Bharat Rakshak

SSridhar wrote:Hats off to Shri PVNR. He truly was a remarkable man.

abhishek_sharma wrote:Not-so-special relationship: Dean Acheson and the myth of Anglo-American unity

Recommended.

Macmillan it was who had said in 1943 that ‘we are the Greeks to their Romans’. The Americans were ‘great big bustling people’, he patronisingly said, who needed to be mentored and guided by the worldly-wise English as Roman households had been by Greek tutors (who were in fact slaves, unhappily for the metaphor).

Acheson? He is as relevant a figure as Queen Victroria. Acheson came from a period when the United States was the undisputed military, economic and cultural power on the planet. Those days are already over -- like Macmillan's Britain, the present-day US is living on a legacy of the past.
So yes, by all means, bin the special relationship. And get the hell out of the EU while we're at it. We're headed for a multi-polar world -- so let's start looking out for ourselves and stop giving a toss what Johnny Foreigner thinks.

How did Britain 'lose' it's empire. One of Americas WWII war aims was to destroy the old European empires (French, Dutch and British), all their actions in the Far East in 1945 show it.

I puke ever time I read people talking about America and our relation with it. Britain was altered for ever, for the worse in so many ways , by the American invasion of Britain in 1943, they are still in occupation.

Is it still to late to kick them where it hurts? No, not if we helped the Chinese and the Russians, the Americans will soon be on the back foot.

3. On cyberwar: "Are you worried that America's use of cyberwarfare capabilities -- such as the famous STUXNET attack on Iran -- is setting a dangerous precedent for others? Given our growing dependence on computer networks, shouldn't we be actively pursuing some sort of a global regime to limit this danger, instead of assuming we will always be better at it than others?

#9: On rape in the U.S. armed forces: "President Obama has recently authorized the deployment of women in combat roles. Yet sexual harassment and rape have reached epidemic proportions within the U.S. military, with over 3000 incidents per year being reported. What do you intend to do about this?"

The U.S. is reducing its naval presence in the Persian Gulf region to just one aircraft carrier to reduce costs, a military official confirms to the E-Ring.

“Money,” was the one-word answer from the official, when asked for the reason behind the Pentagon’s decision.

The U.S. had positioned two carriers within Central Command last April, during a period when Iran was threatening to mine the Straits of Hormuz as the U.S. was ramping up sanctions on Tehran. USS Harry S. Truman (CVN 75) was due to shove off from Norfolk, Va., on Thursday, the official said, but the last-minute change means thousands of sailors, officers and personnel will now say stateside, indefintely. The Pentagon also cancelled the deployment of the USS Gettysburg (CG-64), a Ticonderoga-class guided-missile cruiser.

It is the latest overt signal from the Obama administration that the budgetary uncertainty in Washington has already begun to affect military operations.

President Obama’s senior advisors met with defense industry executives at the White House on Wednesday, including Huntington Ingalls Industries, which builds aircraft carriers, according to press secretary Jay Carney.

In a Georgetown University speech on Wednesday morning, Defense Secretary Leon Panetta blasted Congress for a “lurching” budget drama he called the most concerning national security issue facing the country. Panetta said that if sequester happens next month, the Pentagon will have to curtail global naval operations, citing the pivot to Asia but not offering specifics.

“This is not a game. This is reality,” Panetta said.

The USS John C. Stennis (CVN 74) has been in the region since last fall. The USS Dwight D. Eisenhower was kept home for maintenance this winter, however, dropping the U.S. presence to one carrier in December.

The U.S. routinely sends carriers through the region at various times, so the actual number of carriers could increase quickly.

Pentagon press secretary George Little, in a statement, said "Facing budget uncertainty -- including a continuing resolution and the looming potential for across-the-board sequestration cuts -- the U.S. Navy made this request to the secretary and he approved. This prudent decision enables the U.S. Navy to maintain these ships to deploy on short notice in the event they are needed to respond to national security contingencies."

George Packer of the New Yorker is always worth reading, and he has a thoughtful reflection in the latest issue on Hillary Clinton's tenure as secretary of state and what it tells us about the Obama administration's successes and failures during the first term. His basic thesis is that the White House didn't give Hillary much to do (though she stayed plenty busy doing it) and downplayed diplomacy in favor of drone strikes, special forces, and other military instruments. These tools were deployed without an excess of zeal and there were no big catastrophes, but also not a lot of big wins either.

So far so good. But Packer's real complaint is that things are deteriorating in some key places, and that Obama is going to have to shoulder the burden of global leadership in his second term. There's trouble throughout the greater Middle East, he warns, and that region "will remain an American problem." And so he concludes his piece with a recommendation that ought to send your "uh-oh" meter tingling. In his words, "[Obama] will need to give his next Secretary of State, John Kerry, the authority that he denied his last one, to put the country's prestige on the line by wading deep into the morass."

I don't know about you, but I've always thought that when you see a morass, the last thing you want to do is "wade deeply into it." Ditto quagmires, bogs, and the "Big Muddy." Indeed, most of the problems U.S. foreign policy has faced in recent years have occurred when we poured vast sums into ambitious social engineering projects in societies we didn't understand and where our prospects for success were never bright.

Packer is surely correct that the greater Middle East is in turmoil, but it does not follow that deep American engagement there -- even if purely diplomatic -- will solve that problem. For starters, there is little affection for the United States in many of these societies, either because they rightly blame us for turning a blind eye to Israel's treatment of the Palestinians or because they rightly blame us for backing various brutal dictatorships for our own strategic reasons. Nor does the United States have a lot of credibility as a diplomatic actor, having screwed up the Oslo peace process (with plenty of help, to be sure) and having bungled the occupation of Iraq.

Instead of wading deeper into the morass, in short, the United States would be far better served with a more distant and hands-off strategy. This doesn't mean writing off the region entirely, as we still have a strategic interest in keeping oil flowing to world markets and in discouraging the spread of WMD or the emergence of more anti-American jihadis. But getting deeply involved in the excruciatingly complex problems of internal governance and institution-building that are going to be taking place in Egypt, Libya, Syria, and elsewhere is probably something America is not that well-suited for, no matter how noble our intentions. Moreover, in some cases greater U.S. involvement fuels jihadism or gives some states greater incentive to think about getting WMD. Regrettably, we are equally incapable of making a positive contribution to solving the Israel-Palestinian conflict, which is neither the source of all the region's troubles nor irrelevant to our diminished capacity there.

I don't like admitting that there are problems that Uncle Sam can't solve, and I wish I could share Packer's enthusiasm for another round of energetic U.S. engagement. But given our track record of late, the Hippocratic injunction to "do no harm" strikes me as the wiser course. And I'm pretty sure Obama agrees, although he's unlikely to admit it too loudly or too often.

The leaders of Muslim countries today offered conflicting approaches to the crises in Mali and Syria, exposing some of the deep divisions that run through the Islamic world. {Classic Islamic divisions. They unite only against the kafir.}

More than 25 Prime Ministers and Presidents are taking part in a two-day summit of the Organisation of Islamic Cooperation in Cairo, which brings together leaders from across the Muslim world.

In his opening address to the gathering, Senegalese President Macky Sall commended France for its military intervention in Mali, and said the Muslim world cannot allow “a minority of terrorists to commit crimes, distort our faith and deepen hatred for Islam”.
{What the heck did you, Islamic countries, do to stop the 'minority' from distorting your faith ? You don't do anyting because you support them in their fight against kafir willy-nilly}
He was alluding to the Islamist militants who seized control of northern Mali before a French-led force, which includes troops from Senegal, began to roll them back.

The French operation has received broad international support although Egyptian President Mohammed Morsi has repeatedly denounced the intervention, saying it threatens to perpetuate instability across the region.

Addressing the summit today, Morsi stopped short of condemning Paris for its actions in Mali, but made clear that Cairo did not support it.

Turning to Syria, Morsi sharply criticised President Bashar Assad’s embattled regime, saying it “must read history and grasp its immortal message: People who... put their personal interests before those of their people will inevitably go.”

The conflict in Syria has been deeply divisive in the Middle-East, pitting a largely Sunni opposition against a regime dominated by Assad’s Alawite minority — a heterodox offshoot of Shiite Islam.

Sunni States such as Egypt, Saudi Arabia and Turkey have thrown their weight behind the rebels, while Shiite heavyweight Iran is Damascus’ closest regional ally.

And, the longest-running and deepest division in the Islamic world — the Sunni-Shiite fault line — was on full display during a meeting on the eve of the summit attended by its highest-profile participant — President Mahmoud Ahmadinejad of Iran.

Sunni-Shiite tensions dominated talks between Ahmadinejad and Egypt’s most prominent cleric, Sheik Ahmed el-Tayeb, who warned against Iranian interference in Gulf nations, particularly Bahrain, where the ruling Sunni minority has faced protests by the Shiite majority.

The two-day Islamic summit is organised by the Saudi-based, 57-member Organisation of the Islamic Conference created in 1969. Syria’s membership has been suspended for its Government’s violent crackdown on the uprising there.

Gideon Rachman is one of the best-informed and most sensible columnists writing on foreign affairs these days, and he's one of the reasons you ought to subscribe to the Financial Times. (Compared to the FT oped page, Wall Street Journal opeds on foreign affairs often read like a weird combination of yellow journalism and worst-case planning, with a shot of Mad Magazine thrown in).

It therefore pains me to have to take issue with Rachman's recent column warning of rising tensions in East Asia, and all the more so because he quotes two respected colleagues, Joe Nye and Graham Allison. His concern is the possibility of some sort of clash between China and Japan, precipitated by the territorial dispute over the Diaoyu/Senkaku islands exacerbated by rising nationalism in both countries and concerns over shifting balances of power. These are all legitimate worries, although it's hard to know just how serious or volatile the situation really is.

The problem lies in Rachman's use of the World War I analogy -- specifically, the July Crisis that led to the war -- to illustrate the dangers we might be facing in East Asia. The 1914 analogy has been invoked by many experts over the years, of course, in part because World War I is correctly seen as an exceptionally foolhardy and destructive war that left virtually all of the participants far worse off. Moreover, popular histories like Barbara Tuchman's The Guns of August (which is said to have influenced John F. Kennedy's handling of the Cuban Missile Crisis), and A.J.P. Taylor's War by Timetable have reinforced an image of World War I as a tragic accident, a war that nobody really intended. In this version of history, the European great powers stumbled into a war that nobody wanted, due to miscalculations, rigid mobilization plans, extended alliance commitments, and poor communications.

This interpretation of 1914 has been especially popular during the nuclear age, as it seemed to provide a bright warning sign for how great powers could blunder into disaster through misplaced military policies or poor crisis management. And given Rachman's concerns about the possibility of a Sino-Japanese military clash over the disputed islands, and the obvious costs that any serious clash of arms would entail, it's not hard to see why he's drawn to the 1914 case.

The problem, however, is that this interpretation of the origins of 1914 is wrong. World War I was not an accident, and the European great powers didn't stumble into it by mistake. On the contrary, the war resulted from a deliberate German decision to go to war, based primarily on their concerns about the long-term balance of power and their hope that they could win a quick victory that would ensure their predominance for many years to come.

As Dale Copeland lays out in the fourth chapter of his masterful book, The Origins of Major Wars, German Chancellor Theobald von Bethman-Hollweg used the assassination of Archduke Franz Ferdinand of Austria as a pretext to launch a preventive war -- something Germany's leaders had been contemplating for some time -- and he cleverly manipulated the July Crisis in an attempt to pin the blame for the war on others. Not only did Germany's leaders give Austria-Hungary a "blank check" to go after Serbia (which had backed the terrorist group that had assassinated the Archduke), they egged the reluctant Austrians on at every turn. German leaders also knew that a Balkan war was likely to trigger Russian military mobilization -- as it eventually did -- and that this step would give them the pretext for war that they were looking for. The war, in short, was not an accident, at least not in the sense that Rachman means.

This is not to say that errors and miscalculations were not at play in 1914. Russia and Great Britain failed to figure out what Germany was planning in a sufficiently timely fashion, and Germany's leaders almost certainly exaggerated the long-term threat posed by Russian power (which was their main motivation for going to war). German military planners were also less confident of securing the rapid victory that the infamous Schlieffen plan assumed, yet they chose to roll the iron dice of war anyway.

But the key point is that the European powers did not go to war in 1914 because a minor incident suddenly and uncontrollably escalated into a hegemonic war. The real lesson of 1914 for the present day, therefore, is to ask whether any Asian powers are interested in deliberately launching a preventive war intended to establish regional hegemony, as Germany sought to do a century ago.

The good news is that this seems most unlikely. Japan is no position to do so, and China's military capabilities are still too weak to take on its various neighbors (and the United States) in this fashion. And in the nuclear age, it is not even clear that this sort of hegemony can be established by military means. If China does hope to become the dominant power in Asia (and there are good realist reasons why it should), it will do so in part by building up its military power over time -- to increase the costs and risks to the United States of staying there -- and by using its economic clout to encourage America's current Asian allies to distance themselves from Washington. It is not yet clear if this will happen, however, because China's future economic and political trajectory remains highly uncertain. But deliberately launching a great power war to achieve this goal doesn't seem likely, and especially not at the present time.

There is one feature of the East Asian security environment that is worrisome, however, though it bears little resemblance to pre-war conditions in 1914. Today, conflict in East Asia might be encouraged by the belief that it could be confined to a naval or air clash over distant (and not very valuable) territories and thus not touch any state's home territory or domestic population. All Asian countries would be exceedingly leery of attacking each other's homelands, but naval and air battles over distant islands are precisely the sort of military exchange one might use to demonstrate resolve and capability but at little or no risk of escalation. That's the scenario that I worry about, but that is not what happened back in July 1914.

Manila - With attention turning from Europe to the “new” world, worshippers in the Philippines prayed quietly and took to social media on Tuesday in the hope their cardinal might be chosen as the next leader of the world's 1.2 billion Roman Catholics.

Many Catholics in the Philippines, the largest Christian community in Asia, were shocked by Pope Benedict's resignation, including their charismatic leader, Cardinal Luis Antonio Tagle.

...

“The announcement also brought sadness to us. We felt like children clinging to a father who bids them farewell,” he said, praising Benedict's “humility, honesty, courage and sincerity”.

Stunning as it was, Benedict's resignation has thrown the papal spotlight outside the Church's European heartland, now home to only 25 percent of the Catholic population.

The post once reserved for Italians is now open for all, although about half the cardinals who will vote for the next pope after Benedict's reign ends on Feb. 28 are from Europe.

Latin America represents the largest single bloc in the Church with 42 percent of Catholics, putting Latin Americans and African cardinals among the front-runners to succeed 85-year-old Pope Benedict.

Tagle's close alignment to Pope Benedict, an uncompromising conservative on social and theological issues, could work in his favour, with the Philippines a bulwark of Catholicism in a mainly Hindu, Muslim and Buddhist region.

...

But Tagle's youth, and the fact that he only became a cardinal late in 2012, may work against him. “What we should do is not pray for Cardinal Tagle but pray for the right pope, as inspired by the Holy Spirit, to be elected by the cardinal members of the conclave,” Lucas said.

pankajs wrote: For example take the case of Saudi Arabia, even if we eliminate the hydrocarbon resources from our trading mix, we simply do not sell that much amount of goods to Saudi Arabia.

Mukesh.Kumar wrote:

Remittances from Saudi form about 11% of total remittances to India as per the World Bank estimates. UAE is another 25% odd. On a base of USD $ 60 billion for the last FY, the Saudi & UAE remittances would amount to USD 5 billion and USD 15 bil respectively. Whereas Saudi & UAE provide about USD 25 bil & USD 13 bil of oil to India. Besides this there is about USD 3 bil and USD 24 bil. In such a case is it not possible to convert at least part of the trade to INR. Saudi needs INR for remittances back to India, and ditto for UAE. What is the drawback?

P.S. The numbers may not be on the dot as I did a ballpark estimation based on INR:USD rates, export figures, remittances and oil imports from mid-2012

Mukesh.Kumar wrote:@ Acharya: So you are saying that imports will outstrip remittances. Hadn't thought of it from that angle. But would not our exports also increase? Would not the rupee also strengthen and thereby find flavour with other countries to trade in?

Christopher Sidor wrote:Other countries will accept Rupee only if they buy massive amounts of goods from us. For example take the case of Saudi Arabia, even if we eliminate the hydrocarbon resources from our trading mix, we simply do not sell that much amount of goods to Saudi Arabia. So Saudi Arabia will not accept Rupees for its hydrocarbon resources. Because what will it do with the rupees that it earns? It needs to buy Wheat from Argentina or USA or Australia. It needs to buy weapon systems from USA or EU. It is not possible for Saudi Arabia to pay Argentina or Australia or USA or EU in Rupees. This applies to Iran, Iraq or any other hydrocarbon exporting nation.

Christopher Sidor wrote:So if a country like Iran even decides that it will receive only euros or yen or swiss franc or any other currency for its hydrocarbon resources then it will not work. Iran's trading partners i.e. japan, PRC, India, South Africa, etc, also have to agree to take euros/yen/swiss franc as a payment for the goods and services sold to Iran. I do not see that happening. Not unless and until American economy is superseded by a bigger economy.

pankajs wrote:I know that the above view is simplistic, but it gives you an idea of what is at stake for the US, the Iranians and the world.

shyamd wrote:

New Delhi,Business/Economy, Sat, 16 Feb 2013 IANS
New Delhi, Feb 16 (IANS) As the West reels under financial crisis, Kuwait and other Gulf nations have urged India to play an active and important role in transforming the Asian continent into an Asian Union.

Contemporary warfare has traditionally involved underlying conflicts regarding economics and resources. Today these intertwined conflicts also involve international currencies, and thus increased complexity. Current geopolitical tensions between the United States and Iran extend beyond the publicly stated concerns regarding Iran’s nuclear intentions, and likely include a proposed Iranian “petroeuro” system for oil trade.

Similar to the Iraq war, military operations against Iran relate to the macroeconomics of ‘petrodollar recycling’ and the unpublicized but real challenge to U.S. dollar supremacy from the euro as an alternative oil transaction currency.

It is now obvious the invasion of Iraq had less to do with any threat from Saddam’s long-gone WMD program and certainly less to do to do with fighting International terrorism than it has to do with gaining strategic control over Iraq’s hydrocarbon reserves and in doing so maintain the U.S. dollar as the monopoly currency for the critical international oil market. Throughout 2004 information provided by former administration insiders revealed the Bush/Cheney administration entered into office with the intention of toppling Saddam Hussein.

Candidly stated, ‘Operation Iraqi Freedom’ was a war designed to install a pro-U.S. government in Iraq, establish multiple U.S military bases before the onset of global Peak Oil, and to reconvert Iraq back to petrodollars while hoping to thwart further OPEC momentum towards the euro as an alternative oil transaction currency (i.e. “petroeuro”).

In essence, Iran is about to commit a far greater “offense” than Saddam Hussein's conversion to the euro for Iraq’s oil exports in the fall of 2000. Beginning in March 2006, the Tehran government has plans to begin competing with New York's NYMEX and London's IPE with respect to international oil trades – using a euro-based international oil-trading mechanism.[7]

The proposed Iranian oil bourse signifies that without some sort of US intervention, the euro is going to establish a firm foothold in the international oil trade. Given U.S. debt levels and the stated neoconservative project of U.S. global domination, Tehran’s objective constitutes an obvious encroachment on dollar supremacy in the crucial international oil market.

The upcoming bourse will introduce petrodollar versus petroeuro currency hedging, and fundamentally new dynamics to the biggest market in the world - global oil and gas trades. In essence, the U.S. will no longer be able to effortlessly expand its debt-financing via issuance of U.S. Treasury bills, and the dollar’s international demand/liquidity value will fall.

As beneficial as it was for the economy, the "petrodollar" system added exponentially to the U.S. dominance in global politics as well. It forced global oil money to flow through the US Federal Reserve, creating international demand for US dollars; but it also allowed US debt to explode with fewer-than-normal consequences. It essentially enabled the US to buy oil for a fraction of what the rest of the market paid, since oil's value is denominated in a currency that only America controlled. The petrodollar system spread to become the currency of choice for all international trade and virtually every country had to maximize its US dollar surplus from its export trade in order to secure its ability to purchase or sell oil.

Therefore, since only the U.S. may print the petro-dollars, they also control the flow of oil. When oil is denominated in dollars exclusively produced through the U.S. Federal Reserve and the dollar is the only fiat currency for trading in oil, an argument can be made that the U.S. essentially owns the world's oil for free.

France and a few other EU members convinced Saddam Hussein to change the petrodollar process and sell Iraq's oil-for-food in euros, not dollars. At about the same time, other nations hinted at their interest in non-US dollar oil trading, including Russia, Iran, Venezuela, and Indonesia.

If OPEC decided to follow Iraq's lead and suddenly began trading oil on the euro standard, it would mean economic meltdown for the U.S.

Oil-consuming nations would have had to divest themselves of U.S. dollars ,via their central bank reserves, and replace them with either euros or whatever currency the party nations preferred. The consequences would be the dollar would crash in value, U.S. currency would collapse, and massive inflation would ensue. Foreign funds would flee from U.S. stock markets and dollar denominated assets, there would be a run on the banks much like the 1930s, and the current-account deficit would become unserviceable. The inevitable result would lead the U.S. budget deficit to go into default creating a severe worldwide depression brought on by the U.S. inability to pay it's debts.

If the US dollar loses its position as the global reserve currency, the consequences for America cannot be over-stated. Most of the dollar's valuation stems from its iron-clad grip on the oil market. Should the U.S. petrodollar monopoly fade, so too would the value of the dollar. Such a major upheaval in global fiat currency relationships would favor some currencies and destroy others. The only certain outcome is that gold would rise even more than it has to date. Again, good for some countries, but given the rise and fall of ALL commodities, huge risk for the U.S., particularly in the short-term.

The agreement with OPEC in the 1970s to price oil in dollars has provided tremendous artificial strength to the dollar as the preeminent reserve currency. This has created a universal demand for the dollar, and soaks up the huge number of new dollars generated each year. Last year alone M3 increased over $700 billion.

The artificial demand for our dollar, along with our military might, places us in the unique position to “rule” the world without productive work or savings, and without limits on consumer spending or deficits. The problem is, it can't last.

Price inflation is raising its ugly head, and the NASDAQ bubble — generated by easy money — has burst. The housing bubble likewise created is deflating. Gold prices have doubled, and federal spending is out of sight with zero political will to rein it in. The trade deficit last year was over $728 billion. A $2 trillion war is raging, and plans are being laid to expand the war into Iran and possibly Syria {Remember this is from 2006}. The only restraining force will be the world's rejection of the dollar. It's bound to come and create conditions worse than 1979—1980, which required 21% interest rates to correct. But everything possible will be done to protect the dollar in the meantime. We have a shared interest with those who hold our dollars to keep the whole charade going.

Most importantly, the dollar/oil relationship has to be maintained to keep the dollar as a preeminent currency. Any attack on this relationship will be forcefully challenged — as it already has been.

In November 2000 Saddam Hussein demanded Euros for his oil. His arrogance was a threat to the dollar; his lack of any military might was never a threat. At the first cabinet meeting with the new administration in 2001, as reported by Treasury Secretary Paul O'Neill, the major topic was how we would get rid of Saddam Hussein — though there was no evidence whatsoever he posed a threat to us. This deep concern for Saddam Hussein surprised and shocked O'Neill.

In 2001, Venezuela's ambassador to Russia spoke of Venezuela switching to the Euro for all their oil sales. Within a year there was a coup attempt against Chavez, reportedly with assistance from our CIA.

It's become clear the U.S. administration was sympathetic to those who plotted the overthrow of Chavez, and was embarrassed by its failure. The fact that Chavez was democratically elected had little influence on which side we supported.

Now, a new attempt is being made against the petrodollar system. Iran, another member of the “axis of evil,” has announced her plans to initiate an oil bourse in March of this year. Guess what, the oil sales will be priced Euros, not dollars.

But the truth is that paying the bills for this aggressive intervention is impossible the old-fashioned way, with more taxes, more savings, and more production by the American people. Much of the expense of the Persian Gulf War in 1991 was shouldered by many of our willing allies. That's not so today. Now, more than ever, the dollar hegemony — it's dominance as the world reserve currency — is required to finance our huge war expenditures. This $2 trillion never-ending war must be paid for, one way or another. Dollar hegemony provides the vehicle to do just that.

For the most part the true victims aren't aware of how they pay the bills. The license to create money out of thin air allows the bills to be paid through price inflation. American citizens, as well as average citizens of Japan, China, and other countries suffer from price inflation, which represents the “tax” that pays the bills for our military adventures. That is, until the fraud is discovered, and the foreign producers decide not to take dollars nor hold them very long in payment for their goods. Everything possible is done to prevent the fraud of the monetary system from being exposed to the masses who suffer from it. If oil markets replace dollars with Euros, it would in time curtail our ability to continue to print, without restraint, the world's reserve currency.

It is an unbelievable benefit to us to import valuable goods and export depreciating dollars. The exporting countries have become addicted to our purchases for their economic growth. This dependency makes them allies in continuing the fraud, and their participation keeps the dollar's value artificially high. If this system were workable long term, American citizens would never have to work again. We too could enjoy “bread and circuses” just as the Romans did, but their gold finally ran out and the inability of Rome to continue to plunder conquered nations brought an end to her empire.

Our intense effort to spread our power in the oil-rich Middle East is not a coincidence. But unlike the old days, we don't declare direct ownership of the natural resources — we just insist that we can buy what we want and pay for it with our paper money. Any country that challenges our authority does so at great risk.

Our whole economic system depends on continuing the current monetary arrangement, which means recycling the dollar is crucial. Currently, we borrow over $700 billion every year from our gracious benefactors, who work hard and take our paper for their goods. Then we borrow all the money we need to secure the empire (DOD budget $450 billion) plus more. The military might we enjoy becomes the “backing” of our currency. There are no other countries that can challenge our military superiority, and therefore they have little choice but to accept the dollars we declare are today's “gold.” This is why countries that challenge the system — like Iraq, Iran and Venezuela — become targets of our plans for regime change.

Ironically, dollar superiority depends on our strong military, and our strong military depends on the dollar. As long as foreign recipients take our dollars for real goods and are willing to finance our extravagant consumption and militarism, the status quo will continue regardless of how huge our foreign debt and current account deficit become.

Concern for pricing oil only in dollars helps explain our willingness to drop everything and teach Saddam Hussein a lesson for his defiance in demanding Euros for oil.

And once again there's this urgent call for sanctions and threats of force against Iran at the precise time Iran is opening a new oil exchange with all transactions in Euros.

Using force to compel people to accept money without real value can only work in the short run. It ultimately leads to economic dislocation, both domestic and international, and always ends with a price to be paid.

The economic law that honest exchange demands only things of real value as currency cannot be repealed. The chaos that one day will ensue from our 35-year experiment with worldwide fiat money will require a return to money of real value. We will know that day is approaching when oil-producing countries demand gold, or its equivalent, for their oil rather than dollars or Euros. The sooner the better.

Mukesh.Kumar wrote:@ Cristopher: Newbie question

pankajs wrote: For example take the case of Saudi Arabia, even if we eliminate the hydrocarbon resources from our trading mix, we simply do not sell that much amount of goods to Saudi Arabia.

Remittances from Saudi form about 11% of total remittances to India as per the World Bank estimates. UAE is another 25% odd. On a base of USD $ 60 billion for the last FY, the Saudi & UAE remittances would amount to USD 6.5 billion and USD 15 bil respectively. Whereas Saudi & UAE provide about USD 25 bil & USD 13 bil of oil to India. Besides this there is about USD 3 bil and USD 24 bil. In such a case is it not possible to convert at least part of the trade to INR. Saudi needs INR for remittances back to India, and ditto for UAE. What is the drawback?

P.S. The numbers may not be on the dot as I did a ballpark estimation based on INR:USD rates, export figures, remittances and oil imports from mid-2012

pankajs wrote:The End of Dollar Hegemony - Ron Paul - 2006

BRASILIA (Reuters) - Russian Prime Minister Dmitry Medvedev met with Brazilian President Dilma Rousseff on Wednesday on a visit to Brazil aimed at sealing defense and nuclear technology deals with a fellow member of the BRIC bloc of emerging nations.On their agenda was the possible sale of Russian anti-aircraft missile systems to Brazil, a Brazilian government spokesman said.Brazil is beefing up its air defenses ahead of the World Cup soccer tournament next year and the 2016 Olympic Games to ward off the threat of a terrorist attack during the global sporting events, which will draw massive crowds of foreigners.Medvedev's trip follows a visit by Rousseff to Moscow in December that underlined the importance both countries attach to building relations among the BRIC club of emerging economies.
The BRIC countries - Brazil, Russia, India, China and South Africa - have a combined GDP of $14.9 trillion and have become increasingly vocal in criticizing developed nations' hold over global economic policies.Ties between Brazil and Russia have been strengthening and they want to raise annual trade turnover to $10 billion from the current $6.5 billion.Moscow will tout its advanced energy expertise and technology aiming to get involved in Brazil's plans to build new nuclear power stations to meet surging demand for electricity that has overwhelmed its generating capacity."We would like to offer our participation in the construction of nuclear plants and would like to get an invitation to participate in (the upcoming) tender," a senior official in the Russian delegation said.He said Russia could train Brazil's nuclear staff, design research reactors and supply fuel for the future plants.Medvedev also will try to clinch the sale of Russia's anti-aircraft missile technology, including the Pantsir S1 combined missile and artillery system and Igla-S portable surface-to-air missiles.
Brazil is interested in buying three Pantsir batteries with medium-range missiles and wants to acquire the technology to build the missiles itself in the future."We have already signed a commercial protocol on Igla-S supplies, which also foresees the opportunity of licensed production, but talks are ongoing," the Russian official said. "Licensed production launch may take some time, so they have expressed interest in importing Igla-S in the meantime too."Russia is the world's second largest arms exporter and a deal with Brazil would largely be seen as a symbolic penetration of the Latin American defense market, after Russia lost some key contracts due to the Arab Spring uprisings in the Middle East.Medvedev also will discuss the possible increase of Brazilian meat supplies to Russia, its largest buyer, the official said, but Moscow's sanitary authorities will make sure it is compliant with all the necessary standards.As a sign of the two countries drawing closer, Brazil on Tuesday became the first country outside Russia to host a monitoring station for the Russian satellite navigation system GLONASS, a global positioning system that uses 24 satellites.

pankajs wrote:Further on the the petrodollar politics
<snip>
Also, folks might look at countries that are oil exporters, that have tried to move away from the dollar or have struck deals in other currencies and the general impression of these countries and their government created by the US government and media. On the other, you don't hear much about the Saudis. Even when negative reference cannot be avoided, such criticism is usually muted in the mainstream media.

brihaspati wrote:Here is some from the "other side" the shi-ite:
http://www.shiitenews.com/index.php/pak ... udi-arabia

Saudi Arabia's alleged financing of Sunni militant groups has been a sore point in Washington. U.S. Secretary of State Hillary Clinton warned in a December 2009 classified diplomatic cable that charities and donors in Saudi Arabia were the "most significant source of funding to Sunni terrorist groups worldwide." In the cable, released by Wikileaks, Clinton said it was "an ongoing challenge" to persuade Saudi officials to treat such activity as a strategic priority. She said the groups funded included al-Qaeda, the Taliban and Lashkar-e-Taiba.

Saudi Arabia is the world's largest source of funds for Islamist militant groups such as the Afghan Taliban and Lashkar-e-Taiba – but the Saudi government is reluctant to stem the flow of money, according to Hillary Clinton.

"More needs to be done since Saudi Arabia remains a critical financial support base for al-Qaida, the Taliban, LeT and other terrorist groups," says a secret December 2009 paper signed by the US secretary of state. Her memo urged US diplomats to redouble their efforts to stop Gulf money reaching extremists in Pakistan and Afghanistan.

"Donors in Saudi Arabia constitute the most significant source of funding to Sunni terrorist groups worldwide," she said.

Three other Arab countries are listed as sources of militant money: Qatar, Kuwait and the United Arab Emirates.

The cables highlight an often ignored factor in the Pakistani and Afghan conflicts: that the violence is partly bankrolled by rich, conservative donors across the Arabian Sea whose governments do little to stop them.

The problem is particularly acute in Saudi Arabia, where militants soliciting funds slip into the country disguised as holy pilgrims, set up front companies to launder funds and receive money from government-sanctioned charities.

Saudi officials are often painted as reluctant partners. Clinton complained of the "ongoing challenge to persuade Saudi officials to treat terrorist funds emanating from Saudi Arabia as a strategic priority".

Washington is critical of the Saudi refusal to ban three charities classified as terrorist entities in the US. "Intelligence suggests that these groups continue to send money overseas and, at times, fund extremism overseas," she said.

Any criticisms are generally offered in private. The cables show that when it comes to powerful oil-rich allies US diplomats save their concerns for closed-door talks, in stark contrast to the often pointed criticism meted out to allies in Pakistan and Afghanistan.

Christopher Sidor wrote:^^^^
Because Saudi Arabia did not attack USA. Al-qeda did. If we follow the logic, that the financier, is equally culpable as the perpetrator of the crime than India would have to go to war with most of the GCC countries, USA, EU and Japan. Worse India would also logically become a target of Sri Lanka (remember LTTE/PLOTE/TULF being financed partly in India) and other countries.

Russia's Putin tells army to shape up for foreign threat


By Alexei Anishchuk
MOSCOW | Wed Feb 27, 2013 2:14pm EST
(Reuters) - Vladimir Putin ordered military leaders on Wednesday to make urgent improvements to the armed forces during his new presidential term, saying Russia must thwart attempts by the West to tip the strategic balance of power.

Putin's remarks, to rows of uniformed officers and defense officials, reflected increasing hawkishness since he returned to the Kremlin for a six-year term last May, and a growing readiness to cite foreign threats and use anti-Western rhetoric to rally support.

"Attempts are being made to tip the strategic balance," said Putin, who as president is commander-in-chief of the armed forces, told his audience at the General Staff academy on Moscow's outskirts. The head of the Russian Orthodox Church, Patriarch Kirill, sat in the front row.

"Geopolitical dynamics call for a quick and considered response ... Russia's armed forces must move on to a new level of capabilities in the next three to five years," said Putin, who has not ruled out seeking another term in 2018.

The former KGB spy said moves that threatened Russia's geopolitical position included the eastward expansion of Russia's former Cold War foe NATO and U.S. deployment of an anti-missile shield in Europe.

He said drills must be sharpened up and held with less advance warning, to keep soldiers on their toes.

"Combat training must not be laid-back, so that soldiers know about emergency exercises six months in advance, but must be as similar as possible to the real conditions of modern combat and warfare," he said.

Following a decade of military spending cuts after the collapse of the Soviet Union in 1991, Putin has been the driving force behind plans to spend 23 trillion roubles ($750 billion) through 2020 to upgrade Russia's ageing armaments.

Budget 2013: Defence budget hiked 14% over last year

Amidst global economic slowdown that fuelled fears of a cut in defence spending, Union Finance Minister P. Chidambaram gave a 14 per cent hike in defence budget aimed at sustaining armed forces’ modernisation drive.

The Defence Ministry’s allocation was proposed to be Rs. 2,03,672 crore, up by Rs. 25,169 crore from last year’s revised estimate of Rs. 1,78,503 crore.
....

“I propose to increase the allocation for defence to Rs 2,03,672 crore. This will include Rs 86,741 crore for capital expenditure,’’ Mr. Chidambaram said while assuring the Lok Sabha that financial constraints would not come in the way of providing any additional requirement for the security of the nation.