Putin and China Reach Tentative Oil and Gas Deal Worth a Trillion Dollars

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China's President Xi Jinping and Russian President Vladimir Putin meeeting yesterday in Shanghai.

Earlier today, Russia and China, or better Russia's President Vladimir Putin and China's President Xi Jinping reached a tentative deal what some are calling a trillion dollar gas and oil deal in Shanghai with only the asking price left to be negotiated and finalized. Of course the New York Times portrayed it as a failure to reach agreement but this needs to be seen as only the beginning of what is sure to be increased trade and development ties between Russia and China.

To wit, sitting next to the two world leaders were the representatives of Russia's VTB investment bank and the Bank of China as they signed an agreement that includes paying each other in domestic currencies, the Russian ruble and the Chinese renmindi.

Pepe Escobar, the roving reporter for Asia Times has called this oil and gas deal "a tectonic shift" [i] intimating this deal could also be concluded in domestic currencies and not the Petrodollar, the usual reserve currency mostly used in these type transactions. Escobar related not only Russia and China but other BRICS countries namely Brazil, India and South Africa as well as Iran have agreed on a "basket of currencies" which they would conduct trade. There's also the BRICS summit to be held in Brazil on July 3 where a $100 billion development bank will be unveiled as an alternative to the IMF and World Bank providing financing for projects in the developing world.

So if you hadn't noticed by now all these developments studiously-intentionally?-avoid anything having to do with the US and the EU.

Now all these new developments didn't start with the crisis in Ukraine-but the neo-Nazi led coup in Kiev in February, the forced departure of Ukraine President Viktor Yanukovych, the subsequent naming of Arseyi Yatsenyuk as prime minister of the post coup government and the man hand picked by Victoria Nuland, the US Assistant Secretary of European and Eurasian Affairs, Russia concluding the US helped instigate the coup, placing new sanctions, demonizing Putin and calling for a new cold war with Russia-but Ukraine became the catalyst for Putin to initiate his own "pivot" to the east and solidify the deal with China.

And let's not forget this all happening as a result of US policies-not only in Ukraine, but primarily the expansion of NATO eastward to the borders of Russia. The US has repeatedly reneged on the 1989 deal between the USSR's Mikhail Gorbachev and President Reagan whereby the Soviet Union wouldn't interfere with the re-unification of Germany as long as NATO wouldn't advance into eastern Europe. But of course with the collapse of the Soviet Union in 1991 that agreement was just ignored first by Clinton, then by Bush Jr and attempted by Obama in Georgia in 2009 and now in Ukraine but resisted by Russia.

But with this continuing US encroachment of Russia through NATO, Ukraine became the "red line" Russia would not accept.

Throw in the US obsession placing sanctions on any country that doesn't submit to its hegemony and its the US that's forcing countries to come up with their own economic and trade alliances and agreements that center on their own needs that bypass the US bully.

Of course these developments are not going unnoticed by the US government. But it remains to be seen what the response will be to Russia and China drawing closer together. Surely the EU and particularly Germany doesn't want to ramp up more sanctions on Russia, not with its dependency on Russian natural gas.

Yet the uncertainty has all to do with Washington particularly being under the sway of the neo-conservatives where US supremacy in the world, with no challengers is their prevailing ideology.

What that could mean relative to the events mentioned above is anyone's guess. Reason and reality should come to the fore and enter the picture where seeking accommodation, reversing course when its clearly wrong and engage in serious diplomacy. But these tactics haven't been embraced by Washington where choosing endless war, threats, sanctions, intimidation, coercion have been the methods of the US hegemon.

Demonizing Putin and the US initiating a new cold war with Russia shouldn't be the way to go. But why should one expect anything else from Washington considering its neoconservative ideologues still believe invading Iraq was a success despite all the evidence to the contrary and the sectarian civil war it created is continuing to fracture that country.