G20 Summit Results: Bargaining Is not Over
By Nikolay Starikov
The meeting of the world’s leading countries came to an end. Just as I thought, the strike on Syria was not commenced before G20; during the meeting the attack would have been absolutely inappropriate.
The Syria problem became an integral part of global bargaining. I wrote about the negotiations in the article Obama Is Getting Ready to Bargain with Putin.
Time to draw conclusions and assess what happened.
But first, some facts.
Once the United States – through confidential sources – received information about Russia and China’s intention to announce in St. Petersburg their “Currency Union” in the form of a sovereign fund capable of crediting economies and independent projects (and most importantly – issue treasuries), the United States sharply escalated the situation around Syria, attempting to prevent such a development. Emergence of an alternative to the financial system of English-Saxons is a great danger to the dollar-oriented world.
Being pressed for time, the U.S. begins to act according to its “instruction manual”: create a problem in order to play out its solution. They start to create heat around Syria. The meaning of their actions: if you announce the “Currency Union,” we start a war that turns into a large regional conflict with the potential of growing into a world war. In the turmoil of the war, the emerging financial alternatives would be simply buried.
Back to the meeting in St. Petersburg. On the very first day, during the meeting of Putin and China’s leader, GAZPROM [one of the top Russian oil and gas producing companies – RV] and Chinese CNPC [China’s largest oil and gas producer and supplier – RV] signed a general outline of an agreement on natural gas supply and Russian oil field development. What’s interesting: according to the agreement, the price of gas for China is not tied into the English-Saxon Henry Hub index.
This means that Russia and China are independent in setting the price for the hydrocarbons. As if they are saying, at your Stock Exchange in London, the price may fall or rise, you can crash it or you can slash it, it is not going to bother us. And we can also choose the currency for this trade. Yuan or Ruble.
One more piece of news follows a bit later the same day:
“Countries of BRICS [Brazil, Russia, India, China, and Republic of South Africa – RV] will form a $100 billion stability fund which will help to improve the world currency markets after the U.S. ends its policy of quantitative stimuli,” President Putin announced at the “Big Twenty” summit. As quoted by Reuters, “The formation of BRICS currency reserve is in its final stage,” said Putin in his opening address at the meeting of BRICS leaders in St. Petersburg. “It was set at a $100 billion.”
This announcement is followed by the Syria problem discussion during dinner. The “big wig company dinner” lasts until half past midnight, whereas Putin and the Prime Minister of Great Britain communicate until three o’clock in the morning.
In the morning of the summit’s second day, Putin makes the third announcement: “We consider formation of the Development Bank to be an important achievement of BRICS in economics. Its initial authorized capital will be $50 billion.”
Finally, on September 6th during a large press-conference the President of Russia makes his fourth announcement.
“Russia will help Syria in case of an external military offence against the country,” said President of the Russian Federation Vladimir Putin. “Will we help Syria? We will,” stated V. Putin at his end of Summit press-conference answering a question. “We are already helping by supplying the weapons, collaborating in economics, and I hope we will collaborate more in a humanitarian sphere, particularly providing humanitarian help to the civilian population.”
‘President of the Russian Federation Vladimir Putin met with President of the United States Barack Obama. He announced it at the post-Summit press-conference today in St. Petersburg. “We talked for about 20 – 30 minutes in an informative, constructive, and benevolent manner,” said Putin, noting that each of the leaders retained his opinion. “I don’t agree with his arguments. He doesn’t agree with mine, but there is a dialog; we hear each other,” stated the President of Russian Federation.’
The meeting between the Presidents of Russia and the U.S. finally did happen. It happened at the very closing of the Summit, which is logical. At first, teams coordinate the positions, bargain, and only after this the leaders come in.
Now let’s look into what happened in St. Petersburg, translating the language of diplomacy into the human language.
What does proper Currency Union mean? It is a financial cushion in a form of a stability fund, which can stabilize the currencies of founding countries in case of a financial crisis. The maintenance of currencies happens within the limits of this fund. The fund’s announced volume of a $100 billion is a trifle, considering the financial crisis of today where trillions are at play. But! For the Fund to really fulfill its job, it must establish a Bank capable of extending credit for the essential programs of its founding countries. As a modern financial institution, the Bank will be able to buy bonds of the Stability Fund, as well as treasuries of the founding countries. This creates a sovereign emission in strict accordance to the rules of today’s financial market. It is the Federal Reserve’s worst nightmare.
A proper Currency Union is: the Fund + the Bank + emission. Two parts of it were voiced at the Summit: the Fund + the Bank.
Putin used the pressure of the U.S. and consolidated the countries of BRICS around Russia to create an instrument for sovereign emission, which hasn’t existed (aside from Federal Reserve) since the fall of the USSR.
Russia and China didn’t announce creation of the proper Currency Union. They took a series of important actions, statements, and steps instead:
1. The price of gas is independent from the dollar just for Russia and China so far, but other countries – members of BRICS or not – may follow suit. Or they may not follow. In any case, the net has been cast.
Now Russia and China are waiting for the U.S. response of renounced war plans, where Syria is but a fuse.
No response follows. Well then, let’s go on:
2. The BRICS countries establish a $100 billion sovereign Fund. It can finance Ussuriysk tigers reserve, or it can finance companies and infrastructure projects. The important part is – the Fund is being established; it can be filled with new meaning any time. For instance, in case the United States initiates another world-wide financial crisis, the Fund can become the center of world finances since the old financial center based on the dollar would become unstable.
Are you abandoning the strike on Syria now? No? We continue to explain our position and
3. We announce establishment of the Bank
and wait for your agreement to stop the war plans. No agreement to stop the war plans follows. We continue.
4. “Russia will support Syria in case of external aggression,” – says Putin. China doesn’t say anything, but is by Russia’s side. Two Chinese ships had already joined the five Russian ones, “fulfilling their orders” by Syrian coastline. What is going to happen if the ships really do get to Syrian coast? In such case any missiles approaching Syria are perceived as direct threat and can be destroyed by these military ships.
Putin practically cornered the U.S. To strike Syria now is to appear to be the impudent aggressor. It means to loose one’s face and reputation. Even the French President started to say that his country “will wait for the results of the United Nations’ experts’ investigation,” however just a week ago he wasn’t planning on it. To abandon the strike on Syria is just as much of a loss of face and reputation. After two weeks of threats and verbal attacks not to strike means disgrace for the superpower.
Power of the United States is based on the dollar and the military might. Today the dollar is “not what it used to be,” and if the military power is “not what it used to be” as well – the world will have more than one centers of power indeed.
What will the U.S. do? Hard to say. They don’t really know what to do. They are pressed for time and must decide quickly. The debate to strike or not to strike shouldn’t last for a month. For in this case, the debate is not a discussion, but simply a way to buy time when it is not possible to come to a decision. Especially when a decision, any decision, will cause defeat of the United States.
Something must be done, it must be done fast, and it will only be to the worse. In chess it is called tsugtsvang. [We refer to it as catch 22 here in the U.S. – RV]
That is why Obama is so gloomy and his meeting with Putin is so brief. He must return home and begin consultations on what to do.
Let’s summarize. For the first time since the collapse of the USSR, Russia was able to create a financial institution for conducting a sovereign emission. To establish something the Federal Reserve System fought against all its life. The Americans are not to be envied now:
Strike Syria and the price of oil goes up; the new emission center has the ground to start the process of sovereign emission with the aim of sustaining financial stability for 3 – 9 months. On a small scale first, and then increasing it. The stronger the crisis orchestrated by the U.S. – the greater may be the emission.
Not to strike Syria means overheating of the U.S. domestic economy from the surplus of not supported by anything dollars. The choice is between a slow death and the fast one.
The Currency Union is a turn-key operation now. One only has to turn the key.
P.S.: pay attention to the part of the interview where Putin names the countries supporting the strike on Syria.
/video in Russian/
Interestingly, Vladimir Putin didn’t start the list of countries with the U.S. He unwillingly started by almost uttering Great Britain, immediately stopped himself and continued, “The United States, Turkey, Canada, Saudi Arabia, and France agreed to bomb Syria.”
The presence of Turkey on the list draws our attention. The leader of Turkey Erdogan has no doubts that chemical weapons were used by Syrian government troops and therefore Syria must be bombed. Why is he so sure? Well, did you forget the tension at the Taksim Square in Istanbul?
Three months ago I wrote the following in my article Turkish Spring: What Is Going on?
“…Turkey starts to sabotage the fight against Syria to the point that even the air strikes on Syria have to be conducted by Israel. Israel, not Turkey, even though it would be more convenient for Turkey to do it. Because what’s needed is not just chaos, but a conflict of religions, a conflict of all against all. It’s not going to be easy for Israel anyway, so Turkey should not just stand by. But it does. Turkey is just standing by when its territory is being bombed by Syria. That’s when bombs explode in the Turkish border towns – to no avail. Turkey “turns its head away” and just verbally threatens.
Hezbollah takes sides with Assad. The fighters are surrounded on the Libyan border and will be exterminated if there is no help. Who must help them? Who must save the Islamic fighters? Well, anyone but Israel, for sure! Turkey! If Turkey doesn’t want to do it, it must be made to do so.
This is how “Turkish Spring” came to be. Chaos, fights with the police, attempts to storm offices of the ruling party. All because of plans to bulldoze [and replace with something else – RV] a park, as it is presented by the media?
Complete nonsense. The reason for the tension is to make Turkey become active in the conflict with Syria and help the Islamic fighters.”
The “orange revolution” was not used in Turkey to overthrow Erdogan, but to remind him who the real master of his house was. He got it. He has no doubts now:
It’s all Bashar al-Assad’s fault.
Russian source:
Link active as of January 30, 2017. RV