Russia is the target of a multi-faceted, asymmetric campaign of destabilization that has employed economic, political, and psychological forms of warfare -- each of which has been specifically designed to inflict maximum damage on the Kremlin.
PART 2 - How Wall Street targeted Russia using oil
In July 2013, Sen. Sherrod Brown, chair of the Senate Banking Subcommittee on Financial Institutions and Consumer Protection, opened a hearing to probe just how connected major Wall Street banks were to the holding of physical oil assets, and the attendant ability of these companies to manipulate oil prices. The findings of the hearing, considered damning by multiple analysts knowledgeable on the subject, prompted an investigation by the Senate’s Permanent Subcommittee on Investigations, published as “Wall Street Bank Involvement with Physical Commodities.”
The report highlighted just one of the big banks, Morgan Stanley, noting:
“One of Morgan Stanley’s primary physical oil activities was to store vast quantities of oil in facilities located within the United States and abroad. According to Morgan Stanley, in the New York-New Jersey-Connecticut area alone, by 2011, it had leases on oil storage facilities with a total capacity of 8.2 million barrels, increasing to 9.1 million barrels in 2012, and then decreasing to 7.7 million barrels in 2013. Morgan Stanley also had storage facilities in Europe and Asia. According to the Federal Reserve, by 2012, Morgan Stanley held ‘operating leases on over 100 oil storage tank fields with 58 million barrels of storage capacity globally.’”
Pam and Russ Martens of the well-respected financial analysis site WallStreetOnParade.com succinctly noted in their analysis of this issue: “With financial derivatives and 58 million barrels of physical storage capacity, it might not be so hard to manipulate the oil market.”
Indeed, the sheer scope of Morgan Stanley’s market influence demonstrates the obvious fact that the major Wall Street banks, and their cousins in the city of London, are able to significantly affect global prices using multiple levers like supply and derivatives, among others.
The Senate report’s brazen honesty is likely the main reason the corporate media failed to cover it all. As noted in the report:
“Due to their physical commodity activities, Goldman, JPMorgan, and Morgan Stanley incurred increased financial, operational, and catastrophic event risks, faced accusations of unfair trading advantages, conflicts of interest, and market manipulation, and intensified problems with being too big to manage or regulate, introducing new systemic risks into the U.S. financial system.”
But perhaps most jaw-dropping is this January 2014 statement by Norman Bay, director of the Office of Enforcement at the Federal Energy Regulatory Commission, who testified before the Committee on Banking and Financial Institutions and Consumer Protection Subcommittee. He plainly outlined how the big banks manipulate global oil markets:
“A fundamental point necessary to understanding many of our manipulation cases is that financial and physical energy markets are interrelated … a manipulator can use physical trades (or other energy transactions that affect physical prices) to move prices in a way that benefits his overall financial position. One useful way of looking at manipulation is that the physical transaction is a ‘tool’ that is used to ‘target’ a physical price.”
When one considers how much influence these large banks have on global prices, it’s almost self-evident that they would be able to use oil prices to execute a political and geopolitical agenda. With that in mind, it seems highly suspicious (to say the least) that the collapse of the oil price coincided directly with Russia’s move to annex Crimea and assert its dominance over its sphere of influence, thereby effectively stopping the eastward expansion of NATO in Ukraine.
It’s amusing then when one reads The New York Times reporting this month that “simple economics” explains the drop in oil prices. In fact, it’s clear that it’s just the opposite: The collapse of oil is the result of financial manipulation by Wall Street in the service of the broader agenda of the Empire.
Indeed, in late 2014 Russian President Vladimir Putin implied strongly that the oil plunge had less to do with economic factors than with political decisions. Putin openly theorized: “There’s lots of talk about what’s causing (the lowering of the oil price). Could it be the agreement between the U.S. and Saudi Arabia to punish Iran and affect the economies of Russia and Venezuela? It could.”
Of course, Putin was not alone in this assessment, as many international observers spread “conspiracy theories” about collusion between the U.S. and Saudi Arabia to deliberately depress oil prices by not cutting production despite all market indicators pointing to a needed decrease.
With U.S.-Russia relations having reached their nadir at precisely that moment, and with Venezuela and Iran also on the enemies list, it is no surprise that many analysts around the world concluded that Washington and Riyadh were conspiring on oil for political reasons.
Of course, the other major impact of the oil plunge on Russia has to do with the burgeoning energy-trade relationship between Russia and China. After the massive oil and gas deals announced between Russia and China in 2014 — deals worth hundreds of billions of dollars over the next three decades, it seems that Washington calculated that while it could not prevent the deals from moving forward, it could undermine them by fundamentally changing the calculus of the deals by tanking oil prices. In so doing, not only have the contracts been rendered less profitable for Russia, they are now subject to decreasing demand from China, which is experiencing its own economic slowdown.
In short, Russia’s attempt to break free of its dependence on revenue from gas sales to Europe by shifting its focus eastward has left Moscow in a bind. Facing the prospect of significantly less revenue than it anticipated coming from the deals with Beijing, Russia has been forced to adjust its own estimates and outlook for the coming years.
What we see in Ukraine is probably another failure of various think tanks, mostly from Washington, which they are funded, of course, by the international capital. It seems that, apart from the fact that they have underestimated Putin's abilities, they have also wrongly estimated that Russia had passed permanently in the neoliberal phase and would be ready to become an easy victim to promote their plans. According to these plans, the ultimate goal would be probably to dissolve the vast Russian territory in future and bring in power Western-friendly puppet regimes, in order not only to conquer the valuable resources, but also to impose permanently the neoliberal doctrine on "unexplored" regions and populations.