2015 Will Be All About
Iran, China and Russia
By Pepe Escobar
January 02, 2015 "ICH"
- "Sputnik"
- - BEIJING, December 31 (Sputnik) —
Fasten your seatbelts; 2015 will be a
whirlwind pitting China, Russia and Iran
against what I have described as the
Empire of Chaos.
So yes – it will be all
about further moves towards the integration
of Eurasia as the US is progressively
squeezed out of Eurasia. We will see a
complex geostrategic interplay progressively
undermining the hegemony of the US dollar
as a reserve currency and, most of all, the
petrodollar.
For all the immense
challenges the Chinese face, all
over Beijing it's easy to detect
unmistakable signs of a self-assured,
self-confident, fully emerged commercial
superpower. President Xi Jinping and the
current leadership will keep investing
heavily in the urbanization drive and the
fight against corruption, including at the
highest levels of the Chinese Communist
Party (CCP). Internationally, the Chinese
will accelerate their overwhelming push
for new 'Silk Roads' – both overland and
maritime – which will underpin the long-term
Chinese master strategy of unifying Eurasia
with trade and commerce.
Global oil prices are
bound to remain low. All bets are off on
whether a nuclear deal will be reached
by this summer between Iran and the P5+1. If
sanctions (actually economic war)
against Iran remain and continue
to seriously hurt its economy, Tehran’s
reaction will be firm, and will include even
more integration with Asia, not the West.
No
matter how it was engineered, the fact that
stands is that the current
financial/strategic oil price collapse is a
direct attack against (who else?) Iran and
Russia.
Washington is well-aware
that a comprehensive deal with Iran cannot
be reached without Russia’s help. That would
be the Obama administration’s sole – and I
repeat – sole foreign policy success. A
return to the “Bomb Iran” hysteria would
only suit the proverbial usual (neo-con)
suspects. Still, by no accident, both Iran
and Russia are now subject to Western
sanctions. No matter how it was engineered,
the fact that stands is that the current
financial/strategic oil price collapse is a
direct attack against (who else?) Iran and
Russia.
That derivative
war
Now let’s take a look
at Russian fundamentals. Russia’s government
debt totals only 13.4% of its GDP. Its
budget deficit in relation to GDP is only
0.5%. If we assume a US GDP of $16.8
trillion (the figure for 2013), the US
budget deficit totals 4% of GDP, versus 0.5%
for Russia. The Fed is essentially a private
corporation owned by regional US private
banks, although it passes itself off as a
state institution. US publicly held debt is
equal to a whopping 74% of GDP in fiscal
year 2014. Russia’s is only 13.4%.
The declaration
of economic war by the US and EU on Russia –
via the run on the ruble and the oil
derivative attack – was essentially a
derivatives racket. Derivatives – in theory
– may be multiplied to infinity. Derivative
operators attacked both the ruble and oil
prices in order to destroy the Russian
economy. The problem is, the Russian economy
is more soundly financed than America's.
Considering that this
swift move was conceived as a checkmate,
Moscow’s defensive strategy was not that
bad. On the key energy front, the problem
remains the West’s – not Russia’s. If the EU
does not buy what Gazprom has to offer, it
will collapse.
Moscow’s key mistake was
to allow Russia's domestic industry to be
financed by external, dollar-denominated
debt. Talk about a monster debt trap which
can be easily manipulated by the West. The
first step for Moscow should be to closely
supervise its banks. Russian companies
should borrow domestically and move to sell
their assets abroad. Moscow should also
consider implementing a system of currency
controls so the basic interest rate can be
brought down quickly.
And don’t forget that
Russia can always deploy a moratorium
on debt and interest, affecting over $600
billion. That would shake the entire world's
banking system to the core. Talk about an
undisguised “message” forcing the US/EU
economic warfare to dissolve.
And
don’t forget that Russia can always deploy a
moratorium on debt and interest, affecting
over $600 billion.
Russia does not need
to import any raw materials. Russia can
easily reverse-engineer virtually any
imported technology if it needs to. Most
of all, Russia can generate — from the sale
of raw materials – enough credit in US
dollars or euros. Russia's sale of its
energy wealth — or sophisticated military
gear — may decline. However, they will bring
in the same amount of rubles — as the ruble
has also declined.
Replacing imports
with domestic Russian manufacturing makes
total sense. There will be an inevitable
“adjustment” phase – but that won’t take
long. German car manufacturers,
for instance, can no longer sell their cars
in Russia due to the ruble's decline. This
means they will have to relocate their
factories to Russia. If they don’t, Asia –
from South Korea to China — will blow them
out of the market.
Bear and dragon
on the prowl
The EU's declaration
of economic war against Russia makes no
sense whatsoever. Russia controls, directly
or indirectly, most of the oil and natural
gas between Russia and China: roughly 25%
of the world's supply. The Middle East is
bound to remain a mess. Africa is unstable.
The EU is doing everything it can to cut
itself off from its most stable supply
of hydrocarbons, prompting Moscow
to redirect energy to China and the rest
of Asia. What a gift for Beijing – as it
minimizes the alarm about the US Navy
playing with "containment" across the high
seas. Still, an
unspoken axiom in Beijing is that the
Chinese remain extremely worried about an
Empire of Chaos losing more and more
control, and dictating the stormy terms
of the relationship between the EU and
Russia. The bottom line is that Beijing
would never allow itself to be in a position
where the US could interfere with China's
energy imports – as was the case with Japan
in July 1941 when the US declared war
by imposing an oil embargo, cutting off 92%
of Japanese oil imports.
Everyone knows a key plank
of China’s spectacular surge in industrial
power was the requirement for manufacturers
to produce in China. If Russia did the same,
its economy would be growing at a rate
of over 5% per year in no time. It could
grow even more if bank credit was tied only
to productive investment.
Now imagine Russia and
China jointly investing in a new gold, oil
and natural resource-backed monetary union
as a crucial alternative to the failed debt
"democracy" model pushed by the Masters
of the Universe on Wall Street, the Western
central bank cartel, and neoliberal
politicians. They would be showing the
Global South that financing prosperity and
improved standards of living by saddling
future generations with debt was never meant
to work in the first place.
Until then, a storm will
be threatening our very lives – today and
tomorrow. The Masters of the
Universe/Washington combo won’t give
up their strategy to make Russia a pariah
state cut off from trade, the transfer
of funds, banking and Western credit markets
and thus prone to regime change.
Further on down the road,
if all goes according to plan, their target
will be (who else) China. And Beijing knows
it. Meanwhile, expect a few bombshells
to shake the EU to its foundations. Time may
be running out – but for the EU, not Russia.
Still, the overall trend won’t be altered;
the Empire of Chaos is slowly but surely
being squeezed out of Eurasia.
You can buy Pepe Escobar’s
latest book "Empire of Chaos"
here
Follow him on
Facebook
