From Petro$ to Petro¥

Few years ago I published an article ¥uan and Waterloo of Petro$  where I predicted following:

As the Americans and their allies are trying to squeeze Russia and Iran with a combination of economic sanctions and political isolation, alternative poles of power are emerging that soon may present a serious challenge to the U.S.-dominated world that emerged from the end of the Cold War.

 

Now it seems that the development is even faster than I expected. Here an excellent view from Gal Luft, Published by Yahoo Finance on August 27, 2018

 

Thwarting the anti-dollar coalition should be Washington’s top national priority

 

By Gal Luft

August 30, 2018

 

The United States is currently waging economic warfare against one tenth of the world’s countries with cumulative population of nearly 2 billion people and combined gross domestic product (GDP) of more than $15 trillion.

These include Russia, Iran, Venezuela, Cuba, Sudan, Zimbabwe, Myanmar, the Democratic Republic of Congo, North Korea and others on which Washington has imposed sanctions over the years, but also countries like China, Pakistan and Turkey which are not under full sanctions but rather targets of other punitive economic measures.

In addition, thousands of individuals from scores of countries are included in the Treasury Department’s list of Specially Designated Nationals who are effectively blocked from the U.S.-dominated global financial system. Many of those designated are either part of or closely linked to their countries’ leadership.

From a U.S. perspective, each one of the economic entities is targeted for a good reason be it human rights violations, terrorism, crime, nuclear trade, corruption or in the case of China, unfair trade practices and intellectual property theft.

But in recent months it seems that America’s unwavering commitment to fight all of the world’s scourges has brought all those governments and the wealthy individuals who support them to a critical mass, joining forces to create a parallel financial system which would be out of reach of America’s long arm. Should they succeed, the impact on America’s global posture would be transformational.

America’s global supremacy has been made possible not only thanks to its military power and its alliance system but also due to its control over the plumbing of global finance and particularly the broad acceptance of the dollar as the world’s reserve currency. The unique status of the U.S. currency has anchored the global financial system since World War II.

Any transaction done in U.S. dollars or using a U.S. bank automatically brings the trading parties under American legal jurisdiction. When the U.S. decides to impose unilateral sanctions, as in the case of Iran, it essentially tells the world’s governments, corporations and individuals they must choose between halting business with the sanctioned country or be shut off from the world’s number one economy. This is a powerful stick.

Not many companies or banks can afford to give up on the U.S. market or be denied access to U.S. financial institutions.

Revisionist countries that wish to challenge the U.S.-led system see this as an affront to their economic sovereignty. Which is why both Russia and China have developed their own versions of the Society for Worldwide Interbank Financial Telecommunication (SWIFT), the global network that allows cross-border financial transactions among thousands of banks. Both countries are also urging their trading partners to ditch the dollar in their bilateral trade in favor of indigenous currencies.

This month Russia was quick to recruit Turkey into the anti-dollar bloc, announcing it would back non-dollar trade with it, after a financial feud between Ankara and Washington broke out. China for its part is using its trillion-dollar Belt and Road Initiative as a tool to compel countries to transact in yuan terms instead of dollars. Pakistan, the number one recipient of Belt and Road money, and Iran have already announced their intention to do just that.

Last month’s BRICS (Brazil, Russia, India, China, South Africa) summit in Johannesburg was a call to arms against the dollar hegemony with countries like Turkey, Jamaica, Indonesia, Argentina and Egypt invited to join in what is known as “BRICS plus” with the goal of creating a de-dollarized economy.

The main front where the future of the dollar will be decided is the global commodity market, especially the $1.7 trillion oil market. Ever since 1973, when President Richard Nixon unilaterally severed the U.S. dollar from the gold standard and convinced the Saudis and the rest of the OPEC countries to sell their oil only in dollars, the global oil trade has been linked to the American currency.

This paved the way for the rest of the commodities to be traded in dollars as well. The arrangement served America well. It created an ever growing demand for the greenback, which in turn enabled consecutive U.S. governments to freely run their growing deficits.

Not anymore. Because so many of the members of the anti-dollar alliance are exporters of commodities they no longer feel that their products should be either priced by a dollar-denominated benchmark like WTI and Brent or be traded in a currency they no longer crave.

For example, when China buys oil from Angola, gas from Russia, coal from Mongolia or soybeans from Brazil it prefers to do so in its own currency and thereby avoid unwanted exchange rate fees on both sides of the transaction. This is already beginning to happen.

Russia and China have agreed to transact some of their traded energy in yuan. China is pushing its main oil suppliers Saudi Arabia, Angola and Iran to receive yuans for their oil. And last year China introduced gold-backed futures contracts, dubbed “petro-yuan” in the Shanghai International Energy Exchange – the first non-dollar crude benchmark in Asia.

The gradual acceptance of digital currencies, backed by blockchain technology offers another way for the revisionists to ditch the dollar in their trading. The Russian central bank indicated that it was considering launching a national cryptocurrency called “cryptoruble” and in the interim it helped Venezuela’s launch of its own cryptocurrency, the “petro,” which is backed by the country’s vast oil reserves. Now BRICS members are discussing a BRICS-backed cryptocurrency.

All of those actions and others point to one direction: In the coming years the dollar will be facing a barrage of attacks with the goal of eroding its hegemony and the energy trading market will be one of the main battlefields where the future of America’s economic dominance will be decided. Any successful attempt to delink commodity trading from the dollar will have a cascading impact not only on the global economic system as we know it but also on America’s posture abroad.

With the overall positive state of the U.S. economy and the remarkable strength of the dollar compared to the currencies of the dollar-busters including the Russian ruble, the yuan, the Turkish lira and the Iranian rial it may be easy to sink into complacency and dismiss the actions of the revisionists as mere pinpricks.

But ignoring the growing anti-dollar coalition would be to America’s detriment. Bull markets eventually come to an end and with a national debt of $21 trillion and growing at a rate of a trillion dollars a year, the awakening could be ruder and sooner than most economists predict.

In the midst of America’s economic euphoria it is worth remembering that one of every four people on the planet lives today in a country whose government is committed to end the dollar hegemony.

Thwarting their effort should be Washington’s top national priority.

The United States is currently waging economic warfare against one tenth of the world’s countries.

Published by Yahoo Finance on August 27, 2018

Gal Luft 
– is co-director of the Institute for the Analysis of Global Security and senior advisor to the United States Energy Security Council.

New Road Maps to the Two-State

“We will be here and you, Palestinians, will be there…Live your lives, improve your economy, create employment. The blocs under Israeli sovereignty will be part of the permanent solution. They will serve as recipients of settlers from outside the major blocs.” (Isaac Herzog)

Ever since the Six Day War in June 1967, innumerable plans have been put forward from the Left, the Right and the Center about what to do with the historic land – and its inhabitants – that suddenly and quite unexpectedly fell under Israel’s control – plans regarding ways to divide sc West Bank up or annex it to Israel, without imperiling the country’s Jewish majority.

A new analysis by Haaretz gives some content for implementing possible Leftist plans in West Bank. At the map by Haaretz  the two-state solution could be achieved with a minimal evacuation of Jews from the West Bank. The suggested numbers are 33 isolated settlements, fewer than 10 000 families and some 46 000 people.

 

For any Israeli government it is necessary to coordinate its actions with the mainstream settler community. According Fathom approximately 590,000 Jews living beyond the Green Line can be divided into three groups. The first group is the approximate 200,000 Israelis who live in the 12 Jewish neighbourhoods of East Jerusalem, which will undoubtedly remain under Israeli sovereignty in any agreement. The second group is some 300,000 settlers who live in the so called ‘settlement blocs,’ located west of the security barrier which are usually very close to the Green Line. The vast majority of these settlements are also likely to remain under Israeli sovereignty. Only the third group, comprising 90,000 settlers – less than 20 per cent of the entire population of those living beyond the Green Line – who live beyond the route of the security barrier, needs to be addressed at the present time.

 

Leftist approach

The main position of the Zionist Left has been spatial separation between Israelis and Palestinians – “they are there and we are here.”One of the first plans for the West Bank was submitted by then-Labor Party minister Yigal Allon. Allon’s basic idea was to give Israel defensible borders, while not significantly altering the demographic balance of the country. His plan called for Israel to annex most of the Jordan Valley – a ribbon some 15 kilometers in width from the Jordan River to the eastern slopes of the mountain ridge running through the West Bank – to serve as a buffer from attacks from the east. Israel would annex one-third of the West Bank, and give up the other two-thirds. The densely populated Palestinian areas from the mountain ridge to the Green Line would not be annexed, and would either form a Palestinian autonomous region, or – in a later revision of the plan – be confederated with Jordan, and linked to the Hashemite kingdom by a corridor near Jericho.

Allon+ Plan, put forward in 1995 by Benjamin Netanyahu

 

The guiding principle of Allon plan, as well most plans after that, was to retain the maximum number of settlers inside Israel in the minimal amount of territory. This principle is valid also with Leftist plans during last years.

Former Leader of the Israeli opposition – and Labor/Zionist Union – Isaac Herzog proposed to divide the land between the Israelis and Palestinians. Following a quote from interview of Isaac Herzog in Fathom:

I speak in a very frank and open manner. I believe that Israel must move for peace. We must move towards the division of the land between the Palestinians and us in order to maintain the future of Israel as a Jewish democratic state. We will be here and you, Palestinians, will be there…Live your lives, improve your economy, create employment. The blocs under Israeli sovereignty will be part of the permanent solution. They will serve as recipients of settlers from outside the major blocs.”

Politically, the idea “us here, them there” harkens back to Yitzhak Rabin, who used that as a campaign slogan in 1992. Later former Prime Minister Ehud Olmert proposed a similar unilateral separation in the West Bank. Herzog’s plan seems likely to garner support among the centrist, center-left and even parts of the center-right Israeli voter base.

According Omer Bar-Lev ( MK for the Zionist Union)

”If Israel wants to be a democratic state, which it does, then it has to either grant them full citizenship rights, which will subsequently destroy Zionism (one state for two nations) or separate from the Palestinians (two states for two nations). In that case, Israel can keep the Zionist spirit.” His steps include a halt to settlement construction beyond the main settlement blocs, passing a compensation law in the Knesset to grant generous compensation to settlers living outside the blocs who want to settle inside Israel, expanding Area B – the territory in the West Bank where the Palestinians have civil control, and Israel has security control – by another 20%, a move that would necessitate taking 20% from Area C, and the evacuation of some 35,000 settlers living in that part of Area C. Once separation is achieved, Bar-Lev hopes the sides will negotiate a final status deal. His map has Israel ceding 95% of the West Bank, and needing to evacuate a total of 70,000 settlers.

According Israeli NGO Blue White Future  Israel should prepare for a reality of two states for two people,

• by considering transferring areas east of the barrier to Palestinian control in a gradual, monitored and supervised manner. [Note that this part requires coordination and therefore is optional].
• by enacting a law that allows for voluntary evacuation, compensation and eventual absorption of settlers presently residing on the eastern side of the security barrier, to encourage settlers who wish to relocate within the green line or within settlement blocs, regardless of whether an agreement with the Palestinians is concluded. and
• by preparing a national plan for the absorption of the settlers who would relocate to Israel proper, whether before or after an agreement is signed. Such a plan should have urban, vocational, social, psychological and other appropriate components.

 

Some alternatives?

“The one-state solution is not a solution, but a problem.” (Ori Nir)

The alternative plans from the Right range from extending Israeli sovereignty over all of Judea and Samaria and encouraging the Palestinians there to leave, to annexing Area C, and giving the 80,000 Palestinians living there Israeli citizenship.

On the far Right of the spectrum is a plan articulated by former Likud MK Moshe Feiglin, who advocates a plan for Jewish sovereignty over Judea and Samaria that includes the following: Annexing all of Judea and Samaria and making sure that Jewish sovereignty extends everywhere. The Arab population would have the following options: Either emigrate voluntarily with the aid of a “generous emigration grant”; receive permanent residency – similar to Green Card status in the US – but be unable to vote.

A different approach has been proposed by Defense Minister Avigdor Liberman. Liberman advocates taking all of the land – excluding Gaza – from the Mediterranean to the Jordan and redividing it along demographic lines. In this plan, large Jewish settlement blocs would be drawn into Israel, and the area of the “Triangle” with its large Israeli Arab population would be penciled into a Palestinian state.

In addition there is the maximalist alternative plans from the Right – annex all of the territories Israel gained during the Six Day War – and also the maximalist plans of the Left: a complete withdrawal from all the territories. Few Israelis, nor I, advocate such a policy, so over the years there have been numerous variations on this theme.

Recently a new approach to the Jewish-Arab/Palestinian conflict was proposed by sc Federation Movement. Its Federation Plan or Federation Program presents a new approach to the Jewish-Arab/Palestinian conflict. The basic idea is

formulation of a common vision for the federal state by establishment of a federal government, and the division of the country into 30 cantons, 20 of which will have a Jewish majority and ten will have Arab majorities (one of which will have a Druze majority). At first place the federation idea sounds interesting as it seems to solve a basic dilemma in Israeli-Palestinian conflict: how Israel same time can survive as a Jewish state, have real democracy and keep – more or less – post-1967 boundaries especially in West Bank.

Sure there is also a zero-alternative, to do nothing else than keep “status quo”.  This alternative, however, is leading towards undemocratic “One-state” solution, which in my opinion is one of the worst scenarios.

My View

The final status agreement has been very close at least since Beilin-Abu Mazen understandings/agreement/plan (1995) where nearly all issues were agreed; The Olmert proposal (2008) was probably the last serious try. (both plans can be found from my document library ) The parameters of the end-game have been clear the whole time but despite of a number of negotiations the final agreement is missing.

As possible solutions for Israeli-Palestinian conflict there has been besides 2-State solution also bi-national ‘One-State’ solution, partial solutions like Sinai and Jordan Options and different variations of ‘Three States’ solutions. One of course easy ‘solution’ is zero-option – ‘frozen conflict’ or ‘status quo’ scenario which can be implemented also through pseudo-talks. Today also unilateral actions – instead vain negotiations – can pave way towards some solutions.

In my opinion democratic One-state, Israel-Palestine federation or confederation based on cantons might work in theory but not in practice at least for decades. My argument is that even since early times of British Mandate first the Pan-Islamic and then pan-Arab rhetoric expressed fundamental ethnic and religious objections to Jews and for the establishment of a Jewish national home in Palestine. The history of repeated aggressions by neighbours have also created deep distrust among Jews about Palestinians. This kind of ecosystem and peoples’ minds are challenging to transform peaceful coexistence with eternal enemy; it might take decades and generations to change fundamental ethic values. Besides instead of Israel-Palestine federation or confederation I see Palestine-Jordan confederation much more better model.

I referred two new leftist initiatives above and in my article Constructive Unilateralism: Leftist Approach to Israel-Palestine Conflict – ‘it’s in our hands’ by Omer Bar-Lev, an MK for the Zionist Union and ‘Constructive unilateralism’ by Blue White Future, leftist think tank – which both in my opinion are steps forward and also to the right direction as well including required new roadmap for better future. I don’t see constructive unilateral steps as goal but more as strategy and process which will lead towards a comprehensive agreement.

The new analysis by Haaretz (How Many Settlers Need to Be Evacuated to Make Way for a Palestinian State ) gives some content for implementing these possible Leftist plans in West Bank.  The map helps to prepare a national plan for the absorption of the settlers inside security barrier; it shows the settlements which will be evacuated from West Bank, it gives the numbers of settlers which helps to plan urban, social, vocational and other needs of operation and to allocate necessary funding and budgeting and all this regardless of whether an agreement with Palestinians is concluded or not. 

Related articles:

Peacemaking – a Holistic Approach

Israeli-Palestinian Conflict: A Revised Hybrid Model as Solution

Palestinians Put Jordanian Option on the Table

Israel-Palestine Conflict: Regional Approach

Israel’s 5 Strategy Options Regarding West Bank After Abbas

Trump Presidency Brings Realpolitik Back To Mid-East

Constructive Unilateralism (II) as Solution to Israeli-Palestinian Conflict

Herzog’s Plan: Security Barrier Around the Major Settlement Blocs of West Bank

Analysis: Resolving The Israeli-Palestinian Conflict

The ideal – maybe utopist – long holistic peace process by Ari Rusila