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Grease Is The Word

March 18th, 2013 - 1:34 am

The Greek Reporter says GAZPROM had practically offered to buy Cyprus in exchange for letting it exploit its offshore oil and gas reserves.

Russian energy giant Gazprom has offered the Republic of Cyprus a plan in which the company will undertake the restructuring of the country’s banks in exchange for exploration rights for natural gas in Cyprus’’ exclusive economic zone, local media reported.

Representatives of the Russian company submitted the proposal to the office of Cypriot President Nicos Anastasiades on Sunday evening, Sigma TV reported.

The proposal states that Gazprom will fund the restructuring of the country’s crippled financial institutions in exchange for substantial control over the country’s gas resources while Cyprus won’t need to take the harsh bailout package offered by the EU.

The Russian interest in Cyprus had described in Cypriot newspapers before. In 2011, the Famagusta Gazette reported: “the Russian energy giant Gazprom is reported to be interested in gaining the exploration rights for natural gas in Cyprus’ exclusive economic zone. According to Cyprus state run television, Gazprom is ready to start exploration in two offshore areas, near the Aphrodite plot, which is currently being drilled by the Texas based Nobel Energy group.”

If this report is accurate, the EU ‘bailout’ may have occurred against the background of a geopolitical bidding war between the EU and Russia. The Greek Reporter described the rejection of Russia’s offer. It also detailed Russia’s wrath.

Cypriot President Nicos Anstasiades is not willing to discuss the Russian’s offer according to Newsit who cited an anonymous source close to the President.

“The president is not going to discuss this plan because he wants a solution that will come from the EU,” said the anonymous source.

Shortly after the rejection of the Gazprom proposal, Anatoly Aksakov, the head of the Association of Regional Banks of Russia and a member of the Board of the Central Bank of Russia spoke to Interfax describing the country’s banking system as “not trustworthy” and advised Russian citizens “to withdraw their deposits from Cyprus.”

The Guardian notes that Putin has made the displeasure official, warning Cyprus that “that this decision, if taken, would be unfair, unprofessional and dangerous.”  The  Guardian also notes “the benchmark credit default swap contract for Cyprus has jumped to 768 basis points, up 113 from Friday”. If the IMF believed they could give the Russians moneymen a 10% haircut before they scoot off they forgot that other depositors were also likely to follow them.

The involvement of GAZPROM in the region was underscored by Russia’s energy deal with Israel. “A new deal by Russia’s Gazprom energy giant to market Israeli liquefied natural gas puts Moscow firmly in the burgeoning and contentious east Mediterranean energy sector, and shows that it’s again emerging as a player in the strategic region.”

With U.S. interest in the Middle East seemingly diminishing, in part because of vast shale oil and natural gas deposits that lessen dependence on Persian Gulf oil, Putin clearly has ambitions of filling the vacuum.

“The Bill Clinton-era in the geopolitics of Caspian energy, which ran through the George W. Bush presidency, imbued with a great sense of rivalry over Russia’s status as an energy powerhouse, is giving way,” said veteran Indian analyst M.K. Bhadrakumar.

“This is one of the messages to be pulled from the … 20-year deal for Israel’s Tamar offshore gas field in the Mediterranean.

“Without doubt, the Tamar deal rewrites the ABC of the geopolitics of energy security,” Bhadrakumar wrote in an Asia Times Online analysis.

“This is an important milestone for strengthening Gazprom’s position in the global LNG market” and in particular “Gazprom’s hand in the booming Asian LNG market.”

And when the Russians get to the Pacific the Boys from Chicago will be there already.  The Brookings Institution notes, in a recent article titled “Energy Security in Northeast Asia: A Pivotal Moment for the U.S.-Japan Alliance”  how Japan’s LNG requirements have taken a huge jump up after its shut down nuclear plans had to be replaced by gas fired generators.

Postponing nuclear reactor restarts have drained Japan’s national wealth considerably. It became a trade-deficit nation for the first time in more than three decades. A major factor in this development is the jump in LNG imports due to replacement of nuclear power generation by gas-fired thermal plants. Imports grew from 70 million tons from 2010 to 78.5 million tons in 2011 and 87.3 million tons in 2012 – an increase of almost 25 percent in two years. However, during the same period, the total value of LNG purchases increased by more than 70 percent … Simply put, Japan must restart nuclear reactors, and it must also introduce and enforce stricter safety regulations. …

Aside from the price issue, securing new LNG supply routes from North America is also important to ensure the safety of Japan’s seaborne hydrocarbon transportation. Currently, approximately 80 percent of crude oil and 30 percent of LNG destined for Japan cut across the East China Sea, where Sino-Japanese tension is simmering.

Shutting down nuclear reactors is proving a big business opportunity.  But what stands in the way of more LNG exports to Nippon is something called the Trans Pacific Partnership. This little known agreement is the focus of intense lobbying. Brookings says, “TPP membership for Japan would remove a potential obstacle to increase LNG exports from the lower 48 states.”  You might have guessed that Japan’s entry into this trade agreement is being blocked by Congressional Democrats, according to the Diplomat.

Thirty-five members of the House of Representatives and eight Senators wrote to President Obama on Thursday to express their opposition to Japan joining the Trans-Pacific Partnership negotiations.

All forty-three lawmakers that signed the letter are members of the president’s Democratic Party. The thirty-five House members account for just under 18 percent of the entire Democratic caucus in the House of Representatives.

“Japan’s significant, long-standing, and persistent economic barriers put in place to block our exports and support theirs have hurt American workers and businesses for decades,” the Congressional Democrats wrote in the letter, which is primarily concerned with Japan’s automobile exports hurting American car companies.

“Nowhere is the closed nature of Japan’s markets more evident than in the auto sector, where Japanese policies and practices have been carefully honed – over generations – to keep out American and other foreign cars and parts,” the lawmakers write.

The Diplomat notes drily that “America’s auto industry and labor union have traditionally been strong backers of Obama’s Democratic Party.”  Quid, meet pro quo.

The apparent narrative runs thus: the Greens have now proved nuclear power is unsafe. Hollywood believes them. Hence Japan must import vast quantities of LNG to replace the reactors. But before it can buy the LNG Japan must kowtow to Democratic Congressional special interests in order to be allowed to buy LNG from the lower 48.

I bow to you but Honorable Emperor bow to UAW

For some there’s no way to lose. For others there’s no way to win.

It’s seems all about Big Time money —  it’s a game in which poor Cypriot depositors, like the cab drivers described by the Guardian who are going to lose their pitiful savings, are just collateral damage  – just as the brain dead low information true believers are just useful fools. The real action is with Gazprom, EU special interests, Japanese industry and the Democratic unions. “No war for oil” was the battle cry of liberals for years. But things change when they’re in charge.

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All Comments   (24)
All Comments   (24)
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Not only can it happened here. It has happened here.

In 1933, Saint Roosevelt confiscated gold coins and bullion of American citizens. In return they were given $20.33 of paper money for each ounce of gold.

If they wanted to buy gold after that (which was illegal) they would have to pay $35 for each ounce of gold. Nice markup huh?

Holders of billions of dollars of US bonds that promised 49.19 oz of pure gold per $1000 of face value received paper money instead. Which somebody (foreign banks) could use 35 of to buy an ounce of gold. So the bonds were transmuted from the right to receive 50 $20 gold coins to a possibility of buying 28.6 oz of gold, if you were a foreigner. A 40% haircut.

10% seems downright civilized by way of contrast.

"Surely", you say,"the American people would not put up with such a theft. And certainly, the Supreme Court would find it it unconstitutional". Think again, white man. The people were as meek as little lambs. And Scotus swallowed it and said is there any thing else I can do for you sir?

Of course the Democrat peg boys who teach our children claim that this outrage was a an act of far sighted statesmanship.

No it wasn't. It was theft pure and simple, and that crime is the corrupt foundation of the Peoples Democratic Republic of the United States.
1 year ago
1 year ago Link To Comment
Not so fast.

According to Denninger, the Cypriot Parliament has said "Nyet" to the theft of depositor's money. Although there is still talk of a 15.6% wealth tax hit on the really big - read Russian Oligarch - depositors.

It may be possible that Cyprus becomes the first EU country to repudiate it's debt and walk away from the EU and their TBTF debt. Wouldn't that be fun?

We can only hope.

But the Wealth Tax/ Depositor Tax is now out of the bag, and will be a major problem for the Big Banks from here on in. As Paul Rahe writes in his post at Ricochet, the IMF , the TBTF and the EU have destroyed the depositors' trust in the ability of the Banks to safeguard their depositor's money. That mattress is looking pretty safe about now.
1 year ago
1 year ago Link To Comment
And the Russian navy gets a warm water port.
1 year ago
1 year ago Link To Comment
The brother of Alaska's junior senator is a regular guest on C2C AM. This scientist (who is the leading public expert on HAARP) made the point that a non-stop flight from Anchorage takes about the same amount of time to get to Tokyo as it does to Oslo, Norway. Alaska really is crucial to America's polar future and perhaps the northward migration of the future when climate change dries out the Southwest aka Azatlan and Mexican-Americans decide they can handle colder weather to go where the jobs and water are.
1 year ago
1 year ago Link To Comment
If I were BC's 'Moscow minder', I'd be splitting that lobster and bottle of champaigne with our esteemed host.

But seriously, Senor Equis told you all that this was coming. I didn't foresee the Cyprus theft, but I did foresee a moment when a Russian bailout might be in the cards in return for gas field concessions and a new home for the Russian Mediterranean squadron away from Tartus. Which is what makes the neocon strategic stupidity of constantly provoking the Russians while they quietly buy up assets for leverage so amusing. And your friendly neighborhood Equis also warned all PJMers and Spengler readers that the Russians would make a major play for Leviathian and/or purchase of Israeli arms -- if nothing else to make the neocon cognitive dissonance between 'our BFFs, the Israelis' and 'Our Enemy, Vlad the Bad's Eternal Evil Empire' unBearable. Pardon the pun. Neocons of course will try to solve this problem the Russians are creating for their Israel position by simply taking the three monkeys approach and pretending Moscow isn't quietly wooing Jerusalem away from Washington. Hey, it's like an old fart with a young hot wife who just ignores the signs she's cheating on him with the rich Russian who just rolled into the neighborhood behind the wheel of his cherny bumer.
1 year ago
1 year ago Link To Comment
Selling the country to the Russian mafia. What could go wrong?
1 year ago
1 year ago Link To Comment
Meanwhile there is speculation that the delay is to give time for the US printing machine to get some "money" enroute to Europe to "save the day." Yeah...that'll work. The US taxpayers and savers have nothing to fear..your deposits, insurance, retirement accounts, and cash on hand are all safe....Dang I wish I had more room in my apartment to store whiskey.
1 year ago
1 year ago Link To Comment
I've seen some speculation already that this action is LeGarde (IMF and closely connected with the Obama backers) vs Putin (KGB). One of the pieces had 80% of the money to be seized as KGB laundered cash. Are they really that arrogant? Are they really that stupid? Best yet, why do it now? Buy popcorn. Cheers -
1 year ago
1 year ago Link To Comment
I think that I shall never see
A Gazprom lovely as a tree
A cypress tree with leafy boughs
That soothe the worried, furrowed brows
Of Cypriots whose money seems
To be a part of EU dreams
While Russians look to score real big
And promise to use just one rig
If only they be put in charge
Of Cyprus finance by and large
Rejected, Putin storms and scowls
As Greeks razz Putin with wild howls
The trees meanwhile just sit and wait
Uncertain of the island’s fate

1 year ago
1 year ago Link To Comment
Drudge is aready reporting that the banks will now be closed til Thursday, whatever that buys. Perhaps they should close them until the following Monday just to round out the week. Maybe by then the rest of the world banking system can stake their claims. No refuge no instability.
1 year ago
1 year ago Link To Comment
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