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Russia And China Do Pipelineistan

Tyler Durden's picture


Submitted by Pepe Escobar, the roving correspondent for Asia Times/Hong Kong, an analyst for RT and TomDispatch, and a frequent contributor to websites and radio shows ranging from the US to East Asia.

The Birth Of Eurasia - Russia & China Do Pipelineistan

A specter is haunting Washington, an unnerving vision of a Sino-Russian alliance wedded to an expansive symbiosis of trade and commerce across much of the Eurasian land mass - at the expense of the United States.

And no wonder Washington is anxious. That alliance is already a done deal in a variety of ways: through the BRICS group of emerging powers (Brazil, Russia, India, China, and South Africa); at the Shanghai Cooperation Organization, the Asian counterweight to NATO; inside the G20; and via the 120-member-nation Non-Aligned Movement (NAM). Trade and commerce are just part of the future bargain. Synergies in the development of new military technologies beckon as well. After Russia’s Star Wars-style, ultra-sophisticated S-500 air defense anti-missile system comes online in 2018, Beijing is sure to want a version of it. Meanwhile, Russia is about to sell dozens of state-of-the-art Sukhoi Su-35 jet fighters to the Chinese as Beijing and Moscow move to seal an aviation-industrial partnership.

This week should provide the first real fireworks in the celebration of a new Eurasian century-in-the-making with Russian President Vladimir Putin visiting Xi in Shanghai this Tuesday and Wednesday. You remember Pipelineistan,” all those crucial oil and gas pipelines crisscrossing Eurasia that make up the true circulatory system for the life of the region. Now, it looks like the ultimate Pipelineistan deal, worth $1 trillion and 10 years in the making, will be inked as well. In it, the giant, state-controlled Russian energy giant Gazprom will agree to supply the giant state-controlled China National Petroleum Corporation (CNPC) with 3.75 billion cubic feet of liquefied natural gas a day for no less than 30 years, starting in 2018. That’s the equivalent of a quarter of Russia’s massive gas exports to all of Europe. China’s current daily gas demand is around 16 billion cubic feet a day, and imports account for 31.6% of total consumption.

Gazprom may still collect the bulk of its profits from Europe, but Asia could turn out to be its Everest. The company will use this mega-deal to boost investment in Eastern Siberia and the whole region will be reconfigured as a privileged gas hub for Japan and South Korea as well. If you want to know why no key country in Asia has been willing to isolate Russia in the midst of the Ukrainian crisis - and in defiance of the Obama administration - look no further than Pipelineistan.

Exit the Petrodollar, Enter the Gas-o-Yuan

And then, talking about anxiety in Washington, there’s the fate of the petrodollar to consider, or rather the “thermonuclear” possibility that Moscow and Beijing will agree on payment for the Gazprom-CNPC deal not in petrodollars but in Chinese yuan. One can hardly imagine a more tectonic shift, with Pipelineistan intersecting with a growing Sino-Russian political-economic-energy partnership. Along with it goes the future possibility of a push, led again by China and Russia, toward a new international reserve currency -- actually a basket of currencies -- that would supersede the dollar (at least in the optimistic dreams of BRICS members).

BRICS leaders (From L) India Prime minister Manmohan Singh, President of the People’s Republic of China Xi Jinping, South Africa's President Jacob Zuma, Brazil's President Dilma Rousseff and Russian Federation President Vladimir Putin, pose for a family photo in Durban on March 27, 2013.( AFP Photo / Alexander Joe )

Right after the potentially game-changing Sino-Russian summit comes a BRICS summit in Brazil in July. That’s when a $100 billion BRICS development bank, announced in 2012, will officially be born as a potential alternative to the International Monetary Fund (IMF) and the World Bank as a source of project financing for the developing world.

More BRICS cooperation meant to bypass the dollar is reflected in the Gas-o-yuan,” as in natural gas bought and paid for in Chinese currency. Gazprom is even considering marketing bonds in yuan as part of the financial planning for its expansion. Yuan-backed bonds are already trading in Hong Kong, Singapore, London, and most recently Frankfurt.

Nothing could be more sensible for the new Pipelineistan deal than to have it settled in yuan. Beijing would pay Gazprom in that currency (convertible into rubles); Gazprom would accumulate the yuan; and Russia would then buy myriad made-in-China goods and services in yuan convertible into rubles.

It’s common knowledge that banks in Hong Kong, from Standard Chartered to HSBC - as well as others closely linked to China via trade deals - have been diversifying into the yuan, which implies that it could become one of the de facto global reserve currencies even before it’s fully convertible. (Beijing is unofficially working for a fully convertible yuan by 2018.)

The Russia-China gas deal is inextricably tied up with the energy relationship between the European Union (EU) and Russia. After all, the bulk of Russia’s gross domestic product comes from oil and gas sales, as does much of its leverage in the Ukraine crisis. In turn, Germany depends on Russia for a hefty 30% of its natural gas supplies. Yet Washington’s geopolitical imperatives - spiced up with Polish hysteria - have meant pushing Brussels to find ways to “punish” Moscow in the future energy sphere (while not imperiling present day energy relationships).

There’s a consistent rumble in Brussels these days about the possible cancellation of the projected 16 billion euro South Stream pipeline, whose construction is to start in June. On completion, it would pump yet more Russian natural gas to Europe - in this case, underneath the Black Sea (bypassing Ukraine) to Bulgaria, Hungary, Slovenia, Serbia, Croatia, Greece, Italy, and Austria.

Bulgaria, Hungary, and the Czech Republic have already made it clear that they are firmly opposed to any cancellation. And cancellation is probably not in the cards. After all, the only obvious alternative is Caspian Sea gas from Azerbaijan, and that isn’t likely to happen unless the EU can suddenly muster the will and funds for a crash schedule to construct the fabled Baku-Tblisi-Ceyhan (BTC) oil pipeline, conceived during the Clinton years expressly to bypass Russia and Iran.

In any case, Azerbaijan doesn’t have enough capacity to supply the levels of natural gas needed, and other actors like Kazakhstan, plagued with infrastructure problems, or unreliable Turkmenistan, which prefers to sell its gas to China, are already largely out of the picture. And don’t forget that South Stream, coupled with subsidiary energy projects, will create a lot of jobs and investment in many of the most economically devastated EU nations.

Nonetheless, such EU threats, however unrealistic, only serve to accelerate Russia’s increasing symbiosis with Asian markets. For Beijing especially, it’s a win-win situation. After all, between energy supplied across seas policed and controlled by the US Navy and steady, stable land routes out of Siberia, it’s no contest.

Pick Your Own Silk Road

Of course, the US dollar remains the top global reserve currency, involving 33% of global foreign exchange holdings at the end of 2013, according to the IMF. It was, however, at 55% in 2000. Nobody knows the percentage in yuan (and Beijing isn’t talking), but the IMF notes that reserves in “other currencies” in emerging markets have been up 400% since 2003.

The Fed is arguably monetizing 70% of the US government debt in an attempt to keep interest rates from heading skywards. Pentagon adviser Jim Rickards, as well as every Hong Kong-based banker, tends to believe that the Fed is bust (though they won’t say it on the record). No one can even imagine the extent of the possible future deluge the US dollar might experience amid a $1.4 quadrillion Mount Ararat of financial derivatives. Don’t think that this is the death knell of Western capitalism, however, just the faltering of that reigning economic faith, neoliberalism, still the official ideology of the United States, the overwhelming majority of the European Union, and parts of Asia and South America.

As far as what might be called the “authoritarian neoliberalism” of the Middle Kingdom, what’s not to like at the moment? China has proven that there is a result-oriented alternative to the Western “democratic” capitalist model for nations aiming to be successful. It’s building not one, but myriad new Silk Roads, massive webs of high-speed railways, highways, pipelines, ports, and fiber optic networks across huge parts of Eurasia. These include a Southeast Asian road, a Central Asian road, an Indian Ocean “maritime highway” and even a high-speed rail line through Iran and Turkey reaching all the way to Germany.

In April, when President Xi Jinping visited the city of Duisburg on the Rhine River, with the largest inland harbor in the world and right in the heartland of Germany’s Ruhr steel industry, he made an audacious proposal: a new “economic Silk Road” should be built between China and Europe, on the basis of the Chongqing-Xinjiang-Europe railway, which already runs from China to Kazakhstan, then through Russia, Belarus, Poland, and finally Germany. That’s 15 days by train, 20 less than for cargo ships sailing from China’s eastern seaboard. Now that would represent the ultimate geopolitical earthquake in terms of integrating economic growth across Eurasia.

Keep in mind that, if no bubbles burst, China is about to become - and remain - the number one global economic power, a position it enjoyed for 18 of the past 20 centuries. But don’t tell London hagiographers; they still believe that US hegemony will last, well, forever.

Russia's President Vladimir Putin (L) and China's President Xi Jinping attend an agreement signing ceremony during a bilateral meeting at Xijiao State Guesthouse ahead of the fourth Conference on Interaction and Confidence Building Measures in Asia (CICA) summit, in Shanghai May 20, 2014.(Reuters / Carlos Barria)


Take Me to Cold War 2.0

Despite recent serious financial struggles, the BRICS countries have been consciously working to become a counterforce to the original and - having tossed Russia out in March - once again Group of 7, or G7. They are eager to create a new global architecture to replace the one first imposed in the wake of World War II, and they see themselves as a potential challenge to the exceptionalist and unipolar world that Washington imagines for our future (with itself as the global robocop and NATO as its robo-police force). Historian and imperialist cheerleader Ian Morris, in his book War! What is it Good For?, defines the US as the ultimate “globocop” and “the last best hope of Earth.” If that globocop “wearies of its role,” he writes, “there is no plan B.”

Well, there is a plan BRICS - or so the BRICS nations would like to think, at least. And when the BRICS do act in this spirit on the global stage, they quickly conjure up a curious mix of fear, hysteria, and pugnaciousness in the Washington establishment. Take Christopher Hill as an example. The former assistant secretary of state for East Asia and US ambassador to Iraq is now an advisor with the Albright Stonebridge Group, a consulting firm deeply connected to the White House and the State Department. When Russia was down and out, Hill used to dream of a hegemonic American “new world order.” Now that the ungrateful Russians have spurned what “the West has been offering” - that is, “special status with NATO, a privileged relationship with the European Union, and partnership in international diplomatic endeavors” - they are, in his view, busy trying to revive the Soviet empire. Translation: if you’re not our vassals, you’re against us. Welcome to Cold War 2.0.

The Pentagon has its own version of this directed not so much at Russia as at China, which, its think tank on future warfare claims, is already at war with Washington in a number of ways. So if it’s not apocalypse now, it’s Armageddon tomorrow. And it goes without saying that whatever’s going wrong, as the Obama administration very publicly “pivots” to Asia and the American media fills with talk about a revival of Cold War-era “containment policy” in the Pacific, it’s all China’s fault.

Embedded in the mad dash toward Cold War 2.0 are some ludicrous facts-on-the-ground: the US government, with $17.5 trillion in national debt and counting, is contemplating a financial showdown with Russia, the largest global energy producer and a major nuclear power, just as it’s also promoting an economically unsustainable military encirclement of its largest creditor, China.

Russia runs a sizeable trade surplus. Humongous Chinese banks will have no trouble helping Russian banks out if Western funds dry up. In terms of inter-BRICS cooperation, few projects beat a $30 billion oil pipeline in the planning stages that will stretch from Russia to India via Northwest China. Chinese companies are already eagerly discussing the possibility of taking part in the creation of a transport corridor from Russia into Crimea, as well as an airport, shipyard, and liquid natural gas terminal there. And there’s another “thermonuclear” gambit in the making: the birth of a natural gas equivalent to the Organization of the Petroleum Exporting Countries that would include Russia, Iran, and reportedly disgruntled US ally Qatar.

The (unstated) BRICS long-term plan involves the creation of an alternative economic system featuring a basket of gold-backed currencies that would bypass the present America-centric global financial system. (No wonder Russia and China are amassing as much gold as they can.) The euro - a sound currency backed by large liquid bond markets and huge gold reserves - would be welcomed in as well.

It’s no secret in Hong Kong that the Bank of China has been using a parallel SWIFT network to conduct every kind of trade with Tehran, which is under a heavy US sanctions regime. With Washington wielding Visa and Mastercard as weapons in a growing Cold War-style economic campaign against Russia, Moscow is about to implement an alternative payment and credit card system not controlled by Western finance. An even easier route would be to adopt the Chinese Union Pay system, whose operations have already overtaken American Express in global volume.

I’m Just Pivoting With Myself

No amount of Obama administration “pivoting” to Asia to contain China (and threaten it with US Navy control of the energy sea lanes to that country) is likely to push Beijing far from its Deng Xiaoping-inspired, self-described peaceful development strategy meant to turn it into a global powerhouse of trade. Nor are the forward deployment of US or NATO troops in Eastern Europe or other such Cold-War-ish acts likely to deter Moscow from a careful balancing act: ensuring that Russia’s sphere of influence in Ukraine remains strong without compromising trade and commercial, as well as political, ties with the European Union - above all, with strategic partner Germany. This is Moscow’s Holy Grail; a free-trade zone from Lisbon to Vladivostok, which (not by accident) is mirrored in China’s dream of a new Silk Road to Germany.

Increasingly wary of Washington, Berlin for its part abhors the notion of Europe being caught in the grips of a Cold War 2.0. German leaders have more important fish to fry, including trying to stabilize a wobbly EU while warding off an economic collapse in southern and central Europe and the advance of ever more extreme right-wing parties.

Reuters / Stringer


On the other side of the Atlantic, President Obama and his top officials show every sign of becoming entangled in their own pivoting - to Iran, to China, to Russia’s eastern borderlands, and (under the radar) to Africa. The irony of all these military-first maneuvers is that they are actually helping Moscow, Tehran, and Beijing build up their own strategic depth in Eurasia and elsewhere, as reflected in Syria, or crucially in ever more energy deals. They are also helping cement the growing strategic partnership between China and Iran. The unrelenting Ministry of Truth narrative out of Washington about all these developments now carefully ignores the fact that, without Moscow, the “West” would never have sat down to discuss a final nuclear deal with Iran or gotten a chemical disarmament agreement out of Damascus.

When the disputes between China and its neighbors in the South China Sea and between that country and Japan over the Senkaku/Diaoyou islands meet the Ukraine crisis, the inevitable conclusion will be that both Russia and China consider their borderlands and sea lanes private property and aren’t going to take challenges quietly - be it via NATO expansion, US military encirclement, or missile shields. Neither Beijing nor Moscow is bent on the usual form of imperialist expansion, despite the version of events now being fed to Western publics. Their “red lines” remain essentially defensive in nature, no matter the bluster sometimes involved in securing them.

Whatever Washington may want or fear or try to prevent, the facts on the ground suggest that, in the years ahead, Beijing, Moscow, and Tehran will only grow closer, slowly but surely creating a new geopolitical axis in Eurasia. Meanwhile, a discombobulated America seems to be aiding and abetting the deconstruction of its own unipolar world order, while offering the BRICS a genuine window of opportunity to try to change the rules of the game.

Russia and China in Pivot Mode

In Washington’s think-tank land, the conviction that the Obama administration should be focused on replaying the Cold War via a new version of containment policy to “limit the development of Russia as a hegemonic power” has taken hold. The recipe: weaponize the neighbors from the Baltic states to Azerbaijan to “contain” Russia. Cold War 2.0 is on because, from the point of view of Washington’s elites, the first one never really left town.

Yet as much as the US may fight the emergence of a multipolar, multi-powered world, economic facts on the ground regularly point to such developments. The question remains: Will the decline of the hegemon be slow and reasonably dignified, or will the whole world be dragged down with it in what has been called “the Samson option”?

While we watch the spectacle unfold, with no end game in sight, keep in mind that a new force is growing in Eurasia, with the Sino-Russian strategic alliance threatening to dominate its heartland along with great stretches of its inner rim. Now, that’s a nightmare of Mackinderesque proportions from Washington’s point of view. Think, for instance, of how Zbigniew Brzezinski, the former national security adviser who became a mentor on global politics to President Obama, would see it.

In his 1997 book The Grand Chessboard, Brzezinski argued that “the struggle for global primacy [would] continue to be played” on the Eurasian “chessboard,” of which “Ukraine was a geopolitical pivot.” “If Moscow regains control over Ukraine,” he wrote at the time, Russia would “automatically regain the wherewithal to become a powerful imperial state, spanning Europe and Asia.”

That remains most of the rationale behind the American imperial containment policy - from Russia’s European “near abroad” to the South China Sea. Still, with no endgame in sight, keep your eye on Russia pivoting to Asia, China pivoting across the world, and the BRICS hard at work trying to bring about the new Eurasian Century.


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Tue, 05/20/2014 - 19:23 | 4779194 reader2010
reader2010's picture

"War is Peace."

Tue, 05/20/2014 - 19:24 | 4779199 Slave
Slave's picture

Slavery is Freedom.

Tue, 05/20/2014 - 19:31 | 4779221 Latina Lover
Latina Lover's picture

Ignorance is Strength.

Tue, 05/20/2014 - 19:35 | 4779233 Latina Lover
Latina Lover's picture

The East returns and rises, as the Sun sets on the western empire.

Tue, 05/20/2014 - 19:42 | 4779262 knukles
knukles's picture

Shit happens

Tue, 05/20/2014 - 19:45 | 4779281 economics9698
economics9698's picture

“Let's face it: our lives are miserable, laborious, and short.” 

Tue, 05/20/2014 - 19:47 | 4779287 economics9698
economics9698's picture

“All animals are equal, but some animals are more equal than others.” 

Tue, 05/20/2014 - 19:56 | 4779315 SafelyGraze
SafelyGraze's picture

this is great news for the dollar

first of all, by not using dollars for buying stuff, both russia and china now be able to hoard those unused dollars and use them as a safe store of value for the future

second, these countries can now use dollars to buy more goods and services from other countries that need dollars, thereby increasing the consumption of (and thereby the demand for) dollars by those countries

third, the regional and global instabilities caused by the bilateral trades will increase the demand for US-made weapons and US-led regime changes, which will continue to boost the domestic economy


Tue, 05/20/2014 - 20:16 | 4779382 rubiconsolutions
rubiconsolutions's picture

"first of all, by not using dollars for buying stuff, both russia and china now be able to hoard those unused dollars and use them as a safe store of value for the future"

More like kindling to start fires and toilet tissue to wipe their backsides.

Tue, 05/20/2014 - 20:34 | 4779438 Keyser
Keyser's picture

Mission accomplished... 

Tue, 05/20/2014 - 20:58 | 4779474 Pinto Currency
Pinto Currency's picture


If settled in Yuan, the Yuan will be convertible by Russia into gold on the Shanghai Gold Exchange opening in the Shanghai Free Trade Zone.

Petrogold reiginition potential.

Tue, 05/20/2014 - 21:05 | 4779551 espirit
espirit's picture

The U.S. can't even do a pipeline from Canada. How come no high speed rail from Toronto to Mexico City?

Dear Leader(s) are going to take us back to the stone age with their backward thinking.

Call someone who cares when the lights go out, No?

Tue, 05/20/2014 - 21:30 | 4779649 Tarshatha
Tarshatha's picture

"The U.S. can't even do a pipeline from Canada."

Isn't that the truth!

Shit will only happen when it benefits a banker.

Tue, 05/20/2014 - 21:53 | 4779704 macholatte
macholatte's picture


Competition from other places....... isn't that what capitalism is all about.

Competition in the bankster business too?  Not likely. Something tells me it's all going according to plan.


You get a shiver in the dark,
It's a raining in the park but meantime-
South of the river you stop and you hold everything
A band is blowing Dixie, double four time
You feel alright when you hear the music ring
Well now you step inside but you don't see too many faces
Coming in out of the rain they hear the jazz go down
Competition in other places
Uh but the horns they blowin' that sound

-- Dire Straits


Tue, 05/20/2014 - 22:01 | 4779746 Chief Wonder Bread
Chief Wonder Bread's picture

This fear is way overblown. The major nations on the Eurasian landmass will never unite as one. They hate each other too much. Same as it ever was.

Tue, 05/20/2014 - 22:08 | 4779766 free_lunch
free_lunch's picture

Just hypothetical, what would happen to the world if someone invented a cheap way to produce infinite energy? Would there be peace finally?

Tue, 05/20/2014 - 22:41 | 4779854 Calmyourself
Calmyourself's picture

Yes, peace for the inventor, his team and for their entire families as they are lowered into a lime filled pit..

Wed, 05/21/2014 - 01:06 | 4780039 Chief Wonder Bread
Chief Wonder Bread's picture

Free Lunch, What's your point?

<You have to explain it so that even a caveman could understand.

Wed, 05/21/2014 - 01:09 | 4780141 Grumbleduke
Grumbleduke's picture

They're still alive (no indication for fraud!):

Wed, 05/21/2014 - 03:54 | 4780234 SoDamnMad
SoDamnMad's picture

No, in this case it is bad for Warren Buffet. Roll them trains and rack up the profits. Screw them little derailments.

Tue, 05/20/2014 - 21:40 | 4779687 Comte de Saint ...
Comte de Saint Germain's picture

Common sense and geopolitics dictate that People's Republic of China and the Russian Federation will sign all the expected agreements, focusing on the colossal energy deals. If everything goes according to schedule, May 21st 2014 will be remembered as the official date that marks the beginning of end of the US Dollar as the world's reserve currency. Any disagreements with China will force Russia to overtly initiate offensive military operations against Ukraine right after the presidential elections of May 25th, 2014 and the implementation of an offensive nuclear strike doctrine against the US and its allies...the Chinese may have the upper hand regarding money but the Russian Federation has a huge storage of Topol ICBMs ready to be used against any target in the globe.

Tue, 05/20/2014 - 22:06 | 4779759 Muc Metals
Muc Metals's picture

Those [sarc] [/sarc] tags went missing? ;)

Wed, 05/21/2014 - 00:27 | 4780088 Antifaschistische
Antifaschistische's picture

I'm with SafelyGraze....this is great news for us.   If they don't need dollars, then there will obviously be more dollars left for me.

Tue, 05/20/2014 - 20:03 | 4779333 philipat
philipat's picture

The author must be referring to very old economic data. It is simply not true that "Russia is dependent on oil and gas sales for most of its GDP". In fact, oil and gas exports account for less than 25% of GDP and Russia is now the largest retail market in Europe. Some of the concusions suggested based on this total fallacy should be viewed accordingly.

Tue, 05/20/2014 - 20:05 | 4779348 Flakmeister
Flakmeister's picture

Try 70%.....

Tue, 05/20/2014 - 20:57 | 4779522 machineh
machineh's picture

'In fact, oil and gas exports account for less than 25% of GDP.'

That's still enormous. Compare Chile, where copper is 19% of GDP.

It means excessive sensitivity to the price of one commodity. 

Tue, 05/20/2014 - 21:12 | 4779569 FinalCollapse
FinalCollapse's picture Russia’s Top 10 Exports

The following export product groups represent the highest dollar value in Russian global shipments during 2013. Also shown is the percentage share each export category represents in terms of overall exports from Russia.

  1. Mineral fuels including oil: $304,559,452,000 (57.9% of total exports)
  2. Iron and steel: $20,050,729,000 (3.8%)
  3. Pearls, gems, precious metals and coins: $14,367,047,000 (2.7%)
  4. Fertilizers: $9,119,157,000 (1.7%)
  5. Machinery: $8,815,393,000 (1.7%)
  6. Wood: $7,324,251,000 (1.4%)
  7. Aluminum: $7,181,742,000 (1.4%)
  8. Inorganic chemicals: $5,009,209,000 (1%)
  9. Copper: $4,962,945,000 (0.9%)
  10. Electronic equipment: $4,914,638,000 (0.9%

This is for 2013 - current and accurate. RuSSia is just one big fucking gas station and a mine. Nothing else. Electronic equipment is 0.9% of exports? WTF?


Tue, 05/20/2014 - 21:21 | 4779617 MisterMousePotato
MisterMousePotato's picture

Wow. Just a big gas station, eh? That sounds pretty bad to me. Guess Exxon is in trouble, too. What the fuck am I gonna do when both Russia and Exxon go out of business?

Tue, 05/20/2014 - 22:55 | 4779884 Volkodav
Volkodav's picture

How you know it is accurate?

You are Russian specialist inside?

It is not..



Tue, 05/20/2014 - 21:14 | 4779586 mumcard
mumcard's picture

They didn't build that...

Tue, 05/20/2014 - 21:21 | 4779616 FreeSlave
FreeSlave's picture


Tue, 05/20/2014 - 20:44 | 4779463 Shad_ow
Shad_ow's picture

Shit trickled down from Washington.

Tue, 05/20/2014 - 21:46 | 4779698 Flatchestynerdette
Flatchestynerdette's picture

@knuckles - this is just their midterm game. what's their long term plan? takeover of seattle after they swallow taiwan?

Tue, 05/20/2014 - 19:43 | 4779267 kaiserhoff
kaiserhoff's picture

"We have always been at war with Eurasia,"

  and pipelines make right purty bonfires.

Tue, 05/20/2014 - 21:16 | 4779591 mumcard
mumcard's picture

So do fault lines off the coast of Japan...nearish Fukushima.

Tue, 05/20/2014 - 19:43 | 4779270 economics9698
economics9698's picture

No one believes more firmly than Comrade Napoleon that all animals are equal. He would be only too happy to let you make your decisions for yourselves. But sometimes you might make the wrong decisions, comrades, and then where should we be?” 

Tue, 05/20/2014 - 19:54 | 4779313 Stuck on Zero
Stuck on Zero's picture

The US is worred by alliances?  Since when have alliances ever worked?  Never.  Does NATO work?  Did SEATO?

In two years Russia will accuse China of spying and currency manipulation.  China will accuse Russia of spying and jacking up gas prices.

Alliances, like corporate acqusitions, are entered into with great fanfare.  Two years later they fall apart with great losses.


Tue, 05/20/2014 - 20:55 | 4779518 sushi
sushi's picture

Alliances, like corporate acqusitions, are entered into with great fanfare.  Two years later they fall apart with great losses.

Are you describing my marriage?

Tue, 05/20/2014 - 22:17 | 4779788 edotabin
edotabin's picture

No, 50% of them.

Tue, 05/20/2014 - 22:48 | 4779872 deflator
deflator's picture

 Me too... my latest ex-wife used to kick me in the balls every chance she had. Must be some human nature or something.

Thu, 05/22/2014 - 01:31 | 4783909 TheReplacement
TheReplacement's picture

Some might say that you deserved it for being dumb enough to get married again, no me mind you, but some.

Tue, 05/20/2014 - 19:36 | 4779237 StacksOnStacks
StacksOnStacks's picture

Debt is wealth.

Tue, 05/20/2014 - 19:43 | 4779263 Baldershymn
Baldershymn's picture

Obama is white.

Tue, 05/20/2014 - 19:44 | 4779275 kaiserhoff
kaiserhoff's picture

Well played.

Why does Moochelle always remind me of Planet of the Apes?

Tue, 05/20/2014 - 20:09 | 4779358 drendebe10
drendebe10's picture

Maybe because this might be true:

Tue, 05/20/2014 - 21:55 | 4779732 Legolas
Legolas's picture

So, let's just call her/him Mikey !

Tue, 05/20/2014 - 21:47 | 4779705 JuliaS
JuliaS's picture

Fonestar Is Intelligent

Tue, 05/20/2014 - 19:41 | 4779255 zerozulu
zerozulu's picture

middle class is poor

Tue, 05/20/2014 - 19:50 | 4779300 centerline
centerline's picture

middle class is sadly a historical anomaly.

Tue, 05/20/2014 - 23:22 | 4779935 August
August's picture

Well begun... is half-done!

Tue, 05/20/2014 - 19:35 | 4779234 RafterManFMJ
RafterManFMJ's picture

This pivot shit makes me fucking laugh.

Hey we will destroy our middle class, give you our manufacturing and IP, wreck our economy ... and then threaten you with a big scary pivot!

Ooooooooooo! Better watch out, we haven't won a war in 70 years but that just means we're about due!

The Chinese probably literally cannot believe what a hollow disaster 'Murika is and are taking things slow just in case it's some kind of trap. Memo to China - yes the treasonous inbred 'leaders' who run this country really ARE that incompetent and inbred.

Tue, 05/20/2014 - 20:31 | 4779433 Let them eat iPads
Let them eat iPads's picture

When did the chinks last win a war?

They've had their asses kicked by Japan and Vietnam in recent history.

Tue, 05/20/2014 - 20:47 | 4779482 Renewable Life
Renewable Life's picture

By recent you mean the last 100 years??? Today's China isn't your grandfathers China and they would wipe Japan off the military map in 72 hours at this point, so it might be time to emerge from 1955, it's 2015 friend!

Tue, 05/20/2014 - 21:00 | 4779532 sushi
sushi's picture

Let's see.

We create a conflict with China and embargo their exports.

The price of the crap in Walmart quadruples.

The peons revolt cause they cannot afford a new cellphone. Or much else.

The revolt results in the over throw of the congressional oligarchs, prez golfers and 57 varieties of fast heinz.

Sounds like a plan.



Tue, 05/20/2014 - 21:22 | 4779621 mumcard
mumcard's picture

If Americans were to stop buying Chinese products there would be a lot (millions) of out of work Chinese factory workers.  Idle hands could lead to problems inside China.

Tue, 05/20/2014 - 22:11 | 4779773 free_lunch
free_lunch's picture

But..but.. they have plenty of housing..

Wed, 05/21/2014 - 15:46 | 4782325 mkkby
mkkby's picture

Anyone who thinks the US woud or could embargo China exports doesn't have a clue how gov works.  The corporations who manufacture good in China OWN AND RUN US politics.  No way do they approve an embargo of their own products.  Only an idiot sheep thinks this is possible.

Tue, 05/20/2014 - 21:14 | 4779581 NidStyles
NidStyles's picture

"glances at the Commies" Looks like the Commies are still in charge over there, yep they've been winning everyday since that thing happened in that square thing. 

Tue, 05/20/2014 - 20:42 | 4779460 Miffed Microbio...
Miffed Microbiologist's picture

But rafter man, we could jump back as a major manufacturing power in 15 min! There's a big toggle switch in the Ford Assembly Plant that goes from Car to Tank with a flick of a finger. This causes all the defunct Steel plants to auto boot up and crank alive in production. Women don their riveters and men spring into action shedding apathy and depressing life in basements to join their fellow warriors in common purpose. Every one works together rationing supplies and living simply to support these courageous men and sacrifice everything possible. Then we all grow victory gardens and have ticker tape parades when the deed is done and we are once again the Superpower of the World! It could happen....Really.


Tue, 05/20/2014 - 20:56 | 4779521 Renewable Life
Renewable Life's picture

Lmfao, have you been out of the house lately and checked out urban America and it's vibrant middle class??

I assume your being sarc, but I'm sure there are ten of millions of Americans that right his minute, believe every word of what you wrote to be the god honest truth!!!

Tue, 05/20/2014 - 21:18 | 4779605 espirit
espirit's picture

MM doesn't need a sarc tag.

I've just finished the (alas) final rebuild of a Spicer-Dana-Foote Transaxle, as parts or compatable replacements are no longer available.  Spicer patented the universal joint in 1904 when everything was chain driven, and continued to revolutionize the power transmission industry.

It's sad we no longer have the foundries, machine shops, and assembly lines that made this country great.

Did I mention no-body wants to get their hands dirty or work hard anymore.

Much like our industries, I expect to be parted out and salvaged as scrap when I'm done.

Tue, 05/20/2014 - 23:01 | 4779898 quasimodo
quasimodo's picture

You raise a good point esprit. I am an engine machinest by trade, then when many quit rebuilding engines, even many heavier diesel blocks and heads, I went to the maintenance field so I could still do things with my hands. Now I work for an animal pharma company that while pays very well, has me doing so damn many SOP's and bullshit online training, filling out PO requisitions,etc ad naseum..........I am forced to farm shit out and was actually thrilled the other day to have some time to do some HVAC work myself when I had a few hours to spare.

It's a sad day when you forget the scent of cutting oils and other rear end grease and actually enjoy it when you can't get it off your skin or from under your fingernails.

Thank God for a garden and weekend repairs.

Tue, 05/20/2014 - 21:04 | 4779549 Tabarnaque
Tabarnaque's picture

Well said. The arrogance and idiocy of the Western leaders blinds them. The problem is that they still have a powerful military and I don't think that they will go down without a fight. Let's hope that Europe goes through a deep power struggle and that the industrials can overthrow the fascist financials.

Tue, 05/20/2014 - 21:16 | 4779593 NidStyles
NidStyles's picture

That military is not as powerful as the propagandists make you think. 

Tue, 05/20/2014 - 21:53 | 4779728 Quus Ant
Quus Ant's picture

powerful enough to leave europa in ashes.  Isn't that enough?

Tue, 05/20/2014 - 19:36 | 4779239 Abitdodgie
Abitdodgie's picture

Amerika just needs to start a war with them, I mean what could go wrong we have no manufacturing or raw material production and a compleate brain drain happening as we speak from Amerika , heavy industry has gone,  farming is on its knees , Isreal is sucking us dry and if we get attacked they will run like the child killers they are and not help, so really what could go wrong . Well if you really want to know what is in store for you good old Amerikans and especially your daughters read what happened to the German population after ww2

Tue, 05/20/2014 - 19:41 | 4779260 Salah
Salah's picture


Tue, 05/20/2014 - 21:09 | 4779564 Tabarnaque
Tabarnaque's picture

Obozo is just a puppet to the real power behind him: The fascist owners of the Federal Reserve who see themselves as Demi-Gods. Changing Obozo will, well, change nothing really.

Tue, 05/20/2014 - 19:53 | 4779308 Leonardo Fibonacci2
Leonardo Fibonacci2's picture

Yeah but at least we have a black man in the White House. The USSA made history by electing Obummer.

Tue, 05/20/2014 - 21:17 | 4779601 NidStyles
NidStyles's picture

They also made history by causing the Great Depression.

Wed, 05/21/2014 - 03:21 | 4780215 edotabin
edotabin's picture

and then a second one which we are seeing live. This one is just papered over and EBTd to death. Eventually it will probably bring about another great invention: Depression III or WWIII

Tue, 05/20/2014 - 19:56 | 4779321 SAT 800
SAT 800's picture

And we were worried about "Dominoes" ; Sigh.

Tue, 05/20/2014 - 20:04 | 4779343 drendebe10
drendebe10's picture

All on the watch of the corrupt, arrogant, narcissistic, illegal indonesian kenyan alien muslin sociopathic ignorant liar in chief... well done, well done..... 

Tue, 05/20/2014 - 21:45 | 4779696 whoisonfirst
whoisonfirst's picture

Back at the ranch...


Tue, 05/20/2014 - 21:55 | 4779736 supersajin
supersajin's picture

Fucking to perserve Virginity!!

Tue, 05/20/2014 - 19:29 | 4779195 FinalCollapse
FinalCollapse's picture

I hate to break the news to the uninformed but China and Russia just failed to sign the pipeline deal.

China consumes 148 bcm produces 108 bcm anc imports 40 bcm. They currently import via CAGP (Central Asian Gas Pipeline) 30 bcm (20 bcm Turkenistan and 10 bcm Uzbekistan). These pipelines and fields are ready to ramp up in the next two years to 60-90 bcm range.

Who The Fuck needs RuSSian gas in China?

Just wait when Poland and Ukraine will shutdown their pipelines to RuSSian gas.

The fun begins.

Vlad the Loser went on his knees to China. He lick Xi's balls, sucked the dick but refuseed to do rimming. Not yet, Vlad. 


Tue, 05/20/2014 - 19:30 | 4779218 kill switch
kill switch's picture

That could be but can you give us a fucking clue how you obtained this info,,,,not much to ask DUH I'll take you word on this,,,, I fucking TRUST YOU LOL

Tue, 05/20/2014 - 19:32 | 4779223 FinalCollapse
FinalCollapse's picture

Fuck, yeah - it was available at midnight. You all are very late in your reading - including the dickhead who wrote the article. Google yourself: you will find WSJ, Bloomberg and many others  reporting it.

Tue, 05/20/2014 - 20:03 | 4779261 Winston Churchill
Winston Churchill's picture

Ever negotiated a big deal ?
They have another day and it will be done at the very last minute.
Ignore the foreplay.

Tue, 05/20/2014 - 19:43 | 4779264 Latina Lover
Latina Lover's picture

RE: Final Collapse.

Worried that your stupid Ukraine/Banderstan coup regime is circling the toilet bowl of history, flushed away like the pieces of shit that they are? 10 years from now, the Ukraine Yatzis will be forgotten, once the USSA figures out there are no resources worth stealing.

Russia will always be a major power, and Europe needs their oil and gas more than Russia needs to sell it. Or perhaps you are expecting the Germans to 2x  more for their natural gas, so that they can further disadvantage their industry in favor of the sinking USSA, LOL?


Tue, 05/20/2014 - 19:52 | 4779307 Abitdodgie
Abitdodgie's picture

Talking of Germany,  did you know that it was for a better word, annexed to Amerika after the 2nd world war and so financially it has to do what we say, thats why they  always bail out Europe and that is why we have a huge base over there , ( they have no choice)

Tue, 05/20/2014 - 20:22 | 4779405 FinalCollapse
FinalCollapse's picture

Re: Latina Bitch. 

Not Ukrainian.

Tue, 05/20/2014 - 20:43 | 4779462 InvalidID
InvalidID's picture


 Much as so many of you guys hate the ol USA, and I honestly can't blame some of ya, it's just not going away in your lifetime. The US and the West will rule the world for a long time coming. And I can tell you why...

 Money. Military. Power. Regardless of what people think, the west has the wealth. China is buying gold? Great! Doesn't matter. Russia has gas and oil? Wonder of fucking wonders, so does Libya, Iran, Iraq, east habibastan... Doesn't fucking matter. Shit, Saudi Arabia was THE oil producer for decades and they barely get a seat at the big table. Oil and gas? So fucking what, there's enough in small poor countries that the big players can take it at will.

 Russia can't take the US and Europe in a war, nor could China. For all the fear mongering out there, China has no interest in a war with the US. IF they did they'd have jumped on Putin's dick the minute he started launching ICBM tests and taking over parts of Ukraine. They abstained from a vote at the UN. They don't want to fight, that's just simply not in their best interests. They're smarter than that, and smarter than most of you.

 America and the west are weak? I am seeing a lot of this on these pages. Weak because they didn't jump to war with Russia over some scrap of land that has no strategic value to the west at all? If you got a cold would you rush out for Chemo treatment? Annexing Ukraine is a Perrhic victory. A small scrap of land was won, NATO was reborn and China see's Russia needing a new outlet for gas and oil. Will they do the deal? Likely so, but it won't be cheap for Russia and the Chinese will come out of it far better than Russia. (And for laughs, lets hope it's not priced in Yuan, which is pegged to the fucking dollar any damned way)

 Mostly the west will be around and largely in charge for another generation simply because those in power want it to be so. The systems for global rule are already in place, based in the west. It's simply too costly to change the entire global ruling system because Russia doesn't think it's getting a good enough deal.


 Bitch about the NWO, and how they are taking over the world. Fact of the matter is they've already won, and Russia is just having a tantrum cause it's not getting what it wants from the deal.

Tue, 05/20/2014 - 21:03 | 4779539 machineh
machineh's picture

$200 trillion negative net worth eventually fells even the biggest of bullies.

Mussolini's cardboard factories (staged for Hitler's visit) come to mind.

So does the crack-up of the USSR, just after the CIA overestimated its GDP by 100%.

Say, you ain't agency, are ya?

Tue, 05/20/2014 - 21:07 | 4779556 InvalidID
InvalidID's picture


 Agency? How very 1950'

 200 Trillion in negative net worth? Source that please.

Tue, 05/20/2014 - 21:06 | 4779553 TheFourthStooge-ing
TheFourthStooge-ing's picture


Money. Military. Power. Regardless of what people think, the west has the wealth.

This guy has an anti chronological take on history, starting from today to end in the past.

Tue, 05/20/2014 - 21:10 | 4779566 InvalidID
InvalidID's picture


 History, like all things, is cyclical yes?

Tue, 05/20/2014 - 21:22 | 4779619 fonzannoon
fonzannoon's picture

That is a helluva rant Invalid. I see you are getting up arrowed for good reason. I think people respect when someone on here fights the tide with an eloquent voice.

Let me ask you this though, is it still about conventional war? Russia can't have their computer guys develop an algo that wreaks havoc on the markets? Something that just sends the U.S off into a tailspin? I am sure there are other examples of things they can do that don't involve straight up war but my brain is broken at the moment.

Tue, 05/20/2014 - 21:45 | 4779697 InvalidID
InvalidID's picture


 I think for Russia it's largely about conventional war. They don't have much else to work with. As I've said, Saudi Arabia was the THE oil producer and they aren't some global superpower by any standard. Russia doesn't have any serious productive capacity really, and are a net importer of food. That's a shitty position to be in.

 If we put aside the war machine for a moment and look at things from a tech, economic, political war only.... The US and the West still come out ahead I think. They own and control most of the networks. They also make the bulk of the software. The NSA can see whatever is on the net, and kill it at will. So computer attacks likely not as effective as one would think.

 Economic power... China is gonna play it cool for sure. They'll get as much as they can from everyone involved as they should, but in the end they know where their bread is buttered. Besides cheap oil what does Russia have for them? How much does China have invested in the current system? For the next 20 or more years China is as dependent on the status quo as we are economically.

 Politically China needs the west as well. It ties to the economy of course. The people want to eat, work, by shit, and live a western lifestyle. Can't do that if you're not making any money.

 I've heard about the death of the dollar for over a decade. I'm bored with it really, but there's always something to worry about. China simply can't take over as the reserve and who in fuck would trust Russia with it? And again, China is far to invested in the status quo to make a real bid to dethrone it anytime soon. Small moves in that direction maybe, but as long as they hold massive amounts of TBills and sell mostly to the west they are trapped in the system that built them.


 I'm a little fried after a long day. Forgive me for the fairly halfassed fragmented reply.

Tue, 05/20/2014 - 21:30 | 4779648 TheFourthStooge-ing
TheFourthStooge-ing's picture


History, like all things, is cyclical yes?

US of A is now in the terminal decline phase of the empire cycle.

Tue, 05/20/2014 - 21:20 | 4779614 NidStyles
NidStyles's picture

You're delusional. The US hasn't the resources to project it's military anymore. 

Tue, 05/20/2014 - 21:35 | 4779675 mumcard
mumcard's picture

Not entirely true, they can fly a crappy drone over your house and/or blow up your wedding.  They get this program for the low price of @ 200 billion a year.

Tue, 05/20/2014 - 21:48 | 4779711 InvalidID
InvalidID's picture


 HA! An up vote wasn't enough.

Tue, 05/20/2014 - 21:53 | 4779726 InvalidID
InvalidID's picture


 You're not paying attention. The US has bases in like 150 countries. That's force projection on a scale never seen in history. Moreover, they don't even need to blow you up. There is a lot more to the NWO than bombs and drones. Unless they've already reduced you to living in caves....

Tue, 05/20/2014 - 22:11 | 4779775 Protokletos
Protokletos's picture

I appreciate your comments here, Invalid.  I sometimes wish I could get more of this type of perspective here.  

Tue, 05/20/2014 - 22:17 | 4779787 InvalidID
InvalidID's picture


 Thanks! I want to point out that I'm not saying I like what I'm saying. It's just the way it is, from my perspective of course.

Tue, 05/20/2014 - 22:22 | 4779803 johny2
johny2's picture

Great tradition of underestimating russia.continues. two words to consider.



Tue, 05/20/2014 - 22:28 | 4779818 InvalidID
InvalidID's picture


 M.A.D. The Russians aren't going to nuke anyone over Crimea, I'm pretty sure of that. Perhaps I over estimate Russian sanity?

Tue, 05/20/2014 - 22:44 | 4779859 johny2
johny2's picture

You over estimate sanity of people who rule the west.

Tue, 05/20/2014 - 19:44 | 4779273 walküre
walküre's picture

Why then even have this big visit with Putin? To exchange Borscht recipes?

China is planning long term. Their coal fired plants will eventually have to be converted.

Russia and China have been getting closer and closer over these past few years. This is just the beginning of a much deeper and stronger business relationship between the two nations.

China is establishing itself as a major imperialist across Asia and will beat everyone surrounding China and doing trade with China in that region into bilateral agreements that will benefit first and foremost China.

The US is not able to stop this anymore.

Tue, 05/20/2014 - 21:25 | 4779629 InvalidID
InvalidID's picture


 In the event of a real war, who do you think China would back? Russia on political grounds? Or the West on economic, strategic grounds? If the oil isn't isn't cheap enough from Russia, and the pipelines not secure, and the flow possibly interrupted, why wouldn't China back the west and simply take it?


 I do agree China is planning long term. I agree that China is going to be THE Asian player. The west can stop this from happening, but is it worth the price they'd need to pay? The military isn't the only weapon large players like the US, China, and Russia have. (Though Russia has much less leverage than the US and China) The US could place trade restrictions on China, give fat tax breaks to companies for bringing factories home, etc. This would leave China in a world of fuck. IT would however, fuck the US short term too. What we're seeing is the world shaking out the new order. China and the US will be the big dogs on the block, Russia... meh.

Tue, 05/20/2014 - 19:45 | 4779277 Telemakhos
Telemakhos's picture

Talks are "continuing," as they have for ten years.  There isn't a deal yet, but the possibility isn't altogether dead.  The Russians just have to bend over and decouple their gas prices from their oil prices and give the Chinese a heavy discount over what they sell Europe, and then provide whatever other favors Beijing feels like demanding.  Remember: Russia needs credibility and export income more than China needs Russian gas.


Tue, 05/20/2014 - 19:48 | 4779293 JR
JR's picture

AP: 3 hours ago – all over but the shouting:

"Significant progress has been reached on gas, but there are issues that need to be finalized regarding the price," Peskov said, according to Russian news agencies. He said a contract could be signed "at any moment."…

Putin and Xi attended the signing of 49 cooperation deals in fields including energy, transport and infrastructure, but no details were given at the ceremony.

The price of gas is the sticking point in the proposed agreement between Russia's government-controlled Gazprom and state-owned China National Petroleum Corp…

A gas deal would mean China would be in a "de facto alliance with Russia," said Vasily Kashin, a China expert at the Center for Analysis of Strategies and Technologies in Moscow.

In exchange, Moscow might lift restrictions on Chinese investment in Russia and on exports of military technology, Kashin said in an email.

"In the more distant future, full military alliance cannot be excluded," Kashin said.

Tue, 05/20/2014 - 20:07 | 4779294 Quus Ant
Quus Ant's picture

"The Russians just have to bend over and decouple their gas prices from their oil prices and give the Chinese a heavy discount"

Seriously?  Does everything here have to be so graphic?  It's like a highschool locker room. 



Tue, 05/20/2014 - 19:53 | 4779311 Latina Lover
Latina Lover's picture

Talks will always continue for years given  multiple contracts are involved.  Besides, who cares what Bloomberg thinks since they are nothing more than another mouthpiece for the Anglo American Banksters. If they tell you there is no deal, then a deal is done. If they tell you it is a bad deal, then it is a good deal.

Tue, 05/20/2014 - 20:16 | 4779361 kill switch
kill switch's picture

WSJ, Bloomberg and many others  reporting it.



Tue, 05/20/2014 - 20:58 | 4779525 FinalCollapse
FinalCollapse's picture

Not big fun of the corrupt MSM. However, they just reported facts. Can you read it? Facts.

If you start fighting and denying the hard facts then you need to check with your friendly psychiatrist - prompto.

Tue, 05/20/2014 - 21:19 | 4779611 TheFourthStooge-ing
TheFourthStooge-ing's picture

Always made me laugh to read this kind of big delusion.

It is trademark of Ukrainian Yatzi Junta Citizenism to think that disagreement on a point is enough to turn that point into a fact.

Tue, 05/20/2014 - 22:43 | 4779857 WillyGroper
WillyGroper's picture

Saucy guy he was.

Tue, 05/20/2014 - 19:53 | 4779309 fonzannoon
fonzannoon's picture

I am guessing this is what finalcollapse is referring to

Tue, 05/20/2014 - 19:45 | 4779282 Quus Ant
Quus Ant's picture

Very homo-erotic post, FC.  Time to cut back on the porn.

Tue, 05/20/2014 - 19:47 | 4779286 Slave
Slave's picture

You underestimate how badly China needs Russia's gas.

They are also still negotiating. I'm sorry two superpowers didn't adhere to your schedule.

Tue, 05/20/2014 - 20:12 | 4779345 HardlyZero
HardlyZero's picture
49 deals cement China, Russia partnership

A record-breaking 49 agreements were reached between Beijing and Moscow on Tuesday, covering political, trade and military areas in a move to further strengthen the Sino-Russian partnership.

President Xi Jinping and his Russian counterpart Vladimir Putin also issued a joint statement on the future of bilateral relations.

The two countries would expand local currency settlement for bilateral trade, cross-border investment and financing, and strengthen exchanges to formulate macro-economic policies, the statement said.

Putin, who is visiting Shanghai for an Asian security summit, is accompanied by a huge delegation of high-ranking officials and business leaders.


The gas price is just one is morning now and the 2nd day of the meeting.  Putin probably had to 'hold out' for the best price in any case because the size of these agreements.  It is the honeymoon.

There will be a parallel oil pipeline and some physical bridges being built in the East to NK as well.  It is their it might take time.  Times.

Tue, 05/20/2014 - 20:12 | 4779367 sangell
sangell's picture

This deal was supposed to have been finalized last month by Deputy PM Rogozin and this meeting would have just been the typical signing ceremony. That is how it is always done. Putin can't negotiate a gas deal and neither can Xi. They don't have the expertise. The fact that this deal was not finalized shows there are some real unresolved issues and any deal cobbled together now at the last minute indicates someone capitulated to some very harsh terms. It won't have been China!

Tue, 05/20/2014 - 20:16 | 4779386 HardlyZero
HardlyZero's picture

Yes, but in the short term Russia is also negotiating Ukraine/EU prices through Ukr pipelines, and trying to fund South Stream.   The North Stream directly from Russia will be producing for many years.  

Big numbers so they all have to 'save face' and show they each 'won' the negotiations. 


Tue, 05/20/2014 - 21:19 | 4779607 CrashisOptimistic
CrashisOptimistic's picture

Does anyone have some number quotes.

I just saw an article hyping this big deal as worth $400 billion over 30 years!!!".

Isn't that less than $15B/year?

Wed, 05/21/2014 - 00:25 | 4780086 HardlyZero
HardlyZero's picture

Yes you are correct for the natural gas part.



Only general comment is Russia is world's largest single producer of Oil/gas, and China is or will be world's largest consumer of Oil/gas.

Delicate beginnings...time will tell how they will collaborate.



Tue, 05/20/2014 - 21:28 | 4779637 Tabarnaque
Tabarnaque's picture

Thanks HardlyZero. You have placed things in their right perspective. There was indeed a significant amount of signed deal. The gas deal will come in its time.

Tue, 05/20/2014 - 19:50 | 4779301 b_thunder
b_thunder's picture

FinalCollapse, U R 100% correct!   China has all the leverage!  If they don't buy Putin's gas, in the near future nobody will!  EU doesn't trust him anymore and will explore different sources of energy.   And so China, quite naturally, playing hard ball with Putin regarding prices.  If they ever do a sizeable deal, it will bring Russia less $$.  Oops, I meant to say Yuan.  Or soon-to-be gold-backed Yuan of course as goldbugs like to point out....  Anyway, advantage:  China. 

In 15-20 years, when Russian population dwindles to ~120 million, China will make a play for the historically Chinese territories annexed by the Russian Empire and the Soviets.  How do you say "NovoChina" in Mandarin?

And finally, what about Europe?  Well, Europe will buy the gas from whoever is selling it to China now and will lose business to the Russians. It's a zero-sum game!


Tue, 05/20/2014 - 20:09 | 4779357 Latina Lover
Latina Lover's picture

Including the costs of delivery, gas is not a zero sum game.

Tue, 05/20/2014 - 21:34 | 4779668 TheFourthStooge-ing
TheFourthStooge-ing's picture

The comment is casual Ukrainian Yatzi Junta Citizenism cheap propaganda, as usual.

Tue, 05/20/2014 - 19:58 | 4779328 sangell
sangell's picture

True, the numbers thrown out by the RT guy are unlike anything I've seen. The Power of Siberia pipeline deal looked to be able to replace about 20% of current Russian exports to Europe and Europe will almost certainly reduce its purchases of Russian gas by more than that over the next 5 years so Russia is in trouble and this deal won't change that since exports to China won't take place until 2019 if they happen at all. Even then that would only put Russia back to the level of exports it has today but it will likely be at lower prices since Europe will also renegotiate the price it pays for Russian gas ( $11 per 1000 cu ft.) to levels closer to what it can buy it for from the US or North Africa or what locally produced shale gas costs. The UK expects to begin delivering its own shale gas to its distribution system by late 2015 and it will onward and upward from then on. Of course most of the folks at ZH are not interested in facts and reality as it pertains to Russia or even China. They are thoroughly invested in some fantasy alliance of Russia and China when the reality would be Russia would simply become an orbiting vassal state if it gets to near the Red Star of China.

Tue, 05/20/2014 - 20:16 | 4779387 Latina Lover
Latina Lover's picture

You are assuming that gas demand will remain static for the next 5 years, no inflation in price, and that European countries will allow fracking, proven to contaminate water tables due to the use of toxic chemicals. I't bet on the country that has proven resources and delivery mechanisms.  One of the main goals of the USSA overthrow of  the Ukraine government was to frighten europeans into buying more expensive LNG from the USSA and allow fracking.  Given the much higher energy costs that european industry will face, making them even less competitive, national interest will trump contrived geopolitics.

Tue, 05/20/2014 - 20:35 | 4779431 FinalCollapse
FinalCollapse's picture

Latina Bitch: Facts are facts and bitch is a bitch. You are totally uninformed and just bitching. The EU demand is dropping and the gradient of the drop is increasing. Right now it is 5% drop per year. It is not a coincidence that the gas demand in EU started dropping after 2009 - the gas snafu with Yulia Timoshenko.

It is time for you to start reading some articles on the subject and cut down on reading the cartoons.

Tue, 05/20/2014 - 22:26 | 4779447 IridiumRebel
IridiumRebel's picture



edit: I need to apologize to Sangell. The other night he was whining about ZH being "infected with a virus". I said, if he doesn't like it he could leave. Another poster, Serenity Now, said he was a good dude who provides a different viewpoint against what is sometimes groupthink; me included. My point is that ZH is a platform. I do not get angry at a car for me being in a wreck. The car is a platform. I enjoy the platform and differening views. I don't know shit from shinola about energy minus what I pay at the pump and what I learn here. Attack the post not the poster. I need to do the same, but try to keep my angst in what I say in what the content is. I appreciate what i learn here from all sides. So on that point, FinalCollapse, no need to go after Latina Lover by name calling. It minimizes what would probably be a point we should consider made by you. As you were. 

Tue, 05/20/2014 - 22:10 | 4779771 Latina Lover
Latina Lover's picture

EU is in a depression, but may one day emerge from it, thus increasing their need for energy.  Alternate energy sources such as windmills are a failure.

Besides, do you really expect demand to keep dropping by 5 percent per year? By simple extrapolation, does this mean that Europe will reduce its energy needs by almost 50% in ten years? I rather doubt that,unless a new source of energy to replace gas and oil is implemented, a highly improbable outcome.

BTW, insults and ad hominems are logical fallacies, not arguments. I suggest avoiding them here since most readers of ZH are too sophisticated to be fooled by cheap shots.

Tue, 05/20/2014 - 22:41 | 4779838 FinalCollapse
FinalCollapse's picture

Not dropping energy demand sweetie but dropping the NG demand. I hoped that you can see the difference .....but never mind.

For example France generates 90% of its energy from nuclear. Poland generates more than 80% from coal. Each country is different. Btw - recently in Germany the electricity rates went negative for short time as wind and solar flooded the grid. It doesn't happen often but it is such a you say.

Tue, 05/20/2014 - 21:07 | 4779560 machineh
machineh's picture

'The UK expects to begin delivering its own shale gas to its distribution system by late 2015.'

No doubt. That's why British engineers coined the expression, 'teething troubles.'

Tue, 05/20/2014 - 21:17 | 4779603 countryboy42
countryboy42's picture

I am sorry if my math is way off, I'm running on very little sleep in the last few days but,

I looked over some rough numbers concerning the amount of NG that the EU imports from Russia. Some where in the 147 bcm. The entire sea worthy fleet of LNG carries holds 54.5 mcm. That equals out to about 2500 trips per year for each ship. Again, sorry if the math is off. IF this is correct, how the hell can the US even think that they can support the EU? The bonus part of the deal is that it consumes 1/4 of the energy contained in NG to compress it into LNG.

Tue, 05/20/2014 - 21:21 | 4779618 CrashisOptimistic
CrashisOptimistic's picture

Well done.

Tue, 05/20/2014 - 21:55 | 4779738 Tabarnaque
Tabarnaque's picture

Here is an interesting article crunching numbers on the unrealistic dream of shipping massive amount of US liquified shale gas to Europe. Will Europe be ready to pay almost doubble Russian price for its natural gas? I doubt it very much.

LNG Won't Save Europe



Tue, 05/20/2014 - 22:11 | 4779774 Latina Lover
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Of course it won't. Even if the ships and facilities existed, the costs would be too high.

Tue, 05/20/2014 - 22:32 | 4779781 FinalCollapse
FinalCollapse's picture

You need to look at the demand side of it too. It is wrong to look at the supply side only - although it is the more important part of the equation here.

On the supply side:

Here is pretty good reading on the subject of gas imports to EU:

"In 2012, Russia accounted for 34% of European natural gas imports, surpassed by Norway as the lead supplier (see Figure 1). Algeria is the third-largest supplier to the EU".

Right now Norway accounts for 35% of EU imports and RuSSia for 34%.

Total EU gas imports are 11 Tcf which is 314 bcm. 34% of 314 bcm is 107 bcm - the RuSSian share. There are higher numbers for imports from RuSSia floating around but we need to consider how current they are. The EU demand is dropping and on top of it they work tirelessly to minimize RuSSian market share. The unit price is also dropping as new contracts are closer to the spot price and even the countries locked into the long term contracts successfully renegotiate them.  

Norway exports around 98% of their gas production. Their output drops but slowly as they manage to develop new gas fields to partially offset the aging ones. Algeria is ramping up big way. The only restriction is the capacity of pipes from Algeria but the new ones are already in planning. There is a sense of big urgency in EU to minimize RuSSia's political mendling using gas as a weapon. 

There are other gas fields ready to be connected to the TANAP pipe (Caspian via Turkey): Azerbaijan, Iran, Iraq. This may take couple of years to sort out as this is very unstable region.

Australia is on the way to become the world's biggest LNG exporter. They export around 40 bcm now and 100 bcm is coming online shortly. They will flood the Asian markets which will result in significant price drop worldwide.

It is a big world out there - and there are so many alternatives to RuSSia. Just look around how everyone in the world is trying to work their ways around the RuSSia. No one likes them. Everyone is afraid trading with them as they will always use their exports  as a political weapon. They are just not smart enough to trade, make money and be happy.


On the demand side: the demand for gas in EU is dropping rapidly. Many factories can immediately switch from NG to electricity. There are many measures to modify the demand like dropping the office temperatures by 1.5C for example. No one will freeze and the savings will be significant. The conservation and switching strategies yield big numbers on the demand side. I don't have the numbers now but I rememebr they are more than Nord Stream can bring to EU. 

Wed, 05/21/2014 - 06:21 | 4780345 Volkodav
Volkodav's picture

$11 per thousand?

Tue, 05/20/2014 - 20:04 | 4779344 Omen IV
Omen IV's picture

when all the terms are already worked out except the diffference between bid and asked that is NOT a failed deal - it will get done and people like you wiill be still touting a failed state  - Obamastan -  formerly America!

Tue, 05/20/2014 - 20:46 | 4779472 Wahooo
Wahooo's picture

As long as they're still talking, they'll cut a deal. And the important thing is the missing party - the U.S.

Tue, 05/20/2014 - 21:14 | 4779584 Muc Metals
Muc Metals's picture

Some 80% of Poland's gas demand is met by Russian deliveries.

Let them shut it down...

Sorry, forgot you don't trust info from a russian source.

So google it yourself.


Tue, 05/20/2014 - 23:11 | 4779894 FinalCollapse
FinalCollapse's picture

Stop bitching and look at the facts. It will help you going thru difficult times, I guess...

Over 80% of Poland's energy comes from coal.

Poland uses 15 bcm per year. Imports 10 bcm. 90% of gas imports are from RuSSia. These are offical statistics - btw. Therefore, Poland imports around 9 bcm from Russia out of 15 bcm. That's 60% of overall demand. Many publications report that the number is closer to 55% but I will go with the official statistics and not with fairytales from Gazprom or other blogosphere source. 

Poland's LNG terminal will be completed by end of 2014 - despite all naysayers. It is official now. This will bring 5 bcm into country with another 2.5 possible by 2016/2017.

Poland has built a huge gas switching station on border with Germany. This is intersection of 10 gas pipes. Now they can reverse flow and distribute it around the country. They can have 5 bcm from the reverse flow anytime and another 2.5 bcm also immediately but it will take some extra logistics. It is there but that 2.5 requires some extra switching work.

So let's summarize it. Right now, Poland can immediately bring extra 10/12.5 bcm of NG to replace 9 bcm of RuSSian gas. Piece of cake. 

Gazprom and RuSSia - such a fucking beacons of statistical integrity. Really.


Wed, 05/21/2014 - 06:19 | 4780342 Volkodav
Volkodav's picture

you post stupidly

Tue, 05/20/2014 - 19:27 | 4779209 blindman
blindman's picture

pnac has a plan b, no? ....

Tue, 05/20/2014 - 19:41 | 4779256 CPL
CPL's picture

Yup, it's called "walk a lot".

Tue, 05/20/2014 - 20:21 | 4779400 blindman
blindman's picture


Tue, 05/20/2014 - 21:24 | 4779628 NidStyles
NidStyles's picture

Can't weld without electricity, nor can you smelt iron into steel without it.

Tue, 05/20/2014 - 19:28 | 4779215 Let them eat iPads
Let them eat iPads's picture

Sorry bitchez, the deal fell through.

Apparantly it's very difficult for two totalitarian shitholes to come to an agreement.

Tue, 05/20/2014 - 19:50 | 4779296 Slave
Slave's picture

What?? I thought they cut the USD out of the agreement?

Tue, 05/20/2014 - 19:52 | 4779306 walküre
walküre's picture

Two totalitarian shitholes that are not exactly known to report the truth.

No way these two are stopping at this juncture in the negotiations.

Tue, 05/20/2014 - 21:49 | 4779713 paddyirishman
paddyirishman's picture

are you talking about the United states and Europe ?

Tue, 05/20/2014 - 21:29 | 4779642 luckylogger
luckylogger's picture

The Chinease are historically the worlds best and most experienced traders...
They will hold Putins feet to the fire and get the gas dirt cheap or no deal...
They have lots of shale like we do in the US...... Russia is trying to diversify their customers and China has the upper hand and they will play it. Putin has met his match and probably a better chess player...

Tue, 05/20/2014 - 21:29 | 4779644 luckylogger
luckylogger's picture

The Chinease are historically the worlds best and most experienced traders...
They will hold Putins feet to the fire and get the gas dirt cheap or no deal...
They have lots of shale like we do in the US...... Russia is trying to diversify their customers and China has the upper hand and they will play it. Putin has met his match and probably a better chess player...

Tue, 05/20/2014 - 21:31 | 4779653 luckylogger
luckylogger's picture

The chinease have the upper hand and will play it very well...........

They will beat the russian chess god.

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