to convert its rupees into rubles, and then use these rubles to help plug its ballooning budget deficit.
But I digress.
Oil-for-rupees (which, just to avoid any confusion, has been shelved for the time being, and was probably phased out, quietly, by the end of February) is symptomatic of a much larger economic woe.
As a result of 10,000+ Western sanctions (and an energy embargo that is not actually enforced), Beijing and New Delhi currently account for an estimated 70–90% of Moscow’s oil exports, up from 45% in August. (China deserves a separate blog post. Stay tuned.)
Because Moscow has spent the last 30 years serving as a resource conveyor belt for the West, and because the domestic market was completely neglected, Russia is now at the mercy of the East. Moscow may be pivoting to Asia, but India and China dictate the terms.
India has been inhaling Urals crude at a discount. How big of a discount? We don’t know exactly, but the Indian government disclosed last month that most of the oil supplied by Russia was bought for less than $60/barrel—below the price ceiling set in December by the G7, Australia, and the European Union.
Moscow seems to have accepted the fact that New Delhi isn’t willing to defy Western dictates: At the end of April, Russian President Vladimir Putin signed a decree allowing oil sales to “friendly countries” that comply with the $60/barrel price cap. A rather revelatory capitulation.
The mere fact that Russia agreed (even if only temporarily) to trade oil for a currency that isn’t fully convertible, and isn’t particularly useful, should be evidence enough that New Delhi is taking full advantage of the situation. And who could blame them?
Considering Russian energy majors are willing to exchange “oil for nothing”—and pay Kiev to transit gas across Ukraine—maybe they could find it in their hearts to install gas lines in Russian schools?
“Unfortunately, a large number of schools in our country have not yet been gasified. I looked at the figures: to be honest, even I was surprised—a lot [of schools are without gas],” Putin said in July.
This is not a problem limited to schools, unfortunately.
A Russian government audit published in 2020 found that hundreds medical facilities across the country were without running water or central heating.
Proposal: Gazprom should build a gas pipeline to Russia. They could call it SchoolStream.
Much of what I’ve just typed was pointed out by Sergei Levchenko, Deputy Chairman of the State Duma Energy Committee, during an interview last month with Free Press.
After Levchenko commented on the seemingly inevitable introduction of “price liberalization” at home (tariffs for gas are already raised every year, although the price is set by regulators), the interviewer turned to Russia’s “pivot to the East”:
Free Press: [Moscow] is now deploying our entire hydrocarbon pipeline, let’s call it that, to the east, to China and India. Well, there’s nothing to hide: They will take advantage of the situation, they will ask for discounts and so on. That is, it will be very painful for our domestic economy. Are such fears correct?
Levchenko: Absolutely correct … We have been trying for a long time to become the periphery not only of the West, but also of the East … We have created a situation in our country where we only serve others with the help of our hydrocarbons.
The Duma Deputy then elaborated on how this economic model came into being:
The representatives of the state work mainly for our commodity oligarchs, and they primarily search for ways to get into peoples’ pockets. As a result, we have tens of millions of people who live below and near the poverty line, and at the same time we have about 100 “dollar billionaires”. Do you think that the representatives of these dollar billionaires are going to take money from their owners? No, of course not—it is the people who should be burdened. […]
And where do dollar billionaires, who send money abroad, come from? We need to develop the country, and not allow the rich to squeeze us, to continue to make money and place it somewhere in [foreign] banks, or bury gold coins abroad. […]
We simply need to invest in the country … The [ruling elite] don’t know how to develop the country, they don’t know how to take care of the people. They only know how to squeeze and send; squeeze, send. They are great specialists here, but they were taught in the West.
(I have nothing to add here, but I sent Levchenko’s comments to Karine Bechet-Golovko, a visiting professor at Moscow State University, who had some very thought-provoking things to say. The interview will be published in the nearest future.)
Interestingly, the core of Levchenko’s argument found its way into the pages of Russian state media in March.
Russian economist Mikhail Khazin (who is very pro-Putin) told RIA Novosti:
Russia shouldn’t turn to the East—it should turn inward. The turn to the East, which we are talking about so much today, is, in my deep conviction, just an attempt to plug the holes that have formed in the country after the departure of Western companies.
To summarize: It’s time for Russia to turn inward. It’s long, long overdue, really.
Kevin Gosztola: British Counter-Terrorism Police Detain And Interrogate British Journalist At Airport
By Kevin Gosztola, The Dissenter, 5/31/23
Kit Klarenberg, a British journalist previously published by The Dissenter, was detained and interrogated by British counter-terrorism police when he arrived at the London Luton Airport on May 19.
Police were particularly interested in his reports for The Grayzone and seized his electronic devices.
The incident was reported by The Grayzone, where Klarenberg regularly covers the British military and security services and their influence over media organizations in the United Kingdom.
Klarenberg was traveling from his home in Belgrade, Serbia, to visit family and friends. He was surrounded by police and issued a “Notice of Detention under Schedule 3 to the Counter-Terrorism and Border Security Act 2019” after he exited the airplane.
Under the notice, police required Klarenberg to answer questions from police, provide any information that was requested, including PINs and passcodes to his electronics, declare whether he had any documents “of a kind specified” by police, and cooperate with any searches of his person or property.
Police also instructed Klarenberg to refrain from obstructing or interfering with officers as they took photographs, fingerprints, and DNA samples, which were authorized by the police superintendent. If he failed to comply, he was told that he would face prosecution.
The Grayzone posted a “communique” from a British police detective on July 27, 2022, which had notified Klarenberg of an investigation into “allegations” that related to “offenses of harassment, malicious communication and offenses under the computer misuse act.”
The “communique” was a response to Klarenberg’s reporting on anonymously leaked emails and documents that detailed U.K. intelligence-linked plots against academics and journalists, including The Grayzone.
Although Klarenberg was later notified by the Metropolitan Police that the matter was closed and he would not be arrested if he “attended” the U.K. in the future, that notification prepared him to anticipate potential harassment when he traveled.
Police in the U.K. “demanded to know why Klarenberg lived in Serbia,” according to Grayzone founder Max Blumenthal. They wanted to know the names of websites that published his journalism, and they were primarily focused on his work for The Grayzone.
Klarenberg was asked how much The Grayzone paid him, “how often, and into which bank account.” He was asked who owned the site and how regular his interactions were with Blumenthal.
Detractors have repeated a range of unproven and false claims about The Grayzone, where they allege that the website receives “opaque” funding and so Blumenthal must be receiving support from within Russia when considering how United States foreign policy is covered.
Naturally, that inspired the counter-terrorism police to ask if The Grayzone had some “agreement” with “Russia’s Federal Security Bureau (FSB) to publish hacked material.” They wanted to know if Klarenberg had any contact with “FSB operatives” or if he was in contact with “current or former personnel of Russian state media.” They even explicitly asked if The Grayzone was “sponsored by Russia.”
“Throughout the interview, the counter-terrorism police probed Klarenberg aggressively on his political affiliations and beliefs,” Blumenthal added. “Was he involved in any activist causes in Belgrade? What did he think of the Russian government? Did he have an opinion on Russia’s arrest of Evan Gerskovich of the Wall Street Journal? What did he think of Rishi Sunak? One officer complained incessantly about Keir Starmer being ‘useless,’ prompting Klarenberg to wonder if the comments were a dangle aimed at drawing him out.”
The U.K. government amended their terrorism law in 2019 to grant police new powers to “stop, question, search, and detain a person at a U.K. port or the Northern Ireland border area.” Police were authorized to use the powers to determine “whether a person appears to be someone who is or has been in engaged in hostile activity.”
If the police decide under Schedule 3 that a person, like Klarenberg, presents some type of “counter-terrorism” threat, they are supposed to notify the person that they are now being questioned under Schedule 7 of the U.K.’s terrorism law, which was adopted in 2000. (It does not appear Klarenberg was ever questioned for a “counter-terrorism purpose.”)
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British counter-terrorism police invoked Schedule 7 in April when they questioned and arrested French publisher Ernest Moret, the foreign rights manager for Editions La Fabrique, after he arrived in London on to attend the London Book Fair.
Police detained Moret and demanded that he give authorities his phone and pass codes. They asked him about his involvement in protests against pension reform in France. When he refused to share his pass codes, officers arrested Moret for “obstruction.”
Verso Books senior editor Sebastian Budgen told The Nation Magazine that British officers “threatened [Moret] saying he would never be able to travel again because he’d be labeled a terrorist.” Authorities also “boasted that the UK’s the only country where authorities can download and keep information from private devices.”
Officers seized Moret’s computer and phone. Although he was released after authorities jailed him overnight, he was threatened with prosecution.
Similarly, police seized a tablet, two memory cards, and an “old SD card, mostly containing music,” from Klarenberg. Everything but the SD card was returned a week later, and Klarenberg was informed that he remains under investigation.
Natasha Hakimi Zapata wrote in the same article for The Nation, “The Terrorism Act of 2000, passed prior to the September 11 attacks under Labour Prime Minister Tony Blair’s government, is indeed one of the most far-reaching anti-terrorism laws in Europe—if not the world.”
“While application of the law has been found to disproportionately discriminate against people from marginalized ethnicities and religions—especially Muslims, in the wake of September 11—Brazilian politician David Miranda was detained for nine hours at London’s Heathrow Airport in 2014. Miranda was carrying sensitive data from NSA whistleblower Edward Snowden to his partner, journalist Glenn Greenwald, and—just as in Moret’s case—Schedule 7 of the 2000 act was cited.”
“Both Britain’s High Court and Court of Appeal have maintained that the stop was ‘lawful’ because of ‘pressing national security concerns,’ despite also admitting that it was ‘an indirect interference with press freedom,’” Zapata added.
WikiLeaks founder Julian Assange has been detained by the U.K. government at the behest of the U.S. government for over 4 years. The U.S. government is prosecuting him for journalism that he produced back in 2010 and 2011.
His wife Stella Assange highlighted the incidents against Klarenberg and Moret and warned journalists and publishers who travel to the UK: “Expect to be interrogated at the border and charged under terrorism legislation in relation to your publishing activity.”