Is the United States being isolated?

Despite all the doubts, ifs and buts the recent agreement between Iran and Saudi Arabia is considered a significant diplomatic achievement not just for the two sides, but also for the entire region. For the United States which has long thrived on the war economy, consolidation of this era equals eternal isolation. The United States is being isolated. 

The agreement was welcomed by many countries inside and outside the region, but shortly after the news broke out, a very strong and loud trend started to emerge and that was the notion of credibility.

It is not hard to read the intentions of China to act as a mediator to bring peace back to a region which is of significant importance, especially for those who are familiar with China’s economic ambitions and its race with the US to win the title of first economic power. To economically grow bigger, a safe West Asia is vital for China. And so is for Iran and Saudi Arabia.

But the open arms of many countries to embrace the reconciliation between Iran and Saudi Arabia speaks volumes about the changing nature of international relations.

The truth is, the world is tired of settling disputes in an old fashion which involves a violent militaristic approach. And this is the core of the multipolar world order notion.

For decades, since WWII, the US along with NATO had made it clear that every country in the world has to choose between two and only two options, either you are with us, or before you know, democracy will be marching in the streets of your capital.

But this mentality has changed unprecedentedly even amongst the most loyal allies of the US against the background of some rather surreal incidents in world in recent years, the most important of which is the war in Ukraine.

The war in Ukraine proved that once the US prescribes war as a solution, peace will not even have a dog door to get into the room, even if it requires sabotaging the daily life of all nations in the Continental Europe.

The biggest state-sponsored act of terrorism against the European Union since the world wars, namely blowing up the Nord Stream pipelines, which the Western mainstream media have been struggling to drag into margins by pointing fingers at different/irrelevant suspects, has opened Europeans’ eyes wide to the bitter truth, there is no coming back from what has already started.

No effort to achieve peace gained support from the US, no diplomatic endeavor was sponsored, not even the call for a proper investigation into the explosion of the pipelines met with praise. And today, Ukraine which is nothing but a shadow of its former self, explains the reasons behind all that by openly speaking about how it’s fighting a war on behalf of the US and NATO.

The obvious victims of this historical fiasco are the citizens of Ukraine and Europe who have to live through a symphony of inflation and fear on a daily basis. The recent anti-war and anti-NATO movements in the US and Europe indicates the partial awareness in Western societies which puts a dreamlike image of a Europe without a war in the horizon, but in this tireless political/militaristic scam that every minute counts, it seems the Europeans do not care about time at all.

This is not the first time the self-centered actions of the US and European politicians raise eyebrows in the West. The US lied about the weapons of mass destruction (WMDs) in Iraq. It lied about the tyranny of Assad’s government in Syria. It lied about Afghanistan hosting terrorists who carried out the 9/11 attacks. It withdrew from Iran’s nuclear deal (JCPOA) without even asking the opinion of its European partners. The United States even lied about the mRNA vaccines it had produced to combat Coronavirus. It lied about the possible origins of Covid-19 in order to deflect attentions and not saying one single word about the Fort Detrick military-based bio-lab complex in its soil while keeping the WHO investigators outside the country’s doorsteps. The list goes on, but what was presented as the backgrounds of the war in Ukraine was the latest in the long line of shameless lies of the US to its allies.

What was said above, although not being comprehensive, takes us back to where we started: credibility. And the United States seems to be suffering a deepening crisis.

It is true that almost everyone is watching the turn of events in West Asia with pessimism and caution, but the frame which was recorded on March 10 can neither be undermined nor ignored, because it represents a new era with unique tendencies and characteristics.

The new era is based on securing the most possible advantages for all sides of every deal, without giving an uncontrollable higher hand to one side. In this era, maintaining peace will be the first and foremost in the list of international priorities of countries even when it comes to their national interests, because competitions will be of economical nature.

 

 

Black Sea Grain Initiative extended

According to Saudi Gazette, the Black Sea Grain Initiative, a UN-brokered deal aimed at supplying markets with food and fertilizer amid global shortages and rising prices, exacerbated by the Ukraine war, was extended on Saturday, the day it was due to expire.

The announcement was made in a Note to Correspondents, released by the UN Secretary-General’s spokesperson’s office, which emphasized that the Initiative allows for the facilitation of the safe navigation for the exports of grain and related foodstuffs and fertilizers, including ammonia, from designated Ukrainian seaports.

Following the invasion of Ukraine by Russian forces in February 2022, the Initiative has been one of the few areas in which the Russian and Ukrainian governments have been able to reach agreement.

It came about in response to the sharp increase in prices for food and fertilizers around the world, Russia and Ukraine are the main suppliers of these products to world markets, and their ability to export was significantly curtailed once hostilities began.

Since the signing of the Initiative in July 2022, some 25 million metric tons of grains and foodstuffs have been moved to 45 countries, and the initiative has been credited with helping to calm global food prices, which reached vertiginous highs in March 2022.

Following the implementation of the Initiative, prices began to fall and, a year later, had dropped some 18 percent.

The deal was mediated by the UN and the government of Türkiye, which was thanked in the statement for its diplomatic and operational support, as part of the agreement, a Joint Coordination Centre (JCC) was established in Istanbul, to monitor the implementation of the Initiative.

The Note to Correspondents reaffirmed the UN’s strong commitment to both agreements, and described the Black Sea Grain Initiative, alongside the Memorandum of Understanding on promoting Russian food products and fertilizers to the world markets, as critical for global food security, especially for developing countries.

 

ICC issues arrest warrants of Russian President

Piotr Hofmanski, President, International Criminal Court (ICC) said in a video statement Friday that an arrest warrant has been issued for Russian President Vladimir Putin for the alleged war crimes of deportation of children from Ukrainian occupied territories into the Russian Federation.

International law prohibits occupying powers from transferring civilians from occupied areas to other territories.

Hofmanski said the contents of the warrants would be kept secret to protect the identities of the allegedly abducted children.

“Nevertheless, the judges of the chamber dealing with this case decided to make the existence of the warrants public in the interest of justice and to prevent the commission of future crimes,” he said.

While the ICC’s judges have issued the warrants, it will be up to the international community to enforce them as the ICC has no police force of its own.

“The execution depends on international cooperation,” Hofmanski said.

While it’s unclear what type of international cooperation would lead to Putin’s arrest, Russia has made clear it has no intention of cooperating.

The Kremlin said earlier this week that it doesn’t acknowledge the ICC’s jurisdiction or authority.

“We do not recognize this court; we do not recognize its jurisdiction,” Kremlin spokesperson, Dmitry Peskov, told journalists in Moscow on Tuesday.

Peskov’s dismissal of the court’s authority came amid media speculation that ICC prosecutors would open two war crimes cases and issue several arrest warrants for those deemed responsible for the targeting of Ukrainian civilian infrastructure and for the mass abduction of children.

Besides seeking Putin’s arrest, the ICC on Friday also announced it had issued an arrest warrant for Maria Alekseyevna Lvova-Belova, the Commissioner for Children’s Rights in the Office of the President of the Russian Federation, on similar allegations.

The ICC said in a statement that both Putin and Lvova-Belova are allegedly responsible for the war crime of unlawful deportation of population (children) and that of unlawful transfer of population (children) from occupied areas of Ukraine to the Russian Federation.

The crimes were allegedly committed in Ukrainian occupied territory at least from February 24, 2022; the court said which marks the date of Russia’s invasion of Ukraine, which Moscow calls a special military operation.

The arrest warrants come about a year after ICC prosecutor Karim Khan opened an investigation into possible war crimes, crimes against humanity, and genocide in Ukraine.

Khan has said that, during four trips to Ukraine, he was looking at the alleged targeting of civilian infrastructure and crimes against children.

Ukraine’s Prosecutor General Andriy Kostin hailed the ICC’s decision in a statement on social media.

“The world received a signal that the Russian regime is criminal and its leadership and henchmen will be held accountable,” he said. “This is a historic decision for Ukraine and the entire system of international law.”

Andriy Yermak, Ukraine’s presidential chief of staff said the move was “just the beginning.”

There were no immediate comments from Russia following the ICC’s announcement.

On Thursday, a United Nations-backed inquiry accused Russia of committing numerous war crimes in Ukraine, including forcibly deporting children to Russian territory.

The ICC’s announcement came as Slovakia on Thursday announced that it would send its fleet of Soviet-era MiG-29 fighter jets to Ukraine.

With the move, Slovakia joined Poland, which on March 16 became the first NATO country to send its fighter jets to its embattled neighbor.

Ukraine’s leaders have repeatedly asked Western powers for fighter jets to help them in the fight against Russian forces.

Analysts say that neither Moscow nor Kyiv has air superiority in the skies above Ukraine, with the decision to send in the jets seen as a potential turning point in repelling Russia’s offensive.

Ukraine President Volodymyr Zelenskyy has repeatedly requested jet fighters, while Washington and other NATO allies have refused, citing concern about escalating the alliance’s role in the conflict.

Peskov downplayed the decision to send Polish and Slovak planes to Ukraine.

“In the course of the special military operation, all this equipment will be subject to destruction,” Peskov said. “It feels like all of these countries are thus engaged in the disposal of old unnecessary equipment.”

Poland, which considers Russia’s regional ambitions a threat to its security, has been one of Kyiv’s staunchest supporters since the conflict began.

Warsaw has already provided Ukraine with some 250 combat tanks and pledged dozens more last month, including advanced German-made Leopard tanks.

 

United States the biggest beneficiary of Russia-Ukraine war

The Ukraine war has entered its second year and the past 12 months have shown there are a variety of aspects of this conflict. In this write up an effort has been done find the movers-shakers and losers-benefiters. My conclusion - Ukrainians the biggest losers.   

In 2014, following the revolution in Ukraine, armed clashes broke out between ethnic Russians (opposed to the new government in Kyiv) and the Ukrainian military in the country’s eastern Donetsk and Luhansk regions which make up the Donbas.

Despite European attempts to ease the fighting, including the Minsk agreements which granted self-government to the Donbas, the fighting continued, leaving around 15,000 people dead. Officials in Donetsk and Luhansk claim that Kyiv aimed to wipe them out. This caused deep concern in Russia.

Meanwhile over the past decade, despite repeated warnings by Moscow, NATO has been expanding eastwards towards the Russian border.  

The US-led military alliance triggered alarm in Moscow which warned NATO to avoid dangerous steps that pose a threat to Russia’s territorial integrity and sovereignty.

Amid the massive NATO buildup of forces coupled with advanced and sophisticated weapons that can strike the heart of Russia, the Kremlin sought security guarantees from the US and NATO. These were effectively ignored by both the US and NATO.

On February 24, 2022, Russia launched attack on Ukraine, calling it a “special military operation”.  It cited several reasons for the attack, including the stance of the government in Kyiv, attacks on ethnic Russians in the Donbas region, and NATO expansion to the borders of Ukraine.

Ukraine and its Western backers argue that the conflict waged by Russia was unprovoked.

Current state of affairs

As things stand, the fighting in flashpoint regions of eastern and southern Ukraine shows no signs of ending.

Moscow has annexed four regions in Ukraine where mostly ethnic Russians reside, following a referendum by the people in Luhansk, Donetsk, Zaporizhia and Kherson.
Ukraine and its Western backers have dismissed the votes as a sham.

The war has seen suffering on both sides, but mostly in Ukraine which has witnessed a high death toll and millions displaced, although a significant proportion of those have returned home.

Sanctions

The US and its Western allies have imposed unprecedented sanctions on Russia. From the freezing of US$330 billion of Russian assets to the silencing of all Russian media outlets, the Western sanctions regime continues to this day and has targeted almost all sectors of Russian society, even to the extent of banning Russian athletes from international sports tournaments. The sanctions have failed to end the war.

On the other hand, they have backfired mostly on the people of Europe. According to IMF forecasts in 2023, the UK economy will be worse off than sanction-hit Russia.  

Inflation

If anything, Western sanctions on Russian energy and wheat have backfired on Europe and beyond.

Europe has faced an energy crisis this winter. It was dependent on cheap Russian gas for 40% of the continent’s consumption.

Europe is now filling the gap by purchasing US liquefied natural gas (LNG) at astronomical prices.

This has spearheaded record inflation levels in European households, which has in turn seen waves of protests and strikes in many European countries paralyzing the public sectors. But it’s a major income boost for US energy firms.

United States Role

1. The United States is widely believed to have instigated the war in its efforts to contain Russia.

2. Washington has by far been the largest supplier of weapons to Ukraine.

3. The Pentagon has been shipping weapons to the tune of tens of billions of dollars. The White House has repeatedly announced fresh military packages for Kyiv.

4. Yet that doesn’t mean NATO members have not chipped in.

The US and other Western arms manufacturers have made very lucrative profits from the war that is the reason many experts argue, allies want the conflict to continue as long as possible.

By the same token, Russia and other countries say pouring weapons into the warzone has not and will not end the conflict. Moscow says the arms deliveries will only increase the suffering of Ukrainians and prolong the war.

Kyiv argues it needs more advanced weapons, such as battle tanks, to repel Russian forces in the country’s east. There are major question marks as to whether these weapons will change anything on the battlefield.

Some European Parliament lawmakers have said the war serves the interests of the US and not the interests of Europeans.

Europe fails in ending violence

After the fall of Afghanistan to the Taliban in August 2021 and the embarrassing scenes of US-led forces fleeing the country, repetitious statements were made by the European Union about the need to distance itself from the military affairs of the US in different parts of the world.

EU foreign policy chief Josep Borrell said Europe needs to develop its own military capacity independent of the United States.

The 27-member bloc revived debates about Europe developing the means to act independently from the US

The EU reiterated it needed to develop diplomatic and military muscle and what France's President Emmanuel Macron termed as strategic autonomy.

Some countries are going to have to ask themselves questions about an American ally which, as Joe Biden said, doesn't want to fight other people's wars for them.

"The Europeans don't have a choice. We must organize ourselves to deal with the world as it is and not the world that we dream of," Borrel said.

"We have to analyze how the EU can further deploy capabilities and positively influence international relations to defend its interests. Our EU strategic autonomy remains at the top of our agenda."

As Europe tried to be sovereign instead of taking directions from Washington, it failed to do so, as witnessed five months later with the eruption of war in Ukraine.

The Europeans understood perfectly that they are still defenseless, both militarily and diplomatically.

They don’t have the means to significantly contribute in ending a conflict on their doorsteps.  

All the European ducks have lined up and have taken their marching orders from Washington again, with a very few exceptions.

The Europeans are unable to take themselves out of this fatal subservience to the Americans.

Accusations against Iran and China

The US and NATO have accused Tehran and Beijing of providing arms to Russia to use in the Ukraine war. Both countries have dismissed the allegations as ludicrous, saying they have been working with both parties to find a political solution to the conflict.

Russia has also rejected reports that it has received weapons from any third party.

International community

While the West claims the international community stands in solidarity against Russia, the facts on the ground suggest otherwise.

However, a considerable number of countries have taken a neutral stance toward the war.

NATO does not represent the international community, despite statements by its Secretary-General, Jens Stoltenberg. 

The international community is calling for a peaceful resolution, something the US has stood firmly against.

Countries benefiting from war

The biggest beneficiary of this war has been the United States.

It has been successful in triggering a conflict in Europe to try and contain Russia’s growing power.

It has disrupted gas supply to the continent by sabotaging Nord Stream pipelines delivering Russia’s cheap gas to European consumers.

Many experts also say the US has pitted and provoked Russia and Ukraine against each other, in a similar fashion to other conflicts instigated by the Pentagon. 

 

UN resolution approves withdrawal of Russian forces from Ukraine

The United Nations General Assembly resolution calling for Russia to withdraw from all territory in Ukraine was approved by member nations on a 141-7 vote. Although, the resolution holds no power but relays a powerful message to Moscow.

General Assembly votes also serve as a key barometer for the success of each side of the war to sway international opinion.

The resolution is purely symbolic, but it allows Ukraine and its allies to build a consensus against Russia.

Thirty-two countries also abstained from the vote, including China, South Africa and India.

The countries opposing the resolution included Belarus, Mali, Nicaragua, Russia, Syria, North Korea and Eritrea.

Russia picked up two additional votes from a previous UN vote on the war in October.

US Ambassador to the United Nations Linda Thomas-Greenfield said the vote will go down in history.

“On the one-year anniversary of this conflict, we will see where the nations of the world stand on the matter of peace in Ukraine," Thomas-Greenfield said in remarks the day before the vote.

Indian Ambassador to the U.N. Ruchira Kamboj said the resolution had inherent limitations and questions that needed to be answered.

South Africa, China and Russia are holding joint drills in the Indian Ocean this weekend.

The United States also accused China of supplying nonlethal aid to Russia, and several officials warned Beijing is considering sending lethal aid.

 

 

 

Russia: Lost oil revenue bonanza for shippers and refiners

Western sanctions on Russia have significantly reduced state oil revenues and diverted tens of billions of dollars towards shipping and refining firms, some with Russian connections.

Most of the winners from the sanctions are based in China, India, Greece and the United Arab Emirates, a handful are partly owned by Russian companies.

None of the firms is breaching sanctions, but they have benefited from measures designed by the European Union and the United States to reduce the revenues of what they call Russian President Vladimir Putin's war machine.

As the Ukraine conflict heads into a second year, the calculations show that Russia's income has dropped but the volume of exports has remained relatively stable despite sanctions.

Putin told the West that sanctions would trigger an energy price rally. Instead, international benchmark Brent oil prices have fallen to US$80 per barrel from a near-all-time high of US$139 in March 2022, weeks after the start of the war. Before Moscow's invasion of Ukraine began on February 24 last year, Brent traded at around US$65 to US$85 per barrel.

After the Group of Seven (G7) industrialized nations imposed a price cap on Russian oil in December 2022, Moscow's oil export revenues fell by 40%YoY in January this year, Russia's finance ministry said.

"Low official oil price meant that the Russian state budget has suffered in recent weeks," Sergey Vakulenko, non-resident fellow at the Carnegie Endowment for International Peace, said.

Vakulenko was a former head of strategy at Russian energy major Gazprom Neft. He left the firm and Russia days after the start of the war.

"Judging by the customs statistics, some of the benefit was captured by refiners in India and China, but the main beneficiaries must be oil shippers, intermediaries and the Russian oil companies," he added.

Sanctions on Russia - probably the harshest imposed on an individual state - include outright bans on purchases of Russian energy by the United States and the EU, as well as bans on the shipping of Russian crude anywhere in the world unless it is sold at or below US$60 per barrel.

Russia has diverted most crude and refined products to Asia by offering steep discounts to buyers in China and India versus competing grades from the Middle East, for instance.

The ban on shipping and the price cap have made buyers wary and forced Russia to pay for transportation of crude as it does not have enough tankers to carry all of its exports.

As of late January, Russian oil firms were offering discounts of up to US$20 per barrel for crude to buyers in India and China.

In addition, Russian sellers have also paid up to US$20 per barrel to shipping companies to take crude from Russia to China or India.

As a result, Russian companies received only less than US50 per barrel of Urals at Russian ports in January, down 42%YoY and just 60% of the European Brent benchmark price, according to the Russian Finance Ministry.

By comparison, a US exporter of Mars crude - a grade similar to Urals - would pay about US$5 to US$7 per barrel for shipping a cargo to India. Given a discount of US$1.6 per barrel versus the US benchmark WTI, a US exporter would collect some US$66 per barrel at a US port, or 90% of the benchmark price.

With output of 10.7 million barrels per day (bpd) in 2022 and exports of crude and refined products of 7.0 million bpd, the discount and additional costs would see Russian producers' revenues falling by tens of billions of dollars in 2023.

The head of the International Energy Agency (IEA), Fatih Birol, said on Sunday the price cap reduced Moscow's revenue by $8 billion in January alone.

However, because some lost revenues are captured by Russian firms, the exact hit to earnings of producers and the state is difficult to quantify.

As a further complication, some Russian oil grades, including Pacific grade ESPO, are also worth more than Urals.

 

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. 

 

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.”

 

Economic costs of Ukraine war

The Ukraine war is one of the most important challenges in the world of politics, especially between Russia and the West. The war began in February 2014 with a speech by Russian President and continues until now.

Putin told the Russian people that he was conducting a “special military operation” to “denazify” Ukraine and prevent NATO from expanding to Russia’s borders.

Many in the West see the war, which they consider the most disruptive conflict in Europe since 1945, as a war of choice by Putin, but he says that NATO’s 2008 decision in favor of eventual Ukrainian membership brought an existential threat to Russia’s borders.

This article aims at exploring the reasons for the war, its process, and the costs.

Russia declared one of the reasons for starting the war to help the Russians living in the two republics of Donetsk and Luhansk, two separatist regions of eastern Ukraine in Donbas. Russia repeatedly stated that the two regions have a Russian majority and should either become autonomous or join Russia. The Kremlin declared racism against the Russians the reason for the war.

After the annexation of Crimea, Russians established self-rule governments in these two provinces. They were only able to take over parts of the two provinces of Donetsk and Luhansk, a struggle started to conquer the two provinces.

Ukrainian government forces also engaged in a military conflict against the separatists. As a result, more than 14,000 people were killed and a many were displaced.

In 2015, with the mediation of France and Germany, an agreement was signed between Russia and Ukraine, which became known as the Minsk Agreement. The main goal of the deal was to end the conflict between the Ukrainian army and Russian-backed separatists in Donbass. According to the agreement, in exchange for regaining control of its borders with Russia, Ukraine gave these two regions autonomy in many areas, which was supported by the United States and its allies.

The agreement was annulled by the war, and once again Donbass became the core of the crisis between Russia and Ukraine and Putin said in his speech before the start of the war, the people's republics of Donbass have asked Russia for help.

As stated, one of the most important reasons for the start of Russia's war against Ukraine was Kyiv's decision to join NATO; in another word, to expand the military coalition to Russia's borders and threaten the country.

In his speech, Putin said, “I will begin with what I said in my address on February 21, 2022. I spoke about our biggest concerns and worries, and about the fundamental threats that irresponsible Western politicians created for Russia consistently, rudely, and unceremoniously from year to year. I am referring to the eastward expansion of NATO, which is moving its military infrastructure ever closer to the Russian border. It is a fact that over the past 30 years, we have been patiently trying to come to an agreement with the leading NATO countries regarding the principles of equal and indivisible security in Europe. In response to our proposals, we invariably faced either cynical deception and lies or attempts at pressure and blackmail, while the North Atlantic alliance continued to expand despite our protests and concerns. Its military machine is moving and, as I said, is approaching our very border.

Some sources say that another reason for the start of the war was Kyiv's threat to resume its nuclear program, and to prove it, they point finger at the statements of Dmitry Medvedev, the former president and prime minister of Russia and the current deputy of the Security Council of this country.

Ukraine’s threats to resume its nuclear program were largely the reason for Moscow’s special military operation, Medvedev said on Nov, 07, 2022.

One of the reasons for conducting the special military operation was the threats by Ukrainian leaders that hinted resumption of the nuclear program, which Kyiv relinquished under the Budapest Memorandum of 1994, Medvedev wrote in a message on the country’s VK social network, according to TASS.

“What do we see in contrast next to our own borders? Poor puppets from an inferior state, now weeping bitterly about the decision taken under the Budapest Memorandum of 1994 to withdraw the nuclear arsenal located on their territory and inherited from the USSR,” Medvedev said, following statements describing South Africa’s accession process to the Nonproliferation Treaty.

Later, Medvedev said that Ukrainians always perceived Kyiv’s accession to the international treaty as a forced step decided under harsh pressure from Washington, adding that this was the case even though Ukraine did not have the means to support the might (nuclear weapons) that had fallen to it by chance.

He further said Ukrainian leaders, from former President Leonid Kravchuk to current President Volodymyr Zelenskyy, have expressed that they would be happy to use it (nuclear weapons) against us (Russia) and their own citizens (Ukrainians).
Whatever the reason for this war, it cost a lot for the parties, especially the European Union, which was highly dependent on Russian energy.

This cost can be examined in two dimensions:

The war in Ukraine, which is called the most destructive in Europe after World War II, has cost a lot to the parties involved.

Ukraine imports most of the weapons it needs. Although the country does not pay for the purchase of these weapons, its supporters - Europe, the US, and NATO - who are forced and committed to supplying Ukraine with weapons, bear the most costs.

Although the exact costs of these countries cannot be assessed, the cases announced by them show that Europe and the United States have incurred a lot of costs, some of which are as follows:

Short-Term Military Support (US$17 billion): This includes the transfer of weapons, both US weapons and those purchased from allies, training of Ukrainian military personnel, and intelligence sharing.

Long-Term Military Support (US$10.4 billion): This consists of money that Ukraine can use to buy new weapons, mostly from the United States but also elsewhere.

US Military Operations (US$9.6 billion): In the spring, the United States sent about 18,000 troops to Europe to strengthen defenses and deter Russia. These deployments cost money above what was planned in the DOD budget.

DOD General Support (US$1.2 billion): This covers a wide variety of activities, some only tangentially related to Ukraine, to prepare DOD for future conflicts.

Indirect costs can also be referred to human costs, war refugees and the EU energy debate.

Europe, as a place on the front line of Ukrainian immigrants, suffered from two aspects. First, Ukrainian refugees directly entered Europe. Second, there was the issue of gas and energy crisis.

Nearly 8 million refugees fleeing Ukraine have been recorded across Europe, while an estimated 8 million have been displaced within the country by late May 2022. Approximately one-quarter of the country's total population had left their homes in Ukraine by March 20, 2022.

Another impact of the Ukraine war was on the European benchmark natural gas prices.

The countries of the European Union, as importers of Russian gas, were deprived of energy due to their positions, and the energy challenge has turned into a super crisis for several months.

The benchmark price spiked to 227 euros after Russia invaded Ukraine on February 24, 2022, and to around 350 euros in late August. As of January 03, 2023, the benchmark price is about 74 euros.

Of course, the same cases are also true for Russia; the country has also suffered a lot of financial losses in addition to the loss of lives.

The sanctions of the European Union and the United States against this country, especially in the field of energy, are one of these losses.

 

Gold prices inching towards record highs

Gold prices are expected to rise towards record highs, above US$2,000 an ounce in year 2023, albeit with a little turbulence, as the United States slows the pace of rate hikes and eventually stops increasing them, according to industry analysts, reports Reuters.

Spot prices of the precious metal have shot above US$1,900 an ounce, surging by about 18% since early November 2022 as inflationary pressures recede and markets anticipate less aggressive monetary policy from the US Federal Reserve.

Fast-rising interest rates hammered gold prices last year, plunging as low as US$1,613.60 in September 2022 from a high of US$2,069.89 in March 2022 - just shy of a record peak in 2020.

Higher rates lifted returns on bonds, making non-yielding gold less desirable for financial investors, and pushed the greenback to its strongest in 20 years, making US$-priced gold costlier for many buyers.

The weakening greenback and bond yields will become macro tailwinds for the yellow metal, pushing gold above US$2,000/oz in the coming months, said analysts at Bank of America.

With less pressure from the US$ and bonds, investors are likely to buy bullion as a hedge against inflation and economic turbulence, said WisdomTree analyst Nitesh Shah, adding that prices could easily move above US$2,100 an ounce by year-end.

Gold is traditionally seen as a safe place to store wealth. "The risk of central banks overdoing it and pushing their economies into recession is high," said Shah.

Speculators who in November 2022 were betting gold prices would fall have amassed a net long position in COMEX futures of 8.3 million ounces of gold, worth US$16 billion, helping push up prices.

Analysts expect central banks to continue stockpiling gold after buying more metal in the first nine months of 2022 than in any year in half a century, according to the World Gold Council.

Retail demand for gold bars and coins should also remain strong, boosted by a revival of economic growth in China, the biggest consumer market, said analysts at ANZ.

But gold may have gone too far too fast in the short term and needs to correct lower, analysts said.

"Should prices fall from current levels to the US$1,870 to US$1,900 an ounce range, we expect the (upward) trend to reverse," the bank said, adding that if gold falls below US$1,800, it could slip to US$1,730.

 

Oil set to end turbulent 2022 directionless

On the last trading day of year 2022, oil prices are inching higher and are on track to post their second straight annual gains, albeit modest, in a stormy year marked by tight supplies due to the Ukraine war, a strong dollar and weak demand from the world's top crude importer China.

Next year is set to be another year of uncertainty, with plenty of volatility.

Brent crude futures rose 20 cents to US$83.66 a barrel by 0445 GMT, after settling 1.2% down in the previous session. Brent looked set to end the year with a 7.6% gain, after jumping 50.2% in 2021. Prices surged in March to a peak of US$139.13 a barrel, a level not seen since 2008, after Russia invaded Ukraine, sparking supply and energy security concerns.

US West Intermediate crude (WTI) was traded at US$78.63, after closing 0.7% lower on Thursday. It is on track to rise 4.5% in 2022, following a 55% gain last year.

While an increase in year-end holiday travel and Russia's ban on crude and oil product sales are supportive of oil prices, declining consumption due to a deteriorating economic environment next year will offset supply tightness, said CMC Markets analyst Leon Li.

The global unemployment rate is expected to rise rapidly in 2023, restraining energy demand. So I think oil prices may fall to US$60 next year," he said.

Oil prices cooled quickly in the second half this year as central banks across the world hiked interest rates to fight inflation, boosting the US dollar. That made dollar-denominated commodities costlier investment for holders of other currencies.

Also, China's zero-COVID restrictions, which were only eased in December, squashed oil demand recovery hopes for the world's No. 2 consumer. While China is expected to slowly recover in 2023, a surge in COVID cases in the country and global recession concerns are clouding the commodities demand outlook.

"The recent easing of travel restrictions was expected to boost oil demand; however, the sharp increase in COVID cases in China has raised serious concerns over a potential global outbreak," John Driscoll, director at consultancy JTD Energy Services, said.

In response to China's surge in COVID cases, several countries including the United States, South Korea and Japan have imposed mandatory COVID tests on travellers from China.

A health data firm estimated that around 9,000 people in China are probably dying from COVID each day, as infections spread in the world's most populous nation.

Looking ahead on supplies, western sanctions will push Russia to divert more crude and refined products exports from Europe to Asia.

In the United States, output growth in top oil-producing states has slowed despite higher prices. Inflation, supply chain snags and economic uncertainty have led executives to lower their expectations, the latest survey by the Federal Reserve Bank of Dallas found.

"This year has been an extraordinary year for commodity markets with supply risks leading to increased volatility and elevated prices," ING analyst Ewa Manthey said.

 

 

 

Key Event of Maritime Trade in 2022

As year 2022 draws to a close it is pertinent to look back at some of the biggest stories that have been covered by Seatrade Maritime News over the last 12 months. For the readers interest we have chosen six major themes.

Tanker market boom

A geopolitical Black Swan supercharged the tanker market. The risk of a major confrontation between Russia, Europe and the United States completely redefined oil trade. Assessing the impact of a possible oil embargo on Russia is a near impossible task. But undoubtedly global oil trade and prices were severely impacted.

By the end of October it was an extremely different picture. As the cliché goes, the tanker sector was on fire. Charter hires reached stratospheric levels on the back of longer voyages for crude oil and for refined products, as well as small and large gas carriers.

As the latest phase of sanctions against Russian oil exports came into force in early December things continue to look extremely good for the tanker sector.

Impact of war in Ukraine

Much of what caused the boom in the tanker market has been the war in Ukraine, which of course has impacted more than shipping. But the invasion by Russia also left over a thousand seafarers stranded on vessels at Ukrainian ports.

Over the coming months seafarers were gradually evacuated from stranded vessels. However, a blockade of Ukrainian ports quickly started to have a serious impact on global food markets and prices as the country is major exporter of wheat and grain. Over a period of months much work was done to create an international corridor for grain exports from Ukraine with a humanitarian corridor and was up and running by the end of July.

“Inchcape Shipping Services (ISS) reported the ports of Odessa, Chornomorsk and Pivdennyi opened as of July 27. ‘We can expect the first vessel sailing by the end of the week, as it’s critical to release the vessels which are still blocked in ports,’ said ISS. Once blocked vessels are cleared, activity will continue via convoy, accompanied by a lead vessel.”

The humanitarian corridor has continued to provide a vital lifeline for grain exports, on occasion it has been threatened with closure. Meanwhile the war continues to have other impacts on shipping such as the growing dark fleet of tankers aimed at busting sanctions against Russian oil exports.

P&O Ferries mass firing

Switching gears considerably and at the start of 2022 the name Peter Hebblethwaite would have meant little to most, but he was in few short months to hit global headlines. Peter Hebblethwaite is of course the CEO of P&O Ferries who was to be branded Britain’s most hated boss.

The branding of P&O Ferries boss as the most hated was a result of the mass firing of 800 seafarers over Zoom on March 17. “Video circulated online of the moment P&O notified some of its staff by Zoom call that their employment was ending the same day.”

Somewhat ambitiously P&O Ferries had planned to have its fleet back in service with agency crew within seven to ten days of the mass seafarer sackings. However, the return to service of P&O Ferries did not go remotely to plan and by the end of May it was still struggling to get it all its vessels back into service.

On May 26 it was reported the UK Maritime & Coastguard Agency clearing the Pride of Canterbury in a Port State Control inspection. One vessel in the P&O Ferries fleet still needed a Port State Control inspection before it can return to service. The whole fleet of 10 ships required inspection after P&O Ferries sacked 800 of its seafarers without warning by Zoom call on March 17.

The fleet did all get back into service, but the backlash continued and in October Hebblethwaite was forced to drop off a panel at the annual Interferry conference and in November voted the world’s worst boss by the International Trade Union Confederation.

Container shipping mega-profits

Container shipping enjoyed unprecedented earnings in 2021 and 2022 but as this year has progressed it has become clear that this is not going to last. We started out 2022 reporting that analysts Drewry had upped their annual forecast for container shipping’s EBIT in 2021 to US$150 billion to US$190 billion. As 2022 continued the profits reported by lines were to get even more staggering and in August we reported on the results of Maersk in Q2 just as they were hitting their peak.

Maersk reported an underlying EBIT of US$8.9 billion for the second quarter but behind the 15th consecutive quarter of on-year earnings improvements, there were signs of change. Profitability in the group’s ocean segment rose ‘significantly’ compared to Q2 2021, as softening volumes and short-term rates were comfortably offset by higher contract rates.”

The extent of the plunge in container spot rates to come was to take even the most pessimistic by surprise. In mid-October we reported: “In a research note entitled ‘Fast and furious’ HSBC noted spot rates reported by the Shanghai Containerized Freight Index (SCFI) had fallen by 51% since the end of July – a decline of 7.5% per week. It was also highlighted that spot rates were now well below the levels of contract rates entered into at the start of 2022, especially on the Transpacific trade.

“In fact, at this pace of a 7.5% week-on-week decline, spot rates may hit the average spot rates of 2019 by the end of 2022, a level where we expect capacity discipline to meaningfully emerge, especially when rates go below cash costs.”

As spot rates head back down to 2019 levels this is particularly concerning for container lines as they negotiate long term contracts for 2023, and there can be little doubt that earnings will be considerably impacted.

Decarburization in focus

It's hard to talk about 2022 without mentioning decarburization and emissions. The industry’s ambitions, regulation and IMO targets have gone well beyond their traditional realms of the trade press. Watching the mainstream press trying to cover week-long bureaucratic meetings at the lumbering beast that is the IMO is not something we ever expected to see.

While the focus has more often than not been on regulation it is moves the industry itself is taking in terms of investing in alternative fuels that are the single most concrete actions. Over the last year we’ve seen growing traction around ammonia and methanol as a marine fuel, the latter attracting significant ship orders. However, while ships are on order the availability of green fuels is another matter. In July we covered an interesting story on potential source of cheap sustainable methanol.

In a September episode of the Seatrade Maritime Podcast it talked to Chris Chatterton of the Methanol Institute. Amid all the talk on regulation and targets the most significant change is the coming into force of the IMO’s EEXI and CII regulations, latter for carbon intensity proving particularly controversial.

These were covered in depth by correspondent Paul Bartlett in a November In Focus episode and as Paul commented, “The pressure is already on however, as ship-owners and operators should have drawn up new ship energy efficiency management plans (SEEMP by the end of this year.”

The December meeting of the IMO’s Marine Environment Protection Committee (MEPC) saw some long-awaited progress on a revision of the IMO’s GHG strategy. IMO Secretary-General Kitack Lim said at the close of the meeting, “It cannot be stressed enough how crucial it is that we keep the momentum and deliver an ambitious and fair, revised IMO GHG Strategy at MEPC 80 next year.”

The return of live events

Moving into the final topic for year-end review without a doubt 2022 was the year the of the in-person event with a huge bounce back in conferences, exhibitions, seminars and cocktail parties.

Winding back to March and CMA Shipping in Connecticut was one of the first larger gatherings followed Singapore Maritime Week in April although the latter was still restricted to some extent by Covid measures.

But revving it up a whole different level was the return of Posidonia in Greece in June. As noted at the time in monthly Maritime in Minutes podcast, “If anyone had any doubts about the appetite for inputs and events post pandemic Posidonia clearly spelled these, the exhibition halls packed with visitors from around the globe. There were huge traffic jams against the venue. And of course, there were the parties.”

It was quickly nicknamed Partydonia and it wasn’t hard to see why. But there was plenty of serious stuff going on as well including for ourselves at the Seatrade Maritime News with a raft of live event coverage as well as recording episodes podcasts with Stealthgas CEO Harry Vafias and Vassilios Demetriades the Shipping Deputy Minister of the Republic of Cyprus.

September saw the massive SMM event in Hamburg back on the calendar.  The event was hugely well attended and had strong theme of decarburization running across both the exhibition and conference content. Our Europe Editor Gary Howard summed up the whole event in a piece entitled Drowning in Decarburization.  It drowned out every other topic at SMM 2022, but most of the maritime industry still awaits direction.

Zelensky to visit US Capitol in person

Ukrainian President Volodymyr Zelensky is expected to visit the United States Capitol in person on Wednesday, sources confirmed to The Hill. 

The visit is not set stone, but hinges on security, according to a second source familiar with the planning. The media leaks, the source said, are not helping. 

Sen. Chris Coons confirmed the plans to The Hill. If the visit does materialize, it would likely mark the first time the Ukrainian president has left his country since Russia launched its invasion on February 24, 2022.

House Speaker Nancy Pelosi sent a letter to lawmakers on Tuesday encouraging them to be present for a very special focus on Democracy Wednesday night.

The visit comes as Zelensky, his top military officials and aides have warned that Russia is planning to renew a large-scale ground invasion of Ukraine, and as the country suffers under devastating aerial attacks that have destroyed its energy and electricity infrastructure entering the winter season.

Congress on Tuesday proposed to provide Ukraine with US$45 billion in military, economic and other assistance related to Russia’s war against the country, as part of the omnibus spending package lawmakers hope to pass by the end of the week.

Coons said Zelensky’s visit was a terrific opportunity with Congress set to pass another major package of support for Ukraine.

“That President Zelensky is going to make his first trip outside the country since the war began to speak to us, to thank us and to challenge us to continue to support the Ukrainian people I think is the perfect ending to two years where President Biden has had some landmark successes,” he said.

Zelensky in addresses to Ukrainians has said that this week is extremely important for Ukraine and will be quite active for us in terms of international events and negotiations.

Zelensky addressed Congress virtually in March, urging lawmakers to provide Ukraine with more military support. And Zelensky’s wife, Olena Zelensky, visited the Capitol in person in July to highlight the humanitarian horrors facing the civilian victims of the conflict.

Zelensky’s visit would be a profound political statement, particularly if he appeared in a Capitol that was itself the target of an anti-democratic mob last year.

Pelosi was a target of that violence, and since then, Democrats have warned of the dangers of eroding democratic norms — a message that’s gained resonance since former President Trump entered the 2024 presidential race.

Senate Majority Leader Charles Schumer referred questions about Wednesday’s plans to Pelosi. Asked if he was comfortable with the security situation around Zelensky’s potential visit, Schumer said, that’s up to the security. 

Zelensky, since the Russian invasion began, has emerged as the global symbol of defiance in the face of authoritarianism. And having him on hand this week to promote the importance of preserving democratic traditions would mark a significant capstone for Pelosi, who is soon to step out of leadership after two decades at the top of the party.

Blast shuts part of Russia-Ukraine gas pipeline

A blast ripped through a gas pipeline in central Russia, killing three people and disrupting some of the limited amount of Russian gas that is still reaching Europe, reported Reuters on Tuesday.

The flow of gas through a section of the Urengoi-Pomary-Uzhhorod pipeline that takes gas from Russia's Arctic to Europe via Ukraine had been halted at 1050 GMT, the local officials said on the Telegram messaging app.

Oleg Nikolayev, governor of the Republic of Chuvashia, told state TV that three people, who were carrying out servicing work, died in the accident, while another, a driver, "was in a state of shock".

He said it was unclear when gas supplies via the pipeline could resume, and authorities were trying to work that out.

The Chuvashia regional Emergencies Ministry said an explosion had ripped through the pipeline during planned maintenance work near the village of Kalinino, about 150 km west of the Volga city of Kazan. It said the resulting gas flare had been extinguished.

The pipeline, built in the 1980s, enters Ukraine via the Sudzha metering point, currently the main route for Russian gas to reach Europe.

Europe's gas prices have surged this year after Russia cut exports through its main gas pipeline route into Germany, leaving only pipelines via Ukraine to ship Russian gas to European consumers.

Gazprom said earlier on Tuesday it expected to pump 43 million cubic metres of gas to Europe via Ukraine through Sudzha in the next 24 hours, a volume in line with recent days.

Forward prices on the Dutch TTF hub rose following the news. The benchmark TTF front-month contract was up 1.10 euros to 108.10 euro per megawatt hour by 1347 GMT. It had traded around 105 euros/MWh earlier in the day.

Russia-China trade on the rise

Days before Putin ordered his troops into Ukraine, President Joe Biden and US allies warned that an invasion would result in devastating sanctions and crippling costs. By summer end, some 30 countries had imposed various forms of sanctions on Russia’s energy and financial sectors, as well as on Russia’s ability to import semiconductors and key technology components.

Despite Putin’s claims that Western economic restrictions and penalties have had little impact, evidence suggests otherwise. Making transactions has become more difficult, supplies of important goods have been much more limited, and the ability for many Russian businesses and businesspeople to move through overseas commercial centers, has become harder. Some 1,200 foreign companies have either sharply reduced operations in Russia or left there altogether.

But many other countries have chosen not to join the sanctions effort, and some seem to view the invasion—complete with atrocities and veiled threats of strategic nuclear weapons—as a business opportunity.

According to Chinese customs data, its bilateral trade with Moscow grew 31% in the first eight months of 2022. In July, China imported US$10 billion worth of goods from Russia, an increase of 49.3% from July 2021. China relies heavily on Russia for oil imports, with crude petroleum making up about 48.3% of total Russian imports to the country. Meanwhile, Russia primarily leans on China for electronics such as broadcasting equipment and computers, which make up about 14% of Chinese imports to Russia.

To be clear, close economic ties between Russia and China aren’t anything new. Since 2014, China (coincidentally, the year Russia illegally invaded and began occupying Crimea) China has remained Russia’s largest trading partner, while Russia is China’s fourteenth largest trading partner. China’s determination not to join in sanctions has amplified Russia’s dependence on what China’s markets and financial systems offer. 

When Xi and Putin met to discuss China-Russia relations on September 15, 2022 during the summit of the Shanghai Cooperation Organization, it was the first time the leaders met since they established a “no limits” relationship shortly before Putin’s invasion.

While China watchers noted Putin’s admission that China had questions about the war in Ukraine, he still exuded confidence in China-Russia relations as a strategic, comprehensive partnership with expectations for the alliance to deepen bilaterally and internationally.

With news of battlefield setbacks reaching domestic audiences in Russia, President Putin will likely be more sensitive than ever about any complaints by Russian citizens about food shortages or daily economic hardships.

If more countries were to join the US and its allies in imposing sanctions, one wonders how long Putin could maintain his current special military operation. Given Russia’s increased reliance on Chinese trade, what would happen if China were one of those countries?

 

US Fed hikes interest rates by 75 basis points for fourth time this year

The US Federal Reserve on Wednesday hiked interest rates by three-quarters of a percentage point, pressing even harder on the brakes of the economy in a scramble to slow inflation.

The Federal Open Market Committee (FOMC), the panel of Fed officials responsible for monetary policy, boosted the central bank’s baseline interest rate range to a span of 3.75 to 4 percent. It is the fourth consecutive 75 basis point hike issued by the Fed and sixth interest rate increase since March.

As the Fed raises its baseline interest rate range, interest rates on mortgages, credit cards, and other loans rise as well. Higher borrowing costs tend to slow the economy as households and businesses have less money to spend on goods and services.

The Fed’s latest hike will add even more financial pressure to a resilient but slowing US economy that some experts believe is on the precipice of recession.

The Fed’s rapid interest rate hikes have caused home sales to collapse and pushed businesses to pull back investment, two major forces that could slow the US economy. Higher Fed interest rates also deepen economic turmoil abroad, which could boomerang on the US.

Inflation has remained stubbornly high as a strong US job market helps support consumer spending and supply shocks — particularly the war in Ukraine — push prices for food and fuel higher. Prices rose 6.2% over the past 12 months, according to the personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge.

The Fed has faced growing pressure from some policymakers, especially Democratic lawmakers, to slow down its rate hike campaign amid growing signs of a looming recession. 

Critics of the Fed’s approach argue the bank will needlessly drive millions into unemployment by ignoring clear signs of inflation falling, the lagging effect of Fed interest rate hikes and the bank’s inability to solve supply snarls.

Fed leaders, however, have insisted for months that they will continue to boost interest rates until inflation shows signs of falling toward the bank’s annual 2 percent target. 

 

 

Russia intends to suspend grain export deal

Russia expresses intent to suspend its participation in the agreement to ensure the continuation of Ukrainian grain exports — vital for food supplies to poor countries — linking the decision to a drone attack on Russian ships in occupied Crimea on Saturday morning. The Defense Ministry announced the move, and it was also reported by the state news agency TASS.

"Taking into account the terrorist act carried out by the Kiev regime with the participation of British experts against ships of the Black Sea fleet and civilian vessels involved in the security of grain corridors, Russia suspends its participation in the implementation of the agreement on exports of agricultural products from Ukrainian ports," the Russian Defense Ministry announced on Telegram.

The move comes a day after UN Secretary-General Antonio Guterres urged Russia and Ukraine to renew the deal that has seen more than nine million tons of grain exported from Ukraine and brought down global food prices.
The Ukrainian president's chief of staff, Andriy Yermak, accused Russia of blackmail and invented terror attacks on its own territory — an apparent response to Russian accusations that Ukraine was behind the blasts.

An adviser to Ukraine's Interior Ministry, Anton Gerashchenko, claimed in his Telegram channel that "careless handling of explosives" in occupied Crimea led to explosions aboard four warships belonging to Russia's Black Sea Fleet.

Regarding the UK, the Russian Defense Ministry also blamed British specialists based in Ochakov, Mykolaiv region for preparing a terrorist act and training Ukrainian military personnel.

It also said British navy personnel blew up the Nord Stream gas pipelines last month, without providing any evidence. Britain's Defense Ministry said the Russian claims were false and designed to distract from Russian military failures in Ukraine.