EU diplomats fear that "the US can strangle Iran by blocking them from SWIFT and CHIPS [payment systems] so that they cannot clear their transactions, and can possibly strangle them with sanctions." Meanwhile, in the Persian Gulf, it's no secret among traders that sooner or later it must be factored in that Iran, in the eventuality of a US attack, "has the power to bring down Western economies by destroying 20% of the oil production in the Middle East. And Russia has that power too. Russia is largely self-sufficient for its needs. It can win this as an economic battle rather than a military one."
The US seems to be extending the proverbial "offer you can't refuse" to the EU; an elusive, assured delivery of LNG in the (unlikely) event of a cutoff of Russian natural gas to the European Union.
First of all, Gazprom has no intention to ditch its extremely lucrative European market. Moreover, this supposed American LNG capacity "does not exist as yet in the United States. The US cannot replace Russian oil or gas for the EU," traders said, even as "Russian oil deliveries to the EU have dropped 40% while exports of Russian oil to China have risen about 30%."
Oblivious to facts, Capitol Hill, through the Countering America's Adversaries Through Sanctions Act (CAATSA), is getting ready to slap Russian defense and energy sectors with devastating secondary sanctions applied to nations doing business with Moscow.
And this sanction double trouble, on both Iran and Russia, is bound to have immense repercussions not only in Europe but all across Central Asia.
Trouble in KazakhstanTake Kazakhstan's massive top three energy projects: Tengiz, Kashagan and Karachaganak. The majority of Kazakhstan's crude exports flow through the 1,500km-long Caspian Pipeline Consortium (CPC) -- partially owned by Moscow (Transneft owns 24% compared to 15% by Chevron and 7.5% by Exxon Mobil).
The expansion of both Tengiz and Kashagan, which pump roughly 950,000 barrels a day to the Russian Black Sea coast, depends on Russian transit routes.
Karachaganak's 250,000 barrels a day of condensate go into the CPC, and most of its 18 billion cubic meters of gas a year go to Russia and are marketed by Gazprom.
Chevron and Exxon Mobil have stakes in Tengiz, Exxon in Kashagan and Chevron in Karachaganak.
Russian oil and gas executives have been caught in the US sanctions web. Transneft has been under sanctions since 2014. Now imagine Washington deciding that Chevron and Exxon Mobil cannot continue to do business with Russian companies.
Compound it with the reaction from Russia. A recent law criminalizes Russian companies which abide by US sanctions -- and further retaliation may include cutting off US companies from access to Russian infrastructure.
Persian Gulf traders argue that if Russia was finally convinced to "divert their oil and natural gas supplies to China, and the EU becomes totally exposed to the Middle East for their oil supplies based on the grave instability of the Gulf states, then Europe could find itself collapsing in an economic sense by a Gulf states oil cutoff."
The nuclear optionAnd that plunges us into the heart of the geopolitical game, as admitted, never on the record, by experts in Brussels; the EU has got to reevaluate its strategic alliance with an essentially energy independent US, as "we are risking all our energy resources over their Halford Mackinder geopolitical analysis that they must break up Russia and China."
That's a direct reference to the late Mackinder epigone Zbigniew "Grand Chessboard" Brzezinski, who died dreaming of turning China against Russia.
In Brussels, there's increased recognition that US pressure on Iran, Russia and China is out of geopolitical fear the entire Eurasian land mass, organized as a super-trading bloc via the Belt and Road Initiative (BRI), the Eurasia Economic Union (EAEU), the Shanghai Cooperation Organization (SCO), the Asia Infrastructure Investment Bank (AIIB), is slipping away from Washington's influence.
This analysis gets closer to how the three key nodes of 21st century Eurasia integration -- Russia, China and Iran -- have identified the key issue; both the euro and the yuan must bypass the petrodollar, the ideal means, as the Chinese stress, to "end the oscillation between strong and weak dollar cycles, which has been so profitable for US financial institutions, but lethal to emerging markets."
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