11.09.2014 Author: Petr Lvov

The US is Yet Again Trying to Create an Oil and Gas Collapse in Russia

New Eastern Outlook collage - 337The failed US politics in the Ukraine who, under the threat of having its army destroyed and with an economy on the verge of collapse, was forced to negotiate a ceasefire with Novorussia, made Washington to shift the focus of its attack against Russia from Europe to the South. Both the Near and Middle East, especially the Gulf Region, yet again became the point of application of White House’s main efforts aimed at weakening and breaking up Russia. First of all, Saudi Arabia and Iran as the world’s major energy exporters may become the primary partners for Washington given the fact that Russia’s dependence on oil and gas is the weakest point of its economy. However, Washington will have to first “modify” the current Iranian regime to fit into its standards to be able to fully tear Tehran away from Moscow. Preconditions for this are in place given the pro-Western inclination of President Rouhani and his team who are counting on massive Western investments in the Iran economy, especially in the hydrocarbon sector. In addition, there is already a “fifth column” of local liberals and minorities – Kurds, Azeris, Baluchis, etc. – active in Iran. And there is no doubt that the Americans will try to involve Qatar in this too, which will be quite easy, as well as Iraq, where Russia’s presence is already being undermined after Prime Minister al-Maliki was replaced for a more accommodating Al-Abadi, and, of course, Syria, where, however, they will have to first get rid of Bashar al-Assad’s regime. These were the main topics of discussion during President Obama’s closed private meeting immediately before the NATO summit in Wales and the Minsk meeting of representatives of Kiev with the Republics of Donetsk and Lugansk.

To implement the plan of strangling Russia by pushing it out from the international oil and gas markets, they are using the old scheme which worked quite successfully 30 years ago during Reagan’s presidency. With the help of Saudi Arabia, he significantly reduced oil prices depriving the USSR of foreign currency earnings. With active involvement of Western Europe, he also prevented the construction of a second gas pipeline from the Soviet Union limiting the ceiling of the European “dependence” on Soviet gas at 30% and banned large long-term loans to Moscow as well as exports of latest technology especially for drilling in offshore and northern permafrost regions. Politically, the undermining of the foundations of Moscow was carried out through Poland in the west and through Afghanistan in the south. So they are using an old scheme but with different actors. It is now Ukraine instead of Poland and Islamist radicals from the Arab region, especially the Islamic State in Iraq and Syria whose militants are being pushed out to the Russian North Caucasus. The scheme which Washington is using for gas is not new either; the goal is to prevent the emergence of the southern pipeline bypassing the Ukraine thus stalling the Southern Stream project and replacing it with the South Pars (a gas pipeline project from Iran) through Iraq (who will soon also start production of gas), Syria and further to Southern Europe. The intention is to use this pipeline for transporting the gas from Qatar from the Gulf’s North Field which is a part of the Southern Pars. The implementation of this project will take two years, provided, of course, that Washington is successful in changing the ruling regime in Iran, getting rid of Bashar al-Assad in Syria and returning Baghdad to the realm of its influence.

These are exactly the goals of the decisions of senior American leadership made during the closed meeting mentioned earlier and of the NATO summit in Wales as well, although not all members of the Alliance have been informed about the details of the new US strategy “against Russia through the Middle East.” That is why the US Air Force is heavily bombing the ISIS mercenaries in Iraq squeezing them out towards Russia aiming to reignite the hotbed of the terrorist and separatist Islamist rebellion in North Caucasus. Russian liberal “fifth columnists” will be used at some point “to fight in the battle” in order to destabilize the situation in Moscow and St. Petersburg as the strongholds of the current Russian regime. And they think that Washington is playing a smart game: the main task during the first stage is to remove President Putin and his inner circle replacing them basically with any other, not necessarily pro-Western, figures. And only then it will be possible to take care of the necessary “modification” of the new Russian government “without Putin.” All in all, a very similar approach is being used for Tehran as well: the “fifth column” in the center of the country and ethnic conflicts in the outskirts.

However, all of this may require a lot of time which is scarce – the winter is coming and Europe needs gas. Disagreement have already surfaced in the EU when they were voiced in Brussels on 8 September for the first time since the beginning of the Ukrainian crisis. This is why the US are forced to ask for help from their ally, Saudi Arabia, following the old Reagan scheme. And to get help, just like before, they will have to sign a large-scale deal with the Saudis. But under Reagan, it was a question of supplying sophisticated weapons to the Saudi kingdom and the matter at stake now is change of regime in Iran, main rival of the Saudi Arabia in the region, removal of Bashar al-Assad to accommodate Riyadh, and constraining the power of the Shiites in Iraq, also to please the Saudis. Saudi Arabia will not join the “game for a fall” in energy prices under different conditions as happened 30 years ago. But in any case, the deal is directed against Russia and Iran, to be exact against the current governments of the two countries.

Obama’s support for the coup in the Ukraine, which has resulted in a serious defeat for the West, makes Washington to urgently find ways of mobilizing all its allies to confront the emerging axis Moscow – Tehran – Beijing. In this sense, there is certain logic in the decision of the White House to urgently revive the somewhat recently stalled relations with their Middle Eastern partners. We are experiencing the time when, according to the Americans, even small differences should be set aside and efforts should be joined to oppose their geopolitical rivals – Moscow and Tehran.

To achieve this, the Al-Saud royal family, after its failures in Lebanon and Syria, will have to prove again its important role to the rest of the Muslim world. They now need victory, and Iraq and Syria fit this goal as no other. A shift in the politics of the government in Bagdad towards reconciliation with the Sunnis and away from Iran is already taking place. But only a victory over Damascus would be a valuable prize for Riyadh which will restore its leading role among Arab countries and will allow to further implement without hindrance regional projects: from creating of a Jordanian-Palestinian federation to forming an anti-Shiite axis from the Arabian Peninsula to Pakistan.

In this regard, Damascus is a desirable prize not only in terms of politics, but also in terms of economics. Thanks to its unique geographic location, Syria may become a key player in oil and gas supplies to Europe. The agreement on the construction of the Iran − Iraq – Syria gas trunk line was signed by the parties in July 2012. Coincidentally, Syria became a major obstacle for the implementation of the gas pipeline project from Qatar’s North Field to Europe which would have allowed another player – Qatar – to hit Gazprom and, therefore, Russia with a sharp increase of the supplies of the cheap Qatar gas to Europe. Damascus, for various reasons, did not give consent for the construction of a gas pipeline from Qatar through its territory to Turkey and the Mediterranean coast and onward transit to Europe. While Assad remains in power, no construction of a gas trunk line to Syria’s Mediterranean coast from Qatar is possible.

It is obvious that, in this situation, Gazprom will lose access to a significant part of foreign markets. And Gazprom’s problems will be followed by problems in the Russia’s budget who is paying the price for the refusal to depend on the “oil and gas curse.” If the Sunnis are successful in taking power in Syria and replacing Assad’s Alawite regime, the Qatar − Saudi Arabia − Jordan − Syria − Turkey gas pipeline (or its variation: Iran + Qatar − Iraq − Syria − Turkey – Europe) will be built almost immediately, which entails enormous financial and political risks for Russia, whose gas cannot compete with Qatar gas because of its extremely low cost.

It is not by chance that recently, instead defeating the forces of the Islamic State of together with Damascus who had declared its readiness, the United States announced their intention to support the main anti-Assad opposition – the Free Syrian Army (FSA). This will soon be followed by bombings of Syria under the pretext of the “war on terrorism.” Everything has been planned according to a tested pattern which was repeatedly reviewed over a year ago during various meetings in Washington: creating a no-fly zone near the Turkish and Jordanian borders, turning this area into a stronghold of militants and “injecting” it with weapons and offensive against Damascus.

On 9 September Obama already made a decision to launch missile and air strikes on Syrian territory, ostensibly to destroy the positions of the Islamic State. And in the interpretation of the US president, no Congress approval is required just like in the case of Iraq. Air strikes may begin within the next few days which also means the beginning of American military operation against Damascus with whom Washington selected not to cooperate in the fight against terrorism.

Now the one thing left is to convince Saudi Arabia to do all the dirty work for the West. There is a precedent for this. Angered with the Soviet invasion in Afghanistan in 1979, Saudis at Reagan’s request sharply increased oil exports which resulted in world oil prices falling to $20 per barrel (in today’s prices) in the mid-1980s. Today a much smaller reduction would be enough – from the current $102 per barrel to under $90 – and Russia will suffer huge financial and economic damages and the United States would take revenge for the Crimea and Ukraine. Naturally, this will undermine the stability in Russia too, especially if the implementation of already budgeted social programs and funding of the upgrading and modernization of its army are disrupted.

The President of the United States no longer hides the fact that he has lost hope for cooperation with the Russian leader. Obama supposedly came to the conclusion that even if a solution is found for the situation in Ukraine, “he will never have a constructive relationship with Putin again.” This is why he decided before the expiration of his term of office to focus on other problems of international relations in which Iran is to have a key role.

The US administration is determined to do everything to drive a wedge between Moscow and Tehran. This raises the question of whether there is a real opportunity for strategic convergence between Tehran and Washington to the detriment of the partnership between Russia and Iran?

Officially, in reaction to the events in the Ukraine, Tehran did not side with the West against Russia. The US is firmly believed to be the main enemy of both countries. In this context, the deterioration of the relations between Moscow and Washington could become a certain bonus for Tehran in deepening the cooperation between Russia and Tehran on a bilateral and regional level. Iranians are not happy about possible enlargement of NATO close to Russia’s borders. Ukraine is a testing ground which, if the Kremlin withdraws, may be followed by the states in the South Caucasus and Central Asia. Iranians also see that instead of the promised democracy in the Ukraine the world has witnessed the triumph of radicalism and extremism, even though not Islamic. The Ukraine, relying on the United States, has already lost part of its territory and it is now one step away from a breakup into two and even more pieces.

Ayatollah Khamenei believes that it might make sense for the Islamic Republic to use new tactics in the changing international environment, but that the basic principles of the 1979 revolution must remain inviolable. Iranians understand that the nuclear issue of Iran is no longer a matter of legal and technical discussions and has become a purely politicized issue for the United States and its allies and the West wants to close this issue with a clear geopolitical advantage for itself in the region.

It is, at least, about change of policy of the Iranian government and ideally for the US it is about replacing Islamic regime with a pro-Western government. But there are problems here. Tehran’s nuclear program is only one of the issues on which Iran and the United States disagree, while many others have still not been solved and are not being solved: the situation in Palestine, Syria and Afghanistan, the confrontation between Iran and Saudi Arabia and the overall situation in the Middle East. And then we have Western speculations about the upcoming and imminent friendship between the US and Iran which are designed only to put Russia and Iran at odds with each other. In reality, Tehran is interested in building strategic relations with Russia and has never acted behind its back even when it would have been very profitable for Iran. A striking example of this is the relatively recent proposal of the Azerbaijan President Ilham Aliyev during his visit to Tehran to mediate an arrangement on delivery of Iranian gas to Europe bypassing Russia in the context of the Ukrainian crisis. Iran refused flat out saying that it will never sign any contracts with Europe behind Russia’s back and without its consent.

Even more so that Russia and Iran have made progress in the negotiations on the supply of Russian goods in exchange for Iranian oil. The total amount of the contract is $20 billion and it covers plans for procurement of 500,000 barrels of Iranian oil per day. Moscow believes that the deal with Iran does not violate the international sanctions imposed against Tehran. Russia only signed the sanctions adopted by the UN Security Council and considers illegal the unilateral restrictions adopted by the United States and the European Union. By doing this, Moscow takes the leverage over Tehran away from the White House and destroys the entire US-backed system of dictating terms to the Iranians. Americans fear exactly this, rather than that the translation will be implemented.

Iran is not only a major oil supplier. The country is estimated to have largest gas reserves in the world and we can build a coalition to prevent such US-controlled actors as Saudi Arabia and Qatar from using illegal unilateral US sanctions for their own advantage. Russia can become a trader for Iranian oil if the US refuses to lift sanctions after the signing of a final agreement with Iran on its nuclear program. And, by creating a Moscow – Tehran gas-axis instead of the failed GECF, the two countries will be able to dictate to Washington and Brussels its conditions in the global gas market, including gas prices. But we must act now taking into account that the US has already begun to implement its new policy toward Russia and Iran.

Peter Lvov, Ph.D in political science, exclusively for the online magazine “New Eastern Outlook”.