17 SEPTEMBER 2014
Jim Willie CB,  “the Golden Jackass”

 


Special Report #1

RUSSIA & CHINA JOIN AT THE HIP

The Western sanctions have attempted to isolate Russia. Despite some growing damage, the Great Bear has been working on a marriage with the Great Dragon. The USGovt has hastened their work together toward creation of an alternative to the USDollar and the SWIFT bank system. The cooperation between Russia & China is broad, deep, and valid. Many are the shuttles between Moscow and Beijing, as numerous roads are being constructed of all types. The Global Paradigm Shift is at work, as the Eastern Alliance is forming both commercially and financially. The end result will be both an extended Eurasian Trade Zone that includes Germany and other members of Europe, and also a BRICS gold-backed currency used for trade. The USDollar will be rejected, and lose its global reserve status as a result of the Ukraine War. It is truly the USDollar Waterloo. The effect on the USEconomy will be horrible and tragic, which the majority of citizens do not properly anticipate. The United States will again experience the whiplash of sanctions failure. The nation has lost almost all prestige. The United States is facing a systemic failure.

◄$$$ GAZPROM WILL ACCEPT YUAN AND RUBLE CURRENCY IN ENERGY PAYMENTS... THE DE-DOLLARIZATION OF EUROPEAN ENERGY MARKET IS MOVING FORWARD... THE PETRO-DOLLAR WILL DIE FROM RUSSIAN AND SAUDI REJECTION, BUT FIRST BY THE EASTERN OIL PRODUCER... THE UKRAINE WAR AND SANCTIONS HAVE HASTENED THE PETRO-DOLLAR DEMISE, OR CRYSTALLIZED ITS REJECTION... THE CROSS-BORDER CAPITAL FORMATION WILL OCCUR IN YUAN & RUBLES... THE CROSS-BORDER TRADE IN GOODS & SERVICES WILL INCREASINGLY BE DONE IN YUAN & RUBLES. $$$

Several months ago at the christening of the Holy Grail energy deal between Russia and China, many details on capital layout and hints on pricing were revealed. Some were disappointed that despite this symbolic agreement meant to break the Petro-Dollar's stranglehold on the rest of the world, neither Russia nor China announced payment terms to be in anything but USDollars. They admitted a deep desire by both nations to move away from a USDollar reserve currency. More progress was made away from the King Dollar court in June, when for the first time the Gazprom CFO announced the gas giant was ready to settle China energy contracts in Yuan or Rubles. More moves away from the USD at a high level in principle. The Peoples Bank of China Assistant Governor Jin Qi and Russian central bank Deputy Chairman Dmitry Skobelkin announced further cooperation on projects and trade financing using local currencies, at the end of August in a huge event.

The USD rejection is moving quickly apace, without the US population comprehending the depth of its importance, or the upcoming impact to come to the USEconomy. The high level bilateral meeting discussed businesses related to bank cards, insurance, and financial supervision sectors. Both sides declared their operational readiness and eagerness to bypass the USDollar entirely, but the setting was much like Letters of Memorandum, not formal policy. The first major shot by Russia across the Petro-Dollar bow was absent, until late August. It was a bold step indeed. The US Press totally ignored the event, which will eventually require the USGovt to launch a calamitous New Dollar for domestic usage. No nation can rely upon bond monetization to cover its federal debt, when only a domestic currency without the global reserve privilege.

The business daily Kommersant reported that Gazprom Neft has agreed to export 80,000 tons of oil from Novoportovskoye field in the Arctic. It will accept payment in Rubles, and will also deliver oil via the Eastern Siberia Pacific Ocean pipeline (ESPO), accepting payment in Chinese Yuan for the shipments. Therefore, the new dawn has arrived, a start to the process. Russia will export energy to Europe and China, with payment received in either Rubles or Yuan. In the process, a remarkable new currency regime has become fait accompli, as in done deal. The two currencies have been rendered equivalent as far as the Eurasian Trade Zone is concerned. The Russian energy supplier will transact completely outside the USDollar. Witness a big first step away from the Petro-Dollar in the Eurasian region. This was precisely the Jackass forecast made in March and April, for Russian energy to supply Europe, and move in an interchangeable fashion toward Ruble and Yuan currency. It has happened, a correct Jackass forecast.

Some details on Gazprom Neft business dealings, which should be regarded the first nail in the Petro-Dollar coffin. The Russian government and several of the country's largest exporters have widely discussed the possibility of accepting payments in Rubles for oil exports, the customers largely from Europe. In early September, Russia began to ship oil from the Novoportovskoye field to Europe by sea. Two oil tankers are expected to arrive in Europe in mid-September. According to Kommersant, the payment for these shipments will be received in Rubles. All subsequent transfers via the ESPO pipeline might be paid for in Yuan. The change in currency for energy payment was made in response to the Western sanctions against Russia. Hence the USGovt has brought about a pushing off the energy shipment passage routes the Petro-Dollar defacto standard which has stood for 40 years.

Zero Hedge has made clear forecasts of the next steps in the transition from the Petro-Dollar to the Gas-O-Yuan. What is happening is the merger of the Ruble with the Yuan, a very unintended consequence of sanctions. Instead of isolating Russia, the US-EU actions have brought a tighter bond between Russia & China. Recall their analysis and statements from April, when the intrepid brilliant journal delineated the steps toward the New Normal Flow of Funds.

  1. Gazprom delivers gas to China
  2. China Gazprom pays in Yuan (convertible into Rubles)
  3. Gazprom funds itself increasingly in Yuan
  4. Russia buys Chinese goods & services in Yuan (convertible to Rubles).

The Jackass adds that Saudi Arabia will soon accept non-USDollar payments for oil at China's urging and Russia'a blessing. Furthermore, the US banker cartel has been completely disintermediated, in terms stated by Tyler Durden, as a result of the glaring absence of the USDollar in any of the bilateral Russian-Chinese energy trade. It goes beyond energy, to include capital formation and other goods & services. One can survey the global landscape and conclude the Petro-Dollar Standard is being phased out, and coming into view is the Gas-o-Yuan. At least 40 central banks have already figured out, but not the USFed or Bank of England or Euro Central Bank. It is worthwhile to recall the past plan stated in early June. Gazprom clients would pass through a de-Dollarized phase. They promised to transact in Euro and Renminbi. Actually four months ago, Gazprom set the stage for the day it finally would push the button to skip the USDollar entirely. It just did, and thus confirmed an important Jackass forecast. See the Zero Hedge article (CLICK HERE) and RIA Novosti article (CLICK HERE). Sanctions have resulted in a stepwise process to eliminate the Petro-Dollar, the foundation. It is reverse sanctions, the counter-measure. Worse, taking away the Petro-Dollar takes away the USGovt war credit card, except that Langley is self-funded by narcotics.

◄$$$ RUSSIAN FOREIGN MINISTER LAVROV HAS BEEN VERY VOCAL... AMAZINGLY, THE US-PRESS HARSHLY CRITICIZES RUSSIA WHEN THE UNITED STATES IS THE MOST BELLIGERENT PARTY IN THE FRAY... LAVROV CLAIMS RUSSIA IS NOT LOSING BATTLE WITH US FOR INFLUENCE IN EUROPE.. HE SPOKE IN DETAIL... HE ASSESSED THE UKRAINE SITUATION FOR ITS GEOPOLITICAL AGENDA BY THE UNMASKED FASCISTS IN THE UNITED STATES. $$$

The USGovt has an objective to prevent the Eurasian Trade Zone from coming together, to obstruct the development of trade and financial relations between Europe and Russia. Although the Unites States is trying to do their best to disrupt the economic relations between the EU and Russia, the superpower to the East is not losing the battle for influence in Europe, claims Foreign Minister Sergei Lavrov. He has proved to be a steady hand in the entire messy situation, deflecting propaganda, and working toward peaceful solutions while the USGovt and Langley work to create a deep division through war, scorched earth, and severed energy supply lines. Lavrov went on in considerable detail, as guest to Russian TVC.

"There is a big battle going on. The United States wants to use the current situation in order to separate Europe from Russia economically, and to bargain the most favorable conditions for themselves in the context of the ongoing negotiations toward the creation of a Transatlantic Trade & Investment Partnership. [US] efforts have intensified, including through the attempt to force Europe to purchase the American liquefied natural gas at prices that cannot be competitive with the price of the Russian gas. This was definitely motivated by economic interest. Now we are seeing the EU giving the subject a second thought. The fact that some of the EU countries, which are not the largest and do not have a leading role, begin to argue openly that the policy of sanctions is a deadlock, that it is counter-productive, says a lot. Speaking about our Western partners, everything has gone if not out of control, then at least by a very confrontational scenario. The reason is simple: they do not want to admit what is obvious to us, that the coup [in Ukraine] was organized with the direct support, if not encouragement, of the United States and Brussels.

Not only the US, but also the European envoys travel to every capital around the world, with no exception, to demand from the leaders of states, to strongly request not to support Russia, to join the Western sanctions and to refrain from any steps that will further the ties between a particular country and the Russian Federation. For me this is an unprecedented situation. Such campaigns are, in fact, subversive for Russia's relations with its partners. Washington is pushing Ukraine towards the precipice for the sake of its own agenda of weakening Russia. The steps it had been taking with regard to the Ukrainian crisis have already proved it is willing to grant carte blanche to extremists, rather than work to achieve peace in the country. Almost everything that radicals and extremists in Ukraine do, including those in the government structures, gets carte blanche from the United States. None of the arguments are working that point to the necessity of taking an objective look at what is happening and calling for national dialogue, reconciliation and respect for minority rights. All the values that the West promotes in any other conflict.

Washington has repeatedly proved that its goal is to escalate this crisis to the maximum in order to use Ukraine as a bargaining chip in yet another attempt to isolate and weaken Russia. The United States does not even try to conceal its agenda. There is neither transparency, nor accountability in attempts to set up a multi-lateral discussion of the MH17 flight crash investigation. We [Russians] are probably the only ones who are constantly reminding all of the fact that there is a UN Security Council resolution, which demands that the investigation should be thorough, international, transparent, and accountable. The hysterical accusations against independence supporters [in Eastern Ukraine] and Russia [arrived quickly without investigation]. Now that the propaganda cream has been skimmed off, it is possible that one does not really want to investigate the true cause of the accident." A big WOW! for a bulls eye assessment in a nutshell of the ugly divisive intractable situation over Ukraine. See the RIA Novosti article (CLICK HERE). The United States is demonstrating clearly that it is a rogue nation.

Contrast to the nonsense and drivel spouted by US Secretary of State John Kerry about 1) Russian aggression, when the USGovt supported the Kiev coup d'etat, 2) the attack and annexation of Crimea, when the Russians secured their naval base and ordered a referendum to the people of Crimea (approved by 95% but not seen in US Press), 3) the Russia troop buildup in Eastern Ukraine that was largely untrue, and 4) the atrocities committed against eastern province civilians, which is almost exclusively done by the Kiev Regime. The USGovt ministers have proved to be dishonest, belligerent, and unprofessional, actually unworthy to be part of a peace pact. Leave it to the German team and the Kremlin team. The US has exported a fascist war with deep ulterior motive, using Langley mercenaries as proxies while it pilfers the Ukraine nation of its wealth.

◄$$$ RUSSIANS ARE BUSY WASHING THEIR HANDS FROM THE SWIFT SYSTEM... RUSSIA & CHINA ARE IN TALKS TO MAKE AN ALTERNATIVE BANKING SYSTEM TO SWIFT... THIS IS A PERMANENT MOVE BY THE RUSSIANS TO ABANDON THE SWIFT SYSTEM AMIDST STEADILY DELIVERED THREATS FOR EXCLUSION. $$$

The United States Govt believes they are isolating Russia, when they are actually isolating themselves, while alienating European Union member nations at the same time. The US will soon be a pariah nation on the global stage, shunned by all. Russia and China are in discussions to set up a system of interbank transactions which will become an analogue to broadbased banking transaction system called SWIFT. The Russian First Deputy Prime Minister confirmed the development. After negotiations in Beijing, Igor Shuvalov confirmed the news, stating "Yes, we have discussed and we have approved this idea." Russian authorities have sought to decrease their financial dependence on SWIFT (Society for Worldwide Interbank Financial Telecommunications) since the USGovt imposed the first sanctions, which were quickly followed by blocked international payments by VISA and MasterCard. Late in August, the Russian Central Bank and their finance and economic ministries drafted a bill to create a Russian alternative of the SWIFT international financial system. Expect by mid-2015, many European banks will be using the Russia-China New SWIFT system on an increasing basis on payments for energy and other products. Both the USDollar and US-centric SWIFT system will be bypassed, avoided, rejected.

The urgent need to create the new system was made clear when earlier this month, UK Prime Minister David Cameron promoted a proposal at a EU summit to block Russian banking access to the system. Expect that the Kremlin will exact its revenge in Gazprom shipments this winter, or threats thereof, at least bargaining chips utilized. One week after the clown Cameron suggested cutting Russia off the international payment system, the Russians announced they were in talks with China for a SWIFT response to the threat. Action then reaction. Isolation will harm the West far more than the East. The Russian responses have been broadbased, like with expanded Ruble-Yuan currency swap facilities, the expansion of UnionPay credit cards, and the establishment of an independent ratings agency with China. Much of Europe will join Russia in these platforms, since the US has abused European nations in open fashion. Evolution is at work in response to need, in avoidance of monetary cancer, in reaction to diffuse sanctions with almost no bite. See the FOREX Magnates article (CLICK HERE) and the ITAR-TASS article (CLICK HERE).

China & Russia are going to jointly face external challenges. Bill Holter pointed out that China is not going to let Russia take a fall or enter decline, and certainly not suffer isolation. For a good BRICS discussion, review the Holter essay, who always provides good insight and level-headed analysis. See the BRICS Post article (CLICK HERE).

◄$$$ RUSSIA & CHINA MERGE INTERESTS WITH A WIDE MIXTURE OF PROJECTS... THE TWO SUPERPOWER NATIONS ARE RAMPING UP THEIR COLLABORATION... THEIR COMMERCIAL BONDS ARE FIRMING... ISOLATION OF RUSSIA IS A PROPAGANDA ITEM WITH NO MEANING OR SUBSTANCE. $$$

Russia & China (R&C) are joining at the hip, the brain, and cash register, but maybe more so with the heart than is recognized. The two superpower nations pledged to settle more bilateral trade in Ruble and Yuan and to enhance cooperation between banks. Russia's First Deputy Prime Minister Igor Shuvalov made the announcement in Beijing. An economic cooperation pact had been agreed upon with China's Vice Premier Zhang Gaoli that included broader usage of the Ruble and Yuan for trade transactions. The pact has other key provisions. The agreements permit Russian banks to create accounts with Chinese banks, and to enable Russian companies to seek loans from Chinese firms. Shuvalov stated, "We are not going to break old contracts, most of which were denominated in dollars. But we are going to encourage companies from the two countries to settle more in local currencies, to avoid using a currency from a third country." Expect new contracts, and extensions of contracts to be written in Rubles and Yuan, to the exclusion of USDollars. Expect phase out of older USD-based contracts. The oil & gas funding sanctions plan has been averted for the most part, since Russian firms will merely fund via China. See the Reuters article (CLICK HERE).

A particular deal might set a precedent in Russia-China relations, as the Holy Grail comes into reality. The Chinese company CNPC is to receive up to a 10% stake in Russia's Vankor oilfields, the biggest Rosneft production asset. Chinese investors are to receive up to 10% in the Vankor cluster fields of northern Siberia. It serves as one of the biggest developed Russian oilfields and the oil giant's largest production asset. Russian President Vladimir Putin announced the plan at the construction launch of the Power of Siberia gas pipeline on September 1st. Putin stated to the members of the Chinese delegation that there are no restrictions for their Chinese friends. The 10% stake would require an investment of around $1 billion. CNPC is a gigantic state owned Chinese corporation with 1.67 million employees. The deal knocks another leg out of the sanctions stool, since investment in energy infrastructure and technology is covered. Look for China to have numerous stakes in major Russian projects, each gradually expanding in size. The practice will firm the bond between R&C, but also provide Russia with valuable working capital. At the same time, China will exploit a window to dump USTreasury Bonds to pay for its investment stakes, in the Indirect Exchange manner.

Rosneft and CNPC are also in talks concerning joint projects on the Barents Sea and other locations. Up until recently, Rosneft has had no functioning joint ventures with Chinese companies, which makes this agreement unique. Irina Grinets is chief commodity analyst at the Russian Presidential Academy of National Economy & Public Admin. She provided another angle view. She said, "This decision is driven by Rosneft's financial needs, rather than some potential benefit from a specific deal on the Vankor deposit." Rosneft holds a large volume of liabilities. In 2013 Rosneft net debt amounted to about $44.5 billion, while the company's debt payments will peak in 2014 to 2015. A tiny $30 million in debt service must be paid. Here is the strain. As a result of USGovt sanctions, Rosneft cannot take out credits for more than 90 days. Turning to China for investment capital seems logical and expedient within this context. The debt service size is not large. See the Russia Beyond the Headlines article (CLICK HERE) and the Oil Price article (CLICK HERE).

Russian Railways are set to receive a ripe RUB 400 billion (=US$10.6 bn) investment from Chinese investors. The Middle Kingdom is willing and eager. The projects center on the construction of high speed highway linking Moscow to Kazan. The city of Kazan is the capital and largest city of the Republic of Tatarstan in the eastern region. Its population of 1.14 million is the eighth largest among Russian cites. Kazan lies at the confluence of the Volga and Kazanka Rivers in European Russia. The source could be led by the China Development Bank, which is prepared to raise the funding needed for this project. The final decision on the construction of high speed railways is in Russian Govt hands. See the ITAR-TASS article (CLICK HERE).

◄$$$ RUSSIA WAS PERMITTED TO PROCEED WITH THE RWE ACQUISITION OF THE GERMAN FIRM... THE DEAL ENABLES RUSSIA TO CONDUCT ENERGY EXPLORATION FROM A HUGE NUMBER OF CONCESSIONS... IT SEEMS LIKE THE TIDE IS TURNING SOMEWHAT INSIDE GERMANY... LIP SERVICE GIVEN BY POLITICIANS TO THE AMERICANS, WHILE COMMERCIAL INTERESTS SET DEEPER ROOTS. $$$

Germany allowed Russian investors to buy RWE, a remarkable event given the atmosphere of sanctions. The German Govt Ministry of Economy approved the purchase of the German company RWE from the current owner DEA, the acquistion done by investment group LetterOne led by Mikhail Fridman. From mid-June, the German Govt conducted an analysis of the RWE transaction for violations of the strategic interests of Germany. The transaction might be one of the largest acquisitions by the Russian business sector. The process has received the green light from the authorities. The first transaction of a fledling group LetterOne was announced in March. By convention, the LetterOne buys oil & gas giant RWE  for a total EUR 5.1 billion. LetterOne pay EUR 4.5 billion and shall assume the obligations on DEA, to the amount of EUR 0.6 billion. Upon successful closing, a group of Russian investors will receive more than 190 concessions for oil & gas in Europe, North Africa, and the Middle East. The giant Russian energy conglomerate apparatus will extend more so globally. The energy sector remains strangely the exception within the great sanctions game. The Jackass believes the USGovt plans to cripple the EU Economy without resorting to energy cutoffs or energy blockades or even energy merger obstruction. The plan is to cripple Europe, but not kill it. The ultimate goal is to install a fascist state, a totalitarian regime in Pan-Europe that matches the US fascist state in place since 2001.

◄$$$ THE KHERSON SHIPYARD HAS DIED, AN IMPORTANT UKRAINE FACILITY... IT IS A CASUALTY OF WAR. $$$

Kherson Shipyard, one of the largest shipbuilding companies in Ukraine, has gone under and gone bust. It was founded in 1951, kicked the bucket. It was the center of a city, the main thrust behind many supporting businesses, with a certain trickle down on a large scale. The Economic Court of the Kherson region initiated legal proceedings in the bankruptcy case of PJSC, known as the Kherson Shipyard, on the application of PJSC Balaklava Mine of Gorky of Sevastopol. Both companies are controlled by the Smart-Holding, whose main beneficiary is a billionaire tycoon Vadim Novinsky. The court imposed a moratorium on satisfaction of creditors, and appointed Teterich Natalia as executor of the estate. It instructed her to develop a roster of creditors, and then to make an inventory of the debtor's property for the purpose of determining its value, all within a time schedule. A preliminary hearing in the case is scheduled for October 15th. The shipyard will be revived at a later date.

◄$$$ RUSSIA & CHINA PLAN TO BUILD A SEAPORT IN THE SEA OF JAPAN, WITHIN EFFECTIVE DISTANCE TO SERVICE JAPAN... THE DEVELOPMENT OF THE NORTHEAST PACIFIC REGION IS OCCURRING. $$$

On official level, Russia & China will build a seaport that is supposed to become one of the largest seaports in NorthEastern Asia. The Peoples Daily Online reported the new giant seaport will be able to handle about 60 million tons of cargo per year. The new seaport will be situated on the Russian coast of the Sea of Japan, around 18 km (=11 miles) from the Chinese border. The deal was signed at a CICA conference in Shanghai held in May. The construction of the new seaport is one of the steps recently taken by the two countries aimed at establishing strategic energy cooperation. An event is upcoming. In October, Russian President Putin and Chinese President Xi Jinping are scheduled to attend the China-Russia Energy Cooperation Committee summit meeting. The agenda is simple in strategy but complicated in execution. China strives to diversify its energy sources, while Russia strives to refocus its gas & oil exports towards Asia. Many are the follow-up contracts and agreements after the historic Holy Grail Deal signed on May 21st, in which Russia & China agreed on a long-term gas supply contract. It features large scale multi-year sales and delivery of natural gas through the eastern routes, some which must be constructed. See the Strategic Culture article (CLICK HERE).

Japan must have a port in order to handle the LNG from the pipeline. This seaport is part of a long-term strategy. Eventually, the seaport will either feature as new or work in concert with a natgas pipeline facility like for LNG. Japan might talk nice to the USGovt, but they are moving into the Russia-China camp. Expect the capital costs for the construction to be paid often in USTreasurys, more Indirect Exchange.

◄$$$ NORWAY PRESSES TO DEVELOP POSITIVE RELATIONS WITH RUSSIA, WHILE SUPPORTING THE WESTERN LINE... ONE BY ONE, THE NATIONS OF EUROPE ARE BREAKING RANKS. $$$

Norway is not an EU member. As such, the Norwegian Govt is not bound to join a new round of EU sanctions directed against Russian individuals and legal entities.  The Prime Minister Erna Solberg wants to develop positive relations with Russia. A head of state meeting took place between Solberg and Russian State Duma Vice-Speaker Ivan Melnikov. Oslo hosted a European Conference of Parliamentary Speakers. He said, "Solberg made it clear that Norway wants to build positive relations with Russia. It seems that she definitely meant that the policy of sanctions was not constructive, irrespective of who initiates it." Melnikov believes Norway has built itself into political organizations that can coerce it to dance to their tune against its will. For her part, Solberg said, "We would like to maintain constructive and predictable relations with Russia. But it is necessary that Russia should want the same." Norway is a small country of only 5.0 million in population, but in possession of a gigantic $880 billion sovereign wealth fund, often called the Pension Fund.

In the past, often reliable precedent, Norway has consistently joined all previous restrictive measures as defined in sanctions by the European Union against Russia. In a recent visit by Solberg to Tromso, a city in northern Norway, she learned of the impact by Russian bans on imports of Norwegian fish and seafoods. The Prime Minister stated in clear terms that growing tensions in Western relations with Russia had a negative impact on economic interests for Norway. However, the Norwegian Govt feels obliged to support the line of its allies and partners, she admitted. Her objective is for Norway to maintain cooperation with Russia in spheres like joint management of fish resources. See the ITAR-TASS article (CLICK HERE). The nations of Europe are slowly breaking ranks from the restrictive and destructive European Union and USGovt dictums. Scotland has seen how well Norway has managed with independent off-shore wealth.

◄$$$ RUSSIA HAS SIGNALED ITS INTENTION TO ADMIT IRAN TO THE ASIAN SECURITY BLOC... INDIA SHOULD FOLLOW SOON BUT WITH GREATER RISKS... THE NEW SILK ROAD & SCO ARE FIRMING UP WITH IRAN TO BECOME A FULL MEMBER... THE SCO ALLIANCE COULD EMERGE AS THE EAST'S ANSWER TO THE NATO ALLIANCE... THE EAST WILL NOT BE BULLIED. $$$

Iran has been trying for years to enter the Eurasian security bloc known as the Shanghai Cooperation Organization (SCO), a six-member bloc. It has recently been described as a regional counter-weight to the US and NATO, a remarkable perspective. This means NATO has fallen in prominence, while SCO has risen. Amidst the most serious tensions with the West in decades, Russia could take advantage of its upcoming post at the helm of the group to hasten Iran's admission. At the annual SCO meeting of its leaders in the Tajikistan capital of Dushanbe, Russia will assume the rotating presidency. Russian Foreign Minister Sergei Lavrov noted that Iran, India, and Pakistan were all eager to become full members of the expanding bloc. He also mentioned that an increasing list of  countries are seeking observer or dialogue partner status. It is not clear what the SCO agenda is, which must be clarified.

The Russian daily Rossiyskaya Gazeta reported that Lavrov would formalize procedures for admitting new members at the summit, "making it possible to start expanding the organization during the Russian presidency. SCO is an important factor in the emergence of a new polycentric world order, [where its members] work together to adequately respond to events in the region and the world." Russia will make the expansion happen, and furthermore, broaden its influence, as in make it a NATO-like entity to produce a geopolitical balance. A challenge is being made to other alliances, a slap at Europe, with stated focus on discipline, peace priority, and integrity. Lavrov said SCO success rests on its commitment to the principles of "equality, mutual respect, consideration of each other's interests, resolving conflicts and disputes by political and diplomatic means, and the right of nations to choose their own path of development. The SCO is fully in tune with the realities and demands of the 21st century, unlike the discipline that exists within particular blocs of countries." Russia & China are emerging as diplomatic leaders, while the United States and United Kingdom fall into their fascist warlike roles.

The original Shanghai Five in 1996 later expanded regionally to six members, then renamed itself the SCO in 2001. Stretching across the vast region from the Pacific to the Caucasus, its members consist of China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan, the latter four being former Soviet Central Asian republics. These SCO nations combine to account for one quarter of the world's population, and control a substantial chunk of the world's oil & natural gas reserves outside of Arab control. The nations Iran, India, and Pakistan were first granted SCO observer status in 2005, giving them the right to attend meetings. For the last few years, the existing members appeared to be in no hurry to expand the group. However, Lavrov signaled that change will happen on Russia's watch. In lockstep, in early September the Chinese Foreign Ministry openly shared the desire for progress on admitting new members at the summit. The Iranian President Hasan Rouhani will be in attendance. The long awaited expansion now looks likely, just in time as the NATO alliance is under great strain and in the process of fracturing. See the CNS News article (CLICK HERE).

Furthermore, India has applied for full membership of SCO, the security group dominated by China. The government in Delhi made a statement that it is ready to assume day-to-day responsibilities within the context of the bloc. On September 12th, External Affairs Minister Sushma Swaraj formally submitted an application for full membership to the SCO on behalf of India at the SCO Heads of State Summit 2014 meeting held in Dushanbe Tajikistan. The next step is for SCO to make the decision on membership. See the Indian Business Standard article (CLICK HERE). Prime Minister Mori is making good decisions, but in direct opposition to US interests. Its neighbors Pakistan and Iran will move from being observers to members of SCO in short order. One must raise the question of whether the USGovt through its Langley assassins will attempt to kill Mori so as to change the course for the nation of India. There are too many precedents for such murders, like recently in Brazil, and possibly in Venezuela.

◄$$$ DE-DOLLARIZATION CONTINUES AS CHINA & ARGENTINA AGREE TO A CURRENCY SWAP... THEY WILL TRADE IN RMB IN GOOD VOLUME... ONE MIGHT SMELL A DEFAULT IN THE AIR, WITH WESTERN BANKERS AS BAGHOLDER VICTIMS, AND A STURDY CHINESE REINFORCEMENT FOR BUENOS AIRES... HINTS ARE FOR ARGENTINA TO JOIN THE BRICS ALLIANCE SOON FROM THE BACK DOOR. $$$

The Russia-China camp appears ready to adopt another forlorn crippled nation. The victim of its own socialism and US banker exploitation, Argentina has become a marked nation, suffering serial defaults of debt. One by one, Russia & China are dealing with allies willing to de-Dollarize, the latest being Argentina. The nation has been deeply entangled in debt default resolution with the courts taking a stand, in a manner which on its face seems inappropriate if not illegal. The US Courts and Private Equity Firms (often called Vulture Funds) have far too big a voice on matters pertaining to the sovereign matters inside the Buenos Aires, related to banks. In response, in a defiant gesture, the central banks of China and Argentina have agreed a massive currency swap operation intended to bolster the Argentine foreign reserves. The facility could also be used to pay for Chinese imports with Yuan, as Argentina's USDollar reserves dwindle. In addition, Argentina claims China supports the nation's plans in the defaulted bondholder dispute. The USGovt (run by big US banks) has opposed the default. The US prefers a continued ball & chain at work, operated by Wall Street. A big battle is to come.

The two parties chose an interesting location to meet on neutral ground, in Basel Switzerland two months ago in July. At the Basel meeting, Argentine and Chinese central banks agreed to a currency swap equivalent to $11 billion which Cabinet Chief Jorge Capitanich said could be used to stabilize reserves. Their financial system is experiencing a powerful toilet bowl effect, with capital vanishing down the tubes. The nation of Argentina, which defaulted on its debt in July, is scheduled to receive the first tranche of a multi-$billion currency swap operation with China's central bank before the end of this year. The purpose of the funds is not specified. China might be in a position to exploit access to important large Argentine assets. La Nacion newpaper reported that Argentina would receive Yuan worth $1 billion by the end of 2014, the first payment of a loan worth a total $11 billion, endorsed by Argentina's President Cristina Fernandez and the Chinese counterpart in July. The swap would allow Argentina to bolster its foreign reserves, or to make payment for Chinese imports with the Yuan currency. The Argentine Economy is suffering from weak export revenues and an ailing currency, as a result of a generation of horrendous socialism stupidity and recklessness. Its strict laws against USDollar refuge have accelerated the toilet bowl downward spiral. The Yuan will take over, as the USDollar is pushed out, more USD rejection after abuse. See the Zero Hedge article (CLICK HERE) and the Reuters article (CLICK HERE).

Speculation abounds on the analytic side. A fund manager offered an assessment, which the Jackass will edit with minor added embellishment. Argentina will leave all ties to the USDollar for the Chinese RMB. Then they pay off the bond holders with their increasingly worthless Peso. Kiss the IMF and bankers goodbye, with full prejudice. The bankers and vulture funds can serve as bagholders, rather than to exploit the situation further. This is a resource rich nation pillaged by the collaboration of the Military Generals and the US bankers, with a strong theme of US Nazis running through their high offices. Kissinger made frequent trips there in the 1970 decade, under restricted photos taken. It sure seems like Argentina will be accepting a BRICS loan soon. Regard Argentina as yet another Fascist wasteland.

◄$$$ CHINA, JAPAN, SOUTH KOREA CONCLUDED THEIR LATEST FREE TRADE AGREEMENT TALKS... THE THREE NATIONS FORM THE CORNERSTONE OF EAST ASIAN ECONOMIES... THE FTA WOULD CHANGE THE REGION. $$$

China, Japan, and the Republic of Korea concluded their fifth round of Free Trade Agreement (FTA) talks in Beijing in the first week of September. Discussions covered fruitful negotiations over the models of tax reduction for goods trade as well as approaches for opening up service trade and investment. Differences have been narrowed over goods trade, service trade, and investment. The sides also agreed to include the important new agendas of e-commerce, the environment, and cooperation in future talks. The sixth round of talks is scheduled to be held in Tokyo in late November. No further details were disclosed. The origin of the trio of Asian economic giants was launched with FTA negotiations in November 2012. An FTA usually aims to eliminate tariffs, import quotas, and obstacles in trade among signatories. The three nations form major economies in East Asia with a combined population of over 1.5 billion people with outsized economies. See the Xinhua article (CLICK HERE).

Japan and SKorea appear to be pivoting away from both the proposed US-backed TPPA (Trans-Pacific Partnership Agreement) and the proposed US/EU-backed TISA (Trade In Services Agreement). The two nations, each traditional US allies, stand at great risk. The Fukushima event was devastating to Japan, both for its electricity grid and radiation spew. It was a Langley operation, complete with elaborate off-shore platform posts (murder of the engineers), which might be repeated in some other sinister flank. SKorea is home to 28,500 USMilitary troops, and increasingly seems like an occupied nation unable to pursue its own goals. Always bear in mind that the East wants trade, while the West pursues war. The Voice added a couple gems. "If this is not a game changer then I don't know what is. I have unconfirmed news that once the United States implodes, North and South Korea will be reunited within 12 months. They currently need the Kim Jong-un [psycho deviant in his peacock throne] to keep the US tied up in the region." The response to US exploited chaos is maintained tensions to distract.

George (source from COMEX) pitched in, the comment with my edits but his message. Japan as a nation and as a people are suffering the severe effects of radiation sickness, which could permanently destroy their gene pool. On the economic front, their energy needs could quickly, directly and indirectly, lead them to make much more firm connections to Russia & China. It could be a very energy challenged winter in Japan. We are at a juncture in the world where you need to think in terms of basics like food, energy, how to keep the business running, and where to sell the goods. Nations will begin on a growing basis to respond and to act in their own best interests. Ultimately America will feel this and respond in kind. The USGovt reaction will come in many forms of retribution from many sources. See Fukushima, the US retaliation to Japan working with East Asian nations on a USDollar alternative. The Free Trade Agreement will not use the USD ultimately. The nuclear plant exposures have threatened the entire North Pacific region of the world. George gets it.

◄$$$ IRAN AND ARMENIA SIGN ON THE TRADE ZONE... IT COULD BLOSSOM AND PERMIT ENTRY OF IRAN INTO THE RUSSIAN CUSTOMS UNION. $$$

Iran and Armenia will soon begin negotiations on creation of a free trade area (FTA). Yerevan and Tehran are preparing for a breakthrough in loosened trade for growth, in yet another free trade deal inside Eurasia. The nation of Armenia shares a small border with Iran. The initiative was suggested by the Iran Govt. Recall that Iran remains subject to the onerous USGovt and Western sanctions, although they are softening slowly over time. The idea of creating a free trade zone between Iran and Armenia is not new. The idea has been revived for two reasons. First, Iran is attempting to liberalize its trade and economic relations with its closest neighbors. The Tehran officials are actively working to establish free trade zones and free terminals. These structures, when in place, will enable Iran to circumvent the restrictions imposed by the sanctions. Secondly, trade between Armenia and Iran has dwindled and soon could be limited solely to energy. There has been a movement in the capital Yerevan to make new interpretations of economic cooperation with Iran due to the fact that trade has been in decline with the country.

The FTA is an effective tool to increase trade and to develop relations with Iran. The FTA does not conflict with Armenia's consent to join the Customs Union, pushed by Russia. In the same way the emerging Iranian-Turkish FTA is not contrary to Turkey's FTA with the European Union. The free trade zone should not be interpreted to mean that the goods produced in Iran can enter the territory of the Customs Union free from customs duties. This is a purely an Armenian-Iranian project, and all Iranian products coming from the territory of Armenia to the territory of the Customs Union will be subject to customs duties. Consider the FTA pacts to be building blocks toward ramping up trade. The Free Trade Zone concept is much bigger, and would often eliminate duties and tariffs. Regard this bilateral deal to be a bridge that permits Iran entry in the Russian Customs Union eventually. See the New Eastern Outlook article (CLICK HERE).

Expect the Eurasian Trade Zone to grow quietly and completely, before it offers marriage with Europe, underpinned by inclusion of Germany and France, with Holland and Austria to be attached. By then EU members will be sick of suckling hind dry tit from the Americans, whose political milk capital is fast running out. By then EU members might be facing farmer protests and calls for their heads. The wild card is always natgas restrictions. The Voice added some historical and other unique perspective. "What people need to realize this is nothing but re-establishing old trade routes with modern technologies and faster logistics. There is absolutely nothing new about this. It a reanimation of what has been lying dormant for a long time due to Western domination and destruction. The British became so scared of the Kama-Sutra in India that they destroyed all and everything that was in plain sight. The current development in India is of particular interest to closely follow. All these common outsourcing from Western nations along with the information technology hype will be coming to a brutal end in the not too distant future. The target nations will be joining as components to the Eurasian Trade Zone." The winds have changed, and come from the East.