Posts Tagged ‘Fail’
It’s Official: Gold Is Now The Most Hated Asset Class

Submitted by Pater Tenebrarum of Acting-Man blog,

Full Court Press

Not a day passes without the financial media denouncing gold as an investment option and hailing the bureaucrats heading the world's monopolist monetary central planning agencies as superheroes. It began prior to gold's recent breakdown, with widely cited bearish reports on gold published by Credit Suisse and Goldman Sachs, among others. Never mind that most of their arguments were easily unmasked as spurious. It should be no wonder though: gold's rise was the most conspicuous evidence of faith in central banking being slowly but surely undermined. (Read more…) The banking cartel relies on the fiat money system remaining intact; the legal privilege of fractional reserve banking provides it with what is an essentially fraudulent profit center unparalleled by any other in the world (fraudulent in terms of traditional legal principles, but not in terms of the current law of course). Not surprisingly, ever since the completely unrestrained fiat money system became operational in the early 1970s, the financial sector's share of corporate profits has inexorably risen and finally eclipsed all other sectors of the economy.

 

financial share of profits

The share of financial profits of total corporate profits – a direct result of the fractional reserve banking privilege and the central bank monopoly on money (via Ed Yardeni) – click to enlarge.

 

In other words, the banks have to protect a major franchise. It is a good bet that if gold had continued to rise in the face of money printing being accelerated all over the world, the inevitable loss of faith in central banks would have happened sooner rather than later. That it will eventually happen is unavoidable – the modern monetary system was fated to self-destruct the moment it was conceived. This is so because central planning and price controls cannot work in the long run, even though central banks are socialistic institutions adrift in a capitalist sea, so to speak. They can to some extent observe prices in the market, but the problem is that the market price most relevant to them – namely the ratio of future against present goods as expressed in interest rates on the credit markets – is not independent of their actions. There is therefore nothing that can tell them whether their administered interest rates are too high or too low. It is a system that is condemned to fail at some point (unfortunately with grave consequences for the economy at large).

The fact that a great many people ostensibly believe in its viability is not proof that it is viable; most of those who are most vocal about retaining the central bank money monopoly are directly profiting from its existence after all. That the commercial banks only want to protect a source of large profits and an invaluable backstop in case their speculations go wrong is clear, but the same is true of most academics in the economics profession. The great bulk of them derives its income from the State, and the central bank is at the forefront of supporting the livelihood of its apologists.

Among commercial banks, Credit Suisse has been a leader in the recent rhetorical onslaught against gold, and has just published a follow-up, duly repeated by Bloomberg under the non-too-subtle title: 'Gold Seen Crushed'.

“Gold, down 17 percent since January, is poised to lose 20 percent in a year as inflation fails to accelerate and with the worst risks to the global economy waning, Credit Suisse Group AG said.

 

Gold will trade at $1,100 an ounce in a year and below $1,000 in five years, according to Ric Deverell, head of commodities research at the bank. Lower prices are unlikely to lure more central-bank buying, said Deverell, who worked at the Reserve Bank of Australia for 10 years before joining Credit Suisse in 2010.

 

“Gold is going to get crushed,” Deverell told reporters in London today. “The need to buy gold for wealth preservation fell down and the probability of inflation on a one- to three-year horizon is significantly diminished.”

 

Investors are losing faith in the world’s traditional store of value even as central banks continue to print money on an unprecedented scale. Bullion slumped into the bear market last month after a 12-year bull market that saw prices rise as much as sevenfold. Gold is a “wounded bull,” Credit Suisse said in a Jan. 3 report.

(emphasis added)

Color us unsurprised that the main author of the report is an ex-central banker. As regards inflation, below is a chart we have recently shown, US money TMS-2. The good people at Credit Suisse neglect to mention in their report that official 'CPI inflation' has rarely risen beyond the central bank's 'target' of 2% during the entire gold bull market to date. It was completely irrelevant to the gold market thus far, so why should the outlook for the government's 'inflation' data suddenly become relevant now? Monetary inflation has been higher over the past five, 10 and 15 years than at any time since the end of WW2 in a comparable period – and it continues to accelerate.

It is therefore erroneous to claim that 'the probability of inflation on a one to three year horizon is diminished' – the exact opposite is the case. As noted above, Credit Suisse's argumentation has been spurious in its first bearish gold report already and it continues to be so. It seems more likely that a concerted public relations campaign against gold is underway, while parallel to that, a pro-central banking campaign is in full swing. We're not really big fans of conspiracy theories, but in this case, everything points to this being the case; it is just as transparent as the pro-war campaign prior to the Iraq war was.

 

US-TMS-2-LT
Monetary inflation in the US since the year 2000. Money TMS-2 has more than tripled – click to enlarge.

 

Success! Gold Now Seen as 'Worst Performing Asset' by Investors

The gold market is of course complying so far, as the clients of the banks issuing bearish reports are bailing from their gold positions. Skeptical voices like Elliott Capital Management's Paul Singer have been drowned out by the incessant barrage of propaganda. Gold continues to decline in the near term and its chart has begun to look rather ominous.

 

Gold-one week

Gold over the past week (most active futures contract) – down every day of the week – click to enlarge.

As Credit Suisse incidentally also reported, its campaign has been crowned with success: not only has the gold price declined sharply, gold has now become the 'most hated asset class' with the 'worst outlook among commodities' according to a recent CS survey among institutional investors:

“Gold has the worst 12-month outlook among commodities and will trade below $1,400 an ounce in a year, according to an investor poll by Credit Suisse Group AG.

 

Sixty percent of respondents named bullion as having the worst outlook, 18 percent picked copper and 16 percent selected corn, the bank said in an e-mailed report today. Fifty-one percent predicted gold will fall under $1,400 in 12 months, it said. The bank polled 185 investors including hedge funds, pension funds and family offices on May 15 in London.

 

“Bearishness for gold was a very clear consensus,” said Kamal Naqvi, the head of commodities sales for Europe, Middle East and Africa at Credit Suisse. “It’s not about just not buying gold, it’s about shorting it,” or wagering on a drop.

 

Gold slumped into a bear market last month as investors lost faith in the metal as a store of value. Bullion is down 17 percent this year, compared with the 2.9 percent drop for the Standard & Poor’s GSCI gauge of raw materials.

 

Fifty-three percent of investors expect commodity prices to stay near current levels, Credit Suisse said. Most were underweight raw materials or had zero exposure, while they expected to be overweight or neutral in 12 months, the bank said. Investors named relative value trades, fundamentally based directional trades and volatility as the best ways to extract value from commodities.”

(emphasis added)

The general bearishness on commodities jibes with what we have seen in the recent Merrill Lynch fund manager survey. The bearishness on gold is in keeping with what we have seen in the Barron's 'Big Money' survey and other polls. Apparently though the people who write the gold reports at Credit Suisse are oblivious to the contrarian implications of their own survey.

As we have recently pointed out, just before Japan's stock market embarked on a 75% rally in the space of a few months, fund managers absolutely hated Japan (they love it now!). As we wrote in our October 30 review of the Barron's Big Money poll:

“However, what we really love is that they hate Japanese stocks even more! As it were, we are busy writing an article on Japan that will be entitled 'Reconsidering Japan' and should be published sometime this week. There are quite a few reasons to believe that Japanese stocks will finally do the unexpected and come back to life.”

At the time, a full 76% of the 'big money' fund managers surveyed declared themselves bearish on Japan. Currently, 69% of the managers surveyed in the most recent Barron's poll are bearish on gold. One must of course admit that from a technical perspective gold currently looks weak. That is undeniably the case and there could therefore be more near to medium term downside. However, the most important fundamental data as well as the sentiment backdrop clearly remain bullish. In fact, the skepticism of investors regarding commodities in general and gold in particular in the face of the biggest money printing orgy of the modern age is what we would call an 'extreme long term bullish dichotomy'. It seems highly likely to us that a year from now or maybe even earlier,  the conversation will have profoundly changed.

    



 
The Bermuda Triangle Of Economics

Excerpted from Jacob Steen’s Chronicle blog at Tradingfloor.com,

The mystique of the Bermuda Triangle has caught the imagination and interest of generations. In much the same way it has also caught my attention and I feel that now there is a Bermuda Triangle of economics – a space where everything tends to disappear without radar contact, a black hole in which rationality and science is replaced by hope, superstition and nonsense pundits like myself pretending to understand the real drivers of the economy.

(Read more…)

The Bermuda Triangle in real life runs from Bermuda to Puerto Rico to Miami. The economic one runs from high stock market valuations to high unemployment to low growth/productivity. Just like the real Bermuda Triangle, in the Bermuda Triangle of economics there is plenty of scientific evidence that can explain most, if not everything, of what is going on. But that does not suit Hollywood, sorry, the US Federal Reserve.

Neither does it suit mainstream banking analysis or the media in dealing with reality and facts: the mystique simply sells better! After all, there is a reason why people leave science education for PhDs in apps and virtual reality.

There is a myth that the sunken Atlantis could be in the middle of this triangle. It has been renamed Modern Monetary Theory (MMT) to make it suit the black hole’s main premise of ensuring there is a fancy name for what is essentially the same economic recipe: print and spend money, then wait and pray for better weather.

The economic Bermuda Triangle, or EBT, is getting harder and harder to justify – if for nothing else because the constant reminders of crisis keep us all defensive and non-committed to investing beyond the next quarter. We all naively think we can exit the “risk-on” trade before anyone else. A less cynical person than me could think that some things in life need to be experienced – not talked about.

Where to from here?
A long time ago, policymakers entered a one-way street where reversing is, if not illegal, then impossible. Enough though about the polices. What is more important is what is next?

If a political scientist should create a simple model for how this Bermuda Triangle works, the first action point would be to test the premise of the policy. No theory is better than its premise – clearly.

The Federal Reserve version of the premise is to create a positive wealth effect that ultimately leads to better sentiment and investment. The barometer of success is the stock market, but does the stock market really correlate to wealth? Clearly the stock market has been on a tear, but is everyone, including the average Joe, benefitting? Clearly not. Ownership of stocks is almost exclusively for the top 10 percent of the population. Social divide is much higher today than it was before the crisis. 

In Japan, they are more open – they simply want to create a bubble. I repeat, a bubble. That is interesting when policymakers for years have said it is impossible to figure out when there is a bubble! I guess – proactively wanting a bubble makes it more transparent? Confused? Certainly I am, but then again Abenomics is “double Dutch” to me anyway.

So the premise does not hold, but how will the policymakers deal with failure? Change course? Never! It would be worse than blasphemy! A one-way street means cars can only go one way – not in reverse. Optionality is for democracies and capitalistic systems, not for a time of crisis. In times of crisis, we need the foresight of our great supreme leaders, sorry, politicians and central bankers, to guide us. Their divine insight will lead us safely ashore to the beaches of Lalaland, where the sun always shines.

No, the response is to do more. Take the Bank of Japan’s quantitative easing (QE) infinite released on April 4. One month into the experiment and Japanese Government Bond (JGB) yields are higher, not lower.

JGB Yield - Saxo Bank

The yield curve is steeper, inflation expectations are flat but the Nikkei and USDJPY are higher. A success? Yes, except in the one area you wanted to impact: the yield and the yield curve!

The other part is that for this to work, the stock market needs to keep outpacing the fall in JGBs. The Government Pension Fund manages more than USD 1 trillion. Its allocation? Sixty-five percent in JGBs and less than 11 percent in stocks. Hence, the present scoreboard would read: 

USD 650 billion x (146.50 – 143.50) = 2% =  - USD 13bn.  USD 110bn  x 40% =  USD 48bn. A net gain of USD 35bn but…

What if the Nikkei comes off 10 percent – then USD 48bn becomes USD 37bn and the new equilibrium price of 138.50 is only five figures away.

JGB continues

A price point that will make Japan less well off, not better, plus it would have increased the funding price of the 240 percent debt-to-GDP ratio. Some strong macro fund managers think that a collapse in Japan is less than 12 to 18 months away, among them Mr. Kyle Bass stands out. Maybe Japan should be careful about what it wants. My conclusion on Japan is:

1. The Japan scenario is neither black nor white, but a continuous gradual process. Japan is notoriously slow in changing its political process and ultimately nothing will have changed materially one year from now. Yes, the Nikkei could be the start of a secular bull market as Stanley Druckenmiller recently said in New York, but it is already up 60 percent from the low. And with China and Europe slowing, it is likely to see a major correction and probably soon.

 

2. The unintended consequence of QE Infinite in Japan is so far (as shown above) a higher yield – even higher than the recent rise in US rates – USDJPY becomes vulnerable for a major correction down to 95/96.

 

3. Japan will not go bankrupt inside 12 months or even 12 years, but the hope of a recovery will wane and soon. Watch how the Upper House election in the Diet in July becomes the final destination for Abenomics. Prime Minister Shinzo Abe needs to secure 63 and 100 new seats; 63 seats to maintain momentum behind his economic policy and 100 to secure the majority to change the constitution.

 

Diet Election in July

 

Delivering “cheap money” is the easy part of his three pillar strategy, which got him elected. Using stimulus correctly and working on the supply side of the economy will be impossible due to structure, lack of immigration, health care and ageing costs. I wish Japan well, but nothing will be saved by using the economic Bermuda Triangle. Of all countries, Japan should know – it invented the economic version of it!

Another key event will be the German election.

In Germany,  Chancellor Angela Merkel will win the battle (the election), but will probably lose the war: she needs to step up. Europe expects it. The market wants it. The problem is, she can’t afford it.

Bailing-in will mean a loss of rating for Germany, while staying austere will cost exports and long-term growth. Which scenario to choose? I personally think she will fail – fail to reconcile. She is already short of a Chancellor’s majority and after the election, the Greens and SPD will hold her hostage. Staying in power will mean giving in. Simply. 

That, however, will be the end of the honeymoon for Europe. Germany cannot save Europe. Each country in Europe needs to realise that its recovery comes from its own political willingness to reform and eat reality pills. Europe is destined to repeat the history of Japan, unless an even more severe crisis makes us wake-up. 

This means we see the July to October period as a very important time frame for this experiment. We firmly believe the German election will be the game changer, but we could get a surprise in July unless Mr Abe gets JGB yields under control.

Policy conclusion

The Federal Reserve is testing the waters with its “tapering”, but Fed chief Ben Bernanke is financing the budget deficits via his QE. Hence, he will continue less aggressively, but QE is not ending.

The Bank of England gets a new boss in July. This will kick-start American-style policies, which sits right in the middle of the economic Bermuda Triangle, with GBP being the main casualty.

The Bank of Japan will soon correct its maturity in buying – buying longer and deeper – as the July election looms.

The European Central Bank is close, very close to doing something that smells and feels like QE. Selling the sick man of Europe – France – makes a lot of sense here.

Strategy

We are entering the realisation part of this global slowdown. Unlike three months ago, policymakers now realise that growth is not coming back in six months’ time as they all love to estimate at their press conferences. So over the summer, the Federal Reserve, Bank of England, Bank of Japan, International Monetary Fund and European Central Bank will all go back to their drawing boards and… do more of the same.

Citigroup G-10 Economic Surprise Index

The policy is not wrong; clearly, it is only the amplitude of it. I agree with Jeff Gundlach, who believes QE is here to stay for a long, long time, but also that the only thing that will get us out of this funk is innovation and reality. How do I reconcile this?

By allowing the 70 percent likelihood for Extend-and-Pretend Season 4 through to the July to October period (German and Japanese elections), which will lead us to Japanisation (dis-inflation, no growth and productivity plus an ageing population).

Mad Men

There is a 30 percent chance of failing before July – failing as in the market collapsing or social tensions rising, governments falling and the financial system under pressure.

We are due for a new crisis. We have governments and central banks proactively pursuing bubbles. Hence, the probability of bursting one of those bubbles will need to have risen by the same magnitude as the desperate moves of policymakers.

    



 
Mystery Sponsor Of Weapons And Money To Syrian Mercenary “Rebels” Revealed

Previously, when looking at the real underlying national interests responsible for the deteriorating situation in Syria, which eventually may and/or will devolve into all out war with hundreds of thousands killed, we made it very clear that it was always and only about the gas, or gas pipelines to be exact, and specifically those involving the tiny but uber-wealthy state of Qatar.

Needless to say, the official spin on events has no mention of this ulterior motive, and the popular, propaganda machine, especially from those powers supporting the Syrian “rebels” which include Israel, the US and the Arabian states tries to generate public and democratic support by portraying Assad as a brutal, chemical weapons-using dictator, in line with the tried and true script used once already in Iraq.

On the other hand, there is Russia (and to (Read more…) lesser extent China: for China’s strategic interests in mid-east pipelines, read here), which has been portrayed as the main supporter of the “evil” Assad regime, and thus eager to preserve the status quo without a military intervention. Such attempts may be for naught especially with the earlier noted arrival of US marines in Israel, and the imminent arrival of the Russian Pacific fleet in Cyprus (which is a stone throw away from Syria) which may catalyze a military outcome sooner than we had expected.

However, one question that has so far remained unanswered, and a very sensitive one now that the US is on the verge of voting to arm the Syrian rebels, is who was arming said group of Al-Qaeda supported militants up until now. Now, finally, courtesy of the FT we have the (less than surprising) answer, which goes back to our original thesis, and proves that, as so often happens in the middle east, it is once again all about the natural resources.

From the FT:

The tiny gas-rich state of Qatar has spent as much as $3bn over the past two years supporting the rebellion in Syria, far exceeding any other government, but is now being nudged aside by Saudi Arabia as the prime source of arms to rebels.

 

The cost of Qatar’s intervention, its latest push to back an Arab revolt, amounts to a fraction of its international investment portfolio. But its financial support for the revolution that has turned into a vicious civil war dramatically overshadows western backing for the opposition.

 

In dozens of interviews with the FT conducted in recent weeks, rebel leaders both abroad and within Syria as well as regional and western officials detailed Qatar’s role in the Syrian conflict, a source of mounting controversy.

Just as Egypt and Libya had their CIA Western-funded mercenaries fighting the regime, so Qatar is paying for its own mercenary force.

The small state with a gargantuan appetite is the biggest donor to the political opposition, providing generous refugee packages to defectors (one estimate puts it at $50,000 a year for a defector and his family) and has provided vast amounts of humanitarian support.

 

In September, many rebels in Syria’s Aleppo province received a one off monthly salary of $150 courtesy of Qatar. Sources close to the Qatari government say total spending has reached as much as $3bn, while rebel and diplomatic sources put the figure at $1bn at most.

 

For Qatar, owner of the world’s third-largest gas reserves, its intervention in Syria is part of an aggressive quest for global recognition and is merely the latest chapter in its attempt to establish itself as a major player in the region, following its backing of Libya’s rebels who overthrew Muammer Gaddafi in 2011.

That, sadly, is not even close to half the story. Recall from Qatar: Oil Rich and Dangerous, posted nearly a year ago, which predicted all of this:

Why would Qatar want to become involved in Syria where they have little invested?  A map reveals that the kingdom is a geographic prisoner in a small enclave on the Persian Gulf coast.

 

It relies upon the export of LNG, because it is restricted by Saudi Arabia from building pipelines to distant markets.  In 2009, the proposal of a pipeline to Europe through Saudi Arabia and Turkey to the Nabucco pipeline was considered, but Saudi Arabia that is angered by its smaller and much louder brother has blocked any overland expansion.

 

Already the largest LNG producer, Qatar will not increase the production of LNG.  The market is becoming glutted with eight new facilities in Australia coming online between 2014 and 2020.

 

A saturated North American gas market and a far more competitive Asian market leaves only Europe.  The discovery in 2009 of a new gas field near Israel, Lebanon, Cyprus, and Syria opened new possibilities to bypass the Saudi Barrier and to secure a new source of income.  Pipelines are in place already in Turkey to receive the gas.  Only Al-Assad is in the way.

 

Qatar along with the Turks would like to remove Al-Assad and install the Syrian chapter of the Moslem Brotherhood.  It is the best organized political movement in the chaotic society and can block Saudi Arabia’s efforts to install a more fanatical Wahhabi based regime.  Once the Brotherhood is in power, the Emir’s broad connections with Brotherhood groups throughout the region should make it easy for him to find a friendly ear and an open hand in Damascus.

 

A control centre has been established in the Turkish city of Adana near the Syrian border to direct the rebels against Al-Assad.  Saudi Deputy Foreign Minister Prince Abdulaziz bin Abdullah al-Saud asked to have the Turks establish a joint Turkish, Saudi, Qatari operations center.  “The Turks liked the idea of having the base in Adana so that they could supervise its operations” a source in the Gulf told Reuters.

 

The fighting is likely to continue for many more months, but Qatar is in for the long term.  At the end, there will be contracts for the massive reconstruction and there will be the development of the gas fields.  In any case, Al-Assad must go.  There is nothing personal; it is strictly business to preserve the future tranquility and well-being of Qatar.

Some more on the strategic importance of this key feeder component to the Nabucco pipeline, and why Syria is so problematic to so many powers. From 2009:

Qatar has proposed a gas pipeline from the Gulf to Turkey in a sign the emirate is considering a further expansion of exports from the world’s biggest gasfield after it finishes an ambitious programme to more than double its capacity to produce liquefied natural gas (LNG).

 

“We are eager to have a gas pipeline from Qatar to Turkey,” Sheikh Hamad bin Khalifa Al Thani, the ruler of Qatar, said last week, following talks with the Turkish president Abdullah Gul and the prime minister Recep Tayyip Erdogan in the western Turkish resort town of Bodrum. “We discussed this matter in the framework of co-operation in the field of energy. In this regard, a working group will be set up that will come up with concrete results in the shortest possible time,” he said, according to Turkey’s Anatolia news agency.

 

Other reports in the Turkish press said the two states were exploring the possibility of Qatar supplying gas to the strategic Nabucco pipeline project, which would transport Central Asian and Middle Eastern gas to Europe, bypassing Russia. A Qatar-to-Turkey pipeline might hook up with Nabucco at its proposed starting point in eastern Turkey. Last month, Mr Erdogan and the prime ministers of four European countries signed a transit agreement for Nabucco, clearing the way for a final investment decision next year on the EU-backed project to reduce European dependence on Russian gas.

 

“For this aim, I think a gas pipeline between Turkey and Qatar would solve the issue once and for all,” Mr Erdogan added, according to reports in several newspapers. The reports said two different routes for such a pipeline were possible. One would lead from Qatar through Saudi Arabia, Kuwait and Iraq to Turkey. The other would go through Saudi Arabia, Jordan, Syria and on to Turkey. It was not clear whether the second option would be connected to the Pan-Arab pipeline, carrying Egyptian gas through Jordan to Syria. That pipeline, which is due to be extended to Turkey, has also been proposed as a source of gas for Nabucco.

Based on production from the massive North Field in the Gulf, Qatar has established a commanding position as the world’s leading LNG exporter. It is consolidating that through a construction programme aimed at increasing its annual LNG production capacity to 77 million tonnes by the end of next year, from 31 million tonnes last year. However, in 2005, the emirate placed a moratorium on plans for further development of the North Field in order to conduct a reservoir study. It recently extended the ban for two years to 2013.

Specifically, the issue at hand is the green part of the proposed pipeline: as explained above, it simply can’t happen as long as Russia is alligned with Assad.

So there you have it: Qatar doing everything it can to promote bloodshed, death and destruction by using not Syrian rebels, but mercenaries: professional citizens who are paid handsomely to fight and kill members of the elected regime (unpopular as it may be), for what? So that the unimaginably rich emirs of Qatar can get even richer. Although it is not as if Russia is blameless: all it wants is to preserve its own strategic leverage over Europe by being the biggest external provider of natgas to the continent through its own pipelines. Should Nabucco come into existence, Gazpromia would be very, very angry and make far less money!

As for the Syrian “rebels”, who else is helping them? Why the US and Israel of course. And with the Muslim Brotherhood “takeover” paradigm already tested out in Egypt, it is only a matter of time.

According to the Stockholm International Peace Research Institute, which tracks arms transfers, Qatar has sent the most weapons deliveries to Syria, with more than 70 military cargo flights into neighbouring Turkey between April 2012 and March this year.

Perhaps it is Putin’s turn to tell John Kerry he prefer if Qatar was not “supplying assistance to Syrian mercenaries”?

What is worse, and what is already known is that implicitly the US – that ever-vigilant crusader against Al Qaeda – is effectively also supporting the terrorist organization:

The relegation of Qatar to second place in providing weapons follows increasing concern in the West and among other Arab states that weapons it supplies could fall into the hands of an al-Qaeda-linked group, Jabhat al-Nusrah.

Yet Qatar may have bitten off more than it can chew, even with the explicit military Israeli support, and implicit from the US. Because the closer Qatar gets to establishing its own puppet state in Syria, the closer Saudi Arabia is to getting marginalized:

But though its approach is driven more by pragmatism and opportunism, than ideology, Qatar has become entangled in the polarised politics of the region, setting off a wave of scathing criticism. “You can’t buy a revolution,” says an opposition businessman.

 

Qatar’s support for Islamist groups in the Arab world, which puts it at odds with its peers in the Gulf states, has fuelled rivalry with Saudi Arabia. Qatar’s ruling emir, Hamad bin Khalifa al-Thani, “wants to be the Arab world’s Islamist (Gamal) Abdelnasser,” said an Arab politician, referring to Egypt’s fiery late president and devoted pan-Arab leader.

 

Qatar’s intervention is coming under mounting scrutiny. Regional rivals contend it is using its financial firepower simply to buy future influence and that it has ended up splintering Syria’s opposition. Against this backdrop Saudi Arabia, which until now has been a more deliberate backer of Syria’s rebels, has stepped up its involvement.

 

Recent tensions over the opposition’s election of an interim prime minister who won the support of Syria’s Muslim Brotherhood has also driven Saudi Arabia to tighten its relationship to the political opposition, a job it had largely left in the hands of Qatar.

What Saudi Arabia wants is not to leave the Syrian people alone, but to install its own puppet regime so it has full liberty to dictate LNG terms to Qatar, and subsequently to Europe.

Khalid al-Attiyah, Qatar’s state minister for foreign affairs, who handles its Syrian policy, dismissed talk of rivalry with the Saudis and denied allegations that Qatar’s support for the rebels has splintered Syria’s opposition and weakened nascent institutions.

 

In an interview with the Financial Times, he said every move Qatar has made, has been in conjunction with the Friends of Syria group of Arab and western nations, not alone. “Our problem in Qatar is that we don’t have a hidden agenda so people start fixing you one,” he says.

Sadly, when it comes to the US (and of course Israel), it does have a very hidden agenda: one that involves lying to its people about what any future intervention is all about, and the fabrication of narrative about chemical weapons and a bloody regime hell bent on massacring every man, woman and child from the “brave resistance.” What they all fail to mention is that all such “rebels” are merely paid for mercenaries of the Qatari emir, whose sole interest is to accrue even more wealth even if it means the deaths of thousands of Syrians in the process.

A bigger read through of the events in Syria reveals an even more complicated web: one that has Qatar facing off against Syria, with both using Syria as a pawn in a great natural resource chess game, and with Israel and the US both on the side of the petrodollars, while Russia and to a lesser extent China, form the counterbalancing axis and refuse to permit a wholesale overthrow of the local government which would unlock even more geopolitical leverage for the gulf states.

Up until today, we would have thought that when push comes to shove, Russia would relent. However, with the arrival of a whole lot of submarines in Cyprus, the games just got very serious. After all the vital interests of Gazprom – perhaps the most important “company” in the world – are suddenly at stake.

Finally, one wonders just what President Obama and Turkish Prime Minister Erdogan were really talking about behind the scenes.