Palestinians condemn comments by head of European Commission

Palestinians have described remarks about Israel by the head of the European Commission as inappropriate, false and discriminatory.

It follows a congratulatory video message by Ursula von der Leyen on Israel's Independence Day. In it she praised Israel, among others, for having made the desert bloom.

It has sparked an unusual diplomatic spat between the Palestinian Authority (PA) and the European Union (EU), its main donor.

A spokesperson for the commission told the BBC, "The EU is unpleasantly surprised by the inappropriate statement of the Palestinian foreign ministry accusing the president of the European Commission of racism."

The PA singled out Ms von der Leyen's suggestion that Israel had cultivated barren land, calling it an anti-Palestinian racist trope.

The phrase making the desert bloom is commonly used by Israel and its backers to describe what they view as the country's success in developing the land since the founding of Israel in 1948.

However, Palestinians argue that it erases their history and suggests that the land was previously uninhabited or untended.

The PA is calling for an apology from the European Commission president.

"Seventy-five years ago, a dream was realized with Israel's Independence Day," Ms von der Leyen said in her message. "After the greatest tragedy in human history, the Jewish people could finally build a home in the promised land."

"Today, we celebrate 75 years of vibrant democracy in the heart of the Middle East, 75 years of dynamism, ingenuity and groundbreaking innovations. You have literally made the desert bloom, as I could see during my visit to the Negev last year."

The PA statement describes the message, addressed to Israel's President Isaac Herzog, as propagandist discourse and part of an ongoing dispossession of Palestinians.

The PA claims it "dehumanizes and erases the Palestinian people and falsifies their rich history and civilization".

In addition, it says that the European statement whitewashes Israel's occupation of lands Palestinians claim for their hoped-for future state and denies what they call the Nakba (Arabic for catastrophe) of 1948.

Some 700,000 Palestinians fled or were forced to leave their homes in the war that followed the Israel's creation.

Palestinians mark Nakba Day on May 15 according to the Gregorian calendar, while the timing of Israel's Independence Day follows the Hebrew calendar.

Some Palestinians on social media have also criticized or mocked the European leader for her comments about shared values with Israel.

The European Commission is part of the executive of the European Union.

The spokesman for the commission stressed the EU's diplomatic ties with the PA, pointing out that Ms von der Leyen met PA Prime Minister Mohammed Shtayyeh when she visited the region in June 2022.

They said a meeting to co-ordinate the delivery of international aid to the Palestinians was due to take place in Brussels next week.

"The EU is actively looking for solutions for the difficult situation of the Palestinian people," they added.

Saudi foreign minister holds talks on Sudan with counterparts

According to Saudi Gazette, Prince Faisal Bin Farhan, Foreign Minister of Saudi Arabia discussed the developments in Sudan with counterparts during phone calls on Sunday.

Prince Faisal and UK Foreign Secretary James Cleverly discussed the rapid development of events in Sudan, and the conditions of stranded foreigners.

They stressed the importance of stopping the military escalation, providing necessary protection for Sudanese civilians and residents on its soil, and providing safe humanitarian corridors for those wishing to leave Sudan.

Prince Faisal and the High Representative of the European Union for Foreign Affairs and Security Policy Josep Borrell discussed the efforts being exerted to stop the military escalation between the conflicting parties in Sudan.

They also discussed the end of the violence, and provide the necessary protection for Sudanese civilians and residents on its territories.

The two sides also reviewed the latest regional and international developments and the efforts being exerted in this regard, especially in enhancing international peace and security.

Pakistani Foreign Minister Bilawal Bhutto Zardari congratulated the Saudi foreign minister on the successful evacuation of Saudi citizens and other nationals from Sudan to the Kingdom.

Bilawal Zardari also commended the Saudi authorities for their high efficiency and professional handling of the evacuation operations, which contributed to their success.

 

Bulgaria: Newest customer of Iranian oil

The Eurostat, European Union statistics office announced the import of Iranian oil by three European Union (EU) members in 2022, and introduced Bulgaria as the newest customer of Iranian oil in this union, IRNA reported on Sunday.

The information published by Eurostat shows that the European Union imported 4,181 tons of crude oil or oil products from Iran last year.

Although the amount of EU oil imports from Iran is not a significant figure, it indicates the desire of European refineries to ignore the US sanctions against Iran, and the inclusion of these figures in the official European oil import statistics shows the desire of the European authorities to distance themselves from the sanctions, or at least showing their objection to the US sanctions policy against Iran.

Iranian President Ebrahim Raisi has said that the oil and gas sector experienced a growth of 9% in the past Iranian calendar year 1401.

Oil Minister Javad Oji has recently said that a new record high will be reached in the country’s oil export in the current Iranian calendar year.

The country’s oil export in 1401 was 83 million barrels more than that of 1400 and 190 million barrels more than the export in 1399, the minister announced.

Underlining that now oil export has reached the highest figure in the last two years, the official said, “Considering that the Oil Ministry is one of the main providers of the country's foreign currency; in the 13th government, despite the tightening of cruel sanctions, fortunately, thanks to the grace of God and the efforts of our colleagues in the country's oil and gas industries, there are good records in the field of exporting crude oil, gas condensate, and petroleum and petrochemical products.”

Despite the negative impacts of the US sanctions, Iran has been ramping up its oil production and exports over the past few months.

In his remarks in November 2022, President Raisi highlighted the failure of the enemy’s policy of maximum pressure, saying the country’s oil export has reached the pre-sanction levels.

Back in January, the US Energy Information Administration (EIA) in a report put Iran’s average oil production in 2022 at 2.54 million bpd, 140,000 bpd more than the previous year.

Iran's oil production in 2021 was about 2.4 million bpd.

 

 

China not to supply weapons to any party in Ukraine war

China won't sell weapons to either side in the war in Ukraine, the country's foreign minister said Friday, responding to Western concerns that Beijing could provide military assistance to Russia.

China has maintained that it is neutral in the conflict, while backing Russia politically, rhetorically and economically at a time when Western nations have imposed punishing sanctions and sought to isolate Moscow for its invasion of its neighbor.

Qin Gang is the highest-level Chinese official to make such an explicit statement about arms sales to Russia. He added that China would also regulate the export of items with dual civilian and military use.

"Regarding the export of military items, China adopts a prudent and responsible attitude," Qin said at a news conference alongside visiting German counterpart Annalena Baerbock. "China will not provide weapons to relevant parties of the conflict, and manage and control the exports of dual-use items in accordance with laws and regulations."

The minister also reiterated China's willingness to help find a peaceful resolution to the conflict.

At the same news conference, Qin also blamed Taiwan's government for heightened regional tensions after Beijing held large-scale military drills in an attempt to intimidate the island it claims as its own territory.

In February, Secretary of State Antony Blinken said the U.S. had intelligence suggesting China was considering providing arms and ammunition to Russia — and warned that such involvement in the Kremlin's war effort would be a "serious problem."

In recent days, European leaders have issued similar warnings, even as they visited China, and the European Union's foreign policy chief lashed out at Beijing, saying its support of Russia during the invasion was "a blatant violation" of its United Nations commitments.

In her remarks, Baerbock also referred to China's role as a permanent member of the U.N. Security Council, saying it bore a special responsibility for helping end the conflict.

"But I have to wonder why the Chinese positioning so far does not include a call for the aggressor, Russia, to stop the war," she said. "We all know that President (Vladimir) Putin would have the opportunity to do so at any time, and the people in Ukraine would like nothing more than to finally be able to live in peace again."

A visit to Moscow last month by Chinese leader Xi Jinping underscored how Beijing is increasingly becoming the senior partner in the relationship as it provides Russia with an economic lifeline and political cover. China announced Friday that Defense Minister Gen. Li Shangfu would visit Russia next week for meetings with counterpart Sergei Shoigu and other military officials.

On both Ukraine and Taiwan, Qin articulated well-worn defenses of Chinese policies that underscore Beijing's rejection of criticisms from the West, particularly the U.S. Under the ardently nationalist Xi, China has sharpened its rhetoric, particularly on the issue of Taiwan, which split from mainland China amid civil war in 1949.

Tensions around the island rose significantly after China deployed warships and fighter planes near Taiwan last weekend in retaliation for a meeting between U.S. House Speaker Kevin McCarthy and the island's president, Tsai Ing-wen.

China insists that self-governing Taiwan submit to its rule, either peacefully or by force, and Qin said the pursuit of independence by Taiwan's government and its foreign supporters — a veiled reference to chief ally the United States — were the reason for the tensions.

Baerbock warned that a conflict in the Taiwan Strait, through which much of the world's international trade passes, would bring global disaster.

"We therefore view the increasing tensions in the Taiwan Strait with great concern," she said. "Conflicts must be resolved peacefully. A unilateral change of the status quo would not be acceptable to us as Europeans."

Apparently rejecting Baerbock's concerns, Qin said Taiwan was "China's internal affair."

"Taiwan independence and peace cannot co-exist," he said.

 

UBS takes over Credit Suisse

Moves by authorities to avert a global banking crisis appeared to have lifted market confidence on Monday as investors welcomed emergency dollar liquidity from top central banks and a historic Swiss-backed acquisition of troubled Credit Suisse by UBS Group.

In a package orchestrated by Swiss regulators on Sunday, UBS Group AG will pay 3 billion Swiss francs (US$3.23 billion) for 167-year-old Credit Suisse Group AG and assume up to US$5.4 billion in losses.

Major central banks, faced with the risk of a fast-moving loss of confidence in the financial system, also scrambled on Sunday to bolster the flow of cash around the world with a series of coordinated currency swaps to ensure banks have the dollars needed to operate.

The Swiss banking marriage is backed by a massive government guarantee, helping prevent what would have been one of the largest banking collapses since the fall of Lehman Brothers in 2008.

Financial markets staged a modest relief rally in Asia on Monday but are wary about a range of risks including contagion, the fragile state of US regional banks, and moral hazard.

"Policy makers will be hoping that the weekend's UBS buyout of troubled Credit Suisse will draw a line under recent market stresses," said Brian Martin, ANZ head of G3 economics in London.

Central banks were already facing the conundrum of how much is enough? in the face of resilient labour markets, given the lags with which their policy decisions affect economies. They now have a new conundrum, 'how much is too much?' for financial stability?

Pressure on UBS helped seal Sunday's deal.

"It's a historic day in Switzerland, and a day frankly, we hoped, would not come," UBS Chairman Colm Kelleher told analysts on a conference call. "I would like to make it clear that while we did not initiate discussions, we believe that this transaction is financially attractive for UBS shareholders," Kelleher said.

UBS CEO Ralph Hamers said there were still many details to be worked through.

"I know that there must be still questions that we have not been able to answer," he said. "And I understand that and I even want to apologize for it."

In a global response not seen since the height of the pandemic, the Fed said it had joined central banks in Canada, England, Japan, the EU and Switzerland in a coordinated action to enhance market liquidity. The European Central Bank vowed to support euro zone banks with loans if needed; adding the Swiss rescue of Credit Suisse was instrumental in restoring calm.

Problems remain in the US banking sector, where bank stocks remained under pressure despite a move by several large banks to deposit US$30 billion into First Republic Bank, an institution rocked by the failures of Silicon Valley and Signature Bank.

On Sunday, First Republic saw its credit ratings downgraded deeper into junk status by S&P Global, which said the deposit infusion may not solve its liquidity problems.

US bank deposits have stabilized, with outflows slowing or stopping and in some cases reversing, a US official said on Sunday, adding the problems of Credit Suisse are unrelated to recent deposit runs on US banks and that US banks have limited exposure to Credit Suisse.

The US Federal Deposit Insurance Corp (FDIC) is planning to relaunch the sale process for Silicon Valley Bank, with the regulator seeking a potential breakup of the lender, according to people familiar with the matter.

There are also concerns about what happens next at Credit Suisse and what that means for investors and employees.

UBS chairman Kelleher told a media conference that it will wind down Credit Suisse's investment bank, which has thousands of employees worldwide. UBS said it expected annual cost savings of some US$7 billion by 2027.

The Swiss central bank said Sunday's deal includes 100 billion Swiss francs (US$108 billion) in liquidity assistance for UBS and Credit Suisse.

Credit Suisse shares had lost a quarter of their value last week. The bank was forced to tap $54 billion in central bank funding as it tries to recover from scandals that have undermined confidence.

Under the deal with UBS, some Credit Suisse bondholders are major losers. The Swiss regulator decided that Credit Suisse bonds with a notional value of US$17 billion will be valued at zero, angering some of the holders of the debt who thought they would be better protected than shareholders in the takeover deal announced on Sunday.

(US$1 = 0.9280 Swiss francs)

 

 

European Union Floating Wind Turbine Experience

Floating wind has gained further momentum with proof that the European Union’s FloatGen facility, off the coast of Brittany, has run at maximum power more than 60% of the time over a three-month period.

The figure of running at maximum power of 60% of the time is significantly higher than bottom-fixed installations; however, there is a significant shortage of suitable sector support vessels so far.

The FloatGen facility, comprising a 2MW Vestas turbine mated with a ‘damping pool’, BW Ideol, that reduces the impact of heavy swells and high seas in stormy conditions, has affirmed findings from Equinor’s floating wind facility, the 30MW Hywind Scotland wind park. This was commissioned in 2017 and has demonstrated a performance factor of more than 57%.  

Commenting on the data, BW Ideol’s Chief Executive Paul de la Guérivière said, “FloatGen – one of the few floating wind turbines currently in operation across the globe – continues to deliver outstanding results in terms of reliability, efficiency, and production. It keeps on validating the merits of our unique floating offshore wind technology, even in the harshest environments.

“Such repeated performance, high availability and consequently high capacity factor underlines the benefits of floating wind and its ability to capture the best possible wind resources without depth constraints, contributing to a much needed energy resilience in the process,” he added.

The drive for floating wind development has gathered momentum in Europe over the last 12 months as energy security climbs the agenda in the wake of Russia’s invasion of Ukraine almost a year ago. The climate change emergency is adding extra impetus.

The FloatGen findings have far-reaching implications for shipping’s offshore sector. There is already a dramatic shortage of large offshore wind installation vessels and few are capable of handling the vast components required by the floating wind sector.

In the US, offshore wind has become a top priority for the Biden Administration and many regions, particularly off the deepwater west coast, are unsuitable for bottom-fixed installations.

Although there are now several Jones Act-compliant vessels under construction, there is a dire shortage of installation and support vessels for both the early fixed-bottom facilities, and the floating installations of the future.

Earlier this week, Netherlands-based ship design and construction group, Damen, released design details of a floating wind installation vessel, FLOW-SV. The highly sophisticated 150 meter ship, ready for methanol propulsion, has a maximum pull strength of 1,000 tons for embedding anchors around each turbine, two remotely operated vehicles for surveying and checking the security of anchor groundings, and a range of propulsion and component handling capabilities to meet the floating wind installation challenge.  

Courtesy: Seatrade Maritime News

NATO using Ukrainian blood to fight Russia

The West, with the United States in particular, has been shipping billions of dollars worth weapons to Ukraine. As the Ukraine war drags on, more sophisticated weapons are being delivered in an attempt to prolong the war. At the same time, Western governments have been very wary of direct involvement in confronting Russia on the battlefield. 

The most that the West has done is impose round after round of sanctions on Moscow. However, despite repeated Ukrainian appeals, the European Union says there are no rigid timelines for Kyiv to become a member. "There are no rigid timelines, but there are goals that you have to reach," European Commission President Ursula von der Leyen said during an EU-Ukraine summit in Kyiv attended by 15 of the 27-nation bloc's commissioners.

"Ukraine and the EU, we are family," European Council President Charles Michel claimed. "The future of Ukraine is within the European Union," he chipped in, while also refusing to comment about any timeline. The EU has declined to offer a fast-track membership, with the bloc's officials citing several entry requirements such as political and economic stability.

The EU is saying we have goals but we don't have timelines. If we look at that in a wider context and the promises the EU gave to Turkey about its accession which Ankara has not seen for decades now, this process could take many years, potentially a decade judging by Croatia?, the last country that gained membership. It's a similar approach that the US-led NATO military alliance has taken toward Kyiv. 

This effectively means there is no real intention on the EU or NATO side apart from keeping Ukrainians to continue fighting, dying, and suffering as well as prolonging the war to serve the purposes of US hegemony. 

Weapons have been pouring into Ukraine with one NATO member trying to outbid the others in sending its most advanced military equipment. The Western military-industrial complex has been making extremely lucrative profits in the process. 

Prolonging the war, Ukrainian blood as well as rising inflation rate in Europe with consumers struggling to survive as a result. 

Ukrainian President Volodymyr Zelensky also used the summit to call on his Western allies to send even more sophisticated weapons to help repel Russian forces in the country's east.

This is the same region in the country that has witnessed deadly fighting between ethnic Russians and Ukrainian forces since 2014, killing at least 14,000 people until Russia launched what it called a "special military operation".

But can these more advanced weapons help Ukrainian forces? More recently that has come under the spotlight, with NATO members themselves divided on the issue. Some NATO members have started to question whether supporting Ukraine is going ahead as it had planned. 

Reports have emerged that say the tanks being sent to Ukraine will take months to arrive at the frontline, perhaps until the end of May this year. This is while Russia has been taking large chunks of the Eastern Donbas region. 

There is also an expectation among experts that Russia will launch a massive operation in the coming weeks or months, should the war continue, and consolidate its forces in the towns and villages there. That is expected to happen before any NATO tanks even reach the frontline in the country's east.

Russia can mobilize a large number of soldiers and military equipment. That is why NATO at some point will have to enter peace negotiations with Russia. But the pro-war camp led by the hawks in Washington and others in Europe have been advocating for more escalation. 

This comes even though it is the Ukrainians who are suffering the most.

The European Commission president has since taken down a video that revealed Ukraine has lost 100,000 soldiers in ten months. Some say that is a conservative figure when you factor in all the soldiers that are missing and whose mothers and wives are desperately searching for them.

Even the 100,000 figure is horrifyingly large. Some pundits following the war closely have suggested the actual death toll among the Ukrainian armed forces is around a quarter of a million.

Most Western media reporters are stationed in western Ukraine. Research by other journalists who have been dispatched to the flashpoint eastern part of the country on the frontline where the fighting is taking place shows these are realistic figures.

A few months ago, Moscow said it had lost 6,000 of its servicemen. That death toll could be higher but analysts say it will never come anywhere close to the Ukrainian fatalities, who are dying in much higher numbers.

This is not taking into account the pro-Russian forces in the Donbas as well as private military fighters, but without doubt, the Russians have overwhelmingly artillery superiority.

Many journalists believe the figures on the Ukrainian side of 100,000 are far more accurate.

What the U.S. wants is to keep Ukrainians fighting Russia until the last Ukrainian. It doesn't make any sense for Ukraine to continue this war but the West is egging it on with repeated military aid packages and false promises of accession to NATO and the EU.

Western media has also played a major role in trying to shape public opinion.With every war, there is a level of propaganda and Ukraine is no exception.

Noam Chomsky, and John Pilger among a few other veteran war reporters who covered Vietnam say they have never seen such levels of Western mainstream propaganda when it comes to the Ukraine conflict. 

With all Western reporters in the west of the country, there is little coverage of the deaths and terror in the flashpoint east. 

Most civilians in the eastern Donbas part of Ukraine voted in a referendum to be a part of Russia. 

So a peace solution that can be found without pouring in so many weapons, but the US and some of its Western allies are not satisfied with that scenario and want to prolong this conflict as long as possible. 

Even before the war erupted, US officials said they wanted to use Ukraine to inflict a geopolitical defeat on Russia. 

Does it come as a surprise that before the US and NATO refused to entertain the Kremlin's proposal for security guarantees over NATO's expansion toward Russian borders that US and UK officials invested shares in their respective country's arms manufacturing companies?

In essence, this war benefits the US establishment. Unfortunately, Ukraine is being used as yet another US proxy that is suffering from Washington's foreign military adventurism.

This appears to be the new strategy of the US following the death of its soldiers in Iraq and Afghanistan. 

Let other countries suffer, its civilians suffer and its soldiers die instead of American soldiers, while at the same time serving multiple US foreign interests. As for the EU in this current day and age, it seems to be taking its orders directly from Washington. 

 

Russia and Iran in Energy Market: Competition or Cooperation

Many observers believe Moscow is behind every significant international development or organization, be that the results of the US Presidential elections or the decisions of the European Parliament.

That is rooted in lack of systemic understanding of international relations and sovereign motivation of its actors. A similar approach is taken with regard to Iran’s policy in the Middle East. Where a Shiite individual or movement makes a step, Iran’s opponents see footprints leading to Tehran. Neither of the two capitals has both motivation and capabilities to control such developments abroad, so before ascribing any role to Moscow or Tehran, one should better study how things work in reality, rather than according to their imaginary schemes, even if such schemes make sense to the public.

One of these approaches, which is rather similar to the conspiracy theory, is to blame Russia of taking deliberate actions to strain the relations between Iran and Europe, and subsequently, targeting Iran in the energy market as a potential actor to replace Russia in Europe's energy supply.

The global developments that have turned up in the last few years have caused Iran-Russia relations to enter a new, comprehensive and rather strategic phase. Despite the unprecedented violations and sanctions imposed on Iran by Western countries, the evidences of new cooperation between Iran and Russia show that the recent alliances are on the path of comprehensive development.

Cooperation in the field of advanced technologies, unprecedented trade volume up to US$4 billion in 2022, bilateral military collaboration, gas memorandum between Iran and Russia's Gazprom and also, Russia's support for Iran's membership in the Shanghai Cooperation Organization shows the remarkable expansion of strategic relations in recent years, especially after the intensification of Western sanctions on both countries.

In a completely simplistic judgment, some analysts believe in Russia's pre-planned strategy to completely eliminate Iran from global equations, especially by preventing the restoration of this country's relations with the European Union in the field of energy exports as an alternative to the sanctioned Russia in this market. In order to justify their claim, they pointed to the military cooperation between Iran and Russia, which became an excuse to intensify the sanctions of the European Union against Iran, as well as diminishing the possibility of revitalizing the JCPOA, and they consider it as a scheme by Russia.

Spreading such pessimistic views lead to questions that can invalidate such views to some extent. Considering the disconnection between Russia and European countries in the field of energy trade, how can Iran supply the amount of energy needed by Europe as an alternative to Russia in terms of production infrastructure, production volume, export capacity, as well as logistical ability?

A detailed examination of Iran's production and export capacities and capabilities in the field of energy such as oil, gas and even petrochemical products can well answer the above question and negate the mentioned point of view.

According to the gas crisis of Europe during the last year, many supposed that Iran would be the best option to compensate for the shortage of gas in Europe. Declaration of such a proposal showed that some analysts were not informed about the production capacity and conditions of facilities and infrastructure of Iran's gas fields.

According to statistics, the average gas consumption in the country is 250 billion cubic meters per year, and the total gas production in 2021 was about 269 billion cubic meters. Moreover, Iran's total gas exports to Iraq and Turkey are 17 billion cubic meters annually. Therefore, if we consider consumption and export to Turkey and Iraq, the amount of production is almost equal to both consumption and exports. Therefore, considering gas export, Iran will need a large investment for development of production infrastructure, that the recent agreement between Iran and the Russian company Gazprom is concluded with the anticipation of the infrastructure expansion, which is a manifestation of Russia's willingness to strategic cooperation with Iran even in the field of energy.

Others point to Europe's greater need for Iranian oil than gas, and this will be the best opportunity for Iran to take advantage of the current situation by supplying oil to European Union countries.

Although this expectation seems reasonable to some extent, it should be noted that in the current situation Europe's immediate demand for oil is lower than gas. One should acknowledge that oil transportation is easier than gas, and Europe's supply sources, such as Saudi Arabia have more variety of products. Moreover, it should also be taken into consideration that even with restoration of the JCPOA and the beginning process of exporting oil to Europe, in the current conditions Iran's oil will not have a notable impact on the reduction of Europe's oil demands.

Considering the production of 4 million barrels of oil per day and also in light of domestic consumption, Iran's export capacity is expected to be 2.0 to 2.5 million barrels per day. Referring to the number of barrels that will be exported to South Korea, Japan, China and India, therefore ultimately one cannot imagine a significant amount for export to Europe. Although one should admit that this number of barrels will make no difference to Russia and the long-term prospects of this country in international relations.

According to the mentioned points, it implies that some criticisms toward the enlargement of Iran and Russia's relation are completely thoughtless and stem from the lack of correct and systematic understanding of international relations, and undoubtedly, some of them are rooted in some historical narratives in the relations between the two countries.

The analysis of any international policies should be based on the principles of international relations and realities, not on excitement and personal interests to a particular side or even conspiracy theories.

The relations between Iran and Russia have been progressing towards comprehensive development in recent years, and its effects can be seen in the internal and external developments of both countries.

One of these fields is energy trade, where both countries have had valuable cooperation to increase each other's production and export capabilities.

Nevertheless, the Russia's strategy in destruction of relations between Iran and Europe with the aim of maintaining the monopoly of energy exports is completely simplistic as well as short-sightedness of the depth of Iran-Russia relations in recent years.

Courtesy: Tehran Times

 

 

Western companies still doing business in Russia

Fewer than one in ten Western multinationals with subsidiaries in Russia has quit any of them in the year wo22 since the Ukraine invasion began.

This finding by two highly regarded academics, Simon Evenett from University of St Gallen and Niccolo Pisani from IMD Business School, contradicts earlier reports of a mass exodus by Western businesses and points to a lack of alignment between the geopolitical strategies of Western governments and the commercial realities of Western businesses.

The study identified 1,404 companies headquartered in EU and G7 countries with a total of 2,405 subsidiaries in Russia before its February 2022 invasion of Ukraine. Only 120 of these companies, or 8.5% of the total, had exited at least one of their subsidiaries by the end of November.

Moreover, some of the companies that have trumpeted their withdrawal from Russia, such as McDonald’s and Nissan, have buy-back options. Russia’s anti-monopoly agency says McDonald’s can repossess its Russian operations within 15 years, while Nissan, which sold its business to a Russian state-owned enterprise for €1, can buy back within six years.

The study is at odds with earlier work by Yale University’s Jeffrey Sonnenfeld, which said more than 1,000 companies had pulled out, threatening Russia with economic oblivion, but it is broadly consistent with research by the Kyiv School of Economics. The latest research double-checked the prior-data bases to see whether companies that said they were withdrawing had in fact done so.

The researchers acknowledge that there are many sound reasons why companies might fail to withdraw. A Western firm operating in a sector excluded from official sanctions may decide that it is inappropriate to abandon its Russian customers, who may have played no part in the decision to invade Ukraine or in the prosecution of the armed conflict, they wrote.

In other cases, Western firms may not want to abandon long-term relationships with employees or suppliers or decide to cease operations because of the societal relevance of their products and services (for instance, the supply of lifesaving medicines).

Even when a Western firm has decided to exit and committed to do so publicly, it may still ultimately fail to do so. For instance, it may not be able to find a buyer for its subsidiary that is prepared to pay a high enough price. And even when a buyer is found and the price agreed, the Russian government may have put in place obstacles that impede or anyway delay the sale, or ultimately prevent transfer of proceeds abroad.

It can take time to conclude such sales in adverse circumstances so it is likely that the percentage quitting will rise, however the evidence shows the overwhelming majority of Western companies with operations in Russia are staying put.

US Treasury Secretary Janet Yellen has repeatedly called on the US business sector to strengthen the resilience of its supply chains by friend-shoring, or redirecting investment to allies. In the context of the risk of conflict in the Taiwan Strait, she urged US businesses to pay greater heed to geopolitical realities. We are seeing a range of geopolitical risks rise to prominence, and it’s appropriate for American businesses to be thinking about what those risks are.

However, the latest study suggests that those pressures may not translate into meaningful changes in the international footprint of companies. It is reasonable to conclude that the high cost of exiting an operation that may have taken years and billions of dollars to establish has restrained companies from following their country’s wishes, even if that means they are effectively ‘trading with the enemy.

The authors note that, if the immense geopolitical pressure on companies to decouple from Russia has been resisted, it’s unlikely that the similar pressure for companies to pull out of China will gain traction. For every US$1 invested in Russia, Western multinationals have US$8 invested in China.

They argue that the Russian economy is large enough to be a good test of the willingness of companies to respond to geopolitical pressure, while not being so large (as China’s economy is) that Russia’s future economic prospects are decisive for the global strategies of most companies.

The study found wide variation in both national and sectoral responses to the geopolitical pressure to withdraw from Russia. About 16% of US firms have closed subsidiaries, compared with 15% of British firms, 7% of Japanese firms and 5% of German firms.

Companies were more likely to close loss-making subsidiaries than those with healthy profits. The 120 companies that have shut subsidiaries in Russia represent 15.3% of the pre-invasion workforce of Western multinationals in the country but only 6.5% of the profits. The inclusion of large service firms like McDonald’s and Starbucks among the exiting firms would help to explain this difference.

In the manufacturing sector, the 50 subsidiaries that were sold or closed were responsible for 18.6% of the workforce of Western operations in the sector but only 2.2% of the profits.

The study said its finding that 8.5% of Western multinationals had exited their Russian operations was almost certainly an overestimate. Companies were counted if they had withdrawn one or more subsidiaries but not necessarily all their operations in Russia. The presence of buy-back options casts doubt on the finality of exits.

The study says greater attention should be given to the costs of decoupling and friend-shoring.

If the write-offs announced by publicly traded Western companies are anything to go by, divestment, decoupling, and supply chain reconfiguration are likely to be costly to firms, their employees, and their shareholders.

If those costs must be borne on geopolitical grounds, who should bear them? Answering this question is of the essence since to date Western corporate retreat from Russia has been limited.

 

 

German caution on Ukraine arms rooted in political culture

Germany became one of Ukraine’s leading weapons suppliers in the 11 months since Russia’s invasion, but Chancellor Olaf Scholz also gained a reputation for hesitating to take each new step — generating impatience among allies.

Berlin’s perceived foot-dragging, most recently on the Leopard 2 battle tanks that Kyiv has long sought, is rooted at least partly in a post-World War II political culture of military caution, along with present-day worries about a possible escalation in the war.

On Friday, Germany inched closer to a decision to deliver the tanks, ordering a review of its Leopard stocks in preparation for a possible green light.

There was still no commitment, Defense Minister Boris Pistorius rejected the suggestion that Germany was standing in the way and said, “We have to balance all the pros and contras before we decide things like that, just like that.”

It’s a pattern that has been repeated over the months as Scholz first held off pledging new, heavier equipment, then eventually agreed to do so.

Most recently, Germany said in early January that it would send 40 Marder armored personnel carriers to Ukraine — doing so in a joint announcement with the US, which pledged 50 Bradley armored vehicles.

That decision followed months of calls for Berlin to send the Marder and stoked pressure for it to move up another step to the Leopard tank.

“There is a discrepancy between the actual size of the commitment and weapons deliveries — it’s the second-largest European supplier — and the hesitancy with which it is done,” said Thomas Kleine-Brockhoff, a Berlin-based senior analyst with the German Marshall Fund of the United States think tank.

Scholz, an unshakably self-confident politician with a stubborn streak and little taste for bowing to public calls for action, has stuck resolutely to his approach. He has said that Germany won’t go it alone on weapons decisions and pointed to the need to avoid NATO becoming a direct party to the war with Russia.

As pressure mounted last week, he declared that he wouldn’t be rushed into important security decisions by excited comments. And he insisted that a majority in Germany supports his government’s calm, well-considered and careful decision-making.

Speaking at the World Economic Forum in Davos, Switzerland, on Wednesday, Scholz listed some of the equipment Germany has sent to Ukraine, declaring that it marks a profound turning point in German foreign and security policy.

That is, at least to some extent, true. Germany refused to provide lethal weapons before the invasion started, reflecting a political culture rooted in part in the memory of Germany’s own history of aggression during the 20th century — including the Nazi invasion of the Soviet Union.

“No German chancellor, of no party, wants to be seen out front in pushing a military agenda — you want to try all other options before you resort to that,” Kleine-Brockhoff said. “And therefore for domestic consumption, it is seen as a positive thing for a German chancellor not to lead on this, to be cautious, to be resistant, and to have tried all other options.”

Scholz does face calls from Germany’s center-right opposition and some in his three-party governing coalition to be more proactive on military aid; less so from his own center-left Social Democratic Party, which for decades was steeped in the legacy of Cold War rapprochement pursued by predecessor Willy Brandt in the early 1970s.

“Scholz decided early on that he does not want to lead militarily on Ukraine assistance,” Kleine-Brockhoff said, though “he wants to be a good ally and part of the alliance and in the middle of the pack.”

But the cautious approach drives allies crazy and raises questions over whether they can count on the Germans, Kleine-Brockhoff acknowledged.

Berlin kept up its caution on the Leopard tank even after Britain announced last week that it would provide Ukraine its own Challenger 2 tanks.

The hesitancy isn’t just an issue between Berlin and Kyiv, since other countries would need Germany’s permission to send their own stocks of German-made Leopards to Ukraine. On Wednesday, Polish Prime Minister Mateusz Morawiecki said Warsaw would consider giving its tanks even without Berlin’s permission.

“Consent is of secondary importance here. We will either obtain it quickly, or we will do the right thing ourselves,” Morawiecki said.

British historian Timothy Garton Ash wrote in The Guardian and other newspapers this week that to its credit, the German government’s position on military support for Ukraine has moved a very long way since the eve of the Russian invasion.

But he argued that the tank issue has become a litmus test of Germany’s courage to resist (Russian President Vladimir) Putin’s nuclear blackmail, overcome its own domestic cocktail of fears and doubts, and defend a free and sovereign Ukraine, and that Scholz should lead a European Leopard plan.

Whether that will eventually happen remains to be seen. Scholz’s government has insisted on close coordination with the United States, a possible reflection in part of the fact that Germany — unlike Britain and France — relies on the US nuclear deterrent.

On Friday, Scholz’s spokesman, Steffen Hebestreit, denied reports that Germany had insisted it would only deliver Leopard tanks if the US sends its own Abrams tanks. He rejected the notion that Berlin is trailing others and insisted it is taking the right approach.

“These are not easy decisions, and they need to be well-weighed,” he said. “And this is about them being sustainable, that all can go along with them and stand behind them — and part of a leadership performance is keeping an alliance together.”

 

Global economy faces tougher year 2023

For much of the global economy, 2023 is going to be a tough year as the main engines of global growth - the United States, Europe and China - all experience weakening activity, the Head of International Monetary Fund (IMF) said on Sunday.

The New Year is going to be "tougher than the year we leave behind," IMF Managing Director Kristalina Georgieva said on the CBS Sunday morning news program "Face the Nation."

"Why? Because the three big economies - the United States, European Union and China - are all slowing down simultaneously," she said.

In October 2022, the IMF had cut its outlook for global economic growth for 2023, reflecting the continuing drag from the war in Ukraine as well as inflation pressures and the high interest rates engineered by central banks like the US Federal Reserve aimed at bringing those price pressures to heel.

Since then, China has scrapped its zero-COVID policy and embarked on a chaotic reopening of its economy, though consumers there remain wary as coronavirus cases surge. In his first public comments since the change in policy, President Xi Jinping on Saturday called in a New Year's address for more effort and unity as China enters a "new phase."

"For the first time in 40 years, China's growth in 2022 is likely to be at or below global growth," Georgieva said.

Moreover, a "bushfire" of expected COVID infections there in the months ahead are likely to further hit its economy this year and drag on both regional and global growth, said Georgieva, who traveled to China on IMF business late last month.

"I was in China last week, in a bubble in a city where there is zero COVID," she said. "But that is not going to last once people start traveling."

"For the next couple of months, it would be tough for China, and the impact on Chinese growth would be negative, the impact on the region will be negative, the impact on global growth will be negative," she said.

In October's forecast, the IMF pegged Chinese gross domestic product growth last year at 3.2% - on par with the fund's global outlook for 2022. At that time, it also saw annual growth in China accelerating in 2023 to 4.4% while global activity slowed further.

Her comments, suggest another cut to both the China and global growth outlooks may be in the offing later this month when the IMF typically unveils updated forecasts during the World Economic Forum in Davos, Switzerland.

 

United States Joins hands with Britain to control energy trade

The United States and Britain announced on Wednesday an energy partnership aimed at sustaining a higher level of liquefied natural gas (LNG) exports to Britain and collaborating on ways to increase energy efficiency.

Britain and other European countries have turned to the United States as they try to reduce their reliance on Russian energy supplies following Moscow's invasion of Ukraine begun in February.

This partnership will bring down prices for British consumers and help end Europe's dependence on Russian energy," British Prime Minister Rishi Sunak said in a statement.

The "UK-US Energy Security and Affordability Partnership" will also aim to drive investment in clean energy and exchange ideas on energy efficiency and reducing demand for gas.

Household energy bills have hit record highs this year following Russia’s invasion of Ukraine forcing the UK government to cap costs and subsidize the difference a measure analysts forecast could cost up to 42 billion pounds or US$51 billion over the 18 months the cap is in place.

Western countries are also attempting to cap how much Russia can profit from the rise in energy costs that has followed its invasion of Ukraine.

The G7 - which includes Britain and the United States - has agreed a $60 per barrel price cap on Russian seaborne crude oil.

The United States became the world's largest LNG exporter in the first half of 2022, US Energy Information Administration data showed as the country rapidly increased its export capacity and high prices, particularly in Europe led to higher exports.

Britain said the United States would aim to export 9-10 billion cubic metres of LNG over the next year under the agreement, maintaining the increase in exports seen this year.

Refinitiv Eikon data showed Britain has imported around 11 billion cubic metres (bcm) of gas from the United States so far in the first 11 months of 2022, up from 4 bcm in 2021.

Sunak met US President Joe Biden at the G20 in Indonesia last month, where Sunak highlighted the importance of the United States as an economic partner even without a free trade deal. Talks on a free trade agreement are suspended.

On Wednesday, Junior Trade Minister Greg Hands will begin a visit to the United States, where he is announcing a memorandum of understanding on trade with South Carolina, the third such agreement with a US state aimed at boosting trade missions and sharing expertise.

 

 

 

 

 

 

 

 

 

G-7 agrees US$60/barrel price for Russian oil

The Group of Seven (G7) nations and Australia on Friday said they had agreed a $60 per barrel price cap on Russian seaborne crude oil after European Union members overcame resistance from Poland and hammered out a political agreement earlier in the day. The price cap would take effect on December 05, 2022 or very soon thereafter. Details of the deal are due to be published in the EU legal journal on Sunday.

The Group of Seven (G7) is an intergovernmental political forum consisting of Canada, France, Germany, Italy, Japan, United Kingdom and United States; additionally, the European Union is a "non-enumerated member". It is officially organized around shared values of pluralism and representative government, with members making up world's largest IMF advanced economies and liberal democracies. As of 2020, G7 members account for over half of global net wealth (at over US$200 trillion), 32 to 46 percent of global gross domestic product, and 10 percent of the world's population (770 million people). Members are great powers in global affairs and maintain mutually close political, economic, diplomatic, and military relations

The nations said they anticipated that any revision of the price would include a form of grandfathering to allow compliant transactions concluded before the change.

"The Price Cap Coalition may also consider further action to ensure the effectiveness of the price cap," the statement read. No details were immediately available on what further actions could be taken.

The price cap, a G7 idea, aims to reduce Russia's income from selling oil, while preventing a spike in global oil prices after an EU embargo on Russian crude takes effect on December 05, 2022.

Warsaw had resisted the proposed level as it examined an adjustment mechanism to keep the cap below the market price. It had pushed in EU negotiations for the cap to be as low as possible to squeeze revenues to Russia and limit Moscow's ability to finance its war in Ukraine.

Polish Ambassador to the EU Andrzej Sados on Friday told reporters Poland had backed the EU deal, which included a mechanism to keep the oil price cap at least 5% below the market rate. US officials said the deal was unprecedented and demonstrated the resolve of the coalition opposing Russia's war.

A spokesperson for the Czech Republic, which holds the rotating EU presidency and oversees EU countries' negotiations, said it had launched the written procedure for all 27 EU countries to formally green light the deal, following Poland's approval.

European Commission President Ursula von der Leyen said the price cap would significantly reduce Russia's revenues.

"It will help us stabilize global energy prices, benefiting emerging economies around the world," von der Leyen said on Twitter, adding that the cap would be "adjustable over time" to react to market developments.

The G7 price cap will allow non-EU countries to continue importing seaborne Russian crude oil, but it will prohibit shipping, insurance and re-insurance companies from handling cargoes of Russian crude around the globe, unless it is sold for less than the price cap.

Because the most important shipping and insurance firms are based in G7 countries, the price cap would make it very difficult for Moscow to sell its oil for a higher price.

US Treasury Secretary Janet Yellen said the cap will particularly benefit low- and medium-income countries that have borne the brunt of high energy and food prices.

"With Russia’s economy already contracting and its budget increasingly stretched thin, the price cap will immediately cut into Putin’s most important source of revenue," Yellen said in a statement.

A senior US Treasury Department official told reporters on Friday that the US$60 per barrel price cap on Russian seaborne crude oil will keep global markets well supplied while institutionalizing discounts created by the threat of such a limit.

The chair of the Russian lower house's foreign affairs committee told Tass news agency on Friday the European Union was jeopardizing its own energy security.

The initial G7 proposal last week was for a price cap of $65-$70 per barrel with no adjustment mechanism. Since Russian Urals crude already traded lower, Poland, Lithuania and Estonia pushed for a lower price.

Russian Urals crude traded at around $67 a barrel on Friday.

EU countries have wrangled for days over the details, with those countries adding conditions to the deal - including that the price cap will be reviewed in mid-January and every two months after that, according to diplomats and an EU document.

The document also said a 45-day transitional period would apply to vessels carrying Russian crude that was loaded before December 05 and unloaded at its final destination by January 19, 2023.

Volatility of oil prices will be name of the game in December 2022

The month of December has started and it can be rightly termed the most crucial for the energy market as several events and factors would determine the trend in prices by the end of year 2022 and beyond.

While the Chinese zero-Covid policy and protests against that policy weigh negatively on market sentiment, the OPEC plus meeting on December 04 and the beginning of the European Union embargo on Russian seaborne crude oil imports on the next day are likely to shape the course of the prices. Uncertainty is high, which would stoke further volatility in prices. 

Oil slumped early on Monday to the lowest level in nearly a year – since December 2021, weighed down by risk aversion in commodity markets amid protests in China over the authorities’ strict Covid curbs policy. 

The recent price rout, with Brent plunging by 10% in one week, intensified speculation that OPEC Plus members could consider another production cut when they meet on Sunday, December 4. On the following day, December 5, the EU ban on imports of Russian crude oil and the associated G7-EU price cap begins, with the exact price of the cap yet to be agreed on and announced. 

With so many uncertainties, oil prices are seesawing on every rumor or report. This week and the ones after that will likely see more of the same and prices could swing either way depending on the OPEC Plus meeting, the EU ban and price cap on Russian oil and Russia’s reaction to it, and the developments in China, which, so far, is singlehandedly dragging down oil prices due to fears of weak demand in the world’s top crude oil importer at least in the short term. 

A violent move down in prices began on November 21 after The Wall Street Journal citing OPEC delegates that the members of the group had informally discussed whether there would be a need for more oil on the market in view of the EU embargo on Russian crude oil imports. The report was immediately denied by OPEC’s top producer Saudi Arabia and another influential member of the cartel, the United Arab Emirates (UAE). 

“United Arab Emirates denied that it is engaging in any discussion with other OPEC+ members to change the last agreement, which is valid until the end of 2023,” its Energy Minister Suhail al-Mazrouei said on November 21.

“We remain committed to OPEC Plus aim to balance the oil market and will support any decision to achieve that goal,” the minister added. 

As of November 29, speculation is mounting that OPEC Plus could consider a cut at its December 4 meeting due to gloomier-than-expected oil demand outlook amid Chinese Covid curbs and protests and slowing economies elsewhere. 

Considering that oil prices slumped to the lowest level since December 2021, OPEC Plus could indeed decide to defend an US$80 floor under prices, but it will have a difficult task in predicting how the embargo on Russian crude will impact trade flows and prices. 

The structure of the oil futures market is showing sign of sluggish global oil demand and sufficient supply just ahead of the embargo on Russian oil. Weakening physical demand and plunging spot premiums for Middle Eastern crude could prompt OPEC Plus to announce a fresh cut on Sunday. 

The alliance of OPEC and non-OPEC producers led by Russia regularly denies it’s defending a certain oil price, but it always says that it looks at the market fundamentals.

These days, the physical market is showing signs of weakness and even an oversupply in the short term, considering the contango in both WTI and Brent front-month to second-month futures. 

Iraq, OPEC’s second-largest producer, signaled this weekend that the OPEC+ meeting would focus on the current market conditions and balances.  

Several hours after the OPEC+ meeting, the EU embargo and the price cap on Russian oil enter into force. There are so many uncertainties surrounding the measures that analysts cannot predict anything but further volatility in oil prices. The uncertainties range from the exact price of the cap – with the EU still at odds over this five days before the embargo kicks in – to how many vessels Russia would need to place its oil to willing buyers, where ship-to-ship transfers can occur for Baltic exports bound for Asia, how big the ‘dark fleet’ under the radar could be, and last but not least, whether Putin will go through with his promise to stop supplying oil to anyone joining the price cap. 

“All of these things are so significant to the oil markets that they could whip prices from one direction to the other very significantly,” Michael Haigh, Global Head of Commodities Research & Strategy Societe Generale, told The Wall Street Journal.   

EU Countries Lambast Gas Price Cap Proposal

European Union Energy Ministers locked horns on Thursday over a proposed gas price cap at 275 euros per megawatt hour (MWh), grappling over its effectiveness at that level and the impact on supplies and incentives to cut consumption.

The long-standing disagreements were holding up other policies to alleviate the acute energy crisis, such as the launch of joint EU gas purchases and a quicker permit process for renewables.

Diplomats said the 27 EU countries agreed on these two in principle but delayed formal approval until another meeting called for December 13, 2022 with proponents of a cap demanding a green light for all three proposals or none at all.

Polish Climate Minister Anna Moskwa called the 275 euro blueprint put forward by the European Commission a joke.

Belgium's Energy Minister Tinne Van der Straeten also chimed in, telling reporters, "The text that is on the table is unsatisfactory ... it doesn't clearly say if it will have an effect on prices."

Their Greek counterpart, Konstantinos Skrekas said a cap of 150-200 euros/MWh would be realistic.

"It could help us reduce gas prices and therefore reduce electricity prices, which is a major challenge in Europe this winter," he said.

Malta was also unhappy with the proposed ceiling. Energy minister Miriam Dalli said the strict conditions needed for the mechanism to kick in made it "next to impossible".

As many as 15 EU states want a set limit to contain energy costs after gas prices soared to record highs in August 2022, driven up by Russia cutting supplies to Europe in the wake of Western sanctions over Moscow's war against Ukraine.

But stiff opposition comes from a smaller but powerful camp led by Germany, the EU's biggest economy. Together with the Netherlands, Sweden, Austria and Finland, they say a cap could shift supply elsewhere and cut incentives to lower consumption.

The Commission proposed to limit the front-month price on the Netherlands' Title Transfer Facility (TTF) gas exchange if it exceeds 275 euros/MWh for two weeks and if the price is more than 58 euros higher from a liquefied natural gas (LNG) global reference for 10 consecutive trading days.

Dutch minister Rob Jetten was highly critical of the plan.

"The proposal is flawed," he said. "There is a lot of risk for damaging the energy security of supply, and also for stability of the financial markets."

German state secretary for climate, Sven Giegold, added, "We still have a lot of work to do."

The Estonian minister was the only one to say the plan was OK, pretty much as a temporary measure and only to address extreme price increases rather than a permanent solution.

The EU has approved a series of measures to mitigate the crisis in recent months, ranging from consumption savings to windfall taxes to claw back profits from energy producers. But the issue of whether and how to cap gas prices has split the bloc.

Ukraine's energy minister was also due to dial in, according to an EU diplomat, to discuss support for his country where the Russian war destroyed civilian infrastructure and incapacitated power and heating systems as winter cold sets in.

 

 

Poland seeking German support to sanction Russian Druzhba oil pipeline

According to a Reuters Report, Poland is seeking German support to slap EU sanctions on the Polish-German section of the Druzhba crude pipeline so Warsaw can abandon a deal to buy Russian oil next year without paying penalties.

The sources also said the pair was nearing an agreement for Poland to coordinate seaborne oil supplies to Germany via Gdansk and part of Druzhba to facilitate Poland's purchase of the Russian-owned Schwedt refinery in Germany.

The EU has pledged to stop buying Russian oil via maritime routes from December 05, 2022, but Druzhba is currently exempt from sanctions. That presents a problem for Polish refiner PKN Orlen, which has a long-term deal to purchase Russian oil via the pipeline and would need to pay penalties to break the contract.

If the EU were to impose sanctions on Druzhba - or at least its northern section supplying Poland and Germany - both countries would be able to get out of their Russian oil importing commitments penalty-free.

The southern section of the pipeline supplies Hungary, Slovakia and the Czech Republic which, unlike Poland and Germany, would struggle to diversify their oil imports.

According to the sources, the Polish climate ministry and German economy ministry are in the final stage of talks on a memorandum of understanding on oil logistics, which could unlock non-Russian flows and help Poland's top refiner pursue its interest in Schwedt.

Germany remains committed to not using Russian oil from 2023 and is working on a solution with Poland to secure the supply of Schwedt, a spokeswoman for the economy ministry in Berlin said on Friday.

Meeting pledges by Poland and Germany to stop buying Russian oil requires regulation at the EU level and both countries are cooperating to achieve this, the Polish climate ministry said on Friday.

Germany has put Schwedt under a six month trusteeship, stopping short of nationalising the refinery, and is seeking ways to supply it with oil.

Poland and Germany promised in spring to try to end Russian oil imports via Druzhba's northern leg by the end of year but Orlen remains tied to its contract with Russian oil and gas company Tatneft.

The Polish refiner has nominated supplies for Druzhba for 2023 as stipulated by the contract but these would stop if the pipeline was hit by sanctions, one of the sources said.

Orlen declined to comment on Friday.

The company has already cut its reliance on Russian oil to 30% of its requirement, replacing it with deliveries from Saudi Arabia and Norway among others.

Kommersant newspaper reported earlier this month that Orlen had submitted an application to the Russian oil pipeline operator Transneft for the supply of 3 million tonnes of oil to Poland through Druzhba in 2023.

Control over Schwedt, which also supplies western Poland, would boost Orlen's refining capacity and control over the flows of oil and its products in the region with assets in Poland, Czech Republic, Lithuania and Germany.

 

 

 

Turkey warns oil shippers

Turkey warned the oil shippers they will need to prove they’re insured to cross the country’s vital straits, a move that could restrict flows of Russian oil as new European sanctions kick in.

The new rule starts December 01, 2022 a few days before the European Union and UK impose additional curbs on Russian trade that will make it much harder for tankers carrying the nation’s oil to get insurance. 

The insurance covers everything from oil spills to collisions, Turkey is in effect seeking to protect its waters, but it could also affect the flow of millions of barrels of Russian crude exports.

Ships hauling oil through the waterway and the nearby Dardanelles strait will be required to provide a letter from their insurer saying that cover will be provided for that specific vessel voyage and cargo, the Turkish Ministry of Transport said in a circular.

The European Union and the UK commence aggressive sanctions on Russian oil shipments on December 05, 2022 that will dramatically affect the availability of industry standard insurance. 

Russia shipped almost 650,000 barrels a day of its own oil through the straight from its Black Sea port of Novorossiysk over the past six months, loading programs compiled by Bloomberg show. A nearby Russian port exported almost 1.3 million barrels a day of cargo from Kazakhstan.

A director from the Turkish institution governing maritime traffic confirmed the letter, and said the motive behind it was to comply with EU sanctions even though Turkey is not part of them. 

The director said the move could well impact Russian tankers if they struggle to obtain the necessary protection and indemnity insurance, which covers owners against liabilities such as oil spills. The measure should boost maritime safety along the Turkish straits, he said.

Under the EU and UK sanctions, vessels will still be able to get industry standard cover, provided the cargoes being transported are purchased below a yet-to-be-determined price cap.

If ships sail through the straits uninsured, there could be significant damage to the waterway and vessel traffic could come to a standstill if an uninsured ship has an accident, the circular said. As a result, a letter guaranteeing insurance cover is considered a solution to this problem, it added. 

The International Group of P&I Clubs is based in London and organizes the cover of 95% of the global tanker fleet. It’s also reliant on Europe for reinsurance.

 

Cunningly US has dragged EU into Ukraine war

With no end in sight to the fighting in Ukraine, the European Union has become financially exhausted with the drawn-out conflict on its doorstep. As against this, United States, sitting across the pond, is watching on as well as making huge profits. As the war drags on, the costs for Europe are mounting.

One thing is for sure. It is certainly not the first time Washington has tricked the international community into a war. One can still recall the US sending fake intelligence, to the UN Security Council to make the case for the Iraq war.

At the time, France and Germany formed a coalition, making strong arguments and objections to prevent the Iraq war. 

This time, critics argue EU members caved in too quickly and are acting as US proxies without even being aware of it.

Before the conflict broke out on Europe’s doorstep in February, Russia regularly accused the US of deliberately creating a scenario that was designed to lure Moscow into war while ignoring Russia's security concerns over Ukraine.

The Pentagon led the mobilization of NATO troops and weapons on Russian borders and Europe quietly followed suit. The security concerns expressed by the Kremlin were ignored by Washington despite many experts describing them as legitimate.

Moscow wanted the West to respect an agreement signed in 1999 that no country can threaten its security at the expense of others. The Kremlin said this was at the heart of the crisis before the conflict broke out.  

The question must be asked, why not sending peace delegations to Russia and Ukraine instead of arms packages? The answer is the American economy crashed in the aftermath of the covid-19 pandemic and now it is growing again as a result of the war. America has a long history of making money out of waging or triggering wars across the planet.

Those paying the price on this occasion are European states with the continent slipping into a recession and ordinary households failing to make ends meet.

Reportedly, the EU has set aside fund to reimburse member states with the money they spend on sending weapons to Ukraine. However, the EU has been flooded with requests that the bloc simply cannot cover. Brussels has reportedly not even sent out the first payment.

The news outlet cites diplomats as saying the EU had estimated it could cover some 85% of the costs but so many requests were sent to the bloc’s headquarters that it revised that number down to 46%.

That is said to have angered Poland, which is one of the EU’s largest arms exporters to Ukraine and a leading seeker for reimbursements. The diminishing payback scheme and struggling attempts to reimburse risks damaging the EU’s reputation.

The argument coming out of Brussels is that at times like these, unlike the Iraq war, the Western allies must stick together with the United States.

What allies is Brussels exactly referring to? Europeans are struggling to heat their homes this winter because of the Ukraine war. France and Germany’s request for US gas supplies to alleviate the crisis in “ally” states were met with “astronomical” prices by Washington.

There is no doubt the US is making astronomical gas sale profits from the Ukraine war. The US oil giant Chevron, also a large global natural gas producer, is expected to make record exports to Europe.

"We have seen a big uptick in demand from European customers so we are adjusting to that," said Colin Parfitt, who oversees the company's shipping, pipeline, supply and trading operations. Europe will not "go back to the same flows from Russia as it did before," he said.

The US achieved its long term desire to replace Russian gas flows to Europe with its own stocks of liquefied natural gas (LNG). For years Washington has been demanding Europe to wean itself off Russian gas and the Ukraine war has met that demand, even slapping sanctions on Russia’s Nord Stream 2 gas pipeline to Germany. At the time, Berlin strongly censured the move.

American energy companies are now reaping in the profits. "What's growing in the United States is demand for exports," Parfitt said.

According to the Energy Information Administration, the US became the top LNG exporter in the first half of 2022, because of increased supplies to Europe amid the Ukraine crisis. Exports rose to average 11.2 billion cubic feet per day compared with the second half of 2021.

The fact is Europe has no choice but to purchase American energy as Washington has imposed sanctions on certain other major gas-producing countries. But why is the US selling at “astronomical” prices to its “allies”. The answer is American politicians, energy giants and arms manufacturers don’t really care about Europe.

Senior officials in France and Germany have even accused the US of overcharging for its LNG and using the war in Ukraine and the energy crisis to make profit and make Europe dependent on US gas.

French Finance Minister Bruno Le Mair recently noted the US should not be allowed to dominate the global energy market as its allies in Europe are suffering from the consequences of the Ukraine conflict.

He also said it is unacceptable for the US to sell LNG at prices four times higher than those paid by companies in America. The French Minister also called for the establishment of a more balanced relationship between the US and Europe.

The German Economy Minister Robert Habeck decried American LNG companies of charging too much for gas at a time when Europe’s biggest economy is struggling to balance its energy mix without Russian supplies.

He also recalled how the US has turned to the EU before when crude oil costs were skyrocketing, and that Europe’s national reserves were used at the time to push the prices back down.
At a time that the EU is in crisis, with friends like the US who needs enemies? Of course, American arms manufacturers are also making gigantic profits. They are shipping weapons to the warzone in Eastern Europe.

In the lead up to the war, President Putin said Russia needs to defend itself from an aggressive and hostile America. Washington is not primarily concerned with Ukraine's security, but with containing Russia, Putin said.

"In this sense, Ukraine itself is just an instrument to achieve this goal, this can be done in different ways, by drawing us into some kind of armed conflict and, with the help of their allies in Europe, forcing the introduction against us of those harsh sanctions they are talking about now in the US" he said at the time.

The consequences of the conflict have been felt by Europeans who have been staging mass protests, strikes and voting governments out of power across the continent. While the war has triggered soaring costs that the European public simply cannot afford, it has also frustrated hopes of any normalization in Europe following the covid-19 pandemic as well as European unity.

Studies show there is growing polarization in Europe as to whether supporting the US into triggering the Ukraine crisis was worth it after all?