Key malicious US interests in Pakistan

For more than six decades Pakistan has been fighting proxy US war in the region. Those in power are reluctant in admitting this harsh reality. The US terms Pakistan front-line partner in war against terrorism. The country might have received peanuts in terms of military support but the focus of economic cooperation has remained India.

The US has been a major buyer of textiles and clothing but when it comes to outsourcing India is the preferred choice. The logic is that India is one of the biggest democracies, its economic policies are consistent and above all foreign investment in that country is more secure. Political instability and precarious law and order situation does not permit American investors to make any substantial investment in Pakistan.

In one of the previous blogs I have stated categorically that the US install and dislodges governments in various countries to pursue its foreign policy and more importantly establish its hegemony in any specific area. South Asia and MENA have remained prime focus, it was to counter communism in the past and now controlling natural resources, particularly oil.

An important point to be kept in mind is that the US first creates phantoms like Al Qaeda and ISIS, which get funds and arms to pave way for the entry of US combat forces under the disguise of UN approved assaults or peace keeping forces, the worst examples are Afghanistan, Iraq and Syria.

The facts of US policy become evident when one reads the details of briefing of Marine Corps General Joseph F. Dunford Jr. He currently heads the US Marine Corps and is the next chairman of the US Joint Chiefs of Staff. According to him the areas of divergent interest with Pakistan include “our views on the use of proxies and the importance of a positive and stable Pakistan-India relationship”.

He specified the US still has three key interests in Pakistan, averting Al Qaeda’s re-emergence, preventing the proliferation of nuclear weapons and promoting regional stability. He said that the US-led coalition and the Afghan government were closely watching the ISIS’s attempt to expand its reach to Afghanistan and Pakistan and were collaborating closely to prevent this threat from expanding.

The US-Pakistan relationship, according to general, was fundamental to US vital national security interests. The US needs to continue cooperation with Pakistan to defeat Al Qaeda, support Pakistan’s stability and achieve a lasting peace in Afghanistan.

Dunford said, “Regional partners have an important role to play in ensuring a stable, democratic Afghanistan. We have encouraged stronger ties between Afghanistan and Pakistan and have been pleased with their recent bilateral efforts to address their security concerns.”

Dunford said Pakistan had been, and remained, the largest recipient of the Coalition Support Fund. It is in US interests to have an enduring partnership with Pakistan. He expressed his commitment by saying “I will continue to evaluate the efficacy of the mil-to- mil cooperation we have with Pakistan and identify ways in which we can work with Pakistan to enhance regional stability.”

Do more mantra was also evident as Dunford said the US assistance to Pakistan had enabled operations in Afghanistan and operations against Al Qaeda and helped secure its strategic interests. “If confirmed, I will continue to work with the Pakistani military to ensure that they continue to do more.”

His statement has come at a time China is supporting Pakistan in the development of infrastructure under China Pakistan Economic Corridor (CPEC). One fears that the US once again wishes Pakistan to fight its proxy war rather than focusing of its economic development. For the implementation of projects under CPEC peace is the prime requirement, which can’t be achieved unless all the militants, be it foreign or funded by outsiders are weeded out.

Saudis becoming the game spoiler

While oil prices experience volatility due to Greece crisis inching towards its exit from euro zone and P5+1 negotiations keep on extending Saudi Arabia takes a somersault.

It is becoming evident that Saudis are getting more desperate to retain their market share and trying to strike new deals with India and Russia. For India, the Saudis are offering to ship crude using their own tankers to Indian refineries, which would cut the costs significantly for India.

The strategy is aimed at selling crude oil to India at a discount, one of the major buyers of Iranian oil. It may be said that using Saudi ships to transport crude to India would allow the country to save up to 30 cents per barrel. Saudi strategy is aimed at securing it market share at a time Asian buyers are looking for better deals in a global glut.

Another negotiation is going on between two oil giants Saudi Arabia and Russia. This is important also because Russia has now officially surpassed Saudi Arabia to become China’s top crude supplier in a battle to enhance its market share.  But it’s not oil that the Saudi’s are dealing with Russia—for obvious reasons.

Saudi Arabia has signed a deal to invest up to US$10 billion in oil rival Russia, in the fields of agriculture, medicine, logistics, retail and real estate. It is evident that while the Saudis are busy trying to secure oil market share, the Russians are trying to make up for hits they’ve taken from Western sanctions.

This has produced a fair amount of dramatic talk about Saudi Arabia and Russia joining forces in a new alliance. Overly dramatic or not, the U.S. sentiments are turning against long-time friend Saudi Arabia. Washington is certainly annoyed with changing mindset of Saudis that may pave way for the withdrawal of sanctions from Iran to teach a lesson to the ally of recent past.

Any deal with Iran would mean more geopolitical change than the faltering Saudi Arabia—which is fighting a war in Yemen that is leaking across its borders. The competition on the oil scene, though not immediate, would eventually hit Saudi Arabia hard, as the Kingdom is already scrambling to secure market share. The consequences would be immense and Iranian deal, more than anything, will define future relations. There are many who would like to see this final noose tighten around Saudi Arabia.  

Experts have repeatedly expressed fears that Greek crisis could infect oil markets. WTI fell by 8 percent on July 6, falling to around US$53 per barrel. Brent lost nearly 5 percent, dropping to under US$58 per barrel. Oil is now trading at its lowest level in months, erasing several weeks of stability as well as optimism that the market had begun the arduous process of adjustment.

The Greek crisis has entered a new and much more dangerous phase, raising the possibility that the country could get booted from the currency union. JP Morgan Chase stated that it thinks odds are more likely than not that Greece leaves the euro. With Europe in turmoil, oil prices may not recover in the short-term.

But it isn’t just Greece. In another geopolitical development, the Iranian negotiations are at the finish line. The outcome is still in doubt, as the deadline has once again been pushed back, but all sides seem extremely close to striking a deal. After weeks and months of uncertainty, the progress over the past week seems to have finally convinced the oil markets that a return of Iranian oil is close to becoming a reality.

The extent to which Iran can bring oil fields online and ramp up exports is a matter of much debate. But realistically speaking Iran could send up to a million barrels oil per day to the global marketplace after concluding the agreement. Reportedly Iran has stored over 40 million barrel crude oil in ships that ready to sail any minute.

Why Richard Olson talks about ending proxy war in South Asia only?

One is completely amused to read the statement of Richard Olson, US Ambassador in Pakistan, “Era of proxy wars should end in South Asia”. It raises a question, why is he talking about South Asia only while the super power continues to fuel proxy wars in Middles East and North Africa (MENA). The hottest spots are Iraq, Syria, Yemen, Libya, Sudan and even Nigeria.

One just can’t forget that the most recent and longest proxy war is being fought in Afghanistan for nearly four decades. The pretext at that time was averting USSR attack on Afghanistan, which was termed an attempt to reach ‘warm waters’. The attack on Afghanistan in the aftermath of 9/11 was aimed at catching OBL, hibernating in a country ruled by Taliban, who fought proxy war against USSR.

One may say that this statement is the outcome of paradigm shift in the US foreign policy. It seems the way is being paved for emerge of new regional powers in South Asia and MENA to fill the gap likely to emerge from an exit of the super power from the oil rich region.

The new power contenders are China, India, Iran and to some extent Pakistan. Pakistan is likely to get stronger under the umbrella of China Pakistan Economic Corridor (CPEC). Iran and India enjoy their own latent powers due to economic cooperation going on for a long time despite economic sanctions imposed on Iran for more than three decades.

Efforts to bring Iran out of shamble and increasing oil export from Iraq and Libya seems a proxy war against Saudi Arabia by denting its petrodollar income and also keeping Iranian oil proceeds low. The US is the biggest beneficiary of nearly 60 percent decline in crude oil prices due to shale oil boom in the US. It is no longer dependent on Saudi Arabia for its oil requirements.

Many may wonder why the US is giving China a leeway in South Asia but countering its policy in South China Sea. It seems Malacca Strait has become more important for the US as compared to Arabian Peninsula or Strait of Hormaz. Somali pirates have been tamed and proxy war in Yemen is enough to block Suez Canal as and when required.

It may also be said that the US is allowing China to conduct its international trade through Gwadar port to lessen its dependence on Russia for its energy requirements. Supporting China is ‘selecting a lesser evil’ to contain growing Russian phantom and rest of the talk is only eyewash.

  

What can derail P5+1 negotiation with Iran?

Experts say that P5+1 negotiation with Iran are the outcome of paradigm shift in the US foreign policy. The US seems to have lost interest in the Middle East and wants to focus more on South China Sea emerging saga. However, it still wants to protect the interest of its old allies in the Middle East, who feel deprived after the US attained the status of largest crude oil producing country.

With the July 9th, the real deadline for the nuclear negotiations between Iran and the P5+1 approaching fast, the critics of the Lausanne Nuclear Framework Agreement in Washington and Tehran has stepped up their criticism. The foreign ministers of world powers are likely to clinch an accord they hope will end a 13-year standoff.

The time has come P5+1 group should take a sensitive and historical decision and choose between an agreement or imposition of new sanctions on Iran. It is encouraging that both the sides want to put an end to an unnecessary and lingering crisis that should have been resolved a long time ago. The positive point is that in spite of all the remaining differences in these last hours, the negotiators have never been so close to a long lasting solution. However, reaching a consensus does not look definite as yet.
The Iranian foreign minister has rightly said that reaching an agreement requires courage to compromise, self-assertiveness to be flexible, maturity to take logical decisions, wisdom to abandon illusions and audacity to break old habits. He claims that logic is winning over illusion because super powers have finally understood that pressure and threat just can’t yield long lasting solutions, but increase tensions and enmities.
Many may tend to agree that imposition of the cruelest economic sanctions against Iran has not helped the opponents of its nuclear program in achieving their objective that is the reason they chose to negotiate. Iran has repeatedly expressed its readiness for reaching a good and balanced agreement and open new prospects to fight emerging challenges, the worst being extremism a common threat against the entire world.

It is necessary to understand that some of the concerns expressed by Iranians are but natural. They say the deal limiting R&D is an act of imposing sanctioning. Iranian apprehensions are being interpreted by the West as its pulling back from the commitments under the framework of agreement.

The biggest thorn is Iranian strongly believe that the US, keeping in view its history of animosity with Iran, cannot be trusted to abide by its commitments.  Their doubts are entrenched in the belief that the IAEA is untrustworthy because of being an American tool.

Those watching the negotiations closely say that allowing the foreign inspectors to get any time to any sensitive Iranian site violates Iran’s sovereignty and makes its national security secrets vulnerable. They also oppose allowing Iranian scientists to be interrogated given the track record of several Iranian scientists having been assassinated by Israeli intelligence.

Iranian critics also believe that Lausanne agreement prevents Iran from meeting its practical domestic energy needs on time. The current contract Iran has with Russia to provide fuel for its nuclear power plant in Bushehr will expire in 2021. After the expiry of this contract Iran will not be able to operate this power plant as being stipulated in the Lausanne agreement.

Implications of the US becoming the largest energy producer

The United States that surpassed Saudi Arabia in oil production has now beaten Russia in oil and gas production, thanks to the fields falling in the category of shale.

According to a report released by BP on Wednesday, U.S. oil production rose to a record last year, gaining 1.6 million barrels a day. Gas output also climbed, putting the United States ahead of Russia as a producer of the hydrocarbons combined.

The data confirming emergence of the U.S. as the top driller also endorses a trend that has helped the largest economy of the world reduce imports, caused a slump in global energy prices and shifted the foreign policy priorities of the country.

The world is witnessing a changing of the guard of global energy suppliers and the implications of the shale revolution in the U.S. are profound, this was stated Spencer Dale, Chief Economist of BP.

The other major shift BP report shows is that energy demand in China is growing at the slowest pace since the Asian financial crisis of the late 1990s as the economy slows and the country tries to reduce its reliance on heavy industry.

The boom in oil and gas production in the U.S. has started to change the domestic economy profoundly. Cheap fuel has seen manufacturing return to the U.S. as the country produced about 90 percent of the energy it consumed last year.

Last year, energy imports by the U.S. equaled one percent of GDP, of the country. In 2007, prior to the commencement of the financial crisis, energy imports by the U.S. accounted for about half of the current account deficit of 5 percent of GDP.

Shale drillers from Exxon-Mobil to Chesapeake Energy have spent about US$120 billion last year in the U.S., more than double the amount five years earlier. The surge in output and a slowdown in global demand have pushed crude oil prices down about 40 percent in the recent past.

The lower prices will force some producers to shut in “frothy activity” at some shale fields in the U.S. but most output can work even at current prices. The number of rigs drilling in shale fields are down by half from an October 2014 peak and may stabilize by the end of the summer, says BP Report.

The shale revolution hasn’t run out of steam in the U.S. as the country increased oil output last year, helping it to overtake Saudi Arabia as a crude producer. This was the first time a country has raised production by at least one million barrels a day for three consecutive years.

Among other producers outside the Organization of Petroleum Exporting Countries (OPEC), Canada and Brazil also reported record production last year, prompting OPEC’s policy shift of ditching price support for defending market share.

On the demand side, countries outside the Organization of Economic Cooperation and Development (OECD) accounted for all of the net growth in global consumption of 0.8 million barrels a day, or 0.8 percent, last year. Chinese consumption growth, though slower, still jumped 390,000 barrels a day, the biggest increase in the world.

Tail Piece: Having achieved self sufficiency in energy products is likely to shift the U.S. focus away from Middle East and MENA to South China Sea. This may not be a good omen for the region as some other countries may try to declare themselves regional super powers, the mostly likely being Iran and India.

 

Why CPEC has become a nightmare for Modi?

The world in general and Pakistanis in particular fail to understand the vehement opposition of China Pakistan Economic Corridor (CPEC) by Indian Prime Minister Narendra Modi. The level of insanity is also evident from the dictating tone in which he is addressing the Chinese government. Therefore, there is need to understand his level of anxiety.

Indian External Affairs Minister, Sushma Swaraj has said that India strongly opposes US$46 billion CPEC project. Addressing a press conference she said that during his visit to China, Indian Prime Minister Modi had raised "very strongly" the issue of the CPEC to Beijing and told them that it was "unacceptable" for India.

Modi’s prime objection is that CPEC will pass through Pakistan occupied Kashmir, which is not the real issue. He knows it very well that if CPEC becomes fully operative, importance of Chabahar port, which India is building in Iran will diminish drastically. It is known to all that Pakistan offers the shortest and the most cost efficient route to Central Asia passing through Afghanistan.

Ever since Pakistan started construction of Gwadar port and particularly after its management was transferred to China, India has been spreading disinformation that China is building a naval base under the disguise of a civil commercial port.

The fact is that CPEC is a development megaproject aimed at connecting Gwadar Port in southwestern Pakistan to China’s northwestern autonomous region of Xinjiang, via a network of highways, railways and pipelines to transport oil and gas as well as other goods. The economic corridor is considered the focal point of China Pakistan relations and will run about 3,000 km from Gwadar to Kashgar. The 3,000 kilometer corridor is an extension of China’s proposed 21st century Silk Road initiative.

The project will also open trade routes for Western China and provide China direct access to the resource-rich Middle East region, bypassing longer logistical routes currently through the Strait of Malacca. According to The Guardian, "The Chinese are not just offering to build much-needed infrastructure but also make Pakistan a key partner in its grand economic and strategic ambitions."

CPEC is a paradigm shift toward greater economic cooperation between Pakistan and China, which have long had close security ties amid common disputes with neighboring India. The corridor would give China access to the Indian Ocean and lead to investments that would help ease power shortages that are hindering economic growth in Pakistan.

India wants to sabotage CPEC at any cost, even to the extent of taking advantage of various insurgent groups operating in Pakistan, the most notorious being those having bases in Southern Punjab and Baluchistan. It is often alleged that RAW and Mousad are involved in proving funds, arms and training to certain group, the most notorious being Jundullah.

Modi knows well that if China bound goods are passing through Pakistan, special care will be taken by both the governments to ensure safety and security of the goods. In such a scenario agents funded by Israel and India may find it difficult to continue supporting insurgent groups in Baluchistan.

It is also necessary to remind the incumbent government that it has not been able to tell the public the route, which provides opportunities to those having vested interest to spread disinformation. At present at least maps of four different routes are in circulation, which provide ample opportunities to the groups having vested interest to initiate unnecessary debate and arouse anti Pakistan sentiments.