āAsterism - astral thinking...
With respect (and this is the first time I have been to your site) you have put a piece of misleading information in your piece which detracts from the otherwise sound analysis. Specifically, the line "Given that China is now dependent on Iran for its fuel supplies for the next 25 years" takes no account of the deal signed between Beijing and Moscow soon after the Beijing/Tehran deal was confirmed.
Putin acted just in time to prevent Yukos from handing ownership of 26.1% of Russia's known oil reserves to Exxon, for a few billion dollars that would have all channelled through Khodorkovsky's own Gibraltar based bank (the bank that brokered the original purchase of Yukos) leaving Russia within nothing, except the knowledge that they had been robbed. Yukos was then effectively re-nationalised at a cost of c.$3bn to the Russian treasury. That deal was financed by a c.$3bn loan from the Chinese government and at his history-making visit to Beijing Putin signed a deal which more-or-less guarantees Yukos' output to China, not for cash, but for goods. This was undoubtedly the biggest non-cash (barter) deal ever in history, just as the China/Tehran deal (which I believe was worth $100bn - $200bn, not $70bn as stated) was the largest ever cash deal in history (events whose significance was very downplayed in the western media).
These deals were of massive global significance for several reasons. Firstly, China has now secured a guaranteed supply of oil to allow it to continue the rapid development of their economy for the next twenty plus years, subject to war or other catastrophe (the five day top-of-the-range state visit to Beijing afforded Hugo Chavez underlines just how canny and single-minded Chinese foreign policy is, especially compared to the blundering neoliths in Washington!).
Secondly, as you point out, China now has a strong legitimate strategic interest in Iran, greatly complicating any neo-con/Israeli 'pre-emptive' ie unprovoked attack on the country.
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Thirdly, the wider implications of the deal with Russia. The Chinese government (as well as Puitn!) must have watched with alarm as the US used the pretext of the Afghanistan war to establish permanent military bases in Central Asia, completing the military encirclement of China. B-2s are now less than two hours flying time from Chonqing, Kunming, Chengdu etc., and virtually minutes away from Lop Nor, China's Los Alamos. The redoubtable and impenetrable south-western barrier of the Himalayan range was compromised. However, the Chinese do have a sort of Doomsday weapon at their disposal, namely the c.$200bn of US Treasury Bonds held by the Central bank in Beijing, obtained financing Bush's cataclysmic deficit. If they were release even a smallish amount onto the market the dollar would plunge, and the American economy would go into downspin as the dollar price of oil rocketed, interest rates rose and import based businesses collapsed, depression, rather than recession may well result. Of course such a move would have an enormous economic blowback to China's own manufacturing sector, but the Chinese central authority is strong enough to cope (to understand Chinese government policy, read Confucius not Marx) and ensure everyone got fed. So, to the deal with Putin. As this deal was not valued in dollars, it is hard to put a cash value on it, but it is certainly worth tens of billions of dollars at the very least, and this represents a massive new market for Chinese goods. What is even better, is that all those goods are effectively pre-sold, even before manufacture, providing a strong sustainable base for their industry. In my view this is a logical step for the Chinese, to start to wean themselves off the US market, partly for geopolitical reasons, but also probably for economic reasons as the long-term prognosis for slash-and-burn economics is not healthy.
The fourth component has been touched on above, but it is important to note that this was a truly massive oil deal that was not priced in dollars. It is a bald fact to say that the only thing keeping the US economy afloat at the moment is oil being priced in dollars. Every country needs to buy oil every day, therefore they need to buy dollars every day, hence the US can just keep printing dollars to exchange for all those imports (trade deficit of $160bn with China last year alone!) because demand remains high for oil transactions. If any oil producer was to announce that henceforth their oil would be traded in euros, as Saddam Hussein did weeks before invasion, that would be interpreted by the US as a hostile act and considerable sanction of some kind would follow.
So the world is changing, the US is weakening because of it's own excess, and their aggressive actions have brought about a grand alliance between China, Russia, India, Brazil, Iran and Venezuela, countries that feel no compulsion to bend to US neo-imperialism and have worked out the limitations of US power. The w
Part 3
The worrying aspect to this is that the only way out for the lunatics in Washington is to escalate, for the 'Global War on Terror"© to become just the Global War.
Thanks for the comment -very enlightening. Well lets just hope that the US establishment realises the madness of Bush's policies and do to him what the Bavarian government did to King Ludwig II when he nearly bankrupted the state building his fairytale castle.
To quote the official history: The king's refusal to react rationally led the government to declare him insane and depose him in 1886 a procedure not provided for in the Bavarian constitution. Ludwig II was interned in Berg Palace. The next day he died in mysterious circumstances in Lake Starnberg, together with the psychiatrist who had certified him as insane.
Hear! Hear! To the above! To fill in the gaps I highly recommend this phenomenal piece of background research which makes a lot of things that much clearer. The New U.S.-British Oil Imperialism Facts Of Proof
no question about it . The energy supplies will eventionally mostly be sold regionally to china. No market price mechanism. Isolation of america. Fine. Remember America is the only country willing to pay the most for energy. The old world does not work that way.Remove america from the equation and the oil producers will recieve less money or a partial payment at best. The only answer is a free market.There is no escape from reality.
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