The quagmire in Ukraine ties up the Russian energy industry. This is payback for the Russian disruption of the Petrodollar.
The Russo-Chinese Energy Deals
The Russians responded to the setbacks in Ukraine by forging massive energy deals with China. These deals did help to ensure the future of the Russian oil industry. However, these deals do nothing to aid Putin in the reconstruction of the former Soviet Union.
At the heart of the American economy and the Petrodollar is energy and Russia and China just cemented an agreement where they do not need the dollar. The Russia –China $400 billion energy deal, signed in May of 2014, will by 2018 have some 38 billion cubic meters of gas flow through the so-called ‘Holy Grail’ pipeline from the largest gas producer, Russia, to the largest energy user, China. This deal is many things at once: It is, of course a symbolic step in the process of decoupling hydrocarbon trading from the dollar, as it foresees payments in local currencies, rubles and yuan. It sidesteps the Petrodollar for hydrocarbon trading. Over one-third of the planet just moved away from the dollar when this recent deal was cemented.
As if the Russian-Chinese energy deal is not bad enough, the BRICS are driving a stake into the American economy as they have set up a new development and investment bank for all of the BRICS countries. The banks will be headquartered in Shanghai, China, with the first president of the bank will be from India.
The Turkey Factor
In a direct means to compensate for the loss of Ukraine as an energy hub, Russia reached out to NATO member Turkey and reached an accord to bypass Ukraine as a conduit for oil shipments.
Turkey’s gas deal, inked with Russia in the Spring of 2014, represents one more time that the grand chess master, Putin, had apparently outmaneuvered the amateur checkers player, Obama. With this gas deal, Turkey may not have formally left NATO, but make no mistake about it, Turkey had left NATO with this deal. Further, Russia could bypass Ukraine with regard to the shipment of Russian oil.
Turkey and Russia are long-time adversaries since the implementation of the Cold War and the advent of the 1947 Truman Doctrine. This gas deal looked like a staggering blow to the U.S. and NATO because Turkey has been not only a key NATO ally, but it has been the linchpin of all American efforts to bypass Russia with oil and gas pipelines. The situation caused by the Turkey-Russia gas deal was so dire, that in the event of World War III, the U.S. would be forced to destroy this pipeline. In other words, Turkey has just become a military ally with Russia.
South Stream was supposed to run through the Black Sea, Bulgaria, Serbia and Hungary into Austria and points west and it attempted to counter South Stream by proposing another pipeline, called “Nabucco” which was to have linked Austria, Hungary, Romania and Bulgaria with Turkey and Azerbaijan. This pipeline failed because the United States failed to secure funding for the pipeline and or a source of gas. Are you keeping a body count of the NATO allies which are going to have extreme difficulty heating their homes and businesses and are now subject to Putin’s blackmail? From a military perspective, these nations provide a buffer between Russian invasion of America’s primary NATO allies of Germany, France, Italy and the UK. Putin will now focus on seeking defectors from these four allies.
The United States/Federal Reserve avoided catastrophe because they were able exert enough pressure on Turkey to withdraw from their Russian deal. Turkey backed of this deal in July of 2015 after the CIA began to exert real pressure on Turkey.
Checkmate on Putin and his attempt at using oil to blackmail members of NATO into leaving the alliance.
Putin will not be denied his dream of one day ruling over a resurrected Soviet Union. Subsequently, Putin called Obama’s bluff and invaded Syria and now Russian/Syrian forces are preparing to force all rebels out of the country. Syria also serves as a base of operations for Russian military activity in the Middle East. If I were to hazard a guess, I believe that Putin will chase ISIS into Jordan and World War III will commence.
Russian and Chinese Strategy
It is interesting that Russia and China have adopted similar strategies with regard to simultaneously attacking American alliances which will serve to weaken the American economy. In the South China Sea, China is imperiling Taiwan’s economy through disrupting trade in the South China Sea. Further, these moves by China imperil any economic benefit by the United States participation in the TPP. On the other hand, Russia has driven a wedge into NATO, even though he was not able to kill NATO. However, Germany did come out in support of Russia’s invasion of Syria.
It is clear that Russia and China are attacking America’s alliances in preparation for WW III.
The joint Chinese/Russian strategy which seeks to weaken the US and separate her from her military and economic allies is having some effect. It is a “death by a 1000 cuts strategy”.
The United States on the other hand, has been successful in preserving its alliances and blocking the re-emergence of the Soviet Union.
At what point do these frustrations boil over and the shooting starts for real? When the US Air Force and the Russian Air Force can make visual contact between each other’s planes in Syria, it is just a matter of time until this cold war turns hot.
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