By Christopher R Rice
Moscow’s and Washington’s argument over prices for natural gas has quietly simmered in the background as the two countries have squared off over Ukraine’s Crimea peninsula, Libya and now Syria’s oilfields, pipelines, refineries and terminals.
Contrary to the promised “peace dividend,” the U.S. has maintained its military arsenal and used it to enforce its agenda with successive and intensifying military interventions–from the use of conventional troops in Iraq, to “humanitarian intervention” in Haiti, to Obama’s drone wars in Central Asia.
The U.S., Russia and other states are locked in a race to stake out territorial claims and drilling rights. The U.S. is also intent on reestablishing itself as a petro-power to fuel its own re-industrialization and supplant Russia and Saudi Arabia as the leading exporter of hydrocarbons.
In the policy journal of American imperialism, Foreign Affairs, Edward Morse said (in 2014):
Having outstripped Russia as the world’s largest gas producer, by the end of the decade, the United States will become one of the largest gas exporters, fundamentally changing pricing and trade patterns in global energy markets. U.S. oil production, meanwhile, has grown by 60 percent since 2008, climbing by 3 million barrels a day to more than 8 million barrels a day. Within a couple of years, it will exceed its old record level of almost 10 million barrels a day as the United States overtakes Russia and Saudi Arabia and becomes the largest oil producer.
Obama’s European trip was to assure gas exports to Europe and thereby undercut Russia’s ability to blackmail American allies with the threat of cutting off their gas supplies. The Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated between the U.S. and EU promises to “expand fracking, offshore oil drilling and natural gas exploration” specifically for export to the European market.
In 2001 the Cheney Task Force formulated the National Energy Policy (NEP), or Cheney Report, bypassing possibilities for energy independence and reduced oil consumption with a declaration of ambitions to establish new sources of oil.
Market deregulation incentivized gas exploration of all varieties, not merely fracking, exploration and production (E&P) companies went into overdrive.
Away from resource rights, the critical banker in the US, which few people realize, is the Natural Gas Policy Act of 1978, say contacts at Baker & McKenzie’s Houston office.
Compare the pipeline maps of Europe and North America. The latter’s vastly superior infrastructure would trump Europe’s any day giving US and Canadian E&P companies much better access to move the product to market. It took the US decades to get where it did, and Europe is not getting there any time soon.
In the US, unless the drilling site itself is on Federal land, mineral rights belong to the landowner. In Europe, they belong to governments in most cases. Hence, the lack of incentive and a surplus of opposition on landowners and residents part is hardly surprising. Population density brings more affected people into the equation too.
Back in 1995, energy prices had been so low for so long that investment had dried up. With crude oil selling for about $16 a barrel, scores of wildcatters and small exploration companies had gone out of business.
The reason US shale took the amount of time that it did to takeoff was because it would not be worth it unless oil prices were above $40 a barrel for a sustained period. Only a disruption in the oil-supply such as an invasion of Iraq would do.
By mid-2008, the Iraq war drove oil up to $140 a barrel. It was ExxonMobil (XOM’s) most profitable year ever. The destruction in Iraq made profitable the plunder of Canada’s tar sands, the Keystone XL pipeline and the Anglo-US-owned Baku-Tbilisi-Ceyhan pipeline from former Soviet Central Asia to the Mediterranean.
October 2, 2008 Sarah Palin said, “The chant is ‘drill, baby, drill.’ And that’s what we hear all across this country in our rallies because people are so hungry for those domestic sources of energy to be tapped into.”
It’s not the oil; it’s the money
The oil industry has prospered over the past decade, thanks to high oil and gasoline prices. The five largest companies — BP, Chevron, ConocoPhillips, ExxonMobil, and Shell — earned more than $1 trillion during this time. In the first nine months of 2013, these five companies realized a combined $71 billion in profits.
The U.S. Energy Information Administration projects that the United States will replace Russia this year as the world’s top hydrocarbon energy producer. The U.S. produced more oil than Saudi Arabia in 2015.
This development is possible because U.S. companies have invested more than $1 trillion over the past 10 years in fracking — the hydraulic fracturing of oil and natural gas from shale rock.
XOM, now the largest U.S. natural gas producer, Phillips66, Valero, Berkshire Hathaway, General Electric, Koch Industries, KKR and Halliburton are among the giant firms betting billions on the superprofits they hope fracking will bring. Every major bank is also involved.
But these environment-destroying investments would not be profitable without the triple-digit oil prices of the last decade. These record oil prices were made possible by the armed and bloody suppression of Arab and Iranian oil production by the Pentagon.
Oil prices of $60-$80 a barrel are needed for most fracking projects to break even.
Britain, Sweden, Poland and Ukraine are places for a European fracking heaven but European geology is less favorable than North America’s with the former’s shale deposits being deeper underground and costlier to extract according to a British Geological Survey (BGS) spokesperson.
Holding the world’s biggest potential reserves of natural gas in shale rock, China will spend billions of dollars in developing the energy resource, according to a study by Bloomberg New Energy Finance.
The emergence of shale projects in Asia and Europe affects global gas and oil prices and is changing the energy agendas of governments from London to Beijing.
Chinas strategy to meet its energy needs has come into conflict with several states in Asia–from Japan to the Philippines and Vietnam–over disputed islands and claims to territorial waters in the South and East China Seas.
China has no interest in risking relations with its main export market. Similarly, as the sanctions over Ukraine proved, Russia is also very dependent on the world financial markets and therefore cannot risk open confrontation with the U.S.
China had been considering importing liquefied natural gas (LNG) from North America. Instead, China opted to strike a deal with Russia, which will provide China with 20 percent of its natural gas after the pipeline opens in 2018.
The Russia-China strategic partnership had been in the works since Russian President Boris Yeltsin and Chinese President Jiang Zemin announced it in 1996. But other than joint military exercises, the relationship had grown stale. This energy deal was supposed to change that.
It also has serious implications for the middle east crisis. One of the reasons Russia sought the partnership with China was to wean itself off of European energy money. If it diversified exports, the relationship with Europe became less important and Europe would lose leverage over Moscow.
This could free Russia up to act across Eastern Europe as it has in Ukraine. If Europe were to sanction Russia’s energy sector it could squeeze the life out of the Russian economy.
“The Chinese managed to achieve a lower price than the Russians had wanted,” according to Britain’s Guardian newspaper, “and the deal will mean a loss for Russia, at least for the first several years after operations start in 2018.”
China will pay $350 per 1,000 cubic meters, according to National Public Radio, a bit lower than the European standard and dramatically lower than the average in Asia. China will in turn use the deal with Russia to pressure its other suppliers to lower their prices. By securing gas through an overland pipeline from Siberia, China lessens its dependence on imports of oil and gas through the chokepoint of the Straight of Malacca, which the U.S. polices with its Navy.
China and Russia struck the deal in their own currencies–the yuan and ruble–not petrodollars. They did so as part of a developing strategy on both their parts to free themselves from dependency on U.S. finance capital.
Forbes’ Mark Admonanis voiced his worries:
A Russia-China alliance would, of course, be an absolute disaster for the United States, pretty much the only grouping of countries that would be genuinely interested in and capable of challenging its position of global leadership. Preventing the emergence of a Russia-China alliance ought to be at the very top of the list of U.S. foreign policy priorities, but…no one seems to be paying any attention…The U.S. foreign policy community needs to wake up or, a decade from now, we’ll be hearing debates about “who lost Eurasia.”China has transformed itself from a state capitalist backwater in the 1970s into the world’s second-largest economy–and soon, it will even eclipse the U.S. to become the world’s largest economy.
America’s imperial reassertion has driven Russia and China, which have been historic antagonists, closer and closer together. “Russia and China appear to have decided that, to better advance their own interests, they need to knock Washington down a peg or two,” write Leslie Gelb and Dimitri Simes in the New York Times.
“The U.S. dollar remains the top global reserve currency, involving 33 percent of global foreign exchange holdings at the end of 2013, according to the IMF,” notes Asia Times columnist Pepe Escobar. “It was, however, 55 percent in 2000. Nobody knows the percentage in yuan (and Beijing isn’t talking), but the IMF notes that reserves in ‘other currencies’ in emerging markets have been up 400 percent since 2003.”
The U.S. is attempting to crack open OPEC, which has been able to maintain high oil and gas prices. As Morse writes, cheap American hydrocarbons will put an “end to OPEC’s 40-year dominance, during which producers were able to band together to raise prices well above production costs, with negative consequences for the world economy.”
But Bush overplayed the American hand in Afghanistan and Iraq. And had hoped to conduct rolling regime changes to install allied regimes throughout the Middle East, the main source of oil for the world economy. With the region under its control, Bush had hoped to lock in U.S. global domination. Instead, both wars turned into occupations for the benefit of war profiteers and regime change turned into full scale civil-wars.
Then, the economic crisis of 2008. Only record bailouts and stimulus packages prevented a full-scale depression, but they failed to trigger a new expansion, instead paving the way for a program of neoliberal austerity amid long-term global slump.
Obama’s European mission was meant to obstruct Russian access to the Asian market.
LNG provides the prospect of establishing genuine spot markets that will undermine pipeline prices. As we have already seen, increasing (and reliable) LNG consignments into Europe have established local spot markets surrounding receiving terminals like Rotterdam Gate in the Netherlands, creating major competition to existing Gazprom contracts.
As a result, European end users are now demanding the Russians factor in the lower spot prices from LNG imports into the longer-term pipeline gas price calculations. Spot sales are ad hoc and quick (usually over and done in 72 hours). Provided the volume is guaranteed, the resulting prices will usually undermine longer-term pipelined gas based on oil prices.
We are not talking about the importing cost but the wholesale spot price at the terminal. That is a distinction Gazprom would prefer people not notice.
From the standpoint of Washington, however, there is a second and even more vulnerable point in this latest version of the Cold War. Remember this one, because it is likely to be the Achilles’ heel of the Russian-Chinese deal, at least in regard to what Moscow needs to get out of this.
To undermine the deal, it is not necessary for the U.S. to replace all or even most of the Russian gas with a more attractive combination of LNG deliveries and technical support for Chinese shale gas projects.
The truth is, replacing only 8% to 10% of the annual total will be enough to destabilize this 30-year deal. As we know from private sector transactions, profits are made at the margin.
In “The Great Game” of geopolitics, a competitor’s policies can be undermined exactly the same way.
The U.S. has deployed U.S. military planners, and more naval deployments in the Black Sea and Baltic Sea, on Russia’s doorstep.
From the Weekly Standard: ISIS’s first success in tribal politics was in Raqqa, which it snatched from the hands of the Assad regime and turned into its capital. Until the middle of 2013, Raqqa remained loyal to Assad. Although few Syrian security forces were present in the city, and the capital, Damascus, is nearly 300 miles away, making it virtually impossible to maintain communications and supply lines, Raqqa remained in Assad’s control because the city was run by the Sharabeen tribe.
In the tribal world, the Sharabeen are not part of the elite. They are a cattle-raising tribe, considerably less prestigious than, say, the camel-raising Shammar, one of the biggest tribes in the Middle East, whose members are known for their valor. When the founder of modern Saudi Arabia, Abdul-Aziz Ibn Saud, defeated the Shammar in 1910, the tribe pledged allegiance to him. Even as the British and French forced Ibn Saud to relinquish much of the Shammar territory he’d won, the Saudi king issued many Shammar Saudi passport
CBS News traced ISIS back to a U.S. military prison
Camp Bucca was known as the largest, and one of the toughest, American prisons in Iraq.
As a vicious insurgency raged across the country, Bucca’s numbers swelled.
But there is growing evidence that the sprawling prison was also the birthplace of ISIS.
According to a CBS News investigation, at least 12 of the top leaders of ISIS served time at Camp Bucca, including the man who would become the group’s leader, Abu Bakr al Baghdadi. CBS News obtained photos of 10 of them in Bucca’s yellow prison jumpsuits.U.S. officials who worked at Bucca told us they were concerned that prisoners were becoming radicalized. The prison has been described as “a pressure cooker for extremism.”
And that wasn’t the only problem. It was at Bucca that an unexpected and powerful alliance was formed between the Islamic extremists and the Ba’athists loyal to Saddam Hussein, who were angry at losing power.
“You put them together and you get a mixing of organized military discipline with highly motivated, highly active ideological fervor, and the result is what we have today,” Skinner said. “I mean, there were other circumstances, but the toxic brew of Bucca started this recipe.”
Former Syrian president Hafez al-Assad, father of Bashar, well understood the significance of the ties between the Shammar and the Saudis. To counter Saudi influence in Raqqa, he propped up the Sharabeen, funding them, arming them, and giving them government jobs. All this came at the expense of the Shammar, many of whom picked up and moved to Saudi Arabia. When the anti-Assad rebellion erupted in 2011, Riyadh sent some Shammar tribal leaders back to Syria, like onetime head of the Syrian National Council Ahmed al-Jarba. The potential return of the powerful Shammar became a pressing concern not just for the Sharabeen, but for other tribal groups as well, which is what prompted 14 Raqqa clans to pledge allegiance to ISIS in November 2013. This is how Raqqa turned, quickly and peacefully, from an Assad stronghold into ISIS’s capital.
When British diplomat Gertrude Bell assembled modern Iraq, it was with an eye to securing a pipeline that linked the oil fields of Basra, in southern Iraq, to the Port of Haifa, in northern Palestine. This required integrating the Dulaim, an enormous tribe of around three million people today, and its territory, Dulaim Province, into Iraq. The Dulaimis would produce two Iraqi presidents, the last of whom was deposed by the Baathists, who changed the name of Dulaim Province to Anbar. Between 1993 and 1996, the CIA reportedly encouraged the Dulaimis to revolt against Saddam, which they did, and, losing, paid dearly. Nonetheless, one of the leading clans of the Dulaim, the Abu Risha, came to ally itself with the United States during the occupation, and without them, the coalition forces almost certainly would not have won the surge.
ISIS—or the Islamic State, as it now calls itself—is an extremist movement, attracting militants from all over the world eager to help build the new caliphate. Thousands of foreigners—including Chechen snipers, Saudi car bombers, and Western misfits like American Douglas McAuthur McCain—who have signed on to fight alongside ISIS.
The group kidnaps and murders American journalists, who have threatened to expose the CIAs ties to ISIS.
It threatened the existence of the Yazidi community in Iraq, and it slaughtered at least 700 members of the Sheitat, a tribe in Syria. It regularly employs the vicious hudud punishments to enforce sharia law in the areas it controls in Syria and Iraq.
Reuters had reported in 2012 that the FSA’s command was dominated by Islamic extremists, and the New York Times had reported that same year that the majority of the weapons that Washington was sending into Syria were ending up in the hands Jihadists. For two years the U.S. government knew that this was happening, but they kept doing it.
Pulitzer Prize winning journalist Seymour Hersh released an article in April of 2014 which exposed a classified agreement between the CIA, Turkey and the Syrian rebels to create what was referred to as a “rat line”. The “rat line” was covert network used to channel weapons and ammunition from Libya, through southern Turkey and across the Syrian border. Funding was provided by Turkey, Saudi Arabia and Qatar.
Some presidents, like George W. Bush, rely primarily on overt military aggression. Obama gets the same job done, but he prefers covert means. Not surprising considering the fact that Zbigniew Brzezinski is his mentor.
What we’re seeing happen in Iraq, Afghanistan and Syria right now is actually a continuation of an old story. ISIS is a five headed beast, one of those heads is Al-Nusra, another the Islamic State, another al-Qaeda and so on. Like the US has a navy but also has the Marines.
A new book, The Jihadis Return, which is an extended essay on the emergence of ISIS says: Ideologically, it comes out of the Jihadi movement and actually its religious beliefs are not that much different from Saudi Wahhabism, the variant of the Islam which is effectively the state religion of Saudi Arabia with its denigration of Shia as heretics, [along with] Christians and Jews. It’s just carrying these beliefs to a higher and more violent level but it’s very much in the context of the Jihadi movement.
This Jihadi movement did not exist in Iraq prior to the American invasion and occupation. Saddam arrested anybody who was an obvious Jihadi. I mean, it was always an absurd pretense at the time of the invasion of Iraq to say that Saddam had any connection with the Jihadist or 9/11. Though such was the volume of propaganda at the time that 60% of Americans believed that somehow Saddam was linked to 9/11.
WHY IRAQ’S ARMY RAN INSTEAD OF FIGHTING ISIS:
A colonel of a battalion nominally of 600 men would get money for 600 men, [but] in fact there were only 200 men in it, and would pocket the difference, which was spread out among the officers. And this applied to fuel, it applied to ammunition… At the time of the fall of Mosul there are meant to be 30,000 troops there. In fact, it’s estimated that only one in three was there. Because what you did was: you joined the army, you got your full salary and then you kicked back half that salary to your officer, who spread it among the officers. So I remember about a year ago talking to a senior Iraqi politician, and who said look: the army’s going to collapse if it’s attacked. I said surely some will fight, he said: no, no, no, you don’t understand. These officers are not soldiers, they’re investors! They have no interest in fighting anybody; they have interest in making money out of their investment. Of course you had to buy your position. So in 2009, you want to be a colonel in the Iraqi army, it’ll cost you about 20,000 dollars, more recently it cost you about $200,000. You want to be divisional commander, and there are 15 divisions, it will cost you about 2 million. Of course, there are other ways of making money. Checkpoints on the roads act as sort of customs barriers and a tariff on each truck going through would be paid. So that’s why they ran away, led by their commanding officer, the three commanding generals got into a helicopter in civilian clothes and fled to Erbil, the Kurdish capital. And that led to the final dissolution of the army.
ISIS was quite effective in spreading terror through social media, by films of it decapitating Shia captives. So the soldiers were terrified of ISIS.
And also the whole Sunni community, about 20% of Iraqis, maybe 6 million in the Sunni provinces, were alienated by the Nouri al-Malaki’s regime. They were persecuted, they couldn’t get jobs, collective punishment, young men in villages around Fallujah – sometimes there aren’t many young men because they’re all in jail – and some were on death row going to be executed for crimes which somebody had already been executed for. It was completely arbitrary. So not surprisingly to this day it’s one of the reasons that ISIS still has support, that for all its bloodthirstiness, for a lot of the Sunni community it’s better than the Iraqi army and the Iraqi Shia militias coming back.
The Saudis have always been behind the Jihadi movement in general, above all abroad, not within Saudi Arabia. And generally they will support those who oppose Shia governments, and don’t really distinguish or didn’t really distinguish who they were supporting. But it’s also pretty clear that a lot of their support did go to ISIS, did go to other groups like Jabhat al-Nusra, this was all through private donors, not just Saudi Arabia, but Kuwait and Qatar and Turkey.
The US and Britain would [try to] distinguish between the moderate Syrian opposition in this corner and the Jihadi extreme opposition in the other corner. But actually the two were together, I mean there was a report this very week by a research organization itemizing various weapons in the hands of ISIS that appear to have been supplied by Saudi Arabia last year to the supposedly moderate Syrian opposition, but were immediately transferred because the gap between the two is much more limited than you’d imagine.
So it’s rather an extraordinary situation that you have America and the other Westerners and powers saying we’re going to intervene against ISIS but we’re not going to do anything to help Assad. But Assad is the main enemy of ISIS and if they’re trying to weaken Assad then they help ISIS. And it’s the result of their, to my mind, catastrophic policies over the last two years. It has been evident since the end of 2012 that Assad was not going to go, previous to that there was a presumption that in 2011 and 2012, in the Western capitals and elsewhere, that he was going to follow Gaddafi–he was going to go down. But they’ve sort of pretended that he was going to go.
In the tribal world, the Sharabeen are not part of the elite. They are a cattle-raising tribe, considerably less prestigious than, say, the camel-raising Shammar, one of the biggest tribes in the Middle East, whose members are known for their valor. When the founder of modern Saudi Arabia, Abdul-Aziz Ibn Saud, defeated the Shammar in 1910, the tribe pledged allegiance to him. Even as the British and French forced Ibn Saud to relinquish much of the Shammar territory he’d won, the Saudi king issued many Shammar Saudi passports.
America, Saudi Arabia, Qatar, United Arab Emirates, the UK, Poland and the French put up the seed money so the Iraqi rebels (IS) could hire mercenaries from around the world. If this sounds familiar it’s because the CIA has used these same tactics the world over. From Al-Qaida in Afghanistan to the Contras in Nicaragua.
Remember Brzezinski? Brzezinski and his protégé, Zalmay Khalilzad, set up a corporation in 1985, funded by the US congress, to train the mujahedeen to sell reporters the lie that the mujahedeen were freedom fighters and victims of aggression (Associated Press).
“U.S. Provides $500,000 So Afghan Rebels Can Tell Their Story
AP, September 16, 1985, Monday, PM cycle SECTION: Washington Dateline, by JOAN MOWER
Guerrillas in Afghanistan are about to get money from the United States government for a public relations campaign intended to bring their struggle against Soviet troops to the world’s attention.
The money will train Afghan rebel journalists to use television, radio and newspapers to advance their cause. Reporters will be given mini-cameras to photograph the war inside Afghanistan.
“It is the goal of this project to facilitate the collection, development and distribution of credible, objective and timely professional-quality news stories, photographs and television images about developments in Afghanistan,” said a notice in the Federal Register. The program will be overseen by Uncle Sam’s own propaganda arm, the U.S. Information Agency. Congress appropriated $500,000 to hire experts and may provide more later.
In making the money available, Congress all but instructed USIA to consider an organization like Friends of Afghanistan, a new group whose board includes former Carter administration national security adviser Zbigniew Brzezinski, known for hard-line anti-Soviet views.”
Alfred W. McCoy is the Harrington Professor of History at the University of Wisconsin-Madison and author, most recently, of Torture and Impunity: The U.S. Doctrine of Coercive Interrogation, and co-editor of Endless Empire: Europe’s Eclipse, Spain’s Retreat, America’s Decline.
Blum, William. Killing Hope: U.S. Military and CIA Interventions Since World War II. Monroe, ME: Common Courage Press, 1995. ISBN 1-56751-052-3
Jones, Matthew. “The ‘Preferred Plan’: The Anglo-American Working Group Report on Covert Action in Syria, 1957″. Intelligence and National Security 19(3), Autumn 2004; pp. 401–415.
Saunders, Bonnie. The United States and Arab Nationalism: The Syrian Case, 1953–1960. Westport, CT: Greenwood, 1996. ISBN 0-275-95426-9
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