In the past two weeks while NATO was issuing empty threats and the EU was holding its collective breath Russia was busy cementing its energy ties with China and India. In the case of China, Gazprom, Europe's most important supplier of natural gas, is preparing to announce the completion of a "holy grail" natural gas supply deal with Beijing. A deal that would send geopolitical shockwaves around the world and bind the two nations in a commodity-backed axis. A deal that would see Russia in a position to tell the EU countries they'd better stock up on blankets 'cause next winter could be a cold one.
Then a couple of days ago Reuters reported that Rosneft, the world's top listed oil producer by output, may join forces with Indian state-run Oil and Natural Gas Corp to supply oil to India. Apparently pushing Russia into the warm embrace of the world's most populous nation wasn't enough for the neo-cons, now there's a deal with the second most populated country in the world, India. Rosneft said it had also agreed with ONGC to join forces in Rosneft's yet-to-be built liquefied natural gas plant in the far east of Russia to the benefit of Indian consumers.
Russia is the world's top oil producer, pumping over 10 million barrels per day. Rosneft also has plans to triple oil flows to China to over 1 million barrels per day in coming years. As well, the head of Indian conglomerate Reliance Industries also announced potential cooperation in developing Russia's offshore resources, viewed by Moscow as a source of future oil production growth. Then there's the trip Rosneft CEO Igor Sechin quietly made to Japan, South Korea and Vietnam last week. Behind the scenes, the Russians are preparing for financial warfare, the EU is not amused.
While Obama, who fears the flapping of neo-con hawks in this mid-term election season and Harper says -well, who the hell cares what Harper says - try escalate the fight with Russian President Putin over Ukraine, the Europeans are reluctant to stoke a fire that would consume their fragile economy and ignite more fires of political discontent. Under EU rules, unanimity is required to impose sanctions. Angela Merkel has been the most forthright among EU leaders in advocating mediation, a position backed to varying degrees by France, Britain, the Netherlands and Italy - five of the largest and most powerful EU member states.
All this would only make Obama and NATO look like 'paper tigers' spouting hot air if it weren't for the fact that the only reason the American Empire still exists is the petrodollar and every country in the world [except maybe Canada] is looking for the exit from the petrodollar. Every country is forced to collect US dollars, the reserve currency, because that is the only currency energy deals are concluded in creating an unreal upward force on the dollars value.
Instead, if energy deals were concluded in any other currency or gold or?, the US dollar would plummet in value. In the US the cost of imports would skyrocket, GDP and the stock market would plunge. The US's exceptionalism fantasy is only supported by one shaky column - the petrodollar. The US Federal Reserve by printing $65 billion dollars every month, including $40 billion a month in worthless purchases of mortgage-backed securities, means the Fed is now wholly committed to the creation of money out of thin air to cover old debts. This makes every dollar in existence worth less every month. If not for its reserve currency status, the US's only exceptional characteristic would be the speed of its plunge into depression.
As the ZeroHedge article 'Petrodollar Alert: Putin Prepares To Announce "Holy Grail" Gas Deal With China' explains, "While the west monetizes its debt, revels in the paper wealth created from an all time high manipulated stock market the biggest geopolitical tectonic shift since the cold war accelerates with the inevitable firming of the "Asian axis" [Russia-China-India].
More tomorrow on how Russia and the other BRICS countries [Brazil-Russia-India-China-South Africa] are well on their way to establishing a new world order in energy payments, how pissing off Putin has only hastened that change and how the idiocy poking the bear and the neo-con agenda, is suicidal for US hegemony but liberating for everyone else.
