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Wall Street Journal 14-Aug-16
Leaving the EU raises questions about how easily U.K. will be able to fund the gap
The long-cherished goal of successive British governments to reduce the nation’s decadeslong habit of spending more than it earns may be coming within reach, but not necessarily in the way they would have liked.
The U.K.’s decision to leave the European Union could make it harder for the country to sustain its large and persistent current-account deficit, which means it brings in less from overseas trade, investment income and remittances each year than it shells out to foreigners.
Financing the shortfall requires the U.K. to borrow from abroad or sell U.K. assets to overseas buyers, a tendency Bank of England Gov. Mark Carney has said makes the U.K. dependent on “the kindness of strangers.” The question now facing the U.K. is whether foreigners will continue to be as willing to keep plugging the gap, particularly as the U.K.’s future access to the EU’s vast single market is unclear.
“If strangers were to become less kind, funding the deficit becomes harder,” said Rob Wood, chief U.K. economist at Bank of America Merrill Lynch.
How this current-account drama plays out will have repercussions for British households and businesses. Funding the deficit may require a weaker pound or higher interest rates to lure foreign investors, both of which could squeeze domestic spending and dampen demand for imports. A weaker pound may boost British earnings overseas, but would also stoke inflation. So British policy makers could get the smaller deficit they have yearned for—but at the cost of making Britons poorer.
The shock waves from the U.K.’s June 23 vote to exit the European Union rocked financial markets and triggered political upheaval, and have cast doubt on the economy’s future prospects.
That has focused attention on the nation’s yawning current-account deficit, a key gauge of an economy’s health.
The U.K. had a deficit in 2015 that was equivalent to 5.4% of annual national income, the widest among comparable advanced economies. The U.S. ran a current-account deficit last year of 2.6% of income. Germany, China and Japan have long run persistent surpluses.
The U.K. shortfall reflects patchy exports and declining earnings on Britain’s overseas assets. Healthy U.K. growth before the referendum further swelled the gap, by boosting foreigners’ earnings in the U.K. and increasing demand for imports.
The Bank of England has zeroed in on the current-account deficit as a potential vulnerability of the economy in the wake of the Brexit vote. Officials worry that if foreign financing dries up, it could destabilize the financial system and hurt the wider economy.
The signs so far have been mixed. The BOE has said inflows from abroad into U.K. equities, corporate bonds and especially real estate appeared to be slowing, while some foreign direct investment by companies—a critical source of funding for the current-account deficit—was being put off.
Yet the post-Brexit period has also been marked by a flurry of corporate deal-making, suggesting the U.K. still holds plenty of attractions for some foreign firms. MasterCard Inc. said it agreed to acquire most of London-based payment-technology company VocaLink Holdings Ltd. for about $920 million, while Japan’s SoftBank Group Corp. announced a $32 billion deal to acquire ARM Holdings PLC, a chip maker.
One factor helping such deals has been the weakening pound, which makes British assets cheaper to overseas buyers. Sterling has fallen 11% against the currencies of its biggest trading partners since the referendum, and by almost 12% against the dollar.
A flexible exchange rate is one reason economists think the U.K. should be able to avoid a severe crisis of the type that gripped parts of Asia in 1997, when a swift exodus of foreign capital caused financial havoc. The U.K., as a large, advanced economy, also tends to attract long-term, stable investment instead of flighty “hot money” seeking a quick return.
A major current-account crisis is “a risk that can be overstated,” said Simon Kirby, head of macroeconomic modeling and forecasting at the National Institute for Economic and Social Research, a nonpartisan London think tank.
But the deficit could still cause problems. Economists say a significant domestic cost arises from the falling pound, which may need to fall further still to keep bringing in foreign investment. A lower exchange rate drives up the cost of import prices and thus inflation, making consumers poorer. A slowdown in consumer spending, the engine of domestic growth, risks further weakening an economy already facing Brexit-induced uncertainty. The BOE cut its benchmark interest rate to a new low this month in response to a darkening economic outlook.
“As long as the economy keeps growing no one looks at the current account,” said Ilaria Maselli, senior economist for Europe at the Conference Board, a business-research group. “When there’s a problem, everyone gets worried.”
- ISIS Losing Oil Revenue
According to Iraqi news reports, ISIS has lost a significant amount of the oil revenue it used to count on. Before losing control of oil fields near the city of Tikrit, it is believed that ISIS used to bring in somewhere around $20 million in oil revenue a month. Nearly 80 ISIS oil tank trucks were also destroyed in U.S. airstrikes targeting ISIS’s oil smuggling network. The Syrian Army and Kurdish forces have also made some gains in capturing key points along important oil pipelines that had fallen under ISIS control. The current strategy to cut ISIS off from its oil revenue seems to be having some impact – at least in Iraq. In Libya, however, ISIS continues to expand and threaten oil resources there. At the end of 2014, ISIS reportedly controlled enough oil fields to produce as much as 75,000 barrels per day. Since then, the amount has been reduced, as has ISIS’s oil transport system, but how much is unclear.
- Will Oil Guarantee Kurdistan’s Future Independence?
The Kurdish people do not have an independent country, but there is much talk of that possibility arising out of the mess of the current regional destabilization. The successful future of any potential independent Kurdistan would depend, in large part, on its access to oil. In June 2014, just as ISIS seized control of Tikrit and nearby areas of Syria, the Kurdistan Regional Government (KRG) moved in to take control of key oil resources from the Iraqi government in northern Iraq (specifically the city of Kirkuk and its surrounding oil fields). Although Baghdad demanded the Kurds return the oil and the city to central Iraqi control, the Kurds refused, and continued to hold the city against encroaching ISIS forces. Recently, the Kurds seem to have gained the upper hand in this fight. Controlling these oil resources would provide a potential independent Kurdistan with a major oil industry. Reports indicate that the area the Kurds currently or may eventually control could potentially contain 50 billion barrels of proven oil, 80 billion barrels of unproven oil, and 8-10 trillion cubic tons of Natural Gas. When the future of post-ISIS Iraq is decided, the KRG will have a stronger hold on the region because of its own military presence and opportunity from the native oil resources. As it stands now, the Kurds have significantly increased the territory and resources they need for independence. If they maintain control, they may declare an independent Kurdistan in an oil rich country.
- Natural Gas Brings Egypt and Israel Together
Meanwhile, development of offshore natural gas resources is heating up in the Mediterranean, with Egypt and Israel cooperating to turn the area into a natural gas powerhouse. Egypt recently secured a significant investment from Italy’s ENI (MI:ENI) to increase production in its offshore Zohr natural gas field. Energy companies, after significant domestic legal delays in Israel, are finally pursuing development of Israel’s offshore Leviathan gas field. The nearby Tamar field has been producing since 2013, and new reports expect Tamar to produce over 1 billion cubic feet of natural gas a day when it reaches peak production in 2017. It should eventually also produce over 1,000 barrels of condensate a day. Leviathan will likely come online in 2019 and, at peak production, produce 2.1 billion cubic feet per day. Leviathan will significantly alter Israel’s precarious fuel situation by providing enough gas to cover Israeli electricity demand with a surplus to export natural gas to Egypt.
Israel and Egypt were even able to resurrect a stalled $10 billion deal between Egypt and Noble Energy (NYSE:NBL) (which owns a 40% stake in Leviathan). Egypt had threatened to cancel the deal when an international court ordered the country to pay a $1.73 billion fine to Israel for unilaterally cancelling its natural gas exports to Israel in 2012. In May, however, Israel conceded to accept half that amount in exchange for reviving Noble’s natural gas deal with Egypt.
- After Attempted Coup, Turkey and Russia Move Forward on Pipeline
Before Turkey shot down a Russian military plane near Syria in November 2015, the two countries had been deeply involved in negotiations to build a new gas pipeline (called the TurkStream) to provide Russian natural gas to Europe. This pipeline would run underneath the Black Sea and through Turkey before terminating in Ipsala, a town on Turkey’s border with Greece. The TurkStream is an important part of Russia’s strategy to keep its European customers from switching to other sources of natural gas. Since the failed coup attempt last month in Turkey, Erdogan has reached out to mend fences with Russia. The TurkStream pipeline is playing a major role in these talks. If the negotiations are successful, the pipeline could be completed as soon as 2019, further solidifying European dependence on Russian energy.
UK-EU:160814:(18-AUG-16):Hammond vows to cover the cost of lost EU grants: Chancellor pledges to help farmers, scientists and small businesses who will suffer after Brexit
The Daily Mail 14-Aug-16
Philip Hammond says he will guarantee that projects receiving EU money will be fully funded, even after Britain has quit
Thousands of farmers, scientists and small businesses will not lose out financially in the wake of Brexit, the Chancellor pledges today.
Philip Hammond says he will guarantee that projects receiving EU money will be fully funded, even after Britain has quit.
He also pledges that payments made to farmers under the controversial Common Agricultural Policy will continue until 2020.
And scientists, who have complained bitterly about Brexit, will have any bids they make to the European Commission for grants underwritten by the Treasury.
Key projects supporting economic development across the country could be given the green light, ending uncertainty over their future after the decision to leave the EU.
No date has been fixed for the UK’s departure, but International Trade Secretary Liam Fox has said he expects it to be in early 2019.
Mr Hammond says: ‘The UK will continue to have the all of the rights, obligations and benefits that membership brings, including receiving European funding, up until the point we leave the EU.
‘We recognise that many organisations across the UK which are in receipt of EU funding, or expect to start receiving funding, want reassurance about the flow of funding they will receive.
‘That’s why I am confirming that structural and investment funds projects signed before the Autumn Statement and Horizon research funding (from the EU) granted before we leave will be guaranteed by the Treasury after we leave.’
He adds: ‘The Government will also match the current level of agricultural funding until 2020, providing certainty to our agricultural community, who play a vital role in our country.
‘We are determined to ensure people have stability and certainty in the period leading up to our departure from the EU and that we use the opportunities that departure presents to determine our own priorities.’
His comments dispel some of the dire warnings delivered by Project Fear during the EU referendum campaign.
Former prime minister David Cameron, for example, said that if rural communities wanted certainty over their futures, they should vote Remain. He added: ‘I’m saying vote to stay in, keep the Common Agricultural Policy payments we get now, keep Europe’s markets open.’
Meanwhile, scientists, who get around £1billion a year for research from the EU, have repeatedly warned of post-Brexit doom and gloom.
Paul Boyle, vice-chancellor of Leicester University, called the referendum result a ‘dark day for UK science’.
Councils in regions such as the North East and Cornwall also voiced alarm about what would happen to EU structural funding paid to less prosperous parts of the UK. It helps to support small business, infrastructure, universities and broadband internet.
Before the June 23 decision, Vote Leave said money paid by the EU to farmers and others could readily be found from the £9billion Britain will no longer be paying into the EU as an annual membership fee.
Under the package unveiled today by the Treasury, all structural and investment fund projects signed before this year’s Autumn Statement will be fully funded, even when they continue beyond the UK’s departure from the EU.
Where British organisations bid directly to the European Commission for EU funding, for example universities participating in the Horizon 2020 science research project, the Treasury will underwrite the payments of such awards.
Simmering tensions between Russia and Ukraine have soared unexpectedly in recent days after Moscow accused Kiev of attempting armed incursions into the Crimea peninsula it annexed in 2014.
Ukraine has fiercely denied the allegations but the war of words between the two sides has sparked fears of a wider conflict as fighting drags on between Kiev and pro-Russian rebels in two other eastern regions bordering Russia.
While the details of the incident remain extremely murky and with both sides making claims and counter claims, here is an analysis of what the latest flare up could mean:
What do the sides say?
Russia’s security service on Wednesday said it had thwarted “terrorist attacks” in Crimea over the weekend by Ukrainian military intelligence and beaten back armed assaults.
The FSB said one of its officers died in a firefight while arresting infiltrators and a soldier was killed in further clashes.
An irate President Vladimir Putin accused Kiev of “practising terror” and pledged not to let the death of the servicemen go unpunished.
Ukraine’s President Petro Poroshenko dismissed the claims as “fantasies” aimed at providing a “pretext for the next military threats” and put his troops on high alert.
Russian TV has aired footage of explosives and alleged Ukrainian military intelligence Evgen Panov, whom Moscow says was captured and confessed to plotting attacks. Ukraine says Moscow kidnapped Panov and has even blamed drunk Russian soldiers for the incident.
Whatever the truth of the incident, analysts say, far more telling is how both sides have reacted.
What could Russia gain?
Putin’s furious reaction fuelled fears that Russia might use the incident as a pretext to start a broader war against Ukraine. Moscow has long been accused of harbouring desires to conquer a land bridge to Crimea through Ukrainian territory.
But analyst Alexander Baunov from the Moscow Carnegie Centre wrote that any attempt to start a broader conflict “contradicts the logic” of Moscow’s recent moves aimed at tamping down tensions with the West over Ukraine and convincing Europe to drop punishing economic sanctions.
Instead the Kremlin appears keen to gain leverage over Kiev in any further negotiations on a stalled peace deal for the conflict in the east. Putin said the incident made a mooted fresh round of peace talks next month “senseless” and blasted Kiev as an unreliable partner for the West.
“Russia is clearly using what happened in Crimea as an attempt to raise more sharply with the West the idea of the Ukrainian leadership’s intractability,” Baunov wrote in an analysis Friday.
The FSB said Ukraine was aiming to destabilise the situation on Crimea ahead of nationwide legislative elections next month.
That has also led to allegations from some that the Russian leadership could be looking to ratchet up patriotic fervour and distract from a bruising economic crisis.
What could Ukraine gain?
Ukraine understands it cannot wrest back control of Crimea from Russia through armed conflict. So any suggestion that this could be part of a broader push to recapture the territory seems highly unfeasible.
Russia has said Ukraine might be trying the disrupt the tourist season on the peninsula and Putin accused Kiev of attempting to deflect attention from domestic woes.
Ukrainian analyst Volodymyr Fesenko at Kiev’s Penta think-tank told AFP however that he did not see any “benefits for Ukraine” in raising the stakes so dramatically and tempting a full-scale conflict with Russia.
“In Ukraine for the first time in two years people have again begun speaking about a possible war,” he said.
But Baunov at the Carnegie Centre in Moscow said Kiev could try to drag the fate of Crimea back to the heart of the debate on the Ukraine crisis as Western focus centres solely on resolving the conflict in the eastern Donbass region.
“Russia has quite quickly managed to separate the issues of Donbass and Crimea,” Baunov wrote. “The moment when they can be linked back together could slip by forever.”
MAR-MSY-RU:160815:(18-AUG-16):Russia’s “Permanent Military Base” in Syria: Moscow just tipped the Balance of Power in the Mediterranean
The Duran 15-Aug-16 [Reproduced in Global Research, 16-Aug-16]
Though there has been remarkably little discussion of the subject in the Western media, Russia last week quietly acquired for the first time in its modern history a proper permanent base in the Mediterranean.
Following negotiations between the Syrian government and Russia an agreement dating to 2015 has now been ratified by Russia turning the Russian air base at Khmeimim in Syria into a permanent base. In other words Russia will retain the base at Khmeimim beyond the conclusion of the Syrian conflict, and its presence there has just been made permanent.
That the Syrian government has wanted to grant the base to Russia on a permanent basis has been known for some time. From the Syrian point of view the Russian base not only guarantees Russia’s support for the present Syrian government but also provides Syria with a measure of protection it has never had before from Israeli air incursions. These have been a continuous reality for decades with Syria lacking the capability to prevent them. The Russians do have that capability and the Syrians will be hoping that because of the presence of the base they will now use it to protect Syria from Israeli air incursions. As it happens reports suggest that the number of Israeli incursions of Syrian airspace have fallen off significantly since the Russian Aerospace Forces deployed to Syria last autumn, with the Israelis now careful to keep the Russians informed of their flights.
Whilst the Syrian government is known to have been keen to grant Russia a permanent base, the Russians have up to now been less sure. Establishing a permanent foreign base in Syria is for the Russians a major departure from their former policy given the Russian military’s overwhelming focus on defending Russian territory rather than projecting Russian military power far beyond Russia’s borders.
Some Russian military officials are also believed to have questioned the military utility of a Syrian base, pointing out that the eastern Mediterranean where the base is located is well within the range of Russian ballistic and cruise missiles. Importantly, judging from comments he made in December last year, one of the leading skeptics was none other than Putin himself:
“about the base, opinions differ, you know. Some people in Europe and the US repeatedly said that our interests would be respected, and that our [military] base can remain there if we want it to. But I do not know if we need a base there. A military base implies considerable infrastructure and investment.
After all, what we have there today is our planes and temporary modules, which serve as a cafeteria and dormitories. We can pack up in a matter of two days, get everything aboard Antei transport planes and go home. Maintaining a base is different.
Some believe, including in Russia, that we must have a base there. I am not so sure. Why? My European colleagues told me that I am probably nurturing such ideas. I asked why, and they said: so that you can control things there. Why would we want to control things there? This is a major question.
We showed that we in fact did not have any medium-range missiles. We destroyed them all, because all we had were ground-based medium-range missiles. The Americans have destroyed their Pershing ground-based medium-range missiles as well. However, they have kept their sea- and aircraft-based Tomahawks. We did not have such missiles, but now we do – a 1,500-kilometre-range Kalibr sea-based missile and aircraft-carried Kh-101 missile with a 4,500-kilometre range.
So why would we need a base there? Should we need to reach somebody, we can do so without a base.
It might make sense, I am not sure. We still need to give it some thought. Perhaps we might need some kind of temporary site, but taking root there and getting ourselves heavily involved does not make sense, I believe. We will give it some thought.”
These comments, whilst carefully leaving the option open, suggest a distinct lack of enthusiasm for the idea of a permanent base and an ongoing debate on the subject within the Russian leadership. Presumably it was these doubts and this debate that held up ratification of the base agreement for so long. It is clear that that debate has now been settled, with the agreement finally ratified and with the decision finally made to make Khmeimim into a permanent base.
It should be said clearly that this is a major shift. Tsarist Russia did operate naval bases in the Greek islands and in Piedmont in Italy in the nineteenth century, and the USSR negotiated naval and air facilities at various times with Albania, Yugoslavia, Syria and Egypt, which however all fell well short of being true permanent naval and air bases. The USSR did seek at the end of the Second World War Western agreement for a Russian base in Libya, but unsurprisingly this was refused.
All these previous projects proved ephemeral or stillborn, with whatever temporary arrangements the Russians negotiated with the various Mediterranean powers always reversed whenever these powers realigned towards the West, as they invariably did. The one exception was the Russian naval facility in the Syrian port of Tartus which dates back to 1971. Though it has attracted huge attention during the Syrian conflict, like all the other facilities the USSR acquired in the Mediterranean during the Cold War it is in no sense a base. As even the BBC has been obliged to admit, the facility at Tartus is at best a support and resupply station for Russian ships in the Mediterranean. It is too small to host Russian naval warships of frigate size and upwards, and has no facilities to host large numbers of Russian sailors or personnel such as a true base would need to do.
The military reality is that since 1943 it is the US Navy which together with its naval allies (primarily Britain and France) has been the overwhelmingly dominant military power in the Mediterranean. Since the Second World War the Mediterranean has been in military terms an American lake.
The base at Khmeimin however is different from anything that has existed before. Not only does it already host a formidable strike force of aircraft roughly equivalent to that of a US Navy carrier strike group, but it is heavily defended by formidable air defence assets including S400, BUK and Pantsir anti aircraft missiles, and contains a host of radar, electronic warfare and command facilities. It is also defended by a formidable force of Russian ground troops, said to be of battalion strength. Moreover there is talk the base is going to be significantly expanded to make it capable of hosting much heavier strike aircraft, possibly TU22M3s. Khmeimim also forms part of what is becoming a very powerful complex of Russian military bases and facilities in Syria, which obviously include the Tartus naval facility (which may also now be expanded) and a top secret Russian listening post which has long been rumoured to exist somewhere in Latakia province.
In aggregate this is a base complex of a sort the Russians have never had in the Mediterranean before, and one that has now been made permanent.
The Russian base in Syria cannot challenge the supremacy of the US Navy in the whole of the Mediterranean area. However it does have the potential to change drastically political and military perceptions in its eastern half. There is now the prospect of Russian fighters flying over the eastern Mediterranean in regular patrols, monitoring US warships and aircraft in the area, and making Russia’s presence felt in the area as it has never been felt before. It is one thing to know in the abstract that Russian ballistic and cruise missiles can reach this area. It is quite another actually to be able to see Russian military aircraft physically present there. The psychological and political impact on the countries that border the eastern Mediterranean (Greece, Turkey, Cyprus, Lebanon and Israel) and on the US Navy (in an area where it has long been accustomed to sailing unchallenged) cannot be overstated, and would be tremendous.
All this of course depends on the eventual outcome of the conflict in Syria. By establishing a permanent base there Russia has just raised the stakes, a fact that undoubtedly explains the intensity of the conflict.
Int. Chr. Emb. Jerusalem 16-Aug-16
The Russian Defense Ministry announced on Tuesday that it has deployed strategic bombers to an Iranian airfield for the purpose of carrying out strikes in Syria. The announcement came even as Russian officials have said the Kremlin is interested in working together with the West to move towards a resolution of the multi-faceted civil war in Syria. Also, on Monday, Russian warships began large-scale exercises off the Syrian coast.
Wall Street Journal 16-Aug-16
The Arab world has a problem of the mind, and its name is anti-Semitism.
An Israeli heavyweight judoka named Or Sasson defeated an Egyptian opponent named Islam El Shehaby Friday in a first-round match at the Rio Olympics. The Egyptian refused to shake his opponent’s extended hand, earning boos from the crowd. Mr. Sasson went on to win a bronze medal.
If you want the short answer for why the Arab world is sliding into the abyss, look no further than this little incident. It did itself in chiefly through its long-abiding and all-consuming hatred of Israel, and of Jews.
That’s not a point you will find in a long article about the Arab crackup by Scott Anderson in last weekend’s New York Times Magazine, where hatred of Israel is treated like sand in Arabia—a given of the landscape. Nor is it much mentioned in the wide literature about the legacy of colonialism in the Middle East, or the oil curse, governance gap, democracy deficit, youth bulge, sectarian divide, legitimacy crisis and every other explanation for Arab decline.
Yet the fact remains that over the past 70 years the Arab world got rid of its Jews, some 900,000 people, while holding on to its hatred of them. Over time the result proved fatal: a combination of lost human capital, ruinously expensive wars, misdirected ideological obsessions, and an intellectual life perverted by conspiracy theory and the perpetual search for scapegoats. The Arab world’s problems are a problem of the Arab mind, and the name for that problem is anti-Semitism.
As a historical phenomenon, this is not unique. In a 2005 essay in Commentary, historian Paul Johnson noted that wherever anti-Semitism took hold, social and political decline almost inevitably followed.
Spain expelled its Jews with the Alhambra Decree of 1492. The effect, Mr. Johnson noted, “was to deprive Spain (and its colonies) of a class already notable for the astute handling of finance.” In czarist Russia, anti-Semitic laws led to mass Jewish emigration as well as an “immense increase in administrative corruption produced by the system of restrictions.” Germany might well have won the race for an atomic bomb if Hitler hadn’t sent Albert Einstein, Leo Szilard, Enrico Fermi and Edward Teller into exile in the U.S.
These patterns were replicated in the Arab world. Contrary to myth, the cause was not the creation of the state of Israel. There were bloody anti-Jewish pogroms in Palestine in 1929, Iraq in 1941, and Lebanon in 1945. Nor is it accurate to blame Jerusalem for fueling anti-Semitism by refusing to trade land for peace. Among Egyptians, hatred of Israel barely abated after Menachem Begin relinquished the Sinai to Anwar Sadat. Among Palestinians, anti-Semitism became markedly worse during the years of the Oslo peace process.
In his essay, Mr. Johnson called anti-Semitism a “highly infectious” disease capable of becoming “endemic in certain localities and societies,” and “by no means confined to weak, feeble or commonplace intellects.” Anti-Semitism may be irrational, but its potency, he noted, lies in transforming a personal and instinctive irrationalism into a political and systematic one. For the Jew-hater, every crime has the same culprit and every problem has the same solution.
Anti-Semitism makes the world seem easy. In doing so, it condemns the anti-Semite to a permanent darkness.
Today there is no great university in the Arab world, no serious indigenous scientific base, a stunted literary culture. In 2015 the U.S. Patent Office reported 3,804 patents from Israel, as compared with 364 from Saudi Arabia, 56 from the United Arab Emirates, and 30 from Egypt. The mistreatment and expulsion of Jews has served as a template for the persecution and displacement of other religious minorities: Christians, Yazidis, the Baha’ i.
Hatred of Israel and Jews has also deprived the Arab world of both the resources and the example of its neighbor. Israel quietly supplies water to Jordan, helping to ease the burden of Syrian refugees, and quietly provides surveillance and reconnaissance capabilities to Egypt to fight ISIS in the Sinai. But this is largely unknown among Arabs, for whom the only permissible image of Israel is an Israeli soldier in riot gear, abusing a Palestinian.
Successful nations make a point of trying to learn from their neighbors. The Arab world has been taught over generations only to hate theirs.
This may be starting to change. In the past five years the Arab world has been forced to face up to its own failings in ways it cannot easily blame on Israel. The change can be seen in the budding rapprochement between Jerusalem and Cairo, Riyadh and Abu Dhabi, which might yet yield tactical and strategic advantages on both sides, particularly against common enemies such as ISIS and Iran.
That’s not enough. So long as an Arab athlete can’t pay his Israeli opposite the courtesy of a handshake, the disease of the Arab mind and the misfortunes of its world will continue. For Israel, this is a pity. For the Arabs, it’s a calamity. The hater always suffers more than the object of his hatred.
Royalties from gas and oil rose 12.8% in the first half of 2016, the Ministry of Energy reports.
The Ministry of National Infrastructures, Energy and Water Resources has reported a new NIS 411 million record in revenues from fees and royalties related to natural gas, oil and minerals in the first half of 2016.
The lion’s share of these revenues was due to natural gas and oil royalties, a total of NIS 394 million in the first half of 2016. NIS 392 million royalties were received for a 4.5 BCM natural gas output at the Tamar gas field. This constitutes an impressive 12.8% rise from the corresponding period last year.
The rest of the sum, NIS 2 million, was oil production royalties. A further NIS 2.6 million were revenues from various fees and activities.
In the field of minerals, royalties increased significantly due to a change in legislation made in late 2015 following the recommendations of the Sheshinski 2 Committee. In the first half of 2016, mineral royalties totaled NIS 13.8 million, a 105% jump from NIS 6.7 million last year.
The Ministry of National Infrastructures, Energy and Water Resources is expecting a further increase in royalty revenues in the coming years. The increase will follow from an expected rise in Tamar output, the development of the Leviathan gas field, as well as from the future development of fields already discovered, and further fields that might be discovered following the opening of the sea to exploration.
Minister of National Infrastructures, Energy and Water Resources Yuval Steinitz said, “The increase in natural gas royalties significantly bolsters Israel’s economy. Revenues are expected to rise even further in the next few years, among other things because of the development of the Leviathan field and the opening of the sea to further gas and oil exploration.”
RU-NATO:160816:(18-AUG-16):Russia sends NATO a message by conducting naval exercises in Mediterranean, near Syria
Ottawa Citizen 16-Aug-16
Ships from NATO nations, including Canada, have been conducting “in-your-face” naval exercises and operations in the Black Sea, in Russia’s backyard. NATO was sending a message to the Russians of its capabilities.
Now Russia’s navy is sending its own message. It has begun an exercise in the eastern Mediterranean Sea near the Syria coast. The exercise is aimed to respond to “crisis situations of a terrorist nature.” That is a dig at NATO since Russia has claimed that NATO is more interested in creating a new Cold War than to fight terrorists such as those operating in Iraq and Syria. The exercise will involve live fire, including with missiles. Two corvettes are involved in the exercise.
South Front 16-Aug-16 [Appeared in Global Research 17-Aug-16]
On August 15, commenting various proposals of “humanitarian ceasefires” in Aleppo city, Russia’s Foreign Minister Sergey Lavrov said that short-term truces had helped terrorists resupply munition and get reinforcements. “The main results of those pauses was an insignificant relief in the humanitarian situation, while terrorists added 7,000 people to their ranks, not to mention huge amounts of arms and munitions they received,” he said.
The very same day the Russian Navy started drills in the Mediterranean Sea and in the Caspian Sea that will last until August 20 and involve six vessels armed with the sophisticated “Kalibr” cruise missiles. Last week, the Russian Ministry of Defense requested has sent requests to the flight of cruise missiles on the territory of Iraq and Iran. Last year through these countries flying missiles launched at terrorist positions in Syria.
The Russian aircraft-carrying missile cruiser Admiral Kuznetsov, with about 15 Su-33 and MiG-29K/KUB fighter aircraft and more than a dozen of Ka-52K, Ka-27 military helicopters and Ka-31 airborne early warning & control rotorcraft aboard, is also expected to be deployed to the eastern Mediterranean to conduct air strikes on terrorist targets in Syria and ensure the air defense of the Russian military grouping located at the Khmeimim Air Base.
In its turn, the Khmeimim Air Base will be transformed into a full-fledged military base and a permanent contingent of the Russian Aerospace Forces will be deployed there. The existing air base structure and defenses will be expanded, creating opportunities for deployment of additional military helicopters and aircraft. New radio equipment, including air traffic control systems, will be also deployed to the base. Additional sites for the Pantsir-S2 surface-to-air missile and anti-aircraft artillery weapon systems will be arranged on the base and a special area, assigned for loading, unloading and servicing of the Antonov An-124 transport jets will be created.
All these developments came amid the start of Russia’s usage of the Iranian Hamedan Air Base to conduct air strikes on targets in Syria. On August 16, Russian Tu-22M conducted first air strikes from the base. On August 15, AlMasdarNews released photos of Russian Tu-22M3 strategic bombers allegedly deployed there. The Hamadan Air Base was already used by the Russian military on November 23, 2015 when a Russian Su-34 “Fullback” landed and remained there for at least two days, according to AllSource analysts. An Il-76 transport aircraft arrived on November 24 and they both departed the base.
The deployment of Russian Tu-22M bombers in Iran is a significant step that will change the military politic situation in Syria and in the whole Middle East, pushing Moscow and Tehran to deeper cooperation over crucial issues in the region. On the other hand, Iran is a state that evaluates its independence above anything else. This is why a long-term deployment of Russian aircraft in the Islamic republic will be in question.
In any case, the military political developments show that Moscow is not going to soften its anti-terrorist stance and will continue to increase military pressure on the Western-backed illegal armed formations in Syria.
Wall Street Journal 16-Aug-16
A plan for multiple large European energy companies to team up to build a second natural-gas pipeline from Russia to Germany has collapsed but the impact on the overall project was unclear, reports The Wall Street Journal.
An application with Poland’s competition authority to form a joint venture to build a pipeline called Nord Stream 2 was withdrawn in the face of opposition from Warsaw, where the deal was seen as giving Russia greater sway over Polish energy supplies.
That leaves Russia’s state-owned PAO Gazprom as the project’s sole operator, potentially robbing it of the political support that big European partners such as Royal Dutch Shell PLC and Germany’s Wintershall AG provided.
But in a joint statement, the consortium of Gazprom, Shell, Wintershall, French utility Engie SA, Austria’s OMV AG, and a unit of German utility E.ON SE said the decision wouldn’t affect the project, which has had strong backing from German Chancellor Angela Merkel.
The Times 17-Aug-16
Bearish sentiment has intensified as markets prepare for official UK economic datachristopher furlong/Getty Images
The pound dropped close to its lowest levels since the Brexit vote as markets braced themselves for hard evidence this week that the UK economy has been knocked off course by the decision to leave the European Union.
Sterling dropped half a per cent to $1.2874 against the dollar, dipping to its July 11 low and close to the $1.2798 it reached on July 6, which was the lowest since 1985.
The pound was also down by half a per cent against the euro at 87p for the first time in three years as currency speculators turned the most negative on sterling since records began.
Bearish sentiment intensified as markets prepared for a blizzard of official UK economic news on inflation, employment, retail sales and the health of the public finances, offering the first indication of the state of the economy since the referendum vote. Another sign of concern is that yields on ten-year gilts or government bonds are trading at record lows.
However, concern over the fall in sterling and the forthcoming data failed to hold back share prices from continuing their dramatic rally. The FTSE 100 rose for the eighth consecutive day yesterday to reach a 14-month high of 6,941.19 points, helped by a rally in oil prices and the prospect of further stimulus from the Bank of England. The FTSE 250, which focuses more on the UK, also closed at its highest since June last year.
The slump in sterling since the Brexit vote has been the most tangible symbol of concerns that the UK economy could suffer a painful reversal. It is down by 13 per cent so far this year, the worst performer among 32 leading currencies, making British exports more competitive but pushing up the price of imported goods and raw materials. It has fallen steadily since the Bank cut interest rates to 0.25 per cent two weeks ago and announced a package of emergency stimulus measures.
Figures from the Commodity Futures Trading Commission showed hedge funds being the most bearish on the pound versus the dollar since it started keeping records in 1992, prompting the SEB bank in Stockholm to warn that the pound could fall as low as $1.270.
Ana Thaker, market economist with PhillipCapital UK, said: “This week’s data is a crucial set as it is some of the first to cover the entire month of July and take into account the full effect of Brexit on the UK economy.” She said there was “significant downside risk” for sterling and that sentiment regarding the currency could decline. Inflation figures for July will be released today, and they could show the first signs of higher import costs feeding through into higher prices, while producer-price figures will give an insight into how the drop in the pound has increased the pressure on costs to companies.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “July’s consumer price figures likely will bring early evidence that sterling’s Brexit-driven depreciation already is pushing inflation.” He predicted that the consumer prices index inflation would rise from 0.5 per cent in June to 0.6 per cent last month and added that experience of currency depreciations suggested that it would not be the last time markets were surprised by the speed of the rise in inflation.
Tomorrow marks the release of UK unemployment and average earnings figures for June and claimant count figures for July.
So far, surveys have shown that the jobs market has been resilient since the Brexit vote but the Bank has forecast that unemployment will rise from 4.9 per cent to 5.5 per cent at the end of next year, which would have a serious impact on consumer spending, one of the bright spots of the economy in recent years.
Just how sensitive shoppers are to the uncertainties surrounding Brexit will be revealed on Thursday with the publication of July’s retail sales figures by the Office for National Statistics, with analysts expecting a rise of 0.5 per cent.
The week ends with the release on Friday of figures showing the health of the public finances in July, usually a strong month as the Treasury receives higher than normal income tax and corporation tax receipts. Analysts are predicting that public sector net borrowing will show a surplus of £1.9 billion, up from £1.2 billion a year earlier.
EU Council president Donald Tusk is meeting chancellor Angela Merkel at a castle retreat in Germany on Thursday (18 August) as part of preparations for the Brexit summit in Bratislava.
The evening dinner, at the Meseberg castle 65km north of Berlin, will take place without a media briefing and comes amid plans by the EU chairman to visit every EU capital over the next four weeks.
He has already scheduled meetings in Luxembourg, France, Ireland, Malta, Spain, Sweden and the UK as well as the three Baltic states.
At the heart of the discussions will be whether Europe should make another leap forward in integration in reaction to the Brexit vote, with further pooling of sovereignty on economic governance and immigration, or whether it should hand greater control to national capitals to avoid feeding euroscepticism.
Merkel and her party, along with several central European leaders, have indicated wariness on further integration.
But the Social Democratic Party in Germany’s ruling coalition, as well as France and Italy, are pulling in the other direction. Italy is planning to hold an informal summit with France and Germany on the island of Ventotene next week to set out its ideas.
The Bratislava meeting, in mid-September, will also discuss how to handle future relations with the UK.
Germany this week indicated it is willing to grant Britain what it called a “special status”, indicating closer relations and more beneficial terms than associated EU states such as Norway or Switzerland.
But Berlin, like central and eastern Europe, ruled out limitations to EU freedom of movement if the UK is to have access to the single market.
According to a report by British broadcaster ITV on Wednesday, citing British official sources, that would not be acceptable to London, which is angling for control over immigration and curbs on its future contributions to the EU budget.
Norway and Switzerland have to let in EU workers and pay into the EU coffers in return for market access but have no say over EU laws.
The ITV report added that the UK minister in charge of Brexit, David Davis, is considering UK-EU relations on the model of a draft Canada-EU free trade deal, with preferential access to certain sectors of the single market only, while retaining immigration control.
RU-EU-NATO:160818:(18-AUG-16):Russia’s secret plan to destroy EU and NATO: Putin funds covert anti-West op across Europe
The Express 18-Aug-16 [The West does exactly the same!! See p12 article for a different slant Don]
VLADIMIR Putin is seeking to bring about the destruction of the European Union and NATO through covert funding worth tens of millions of pounds for organisations across Europe that are spreading an anti-Western message, a study has found.
Anti-Russian sentiment is on the rise in Europe
The Kremlin is secretly manipulating European public opinion as well as government policy while fomenting social unrest to precipitate the fall of Western society in favour of Russian orthodox values.
Russian state-backed non-governmental organisations (NGOs) and think tanks backed by the Kremlin are operating a charm offensive across the EU with the aim of shifting European public opinion towards a positive view of Russian politics and policies.
The groups seek to legitimise a Russian crackdown on human rights and encourage understanding and support for Russian culture, language, history and conservative values while opposing democracy, the report entitled ‘The Bear in Sheep’s Clothing’ warns.
The Kremlin is using so-called ‘soft power’ to promote anti-democratic principles, including support for a powerful leader – namely Putin – alongside the narrative that the US is a common enemy for both Russia and Europe.
Putin has encouraged opposition to progressive values from within the EU, including to gay marriage, offering traditional Russian orthodox values as an alternative.
The notion of a strong leader in Moscow juxtaposed with “weak” Western politicians has added to a narrative of Russian strength versus European impotence.
The findings, in a report by the Wilfried Martens Centre for European Studies, finally shed light on Russia’s overt – and covert – operations deep inside the EU.
Russia’s annexation of Crimea in 2014 and the subsequent ratcheting up of tensions with Ukraine has focused the spotlight on Europe’s relations with the former Soviet power.
Anti-Russian sentiment is on the rise in Europe and positive views of Russia have even declined in countries that are traditionally supportive, such as Germany.
The paper reveals how Russia’s tentacles stretch from the upper echelons of the Kremlin, including foreign minister Sergey Lavrov, to every single one of the EU’s 28 member states.
This includes the UK, which hosts a number of Russian-state backed media organisations that the paper says are generating a “latent potential for unrest” and encouraging expat Russians to create “chaos in their home countries”.
In the paper, which was published in July but is being reported for the first time in Western media by Express.co.uk today, researchers argue that the overall aim of Putin’s government is to create a “pan-European partnership of independent nations based on the axis of Moscow, Paris and Berlin, to replace NATO and EU”.
Russia is ploughing money into various European organisations that are against the North Atlantic military alliance or a US military presence on the continent, including Ne základnám [No to the Bases], a movement against the US missile defence system in Czech Republic.
The paper identifies a funding stream of €55million (£47million) but warns that the true figure is likely be far higher as that sum only covers official, registered financial backing.
Money is also being channelled directly from the Kremlin to already-established European think tanks to influence national political and intellectual elites.
Putin has encouraged opposition inside the EU to progressive values
The researchers say Russia’s plan is “ideologically based on the alliance of Islam and Orthodoxy against Western Catholicism”.
Methods used by the Kremlin include encouraging anti-Americanism in France and supporting the Orthodox faith in the Balkans to emphasise the ties between eastern Europe and Russia.
Russkiy Mir Foundation and Rossotrudnichestvo are just two Russia-based organisations named as having branches inside the EU to promote the spread of Russian culture and political ideas.
They are operating alongside semi-official Russian think tanks and other organisations are financed in EU countries but working to promote a narrow set of Russian values that bolster Putin’s “authoritarian” leadership.
Estonia, Latvia and Lithuania are said to be most vulnerable to the Kremlin’s covert charm offensive.
Russian secret services control most NGOs in the Baltic countries, the report says.
The researchers traced the chain of command to high-level Russian political figures, such as Konstantin Kosachev, chair of the foreign affairs committee in the Federation Council, Russian Foreign Minister Sergey Lavrov and Vitaly Ignatenko, deputy chair of the Foreign Affairs Committee of the Federation Council.
The boards of the most influential pro-Russian think tanks are populated by Kremlin insiders, former ambassadors, senior Russian parliamentarians and business leaders.
The report states: “In light of Russia’s annexation of Crimea, Russian aggression in Eastern Ukraine and concerns over the militarisation of the country under President Vladimir Putin, the overt or covert support for GONGOs [government-organised non-governmental organisations], NGOs and think tanks in the EU must become a matter of concern to the EU.”
The Martens Centre, a think-tank tied to the centre-right European People’s Party (EPP) – the largest grouping in the European Parliament – says EU-based police and intelligence agencies should focus their attention on “underhand Russian activities”.
The report is also critical of the way the EU monitors NGOs working closely with European policymakers.
Loopholes in the way think tanks are vetted by the European Commission and European Parliament allow Russian bodies access to MEPs, while the information held by the register is provided by the organisations themselves and there are no sanctions for incorrect information.
RU-MED-MIN:160818:(18-AUG-16):Warplanes Deployed to Hmeymim Will Protect Russian Ships in the Mediterranean
Although Russia currently uses the Hmeymim airbase to fight radical groups that are trying to overthrow the Syrian government, this is not the real reason why Moscow needs a military base in the Middle East in the long term, defense analyst Sergei Ishchenko wrote for Svobodnaya Pressa.
Tackling international terrorism is a short term goal, the former Navy captain maintained.
“Moscow’s true and main goal is different. We need dozens of Russian attack planes and helicopters [in the Middle East] to provide air cover for our naval group in the Mediterranean,” he suggested. “We did not have these capabilities for more than five decades, but we desperately needed them.”
Winds of Change: Russia, US, Turkey Will ‘Join Forces’ to Resolve Syrian Crisis
The Soviet Union maintained its 5th Mediterranean Squadron that was established to counter the US Navy’s 6th Fleet from 1967 until 1992. Ishchenko described the flotilla that consisted of up to 50 warships and auxiliary vessels as a “force to be reckoned with.” The analyst added that the lack of air cover was the squadron’s only disadvantage.
“Fighter cover during the Soviet times was absent. We did not have aircraft carriers until the 1990s. The Kiev-class aircraft-carrying heavy cruisers were outfitted with several Yakovlev Yak-38 strike fighters, but these planes were not really suited for air combat,” he explained.
The Soviet Union reached an agreement to station warplanes in Egypt in 1967, but the arrangement lasted until 1972. In the last two decades Russia’s only aircraft carrier Admiral Kuznetsov was deployed to the Mediterranean four times: in 1995-1996, 2007-2008, 2011-2012 and 2014. These missions lasted for a maximum of four months.
This situation changed when Russia and Syria reached an agreement that allows Moscow to use the Hmeymim air base for an indefinite period of time free of charge.
“Russia has deployed up to four Sukhoi Su-30SM supermaneuverable fighter aircraft to Hmeymim. They have been tasked with providing air cover for bombers and strike planes taking part in the counterterrorism operation in Syria,” Ishchenko noted.
Russia, he added, apparently decided not to send more Su-30SMs to the region because there are no aerial adversaries that it needs to fight. If needed, additional deployment could be completed in approximately 24 hours.
Ishchenko maintained that there are grounds to assume that Russia is already using the Hmeymim base to protect its ships in the Mediterranean.
“For instance, the Tupolev Tu-142 maritime reconnaissance and anti-submarine warfare aircraft landed at Hmeymim in June. Clearly it did not land in Syria to fight against Islamists, but was busy performing its main task, searching for submarines of a potential adversary in the eastern Mediterranean,” the analyst explained.
Energean Oil & Gas will pay Israeli tycoon Yitzhak Tshuva’s Delek Group a reported $148 million for two gas fields • Agreement designed to meet requirements under revised natural gas framework.
The Greek energy company Energean Oil & Gas has agreed to buy the Delek Group’s drilling rights in the Karish and Tanin gas fields for a reported $148 million, pending the approval of Israeli regulators.
Energean has been involved in gas and oil drilling and exploration for the past 35 years. Although most of its operations are focused in the Aegean Sea, it recently bought Egyptian exploration rights as well.
According to the Delek Group, the deal is “still being finalized.” But Israel Hayom has learned that senior officials from Energean are expected to arrive in Israel soon to pen the agreement. Energean is expected to pay some $40 million up front and more than $108 million at a later stage, in several installations. As part of the deal, Delek will receive 9% in royalties from gas revenues associated with the two fields.
Italian-French company Edison and U.S.-based Coleridge Capital were also in talks to acquire the Delek Group’s stake in Tanin and Karish, but a deal never materialized.
The deal is part of the Delek Group’s effort to dilute its stake in Israel’s gas fields in accordance with Israel’s regulatory framework for the natural gas industry. The new regulatory framework, the brainchild of Energy Minister Yuval Steinitz, mandates that Delek Group owner Yitzhak Tshuva sell his conglomerate’s stake in Karish and Tanin, Israel’s two smallest gas fields.
Under the regulation, the Delek Group will have to sell its 15% share in the Tamar gas field, which began gas production in recent years. The Nobel Energy company will have to sell most of its 36% share in that field as well. In return, the state has agreed to give the two companies a bolstered status in Leviathan, the largest gas field off Israel’s coast. Before production can begin in Leviathan, the companies will have to develop the infrastructure in the area, at an estimated cost of about $ 1 billion.
Two independent sources told EurActiv.com that the US has started transferring nuclear weapons stationed in Turkey to Romania, against the background of worsening relations between Washington and Ankara.
According to one of the sources, the transfer has been very challenging in technical and political terms.
“It’s not easy to move 20+ nukes,” said the source, on conditions of anonymity.
According to a recent report by the Simson Center, since the Cold War, some 50 US tactical nuclear weapons have been stationed at Turkey’s Incirlik air base, approximately 100 kilometres from the Syrian border.
During the failed coup in Turkey in July, Incirlik’s power was cut, and the Turkish government prohibited US aircraft from flying in or out. Eventually, the base commander was arrested and implicated in the coup. Whether the US could have maintained control of the weapons in the event of a protracted civil conflict in Turkey is an unanswerable question, the report says.
Another source told EurActiv.com that the US-Turkey relations had deteriorated so much following the coup that Washington no longer trusted Ankara to host the weapons. The American weapons are being moved to the Deveselu air base in Romania, the source said.
Deveselu, near the city of Caracal, is the new home of the US missile shield, which has infuriated Russia.
Romania was an ally of the Soviet Union during the Cold War, but it never hosted nuclear weapons during that period. Stationing tactical US nuclear weapons close to Russia’s borders is likely to infuriate Russia and lead to an escalation. The stationing of Russian nuclear missiles in Cuba in 1962 was the closest the Cold War came to escalating into a full-scale nuclear war.
EurActiv has asked the US State Department, and the Turkish and the Romanian foreign ministries, to comment. American and Turkish officials both promised to answer. After several hours, the State Department said the issue should be referred to the Department of Defense. EurActiv will publish the DoD reaction as soon as it is received.
In the meantime, NATO sent EurActiv a diplomatically worded comment which implies that allies must make sure that US nuclear weapons deployed in Europe remain “safe”.
“On your question, please check the Communiqué of the NATO Warsaw Summit (published on 9 July 2016), paragraph 53: “NATO’s nuclear deterrence posture also relies, in part, on United States’ nuclear weapons forward-deployed in Europe and on capabilities and infrastructure provided by Allies concerned. These Allies will ensure that all components of NATO’s nuclear deterrent remain safe, secure, and effective,” a NATO spokesperson wrote to EurActiv.
The NATO summit took place a few days before the failed coup in Turkey. At that time, the risks for the US nukes in Incirlik were related to the proximity of the war in Syria and the multiple terrorist attacks that have taken place in Turkey in recent months. For some of the attacks, Ankara blamed Islamic State, and for others the PKK, the Kurdish military organisation that appears on the EU and US terrorist lists.
Strong denial by Romania
The Romanian foreign ministry strongly denied the information that the country has become home of US nukes. “In response to your request, Romanian MFA firmly dismisses the information you referred to,” a spokesperson wrote.
According to practice dating from the Cold War, leaked information regarding the presence of US nuclear weapons on European soil has never been officially confirmed. It is, however, public knowledge that Belgium, the Netherlands, Germany and Italy host US nuclear weapons.
After the failed putsch, relations between Washington and Ankara are at their worst since Turkey joined NATO in 1952. Ankara believes the US government supports the Turkish US-exiled cleric Fethullah Gülen, whom it accuses of having masterminded the failed coup. Turkey is demanding Gülen’s extradition, and the issue is expected to take center stage when US Vice President Joe Biden visits Turkey on 24 August.
Arthur H. Hughes, a retired US ambassador, wrote in EurActiv yesterday (17 August) that Gülen has indeed received considerable assistance from the CIA.
IS-MPA:160818:(18-AUG-16):Israeli Defense Minister Declares “Carrot and Stick” Policy vs. Palestinians
Media Line MidEast Daily News 18-Aug-16
Israeli Defense Minister Avigdor Lieberman declared on Wednesday that he will initiate a “carrot-and-stick” policy toward the Palestinians in response to the wave of street terror that began last October and has claimed more than 200 lives. Speaking to reporters at the army headquarters in Tel Aviv, Lieberman explained that he will institute new measures designed to increase communication and civility, but other measures will punish severely those who practice violence and the families that support such behavior. Lieberman intends to bypass officials of the Palestinian Authority and deal directly with the Palestinian population. On the positive side, the controversial minister plans to increase contact and cooperation between Palestinian citizens and Israeli officials, the easing of conditions for towns and villages that are not home to terrorists, and a new Israeli news website in Arabic. The initiative will begin with fifteen villages identified as being “clean” of terrorists – and labeled “green villages” — which will begin to receive the Lieberman-directed largesse. Plans include a multi-million dollar expenditure to build kindergartens, hospitals and sports facilities for the Palestinians in the West Bank. On the flip side, “red villages” – those deemed to support terror – will bear the brunt of a new, aggressive campaign that will include cancellation of work permits, confiscation of funding that supports terrorism, stepped-up army operations in what is designated “Area A” by the Oslo Accords [where the Palestinians are supposed to have full administrative and security control with no Israeli incursions], and the demolition of homes belonging to the families of those who carry out acts of violence against Israeli targets.
lowyinterpreter.org 16-Aug-16 [The Lowy Institute is an independent, nonpartisan international policy think tank located in Sydney, Australia. Ranked as Australia’s leading think tank, it provides high-quality research and distinctive perspectives on the international trends shaping Australia and the world. (From their Website). Of course there is a Romanov heir, who is supported by the Russian Church, that the writer seems oblivious of. Georgy Romanov (see Wikipedia Grand Duke George Mikhailovich of Russia) who would be of the Land of Magog (German – Prussian – price as father), and Russian princess as mother, so prince of Rosh, Meshech and Tubal! Don]
Part 1 16-Aug-16
When US Secretary of State John Kerry visited Moscow in March, looming over his meeting with Russian President Vladimir Putin in the Kremlin was a statue of Russian Emperor Alexander II (1855-81). Known as the ‘Tsar-Liberator’, Alexander freed the serfs, introduced trial by jury, relaxed press censorship and created elected regional assemblies that might, but for his assassination, have laid the foundation for bolder constitutional experiments.
But isn’t Alexander the wrong autocrat? Russia, we are told, is in the grip of Stalin-mania. Over the past 12 months, The New York Times, The New Statesman, The Independent and Foreign Policy have reported on an unspoken Kremlin policy to rehabilitate the Soviet tyrant.
Dubbed ‘re-Stalinisation’, its alleged aim is to return Russia to the fear and suspicion that characterised life until Stalin’s death in 1953 and to secure what are asserted as having ever been Putin’s twin goals: the consolidation of absolute personal power and restoration of the Soviet Union (or something like it) in Eastern Europe.
Appearing to support such dark tidings, a survey from the Levada Center (an independent polling organisation) earlier this year showed a significant rise during Putin’s presidency in the number of Russians who believe Stalin’s time in power ‘brought with it more good than bad’, from 26% in 1999 to 40% in 2016.
Also serving as evidence of a Kremlin-directed revival of the Stalin cult and, by extension, of Putin’s own Stalin-esque ambitions is a handful of recent provincial monuments raised in Stalin’s honour, mostly at the initiative of the opposition Russian Communist Party. Others fault the Kremlin’s failure to suppress the popular use of Stalin’s image during last year’s 70th anniversary celebrations of Soviet victory in the Second World War.
But does the evidence really support the phenomenon such commentators believe they see?
Not according to Mikhail Remizov, director of the National Strategy Institute.
‘It is absolutely not the case’, says Remizov, ‘that there’s any official programme for rehabilitating the Stalin cult from above. It’s a popular movement, driven from below, propelled by a sense of anger towards what is perceived to be a vast trahison des élites.’
Motivated by a desire to cut the country’s oligarchs down to size, popular nostalgia for Stalin offers an implicit challenge to what has from the start been a central element of Putin’s legitimacy: his claim to have ‘tamed the oligarchs’.
Despite his public image, says Remizov, Putin isn’t a Vozhd (‘Leader’, a popular name for Stalin) before whom Russia’s ruling elite trembles; he’s an (imperfect) moderator of their squabbles.
‘Putin isn’t even a Stalinist in the good sense’, says Remizov, with irony. ‘He can’t fully discipline his own system. To defeat the Stalinist myth, you need to solve the problems Stalin solved with violence with non-violent means. And the present system cannot yet do that.’
Official treatment of Stalin reflects the result of this impasse, neither to suppress nor promote popular support for his legacy.
But if the Kremlin isn’t trying to revive Stalinism, what is going on?
Absent from Western reports of ‘re-Stalinization’ is the evidence for a much wider shift in Russians’ views on their country’s history. Particularly striking has been the rehabilitation of the pre-revolutionary regime. The same survey that showed an increase in favourable perceptions of Stalin also revealed that since 1999 the number of Russians believing the reign of Nicholas II (1894-1917), Russia’s last tsar, ‘brought more good than bad’ had risen from 18% to 30%. Also, the number believing the 1917 Revolution to have been a good thing fell from 27% in 1999 to 19% in 2016, while those believing it to have been for the worse rose from 38% to 48%.
The shift is reflected in Russian public space. With communism having withered, the contours of an older Russia have re-emerged.
On the banks of the Moscow River, in the gardens of the restored Cathedral of Christ the Saviour (consecrated in 1883 as a monument to Imperial Russia’s 1812-14 victory over Napoleon but demolished by Stalin in 1931), a six-metre bronze statue of the ‘Tsar-Liberator’ Alexander II enclosed by a half-circle marble colonnade of Doric columns was unveiled in 2005.
Unthinkable 25 years before, in 2013 an obelisk originally erected in 1914 outside the Kremlin walls was cleansed of its Soviet-era transformation into a monument to the workers’ struggle, and rededicated to its original commemoration of the Romanov tercentenary (1613-1913), Imperial Russia’s last great national celebration.
By the time of the dynasty’s 400th anniversary celebrations, monuments to Russia’s last tsar, Nicholas II (1894-1917), and his pious father Alexander III (1881-94, formerly reviled as executioner of Lenin’s brother, a revolutionary) had appeared from Russia’s Baltic to Pacific coasts.
Part 2 17-Aug-16
If there’s a Russian leader whose reputation has been unequivocally rehabilitated during the Putin era, it’s Nicholas II. Known during communist days as ‘the Bloody’, Nicholas is now more commonly known to Russians as the ‘Tsar-Martyr’.
Since Nicholas and his family were sainted by the Russian Orthodox Church in Russia in 2000, churches, chapels and shrines dedicated to the so-called ‘Holy Imperial Martyrs’ have appeared across Russia.
In conformity with Orthodox practice, icons (devotional images) of these sainted Romanovs are for sale in a variety of poses, from mass-produced laminated cards to lavish diptychs housed in soft red velvet cases. Their former palaces and places of exile and execution have become pilgrimage destinations. A hundred years next year since the 1917 revolution, public memory has turned full circle. Where Russians were once encouraged to repudiate the Romanovs as ‘oppressors of the people’, today they’re encouraged, quite literally, to worship them.
Inside Moscow’s Christ the Saviour Cathedral, an icon of the ‘Imperial Passion-bearers’ romanticises life at Russia’s pre-revolutionary court: Nicholas II and his son, Alexei, wear military uniform; the Empress and her daughters elegant dresses.
On the other side of the nave, the magnificent icon of the ‘Assembly of the New Russian Martyrs and Confessors’ depicts Nicholas, Alexandra and their five children at the centre of a mass of bishops, priests, monks and nuns martyred by the Communist government between 1918 and 1941.
To the family’s left stands another sainted Romanov, the Grand Duchess Elizabeth, who, after being widowed by Socialist Revolutionaries in 1905, founded a home for poor women and children on Moscow’s south bank. She too was executed by the Bolsheviks in 1918.
Along with those of a dozen other bishops and monks, their deaths are depicted, almost cartoon-like, in a cycle of smaller images that form a border around the edge: Bolshevik soldiers gun the Tsar and his family to death, while others cast Elizabeth down a mineshaft (earlier this year the State Historical Museum on Red Square staged a four-month special exhibition on Elizabeth’s life, a joint project between the Moscow Patriarchate and Ministry of Culture; the home she founded has now re-opened, embellished with a sculpture of the Grand Duchess).
Then there are the books.
Parish churches offer a range of devotional literature: The Childhood of Nicholas II; ‘Give Them Love’ – The Words of Empress Alexandra; The Imperial Children; The Charitable Causes of the Romanov Family. For sale in Moscow and St Petersburg bookshops are titles of a more overtly political nature: The Emperor Who Knew His Fate and Russia, Which Didn’t; Emperor Nicholas II and the Plot of 1917; ‘Surrounded by Treachery, Cowardice and Deceit’ – The real story of the abdication of Nicholas II; ‘Lord, Bless My Decisions’ – Nicholas II as Commander-in-Chief and the Generals’ Plot, et cetera, et cetera.
But does such idealised veneration reach as far as the Kremlin?
On a sunny afternoon in Moscow I meet a well-connected former editor of a Moscow daily.
‘Putin doesn’t want to be seen as merely continuing the USSR’, he says. ‘The Soviet Union failed and for him that indicates that there was something wrong with it.’
Putin, he says, ‘isn’t interested in being remembered as some kind of Communist Party general secretary. He thinks of himself as a Russian De Gaulle or a Franco’, head of a self-consciously ‘transitional regime’ aimed at restoring a semi-traditional political and social order.
That may even include the monarchy.
‘The return of the Romanovs would be part of his historical role, a way of knitting the country’s history together again, of declaring that at last the revolution is over.’
He claims he was once present when Vladimir Zhirinovsky, the firebrand nationalist that heads Russia’s Liberal National Democratic Party, compared Putin to Franco in Putin’s presence. The Russian president didn’t object.
‘The problem is with the dynasty.’
With all of Nicholas’s children perishing with him in a hail of Bolshevik bullets in 1918, no legitimate successor is acknowledged; the various Romanov contenders are ferociously divided (both leading claimants have recently visited Crimea to support Russian claims to the peninsula and, cynics will argue, their own to a future throne).
‘What’s needed’, he says, ‘is a new zemsky sobor’, referring to the 16th and 17th century assemblies that advised the Tsar on subjects of pressing national importance and which most famously, in 1613, elected the first Romanov tsar.
Part 3 18-Aug-16
Could Putin really be planning a restoration of the Romanovs?
Of Putin’s three ‘favourite’ philosophers (Vladimir Solovyov, Nikolai Berdyaev and Ivan Ilyin) it’s Ilyin who is thought to have exercised the greatest influence over Putin’s understanding of Russia’s political and spiritual history.
In his best-known work, Our Tasks, Ilyin depicts all of Russia’s 20th century woes (its descent into tyranny, its economic collapse, its cultural and spiritual ruin) as flowing flow from the Tsar’s abdication. Seeing the essence of what he calls Russia’s ‘national legal self-awareness’ to rest on ‘two foundations, Orthodoxy and faith in the Tsar’, Ilyin asks why that self-awareness failed in 1917 and what can be done to repair it.
‘The obligation rests upon us’, he writes, ‘on this generation of Russian people who have suffered this revolution with sorrow and torment, to ask ourselves wherein the essence of healthy, strong and deep monarchical legal consciousness consists and how to replant it in Russia.’
Certainly, Putin’s views have moved in step with Russians’ changing perceptions of the 1917 revolution. When in January of this year he reproached Lenin for errors of moral and political judgement during and after the Revolution, he provoked rage among Russia’s remaining Communists.
‘Everyone accused the tsarist regime of repressions’, he said. ‘But what did Soviet power begin with? Mass repressions.’
Of these, he said, ‘the execution of the Tsar’s family together with his children’ was the ‘most outstanding example’ (one wonders whether he had the icon of the ‘New Russian Martyrs’ in mind).
Certainly, Putin has come to see it as part of his legacy as president to ‘restore the links of time, the unbrokenness of [Russia’s] history’, as he put it when in August 2014, he dedicated Russia’s first memorial to the dead of the First World War, written off in Soviet times as an inglorious imperialist venture.
But when it comes to Russia’s public memory, the Kremlin shares power with the Russian Orthodox Church, a critical voice in any future zemsky sobor. Indeed, it was the Patriarchate that last year frustrated the government’s plan to rebury the remains of two of the Romanov children alongside those of their parents in the Imperial mausoleum, lest it stir undue controversy among the many Russians still nostalgic for Soviet days.
Vakhtang Kipshidze, a Patriarchate spokesman, cautioned against any perception that the Church was looking for a restoration.
A ‘political struggle’, he said, was ‘not on the Church’s agenda’. The goal instead was spiritual, what Patriarch Kirill in a 2015 address to the Duma called ‘historical reconciliation’.
Central to this project have been the three ‘My History, Orthodox Rus’ national historical exhibitions staged annually in Moscow’s Manezh Exhibition Center under the joint aegis of the Patriarchate and Ministry of Culture since 2013, when the first opened in honour of the Romanovs’ 400th anniversary.
Each attracted around half a million visitors in Moscow before touring the country. They’re now permanently if incongruously housed in a brand-new building in the dated, Soviet-era surrounds of Moscow’s All-Russia Exhibition Park. A portrait of Alexander III flanks the entrance.
In the spirit of the times, advertisements in the Moscow metro bear the famous riposte of Peter Stolypin (Nicholas II’s liberal conservative prime minister and a known Putin ‘hero’) to anti-tsarist deputies in the Duma: ‘You, gentlemen, are in need of great upheavals; we are in need of a Great Russia.’
To be sure, this is an essentially conservative project. But 21st century Russia resembles more the conservative, but ultimately limited, authoritarianism of the last Romanovs than the industrialised totalitarianism of the Soviet Union (with its goal of worldwide Marxist-Leninist revolution). Like the tsars, Russia’s ruling caste today seeks to control a programme of modernisation based on the selective imitation of the West. Though the government is hostile to competitors for political power, the Soviet-era ambition of absolute control over Russians’ thought and economic lives is foreign to it.
What might all this mean for Western policy?
Talk of a ‘New Cold War’ has made it commonplace to cast Putin’s Russia as a neo-Soviet power in deluded search of vanished global superpower status, an aspiring and implacably anti-Western hegemon in Europe, and an imminent threat to Western democracy. It has fuelled calls for NATO to embrace a policy of ‘Containment 2.0’ (as the Alliance effectively did at its recent Warsaw summit).
But rethinking the sources of Russian behaviour possibly changes this picture.
Between 1613 and 1917 the Romanovs transformed a remote and backward principality on Europe’s periphery into a leading power not in opposition to, but within the European state system. There’s a good argument that what Moscow wants today is not a return to the superpower confrontation of 1947 to 1989, but a version of the ‘European concert’ of 1815 to 1914.
Thus, unveiling in 2014 [20-Nov-14 DFP] a bronze statue of Emperor Alexander I (1801-25) in the shadow of the Kremlin wall (pictured above), Putin hailed the tsar who defeated Napoleon as a ‘farsighted strategist and diplomat, a statesman’ who created ‘the conditions for a so-called balance, built not only on a consideration of countries’ mutual interests, but also of moral values.’
We needn’t take this at face value. Alexander was inspired more by a vision of Christian universalism than realism. But as a statement of present-day Russia’s aims, it’s consistent enough. In the face of NATO expansion, re-establishing such a balance has been a theme in Russian foreign policy for well over a decade.
Finally, there’s the question of the succession – to Putin. His present term ends in 2018, the centenary of Nicholas II’s murder. Nobody knows for sure whether he’ll run for president again (he has left open the possibility that he might not).
But absent a single legitimate heir, Russian monarchists are remarkably fond of observing that, should it ever come to a zemsky sobor, nobody says Russia’s next tsar must be a Romanov.
For Greek E&P company Energean, the $148.5mn acquisition of Karish and Tanin from Delek Group, is a big bet and a strategic turning point.
Energean is a small upstream company with operator’s capabilities and no ambitions to become a global player in the energy sector. Its efforts are concentrated in Greece, the Balkans, Egypt and now in Israel’s Karish and Tanin gas fields, the biggest undertaking in its history. Energean will be allowed to sell its Israeli output only in the Israeli market.The two fields together hold 60 bn m³ which are valued at about $10bn at a price of $5.00/mn Btu.
Energean’s point man and representative in Tel Aviv is Shaul Zemach, formerly the general manager of the energy ministry and famous for heading the Zemach Committee, which set gas export quotas.
With the acquisition of Karish and Tanin, Energean has undertaken its biggest ever challenge: a development of deep water natural gas resources. Energean has never carried out such a technically complicated and challenging project. However, as in any project of this kind the quality of the project is dependent also on the contractors’ capabilities and experience. So Energean will have to choose experienced and trusted contractors.
Energean’s sphere of operations (Credit: Energean)
Not less of a challenge for Energean will be the operations to raise estimated $800-$900mn in investment needed to develop Karish and Tanin. As it is a private company, it will have to rely mainly on banks loans and institutional investors in order to raise the money or to hope that its deep pocketed shareholder would come to the rescue. Entry of a new partner would also be favourably accepted. Energean will have to submit a development program to the energy ministry within six months of the transaction’s closure.
It is expected that apart from drilling the wells and connecting them to the treatment platform, Energean will have to build its own infrastructure, a platform for gas treatment and a pipeline to connect it to the shore. However, the situation is still complicated and fluid, since the Israeli energy ministry has yet to decide upon the incentives that were promised to the small reservoirs’ operators and also to set regulations. Energean expects to bring its gas fields online in 2019 on 2020.
Where are the offtakers?
In order to be competitive in the Israeli market Energean will have to offer its gas at a price level of about $4.50/mn Btu. The average gas price is $5.15/mn Btu. However at least 90% of the market is contracted to Tamar Partnership under long term agreements until 2027.
The two new players, Leviathan and Karish-Tanin will struggle to find customers for their gas in the domestic markets. A sharp rise in demand is not forecasted for the next few years and any price Energean would offer, Leviathan, or even Tamar, could undercut because of their scales of operations. So Energean’s success is very much dependent on the regulatory framework when the effective monopoly ends.
In the next few weeks the Israeli energy ministry will examine the deal. It already issued a pre-ruling stating that Energean is suitable to be an operator. And in 45 days, when the deal is approved and sealed and the first $40mn will change hands, the countdown will start.
PolicyWatch 2675, 17-Aug-16
When Moscow confirmed that Russian planes were using the Nojeh base as a staging area to conduct bombing missions against five rebel targets in Syria, it provided some notable details. The announcement was accompanied by video and photographs showing at least four Tupolev Tu-22M3 Backfire-C long-range bombers and one Sukhoi Su-34 strike aircraft, along with a transport plane carrying ground personnel and equipment.
Soon after Moscow’s announcement, Iranian Majlis speaker Ali Larijani denied any reports that his country was handing Russia a permanent military base at Nojeh, citing Article 146 of the constitution. In light of such swift denials, it is unlikely that Russia will be establishing any permanent presence in Nojeh. Yet it could dramatically increase its use of Iranian routes and services for staging and recovery sorties on the way to and from Syria.
In terms of military impact, the decision to stage Russian bombers from western Iran is unprecedented because it allows Moscow to significantly increase the pace and scope of its carpet bombing missions over Syrian flashpoints if it so chooses, in line with its recently escalated bombing campaign over much of the country. To be sure, Russian aircraft continue to carry minimal loads of dumb bombs in an apparent effort to keep the costs of the intervention down, so even if they use Hamedan on an ongoing basis, they may not necessarily carry heavier loads. Yet the symbolic and political weight of the move is important in of itself, regardless of military factors.
According to Flight International’s world air forces database, Russia currently operates up to 70 Tu-22Ms, of which 6 are modernized M3 variants, as well as around 60 operational Su-34s. The Tu-22M3 is one of the more versatile long-range bombers in the Russian arsenal, capable of hauling 9 to 12 tons of bombs up to 2,400 km (1,500 mi), or 24 tons at shorter ranges. The use of Nojeh as a forward staging base means bombers flying to Aleppo will travel about 1,000 km less than when going directly from Mozdok Air Base in North Ossetia, where most of the recent raids have originated. This allows for heavier payloads, more flexibility by allowing for some loitering time over targets, and more rapid response to tasking emergencies.
Every Tu-22M3 bomber carries four crewmembers and can take on 118,000 lbs (53,000 kg) of fuel. Nojeh’s location becomes even more important when one considers that these bombers had their inflight refueling equipment removed in the early 1980s to conform to the START disarmament agreements, so they cannot use tankers to fill up in mid-air. The smaller but equally capable Sukhoi Su-34 is Russia’s new heavy strike fighter, capable of carrying about eight tons of bombs. Yet its combat radius is around 1,000 kilometers, so it needs either aerial refueling or ground refueling at a forward base like Nojeh to conduct effective strike missions over Syria.
Closest to the air corridor between Tehran and Damascus, Nojeh is considered Iran’s main combat air base, home to four squadrons of aging F-4 Phantoms. This “strategic air base” was designed and completed by the United States in the 1960s, when Iran and Washington were allies, as part of a grant aid program to counter the perceived threats of Soviet invasion across the Zagros mountain passes and Iraqi aggression from the west. During the Iran-Iraq War, it was the main hub for conducting deep strike missions inside Iraq as far away as the H-3 air base near the Jordanian border.
The base has now come full circle, with Russian bombers using its long three-mile runways and spacious ramps to launch and recover raids in Syria. While the runway length at Russia’s main air facility in the Syria campaign, Hmeimim base in Latakia, can support Tu-22M3 takeoffs and landings, its very limited ramp space makes sustained bomber operations unfeasible. Yet it should be pointed out that if Russia tries to improve Nojeh in a manner that makes it better suited to Tu-22M3 operations, this would probably be seen as a violation of UN Security Council Resolution 2231.
Whatever the case, even if Russian bombers only stop by Nojeh for a few hours to refuel as suggested by some Iranian officials, such activity points to the start of a cozier and more confident strategic relationship between the two countries. Iran has once again reiterated its intention to strengthen ties with players such as Russia and China, while Moscow seems to be sending Washington an overt message that it is in the Middle East to stay.
Farzin Nadimi is a Washington-based analyst specializing in the security and defense affairs of Iran and the Persian Gulf region.
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