Abu Dhabi, UAE CNN — Saudi Arabia and Iran announced on Friday that they had agreed to reestablish diplomatic ties after seven years of hostility, in a deal between the regional archrivals that could have wide-ranging implications for the Middle East. Riyadh and Tehran plan to reopen their embassies within two months in an agreement mediated by China, Saudi Arabia and Iran said in a joint statement after talks in Beijing on Friday. They also plan to reimplement a security pact signed 22 years ago under which both parties agreed to cooperate on terrorism, drug-smuggling and money-laundering, as well as reviving a trade and technology deal from 1998.
Friday’s announcement is also a diplomatic victory for China in a Gulf region that has long been considered part of the US’ domain of influence. It comes as the Biden administration tries to notch its own win in the Middle East by trying to broker a normalization pact between Israel and Saudi Arabia.
Talks had been ongoing since March 6 in Beijing between Iranian national security chief Ali Shamkhani, Saudi national security council adviser Mosaed Bin Mohammad Al-Aiban and China’s top diplomat Wang Yi, according to Iranian state media. Video of the signing ceremony aired by Iranian media showed officials seated around tables on opposite sides with the Saudi Arabian, Iranian and Chinese flags around them.
“We will continue to play a constructive role in properly handling hotspot issues in today’s world in accordance with the wishes of all countries and demonstrate our responsibility as a major country,” Wang said, adding that Chinese President Xi Jinping supported it since the beginning. In an apparent push back to American influence, Wang said that “the world is not limited to the Ukraine issue” while emphasizing that the fate of the Middle East should be determined by the people of the Middle East.
https://www.cnn.com/2023/03/10/middleeast/saudi-iran-resume-ties-intl/index.html
Comment: JamesT brought this to my attention earlier today. He’s right. It is a big deal. My first thought was that this may finally bring peace, or an absence of war, to Yemen. This is a bold example of diplomacy as a tool of national power. Between the war in Ukraine and the threat of war in Taiwan, the West has been focused on the shininess of military power, with a little economic power thrown in the mix in the form of sanctions. Come to think of it, though, the revival and strengthening of the NATO alliance is quite the diplomatic accomplishment. Still, we’re clearly focused on military power. The bottom line is that Chinese diplomacy has made the rest of the world’s powers look small and foolish.
Another possible outcome of this Chinese diplomatic coup is the weakening and possible collapse of the all powerful petro-dollar. I don’t see this as a sure thing, but it’s possible as an Indian observer, S.L. Kanthan, put it today.
“The Saudi-Iran peace brokered by China today may very well be the cornerstone for petro-yuan — i.e., oil being sold for Chinese yuan. Obviously, this detente also paves the way for both Saudi Arabia and Iran to join BRICS. Imagine a BRICS+ with three oil giants — Russia, Saudis and Iranians. How hard will it be create a new currency that’s backed by oil and gas? Endless possibilities in a multipolar world!”
TTG
“….may very well be the cornerstone for petro-yuan…”
The demise of “petro-dollar” has been forecast by many for decades and of course amplified by the anti-American chorus as the death knell of the USA. These theories emanate from those who know very little about financial flows, eurodollars, banking and trade finance. Any commodity can be traded in any instrument today. If Saudi Arabia wants to sell their oil in yuan, they can do that now. However, they may not have many takers other than those who have yuan or who can trade their currency for yuan. What is the volume of yuan trades in forex markets today? Compare that to the USD.
To become a reserve currency, one has to first have an open capital account. Second, one has to have deep & liquid capital markets. Third, they have to be willing to export the reserve currency in sufficient quantities to lubricate global finance.
Neither CCP-run China nor any of the BRICS can do that today or anywhere in the immediate future. If CCP decide to open their capital account, for example, they may see a surge of capital outflows NOT inflows. How many Chinese businesses and wealthy CCP politburo members will want to get their capital out of Hotel California? Just see Mark Mobius’s recent comments, he can’t get his money out of China. On the contrary, reserve currency has been a burden to the US.
Folks need to learn more about global finance and capital flows! How many understand how the eurodollar system works?
I’ll make a bold prediction, that in the lifetime of the current generation and the next, the US dollar will reign supreme and in times of financial stress, capital will gravitate to the relative safety of US Treasury instruments, which is the ultimate collateral in today’s financial system.
BP,
Yes, most haven’t the knowledge of the plumbing of the global financial system. I’m honestly tired of these “petro-dollar” stories and the discussions that were had at SST on this topic in the past with folks with no expertise, opining based on some link or another quoting some well known person. As if the USD gained prominence because Saudi Arabia priced its oil in USD? I’ve read that Kissinger coined this term. A guy who knows not much about global financial flows and lending collateral.
With the exception of India, the rest of the BRICs are not exactly in the best shape balance sheet wise.
The acid test question is what is the preferred currency for a hooker in Bangkok? Write me when they demand yuan!
Walking home from Jr. High in ’60 I asked my friend Nineas if he was an Arab. “Hey Nin, you an Arab or sumpthin?” “Arab!! I am Persian. Persians use Arabs for camels; they are a stupid dirty people”. We were 14. Who told this to my friend? There is a ugly history of Persian dominance of the Arab and an equally ugly turn about centuries later. To make matters worse, after Mohammed’s death Arabs and Persians couldn’t agree on a proper successor. They still kill one another about this now and again. Then there is rank economic jealousy. Nature gave much more oil to the camels. They say the mid east keeps a long memory. Maybe the Chinese (who are interested in a peaceful western leg of their new silk road) have convinced the Persian and Arab of the power of lub and brohood…. nawww, I aint buyin it.
“…keeps a long memory.” Me too, 9/11. I’m sorry that our relationship with Iran is in such distress, perhaps to the point of war. I feel no such way toward the Saudis.
Sam, you are correct. The following is a piece after a Goldman report from 20 years ago. The BRICs aren’t doing too well, India maybe a tad better. The Renminbi is not reputable enough.
https://www.tabletmag.com/sections/news/articles/chinas-grim-future
Hmm, so Josef Joffe writes for Tablet too. I didn’t know. But yes, apparently he is not the editor of DIE ZEIT anymore. Indeed. I did not know that, either.
I missed he has to take-his-hat, as we call it, meaning had to leave his job as editor after it surfaced he prevented an article in 2016 about the lucrative cum-ex/or dividend stripping business, proudly informing his good friend Max Warburg of Warburg Bank of it. Well he could have retired ages ago, and strictly he is only “on leave” till the end of his contract Dec. 31, 2024.
https://en.wikipedia.org/wiki/CumEx-Files
Yes, investigative reporting is so boring and only for losers.
The subject of the article is the twenty year old Goldman report concerning the BRICs and how they have fared since then. China is not doing so well in the big picture in spite of an occasional headline.
Source and subject can be different things.
Sorry, Whitehall, babbling alert?!?
I have no money to invest in either US, Chinese or Ukrainian stock. Thus yes, I did not read the article, since I give a fly shit about economics. Otherwise, do check Tablet occasionally, just as Commentary, as a lot of other US media. Apart from that, I of course know that the BRIC are and will remain economical losers since ‘we’ will do (have to?)our very, very best to keep it that way. 😉
At what point did Japan stop to steal our expertise I wonder, and could it be that China while politically alien is a new variant on the copyright/superior expertise topic. …
The Bangkok hooker financial test is a good one. I the ’80’s a friend & I were ending up a WestPac tour drinking in a Seoul bar.
We put all of our left over Asian currency on the table & the waitress would pull the cost of the drinks out of the pile. The yen went 1st followed by the won, the baht & finally the pesos. Did the same thing at the end of a European fling pre-Euro. Having a final meal in a Turkish restaurant near teh Munich Airport. It was a Sunday night & it was Y2K & the German ATM wouldn’t accept our plastic. At the end of the meal when the grandfather presented our bill we laid our our collection of currencies. The Swiss francs & marks were counted out 1st followed by pounds & francs. Fortunately that covered the bill. The gentleman pointed to the pile of lira still on the table & said, “A million lira, just shit.”
Blue Peacock and Sam can ignore facts that are developing on the ground, but the rest of you should not. First, the “demise of the petro-dollar” should never be put forward as if one day there will suddenly be a replacement of the USD in all international oil transactions. What is occurring may be described as a slow chipping away of dollar dominance in oil trades internationally as the US makes a variety of moves that result in countries seeking to avoid the USD and trade in their own currencies. We should be aware of the increase in oil imports from Russia by both China and India, AND the fact that these deals are going through in Roubles, Rupees and Yuan. These shifts will be long lasting, as China, India and Russia no longer want to be exposed to the arbitrary sanctions gun that the US is using these days for foreign policy. It becomes a game of whack-a-mole as the US and Europe place Russian banks on the sanctions list and the Russians and Indians/Chinese scramble to find other financial institutions that will facilitate payments. When two countries are determined to trade together, they will find a way. How about oil trade from Iran to China? They use Yuan, USD and Euros, but the trend is an increase in sales in Yuan, as they slowly move away from western controlled currencies. These slow movements are NOT going to cause a sudden end to oil trade in USD, but the percentage of global oil trade in USD is falling and will continue to do so. This has ramifications.
I agree. The next generation however no. The BRICS countries will overthrow the West and the US dollar. Way too many people on that side of the table and way to many goods and labor. Their GDP will dwarf the west. The ponzi scheme of the dollar is going to die along with the socialists welfare state it created. It was fun I admit but the game is ending. I probably won’t get to see it end but maybe I do. I’m in my 40’s. I’m ok with it. It was a good run. Politicians will always burn a good system the ground if it means they get re-elected and this is where we are. They set it on fire. Just waiting for it to burn out.
Dude, you’re way too burnt for only being in your 40s. You’ve given too much already. Life is huge, only thieves covince you otherwise. Live Free – Die Old. Find your true calling and do that. The “game” never ends – so F the fear merchants.
Blue Peacock,
” one has to first have an open capital account. ”
Where, the City of London? LOL.
“How many understand how the eurodollar system works?”
Jerome Powell and the NY Banks know how it works, and how eurodollars and their creators in Europe have been screwing the USA for decades. That’s why Powell and Company are busy dismantling that system via SOFR and a rising interest rates.
BTW what reserves does the ECB have to back the Euro? Good luck with saving that currency.
Fred,
That ‘what backs the Euro’ question has come around before. It seemed for a while the answer would be something like the full faith and credit and depth of Germany’s check book.
Whitewall,
Germany, and to some extent France, have been manipulating the rest of the EU members by their control of monetary policy, and the U.S. via central bank issuance of debt denominated in dollars. Having internationalists like Bernanke, Paulson, and Geithner in the Obama administration meant the EU banks would get bailed out by the U.S. taxpayers. That won’t be happening this time, much to the detriment of Christine Lagarde, Janet Yellen, and the Blackrock boys.
Fred,
I got into a argument with Yves Smith at nakedcapitalism.com because I argued that Eurodollars are outside the “US dollar system” and thus are unsanctionable by the US. I believe I am right about that, and I believe that if China&friends want to build a successful challenge to the petrodollar they can best do it by first building their own Eurodollar banking system. That is how we compete in IT – if we are going to build a new standard we make it backward compatible with a very popular existing standard and then gradually move people to the new standard.
That discussion on NC about “dethroning the dollar” is pretty good IMO:
https://www.nakedcapitalism.com/2022/12/dethroning-the-dollar-why-the-alternatives-are-not-ready-for-prime-time.html
”…Eurodollars are outside the “US dollar system”…”
Banks outside the US create USD credit which are Eurodollars. Many don’t get the mechanics or the implications of this and the fact of its scale and size that provides enormous global USD liquidity and depth.
“China&friends want to build a successful challenge to the petrodollar they can best do it by first building their own Eurodollar banking system. “
Banks will solely determine if they do create credit in other currencies. Of course the first question they’ll ask is how they hedge such exposure. They will be unwilling take yuan exposure of size since China doesn’t have an open capital account nor deep capital markets to hedge exposure. China, Russia, Iran axis can’t force banks they don’t control to create yuan credit. That’s the nub!
Dethroning USD primacy is more than Xi, Putin and the Ayatollah deciding.
Sam,
“Banks outside the US create USD credit”
When did the US Government authorize banks outside the US to create such credit? Where are ‘banks’ – a term you should define, such as the European Central Bank, the Deutsche Bundesbank (the central bank of the Federal Republic of Germany), or some private bank such as Credit Suisse Group AG ? Why were/are they allowed to create debt that would potentially impact the value of the USD, especially if that debt turns out to be worthless, like a bunch of European debt right now? Similarly who set the interbank interest rates – LIBOR – for years? What is SOFR and what’s that doing LIBOR and to those banks that once set LIBOR rates?
Fred,
You should get up to speed on how banking works. It will answer your questions.
Banks like Credit Suisse or First Bank of Seychelles create credit. That is for every unit of deposits they can create some multiple of that as credit at a higher yield than what they pay on deposits and that’s their business at a fundamental level. Of course they can and do engage in all kinds of transactions where they can deploy their credit creation. Banks are leveraged institutions that borrow short and lend long. They have duration mismatch. They operate successfully because depositors don’t withdraw their money all at once which is why banks fail in a run as they don’t have immediate liquidity as their assets are long dated.
The US government has no say in the credit creation of these banks outside the US as they don’t fall under US government jurisdiction and regulations. The USD credit creation by banks outside the US is gargantuan and fuels global finance.
Sam,
You left out an explantion of SOFR and LIBOR and just how the conduct of the Fed is ending all that Eurodollar creation.
Fred,
On the topic of Eurodollars, you asked “When did the US Government authorize banks outside the US to create such credit?”.
If some bank in Russia wants to issue a dollar denominated IOU, they don’t need US permission to do so. That is what my understanding of what Eurodollars are – they are term deposits (as opposed to “on demand” deposits) and thus essentially IOUs. Because they have “dollar” in the name people think they are similar to dollars and thus subject to regulation by the Fed. My understanding is that this is a false assumption – they are just dollar denominated IOUs.
The reason that they are term deposits is that makes it much easier for the banks who deal in them to make sure their credits and liabilities balance (if they did not then the bank would be exposed to currency risk).
JamesT,
When the European banks were tottering on the edge of collapse in ’08-9 why did the US Government send them a bailout via lending through the Federal Reserve rather then let them collapse? That’s not happening this time out, which is doing what to Europe and all the Eurodollar market lending?
“Neither CCP-run China nor any of the BRICS can do that today”…
So what about the idea that the BRICS don’t like the concept of a reserve currency at all? That they first want to transact business between themselves in their own currencies without the need for an intermediary currency, and then extend that practice to the rest of the world?
As in: it isn’t about THEM becoming the holder of the new reserve currency, but about stripping the US dollar of that status?
I Think This was a Very Important Topic and Read For TTG to put up at this Time….Very Important..As Well as Blue Peacock getting into The Area Most Important about Whats going on and Raising The BRICS Flag At This Time…Very Important Event..
BRICS…Five Nations…Brazil…Russia..India..China…South Africa…
A Officially Formed Group at a Meeting in Yekaterinburg, Russia on June 16..2009
By The First Four Members who were Preplanning the Group in New York Meetings
first…and Later brought in S. Africa..Because its Resouce Rich…
This Groupos Objective is to Be the Dominate Suppliers of Manufactored Goods.
Services and Raw Materials…It is predicted they will equal..then Pass The G-7
by 2027…During thier Meetings..They Are Calling for Super Currencys..such
as The DEY….Dollar….Euro…Yen..
It is No coincidence that China made this play with Xi getting “ReElected” and
Moving Events to the Next Stage…With Iran…Will He Negoiate Next With Ukraine and Russia..? I Think That Putin is Close to Achieving All He Wanted if he Takes the
Bakmut..And can Keep the Rest of What He Holds on The East…
I Think The USD is weak..The Run on the Silico Valley Bank…Big Headlines..
“TECH Bank Bust…Regulators Shut…Run Fear..Contagion Alarm..”
Just How Frail is The Dollar..All I See and smell..is Fear and Panic in the Air..Except..
in the Hen House..With its Avian Flues..and the Wolf in Bed..
I Play Historical Events…1920s…1930s..1940s..in My Head…What is the End Game.??
The BRICS has made thiers CLEAR ..and its a PRESENT Danger IMO..
Do a WIKI on Them..Most Interesting research..Crypto Level..IMO..
To take events to the Next Stage..Wont take Much..
Fragil..Frail..Desperate..Geo..Political..Catastrophies..Enviroment..CBW.? Whats next by 2024..??
CBDC..? Central Bank Digital Currency.. Chip Implants..The Mark of the Beast..??
Perhaps..It seems to Be Fueled.. Gassed Up,,,Centralized..On Target..Planned..
….Requires Homework..Not Guess Work…. Because…It IS Written..
JT
The Strength of the U.S. Dollar..vs Debt..and revenue is Interesting..
The German Mark Collapsed in 1923 FROM Hyper *..and INFLATION..
And Germany Over Printing Worthless Money..because France had
taken over Germanys COAL Fields in the Ruhr..1923…! One Hundred
Years Ago..
One could see Historical Comparisons..Both Currently in Europe..Currency Markets and The U.S. Debt…And Policys.. https:// http://www.usdebtclock.org Debt per U.S. TAXPAYER..is$246,876.00
National Debt is 32 Trillion Dollars…Incomed is 1.4 Trillion less that spending
http://www.cnn.com/interactive /2023/03/politics/government-spending-explainer/
Things can go wrong…WW1…WW2..and Now…Reality…in B&W..
Writing Checks….With No Regard for Balances..Fisical FUBARS..
The Good People is the United States..Our Veterans..and Children..Deserve
Far..Far Better..and I Pray..To a Living God..We Get it…Soon ..
JT
” the West has been focused on the shininess of military power, with a little economic power thrown in the mix in the form of sanctions. ”
You really think the sanctions on the Russian Federation were just ‘a little economic power’? Nothing like having it blow up in your face, unless the objective goals were destroying fossil fuel investments and the collapse of most of the industrial sector in Europe, followed by riots in Paris over financial reforms needed to shore up the French budget to meet obligations the the EU Council. Great stuff.
Those sanctions were the catalyst for the Saudi’s, and every other nation on Earth, to recognize that if Biden will sieze the assets of a member of the UN Security Council their country’s don’t stand a damn chance should the neocons running the US decide to go after them. But at least NATO is ‘revitalized’ – with the US obligated to pay the entire cost of running Ukraine, no oversight allowed, at least until the next non-uniparty president is elected. And of course sadled with the blame of destroying Nordstream 2, which is only half owned by the Russians. But great work Joe. fabulous Statesmanship!
On a related NATO revialization and statesmanship note I see Tiblisi Georgia is all ablaze over a proposed law requiring NGOs and others to register if they recieve funding of over 20% from outside the country. How dare they have their own Foreign Agents Registration Act! HOW DARE THEY. Oh, wait, never mind. Apparently ‘spontaneous’ rioting of people who want foreign money won the day. Or the riot. “The Spice Must Flow” as they say on Arakis. How long until the “revival and strengthening of the NATO alliance” includes Georgia?
How long b/f Georgia is part of NATO? Who knows, but I’ll guess the results of the Russia’s invasion and re-subjucation of Ukraine will have something to do w/it. It would be a relief for the Georgians. They, like the Balts, would gain some security against the re-establishment of the Russian Empire. Good for them. Btw, DUNE was one of the best books I’ve ever read; such imagination. Yes, the spice must flow! I think(?) I read the second of the trilogy. Not as good as Dune.
Bill,
The President was born in France and was once the French ambassador to Georgia. She was brought into the government their by their current prime minister, with whom she has had a falling out. He’s also popularly elected and doesn’t agree with becoming entangled with NATO. But that’s not allowed now, thus the color revolution riot under cover of opposition to a law modeled on American law doing the same thing, which is rather rich.
She was also conveniently in NYC rather than running “her” country. Because nothing says loyalty to a people more than having served as an ambassador for a foreign country – the one you are born, riased, educated in, and in whose government you serve for years. The “spice flow” is a bit disrupted with the implosion of FTX, and now their go to bank, SVB. I wonder how the NGO funds being remitted back will flow now….
Fred –
The protests in Tblisi were against a Georgian version of Russia’s “Law on Transparency of Foreign Influence”. It was not modeled on American law. That came later during the protests when a second version was introduced by Russian-backed pols as a red herring. Both I believe have now been retracted.
Leith,
Thanks for the clarifacation on the law being protested. Should we consider their president “French backed” since she was born, raised and educated in France as well as being a employee of ambassadorial rank before becoming a resident of Georgia and running for office?
the collapse of most of the industrial sector in Europe, followed by riots in Paris over financial reforms needed to shore up the French budget to meet obligations the the EU Council. Great stuff.
Neither EU nor EU Council dictates a countries retirement age. What is your source that the EU or EU Council created the riots in France? It’s still all about the retirement age.
https://www.euronews.com/next/2023/01/10/pension-reform-in-france-which-countries-have-the-lowest-and-highest-retirement-ages-in-eu
The French government unveiled its pension reform on Tuesday, raising the retirement age from 62 to 64 by 2030.
Not exactly on topic but getting there ..
Those of you who enjoyed those funky Intelligence and Aptitude tests from childhood may like to contemplate this series completion test which is suggested by the diagram which leads off in this article linked below. Or if geophysics is your game – earthquake and aftershocks. To summarize: What comes next, if the past is in any way prologue?
https://www.nytimes.com/interactive/2023/03/10/business/bank-failures-silicon-valley-collapse.html
Is it really a bad thing for the US? Why should we be the sole guardian of world peace? And if it brings peace in Yemen it’s a bonus. But the bigger questions are:
1] Will the Saudis and Iranians play nice for long? I agree with the comment by Bill Roche above. There’s a lot of hate between those two . I don’t see the IRGC stopping their proselytism and agitation among the millions of Saudi Shia – and neither in Yemen, Iraq, Syria nor Lebanon. Plus the Saudi Wahhabi are not going to bow out peacefully and stop funding insurrection among Iran’s ethnic Arabs in Khuzestan province – nor among Iran’s ethnic Baluchis in the SE.
2] Will it bring stability to the Middle East? What will be the reaction by Israel? Turkey? They have more at stake than we.
3] Is this the last gasp of JCPOA? China is a signatory. Does Xi want a nuclear armed Iran?
Leith,
I’m also skeptical about how long this Saudi-Iranian deal can hold together. Their difference is a deep seated religious animosity, not a mere squabble over resources. But if it holds together long enough to bring some relief to Yemen, it will be worth it.
Good question about China’s attitude towards a possible nuclear armed Iran. Will they offer defense guarantees? In exchange for not developing nuclear weapons, that’s possible. Will they extend a defense umbrella over Iran? That I doubt.
Leith,
I talked to an Egyptian colleague about the deal late Friday afternoon and I was a bit surprised how much chauvinism he exhibited for Shiites. That sunni/shia division is certainly real.
At the same time he himself said that this deal may be a sign of maturity on the part of the signatories – that they might be “growing up” and learning how to behave and relate with others in a more mature way. He seemed torn between the part of him that wants to see the Muslim world “get their act together” and the parts of him who dislike both the Chinese and the Shiites.
My takeaway from talking with him is that there are lots of hearts and minds in play right now.
James T –
Thanks for that insight. I’d like to hear much more about this deal from people who live in that part of the world.
What is Babak’s opinion I wonder?
The question that completely puzzles me is why both Iran and KSA defend China’s Uighur genocide in Xinjiang. It seems Turkey and Somalia are the only Islamic countries that condemn China’s human rights violations of Muslims.
Leith; Regardless of what Xi wants the world is going to have a nuclear armed Iran unless the Jews decide otherwise. The real question is will an agreement “to play nice” by the Iranians and Saudis bring the dawning of the age of aquarius to the M.E. Your reference to the Turks makes me think otherwise. Turks know they are superior to the Persians who are superior to the Arabs who know they are superior to the Turks. They all hate Jews and Kurds. Meanwhile the Chinese don’t give a shipt as long as the Persian Gulf and the Gulf of Aden are not filled with pirates preying on Maritime trade up from Somalia. The sea passage up from Mogadishu will, imho, prove unproductive. Somalis, Eritreans, and Kenyans have nothing to sell. Since Pakis and Indians hate each other (there that religious thing again, Muslims still intend to conquer the rest of the sub continent), Indian goods will wind up traveling straight through the Persian Gulf. Indian trade could travel north but north reqrs passage over the Himalayas or Khyber and that aint happening. The northern land route staring at Moscow could happily go through Ukraine if the Russians would learn to live “with” their neighbors instead of conquering them. They can’t. They got “them Russian Imperial Blues”. Geography has not changed. Turkey still controls the Bospurus/Dardanelles and thereby the Asia to Europe trade. It doesn’t need a Chinese “silk road” to do that. The Chinese simply have made it easier for Asians goods to enter the oriental bazzare. You know if trade/money helps people overcome their hate, isn’t that good?
Bill – Re your trade/money/hate question: Yup, definitely good.
“By the grace of God Almighty
And pressures of marketplace
The human race has civilized itself
It’s a miracle” Roger Waters
It’s a Miracle
https://www.youtube.com/watch?v=naDlaXAci2w
It didn’t work in WWI
The Aztec Pochteca (traders) only ever brought the military
How about that Carthage :- )
Trade is only necessary until dominance, then it’s tribute.
Cobo – You might also be right.
The Dutch East India Company – the British East India Company – the Hudson Bay Company.
The prophet Mohammed had been a merchant: https://islamweb.net/en/article/137272/the-role-of-merchants-in-spreading-islam
BP: “ To become a reserve currency, one has to first have an open capital account. Second, one has to have deep & liquid capital markets. Third, they have to be willing to export the reserve currency in sufficient quantities to lubricate global finance”
You said it brother, however successive American administrations, via sanctions on a wide variety of 1people and nations, have demonstrated that dollar accounts are regarded as tools of national policy and are only open and available to our friends from time to time in line with the Kissinger rule. Just ask the Russians.
Even if you are a “friend” and a member of the five eyes, there is an implicit threat that if you display too many independent tendencies, that those New York markets can suddenly freeze up on you. It has happened to Australia in the past which is why we slavishly follow US foreign policy dictats today.
It would be a very stupid country or oligarch who trusted the US and European banking system.
In addition, BRICs/ SCO already announced their intent to create a synthetic reserve currency out of a basket of their own. A Chinese brokered peace pact between KSA and Iran can only help this process.
walrus,
The only real beneficiary of USD reserve currency status is Wall St and the federal government.
For the rest of America not so good and a net negative.
Yeah, financial sanctions are a stupid policy as it is as porous as Swiss cheese in the first place. The reality is that there’s no currency that can compete with USD today. The Euro tried but has its own contradictions that prevented any kind of scale.
Stop thinking of the reserve currency as an economic concept. Reserve currency is the tender of the world power. It is about control and privilege. We are taught and accept naively that it is due “capital markets”, “trust”, and “rule of law/ adherence of contract law”, but reality is that we have the privilege because we have the monopoly of violence on an international scale.
If the dollar is losing it’s status, then we are losing our capacity to inflict our will or lack the will to do so. Forget the economics.
This rapprochement is more than concerning, and it makes an Israeli strike inevitable IMO.
The Saudis are hedging. They know how essential they are to us and their treachery will be overlooked hopefully not forgotten.
Suteeeeee,
The proposed reforms of the Isreali courts and its impact on their domestic politics make such a strike more likely, not a shift in dollar reserve currency status. They’ll need a much bigger airforce and better intelligence to have any chance of success.
Fred, “Reforms” of the Israeli courts? You mean “the get out of jail” card for BiBi?
Al,
You think Bibi is immortal and there will be no prime minister after him?
the re-approachmant makes an Israeli strike (on Iran) more likely. Why? Are Jews afraid the Persians, gaining backup from China and relieved of threats from SA, will try to kill them after all? This w/b a successful end of Islam’s 1400 year campaign against Judaism. Can S.A. and Iran (Sunni and Shi’it) still deeply hate non Muslims in 2023. IMHO neither care for the Uighurs who are disposable refuse for more important things. Iran will get Chinese weapons help and S.A. will get Chinese trade. China will get peace for the sea leg of their new Silk Road AND S.A. oil. Additionally there will be Chinese influence in Teheran right below the “soft underbelly” of the Russian Empire. After all the Chinese and Russians have never been “really tight”. There is a big shake up coming in the M.E. Next move to the Turks who despise both Arab and Persian. “The times they are a changin”.
Walrus,
It seems the aspect of both the KSA and Iran wanting the Chinese to be credited says something, but I am unsure what that might be.
Two sides to this coin. Diplomacy and money. With Xi Jinping granted a third term, and Putin carrying a support rate of around seventy five percent in his own country, the two of them are far more attractive than the ‘Rainbow’-countries pushing agenda’s which are alien to most non-NATO-aligned countries. Certainly the oil producing countries. This diplomatic breakthrough has been skilfully prepared, and executed, as the ‘Collective West’ is seen pushing for ‘Regime Change’ everywhere, in an effort to prop up their waning power and standing. They figure that if the ‘Collective’ West’ can take it upon itself to isolate a Security Council member, and steal all the money and assets this country held in Western countries, their money and assets are no longer safe with us. A correct assessment, clearly, given the prevalence of our governments to steal the assets of countries which are not prepared to accept our ‘candidates for office’.
TTG insists that this war in Ukraine resulted in a re-unified NATO, but the opposite is closer to the truth. We’ll have to wait and see, but polls indicate that the people in Europe don’t want this war at all, and the trend of support is down, not up, despite the fanatic attempts by various governments to make it seem as if that is not so. Those captured in the orbit of power took it upon themselves to promote this war, be they ‘Left’- or ‘Right’-leaning, but many have this sense that they are taken for a ride. They most certainly want this war to stop, and won’t mind another deal brokered by China. While the new Security Adviser of Zelensky warned that the mood in his own country is shifting as well, even in ‘Bandera County’ in the West of Ukraine. Like in Afghanistan, Iraq, Libya and Syria, people discover too late that their ‘friends’ from the West are after oil, gas, pilelines and stuff like that, and opiates for their profitable ‘pain killers’ and ‘off the books’ narco-business. All of that while encircling Russia and China in a vain attempt to choke them economically, because they are the countries which dropped out of the ‘WEF’-promoted, oligarch owned agenda. Otherwise known as ‘Financial Capitalism’, or ‘Neofeudalism’, or ‘Rent Seeking, Non Productive Services’.
The ‘PetroDollar’ is toast with this deal. And with it the ‘EuroDollar’ in trade. I do understand all the talk over complex ‘mechanisms’ needed to make international trade work, but that only reflects our own trickery to insert our own commercial banks, and ‘ownership on paper’, which includes the FED, since it is not a government owned entity serving the people, but the possession of large commercial banks in the US, serving a wealthy elite, and a subservient political class. I’m not saying we can go back to barter trade and we’ll do fine, but China and Russia have been preparing for this moment for years, and increasing volumes of trade are already settled in other currencies. Which actually is extremely interesting, as it does open the way to making a buck in entire new ways, without the need to have the fastest connection to the terminals at ‘Wallstreet’, and a top of the bill mainframe, instead using common sense again. Paying attention to the real client, and the real producer.
Allow me to highlight the failure of the ‘sanctions’ against Russia as a backdrop. Once Europe understood they targeted their own brittle economy with those ‘Sanctions from Hell’, and the ‘Global South’ wouldn’t follow their lead, they hastily retreated, allowing ‘diluted’ Russian oil to be sold on the European market, as well as re-packaged LNG. Russia will export its oil to the Middle East, some smart-ass middleman will add a few drops of Saudi crude, and sell it at a premium in Europe. Dumb and Dumber are left behind, congratulating themselves because they are ‘All Powerful’, and the ‘Masters of the Universe’. All the while they failed the ‘weapons test’ as well, since the Russian economy is alive and well, pumping iron to boot as they have no lack of missiles or ammo since they ‘came prepared’, anticipated to grow next year according to IMF forecasts, while Western economies are clinging on by the grace of the printing press in various forms, with only a minimal rise in interest rates threatening their survival as we speak. Circular forms of ‘budgeting’ through fraudulent ‘Money Exchanges’ run by political hacks, and bringing shiploads of money to the most corrupt country in Europe, to pay for mothballed weapons being dusted off and sold at rip-off prices is an ‘End of Times’ money making scheme. We’re looking into the abyss. And we’ve got only ourselves to blame, I’m afraid.
I believe that is an accurate summary but the decline of the West we’re facing – the “abyss” you mention – is not due to the Ukrainian war. Both in the States and in Europe the economy has been hollowed out and the financial system only kept going by increasingly unstable fixes. We were due for decline and have been for several decades. The Ukrainian war accelerated and underlined that decline but did not cause it.
As for the European part in all this, if one ignores moral considerations and take into account the fact that we in the West greatly underestimated the resilience of the Russian economy, then the European politicians did have a workable plan of sorts.
Force a Russian military move. Portray this move as unprovoked Russian aggression. On the back of the outrage so caused impose sanctions that were intended to break the Russian economy.
It’s gone wrong in two ways. One obvious – we did not break the Russian economy. One not so obvious. The European electorates were in the main thoroughly outraged by this “unprovoked Russian aggression”. In part, they remain so.
It will therefore be difficult for the European politicians to effect the rapprochement with Russia that is needed if they are to have a chance of repairing or at least reducing the economic damage caused by the failed sanctions war.
EO, we can see eye to eye on this, but allow me to make a few important observations. As Boris Johnson said in an interview, Germany and France needed some ‘help’ in the run-up to this plan to use a military conflict in the Donbas to ‘Regime Change’ Russia. Not unlike the situation in 2014, when Victoria Nuland sidelined the EU, which became all too clear when this ‘Fuck the EU’-chat with the American ambassador broke.
At the time, one year after the revelation of the ‘BRI’-plans, continental Europe stood to benefit tremendously from over-land rail connections as envisioned. The ‘Regime Change’ project in Ukraine was meant to take a wrecking ball to those plans, with the US putting its heavy hand on the pipelines running through Ukraine, as well as any rail and road connection into Southern Europe. In addition they were dreaming of a ‘hot headed’ response by Putin, or Russia withdrawing out of fear of a clash with NATO, for which Russia was not ready, yet. Instead he played it brilliantly, incorporating the Crimea peninsula without a whisper, cheered along by the local population. While later that year he provided just enough support for the Donbas-militia to kick Porochenko’s backside, forcing the ‘Collective West’ to sign this ‘Minsk Accord’, and turn it into a UN ratified solution. If executed, it would restore democratic rule in Ukraine, with federal regions having plenty of economic and cultural breathing space, leaving the Nuland-clan with ‘Bandera county’, sucking ‘Brussels’ dry, very much like Poland and the ‘Baltic’ nations lived on subsidies for many years after they joined. From a European point of view, this was adding insult to injury, and when 2022 arrived with another Nuland plan to use Ukraine to ‘Regime Change’ Russia, the European leaders should have hit the brakes.
They didn’t, because the AngloSaxons in NATO promised them that their ‘intelligence’ indicated it would be a walk in the park to ‘bleed Russia white’. And once more, Team Nuland bit the dust. They don’t give a hoot about Ukraine, or the people in that country, and with this ‘Northstream’-thing now blamed on Ukraine, while everyone truly interested knows it was Biden, Blinken, Nuland and Sullivan as expose by Hersh, even Zelensky has received the message. But you are correct that he, nor the European leaders, are in a position to drop their ‘AngloSaxon friends’ without destroying their entire political career, and inviting repercussions for their country. Macron has some room to move, as has Orbán, but Scholz is cornered by Baerbock and Ursula von der Leyen, and the war-hungry Poles and Baltic states to his East and North, insisting Germany already betrayed them at the start of the Second World war, by not crushing the Russians. At the government level my own country is part of that ‘Warparty’, but elections this Wednesday for the Senate may be the ‘last call for alcohol’, even though there is just one party openly opposed to this war with Russia on Ukrainian soil.
In the past, from before this military conflict erupted, I kept saying that neither Russia, nor China, were looking for such a resolution at all. But if we provoked them, they would teach us a few things about modern warfare, and state-of-the-art diplomacy. As the ‘Collective West’ is feeding on its own propaganda, the artillery barrages, missiles and drones reduce Ukraine and our economy to rubble, which was already on the brink, and exposing our weaknesses for the world to see. This rapprochement of Iran and Saudi Arabia is blaring, in large neon letters, that the US is done. And I wouldn’t be surprised at all if the Chinese will mend the ties between Ukraine and Russia as well, after which no European leader, save for Johnson, Truss and Sunak, with the odd Polish leader and some Baltic and Scandinavian ladies enamoured with cocky Boris, will be able to stay the course. And Russia and China may save their sorry arses, and extend an olive branch to the AngloSaxons and the Scandinavians/Baltics, but that will require a revolution of sorts.
Not entirely sure about “Anglo Saxon”. Reading the American blogs I believe that the European contribution to the debacle is not given sufficient attention.
Perhaps because the European power centres are too many and their connections difficult to trace. After all, though Washington is riven by faction and subject to a variety of pressures, when we talk of “The US” we can confidently state that it has one power centre that determines what happens in foreign policy and that is “Washington”. The two terms are for many purposes interchangeable.
Not so in Europe. Kissinger could still ask “who do I call when I want to call Europe?” and still get no clear answer. Nor Biden. He still has to phone around rather than make the one call.
But the most important call he’ll make is to Berlin. That is only one of the power centres but it is the power centre with by far the most weight either directly or, indirectly, through Brussels.
On that last, Brussels, we can take Juncker’s dictum as gospel. “Nothing gets past Brussels unless it gets past Berlin and Paris first”; and although Paris is allowed considerably leeway, nothing significant gets past Paris that doesn’t get past Berlin.
All eyes, then, on Scholz. Now the broken man of Europe but last year, before February, the boss.
Here I do not find that the American blogs get it. There’s this tendency to regard Scholz as the patsy of the Washington neocons, swept along, and with him his country, in Biden’s wake.
Not so. The Europeans, London included, are expert in leveraging the military and financial dominance of the US for their own purposes. Scholz was no patsy. He was fully on board with this failed Ukrainian venture, as also of course were Merz and Baerbock, and without him the Washington neocons would have had to look elsewhere for prey. His role was that determinative.
,
The Europeans, London included, …
Good, a tiny little bit London too. E.g. Boris Johnson as the world out there assumes? Both Dog and Tail misused by the Continentals. I agree all historical evidence tells us the culprit must sit in Berlin. With a little hesitant help from Paris in the end? Which initially felt ignored?
English Outsider, how’s your tea lately? Anything changed?
Deep background advice is that major US companies are in a hiring freeze, at least at executive level, in anticipation of a recession starting June.
Wow! The level of doom porn on the US by some on this thread. Question for you guys, how long have you been on this kick?
What will you do when the US & USD remains dominant in a decade or two? Keep like a stuck record?
Sam – a country the size of a continent that can feed and fuel itself should be OK. And the often savage political debates one sees in the US we need not see as a portent of disintegration. We could equally well see those debates as proof that regeneration in a democratic society is possible. Certainly enough are striving for it.
But I wouldn’t be so relaxed about Europe. That continent does not fuel itself and since agriculture these days is heavily dependant on fossil fuel it might not do as well as it did on the feeding either.
As for the economy Borrell laid it out clearly. The twin supports of the European economy were access to cheap fossil fuels for an otherwise uncompetitive industry, and full access to the global market.
Those supports are gone or seriously weakened. We don’t know how determinative that will be but that it’ll have an effect is undisputed.
That effect comes on top of an already dysfunctional financial structure. Fiscal Transfer and the Target 2 problems, and related problems arising from incomplete integration are insoluble. Those are problems you not only don’t have in America, they are problems few in the States know about.
Oh and by the way, there’s no equivalent to your First Amendment here, nor any commitment to it that is engrained in our souls. Many of us quite approve of the increasing restrictions government puts on our freedom of expression. I can give you chapter and verse for that. You might think free speech is under attack over your way but I doubt many in the States have much idea of what’s happening in that respect in Europe.
On top of that there’s a spreading political demoralisation as more come to recognise that our politicians have sold us a pup by throwing in their lot with the Washington neocons. Russia is not, as confidently expected by the European elites around this time last year, going to be our lunch. We are going to be Washington’s.
Here’s a comment I saw recently that summed up that last:-
When asked why the US seemed to be forcing Russia and China together, along with India and Iran, etc, the answer was,
” They’re going together anyway, whatever we do. We’re just arranging the West around us.’
Maybe that’s all that’s going on?”
One way of looking at it. And Scholz, Macron, Meloni, Sunak, the passive actors being arranged.
Now I don’t know what is meant by the US and USD “remaining dominant”. If it means the average American citizen can stand tall because the Washington neocons stand tall, is that the be all and end all of life for the average American?
Can’t answer that one. But when it comes to the practicalities, when it comes to being able to provide for a family and being able to do so in a free society, I reckon the Americans have a better chance of getting there than the Europeans.
EO,
“….the US and USD “remaining dominant”
What is meant is that even mid-century the USD will be the pre-eminent currency for global finance. And both the US economy and military capabilities will be unmatched in strength. Despite, the neocons, the national security surveillance state, the woke, the oligarchy. The dynamism at the core will keep the engine rolling. The innovation and entrepreneurship that exists in computer & software technology, biotechnology, materials, robotics and space in the US is insane. The best & brightest from around the world including Russia & China flock here to follow their dreams. If we could strip the stranglehold of Wall St on Congress it would take it all to another level.
. If we could strip the stranglehold of Wall St on Congress it would take it all to another level.”
Sam – absolutely!
I had been hoping Trump would do that, or even Sanders at a pinch, and maybe the example would rub off on us in England. Older and wiser now but still hoping!
Sam, the longer it continues, the worse the reckoning when the burden becomes unsustainable.
We rely on borrowings from foreigners to eat. When that is not available we will literally starve.
“We rely on borrowings from foreigners to eat.”
That’s incorrect. The vast majority of Treasury instruments are placed right here in the US. From pension funds, insurance companies, university endowments and even banks, Treasury instruments are the anchor to any institutional portfolio.
To quote Sam, the “US doom porn” crowd were predicting & cheering financial collapse in the US when CCP sold a huge chunk (hundreds of billions) of their Treasury holdings, yet it did not perturb the treasury market. There were no limit down days. In fact it made no difference to the tick as their trades came in.
This is why so many in the private sector across the globe choose to use USD in international trade and global financial flows. Let me ask a question, in which currency do you think Xi, Putin & the Ayatollah have stashed their personal wealth? There’s a reason why the CCP keeps their capital account closed.
walrus, I’ve long been railing at the borrowing from future generations to fund current excessive consumption. And I’ve railed against the bailouts of Wall St speculative losses and the financialization of our economy. Yeah, I know it is fashionable in certain circles to keep bashing the US. Would any of them want to live in Xi’s maoist utopia?
At the end of the day, the US with all its warts and all, is still the cleanest shirt in the laundry by far! Despite the entrenchment of the Deep State and the oligarchy, we still have the most politically responsive system. We elected Trump even as the entire establishment was arrayed against his candidacy. Now, he didn’t turn out to be any different than a Clinton, Bush, Obama, Biden as he also staffed his entire administration with the same posse and didn’t have the courage to expose the Deep State when he had the chance, nor did he rein in federal government spending, instead increased the government’s debt by over a trillion dollars in each year of his presidency.
CCP is just an event away from getting their asses whacked. We saw how fast they back-pedaled when their covidian dictatorship was challenged spontaneously by ordinary Chinese protesting across dozens of their cities. Don’t over-estimate their strength. Putin’s army was ten feet tall before he invaded his neighbor. He’s been stuck there for a year and can’t get out with his head intact!
I agree with Buffet – don’t sell America short. You could end up with a margin call.
BP,
“in which currency do you think Xi, Putin & the Ayatollah have stashed their personal wealth? ”
ROFL I’ll bite on the rhetorical question. Their respective national currencies as they are heads of state of their respective countries. You sound like you expect them to finish out their days in Paris bemoaning their fate like Porfirio Díaz and blaming Uncle Sam for their winding up that way. BTW Trump was and is different from Bush, Obama, Clinton and Biden. That’s why they are terrified of his return. But never Trump away, maybe you can help Disney get DeSantis out of Tallahassee that way. They are just as troubled by his as the DS is of Mr. T.
Fred,
I don’t read that as rhetorical at all. I haven’t seen anything suggesting Xi or the Ayatollah have stashed any wealth outside their countries, but a substantial part of the wealth of Putin and Russian oligarchs have found its way to the West. From a year ago:
“On average, 10% of world GDP is held offshore. However, in Russia, offshore wealth accounted for as much as 60% of GDP in 2015, according to a 2018 Journal of Public Economics research paper, the most recent estimate available. Experts say about a quarter of this dark money is indirectly controlled by Putin and his tight-knit circle of oligarchs and poses a “serious national security threat” to the United States. The Mueller report illustrated how Russian offshore accounts were used to interfere in the 2016 elections.”
https://www.cnn.com/2022/03/17/business/putin-wealth-sanctions-invs/index.html
Obviously Putin and his oligarchs aren’t alone is stashing riches overseas. It’s a widespread practice, but the Panama Papers gave us a glimpse in where Putin stashed some of his money. London is jam-packed with Russian money and, at least for a time, so were Trumps bank accounts and real estate holdings.
TTG,
“experts say” which ones are those, from back in 2015, seven years ago? Isn’t that just after the EU acquisition of Bank of Cyprus assets?
https://www.theatlantic.com/business/archive/2013/03/everything-you-need-to-know-about-the-cyprus-bank-disaster/274096/
Of course, Mueller, he’s the one who didn’t know what the Steele Dossier was but did prove Trump didn’t collude with you know who. At least his lawyers were all expert enough to erase their cell phones before turning them back in.
“Trumps bank accounts and real estate holdings.”
I’m sure Putin and Trump are both breathing a sigh of relief over not parking money in SVB, unlike SBF of FTX fame. You remember that big, fat, arrested, donor to the Dems? Unlike all those you mention SVB doners are getting bailed out. Which only means one thing: Trump will probably win in 2024.
Fred,
The experts were the ones who wrote the article in “Journal of Public Economics” in 2018 using “published macroeconomic statistics.”
https://www.sciencedirect.com/science/article/abs/pii/S0047272718300082
I don’t know if any info from the Panama Papers made it into those macroeconomic statistics. China and Russia top the list of money hiders in those revelations, including $2 billion leading back to Putin himself. But he’s far from being alone. Hiding money offshore is a far ranging international phenomena.
SVB donors? You mean the depositors? I have no problem with them being made whole with SVB assets. The losers are the SVB investors, but they took the gamble of investing for big returns. Gambling doesn’t always pay off.
TTG,
Three Europeans, one who teaches at Berkely. Why am I not surprised at the political hit piece from years ago.
No I do not mean depositors. I mean all those bitcoin users whose exchange banked with SVB and all the Silicon Valley types who put millions of VC dollars into that bank ‘depositors’ at risk after doing what looks like zero due diligence. That class of people deserve to be busted for anything over $250K. The fact that they are donors to the Democratic Party is the main, if not only, reason they are getting made whole. At the expense of everyone in the US who pays FDIC deposit insurance. That’s all of us. We get screwed so Biden can Bailout the VC elite.
Fred –
Trump May 2018: “This is truly a great day for America and a great day for American workers and small businesses. The legislation I’m signing today rolls back the crippling Dodd-Frank regulations..”
Serves us right for taking banking advice from a guy who went bankrupt five times.
PS – don’t forget the 16 banks that went under during the prior administration. Hope you did not have any bucks in the Sarasota bank that folded?
Leith,
Please quote Barney Frank from 2018 regarding that same legislation, then from this past week regarding the siezeure of the bank of which he is a director. Then explain bitcoin, how the exchanges that get cash for those things handle those billions of dollars – a little hint “SVB” and then ask yourself how withdrawing such funds so the exchanges can pay the bitcoin owners their money affected bonds held by SVB. “Mark to market” and how many months did that happen might be important. Don’t ask how ‘sophistacted’ investors like Mark Cuban or VC firms in CA could fail to do due dilligence on a bank before putting a few hundred million dollars into it.
“Biden Bailout” is going to be the new campaign slogan. So much catchier than “lock her up”.
Fred –
“…withdrawing such funds…”
You mean the homosexual Republican superdonor to Trump, Peter Thiel, whose withdrawal of millions from SVB sparked the bank run.
https://www.washingtonexaminer.com/news/business/svb-collapse-peter-thiel-silicon-valley-
https://en.wikipedia.org/wiki/Peter_Thiel
Maybe Thiel got some pillow talk from Barney?
Leith,
thanks for the C-minus trolling effort. I take that to mean Biden has no agency, nor did the democrats running the House, thus not reimposing the Dodd-Frank legislation TTG indicated was the causation (for years from 2018 to present). Also not having agency – the SVB chief risk officer, a position vacant for a year; the CEO of SVB, and VC firms ‘due dilligence’ departments, variously structured.
Where was Mr. Thiel last year when crypto exchanges were pulling their funds out of SVB and marking to market the bonds they needed to sell to replenish cash on hand to make payouts? My, sounds like another ‘sophisticated investor’ not performing too well. Nice try though.
Fred –
“Where was Mr. Thiel last year…”.
Perhaps he was busy spending more super pac money on the congressional midterms for his drag queen buddy George Santos.
Leith,
You sound rather vaxxed.
@blue peacock
“We saw how fast they back-pedaled…”
That may not mean what you think it mean, just normal Imperial fickleness.
See this opinion from a well informed observer.
https://danwang.co/2022-letter/
Watch for BiBi to stir up civil discord within the Sunni and Shia populations. The Iran-Saudi agreement takes a key ally away in his dustup with Iran. Also, leaves the US with ” just … its sanctions to keep it warm…”, per what Prof Juan Cole notes in his column: https://www.juancole.com/2023/03/indispensable-relations-sidelined.html
Ann Arbor (Informed Comment) – In an interview with Al Jazeera English, veteran Washington Iran watcher Hillary Mann Leverett asserted that, in the wake of the reestablishment of Iran-Saudi diplomatic relations in an agreement brokered by Beijing, China is now “the indispensable nation” in the Middle East. She underlined that the United States could not have achieved this accomplishment.
The joint statement issued on Friday, crafted by Chinese Foreign Minister Wang Yi and diplomats of the two feuding Middle Eastern states, pledged non-interference in each other’s domestic affairs. Saudi Foreign Minister Faisal Bin Farhan tweeted that the agreement formed part of the Saudi vision for peaceful cooperation in the region toward a common efflorescence.
The Iranian official press crowed about the excision of America from this decision, which was a solely “Asian” one, it said. The US, the article announced, is no longer the “Godfather” of diplomatic relations in West Asia (i.e. the Middle East).
Israel and the US Israel lobbies had been hoping to turn Saudi Arabia into a friend of Israel and have it join an aggressive coalition against Iran. That things went in the opposite direction has roiled politics in Tel Aviv. Israeli Prime Minister Binyamin Netanyahu blamed President Joe Biden for being weak. Benny Gantz, in the opposition, instead blamed Netanyahu’s failed belligerency.
Leverett hit the nail on the head, and her phrase was too provocative not to steal. I can remember how, after the 1973 war between Egypt and Israel, Anwar El Sadat unceremoniously dumped his Soviet military and political backers and took up with Nixon and his Secretary of State, Henry Kissinger in order to get the Occupied Sinai back from Israel and to extract Egypt from the cycle of ruinous Arab-Israeli wars. Sadat explained why he was now flying off to Washington, D.C., instead of to Moscow: “America,” he said, “has 99% of the cards.” He meant by this odd phrase, which doesn’t correspond to any card game of which I am aware, that only the United States could conclude a peace between Cairo and Tel Aviv. The Soviets would not have had the trust of the Israelis in the same way.
Now, half a century later, it is China that has 99% of the cards when it comes to relations across the Oil Gulf. The hardest of hard lines taken by the United States against Iran, with the imposition of a de facto global financial and trade embargo on that country’s oil exports, putting the two countries on a war footing, has led to the US utterly lacking influence in Iran or Syria, and to its having alienated most of Iraq. This invisible blockade was imposed on Iran even though it had carefully adhered to the 2015 nuclear deal it signed with the Security Council, a deal from which Trump withdrew and which he more or less destroyed.
Indeed, Oman and Iraq have been playing a key role in these Iran-Saudi negotiations. Regarding Iraq, then Prime Minister Adil Abdul Mahdi invited the head of the Iranian Revolutionary Guards Corps’ Jerusalem Brigades, Qassem Soleimani, to Baghdad on January 2, 2020, to pursue these very negotiations between Iran and Saudi Arabia. Then President Donald Trump could think of nothing better than to blow Soleimani away at Baghdad International Airport, along with an Iraqi general, claiming that Soleimani was coming to Iraq to kill Americans. Much of the US press swallowed this bald-faced lie, though perhaps they were dizzy from the 30,000 other lies Trump told.
It is desirable that Saudi Arabia and Iran turn down the dial in their often fractious relationship. With the Yemen War having subsided into stalemate and occasional truce, with the Syrian regime having survived the civil war with Russian and Iranian help, the flash points nowadays are fewer than at any point since 2010. In 2019 drones either belonging to Iran or an Iranian proxy hit the Saudi Abqaiq refinery and temporarily knocked out half of Saudi oil production. That was one of the most tense periods in the conflict, which was exacerbated by the youth revolutions of 2011 and after, and the civil conflicts that followed in some Arab states. Saudi Arabia saw Iran’s hand in Syria, Iraq, Bahrain and Yemen, for instance, and felt surrounded.
Middle East scholar Ibrahim Freihat pointed out on the same Al Jazeera segment that China imports a great deal of petroleum from both Saudi Arabia and Iran, and it is in Beijing’s interest to keep the black gold flowing to fuel its cars, trucks and trains, the arteries of its vast $17 trillion a year economy. Quincy notes, “By 2019, it [China] imported $106.5 billion from Persian Gulf countries – 43.9 percent of its total imports of crude oil.”
So, Freihat argues that this deal, signed in Beijing, was something the Chinese Communist Party wanted in order to secure its own economic growth. Beijing has a goal of growing 5% this year.
In any case, the agreement and the role of China in it do demonstrate that big changes are taking place in the geopolitics of the Middle East, and by tying itself so closely to Israeli priorities, the Biden administration made a significant error in not reviving the 2015 nuclear deal. Iran would have been less likely to go into the Russian orbit if it had the prospect of trading with Western Europe, and it could have used Washington as the channel to restore relations with Riyadh.
Instead, the US just has its sanctions to keep it warm. China is now in the spotlight.
Al,
Which part of that is your commentary, there not being any quotation marks to id what was the lefty prof’s opinions, last on SST years ago when he was repeatedly proved wrong about events in the Middle East?
Al; of course Netanyahou will stir the sunni/shite pot. That keeps a united Islam off the Jews back. The Iroquis/Algonquins did the same thing re the French and the English. They were smart, as is Netanyahou, for doing so.
Will this cause the Israelis to stop selling US weapon systems data and knock-offs to China ?
Nah! They’ll probably double up to try to sweet talk Xi into undoing the rapprochement.
I suspect it possible the Saudis chose the Chinese over the Russians for mediators. We were never in the cards for anything involving Iran. IOW, might this have been an FU to Russia? We tend to be self-obsessed, so we assume it has to be about us a lot of the time when it isn’t.
Yes, there are other Nations in the world. They all have energy/trade/security needs just like the U.S. It occurs to me, so simple am I, that much of this w/b irrelevant if we has continued Trump’s policy of maximizing our own gas/oil extraction. Oh well, there’s always Mexico, Venezuela, and Nigeria when you need some oil.
Belarus and Iran sign cooperation deal for 2023-2026
https://www.jpost.com/international/article-734170
“It was also reported recently that Russia is sending munitions captured in Ukraine to Iran for possible reverse engineering. These would likely be Western munitions that were sent to the beleaguered country.”
It’s a sad day for Russia when they have to rely on the Iranians to do their reverse engineering.
The Cradle claims to have “the hidden security clauses of the Iran-Saudi deal”:
https://thecradle.co/article-view/22445/exclusive-the-hidden-security-clauses-of-the-iran-saudi-deal
The Cradle claims that one of the clauses “appears to establish a new reference for conflicts in West Asia, in which China plays the role of “peacemaker” — in partnership with Iran and Saudi Arabia — in which Beijing assumes a role in various regional conflicts or influences the relevant parties”.
JamesT,
It would appear both sides agreed that if there is a perceived breach they will accept Chinese arbitration. This seems a role for which both Russia and the US are currently unsuitable.
The Chinese, it seems, are becoming “the adult in the room”.
There is arbitration and there is Binding Arbitration. Which is it? Then there is Binding Arbitration which one side ignores 6 months later. Are there penalties therefore and who enforces them? Things are never easy.
In honor of the Ides of March let me paraphrase Pompey
“Why do you quote laws to those of us who have swords”.
Arbitration indeed. The RUAF just sent a message about the sanctuary bases in Romania from which the ‘not involved’ USAF operates the Ukranian command and control drones performing all that surveillance over the “international” waters of the Black Sea. They of course aren’t Ukrainian, not collecting and transmitting real time intel, nor providing that to any of the combatants. They are doing just like Chinese balloons flying over the US….
Bill Roche,
If neither side hadn’t an honest desire for an agreement it wouldn’t have happened.
As is said in any contract you sign … “this is for the lawyers. We participants in the day-day will make it work … or it wont”.
I personally think a major factor in all this is the Saudis watched Russia lose $600bn overnight and thought – have we just been saving money all these decades so that we can wake up one morning and find it has all been confiscated for our human rights abuses? If it can happen to a security council member with a huge nuclear arsenal, why can’t it happen to a bunch of Arabs who nobody likes.
So they need to diversify. And I suspect the Chinese said “we can help you out but there is something we need you to do”.
Bill,
Serious contracts anticipate issues may crop up and establish ways to settle them, hence the need for a third party both sides view as unbiased, intelligent and likely to remain so. I suspect China agreed with the provision they get public credit for the deal, as JamesT may be suggesting.
I am very much looking forward to hearing what Col. Lang has to say about this rapprochement between Saudi Arabia and Iran,
when he is able to do so.
Saudi Arabia and Iran were respectively the leading states in the Sunni and Shite worlds,
so might this lead to some reconciliation between those two branches of Islam?