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"New Silk Road" Part 2: Cold War Or Competition?
Submitted by Robert Berke via OilPrice.com,
Part 2: Cold War or Competition on the New Silk Road.
Note:
In Part 1 of “The New Silk Road,” we examined the China’s plan for rebuilding the Silk Road, stretching from Europe to Asia.
In Part 2, we look at currently proposed projects, and geopolitical rivalries that could stall and hamper progress.
Silk Road Projects:
It is important to understand that the new “Road’ is not a formal plan in any sense but merely a broad outline of goals, a work in progress, being filled in, opportunistically, with projects as they are developed, and as negotiations with target countries allow. The Road is also not a 'start-up' from scratch, but builds upon and extends a number of projects that have been ongoing with China's partners.
The Iran-Pakistan-China project (described in Part 1) is one of the few that provides more details, but it is still very much in the planning stage. The second proposed project, only recently made public, focuses on Russia. China is also proposing a partnership with India for its third project.
The Pakistan program is an important economic development project that ties in with the Road as one of the connecting dots along the way, while the proposed program for Russian could become the nexus for the entire Road project, and the proposed India project could become the crucial piece in tying it all together.
Russia and China, the Emerging Partnership:
What makes Russia important enough to include in the plan? A better question might be: how is it possible to leave out Russia, the largest country in Eurasia, from a plan to build across the entire region?
In a recent meeting in Moscow, celebrating the 70th anniversary of the allied victory in World War II – which saw Indian, Chinese, and Russia troops parading in Red Square – China and Russia signed multiple agreements to tie development of the Chinese sponsored Silk Road to the Russian sponsored Eurasian Economic Union (EAEU).
The EAEU plan is a Kremlin-sponsored trade union between Russian, Kazakhstan, Kyrgyzstan, Belarus and Armenia, that has been pilloried in the western press as part of Russia’s supposed underlying agenda to re-establish the Soviet Union. With Russia’s inclusion, the plan for the Silk Road will extend from Beijing to the border of Poland. The blossoming cooperation between Russia and China is not something to be ignored, according to former Indian diplomat M.K. Bhadrakumar:
“Clearly, the cold blast of western propaganda against the EAEU failed to impress China…China’s integration with the EAEU means in effect that a real engine of growth is being hooked to the Russian project. In reality, China is the key to the future of the EAEU. Significantly, Xi has combined his visit to Moscow with a tour of Belarus and Kazakhstan, the two other founder members of the EAEU….This is vital for the implementation of the Silk Routes via Russia and Central Asia.”
The Chinese/Russian agreements cover eight specific projects, starting with the development of a high speed railway that will connect Moscow and Kazan (Tatarstan Republic), and will be extended to China, connecting the two countries via Kazakhstan. China’s Railway Group has won a contract for $390 million to build the road, with China contributing an initial $5.8 billion toward total estimated costs of $21.4 billion. Eventually, the planners hope to link this project to Russia’s planned high speed railway to Europe.
Also, China's Jilii province has offered to build a cross-border high speed railway link between the two countries connecting with Russia's major Pacific port city, Vladivostok. In addition, the two nations are expanding their energy partnership through a variety of projects. As Oilprice reported in a May 12 article, “the Russian hydropower company RusHydro and China Three Gorges Corp. have signed a deal to cooperate on a 320-megawatt hydroelectric power project in Russia’s Far East…near the border between China and Russia.” As described, this is the largest dam project in China or Russia, already under construction, and is expected to generate 1.6 trillion watts of electrical energy per year, with an estimated cost of around $400 billion.
China has also proposed developing an economic corridor between Russia, Mongolia, and China, a plan likely to include the EAEU member states, the initial step in development of one of the major components of the Silk Road, the Eurasia Economic Corridor, a preferential trade zone stretching across the region.
Several smaller joint project deals were also signed, including establishing a $2 billion agriculture financing fund.
Geopolitics on the Silk Road:
Until very recently, it was widely assumed that the US would lead its western allies in a campaign against the Russian/Chinese deal to develop the Silk Road, but events have been reversing with remarkable speed.
With Obama desperately trying to keep the wars in Yemen, Syria, and Iraq from metastasizing across the region, Obama’s Middle East policy is at a crossroads, with none of the big issues likely to be resolved before his term ends. Clearly, the US President wants to concentrate on Asia and reduce the US presence in the Mid-East, a region that has bedeviled every President for more than a generation.
The Deal to Get Out:
In the midst of all this, and after more than a two year absence from Russia, Kerry and his entourage requested an immediate urgent meeting with Putin and Lavrov that was granted by the Kremlin.
There is widespread speculation over what might have taken place in the Kremlin meeting on May 8th. Yet, the fact that the meeting took place at all may be more important than any agreements reached, because it clearly shows some form of thaw in a relationship that’s in process.
The rumor out of Russia is that Kerry requested Putin’s help in resolving the ME conflicts and closing the nuclear deal with Iran, with the Russian President agreeing. The quid pro quo for Russia was the US lowering tensions in Ukraine. The issue of Crimea was apparently not even raised, while the visit ended with Kerry’s unprecedented warning to Kiev to abide by the Minsk 2 agreement for a truce in Ukraine’s eastern provinces.
Much of the news media is speculating that the US is starting to remove the ‘crime scene tape’ around the Kremlin. Whether this is really a US offer of an olive branch to Russia is still pretty much guesswork, and even if it were, how far the US is willing to go in accommodating the Kremlin is largely unknown. Stratfor, the popular internet intelligence newsletter, speculates that the US is willing to start easing sanctions on Russia.
Israel and the Gulf Kingdoms:
For the Israelis, any easing of tensions with Iran and Russia is very bad news. In the Middle East, Israel is the canary in the coal mine, and is always among the first to discern the faintest signs of political unrest in its region.
There's no denying the significance of Israel's reaction to the US/Iran nuclear deal and US coordination with Iran and Russia in Syria and Iraq. Israel placed all of its chips on its ability to stop the deals, and lost badly, while perhaps severely damaging its relationship with it largest ally, the US.
Now, the howls of protest and betrayal pour out of every media source in the country, and Israel is not the only one. Saudi Arabia also feels left out in the cold with the Iran deal.
Proposed Partnership with China and India:
If it were possible to put politics aside, there’s no question that China’s single best partner for the Road would be its giant neighbor India, bringing together the two most important markets for traders on the original ancient Silk Road. As the Associated Press reported on May 14, 2015:
“Both countries are members of the BRICS grouping of emerging economies, which is now establishing a formal lending arm, the New Development Bank, to be based in China's financial hub of Shanghai and headed by a senior Indian banker. India was also a founding member of the embryonic China-backed Asian Infrastructure Investment Bank.
The cooperation between China and India is only growing, and their needs appear to be compatible, as the AP goes on to note:
China is looking to India as a market for its increasingly high-tech goods, from high-speed trains to nuclear power plants, while India is keen to attract Chinese investment in manufacturing and infrastructure. With a slowing economy, excess production capacity and nearly $4 trillion in foreign currency reserves, China is ready to satisfy India's estimated $1 trillion in demand for infrastructure projects such as airports, roads, ports and railways.”
If India chooses to partner with China in the Silk Road, it could keep China building for the rest of the century, in a project that would combine the world’s most populous nations, with more than 2.6 billion people. With Russia already a partner, and Iran waiting in the wings to join, the project could add almost another quarter of a billion people, with a combined total of over one third the global population. A better fit would be hard to find.
But there is no shortage of historical baggage between China and India, ranging from a half century of unresolved border disputes; China’s growing relationship with Pakistan, India’s longtime adversary; and India’s close relationship with the US and Japan, both opposed to China’s claims in the South China Sea.
In a recent meeting in Beijing, China and India signed agreements for $22 billion in development projects, disappointing to many observers when compared to the $47 billion committed to the China/Pakistan deal. A former Indian diplomat, Bhadrakumar, argues, “that strategic distrust cannot be wished away,” and “...that India is not ready to replace the west as its development partner.”
It seems like the US influence with India has at least slowed prospects of recruiting India as a major Silk Road partner. Yet, the results are not so simple to predict since so many countries involved are dependent upon trade with China to the tune of hundreds of billions of dollars annually, and are also active trading partners with both Russia and Iran.
Even in the cold war, India became adept in its studied policy of co-existence with the Soviet Union and the US, which allowed India to play both sides. For pragmatic India, the choice of development partners may depend on the simple formula of 'following the money', given the fact that China is one of the few countries in the world with sufficient resources to finance the rebuilding of India's infrastructure.
The rush of western allies, including India, to join China's sponsored Asian Infrastructure Bank speaks clearly to the fact that western business is eager to take part in the Road projects. There are probably few banks in the world that would hesitate to finance major components of the project. However, whether the recent sea change in the US/Russian dynamic is a prelude for US support of the Silk Road project remains an open question.
Coming in June, Part 3: Prospects for Success and What it Means for Investors.
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the US is running out of fingers to put in the dike.
And there will be far more 'roads' in and out of the 'Stans than this chart suggests.
The center of power is headed East, and it won't be coming back
for a very long time.
one does'nt need a phd to see the empire is finished. just sit back and watch.
Hilary will be glad to help with that.
The great US plan to control the seas becomes irrelevant with contact with the enemy. Naval/military central planning fails again.
The Silk Road is, at least in part, a major centrally-planned politico-military effort to circumvent an unbreakable US naval blockade. From a strict economic standpoint, many of these projects seem to make little sense on their own hook and will prove to be very expensive white elephants in a peacetime world.
But it is not a peacetime world ..... WWIII started at the end of 1945 and continues to this day.
"From a strict economic standpoint, many of these projects seem to make little sense on their own hook and will prove to be very expensive white elephants in a peacetime world."
You're right, Tarabel, it makes no economic sense. That's why worldwide, big bucks - that are owned, as we know, by bankers and CEOs who are all poets and dreamers - are converging to the New Silk Road. Also, that's why the USA, who are totally confident the project can't stand on its own two feet, are so unhappy with it.
I mean, I guess that suggesting you check how and why the New Silk Road project makes perfect economic sense would be a loss of time. But then, you're obviously neither a banker nor a CEO.
Holy shit. 400 BILLION DOLLARS for 320 megawatts of power? That's fucking ridiculously overpriced by at least 1000x. Makes the Pentagon look like Ebenezer Scrooge on ultra steroids.
Traditionally, 1 megawatt of power is enough for 1000 US people for one year. Since it's China and Russia, figure about 5x this number. That means they are paying 400 billion dollars for enough power for about 1.5 million people annually. Given the size of populations involved, this is a mere drop in the bucket.
Conversely, 21 billion to build a high speed rail corridor from China to Moscow sounds like the sort of arithmetic Democrats use when calculating the costs of their social programs.
My conclusion therefore is that the author is speculating based on various press releases and has no idea of what he is actually talking about or else he would have questions about these numbers.
This map (from the WSJ) shows a curved line from Dushanbe to Moscow that seems to imply that
the Silk Road from China to Russia would pass through Bulgaria, Romania, and the Ukraine.
nothing like I have seen from Russian, China, Kazakh releases
it looks sloppy version what WSJ made it...
Without gold, the Wahington Empire of Debt, Fraud and Chaos has only debt and a worthless paper currance. The idiots in washington burned their bridges moving forward with their New World Order. War is inevitable.
http://en.wikipedia.org/wiki/Silk_Road#/media/File:Silk_route.jpg
Silk Road just got cut at Palmyra....
There is a reason we use ships to move goods around the world.... It's ridiculously expensive to move shit by rail in comparison.
this about moving across Asia
you missed the boat....
WSJ route map is not what Russia and China have presented.
looks their idea only
Don't listen to the Invalid, Volkodav, it's Sour Grapes. As an old paranoid friend of mine who used to believe the Value Added Tax (VAT) man was following him, said to me often, JEALOUSY is the biggest disease.
Times are similar slightly favouring train but if you add in the factors of the new rail build ( as i'm measuring against the Trans-Siberian-Rail (TSR older stock ) we will see faster trains and the fact they will be stopping to drop of goods all along the route i believe it will be economically viable.
You know the costs of producing energy in and the vast amounts Russia have, for example, it is 3 times more expensive at the pump in norway ( how come i've always wondered as they are major european producers ) and 2.5 times more expensive in Germany and UK (obviously scam taxes don't help ).
. . . . . . not to mention the sheer volume of business and the number of full time jobs across countries and sectors over a century.
The pump price of fuel, both petrol and diesel, bears no relationship to its production cost or source in much of the world, and especially Europe. Fuel is seen as an ideal, and cheap, way of raising tax. In addition Norway in particular is a high social cost country that needs lots of tax revenue, hence the very high price there.
There is already a 3 times a week, 50 container, train that runs between China and Germany. If societies were driven purely on economic grounds then the Germany, Russia, China axis would be powering ahead, perhaps it will in the years to come as the world's financial systems evolve to flush out the excessive debt loads. Certainly those countries that do have low debt loads ATM will do well and one of them is in the middle of that axis.
so tired of hearing these nonsense analaysis.
stratfor is a bought and paid for cia information machine giving pre-ordered reports of desired outcomes as the 'analysis'.
there is no deal between the u.s. and iran. u.s wants to start a huge war in the middle east ANY WAY IT CAN.
u.s.g. as head empire, thrives only off creating controlled chaos and not-so-controlled chaos. the worst thing for the u.s. is peace, and any deal it made with iran is simply a move to help push chaos in one form or another.
is this good or bad for israel , saudi arabia, -----well is the us. just now selling billions of dollars of advanced weapons to these countries?
it's irritating to hear epopel who believe when one disagress with analysis than that means one must believe the 'opposite is true'
THAT ISN'T HOW IT WORKS FUCKTARDS. this is sloppy stupid ass analysis decontextualized from a framework of international recent history and incentives that would give any reasonable meaning and texture to what is really going on .
and this is not it. this zh article is a steaming pile of ass shit.
Couldn't access my Stratfor A/C when they were hacked for a few months and the cheap fuckers never offered me a refund.
The info i required was not predominately geopolitical and fairly useful.
It's good to hear different opinions but on any issue critical to my business i trust no cunt implicitly.
all you need to know is the head of stratfor publicly endorsed space based solar power as the major thing for energy in the future.
this means 1 of 2 things. either he's a fucking moron. that makes little sense, how could a fucking moron get such a profiteable gig with the cia?
or 2; he is publicly endorcing a propoganda front that will be used to fund secret weaponization of space by the u.s.g. or global nato military under whatever rubric is necessary.
2 is FAR MORE LIKELY. space based ANYTHING is alwyas going to be part of us miltiary propoganda for securing military superiority in the most important single frontier for spying other than your phones and telecom wires.and that is; space.
The WORLD is crying out for these long term projects/commitments/initiatives.
The current insanity can't continue.
The current insanity WILL continue.
FIFY.
"and with all the deception of wickedness for those who perish, because they did not receive the love of the truth so as to be saved. For this reason God will send upon them a deluding influence so that they will believe what is false, in order that they all may be judged who did not believe the truth, but took pleasure in wickedness. - 2 Thessalonians 2:10-12
Nah S_T i feel it in my bones; going from manically depressed to just depressed.
My friend, it is good to be depressed now and then. It is honorable to admit it it.
This world we live in is depressing.
All who deny that are living in delusion.
Yes the US/UK sanctions on Russia hit several of my projects in terms of financing. No big deal as i needed a long sabbatical.
Directly and more indirectly a few hundred good people and their families are screwed.
When relations improve of course a group of banksters and selected companies will suddenly be awarded contracts that us smaller companies were negotiating. Always the way.
WW3's nukes will be called to duty.
One thing is sure CAPITALISM IS TOTALLY AGNOSTIC !
You can bet on that and GWB and Clinton as well as the Rockfellas made that the bedrock of their own political and business mantras for the Pax Americana club.
The only thingie is that these members of the age old house of Atreus ALWAYS want to STAY in the club at the top of the heep ; whatever may happen to the serfs of their countries of origin.
That is what the Trojan war was all about. Top man gets Helen and the spoils like Cassandra and Andromach !
But it can have unintended fallout as Agamemnon and his ilk found out!
Nemesis or Karma !
Simply put, this is a Package Deal where the USA, GBR (all the Five Eyes), and ISR are not going be Major Players in.
I don't see why OilPrice would even mention ISR as being a "Canary in the Coalmine". This Silk Road will happen; and it isn't going to go through or branch out to ISR. Thank ISIL and their own support of Anarchists in SYR - CHN will stick to RUS and TRK to buzz by the "Black and the Med". ISR will have to wait for a North Africa to Asia Corridor or a KSA/JOR to the Med Pipeline(something tells me KSA will level with (what's left of)SYR/LBN or KSA/EGY instead) for a Grand Scale Trade Route.
From what I gather, they, their ZioCon, ZioLiberal/ZioBolshevik Friends, and "Frenemies with Benefits-to-be-gained-by-collaboration" were destabilizing Govts in their Vicinity (e.g., PNAC, ISIL). I don't think CHN wants in on that Game for the Silk Road - especially when Silk Road Partners will have to raise Capital in Part by Issuing AIIB/EurasiaZone/ECB and Soverign BONDS. Hard to get Sovereign Bonds to work in places were Regime Change and Anarchy are rather rampant.