"Washington Blows Itself Up With Its Own Bomb"--the Sochi Meeting
Washington Blows Itself Up With Its Own Bomb--the Sochi Meeting
By F. William Engdahl
F. William Engdahl is strategic risk consultant and lecturer, he holds a degree in politics from Princeton University and is a best-selling author on oil and geopolitics, exclusively for the online magazine “New Eastern Outlook”.
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May 26, 2015 "Information Clearing House" - "NEO" - These are sad days in Washington and Wall Street. The once unchallenged sole Superpower at the collapse of the Soviet Union some quarter century ago is losing its global influence so rapidly that most would not have predicted anything comparable six months ago. The key actor who has catalyzed a global defiance of Washington as Sole Superpower is Vladimir Putin, Russia’s President. This is the real background to the surprise visit of US Secretary of State John Kerry to Sochi to meet with Russian Foreign Minister Sergei Lavrov and then a four hour talk with “Satan” himself, Putin.
Far from a “reset” try, Washington’s hapless geopolitical strategists are desperately trying to find a better way to bring the Russian Bear to her knees.
A flash back to December 2014 is instructive to understand why the US Secretary of State holds out an apparent olive branch to Russia’s Putin at this juncture. At that point, Washington appeared about to pin Russia to the ground, with its precision targeted financial sanctions and its deal with Saudi Arabia to collapse oil prices. In mid-December the Ruble was in free fall against the dollar. Oil prices were similarly plummeting down to $45 a barrel from $107 only six months earlier. As Russia is strongly dependent on oil and gas export revenues for its state finances, and Russian companies held huge dollar debt obligations abroad, the situation was bleak as seen from inside the Kremlin.
Here fate, as it were, intervened in an unexpected way (at least by the USA architects of the financial warfare and oil collapse strategy). Not only was John Kerry’s September 2014 deal with ailing Saudi King Abdullah delivering heavy pain in the Russian finances. It was also threatening an explosion of an estimated $500 billion in high-risk-high-yield “junk” bonds, debt that the US shale oil industry had taken on from Wall Street banks in the past five years to finance the much-touted US shale oil revolution that briefly propelled the USA ahead of Saudi Arabia as the world’s largest oil producer.
US strategy backfires
What Kerry missed in his clever Saudi horse trading was the sly double agenda of the Saudi royals. They had earlier made clear they did not at all want their role as world premier oil producer and market king to be undercut by an upstart US shale oil industry. They were happy to give Russia and also Iran pain. But their central aim was to kill the US shale oil rivals. Their shale projects were calculated when oil was $100 a barrel, less than a year ago. Their minimum price of oil to avoid bankruptcy in most cases was $65 a barrel to $80 a barrel. Shale oil extraction is unconventional and more costly than conventional oil. Douglas-Westwood, an energy advisory firm, estimates that nearly half of the US oil projects under development need oil prices greater than $120 per barrel in order to achieve positive cash flow.
By end of December a chain-reaction series of shale oil bankruptcies threatened to detonate a new financial tsunami at a time the carnage from the 2007-2008 securitization financial crisis was anything but resolved. Even a few high-profile shale oil junk bond defaults would have triggered a domino-style panic in the US $1.9 trillion junk bond debt market, no doubt setting off a new financial meltdown that the over-stressed US Government and Federal Reserve could scarcely handle. It could have threatened the end of the US dollar as global reserve currency.
Suddenly in the first days of January, IMF head Lagarde was praising Russia’s central bank for its “successful” handling of the ruble crisis. The US Treasury Office of Financial Terrorism quietly eased off on further attacks on Russia while the Obama Administration pretended it was “World War III as usual” against Putin. The US oil strategy had inflicted far more damage on the US than on Russia.
Continued Interesting Read at........
http://www.informationclearinghouse.info/article41973.htm
