Europe May Fold, But China and Russia See Opportunity
Although European leaders are talking a big game about keeping the Iran deal (JCPOA) alive following Trump’s unilateral withdrawal, there’s a good chance nations across the pond, especially the UK and France, will ultimately fold to U.S. demands. This is despite the fact these countries stand to lose far more economically than America. Acquiescing to U.S. imperial demands as submissive client states is simply what Europe does. On the other hand, China and Russia sense opportunity for major geopolitical gains and will not back down.
Political leaders in China and Russia must be licking their chops at the short-sighted stupidity of Donald Trump’s decision to ditch the Iran deal. As mentioned in previous pieces, the Trump administration isn’t just saying the U.S. will sanction Iran from its end, but that it could leverage the global financial system and its dependency on the USD, to punish those who dare defy U.S. policy.
As discussed in the recent post, The Road to 2025 (Part 3) – USD Dominated Financial System Will Fall Apart, this unilateral move against Iran is likely to be a key catalyst in the planet transitioning away from a financial system completely and totally dominated by the USD into a more multi-polar currency world. Trump’s essentially willing to trade away U.S. global geopolitical and financial dominance because he’s obsessed with taking out the Iranian regime.
While Europe may not be willing to make a huge fuss about all this right now, its leaders, and more importantly its citizenry, know exactly what this means. As long as the global financial system is totally dominated and controlled from the U.S. via the USD, no country on earth can be truly sovereign, in terms of economic or foreign policy.
In case you still aren’t getting how serious this is, let me point you to a few comments recently made by Russian leader Vladimir Putin:
In comments to lawmakers on Tuesday after his inauguration for a record fourth term as president, Putin said a “break” from the U.S. currency is necessary to bolster Russia’s “economic sovereignty,” especially in light of recent penalties and what he called politically motivated restrictions on trade.
“The whole world can see that the dollar’s monopoly is precarious and dangerous for many,” he said. “Our gold and currency reserves are being diversified, and we’ll continue to do that further…”
Putin acknowledged this week that since oil trades in dollars, “we are thinking of what needs to be done to free ourselves from that burden.”
Every world leader understands this, Putin’s just unique since he’s willing to come out and say it. It’s not just Russia though. People across the world have had just about enough of U.S. bullying and recognize USD dominance in the global financial system represents the key obstacle to overcome if they wish to avoid being pushed around forever.
Chinese leaders tend to speak less bluntly, but actions speak louder than words and China clearly has no intention of leaving Iran. It understands that becoming more involved in the Iranian economy, not less, is where the huge geopolitical gains are to be found. As we learned from a recent fascinating Bloomberg article, Iran’s Door to the West Is Slamming Shut, and That Leaves China:
To develop its $430 billion economy, Iran is being forced to rely on political allies in the east.
Trade with China has more than doubled since 2006, to $28 billion. The biggest chunk of Iran’s oil exports go to China, about $11 billion a year at current prices…
China is “already the winner,’’ said Dina Esfandiary, a fellow at the Centre for Science and Security Studies at King’s College in London, and co-author of the forthcoming ‘Triple Axis: Iran’s Relations With Russia and China’.
“Iran has slowly abandoned the idea of being open to the West,’’ she said. “The Chinese have been in Iran for the past 30 years. They have the contacts, the guys on the ground, the links to the local banks.’’
And they’re more willing to defy U.S. pressure as Trump slaps sanctions back on…
Airbus Group SE’s contract for 100 jetliners, worth about $19 billion at list prices, was already held up amid financing problems, and Treasury Secretary Steven Mnuchin said Tuesday that the export licensewill be revoked (Russian manufacturers could be the beneficiaries). Total SA has a contract to develop the South Pars gas field together with China National Petroleum Corp., but has signaledthat it would pull out if the U.S. re-imposes sanctions and it can’t win an exemption. In that event, Iran says, the Chinese partner would take over Total’s share…
The Chinese have some workarounds that Europeans lack. There are many more Chinese companies with zero exposure to the U.S. And, since many of the Chinese businesses working in Iran are state-run, it’s relatively easy to set up special-purpose vehicles for bypassing U.S. regulations. “All they have to do is create a subsidiary that’s separate from the original entity, and they’re good to go,” said Esfandiary.
Chinese businesses are also likely to be more flexible about how they’re paid, says Batmanghelidj, citing a transaction he’s aware of where the European company declined to be paid in bonds…
China — along with Russia — is America’s main strategic rival, with big geopolitical ambitions. Central to them is a plan to crisscross Eurasia with a web of transportation and infrastructure links. Persia was on the old Silk Road, and Iran is at the heart of President Xi Jinping’s plans for a new one.
Chinese companies are building or funding railway lines to the eastern city of Mashhad and the Gulf port of Bushehr, under deals signed in the past year worth more than $2.2 billion. India was supposed to be developing the strategic port of Chabahar on the Arabian Sea., but repeated delays have prompted Iranian officials to turn to China in the hope of speeding up construction.
Much of Trump’s base supported him because they wanted the U.S. to focus on domestic issues as opposed to foreign adventurism. Ironically, he’s doing the exact opposite. Rather than tackling the country’s dilapidated infrastructure, continued theft by finance criminals and a completely rancid healthcare system, the national dialogue is now dominated by an embassy move to Jerusalem and heightened confrontation with Iran. I’m not sure what this is, but it’s certainly not “America First.”
Many Trump supporters like to say he’s playing “3D chess,” but in the case of Iran he isn’t playing chess at all — he’s playing checkers. His infatuation with Israel and Saudi Arabia, coupled with a deep-seated disdain for Iran is blinding him, and opening up a historic opportunity for China and Russia to make major geopolitical gains. Europe’s trying to hang out on the fence and see who comes out on top, but the outcome of such a game should not be in doubt. The results will be crystal clear by 2025.