by Lev Igorevich
Dollars for borsch
There is a lot of speculation about the economic health of Russia in the light of tougher sanctions, falling oil prices and tumbling ruble. Concerns are raised whether Russia can afford it’s existence. However, those concerns are paper thin and are presented in more of a mocking spirit, because in most prediction acrobatics, actual revenues of Russian state are not considered at all. Many sources, in their predictions for Russian economy, are repeating the same mistake over and over again. Roughly speaking – assesments are made under the assumption that Russians pay dollars for their borsch. In reality, Russia sells borsch for dollars. This is important point to consider, because Russia pays it’s public sector expenditures (education, healthcare, pensions, police, army etc) in rubles!
As we all knew (those who didn’t got it stamped in the face this year thanks to the good will of liberal media), Russian revenues are based on natural resources. Sales are conducted in FX (except for special agreements, some of which are still pending). So let’s take a look how the purse of Russian state is being filled.
For the purpose of this article, rough numbers were taken from Nasdaq WTI chart for oil and XE USD/RUB chart for FX. Example will be based on average gas price for Germany in 2013, which was $366 (according to Bloomberg).
Oil Situation
As far as Russian Treasury is concerned, income from oil industry is just fine and is probably exceeding early 2014 estimates for next years budget. Even at tumbling oil prices, falling ruble is compensating more than enough – revenue rose roghly 12% year-over-year.
| Year | Month | WTI Crude $ | USD/RUB | RUB revenue |
|
2013
|
1Y AVG |
97
|
33
|
3201
|
|
2013
|
November |
94
|
33
|
3102
|
|
2014
|
February |
103
|
36
|
3708
|
|
2014
|
May |
103
|
35
|
3605
|
|
2014
|
August |
95
|
37
|
3515
|
|
2014
|
November |
75
|
46
|
3450
|
|
2014
|
December |
60
|
60
|
3600
|
| Crisis Average |
88
|
41
|
3 497
|
|
Let’s take a look at this years picture using the same ruble prices from the oil chart. It is easy to see that ruble revenue almost doubled by the end of the year and avaregad 31% more in year-over-year income.
| Year | Month | Gas3 $ | USD/RUB | RUB revenue |
|
2013
|
1Y AVG |
366
|
33
|
12078
|
|
2014
|
February |
366
|
35
|
12810
|
|
2014
|
May |
366
|
35
|
12810
|
|
2014
|
August |
366
|
37
|
13542
|
|
2014
|
November |
366
|
46
|
16836
|
|
2014
|
December |
366
|
60
|
21960
|
|
2014
|
1Y AVG |
366
|
43
|
15 592
|
Surprise, n***a!
On paper, Russia will have good fiscal numbers and a solid budget for 2015. This of course is just a cover image. Russia plans major investments for 2015 and onwards (with developments in the west, Russia needs “2020” to happen much quicker) and is most likely to tap it’s floating currency mechanisms for issuing more rubles for those investments. I doubt that Russia will waste FX by selling them for rubles right off the bat if they can print the money against fresh FX holdings. The “big throw” will be reserved for later as we all know what happens to countries that dump dollar overnight. Last thing Russia (and China, too) needs right now is another color/umbrella revolution being sped up. Equally importantly, one must not forget that Russian and Chinese financial systems combined hold trillions of US treasuries (it’s insane to hold cash as bank deposits are guaranteed up to $250K, treasuries have no limit against bankruptcy) which they wouldn’t want to depreceate before major swap and secure measueres are in place. So unless the west comes in with guns, don’t hold your breath for international ruble just yet. Instead, what Russia needs right now is a weak ruble that will force to dump imports and start thinking about substitution and better yet realizing Russias natural potential. The plan is to force Russians to think about long-term local business, not just quick-buck consumerism. Russia must give a crude awakening slap to the late and advantage to the early wakers amids decreasing foreign profits. Make the business to step up with own goods and technologies, initiate a cross-sectoral build up and stop companies syphoning money off-shore where it gets pocketed by western “asset managers”.
Fate’s irony or enjoy your bath
Ironically, weak ruble will also punish EU for doing dirty work for the US. Now it’s for everyone to see that US waves the stick while the EU pays the price. Weak ruble will decrease tourism from Russia and exports to Russia. EU’s agricultural sector is already sensing light, but increasing pain. Tech industry shall follow if Russia is to prolong the embargo and weak ruble combo. Yes, low ruble means less purchasing power abroad. Yet it also means competitive advantage for Russian goods in foreign markets and thus increased selling power – a signal for future development. Mercedes-Benz has announced that it plans to build several plants in Russia. Volvo, Renault-Nissan and others are already there. If this will materiaize – hello jobs for Russians and goodbye long awaited economic recovery for EU! Germany will be punished for it’s ambition to monopolize the distribution of Russian gas by attempting to take Ukraine into its fold through post-coup privatization (now just a crushed dream), while actually opening Pandora’s Box for US to exploit. Get ready for a triple whammy (must be some excellent German engineering)! Firstly – US took Ukraine over and kicked Germany over the fence with Merkel compliantly shutting up. Secondly, EU’s sales to Russia were decreasing and with tumbling ruble are guaranteed to decrease even more. South America, Turkey, India and China will be more than happy to fill the void. And thirdly, how’s prospect of Turkey becoming major regional gas hub for you? Saxon greed has met its borders within the mauling paws of the bear while oldest nations of the world are economically invited to watch the show.
Crackdown on Brokeback Mountain
During the 18.12.2014 press Q&A session, when asked if he has confidence in the elites surrounding him, Putin replied that the biggest confidence stems from the overwhelming support of the Russian people. That was after some quite dangerous fifth column definition gymnastics and attempts to break Putins confidence took place. Russia will use current economic situation not only to punish it’s western “partners”, but also will have the perfect excuse, once comfortable, to clean up its fifth column in the government and banking. While low ruble will add pressure to European economy and steep central bank rate will stop predatory ruble trading, Putin will have a card up his sleeve to unleash the “wrath of Russian people” onto the traitors in the establishment responsible for “susceptibility to western sanctions”, “unexpected currency dive” and “expensive financing”. Switching staff by popular demand will remove a lot of questions internally and give that extra legitimacy externally. “The Moor has done his work, the Moor may go” at its finest. However, lowering the funds rate at the central bank will probably not give any rise to ruble (because of foreign perception, not economic reality), but as previously laid out, that might be desireable all along – easier financing and boosted competitivness is what the business always needs.
Russia has conditions (natural resources, educated people, social safety networks) to develop at China’s comparable rates and become i) virtually unassailable by her enemies and ii) a major agent of global human progress.
Of course, Russia also has self-limiting factors, otherwise she would not be going through the current predicament.
To an external observer, the single most important self-limiting factor is the ignorance of Modern Monetary Theory displayed by Russian political decision making.
Developed economies do best in open markets, developing ones institute protectionism to nurse along their developing national economy. Putin’s references to a diversification of the Russian economy as essential to the nation’s existence, that the sanctions “stimulated” Russia to move in that direcction, that Russia has been “addicted” to the quick and easy profits from oil and gas which pushed diversification and development into the background.
Putin appears to be using the sanctions as a form of protectionism — a godsend since Russia doesn’t have to bear the opprobrium of being protectionist in an open market global economy, and any “distortions” of market economics, due to protectionist policies, can be blamed on the sanctioning nations.
I assume those called “Atlanticists” prefer Russia to continue as the “gas station” to the west, to reap quick and easy profit.
Wow. Extremely pessimistic article on the French Saker.
What a difference a week makes.
Very interesting decoding of the Russian game. Thank you for this insightful article!
I tend to agree with the above assertions.
While the short term consequences of ruble devaluation will be painful, the medium term and long term consequences will be extremely positive for the Russian economy by severely limiting imports (hello EU) and boosting domestic industry.
Here a national industrial policy will be needed for this opportunity to not go to waste. Foreign corporations should be welcomed (priority for our Chinese friends of course) but the growth of domestic firms should be the primary goal.
I also agree that the fifth column inside Russia must definitely be booted out of the corridors of power completely. This crisis creates the perfect condition for that to happen.
One important aspect of the equation that the article fails to tackle however is what happens with the FX liabilities of the big Russian corporations. Are those liabilities manageable with a low oil price throughout 2015?
Another thing. How can Russia force her capitalists to bring the money back from Western financial havens?
Capital flight is the bane of virtually all emerging markets and at the same time keeps the parasites in the west afloat.
I almost forgot.
China is clearly signaling that she is ready to help Russia whenever asked.
At least one pro-Beijing newspaper in Hong Kong has hinted at this a couple of days back. And today, Global Times (a mouthpiece of the ruling Chinese Communist Party) claims that the China should outline a clear strategy of how to aid Russia if so required and asked by the Russian government.
I don’t think that Russia will even need this help, but since the AZ empire is so ruthless, then it is more than precious to know that the Dragon has the Bear’s back covered.
I know that some do not trust the Chinese so much, but in my opinion this is as good news as we can get at this point in time. China and Russia will have to hang together, or they will hang separately. Simple as.
crouching sanctions: The issue not addressed is the remaining pay backs due in dollars to pay for outstanding foreign loans made previously. Evidently Russia has enough dollar reserves for this? If they have to pay them back in a devalued double then it automatically makes these loans more expensive and that is a drain. The run on the ruble ploy evidently fell flat with the Russian middle class spending on consumer goods and hunkering down after an initial run on the banks. By the way, The Russians need to expel the new American Mormon ambassador as soon as he tries the dirty tricks he has been known for and has been sent to do. He is not very smart and can be caught with his pants down easily enough–along with others.
http://mobile.bloomberg.com/news/2014-12-19/did-china-float-a-bailout-offer-for-crisis-hit-russia-.html
Even Bloomberg is reporting the latest Chinese gesture.
I have been lusting for a Russia – China Alliance for as long as I can remember.
I think this is the point where we have to thank Obola and his paedophile Euroland vassals.
very auspicious article …. thanks!
Thank you for this, Saker. I was glad to be reminded of Putin’s response in the press conference to questions about the ‘elite’. He said very forcefully that it is the ‘peasants’ who are the elite – by which he meant what this article is saying, that in contradiction to the fears that Russia is playing by western rules, the glaring contrast is that western ‘wealth’ is purely casino wealth, betting and trading, splicing and dicing to extract ‘peasant’ wealth in whatever way possible.
So, the rouble is soundly based, while ‘toxic assets’ in the west go the musical chairs rounds as mad music plays. That ‘wealth’ is only a pretense being buttressed by ‘power’ and the sooner both dissolve like the wicked witch of the west “I’m melting…” the better.
We might even stop the bombs from falling.
Now, that’s real wealth.
I do not fault countries for falling for western propaganda. The west traded on its ideals and principles of the past, which many citizens still believe in. In this they are closer by far to Putin than to Obama. The glitz and glamor is phony, but there are ‘peasant’ elite ideals deep down, much as has happened with many of the world’s religions. And those are what we must return to in this enlightening moment.j
Logically German companies will serve Russia from their factories in Asia or simply through Turkey. There is too much at stake. Russia should start developing tourism and advertise holidays in Crimea and cultural tours of St Petersburg and package holidays through RT programmes
I am Greek-Cypriot, but if I see many Russians visiting either Greece or Cyprus this coming summer I will be livid.
A total boycott of European Union countries should be stealthily implemented, or by Russian political parties, organizations etc.
Visit Crimea and other internal tourist destinations. At the maximum, visit friendly countries such as China, Egypt, Malaysia or Brazil. Maybe even turkey.
As a greek I agree with you. The new vacation destination for russians should be Crimea and Sochi
I loved every word of this article, it was a romp to read. The author has perfectly nailed the entirety of the situation, in my opinion. Thanks, Saker for publishing a piece that probably goes against some of your own convictions. But I hope you can take heart for Russia from this piece.
Also – Title Of The Year Award?
“Russia’s richest man Alisher Usmanov has transferred his holdings in mobile operator Megafon and iron ore producer Metalloinvest to Russian entities after President Vladimir Putin urged businessmen to bring their assets home.”
Vladimir Putin is trusted by the Russian people. The human mind is activated in times of chaos and suffering. People begin to have a psychological ‘feel’ for choosing and supporting leaders with conscience and competence. Compare Vladimir Putin to EU and USA and Japan political leaders…we in the Anglo-Zionist Empire have weak minds and lazy bodies from generations of exorbitant privilege as citizens of a rapacious empire. Vladimir Putin and Russia are winning the battle for the ‘hearts and minds’ of humanity.
Alishire Usmanov trusts the words of Vladimir Putin and the future of Russia enough to bring his money back into Russia. His money is safer invested in the future of a country which is emerging from collapse with a new vigor and vision. I wonder if many of the Russian diaspora will return home?
Lev Igorevich’s view is one of the clearest articulations of the reality of Russia’s economics and politics I have encountered. Thanks!
While I can understand the logic about a weak ruble creating an opportunity for domestic businesses to develop, the way the Russian Central Bank operates will stifle the growth. The RCB only provides short term finance 1-6 days mostly at the high interest rate. Its function is to provide cash flow not investment long term loans those come only via foreign banks at lower interest rates.
In South Africa we have gone through this same scenario with the SA Rand essentially loseing 94% of its dollar value since 1983 when I arrived. The weak Rand has benefited the mines that sell in US$ but pay ZAR wages and operating expenses, the imported inflation is what is causing the pain to the locals.
Also, the weak Rand hasn’t brought in the foreign companies as envisioned, but this is also partly due the poor management / operation of the power supply, and labour policies.
So having a weak currency won’t necessarily bring about the internal growth that is suggested without some other changes occurring first.
This is why Peter Koenig’s comment makes sense. The rouble is grossly under-valued. Russia can theoretically dump dollar, but it can only make a profit out of it when the market prices the real strenght of Russia and the real weakness of the USA.
Conventional wisdom says: the moment of truth will be the next crash of the New York stock exchange.
[from Blue]
This guy is good!
Yes, interest rate for domestic business is problematic, and there are problems which remain to be solved, but some of this is giving the oligarchs enough rope to hang themselves in the meantime the people being supported through government social spending.
Again, the manufacturing businesses in Europe are getting pinched (the other side of sanctions and currency war coin) by US attacks on Russia, and I expect they are getting darned tired of that, and the European politicians.
The thing about a few on flying carpets fighting a war with the many is when the carpets run out of fairy dust and fall to the ground the few don’t have much of a chance left of winning — that’s where the real fundamentals of the economies takes their bite.
It is much easier on the Russian people to fight an economic war, with less money, than being overrun with armies and bombs. In the end they have more infrastructure and productive capability, not less.
__Blue
Here’s a little concept I just came across that I hadn’t considered. In line with the call for patriotic Russians to repatriate their capital from offshore to onshore – the devalued Ruble makes a nice gift for those who are bringing it all back home, swapping Dollars and such for Mother’s own currency.
I don’t believe that Russia itself engineered the Ruble fall, although this is a theory now emerging out on the fringe. I think however that Russia’s technical appreciation of currencies is easily on a par with the best anywhere, and knows how to hit several birds with one stone.
Thank you Saker, for explaining this to us. After a restless few days, now I’ll have a more peaceful weekend’s rest.
:-)
http://www.cbr.ru/Eng/today/publications_reports/on_15-eng.pdf
This is a publication in English by the CBR “Guidelines for the Single State Monetary Policy 2015-2017”, written last month.
I imagine it’s in English cuz it’s required by IMF for transparency, but I don’t know that.
Dean, I agree w you. It looks as if the CBR is chasing the idea “Let’s reduce inflation.” This is exactly wha caused recession during the Maggie Thatcher/Ronald Reagan years. It’s a neo-liberal methodology. Investment so obviously requires liquidity. However, the CBR seems to be ruled out of the IMF, the same institution that claims that those to whom it lends can be made more vigorous by austerity.
It seems they have all swallowed the TINA pill. (There Is No Alternative) to neo-liberal economics. Michael Hudson and Ellen Brown are the best advocates of Modern Monetary Theory, which is an alternative.
Thanks for commenting on your experience. Regards.
If Russia can’t get credit from the West, perhaps Putin should charge European countries ADVANCE PAYMENT for their gas. Why should he give them credit? After the Mistral he especially can’t be sure of being paid by France.
Dear The Saker,
Just saw a clip on RT of the meeting with Putin and the top business men. Some looked a little uncomfortable to have their faces on t.v. It will be interesting to see who else brings back their money apart from Usmanov. As the saying goes keep friends close and enemies closer.
All Russians can now see them all too – the light is shining on them ;)……
Rgds,
Veritas
@ Stavros H.
“I know that some do not trust the Chinese so much, but in my opinion this is as good news as we can get at this point in time. China and Russia will have to hang together, or they will hang separately. Simple as. “
Perfectly true – at this point in time. And 10 years from now the world may be a changed place, quien sabe :-)
Russia Busts “Gold-Selling” Rumors, Reports It Bought Another 600,000 Ounces Taking Gold Holdings To New Record High.
“…Moments ago, as if to deter further speculation that Russia is indeed converting hard money earned from real resources for fiat paper, the Russian monetary authority made it quite clear, that at least in November, Russia not only did not sell any gold, but in fact bought another 600K ounces in the month of November.
RUSSIAN MONETARY GOLD HOLDINGS RISE VS 37.6M ON NOV. 1
RUSSIAN MONETARY GOLD HOLDINGS 38.2M TROY OZ AS OF DEC. 1
So we can now add another 600K to Russia’s most recent holdings…”
read more here
While RF doesn’t have currency controls there is a degree of currency regulation.
http://petersburgcity.com/business/bguide/currency/
NotSoFast, I want once again to deflate what I believe to be the myth that Russia is depriving the US of its gold holdings by buying them up. Russia is the 2d highest gold producer and it is therefore highly unlikely that she is buying gold from US stocks. Here are are facts:
In 2013 Russia produced 254 metric tons from all sources including mining. Her commercial banks bought 90% of this output. They resold 77.5 metric tons to the CBR and the rest to foreign banks. There are 32,150 troy ounces per metric ton, so the purchase of 6,000 metric tons tt you mention is in no way unusual. If this year is like others she is also selling gold, tho the CBR is a net buyer by retaining some of Russia’s production.
2012 was similar.
I believe that it is a fantasy that the US will run out of gold because it is doubtless buying it (as well as stealing it).
I hope that people can see from this what a stupid, unsubstantiated story it is that Russia is using her oil income to buy US gold. Money is fungible & the story circulating, with its idiotic premise that Putin set a trap for the US, and is spending his oil money only on US gold is a childish fantasy.
Greetings from France:
Falling oil prices (due to deflation and dumping by the Saudis) combined with ‘intend’ to stop QE in the US, makes the dollar expensive, it raises in value against all currencies. This will hit the emerging economies, mainly the corporations from emerging countries which have dollar debt. (Petrobras, Vale, etc). Their difficulty in re-paying US dollar debt, could also create panic sales of foreign investors in this companies.
It is not solely Russia, which is here targetted. It is the emerging countries (BRICS included).
On Russia:
A Rouble devaluation affects primarily Russian corporations which have US Dollar debt. The average Russian which earns Roubles and spents Roubles has only an indirect damage, for whatever products he buys which are imported, which he could avoid. The real damage to the average Russian is not devaluation but raising interest rates to 17%.
Rgds
Mario Medjeral
The logic of this article is based on the assumption that a weak rouble brings in more roubles for the economy because the RCB releases roubles equal to the dollar earnings. And since internal day to day transactions are carried out in doubles so there won’t be much of a problem. But this logic is impaired. Had the Russian state been truly independent they could have printed the roubles for internal use without having to have equivalent dollar earnings. So yes a weak rouble is a bandaid over the pestering sore. The sore remains.
Russia and Syria are currently blocking the construction of oil and gas pipelines from Saudi Arabia and Qatar to the coast of Syria. Thus far the subsequent engineered civil war in Syria using the ISIS and El Nasra proxies supported by the US and Israel have failed after they went off the reservation and ran their own agenda in Iraq. Subsequently, the US and its gulf allies has foolishly tried an economic shark attack on Russia via a drop in the price of oil (as was done in 1990) in alliance with Saudi Arabia and probably Qatar in hopes of forcing Russia to support these pipelines: http://www.boilingfrogspost.com/2014/10/24/the-secret-stupid-saudi-us-deal-on-syria/
The US administration has also failed to realize that Russian gas contracts with the EU and Turkey are priced long-term dollars, not rubles. Oil contracts are shorter but may be in dollars or rubles (I do not know the proportion). Fortunately, oil exports only comprise 8% of the Russian GDP which limits losses which can be covered by the Russian state reserves.
The drop in oil prices is, slowly destroying oil and gas companies in the US:
http://www.unz.com/mwhitney/will-falling-oil-prices-crash-the-markets/
and the UK:
http://www.zerohedge.com/news/2014-12-18/its-huge-crisis-uk-oil-industry-close-collapse-people-are-being-laid
More specifically, US oil and gas sector constitutes about 20% of the economy with most of the recent growth in the fracking ponzi scheme as was done in the early 1980s:
Déjà Vu All Over Again
http://thearchdruidreport.blogspot.com/
Hundreds of billions are being lost in the fracking game with much of the losses being transferred to the banking sector via derivatives: http://www.theautomaticearth.com/will-oil-kill-the-zombies/
and:
The bankers solution was to successfully get the US Congress to transfer some 303 trillion US$ in derivatives to the FDIC which could crash the US economy:
http://www.zerohedge.com/news/2014-12-12/presenting-303-trillion-derivatives-us-taxpayers-are-now-hook
In the meantime, the US dollar has been strengthening in relation to almost all other currencies due to the end of the QE program and the drop in oil prices that have selectively weakened oil exporting countries. Added to this is the potential for a worldwide depression due to a collapse of the dollar carry trade:
“Emerging markets must now brace for their ordeal by fire. They have collectively borrowed $5.7 trillion in US dollars split between $3.1 trillion in bank loans and $2.6 trillion in bonds”
http://www.theautomaticearth.com/the-biggest-economic-story-going-into-2015-is-not-oil/
Some of this dollar debt (50-100 billion) is held by Russian business interests who must repay in higher priced dollars. Thus the Russian economy will also suffer due to repaying foreign investment loans denominated in US dollars.
I would hope the US and its NATO allies take the economic hit without resorting to total war to prevent Russia and China from winning the present economic war http://www.unz.com/proberts/on-the-brink-of-war-and-economic-collapse/
There are numerous odd discrepancies in the text like
“Sales are conducted in FX”
An odd phrase but Russia (Muscovite oligarchy) exports its goodies in exchange for US dollars, not just some FX like Swiss francs or yen, were that the case Russia would not be so dependent on the Fourth Reich. I am not going into what Russia should or should do not, a pointless, even a stupid task.
Unfortunately, the USSR and the socialist countries came to an end with disastrous economic, geopolitical and social effects.
Because of the disappearance of Soviet socialism (which have its good and bad qualities) and because of the simultaneous systemic rise of economic globalisation we have witnessed many unfortunate things.
(1) the invasion and destruction of multiple countries (Serbia, Iraq, Afghanistan, Libya, Syria etc) in order to subjugate them and integrate them into the NWO.
(2) The fact that even the European countries have now completely lost their (Economic and political) sovereignty and EU has transformed into a dictatorship that exists in order to promote economic and cultural globalisation. EU states have become colonies and millions of europeans (especially in southern europe) are suffering from very high unemployment, crime and poverty.
25 years after the end of USSR, it is now possible that the end of the west globalised capitalistic world is coming. EU and USA is deep in shit and their implosion is imminent. There is no other solution to the eurozone crisis other than its destruction and that will have profound effects to the globalised system…
And Russia (despite its various problems and contradictions) is the last bastion of resistance and a hope for people around the world for resistance against the NWO. Thats why USA-EU- NATO have put pressure and sanctions against Russia and try to integrate Ukraine into NWO.
Maybe the process of globalisation will come to an end and there will be a new union-alliance of truly democratic sovereign countries that will try to regain their political and economic independence, revitalise social economic policies and preserve their traditions against the NWO.
Or not…
On that case, economic and cultural globalisation will prevail and we will all become corporate slaves and our various traditions, ethnic-national diversity and local culture will disappear from the face of earth.
“Russia and Syria are currently blocking the construction of oil and gas pipelines from Saudi Arabia and Qatar to the coast of Syria. “
So what?… so equally are Jordan and Israel and Egypt to the Mediterranean coast.
I dont know if I would believe Pravda on Russia placing nuclear missiles in Cuba. such an event I would be far more reliable and verifiable proof. I am not even sure Russia activated their old Cuban port on a permanent basis like in Syria or just a port of call to take on provisions which can be denied if the US asks Cuba if could let a container ship form the US going to pick up Cuban cigars dock there instead..
Bit for some other stuff, we have to go on logical conclusions without much evidence because they are far harder to find. But logically adding 2+2 we can reasonably conclude that the answer is close to 4… The people involved and the results all point to certain conclusions.. Even comments by Putin about a permanent lower Oil price..
How the CIA Launched the «Financial Pearl Harbor» Attacks on Russia and Venezuela
By pumping high-pressure salt water into older wells, some at a depth of three to six thousand feet, an inordinate amount of pressure was built up. The CIA’s oil industry implants knew what would occur when the fracking operations began. Due to the dangerously high water pressure, the Saudis were forced continuously pump oil until the pressure became equalized. That process is continuing. If the Saudis ceased pumping oil, they would permanently lose the wells to salt water contamination. In the current “pump it or lose it” situation, the Saudis are forced to pump at a rate that may take up to five years before they can slow down production rates to pre-glut levels.
The net result of the CIA-inspired fracking operations, which the Saudis were warned not to pursue by petroleum engineers working for some foreign-based firms like Schlumberger, is that there will be an oil supply glut for the next 5 years.
The CIA operation to frack Middle Eastern oil fields was not only limited to Saudi Arabia. Oil industry sources have revealed that similar fracking caused over production problems in Kuwait and Iraq.
The CIA is believed to have played a part in the crash of the Russian-made Sukhoi Superjet 100 in May 2012 in Indonesia. A Russian military intelligence spokesman said that U.S. industrial sabotage in downing the flight, which killed 45 Indonesian and Russian nationals, was considered a likely cause. The crash came after the head of the Russian space agency, Roskosmos, said he believed that it was possible that the failure of the Phobos-Grunt mission to the moons of Mars may have been caused by American sabotage.
Brennan’s and the CIA’s industrial sabotage of the Saudi industry will continue to have far-reaching effects on the world economy. Oil industry insiders fear that the CIA has unleashed something that may deal a devastating blow to the global economy from which it will be difficult to recover.
http://www.strategic-culture.org/news/2014/12/20/how-cia-launched-the-financial-pearl-harbor-attacks-russia-venezuela.html
@ AlienTech at 17:25 – I read that story, about the CIA-sponsored fracking in Saudi, and it seems pretty earth-shaking if true. No pun intended. I don’t know what I think of Wayne Madsen, I’ve read plenty by him this year and I don’t think I have anything against him. But I sure wish I could see more collateral for this.
Madsen is claiming that the CIA deliberately induced the Saudis to frack some older wells, and now they have a pressure buildup that will take several years to pump out, or they lose the wells permanently to salt-water contamination. Which means the Saudis CANNOT cut production – and thereby allow the oil price to rise – even if they want to.
That’s one very large claim, with a huge chunk of petro-politics riding on it. I’m not saying it’s wrong. I just hope more people will pick up on it or at least that we can see some evidence for this.
@Penelope
“NotSoFast, I want once again to deflate what I believe to be the myth that Russia is depriving the US of its gold holdings by buying them up. Russia is the 2d highest gold producer and it is therefore highly unlikely that she is buying gold from US stocks.”
I was never of the opinion that Russia wanted to use its oil/gas revenues to buy US gold – btw the corresponding numbers don’t add up. I’ve been posting this because SocGen was hinting that Russia was suffereing and had started selling its gold.