by Christopher LaBorde, Gold Seek:
Last Tuesday (Nov. 22), during an emergency virtual BRICS meeting Putin declared that US unilateralism has wrecked all chances of peace in the Middle East. The statement was made with the support of China, BRICS nation supporters, the Arab world, and much of the Global South.
The following day a temporary cease-fire was brokered. A month after a UN General Assembly meeting voted on a Humanitarian truce, a week after the UN instructed the need for Humanitarian Pauses, and 12 hours after a Russian President explained that the US is destroying peace; the bullets will stop for increments of 24 hours. The accusation was that the US was killing people and destroying all options on peace by monopolizing diplomacy for their own interests. Putin’s timing, audience, and framing for this statement were that of a master chess player. Its moves like these that have left Biden looking more confused and bewildered than ever.
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Securing the Destruction of the US-Saudi Relationship
The Biden administration was trying to broker the Israeli / Saudi peace deal to bring the Saudis back to the Western side of the table after a disastrous destruction of the US-Saudi economic support system. At the beginning of his campaign for president, Biden failed to recognize the potential power Prince Mohammed Bin Salmon was amassing and the new position that Saudi was taking in the world. Biden’s understanding of his mistake and the resulting claw-back mission over the course of the last nine months has been a heroic but transparent effort. Progress was being slowly made but not everyone was happy about it. It has been speculated that Iran wanted to make sure that the bonds stayed broken between the US and Saudi enough for them to have served as the intelligence behind the Hamas attacks of October 7th. The attacks and the US response to those attacks formally ended all peace negotiations between Saudi and Israel and turned MBS back into a free agent with minimal ties binding him to the US. Putin’s declaration has skillfully insured that this status is more likely to stick and all he had to do was wait patiently and grab the microphone at the right time.
The US Dollar is Conditional
When the US issued sanctions against Russia after its invasion of Ukraine, the US was choosing to not honor Russia’s efforts to spend its US dollar holdings. If this was any other currency that may have not been a big deal, but since the US dollar is the reigning global reserve currency, this sent a very tricky message. The message was that the US dollar is the most stable form of currency in the world unless you disagree with the US. While the West was cheering the bold move to freeze the Swift System and hit Russia where it counted, Russia was making sure that everyone outside of the G20 understood that their dollar holdings were conditional. Since the Sanctions were put in place, 22 nations have applied to join the original five BRICS nations. If all applicants are accepted, the BRICS nations would have control of 78% of the global oil reserves and 36% of the global GDP, a 6% larger GDP share than the G7. Again, Putin’s move wasn’t even the aggressor’s move, it was just a careful move in response to a US-led counter attack.
The Petrodollar
Another byproduct of the sanctions was the pricing of oil to China in currencies other than the US dollar. If at any other point in history, Russia had decided to price oil outside of dollars, the US would have considered it an act of war against the dollar. However, since the US had issued sanctions that forced Russia out of the dollar, Putin had no choice but to price oil in dollars. The door has now been opened and it appears that the BRICS nations are cautiously finding their feet on this one. It was another display of how the US gave the appearance of failing to see how their moves were going to enable a counter-move that may have much larger and longer-lasting impacts.
Breaking the Energy Supply Line to Europe
Long before Russia invaded Ukraine, the US had made declarations that the Nord Stream pipelines were bad for the US. Whether or not we crippled them or supported their crippling, it was not a comprehensive win. The twelve months that followed the destruction of the pipelines were the most volatile months in the history of the natural gas trade, and none of those prices were lower than prior to the event. Even with the loss of their pipeline, Russia was still selling gas through LNG container ships and possibly making up for the drop in volume with an increase in pricing. On top of that, despite Russia’s ties with Iran, the sanctions and the pipeline destruction have brought Russia and Saudi closer together in the OPEC+ relationship. So much so, that Russia has been exploring sharing nuclear energy technology with Saudi, the very thing that the US was trying to use as the incentive for Saudi to continue peace conversations with Israel. This is an example of yet another chess move Russia has made to reduce US leverage.
Many of these small moves may not seem significant, but it’s a program of death by a thousand cuts. And while the US is still the most powerful player on the block, we are not impervious to the actions of others. The fact that the diplomats of the Arab world traveled first to Russia and China last week to lobby for the UN vote on the humanitarian pause is telling. In the last three decades, you were either in the good graces of the US or not. In the last two years, the birth of a second option has come about at a time when those who are not in complete alignment with the West are looking for one. This second option doesn’t have to have all of the options to grow in power, it just has to be big enough not to fear the US, and Mr. Putin is playing an extremely nimble game to build this alternate alliance.
