Debt, Oil and Empire

New readers should know that my Substack posts are dedicated to surveillance of matters related to a central premise, and that premise, put at its simplest, is that the collective West, made ever more desperate and ruthless because of its unsustainable debt load, is attempting to beat back the multiple forces of multipolarity. It is currently doing this on three main fronts: against Russia over the proxy excuse of defending Ukraine; against Iran over the proxy excuse of defending Israel; against China over the proxy excuse of defending Taiwan. But there is no limit to the number of fronts that the West will entertain.

The Question of Debt

In what follows I will be addressing the sudden acceleration in the formation of a new climate of imperialistic ambition, principally on the part of the US and of Israel, as a symptom of imperial rot and decay. This relates to the growing crisis of US hegemony and that of the collective West (a partnership which may be severely ruptured in the event of a US departure from Europe) which is increasingly challenged by the rise of the Global South or the Global Majority, as represented by the BRICS.

A Lithuanian scholar (reference to be supplied very soon) wrote in 2023 of the:

“Serious symptom of the US erosion in international politics is that the US share of global financial reserves drastically declined especially in comparison to the Russian and Chinese share.

The US is today the largest world debtor and even the biggest debtor ever existed in history (32 $ trillion or around 123 percent of the GDP) mainly, but not exclusively, due to huge military spending, alongside tax cuts that reduced the US federal revenue.

The deficit in current account balance with the rest of the world (in 2004, for instance, it was $650 billion) the US administration is covering by borrowing from private investors (most from abroad) and foreign central banks (most important are of China and Japan). Therefore, such US financial dependence on foreigners to provide the funds needed to pay the interest on the American public debt leaves the USA extremely vulnerable, especially if China and/or Japan decide to stop buying US bonds or sell them. Subsequently, the world’s strongest military power at the same time and the greatest global debtor with China and Japan being direct financial collaborators of the US hegemonic leadership’s policy of a Pax Americana after 1989 (up to 2014)”.

Today, in 2024, the total US debt is approximately $36 trillion, and the rate of increase in that debt, given the seeming inability of US politicians to stop fighting wars that mainly benefit the military-industrial complex, or reign in the debt, or in any way to stop providing their constituencies with bonuses on every spending package (“entitlements”), currently runs at $2 trillion a year. Government spending accounts for some $12 trillion out of a total annual economy of $26 trillion.

The BRICS summit in Kazan in 2024 demonstrated its members’ capability to establish at first, a parallel financial and trading system to the system that is currently dominated by the US and its financial tools of hegemony - the IMF and World Bank - by creating inter-bank transfers that enable trade in national currencies, and establish alternative lending institutions. The BRICS’ newest full member, Indonesia, brings to the BRICS table one of the strongest fastest growing Asian economies and a population of 300,000, an oil country, and a predominantly Muslim country, which will add significantly to the strengths of current members such as China, Russia, India, Iran, the UAE, and even Saudi Arabia (although its membership is flaky) - to name a few - that already account for most of existing global energy reserves, approaching half or more of the global economy and half of the world’s population.

Gas, Oil and Empire

Replacing Russia in Europe

For much of Central Europe the loss of Russian gas through Ukraine has been compensated for by gas flows from Germany, Italy and Azerbaijan. Alex Kimani for Oilprice.com reports that Austria boosted its imports from Germany and Italy. Slovakia has drawn on Hungary (see Gas). Azerbaijan’s state oil company, SOCAR, is supplying natural gas to Slovakia’s SPP, the country’s largest state-owned energy operator. SPP has pledged to supply its customers mainly via pipelines from Germany and also Hungary, albeit at additional transit costs.

Norway and the U.S. have replaced Russia as Europe’s biggest gas supplier. In 2024 Norway supplied 30.3% of Europe’s total imports while the U.S. accounting for 19.4% of total. However, the U.S. is the biggest LNG supplier to Europe, accounting for nearly half of total LNG imports. Europe’s capacity to accept LNG is increasing. Europe’s LNG import, or regasification, has risen 33% in 2024 over 2021. Germany is adding the most LNG regasification capacity in Europe.

Ukraine’s dependence on Hungary and Slovakia and US LNG

Intellinews reports today, January 7, that Ukraine has increased its electricity imports from EU countries by 5.5 times in 2024, with 39% of its imported electricity coming from Hungary. There is therefore a supreme irony in that Ukraine’s saviors from the extensive damage caused by Russian strikes on Ukrainian energy facilities are two of the European countries that are most critical of NATO’s war against Russia over the Ukraine proxy. By autumn, Hungary had become the largest supplier among the five EU sources. Of electricity supplied to Ukraine 39% was shipped from Hungary, 23% arrived from Slovakia, 18% from Romania, 14% from Poland and 5% from Moldova.

Hungary has continued to be Ukraine’s largest electricity provider, supplying 35% of the total last month. As reported in my previous posts, Slovakia is threatening that it might cancel its agreement to supply electricity in retaliation for Ukraine’s decision to stop the transit of Russian gas to Europe, a measure will radically increase Ukraine’s dependence on other countries for energy. Poland and Romania are expected to increase their supplies of electricity to Ukraine to compensate.

Other potential sources include Azerbaijan, Norway and, as a supplier of ENG, Qatar (see below). Azerbaijani oil is transported to international markets via the Baku-Tbilisi-Ceyhan (Turkiye) (BTC) pipeline, which is operated by British multinational BP. Azerbaijan is a significant investor in Turkiye. Azerbaijan’s state oil company Socar plans to invest an additional $7bn in Turkiye’s energy sector in the coming years to establish new petrochemical facilities in Turkiye. Socar is Turkiye's largest foreign investor, with a total investment of $18.5bn over the past 17 years. In 2018, Azerbaijan made its largest one-time foreign investment in Turkiye by establishing the Socar Star Oil Refinery, which has an oil processing capacity of approximately 214,000 barrels per day (SOCAR).

Moldova and Transnistria

Transnistria is one of the most badly affected by the Ukrainian shut-off. So too, though less severely, is Moldova, from which Transnistria is a pro-Russian secessionist territory. It broke free of control of Moldova’s central government in a brief war in 1992 and still hosts 1,500 Russian soldiers. Moldova’s circumstances appear to be different from those of Transnistria or Slovakia in as much as it seems that it was Russia that stopped the supply to Moldova because it claimed that Moldova was not paying its bills. This suggests that Moldova received its Russian gas separately from the Ukrainian pipeline. Moldova has met its power needs by importing about 60 percent of its requirement from Romania.

The Qatari-Syria Factor

Qatar began to invest heavily in LNG exports after it became clear in or around 2011 or 2012 that the former President of Syria, Bashar Assad, did not favor a Qatari-backed proposal for a pipeline that would run from Qatar through Syria to Turkiye and then to Europe. Assad preferred a counter proposal that would have ignored Turkiye, that would have better served Russian interests and made Syria the regional gas hub that Turkiye eventually became.

Assad’s decision was a significant factor that led Qatar to start backing the anti-Assad Free Syria Army and jihadist militia such as Al Nusra (which eventually became HTS), along with Turkiye, which has traditionally been allied with Muslim Brotherhood politics in the Middle East. The Muslim Brotherhood had sponsored violent regime-change manuevers in Syria both in the period of Hafez Assad and of his son, Bashar.

It is not clear, at least to me, whether Qatar retains any interest in a Syrian pipeline now or whether it is content with the revenues (much higher per barrel) that it earns from LNG exports. The great advantage of LNG exports for the exporter is that the gas can be shipped anywhere, and not just to the destinations at the ends of pipelines. An entirely new energy market is forming over LNG and it may yet see the development of an OPEC-style cartel for LNG that would be dominated by Russia and Qatar (but would almost certainly not include the US) in the same way as Russia and Saudi Arabia control OPEC.

A Further Note on Syria

The demise of Syria was brought about in good measure by the dumping of tens of billions’ worth of arms by the West and its anti-Syrian allies into Syria for the benefit of Western-supported rebel groups, mostly Salafist, together witrh Turkish provocation and sanctions, Kevork Almassian told Judge Napolitano today. Almassian went on to describe the direct connection between the weight of US sanctions on the Syrian economy and the institutionalization of corruption that comes about when business is looking for ways around sanctions, this corruption in turn contributing to the process of demoralization of both the people and the Syrian army. Almassian describes Al Qaeda and ISIS as “contract armies” working for Western interests. Syria’s future is almost certainly one of Balkanization. Israel’s new territory seized in southern Syria will be integrated into Israel, giving Israel outsize influence over Syria (Israel has destroyed Syria’s military facilities, other than those furnished by Turkiye through HTS, including Syrian air defenses) and, because of its integration of Mount Hemron, effective control over Lebanon.

Neo Neo-Imperial Energy Politics

Energy issues form a significant part of what I have called the neo neo-imperial policies of both Netanyahu’s Israel and Trump II’s US.

Israel and Iran

Israeli belligerance over Gaza, Lebanon, Syria, Iran and, possibly in the near future, Egypt, has a great deal to do with both oil and gas and the shipping of oil and gas. The US, with the support of Syrian Kurds east of the Euphrates has control over Syrian oil, much of which is sold to Israel. And now Israel is encroaching into Syria and forming an alliance with the Kurds which will improve Israel’s access to Syrian oil, and will also strengthen its aggressive posture for what may well be an upcoming Israeli attack on Iran which, of course, is an important source of oil and gas.

There is little to hold Israel back. As Mathew Hoyt observed tday in interview with Judge Napolitano, even its sternest critics are beholden to Israel economically: South Africa, the prime plaintiff against Israel through the International Court of Justice, is a major seller of coal to Israel; Ireland has increased its trade with Israel of dual-use products by 700% in 2024; and Turkiye continues the supply to Isrsael of Azeri oil through its pipeline from Ceyhan.

Iran was the fifth-largest crude oil producer in OPEC in 2021 and the third-largest natural gas producer in the world in 2020. It holds some of the world’s largest deposits of proved oil and natural gas reserves, ranking as the world’s third-largest oil and second-largest natural gas reserve holder in 2021. At the end of 2021, Iran accounted for 24% of oil reserves in the Middle East and 12% in the world. Iran’s oil reserves were more than the reserves of all other countries except for Venezuela and Saudi Arabia.

If the US in alliance with Israel strikes Iran successfully, in a context in which which Iran has been weakened by the destruction of Syria and where the degree of Russian support for Syria, despite the upcoming strategic partnership treaty to be signed on January 17, seems less than rock solid, and given the context of an Iranian government that is dominated by pro-Western Iranian politicians, then a resulting weaker or fragmented Iran will be an Iran more vulnerable to predatory Western energy corporations.

On the other hand, Russia’s support for Iran may turn out to be strong. China too might become involved given its high dependence on Iran for its energy needs. China could decide that its needs would be met regardless of who is in control in Terhan, but it would surely feel more comfortable with a pro-Russian than with a pro-Western establishment in Terhan.

Writing in 2023, Joshua Krasna (Krasna) wrote that high gas prices and Europe’s need to diversify gas sources had raised the salience of the decade-old Eastern Mediterranean gas market—for now, Egypt, Israel, and Cyprus–despite its small volume in world production.

“A major problem for the Eastern Mediterranean gas ecosystem is the lack of pipelines out of the sub-region, and dependence on limited gas liquefaction capabilities in Egypt. There are competing proposals for new liquefaction plants off Israel and Cyprus, while intra-regional pipelines are being developed and more proposed. The Eastern Mediterranean has come late to the fossil fuel buffet and much of the world will be moving towards decarbonization in the coming decades. These countries are therefore motivated to get their gas “out of the ground” and to market as quickly as possible”.

There is an increasingly strong likelihood, however, that Israel is over-extending itself in Gaza and the West Bank, southern Lebanon, southern Syria and, possibly Iran. There are also many internal source of pressure on the survival of its political system. If Israel collapsed, would Donald Trump, the “best friend of Israel,” in his own words, move the US into the region to fulfill the Zionist mission?

Trump II US

Recent statements from Donald Trump suggest that he may propose the exercise of US military and/or economic leverage in the pursuit of US interests in the Panama Canal, which the US might decide to seize, and in the ownership of Greenland (which is currently owned by Denmark, and from which Greenlanders wish to become independent anyway), while Israel, meantime, is not merely invading southern Lebanon, southern Syria and threatening to attack Iran, but is also indicating possible inclination to destabilize Egypt (perhaps to seize the Sinai), whose President Sisi may not be able to contain Egyptian growing Islamist rage against the Israeli genocide of Palestinians and Egypt’s collusion with this nightmare.

All of these issues and potential conflicts relate significantly to energy politics. Also relevant is Trump’s threat to involve the US on the ground in Gaza, ostensibly to “rescue the hostages” (he doesn’t care about the 10,000 political Palestian prisoners tortured and rotting in Israeli prisons) but presumably to make sure that the US gets its share of East Meditteranean oil and gas booty. Perhaps we cannot find an immediate energy dimension to Trump’s other suggestions for invasion, of Canada and Mexico, but there surely will be some.

Russia and Ukraine

The much-touted new Ukrainian offensive in Russia’s Kursk oblast, targeting Berdin and heading towards Bol’shoye Soldatskoye has already been routed by Russia. Additional expected Ukrainian offensives have not so far materialized. It is rumored that one reason for this is that one of the army divisions deputed to undertake them simply refused to do so. If Ukraine’s purpose was to reassure the West ahead of the Ramstein NATO conference this week that Ukraine remains strong and effective on the battlefield, it has likely failed, and this may account for the decision by General Kellogg, nominated to be President Trump’s special envoy, to postpone travel to Ukraine to meet Zelenskiy until after Trump’s inauguration.

The Center Cannot Hold

Europe’s fanatical support for Project Ukraine reveals, every day more, fissures and fractures. In addition to the stubborn resistance of Hungary and Slovakia, we have seen how the governments of both France and Germany have been destabilized by their establishments’ attempts to block the rise to power of anti-war parties (AfD in Germany, the National Assembly in France) by refusing them access to membership of governing coalitions that are then rendered feeble by their absence.

To the number of challenges to EU Orthodoxy is now added that of Austria (not a NATO member) whose FPO or Freedom Party won power in recent elections with 29% of the vote. Its leader, Herbet Kickl, is likely to become Austrian Chancellor. In the Czech Republic there is a good chance that upcoming elections will see the return to power of pro-Russian Andrej Babis. There is even some speculation today that Germany may leave NATO and turn eastwards towards the formation of a new Europe in which Russia is accepted as a fundamental and necessary member.

Pressure on NATO members to dedicate from 3.5 to 5% of their GDPs to defense is a great deal more than many can afford either financially or politically or both.Hardly an incentive for a continuation of the war, certainly if plots to seize the interest payable on seized Russian assets don’t turn out to be so straight forward.

A US departure from NATO means the effective end of NATO. A German departure from NATO, likewise.