Russian sanctions hurt (II)
by Don Hank
I have shown in a previous commentary that sanctions against Russia have really hurt. But not the Russians. They boomeranged on the US. How? By strengthening economic and military relations between Russia/Eurasian region and the rest of the world (eg, the accession of almost all US allies to the AIIB), military and economic coalition with China, lucrative contracts with the Saudis, India, etc.
As the icing on the cake, today I was translating an article in the Chinese economic daily finance.sina.com which shows that Russia in June sold a record amount of oil to China, and this, according to the article, for two reasons:
1—The Saudis obligingly raised their Asian benchmark oil prices selectively for Asia only, giving Russia the edge as an oil seller. (See the below time line for clues as to why the Saudis did this).
2—These oil deals with China are settled in yuan (RMB) making them more attractive to China in terms of both monetary policy (strengthening the RMB) and economics.
The latter fact is bad news for the dollar. The main thing propping up the USD is country-to-country trade settled in USD. The whole purpose of the petrodollar agreement with the Saudis in 1973 was to oblige them to accept payment only in USD for the purpose of maintaining an artificially high value of the dollar. Now Saudi Arabia itself is in fact sabotaging that deal, while sticking to the letter of it. This was a stroke of genius on someone’s part, and I think that someone was Russian President Putin.
Look at what Putin had been up to since no later than the end of 2014:
Timeline of Russia-Saudi negotiations.
1—December 2014, Putin meets with Saudi Intel Chief in Moscow
2—April 2015 King Salman bin Abdulazziz el-Saud calls Putin, sets up visit in June. (Was this motivated by the outcome of the Dec meeting?)
3—June 2015, Saudis raise benchmark oil price for Asia
4—June 2015, Russia signs 6 nuclear energy contracts with the Saudis (quid pro quo for the raised Asian oil prices?)
5—July 2015, Russia announces sale of Iskander missiles to Saudis (more quid pro quo for the raised Asian oil prices?)
There are no coincidences in events involving Russia. The tit-for-tat here is obvious. The Saudis got beefed up defenses and nuclear energy deals. Russia got a chance to sell more oil. Of course, for obvious reasons, the paper trail here omits the main details. The Saudis never disclose all the details of their agreements with other countries. But anyone who pays attention and knows what to look for can easily extrapolate the hidden details of these bargains.
Watch for more surprises soon.
As Donald Trump said: The decision makers in US policy are stupid.
PS: Speaking of stupid policy, did you happen to read about that fist fight that broke out in the Japanese Parliament over the latest change in the Japanese constitution allowing their armed forces to join with the US in its military adventures? An increasing number of Japanese are waking up to the insanity of US military policy and want nothing to do with US wars designed to be lost. Yet establishment thugs managed to pass this potentially disastrous piece of legislation, almost certainly under pressure from the war hawks in Washington.
Russian and US tactics are as different as day and night. Russia makes offers that tempt and reward. The US applies pressure and threats to punish.
Which side is winning?