Iraq developments show total failure of American-British 'adventure'
The events in Iraq are a result of the actions carried out by the US and the UK, and the situation has spiraled out of control, Russian Foreign Minister Sergey Lavrov told journalists.
“It has been reported that the UK foreign minister declared that the events in Iraq are, according to him, an illustration that terrorism is rampant in the region due to the absence of reconciliation in Syria,”Lavrov said.
“We’ve known that our English colleagues have a unique ability to twist everything. But I didn’t expect such cynicism, because the events that are taking place in Iraq are an illustration of a complete failure of the venture started by the US and the UK that allowed it to spiral out of control completely.”
“We express our solidarity with the Iraqi authorities, the Iraqi people who should restore peace and security in their country, but the actions of our Western partners raise a lot of questions,” Lavrov marked.
Lavrov noted that 11 years ago the US president announced the victory of democracy in Iraq, and that“the situation has deteriorated in geometrical progression.”
“The unity of Iraq has been called into question. The rampant terrorism is taking place due to the fact that the occupation troops didn’t pay any attention to the interior political processes, didn’t help the national dialogue, and only pursued their own interests,” Lavrov said.
On Monday night, the terrorists seized control of the town Mosul – the administrative center of the northern province of Nineveh. On Wednesday, the authorities informed the population about the fall of Tikrit, the hometown of former leader Saddam Hussein and just 150km from Baghdad.
Sergey Lavrov has also touched on the developments in Ukraine. He said Moscow demands an immediate investigation into the reports of the use of banned weapons in Ukraine.
Al Qaeda Surges Toward Baghdad
Now that 25 year old math PhD HFT programmers have finally figured out what this thing called Iraq is, and why headlines around it should factor into algo trading signals - especially those of crude oil - here, for their benefit is a summary of the latest events in Iraq, and also for everyone else confused why crude is back to levels not seen since last summer.
In broader terms (via RanSquawk):
The situation in Northern Iraq continues to deteriorate as the extremist ISIS/ISIL group took control of Mosul and then moved into Tirkit, which was later recaptured, in the north of Iraq which is near the Ceyhan-Kirkuk pipeline, which carries 1.6mln bbls per day. ISIS/ISIL forces then seized the Baiji refinery, the main refinery in Iraq, from Iraqi forces. (BBG/RTRS)
Iraqi forces and militants have now clashed in Ramadi, 100km from Baghdad, as ISIL extremist forces push towards the Iraqi capital. (BBG)
However Iraqi Oil Minister Luaibi said US planes may bomb North Iraq and denied ISIL took Baiji refinery in the North. The oil Minister also said Iraq average crude exports 2.6mln bbl/d, Iraq crude production 3.166mln bbl/d, Kirkuk production 167,000 bbl/d and Iraq has stored oil products and won't increase imports. (BBG/RTRS)
Washington has vowed to boost aid to Iraq and is mulling done strikes amid fears that Iraqi forces are crumbling in the face of militant attacks. (RTRS)
And in detail:
As the WSJ reports, after hard core Al Qaeda spin off ISIS (no relation to Sterling Archer) took over Saddam's home town of Tikrit yesterday, Iraq edged closer to all-out sectarian conflict on Thursday as Kurdish forces took control of a provincial capital in the oil-rich north and Sunni militants vowed to march on two cities revered by Shiite Muslims. Kurdish militia known as peshmerga said they had taken up positions in key government installations in Kirkuk, as forces of the Shiite-dominated government of Prime Minister Nouri al-Maliki abandoned their posts and fled in fear of advancing Sunni militants, an official in the office of the provincial governor said.
Reuters adds that "The whole of Kirkuk has fallen into the hands of peshmerga," citing Jabbar Yawar. "No Iraqi army remains in Kirkuk now."
This in turn has put the output of the key Kirkuk-Ceyhan pipeline, with a 1.6MM bbls/day capacity, at risk.
The militia were operating out of the headquarters of the Iraqi army's 2nd Division. The official said western parts of Kirkuk province were still under the control of fighters from the Islamic State of Iraq and al-Sham, or ISIS, an al Qaeda offshoot.
Abu Mohammed al-Adnani, a spokesman for the Islamic State of Iraq and al-Sham, said the al Qaeda-inspired group would advance on Karbala and Najaf, as well as the capital Baghdad, the Associated Press reported, citing an audio statement.
However, as we showed yesterday, the final ISIS target is none other than the city of Baghdad, and the overthrow of the Iraq government entirely.
In Tikrit, militants have set up military councils to run the towns they captured, residents said.
“They came in hundreds to my town and said they are not here for blood or revenge but they seek reforms and to impose justice. They picked a retired general to run the town,” said a tribal figure from the town of Alam, north of Tikrit.
“'Our final destination will be Baghdad, the decisive battle will be there,' that’s what their leader of the militants group kept repeating," the tribal figure said.
The powerful Shiite leader, Moqtada al-Sadr, urged his followers on Wednesday to form military units to defend the two cities, which along with Mecca and Medina in Saudi Arabia are considered sacred by Shiites.
Before he suspended its operations in 2008, Mr. Sadr's Mahdi Army, once estimated to have nearly 60,000 members, played a major role in the country's Sunni-Shiite sectarian conflict.
His call for military mobilization came after Mr. Maliki said the government would arm citizens who volunteer to fight militants, after the fall of Mosul on Tuesday.
Security was stepped up in Baghdad to prevent the Sunni militants from reaching the capital, which is itself divided into Sunni and Shi'ite neighborhoods and saw ferocious sectarian street fighting in 2006-2007 under U.S. occupation.
* * *
The Kurdish capture of Kirkuk instantly overturns the fragile balance of power that has held Iraq together as a state since Saddam's fall.
Iraq's Kurds have done well since 2003, running their own affairs while being given a fixed percentage of the country's overall oil revenue. But with full control of Kirkuk - and the vast oil deposits beneath it - they could earn more on their own, eliminating the incentive to remain part of a failing Iraq.
Maliki's army already lost control of much of the Euphrates valley west of the capital to ISIL last year, and with the evaporation of the army in the Tigris valley to the north this week, the government could be left in control only of Baghdad and areas south.
The surge also potentially leaves the long desert frontier between Iraq and Syria effectively in ISIL hands, advancing its stated goal of erasing the border altogether and creating a single state ruled according to mediaeval Islamic principles.
Maliki described the fall of Mosul as a "conspiracy" and said the security forces who had abandoned their posts would be punished. He also said Iraqis were volunteering in several provinces to join army brigades to fight ISIL.
In a statement on its Twitter account, ISIL said it had taken Mosul as part of a plan "to conquer the entire state and cleanse it from the apostates", referring to the province of Nineveh of which the city is the capital.
Militants were reported to have executed soldiers and policemen after their seizure of some towns.
* * *
And while all of the above explains oil's spike today, now that the world has yet another geopolitical hotzone to follow, following the China-Japan naval conflict, the China-Vietnam escalation, the Thailand martial law, the Ukraine civil war and now the Iraq collapse, expect the USDJPY rigging crew to ignite enough momentum to send the S&P 500 to fresh all time highs.
Credit to Zero Hedge
The Russians are actually making a move against the petrodollar. It appears that they are quite serious about their de-dollarizationstrategy. The largest natural gas producer on the planet, Gazprom, has signed agreements with some of their biggest customers to switch payments for natural gas from U.S. dollars to euros. And Gazprom would have never done this without the full approval of the Russian government, because the Russian government holds a majority stake in Gazprom. There hasn't been a word about this from the big mainstream news networks in the United States, but this ishuge. When you are talking about Gazprom, you are talking about a company that is absolutely massive. It is one of the largest companies in the entire world and it makes up 8 percent of Russian GDP all by itself. It holds 18 percent of the natural gas reserves of the entire planet, and it is also a very large oil producer. So for Gazprom to make a move like this is extremely significant.
When Barack Obama decided to slap some meaningless economic sanctions on Russia a while back, he probably figured that the world would forget about them after a few news cycles.
But the Russians do not forget, and they certainly do not forgive.
At this point the Russians are turning their back on the United States, and that includes the U.S. dollar.
What you are about to read is absolutely stunning, and yet you have not heard about it from any major U.S. news source. But what Gazprom is now doing has the potential to really shake up the global financial landscape. The following is an excerpt from a news report by the ITAR-TASS news agency...
Gazprom Neft had signed additional agreements with consumers on a possible switch from dollars to euros for payments under contracts, the oil company's head Alexander Dyukov told a press conference."Additional agreements of Gazprom Neft on the possibility to switch contracts from dollars to euros are signed. With Belarus, payments in roubles are agreed on," he said.Dyukov said nine of ten consumers had agreed to switch to euros.
And Gazprom is not the only big company in Russia that is moving away from the U.S. dollar.
According to RT, other large Russian corporations are moving to other currencies as well...
Russia will start settling more contracts in Asian currencies, especially the yuan, in order to lessen its dependence on the dollar market, and because of Western-led sanctions that could freeze funds at any moment.“Over the last few weeks there has been a significant interest in the market from large Russian corporations to start using various products in renminbi and other Asian currencies, and to set up accounts in Asian locations,” Pavel Teplukhin, head of Deutsche Bank in Russia, told the Financial Times, which was published in an article on Sunday.Diversifying trade accounts from dollars to the Chinese yuan and other Asian currencies such as the Hong Kong dollar and Singapore dollar has been a part of Russia’s pivot towards Asian as tension with Europe and the US remain strained over Russia’s action in Ukraine.
And according to Zero Hedge, "expanding the use of non-dollar currencies" is one of the main things that major Russian banks are working on right now...
Andrei Kostin, chief executive of state bank VTB, said that expanding the use of non-dollar currencies was one of the bank’s “main tasks”. “Given the extent of our bilateral trade with China, developing the use of settlements in roubles and yuan [renminbi] is a priority on the agenda, and so we are working on it now,” he told Russia’s President Vladimir Putin during a briefing. “Since May, we have been carrying out this work.”“There is nothing wrong with Russia trying to reduce its dependency on the dollar, actually it is an entirely reasonable thing to do,” said the Russia head of another large European bank. He added that Russia’s large exposure to the dollar subjects it to more market volatility in times of crisis. “There is no reason why you have to settle trade you do with Japan in dollars,” he said.
The entire country is undergoing a major financial conversion.
This is just staggering.
Meanwhile, Russians have been pulling money out of U.S. banks at an unprecedented pace...
So in March, without waiting for the sanction spiral to kick in, Russians yanked their moolah out of US banks. Deposits by Russians in US banks suddenly plunged from $21.6 billion to $8.4 billion. They yanked out 61% of their deposits in just one month! They'd learned their lesson in Cyprus the hard way: get your money out while you still can before it gets confiscated.
For those that don't think that all of this could hurt the U.S. economy or the U.S. financial system, you really need to go back and read my previous article entitled "De-Dollarization: Russia Is On The Verge Of Dealing A Massive Blow To The Petrodollar". The truth is that the U.S. economic system is extremely dependent on the financial behavior of the rest of the globe.
Because nearly everyone else around the rest of the planet uses our currency to trade with one another, that keeps the value of the U.S. dollar artificially high and it keeps our borrowing costs artificially low.
As Russia abandons the U.S. dollar that will hurt, but if other nations start following suit that could eventually cause a financial avalanche.
What we are witnessing right now is just a turning point.
The effects won't be felt right away. So don't expect this to cause financial disaster next week or next month.
But this is definitely another element in the "perfect storm" that is starting to brew for the U.S. economy.
Yes, we have been living in a temporary bubble of false stability for a few years. However, the long-term outlook has not gotten any better. In fact, the long-term trends that are destroying our economic and financial foundations just continue to get even worse.
So enjoy the "good times" while you still can.
They certainly will not last too much longer.
Credit to Zero Hedge