Yves here. We sometimes run articles by Simon Watkins because they epitomize a sadly-common hard-core neocon school of thought in policy circles. Unfortunately, given the number of hawks that Trump has appointed to foreign policy and defense positions, it seems likely that the views Watkins set forth below have a strong following within Team Trump.
Here we see Watkins as a true believer who builds his vision of how to beat Russian, China, and Iran on shaky foundations. The first is the depiction of all of them as belligerents. Larry Wilkerson, who has over his long career often had a seat at the table, forcefully disputed that notion in his latest talk on Nima’s Dialogue Works. He describes how the US military is so weak that it can attempt to maintain its dominance only through proxies, and that is has been a matter of explicit policy not to allow any competing power to threaten that position.
The entire video is very much worth your time, but consider in particular the section that starts at 27:50:
The real reason is ee do not want peace! Period. We want everything from the Baltic to the Persian Gulf to be in turmoil and chaos. We want it that way by proxy wars and proxy conflicts so that the power shift is arrested, so that we maintain our American empire imperium and it is not taken over and subjugated by China. That’s what it’s all about.
A second unfathomable reading is Watkin’s insistence that Russia is economically weak and can be broken by a further tightening of Western sanctions to hurt Russia’s energy sector to the advantage of US LNG. Has he missed the IMF data that shows Russia having one of the highest GDP growth rates among advanced economies? That since the Special Military Operation started, Russia has advanced to become the fourth largest economy in PPP terms? The sanctions of Russian energy have done far more harm to US allies, particularly in the EU. Since when does weakening your allies make you a stronger power?
We’ll stop our critique here in the interest of encouraging readers to apply their knowledge and analytical skills.
However, it does seem that the prevalence of articles like Watkins’, that recommend yet more aggressive US action, first and foremost against Russia, provide yet more confirmation of the notion that Trump’s end the war plans for Ukraine are dead on arrival. The official information is so polluted that his emissaries, and almost certainly Trump himself if he meets Putin, simply will not believe that Russia is in a position to get its way in Ukraine with respect to the disposition of territory. And they also seem convinced that the Russian economy is flagging and can’t keep up the war effort for much longer.
The only reason to hope that Trump might still walk away from Project Ukraine is his extreme antipathy towards NATO and other spending that he regards as welfare for Europeans…compounded by the fact that European leaders during his first term and to this date keep making clear that they loathe Trump personally.
By Simon Watkins, a former senior FX trader and salesman, financial journalist, and best-selling author. He was Head of Forex Institutional Sales and Trading for Credit Lyonnais, and later Director of Forex at Bank of Montreal. He was then Head of Weekly Publications and Chief Writer for Business Monitor International, Head of Fuel Oil Products for Platts, and Global Managing Editor of Research for Renaissance Capital in Moscow. Originally published at OilPrice.com
- Trump’s second term aims to counter the Axis of Upheaval.
- Plans include tightening sanctions on Russia’s LNG sector and transshipment methods, and extending similar sanctions to Iraq for aiding Iran’s oil exports.
- Broader sanctions and measures on Iraq, Iranian proxies, and Chinese financing networks indicate a U.S. strategy to curtail economic and logistical support for adversaries.
As Donald Trump’s new advisory team prepares for his second term in the U.S.’s highest office, the general feeling is that the much-vaunted ‘Axis of Upheaval’ is at its lowest ebb to date. The aim of this axis – driven by Chinese money, Russian military aggression, and the respective destabilising Middle East and Asian presences of Iran and North Korea – is to replace the primacy of the U.S. and its key allies’ influence in global geopolitics with a multipolar version, albeit in reality with Beijing at its centre.
However, according to a senior source who works closely with the new presidential team: “China’s finances are failing [with struggling economic growth], Russia’s military has failed [in Ukraine and Syria], Iran’s proxies have been incapacitated [Hezbollah, Hamas, Houthis et al], North Korea is on the sidelines, and now Trump is back.” Consequently, although many observers expect a continuation in Trump’s second presidential term of the neo-isolationism evident in several key respects in his first term this is unlikely to be the case. Instead, the Washington-based source exclusively told OilPrice.com, the second term is going to be about reasserting the primary influence of the U.S. and its allies in the world through whatever means necessary in order that Trump can be seen by his voters as keeping his promise to ‘Make America Great Again’. In essence, it will be a bold reassertion of the original 1992 Wolfowitz Doctrine. This was modified slightly in 1994 for public consumption, but the original version is the one that Trump’s second-term vision will most closely approximate.
Top of the Trump team’s list of priorities internationally is ending the war in Ukraine, which they are still confident of being able to do relatively quickly through the methodology previously outlined by OilPrice.com. From there, the aim will be to dramatically reduce Russia’s capability to mount any credible conventional military invasion of further European territories by severely degrading its financial ability to do so. The immediate focus here, according to the Washington source, will be continuing to reduce Russia’s gas and oil export receipts to as near to nothing as can be managed. As liquefied natural gas (LNG) became – and remains – the key global emergency energy source following the invasion of Ukraine in February 2022, Russia’s ability to monetise these exports will be the first in Washington’s cross-hairs, to be hit hard not just by the U.S. but by its European allies as well. “Early on, the [presidential] team will expand the actions taken in August, with many more key LNG targets hit by new sanctions,” said the source last week. In this context, the day before the 24 August commemoration day of Ukraine’s Declaration of Independence in 1991, the U.S. Treasury and State departments expanded their sanctions-related designation of individuals, companies, projects, and trading and delivery mechanisms involved in developing key energy projects and associated infrastructure including the Ust Luga LNG Terminal, the Vostok Oil Project, and the Yakutia Gas Project, among many others. This aligned with earlier comments from the U.S. Assistant Secretary of State for Energy Resources Geoffrey Pyatt that: “We’re going to keep tightening the screws [on Russia’s major LNG sector projects, including the cornerstone Arctic LNG 2 project].”
The Trump team has already been busy laying the groundwork with the U.S.’s allies in Europe to support this tightening of the screws on Russian energy exports. These arguments are even more forceful now, as the warnings Trump’s team made in his first term to key European Union (E.U.) states – especially de facto leader, Germany — of the political and economic dangers of becoming over-reliant on Russian gas and oil were proven correct with its second invasion of Ukraine in less than 10 years, as analysed in full in my new book on the new global oil market order. The same E.U. states have already reduced these energy imports considerably, but just over a week ago they agreed the organisation’s 15th sanctions package against Russia aimed primarily at disabling the ability of Russia to move oil and LNG through a shadow fleet of tankers. According to industry figures, over 80% of Russia’s seaborne crude exports are currently moved by tankers not flagged, owned or operated by companies based in the G7, the E.U., Australia, Switzerland and Norway, and not insured by Western protection and indemnity clubs. Consequently, the new shipping sanctions greatly expand the number of individuals and entities to the previous sanctions list. These dramatically increase the list of entities not just in Russia but in third-party countries and organisations in Russia that indirectly contribute to Moscow’s military and technological enhancement through the avoidance of export restrictions. At the same time, similar E.U. sanctions are being introduced to prohibit the transshipment of Russian LNG through E.U. ports as from March, alongside further bans of the import of Russian LNG into terminals not connected to the E.U. gas pipeline network. All these moves – and more to come, according to a senior E.U. energy security source exclusively spoken to by OilPrice.com last week – are ultimately geared to completely end Russian fossil fuel imports into the E.U. and non-E.U. European countries by 2027.
A similar idea of degrading the ability of Axis of Upheaval members to side-step direct sanctions by utilising ‘useful idiot’ states to help them is also under consideration for Iran’s key accomplice in this regard – Iraq. As highlighted recently by OilPrice.com, the Trump team is considering imposing similar-style sanctions on Iraq as it has in place for Iran, including on individuals and entities connected to the financing, movement, and logistics involved in moving Iranian oil and gas, and the money relating to it.
A precedent for this was set in the first Trump presidency when, after Iraq signed a two-year contract gas and electricity import deal with Iran despite pledging to reduce the length of such deals, Washington responded with swingeing targeted sanctions on 20 Iran- and Iraq-based entities. The State Department cited them as being instruments in the funnelling of money to Iran’s Islamic Revolutionary Guards Corps’ (IRGC) elite Quds Force. It added that the 20 entities were continuing to exploit Iraq’s dependence on Iran as an electricity and gas source by smuggling Iranian petroleum through the Iraqi port of Umm Qasr and money laundering through Iraqi front companies. And it said that Iraq was continuing to act as a conduit for Iranian oil and gas supplies to make their way out into the world’s major export markets. As nothing whatsoever has changed in this complicity, there is every reason to expect the threat of such sanctions on Iraq early in Trump’s second term, according to the Washington source last week, followed by the imposition of further sanctions if the threats are not heeded.
Extending such measures on Iraq – and increasing their scope – would also signal to Iraq, and to other members of the Axis of Upheaval, that a much greater degree of accountability for acts deemed hostile against the U.S. and its allies is in the offing. Again, there is recent precedent here as a year ago the U.S.’s Department of Treasury’s Office of Foreign Assets Control (OFAC) applied sanctions against Iran to a broader part of its international support network, especially to those entities and officials involved funding the Islamic Republic’s proxy terrorist organisations – Hamas and Hezbollah. Those sanctions were focused on 20 individuals and entities for their involvement in financial facilitation networks for the benefit of Iran’s Ministry of Defense and Armed Forces Logistics (MODAFL) and Iranian Armed Forces General Staff (AFGS), and the Islamic Revolutionary Guard Corps-Qods Force (IRGC-QF). Interestingly, among the long-suspected list of names and companies that were sanctioned at that point were companies in Hong Kong and the United Arab Emirates that were suspected of being part of the network that sells billions of dollars’ worth of Iranian commodities to customers in Europe and East Asia. “It flagged that the U.S. can and will go after the major financing centres that China uses if Washington thinks Beijing is consistently overstepping the line in challenging key areas of strategic interest for the U.S., in addition to the scalable tariff rates to be applied on China’s critical export flows,” the Washington source concluded.