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Friday 30 June 2023

Russia, an elephant in the room

Joe Biden unwittingly brought forth “Make Russia Great Again” a reality by fighting proxy war against Russia. He failed to realize that by his foolish action he would allow Russia to enter the room as much stronger an elephant than what she was previously.

This is also connected to the ancient Tamil wisdom that says “An elephant does not know her strength until it is provoked”. True to this maxim, Russia which remained as a one-dimensional power during much of the cold war and for a decade or two after the collapse of USSR, was given a make-up by Vladimir Putin.

Still Russia remained just second to European Union, not to mention USA. His re-calibration of the state of Russian Federation could not bring her to the super power status she enjoyed earlier. Then enters Joe Biden with his experience of fifty years in politics backing him. Yet he misread the Russian special military operations by unleashing covert operations with his Western allies to corner the bear.

Initially Russia was taken aback; the intended operation in Ukraine did not go well. Putin was caught in a deadly clap trap where he has to fight America and fifty or so allies arraigned against him in an existential crisis. The fact that cannot be overlooked is Russians are masters of maskirovka strategy along with matryoshka dolls where a set of wooden dolls of decreasing size are placed one inside another. It is all confusing to outsiders prodding them to make wrong moves.

Putin then made the right moves to regain initiative to beat his opponents decisively and once gain got back the lost glory of superpower. Here are quite some of the gleanings that demonstrate Russia is back as the elephant in the room and that too a stronger one not only in military sense but in geoeconomics too.

As the west chased Russia from their camp Russia went to the East where she was welcomed with out-stretched arms. Taps of oil and gas pipelines to the West were turned off. The largest one Nord Stream was blown out due to terrorist activity. Cheap oil & gas was flowing to the East continuously. The kind of economic leverage Germany made using cheap gas for industrial growth & prosperity was suddenly lost and then found in the factories of East. Despite price caps and other trickery imposed by west, the East got a better deal at deeply discounted price. Evidently, Saudi Arabia was importing cheap crude oil from Russia and exporting refined oil to the West at premium price.

Overnight Russia became a giant in the commodity market. As most of the Ukraine grain harvest was systematically being destroyed, Russian grain replaced that with her own surplus and thereafter exporting to countries in Asia & Africa. Apart from agriculture & farming the industrial production saw a major up-tick. War industrial production worked apace to bring out weapons for own defence and also for exports. Consumer goods were in plenty too.

Whereas malls in Germany had empty shelves Russia public had plenty in their supermarkets that too in affordable price. Inflation was controlled and public who required cash if any were immediately given sufficient Ruble to tide over any deficit. The West is reeling in recession while Russia is beaming in boom!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

 


Wednesday 28 June 2023

Iran back in geoeconomics game

Suddenly, Iran got a big boost in her geoeconomics power spectrum.  Lithium was discovered in abundance in the Hamadan province of North-Western Iran. Understandably, Iranian lithium deposits is the second largest globally giving the beleaguered nation a heaven sent boon.  My analysis:

Lithium a silvery white alkali soft metal used extensively in many of the everyday products. As a critical component in the cathodes of lithium-ion used mainly in batteries of various kinds, such as electric vehicles power packs & re-changeable batteries, lithium is a sought after commodity. Either excess or surplus of lithium could affect the supply lines of many products that use lithium based batteries as power source.

Generally speaking lithium is extracted from two sources. Brine mines is the primary one. Chile which boasts the largest deposits of more than 9.2 million tonnes is the second largest producer of about 39,000 tonnes of lithium. Australia, on the other hand, extracts lithium from rock source, yet stands as number one producer with 61,000 tonnes. China has a mix of both but tends to get more from the salt mines. Annually 19,000 tonnes are coming out of her brine and rock sources.

Geoeconomics could play the role of spoiler. China being the largest user of lithium gobbles up about 40 percent of the 93,000 metric tons of raw lithium mined globally. South Korea and Japan also imports large quantities of lithium after China.

Obviously, Iranian lithium lies in rocky areas. Even though the estimation of her deposits is on the ball-park figure of 8.5 million tonnes neither she has the capacity to extract nor the ability to export major part of her production due to prevailing sanctions targeted against her. Collaborating with Australia is out of question. Hence, only China can help Iran to work over the deposits.

Now look at the Iran – China 25 year cooperation programme that was signed in 2021. According to this covenant China has agreed to inject $300-$400 billion by foreign direct investment into the Iranian oil, gas and petrochemical industries. The bottom line is China originally baulked at this high figure as Iran might not offer eligible projects for the fruition of this agreement.

Lithium bonanza solves the conundrum. China smitten by Australian negativity towards her during the last few years would have sigh of relief. Iran is not only a reliable partner to work with as regards to trade and economic progress, but could help in implementing China business strategy in Middle-East and elsewhere.

Sooner than later both would ink a deal to extract, process and export lithium from Iran meant for China and the Far East. That sounds a workable proposition for these two countries to enhance their geoeconomics prowess.

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist

 

 


Monday 26 June 2023

Forever war, fails Saudi Arabia

After horrendous failure of “forever war” policy in America now it is Saudi Arabia’s turn to taste the grapes of wrath. It was the mirror image of the American policy KSA wished to implement from way back June 8, 1974 when Henry Kissinger and Deputy Premier Prince Fahd Ibn Abdel Aziz signed wide-ranging military and economic agreement emboldening the kingdom.

Though Initially it appeared as a purely business agreement  wherein America providing security and KSA proving oil, it later morphed into a vital strategic salience where America began to provide cover for KSA in international forums for the latter’s  flawed policy of “forever war”. KSA feared any hint of revolution be it is in religion, politics and business strategy in and around Saudi Arabia. The oil crisis of 1973 brought unexpected wealth that need to be preserved or used for the purposes of keeping KSA out of trouble but placing her neighbours as well as other enemies lurking far and wide in continuous turmoil.

Chief amongst these threats was Muslim Brotherhood, founded in 1928 by Hassan Al-Banna that preached political Islam which is anathema to the Kingdom. To keep this particular enemy at bay KSA commenced to spread their own brand of regressive Salafi Islam globally that requires untrimmed loyalty to monarchy as a pillar of authority. Then came the Iranian Revolution of 1979 whose leader Ayathullah Khomeini called for the overthrowing of pro-American monarchies in the Gulf, including Saudi Arabia. At the end, KSA found herself in splitting the Muslim world into several camps.

Further fillip came in May 2011 when President Obama made a speech in Cairo endorsing the Arab Spring where a series of anti-government protests, uprisings and armed rebellions spreading across much of the Arab world that was unfriendly to American hegemon. Moreover, KSA was terrified when things boiled in Syria and she took it as a cardinal duty to overthrow President Assad.

In quick succession KSA found Yemeni Houthis rebelling against Sanaa based government supported by the kingdom. In addition to pouring money & weapons KSA sent her army along with UAE. Lebanan also got into turmoil as Saudi supported Saad Hariri regime was facing multi-pronged attack.   

After draining men & money and facing repeated missile attacks by Houthis over Saudi oil infra-structure the Kingdom realised that forever war as business strategy is not taking the country anywhere but to hell.

Qatar blockade was another hapless adventure. The Saudi-led coalition cited Qatar's alleged support for terrorism as the main reason and especially supporting among other things Muslim Brotherhood. Beginning in June 2017 the blockade miserably failed and KSA orchestrated its end in January 2021 marking the first time an ignominious defeat for KSA.

On top of all, the Kingdom found herself as an unwilling participant if and when war breaks out over Iran by either America, Israel or both. The murder of Qasem Soleimani strengthened the resolve by Iran for a revenge attack that would not spare KSA.

Prince Mohamed bin Salman (MBS) who took helms in 2015 gradually became the de facto ruler by acting for his ailing father Salman bin Abdul Aziz Al Saud. Despite the fact he was chiefly responsible for Yemen fiasco and Qatar debacle, MBS finally found enough is enough and started winding down the forever war policy that had messed-up business strategy of Saudi being leader of gulf monarchies!

 

Cheers!

 

Muthu Ashraff Rajulu

Business Strategist

Mobile: + 94 777 265677

E-mail: cosmicgems@gmail.com

Blog:   Business Strategist