All right, y'all, welcome back to the show.
It's Antiwar Radio.
I'm Scott Horton, and our first guest today is the great Pepe Escobar from the Asia Times Online, author of Obama Does Globalistan, and regular guest on all kinds of things.
You can find him, of course, at atimes.com.
Here he is at tomdispatch.com, and then, of course, under Tom's name at antiwar.com, sinking the petrodollar in the Persian Gulf.
Welcome back, Pepe.
How are you doing?
Wonderful.
Great to be with you again, Scott.
Well, you know, I know it's 1920s technology or something, but I'm still fascinated.
I can talk to you, and you're on the phone in Thailand right now.
That's pretty far away to me, but I guess if you travel all around the world all the time, it's not that far, huh?
Well, this is my hood, actually.
I lived here on and off for, I don't know, 15 years or so, so it's like being home.
I'm way over here in Texas, and it sure seems far away.
Well, I miss Texas.
I haven't been to Texas in a few years, so I do miss it.
Sound traveling at the speed of light here.
It's amazing.
All right, so let's talk about what the hell is going on in the world, specifically all the brinksmanship in the Persian Gulf and all the hype and all the oil.
This article at Tom Dispatch is really great.
I love the way it begins with Tom's little summary of, oh, I don't know, post-World War II history of American intervention in Iran, and then just to set up the background so that people know what's going on as you keep us up to date about how far, whose red line counts for what over there right now.
And Tom told the whole story in four or five paragraphs.
Yeah, he does it very well, doesn't he?
Very, very well, better than anything you're reading in the New York Times or the Washington Post for the past 30 years, you know.
Absolutely.
I guess let's start with where you start this article.
A very important thing.
Last week, Leon Panetta basically retreated his red line for when we go to war all the way to when they actually have a nuclear bomb.
Then we'll attack them, which doesn't seem like a good strategy to attack them at that point when they can actually really fight back, but anyway.
And by the way, after I finished the article, and I think one day before publication, the red line changed again because of that letter that Obama sent to Supreme Leader Ayatollah Khamenei.
And now the red line is, don't block the Strait of Hormuz, otherwise we're going to kick your ass.
Yeah, well, but nobody ever thought that they were going to start a war by blocking the Strait, right?
That was always their warning, that they could fight back a little bit if we start bombing them.
Everybody knows that.
Exactly, but the spinning in the Western corporate media, in the U.S., in major European countries, in Israel, is that now they are a threat because they are a threat to the global economy.
This was just a reaction to the non-stop threats from the U.S. and Israel for the past, what, two, three, four, five years, since 2005 at least, on a weekly basis, and these past few months it's been on a daily basis.
And we have to understand that this is also for internal consumption.
They had to do something vis-à-vis the Iranian population, because, especially in Tehran and the big cities, they are very well informed.
Most of them speak at least two or three other languages apart from Farsi.
They follow everything that happens in the West.
So they read about these threats, or their families in Paris, in London, or in L.A., telling about these threats every day.
What about our government?
They don't do anything.
So, a few officials in the government, they said, look, maybe, if we are attacked, we might consider blocking the Strait of Hormuz.
Of course, they will never do it, because this is how they export their own oil as well.
Well, but they're working on that, right?
Building a pipeline over the other way, west across the Arabian Peninsula to Yemen.
You're totally right.
Pipelines that go through Central Asia, they have, for instance, they have a swap agreement with Turkmenistan, so they have pipelines going from Iran to Central Asia.
And from Central Asia, these pipelines go to China, for instance.
I was talking about from northeastern Saudi Arabia to southwestern Saudi Arabia, or Yemen, at the Red Sea, right?
Aren't they trying to bypass the Persian Gulf itself to the west?
Oh, yes, this is another pipeline.
This is the Emirates, they are building a pipeline from east to west as well, so they can bypass the Strait of Hormuz.
It's going to take a while.
It's a very costly pipeline, it's going to take a while.
It's $3 billion or something.
So they are thinking about alternative strategies, but, of course, we have to look at the Sunni-Shiite angle, which is also very important.
Don't forget that the six GCC countries, the Gulf Cooperation Council, they are all Sunni monarchies.
Obviously, they subscribe to that fiction that was invented by the House of Saud and King Abdullah of Jordan during the Bush administration about the Shiite crescent.
So they think that it's Iran, Iraq, Syria, and Hezbollah against them, which is absolutely ridiculous, because there is no expansionist policy built in the Islamic Republic of Iran.
This is completely nuts.
They just want to be respected as regional power, and they are not.
They are trampled upon by the US and by the Europeans all the time.
Let's go back two years ago.
Remember when Brazil and Turkey organized that swap agreement?
They flew their foreign ministers to Tehran.
They sat down together for 18 hours.
In the end, they had a swap agreement for Iranian enrichment.
The Iranian would be transferred to Turkey, and then back to Iran.
And they clinched that deal.
Why?
Because they sat down, they talked, they respected the Iranians as a logical interlocutor, and in the end, they had a deal.
And the next day, Hillary Clinton bombed the deal.
We all remember the story.
Yeah, and of course, this was really their acceptance of what Obama had at least pretended to offer in the first place, which was, we'll at least implicitly recognize your enrichment of low-enriched uranium at 3.6%, as long as you let any up to 20 or higher go out of the country and let the French and the Russians do it for you.
And on top of it, Obama gave the guidelines at the time Lula was president of Brazil.
Obama sent a letter to Lula outlining, look, when you sit down to negotiate with them, this is what we need.
We means the West in general.
And they got it.
This is completely crazy.
The Brazilian foreign minister, he told us, I don't know, a little over a year ago, he said, look, when we flew to Tehran, we were thinking maybe we have a 1% chance of this thing working.
And in the end, they managed.
It's basic rules of diplomacy.
And Iran, they have very able diplomats.
They are among the best in the world.
Very well educated.
Even if they have, let's put it this way, an Islamist background, not all of them, they are career diplomats.
They know how to play the game and they are very able negotiators.
But they are treated like shit by the Europeans and the Americans.
And now with this letter, if you've been reading the Iranian press for the past 48 hours or so, there are some leaks about the letter.
They say the first part of the letter is just threats.
And the second part of the letter, Obama more or less says, if you fall over and die, you accept everything that we're doing, the sanctions, more sanctions at the UN, our unilateral sanctions that I just approved three weeks ago, and then we'll sit down and talk.
What kind of negotiation is this?
Well, they're kind of making fools out of themselves and out of the United States of America, it seems like to me.
Because, like we started out in this thing, they keep backing their red line up.
It used to be, you cannot operate Natanz and then it was, well, you can't turn on the Bushehr reactor.
And then it was, now it's you can't make nukes or you can't finish one or you can't be, you can't go one day after finishing one or whatever.
You know, they keep backing up at the same time that, as you say, they're putting on these would-be draconian sanctions.
But as you detail in your article, they're not nearly so isolated as, say, for example, Iraq in the 1990s, where it was a UN Security Council resolution that had Russia and China on board for it and couldn't be repealed, basically, where Iraq was completely isolated.
Iran still has more than half the world to trade with.
America's really just, it's like Hillary Clinton throwing a temper tantrum in front of everyone.
There's really a lot of mouths to it, it seems like.
And even at that time, Scott, Iraq was selling, smuggling a lot of oil to Jordan in trucks.
I saw that myself.
You know, trucks in the middle of the night full of oil crossing the Iraqi-Jordanian border.
So even if this thing worked, Iran could smuggle oil and gas to all of its neighbors, starting with Turkey, because they need it badly.
Central Asia, obviously, because they have agreements.
And with China, obviously they can be paid anywhere in Hong Kong via a third bank in a fiscal paradise somewhere.
And now, very interesting development as well.
You know that soon there's going to be yuan trading at the city of London.
London traders and people in Beijing, they are saying, look, this is practically a done deal.
It's going to take a few months, but soon it's going to be a done deal.
So now, yuan is becoming an international currency de facto.
Under the controls imposed by Beijing.
This means, among other things, that soon Iran can sell its oil in yuan not only to China, but to anybody that wants to pay in yuan as well.
And even with this latest visit by Wen Jiabao, prime minister of China, he went to the GCC these past few days.
He went to Saudi Arabia, Qatar, and the Emirates.
He clinched a swap deal in the Emirates, in yuan.
So this means that the Emirates will have these sovereign funds with almost a trillion dollar reserves.
Soon they're going to have yuan in their own reserves as well.
And they're probably going to make a lot of money because yuan is going to appreciate further and further within the next few years.
And in terms of oil and gas, China and Iran are already trading in rials and yuan.
China with Russia trades in rials and rubles.
With India, India pays for Iranian oil via a Turkish bank.
So if you multiply this with other countries that do deals with Iran, they're going to be paying for the oil they need to Iran in a basket of currencies in their own currencies via third banks in fourth countries and even American allies like Japan and South Korea.
They already told the Obama administration face to face that they want exemptions from these because South Korea imports 10% of their oil from Iran.
They said, look, we need this and there's nobody else to sell it to us so that's it.
We want an exemption and we'll get an exemption.
And the Japanese very politely in a very Japanese way they told him, Geithner, look, you put us in a very I don't think we'll be able to follow your prescription this time.
Well, and you know the thing is about it it's a fungible resource it's literally a liquid so if they can still only sell it to China that just means China buys less from somewhere else but let me ask you this what exactly is the nature of Iran's relationship with Venezuela because of course the war party would have it the Heritage Foundation report I think it was the Muslim takeover of South America to wage the Jihad against us all or something even worse than that maybe Pepe, what do you say?
Well, considering how misinformed these people are in one of the debates Rick Santorum actually said that Hamas and Hezbollah were taking over Latin America he actually said that, can you believe it?
Well, anyway, they have a lot of bilateral projects it's worth 4 to 5 billion dollars it's not a lot but it's the beginning they are both OPEC members so they coordinate what they do inside OPEC closely they want high oil prices for obvious reasons for fighting unemployment and in the case of Venezuela the inequality in Venezuela is still huge Chavez ministries are not exactly well organized as you probably know and in Iran because of the sanctions and because of mismanagement Ahmadinejad especially in the second term he puts people in planning ministries, ministry of finance these people don't know absolutely anything about economics it's a total disaster the inflation rate is over 20% and unemployment among young people is 25-30% in Iran almost like Spain so they need high oil prices in fact everybody at the moment wants high oil prices the Saudis, they need oil at 100 a barrel because they remember a few months ago they had this huge bribe program of most of their population look, we'll give you a lot of money state jobs and all that but don't come up with this Arab Spring thing over here so everybody wants high oil prices but the motivations from different players are different although everybody wants the same thing so Iran what they are trying to do is a very complicated thing if they feel they have their backs against the wall all the time they issue something like look, we're going to try to close the Strait of Hormuz and oil goes up 5-10 bucks in less than a week so they have the ability with saying 3 or 4 phrases oil goes from 99-101 to 115-120 for the European economy it's a total disaster nobody's going to have a war with Iran this is all just about jacking up the oil price and both sides are winking and elbowing each other exactly look, American big oil they are laughing all the way to the bank as well so for big oil in the US it's great to have oil Brent at 114 it's fantastic I was reminded of Greg when I was reading your article when you were talking about all these red lines and the different ways of using that terminology going back decades there had been a red line drawn around the Kirkuk oil reserves I think mostly and I guess some on the Iranian border and the deal was to keep that oil off the market for the long term to keep prices artificially high and that was a policy between I guess Houston and London that had gone back for decades and there's the Iraq angle as well I got something this week it's crazy the Iraqis are saying that in 3 or 4 years they are going to be producing 5 million barrels of oil a day this is completely crazy this means that in 3 or 4 or 5 years oil could drop to $50 a barrel easily because then it's not Saudi Arabia the best oil analysts say they don't have extra spare capacity like if Iranian oil for these buyers in Europe or some countries in Asia Saudi Arabia, they cannot make it up but Iraq in 3 or 4 or 5 years could and this would change the whole equation once again and as Tom says in the introduction to your article that was part of the neocon plan only they thought they would own Iraq for the long term they were actually accomplishing what they wanted only it's Iran that turns out to be the ones with the ability to destroy OPEC which is basically the Saudi Kingdom's dictatorship over the price of oil in the world exactly in fact even if they had the extra capacity they wouldn't want to use it because they want high oil prices for their internal needs they have to bribe their whole population basically but Iran is different if they had investments from the Europeans this is something that any independent European advisor or consultant or some diplomats that have a little bit of perspective in their lives they always say off the record we are dying to do business with Iran we cannot do it because of the US sanctions especially their gas we could go there and say how much money do you need for infrastructure because this is the basic problem for Iran they cannot produce more because they don't have the money to invest in infrastructure or the newest machinery the Europeans have it the Canadians have it the Americans have it because of the sanctions it doesn't go to Iran sooner or later the Chinese are going to Iran so in terms of Iran China anything the US does is counterproductive for China Iran is a matter of national security they import 22% of their oil from Iran soon it could be 30% from the point of view of the leadership in Beijing that's it this is untouchable it's even more important for them Central Asia they already secured a gas pipeline from Turkmenistan so they are covered on this and with Russia there are two pipelines on the way one for oil one for gas from Siberia so they are covered as well but Iran for them is essential soon it's going to be 30% of the oil they need whatever the US does forget it so tell me the state of the whatever it is in Syria right now who's doing what who even knows what's going on inside Syria this past few days I didn't even look at what was going on in Syria I just glanced at a few headlines from Middle Eastern papers basically still the same the stalemate could last another year easily because the repression this is from the lion's mouth he said that 3 or 4 days ago and he considers the whole protest movement as a terrorist operation the Assad regime and the intelligence apparatus they cannot see that they are legitimate grievances that people even stable middle class people in the big cities in Syria they are fed up with corruption and an inefficient economy and they would like a little bit of political participation it doesn't have to be a full blown western parliamentary democracy but you know for the regime the mentality reminds me of the Soviet Union by the way it is based on the Soviet Union when you travel to some parts of Syria it looks like you are in Brezhnev Soviet Union good times I can't imagine why anybody would be protesting but now I got to tell you as soon as somebody says the word CIA I assume that even if somebody means well and is doing something if the CIA agrees with them they are basically a dupe whether they want to be useful or not how does that work?exactly and that is the problem the legitimacy problem the Free Syrian National Council and the Free Syrian Army the Free Syrian Army is a joke it is a bunch of mercenaries and opportunist defectors it is exactly the same scenario with that base that NATO established in southern Turkey near the Turkish-Syrian border and Qatar is smuggling weapons and operatives to them as well you can even read about that in the Lebanese press most of it is pro-Sunni but they publish this it is easy to find stuff like this so the stalemate will continue and the problem is it is not going anywhere it is not going anywhere I don't see the Free Syrian Army for instance liberating parts of Syria like Homs Hama or the suburbs of Aleppo it is impossible they don't have the numbers they don't have the organization the problem is something that we discussed last time we spoke the possibility of NATO inflicting some sort of mini-civil war in northern Syria this is still part of the it is a very strong possibility but at the moment the attention of NATO is now concentrated on Iran they dispatched since the beginning of the year in fact they forgot a little bit about Syria because the build-up in Iran a few days ago was terrifying how popular is the uprising there?
I don't think anybody says that Assad isn't a dictator and that people wouldn't want to overthrow him but when you look at it ballpark numbers of people or percentages of the population of these towns you are right there are different assessments because there is the Free Syrian Army I don't know what the MI6 front group in Turkey as far as the actual Syrian people exactly actual Syrian people at least one third of the population is still pro-regime because they with all the drawbacks we don't know what could come next and we don't want an Islamist Muslim Brotherhood dominated regime at least half of the population for a number of reasons is against the regime I would say one third is radical they want regime change and the other half of the total population they want at least more political participation and especially end of corruption for the three major clans that are part of the leadership allied with the Assad clan as well this means they want Christians and Sunnis to have more participation as well and everything in Syria is concentrated with the Alawites and that's came with the Hafez Assad Alawization of Syria for the past 40 years so it's like North Korea if you're not part of the Kim Il Sung Kim Jong Il family nothing happens to you alright we're all out of time but I want to thank you very much for your time Pepe we just scratched the surface once again we'll get back to it I promise alright everybody from the Asia Times ATimes.com and he's got one at TomDispatch.com sinking the petrodollar in the Persian Gulf check it out
