Courtesy of The Automatic Earth.
Lewis Hine 10-year-old oyster shucker, does 5 pots a day; been working 3 years Feb 1912
As the propaganda war over 298 innocent dead people plunges into ever deeper absurdity, I think we may have found the answer to a question that intrigued me over the past few days: why did Ukraine PM Yatsenyuk and his government resign all of a sudden last week? A banker, installed by the west, who produced some of the most over the top language against Russia and his own Russian speaking fellow citizens, who leaves mere days after the battle he’s involved in gained a whole new dimension with MH17. Puzzling.
But there are now clues as to why he may have done it (note: I don’t rule out his possible personal involvement in the MH17 crash either). The clues don’t come from western media, but that’s probably not surprising. I therefore have to turn to Russian media, and though many will say they may be part of the propaganda war as well, I don’t think these particular things are made up, simply because it makes no sense to invent a TV talk show and a parliamentary vote out of thin air; these things are easy to trace.
First, Ria Novosti reports on a Yatsenyuk talk show appearance after his resignation:
“My decision to resign has one motive: I want the whole country to see that the parliament refuses to support the Ukrainian Armed Forces, the parliament refuses to fight for the east and impose taxes on those who need to pay taxes,” Yatsenyuk said in a Shuster LIVE Ukrainian talk show. Yatsenyuk said the country’s parliament needs a “reset” and also called to carry out reforms even if this demands taking unpopular steps among the Ukrainian population. He urged the parliament to allocate additional 9 billion hryvnia ($0.7 billion) to support the troops and also approve the bills on levying taxes on the most profitable sectors and attracting European and US companies to the management of the country’s gas transmission network.
In my view, that last bit is the clincher. RT expands on the story.
Ukraine Votes To Keep Western Companies Out Of Gas Industry
Ukraine’s parliament has rejected allowing EU and US companies to buy up to 49% of oil and gas company Naftogaz, and also said they were against liquidating the national energy monopoly . Kiev rejected splitting the company in two, a measure encouraged by the West in order for Naftogaz to comply with Europe’s third energy package, which doesn’t allow one single company to both produce and transport oil and gas. The bill proposed creating two new joint stock companies in order to conform to the package, “Ukraine’s Main Gas Transmission” and “Ukraine’s Underground Storages.” The proposal sought to meet the requirements of EU legislation and strengthen Ukraine’s energy independence.
Earlier in July, the Ukrainian parliament passed a first reading of the bill that would have allowed Western companies up to a 49% of Ukraine’s Gas Transportation System (GTS). There had been rumors the state would sell off at least 15% of Naftogaz in a public offering, however, the conditions in Ukraine’s capital and equity market aren’t strong enough to get a high enough price. The changes was rejected because of the large monopoly and influence Naftogaz has over the Ukrainian market, the country’s political scientist Alexander Ohrimenko, told Russian business daily RBC.
Ukraine’s Rada needed a minimum of 226 votes to support the reform, but only 94 deputies were “for” the change. In the first reading, it received 229 of the 226 votes required to restructure the company. Voting bloc dynamics changed on Thursday after the ruling coalition dissolved itself triggering an early parliamentary election after the government resigned. Following the rejection of privatizing Naftogaz, Prime Minister Yatsenyuk announced his resignation as head of the government. The vote took place among other proposed budget reforms, defense spending, as well as a discussion on how to tackle Ukraine’s gas debt. Naftogaz’s debt to Russia now exceeds $5 billion.
While I don’t rule out that URDA, Kiev mayor Klitschko’s party, may have left the coalition in part as a protest against the army’s continued and intensified assault on east Ukraine, I’d put my money on Yatsenyuk’s failure to deliver control over Ukraine’s energy industry to western interests as the reason he left. And I’m equally sure there is a plan B in place to use the ensuing political – and military – chaos to let the west take over large parts of Naftogaz anyway.
That’s why we’re there. It’s an energy war. IMF loans, IMF-style reforms – in an EU sauce -, the whole package is in place. And Yats failed to make it happen. It’s very possible that “we” have found an alternative option to get what we want in President Poroshenko, who can rule like an emperor until the end of this year.
Meanwhile, Poroshenko’s army launched another major offensive against east Ukraine, which makes it impossible for international forensic experts to work on the crash scene. This has basically been going on since the plane came down, and all the blame has been put with the rebels.
Who, when asked why they removed – some of – the bodies from the scene, said no-one turned up for three days to claim them, and the sweltering heat made it seem respectless to leave them out in the sun any longer. And, despite what the Kiev government and western media said to the contrary, this was done in a dignified way. A fact that was corroborated by the experts who took possession of the remains.
The overall western storyline remains Putin’s desire for empire building, but from where I’m sitting it looks a whole lot more like it’s not Putin but Washington and Brussels who dream of empires. And that, as I said earlier, is directly linked to to the demise of the age of fossil fuels. That age is not over yet, and shale provides some – futile – hope for more oil, but empires need to look forward lest they crumble and fall.
While many may not yet be fully aware of how valid it already is, the energy=power principle will become much more pronounced as less energy becomes available – we’ve entered that phase – . If energy equals power, less energy equals less power, and if you don’t want to lose your power, you will have to take someone else’s resources, and that will in almost all cases involve some act of war, be it economic, physical or otherwise (e.g. propaganda).
Putin, and Russia, were fine with Ukraine the way it functioned before the Maidan protests, and especially before the western involvement in these protests. They had a good oil and gas deal going, they had steady customers and steady income. There was one weak link in that chain: the pipelines that delivered the gas destined for Europe ran largely under Ukraine soil (dating back to Ukraine being part of the Soviet Union). This is the weak link US and EU are now seeking to explore. That’s why they seek to take over Naftogaz.
And now it’s sanctions time. Time for Brussels to self-righteously squeeze Moscow, or something like that. I got to tell you, I can only see this go horribly wrong. I have a picture in my head of a boomerang hitting the various EU politburos straight back in the jaw. But they certainly don’t see it coming, they’re far too smug about what they think is their new found power:
“The shooting down of the airliner was a tipping point that’s changed the EU constellation,” Joerg Forbrig, senior program officer for central and eastern Europe at the Berlin bureau of the German Marshall Fund of the U.S., said in a phone interview. “Putin has crossed a line and misread the mood in European capitals to close ranks on new sanctions.”
Europe rides the train of public anger that their own spin doctors have created. And that is a hazardous thing to do. The EU can agree amongst itself to define – new – sanctions on Russia, or perhaps it can’t even do that, we’ll have to wait and see. And the US can unilaterally announce all sorts of additional sanctions of its own. And some of these sanctions may hurt Russia quite a bit, simply because it’s part of the global financial system.
Still, if either US or EU wants a UN resolution to be accepted (they’ll need it at some point), they will, despite all the applied propaganda, have to produce hard evidence. Something both have so far categorically refused to do. They’ve managed to change the mood in many places without even one piece of evidence. Maybe we should congratulate them on that.
To illustrate: RT has another video on its YouTube channel of a conversation between State Dept. spokesperson Marie Harf and AP journalist Matt Lee (see below), and it’s as painful to watch as the first one a few days ago. Perhaps it’s simply the arrogance of the aggressor, edged on by countless polls being done among the public that show huge support for unsubstantiated claims. Still, one would think having Ms Harf do the talking doesn’t help, but that’s what we all once thought about W. too.
And it’s not just the UN either. The Telegraph reports on a whole new potential threat to the propaganda induced storyline:
Putin To Face Multi-Million Class-Action Suit Over MH17 Crash
Vladimir Putin is facing a multi-million-pound legal action for his alleged role in the shooting down of a Malaysia Airlines passenger jet over eastern Ukraine, The Sunday Telegraph can disclose. British lawyers are preparing a class action against the Russian president through the American courts. Senior Russian military commanders and politicians close to Mr Putin are also likely to become embroiled in the legal claim.
The case would further damage relations between Mr Putin and the West, but politicians would be powerless to prevent it. Last week, lawyers from McCue & Partners, the London law firm, flew to Ukraine for discussions about how to bring the case and where it should be filed. Victims’ families will be invited to join the action. The case will inevitably highlight the role allegedly played by Russia in stoking conflict in eastern Ukraine.
Though the neutrality of US courts can be questioned, and justifiably at times, one would still have to assume that mere propaganda wouldn’t cut it, if only because no court wants to make itself a laughing spectacle in the eyes of the entire world. Will the US, the EU and the British government persist in their refusal to provide evidence for their version of the truth even when a US court asks them for it? If they do, how can any case be brought forward? And if they do provide the evidence, the question will be why they didn’t do that sooner, like today.
As for the sanctions themselves, the EU attempts to maximize the pain for Russia (or maybe I should say they try to make the impression that they’re doing that), while minimizing the pain for its member nations. To achieve that double goal, however, it must bend itself into a convoluted pretzel shape. Because Italy wants exemptions to sanctions, and Britain too, but different ones, and there are 28 separate nations in the EU. Who in the end will all have to sign off on everything.
What we see now is compromises, like the sanctions on shared technology are supposed to impact oil but not gas, and military but not civil applications. As if these things are so easy to tear apart. The reason is obvious: many EU nations are very vulnerable to disruptions in Russian gas deliveries – and other business interests. Reuters has a reasonable take:
EU Edges To Economic Sanctions On Russia But Narrows Scope
The European Union reached outline agreement on Friday to impose the first economic sanctions on Russia over its behaviour in Ukraine but scaled back their scope to exclude technology for the crucial gas sector. The sanctions on access to capital markets, arms and hi-tech goods are also likely to apply only to future contracts ..
Brussels seeks a short cut, to profit from the still fresh public anger, and before people start asking questions about evidence.
Van Rompuy said the proposed sanctions package “strikes the right balance” in terms of costs and benefits to the EU and in its flexibility to ramp up sanctions or reverse them over time. “It should have a strong impact on Russia’s economy while keeping a moderate effect on EU economies,” he wrote in the letter, seen by Reuters. But the narrowing of the proposed measures highlighted the difficulty of agreeing to tough sanctions among countries which have widely different economic interests and rely to varying degrees on Russian gas.
European Commission President Jose Manuel Barroso said the Commission had adopted a draft legal text for the Russia sanctions package. “The final decision now lies with the EU’s member states, but I believe that this is an effective, well-targeted and balanced package … I call on Russia to take decisive steps to stop the violence and genuinely engage in peace plan discussions,” he said.
Russia has been calling for peace plan discussions for half a year. What have Europe and America done? They bring demands to such a discussion that they know will fail: for Russia to withdraw altogether, and let its people in Ukraine perish. That is not an honest discussion. It’s Europe that has never been willing to “genuinely engage in peace plan discussions”.
Key measures include closing EU capital markets to state-owned Russian banks, an embargo on arms sales to Moscow and restrictions on the supply of dual-use and energy technologies. They would not affect current supplies of oil, gas and other commodities from Russia. Van Rompuy said there was an “emerging consensus” among EU governments that “the measures in the field of sensitive technologies will only affect the oil sector in view of the need to preserve EU energy security.”
If the sanctions had applied to gas technology, they could have affected Gazprom’s huge South Stream pipeline project to Europe and Novatek’s Arctic Yamal LNG facility. That in turn would have hit large EU energy suppliers and manufacturers with an interest in the project, including in Germany, Austria and Italy.
See, when I read these things, my first reaction is Russia has the longer scope: it still has time left to further develop non-conventional resources. Europe – and Big Oil – need energy now, and immediate supplies are under threat for both. Killing off the South Stream line will hurt the EU at least as much as Russia. And when van Rompuy talks about measures that will “only affect the oil sector in view of the need to preserve EU energy security”, he puts his foot so far up his mouth Putin can only be slapping his thighs. Cherry picking sanctions is a game as silly as it is dangerous. Not that van Rompuy would know.
Separately, the EU was due to publish on Saturday the names of 15 individuals and 18 entities, including companies, subject to asset freezes for their role in supporting Russia’s annexation of Crimea and destabilisation of eastern Ukraine. That will bring the number of people under EU sanctions to 87 and the number of companies and other organisations to 20.
Yes, rich Russians that have their assets spread around the world can be hurt.
Spreading the burden evenly among EU member states is a delicate balancing act. Britain is strong in financial services, Germany in technology and machinery, France in arms sales, while Italy is heavily dependent on Russia for energy. “To a degree everyone is reverting to trying to protect their own national interests from harm,” a senior European diplomat said. As things stood, Britain would probably face more pain than any other state from the proposed measures because of London’s key position as a financial centre.
Finally, to put it all into perspective, especially my contention that the underlying “logic” beneath the propaganda, the sanctions and all the dead bodies are dwindling global energy supplies, look at how the once mighty oil giants are falling:
Are We On The Cusp Of The Oil Mega Mergers?
[..] … some senior City sources think falling fortunes could force the giants into each other’s arms in the next year or two. Their central argument for a fresh flurry of deal-making is a problem affecting the whole industry: a slump in profits. In January, Shell issued a shock quarterly profit warning and weeks later posted a 23% fall in annual earnings from $25.3bn the year before to £19.5bn in 2013. In April, BP followed suit, reporting a similar drop in profits for 2013 and the first quarter of 2014.
Their US rivals are similarly struggling. In May, Exxon Mobil, the titan of the world’s oil majors, reported falling profits for the fourth quarter in a row. ConocoPhilips also posted a dip. The industry is being hit by a perfect storm of headwinds: lower oil and gas prices which mean falling margins in their downstream businesses, which make petrol, diesel, and other finished products; as well as higher exploration expenses and dwindling reserves. Oil executives say their profits are pinched because, as many fields around the world age and produce less oil, they are forced to drill in deeper oceans and more remote places such as the Arctic to keep up with production.
The days of easy discoveries seem to be over and widening the search costs more money. There is certainly plenty of rationale for a further round of mega deals such as that led by Browne in the late Nineties. And there may be appetite from investors too. Some of Shell’s big shareholders are said to be frustrated by the company’s continued spending on expensive far-flung projects that fail to yield healthy returns.
Big Oil is done, toast. But its political clout will make that a very hard thing to absolve. So much so that it’s not at all hard to imagine Shell and BP and Exxon playing a role in the battle over Ukraine, which is part of a larger battle against Russia, and against its control over what today must look to the oil majors like very abundant resources, compared to what they themselves have left. I have no doubt they were among the major bidders for Naftogaz.
One thing’s for sure: we have entered a whole new chapter in global energy and power policy, and we’ve entered it for good.
