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Saturday, October 18, 2014
Connections: Saudi Arabia raises production and drop oil prices - Turkey loses bid to serve on the UN Security Council - Putin and Merkel meeting gets cancelled because he’s late
Let’s go back two years ago for some background - The usual suspects were determined to destabilize Syria and affect a regime change - The Russians were warning about the possible repercussions of interference in Syria :
Who was right and how has the interference worked out so far?
Putin, Erdogan, Saudi Arabia: The Balance Of Power Is Shifting
FORBES - Melik Kaylin If you subtract Ebola and ISIS from the news, what are the three most significant recent developments in world affairs? Here are my nominations: Saudi Arabia announces it will raise production and drop oil prices, Turkey loses its bid to serve on the UN Security Council, a meeting between Putin and Merkel gets cancelled because he’s late (though they meet later). You may be surprised to know that all three events do interconnect in unexpected ways. They also tell us a lot about real-time shifts in geostrategic power balances, how they happen and how to read them.
Let us begin with the first. Why would Saudi Arabia seemingly cut off its nose to spite its face, as it were, by gratuitously reducing its own national revenue? Recent reports have it that the Saudis are willing to see oil prices go down to $80 a barrel and even, according to this report, down to $60 or $50 for preferred customers in the West and Asia.http://www.aa.com.tr/en/economy/402343–saudi-arabia-to-pressure-russia-iran-with-price-of-oil. The article identifies the real purpose: to punish Iran, Russia and its client Assad, of Syria. Top Russian oil official Mikhail Leontyev from Rosneft was quoted in Russian media as saying, “Saudi Arabia has begun making big discounts on oil. This is political manipulation and Saudi Arabia is being manipulated politically which could end badly”. Translated into blunt English, Leontyev is actually threatening the Saudis while not accusing them directly. In other words, the Russians know it’s the Saudis making a strategic move against them. According to most statisticians Moscow needs to sell oil at $100 to pay for its budget commitments.http://www.businessinsider.com/russia-saudi-arabia-and-oil-prices-2014-10.
All this comes on the heels of a slowdown in the world economy also dragging down the price of oil. Add to that the sanctions imposed on Moscow and Tehran by the West and the pressure on the geostrategic balance of power grows clearer. Although SA’s decision helps Western sanctions, Moscow knows full well Riyadh has not co-ordinated with Washington because really low oil prices (at say $50) will also damage America’s fracking revolution by undercutting it. So Leontyev’s message to Saudi should actually read “you are helping Western sanctions even if you don’t intend to but we know you’re acting alone and that makes you the more vulnerable”. So why would Saudi, acting unilaterally, risk Moscow’s ire at this juncture? Because the alignment of the US with Russia and Iran and Assad against ISIS doesn’t suit the Saudis at all. Riyadh tried countering the Shiite bloc by helping fund jihad in Syria and it backfired. So now the Saudis have decided to punish everyone concerned, including the US. A huge gamble indeed. The Saudis are deploying the last arrow in their quiver.
Let us put Turkey to one side for now and consider how the above affects Merkel’s behavior towards Putin. He was late to a crucial meeting with her in Milan because he preferred to hang out in Serbia partying with pan-Slavists. As I noted in my column before, Putin conducts himself at the highest levels of summitry in the most insulting fashion towards his counterparts. Publicly so. He routinely flouts the common courtesies of protocol so pointedly that he intends the world in general and Russians in particular to take note of his power. http://www.forbes.com/sites/melikkaylan/2014/09/04/putins-duplicity-is-a-kind-of-theater-what-is-his-real-message/. In my column on this topic, I commented “One can imagine the exasperation of the no-nonsense Frau Merkel confronting (Putin’s) poker-faced unsmiling insincerity yet again,,, He knows that she knows that he’s lying to her.” I noted that he had met Merkel three times and given her reassurances of peace which he instantly falsified by new aggressions against Ukraine upon returning to Moscow.
So by now Merkel knows it’s going nowhere each time. But Putin likes to humiliate his adversaries by using diplomatic protocols to insult them. He made Secretary Kerry wait four hours after Kerry flew to Moscow for a face-to-face. On one occasion, after the invasion of Georgia, when the feckless EU pressured Georgia’s then President Saakashvili to make a special trip to conciliate Putin, Saakashvili had to wait seven hours. Putin tried the same thing with Merkel at the current annual Asia-Europe summit in Milan and she cancelled on him for being late. http://www.thejournal.ie/merkel-putin-late-meeting-milan-belgrade-1728826-Oct2014/. The meeting was rescheduled, lasted two hours and led to frosty exchanges on the Ukraine situation. Putin then took off for a late night party at his friend Berlusconi’s private residence lasting til 4am. So much for his priorities.
Merkel blamed him publicly for his intransigence on resolving the conflict in Ukraine. His response was, “I’m always getting blamed for something”. He threatened to reduce gas to Ukraine if Kiev siphoned off any gas intended for Europe on the shared pipeline. Which makes no sense as it would further reduce Russia’s fuel revenues. The fact is, Merkel has enough problems with the re-collapsing Euro economy. But even more – she knows that Putin has overreached his gamesmanship. His bluffs grow ever hollower as oil prices collapse, as Saudi piles on the pressure, as China’s economy (and demand for Russian oil) slackens, as the EU co-ordinates Europe-wide gas usage so it can even resell Russian gas to Ukraine. Merkel doesn’t have to take it from Putin anymore.
Now Turkey. Erdogan has also reached the limit of his tomfoolery. Having stoked, funded and supported ISIS in various ways, he faced the ultimate blowback with the Kurdish battle over the border town of Kobane. The Kurds were either going to suffer slaughter – and blame Erdogan in world media – or achieve a public victory – and humiliate Erdogan. All because he won’t commit Turkish troops to fight ISIS. He doesn’t trust his own military. He won’t allow Nato to use its Turkish airbase at Incirlik to bomb ISIS. He doesn’t trust his American allies. But he also won’t let Kurds in Turkey go across to help the Kurds in Kobani. For all this, he doesn’t have the excuse anymore that ISIS is holding Turkish hostages; they’ve been repatriated. He has looked the other way while cheap ISIS oil got sold through Turkey. He has let Iran launder sanctioned money through Turkish banks.
Meantime, he has criticized the regime in Egypt for suppressing his allies, the Muslim Brotherhood. So Egypt hates him. Ditto the Saudis who also hate the MB. He has certainly alienated Russia, Iran and Syria’s Assad. He has alienated the Libyans by supporting the jihadis there.
Yet he expected Turkey to get elected to a (revolving) UN Security Council chair. In public, scores of countries (including Saudi) pledged to support him. In the actual (secret) vote, the majority voted for Spain instead. His prestige internationally has collapsed. The Turkish economy will follow. The Saudis will exclude Turkey from their cheaper oil clients roster. Their oil glut will force OPEC countries to cut prices and cut subsidies to Erdogan’s party. Turkey’s export markets are shutting down one by one due to turmoil, sanctions or sheer political disgust. Its tourism will ebb at the first sign of terrorist incidents within. The black money that has buoyed the economy stealthily is being hunted down through global pressure. Erdogan has played himself and his country into a corner. He, like Putin, is losing leverage and his tatterdemalion posturing looks daily more threadbare.