Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
US Presidential Election Year Stock Market Seasonal Trend - 29th Nov 24
Who controls the past controls the future: who controls the present controls the past - 29th Nov 24
Gold After Trump Wins - 29th Nov 24
The AI Stocks, Housing, Inflation and Bitcoin Crypto Mega-trends - 27th Nov 24
Gold Price Ahead of the Thanksgiving Weekend - 27th Nov 24
Bitcoin Gravy Train Trend Forecast to June 2025 - 24th Nov 24
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Putin is Grinning - The Deal of the Century

Politics / Russia May 25, 2014 - 01:05 PM GMT

By: LewRockwell

Politics

Eric Margolis writes: GENEVA – Russia’s leader Vladimir Putin usually wears a perfect poker face. But last week in Shangahi, the icy-cold Russian president came awfully close to bursting into a big grin.

And why not? Putin had just stolen a march on his western rivals. The US-British attempt to wound Russia’s economy and punish Putin for disobedience had just blown up in their red faces.


After 20 years of difficult talks, Russia and China had just signed a huge deal that called for Russia to export 38 billion cubic meters of gas worth some $400 billion to China. The agreement begins in 2018 and will involve one of the globe’s largest engineering projects that links Russia’s remote gas fields to China’s pipeline system.

In addition, China will invest at least $20 billion in Russian industry and boost imports of Russian products, notably military systems. China will become Russia’s largest trade partner.

This was not the much ballyhooed “pivot to Asia” that President Barack Obama expected. It is, however, the long-dreaded embrace between the Chinese dragon and Russian bear that has given western strategists the willies.

One must suspect that the recent fracas in Ukraine was the last straw that pushed China to make a strategic alignment with Russia. Until now, the two great powers had quietly cooperated, not always without problems. Thanks to all the bluster and sabre-rattling from the US and its allies over Eastern Europe and the South China Sea, China decided to deepen and expand its entente with Moscow.

The Republicans in the US Congress who have been beating the war drums and calling for Obama to get tough with Russia (whatever that means) now share blame for pushing Moscow into China’s arms. All perfectly predictable and perfectly dumb. A diplomatic fiasco of the first water.

Russia has thus given its economy a big boost and made western sanctions look inconsequential. Chinese funds will allow cash-strapped Russia to modernize its oil and gas industry. The new gas pipelines will be a major economic boost for Russia’s distressed eastern regions and Siberia.

If the gas deal works and prospers, it will serve as a template for heightened Sino-Russian cooperation in military projects, such as fifth generation fighter aircraft, missile systems, naval forces and advanced electronics. Until today, Russia had been reluctant to share more advanced military systems with China because of China’s copying of Russian technology, then refusing to pay adequate royalties.

For China, the deal offers many advantages. China has been energy deficient for years. Beijing desperately needs to find new energy sources to fuel its growing economy. Russian gas offers a clean alternative to the filthy coal China has used for power and heat. Estimates are that a switch to gas will reduce air pollution by at least 25% in China’s northern cities, maybe much more. Having gasped for air through numerous Beijing nights, I fully appreciate what this means.

Russia has long been reluctant to cooperate too closely with China on Far East industrial projects. Russians have little love for China – or “Kitai” – because China evokes memories of the Mongol-Tatar invasions that ravaged large parts of Russia for hundreds of years. Distrust and even straight out dislike is wired into the mentality of many Russians. During the 19th century, Russia joined the western powers and Japan in raping China.

Demography lies at the heart of Russia’s fears of China. Russia’s far eastern regions, with the vital port of Vladivostok, has only 7.4 million citizens. Ten times as many Chinese lived just across the border in the northeast region known as the “Dongbei.” This highly strategic region and Manchuria became an arena of conflict at the end of the 19th century between Russia, Japan, and China, leading to the bloody 1904-1905 Russo-Japanese War, the first big, modern war of the 20th century.

Some 1.5 million Chinese infiltrate annually over the Russian border and settle illegally, producing a situation akin to that between the US and Mexico. Fears are expressed in Moscow that the 2 million illegal Chinese settlers in Russia’s Far East may one day expand to 20 or 30 million, outnumbering Russian inhabitants.

When I was invited in 1980 by Chinese military intelligence to “exchange views” in Beijing, I cheekily asked how long it would take for the Chinese Army to take Vladivostok. After a long, uncomfortable silence, a general spat out, “one week.”

Russia still holds vast tracts of land seized in the mid 1800’s from China. Beijing and Moscow will have their work cut out to resolve lingering disputes and build mutual respect and trust. There is a big deficit on both sides right now.

Today, China’s growing energy imports are very vulnerable to interdiction. The US and lately India have the capability to block inbound Chinese oil tankers and maritime cargo exports, either of which would shut down China’s major industries.

Key choke points would be the inner and outer island chains of the South and North China Seas, and the narrow Malacca Strait. India’s new aircraft carriers and submarines are being specifically built to interdict China’s oil imports.

Pipeline oil from Russia would be secure from most attacks and offer China its long-sought energy security.

This new deal is so good on many levels that old fears and mistrust must yield to its logic.

Most important, the Sino-Russian energy deal may further alter the world’s balance of power to the East. Russia and China working in tandem could offset the great power and wealth of the US and its rich allies. It is a major geopolitical event.

Eric Margolis [send him mail] is contributing foreign editor for Sun National Media Canada. He is the author of War at the Top of the World and the new book, American Raj: Liberation or Domination?: Resolving the Conflict Between the West and the Muslim World. See his website.

Copyright © 2014 Eric Margolis

http://www.lewrockwell.com

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in