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Syria’s new position on the Russian scene

Giancarlo Elia Valori

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[yt_dropcap type=”square” font=”” size=”14″ color=”#000″ background=”#fff” ] A [/yt_dropcap]mong the nine military bases currently used by the Russian Federation, so far the only one in Syria is Tartus, a naval facility classified by Russia as a “technical and material support point”, operating since 1971 thanks to an agreement with Hafez al-Assad’s Baathist Syria. The Humaynim air base, however, is Syrian and, in any case, Russian aircraft and sensors are stationed there.

The Tartus base is a necessary supply and repair point for the initially Soviet and later Russian ships that were to transit through the base located in the Syrian territory to reach the Mediterranean and the Black Sea.

The Tartus base can accommodate three ships at the same time and an Amur PM-138 class repair ship is stationed there. Nevertheless the base is not yet suitable for hosting, protecting and repairing the new large Russian warships.

Nevertheless the new agreement between the Russian and Syrian governments, signed last January, extends the concession of the base to the Russian Federation for further 49 years and allows the necessary works to make the Tartus base capable of repairing and supplying eleven ships at the same time. Most importantly, it grants to Russia sovereignty over the base territory and its waters.

In particular, the Tartus base will be able to host ships which are both nuclear-armed and nuclear-propelled.

If we relate this fact to the Russian base planned by Khalifa Haftar’s “Operation Dignity” on the coast of Cyrenaica – an operation seeking to ridicule the European and North American powers which have bet on the wrong horse, namely Al Serraj, a true Machiavelli’s “unarmed prophet” – we have all the geopolitical dimension of the new projection of Russian power onto the Mediterranean.

We must also consider the Conference managed by Russia for mediating between Hamas and Fatah, making Russia stand for becoming the only real Middle East power broker, while the United States is turned into a  free tool of the Saudi policy against Iran and Qatar, which are still supported by Turkey, namely NATO’s second armed force.

It is certainly not easy for NATO to find a common policy on the Middle East, considering that France and Turkey support Haftar; the other NATO European countries unnecessarily support al-Sarraj’s government, in line with UN preferences; Russia backs “Operation Dignity” of Libyan General Haftar, who already controls Cyrenaica, Sirte and much of the Libyan oil crescent, and the United States does nothing.

In other words, in the Mediterranean basin, the Russian Federation plans to restructure the whole Maghreb region on its own, after the evident US failure of the “Arab Springs”.

The Russian strategy is easy to explain, namely a series of military bases or concessions, which progressively expel the United States and its  European allies from the Mediterranean region.

Furthermore Russia will soon propose a possible agreement of mutual alliance and bilateral support against terrorism that will be offered by it to all NATO and EU Mediterranean countries, ever less seduced by NATO and above all by the United States.

Let us revert, however, to the new Russian base in Syria, which closes the loop of this strategic project.

Today, the military engineers’ corps of the Russian Armed Forces are building a new base, which will probably be the vertex of the new Russian Mediterranean triangle, at Kirbet Ras Al-Wa’r, in the Syrian district of Bir Al Qasab.

The Syrian-Arab army, the main force available to Bashar al-Assad, has recently reconquered the whole area from Kirbet up to Arinbah and the whole desert south-east of Damascus, by defeating the para-jihadist – albeit US-backed – forces of Assud Al Sharqia.

Assud Al Sharqia’s group operated under the command of the US base of Al Tanf, on the Syrian border with Iraq.

As we will see later on, this base has now been made harmless.

The war material left by the defeated anti-Assad “rebels” is certainly remarkable both in quantitative and in qualitative terms: many RPG-26 disposable anti-tank rocket launchers developed by Russia, but probably of Jordanian origin; other GRAD BM 21 missiles, namely largely and effectively used rocket launchers manufactured by Russia; many KONKURS (NATO reporting name: AT 5 Spandrel), widely-used wire-guided anti-tank missiles developed in the former Soviet Union.

Clearly the new Russian base of Khirbat Ras al Wa’r, at the core of the Syrian Southern region, deprives the United States of the only concrete possibility of attacking Bashar Assad’s forces north of Al Tanf and, in any case, of drawing the Syrian-Arab Army of the Alawite government away from the Iraqi border, a primary source of support for jihadists and for those whom the United States – using an Orwellian expression – calls “moderate Islamists”.

The new Russian base is 85 kilometres from Damascus, 96 from Deraa and 185 kilometres from the US base of Al-Tanf, which will soon be encircled from the South by the operations of Bashar al-Assad’ Syrian-Arab Army, which is also opening its way to Deraa and Idlib along the Jordanian border.

Furthermore, the recent US operation against the Russian-Syrian base of Shayrat, in central Syria, was meant to be a retaliation against the attack on the village of Qan Shayqun, for which Syria had considered the possibility of using nerve gas.

Despite the scarcity of sources, also the US intelligence had clarified that  the Syrian attack had been targeted against a jihadist gathering organized there on April 4 – an attack carried out by a Russian-guided missile containing conventional explosives.

The US reaction – prompted by the fake news that Syria had used Sarin –  was based on a series of Tomahawk missile launches, but most of the Syrian aircraft had already been moved to bases far from Shayrat.

All this gives you the idea of the poor quality of the US operational and tactical intelligence on the Syrian territory and of the particular level of disconnection between the collection of data on the field and the US decision-making process.

The new base – the intelligence axis of Russia’s engagement in Syria –  will be aimed at controlling the Syrian South-Eastern border, where both the US-backed and the Iranian forces enter.

Building this new military base, just 50 kilometres from Damascus, means protecting the Syrian capital city from any present and future threat, namely the one currently coming from the Al Tanf area and, hence, from the  Jordanian forces, from the US ones and their “moderate jihadist” allies operating on the Syrian soil.

Hence the final stabilization of Bashar al-Assad’s regime under the Russian protection is approaching, as well as the consequent expulsion of the Sunni and pro-American jihad from the Syrian territory.

This is the operation that will become the starting point for a new Russian hegemony in the Greater Middle East, where Russia has no real enemies, but wants to restructure it according to its interests: at first, the projection onto the Mediterranean and, later, the strategic correlation between Russian and OPEC oil.

The construction of the base has begun when the secret contacts between the United States and the Russian Federation resumed in Amman, Jordan.

Contacts useful primarily to define the “de-escalation zone” in Southern Syria, especially in the Deraa area.

For various parts of Syria, the four de-escalation zones had already been defined during the Astana talks of last May in a specific agreement between Russia and Iran.

Obviously the United States does not accept an agreement with Iran, but  proposes a new de-escalation zone to Russia, without having to rely on a relationship with Iran.

The two delegations are led by Michael Ratney for the United States and Aleksandr Lavrentiev for Russia.

At the end of last January, the Russian envoy had already negotiated with Israel the central lines of the future peace in Syria.

Al Tanaf, the US base that the new Russian facility could make harmless, was one of the two pillars of the US plan, consisting in unilaterally declaring a “de-escalation zone” between Al Tanaf itself up to the Euphrates valley, in the direction of Deyr al-Zur.

The plan underlying this operation was to break the “Shiite crescent” that was supposed to connect, on the ground, Iran to the Lebanon via Southern Syria.

It is likely, however, that the plan was, in fact, to build a larger Sunni corridor, at the sides of the Shiite crescent, going from the Saudi-Iraqi border, namely from Al Anbar – through the Syrian Sunni area and the area occupied by the Kurds, up to the Turkish border.

The Syrian forces alone have blocked this plan by connecting the Western area of their country to the Iraqi border, north-east of Al Tanaf, and by advancing just north-east towards Abu Qamal and the Euphrates valley.

The US-Jordanian base of Al Tanaf has been closed southwest – as in a vice – by both Syria and the Iranian forces. This is the premise for the passage of Bashar al-Assad’s Syrians towards Deyr al Zur and the Euphrates valley, although today Deir is still surrounded by jihadists.

Hence the United States is acknowledging its limited room for manoeuvre in Syria.

In fact, on June 22, a still confidential tripartite agreement was reached by the United States, Russia and Jordan to create a true demilitarized zone in Southern Syria, which would also cover the Israeli and Jordanian borders.

As far as we know, the agreement envisages that the United States will continue to manage the base of Al Tanaf.

In return, the United States will not react to Syrian, Iranian and Hezbollah operations against Daesh-Isis to reconquer the border town of Abu Kamal, north of Al Tanaf.

Conversely, Russia ensures the return back home of the Iranian forces, of Hezbollah and the militia they command, in a still undefined phase of the future stabilization of the Syrian area.

Moreover a joint Russian-American administration will be defined to manage the civil affairs of Southern Syria, including the areas bordering on Israel and those bordering on Jordan.

Russia, to which Syria cannot deny large interference with some Syrian areas, will ensure stability north of the Jewish State – in the place of the United States and, anyway, in a hegemonic way with respect to it – which Russia wants to keep within the Middle East, but without playing the old role of power broker it had before the conflict in Syria.

A clash that has revealed who is the new, real Middle East broker and manager, after the US ill-advised support to the jihadist guerrilla warfare against Bashar el Assad, the last tessera of the “Arab Springs” and the final crucial point of the US hegemony over the whole area.

Meanwhile, the US-linked Syrian Democratic Forces have encircled Raqqa – and Syria foresees that the liberation of the last “capital city” of Daesh-Isis will last at least three months.

The US geopolitical tape will rewind: hence future stabilization – also with the US support – of the tension between the various Palestinian organizations; probable peace between Israel and the PNA Territories; Russian-American cooperation against the jihad in Sinai and a new agreement between the United States and Egypt, while a new role of  armed mediation will be probably played by the United States and by the two conflicting governments within Libya.

Conversely, no one can say anything about Russia’s expansion in the Mediterranean, which will probably be supported by Turkey that, as already said, is the second NATO armed force, while Russia will favour either an agreement between Khalifa Haftar and Fayez al-Sarraj or a definitive military action against Tripoli’s government.

Nevertheless, the United States will not have the opportunity of accepting  the new bilateral US and Russian administration in Southern Syria: in fact, if Bashar al-Assad’s forces conquer Abu Kamal, Iran will strengthen its position on the Syrian-Iraqi border, while the United States does not want any presence – albeit limited in time – of Iran and Hezbollah on the Syrian territory.

Hence, according to the United States, at first the Shiites must be out of the Syrian territory and later the real bilateral negotiations on Southern Syria can start.

Nevertheless will Israel trust more the control that Russia has shown over the Iranian and Lebanese operations north of Golan or the US side guarantees which, however, will be marginal in the future in the region?

Another factor we must consider – also in view of understanding Syria’s future – is the clash between Saudi Arabia and Qatar.

As is well known, the Saudi demands to Qatar are thirteen: in particular, breaking any relationship with Iran – and I think it will be hard, considering the cooperation between the two countries for the South Pars gas field; closing the Turkish military base, which does not only depend on Qatar – but Turkey has no intention of closing anything and, indeed, it is planning joint Turkish-Qatari exercises after Eid-ul Fitr, i.e. in a few days;  Qatar’s closing Al Jazeera and not funding media such as “Arabi21”, “Rassdi”, “Arabi Al-Jadid” and “Middle East Eye”; blocking any funding to terrorist groups so defined by Saudi Arabia, Egypt, the United States,  Bahrain and the United Arab Emirates – and you can tell they will be mainly Shiite and pro-Iranian groups; breaking off any relations with Hezbollah, al-Qaeda and the Caliphate; not interfering with the internal affairs of the signatory countries of the motion against Qatar; suspending any aid to the internal opponents in Egypt, Saudi Arabia, the United Arab Emirates and Bahrain; compensating the damage caused to the above-stated countries; finally aligning with said countries from all viewpoints, according to the agreement signed by Qatar and Saudi Arabia in 2014, so as to be later subjected to monthly inspections to monitor the implementation of these agreements, at least for the first year.

In principle, it is a spoliation of Qatar to support the Saudi finances and back the transformation of the Saudi economy, with the capital and funds  of the wealthy Qatar, so as to make it no longer dependent on oil.

The United States supports this agreement to rebalance the power void experienced in Syria, but it is by no means certain it will have to do with friendly countries and with similar regional interests.

Saudi Arabia’s financial crisis is severe, mainly because of the expensive engagement of the Al Sauds’ kingdom to support the war in Syria, Iraq and Yemen – a war that the very link between Bashar al-Assad and the Russian Federation has shown to be useless and dangerous from the Sunni side.

The fight to reduce the oil barrel price, triggered off by Saudi Arabia to undercut the US shale oil competition, on which Obama’s new economic growth was centered, led to Trump’s victory, thus creating – in the Saudi clan – an internal war between those who want a new relationship with Russia and China, the winners on the field, and a new and stronger relationship with the new US Presidency – which, however, will be ever  less important in the Middle East.

An almost explicit goal is to block the participation of the Saudi-dominated Middle East system in the Chinese New Silk Road project,  encompassing Iran and part of Syria.

And here we revert again to the Russian project on Syria, crowned with  the future victory on the field.

In fact, Iran would be the spearhead of the new Chinese project to put its currency at the core of future oil trade.

This is also the reason why we are still fighting in Syria. And it is precisely Iran that has just liberated Mosul.

Nevertheless it is exactly the Chinese finance that is currently pivoting on Qatar, for the whole Middle East.

Hence if the situation in Syria stabilizes under the legitimate government of Bashar al-Assad, Saudi Arabia will no longer have any protection from the Syrian-Jordanian border towards its territory, and even a pincer movement might take place, while the Kingdom’s finances go bust, between Qatar and Iran’s Northern allies, namely Syria, the Lebanon and Iraq.

Moreover, if Saudi Arabia keeps its role as Asia’s primary oil supplier, excluding Iran from playing this role, it can reasonably support its post-oil project for transforming its economy.

Conversely, if the United Kingdom unwillingly accepts a strong and dominant presence of Iran and its allies in the New Middle East, it shall necessarily accept to play a marginal role in the Chinese Road and Belt Initiative, which already makes most of its Middle East investment in Qatar.

Nevertheless there is the variable of the contrast between Hezbollah and Israel. Just in these days the Jewish State has carried out air raids against Syrian positions near Quneitra, three kilometres from the Golan border.

Shortly before, Bashar al-Assad’ Syrian-Arab Army and Hezbollah had fought against a large alliance of Salafist jihadist groups, while the Lebanese Shiite groups were made up of Shiites, Circassians, Shiite Afghans and soldiers of some Bashar al-Assad’s brigades.

If Syria tends to put Golan under its control, Israel’s immediate reaction will be very tough. Moreover if, from Deraa southwards, Syrians arrives at the border with Jordan, a severe casus belli will be created with the Hashemite Kingdom.

Syria cannot hit two of its opponents at the same time to avoid a joint attack that would move the Syrian-Arab Army away from Golan and would push it into the arms of Al Nusra and the other jihadist groups still present north of Quneitra.

And this will be a real acid test for the Russian Federation’s credible mediation role.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs "La Centrale Finanziaria Generale Spa", he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group and member of the Ayan-Holding Board. In 1992 he was appointed Officier de la Légion d'Honneur de la République Francaise, with this motivation: "A man who can see across borders to understand the world” and in 2002 he received the title of "Honorable" of the Académie des Sciences de l'Institut de France

Middle East

Shifting Middle Eastern sands spotlight diverging US-Saudi interests

Dr. James M. Dorsey

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A series of Gulf and Middle East-related developments suggest that resolving some of the Middle East’s most debilitating and devastating crises while ensuring that efforts to pressure Iran do not perpetuate the mayhem may be easier said than done. They also suggest that the same is true for keeping US and Saudi interests aligned.

Optimists garner hope from the fact that the US Senate may censor Saudi crown prince Mohammed bin Salman for the October 2 killing of journalist Jamal Khashoggi in Istanbul; the positive start of Yemeni peace talks in Sweden with an agreement to exchange prisoners, Saudi Arabia’s invitation to Qatar to attend an October 9 Gulf Cooperation Council (GCC) summit in Riyadh, and a decision by the Organization of Oil Exporting Countries (OPEC) to cut production.

That optimism, however, may not be borne out by facts on the ground and analysis of developments that are likely to produce at best motion rather than movement. In fact, more fundamentally, what many of the developments suggest is an unacknowledged progressive shift in the region’s alliances stemming in part from the fact that the bandwidth of shared US-Saudi interests is narrowing.

There is no indication that, even if Qatari emir Sheikh Tamim bin Hamad Al Thani decides to accept an invitation by Saudi king Salman to attend the GCC summit rather than send a lower level delegation or not attend at all, either the kingdom or the United Arab Emirates, the main drivers behind the 17-month old economic and diplomatic boycott of the Gulf state, are open to a face-saving solution despite US pressure to end to the rift.

Signalling that the invitation and an earlier comment by Prince Mohammed that “despite the differences we have, (Qatar) has a great economy and will be doing a lot in the next five years” do not indicate a potential policy shift, UAE Minister of State for Foreign Affairs Anwar Gargash insisted that the GCC remained strong despite the rift. “The political crisis will end when the cause behind it ends and that is Qatar’s support of extremism and its interference in the stability of the region.,” Mr. Gargash said, reiterating long-standing Saudi-UAE allegations.

Similarly, United Nations-sponsored peace talks in Sweden convened with the help of the United States may at best result in alleviating the suffering of millions as a result of the almost four-year old Saudi-UAE military intervention in Yemen but are unlikely to ensure that a stable resolution of the conflict is achievable without a lowering of tension between Saudi Arabia and Iran. Even humanitarian relief remains in question with the parties in Sweden unable to agree on a reopening of Sana’a airport to facilitate the flow of aid.

More realistically, with the Trump administration, backed by Saudi Arabia and Israel, determined to cripple Iran economically in a bid to force it to alter its regional policies, if not change the regime in Tehran, chances are the Yemeni conflict will be perpetuated rather than resolved.

To Yemen’s detriment, Iran is emerging as one of the foremost remaining shared US-Saudi interests as the two countries struggle to manage their relationship in the wake of Mr. Khashoggi’s killing. That struggle is evident with the kingdom’s Washington backers divided between erstwhile backers-turned-vehement critics like Republican senator Graham Lindsey and hardline supporters such as national security advisor John Bolton. The jury is out on who will emerge on top in the Washington debate.

The risks of the Saud-Iranian rivalry spinning out of control possibly with the support of hardliners like Mr. Bolton were evident in this week’s suicide bombing in the Iranian port of Chabahar, an Indian-backed project granted a waiver from US sanctions against the Islamic republic to counter influence of China that support the nearby Pakistani port of Gwadar.

Iranian officials, including Foreign Minister Mohammad Javad Zarif and Revolutionary Guards spokesman Brigadier General Ramadan Sharif suggested without providing evidence that Saudi Arabia was complicit in the attack that targeted the city’s police headquarters, killing two people and wounding 40 others.

Iran’s semi-official Tasnim news agency, believed to be close to the Guards, said the attack was the work of Ansar al-Furqan, an Iranian Sunni jihadi group that Iran claims enjoys Saudi backing.

Iran’s allegation of Saudi complicity is partly grounded in the fact that a Saudi thinktank linked to Prince Mohammed last year advocated fuelling an insurgency in the Iranian province of Sistan and Baluchistan that incudes Chabahar in a bid to thwart the port development while Mr. Bolton before becoming US President Donald J. Trump’s advisor called for US support of ethnic minorities in Iran.

In a bid to create building blocks for the fuelling of ethnic insurgencies in Iran, Pakistani militants have said that Saudi Arabia had in recent years poured money into militant anti-Iranian, anti-Shiite madrassas or religious seminaries in the Pakistani province of Balochistan that borders on Sistan and Baluchistan.

The divergence of US-Saudi interests, agreement on Iran notwithstanding, was on display in this week’s defeat of a US effort to get the UN General Assembly to condemn Hamas, the Islamist group that controls the Gaza Strip. Saudi Arabia, despite the kingdom’s denunciation of Hamas as a terrorist organization and its demand that Qatar halt support of it, voted against the resolution.

The vote suggested that Mr. Trump may be hoping in vain for Saudi backing of his as yet undisclosed plan to resolve the Israeli-Palestinian dispute that is believed to be slanted towards Israel’s position.

Saudi ambassador to the UN Abdallah Al-Mouallimi said the defeated UN resolution would “undermine the two-state solution which we aspire to” and divert attention from Israel’s occupation, settlement activities and “blockade” of territories occupied during the 1967 Middle East war.

Saudi Arabia’s changing status and the divergence of longer-term US-Saudi interests was also evident in this week’s OPEC meeting in Vienna.

To get an OPEC deal on production levels, the kingdom, once the oil market’s dominant swing producer, needed an agreement with non-OPEC member Russia on production levels as well as Russian assistance in managing Iranian resistance, suggesting

The agreement, moreover, had to balance Mr. Trump’s frequently tweeted demand for lower prices, and the kingdom’s need for higher ones to fund its budgetary requirements and Prince Mohammed’s ambitious economic reforms and demonstrate that the Khashoggi affair had not made it more vulnerable to US pressure.

The emerging divergence of US-Saudi interests in part reflects a wider debate within America’s foreign policy community about what values the United States and US diplomats should be promoting.

With some of Mr. Trump’s ambassadorial political appointees expressing support for populist, nationalist and authoritarian leaders and political groups, the fact that some of the president’s closest Congressional allies back the anti-Saudi resolution illustrates that there are red lines that a significant number of the president’s supporters are not willing to cross.

All told, recent developments in the Middle East put a spotlight on the changing nature of a key US relationship in the Middle East that could have far-reaching consequences over the middle and long-term. It is a change that is part of a larger, global shift in US priorities and alliances that is likely to outlive Mr. Trump’s term(s) in office.

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Middle East

Qatar’s decision to leave OPEC

Giancarlo Elia Valori

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The Emirate of Qatar will leave OPEC as from January 1, 2019.

The primary reason for this choice is the Emirate’s project to become the world leader in the natural gas market, raising its production from 77 million tons per year to 110 million tons. However, there is obviously also a geopolitical and energy decision underlying Qatar’s current choice.

This is the Emirate’s final response to the boycott and blockade imposed by Saudi Arabia on Qatar in June 2017, with the support of the United Arab Emirates, Bahrain, Yemen, Maldives, the Libyan GNA, Egypt and Jordan – based on Saudi Arabia’s generic accusation whereby Qatar was supposed to sponsor and support “terrorism” on its own.

The blockade was imposed two days after President Trump had met as many as 55 Heads of Arab and Muslim countries to build a sort of NATO equivalent, always against “terrorism” – an alliance to be set up immediately to counteract, above all, the Shiite and Iranian danger.

Let us leave aside the twenty-eight pages taken from the report of the US Senate on September 11, which would definitively prove the connection between those Al-Qaeda operatives and the Saudi regime – as well as the many multiannual reports of private and public funding to the jihadists and finally the lines of credit opened again by eminent citizens of the Wahhabi Kingdom in favour of Al Baghdadi’s Syrian-Iraqi Caliphate.

The Saudis, however, are too rich not to be believed, especially by the USA – hence the great blockade on Qatar succeeded also with the support of some Western countries.

For the whole Middle East, their troops, like the US ones, reported to CENTCOM, at the Al Udeid base  having its headquarters precisely in Qatar.

The strategic characteristics of Qatar, which today wants to build its autonomous natural gas organization –  independent of the oil one of OPEC, which does not deal with gasand is, however, dominated by Saudi Arabia –  are many and particularly interesting: firstly, the Qatari people are probably the richest citizens in the world.

If we assume that the Americans’ average income is 100, that of Qatari citizens is 187.4.

Just about the size of the Falkland Islands, the Emirate has 1.9 million residents, with a very high and growing share of immigrants.

From 2000 to 2010 the Emirate’s economy grew by a 12.9% average per year.

Its future growth up to 2022 is expected to be 18% higher than the current one.

There is also an interesting geopolitical sign: Qatar  participated – with great commitment – in the Western operations against Gaddafi by supporting, in particular, the black market of Cyrenaica’s oil, together with the Turkish intelligence services.

Nevertheless Qatar supports also some “rebel” jihadist Syrian groups against Assad, thus doing half a favour to US allies – while hosting, since 2013, a political office of the Afghan Taliban, which is well known and also frequented by the US intelligence service operatives.

Qatar’s global industrial and financial investments, however, are manifold.

Through its sovereign fund, the Emirate owns significant shareholdings of the Agricultural Bank of China – and certainly the Qatari decision to leave OPEC has been blessed by China. It also has shareholding in the Airbus Group; the London Stock Exchange (15.1%); Volkswagen (17%); Lagardère, a large and diversified media and publishing company; the Paris St.Germain football club; the Virgin megastore;  the HBSC, one of the largest banking groups in the world; Credit Suisse (5.2%) and Veolia, a French water and gas utility and service company.

Not to mention the countless real estate operations: Porta Nuova in Milan; Westin Excelsior in Rome; Gallia in Milan; Costa Smeralda in Sardinia;  Deutsche Bank; Barclay’s; Royal Dutch Shell; Tiffany; Siemens; the Heathrow airport; Walt Disney and the Empire State Building.

In addition to many other shareholdings not mentioned in this paper.

However, it has also a 3% shareholding of Total, which for Italy is an extremely important sign; a majority shareholding of the Miramax entertainment and movie company, as well as shareholdings in Rosneft, the Russian giant of natural gas and raw materials, and in the big five-year project for liquefied petroleum gas (LPG) in Germany and in the EU – a 30 billion US dollar project, of which 10 invested for Germany alone.

Therefore, between Qatar and Saudi Arabia, in the fight  between oil producers and natural gas extractors, there is a real war for the hegemonic conquest of technologically advanced areas and of Europe, in particular, with a view to definitely acquiring markets and using their diversification opportunities.

Moreover, Qatar is at least as rich in natural gas as Iran (and, together with the Shiite Republic, it participates in the exploitation of the South Pars II marine field), but also as the Russian Federation.

The new  Qatar-centred “gas OPEC” means, therefore, that there is no longer the US-friendly Sunni oil OPEC,  precisely the one that organized the great petrodollar recycling started after Egypt and Syria’s Yom Kippur war against Israel in 1973.

Oil recycling at a “high” price against the US dollars which, after the end of the Bretton Woods agreements, led to the new hegemony of the US currency and its inappropriate exchange rate, despite its internal fundamentals.

“The dollar is our currency, but it is your problem”, FED Governor Paul Volcker said to his fellow Governors of the European Central Banks.

At that time, there was not yet the weak and irresolute timidity of the Euro to make the picture more complex.

The European currency is not a lender of last resort, but it plays the game of the global currency as an alternative to the US dollar, with the operational results we can imagine.

It is therefore no mere coincidence that the only strategic uses of the Euro were the minimum Iranian ones, in the oil Stock Exchanges of the islands in the Persian Gulf, or the more paraded than real ones by Saddam Hussein.

In essence, reverting to the geopolitical sense of the very recent Qatari decision to leave OPEC, this means that the 600,000 barrels/day of oil extracted from Qatar are considered fully marginal by it and certainly can never compete with Saudi Arabia’s 11 million barrels/day of Saudi Arabia.

Qatar plays the game with its natural gas – it does not play its oil cards.

The current Qatari operation, however, implies a strategic choice in the near future, which could be the creation of a “gas OPEC” with Russia and Iran, in view of a doubling of the LPG prices in 2019, with China becoming the world’s LPG top consumer and the USA the world’s top oil extractor, albeit with the new and expensive shale techniques, which generate profits only with high oil barrel prices.

Or an economic and financial alliance between Qatar, China, Japan and Russia, which could marginalize the dollar area by reducing it to oil.

At geopolitical level, this will certainly mean greater instability – not necessarily fully peaceful – between the Emirate and the Saudi Kingdom, while the former will invest – also within the EU – in the industrial processing  of LPG, which mainly regards plastics, resins and all synthetic products from hydrocarbons.

If Russia – which also plays on the Saudi table – will be able to control its oil production, in line with the Sunni OPEC, the Qatari operation will be successful, but only for the creation of the new LPG market, and Qatar will not affect the positions already reached by Saudi Arabia and its  allies.

Conversely, if Russia and Iran increase oil production, the pro-Saudi OPEC will definitely collapse and the African, Indonesian and South American production areas shall  look for other regional cartels and, hence, for other geopolitical axes.

Furthermore, the bilateral relationship between the USA and Saudi Arabia will be put to an end, given the new US production and oil power, its global exporting capacity and, finally, its autonomy from the Middle East political and financial cycles.

Moreover, according to the Emir’s policy lines, the Qatari economy  is focused on attracting and accumulating foreign investments, especially after the 2017 blockade, which has attracted much capital from Asia and the Middle East itself,  in addition to the opening of new ports and the creation of  new Special Economic Zones.

Both Saudi Arabia and Qatar have used the so-called Arab “springs” to broaden their personal power and create strong competition among the Gulf countries.

Moreover, Qatar has used the phase following the Arab “springs” to redefine its traditional expansion axes: the special relationship with the Muslim Brotherhood and its traditional link with Iran.

The Emirate, in fact, believes that the Muslim Brotherhood is the central axis of Arab politics and, hence, intends to support it.

While all the others repress it, in line with Saudi Arabia.

Even after the fall of the “Muslim Brotherhood” regime in Egypt – with the coup organized by Al Sisi in 2013 against Mohammed Morsi – Qatar keeps on supporting the fraternal Ikhwan or also Hamas and all the other organizations that have integrated into the global network of the Muslim Brotherhood.

The Saudi tension with Qatar also results from the Qatari geo-economic link with Iran and, above all, from Iran’s  economic growth after the 2014 JCPOA agreements on the Iranian nuclear capacity. Saudi Arabia wants to avoid said agreements leading to the economic, oil and military recovery of the Shiite Iran.

Furthermore it cannot be ruled out that, in the near future, Saudi Arabia – possibly supported by the USA, which now believes in every “counterterrorist” storytelling – even organizes a coup against Al-Thani and the current Qatari ruling elite.

The sequence of attempted and failed coups is already long.

It would be a geopolitical suicide, but it may happen.

Pakistan, Bangladesh and other countries are now dependent on the remittances sent from Qatar by their fellow citizens to their homeland, even if, as countries, they sided with Saudi Arabia during the blockade imposed on Qatar in 2017.

Since the beginning, however, Tunisia refused to condemn Qatar (and Italy should be more careful to these infra-Islamic shifts), while Turkey – which operated with Qatar  during the Libyan jihadist uprising – does not accept the Saudi diktat. The same obviously holds true for Iran and – probably less intuitively – for Oman.

After an ambiguous phase, even the Russian Federation  – which had not well foreseen the internal conflict on Qatar within the Gulf Security Council in 2017 – has gradually  linked itself to the Emirate, even without questioning its ties with Saudi Arabia.

Moreover, the United States has even discovered it still has a large military base in Qatar and hence cannot afford a worsening of the infra-Arab conflict and, above all, of the infra-Wahhabi conflict between Saudi Arabia and Qatar.

Obviously the issue of relations between Qatar and “terrorism”, or the link between Qatar and Iran, is a completely uncertain and widely manipulated issue.

The Emir’s speech that expressed support for Iran and Hamas and criticized the other governments of the region – a speech that allegedly was to be held on May 23, 2017 – was never delivered. There had been announcements widely publicized by the Saudi and Emirates’ news agencies, but the Emir’ speech had never been delivered.

In this regard, the official Qatar’s news agency in Doha talked about the hacking of Qatari websites, but not even this is certain.

There is also the issue of the one billion US dollars paid  as a ransom to “bandits” in Iraq by some members of the Emir’s family.

It is ascertained that part of that money arrived at the Syrian Al-Qaeda “section”, Jabhat Tahrir al Sham, with a share of funds that – not too strangely – later reached the Iranian government.

Certainly there is also the already-mentioned support for the Muslim Brotherhood and there are now ascertained links between the Ikhwan and some Iranian financial and political-military networks.

Everything is possible in the Middle East.

In Doha there is also a “historical” office of the Palestinians and also one of Hamas, which has always been an integral part of the Muslim Brotherhood, while it is certain that large amounts of money were sent by Qatar to the Egyptian Brotherhood during Morsi’s government and that the Ikhwan militias from every part of the Middle East were trained in Qatar.

Obviously, at least initially, the guerrilla warfare in Libya after Gaddafi’s fall was a clash between the forces supported by the Qatari intelligence services and those organized by the other Emirates, with a specific role played by Turkey – a loyal ally of Qatar – above all at economic level.

Westerners’ stupidity did the rest.

Moreover, Qatar also sent its troops so that the Sunnis could regain control in Bahrain during the 2011 Shiite uprising.

Nor should we forget that, apart from the Al Udeid US base in Qatar, Turkey itself is building its base in Qatar for as many as 5,000 soldiers – a base located in Tariq bin Ziyad, south of the capital city.

However, how does the Gulf Cooperation Council (GCC) – the instrument of confrontation between Saudi Arabia and Qatar – work?

Is it not affected – like OPEC – by an internal weakness that blocks it for any relevant decision?

The GCC was founded in 1981. However, the monetary union, which has been gradually abandoned by Oman and the Emirates, has never been reached.

And the GCC still regards Iran as an “imperialist” factor of radical destabilization of the Arabian peninsula, especially with the organization of Shiites in Saudi Arabia and in other areas of the Emirates.

The Shiites within the Saudi regime account for 15-20%, especially in the major oil extraction areas. Obviously the Saudi regime does not want to destabilize these areas and, above all, it does not want to break the link between the USA and the Sunni world of the Arabian Peninsula – a break that, in the near future, would lead to the victory of the Iranian  Shiites.

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Middle East

Iran: Which way to go?

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The US withdrawal from the Joint Comprehensive Plan of Action (JCPOA), seriously hampered the chances for keeping the landmark accord in place.

The accord, signed in 2015 by the P5+1 group of countries — China, Germany, France, Russia, the United Kingdom and the United States — with Iran, requires Tehran to maintain a peaceful nuclear program in exchange for sanctions relief.

According to the IAEA, Iran strictly abides by the terms of the JCPOA, while the international community is unable to do the same, no matter how much politicians in the EU and other countries would like to stick to its provisions – all because of US pressure.

Sadly, the United States has financial and economic levers to punish not only Iran, but also foreign companies doing business with the Islamic Republic. Given the choice of either maintaining business relations with the US and the rest of the world or with Iran alone, there is little wonder which of the two options they will go for. This doesn’t necessarily mean that they will do this under US pressure. Business always goes where the money is and sticking with the US looks a more profitable way to go. This is exactly what business-savvy Donald Trump is staking on.

In 2018, some 100 foreign companies, including big ones as Shell, Volkswagen, Daimler, Peugeot, Airbus, Total, PSA, Siemens, and Russia’s LUKOIL and Zarubezhneft, started pulling out of Iran even before the US sanctions, announced by President Trump in May, actually took effect. However, although bending under Washington’s pressure, the authors of the 2015 Iran nuclear deal (Russia, China, Britain, France and Germany) as well as the European Union as a whole and many other countries around the world are still interested in keeping the nuclear accord alive. Why?

First, the JCPOA is a truly historic document which, possibly for the first time ever (not mentioning, of course, the Treaty on the Non-Proliferation of Nuclear Weapons – NPT) has curbed the nuclear ambitions of a particular country and put its nuclear program strictly in line with international laws and IAEA requirements. This is a vivid example of the world countries’ effective diplomatic work, which created a precedent of genuine confidence of the parties for the sake of preserving the nuclear non-proliferation regime.

Secondly, Iran a leading player in the volatile region of Western Asia, which incorporates the Middle and Near East, the Caucasus, the Caspian Sea zone, and Central Asia.

Thirdly, it should be borne in mind that Iran is a powerful source of hydrocarbons, and that its territory is an important transit route for oil, natural gas and other products to the world market. A well-educated population and a relatively developed industry and agriculture attract the attention of world business. In addition, the 70-million-strong Iran, which boasts one of the world’s biggest militaries, is an important factor in West Asian and world politics.

What needs to be done to resist US sanctions and, thereby, save the JCPOA?

To solve this complex task, Iran and all countries willing to preserve the accord, above all Britain, France, Germany and the EU as a whole, should work together. This is already being done now with the direct and active participation of Russia and China.

Today, the main priorities are:

Providing legal assistance to companies doing business with Iran. The practical implementation of the EU-declared blocking statute, which declares null and void US sanctions against Iran on its territory, prohibits European companies from observing them, as well as implementing any decisions by foreign stemming from these sanctions. The blocking statute also allows European organizations to take legal action to make up for the losses incurred as a result of the implementation of sanctions at the expense of persons who caused these losses (meaning the US government).

It is also necessary to establish an independent payment system that would safeguard European businesses against US sanctions on Tehran (a special purpose vehicle, SPV, to facilitate financial transactions with Iran) with the possible involvement, among others, of the French and German central banks.

The EU is creating a special legal entity to carry out transactions with Iran. Other participants will be able to join in, which will allow European companies to work with Iran in keeping with European legislation – something like the SWIFT banking system, only on a European scale and based on the euro.

This will be an extremely difficult task for Europeans, both from “political” (a real challenge to the US) and technical standpoints. EU foreign policy chief, Frederica Mogherini, said: “The involvement of the Finance Ministers of the E3 [France, Germany, UK] is of key importance at this stage. They are working hard to finalize it. I cannot tell you a date, but I can tell you that work is continuing and is progressing in a positive manner.”

In his turn, Russia’s Deputy Foreign Minister Sergei Ryabkov said that this was fraught with problems.

“We need to redouble our efforts here and this is what we are doing now with both Europeans and Iranians.”

Meanwhile, the Iranians, who have so far been strictly implementing the terms of the 2015 nuclear accord, are losing faith in the EU’s ability to resolve the problem. Therefore, it may take several months to see whether this plan is really working.

Speeding up the process of shifting to the use of national currency in trade with Iran (primarily by Russia, China, India, Turkey, which have done this before) would be of much help to Tehran.

In order to move around the financial and banking hurdles erected by the United States, it would be advisable to enlist the help, whenever possible, of Islamic banks in Muslim countries for cash transactions to and from Iran. The Islamic banking system has its specific features that are hard to destroy from the outside, even by a financial superpower like the United States.

The same is true about small and medium-sized companies in Muslim countries used as intermediaries in financial transactions with Tehran. Moreover, it is small and medium businesses, and not necessarily in Muslim countries alone, that can play the main role in maintaining trade and other economic relations with Iran.

Therefore, it would be equally desirable for the EU to provide legal and financial assistance to small and medium-sized companies in Europe, which are willing to do business with Iran, and to shift the main load from big companies to medium and small firms for financial transactions with Iran in Euros. Even though they will hardly be able to completely replace the giant companies, small and medium-sized firms have all they need to offset at least part of the losses. According to Iranian estimates, Tehran hopes to establish business relations with many of the 23 million or so small and medium-scale enterprises in Europe in order to circumvent US sanctions. Moreover, Iran has good experience in getting around tough sanctions between 2012 and 2016.

What can Tehran do under these circumstances?  First and foremost, it should establish a business triangle of Iran-EU, Islamic banks and Islamic small and medium-sized businesses, build close trade and economic partnership with European and other small and medium-sized businesses. This is quite feasible because the Americans will find it hard to keep an eye on a huge number of enterprises, much less trace their transactions in Euros, especially if the European Union contributes to such cooperation with Iran.

Iran’s Supreme Economic Coordination Council recently allowed the country’s private sector to sell crude oil abroad as a way of circumventing US sanctions. This is the first time the Iranian private companies have been granted permission to trade in oil. Tehran should avail itself of this opportunity as soon as possible.

As for Iran’s time-tested methods of tackling sanctions like, for example,  the use of “ghost” oil tankers, which switch off their automatic identification system (AIS) transmitters not to disclose their route and destination, as well as selling “unrecorded” oil at reduced prices, I can assume that these methods have been used before and are being used today.

It seems that, in view of the situation at hand, Tehran should also recall its oil-for-goods project with Russia, prepared back in 2014, whereby Iran supplies oil to Russia (at least 100,000 barrels per day – about 5 million tons a year) in exchange for industrial equipment and machinery. Four years ago, the plan was never implemented in full because Iran, already withdrawing from the sanctions regime in keeping with the JCPOA, was no longer interested in it.

There was only one shipment made in November 2017, to the tune of 1 million tons. The project could be revived now. Russia’s Promsyryeimport, which is part of the Russian Energy Ministry and was created expressly with this project in mind, will implement the Russian side of the deal.

A program of developing two Iranian oil fields, Aban and Peydar, by Promsyryeimport (which replaced Zarubezhneft) and Iran’s Dana Energy Company, could also be considered.

Overall, the across-the-board cooperation between Russia and Iran against US sanctions could contribute very significantly to minimizing their impact.

Tehran will certainly put to maximum use the great potential of the Islamic Revolutionary Guard Corps (IRGC), which proved so effective during the period of hard-hitting sanctions of 2012-2016 and which controls between 25% and 35% of the country’s economy and 25% of all its capital.

In 2012-2016, the IRGC set up a large-scale system of circumventing the sanctions by controlling considerable “gray” financial flows to, through and out of Iran. IRGC intelligence was gathering information abroad about the “weak” spots in the sanctions system, about the most effective ways of circumventing sanctions, and was also obtaining data on new technologies Iran was not allowed to buy.

Iran and countries opposed to US sanctions against it are looking for ways to ease their impact. Even though completely neutralizing the negative effect of these sanctions will hardly be possible, a certain let-up is quite possible.

Well, the Iranian response to the US sanctions could at times be controversial, but Washington’s exit from the JCPOA and the US sanctions themselves are by no means legal either.

In October, President Hassan Rouhani warned that the previous four months had been a difficult time for the Iranians and that the coming few months would be equally hard. He said that the government would make every effort possible to tackle the situation. Meanwhile, Tehran says it will stick to the terms of the JCPOA as long as its other signatories (save for the US, of course) do the same. Can they do this?

The situation is complex and unpredictable. For Iran, much will depend on whether the JCPOA is kept alive without the US, if Tehran is able to maintain, albeit limited, financial and economic cooperation with foreign countries, primarily with small and medium-sized businesses, and whether it is satisfied with the results of this cooperation.

How will the sanctions, and especially the fall in oil production and exports, affect the national economy and the life of ordinary Iranians? A good question, given the impact the internal political situation can have on the alignment of political forces in the country.

The outcome of this struggle may not take too long coming. Maybe six months, when a European mechanism against Washington’s unlawful withdrawal from the JCPOA and the resumption of its sanctions on Iran is already in place and the deadline set by President Trump for the eight importers of Iranian oil has expired.

First published in our partner International Affairs

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