Eurasia note #74 – OPEC Eases Off The Gas; Powers New Alliance

Russia’s new foreign policy doctrine aligns with Chinese perspective

• OPEC+ cuts oil output, drives prices higher, as West faces more inflationary pain.

• Analysts see Saudis putting own interest and regional partners first.

• Rebuff to U.S. which wanted lower prices before refilling its strategic reserve.

• Russia, Saudi Arabia in China’s energy orbit, while U.S. faces economic retreat.

• After peace with Iran, will Iraq be drawn into the same sphere?

• Syria’s Arabian overtures raise a question over northeastern oilfields.
  

• Russia’s new foreign policy doctrine follows visit of China’s Xi Jinping to Moscow.

• Extends multipolar objective to eliminate vestiges of the dominance of the US.

• Will the owner-investors adjust as trade’s magnetic pole reverts to the Silk Road?

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Saudi Aramco will supply oil to Zhejiang Petrochemical Corp in a 20-year deal

Tbilisi, Apr 3, 2023

Symbolic, or evidence of new loyalties and alignments, the Sunday oil surprise delivered by OPEC+ — including ministers of Saudi Arabia and Russia — places Eastern oil needs above Western worries about inflation and energy pressures.

First a little market chatter.

The curtailment of a million barrels per day through the end of the year could drive the barrel price higher by about $10 — after prices slumped in the wake of banking collapses. Producers may fear further weakening of demand from the West.

It coincides with increased consumption from the East. Last week Saudi Aramco expanded a deal involving two refineries in China supplying not just energy but chemicals essential to manufacturing. Saudi Arabia competes with Russia as the country’s largest crude suppler — and China wants to pay in yuan.

China likes secure supply but also favourable pricing, as seen in Russia’s agreement in 2014 to a 30-year contract for natural gas. The duo may use their leverage with Iran, which has sway in Iraq, to increase access to Baghdad’s bounty, after brokering a diplomatic embrace between Riyadh and Tehran. Simon Watkins writes:

“Specifically, a source who works closely with the European Union’s energy security apparatus exclusively told OilPrice.com last week, Iran was told by a very high-ranking official from the Kremlin that: ‘By keeping the West out of energy deals in Iraq — and closer to the new Iran-Saudi axis — the end of Western hegemony in the Middle East will become the decisive chapter in the West’s final demise’.” [1]

He does not mention Syria, where the U.S. has been pumping crude in the northeast, in al-Hasakah and Deir Ez-Zor — something the official U.S. media deny. [2]

After Syria’s president Bashar Hafez al-Assad was welcomed in UAE, a further warming of relations is expected in the Arab world.

Reversing hegemony

In the diplomatic field, Russia on Friday announced a new foreign policy doctrine in response to what foreign minister Sergei Lavrov called a U.S. attempt to weaken Russia in every way in a new type of hybrid war.

The doctrine asserts Russia’s right to maintain regional as well as global security, including the development of “a secure information space” to protect Russian society from “destructive foreign information and psychological impact.” [3]

The policy, which president Vladimir Putin outlined to the nation’s security council, was couched in terms of protecting “traditional Russian spiritual and moral values” of the “multinational people of Russia.”

At its core is a defiant response to U.S. hegemony, which Lavrov fingered as instigator of anti-Russian policy.

As well as hardening Russia against malign influence and “defending Russian organizations from foreign illegal encroachments,” the doctrine aligns Russia with developing countries and organisations of regional integration in language reminiscent of the Non-Aligned Movement established in 1961 to offset the polarisation between NATO and the Warsaw Pact — but with a twist, for Russia has found itself the outsider.

The difference today is that there is no Warsaw Pact (1955-1991) but there is still NATO (1949-present), and there are many countries that have begun to question the cost-benefit of U.S. hegemony. And then there is China.

Far from being unaligned, Russia is very much positioned alongside China with the objective not just of challenging but reversing U.S. hegemony, not only in Asia and the Pacific but across Africa, to the Middle East and in South America.

Russia, though still a world power, must seek allies no longer from a position of dominance or former empire but by negotiation that offers mutual benefit.

This is not Moscow being gracious — they don’t sing kumbaya in the Kremlin; it is a response to the hard reality of the resource-war approach that dominates Western thinking. How many examples does one need of what Gen Wesley Clark (retd) described as, “we’re going to take out seven countries in five years”? [4]

U.S. policy has pushed Russia more quickly into accord with China. It is a century-long power shift in the view of Chinese analysts (more of which, below) but it might not have happened so fast without Washington painting Beijing as its main rival, while backing a war in which Russia can be perceived as a proxy for China.

Multi polar bear

The announcement of a new foreign policy doctrine also shows that Russia operates very differently to the caricature in the Western press. Policy is not determined by one man’s whim.

Countries that share their borders with many others have a different view of the world, in contrast to islands like Britain or those that occupy much of a continent from sea to shining sea. Extensive land borders require that they expend much more effort negotiating with neighbours and that demands a considerable diplomatic infrastructure.

Russia borders 14 countries (Azerbaijan, Belarus, China, Estonia, Finland, Georgia, Kazakhstan, North Korea, Latvia, Lithuania, Mongolia, Norway, Poland, and Ukraine).

Russia indeed inherited its bureaucratic infrastructure, including its Diplomatic Academy, from the USSR but, again, one must keep in mind the discipline that multiple borders, including the challenge of historic disputes and frozen conflicts, impose on the conceptualization and practice of diplomacy.

Contrast this with the apparent ease which which the neo-conservative cohort has established an outsize voice in Washington policy. Though the Soviet Union no longer exists the neo-cons project the spectre of their own ambition upon today’s Russia.

Alistair Crooke quotes Trita Parsi, co-founder of the Quincy Institute for Responsible Statecraft, about the way in which the U.S. places itself above all rules:

“We deliberately chose a different path. America prides itself on not being an impartial mediator...

We abhor neutrality. We strive to take sides in order to be ‘on the right side of history’ since we view statecraft as a cosmic battle between good and evil, rather than the pragmatic management of conflict where peace inevitably comes at the expense of some justice.” [5]

Of course some countries have not forgiven the Soviet Union, and may never do, even though they fail to account for the Bolsheviks’ origins and their financing by Western oiler-bankers. Some are stalked by the ghost of Golitsyn (Anatoly) and maintain that the communists faked the demise of the USSR. Others are motivated by ethnic feuds and even messianic longing for the lands of Rus.

For others, it’s all about the money, or rather the black gold of Ukrainian and southern Russian soil: the chernozëm or black earth. Ukraine’s share is equivalent of one-third of all farmland in the European Union. It has attracted the attention of asset managers and the biggest companies in agriculture: Monsanto, Cargill and Dupont.