Washington’s “replacement strategy” for sanctioned imports of oil and gas from Russia appears to be to move closer to its bitter oil-producing enemies Iran and Venezuela.
Russia’s official blacklist of hostile sanctioning nations includes the United States, the EU, Canada and, in Asia, Japan, South Korea, Taiwan and Singapore (the only one in Southeast Asia). Notice how that “international community” continues to shrink.
The global South should be aware that no nation in West Asia, Latin America or Africa has joined Washington’s sanctions bandwagon.
Moscow has not even announced its own counter-sanctions package. Yet an official decree “On the temporary order of obligations to certain foreign creditors”, which allows Russian companies to settle their debts in rubles, provides a clue as to what will happen.
The Russian countermeasures all revolve around this new presidential decree, signed last Saturday, which economist Yevgeny Yushchuk calls a “retaliatory nuclear mine”.
It works like this: To pay off loans obtained by a sanctioning country that exceed 10 million rubles per month, Russian companies do not have to make wire transfers. They ask a Russian bank to open a corresponding ruble account in the name of the creditor. So the company transfers rubles to this account at the current exchange rate and it’s all perfectly legal.
Payments in foreign currencies pass through the Central Bank only on a case-by-case basis. They must receive special permission from the Government Commission for the Control of Foreign Investments.
In practice, this means that most of the roughly $ 478 billion in Russian foreign debt could “disappear” from the balance sheets of Western banks. The equivalent in rubles will be deposited somewhere in Russian banks; but Western banks, as things stand, cannot access them.
It is questionable whether this simple strategy was the product of those “non-sovereign” brains gathered at the Russian Central Bank. More likely, there was the contribution of influential economist Sergei Glazyev, also one of the top former advisors to Russian President Vladimir Putin on regional integration. Here is a revised edition, in English, of his groundbreaking essay Sanctions and Sovereignty, which I summarized above.
Meanwhile, Sberbank has confirmed that it will issue Russian Mir debit / credit cards co-badge with China’s UnionPay. Alfa-Bank, the largest private bank in Russia, will also issue UnionPay credit and debit cards. Although it was only introduced five years ago, 40% of Russians already own a Mir card for home use. Now they will be able to use it internationally too, through the huge UnionPay network. And without Visa and Mastercard, the fees on all transactions will remain in the Russia-China sphere. De-dollarization, in fact.
The negotiations on the Iranian sanctions in Vienna could reach the last stage, as also recognized by the Chinese diplomat Wang Qun. But it was Russian Foreign Minister Sergei Lavrov who introduced a crucial new variable into the final discussions in Vienna.
Lavrov made his 11th hour request quite explicit: “We asked for a written assurance… that the current [Russian sanctions] process triggered by the United States does not in any way harm our right to free and full commercial, economic cooperation. and of investment and technical-military cooperation with the Islamic Republic “.
Under the 2015 Joint Comprehensive Plan of Action (JCPOA) agreement, Russia receives enriched uranium from Iran and exchanges it for yellowcake and, in parallel, is converting Iran’s Fordow nuclear power plant into a research center. Without Iranian exports of enriched uranium there is simply no JCPOA deal. He upsets the mind that US Secretary of State Blinken doesn’t seem to understand him.
Everyone in Vienna, including the margins, knows that for all actors to sign the JCPOA revival, no nation needs to be individually targeted in terms of trade with Iran. Tehran knows it too.
So what’s happening now is an elaborate Persian mirror game, coordinated between Russian and Iranian diplomacy. Moscow’s ambassador to Tehran, Levan Dzhagaryan, attributed the ferocious reaction to Lavrov in some Iranian neighborhoods to a “misunderstanding”. All of this will take place in the shade.
One more element is that according to a Persian Gulf news source with privileged access to Iran, Tehran could already sell up to three million barrels of oil a day, “so if they sign a deal, it won’t affect supply at all; only they will be paid more.
The US government has spent years, if not decades, burning all bridges with Venezuela and Iran. The United States destroyed Iraq and Libya and isolated Venezuela and Iran in an attempt to take over global oil markets, only to end up miserably in an attempt to buy back both and escape being crushed by the economic forces they unleashed. . This shows, once again, that the imperial “politicians” are completely in the dark.
Caracas will demand the lifting of all sanctions against Venezuela and the return of all the gold seized. And it seems that none of this has been clarified with the “president” Juan Guaido, who since 2019 is the only Venezuelan leader “recognized” by Washington.
Social cohesion torn apart
The oil and gas markets, meanwhile, are in utter panic. No Western trader wants to buy Russian gas; and this has nothing to do with Russian state-owned energy giant Gazprom, which continues to duly supply customers who have signed contracts with fixed rates, ranging from $ 100 to $ 300; (others are paying over $ 3,000 in the spot market).
European banks are less and less willing to lend for energy trade with Russia due to the hysteria of sanctions. A strong indication that the pipeline from Russia to Germany Nord Stream 2 could be literally six feet below is that importer Wintershall-Dea has written off its funding share, assuming in fact the pipeline won’t launch.
Anyone with a brain in Germany knows that two extra liquefied natural gas (LNG) terminals – yet to be built – will not be enough for Berlin’s needs. There is simply not enough LNG to supply them. Europe will have to fight Asia over who can pay the most. Asia wins.
Europe imports around 400 billion cubic meters of gas per year, of which 200 billion to Russia. There is no way Europe can find $ 200 billion elsewhere to replace Russia, be it Algeria, Qatar or Turkmenistan. Not to mention the lack of the necessary LNG terminals.
So, of course, the main beneficiary of the whole mess will be the United States, which will be able to impose not only their terminals and control systems, but also profit from loans to the EU, the sale of equipment and full access to the whole. EU energy infrastructure. All LNG plants, pipelines and warehouses will be connected to a single network with a single control room – an American entrepreneurial dream.
Europe will remain with reduced gas production due to its declining industry; job losses; decrease in quality of life standards; increased pressure on the social security system; and, last but not least, the need to apply for non-US loans. Some nations will revert to coal for heating. The Green Parade will be livid.
And Russia? As a hypothesis, even if all of its energy exports were reduced – and they won’t be; their main customers are in Asia: Russia is not expected to use its foreign reserves.
The Russophobic attack on Russian exports also targets palladium metals, vital to electronics, from laptops to aviation systems. Prices are skyrocketing. Russia controls 50 percent of the global market. Then there are the noble gases – neon, helium, argon, xenon – essential for the production of microchips. Titanium has risen by a quarter, and both Boeing (by a third) and Airbus (by two thirds) are relying on titanium from Russia.
Oil, food, fertilizers, strategic metals, neon gas for semiconductors: all at the stake, at the foot of Witch Russia.
Some Westerners who still appreciate Bismarck’s realpolitik have begun to question whether protecting energy (in the case of Europe) and selected flows of goods from sanctions may have to do with protecting an immense racket: the derivatives system of goods.
After all, if this implodes, due to the scarcity of raw materials, the entire Western financial system explodes. This is a real system error.
The key issue for the global South to digest is that the “West” is not committing suicide. What we have here, essentially, is the United States voluntarily destroying German industry and the European economy – strangely, with their connivance.
Destroying the European economy means not allowing further market space to China and blocking the inevitable extra trade that will be a direct consequence of closer trade between the EU and the Regional Global Economic Partnership (RCEP), the largest trade agreement in the world. .
The end result will be that the US eats European savings for lunch while China expands its middle class to over 500 million people. Russia will do very well, as Glazyev points out: sovereign and self-sufficient.
American economist Michael Hudson briefly sketched the outlines of imperial self-implosion. Yet far more dramatic, as a strategic disaster, is how the parade of the deaf, dumb and blind into deep recession and near hyperinflation will tear apart what remains of the social cohesion of the West. Mission accomplished.
Melissa Galbraith is the World News reporter for Globe Live Media. She covers all the major events happening around the World. From Europe to Americas, from Asia to Antarctica, Melissa covers it all. Never miss another Major World Event by bookmarking her author page right here.