American Resistance To Empire

Bulgaria Resisting Putin’s Closure of South Stream Project

Decision on South Stream can be taken only by both Russia and EU – Bulgarian president


Bulgarian President Rosen Plevneliev (Reuters / Stoyan Nenov)

Bulgarian President Rosen Plevneliev (Reuters / Stoyan Nenov)

The fate of the South Stream gas pipeline can’t be left up to just Russia and Bulgaria, as it involves a number of other European countries that have done a lot of preparatory work, Bulgarian President Rosen Plevneliev has said.

“South Stream is not a project of Russia and Bulgaria; it’s of Russia and the European Union. A decision on it can only be made in the Russia-EU format,” Rosen Plevneliev said Tuesday.

READ MORE: Putin: Russia forced to withdraw from S. Stream project due to EU stance

“The participant states of South Stream have done serious preparatory work and authorized the European Commission to hold talks with the Russian leadership to take a final decision on the project,” he said.

The president stressed that there will be no objections to the gas project if Russia agrees to comply with EU legislation.

“I oppose the idea that a kind of confrontation is happening,” he said. “When laws and regulations are observed, all large and small projects work out. I believe that no one in the EU will say ‘no’ to South Stream if Russia complies with the requirements of European legislation,” Plevneliev concluded.

Earlier on Tuesday Bulgaria’s Economy Minister Bozidar Lukarsky said the country will consider South Stream an operating project until it receives an official announcement from Russia.

“For me, the South Stream project isn’t closed yet; we haven’t received any official announcement from Russia. When it comes, then we will comment on this topic,” said Lukarsky.

Deputy Prime Minister Meglena Kuneva also declined to comment, but stressed that “Bulgaria supports the idea of having a cost-effective project and at the same time comply with European legislation.”

Italian construction company Saipem is involved in South Stream construction and has said it continues to work on the project, since it hasn’t received official notification about a halt to South Stream.

Preparations for the ceremony launching the construction of South Stream pipeline. (RIA Novosti / Sergey Guneev)

Preparations for the ceremony launching the construction of South Stream pipeline. (RIA Novosti / Sergey Guneev)

Losses to Europe

The ending of the South Stream project would mean huge losses for countries across Europe.

For Bulgaria, this would mean €400 million in lost transit fees, Russian President Putin said on Monday.

The share in the country’s €40 billion GDP to come from South Stream was expected to be 1.5 percent, according to Bulgarian Economic Ministry.

Direct investment was supposed to be around €3 billion creating around 2,500 new jobs. The Northern parts of the country, through which the main pipeline route would be laid, were expected to have significantly improved social infrastructure and become more attractive to investment.

The European Commission is impeding the South Stream pipeline construction; however Serbia is interested in the project, the president of the Serbian Gas Association Vojislav Vuletic said Tuesday.

The gas association head thinks the EU is only hurting itself. “It turns out that the problems are created by bureaucrats from the European Commission, while the real participants of South Stream are very interested in the implementation,” he said.

Vuletic also pointed out the project’s importance for Serbia, as it would provide construction jobs, not to mention jobs operating the pipeline itself, and the income the country would get from transit. He confirmed that the closure of the project would seriously damage the Serbian economy.

Hungary has reacted saying that it will be forced to look for alternative sources of gas to replace South Stream supplies. The country could possibly increase the amount it gets from Azerbaijan to compensate, according to the Hungarian Foreign Minister Peter Siyyarto.

“Russia had the right to take such a decision, and Hungary admits it,” he said, commenting on Russia’s decision to close South Stream. Hungary has been actively supporting the project, and passed a special law early last month allowing construction to begin, bypassing restrictions imposed by the EU.

Will Fracking Kill Gasohol?

In a world beset by starvation and famine..,in a country overburdened by hunger and malnutrition…, is it possible to prove a direct link between human suffering and the US executive decision to turn 40% of the American corn crop into ethanol?  How much (if any) of this misery was increased by the “gasohol” initiative?  I have located one news report from the Boston Herald which addresses these questions, highlighting another comprehensive study produced by the United Nations.  Both of these are posted below. 

The following chart from the UN report definitely shows just how much of US corn production has been transferred over into ethanol production and how much American grain exports have fallen.  Even though we produce twice the corn that we did in 1980, actual exports have dropped by 20% and farmers are only feeding a little more to livestock than they did back then.  What would the effect be upon global hunger if we were exporting all or most of that increased corn production to Africa, or wherever it is needed?

ethanol and corn

Fuel policy wreaks global havoc, as well as HLPE-Report-5_Biofuels_and_food_security were buried so deeply within the Internet, that they had to be found and retrieved the hard way, All Google-acquired links for either report were dead.  The HLPE Report may remain available at ResearchGate.  Biofuels and Food Security will remain here until  therearenosunglasses is also “disappeared.”].  This report was so controversial upon its release in June 2013 that the Global Renewable Fuels Alliance demanded that its UN authors “withdraw” the “imbalanced report [with] impractical policy recommendations” from publication.  From its retrieval difficulty level, I would have to assume that the UN met the American demands.  The following excerpts help explain the temperature of this document.

“The share of US corn production directed to ethanol increased in one decade from less than 10 percent to over 40 percent in the 2010/11 crop year, and remained at that high level in 2011/2012. Not only did the US exports and share in international corn trade decline as a result, but a significant part of the expansion of corn production in the US came at the expense of other major global crops, including soybeans.”

“The use of either grain or oilseeds for biofuels leaves a large co-product useful as an animal feed. In the case of ethanol from grain, the co-product is dried distillers grain with solubles (DDGS) and, in the case of biodiesel, the co-product is principally oilseed meal. Yet, even with the production of co-products, the diversion of the grain or the vegetable oil into the biofuel itself does sacrifice some food production and therefore creates pressures on prices.

“To evaluate the overall impact of corn-ethanol production on food prices, the animal feed co-products, which are the result of ethanol production – dry and wet distiller´s grains – must be taken into account. Any analysis that fails to account for these co-products will overstate the impacts of biofuels on food supplies. With the expansion of ethanol production, these animal feeds become produced in sufficient quantities to affect the animal feed market, competing with soy meal. Co-products are even more important in calculating the price effects of biodiesel. Soybean, which is by far the principal feedstock in the US, Brazil and Argentina, and rapeseed in the EU, produce protein meal, which at certain levels of biodiesel production can similarly exert downward pressure on feed markets and therefore on animal protein products.
Source: FAO (2013).

If this extensive, corporate-contested UN commissioned study can be easily suppressed to win favor with pissed-off US corporate advocacy groups, then it may be impossible to answer any cause and effect questions about US policies, using the Internet.

Has anyone bothered to consider or measure the increase in US fuel inflation caused by the American ethanol program?  More importantly, is it even possible to measure the amount that ethanol-driven fuel inflation has contributed to overall  inflationary factors?  What percentage of the recent all-time record high fuel prices can be attributed to the US decision to add ethanol to its gasoline?  

What happens when one gas-producing enterprise comes up against another gas/oil-producing endeavor?  The dry American West cannot support two water-intensive fuel industries simultaneously, either gasohol will have to give way to “fracking” or both will have to continue, albeit at reduced levels of production.  Profit will ultimately determine the winner in this contest.  Fracking may fall victim to its own success.  The more American shale-oil that enters the global oil market, the more that Middle Eastern suppliers are driven to push the price of oil down through oversupply, even if it means a global oil “price war.”  The current plunge in oil prices has begun to set-off global deflation, threatening to burst the fracking bubble. 

break-even thresholds for U.S. shale projects BLOOMBERG

What happens when the breakeven point of oil production comes up against society’s “tipping point,” the point at which scarcity causes revolution to break-out (SEE: Are Plunging Oil Prices Portent of More Violent Revolutions, Possibly World War?)?  What happens when America’s geostrategic decisions to wage a global energy war collide with its domestic policies?  Will America’s war reach its own tipping point?  Gasohol and fracking were geostrategic decisions made to forestall American economic collapse, while simultaneously bringing-about the ruin of other oil-producing economies like Russia, Iran and Venezuela.  The world strategy may destroy the economies of the Russian bloc, or it may fail, but the real trick is in bringing-about their ruin and not our own.

Fuel policy wreaks global havoc   [BEHIND PAY WALL BOSTON HERALD]


By: Yaneer Bar-yam

“In total, the impact of corn-to-ethanol conversion has led to doubled food prices from 2004 to 2013.”

Last month, members of the European Parliament’s environment committee voted to limit the use of crop-based biofuels in the transportation sector in an effort to mitigate the environmental and social impacts of biofuels production. This came in the wake of a report by the United Nations, which reviews the mounting body of evidence showing the harmful effects of biofuels.

The new “Biofuels and Food Security” report elevates concerns about the harsh global consequences of the United States’ biofuels policy. When crops such as corn are used to produce biofuels — as is being done in the U.S. to meet the federal Renewable Fuel Standard (RFS) — food and animal feed availability is reduced, food prices rise dramatically and hunger intensifies worldwide, as already impoverished people struggle to secure sustenance.

The U.N. report was released just a day after President Obama, in announcing his plan to address climate change, reiterated support for the RFS. Since its establishment by Congress in 2005 and aggressive expansion in 2007, the policy has been touted as a solution to rising greenhouse gas emissions and a cure-all for the nation’s dependence on foreign oil. It mandates the blending of increasing quantities of biofuels — the most common of which by far is corn-based ethanol — into the U.S. gasoline supply.

But in practice, the RFS is introducing new environmental woes and doing little to limit U.S. dependence on foreign oil, and it has become increasingly clear that the policy is causing a number of unintended consequences with devastating impacts. The requirement diverts more than 40 percent of all corn grown in the U.S. — the world’s largest corn producer and exporter — to fuel production, swelling prices for corn and other grains, increasing animal-feed costs and tightening supplies of food. For every gallon of ethanol required by the standards to be blended into the U.S. gasoline supply, 14 people could be fed for a day.

These dangerously elevated worldwide food prices currently sit at the threshold above which widespread global unrest is expected. As the U.S. continues to promote fuel over food, food insecurity is causing outrage and instability. Food price spikes between 2007 and 2008 have been directly linked to more than 60 food riots in 30 countries. In 2011, the Arab Spring began in large part because of food insecurity.

According to the USDA’s chief economist, Joseph Glauber, “The increase in U.S. ethanol production was estimated to account for about 36 percent of the increase in corn prices over the period from 2006 to 2009.” Our analysis is consistent with this evaluation and further shows an even larger increase since 2009.

In total, the impact of corn-to-ethanol conversion has led to doubled food prices from 2004 to 2013. As the foundation of most animal feed, cereals, meal and cooking oil, price increases in corn carry over to other necessary food items. These concerns were among those highlighted in recent U.S. House Energy and Commerce committee hearings.

While other countries take action to address the various negative impacts of biofuel mandates, the continued implementation of the United States’ RFS stands to create further repercussions abroad. Reducing U.S. biofuel production would go a long way in lowering food prices both in the U.S. and around the world. We should act definitively to change this policy to prevent future consequences.

Yaneer Bar-Yam is president of the New England Complex Systems Institute. Dominic Albino and Casey Friedman provided research. “As You Were Saying” is a regular Herald feature.

Are Plunging Oil Prices Portent of More Violent Revolutions, Possibly World War?

[SEE: City of London Freaks, Frantic with Fear Over Impending Anti-Capitalist World Revolution ]


Oil could plunge to $40 or lower

daily star LEB

Pump jacks are seen in the Midway Sunset oilfield.

Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union. Russia, the world’s largest producer, can no longer rely on the same oil revenues to rescue an economy suffering from European and U.S. sanctions. Iran, also reeling from similar sanctions, will need to reduce subsidies that have partly insulated its growing population. Nigeria, fighting an Islamic insurgency, and Venezuela, crippled by failing political and economic policies, also rank among the biggest losers from the decision by OPEC last week to let the force of the market determine what some experts say will be the first free fall in decades.

“This is a big shock in Caracas, it’s a shock in Tehran, it’s a shock in Abuja,” Daniel Yergin, vice chairman of Englewood, Colorado-based consultant IHS Inc. and author of a Pulitzer Prize-winning history of oil, told Bloomberg Radio. “There’s a change in psychology. There’s going to be a higher degree of uncertainty.”

A world already unsettled by Russian-inspired insurrection in Ukraine to the onslaught of ISIS in the Middle East is about be roiled further as crude prices plunge. Global energy markets have been upended by an unprecedented North American oil boom brought on by hydraulic fracturing, the process of blasting shale rocks to release oil and gas.

Few expected the extent or speed of the U.S. oil resurgence. As wildcatters unlocked new energy supplies, some oil exporters abroad failed to invest in diversifying their economies. Coddled by years of $100 crude, governments instead spent that windfall subsidizing everything from 5 cents-per-gallon gasoline to cheap housing that kept a growing population of underemployed citizens content.

“If the governments aren’t able to spend to keep the kids off the streets they will go back to the streets, and we could start to see political disruption and upheaval,” said Paul Stevens, distinguished fellow for energy, environment and resources at Chatham House in London, a U.K. policy group. “The majority of members of OPEC need well over $100 a barrel to balance their budgets. If they start cutting expenditure, this is likely to cause problems.”

Oil has dropped 38 percent this year and, in theory, production can continue to flow until prices fall below the day-to-day costs at existing wells. Stevens said some U.S. shale producers may break even at $40 a barrel or less. The International Energy Agency estimates most drilling in the Bakken formation – the shale producers that OPEC seeks to drive out of business – return cash at $42 a barrel.

Canadian Natural Resources Ltd. Chairman Murray Edwards said crude may sink as low as $30 a barrel before rebounding to stabilize at $70 to $75 a barrel, the Financial Post reported.

“Right now we’re seeing a price shock coming out of the meeting and it will be a couple of weeks until we see where the price really falls,” Yergin said. Officials “have to figure out where the new price range is, and that’s the drama that’s going to play out in the weeks ahead.”

To be sure, not all oil producers are suffering.

The International Monetary Fund in October assessed the oil price different governments needed to balance their budgets. At one end were Kuwait, Qatar and the United Arab Emirates, which can break even with oil at about $70 a barrel. At the other extreme: Iran needs $136, and Venezuela and Nigeria $120. Russia can manage at $101 a barrel, the IMF said.

“Saudi Arabia, UAE and Qatar can live with relatively lower oil prices for a while, but this isn’t the case for Iran, Iraq, Nigeria, Venezuela, Algeria and Angola,” said Marie-Claire Aoun, director of the energy center at the French Institute for International Relations in Paris. “Strong demographic pressure is feeding their energy and budgetary requirements. The price of crude is paramount for their economies because they have failed to diversify.”

Brent crude is poised for the biggest annual decline since 2008 after OPEC last week rejected calls for production cuts that would address a global glut.

Like this year’s decline, oil’s crash in the 1980s was brought on by a Saudi-led decision to defend its market share, sending crude to about $12 a barrel.

“Russia in particular seems vulnerable,” said Allan von Mehren, chief analyst at Danske Banke A/S in Copenhagen. “A big decline in the oil price in 1997-98 was one factor causing pressure that eventually led to Russian default in August 1998.”

VTB Group, Russia’s second-largest bank, OAO Gazprombank, its third-largest lender, and Russian Agricultural Bank are already seeking government aid to replenish capital after sanctions cut them off from international financial markets. Now with sputtering economic growth, they also face a rise in bad loans.

Oil and gas provide 68 percent of Russia’s exports and 50 percent of its federal budget.

Russia has already lost almost $90 billion of its currency reserves this year, equal to 4.5 percent of its economy, as it tried to prevent the ruble from tumbling after Western countries imposed sanctions to punish Russian meddling in Ukraine. The ruble is down 35 percent against the dollar since June.

While the country’s economy minister and some oil executives have warned of tough times ahead, President Vladimir Putin is sanguine, suggesting falling oil won’t force him to meet Western demands that he curb his country’s interference in Ukraine.

“Winter is coming and I am sure the market will come into balance again in the first quarter or toward the middle of next year,” he said Nov. 28 in Sochi.

Even before the price tumble, Iran’s oil exports were already crumbling because of sanctions imposed over its nuclear program. Production is at a 20-year low, exports have fallen by half since early 2012 to 1 million barrels a day, and the rial has plummeted 80 percent on the black market, the IMF says.

Lower oil may increase the pain on Iran’s population, though it may be insufficient to push its leaders to accept an end to the nuclear program, which they insist is peaceful.

“The oil price decline is not a game changer for Iran,” said Suzanne Maloney, senior fellow at the Brookings Institution, a Washington-based research organization, who specializes on Iran. “The Iranians were already losing so many billions of dollars because of the sanctions that the oil price decline is just icing on the cake.”

While oil’s decline wrenches oil-rich nations that squandered the profits from recent high prices, the world economy overall may benefit.

The Organization for Economic Cooperation and Development estimates a $20 drop in price adds 0.4 percentage point to growth of its members after two years.

By knocking down inflation by 0.5 point over the same period, cheaper oil could also persuade central banks to either keep interest rates low or even add stimulus.

Energy accounts for 10 percent to 12 percent of consumer spending in EU countries such as France and Germany, HSBC Holdings PLC said.

As developed oil-importing nations benefit, some of the world’s poorest suffer. Nigeria’s authorities, which rely on oil for 75 percent of government revenue, have tightened monetary policy, devalued the naira and plan to cut public spending by 6 percent next year.

Oil and gas account for 35 percent of Nigeria’s economic output and 90 percent of its exports, according to OPEC.

“The current drop in oil prices poses stark challenges for Nigeria’s external and fiscal accounts and puts heavy pressure on the exchange rate,” Oliver Masetti, an economist at Deutsche Bank AG, said in a report this month. “If oil prices remain at their current lows, Nigeria will face tough choices.”

Even before oil’s rout, Venezuela was teetering.

The nation is running a budget deficit of 16 percent of gross domestic product, partly because much of its declining oil production is sold domestically at subsidized prices. Oil is 95 percent of exports and 25 percent of GDP, OPEC says.

“Venezuela already qualifies for fiscal chaos,” Yergin said.

The country was paralyzed by deadly riots earlier this year after police repressed protests about spiraling inflation, shortages of consumer goods and worsening crime.

“The dire state of the economy is likely to trigger renewed social unrest, while it seems the government is running out of hard currency,” Capital Economics, a London research firm, wrote in a Nov. 28 report.

Declining oil may force the government to take steps to avoid a default including devaluing the currency, cutting imports, raising domestic energy prices and cutting subsidies shipments to poorer countries in the region, according to Francisco Rodriguez, an economist at Bank of America Merrill Lynch.

“Though all these entail difficult choices, default is not an appealing alternative,” he said. “Were Venezuela to default, bondholders would almost surely move to attach the country’s refineries and oil shipments abroad.”

In an address on state television Nov. 28, President Nicolas Maduro said Venezuela would maintain social spending while pledging to form a commission to identify unnecessary spending to cut.

He also said he was sending the economy minister to China to discuss development projects.

Mexico shows how an oil nation can build new industries and avoid relying on one commodity. Falling crude demand and prices in the early 1980s helped send the nation into a debt crisis.

Oil’s share of Mexico’s exports fell to 13 percent in 2013 from 38 percent in 1990, even as total exports more than quadrupled. Electronics and cars now account for a greater share of the country’s shipments. Though oil still accounts for 32 percent of government revenue, the Mexican government has based its 2015 budget on an average price of $79 a barrel.

Turkey Gets 63 Billion Cubic Meter Gas Line That Europe No Longer Wanted

[SEE: Gazprom to build new 63 bcm Black Sea pipeline to Turkey]

Putin: Russia forced to withdraw from S. Stream project due to EU stance


Russian President Vladimir Putin (L) and President of Turkey Recep Tayyip Erdogan during a meeting in the Presidential Palace in Ankara December 1, 2014. (RIA Novosti / Michael Klimentyev)

Russian President Vladimir Putin (L) and President of Turkey Recep Tayyip Erdogan during a meeting in the Presidential Palace in Ankara December 1, 2014. (RIA Novosti / Michael Klimentyev)

Russia is forced to withdraw from the South Stream project due to the EU’s unwillingness to support the pipeline, and gas flows will be redirected to other customers, Vladimir Putin said after talks with his Turkish counterpart, Recep Tayyip Erdogan.

“We believe that the stance of the European Commission was counterproductive. In fact, the European Commission not only provided no help in implementation of [the South Stream pipeline], but, as we see, obstacles were created to its implementation. Well, if Europe doesn’t want it implemented, it won’t be implemented,” the Russian president said.

According to Putin, the Russian gas “will be retargeted to other regions of the world, which will be achieved, among other things, through the promotion and accelerated implementation of projects involving liquefied natural gas.”

“We’ll be promoting other markets and Europe won’t receive those volumes, at least not from Russia. We believe that it doesn’t meet the economic interests of Europe and it harms our cooperation. But such is the choice of our European friends,” he said.

The South Stream project is at the stage when “the construction of the pipeline system in the Black Sea must begin,” but Russia still hasn’t received an approval for the project from Bulgaria, the Russian president said.

Investing hundreds of millions of dollars into the pipeline, which would have to stop when it reaches Bulgarian waters, is “just absurd, I hope everybody understands that,” he said.

December 1, 2014. Russian President Vladimir Putin at the concluding news conference in Ankara. (RIA Novosti/Michael Klimentyev)

December 1, 2014. Russian President Vladimir Putin at the concluding news conference in Ankara. (RIA Novosti/Michael Klimentyev)

Putin believes that Bulgaria “isn’t acting like an independent state” by delaying the South Stream project, which would be profitable for the country.

He advised the Bulgarian leadership “to demand loss of profit damages from the European Commission” as the country could have been receiving around 400 million euros annually through gas transit.

The South Stream was intended to transport Russian gas through the Black Sea to Bulgaria – and through Serbia, Hungary, and Slovenia, further to Austria.

Russian gas giant Gazprom began construction of the onshore facilities for the pipeline back in 2012.

But the €23.5 billion project ran into difficulties, as it violated European Union regulations which state that the same company cannot both own the pipeline and the gas which is transported through it.

The crisis in Ukraine has turned the legal debate over the pipeline into a political issue, affecting the EU’s willingness to find a solution to the deadlock.

The EU Commission has been pressuring member states to withdraw from the project, with the new Bulgarian government saying it will not allow Gazprom to lay the pipeline without permission from Brussels.

Putin said that Russia is ready to build a new pipeline to meet Turkey’s growing gas demand, which may include a special hub on the Turkish-Greek border for customers in southern Europe.

For now, the supply of Russian gas to Turkey will be raised by 3 billion cubic meters via the already operating Blue Stream pipeline, he said. Last year, 13.7 bcm of gas were supplied to Turkeyvia Blue Stream, according to Reuters.

Moscow will also reduce the gas price for Turkish customers by 6 percent from January 1, 2015, Putin said.

“We are ready to further reduce gas prices along with the implementation of our joint large-scale projects,” he added.

Russia, Turkey don’t want chaos in Syria

The Russian president has said that Turkey is an important participant of the peace process in Syria, outlining the many similarities that Moscow and Ankrara have regarding the issue.

“We share a common opinion that the situation in Syria can’t be considered adequate, we share a common opinion that we don’t want to allow chaos in the region and the strengthening of terrorist organizations like it happened in Iraq,” he said.

According to Putin, it is important to create the conditions under which all citizens of Syria will feel safe and have equal access to governance.

“We certainly need to find an acceptable solution – first of all, acceptable for the Syrian people and all political forces in the country. And, definitely, we’re going to stay in contact with all participants in this process, including our friends in Turkey,” he stressed.

Members of al Qaeda's Nusra Front carry their weapons as they walk near al-Zahra village, north of Aleppo city, November 25, 2014. (Reuters/Hosam Katan)

Members of al Qaeda’s Nusra Front carry their weapons as they walk near al-Zahra village, north of Aleppo city, November 25, 2014. (Reuters/Hosam Katan)

However, the sides still disagree on the future of Syrian President Bashar Assad, which Ankara wants removed from power.

“We sincerely expressed our attitude towards this [Assad’s] regime. Mr. President has another stance on the issue. But in general, we have reached a certain agreement on [the] resolution of the Syrian conflict,” Turkish President Recep Tayyip Erdogan said.

“The only thing that we were unable to agree on is the way to resolve the crisis,” he added.

A civil war between Syria’s government forces and the Islamist opposition has been raging in Syria since 2011, taking over 200,000 lives, according to UN estimates.