Voices from Russia

Friday, 11 January 2013

Washington to Surprise Beijing

00 US-China. 09.01.13


Resources on the planet are being exhausted, consequently, the fight for them and markets is toughening. International Grandmaster Aleksei Kuzmin predicted that this means that the confrontation between the main players on the world chessboard will significantly escalate, saying, “This year will proceed under the sign of a heated economic duel between the USA and China. In economic diplomacy, the two rivals will stick to a strategy of position warfare accompanied by mutual tactical attacks. China won’t cease to make claims against the American government that is putting Chinese investors to the ‘test of political loyalty’. For its part, the USA will spread rumours concerning the forgery of American products by China and accuse it of infringing its property rights”.

International Grandmaster Vladislav Tkachiev said, “There wouldn’t be a break in the economic war between Washington and Beijing; the USA is losing it. The list of mutual accusations will only grow. However, the volume of trade will increase in all directions too. This shows a sharp growth in Chinese purchasing power, a sign that the Chinese market is growing. However, the situation is quite curious. The strength of the world’s largest economy is based largely on a belief in its financial system, whilst China has long been the world’s main creditor. China’s ascent to the world’s largest economy is inevitable”.

On the other hand, Aleksei Kuzmin noted, “The White House has no intention to change its habits and restrict itself by economic methods. All methods are good in the struggle for influence in the world and resources. Strategic risks linked to the situation in the Middle East pose a greater threat to China than positional attacks by diplomats. A blockade of the Strait of Hormuz might worsen the situation and skyrocket the price of oil. This would deal a heavy blow to China; it needs energy resources desperately”. On the other hand, Vladislav Tkachiev noted, “It’d be naïve to expect Washington to come to terms easily with the loss of its leading position”.

At present, Beijing, as an experienced Grandmaster does, is using the relative stability on the chessboard to strengthen the weak spots in its camp. At the same time, it continues its economic presence in Africa, its largest supplier of oil. What’ll be Washington’s response? The game is getting breath-taking like any game between such strong players.

9 January 2013

Igor Siletsky

Voice of Russia World Service




Friday, 29 June 2012

Iran: Myths and Consequences

The real Iran… it’s not mad mullahs and Revolutionary Guards… it’s the people… just like the USA


The West is stepping up its efforts to tighten a grip on Iran in connection with its nuclear programme. The USA slapped sanctions on foreign state-run banks that clinched oil deals with Tehran and imposed restrictions on the operations of private financial institutions cooperating with the Islamic Republic. On 1 July, the EU’s launching an oil embargo against Iran. Such an abundance of “economic reprisals” against a major player on the world oil market could have lasting consequences. No more new oil from Iran will be available in Europe after 1 July. Countries will have to rely on the Iranian oil that they purchased under previous contracts. The EU has even banned crisis-struck Greece from importing Iranian oil on preferential terms. Washington’s restrictions on the banks that were “spotted” in partnership with Tehran pursue the same agenda… to slash Iranian oil sales.

The restrictions in question have already had a negative effect on the social and economic situation in Iran, which has seen a rise in food prices and a devaluation of the national currency. However, the embargo on Iranian oil led to an increase in oil prices throughout the EU this spring, to the disappointment of millions of European consumers. Oil prices might spike again after 1 July. The EU accounts for 20 percent of Iranian oil exports, this amounts to about 30 million tons (195 million bbl). Europe expects Saudi Arabia to fill the gap. Nevertheless, Iran has the resources to block the Strait of Hormuz, through which oil from Saudi Arabia and LNG from Qatar reaches world markets.

Yevgeni Satanovsky, of the Institute of the Middle East, said, “As for Iran, it could offset its losses by supplying oil to other countries. This means that the embargo might not prove as effective as planned. Some countries, including South Africa, have sharply increased Iranian oil imports. Consumption of Iranian oil hasn’t dropped in Turkey. South Korea cut Iranian oil supplies, but only slightly. Indian companies reduced the consumption of Iranian oil in the country’s state sector, but it’s increased in the private sector. China, even though it cut Iranian oil supplies, has exerted pressure on Iran to get it to slash oil prices so that Beijing could boost the consumption of Iranian oil for the same prices”.

Because of the embargo, Iran will lose 20 percent of the 100 billion USD (3.25 trillion Roubles. 79 billion Euros. 64 billion UK Pounds) it earns from oil exports annually. The loss is far from disastrous. In addition, sanctions will help to spur Iran’s efforts in other areas. Vitaly Bushuyev, General Director of the Institute of Energy Strategy, observed, “The role of Iran in the formation of world oil prices has been exaggerated. No radical fluctuations on the oil market have been predicted for the near future. Oil prices will range between 85 and 110 USD (2,760-3,570 Roubles. 67-87 Euros. 54-70 UK Pounds). Iran may affect that, but its influence won’t go further than causing one-time price volatility within a maximum variation of 3-5 dollars (97-162 Roubles. 2.50-4 Euros. 2-3.25 UK Pounds)”.

In other words, the western sanctions against Iran won’t trigger any upheavals on the world market or an economic collapse in Iran. Instead, they could hit the wallets of ordinary people in Europe. US Secretary of State Hillary Clinton said that unless Iran takes specific steps to dispel the international community’s concerns regarding its nuclear programme, pressure on it will increase, and it’ll become more and more isolated. As an alternative to economic pressure, Washington might carry out air strikes against Iran’s military facilities. In this respect, attempts to exert pressure on Tehran through economic sanctions aren’t the worst option.

29 June 2012

Ilya Kharlamov

Voice of Russia World Service


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