Saturday, 20 December 2014

The Real Reason Russia Cancelled South Stream



However the Europeans did not envisage that Russia would just supply them with energy.  Rather they always supposed this energy would be extracted for them in Russia by Western energy companies.  This after all is the pattern in most of the developing world.  The EU calls this “energy security” – a euphemism for the extraction of energy in other countries by its own companies under its own control.
It never happened that way.  Though the Russian oil industry was privatised it mostly remained in Russian hands.  After Putin came to power in 2000 the trend towards privatization in the oil industry was reversed.  One of the major reasons for western anger at the arrest of Khodorkovsky and the closure of Yukos and the transfer of its assets to the state oil company Rosneft was precisely because it reversed this trend of privatization in the oil industry.
In the gas industry the process of privatisation never really got started.  Gas export continued to be controlled by Gazprom, maintaining its position as a state owned monopoly gas exporter.  Since Putin came to power Gazprom’s position as a state owned Russian monopoly has been made fully secure.
Much of the anger that exists in the west towards Putin can be explained by European and western resentment at his refusal and that of the Russian government to the break up of Russia’s energy monopolies and to the “opening up” (as it is euphemistically called) of the Russian energy industry to the advantage of western companies.  Many of the allegations of corruption that are routinely made against Putin personally are intended to insinuate that he opposes the “opening up” of the Russian energy industry and the break up and privatisation of Gazprom and Rosneft because he has a personal stake in them (in the case of Gazprom, that he is actually its owner).  If one examines in detail the specific allegations of corruption made against Putin (as I have done) this quickly becomes obvious.
This agenda of forcing Russia to privatise and break up its energy monopolies has never gone away.  This is why Gazprom, despite the vital and reliable service it provides to its European customers, comes in for so much criticism.  When Europeans complain about Europe’s energy dependence upon Russia, they express their resentment at having to buy gas from a single Russian state owned company (Gazprom) as opposed to their own western companies operating in Russia.
This resentment exists simultaneously with a belief, very entrenched in Europe, that Russia is somehow dependent upon Europe as a customer for its gas and as a supplier of finance and technology.
This combination of resentment and overconfidence is what lies behind the repeated European attempts to legislate in Europe on energy questions in a way that is intended to force Russia to “open up” its the energy industry there.
The first attempt was the so-called Energy Charter, which Russia signed but ultimately refused to ratify.  The latest attempt is the EU’s so-called Third Energy Package.
This is presented as a development of EU anti-competition and anti-monopoly laws.  In reality, as everyone knows, it is targeted at Gazprom, which is a monopoly, though obviously not a European one.
This is the background to the conflict over South Stream.  The EU authorities have insisted that South Stream must comply with the Third Energy Package even though the Third Energy Package came into existence only after the outline agreements for South Stream had been already reached.
Compliance with the Third Energy Package would have meant that though Gazprom supplied the gas it could not own or control the pipeline through which gas was  supplied.
Were Gazprom to agree to this, it would acknowledge the EU’s authority over its operations.  It would in that case undoubtedly face down the line more demands for more changes to its operating methods. Ultimately this would lead to demands for changes in the structure of the energy industry in Russia itself.
What has just happened is that the Russians have said no.  Rather than proceed with the project by submitting to European demands, which is what the Europeans expected, the Russians have to everyone’s astonishment instead pulled out of the whole project.
This decision was completely unexpected.  As I write this, the air is of full of angry complaints from south-eastern Europe that they were not consulted or informed of this decision in advance.  Several politicians in south-eastern Europe (Bulgaria especially) are desperately clinging to the idea that the Russian announcement is a bluff (it isn’t) and that the project can still be saved.  Since the Europeans cling to the belief that the Russians have no alternative to them as a customer, they were unable to anticipate and cannot now explain this decision.
Here it is important to explain why South Stream is important to the countries of south-eastern Europe and to the European economy as a whole.
All the south eastern European economies are in bad shape.  For these countries South Stream was a vital investment and infrastructure project, securing their energy future.  Moreover the transit fees that it promised would have been a major foreign currency earner.
For the EU, the essential point is that it depends on Russian gas.  There has been a vast amount of talk in Europe about seeking alternative supplies.  Progress in that direction had been to put it mildly small.  Quite simply alternative supplies do not exist in anything like the quantity needed to replace the gas Europe gets from Russia.
There has been some brave talk of supplies of US liquefied natural gas replacing gas supplied by pipeline from Russia.  Not only is such US gas inherently more expensive than Russian pipeline gas, hitting European consumers hard and hurting European competitiveness.  It is unlikely to be available in anything like the necessary quantity.  Quite apart from the probable dampening effects of the recent oil price fall on the US shale industry, on past record the US as a voracious consumer of energy will consume most or all of the energy from shales it produces.  It is unlikely to be in a position to export much to Europe.  The facilities to do this anyway do not exist, and are unlikely to exist for some time if ever.
Other possible sources of gas are problematic to say the least.  Production of North Sea gas is falling.  Imports of gas from north Africa and the Persian Gulf are unlikely to be available in anything like the necessary quantity.  Gas from Iran is not available for political reasons.  Whilst that might eventually change, the probability is when it does that the Iranians (like the Russians) will decide to direct their energy flow eastwards, towards India and China, rather than to Europe.
For obvious reasons of geography Russia is the logical and most economic source of Europe’s gas.  All alternatives come with economic and political costs that make them in the end unattractive.
The EU’s difficulties in finding alternative sources of gas were cruelly exposed by the debacle of the so-called Nabucco pipeline project to bring Europe gas from the Caucasus and Central Asia.  Though talked about for years in the end it never got off the ground because it never made economic sense.
Meanwhile, whilst Europe talks about diversifying its supplies, it is Russia which is actually cutting the deals.
Russia has sealed a key deal with Iran to swap Iranian oil for Russian industrial goods.  Russia has also agreed to invest heavily in the Iranian nuclear industry.  If and when sanctions on Iran are lifted the Europeans will find the Russians already there.  Russia has just agreed a massive deal to supply gas to Turkey (about which more below).  Overshadowing these deals are the two huge deals Russia has made this year to supply gas to China.
Russia’s energy resources are enormous but they are not infinite.  The second deal done with China and the deal just done with Turkey redirect to these two countries gas that had previously been earmarked for Europe.  The gas volumes involved in the Turkish deal almost exactly match those previously intended for South Stream.  The Turkish deal replaces South Stream.
These deals show that Russia had made a strategic decision this year to redirect its energy flow away from Europe.  Though it will take time for the full effect to become clear, the consequences of for Europe are grim.  Europe is looking at a serious energy shortfall, which it will only be able to make up by buying energy at a much higher price.
These Russian deals with China and Turkey have been criticised and even ridiculed for providing Russia with a lower price for its gas than that paid by Europe.
The actual difference in price is not as great as some allege.  Such criticism anyway overlooks the fact that price is only one part in a business relationship.
By redirecting gas to China, Russia cements economic links with the country that it now considers its key strategic ally and which has (or which soon will have) the world’s biggest and fastest growing economy.  By redirecting gas to Turkey, Russia consolidates a burgeoning relationship with Turkey of which it is now the biggest trading partner.
Turkey is a key potential ally for Russia, consolidating Russia’s position in the Caucasus and the Black Sea.  It is also a country of 76 million people with a $1.5 trillion rapidly growing economy, which over the last two decades has become increasingly alienated and distanced from the EU and the West.
By contrast, by redirecting gas away from Europe, Russia leaves behind a market for its gas which is economically stagnant and which (as the events of this year have shown) is irremediably hostile.  No one should be surprised that Russia has given up on a relationship from which it gets from its erstwhile partner an endless stream of threats and abuse, combined with moralising lectures, political meddling and now sanctions.  No relationship, business or otherwise, can work that way and the one between Russia and Europe is no exception.
I have said nothing about Ukraine since in my opinion this has little bearing on this issue.
South Stream was first conceived because of Ukraine’s continuous abuse of its position as a transit state – something which is likely to continue.  It is important to say that this fact was acknowledged in Europe as much as in Russia.  It was because Ukraine perennially abuses its position as a transit state that the South Stream project had the grudging formal endorsement of the EU.  Basically, the EU needs to circumvent the Ukraine to secure its energy supplies every bit as much as Russia wanted a route around Ukraine to avoid it.
Ukraine’s friends in Washington and Brussels have never been happy about this, and have constantly lobbied against South Stream.  The point is however that it was Russia which pulled the plug on South Stream when it had the option of going ahead with it by accepting the Europeans’ conditions.  In other words the Russians consider the problems posed by the Ukraine as a transit state to be a lesser evil than the conditions the EU was attaching to South Stream .
South Stream would anyway take years to build and its cancellation therefore has no bearing on the current Ukrainian crisis.
The reason the Russians decided they could cancel it is because they have decided Russia’s future is in selling its energy to China and Turkey and other states in Asia (more gas deals are pending with Korea and Japan and possibly also with Pakistan and India) than to Europe.  Given that this is so, for Russia South Stream has lost its point.  That is why in their characteristically direct way, rather than accept the Europeans’ conditions, the Russians pulled the plug on it.
In doing so the Russians have called the Europeans’ bluff.  So far from Russia being dependent on Europe as its energy customer, it is Europe which has antagonised, probably irreparably, its key economic partner and energy supplier.
Before finishing I would however first say something about those who have come out worst of all from this affair.  These are the corrupt and incompetent gaggle of politicians who pretend to be the government of Bulgaria.  Had these people had a modicum of dignity and self respect they would have told the EU Commission when it brought up the Third Energy Package to take a running jump.  If Bulgaria had made clear its intention to press ahead with the South Stream project, there is no doubt it would have been built.  There would of course have been an almighty row within the EU as Bulgaria openly flouted the Third Energy Package, but Bulgaria would have been acting in its national interests and would have had within the EU no shortage of friends.   In the end it would have won through.
Instead, under pressure from individuals like Senator John McCain, the Bulgarian leadership behaved like the provincial politicians they are, and tried to run at the same time with both the EU hare and the Russian hounds.  The result of this imbecile policy is to offend Russia, Bulgaria’s historic ally, whilst ensuring that the Russian gas which might have flown to Bulgaria and transformed the country, will instead flow to Turkey, Bulgaria’s historic enemy.
The Bulgarians are not the only ones to have acted in this craven fashion.  All the EU countries, even those with historic ties to Russia, have supported the EU’s various sanctions packages against Russia notwithstanding the doubts they have expressed about the policy.  Last year Greece, another country with strong ties to Russia, pulled out of a deal to sell its natural gas company to Gazprom because the EU disapproved of it, even though it was Gazprom that offered the best price.
This points to a larger moral.  Whenever the Russians act in the way they have just done, the Europeans respond with bafflement and anger, of which there is plenty around at the moment.  The EU politicians who make the decisions that provoke these Russian actions seem to have this strange assumption that whilst it is fine for the EU to sanction Russia as much as it wishes, Russia will never do the same to the EU.  When Russia does, there is astonishment, accompanied always by a flood of mendacious commentary about how Russia is behaving “aggressively” or “contrary to its interests” or has “suffered a defeat”.  None of this is true as the rage and recriminations currently sweeping through the EU’s corridors (of which I am well informed) bear witness.
In July the EU sought to cripple Russia’s oil industry by sanctioning the export of oil drilling technology to Russia.  That attempt will certainly fail as Russia and the countries it trades with (including China and South Korea) are certainly capable of producing this technology themselves.
By contrast through the deals it has made this year with China, Turkey and Iran, Russia has dealt a devastating blow to the energy future of the EU.  A few years down the line Europeans will start to discover that moralising and bluff comes with a price.  Regardless, by cancelling South Stream, Russia has imposed upon Europe the most effective of the sanctions we have seen this year..
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Keiser Report: Ruble’s Baptism by Fire

Max Keiser and Stacy Herbert are joined by Liam Halligan of They talk rubles, sanctions and diversifying the economy with some technology investments. In the second half, Max interviews Konstantin Gurdgiev about the ruble, the Russian budget and David Cameron’s take on the causes and consequences of the crisis and sanctions. They also discuss the ruble’s ‘baptism by fire’ as it only just joined the five 


German Report How Turkey Arms and Sends Wahhabi Jihadists into Syria

Will the "Coalition of the Willing" bomb jihadists into power in Syria?
Most Syrians are much more afraid of the anti-government jihadists than of any other force fighting on the ground. NATO member Turkey is mainly responsible for the growing number of al-Qaeda affiliated jihadists in Syria.

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Sisi brings back Egypt’s police state with a vengeance

Published Saturday, December 20, 2014



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Che Guevara is laughing for Cuba has triumphed

Che Guevara, the iconic revolutionary, in 1958. AFP/Getty Images/Antonio Nunez Jimenez
Published Friday, December 19, 2014
The sun sets behind the old neighborhoods in Havana. Lovers are scattered along the Corniche. Here, there is no racism, no religious doctrines and sects, no wars by “ISIS” and “al-Nusra Front,” and no Dahes wal-Ghabra’ battles. There are lovers from different ethnicities and races. Their African and Spanish origins give distinctive charm to the Cuban nights. The city sways to the sounds of salsa music blaring from cars parked at both sides of the street.
Havana – Slogans against the neighboring United States line the road between Havana and Santa Clara. Among the banners are pictures of the ‘Cuban Five,’ detainees who were held at the infamous Guantanamo Bay detention camp, and who the United States accused of infiltrating the Cuban opposition in the United States. Their arrest became a diplomatic issue between the two countries.
The employee at the car rental company smiles. He wipes the dust off the windshield of a car, goes underneath it and rises up, walks around it to make sure there are no damages, and then presents the rental paper for signing. He smiles again and says,
“I wish I could go with you to Santa Clara.” Like all the people in his beautiful and warm country, he seems to have maintained his love for that who is in Santa Clara.
Before leaving the capital Havana, we spot the United States Interests Section building, on which 138 black flags are raised. This is how Cuba blocked the electronic screen installed on the fifth floor of the “espionage section” – as they call it here – to prevent the broadcasting of anti-regime propaganda. Relations have slightly improved during President Barack Obama’s terms, but Cuba continues to suffer from injustice by its neighbor.
In the spring of 1960, US Secretary of State Christian Herter expressed the need to take a “positive position which would call forth a line of action while as adroit and inconspicuous as possible makes the greatest inroads in denying money and supplies to Cuba, to decrease monetary and real wages, to bring about hunger, desperation and overthrow of government.”
Cuba endured starvation and remained steadfast. It stood high and upheld the dignity of its freedom fighters.
“Would you please show us the way to Santa Clara?” The Cuban woman clad in white smiles and bends over towards us, almost poking her head through the window. She says that she is heading to a place not far from the area. She tries to climb into the back seat, but we ask her to sit next to the driver. I sat in the back seat.
She praises our respect for women. She asks where we come from and seems more interested in knowing what is going on in our country. Here, popular culture is more inclined towards literature, arts, science, and medicine. The people seem to have had enough suffering. She says that Palestine used to be the only thing she knew about the Arab world. Despite its modest capabilities, Cuba today still hosts and sponsors Palestinian students. Today, the Cuban woman knows Syria, Iraq, the Islamic State in Syria and Iraq (ISIS), Tunisia, Yemen, and Egypt. She smiles and says,
“Beware of the United States and NATO… they are the cause of our problems.”
Her name is Maria. Her modest golden ring perhaps holds one of the many beautiful love stories in Cuba. We all go silent. She places her right hand on the car window, salutes people standing on the sidewalk as if she knows them, guides us to our destination, thanks us and gets out of the car. Here, the people are kind and love life. They are well-read and have been patient for the duration of the sanctions imposed on their country. They dream of having some extent of luxury, but not at the expense of their dignity.
Maria crosses about 50 kilometers every day to and from work. She has two degrees, one in nursing and another in world literature. A picture of Che Guevara is pinned to her chest. Pictures of “Che” – as he is affectionately called here – spread along the road between Havana and Santa Clara. He is smiling in all pictures. It is as if he is laughing at where the United States has come to be on the world stage – or perhaps at what remains of the Arab left in the era of the Islamic caliphate.
Guevara was not Cuban. He was an Argentinian doctor, intellectual, and writer. He came to Cuba to support the revolution. He was loved by the people, and his image became engraved in every heart and street. His pictures abounded after his death, while pictures or statues of Cuban leader Fidel Castro are rarely seen. Leaders here revolt, triumph, and build their country. In countries where statues are revered, the leaders rob their people.Here, history recognizes rebels and leaders alike. There, history damns both the statues and who they represent.
How beautiful Santa Clara is. The statue of Che Guevara rises skyward. It stands tall above the grave, which has become a pilgrimage site and the most visited by tourists. A square-shaped picture of the handsome rebel hangs between round-framed pictures of his comrades in struggle and revolution. A pink lily flower sits next to the picture, under which a torch burns day and night – as did the revolution – and like the dignity of the people in Cuba today.
The receptionist smiles at us. She realizes that we – as millions of visitors before us – came to experience the flame of a real revolution. Here, the revolution did not consume its children, just as others did not consume the revolution. The employee smiles and reminds us that taking photographs is forbidden, and then continues reading. We ask if we are required to pay an entrance fee. She closes the book, laughs, removes her glasses, and says in Spanish, “Dear comrades, the revolution is not for sale.” Former allies in our revolutions, who are currently part of the NATO alliance, came to my mind.
Many personal belongings of Che Guevara and his companions are here: his identity card carrying his birth date in 1928, his camera which captured the last photos of the rebels, a cup of maté (a green drink similar to tea), a Colt pistol, military clothing, an old radio, a leather belt, and many pictures of the rebel beau with the revolution’s leader Fidel Castro. Each piece is accompanied with several explanations.
Visitors of the memorial experience a strange feeling. It could be the significance of the place, or perhaps the honorable history which is embodied in a rebel’s smile and some of his belongings.
Like us, about 1,500 visitors come to the memorial every day. If every visitor pays just one dollar, it would help improve conditions in Cuba. But here, the revolution is not for sale. The majority of visitors are Italians. The memorial attendant jokingly says, “especially Italian women.”
We are the only Arabs on the visitors’ list. Arabs do not care about the history of the Cuban revolution, or perhaps do not like this type of tourism. Arab money is accumulated in American banks, is spent in the streets of Europe and at nightclubs and casinos, or is sent to terrorist takfiri groups to ruin other countries, some which look like Cuba. The attendant feels happy when we tell her that Che’s image is also engraved in the hearts and homes of many in the Arab countries.
The Cuban night falls on Santa Clara. We pull a cigar from the yellow pack, as most Cubans do. Here, cigars are not limited to the corrupt, the illegally wealthy, or politicians who rob the people, as is the case in our country. The cigar here is not a symbol of status or social class. Refuse collectors, restaurant waiters, taxi drivers, intellectuals, politicians, and everyone smoke cigars. The cigar is the pride of Cuba.
Cuban nights are beautiful. There is a general sense of happiness that rises above the dire economic situation and inhabits the hearts of the people. Since the early evening, Cuban music blares from houses, kitchens, and cafes. Cubans in their summer clothes gather in front of their houses. They bring out food and drinks, and dance to the sounds of music. It is commonplace to see housewives dancing with their ​​husbands. Everyone is hospitable, and hosts would walk hundreds of kilometers to accompany a guest who gets lost. The people exude kindness that is rare to find in any country in the world.
Cuba’s revolution did not come out of nowhere. The country’s history has a lot of similarities with the history of the Arab countries. Since its independence in 1902, Cuba has known how to punish corrupt rulers linked to the United States. The American neighbor did not hesitate to violate its smaller neighbor. The United States attacked Cuba at least three times, and helped install and protect the dictator Fulgencio Batista, who suppressed the people and sold his country’s resources to the West. Does he remind you of anyone? Does he not remind you of many rather than one?
Batista arrested the young Fidel Castro. In the dictator’s prison, Castro wrote his famous letters: “History Will Absolve Me.” And history did him justice. The Soviet Union became his ally. China supported him. The United States severed ties with its neighbor, which became a powerful symbol of dignity. The infection of revolution spread. Pictures of Che Guevara sprouted like glorious lilies across Latin America and Africa. He continued to raise the banner of pride and dignity until he was betrayed by Bolivia itself, where he revived revolutionary sentiment.
Guevara was martyred. The revolution triumphed. America was enraged, and sought to suffocate Cuba economically by punishing all companies that do business with the country. Does this remind you of something? The Europeans put their support behind Washington. How history repeats itself. The helpless United Nations – which sometimes condemns, and at other times just lies dormant – slept more than it should, just as it does when it comes to Palestine.
Cuba held its ground and stood tall. It made of its people’s dignity a commitment, and of their pride a beacon. Then came the idiotic invader George W. Bush. Iraq’s Nero sought to punish the rebellious neighbor. He said,
“We will soon bring down the Cuban regime.”
Guevara laughed in his picture and Castro scoffed at him. He said from his hospital bed:
“Bush should remember that we defeated Batista although we were just a thousand men while the Cuban dictator had 80,000 men… we will turn the life of the invader into hell.”
Threats were useless, and sanctions did not undermine the dignity of the people or education in the country. Cuba advanced scientifically, medically, and culturally in an astounding manner. The country produced medicines and drugs to treat diabetes, cholesterol, and at least 13 infectious diseases that afflict children, and developed the first vaccine against epilepsy. The country exported drugs to over 40 countries, and more than 80,000 doctors worked in neighboring Venezuela under the faithful late Comrade Hugo Chavez.
Castro said to Bush:
“You can export bombs to the world, and we will export medicines and doctors.”
The wonderful opera song “Hasta Siempre, Comandante” plays on the radio. We turn the volume up. The car slides like the flow of the river between the lush trees. The evening breeze feels refreshing after two days in Santa Clara. The green fields, colored pastures, and old wooden houses in the Cuban villages smile at us. We listen to another version of the song played by a Cuban band. Many versions of this song have been released, glorifying the memory of a comrade who came from Argentina to say to the Cubans that revolting against dictatorship, oppression, tyranny, and colonialism is one. Sheikh Imam and his song “Guevara Died” come to mind. We feel like singing “Oh Comrades in Proud Cuba” by Marcel Khalife.
Here, the revolution was not for sale, and thus succeeded. Here, the Spring was led by genuine freedom fighters, and thus yielded dignity. Here, the people remained silent for half a century, forcing the United States to apologize and admit that its policy was wrong.
Congratulations to Cuba and its people, in the hope that the US’ return will not bring an end to that beautiful era, or to the cities which still retain the fragrance of the country’s history.
This article is an edited translation from the Arabic Edition.


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Published Saturday, December 20, 2014

"Lebanon considers this to be a major progress,” Salam said. “This resolution also paves the way for further compensation into other areas of damage (health, ecosystem services as habitat, potential groundwater contamination, and marine diversity), that were not considered in the current calculated amount.”
“Furthermore, its adoption asserts the will of the overwhelming majority of the international community to hold countries responsible for their internationally wrongful acts,” he added.
“We affirm that Lebanon will continue to mobilize all resources and resort to all legal means to see that this resolution is fully implemented, and that the specified compensation is paid promptly.”
In a statement, Israel condemned the resolution as “[serving] no purpose other than to contribute to institutionalizing an anti-Israel agenda at the UN,” Israeli media reported.
The oil spill was caused by Israel's air force when it bombed oil tanks near a coastal Lebanese power plant during its fierce month-long war with Hezbollah resistance fighters.
The attack flooded the Mediterranean coastline with 15,000 tons of oil, according to the United Nations.
The adopted resolution cited $856.4 million (700 million euros) in damages caused by the oil spill, accounting for inflation of a October 2007 estimate by the United Nations Secretary General that reported the spill caused $729 million in damage.
Lebanon bore the brunt of the spill, but the Syrian coast and other Mediterranean countries have suffered as well, the UN said.
The oil slick made by the spill "has had serious implications for livelihoods and the economy of Lebanon," the resolution said.
The UN asked Lebanon to continue clean-up efforts and the international community to increase funding for its environmental restoration.
The US, Australia, Canada and Israel were among the six states that voted against the UN text.
(AFP, Al-Akhbar)
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