Massenbach-Letter. NEWS 12.5.17

Massenbach-Letter. News

  • WSJ:Trump Set to Arm Kurds in ISIS Fight, Angering Turkey
  • U.S. Sec. of State Rex W. Tillerson-Grundsatzrede zur US-Außenpolitik /
  • Remarks to U.S. Department of State Employees
  • U.S. Senator Bob Corker (Tennessee): Corker Votes Against Trillion Dollar Spending Bill
  • DIW Women’s Finance Summit 2017 – Berlin
  • Friedman/Shapiro: The Best-Laid Plans of Saudi Arabia and Russia
  • Ophir to Borrow $1.2 Billion from Chinese Banks for Fortuna Floating LNG
  • Carnegie-Moscow: Local Civic Activism in Moscow
  • From our Russian News Desk. (The views expressed are the author‘s own.)
  • Iran_Oil_Industry
  • US_Russia_INF
  • Azerbaijan
  • China_Aircraft_Carrier

Massenbach* WSJ: Trump Set to Arm Kurds in ISIS Fight, Angering Turkey

Aim is to take Raqqa with help of YPG, but Turkey considers it a terrorist organization

May 9, 2017 2:12 p.m. ET

President Donald Trump approved plans to directly arm Kurdish fighters battling Islamic State in Syria, U.S. officials said Tuesday, paving the way for an offensive against the extremist group’s de facto capital but angering Turkish allies who view the Kurdish fighters as terrorists.

After months of internal debate, Mr. Trump approved a proposal to arm the YPG, the Kurdish organization in Syria that the U.S. military considers its most reliable military ally in the country.

But Turkey, a North Atlantic Treaty Organization ally, considers the YPG to be a terrorist group that threatens its borders, and it has long opposed the U.S. plans.

The decision sets the stage for the YPG and its Arab allies to launch an offensive on Raqqa, Islamic State’s de facto capital in Syria.

Top Turkish officials met on Monday in the White House for a tense meeting to discuss the U.S. plans.

On Tuesday, the Pentagon said the U.S. is moving ahead with the plan, despite Turkish objections.

“We are keenly aware of the security concerns of our coalition partner Turkey,” said Dana White, the chief Pentagon spokeswoman. “We want to reassure the people and government of Turkey that the U.S. is committed to preventing additional security risks and protecting our NATO ally.”


From our Russian News Desk. (The views expressed are the author‘s own.)

  • Iran_Oil_Industry
  • US_Russia_INF
  • Azerbaijan
  • China_Aircraft_Carrier


The Best-Laid Plans of Saudi Arabia and Russia

May 9, 2017

By Jacob L. Shapiro

It was only a few months ago that OPEC, once the de facto arbiter of oil markets, seemed to have a plan to inflate the price of oil: The cartel, along with several non-OPEC members, agreed in December to cut production by roughly 1.2 million barrels per day. And for the first quarter of 2017, OPEC largely made good on its pledge. It produced 1.1 million fewer barrels of oil per day in the first quarter of 2017 than it did in the final quarter of 2016. Saudi Arabia, OPEC’s largest producer, accounted for 55 percent of the cuts.

And yet on May 4, oil prices reached a new low for the year, dropping to roughly $48 per barrel and hovering there ever since. The original deal wasn’t meant to return oil prices to previously high levels; it was meant only to keep them from crashing altogether. Still, the plan appears to be failing, and its failure bodes ill for Saudi Arabia – and for Russia, which was a little disingenuous in how much its own cuts would affect prices.

Saudi Arabia can shoulder so much of the burden of production cuts because, unlike most other countries, it has roughly $500 billion of reserves to fall back on. Put simply, it can afford short-term losses that other countries cannot. When prices are in the $50 per barrel range, as they have been for most of 2017, Riyadh doesn’t have to dip too far into its reserves to cover its budget deficit.

But the prospect of low prices, not to mention the reinstatement of government spending on public sector salaries and bonuses, means that Riyadh will soon feel the pain that so many other countries have felt for some time. The days when Saudi Arabia could dictate market prices by itself have passed. And so the country needs to do what it can to maximize value now, before its ability to dictate the market wanes further and before it invests even more money into diversifying its economy.

There are, of course, reasons beyond Riyadh’s control that oil prices are falling. The United States, for example, has increased production – something it tends to do when prices reach producers’ break-even point in the $50 per barrel range. Projections by the U.S. Energy Information Administration from late 2016 estimated that the United States would produce 8.7 million barrels per day in 2017. The EIA has already begun to revise its forecast upward: New estimates suggest the country will produce 9.2 million barrels per day in 2017, and perhaps as much as 10 million barrels per day in 2018. If these rates continue, the United States would produce more crude oil than Saudi Arabia would if it, too, maintained current rates.
(click to enlarge)

Then there is Russia, which has arguably misrepresented how closely it has adhered to the December agreement. This is because Russia simply can’t afford to cut production. Russian Energy Minister Alexander Novak has said Russia met its promised cuts of 300,000 barrels per day. Russian Energy Ministry statistics suggest that number may even be 400,000 barrels.
(click to enlarge)

But these numbers are misleading. Decreased production and intentional cuts aren’t the same thing. There was a similarly steep drop in Russian production – 432,000 barrels per day – at this time in 2016, raising the question of whether this is just a monthly seasonal adjustment. Crude oil production cuts are in the eye of the beholder. Russia has technically met its obligation to cut 300,000 barrels per day if the benchmark for the cuts is December 2016. Russia has not met its obligations, however, if the standard is a year-on-year comparison of cuts. As the chart above shows, Russia raised crude production in January and March 2017 when compared with the previous year. The April 2017 decrease in production, when viewed year-on-year, is just over half of Russia’s commitment to OPEC.

The ebbs and flows of oil prices, for whatever their reasons, are best analyzed by oil experts. The bottom line is that there is more supply than there is demand, and when the price hits a certain point, U.S. production begins to kick in, increasing supply and offsetting other cuts agreed to by OPEC and non-OPEC countries. That puts a ceiling on the price of oil, putting countries such as Russia that depend on oil exports in a difficult situation. Moscow could afford a short-term production cut if cutting production put prices into the $70 and $80 per barrel range. But it could not afford a short-term cut that would close production facilities because of how dependent some regions in Russia are on oil. A long-term production cut to keep the bottom from falling out of oil prices would also be difficult for Russia to maintain. After all, it’s already on pace to exhaust one of its reserve funds this year.

With Russia unable to stomach even a short-term cut, the bulk of the responsibility for decreasing production has fallen to Saudi Arabia, which has a large but not-inexhaustible amount of money to cover losses. The result is that GPF’s forecast on Russia, which identified Russian aggressiveness abroad and political instability at home as the key drivers of Russia’s geopolitical situation in 2017, is on track. The same is true of GPF’s forecast on Saudi Arabia, which predicts that Saudi Arabia is standing on the brink of an existential political crisis that a Saudi Aramco IPO and a “Vision 2030” will not be able to avert.

OPEC bought itself some time with its agreement to cut production in December. But it now faces the difficult choice of ending those cuts and watching prices fall (an untenable choice for most OPEC and non-OPEC countries), or continuing those cuts to keep prices at their current levels – an increasingly difficult thing to guarantee, given producers’ history of adhering to OPEC agreements. Sooner or later, the result is going to be lower oil prices, at which point many of the predictions GPF made at the beginning of the year will begin to form more quickly.

The post The Best-Laid Plans of Saudi Arabia and Russia appeared first on Geopolitical Futures.


Policy= res publica

Freudenberg-Pilster* DIW Women’s Finance Summit 2017 – Berlin
Structural Change in the Financial Sector – Women’s Perspectives
May 23, 2017

Almost ten years after the crisis, the financial sector is still in the midst of a far-reaching transformational process. The macroeconomic environment and regulatory frameworks are changing quickly and profoundly, whereas new technologies are challenging established players – both from the public and private sector – like never before. These developments and their implications for the financial services industry and economies at large will be discussed primarily by leading female exponents. The ways in which organizations benefit from a sound gender balance in management and supervisory boards, among other topics, will also be addressed in the discussions.

Welcome addresses by
Marcel Fratzscher and Elke Holst

Keynote addresses by
Christine Lagarde, Managing Director, IMF (by Video)
Brenda D.H. Trenowden, Global Chair, 30% Club, and ANZ
Sir Philip Hampton, Chairman, GlaxoSmithKline plc, Chair of the Women on Board’s Review
Viviane Reding, Member, European Parliament

Changing Finance – international perspectives | Regulation – Digitalization – Political uncertainty
with Megan Butler, Christine Graeff, Sabine Keller-Busse, Sylvie Matherat, and Sandie O’Connor

Changing Finance – German perspectives | Beyond the crisis – the German financial sector in transition
with Dorothee Blessing, Christine Bortenlänger, Ingrid Hengster, Elke König, and Carola von Schmettow

Changing Finance – Governance and Diversity | Positive aspects of having women in leadership positions, and how to increase their numbers
with Douglas Flint, Peter Grauer, Sir Philip Hampton, and Axel A. Weber

****************************************************************************************************************** Politics: From Vision to Action

Barandat* U.S. Senator Bob Corker (Tennessee): Corker Votes Against Trillion Dollar Spending Bill

May 04 2017

WASHINGTON – U.S. Senator Bob Corker (R-Tenn.), a member of the Senate Budget Committee, today released the following statement after voting against the fiscal year 2017 omnibus spending bill.

“While this bill funds a number of important priorities, I could not support it because it increases spending by using the OCO slush fund without appropriately offsetting those increases in other places,” said Corker. “Every day that goes by, our fiscal situation becomes more of a threat to our country’s national security.”

The fiscal year 2017 omnibus spending bill designates $104 billion for Overseas Contingency Operations (OCO), exceeding the recommended amount agreed to in the Bipartisan Budget Act of 2015 by $30 billion. OCO is intended to provide emergency funding for military missions overseas but has been repeatedly abused to fund normal operations at the Departments of Defense and State in order to avoid exceeding statutory spending caps.


Middle East/Africa

Ophir to Borrow $1.2 Billion from Chinese Banks for Fortuna Floating LNG

British oil and gas explorer Ophir Energy plans to borrow $1.2 billion from Chinese banks to back the development of its Fortuna floating liquefied natural gas (FLNG) export project in Equatorial Guinea.

The project is set to be cleared at the end of June, while the buyer of the LNG and the financial structure underpinning the scheme should be announced by the end of this month, Ophir Energy CEO Nick Cooper said on Monday.

The choice of Chinese banks reflected the unwillingness of Western institutions to back African oil and gas projects, Cooper told Cooper an industry conference in Amsterdam…

Fortuna FLNG will be Africa’s first deepwater floating liquefaction facility, with production capacity of 2.2 million tonnes per year and an estimated start-up in 2020.

Italian oil and gas group Eni is advancing its own FLNG project, Coral, in waters off Mozambique.

Eni expects to approve the investment imminently after a breakthrough in convincing its Chinese partner, CNPC, which had previously withheld its blessing, to back the scheme, industry sources said.

The two African FLNG projects are expected to be the only multi-billion-dollar LNG projects to be given the go-ahead globally this year, as low oil and gas prices make companies rethink investment plans.

Ophir’s Cooper said Fortuna FLNG was highly competitive against rival producers, which have heavier capital investments, allowing it to deliver supply to Europe more cheaply than even new projects in the United States.

While Ophir has not announced the identity of the buyer of output from its facility, industry sources have said the majority of interest has come from European players, including utilities.

Shipping company Golar LNG, also a partner in Fortuna FLNG with oil services firm Schlumberger via a joint venture, will build, own and deliver the FLNG vessel, which is called the Gimi.

The Gimi is an LNG tanker which Golar is fitting out with liquefaction technology.

Conversions like these are highly price competitive against traditional and more costly onshore liquefaction plants, said Chris Holmes, managing director of gas and LNG at IHS.

Malaysia’s Petronas brought on stream the world’s first FLNG project this year, called PFLNG 1. On the other end of the spectrum, the world’s biggest FLNG project, the giant Prelude plant being specially built by Royal Dutch Shell for deployment off the coast of Australia, staggers in at a cost of $12 billion. It is due to start next year.

By the end of the decade, 14 million tonnes of FLNG production is expected to come online, Holmes said.

About Orphir Energy:


*Massenbach’s Recommendation*

U.S. Sec. of State Rex W. Tillerson

Grundsatzrede zur US-Außenpolitik

WASHINGTON – (AD) – Nachfolgend veröffentlichen wir die unwesentlich gekürzte Rede, in der US-Außenminister Rex Tillerson am 3. Mai 2017 vor den Mitarbeitern des US-Außenministeriums einen Überblick über die amerikanische Außenpolitik der Regierung Trump gab.[…]

Ich bin jetzt seit etwa drei Monaten hier, wir arbeiten Seite an Seite, und deshalb dachte ich, es ist vielleicht nützlich, wenn ich einige meiner Gedanken darüber mit Ihnen teile, wo wir meines Erachtens stehen und was auf uns zukommt, was sicherlich von Interesse für Sie ist.


Ich möchte also mit Ihnen über einige Themen sprechen. Ich möchte meine Sichtweise dessen erklären, wie die Politik dieser Regierung – „Amerika zuerst“ – in unsere Außenpolitik und die auswärtigen Angelegenheiten einzuordnen ist. Darauf werde ich also eingehen. Und dann will ich einen kurzem Rundgang um die Welt machen. Die meisten von Ihnen wissen in etwa, was auf der Welt vor sich geht, aber ich habe mir dennoch gedacht, dass ich kurz auf die einzelnen Regionen eingehe, um zu erklären, wo wir meines Erachtens stehen und welchen Bereichen wir noch nicht die Aufmerksamkeit zuteilwerden lassen konnten, die wir ihnen gerne widmen würden – und ich möchte auf keinen Fall den Eindruck erwecken, wir hielten diese Bereiche nicht für wichtig. Die Frage ist: Welches ist die gefährlichste Situation, die wir angehen müssen?…..


Remarks to U.S. Department of State Employees

Rex W. Tillerson
Secretary of State

Dean Acheson Auditorium

Washington, DC

May 3, 2017

……So I thought we’d talk about a couple of things. I want to share my perspective as to how does this administration’s policies of “America first” fit into our foreign policy and foreign affairs. And so I want to touch on that. And then I’ll take a quick walk around the world. Most of you have some familiarity of what’s going on around the world, but I thought just regionally I’d hit each one of them very quickly, to share with you my perspective on kind of where I feel we are, and then in some areas where we’ve not yet had time to devote the attention to we would like, and I don’t want that to be in any way considered that we don’t think those are important. It’s kind of a – what’s the hottest fire that we’ve got to deal with?

So I want to talk about that a little bit, and then spend some time at the end talking about where we’re going in the future of the department, USAID, and, as you know, we just kicked off this listening exercise.

So let’s talk first about my view of how you translate “America first” into our foreign policy. And I think I approach it really that it’s America first for national security and economic prosperity, and that doesn’t mean it comes at the expense of others. Our partnerships and our alliances are critical to our success in both of those areas. But as we have progressed over the last 20 years – and some of you could tie it back to the post-Cold War era as the world has changed, some of you can tie it back to the evolution of China since the post-Nixon era and China’s rise as an economic power, and now as a growing military power – that as we participated in those changes, we were promoting relations, we were promoting economic activity, we were promoting trade with a lot of these emerging economies, and we just kind of lost track of how we were doing. And as a result, things got a little bit out of balance. And I think that’s – as you hear the President talk about it, that’s what he really speaks about, is: Look, things have gotten out of balance, and these are really important relationships to us and they’re really important alliances, but we’ve got to bring them back into balance……


Carnegie Moscow Center

Local Civic Activism in Moscow

In March 2017, major Russian cities witnessed their largest anticorruption protests in years. Recently, Moscow has also been facing an upsurge in local civic activism in response to government inefficiency, controversial urban planning projects, and the resettlement of inhabitants of khrushchevki, a low-cost housing developments implemented during the Soviet period as a solution to urban housing shortages, which were not designed to be standing over half a century later.

A new article on local civic activism in Moscow by Carnegie’s Andrei Kolesnikov and the Levada Center’s Denis Volkov draws on in-depth interviews and focus groups conducted by the Carnegie Moscow Center and the Levada Center with people actively involved in various civic initiatives, local and national officials, and average citizens.

This analysis does not paint an exhaustive picture, but rather indicates that activism in Moscow is becoming increasingly dynamic. For the most part, local activists have not expressed political ambitions to date, but the more the authorities fail to address the people’s concerns, the more political this activism is likely to become. If the government does not want the current wave of civic activists to become a political opposition movement, it needs to open proper channels of dialogue with them.



see our letter on:

*Herausgegeben von Udo von Massenbach, Bärbel Freudenberg-Pilster, Joerg Barandat*



05-03-17 U.S. Sec. of State – Rex W. Tillerson_ Remarks to U.S. Department of State Employees.pdf

05-03-17 U.S. Sec. of State Rex W. Tillerson – Grundsatzrede zur US Aussenpolitik.pdf

05-05-17 05-05-17 Iran_Oil_Industry – US_Russia_INF – Azerbaijan – China_Aircraft_Carrier.docx