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Why the EU Can’t Isolate Russia

German Chancellor Angela Merkel could teach US President Barack Obama one or two things about how to establish a dialogue with Russian President Vladimir Putin.

As if Obama would listen. He’d rather boost his constitutional law professor self, and pompously lecture an elite eurocrat audience in the glittering Palais des Beaux-Arts in Brussels, like he did this Wednesday, on how Putin is the greatest threat to the US-administered global order since World War II. Well, it didn’t go that well; most eurocrats were busy taking selfies or twittering.

Putin, meanwhile, met with the CEO of German engineering and electrical conglomerate Siemens, Joe Kaeser, at his official residence outside Moscow. Siemens invested more than US$1.1 billion in Russia over the past two years, and that, Kaeser said, is bound to continue. Angela was certainly taking notes.

Obama couldn’t behave otherwise. The constitutional law expert knows nothing about Russia, in his (meager) political career never had to understand how Russia works, and may even fear Russia – surrounded as he is by a coterie of spectacularly mediocre aids. His Brussels rhetorical tour de force yielded absolutely nothing – apart from the threat that if Putin persisted in his “aggression” against eastern Ukraine or even NATO members-countries the president of the United States would unroll a much stiffer sanction package.

What else is new, considering this by supreme CIA asset and former Pentagon head in the first Obama administration, Bob Gates, is what passes for political analysis in the US.

The $1 trillion game-changer

Demonized 24/7 by the sprawling Western propaganda machine as a ruthless aggressor, Putin and his Kremlin advisers just need to play Sun Tzu. The regime changers in Kiev are already mired in a vicious catfight. [1] And even Ukraine’s acting Prime Minister Arseniy Petrovych “Yats” Yatsenyuk has identified the gloomy times ahead, stressing that the signature of the economic part of the association agreement between Ukraine and the EU has been postponed – so there will be no “negative consequences” for industrialized eastern Ukraine.

Translation: he knows this will be the kiss of death for Ukrainian industry, on top of it coupled with an imminent structural adjustment by the International Monetary Fund linked to the EU (maybe) bailing out a bankrupt Ukraine.

Asia Times Online’s Spengler coined a formulation: “A specter is haunting Europe, and that is the specter of a Russian-Chinese alliance at the expense of Europe.” The alliance is already on – manifested in the G-20, the BRICS and the Shanghai Cooperation Organization. There are military technology synergies on the horizon – the ultra-sophisticated S-500 air defense system is to be unveiled by Moscow, and Beijing would absolutely love to have it. But for the real fireworks, just wait a few weeks, when Putin visits Beijing in May.

That’s when he will sign the famous $1 trillion gas deal according to which Gazprom will supply China’s CNPC with 3.75 billion cubic feet of gas a day for 30 years, starting in 2018 (China’s current daily gas demand is around 16 billion cubic feet).

Gazprom may still collect most of its profits from Europe, but Asia is its privileged future. On the competition front, the hyper-hyped US shale “revolution” is a myth – as much as the notion the US will be suddenly increasing exports of gas to the rest of the world any time soon.

Gazprom will use this mega-deal to boost investment in eastern Siberia – which sooner rather than later will be configured as the privileged hub for gas shipments to both Japan and South Korea. That’s the ultimate (substantial) reason why Asia won’t “isolate” Russia. ( See Asia will not ‘isolate’ Russia, Asia Times Online, March 25, 2014.)

Not to mention the much-anticipated “thermonuclear” (for the petrodollar) possibility that Russia and China will agree payment for the Gazprom-CNPC deal may be in yuan or rubles. That will be the dawn of a basket of currencies as the new international reserve currency – a key BRICS objective and the ultimate, incendiary, new (economic) fact on the ground.

Time to invest in Pipelineistan

Even though its centrality pales compared to Asia, Europe, of course, is not “expendable” for Russia. There have been rumbles in Brussels by some poodles about canceling the South Stream pipeline – pumping Russian gas underneath the Black Sea (and bypassing Ukraine) to Bulgaria, Hungary, Slovenia, Serbia, Croatia, Greece, Italy and Austria. The Bulgarian Economy and Energy Minister, Dragomir Stoynev, said no way. Same for the Czech Republic, because it badly needs Russian investment, and Hungary, which recently signed a nuclear energy deal with Moscow.

The only other possibility for the EU would be Caspian gas, from Azerbaijan – following on the trail of the Zbig Brzezinski-negotiated Baku-Tblisi-Ceyhan (BTC) oil pipeline, which was conceived expressly to bypass both Russia and Iran. As if the EU would have the will, the speed and funds to spend billions of dollars to build yet another pipeline virtually tomorrow, and assuming Azerbaijan had enough supply capacity (it doesn’t; other actors, like Kazakhstan or ultra-unreliable Turkmenistan, which prefers to sell its gas to China, would have to be part of the picture).

Well, nobody ever lost money betting on the cluelessness of Brussels eurocrats. South Stream and other energy projects will create a lot of jobs and investment in many of the most troubled EU nations. Extra sanctions? No less than 91% of Poland’s energy, and 86% of Hungary’s, come from Russia. Over 20% of the foreign lending of French banks is to Russian companies. No less than 68 Russian companies trade at the London Stock Exchange. For the Club Med nations, Russian tourism is now a lifeline (1 million went to Italy last year, for instance.)

US Think Tankland is trying to fool American public opinion into believing what the Obama administration should be applying is a replay of the “containment” policy of 1945-1989 to “limit the development of Russia as a hegemonic power”. The “recipe”: weaponize everybody and his neighbor, from the Baltic nations to Azerbaijan, to “contain” Russia. The New Cold War is on because, from the point of view of US so-called “elites”, it never really left.

Meanwhile, Gazprom’s stock price is up. Buy now. You won’t regret it.

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge and Obama does Globalistan (Nimble Books, 2009). He may be reached at pepeasia@yahoo.com

Notes: 1. Popcorn Please While “Putin’s Agitators” Rule in Kiev, Moon of Alabama, March 26, 2014.

This essay originally appeared on Asia Times.

More articles by:

Pepe Escobar is the author of Globalistan: How the Globalized World is Dissolving into Liquid War (Nimble Books, 2007), Red Zone Blues: a snapshot of Baghdad during the surge and Obama does Globalistan (Nimble Books, 2009).  His latest book is Empire of ChaosHe may be reached at pepeasia@yahoo.com.

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