SeventyTwoTrillion

Naked Capitalism: Russian Trade Corridors Flourish Under Western Sanctions

TLDR:

• Russian sea exports are up 7.8% despite all the efforts by the West to shut down Russian shipping as much as possible.
• Both Russia and China are taking the Arctic very seriously, as it's both faster than the Suez route and also safer from strait blockades. The US is trying to take it seriously and are putting military bases in their newfound colonial possessions in Finland and Sweden that NATO just conquered militarily, but they kinda need like, ships, and building those ships kinda sucks and is hard, and they'd rather be inflating housing bubbles and creating cryptocurrency farms.
• Black Sea shipping has increased despite Ukrainian... I don't even think "pressure" is the right word, they're more like pinpricks. NATO wants to get into the Black Sea but Turkiye isn't interested in all the headaches and potential incidents that might cause.
• Caspian Sea shipping is up too, as it's right in the middle of a bunch of routes, including the INTSC, which connects St Petersburg to Iran and then India. There are problems to overcome here, both in terms of building infrastructure in very challenging conditions, as well as Western sanctions and meddling in the Caucuses.
• Greece has been selling its tankers to shady companies that are transporting Russian oil as that's what's profitable now, and that the US seems totally unable to accept that it isn't actually needed in the global trade system as some high and mighty arbiter, and that other countries can, in fact, do things perfectly well without their corporations.

Quite an interesting article; it goes over the Baltic + Arctic route; the Black Sea route; the Caspian route; and the Pacific route.

For the Baltic Sea leading into the Arctic, cargo turnover at their Baltic seaports has increased by 2.5%, mainly due to oil exports to China surging fivefold since 2019 to 10.4 million barrels in summer 2023, though most Russian oil going to China still moves via the Suez Canal. As has been discussed before in these megathreads, China and Russia really don't wanna rely on these straits given the potential chaos that could be unleashed there; luckily right now it's by a force friendly to them (Yemen), but in the future it could be a more unfriendly force.

It's worth noting that the Arctic route is about 33% shorter than the Suez route, provided ice and bad weather doesn't slow things down. Russia is building up its fleet of icebreakers - it wants to build more than 50 icebreakers and ice-class vessels, ports, and terminals over the next 13 years. And obviously climate change will do its part to help clear the ice out of the way. Additionally, Russia wants to send its natural gas towards Asia now instead of Europe given that Nord Stream is... experiencing technical difficulties, and they're building facilities up for that.

The imperial core is seeking to expand its foothold in the Arctic via Norway, Finland, and Sweden, as well as Greenland and Alaska, to try and counter all of this. The EU has also floated the idea of stopping Russian ships in the Baltic. The US has a grand total of two old icebreakers which constantly need maintenance, so not exactly a fearsome force. Never fear, though - the US is building new ones, with the first set to be ready in... 2028. Russia has over 30 icebreakers and China is also getting started on construction, with 4 icebreakers so far.

Meanwhile, Black Sea trade is up 17% despite Ukraine's very impressive and epic drone strikes on Crimea. While Turkiye continues to stop NATO from entering the Black Sea, there's not really a ton they can actually do beyond denunciations. They're trying to enlarge their presence by trying to establish a mine-clearing force that would be a trojan horse, letting NATO naval assets into the sea, but everybody can see right through this and nobody is fooled by the language of it being a "peaceful" effort. Turkiye still doesn't appear to want much to do with this and Russia increased its aerial presence over the Black Sea with jets armed with hypersonic missiles, serving the dual purpose of dissuading NATO in the Black Sea and also off the coast of Israel, just in case the US tries to do something funny with all the ships they have concentrated there.

The Caspian Sea is a transit point for the INSTC and trade grew by 36% last year. The INSTC connects St Petersburg all the way down to the Caspian Sea and then into Iran and the Persian Gulf, ending at India's Mumbai. Several other important routes go through the region too which connect various Central Asian countries together. It was kind of dead for a while but the US's pressure on Russia and Iran in the last couple years has greatly renewed interest in it, especially as it also bypasses the Suez Canal. The US has been trying to fuck this up again and has had some success, though sanctions just don't have the same kick that they used to. Instead, the issues appear to be mostly internal - if you've looked at a map of Iran, you can see that going north-south kinda fucking sucks due to the mountain ranges, and west-east is considerably easier. Russia and Iran are working on these problems.

Russia's Pacific ports, with the main one being Vladivostok, has seen renewed interest as they're along the Arctic route. China is boosting trade routes to these ports, and Russia is having more interest in developing their far east due to Western pressure.

Hilariously, after several Greek shipping companies promised to stop shipping Russian oil after getting warned by the US, they're just selling the ships. Greece sold 97 tankers in 2023. Companies in the UAE, China, India, and Turkiye have bought these ships, and nearly a thousand maritime companies have been created with an association with Russia in 2022. The US response behind closed doors, I like to imagine, has been "Hey, what the fuck? You can't do that! That's not how that should work! We created this global system of trading and you inferior motherfuckers can't just do all this shipping and insurance without us! WE HAVE FINANCIAL HEGEMONY!!!"

Your Tuesday Briefing

Estonia has become the first former Soviet republic to legalize gay marriage, due to an amendment to its Family Law which passed 55 to 34.

The United States and Europe are unable to compete with China in the solar panel industry according to a report from consultancy Wood Mackenzie. The cost of producing solar modules dropped by 42% in 2023 to $0.15 per watt; in Europe the cost is $0.30 and in the US, $0.40. China also has 80% of the world's solar panel manufacturing capacity.

Uganda is beginning construction on the $5 billion East African Crude Oil Pipeline as the first shipment of pipes have arrived from China, as Uganda seeks to deliver its first oil to international markets by 2025 by shipping it to Tanzania's ports. Pressure from environmental campaigners under the StopEACOP slogan has since several US, European, and Japanese companies withdrawing from the project, leaving China to fill the gap. France's TotalEnergies has a 62% interest in the pipeline, and European politicians have warned against TotalEnergies from continuing to back the project.

Iran and Russia have officially abandoned the dollar for mutual settlements, finalizing an agreement to trade in the ruble and rial. New financial and banking institutions have been established to allow non-SWIFT messaging systems, and establishing bilateral brokerage relations in national currencies. This comes as Iran signs a free trade agreement with the Russia-led Eurasian Economic Union, in which tariffs are being cut down for 87% of products.

Russian manufacturing is at its highest level of growth in seven years, as the PMI rose from 53.8 to 54.6 in December. Unemployment has also hit a record low of 2.9%. The service sector also expanded.

An article by Danny Haiphong: How U.S. hegemony reached its limits in 2023

U.S. political leaders often hype the "rules-based international order" as the pinnacle of global "democracy." However, the "rules-based order" exercised by the U.S. is predicated not on rules or order but rather on the domination of a single state over the interests of the rest. In 2023, this particular form of global leadership (or misleadership) has run up against profound and irreversible limitations.

Nowhere is this more evident than in the conflict in Ukraine. U.S. military strategists and political officials entered 2023 optimistic about Ukraine's chances of defeating Russia militarily with the infusion of large sums of aid from NATO. Optimism quickly turned into its opposite as the year wore on. U.S. and Western mainstream media now openly admit that Ukraine's hyped counteroffensive failed to achieve any of its objectives and led to massive losses in human and military resources. Aid to Ukraine has since been scaled down as Kyiv's U.S. and NATO backers manage growing political divisions over the best way forward in a losing war.

The U.S. and its NATO counterparts gambled on the hope that a combination of economic sanctions and WWI-style warfare would weaken the Russian government and cause the collapse of Vladimir Putin's leadership. The opposite has occurred. Russia reoriented its economy to the Global South, strengthening ties with the emerging markets in Asia, Africa, and Latin America. Russia prioritized a war of attrition to limit casualties while using its military industrial capacity to gradually grind down Ukraine's army. Far from destroying Russia, the conflict in Ukraine has handed the U.S. a historic setback to its hegemonic aims.

On October 7, 2023, the U.S. was confronted with another massive challenge to the stability of its "rules-based" order when the conflict between Palestine and Israel entered a new phase. Israel's response to the Hamas-led military raid has been internationally recognized as disproportionate and brutal, with many credible observers describing the humanitarian catastrophe in Gaza as genocide. While China and Russia have worked diligently in the UN Security Council to answer the worldwide call for a humanitarian ceasefire, the U.S. has either vetoed, voted against or abstained any resolution for a ceasefire or humanitarian aid in favor of Gaza.

Furthermore, U.S. President Joe Biden has provided unconditional military and diplomatic aid to Israel despite the role such aid has played in the death of over 20,000 Palestinians and the displacement of at least 2 million more. U.S. policy toward the Israel-Palestine conflict has caused enormous damage to the legitimacy of Biden's leadership. Public opinion toward the administration has reached a historic low and prominent party leaders are seeking possible alternatives. U.S.'s support in Israel's activities in Gaza has also raised the specter of a broader war involving neighboring states and political forces in West Asia.

The improper diplomacy in dealing with conflicts in Ukraine and Gaza and the domestic economic turmoil, which has brought huge pressure on Biden administration, have additionally forced the United States to rebalance its relations with China. In the last six months of 2023, high-level U.S. officials from Secretary of State Antony Blinken to Treasury Secretary Janet Yellen have made visits to Beijing in the lead-up to the meeting between Chinese President Xi Jinping and U.S. President Joe Biden this past November. These meetings have reduced tensions between the two countries on the surface but have not produced significant policy change from the U.S. side. Washington's overall foreign policy of containment remains in the form of aggressive maneuvers in the South China Sea as well as ongoing economic sanctions on key sectors of China's economy.

The Biden administration's contradictory policy toward China is a stark reflection of the limits of U.S. hegemony. China spent 2023 moving toward its overall goal of sustainable economic growth, peaceful development, and integration within a multipolar global framework. For example, while the U.S. neglected the Middle East for "Great Power competition" in the wake of its defeat in Afghanistan, China helped negotiate peace between Saudi Arabia and Iran.

Thus, the rigid limitations of U.S. hegemony have opened up opportunities for the advance of multipolarity. It is imperative that U.S.-inflamed conflicts in Gaza, Ukraine and elsewhere come to an end in 2024 so that the benefits of a more democratic world order are felt farther and wider.

How Yemen is blocking US hegemony in West Asia

Given the renewed focus on Yemen's de facto government led by Ansarallah and its armed forces, it is time to move beyond the simplistic and dismissive characterization of the Houthis as merely a ‘rebel’ group or a non-state actor. Since the start of the war by the Saudi-led coalition against Ansarallah in 2015, the Yemeni resistance movement has transformed into a formidable military force that has not only humbled Saudi Arabia but is also now challenging Israel’s genocidal actions in Gaza as well as the superior firepower and resources of the US Navy in the world’s most important waterway.

...

To date, Ansarallah has successfully targeted nine ships using drones and missiles, and managed to seize one Israeli-affiliated ship in the Red Sea, according to their official statements. These operations have prompted the largest international shipping companies, including CMA CGM and MSC, and oil giants BP and Evergreen, to re-route their Europe bound ships around the horn of Africa, adding 13,000km and significant fuel costs to the journey. Delays, transit times, and insurance fees for commercial shipping have skyrocketed, threatening to spark inflation worldwide. This is especially worrisome for Israel, which is already contending with the economic repercussions of its longest and deadliest conflict with the Palestinian resistance in history. Additionally, Ansarallah has launched multiple missile and drone attacks on Israel’s southern port city of Eilat, decreasing its commercial shipping traffic by 85 percent.

The disruption in the Red Sea directly undermines a key element of the White House’s 2022 National Security Strategy, which unequivocally states that the US will not permit any nation “to jeopardize freedom of navigation through the Middle East’s waterways, including the Strait of Hormuz and the Bab al-Mandab.”

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The Pentagon plans to defend commercial ships using missile defense systems on US and allied naval carriers deployed to the region. But the world’s superpower, now largely on its own, does not have the military capacity to counter attacks from war-torn Yemen, the poorest country in West Asia. This is because the US relies on expensive and difficult to manufacture interceptor missiles to counter the inexpensive and mass-produced drones and missiles that Ansarallah possesses.

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If Ansarallah persists with this strategy, US forces will quickly deplete their interceptor missile stocks, which are needed not only in West Asia but in East Asia as well. As Fortis Analysis observed, the US has eight guided missile cruisers and destroyers operating in the Mediterranean and Red Seas, with a total of 800 SM-2 and SM-6 interceptor missiles for ship defense between them. Fortis Analysis further notes that production of these missiles is slow, meaning any ongoing campaign to counter Ansarallah will quickly deplete US interceptor missile stocks to dangerously low levels. Meanwhile, the US weapons manufacturer Raytheon can produce less than 50 SM-2 and fewer than 200 SM-6 missiles annually.

If these stocks are diminished, this leaves the US Navy vulnerable not only in the Red Sea and Mediterranean, where Russia is also active, but also in the Pacific Ocean, where China poses a significant threat with its hypersonic and ballistic missiles. Fortis Analysis concludes by observing that the longer Ansarallah continues “throwing potshots” at commercial, US Navy, and allied maritime assets, “the worse the calculus gets. Supply chains win wars – and we are losing this critical domain.”

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As a result, Abdulghani al-Iryani, a senior researcher at the Sanaa Center for Strategic Studies, described the situation in Yemen as a case where technology acts as a “great equalizer.” “Your F-15 that costs millions of dollars means nothing because I have my drone that cost a few thousand dollars that will do just as much damage,” he told the New York Times.

If you shoot down a $2000 drone with an air defense missile, then in actuality, your air defense missile was shot down by a drone.

out of the frying pan, into the fire

Hamas is sufficiently horizontal that this will have little impact on operations, it's just Israel having a temper tantrum that their troops are being owned in Gaza. Hezbollah will shoot a few missiles their way and shut up their infantile reaction

This is code for "Oh fuck. Oh shit. We just got blown the fuck out. Thousands of our troops are dead, thousands more are injured. What do we do? Anybody have any ideas? Let's, uh, just bomb them a bunch more. Let's hope that works. Fuck. We're so screwed."

given all the dead ones, they're actually in the negatives

There are more and more reports that Israel is pulling/about to pull troops out of northern Gaza. If true, then without any hostages being rescued and with Hamas' capabilities still seeming pretty well intact given that they are still firing missiles at Tel Aviv, it looks like the Gazan Resistance has won the Battle of Gaza City. It'll be interesting to see how things progress from here.

10 out of 10 Kh-47M2 "Kinzhal" aeroballistic missiles;

Ethiopia, Egypt, Iran, Saudi Arabia, and the UAE are officially in BRICS, as of yesterday.

sign me up